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Lianhe Zaobao: Intel Put Supplying Chinese Manufacturer on Hold

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that, in order to comply with the U.S. government’s new export restrictions, Intel has put supplying Chinese manufacturer Inspur Group on hold. Intel explained in an announcement that the move was solely to ensure that U.S. laws are followed. Inspur Group is China’s largest computer server manufacturer and is ranked number three in the world. It is a large customer of Intel’s and Inspur’s entire product line of families uses Intel processors. Intel’s decision formed a strike on Inspur’s future, causing its stock to fall five percent within a day. The U.S. Department of Defense established a 20-company list not long ago identifying Chinese companies either owned or controlled by the Chinese military. According to new U.S. regulations, these companies are banned from obtaining advanced U.S. technologies. The list includes both Huawei and Inspur. Inspur manufactures both traditional servers and Artificial Intelligence (AI) servers.

Source: Lianhe Zaobao, July 3, 2020
https://www.zaobao.com.sg/realtime/china/story20200703-1066076

Briefings | | |   Information/Technology US-China Relations

A Xi’an Company Banned the Use of the Apple iPhone

Well-known Chinese news site Tencent News recently reported that a company in the City of Xi’an just issued a company-wide ban on the use of the Apple iPhone. Any company employee found using an Apple iPhone will be fined six months’ worth of merit pay, which will be directly deducted from payroll. In the meantime, if an employee buys a Huawei cellphone, the company will award RMB 100 (around US$14). The company also pays any employee RMB 1000 (around US$140) for a domestically made car purchase. The story went viral online among Chinese netizens. It triggered a heavy debate on what is the right take on American products. However, not long ago, Apple iPhone 11 sales ranked among the top two across several major Chinese online retailers. It shows that Apple iPhones are widely recognized among Chinese consumers. Among the online discussions of the event, the population appears to be very divided. Many suggested their own companies had similar policies but they may not be published. Some suggested the iPhone buyers should be fired directly. However, a large number of people thought the fine was too extreme, and some even suggested that the fined iPhone buyers sue the company. Technical netizens also pointed out that Huawei products also use American technology.

Source: Tencent News, June 8, 2020
https://wxn.qq.com/cmsid/20200608A01CVW00

Briefings | | |   Information/Technology US-China Relations

People’s Daily: Chinese Ministry of Commerce Responded to New U.S. Sanctions

People’s Daily recently reported that the spokesperson for the Chinese Ministry of Commerce responded to the recent actions taken by the U.S. Department of Commerce to list additional Chinese individuals and agencies on the “Entity List” for sanction. The United States identified 24 Chinese agencies and individuals as doing “military procurement” and nine agencies for human rights violations in Xinjiang. China strongly opposes this new action against Chinese companies, universities, research institutes, and individuals under the names of military involvement and human rights matters. The Unites States frequently abuses its export control system to hammer other nations. This abuse of state power significantly harms the international trade order and threatens the global supply chain. It will not benefit China, the United States, or the world. China urges the U.S. to stop this wrong behavior immediately and to protect decisively the legal rights of Chinese companies.

Source: People’s Daily, June 5, 2020
http://politics.people.com.cn/n1/2020/0605/c1001-31737261.html

Briefings | | |   US-China Relations

Average HK Residents Responded to the New HK National Security Law

When the Mainland communist government introduced the Hong Kong National Security Law, the average Hong Kong local residents immediate response was to go to the banks in Hong Kong. According to Radio France Internationale (RFI) Chinese Edition, as soon as the new law’s draft was submitted, foreign exchange stores across Hong Kong were immediately overwhelmed by customers converting HK Dollars to US Dollars. A typical exchange store could reach over US$1 million in cash exchange within one hour. British Pounds and Japanese Yen also ran out fast. Many customers of Chinese banks nearly emptied their money in HK Dollars and immediately opened US Dollar accounts in local branches of U.S. banks or Singapore banks. In the meantime, the major Hong Kong newspaper Apple Daily reported that the locals took another immediate action to download VPN (Virtual Private Network) apps, which help users avoid being monitored by authorities. On May 21, Apple’s HK AppStore reported seven of the top ten downloads were VPN apps. The download volume was 120 times more than the previous day. Mainland China is well-known for its tight control over Internet access and most of the World’s popular social networks, such as Twitter and Facebook, are blocked in China. Meanwhile, immigration service providers also saw a sharp increase in immigration inquires.

Sources:

(1) RFI Chinese, May 30, 2020
https://bit.ly/2XKXmC7

(2) Apple Daily, May 22, 2020
https://tw.appledaily.com/international/20200522/25YVFLSQXAKTJJ65PXYDQUMXBA/

Briefings | | |   Geo-Strategic Trend US-China Relations

Huawei Placed Emergency Order with TSMC

Chinese technology news site Moore recently reported that the Taiwan Semiconductor Manufacturing Company (TSMC) received a US$700 million emergency order from Huawei on May 18. However, sources from Japan said TSMC has refused that order. TSMC is the world’s largest chip-maker and manufactures most of Huawei’s critical high-end chips. On May 15, the U.S. Department of Commerce released new regulations on approval requirements for manufacturers using U.S. technologies. The new rules will effectively ban any suppliers from helping Huawei. TSMC just reached an agreement with the U.S. government and announced a plan to construct a new cutting-edge 5nm chip manufacturing facility in Arizona. The Chinese government has already threatened retaliation against U.S. high-tech companies.

Source: Moore, May 19, 2020
http://news.moore.ren/industry/223474.htm

Briefings | | |   Information/Technology US-China Relations

Escaping Nasdaq – Chinese High-Tech Heavy-Weights Prepare Plan B

Well-known Chinese news site Sina recently reported that, with the recent success of Chinese high-tech leader Alibaba going public on the Hong Kong Stock Exchange (HKSE) for the second time, key Chinese high-tech companies are coming up with Plan B to face the high probability of being kicked out of the U.S. stock markets, mainly Nasdaq. Luckin Coffee’s latest scandal story about accounting fraud served as the last straw that pushed U.S. senators to propose regulations to delist Chinese companies traded on U.S. stock exchanges, due to their lack of transparency. The Chinese search engine leader Baidu (Nasdaq listed since 2005), though it denied it publicly, is actively preparing to withdraw from the U.S. market for the HKSE. Jing Dong (JD.com), NetEase and CTrip are all looking at IPOs or re-IPOs in Hong Kong. The planning even started in January. Nasdaq has been strengthening its restrictions on reporting requirements for foreign companies, especially audit requirements to align with international accounting standards. The U.S. Senate’s recent passage of the Holding Foreign Companies Accountable Act sent a very strong signal to drive Chinese companies out of all U.S. stock markets, though China’s name was not mentioned. Currently there are around 200 companies that this new act may impact if it also passes the House.

Source: Sina, May 22, 2020
https://finance.sina.com.cn/roll/2020-05-22/doc-iircuyvi4458096.shtml

Briefings | | |   Information/Technology US-China Relations

China Pumps US$22.5 billion into its Chipmaker SMIC

Semiconductor Manufacturing International Corporation (SMIC), headquartered in Shanghai and incorporated in the Cayman Islands, is a Chinese semiconductor foundry company. On May 15, the Hong Kong-listed chip maker announced that two China state-backed funds injected a total of US$22.5 billion into its wafer factory that will help SMIC produce advanced chips.

As the Trump administration has moved to block global chip supplies to blacklisted telecoms equipment giant Huawei Technologies, which is gradually shifting its own wafer design and production from Taiwan based TSMC to SMIC in response to the possibility of more restrictive measures, China is betting the local chip foundry can help reduce the country’s reliance on US technology.

The plant has the capacity to produce 6,000 14-nanometre wafers a month and plans to boost that to 35,000. After the capital infusion, the SMIC plant’s registered capital jumped from US$3.5 billion to US$6.5 billion. The chip maker’s stake in the facility will drop from 50.1 per cent to 38.5 per cent, according to the company.

Source: Central News Agency, May 17, 2020
https://www.cna.com.tw/news/acn/202005170185.aspx

Briefings | | |   US-China Relations