Bottom line: Foxconn’s taking of the smartphone manufacturing crown from Samsung reflects the resurgence of Apple and rises of Huawei and Xiaomi, and could ultimately force other brands to use such third-party producers.
OEMs rise on smartphone manufacturing list
Today we’ll take a step back from the usual name-brand smartphone rankings to look at a new report that shows that Taiwan’s Foxconn (HKEx: 2038) is emerging as one of those “industry leaders you never heard of”, quietly supporting some of the fastest-growing names. That’s the big takeaway from the latest figures from data tracking firm IDC, which show that Foxconn officially passed global titan Samsung (Seoul: 005930) in last year’s final quarter to become the world’s biggest smartphone manufacturer.
Most industry insiders already know Foxconn and its parent, Hon Hai, because of their longtime relationship as a key producer of iPhones for Apple(Nasdaq: AAPL). But the Taiwan company also counts Xiaomias a major client, as that company experiences a resurgence in its fortunes after a couple of years in the dark. Foxconn also makes phones for Huawei, which is also doing quite well on the global smartphone scene at the moment. Read Full Post…
Bottom line: Apple’s reported decision to study moving some iPhone production to the US could have been a form of contingency planning, but is unlikely to happen unless a major trade war breaks out between the US and China.
Apple reportedly eyes US iPhone production
The headlines have been buzzing these past few days over reports that global tech giant Apple (Nasdaq: AAPL) might be considering moving some of its iPhone production from China to the US. The original report comes from a respectable Japanese publication, and at least on the surface seems somewhat logical in light of Donald Trump’s surprise win in the US presidential election.
After all, Trump, among other things, has been quite vocal on getting companies like Apple to manufacture in the US. He’s also promised to slap a generic 45 percent tariff on goods made in China. Never mind that goods imported from China and elsewhere fall under a wide range of categories, each subject to different tariff rates. Trump is known for throwing out random thoughts, even when they’re far from practical or connected with reality. Read Full Post…
The following press releases and news reports about China companies were carried on September 9. To view a full article or story, click on the link next to the headline.
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Foxconn (Taipei: 2317) Invests $120 Mln in Chinese Ride-Hailing App Didi Chuxing (English article)
China’s XIO Group Completes Acquisition of JD Power and Associates (PRNewswire)
Western Digital (Nasdaq: WDC), Unisplendour Celebrate New Joint Venture (Businesswire)
In North Korea, China’s Xiaomi Gets the People’s Pulses Racing (English article)
Former Homeinns CEO Takes Gen Mgr Spot at Merger Partner BTG Hotels (Shanghai: 600258)
Bottom line: The 5 percent drop in China smartphone sales during the first quarter reflects the market’s current state of saturation, which will lead to more bankruptcies this year for suppliers and second-tier brands.
Xiaomi slips to third in China smartphone market
New data from China are shining a spotlight on the sudden slipping of global giant Apple (Nasdaq: AAPL) in the world’s largest smartphone market, as well as the slower decline of homegrown challenger Xiaomi. At the same time, the 5 percent decline in first-quarter shipments in the huge but intensely competitive China market bodes poorly for everyone. That includes a growing number of suppliers to the big brands like contract manufacturing giant FIH Mobile (HKEx: 2038), which has just warned that its profits are coming under intense pressure.
Much has been written about the effects that intense competition are having on Chinese smartphone brands, many of which are either barely profitable or are even losing money. But the toll has been even bigger on many of their suppliers like FIH, which makes phones for the likes of Xioami and Sony (Tokyo: 6758) and are coming under even bigger pressure due to slowing orders and cries from their customers for lower prices. Read Full Post…
Bottom line: A new global tie-up with Uber marks a major advance for Ant Financial’s Alipay, while new Internet car initiatives by Tencent and Alibaba are unlikely to find big audiences despite getting big resources from their backers.
Alibaba, Tencent car initiatives drive ahead
A series of stories involving Alibaba (NYSE: BABA) and Tencent (HKEx: 700) reflect the growing importance China’s leading Internet firms are placing on cars, which could be the next major battleground for web-based services. Alibaba is in 2 related headlines, including one that says its affiliated Ant Financial unit has signed a major tie-up that will allow anyone in the world to use its Alipay electronic payments service to pay for Uber hired cars.
The other 2 headlines both involve car manufacturing, including one that says mass production has begun for the first Internet-equipped model co-produced through a tie-up between Alibaba and SAIC (Shanghai: 600104), China’s leading car maker. The other headline says a car-making venture backed by Tencent has been quietly poaching workers from the likes of Google (Nasdaq: GOOG) and Germany’s Daimler (Frankfurt: DAIGn), as it gears up for its own production. 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: Lack of buzz around Xiaomi’s launch of production in India and Lenovo’s new line of ZUK smartphones reflect fatigue that is rapidly consuming domestic Chinese brands due to rampant competition in their home market.
More fatigue signs in China smartphone market
Signs of fatigue continue to grow in China’s overheated smartphone market, where rampant competition and unending price wars these last 2 years have led to saturation and a rapid slowdown. That fatigue is visible in 2 of the latest headlines, one of which has former superstar Xiaomi failing to garner much buzz as it launches production in India to jump-start its stalling growth. The other has the struggling Lenovo (HKEx; 992) launching its own new brand of smartphones, as it also faces lackluster performance for its current lineup sold under its own name and the Motorola brand it acquired last year.
China’s smartphone market is the world’s largest, but also the most competitive due to the presence of many homegrown domestic players. That reality has forced many mid-sized and smaller names to seek tie-ups with wealthier partners, and forced everyone to look abroad for growth as profits shriveled at home. Adding to the woes, China’s smartphone market has been contracting this year, with sales falling 4.3 percent in the first quarter after several years of explosive growth. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 4. To view a full article or story, click on the link next to the headline.
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China E-Commerce Transactions Topped 1.6 Trillion Yuan Last Year – Stats Ministry (Chinese article)
India’s Snapdeal Said to Draw $500 Mln From Alibaba (NYSE: BABA), Foxconn (English article)
China’s Airbnb Valued at More Than $1 Bln After Funding (English article)
Car Inc (HKEx: 699) Announces Plan to Issue US Dollar Denominated Notes (HKEx announcement)
JinkoSolar (NYSE: JKS) Receives $70 Mln in China Ex-Im Loans for Factory (English article)
Bottom line: ZTE’s new campaign in its home China smartphone market looks relatively well timed if a wave of consolidation starts by year-end, but it could miss its annual sales target if the competition doesn’t start to subside soon.
ZTE targets high-end with Axon
After quietly falling out of the top 5 in its home smartphone market over the past 2 years, telecoms stalwart ZTE (HKEx: 763; Shenzhen: 000063) is gearing up for a new push with an aim to become one of China’s top 3 players in the next 3 years. That’s the message coming from Adam Zeng, who has been working hard to breathe new life into ZTE’s smartphone business since taking over the company’s mobile device unit about a year ago.
Zeng detailed his plans for me in an interview last week, including his attempts to go upmarket with a new line of smartphones and also a broader blitz of new models slated for release in China later this year. In my view, ZTE was quite wise to scale back its smartphone campaign in China over the last 2 years, as the market became incredibly competitive with a wide range of established and new names all competing for space. Read Full Post…
Bottom line: Alibaba’s boosting of its stake in a leading Indian e-payments firm is part of a broader strategy that aims to replicate its China success in India through a series of acquisitions, and looks relatively well conceived.
Alibaba eyes new India investment
Just a week after abruptly pulling out of a major US investment, e-commerce giant Alibaba (NYSE: BABA) is increasingly focusing on India as the first major stop on its global expansion, with word that it’s in talks for a major new investment in a local e-payments firm. The new investment in Paytm, which would be worth about $600 million, is just the latest in a growing string of similar Indian acquisitions for Alibaba as it tries to replicate its success in China in overseas markets.
From a strategic perspective, India looks like a smart bet for Alibaba. The Indian market shares many characteristics with China, including the lack of a mature western-style retail industry from the pre-Internet era. As a result, a far bigger percentage of people in these markets are more likely to shop online. What’s more, the Indian retail market is relatively less competitive than western markets, and is experiencing rapid growth. Read Full Post…
Bottom line: Alibaba’s new fund-raising activities are relatively small but provide insight about its future direction, hinting at a major pushes into the gadget and financial services spaces.
Alibaba, Foxconn invest in Pepper
A couple of new fund-raising headlines involving e-commerce giant Alibaba (NYSE: BABA) show company founder Jack Ma engaged at one of the things he does best, namely making deals and forging new partnerships. Neither deal is particularly big in terms of dollar investment, but both provide some insight on the kinds of partners and tie-ups that Ma is pursuing for both the New York-listed Alibaba and its separate but affiliated Ant Financial unit. Read Full Post…
