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The Chip Industry Encounters another Unexpected Event

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that a magnitude 7.4 earthquake struck off the coast of Fukushima, Japan. The earthquake also shut down some factories, including chip maker Renesas Electronics. This tragedy in Japan once again casts a shadow over the auto industry, which is suffering from chip supply bottlenecks and rising raw material prices. A total of three Renesas factories were affected. One of them is an important chip production base for Renesas, and automotive chips account for about two-thirds of the products it produces. The earthquake also affected Japanese car companies such as Toyota and Nissan. Renesas is the world’s third largest automotive chip maker and the world’s largest manufacturer of microcontrollers (MCUs), accounting for about 19 percent of the global market. In addition to Toyota, Nissan, Ford, Great Wall Motors and other automakers are also customers of Renesas Electronics. Many automobile companies are planning to raise prices. Since 2020, the global auto industry has been plagued by chip shortages. According to Auto Forecast Solutions (AFS) data, due to the shortage of automotive chip supplies, the global automobile production volume was reduced by 11.31 million vehicles in 2021, a drop of 14.6 percent, of which the Chinese vendors reduced production by 2.148 million vehicles in 2021. According to the latest forecast from AFS, global automakers may cut production by more than 1 million vehicles in 2022 due to chip shortages. In this context, chip prices have also risen. The shipment cycle of chips is also much longer than before the pandemic. China’s auto production and sales account for about 33 percent of the global market, but auto semiconductors and other components mainly rely on overseas suppliers.

Source: Sina, March 18, 2022
https://news.sina.com.cn/s/2022-03-18/doc-imcwipih9278428.shtml

China’s Cyber Regulator Sends Team to Social Media Firm Douban

On March 15, the Cyberspace Administration of China (CAC), China’s top cyber regulator, directed its office overseeing the city of Beijing to send a team to Douban to “supervise its rectification and reform.”

Douban is an interest-based networking site in China that lets users form online communities and review films, books and music. At the end of last year, the head of the CAC had already met with the person in charge and chief editor of Douban.com, as there were “repeated appearances of information prohibited by laws and regulations being published or transmitted on Douban.com and its accounts.”The  CAC ordered Douban “immediately to rectify and seriously deal with the persons responsible” in accordance to the Cybersecurity Law. The CAC’s office in Beijing imposed administrative penalties totaling 1.5 million yuan (US$ 0.24 million) in fines on Beijing Douwang Technology Co., the main operator of Douban.com.

In fact, this is not the first time that the CAC punished Douban. From January to November 2021, the CAC directed its office in Beijing to impose 20 penalties on Douban, for a total cumulative fine of 9 million yuan (US$ 1.4 million).

Source: China.com.cn, March 15, 2022
http://tech.china.com.cn/app/20220315/385795.shtml

China Has World’s Largest Robotics Market but it Has No Core Technology

China is the world’s largest production base and consumer market in the field of industrial robots, but it has almost no pricing rights. The reason is that its key technologies are in the hands of other countries.  

At the end of 2021, the Ministry of Industry and Information Technology of China said that China has been the world’s largest consumer of industrial robots for the last eight consecutive years. The density of robots in manufacturing reached 246 per 10,000 people in 2020. That is nearly twice the global average.  

To carry out each motion a robot makes, it needs a core controller, a servo driver and a servo motor to work together. The core controller is the “brain” of the industrial robot, which directly affects the stability and accuracy of the machine.

The Chinese financial media, Chinese Business Strategies, said in a commentary article in February of this year that the biggest reason that China-made robots are inferior to those of other countries is the “algorithm gap” in the core controller system, which is not only reflected in the core controller, but also slows down the response speed of the servo system. 

Last June, a Chinese Academic Group, The Automation Committee, published an op-ed article, “A Panoramic Analysis of the Industrial Robot Industry Chain.” The article said that the high-end market is also mainly monopolized by international companies. Imported products account for more than 70 percent of China’s industrial robot servo market. A total of 85 percent of the precision reducers necessary for manufacturing industrial robots in China are also manufactured by foreign investors. These are mainly from Japan, Europe and the United States. Therefore, China has almost no pricing power in the field of industrial robots. 

China-made industrial robots are reluctantly used to produce those products with low precision requirements. High-end fields such as aerospace and the military industry have to rely on imported robots. The failure rate of Chinese-made robots is possibly several times higher than the failure rate of imported machines. Chinese companies would rather buy second-hand products from other countries at a high price than buy low-priced Chinese products.  

Source: Epoch Times, Feb. 27, 2022
https://www.epochtimes.com/gb/22/2/27/n13608785.htm 

Global Times: India Banned 54 More Chinese Apps

Global Times recently reported, based on Indian media coverage, that the Indian government banned 54 more Chinese mobile apps for “threat to Indians’ privacy and security.” Many of these apps are products of large Chinese technology companies like Tencent, Alibaba and NetEase. Since June 2020, India has carried out four rounds of operations against Chinese apps, with a total of more than 270 apps banned. The current one is the fifth round of the Indian government’s crackdown on Chinese apps, and overall, more than 300 apps have been banned. This is the latest step taken by India against the backdrop of tensions between China and India due to border disputes. The latest 54 banned apps are mostly those banned by the Indian government two years ago but have since been repackaged. Many apps owned by Tencent and Alibaba have changed hands to hide ownership and are hosted in regions like Hong Kong or Singapore, but the data ends up being sent to servers in China. A senior Indian official said on condition of anonymity that, the government has taken notice of this. The Ministry of Electronics and Information Technology of India issued a statement saying that it had received a request from the Ministry of the Interior of India to implement an emergency blocking of 54 applications in accordance with relevant laws. The statement said the 54 apps gained a number of key permissions and collected sensitive data from users. The Chinese government has stated on many occasions that it firmly opposes India’s repeated use of “national security” as an excuse to ban apps with Chinese backgrounds. Such practices violate the WTO principle of non-discrimination and the principle of fair competition in the market economy.

Source: Global Times, February 15, 2022
https://world.huanqiu.com/article/46osKXPY6dp

“Privileged Internet Freedom” during the Beijing Winter Olympics

On February 4, a Chinese netizen posted a picture taken at the “Beijing Winter Olympics reception lobby.”

The picture was of a notice board with a blue background, with a large Wifi logo above and six smaller icons, each representing YouTube, Google Chrome, Instagram, Facebook, Twitter, and Telegram. The six applications are banned in China and ordinary Chinese Internet users cannot access them .

This posting was deleted two hours after it had been posted. At present, a number of netizens have also been blocked from resending the picture.

According to Beijing News, a newspaper based in Beijing, there are 82 “official reception hotels” for the Beijing Winter Olympics, located in Beijing, Yanqing and Zhangjiakou. These official hotels are responsible for hosting the International Olympics Committee and the International Paralympic Committee families, international sports federations, national and regional Olympic and Paralympic committees, the press and other media, and other stakeholders.

Yu Debin, the head of the Games Service Department of the Beijing Organizing Committee, told Beijing News that these officially designated hotels will “launch overseas satellite channels in accordance with the law, with a good 5G network and barrier-free network transformation.”

Source: China Digital Times, February 4, 2022

【图说天朝】依法翻墙:北京冬奥会的“特供网络”

Apple Surpassed Vivo in Q4 to Become the Top Brand in China

Well-known Chinese news site Sohu (NASDAQ: SOHU) recently reported that Counterpoint Research just released the Chinese smartphone’s market sales data for the fourth quarter and full year of 2021. Based on the data for the whole year of 2021, Vivo ranks first in the Chinese market, with a market share of 22 percent. OPPO ranked second with a market share of 21 percent. Apple ranked third, with a year-over-year sales growth rate of 47 percent, which was the fastest among the top five manufacturers. Xiaomi and Honor are fourth and fifth respectively. In the fourth quarter of 2021, Apple surpassed Vivo to become the No. 1 brand in China, with a market share of 23 percent, the highest ever. The new iPhone 13 has been a successful thanks to the relatively low starting price it had at its launch in China, as well as its new cameras and 5G capabilities. Also, Apple’s main rival in the premium segment, Huawei, faces declining sales due to ongoing U.S. sanctions. Huawei’s market share dropped from 31 percent to 10 percent. In the fourth quarter, faced with more severe parts shortages, slowing sales channel penetration, and competition from Honor, Xiaomi ranked fifth in the quarter.

Source: Sohu, January 26, 2022
https://www.sohu.com/a/519193877_115565

Micron Disbands Shanghai DRAM Design Team

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that the major U.S. storage manufacturer, Micron Technology, is disbanding its Shanghai Research and Development (R&D) center with about 150 employees. It has selected more than 40 core R&D personnel to provide qualifications for immigrating to the United States. These core employees will be able to bring their family members and immigrate to the United States. It is still unclear how many employees will choose the immigration path. Sources confirmed that, instead of disbanding the entire Shanghai R&D center, Micron only took out the DRAM design department, which has more than 100 people in total. In addition to the design team, the Micron Shanghai R&D Center also includes sales, testing and other departments. According to a former Micron employee, Micron’s DRAM design team had previously lost a large number of personnel to Chinese domestic chip design companies and storage manufacturers. Micron’s move is highly likely to prevent technology leakage. Although the number of domestic DRAM companies is relatively small, yet several new DRAM manufacturers may emerge in the next few years and the existing DRAM companies are also looking for talent. Micron is apparently consolidating its product design and R&D capabilities to areas outside Mainland China. Micron has been emphasizing the importance of intellectual property protection for a long time. Micron had previously taken UMC to court for leaking trade secrets. Micron indicated after winning the case that intellectual property protection is an important cornerstone for Micron to remain competitive. Currently, Samsung ranks first in the market with a market share of 41.5 percent, SK Hynix ranks second with a market share of 29.3 percent, and Micron ranks third with a market share of 23.4 percent. The top three manufacturers together account for 94.2% of the global DRAM market.

Source: Sina, January 25, 2022
https://finance.sina.com.cn/tech/2022-01-25/doc-ikyakumy2509223.shtml

Kicked out of America! China Unicom Ordered to Stop All Business in the U.S.

Well-known Chinese news site Sohu (NASDAQ: SOHU) recently reported that the U.S. Federal Communications Commission (FCC) voted 4 to 0 to revoke China Unicom’s subsidiary’s 214 license. The FCC cited national security concerns. The decision means China Unicom (America’s) Operations Limited must stop all services in the United States within 60 days. The company provides mobile services, leased lines, Internet access and cloud services in the United States. FCC Chair Jessica Rosenworcel said, “There is growing evidence that Chinese operators pose a threat to the security of our telecommunications networks.”  Rosenworcel also said that the FCC will conduct similar measures against Pacific Networks Corp. and its wholly-owned subsidiary ComNet. This is not the first time the United States has dealt with companies in the Chinese telecommunications industry. Last October, the FCC decided to revoke China Telecom Americas’ authorization to operate in the U.S. In 2019, the FCC also rejected China Mobile’s application to do business in the United States. The Chinese Ministry of Industry and Information Technology issued a statement saying that, the U.S. has revoked China Unicom’s license based on subjective speculation and suspicion without listing the specific illegal facts of the company.

Source: Sohu, January 28, 2022
https://www.sohu.com/a/519542752_639898