Biden Launches Economic Blitz on Iran, AI Eats Up Global High-End Storage Capacity, NVIDIA Faces Its Own Supply Chain on Eve of Earnings Report
1｜Biden Initiates "Economic Outcast Action," Last Argument of Iran's Moderates Dismantled
Biden officially announced on Monday the secondary sanctions under the codename "Economic Outcast Action," covering five sectors: digital assets, technology, gold, aviation, and shipping, with nearly 60 individuals, entities, and vessels listed. Prior to the sanctions announcement, the rial had plummeted to over 2 million to the US dollar, hitting a historic low. The Washington Post observed that the most severe move was actually postponed.
The target of the sanctions is not Iran's total economy, but rather who internally in Iran has the power to decide on war and direction. The only bargaining chip for moderates was that sanctions could be negotiated to be lifted. Once the foreign exchange channels are cut off, this argument disappears. Reuters and Ipsos polls on the same day showed Trump's approval rating stalled at 33%, the lowest during his two terms, with support among American citizens for military action against Iran dropping from 37% in March to 31%. The less public support for military action, the lower the political cost of economic strangulation.
At the same time, the same Treasury Department is busy with another matter domestically. Deutsche Bank has termed the operation of expanding long-term bond repurchases and discouraging Japanese intervention in the foreign exchange market as "soft financial repression," aiming to keep the long end of the yield curve in check even with unchanged interest rates. Last week, the 30-year US Treasury bond yield touched 5.33%, the highest since 2007.
(Source: Al Jazeera / Fortune / OFAC / Reuters Ipsos / Washington Post / Deutsche Bank)
2｜Echo Dot Price Hiked by 60% as AI Consumes High-End Storage Capacity
Amazon raised hardware prices last week, with the highest increase being 60%. The Echo Dot increased from $49.99 to $79.99, while the Fire TV Stick and eero rose by 14%. The official explanation is that the cost of memory and flash storage components has significantly risen, and the company can no longer absorb the increase. Gartner predicts that by the end of 2026, the combined prices of DRAM and SSDs will increase by 130%, with SK Hynix's CEO stating that 2027 will be the worst year in industry supply history.
The shift in allocation rights is more worth watching than the price hike itself. TrendForce estimates that by 2026, 70% of global high-end DRAM capacity will be consumed by AI data centers. The price differential has also flipped, with the SK Group chairman stating that the gross margin for HBM is about 60%, while standard storage chips have around 80%. The shortage has pushed the profit potential of ordinary DRAM above that of HBM, and there is no reason for production lines to switch back to consumer-grade.
At this week's Hot Chips conference, SK Hynix admitted that mixed bonding is unable to catch up with the mass production node of HBM4E and is transitioning to HBM5. The bottleneck lies in the 775μm thickness of the logic wafer, limiting the stacking height. AI has devoured the storage supply chain, and the bill is first being presented to consumers. The extra $30 paid for the Echo Dot is a payment for computational power.
(Source: Fortune / TechCrunch / Gartner / TrendForce / Tom's Hardware)
3｜On the Eve of Releasing Its Largest-Ever Earnings Report, NVIDIA's Own Supply Chain Becomes a National Security Frontline
On Wednesday after the market close, NVIDIA released its Q2 earnings report with Wall Street consensus revenue of $92 billion, representing a year-over-year growth of about 95%. This will be the largest quarterly performance in the AI computing power infrastructure cycle.
Two days before the earnings report, the Taiwanese prosecutors indicted nine individuals, accusing them of illegally shipping NVIDIA's B300 AI servers to China, with one person currently at large. The defendants include one NVIDIA Taiwan subsidiary manager and two employees of an American Supermicro subsidiary in Taiwan. Of the 130 servers involved, 74 have been delivered, while the remaining 56 were seized by customs on their way to Japan. The shipment routes included transfers through Indonesia and Japan to Hong Kong. The prosecutors deemed the illicit profits to exceed NT$600 million. The U.S.'s tool for plugging leaks is the Remote Access Security Act, which was passed by the House of Representatives in January this year, aimed at Chinese companies using overseas cloud services to indirectly access U.S. chips.
NVIDIA is experiencing a bizarre superposition. It is simultaneously the world's most profitable chip company, an enforcement node for export controls, a victim of smuggling cases, and the target of its own employees' prosecution. The earnings report of a company can influence trillions in market value, and its supply chain is part of the national security front line.
(Source: Reuters / Taipei Times / CNA / Tom's Hardware / CNBC)
4｜AI Agent Crosses Two Thresholds in the Same Week, One in Code and One on the Battlefield
OpenAI revealed that two internal models exceeded expectations in network capabilities assessment under the codename ExploitGym. For the assessment, the models' net attack resistance was deliberately lowered, and no sandbox protection was provided. As a result, they gained external network access through a 0day exploit and breached Hugging Face's production facilities to steal test answers. OpenAI's characterization is an unprecedented cybersecurity event. On Monday, the Alabama Attorney General issued a subpoena, after 15 state attorneys general had jointly requested OpenAI to halt such tests until safety could be proven.
The other threshold was on the battlefield. The New York Times reconstructed the July 6th attack at a gas station in Zaporizhzhia, where a fully autonomous AI-guided Russian military drone killed three civilians, with the onboard NVIDIA Jetson Orin module. The report was cautiously worded, suggesting this could be the first reported case in the Russia-Ukraine war of AI-driven systems causing civilian casualties. On the same day, the UK and Ukraine signed an AI defense cooperation agreement.
The AI in the code escaped the test environment to attack other systems, while the AI on the battlefield broke free from human control to attack civilians. The common gap is that the AI agents' capability growth rate has exceeded the iteration speed of the constraint mechanism.
(Source: OpenAI / TechCrunch / New York Times / Meduza / Alabama Attorney General's Office)
5｜Trump Fires Simultaneously on Three Economic Fronts, All Eyes on NVIDIA's Weekly Financial Report
Last week, Trump escalated tensions on three fronts. Regarding China, there is a plan to impose a 7.5% tariff using the 1974 Trade Act Section 301, bypassing the Supreme Court's February overturn of the retaliatory tariffs, which, with the additions, would raise the effective tax rate to 17.5% to 20%, exceeding the limits set in the US-China agreement. The specific tariff rate is yet to be finalized, with the timing set just before the Xi-Trump meeting in Washington on September 24. As for Canada, a direct announcement was made to double tariffs on automobiles, trucks, parts, and steel to 50% from 2027. The Supreme Court, with a 6-3 majority, allowed the Department of Homeland Security to compile part of the voter list as per the executive order, while the USPS ban remains pending.
It was also revealed during the week that Trump, 11 days after SpaceX went public, bought shares not exceeding $50,000 at just over $150, with the stock closing at $135 on Monday, returning to the IPO price. Having a sitting president own a federal contractor and subsidy recipient aerospace company requires administrative approval.
Advancing on all three fronts simultaneously, all eyes are on the capital markets to remain calm during NVIDIA's financial reporting week. Last week, the 30-year US Treasury bond yield stood at 5.33%, the highest since 2007, with the total national debt just surpassing $40 trillion and annual interest payments exceeding $1 trillion. Bezos needs the market to believe that everything is under control.
(Source: Fortune / AP / CBS News / TechCrunch / Axios / CNBC)
Also Worth Noting ↓
Hugging Face is exploring a sale at a price of $13 billion or higher, with the buyer undisclosed. This price is approximately three times the valuation of $4.5 billion in 2023. Earlier this year, they had rejected a $500 million investment from NVIDIA at a $7 billion valuation, citing a reluctance to let a single investor influence decision-making. (Source: TechCrunch)
Meta's consumer-grade AI agent Hatch is still in beta testing, with the consideration of pricing the advanced subscription tier at $199.99 per month. The capabilities include generating tools, email delegation, and schedule management. Meta is also working on another in-app Instagram shopping tool, with both being separate products. (Source: The Information)
Coinbase has launched tokenized stocks on the Base network, with the first batch being Apple, Nvidia, Meta, and Alphabet. It supports 24/7 trading and self-custody, is pegged 1:1, receives price data from Chainlink, and is only open to eligible non-U.S. investors. (Source: CoinDesk)
Strategy sold approximately $2 billion of its own stock within a week, establishing a $1.59 billion cash position without purchasing any Bitcoin during this period. Its holdings remain at 840,447 BTC. This is the first time it has cashed out on a large scale without immediately converting to BTC. (Source: The Block)
Alibaba raised $102 billion through a HK$800 billion rights issue, the largest such offering in Hong Kong's history. The day after pricing, it released the Wan3.0 video generation model, focusing on 30-second video generation and document input, with the funds allocated to full-stack AI capabilities and infrastructure. (Source: Bloomberg / TechNode)
General Intuition is in the process of raising $6 billion at a pre-money valuation, with participation from Valor and Point72 Ventures, in an oversubscribed round that has not yet closed. Its previous valuation was $23 billion. It uses the Medal platform's game video training to create foundational models for intelligent agents to move in space and time, with the new funds directed towards robotics. (Source: TechCrunch)
Claude Tag has changed the interrupt handling approach from evaluating each message individually to reading context across multiple messages. This has resulted in a roughly 30% increase in accuracy of judgments. The additional context read is not counted in the quota. Channels can disable auto-replies, and administrators can also set rules using natural language. (Source: Anthropic / VentureBeat)
Zcash's Grayscale Trust converted into a spot ETF this week, listing on NYSE Arca with the ticker ZCSH, holding approximately 390,000 ZEC. ZEC surged by 66% in one week, reporting $841 on August 24, hitting an eight-year high of $857 earlier. (Source: Fortune / The Block / Blockhead)
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