China’s subsea strategy and a new data centre for Singapore

Hi everyone, this is Lauly from Taipei.

I’m stuck in a café in downtown Taipei after an industry luncheon due to an afternoon thunderstorm. But my mind is at ease knowing that a crazily busy month, which has included the arrival of Nvidia CEO Jensen Huang, a major trade show and a rush of tech industry annual general meetings, is finally coming to an end.

Most important of all, the latest Big Story on China’s subsea cable ambitions, written with my colleagues Annie Cheng Ting-Fang, Tsubasa Suruga and Shunsuke Tabeta, is now online.

It all began with a random conversation between Annie, me and an executive from FiberHome, a blacklisted Chinese telecom equipment company, on the sidelines of an industry event. We were surprised by the executive’s openness about his company’s role in extending China’s Belt and Road Initiative from land to the sea, and his comment that FiberHome “doesn’t care about the US blacklisting”.

We spent months digging into the global subsea cable industry to find out whether the executive was just bluffing. What we found is that China really has built a self-sufficient subsea cable industry, from tiny components to massive cable-laying vessels. After combing through more than a decade of data covering over 80 cables, I could feel my nearsightedness getting worse.

Our designers, editors and us reporters put a lot of effort into telling this visually rich story. I hope you will enjoy reading it.

Meanwhile, at the industry luncheon I just attended, I heard for the second time this week suppliers talking about their expansion in south-east Asia, particularly in Vietnam, Thailand and Malaysia.

An executive from a supplier that specialises in building semiconductor and contract manufacturing facilities told me that business in south-east Asia is going to boom over the next couple of years thanks to the supply chain shift. But power supply and talent shortages remain major challenges for every company.

“Can you imagine? From skilled workers and accountants to HR and legal personnel . . . there’s a shortage in almost every aspect,” he said. He can’t even send people from Taiwan, he added, as his company has its hand full supporting TSMC’s domestic expansion.

Communication issues

China has quietly risen as a competitive player in the subsea cable industry, which for the past century has been dominated by the US and its allies, write Nikkei Asia’s Cheng Ting-Fang, Lauly Li, Tsubasa Suruga and Shunsuke Tabeta in this special report.

Subsea cables, which carry more than 95 per cent of global cross-country communication, have become one of the latest battlegrounds between the US and China.

After Washington blacklisted Huawei and its marine cable business, Wuhan-based telecom equipment supplier FiberHome emerged as one of the driving forces behind China’s push to build up a domestic supply chain and win overseas projects.

“The subsea cable industry is like a membership club. We all need other governments’ consent to link with their countries,” one FiberHome executive said. “This is a diplomatic race.”

Grinding the gears

Want work-life balance? Then JD.com is not the company for you, founder and chief executive Richard Liu recently told staff during a video conference.

As growth slows in China and company share prices suffer — China’s top five publicly traded tech companies have collectively lost about $1.3tn in market value from their peak levels in 2021 — tech executives here are trying to return to their leaner and meaner start-up days.

They want employees to work harder and produce more to keep up in China’s fiercely competitive internet ecosystem, write Ryan McMorrow and Nian Liu for the Financial Times.

The growing demands on tech workers cut against Chinese President Xi Jinping’s “common prosperity” campaign, which aims to reduce income inequality and promote fairness. In 2021, Xi’s policy initiative spurred China’s supreme court to ban “996”, the 9am to 9pm, six days a week work hours, which were standard at the time.

While the long hours have improved somewhat, employees say life at China’s tech giants remains a grind. “Outwardly, I appear very calm,” said a developer at Tencent Games. “But the pressure is intense; we’re like gears grinding until they break due to lack of lubrication.”

Back online

Line chart of Gigawatts showing Data centre capacity in south-east Asia

A Singapore state-backed defence conglomerate is building one of the city-state’s first data centres since the government announced it was lifting restrictions on construction and looking to boost computing capacity, Nikkei Asia’s Tsubasa Suruga writes.

Singapore Technologies Engineering plans to build a seven-story facility that will bring the group’s data centre capacity to over 30 megawatts across four sites in Singapore. Total investment will be around 120mn Singapore dollars ($88.6mn) over the next three years and the project is scheduled for completion in 2026.

ST Engineering’s plan comes after Singapore’s surprise move last month to allocate at least 300 megawatts of additional electricity capacity in the near term to data centres, and potentially 200 megawatts or more on top of that powered by green energy. The city-state in 2019 halted construction of new data centres due to environmental concerns but began calling for applications in 2022 to build new facilities with higher environmental standards.

900mn and counting

China’s tech champion Huawei Technologies has introduced the latest versions of its operating system and AI training model in a challenge to leading US companies like Open AI, Google, Apple and Nvidia, Nikkei Asia’s Lauly Li and Cheng Ting-Fang write.

Huawei says HarmonyOS Next, its answer to Google’s Android operating system, will be used on all of its products from later this year, including its upcoming Mate 70 flagship smartphone series. HarmonyOS already runs on more than 900mn devices, the company said, mainly in the Chinese market.

Huawei also introduced Harmony Intelligence and a major update to its Pangu large language model for AI, aimed at competing with Apple’s Apple Intelligence and Open AI’s GPT-4 LLM, respectively.

The company is betting big on AI despite a US crackdown. “We are the most important alternative beyond Nvidia’s [AI computing] solutions,” Richard Yu, chair of Huawei’s Consumer Business Group, said.

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