The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
Beijing is intensifying its push for Chinese companies to prioritize locally produced AI chips over Nvidia Corp's products, as part of an ongoing effort to bolster the country's semiconductor industry and reduce reliance on foreign technology amid US sanctions.
Chinese regulators have been quietly guiding firms away from purchasing Nvidia’s H20 chips, widely used in the development of artificial intelligence (AI) models. While not an outright ban, this strategy aims to help domestic AI chipmakers like Cambricon Technologies Corp and Huawei Technologies Co gain market share, while also preparing local companies for potential additional US restrictions, according to people familiar with the matter.
The move comes after the US government banned Nvidia from selling its most advanced AI processors to China in 2022, prompting Nvidia to modify its chips to comply with US export regulations. Despite this, Nvidia’s shares fell by 3.9% on Friday following the news of China's guidance.
Chinese regulators, including the Ministry of Industry and Information Technology, have issued informal instructions—known as window guidance—to encourage companies to source from local vendors like Huawei and Cambricon. However, China’s officials are also prioritizing technological advancement, and if companies need to buy foreign semiconductors to build superior AI systems, they will still tolerate such purchases.
Nvidia has seen substantial sales growth globally, especially in the AI space, despite trade restrictions impacting its revenue from China, which accounted for 12% of its revenue in the July quarter—around US$3.7 billion. The company’s CEO, Jensen Huang, emphasized his commitment to serving Chinese customers while complying with US government restrictions, saying, “We will do our best to support them.”
Meanwhile, China's AI sector continues to grow, with major players like ByteDance and Alibaba heavily investing, and several startups developing AI models to rival international competitors. Despite government pressure, some Chinese companies are still rushing to stockpile Nvidia chips ahead of anticipated US sanctions, while also procuring Huawei chips to align with Beijing’s goals.
The competition between Nvidia and Chinese chipmakers highlights the broader global AI race and the technological divide deepening due to geopolitical tensions.
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