Asia Communique
US Seeks Half of Taiwan Chips Amid Tariffs | Pentagon Speeds Missiles for China Clash | China Factory Slump Deepens, Services Slow | China K-Visa vs US H-1B in Talent War |
Hello Readers,
Welcome to your today’s roundup of the most pressing developments across Asia, with a sharp focus on the geopolitical currents shaping the region. From escalating trade frictions to semiconductor power plays and military buildup, here’s what you need to know from the past 24 hours.
US Pushes for Half of Taiwan’s Chip Output Amid Tariff Escalation
Pic: U.S. Commerce Secretary Howard Lutnick and Taiwan’s Vice Premier Cheng Li-chiun
In a bold move to bolster domestic semiconductor production, the United States is reportedly seeking to relocate up to 50% of Taiwan’s chip manufacturing capacity stateside, according to discussions led by Commerce Secretary Howard Lutnick. This demand, which could reshape global supply chains, comes as Taiwan vows a “prudent” response to avoid disrupting its key industry. Lutnick’s demand wouldn’t go down well domestically in Taiwan where there is already a growing concern about TSMC turning into the “U.S. Semiconductor Manufacturing Company.”
Meanwhile, thousands of Taiwanese professionals are grappling with uncertainty over H-1B visa renewals, with over 283,000 Indian nationals dominating approvals last year, potentially squeezing opportunities for tech talent from the island.
Pentagon Accelerates Missile Production for Potential China Clash
The U.S. Pentagon is intensifying efforts to double—or even quadruple—production of 12 key missiles critical for a possible conflict with China, driven by depleted stockpiles exposed by global conflicts. Deputy Defense Secretary Steve Feinberg is spearheading the Munitions Acceleration Council, holding weekly calls with executives from Lockheed Martin, Raytheon, and newcomers like Anduril to ramp up assembly lines for weapons like Patriot interceptors, Standard Missile-6, and Long-Range Anti-Ship Missiles. A June roundtable at the Pentagon, attended by Defense Secretary Pete Hegseth and Joint Chiefs Chairman Gen. Dan Caine, set aggressive targets: for instance, boosting Patriot output to nearly 2,000 units annually—four times current rates—via $10 billion contracts and supply-chain overhauls.
Challenges loom, including multi-year assembly timelines, qualification hurdles for new suppliers, and funding gaps beyond the $25 billion from Trump’s Big, Beautiful Bill. Contractors like RTX warn that firm commitments and cash are essential, while firms like Northrop Grumman are investing over $1 billion upfront in rocket motors. This surge underscores U.S. anxieties over Pacific defenses, especially after missile barrages in the Israel-Iran clash further strained reserves.
China’s Economy: Factory Slump Extends, Services Cool
China’s latest economic data underscores persistent weakness at the close of the third quarter, even as official figures offered a hint of stabilization.
The official manufacturing purchasing managers’ index (PMI) registered 49.8 in September, up slightly from August’s 49.4 but still below the 50 threshold that separates expansion from contraction. That marks the sixth straight month of decline — the longest slump since 2019. Economists surveyed by Bloomberg had expected 49.6.
Meanwhile, the non-manufacturing PMI, which tracks construction and services, slipped more than forecast to 50 from 50.3, reflecting the end of the summer holiday boost and softer activity in travel, catering, culture, and entertainment.
Exports and Demand in Focus
China’s factory outlook continues to be pressured by subdued domestic demand and uncertainty over U.S. tariffs. Exporters had earlier front-loaded shipments ahead of new tariff measures by President Trump, but port data shows activity tapering off before the national holidays.
The National Bureau of Statistics highlighted modest gains: both production and new orders indexes improved, hinting at firmer market demand. Yet the underlying picture remains fragile.
Diverging Signals: Private vs Official Surveys
In contrast to the official data, private surveys painted a more upbeat picture.
The RatingDog China General Manufacturing PMI rose to 51.2 in September, with new export orders expanding for the first time since March 2025. Its services PMI also improved to 52.9, suggesting stronger performance among small and export-oriented firms.
“Although new export orders rose only modestly, it was still a relatively positive signal, alleviating some market concerns over the recent weakness in exports,” noted Yao Yu, RatingDog’s founder.
Outlook
China’s economy grew 5.3% in the first half of 2025, but momentum is now fading. Analysts expect the slowdown to deepen into the year’s final quarter as tariff pressures bite and earlier consumption subsidies lose steam.
Societe Generale’s Greater China economist Michelle Lam summed it up: “We may see some marginal improvement in September after the weakness over the summer. But the growth outlook will remain challenging.”
China Sets Plenum Dates To Chart 2026–2030 Course
China’s Communist Party has officially scheduled its 4th plenum for October 20–23 in Beijing, marking a pivotal gathering where leaders will deliberate and finalize the blueprint for the country’s 15th Five-Year Plan (2026–2030).
At a recent Politburo meeting chaired by President Xi Jinping, a draft of the new plan was reviewed and refined. The final version will be endorsed at the plenum before being submitted for legislative approval in March.
Global Tech Talent Wars: China’s K-Visa vs. US H-1B Fee Hike
As U.S.-China rivalry heats up, Beijing launches a “K visa” to snag young foreign STEM talent—right when Washington jacks up H-1B fees to $100,000 per year. This talent scramble could redirect global innovators from Silicon Valley to Shanghai.
K-Visa: Job-Free Entry to China
Unveiled September 25, the K visa targets fresh STEM grads, allowing entry, residency, and work without a job offer. Eligibility focuses on age, education, and experience; no family perks or clear citizenship path yet. It’s Beijing’s bid to boost FDI and tech amid U.S. curbs.
H-1B Squeeze: Barriers Rise in the US
The new fee—up from $460—piles on costs for employers, hitting India’s 71% share of approvals hardest. Experts like strategist Michael Feller warn: “The U.S. has shot itself in the foot,” potentially fueling a brain drain.
Stakes: A Pivot in the AI Race
China sweetens the pot with repatriation bonuses up to $702K and visa waivers for Europeans/Japanese. Even modest uptake from H-1B rejects could turbocharge Beijing’s AI and chips edge. One Indian student calls it “an appealing alternative.”
Huawei’s AI Chip Power Play: Doubling Output as Nvidia Falters in China
Amid the intensifying US-China tech showdown, Huawei is accelerating its AI ambitions, planning to double production of its flagship 910C Ascend chip to 600,000 units in 2026—up from this year’s output—while scaling its broader Ascend lineup to 1.6 million dies. This aggressive push targets Nvidia’s slipping grip on China’s vast semiconductor market, where US sanctions have already cramped Huawei’s 2025 efforts.
Huawei’s Production Surge
Huawei’s strategy hinges on ramping up domestic manufacturing to sidestep export curbs, aiming to flood the market with homegrown AI silicon. The 910C, a high-performance alternative to Nvidia’s offerings, is central to this bet, positioning Huawei as a resilient player in data centers and cloud computing despite earlier sanctions-induced bottlenecks.
Nvidia’s China Headache
Geopolitical headwinds are battering Nvidia, with US restrictions limiting its access to the world’s biggest chip buyer. As Huawei fills the void, Nvidia’s market share in China—once dominant—could erode further, forcing the US giant to navigate a fragmented landscape of compliance and lost revenue.
Broader Rivalry Ripples
This chip escalation underscores the high-stakes US-China decoupling: Huawei’s gains could turbocharge Beijing’s AI sovereignty, while Nvidia and allies face tougher innovation paths. For global tech, it’s a reminder that supply chains are now battlegrounds—expect more volatility in AI hardware pricing and availability.
Broader Asia Pulse: Markets on Edge, Population Milestones
Asian markets ticked higher Tuesday, buoyed by gold’s record surge but shadowed by U.S. government shutdown fears that could ripple through trade-dependent economies. In Singapore, the city-state’s population swelled to a record 6.11 million, fueled by foreign workers—a demographic shift underscoring labor demands in a high-growth hub.
Reads:
The Missiles Threatening Taiwan — NYT
China Goes on Offense: Beijing’s Plans to Exploit American Retreat — Foreign Affairs