Critical infrastructure

China faces Nvidia chip shortages

Chinese server manufacturer H3C has warned of potential shortages of Nvidia’s H20 chip, the most advanced AI processor still legally available in the country under US export controls.

In a notice to clients, the company revealed that its stock of H20 chips was nearly depleted, citing geopolitical tensions as a major factor affecting global supply chains.

New shipments are expected by mid-April, but future availability remains uncertain due to ongoing trade restrictions and supply disruptions.

The demand for H20 chips has surged, particularly as companies race to integrate AI models developed by Chinese startup DeepSeek.

Major tech firms such as Tencent, Alibaba, and ByteDance have significantly increased their orders, leading to further strain on supply.

H3C stated that future chip distribution will prioritise long-term, high-margin customers under a profit-first approach, raising concerns among smaller buyers about access to the critical technology.

The H20 was introduced after the US tightened export controls on high-performance AI chips in October 2023, blocking Nvidia’s most advanced processors from the Chinese market.

Washington has restricted such exports since 2022, citing national security concerns over China’s potential military applications of AI technology.

Despite these measures, Nvidia has reportedly shipped around one million H20 units in 2024, generating more than $12 billion in revenue. Meanwhile, domestic alternatives from Huawei and Cambricon are emerging as potential substitutes amid the ongoing supply crunch.

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US report highlights China’s growing military capabilities

A US intelligence report has identified China as the top military and cyber threat, warning of Beijing’s growing capabilities in AI, cyber warfare, and conventional weaponry.

The report highlights China’s ambitions to surpass the US as the leading AI power by 2030 and its steady progress towards military capabilities that could be used to capture Taiwan.

It also warns that China could target US infrastructure through cyberattacks and space-based assets.

The findings, presented to the Senate Intelligence Committee, sparked tensions between Washington and Beijing. Chinese officials rejected the report, accusing the US of using outdated Cold War thinking and hyping the ‘China threat’ to maintain military dominance.

China’s foreign ministry also criticised US support for Taiwan, urging Washington to stop backing separatist movements.

Meanwhile, Beijing dismissed accusations that it has failed to curb fentanyl shipments, a key source of US overdose deaths.

The report also notes that Russia, Iran, and North Korea are working to challenge US influence through military and cyber tactics.

While China continues to expand its global footprint, particularly in Greenland and the Arctic, the report points to internal struggles, including economic slowdowns and demographic challenges, that could weaken the Chinese government’s stability.

The intelligence report underscores ongoing concerns in Washington about Beijing’s long-term ambitions and its potential impact on global security.

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India’s Gen AI market to drive data centre growth

India’s Generative AI sector is poised for rapid growth over the next five years, driving an increased demand for data centres, according to a report by ANAROCK.

The market size of Gen AI in India is projected to rise from USD 1.1 billion in 2025 to USD 6.4 billion by 2030, expanding at a compound annual growth rate of 42 per cent.

The surge will require advanced infrastructure, with data centres playing a key role in managing computing power, storage, and data processing needs.

As AI-driven applications become more sophisticated, data centre operators are adapting their strategies to accommodate rising infrastructure demands.

The push for real-time AI applications will also drive the need for edge data centres, particularly in Tier-II cities like Jaipur, Ahmedabad, and Visakhapatnam, bringing computing closer to users and improving efficiency.

With the expansion of India’s data centre industry, there is a growing focus on sustainability and energy efficiency. Operators are increasingly relying on renewable energy sources and adopting energy-efficient solutions to meet rising power demands while aligning with India’s sustainability goals.

Over the past decade, the sector has attracted over USD 6.5 billion in investments, benefiting from infrastructure status that facilitates easier project financing.

With continued interest from global investors, India’s data centre industry is set for exponential growth, playing a crucial role in the country’s digital transformation.

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Ukrzaliznytsia shifts to offline ticket sales after IT system failure

Ukraine’s state-owned railway company, Ukrzaliznytsia, has been hit by a large-scale cyberattack, affecting its online systems.

While train services remain operational without delays, the company has been working to restore its IT infrastructure. Passengers were advised to buy tickets offline on Monday as backups were recovered.

The cyberattack, described by Ukrzaliznytsia as ‘systemic, non-trivial and multi-level,’ was first reported on Sunday.

The railway has become a critical part of Ukraine’s transport network since the Russian invasion in 2022, with airspace closed and trains serving as the primary mode of domestic and international travel. Last year, it transported 20 million passengers and 148 million tonnes of freight.

Efforts to fully restore online systems are ongoing as authorities investigate the incident.

Cyberattacks targeting Ukraine’s infrastructure have increased since the start of the war, with railways playing a crucial role in both civilian and military logistics. Officials have not yet attributed responsibility for the attack.

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FuriosaAI rejects $800m acquisition offer from Meta

FuriosaAI, a South Korean startup specialising in AI chips, has reportedly turned down an $800 million acquisition offer from Meta.

Instead of selling, FuriosaAI plans to continue developing its AI chips. Disagreements over post-acquisition business strategy and organisational structure were reportedly the cause of the breakdown in negotiations, rather than issues over price.

Meta, which has been trying to reduce its reliance on Nvidia for chips specialised in training large language models (LLMs), unveiled its custom AI chips last year. The company also announced plans to invest up to $65 billion this year to support its AI initiatives.

FuriosaAI, founded in 2017 by June Paik, who previously worked at Samsung Electronics and AMD, has developed two AI chips—Warboy and Renegade (RNGD).

The startup is also in talks to raise approximately $48 million and is planning to launch the RNGD chips later this year, with LG AI Research already testing them for use in its AI infrastructure.

FuriosaAI’s decision to focus on expanding its chip production signals its confidence in competing with giants like Nvidia and AMD in the rapidly growing AI hardware market.

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Cyberattack exploits a flaw in ZoneAlarm’s vsdatant.sys driver

A sophisticated cyberattack has targeted vulnerabilities in the vsdatant.sys driver, a component of Checkpoint’s ZoneAlarm antivirus software, allowing attackers to bypass critical Windows security features.

The driver, released in 2016, has been exploited in a Bring Your Own Vulnerable Driver (BYOVD) attack, enabling attackers to elevate privileges and access sensitive data.

The vsdatant.sys driver operates with high kernel-level privileges, containing long-known vulnerabilities that allow attackers to exploit crafted Interrupt Request Packets (IRPs).

These flaws, affecting versions of the driver prior to 7.0.362, allow for arbitrary code execution by improperly validating arguments passed to system function handlers.

BYOVD attacks have become increasingly common, with attackers leveraging legitimate but vulnerable drivers to bypass security measures undetected.

In this case, attackers were able to disable Windows’ Memory Integrity feature, which is designed to protect critical system processes.

By exploiting flaws in vsdatant.sys, the attackers gained full access to the compromised system, enabling them to steal sensitive information.

To mitigate the risk of such attacks, security experts recommend implementing driver blocklisting, enabling Memory Integrity, and ensuring that all security products are kept up to date.

Users are urged to update their ZoneAlarm installations to the latest version to avoid exposure to these vulnerabilities.

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Data centre surge exposes vulnerabilities in the US grid

A recent incident in Data Center Alley, a region outside Washington DC housing over 200 data centres, exposed a new vulnerability in the US power grid.

Last summer, 60 data centres unexpectedly disconnected from the grid and switched to on-site generators, causing a surge in excess electricity. However, this triggered the need for grid operators to scale back power output to avoid cascading outages.

The disconnection event, caused by a failed surge protector, forced regulators to address the growing risk of power imbalances due to the rapid expansion of data centres, especially those involved in AI and crypto mining.

As these centres consume increasing amounts of energy, grid operators face new challenges in maintaining stability.

Federal regulators like the North American Electric Reliability Corporation (NERC) are now studying the impact of such events and the risks posed by unannounced data centre disconnections.

The power consumption of data centres has tripled over the last decade and is projected to continue rising, prompting calls for updated reliability standards.

Industry stakeholders, including major tech companies, have expressed concerns about the potential costs and risks of requiring data centres to remain connected during voltage fluctuations.

With the growing presence of large data users, grid operators face a tough balancing act to ensure power stability while accommodating the demands of the data centre industry.

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Microsoft invests $2.2 billion in Malaysian cloud expansion

Microsoft is set to launch its first cloud region in Malaysia, featuring three data centres in the greater Kuala Lumpur area.

The centres, known as Malaysia West, will begin operations by mid-year, marking a significant step in the company’s $2.2 billion investment in the country.

However, this move is part of Microsoft’s broader plan to expand its cloud and AI services in Southeast Asia. Microsoft estimates the investment will generate $10.9 billion in revenue and create over 37,000 jobs in Malaysia over the next four years.

Laurence Si, managing director of Microsoft Malaysia, stated that the company’s operations in Malaysia remain on track despite concerns over US export controls on semiconductor chips.

Microsoft remains confident in its relationships with stakeholders and its ability to meet its investment commitments.

Local businesses are expected to benefit from enhanced cloud and AI capabilities, with the country aiming to become a leading hub for technological innovation in the region.

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Ofcom backs broadband competition to expand full-fibre coverage

Britain should maintain competition in the broadband market to boost full-fibre coverage to 96% of premises by 2027 while capping prices on slower-speed services, UK telecoms regulator Ofcom announced on Thursday.

The cap would limit what BT’s Openreach can charge for connections up to 80Mbit/s, an increase from the current 40Mbit/s limit.

Ofcom’s previous measures, including encouraging new providers to use Openreach’s infrastructure, have helped increase full-fibre coverage from under 25% to nearly 70% of homes.

It now proposes keeping high-speed broadband prices free from regulation until 2031 while ensuring affordability for those relying on older copper-fibre connections.

In rural areas where commercial networks are less viable, Ofcom plans to support Openreach in expanding full-fibre access. The regulator’s consultation on these proposals will run until June 12, with final decisions expected in March 2026. BT shares rose 0.5% following the announcement.

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Nvidia holds back on optical technology for GPUs

Nvidia’s CEO, Jensen Huang, has stated that a promising new chip technology, co-packaged optics, is not yet reliable enough for use in the company’s flagship GPUs.

The technology, which uses laser beams to transfer data via fiber optic cables instead of traditional copper, is more energy-efficient and faster.

However, Huang emphasized that copper connections remain ‘orders of magnitude’ more reliable than today’s optical alternatives, making them the preferred choice for now.

Speaking at Nvidia’s annual developer conference in San Jose, Huang announced that the company will use co-packaged optics in two upcoming networking chips designed for server switches, increasing their energy efficiency by three and a half times.

These switch chips will be released later this year and into 2026, marking a gradual technological step forward. However, Huang clarified that Nvidia currently has no plans to implement optical connections between GPUs, as reliability remains a key priority for its AI-focused customers like OpenAI and Oracle.

Silicon Valley startups such as Ayar Labs, Lightmatter, and Celestial AI have invested heavily in co-packaged optics, seeing it as essential for building more powerful AI systems. Nvidia itself has backed some of these ventures, despite Huang’s cautious approach.

While optical connections could eventually help AI models process complex tasks more efficiently, Nvidia is prioritizing proven technology for its near-term roadmap, ensuring stability in an industry preparing to invest hundreds of billions in AI infrastructure.

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