Bottom line: Xiaomi’s first-ever quarter-to-quarter sales decline means it’s unlikely to meet its 2015 sales target, while Apple’s latest environmental announcement is part of a broader image-polishing campaign in China that seems to be working.
Xiaomi posts first-ever sales drop
You don’t hear sputtering smartphone maker Xiaomicomparing itself to former role model Apple(Nasdaq: AAPL) too much these days, but both companies are in the headlines today as each pursues its own different agenda. An increasingly desperate-looking Xiaomi is reportedly eyeing the US, as the former high-flyer notches its first-ever quarter-on-quarter decline in smartphone shipments. Meantime, Apple is turning up its China public relations machine with announcement of a major expansion of its environmental protection campaign in the heavily polluted country.
Xiaomi and Apple were often mentioned in the same sentence as recently as last year, when the former was one of China’s hottest companies and pegged by some to become the nation’s first global smartphone brand. During that time Xiaomi’s talkative chief Lei Jun liked to compare his company to Apple, resulting in a war of words at one point after Apple’s chief designer accused Xiaomi of being a copycat. Read Full Post…
Bottom line: Tsinghua Unigroup could be quietly helping to bankroll Western Digital’s bid for SanDisk, as part of its vision of building a Chinese NAND memory powerhouse that could challenge Samsung.
Unigroup bankrolling Western Digital’s SanDisk bid?
I don’t consider myself a conspiracy theorist, but a sudden flurry of multibillion-dollar memory chip deals all involving Tsinghua Unigroup is certainly catching my attention. Just a day after global chip giant Intel (Nasdaq: INTC) announced a $5.5 billion investment that looked related to Unigroup, we’re seeing yet another similarly large deal that has some indirect ties to this Chinese company linked to the nation’s top science institution, Tsinghua University.
This latest new deal will see hard disk maker Western Digital (Nasdaq: WDC) buy flash memory maker SanDisk (Nasdaq: SNDK) in a cash and stock deal worth $19 billion. (English article; Chinese article) China watchers will recall that announcement of this deal comes just 2 weeks after a Unigroup affiliate paid $3.8 billion for 15 percent of Western Digital. (previous post) I theorized a short time later that Unigroup’s sudden thirst for memory could even prompt it to make a play for storage device giant EMC (NYSE: EMC), which is in the process of being acquired by Dell in a blockbuster deal worth $67 billion. (previous post) Read Full Post…
Bottom line: Intel’s massive spending plan to convert its Dalian CPU plant to memory chip production looks like part of its growing alliance with Tsinghua Unigroup, which is probably helping to finance the conversion.
Intel overhauls Dalian chip plant
Just days after struggling US chip maker AMD (NYSE: AMD) announced plans to largely sell off its Asia manufacturing operations, larger rival Intel (Nasdaq: INTC) is doing the opposite with plans to invest up to $5.5 billion in one of its main Chinese fabs. But in an interesting twist to the story, Intel is spending the big money to convert the fab, which was originally designed to make integrated circuits for PCs, to memory chip production.
This unusual twist is just the latest move that shows Intel is placing its bets on China, as it plays catch up to other chipmakers like Qualcomm (Nasdaq: QCOM) that have discovered the future of computing lies in the mobile telecoms space. As part of its catch-up attempts, Intel has formed a major and growing alliance with Beijing-based Tsinghua Unigroup that is squarely focused on chips used in telecoms and IT services. Memory chips would fit nicely into that equation, since such chips are also a critical part of most IT products, ranging from smartphones to complex networks. Read Full Post…
Bottom line: AMD’s sell-down of its China assets, and a record fine against Qualcomm earlier this year reflect China’s fading attraction for global chip makers due to technical and bureaucratic obstacles.
AMD sells down China operations
A trio of headlines from the chip-making sector is showing just how much China has lost its luster for big multinationals, as logistical and technological issues dog this once-promising industry. Leading the headlines is word that struggling US chip maker AMD (NYSE: AMD) is selling most of its Asia-based foundry business, including sizable China operations, to a Chinese partner.
That was followed by announcement of a new very domestic chip-making joint venture anchored by SMIC (HKEx: 981), China’s largest contract foundry that at one time had hopes of becoming a global giant. Last but not least is a headline showing that US giant Qualcomm (Nasdaq: QCOM) was the main recipient of China’s recent anti-monopoly fervor, paying 90 percent of the penalties meted out by one of the nation’s main anti-trust regulators in 10 cases so far this year. Read Full Post…
Bottom line: Huawei’s ongoing surge should help to consolidate its position as China’s leading domestic smartphone brand, while a newly formed cell tower operator will relieve China’s 3 telcos of the burden of owning and operating such assets.
New cell tower operator takes shape
The telecoms space is buzzing on both the operator and consumer products sides, with surging smartphone maker Huawei and a new cell tower operator called China Tower both rising in the latest headlines. The higher profile of these 2 telecoms headlines has Huawei continuing its rise to become the world’s third largest smartphone brand, stealing the title from the fading Xiaomi. Meantime, all 3 of China’s big state-run telcos have come out with one of their simultaneous announcements saying they have formally transferred their cell tower assets to China Tower.
This pair of stories is quite different, but the bigger picture is one of trying to improve by becoming more efficient and diverse. In the case of Huawei the company is trying to leverage its long experience in making telecoms equipment to diversify into the consumer-oriented smartphone space. In the second case, China’s telecoms regulator is trying to improve efficiency among the nation’s 3 stodgy telcos by doing something that carriers in the west did on their own long ago. Read Full Post…
Bottom line: Lenovo and Tsinghua Unigroup may be considering rival bids for EMC following a $67 billion offer from Dell, but will ultimately abandon any such plans due to high price and political sensitivities.
Unigroup, Lenovo eying rival bids for EMC?
As the blockbuster deal that would see faded PC giant Dell buy leading memory products maker EMC (NYSE: EMC) for $67 billion buzzes through the high-tech headlines, I thought I would look at 2 leading Chinese candidates whose names were noticeably absent on the list of companies that might make rival bids for EMC. China tech watchers will know I’m referring to local PC giant Lenovo (HKEx: 992), which has never seen an acquisition opportunity it didn’t like, and the more recently acquisitive Tsinghua Unigroup.
Both of these names could be interested in EMC for similar reasons, and each could theoretically make rival bid for the US company. Dell’s newly announced purchase of EMC would be one of the biggest-ever sales in the high-tech world, but also includes a 60 day period where others could make counter offers. Other names mentioned that could make such bids include the likes of IBM (NYSE: IBM), Cisco (Nasdaq: CSCO) and Hewlett-Packard (NYSE: HPQ), though sources say the chances of such a bid are slim. Read Full Post…
Bottom line: The latest global acquisitions by Tsinghua Unigroup and Unisplendour show the company still aims to build a global IT services and hardware giant, which could culminate with a new bid for Micron in 2017.
Unigroup makes major boardroom acquisition
The ambitious Tsinghua Unigroup may have abandoned its controversial bid for leading US memory chip maker Micron (Nasdaq: MU) for now, but the Chinese high-tech wannabe certainly isn’t giving up on its global aspirations. That’s my interpretation of the company’s latest moves, which include its hiring of a Taiwanese executive with ties to Micron, as well as the recent purchase of a major stake in leading US hard drive giant Western Digital (Nasdaq: WDC) by a sister company.
Unigroup and sister company Unisplendour‘s names have appeared all over the map this past year, as they form a steady string of major equity tie-ups with the likes of leading global chip maker Intel (Nasdaq: INTC) and IT services and hardware giant Hewlett-Packard (NYSE: HPQ). But the companies’ ambitious plans to create an IT services and hardware megaplex similar to IBM’s (NYSE: IBM) hit a major roadblock over the summer, when Unigroup had to scrap its plans to buy Micron due to potential political opposition in Washington. (previous post) Read Full Post…
Bottom line: The bankruptcy of a major component supplier to ZTE and Huawei is the latest sign of stress in the overheated smartphone sector, and at least 1-2 small to mid-sized brands are likely to leave the market by mid-2016.
Smartphone price wars undermine parts maker Fosunny
Fresh new cracks are appearing in China’s smartphone making machinery, with reports that a major component supplier to Huawei and ZTE (HKEx: 763; Shenzhen: 000063) has gone bankrupt. At the same time, another report is citing bad weather for a supplier’s delivery delays that are causing Alibaba-backed (NYSE: BABA) smartphone maker Meizu to postpone the launch of a new high-end model.
The most worrisome of these 2 stories is the bankruptcy of Fosunny, a maker of metal casings used for smartphones. The company lists US wireless carrier AT&T (NYSE: T) and Europe’s Vodafone (London: VOD) among its customers on its website, but I suspect that both of those relationships come via third-parties like Huawei and ZTE that supply smartphones to those telcos. Read Full Post…
Bottom line: A new plan allowing customers of China’s 3 telcos to roll over unused data is being forced upon them by Beijing, and once again underscores the regulators’ frustration at their inability to innovate.
Telcos launch data roll-over policy
In the latest signal of just how uncreative China’s big 3 telcos are, the trio have all just simultaneously announced a major new move to boost data usage on their networks by lowering costs for consumers. It will come as no surprise that none of the 3 carriers are taking this step voluntarily, and instead are being forced into the move by the telecoms regulator. But that’s quite common for the uninspired trio of China Mobile (HKEx: 941; NYSE: CHL), China Unicom (HKEx: 763; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA).
Instead, it’s more interesting to note that this new move may represent the latest signal of Beijing’s growing frustration with a trio of companies that have become global laggards despite having a state-granted monopoly over the world’s largest telecoms market. That frustration could see Beijing soon decide to end the state-run monopoly, in an overhaul that would allow privately funded players into the market and perhaps even see a merger for 2 of the current big 3 telcos. Read Full Post…
Bottom line: Cisco’s new joint venture will mostly resell its networking equipment into China, and is unlikely to ease Beijing’s worries that its products could be used by Washington for cyber spying.
Cisco calls on China with new JV
Networking equipment giant Cisco (NYSE: CSCO) has become the latest global tech firm to capitulate to China’s national security paranoia, announcing the formation of a new joint venture with a local partner. The tie-up with Inspur Group is just the latest in a recent string of new China-based partnerships involving big western tech firms. Those companies, whose ranks also include IBM (NYSE: IBM) and Hewlett-Packard (NYSE: HPQ), fear that without such well-connected local partners, they could get locked out of the lucrative IT services market under tough restrictions imposed by a new Chinese national security law.
Announcement of the new joint venture with Inspur marks a major shift for Cisco, which up until now has preferred to do its business in China by itself rather than with a local partner. Cisco’s earlier go-it-alone posture has already come with a high cost it in a country where Beijing prefers to see big foreign tech names transfer technology to local partners. Thus this latest partnership should perhaps help to ease some of that pressure, even though it could ultimately put some of Cisco’s intellectual property at risk. Read Full Post…
Bottom line: Huawei’s new Nexus tie-up with Google could help Huawei make significant inroads to the US, and could see Google enter the crowded Chinese smartphone market by year-end.
Huawei, Google link up through Nexus
Just days after the launch of the newest iPhone, fast-rising Chinese smartphone maker Huawei will make its own renewed push into Apple’s (Nasdaq: AAPL) home turf through a highly-anticipated tie-up with Internet titan Google (Nasdaq: GOOG). This particular tie-up will see Huawei make one of the newest phones in Google’s Nexus line, in a tie-up that has been written about quite a bit already but is set for a formal announcement later on Tuesday.
That announcement would come just days after the launch of the newest iPhone 6s models, which broke records by selling 13 million units over their first weekend. Apple was able to break that record in no small part due to contributions from China, the world’s biggest smartphone market, which was absent in the last iPhone global launch due to delays for technical reasons. Read Full Post…
