Hello from Yifan in Silicon Valley, your #techAsia host this week.<\/p>\n
It\u2019s been a busy week for the chip industry. In addition to anxiously waiting for the long-threatened semiconductor tariffs, now floated at around 300 per cent by US President Donald Trump, the biggest AI and semiconductor industry barometer, Nvidia, reported earnings on Wednesday.<\/p>\n
Despite logging another over 50 per cent year-on-year revenue jump, investors seemed dissatisfied. Nvidia shares dipped over 3 per cent<\/a> during extended trading on Wednesday following the earnings release.<\/p>\n Part of the market reaction might be because Nvidia\u2019s road to recovering the China market is proving to be tougher than first expected.<\/p>\n While investors cheered the deal Nvidia and other chipmakers made with the Trump administration \u2014 15 per cent of their revenue<\/a> in exchange for China export licenses \u2014 the Chinese government is putting some new roadblocks on Nvidia\u2019s return by calling the H20 chip \u2014 a downgraded artificial intelligence chip specially designed for the Chinese market \u2014 a \u201csecurity risk.\u201d<\/p>\n However, on Wednesday, Nvidia chief Jensen Huang said he still sees China being a $50bn market for the company this year as long as it can provide competitive products there, adding that bringing its advanced Blackwell graphics processing unit to the country is a \u201creal possibility.\u201d<\/p>\n It reminded me of a conversation I had with a venture capitalist from Beijing earlier this month about why the Chinese government is calling out H20 and Nvidia. In addition to the usual motive of promoting Chinese domestic chip supply, the VC suggested bashing H20 could also be the Chinese government\u2019s way of pressuring Nvidia and Washington to open up Blackwell for export.<\/p>\n I chuckled and dismissed his \u201cconspiracy theory\u201d way of thinking, but now looking back, he might have been right.<\/p>\n Meanwhile, another US chip giant is also making headlines. Intel sold about 10 per cent of its shares<\/a> to the US government for grant money from the Chips Act and another defence programme it was already promised by previous president Joe Biden\u2019s administration before Trump returned to the White House.<\/p>\n The equity was not part of the deal under the original Chips Act terms, and I distinctly remember during a briefing with Biden\u2019s Department of Commerce officials that they told me the companies would definitely get the money as promised because it was in an enforceable \u201ccontract.\u201d But tech companies are learning that Trump makes his own arrangements with little regard to precedent.<\/p>\n Meanwhile, Trump has said that he wants to make more deals like the one with Intel, meaning big fish like Taiwan Semiconductor Manufacturing Co and Samsung Electronics or other smaller Chips Act awardees could be next.<\/p>\n For the three-month period ended July 27, Nvidia recorded $46.7bn in revenue, up 56 per cent on the year and 6 per cent higher from the previous quarter, the company announced on Wednesday.<\/p>\n For the third quarter, the company set expected revenue at $54bn, plus or minus 2 per cent. But the company\u2019s outlook is clouded by uncertainties in China<\/a> as it did not include any sales of its H20 \u2014 a downgraded artificial intelligence chip specially designed for the Chinese market \u2014 there in the estimate, Nikkei Asia\u2019s Yifan Yu<\/strong> reports.<\/p>\n In addition to its 15 per cent revenue sharing deal with the administration of US President Donald Trump yet to be \u201ccodified,\u201d Nvidia is also facing headwinds in China as Beijing recently summoned<\/a> domestic tech giants including ByteDance, Alibaba, Tencent and Baidu to discuss their use of Nvidia chips over alleged security concerns.<\/p>\n \u201cWe\u2019re still waiting on several of the geopolitical issues going back and forth between the governments and the companies trying to determine their purchases and what they want to do,\u201d Nvidia Chief Financial Officer Colette Kress said on Wednesday\u2019s earnings call.<\/p>\n But if the geopolitical issues are resolved, the company estimates reaping $2bn to $5bn in H20 revenue for the ongoing quarter, if not more.<\/p>\n SoftBank\u2019s Masayoshi Son has emerged as one of Donald Trump\u2019s most favoured overseas investors<\/a>, funding deals with OpenAI and Intel that have been welcomed in Washington, write the FT\u2019s David Keohane, Leo Lewis, Michael Acton, Stephen Morris and Joe Miller.<\/strong><\/p>\n Over golf, multiple meetings in the White House and mammoth investment pledges, Son has been building close ties to Trump ever since he was first elected. Son will need to maintain that relationship should he want control over more physical and politically sensitive assets.<\/p>\n The SoftBank boss has been eyeing up Intel\u2019s foundry business \u2014 both the Japanese group and the US government are now shareholders \u2014 and has ambitious plans for an AI and robotics site in Arizona.<\/p>\n As his commercial efforts intensify, it is also the political side of his role in Washington that is causing concern for Japanese diplomats, cautiously trying to work the situation to their advantage but railing against Son\u2019s position as a gatekeeper.<\/p>\n \u201cThe dilemma is that if [Son is] not close to Trump, he\u2019s not usable,\u201d said Kunihiko Miyake, visiting professor at Ritsumeikan University in Kyoto and a former Japanese diplomat. \u201cIf he\u2019s too close, it\u2019s dangerous.\u201d<\/p>\n Thanks to strong AI demand, total net profits at publicly listed companies around the world rose 7 per cent on year<\/a> in the April-to-June quarter, led by US artificial intelligence and semiconductor companies, Nikkei\u2019s Kensho Motowaki<\/strong> writes.<\/p>\n Data from roughly 25,000 listed companies in Japan, the US, Europe, China and elsewhere \u2014 including market forecasts in cases where earnings were not released \u2014 accounting for more than 90 per cent of global market capitalisation, showed total net profits rose to about $1.2tn, marking a fifth straight quarter of growth.<\/p>\n Some sectors in particular shined. Net profits in information technology surged 58 per cent, while electronics, including semiconductors, saw a 16 per cent increase in net profits.<\/p>\n In contrast, tariff-sensitive industries suffered, with automakers\u2019 net profits dropping 37 per cent.<\/p>\n Taiwan Semiconductor Manufacturing Co will not use Chinese tools<\/a> in its latest 2-nanometer chipmaking production lines \u2014 the most advanced in the entire industry \u2014 which will go into mass production this year, Nikkei Asia\u2019s Cheng Ting-Fang<\/strong> reports.<\/p>\n The move is to avoid any potential US restrictions that could disrupt 2nm production which is scheduled to start first in Hsinchu, Taiwan, followed by the southern Taiwan city of Kaohsiung. The Taiwanese chip titan is also building a third plant in Arizona to eventually make such chips.<\/p>\n TSMC\u2019s decision was influenced by a potential US regulation that could prohibit chipmakers that receive American funding or financial support from using Chinese manufacturing equipment, sources said.<\/p>\n The likely winners and losers from Trump\u2019s threatened 300% chip tariff<\/a> (Nikkei Asia)<\/p>\n<\/li>\n Japanese media groups sue AI search engine Perplexity over alleged copyright infringement <\/a>(FT)<\/p>\n<\/li>\n China crackdown boosts lithium prices, but how long can the rally last?<\/a> (Nikkei Asia)<\/p>\n<\/li>\n Temu resumes direct shipping from China to US after Trump truce<\/a> (FT)<\/p>\n<\/li>\n China\u2019s food delivery discount war chops Meituan profit by 97%<\/a> (Nikkei Asia)<\/p>\n<\/li>\n Sony is building a vast games empire: can it keep control?<\/a> (FT)<\/p>\n<\/li>\n Japan to invest $68bn in India over 10 years, including AI and chips<\/a> (Nikkei Asia)<\/p>\n<\/li>\n Chinese semiconductor shares surge after DeepSeek gives boost to homegrown chips<\/a> (FT)<\/p>\n<\/li>\n Japanese newspapers Nikkei and Asahi sue Perplexity AI over copyright<\/a> (Nikkei Asia)<\/p>\n<\/li>\n TikTok to lay off hundreds of UK moderators as it shifts to AI<\/a> (FT)<\/p>\n<\/li>\n<\/ol>\n #techAsia is co-ordinated by Nikkei Asia\u2019s Katherine Creel in Tokyo, with assistance from the FT tech desk in London.\u00a0$2bn to $5bn worth of geopolitics<\/h3>\n
SoftBank\u2019s Son favoured by Trump<\/h3>\n
Up and up<\/h3>\n
No China tools for 2-nanometer chips<\/h3>\n
Suggested reads<\/h3>\n
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Sign up <\/em>here<\/em><\/a> at Nikkei Asia to receive #techAsia each week. The editorial team can be reached at <\/em>techasia@nex.nikkei.co.jp<\/em><\/a><\/p>\n<\/div>\n\n
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