Hello, this is Kenji in Hong Kong.

Gaza is about 8,000 km away from here, but the impact of the war there is being felt here and throughout the region.

The potential escalation of violence is dampening investors' appetite for risk, as reflected in major stock indexes, such as the increasingly jittery Hang Seng and CSI 300.

The Chinese economy grew faster than expected in the July-September quarter, but that did little to prop up confidence, as the outbreak of the Israeli-Hamas war has only added to U.S.-China tensions and deepened rifts in the fragile geopolitical landscape. Jamie Dimon, CEO of JPMorgan Chase, warned last Friday: "This may be the most dangerous time the world has seen in decades."

The geopolitical divide was clearly illustrated this week, as Chinese President Xi Jinping hosted an event to commemorate the 10th anniversary of his pet project, the Belt and Road Initiative. Russian President Vladimir Putin was among the foreign, mostly non-Western, leaders who attended. Xi and Putin vowed to further enhance their "intimate and effective" cooperation, as economic ties between their countries have broadened significantly since Moscow's invasion of Ukraine and Beijing's implicit support of that action.

While the two were shaking hands in Beijing, President Joe Biden landed in Tel Aviv. The visit was another sign of U.S. support for Israel, as China and Russia seem to be standing on the other side of the conflict.

The tensions unfolding on the global stage are inevitably hitting the tech industry, as Morris Chang warned in a rare public appearance on Saturday. In the words of the founder of Taiwan Semiconductor Manufacturing Co. (TSMC), the only priority now is national security.

Taiwan's chip godfather speaks

TSMC founder Morris Chang's latest assessment of the state of the global tech industry was both gloomy and crystal clear.

"In the semiconductor space, there is no globalization anymore; there is no free trade anymore," Chang said. "The priority is national security only. I see this global competition going on."

Nikkei Asia's chief tech correspondent Cheng Ting-Fang went to the northwestern Taiwanese city of Hsinchu to hear the 92-year-old speak at TSMC's annual sports day event on Oct. 14.

Chang said U.S. competitor Intel was in a position to take advantage of Washington's policy of boosting the domestic tech industry to counter China. At the same time, TSMC is seeking permanent approval from American authorities to continue exporting chipmaking equipment to its factory in Nanjing, China.

These moves come shortly after Huawei's surprise release of a 5G-capable smartphone, which triggered a swift response from Washington. Just when Xi was entertaining Putin and his guests, the U.S. Commerce Department unveiled a new round of export restrictions to curb China's access to advanced artificial intelligence chips and cutting-edge semiconductor production equipment.

Independent and expansion-minded

Four months ago, Sequoia Capital, one of the world's most prolific venture capital investors, announced it was hiving off its China business into an independent entity.

Now Neil Shen, the billionaire boss of HongShan -- as the Chinese business is now known -- is plotting a global expansion as a slowdown in the domestic economy pushes it overseas, write the Financial Times' Eleanor Olcott, Mercedes Ruehl, Tabby Kinder and George Hammond.

Shen made his name with early bets on TikTok parent ByteDance and ecommerce giants Alibaba and Meituan. Geopolitical tensions between the U.S. and China, however, have made it increasingly difficult for American companies to invest in semiconductors and artificial intelligence sectors in China.

He raised $9 billion across four funds last year, including from U.S. investors, defying a slowdown in fundraising for China-focused funds.

But a depressed tech environment following a bruising regulatory crackdown, a weak listings market and a slowing domestic economy have turned Shen's attention overseas.

The global push could see HongShan invest in foreign companies targeting the Chinese market or those founded by overseas Chinese entrepreneurs.

Standing with startups

A group of global venture capitalists has responded to the war in the Middle East by voicing solidarity with Israel and its startup community. In an open letter, close to 800 firms -- including several from Asia -- vowed to "support and engage with Israeli startups, entrepreneurs, and investors as they navigate through these challenging times."

This reflects Israel's emerging position as a prominent tech hub, attracting over $3.3 billion in venture capital investments this year as of Oct. 10, according to data provided by PitchBook. Most of the VCs are from the U.S., but more and more Asian names are becoming active in the country as well, Nikkei Asia's Silicon Valley correspondent Yifan Yu reports.

In a ranking of deal counts this year, four out of the top five Asian funds active in Israel are Singaporean.

Wood you believe it?

In this Nikkei Film, a team of reporters delves into a new wood-based manufacturing material that is both five times stronger and five times lighter than steel.
The material is known as cellulose nanofiber (CNF). Basically a piece of wood is broken down to the nano-level -- a billionth of a meter -- and molded into various shapes by mixing it with polypropylene.

Japan's Yamaha Motors spent seven years studying the material and has recently started using it for the engine covers on its latest watercraft. This is thought to be the first instance in the world of cellulose nanofiber being used for mass-produced transport vehicles. CNF is expected to reduce carbon emissions in the supply chain and make recycling easier than it is with conventional materials.

Cost remains the major issue, but, as the report shows, there are hopes of overcoming this hurdle as well. Other industrial applications, such as automobile bodies, are on the horizon, which could help the cost come down more if production can be scaled up.