A journal investigation finds China is supplying Russia and Iran with drone factories circumventing U.S. sanctions. Plus, Samsung joins the trillion-dollar club amid relentless demand for AI memory chips. And weight-loss drug giant Novo Nordisk surprises with strong sales even as competition continues to weigh on growth. For now, we have to remember that the pill from Lily is just launched, but they are off to a very strong start and really have to be on their toes to keep up. It's Wednesday, May 6th. I'm Daniel Bach for The Wall Street Journal, filling in for Luke Vargas. And here is the AM edition of What's News, the top headlines and business stories moving your world today. President Trump has scored decisive victories in a handful of Indiana state Senate primaries, in a sign his grip on the Republican Party base remains firm. President Trump had warned that a group of Indiana Republican state senators would face retribution for opposing his redistricting plan in the state. Tuesday's primaries showed that Trump largely made good on that threat. Five of the seven Trump-backed Republican challengers won their primaries for state Senate. That's Journal-National political reporter Ken Thomas. Now, all of this stemmed from Trump's push last year for Indiana to conduct a mid-decade redistricting plan, similar to those approved in Texas and North Carolina. But that ran into opposition from a group of Indiana state senators, which led to the president engineering primary challenges against the Republican incumbents. In the short term, this is good news for the White House. Trump will still need to overcome slumping approval ratings and concerns from voters over inflation and rising gas prices. Those will be key to the November midterm elections when Republicans won't have Trump on the ballot but will be defending majorities in both the House and the Senate. But Tuesday's primaries show that despite these headwinds, Trump is still in command of his Republican base. And Republican lawmakers who oppose him run the risk of seeing an end to their political careers. At the same time, in Ohio, stalwart Trump backer Vivek Ramaswamy advanced in the state's Republican primary for governor. He would face Democrat Amy Acton, a former Ohio health director. The state will also see a special election in November to fill the last two years of J.D. Vance's term. Former Senator Sherrod Brown won the Democratic nomination yesterday and will face Republican Senator John Husted, who was appointed last year when Vance became vice president. And while the White House may be focused on retaining the House and Senate in November's primaries, Marco Rubio's growing list of responsibilities has some starting to talk about 2028. Yesterday, the Secretary of State and National Security Advisor held court for almost an hour in the White House briefing room as a temporary stand for Press Secretary Caroline Levitt who is now on maternity leave According to some pundits Rubio delivered a more direct explanation of the administration goals in Iran after weeks of mixed messaging He urged Tehran to negotiate with the U to end the war and he did so by quoting Ice Cube. But look, the message to Iran, these guys are facing, they are facing real catastrophic destruction to their economy, generational destruction to their economy, generational destruction to the wealth of their country, imposed on themselves by the actions that they're taking. They should check themselves before they wreck themselves in the direction that they're going. We report that Trump has been polling advisors and friends in recent months on Rubio's political strengths compared with Vice President J.D. Vance, who has positioned himself to inherit the president's political movement. As Rubio spoke with reporters in Washington, Vance was on his way back from a GOP fundraiser in Des Moines, his first appearance in Iowa since becoming vice president. He didn't take questions from reporters, but his appearance has added fuel to speculation that he will run for president. Meanwhile, President Trump has said the U.S. would pause its operation to guide commercial ships through the Strait of Hormuz. Project Freedom, as it's being called, began on Monday, prompting Iran to fire its ships in the waterway and target energy facilities in the United Arab Emirates. Trump said, quote, great progress had been made toward a peace agreement with Tehran, though he also said that a pre-existing effort to blockade Iranian ports will continue. Coming up, Novo Nordisk tops analyst expectations managing to deal with competition in the GLP-1 space. That story and more after the break. Well, if you're going to skirt sanctions to sell parts under the radar to a U.S. adversary to make weapons, it's perhaps best not to send your marketing emails to an Iran nuclear watchdog. That's how the Wall Street Journal's senior global correspondent, Josh Chin, learned about Chinese drone parts being sold to both Iran and Russia. Josh, tell us more about how this was uncovered. Yeah, right. Well, so when the Iran war broke out, we knew that Iran was burning through a bunch of drones. And we know from previous reporting that China was a major supplier of those drone parts. We started digging around. And in the process, we contacted this group named Iran Watch that tracks weapons procurement to Iran. And they told us about an email that they had gotten accidentally from a company calling itself Shaman Victory Technology, which was a company based in China that was openly selling a sort of German design engine that has been used in the Shahed drone, which is the main sort of one-way attack drone that Iran and Russia both have been using. And it was a completely open sales pitch that ended up in their inbox, apparently because the sales rep for Shaman Victory Technology later told us he was using AI to target potential clients. And so these engines are considered dual-use goods. They're subject to sanctions by the US and EU, but this company was happy to sell them without really hiding it. How is this actually happening then against sanctions? What have you learned about how they are able to so openly sell these drone parts Right So this engine was originally designed by a German company called Limbach which was purchased a few years ago by a Chinese company And what it comes down to ultimately is that these are smaller factories that this particular company said they started only selling these engines earlier this year, which is coincidentally when the tensions between Iran and the US started to pick up. And it's such a small company, it just doesn't really deal in dollars. And so the way that sanctions work is by essentially cutting off a company's access to the U.S. financial system. For a company that doesn't deal in dollars, isn't planning to travel to the U.S. anytime soon, they just don't worry about it as much. So how is this turning up in the current conflict then? And what is the concern there for the U.S.? Yeah, you know, I think the big general concern for the U.S. right now is that warfare is kind of moving to these sorts of cheap, disposable weapon systems like the Shahad drone, and that the parts used in those weapon systems are very common. I mean, the engine we're talking about is kind of like a motorcycle engine or a scooter engine. And so these things are really easy to hide in the flow of global trade, unlike, say, a nuclear weapon or a ballistic missile, which use these very unique parts that are easy for nonproliferation officials to sort of spot and stop the trade of. So we're sort of going into this new era where the U.S. is just not going to be able to control the spread of weapons the way it used to. Are there any mechanisms that the U.S. does have to do anything about this? Yeah. So we talked to the Treasury Department and what they told us is that they are, you know, they recognize that they can't really stop this. And so their ultimate aim is to just disrupt it as much as possible. And the way they're trying to do that is by cutting off funding sources. So Iran funds a lot of its weapon purchases through the sale of oil to China. The U.S. is basically trying to disrupt the ability of those oil revenues to be used by Iran. You know, they have succeeded in some ways in sort of forcing the, you know, Iranian and Russian drone programs to rely more on Chinese parts rather than other sort of more sophisticated Western parts that they were buying earlier. And the Chinese parts are not, you know, they're not as good. And so the drones don't perform as well. So there is some benefit to that. That's the journal's senior global correspondent, Josh Chin. Josh, thank you so much for this. My pleasure. Novo Nordisk's first quarter operating profit has beat expectations after sales surged 30 percent. Juska Bank's Henrik Hallengren is one of several analysts that holds Novo stock, and he told us it's a turnaround for the maker of weight loss drug Wegovi, which has been locked in stiff competition with U.S. rival Eli Lilly and trying to offset a bruising obesity drug price war. When we talk about a good performance in Q1, we have to remember that the expectations is a drag under growth due to this pricing agreement with the US, especially the most favoured nation part. So in terms of overall growth, it's negative. But I think the overall obesity pill launch is very positive. They say around 2 million people are on the pill since launch. That's the best volume launch of a GLP product ever So very successful And of course that also positive for the share price and the sentiment around it Whether this growth will continue in the coming quarters will partly depend on the success of Eli Lilly weight loss pill which only launched at the end of the first quarter Korean tech giant Samsung has joined a rare league of companies worth more than a trillion dollars. Its shares have more than doubled this year, thanks to AI's red-hot demand for its memory chips, in particular so-called DRAMs, as Heard on the Street tech columnist Dan Gallagher explains. That's the system memory that helps any computing device do its job. Any device that has any kind of processing chip needs system memory to actually function. And so that's Micron, Samsung, Hynix. They're the big makers of DRAM. AI systems need tons and tons of memory. They need a lot of a special type of DRAM memory for the chips to like do the computing that's required. Dan says demand for old school memory chips and flash drives is boosting a broad range of companies that weren't originally part of the AI boom. These are kind of later bloomers, but over the past year, the market has woken up to what is happening. The sales are exploding at these companies. SanDisk in particular, that stock is up almost 4,000% in the last 12 months. Western Digital and Seagate, they've nearly tripled in value just in the last six months. Micron has more than doubled just since the first of the year. In terms of market cap, Micron is now worth more than ExxonMobil. And that's worth more than ExxonMobil in the midst of a historic oil price surge. And finally, the live entertainment ticket provider Live Nation swung to a loss this quarter, weighed down by a $450 million legal charge. The company's bottom line was hit after a federal jury found it illegally monopolized the U.S. ticket market. That said, revenue grew thanks to strong concert demand, not least because the so-called man-band era is in full swing. Adult fans are paying premium prices to see grown-up heartthrobs like the Backstreet Boys. Tell me why it ain't nothing but a lot. There's also new kids on the block. And there's money to be made on the nostalgia-obsessed touring circuit, with Backstreet Boys fans spending upwards of $1,000 when seeing them at the Sphere in Las Vegas last year. The band grossed more than $55 million on ticket sales, according to Billboard Boxscore. And there'll be more breezy tunes on the concert circuit this year, with New Kids on the Block and Boyz II Men taking up stints in Vegas, and take that headlining 17 nearly sold-out UK stadium gigs. Safe to say, the boy bands are back for good. And that's it for What's News for this Wednesday morning. Additional sound in this episode was from Reuters. Today's episode was produced by Hattie Moyer. Our supervising producer is Sondra Kilhoff. And I'm Daniel Bach for The Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.
