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A 300mm wafer on display at the booth of Taiwan Semiconductor Manufacturing Company during the 2023 World Semiconductor Conference at Nanjing International Expo Center on July 19, 2023, in Nanjing, China.

Vcg | Visual China Group | Getty Images

The U.S. has revoked a waiver that allowed Taiwan Semiconductor Manufacturing Co. to export key chipmaking equipment and technology to its manufacturing plant in Nanjing, China, as Washington continues to ramp up efforts to limit Beijing’s semiconductor advancement.

The change will remove a fast-track export privilege known as validated end user (VEU) status, effective Dec. 31, TSMC confirmed to CNBC on Wednesday.

The world’s largest contract chipmaker had received the exemption soon after the Commerce Department launched its initial restrictions on the sale of U.S.-origin chipmaking tools in 2022.

Under the new policy, shipments of chipmaking tools with American origins to TSMC’s manufacturing facilities in Nanjing, China, will require U.S. export licenses.

“While we are evaluating the situation and taking appropriate measures, including communicating with the US government, we remain fully committed to ensuring the uninterrupted operation of TSMC Nanjing,” the company said. 

South Korean memory chipmakers SK Hynix and Samsung also had their VEU privileges revoked on Friday, according to a statement on the Federal Register. Both companies run China-based memory chip facilities.

At the same time, the Department of Commerce’s Bureau of Industry and Security said in a statement that it was closing the VEU “Biden-era loophole” for all foreign semiconductor manufacturers.

It added that it intends to grant export license applications to allow former VEU participants to operate their existing manufacturing facilities in China, but not to expand capacity or upgrade technology in China. 

Jeffrey Kessler, under secretary of commerce for industry and security, stated that the Trump administration is “committed to closing export control loopholes — particularly those that put U.S. companies at a competitive disadvantage. Today’s decision is an important step towards fulfilling this commitment.”

According to Brady Wang, associate director at Counterpoint Research, the policy changes “reflect Washington’s broader push to tighten control over semiconductor equipment and technology exports to China, strengthening U.S. power over chip production in China,” he said.  

TSMC operates two manufacturing sites in China, one in Shanghai and Nanjing, with the latter facility more advanced. To power its fabrication plants, the company uses hardware from several U.S. chip equipment suppliers, including Applied Materials and  KLA Corp.

However, according to Wang, as TSMC’s Nanjing fab contributes less than 3% of TSMC’s total revenue and represents a minor share of its global capacity, the financial impact on the company “should be minor.”

Renewed crackdown? 

The recent VEU reversals may come as a surprise to some, as they follow the Trump administration’s announcement that it would ease controls on the export of some American artificial intelligence chips. 

Last month, the U.S. said Nvidia and AMD would be allowed to resume exports of some of their previously banned made-for-China AI chips, and signaled that the policy could be expanded.

Prior to that, the administration had also struck down the Biden-era AI diffusion rule, a move that could’ve seen the expansion of export controls on advanced AI chips.

The rollbacks of advanced chip restrictions have been posed by U.S. officials as a way for the U.S. to maintain the supremacy of the AI technology stack globally, including in China. 

However, the removal of the VEU exemptions shows that the same logic is unlikely to be applied to memory and chipmaking technologies. 

According to Ray Wang, research director for semiconductors, supply chain and emerging technology at Futurum Group, the policies show that Washington remains committed to preventing China from boosting its local chip production capacity and cultivating its local know-how and talent. 

“Zooming out, another underlying goal may be to constrain companies’ ability to expand their supply chain footprint in China—particularly in strategic sectors such as semiconductors, which the administration is keen to prevent,” he said. 

Conversely, the Trump administration has been working to attract more of the semiconductor supply chain to the shores of the U.S. through tariff threats.

This year, TSMC, SK Hynix and Samsung have committed new investments into their American manufacturing plans. 

On Monday, shares of SK Hynix and Samsung fell on the VEU news. However, shares of TSMC traded flat on Wednesday after news of its VEU reversal.

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Microsoft AI chief says only biological beings can be conscious

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Microsoft AI chief says only biological beings can be conscious

Mustafa Suleyman, CEO of Microsoft AI, speaks at an event commemorating the 50th anniversary of the company at Microsoft headquarters in Redmond, Washington, on April 4, 2025.

David Ryder | Bloomberg | Getty Images

Microsoft AI chief Mustafa Suleyman says only biological beings are capable of consciousness, and that developers and researchers should stop pursuing projects that suggest otherwise.

“I don’t think that is work that people should be doing,” Suleyman told CNBC in an interview this week at the AfroTech Conference in Houston, where he was among the keynote speakers. “If you ask the wrong question, you end up with the wrong answer. I think it’s totally the wrong question.”

Suleyman, Microsoft’s top executive working on artificial intelligence, has been one of the leading voices in the rapidly emerging field to speak out against the prospect of seemingly conscious AI, or AI services that can convince humans they’re capable of suffering.

In 2023, he co-authored the book “The Coming Wave,” which delves into the risks of AI and other emerging technologies. And in August, Suleyman penned an essay titled, “We must build AI for people; not to be a person.”

It’s a controversial topic, as the AI companion market is swiftly growing, with products from companies including Meta and Elon Musk’s xAI. And it’s a complicated issue as the generative AI market, led by Sam Altman and OpenAI, pushes towards artificial general intelligence (AGI), or AI that can perform intellectual tasks on par with the capabilities of humans.

Read more CNBC reporting on AI

Altman told CNBC’s “Squawk Box” in August that AGI is “not a super useful term” and that what’s really happening is models are advancing quickly and that we’ll rely on them “for more and more things.”

For Suleyman, it’s particularly important to draw a clear contrast between AI getting smarter and more capable versus its ability to ever have human emotions.

“Our physical experience of pain is something that makes us very sad and feel terrible, but the AI doesn’t feel sad when it experiences ‘pain,'” Suleyman said. “It’s a very, very important distinction. It’s really just creating the perception, the seeming narrative of experience and of itself and of consciousness, but that is not what it’s actually experiencing. Technically you know that because we can see what the model is doing.”

Within the AI field, there’s a theory called biological naturalism, proposed by philosopher John Searle, that says consciousness depends on processes of a living brain. 

“The reason we give people rights today is because we don’t want to harm them, because they suffer. They have a pain network, and they have preferences which involve avoiding pain,” Suleyman said. “These models don’t have that. It’s just a simulation.”

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Suleyman and others have said that the science of detecting consciousness is still in its infancy. He stopped short of saying that others should be prevented from researching the matter, acknowledging that “different organizations have different missions.”

But Suleyman emphasized how strongly he opposes the idea. 

“They’re not conscious,” he said. “So it would be absurd to pursue research that investigates that question, because they’re not and they can’t be.”

‘Places that we won’t go’

Suleyman is on a speaking tour, in part to inform the public of the risks of pursuing AI consciousness.

Prior to the AfroTech Conference, he spoke last week at the Paley International Council Summit in Silicon Valley. There, Suleyman said that Microsoft will not build chatbots for erotica, a stance that’s in conflict with others in the tech industry. Altman announced in October that ChatGPT will allow adult users to engage in erotic conversations, while xAI offers a risque anime companion.

“You can basically buy those services from other companies, so we’re making decisions about what places that we won’t go,” Suleyman reiterated at AfroTech. 

Suleyman joined Microsoft in 2024 after the company paid his startup, Inflection AI, $650 million in a licensing and acquihire deal. He previously co-founded DeepMind and sold it to Google for $400 million over a decade ago.

During his Q&A session at AfroTech, Suleyman said he decided to join Microsoft last year in part because of the company’s history, stability and vast technological reach. He was also pursued by CEO Satya Nadella.

“The other thing to say is that Microsoft needed to be self-sufficient in AI,” he said onstage. “Satya, our CEO, set about on this mission about 18 months ago, to make sure that in house we have the capacity to train our own models end to end with all of our own data, pre training, post training, reasoning, deployment in products. And that was part of bringing on my team.”

Since 2019, Microsoft has been a major investor and cloud partner to OpenAI, and the companies have used their respective strengths to build big AI businesses. But the relationship has shown signs of tension of late, with OpenAI partnering with Microsoft rivals like Google and Oracle, and Microsoft focusing more on its own AI services.

Suleyman’s concerns about consciousness have gained resonance. In October, California Gov. Gavin Newsom signed SB 243, which requires that chatbots disclose they are AI and tell minors every three hours to “take a break.”

Last week, Microsoft announced new features for its Copilot AI service, including an AI companion called Mico and the ability to engage with Copilot in group chats with others. Suleyman said Microsoft is building services that are aware that they’re AI. 

“Quite simply, we’re creating AIs that are always working in service of the human,” he said. 

There’s plenty of room for personality, he added.

“The knowledge is there, and the models are very, very responsive,” Suleyman said. “It’s on everybody to try and sculpt AI personalities with values that they want to see, they want to use and interact with.”

Suleyman highlighted a feature Microsoft launched last week called real talk, which is a conversation style of Copilot designed to challenge users’ perspectives instead of being sycophantic.

Suleyman described real talk as sassy and said it had recently roasted him, calling him “the ultimate bundle of contradictions” for warning of the dangers of AI in his book while also accelerating its development at Microsoft. 

“That was just a magical use case because in some ways I was like, I actually do feel kind of seen by this,” Suleyman said, noting that AI itself full of contradictions. 

“It is both underwhelming in some ways and, at the same time, it’s totally magical,” he said. “And if you’re not afraid by it, you don’t really understand it. You should be afraid by it. The fear is healthy. Skepticism is necessary. We don’t need unbridled accelerationism.”

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Microsoft plans to hire more but with ‘a lot more leverage’ thanks to AI, CEO Satya Nadella says

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Microsoft plans to hire more but with 'a lot more leverage' thanks to AI, CEO Satya Nadella says

Microsoft CEO Satya Nadella speaks during an event commemorating the 50th anniversary of the company at Microsoft headquarters in Redmond, Washington, on April 4, 2025. Microsoft Corp., determined to hold its ground in artificial intelligence, will soon let consumers tailor the Copilot digital assistant to their own needs.

David Ryder | Bloomberg | Getty Images

Microsoft will expand its employee base once again, CEO Satya Nadella told investor Brad Gerstner on a podcast that aired on Friday.

The software maker’s workforce didn’t budge in the 2025 fiscal year, which ended in June. It stood at 228,000, with multiple rounds of layoffs lowering the total number by at least 6,000. In July, Microsoft let go of another 9,000 workers.

“I will say we will grow our headcount, but the way I look at it is, that headcount we grow will grow with a lot more leverage than the headcount we had pre-AI,” Nadella said on the BG2 podcast. OpenAI, which has a broad partnership with Microsoft, introduced its ChatGPT assistant in 2022. Microsoft’s headcount grew by 22% in the 2022 fiscal year.

Employees will figure out how to do their jobs differently, Nadella said, adding that the company wants to ensure they can access artificial intelligence features in Microsoft 365 productivity software and the GitHub Copilot AI coding assistant. Those services draw on AI models from Anthropic and OpenAI.

“It’s the unlearning and learning process that I think will take the next year or so, then the headcount growth will come with max leverage,” he said.

A similar adjustment played out at corporations decades ago, Nadella said. To prepare forecasts, inter-office memos would circulate across multiple sites by fax, and then came email and Excel spreadsheets, he said.

“Right now, any planning, any execution, starts with AI. You research with AI, you think with AI, you share with your colleagues and what have you,” Nadella said.

This week, Amazon, which is racing against Microsoft to rent out cloud infrastructure for running AI models, cut 14,000 corporate employees.

Amazon’s senior vice president of people experience and technology, Beth Galetti, told workers in a memo that “this generation of AI is the most transformative technology we’ve seen since the Internet, and it’s enabling companies to innovate much faster than ever before (in existing market segments and altogether new ones).”

On the podcast, Nadella talked about a Microsoft executive who deals with networking fiber. As the company ramped up data center operations to meet rising cloud demand, the executive realized she wouldn’t be able to hire all the people she thought she needed, and so she built AI agents to handle maintenance, Nadella said.

“That is an example of you, to your point, a team with AI tools being able to get more productivity,” Nadella told Gerstner, who is founder and CEO of technology investment firm Altimeter Capital.

On Wednesday, Microsoft reported 12% year-over-year revenue growth and showed the widest operating margin since 2002.

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