Hi everyone! This is Ting-Fang from Taipei.
Last week, I took part in a Nikkei webinar with “Chip War” author Chris Miller and my colleague Lauly Li.
Tech industry managers, analysts and government officials from around the world tuned in, and we received hundreds of questions from them before and during the event. Many wanted to know if their country or region was in a good position in the global tech supply chain and could benefit from the once-in-a-generation reshuffle as chipmakers scramble to diversify production.
Another frequently asked question was whether geopolitical uncertainty will lead to the creation of a truly diversified supply chain.
Miller replied that technology will only grow more complex and chip investment — already an expensive endeavour — will become even more capital intensive, making such a scenario unlikely.
“We are going to have the same level of concentration of semiconductor production in 10 years’ time,” he said. And while the geography of that concentration might be somewhat different to what it is today, “it’s not likely we can have a large number [of countries] that can build cutting-edge chips”.
Hungry for chips
Chinese tech champion Huawei, which has been struggling to shake off the impact of a yearlong US clampdown, aims to bring back its 5G mobile chips as soon as this year, Nikkei Asia’s Cheng Ting-Fang writes.
The one-time smartphone powerhouse is working with top Chinese chipmaker Semiconductor Manufacturing International Company — which is also on the US trade blacklist — to mass-produce mobile chips using the 7-nanometer process technology, according to industry executives briefed on the matter.
If the plan materialises, it would mark a major victory in China’s fight to regain some access to advanced chip technology that has been lost due to sweeping US trade restrictions.
For Huawei, access to chip supplies is essential for all of its businesses, from consumer electronics to enterprise solutions, analysts say. But hurdles remain, not least Japan and the Netherlands recently following America’s lead in restricting export of cutting-edge semiconductor equipment.
China is not the only country hungry for chips. Russia is doing all it can to gain access to vital semiconductors after the US and its European allies imposed export controls against the country following its invasion of Ukraine.
Moscow’s appetite is drawing in companies and countries as far away as the Indian Ocean. Through an analysis of trade records and on-the-ground reporting, Nikkei Asia found the Maldives, better known as a tropical resort destination, has also become a hub for transferring semiconductors to Russia, Nikkei’s Shoji Yano and Katherine Creel report.
Some 400,000 US-made chips worth a total of $53.6mn were shipped from the Maldives to Russia in the year after the start of the Ukraine war, second only to China. The value of those US chip shipments is equivalent to 20 per cent of the country’s export figures of approximately $280mn in 2021, according to the latest available data from the United Nations.
Scrambling for a hit
Chinese gaming giant Tencent is playing catch-up after its smaller rival NetEase secured a surprise smash hit with its mobile game Eggy Party, writes the Financial Times’ Eleanor Olcott.
The viral mobile game, where players race egg avatars around obstacle courses, put NetEase in direct competition with Tencent in the casual games market, which the larger player usually dominates by embedding its products into its ubiquitous social messaging app WeChat.
Eggy Party racked up 30mn daily active users in China and sparked concern at Tencent headquarters about the company’s paltry pipeline of new mobile games. Tencent insiders say the company has become over reliant on squeezing revenue from its legacy titles Honor of Kings and PUBG, and needs to devote more resources to develop new smash hits internally.
The success of Eggy Party was particularly painful for Tencent after one of its investee companies, Epic Games, was forced to shelve the publication of a similar mobile app due to a legal dispute with Apple. In the void, NetEase launched Eggy Party, which it is now plotting to release to the global gaming market.
No country for young grads
For many young students in China today, the joy of graduation is overshadowed by worries about their future careers, write Nikkei Asia’s Marrian Zhou and CK Tan.
The economy has reopened from the pandemic, but the job market remains gloomy due to plunging foreign direct investment, supply chains shifting overseas and Beijing’s multiyear crackdown on the technology and education industries, the most popular sectors for college students seeking well-paid jobs.
Unemployment for the 16-24 age group is at a record of more than 21 per cent, and analysts say the actual figure could even be higher because the official number only includes people actively seeking work. Even the official figure is almost three times higher than in the US and significantly higher than the eurozone’s 14 per cent.
The unemployment figure underlines the challenges facing Asia’s biggest economy as it attempts to put three years of Covid restrictions behind it. But it also speaks to a structural problem: China now produces twice as many graduates as it did a decade ago and it does not have enough jobs for all of them.
Rapidus speeds up
Japan is betting on its new chipmaker Rapidus to return the country’s semiconductor industry to its glory days of global competitiveness.
The company, launched in 2022, is in talks to supply top US tech giants such as Google, Apple, Facebook, Amazon and Microsoft with cutting-edge AI chips, president and CEO Atsuyoshi Koike said in an exclusive interview with Nikkei’s Yasu Ota.
Rapidus, which counts IBM as a tech partner, is backed by the Japanese government and leading companies such as Toyota.
The CEO said Rapidius’ business model will be different to that of Taiwan Semiconductor Manufacturing Company the world’s biggest contract chipmaker, as it will not aim to serve a massive number of clients. Instead, the Japanese chipmaker will start with five chip developer clients and gradually expand to 10, Koike said.
Meanwhile, Rapidius is moving forward its schedule for pilot production of cutting-edge 2-nanometer chips from 2027 to 2025. Top global chipmakers TSMC, Samsung and Intel are also targeting 2025 for the start of their own 2-nm production.
Koike acknowledged, however, that his company still needs more capital investment to facilitate the development. The company currently has 150 industry veterans, compared with market leader Intel’s 132,000 workforce and the 73,000 employees keeping TSMC’s massive semiconductor production operations going.
China weighs easing tech transfer rules for office gear (Nikkei Asia)
#techAsia is co-ordinated by Nikkei Asia’s Katherine Creel in Tokyo, with assistance from the FT tech desk in London.