China has established its third state-backed investment fund to bolster the semiconductor industry, with a registered capital of 344 billion yuan ($47.5 billion). The initiative underscores President Xi Jinping’s push for self-sufficiency in semiconductors. The matter has become more urgent following US export controls aimed at limiting China’s access to advanced chip technology due to security concerns. The new fund, the largest yet from the China Integrated Circuit Industry Investment Fund, was officially set up on 24 May and registered under Beijing’s market regulation authorities.
The fund’s major stakeholders include China’s finance ministry, which holds a 17% stake, and China Development Bank Capital, with a 10.5% stake. Seventeen other investors, including five major Chinese banks, also contribute to the fund, each adding around 6% to the total capital. The substantial investment has already sparked a positive response in the market, with the CES CN Semiconductor Index rising by over 3%, marking its largest one-day gain in over a month.
Why does it matter?
The Big Fund, as it is known, has been pivotal in supporting leading chip manufacturers in China, such as Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor, as well as emerging players, such as Yangtze Memory Technologies. The third phase will emphasise investments in chip manufacturing equipment, a strategic move to enhance China’s production capabilities. The ongoing effort highlights China’s determined bid to overcome technological barriers and secure its position in the global semiconductor landscape.
Nvidia’s latest AI chip, the H20, tailored for the Chinese market, is struggling with weak demand, leading to prices dropping below that of rival Huawei’s Ascend 910B chip. Despite being Nvidia’s most advanced product available in China, the H20’s abundant supply suggests it needs to gain more traction. This comes as Nvidia faces stiff competition and US sanctions that have significantly impacted its business in China, a market that previously contributed 17% to its fiscal 2024 revenue.
The competitive pressure and sanctions create uncertainty for Nvidia’s prospects in China. Senior executives acknowledged a substantial drop in their data centre revenue from China since new export control restrictions were implemented. Market analyst Hebe Chen noted that Nvidia is trying to balance maintaining its presence in China while navigating US tensions and preparing for potentially worse outcomes in the long term.
Huawei’s aggressive expansion and increased shipments of its Ascend 910B chip, which reportedly outperforms the H20 in some metrics, further challenge Nvidia. While Nvidia’s H20 has seen some orders from major Chinese tech firms like Alibaba, its success is constrained by Beijing’s preference for domestically produced chips. With a significant price discrepancy between Nvidia’s H20 and Huawei’s 910B, Nvidia’s margin squeeze is apparent as it competes in a market increasingly dominated by local players.
The US House of Representatives passed a bill to establish a new legal framework for digital currencies. The Republican-sponsored Financial Innovation and Technology for the 21st Century Act was approved with a bipartisan vote of 279-136. Proponents argue that the bill will offer regulatory clarity and promote the growth of the digital currency industry. However, whether the Senate will take up the measure remains to be seen.
The US Securities and Exchange Commission (SEC) has raised significant concerns despite the House’s approval. SEC Chair Gary Gensler warned that the bill could create regulatory gaps and undermine long-standing oversight practices, posing risks to investors and capital markets in the US. Gensler pointed out that under the bill, investment contracts recorded on a blockchain would no longer be considered securities, stripping investors of protections under existing securities laws.
Why does it matter?
Supporters from the crypto industry, who view Gensler’s SEC as a barrier to broader adoption of digital assets, welcomed the bill. They argue it addresses necessary regulatory updates for the evolving industry. Nonetheless, Gensler highlighted the bill’s provision allowing crypto issuers to self-certify their products as digital commodities, which could limit SEC oversight and complicate regulatory enforcement.
The SEC’s recent indication that it may approve applications for spot ether exchange-traded funds has boosted the industry. Still, the debate over the appropriate regulatory approach for digital currencies continues, with significant implications for the future of financial innovation and investor protection.
South Korea has unveiled a substantial 26 trillion won ($19 billion) support package for its semiconductor industry to stay competitive in the fiercely contested global market. Announced by President Yoon Suk Yeol, the package includes a 17 trillion won financial support program from the state-run Korea Development Bank to boost investments by semiconductor companies. Yoon emphasised the urgency of advancing in chip design and contract manufacturing, highlighting the ongoing ‘all-out warfare’ in the global semiconductor sector.
Despite being home to leading memory chip makers like Samsung Electronics and SK Hynix, South Korea lags in chip design and contract manufacturing. The nation holds only about 1% of the global fabless market, dominated by companies such as Nvidia, and faces a significant gap with top contract chip manufacturers like Taiwan’s TSMC. To address this issue, the government plans to establish a 1 trillion won fund to support equipment makers and fabless companies and aims to increase its share in non-memory chips from 2% to 10%.
Finance Minister Choi Sang-mok stated that the chip support package positions South Korea competitively on the global stage, comparable to substantial investments made by countries like the US and China. The government also plans to cut red tape to expedite the construction of a mega chip cluster in Yongin, which is projected to be the world’s largest high-tech chipmaking complex. Additionally, President Yoon has pledged to extend tax credits for investments in the semiconductor sector to boost employment and attract talent.
A recent PwC (PricewaterhouseCoopers International Limited) report highlights that sectors of the global economy with high exposure to AI are experiencing significant productivity gains and wage increases. The study found that productivity growth in AI-intensive industries is nearly five times faster than in sectors with less AI integration. In the UK, job postings requiring AI skills are growing 3.6 times faster than other listings, with employers offering a 14% wage premium for these roles, particularly in legal and IT sectors.
Since the launch of ChatGPT in late 2022, AI’s impact on employment has been widely debated. However, PwC’s findings indicate that AI has influenced the job market for over a decade. Job postings for AI specialists have increased sevenfold since 2012, far outpacing the growth for other roles. The report suggests that AI is being used to address labour shortages, which could benefit countries with ageing populations and high worker demand.
PwC’s 2024 global AI jobs barometer reveals that the growth in AI-related employment contradicts fears of widespread job losses due to automation. Despite predictions of significant job reductions, the continued rise in AI-exposed occupations suggests that AI is creating new industries and transforming the job market. According to PwC UK’s chief economist, Barret Kupelian, as AI technology advances and spreads across more sectors, its potential economic impact could be transformative, marking only the beginning of its influence on productivity and employment.
IBM announced it would release a family of AI models as open-source software and assist Saudi Arabia in training an AI system in Arabic. Unlike competitors such as Microsoft, which charge for their AI models, IBM provides open access to its ‘Granite’ AI models, allowing companies to customise them. These models aim to help software developers complete computer code more efficiently. IBM monetises this by offering a paid tool, Watsonx, to help run the customised models within data centres.
IBM’s approach focuses on profiting when customers utilise the AI models, regardless of their origin or data centre location. IBM’s CEO, Arvind Krishna, emphasised that they believe in the early potential of generative AI and the benefits of competition for consumers. He also highlighted the importance of being safe and responsible in AI development.
Additionally, IBM announced a collaboration with the Saudi Data and Artificial Intelligence Authority to train its ‘ALLaM’ Arabic language model using Watsonx. The following initiative will enhance IBM’s AI capabilities by incorporating the ability to understand multiple Arabic dialects.
On Tuesday, Chinese tech giants Alibaba and Baidu significantly reduced prices for their large-language models (LLMs), intensifying a price war in the cloud computing sector. Alibaba’s cloud unit announced cuts of up to 97% on its Tongyi Qwen models, with the Qwen-Long model now costing only 0.0005 yuan per 1,000 tokens, down from 0.02 yuan. Baidu quickly followed, making its Ernie Speed and Ernie Lite models free for all business users.
The price reduction comes amid an ongoing price war in China’s cloud computing industry, with Alibaba and Tencent already lowering prices for their cloud services. Cloud vendors in China have increasingly relied on AI chatbot services to boost sales, spurred by the popularity of OpenAI’s ChatGPT. The competition has now extended to the LLMs powering these chatbots, potentially impacting profit margins.
Other companies have also joined the fray. Bytedance recently slashed the prices of its Doubao LLMs by 99.3% below the industry average for business users. Chinese startup Moonshot introduced a tipping feature for prioritising chatbot use, targeting both business and individual users. Baidu was the first in China to charge consumers for its LLM products, with its Ernie 4 model costing 59 yuan per month.
Elon Musk, alongside Indonesian Health Minister Budi Gunadi Sadikin, introduced SpaceX’s Starlink satellite internet service to Indonesia’s health sector during a launch event on Sunday. Musk, adorned in a traditional green batik shirt, emphasised the potential of Starlink to enhance internet accessibility for millions residing in remote areas across Indonesia’s vast archipelago. The initiative aims to bridge the digital divide in a country with over 270 million people spread across three time zones.
Bringing connectivity to remote communities radically improves access to education and economic opportunities pic.twitter.com/hDVYvpRDKZ
The launch ceremony, held at a community health centre in Denpasar, Bali, marked the deployment of Starlink at three Indonesian health centres, including sites in Bali and the remote island of Aru in Maluku. A video demonstration showcased how high-speed internet facilitated real-time data input, aiding in addressing health challenges like stunting and malnutrition. Musk expressed his enthusiasm for expanding connectivity, highlighting the transformative impact of internet access on learning and development.
While speculation arose about Musk’s potential involvement in Indonesia’s electric vehicle industry, he reiterated his focus on Starlink during the event. Despite Indonesia’s efforts to attract Tesla for EV-related manufacturing, Musk stressed the importance of internet connectivity as a primary agenda. The Indonesian government, represented by Communications Minister Budi Arie Setiadi, underscored Starlink’s commercial availability, prioritising its deployment in remote and underdeveloped regions to address connectivity gaps.
Why does it matter?
Starlink’s entry into Indonesia marks another milestone for SpaceX’s satellite internet venture, which holds a dominant position in the global satellite internet market. With permits secured for retail consumer services and network provision, Starlink’s expansion underscores its commitment to bridging digital disparities worldwide. Musk’s upcoming meeting with Indonesian President Joko Widodo and participation in the World Water Forum signify broader engagements to leverage technology for societal advancement and connectivity enhancement.
Google has revealed plans to inject an additional $1.1 billion into its data centre campus expansion in Finland, emphasising its commitment to bolstering its AI business growth in Europe. The investment aligns with a broader trend of locating data centres in the Nordic region due to factors like the favourable climate, tax incentives, and abundant renewable energy sources.
While some Nordic countries have become more apprehensive about hosting data centres, Finland’s wind power capacity surge has left ample room for expansion. With a staggering 75% increase in wind power capacity in 2022 alone, Finland boasts a surplus of renewable energy, even witnessing negative pricing on windy days. Google secures its renewable energy needs through long-term contracts in Finland, ensuring sustainable operations for its data centres.
Why does it matter?
The exponential rise in AI usage is anticipated to drive a global power consumption surge for data centres. Google’s investment decision in Finland underscores its recognition of this trend, alongside its commitment to sustainability. Notably, Google’s Hamina data centre in Finland already operates with 97% carbon-free energy, with excess heat being redirected to the district heating network, benefiting local communities.
The investment is part of Google’s broader strategy to expand its data centre footprint in Europe, with recent announcements about new data centre constructions in the Netherlands and Belgium. Google’s ambitious sustainability goals aim for net-zero emissions across its operations and value chain by 2030, reflecting its proactive approach towards environmental responsibility and technological advancement.
Paris-based quantum computing startup Pasqal has inked a significant deal with Saudi Arabia’s oil giant Aramco, marking the installation of the kingdom’s first quantum computer. Scheduled for deployment in the latter half of 2025, Pasqal will oversee the installation, maintenance, and operation of a powerful 200-cubit quantum computer.
Georges-Olivier Reymond, CEO and co-founder of Pasqal expressed enthusiasm about the partnership, highlighting its role in advancing the commercial embrace of quantum technology within Saudi Arabia. The initiative follows Pasqal’s successful provision of quantum computers to both France and Germany. Notably, Alain Aspect, a co-founder of Pasqal, was awarded the 2022 Nobel Prize in Physics for groundbreaking experiments underpinning quantum mechanics, laying the foundation for quantum computing.
Why does it matter?
The allure of quantum computing lies in its potential to revolutionise computational capabilities, with projections suggesting that quantum computers could outpace today’s supercomputers by millions of times in certain computations. This partnership between Pasqal and Aramco signals a meaningful step towards harnessing the power of quantum technology to solve complex problems across various sectors, including energy, finance, and logistics. As the global race for quantum supremacy intensifies, collaborations like this one are pivotal in pushing the boundaries of technological innovation, promising transformative advancements with far-reaching implications for industries and societies worldwide.
