News about High Tech industry in China

SMARTPHONES: Coolpad Finds New Suitor, as LeEco Retreats

By newsdoug on October 19, 2017

Bottom line: LeEco is likely to sell its stake in Coolpad in the next six months, and new investor Centralcon could emerge as the buyer with a goal of trying to turn the company around.

Coolpad finds new suitor

A potential white knight has stepped forward to provide some funds for struggling smartphone maker Coolpad (HKEx: 2369), in a fresh sign that controlling stakeholder LeEco (Shenzhen: 300104) may be preparing to dump the company as part of its protracted reorganization. The amount of the fund-raising is relatively small at HK$582 million ($75 million), though it could be enough to help Coolpad figure out what it wants to do next.

The more interesting question is whether this signals that LeEco is planning to dump Coolpad and the smartphone business in general, which I’ve been predicting for a while since the ousting of LeEco founder Jia Yueting from the company in July. Smartphones was one of the many businesses that Jia entered at the height of his expansion euphoria, and seems like a likely candidate to be jettisoned as the company’s new managers try to right this foundering ship. Read Full Post…

SMARTPHONES: ZTE Sees Double With New Smartphone

By newsdoug on October 18, 2017

Bottom line: ZTE’s new dual-screen smartphone will turn some heads and raise the company’s profile briefly due to the novelty factor, but the effect will quickly fade due to lack of practical uses.

You can’t blame ’em for trying. That’s the first thing that came to mind when I saw the announcement and some photos of a new foldable ZTE (HKEx: 763; Shenzhen: 000063) smartphone with two screens. This clearly looks like the company’s attempt to find new relevance in the cutthroat smartphone market, where phones increasingly look and feel the same. The move seems to be part of a recent trend that says “give them more space” on their screen, which others are trying to do by creating phones whose entire face is taken up by the screen.

I’m not really a gadget person, but from a business perspective I do have to credit ZTE for trying to find something new to distinguish itself from the pack. The company was one of China’s earliest success stories in the cellphone and later the smartphone space. But a big portion of its products still go to US wireless carriers who stamp their own brand on the phones and give little or no space to their Chinese supplier. Read Full Post…

IPOs: Tencent Literature IPO Nears Take-Off, But Will It Read?

By newsdoug on October 10, 2017

Bottom line: China Reading’s IPO should be well received when it launches its road show as soon next week, and the shares should price and debut strongly on its good profit margins and growth prospects.

China Reading set to launch IPO road show

Another hot IPO with ties to one of China’s leading Internet firms is nearing the starting line, with word that the highly anticipated listing for Tencent’s (HKEx: 700) online literature unit is finally going to kick off shortly. That means we will finally get to see some financials for China Reading, whose plans for an $800 million IPO have been discussed since as early as February.

In fact, this particular IPO has been discussed for far longer than that, since the company has gone through a number of forms in its long march to market. I’ll recount that shortly, but will begin with some quick thoughts on this offering’s chances for success. We’ve already seen in this burgeoning IPO season that having a pedigree from a name like Tencent doesn’t guarantee success, as was the case with Alibaba-backed logistics firm Best Inc. (NYSE: BSTI). That IPO priced miserably due to stiff competition in the logistics space, and the stock is only up a modest 6 percent since it started trading in New York. Read Full Post…

PCs: Lenovo Taps Top Managers for Funds, Goes Retro

By newsdoug on October 9, 2017

Bottom line: Lenovo’s new fund raising and roll-out of a retro commemorative ThinkPad 25th anniversary model show the company is focused on short-term fixes rather than the shock therapy it really needs.

With the October 1 Golden Week holiday now in the rear view mirror, we’ll jump back into the latest tech trends with a look at PC giant Lenovo (HKEx: 992), which was in a couple of headlines over the holiday that underscore its ongoing difficulties. The first of those has the company raising $500 million from a group of its core supporters, who are probably the only ones who have faith that this former superstar can right its sinking ship.

The other has the company rolling out a line of retro computers to celebrate the 25th anniversary of its ThinkPad computers, which arguably launched Lenovo on its trajectory that would ultimately take it to the top of the global PC hill. The only problem is that it’s difficult to stay king of the hill for too long in today’s cut-throat high-tech world, and also there’s the fact that PCs aren’t exactly the cutting-edge product they used to be. Read Full Post…

SMARTPHONES: HTC Ties Up With Google, or Does It?

By newsdoug on September 22, 2017

Bottom line: Google’s purchase of HTC’s Pixel assets is a sign of no confidence in HTC’s chances of longer-term survival as an independent smartphone maker.

Google’s HTC purchase: reason for optimism or pessimism

Everyone is giving their two cents about the big new tie-up between Taiwan smartphone maker HTC (Taipei: 2498) and Google (Nasdaq: GOOG), so I figured I’d weigh in as well on this deal that has quite a few threads. From where I sit, the deal marks the latest distress sign coming from an overcrowded smartphone field here in China, even though HTC is technically based in Taiwan.

Equally or even more interesting is the question of whether Google is a white knight riding to HTC’s rescue, or rather trying to protect its own interests from what it sees as a fast-sinking ship. I tend to think the case might be the latter, which I’ll explain shortly, even though both Google and HTC would probably vehemently deny such a conclusion. Read Full Post…

M&A: Cowen, MoneyGram Deals Wait for US Nod, Xinhua Lectures Trump

By newsdoug on September 18, 2017

Bottom line: The US could veto the purchase of brokerage Cowen by a Chinese energy firm, and could also block Ant Financial’s purchase of MoneyGram under tougher scrutiny by the Donald Trump administration.

Just days after President Donald Trump made his first veto of a Chinese deal in the US, two other deals appear to be running into trouble for similar reasons, though it’s too early to call either dead just yet. In both instances, the buyers, Ant Financial and CEFC China Energy, have refiled proposals to regulators for their purchases of two financial services firms, MoneyGram (NYSE: MGI) and Cowen Inc. (Nasdaq: COWN), respectively. Both need approval from the powerful Committee on Foreign Investment in the United States (CFIUS), which reviews all such cross-border deals for national security considerations.

The regulatory stalling of those two deals comes just days after Trump officially killed another deal for a China-backed bid to buy Lattice Semiconductor (Nasdaq: LSCC), (previous post). So now people are trying to draw connections between these developments. Since that veto, China’s official Xinhua news agency has come out with an editorial over the weekend saying Trump is only hurting America by blocking such deals, which are part of the natural ebb and flow of global trade. Read Full Post…

CHIPS: Trump Vetoes Chipmaker Sale, More to Come?

By newsdoug on September 14, 2017

Bottom line: The US is likely to take a tougher stance towards Chinese M&A of politically sensitive companies following Trump’s veto of a major deal, but in such cases will still need to justify the national security risk.

In a move that is sure to make major waves but wasn’t completely unexpected, Donald Trump has made his first big statement on the sale of US high-tech companies to Chinese buyers by formally blocking a relatively large deal that was pending for quite some time. Followers of the space may recognize I’m talking about chipmaker Lattice Semiconductor (Nasdaq: LSCC), which was set to be bought by a China-backed private equity firm in a deal that has dragged on for more than a year.

Some might argue that this marks a big setback for cross-border M&A between China and the US in the high-tech realm, though the decision does seem consistent with what we’ve seen in the past. I’ll recount some of the deals we’ve seen previously vetoed for similar reasons, which usually involves defense applications. Perhaps the major difference here is that Trump has made the first such move quite early in his presidency, which could presage a more aggressive position for national security reviews in future deals. Read Full Post…

SMARTPHONES: Huawei Unseats Apple, Eyes the Cloud

By newsdoug on September 11, 2017

Bottom line: Huawei could overtake Apple as the world’s second largest smartphone seller in the next 1-2 years, while it could also pose a challenge in global cloud services over the next 5 years.

We’ll begin the new week with a couple of items from Huawei that show how the company that began as a telecoms network builder looks set to unseat fading PC giant Lenovo (HKEx: 992) as China’s global leader in consumer tech. The first of those has one research house releasing data that show Huawei’s smartphones surpassed Apple (Nasdaq: AAPL) for two consecutive months in June and July to become the world’s second largest brand. The second has a Huawei executive discussing his plans for the company’s cloud computing services, saying he wants to become a global top 5 player.

The first headline shows that Huawei is not a company to be taken lightly, which means that people should pay close attention to the second headline. In my years of covering Huawei, the company has proven to be quite focused and determined, and pours large amounts of money into product development to make sure it can meet its goals. It focused its early efforts on building traditional telecoms networks, but more recently has moved to enterprise networks and consumer devices like smartphones and notebook computer. Read Full Post…

INTERNET: Google Steps Up Beijing Dance With AI Drive

By newsdoug on September 6, 2017

Bottom line: Google’s campaign to build a China-based artificial intelligence team is at least partly designed to woo Beijing, as part of its broader effort to get permission to open a China-based Google Play app store.

In the latest signal of its move back to China, Internet titan Google (Nasdaq: GOOG) is apparently on a hiring spree in Beijing that looks aimed at building up an artificial intelligence (AI) team in the world’s largest online market. This particular move doesn’t come as a huge surprise, and seems to be part of Google’s recent obsession with the world’s biggest Internet market.

The backstory is that Google quit China seven years ago, at least for its core search business that is the backbone of its operations in other markets, due to a dispute over Beijing’s tough policies requiring all sites to self-police themselves for sensitive content. But over the last two or three years Google has had a change of heart, realizing it really can’t afford to ignore an Internet market that has 750 million users. Read Full Post…

SMARTPHONES: LeEco Mobile Chief Leaves, Ending Jia Era

By newsdoug on August 28, 2017

Bottom line: The rumored departure of LeEco’s mobile chief is likely to be followed by the official closure of its smartphone division and sale of its Coolpad stake by the end of October.

As we approach the first anniversary of the crisis that has seen the rapid demise of LeEco (Shenzhen: 300104), the latest headlines are hinting at the imminent unraveling of the former video superstar’s smartphone business. The headlines I’m referring to say the CEO of LeEco’s mobile division, who has the very un-Chinese looking name of Abulikemu Abulimiti, has left the company.

Like many other things involving LeEco these days, there’s no official confirmation from the company on whether the mobile division chief has really left. Instead, the reports are quoting company insiders, but adding that it’s a bit unclear whether he has actually left or just resigned. That pretty much reflects the state of chaos at LeEco these days, where it’s quite difficult to confirm what exactly is happening inside the company anymore. Read Full Post…

SMARTPHONES: Smartisan Gets New Funding, But From Where?

By newsdoug on August 7, 2017

Bottom line: Smartisan’s new funding and plans to produce 5-6 smartphones a year look like an anomaly in the highly competitive market, and it’s unlikely to survive as a standalone entity over the next 5 years.

I was a bit surprised to read that a clear second-tier smartphone player, the uppity Smartisan, has received 100 million yuan ($147 million) in new funding, as we begin the latest week of summer. I haven’t seen this company’s name or many second-tier players like OnePlus in more than half a year, though their collective names have come up quite a bit in the bigger smartphone numbers.

That’s a reference to the “other” category in the quarterly smartphone figures put out by data tracking firms like IDC, which show that this collective group that includes all names lumped together after the top 5 is rapidly losing share. In IDC’s latest China market data that came out last week, the top 5 vendors, Huawei, Oppo, Vivo, Xiaomi and Apple (Nasdaq: AAPL), collectively controlled 73 percent of the market. “Others”, including the likes of Smartisan, had to divvy up the remaining 26.9 percent. But what was most notably was that 26.9 percent marked a sharp decline from last year, when this group controlled 36.2 percent. Read Full Post…