Arvind’s Newsletter- Weekend edition

1.Nvidia, Reliance Industries join forces to build AI computing infra

American chip behemoth Nvidia Corp and India’s retail-to-refining giant Reliance Industries unveiled their goal to build a formidable AI computing infrastructure in the country.

Highlighting the tie-up, Jensen Huang, founder and CEO of Nvidia, made a broader appeal: India should focus on “manufacturing” AI, rather than racing to build semiconductor fabs. 

As part of this collaboration, Nvidia will reportedly supply its Blackwell AI processors to power Reliance’s one-gigawatt data center in Jamnagar, Gujarat. The US tech company will also provide its advanced Hopper AI chips to build large-scale data centers, in an expansion led by firms, such as data centre provider Yotta Data Services and Tata Communications. 

Infosys, TCS, and Wipro, all titans of India’s IT industry, will help deploy custom AI solutions using Nvidia’s enterprise platform, while Tech Mahindra shall tap into its new Hindi-language AI model to develop Indus 2.0.

Nvidia CEO Jensen Huang said that instead of focusing on manufacturing chips, India should harness its data and energy resources to become an AI export powerhouse: “Other countries have been manufacturing chips… for a long time. No one manufacturers intelligence at the moment.

2.HSBC flash India composite PMI rises to 58.6 in Oct; job creation improves

HSBC's flash India Composite Purchasing Managers' Index (PMI) in October rose from a 10-month low of 58.3 in September to 58.6, signalling a slight rebound in the private sector. According to S&P Global's survey, manufacturing demand strengthened, driving job creation to its fastest pace since February 2006.

The index has remained above the 50-mark, separating growth from contraction, for 39 months, The Business Standard reported. Manufacturers outpaced service providers in output and sales growth, while input costs and prices increased faster. Final PMI figures will be released in early November.

3.HSBC Bank’s east-west overhaul reignites break-up debate

HSBC chief executive Georges Elhedery’s planned overhaul of the bank has reignited debate about a break-up of the group, with one top 20 investor saying it should consider a total split between operations in the east and west.

Rajiv Jain, founder of GQG Partners, which owns an almost $800mn stake in HSBC, said the “direction” for the bank “should really be an eventual break-up”, an idea that was championed by top shareholder Ping An and shot down at an investor vote last year.

HSBC, which is headquartered in London but generates the bulk of its profits in Asia, on Tuesday announced what it described as a “simpler” structure that will see it go from three divisions and five geographic regions to four divisions and two geographic regions.

Under Elhedery’s plan, Hong Kong and the UK will become standalone units. Business in the remaining two divisions — corporate and institutional banking, and international wealth and premier banking — will be split between “eastern” and “western” markets. Although Elhedery insisted that the bank’s strategic priorities had not changed, the division drew immediate comparison to the demands made by Ping An two years ago, when the bank’s largest shareholder called for HSBC to split off its Asia operations.

4.The myth of lone genius: How innovation clusters drive progress

Many cultures have the archetype of the lone genius. These are the hermitic scholars who isolate themselves from worldly concerns to focus on their studies, inventions, and arcane tomes.

The thing is, this archetype is more myth and storytelling convenience than reality. Yes, there are examples of great minds who did their best work in solitude, but innovation tends to prefer groups of people sharing, vetting, and critiquing each other’s ideas through shared social networks.

Innovation clusters are a modern take on this historic trend. These hotbeds of creative businesses produce new technologies at fantastic rates. These businesses attract money, talent, and credentialed workers, which attracts more new industries to the area. Why they work and how they operate can shed light on the nature of innovation and offer a blueprint for a more inventive future.

5.Are bosses right to insist that workers return to the office? The Economist

Amazon is not the only big company that has clamped down on remote work. Goldman Sachs, a bank, pwc, a professional-services firm, and Stellantis, a carmaker, are among those that have raised the number of days they require their employees to come into the office. More are set to follow. A recent global survey by kpmg, another professional-services firm, found that four-fifths of bosses expect a return to the office five days a week within three years.

Such mandates may already be starting to show up in aggregate figures. Every month wfh Research, a group of academics, asks Americans how many days they were able to work from home in the past week. In September around 28% of their working days were at home, down about two percentage points from the year before. The change in some industries is more dramatic: the portion of employees in tech, financial and professional-services firms who work at least some of the time from home has fallen by an average of ten percentage points.

Mandating a return to the office tends to irritate staff. A survey by Gartner, a research firm, found that a third of executives and a fifth of other employees would leave their jobs if they were forced back to the office. For some companies, that may be the point. Many tech firms and consultancies hired too many workers during the covid-19 pandemic boom. Getting some of them to leave voluntarily would reduce severance costs—though it also risks pushing talented employees to join rivals.

The more likely explanation is that many bosses believe having employees in the office leads to better performance. Plenty of studies now suggest that remote employees are less productive. One paper that looked at data-entry workers in India found that those consistently working from home were 18% less productive than those consistently in the office.

There is less evidence, though, that letting staff work from home a couple of days a week in a hybrid arrangement has a negative effect on performance. A randomised control trial at a Chinese online travel agency by Nick Bloom of Stanford University and two other researchers found no discernible difference in performance between hybrid workers and those who toiled entirely from the office. Read on.

6.As Taleb sees black swan for dollar; these three threats can shatter the global economy

Statistician and former options trader, Nassim Nicholas Taleb, also the author of The Black Swan, says the biggest mistake of 21st century is the US confiscating Russia’s dollar assets. This has presented a peculiar tail risk wherein investors are beginning to lose confidence in the dollar, which could be source of global instability. Rising gold holdings by global central banks, increasing usage of the Chinese renminbi in international transactions and Russia contemplating a new global payment system are three emerging threats to the dollar as the debate of de-dollarisation revives.

De-dollarisation entails a significant reduction in the use of dollars in world trade and financial transactions, as well as its storage in the form of countries buying the US debt.