Nvidia goes big and US chip projects stutter

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Hello everyone, this is Akito from Singapore.

About two decades ago, I had a sneak peek at the PlayStation 3 before it was released at the former Sony Computer Entertainment headquarters in Aoyama, Tokyo. One of the standout features of the gaming console was its graphical performance. Although I’m not a gamer, I remember being astonished by how realistic a race car game being played on a large-screen TV looked.

The PlayStation 3 was a strategic product for Sony as the company aimed to increase its presence in the semiconductor industry. This console was equipped with a processor called “Cell’‘ that was jointly developed by the Sony Group, Toshiba and IBM. At that time, Sony aimed to incorporate Cells into a wide range of products, such as flatscreen TVs and home servers. The grand vision was for these chips to be used in all home digital equipment, just as Intel’s chips were (and still are) ubiquitous in personal computers.

The Cell strategy ultimately failed as Sony couldn’t recoup the massive manufacturing investment.

But the PlayStation 3 was equipped with another chip that would become the centrepiece of today’s semiconductor industry — a graphics processor that used Nvidia’s technology to generate realistic graphics. Some 20 years later, Nvidia has ridden this technology to the top of the semiconductor industry.

Nvidia goes big

Nvidia has unveiled its latest graphics processing unit (GPU) for artificial intelligence computing as the Silicon Valley company looks to cement its grip on the global market for AI chips, writes Nikkei Asia’s Yifan Yu.

During its annual GPU Technology Conference, the company announced the new Blackwell GPU, which it says provides better AI training performance and energy efficiency than its popular predecessor.

Nvidia says Blackwell will power artificial intelligence developed by OpenAI, Microsoft, Google and other major players in the AI industry. Top tech executives such as Sam Altman, CEO of OpenAI, and Elon Musk, CEO of Tesla and formerly X, endorsed Nvidia’s technology.

One immediately obvious difference between Blackwell and its predecessor is its size: The new GPU is about twice as big as the Hopper GPU, giving it more processing power. Jensen Huang, Nvidia’s co-founder and CEO, showed off the new chip before an audience of thousands. “Hopper is fantastic, but we need even bigger GPUs,” he said.

Surging sales, uncertain future

TikTok has hit $16bn in sales in the US, where the viral video app that has hooked Gen Z users is at risk of being banned, writes the Financial Times’ Ryan McMorrow.

The app, owned by Beijing-based ByteDance, achieved record revenues in the US in 2023, three people with knowledge of its finances told reporters at the FT.

TikTok’s surging revenue in the US and around the globe has put its parent company on track to overtake Facebook owner Meta as the world’s largest social media company by sales.

ByteDance racked up $120bn in revenues in 2023, up about 40 per cent from a year earlier. Meta, in comparison, reported $135bn in revenues for the year, up 16 per cent from 2022.

The figures come as TikTok’s future in its largest market was plunged into doubt after the US House of Representatives approved a bill to force TikTok to be sold to a non-Chinese company within six months or be banned from US app stores.

A chill in the air

Higher US interest rates have taken most of the blame for a global downturn in tech start-ups. But in south-east Asia, one institution has an outsize influence on tech fortunes: SoftBank Group’s Vision Fund. In the first quarter of this year, start-up funding fell to around $800mn as of March 18, dropping to the 2017 level when the Vision Fund was founded, write Nikkei Asia’s Akito Tanaka and Tsubasa Suruga.

Ride-hailing, delivery and other digital start-ups have transformed daily life in south-east Asia. But as these companies’ money dried up and the market began to mature, regular users have also started to feel squeezed by a steady rise in fares and platform fees in recent years.

Desert strains

While chip demand from the AI boom continues to grow, at least five suppliers to Taiwan Semiconductor Manufacturing Co and Intel have delayed the construction of facilities in Arizona, where the Taiwanese and US tech giants are also building their own manufacturing sites.

Constructions on facilities of chemical and material makers LCY Chemical, Solvay, Chang Chun Group, KPPC Advanced Chemicals (Kanto-PPC) and Topco Scientific in Arizona have been put on hold or significantly scaled back, write Nikkei Asia tech correspondents Cheng Ting-Fang and Lauly Li. These facilities are vital for building a complete chip supply chain.

The delays in construction for these facilities are attributed to surging costs for building materials and labour, as well as a shortage of construction workers. The suppliers also cited slower-than-expected progress on Intel’s and TSMC’s expansions for the postponements. According to one expert, “Many materials companies are worried about investing too quickly for fear that they will have a new factory or expansion built before it is needed.”