Telecoms

SMARTPHONES: Is Apple’s Price Cutting Enough to Salvage China?

Bottom line: Apple will continue discounting its iPhones in China to stop its sinking market share, which could slow but not halt its decline in the face of growing competition from the likes of Huawei.

Apple’s retail partners pare back China iPhone prices

Following a break of a month, I’m returning to my writer’s seat with discussion of the China outlook for tech giant Apple (Nasdaq: AAPL), which has turned to a very un-Apple-like strategy of discounting its products in the world’s largest smartphone market. China has been a fickle place for Apple, at one point accounting for nearly a quarter of the company’s global sales, as brand-conscious Chinese paid big premiums for trendy iPhones. That’s hardly the case now, with China accounting for just 15.6 percent of Apple’s total sales in its last quarterly report. Read Full Post…

TELECOMS: Huawei Lands at Center of US-China Trade War

Bottom line: The US case against Huawei’s CFO is likely to end with her release on technical grounds as part of a deal between the US and China, though the company could still face punishment for illegally selling US products to Iran.

Huawei CFO detained for violating US anti-Iran sanctions

It’s a few days old by now, but I wanted to begin the new week by sharing some of my thoughts on the recent blow-up involving telecoms equipment giant Huawei’s CFO, who was detained in Canada at Washington’s request. At this point I mostly want to give my views on the politics behind this story, and also my take on how things are likely to play out.

I’ll start off with the view that this particular story has been a long time in the making, and anyone who thinks it was cooked up by Donald Trump as an excuse to wring concessions out of China is mistaken. I’ll also give my view that this kind of come-uppance for a corporate giant like Huawei is relatively deserved, since Chinese companies have basically thrived and grown as quickly as they have by frequently thumbing their noses at the law. Read Full Post…

SMARTPHONES: Huawei Takes New Look at India

Bottom line: Huawei’s new push into India looks like a smart and well-timed move to take advantage of the country’s emerging middle class, and could help it take the global smartphone crown by the end of next year.

Huawei takes aim at India

As it creeps up on its goal of becoming the world’s largest smartphone maker, the controversial Huawei appears to finally be waking up to the potential of the fast-growing India market. That’s the key takeaway from some Indian media reports last week, which quoted a company executive saying Huawei is planning a major push into an India market that it has largely ignored up until now.

The bigger theme in this particular story is that India is quickly emerging as a market not to be taken lightly on the smartphone scene. Global leader Samsung (Seoul: 005930) learned that early on, and until recently was the market leader before getting eclipsed by China’s Xiaomi (HKEx: 1810). I was quite surprised when doing some quick research for this post to learn that India actually passed the US to become the world’s second largest smartphone market in the third quarter, behind only China. Read Full Post…

CHIPS: China Chipmaker Lands in Eye of Trump Trade War

Bottom line: Washington’s punishment of a Chinese chipmaker accused of stealing from Micron Technology is part of a savvy targeted approach by the Trump administration aimed at spotlighting illegal business practices by Chinese tech firms.

Trump punishes China chipmaker for IP theft

I thought I’d begin this Monday with a wrap and look at what’s ahead for a Chinese chipmaker called Jinhua, which fell squarely in the crosshairs of Donald Trump’s trade war with Beijing in a series of breakneck developments last week. This particular case seems to be part of a growing pattern that is seeing Trump pick his battles one at a time, at least when it comes to handling Chinese technology companies.

We’ll review the details on this latest case involving Jinhua and its dispute with US chip giant Micron Technology (Nasdaq: MU) shortly. But the bigger picture is that Trump has accused Chinese companies of stealing US intellectual property and has made that issue central in his current push for a trade deal. Previously US companies with such complaints could only seek assistance from the courts, mostly in the US and EU, since few believe the Chinese court system could handle such cases effectively and objectively. But the government can obviously take action much more quickly and effectively, as Trump is showing with his latest actions. Read Full Post…

HARDWARE: Is China Spying on Western Hardware?

Bottom line: A Bloomberg report on Chinese government spying microchips in hardware used by Apple, Amazon and others may be flawed, but highlights the potential for such spying due to China’s important place in the global supply chain.

Controversy builds over story of China spyware

As I return to blogging after a couple weeks absence, I wanted to weigh in on an explosive story that ran last week in Bloomberg about tiny spying chips that had been secretly loaded by China’s military onto globally used motherboards. Quite a bit has happened since the original story’s publication (English article), which said that tiny custom-made chips developed by the People’s Liberation Army had secretly been installed into motherboards assembled in China by US hardware maker Supermicro (OTC: SMCI).

The story, which went out of its way to quote quite a few unnamed sources to bolster its credibility, went on to say that those motherboards had been used in servers used by a wide range of companies and government agencies, including Apple (Nasdaq: AAPL) and Amazon (Nasdaq: AMZN). Everyone initially applauded the ground-breaking report, which appeared to show how China could easily insert itself into the global high-tech complex by taking advantage of its important place in the hardware supply chain. Read Full Post…

IPOs: China Tower, BeiGene IPOs Fail to Excite in HK

Bottom line: Lackluster debuts for two of this year’s largest China IPOs in Hong Kong points to a cresting of the current new listing wave, with sentiment starting to wane as investor appetite for new choices gets satisfied.

China Tower, BeiGene in lackluster debuts

Two of the year’s biggest China IPOs have formally launched in Hong Kong this week, each with a different story and accompanying moral to tell. The larger of those, and the world’s largest IPO in the last two years, has seen state-run cellular tower operator China Tower (HKEx: 0788) raise nearly $8 billion, while the second has seen biotech firm BeiGene (HKEx: 6160; Nasdaq: BGNE) raise a smaller but still significant sum of nearly $1 billion.

These two listings are about as different as you could possibly ask for, at least in terms of the companies’ backgrounds. On the one hand China Tower is a big state-owned behemoth that was formed by the telecoms regulator a few tears ago by pooling the cellular toward assets of China’s big three telcos. At the other end of the spectrum, BeiGene is a privately-backed hotshot that develops biologically-based cancer-fighting drugs. Read Full Post…

SMARTPHONES: Huawei Rolls Past Apple

Bottom line: Huawei could challenge Samsung for the global smartphone crown in as little as a year, though a potential Achilles heel could be the “outing” of its surging Honor brand that most may not associate with the Chinese parent.

Huawei passes Apple in global smartphone ranks

Smartphone pioneer Apple (Nasdaq: AAPL) has just reported its latest quarterly results, which means that all the data tracking firms can simultaneously release their own industry data showing the latest trends. Those trends show that Apple’s sales were basically flat for in the quarter on a unit basis, even as the bigger story was that the US giant lost its spot as the world’s No. 2 smartphone seller to a surging Huawei during the period.

The big picture is less that Apple is losing market share, and more that Huawei is surging in its march toward market dominance. Part of the reason behind the surge is booming popularity for Huawei’s sub-brand called Honor, which perhaps doesn’t carry the same stigma of the Huawei name. Read Full Post…

CHIPS: China Kills Qualcomm Mega-Merger With Silent Treatment

Bottom line: China used its traditional silent treatment approach to kill Qualcomm’s bid to buy NXP, quite possibly to show its displeasure with recent US trade tensions, but resulting global pressure could forced it to be more transparent in the future.

China kills Qualcomm-NXP deal with silent treatment

We’ll close out the week with my own quick-and-dirty post mortem of the collapsed deal that would have seen telecoms chip maker Qualcomm (Nasdaq: QCOM) purchase Dutch rival NXP (Nasdaq: NXPI) for $44 billion. Put simply, this deal appears to have been killed by China’s classic approach of “kill them with silence.”

But there’s a bit of a postscript this time around, as China’s regulator took the unusual step of actually breaking its silence once the deal was dead. This appears to show that China has learned a lesson from this particular battle, namely that it needs to take a stance on things and explain its decisions, even if people might disagree. That would be quite a break from its old approach of just sticking its head in the sand and pretending like nothing is happening when it makes unpopular decisions.  Read Full Post…

SMARTPHONES: Xiaomi Takes Big Step Into South Korea

Bottom line:  Xiaomi appears to be gaining confidence of investors through moves like its entry into South Korea, but it will take at least another year to prove it really has the savvy to thrive over the longer term.

Xiaomi calls on South Korea

Newly listed smartphone maker Xiaomi (HKEx: 1810) has kept the world guessing these past two weeks with its on-again-off-again performance both on the Hong Kong stock exchange and now in the real world. The former is a reference to its stock, which did quite poorly in the run-up to its trading debut last Monday but has done a U-turn since then and posted some impressive gains.

The latter is a reference to the company’s latest strategic move, which has it launching its low-end smartphones in South Korea. That may not sound like much, since the market is relatively small and Xiaomi already sells its products in more than 70 countries and regions globally. But the symbolic significance is quite large, since South Korea is home to leading global smartphone maker Samsung (Seoul: 005930). Read Full Post…

TRADE: Micron, China Mobile Muddy US-China Trade Tensions

Bottom line: A court order barring Micron Technology from China and Donald Trump’s attempts to keep China Mobile out of the US reflect blurring lines between business and politics in heightening US-China trade tensions.

Fujian court bars Micron sales in China

Two new headlines are showing how trade tensions between the US and China are spilling over into the high-tech realm, while also reflecting a certain amount of confusion and twisting of the facts. Leading the somewhat misleading headlines is an item that has U.S. memory chip giant Micron (Nasdaq: MU) suddenly being shut out of China for a number of its products due to a patent dispute. The other headline has Donald Trump saying that leading Chinese telco China Mobile (HKEx: 941; NYSE: CHL) shouldn’t be allowed to offer services in the US due to national security concerns.

The Micron story is being spun by some media as having a US-China trade tensions angle, when really that’s not the case and it’s just a typical patent dispute. The same could be said for the much larger case involving a US ban on telecoms equipment maker ZTE (HKEx: 763; Shenzhen: 000063), which is being spun as part of US-China trade tensions, even though ZTE is being punished for violating much older US sanctions against sales to Iran. China Mobile, on the other hand, is clearly a Trump pet project and does reflect his protectionist tendencies. Read Full Post…

TELECOM: What’s Next After ZTE Resolution of ZTE Case

Bottom line: ZTE will experience fallout from its run-in with Washington through much of next year, and could see an even longer-term hit to its global business as international customers start to look for alternate suppliers.

ZTE off life support, but major challenges remain

The saga of embattled smartphone and telecoms equipment maker ZTE (HKEx: 763; Shenzhen: 00006) appears to be nearing an end, as trading resumed in the company’s stock following an official settlement with Washington over  illegal sales to Iran. The ending to this story certainly came with a big climax, with ZTE shares plunging by 42 percent in Hong Kong on the first day after trading resumed.

They fell by a smaller 10 percent in China on Wednesday, but only because China places a 10 percent limit on daily rises and declines in individual stock prices. Not surprisingly, the stock was down another 10 percent in China on its second day of trade, while the Hong Kong shares did a dead cat bounce and were up slightly. Read Full Post…