Tesla's recent transformation and Thailand's potential energy problems

Hi everyone! This is Lauly from Taipei.

While I used to be writing this article, China unexpectedly announced the immediate start Military exercises around Taiwanjust days after the brand new president of the democratically governed island, Lai Ching-te, was sworn in.

Lai, who like his predecessor Tsai Ing-wen belongs to the identical China-skeptical Democratic Progressive Party, is viewed as a “separatist” in Beijing. In his inaugural speech on Monday, he called on China to acknowledge the existence of Taiwan.

In fact, I received several texts from tech executives who said they sensed “determination” in Lai's speech and wondered how Beijing would respond. Many of those suppliers have already begun build up their capability outside Taiwan after China conducted live-fire military exercises around Taiwan in the summertime of 2022.

Despite the geopolitical uncertainties, I sense the joy because the tech industry prepares for Computex, one in all Asia's most vital tech shows, which takes place in just a few weeks. The excitement is very high because Computex will host CEOs from Nvidia, Advanced Micro Devices, Intel, Qualcomm, Arm and other corporations for the primary time since Covid. Their key partners, including Quanta Computers, Pegatron, Asustek Computer and Acer, are also preparing major press events.

The foremost topic of the event will almost actually be artificial intelligence. The tech supply chain has already seen exponential growth driven by AI servers since last 12 months, due to demand for generative AI. Nvidia reported one other record revenue of $26 billion on Wednesday. The PC industry can be enthusiastic about AI's potential to revive the sector after it experienced a downturn within the second half of 2022.

AI is also a boon for Sharp. The Japanese electronics maker, a subsidiary of Foxconn, recently announced that it plans to halt production at its foremost display factory in Sakai, a coastal town in Osaka, and convert it into an AI data center. A source near Foxconn told me that the oversupply within the LCD display industry attributable to China is making it difficult to get the factory back on course.

“However, the Sakai factory was designed with a large power supply as a result of the display technology. It can be situated near the ocean, making the power ideal for conversion into an AI data center, which consumes quite a lot of power and requires liquid cooling measures,” the source said.

Tesla's recent transformation

Tesla has asked suppliers to begin manufacturing components and parts outside China and Taiwan To mitigate rising geopolitical risks, Nikkei Asia’s Liane Lauly And Cheng Ting Fang write.

Several suppliers have received such requests, including manufacturers of printed circuit boards, displays and electrical control units, in accordance with six supply chain executives with direct knowledge of the matter.

“We have received a request from Tesla that they hope to have each OOC and OOT components, that’s, from China and from Taiwan,” a source at a Taiwan-based supplier to Tesla and others told Nikkei Asia. “They hope such a proposal could be implemented as a part of next 12 months's recent projects.”

The requests got here before Taiwan's recent president took office and before the U.S. announced significantly higher tariffs on Chinese electric cars. For corporations whose supply chains touch Taiwan, China's recent military exercises across the island will only add to concerns about potential disruption.

AI in a box

China's artificial intelligence groups have found a brand new strategy to commercialize the technology by creating “AI-in-a-box” products that allow corporations to run generative AI in their very own premises.

The emerging trend poses a threat to the AI ​​cloud computing services offered by the country’s major technology corporations corresponding to Alibaba, Baidu and Tencent, write Ryan McMorrow And Nian Liu for the Financial Times.

Leading the best way in “all-in-one” AI machines is national champion Huawei, which has signed up greater than a dozen startups to bundle and commercialize their large language models with its AI processors and other hardware. Its partners include groups corresponding to Beijing-based Zhipu AI and language specialist iFlytek.

Chinese groups wish to use the AI ​​boxes to bring the advances of generative AI to on-premise or private cloud setups, that are considered safer and make up about half the market.

Huawei estimates that the Chinese marketplace for these machines will reach 16.8 billion RMB ($2.3 billion) this 12 months. Analysts at Minsheng Securities predict that the state-run marketplace for AI boxes could reach 450 billion RMB by 2027.

Painfully popular

Thailand's industrial parks are increasingly in danger Bottlenecks in the facility supply As a flood of investments in printed circuit boards will come online next 12 months, writes Nikkei Asia's Liane Lauly. Printed circuit boards are the fabric on which chips and components are mounted before they’re assembled into final products.

The Southeast Asian country is one in all the prime destinations for relocation of PCB production from China and Taiwan, in accordance with the Taiwan Printed Circuit Association, a number one industry association representing 700 printed circuit board manufacturers and their suppliers. Many of those investments are happening in clusters.

“Take Prachinburi province, for instance. There are 10 recent PCB manufacturing plants there, in addition to 4 recent factories for material and equipment suppliers,” said TPCA chairman Maurice Lee. “We are concerned in regards to the increase in demand for electricity and water as the brand new factories progressively reach full capability.”

Looking inside

Semiconductor Manufacturing International Co and ChangXin Memory Technologies (CXMT) – China’s leading contract chip manufacturer and memory chip manufacturer – are preparing for Localize deliveries of key chip materials and chemicals to counter ongoing US export controls, Nikkei Asias Cheng Ting Fang reports.

SMIC is asking the chip developers it supplies for assistance in choosing, verifying and adopting local suppliers of wafers, chemicals, gases and other materials, while CXMT has begun evaluating local suppliers to switch foreign ones.

The latest localization push goes beyond efforts to make use of more domestic facilities to make chips – a sector that has been directly affected by tighter U.S. regulations – and in addition extends to the availability of lots of of chemicals, materials and gases, potentially forcing foreign suppliers out of the market.

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