Reuters World News - How China built its ‘Manhattan Project’ to rival the West in AI chips

Episode Date: December 18, 2025

Reuters reveals ⁠China has secretly built a prototype chipmaking machine⁠ in a six-year effort insiders compare to the Manhattan Project. President Donald Trump delivers a holiday address boasting of accomplishments as the House fails to rein in his Venezuela aggression.  Warner Bros Discovery rejects Paramount Skydance's $100 billion hostile takeover bid, backing Netflix's offer instead. Plus Nick Reiner, son of director Rob Reiner, appears in court charged with murdering his parents. Recommended Read: AI romance blooms as Japanese woman weds virtual partner of her dreams Listen to Morning Bid podcast ⁠⁠here⁠⁠. Sign up for the Reuters Econ World newsletter ⁠⁠here⁠⁠.  Listen to the Reuters Econ World podcast ⁠⁠here⁠⁠. Visit the Thomson Reuters Privacy Statement for information on our privacy and data protection practices.  You may also visit megaphone.fm/adchoices to opt out of targeted advertising. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, I'm Kim Vinal in Wanganui, New Zealand. It's Thursday, December 18th. Today, Reuters uncovers what analysts are calling China's Manhattan Project, a prototype chipmaker to rival the West in AI. Trump airs his grievances in a holiday speech. And Warner Brothers urges stakeholders to refuse a hostile takeover bid from Paramount Skydance. This is Reuters World News, bringing you Everything you need to know from the front lines in 10 minutes, seven days a week. We start in China. Reuters has learned the country has secretly built a prototype of one of the world's most advanced chip-making machines. A project insiders describe as China's Manhattan Project.

Its technology, Washington, has spent years trying to keep out of Beijing's hands and moves China much closer to producing its own chips to power AI, smartphones and modern weapons. Fannie Potkin in Singapore is the reporter on the story. So this is the first time that China has built a working prototype for this machine, which is the key to producing the world's most advanced chips, and it is years ahead of Western estimates. So how did they make this? China recruited former engineers from a Dutch company that's the only one in the world that makes those machines, and had them revoked, engineer the technology. So we actually learned that some of those engineers were given fake ideas to work in secret,

and they worked with research institutes all across China to develop homegrown alternatives to parts that they couldn't get. So one of our sources told us that the team made a breakthrough once it built a prototype to be as big as possible instead of earlier attempts to replicate the size of the Dutch one. So it's made it huge. It feels nearly an entire factory floor, and it's been a six-year government effort involving thousands of engineers, research centers, development centers all across China with the help and coordination from Huawei who has involved entire teams on this. This is fundamentally about China's push for technological self-sufficiency. What it wants is to protect itself.

It wants the US 100% kicked out of its supply chain. It's about strategic independence. It's not about commercial competition, which is why some of our sources told us that this project is compared to the Manhattan Project because it is seen as so strategically important to China and to China's leadership. The sources spoke on condition they not be identified due to the confidentiality of the project.

Chinese authorities did not respond to requests for comment. Speaking of strategically important to China, we now go to Taiwan and Washington's largest ever arm sale to the island nation. It's an $11 billion package that includes rocket systems, howitzes, anti-tank missiles and drones. Taiwan's defense ministry says the deal is about boosting its ability to carry out asymmetric warfare as China ramps up military pressure on the island, which Beijing claims as its own. In the U.S., efforts to reign in President Donald Trump's aggression toward Venezuela has failed in the House of Representatives.

It comes as speculation mounts that the president is going to launch an attack on the South American nation. President Nicolas Maduro has responded to Trump's order for a blockade on oil tankers by saying Venezuela will continue to trade. The Venezuelan Navy is now escorting some ships through its waters. And the country has requested a UN Security Council, meeting over what Maduro calls ongoing U.S. aggression. The House vote on Venezuela came ahead of a rare evening address from the White House where Trump, in the diplomatic reception room, festooned with holiday decor, boasted

off his accomplishments and blamed his Democratic predecessor for soaring consumer prices. One year ago, our country was dead. We were absolutely dead. The Republican president offered a few new policy initiatives to address, high costs, instead railing about migrant invasions, violent crime and transgender rights. Among the few policy initiatives, Trump announced his administration would send a warrior dividend of $1,776 to over a million service members in the coming week. Over in the Senate, lawmakers have voted to advance a defense spending bill, setting aside a record $900 billion a year.

The 65th consecutive year that Congress has come together across the aisle and across two chambers to send the president a bill designed to sustain and strengthen the national defense. It's aimed at keeping the U.S. competitive with China and Russia. The bill also funds boosting security in Europe and $800 million in military aid for Ukraine, moves seen as a break from President Trump. And in another, House vote, lawmakers have chosen to let the Affordable Care Act subsidy expire. That's a tax credit that helps 24 million Americans lower their health insurance premiums. It means insurance costs

could dramatically rise from January 1st. Democrats tried to force a three-year extension of the subsidies, but failed. Republicans say the program funnels money to insurers, while Democrats warn millions of people could now lose coverage. The Senate isn't expected to revisit the issue or hold the vote until January. Now to markets and BP has appointed its first female CEO Meg O'Neill after the abrupt departure of Mari Orkinclos. Elsewhere, US inflation data is big news on our sister podcast Morning Bid. Here's Mike Dolan. Hi Kim. Yeah, the government data is coming thick and fast. It's like uncorking a bottle. We hadn't data for many weeks

during the government shutdown and now we get a torrent. Today's November consumer price report is top of mind for anyone looking at the macroeconomy at this point including the Fed. But it's also going to be interesting for the White House

and for Donald Trump as well. Last night he was giving us a list of his economic achievements including as he described it, getting prices down. But the inflation rate that's expected today is going to be above 3% and that's back above where it was in February

the month after his inauguration. So work to do, you might think. You can listen to MorningBid wherever you get your podcasts. In a court in Los Angeles, Nick Rayner, the youngest son of Hollywood director, Rob Rayner, has made his first appearance charged with murdering his parents in their Alley home. The 32-year-old appeared wearing a blue protective vest

and did not enter a plea. If convicted, Nick Rainer faces life in prison or the death penalty. The hunt for the gunman who killed two Brown University students has entered its fifth day, and there's no indication that authorities have grown closer to identifying the suspect. Providence police chief, Oscar Perez, said of the killer on Wednesday, he could be anywhere. Warner Brothers' discovery has rejected Paramount Skydances

100 billion-dollar hostile takeover bid, calling it illusory and accusing Paramount of misleading shareholders about financing. The board says Netflix's offer, a cash-and-stock deal, which amounts to just over 70 billion, is binding and far less risky. Business of Entertainment reporter, Don Chimilesky, says, as Warner Brothers shareholders have the final say, as far as Paramount is concerned, there's still time. Paramount issued a statement saying, We're proceeding ahead with our offer. We disagree with the conclusions of Warner Brothers Board. We are offering $30 cash.

Our funding is guaranteed. We think we have a superior offer. And that, by the way, the winning bidder Netflix is going to be in for more regulatory woes. Paramount has a time period where it's $30 share offer lapses. That's on January 8th. Meanwhile, Warner Brothers shareholders and Netflix's shareholders have a say in the matter. publicly traded companies. Both of those companies will have to publish proxies, describing the nature of the transaction fully to shareholders and giving them an opportunity

to vote, yay or nay. That's likely to happen next year. And for today's recommended read, we travel to Japan, where AI romance has bloomed and a woman has wed the virtual partner of her dreams. There's a link to that in the description. For more on any of the stories from today, check out Reuters.com or the Reuters app. Don't forget to follow us on your favourite podcast player. If you're listening on a smart speaker, just ask for the latest news from Reuters seven days a week. We'll be back tomorrow with our daily headline show.