China Decode: Apple's China Chip Play, DeepSeek Seeking Billions, and the Californication of Chinese Food

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**James Kynge** (1:00)
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**James Kynge** (1:47)
We have to recognize how enormous a trend this is. The South Korean government, along with Samsung Electronics and SK Hynex, have allocated 520 billion US dollars to keep South Korea in the AI race. Can we see any kind of a pledge like that in Europe? Nothing so far comes close to that.

**Alice Han** (2:16)
Welcome to China Decode. I'm Alice Han.

**James Kynge** (2:18)
And I'm James King.

**Alice Han** (2:20)
In today's episode of China Decode, we're discussing big money moves in the AI arms race, China's latest strategy to increase its global influence, and the Californication of Chinese diets. That's all coming up, but first, let's do a quick check in with how the markets are starting the week in China. On Monday, markets finished mostly higher after sentiment improved on easing geopolitical tensions and renewed risk appetite. The Shanghai Composite was up 1.16 percent, the CSI 300 rose 1.21 percent, and the Shenzhen Component added 0.19 percent. Financial stocks led the way with Industrial and Commercial Bank of China up 0.98 percent, and the Agricultural Bank of China up 0.81 percent. All right, let's get into it. A lot of news this week in the AI world. Starting with Apple, who raised prices on the MacBook and the iPad, in some cases by around 20 percent.
AI is to blame, but not because of new features. It's because of the growing chip shortage, as chip makers prioritize orders for companies like Nvidia.
Now, Apple is reportedly lobbying the Trump administration for permission to buy chips from blacklisted Chinese DRAM company, CXMT. Meanwhile, Chinese AI company DeepSeek has just announced plans to double its headcount in some departments, and is preparing to take outside investment for the first time ever. James, a lot of exciting things happening in the world of AI, not just in the US, clearly in China too. The first one really is this Apple story. Not only will consumers have to confront price rises globally of Apple products, but now Apple is really stretched in terms of capacity for memory as well as chips. This speaks to a broader supply shortage that we're seeing. It explains why DRAM prices from the Korean companies have basically doubled in the last few months.
This is a perfect entry point for some of the Chinese players like CXMT, which is China's big chip maker in the space, to enter and potentially cater to the Apples of the world. But I think the bigger political question is whether or not the Trump administration is going to ultimately clear CXMT for sales to Apple or to American companies. Because right now, as you know, it's technically on a list banned by the Pentagon because it's blacklisted as a company that's aiding the People's Liberation Army of China. Now, this is not a ban that creates legal penalties for an Apple or a company trying to buy CXMT chips. But it does carry a lot of reputational risks. So the big question is, A, will there be a change of tune from the Trump administration? And B, will Apple try to risk it in order to get more DRAM?