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

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

The week started with back-to-back events involving Jensen Huang, founder and CEO of Nvidia, at the annual Computex Taipei tech expo. The Taiwan-born American entrepreneur, whose company is riding high on the generative AI boom, received a rock starlike reception from the tech-focused island.

On Monday and Tuesday, Huang delivered a keynote speech on generative AI, hosted a media roundtable and dropped by the booth of QCT, a Quanta Computer subsidiary and key AI server supplier to ChatGPT developer OpenAI. Following him around the venues, I felt like I was at a Blackpink concert. A five-minute walk from one hall to another took nearly twice that long as dozens of reporters, cameramen and members of the public thronged around him.

Another highlight this week is a joint project by Nikkei, Nikkei Asia and the Financial Times that went online on Wednesday. More than 20 people across four times zones were involved, including my dear Nikkei Asia colleagues Annie Cheng Ting-Fang and Grace Li, and editors and designers from all three organisations. A massive amount of time and effort (not to mention sweat and tears) went into this project.

Annie and I spent more than eight months interviewing dozens of supply chain sources, diving into trade data and analysing the sophisticated Apple supply chain to bring you a new perspective on why Taiwan’s tech industry is so important to the world. Trust me, it is 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 looking to shift some production elsewhere due to fears of a potential conflict around the Taiwan Strait, but severing ties with the self-ruled island is easier said than done.

“People underestimate Taiwan’s position in the supply chain. It’s much more than just about semiconductors,” a senior executive at Compal Electronics, a vital product assembler to Dell, HP and Apple, said. “If there’s military friction happening to Taiwan, the entire global supply chain will collapse for sure.”

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

In addition to months of on-the-ground reporting and interviews with dozens of industry sources, our teams analysed data on bilateral trade, Apple’s newly published 2023 Supplier List and more. The result is an immersive visual story that illustrates the complexity of today’s tech supply chain.

Levelling up

Gaming company miHoYo was little known outside of its native China before the breakout success of its online game Genshin Impact. The anime role-playing game has raked in $4.8bn in revenues on mobile since its launch in September 2020, making it one of the top three money-spinning mobile titles.

The Chinese company is now seeking to replicate Genshin’s success with Honkai: Star Rail, a space-travel anime 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 been developing titles with global appeal to combat slowing growth, stringent censorship restrictions and a regulatory crackdown at home.

Swap and go

Vietnam is one of south-east Asia’s biggest motorbike markets, with some 70mn two-wheelers in a population of around 100mn. The vast majority are gas guzzlers — a situation local start-up Selex Motors sees as an opportunity, writes Nikkei Asia’s Lien Hoang.

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

As with other EV players, sourcing battery materials is a challenge, according to CEO Nguyen Nguyen. Most metals come from just a handful of countries, he said, and that’s set to be 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 exports of semiconductor technology and says existing players will have to work hard to stay ahead, Nikkei Asia’s Lauly Li writes.

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

“Whatever the regulations are . . . of course we will absolutely comply, but I think China will use the opportunity to foster their local entrepreneurs, and that’s why there’s so many GPU start-ups in China,” Huang said at a media roundtable at Computex Taipei.

Washington restricted 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 American export control rules to keep supplying to the Chinese clients.

Answering Nikkei Asia’s questions on the sidelines of the event, Huang emphasized the sheer number of new GPU start-ups in China: “The amount of resources that has been dedicated to this area in China . . . is quite massive, so you can’t underestimate them.”

Suggested reads

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

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

3. Japanese banks prepare to launch stablecoins (Nikkei Asia)

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

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

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

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

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

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

10. Japan to try beaming solar power from space in mid-decade (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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