Dear Reader,

It’s been yet another interesting week, with the G7 summit taking place in Biarritz, France. Cooler heads have prevailed: China’s Vice Premier Liu He suggested that China would like to resolve the trade negotiations with a “calm attitude” and that it “resolutely oppose[s] the escalation of the trade war.”

This is certainly more positive than last week’s rhetoric, and I believe that the “escalations” are simply a tactic to bring trade negotiations to a close.

As technology investors, it’s important to keep track of these kinds of trade negotiations. Tariffs and bans can have a material impact on certain technology companies that do business with companies in mainland China.

In particular, semiconductor companies have long used mainland China as a base for less strategic but still important semiconductor manufacturing. Therefore, this segment of the market is highly susceptible to changes in international trade agreements. That’s why I update readers regularly on the progress of the trade talks.

But there is a far bigger and more interesting trend at play than these country-versus-country “antics” that we should be aware of as investors…

I’ll tell you more about this theme in an upcoming issue of The Bleeding Edge. Be sure you keep reading. But for now, let’s turn to our insights.

Huawei’s counterstrike in the ongoing trade wars…

China’s technology corporation Huawei just announced a key product to support the country’s ambitions to become the dominant world leader in artificial intelligence by 2030… just 11 years from now.

We can think of the Chinese tech giant as a combination of Sweden’s Ericsson and the U.S.’s Cisco Systems along with the smartphone division of Apple. It is just massive.

Huawei has antennas and transmission equipment for wireless networks. And it has information technology routing equipment similar to Cisco’s. (In fact, Huawei’s internet routers have literally contained copies of Cisco’s technology; the company has gotten in trouble in the past for simply appropriating the code and installing it on its own hardware.) It also happens to make mobile phones.

And Huawei has fallen under deep suspicion over the past year. Its internet routing equipment was even used to spy on U.S. entities. Data traffic was routed from the U.S. to China before being sent where it needed to go. Incidents like this are one reason President Trump banned government departments from using Huawei’s products.

But the tech giant isn’t sitting still…

Huawei just launched its own artificial intelligence (AI) chip. It’s called the Ascend 910. And it’s the first high-end semiconductor customized for AI that Huawei has developed. It is claiming this is the most powerful AI processor on Earth.

Of course, nobody has seen the chip yet. And it hasn’t been tested by independent agencies. So we don’t really know how good the chip is.

Regardless, the timing of this launch isn’t a coincidence. Huawei is doing this now in case the trade war continues to escalate.

If that happens, U.S. companies could be banned from selling to Huawei… which means the company would not have access to the top AI chips on the market. If the company couldn’t purchase AI chips from key U.S. or European semiconductor manufacturers, it would certainly affect its competitiveness. This is a smart move by the company, given the politics at hand.

We’ll be watching closely to see how the new chip performs compared to many of the other great AI semiconductors discussed in The Bleeding Edge.

Here come the autonomous delivery robots…

Thousands of autonomous delivery robots are about to hit college campuses in the U.S.

Starship Robots at University of Pittsburgh

Source: Starship Technologies

An early stage company called Starship Technologies developed these robots. Starship was founded in 2014 to work on autonomous driving technology for robotic deliveries. That’s an application-specific approach, which is what I like to see.

And Starship is going even more specific…

Its robots will start by delivering food on college campuses. The small, specific deployment area will make it easier for the autonomous robots to operate. This kind of deployment enables “geofencing,” which limits the robots to small, well-mapped-out geographic areas… like a campus. They will go from restaurants to dorm rooms and apartments.

That’s a smarter approach than trying to deploy everywhere at once. Starship can start off smaller, with a clearly defined goal, and use that deployment as a training ground for a much larger objective.

And college campuses are a great first target market. After all, college students order a lot of delivery food.

And get this… Starship’s robots are battle-tested. At this point, they have traveled 350,000 miles… and made more than 100,000 deliveries… in more than 100 cities across 20 different countries.

This is astonishing, especially considering most of us have never heard of this company.

And this success enabled Starship Technologies to raise $40 million in its Series A venture capital round this month. That’s quite a large Series A round. Morpheus Ventures led the deal.

The size of this deal is an indication of the size of this opportunity.

Think about this… Online grocery shopping is expected to increase fivefold over the next 10 years. And $100 million worth of food deliveries is expected to take place in the U.S. by 2025.

It’s a massive market. And we can see how autonomous delivery robots stand to do very well.

So you shouldn’t be surprised if one of these robots shows up to your door a few years from now, filled with fresh groceries…

Amazon’s big problem to solve…

Amazon is one of my favorite companies. I’ve written about it many times in these pages. From building the world’s largest logistics network… to AI-driven convenience stores… to automated warehouses… to drone delivery services… to the world’s largest and most successful cloud services company… there’s a lot to love about Amazon.

But Amazon is having trouble in one key area right now…

It is having a hard time controlling the quality of the goods on its e-commerce site. The Wall Street Journal reported that there are thousands of banned, unsafe, or mislabeled products sold on Amazon right now.

These are items like motorcycle helmets known to be defective, toys with lead in them, and products falsely labeled as FDA-approved or that have failed safety tests. The list goes on and on…

As we know, Amazon has a massive third-party marketplace. That marketplace is one of the reasons for its success. Merchants can sell just about anything they want… which enables consumers to get virtually any product delivered right to their door.

But the challenge is how to deal with dishonest, unethical, and sometimes illegal behavior in that same marketplace.

In a way, this isn’t much different from the challenges facing social media platforms.

After all, Facebook and Twitter are marketplaces for information, just as Amazon is a marketplace for products.

I see these challenges as a major business opportunity. A platform for certifying trusted products and trusted content would be a major commercial success. The world’s consumers are desperate to have sources that are certified or otherwise confirmed as trustworthy.

And we need to know that the companies and people we deal with are good actors. Whoever can figure out a solution will make a lot of money… and do us all a major favor.

Until recently, Amazon has avoided criticism of its marketplace. But given its scale, it was just a matter of time before bad actors took advantage of it. And I am betting that Amazon will find a solution to this problem. It has the money and the operational discipline to put both the process and the technology in place to solve this problem.

And while Amazon may do it in-house, I’m also looking for other companies that will develop technology to “certify” both products on a marketplace and sources of information.

And once I find an investment idea in this area, my readers will be the first to know.


Jeff Brown
Editor, The Bleeding Edge