Sweden unable to determine cause of Baltic Sea cable damage

The Swedish Accident Investigation Authority (SHK) has published its final report on the damage to the C-Lion 1 subsea cable in the Baltic Sea on 18 November 2024, concluding that it cannot determine whether the incident was the result of an accident or intentional sabotage.

The investigation focused on the Chinese bulk carrier Yi Peng 3, which was initially identified as having caused the damage.

While investigators from several neighbouring countries, including Sweden, were allowed to board the vessel, the SHK reported that the visit was time-constrained and that access to key evidence—such as surveillance footage and the vessel’s Voyage Data Recorder—was not granted.

Interviews with the crew were conducted in the presence of Chinese officials.

The SHK outlined two possible scenarios: one in which the anchor was deliberately released to damage seabed infrastructure, and another in which it detached due to improper security.

The report noted that certain technical details—such as the absence of damage to key anchor components—make the accidental scenario less likely, but acknowledged that neither hypothesis could be confirmed due to investigative limitations.

Under international maritime law, flag states typically lead investigations in international waters, though exceptions may apply in cases involving suspected criminal activity.

While some analysts have raised concerns about potential state-sponsored sabotage, officials from several European countries have indicated increasing confidence that the recent cable breaks were not the result of coordinated or intentional activity.

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AMD warns of financial hit from US AI chip export ban

AMD has warned that new US government restrictions on exporting AI chips to China and several other countries could materially affect its earnings.

The company said it may face charges of up to $800 million related to unsold inventory, purchase commitments, and reserves if it fails to secure export licences for its MI308 GPUs, now subject to strict control measures.

In a filing to the US Securities and Exchange Commission, AMD confirmed it would seek the necessary licences but admitted there is no guarantee they will be granted.

The move follows broader export restrictions aimed at protecting national security interests, with US officials arguing that unrestricted access to advanced chips would weaken the country’s strategic lead in AI, instead of preserving it.

AMD’s stock dropped around 6% following the announcement. Competitors are also feeling the impact. Nvidia expects charges of $5.5 billion from similar restrictions, and Intel’s Gaudi hardware line has reportedly been affected as well.

The US Commerce Department has defended the move as necessary to safeguard economic and national interests.

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NATO allies strengthen cyber defenses against critical infrastructure threats

Between 7 and 11 April, representatives from 20 allied governments and national agencies participated in a NATO-led exercise designed to strengthen mutual support in the cyber domain.

The activity aimed to improve coordination and collective response mechanisms for cyber incidents affecting critical national infrastructure. Through simulated threat scenarios, participants practised real-time information exchange, joint decision-making, and coordinated response planning.

According to NATO, cyber activities targeting critical infrastructure, industrial control systems, and public sector services have increased in frequency.

Such activities are considered to serve various objectives, including information gathering and operational disruption.

The role of cyber operations in modern conflict gained increased attention following Russia’s actions in Ukraine in 2022, where cyber activity was observed alongside traditional military operations.

Hosted by Czechia, the exercise served to test NATO’s Virtual Cyber Incident Support Capability (VCISC), a coordination platform introduced at the 2023 Vilnius Summit.

VCISC enables nations to request and receive cyber assistance from designated counterparts across the Alliance.

The support offered includes services such as malware analysis, cyber threat intelligence, and digital forensics. However, the initiative is voluntary, with allies contributing national resources and expertise to mitigate the impact of significant cyber incidents and support recovery.

Separately, in January 2025, the US officials met with her Nordic-Baltic counterparts from Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, and Sweden.

Discussions centred on enhancing regional cooperation to safeguard undersea cable infrastructure—critical to communications and energy systems. Participants noted the broadening spectrum of threats to these assets.

In parallel, NATO launched the Baltic Sentry to reinforce the protection of critical infrastructure in the Baltic Sea region. The initiative is intended to bolster NATO’s posture and improve its capacity to respond promptly to destabilising activities.

In July 2024, NATO also announced the expansion of the role of its Integrated Cyber Defence Centre (NICC).

The Centre is tasked with enhancing the protection of NATO and allied networks, as well as supporting the operational use of cyberspace. It provides commanders with insights into potential cyber threats and vulnerabilities, including those related to civilian infrastructure essential to military operations.

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KiloEX loses $7.5 million in oracle hack

A hacker has exploited decentralised exchange KiloEX, draining approximately US$7.5 million by manipulating its price oracle mechanism. The breach led to an immediate suspension of the platform and sparked a cross-industry investigation involving cybersecurity firms and blockchain networks.

The vulnerability centred on KiloEX’s price feed system, which allowed the attacker to manipulate the ETH/USD feed by inputting an artificial entry price of 100 and closing it at 10,000.

According to cybersecurity firm PeckShield, this simple flaw enabled the attacker to steal millions across multiple chains, including $3.3 million from Base, $3.1 million from opBNB, and $1 million from BNB Smart Chain.

KiloEX is working with various security experts and blockchain networks such as BNB Chain and Manta Network to recover the stolen assets.

Funds are reportedly being routed through cross-chain protocols like zkBridge and Meson. Co-founder of Fuzzland, Chaofan Shou, described the breach as stemming from a ‘very simple vulnerability’ in oracle verification, where only intermediaries were validated rather than the original transaction sender.

The attack caused KiloEX’s token price to plummet by over 29% and came just one day after the platform announced a strategic partnership with DWF Labs, aimed at fuelling growth. KiloEX has promised a full incident report and a bounty programme to encourage asset recovery.

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Beijing blames NSA for hacking Asian Games systems

Chinese authorities have accused three alleged US operatives of orchestrating cyberattacks on national infrastructure during the Asian Games in Harbin this February.

The individuals, identified by Harbin police as Katheryn A. Wilson, Robert J. Snelling, and Stephen W. Johnson, are said to have worked through the US National Security Agency (NSA).

The attacks reportedly targeted systems critical to the Games’ operations, including athlete registration, travel, and competition management, which held sensitive personal data.

Chinese state media further claimed that the cyber intrusions extended beyond the sporting event, affecting key infrastructure in Heilongjiang province. Targets allegedly included energy, transport, water, telecoms, defence research institutions, and technology giant Huawei.

Authorities said the NSA used encrypted data to compromise Microsoft Windows systems in the region, with the aim of disrupting services and undermining national security.

The Foreign Ministry of China denounced the alleged cyberattacks as ‘extremely malicious,’ urging the United States to halt what it called repeated intrusions and misinformation.

The UD Embassy in Beijing has yet to respond, and the allegations come amid ongoing tensions, with both nations frequently accusing each other of state-backed hacking.

Only last month, the US government named and charged 12 Chinese nationals in connection with cyberespionage efforts against American interests.

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Nvidia brings AI supercomputer production to the US

Nvidia is shifting its AI supercomputer manufacturing operations to the United States for the first time, instead of relying on a globally dispersed supply chain.

In partnership with industry giants such as TSMC, Foxconn, and Wistron, the company is establishing large-scale facilities to produce its advanced Blackwell chips in Arizona and complete supercomputers in Texas. Production is expected to reach full scale within 12 to 15 months.

Over a million square feet of manufacturing space has been commissioned, with key roles also played by packaging and testing firms Amkor and SPIL.

The move reflects Nvidia’s ambition to create up to half a trillion dollars in AI infrastructure within the next four years, while boosting supply chain resilience and growing its US-based operations instead of expanding solely abroad.

These AI supercomputers are designed to power new, highly specialised data centres known as ‘AI factories,’ capable of handling vast AI workloads.

Nvidia’s investment is expected to support the construction of dozens of such facilities, generating hundreds of thousands of jobs and securing long-term economic value.

To enhance efficiency, Nvidia will apply its own AI, robotics, and simulation tools across these projects, using Omniverse to model factory operations virtually and Isaac GR00T to develop robots that automate production.

According to CEO Jensen Huang, bringing manufacturing home strengthens supply chains and better positions the company to meet the surging global demand for AI computing power.

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Trump eyes tariffs on semiconductors in push to boost US tech manufacturing

US President Donald Trump is preparing to introduce new tariffs on semiconductor imports, aiming to shift more chip production back to the United States.

Semiconductors, or microchips, are essential components in everything from smartphones and laptops to medical devices and renewable energy systems.

Speaking aboard Air Force One, Trump said new tariff rates would be announced soon as part of a broader effort to end American reliance on foreign-made chips and strengthen national security.

The global semiconductor supply chain is heavily concentrated in Asia, with Taiwan’s TSMC producing over half of the world’s chips and supplying major companies like Apple, Microsoft, and Nvidia.

Trump’s move signals a more aggressive stance in the ongoing ‘chip wars’ with China, as his administration warns of the dangers of the US being dependent on overseas production for such a critical technology.

Although the US has already taken steps to boost domestic chip production—like the $6.6 billion awarded to TSMC to build a factory in Arizona—progress has been slow due to a shortage of skilled workers.

The plant faced delays, and TSMC ultimately flew in thousands of workers from Taiwan to meet demands, underscoring the challenge of building a self-reliant semiconductor industry on American soil.

Why does it matter?

Trump’s proposed tariffs are expected to form part of a wider investigation into the electronics supply chain, aimed at shielding the US from foreign control and ensuring long-term technological independence. As markets await the announcement, the global tech industry is bracing for potential disruptions and new tensions in the international trade landscape.

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Nvidia expands AI chip production in the US amid political pressure and global shifts

Nvidia is significantly ramping up its presence in the United States by commissioning over a million square feet of manufacturing space in Arizona and Texas to build and test its powerful AI chips. The tech giant has begun producing its Blackwell chips at TSMC facilities in Phoenix and is developing large-scale ‘supercomputer’ manufacturing plants in partnership with Foxconn in Houston and Wistron in Dallas.

The company projects mass production to begin within the next 12 to 15 months, with ambitions to manufacture up to half a trillion dollars’ worth of AI infrastructure in the US over the next four years. CEO Jensen Huang emphasised that this move marks the first time the core components of global AI infrastructure are being built domestically.

He cited growing global demand, supply chain resilience, and national security as key reasons for the shift. Nvidia’s decision follows an agreement with the Trump administration that helped the company avoid export restrictions on its H20 chip, a top-tier processor still eligible for export to China.

Nvidia joins a broader wave of AI industry leaders aligning with the Trump administration’s ‘America-first’ strategy. Companies like OpenAI and Microsoft have pledged massive investments in US-based AI infrastructure, hoping to secure political goodwill and avoid regulatory hurdles.

Trump has also reportedly pressured key suppliers like TSMC to expand American operations, threatening tariffs as high as 100% if they fail to comply. Despite the enthusiasm, Nvidia’s expansion faces headwinds.

A shortage of skilled workers and potential retaliation from China—particularly over raw material access—pose serious risks. Meanwhile, Trump’s recent moves to undermine the Chips Act, which provides critical funding for domestic chipmaking, have raised concerns about the long-term viability of US semiconductor investment.

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US exempts key electronics from China import taxes

Smartphones, computers, and key tech components have been granted exemption from the latest round of US tariffs, providing relief to American technology firms heavily reliant on Chinese manufacturing.

The decision, which includes products such as semiconductors, solar cells, and memory cards, marks the first major rollback in President Donald Trump’s trade war with China.

The exemptions, retroactively effective from 5 April, come amid concerns from US tech giants that consumer prices would soar.

Analysts say this move could be a turning point, especially for companies like Apple and Nvidia, which source most of their hardware from China. Industry reaction has been overwhelmingly positive, with suggestions that the policy shift could reshape global tech supply chains.

Despite easing tariffs on electronics, Trump has maintained a strict stance on Chinese trade, citing national security and economic independence.

The White House claims the reprieve gives firms time to shift manufacturing to the US. However, electronic goods will still face a separate 20% tariff due to China’s ties to fentanyl-related trade. Meanwhile, Trump insists high tariffs are essential leverage to renegotiate fairer global trade terms.

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Rapid AI growth raises global energy demands

The global demand for AI technology is set to consume nearly as much energy by 2030 as Japan does today, with much of that coming from data centres. According to the International Energy Agency (IEA), electricity demand from data centres will more than double by 2030, driven largely by AI.

Some AI data centres will require up to 20 times more energy than the average one, raising concerns about the environmental impact.

While AI’s rapid adoption could increase energy consumption, the IEA believes it also holds the potential for reducing overall greenhouse gas emissions. AI could improve energy efficiency, assist in designing grids for renewable energy, and optimise industrial processes.

However, the report warns that without careful regulation, AI’s growth could strain energy systems and harm the environment, particularly if fossil fuel-powered plants are used to meet energy demand.

Efforts to mitigate the impact of AI include harnessing its capabilities to design energy-efficient systems, optimise transport, and assist in critical infrastructure management. Yet, some experts argue that AI’s energy demands might outpace these benefits unless governments take proactive steps.

Claude Turmes, former Luxembourg energy minister, warned that the IEA’s optimistic outlook overlooks the severe risks to energy systems, urging stronger regulatory measures.

For more information on these topics, visit diplomacy.edu.