Building The Ph(ysical)AI Layer Of Machine Intelligence Researchers have developed a principle-driven foundation model that encodes signal-theoretic principles like Fourier decomposition and energy conservation, achieving cross-modal transfer from radio-frequency data to audio, images, text, and video without fine-tuning. The 1.99 million parameter frozen encoder reached 77.7% average accuracy across 15 diverse tasks, with 84.5% on physically-grounded tasks versus 70% on semantic tasks. This approach demonstrates that encoding physical principles offers a complementary path to scale-driven models, establishing a clear boundary between physical and semantic understanding in machine intelligence. arXiv:2606.04106v1 Announce Type: new Abstract: Foundation models achieve generalization through massive-scale training on diverse data, but have limitations with transfer to truly unseen domains without paired training data. We propose principle-driven foundation models that encode signal-theoretic principles Fourier decomposition, energy conservation, symmetry rather than learn untethered statistical correlations. We hypothesize that domains differ not in fundamental physics, but in learnable transformations in time, frequency, magnitude, or phase. Training exclusively on radio-frequency RF data with co-designed architecture and losses incorporating these principles, we achieve cross-modal transfer to audio, images, text, and video using only frozen representations learned from RF data, requiring no fine-tuning of the encoder on target domains. Our 1.99M parameter frozen encoder achieves 77.7% average accuracy 91.9% top-3 across 15 diverse tasks via linear probing, with systematic variation: 84.5 on physically-grounded tasks speaker recognition, seismology, RF fingerprinting versus 70.0% on semantic tasks music genre, language recognition . This reveals that principle-driven and scale-driven approaches offer complementary paths: physical principles enable efficient cross-modal transfer while naturally establishing the boundary between physical and semantic understanding.