US sanctions fail to stop flow of chips to China

Good morning. Today we will be covering:

• The US military’s planning for the potential breakdown of Gaza ceasefire talks.

• The owner of 7-Eleven rejecting an offer by Canada’s Alimentation Couche-Tard.

• The latest data on Kamala Harris’s and Donald Trump’s campaign fundraising.

But first, we have an exclusive report on Nvidia. The cost of renting cloud services using the company’s leading artificial intelligence chips is cheaper in China than in the US, a sign that the advanced processors are easily reaching the Chinese market despite Washington’s export restrictions.

Four small-scale Chinese cloud providers charge local tech groups roughly $6 an hour to use a server with eight Nvidia A100 processors in a base configuration, companies and customers told the Financial Times. Small cloud vendors in the US charge about $10 an hour for the same set-up.

The low prices, according to people in the AI and cloud industry, are an indication of plentiful supply of Nvidia chips in China and the circumvention of US measures designed to prevent access to cutting-edge technologies. Here’s more on the thriving black market for the company’s most powerful AI chips.

• Intel in crisis: The company remains far behind Nvidia, with senior departures and a plunging share price adding to chief executive Pat Gelsinger’s worries.

Here’s what else I’m keeping tabs on today and over the weekend:

• Economic data: The EU releases final second-quarter GDP figures today, while Halifax publishes its UK house price index. The US has jobs data that will be closely watched ahead of an interest rate decision later this month.

• Elections: Algeria holds its presidential election tomorrow, while Russia has local polls on Sunday.

• Sport: The US Open tennis finals start with the women’s singles tomorrow and the men’s the next day. The Paris Paralympics close on Sunday.

Five more top stories

1. The US military is preparing for the possible collapse of ceasefire talks between Israel and Hamas. General CQ Brown, chairman of the US joint chiefs of staff, told the Financial Times that he was weighing how regional actors would respond to such a breakdown and the potential of a broader conflict. Read more from the interview.

2. Chinese car buyers are shunning Elon Musk’s Tesla as rival manufacturers flood the world’s largest car market with more up-to-date electric vehicle models. The US company’s share of Chinese EV sales, including battery and plug-in hybrids, slipped to 6.5 per cent in the first seven months of the year from almost 9 per cent a year earlier. Here are the local rivals giving Musk’s group a run for its money.

3. France’s new prime minister Michel Barnier promised to respect “all political forces” as he accepted the nomination by Emmanuel Macron yesterday, ending two months of political limbo. But the respite for both president and premier could yet be brief, not least because they are hemmed in by a divided parliament that could topple the government at any time.

4. The owner of 7-Eleven has rejected a takeover offer from Canada’s Alimentation Couche-Tard, saying it was “opportunistically timed and grossly undervalues” the business. In a letter made public today, the board of Seven & i Holdings said even if the offer was improved, US competition rules would still entail “multiple and significant challenges”.

5. Kamala Harris’s campaign says it raised $361mn in August compared with Donald Trump’s $130mn. The vice-president has raised more than $500mn since she joined the race in July as she benefits from renewed enthusiasm from voters. Read more about Harris’s cash lead here.

• Trump and Harris policy positions: Both candidates offer vastly different visions for the economy. Trump promises low tax and deregulation and Harris tax rises and more government spending. Read more about their policy positions.

How well did you keep up with the news this week? Take our quiz.

The Big Read

Cracks are appearing in the global economy as the plumbing that underpins trade — the networks carrying cargo, commodities and information — increasingly becomes politicised. Although Beijing and Washington are using subsidies, tariffs and export controls to compete for critical minerals and technological advantages, the system is proving more resilient than many expected.

We’re also reading . . . 

• Iranian society: The Islamic republic’s leaders are worried about declining religious observance and population decline as young people fall out of love with marriage.

• Boeing: The aerospace group’s work with Nasa dates back to the Apollo missions. But recent setbacks raise a once unthinkable question: should it exit the space business?

• Frozen croissants: Unwitting coffee shop customers are eating pre-made goods in record volumes, hastening the displacement of freshly produced pastries — even in France.

• ESG backlash: Despite the anti-woke crusade, stakeholderism is flourishing in new ways, writes Gillian Tett.

Chart of the day

How would an economist optimise their morning routine? One consideration is how much to sleep, writes Soumaya Keynes. Are higher earners responding to stronger incentives to stay awake? Or does joining their ranks mean waking up early to get ahead?

Take a break from the news

Household mess is an unavoidable fact of life, so why hide it from guests? Oliver Burkeman is embracing “scruffy hospitality”, a concept that would be valuable enough if all it conveyed was permission to put a little less effort into keeping a pristine home. But there’s more to it.

Additional contributions from Tee Zhuo and Benjamin Wilhelm