China

China’s CXMT DRAM maker’s IPO is generating massive speculation in a nascent derivatives market, with offshore investors driving its perceived valuation to over $425 billion, far exceeding its offer price. This surge is due to limited access to the Shanghai STAR Market listing for international and mainland retail investors. Crypto traders on Hyperliquid are pricing the company at stratospheric heights, creating an arbitrage opportunity and highlighting the evolving role of decentralized finance in price discovery for inaccessible assets.

SenseTime launches the “Galaxy Project” with nearly 20 partners to expand China’s AI chip infrastructure. The initiative focuses on a closed-loop system integrating chip development, ecosystem partnerships, and AI computing deployment. Key strategies include improving token processing efficiency, enabling multi-chip adaptability, and pioneering energy efficiency metrics. The project also explores advanced computing like space and quantum. While ambitious, claims of performance and cost-effectiveness require independent verification.

U.S. Treasury Secretary Scott Bessent is scrutinizing Chinese AI models for potential intellectual property theft, citing “watermarks” from American LLMs. This concern arises as Chinese open-weight models gain traction, challenging U.S. AI dominance. Bessent warned of sanctions for IP violations, particularly through “distillation.” The US plans AI dialogues with China in September, highlighting the global race and the need for fair competition and IP protection in the rapidly evolving AI sector.

ASML, a key supplier of chipmaking equipment, faces geopolitical pressure amid booming AI demand. While China remains a crucial market, the US is pushing for stricter export controls on less advanced DUV lithography machines. ASML, which doesn’t export its most advanced EUV technology to China, has raised its guidance due to strong customer demand for AI chips. Potential US legislation like the MATCH Act could impact its orderbook, forcing ASML to balance global demand with international relations.

At the World AI Conference in Shanghai, President Xi Jinping invited the Global South to collaborate on AI development, pledging 5,000 training opportunities and enhanced cooperation with ASEAN, the Arab States, and the African Union. He advocated for a “symphony of international cooperation” and stressed AI must be secure and human-controlled. This comes as 29 countries signed an agreement to establish the World Artificial Intelligence Cooperation Organization (WAICO) in Shanghai.

Baidu and Alibaba shares surged following news of AI partnerships with Apple for China. Baidu is collaborating on “Apple Intelligence” for iPhones, while Alibaba’s Qwen AI will be integrated into Apple’s services. This signals a major push in China’s AI market and Baidu’s potential IPO for its AI chip unit.

Alibaba’s Qwen AI model will be integrated into Apple’s systems in China, following regulatory approval. This deal significantly boosts Alibaba’s US-listed shares and enhances AI capabilities for Chinese Apple users. The integration highlights a trend towards on-device AI and navigates the complex US-China tech competition, with Qwen’s efficiency on iPhones recently demonstrated.

A US official stated that very few Nvidia H200 AI chips have been shipped to China, suggesting a potential shift in export controls. This could boost Nvidia’s revenue, as they previously excluded Chinese sales from forecasts due to stringent restrictions. While H200s are powerful, Nvidia is transitioning to newer Blackwell architecture. The limited availability of advanced chips impacts China’s AI development, forcing reliance on less capable domestic alternatives.

Despite geopolitical tensions, U.S. demand for products manufactured in Shenzhen remains strong, driven by the city’s unparalleled hardware development ecosystem. Companies like The Sparrows and Even Realities highlight Shenzhen’s cost efficiencies, rapid prototyping, and skilled suppliers. While some U.S. firms explore supply chain diversification, China’s role in driving hardware innovation, particularly for AI, continues to be crucial. Upcoming economic data and events, including trade figures and GDP, will be key indicators.

China has warned of a “back-door” security risk in Anthropic’s Claude Code AI tool, citing potential transmission of sensitive user data to remote servers. This warning, issued by China’s Ministry of Industry and Information Technology, follows accusations of Alibaba attempting to extract Anthropic’s AI capabilities. Despite official restrictions, many in China reportedly access U.S. AI tools, prompting companies like Alibaba to ban their employees from using Anthropic products. The situation underscores rising U.S.-China tech competition and the critical need for AI security.