New and improved sanctions

Hi, this is Debby in Tokyo this week. The US is planning to slap more restrictions on China’s access to artificial intelligence chips at the [View in browser]( [Bloomberg]( Hi, this is Debby in Tokyo this week. The US is planning to [slap more restrictions]( on China’s access to artificial intelligence chips at the same time as China’s AI leader is touting it has its own ChatGPT. But first... Three things you need to know today: • Sales of the iPhone 15 are[down 4.5% in China]( • LinkedIn is [cutting 668 jobs]( • TikTok is fighting the EU’s [data privacy fine]( New and improved sanctions Like the launch of a new iPhone, the US is preparing to introduce what it will call new, upgraded, more effective sanctions on China’s tech. And like the latest iPhone, those measures might [underwhelm](. The latest guidelines will set new limits for companies like Nvidia Corp., which has been selling a slightly less powerful variant of its flagship AI accelerators to Chinese customers, and likely further impact the business of US equipment suppliers including Applied Materials Inc. There are additional measures to ensure that China will not obtain cutting-edge AI semiconductors via alternative routes. This is all exceedingly timely because of China's growing ambitions in AI. Earlier today, Baidu Inc., one of those Nvidia customers, took over a large Beijing venue to [tout its Ernie Bot](, an AI system it now claims is as good as OpenAI’s best GPT-4 model. There are [growing concerns]( in Washington that existing export controls have failed to achieve the Biden administration’s goal of curbing China’s pursuit of critical technologies like semiconductors that can be used in military applications. You won’t hear those voiced right now, as the Israel-Hamas conflict dominates the agenda, but they persist and will factor into the new sanctions. China, for its part, shows no signs of slowing its pursuit of tech and geopolitical supremacy. The latest cartoon in Beijing mouthpiece Global Times, dubbed [Self-sabotage](, depicts the US export controls as a form of self-harm inflicted by Washington on American chipmakers. Also earlier on Tuesday, Russian President Vladimir Putin [arrived]( in Beijing to meet senior Chinese leaders. Last month, US Secretary of Commerce Gina Raimondo [said]( she was “upset” that Huawei Technologies Co. released its advanced 5G phone during her visit to China, ostensibly flaunting the tech advance in the face of the US official responsible for implementing sanctions to foil China’s ascent. Huawei, the most heavily sanctioned of all Chinese companies, has resumed its former status as a formidable rival to Apple Inc. in China. Jefferies analysts led by Edison Lee [reckon]( sales of the iPhone 15 were down by a double-digit percentage from its predecessor after Huawei outsold Apple overall, powered by the surprising debut of the Mate 60 Pro. A number of analysts, including Haitong International Securities’ Jeff Pu, estimate that Huawei is likely to build as many as 70 million phones with its own Kirin chips in 2024, which is not an insignificant amount, especially when those are likely to be focused on the world’s biggest handset market. Apple gained market share in China when Huawei’s phone business was derailed by trade restrictions, and it may have to relinquish those gains now that Huawei’s worked its way around some of the limitations. No wonder Apple Chief Executive Officer Tim Cook is [making an appearance]( in China this week in what is potentially his attempt at a charm offensive to bolster Apple’s standing in its second-largest market. It’s unclear whether the new, remedial US measures targeting China’s technological progress will indeed thwart Beijing’s grand plans. For one thing, we can’t be entirely sure that every US partner will play along — already we’ve seen evidence of some Taiwanese firms [clandestinely helping]( Huawei. This we can say for sure: whatever the impact on US chipmakers, these trade curbs are only going to bolster state support for China’s domestic semiconductor firms. Cutting back on import options will make the development of indigenous tech all the more critical.—[Debby Wu](mailto:dwu278@bloomberg.net) The big story Grocers and stores like Walmart are increasingly opting to hand out [free samples instead of buying online ads](. Get fully charged An Australian watchdog fined X for failing to provide answers to how it [detects, removes and prevents child sexual abuse material](. The US is calling on other nations to [stop paying hackers’ ransoms](. TSMC dropped a plan to build an advanced chip fab in Taoyuan after locals protested government-led land acquisition. UC Berkeley is planning a [$2 billion development]( for an aerospace education and research complex on an existing NASA campus. More from Bloomberg Live event: The Bloomberg Technology Summit in London will host top technology leaders, business executives, innovators and entrepreneurs on Oct. 24. The event will explore the rapid advance of AI, green technology, the escalation of cyber warfare and more. [Register here](. 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