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If you track where AI touches your body, your power bill, and your tools, this update is for you. Altman is moving into brain hardware, Rolls Royce is pitching nuclear muscle for AI demand, and Skywork is opening up interactive worlds for agents.
📌 In today’s Generative AI Newsletter:
Merge Labs steps in with Altman and Blania on brain interfaces
Rolls Royce pushes SMRs as power for AI data centers
Skywork AI releases Matrix Game 2.0 as an open world model
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🧠 Altman's New Brain-Tech Startup to Rival Neuralink
Credit: Andrew Harnik/ Getty Images
Sam Altman is co-founding Merge Labs, a brain–computer interface startup raising funds at an $850M valuation, according to FT and TechCrunch. Backing could come from OpenAI Ventures, marking OpenAI’s first major move into neuro-tech. Merge will compete directly with Elon Musk’s Neuralink, which is already in human trials.
Here’s what’s being built:
Founding team: Altman as co-founder, with Alex Blania (Worldcoin CEO) leading operations.
The tech race: Neuralink is testing brain implants to let paralyzed patients control devices by thought.
Big money: Neuralink raised $600M in June at a $9B valuation; Merge is seeking fresh capital.
Old vision, new push: Inspired by Altman’s 2017 blog “The Merge” on human–AI fusion.
The move sets up a direct face-off between two of tech’s biggest egos. Whether Merge Labs changes neuro-tech or simply fuels the Altman–Musk rivalry. The next platform may not be a phone or a headset. It may be a cortex, and the winner writes the API.
⚙️Royce CEO Says AI-Fueled SMRs Will Make It the UK's Most Valuable Firm
Chief executive Tufan Erginbilgic/ Credit: BBC
Rolls-Royce chief executive Tufan Erginbilgic believes small modular reactors (SMRs) could vault the company to the top of the UK’s valuation charts. The engineering giant has signed SMR deals with the UK and Czech Republic, pitching them as a clean, high-output power source for energy-hungry AI systems.
Here’s what’s powering the ambition:
Massive market potential: Erginbilgic estimates the world will need 400 SMRs by 2050. At up to $3B each, that’s a trillion-dollar-plus market Rolls-Royce aims to dominate.
AI as a customer: Big tech players like Google, Microsoft, and Meta have already inked deals in the US to secure SMR energy for data centers.
A proven nuclear track record: Rolls-Royce has decades of experience powering nuclear submarines, now looking to adapt that tech for land.
SMR advantages: Smaller footprint, faster build times, and potential cost drops as more units roll out.
Biggest market gamble: Beyond AI, Rolls-Royce wants to crack the $1.6T narrow-body aircraft engine market, currently dominated by CFM International.
Since taking over in 2023, Erginbilgic has delivered a 10x share price increase, cut debt, and steered profits above £3B. But SMRs remain unproven at scale, with no working examples yet and concerns over water use for cooling. Erginbilgic says no other private company matches Rolls-Royce’s nuclear capabilities and if it fails to lead globally, “we did something wrong.”
🧩 Matrix-Game 2.0: The New Open-Source Alternative to Genie 3
Image Credit: Skywork AI
Skywork AI has launched Matrix-Game 2.0, the first open-source interactive world model capable of real-time, minutes-long, high-frame-rate generation. The release lands just a week after DeepMind’s closed Genie 3 update, offering the AI community a transparent alternative for building interactive virtual worlds.
Here’s what’s inside the upgrade:
Fully open-source: Code, models, and documentation available on GitHub, Hugging Face, and the project’s homepage for unrestricted use.
High-speed rendering: Maintains stable 25 FPS for minute-long sequences, with smooth, lifelike motion and responsive camera control.
Cross-scenario adaptability: Handles environments from cities to wilderness, and visual styles from photorealistic to painterly.
Physics-aware movement: Characters navigate stairs, obstacles, and complex terrains with physical plausibility.
Interactive freedom: Users can move, rotate views, and manipulate environments in real time through simple commands.
By delivering low-latency, long-sequence generation with robust scene semantics, Matrix-Game 2.0 blurs the line between content creation and interaction. It also positions Skywork AI as a champion for open research in a space increasingly dominated by closed, corporate models. If Genie 3 showed what’s possible behind closed doors, Matrix-Game 2.0 just handed the keys to the entire AI developer community.
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