China’s worsening relationship with US businesses could put AI’s chip supply on shaky ground

But first, I think it’s time to leave.

If this was forwarded to you, sign up here.

The big story

Quitting China

American businesses have worn out their welcome in China.

US-China relations have been on shaky ground for a while, to put it mildly. But despite the growing animosity, US corporations’ push to sell things to Chinese consumers has been a middle ground everyone can agree on. (As always, money is the great equalizer.)

But China’s goal of being less reliant on foreign businesses and supporting domestic companies is blowing up one of the country’s last good relationships with the US, writes Business Insider’s Linette Lopez.

It’s a marked change from the past few decades when China was the next frontier for US companies. But for US giants like Apple, Starbucks, and Nike, China doesn’t offer the same growth opportunities it once did.

One issue is domestic competition. Chinese consumers increasingly favor homegrown companies over imports (i.e. Huawei over Apple).

But that’s not the only headwind US companies face. China’s economy, quite frankly, isn’t doing too hot.

The great pandemic rebound that Wall Street was banking on never materialized. Instead, slowing industrial growth, a shaky real-estate market, and diminishing consumer demand has China on its heels and at risk of missing its growth targets.

US companies might be missing out on a revenue opportunity, but China is suffering as well. As the dollars dry up, US companies are less incentivized to play mediator between Washington and Beijing.

Still, China has one massive bargaining chip, literally.

The world’s economic hopes and dreams are banking heavily on artificial intelligence. And Taiwan, which China claims, plays a key role in that equation.

Taiwan Semiconductor Manufacturing Company makes vital hardware components for most the world’s chip companies, including industry giant Nvidia. So China’s potential invasion of Taiwan, a growing concern, could throw the AI industry into disarray.

Nvidia CEO Jensen Huang recently said his company has a backup plan if things were to kick off in Taiwan. But he also acknowledged concessions would be made.

“Maybe the process technology is not as great. Maybe we won’t be able to get the same level of outperformance or cost, but we will be able to provide the supply,” Huang said.

That’s a scary outcome considering the AI industry has spent the past few months trying to explain to customers and investors the benefits they’ll get from their pricey investments in the tech.

News brief

Top headlines

3 things in markets

1. How baby boomers could make the economy go bust. America’s richest generation might upend the economy if they get spooked by a mild correction in the stock market or home prices. Panic selling and a pullback on spending from a group that’s been key to the economy’s growth would spell disaster.
2. It’s not sexy, but life insurance is a great way the ultrarich avoid taxes. Putting an insurance policy inside of a trust means the death benefit is excluded from estate taxes. It also protects the remaining assets from lawsuits.
3. Trump? Harris? One billionaire investor isn’t a fan of either’s economic policies. Howard Marks said both presidential candidates are “making promises that ignore economic reality” by either failing to understand the problem or disregarding the costs that come with it. Marks takes issue with Trump’s tariff and tax plans and Harris’ anti-price gouging policy.

3 things in tech

1. Millennials are facing ageism. They used to be Big Tech’s hottest hires, but new data suggests otherwise. The number of US tech workers over the age of 40 is shrinking while tech workers under 25 are becoming more common. This isn’t good news, but it does validate a suspicion many millennials have had for a while.
2. Examining a potential Intel-Qualcomm deal. Qualcomm’s reported takeover offer comes at a critical juncture for America’s fallen tech giant. But the odd-couple marriage won’t necessarily solve the US’ chipmaking woes. Also, Qualcomm isn’t alone — Apollo is reportedly eyeing a $5bn investment in Intel.
3. TikTok ban? Don’t know her. TikTok’s days are technically numbered in the US. Try telling that to the advertisers, employees, and creators who are carrying on business-as-usual. The creator economy is exuding confidence, but there are other storms in TikTok’s skies: It’s losing a big marketing boss as part of a shock leadership shake-up.

3 things in business

1. JD Vance thinks grandparents should be families’ childcare plan. Childcare workers think that’s “ridiculous.” Experts in the childcare industry say Vance’s plan is not grounded in “the reality of Americans today.” Care workers would rather the government spend more on early-childhood programs — which is the opposite of Vance’s plan.
2. Welcome to Billionaire Fortress, USA. Indian Creek Village, a private island city in Florida, is America’s wealthiest town. Tom Brady and Jeff Bezos are among the island’s 89 residents. But good luck getting in — it’s also America’s most gated community in a country full of gates.
3. MrBeast is taking a gamble. The world’s biggest YouTuber is launching a new product while remaining tight-lipped about his recent string of controversies. Marketing experts say the release could be a good PR move, but that it comes with risks.

What’s happening today

• Detention hearing for Ryan Routh, the man accused of attempting to shoot Donald Trump on his golf course last weekend.
• G7 foreign ministers meet.
• World Economic Forum holds sustainable development impact meetings.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Jack Sommers, deputy editor, in London. Amanda Yen, fellow, in New York. Grace Lett, editor, in Chicago. Milan Sehmbi, fellow, in London.