Robot dolls, chip shortages and Apple’s soft sales

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Hello everyone, this is Cissy in Hong Kong. One of the biggest surprises in Chinese politics for me this week was the probe into Huang Qifan, the former Chongqing mayor who served under two disgraced Chinese Communist Party heavyweights — Bo Xilai and Sun Zhengcai — and somehow emerged unscathed from both purges.

In 2019, when I was in Shanghai for an event, I overheard a conversation between Huang and the chairman of one of China’s biggest private companies. The chairman asked Huang: “What’s your secret for surviving when everyone around you keeps getting arrested?” Huang laughed, said something vague, and added that he would one day write a book about everything he has been through. Seven years later, before we can read that book, he is now under investigation for alleged corruption.

The real reasons for the inquiry remain unknown. Some speculate that he has been too high-profile after his retirement; others suspect straightforward corruption. Either way, his aura of political invincibility has vanished.

It has also been a busy week on the ground. On Tuesday, I visited an electronics show organised by the Hong Kong Trade Development Council. It was another event once again awash with robots from mainland China.

One that drew plenty of attention was UBTech’s companion humanoid robot: a life-size female figure with long, curly hair, delicate make-up, a Chanel-style skirt suit and pearlescent, glittery high heels. Sitting on a sofa, the robot — or, as I’d rather call it, doll — fooled me into thinking it was a real person at first glance. It looked just like a typical Chinese social media influencer posing for photos against just about any backdrop.

Up close, the face reads as human, largely thanks to make-up. The skin on its arms and legs, however, was a dead giveaway that it was made of silicone.

I’d call it a doll with a chatbot, as it cannot even dance like other robots, but the market apparently disagrees. The product has already begun shipping in China, with the male version outselling the female one, and the customer base skewing heavily toward young women, UBTech’s global sales director told me.

She added that people are spending $20,000 on this creature to use it for emotional support. A flagship model featuring autonomous navigation and higher computing power costs $130,000.

The global sales director also told me that the company believes Japan could become their biggest market due to huge potential demand in the country. UBTech is still working to obtain the necessary certifications to sell its robots there.

NTT to build Anthropic’s first Japan data centre

It’s not just Chinese robot makers setting their sights on Japan. US frontier AI labs are also looking to expand there, with Anthropic set to establish its first dedicated data centre in the country, according to Nikkei’s Kosuke Shimizu, Katsuyuki Tanimoto and Shugo Tamura.

It will be built by Japan’s NTT Data Group, the world’s third-largest data centre operator by market share. The facility in Osaka prefecture will be one of Japan’s largest, potentially costing ¥1tn ($6.3bn), or ¥7tn if including the advanced AI servers to be installed later.

But securing power will be a challenge, so the project will initially consider alternatives, including on-site generation and fuel cells.

China’s AI chip shortfall

China has made AI development a national strategic priority and more than doubled the production of domestic AI chips this year, led by companies including Huawei, Alibaba, Baidu and Cambricon.

But it is still not enough to meet soaring demand from the country’s biggest tech companies, report the FT’s Zijing Wu and Eleanor Olcott.

Alibaba, ByteDance and Tencent alone are expected to more than double their capital expenditure this year to about Rmb700bn ($104bn), according to people familiar with their plans.

Domestic supply of AI chips is expected to reach as many as 3.5mn units this year, including about 1mn manufactured overseas, but total demand is estimated to far exceed 5mn, according to industry insiders.

The imbalance is expected to become even more pronounced next year. Domestic chip production is forecast to increase again, but demand could more than double, exceeding 10mn units and leaving a significant shortfall.

The widening gap between demand and domestic supply presents a challenge not only for Chinese tech groups trying to catch up with US rivals but also for Beijing as it seeks to build a self-sufficient AI industry.

To help bridge the gap, Chinese technology groups have turned to Nvidia’s gaming and workstation processors that comply with US export controls but can be repurposed for some AI workloads.

Chinese technology companies have bought more than 1mn Nvidia gaming and workstation chips this year, according to multiple industry insiders.

Read more in the second of the FT’s three-part series on China’s data centre dreams.

SB Energy does SoftBank’s AI spadework

Japan’s SoftBank is expanding beyond tech investments to build the physical infrastructure needed to power AI. At the heart of this shift is a proposed $33bn natural gas-fired power complex and data centre campus in Ohio, set to serve OpenAI’s needs, Nikkei Asia’s Tsubasa Suruga, Pak Yiu and Yifan Yu write.

One of the developers is SB Energy, a renewable energy company now central to SoftBank Group founder Masayoshi Son’s plans to expand into AI infrastructure. The company filed for a Nasdaq listing in September, seeking an estimated $50bn valuation, but the offering has since been delayed following volatility in AI-linked stocks.

However, most of SB Energy’s revenue still comes from power and renewable energy operations, as it has no operational data centres yet. The company posted a net loss of about $3.2bn in the first half of the year. Analysts view the venture as a high-risk, high-reward power play.

Meanwhile, SB Energy’s close ties with OpenAI and Nvidia may also concern investors. The two are expected to become important shareholders, while OpenAI is the anchor customer for most of its planned data centres. Nvidia supplies the chips that will run inside them and is supporting financing arrangements for some projects.

Apple cuts iPhone 18 Pro orders due to soft demand

Apple is cutting orders for components for its newly launched iPhone 18 Pro and iPhone 18 Pro Max, slashing them by at least 15 per cent in October compared to the original request. Soaring memory chip costs forced price increases that have dampened consumer demand, multiple people familiar with the matter told Nikkei Asia’s Cheng Ting-Fang and Lauly Li.

Another source said that volume demand from late August into October has been softer than previous years, but that this could be related to Apple changing its launch schedule for iPhone models.

The decline in shipment volume would not immediately translate into lower revenue for Apple, as all models have become at least 10 per cent more expensive than last year’s.