Semiconductors

The US considers chip tracking to prevent smuggling to China

The US is exploring how to build better location-tracking into advanced chips, as part of an effort to prevent American semiconductors from ending up in China.

Michael Kratsios, a senior official behind Donald Trump’s AI strategy, confirmed that software or physical updates to chips are being considered to support traceability.

Instead of relying on external enforcement, Washington aims to work directly with the tech industry to improve monitoring of chip movements. The strategy forms part of a broader national plan to counter smuggling and maintain US dominance in cutting-edge technologies.

Beijing recently summoned Nvidia representatives to address concerns over American proposals linked to tracking features and perceived security risks in the company’s H20 chips.

Although US officials have not directly talked with Nvidia or AMD on the matter, Kratsios clarified that chip tracking is now a formal objective.

The move comes even as Trump’s team signals readiness to lift certain export restrictions to China in return for trade benefits, such as rare-earth magnet sales to the US.

Kratsios criticised China’s push to lead global AI regulation, saying countries should define their paths instead of following a centralised model. He argued that the US innovation-first approach offers a more attractive alternative.

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Nvidia refutes chip backdoor allegations as China launches probe

Nvidia has firmly denied claims that its AI chips contain backdoors allowing remote control or tracking, following questioning by China’s top cybersecurity agency.

The investigation, which focuses on the H20 chip explicitly designed for the Chinese market, comes as Beijing intensifies scrutiny over foreign tech used in sensitive systems.

The H20 was initially blocked from export in April under US restrictions, but is now expected to return to Chinese shelves.

China’s Cyberspace Administration (CAC) summoned Nvidia officials to explain whether the chip enables unauthorised access or surveillance. The agency cited demands from US lawmakers for mandatory tracking features in advanced AI hardware as grounds for its concern.

In a statement, Nvidia insisted it does not include remote access capabilities in its products, reaffirming its commitment to cybersecurity.

Meanwhile, China’s state-backed People’s Daily questioned the company’s trustworthiness, stating that ‘network security is as vital as national territory’ and warning against reliance on what it described as ‘sick chips’.

The situation highlights Nvidia’s delicate position as it attempts to maintain dominance in China’s AI chip market while complying with mounting US export rules.

Tensions have escalated since similar actions were taken against other US firms, including a 2022 ban on Micron’s chips and recent antitrust scrutiny over Nvidia’s Mellanox acquisition.

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China demands Nvidia explain security flaws in H20 chips

China’s top internet regulator has summoned Nvidia to explain alleged security concerns linked to its H20 computing chips.

The Cyberspace Administration of China stated that the chips, which are sold domestically, may contain backdoor vulnerabilities that could pose risks to users and systems.

Instead of ignoring the issue, Nvidia has been asked to submit technical documents and provide a formal response addressing these potential flaws.

The chips are part of Nvidia’s tailored product line for the Chinese market following US export restrictions on advanced AI processors.

The investigation signals tighter scrutiny from Chinese authorities on foreign technology amid ongoing geopolitical tensions and a global race for semiconductor dominance.

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Scientists use quantum AI to solve chip design challenge

Scientists in Australia have used quantum machine learning to model semiconductor properties more accurately, potentially transforming how microchips are designed and manufactured.

The hybrid technique combines AI with quantum computing to solve a long-standing challenge in chip production: predicting electrical resistance where metal meets semiconductor.

The Australian researchers developed a new algorithm, the Quantum Kernel-Aligned Regressor (QKAR), which uses quantum methods to detect complex patterns in small, noisy datasets, a common issue in semiconductor research.

By improving how engineers predict Ohmic contact resistance, the approach could lead to faster, more energy-efficient chips. It also offers real-world compatibility, meaning it can eventually run on existing quantum machines as the hardware matures.

The findings highlight the growing role of quantum AI in hardware design and suggest the method could be adopted in commercial chip production in the near future.

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Samsung chair heads to Washington amid chip deal with Tesla

Samsung Electronics Chairman Jay Y. Lee has embarked on a business trip to Washington just one day after announcing a landmark $16.5 billion chip supply agreement with Tesla. 

The deal, which involves advanced semiconductors manufactured at Samsung’s Texas facility, signals a deepening partnership between the South Korean tech giant and the American electric vehicle leader.

While Samsung confirmed Lee’s departure, it offered no details about the agenda. However, South Korean media, including Yonhap News Agency, suggest that Lee’s presence in the US may align with broader trade discussions between Seoul and Washington. 

With a 1 August deadline looming, South Korean officials are working to finalise a trade agreement to ease or eliminate tariffs threatened by the US on key Korean exports.

The diplomatic push has drawn high-level participation from Seoul. Finance Minister Koo Yun-cheol is preparing to meet with US Treasury Secretary Scott Bessent, while Foreign Minister Cho Hyun is scheduled to hold talks with Secretary of State Marco Rubio. 

Though the South Korean presidential office has not commented on Lee’s involvement, his timing suggests a coordinated effort between the nation’s corporate and political leadership to safeguard industrial ties with the US.

Source: Reuters

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Samsung’s $16.5B Tesla chip deal sparks optimism but execution remains crucial

After securing a landmark $16.5 billion deal to supply AI chips to Tesla, Samsung Electronics saw its stock initially dip on Tuesday, only to recover by midday. The short-lived market hesitation reflected a broader investor calculation: while the agreement represents a significant breakthrough for Samsung’s underperforming contract chipmaking division, it also places the company under intense scrutiny to prove it can deliver at scale and quality.

The deal, confirmed over the weekend by Tesla CEO Elon Musk, will see Samsung’s facility in Taylor, Texas, produce the next-generation AI6 chips, expected to power Tesla’s future self-driving vehicles, robotics, and data infrastructure. For Samsung, which has struggled to attract major clients for the Texas site due to low chip yield rates, this partnership offers financial relief and a reputational lift.

The company’s memory chip business, once the crown jewel of its semiconductor empire, has recently stumbled, particularly due to delays in delivering high-bandwidth memory (HBM) chips to Nvidia. These setbacks have affected profits and placed Samsung at a competitive disadvantage, especially against Taiwanese rival TSMC and domestic competitor SK Hynix, which enjoy stronger market positions.

While Samsung remains a global leader in memory chips, it lags far behind TSMC in foundry operations, where it manufactures chips designed by external clients. Analysts agree that securing further high-profile contracts will depend on this deal and Samsung’s operational execution moving forward.

Some analysts believe that Tesla’s decision to work with Samsung may reflect favourable negotiation terms for the automaker, given Samsung’s pressing need to demonstrate its manufacturing credibility. The long-term nature of the deal, likely spanning several years, also provides strategic advantages to both sides. Producing the chips within the US, instead of relying on East Asian facilities, reduces exposure to potential supply chain shocks and geopolitical trade tensions, particularly around tariffs.

Despite the promise of the Tesla partnership, market experts urge patience. The chips in question are unlikely to appear in Tesla’s consumer vehicles for at least a year or two, according to Hargreaves Lansdown analyst Matt Britzman.

Source: Reuters

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Huawei challenges Nvidia with AI super server

Huawei has unveiled its most powerful AI server, the CloudMatrix 384, to challenge Nvidia’s grip on the high-performance AI infrastructure market.

The system, launched at the World AI Conference in Shanghai, uses 384 Ascend 910C chips, significantly outnumbering Nvidia’s 72 B200 GPUs in the GB200 NVL72.

Although Nvidia’s GPUs remain more powerful individually, Huawei’s design relies on stacking and high-speed chip interconnection to boost overall performance.

The company claims the CloudMatrix 384 can deliver 300 petaflops of computing power, well above Nvidia’s 180 petaflops, though it consumes nearly four times more energy.

The US recently reversed its ban on Nvidia’s H20 chip exports to China, seeking to curb Huawei’s momentum. However, ongoing reports of smuggled Nvidia GPUs raise doubts over the effectiveness of these restrictions.

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Samsung strikes $16.5B semiconductor deal with Tesla

The South Korean tech giant, Samsung Electronics, has secured a $16.5 billion deal to manufacture semiconductors for Tesla Inc., signalling a potential revival for its ailing foundry division.

The long-term agreement, slated to extend through 2033, was confirmed on Monday, 28 July and highlights rising confidence in Samsung’s cutting-edge chip technology, especially its 2-nanometer production line.

Although Samsung declined to name Tesla as the client, insiders familiar with the deal identified the electric vehicle leader as the buyer.

News of the pact propelled Samsung’s shares upward by 3.5%, its sharpest intraday rise in nearly a month; a clear indicator of investor optimism following a lull in the semiconductor foundry sector.

In recent quarters, Samsung has grappled to hold its ground in the cutthroat chip manufacturing market, seeing its global foundry share dip to 7.7% from 8.1%.

By contrast, market leader Taiwan Semiconductor Manufacturing Co. (TSMC) commands a 67.6% share, operating at full capacity, while Samsung struggles to fill its production lines, straining its foundry revenue.

Analysts estimate the Tesla deal could lift Samsung’s foundry sales by 10% annually, injecting fresh vigour into a faltering business segment.

Furthermore, this breakthrough may pave the way for new contracts with other fabless chipmakers, broadening Samsung’s client portfolio and securing steady growth in an unsteady industry.

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Amazon exit highlights deepening AI divide between US and China

Amazon’s quiet wind-down of its Shanghai AI lab underscores a broader shift in global research dynamics, as escalating tensions between the US and China reshape how tech giants operate across borders.

Instead of expanding innovation hubs in China, major American firms are increasingly dismantling them.

The AWS lab, once central to Amazon’s AI research, produced tools said to have generated nearly $1bn in revenue and over 100 academic papers.

Yet its dissolution reflects a growing push from Washington to curb China’s access to cutting-edge technology, including restrictions on advanced chips and cloud services.

As IBM and Microsoft have also scaled back operations or relocated talent away from mainland China, a pattern is emerging: strategic retreat. Rather than risking compliance issues or regulatory scrutiny, US tech companies are choosing to restructure globally and reduce local presence in China altogether.

With Amazon already having exited its Chinese ebook and ecommerce markets, the shuttering of its AI lab signals more than a single closure — it reflects a retreat from joint innovation and a widening technological divide that may shape the future of AI competition.

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EU and Japan deepen AI cooperation under new digital pact

In May 2025, the European Union and Japan formally reaffirmed their long-standing EU‑Japan Digital Partnership during the third Digital Partnership Council in Tokyo. Delegations agreed to deepen collaboration in pivotal digital technologies, most notably artificial intelligence, quantum computing, 5G/6G networks, semiconductors, cloud, and cybersecurity.

A joint statement committed to signing an administrative agreement on AI, aligned with principles from the Hiroshima AI Process. Shared initiatives include a €4 million EU-supported quantum R&D project named Q‑NEKO and the 6G MIRAI‑HARMONY research effort.

Both parties pledge to enhance data governance, digital identity interoperability, regulatory coordination across platforms, and secure connectivity via submarine cables and Arctic routes. The accord builds on the Strategic Partnership Agreement activated in January 2025, reinforcing their mutual platform for rules-based, value-driven digital and innovation cooperation.

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