The Morning Download: TSMC and the AI ‘Frontlash’

Good morning. The signs of an AI backlash are real, from resistance to rampant data center construction and outright threats on the lives of high-profile CEOs. Taiwan Semiconductor Manufacturing Co.’s latest quarterly financial results, however, are testament to still-mounting demand, or what I think of as the “AI frontlash.”

TSMC posted its fifth straight quarter of record earnings, the latest sign that AI demand remains healthy, the WSJ reports. The world's largest chipmaker, whose customers include Nvidia and Apple, said quarterly net profit jumped 77% from a year earlier to $21.98 billion, beating analysts' expectations. TSMC also announced plans to invest an additional $100 billion in the U.S., Barron's reports. The results add to a string of bullish AI signals from the chip sector. Earlier this week, semiconductor-equipment maker ASML raised its annual sales outlook.

Tech-leader takeaway. Pricing the frontlash and handicapping its leaders and laggards remains an open and interesting discussion, as does the significance of the ongoing backlash as a force in politics, the markets and the economy. The frontlash is still the dominant force, though, and there’s no sign now that it is changing. The new AI model from Thinking Machines, designed to provide a faster, cheaper and open alternative to the frontier, confirms that there’s demand for new models with new approaches in a growing market.

The AI frontlash may be roaring in the chip industry, but on the factory floor, workers are pushing back against automation.

Hyundai’s auto workers in South Korea have gone on a partial strike over the threat of humanoid robots one day occupying the assembly line, the Journal reports. Union representatives are requesting a shift from hourly pay to a fixed salary on top of other job-security guarantees related to AI adoption. 

Hyundai's Atlas humanoid robot lacks a firm deployment date in South Korea, which boasts the highest per capita rate of industrial robot adoption in the world, according to the International Federation of Robotics.

Outside of South Korea, German auto-parts maker Schaeffler is using four-fingered robots in South Carolina and China’s Xiaomi earlier this year started a trial run of humanoid robots in its EV plants. Tesla expects production for its Optimus humanoid robots, which could one day help build its electric vehicles, to start by year’s end.  

Like Tesla, Chinese EV-maker XPeng has lofty goals to transform itself into a physical AI company. The WSJ reports that the company plans to launch its humanoid robot, IRON, globally next year. 

• Thinking Machines Lab, the company led by OpenAI’s former tech chief Mira Murati, released its first AI model on Wednesday. Called Inkling, the open-weight model is smaller than estimates of the most advanced closed-source models from rivals such as OpenAI and Anthropic, the WSJ reports. Many U.S. companies have embraced open-weight models, which are generally free for users to modify, to help complete less-sophisticated AI tasks.

• Mounting opposition to AI has gotten to the point where AI companies are now discouraging their rank-and-file workers from wearing corporate logos, a longtime security professional in Silicon Valley tells the Journal. Meanwhile executives at tech companies are bulking up their personal security arrangements amid rising threats of violence.

• Nvidia is partnering with Noetra Corp., a new company backed by a consortium including SoftBank and Sony, to build a 140-megawatt AI factory, part of Japan's effort to accelerate AI development. The country has a goal to capture 30% of the global AI robotics market by 2040, the Journal reports. Set to begin construction in April 2027, the AI factory will feature 13,750 Vera CPUs and 27,500 Rubin GPUs.

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Follow Isabelle Bousquette on LinkedIn, Instagram, X, and TikTok for more behind the scenes on her tech and AI coverage, and lately, her contributions to the WSJ Leadership Institute's new Executive Resilience series, where she's profiling America's top execs about their fitness and wellness habits.

Follow Belle Lin on LinkedIn and X for her latest reporting on enterprise technology and AI.

Steven Rosenbush is chief of the enterprise technology bureau at the WSJ Leadership Institute. He also has a column. You can follow him on LinkedIn.

Tom Loftus is the editor of The Morning Download. He suggests following Isabelle, Belle and Steve on their various social channels. But if you insist, here's his LinkedIn.