Tech Newsround – Nvidia and Apple

Nvidia – Window dressing

• Nvidia is signing up to make products in the USA which is a move I suspect that it was already executing but it will have done itself no harm by being seen to fall in with the patriotic agenda.
• Following a catch-up with the President of the United States, Nvidia has said that it will produce up to $500bn of products in the US including full AI systems in addition to the chips that TSMC is making in Arizona.
• This does not look like there is very much new here as Nvidia had already committed to making chips in Arizona and it is already building facilities in Houston and Dallas with its partners.
• However other partners like Amkor and SPIL are also increasing their commitment to the USA and this is where I think Nvidia is increasing its commitment.
• The real reason why Nvidia is already diversifying away from Taiwan is to mitigate the risk of China interfering in the semiconductor supply chain which has been rising for some time.
• This risk will only continue to increase as the USA and its allies increase trade and technological pressure on China.
• Hence, we are likely to see continued diversification by all of TSMC’s customers away from Taiwan even if a trade deal is struck with China and the tariff-related chaos dies down.
• Although China has retaliated with reciprocal tariffs, it has yet to take serious action against the increasing pressure being placed upon it.
• This could take the form of a ban on Apple or Qualcomm shipments into China or a blockade of Taiwan which would cause real consternation.
• However, these sorts of moves are very risky for China and could do as much, if not more, damage to the Chinese economy than to the US meaning that these sorts of measures can only be a last resort.
• Hence, I think that a deal of some description will get done as this remains in everyone’s best interest (especially China’s) given how weak and troublesome its economy has been since the pandemic.

Apple – Privacy? What privacy?  

• Apple is in real trouble when it comes to AI as it is now resorting to using its users’ data to train its AI to try and catch up in a field where it remains woefully adrift.
• This is also an admission that synthetic data is never as good as the real thing, and now that it is in trouble, it has been forced to compromise its long-standing position on the privacy of its users.
• In a blog (see here) Apple details how it is extending its differential privacy technique so that it can improve the quality of its AI algorithms and try to close the yawning gap to its rivals.
• Differential privacy is a technique where data is injected with random sequences such that it is meaningless when viewed in insolation but when aggregated the random pieces cancel each other out and the real aggregated data remains.
• This protects user privacy but only using the averages means that the model that is trained will never be as good as if it were trained with the individual pieces of data.
• This has been acceptable to date but now that AI is becoming more important, users are beginning to notice just how bad Apple is at AI which has been exacerbated by the less-than-successful roll-out of Apple Intelligence.
• Apple has been training its AI with synthetic data, but I remain sceptical about the value of synthetic data because it depends on being a realistic simulation of reality which it almost always is not.
• Hence, one quickly arrives at a garbage-in, garbage-out scenario which is where Apple has found itself.
• I think that this is why it has had to come up with this convoluted way of using the real data of its users while still being able to claim that it has not violated its privacy standards.
• One can argue whether or not its desperation has forced it to compromise its privacy ideals, but what is clear is that Apple is in a very difficult position when it comes to AI and it is not getting any better.
• Fortunately, for the moment, this is not going to compromise the sale of iPhones, but if competing devices start sporting AI agents that everyone loves to use (big if), then Apple’s market position will come under much greater threat.
• This is why Apple needs to do something but I suspect that this will not go nearly far enough to fix the issue.