Bottom line: Huawei’s latest big financial commitment to the UK is mostly for show, but Britain could still emerge as a winner over the longer term if Huawei conducts more R&D work in its British labs.
Huawei gives $4.2 billion gift to UK
After getting the cold shoulder from the US for its smartphones, telecoms superstar Huaweiis turning increasingly to Europe, and specifically to Britain, for consolation. That’s the key takeaway from the latest reports that say Huawei has told British Prime Minister Theresa May that it will spend a further 3 billion pounds ($4.2 billion) on procurement from the UK on top of its other commitments to the country. (English article)
This particular move seems mostly political, and also it’s questionable how significant it is. Huawei made its commitment last week during a trip by Theresa May to China, and this kind of mega-commitment is quite common during these meetings between Chinese and global leaders. The fact of the matter is that Huawei posted 600 billion yuan ($97 billion) in sales last year, meaning it had to spend perhaps half of that amount, or around $50 billion, on procurement of various components for its core networking equipment and smartphones. Read Full Post…
Bottom line: Huawei’s decision to go ahead with a US market entry for its latest high-end phone, despite collapse of a tie-up with AT&T, is likely to produce very limited results due to lack of a carrier partner.
Huawei goes solo into US
If you can’t get a serious business partner, at least get a pretty face. That seems to be the message coming from a frustrated Huawei, which has announced it has signed on “Wonder Woman” star and model Gal Gadot as chief experience officer as it prepares to enter the US. This somewhat frivolous move was most likely part of a bigger announcement the company hoped to make for a grander entry to the US in partnership with corporate partner AT&T (NYSE: T).
But as many market watchers may already know, the AT&T deal reportedly collapsed at the last moment for unexplained reasons. The new tie-ups were all set to be unveiled at the Consumer Electronics Show (CES) taking place this week in Las Vegas. While the show went on and Huawei announced plans to release a version of its high-end Mate 10 in the US, with Gadot as product spokeswoman, the AT&T announcement never came. Read Full Post…
Bottom line: Xiaomi’s growing comeback is giving it confidence to launch an IPO plan, as its loss of a trademark case in Europe highlights renewed obstacles it will face in its global expansion.
Xiaomi eyes Hong Kong IPO
Comeback kid smartphone maker Xiaomi is in a couple of headlines as we reach the middle of the week, including one that highlights its return to growth and another that shows the obstacles it will face as it continues with its global expansion. The first headline has media reporting that Xiaomi is planning an IPO as early as next year, as its sagging valuation finally returns to a growth track. The second has the company suffering a setback in Europe related to a trademark dispute with industry colossus Apple (Nasdaq: AAPL), highlighting the perils it is likely to face as its global expansion moves into more developed western markets.
It’s still a bit early to say whether Xiaomi’s comeback story has legs, though growing signals are certainly pointing in that direction. I know at least one person who is a Xiaomi fan and goes out of his way to buy their phones, which means that at least some people are coming back to the brand. That’s a shift from a couple of years ago, when the company’s legions of early fans abandoned the brand after it lost its early trendy image and became more known for product problems and other glitches. Read Full Post…
Bottom line: Attendance of Google’s CEO at China’s premier Internet event marks a continuation of its slow return to China, while appearances by top Apple, Qualcomm and Microsoft executives are more expected.
Western tech execs hobnob at Internet conference
As we head into the new week, the headlines are filled with the latest words of wisdom on the future of the Internet from some of China’s leading company chiefs, who were all in the scenic city of Wuzhen for a major conference that kicked off over the weekend. But equally interesting were the guest list of foreign big-wigs in attendance, which included top executives from Google(Nasdaq: GOOG), Apple(Nasdaq: AAPL), Microsoft (Nasdaq: MSFT), Cisco (Nasdaq: CSCO) and Qualcomm (Nasdaq: QCOM), among others.
This is the third year for the show, which I previously pooh-poohed as a show of pageantry without too much substance. But it does appear to be gaining a bit of traction over time, and I suppose I should grudgingly admit that perhaps China should have a greater say in the development of the Internet and that these major players are at least partly right to be attending in high-profile roles. After all, China is easily the world’s largest Internet market with more than 700 million users. Read Full Post…
Bottom line: A bevy of signals from Beijing indicate China will roll out 5G networks around 2020, in step with major Western markets, providing a boon for telcos, equipment sellers and Internet companies.
China gets serious on 5G
After years of watching China following years behind the West in rolling out its next-generation wireless networks, there are growing signs that the country intends to be a leader rather than a laggard with upcoming 5G service. The latest signal in that drive is coming from the country’s state planner, which has just announced that five or more cities will start to build rudimentary 5G networks starting next year.
All this may sound quite boring for many of my readers who are more interested in high-tech companies than stodgy telecoms carriers. But it really has huge implications for not only China’s big 3 telcos, but also the nation’s booming Internet industry that will become the direct beneficiaries of 5G networks that offer data speeds that are well ahead of what you can get from current 4G technology. Read Full Post…
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.
ZTE tries two screens
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…
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.
US set to block more Chinese purchases?
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…
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.
Trump vetoes sale of chipmaker
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…
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.
Huawei takes a shot at the cloud
We’ll begin the new week with a couple of items from Huaweithat 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…
Bottom line: Samsung’s new $7 billion investment in a chip expansion in Xi’an should help to earn big government goodwill, which could help position its smartphone division for a rebound in China.
Samsung expands chip chip plant
A major new China investment by chip maker Samsung(Seoul: 005930) is spotlighting just how important the market has become to the company, and South Korean companies in general, and how they are trying to play into Beijing’s agendas to maintain their place at the table. That’s become all the more important lately, as a disagreement between Beijing and Seoul has been costing South Korean companies business in China, as often happens when such political disputes spill out into the business sector.
This particular investment, totaling $7 billion, was obviously in the planning stages long before that dispute broke out earlier this year, involving Seoul’s decision to install a sophisticated anti-missile defense system supplied by the US to counter the North Korean threat. But Samsung’s decision to make its announcement now looks shrewd, as it should win it some goodwill from Beijing at a time when the company’s smartphones face similar struggles in China that they’re seeing in the rest of the world. Read Full Post…
Bottom line: Unicom’s choice of 14 partners for a mixed-ownership reform plan involving its Shanghai-listed unit is far too many, and is ultimately likely to fail when those partners become frustrated and sell their shares.
Unicom puts 14 new partners into its mix
What I feared might happen has come to pass in a mixed-ownership reform plan being crafted by China Unicom(HKEx: 762; NYSE: CHU), one of the nation’s three telcos that is experimenting with selling some of itself to private investors. That’s a reference to reports in early August that the company might be planning to take on as many as 20 partners in the plan to sell a significant stake in its Shanghai-listed unit, China United Network Communications (Shanghai: 600050), to strategic private investors.
My worry was that taking on so many partners would effectively dilute the plan, since none of the partners would receive a very big stake and Unicom’s attention would be too fragmented. As it turns out, the number 20 was a bit too high, but not far off the mark. That’s the latest word, as Unicom has finally announced its mixed-ownership reform plan that will see it partner with 14 private companies in a bid to become more dynamic. Read Full Post…
