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  1. WASHINGTON (Reuters) - The Trump administration on Tuesday delayed imposing a 10% import tariff on laptops, cell phones, video game consoles and a wide range of other products made in China, in an abrupt pull-back from a hardline stance on Chinese trade. The U.S. Trade Representative’s Office action was published just minutes after China’s Ministry of Commerce said Vice Premier Liu He conducted a phone call with U.S. trade officials. The delay in the tariffs that had been scheduled to start next month provides some relief to retailers. Although most stores would have stocked their holiday merchandise before the earlier September deadline, some might have faced the tariffs for fill-in orders late in the holiday shopping season. “We’re doing this for the Christmas season, just in case some of the tariffs would have an impact on U.S. customers” President Donald Trump told reporters as he prepared to depart from New Jersey for an event in Pittsburgh. The decision came less than two weeks after Trump said on Aug. 1 he would impose a 10% tariff on $300 billion of Chinese goods, blaming China for not following through on promises to buy more American agricultural products. The administration is still moving forward with 10% tariffs on much of the $300 billion of imports first disclosed in May, publishing a 122-page list of products that will face tariffs beginning Sept. 1, including smartwatches. Since Trump’s Aug. 1 tweets threatening the new tariffs, the U.S. benchmark S&P stock index has dropped more than 4% percent. On Tuesday, technology investors welcomed news of the exemptions, pushing an index of chip stocks up 3.1%, while shares of Apple (AAPL.O) surged more than 5% and the Dow Jones Industrial Average rose more than 500 points. The exemptions, combined with renewed talks with China, suggest Trump may be willing to compromise. In a sign the administration may be expecting something in return, Trump tweeted on Tuesday: “As usual, China said they were going to be buying “big” from our great American Farmers. So far they have not done what they said. Maybe this will be different!” Trump tweeted. Other products that will have tariffs delayed until Dec. 15 include “computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing,” the USTR said in a statement. The U.S. Chamber of Commerce praised the tariff delays and said it was “more important than ever that the two sides return to the negotiating table and recommit to achieving progress towards a comprehensive, enforceable agreement.” The Retail Industry Leaders Association said “removing some products from the list and delaying additional 10% tariffs on other products, such as toys, consumer electronics, apparel and footwear, until Dec. 15 is welcomed news as it will mitigate some pain for consumers through the holiday season.” The 21-page-list of products that won’t get hit with tariffs until December includes baby monitors and strollers, microwaves, instant print cameras, doorbells, high chairs, musical instruments, ketchup dispensers, baby diapers, fireworks, sleeping bags, nativity scenes, fishing reels, paint rollers and food products. USTR is still moving forward with tariffs on Sept. 1 on many products such as live animals, dairy products, skis, golf balls, contact lenses, motorcycle engines, lithium ion batteries, snowblowers and various types of steel. A separate group of products will also be exempt altogether, “based on health, safety, national security and other factors,” it added. The announcement comes amid growing concerns about a global slowdown. Goldman Sachs said on Sunday fears of the U.S.-China trade war leading to a recession are increasing and that Goldman no longer expects a trade deal between the world’s two largest economies before the 2020 U.S. presidential election. Cell phones, laptop and tablet computers, toys and video game controllers were among the top four product categories in the proposed $300 billion list of products targeted by the latest 10% tariff. These products accounted for a combined $98 billion of Chinese imports in 2018, according to a Reuters analysis of U.S. Census bureau data. Trump has also personally criticized Chinese President Xi Jinping for failing to do more to stem sales of the synthetic opioid fentanyl amid an opioid overdosing crisis in the United States. The USTR office plans to conduct an exclusion process for products subject to the additional tariff. Source
  2. BEIJING/HONG KONG (Reuters) - ByteDance, the owner of short-video app TikTok, has launched a new search engine in China, entering a sector currently dominated by Baidu Inc. Beijing-based ByteDance is moving beyond its core businesses in news and video and into work-place messaging and music streaming, competing with Tencent Holdings and other Chinese tech firms. The domain for the new search engine, Toutiao Search, sits within the company’s flagship product - Chinese news aggregator Jinri Toutiao. ByteDance, which according to sources familiar with the matter was valued at $78 billion in its last financing round in 2018, declined to comment. The company said on social media last month it was looking to hire people to work with its search engine team, and had hired technical experts from Google, Baidu and Bing. It said the search engine would offer content from ByteDance-owned apps, including Jinri Toutiao and the Chinese version of TikTok, as well as the wider web. Toutiao Search offers censored results like other Chinese search engines, according to searches conducted by Reuters. A search for “June Fourth”, a term associated with the violent suppression of pro-democracy demonstrations in Beijing’s Tiananmen Square in 1989, the search engine showed results from the People’s Daily and other official news websites. Baidu has been the dominant search engine in China since 2010, when U.S. search engine giant Google retreated from the Chinese market after it declined to comply with a government request to filter its search results. Baidu in 2018 accounted for 66% of desktop searches and 71% of mobile searches in China, according to market researcher StatCounter. Baidu, which reported its first quarterly loss in May since its 2018 initial public offering, has shrugged off the threat from ByteDance. “We have estimated that there are about two new players emerging in the search engine market each year,” Ping Xiaoli, general manager of Baidu App, told reporters last week when asked about Bytedance’s search engine. “We have been dominating the market over the past two decades,” Ping added. Source
  3. The White House is holding off on a decision about licenses for U.S. companies to restart business with Huawei Technologies Co. after Beijing said it was halting purchases of U.S. farming goods, according to people familiar with the matter. Commerce Secretary Wilbur Ross, whose department has vetted the applications to resume sales, said last week he’s received 50 requests and that a decision on them was pending. American businesses require a special license to supply goods to Huawei after the U.S. added the Chinese telecommunications giant to a trade blacklist in May over national-security concerns. The U.S. decision rattled stocks, bonds, currencies and even soybean prices around the world. Huawei suppliers Micron Technology Inc. and Western Digital Corp. declined as much as 2.2% after news of the delay in license approvals, while Qualcomm Inc., Xilinx Inc. and NeoPhotonics Corp. all fell more than 1% in after-hours trading. Huawei’s dollar bond spreads widened by 10 to 15 basis points Friday morning, while the Australian dollar and offshore yuan weakened versus the greenback and the yen gained. Trade Truce President Donald Trump said in late June after agreeing to a now-broken trade truce with Chinese President Xi Jinping in Japan that some restrictions on Huawei would be loosened. But that promise was contingent upon China beefing up its purchases from American farmers, which Trump has complained the country has failed to do. In the past week tensions have escalated further as Trump said he would impose a 10% tariff on $300 billion of Chinese imports as of Sept. 1 and his Treasury Department formally labeled China a currency manipulator. Still, Trump said last week there were no plans to reverse the decision he made in Japan to allow more sales by U.S. suppliers of non-sensitive products to Huawei. He said the issue of Huawei is not related to the trade talks. The White House had no immediate comment, and the Commerce Department declined to comment. Huawei also declined to comment. China’s foreign affairs and commerce ministries didn’t immediately respond to faxed requests for comment. Tech Pitch Technology companies have already made their pitch to the White House for a rapid granting of licenses that would allow them to resume some shipments of components to Huawei. The Chinese company is one of the world’s biggest purchasers of semiconductors. Continuing access to that market is crucial to the fortunes of chipmakers such as Intel Corp., Qualcomm Inc. and Broadcom Inc. who sent their chief executives to meet with Trump in July. Companies such as Xilinx Inc. and Micron have publicly said they’ve applied for licenses and called on the U.S. to allow them to resume doing business with Huawei. They argue that many of their products are easily obtainable from their overseas rivals, making a ban ineffective and also harmful to the industry that the trade dispute with China is supposed to be helping. Some U.S.-based makers of electronic components have already reported earnings and given forecasts that show the negative effects of the trade dispute. Source
  4. BEIJING (Reuters) - U.S. electric vehicle maker Tesla Inc is considering lifting its prices in China from September amid yuan-related uncertainty, two people familiar with the matter said. The people declined to be named as the plan has not been made public. They did not offer detail on the price change. China allowed the yuan to weaken past the 7-per-dollar level on Monday for the first time in more than a decade, after which the U.S. government labeled China a currency manipulator, raising the stakes in the trade dispute between the two countries. China firmly opposes the currency manipulator label saying it has not used and will not use the yuan to cope with the U.S. trade frictions. The sharp drop in the yuan comes days after U.S. President Donald Trump stunned financial markets by vowing to impose 10% tariffs on the remaining $300 billion of Chinese imports from Sept. 1, abruptly breaking a brief ceasefire in a trade war that has disrupted global supply chains and slowed growth. Tesla currently imports all the cars it sells in China, but it is in the process of building a factory in Shanghai that will manufacture Model 3 cars in the initial phase and help it minimize the impact of the trade war and tariffs. If enacted, this would be the first case of a planned price adjustment by an importer since the yuan fell this week and points to the growing pressure that importers are facing. Tesla broke ground on the Shanghai factory in January and its Chief Executive Officer Elon Musk has said the firm aims to finish initial construction this summer and start production of the Model 3 toward the end of the year. Deliveries of all models in the second quarter this year rose 51% from the first quarter to 95,200 vehicles, including 77,550 Model 3s, 17,650 Model S and X. Last month, Tesla globally dropped the standard-range variants of its Model X and Model S from its product lineup and adjusted prices across its range. In China, the world’s largest electric vehicle market, the trade frictions between China and the U.S. has caused Tesla to adjust its multiple times over the past year because of the tariff changes. Tesla did not immediately respond to a Reuters’ request for comment. Source
  5. WASHINGTON (Reuters) - A month after President Donald Trump said he would allow U.S. companies to resume selling to blacklisted Chinese telecommunications giant Huawei, his administration has done little to clarify what sales will be permitted. The lack of clarity on what U.S. firms can supply to the world’s top producer of telecommunications equipment as long as it’s on a so-called “entity list” is likely to cast a shadow over this week’s U.S.-China trade negotiations in Shanghai. Trump had pledged to allow the sales as a goodwill gesture to President Xi Jinping when the two met last month and agreed to restart talks to try to resolve their year-long trade war. China, for its part, agreed to restart large-scale agricultural purchases. U.S. chipmakers cheered Trump’s announcement, which administration officials clarified afterwards meant the government would issue export licenses in cases where there is no national security risk and where the items are “non-sensitive” and readily replaced by rivals. But the department has yet to respond to any of a total of around 50 license requests from about 35 companies, sowing uncertainty in the industry and in Beijing. “At this stage, there is mass confusion,” said William Reinsch, a former Commerce official, adding that the plan for case-by-case decisions “maximizes the uncertainty.” The governments of the world’s two largest economies have imposed billions of dollars of tariffs on each other’s goods, slowing global growth and roiling markets. U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer will meet with Chinese Vice Premier Liu He starting on Tuesday, the first face-to-face meeting since the two leaders met. Many people close to the talks expect the topic of Huawei to dominate, along with the failure of Chinese agricultural purchases to meet expectations, taking time and attention away from the many deeper, longer term issues. Trump hosted a meeting of seven technology CEOs last week to discuss Huawei and other topics, at which the executives expressed frustration at Commerce Secretary Wilbur Ross for not providing clear guidelines, Reuters reported. “By making the meeting public, the U.S. was trying to send a signal, ‘we’re moving on Huawei, we need you to move on agriculture’,” said Wendy Cutler, a former U.S. trade negotiator and Vice President of the Asia Society Policy Institute. PAR FOR THE COURSE Many companies have halted sales to Huawei since the company was put on the entity list on May 16, while some have chosen to resume selling items made abroad. Some, including Intel Corp (INTC.O) and Qualcomm (QCOM.O), began pressing Commerce for carve-outs soon after. Some companies have taken advantage of a narrow “temporary general license” provided by the Commerce Department which allows for transactions such as software updates for Huawei. Last week, Intel and Xilinx Inc (XLNX.O) said they had applied for licenses to resume sales of some products to Huawei. The companies also said they had resumed sales of some products they had independently determined were not subject to the ban. Secretary Ross has said responses to requests for licenses are coming in a matter of weeks. “It’s par for the course for this administration,” said trade lawyer Doug Jacobson. “They are making up policy as they go along based on the president’s direction.” The uncertainty continues to roil global industry. Last month San Jose, California-based Broadcom forecast that the U.S.-China trade tensions and the Huawei ban would knock $2 billion off its sales this year. CEO Hock Tan said there was no obvious substitution for Huawei, which accounted for about $900 million or 4 percent of its sales last year. Fedex Corp (FDX.N) last week said “unclear” Commerce department policy on Huawei “resulted in considerable complexity for our operations,” to explain why it held back more than 100 Huawei packages, which is now under investigation by Chinese authorities. The May blacklisting represented a significant escalation in Washington’s campaign against Huawei, which it says steals U.S. intellectual property and violates Iran sanctions. CFO Meng Wanzhou was arrested in Canada on a U.S. warrant on charges she misled global banks about Huawei’s relationship with a company in Iran. Meng, who is also the Huawei CEO’s daughter, maintains her innocence and is fighting extradition. Washington has also launched a lobbying effort to convince U.S. allies to keep Huawei out of next-generation 5G telecommunications infrastructure, citing concerns the company could spy on customers. Huawei has denied the allegations. Judith Alison Lee, a trade attorney at Gibson Dunn, said her clients have received requests from Commerce for more information related to their license applications but no approvals so far. “There is a real sense of uncertainty at the department about where the administration is going on Huawei,” she said. “Every day that goes by it creates more damage to Huawei and the Chinese, and that makes the trade talks that much more difficult.” Source
  6. On Tuesday, Google vice president of public policy Karan Bhatia told members of the Senate Judiciary that the company’s Project Dragonfly—a search engine for the Chinese market that was widely reported to involve huge concessions to state censors and protested by its own staff—has been “terminated” and employees working on it have been reassigned, per BuzzFeed News. Image: The Google headquarters in Beijing in 2010. Responding to questions from Republican Senator Josh Hawley, Bhatia said that “We have terminated Project Dragonfly.” That’s the first time it has used such a concrete term to describe the fate of the project, BuzzFeed noted. In response to a request from comment from Gizmodo as well as other outlets, Google pointed to statements it issued in March 2019: “As we’ve said for many months, we have no plans to launch Search in China and there is no work being undertaken on such a project. Team members have moved to new projects.” Google withdrew many of its services from China in 2010 amid concerns of surveillance and censorship by the country’s authoritarian government, but in the past few years has been reported to be eyeing a comeback as it watched competitors take over its gargantuan market. It has continued to maintain staff there working in hardware and sales. As late as December 2018, Google was wishy-washy about the state of Project Dragonfly, with CEO Sundar Pichai telling the House Judiciary Committee that the company had no plans to launch in China “right now.” As late as March 2019, some Google employees suspected work was continuing in secret, according to the Independent. But in general the torrent of criticism directed at Google over Dragonfly has showed no signs of ceasing and came at the same time it decided not to renew its Project Maven drone-imaging contract with the Pentagon (Google is still paying a political price in D.C. on all subjects China-related). According to Bloomberg, Senator Mark Warner also said on Tuesday that Pichai had told him that Google was backing off from its Chinese ambitions. Warner was light on specifics, though Bloomberg noted that Google signed a deal to “cross-license technology and intellectual property” with Chinese tech giant Tencent Holdings in January 2018 and was reportedly in talks to offer cloud services in China later that year. “I do think there’s some explaining that Google needs to make,” Warner told Bloomberg Technology. “I’ve met with the Google CEO. He said they are backing out of some of those partnerships, and they’re willing to work with the U.S. government.” Source
  7. (Reuters) - Apple Inc (AAPL.O) will likely see a surge in services revenue in the third quarter, charged by app store developer revenue and renewed growth in China, critical areas for the future as the iPhone maker faces a maturing smartphone market, Evercore ISI said on Tuesday. Shares of Apple were flat at $199.70. Apple has been focusing more on its Services unit, which includes sales from iCloud, the App Store and other businesses, as smartphone sales show signs of slowing down. The services business accounted for 20% of Apple’s $58.02 billion revenue in the second quarter, up from 16% a year earlier. The App Store is a key driver of Apple’s services segment, which brought in $37.1 billion in revenue last year. Evercore analyst Amit Daryanani expects total App Store developer revenue to grow 18% to about $9 billion in the third quarter. Apple is due to report quarterly results on July 30. “We think there is likely upside ahead when it comes to services revenues in the June-quarter, driven by a sizable acceleration in China-centric markets,” said Daryanani, who has a 3-star rating for accuracy of estimates on Apple, according to Refinitiv data. The iPhone maker earned nearly 18% of its revenue from Greater China in the quarter ended March. But, Apple still gets more than 50% of its revenue from iPhone sales. Wall Street analysts expect consumers to hold off upgrading their iPhones until Apple’s expected launch of a 5G-enabled smartphone in the second half of 2020. Brokerage Rosenblatt Securities on Monday downgraded Apple shares to “sell” from “neutral”, saying “new iPhone sales will be disappointing” leading to “fundamental deterioration” in the next six to 12 months. Rosenblatt Securities analyst, Jun Zhang, has a 4-star rating for accuracy of his estimates on the iPhone maker, according to Refinitiv data. Of the 44 analysts covering the stock, 23 have a buy or higher rating, 18 have a hold and the rest have a sell rating. Source
  8. China’s central bank is stepping up its plan for a digital currency—to keep out the Zuckerbergs. China’s timeline to make a state-run cryptocurrency just got moved forward. The announcement of the impending launch of Facebook’s Libra in 2020 has put pressure on China’s central bank to get the ball rolling. Speaking at the Peking University’s Institute of Digital Finance, Wang Xin, director of the People’s Bank of China (PBoC), said that a successful U.S.-based cryptocurrency would negatively affect China’s financial system. According to the South China Morning Post, Wang said, “If [Libra] is widely used for payments, cross-border payments in particular, would it be able to function like money and accordingly have a large influence on monetary policy, financial stability and the international monetary system?” China has never thought much of Mark Zuckerberg’s social network. For more than a decade it has banned Facebook–alongside other American-owned sites like Google and Twitter–as part of its stance against American companies operating on its soil. Libra it seems, is no different. China was one of the first jurisdictions to implement a blanket ban on the trading of any cryptocurrencies–while still hosting some of the world’s largest crypto mining operations. But China’s relationship with blockchain is complicated. While it doesn’t believe its citizens should trade crypto, it does see value in the technology. As we’ve reported before, the Chinese state sees blockchain as a natural ally when it comes to mass surveillance and control. Source
  9. SHANGHAI/BEIJING (Reuters) - Shanghai-based Buick dealer Ron Li in late April found himself in an unfamiliar quandary: how to sell off almost 80 sedans and sport-utility vehicles crowding up his dealership lot. A Nissan Altima car with a China Stage VI emission standard is seen at a dealership in Beijing, China June 23, 2019. The crux of the problem: a June 30 deadline for cars built to so-called China-5 emissions standards to be sold. After that only vehicles meeting new standards could be put up for sale. People were still coming in but weren’t buying the stage-5 cars, Li said. “Customers didn’t know how long they could drive China-5 cars or whether they would be able to resell them in the future. And to be honest, we didn’t know either.” To cope, his dealership in May slashed stage-5 vehicle prices by as much as 30%, participating in what dealers and industry executives have called unprecedented widespread discounting as China’s auto sales headed for their worst ever monthly drop. Encouraged by a central government eager to combat smog, Shanghai is one of 15 cities and provinces to implement new stage-6 standards ahead of the original July 1, 2020 deadline. Checks by Reuters with employees at about 20 dealerships in Shanghai, Beijing and the provinces of Jiangsu and Zhejiang, which have also brought forward the implementation of new standards, found that stage-5 cars had been a tough sell. Some offered discounts of more than $2,000 when compared to the same model that meets stage-6 standards. One Peugeot dealership in Shanghai even went so far as to offer a free 301 compact car for customers who bought a 5008 SUV. While a slowing economy and the trade war with the United States were initially held responsible for slides in sales since April, most of the blame is now being laid on the poorly managed fast-tracking of new rules by the 15 cities and provinces, which account for more than 60% of sales in the world’s largest auto market. The sales crisis, which saw May sales plunge 16% from a year earlier, is prompting downward revisions to forecasts for China’s 2019 auto sales that most analysts had thought would be flat or show mild growth. Now, most expectations are for an annual decline in sales of around 5%, which would follow a 2.8% decline in 2018 when sales contracted for the first time since the 1990s. But Yale Zhang, an analyst at Shanghai-based Automotive Foresight, believes the fall could be closer to 10%. “Those unsold China-5 vehicles in key areas will be sold to other regions and sales in those areas will be hit as well,” he said. SCOURGE OF SMOG In China, smog has become a major source of public discontent and Beijing declared a “war on pollution” five years ago, seeking to mitigate the environmental damage done during four decades of breakneck economic growth. To that end, it has aggressively pursued the adoption of the electric cars and its stage-6 emission standards are regarded as the most stringent in the world. The central government ramped up its anti-pollution drive last year, urging local authorities to implement stage-6 standards ahead of time. The southern province of Hainan was the first to jump on the bandwagon, saying it was thinking of doing so as early as November 2018. This set off a round of announcements from other provinces and cities which began bringing their implementation dates forward - though the timing varied from January to March to July. Some, including Hainan, later postponed after local dealers complained they wouldn’t be able to sell off inventories. Confusion ensued and it was not until last month that authorities clarified that buyers of stage-5 cars would be able to resell them. Dealers will also need to bear the cost of shipping unsold stage-5 cars to other cities and provinces where implementation comes later, while automakers have had to contend with headaches related to rolling out stage-6 models to market in time. “Why can’t companies be allowed to arrange production and new product rollouts according to the rules?” Shi Jianhua, a senior official at the China Association of Automobile Manufacturers, told a news conference in June. “The implementation date of China-6 rules was fixed, so why has it been accelerated in a way that doesn’t give companies sufficient time?” he added in rare criticism of government moves. While carmakers do not necessarily have to make fundamental changes to engine technology to meet the new standards, they have to add catalysts and come up with better filtering systems that trap exhaust gases and particulate matter. In some cases, such changes might take a few years to design and execute, engineers told Reuters. The problem is “the cost and the amount of time it takes to design specific components into the design of a given engine,” said a China-based engineer at General Motors Co, declining to be identified as he was not authorized to speak to the media. The process to gain regulatory approval for car models can take six months to a year and vehicle testing agencies such as the China Automotive Technology and Research Center (CATARC) do not have enough labs to meet the sudden surge in demand, multiple industry sources said. CATARC did not respond to a request to comment. That’s meant carmakers have produced fewer stage-6 compliant vehicles than hoped for. Just 21% of cars sold in May met stage-6 standards but this has to rise to 50% if supply is to meet demand, Jefferies said in a research note last month. Volkswagen AG, the biggest foreign brand in China, said in an emailed statement all its existing model lines will meet stage-6 standards in key regions from July 1. “Currently, we have a reasonable stock of China-5 vehicles and are reducing this, for example by reallocating the models nationwide,” it added. A Ford Motor Co representative said almost all of its line-up was stage-6 compliant. GM did not immediately respond to a request for comment. A representative for Geely said all of its gasoline models met stage-6 standards, while a spokesman for Toyota Motor Corp said the Japanese automaker had the technical reserve to meet the new standards and the switch to stage-6 rules would not have a big impact. Nissan Motor Co Ltd is widely regarded within the industry as the most prepared international car manufacturer, having stated that as of February 90% of its China car manufacturing met stage-6 standards. By contrast, local carmakers such as GAC and Great Wall Motor Co Ltd still had models waiting to be verified in June, according to the government’s Vehicle Emission Control Center. For some customers, however, the confusion surrounding the switch to new emissions standards was a win for them. “I know cars well. These China-5 vehicles are technologically advanced enough. Why shouldn’t I buy a new car with big discounts?” said Jiang Lingfeng as he checked out a stage-5 Regal sedan at the Buick showroom in Shanghai. Source
  10. Apple moves Mac Pro production from Texas to China Apple makes new Mac Pro in China despite Trump's tariff threat. Apple is manufacturing the new Mac Pro in China, marking a change from the previous Mac Pro that was made in the US. Apple made the previous Mac Pro in Austin, Texas beginning in 2013. But with the new Mac Pro unveiled this month being made in China, Apple is "shifting abroad production of what had been its only major device assembled in the US as trade tensions escalate between the Trump administration and Beijing," The Wall Street Journal reported today. "The tech giant has tapped contractor Quanta Computer Inc. to manufacture the $6,000 desktop computer and is ramping up production at a factory near Shanghai," according to the Journal's sources. "Quanta's facility is close to other Apple suppliers across Asia, making it possible for Apple to achieve lower shipping costs than if it shipped components to the US." Apple told the Journal that it designs and engineers the new Mac Pro in the US and that the computer includes some US-made components. "Final assembly is only one part of the manufacturing process," Apple said, according to the Journal. President Trump has urged Apple to make more products in the US and his administration plans 25 percent tariffs on products imported from China. Apple last week urged the US government to avoid issuing the new tariff, saying it would make production of iPhones, iPads, Macs, AirPods, and Apple TVs more expensive. We contacted Apple this morning and will update this story if we get a response. Apple unveiled the new Mac Pro at its Worldwide Developers Conference on June 3, and the company says it will be released in the fall. These pictures from the event (taken by Senior Reviews Editor Samuel Axon) show what the new hardware look like upon final assembly: Problems in US production In May 2013, Apple CEO Tim Cook confirmed plans to make a new Mac computer in Texas and said the company would spend $100 million to bring manufacturing stateside. But Apple ran into problems with the US-based Mac production. Apple "struggled to find enough screws" when it began making the 2013 Mac Pro, a New York Times article explained. "Tests of new versions of the computer were hamstrung because a 20-employee machine shop that Apple's manufacturing contractor was relying on could produce at most 1,000 screws a day." The screw shortage and other problems caused a months-long delay in Mac Pro sales. The design of the 2013 Mac Pro was also a problem. In 2017, Apple executive Craig Federighi told journalists that "we designed ourselves into a bit of a thermal corner," as the Mac Pro's cooling systems weren't able to handle powerful GPUs. The computer also didn't have the kind of modularity and expandability demanded by pro customers. Mac Pro sales were also not helped by the lack of a major upgrade for more than five years. "Making the new model in China isn't likely to affect many workers in Texas because demand for the old Mac Pro had fizzled years ago," the Journal wrote today. The Texas facility run by Apple contractor Flex had "shifted to refurbishing already-made computers" and "continues to make products for HP Inc. and other companies." Source: Apple moves Mac Pro production from Texas to China (Ars Technica) (To view the article's image gallery, please visit the above link)
  11. Faces for cookware: data collection industry flourishes as China pursues AI ambitions PINGDINGSHAN, China (Reuters) - In a village in central China’s Henan province, amid barking dogs and wandering chickens, villagers gather along a dirt road to trade images of their faces for kettles, pots and tea cups. At the front of the line, a woman stands in front of a camera zip-tied to a tripod. She holds a photograph of her head with the eyes and the nose cut out in front of her face and slowly rotates side to side. Villagers waiting their turn take a numbered ticket. Some of them say it’s the third or fourth time they’ve come to do this sort of work. The project, run out of a sleepy courtyard village house adorned with posters of former China leader Mao Zedong, is collecting material that could train AI software to distinguish between real facial features and still images. “The largest projects have tens of thousands of people, all of whom live in this area.” said Liu Yangfeng, CEO at Qianji Data Co Ltd, which collects and labels data for several of China’s largest tech firms and is based in the nearby city of Pingdingshan. “We are creating more data sets to serve more AI algorithm companies, so they can serve the development of artificial intelligence in China,” said Liu, declining to disclose his clients. The boom in demand for data to train AI algorithms is feeding a new global industry that gathers information such as photos and videos, which are then labeled to tell the machines what they are seeing. Companies involved in data labeling or data annotation as it is also called include crowdsourcing platforms such as Amazon.com’s (AMZN.O) Mechanical Turk which offer users small amounts of money in return for simple tasks, outsourcing firms such as India’s Wipro Ltd (WIPR.NS) as well as professional labellers like Qianji. Cognilytica, a U.S. research firm specializing in AI, estimates the global market for machine-learning related data annotation grew 66% to $500 million in 2018 and is set to more than double by 2023. Some industry insiders say, however, that much of the work done is not disclosed, making accurate estimates difficult. FILE PHOTO: Employees work on labeling different items for data collection on computer screens, which would serve for developing artificial intelligence (AI) and machine learning technology, at the Qian Ji Data Co in Jia county, Henan province, China March 20, 2019. REUTERS/Irene Wang WEAK PRIVACY LAWS, CHEAP LABOR China has emerged as a key hub for data collection and labeling thanks to insatiable demand from a burgeoning artificial intelligence sector backed by the ruling Communist Party, which sees AI as an engine of economic growth and a tool for social control. A plethora of firms have invested heavily in an area of AI known as machine learning, which is at the core of facial recognition technology and other systems based on finding patterns in data. These include tech giants Alibaba Group Holding Ltd (BABA.N), Tencent Holding Ltd (0700.HK), Baidu Inc (BIDU.O) as well as younger companies such as AI specialist SenseTime Group Ltd and speech recognition firm Iflytek Co Ltd (002230.SZ). The result has been a proliferation of AI products and services in China, from facial recognition-based payment systems to automated surveillance and even AI-animated state media news anchors. Chinese consumers mostly see these technologies as novel and futuristic, despite concerns raised by some over more invasive applications. Weak data privacy laws and cheap labor have also been a competitive advantage for China as it races to become a global leader in AI. The Henan villagers were happy to trade several sessions in front of a camera for a tea cup, or several hours for a stove-top pot. OVERSEAS CUSTOMERS Beijing-based BasicFinder, a leading data labeling firm with locations across Hebei, Shandong and Shanxi provinces, boasts a robust mix of domestic and overseas clients. At a recent visit to its Beijing offices, some staff were labeling images of sleepy people that will be used by an autonomous driving project to identify drivers who might be falling asleep at the wheel. Others were labeling British documents from the 1800s for a Western online ancestry service, marking fields for dates, names and genders on birth and death certificates. According to BasicFinder Chief Executive Du Lin, hiring trained labellers in China is cheaper than using Western crowdsourcing marketplaces. A Princeton University project related to autonomous driving initially put a task on Amazon’s Mechanical Turk but as the task became more complicated, people began making mistakes and BasicFinder was brought in to help correct the results, said Du. In that project, one trained BasicFinder labeler was able to do the work of three crowdsourced labellers, he added. “Gradually they saw they were paying less for labeling from us, so they hired us to label all the works from the very beginning,” said Du. Princeton declined to comment. For labeling employees, the reasons for joining China’s data industry are straightforward. The work, though sometimes tedious, is an upgrade on other jobs available to young workers who want to return home to small Chinese cities and villages. Labellers at Qianji make roughly 100 yuan ($14.50) a day marking data points on photographs of people, surveillance footage and street images. The work is usually simple, according to the employees, though some overseas content poses a challenge. “One time we thought we were classifying Europe-style cooker machines that have a washer attached,” said Jia Yahui, a labeler at Qianji. “Later we were told it’s actually two separate things, a stove and a dishwasher.” The labeling work brings some of the employment benefits of the tech sector to rural areas, but those benefits may prove short-lived if AI improves enough to perform many of the tasks labellers do. “We think this industry will still exist in three to five years. It may not be a long-term career - we can only think of the five-year plan for now,” said Qianji CEO Liu. Source: Faces for cookware: data collection industry flourishes as China pursues AI ambitions
  12. SiFive bets open-source chips will win over Chinese clients looking to avoid US clampdown PALO ALTO, U.S. -- American chip startup SiFive sees an opportunity to gain ground in China amid the intensifying trade war by offering an open-source alternative for chip design that could help reduce the country's reliance on Western technology. The California-based company provides design services for chips, such as those used in mobile devices and storage centers, based on the RISC-V chip architecture. Because RISC-V is open source -- meaning anyone in the world can access it freely -- Chinese companies increasingly see it as a potential alternative to global chip leaders Intel and Arm Technologies for powering their devices. This is particularly important as Washington steps up its restrictions on exports of U.S. technology to China. In May the U.S. Commerce Department placed Huawei Technologies on its so-called Entity List, which bars American companies from transferring technology to it without a special license. Five more Chinese companies were recently added to the list. These restrictions, however, do not apply to open source technology, according to Kevin Wolf, a former U.S. Assistant Secretary of commerce and partner at law company Akin Gump. "Technology that is 'published' and openly accessible is not subject to the Export Administration Regulations and thus not affected by Entity List prohibitions," Wolf said. Because the RISC-V chip architecture falls under the "published" category, it could serve as a potential chip alternative for Huawei -- though the company has indicated it will continue using Arm-based chips in its devices for the time being. SiFive was founded in 2015 by three academics at the University of California, Berkeley who originally developed RISC-V. While anyone, in theory, can use RISC-V to design chips, doing so is extremely time consuming and costly. SiFive makes money by offering cloud-based design services that simplify the process. SiFive President and CEO Naveed Sherwani, an ex-Intel chip developer and industry veteran who joined the company in 2017, says it is perfectly positioned to grow. "We are going to expand big time in China. The trade war has helped us a lot because it convinced China to do more chips inside the country and we are helping them do so," Sherwani said. "It became clear to us about three or four years ago that a trade war is going to happen," Sherwani said, "and the action we took is building a completely independent company in China." That company is SiFive China, in which SiFive holds a less than 20% stake. That small share, will be diluted as more outside funding comes in, means SiFive does not have to report the Chinese company's financials in its own earnings, and SiFive China is treated as an independent company by U.S. regulators. SiFive provides its counterpart in China with intellectual property related to its design services. "I think there is a common misunderstanding in the market that the U.S. Entity List is a blanket ban, like a wall between U.S. and China, but it's not. It's more like a gate, there are things allowed through and there are things not," Sherwani said. If SiFive is ever blocked from such transfers in the future, the company's thinking goes, SiFive China will still be able to serve Chinese customers. SiFive currently has three offices in China, with its headquarters in Shanghai. The company said it will open more Chinese offices as the country pushes ahead with its national goal of semiconductor independence. SiFive told the Nikkei Asian Review that it will announce a 5G chip based on the RISC-V architecture in the near future. Although the company may not be able to export the chips directly to China, most of their design could be transferred to SiFive China, and the local team trained to build the chips within the country, SiFive said. China has some of the best universities in the world and is producing some of the best PhDs. There are obviously a lot of smart people living there, and it's a question of hiring them, training them, putting them in the structure and getting the work done," Sherwani said. His optimism stands in contrast to the downbeat mood among chip industry insiders in China, who say that without continued access to cutting-edge U.S. technology, local chip development will "hit a wall." Sherwani, however, is confident that SiFive China -- which registered as an independent company under the name Shanghai SaiFang Technology Co. in 2018 -- will be able to stand on its own. The company said all executives at SiFive China are Chinese nationals and are familiar with the local market. "It's a 100% Chinese company," Sherwani said. "We set it up this way so that our U.S. operation will not impact China, and vice versa." Earlier this month SiFive raised $65.4 million in a Series D funding round from existing backers such as Sutter Hill Ventures and Chengwei Capital, and new investor Qualcomm. SiFive has also previously received investment from Intel, Samsung and Western Digital and has raised a total of more than $125 million since 2016. Raja Koduri, general manager of edge computing solutions and chief architect at Intel, praised the startup's technology. "SiFive's cloud-based SaaS [software as a service] approach provides another level of flexibility and ease for design teams." The startup says it currently has more than 100 licenses for its RISC-V processors, and said six of the top 10 semiconductor companies, including Qualcomm and SK Hynix, are among its customers. SiFive-designed chips have been used in commercially released products, including a smartwatch made by Chinese wearable device company Huami and a storage device by South Korean startup Fadu. While SiFive does not have any exposure to Huawei, the company said it is open to the possibilities of working together through SiFive China. Huawei declined to comment for this article. Not everyone is confident that RISC-V will be able to fill Arm's shoes in China, however. "RISC-V is new and might not be ready yet, especially for the 5G phones," said Neil Shah, research director at Counterpoint, an Asia-based technology analysis company. But Sherwani believes RISC-V will soon catch up. "It took Arm 25 years to get here. RISC-V started in 2010, but it was just an academic project and didn't really start in full speed until three years ago," he said. "And in three years, RISC-V has got close to the Arm v8 processor, and we think we will be on equivalent or beyond v8 in about a year." Source
  13. Key Points The move comes amid heightened trade tensions between the U.S. and China. The discussions include asking telecommunications companies whether they can develop and produce equipment outside of China. The Trump administration essentially banned Chinese 5G telecom giant Huawei Technologies last month. The U.S. is considering a requirement that next-generation 5G cellular technology for domestic use be made outside of China, the Wall Street Journal reported on Sunday, citing sources. The shift could force telecom giants like Nokia and Ericsson to move production outside of China in order to continue providing equipment to the U.S., the world's largest market for telecom equipment and services, the Journal said. President Donald Trump on May 15 declared a national emergency over threats on U.S. technology and blocked transactions that involve technology that "poses an unacceptable risk to the national security of the United States." The administration then essentially banned Chinese telecom giant Huawei Technologies from the U.S. amid concerns about that Huawei's equipment and phones can be used to spy over wireless networks, which the Chinese company has repeatedly denied. The move to require equipment be made outside of China would come at a time of heightened trade tensions between the two countries. Under the 150-day review of the supply chain called for in Trump's executive order, the U.S. government will ask telecom companies if they can develop hardware like routers and switches, and software outside of China, the Journal said, citing people familiar with the matter. The Journal said the conversations are in "early" and "informal" stages. The Wall Street Journal's story can be found here. Source
  14. "Everyone is in deep fear of having their own identity exposed," one demonstrator said. Thousands of protesters took take part in a rally against an extradition law proposed in Hong Kong. HONG KONG — College student Naida Lam didn't think much about her digital privacy until June 11. It was the night before massive protests in Hong Kong against a law that would allow suspects to be extradited to mainland China. Like many students, Lam, 20, had been using the encrypted messaging app Telegram, participating in group chats that were used to plan and coordinate ahead of the demonstration. But that night, Hong Kong authorities arrested the administrator of one of the largest of these groups. For Lam it was a wake-up call. "When my friends told me that another group's administrator got arrested, immediately I feared that something will happen in the group I was in," Lam said. "I left the group and changed all my privacy settings." The arrested Telegram administrator, Ivan Ip, 22, managed a chat of more than 30,000 members. While protesters were starting to gather around Hong Kong's government headquarters, police turned up at Ip's house and arrested him for conspiracy to commit public nuisance. It was not clear how the police were able to identify Ip, raising questions about whether officials had infiltrated the group itself. Lam said the arrest put people on alert that they could also be identified. "Everyone is in deep fear of having their own identity exposed on Telegram," Lam said, "and all were trying to help each other to hide our identities." The arrest did not appear to put a dent in the protests. Thousands of people occupied major roads and surrounded the Legislative Council building — the Hong Kong government's headquarters — preventing lawmakers entering for a meeting to discuss the bill. Protesters shine lights from their mobile phones during one of the demonstrations on June 16. A small group of the demonstrators clashed with police, overturning barricades and throwing objects at the officers, who fired pepper spray, tear gas and rubber bullets. The legislation was eventually postponed indefinitely, and Carrie Lam, Hong Kong's chief executive, was forced to issue a public apology. But the digital crackdown nevertheless left its mark. Internet-savvy young people, who once only saw the upsides of a technology that helped them organize protests, have grown increasingly wary of surveillance. They are worried the extradition law is the latest step in Hong Kong, a semiautonomous capitalist city, being drawn into the murky legal system of mainland China. Beijing has created a sophisticated surveillance state, and has emerged as a world leader in facial recognition technology. It's a concern that extends beyond messaging apps. During the protests, there was the unfamiliar sight of people waiting in line to buy paper tickets at the city's train station. Usually they use a contactless digital card, named Octopus, but many were avoiding this because they feared leaving digital tracks. Meanwhile, others decided to clear their phone's location history, and delete any other data that might give away their whereabouts. Many discouraged their fellow demonstrators from taking photos and videos because they might be posted online. Shouts of "do not post it on social media" were heard throughout the marches. demonstrator outside the Legislative Council building on June 21. Tam, 24, who declined to provide his first name in fear of being prosecuted, was among the thousands who dressed in black and engaged in a sit-down protest outside the Legislative Council on Monday afternoon. "I usually use story mode for Instagram, as it is harder to leave a record," Tam said, referring to the app's feature where posts automatically disappear after 24 hours. "If I leave a record, I'm afraid it could be used against me in the future." As well as their digital efforts, many protesters deployed the more traditional tactic of wearing a mask, something that has become commonplace in Hong Kong in recent years. Protesters that spoke with NBC News said the realities of modern surveillance have changed even in the five years since Hong Kong's pro-democracy Umbrella Movement, which flooded the streets for 79 days in 2014. "People are now more aware of their own safety before taking any action. Some would even consult a lawyer's suggestion before acting," said John Jung, a 20-year-old university student. Jung, who runs one of the area's few civilian-led first-aid stations, said he and colleagues still used encrypted messaging apps, but now limit the number of people stored in the contacts list. "The lesser number of people knowing about our internal information the better," he said. "This is to prevent any form of information leakage." Source
  15. Another day, another shareholder suit. This time it’s Google in the spotlight. Shareholders have tabled a resolution which, if passed, would demand Google put the brakes on its controversial search engine efforts in China. The program, internally dubbed “Dragonfly,” is said to be a censorship-friendly search engine with the capability to hide results at the behest of Beijing, which administers one of the most restrictive internets in the world. The project remains largely secret, amid an internal upheaval and political pressure from the Trump administration to scrap the effort, but was later acknowledged by Google chief Sundar Pichai, describing China as an “important” market. The resolution, set to be voted on at the company’s annual shareholder meeting Wednesday, would instruct Google to conduct and publish a human rights impact assessment examining the impacts of a censored Google search engine in China. Open Mic, a non-profit representing shareholders worth $3 billion in Google assets, said Google should examine the human rights impact during Dragonfly’s development and not after. “The Chinese government already employs invasive, data-driven surveillance to track its citizens,” said Joshua Brockwell, an investment communications director at Azzad Asset Management, which supports the resolution. “The potential for it to weaponize data from Google searches could allow the government to expand its human rights abuses, including mass detentions of the Uighur minority.” Among recent crackdowns, China has come under international pressure in the past year for targeting Uighur Muslims and holding more than a million in detention. Google opposes the resolution, saying in its proxy statement: “Google has been open about its desire to increase its ability to serve users in China and other countries. We have considered a variety of options for how to offer services in China in a way that is consistent with our mission and have gradually expanded our offerings to consumers in China, including Google Translate.” A spokesperson for Google told TechCrunch it had “nothing more to add” beyond its proxy statement. It’s unclear how the vote will go, given the pressure on Google to evaluate the introduction of search into China. In context, the shareholder in the top 10 with the least amount of shares still has $3.9 billion in stock. Source
  16. Magic Leap Inc, a US startup that makes a headset to project digital objects onto the real world, accused one of its former engineers of stealing its technology to create his own augmented reality device for China. In a lawsuit filed June 17, Magic Leap alleges that Chi Xu, who left in 2016, exploited its confidential information to “quickly develop a prototype of lightweight, ergonomically designed, mixed reality glasses for use with smart phones and other devices that are strikingly similar” to the Florida-based startup’s designs. The lawsuit marks the latest accusation from an American firm of intellectual property theft by Chinese companies, a perennial sore point that’s helped escalate tensions between the world’s two largest economies. With more than US$2bil (RM8.35bil) in financing, Magic Leap is one of the better-funded startups delving into so-called augmented or mixed reality, a technology that gives users the illusion that fantastical, three-dimensional digital objects exist in the physical world. Xu, who founded Beijing-based Hangzhou Tairuo Technology Co, also known as Nreal, unveiled his own augmented reality glasses at a major Las Vegas trade show in January, touting them as lighter than the Magic Leap One, Forbes has reported. Apart from Magic Leap, Facebook Inc, Microsoft Corp and Alphabet Inc’s Google are also developing products for virtual or augmented reality. It remains to be seen whether anyone can turn the area into a big money-spinner. Magic Leap released its headset last August after seven years of secretive work and more than US$2bil (RM8.35bil) of investment. The startup alleges that Xu plotted during his roughly 13 months working there to launch his own competing company in China and “neglected his work duties” to acquire proprietary information. “Whereas Nreal purported to develop its Nreal Light product in under two years, Magic Leap developed its technology after extensive investment of time (multiple years), money (hundreds of millions of dollars spent on research and development) and human resources (hundreds of engineers),” according to the complaint. Xu is accused in the suit of breach of contract, fraud and unfair competition. Nreal is also named as a defendant. Representatives at Nreal had no immediate comment on the lawsuit, while Xu did not respond to a message sent to his LinkedIn account. Source
  17. STOCKHOLM (Reuters) - China’s Geely has picked Zenuity, a joint venture between its Volvo car marque and Swedish technology group Veoneer, as its preferred supplier for assisted and self driving software. Regulatory and technological challenges as well as soaring development costs mean carmakers have delayed forecasts for the mass adoption of self-driving cars and the Geely deal is a welcome boost for Zenuity. It said on Wednesday that the deal would encompass Geely’s range of car brands, which include Geely Auto, performance brand Polestar, subscription-based electric carmaker Lynk & Co and British sports car maker Lotus. Sweden’s Veoneer said earlier this year it was conducting a review and seeking new efficiency measures at Zenuity, as well as raising cash to shore up its working capital. Zenuity, whose customers include Volvo and Geely Auto, employs more than 600 people and in January won an approval to begin hands-free testing of its software for self-driving Volvos on Swedish highways. It is competing with larger rivals in self-driving technology, where U.S. companies are leading the way, with Google’s Waymo last year winning the first approval to test cars without safety drivers on Californian roads. Gothenburg-based Zenuity was formed in 2017 by Volvo, which Geely bought from Ford in 2010, and Autoliv, the former parent of Veoneer which then made a 1.1 billion Swedish crown ($115 million) capital injection in the venture. Source
  18. HONG KONG/BEIJING (Reuters) - Last year, Wei Qing and his private equity investment team visited more than 20 Chinese electric vehicle manufacturing startups. The end result? They decided not to invest in any. “There are too many uncertainties from when a company tells a story in the early stage, to when it produces a sample car and raises funds, to the eventual mass production,” said Wei, managing director at Shanghai-based Sailing Capital. Wei, who declined to name the EV makers his team visited, said he thinks only a few of them will survive. Sailing instead decided to invest in an EV parts supplier, he added. His concerns reflect what bankers describe as increasingly tough funding times for Chinese EV makers which must jostle for attention in a crowded sector and produce convincing arguments about future profitability despite government cuts to EV subsidies and plans to phase them out. Numerous setbacks plaguing Tesla Inc in its quest for sustained profitability as well as a dramatic slide in sales and problems with some cars at Chinese startup Nio Inc have also put investors on their guard. This year, Chinese EV makers have raised just $783.1 million as of mid-June compared with $6 billion for the same period a year earlier and $7.7 billion for all of 2018, according to data provider PitchBook. One Hong Kong-based banker said he had been approached by at least a dozen EV makers seeking new funds but had to pass on most of them as they were not able to set themselves apart from the crowd. Even fundraising efforts that have gotten off the ground are not moving as fast as EV makers would like. “It is challenging,” said the banker who began working on one fundraising this year. “If you can get a meeting with investors, you can always tell a story, but some don’t even reply to your requests for a meeting.” He declined to be identified as the negotiations were not public. SUBSIDY WOES Eager to curb smog and jump-start its own auto industry, China has said it wants so-called new energy vehicles (NEVs) - which also include hybrids, plug-in hybrids and fuel cell cars - to account for a fifth of auto sales by 2025 compared with 5% now. Those ambitions have spawned a plethora of EV startups competing not just with each other, but also global automakers and Tesla, which plans to start production in China this year. About 330 EV firms are registered for some sort of subsidy, government data shows, although the number of more well established startups is much smaller, at around 50. But amid criticism that some firms have become overly reliant on government funds, Beijing has reduced subsidies, raised the standards needed for vehicles to qualify and flagged they will end altogether after 2020. That has led to sharp slowdown as vehicle prices rise. Sales of NEVs in May rose just 1.8% from a year earlier compared with 18.1% in April, and 62% growth for 2018. Surviving in the current funding environment, requires much cost discipline, Daniel Kirchert, CEO at Nanjing-based EV maker Byton, told Reuters. “Given the current situation, it is not enough for any startup to come up with good products and be fast to market. At least it’s equally important to manage cost. Not only fixed costs but variable cost,” he said. Byton, which is backed by state-owned automaker FAW Group and battery supplier Contemporary Amperex Technology Co (CATL) is one of a few EV makers with a fundraising round in train, seeking $500 million. Others include Leap Motor, backed by state-owned Shanghai Electric Group Corp and Sequoia Capital China, which is seeking $372 million as well as CHJ Automotive, founded by serial entrepreneur Li Xiang, which wants to raise as much as $500 million. Those with successful funding under their belts this year include Baidu Inc-backed WM Motor Technology Co Ltd which closed a $446 million round in March, according to PitchBook. Some have obtained money outside private equity. E-Town Capital, a Beijing government investment firm, will invest 10 billion yuan ($1.4 billion) in a joint venture with Nio, which could help Nio build its own plant. TESLA, NIO WEIGH But overall, industry funding prospects are much bleaker, particularly as Tesla and Nio struggle. Founder Elon Musk told Tesla employees last month the $2.7 billion the company recently raised would give it just 10 months to break even at the rate it burned cash in the first quarter. Shares in the industry pioneer have slid 32% in the year to date. Nio’s shares have been hit harder, down 60% this year on a cut to its delivery outlook, a halving in first-quarter sales from the previous quarter, increased competition and reduced subsidies. Its reputation has also been hurt after three vehicles caught on fire and by the inadvertent shutting down of a car on Beijing’s prestigious Changan Avenue after the driver initiated a software update. Nio declined to comment. “Some of the listed EV industry leaders are currently underperforming in the secondary trading market and that has created pressures for the sector’s short-term outlook,” said Brian Gu, president of EV startup Xpeng Motors and a former senior JP Morgan banker. “We are seeing investors become more cautious, selective and keenly focused on the frontrunners. I think this trend is likely to persist,” he said. An investor in WM Motor was more downbeat about the willingness of private equity investors to fund the industry. “Nio is probably the best among Chinese EV start-ups. Look where it stands now - how can that make us comfortable about writing cheques for other EV start-ups?” said the investor who also held Nio shares but sold them this year. Source
  19. (Reuters) - Apple Inc has asked its major suppliers to assess the cost implications of moving 15%-30% of their production capacity from China to Southeast Asia as it prepares for a restructuring of its supply chain, according to a Nikkei Asian Review report on Wednesday. Apple's request was a result of the extended Sino-U.S. trade dispute, but a trade resolution will not lead to a change in the company's decision, Nikkei said s.nikkei.com/31zCGhw, citing multiple sources. The iPhone maker has decided the risks of depending heavily on manufacturing in China are too great and even rising, it said. Key iPhone assemblers Foxconn, Pegatron Corp, Wistron Corp, major MacBook maker Quanta Computer Inc, iPad maker Compal Electronics Inc, and AirPods makers Inventec Corp, Luxshare-ICT and Goertek have been asked to evaluate options outside of China, Nikkei reported. The countries being considered include Mexico, India, Vietnam, Indonesia and Malaysia. India and Vietnam are among the favorites for smartphones, Nikkei said, citing sources who did not want to be identified as the discussions are private. Last week, Foxconn said it had enough capacity outside China to meet Apple’s demand in the American market if the company needed to adjust its production lines, as U.S. President Donald Trump threatened to slap further $300 billion tariffs on Chinese goods. China is a key market for Apple as well as a major production center for its devices. A group of more than 30 people from Apple’s capital expense studies team have been negotiating production plans with suppliers and governments over monetary incentives that could be offered to lure Apple manufacturing, the report said. A deadline has not been set for the suppliers to finalize their business proposals, Nikkei said, adding that it would take at least 18 months to begin production after choosing a location. Apple and Foxconn did not immediately respond to a request for comment on the report. Source
  20. Trump's meeting with Cook was disclosed by daughter and adviser Ivanka Trump. US President Donald Trump met with Apple CEO Tim Cook on Thursday to discuss trade and other hot-button issues facing the tech company as Trump deliberates whether to make good on his threat to hike tariffs on imports from China. Trump's meeting with Cook was disclosed by daughter and adviser Ivanka Trump during an event that Trump held with governors on skills development. Cook is a frequent visitor to the White House and has worked with Ivanka Trump on her job training and education initiatives. The president often name-checks Cook as a business leader who has brought jobs and investment back to the United States. On Thursday, Trump spoke with Cook about "trade, US investment, immigration and privacy," White House spokesman Judd Deere said. A spokesperson for Apple could not be immediately reached for comment. The meeting comes as Trump weighs whether to go ahead with proposed increases to tariffs in his trade war with China. He has said he will make a decision some time after the G20 summit in Osaka, Japan at the end of June, where he hopes to meet with Chinese President Xi Jinping. Trump is using tariffs to push Xi to change a host of Chinese trade practices, but negotiations have flagged. Makers of consumer electronics like phones and tablets have escaped the brunt of tariffs to this point but likely would be affected by the next hike. US authorities are also preparing to probe market power of large technology companies, according to sources. Cook has defended his company, saying it has a moderate share of the market and is not too large. Source
  21. BEIJING (Reuters) - Chinese authorities have launched an investigation into FedEx Corp over parcels delivered to the wrong addresses, China’s official Xinhua news agency reported on Friday. The report did not give details about the deliveries in question. FedEx did not immediately respond to a request for comment. Xinhua previously reported that China would investigate whether FedEx damaged the legal rights and interests of its clients after Huawei Technologies Co Ltd said this month the U.S. company diverted parcels destined for the Chinese firm’s addresses in Asia to the United States. FedEx said the packages were “misrouted in error”. The inquiry comes amid worsening trade relations between China and the United States, which saw the two governments slap new tit-for-tat tariffs on each other’s goods last month. Washington also last month put Huawei on a blacklist that effectively blocks U.S. firms from doing business with the Shenzhen-based telecoms equipment maker. Source
  22. Apple manufacturing partner Foxconn says it has enough capacity to make all iPhones bound for the U.S. market outside of China if the current trade war between the two countries intensifies. That's according to Foxconn board nominee and semiconductor division chief Young Liu, who made the comments at an investor briefing in Taipei on Tuesday, reports Bloomberg. As the U.S.-China trade war gets more unpredictable, Foxconn – also known as Hon Hai – will "fully support Apple if it needs to adjust its production," he said. "Twenty-five percent of our production capacity is outside of China and we can help Apple respond to its needs in the U.S. market," said Liu, adding that investments are now being made in India for Apple. "We have enough capacity to meet Apple’s demand." Liu conceded that Apple has not given its Taiwanese partner instructions to move production out of China, but he said Foxconn is "capable of moving lines elsewhere according to customers' need." The Hon Hai senior executive said it will respond swiftly and rely on localized manufacturing in response to the trade war, just as it saw the need to have a base in the U.S. two years ago before the trade dispute began. Foxconn has been considering expanding its production plants in India as a way to diversify its supply chain away from China, where most of the Taiwan-based firm's facilities currently reside. Apple manufactures most of its iPhones through Foxconn, but the latter's growing India base provides security in the face of Apple's vulnerability to rising U.S.-China tensions over trade and technology. Foxconn already has plants in India, and in late 2017 it was reported that the firm would invest around $356 million to expand its facilities there to begin assembling Apple's high-end iPhones. Manufacturing iPhones in India could help Apple lower prices by allowing it to avoid a tariff that adds 20 percent to devices imported from China. Source
  23. Spain has extradited 94 Taiwanese to China to face telephone and online fraud charges, drawing protest from Taiwan's government. The suspects arrived Friday morning at Beijing airport on a chartered flight. Footage on state broadcaster CCTV showed uniformed officers escorting them off the China Eastern plane one-by-one. Taiwan's Foreign Ministry expressed "serious concern and strong regret," according to the island's official Central News Agency. The extraditions are the latest stemming from a 2016 investigation into Spain-based scam operations that targeted victims in China. Police from both countries raided 13 sites in Madrid, Barcelona and elsewhere in Spain in December of that year, the Chinese Public Security Ministry said. The amount of money involved totaled 120 million yuan ($17 million), the ministry said in a statement on its website. Similar scams operate from several countries and usually prey on Chinese. The callers typically masquerade as Chinese authorities and pressure or persuade the victims to transfer money to the scammers' accounts. Spain has extradited 225 suspects to date, including 218 Taiwanese. Taiwan split from China in 1949 during a civil war, but China still considers Taiwan part of its territory. The two sides agreed in 2009 to fight crime jointly, but Beijing broke off contacts after the election of Taiwanese President Tsai Ing-wen, who is less friendly to China than her predecessor. Shortly before she took office, Beijing began demanding that Kenya, Malaysia, Spain and other countries send phone and computer fraud suspects to China, where they face almost certain conviction and stiff sentences. Taiwan's Foreign Ministry called on Spain on Friday to uphold the spirit of humanity and the principle of human rights and to cooperate with Taiwan in the fight against transnational crime, the Central News Agency reported. This case is China's first joint operation with a European country against telecom fraud and its largest international one to date against such crime, the Public Security Ministry said. Liu Zhongyi, the deputy director of the Chinese Criminal Investigation Bureau, said that the joint operation was challenging because of major differences in the law and law enforcement concepts between China and Spain. "We have overcome various difficulties," he told CCTV, adding that the operation has laid a foundation for future cooperation with other police forces. Liu said that there are still many criminal gangs in the China-Myanmar border area and in Southeast Asia that are trying to scam Chinese. He pledged to "find the suspects, no matter to which country or which place they have fled." Source
  24. China issues 5G licenses to local telcos, TV network Chinese government awards commercial 5G licenses to the country's three biggest telcos--China Mobile, China Telecom, and China Unicom--as well as state-owned China Broadcasting Network, just as Huawei announces it will be deploying 5G technology in Russia, with tests to start this year. China has issued commercial 5G licenses to its three biggest telcos and state-owned China Broadcasting Network, as it looks to accelerate the deployment of the high-speed mobile technology ahead of its previous target. The Ministry of Industry and Information Technology (MIIT) also adds that foreign companies are welcomed to partake in the development of the country's 5G industry. Its minister Miao Wei said foreign participants could "share the benefits" generated as a result of 5G adoption in the Chinese market. The ministry on Thursday awarded licenses to China Mobile, China Telecom, and China Unicom in a move it said marked an accelerated push to deploy the mobile technology ahead of its original plan to commercialise 5G in 2020. China Mobile had said its 5G services would be available in more than 40 cities across China by end-September this year. "5G licensing will be a significant boost to the domestic economy, as it will drive the transformation and upgrading of the real economy, promote the application of 5G to various fields including manufacturing and agriculture, and boost digital economic growth," said Wang Zhiqin, who heads the IMT2020 (5G) Promotion Group, established by the MIIT to drive 5G development in China. "Issuing licenses for China Broadcasting Network, a new fourth 5G carrier, will help build a next-generation communication network," Wang said in a report by state-owned newspaper China Daily. "Granting four 5G licenses is conducive to fostering rational competition and investment in the market." He said the MIIT would take steps to help fuel 5G adoption, improve resource allocation, encourage companies to participate in 5G deployment, and integrate 5G with vertical markets. According to market figures from industry group GSMA, China is expected to become one of the world's largest 5G markets by 2025 when it will be home to 460 million 5G connections, or 28 percent of the country's total mobile connections. The China Academy of Information and Communications Technology also projected that 5G would generate US$1.54 trillion in economic output and more than three million jobs between 2020 and 2025. Miao said the high-speed mobile technology would spur new market opportunities and fuel the growth of China's digital economy, with sectors such as "industrial internet" and "internet of vehicles" expected to see high 5G adoption. Networking equipment manufacturer Huawei, which is battling a 5G trade ban in US, said it was ready to drive commercial adoption of 5G in the country. The Chinese vendor had invested US$2 billion in its 5G research and development efforts since 2009. The MIIT's announcement had come shortly after Huawei inked an agreement with Russian mobile operator MTS to deploy 5G technology in Russian, with test runs scheduled to commence this year as well as in 2020. The agreement was inked on the sidelines Chinese president Xi Jinping's visit to Moscow, where he met Russian president Vladimir Putin. Source
  25. SHANGHAI (Reuters) - China’s Ministry of Industry and Information Technology (MIIT) will roll out commercial 5G licenses “in the near future”, Xinhua said. It did not provide further details. Beijing had granted licenses at the end of 2018 to China’s three state-owned carriers to conduct trials for 5G deployment. It has yet to approve full commercial deployment, however. Source
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