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China’s New Energy Vehicle Growth Slowed after Subsidy Cancellation

Well-known Chinese news site Sina (NASDQ: SINA) recently reported that, according to the data just released by the China Passenger Car Association (CPCA), from January 1 to 15, the national new energy passenger car manufacturers wholesaled 187,000 units, a month-over-month decrease of 38 percent. The market retail sales reached 184,000 units, a month-over-month decrease of 33 percent. According to a report released by CPCA, on January 18, the growth of new energy vehicle sales has entered a bottleneck stage. After the discontinuation of the government’s new energy policy in 2023, sales growth will be a serious problem. At the same time, the prices of new energy models have increased too much in the early stage. Orders are decreasing and the price cuts of leading manufacturers such as Tesla have been aggressive, which has caused consumers to take a wait-and-see attitude. China’s new energy vehicle subsidies started in 2010. In that year, a total of 25 cities in three batches were selected to carry out demonstration and promotions of energy-saving and new energy vehicles. Since then, the industrialization process has started. In 2016, the subsidy policy entered the full application stage. Under the government subsidy policy dividends, the new energy vehicle market has achieved rapid development. Recently, Tesla China began to cut prices, which disrupted the market rhythm to a certain extent. After Tesla announced the price cuts, the number of new orders increased significantly, and the traffic at Tesla stores in many regions of the country increased significantly too. Some customers who originally planned to order other brands even cancelled their orders and turned to Tesla.

Source: Sina, January 20, 2023
https://finance.sina.com.cn/chanjing/cyxw/2023-01-20/doc-imyauhaw5442320.shtml

Briefings | | |   Economy/Resources Information/Technology

Global Times: TSMC Considering Building a Second Factory in Japan

Global Times recently reported that the Japanese government actively invited TSMC (Taiwan Semiconductor Manufacturing Company) to expand its manufacturing capacity in Japan and introduce EUV process. The TSMC CEO confirmed for the first time at a press conference that TSMC is indeed considering building a second factory in Japan. TSMC is currently building a fab with special process technology in Japan, which will use 12/16nm and 22/28nm process technology, and plans to enter mass production by the end of 2024. Though the first factory is still under construction, TSMC plans to build a second fab at the same time, as long as customer demand and the level of government support make sense. According to previous Japanese media reports, TSMC’s first factory is being constructed in Kumamoto Prefecture, Japan. The Japanese government had previously decided to subsidize nearly half of the 1 trillion yen investment required by TSMC to build the factory. In response to foreign government invitations, TSMC is promoting the construction of factories overseas. In last December, TSMC announced that it would increase its planned investment of US$12 billion to US$40 to build two factories in Phoenix, Arizona. 4nm and 3nm chips will be put into production in 2024 and 2026. That represents TSMC’s largest investment outside of Taiwan and one of the largest foreign direct investments in U.S. history.

Source: Global Times, January 12, 2023
https://world.huanqiu.com/article/4BG6VCqka5b

Briefings | | |   Geo-Strategic Trend Information/Technology

CNA: TSMC 3nm Started Mass Production and Factory Expansion

The Primary Taiwanese news agency Central News Agency (CNA) recently reported that TSMC (Taiwan Semiconductor Manufacturing Company) held a 3nm mass production and factory expansion ceremony. TSMC Chairman Mark Liu clearly stated that the company will continue to develop advanced technologies and expand in Taiwan. TSMC previously held a grand relocation ceremony for the Arizona factory in the United States, and decided to expand investment in the U.S. Not only was the mass production technology of the Arizona Phase One Project adjusted from the originally planned 5 nanometers to 4 nanometers, but also new investment was committed for a 3 nanometers plant. The total U.S. investment increased to US$40 billion. The 3nm mass production demonstrated TSMC’s concrete actions in developing advanced technology and expanding advanced production capacity in Taiwan. Also, TSMC’s global R&D center in Zhuke will be officially opened in the second quarter of 2023, with 8,000 personnel expected to be stationed there. In the meantime, the 2nm plant is scheduled to be launched in Zhuke and Zhongke, Taiwan. TSMC is now building super-large fabs, connecting several fabs together through automatic transfer systems and tube bridges. In response to customer demand, TSMC will expand overseas investment at the same time. TSMC (NYSE: TSM), Taiwan Semiconductor Manufacturing Company Limited, is a Taiwanese multinational semiconductor contract manufacturing and design company. It is the world’s most valuable semiconductor company and the world’s largest dedicated independent semiconductor foundry.

Source: CNA, December 29, 2022
https://www.cna.com.tw/news/afe/202212290385.aspx

Briefings | | |   Information/Technology

CNA: U.S. and Japan Plan to Cooperate in Developing Semiconductor Talents

Primary Taiwanese news agency Central News Agency (CNA) recently reported that, with China’s significantly enhanced military strength, and in view of the rising security tensions with China, the governments of the United States and Japan are planning to cooperate to develop advanced semiconductor technology talents, with the hope of playing a leading role in the global semiconductor market. The governments are scheduled to hold a discussion in Washington in January at the U.S.-Japan Summit and Ministerial Talks to confirm the cooperative relationship. Discussions of the specifics to strengthen the talent development plan are set to kick off in the coming spring. At present, it is the most feasible plan for the United States and Japan to send researchers or students to research institutions or high-tech companies. The scope of enhanced cooperation will include new generation technologies such as artificial intelligence (AI) and supercomputers. The U.S. and Japan reached a consensus on the principles of semiconductor cooperation in May 2022. That includes promoting the diversification of semiconductor manufacturing capabilities. The two sides have their own strengths in semiconductor technology and will cooperate to complement each other. Japan’s Ministry of Economy, Trade and Industry established the Leading-edge Semiconductor Technology Center (LSTC) in December 2022. The United States is scheduled to establish the National Semiconductor Research Center under NSTC in February 2023. The two countries will strengthen the exchange of semiconductor talents, the practical application of research results, and the mass production of new-generation semiconductor technologies.

Source: CNA, December 29, 2022
https://www.cna.com.tw/news/aopl/202212290373.aspx

Briefings | | |   Geo-Strategic Trend Information/Technology

Chinese Newspaper Global Times: UK Government Unreasonably Suppressed Chinese Companies Again

Global Times, a Chinese newspaper under the People’s Daily, recently reported that the British government asked a number of departments to stop installing surveillance cameras related to China in sensitive buildings, citing security risks. The Cabinet Office of the British government stated in a written request submitted to Parliament that it was asking all departments under its jurisdiction to prohibit these installations, “given the threat to the UK, and the increasing capability and interoperability of these systems, we need additional controls.” The UK government’s new rules, which apply to surveillance camera equipment made by companies subject to Chinese security regulations, include instructing departments to disconnect such equipment from core computer networks and consider removing it entirely. This is not the first time the UK has cracked down on Chinese surveillance products. Chinese Foreign Ministry Spokesperson Mao Ning said at a press conference in response to this matter that China firmly opposes some people’s generalization of the concept of national security and their unreasonable suppression of Chinese companies. Ne also said that  in addition, the Chinese government will firmly safeguard the legitimate rights and interests of Chinese companies.

Source: Global Times, November 25, 2022
https://world.huanqiu.com/article/4AcXuQ7XIFv

Briefings | | |   Geo-Strategic Trend Information/Technology

RTI: U.S. Broadened Bans on New Chinese Communications Equipment Imports

Radio Taiwan International (RTI) recently reported that the U.S. Federal Communications Commission (FCC) just issued a broadened ban on new telecommunications equipment from Chinese companies such as Huawei and ZTE, citing “unacceptable risk” to US national security. The FCC said it had passed a final rule prohibiting the sale or import of equipment deemed to pose a national security risk to the United States. This is the latest blow to Chinese telecommunications equipment makers. Jessica Rosenworcel, chairwoman of the FCC, circulated the proposed measure to three other commissioners who will give their final approval next month. She said these new rules are an important part of our ongoing efforts to protect the American people from national security threats involving telecommunications. The FCC follows the requirements of the Safety Equipment Act of 2021, which was signed into law by President Biden last November. The following Chinese companies, Huawei, ZTE, Dahua Technology, Hangzhou Hikvision Digital Technology, and Hytera Communications will all be impacted by this ban. The measures would effectively disallow these companies from selling new devices in the U.S. and will also expand and update the FCC’s “covered list” of prohibited products to prevent private entities from bringing products from these Chinese companies into the United States as well. Huawei declined to comment on this matter, while ZTE did not immediately respond to a request for comment.

Source: RTI, November 26, 2022
https://www.rti.org.tw/news/view/id/2151714

Briefings | | |   Information/Technology US-China Relations

RFA Chinese: Tencent Launched another Round of Layoffs

Radio Free Asia, Chinese Edition, recently reported that sources said that Chinese tech giant Tencent Holdings has begun a new round of layoffs in its video streaming, gaming and cloud computing divisions. This round of layoffs affects three of Tencent’s six business units. It is difficult to determine the size of the layoffs. China’s tech sector continues to feel the effects of regulatory crackdowns and the Zero Covid government policies that have slowed China’s economic growth. Earlier this year, Tencent had already cut staff along with other well-known tech companies such as the Alibaba Group. Tencent management said they were focused on cutting costs and have closed non-core businesses in some areas. The Shenzhen-based company is eyeing global expansion to offset slowing growth in China. Tencent is recalibrating its mergers and acquisitions strategy, focusing more on buying majority stakes in mostly overseas game companies. Market analysts expressed the belief that Tencent will report flat or slightly smaller revenue for its third quarter. Tencent declined to comment on the matter.

Source: RFA Chinese, November 15, 2022
https://www.rfa.org/cantonese/news/tencent-11152022065627.html

Briefings | | |   Economy/Resources Information/Technology

Apple Factory in Shanghai Stopped Hiring Workers

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that Shanghai Pegatron, known as Apple’s second largest foundry (after Foxconn), issued an announcement on October 15th that it would suspend recruitment. Pegatron has always been the main force in manufacturing iPhone Plus models. The reporter visited Pegatron’s Shanghai Apple factory in person, and the recruitment interview office was empty. The security guard at the factory gate explained, “The factory is not that busy right now, and recruitment has stopped.” According to sources, Apple cut 70 percent and 90 percent respectively of the orders from two of its suppliers in China. At the same time Apple asked at least one component supplier to stop production immediately. The recent sharp reduction in working hours has caused dissatisfaction among many employees, since their income has been reduced substantially and they can only get a base salary. As the largest iPhone OEM, Zhengzhou Foxconn accounts for half of the world’s iPhone assembly work. Foxconn also lowered the company’s performance forecast for the fourth quarter, due to the Zero Covid government policy. Apple has been spreading its supply chain around the world to manage risk. This year, the number of factories from the United States and South Korea increased significantly. In particular, the number of American suppliers has increased from 54 to 85.

Source: Sina, November 15, 2022
https://finance.sina.cn/tech/csj/2022-11-15/detail-imqqsmrp6279086.d.html

Briefings | | |   Information/Technology US-China Relations