Chinese firms find loopholes to get US AI tech
Chinese firms find loopholes to get US AI tech
ByteDance and others are renting chip tech from Nvidia and others to skirt US sanctions
Welcome back,
This week’s newsletter looks at how Chinese firms are using a previously unknown loophole to get access to chips from Nvidia and other firms that are banned from doing business in China.
We also have the details on Amazon’s newest bit of bargain M&A hunting, India as the testbed for AI services for businesses on WhatsApp and Samsung’s first-ever worker strike. My other news picks this week include a dating app for singles in Tokyo that’s run by the government and requires you to turn in your tax returns; fintech Nium looks headed for an IPO; and my ex-colleague Alex Wilhelm looks at the numbers behind manga startup Webtoon’s upcoming IPO—check out his newsletter if you’re into tech and business.
Catch you again next week,
Jon
PS: Follow the Asia Tech Review LinkedIn page for updates on posts published here and interesting things that come our way. If you’re a news junkie, the ATR Telegram news feed has you covered with news as-it-happens.
News in focus
Chinese firms find loopholes to get US AI tech
The US government may have stopped chip firms like Nvidia from selling to customers in China, but ByteDance and others who seek the technology to develop AI services and features have found a loophole: renting.
The Information reports on this previously overlooked trend:
Some big Chinese tech firms have taken advantage of that loophole, or tried to. ByteDance, owner of TikTok, has been renting Nvidia’s best chips from Oracle for AI computing, according to two people with knowledge of the arrangement. China Telecom, a large state-owned wireless carrier, has sought a similar deal with other cloud providers, said two people who were involved in the talks. Meanwhile, Chinese cloud providers Alibaba and Tencent have held discussions with Nvidia about potentially obtaining such chips for data centers they would operate in the U.S., according to a person who has been involved in the talks.
The fact this happens on US soil, appears to be the loophole. So ByteDance being expelled from the US, for instance, could thwart this current arrangement. It’s another example of the complicated entanglement between the US and China.
India becomes a testbed for WhatsApp’s AI push
Meta is blowing the lid off its AI plans and WhatsApp is its trojan horse—that has interesting implications for India, which is the messaging app’s top market in terms of sheer user numbers.
WhatsApp got a raft of new features over the last week with a major focus on the business side. WhatsApp has already established a strong footprint in India connecting companies and their users, and now it wants to see if adding AI will supercharge that push. The newly announced features include an AI assistant for handling those customer interactions, questions and more. India, Singapore and Brazil will be the first markets where it is tested.
There are already a handful of customers testing these features in India, TechCrunch notes, but it’s particularly interesting that the focus is on merchants who might not want additional tools—and they are being offered for free. For now, at least.
Free certainly works for initial adoption, but there is a tale of caution around WhatsApp’s authentication feature, used instead of SMS and other one-time password (OTP) services for cases like user sign-ins or authentication. A price hike earlier this year has seen customers like Amazon, Google and Microsoft migrate away from WhatsApp.
Amazon buys fallen streamer MX Player in fire sale
Perhaps it goes without saying that Amazon, the world’s foremost e-commerce expert, likes a good bargain. A lot of its M&A consists of deals on the cheap and it is back on that beat after it acquired video streaming service MX Player in India.
TechCrunch reported the deal is less than $100M. That’s a long way short of its previous valuation of $500M, that is from nearly five years ago when MX Player raised $111M from Tencent and majority owner Times Internet.
Amazon did confirm it acquired “some assets” from MX Player but not the entire firm. That will apparently include some executives from the startup, as well as the content libraries, users etc.
Streaming is a boom or bust industry that has seen plenty of casualties in Southeast Asia. Tencent, for instance, picked up the assets of fallen Southeast Asian streamer iFlix in a similar fire sale deal in 2020. Korean e-commerce giant Coupang bought the remains of iFlix former rival Hooq, too.
MX Player’s circle of life is now complete.
Samsung workers hold first-ever strike
Samsung workers went on strike for the first time in the company’s history. The National Samsung Electronics Union (NSEU), the largest of a number of Samsung unions, called for the one-day strike on Friday as negotiations over pay bonuses and time off hit a standstill. It wasn’t clear how many of the union’s nearly 30,000 workers went on strike, but it was still an historic moment as Samsung battles to compete with global rivals on AI.
China
US venture capital firms are putting pressure on tech startups to cut ties with Chinese backers as they anticipate tighter controls on foreign ownership from Washington link
HeyGen, a generative AI startup that was founded in Shenzhen during the pandemic but has since moved to Los Angeles, asked its Chinese investors — IDG Capital, Baidu Ventures, Sequoia Capital’s former Chinese venture capital arm HongShan and ZhenFund — to sell shares to US counterparts.
The AI video start-up, co-founded by former Snap software engineer Joshua Xu, completed a funding round led by Silicon Valley’s Benchmark in March, during which early-stage Chinese investors dramatically reduced their stakes through sales to US VC firms.
Shut out of the US by tariffs and facing a backlash in Europe, Chinese carmakers could end up dominating many emerging markets link
A key semiconductor industry event in China attracted a smaller number of exhibitors this year, reflecting local market challenges and a desire to stay out of the limelight amid intensified US export restrictions link
Delivery giant Meituan beat estimates to post 25% quarterly revenue increase link
Some of that growth is from cheap ‘group orders’ from restaurants, that is helping reach a new price sensitive audience but drivers are said to be working longer and for less link
Meituan users place group orders by sharing links with people who live nearby, and enjoy a big discount if two to four people end up ordering the same things together. The goal is to make delivery so cheap that even frugal or low-income buyers could afford frequent orders. “Eat well for 9.9 yuan ($1.4) and no delivery fee,” the program’s tagline reads.
Alibaba says its new AI model Qwen2 beats Meta’s Llama 3 in tasks like maths and coding link
ByteDance is raising between $700M-$800M for its online auto information and marketplace business Dongchedi in preparation for an IPO link
As China’s internet disappears: ‘We lose parts of our collective memory’ link
The number of Chinese websites is shrinking and posts are being removed and censored, stoking fears about what happens when history is erased. China's internet had 3.9M websites in 2023, down ~27% from 2017; Chinese-language websites were 1.3% of the global total, down 70% from 4.3% in 2013
Kuaishou, China’s second largest video app, launched a Sora-style service that turns text prompts into up to two minute videos link
WeChat now requires users to disclose AI-generated content to combat misinformation link
A group of 22 Chinese nationals plead guilty to running internet scams out of Zambia link
India
India's commerce secretary says strong economic growth is attracting domestic startups to redomicile as Indian businesses, having previously registered abroad for access to capital and tax benefits—we wrote about this trend last week link
Speaking of reversing trends, Byju’s—once India’s highest valued startup at $22B—could be worthless according to HSBC and BlackRock, one of its investors; I generally ignore these valuation write-down reports but this one is significant given the extremity link
Temasek and Fidelity bought $200M stakes in Lenskart at $5B valuation—the deal was a secondary share purchase and it follows a $500M investment in the eyewear maker last year link
SaaS startup Testsigma raised $8.2M led by MassMutual Ventures link
Lending startup Fibe closes $90M financing in mix of primary and secondary transaction link
Opening a new front to Make in India, the country’s biggest telecom companies—both led by billionaires—are primed to challenge Elon Musk’s Starlink by launching satellite internet services over the next year link
India is outpacing Japan, Singapore and Hong Kong in data center investment, according to a new industry report, a trend driven by major funding commitments by global heavyweight Amazon and domestic conglomerates like Reliance Industries link
India's data center boom was inevitable, analysts said, due to its internet-savvy population accelerating its consumption of payments, e-commerce and other digital services, and tech companies setting up offices in the South Asian nation, drawn by its large talent pool.
Southeast Asia
Fintech startup Nium raised $50M from new backers in what looks to be a pre-IPO round—the valuation came in at $1.4B, still a unicorn but 30% less than its previous $2B-valued round in 2022 link
NXP is teaming up with a company partly owned by TSMC to build a $7.8B chip wafer plant in Singapore link
Following the lead of Microsoft, Google and others, ByteDance has picked Malaysia for a new AI hub that it will invest more than $2B to develop link
McEasy, an Indonesia-based startup that provides SaaS solutions for logistics operators and vehicle tracking, raised $6.5M link
South Korea
Travel startup Yanolja is shooting to raise $400M from a US IPO that could happen as soon as July and at a valuation of $7B-$9B link
AI startup Wrtn raised $18.3M for its app that helps students and young creators with content generation, editing and research—it claims 3.7M in Korea and Japan link
Japan
DearMoon, a private mission to travel around the moon funded by a Japanese billionaire that would have featured passengers including DJ Steve Aoki, has been cancelled due to ongoing delays link
The Tokyo government is launching a dating app in a bit to boost birth dates—users will need to prove that they are single and submit a tax return to show their salary, a common piece of information used in dating apps in Japan link
Crypto exchange DMM Bitcoin says it will pay back $300M lost following a hack using loans and new fundraising link
Activist investor Elliott has rebuilt stake in SoftBank to around $2B and now it is pushing for a $15B share buyback initiative—it made a similar move in 2020 and it is going at it again while SoftBank is on a high from a 50% share price jump this year thanks to its 90% ownership of surging chip firm Arm link
Taiwan
Two Taiwan-born tech CEOs are battling for the future of AI—Nvidia’s Jensen Huang and AMD’s Lisa Su, who both descended on Taipei for the Computex show last week link
At the show, Huang said that ‘AI factories’ powered by Nvidia’s chips and software is ‘in our near future’ link
TSMC says it has discussed moving fabs out of Taiwan, in the event of an emergency such as a Chinese attack, but it ruled such a move out as it is impossible link
That isn’t stopping TSMC though, as its share hit a record high on the growing demand from AI link
RoA
Ride-hailing is about being on the front foot as this story on how Careem went from Pakistan’s ride-hailing leader to an also-ran shows link
Within this short span, new entrants like inDrive and Yango have taken over the ride-hailing sector in the world’s fifth most populous nation, with Careem lagging at a distant third. Careem currently has just 373,920 daily active users in Pakistan, as compared to over 2 million for inDrive, according to data analytics platform Data.ai.
Bangladeshi police agents stand accused of selling citizens’ personal information on Telegram link