Geopolitical Risks in Business

Last week, China barred its major tech companies from buying Nvidia chips. This move received only modest attention in the media, but has implications beyond what’s widely appreciated. Specifically, it signals that China has progressed sufficiently in semiconductors to break away from dependence on advanced chips designed in the U.S., the vast majority of which are manufactured in Taiwan. It also highlights the U.S. vulnerability to possible disruptions in Taiwan at a moment when China is becoming less vulnerable. After the U.S. started restricting AI chip sales to China, China dramatically ramped up its semiconductor research and investment to move toward self-sufficiency. These efforts are starting to bear fruit, and China’s willingness to cut off Nvidia is a strong sign of its faith in its domestic capabilities. For example, the new DeepSeek-R1-Safe model was trained on 1000 Huawei Ascend chips. While individual Ascend chips are significantly less powerful than individual Nvidia or AMD chips, Huawei’s system-level design to orchestrate how a much larger number of chips work together seems to be paying off. For example, Huawei’s CloudMatrix 384 system of 384 chips aims to compete with Nvidia’s GB200, which uses 72 higher-capability chips. Today, U.S. access to advanced semiconductors is heavily dependent on Taiwan’s TSMC, which manufactures the vast majority of advanced chips. Unfortunately, U.S. efforts to ramp up domestic semiconductor manufacturing have been slow. I am encouraged that one fab at the TSMC Arizona facility is operating, but issues of workforce training, culture, licensing and permitting, and the supply chain are still being addressed, and there is still a long road ahead for the U.S. facility to be a viable substitute for Taiwan manufacturing. If China gains independence from Taiwan manufacturing significantly faster than the U.S., this would leave the U.S. much more vulnerable to possible disruptions in Taiwan, whether through natural disasters or man-made events. If manufacturing in Taiwan is disrupted for any reason and Chinese companies end up accounting for a large fraction of global semiconductor manufacturing capabilities, that would also help China gain tremendous geopolitical influence. Despite occasional moments of heightened tensions and large-scale military exercises, Taiwan has been mostly peaceful since the 1960s. This peace has helped the people of Taiwan to prosper and allowed AI to make tremendous advances, built on top of chips made by TSMC. I hope we will find a path to maintaining peace for many decades more. But hope is not a plan. In addition to working to ensure peace, practical work lies ahead to multi-source, build more fabs in more nations, and enhance the resilience of the semiconductor supply chain. Dependence on any single manufacturer invites shortages, price spikes, and stalled innovation the moment something goes sideways. [Original text: https://lnkd.in/gxR48TK8 ]

Amid rising tariffs and shifting geopolitics, the foundations of the rules-based global economy are being redefined. With the US policy shifts, the uncertainty is real. In fact, I just got back from New York, where I met with a number of CEOs – and for the first time, all of them said the same three words: “I don’t know.” It’s clear we’re not going back to “business as usual”. That’s why we felt it was crucial to bring our clients together today to hear from Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong at a closed-door conversation. He’s just been appointed Chairman of the new Singapore Economic Resilience Taskforce, and his perspectives were insightful, as he also listened to the concerns and questions our clients brought to the table. Looking ahead, I believe we’re in for more short-term volatility and uncertainty. My advice to clients: lock in good rates, manage your FX exposure, and address any supply chain constraints. Longer term, we need to think about the new world order more strategically. There are four key areas businesses need to focus on: • Supply Chain – Diversify sources and build in resilience • Logistics – Plan for the possibility of longer routes and ensure continuity • Financial and Payments – Prepare for alternatives beyond USD • Technology – Be ready for dual tech ecosystems and interoperability costs The silver lining is that we are in Singapore. While Asia does bear the brunt of tariffs, it is also home to 18 of the 20 fastest-growing trade corridors. Also, even though we have had slowdowns in our neighbourhood, we are still surrounded by big economies – China, India and Indonesia. Over the years, we’ve walked alongside our clients through many turning points, and we’ll keep showing up, especially when things get tough. Whether it’s navigating treasury decisions, managing volatility, or adapting supply chains. Storms may come, but like Singapore, we’ll stay steady – anchored, open, and here for the long haul.

🇷🇺 Russia’s digital soldiers: report on Russia’s Cyber operations, analyzing how they scale through mass mobilisation of “digital soldiers”. By Anastasia Sentsova Analyst1 👉🏼Key learnings : The Russian state has built a militarised civic-information system that blurs the boundaries between state, volunteer and criminal cyber actors. It deliberately cultivates a safe haven for cybercriminals — non-prosecution and even public praise serve as implicit state incentives for aligning cyber-criminal activity with state aims. 🔹State-aligned hacktivist groups or “digital soldiers” combine narrative alignment, symbolic language and targeting patterns that mirror official Russian strategic messaging — offering a high probability of state influence even if direct control is hard to prove. 🔹The information-domain mobilisation is formalised via institutional structures (e.g., civic youth militarisation, volunteer networks) and extended into the digital sphere through gamified cyber-volunteer systems. 🪖Understanding the militarisation of civic life → digital front 🔹Legal and institutional changes (the “Foreign Agents” law, Undesirable Organisations” law) transformed civil society into a component of the militarised domestic order. 🔹The civic movement All‑Russia People’s Front (ONF) illustrates this: launched in 2011 to mobilise local groups, it has digital arms such as “CyberSquad” (in 2023) for volunteer monitoring and reporting “hostile” content. • Example: CyberSquad recruits volunteers, assigns military-style ranks via bot, tasks include complaints against “Russophobic” content, rewards via merch and premium services. 🔹Safe-harbour effect for cybercrime aligned with state goals • The case of the REvil ransomware gang: even after indictment, Russia’s non-cooperation and the embracing of “Putin Team” branding by some criminals signal an informal alignment. • Example: 2 FSB officers indicted for the massive Yahoo breach in 2017 (500 million accounts) prove state-criminal overlap. • Ex: In 2024, convicted hackers were welcomed back to Russia and publicly thanked by the President — a symbolic signal of reward. 🔹Hacktivist groups mirror state narrative and target regime’s adversaries 🔹The Cyber Army of Russia (CARR) demonstrates this alignment: launches with messaging echoing Kremlin language, uses state symbols (“Z” in St George ribbon colours), claims operations against Western/Ukraine-aligned infrastructure. • Ex: CARR claimed responsibility for compromising municipal water storage tanks in Texas (Jan 2024) — an attack crossing from cyber into physical infrastructure damage. 🔹Integrated narrative-cyber-crime apparatus complicates attribution & deterrence

Logistics is about so much more than shipping or moving goods from A to B. It’s about all that happens before, in-between, and after. Today, more than ever, logistics is about turning challenges into opportunities. While the current #tariff situation is creating new challenges for businesses and supply chains daily, logistics experts around the world are running at full speed to support customers in their immediate logistics needs, from rescheduling or rerouting cargo to understanding and managing #customs requirements and processes. In times of high insecurity, panic is the wrong answer. We need to use the dynamics to seize opportunities to adapt and innovate. Driver, not disruption As businesses might venture into alternative markets, trade will inevitably be reshaped. Unlike the disruptions we have experienced in recent years post-Covid, we see the current situation as a temporary disorder that challenges our ability to anticipate and our power to move forward. While it breaks up and questions our existing global structures, it can be a driver for change and growth. If uncertainty makes us struggle, we need to become agile instead of reactive. Naturally, no data or technology could have predicted the current situation. Therefore, despite all the advancements in digitalisation, we must not overlook the importance of human know-how and expertise. This is where the motto we have always embraced at Kuehne+Nagel comes into play: Logistics is People Business. Market insights are key Exploring new markets under pressure while keeping business goals on track is a challenge in itself. New markets present new opportunities, but they also require a shift in mindset and culture. This is where the logistics expertise and network come in and where we show that our strength is more than transport from A to B: Our local experts know the markets like the back of their hands. They understand local requirements and business culture. They open doors and connect. Even though tariffs might settle down again, geopolitics remains more volatile than ever. This may seem contradictory, but long-term strategic planning for the unforeseen is essential. Effective crisis management is preceded by continuous preparation and the establishment of agile structures. As #trade shifts, so must our approach. Globalisation will undoubtedly become more complex, but it is far from ending. The world continues to evolve, and so do supply chains around the globe. Our role as a logistics provider is to ensure they remain resilient and connected. Whether in Shanghai, Long Beach, or Rotterdam, what characterises a top-tier logistics provider is their ability to support customers wherever they need it. Logistics can offer valuable market insights, and when combined with a global network, it can be a game-changer for those looking to adapt and thrive in this dynamic environment.

The World Economic Forum Global Risks Report 2025, launched today, offers critical insights into the most consequential risks facing the world over the next two years and beyond. #wef25 In the short term, challenges such as misinformation, extreme weather events, societal polarization, and cyber threats dominate the risk landscape. These issues are reshaping economies, governance, and communities worldwide, demanding immediate, coordinated action. Over the next decade, #environmental risks are projected to intensify, with extreme weather, biodiversity loss, and disruptions to Earth's systems emerging as the most severe challenges. These risks underline the urgent need for long-term strategies to safeguard ecosystems, secure resources, and mitigate climate-related impacts. Addressing these challenges requires a global commitment to sustainability and innovative approaches. This report serves as a vital resource for understanding the interconnected nature of global risks and the need for collaboration to build resilience in a rapidly changing world. It also provides timely context as we prepare for discussions at #Davos, where global leaders will convene to address these pressing challenges. Read the full report here: https://lnkd.in/e7cReNiH #risks25

Strategic Flexibility: LG’s Playbook in the Age of Uncertainty #3. Geoeconomics: The Precision Calibrator for Strategic Impact For some time now, we’ve been reshaping our portfolio by expanding business domains and transforming business models. Beyond home appliances, we’ve grown into B2B solutions such as mobility, smart factories, and HVAC. At the same time, we’ve moved from hardware-centric businesses to subscription services, D2C, and platform-based models. As of Q2 2025, B2B represents 37% of total revenue, while non-hardware platform sales grew 18% year-on-year. But today, the world asks a new question: “Where, when, and how should opportunities be seized?” As AI innovation and geoeconomic shifts unfold together, LG Electronics’s strategy has become three-dimensional: business expansion as the X-axis, new models as the Y-axis, and geoeconomics as the Z-axis. If AI creates opportunities, geoeconomics acts as the calibrator—defining their scale, direction, and impact. Global South: The New Stage of Growth The Global South is no longer just “emerging”—it’s becoming a central driver of growth. Across leading countries in this region, LG is laying the groundwork for the future with expanded R&D, production capacity, and locally tailored strategies. • LG India: USD 600M investment in a third plant with 5M-unit capacity; stronger R&D through LG Soft India and our Noida lab; 2024 revenue of KRW 3.79T and net profit of KRW 331.8B*; IPO preparation underway. • LG Electronics Indonesia: New Cibitung R&D base for our Media Entertainment Solution Company; reinforcing production hub role; expanding AI data center HVAC contracts. • LG Electronics Brasil: Manaus plant operating 30 years as a regional hub; BRL 2B investment in a Paraná plant by 2026 to localize premium appliances. • LG Electronics Saudi Arabia: HVAC production hub; expanding AI data center partnerships; growing as a Middle East and Africa export base. Operational Agility Our Locally Self-Sufficient Model builds complete value chains within each market, enabling fast response and supply chain stability. In parallel, our Swing Production System links 35 sites across 16 countries—including the U.S., Mexico, Vietnam, Hungary, Saudi Arabia, Brazil, and India—into a flexible global network. Together, these models let us adjust production to tariff changes or geoeconomic challenges, ensuring stability and efficiency. This dual foundation enables LG to navigate uncertainty with resilience and agility. The environment will always bring new challenges. But our commitment is clear: understand markets, capture opportunities, and deliver solutions when and where they are needed. With strategic flexibility, we aim to turn challenges into growth and open new pathways for the future. * Source: LG Electronics 2024 Annual Report

I’m pleased that President Trump has announced a pause on implementing some of the “reciprocal tariffs” that he announced last week.   In the short-term, tariffs can hurt economic activity. They cause costs to rise, and companies will either absorb those costs, decreasing margins, or pass them on, which will affect pricing and demand. So delaying the tariffs will avoid these short-term impacts.   But we remain in a period of high uncertainty, including the near-term rising risk of an escalating trade war with China. This uncertainty will likely dampen global investment and growth. Every investment decision is based on both risk and return. The large uncertainties in the global trading system have substantially increased risks for most companies.   BCG’s trade and geopolitics experts, put it this way: “Every company, regardless of sector or location, needs to build tariffs and the related uncertainty into its planning and operating model.” In other words, core decision making just got a lot more complicated for business leaders. You can read more from our Global Advantage team on navigating the impact of tariffs: https://lnkd.in/ert8gazK Some companies have already built geopolitical muscle, developing capabilities to anticipate and respond to policy shifts. They’ve set up teams to map out tariff impacts, consider pricing strategies, and work with suppliers to share cost burdens. They should be better positioned to confront the current turbulence and headwinds. But even the leaders of those companies are now asking harder, longer-term questions. All businesses need to understand how sustained high tariffs could affect their supply chains and manufacturing networks—and prepare in advance as much as possible.   Trade battles and higher uncertainty are not what most of us would have wished for, but that’s the world we’re in. Leaders must embed a mindset of resilience grounded in adaptiveness and agility and seek advantage and opportunity amid uncertainty.

The news from Venezuela this morning is a reminder that reserves are not supply. Early reports suggest oil facilities remain intact. That removes the worst-case scenario, but does not determine whether barrels will actually move. Oil flows on control, logistics, payments, insurance, and confidence in the system surrounding production and exports. When those break down, barrels remain stranded no matter how large the resource base. Venezuela holds the world’s largest proven oil reserves, yet it produces only about one million barrels per day (the US produces over 13M barrels per day). The constraint has never been geology. It has been governance, sanctions, capital access, and execution. If political change brings rapid stabilization and credible authority over PDVSA, the upside is incremental supply over time, not a sudden surge. Heavy oil requires diluent, maintenance, skilled labor, and sustained investment, all of which take time. If control fragments instead, the outcome is higher geopolitical risk premiums and continued tightness in heavy sour crude markets. This event may also test OPEC. Venezuela has long operated outside effective quota discipline due to capacity constraints. If barrels return meaningfully, the group will face difficult choices about accommodation, offsetting cuts, and credibility in a market that is already well supplied. Russia’s role also bears watching. Moscow has been a consistent political and commercial backer of Caracas, even as its own energy revenues face pressure. Venezuela therefore remains both an oil variable and a geopolitical pressure point. The real issues are not how much oil sits underground. They are who controls the system, how quickly exports can be stabilized, and whether any potential increase in supply can be sustained. These are judgments with real consequences. It is an extraordinary moment for the global energy industry.

US microchip manufacturers Intel Corporation, AMD, and Texas Instruments are accused of failing to prevent their technology from ending up in russian-made drones and missiles that have killed and injured civilians in Ukraine. A series of lawsuits have been filed in Texas state court accusing major American semiconductor companies — Intel, AMD, Texas Instruments and U.S. distributor Mouser Electronics — of failing to prevent their microchips and components from being illegally diverted into russian missiles, drones and other weapons used against Ukrainian civilians. The plaintiffs are dozens of Ukrainian civilians and families who allege that restricted components originally manufactured in the United States ended up in russian and Iranian-made weapons systems, including cruise missiles and UAVs, despite longstanding U.S. export controls and sanctions. According to the legal filings, third-party intermediaries, shell companies and re-export channels are believed to have bypassed export rules, funneling chips into foreign military supply chains. The suits claim companies “ignored warning signs” and lacked adequate oversight to stop these diversions. The litigation argues that while these manufacturers did not intend for their products to be used as weapon components, they failed to enforce effective supply-chain controls — leading to components being found in missiles and drones that injured and killed civilians in Ukraine between 2023 and 2025. This development highlights ongoing challenges in enforcing export restrictions on dual-use technologies, particularly in complex global supply networks where microchips can quickly change hands through multiple countries and distributors. What’s next: The lawsuits seek compensation for the victims and aim to hold industry players accountable for compliance failures — potentially setting precedents for how technology companies manage export risk in conflict zones.

Microsoft confirms: U.S. law overrides Canadian data sovereignty. Now what? The recent admission by Microsoft France that U.S. legal requests take precedence over EU (and by extension Canadian) law should be a wake-up call for Canada. Data residency is not data sovereignty. Hosting Canadian government, military, and citizen data on U.S.-based platforms means it remains subject to the CLOUD Act—no matter where the servers are located. This is not just a privacy issue; it’s a sovereignty issue. As the Government of Canada defines it: “Canada’s right to control access to and disclosure of its digital information subject only to Canadian laws.” When U.S. companies can hand over Canadian data without Canadian oversight, that right is compromised. The takeaway is clear: - Procurement is policy. Every contract signed with a foreign-owned cloud provider effectively cedes sovereignty. - Canada needs a sovereign AI and cloud stack. Without domestic alternatives, Canada will always be forced into dependency. - Urgency matters. With critical systems in defence, health, and infrastructure already tied to U.S. providers, the risk is not theoretical. At Canada’s AI Sovereignty & Innovation Cluster (CAISIC), our mission is to ensure Canada has the capacity to build, govern, and trust its own AI and digital infrastructure. Microsoft’s testimony only confirms the urgency of this work. The question is no longer if Canada needs sovereign cloud and AI infrastructure, but how fast we can get it built. #AISovereignty #DigitalSovereignty #Canada Source: https://lnkd.in/gjXg4TbD