Taiwan’s supply chain centrality and Nvidia’s ‘rock star’ CEO

Bye everyone! This is Lauly writing from Taipei. I have so much to share with you.

The week kicked off with back-to-back events with Jensen Huang, founder and CEO of Nvidia, at the annual Computex Taipei tech expo. The Taiwanese-born American entrepreneur, whose business is highly regarded on the generative AI boom, received a rock star reception from the technology-focused island.

On Monday and Tuesday, Huang delivered a keynote speech on generative AI, hosted a media roundtable and visited the booth of QCT, a subsidiary of Quanta Computer and the main supplier of AI servers to ChatGPT developer OpenAI. Following him through the halls made me feel like I was at a Blackpink concert. A five-minute walk from one room to another took nearly twice as long as dozens of reporters, cameramen, and members of the public crowded around him.

Another highlight this week is a joint project between Nikkei, Nikkei Asia and the Financial Times that went online on Wednesday. It involved more than 20 people from four time zones, including my dear Nikkei Asia colleagues Annie Cheng Ting-Fang and Grace Li, and editors and designers from all three organizations. An enormous amount of time and effort (not to mention sweat and tears) has been put into this project.

Annie and I spent more than eight months interviewing dozens of supply chain sources, diving into trade data and analyzing Apple’s advanced supply chain to bring you a new perspective on why Taiwan’s technology industry is so important to the world . Trust me, it’s about more than just making chips. We hope you will enjoy reading it.

The indispensable island

Could the world live without Taiwan’s tech supply chain? Western companies are trying to relocate some production elsewhere amid fears of potential conflict around the Taiwan Strait, but cutting ties with the self-governing island is easier said than done.

“People underestimate Taiwan’s position in the supply chain. It’s about much more than semiconductors,” said a senior executive at Compal Electronics, a major product engineer for Dell, HP and Apple. “If military friction arises with Taiwan, the entire global supply chain will surely collapse.”

In this collaboration between Nikkei and the Financial Times, we examine the critical interdependence between Taiwan, China and the US, and how it has deepened even as tensions between Beijing, Washington and Taipei have increased.

In addition to months of on-site reporting and interviews with dozens of industry sources, our teams analyzed data on bilateral trade, Apple’s recently released 2023 supplier list, and more. The result is a compelling visual story that illustrates the complexity of today’s tech supply chain.

Leveling up

Gaming company miHoYo was little known outside its native China before the success of its online game Genshin Impact. The anime role-playing game has racked up $4.8 billion in revenue on mobile since its launch in September 2020, making it one of the top three monetized mobile titles.

The Chinese company is now trying to replicate Genshin’s success with Honkai: Star Rail, an anime space travel game. Executives have poured huge resources into the game to establish miHoYo as one of China’s top game developers in the face of competition from industry giants Tencent and NetEase, company insiders told the Financial Times. Eleanor Olcott And Gloria Li.

The international popularity of miHoYo’s games has highlighted the increased competitiveness of Chinese game studios, which have developed titles with global appeal to counter slowing growth, severe censorship restrictions, and regulatory crackdowns domestically.

Swap and go

Vietnam is one of Southeast Asia’s largest motorcycle markets, with some 70 million two-wheelers out of a population of about 100 million. The vast majority are gas guzzlers – a local start-up Selex Motors sees it as an opportunitywrites Nikkei Asia Lien Hoang.

Backed by the Asian Development Bank, Selex has developed a battery-swap system for electric bicycles that it hopes will win over riders, starting with delivery drivers. The bikes cost less than $1,000, and the company’s “battery dispensers” make replacing a dead battery as quick as withdrawing cash. The start-up’s priority is to get motorists on the battery network, even if they use rival motorcycles.

As with other EV players, sourcing battery materials is challenging, CEO Nguyen Nguyen said. Most metals come from only a handful of countries, he said, and that threatens to become a geopolitical tangle.

A heads up from Huang

Nvidia’s Jensen Huang has warned that China will nurture its own chip companies in response to US restrictions on semiconductor technology exports and says existing players will have to work hard to stay ahead, Nikkei Asia’s Lauley Li writes.

Nvidia makes ultra-advanced graphics processing units, or GPUs, that are essential for high-performance computing and generative AI technologies.

“Whatever the rules. . . of course, we will absolutely obey, but I think China will take the opportunity to boost their local entrepreneurs, which is why there are so many GPU start-ups in China,” Huang said at a media roundtable at Computex Taipei.

Washington banned Nvidia from selling its H100 processor — the engine behind generative AI poster child ChatGPT — to the Chinese market last year. The company had to modify its H100 as the less powerful H800 to comply with US export control regulations in order to continue supplying Chinese customers.

Answering questions from Nikkei Asia on the sidelines of the event, Huang highlighted the sheer number of new GPU startups in China: “The amount of resources spent in China on this area. . . is quite massive, so you can’t underestimate them.”

Suggested reading

1. Indonesian digital insurer PasarPolis looks at Malaysia, Philippines (Nikkei Asia)

2. iPhone maker Foxconn follows Nvidia with AI sales boost forecast (FT)

3. Japanese banks are preparing to launch stablecoins (Nikkei Asia)

4. South Korea’s Naver targets foreign governments with latest ChatGPT-like AI model (FT)

5. Nvidia hits $1 trillion market cap as chipmaker rides AI wave (FT).

6. Singapore’s Temasek cuts staff compensation for failed FTX bet (Nikkei Asia)

7. Bukalapak from Indonesia sees itself as ‘champion of financial inclusion’ (Nikkei Asia)

8. AI executives warn threat to humanity rivals ‘pandemics and nuclear war’ (FT)

9. There is no sign yet that it is safe to reinvest in Chinese tech companies (Nikkei Asia)

10. Japan is trying to beam solar energy from space in the middle of the decade (Nikkei Asia)

#techAsia is being coordinated by Nikkei Asia’s Katherine Creel in Tokyo, with assistance from the FT tech desk in London.

To register here at Nikkei Asia to receive #techAsia every week. The editors can be reached at techasia@nex.nikkei.co.jp