Nvidia’s trillion-dollar dinner and a fight for AI users in China

Greetings from Katey here in Tokyo, where a snowy Sunday election has come and gone, leaving Prime Minister Sanae Takaichi with a resounding victory and a long to-do list.

Somewhere on that list, which includes tackling a cost-of-living crisis and managing an unusually challenging relationship with the U.S., are Japan’s high-tech ambitions. Successive governments have made a renaissance of Japanese chipmaking a key priority, most notably by pouring billions of dollars into startup Rapidus.

So it must have been extremely welcome news for Takaichi when C.C. Wei, CEO of Taiwan Semiconductor Manufacturing Co., arrived in Tokyo last week to discuss plans for upgrading his company’s second chip plant in Kumamoto, Japan.

TSMC already has one plant up and running in the southwestern prefecture. The second facility, still under construction, was originally meant to produce 6- and 7-nanometer chips. Advanced, for sure, but still a few generations away from cutting edge. Such is the demand for AI chips, however, that TSMC has decided to make 3-nm chips instead and potentially serve not only local demand but even global customers. (Rapidus, by the way, is supposed to start making even more advanced 2-nm chips in 2027 — the smaller the number, the more powerful the chip, generally speaking.) TSMC announced the strategic upgrade for the Kumamoto plant this week, after taking the rare step of holding its annual board meeting there rather than at home in Taiwan.

This is just the latest example of how appetite for AI computing power is providing the impetus for supply chain shifts and upgrades that political will alone has been unable to provide. In the U.S., for example, demand for AI data centers is drawing investment from numerous Nvidia suppliers, as Nikkei Asia’s veteran tech correspondents in Taipei report.

For now, the AI tide is lifting all boats, at least when it comes to hardware manufacturing. As for applications, however, the story is a bit more fraught. Ranging from unease over jobs in India to the all-out battle for users and market share unfolding in China, the divide between the exuberance of toolmakers and the harsher realities for tool users is growing increasingly stark.

A rich meal

At a recent dinner in Taipei, Nvidia CEO Jensen Huang raised a toast to the island’s formidable tech supply chain. He thanked the suppliers for ensuring the smooth rollout of Nvidia’s AI chips and later told reporters that, “Without Taiwan, there will be no Nvidia today.”

But of the 25 or so companies that attended the “trillion-dollar dinner,” including Foxconn, Wistron and Quanta Computer, roughly a third are making massive investments to expand production in the U.S., write Nikkei Asia’s Lauly Li and Cheng Ting-Fang.

While geopolitical tensions and President Donald Trump’s tariff threats have played a role in these investment plans, the most decisive factor has been America’s relentless appetite for AI computing power. Building capacity closer to key customers is good business sense for many suppliers, but the increased spending is also raising concerns. One is unease over what many see as the bubble-like nature of the AI boom. The other is where such production shifts will leave Taiwan’s tech-dependent economy.

Orange explosion

Chinese consumers are snapping up Apple’s new iPhones, with a flashy “Hermes orange” premium model going viral and helping reverse a lengthy sales decline in one of the U.S. tech giant’s largest markets, write the Financial Times’ Ryan McMorrow and Michael Acton.

Chief executive Tim Cook recently touted Apple’s record-breaking iPhone sales in China in the fourth quarter, when revenue jumped 38% year-on-year to $26 billion, contributing nearly a fifth of total sales.

Analysts said a design refresh for the iPhone 17 range has reinforced Apple’s status-symbol position in China by making the latest handsets more immediately recognizable as new and high-end.

In particular, the new vivid orange-colored device has attracted thousands of online posts and videos from fans showing off their new phones since its launch last autumn. The phone has been dubbed “Hermes orange” for its resemblance to the French luxury brand’s signature hue, though Apple officially calls the tone “cosmic orange.”

“It sounds simple, but it’s the external obvious changes to design, which includes the introduction of a shout-out orange color, that pulled out early upgraders,” said IDC senior research director Nabila Popal.

The turnaround in China reverses a roughly three-year sales slump that left investors questioning the tech company’s future in the highly competitive smartphone market where it vies for attention against domestic rivals such as Huawei, Vivo and Xiaomi.

Pushing the envelopes

China’s biggest AI companies are releasing new models and handing out “red envelope” freebies to woo users ahead of the Lunar New Year holiday, traditionally a prime season for companies to drum up consumer interest in Asia’s largest economy, writes Nikkei Asia’s Cissy Zhou.

ByteDance’s Volcengine will be the exclusive AI cloud partner for national broadcaster CCTV’s 2026 Spring Festival Gala, which draws hundreds of millions of viewers every year, while Tencent and Alibaba are hoping users will be attracted to the digital equivalent of cash-filled envelopes traditionally given as gifts during this time of year. Several AI players are also releasing new models during a season analysts describe as “critical” for attracting consumer attention.

“The Spring Festival is China’s most important holiday and a period uniquely suited to mass user adoption. Products launched or promoted during this window can more easily trigger explosive growth, potentially attracting hundreds of millions of users in a short time,” said Zhang Yi, CEO and principal analyst at Guangzhou-based consultancy iiMedia Research Group.

Watch your headcount

U.S.-based Anthropic recently released a string of new and updated AI-powered workplace tools, and India Inc. is feeling the effect, writes Nikkei Asia’s Sayan Chakraborty.

Advances in AI agents, analysts say, are threatening to reshape the role of India’s technology outsourcing companies by putting downward pressure on headcount. Share prices of the likes of Tata Consultancy Services (TCS) have already tumbled, underscoring persistent concerns over the nearly $300 billion sector’s ability to navigate rapid advances in AI.

An update to Anthropic’s Claude has boosted the model’s coding abilities, while its new Claude Cowork tool promises to help enterprises automate legal, finance, sales and marketing work, among other things.

The proliferation of AI has led to a “full-blown shift in client psychology,” said Sanchit Vir Gogia, chief executive at technology consultancy Greyhound Research. “The question has moved from ‘How many people [do] we need?’ to ‘Why do we still need so many people?'”

Suggested reads

1. South Korea’s battery makers eye robot market as EVs slump (Nikkei Asia)

2. EU warns TikTok over addictive feeds and risks to children (FT)

3. Vietnam’s FPT partners with UAE’s G42 on AI data centers (Nikkei Asia)

4. US plans Big Tech carve-out from next wave of chip tariffs (FT)

5. Top China chipmaker SMIC says industry in ‘crisis mode’ over memory crunch (Nikkei Asia)

6. TSMC turns Japan into 3rd advanced chip base as AI demand soars (Nikkei Asia)

7. Chinese companies overtake US in Singapore investment (FT)

8. Fujitsu to boost server production in Japan, eyeing sovereign AI demand (Nikkei Asia)

9. China has seized Sony’s television halo (FT)

10. Andreessen Horowitz backs AI virtual character in 1st Japan-related bet (Nikkei Asia)

Podcast: Tech Latest

Japan focuses its rare earths strategy on non-China sources

Welcome to the Tech Latest podcast. Hosted by our tech coverage veterans, Katey Creel and Shotaro Tani, every Tuesday we deliver the hottest trends and news from the sector.

In this episode, Katey speaks with Shotaro about Japan’s strategy to secure non-Chinese sources for rare earth minerals.

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