Morning Chronicle - French AI firm Mistral announces deals with BMW, Airbus

The Paris-based company, looking to punch above its weight in a sector dominated by US and Chinese firms, said it would be involved with car-crash tests and plane design.

Mistral was already closely tied with ASML, the Dutch firm producing chipmaking equipment indispensable to modern high-end semiconductors that invested in the French company last year.

"It's an interesting new market where Europe is strong... Europe has significant high-end manufacturing companies," chief executive Arthur Mensch told reporters ahead of the company's AI conference in the French capital.

The company this month bought Austrian startup Emmi AI, which specialises in digital simulations for industry, after earlier snapping up French cloud computing startup Koyeb.

AFP news agency has a deal with Mistral allowing the startup's chatbot to draw on the news agency's articles to formulate responses.

- 'Dedicated team' -

Mistral's Mensch called defence a "growing business" for his firm and revealed he had a "dedicated team" working on it.

The company is already working with the French and Singaporean militaries, Forbes magazine has reported.

But Europe's defence industry is dominated by American tech giants and Mistral is a much smaller player.

It has grown to around 1,000 employees since its 2023 founding and is now building its own computing infrastructure.

But the firm's four-billion-euro ($4.6 billion) plans for European data centres are dwarfed by the hundreds of billions being deployed by American "hyperscalers" like Google, Amazon and Microsoft.

Where American firms measure their AI infrastructure in hundreds of megawatts or gigawatts of power, Mistral has a 44-megawatt data centre outside Paris and is building another in Sweden.

The company also announced Thursday a deal for 10 megawatts of computing power with American data centre operator Digital Realty.

- 'Buy European' -

"We don't have the balance sheet of Microsoft," Mensch said Thursday.

"We can't put 50 billion on the table to build a gigawatt ahead of demand."

His group signed a five-year partnership with Airbus to apply AI to defence and space activities and helicopter manufacturing -- though the value of the contract has not been revealed.

Mensch said Mistral would be involved in improving flight safety with the deployment of AI in the cockpit, and helping with the design and construction of new aircraft through digital simulation.

For BMW, Mistral would build specific models that "understand the physics" of the vehicles and are intended to optimise crash-test procedures.

Mensch has repeatedly urged European policymakers to create "buy European" rules prioritising local suppliers for public digital services contracts in sectors like cloud and AI.

French President Emmanuel Macron, himself a great booster of Mistral, has made similar arguments in Brussels.

American tech giants expect to spend $750 billion this year on capital investments, compared with Mistral's one billion euros.

The disparity has fed repeated episodes of rumours that Mistral could be taken over by a foreign player.

That could only happen if the French government does not back Mistral "at every stage of its development", French digital affairs minister Anne Le Henanff told AFP.

CEO Mensch told French parliamentarians this month that the company's best shot at independence is an eventual stock market flotation.

A.Atkinson--MC-UK