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Lianhe Zaobao: U.S. Plans to Ban All Huawei and ZTE Equipment from New U.S. Sales

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that an internal document revealed the U.S. Federal Communications Commission (FCC) plans to ban approval of new U.S. communications equipment using products from Chinese communications equipment companies Huawei and ZTE. The report cited national security grounds. FCC Chair Jessica Rosenworcel issued the proposed ban to three other commissioners last week for final approval. The ban stipulates that neither Huawei nor ZTE can sell new equipment in the United States without authorization from the U.S. government. Rosenworcel said in a statement that the FCC remains committed to protecting national security by ensuring untrustworthy communications equipment is not authorized for use within the United States. This is the first time the US FCC has banned the sale of electronic devices on national security grounds. The FCC had earlier banned U.S. companies from using federal funds to buy equipment from those companies, but the new order will extend that ban to all purchases. The FCC rules would also explicitly prohibit the sale of video surveillance equipment for public safety in the United States. This will affect U.S. sales by Chinese companies Hydra Communications, Hangzhou Hikvision and Dahua Technology. However, the rule is not retroactive, meaning U.S. companies can still sell FCC-approved Chinese communications equipment. The Chinese embassy in the U.S. earlier this year criticized the FCC for “abusing state power” and again for “maliciously attacking” Chinese telecom operators without a factual basis.

Source: Lianhe Zaobao, October 14, 2022
https://www.zaobao.com.sg/realtime/china/story20221014-1322739

Briefings | | |   Information/Technology US-China Relations

Apple Suspended Adoption of Chinese Flash Memory Chips

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that Apple appears to have suspended plans to use YMTC (Yangtze Memory Technologies Co., Ltd.) flash memory chips in its products. Apple had previously confirmed that it was testing NAND Flash chips imported from China’s YMTC in iPhones. Apple’s decision came after the U.S. government imposed a new round of export controls on Mainland China’s tech industry on October 7. Multiple sources said Apple had completed a months-long certification for longevity before the U.S. government announced it would impose stricter export restrictions. Earlier, Apple noted that it did not consider the use of Yangtze memory chips in phones sold outside of China, and said all user data stored on the flash memory chips used by the company was “fully encrypted.” At present, YMTC is the largest domestic NAND Flash supplier in China, and its mass-produced 128-layer NAND Flash chips are also China’s most advanced NAND Flash chips. Apple initially planned to use YMTC NAND Flash chips starting this year because its chips are at least 20 percent cheaper than those from other major rivals, A source from a top supply chain executive said that the reason for Apple’s suspension of the plan to adopt YMTC chips this time was that YMTC actively proposed to Apple to “exit Apple’s supply chain.” It is because it does not want to continue to stimulate the sensitive nerves of the United States at this sensitive time.

Source: NetEase, October 17, 2022
https://www.163.com/dy/article/HJT1F7040511838M.html

Briefings | | |   Information/Technology US-China Relations

TSMC’s Third-Quarter Net Profit Surged 80 Percent

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that the foundry giant TSMC (Taiwan Semiconductor Manufacturing Company) released its third-quarter financial report. Data showed that TSMC’s revenue in the third quarter surged and its profit margin increased significantly. TSMC’s net profit increased by 80 percent compared with the same period last year, setting a new record. From the perspective of revenue sources, TSMC’s smartphone business revenue in the third quarter increased by 25 percent to 41 percent month-over-month, and its high-performance computing (HPC) business revenue increased by 4 percent to 39 percent. From a regional angle, revenue from North American customers accounted for 72 percent of total revenue, up from 64 percent in the second quarter. Revenue from Mainland China accounted for 8 percent, down from 13 percent in the previous quarter. The main figures in TSMC’s third quarter financial report were significantly higher than expected, indicating strong market demand for advanced process products. While delivering dazzling performance, TSMC announced that it would lower its full-year capital expenditures to US$36 billion. This is considered an important signal of a slowdown in the semiconductor market. Experts expressed the belief that the semiconductor industry may decline in 2023, but it will still be a year of revenue growth for TSMC. TSMC is Apple’s primary chip supplier for its cutting-edge mobile devices.

Source: Sina, October 13, 2022
https://finance.sina.com.cn/jjxw/2022-10-13/doc-imqqsmrp2483888.shtml

Briefings | | |   Information/Technology

CNA: British Government Officially Gave Notice to Remove Huawei by 2027

Primary Taiwanese news agency Central News Agency (CNA) recently reported that the British government issued an official notice on October 13 to 35 domestic broadband and mobile network operators, as well as to the Chinese telecom giant Huawei that Huawei must completely remove Huawei equipment from the UK’s 5G public network by the end of 2027. The ban also includes 1.) an immediate halt to the installation of Huawei equipment on 5G networks and 2.) the complete removal of Huawei from facilities important to national security by January 28, 2023, and 3.) the refusal to install any Huawei products affected by U.S. sanctions on full-fiber networks. In a notice to Huawei, the UK Digital Ministry explained the reasons for the ban.  Huawei is headquartered in China and its business is controlled on the Chinese end. The Chinese government and related actors have carried out and are expected to continue to carry out cyber-attacks on the UK. The Chinese government and related actors continue to seek to exploit weaknesses in telecommunications service equipment and networks in order to undermine their security. Chinese laws such as the National Intelligence Law allow the Chinese government to require Chinese companies and their employees to engage in activities “harmful to the UK.” Also, in terms of law enforcement practices, the Chinese government may even ask Huawei employees to cooperate with the Chinese government. The Chinese government’s authority under the statute means Huawei’s equipment could be secretly embedded with malicious functions. The UK Telecommunications (Security) Act, which went into effect in November last year, gave the UK government new powers to impose stricter controls on high-risk telecom service providers based on national security concerns.

Source: CNA, October 13, 2022
https://www.cna.com.tw/news/aopl/202210130365.aspx

Briefings | | |   Geo-Strategic Trend Information/Technology

U.S. Department of Defense Blacklisted DJI and BGI for Investment

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that, according to the U.S. Department of Defense’s (DOD’s) official website, the DOD is determined to identify and counter China’s “Military-Civilian Integration” strategy. This strategy is based on Chinese companies, universities and research programs that appear to be civilian institutions. Advanced technologies and expertise owned and developed by these agencies will in the meantime support the Chinese military’s modernization goals. Contributors to the Military-Civilian Integration strategy operate directly or indirectly within the United States. The U.S. Department of Defense will continue to update this blacklist. The list announced last June included Huawei and Hikvision. The new list just released has a total of 13 companies, including DJI and BGI. Basically, those blacklisted by the U.S. Department of Defense are China’s leading high-tech companies or colleges with strong influence. According to public information, DJI is headquartered in Shenzhen, China. As of October 2020, DJI had a market share of over 80 percent in the global civilian and commercial drone market, ranking first among all commercial drone companies. BGI was established in 1999 and also headquartered in Shenzhen, China. The company provides research services and comprehensive solutions for precision medical testing for medical institutions, scientific research institutions, and social health organizations through genetic testing, mass spectrometry testing, and bioinformatics analysis.

Source: Lianhe Zaobao, October 7, 2022
https://www.kzaobao.com/cngov/2022-10/07125587.html

Briefings | | |   Information/Technology US-China Relations

U.S. Announced New Controls over Chips and Chip-making Equipment

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that, on October 7, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced new export controls over chips. New export control measures restrict U.S. companies from selling certain advanced chips and manufacturing equipment to Chinese manufacturers. Also, the BIS increased export licensing requirements for technologies that China can use in supercomputing and semiconductor development. This may be the biggest change in U.S. policy on exporting technology to China since the 1990s. If implemented, U.S. technology and chip manufacturing will no longer be able to support China, which will set China’s chip manufacturing industry back by several years. The BIS stipulates that if U.S. manufacturers want to export equipment that can make DRAM of 18 nanometers or below, NAND Flash of 128 layers or above, or logic chips below 14 nanometers to local Chinese manufacturers, they must apply for export licenses. The Commerce Department said the move would protect U.S. national security and foreign policy interests. A senior official at the ministry said that concerted action is still in discussions with allies. For Its own self interest, Americans have not hesitated to use the laws of fair trade, or suppress and contain the development of technology companies in other countries.  They have reached that point.

Source: NetEase, October 8, 2022
https://www.163.com/dy/article/HJ4UL3D50553JNEE.html?f=post2020_dy_recommends

Briefings | | |   Information/Technology US-China Relations

Apple Is Very Glad to Make the iPhone 14 in India

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that Apple said, not long ago, that the iPhone manufacturers are “excited to produce the iPhone 14 in India.” In order to diversify the supply chain and avoid over-reliance on China, it is reported that Apple plans to transfer a quarter of iPhone production to India by 2025. J.P.Morgan Chase analysts said they believe Apple will move about 5 percent of the iPhone 14 production to India by the end of this year. The iPhone 14’s mass production progress in India this year is still about six weeks behind China, and it has generally been behind by a quarter or more in the past. Apple first started producing the iPhone SE in India in 2017. This April, Apple announced that it had started production of the iPhone 13 smartphone in India. Previously, some iPhones were assembled at Foxconn’s local Indian  factories, while others were assembled at Wistron’s Indian factories. Bloomberg revealed earlier in September that the Tata Group, a leading Indian company, is in talks with Taiwanese supplier Wistron, hoping to establish a joint venture to assemble Apple’s iPhones in India.

Source: NetEase, September 26, 2022
https://www.163.com/dy/article/HI6PD4OP0511B8LM.html

Briefings | | |   Information/Technology US-China Relations

626 Million Surveillance Cameras Are All over China: 432.2 surveillance cameras per 1,000 people

According to a 2019 projection by IHS Markit, a leading information analysis firm, 54 percent, or 540 million, of the more than 1 billion surveillance cameras deployed around the world by the end of 2021 are or will be deployed in China. In fact, this is a low estimate. The latest statistics and estimates put the number of public surveillance cameras across China at 626 million.

A study published by the information research firm Comparitech on July 11, 2022 analyzed that if one takes the lower estimate, which is 540 million surveillance cameras deployed in China, there is an average of 372.8 surveillance cameras per 1,000 people; if adopting the higher estimate, 626 million surveillance cameras, that translates into an average of 432.2 surveillance cameras per 1,000 people. By either figure, the ratio exceeds that of the other most populous cities in the world by hundreds of times.

For example, in the world’s largest city, Tokyo, the capital of Japan, there is an average of only 1.06 surveillance cameras per 1,000 people; the fifth largest city, Mexico City, Mexico, has an average of only 3.62 surveillance cameras per 1,000 people. New York, the largest city in the United States has an average of 6.87 surveillance cameras per 1,000 people. The second largest city, Los Angeles, has an average of 8.77 surveillance cameras per 1,000 people.

Among the hundreds of millions of surveillance cameras installed in China, more than 200 million surveillance cameras are controlled by the Chinese police force’s ‘Skynet’ surveillance system. It spreads across commercial and residential areas and highways. The ratio is almost one surveillance camera for every two Chinese people.

Source: Voice of America, August 26, 2022
https://www.voachinese.com/a/ai-technology-has-become-an-effective-tool-for-china-s-control-over-its-citizens-20220826/6718069.html

Briefings | | |   Information/Technology