China Just Accused America's Biggest AI Company of Building Secret Spy Chips
4IR - Daily AI News
Welcome back to 4IR. Here's today's lineup:
China summons Nvidia over H20 chip "backdoors" sparking tech cold war escalation
Apple crushes earnings with $94B revenue showing tariff resilience and AI momentum
Vogue's AI models trigger industry backlash as Guess campaign goes viral
🔥 TOP STORY: China summons Nvidia over H20 chip security concerns
The story: China just hauled Nvidia into a meeting over alleged "backdoors" in its H20 AI chips, casting a shadow over the company's plans to restart sales after Trump lifted the ban earlier this month. Beijing's Cyberspace Administration claimed the chips have "serious security vulnerabilities" including tracking and remote shutdown capabilities that could compromise Chinese systems.
What we know:
China specifically worried about "tracking and positioning functions" and potential U.S. government backdoors
Nvidia was required to submit documentation explaining security risks by August 8
The company flatly denied the allegations: "NVIDIA does not have 'backdoors' in our chips that would give anyone a remote way to access or control them"
Nvidia had just placed orders for 300,000 H20 chipsets with TSMC to meet Chinese demand
Why it matters: This is geopolitical chess at its finest. Beijing is clearly suspicious of Trump's sudden reversal on H20 exports, especially after U.S. lawmakers called for mandatory tracking features on advanced chips. The timing stinks - just weeks after Jensen Huang met Chinese officials and got assurances the country was "open and stable."
China's also pushing hard for companies to ditch Nvidia for domestic alternatives like Huawei's 910C chip. If Beijing blocks H20 imports, it's a massive blow to Nvidia's China business, which represented 13% of sales in 2024. The company took a $4.5 billion writedown in May on unsold H20 inventory alone.
The semiconductor cold war is heating up fast, and Nvidia is caught in the crossfire between Washington's export controls and Beijing's security paranoia. Every chip sale is now a national security decision.
🏛️ POLICY SHIFT: Apple reports monster Q3 earnings despite tariff headwinds
The story: Apple just delivered its biggest revenue growth since late 2021, posting $94.04 billion in Q3 revenue (up 10% year-over-year) that crushed Wall Street expectations of $89.53 billion. iPhone sales jumped 13% to $44.58 billion, while the company navigated $800 million in tariff costs better than expected.
What we know:
CEO Tim Cook said about 1 percentage point of revenue growth came from customers buying ahead of potential tariffs
Services revenue hit another record, growing 12% to help offset hardware pressure
Apple Intelligence features drove stronger iPhone 16 performance in markets where AI was available
The company expects about $1.1 billion in tariff costs for Q4 if nothing changes
Why it matters: Apple just proved it can weather the tariff storm better than anyone expected. While competitors worry about supply chain disruptions, Apple's diversification strategy - moving production to India and Vietnam - is paying off. India now sources the majority of iPhones sold in the U.S.
The real story is AI. Cook emphasized that iPhone 16 sales were notably stronger in countries with Apple Intelligence available, signaling the AI upgrade cycle is real. Trump threatened a 25% tariff on Apple products not made in the U.S., but Apple's already hedging with $200+ billion in supply chain investments outside China.
Apple's beating Wall Street while dodging tariffs and proving AI can drive hardware upgrades. If they can pull this off, no one else has an excuse.
🎯 REALITY CHECK: Vogue's AI models spark industry-wide backlash
What happened: Vogue's August 2025 issue just triggered a massive controversy after featuring a two-page Guess ad with AI-generated models. The campaign, created by London agency Seraphinne Vallora, shows a flawless blonde model in striped dresses and floral playsuits - but she doesn't exist. A tiny disclaimer reading "Produced by Seraphinne Vallora on AI" was the only clue.
What we know:
TikTok user @lala4an's video about the ad has been viewed over 2.7 million times
Guess co-founder Paul Marciano commissioned the campaign via Instagram DMs
This marks the first time an AI-generated person appeared in American Vogue
Several people are calling for boycotts of both Guess and Vogue
The concerning reality: Fashion is quietly replacing human models with AI, and most people don't even notice. H&M is rolling out "digital twins," and Seraphinne Vallora's work has appeared in Elle, WSJ, and Harper's Bazaar. The agency says each campaign costs clients up to the low six figures - way cheaper than traditional photo shoots with real models, stylists, and crews.
Why it matters: This isn't just about jobs - it's about reality itself. Young people are already getting plastic surgery to look like Instagram filters, and now they're comparing themselves to people who literally don't exist. Former model Sinead Bovell told the BBC: "Beauty standards are already being influenced by AI. There are young girls getting plastic surgery to look like a face in a filter."
The real issue? The disclosure was so subtle most readers missed it entirely. If Vogue can't clearly label AI content, what happens when smaller brands start using fake models everywhere?
We're entering a world where perfect doesn't exist, but it's selling us products anyway. The line between real and artificial just got a lot blurrier.
🛠️ HOW-TO: Set up Apple Intelligence features that are driving iPhone sales
What you'll build: Access to the AI features that Cook says are boosting iPhone 16 demand.
Steps:
Update to iOS 18.4 or later on your iPhone 16, iPhone 15 Pro, or iPhone 15 Pro Max
Go to Settings > Apple Intelligence & Siri and tap "Turn on Apple Intelligence" (you may need to join a waitlist)
Try Writing Tools: Select any text in Messages, Mail, or Notes and tap "Proofread" or "Rewrite" to see AI suggestions
Use Visual Intelligence: On iPhone 16, press and hold Camera Control, then point at objects to get instant information, translate text, or search Google
Pro tip: Visual Intelligence works best for identifying plants/animals, reading restaurant menus, and finding shopping info. It's like having Google Lens built into your camera button.
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