Taiwan's cable concerns and Apple's AI issues

Hi everyone! This is Annie Cheng Ting-Fang, your #techAsia host for this week.

I have been camped out at the Nangang Exhibition Center for the past few days as Taipei welcomes a flood of semiconductor executives and trade diplomats from around the globe, all eager to catch the latest in chip manufacturing technologies and industry trends.

Inside the Semicon Taiwan exhibition halls, the crowd is so thick that weaving through the aisles to find people is a challenge. Everywhere, suppliers of chipmaking equipment, advanced materials and precision components are showcasing their latest product portfolios. The hum of conversation blends Mandarin, English, Japanese, Korean and German, as business leaders from the U.S., Europe and other major chip economies connect.

But what truly stands out this year is the arrival of delegations from emerging players such as Vietnam, India, Indonesia and Turkey, and even nations as far away as Chile, Guatemala and Argentina. In many of these countries, semiconductors are still at the starting line, or just an ambition for the future. The U.K. and Canada, meanwhile, have sent their largest-ever delegations to the flagship trade fair, evidence of the widening global interest in Taiwan's semiconductor supply chain ecosystem.

One memorable exchange onstage captured the shifting momentum of the chip industry. Tien Wu, chair of SEMI and CEO of ASE, the world's largest chip packaging and testing provider, turned to Jochen Hanebeck, chief of leading European chipmaker Infineon, with a pointed question. Over the decades, Wu said, he had flown to Munich countless times to visit Infineon and Hanebeck. Yet Hanebeck himself had never made the trip to Taiwan. "So why are you here now?" Wu asked.

Hanebeck's reply was revealing. Taiwan, he explained, had long been a trusted partner in contract manufacturing and packaging. But today, it represents something more: a hub for artificial intelligence. Indeed, within a 200-kilometer radius on the island, a company can find every partner it needs for building AI servers and devices -- from advanced chipmakers and packaging houses to downstream server assemblers, printed circuit board makers and providers of power, thermal and cooling solutions.

The same sentiment was echoed by Jim Keller, the world-renowned chip architect and founding CEO of an AI startup Tenstorrent. Keller told Nikkei Asia that he is deepening his company's ties with Taiwan's ecosystem, setting up its first office here to grow its design talent pool and strengthen its supply chain management expertise.

I also recently visited Singapore, where I met many brilliant colleagues for Nikkei's annual meeting for the Asia-Pacific region. How newsrooms can cope with the AI era has become a major topic of discussion. While there, I also reconnected with an old acquaintance in the subsea cable industry. As we caught up over signature dishes of chilli crab, bamboo clams and fried taro with scallops, topped off with creamy durian pudding, he told me how he is involved in planning a new communications cable to India, driven by surging demand for data centers and cross-border data flows across Asia.

Yet as critical infrastructure, submarine cables are never just about technology. Shifts in geopolitics could easily delay or disrupt such projects, he said.

Shades of gray

Taiwan has experienced unprecedented subsea cable disruptions this year. While some were caused by natural cable aging, one incident was particularly alarming: In February, a captain and crew of Chinese nationality were found responsible for damaging a subsea communication cable during the night and were later sentenced to three years in prison.

The case highlights the growing "gray-zone" risks to cables in open waters and has raised concerns among Taiwanese authorities that Beijing could leverage commercially registered ships to disrupt Taiwan's critical communications infrastructure.

In this exclusive and richly detailed project, Nikkei Asia's Cheng Ting-Fang, Lauly Li, and Thompson Chau also examine the regional race to become data center hubs, underscoring the strategic importance of the Asia-Pacific region in the global digital economy.

Setting a precedent

Anthropic will stop selling artificial intelligence services to groups majority owned by Chinese entities, in the first such policy shift by an American AI company, write the Financial Times' Demetri Sevastopulo and Cristina Criddle.

The San Francisco-based developer of Claude AI is trying to limit the ability of Beijing to use its technology to benefit China's military and intelligence services, according to an Anthropic executive who briefed the Financial Times.

The policy, which took effect immediately, will potentially apply to Chinese companies from ByteDance and Tencent to Alibaba.

The shift reflects rising concerns in the U.S. about Chinese groups setting up subsidiaries abroad in an effort to conceal their attempts to obtain American technology.

"We are taking action to close a loophole that allows Chinese companies to access frontier AI," said the executive, who added that the policy would also apply to U.S. adversaries including Russia, Iran and North Korea.

AI still reigns

Artificial intelligence will continue to drive semiconductor equipment spending and chip industry growth over the next few years, Cheng Ting-Fang and Lauly Li write. Spending on chipmaking tools is a key indicator of where semiconductor investment is headed. In 2024, about 39% of global equipment spending was tied to AI and high-performance computing, a share SEMI forecasts will rise to 55% by 2030.

The shift isn't just driven by cloud giants like Google and Amazon betting big on AI. Major sensor and microcontroller makers such as NXP, Infineon and Robert Bosch also expect AI to increasingly move into end devices, further fueling industry growth.

Form over AI functions

Apple launched the iPhone 17 series this week in a key test of its AI strategy, but the launch event had less focus on Apple Intelligence than many expected, Nikkei Asia's Yifan Yu reports. The latest lineup features the faster A19 chip, better cameras, longer battery life and the ultrathin iPhone 17 Air, while AI demos were focused on tools like live translation.

Analysts warned that muted announcements on AI may disappoint users and investors amid slowing upgrade cycles and intensifying competition in the smartphone market, even as Apple kept base prices for the devices unchanged. Apple Intelligence remains unavailable in China pending regulatory approval, also leaving questions over its global rollout and demand.

Podcast: Tech Latest

Printed circuit boards are Thailand's ticket up the tech value chain

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, Katey speaks with Taipei tech correspondent Lauly Li about Thailand's foray into printed circuit board production and how the products are foundational to the larger tech manufacturing pipeline.

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