Nvidia's chip base has a new president

Hi all. This week, Taiwan swore in a new president, Lai Ching-te, against the backdrop of escalating tension with China over the territory’s [View in browser]( [Bloomberg]( [by Tom Giles]( Hi all. This week, Taiwan swore in a new president, [Lai Ching-te](bbg://people/profile/20388226), against the backdrop of escalating tension with China over the territory’s political— and, importantly, technological — independence. But first... Three things you need to know today: • AI is helping sell [perfume and cosmetics in India]( • Nvidia’s earnings were [once again exceptional]( • The world’s biggest PC maker [also reported an AI boost]( Where trillion-dollar companies are made Along with my colleague Debby Wu, I had the chance to attend Lai’s inauguration, a morning-long affair under overcast Taipei skies at the presidential palace overseen by a grand portrait of Sun Yat-sen, the revolutionary Chinese leader. The proceedings swung from august to festival-like, with elements you’d witness at an Olympics opening ceremony — choirs, dancers, acrobats and even a ginormous likeness of a steam-snorting, rainbow-maned blue horse meant to symbolize Taiwan’s diversity. But the celebratory air had decidedly defiant undertones. There were multiple flyovers by military aircraft, including a helicopter flying the Taiwanese flag. There was a raucous performance of the song Let Me Stand Up Like a Taiwanese by the popular rock band Fire EX, which hails from Kaohsiung. (I saw one small group of young people forming an impromptu mosh pit). And, in his inaugural address moments later, Lai made clear he too will stand firm — against threats from Beijing. All this matters to us in tech because, well, there’s no multitrillion-dollar Nvidia Corp. or Apple Inc. without the chips manufactured on this island. Taiwan Semiconductor Manufacturing Co. is the most important company not just here, but also to a good chunk of the US stock market. “I call on China to cease their political and military intimidation against Taiwan, share with Taiwan the global responsibility of maintaining peace and stability in the Taiwan Strait as well as the greater region,” Lai [said]( Monday. He also said that Taiwan and the People’s Republic of China are not “subordinate” to each other, drawing loud cheers from the audience. China’s response came Thursday, as it held its [most expansive military drills]( in Taiwan’s vicinity of the past year. It was a punishment for separatist acts and “a stern warning against the interference and provocation by external forces,” according to a military spokesman cited by the Xinhua News Agency. The complicated and sometimes tense relationship between Taiwan and China was on the minds of many people I met over my several days in Taipei. “Sovereignty is the most important thing to Taiwanese,” said Chuang Han-ting, 21, who was in the audience Monday along with a group of more than half-dozen other young people who identified as supporters of Lai’s Democratic Progressive Party. “The China problem is very dangerous.” Some of Chuang’s companions underscored the need for Taiwan to “decouple” from China and strengthen ties to global allies, including the US. “The more connected with the world, the safer Taiwan is,” said Wang Jia Wei, 24. He and other attendees sitting nearby pointed with pride to the territory’s economic development, especially in the area of technology. “Taiwan has good technology and talent in science,” Wang said. (Shout out to Google Translate for narrowing communication gaps resulting from my rudimentary Mandarin!) China has actively pushed against Taiwan’s efforts to build up diplomatic ties with other major economies, though the island’s role as an indispensable provider of the world’s fastest chips has helped it secure cooperation agreements with the likes of France and Germany in recent times. My colleagues over at Bloomberg Economics took a close, if unnerving, examination of the [economic dimensions of tensions](bbg://news/stories/SDU8MUDWRGG0) between China and its island neighbor, publishing a tally of costs of a concerted effort by China to stanch the flow of chips from Taiwan. “A real blockade that cut Taiwan off from the world would choke off a significant portion of global semiconductor supplies,” analysts Jennifer Welch and Gerard DiPippo wrote this week. “Our modeling exercise suggests that could cost the world economy about $5 trillion.” Thankfully, that same analysis put the odds of a full blockade at only 5%. Phew. “China’s military has long studied a potential blockade against Taiwan. This could take several forms, from a full military blockade to something less obviously threatening. It could be used in isolation to force Taiwan’s submission, but more likely as part of an amphibious invasion campaign.” — Bloomberg Economics As unlikely as this scenario is, Taiwan isn’t taking chances. The territory’s annual military drills this year will simulate what it would take to break a blockade by China, Bloomberg Economics wrote, citing a [report]( by Reuters. Nor, for that matter, are ASML Holding NV and TSMC, which have built in ways to disable the most advanced chipmaking machines in the event of a Chinese invasion, my colleagues [reported]( this week. We all got a vivid reminder of Taiwan’s significance as a global tech hub Wednesday, when one of TSMC’s biggest customers, Nvidia Corp., [issued]( a sales forecast that topped analysts’ estimates and sparked a rally in its shares. President Lai nodded to the territory’s chipmaking prowess in his remarks Monday. “Taiwan has already mastered advanced semiconductor manufacturing, and we stand at the center of the AI revolution,” he said. “We are a key player in supply chains for global democracies.” “With every step forward that Taiwan takes, the world takes a step forward with us,” the new leader said. That’s some heady rhetoric, even for a new president. But given that Taiwan accounts for the bulk of the world’s most advanced chips, he’s got a point. Along with my Taipei-based colleagues Debby Wu and Jane Lanhee Lee, I look forward to telling more of the story of Taiwan and its tech industry — because that’ll help determine the path for global tech as a whole.—[Tom Giles](mailto:tgiles5@bloomberg.net) The big story Have you heard of Xiaohongshu? It’s one of China’s most popular apps, delivering what might be deemed a mix of Instagram and Pinterest. It’s caught the attention of brands, which are increasingly [leveraging it to reach the country’s Gen Z women.]( One to watch [Watch Alexandr Wang, CEO of startup Scale AI, interviewed on Bloomberg Television about the company’s latest fundraising round.]( Get fully charged South Korea has set aside $19 billion in funding and subsidies [to help its chipmaking and design industry.]( OpenAI has struck a deal with the [publisher of the Wall Street Journal.]( Amazon announced a €15.7 billion investment in Spain over the coming decade to [build out its global Amazon Web Services network.]( Russia’s misinformation machine has turned its focus to [the Slovak assassination attempt.]( Mark Zuckerberg has set up an advisory council to help guide Meta’s [development of AI and other novel tech products.]( More from Bloomberg Get Bloomberg Tech weeklies in your inbox: - [Cyber Bulletin]( for coverage of the shadow world of hackers and cyber-espionage - [Game On]( for reporting on the video game business - [Power On]( for Apple scoops, consumer tech news and more - [Screentime]( for a front-row seat to the collision of Hollywood and Silicon Valley - [Soundbite]( for reporting on podcasting, the music industry and audio trends - [Q&AI]( for answers to all your questions about AI Follow Us Like getting this newsletter? 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