The inside story on the Asia tech trends that matter, from Nikkei Asia and the Financial Times Hello from Yifan in Silicon Valley.
The inside story on the Asia tech trends that matter, from Nikkei Asia and the Financial Times Hello from Yifan in Silicon Valley. I hope everyone (in the Northern Hemisphere) is enjoying the falling leaves and sweater season. Wall Street got a proper scare from Alphabet's earnings before Halloween. On Wednesday, Google's parent company reportedsolid third-quarter revenue growth, with record sales for the cloud business unit. But its shares plunged more than 10% at one point during extended trading, despite all signs indicating that more people and companies are now using Google's AI services and even its in-house AI chips. After several years of tech companies pouring billions and billions of dollars into AI, revenue growth alone is no longer enough to impress the market. Google's spending of 9 billion turned out to be a warning sign for many, rather than a boost to confidence in continued AI investment. Samsung Electronics gota similar cold shoulderfrom the market after its earnings report Thursday. Despite the South Korean semiconductor giant saying it became the first global technology company to top 100 trillion won in quarterly operating profit, thanks to continued demand for memory chips amid the AI buildout, its shares slumped following the earnings report. Investors are now growing increasingly worried about the massive spending on AI by companies such as Google and are starting to demand proper returns here and now, not in five years. As Wall Street awaits this week for other U.S. Big Tech companies to release their third-quarter earnings and future AI investment guidance, we are seeing similar reality checks on AI across global markets, including in China, whereAI stocks have fallen sharplyin recent weeks due to similar concerns about the profitability of AI. Tech illuminati such as Elon Musk have long criticized the public market for being shortsighted and overlooking the long-term benefits of investing in technology that's expensive to build. But it has been almost four years since the ChatGPT-led AI boom began, so how patient should the market be? As if it were not jittery enough, the U.S. midterm elections next week are casting another shadow over AI trades. More U.S. voters areturning against AI and data centersthan ever before. Around 40 local ballot measures nationwide on data center development will go to a vote on Nov. 3. The implications will reach far beyond the U.S., as the entire Asian tech supply chain, from Taiwanese server makers to South Korean chipmakers, eagerly awaits the results. Leading PC makers, including HP of the U.S. and Asus and Acer of Taiwan, are combating soaring component costs byshifting some productionfrom Thailand and Vietnam back to China and using a new generation of contract manufacturers, Nikkei Asia'sLauly LiandCheng Ting-Fangreport. Multiple sources told Nikkei Asia that the PC makers are seeking greater manufacturing efficiency as their bill of materials rises, with demand from AI causing acute memory and storage shortages. The shift marks a partial reversal, for now, of the global tech supply chain's "China+1" diversification strategy, which moved some production from China to other Southeast Asian countries as U.S.-China tensions led to trade restrictions. The PC makers are now turning to lesser-known Chinese contractors whose larger rivals have become increasingly occupied with higher-margin orders for AI data center servers. Dell of the U.S., the third-largest PC maker behind Lenovo and HP, is also evaluating a similar move, according to the sources. Industry insiders say China remains the best option for making computers, with its experienced workforce, lower prices and a complete supply chain ecosystem that can offer full access to components. Toyota is setting its sights on becoming aglobal robotics powerhouse, as the world's largest car manufacturer modernizes production lines to compete with China and diversify beyond the auto industry, writeHarry DempseyandDavid Keohanefrom the FT's Tokyo bureau. Its top executives have been drumming up global investor interest for its robotics strategy, including plans to deploy 400,000 robots as part of a 6.4 billion annual investment to automate factories and establish a dedicated robotics team. "I think that Toyota could be the biggest humanoid robot company on the planet - they just need to get after it," said Carl Vine at M&G, a Toyota investor. The auto market is offering less room for growth, and the price tag for a humanoid robot is likely to be significantly higher than the cost of a new car. Goldman Sachs analysts estimate that Toyota could capture 3% to 8% of the humanoid market by 2035. But that might not be enough to boost Toyota's overall growth. "It's the kind of thing that's rewarded if Toyota's core car business is doing well and dismissed as a distraction if the car business is suffering," one Asia-based Toyota investor said. Mounting concerns over the profitability of AI areweighing onChinese stock markets, despite homegrown AI being crucial to the country's strategy of technological self-reliance, Nikkei Asia'sKensaku IharaandAnne Chanwrite. The CSI Artificial Intelligence Index, which tracks major Chinese AI-related companies, has fallen nearly 40% from its June peak, led by state-backed semiconductor companies such as Cambricon Technologies, often dubbed "China's Nvidia." China Merchants Securities International has warned investors of increasing volatility in AI-related stocks, advising them to "pay greater attention to defensive stocks in the sector." Concerns about the earnings prospects of AI players are growing in China, following a sell-off of U.S. AI stocks driven by questions over whether their massive infrastructure investments will pay off. SK Hynix's third-quarter operating profitsoared more than sevenfoldto 83.3 trillion won (62.9 billion) from a year ago, driven by strong demand for its advanced memory chips critical to AI computing, as global hyperscalers increase investment in servers, data centers and other AI infrastructure. The world's second-largest memory chipmaker said on Wednesday that revenue more than quadrupled to 104.6 trillion won in the three months through September. The South Korean company's net profit more than tripled to 39.8 trillion won, Nikkei Asia'sKim Jaewonreports. The stellar performance of SK Hynix, a key supplier of high-bandwidth memory (HBM) chips to U.S. chipmaker Nvidia, comes as investors express concern through volatile stock markets about massive AI investments by major tech companies such as Google, Meta and OpenAI. On Thursday, Samsung Electronics, another major memory chip supplier, alsoreported record third-quarter earnings. Its semiconductor unit's operating profit surpassed 100 trillion won. But rising memory chip prices backfired on its smartphone business, as higher manufacturing costs led the unit to post an operating loss of 0.6 trillion won. 1.AI boom sparks circuit board crunch across global tech supply chain(Nikkei Asia) 2.Shares of Ambani's Jio surge 27% in India's biggest IPO(FT) 3.Asia's AI data center boom faces 'reality check' from public markets(Nikkei Asia) 4.SoftBank-backed drone maker wants every farmer to 'have their own robot'(FT) 5.Micron won't pursue 4F-squared memory chips despite CXMT's advance: CTO(Nikkei Asia) 6.US Treasury proposes tighter rules on investing in sensitive Chinese tech(FT) 7.SK Hynix abandons plan for US unit's IPO, citing market volatility(Nikkei Asia) 8.China's rapid human trials draw western drugmakers - and safety concerns(FT) 9.Taiwan's first-ever chip workers strike hits Micron plant(Nikkei Asia) 10.Australia's drive to transform economy with data centres, aerospace - and meat pies(FT) Welcome to the Tech Latest podcast. Every Tuesday, we deliver the hottest trends and news from the tech sector. In this ep