Hello everybody, that is Lauly, sending greetings from wet and windy Taipei.
It’s been two weeks for the reason that US presidential election, and but the commonest subject of dialog amongst Asia’s tech suppliers continues to be President-elect Donald Trump’s return to the White Home.
An govt with a server and pocket book laptop provider instructed me that the very first thing his American consumer requested him days after the election was: “Are you ready?”
Peter Chen, chair of Taiwanese electronics maker Qisda, instructed an buyers convention that his “heart started to worry” and that he nonetheless remembered the 4 years below the Trump administration earlier than and through Covid.
Moreover, at a latest media dinner with a tech provider, one of many executives half-jokingly stated the occasion was imagined to be celebratory however the temper was now clouded by uncertainty concerning the future.
Most tech suppliers Nikkei Asia reporters have been in contact with are bracing for larger tariffs on China or elevated stress to put money into the US However the good factor is: this time, they’re higher ready. After years of a Washington-Beijing commerce battle, a good portion of tech manufacturing capability has been shifted from China to south-east Asia, India and North America.
An govt at a provider to Apple and Microsoft instructed me his firm has drafted “contingency plans for 18 scenarios” ought to the commerce battle between the world’s two largest economies escalate. Whereas he could have been exaggerating for impact, he was severe when he stated his firm can rapidly add extra capability exterior of China if wanted, which is totally totally different than when the commerce battle began six years in the past.
However even when suppliers can modify manufacturing capability on the fly, the expertise race between the 2 superpowers guarantees to convey much more challenges. All eyes, particularly within the semiconductor business, can be on how tensions play out after January.
We’ve already seen the Biden administration rush to finalise $6.6bn in Chips Act cash for Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker, forward of Trump’s return to workplace. That announcement additionally got here with considerably shocking information that TSMC would ultimately produce its upcoming A16 chips, essentially the most cutting-edge providing in its product street map, in Arizona, too.
China, in the meantime, lately launched an in depth set of export management rules overlaying many chemical compounds, uncooked supplies, tools and metals which can be generally used within the world tech provide chain, defence tools, aviation and spacecraft.
As an Apple provider govt as soon as instructed me: “There’s no crystal ball to predict the future. But what is sure is that we need to buckle up and brace for a bumpy road ahead.”
Additionally, be certain that to affix us on November 28 for a webinar with Chris Miller, creator of Chip Warfare, Yeo Han-koo, former commerce minister of South Korea, and our personal chief tech correspondent Cheng Ting-Fang as we delve into this ever-changing business. Register right here and make sure you submit your questions for the panel forward of time.
Photo voltaic eclipse
China’s full line-up of cost-competitive photo voltaic vitality merchandise have turn out to be a straightforward reply for Asian governments and corporations seeking to obtain bold inexperienced vitality targets. Such provide chain dominance, overlaying every of the important thing sectors in photo voltaic vitality infrastructure, is difficult to interrupt, write Nikkei Asia’s Cheng Ting-Fang and Lauly Li.
This tech characteristic begins with a stroll by way of a photo voltaic vitality farm nestled amid the durian and pine bushes of Kulim, Malaysia, and continues on a journey by way of the provision chain of photo voltaic panels, inverters, chip supplies and extra. Interviews with purchasers and rivals reveal how Chinese language gamers have come to dominate the worldwide business, regardless of US tariffs and different commerce obstacles.
Washington has accused Beijing of unfairly subsidising its photo voltaic business, however whether or not the incoming Trump administration will take the identical strategy is an open query.
Reaching out
Main Chinese language tech firms are attempting to poach high US synthetic intelligence expertise that may assist them speed up the race to revenue from generative AI, writes the Monetary Occasions’ Eleanor Olcott.
Alibaba, ByteDance and Meituan have all been constructing their AI groups in California in latest months, regardless of Washington’s efforts to curb China’s improvement of the cutting-edge expertise.
Chinese language tech teams are banned from importing the highest-end Nvidia AI chips to China, however there aren’t any restrictions in opposition to them from accessing the silicon to energy model-training within the US.
Alibaba is recruiting an AI crew in Sunnyvale in California’s San Francisco Bay Space and has approached engineers, product managers and AI researchers who’ve labored at OpenAI and the largest US tech teams, based on three folks accustomed to the matter.
ByteDance has essentially the most established AI footprint in San Jose, with a number of groups engaged on totally different initiatives, together with one targeted on integrating AI options into TikTok.
However these firms face an uphill battle in convincing high expertise to leap ship, even with enticing compensation packages and guarantees of extra duties. Business insiders stated that American tech employees who assist Chinese language AI improvement threat getting caught up in geopolitical tensions and Washington’s elevated scrutiny of Chinese language tech teams.
Getting ready for stress
China is accelerating efforts to enhance home chip manufacturing amid an anticipated improve in stress from the US below a second Trump administration, Nikkei’s Shunsuke Tabeta writes.
The Chinese language self-sufficiency fee in semiconductors has risen from round 14 per cent in 2014 to 23 per cent in 2023 and is anticipated to achieve 27 per cent in 2027, based on information from Canadian analysis agency TechInsights.
The state-backed China Built-in Circuit Business Funding Fund, or the Massive Fund, as it’s generally recognized, has performed a essential function on this progress. The fund’s first part launched in 2014 with registered capital of Rmb138.7bn ($19.2bn at present charges). The second part adopted in 2019 with Rmb204bn, then a 3rd this Could with Rmb344bn.
However Chen Nanxiang, chair of China’s main reminiscence chipmaker Yangtze Reminiscence Applied sciences Co (YMTC), has warned that “changes and risks” within the world surroundings and tighter restrictions on China’s entry to US expertise are anticipated.
$3bn, 480 petaflops, one purpose
Taiwan plans to spend roughly $3bn over the subsequent three years on synthetic intelligence information centres and purposes to cement the democratically dominated island’s main place within the world tech provide chain, the federal government’s high science official instructed Nikkei Asia’s Thompson Chau, Cheng Ting-Fang and Lauly Li in an unique interview.
Wu Cheng-wen, minister of science and expertise, stated the federal government plans to funds about $1bn yearly to bolster Taiwan’s AI prowess. This features a purpose of accelerating the federal government’s whole computing functionality from 20 petaflops to 480 petaflops over the subsequent 4 years as a way to improve “AI sovereignty”, or the power of a state to develop and management the expertise.
Petaflops are a unit of measurement used for calculating computing efficiency. One petaflop is equal to 1,000tn floating-point operations per second.
Wu stated the Lai Ching-te administration can also be eager to strengthen co-operation with the US below Trump, and that Taiwan is keen to share expertise with world democratic allies, together with the US, Japan and Germany. Such a collaborative strategy will enable Taiwan to “foster mutual growth with friendly countries”, Wu stated.
Prompt reads
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EU to demand expertise transfers from Chinese language firms (FT)
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Robots and rails give Vietnam provide chains facelift (Nikkei Asia)
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Japan proposes $1.3bn funding in Rapidus (Nikkei Asia)
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LG provides software program jobs in Vietnam as nation strikes up worth chain (Nikkei Asia)
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China’s smartphone makers head upmarket in European push (FT)
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Xiaomi’s EV success clouded by shrinking smartphone margins (Nikkei Asia)
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EV batteries are getting cheaper, however can they be protected too? (Nikkei Asia)
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TSMC secures $11.6bn in funding as US Chips Act faces unsure future (FT)
#techAsia is co-ordinated by Nikkei Asia’s Katherine Creel in Tokyo, with help from the FT tech desk in London.
Join right here at Nikkei Asia to obtain #techAsia every week. The editorial crew might be reached at techasia@nex.nikkei.co.jp.
