Rolls-Royce says AI could help it become UK's biggest company
What's the story
Rolls-Royce, the British engineering giant, has revealed plans to use its nuclear reactors to power artificial intelligence (AI) systems. The move could potentially make the company the UK's most valuable firm, its CEO Tufan Erginbilgic told BBC. The company has signed contracts with the UK and Czech governments to supply small modular reactors (SMRs), which could be used to power AI-driven data centers.
Market dominance
Rolls-Royce's unique nuclear capability
Erginbilgic emphasized Rolls-Royce's unique nuclear capability, saying "there is no private company in the world with the nuclear capability we have." He added that if the company isn't a global market leader, they would have done something wrong. Speaking about SMRs, he said they are smaller and quicker to build than traditional nuclear plants with costs likely to come down as units are rolled out.
Energy transition
Trillion-dollar SMR market potential
Erginbilgic estimates that the world will need 400 SMRs by 2050, creating a trillion-dollar-plus market. The company has already signed a deal to develop six SMRs for the Czech Republic and is working on three for the UK. However, he admitted that SMR technology is still unproven but remains confident about its future potential.
Market expansion
Next-gen narrow-bodied aircraft engines
Apart from SMRs, Rolls-Royce is also eyeing the next generation of narrow-bodied aircraft engines. The market for these engines is worth $1.6 trillion, nine times that of wide-bodied ones. Despite being a small player in this space with established competitors, Erginbilgic sees it as an industrial strategy and a major opportunity for economic growth in the UK.
Market performance
Since 2023, Rolls-Royce's share price has increased by over 1,000%
Despite 50% of its shareholders and customers being US-based, Erginbilgic has ruled out the idea of listing shares in New York. He believes that performance isn't limited to the US market. Under his leadership since January 2023, Rolls-Royce's share price has increased by over 1,000% and profit is estimated at over £3 billion. Despite some criticism for job cuts early on in his tenure, the overall global headcount has increased from 43,000 to 45,000 since 2023.