Economic Archives | Page 428 of 708 | Digital Watch Observatory

AI chip production to benefit from Rapidus and Quest Global alliance

Japanese chipmaker Rapidus Corporation has announced a strategic partnership with Singapore-based engineering firm Quest Global to develop advanced artificial intelligence semiconductors.

The collaboration focuses on producing low-power, high-performance chips using cutting-edge 2-nanometre technology.

Quest Global will support Rapidus and its clients by designing these next-generation AI chips.

The partnership is also expected to expand Rapidus’s customer reach by tapping into Quest Global’s broad international client base, enabling both companies to deliver new products to established and emerging markets.

Rapidus aims to begin pilot production of the new chips in April at a new facility under construction in Hokkaido, Japan, with mass production planned for 2027.

The move forms part of Japan’s broader effort to revitalise its semiconductor industry amid increasing global supply chain concerns.

Founded in 2022 with investment from major Japanese firms including Toyota and Sony, Rapidus was created to strengthen domestic chip manufacturing and reduce reliance on foreign suppliers in an era of growing geopolitical uncertainty.

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ECB warns Euro zone banks on geopolitical risks

Euro zone banks must remain resilient and prepared for geopolitical shocks, including the risk of liquidity drying up amid volatile financial markets, according to Claudia Buch, the European Central Bank’s supervisory chief.

She highlighted concerns about the potential impact of policy reversals by the US government, particularly under President Donald Trump, which have unsettled investors and created uncertainty about future growth and stability.

Buch also pointed to the ongoing financial and political pressures arising from Russia’s war in Ukraine and the sanctions that followed.

She emphasised the need for banks to maintain sufficient capital, robust governance, and effective risk management systems in the face of potential asset quality deterioration and economic disruptions caused by geopolitical conflicts or sanctions.

Additionally, Buch noted the increasing threat of cybersecurity attacks, which have become more frequent and severe. The ECB’s annual report warned that geopolitical risks could strain liquidity and funding, particularly in foreign currencies, leading to higher borrowing costs and increased use of credit lines.

Buch called for progress in creating a crisis management and deposit insurance framework to protect depositors in the event of bank failures.

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A Russian economist criticises Bitcoin reserves as an economic risk

Valentin Katasonov, a leading Russian economist and Chairman of the S. F. Sharapov Russian Economic Society, has cautioned against developing a national strategic Bitcoin reserve.

Katasonov described such a move as ‘laying landmines,’ suggesting it would pose significant risks to Russia’s economic stability.

He argued that cryptocurrencies are speculative tools, not fully-fledged money. He warned that they could lead to inflationary bubbles that may eventually burst, affecting the economy and creating numerous casualties.

Katasonov also expressed concern over crypto advocates pushing for the inclusion of digital assets in Russia’s official economic system. He labelled these individuals as ‘fifth columnists,’ accusing them of attempting to undermine the country’s financial security.

Despite the growing interest in digital currencies, Katasonov pointed out that no country has successfully launched a crypto reserve to date. He referenced scepticism about the feasibility of Bitcoin reserves, even in countries like the US.

While Russia’s Central Bank has ruled out the idea of a Bitcoin reserve, the country’s finance ministry has shown some openness. Despite this, the ministry continues to focus on gold and the Chinese yuan for the time being.

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South Korea blocks 17 unregistered exchanges on Google Play

South Korean regulators have strengthened their efforts to curb money laundering and protect local users by urging Google Play to block 17 unregistered overseas crypto exchanges.

They cited concerns about platforms failing to comply with local regulations.

The blocked exchanges, including major names such as KuCoin, MEXC, and Poloniex, can no longer be accessed for new downloads or updates through the Google Play Store.

South Korean authorities are increasing oversight of virtual asset service providers (VASPs) to prevent illicit activities and ensure the security of users.

The move follows heightened scrutiny of the crypto industry in South Korea. Recently, the Southern District Prosecutors’ Office raided Bithumb offices over allegations of financial misconduct.

The authorities are also in discussions with Apple Korea to extend the block to the App Store. As these regulatory measures progress, exchanges are being urged to comply with South Korea’s strict crypto laws to maintain their access to the market.

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WhatsApp wins support in EU fine appeal

WhatsApp has gained support from an adviser to the European Court of Justice in its fight against a higher fine imposed by the EU privacy watchdog.

The Irish Data Protection Authority fined WhatsApp 225 million euros ($242.2 million) in 2021 for privacy breaches.

The fine was increased after the European Data Protection Board (EDPB) intervened.

A lower tribunal had rejected WhatsApp’s challenge, saying the company lacked legal standing. However, WhatsApp appealed to the Court of Justice of the European Union (CJEU).

Advocate General Tamara Capeta disagreed with the tribunal, recommending that the case be referred back to the General Court for further review.

The CJEU usually follows the adviser’s recommendations, and a final ruling is expected soon. This case could have significant implications for the fine imposed on WhatsApp.

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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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Trump weighs tariff cuts to secure TikTok deal

US President Donald Trump has indicated he is willing to reduce tariffs on China as part of a deal with ByteDance, TikTok’s Chinese parent company, to sell the popular short-video app.

ByteDance faces an April 5 deadline to divest TikTok’s US operations or risk a nationwide ban over national security concerns.

The law mandating the sale stems from fears in Washington that Beijing could exploit the app for influence operations and data collection on American users.

Trump suggested he may extend the deadline if negotiations require more time and acknowledged China’s role in the deal’s approval. Speaking to reporters, he hinted that tariff reductions could be used as leverage to finalise an agreement.

China’s commerce ministry responded by reaffirming its stance on trade discussions, stating that engagement with Washington should be based on mutual respect and benefit.

The White House has taken an active role in brokering a potential sale, with discussions centring on major non-Chinese investors increasing their stakes to acquire TikTok’s US operations. Vice President JD Vance has expressed confidence that a framework for the deal could be reached by the April deadline.

Free speech advocates, meanwhile, continue to challenge the law, arguing that banning TikTok could violate the First Amendment rights of American users.

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Coinbase urges Canada to prioritise crypto regulation ahead of elections

As Canada nears a federal election, Coinbase urges the next government to prioritise clear crypto regulations. Coinbase’s Canadian country director highlighted that while Canada has been a leader in crypto adoption, regulatory uncertainty could hinder further progress.

Matheson cited statistics showing that five million Canadians already hold crypto. According to Coinbase, 86% of Canadians see room for improvement, 80% feel the system is unfair, and 76% view it as outdated. The growing dissatisfaction signals the need for forward-thinking financial policies.

Regulatory challenges have forced several crypto exchanges to exit Canada following stricter rules. Meanwhile, Mark Carney, a Liberal Party leader, has expressed scepticism towards Bitcoin, favouring central bank digital currencies instead.

Coinbase calls for reforms, including a government crypto task force within 100 days, federal stablecoin regulations, and clearer asset definitions.

The company also advocates for a national Bitcoin reserve and fewer barriers for mining. It further supports enabling banks to integrate crypto into their services. Without swift action, Canada risks falling behind in the global digital landscape.

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Judge rejects UMG’s bid to block Anthropic

A US federal judge has denied a request by Universal Music Group and other publishers to block AI firm Anthropic from using copyrighted song lyrics to train its chatbot, Claude.

Judge Eumi Lee ruled that the publishers failed to prove Anthropic’s actions caused them ‘irreparable harm’ and said their request was too broad. The lawsuit, filed in 2023, accuses Anthropic of infringing on lyrics from at least 500 songs by artists such as Beyoncé and the Rolling Stones without permission.

The case is part of a wider debate over AI training and copyright law, with companies like OpenAI and Meta arguing that their use of copyrighted material falls under ‘fair use.’

Publishers claim that Anthropic’s actions threaten the licensing market for lyrics, but the court ruled that defining such a market is premature while fair use remains unresolved.

Lee’s decision did not address whether AI training with copyrighted works constitutes fair use, leaving that question open for future legal battles.

Anthropic welcomed the ruling, calling the publishers’ request ‘disruptive and amorphous,’ while the publishers remain confident in their broader case against the AI company.

The lawsuit highlights the growing tension between content creators and AI firms as courts and lawmakers grapple with the legal and ethical implications of training AI on copyrighted material.

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Tech investors shift focus to AI adopters over hardware makers

European companies investing heavily in generative AI must start delivering returns by next year or risk losing investor confidence. While AI stocks have seen significant interest, recent market volatility and recession fears have led to a shift in investment focus.

Many investors are now favouring companies that integrate AI, such as SAP and RELX, over those supplying AI hardware. However, adopters must also prove that AI investments translate into profitability, or they too could fall out of favour.

The launch of DeepSeek in January sparked a tech selloff by offering a low-cost AI model that threatened demand for expensive chips. Hardware firms like ASM International and BE Semiconductor have since suffered sharp declines, while AI adopters have fared better.

SAP, for example, recently overtook Novo Nordisk as Europe’s most valuable company despite only a minor stock dip. Analysts warn that companies promising AI-driven growth must soon demonstrate tangible financial benefits, or investors will reassess their high valuations.

Market patience is wearing thin, with some analysts suggesting 2025 as a key deadline for AI firms to show meaningful impact. An internal Fidelity survey revealed that 72% of analysts expect AI to have no major profitability impact next year, though optimism grows over a five-year horizon.

Investors like Lazard and Schroders stress the need for viable AI applications that generate revenue, while asset managers at Amundi warn that AI firms trading at high multiples could see their valuations adjusted if returns fail to materialise.

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