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Hard Numbers: Doctor vs. machine, Pony rides to an IPO, Hot chips, Foxconn’s crazy demand
4.5 billion: A Chinese self-driving car company, called Pony AI, is attempting to go public on the Nasdaq stock exchange. The company, which is backed by the Japanese automaker Toyota among others, is seeking a $4.5 billion valuation for its initial public offering. The company previously tried to go public in the US through a blank-check company, but plans fell apart when China cracked down on such deals.
72: Nvidia's new Blackwell AI chips are reportedly overheating when installed in server racks designed to hold 72 chips. The company has already faced delays due to design flaws with these chips and is now asking suppliers to modify the designs of the racks numerous times. This issue could further delay sales to the largest tech companies in the world, such as Google and Meta.
A microchip and the Taiwanese flag in an illustration.
TSMC set to get its CHIPS money
The award marked the first finalized disbursement of the CHIPS Act since it was passed in 2022 and will go toward building TSMC's three new chip factories in Arizona — helping offset the $65 billion cost.
A total of $36 billion has been approved by Congress and directed by the Commerce Department to foreign companies such as TSMC and Samsung, as well as US companies including Intel and Texas Instruments. The delays, in addition to the normal snail’s pace of bureaucracy, stem from the fact that the Commerce Department spent much of the past two years negotiating with semiconductor companies, procuring specific commitments before finalizing the amounts they’d receive.
President Joe Biden needs to disburse the payments quickly because the future of the CHIPS Act is in question. When Donald Trump takes office in January, he may fulfill campaign promises to dismantle the Biden initiative or ask the Republican-controlled Congress to repeal it. Alternatively, the president-elect could carry on with the disbursements, which could further a bipartisan goal of beating back China’s AI ambitions.
Flags of Taiwan and the US.
The US tells TSMC to cut off China
The US Department of Commerce ordered Taiwan Semiconductor Manufacturing Company to stop shipping advanced chips to Chinese customers starting yesterday, Monday, Nov. 11. The government sent a letter to TSMC specifying that this restriction applies to all chips that are seven nanometers or smaller, which can be used to power artificial intelligence models.
Just weeks ago, TSMC notified the Commerce Department that it found that chips it produced were used inside of a Huawei processor. Huawei is a Chinese tech giant subject to stringent US trade restrictions. In response, TSMC cut off Sophgo, a Chinese chip designer that used its fabrication facilities to make the Huawei chip in question.
In Oct. 2022, the Biden administration announced stringent export controls against chips flowing into China. But there wasn’t an all-out ban, explains Xiaomeng Lu, director of Eurasia Group’s geo-technology practice. “US suppliers could seek a sales license to sell to Chinese buyers and sometimes they do get approved — this is the nature of [the] export control regime,” she said. “They are not blank bans.”
But now, TSMC, a strategic corporate partner of the US government, will be barred from all Chinese sales under the new export control rules. “It is possible that TSMC has sought these licenses and offered green lights [to bypass the rules],” Lu said. “Conversely, they have failed to comply with US rules and were caught doing so.”
Middlemen help US chips into China and Russia
Joe Biden’s administration has been aggressively enacting export controls on China and economic sanctions on Russia, preventing US companies from selling powerful chips and semiconductor manufacturing equipment to both nations. But now attention is turning to middlemen enabling the flow of AI-grade chips into the countries.
A Mumbai pharmaceutical company reportedly sold more than 1,000 Dell servers containing Nvidia H100 processors to Russian companies between April and August of 2024, according to a Bloomberg analysis of international trade data. India isn’t held to US sanctions, so it’s not clear what recourse the US would have — except if Dell or Nvidia are knowingly selling to middlemen to get their chips into Russia.
Elsewhere in the world, Taiwan Semiconductor Manufacturing Company, the largest contract chipmaker in the world, suspended shipments to a Chinese chip designer Sophgo last week when it discovered its chips inside a Huawei processor. Huawei, China’s most important chip company, is subject to stringent US export controls, an attempt to keep Chinese industry and military at bay. As GZERO AI wrote last week, the US Commerce Department is investigating whether TSMC, a strategic commercial and geopolitical partner for the US that has received billions to build facilities in America, knowingly evaded US export controls to sell to Huawei.
Gina Raimondo, the US Commerce Secretary, recently said she’s under “no illusion” that export controls on US-made chips from Nvidia, AMD, and other semiconductor companies are perfect. But these reports underscore that sanction controls are a moving target — and a game of whack-a-mole both for companies seeking compliance and regulators seeking enforcement.In this photo illustration, the Saudi Arabian Airlines (Saudia) logo seen displayed on a smartphone with an Artificial intelligence (AI) chip and symbol in the background.
A Saudi tech institute chooses the US over China
Sir Edward Byrne, recently named the head of King Abdullah University of Science and Technology in Saudi Arabia, or KAUST, signaled that the institution will prioritize US technology and cut off ties with China if it jeopardizes its access to chips made in the US.
Byrne, an Australian neuroscientist, served as president at King’s College London from 2014 to 2021, and he was named president of KAUST last month. KAUST’s researchers depend on high-end chips from US companies such as Nvidia and AMD to train and run powerful artificial intelligence models and applications.
Both the US and China have vied for power in the Arabian peninsula, but the US has a clear advantage with most of the top chip and AI companies in the world — as well as strict export controls for US companies shipping to China or intermediaries.
Byrne is following the lead of others in the kingdom. In May, the chief executive officer of the Saudi Public Investment Fund-backed fund Alat also said that if asked to choose between the US and China, the fund would divest from China.
At a global AI summit in Riyadh last month, the Saudi Data and Artificial Intelligence Authority recently announced a deal to buy 5,000 Nvidia graphics chips to help develop an Arabic large language model, pending US government approval. The future of Saudi tech depends on the US and, it seems, the government and its most important institutions are signaling that while they don’t want to choose sides, the answer is clear as to who would win if they did.
The logo of semiconductor company Advanced Micro Devices Inc (AMD) is seen on a graphics processing unit (GPU) chip in this illustration picture taken February 17, 2023.
AMD has a fancy new chip to rival Nvidia
The US semiconductor designer AMD launched a new chip on Oct. 10. The Instinct MI325X is meant to compete with the upcoming Blackwell line of chips from market leader Nvidia.
Graphics processing chips from Nvidia, AMD, and Intel have been the lifeblood of the artificial intelligence boom, allowing the technology’s developers to train their powerful models and deploy them worldwide to users. Major tech companies have clamored to buy up valuable chips or pay to access large data centers full of them remotely through the cloud.
Lisa Su, CEO of AMD, claimed that the market for AI data centers will balloon by 60% a year and hit $500 billion by 2028. Still, investors weren’t convinced by what AMD showcased: The company’s stock fell 4% in trading Thursday, perhaps because AMD didn’t announce any big new deals with customers, though it bounced back 2% on Friday.
AMD’s new chips feature increased memory and a new architecture that the company promises will improve performance relative to prior models. Nvidia is expected to release its much-anticipated Blackwell chips by early next year, as the rivalry between the two most important AI chip designers in the world only gets hotter.
An illustration of US and Chinese flags in front of a circuit board with semiconductor chips.
China wants its companies to ditch Nvidia
Nvidia’s highest-end chips are off-limits to Chinese companies due to strict export controls from the US. That hasn’t stopped developers from either buying lower-grade chips or finding the best chips in underground markets, but that may soon change.
Beijing has reportedly begun urging its private sector to use Huawei’s chips instead of Nvidia’s chips. China’s government hasn’t made an official announcement on the matter — at least not yet. Analysts expect that Huawei’s newest chip could perform better than the China-specific chip currently marketed by Nvidia. Huawei’s chips are nowhere near as advanced as chips from Nvidia or AMD, but they are more advanced than the ones Chinese companies can legally buy.
That all results in Huawei getting a boost in business from China’s domestic AI sector. If it can offer a decent chip for running and training AI models, and the government pressures companies to buy from them, it could be a boon for their pockets and help them develop better tech in the future.
A reporter films at a data centre supported by Huawei, at Hongliulin Coal Mine during a Huawei-organised media tour, in Shenmu of Yulin city, Shaanxi province, China April 25, 2023.
When banned US chips are cheaper in China
Not only are Nvidia’s high-end chips getting through to the Chinese market, despite stringent export controls levied by the Biden administration, but they’re actually cheaper to access in China than in the US.
According to a new Financial Times report, Chinese data centers offering Nvidia’s AI chips charge just $6 an hour to use a server with eight Nvidia A100 processors. That same setup in the US costs about $10 an hour.
Nvidia’s H100 and A100 models are industry-standard for training and running large language models. But the Biden administration has restricted the sale of those chips and others, along with semiconductor manufacturing equipment, so that Chinese industry cannot take advantage of made-in-America technology.
It’s unclear how the chips are getting into China, but tech companies and resellers said that chips and data center inventories are openly advertised on Chinese social media and e-commerce sites — a sign that there are still gaping holes in the Biden administration’s attempts to wall off China. The Commerce Department, which oversees export controls, can’t remove what’s already gotten through, but it’ll try to keep plugging holes with future measures.