Kevin Xu

Q1 2024: Inner Scorecard

Welcome to my first quarterly letter of 2024. To new and old readers alike, a friendly reminder: at Interconnected, I run a long/short equity portfolio that is laser-focused on investing in the “picks and shovels” of the interconnected global digital AI economy. I

Topics: Semiconductor• TSMC• Industrial Policy•

($) TSMC: Where and How Will It Raise Prices

Most of the CHIPS Act subsidies have (finally) been (preliminarily) allocated. Out of the pot, and out of the companies’ whose fabs and capabilities actually matter in the industry, Intel got $8.5 billion, TSMC got $6.6 billion, Samsung got $6.4 billion,

Topics: EVs• Tesla•

Is Tesla China’s “Catfish”?

If you google “catfishing”, you get a plethora of results on its use as a term to describe fake online personas to dupe or scam people on social media and dating apps. A beautiful gal showing fake interest in unattractive guys for their money

Topics: AI• Geopolitics•

($) Do We Need Sovereign AI?

Topics: Cloud Industry• Geopolitics•

When the Houthis Found “the Cloud"

One topic this newsletter has been obsessed with over the last four years is cloud data centers. Partially because of my previous industry experience, working deeply on cloud-based tech products, partially because these data centers are just fascinating and so crucial to the global

Topics: AI• Open Source•

($) Tracking Global AI Talent Flow

Topics: Semiconductor• Japan• Taiwan•

Japan's Semiconductor Red Carpet

Over the weekend, while I was recovering from jetlag after attending a wonderful three-day, closed-door conference on China hosted by the Salzburg Global Seminar, TSMC quietly opened its first chip fab in Japan. I only say quietly because very few mainstream English media outlets

Topics: China• GDP•

($) China’s Provincial GDPs: Pessimism or Sandbagging

Topics: EVs• China•

Wang Chuanfu: A Name Everyone in the West Should Know

Elon Musk has almost 100% name recognition worldwide. Wang Chuanfu (王传福), the founder of BYD which just beat Tesla in global electric vehicles sales, is virtually unknown in the west. Even in China, he is only well-known in the business circle and has a

Topics: Geopolitics• AI•

($) 10-K's and Geopolitics: AMD, Intel, Meta Edition

Topics: Nvidia• Huawei•

U.S. Export Control is Hurting Nvidia and Helping Huawei

U.S. export control on advanced semiconductors is starting to become counterproductive. While the intended goal is to strengthen national security by preventing China from obtaining cutting edge American-designed AI chips, the real effects are hurting leading American companies, particularly Nvidia, while helping China’

Topics: AI•

($) AI May Have A Gross Margin and Bullshit Revenue Problem

Topics: TSMC• Industrial Policy• Semiconductor•

TSMC Hedges Against a CHIPS Act Fail

The much-lauded CHIPS Act is not going well. And TSMC, which is supposedly to be one of the Act’s biggest beneficiaries, is starting to hedge against a failing industrial program. Since its passage 16 months ago, the Act’s implementation led by the

Topics: Investing• Quarterly and Annual Letters•

($) Less is More: 2023 Annual Letter

Topics: AI• China• Regulation•

🤷Does China Want Generative AI?

My first post of 2024 tries to answer a question I’ve been wrestling with throughout 2023. Does China want generative AI? Increasingly, I think the answer is: not really. On balance, China as a whole (minus the small, elite circle of tech entrepreneurs,

Topics: Reflection•

😍 My 6 Favorite Posts of 2023

Last week, I shared what I think are the top 5 US-China tech stories of 2023. Continuing this end of year look-back theme, I’m sharing my 6 favorite posts written in 2023. Being a personal “favorite” doesn’t necessarily mean the post got

Topics: AI• Semiconductor• EVs•

($) Top 5 US-China Tech Stories of 2023

Topics: Investing• Monthly Review•

🍁November Review: Micro Plus Macro and the Roblox Story

When we introduced Interconnected 2.0 in October, one of the new elements was a monthly post sharing our observations on the market and any interesting investment research work we undertook in the previous month. Today’s post is the first installment of this

Topics: AI• Zoom• Snowflake•

($) AI Spending Against the Price of Time

Topics: Nvidia• AI• China•

Nvidia’s China Business is Important to US Geopolitical Positioning

But not in the way most people think. Sun Tzu, who wrote “The Art of War” roughly 2500 years ago, distilled many military strategies that are studied by both military and business leaders everywhere. One of the more well-known psychological warfare tactics he espoused

Topics: Cloud Industry• AWS• AI•

($) re:Inventing AWS: Keynote Digs and Narratives

Topics: Alibaba•

Alibaba's Reorg Hot Mess

Corporate reorgs are never easy. When Alibaba proposed its “1+6+n” corporate reorg in March, breaking up the giant into one single holding company with six loosely held, somewhat independent businesses, plus a cohort of other assets (the “n”), it was the mother

Topics: China•

($) The Age of Not Obvious: China in September 2023