FirstFT: Chinese tech groups seek to build AI footprints in Silicon Valley

Today’s agenda: G20 weakens support for Ukraine; EU on Chinese IP transfer; Baltic cable cut; rehabilitating KPMG; and VW’s US woes

---

Good morning. We start with a story on efforts by China’s biggest technology groups to build artificial intelligence teams in Silicon Valley.

Who’s growing their operations: Alibaba, ByteDance and Meituan have been expanding their offices in California in recent months, seeking to poach staff from rival US groups who could help them make up ground in the race to profit from generative AI.

Alibaba, for example, is recruiting an AI team in Sunnyvale in California’s San Francisco Bay Area. It has approached engineers, product managers and AI researchers who have worked at OpenAI and the biggest US tech groups, according to three people familiar with the matter.

What’s prompting the move: Chinese groups have been hit by a US ban on exports of the highest-end Nvidia AI chips, which are crucial for developing AI models. So far, there are no restrictions on US-based entities related to or owned by Chinese tech companies accessing high-end AI chips through data centres located in the US. However, the Department of Commerce proposed introducing a rule in January that cloud providers have to verify the identity of users training AI models and report their activities. Read the full report.

Here’s what else we’re keeping tabs on today:

• Central banks: Bank of England governor Andrew Bailey appears before MPs on the Treasury committee. Eurozone inflation data is published.

• Israel: Local elections are held for people in areas close to the border of Gaza and Lebanon who were unable to vote in February.

• UK: The National Farmers Union holds a rally in London.

• Results: Diploma, Imperial Brands, Lowe’s, Medtronic, Thyssenkrupp and Walmart report.

Join us on December 4-6 at The Global Boardroom, the Financial Times’ award-winning digital conference, and hear leaders in policy, business and finance debate strategies for growth amid continued geopolitical, economic and technological disruption. Register for free here.

Five more top stories

1. The world’s biggest economies have signalled weakening support for Ukraine, issuing a joint declaration that watered down previously agreed criticism of Russia’s war against the country and included only a broad reference to “human suffering” caused by its 1,000-day invasion. The statement from G20 leaders came as Ukraine’s President Volodymyr Zelenskyy has come under rising pressure from some allies to consider peace talks. Read how the Rio communiqué walked back on previous diplomatic censure of Moscow.

• Security guarantee options: European allies should be prepared to send military forces to Ukraine to underpin any peace deal brokered by Donald Trump between Kyiv and Moscow, Estonia’s foreign minister has said.

• Storm Shadow: UK Prime Minister Keir Starmer has declined to rule out allowing Ukraine to use UK-made cruise missiles for strikes inside Russia, after President Joe Biden’s policy shift on US-supplied long-range weapons.

2. Israel struck a “specific component” related to Iran’s nuclear programme last month, Prime Minister Benjamin Netanyahu told the Knesset yesterday, despite pleas from the US to contain its retaliatory air strikes on the Islamic republic. More on his comments to parliament.

3. Exclusive: Brussels is planning to force Chinese companies to transfer intellectual property to European businesses in return for EU subsidies as part of a tougher trade regime for clean technologies. The requirements, while at a much smaller scale, echo China’s own system, which pressures foreign companies into sharing their IP in exchange for access to the Chinese market. Read more on the proposed scheme.

4. Germany and Finland have said they are “deeply concerned” about a severed undersea communications cable between the two countries, saying that it raised suspicions of possible Russian sabotage. The Finnish state operator of the 1,200km fibre optic cable between Helsinki and Rostock said it had been cut early yesterday morning and was almost certainly the result of an “external force”.

5. Asia’s arms makers and naval shipbuilders are leading a global surge in defence stocks this year as investors bet that the region’s companies are primed to lead a rearmament boom. The share moves underline a shift in the global security order as US allies in Europe and Asia brace for president-elect Donald Trump pressing them to increase military spending.

Join tomorrow’s Global M&A Outlook — Americas webinar, organised by the FT in partnership with Datasite, which convenes dealmakers to discuss M&A activity and trends in the Americas region.

The Big Read

KPMG’s UK unit, second only to its US business in size, employs 18,000 people and checks the books of 22 of the country’s largest listed companies. A series of multiple audit failings, however, has resulted in regulatory fines and hit its reputation. Jon Holt, who took the reins in 2021, has since been able to engineer a successful turnaround. But some worry the company is still losing ground to rivals.

We’re also reading and listening to . . . 

• Politics in a noisy age: We are once again having to readjust to a vast expansion in the amount of conflicting information at our fingertips, writes Stephen Bush.

• UK jobs: There is a strong case for some of Labour’s proposed reforms, but as Sarah O’Connor writes, big policy interventions are always a leap in the dark.

• Tech Tonic 🎧: Semiconductor technology has advanced at a breakneck pace, but signs show this might be slowing down. What will that mean for the global fight for chips? The FT’s James Kynge reports from the Netherlands.

Chart of the day

Volkswagen’s high-stakes bid to woo US consumers with its electric vehicles in a slowing market was a risky endeavour from the start. But with Donald Trump’s return to the White House, the American dream of Europe’s largest carmaker is looking more fraught than ever with the president-elect promising to scrap EV subsidies and impose tariffs on foreign-made vehicles.

Take a break from the news

The work of William Morris, chief founder of Britain’s 19th-century Arts and Crafts movement, has become a global signifier of an innately British style. Yet a London exhibition traces the profound influence of Iranian, Turkish and Syrian arts on his geometrically precise designs.

This post was originally published on here