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BIZ & FINANCE WEDNESDAY | JULY 2, 2025

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Asian factories hobbled by US tariffs uncertainty

Two Chinese chip firms seek 12b yuan IPO amid US trade pressure BEIJING: Two Chinese artificial intelligence chip startups are seeking to raise a combined 12 billion yuan (RM6.9 billion) in initial public offerings (IPO), hoping US curbs on advanced chip sales to China will boost local demand for their products, their filings show. Beijing-based Moore Threads plans to raise 8 billion yuan, while Shanghai-based MetaX seeks 3.9 billion yuan, according to their IPO prospectuses filed on Monday. Both companies intend to list on Shanghai’s STAR Market, the tech focused board of the Shanghai Stock Exchange. Their fundraising plans underscore growing efforts by Chinese chipmakers to capitalise on Beijing’s push to develop domestic champions in graphics processing units (GPU), which are crucial for AI development. Reuters reported last week that Biren Technology, another Chinese AI chipmaker, raised about 1.5 billion yuan in fresh funding and was preparing for a Hong Kong IPO. Developing domestic chip champions has become increasingly urgent for Beijing, as the US tightens export restrictions, with the latest rules implemented in April banning Nvidia’s H20 chips, one of its most popular chips, from being shipped to China. The US has also imposed restrictions since last year that prevent Chinese AI chip designers from accessing advanced global foundries like Taiwan Semiconductor Manufacturing for producing cutting-edge semiconductors. Moore Threads and MetaX both cited US sanctions as a major risk to their development but also emphasised the restrictions could create significant market opportunities. “US restrictions on high-end GPU exports to China are prompting Chinese companies to accelerate domestic substitution processes,“ Moore Threads said. The company was added to the US Entity List in late 2023 and is barred from partnering with TSMC. MetaX said “geopolitical pressures are forcing relevant domestic clients to use domestically produced GPU products, which will help domestic GPU manufacturers establish closer ties with local customers and suppliers.” The two firms design GPUs to compete with Nvidia products and have reported steep losses over the last three years, which they largely attributed to heavy research and development spending. Moore Threads generated revenue of 438 million yuan in 2024 but posted a loss of 1.49 billion yuan, adding to losses of 1.67 billion yuan in 2023 and 1.84 billion yuan in 2022. MetaX posted 2024 revenue of 743 million yuan against a 1.4 billion yuan loss, following losses of 871 million yuan in 2023 and 777 million yuan in 2022. “Moore Threads and MetaX are both considered leading GPU firms in China, and accessing the capital market in China would be crucial for them to continue their research and development,“ said He Hui, research director on semiconductors at Omdia. China’s drive to achieve higher self sufficiency in chips would help domestic GPU firms achieve economies of scale, crucial to generating higher revenue and profits, He said. Both companies were founded in 2020 by executives who previously worked at major US chip firms. MetaX was founded by former AMD employees including chairman Chen Weiliang, who previously served as the US chipmaker’s global head of GPU product line design. Moore Threads was established by former Nvidia employees including chairman Zhang Jianzhong, who previously held the role of general manager for the AI chip giant’s China operations. – Reuters

o Manufacturing shrinks in June amid stalled trade talks, weak global demand and China’s sluggish growth although there are signs of modest relief

heavily reliant on exports to the US market. Negotiators from more than a dozen major US trading partners are rushing to reach agreements with Trump’s administration by a July 9 deadline to avoid import tariffs jumping to higher levels. While China is continuing negotiations for a broader trade deal with the US – Japan and South Korea have so far failed to gain concessions on tariffs imposed on their mainstay export items like automobiles. India was a significant outlier in the region, as manufacturing activity accelerated to a 14 month high in June, driven by a substantial rise in international sales that helped spark record-breaking hiring. The PMI climbed to 58.4 in June from the previous month’s 57.6 and in line with a preliminary estimate released last week. Factory activity in many other countries in Asia shrank. Indonesia’s PMI fell to 46.9 in June from 47.4 in May, while that of Vietnam stood at 48.9 in June, down from 49.8 in the previous month, the private surveys showed. Malaysia’s PMI rose slightly to 49.3 last month, from 48.8 in May, while that of Taiwan dropped to 47.2 in June from 48.6 in the previous month, the surveys showed. Shivaan Tandon, markets economist, at Capital Economics, said that given the broader weakness in manufacturing in the region, policymakers are likely to focus their attention on reviving growth. “With worries about growth having taken precedence over those about inflation, we think most central banks in the region will continue to loosen monetary policy and by more than most analysts expect.” – Reuters

TOKYO: Factory activity in many Asian economies shrank in June as US tariff uncertainty kept demand low, but signs of modest relief for manufacturers raise the stakes in trade talks with Washington amid the region’s gloomy economic recovery prospects. The underlying softness in private surveys released yesterday highlights the challenges facing policymakers as they try to navigate US President Donald Trump’s moves to shake up the global trade order with sweeping tariffs. Japan’s manufacturing activity expanded for the first time in 13 months, and South Korea’s activity contracted at a milder pace, private surveys showed yesterday. China’s Caixin purchasing managers’ index (PMI) also expanded in June due to an increase in new orders, confounding an official survey that showed activity shrinking for a third straight month. However, stalled trade talks with the US, prospects of weakening global demand and lacklustre growth in China will likely weigh on Asia’s factory activity, analysts say. “Overall, manufacturing supply and demand recovered in June,” said Wang Zhe, economist at Caixin Insight Group on China’s PMI. “However, we must recognise that the external environment remains severe and complex, with increasing uncertainties. The The smartphone turned EV maker said it received roughly 240,000 orders for the YU7 in the first 18 hours after the car went on sale last Thursday night, but only a small number of vehicles were available for immediate delivery. By yesterday, the Xiaomi app showed purchasers were facing a wait of between 38 and 60 weeks, according to Reuters checks. Since Friday, more than 400 buyers have lodged complaints on Sina’s Black Cat consumer complaint platform saying they were not made aware of the long wait and demanding a refund, according to a Reuters review of the records on the platform. Buyers had to make a non-refundable deposit of 5,000 yuan (RM2,940) to place their order. They said the official app only showed the estimated waiting time for the car after the order had been confirmed. They also raised concerns about whether the longer wait would mean they would have to pay more because a tax exemption for EVs is set to expire at the end of this year. Xiaomi did not immediately respond to a request for comment. Its charismatic CEO Lei Jun said on his Weibo account, where he has 26.8 million followers, that he would answer some questions raised after the YU7 launch in a livestreaming event today. Xiaomi made a huge splash in China’s EV market with the launch of its first vehicle, the SU7 sedan, in March last year. While early

issue of insufficient effective demand at home has yet to be fundamentally resolved,” Zhe said. The Caixin/S&P Global manufacturing PMI rose to 50.4 in June from 48.3 in May, surpassing analysts’ expectations in a Reuters poll and the 50-mark that separates growth from contraction. Japan’s final au Jibun Bank PMI rose to 50.1 in June from 49.4 in May due to an upswing in output, but overall demand remained weak as new orders shrank on uncertainty over US tariffs, a private sector survey showed. Factory activity in South Korea contracted for the fifth straight month in June at 48.7, though the pace of decline eased due to companies’ relief over a snap presidential election on June 3 that ended six months of uncertainty. “Volatility in US tariff policy and economic recovery uncertainty are expected to persist in the second half,” South Korean Industry and Trade Minister Ahn Duk-geun said, underscoring the urgency in Seoul to reach a trade deal with the US. The comments came after separate June data showed exports from Asia’s fourth largest economy rebounded but shipments to the US and China remained weak. Steep tariffs imposed by Trump have upended global trade and heightened uncertainty for many Asian economies

Xiaomi’s YU7 buyers hit by delivery delays SHANGHAI: China’s Xiaomi is telling customers of its new YU7 electric sports utility vehicle they will have to wait more than a year to receive their cars, sparking a fresh wave of complaints against the company.

Massive demand sees 240,000 orders in 18 hours, but limited stock and 38-60 week wait spark buyer complaints for EV newcomer. – AFPPIX buyers of the SU7 initially faced waits of up to 7 months it has outsold Tesla’s Model 3 in China on a monthly basis since December. priced from 253,500 yuan, nearly 4% less than Tesla’s Model Y, currently China’s best-selling SUV. Lei has been open about how Xiaomi wants to challenge Tesla’s Model Y for the top spot.

The company has been grappling with a consumer backlash since a fatal crash involving an SU7 in March. It has also faced complaints over the confusion surrounding vehicle delivery times, as well as optional features. The YU7 is Xiaomi’s second model and

Xiaomi has been ramping up output at its Beijing plant and plans new factories on two plots of land nearby. Monthly output has increased to 28,000 units in May from 4,000 units last March. – Reuters