Contrary Research Rundown #111
China and US chip tensions continue to escalate, plus new research memos on Epirus and Hebbia.
Research Rundown
Last weekend, the US ordered Taiwan Semiconductor to halt all shipments of advanced chips, meaning chips with designs of seven nanometers or less, to China. The reason: tech research firm TechInsights discovered a TSMC chip inside one of Huawei’s Ascend 910B AI processors. The Ascend 910B is largely seen as the most advanced AI chip made by any Chinese company. Huawei, one of China’s most important technology companies, is on a US restricted trade list that should prevent it from accessing TSMC chips, and this discovery by TechInsights put DC on high alert.
The semiconductor power struggle between the US and China has been one of the defining events of Joe Biden’s presidency. In August 2022, President Biden signed the CHIPS and Science Act, a $280 billion bill that sought to invest in domestic research and manufacturing for semiconductors in the United States. The bill was meant to reduce the geopolitical risk of America’s dependency on Taiwan, located just 100 miles from China, for its chip supply.
Two months later, In October 2022, the Bureau of Industry and Security said that semiconductor chips in China had been used to “produce advanced military systems including weapons of mass destruction” and “commit human rights abuses,” prompting the Biden Administration to issue a “broad set of prohibitions” on exports of semiconductor chips and other high tech equipment to China. As part of these prohibitions, the Export Administration Regulations were granted scope over “certain foreign-produced advanced computing items and foreign-produced items for supercomputer end uses,” hence the US’s ability to enforce export restrictions on TSMC.
While the export bans were intended to hinder China’s semiconductor progress, this latest security breach highlights the difficulty of enforcing these restrictions.
On October 26, Reuters reported that Sophgo, a Chinese chip designer affiliated with the cryptocurrency mining equipment company Bitmain, had ordered chips from TSMC that matched the chip found on the Huawei AI processor. Sophgo denied any wrongdoing, saying that it was “in compliance with all laws and had never engaged in any business relationship with Huawei.
However, while Sophgo may not have engaged in business with Huawei directly, it’s possible that chips from TSMC could have been offloaded by Sophgo in gray markets, as chip buyers often do when they have excess inventory.
Between the ever-increasing chip restrictions of the Biden Administration and the looming possibility of increased tariffs on Chinese goods once Donald Trump reenters the Oval Office in January, trade tensions between the US and China will be one of the biggest geopolitical stories to watch as we enter 2025, especially given its implications for the AI arms race between China and the US.
Epirus leverages technological breakthroughs, providing innovative and cost-effective counter-UAS solutions. By harnessing advancements in semiconductor technology and HPM systems, Epirus aims to bridge the gap between the escalating drone threat and the need for efficient defenses in modern warfare. To learn more, read our full memo here and check out some open roles below:
Senior Principal RF Systems Engineer (Phased Array) - Torrance, CA
Operations Senior Manager (Quality Systems) - Torrance, CA
Hebbia was founded to provide neural search functionality for investment banking and private equity analysts so they could solve queries that were more complicated than what a typical chatbot could handle. Its core product, Matrix, allows users to upload any type of document, specify questions, and instantly provide detailed insights in a tabular format. To learn more, read our full memo here and check out some open roles below:
Product Manager - New York, NY
DevOps Engineer (Staff) - New York, NY
Check out some standout roles from this week.
Finix | San Francisco, Chicago, Toronto, or Remote - Senior Software Engineer, Senior DevOps Engineer, Android Engineer, Senior Data Engineer
AtoB | San Francisco, New York, Vancouver, Toronto, Montreal or Remote - Senior Software Engineer, Staff Software Engineer, Product Marketing Manager
Stytch | San Francisco, CA - Backend Engineer (Product), Experienced Full-Stack Engineer (Web), Experienced Software Engineer, Business Systems Engineer
Aurora Solar | Canada or Mexico - Senior Software Engineer (Full Stack), Senior Software Engineer/Developer (Full Stack)
Zipline | San Francisco, CA - Business Intelligence Analyst, Electrical Engineer (Reliability), Perception Software Engineer (Acoustic ML)
SpaceX is preparing to launch a tender offer to sell its existing shares at $135 per share in December 2024. This would value SpaceX at more than $250 billion.
SpaceX founder Elon Musk announced a new project called “Marslink”, which will potentially enable WiFi communication between Earth and Mars. Marslink is an adaptation of SpaceX’s Starlink satellite network.
OpenAI’s new model, code-named Orion, reportedly demonstrated greater performance than its existing models. However, it did not match the improvement from GPT-3 to GPT-4. As a result, OpenAI created a “foundations team” to test new strategies like training Orion on synthetic data produced by AI models.
Perplexity announced plans to introduce ads in the form of “sponsored follow-up questions.” Participating brands in Perplexity’s ad program include Whole Foods and Universal McCann.
Amazon is reportedly developing smart glasses, code-named Amelia, which will be designed to provide Amazon delivery drivers with turn-by-turn navigation via an embedded display, building off Amazon’s existing Echo Frames. Amazon hopes to provide drivers with specific turn-by-turn directions to help shave seconds off of each delivery and improve efficiency.
Thrive Capital is in talks to invest ~$1 billion in Databricks at a valuation of ~$55 billion.
Amazon will soon roll out its newest AI chips as it aims to reduce its reliance on NVIDIA. Austin-based Annapurna Labs, acquired by Amazon in 2015, will launch the Trainium 2, an AI chip designed for training large models, in December 2024.
Lilian Weng, OpenAI’s VP of research and safety, left the company. Weng marks the latest among several high-profile departures from OpenAI’s AI safety team in 2024.
David Faugno, former president and COO of 1Password, stepped into a co-CEO role where he will serve alongside Jeff Shiner, who had previously been sole CEO.
Nubank, a digital bank offering financial services in Brazil, Mexico, and Colombia, now has over 100 million customers in Brazil, or 57% of the country’s population.
Forward, a healthcare startup that envisioned creating an autonomous doctor’s office, is shutting down after having previously raised $650 million.
Klarna saw its implied valuation increase from $7.9 billion in 2023 to $14.6 billion in October 2024 after an existing shareholder increased the value of its stake. Nevertheless, its valuation is still down from a peak of $45.6 billion in June 2021 ahead of a potential IPO next year.
OpenAI is preparing to launch Operator, a new AI agent that can use a computer to take actions on behalf of a user. This could include tasks from booking flights to writing code.
Spotify is launching a new program in January 2025 that pays creators a cut of its subscription earnings and ad revenue from video podcasts.
Microsoft launched specialized AI models tailored to specific industries including agriculture, retail, and manufacturing. The models are available through Microsoft’s online catalog and are pre-trained with industry-specific data.
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