China's overseas EV shifts and a Tenstorrent exclusive

Hello, this is Kenji, your host for this week's #techAsia newsletter from Tokyo. Entering the month of October, the record-breaking summer heat seems to be finally receding, as the daily high temperature was below 25 C on Wednesday for the first time in 112 days.

While the weather has begun to cool off, local politics have been heating up. The election campaign for president of the ruling Liberal Democratic Party is in full swing ahead of voting by its parliamentarians and eligible party members on Saturday.

The election brings a sense of deja vu, being an almost exact re-run of the election held about a year ago, with almost all of the same candidates, with Prime Minister Shigeru Ishiba one of the few missing this time. His term as party president was supposed to last three years, but internal party politics compelled him to resign, even though he was not part of the money corruption scandal that has damaged the party's popularity.

The LDP, which has been in power for most of Japan's postwar history, has used this playbook before: Bringing someone on the fringe like Ishiba to power, only to oust him a short time later, to create the image of a political "reset" that captures media and popular attention.

But things are different this time. The LDP has suffered defeats in both the lower and the upper house elections for the first time, the number of its parliamentarians is down to 295 from 368 a year ago, and its party membership has dropped more than 10%, sinking below the 1 million mark.

As the LDP and coalition partner Komeito have lost a majority in both chambers, it is not guaranteed that the new LDP party president will become prime minister, though the splintered and uncoordinated state of opposition forces makes that more likely than not.

The price of such internal political jockeying is stagnation of real debate in the legislature and the execution of policies.

Ryosei Akazawa, minister in charge of economic revitalization and Ishiba's top confidant, urged the incoming prime minister to carry on with key policies initiated by the current administration, including drastic minimum wage hikes, enhanced natural disaster preparations and the full implementation of the trade deal with U.S. President Donald Trump.

As Japan's top trade negotiator, Akazawa made 10 trips to Washington this summer. He stressed that the $550 billion investment pledge to the U.S., which is at the core of the deal, is about "establishing a new supply chain to foster economic security."

Akazawa is confident that the agreement will be respected and that enhancing the alliance with the U.S. will be high on the priority list regardless of who wins the race.

However, while the candidates have been vocal on more immediate issues like inflation, foreign tourists and immigrants, they have spoken less on core growth strategies, such as catching up in artificial intelligence, chips, biotechnology, green innovation and other key tech sectors. Close scrutiny of their official policy statements is needed in order to understand what might materialize after the election is over.

Tapping the brakes

China's spending on overseas supply chains for electric vehicle manufacturing is showing signs of a slowdown, after five years of aggressive global expansion, Nikkei Asia's Pak Yiu in New York reports. While Chinese companies previously invested heavily in capital intensive battery and raw material projects, the focus has shifted to lower-cost vehicle assembly facilities over the past two years, according to U.S.-based consulting firm Rhodium Group.

Chinese battery executives told Nikkei Asia that new outbound investments have tapered due to an uncertain geopolitical environment and U.S. President Trump's sweeping tariffs that have upended global trade relations. However, the overseas markets remain more lucrative for many, as a cut-throat price war at home continues.

Meanwhile, Chinese automakers' strategies are starting to diverge in Russia, where their collective market share has spiked from less than 10% to over 60% since Moscow's invasion of Ukraine. Kenji Kawase writes that Chinese players are able to fill the void created by the exodus of European, Japanese and South Korea peers. But differences are now emerging over how to comply with Western sanctions, while President Vladimir Putin is imposing protectionist measures apparently aimed at curbing the sharp influx of imported cars, mainly from China.

Chery Automobile, the top selling Chinese automaker in Russia, has said it will exit the market by 2027, while Great Wall Motor seems to be doubling down on the country.

Questions over conditions

Chinese factory staff assembling Apple's latest iPhone continue to face precarious conditions, working many hours of overtime and suffering wage delays and discrimination against ethnic minorities, according to a leading labor rights group.

China Labor Watch found that more than half of the estimated 200,000 workers employed during peak season at the world's largest iPhone factory, run by Foxconn in Zhengzhou, are seasonal staff known as "dispatch workers," writes the Financial Times' Eleanor Olcott.

This is despite a Chinese law capping the use of such staff at 10% of a company's workforce. U.S.-based CLW, which specializes in undercover investigations of Chinese factories, also found that dispatch workers faced staggered payment schedules that withhold part of their wages to deter them from quitting during peak production.

These staff were not entitled to the same benefits as full-time employees, such as paid sick leave, paid holiday and social insurance that includes medical coverage and pension contributions. CLW also claimed that there is systematic discrimination in hiring certain ethnic minorities and pregnant women.

Foxconn said it was "an equal opportunity employer" that does not "stand for discrimination." It added that for the past two years it had "proactively undergone independent, third-party audits," which demonstrated "critical compliance and transparency in social and environmental responsibility."

Apple said teams were "on site and [had] begun an immediate investigation" after being informed of CLW's findings, adding that it was "firmly committed to the highest standards of labour, human rights, environmental, and ethical conduct."

A case for glasses

Glasses equipped with built-in transparent displays and assisted by artificial intelligence are emerging as the new battleground between the U.S. and Chinese tech companies, according to Nikkei Asia's Silicon Valley correspondent Yifan Yu. The Tuesday launch of the latest AI glasses by Meta was received warmly by consumers, despite a fumbled live demo by CEO Mark Zuckerberg two weeks before.

The new wearable device can display text messages and map directions, while allowing users to take calls and send messages with a motion of their hand thanks to a special wristband.

Global shipments are estimated to reach 5.1 million units this year, well behind the billion or so smartphones sold annually, but such devices could be a game changer when it comes to AI adoption.

"AI glasses offer a more natural interface for personal AI agents, enabling continuous, hands-free and contextual computing -- seeing what users see and hearing what they hear," said Flora Tang, senior analyst at Counterpoint Research.

There is potential for the devices to be the next frontier of the "software and hardware" ecosystems that could be critical for winning the AI race. That is why major Big Tech players across the Pacific are betting on this niche product.

The more the merrier

Unlike Nvidia and Apple, AI startup Tenstorrent does not rely on one or two major contract chipmakers, but rather aims to work with almost every notable production partner globally to put its AI chips into production.

Founder and CEO Jim Keller told Nikkei Asia tech correspondents Cheng Ting-Fang and Lauly Li in Taipei that this is made possible by "chiplet" technology, where different chips are bundled into one advanced package.

The company's first chip was built on GlobalFoundries' 12-nanometer process, while its current chips, including the Blackhole AI accelerator, are produced using TSMC's 6-nm process and the next-generation Quasar chip will be made with Samsung's 4-nm technology.

"We are talking to TSMC, Rapidus and Samsung for 2-nm technologies," Keller said. Intel is also a candidate for future chip production, but he said, "they still have a lot of work to do ... to deliver a really solid technology roadmap."

Podcast: Tech Latest

How embracing AI is impacting India's labor market

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 India correspondent Sayan Chakraborty about the impact artificial intelligence is having on India's labor market.

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