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Some of the world’s largest chipmakers have today agreed to invest billions of dollars in Japan as the world’s most developed economies seek to reduce their dependency on Taiwan’s semiconductor industry amid rising tension between the west and China.
Japanese prime minister Fumio Kishida met the heads of leading western chipmakers, including Taiwan Semiconductor Manufacturing, South Korea’s Samsung Electronics and Intel and Micron of the US, in Tokyo ahead of the G7 summit that begins tomorrow in Hiroshima.
Semiconductors, which are integral to modern technology, have emerged as an area of intense focus for the US and its allies since Russia’s invasion of Ukraine. Taiwan is at the centre of the global chipmaking industry but is at risk of a possible invasion by China, which sees it as part of its territory.
According to experts, Taiwan makes 65 per cent of the world’s semiconductors and almost 90 per cent of the most advanced chips.
The US has deployed significant diplomatic capital to urge closer alignment among its allies in Asia and to reduce their dependency on chips produced by TSMC and others in Taiwan.
Ahead of the G7 summit, Kishida will meet US president Joe Biden later today. The two leaders are expected to announce a $70mn deal to educate and train 20,000 semiconductor engineers at 11 universities in the US and Japan.
Here’s what else I’m watching today:
Monetary policy: New vice-chair of the Federal Reserve, Philip Jefferson, will speak on the economic outlook today and Dallas Fed president Lorie Logan will address a convention.
Central Asia: As Fumio Kishida prepares to host leaders of the G7, Xi Jinping will court leaders of central Asia at a summit in the ancient Chinese city of Xi’an. Read a preview of the 2-day meeting.
Five more top stories
1. TikTok is facing its first ban by a US state over national security concerns after Montana’s governor signed a bill prohibiting downloads of the Chinese-owned social media app. The bill, signed by state governor Greg Gianforte yesterday, takes effect in January.
Artificial intelligence: Turing Award winner Yoshua Bengio warns of a “danger to political systems, to democracy, to the very nature of truth” from advanced artificial intelligence systems such as OpenAI’s GPT. Read more from his interview with the FT.
2. Deutsche Bank has agreed to pay up to $75mn to settle a lawsuit brought by the pseudonymous Jane Doe who alleged the lender had benefited from human trafficking by retaining Jeffrey Epstein as a client. Read more on the “likely . . . largest sex-trafficking settlement involving a banking institution in US history”.
3. Penguin Random House is suing the Escambia County School Board in Florida for banning several of its books, including titles by Toni Morrison, Kurt Vonnegut and Khaled Hosseini. Read more on the latest pushback by companies against “anti-woke” actions by conservatives in the US.
4. The prospect of stricter work requirements for people on social safety net programmes has become a sticking point in negotiations over raising the US debt ceiling. Read more on Kevin McCarthy’s red lines as the debt ceiling deadline looms.
5. European officials are increasingly concerned about the flow of aid next year to Ukraine as the US enters a divisive presidential campaign. Ten senior figures in countries allied with Ukraine spoke to the Financial Times about the next phase of the war.
A crisis of homelessness, drug abuse and crime threaten San Francisco’s future, with a growing sense that the city’s progressive political class has failed its citizens. As its reputation for severe urban decay gets steadily worse, many are asking: What if the “City by the Bay” never pulls out of its “doom loop”?
We’re also reading . . .
Graphic of the day
Global temperatures are likely to exceed 1.5C above pre-industrial levels for the first time in human history within the next five years, according to the World Meteorological Organization. Scientists at the WMO said that for the first time there was a 66 per cent chance it would happen in “at least” one year by 2027.
Take a break from the news
FT writers nominate their favourite home-from-home hotels, from a former lakeside camp for the Rockefellers to a 19th century ryokan in Japan.
Additional contributions by Gary Jones and Emily Goldberg
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