Bottom line: Huawei’s move into the US smartphone market looks like a logical and necessary step to consolidating its place as a top global brand, but will require years of major investment to succeed.
Huawei to sell smartphones in US
Riding high on strong momentum from the second half of 2015, smartphone maker Huaweiis aiming to fill the last major black hole in its global footprint by entering the US. The new campaign carries special significance for Huawei, since the company was banned from selling its older networking equipment in the US several years back due to national security concerns from Washington.
The move into the US was just one of many topics that Huawei executives discussed at CES, the world’s biggest consumer electronics show taking place this week in Las Vegas. But it was the move the attracted the most attention due to Huawei’s past frustrations with one of the world’s biggest markets for both networking equipment and smartphones. Read Full Post…
Bottom line: Fairchild’s decision to negotiate a potential sale of the company to China Resources looks like a bargaining tactic to force previous suitor ON Semiconductor to sweeten its earlier bid.
Fairchild opens sale talks with China Resources
In a move that comes as a bit of a surprise, high-tech chip maker Fairchild Semiconductor (NYSE: FCS) has indicated it is open to selling itself to a Chinese buyer after previously appearing to reject an unsolicited bid from China Resources. The move comes as China looks to beef up its chip-making capabilities through an M&A campaign aimed at buying up companies and their technology in the consolidating global semiconductor market.
Fairchild had previously agreed to be purchased by US rival ON Semiconductor (Nasdaq: ON), and last month it rejected an unsolicited bid from a group that was reportedly led by China Resources, one of China’s oldest and largest conglomerates. So this change of tune could indicate Fairchild is open to acquisition by a Chinese buyer. But it could also be a bargaining ploy to get a higher price from ON. Read Full Post…
Bottom line: ZTE’s new Suning tie-up presages an aggressive push into the China smartphone market this year, potentially helping it reach an aggressive target for 20 percent annual revenue growth over the next 5 years.
Suning buys into Nubia
Following a painful restructuring that wrapped up more than a year ago, telecoms stalwart ZTE (HKEx: 763; Shenzhen: 0000063) is heading into the New Year with a major new partnership with retailing giant Suning (Shenzhen: 000063), and a medium-term revenue target that looks quite aggressive. The signals reflect a new level of confidence at ZTE, which has returned to the profit column and is aggressively building up its smartphone business as a key plank for its future growth.
The smartphone business lies at the heart of the new tie up with Suning, which is buying a major stake in ZTE’s separately-run upscale Nubia brand. The bigger picture has a top ZTE official forecasting the company’s revenue will hit 200 billion yuan ($31 billion) by 2020, a 150 percent increase over 2014 levels. Read Full Post…
Bottom line: LeTV will announce the launch of a new smart TV and video services in the US during the Consumer Electronics Show in last Vegas next month, but the foray will end in failure due to inexperience and fierce competition.
LeTV goes to CES
China’s LeTV (Shenzhen: 300104) looks set to launch its trademark smart TVs and affiliated video service in the US, a move that would make it the first Chinese player to enter a major western market. In this case LeTV is making lots of noises that point to such a move, though it hasn’t officially announced anything just yet.
The company is preparing to attend the massive Consumer Electronics Show (CES) in Las Vegas next month for the first time, providing the perfect venue for such an announcement. The other major signals for such a launch come from LeTV’s own recently launched US online mall, lemall.com/us, whose product offerings include a $799 smart TV that is currently not available but “coming soon”. Read Full Post…
Bottom line: A corruption probe against the head of Unicom could be the latest signal that Beijing plans to merge the company with China Telecom in the next 2 years to create a serious rival to China Mobile.
Corruption probe nets Unicom chief
China’s 2-year-old corruption crackdown has finally made the inevitable move into the nation’s telecoms sector, with word that the newly named head of Chinia Unicom(HKEx: 763; NYSE: CHU) is being probed for corruption. But while many are speculating that Chang Xiaobing is just the latest victim in the anti-corruption campaign, the timing of his downfall could also be the newest signal of a coming overhaul for China’s big state-run 3 telcos.
Industry watchers will recall that Chang assumed his position at the head of Unicom just 4 months ago, in a slightly bizarre but also somewhat typical case that saw him swap positions with the then-head of Unicom who is now the chief of rival China Telecom (HKEx: 728; NYSE: CHA). (previous post) That led to buzz that the telecoms regulator might be preparing the consolidate Unicom and China Telecom into a single company, a move that would have reduced the current field of 3 major telcos to just 2. Read Full Post…
It’s official: the fast-rising Huawei has formally passed the 100 million mark for smartphone sales this year, cementing its place as the world’s undisputed third largest player behind only Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930). In a relatively unusual move for this low-profile company, Huawei is also trumpeting the milestone in a formal press release and forecasting more strong growth for next year.
Huawei has been China’s biggest success story to date in the young smartphone space, gaining rapid momentum over a crowded field of domestic rivals that includes Lenovo (HKEx: 992), ZTE (HKEx: 763; Shenzhen: 000063) and smaller names like Alibaba-backed Meizu. But the company should also carefully watch the case of the stumbling Xiaomi, which was being called a homegrown Chinese version of Apple before it began its recent rapid fall from grace. Read Full Post…
Bottom line: OnePlus and Smartisan are 2 brands that could be most at risk for closure or acquisition in a looming smartphone shakeup that will intensify next year and claim at least 2-3 mid-sized and smaller players.
Less than 2 weeks after he talked about a looming shakeup in China’s overheated smartphone sector, OnePlus co-founder Carl Pei is having to explain layoffs at his company, and also fend off rumors of a takeover bid. At the same time, more signs of Pei’s predicted shakeup are coming from Smartisan, another newer smartphone play, whose manufacturing partner for its new model has reportedly gone bankrupt.
Both OnePlus and Smartisan fit the profile of the kind of company that Pei said would be most at risk in the coming shakeup. Each is relatively young, and both are pure smartphone plays without any other operating history. That means they have few other resources to fall back on as their profits evaporate in the unending price wars gripping China’s smartphone market. Read Full Post…
Bottom line: Next year’s likely election of a Taiwan president from its current opposition party could delay many of Tsinghua Unigroup’s pending Taiwan acquisitions, crimping its plans to build a Chinese chip giant using Taiwanese technology.
Unigroup buys into 2 more Taiwan chip firms
Barely a week seems to pass without news of a major new acquisition by Tsinghua Unigroup, the Beijing-backed company that suddenly seems intent on building a global chip giant able to challenge worldwide leaders like Intel (NYSE: INTC), TSMC (Taipei: 2330) and Samsung (Seoul: 005930). The company is once again in the headlines as we head into year-end, this time in new deals to buy stakes in 2 Taiwanese chip firms for a combined $2.1 billion.
These latest deals follow another major purchase in Taiwan last month, making it increasingly clear that Unigroup hopes to combine its own financial resources and government connections with Taiwan’s high-tech expertise to realize its chip-making dreams. That plan looks good in principle, since China and Taiwan are highly complementary and also share many cultural elements. But the plan could run into big problems next year, as Taiwan’s political landscape looks set for major change that could see the current China-friendly regime replaced with a more conservative government. Read Full Post…
Bottom line: New remarks by Taiwan’s likely new president indicate a flurry of recent new cross-Strait chip tie-ups could be delayed, but most are likely to ultimately get approved in a new era of more pragmatic cross-Strait relations.
Taiwan presidential candidate cautious on new China chip tie-ups
In a move that I predicted earlier this week, Taiwan’s likely next president is pouring cold water on a nascent series of tie-ups between its fragmented high-tech chip industry and cash-rich partners from mainland China. The latest reports cite Tsai Ing-wen, presidential candidate of the opposition Democratic Progressive Party (DPP), calling a recent series of planned Chinese investments a “huge threat” to the island’s large but also struggling semiconductor industry.
Even I was a bit surprised by the alarmist tone of Tsai’s comments, as I previously predicted that she was likely to call for a slowdown in the recent series of new deals but not an outright halt. (previous post) Beijing was also somewhat surprised, and a top official called on Taiwan not to politicize such commercial transactions. Read Full Post…
Bottom line: Huawei’s smartphone unit is finishing 2015 on a solid note, meeting its annual targets a month early, while Xiaomi will need to show better overseas performance next year to regain some of its fading momentum.
Huawei meets smartphone targets early
A flurry of new numbers are coming from the smartphone space as we head into year end, reflecting the different focuses of domestic leaders Huawei and Xioami. When the history books are written, 2015 will be remembered as the year when Huawei surged to become the world’s third biggest smartphone brand behind only Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930), and also the clear Chinese leader. But for Xiaomi, 2015 could be a year the company would rather forget, as it lost momentum in its home China market due to stiff competition and saw slow progress in its overseas expansion.
The latest headlines have Huawei forecasting its overall revenue will surpass the $60 billion mark this year, equating to a rise of 29 percent or higher from last year’s $46.5 billion. That would mark a nice acceleration from the previous year’s 20.6 percent revenue growth, with much of the gains coming from the company’s rapidly growing smartphone division. Read Full Post…
Bottom line: China Resources’ unsolicited bid for Fairchild Semiconductor is certain to fail, but reflects Beijing’s desire to broaden its field of domestic companies making bids for global microchip companies.
China Resources enters chip-buying race
Beijing’s recent bid to build up its high-tech microchip sector is in the headlines again, with word that state-run conglomerate China Resources has made an 11th-hour bid for mid-sized US chip company Fairchild Semiconductor (Nasdaq FCS). This particular bid, which would value Fairchild at nearly $2.5 billion, was quite a surprise, since Fairchild had agreed just last month to be acquired by US rival ON Semiconductor (Nasdaq: ON).
There are 2 major elements to this chip story that has seen China become a sudden major bidder for global assets. The biggest picture is a story of consolidation in the global sector, which is long overdue and comes as maturing technology and has created an intensely competitive field of mid-sized players, many of those losing money. The second element is Beijing’s own recent decision to join the field of global buyers, as it tries to build up a homegrown chip giant to compete with big global players like Taiwan’s TSMC (Taipei: 2330) and South Korea’s Samsung (Seoul: 005930). Read Full Post…
