Due to national security concerns, the US Commerce Department announced plans to consider new rules restricting or banning Chinese-made drones. The proposed regulations, open for public comment until 4 March, aim to safeguard the drone supply chain against potential threats from China and Russia.
Officials warn that adversaries could exploit these devices to access sensitive US data remotely. China dominates the US commercial drone market, with DJI, the world’s largest drone manufacturer, accounting for more than half of all sales.
The Biden administration has already taken steps to curb Chinese drone activity. In December, President Joe Biden signed legislation requiring an investigation into whether drones from companies like DJI and Autel Robotics pose unacceptable security risks.
If unresolved within a year, these companies may be barred from launching new products in the US. Additionally, DJI has faced scrutiny over alleged ties to Beijing’s military and accusations of violating the Uyghur Forced Labor Prevention Act, claims the company denies.
US Commerce Secretary Gina Raimondo hinted at measures similar to those targeting Chinese vehicles, focusing on drones with Chinese or Russian components. While DJI disputes allegations of data transmission and surveillance risks, US lawmakers remain concerned.
The evolving landscape underscores Washington’s broader efforts to address perceived security vulnerabilities in Chinese technology.
Apple has announced rare discounts on its latest iPhone models in China, offering up to 500 yuan ($68.50) off in a bid to counter growing competition from domestic rivals like Huawei. The promotion, running from 4 January to 7, applies to several iPhone models when purchased through specific payment methods, such as WeChat Pay or Alipay.
The flagship iPhone 16 Pro and iPhone 16 Pro Max, priced at 7,999 yuan and 9,999 yuan, respectively, will receive a maximum discount of 500 yuan. Meanwhile, the iPhone 16 and iPhone 16 Plus will see a 400 yuan reduction. The offer extends to older iPhone models and other products, including MacBook laptops and iPad tablets, with discounts ranging from 200 to 300 yuan.
That move comes as Apple faces a challenging environment in China, where economic pressures and intensifying competition have weighed on consumer spending. Huawei has reemerged as a formidable competitor, significantly boosting its market presence with locally-made chipsets and aggressive pricing.
While Apple briefly dropped out of China’s top five smartphone vendors in mid-2024, it regained some ground later in the year despite a slight dip in sales. By offering these discounts, Apple aims to retain its footing in the world’s largest smartphone market amid Huawei’s resurgence and a cautious economic climate.
Tesla’s energy storage Megafactory in Shanghai has commenced trial production, marking a milestone in US-China cooperation on climate solutions. The facility, Tesla’s second in the city, is dedicated to producing Megapacks, with full-scale production anticipated by early 2025. Initial capacity is set at 10,000 units annually, equating to approximately 40 gigawatt-hours of energy storage.
The plant highlights Tesla’s confidence in China’s manufacturing capabilities and commitment to investing in its thriving new energy sector. Rapid construction saw trial production launched within seven months, a record for the company in the region. The factory, spanning 200,000 square metres, represents a $201.7 million investment and is the first of its kind built outside the US.
China’s robust infrastructure and favourable business environment have been crucial to the project’s success. Shanghai remains a key hub for Tesla, which recently celebrated the production of its three-millionth vehicle at its other Gigafactory in the city. Foreign investment in China continues to rise, reflecting the nation’s efforts to support global investors through supply chain access and policy initiatives.
Collaboration between China and the US in energy storage underscores the potential for market-driven solutions to climate challenges. Tesla’s Shanghai ventures exemplify the mutual benefits of such cooperation, reinforcing the impracticality of decoupling in an interconnected global economy.
As 2024 concludes, China’s AI sector is making global waves with groundbreaking innovations. DeepSeek, a Hangzhou-based startup, unveiled its V3 large-scale language model, which rivals leading proprietary models like GPT-4o. Remarkably, the V3 was developed in just two months with minimal resources, showcasing China’s ability to deliver cutting-edge AI solutions at significantly lower costs. Experts have praised the model’s efficiency and ingenuity, highlighting its potential to disrupt the industry.
China’s AI ambitions extend beyond language models. In November, ShengShu Technology introduced Vidu-1.5, an image-to-video tool that generates dynamic visuals in record time. The tool gained recognition for its creative applications, such as crafting an ink-style promotional video for Sony’s ‘Venom: The Last Dance.’ The innovation has drastically reduced production times and costs in the film industry, inspiring artists with its blend of tradition and technology.
AI-driven creativity also thrives in literature and virtual interaction. Researchers at East China Normal University used AI to author fantasy novels, completing projects in weeks that would take human authors a year. Meanwhile, apps like Xingye are redefining digital companionship, integrating AI chatbots with user-generated content to create unique community experiences. These advancements have resonated globally, with Chinese AI apps gaining popularity in markets like the United States.
E-commerce sector in China is leveraging AI to transform operations and consumer experiences. Entrepreneurs like Lyu Hongwei have used AI to identify trends, tailor product offerings, and accelerate growth. Analysts predict that AI-driven tools will continue to enhance business efficiency, paving the way for a more personalised and streamlined shopping experience.
Chinese hackers have been accused of infiltrating the US Treasury Department in a significant cyber attack. The breach, described as a ‘major incident’, allowed attackers to access employee workstations and unclassified documents, raising concerns over national security. The intrusion reportedly involved a third-party service provider’s compromised security key.
Officials confirmed that BeyondTrust, the affected service provider, had been taken offline. Investigations suggest a China-based Advanced Persistent Threat group was responsible. The Treasury has since partnered with the FBI and other agencies to assess the damage, while third-party forensic investigators are analysing the breach’s full impact.
China’s foreign ministry dismissed the allegations as baseless, reiterating its opposition to hacking. Accusations of Chinese cyber espionage have become more frequent, with recent incidents involving critical infrastructure and telecom companies. Officials claim the Treasury hack sought information rather than financial theft.
The incident comes amidst heightened scrutiny of Chinese cyber activities, with two prominent hacking groups linked to espionage and potential disruption campaigns. A supplemental report on the Treasury breach is expected within 30 days, as investigators continue their inquiries.
AT&T and Verizon have confirmed cyberattacks linked to a Chinese hacking group known as “Salt Typhoon,” but assured the public on Saturday that their US networks are now secure. Both companies acknowledged the breaches for the first time, stating they are cooperating with law enforcement and government agencies to address the threat. AT&T disclosed that the attackers targeted a small group of individuals tied to foreign intelligence, while Verizon emphasised that the activities have been contained following extensive remediation efforts.
The attacks, described by US officials as the most extensive telecommunications hack in the nation’s history, reportedly allowed Salt Typhoon operatives to access sensitive network systems, including the ability to geolocate individuals and record phone calls. Authorities have linked the breaches to several telecom firms, with a total of nine entities now confirmed as compromised. In response, the Cybersecurity and Infrastructure Security Agency has urged government officials to transition to encrypted communication methods.
US Senators, including Democrat Ben Ray Luján and Republican Ted Cruz, have expressed alarm over the breach’s scale, calling for stronger safeguards against future intrusions. Meanwhile, Chinese officials have denied the accusations, dismissing them as disinformation and reaffirming their opposition to cyberattacks. Despite assurances from the companies and independent cybersecurity experts, questions remain about how long it will take to fully restore public confidence in the nation’s telecommunications security.
President-elect Donald Trump has called on the US Supreme Court to postpone implementing a law that would ban TikTok or force its sale, arguing for time to seek a political resolution after taking office. The court will hear arguments on the case on 10 January, ahead of a 19 January deadline for TikTok’s Chinese owner, ByteDance, to sell the app or face a US ban.
The move marks a stark shift for Trump, who previously sought to block TikTok in 2020 over national security concerns tied to its Chinese ownership. Trump’s legal team emphasised that his request does not take a stance on the law’s merits but seeks to allow his incoming administration to explore alternatives. Trump has expressed a newfound appreciation for TikTok, citing its role in boosting his campaign visibility.
TikTok, with over 170 million US users, continues to challenge the legislation, asserting that its data and operations affecting US users are fully managed within the country. However, national security concerns persist, with the Justice Department and a coalition of attorneys general urging the Supreme Court to uphold the divest-or-ban mandate. The case highlights the growing debate between free speech advocates and national security interests in regulating digital platforms.
Chinese AI firm DeepSeek has unveiled DeepSeek V3, a groundbreaking open-source model designed for a range of text-based tasks. Released under a permissive licence, the model supports coding, translations, essay writing, and email drafting, offering developers the freedom to modify and deploy it commercially.
In internal benchmarks, DeepSeek V3 outperformed major competitors, including Meta’s Llama 3.1 and OpenAI’s GPT-4o, especially in coding contests and integration tests. The model boasts an impressive 671 billion parameters, significantly exceeding the size of many rivals, which often correlates with higher performance.
DeepSeek-V3!
60 tokens/second (3x faster than V2!) API compatibility intact Fully open-source models & papers 671B MoE parameters 37B activated parameters Trained on 14.8T high-quality tokens
DeepSeek V3 was trained on a dataset of 14.8 trillion tokens and built using a data centre powered by Nvidia H800 GPUs. Remarkably, the model was developed in just two months for a reported $5.5 million—far less than comparable systems. However, its size and resource demands make it less practical without high-end hardware.
Regulatory limitations influence the model’s responses, particularly on politically sensitive topics. DeepSeek, backed by High-Flyer Capital Management, continues to push for advancements in AI, striving to compete with leading global firms despite restrictions on access to cutting-edge GPUs.
US strategies to maintain technological leadership over China include a combination of the CHIPS and Science Act and export controls. Secretary of Commerce Gina Raimondo recently underscored the importance of technological innovation over solely blocking China’s advancements, suggesting that maintaining a competitive edge is essential. The CHIPS Act aims to strengthen the US’s economic security, while export controls are designed to protect critical intellectual property.
Combining these policies may be the most effective way to sustain US leadership. Export controls serve to slow China’s technological progress, complementing the domestic benefits of the CHIPS Act. However, ensuring the effectiveness of export controls demands close coordination with supply chain partners. Non-compliance by any party in the supply chain can compromise these efforts.
Expanding export controls beyond advanced technologies to mature processes presents a significant challenge. Managing compliance across numerous companies and countries raises costs and logistical complexity. Additionally, aligning with countries that share economic interests can reduce these difficulties. Collaborative efforts with strategic partners ensure export controls remain effective and sustainable.
The potential relocation of production from Taiwan to mitigate instability in the Taiwan Strait poses another challenge. Working with regions that complement US production goals, rather than those with conflicting interests, will be critical to achieving long-term success in export control implementation.
China’s semiconductor industry has seen a significant rise in merger and acquisition (M&A) activity in 2024, with 31 deals disclosed so far. Over half were announced after September, signalling a surge in activity during the latter part of the year. Nearly half of these transactions focused on semiconductor materials and analog chips, key areas driving innovation and growth.
Notable companies in the analog chip sector, such as Convert, Halo Microelectronics, BPS, and Novosense, played pivotal roles. For instance, BPS acquired controlling shares in Convenient Power to strengthen its power management chip offerings. This move highlights the growing synergy in product lines for mobile and automotive applications while expanding customer bases and supply chain networks.
Semiconductor materials companies also showed robust activity, with seven deals disclosed. Transactions included upstream silicon wafer manufacturers like Li-on and TCL Zhonghuan, as well as raw material providers such as Grandit. JCET, a major semiconductor packaging firm, made headlines with its acquisition of SanDisk Semiconductor and its subsequent control transfer to China Resources Group.
Digital circuits lagged behind in M&A activity, recording only two transactions. Among these, GigaDevice secured a 70% stake in Xysemi for RMB 580 million. Analysts note the dominance of analog chips and materials in reshaping China’s semiconductor industry.
