Welcome back,

It’s hard to believe we are in December already, but here we are. Thanksgiving contributed to a slightly lighter newsletter than usually, but we do have a heavy serving of essential reads which include:

Details on China’s AI landscape—in particular there are more than 200 million generative AI users, and US services are among the most popular, despite being blocked.

Elsewhere, Nvidia and Apple are making major investments in Southeast Asia—Vietnam and Indonesia, respectively—but for very different reasons. And there could be a seminal moment in India’s startup space as reports begin to trickle in that Flipkart, the homegrown e-commerce giant valued at $36 billion, is making structural changes that will allow it to go public in an IPO that could happen as soon as next year.

There’s also more on TikTok’s Black Monday-pending US ban, China and the US have escalated their tech export war, a major edtech acquisition is pending in India and Vietnam is clamping down on overseas fast fashion services.

All that and more in this week’s newsletter—see you next time,

Jon

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There was a period in the last decade when China Internet Network Information Centre (CNNIC) became popular with reporters. Mobile internet was ripping through China with crazy growth, tens or hundreds of millions of new internet users each year or even quarter. The internet revolution continues but these days the growth has plateaued. Enter the next era of fascination with CNNIC numbers: AI.

The government unit released figures which indicate that China had 230M users of generative AI services as of June 2024. That’s one in six internet users in the country—a figure that’s likely even higher now, more than six months later.

In October, the director of China’s internet watchdog claimed there were 600M users which gave us an indication of the growth.

There’s little qualitative data behind the CNNIC report, but it did rank the top gen-AI services by use:

1. Baidu’s Ernie Bot: 11.5%

2. ChatGPT from Open AI: 7%

3. Google Gemini: 3.8%

The market is clearly very early and very open, two of these services aren’t even available in Mainland China without the use of a VPN.

It’s no coincidence when data like this is released. I’d suggest this is part of a push to assert China as a huge AI market worth going after and also rally the hundreds of competing companies to go after market share—particularly from those two US companies. Indeed, the FT reports that ByteDance has “emerged as an early frontrunner” in China’s AI race by luring top talent from big tech like Alibaba and Tencent, as well as AI startups. The TikTok owner is said to have poured billions into AI infrastructure, too.

The next report will hopefully include a lot more details and give us a better idea of growth.

In a related story, it’s not surprising to see that Apple is (again) reported to be working with Baidu to bring AI features to China-based iPhones next year—but it is said to be running into issues adopting its language models.

Meanwhile, the CEO of Hugging Face has concerns around Chinese open source AI models.

How important is Indonesia to Apple? Maybe to the tune of a billy?

That’s right, Apple’s dance with Indonesia around investment to release a ban on the sale of new iPhones continues. I must admit, I didn’t expect this to run so long or so high. Now, Indonesia’s investment minister has said the government expects to see a $1B commitment from Apple within the next week.

To recap, Indonesian regulations require 40% of the parts in a smartphone to be locally-made. The government said Apple’s newest iPhones don’t comply so it barred their sales at the end of October. Apple had previously made lower offers for investment in Indonesia to ease the situation, according to media reports, but now the $1B figure has been raised.

While it is true that government officials, and particularly those in Southeast Asia, love to come forward with a figure, you can believe a deal will need to be done. Just look at TikTok’s acquisition of Tokopedia two years ago, a transaction that enabled the Chinese firm to go legit in Indonesia.

While Apple is being strong-armed into investing in Indonesia, Nvidia has increased its focus on Vietnam after it completed an acquisition and announced plans for its first R&D centre in the country.

The US firm acquired VinBrain, an AI unit owned by Vietnamese mega-conglomerate Vingroup—which has a broad business scope that covers real estate, hotels, EVs and much more.

Bloomberg reports:

The initiatives, including a Viettel Group data center using Nvidia technology, will enhance AI infrastructure, train experts, and support startups. VinBrain, focused on AI in healthcare, will also serve as the foundation for a future design hub. Huang did not disclose the acquisition’s valuation. The announcement was made at a ceremony in Hanoi, attended by Prime Minister Pham Minh Chinh.

CEO Jenson Huang also visited Thailand, where he met the Prime Minister to discuss helping develop AI infrastructure, but there was no similar deal to Vietnam.

The Economic Times reports that Flipkart is eyeing an IPO next year after it secured internal approvals to move its domicile from Singapore to India.

Valued at $36B, Flipkart already had an exit of sorts when Walmart bought a majority (but not entire) stake for $16B in 2018 to pit it directly against its US rival Amazon. Walmart has increased its holdings over the years but still an IPO would be a seminal moment for startups in India given Flipkart’s status and employee share options. It would certainly epitomise the trend of startups redomiciling in order to go public.

The ET story is light on details so we can assume that a lot needs to happen before any listing, the publication noted that the IPO could happen in 2026 rather than next year.

TikTok faces a potential US ban by mid-January after federal judges unanimously upheld a new law on Friday link

But that isn’t stopping its march in America: TikTok tripled its Black Friday sales in the US to over $100M, with TikTok Shop seeing a 165% annual shopper boost through Cyber Monday link

WeDoctor, a health platform backed by Tencent, is reviving IPO ambitions with plans to raise $400M-$500M from a Hong Kong listing by the middle of next year—it shelved listing plans in 2021 following a crackdown in 2021 which targets private companies like Didi link

The EU plans to crack down on a surge of packages from Asian retailers like Temu and Shein—it is said to be considering a revenue tax and per-item fees to curb ecommerce that bypasses customs checks link

AI firm SenseTime, which has seen its share price decline 60% since its IPO 3 years ago, has restructured to prioritize generative AI rather than computer vision and surveillance where it had been a leading player link

The Biden administration announced an update to its controls on technology exports to China which target military and AI development—the additions focus on chip and machinery sales but White House also added over 100 Chinese firms to a restricted trade list link

Meanwhile, a Washington think tank warned that Chinese-made lidar sensors could expose the US military to hacking and sabotage—it has urged a ban on their use within defense equipment link

And China’s industry bodies have claimed that US chips are “no longer safe” to buy link

Despite all of the US efforts, Chinese phone makers now believe they can weather the storm with local components and parts to replace those that they cannot acquire due to export curbs link

China has banned exports of rare minerals like gallium, germanium, and antimony to the US on the basis of national security concerns and their military applications link

At least 8 US telcos and dozens of countries have been impacted by the massive Salt Typhoon breaches, the White House said link

Ant Group is appointing Cyril Han Xinyi, its finance chief and president, as CEO starting March 1 link

Meituan is reportedly expanding its Middle Eastern food delivery service Keeta to more cities, suggesting the expansion is going according to plan link

BYD isn’t just an EV powerhouse, the company assembles over 30% of iPads, according to industry insiders, thanks to 10,000+ engineers and 100,000 employees in Apple’s supply chain—this business with Apple has helped the firm aggressively expand to areas like EVs link

Uber and autonomous vehicle firm WeRide launched a commercial robotaxi service in Abu Dhabi link

The price of Bitcoin and other cryptocurrencies may be skyrocketing by now, but it’s a nightmare story for customers of WazirX, the exchange that was hacked for $235M over the summer and has failed to repay its users—it’s an unfortunate reminder that self-custody is the best way to hold cryptocurrency assets (but even that can throw up problems for inexperienced users) link

Allen Institute is in talks to acquire edtech Unacademy for around $800M, according to sources—the startup was valued at $3.4B as recently as 2021 and it has $160M in the bank, but revenue has stagnated and the founders are looking to exit link

Indian police will contact Elon Musk’s Starlink after the satellite internet system was said to be used to smuggle over $4B in drugs into the country link

Tata Electronics is expanding beyond Apple to partner with Microsoft, Dell, and HP to diversify its manufacturing client base and emulate Foxconn’s model link

Prosus, the Dutch investment firm that’s gone big on India deals, is anticipating as many as 5 IPOs from its portfolio over the coming 18 months—including payments giant PayU, e-commerce startup Meesho, and online jewelry seller Bluestone link

But fintech MobiKwik has slashed its IPO size for the third time, down from an original valuation of $924M in 2021 to $250M now—it aims to raise $69M from its listing which will see trading begin in a week link

Swiggy has scaled its 10-minute food delivery to 400 cities in a rapid quick-commerce push link

Vietnam has ordered Temu and Shein to suspend operations after the companies missed a November deadline to register their local entities. They now risk having their domains and apps blocked. link

KPay, a financial management platform that helps SMEs manage payments, bills, remittance and more, closed a $55M Series A led by UK-based Apis Partners—this is the first funding announced for the 3-year-old company which is based between Singapore and Hong Kong link

Blockchain payments fintech Partior secured a $20M extension to its $60M round from July, with Deutsche Bank joining as an investor—Peak XV Partners, Standard Chartered, JP Morgan and Temasek are among its existing backers link

OpenPad AI, a Singapore-based startup uses decentralized AI for data-driven investment strategies, raised $2M link

Indonesia is facing a digital debt crisis with an apparently 137M people, two-thirds of the population aged over 15, holding overdue digital loans—amounts of around $300 which come with high-interest rates that are typically due to be repaid within a month. The suggestion from the data—which seems outrageous but it is according to data from Indonesia’s Financial Services Authority (OJK)—is that millions are struggling to cover the cost and potentially falling into debt link

NXP Semiconductors and TSMC affiliate Vanguard International Semiconductor are planning to expand their $7.8B Singapore venture to diversify chip production amid rising US-China tech tensions link

Paytm is selling its stake in its Japanese JV PayPay to partner SoftBank for $250M link

Crypto exchange DMM Bitcoin is now owned by financial conglomerate SBI Group after the unit was transferred just over 6 months following a $300M hack in May that decimated its business link

Netflix says it has hit 10M subscribers in Japan—that’s double over 4 years and the US firm claims it shows local programming is gaining attention link

TSMC is in talks with Nvidia to produce its Blackwell AI chips at TSMC’s new Arizona plant, sources say link

AI chipmakers Rebellions and Sapeon Korea completed a merger into an entity called Rebellions, which is valued just shy of $1B—Rebellions CEO Park Sung-hyun will lead the business link

North Korean hackers stole $16M from the Bahrain-based cryptocurrency exchange Rain by using fake recruiters on LinkedIn to trick an employee into installing malware link