China

Nvidia CEO Jensen Huang is reportedly invited to a state dinner for Chinese President Xi Jinping during his Washington visit. This highlights AI’s prominence in bilateral discussions and signals a strategic US administration approach, leveraging tech leaders to foster dialogue and promote American innovation and economic competitiveness on the global stage.

The US faces growing dependence on China for critical data center components, including transformers, switchgear, batteries, and optical technologies. This reliance, amplified by AI competition, poses national security and supply chain risks. President Trump declared a national emergency to restrict foreign transactions in power grid components. While the US aims to boost domestic manufacturing, scaling production to meet demand remains a challenge, potentially leading to increased costs for hyperscale operators.

Tesla is voluntarily recalling approximately 3 million vehicles in China due to two safety concerns. The first involves electronic door handles on several models, where severe collisions could prevent egress. An over-the-air software update will lower windows automatically in accidents. The second recall addresses driver monitoring systems for partially automated driving features on Model 3 and Y. A software update will enhance in-cabin camera monitoring to ensure driver attentiveness. These actions highlight Tesla’s efforts to navigate China’s regulatory environment and competitive market.

China is rapidly advancing in AI development, particularly in open-source models, posing a challenge to US dominance. Chinese AI is becoming cost-effective and widely adopted globally, even in Western markets. Despite US advantages in compute power and talent, China’s strategic positioning in deployment sectors like robotics suggests potential long-term leadership. The AI race hinges on the US’s ability to adapt to China’s multifaceted competitive strategy.

A recent cyber breach at Tata Electronics, an Apple supplier in India, has fueled China’s narrative of manufacturing superiority. Chinese state media is using the alleged leak of iPhone 18 Pro specifications to highlight perceived weaknesses in Indian supply chains, contrasting it with China’s security. While Tata confirmed an incident, its operational impact was minimal. Experts believe replicating advanced iPhone components from schematics is impractical. Despite this propaganda opportunity, Apple’s diversification away from China is expected to persist due to geopolitical and economic factors.

U.S. lawmakers are investigating DoorDash’s use of Chinese AI models, specifically Kimi K2.6 from Moonshot AI. This inquiry stems from concerns about national security risks associated with American companies relying on AI developed in China. DoorDash stated its commitment to American AI innovation and looks forward to engaging with committees on responsible AI use. The investigation is part of a broader congressional effort to assess the risks of adopting Chinese AI technologies.

U.S. tech giants urge Washington to adopt a robust, open-source AI strategy to counter China’s growing influence. While the U.S. focuses on domestic chip manufacturing, it lacks a clear approach to open-weight AI models. Open models offer cost reduction, data control, and transparency benefits. China is actively advancing its open-source AI, potentially dominating global infrastructure. The U.S. must invest in open AI development and security to maintain competitiveness, rather than imposing bans, to avoid hindering innovation and global adoption.

The FCC has restricted imports of advanced foreign-produced robots, including humanoids, citing cybersecurity concerns. China’s Commerce Ministry strongly criticized the move, accusing the US of disregarding Beijing’s stance and threatening retaliation. This action impacts China’s leading humanoid robotics sector, with companies like UBTech and Unitree facing market challenges. China may retaliate by restricting rare earth sales or market access for US firms. The situation escalates US-China trade and technology tensions amid an AI race.

In the AI race, the US aims to limit China’s global AI supply dominance. At APEC’s Digital Weeks, US participation was understated, with companies like Google and Meta showcasing specialized, not flagship, AI. China, conversely, is pushing open-source models and building regional AI ecosystems. While competition is fierce, complete decoupling is unlikely, with Asia favoring customized solutions and potential technological convergence.

China reports a breakthrough in mass-producing immersion DUV chipmaking tools, prompting investor concern. While this poses a potential challenge to ASML’s dominance, experts suggest its impact may be limited to lower-end chips. Key hurdles for China include achieving yield parity and scaling production, areas where ASML holds a significant advantage due to decades of refinement and deployment, particularly in advanced EUV lithography.