Why Apple Bet on an Engineer to Lead the AI Era

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0:33A changing of the guard at Apple as hardware engineer John Ternus prepares to steer the company into the AI era. Plus, Spirit Airlines looks to Washington for a financial lifeline, and the White House gives a boost to the psychedelic drug industry. A whole slew of companies have been trying to take these kind of age-old psychedelic drugs like MDMA, LSD, magic mushrooms, and professionalizing them, turning them into legit treatments for mental illness. And President Trump signed an executive order basically telling the FDA to expedite the review of a bunch of these drugs. It's Tuesday, April 21st.

1:10I'm Luke Vargas for The Wall Street Journal. And here is the AM edition of What's News, the top headlines and business stories moving your world today. As we reported yesterday, Apple will be getting a new CEO come September. when Hardware Division Chief John Ternus takes the reins from Tim Cook. The leadership shakeup is the company's first in 15 years, and it comes as some critics contend that Apple needs to rekindle its innovative fire as its rivals pour resources into computing infrastructure and AI tools. And while Ternus will likely feel that pressure, Cook shared this advice for his eventual successor with Journal columnist Ben Cohen in a recent interview.

1:50So I would say, you know, be yourself, keep a firm North Star on the values of the company. Because if you get the values right, if you keep the North Star in clear view, you may be blown off course a little bit. But eventually you will come back to the right path. And I have always found that to be true. Ternus' North Star is likely to be product design, having spent the last 25 years working on everything from AirPods to the iPhone and overseeing a shift from Intel to Apple-designed chips that's helped solidify the company's command in the hardware space. And though Ternus has little experience with AI, our Deputy Tech Bureau Chief Bradley Olson says Apple isn't entirely out of the race.

2:44Apple is basically the delivery system for AI and will be for the foreseeable future for billions of people that have iPhones and use Apple products. But it's behind its rivals in terms of building models that people will use. And so how Apple thrives in the AI age is definitely an open question, and that's something that Ternus sort of inherits from Cook. Cook's reputation is someone who took the iPhone, which was one of the most successful products of all time, and used it to build an empire, which Apple really is today. And so Ternus will maybe have to step into that part of the role and the public-facing aspects of being an executive.

3:23And I think with Cook staying on as executive chairman, maybe he'll have the space to do that. Apple's App Store AI revenue is set to top a billion dollars this year simply by collecting subscription fees from companies like OpenAI, and analysts see that role expanding as Apple prepares to release an overhauled version of its Siri Assistant later this year. Amazon is plowing an additional$5 billion into Anthropic, bringing its total investment in the AI company to as much as$25 billion. The deal will see Anthropic purchase more than$100 billion in Amazon cloud services, giving it much-needed computer power after a recent crunch forced it to throttle the performance of its clawed AI model.

4:10Switching gears, high fuel prices are heaping more pressure on the aviation industry, leading the owner of Alaska and Hawaiian Airlines to yank its financial guidance. Shares of Alaska Air Group are down off hours after the company forecast roughly$600 million in added expenses, more than enough to wipe out a single-digit increase in passengers. And higher costs are leading Spirit Airlines to seek a potential lifeline from the Trump administration. Aviation reporter Ben Katz has the latest, as Spirit hopes to stave off potential liquidation after rising fuel prices thwarted its plans to exit bankruptcy.

4:47What we know is that the administration is in talks with Spirit about potential government aid. That's according to people familiar with the discussions. One of those options would actually be the US government taking a stake in the embattled airline. The government has generally avoided intervening to save a single airline in the past, but it has doled out billions of aid to the industry, even as recently as the pandemic. We could learn a bit more about the structure of what Washington is looking into, how it could help the industry later today. A bunch of executives from a number of low-cost airlines are scheduled to meet with the Transportation Secretary, Sean Duffy.

5:21That comes as airlines have really been asking lawmakers to give them some relief from the pressures of these high fuel prices. So whilst Spirit may be in the worst financial shape here and potentially the most desperate for a lifeline, they're not alone in asking for assistance to deal with the surge in fuel prices. Labor Secretary Lori Chavez de Reimer is resigning, capping a tumultuous tenure marked by infighting and allegations that she misused government funds, which she denied. De Reimer is the third cabinet member to leave in less than two months after President Trump ousted Pam Bondi and Kristi Noem in March and April, respectively.

5:58The White House says that Deputy Labor Secretary Keith Sonderling will be stepping in to run the department. Psychedelic drug stocks surged Monday after President Trump signed an executive order aimed at speeding up research and improving patient access to drugs like MDMA, LSD, and Ibogaine. The drugs could be used to treat veterans and those addicted to opioids, And the order is expected to speed up approvals of some drugs rapidly to just a few weeks. Here's Journal Business Editor Alex Frankos. It's been a real struggle for the drug makers to get these treatments approved. MDMA treatment for post-traumatic stress disorder was rejected back in 2024.

6:39The data just wasn't clean enough. Part of it is it's really hard to do placebo tests with these because the patients, you know, know immediately whether they're taking the placebo or not. So there have been lots of hurdles and lots of skepticism, but this administration is clearly more embracing of trying this stuff out. And Alex added that Trump's backing of psychedelics for mental health treatment shows just how impactful the Maha movement has become. Make America Healthy Again is very much open-minded about using these illegal drugs as mainstream treatments for different conditions. This has been an issue that's been advocated by Joe Rogan, the podcaster.

7:20Joe Rogan sent a text to the president last week and said, hey, you really got to get on this. And within a week, he had done this executive order. And with President Trump's latest deadline for Iran looming, there's confusion over whether both the U.S. and Iran will engage in a second round of peace talks today in Pakistan. There are unofficial reports that Tehran is sending negotiators, though the country's top negotiator says it won't accept talks held under the shadow of threats. A White House official has said President Trump is unlikely to extend the two-week ceasefire ahead of his Wednesday evening deadline.

7:55Coming up, long reliant on its auto manufacturing sector, Germany is reinventing itself into a weapons factory. We've got that story after the break.

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8:42Forget guns to butter, our Bojan Ponchevsky reports that German manufacturing is shifting from cars to cannons. Bojan, the rate at which the long-standing engine of the German economy seems to be losing speed, it's all very dramatic. Tell us how quickly this is unfolding. It's basically manufacturing industries across the board. According to government figures, thousands of jobs are disappearing from German manufacturing each month. 15 ,000. That's no joke. On average, a month. Yeah. And then you've got in the once dominant auto sector, the figures are really striking. Mercedes-Benz, the iconic brand, has dropped 49 % in profit last year, year on year.

9:24Volkswagen set its profit slumped by 44 % in the same period. And they also announced that they will cut 50 ,000 jobs by 2030. And finally, Porsche reported a staggering loss of profit by 98 % in 2025 compared to the previous year. Nothing like this has happened in living memory. And yet, for all the gloom in autos in particular, it sounds as if geopolitical anxiety is maybe presenting an opportunity for a bit of a pivot here. I'm curious what form that's taking. We reported last week that over in the US, the Pentagon have been approaching companies like GM and Ford, asking to see if they could help boost weapons production.

10:04Is this kind of the same thing happening in Germany or is it bigger than that? It's kind of bigger than that. Germany is in a search of a new business model. And they figured out that the geopolitical turmoil is here to stay and there will be a growing demand for weapons systems. And Germany is one of the leading industrial nations of the world can supply them. So essentially what happened was the government, but also the companies involved in manufacturing, sat down, strategized, and figured out that this is a market they need to tackle. And also they found incredible synergies. Apparently it's not that complicated.

10:38You know, if you produce engines, you can pivot from cars to tanks or even to drones. Boyan, give us some examples of companies that are making this shift. It sounds like with the encouragement of the government? The government is absolutely encouraging this. The government set up a matchmaking platform, which is if you own a company in manufacturing, you can go there and find someone who needs components that you're able to make. For example, the company Scheffler, which is one of the biggest car suppliers in the world and operates eight factories in the United States, is now aiming for 10 % of their turnover, which is roughly$28 billion to come from their newly founded defense division, which they set up last year.

11:23And they're making all sorts of things from board computers for armored vehicles, components for drones. There's another company, I interviewed the CEO of called Deutz. It's the world's oldest engine maker. And they are now making engines not for cars, but rather for tanks, for unmanned weapon systems, ground drones or aerial drones. They're making all sorts of stuff that is compatible with what they've always been doing. They don't even have to build new production line. They just have to slightly modify existing production line and slightly retrain workers. And finally, Volkswagen itself is in negotiations with Israeli companies that work on the famous Iron Dome aerial defense system, and they are likely to start producing components for that system in the near future.

12:12Finally, Bojan, sounds like there's money to be made here, but I have to ask, Is defense going to be enough to pick up what's being lost for the German economy when the auto sector is pulling back as it is? I mean, obviously, defense cannot replace the rest of the industrial economy that's declining entirely. But you see, Germans are extremely good at scaling up. And there are not that many countries in the world who could compete with them once they get going. Nobody in NATO will buy Chinese weapons, right? Nobody in NATO will buy Iranian weapons or Russian weapons or North Korean weapons, for that matter.

12:44So all these countries that can produce cheaper are not actually in the run. So from the companies that are actually competing, you've got the United States, you've got Germany, France, Britain, at that kind of scale, and in that group of competitors, Germany is very likely to come up front. And there could be a lot of winners here, right? All those countries sort of trying to increase defense spending and maybe needing to lean on their own domestic manufacturers in some capacity. Oh, absolutely. I mean, Germany is now helping the United States. You know, the famous Patriot interceptor system that protects the skies over Ukraine and now the Gulf countries.

13:18The American companies that make it have not been able to scale up quickly enough. So a German company stepped in. And for the first time now, these Patriot missiles will be produced in Germany starting from late this year or early next year. There you go. Bojan Panczewski is The Wall Street Journal's chief European political correspondent. Bojan, always a pleasure. Thank you so much. My pleasure, Luke. And that's it for What's News for this Tuesday morning. Today's show was produced by Daniel Bach and Hattie Moyer. Our supervising producer is Sandra Killhoff. And I'm Luke Vargas for The Wall Street Journal.

13:49We will be back tonight with a new show. And until then, thanks for listening.

13:59Hey, this is Telus Demos. And I'm Miriam Gottfried. We're reporters at The Wall Street Journal and the hosts of WSJ's Take on the Week. It's a weekly show that gives listeners a leg up in the world of markets and investing. From the Fed's moves to market bubbles, we dive into the biggest deals, key players, and business news ahead. If you're looking for more news and tools that you can use to help navigate the markets, consider becoming a subscriber to The Wall Street Journal. Visit subscribe.wsj.com slash takeontheweek to subscribe now.