Alibaba, Moonshot and the US government squabble over what trained Kimi K3
The breakthrough model was likely developed using Nvidia, but was it legal?
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Nobody knows what trained breakout AI model Kimi K3
China’s Moonshot AI burst onto the global scene last month with its Kimi K3 model which grabbed headlines and attention as a cheaper but comparably capable alternative to Claude or ChatGPT. Despite the movement around China’s self sufficiency push for AI and semiconductors, however, Kimi K3 was trained using Nvidia chips.
It’s well known that China is building systems, processes and companies to avoid any reliance on the US for technology. Memory firm CXMT’s massive $8.6 billion IPO is proof it isn’t playing around. But the narrative needs some time to become reality because the country’s top AI firms are still reliant on Western kit. How they get it, however, is worth digging into.
Bloomberg reported that Kimi K3 was trained on a 20,000 Nvidia cluster that was supplied by Alibaba. That seems surprising given the export restrictions on tech from Nvidia and others, but Moonshot is one of many that skirt that restriction by using Southeast Asia. In this case, apparently, Thailand.
Bloomberg was able to confirm that Alibaba supplied Nvidia chips to Moonshot but a lot is unclear:
“Multiple people close to Moonshot” claimed they were H200 chips, once illegal in China but now available in limited quantities
Alibaba denied that they were H200 chips, and would only confirm that they rented some Nvidia capacity to Moonshot
US government official Michael Kratsios claimed they were from Nvidia’s newest Blackwell family, which is banned from sale to Chinese companies
“A person familiar with Moonshot’s procurement strategy” said the company has a channel to access Blackwell chips, but they didn’t specify if it was a rental agreement (legal) or via purchase (illegal)
It’s a messy situation, and one that the US government is clearly keen to clear up through enforcement. That’s not so easy with shell companies, multiple countries, etc.
The most interesting part might be Moonshot and Alibaba’s relationship.
Alibaba is a major investor in the startup, and it clearly helps on tech access. But its own AI models rival Kimi, and its role in enabling a competitor to outpace its own solution is said to be frustrating.
Moonshot is in the market for more Blackwell chips to train its newest Kimi model, will Alibaba still be its partner? You’d think not based on these revelations.
Deals
Tesla is reportedly considering separating or selling its China business to smooth a potential merger with SpaceX, as US-China tensions and SpaceX’s defence work raise regulatory and national-security concerns [WSJ]
Tesla denied the report, with Elon Musk calling it “absurdly fake news” [Nikkei Asia]
But SpaceX is also said to be moving to keep Chinese nationals and China-made components out of parts of its supply chain [Nikkei Asia]
Thailand’s True Internet Data Center is seeking about a $2 billion-equivalent loan to build a new facility, split across a roughly $1.8 billion dollar-denominated tranche and two Thai baht portions [Bloomberg]
Ant Group’s three spin-offs, each operating independently since 2024, are moving on separate fundraising tracks. Ant Digital Technologies is preparing a financing round ahead of a planned IPO, while Ant International just closed a $1.2 billion Series A backed by Ant Group, Alibaba and international investors. OceanBase, the database unit, is reportedly eyeing its first outside equity raise [SCMP]
Indonesia’s TelkomMetra is weighing a sale of MDI Ventures, one of the country’s biggest corporate VCs with $830 million in committed AUM. We recently wrote that the jailing of former MDI and BRI Ventures executives over a $25 million TaniHub investment brought the very idea of state-backed investment into question in Indonesia. [CNBC]
Singapore’s ADA has acquired India’s Algonomy in an undisclosed deal to expand its AI-powered retail decisioning business across 34 markets [TNGlobal]
Groww’s four cofounders are said to be setting up a INR4-5 billion ($45-57 million) second seed and early-stage fund to back consumer internet and deeptech startups, expanding the investment programme they have run for the past few years [Economic Times]
Markets
After a rout that hit many retail investors hard, SK Hynix and Samsung Electronics surged more than 20% in Seoul, helping revive South Korea’s AI-linked chip rally after this week’s brutal sell-off. The move tracked a rebound in US technology stocks and came days after heavy losses in Korean chip shares and leveraged retail bets exposed how volatile the AI trade has become [CNBC]
Samsung’s chip division posted KRW89.2 trillion ($64 billion) in June-quarter operating profit, more than 250 times last year’s level and ahead of forecasts, as AI memory shortages lifted earnings. Group net income reached KRW71.3 trillion ($51 billion), showing how far Samsung has narrowed SK Hynix’s lead in the AI memory boom [CNBC]
Zhongji Innolight fell 5.9% on its Hong Kong trading debut after raising HK$53.41 billion ($6.81 billion), giving the Chinese optical transceiver maker a weak start to the city’s largest listing since Alibaba in 2019 [WSJ]
Pakistan’s Abhi plans to list Abhi Microfinance Bank in an IPO this month, putting a fintech-owned lender on the public market after its acquisition of FINCA Microfinance Bank. The YC-backed company, founded in 2021, has expanded from earned-wage access into embedded finance across Pakistan and the Gulf [Bloomberg]
Zepto announced a pre-IPO private placement from existing investors as it prepares to list within SEBI’s approved timeline, after earlier pausing IPO plans to raise more than INR10 billion ($105 million). The quick-commerce startup is expected to seek a $4-4.2 billion valuation, below its $7 billion private valuation six months ago [Moneycontrol]
South Korea plans to inject KRW20 trillion ($14 billion) into its sovereign wealth fund for strategic investments in AI, data centres and infrastructure, expanding its mandate to domestic assets for the first time. The move follows a rout in technology stocks and gives Seoul another state-backed vehicle for AI-era capital allocation [Bloomberg]
China’s Unitree has launched a STAR Market IPO that could raise about $620 million, giving one of the country’s best-known robotics startups a domestic listing path as humanoid and quadruped robots draw heavier investor interest. The Hangzhou company sells consumer and industrial robots and has become a flagbearer for China’s embodied-AI push [Caixin]
Japan’s Kioxia approved a 3-for-1 stock split effective Oct. 1 after its April-June results missed analyst estimates despite a sharp AI-driven memory rebound [Bloomberg]
Kioxia has started shipping samples of its ninth-generation NAND flash memory chips for smartphones and PCs, with the Japanese chipmaker saying performance is more than 30% higher than the prior generation [Nikkei Asia]
Southeast Asia PE investment fell to $935.5 million across 10 deals in Q2 2026, down from $9.2 billion in the previous quarter, as capital concentrated in mid-market transactions. Exits were the stronger signal, reaching a four-year high of $4.2 billion, led by Singapore real estate and infrastructure deals [TNGlobal]
Chinese venture capital firms are seeking about $35 billion for at least 60 new dollar-denominated funds after a three-year fundraising slump, as AI breakthroughs, robotics advances and recent tech IPOs revive investor interest. HSG, IDG Capital, Matrix Partners China and Future Capital are among firms marketing or planning new funds [FT]
AI and Chips (China)
Xi Jinping called for wider defence use of unmanned and AI technologies as China pushes to build a more advanced PLA before its 100th anniversary in 2027. The directive came at a Politburo study session and paired military-civilian integration with tighter oversight after a widening anti-graft crackdown [Bloomberg]
New CTGT research found censorship in Chinese open-source AI models did not necessarily carry into models distilled from them, challenging one argument for banning DeepSeek- and Moonshot-based systems. The study tested 152 prompt pairs on China-sensitive topics, including Uyghur detention camps and Tiananmen Square, as US officials weigh the risks of cheaper Chinese models [Semafor]
China’s AI boomtowns are pulling further ahead of the wider economy, with growth concentrated in a handful of cities that have attracted model developers, data-centre projects and state support [Bloomberg]
Chinese military researchers have used outputs from OpenAI and Anthropic models to train domestic AI systems for defence uses, based on a review of more than 80 Chinese academic papers and patents [Reuters]
ByteDance is pouring TikTok cash into a full-stack AI push, with Doubao now China’s most popular AI app on 324 million monthly users and founder Zhang Yiming backing investment across models, cloud and chips [FT]
ByteDance folded Lark’s product team into the group behind Doubao and shifted its sales and service staff under Volcano Engine, as its annualised AI revenue reached $4 billion [SCMP]
MiniMax has drifted under the radar compared to its peers but it just released H3, a video-generation model aimed at commercial uses including advertising, e-commerce, gaming, product design and content creation. Its shares jumped 17.4% after the launch [Reuters]
DeepSeek opened a public beta API for its flagship AI model, giving developers a direct way to build on the Chinese startup’s latest systems [Bloomberg]
DeepSeek is planning a 1-gigawatt AI data centre in Ulanqab, Inner Mongolia, and aims to bring at least part of the capacity online by late 2027 or early 2028 [Bloomberg]
RedNote is planning a 600MW data centre in Inner Mongolia with a budget of about 15 billion CNY ($2.2 billion), excluding semiconductor costs, as it builds capacity for AI infrastructure. The Xiaohongshu operator is in talks with VNET and is targeting first-quarter 2027 delivery, while Beijing expects 4 trillion CNY of national computing-network investment over five years [SCMP]
US senators urged Apple to drop any plan to buy memory chips from blacklisted Chinese suppliers CXMT and YMTC, warning it could become reliant on a US adversary for key components [Bloomberg]
AI and Chips (Beyond China)
SoftBank and NTT are leading around 30 Japanese companies, research groups and universities in a public-private consortium to build cross-industry AI data-sharing infrastructure. The xIPF Consortium spans telecom, electronics, energy, real estate and other sectors as Japan looks for common technology to let companies share data more easily [Nikkei Asia]
India’s Sarvam is building a trillion-plus-parameter foundation model from scratch in India, aimed at coding, cybersecurity, simulation and scientific research workloads. The startup also priced its 105B model at $0.80 per 1mn blended tokens, claiming it is 5.5 times cheaper than GPT-5.4 Mini and over 11 times cheaper than Gemini 3.5 Flash [Moneycontrol]
TSMC has developed new AI chip-packaging technology to counter Intel, which is pitching its EMIB approach as an alternative for customers squeezed by advanced-packaging bottlenecks. The move keeps packaging at the centre of the AI chip race, where TSMC’s CoWoS capacity has become a constraint for Nvidia and other accelerator designers [The Information]
MediaTek has approved a discretionary $5 billion financing budget to support long-term growth, including its push into AI data-centre chips. Taiwan’s biggest chip designer is trying to reduce reliance on smartphones and expand custom ASIC sales to cloud providers, with its 2026 AI data-centre ASIC revenue guidance raised to $2 billion [Reuters]
Tata Electronics is in early talks with ASML to explore making components and subassemblies for advanced chipmaking equipment in India, a step that would extend their MoU beyond ASML support for Tata’s $11 billion 300mm fab in Dholera and pull India closer to the lithography supply chain [Economic Times]
In other news:
India’s mobile app market generated a record $345 million in consumer spending in Q2, up 35% year on year, even as quarterly downloads stayed around 6.3 billion since 2023; Sensor Tower said generative AI, streaming and productivity apps drove the gains, with ChatGPT and Claude taking nearly 83% of AI app revenue [TechCrunch]
Australia’s eSafety Commissioner began Federal Court civil penalty proceedings against Telegram, alleging it failed to remove pro-terror material after user reports, including videos of the Christchurch and Buffalo attacks. The case could bring fines of up to A$54.6 million under the Online Safety Act [Reuters]
Amazon has linked recent compromises of popular NPM libraries including axios, debug, chalk and typo-crypto to a DPRK-linked threat actor known as Sapphire Sleet and BlueNoroff, saying maintainers were socially engineered before malicious package updates were pushed. The AWS research says axios has more than 100 million weekly downloads and that attackers are adapting supply-chain tactics for AI-era code review [AWS]
China is rapidly narrowing the satellite technology gap with the US through upgrades to BeiDou, stronger remote-sensing systems and more than 510 surveillance satellites. The buildout is improving Beijing’s ability to track and target forces in the Asia-Pacific, adding a harder military edge to the US-China tech race [WSJ]
India summoned Meta executives after Facebook briefly restricted a video post by Prime Minister Narendra Modi that had first appeared on Instagram and was later shared to Facebook. The company has said the restriction was an error, while New Delhi is seeking an explanation in another flashpoint over political content moderation in India [Reuters]
China’s dominant smart-vacuum makers face possible US disruption after the FCC added foreign-produced advanced robotic devices to its Covered List, blocking new models from equipment authorisation for import and sale. Roborock, Ecovacs, Dreame, Xiaomi and Narwal held 68% of the global robotic vacuum market in 2025, with shipments up 17% to 24.1 million units [SCMP]
South Korean agencies warned that tools and infrastructure used by North Korea’s Lazarus Group appear to have been shared with Gunra ransomware operators targeting Korean organisations. AhnLab found overlaps in malware filenames, privilege-escalation tools, command-and-control servers and SSH key fingerprints, after Lazarus installed espionage backdoors in at least 72 organisations this year [The Record]
Hong Kong lawmakers are deepening ties to Chinese companies flagged by Washington for military links, with a CSRI review finding more Legislative Council members holding roles at firms on US Defense Department or Treasury blacklists. The report also found more personal assets held on the mainland, raising sanctions and conflict-of-interest questions for Hong Kong’s financial hub role [Nikkei Asia]
Malaysia will trial Starlink’s satellite-to-phone internet service as it looks to improve connectivity in areas with limited mobile coverage. The Direct-to-Device service lets compatible phones connect directly to satellites without dedicated equipment, while Starlink has already offered satellite broadband in Malaysia since 2023 [TNGlobal]
Xiaomi launched the SkyNomad N70 Max and N90 Max extended-range SUVs in China, marking its first move beyond pure battery EVs. The hybrid models start at about $36,200 and arrive as Xiaomi chases a 550,000-vehicle 2026 delivery target after shipping 185,055 vehicles in the first half [Bloomberg]
Tencent’s US-based Lightspeed LA has laid off about 80 staff and changed direction on Last Sentinel, its big-budget open-world game led by a former GTA and Red Dead Redemption veteran [Bloomberg]
NTT Data Payment Services India launched ADAPTIS, a unified payments and commerce platform for Indian merchants, bringing payment acceptance, merchant tools, value-added services and commerce capabilities under one brand as the Japanese IT group expands its payments business and works on connecting UPI with fast-payment systems across Asia [Nikkei Asia]