A good day for AI, a rough one for Elon Musk

Hi from Yifan, your #techasia host this week, sending this newsletter from the unusually busy Silicon Valley. Summer is normally a quieter time as people go on vacation and enjoy some breeze. But not this year.

More U.S. trade deals are being announced and Big Tech earnings season kicked off this week. But what excites Silicon Valley the most is probably the government's long-awaited AI action plan unveiled on Wednesday.

The 28 pages of guidelines detail how U.S. President Donald Trump's administration plans to govern AI. It's a long document, so if you want to save some time, here's the gist: no regulation, no "wokeness," more exports.

Silicon Valley had feared U.S. regulators might throw up roadblocks in front of the fast-moving technology revolution, as the European Union did with the EU AI Act.

But they can breathe a sigh of relief now. Trump assured the companies that the federal government will not get in their way as long as they can beat China in the AI race -- he even said he would block state-level regulations on AI.

Trump also said he will further relax some export rules so that other countries will buy more tech products from the U.S. and build their AI future on American hardware and software.

The action plan doesn't address copyright infringement, misinformation, deepfakes and many other key issues with AI, but judging by the share prices of Nvidia and other AI-related companies on Wednesday, it at least makes investors happy.

Speaking of happy, one thing Trump is not entirely pleased with when it comes to artificial intelligence is its name.

"I don't like the name artificial anything, because it's not artificial. It's genius. It's pure genius," Trump said of AI on Wednesday, suggesting the technology be renamed.

But what the president dislikes even more is "woke" AI.

Trump said his administration will make sure the American people do not have "woke Marxist lunacy" in their AI, starting by signing an executive order that directs the federal government not to use AI to generate output that embraces DEI, or diversity, equity and inclusion.

AI with American characteristics

While much of Trump's U.S. AI action plan is focused on competing with China, the day may still come when Washington and Beijing are far more aligned on AI governance.

During a keynote speech on Wednesday, Trump said the U.S. has to "be able to play by the same set of rules" with China if it wants to win the AI race, Nikkei Asia's Yifan Yu reports.

Trump specifically said he wants the AI industry to be more patriotic, similar to what Beijing has demanded from its own tech sector.

"Perhaps most importantly, winning the AI race will demand a new spirit of patriotism and national loyalty in Silicon Valley," Trump said. "We need U.S. technology companies to be all in for America. We want you to put America first. You have to do it, that's all we ask."

The AI action plan repeatedly mentions that AI models should reflect "American values."

China has language in its generative AI regulations emphasizing that content produced through the use of generative AI must reflect "Socialist Core Values" -- the governing credo of the Chinese Communist Party.

Value adding

Top multinationals like McDonald's and UK insurer Bupa are joining giants such as Goldman Sachs and Tesco to set up back offices in India to drive their in-house innovation in artificial intelligence, writes the Financial Times' Krishn Kaushik and Chris Kay in Bengaluru.

As many non-tech companies struggle to compete for hires in the red-hot market for AI in their home countries, India offers an opportunity to recruit tech talent at scale. Groups are doing so by setting up so-called global capability centers that can perform a wide range of big data-related tasks.

Analysts predict these centers, which employ nearly 2 million people today, can reach $100 billion in revenue by 2030, up from $65 billion revenue last year.

For India, this presents a step up the value chain, as these back offices move from providing support services to performing core competitive functions that directly affect companies' profitability.

In search of stability

South Korea's new government under President Lee Jae Myung is eager to issue won-backed stablecoins -- digital tokens pegged to traditional currencies -- hoping to nurture the country's digital asset market and give it a prominent place globally, Nikkei Asia's Kim Jaewon and Stella Yifan Xie write.

Seoul's move comes amid a broader battle surrounding the crypto technology's geopolitical influence, following an aggressive push for dollar-pegged coins by the U.S.

Earlier this month, the U.S. House of Representatives passed the GENIUS Act, which sets up a federal framework to regulate dollar-pegged stablecoins. The bill is being sent to Trump, who is expected to sign it into law.

Such developments have in turn brightened investor sentiment toward digital assets, lifting the price of bitcoin, one of the most-traded cryptocurrencies, above $123,000, an all-time high.

A rough patch of road

Attending an AI summit in Washington D.C. on Wednesday, Trump gave shout-outs to Nvidia CEO Jensen Huang and other tech leaders present at the event. But one noticeable absence was Tesla CEO Elon Musk.

That could be because Musk was busy answering questions at Tesla earning's call on Wednesday afternoon, during which he warned investors that there might be more "rough quarters" ahead as the U.S. EV giant tries to transform into an AI and robotics company, starting with the recent launch of robotaxis, Nikkei Asia's Yifan Yu reports.

It could also be because of the falling out between Musk and Trump. The once-hailed "first buddy" tech billionaire has left his post as a special advisor in the White House and engaged in several virtual shouting matches with the president since.

At the same time, Huang appears to have become Trump's new favorite tech rock star. The Nvidia CEO is also becoming a more prolific figure in geopolitics, as Beijing looks for a business leader who could replace Musk as a bridge to Trump, Nikkei Asia's Ken Moriyasu and Yifan Yu write.

Can China ever match ASML's lithography mastery?

Welcome to the Tech Latest podcast. Hosted by our tech coverage veterans, Katey Creel and Shotaro Tani, every Tuesday we deliver the hottest trends and news from the sector.

In this episode, Shotaro speaks with Taipei tech correspondent Annie Cheng Ting-Fang about how China's chip ambitions are being tested by the challenge of matching ASML's lithography capabilities.