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Oil's price spike is bad news for power-hungry AI

· Business Insider

AI data centers are highly energy-intensive, making them vulnerable to rising power costs.

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  • Oil's price surge is rattling chip stocks and raising AI cost fears.
  • Rising energy prices could slow AI expansion and pressure corporate margins.
  • Qatar's LNG shutdown is also tightening helium supply, which is critical to chipmaking.

Oil's sharp rally amid the Iran war has injected fresh volatility into semiconductor stocks and raised new questions about the cost and pace of the AI boom.

Shares of TSMC, Samsung Electronics, and SK Hynix — key AI chip suppliers — have swung sharply since the conflict began, at one point falling between 9% and 22%, as investors assess rising energy and supply risks.

"Higher energy costs for AI data centers could slow AI infrastructure buildouts, while fabs in Taiwan and South Korea would face growing cost pressures from higher LNG prices," wrote Phelix Lee, an equity analyst at Morningstar, in a Tuesday note, referencing the costs of liquified natural gas.

Energy markets have been at the center of the turbulence.

Oil accounts for roughly 38% of total US energy consumption, according to Lee, and the US hosts most of the world's AI data centers. While oil is not the primary source of electricity generation, higher crude prices tend to ripple across energy markets.

AI data centers consume far more electricity than traditional server facilities, driven by power-hungry graphics processing units and advanced cooling systems.

If energy prices remain elevated, cloud providers may reconsider the pace of AI server deployments — a potential knock-on effect for chipmakers riding a wave of AI-driven demand.

Oil prices have swung sharply since the US and Israel attacked Iran at the end of February, disrupting traffic through the Strait of Hormuz, the world's most critical energy shipping chokepoint.

Brent crude futures were trading around $87 per barrel early Wednesday, while US West Texas Intermediate hovered near $83, after both benchmarks breached $100 earlier this week before retreating.

Liquefied natural gas prices have also jumped following the shutdown of Qatar's largest LNG export facility, tightening global supply.

The US Energy Information Administration said Tuesday it expects Brent to average above $95 a barrel over the next two months as the war disrupts supplies, before easing toward $70 by year-end.

With oil prices more than 40% higher this year, operating costs for chip fabs and data centers are likely to rise. Morningstar estimates energy expenses account for roughly 3% to 6% of projected 2025 revenue for TSMC, Samsung, and SK Hynix.

"Should the war be prolonged, we could see these costs rise materially," Lee wrote, adding that much of the burden could ultimately be passed on to customers given the tight supply of AI-related chips.

Beyond oil: material and shipping risks

Energy isn't the only vulnerability.

Lee also flagged risks to critical semiconductor inputs such as helium and bromine.

Qatar supplies nearly one-third of the world's helium, a byproduct of LNG production that is critical for semiconductor manufacturing.

A prolonged shutdown of LNG production could tighten helium markets, dent chip yields, or, in a worst-case scenario, temporarily halt fab operations.

Bromine poses a smaller immediate risk, as 98% of South Korea's bromine supply comes from Israel and flows remain relatively stable, Lee wrote.

"Tail risks remain, however, as a severe escalation or extension of the war could destabilize bromine supply, potentially affecting supplies of memory chips as well," he wrote.

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Kids books should feel like a hug: children’s author

· Citizen

Sometimes the personality of an author is so vastly different from their words and thus expectations that, despite wanting to, it’s impossible to un-meet someone. It’s a spoiler of a different kind, because a wooden personality can make any good read feel as unappealing as a plank.

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Children’s author Nadine Aisha Jassat is the exact opposite of that. She’s fun, effervescent and exactly what you’d expect someone to be like when they write for your kids, and more. The person behind the storytelling is often as important as the narratives they weave, and because Jassat’s such an awesome human being, the appeal of sharing her books with my offspring is so much greater.

Just like she writes for younger minds, Jassat’s own relationships with books started at an early age. “I was the library kid who would go to the library every day after school and read books,” she said. “When I was growing up, books and characters were friends,” she said. “They helped me understand the world, and being made into a young reader is what made me a writer.”

Books and characters were friends

Jassat said that writing stories for younger readers was not a conscious decision, however, but rather the outcome of the idea for her first novel, The Stories Grandma Forgot (and how I found them) “I didn’t think I was writing a children’s novel,” she said. “With my debut, I just knew there was this story of a girl whose grandma had Alzheimer’s and a girl who had the same mixed heritage as me. I was thinking about voice, character and the heart of the story before anything else. My ideas can come from my life, they can come from a single spark,” she said. “But you don’t just have inspiration, and then the book is done. You have to follow that idea, investigate it, develop it and nurture it.”

Her latest, The House at the Edge of the World, grew from one line that set the entire story in motion. “The first line that came to me was ‘hope is the last sanctuary at the end of the world’,” she said. “Then I thought about hope as a sanctuary, then about a physical sanctuary being a house, and then about this house being haunted by hope.” That idea of hope as something lingering rather than frightening shaped the rest of the book. “A haunted house but not in a scary way,” she said. “Hope is a kind of magic and haunting is a kind of magic.”

Jassat is passionate about writing. Picture: Hein Kaiser

When she writes, Jassat works in verse. It’s unusual, seeing poetry and narrative combine on the page. But it’s incredible. “Poetry is like my first language as a writer,” she said. “When I tried writing my first novel in prose, it was fine, but when I tried it in verse, it felt like I was flying.”

Storytelling in verse and rhyme

It did make her nervous, though. “I was so in my head about it,” she said. “I wondered if children would think it was weird.”

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Instead, the response from young readers surprised her. “I remember being in a signing queue, and children were saying how much they loved that the novel was written in verse,” she said. “They were excited because it was something new.” The format has also opened doors for readers who might struggle with traditional text-heavy pages. “I had a letter from a young reader with dyslexia who said it was the book she had enjoyed most,” she said. “Because the way it was laid out on the page made it less overwhelming.”

While writing for younger audiences often requires tapping into childhood emotions, Jassat said it is less about recreating childhood trends and more about reconnecting with feelings.

It’s about reconnecting with feelings

“You might be speaking to your own inner child,” she said. “Not in a practical way but on an emotional level, like what were the big questions and big feelings at that age? I don’t sit down thinking, here is the teachable moment,” she said. “It’s more organic than that. I start with an emotion or an experience that I want to explore.”

That’s why she said she loved it when another young reader told her that her books have a hug inside them. It was a comment that stuck. “My books are mysteries and page-turners,” she said. “But they all have a heart.”

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Trump Administration Won’t Rule Out Further Action Against Anthropic

· Wired

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