US-China Tech Tensions Rise Amid AI Chip Restrictions

US Eyes AI Chip Curbs on China; Amazon and Musk's AI Ventures Make Waves

US Weighs Restrictions on China’s Access to AI Memory Chips - Bloomberg

• The US is considering unilateral restrictions on China’s access to AI memory chips and equipment capable of making them, escalating the tech rivalry between the world’s biggest economies.

• The measure is designed to prevent US companies from supplying Chinese firms with high-bandwidth memory (HBM) chips, which are required to run AI accelerators like those offered by Nvidia Corp. and Advanced Micro Devices (AMD).

• Micron Technology and South Korea’s SK Hynix and Samsung Electronics Co. are largely unaffected as they have refrained from selling their HBM products to China after Beijing banned its memory chips from critical infrastructure in 2023. The new restrictions are likely to be unveiled as part of a broader package that also includes sanctions against more than 120 Chinese firms and fresh limits on various types of chip equipment.

• President Biden has already asked Seoul to rein in exports of chip technology to China, with a focus on manufacturing equipment and adoption of controls similar to those the US has already implemented. The US plans to lower the threshold for advanced dynamic random access memory (DRAM) to deter Chinese memory chipmaker ChangXin Memory Technologies Inc.

Musk’s xAI Approached Startup Character.AI About Acquisition - Bloomberg

• Elon Musk’s xAI is considering acquiring AI chatbot startup Character.AI, according to people familiar with the matter

• xAI has approached the startup about a deal, but it is unclear if a deal has been seriously discussed

• A deal between xAI and Character.ai would closely link the startup with xAI’s marquee product, Grok, which aims to be an unbiased and lighthearted interlocutor

• Characters.AI was founded in 2021 by Noam Shazeer and Daniel De Freitas and allows users to create customized chatbots to impersonate anyone and anything

Robot Software Maker Covariant Gets Takeover Inquiry From Amazon - Bloomberg

• Covariant, a maker of AI software for industrial robots, has received takeover interest from Amazon due to its potential to provide a single platform for Amazon’s warehouse automation. Amazon has been a leader in warehouse automation since its 2012 acquisition of Kiva Systems, which makes robots for various companies including Otto Group and McKesson Corp.

OpenAI Says ‘Dedicated’ to Safety in Letter to US Lawmakers - Bloomberg

• OpenAI is committed to ensuring the safety of its AI tools.

• The company will allocate 20% of its computing resources towards safety-related research.

Applied Materials Denied US Chips Grant for $4 Billion Project in Silicon Valley - Bloomberg

• Applied Materials won’t receive Chips Act money for a research and development center in Sunnyvale, California

• The company had hoped to get funding for the $4 billion facility through a program designed for large-scale chip manufacturing sites

• Commerce Department officials rejected the project because it didn’t qualify for the Chips Act grant program

• This rejection stands out due to the project’s close alignment with the Biden administration’s goal of reviving the domestic semiconductor industry

• More than 670 firms expressed interest in funding, and Commerce officials had warned that they would turn down many compelling applicants due to limited resources

• $39 billion in subsidies are authorized under the 2022 Chips Act, including subsidies for chip manufacturing plants, R&D and workforce development, defense research, and education

• There is a separate $11 billion Chips Act fund dedicated specifically to researching and development, with the first awards set to be awarded this fall

• Some officials worry that Commerce still lacks a detailed strategy for spending the money after months of indecision

Silicon Valley Venture Capitalists Pledge to Support Kamala Harris - New York Times

• More than 100 venture capitalists have pledged to vote for Vice President Kamala Harris in November and solicited donations for her presidential campaign. The group includes donors such as Reid Hoffman, Vinod Khosla, Mark Cuban, Ron Conway, and Chris Sacca. The move is a response to the splintering among tech leaders over whom to support in the election. The effort was organized under the name VCsForKamala and was buttressed by the group Tech For Kamala. The pledges are a rebuke to right-wing venture capitalists and executives who some tech leaders see as dominating political conversation in the tech community. Elon Musk, Marc Andreessen, Ben Horowitz, and David Sacks have endorsed former President Donald Trump, the Republican nominee. The right is ascendant in Silicon Valley in a way that it had not been in over a decade. Signing the pledge is a vote for strong, trustworthy institutions.

Boeing Names New C.E.O. as It Looks to Recover From Safety Crisis - New York Times

• Boeing has named Robert K. Ortberg as the company’s next chief executive, taking over from Dave Calhoun.

• The appointment comes after a panel blew off a Boeing plane midflight during an Alaska Airlines flight in January, sparking questions about the quality and safety of Boeing’s planes.

• Ortberg will inherit a long list of difficult tasks, including overseeing cultural changes, increasing production, and preparing for the development of the next generation of planes. He brings decades of industry experience and an outsider’s perspective to the role.

Fed Opens Door to September Rate Cut if Inflation Stays Cool - New York Times

• The Federal Reserve left interest rates unchanged at their July meeting, but hinted that recent progress in lowering inflation could lead to future rate cuts.- Officials tweaked their post-meeting policy statement to call price increases only somewhat elevated and emphasize their attention to the threat of a job market slowdown.

• The Fed did not release a fresh set of quarterly economic projections at this meeting, and Jerome H. Powell will deliver a news conference at 2:30 p.m. on Sept. 18, when policymakers will next vote on interest rates.

Politics Makes the Fed’s Job Trickier, but Doesn’t Drive Its Decisions - New York Times

• Central bankers are independent of the White House as they set interest rates

• The Federal Reserve is expected to start cutting rates in mid-September, before the US presidential election

• Republicans may view lowering interest rates before the election as a politicized move meant to help Democrats

• Democrats may prefer low interest rates to help the economy grow more strongly

• President Biden has mostly avoided commenting on monetary policy out of respect for the Fed’s independence

• Jerome H. Powell, the Fed chair, recently said he had not met with the president in the past two years

• Whether a Fed chair can be fired is unclear

China Wants to Start a National Internet ID System - New York Times

• China’s internet regulators propose a national internet ID to reduce the collection of personal information by internet platforms

• The proposal is meant to protect privacy and prevent online fraud

• Use of the ID system by websites and apps would be voluntary

• Critics worry that it could give the government too much power to monitor what people do online

• A centralized internet ID could make people fear using the internet and lead to potential risks and harms

Japan shares fall after rate rise and stronger yen - Financial Times

• Chevron-Hess deal delayed due to arbitration hearing set for May 2025

• ExxonMobil asserted right of first refusal over Hess’s stake in a lucrative oil project off Guyana

• US reaches plea deal with 3 accused of conspiring in 9/11 attacks

• Marriott shares drop due to US election and China weakness

• Albemarle plans $1bn writedown on Australian production line

Meta’s revenue growth reassures investors as Zuckerberg plots AI spree - Financial Times

• Meta’s core advertising business drove revenue growth of 22% to $39.1bn in Q3, surpassing analysts’ expectations and the high end of its own forecast.

• The company raised its full-year capital expenditure guidance to between $37bn and $40bn as it continues to invest in its AI ambitions.

Founder of SoftBank-backed app IRL accused of fraud by SEC - Financial Times

-Founder of SoftBank-backed social media app IRL sued by US authorities for deceiving investors and spending millions of dollars on personal expenses

• Abraham Shafi fraudulently convinced backers to invest $170mn into the app while failing to disclose that it had spent almost $6mn on advertisements

• SoftBank sued Shafi for fraud and demanded the return of $150mn as well as punitive damages

• Shafi had boasted about IRL having 12mn users and a high rank on the Apple App Store, but understated the amount of money spent on marketing

• Investors were unaware that Shafi and his wife had spent personal expenses on furniture, clothing, hotel stays, and groceries with IRL’s credit cards

Nvidia and chip shares soar as Microsoft increases AI spending - Financial Times

• Nvidia shares rebounded after Microsoft indicated it would continue to invest heavily in AI infrastructure

• Investors are becoming more cautious about the near-term returns from Big Tech spending on AI

• Microsoft missed expectations for cloud growth in its latest earnings report, but executives noted that demand for AI services exceeds available computing power

• Nvidia climbed more than 10% on Wednesday, while AMD rose 7.3% and Arm rose 6.1%

• The gains helped the Nasdaq index rebound from Tuesday’s slump

• Tech companies including Google, Amazon, Microsoft, and Meta are investing tens of billions of dollars a year in data centre capacity to support AI applications

• Analysts have raised their forecasts for Microsoft and Amazon’s capital spending for the 2025 financial year.

US reaches plea deal with three accused of conspiring in 9/11 attacks - Financial Times

• Delta Air Lines will cost $500mn due to the IT outage caused by CrowdStrike update

• Microsoft estimates that 8.5mn Windows devices were affected by the outage

• US labour costs slowed more than expected in Q2, indicating a cooling labour market

• Private sector wage growth for those who remained in their jobs slowed to 4.8% in July, the slowest pace in three years

• Boeing has named Kelly Ortberg as new chief executive

• Ares Management has raised $34bn private credit fund, surpassing a $10bn target

• European bonds rally on hopes of rate cuts despite disappointing inflation data

Meta’s AI Costs Surge as Digital Advertising Revenue Grows - Wall Street Journal

• Meta Platforms saw growth in digital advertising, but investments in AI and the metaverse weighed on profits.

• The company increased its minimum spending guidance for 2024 and capital expenditures surged.

3D Printers Are Having a Moment Thanks to the U.S. - Wall Street Journal

• Small 3D-printing companies are experiencing a surge in revenue as defense and energy customers turn to the technology.

• Efforts by the White House to incentivize U.S. manufacturing jobs and reduce emissions are giving a lift to these companies.

Apple Intelligence: Here’s When the New AI Features Come to the iPhone and iPad - Wall Street Journal

• New Siri and other tools will not be available until iOS 18.1 is released later this fall

• Apple is bringing AI to iPhone, iPad, and Mac in a big way

Amazon Paid Almost $1 Billion for Twitch in 2014. It’s Still Losing Money. - Wall Street Journal

• Twitch is experiencing slowing user growth and employees are expecting layoffs.

• Despite periods of popularity, Twitch remains unprofitable.

One of America’s Hottest Entertainment Apps Is Chinese-Owned - Wall Street Journal

• Chinese-owned chatbot app Talkie offers AI-generated conversations with virtual characters in the US

• Talkie ranks No. 5 among the most-downloaded free entertainment apps in the U.S.

• The app was launched around a year ago and traces its ownership roots to a Singapore firm, but its ultimate parent company is Shanghai-based MiniMax

• Beijing’s strict regulations and censorship have undercut free-wielding usage that could improve Chinese AI

• Talkingie brings in real revenue for MiniMax through advertisements and subscriptions

• Users can create their own virtual characters on the app and customize their look, life story, and voices

• More interactions can reap rewards, such as a digital trading card of a user’s Talkie, which can be sold to others with the app’s in-house currency.