Squeezed chipmakers and China’s EV rise – I wish I had more to offer

Hi from Taipei, everyone! This is Cheng Ting-Fang, your tech newsletter host for this week.

It was a super semiconductor week in Taiwan, the world’s second-largest chip economy by revenue. The CEOs of several global chipmakers, including Micron and Intel, were in town to promote their latest AI ventures and to meet key supply chain partners and clients.

However, the public relations teams for these chipmakers have become extremely cautious amid escalating U.S.-China tensions. Now that all major economies have elevated semiconductors from an ordinary electronics component to a national security priority, speaking to the press and commenting on topics like investment and the competitive landscape has become very risky, from a public relations point of view.

For example, Intel restricted international media, including Nikkei Asia, from attending a press roundtable with CEO Pat Gelsinger in Taipei. Limiting such events to local media, public relations professionals say, makes it easier for companies to tailor their message — and to hopefully keep inconvenient headlines from reaching global audiences.

Micron CEO Sanjay Mehrotra, meanwhile, initially planned to meet the media for a brief interview at the grand opening of his company’s advanced chip assembly facility in central Taiwan. But the top American memory chipmaker changed Mehrotra’s itinerary at the last minute, saying he was “too busy” and had other engagements.

“It’s hard not to link Micron’s final decision to keep the CEO from the press with his recent trip to China last week, trying to settle its dispute with China,” a longtime public relations specialist who has experience working with several multinational tech companies told Nikkei Asia. “In this new era when geopolitics play a key role, sometimes no news is good news.”

Micron is a prime example of a company caught up in geopolitics. China banned Micron chips from critical infrastructure in May, and Mehrotra traveled to the country at least twice to try to alleviate the impacts. In June, the company announced it would invest more in its chip assembly and test plant in Xi’an.

Relations may be warming slightly. U.S. President Joe Biden will meet with his Chinese counterpart Xi Jinping next week. Last week, Beijing published a photo of Mehrotra and China’s commerce minister and said the country welcomes Micron if it complies with the rules.

For even more on these topics, please join me on Nov. 21 for a webinar with Chris Miller, author of “Chip War,” and Mario Morales, expert analyst at IDC, where we will delve into the untold stories of the global battle for semiconductor dominance. Register here and be sure to submit your questions for the panel.

Squeezed between two powers

Many American chipmakers still aim to expand business in the world’s second-largest economy despite the ongoing U.S.-China geopolitical tensions.

The number of U.S. chip companies taking part in China’s flagship International Import Expo rose this year, with many of them, such as Micron and Analog Devices Inc. joining for the very first time, Nikkei’s Shunsuke Tabeta writes. Others, like Qualcomm, Intel and Texas Instruments, participated last year as well.

One U.S. chip industry executive told Nikkei that companies don’t want to miss out on the massive market opportunities in China. The increasing participation from American chipmakers in China underscores how difficult it is for them to decouple from the world’s top semiconductor market.

The strong appetite for more business in China came as Washington tightens export control rules on AI chips and advanced chipmaking equipment, which will take effect next week. This move is expected to impact everyone from Nvidia to Intel and Advanced Micro Devices, but the extent will depend on how strict the U.S. is in granting licenses.

China, meanwhile, is continuing to focus on boosting its local supply chain, despite the time and money this will take. The latest U.S. restrictions may even indirectly help Beijing’s cause, as Chinese companies could turn to Huawei’s AI computing solutions as a local alternative to Nvidia’s offerings.

China is also sticking with its push in dynamic random access memory (DRAM) chips, a vital component for AI computing. Changxin Xinqiao Storage Technology, a new emerging DRAM project, has raised another $5 billion or so for its $150 billion yuan project in the Chinese city of Hefei.

Virtual ambitions meet reality

TikTok owner ByteDance has significantly scaled back its virtual reality ambitions as the market suffers a downturn, announcing restructuring plans that will see several hundred employees lose their jobs, write the Financial Times’ Qianer Liu, Wenjie Ding and Tim Bradshaw.

Henry Zhou, the president of ByteDance’s VR arm Pico, acknowledged in an internal meeting that the initial expectations for the VR market were overly optimistic as the industry was still in its infancy, according to two people familiar with the situation.

Zhou said that the company would keep its hardware and core technology teams while downsizing the marketing, studio, video and platform departments, according to the two people.

ByteDance acquired Pico in 2021 with the aim of tapping into the potential of VR headsets to become the next big trend in consumer tech. Pico emerged as a competitor to Meta in VR headsets and a leading VR maker by volume in China, accounting for over half of the domestic market in the first half of this year, according to research company Counterpoint.

However, the VR market has experienced significant declines in both global and Chinese markets this year, forcing Pico to reorganize its strategy to focus on basic hardware and core technologies.

From battery maker to Tesla-beater?

China has developed a competitive electric vehicle industry that is ready to step onto the global stage, led by its biggest EV maker, BYD.

Beyond its home market, where it is the clear champion, BYD has been blazing a trail overseas, Cissy Zhou of Nikkei Asia writes. The company has claimed the title of bestselling EV brand in Thailand, Sweden, Australia, New Zealand, Singapore, Israel and Brazil, and its gap in terms of unit sales with global leader Tesla was negligible in July-September this year.

The shift among consumers and governments to move away from fossil fuels and toward greener energy sources has ushered a new era and new opportunities for Chinese automakers. Chinese EVs are penetrating markets across Asia and Europe at an unprecedented rate. For the very first time, China is exporting more cars than it is importing thanks to its EV boost in the first nine months of 2023, according to custom data. That is a significant change from before, when China’s car industry catered almost exclusively to the domestic market.

On the edge

The global race to put generative AI on devices like smartphones and personal computers is heating up, Cheng Ting-Fang of Nikkei Asia writes.

Taiwan’s top mobile chip developer MediaTek recently unveiled its latest 5G smartphone chipset, which has a dedicated artificial intelligence processing unit, or APU, to handle the computing of on-device generative AI workloads.

MediaTek demonstrated the chip’s ability at its launch event, showing a smartphone capable of writing poems, drawing pictures, answering questions, and more without being connected to the internet.

U.S. rival Qualcomm has also announced a big bet on edge computing, or putting generative AI on devices, with its CEO predicting thousands of applications will begin to emerge in 2024. Top PC chipmakers from Intel and AMD are also stepping up efforts to put generative AI on computers and laptops to energize the lackluster market.

Squeezed between two powers

Virtual ambitions meet reality

From battery maker to Tesla-beater?

On the edge

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