Chinese government bans use of foreign AI chips in state-funded data centers: report

 The Chinese government has issued guidance requiring new data centre projects that have received any state funds to only use domestically-made artificial intelligence chips, two sources familiar with the matter told Reuters.

In recent weeks, Chinese regulatory authorities have ordered such data centres that are less than 30% complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage will be decided on a case-by-case basis, the sources said.

The move could represent one of China's most aggressive steps yet to eliminate foreign technology from its critical infrastructure amid a pause in trade hostilities between Washington and Beijing, and achieve its quest for AI chip self-sufficiency.

China's access to advanced AI chips, including those made by Nvidia, has been a key point of friction with the U.S., as the two wrestle for dominance in high-end computing power and AI.

U.S. President Donald Trump said in an interview aired on Sunday following talks with Chinese President Xi Jinping last week that Washington will "let them deal with Nvidia but not in terms of the most advanced" chips.

The latest move by Beijing, however, would dash Nvidia's hopes of regaining Chinese market share, while giving local rivals, including Huawei, yet another opportunity to secure more chip sales.

It is unclear whether the guidance applies nationwide or only to certain provinces, sources said. The sources did not identify which Chinese regulatory bodies had issued the order. They declined to be named due to the sensitivity of the matter.

Besides Nvidia, other foreign chipmakers that sell data centre chips to China include AMD and Intel.

The Cyberspace Administration of China and the National Development and Reform Commission, two of Beijing's most powerful regulators, did not respond to requests for comment. Nvidia and AMD did not respond, while Intel declined to comment.

NVIDIA THE BIGGEST CASUALTY

AI data centre projects in China have drawn over $100 billion in state funding since 2021, according to a Reuters review of government tenders. Most data centres in China have received some form of state funding to aid their construction, but it is not immediately clear how many projects are subject to the new guidance.

Some projects have already been suspended before breaking ground as a result of the directive, including a facility in a northwestern province that had planned to deploy Nvidia chips, one of the sources said.

The project, being developed by a private technology company that received state funding, has been put on hold, the source said.

Beijing has long been irked by Washington's export controls aimed at impeding China's tech progress and has taken a series of measures, including retaliatory moves, to wean itself off U.S. technology.

The U.S. has justified its restrictions by alleging the Chinese military would use the chips to increase its capabilities.

China discouraged local tech giants from purchasing advanced Nvidia chips over security concerns this year, while showing off a new data centre powered solely by domestic AI chips.

And in 2023, Beijing banned the use of Micron's products in its critical infrastructure, which paved the way for a decision this year by the largest U.S. memory chipmaker to exit the server chip market in China, Reuters reported last month.

Nvidia CEO Jensen Huang has repeatedly lobbied Trump and his cabinet to allow the sale of more AI chips to China, arguing that keeping its superpower rival's AI industry dependent on U.S. hardware was good for America's interests.

Its current share of the Chinese AI chip market is zero, compared to 95% in 2022, according to the company.

Excluding foreign chipmakers like Nvidia from big state projects would eliminate a significant portion of their China revenue, even as a deal is agreed to allow the resumption of advanced chip sales to China.

The new guidance on data centres covers Nvidia's H20 chips, the most advanced AI chip the U.S. firm is allowed to sell to China, but also more powerful processors such as the B200 and H200, the sources said.

While the B200 and H200 are barred from being shipped to China by U.S. export controls, they remain widely available in China through grey-market channels.

BOON AND RISKS FOR DOMESTIC FIRMS

With the latest directive, the Chinese government is carving out even more market share for domestic chipmakers. China has a range of AI chip companies, from the most prominent, Huawei Technologies, to smaller players such as Shanghai-listed Cambricon and startups including MetaX, Moore Threads, and Enflame.

Products from these Chinese companies already rival some of Nvidia's offerings, but they have struggled to crack the market. Developers used to Nvidia's reliable software ecosystem have been reluctant to adopt domestic alternatives.

While the move would help boost sales of domestically developed chips, it also risks widening the U.S.-China gap in AI computing power.

U.S. tech giants like Microsoft, Meta, and OpenAI have spent or allocated hundreds of billions of dollars to build data centres powered by Nvidia's most advanced chips.

Meanwhile, leading Chinese chip manufacturers like SMIC are facing supply constraints due to U.S. sanctions on semiconductor manufacturing equipment that have hit advanced chip production capacity.

https://finance.yahoo.com/news/china-bans-foreign-ai-chips-083739738.html

Novo Nordisk accepts U.S. Medicare price deal for obesity drugs

 Novo Nordisk said on Wednesday it had agreed a price under the U.S. Medicare scheme for semaglutide, the active ingredient in its key drugs Ozempic and Wegovy, in a deal that some analysts said sounded less onerous than feared.

The U.S. Inflation Reduction Act requires pharmaceutical companies to negotiate drug prices with the Medicare health insurance programme, which covers more than 60 million people.

The price will take effect in 2027. The announcement came alongside Novo's third-quarter earnings and a cut to its 2025 financial guidance for the fourth time this year.

It also comes the day after a White House source said Novo and U.S. rival Eli Lilly were expected to announce deals this week with the Trump administration to cut prices of their weight-loss drugs in exchange for Medicare coverage.

Novo did not disclose the agreed price, but said that if applied this year it would have had a "low-single-digit negative impact on sales".

JP Morgan analysts estimated this could equate to around a 6 billion Danish crown ($937 million) hit to sales, adding that was "better than feared" and could offset the negative news from the guidance cut.

"The shares could ultimately be in positive territory today," they wrote in a note.

Novo's stock was up 2.2% at 0947 GMT, after falling as much as 3.7% in early trade.

Markus Manns, a portfolio manager at mutual fund and Novo shareholder Union Investment, also said that Novo's comments on the U.S. deal "implies a price cut less than feared".

The IRA, implemented under President Joseph Biden in 2022, allows Medicare to negotiate prices on select high-cost drugs. Ozempic and Wegovy are among 15 medicines in the law's second round of negotiations.

https://www.msn.com/en-ca/money/topstories/novo-nordisk-strikes-us-medicare-price-deal/ar-AA1PQBwG

Generic Drug and API Manufacturers Call for Onshoring Incentives

 

Having seen Congress spend money to onshore semiconductor production, pharma groups are pushing for similar incentives for domestic drug manufacturing.

In an effort to encourage companies to make generic drugs and ingredients in the U.S., President Donald Trump has signed executive orders this year on regulatory relief and supply chain resilience, and the FDA has made moves toward lowering barriers and creating incentives. While industry representatives have welcomed the steps, some are calling for further initiatives to tackle what they see as the core barrier to onshoring: money.

“As our volumes are going up, our economic footprint is actually going down. It’s decreased about $6.5 billion over the past five years,” Kamaal Anas, corporate vice president for regulatory affairs at B. Braun Medical, said at an FDA meeting in September to discuss the agency’s proposed PreCheck program. “We’re serving more people, but we’re getting less return on investment. That limits our ability to innovate and invest.”

Anas’ proposed fix for the problem goes beyond the scope of PreCheck, which is aimed at making it easier for companies to build new facilities in the U.S., or indeed beyond the FDA’s powers. Citing Congress’ push to promote domestic semiconductor production as an example, Anas called for the U.S. to consider targeted subsidies, grants and other economic incentives to drugmakers.

Congress committed to boosting U.S. semiconductor research and production by passing the CHIPS and Science Act in 2022 authorizing $280 billion in new funding. The idea of a CHIPS Act for pharma has been raised in the past, although a member of the U.S.-China Economic and Security Review Commission said last year that it could be hard to accomplish politically even though it may make sense in theory. Producers of generic drugs and APIs want lawmakers to make an effort, though.

The High Cost of Cheap Generics

A spokesperson for the Association for Accessible Medicines (AAM), a trade group that represents companies including B. Braun, told BioSpace that differences between the economics of the branded and generic drug markets justify grants, tax incentives and other inducements aimed at manufacturers of off-patent products.

Notably, unlike with branded drugs, the U.S. pays less on average for unbranded generic drugs than other countries. The Assistant Secretary for Planning and Evaluation said the finding suggests “robust price competition in U.S. unbranded generic markets continues to drive savings for consumers and health care payers.”

Kevin Webb, president and chief operating officer at the API Innovation Center (APIIC), made the case that those low prices have driven companies to relocate production to countries where it is cheaper to make medicines. Making medicines in the U.S. can provide benefits such as supply chain stability and quality assurance, helping companies justify domestic production even if costs are lower overseas. As price pressures reduce profitability, however, companies may have to move production to a country where costs are lower and ship the products to the U.S.

“There’s a really good understanding within the market that there’s a high cost to low-price generic drugs. It’s not a sustainable model because we see the manufacturing base just shuttering and leaving the country,” Webb told BioSpace. “We’re decimating our manufacturing base, and that doesn’t serve anyone’s interest.”

A Push for Contractual Certainty

Andrea Briggs, a colleague of Webb’s at the APIIC, made the case at the FDA PreCheck meeting that the subsidies China and India offer manufacturers mean the U.S. needs to level the playing field. Briggs said the government could help U.S. manufacturers, particularly smaller organizations, by signing longer-term contracts for the supply of medicines for Veterans Affairs, Medicare and Medicaid.

The direct impact of government contracts may be limited for many organizations. Webb said purchases of pharmaceuticals by the U.S. government account for around 5% of the market. Yet there are potential wider effects of government actions that could give the contracts an outsized effect on the sector.

Webb said long-term government contracts are “a powerful signal to the private sector” that encourages private sector purchasers and distributors of generic drugs to make similar long-term commitments. For manufacturers, having multiple long-term deals could provide the certainty to support investments in domestic production capacity.

The AAM spokesperson made a similar point, arguing that fixed contracts with guaranteed purchases give manufacturers predictability with regard to what medicines they need to make and what financial return they will receive. As trade groups work toward that goal, attention is turning to another group with the power to influence where generic drugs and APIs are manufactured—the U.S. government.

Congress has already shown it views semiconductors as a strategic asset that should be made in the U.S. to support national security. Lawmakers have the power to offer similar targeted subsidies, grants and other economic incentives to the pharma industry. The upcoming talks will show whether lawmakers place similar importance on the supply of semiconductors and drugs.

“The machinery of the federal government is kicking in,” Webb said. “The next level of conversation is with the Congress. We need legislation to support policies that the government is putting into place.”

https://www.biospace.com/policy/generic-drug-and-api-manufacturers-call-for-onshoring-incentives

IAEA: Iran must improve cooperation to avoid further tensions

 International Atomic Energy Agency (IAEA) Director General Rafael Grossi said on Wednesday that Iran will have to "seriously improve" cooperation with the organization if it wants to avoid escalating tensions with Western countries.

In an interview with the Financial Times, Grossi noted that the IAEA inspectors carried out a dozen inspections in Iran since the war with Israel and the US in June. However, he revealed that they still have not been allowed to enter Iran's most important nuclear sites, Fordow, Natanz and Isfahan, which were hit in US air strikes. He also said that it is still unknown what happened to 408 kg of uranium enriched close to weapons-grade levels.

"You cannot say 'I remain within the non-proliferation of nuclear weapons treaty', and then not comply with obligations," Grossi stressed.

https://breakingthenews.net/Article/IAEA:-Iran-must-improve-cooperation-to-avoid-further-tensions/65120085

Germany Dodges Russia's Offer Of Non-Aggression Guarantee For NATO, EU

 Amid enduring anxiety over the potential for the Ukraine war to escalate into a third world war, Russia last week offered to cement its disinterest in invading Europe by entering into a formal non-aggression pact with European Union and NATO states. However, Germany quickly signaled its disinterest in such a treaty -- at least for now. 

In making the case for pouring weapons and money into Ukraine and urging it to prolong the war at any cost, Western hawks routinely claim that Russian President Vladimir Putin is bent on reconstituting the Soviet Union and eventually conquering Europe. Speaking at the Third Minsk International Conference in Belarus last Tuesday, Russian Foreign Minister Sergei Lavrov not only rejected those accusations, but said his country was willing to enter into a non-aggression pact: 

"We have repeatedly said that we had, and have, no intention to attack any current NATO or EU member. We are ready to enshrine this position in future security guarantees for this part of Eurasia." 

Russia's Sergei Lavrov says Western governments refuse to entertain security arrangements that take Russia's interests into account

Lavrov also expressed exasperation with Western governments, saying meaningful dialogue with them is futile for now, given their refusal to entertain "genuine collective security guarantees" that address the security interests of all parties -- including Russia: 

"The heads of state and government of the European Union avoid considering these future guarantees, which are based on a completely collective foundation, and proudly declare that, after the Ukraine crisis, security guarantees should exist not with Russia's participation, but against Russia. This is an example of their mindset."

Following up on Russia's offer at a press conference held by German Foreign Office spokeswoman Kathrin Deschauer, journalist Florian Warweg of NachDenkSeiten asked about the German state's assessment of the non-aggression-pact overtures. Rather than crediting Russia's peaceful overture, Deschauer sidestepped the question, saying its Germany's position that "the Russian side must end its war. In the meantime, "the German government will continue to support Ukraine in its defense against Russian aggression."  

Russia's offer and Germany's deflection come several weeks after Lavrov used an address to the United Nations General Assembly to refute the notion that Russia is seeking to attack European Union or NATO states. "Threats of force against Russia, accused of practically planning an attack on the North Atlantic Alliance [NATO] and the European Union, are becoming increasingly common," Lavrov said. "President Putin has repeatedly debunked such provocations."

At least temporarily rejecting a potential, major avenue of escalation that's been making headlines, President Trump on Sunday said he wasn't about to approve the shipment of Tomahawk cruise missiles to Ukraine.  Asked aboard Air Force One if he was thinking of selling the long-range, precision-guided missiles to Ukraine, Trump replied, "No, not really." 

On Oct 22, NATO Secretary General Mark Rutte brought the proposal up at a meeting at the White House, but Trump has expressed concern over depleting America's supply of the weapons. Last week, the Pentagon told Trump that the DOD had no such reservations, increasing the pressure on Trump to escalate America's arming of Ukraine. Though dismissing the idea Sunday, he didn't rule out subsequently changing his mind. 

With a 1,550-mile range, Tomahawks could put targets across a huge swath of Russia within Ukrainian range -- including Moscow. Russia has warned against introducing Tomahawks to the war -- arguing that their use would necessarily involve American service members. “Using Tomahawks without the direct participation of American military personnel is impossible," said Putin. "This would mark a qualitatively new, completely new stage of escalation between Russia and the US."   

https://www.zerohedge.com/geopolitical/germany-dodges-russias-offer-non-aggression-guarantee-nato-eu