China’s AI giants change course after DeepSeek moment
Big Tech and Six Tigers are more fearless around competition and going global
Welcome back,
China is firmly in the spotlight this week as we look at how DeepSeek’s arrival on the global stage has seen China’s biggest tech players and its up-and-coming AI startups change their businesses. DeepSeek is firmly part of their toolkit, and now they’re shooting beyond their borders with confidence that they can compete with anyone, especially on price.
Our other focus on China revolves around the nation’s self sufficiency push, which is seeing movement around home-grown chips. Now is a good time for China tech, at least in terms of narrative and sentiment.
There’s also news of a potentially radical price cut in India for ChatGPT, digital media in India is also booming and Apple has the all-clear to sell its iPhones in Indonesia.
See you next week,
Jon
PS: Thanks for everyone who reached out about the earthquake in Bangkok—it was surreal but my family and I are fine
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News in Focus
China’s AI startups pivot after DeepSeek breakthrough
China’s AI industry is positively thriving following the DeepSeek breakthrough earlier this year. Last week, we explained that this hasn’t translated to a huge increase in investments in Chinese AI but it has China’s most important AI companies—growing or already established—adjusting their compasses for the future.
We’ve written before that DeepSeek itself has been courted by investors, but the startup’s chosen route would be to continue bootstrapping without taking on external capital. Others, though, are very much taking opportunities offered by the sudden attention that their space has gained.
Butterly Effect, the Chinese startup behind viral AI agent Manus, is reportedly in talks to raise capital at a valuation of $500 million, a big jump on its previous $100 million valuation. The Information reports that US VCs are looking at the company as well as funds based in China.
Elsewhere, China’s ‘Six Tigers’—the startups that dominate early-stage AI in the country—are changing their models:
Zhipu is planning for an IPO as it plots growth and a big move to target enterprises
01.ai halted pre-training and now offers AI solutions using DeepSeek’s models
Baichuan is targeting healthcare
Moonshot dumped its chatbot marketing product to focus on model training
DeepSeek’s model also inspired China’s tech giants to go beyond their borders and focus on undercutting the big names. Baidu, Alibaba and Tencent each launched their own services that are cheaper than the likes of OpenAI and Google.
One further impact has been on data centres. There’s been an unprecedented rise in spending here, the logic being that vast computing power is certainly required if AI is to fulfill its potential. But with DeepSeek emergence of DeepSeek, that assumption is now being challenged.
Alibaba co-founder Joe Tsai suggested there may be a bubble, with many investments in data centres built on speculation without customers in mind. He was referring more to the US, but Asia is equally at risk. Indeed, an MIT Technology Review report found that many of the hundreds of AI data centres constructed in China now sit idle. Despite billions poured into infrastructure, speculative investments have outpaced demand, with shifting AI trends led by DeepSeek adding to the slowdown, it suggested.
China races to AI and chip self sufficiency
The DeepSeek moment has galvanised China’s sufficiency push, and that’s playing out in the chipset space too.
Ant Group used Chinese-made chips from Alibaba and Huawei to develop AI training techniques that cut costs by 20%, achieving results similar to Nvidia’s H800, according to sources quoted by Bloomberg. Ant hasn’t stopped using Nvidia chips, but it is increasingly looking at alternatives for its newer models.
Huawei is also involved in a push to replace machines from Dutch firm ASML. SiCarrier—a Chinese semiconductor equipment maker with ties to Huawei—is developing lithography and other chip fabrication tools, benchmarking against ASML, Applied Materials, and Lam Research.
The push to remove Nvidia tech isn’t just coming from the US—where the Trump government just added 80 new Chinese firms to a list banned from purchasing US tech—Beijing is involved, too. It’s reported that new energy efficiency rules could bar Chinese firms from buying Nvidia’s top-selling chips if strictly enforced. That’s because Nvidia’s H20 chip—designed to meet US restrictions and therefore be sold in markets like China—does not comply, although it remains to be seen if restrictions will be enforced strictly.
There’s already a supply crunch on H20 chips, according to Chinese server giant H3C, which doesn’t expect to see new shipments until mid-April.
Things could be bleaker still. Foreign officials and tech giants are urging the Trump administration to reconsider US semiconductor strategy as it finalises a controversial AI export control framework. The AI diffusion rule, limiting AI chip exports, drew criticism from Nvidia and concerns from allies like Israel and Poland over potential supply risks and reduced AI investment.
ChatGPT considers radical price cut in India
OpenAI might be about to make a big move in India, where it may reduce its premium subscription by 75-85%, according to The Information. Such a move would price it at just a few dollars per month which could hugely disrupt the market, or at least give it first mover advantage as consumer AI apps chase mainstream audiences in growth markets like India.
It remains to be seen whether OpenAI would plan a price increase, develop a lower priced product and expand this aggressive approach to other markets in Asia in the future.
Meanwhile, SoftBank is holding the keys to OpenAI’s next funding round which is targeting a $40 billion raise. The Japanese firm may cut the amount to $20 billion (still a huge amount) if the AI giant fails to restructure into an independent for-profit company by the end of this year.
Digital channels overtake TV on revenue in India
Digital channels surpassed television as the preferred platform for advertisers years ago, but only recently have they become the largest segment in India’s media and entertainment sector.
That’s according to data from EY on India’s media consumption habits.
The headline is that Indian consumers averaged five hours of mobile usage per day. Of that, nearly 70% devoted to gaming, social media and videos
China
Tencent is investing €1.2bn for a 25% stake in a new Ubisoft spin-off valued at €4bn, aimed at stabilizing the struggling French developer’s finances link
Tencent took part in an undisclosed funding round for robotics startup Agibot link
Qiming Venture Partners, an early investor in Meituan and Xiaomi, aims to raise around $800M-$1B for a new fund with a focus on Chinese AI link
China’s new deep-sea cable-cutting device is capable of severing heavily fortified underwater communication and power lines at depths of up to 4,000 meters—twice the range of existing subsea infrastructure. This the first unveiling of this kind and it could mark new ground in the global battle for capacity link
China’s Vivo aims to increase sales from overseas markets to 70% of revenue in two years—it currently makes around half of sales from outside China and it is focusing on growth in Southeast Asia and India link
China's cyberspace regulator published regulations governing the use of facial recognition technology, stating that individuals should not be forced to verify their identity using such technology—but the new rules do not mention security authorities, which have used the tech to track some ethnic minorities and suspended criminals link
Huawei lobbyists detained in EU corruption scandal—representatives are accused of offering cash, football tickets and smartphones to parliament staff link
It’s alleged that Huawei bosses were aware of alleged EU bribes link
Xiaohongshu’s global pivot: The unexpected TikTok ban winner fights to retain new users while navigating political risks and e-commerce hurdles before a potential IPO. link
SenseTime reported 2024 revenue of $524M, up 11% YoY but below the $620M estimate, and a wider-than-expected net loss of $592 million—losses narrowed after cost cuts, as competition in the AI market heats up link
TikTok founder Zhang Yiming is now China’s richest person, according to Bloomberg link
Blackstone is considering a small minority stake in TikTok’s US operations, joining ByteDance’s non-Chinese shareholders, including Susquehanna and General Atlantic, to bid for the business—their plan involves spinning off TikTok’s US unit and reducing Chinese ownership below the 20% legal threshold link
India
Quick commerce captured over two-thirds of e-retail orders last year, with its market share surging nearly fivefold to $6-7B since 2022, according to a report by Bain and Flipkart. Led by players like Blinkit (owned by Zomato), the sector also contributed 10% of total e-retail spending in 2024. link
Grocery delivery startup Apna Mart raised $25M from Fundamentum, Accel, and other investors link
The controversial 6% digital ad tax is being scrapped, easing costs for US tech giants like Google, Meta, and Amazon link
Samsung and its executives have been ordered to pay $601M in back taxes and penalties for dodging tariffs on telecom equipment link
Stockbroking platform Groww is exploring a $200M fundraise with GIC and Tiger Global among the potential backers—a deal could value it at $6.5B up from $3B in 2021 link
India’s semiconductor industry is growing but faces challenges like weak supply chains, talent shortages, global competition, and fast-evolving tech, Jefferies reports link
Times Internet spin-out Abound raises $14M to let more Indian Americans send money home link
The government plans to launch "Sahkar Taxi," a cooperative-based taxi service as an alternative to ride-hailing giants like Ola and Uber link
Krafton, the South Korean gaming giant behind PUBG and BGMI, has acquired over 75% of gaming studio Nautilus Mobile for $14M in an all-cash deal—the studio is best known for its Real Cricket franchise link
India criticized Elon Musk’s X for wrongly labeling an official website that notifies tech companies about harmful content as a “censorship portal,” court documents revealed link
An appeals court upheld a 2022 ruling by the Competition Commission that Google’s app store billing policy was unfair to developers, imposing a fine of $110M link
The government approved $2.7B in subsidies to boost electronics component manufacturing and create jobs—the scheme covers parts for displays, camera modules, enclosures, and circuit boards link
Southeast Asia
Apple says it has the go ahead to sell the iPhone 16 series in Indonesia from April 11 after a six-month block link
Malaysia rejected a $10M ransom demand following cyberattacks that caused outages at Kuala Lumpur International Airport (KLIA) starting March 23, according to a joint statement from the National Cyber Security Agency (NACSA) and Malaysia Airports link
Grab is seeking a loan of up to $2B to fund a potential takeover of Indonesian rival GoTo, according to sources link
Documents and insiders reveal how Cambodia-based Huione Group, linked to one of the world’s largest crypto scam networks, launders money and evades detection link
Vietnam will soon allow SpaceX's Starlink satellite internet service link
Thai officers intercepted Starlink transmitters that were allegedly headed for Myanmar scam centers link
Malaysia plans to tighten semiconductor regulations amid US pressure to curb illicit chip flows to China, especially high-end Nvidia chips link
BCG co-authored a report on startup venture capital in the Philippines. link
Indonesia appointed billionaire Ray Dalio and economist Jeffrey Sachs as advisers to its new $900B sovereign wealth fund, Danantara, to address investor concerns over governance—Chapman Taylor of Capital Group and former Thai PM Thaksin Shinawatra joined its advisory council, while ex-presidents Joko Widodo and Susilo Bambang Yudhoyono join the steering committee link
Meta’s top Asia-Pacific business executive, Dan Neary, is stepping down after a decade-long tenure link
Top chipmakers, including TSMC and Intel, are slowing expansions in Japan and Malaysia due to weak demand for older chips and tariff uncertainties—chip packagers ASE and SPIL are also pausing Malaysian growth as many suppliers shift to a “wait and see” strategy link
South Korea
Korean chip startup FuriosaAI rejected an $800 million takeover offer from Meta, opting to remain independent link
Samsung Electronics co-CEO Han Jong-hee died of cardiac arrest aged 63—he led the consumer electronics and mobile division, while co-CEO Jun Young-hyun oversees the chip business link
Japan
SoftBank plans to invest over $1T in AI industrial parks across the US, Nikkei reported—CEO Masayoshi Son will reportedly visit the US to discuss the plan, which is said to include AI-powered autonomous factories to address labor shortages link
Taiwan
TSMC’s pledge to spend an extra $100B on advanced manufacturing plants in the US will do little to help the country restore its global lead in chipmaking, according to Pat Gelsinger, who was forced out as chief executive of Intel late last year link
Taiwan is investigating whether China’s top chipmaker, SMIC, illegally recruited local engineers to access advanced chip technology link
Hackers have been targeting users in Taiwan with PJobRAT malware delivered through malicious instant messaging apps, according to new research link
Rest of Asia
An Asian telecommunications company was allegedly breached by Chinese government hackers who spent four years inside its systems, the incident response firm Sygnia link
Good coverage Jon. I just wrote about this too. Wondering if the startups will find a viable product in their new found niche.