Nvidia may finally have a lower-spec AI chip it can sell in China
Airwallex bucks funding winter to chase growth and Xiaomi goes big on R&A
Welcome back,
Nvidia is in the news as it finally may have an AI chip for China that’s suitably underpowered enough for the US government to be okay with it. But has it already allowed Huawei to take advantage—and might Huawei also find customers outside of China for its rival AI chips?
Also in this week’s issue, Xiaomi is pouring tens of billions more into R&D after it showcased a phone chip it says it competitive with Apple’s custom silicon; cross-border payment giant Airwallex bucked the fintech funding freeze with another $150 million to expand into Latam and other markets; and Southeast Asia has a big new fund that wants to take traditional VC risks with early-stage startup deals.
There was no newsletter last week as I was down with Covid, which was worse for me than during the pandemic—extreme fatigue. It’s going around Asia so be careful, folks.
Have a great week—best,
Jon
PS: I’ve been spending stablecoins more than ever lately—and KAST is what I use. It works with Apple/Google Pay, takes under 5 minutes to pass KYC, and if you sign up with my referral code, you get a $15 bonus plus 20% off a physical card. Disclosure: I consult for KAST, but this isn’t a paid plug—I just rate the product and use it daily.
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News in Focus
Nvidia plans new lower-spec chip for China
You could almost feel sorry for Nvidia. It continues to be the world’s hottest business, but it is navigating a tough situation that seems to lead to a hiding to nowhere.
After the US government cracked down on allowing China access to cutting-edge US tech, its status in the country looked fraught so it designed, built and sold a lower-powered chip that was acceptable to the US government and useful enough to Chinese companies.
Only to find that the US government would change its mind. The H20 model that it built for China was too much.
Now it plans to launch an even cheaper AI chip for the Chinese market—down from $10k-$12k from the H20, to just $6.5k-$8k. Reuters reports that the as-yet-unnamed chip has “lower specs, simpler production and uses standard GDDR7 memory.” It reports mass production could come in weeks.
The government plan seemed to be to kneecap China and restricting the tech it could use to develop Ai systems, models and more. But it is widely seen as having actually done the opposite. Nvidia’s own CEO, Jensen Huang, said last week that the chip export bans have actually made Huawei and other chip firms in China stronger. Allowing and then restricting kit from Nvidia and others created a void that China’s home tech firms are stepping up to fill, with little to no competition.
This is not new to regular ATR readers, who also know that China’s self sustainability push will take years if not decades, but Huang is pretty vocal—because it is hurting his business not only now, but in the future.
Despite his pleas, the White House will continue to restrict tech exports to China. But, in a new twist, China said it will take action against the US if it puts curbs on Huawei’s AI chips, which are finding a market beyond Mainland China.
Airwallex lands $150M to chase Latam and other markets
Airwallex is one of the fastest growing startups I can recall in Asia, although it maintains strong links to China where its co-founder and CEO Jack Zhang is originally from—it just raised $150M at a valuation of $6.2B, up from a previous $5.6B in 2022.
It started out solving cross-border currency issues for Zhang’s coffee shop, but it has grown into a much bigger project that effectively allows companies to bank locally in any country across the world using just its platform. It has reached 150,000 customers and is on track to hit $1 billion in annual run rate revenue.
Airwallex is positioning itself as “a full-stack operating system for global businesses” and its pretty hard to get a solid read on how that plays out for net profit and losses whilst it is in a continuing growth period. The plan is to go beyond Asia and attack Latin America—with one impending acquisition—but it is not alone in targeting that region so we shall see how it plays out.
There’s a good analysis in Forbes (yes, Forbes) from Singapore-based fintech expert Zennon Kapron.
Xiaomi goes big on R&D
Xiaomi is going big on R&A after it revealed plans to invest nearly $28 billion into core tech over the next five years.
The Chinese electronics giant just announced its first electric SUV and mobile chip, and now it plans to build its moat even deeper with its own home-grown innovation rather than relying on others. Xiaomi phones are not slouches, but the company has also perfected its marketing and it knows what areas to attack to showcase its prowess against bigger rivals like Apple. You’d be hard pushed to say a Mi phone is better than a top range iPhone, but its fan and some features do out-perform Apple. And it made the same claim for its new chip.
Founder Lei Jun presented data that he said shows Xiaomi’s XRing O1 chip equals Apple’s Apple’s A18 Pro in many tests and beats it “by a large margin” in others.
Xiaomi’s chip was four years in the making, and it does not want to stand still there.
The firm went public at around $50 billion valuation in 2018. That was considered underwhelming, and today it is worth around $170 billion—so clearly it has gone beyond merely being a phone company. Other questions are whether it can truly crack EVs, and if there’s desire to reverse its struggle in markets like India where it once ruled as king.
Headline Asia has new $145M fund
Southeast Asia is going through a tricky period, with big name IPOs struggling, few exits, lower investment and regular coverage of startup fraud. This warrants a longer discussion, but there’s some positive news after Headline Asia, a Japan-based fund, announced a new $145M fund to spend.
The focus is on early-stage deals in Southeast Asia, Japan, Taiwan and South Korea with $1M-$15M the cheque size.
In an interview with TechCrunch, co-founder Akio Tanaka said the fund will continue to take classic, risky startup deal bets rather than the more conservative type deals that we’ve seen more of lately.
Personally, I don’t see so many startups buzzing around the region these days so I’m quite curious to watch how the fund is deployed. But great news if you’re a founder.
China
Obvious but important to note: China’s smartphone export volume to US, including Apple’s iPhones, plunged to lowest since 2011 during April link
We wrote recently that Huawei’s newest innovation was a PC running on its own operating system and now it is formally launched HarmonyOS as a replacement for Microsoft Windows in China—the OS is compatible with over 2,000 apps on Huawei’s smartphone, and it will debut with the MateBook Fold, a laptop with an 18-inch OLED screen that will sell for around $1,100 from 6 June link
Ant Group’s international arm is rumoured to be preparing to go public so the leaks are coming—the unit is said to have generated nearly $3B in 2024 revenue with two consecutive years of adjusted profit, sources said link
Energy giant Huaneng Group launched the world’s largest fleet of 100 driverless electric mining trucks in Inner Mongolia, equipped with Huawei’s autonomous driving technology and smart battery swapping link
China has been strict on what AI services can do so it’s notable that authorities reportedly found that top AI chatbots from Zhipu AI and Moonshot AI collect excessive and unauthorised user data, including info unrelated to their functions—together they reach around 35M users link
Zhejiang is already home to Alibaba and DeepSeek but now it is investing big to lure more AI companies and talent link
Shenzhen is ramping up its focus on AI hardware companies and tech link
But Shenzhen is known for other less positive things: this FT articles looks at look at how iPhones snatched from the streets of London, New York and other major Western cities are ending up in a single building in the province link
TikTok told its US-based e-commerce staff to work from home ahead of expected layoffs as it streamlines operates in the market following changes from tariffs link
Alibaba’s Amap, a mapping and navigation app offering local services like traffic updates and route planning, has added ride-hailing to its English version link
Flying taxis could be used for public transport within the next five years on the mainland, according to a senior executive of Chinese passenger drone maker EHang link
The FTC will bar Chinese labs deemed to be a risk to national security from testing electronic devices for use in the US link
The EU is escalating its warnings to Shein as it continues to investigate consumer protection issues around the online selling platform link
India
Rest of World looks at how Mukesh Ambani, India’s richest man, has been unable to crack e-commerce despite multiple digital plays which include a much-heralded partnership with Shein, which returned to India’s with Ambani’s Reliance some five years after being banned link
Foxconn is investing $1.5B in its India unit as it continues to shift production from China link
Zepto has been India’s startup golden child in recent years, at least from investors, but a backlash is coming from drivers—after workers in Hyderabad held a strike over payout cuts, labour rights violations link
PhonePe may have the backing of Walmart, but analysts say it remains too reliant on its payment business as it prepares to head to IPO—financial services is seen as the key area where it can unlock revenue and growth, particularly when looking at rivals which see credit and other areas generate more than just financial services. These are key as the company moves towards valuations and pricing for its planned listing link
Fintech startup Data Sutram raised $9M from B Capital, Lightspeed and others link
Southeast Asia
Vietnam ordered its telecom providers to block Telegram for failing to cooperate in tackling user-related crimes—word people on the ground (including Vietnam Weekly author Michael Tatarski) suggests the block is active and can only be circumvented using a VPN link
Singapore’s CapitaLand Investment is seeking $200–$250M to build data centers in India link
Grab and GoTo faced mass driver protests in Indonesia, with over 25,000 drivers logging off platforms to demand better pay and conditions link
Indonesians are being tricked into scam compounds overseas through social media jobs that advertise attractive IT roles link
Malaysia announced plans to launch a national AI system using Huawei chips but quickly backtracked, revealing the tightrope it walks in the US-China tech race link
Foxconn is said to among potential bidders for Singaporean chip assembly firm UTAC in $3 billion deal, sources say link
Japan
SoftBank founder Masayoshi Son has proposed a joint US-Japan sovereign wealth fund to invest in tech and infrastructure, according to sources link
South Korea
Bithumb is regaining ground in South Korea’s crypto market as plans an IPO by the end of this year—its trading volume is up to an estimated 25% from single-digits two years ago link
Korea will introduce stricter rules for crypto anti-money laundering and know-your-customer verification as it prepares to allow institutional investors to trade link
President Trump has said that US tariffs on Apple devices will also apply to Samsung link
Pakistan
Pakistan has earmarked 2,000 megawatts of power for Bitcoin mining and AI data centers as it works to legalize crypto and draw foreign investment—inspired by the example of Bhutan and others to embrace crypto and tech. With investors and data firms rushing to cosy up the government, it does raise the question around the ethics of what funds raised will be used for… link
Taiwan
Computex has gone from being a handset geek event to Asia’s biggest AU showcase—Bloomberg has five key takeaways, which will all make sense to those following the industry in any reasonable way link
Consumer AI needs more time
DeepSeek changed AI
China looms large
Taiwan is on the charm offensive
And whether we have overestimated the need for datacenters?
As part of the show, Nvidia announced that it will partner with Foxconn and the Taiwan government to build an AI supercomputer link
Nvidia would better reward its shareholders by moving its HQ to China. Why aren't shareholders demanding that?