Geopolitical Risks

The AI sector faced volatility this week despite Nvidia’s strong earnings, with bubble concerns rising. Industry insiders, including Alphabet’s Sundar Pichai, caution about overinvestment. Google, however, gains momentum with Gemini 3, surpassing Microsoft in market cap. Nvidia faces geopolitical risks in China as restrictions impact chip exports and competition increases.

Enterprises are strategically diversifying away from Nvidia in the AI accelerator market due to over-reliance vulnerabilities including pricing, supply chains, and geopolitical risks. Alternatives like Huawei offer negotiating leverage, mitigate vendor lock-in, and provide access to alternative supply chains, especially in regions with Nvidia restrictions. Huawei’s Ascend platform excels in inference workloads, offering potential cost and power efficiency. This transition involves a risk assessment, weighing diversification benefits against Nvidia’s established ecosystem. For some, this realignment is crucial for competitiveness and future-proofing AI initiatives.

UMC reported August 2025 sales amidst semiconductor industry headwinds like fluctuating demand and geopolitical uncertainties. Analysts offer varied perspectives, with some citing consumer electronics slowdown impacting mature process technologies (28nm, 40nm). Others highlight strengths in automotive, industrial, and IoT applications, along with geographic diversification mitigating risks. UMC anticipates moderate growth driven by electrification, IoT, and 5G, investing in SiC and GaN for power semiconductors. The upcoming earnings call will provide further insights into financial performance and future outlook.