AI’s other winners and the new battery battle

Hello everyone, this is Akito from Singapore.

The school holiday will start in a couple of months here, and I have already started planning our family vacation. As I spent time Googling the destination, my daughter, in her early teens, offered me very helpful yet alarming advice: “Dad, you should ask ChatGPT instead.”

As a father who happens to be a tech journalist, my search for the family trip turned into a lecture explaining to my daughter the pros and cons of generative AI. Although it may be helpful, you should always double-check AI’s answers and be very careful of how and what you use it for . ..

While my young teen reluctantly listened to me preach, I recalled a conversation with a Google executive before my daughter was born.

In 2008, I asked Marissa Mayer, then head of Google’s search business, “What is the ultimate goal of search technology?” To become “your longtime best friend,” she replied, answering any of your questions with an accuracy backed by all the world’s available information.

I have no idea if OpenAI’s ChatGPT will eventually become humanity’s best friend or its worst foe. More immediately important for me is what kind of questions my daughter might ask AI and how seriously she will take its advice.

But for all the unknowns, global investors seem fairly sure of one thing: The early winners in the generative AI frenzy are not necessarily the companies on the front line, but those like Nvidia of the US who are feeding the booming demand for chips used to power ChatGPT and its many challengers.

Early risers

In the week following the release of the latest version of ChatGPT, Nvidia’s shares jumped nearly 12 per cent. Fellow US chip company AMD, chip tool maker Applied Materials and chip manufacturer Taiwan Semiconductor Manufacturing Co, meanwhile, have all seen a more than 20 per cent gain in share prices this year amid surging demand for AI-related chips, writes Nikkei Asia’s Yifan Yu.

The companies trying to make ChatGPT and similar AI-powered chatbots into viable consumer products — Microsoft, Google and Baidu in China, to name a few — are also in the market’s sights. But analysts say that chip companies give investors a way to tap into the ChatGPT buzz at a time when there are still relatively few ways for them to get in on the action.

And according to one analyst, semiconductor companies and their suppliers will benefit no matter who wins the AI race, as they sell to all the combatants in the battle for AI supremacy.

Jensen Huang, founder and CEO of Nvidia, says ChatGPT has kicked off “the iPhone moment of AI.” And this, according to the vice-president of Nvidia’s advanced technology group, “is certainly going to explode the demand for chips”.

India hunts for spyware

India is on the hunt for new spyware with a lower profile than the controversial Pegasus system developed by Israel’s NSO Group and blacklisted by the US government and is willing to spend tens of millions of dollars to find it, write the Financial Times’ Mehul Srivastava and Kaye Wiggins.

Narendra Modi’s government is preparing a so-called Request for Proposals for an initial spyware contract of $16mn, eventually swelling to about $120mn over the next few years, according to two people familiar with the move.

Discussions have focused on rival surveillance software makers — some Israeli, others with ties to the Israeli military, which produces hundreds of elite engineers each year who are trained in just this sort of hacking.

About a dozen competitors are expected to join the bidding process, according to two people with knowledge of the talks, stepping into the void created by the pressure on NSO from human rights groups and the administration of US president Joe Biden.

India has never publicly acknowledged being a customer of NSO. However, the company’s malware has been found on the phones of journalists, left-leaning academics and opposition leaders around India, sparking a political crisis.

NSO said it remained “financially stable, profitable and cash positive” because its contracts with “allies to the US and Israel, particularly in Western Europe, continue to grow”.

A tough spot

Japan is joining the US in its efforts to curb China’s chip development — but clients in China provide a significant amount of business for Japanese chip tool makers, writes Nikkei’s Masaya Kato.

Beijing, unsurprisingly, is not pleased about the export controls announced on March 31. Chinese foreign ministry spokesperson Mao Ning recently warned that such moves will “eventually backfire”.

The Japanese government says the curbs, which cover 23 categories, are narrowly targeted at equipment for advanced chips and the measure’s “overall impact will be limited”.

With over a trillion yen ($7.6bn) in sales to China last year, Japan’s chip tool makers will undoubtedly be hoping the government’s prediction turns out to be right.

The battery battle

In the 1990s, Japanese companies took the lead in commercialising lithium-ion batteries, now widely used in smartphones, personal computers and electric vehicles. When it comes to developing next-generation batteries, however, China is racing ahead of the rest of the world.

That is according to an analysis by Nikkei staff writers of a country-by-country tally of battery patents.

China, the biggest EV market in the world and the manufacturing hub for electronics devices, has emerged as the leader in developing sodium-ion batteries, which are expected to unseat today’s Li-ion batteries in tomorrow’s gadgets. Although they have a smaller capacity than lithium-ion batteries, they are expected to cost 60 per cent to 70 per cent less. Sodium, moreover, is a plentiful resource that can reduce the use of scarce industrial materials like lithium.

The Chinese government has been pushing the development of next-generation batteries to expand the use of EVs and renewable energy. Contemporary Amperex Technology (CATL), the world’s largest maker of automotive batteries, has announced plans to mass-produce and supply sodium-ion batteries for EVs this year.

Japan and the US, meanwhile, lag in overall patent numbers but still have their strengths, according to the Nikkei analysis. In an overall ranking that takes in both the number and quality of patents, Japan came first in patents related to fluoride-ion batteries, whose capacity could be as much as 10 times that of lithium-ion batteries.

Suggested reads

1. China presses Japan to change course on chip export curbs (FT)

2. China weighs export ban for rare-earth magnet tech (Nikkei Asia)

3. Vietnam pledges to solve ‘pain points’ for tech start-ups and VCs (Nikkei Asia)

4. China escalates tech battle with review of US chipmaker Micron (FT)

5. Asean start-ups face talent crunch despite tech lay-offs: study (Nikkei Asia)

6. Alibaba may cede control of new businesses if they list after break-up (FT)

7. Samsung Display to invest $3bn in OLED panels for tablets, laptops (Nikkei Asia)

8. Japan to restrict semiconductor equipment exports as China chip war intensifies (FT)

9. Lex: Alibaba: a bouquet of six small poppies for party bosses (FT)

10. Chinese display maker BOE suffers first sales decline in 13 years (Nikkei Asia)

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

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