As the US prepares for Donald Trump’s second term, China is significantly increasing its semiconductor imports from the US, anticipating potential sanctions. In October, China imported $1.11 billion worth of microchips, a 60% rise from the previous year, and has already imported $9.61 billion in the first ten months of 2024, marking a 42.5% year-on-year increase. This surge reflects China’s growing demand for US semiconductors, particularly CPU-based processors and chips for storage and signal amplification, which align with its AI ambitions.
Despite these imports, China faces hurdles in advancing its chip technology. US sanctions have crippled Huawei’s ability to develop competitive AI chips, with the company’s upcoming processors lagging years behind NVIDIA’s offerings. This setback is largely due to restrictions on access to advanced lithography equipment, such as ASML’s EUV tools, essential for creating cutting-edge chips.
Meanwhile, China has been ramping up its chip manufacturing efforts, investing $25 billion in equipment in the first half of 2024, surpassing spending by Korea, Taiwan, and the US. However, as one-third of global semiconductor demand, China’s position remains critical for the industry. The impact of Trump’s potential tech restrictions, whether broad or selective, will likely influence the global semiconductor market, requiring careful balancing of US production and Chinese demand.
Alibaba Group is merging its domestic and international e-commerce platforms into a single business unit for the first time, the company announced on Thursday. The new unit, Alibaba E-Commerce Business Group, will combine the Taobao and Tmall Group with the Alibaba International Digital Commerce (AIDC) Group, which oversees platforms like AliExpress and Alibaba.com.
Jiang Fan, who previously headed Tmall, will lead the newly formed unit. Jiang, who faced a demotion in 2020 following an online scandal, will report directly to Alibaba’s CEO, Eddie Wu. Wu emphasised that the future competitive landscape in e-commerce will be shaped by global supply chain capabilities, fulfilment, and consumer service.
This move is part of Alibaba’s larger restructuring, which saw the company split into six business units last year. While Alibaba has faced increased competition from platforms like Pinduoduo, Temu, and TikTok, the company’s international division, under Jiang’s leadership, has posted strong growth, including a 29% increase in the September quarter.
Despite challenging market conditions in China, Alibaba has shown signs of stabilising its position. The company reported strong results during this year’s Singles Day sales, with robust growth in sales and a record number of shoppers, surpassing analyst expectations.
Huawei plans to begin mass-producing its Ascend 910C AI chip in early 2025, despite ongoing struggles to achieve sufficient production yields due to US trade restrictions. The Chinese telecom giant has already sent samples to tech firms and started taking orders for the chip, designed to rival Nvidia’s high-performance processors. The company faces significant challenges, as restrictions on advanced manufacturing technologies have limited its chip-making efficiency.
The Ascend 910C is produced by Semiconductor Manufacturing International Corp (SMIC) using an N+2 process but suffers from a yield of just 20%—far below the 70% required for commercial viability. Previous Huawei processors, including the 910B, achieved yields of around 50%, leading to delays in fulfilling orders from major clients like ByteDance. Washington’s restrictions, which prevent access to critical Dutch lithography equipment, have further constrained China’s ability to produce advanced semiconductors.
Huawei’s reliance on SMIC has been costly, with chips produced on its advanced nodes priced up to 50% higher than alternatives. While the company has sought supplemental production from Taiwan’s TSMC, US authorities have tightened export controls, limiting access to cutting-edge chips and forcing Huawei to prioritise strategic government and corporate orders. The escalating trade tensions underscore the geopolitical struggle between the US and China over technological dominance, with both nations doubling down on policies to secure their interests.
As Beijing pushes for self-reliance in semiconductors, Huawei’s production challenges reflect the broader impact of US restrictions on China’s tech sector. With further curbs on the horizon, Huawei’s success in advancing its AI chips may shape the next phase of the US -China tech rivalry.
Senator Richard Blumenthal has reaffirmed that ByteDance must divest TikTok’s US operations by January 19 or risk a ban. The measure, driven by security concerns over potential Chinese surveillance, was signed into law in April. A one-time extension of 90 days is available if significant progress is made, but Blumenthal emphasised that laws cannot be disregarded.
Blumenthal also raised alarms over China’s influence on US technology companies. Tesla’s production in China and the US military’s reliance on SpaceX were flagged as security risks. He pointed to Elon Musk’s economic ties with China as a potential vulnerability, warning that such dependencies could compromise national interests.
Apple faced criticism for complying with Chinese censorship and surveillance demands while generating significant revenue from the country. Concerns were voiced that major tech companies might prioritise profits over US security. Neither Apple nor Tesla has commented on these claims.
TikTok and ByteDance are challenging the divestment law in court. A decision is expected soon, but restrictions will tighten for app stores and hosting services if compliance is not achieved. The Biden administration has clarified that it supports ending Chinese ownership of TikTok rather than an outright ban.
At the G20 Summit in Rio de Janeiro, Chinese President Xi Jinping warned against allowing AI to become the exclusive domain of wealthy nations. Speaking at the global forum, Xi called for stronger international governance and cooperation to ensure equitable access to AI technologies.
Xi highlighted China’s commitment to supporting developing countries, unveiling a joint initiative with G20 partners to improve access to scientific and technological innovations in the Global South. The Chinese leader also cautioned against protectionist policies, such as tariffs on Chinese goods, which he argued undermine global trade and the transition to green economies.
The remarks come as Xi tours Latin America, echoing similar criticisms of economic barriers he raised at the APEC forum in Peru. His appeal for openness and collaboration underscores China’s broader efforts to position itself as a champion of equitable global development.
The US Senate Judiciary subcommittee will convene a hearing on Tuesday to investigate recent Chinese cyberattacks targeting American telecommunications companies. The hearing, led by Senator Richard Blumenthal, will delve into the national security threats posed by these breaches and their impact on the US economy.
Authorities allege that China-linked hackers accessed surveillance data from telecom networks, intercepting sensitive communications tied to government and political figures. This breach has heightened concerns over the security of critical infrastructure, especially as bipartisan lawmakers scrutinise the role of major providers like AT&T and Verizon.
The session will also include discussions on Elon Musk’s business ties with China amid his growing involvement in US government affairs. Witnesses, including cybersecurity and industry experts, are expected to shed light on the scale and potential consequences of these incidents. Beijing, however, has denied any involvement in cyber espionage activities.
Brussels is planning new rules requiring Chinese firms to transfer technology and build factories in Europe to qualify for EU subsidies. These measures will apply to a €1 billion battery development scheme launching in December, potentially setting a precedent for other clean technology initiatives.
The proposals echo China’s own approach to foreign businesses, which compels them to share intellectual property to access its markets. The European Commission has also implemented tariffs on Chinese electric vehicles and stricter rules for hydrogen technology, aimed at reducing reliance on cheaper imports that undercut local manufacturers.
Chinese companies such as CATL and Envision Energy are already investing heavily in European facilities. However, domestic challenges persist, with Sweden’s Northvolt struggling financially as it attempts to scale up battery production. Batteries are critical for electric vehicles, making supply chains essential for Europe’s transition to greener technologies.
Critics warn that these tougher trade policies could disrupt EU climate goals by driving up costs for consumers. While the measures aim to support European industries, experts suggest they risk creating uncertainty and hindering innovation.
President Joe Biden and China’s President Xi Jinping held a two-hour meeting on the sidelines of the APEC summit on Saturday. Both leaders reached a significant agreement to prevent AI from controlling nuclear weapons systems and made progress on securing the release of two US citizens wrongfully detained in China. Biden also pressured Xi to reduce North Korea’s support for Russia in the ongoing Ukraine conflict.
The breakthrough in nuclear safety, particularly the commitment to maintain human control over nuclear decisions, was reported as an achievement for Biden’s foreign policy. Xi, in contrast, called for greater dialogue and cooperation with the US and cautioned against efforts to contain China. His remarks also acknowledged rising geopolitical challenges, hinting at the difficulties that may arise under a Trump presidency. The meeting showcased a shift in tone from their previous encounter in 2023, reflecting a more constructive dialogue despite underlying tensions.
Reuters reported that it remains uncertain whether the statement will result in additional talks or concrete actions on the issue. The US has long held the position that AI should assist and enhance military capabilities, but not replace human decision-making in high-stakes areas such as nuclear weapons control. Last year, the Biden-Harris administration announced the Political declaration on responsible military use of AI and autonomy, and more than 20 countries endorsed the declaration. The declaration specifically underlines that “military use of AI capabilities needs to be accountable, including through such use during military operations within a responsible human chain of command and control”.
A US congressional commission has proposed a bold initiative modeled on the Manhattan Project to accelerate the development of artificial general intelligence (AGI) that could rival or surpass human intelligence. The US-China Economic and Security Review Commission (USCC) emphasised the importance of public-private partnerships to drive technological innovation as competition with China intensifies. However, the panel provided no specific funding plans in its annual report.
Commissioner Jacob Helberg highlighted China’s rapid advancements in AGI, warning of potential shifts in global power dynamics. Addressing infrastructure bottlenecks, he suggested streamlining regulations for data centres as a step to accelerate AI progress. Tech leaders like OpenAI have also advocated for increased government investment in AI to maintain global competitiveness.
Beyond AI, the USCC report included recommendations to tighten trade regulations, particularly by ending the “de minimis” exemption that allows duty-free imports under $800. Commissioner Kimberly Glas underscored the challenge of inspecting the overwhelming volume of such shipments, which she claimed serve as a channel for unregulated Chinese goods, including dangerous materials. Proposals to curb this exemption have sparked bipartisan debate, though legislative progress has been hampered by industry opposition and political gridlock.
Global semiconductor manufacturers are accelerating their shift from China to Vietnam, driven by the anticipated intensification of US sanctions on China’s semiconductor industry, especially with the return of Donald Trump to the White House. South Korean firms, including Samsung Electronics and SK Hynix, are leading this transition, halting production expansions in China and focusing investments on Vietnam, which has become a rising hub for semiconductor production.
SK Hynix, for instance, shelved plans to increase DRAM chip production at its Wuxi plant in China, while Samsung Electronics is cutting back on production at its NAND flash memory facility in Xi’an. Other companies are also following suit; South Korea’s Hana Micron is expanding its presence in Southeast Asia, and Amkor Technology is investing $1.6 billion in a new semiconductor packaging plant in Vietnam. The facility will feature advanced technology, with some equipment reportedly transferred from China.
Vietnam’s semiconductor industry is also benefiting from the growth of companies like Samsung, which established a $1.7 billion OLED plant in the country. Samsung’s semiconductor division is reportedly boosting its investments in Vietnam, encouraging further expansions from supporting companies. Semiconductor testing and packaging firm Signetics is set to invest $100 million in a new facility in Vietnam, and German company Infineon is considering setting up an R&D center in Hanoi.
This shift underscores the ongoing global realignment in the semiconductor industry as companies adapt to geopolitical tensions and US-China trade policies.
