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The United Arab Emirates has announced plans to introduce AI education in curriculum in all government schools, making AI a mandatory subject from kindergarten through to grade 12, starting next academic year.

The initiative, announced by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, aims to provide children as young as four with understanding of AI technologies, principles, and ethical considerations.

“Our goal is to teach our children a deep understanding of AI from a technical perspective, while also fostering their awareness of the ethics of this new technology, enhancing their understanding of its data, algorithms, applications, risks, and its connection to society and life,” Sheikh Mohammed stated on May 4.

Global context: A competitive landscape

The UAE’s announcement comes amid a global rush by multiple nations to integrate AI education into their curricula, with each country adopting distinctive approaches based on their educational priorities and technological aspirations.

In Beijing, China, primary and secondary school pupils will receive a minimum of eight hours of AI-focused lessons each academic year beginning this autumn. Children as young as six will learn how to engage with AI-powered tools, gain a foundational understanding of the technology, and explore ethical considerations surrounding its use.

The Beijing Municipal Education Commission recently announced that schools may integrate these lessons into existing subjects like information technology and science or offer them as standalone courses.

Its plan includes developing a multi-year AI curriculum, establishing a structured education and training system, introducing support initiatives, and promoting awareness of the program. China’s approach is particularly notable as it has already taken concrete steps toward implementation.

Last December, China’s Ministry of Education selected 184 schools to trial AI-focused curricula, forming the basis for future expansion. According to Minister Huai Jinpeng, AI represents a crucial component of China’s educational strategy.

Estonia, with its already strong digital education foundation, is taking a different path. Estonia’s government recently partnered with OpenAI to introduce AI-driven education tools to secondary school pupils and teachers. From September, students in Years 10 and 11 will gain access to customised AI learning platforms, with additional support for educators in lesson planning and administrative tasks.

Comparing approaches

While the UAE curriculum appears comprehensive on paper, with 7 key areas spanning from foundational concepts to community engagement, it’s important to note that there has been no announcement yet on whether private schools, which are regulated separately, will be instructed to roll out AI classes.

This contrasts with China’s approach which appears to be moving toward broader implementation beyond pilot programmes. The UAE’s plan is ambitious in its age range, starting with four-year-olds, which is younger than many other programmes globally.

The curriculum is broken into three cycles, with tailored units for each age group. Four-year-olds will engage in visual and interactive activities to discover AI through play, while older students progress to comparing machines to humans, designing their own AI systems, andtually learning command engineering with real-world scenarios.

South Korea and Canada have taken different approaches, incorporating AI into existing school curricula, offering AI-powered learning materials and classroom tools for teachers rather than creating entirely new subject areas. The integration model may prove more practical for educational systems that face challenges in adding new subjects to already crowded curricula.

Critical assessment

What distinguishes the various approaches is not necessarily which country is “leading,” but rather how each nation’s AI education strategy aligns with its broader technological and economic goals.

For the UAE, the emphasis appears to be on creating a framework that starts from the earliest years of education. Sarah Al Amiri, Minister of Education, described the integration of AI in education as a “national imperative” that “supports economic growth, fosters sustainable development and significantly enhances individual capabilities.”

However, experts might question whether starting AI education at age four is developmentally appropriate, or if the UAE’s education system has the necessary infrastructure and teacher training to deliver such an ambitious curriculum effectively. The practical considerations will determine the program’s success beyond the ambitious announcement.

China’s approach benefits from the country’s established technological infrastructure and its significant investments in AI research and development, potentially giving it advantages in implementation. The selection of 184 schools for trial programmes demonstrates a methodical approach focused on gathering data before broader implementation.

In the UK, the approach has been more fragmented with at least one private school launching an experimental learning space where students use virtual reality headsets and AI platforms instead of traditional teaching methods. This reflects a more market-driven approach compared to the centralised government initiatives seen in the UAE, China, and Estonia.

Balancing technology and pedagogy

All these initiatives face similar challenges regarding the balance between technological innovation and sound pedagogical approaches. While AI can transform education by making learning more accessible and personalised, education authorities worldwide remain cautious.

The United Nations has highlighted the importance of responsible AI implementation, recommending clear guidelines, inclusivity, and a focus on human-centred learning.

The rush to implement AI education also raises questions about equity and access. Will these programmes exacerbate existing digital divides between well-resourced and under-resourced schools? Will all teachers receive adequate training to deliver these curricula effectively?

Looking forward

Rather than crowning any nation as the definitive leader in AI education, it’s more accurate to observe that there is something of a global recognition of AI litreacy as a component of future education. Each country’s approach reflects its unique educational philosophy, technological capabilities, and strategic priorities.

The UAE’s ambitious programme, China’s methodical implementation, Estonia’s partnership model, and other nations’ varying approaches will provide data on the results of AI education strategies. The true test will be in implementation, teacher training, curriculum quality, and ultimately, student outcomes.

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For years, American consumers have enjoyed a steady stream of incredibly cheap Chinese goods flowing directly to their doorsteps. The $10 t-shirts, $15 electronics, and $5 household items that populated platforms like Temu and Shein seemed almost too good to be true. And in a way, they were – propped up by a little-known trade provision called the “de minimis exemption” that allowed packages valued under $800 to enter the United States completely duty-free.

But as of May 2, 2025, that era of Chinese import tariff-free bargain hunting has abruptly ended. President Donald Trump has officially closed this loophole, meaning those same goods could now cost more than double as they face tariffs of up to 145%. The $10 t-shirt you ordered last month might now cost $24.50. The household gadget that was once $20 could balloon to nearly $50. The seismic shift has sent e-commerce giants scrambling to adapt their business models and left American consumers facing a new reality: the days of ultra-cheap Chinese imports are over. As Temu blocks US shoppers from seeing Chinese import products and Shein quietly incorporates the cost from tariffs into its pricing, we’re witnessing nothing less than a fundamental restructuring of global e-commerce dynamics.

What was the de minimis exemption?

The de minimis exemption, introduced in 1938 as Section 321 of the Tariff Act of 1930, allowed packages valued under $800 to enter the United States duty-free. The provision was originally designed to facilitate trade by eliminating the administrative burden of collecting negligible duties on low-value goods at a high cost to the government. Over time, this exemption became what a Congressional Research Service report called the “primary path” for Chinese exports to enter the US market From 2018 to 2023, the value of low-value e-commerce exports from China ballooned from $5.3 billion to $66 billion, according to a February report from the Congressional Research Service. US Customs and Border Protection processed a billion such packages in 2023, the average value of which was $54.

Why did Trump end the exemption?

In a cabinet meeting at the White House on Wednesday, Trump referred to the loophole as “a big scam going on against our country, against really small businesses,” he said. “And we’ve ended, we put an end to it.” The Trump administration cited multiple reasons for eliminating the exemption:

• Fentanyl concerns: President Trump in February said he would eliminate the loophole because he didn’t believe China was taking sufficient action to stem the flow of fentanyl into the US The administration said drug traffickers were “exploiting” the loophole by sending precursor chemicals and other materials used to manufacture fentanyl into the United States without having to provide shipping details.
• Protecting American businesses and jobs: The growing use of the loophole also threatened US jobs in warehousing and logistics. It encouraged major American retailers to ship more products directly from China to consumers’ doorsteps, avoiding larger shipments that were subject to tariffs and then distributed through US warehouses and delivery networks.
• Supporting domestic manufacturers: Kim Glas, the president of the National Council of Textile Organisations, which represents American textile makers and fought to eliminate the loophole, said it had “devastated the US textile industry.” Glas said it had allowed unsafe and illegal products to flood the US market duty-free for years.

How are retailers responding?

Major Chinese e-commerce platforms are already adapting their business models:

• Temu announced a dramatic shift to its business model. “All sales in the USare now handled by locally based sellers, with orders fulfilled from in the country,” the company said in a statement to CBS MoneyWatch. The company said on Friday that it would no longer ship products from China into the United States. Temu saidthat it “has been actively recruiting USsellers to join the platform,” and that “all sales in the USare now handled by locally based sellers, with orders fulfilled from in the country.”
• Shein announced it would begin adjusting prices on April 25. The company’s website tells shoppers that tariffs are “included in the price you pay.”
• Other retailers have started displaying tariff surcharges in their online shopping carts to help consumers understand where added fees are coming from.

Impact on consumers and markets

The end of the de minimis exemption will have far-reaching consequences:

• Higher prices: According to The New York Times, Gabriel Wildau, a China analyst at Teneo, an advisory firm, said the change would “take a bite out of Chinese exports” and “force online retailers whose main selling point is dirt cheap prices to raise their prices dramatically.” Wildau warned, “It’s a price shock for price-sensitive US consumers who really enjoyed access to cheap goods.” The same article notes that goods coming into the United States from China via private carriers like DHL or FedEx will be subject to tariffs of at least 145% – for example, adding $14.50 of duties to a $10 T-shirt.
• Potential product availability issues: Mary Lovely, an international trade expert and senior fellow at the Peterson Institute for International Economics, told CBS News “You’ll see a much-diminished market and at some point, it won’t be worth it to import to a small market,” so you’ll see products disappearing. As reported by Wired, Temu is currently blocking US shoppers from seeing products shipped from China, effectively narrowing the number of goods for Americans to choose from.
• Shipping delays: Ryan Young, a trade policy expert at the Competitive Enterprise Institute, explained to CBS MoneyWatch that “It will be an administrative nightmare, so you will see a lot of delays.”
• Changing consumer behaviours: According to CBS News, PwC consumer markets industry leader Ali Furman expects to see consumers start “trading down” by swapping name brands for store labels or even turning to resale platforms to stretch budgets.

Potential loopholes and enforcement challenges

Despite the administration’s intentions, several potential issues remain: Goods that come into the US from China via private carriers like DHL or FedEx will be subject to tariffs of at least 145%. But shipments that come in through the Postal Service face either a tariff of 120% of the value of the goods or a fee of $100 per package, which increases to $200 in June. The Postal Service appears to face less scrutiny for collecting tariffs on goods shipped from China to other countries and then into the US through foreign postal services. However the Postal Service has not been legally required to collect information on where products originate, and neither are foreign postal services. That could lead to an increase in schemes that try to bypass China tariffs by using the post office. Experts also question whether the government has enough CBP agents to efficiently inspect packages and enforce policies. Ram Ben Tzion, CEO of Publican, a company that authenticates shipment documentation, told CBS MoneyWatch: “As these adjustments are made, a key question remains, which is the ability of CBP to effectively regulate and enforce these measures. As of today. CBP does not have that ability.”

Who benefits?

While consumers may face higher prices and delays, certain groups stand to benefit from this policy change: Companies that sell goods made in the US could face less competition as previously cheap China-made goods rise to new price highs. Larger corporations with bigger profit margins, or more diversified businesses, will likely fare better than smaller retailers that operate on thin profit margins, making it difficult to re-jigger supply chains.

The future of e-commerce

As both retailers and consumers adjust to this new reality, the landscape of online shopping is fundamentally changing. Ben Tzion said to CBS MoneyWatch, “the way we shop online will never be the same.” Specifically, “everything will take more time, cost more money, and everything that’s price-sensitive won’t be available,” he said. For Asian businesses exporting to the US, this represents a significant shift in the economics of cross-border e-commerce. Companies will need to reassess their supply chains, and pricing strategies, and possibly even consider establishing US-based operations to remain competitive in this new environment where the days of duty-free Chinese imports under $800 are now firmly in the past. The Chinese import tariffs policy change marks not just the end of an era of ultra-cheap online shopping, but also signals a broader realignment of global e-commerce dynamics that will continue to unfold in the coming months and years.

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China’s gaming and animation industries are no longer just local success stories. With titles like Black Myth: Wukong and Ne Zha 2 drawing attention from global audiences, the country has shown its ability to produce content that travels well beyond its borders. At the same time, rapid adoption of artificial intelligence is reshaping how stories are made, blending machine efficiency with human creativity.

Tech Wire Asia spoke with Cheng Lu, President and CEO of CreateAI, about how Chinese studios are redefining entertainment, the role of AI in production, and what the future holds for immersive storytelling.

China’s growing influence in global gaming and animation

Asked about China’s role in shaping global entertainment over the next decade, Cheng points to the momentum already visible in the market. “China’s gaming and animation industries are gaining global dominance. Blockbusters like Black Myth: Wukong and Ne Zha 2 are showcasing our ability to captivate audiences worldwide,” he said.

That influence is backed by strong numbers. According to the “2025 H1 China Game Industry Report” from the Game Publishing Committee, the industry generated RMB 168 billion (USD 23 billion) in sales revenue in the first half of 2025 – a 14% year-on-year increase. Chinese self-developed games earned USD 9.5 billion overseas, underscoring their reach in a global market worth around USD 250 billion.

Cheng sees the next decade as one where Chinese studios can lead in immersive, AI-enhanced storytelling. “Fueled by rapid AI adoption and investment in creative production, Chinese studios are redefining entertainment with innovative technology and cultural storytelling,” he explains. “Over the next decade, China is likely to lead in immersive, AI-enhanced storytelling and cross-platform experiences, shaping global trends by blending technology with cultural heritage.”

Balancing AI efficiency and human artistry

AI has become more visible in creative production pipelines, raising the question of how to balance machine efficiency with human artistry. Cheng notes that animation, especially 2D, has long been labour-intensive. Scriptwriting, keyframing, and colouring often slow production, particularly when there’s a shortage of skilled animators.

Here, AI can make a difference without displacing artists. “AI can help studios produce higher-quality content more efficiently without sidelining human creators,” Cheng says. Tools like Animon.ai can turn simple images into anime videos, reducing repetitive tasks and giving artists more time to focus on storytelling.

The idea of synergy – AI handling technical tasks while humans guide the creative heart – runs through Cheng’s perspective. He points to the company’s recent release for example: “Our Animon.ai Studio Version, launched in July, exemplifies this approach by providing creators with tools like high-quality 2K visual generation and consistent keyframe editing, enabling both professionals and beginners to streamline workflows while retaining full creative control.”

Making local stories travel

Chinese titles often draw from local myths and traditions but still manage to resonate with audiences around the world. Cheng sees lessons here for other markets.

He highlights CreateAI’s game Heroes of Jin Yong, which reflects the role of chivalry in Chinese wuxia culture. “Chivalry is something that resonates in the world, but manifests uniquely in China with wuxia culture,” he explains. The broader lesson, he says, is to take cultural dynamics rooted in one place and show how they reflect universal human experience.

“All markets can consider cultural dynamics inherent to themselves that are shared in the human experience, and show how those come to fruition in their unique culture,” Cheng says. Done well, this approach lets people outside the culture connect to familiar values while sparking curiosity about a new one.

The future of immersive entertainment

Advances in motion capture, real-time rendering, and AI animation are already changing the entertainment industry. Cheng expects those shifts to accelerate. He outlines two big trends:

1. The gamification of everything. “Top content is becoming more immersive and interactive,” Cheng says.
2. Cross-media synergies. “Blending between what is a video game and TV show, and video game IP are being made into anime shows, and vice versa.”

At CreateAI, the team is exploring both directions. With the Three-Body Problem franchise, they are working on an anime feature film and a AAA video game, based on the second book of the series. The goal is to launch them side by side. “The generates maximum consumer exposure and greatly enhances fan experience,” Cheng says.

As AI gains the ability to generate characters, voices, and entire worlds, questions about authenticity and ethics are unavoidable. Cheng is clear on this point: “We believe in ‘safe AI’ and will do our part to promote the generative AI industry to grow according to high ethical values and local regulations.”

Asked to compare how AI and gaming innovation differ in regions, Cheng avoids making sweeping claims. “AI and gaming are truly global industries facing global competition,” he says. Still, he notes that companies succeed by excelling in three areas: creating compelling intellectual property, applying new technology for efficiency or storytelling, and using effective distribution channels.

Skills the next generation of China’s gaming creators will need

Looking ahead, Cheng sees a need for a new mix of skills among animators, developers, and storytellers. “The next generation of animators, game developers, and storytellers will need to blend technical proficiency with creative adaptability to thrive in an AI-driven industry,” he says.

A key mindset is to see AI as a tool for expansion rather than replacement. “Viewing AI as an opportunity to create more content, rather than a replacement, is key,” Cheng stresses. He also underlines the importance of cultural sensitivity and narrative innovation – qualities that make stories resonate beyond their home market.

Opportunities in China’s gaming and animation with AI

When asked what excites him most about the future, Cheng points to AI’s potential to open creation to more people. “At CreateAI, what excites us most is AI’s potential to democratise creation and deliver deeply personalised, immersive experiences,” he says.

“Our tools allow any fan to become a creator, freeing new opportunities in the creative economy, while adaptive narratives create immersive experiences,” Cheng explains. He sees breakthroughs coming from cross-platform projects, using global IPs like Heroes of Jin Yong and The Three-Body Problem to build both anime and AAA games.

That approach, he says, creates communities of fans and creators who help redefine how stories are consumed. “We have a full pipeline of projects currently, but we are always opportunistic to work with strong IP holders, using our technology and development know-how to innovate and bring immersive content to a global audience.”

Closing thoughts

From China’s expanding influence in the global gaming market to the role of AI in reshaping production, Cheng Lu’s perspective underscores how technology and cultural storytelling are increasingly intertwined. The future of entertainment, he suggests, won’t be about choosing between AI or human creativity but about finding new ways for them to work together.

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Apple’s thinnest iPhone may take longer to reach Chinese consumers as the country’s eSIM system is not yet ready for nationwide launch. The setback could delay availability of the iPhone 17 Air, a model expected to debut this month alongside the rest of the iPhone 17 lineup, according to the South China Morning Post.

At two Apple-authorised resellers in Foshan, Guangdong province, shop assistants said they had not received training on how to support eSIM. By comparison, Apple resellers in the European Union were asked to complete an eSIM training course by last week, MacRumors reported. The difference highlights how China may not be ready to match the iPhone’s global rollout schedule.

On Chinese social media, concerns about delays are gaining traction. Tech influencer Fixed Focus Digital, who has 2.3 million Weibo followers, said Wednesday that eSIM services in mainland China were “unlikely” to go live this month. He pointed out that mass production of the slimmer model, thought to be called the iPhone 17 Air, began later than the standard iPhone 17, the iPhone 17 Pro, and the iPhone 17 Pro Max. He also downplayed the impact, saying that later availability “isn’t problematic.”

Apple is still expected to reveal the iPhone 17 series on September 9, an event that typically draws global attention and sets the tone for the company’s holiday season sales.

China carriers send mixed signals on iPhone eSIM rollout

Hints of preparation have emerged from China Unicom, one of the country’s three state-owned telecom operators. Weibo user ChillsYaya wrote last week that the carrier had told staff to offer eSIM support for Apple devices. But it was unclear if the directive covered smartphones, since China Unicom already supports eSIM for iPads and Apple Watches. Neither Apple nor China Unicom responded to requests for comment on Wednesday.

In July, China Unicom updated its “5G AI terminal white paper” with eSIM phone specifications, a move seen as preparation for future iPhone support in China. Around the same time, users discovered a beta webpage for eSIM activation, though it only pointed customers to offline stores and gave no clear details on locations.

China’s three major carriers – China Unicom, China Telecom, and China Mobile – have been cautious about smartphone eSIM services. According to a July report from the state-backed China Business Journal, the operators have focused their eSIM development on wearables for now, while smartphone integration remains on hold.

Broader competition on thin designs

The eSIM issue in China extends beyond Apple’s iPhone. Rival smartphone makers are also working on thinner devices that rely on eSIM technology. Xiaomi, for example, lists 16 smartphones with eSIM support in overseas markets, suggesting that competition around slimmer hardware is already under way.

Apple’s September event will not just be about this year’s lineup. The company is beginning a three-year refresh cycle for its most important product. Reports suggest that next year may bring Apple’s first foldable iPhone, a move that would follow similar launches by Samsung Electronics and Google.

Siri’s next upgrade

Alongside hardware, Apple is also preparing major software changes.

Bloomberg‘s Mark Gurman reported that Apple is building an AI-powered search feature for Siri, internally known as “World Knowledge Answers,” a change that will affect how future iPhones function in China and elsewhere. The feature would pull information from the web and deliver AI-generated summaries, presented with text, photos, videos, and location details.

To make this work, Apple may have to rely on third-party services. Google is currently the front-runner to provide an AI model – likely from its Gemini family – that would run on Apple’s servers. The two companies reached a “formal agreement” this week for Apple to test Google’s model for Siri summaries, according to the publication.

The planned Siri upgrade is part of Apple’s broader but delayed effort to expand the voice assistant’s functions. The new system is expected to rely on three parts: a planner that interprets user prompts, a search engine that can scan personal data or the internet, and a ‘summariser’ that packages the results in a usable format.

Apple is still considering other partners. While its own AI models are expected to handle personal data searches, the company is evaluating Google’s Gemini and Anthropic’s Claude for tasks like planning.

What’s next for the iPhone in China

Even with the iPhone 17 launch scheduled for next week, the AI-enhanced Siri is not expected to arrive immediately. Bloomberg reported the new features will roll out with iOS 26.4, which could be released as early as March next year.

For Apple, the timing matters. The iPhone remains its most important product in China, where competition from local brands is intense and regulatory conditions are complex. A delay in eSIM readiness may slow adoption of its thinnest model to date, but the company’s long-term plans – including new form factors and AI-powered software – show that it is preparing for more than just one launch cycle.

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Nvidia shares slipped on Wednesday as uncertainty grew around its business in China, caught in the middle of the trade fight between Washington and Beijing.

CEO Jensen Huang said he expects approval to restart sales of Nvidia chips in China after striking a deal with US President Donald Trump to pay commissions to the government. But with no formal rules yet, and doubts about whether Chinese regulators might discourage purchases, Nvidia left potential China sales out of its forecast for the current quarter.

That decision led to an outlook that looked steady but less than what investors have come to expect. Nvidia projected revenue of about US$54 billion for the third quarter, just above Wall Street estimates of US$53.14 billion, according to LSEG data. The forecast was enough to beat analyst targets but fell short of the “blowout” growth the market has grown used to, pushing the stock down 3.2 per cent in after-hours trading. That drop cut about US$110 billion from Nvidia’s US$4.4 trillion valuation.

As reported by Reuters, Huang downplayed concerns that the AI spending surge could be cooling, telling investors the opportunity could expand into a multi-trillion-dollar market over the next five years. “A new industrial revolution has started. The AI race is on,” he said, adding that Nvidia sees $3 trillion to $4 trillion in AI infrastructure spending by the end of the decade.

“Nvidia’s biggest bottleneck isn’t silicon, it’s diplomacy,” said Michael Ashley Schulman, chief investment officer at Running Point Capital. He added the company’s growth is “still impressive, but not as exponential.”

Second-quarter revenue reached US$46.74 billion, above the US$46.06 billion analysts expected. But the data centre segment, a key driver of Nvidia’s growth, missed some estimates. Analysts suggested that big cloud providers may be spending more carefully. Nvidia said around half of its US$41 billion in data centre revenue came from major cloud companies, slightly below Visible Alpha’s estimates of US$41.42 billion.

The company’s forecast also assumed no shipments of its H20 chips to China, even though some licenses to sell them have already been granted. Nvidia said that if geopolitical hurdles ease and orders come in, H20 sales to China could add between US$2 billion and US$5 billion in the third quarter.

“That is a big question mark to watch,” said Ben Bajarin, CEO of consulting firm Creative Strategies.

Analysts also pointed out that Nvidia’s share price, which has risen by about one-third this year, may have created lofty expectations that are hard to meet. “The mega caps are the ones propelling a lot of the capex that Nvidia is benefiting from. But obviously Nvidia still is growing, is able to sell,” said Matt Orton of Raymond James Investment Management, who argued the durability of the AI trade remains intact.

Even so, demand for Nvidia’s chips remains strong. Businesses racing to build generative AI systems continue to buy the company’s processors, which are designed to handle huge amounts of data quickly. CFO Colette Kress said Nvidia’s “sovereign AI” push — aimed at selling AI hardware and software to governments, including outside China — is on track to bring in US$20 billion this year. She added that cloud and enterprise customers could spend as much as US$600 billion on AI in 2025 alone, with total infrastructure spending tied to AI reaching US$3 trillion to US$4 trillion by the end of the decade.

Huang said much of this growth will come from hyperscalers like Microsoft and Amazon, which are expected to spend about US$600 billion on data centres this year. He added that for a US$60 billion data centre, Nvidia can capture roughly US$35 billion in revenue.

Big Tech firms including Meta and Microsoft are spending heavily on AI, much of it flowing toward Nvidia chips. For the current quarter, Nvidia forecast adjusted gross margins of 73.5 per cent, a touch above analyst estimates of 73.3 per cent.

“The data centre results, while massive, showed hints that hyperscaler spending could tighten at the margins if near-term returns from AI applications remain difficult to quantify,” said Jacob Bourne, an analyst at eMarketer.

Shares of rival Advanced Micro Devices, which is developing competing AI servers, also fell 1.4 per cent after Nvidia’s results.

AI enthusiasm, with Nvidia at the centre, has been one of the main drivers of the S&P 500’s rally over the past two years. But the company’s latest report drew a more muted response.

“This is the smallest reaction to an earnings report in Nvidia’s AI incarnation,” said Jake Behan, head of capital markets at Direxion in New York. “While it may not have been a blowout, it’s not a miss.”

Outside China, Nvidia is still seeing strong demand for its H20 chips. Kress said one customer alone bought US$650 million worth during the second quarter.

Huang also said the company’s high-end Blackwell chips are already largely booked through 2026, while its older Hopper processors remain in demand. “The buzz is: everything sold out,” Huang told analysts, describing the pace of orders.

The company also said its board had approved an additional US$60 billion in share buybacks.

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Just three years ago, Cambricon Technologies was bleeding money, blacklisted by Washington, and fighting for survival in the shadow of Nvidia’s dominance. Today, the Chinese AI chipmaker has done something that seemed impossible: it turned a stunning US$144 million profit while US sanctions intended to cripple China’s tech ambitions appear to be backfiring spectacularly.

Record-breaking financial performance

The numbers tell the story of a company—and a country—defying expectations. Cambricon posted a 1.03 billion yuan profit versus a year-earlier loss of 533 million yuan, driven by a staggering 44-fold surge in revenue to 2.9 billion yuan for the first half of 2025. More than just a corporate comeback, this represents China’s most concrete proof yet that its domestic AI ecosystem can not only survive American restrictions—it can thrive because of them.

Cambricon Technologies, which competes directly with Huawei Technologies in providing AI accelerators for developing and hosting AI models, has achieved what many analysts thought was impossible under US restrictions. The company’s earnings per share (EPS) of 2.48 yuan and a sustained profitability trajectory, which began with its first-ever quarterly profit in late 2024, signal a fundamental shift in China’s semiconductor capabilities.

The transformation is all the more remarkable given the company’s recent struggles. Just months ago, Cambricon was grappling with years of persistent losses, while US sanctions severely limited its access to advanced manufacturing processes and cutting-edge technologies.

Market euphoria and valuation surge

The market’s response to Cambricon Technologies has been nothing short of euphoric. As of Aug 26, 2025, Cambricon Technologies was trading at 1,329.00 yuan, with a previous close of 1,384.93 yuan, representing an 11.6% jump on Monday alone. Cambricon’s stock closed up 11.4% on Monday at 1,384.93 yuan ($191.07) per share, just shy of the fiery liquor-maker Kweichow Moutai, which closed at 1,490.33 yuan.

Investors are paying an extraordinary premium for a piece of China’s AI future—Cambricon’s price-to-earnings ratio has ballooned to 4,463 times, making Kweichow Moutai’s 20 times multiple look conservative by comparison. The rally shows no signs of slowing: after rising 383% in 2024 to become China’s best-performing stock, shares have more than doubled since mid-July, delivering a spectacular 562% return since September.

The DeepSeek effect and China’s AI renaissance

Behind Cambricon’s meteoric rise lies a game-changing development: DeepSeek, the Chinese AI startup that shocked Silicon Valley with its cost-effective approach to artificial intelligence. When DeepSeek revealed it could achieve a “theoretical” profit margin of 545%—more than five times its costs—it didn’t just demonstrate Chinese AI prowess, it created a gold rush for the domestic chips powering these breakthroughs.

The ripple effect was immediate. As DeepSeek optimised its models for the “next generation of domestic chips,” investors suddenly grasped the full potential of China’s homegrown AI ecosystem. Beijing’s push for technological self-reliance wasn’t just about politics anymore—it was about profits, and companies like Cambricon were perfectly positioned to capitalise

When sanctions backfire

The irony is impossible to ignore: the very restrictions designed to kneecap China’s AI ambitions have become Cambricon’s greatest competitive advantage. When Washington added the company to its Entity List in December 2022, cutting off access to advanced US technologies, it seemed like a death sentence. Instead, it became a business opportunity.

Nvidia’s China-specific H20 chips—already a watered-down version designed to comply with export controls—were further restricted under the Trump administration’s latest regulations. The result? Chinese companies had no choice but to look inward, and Cambricon was ready with domestic alternatives. 

In September 2024, when Beijing ramped up pressure on local firms to ditch American processors, Cambricon’s shares hit the 20% daily trading limit.

The technical reality check

But can Cambricon actually compete with Nvidia’s technological prowess? The company, founded by brothers Chen Yunji and Chen Tianshi from China’s elite “genius youth class,” is betting its future on the Siyuan 690 processor—a chip designed to rival Nvidia’s H100. 

While specifications remain closely guarded, the China Academy of Information and Communications Technology has validated Cambricon as one of eight suppliers with DeepSeek-compatible hardware.

The real test isn’t just raw performance, but ecosystem compatibility. Chinese AI companies increasingly need chips optimised for their specific algorithms and cost structures—something Nvidia’s export-restricted chips struggle to deliver.

The $5 billion bet

Cambricon isn’t just riding the wave—it’s doubling down with a massive 5 billion yuan capital raise to fund large language model chip development. The allocation tells the story: 2.9 billion yuan for LLM chips, 1.6 billion yuan for software, and the rest for working capital. This isn’t incremental improvement; it’s an attempt to leapfrog generations of chip development.

Goldman Sachs’ bullish 1,835 yuan price target (50% above current levels) reflects growing confidence that Chinese cloud giants like Tencent will fuel sustained demand. But with a 4,463x P/E ratio, there’s little room for execution missteps.

The uncomfortable truth

The sustainability question looms large, and it’s not just about valuation bubbles. Cambricon’s explosive growth masks dangerous client concentration risks—a few large customers departing could crater revenues overnight. More fundamentally, while China can design competitive AI chips, manufacturing them at scale without access to cutting-edge Western equipment remains an open question.

The company likely relies on domestic foundries like SMIC or Hua Hong Semiconductor, which lag TSMC by several process generations. Physics doesn’t care about geopolitics, and advanced AI workloads demand the most efficient chips available.

The new semiconductor reality

Cambricon’s remarkable turnaround isn’t just a corporate success story—it’s a preview of the technology cold war’s next phase. For decades, the semiconductor industry thrived on global integration: American designs, Taiwanese manufacturing, Chinese assembly. That era is ending.

What we’re witnessing isn’t just market fragmentation, but the birth of parallel technological universes. Chinese AI companies will increasingly optimise for domestic chips, while American firms double down on Western hardware. The result won’t be healthy competition—it will be technological tribalism that ultimately slows innovation for everyone.

The real winners may not be the companies or countries involved, but the geopolitical rivals watching from the sidelines. While the US and China spend hundreds of billions building duplicate semiconductor ecosystems, Europe, India, and others are quietly developing their own capabilities without the baggage of a tech cold war.

Overall, Cambricon’s success proves that China can build a domestically powered AI ecosystem. But success and optimality are different things. The world is about to find out how much innovation we’re willing to sacrifice on the altar of technological sovereignty. Based on Cambricon’s soaring stock price, investors think the answer is: quite a lot.

The question isn’t whether China can build its own AI chip champions—Cambricon has already answered that. The question is whether a bifurcated global technology system will ultimately serve anyone’s interests, including China’s. On that, the jury is very much still out.

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Apple manufacturing in India has reached unprecedented heights, but the narrative of India becoming “the next China” oversimplifies a far more nuanced strategic reality. Apple assembled US$22 billion worth of iPhones in India in the 12 months ended March, increasing production by nearly 60% over the previous year, marking a pivotal moment in global supply chain dynamics.

The transformation is remarkable by any measure. In the first half of 2025, iPhone production in India rose by 53% compared to the same timeframe in 2024, reaching nearly 23.9 million units. Exports from India surged as well, totalling US$22.56 billion, a substantial increase from US$14.71 billion the previous year.

For the first time in history, India overtook China to become the top exporter of smartphones to the US, with smartphones assembled in India accounting for 44% of US imports of those devices in the second quarter.

The geopolitical catalyst behind the shift

Apple’s accelerated pivot stems from mounting geopolitical pressures and market realities in China. Apple’s smartphone shipments in China fell 17% year-over-year, dropping from 51.8 million units in 2023 to 42.9 million in 2024.

The company’s Chinese market share has contracted dramatically, falling to 15% in China, behind Huawei’s 16% and top-ranking Vivo’s 17%. The decline isn’t merely cyclical. Local manufacturers have emerged as the primary beneficiaries, with government support through nationwide smartphone subsidy policies providing additional momentum for domestic brands.

Notably, Apple’s premium-priced iPhones were reportedly ineligible under the new subsidy scheme. The resurgence of Huawei, previously hampered by US sanctions, has particularly impacted Apple’s premium market position.

Patrick McGee, author of “Apple in China: The Capture of the World’s Greatest Company,” provides context to this shift. McGee argues that Apple is still far from withdrawing from China, having invested billions of dollars in talent and equipment in China, with the country’s authoritarian government now having more influence over Apple’s fate than any other country. His analysis reveals a fundamental dependency that extends beyond simple manufacturing.

India’s manufacturing momentum and limitations

India’s rise as an Apple manufacturing hub has been swift but faces inherent constraints. Apple and its suppliers are aiming for a significant shift in global iPhone production, with plans to assemble 32% of global output and 26% of its value in India by 2026-27. The ambitious target could see India’s iPhone production value rise beyond US$34 billion.

However, the reality on the ground reveals some challenges. India’s manufacturing ecosystem is less mature than China’s, with supply chain inefficiencies and a less experienced workforce combining to slow scalability. Indian factories still face many problems, including low iPhone yield rates (only about 50%) and hygiene issues.

Manufacturing executives acknowledge the limitations, and the infrastructure gap remains substantial. While iPhone assembly lines in China work on two 12-hour shifts, Indian labour laws force Apple supply chain partners to have three eight-hour shifts, requiring them to employ more workers.

Quality control presents another hurdle, with Apple having to reject almost half the production out of one partner in India as it failed to meet standards.

The supplement strategy: Why complete replacement isn’t feasible

The evidence suggests India serves as a strategic supplement rather than a wholesale replacement for China. While Apple has been able to build iPhones in India, it’s only a tiny percentage of its needs; it’s only final assembly processes for now, and it will take years to reach any significance in numbers. Surprisingly, many of Apple’s factories in India are Chinese subsidiaries that followed Apple to the continent.

Apple’s dependency on China extends beyond final assembly. Ten years ago, Apple relied on China primarily for final assembly, while today, Apple not only assembles devices in China, but it also sources many components from the country. This deep integration means that even Indian-assembled iPhones rely heavily on Chinese components and expertise.

The scale disparity is telling. India could reach about 15%-20% of overall iPhone production by the end of 2025, while China still accounts for the majority of Apple iPhone production. Even Apple’s most ambitious projections suggest India will handle approximately 25% of global iPhone production by 2027 – significant, but hardly a complete replacement.

Market dynamics and strategic positioning

Apple’s India strategy represents sophisticated risk management rather than abandoning China. As of late 2024, 15% of iPhones are now produced in India, up from just 5% two years prior. Its measured approach reflects practical constraints and strategic thinking.

The geopolitical environment continues to shape decisions. President Donald Trump laid out US “reciprocal tariff” rates on more than 180 countries, with China facing a 34% tariff and India pegged at 26%. However, the tariff differentials don’t eliminate the fundamental challenges of replicating China’s manufacturing ecosystem elsewhere.

Apple’s approach mirrors broader industry trends. Samsung Electronics and Motorola have also been striving to move assembly for US-bound smartphones to India, though their shift has been significantly slower and is limited in scale compared with Apple, indicating systemic challenges in scaling alternative manufacturing hubs.

The path forward: Coexistence, not replacement

The most realistic scenario involves sustained coexistence rather than replacement. The end goal for Apple is to have about half of iPhone production in India and half in China, according to industry analysis. A balance recognises the strategic necessity of diversification and the practical impossibility of complete disengagement from China.

Apple’s investment trajectory supports this interpretation. Apple announced a US$500 billion investment in US facilities and is establishing new production lines in Vietnam for AirPods, Apple Watch, and MacBook parts: a multi-hub strategy rather than a simple China-to-India migration.

The company’s approach to component sourcing reinforces this complexity. Assembly is the final stage of iPhone production, with hundreds of components sourced from China. As final assembly shifts geographically, the underlying supply chain remains integrated with Chinese manufacturers.

Conclusion: Redefining the narrative

Apple’s manufacturing shift to India represents neither the wholesale replacement of China nor a simple geographical arbitrage. Instead, it reflects a sophisticated strategy of supply chain resilience, market access optimisation, and geopolitical risk management.

The success of Apple’s diversification strategy shouldn’t be measured by India’s ability to completely replace China, but rather by its capacity to provide strategic alternatives, serve specific market demands, and contribute to overall supply chain resilience. In this context, India’s emergence as an Apple manufacturing hub represents a strategic success.

The India-China dynamic in Apple’s supply chain will likely remain complementary rather than competitive, with each region serving distinct strategic purposes in the company’s broader manufacturing ecosystem.

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Chinese internet conglomerate Tencent has dismissed concerns over US GPU export restrictions, with executives stating the company’s AI infrastructure possesses adequate processing power for ongoing operations. This comes as Washington and Beijing continue negotiations over semiconductor trade policies.

During Tencent’s Q2 2024 earnings call, company president Martin Lau addressed questions about potential consequences of recent US decisions that allow Nvidia and AMD to resume limited GPU sales to China. Lau’s response suggested the policy changes hold minimal significance for the company’s immediate operations.

“We do not have a definite answer on the import situation yet. There are a lot of discussions between the two governments,” Lau stated, according to The Register. However, he emphasised the company’s current position: “From our perspective, we do have enough chips for training and continuous upgrade of our existing models. We also have many options for inference chips.”

Strategic shift toward software optimisation

Tencent’s approach extends beyond developing stockpiles. “We are executing a lot of software improvements to drive efficiency in inference so we can put more workloads on the same number of chips,” Lau said during the earnings call.

The optimisation-first strategy represents a shift in how Chinese technology companies respond to ongoing US export controls. Rather than scrambling for alternative hardware sources, Tencent appears to be focusing on extracting maximum performance from current resources.

Implications for US semiconductor giants

The company’s self-sufficiency claims present challenges for American chip manufacturers hoping to capitalise on renewed access to Chinese markets. Both Nvidia and AMD had anticipated revenue increases from resuming sales to China, particularly given the massive scale of Chinese AI development projects.

Lau’s remarks suggest Tencent may not contribute to the expected purchasing surge, potentially dampening revenue projections for US semiconductor companies. The situation becomes more complex when considering the Trump administration’s reported plans to claim a percentage of GPU sales to China.

Moreover, Tencent has indicated flexibility in sourcing inference chips from non-US suppliers, suggesting the company has developed alternative supply chains that could reduce American market share in Chinese AI infrastructure.

Financial performance amid AI investment concerns

Despite robust financial results, Tencent’s earnings call revealed challenges it’s facing recouping AI investments. The company reported Q2 revenue of RMB 184.5 billion (US$25.7 billion), representing 15% annual growth, while net profit reached RMB 64.8 billion (US$9 billion), up 11%.

However, Lau acknowledged persistent difficulties in balancing AI infrastructure costs with revenue generation. “Depreciation costs from AI will continue to go up,” he noted. “But we continue to reap the benefits of AI. The issue is these two may not match each other completely, but both are moving in the same general direction.”

The comments suggest Tencent, like many technology companies globally, continues struggling to translate substantial AI investments into proportional revenue streams.

Diversification beyond GPU-dependent services

Tencent’s cloud division has adapted its strategy to reduce dependence on GPU availability, according to Lau’s statements. The company is actively pursuing opportunities in CPU-based computing and database services, areas less affected by current US export restrictions.

“Our cloud strategy is not dependent on GPU,” Lau emphasised, adding, “We are also growing in CPU and database.” The tendency to diversification allows Tencent to maintain growth in cloud services regardless of semiconductor supply chain disruptions, and potentially reduce exposure to future trade policy changes.

Consistent messaging on hardware independence

This is the third consecutive quarter where Tencent has communicated to investors that additional GPU purchases are unnecessary for current operations, which suggests the company’s position on hardware sufficiency is not reactive to recent US policy developments.

The company’s core social media platforms continue showing strong user engagement, with numbers of Weixin and WeChat monthly active users reaching 1.411 billion, an annual growth of 40 million users or a 3% increase.

As US-China technology trade relationships remain in flux, Tencent’s stated hardware independence and optimisation focus may serve as a template for other Chinese technology companies navigating similar export control challenges. The long-term effectiveness of its approach to maintain competitive AI capabilities will likely influence industry-wide strategies in China’s technology sector.

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Huawei is expected to unveil a technology that could lessen China’s dependence on high-bandwidth memory (HBM) chips for running artificial intelligence reasoning models, according to the state-run Securities Times.

As reported by the South China Morning Post, the announcement will be made at the 2025 Financial AI Reasoning Application Landing and Development Forum in Shanghai today. The event focuses on AI in the financial sector.

Huawei did not respond to a request for comment on Monday. If confirmed, the development would mark another step by the US-sanctioned company in strengthening China’s AI hardware capabilities and reducing reliance on foreign technology.

HBM chips are a key component in advanced AI systems, particularly for running reasoning models. The models take an already-trained AI system and apply it to real-world data, making decisions based on patterns the AI has learned. HBM is important for these workloads because it can move large amounts of data quickly between the processor and memory.

The current market for HBM is dominated by US companies Micron and AMD, as well as South Korean firms Samsung Electronics and SK Hynix. The chips are often integrated directly into AI processors used in data centres.

China’s two main memory chip producers, Yangtze Memory Technologies and Changxin Memory Technologies, have expanded their capabilities, but analysts say they are still behind their US and Korean competitors in technical performance. That gap has left China dependent on imports for the most advanced HBM products, an issue made more pressing by US export controls on advanced chipmaking tools and technologies.

While China works to strengthen its domestic supply chain, demand for HBM worldwide is rising sharply. Orders have surged as major tech companies build more AI data centres.

Micron, one of the top HBM producers, raised its forecast for fourth-quarter revenue and profit on Monday, citing strong demand for AI infrastructure. The company now predicts $11.2 billion revenue, plus or minus $100 million, up on its earlier estimate of $10.7 billion. Adjusted earnings per share are forecast at $2.85, plus or minus 7 cents, up from a prior estimate of $2.50.

Micron also increased its adjusted gross margin outlook to 44.5%, from 42%, plus or minus 1%, pointing to stronger pricing notably in DRAM product lines.

“We look at all of our different end markets around the world, the pricing trends have been robust, and we have had great success in being able to push that pricing up,” said Sumit Sadana, Micron’s chief business officer, during an industry event on Monday.

Analysts say the combination of limited HBM supply and surging AI demand has allowed producers to raise prices – a reversal from past years when memory chipmakers faced shrinking margins.

SK Hynix, another leading HBM supplier, expects the market for AI-focused memory chips to grow by about 30% per year until 2030.

Trade measures could still affect the sector. The US recently imposed 100% tariffs on certain imported chips, although the duties will not apply to companies that manufacture in the US or have committed to doing so.

In June, Micron said it would increase its planned US investment by $30 billion, bringing its total commitment to $200 billion in the country.

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For decades, US export controls have operated on a simple principle: companies either get licences to sell restricted technology abroad, or they don’t. But reports of a new deal between semiconductor giants Nvidia and AMD and the Trump administration suggest this binary approach may be changing, with the companies reportedly agreeing to pay 15% of their revenues from Chinese AI chip sales to the US government.

The reported revenue-sharing deal between both chip giants, if confirmed, would represent a shift in how Washington approaches technology export controls and could set a new precedent for US-China trade relations.

What the reports say

According to multiple media reports citing sources familiar with the matter, Nvidia plans to share 15% of the revenue from sales of its H20 AI accelerator in China. AMD would deliver the same share from MI308 revenues. The two chip companies reportedly agreed to the fee structure last week, following months of lobbying efforts by industry leaders.

The reported revenue-sharing arrangement specifically targets Nvidia’s H20 chip and AMD’s MI308, both important for AI applications. The chips were developed after the Biden administration imposed export restrictions in 2023, with the H20 designed specifically for the Chinese market to comply with those limitations.

The path to this deal has been marked by shifting policies and intense lobbying. US President Donald Trump’s administration halted sales of H20 chips to China in April, but Nvidia last month announced that the administration said it would allow the company to resume sales, and it hoped to start deliveries soon.

It followed a separate report from the Financial Times that the US Commerce Department started issuing H20 licenses on Friday, two days after Nvidia Chief Executive Officer Jensen Huang met President Donald Trump. The timing suggests the personal involvement of industry executives in securing the arrangement.

Why these reports matter

While export controls for sensitive products are nothing new, reports of charging a company 15% of its revenue to sell a particular product to a particular country would be unprecedented if confirmed. The reported arrangement would represent a shift from traditional export control mechanisms, which typically involve licensing fees or outright bans, to a revenue-based approach.

For the companies involved, China represents a massive market opportunity. Despite export restrictions, Chinese demand for AI chips remains robust as the country continues to invest heavily in artificial intelligence capabilities. The 15% payment allows these companies to maintain market access while demonstrating compliance with US national security concerns.

The reported deal has already attracted significant criticism from legal experts who question its constitutional validity if implemented. “In addition to the policy problems with just charging Nvidia and AMD a 15% share of revenues to sell advanced chips in China, the US Constitution flatly forbids export taxes,” Peter Harrell, the White House senior director for international economics under the Biden administration, said in a Sunday post social media.

Christopher Padilla, a top export control official in the George W. Bush administration who is now a senior adviser with the Brunswick Group consulting firm, echoed those fears, describing the deal as “unprecedented and dangerous.”

The constitutional prohibition referenced stems from Article I, Section 9, Clause 5 of the US Constitution, which states, “No Tax or Duty shall be laid on Articles exported from any State.” The clause was designed to prevent the federal government from imposing taxes specifically on exported goods.

Industry response and market impact

“We follow the rules the US government sets for our participation in worldwide markets,” a Nvidia spokesperson said in a statement. The company added: “While we haven’t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide.”

AMD has not yet responded to requests for comment regarding the reported arrangement. It was not immediately clear how the government would deploy the presumed billions of dollars in fees collected if the reports prove accurate.

From a business perspective, the revenue-sharing model allows both companies to maintain their competitive positions in the crucial Chinese market. For Nvidia, especially, which has seen explosive demand for its AI chips globally, maintaining access to China’s market – even with a 15% revenue reduction – is likely preferable to being shut out entirely.

Broader trade implications

The arrangement comes amid a broader context of evolving US-China trade relations. The semiconductor industry has become a key battleground in technological competition between the world’s two largest economies. The US has progressively tightened export controls on advanced chips since 2022, citing national security concerns about their potential use in military applications and AI development.

The reported revenue-sharing approach could represent a new model for managing technology exports to strategic competitors if implemented. Rather than implementing outright bans, which can harm US companies’ competitiveness, this reported arrangement would allow for continued market access while extracting value for the US government.

What happens next?

The constitutional challenges to the reported arrangement are likely to continue if it’s confirmed, potentially leading to legal challenges that could test the boundaries of executive authority over export controls.

Even without the revenue-sharing provision, Donald Trump’s decision to ease the chip-sale restrictions on Nvidia was controversial, with officials from both parties expressing concern that the flip-flopping policy would erode further any trust in US export controls.

The precedent that could be set by this reported deal might influence how other technology exports are managed, particularly for companies seeking to maintain access to strategically important markets while complying with national security restrictions.

The bottom line

While neither the US government nor the companies involved have officially confirmed these reports, the potential implications are far-reaching. If true, the revenue-sharing model between Nvidia and AMD could reshape how American technology companies access overseas markets under national security restrictions.

For China, such an arrangement might accelerate its push toward semiconductor self-sufficiency, as Beijing has been investing heavily in domestic chip manufacturing precisely to reduce dependence on foreign suppliers. The prospect of US companies paying their government a premium to sell in China could provide additional motivation for Chinese firms to develop competitive alternatives.

Other US technology companies will be watching, as the model could extend beyond semiconductors to other strategic technologies like quantum computing, advanced software, or telecommunications equipment. Companies in sectors deemed critical to national security might face similar revenue-sharing requirements when seeking to operate in sensitive markets.

The broader tech industry could also see fragmentation accelerate, with American companies paying premiums to access certain markets while competitors from other countries operate without constraint. This could reshape global supply chains and partnerships in ways that extend far beyond the current US-China technology rivalry.

Until official confirmation emerges, however, these remain speculative scenarios based on unverified reports. What’s clear is that any such arrangement would mark a significant evolution in how economic statecraft intersects with private enterprise.

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Chinese AI start-up Z.ai, formerly known as Zhipu AI, has made its GLM models compatible with Huawei Technologies’ processors, adding momentum to China’s efforts to build up its own technology supply chain, according to the South China Morning Post.

The Beijing-based company said its models now work with Huawei’s Ascend chips, used in AI servers, and Kirin processors, which power smartphones and laptops.

“The tie-up marks a major breakthrough in cloud-device collaboration between home-grown large [language] models and computational architecture, highlighting the deeper integration of a domestic AI ecosystem,” Z.ai said.

The move comes shortly after Huawei announced it would open-source its Compute Architecture for Neural Networks (CANN) – the software toolkit for its Ascend processors. Opening the code lets developers build, adapt, and scale applications for domestic chips without relying on foreign platforms.

CANN competes with Nvidia’s proprietary CUDA toolkit, long used by Chinese AI developers who depend on the US company’s GPUs in many data centres. Working with Z.ai helps Huawei push wider use of its own processors in AI projects.

Last month, Huawei’s Ascend division became a founding member of the Model-Chips Ecosystem Innovation Alliance, alongside Chinese AI companies like StepFun, Infinegence AI, SiliconFlow, MetaX, Biren Technology, Enflame, Iluvatar Corex, Cambricon Technologies, and Moore Threads.

Z.ai said it will use CANN to fine-tune its GLM models on Huawei’s Ascend-powered cloud, showing the open-source toolkit in action.

In June, OpenAI described Zhipu – before its rebranding – as making “notable progress” in delivering AI infrastructure to governments and state-owned firms in non-Western markets. Backed by more than 10 billion yuan (US$1.4 billion) in funding, Z.ai filed pre-IPO documents in April, with plans to go public as early as 2026.

China’s response to GPT-5

OpenAI’s latest flagship model, GPT-5, debuted last week with claims of being “smarter, faster, and more useful,” offering improved abilities in coding, maths, writing, health, and visual perception. It also includes a “thinking” function that switches between standard and deep reasoning modes depending on the task.

“It’s like a PhD-level expert in anything, any area,” said OpenAI CEO Sam Altman.

In China, where OpenAI services like ChatGPT are unavailable, experts were unconcerned about falling behind.

“GPT-5 is not significantly ahead of Chinese models, so it won’t put substantial pressure on Chinese researchers and developers,” said Zhang Linfeng, assistant professor at Shanghai Jiao Tong University. He added the model “doesn’t come with revolutionary breakthroughs; it lacks memorable characteristics.”

Zhang noted that the “thinking” feature is already in some Chinese systems, including Alibaba’s AI products. Still, he credited OpenAI with reducing hallucinations – incorrect AI outputs – and improving coding and general intelligence.

Despite the muted reaction, interest was high. A GPT-5 discussion on Zhihu drew more than 3.2 million views, with some users praising the upgrades. GPT-5 is now the default model on ChatGPT for both free and paid users, and Microsoft is adding it to products like GitHub Copilot and Visual Studio Code.

AI talent in high demand

Competition for AI experts in China is also heating up where Alibaba’s Tongyi Lab, creator of the Qwen open-source models, has lost senior staff to rivals.

Yan Zhijie, who joined Alibaba in 2015 and led Tongyi’s speech lab, left in February. He joined JD.com’s Explore Academy but later moved to Tencent, leaving soon after an internal restructuring. His role was filled by Li Xiangang, co-founder of 01.AI.

Bo Liefeng, former head of Tongyi’s applied vision division, has also moved to Tencent’s Hunyuan AI team. Tencent and Alibaba did not comment.

Alibaba says its Qwen models have been downloaded over 400 million times worldwide, leading to the creation of 140,000 derivative models.

The flow of talent mirrors trends in the US, where firms like Meta have hired away AI experts from Google, OpenAI, and Apple. In China, ByteDance, Alibaba, and Tencent have all launched fresh recruitment drives, many aimed at AI research roles.

ByteDance’s “Top Seed Talent Programme” lists 65 AI-related openings, while Alibaba’s “Star Top Talent” campaign is targeting researchers in foundational models, infrastructure, and AI applications. Tencent recently opened internal applications for roles tied to its Yuanbao chatbot, Hunyuan model, and WeChat e-commerce.

As China pushes to build its AI ecosystem with home-grown chips and models, the fight for top talent is becoming as important as the technology itself.

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