Bottom line: Qualcomm and Meizu are likely to reach a new licensing agreement after the former sued the latter, pressuring Meizu’s profits, while Taipei will reach a compromise with local chip makers that would allow mainland investment in the sector.
Qualcomm sues Meizu over chip license
Two high-tech chip stories are in the headlines today, reflecting the complex dynamics now taking place in the market between China and the rest of the world. In both cases, the common theme is that China wants to build up its own manufacturing base for high-tech chips that power everything from cars to smartphones and home appliances. It’s already the world’s biggest consumers of such chips, since it manufactures many of those devices. But it doesn’t design or produce most of the actual chips, which is an extremely high-tech business that also carries high profit margins. Read Full Post…
The following press releases and news reports about China companies were carried on June 25. To view a full article or story, click on the link next to the headline.
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PBOC to Study Alibaba’s (NYSE: BABA) Shadow Banking Activities, Zhou Says (English article)
MediaTek (Taipei: 2454) Calls on Taiwan to Ease Limits on Investment from China (Chinese article)
MIIT Says Licensed Non-Telcos Allowed to Provide Free Voice Service (Chinese article)
Qualcomm (Nasdaq: QCOM) Sues Meizu for Patent Infringement (Chinese article)
SMIC (HKEx: 981) to Buy 70 Pct of Italy’s LFoundry for 49 Mln Euros (HKEx announcement)
Bottom line: Unigroup’s aim of building a telecoms and memory chip giant through strategic tie-ups and plant construction could provide challenges for global leaders like Qualcomm and Samsung.
Unigroup affiliate eyes new chip factory
Tsinghua Unigroup has leaped from obscurity to become a major headline grabber over the last 2 years, by snapping up a series of global and domestic assets aimed at building a Chinese chip maker that could someday rival the likes of Qualcomm (Nasdaq: QCOM) and Intel (Nasdaq: INTC). That spending binge continues this week with 2 new headlines, led by comments from Unigroup’s top executive saying he would consider a bid for Taiwan’s MediaTek (Taipei: 2454), one of world’s top makers of chips used in smartphones. In the other headline, a China-listed Unigroup affiliate has just said it plans to raise up to 80 billion yuan ($12.7 billion) to build new chip plants.
All of this comes just a week after Unigroup announced another $600 million deal to purchase a quarter of Taiwan’s Powertech (Taipei: 6239), which engages in the relatively low-end business of test and assembly services for microchips. (previous post) These latest headlines are the clearest indication yet that Unigroup and its affiliates have strong backing from Beijing. I say that because most of the funds being raised in a newly announced private placement by Tongfang Guoxin Electronics (Shenzhen: 002049) are coming from state-run sources. Read Full Post…
China has developed a sudden appetite for global microchip makers, with the latest reports saying several Chinese suitors are pursuing a purchase of the telecoms chip business of US-based MarvellTechnology (Nasdaq: MRVL). This kind of consolidation is sorely needed in the global microchip sector, especially in the telecoms area, where many smaller companies are having trouble competing with global titans Qualcomm (Nasdaq: QCOM) and Taiwan-based MediaTek (Taipei: 2454).
An interesting twist to this story has seen Chinese state-backed firms emerge as some of the main consolidators in this trend, reflecting Beijing’s desire to build up a local chip-making sector. Despite years of trying and billions of dollars in investment, China has yet to find success in building a homegrown chip giant that can challenge big global names like Qualcomm, Intel (Nasdaq: INTC) and Taiwan’s TSMC (Taipei: 2330). Read Full Post…
Bottom line: The presence of the CEOs of Microsoft and Intel at a Lenovo tech fest in Beijing represent the struggles that all 3 former PC giants are facing, and how each is looking to China in a bid to reverse its slide.
Lenovo, Microsoft, Intel CEOs share stage in Beijing
It’s not often that anyone uses the term Wintel anymore, which refers to the duopoly of Microsoft’s (Nasdaq: MSFT) Windows operating system (OS) and central microprocessing chips from Intel (Nasdaq: INTC) that dominated the computing world for decades. But Wintel was center stage this week in Beijing, in a rare case where the CEOs of both Microsoft and Intel shared the stage with the CEO of Lenovo (HKEx: 992), the world’s largest PC maker, which was holding a bash to launch a wide range of new products.
Lenovo has been steadily hyping this event that finally took place on Thursday, where it unveiled a wide range of new products like a dual-screen smart watch and laser projector smartphone, all of which looked interesting but not too exceptional. I wasn’t planning on writing about the event at all for that reason, until I spotted the photo featuring Lenovo CEO Yang Yuanqing taking a selfie of himself with Microsoft CEO Satya Nadella and Intel CEO Brian Krzanich at the Lenovo Tech World event in Beijing. Read Full Post…
Bottom line: The NDRC should force Qualcomm to change some of its licensing practices but not force it to lower prices in its upcoming antitrust settlement against the company.
Qualcomm judgment coming soon
All eyes will be on China’s anti-monopoly regulator in the days ahead, when it’s expected to rule in a case involving the pricing and licensing policies of global smartphone chip leader Qualcomm (Nasdaq: QCOM). The case is the latest in a string of recent similar antitrust probes by Beijing against major companies. But it’s also quite different because it involves licensing practices for proprietary technology, which aren’t typically included in the conventional definition of monopolies. Read Full Post…
Bottom line: Intel’s new Chengdu investment is the latest step in its bid to find a market for its mobile chips, by working with China to create a major domestic designer of mobile device chips.
Intel in major upgrade of Chengdu plant
Global tech leader Intel (Nasdaq: INTC) is showing growing signs of placing its bets on China, with word that it’s planning a major upgrade at one of its 2 Chinese chip plants in the interior city of Chengdu. This latest move comes just 2 months after Intel announced another similar-sized investment aimed at consolidating China’s wireless chip sector, leading me to suspect that these 2 moves could be related. When the final picture becomes clearer, I expect we could see similar upgrades also occur at Intel’s newer plant in the northeast city of Dalian, with China poised to become a major center for the company’s belated push into wireless chips. Read Full Post…
A significant move of consolidation occurred in China’s fragmented microchip design sector last week, when global leader Intel (Nasdaq: INTC) purchased a strategic minority stake in a Chinese company formed through the recent combination of 2 midsized players. The step will bring together domestic smartphone chip designers RDA Microelectronics and Spreadtrum, with Intel’s huge financial resources, R&D muscle and global sales network. Read Full Post…
A headline this morning about a potential new China smartphone chip tie-up for Intel (Nasdaq: INTC) made me realize that this company that once ruled the global semiconductor market has been rapidly losing relevance these last few years. I can remember a time not long ago when finding news about Intel was a huge achievement for any reporter, as the company dominated the market for chips used to power most of the world’s PCs. Nowadays, Intel can’t even seem to attract the attention of China’s anti-trust regulators, who are conducting a series of high-profile probes on top computing names like Microsoft (Nasdaq: MSFT) and Qualcomm (Nasdaq: QCOM). Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 15. To view a full article or story, click on the link next to the headline.
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China Mobile (HKEx: 941) Cuts $2 Bln From Phone Subsidy Budget (English article)
Chinese Group Proposes To Buy US Chipmaker OmniVision (English article)
Leading cellphone chipmaker Qualcomm (Nasdaq: QCOM) has become the latest foreign firm to encounter resistance in China following the Edward Snowden spying scandal, as Beijing shows it can also play the national security card to the detriment of big western tech firms. But in this case, the US chip giant is not only seeing sales to its Chinese customers drop, but is also facing scrutiny from China’s powerful state planner on allegations of monopolistic behavior. Both of these developments show that Beijing is quite capable of using the national security pretext to play tit-for-tat games with Washington, potentially costing US tech firms billions of dollars in lost China sales. Read Full Post…
