TSMC's rosy outlook and Huawei's investment web
Hello everyone, this is Cissy from Hong Kong. This week, the Hong Kong police are on high alert again as Wednesday marked the 36th anniversary of Beijing's bloody crackdown on pro-democracy demonstrators in and around Tiananmen Square in the Chinese capital.
Although public mourning over the tragedy has diminished since the implementation of the National Security Law in 2020, some pro-democracy individuals still have been trying in their own ways to commemorate those who were killed. For example, one shop was selling white candles -- like those traditionally used for candlelight vigils to mark the anniversary -- for 6.40 Hong Kong dollars each. Some individuals stopped by Victoria Park, where people had gathered to commemorate the victims of the crackdown for 30 years, with white flowers, but they were soon escorted away by the police. In Causeway Bay, the usual starting point for most protests over the past 30 years, a performance artist chewing gum with her hands in pockets was searched by police and then escorted to a subway station.
Even more upsetting is the case of the owner of a white Porsche with the license plate "US 8964." The driver was pulled over and detained by police on June 4 in both 2023 and 2024, and he told local media this week that he has shipped the car outside Hong Kong after his family was harassed and intimidated by unknown individuals over the past year.
From its population structure to daily consumption patterns, Hong Kong has changed a lot in the past five years. As I was casually watching the street on Wednesday, I briefly counted the car brands passing me at an intersection in the central business district. In the space of about 5 minutes, the majority of cars that passed by were Tesla, Toyota or Mercedes-Benz. I also saw five Maxus, a brand under the state-owned SAIC, one BYD, one Xpeng and one Zeekr, as EV brands from mainland China are increasingly seen in Hong Kong's streets, while they are caught up in an increasingly ugly war at home as their pricing and inventory tactics draw scrutiny from regulators.
Expecting a record
Despite geopolitical tensions, tariffs and volatile exchange rates looming over the semiconductor market, the world's largest chip foundry is confident that it will log a record profit this year as AI demand remains strong, writes Nikkei Asia's Cheng Ting-Fang.
TSMC Chairman and CEO C.C. Wei said during the company's annual general meeting on Tuesday that tariffs would drive up prices and potentially suppress demand, and that the only thing he fears is a global economic slowdown. Still, he noted that AI chip demand continues to exceed supply, and his recent discussions with Nvidia CEO Jensen Huang have centered on quickly boosting production capacity to address this shortfall.
Wei also talked about his company's fresh $100 billion investment in the U.S., saying he announced the total all at once because a smaller figure "wouldn't even make Trump open his eyes." And while he did try to explain to the president how challenging it would be to achieve that five-year plan, Trump -- who Wei described as "warm" -- simply replied, "Do your best!"
In the crosshairs
Electronics giant Xiaomi is among the Chinese tech groups hit hardest by Donald Trump's latest crackdown on the semiconductor supply chain, write the Financial Times' Zijing Wu and Eleanor Olcott.
The U.S. president announced a directive last month instructing electronic design automation (EDA) groups to stop supplying their technology to China.
That move will hit a number of Chinese groups that use the American-made software to design their own advanced chips before manufacturing the processors in Taiwan.
And Xiaomi is first in line to be affected, according to people with knowledge of the matter.
The company unveiled a breakthrough self-designed mobile processor in May. Its chip is on a leading-edge 3-nanometer node of miniaturization and is made in Taiwan with a mix of licenses and tools from now-restricted U.S. EDA companies.
Other Chinese groups also using American EDA tools and TSMC's contract manufacturing for their self-designed chips include the world's biggest computer maker Lenovo and bitcoin mining specialist Bitmain, according to industry insiders.
Huawei's investment strategy
Since Huawei was sanctioned by the U.S. in 2019, the Chinese tech giant has invested in more than 60 chip companies in China to foster its own supply chain, Nikkei's Itsuro Fujino reports.
Huawei has been ramping up its investments through Hubble, a wholly owned investment arm established in 2019. Since its inception, Hubble has backed companies spanning chip design, materials, manufacturing and testing. In the majority of these deals, Hubble holds a stake of less than 10%.
In addition to its investments through Hubble, Huawei maintains close ties with chip equipment maker SiCarrier. The Shenzhen-headquartered company develops and produces equipment primarily for the front-end process of creating fine circuits on wafers. The company reportedly spun off from Huawei following U.S. sanctions and now operates under the umbrella of the Shenzhen city government.
Half the power, just as strong
SoftBank and Intel are partnering to develop an advanced AI-specific memory chip that promises a substantial reduction in power usage. The plan involves creating a novel stacked DRAM chip that is distinct from current high-bandwidth memory (HBM) and is expected to halve power consumption, according to Nikkei's staff writers.
The project is spearheaded by Saimemory, a newly formed company, leveraging Intel's technology alongside patented innovations from Japanese institutions, including the University of Tokyo.
The goal is to complete a prototype within two years, after which a decision will be made on mass production. Targeting commercialization within the 2020s, the project is estimated to cost about $70 million.
Welcome to the Tech Latest podcast. Hosted by our tech coverage veterans, Katey Creel and Akito Tanaka, every Tuesday we deliver the hottest trends and news from the sector.
In this episode, our host Katey speaks with Seoul correspondent Kim Jaewon about how tech and AI startups are transforming legal services in South Korea -- and the friction this sometimes creates with long-standing industry practices.
Suggested reads
2. Indian tech fund sees domestic opportunity akin to 1990s Silicon Valley (FT)
3. Myanmar startup looks to bring 'affordable housing' to Bhutan, India (Nikkei Asia)
4. Cooking robots from Japan to serve US restaurants short on labor (Nikkei Asia)
6. Can the Gulf really become an AI superpower? (FT)
8. The West fears AI's threat to jobs. In Japan, it might save them (Nikkei Asia)
10. The VC industry needs a geopolitical reboot (FT)
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The Diplomat
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Complementarity, Not Exploitation China's trade with the region has historically been asymmetrical but stable, built on complementary strengths rather than competitive overlap. In 'The Nanhai Trade: The Early History of Chinese Trade in the South China Sea,' the historian Wang Gungwu's traces this dynamic from the Han dynasty (211 BCE) to the founding of the Song dynasty in 960 CE, highlighting both the imperial attitudes towards the region and the economic foundations of maritime commerce. Then and after, Southeast Asian kingdoms such as Srivijaya and Ayutthaya exported spices, rice, metals, and timber to China in exchange for ceramics, textiles, and manufactured goods. The modern iteration of this relationship is governed by a more institutional framework. In 2009, China overtook Japan as ASEAN's largest trading partner. Today, annual China-ASEAN trade is projected to reach $1 trillion, surpassing the combined trade volumes of the United States and the European Union with China, and making ASEAN China's largest trading partner too. These new dynamics shed light on the nature of China's trade surplus with Southeast Asia, which extends beyond conventional narratives of high-tech dominance or state-induced overcapacity. Pop Mart's soft toy, Labubu, for instance, illustrates China's expanding strength in IP-driven consumer goods, where value is derived from design, branding, and emotional appeal. Southeast Asia has emerged as the company's largest and fastest-growing international market, with revenue in the region rising 619 percent year-on-year to $336 million, nearly half of Pop Mart's overseas earnings. ASEAN Shaping Engagement Clearly, in recent years the nature of China-ASEAN trade has evolved, driven by the rising value of China's intermediate and finished goods relative to Southeast Asia's commodity exports. This shift, combined with the region's growing middle class and purchasing power, has contributed to a widening trade imbalance. Yet governments across Southeast Asia have increasingly learned to use access to their fast-growing markets as strategic leverage, positioning themselves not simply as recipients of investment and exports but as active participants capable of demanding reciprocity and shaping the terms of engagement. The clearest example of this strategic posture can be seen in the defense sector, one of the most politically sensitive domains. In 2024, Thailand opted for Sweden's SAAB Gripen fighter jet over a U.S. bid, securing not just a fighter platform but full operational control of its Link-T datalink and a 144 percent return on investment via industrial offsets. Indonesia followed suit in 2025 with its commitment to purchase 48 KAAN fifth-generation fighter jets from Turkey, securing terms for local assembly and capability transfer. ASEAN states are replicating similar leverage in civilian sectors by using market access to drive industrial upgrading through local content mandates, technology transfer, and IP enforcement. Thailand now requires electric vehicle (EV) manufacturers benefiting from government tax incentives to produce core components – such as electric motors, reducers, and inverters – locally by 2026. This local content policy has prompted major Chinese automakers, including BYD and Changan, to commit to sourcing more of their EV components from Thai suppliers. The policy is expected to boost Thailand's national EV output by 40 percent in 2025. In parallel, Vietnam has revised its 2025 feed-in tariff system for solar power to favor projects that use locally produced battery storage and polysilicon. The new tariffs provide higher rates to solar projects that meet minimum local content requirements for batteries and polysilicon, aiming to reduce Vietnam's dependence on (mostly Chinese) imports and to advance the country's position in the solar value chain. Furthermore, Malaysia, Indonesia, and other ASEAN governments have imposed a series of tariffs and trade barriers targeting Chinese goods to protect local industries from being overwhelmed by subsidized, low-priced imports. Malaysia has levied anti-dumping duties ranging from 4.48 to 20.42 percent on certain Chinese steel products and is considering broader measures to shield domestic manufacturers. Indonesia, facing a surge of cheap Chinese imports that threaten its small and medium-sized enterprises, has announced plans to impose tariffs of up to 200 percent on a range of Chinese products, including textiles, footwear, ceramics, and cosmetics. Both Vietnam and Indonesia have also launched anti-dumping investigations and duties on various Chinese goods to counteract unfair trade practices. Beyond tariffs, governments are also taking action against Chinese e-commerce platforms. Indonesia, for example, has blocked the Chinese online marketplace Temu, citing concerns over the impact on local micro, small, and medium enterprises and regulatory non-compliance. These moves reflect a broader trend across ASEAN to tighten enforcement, strengthen trade defense mechanisms, and safeguard domestic industries in the face of mounting Chinese overcapacity and aggressive export strategies. As global scrutiny of Chinese exports intensifies, ASEAN is increasingly strengthening its own trade defenses, demonstrating it is far from a passive absorber of the 'Second China Shock'; they are actively shaping the terms of engagement, an approach that in fact aligns with China's own strategic interests. China's Interest in ASEAN's Success Global trends are making reliance on single-source manufacturing untenable. According to McKinsey's 2025 survey of 400 Chinese export firms, 58 percent now use a 'China+1' strategy, with ASEAN as the leading secondary production base. Overcapacity is another driver: Factory utilization rates for China's EVs have fallen below 50 percent (a significant gap from the 80 percent breakeven point), and its solar panel industry faces declining margins due to global oversaturation. Exporting this surplus into politically neutral, fast-growing ASEAN markets is a growing strategic necessity. 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The Diplomat
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China's Bet on Iran: What Now?
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Beijing does not like to be seen backing a losing hand, much less depending upon it. It was only just over two years ago that China used, and then nominally won, a great deal of political capital when it successfully finalized a rapprochement between long-time foes Iran and Saudi Arabia. China has limited experience in engaging in such high-level international diplomacy, much less with success. However, it turns out that the real meat of the negotiations between Iran and Saudi Arabia took place over several rounds beginning in 2021 in Iraq and Oman. It was only in the final days of the negotiations, the United States Institute of Peace reported, that China was brought in as the closer, and was magnanimously given the win. As the institute related, 'The two regional rivals have conducted talks in Oman and five rounds in Iraq in the past two years. They could have chosen either country to get to the finish-line, but instead chose China' – shortly after Xi Jinping visited Saudi Arabia. Notably, China has been all but absent on the diplomatic stage during a true crisis involving Iran. Since the United States bombed Iran's nuclear facilities, China has made several statements criticizing and condemning the U.S. actions, and questioning U.S. credibility going forward. The remarks from China, however, have been predictably boilerplate, lacking in either force or conviction. The Chinese Consulate General in New York put out a statement on June 22 saying that 'China strongly condemns the U.S. attacks on Iran and bombing of nuclear facilities under the safeguards of the IAEA. The actions of the U.S. seriously violate the purposes and principles of the U.N. Charter and international law, and have exacerbated tensions in the Middle East.' The statement went on to call for a ceasefire, to keep civilians safe, and the start of dialogue. 'China,' the statement said, 'stands ready to work with the international community to pool efforts together and uphold justice, and work for restoring peace and stability in the Middle East.' Why the boiler-plate language from China? Why the reiteration of the same old tropes? Where, if China is truly Iran's friend and strategic partner, is the outrage? China's foreign policy is still on training wheels. The Chinese Communist Party (CCP) lacks the real-world experience with and exposure to the rest of the world to be able to successfully read the room or respond to it appropriately – at least at the rapid-fire pace necessitated by a crisis. China's near silence on the dramatic, power map changing events of June 22 expose not only its discomfort with the U.S. strikes, but also its inability to respond quickly with new ideas and leadership of its own. China and Iran find themselves on the same side of certain historical and cultural issues. To the Chinese, even the very idea of monarchy can cause a person to curl one's lip in distaste. China overthrew its monarchy in the early 20th century, and the CCP has been very successful since in teaching its citizens that the evils of emperors, and the greed of imperialists, is what kept China poor and backward for so many centuries. Iran has followed a similar trajectory since Islamist revolutionaries overthrew the Pahlavi dynasty in 1979. It took decades, but finally, and often one piece at a time, the United States admitted to having collaborated with the United Kingdom to remove Iran's democratically-elected leader, which took place on August 19, 1953. Iranian Prime Minister Mohammad Mossadegh was the victim of a plot to secure Iran's oil for British interests, and that, as Lapham's Quarterly recounted, put him squarely in the cross hairs of 'the world's preeminent postwar powers.' The coup – which didn't work the first time, but did the second – put the Iranian monarchy in the person of the Shah firmly back in power for the next 25 years. But it also made the U.S., and the West in general, a prime target for displays of Iranian nationalism in the post-Shah era. This is another point China and Iran have in common: their rulers both find political capital among their relative domestic audiences in denouncing previous foreign involvement in their countries. The fuel that fires much of both China's and Iran's expressed anger and resentment toward the West in general also forges a bond of shared victimhood that is a common trait among autocratically-led countries. Against that backdrop, it is notable that, as Iran quite literally came under attack by the hated Americans, China sat on the sidelines, only offering some empty words of support. Indeed, Iran's foreign minster hurried to Russia – not China – in the immediate aftermath of the U.S. bombing in a quest for support. Tehran apparently understands all too well Beijing's limitations.
