Silicon Valley Tech News Roundup – October 22nd

China responds to the latest chip restrictions imposed by U. S. – 10/20

China expressed displeasure over the latest restrictions on the export of advanced chips imposed by the United States earlier in the week. The Chinese Foreign Ministry stated the restrictions ” violate the principles of the market economy and fair competition” and “forced de-coupling for political purposes.”

According to the Biden administration, the U. S. government is not trying to hurt China economically, but trying to prevent China from accessing advanced chips that could help the country strengthen its military in the field of artificial intelligence.

The restrictions hit several companies like Intel, Advanced Micro Devices, and Nvidia. According to a filing by Nvidia, the export restrictions block the sales of two artificial intelligence chips (A800 and H800) it created for the Chinese market. Experts believe the latest measures will hit Nvidia the hardest since 25% of its data center chip revenue come from China.

The Semiconductor Industry Association branded the restrictions as “overly broad.” Likewise, it also said the new measures “risk harming the US semiconductor ecosystem without advancing national security as they encourage overseas customers to look elsewhere.”

Nvidia and Foxconn to build AI factories together – 10/18

At the annual Foxconn showcase in Taipei on Wednesday, Young Liu (the Chairman of Foxconn) and Jensen Huang (the CEO of Nvidia) announced plans to build AI data factories together. According to the announcement, the new factories will enable Foxconn to utilize AI in its electric vehicles (EVs). While Foxconn does not sell EVs under its brand name, it produces the vehicles for clients in Taiwan and globally.

Jensen Huang stated: “A new type of manufacturing has emerged – the production of intelligence and the data centers that produce it are AI factories.” Meanwhile, Young Liu stated: “Foxconn is turning from a manufacturing service company into a platform solution company.”

This year, because of the use of Nvidia’s advanced chips in AI applications, the company’s stock market value went over $1 trillion. It makes Nvidia the fifth publicly traded company to join the “Trillion dollar club” alongside Amazon, Apple, Microsoft, and Alphabet. Foxconn, the manufacturer of half of Apple’s products globally, is looking to diversify into other business models.

This week, Washington announced the latest export restrictions that will block Nvidia from selling two of its artificial intelligence chips (A800 and H800) to the Chinese market.

New York files fraud charges against three crypto firms – 10/19

On Thursday, New York’s Attorney General filed a lawsuit against three crypto companies – Gemini Trust, Genesis Global Capital, and Digital Currency Group (the parent company of Genesis). The lawsuit alleges the companies defrauded more than 230,000 investors out of over $1.1 billion.

According to the lawsuit, Gemini Trust (founded by Cameron and Tyler Winklevoss) deceived investors about risks associated with Gemini Earn, a lending service Gemini ran in cooperation with Genesis Global Capital. The company marketed the service as a low-risk investment that enabled customers to lend their crypto assets to Genesis and earn interest payments as high as 8%.

Furthermore, the New York prosecutors claim the companies withheld information from creditors, falsified financial documents, and lied to investors. The lawsuit also alleges Gemini Trust failed to address the exposure to Sam Bankman-Fried’s Alameda Research via its relationship with Genesis.

Letitia James (the New York Attorney General) stated: “Hardworking New Yorkers and investors around the country lost more than a billion dollars because they were fed blatant lies that their money would be safe and grow if they invested it in Gemini Earn… Instead, Gemini hid the risks of investing with Genesis and Genesis lied to the public about its losses.”

Barry Silbert (the CEO of Digital Currency Group) said: “I am shocked by the baseless allegations in the Attorney General’s complaint and intend to fight these claims in court. Honesty and integrity have always been my guiding principles.”

Meanwhile, Gemini Trust tweeted: “We wholly disagree with the NY AG’s decision to also sue Gemini… Blaming a victim for being defrauded and lied to makes no sense and we look forward to defending ourselves against this inconsistent position.”

Zhipu (China’s answer to OpenAI) receives $341 million in funding from Alibaba and Tencent – 10/20

Zhipu (a Chinese artificial intelligence startup) released a statement this Friday revealing it raised more than $341 million in funding. The company is hoping to be a Chinese answer to OpenAI. It creates AI models trained on massive amounts of data that can support various applications.

Some of the company’s corporate backers include Alibaba, Tencent, and Xiaomi (the smartphone manufacturer). Venture backers include Sequoia and Hillhouse.

Artificial intelligence remains a bone of contention between the United States and China. China sees artificial intelligence as a technology it wants to develop, but the United States is looking to restrict access to key technologies needed to develop AI models. Earlier in the week, the Biden administration tightened the export restrictions even further.