Nvidia’s outlook in China and Japan’s power chip problem

August 21, 2025 17:20 JST

Hi everyone! This is Lauly, sending greetings from humid and warm Bangkok where I am on a reporting trip.

I experienced one of the worst traffic jams I can recall on my way from the airport to the hotel on Tuesday. The trip was supposed to take around 40 minutes but ended up taking an hour and 45 minutes. There were several spells in the bumper-to-bumper traffic where we could only inch forward as I jealously watched motorcyclists zipping by us. I thought about how suppliers had warned me that the traffic situation would be a downside to developing Thailand’s tech manufacturing industry, as it would drag down the efficiency. That might be true.

At one point, I tried to think positively and enjoy watching the blossoming magnolia trees along the road. They reminded me of a small bouquet of chrysanthemums I bought a few days ago at a florist’s shop in Taipei, with beautiful peach and salmon-pink flowers.

Speaking of flowers, I was surprised when I entered the florist and saw how small the selection was. The owner explained to me that typhoons and numerous floods in central and southern Taiwan since early July had severely damaged agricultural goods, including flowers. This was unusual considering Taiwan hasn’t been hit by so many typhoons in years. Fewer typhoons had led to serious droughts that endangered the tech and chip supply chain.

Extreme weather has hit much of the region. A friend working for an airline in Hong Kong told me that a “black rain” warning, which means extremely heavy rain, delayed her flight duty to Beijing for hours. Once passengers had boarded, they were stuck on the ground for several more hours as the bad weather continued before the airline finally decided to postpone the flight to the next day.

Back in Taiwan, there is an escalating debate over the use of nuclear energy. A public referendum to be held on Saturday will ask voters if the Third Nuclear Power Plant should continue operating after authorities confirmed there are no safety concerns with the plant. Nuclear power has always been a highly politicized issue in Taiwan, with sharp divides between the ruling Democratic Progressive Party and the opposition Kuomintang and Taiwan People’s Party.

T.H. Tung, chairman of iPhone assembler Pegatron, has been a strong advocate for nuclear over the past two years, saying it would enhance the island’s energy security and support its vital chip and AI industries, which are both very power hungry. The tycoon even attended a televised debate last Friday against DPP lawmaker Chuang Jui-hsiung convened by the Central Election Committee for the upcoming referendum.

Energy is a critical issue for other Asian economies that aim to develop their AI and high-tech industries, as Nikkei Asia reported earlier. Every economy wants to seize the once-in-a-generation opportunity to have its own AI capabilities and build a supply chain outside of China, but they will have to face the question of whether they can secure enough clean energy to sustain economic growth and combat global warming.

Still hungry

Despite the Chinese government’s unexpected public warning over alleged “security” issues with Nvidia’s H20, a downgraded AI chip specially designed for the Chinese market, demand from local tech giants remains strong, write Nikkei Asia’s Cissy Zhou, Yifan Yu, and Lauly Li.

Nvidia, the world’s dominant AI chip provider, has been feeling the geopolitical heat lately. It recently struck a deal with U.S. President Donald Trump to pay 15% of the sales of H20 to the U.S. government in order to resume selling the chip to the Chinese market.

Not long after, Beijing summoned Chinese tech companies like ByteDance, Alibaba, Tencent and Baidu to discuss their use of Nvidia chips and encourage them to use more homegrown options, sources said.

The silver lining for Nvidia is that Beijing was not issuing a ban but rather “advice” on the company’s products, and Chinese tech companies’ pent-up demand for the H20 and upcoming Blackwell chips remains strong, according to industry sources.

Chip chats

SoftBank’s billionaire founder Masayoshi Son held talks with Intel’s chief executive about buying its faltering contract chipmaking business in the weeks before Monday’s announcement that the Japanese company would invest $2 billion in the U.S. group’s shares, write the Financial Times’ David Keohane, Leo Lewis, Michael Acton, Stephen Morris and Joe Miller.

Son has met Intel’s Lip-Bu Tan since the latter’s appointment in March to discuss a potential deal, according to multiple people with knowledge of the talks. The U.S. company is seeking to find a solution for its advanced chip manufacturing business, which is struggling to compete with Taiwan’s TSMC.

The talks were wide-ranging and could have led to multiple outcomes, including joint ventures with third parties or a minority investment similar to that announced on Monday. However, two of the people said the announcement did not preclude a bigger deal over Intel’s so-called foundry business in the future.

SoftBank and Intel declined to comment.

Son’s ambitions are being fueled in part by the U.S. government’s ambitions for Intel. On Wednesday, Trump’s White House said that it was “ironing out the details” of a deal that would entail the U.S. government taking a 10% stake in the company.

On the rise

Chinese tech suppliers are enjoying a surge in stock performance as the world’s two superpowers continue to keep a lid on the trade war, Nikkei Asia’s Wataru Suzuki writes.

The ChiNext Index, which tracks many Shenzhen-listed companies tied to the global supply chain, is up nearly 26% since Washington and Beijing first agreed a tariff “truce” in Geneva on May 12. It has outperformed the 9% gain in the broader benchmark CSI 300 Index and the 10.5% rise in Hong Kong’s Hang Seng Index over the same period. That truce was extended for another 90 days on Aug. 12.

Some of the biggest winners from this risk-on appetite are emerging from the country’s high-tech supply chain. Victory Giant Technology, a supplier of printed circuit boards for Nvidia’s AI servers, is up more than 450% this year, with most of the increases coming in the past three months, making it the biggest gainer on the ChiNext Index.

“Investors in China are responding positively to the fact that external pressure has eased,” said Hiroya Yamauchi, China and Asia market specialist at Nikko Asset Management.

Power players

Japanese makers of power semiconductors have long held an important position in the global supply chain. Now, as they are being challenged by the rise of Chinese rivals, they are struggling to form a united front, writes Nikkei Asia’s Ryohtaroh Satoh.

A major power chip alliance between Toshiba and Rohm has struggled to produce tangible results beyond a co-manufacturing project. According to sources briefed on the situation, discussions on deeper collaborations, initially announced in early 2024, have “stalled.”

The lack of visible progress highlights the difficulties in significantly restructuring Japan’s power chip industry, which boasts five major players: Mitsubishi Electric, Fuji Electric, Toshiba, Rohm and Denso, each of which has less than 5% of the global market.

Power semiconductors, which control current flow, are less advanced than AI chips or central processing units (CPU) used for smartphones or PCs, but they are vital in everything from power grids to electric vehicles.

Japan’s power chip industry woes come as China has been aggressively expanding production capacity for mature chips while pushing its automobile supply chain, a heavy consumer of power chips, to use more local supplies.

Singapore’s digital banks bleed cash as customer uptake stalls

Welcome to the Tech Latest podcast. Hosted by our tech coverage veterans, Katey Creel and Shotaro Tani, every Tuesday we deliver the hottest trends and news from the sector.

In this episode, Shotaro speaks with Singapore correspondent Dylan Loh about the nation’s digital-only banking startups and their challenges attracting users in a highly banked society.