TSMC’s big US bet and China’s chip tool challenger

Hello! This is Lauly, saying hi from the warm weather in Taipei.

I can’t believe it’s already been weeks since I returned from Barcelona covering the annual Mobile World Congress, one of the biggest tech exhibitions in a year. As my colleague Annie Cheng Ting-Fang mentioned in her newsletter, we had to take cold showers for three nights at our hotel due to a plumbing issue, walked more than 10,000 steps at the expo and then had to endure subway disruptions for two straight days.

And that was not all. I remember I was on my way back from the exhibition to the hotel when I was alerted that CC Wei, chair and CEO of TSMC, the world’s biggest contract chipmaker, was going to announce a major investment at the White House. My jaw dropped and I texted Annie, and hers dropped as well. I jumped out of the train when it arrived at the station, quickly bought two baguettes (important, as that would be our only food for the night), and ran back to the hotel to start writing. Meanwhile, Annie left a media gathering for a Chinese smartphone maker and hurried back to join me. It had already been such a long day, but thanks to the help of our US colleagues, we were able to cover TSMC’s $100bn investment announcement.

Back in Taiwan, we spent two weeks talking to more than a dozen chip industry people and analysts to try to understand what this bold bet on the US would mean economically and politically. The announcement has become a political saga at home. I was amazed to see politicians from both ends of the spectrum all suddenly becoming linguists, translating and deciphering each word of President Donald Trump when he said the US would still have a “big part” in the chip industry should any conflict break out in the Taiwan Strait. From social networks to political talk shows, TSMC dominated the public discourse for more than a week.

And then there was GTC, the annual tech event hosted by Nvidia, the world’s biggest AI chip company.

I went to lunch with an executive of an Nvidia supplier a day before he flew to San Francisco for the event. We chatted about TSMC’s investments in the US and Nvidia’s rather volatile stock performance since the emergence of China’s DeepSeek. Like many in the Nvidia AI server supply chain, the executive assured me that the robust demand from cloud service providers persists and that all AI server suppliers are hoping Nvidia will allocate more orders to them.

“Lauly, do you know why I need to attend this year’s GTC, why every high-ranking executive from all of the suppliers attend the GTC? It’s like participating in the Matsu Goddess Pilgrimage to get closer to Matsu,” he joked. “If you go and pray, you will get the chance to be blessed.”

TSMC’s biggest bet

Taiwan, which boasts the second-largest semiconductor industry in the world, has long taken a measure of comfort in its “Silicon Shield”, the concept that its crown jewel chip economy makes it too important for the US not to defend it should China ever invade. But what if the shield is weakened?

That question has been growing over the years, and it took on even more urgency when TSMC chair and CEO CC Wei stood alongside US President Donald Trump and announced plans to invest an additional $100bn to build more plants in the country, write Nikkei Asia’s Cheng Ting-Fang and Lauly Li.

TSMC’s planned investment in the US has ballooned from an initial $12bn in 2020 to $40bn in 2022, then to $65bn in 2024 and finally to $165bn, more than 10 times its original commitment and its largest overseas investment ever.

The Taiwanese contract chipmaking titan is even busier expanding capacity at home, too, but this cannot disguise the fact TSMC and Taiwan more broadly are facing unprecedented levels of pressure from the US and China.

“We don’t see the tides turning overnight,” a longtime chip equipment executive told Nikkei Asia. “But in five to 10 years, if US investments fully materialise, they will certainly weaken Taiwan’s role as the world’s top hub for advanced chips. You can’t expect TSMC to replicate these costly facilities in two places.”

The DeepSeek effect

DeepSeek released an update to its open-source model V3 this week, which ranked highly on independent benchmarks for assessing the model’s performance. Once again, developers praised the small start-up for sharing its secret sauce with the AI community for free, write the Financial Times’ Eleanor Olcott, Ryan McMorrow and Zijing Wu.

The research lab is shaking up the global AI competition with its powerful and free open-source models. Its success has prompted some soul-searching among local rivals that have poured money into model training without the same results.

Moonshot, owner of the popular Kimi chatbot, has slashed its marketing budget to focus on model training. Meanwhile, Baichuan laid off its sales team devoted to selling to financial institutions in February, opting to double down on its healthcare focus.

Investors in Zhipu are questioning why the start-up is burning through so much cash. Last year, Zhipu, once considered Beijing’s favoured large language model start-up, made Rmb300mn in sales and Rmb2bn in losses. It has pinned its hopes on an IPO to sustain its cash-intensive growth, but DeepSeek’s newfound popularity may complicate its path to a listing.

The Beijing-based 01.ai stands out from the crowd, having fully embraced what it calls a “DeepSeek Age”. The Kai-Fu Lee-founded start-up stopped pretraining LLMs in late 2024 and, in recent weeks, has pivoted to focus on selling tailored AI business solutions using DeepSeek’s models.

An AI for an AI

In Mandarin, there is a saying similar to “a taste of your own medicine” in English. As scammers around the world use artificial intelligence to ensnare victims, companies like Apate.ai are giving them a dose of this, using AI to counter the scams, Nikkei Asia’s Shaun Turton writes.

The Australian start-up uses AI bot to create “victims” to soak up scammers’ time and gather insights into their activities. Their Apate Voice product creates AI personas that field calls and engage with scammers whose tactics range from impersonating bank staff and merchants to pushing fraudulent investment schemes. The company also created Apate Text, which does the same thing for text exchanges.

The global scam industry has boomed in recent years. A 2024 Global Anti-Scam Alliance report estimated people around the world lost $1.03tn in 2023, with only 4 per cent of victims able to fully recover their money. South-east Asian countries like Cambodia and Myanmar have emerged as hotspots for scam operations, which are also linked to human trafficking.

In this environment, Apate.ai sees many opportunities for its product, which can handle tens of thousands of calls and is already being used in Australia, the UK and Singapore, with collaborations with governments, cryptocurrency exchanges and financial institutions.

An alternative to ASML

Shenzhen SiCarrier Technologies, a Chinese chipmaking tool maker linked to Huawei, has been quietly developing a wide range of equipment to replace tools made by ASML, Applied Materials and Lam Research as part of the national effort to unshackle the most painful supply chain choke point created by US export controls, according to this scoop by Nikkei Asia’s Cheng Ting-Fang and Lauly Li.

Founded in 2021 and backed by the Shenzhen government, the company has been developing machines involving lithography, chemical vapour deposition, measurement, physical vapour deposition, etching and atomic layer deposition, all fields that are currently dominated by companies from the Netherlands, US and Japan, said multiple people familiar with the situation.

SiCarrier has been working closely with Huawei’s growing team of specialists in chip production and chip equipment making, multiple sources with knowledge of the matter said.

In a recent post on WeChat, SiCarrier said it will launch a wide range of chipmaking equipment machines during the SEMICON China industry fair this week, including a new atomic layer deposition (ALD) tool named Alishan, after a famous mountain in Taiwan.

Suggested reads

1. Nvidia’s China sales face threat from Beijing’s environmental curbs (FT)

2. Vietnam approves Starlink service in 5-year pilot plan (Nikkei Asia)

3. Malaysia to crack down on Nvidia chip flows under US pressure (FT)

4. Carmakers focus on hybrids as Thai EV market struggles (Nikkei Asia)

5. Samsung CEO Han Jong-hee dies of cardiac arrest (Nikkei Asia)

6. China is suffering its own ‘China shock’ (FT)

7. Trump administration hits China with slew of tech export controls (Nikkei Asia)

8. US investors in ByteDance explore TikTok deal to appease Donald Trump (FT)

9. Nissan incoming CEO Espinosa has ‘no taboos’ on partnerships (Nikkei Asia)

10. Japan is out of the chip race but still in the game (FT)

#techAsia is co-ordinated by Nikkei Asia’s Katherine Creel in Tokyo, with assistance from the FT tech desk in London. 

Sign up here at Nikkei Asia to receive #techAsia each week. The editorial team can be reached at techasia@nex.nikkei.co.jp