Transcript: Nvidia claims top spot

This is an audio transcript of the FT News Briefing podcast episode: ‘Nvidia claims top spot’

Kasia Broussalian
Good morning from the Financial Times. Today is Wednesday, June 19th, and this is your FT News Briefing.

Nvidia is sitting on top of the world right now. And pretty soon you might not have to worry so much about your cell phone dying. Plus, we take a look at why Shein is having so much trouble going public. I’m Kasia Broussalian and here’s the news you need to start your day.

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Nvidia had a great day yesterday. The US chipmaker beat out Microsoft and Apple to become the most valuable company in the world. Nvidia now has a market capitalisation of $3.3tn. Less than two years ago, the company was worth $300bn, which is just crazy to think about. That huge rise is thanks to a super high demand for AI chips, which power the models behind things like ChatGPT. Nvidia is now trying to double down on its dominance in the industry. It’s working on a new generation of more powerful chips. They’re called Blackwell.

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Japan’s TDK, which is a big supplier for Apple, says that it’s made a big breakthrough in battery technology. The company thinks that it could revolutionise how often you charge things like your cell phone. Harry Dempsey has been looking into the development and he joins me now. Hey, Harry. 

Harry Dempsey
Hi there. 

Kasia Broussalian
So can you unpack this big breakthrough that TDK has come up with? I mean, what’s it all about? 

Harry Dempsey
So TDK says that it’s made a breakthrough in solid-state batteries, which are particularly used in miniaturised devices such as smaller earphones or hearing aids. And they would use basically, instead of a liquid electrolyte, which the batteries currently use, they would use a solid material which would be oxide-based, and that would essentially enable the battery to have far longer life on a single charge. And it would enable increasing sort of miniaturisation of the batteries and devices which use batteries. 

Kasia Broussalian
Now, this is different from the batteries that would go in, say, an electric vehicle eventually, right? 

Harry Dempsey
Yeah, exactly. This is just one particular sort of subset of materials within what we all call solid-state that had a breakthrough. 

Kasia Broussalian
Got it. And just backing up for a minute, tell me a little bit about TDK as a company and then its role in developing this specific type of solid-state battery. 

Harry Dempsey
Sure. So TDK is a Japanese battery provider. They’ve become extremely big in the world of electronics. And so they’re a really key part of sort of the global supply chains. You know, they supply Apple with a lot of the battery technology that they use. And they’ve developed this technology which could be extended into, you know, iPhones. And that could really revolutionise the performance of smartphones on a single charge. 

Kasia Broussalian
So more juice for longer is what you’re telling me here. And how soon do you think we would actually be able to see these batteries in our phones? 

Harry Dempsey
So I think the company, they’ve managed to do this in a laboratory scale. So now they then have to go and see, can they do this at high volume and do mass manufacturing? So I think we’ve got a few years until we really see this hit the market. But you know, I think it just puts more of a spotlight on the race that is afoot to develop solid-state batteries, because it’s very clear. It’s sort of like the holy grail for improving the battery life, that could open up new forms of technology and new applications. 

Kasia Broussalian
Harry Dempsey is a commodities correspondent for the FT. Thanks, Harry. 

Harry Dempsey
Thanks. 

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Kasia Broussalian
Silicon Valley is worried about Chinese spying. Companies like Google and OpenAI are tightening security after US officials warn them that China might be after their secrets. Major tech groups are now being more rigorous in vetting their employees and possible recruits. Beijing has really expanded its spy game recently, and the US is racing to keep up. For example, China has stolen intellectual property from Google, Tesla and Micron in the past five years.

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Most of you have heard of Shein, right? It’s this massive Chinese fashion company that kind of blew up during the pandemic. Now, full disclosure: I’m not on TikTok. I know, I’m weird, but even I have heard about those videos called Shein hauls back then. So you might have read that the company has been trying to go public, but the process is giving Shein a few headaches, and that’s just to put it mildly. One of my colleagues has been looking into all that pain. Her name is Saffeya Ahmed, and she’s a producer and guest host on the FT’s Behind the Money podcast. Hey, Saffeya. 

Saffeya Ahmed
Hello. 

Kasia Broussalian
So tell me a little bit about what’s going on with Shein. 

Saffeya Ahmed
Yeah. So like you mentioned, the company has been trying to go public. And late last year, in November, it filed paperwork to list in the US. But now it’s been over six months and that process has completely stalled. Like the company is getting pretty much ghosted by US regulators. They won’t respond to any of Shein’s emails. 

Kasia Broussalian
Yeah, and that’s actually what really caught my attention. It’s this hugely profitable company, a big brand name and tons of investors. So why all the trouble? 

Saffeya Ahmed
Well, that’s actually what we looked into in our most recent episode of Behind the Money, and I thought we’d share a bit of it on the News Briefing today. 

Kasia Broussalian
Cool. So I officially hand the mic over to you, Saffeya. 

Saffeya Ahmed
Thanks, Kasia.

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Shein has had a really great few years of growth. It’s super popular and it’s cracked the fashion market in the west. Now, you’d think that a company with that type of growth would have a pretty easy time listing in the US. But the story isn’t that simple. 

Eleanor Olcott
Shein’s pathway to an IPO is really complicated. 

Saffeya Ahmed
That’s Eleanor Olcott. She’s the FT’s China tech correspondent, and she’s a resident expert on online fashion giant Shein. 

Eleanor Olcott
The problem is that Shein is a Chinese-founded company with basically its whole supply chain in China. Its founder is Chinese. The vast majority of its staff are still in China. It is successful because China is a behemoth in manufacturing things. 

Saffeya Ahmed
And as tensions between Washington and Beijing only heighten, pursuing an IPO in the US as a Chinese-founded company means there’s gonna be obstacles ahead. But Shein has tried to depict itself as more of a global company. Just listen to how executive chairman Donald Tang described Shein in a visit to the FT’s New York office last month. Now, this was before some more recent headlines about its listing plans came out. 

Donald Tang voice clip
For example, you call us a China-origin company, and I think that’s a correct characterisation. People call me a Chinese. You know, so at times I say yes. At times I kind of take issue with that because I’m American. So you should look at Shein as a global entity with an immigration status. But it’s a good immigrant. Right. (Laughter)

Saffeya Ahmed
Eleanor tells me that Shein has tried a few things over the years to appear less Chinese, so to speak. One example: 

Eleanor Olcott
Since the company got off the ground, it’s never sold any goods in China. If you ask Chinese people about this company, a lot of them will say, oh, I’ve never heard of Shein. We’ve got a big Chinese fashion company that’s really well-known overseas?

Saffeya Ahmed
That helps Shein’s argument that it’s a global company, because not selling in China means that it’s already put a little bit of distance between itself and the Chinese market. Now, that brings us to move number two.

Eleanor Olcott
A couple of years ago, the company migrated its headquarters to Singapore. This was the first real indication that they were divorcing themselves from China. The founder, Sky Xu, also moved to Singapore. It’s also started to slowly shift some of that supply chain out of mainland China.

Saffeya Ahmed
And move number three is actually just pursuing a public listing at all.

Eleanor Olcott
So Shein is definitely pushing the narrative that they are going public to promote transparency.

Saffeya Ahmed
Here’s Shein executive chair Donald Tang again. He wouldn’t comment on the company’s IPO plans, but he said this about the principle of listing . . . 

Donald Tang voice clip
What could be better than a public company to enhance the transparency? Right. The whole world is going to look at you in the public fish tank.

Eleanor Olcott
They aren’t specific in saying we’re going public because we want to show them that we’re not a Chinese company. But if you read between the lines, that is essentially what they are saying. They’ve also been investing heavily on hiring lobbyists and PR agencies to promote this message.

Saffeya Ahmed
Now, Eleanor, these moves, firstly, not having a Chinese customer base from the jump, moving their headquarters out of China, lobbying regulators behind closed doors, these all feel very subtle. Is there anything else that Shein could be doing to put more distance between itself as a company and Beijing?

Eleanor Olcott
Not really. And that’s because Shein can’t be too loud about not being, quote-unquote, Chinese, because the vast majority of its operations, its manufacturing, its designers, are still in China. All of those things require good relationships with Beijing to continue operating in an environment even if they don’t sell there. So an awkward balance for them to send a message to the US that they’re no longer Chinese while it’s also appeasing and keeping the Beijing side happy.

Saffeya Ahmed
It’s quite the balancing act, and it’s left the US Securities and Exchange Commission antsy to do anything with Shein’s IPO, at least until Beijing signs off. 

Eleanor Olcott
So it’s a kind of a chicken-and-egg situation here. And I think we’ve seen a massive delay here because of the kind of regulatory and political sensitivities involved in this case. On the US side, what we’ve been hearing is that the SEC has just refused to engage with Shein at all on this IPO until Beijing gives its approval. And without that being forthcoming, they just haven’t proceeded on the Shein paperwork.

Saffeya Ahmed
Shein’s US listing has hit a dead end. So what’s next for the company? Head to Behind the Money’s feed to hear the rest of this episode. There’ll be a link in the show notes. 

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Kasia Broussalian
And you can read all of these stories for free by checking out our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news. 

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