Nike to Merge Greater China into APGC from FY2028; Korea's September Exports Hit Record as AI Compute and Storage Demand Spills Over

Nike: Quarterly Pressure; Greater China to Merge into APGC from Fiscal 2028

On October 1, Nike reported fiscal 2027 first-quarter results for the period ended in late August: revenue for the period was $11.213 billion, down 4% year over year (down 5% excluding currency effects), net income was $712 million, down 2% year over year, and gross margin rose 0.6 percentage points year over year to 42.8%.^[2]

Greater China remained the biggest drag. In the quarter, Greater China revenue was $1.18 billion, down 22% year over year, or down 26% excluding currency effects, with wholesale revenue down 28% and Nike Direct down 13%; Greater China EBIT fell further by 34% to $248 million.^[2] Separately, according to Caibao Jianwen, Nike's Greater China sales on a constant-currency basis have declined for nine consecutive quarters, and CEO Elliott Hill said on the earnings call that Nike needs to improve local relevance and reduce discount promotions in China, where most local brick-and-mortar stores have not been renovated in more than seven years.^[3] In the same period, North America returned to 2% growth, while Asia-Pacific and Latin America were roughly flat on a constant-currency basis.^[2]

Announced alongside the results was a new plan called Pace. Nike defines it as a business model transformation, not a new growth strategy: the supply chain will shift from a relatively fixed cost structure to a more flexible model, and the company expects Pace to generate cumulative savings of about $2.5 billion by fiscal 2031, while incurring about $1 billion in pretax implementation costs, with the savings concentrated in fiscal 2029 and 2030.^[2]

The organizational changes are more direct. Nike will reduce management layers and push more resources toward countries, regions, and cities; starting in fiscal 2028, its current four regions will be compressed into three: North America and Latin America will merge into Americas, Europe, the Middle East and Africa will remain unchanged, and Greater China will merge with Asia-Pacific into APGC, with the regional leadership team based in Singapore. The company will also build a new capability center in Bangalore, India.^[2]

On guidance, Nike expects full-year fiscal 2027 revenue to decline by a high-single-digit percentage year over year, and full-year adjusted earnings per share guidance of $1.15 to $1.35. After the results were released, Nike's shares fell more than 8% in after-hours trading at one point; based on the after-hours price, the stock is down nearly 50% year to date.^[3]

Korea: September CPI Eases to 2.9%, Semiconductor Exports Hit Record

Data released by South Korea's Ministry of Data and Statistics on Friday, October 2, showed that the consumer price index rose 2.9% year over year in September, down from 3.1% in August and in line with the median economist estimate of 2.9%; core inflation came in at 2.8%, down notably from 3.4% in August, but still running in the mid-to-high range of the 2% band.^[5] Among components, transport prices rose 7.7% year over year, the main driver of inflation; recreation and culture prices rose 5.8%, restaurants and accommodation rose 2.8%, and household goods and services rose 3%.^[5]

Trade data released the same day showed that September exports more than doubled year over year to $120.9 billion, a record high despite fewer working days that month; semiconductor exports surged 263% to $60.3 billion, also a record.^[5]

Several economists expect the Bank of Korea to pause at its October meeting to assess the impact of two consecutive rate hikes, then resume hiking in November. The Bank of Korea raised its benchmark rate twice in a row in July and August, to 3%; the median six-month rate forecast published in August was 3.25%.^[5]

Tesla and SpaceXAI: Reallocating Memory and Compute Resources

Tesla is adjusting the memory specifications of its next-generation AI chips used for both autonomous driving and Optimus. Musk announced sharp cuts to the memory specs of the AI5 and AI6 chips: AI5 memory capacity was halved to 72GB LP5, and AI6 memory capacity was cut by one-third to 144GB LP6, to secure the memory needed for Optimus mass production. Musk said this adjustment was the only way to obtain sufficient volume for Optimus production while also significantly reducing costs.^[4]

Musk also said the impact of this adjustment on Optimus performance should be negligible, because memory bandwidth, rather than total memory capacity, is the more important limiting factor. This comes just over two months after Tesla thanked Micron on its July earnings call for providing an extremely substantial memory allocation.^[4] Optimus weekly production has risen from dozens of units per week in the second quarter to hundreds per week, with management targeting more than 1,000 per week by year-end and an eventual plan of about 20,000 per week.^[4]

On the compute side, The Information recently reported, citing people familiar with the matter, that SpaceXAI had held talks with Microsoft this summer about compute leasing; at the same time, a compute leasing contract worth $1.1 billion per month will start in December. Reuters reported that Anthropic had previously committed to spending nearly $45 billion on SpaceXAI compute, and later disclosed an additional commitment of nearly $40 billion in compute spending.^[1] Musk posted on X last weekend that the company plans to bring about 420,000 Nvidia GPUs online in November, a scale equivalent to twice a typical data center campus.^[1]

Google: Software-First, Copying the Android Playbook for Embodied AI

Google DeepMind CEO Koray Kavukcuoglu last week spoke publicly in relatively detailed terms for the first time about the company's robotics strategy, saying Google's core advantage lies in models, not the robot chassis itself; Google has launched Gemini Robotics, a version of the Gemini model optimized for physical control scenarios, and has already partnered with robotics companies including Boston Dynamics.^[6]

This model is quite similar to how Google promoted Android years ago: Google provides the core software, and scale is achieved through hardware from different manufacturers. Kavukcuoglu said Google hopes to work with other robotics companies and have them use this system; he did not fully rule out Google building humanoid robots in the future, but stressed that the current focus remains model capabilities and the partner ecosystem. Meanwhile, Google this week announced the first release of Gemini 4 Argon to select enterprise customers, focused on cybersecurity defense, and plans to open it to a broader set of users soon.^[6]