Beijing’s local government has introduced a subsidy plan to help local businesses buy Chinese semiconductors, especially GPUs, aiming to strengthen its computing capabilities and lessen reliance on foreign tech. This initiative comes as part of a broader effort to enhance the city’s smart computing capabilities by 2027.

Under the undisclosed subsidy scheme, local firms will receive financial incentives to purchase domestically manufactured GPUs, with the subsidies being proportional to the investment required for building computing services. The policy focus emphasizes the use of domestic-designed and manufactured GPUs, essential for high-performance systems in data centers, particularly for AI development projects.

Recent changes to US export regulations have made it difficult for Chinese companies to get their hands on advanced AI processors and semiconductor manufacturing gear. US trade sanctions have restricted companies like Nvidia from exporting sought-after components to China, prompting Chinese entities to seek alternative solutions.

Beijing’s smart computing initiative aims to support the training of both general and industry-specific large language models (LLMs), crucial for AI development. Access to advanced computing resources, particularly GPUs, is essential for AI development, driving Beijing’s subsidy scheme to ensure self-sufficiency in this area by 2027.

China’s strategic shift to become self-sufficient in AI technology

China is shifting its strategy towards promoting domestic production of AI chips over-reliance on international firms like Nvidia, Intel, and AMD. The subsidy scheme reflects a broader national strategy to encourage the adoption of homegrown AI chips, ensuring self-sustainability in AI semiconductor technology despite external restrictions.

Leading players in the Chinese AI chip market include Huawei, Alibaba, Baidu, and Tencent, with Huawei making significant advancements in AI chip technology. Other emerging companies are expected to gain market share with time and further development.

Beijing’s initiative shows its commitment to technological self-sufficiency amid escalating trade tensions and US export controls. Financial incentives provided to local firms aim to accelerate the adoption of AI processors, bolstering Beijing’s computing infrastructure and reducing dependence on foreign technology.

In addition to traditional semiconductor technology, China is also targeting advancements in silicon photonics and quantum computing chips to achieve full self-reliance on smart computing infrastructure by 2027. However, geopolitical tensions and potential expansion of US-led export restrictions pose business risks for chip makers and equipment suppliers like ASML.

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• Chinese retailers acquire NVIDIA AI Chips despite US restrictions

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In an intensifying trade war between China and the United States, Beijing has taken a significant step by imposing export controls on two crucial raw materials essential to the global chipmaking industry. Gallium and germanium, strategic elements used in semiconductors, have become the latest targets in China’s escalating battle for dominance in the semiconductor sector.

The move announced abruptly on Monday, is seen as China’s second major countermeasure against the tech war, following the May sanctions on Micron Technology, one of America’s largest memory chip manufacturers. Industry analysts at Jefferies believe this action is in response to the potential tightening of the US ban on AI chips.

The announcement has sent shockwaves through global supply chains, as companies caught off guard by the restrictions scramble to secure alternative sources of these vital materials. Not only the semiconductor industry but also electric vehicle manufacturers are concerned that curbs on rare earth exports may be the next step in China’s trade retaliation.

The export controls on gallium and germanium products, slated to take effect from August 1, pose a significant threat to the global chipmaking ecosystem. These metals are integral to the production of semiconductors, which are the backbone of various industries, including technology, automotive, telecommunications, and more. With China being a major player in the semiconductor supply chain, disruptions to the availability of these raw materials could reverberate across the global market.

The ongoing trade war between the world’s two largest economies has witnessed a series of retaliatory actions and countermeasures. However, the imposition of export controls on strategic materials crucial to the semiconductor industry marks a significant escalation in tensions. The repercussions of this move could potentially lead to further disruptions in global supply chains, forcing industries to search for alternative sources and further raising concerns about the future of the semiconductor landscape.

As the trade war continues to unfold, all eyes remain on the actions and reactions of both China and the United States, as well as the impact they will have on various sectors heavily reliant on semiconductors and the critical technologies they enable.

Related:

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• Semiconductor Industry Faces Crisis, AI Demand Brings Hope for Recovery

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U.S. Secretary of State Antony Blinken called upon China to closely monitor and investigate the involvement of private entities within its jurisdiction that could potentially contribute to Russia’s military capabilities, in the midst of the ongoing Ukraine conflict. 

The Secretary of State, while recognizing the complexity of the situation, highlighted the significance of preventing the flow of technology that could be utilized in an adversarial manner against Ukraine.

Although Secretary Blinken did not provide specific details regarding the nature of the technology or the identities of the private companies involved, his request reflects the growing apprehension within the international community regarding the possibility of third-party contributions fueling the conflict.

In a statement issued on Monday, Secretary Blinken underscored his concerns while clarifying that he has not come across any evidence indicating that Beijing is directly providing lethal aid to Moscow.

Since Russia’s invasion of Ukraine in February 2022, Western powers have provided Ukraine with substantial military assistance, including billions of dollars worth of support. During this time, China has faced allegations, which it vehemently denies, of supplying lethal weapons to Russia. It is worth noting that China and Russia had previously announced a “no-limits” partnership shortly before the invasion of Ukraine.

Addressing the issue of lethal aid to Russia in the context of the Ukraine conflict, Secretary Blinken clarified that the United States and other countries have received assurances from China that it is not and will not provide lethal assistance to Russia for use in Ukraine. This statement aims to dispel concerns regarding China’s alleged involvement in supplying weapons that could escalate the conflict further.

While the visit to Beijing did not yield any major breakthroughs, it served as an important platform for reaffirming diplomatic channels and clarifying positions between the United States and China. Both sides acknowledged the significance of maintaining stability and averting the risk of armed conflict. The discussions highlighted China’s stated commitment to refrain from providing lethal assistance to Russia for use in Ukraine, as confirmed by Secretary Blinken.

Related:

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(via)

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Huawei is said to be reviewing its relationship with the US-based multinational courier services provider, FedEx after it reportedly diverted a couple of Asia bound shipments to the US. This screw up comes at a time when China and US tensions are at an all-time high. FedEx has confirmed this mistake.

There were four shipments in total that were rerouted or attempted to be rerouted to the US. Two shipments originating from one of Huawei’s suppliers in Japan were headed to its China branch, while the other two originated from another supplier from Vietnam and were headed for the company’s branches in Asia. The shipments from Japan were rerouted, without authorization from Huawei or its sender, to the US. The other two shipments from Vietnam were also attempted to be rerouted to the US.

FedEx has said that these shipments were ‘misrouted in error’ and it was not made on the directions of any third party.

“This is an isolated issue limited to a very small number of packages,” said FedEx, in a statement to Reuters, referring to the four parcels affected. “We are aware of all shipments at issue and are working directly with our customers to return the packages to their possession.”

The company has even formally published an apology letter on China’s Weibo regarding this goof up. It reiterates that this was a shipping error and there are no external third parties involved.

However, considering the rising tensions between the two world superpowers, Huawei didn’t take it lightly. In a statement to the Reuters, Huawei spokesperson said,

“The recent experiences where important commercial documents sent via FedEx were not delivered to their destination, and instead were either diverted to, or were requested to be diverted to, FedEx in the United States, undermines our confidence. We will now have to review our logistics and document delivery support requirements as a direct result of these incidents,”

Huawei also confirmed that the said shipments only had documents. So, there wasn’t any technology involved.

The timing of this goof up from FedEx couldn’t have come at the worst time. With even non-US companies like ARM and Panasonic struggling to keep relationship with Huawei, the company is in a tight spot right now. After this, we’ll have to wait and see if Huawei continues to work with FedEx in the future.

UP NEXT: World’s First Touch Screen Toothbrush Incoming!

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