OpenAI is setting up shop in Singapore
ChatGPT creator’s office is for Asia growth—plus report resets SEA tech expectations and more
Welcome back,
A bank holiday in Bangkok plus the chaos of half terms means we are coming to you this week on a Wednesday afternoon! Better late than never, as they say.
This week’s issue is packed with analysis and news for Southeast Asia, including word of ChatGPT’s new office and links to Grab, and a new report on startups in Southeast Asia that a Gojek co-founder says would have changed the way he ran the business.
Enjoy the rest of your week,
Jon
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News in Focus
OpenAI is opening an office in Singapore
OpenAI is getting serious about Asia after it announced plans to open an office in Singapore before the end of the year. This will be its second office in Asia following Tokyo and its fourth international outpost.
The Singapore operations will be led by Oliver Jay, a former executive at Asana and board member at Grab. The company is already hiring talent to staff the office, which will have a more regional role than the Tokyo office, which primarily serves growing demand from Japanese corporate clients. An OpenAI spokesperson told ATR that Singapore was the “obvious choice” as its Asia Pacific HQ, and it is hard to imagine the company picking another location.
OpenAI is also likely to engage with governments in the region, which, as we’ve noted for most of this year, have seen a tremendous growth in funding for cloud related projects from the likes of Google, Microsoft and Amazon.
The connection with Grab is interesting since the ride-hailing firm announced a partnership with OpenAI back in June. We speculated at the time that this could be the first of many—Grab is arguably the biggest tech brand in the region, despite its share price struggles—and that looks like it will happen with this localisation.
Lightspeed report ‘resets’ expectation on Southeast Asia startups
VC firm Lightspeed released an inaugural report on Southeast Asia’s startup scene entitled ‘Resetting Expectations’—as the name implies, it looked at the state of the market following a downturn in funding and economic uncertainty.
What particularly caught my eye were comments from Kevin Aluwi, one of the founders of Gojek who is now a venture partner with Lightspeed, who said he “definitely would have made different decisions” at Gojek had he been armed with the information that emerged from the report:
Believing the hype that reports over the past decade were saying about Indonesia and Southeast Asia led me to make many wrong decisions while building Gojek. The narrative that the Southeast Asian consumer class will be the next China or India was, at best, decades early, or at worst, dead wrong. These overly optimistic assumptions about the region led founders, operators, and investors to allocate capital (in the form of marketing, hiring, and fundraising/investing decisions) in a way that was out of touch with reality - leading to the disappointments that all of us in Southeast Asian tech share today.
That’s quite the conclusion. Personally, I’ve never thought Southeast Asia is China or India in terms of economic clout or startup potential, but I can certainly see how a startup raising billions from investors needed to be bullish on its markets.
The report itself is here and some of the takeaways include:
Capital Efficiency: Southeast Asian tech companies have been significantly less capital efficient than their Chinese counterparts, generating only half the value per dollar invested
Network Challenges: “Southeast Asia’s economic centers pale in comparison to India and China, making it harder to generate the network effects necessary for scaling digital businesses.”
Monetizable Users: “Despite significant usage increases, very light users of digital services still represent the majority of the population across Southeast Asia, indicating room for growth.”
Ad Revenue Growth: “Online advertising has become an essential high-margin business model, with digital ad spend growing upwards of 14% annually across Southeast Asia, and over 20% in Indonesia and Vietnam.”
Southeast Asia’s billion-dollar cyberfraud industry grows as criminals embrace cutting-edge tech
In a new report, the UN Office on Drugs and Crime highlights the alarming growth of cyberfraud in Southeast Asia, with crime syndicates integrating advanced technologies into their operations. This shift has made fraud and money laundering even harder to detect, while the region has become a testing ground for new criminal tactics.
Cybercrime syndicates are ramping up their operations, accumulating an estimated $37 billion last year, according to the report. Despite increased law enforcement efforts, organised crime in the region is evolving rapidly, with criminal groups adopting new technologies to stay ahead. The UNODC highlights how the Mekong region—comprising Myanmar, Cambodia, and Laos—has become a key hub for scams, crypto fraud, money laundering, and illegal gambling since the pandemic.
These syndicates are now leveraging advanced tools such as malware, generative AI, deepfakes, and cryptocurrencies to launder money. The region’s cyber-fraud industry is growing so quickly that law enforcement is struggling to keep up. Transnational criminal groups have not only relocated their operations as needed but are also benefiting from a thriving “crime-as-a-service” ecosystem, offering specialised services to support their fraudulent activities.
Additionally, platforms like Telegram have transformed how organised crime operates, enabling large-scale illicit activities with ease.
China
China-backed hackers have infiltrated the wiretap systems of several U.S. telecom and internet providers, potentially gaining access to sensitive information about American citizens. These systems, designed to monitor communications under a 30-year-old U.S. law, grant a select few employees extensive access to customer data, including internet traffic and browsing histories. For technologists who have long raised alarms about the vulnerabilities of such backdoors, this breach is the stark realisation of their worst fears—a moment they had warned was inevitable. link
U.S. officials are in damage control mode after discovering the hack. Congress is now raising concerns about a possible counterintelligence failure, adding to the urgency. The hacking group, known as Salt Typhoon, managed to maintain access to parts of the networks as recently as last week, leaving investigators scrambling to figure out what their endgame might be. At this point, no one is quite sure just how deep this breach goes—or what the hackers were really after. link
TikTok is said to have set aside $1B to pay regulatory fines in Europe while facing a barrage of investigations and lawsuits across the continent and US over TikTok’s mishandling of children’s data. link
Xiaohongshu, China’s Instagram-like app, saw revenues soar to $1bn in Q1 2024, driven by increased advertising aimed at Gen Z women—it reported $200M in net profit on $1B in sales, up from $40M on $600M last year, according to sources familiar with the figures
For more context, Rest Of World offers insight into how Xiaohongshu is influencing Chinese tourism in Southeast Asia. link
Pinduoduo’s price-cutting strategy has fueled its rapid growth, highlighting a broader issue contributing to China’s worsening deflation link
Neil Shen’s HongShan Capital Group—formerly Sequoia China—is opening a London office to explore European investments, focusing on late-stage and private equity deals in sectors like consumer, healthcare, and new energy link
Baidu plans to expand its Apollo Go robotaxi service beyond China, aiming to compete globally in the autonomous vehicle market link
Chinese AI startups like MiniMax, ByteDance, and 01.ai are expanding into the US market to boost revenue, following TikTok’s global success link
Huawei's Android-free 'HarmonyOS NEXT' will go live next week link
Shein's UK business generated £1.55B ($2B) in revenue in 2023, according to a filing link
The European Union has dialled up scrutiny of Chinese ecommerce marketplace Temu, asking for more information about its compliance with multiple provisions of the bloc’s online governance framework link
Lazada is courting top European fashion brands to fend off Asian competitors and reach its $100B e-commerce target by 2030 link
Apple has opened an applied research lab in Shenzhen to strengthen its presence in China’s competitive smartphone market, particularly against rivals like Huawei link
Hikvision is reportedly cutting over 1,000 R&D jobs in China as the US-sanctioned company faces business pressures from geopolitical and economic challenges link
India
Amazon has merged MX Player, which it acquired earlier this year, with its miniTV service to launch ‘Amazon MX Player’—it claims the two services combined had 250 million unique users in September. link
Digital-asset trading and brokerage firm FalconX is hunting for acquisitions as he anticipates that the cost of doing business in crypto will rise as more institutional players enter the market and regulations tighten link
Andrew Ng's ‘AI Fund’ made its first investment in India after backing AI healthcare firm Jivi link
A lawsuit filed in Delaware federal court accuses a software company controlled by Indian entrepreneur Byju Raveendran of diverting funds from its US affiliates in violation of bankruptcy rules link
The court-appointed trustee claims nearly $700,000 meant for creditors was transferred to Whitehat Education Technology. This is part of a larger battle between Byju’s and lenders owed over $1.2B, who have been trying to recover $533M allegedly concealed by the company.
Meanwhile, the founder says that the missing millions from the $1.2B loan went to legitimate business purposes, including expanding in North America link
The IndiaAI Datasets Platform, a key part of the government’s IndiaAI Mission, will launch by January 2025, according to Nand Kumarum, CEO of the National eGovernance Division—it aims to be similar to HuggingFace by providing datasets and AI models for developers to create, train, and deploy their own models link
Reliance Retail is said to be targeting the quick commerce market link
Nykaa and Licious don’t do food but they too have had to increase their quick commerce game as consumers demand instant gratification link
Payments firm Tonetag is raising $50M from Iron Pillar and others at a valuation of at least $200M, double its previous valuation link
PhonePe is buying digital development studio Obvious in an undisclosed deal—you don’t often see agencies sold so this is quite a unique deal link [hat tip Chandra in the ATR chat group for raising this]
VC firm Z47—formerly the Indian wing of Matrix—has reportedly put stakes in some portfolio companies up for sale with a view to raising $150-$180M from deals link
Star Health, India's biggest health insurer, said it received a ransom demand of $68,000 from a cyberhacker in connection with a leak of customer data and medical records link
The hacker claimed Star Health’s chief information security officer sold the data to him—that’s being investigated but so far there’s no evidence of wrongdoing link
Southeast Asia
A major AI hub is emerging in Malaysia’s Johor, traditionally known for palm-oil plantations, with Blackstone and TikTok’s parent among the investors in new data centers link
Indonesia has apparently asked Apple and Google to block China's Temu in order to protect their small merchants link
Philippine chipmakers are embracing automation and leaving low-skilled workers behind—the industry employs over 3M workers, and accounts for about a fifth of the country’s GDP link
Line Man Wongnai, a major on-demand player in Thailand, posted its first gross profit amid 20% revenue growth—the business has long been linked with an IPO, so all the numbers may come out soon link
Salmon, a Philippines-based consumer lending startup, raised $30M in Series A2 funding from IFC and Lunate link
ByteDance has laid off more than 700 workers from its Malaysian unit as the company shifts focus towards greater use of AI in content moderation link
South Korea
Samsung aimed to dominate the memory and logic-chip industries by 2030 but has fallen behind TSMC, which now controls 64% of the global foundry market. Samsung's market share dropped to 10%, and cost-cutting delays in key facilities have slowed its progress in advanced manufacturing processes link
Samsung warned that its third-quarter profit will fall short of expectations, citing delays in AI chip orders and rising competition from Chinese chipmakers link
Liner, an AI search engine for students and researchers, raised $29M—its largest and fastest-growing market is the US, with 10M users at universities like Berkeley link
VESSL AI raised $12M for its MLOps platform that aims to cut GPU costs by up to 80% link
Samsung Electronics says it is not interested in spinning off its foundry business link
Spotify has begun to offer a free streaming option in Korea link
South Korea is could lift its ban on spot crypto ETFs, according to a report link
Japan
Saudi Arabia’s sovereign wealth fund disclosed it’s sold down its stake in Nintendo, days after a senior executive said it was weighing deploying more capital into the Kyoto-based game company link
Chipmaker Rapidus and auto supplier Denso will collaborate on designing advanced chips for AI and self-driving vehicles, as part of an eight-member group—this is the first time Japanese companies are leading efforts to standardise advanced chip design link
Rapidus's Japan chip plant may bring $120B economic windfall, but doubts remain link
Taiwan
A review of the annual Hon Hai (aka Foxconn) technology day, which this year has a big focus on servers and cars as well as the usual iPhone tech link
Foxconn says it is building the world's largest manufacturing facility for Nvidia's GB200 link
TSMC’s Sales Beat Estimates in Good Sign for AI Chip Demand link
Taiwan’s government reported that four Foxconn employees have been detained in Zhengzhou, China, under “strange” circumstances—the Mainland Affairs Council said they are suspected of a “breach of trust,” possibly linked to corruption and abuse of power by a few Chinese security officials link
Tim Culpan, former Bloomberg columnist and friend of ATR, has more details including the suggestion that the arrests could be politically motivated, and even linked to a trend that’s seen local governments kidnapping businesspeople to raise revenue link
Rest of Asia
The US has seized $2.7M in digital assets that were stolen in hacks by North Korea’s Lazarus and then moved through Tornado Cash and other mixers link
Good write up! So many big tech are setting up HQ in Singapore given the proximity to all the data centers in Johor, Malaysia. It’s crazy how much energy it’ll consume regionally but also the injection of intl tech talent/ capital will really drive innovation and energy into the region hopefully!
Thanks Jon. You too have a great week!