3/09/2025

BIZ & FINANCE WEDNESDAY | SEP 3, 2025

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China backseat driving risks sending AI off course

Tesla gets around 600 orders since India launch BENGALURU: Tesla has received orders for just over 600 cars since launching sales in India in mid-July, a number that has fallen short of the company’s own expectations, Bloomberg News reported yesterday, citing people familiar with the matter. The Elon Musk-led EV maker now plans to ship between 350 and 500 cars to India this year, of which the first batch is slated to land from Shanghai in early September, Bloomberg News said. Deliveries will initially be limited to Mumbai, Delhi, Pune and Gurugram, the report said, adding the size of shipments is based on the full payments it has received for the cars, as well as the company’s ability to deliver outside the four cities where it has a physical presence. Reuters could not immediately confirm the report. Tesla did not immediately respond to a Reuters request for comment. In July, Tesla launched its Model Y car in India for about US$70,000 (RM296,000), a price that reflects the country’s high tariffs on imported EVs. The US EV maker has long lobbied India for lower import tariffs on cars. Facing excess capacity in global factories and declining sales, Tesla has adopted a strategy of selling imported vehicles in India, despite the duties and levies. With deliveries estimated to begin from the third quarter, the automaker is targeting a niche segment of the domestic car market, where EVs account for just 4% of overall sales. Although India’s road infrastructure has improved, traffic discipline – like lane driving – is still rudimentary, EV chargers are far and few, stray animals, including cattle, and potholes on the road are a big hurdle, even in cities. – Reuters “The market did not particularly like Freixe, and the restructuring goals were also put on the back burner,“ said Maurizio Porfiri, chief investment officer at trading firm Maverix. “Another fresh start is needed, and it is time for more stability to return to the management at this global corporation,“ he told Reuters. Freixe’s dismissal was featured on the front page of Swiss newspapers, with Neue Zuercher Zeitung noting that Nestle had lost its “legendary stability” where CEOs stayed for years before eventually becoming chairmen. The latest change is likely to leave questions unanswered about Nestle’s mid-term direction and “keep a lid on the equity story until we hear more about Mr Navratil’s plan,“ JPMorgan analysts said in a research note. The bank’s analysts said the news of Freixe’s ouster was unlikely to reassure investors because it was the second time in a year that the company had appointed a new boss without carrying out a thorough search for a replacement. The note also expressed concern that incoming CEO Navratil looked as though he would be “boxed in” by Freixe’s turnaround strategy for now at a time when the market remained unconvinced. Jon Cox, an analyst at Kepler Cheuvreux, said he expected Nestle’s shares to come under pressure due to the latest upheaval at Nestle’s HQ in Vevey, next to Lake Geneva. “This is not the Nestle way to do things, to have two CEO replacements in just over a year,“ Cox said.“Hopefully this will get them back on the straight and narrow.” – Reuters

HONG KONG: China’s economy is a study in contradictions. Decades of centralised industrial planning in China have led to endemic overcapacity, which in turn has fuelled destructive price wars across an array of sectors. Yet Beijing’s approach, for all its flaws, also helped create world-class corporate champions like electric-car maker BYD. Officials now want to curb what they call “disorderly competition” in the booming US$140 billion (RM591 billion) artificial intelligence (AI) sector. There is some logic to intervening, but that will come at a cost. Unlike with EVs or solar panels, it’s not clear what exactly about AI is worrying China’s economic planners. On the contrary, optimism is buoying up the sector, which combined with infrastructure and other related sectors will be worth US$1.4 trillion by 2030, analysts at Morgan Stanley reckon. Such optimism has pushed the Hang Seng Tech Index in Hong Kong up 30% this year, outperforming the mainland benchmarks. There is some justification for the hype. Despite US sanctions and export restrictions, DeepSeek, Alibaba and peers are still churning out open source models that are competitive with, if not

– many of which are sitting idle. And price wars are intensifying in what one tech executive dubbed “a war of a hundred models”, even as business models remain hazy. Yet the authorities now intent on coordinating the country’s AI development and resources do not have a strong record of picking winners, particularly in sectors where the technology is rapidly evolving. Semiconductors are a prime example: the government has deployed billions of dollars into state-designated champions, only to see many go bust, including Wuhan Hongxin Semiconductor Manufacturing and Tsinghua Unigroup, whose former chairman was jailed for corruption and embezzlement. Too much oversight and planning will also squeeze the private sector, where under-the-radar upstarts like DeepSeek have unexpectedly emerged. Beijing is prudent to want to avoid excess, but history suggests its approach risks sending progress off course. RobynMak is a contributor for Reuters Breakingviews. The opinions expressed here are solely her own.

superior to, those from Meta, OpenAI and others in the West. Chatbots and agents are proliferating across the country. Alibaba last week revealed that surging demand for AI services powered triple digit year-on-year growth in related revenue. And chipmaker Cambricon Technologies revealed that its first-half revenue rocketed more than 4000% from a year ago, albeit from a low base. But there’s caution, too. Cambricon’s Shanghai shares had doubled since the end of July. On Friday, hours before Beijing stated its willingness to intervene in the industry, the US$88 billion company took the unusual step of warning investors that the stock price may have “deviated from the company’s current fundamentals”, triggering a selloff. To be sure, pockets of wasteful investments are bubbling up. It’s reminiscent of the mad scramble playing out among US tech giants, which analysts at research outfit IDC forecast will spend a whopping US$336 billion in 2028 on AI. In the People’s Republic, local governments desperate to hit growth targets have embarked on a debt fuelled spree to hoard chips and build data centres

India to start commercial chip production by 2025 NEW DELHI: India will begin commercial semiconductor production by the end of 2025, Prime Minister Narendra Modi said yesterday, touting his nation as a future “global hub” for chip innovation. $50 billion in 2024-25, with government targets of US$100-110 billion by 2030. The country is currently developing 10 semiconductor projects worth US$18 billion in investments, including two new 3-nanometre design facilities – among the most advanced – in Noida and Bengaluru. The announcement comes after Japan pledged to boost investment in India to ¥10 trillion (RM287 billion), including semiconductor and AI cooperation, during Modi’s visit to Tokyo last week. India, the world’s 5th largest and fastest growing major economy, has been battered by the fallout from US President Donald Trump’s punishing 50% tariffs, and is seeking new avenues of growth. – AFP Nestle investors face more turbulence after another CEO ousted Modi, speaking in New Delhi at the launch of the annual Semicon India conference, said test chips from Micron and Tata were already being produced. “Commercial chip production will begin this year,“ he said. “This reflects how rapidly India is advancing in the semiconductor sector.” India’s semiconductor market has surged from US$38 billion (RM160 billion) in 2023, to US$45- India says it has an edge in three areas – producing components for semiconductor equipment, supplying critical materials such as chemicals and minerals, and services ranging from research and development, to artificial intelligence, big data and cloud computing. The world’s most populous nation also claims a “human capital” advantage, Modi said, noting that “20% of the global talent in semiconductor design talent comes from India”.

ZURICH: Nestle investors were pitched back into choppy waters yesterday after the Swiss food giant changed its CEO for the second time in a year, ousting boss Laurent Freixe over an affair he had with a subordinate. The company’s shares were indicated 1.9% lower in pre-market activity in Zurich following Freixe’s sudden dismissal on Monday following a board meeting to discuss the findings of an investigation into the relationship. The downturn is another blow for Nestle investors who have been frustrated with three years of share price declines between 2022 and 2024 and no signs of a recovery this year. Freixe will be replaced by Philipp Navratil, a rising star at the maker of Nescafe coffee and KitKat chocolate bars, which has been struggling with sales volumes since the pandemic. The dismissal of Freixe follows an investigation into an undisclosed romantic relationship with a direct subordinate which breached Nestle’s code of business conduct, Nestle said late on Monday. Freixe, who spent 39 years with Nestle, will receive no exit package following his departure, the company told Reuters. The Nestle veteran’s abrupt removal comes a year after predecessor Mark Schneider was axed, and 2½ months after longstanding chair Paul Bulcke announced he would step down in 2026 in one of the most turbulent periods in the company’s 159-year history. In a short statement Bulcke thanked Freixe for his years of service at Nestle, but said the dismissal was a “necessary decision”. Nestle’s shares, a bedrock of the Swiss stock

Freixe (left) and Nestle chairman Paul Bulcke attend a general shareholders meeting of Nestle on April 16. The Swiss food giant announced on Sept 1 it had dismissed Laurent Freixe as CEO with immediate effect over an “undisclosed romantic relationship with a direct subordinate”. – AFPPIX

exchange, have lost almost a third of their value over the past five years, underperforming European peers. Freixe’s appointment failed to halt the slide, with the company’s shares shedding 17% during

his leadership, disappointing investors. In July, Nestle launched a review of its underperforming vitamins business that could lead to the divestment of some brands after first half sales volumes missed expectations.