Microsoft moves further away from China, rare earth mining firms get a lift

October 16, 2025

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Hello from Tokyo, that is Katherine Creel, your host for this week's #techAsia.

Here in Japan, the massive query in political circles is: “Who will likely be Japan’s next prime minister?” The answer seemed pretty dry after Sanae Takaichi won the leadership of the Liberal Democratic Party, but an unexpected round political upheaval has thrown this certainty overboard

In the world of worldwide technology and investment, the query is now: “When will the AI bubble burst?”

Former Intel CEO Pat Gelsinger is the newest tech industry figure to argue that the rapid increase in spending on chips and data centers means we are literally in a bubble (“Of course we’re,” he recently told CNBC). However, nobody is in a rush to predict its imminent end. Chip tool maker Applied Materials like Gelsinger says the boom has increased years of life remaining in it.

Questions in regards to the reason for this funding spree are growing, alongside evidence that real-world AI is falling wanting its guarantees. Back in June, Gartner predicted that 40 percent of agent AI projects could be canceled by the top of 2027. (AI agents claim to find a way to take over more complex, human-like decision-making processes.) A recent report from website positioning agency Graphite found that about half of online articles are actually generated by AI – but with the caveat that they’re unlikely to be seen in proportion by real humans.

So AI agents aren't superb at being agents, and AI authors aren't particularly good at reaching readers, no less than not yet. Reassuring news for journalists and artistic individuals who fear for his or her jobs. This is less true for anyone who wonders when the trillions of dollars of investment in AI infrastructure will begin to repay.

And yet these investments proceed. Just this week, Google announced it can spend $15 billion over five years to construct AI data center capability in India, while Singaporean data center operator BDx plans to do the identical “significant” investment focused on Indonesia as a part of its growth plans for the region.

In South Korea, collaboration with AI chip king Nvidia and ChatGPT developer OpenAI has boosted the fortunes – and stock prices – of Samsung Electronics and SK Hynix, two of the primary suppliers of advanced memory for artificial intelligence chips. Samsung is well on its solution to releasing it best quarter in three years.

Back in 2007, Chuck Prince, then CEO of Citigroup, described his banking strategy as follows: “As long because the music is playing, you might have to stand up and dance.” It's not hard to see the same ethos at work in the present investment supercycle. But if AI applications don't live as much as their hype, there will likely be numerous sore feet at the top of this tune.

The gap is deepening

Microsoft and AWS are increasing efforts to maneuver production out of China, particularly for sensitive products corresponding to data center servers, Lauly Li And Cheng Ting Fang Report on this Nikkei Asia exclusive.

Executives at suppliers to U.S. technology firms say Microsoft desires to have its latest Surface laptops and data servers manufactured entirely outside China already next 12 monthseven right down to the components. Because of the political sensitivity of those devices, AWS also wants as much of its data center supply chain outside the country as possible, sources said.

While it stays difficult to source some components from alternative locations for logistical or economic reasons, these firms' increased efforts underscore their desire to mitigate geopolitical risks resulting from ongoing US-China tensions.

Chips on the test bench

China has tightened enforcement of its semiconductor import controls and mobilized customs officials at major ports to perform strict checks on advanced chip shipments, in keeping with the Financial Times. Zijing Wu And Cheng Leng write.

The controls began with the aim of securing local firms Stop ordering Nvidia's China-specific chips They followed instructions from Chinese regulators to advise against their purchase, in keeping with three people aware of the matter.

But one person said controls had recently been expanded to cover all advanced semiconductor products to combat the smuggling of high-end chips that violate U.S. export restrictions. Chinese customs had thus far done little to stop chip imports so long as appropriate duties were paid on the border.

The move, coordinated with the Cyberspace Administration of China, underscores Beijing's determination to make sure its technology sector breaks away from American technology and helps the country win the AI race.

The funding limit

Space and defense investments were a key driver of enterprise capital deals this 12 months. But from Japan and China to Europe, activity is accelerating largely by governmentsno private money, writes Nikkei Asia Mitsuru Obe.

Governments view startups as a crucial solution to bolster national security amid growing geopolitical tensions and uncertainty. Your support to the sector can take various forms, from direct financing to project contracts.

Retail investors, meanwhile, are showing signs of impatience with the dearth of profitability and exit opportunities offered by the sector.

It's not all doom and gloom, nonetheless. In Japan alone, for instance, five space start-ups have gone public since 2023.

Pressed higher

Beijing's move to further restrict rare earth exports threw supply chains and foreign governments into disarray, but that was the case a boon for Chinese minersNikkei Asia Kenji Kawase writes.

Shares of China Rare Earth Resources and Technology hit an all-time high on Tuesday, while Xiamen Tungsten surpassed the recent high set in September 2021. Chinese Finance Ministry-backed Shenghe Resources Holding issued promising earnings guidance on the identical day.

China is the world's leading producer of rare earths, essential components of a big selection of technology and defense applications. Prices have risen since April, when the Chinese government imposed export restrictions on seven of 17 key minerals amid a trade war with the United States. On Thursday, the Ministry of Commerce announced that it could add five more rare earth minerals to the export control list.

One of the massive questions now is whether or not this latest measure is “just” a negotiating tactic or the brand new normal.

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