Huawei technology comeback and semiconductor strategy

Good morning from the Financial Times. Today is Thursday, june eighteenth And this is your FT news briefing Huawei is in the middle of a major comeback And U. S. President Donald Trump says he'll unfreeze Iran's assets But first, the Federal Reserve is in its Kevin Warsh era What we've given markets is a new chapter for the central Bank. some fresh thinking. I'm Markc Filino and here' the news you need to start your day New Fed Chair Kevin Warsh held his first press conference yesterday. It's an honor. Its true honor to be back at the Federal Reserve and to take up this duty at a time of such consequence The central bank kept interest rates steady at three point fivecent to three point seven five percent as expected The really big news is the changes that are coming to the central bank Wr said the Fed will be reviewing the way it communicates what it's thinking to investors and the general public laire Jones are US. economics editor and was at that press conference following the meeting. Hi Claire Hi, Mck. I want to get into the changes that Warsh outlined in a second, but first let's talk about how he and the rest of the Fed is thinking about inflation. The consumer price index rose by two percent in May What do we know about how the Fed wants to handle that So coming into the meeting over the weekend. We've had this deal between the US and Iran, which has led to a sharpfall in oil prices And I think Some people thought the Fed might sound a little bit less concerned about inflation then officials have been sound and recently that wasn't the case at all, both from the statement and Warsher's remarks in the post Meting press conference the sense that they're still very concerned And Warsh suggested he's very, very serious about finally getting inflation back to the Fed's two percent goal Clire, you know how I love the topop plot We got one yesterday for those who don't know. It's a graphic that outlines what meembers of the FOMC, the federal open Market Committee are thinking about interest rates in the future But there is one dot missing Who was it It was no one other than Kevin Warsh Going into this meeting, we knew that he wanted to revamp communications with Wall Street and the public There was a lot of guessing but You know, I personally thought that he wouldn't do a dot just because he's objected so much to the dots in the past. and that very much proved to be the case. He set out his stall and said, I'm not going to lay out what I think is going to happen to interest rates. I'm not going to lay out my economic outlook. and that's quite a a sharp change in his first meeting Another very interesting thing is it wasn't just Wash We've got eighteen dots for the projections for this year and next year, but for twenty twenty eight and the longer term, someone joined Wars. We don't know who yet But someone joined Wars in not submitting the dots. so it certainly weakens the sense in which those dot plots are going to be the key tool for the way the Fed communicates with markets here on in And communication was just a broader theme in Wars's press conference. and generally, it sounds like there might be less of it going forward Absolutely. yesterday, we saw big changes to the Fed statement too. It was a lot shorter using what to my mind was a lot more direct language the forward guidance about whether or not Fed officials want to raise or cut rates. That was gone too. He really left his imprint on the way the Fed is going to communicate already, but there's more to come to. I mean, he's going to do this task force. I suspect by year end there'll be a review about communications broadly He's going to look at press conferences, dots, meetings and the like He's going to look at transcripts, minutes, all these things. This is so different than how former chair Jay Powell used to conduct the Fed. very communicative. The idea being that I don't want to catch the markets off card How does Warsh feel like the markets will respond to a change like this? Wash's stance is less is more When he speaks, it's going to be so vital to markets that they're going to better understand how the Fed responds to events But he made clear to investors, there's no going back here. I mean Put it quite succinctly What we've given markets is a new chapter for the central bank some fresh thinking. The markets are going to have to adjust to that So Claire, what were your general impressions of Wars's first meeting? know What was your big takeaway from it This was a guy who people thought was hired by Donald Trump to cut interest rates. What we got yesterday was a very different Kevin Warsh I found his rhetoric. Very hawkish indeed All the focus was on inflation and maintaining price stability and getting back to that two percent target for price pressures that the Fed has That's not what a lot of people imagined when he won the nomination back in January That's the FTs, Claire Jones. Thankk you so much, Claire. Thanks, Mark. pleasure President Trump says the U. S. will release frozen funds back to Iran, but only if Iran, in his words, behaves. taking their money It's not our money. it's their money. And we froze. Trump spoke at the G seven S summit in France yesterday. He defended the memorandum of undernderstanding his administration agreed with Tehran. If we didn't give it back, nobody would ever invest in the dollar again. He also promised Iran relief from sanctions under the same conditions. The MOU extends the U.S Iran april eighth ceasefire for another two months. It reopens the Strait of Hormuz so oil can flow through it again, and it gives the two countries some time to agree to a nuclear deal They're expected to officially sign the MOU either today or tomorrow Seven years ago, Chinese tech giant Huawei received what many saw as a fatal blow The US government in twenty nineteen cut off the company's access to American chips, software, and a key semiconductor manufacturing technology known as EUV, or extreme ultraviolet lithography. But Huawei was secretly working on sidestepping these curbs and says now that it has developed its own backup chips that will eventually allow it to compete with U.S rivals Xi Jin Wu, the FFT's Asia tech correspondent has the story. Hi there Hi M So what impact has the U S. export curves had? on Huawei's business so far So Huawei's AI chips has the dominant position in China right now, but that's mainly thanks to the US export control. The market used to be dominated by Nvidia who can no longer sell to China, its most advced products In terms of the other areas, I believe Huawei' smartphone is among the top three in China at the moment. And it's also expanding into electronic vehicles and many other different areas. So overall, it's doing very well. But now since AI has become a trend, AI Chips is the main bottleneck Now how did Huawei respond when it was stopped from importing Nvidia chips. So when they first planantned all these backup products in twenty nineteen, it was basically just replacement But now since AI has become a trend to solve the problem that it does not have access to the most advanced semiconductor production tools, which is the EUV Huaei has come up with this technology which is called logic stacking. and in simple words, it's basically to fold multiple layers of chips into one to make it more powerful But it is quite complicated work. So Huawei is not going to be able to use it for its AI chip until at least twenty thirty, according to the company's executives So it would take them a few more years, but at least it's showing the world that it has found a plan to get around The bottleneck of not having a new UV and that's giving the industry and the market a lot of confidence of China will be eventually able to achieve semiconductor independence. and that is the key message Huawei is trying to deliver. So let me ask you this, is Huawei able to produce phones as good as an iPhone, for example So Huawei currently is confident that it can produce those logic stacking chips for smartphones And performance wise, it would be similar to an iPhone or the most advanced Android phones globally becausecause of the largest decking technology, it will be producing a lot more heat and consuming significantly more energy battery size for the phone would be a lot larger. So in order to compensate for that, our we then needs to reduce some of the other functions. or find a way to make it more energy efficient That was the FT's Xi Jin Wu in Hong Kong. Thanks so much Thank you Mk. UK inflation unexpectedly held steady last month at two point eight percent. The government figure came out yesterday and was below the thirty percent that analysts expected prices for petrol and airfares were offset by food inflation slowing down. Plus, the cost of heating oil fell, so basically it all evened out and inflation didn't change The data reinforces expectations that the Bank of England will hold off on raising interest rates when it meets today. Before we go, the Makerfield by election is today The constituency in Northwest England has become a key battleground for Prime Minister Ker Starmer That's because Andy Burnham, the current greater Manchester mayor, said he would challenge Starmer's leadership if elected as an MP Burdam is the favorite, but he's got stiff competition from reform candidate Robert Kenyan. You can read more on all these stories for free when you click the links in our show notes. This has been your Daily FT News briefing. Check back tomorrow for the latest businessusiness newews