|Bid||53,200.00 x 0|
|Ask||53,300.00 x 0|
|Day's range||53,100.00 - 53,900.00|
|52-week range||42,300.00 - 62,800.00|
|Beta (5Y monthly)||0.92|
|PE ratio (TTM)||N/A|
|Earnings date||30 Jul 2020|
|Forward dividend & yield||1,416.00 (2.57%)|
|Ex-dividend date||30 Mar 2020|
|1y target est||54,903.00|
(Bloomberg) -- Augmented reality startup Magic Leap Inc. has hired Peggy Johnson, a Microsoft Corp. executive, to take over as chief executive officer starting next month, as the company continues to reshape itself as a provider of business services.Magic Leap had been one of the buzziest startups in recent years. It raised more than $2 billion from high-profile investors including Alphabet Inc., largely on the promise that it would turn augmented reality into a viable consumer technology. Rony Abovitz, the company founder and CEO, became the de facto evangelist for augmented reality, with bold and colorful pronouncements of its potential.But the Florida-based company struggled to execute, and sales of its flagship product, the Magic Leap One headset, never took off after extensive delays. The company said late last year it would focus more on business applications, and cut more than half of its workforce in April. Selling to companies is a far different prospect than building a consumer product, and one Abovitz rarely showed as much enthusiasm for. He announced in May he would step down once the company found a replacement.Johnson, who spent more than two decades at Qualcomm Inc., brings extensive experience negotiating partnerships with other large businesses. She joined Microsoft in 2014 as one of CEO Satya Nadella’s first major hires, at a time when the software maker’s dealings with other companies were often contentious. As head of business development, Johnson worked to repair Microsoft’s relationships with partners like Salesforce.com Inc. and Samsung Electronics Co., becoming the face of a new, friendlier company. In 2016 she started Microsoft’s venture capital arm M12.“I look forward to strategically building enduring relationships that connect Magic Leap’s game-changing technology and pipeline to the wide-ranging digital needs of enterprises of all sizes and industries,” Johnson said Tuesday in a statement.Microsoft also makes one of the main rivals to Magic Leap, the Hololens, which it has always positioned primarily as a business tool. A Microsoft spokesperson said the company is satisfied that any confidentiality issues arising from Johnson moving to a direct competitor have been addressed.Microsoft will conduct an internal and external search to find Johnson’s replacement and her duties will be assumed in the short term by Chief Financial Officer Amy Hood, who already oversees mergers and acquisitions, according to a spokesperson.(Updates with background on Johnson in the fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Samsung Asset Management Hong Kong Ltd. is changing the underlying benchmark for its oil ETF after it was unable to track the current index following a dramatic sell-off and subsequent rally in crude prices this year.Samsung Asset said it worked with S&P Dow Jones Indices to come up with a new index that will track multiple contract months for oil futures to mitigate the risk from holding a single-month contract, the Hong Kong-based money manager said in a statement late Monday.Once the new U.S. dollar index is rolled out in August, it will eventually be weighted 55% to the one-month forward index, 30% to the two-month index and 15% to the three-month, according to the statement. The ETF fell 2% in Hong Kong on Tuesday, the most in a week.The Samsung exchange-traded fund has trailed its underlying index since May, after investors poured into it to bet on a rebound in oil prices after the April plunge. The ETF’s money pool jumped 84 times to $626 million as of July 3, making it the fastest-growing money manager in Hong Kong, according to data compiled by Bloomberg.For those who bought the fund -- the Samsung S&P GSCI Crude Oil ER Futures ETF -- in April, their timing looked to be impeccable. Oil futures plunged to -$40 in New York on April 20, as the pandemic and price war between Russia and Saudi Arabia sent the market into freefall. The spot price for West Texas Intermediate has literally turned upside down since then, rallying to about $40 a barrel.Samsung was unable to track the recovery because its broker didn’t allow the fund to increase its exposure to oil futures. The fund didn’t name the broker. As a result, Samsung’s managers sold out of the active June contract and bought contracts for September, later adding ones for October and December. The September contracts were priced higher than those for June, meaning the fund held fewer of them, reducing their exposure to the ensuing rally.In a letter to shareholders dated April 21, amid the heightened market panic, Samsung explained its move.“Over the course of the past day, the price of June 2020 contracts has dropped substantially,” the fund wrote, adding it could drop to zero or negative.The fund said it was taking a “defensive position” to protect investors by selling the contracts in these “exceptional circumstances.”It acknowledged the trade-off for the move: “The downside is that investors may not be able to enjoy any upside of holding June 2020 contracts” if the market price rebounds.That’s exactly what happened. As a result, the fund has posted a decline of 78% this year as of July 2, compared with a 66% drop in the index it tracks. The fund appointed several clearing brokers in May.Unprecedented oil-market volatility this year has wreaked havoc on ETFs and other products designed to give investors an easy way to bet on the direction of crude prices. The Samsung ETF and the U.S. Oil Fund, which trades in New York, are among those that upended their strategies to reduce the risk of getting wiped out by another plunge below zero.Bank of China Ltd. faced a public outcry and scrutiny over the collapse of an investment product linked to oil futures, and is facing the possibility of absorbing $1 billion in losses suffered by its retail clients.In South Korea, mom-and-pop investors exposed to about 1.45 trillion won ($1.2 billion) worth of structured notes tied to Brent or WTI futures faced losses. In India at least three brokerages have petitioned the courts to challenge the settlement of contracts after their clients faced millions of dollars in losses from the negative prices.(Updates with share price of ETF fund in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Samsung Electronics Co.’s shares slid nearly 3% on concerns that growth in chip demand may slow as the world emerges from Covid-19 in the second half of the year, outweighing a better-than-expected profit.The world’s largest manufacturer of memory chips and smartphones posted operating profit of 8.1 trillion won ($6.8 billion) in the three months ended June, beating the 6.2 trillion won average of estimates. Sales for the quarter were 52 trillion won, according to preliminary results released Tuesday. The company didn’t provide net income or break out divisional performance, which it will do later this month when it releases final results.The estimates include a one-time gain related to the display business. While the company didn’t offer details, some analysts estimated it could have recorded more than 1 trillion won in compensation from Apple Inc. for fewer-than-promised display orders.Despite its strong topline numbers, Samsung shares closed 2.9% down in Seoul on Tuesday, faring worse than the 1.1% drop in the KOSPI. Part of the negative sentiment may be explained by worries of a price decline in the key memory segment, where stockpiling orders in the current period might taper off.“The market is concerned about a potential slowdown in server expansions. Memory prices could be weakening in the 2H,” said Park Sung-soon, analyst at Cape Investment & Securities.The Covid-19 pandemic has presented a silver lining for the tech industry in hastening the shift toward online activity such as video conferencing, web-based education and entertainment streaming, helping Samsung sell more chips in the quarter.“Because of this work-from-home situation, there’s been strong demand for a couple of its products,” said Kiranjeet Kaur, a research manager at IDC. “The demand for DRAM has seen a spike in Q2 due to demand in server and data centers.”Read more: Samsung’s Surprise Leaves More Confusion Over Tech: Tim CulpanAlthough Samsung had warned of a profit slide in the second quarter due to plant and store closings, it managed to mitigate the fallout by cutting marketing expenses and selling TVs and monitors to people spending more time working and playing at home.Samsung’s mobile and consumer electronics businesses took a hit from the closures since mid-March, but stores and factories began reopening across North America and Europe from June. Hana Financial Investment forecasts Samsung will report around 5.5 million smartphone shipments for the second quarter when it releases its full breakdown.While Samsung’s business appears to be weathering the virus storm, the company has another significant challenge to deal with in determining the fate of its de-facto leader, Jay Y. Lee. The company’s vice chairman is facing allegations of corruption in Korea that could lead to prosecution and a return to prison.Read more: Samsung Billionaire’s Fate at Risk Despite Role in Virus Fight(Updates with share price and analyst comment from first paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Samsung Electronics Co.’s second-quarter earnings seem like good news. But it’s really not as simple as that.Revenue beat estimates by around 3.6% while operating profit topped even the highest of sell-side analyst estimates by 6.3%, the South Korean giant reported Tuesday. Right off the bat, those numbers carry a caveat: The company posted a one-time gain related to its display business that would have helped the bottom line.Still, there’s no denying that the top line was largely ahead of expectations — likely due to sales of memory chips used in servers. That doesn’t mean that Samsung has beaten the Covid-19 pandemic, though. Total revenue is 7.4% lower than a year earlier. These numbers reflect the mid-point of guidance, which Samsung provides within days of a quarter’s closing. We don’t yet know the size of that one-time profit on its display business. However, Bloomberg News reports that it could be as much as 1 trillion won ($840 million) in compensation from Apple Inc. for fewer-than-promised orders of screens used in iPhones, iPads and other devices. Such a figure would account for most of the discrepancy between earnings and estimates.Rather than being good news, the payment would represent a bad sign for the technology sector, reflecting weaker demand for gadgets. We saw further signs of that late Monday, with Foxconn Technology Group’s Hon Hai Precision Industry Co. reporting a 9.1% slump in June sales, closing out second-quarter revenue with a 2.3% drop. Hon Hai assembles iPhones. This is traditionally low season for Apple’s flagship device, so much of that decline will be for other products that Foxconn makes, including personal computers, servers and data-center equipment. While a single-digit drop isn’t terrible given what’s happening in the global economy, it does contrast with the optimism shown in stock markets in recent weeks. Apple shares are at an all-time high, while Amazon.com Inc.’s market value just topped $1.5 trillion.Samsung investors seem a little befuddled, too. Its shares rose as much as 1.6% Tuesday after the announcement, but fell later in the morning as the market started digesting the news. The reaction also tells us that rather than being a positive sign, this earnings tidbit highlights just how confusing the current situation is.Samsung’s results are an allegory for much of what we see in the tech sector these days: Bad news (revenue dropping) taken as optimistic because it beat estimates, while seemingly good news (operating profit surpassing expectations) actually being a sign of weakness due to it being a compensatory payment.These are the kinds of conflicting signs we’ll see a lot more this earnings season. Investors need to get used to flying blind.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Samsung Electronics Co Ltd flagged a 23% rise in second-quarter operating profit on Tuesday, beating analysts' estimates on solid chip sales to data centres catering for a work-from-home economy during the novel coronavirus pandemic. The sales offset weak demand for smartphones and televisions, while one-off gains from its display business, which counts Apple Inc. as a customer, also boosted profits, the company said. The world's top memory-chip and smartphone maker said operating profit was likely 8.1 trillion won ($6.8 billion) in the quarter that ended in June, far above the 6.4 trillion won analyst forecast by Refinitiv SmartEstimate.
At Samsung Electronics Co Ltd, demand for its chips from data centres bulking up to meet a surge in work-from-home traffic was not likely enough to offset muted sales of its smartphones in the second quarter, analysts said. Profit likely fell 4.5% to 6.3 trillion won ($5.25 billion) from the same period year earlier, according to Refinitiv SmartEstimate, which is weighted towards the more consistently accurate analysts. Work-from-home orders and growth in online learning is underpinning chip demand amid the COVID-19 pandemic, prompting U.S. DRAM supplier Micron Technology Inc to forecast strong quarterly revenue last month.
(Bloomberg) -- Chinese flexible display maker Royole Corp. is weighing an initial public offering in China while its planned U.S. listing is put on hold, according to people familiar with the matter.Royole had filed confidentially for a U.S. IPO that could raise about $1 billion, Bloomberg News reported earlier this year. However, the startup is now considering a listing in China, the people said, asking not to be identified as the information is private.Considerations are at an early stage and no final decisions have been made, the people said. A representative for Royole declined to comment on the matter.Royole, known for manufacturing the world’s first commercial foldable phone, had originally planned to raise funds via a private financing round at a valuation of about $8 billion, people familiar with that deal said last year. But the Chinese company turned to the U.S. markets after liquidity tightened during a downturn in China’s venture capital sector, the people said.Since January relations between the U.S. and China have deteriorated sharply, with tensions spanning trade, technology and Hong Kong. Many U.S.-listed Chinese companies are considering second listings closer to home in Hong Kong, while China has been actively seeking to lure innovative technology companies to list in Shanghai and Shenzhen.Royole competes with Samsung Electronics Co. and BOE Technology Group Co. to produce bendable screens using cutting-edge organic light-emitting diode technology. The company, which gave away wraparound-screen hats at the 2018 World Cup in Russia, in January unveiled a smart speaker that packs a bendable display around a cylinder.Its full line of products encompasses head-mounted displays intended for use as so-called mobile theaters and other wearable flexible displays. The company even has a smart writing pad that it sells on Amazon.com, JD.com and in stores globally.Royole’s earlier investors include Knight Capital, IDG Capital, Poly Capital Management, AMTD Group, the funds of Chinese tycoon Xie Zhikun and the venture capital arm of the Shenzhen city government.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Cooped up within a large conference room on the 15th floor of government offices in downtown Seoul, 13 South Korean citizens sparred for nine hours over the country’s most contentious issue: the legal fate of Samsung heir apparent Jay Y. Lee.The all-male group -- including professors, school teachers and two Buddhist monks -- gathered Friday after Lee invoked a rarely used option to have a civilian panel review legal cases. They heard arguments for and against indicting the billionaire on allegations of financial fraud. They then debated among themselves for another two hours before deciding to try a secret ballot to break the impasse. The outcome -- 10 against an indictment and just three for -- stunned panel members themselves.“We were all quite surprised,” one of the members told Bloomberg News, asking not to be named since he wasn’t authorized to talk about their discussions. “We had a heated debate but not every member exposed their thinking. It was really hard to tell.”The decision, while not legally binding, hands an important victory to Samsung and its de facto leader, who gambled on the little-known system to undercut the government’s case and showcase support for Korea’s largest corporation. The recommendation provoked an immediate backlash from corporate governance activists and lawmakers, who urged prosecutors to seek Lee’s indictment anyway. But if they decide to ignore the panel, officials risk angering a populace that regards Samsung -- the world’s largest maker of smartphones, memory chips and appliances -- as critical to reviving the country’s economy after the coronavirus outbreak.Lee’s attorneys said they are “thankful” for the panel’s involvement and “respect the decision.” Representatives for the prosecutors’ office declined to comment when contacted for this story.On Wednesday, civil organizations from both sides of the debate held separate press conferences in Seoul to comment on the panel’s conclusion. Samsung Electronics Co. shares fell 0.4% on the day, while Samsung Biologics, one of the companies implicated in the allegations against Lee, was down 3%.Read more: Samsung’s Billionaire Heir Scores Public Win in Graft ProbeBefore Lee’s request, few outside of legal circles had even heard of the civil panel option, which was created in 2018. Now it’s influencing a case that’s spurred nationwide controversy, pitting the country’s most powerful chaebols, or conglomerates, against government agencies that have pledged to diminish their influence and cozy ties to the president’s administration and his Blue House.In most legal systems of the developed world, public prosecutors decide which cases to pursue, with judges or juries acting as a check by determining the ultimate verdict. South Korea started the unusual civilian panel option as part of reforms under the Moon Jae-in administration. It’s similar to the grand jury system except panel members are chosen -- at random -- by the supreme prosecutors’ office from an existing pool of several hundred pre-vetted names. Friday’s panel thus served as a barometer for how the public views the Samsung heir as well as the chief prosecutor, who is appointed by the president.Their meeting started at 10:30 am. Prosecutors gave a presentation for about 75 minutes, then a Q&A session for another 90. Following a half-hour boxed lunch, Lee’s lawyers took their turn. During the discussions, the panelists pored over 50 pages of densely worded legal statements, plus a lengthy filing from a liberal civil organization that explained the allegations against Lee, which included stock and accounting manipulation. There followed a final, two-hour-long. freewheeling debate, during which the 13 openly expressed their views, one of them said. At one point, a reporter texted one of the members -- whose identities had been kept under wraps -- causing a bit of a stir.A second panelist said he expected a close vote considering the polarized public opinion. A third member said he was disheartened about the subsequent controversy over the decision, given they tried their best to be impartial. But he acknowledged one or two members raised the question of the economic impact of Samsung’s legal crisis. “This is an ideological war surrounding a chaebol company behind the scenes,” one of the panelists said.Why Samsung’s Billionaire Scion Is Facing Jail Again: QuickTakeSouth Korea’s special prosecutors first indicted Lee in early 2017 on charges of bribery and corruption, kicking off a years-long dispute that led to the impeachment of former President Park Geun-hye. Prosecutors accused Samsung of providing horses and other payments to a confidante of Park’s, to win support for his succession. Lee was found guilty, but then freed after about a year after the court suspended his sentence -- a controversial decision that the Supreme Court has since reversed, raising the prospect of a retrial. The case discussed Friday was related and centers on whether Lee and Samsung used illegal means to help him take control of the conglomerate founded by his grandfather.While one of the panelists broached the bigger political and economic ramifications, they got bogged down in highly technical details. Members said the biggest hitch in deliberations was how to interpret Article 178 - the prohibition of unfair trading - of the Financial Investment Services and Capital Markets Act, and whether Lee violated the clause. Prosecutors suspect Samsung Biologics Co. intentionally violated accounting rules to justify a more favorable merger ratio between Biologics’ major owner, Cheil Industries, and Samsung C&T. That in turn helped bolster the value of the heir’s stake in Cheil and his influence at Samsung Group. Prosecutors also allege that Lee was involved in stock price manipulations during the 2015 merger, which Samsung and Lee’s attorneys have denied.The panel was divided on whether Samsung complied with financial law during the deal, and on whether Samsung had a clear motive to execute the merger for Lee. One of the members said some were of the opinion that prosecutors had so far failed to produce a “smoking gun,” a strong persuasive argument that crimes were committed. But another member who said he voted against Lee said there were ample documents to support a case against the executive, including records of phone calls and emails that appeared to show Lee was aware of the alleged scheme. He didn’t elaborate, citing legal confidentiality.The ball is now in the prosecutors’ court, another of the members said. Prosecutors have mostly abided by previous recommendations, but no panel has ever reviewed such a high-stakes case. Officials have invested years into their investigation and may seek to make an example of Lee. If they decide to proceed, an indictment may tie up Samsung’s chief in trials for another three years.“Apart from Lee’s personal responsibility, I believe this should be a chance to uphold financial market law and order,” one of the members said. “Our society has to become transparent and fair for our future generations.”(Updates with share prices and Wednesday developments in sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Sydney, Australia, June 30, 2020 - (ABN Newswire) - Etherstack plc (ASX:ESK) has entered a global teaming agreement with Samsung Electronics (KRX:005930) to deliver next generation Mission Critical Push ...
(Bloomberg) -- China’s No. 2 smartphone brand Vivo Mobile Communications Co. has broken ground on a high-rise office in Shenzhen to house its future headquarters, highlighting a construction boom from the country’s burgeoning tech sector.Scheduled for completion in 2025, the gadget maker’s 32-story abode will house 5,800 workers and was designed by NBBJ, the architects behind Samsung’s Silicon Valley campus and Seattle’s Amazon Spheres. The new building will feature Vivo’s flagship store, indoor gardens at every level and a spiraling exterior with self-shading glass, according to the architectural firm.Vivo joins the likes of Tencent Holdings Ltd. and ByteDance Ltd. in spending big on new office space -- much of it in the bustling tech hub of Shenzhen -- adding to a mega-building splurge at a time when economic turmoil is forcing other businesses to cut back. WeChat operator Tencent is building an adjacent campus roughly the size of midtown Manhattan on reclaimed land in Qianhai Bay that cost the company $1.2 billion. Vivo paid 1.3 billion yuan ($182 million) for the site of its new headquarters and TikTok owner ByteDance recently spent 1.1 billion yuan for land in the city’s downtown area, according to the local land authority.Kuaishou, a YouTube-like video platform backed by Tencent, is spending 3 billion yuan on a base for its fledgling e-commerce business in Chengdu, complete with studios for live-streamers hawking wares.Some economists say building booms signal an overheated economy that precedes a crash. But NBBJ, which also designed campuses for Alphabet Inc.’s Google and Alibaba Group Holding Ltd. affiliate Ant Group, argues China’s tech giants have outgrown their old digs and are now merely seeking space to anchor a potential wave of future global expansion.Vivo, which began life in the midst of Android’s rise a decade ago, has steadily grown into a leader at home and across Asia and Europe, alongside compatriots Huawei Technologies Co. and Xiaomi Corp. Its development encapsulates the way Chinese names have started making waves abroad.“What we’ve seen now is part of a natural life cycle of these companies where they’ve outgrown their current facilities, and they need new ones to operationally support their growing global reach,” said NBBJ partner Robert Mankin, who’s responsible for the Vivo project. “It’s increasingly rare in the U.S. for companies to build their individual headquarters campus, and you still see it in Asia.”Read more: ByteDance Launches Global Hiring Spree With 10,000 New JobsThe tech campus boom coincides with a trillion-dollar effort in China to both stimulate the economy and lay the networking and data-center foundations for next-generation internet technology. In terms of offices, Tencent has the most ambitious expansion plans among its peers. Dubbed Net City, its latest project includes solar panels, arrays of automated sensors, mangroves to prevent flooding and a pedestrian-friendly transportation network. It will take around seven years to complete.Tencent currently has 38,000 workers in Shenzhen, with the headcount expected to more than double in seven years, according to the local government. ByteDance has said it plans to create 40,000 new jobs this year, and the startup has rented new offices in Hong Kong and bought a Beijing shopping plaza to convert into a workplace.Vivo’s crosstown rival Oppo is also building new headquarters in Shenzhen. The project, designed by Zaha Hadid Architects, will feature a 20-story vertical lobby, an art gallery, shops and restaurants. Construction is expected to complete in 2025.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The U.S. and China are moving beyond bellicose trade threats to exchanging regulatory punches that threaten a wide range of industries including technology, energy and air travel.The two countries have blacklisted each other’s companies, barred flights and expelled journalists. The unfolding skirmish is starting to make companies nervous the trading landscape could shift out from under them.“There are many industries where U.S. companies have made long-term bets on China’s future because the market is so promising and so big,” said Myron Brilliant, the U.S. Chamber of Commerce’s head of international affairs. Now, they’re “recognizing the risk.”China will look to avoid measures that could backfire, said Shi Yinhong, an adviser to the nation’s cabinet and a professor of international relations at Renmin University in Beijing. Any sanctions on U.S. companies would be a “last resort” because China “is in desperate need of foreign investment from rich countries for both economic and political reasons.”Nevertheless, pressure is only expected to intensify ahead of the U.S. elections in November, as President Donald Trump and presumptive Democratic nominee Joe Biden joust over who will take a tougher line on China.Trump has blamed China for covering up the coronavirus pandemic he has mocked as “Kung Flu,” accused Beijing of “illicit espionage to steal our industrial secrets” and threatened the U.S. could pursue a “complete decoupling” from the country. Biden, likewise, has described President Xi Jinping as a thug, labeled mass detention of Uighur Muslims as unconscionable and accused China of predatory trade practices.And on Capitol Hill, Republicans and Democrats have found rare unity in their opposition to China, with lawmakers eager to take action against Beijing for its handling of Covid-19, forced technology transfers, human rights abuses and its tightening grip on Hong Kong.“China is going to be a punching bag in the campaign,” said Capital Alpha Partners’ Byron Callan. “But China is a punching bag that can punch back.”China has repeatedly rejected U.S. accusations over its handling of the pandemic, Uighurs, Hong Kong and trade, and it has fired back at the Trump administration for undermining global cooperation and seeking to start a “new cold war.” Foreign Minister Wang Yi last month said China had no interest in replacing the U.S. as a hegemonic power, while adding that the U.S. should give up its “wishful thinking” of changing the country.Both sides have already taken a series of regulatory moves aimed at protecting market share.The U.S. is citing security concerns in blocking China Mobile Ltd., the world’s largest mobile operator, from entering the U.S. market. It’s culling Chinese-made drones from government fleets and discouraging the deployment of Chinese transformers on the power grid. The Trump administration has also tried to constrain the global reach of China’s Huawei Technologies Co., the world’s largest telecommunications equipment manufacturer.Meanwhile, China prevented U.S. airline flights into the country for more than two months and, after the U.S. imposed visa restrictions on Chinese journalists, it expelled American journalists. It has stepped up its scrutiny of U.S. companies, with China’s state news agency casting one probe as a warning to the White House. China also has long made it difficult for U.S. telecommunications companies to enter its market, requiring overseas operators to co-invest with local firms and requiring authorization by the central government.One of the most combustible flash points has been the Trump administration’s campaign to contain Huawei by seeking to limit the company’s business in the U.S. and push allies to shun its gear in their networks.The U.S. Federal Communications Commission moved to block devices made by Huawei and ZTE Corp. from being used in U.S. networks. And the Commerce Department has placed Huawei on blacklists aimed at preventing the Chinese company from using U.S. technology for the chips that power its network gear, including tech from suppliers Qualcomm Inc. and Broadcom Inc.After suppliers found work-arounds, Commerce in May tightened rules to bar any chipmaker using American equipment from selling to Huawei without U.S. approval. The step could constrain virtually the entire contract chipmaking industry, which uses equipment from U.S. vendors such as Applied Materials Inc., Lam Research Corp. and KLA Corp. in wafer fabrication plants.The curbs also threaten to cripple Huawei. Although the company can buy off-the-shelf or commodity mobile chips from a third party such as Samsung Electronics Co. or MediaTek Inc., going that route would force it to make costly compromises on performance in basic products.Huawei was on a list the Pentagon unveiled last week of companies it says are owned or controlled by China’s military, opening them to increased scrutiny. The Ministry of Foreign Affairs in Beijing accused the Trump administration of “violating the very market economy principle the U.S. champions.”“We are strongly opposed to this,” the foreign ministry said Sunday of the Pentagon’s designation. “China urges the U.S. to stop suppressing Chinese companies without reason and provide a fair, just and non-discriminatory environment for Chinese companies to operate normally in the U.S.”After the new restrictions, the editor of the Communist Party’s Global Times newspaper tweeted that China would retaliate using an “unreliable entities list” that it first threatened at the height of the trade war last year. Although China didn’t identify companies on the list, the Global Times has cited a source close to the Chinese government as saying U.S. bellwethers such as Apple Inc. and Qualcomm could be targeted.The fallout could extend to companies heavily reliant on Chinese supply chains, as well consumer-facing brands eager to expand sales in Asia. Boeing Co., which recorded $5.7 billion of revenue from China in 2019, and Tesla Inc., the biggest U.S. carmaker operating independently in China, are among companies most exposed if relations sour further.“We’re playing in a much wider field now,” said Jim Lucier, managing director of research firm Capital Alpha Partners. “We’re not simply talking about ‘you tariff me’ and ‘I tariff you.’ The playing field is virtually unlimited.”Planes and AutomobilesU.S. automakers have also been singed. In June, China fined Ford Motor Co.’s main joint venture in the country for antitrust violations, saying Changan Ford Automobile Co. had restricted retailers’ sale prices since 2013.Aviation has been another source of tension, as both countries squabble over access to their skies. China’s decision to limit U.S. airlines operations to those services scheduled as of March 12 hurt carriers such as United Airlines Holdings Inc., Delta Air Lines Inc, and American Airlines Group Inc. that had suspended passenger flights to and from China because of the coronavirus pandemic.The U.S. responded earlier this month by initially threatening to ban all flights from China, then relenting to allow two flights weekly once Chinese officials eased their restrictions. Now, in what appears to be a staged de-escalation, China gave U.S. passenger carriers permission to operate four weekly flights to the country and earlier this month, the Trump administration matched the move by also authorizing four flights from Chinese airlines.It’s happening outside of aviation too. Consider the U.S. government’s decision to seize a half-ton, Chinese-made electrical transformer when it arrived at an American port last year and divert the gear to a national lab instead of the Colorado substation where it was supposed to be deployed. That move -- and a May executive order from Trump authorizing the blockade of electric grid gear supplied by “foreign adversaries” of the U.S. in the name of national security -- have already sent shock waves through the power sector.The effect has been to dissuade American utilities from buying Chinese equipment to replace aging components in the nation’s electrical grid, said Jim Cai, the U.S. representative for Jiangsu Huapeng Transformer Co., the company whose delivery was seized. Although Cai said the firm has supplied parts to private utilities and government-run grid operators in the U.S. for nearly 15 years without security complaints, at least one American utility has since canceled a transformer award to the company, Cai said.Trump’s directive is tied to a broader effort to bring more manufacturing to the U.S. from China. “This is a part of the administration’s efforts to impair China’s supply chains into the United States,” said former White House adviser Mike McKenna.Escalating tensions could jeopardize the U.S. economic recovery as well as China’s trade commitment to buy $200 billion in American goods and services over the next two years. The country’s purchase of U.S. goods increased last month as the economy continued its recovery from the coronavirus shutdowns, but imports are still far behind the pace needed to meet the terms of the phase one trade deal, according to Bloomberg calculations based on data from China’s Customs Administration.U.S.-China struggles also may factor into the November presidential election. Former U.S. national security adviser John Bolton alleges in a new book that Trump asked Xi to help him win re-election by buying more farm products -- a claim the White House has dismissed as untrue.“I don’t expect one single blow to send this relationship in a tailspin,” the chamber’s Brilliant said. “Each side will calibrate their reactions in a way that will not tip the scales too far.”Take the recent spat over media access. After the U.S. designated five Chinese media companies as “foreign missions,” China revoked press credentials for three Wall Street Journal staff members over an article with a headline describing China as the “real sick man of Asia.”Then the Trump administration ordered Chinese state-owned news outlets to slash staff working in the U.S. Beijing responded in March by effectively expelling more than a dozen U.S. journalists working in China.Both the U.S. and China have ample opportunities to ratchet up regulatory pressure. A bill passed by the Senate last month could prompt the delisting of Chinese companies from U.S. stock exchanges if American officials aren’t allowed to review their financial audits.And last week, as the U.S. State Department imposed visa bans on Chinese Communist Party officials accused of infringing the freedom of Hong Kong citizens, a senior official made clear the move was just an opening salvo in a campaign to force Beijing to back off new restrictions on the city.China, similarly, can slow licensing decisions and regulatory approvals, launch investigations under its anti-monopoly law and squeeze financial firms that want to do business in the country. For instance, the country could rescind pledges to let U.S. financial firms take controlling stakes in Chinese investment banking joint ventures, according to a Cowen analyst.“China will not make any significant compromise and will retaliate whenever and wherever possible,” said Shi, the Renmin University professor.Companies are still lured to China and its massive local market -- and tensions with the U.S. don’t overcome the Asian superpower’s appeal. Just one-fifth of companies surveyed by the American Chamber of Commerce in China late last year said they had moved or were considering moving some operations outside of the country, part of a three-year downward trend.But the coronavirus pandemic has subsequently pushed more companies to reckon with the risks of relying too heavily on any single country for their supply chains, amid existing concerns about forced technology transfers, cost and rising tensions that could damp investment in China.China is no longer the lowest-cost manufacturer, and companies are more reluctant to invest there, said James Lewis, director of the Technology Policy Program at the Center for Strategic and International Studies in Washington.“Everyone would like to be in the China market -- everyone wants it to be like 2010 -- but things are changing.”(Updates with trade data in 28th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- South Korean Finance Minister Hong Nam-ki sees a third extra budget pending approval in parliament as the last for this year and said the economic shock from the coronavirus pandemic may have bottomed.South Korea’s economy can still avoid its first annual contraction in more than two decades if stimulus measures including the latest supplementary budget get carried out quickly enough to build on the momentum of improving exports and consumer confidence, Hong said in an interview with Bloomberg on Friday.“We are seeing signs of consumption and exports recovering from May,” said Hong, who also serves as deputy prime minister. “What’s more important than pouring out more measures and money is ensuring that the third extra budget and the series of measures taken in the first half feed through.”The government has so far pledged more than 270 trillion won ($225 billion), or roughly 14% of its gross domestic product, to support businesses and families hit by the pandemic.Though most economists expect South Korea’s GDP to contract this year for the first time since the Asian financial crisis in the late 1990s, Hong reiterated that the government’s 0.1% projection isn’t out of reach if policy efforts are swiftly implemented.While Hong sees a need to focus on passing the third extra budget and implementing measures, lawmakers have a big say in supplementary budget decisions, holding the final key to approvals and often igniting discussions on the need for such spending.Hong’s less pessimistic view on the economy comes amid signs of improvement.Exports may show surprising strength toward the end of the year as major trading partners reopen their economies, Hong said, with chips, ships and medical supplies leading the recovery.South Korea’s exports slumped more than 20% in April and May, but early trade data point to a more moderate fall this month amid resilient chip demand and more purchases from China.“The atmosphere for an improvement of exports is turning more favorable,” he said, while adding that overall shipments will still likely contract for the year.Having flattened the infection curve earlier than most countries, South Korea is now focusing on a post-pandemic growth strategy that fosters new industries. Driving the strategy is President Moon Jae-in’s “New Deal” program, which seeks to create 550,000 new jobs by spending 31 trillion won through 2022, when his term ends.The government will focus its investment on artificial intelligence, bio technology, self-driving cars and other data-intensive industries as their success can spill across other businesses, Hong said.South Korea is keeping a “nervous eye” on China, whose “Made in China 2025” plan overlaps with its ambitions in many technology sectors, he said. Still, it’s the private-sector investment that holds the key to maintaining South Korea’s competitive edge, Hong added, commending Samsung Electronics Co., SK Hynix Inc. and LG Display Co. for their recent decisions to expand production lines.Launching new businesses is also central to finding the next growth engine, he said, adding that only 0.8% of half a million college graduates in Korea begin startups compared with 8% of 7 million graduates in China.South Korea Bets on ‘Untact’ for the Post-Pandemic EconomyHong said the pandemic has prompted South Korea to rethink its dependence on factories abroad, with the government planning to announce supply-chain reshaping measures in July to better absorb future shocks from outside.Hong expressed confidence in South Korea’s economic resilience, but said he was anxious about the possibility of its credit rating being changed as the government ratchets up spending and economic difficulties grow.The government’s stimulus measures are expected to push up South Korea’s debt-to-GDP ratio to about 43%, but that’s still very low compared with the OECD average of around 110%, Hong said.South Korea still has fiscal room for further action, though the pace of debt increase could be a concern, he said. The government is looking to propose rules limiting debt accumulation in late August, he added.The Bank of Korea has also done its part to avert a deeper downturn, cutting rates to a record 0.5% and providing unlimited liquidity via repurchase agreements. While pledging to keep monetary policy accommodative until the economy recovers, Governor Lee Ju-yeol recently flagged the need to prepare for an eventual policy normalization to prevent financial distortions.Hong said he understands Lee’s concerns from a monetary policy perspective, but added that the focus must stay on economic recovery for now.“The timing is too early to talk about normalizing the supply of liquidity as many companies are still complaining about a lack of liquidity,” Hong said.As for ongoing minimum wage discussions for next year, Hong said the economic situation under the coronavirus should be considered by the committee that sets the rate of increase, as well as the welfare of workers.The minimum wage rose by double digits in 2018 and 2019 after Moon took office vowing better living standards for workers. The pace slowed to 2.9% for this year amid a backlash from businesses.Asked about his biggest concern of late, Hong mentioned the “For Rent” signs on streets he saw during his 10-minute ride to work that point to more business closures.“That hurts,” he said. “The pressure to get an economic recovery going as early as possible is what keeps me awake at night.”(Adds Hong’s comments on entrepreneurship, business closures)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Samsung heir-apparent Jay Y. Lee scored a symbolic public victory Friday after a civilian review panel recommended against indicting the billionaire on charges of corruption.The panel, convened after Lee’s lawyers invoked the rarely used system in an effort to undermine prosecutors, voted in favor of halting an indictment, a spokesperson for the supreme prosecutors’ office said by phone. While not legally binding, that judgment could prove difficult to contravene. “We respect the decision made by the committee members,” Lee’s attorneys said in a statement. “We are thankful that the panel gave an opportunity for Samsung and vice chairman Jay Y. Lee to overcome the current crisis by focusing on business activities.”In most legal systems of the developed world, public prosecutors get to decide which cases to pursue, with judges or juries acting as a check by determining the ultimate verdict. In South Korea, the approach is a little different.The country has established an unusual process that allows suspects to call for an independent panel of experts to review prosecutors’ investigations. The highest-stakes case since this novel system was established in 2018 was heard Friday when lawyers for the billionaire scion of Samsung Group tried to convince a panel his prosecution for alleged financial crimes would be unfair.Attorneys for Lee, de facto leader of Samsung Electronics Co., squared off Friday against government prosecutors before 14 academics, legal experts and civil activists.Lee, embroiled in an increasingly contentious dispute with Korean prosecutors over allegations of bribery and accounting manipulation, represents the biggest test so far of a civil committee system created to help check prosecutors’ powers. Friday’s panel served as a barometer for how the public views the Samsung chief’s culpability as well as a test of the legitimacy of prosecutors, whose leader in Korea is appointed by the president.Lee’s attorneys -- who invoked their right to convene that group -- gambled the panel will rule in his favor, particularly after prosecutors failed this month to win an arrest warrant for the executive. Samsung, the world’s largest smartphone and memory chip maker and a symbol of Korea’s decades-long economic ascent, spent millions in past months on initiatives to battle Covid-19, including the widespread testing that’s proven instrumental in curbing the pandemic at home.“If the panel decides the case is not indictable, prosecutors will be put under immense pressure, and that’s what Samsung is aiming for,” Park Ju-gun, president at corporate research firm CEOScore.com, said before the panel’s recommendation was announced.Read more: Samsung Billionaire’s Fate at Risk Despite Role in Virus FightBefore Lee’s request, few outside of legal circles had even heard of the civil panel option. Adopted as part of prosecution reforms under the Moon Jae-in administration, it’s similar to the grand jury system except the panel members are chosen -- at random -- by the supreme prosecutors’ office from an existing pool of several hundred previously vetted names.Now, the little-known system proved pivotal to a case that’s spurred nationwide controversy, pitting the country’s most powerful chaebols, or conglomerates, against government agencies that have pledged to diminish their influence and cozy ties to the Blue House.South Korea’s special prosecutors first indicted Lee in early 2017 on charges of bribery and corruption, alleging that Samsung provided horses and other payments to a confidante of the former president to win support to help ease his succession. The case heard Friday was related and centers on whether Lee and Samsung used illegal means to help him take control of the conglomerate founded by his grandfather.Why Samsung’s Billionaire Scion Is Facing Jail Again: QuickTakeThe current probe kicked off after regulators concluded Samsung Biologics Co. intentionally violated accounting rules and inflated its value ahead of an initial public offering. Prosecutors suspect the violation was intended to justify the merger ratio between Biologics’ major owner, Cheil Industries, and Samsung C&T. That in turn helped bolster the value of the heir’s stake in Cheil and his influence at Samsung Group. The Biologics unit has said it didn’t violate accounting standards. Lee’s attorneys, which include several former senior prosecutors, may argue to the panel that the Biologics transactions were legitimate and approved by authorities at the time.Lee also counted on his image as a virus-fighter and national business leader to not just win a favorable panel review on Friday, but also more broadly influence the ongoing trial, said Lee Sang-hun, analyst at HI Investment & Securities. Beyond Samsung’s highly visible battle against Covid-19, Lee scored points last month after he issued a rare public apology for past mis-steps, and vowed never to pass Samsung’s reins to his children.Prosecutors have mostly followed the panel’s decision in past cases, according to local media. They can ignore an unfavorable outcome and move forward with an indictment -- but that risks angering the populace. Public opinion is so important in Korea it’s been known to sway court verdicts. Lee’s request for a panel has incensed prosecutors, who regard the move as an attempt to circumvent the legal process by appealing to a third party.“Samsung is striving to reduce legal risks with support from public opinion,” said Lee of HI Investment & Securities.Read more: Court Rejects Arrest of Samsung’s Lee in Succession Probe(Updates with comment from Lee’s lawyers in third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The U.S. campaign to hamstring China’s Huawei Technologies Co. is gaining fresh impetus as the Trump administration chokes off supplies of vital microchips and Beijing causes dismay on both sides of the Atlantic with its stance on Hong Kong and the coronavirus.The U.K. is reconsidering its embrace of Huawei while carriers in Denmark and Singapore have chosen other providers for their telecommunications networks. Meanwhile, Germany and France are reassessing the role of the company that the U.S. accuses of theft, sanctions busting and providing an avenue for espionage.Only months ago, the U.S. was struggling to persuade its allies not to use Huawei’s equipment. But in May, Washington moved to handcuff Huawei to outdated technology by denying it chips made with U.S. techniques. The change could turn Huawei into a permanent laggard, unable to update and maintain cutting-edge 5G networks that will be communications backbones for decades to come.At the same time, politics have been unkind to Huawei’s ambitions. Officials in Europe and the U.S. have criticized China over its handling of the Covid-19 pandemic. And Beijing drew condemnation for preparing national security laws for Hong Kong, a step seen as a threat to the city’s autonomy.“Two years ago no one worried about buying Huawei - that’s not true any more,” said James Lewis, director of the technology policy program at the Center for Strategic & International Studies in Washington. He sees “some progress,” in swaying other countries to ban Huawei “although well short of a total ban.”President Donald Trump is boasting of success, saying in a recent interview with the Wall Street Journal, “Look how tough I’ve been on Huawei. Nobody has been tougher than me.”The U.S. says Huawei is a threat to security for the fifth-generation, or 5G, wireless systems that are beginning to be deployed around the world. The networks promise speed and ubiquity: a thick forest of always-on links to billions of devices in homes, factories, surgical suites and autonomous vehicles. As more and more devices and networks are connected, vulnerability to hacking or espionage grows apace.Because Huawei is subject to control by China’s ruling Communist Party, it can be compelled by law to cooperate with the country’s security apparatus, and has been implicated in espionage, according to the State Department. The Pentagon chimed in Wednesday, sticking Huawei on a list of 20 companies it says are owned or controlled by China’s military, opening them up to potential new US. sanctions.Rob Manfredo, a U.S.-based spokesman for Huawei, didn’t respond to a request for comment.Huawei has denied allegations of spying, saying it would lose customers if it weren’t trustworthy. The Shenzhen-based company says it’s a private business that can’t be directed by Beijing, and that no Chinese law requires private national companies to engage in cyber-espionage.Chip BanThe Commerce Department’s ban in May of the sale of any silicon made with U.S. know-how was a potentially crippling blow to China’s tech champion. Huawei’s stockpiles of certain self-designed chips essential to telecom equipment will run out by early 2021, people familiar with the matter have said. While Huawei can buy off-the-shelf or commodity mobile chips from a third party like Samsung Electronics Co., it couldn’t possibly get enough and may have to make costly compromises on performance in basic products, they added.The chip restrictions add “uncertainty and potential costs” that could leave Huawei unable to meet commitments to build and maintain networks, said Robert Williams, executive director of the Paul Tsai China Center at Yale Law School. “The trade-offs between cost and security risks may look different now than they once did to the U.K.”Huawei’s position is sharply contested in Britain.The U.K. in January barred Huawei from sensitive core network components and high-risk areas like nuclear-power sites, but said the Chinese company could still constitute as much as 35% of networks’ 5G and fiber equipment elsewhere.That prompted an angry phone call from Trump to U.K. Prime Minister Boris Johnson. The Trump administration has said any country that uses an “untrustworthy” 5G vendor jeopardizes intelligence sharing with the U.S. That would strike at the heart of the traditional “Five Eyes” security alliance linking the U.S. and U.K., along with Australia, Canada, and New Zealand to cooperate on espionage.The U.K.’s January decision also triggered a rebellion of junior lawmakers in Johnson’s Conservative Party. Since then, Hong Kong and Covid-19 have helped to harden their stance.U.K. government officials now are seeking ways to phase the company out in as little as three years.“There’s been a pretty effective relentless American campaign,” said Sam Armstrong, spokesman for the Henry Jackson Society, a London-based policy group that has argued for blocking Huawei from the U.K.’s 5G networks. “The evidence in Parliament and the threats to Five Eyes intelligence-sharing arrangements have all contributed to a sense that this has had a seriously undermining effect on our trans-Atlantic relationship.”Despite the storm clouds obscuring its future in the U.K., Huawei committed Thursday to invest $1.2 billion in a research and development center near the English city of Cambridge, drawing criticism from a former leader of the ruling Conservative party. It said the timing was coincidental and the plans had been in the works for years. Growing TensionThe issue is fraught in other European countries, too. The company is losing luster in Europe after winning contracts across the continent, said John Strand, a consultant based in Copenhagen.“Around Europe, there is a growing focus on the use of Chinese equipment including Huawei,” Strand said in an interview. “When it comes to Hong Kong, it obviously has an impact.”Strand predicted other countries would follow paths such as those taken by Denmark, where the biggest phone company TDC A/S in March chose Stockholm-based Ericsson AB to build its 5G network, rather that its existing supplier Huawei. Earlier, Energy Minister Lars Christian Lilleholt highlighted security considerations for 5G, without mentioning Huawei.Such moves would represent a change of momentum for a beleaguered U.S. campaign, said Justin Sherman, a fellow at the Atlantic Council’s cyber-statecraft initiative.“There are many countries that have not done what the U.S. wanted,” including Germany, France and Italy, Sherman said. “There’s legitimate reason to be concerned about Huawei’s position on the 5G networks,” he said.U.S. diplomats say Ericsson and Finland’s Nokia Oyj build 5G gear and can be alternatives to Huawei. The European providers have struggled to compete with Huawei and ZTE Corp. equipment that’s often cheaper and at least as capable.“5G systems carry the most private information and intellectual property. It comes down to one question: Who do you trust?” Keith Krach, the U.S. undersecretary of state for economic affairs, said in an interview. “People are realizing that Huawei’s 5G is the backbone of that surveillance state.”U.S. officials point to progress in persuading allies, citing the European Union’s January adoption of a policy that said companies based in non-democratic countries could be excluded from parts of the network. The EU stopped short of an outright ban on Huawei.The German government is struggling to settle on rules that would require security certification for vendors in the 5G network. Earlier senior Chinese officials highlighted German car companies – the crown jewel of Europe’s biggest economy – as a potential target for retaliation if Huawei is banned from their markets. China is the biggest single market for Volkswagen AG, BMW AG and Mercedes-Benz maker Daimler AG. German Chancellor Angela Merkel has resisted a blanket ban on Huawei from 5G networks.France won’t ban any equipment maker from its 5G network, but will seek to protect critical infrastructure, finance minister Bruno Le Maire said earlier this year. With a spectrum auction set for September, carriers including Bouygues SA await a decision from the French cyber security agency Anssi on whether Huawei can be part of their plans. In a tweet earlier this week, U.S. Secretary of State Mike Pompeo praised France’s leading phone company Orange SA, calling it a “clean” telecom carrier after it picked “trusted” 5G equipment suppliers Nokia and Ericsson in January.Italy hasn’t moved against Huawei, though it has adopted rules to closely monitor telecommunications equipment suppliers, and scrutinize gear that comes from outside Europe. Italy has pursued a friendly approach with Chinese investors and especially with Huawei, which has poured money into the country, financing research centers, universities and schools.In Canada, Prime Minister Justin Trudeau has been stalling a decision on whether to ban Huawei from 5G wireless networks. Tensions between the two countries have been rising since Canadian authorities arrested Huawei Chief Financial Officer Meng Wanzhou on a U.S. extradition request in late 2018. After her arrest, China put two Canadian citizens in jail, halted billions of dollars in Canadian imports and put two other Canadians on death row. On June 2, two major Canadian wireless companies -- BCE Inc. and Telus Corp. -- said they’d build out their 5G wireless networks with equipment from Ericsson and Nokia.India has allowed Huawei to participate in trials, but the company’s entry into the country’s 5G commercial network could be blocked as tensions persist following border clashes with China. India is the largest wireless market outside China by number of subscribers, and has been a focus for investment by Huawei.“The tide is turning against Huawei as citizens around the world are waking up to the danger of the Chinese Communist Party’s surveillance state,” Pompeo said in a statement Wednesday.(Updates to add reference to U.K. development site in 19th paragraph. An earlier version of this story was corrected to fix the spelling of Huawei in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Curve, the London fintech that is re-bundling various financial products by letting you consolidate all your bank cards into a single card and app, is partnering with Samsung in the U.K. to power its forthcoming debit card, which is scheduled to launch later this year. Dubbed "Samsung Pay Card" -- and obviously a bid by Samsung to better compete with Apple Wallet and Apple's own credit card launch -- the product is being described as a digital payment solution that will give Samsung customers "greater flexibility and control when managing their finances by offering a single view of spend, whilst also enabling a simple and secure way to pay." Notably, at one point in the press release the product is referred to as Samsung Pay Card "powered by Curve," pointing to a degree of co-branding.
(Bloomberg) -- A top-performing fund manager who bought Amazon.com Inc. and Alphabet Inc. more than a decade ago is betting on winners from the Covid-19, believing the pandemic will fundamentally change people’s lifestyles.Mark Urquhart, who helps manage Baillie Gifford & Co.’s Long-Term Global Growth Equity Fund, says he’s picking up companies that may benefit from the growing trend of online and stay-at-home services, as the prolonged spread of the coronavirus will eventually alter consumer behavior.“We’ve been looking at companies that can benefit in the long-term from changes,” said Urquhart, who works at the $245 billion Edinburgh-based firm. “What the virus has done is accelerated some of the changes, perhaps open people’s minds, to consuming in different ways. And they realize the convenience. The economy is being more flexible. We see these companies will be larger in 10 years.”The fund is beating 99% of peers in three-year annual returns and is ahead of 62% of them year to date with a gain of 37%, according to Bloomberg-compiled data.Along with Netflix Inc. and Tencent Holdings Ltd, the fund has bought Netherlands-based payments platform Adyen NV. Tencent-backed Chinese food delivery giant Meituan Dianping is also a favorite, as is interactive exercise firm Peloton Interactive Inc.Adyen is “a company that we think benefits from many of the ongoing trends of people shopping more remotely,” Urquhart said. “Consumers won’t recognize the brand, but it’s very important.”The fund’s high returns come from its bottom-up investing, with managers looking for industry disruptors. Top holding Amazon, which makes up 8.46% of the fund, was one of its initial picks when the fund was first initiated in 2005. The stock has risen 5,892% since then. Alphabet was added in 2008, followed by Tencent and Baidu Inc. in 2010, with Alibaba Group Holding added in 2015.In South Korea, Urquhart says he’s watching Softbank Group-backed e-commerce giant Coupang Corp., which is reported to be preparing an initial public offering as soon as 2021, rather than industrial stocks or conglomerates like Samsung Electronics Co.“I’m interested in Coupang, it’s a classic disrupting company,” he said. “We had held Samsung in the past, at the moment we don’t find growth prospect as attractive.”(Adds a super tout)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Arm Ltd., the chip designer owned by SoftBank Group Corp., ousted the head of its Chinese venture after discovering the executive had set up an investing firm that would compete with its own business in China, according to people with direct knowledge of the decision.Arm China Chief Executive Officer Allen Wu established a fund called Alphatecture whose aim is to invest in companies that use Arm technology, said the people, who requested anonymity discussing a personnel decision. It’s common -- and legal -- for chip companies to use investment divisions to provide financial help to fledgling companies that can’t otherwise afford their typically pricey components. But the problem in Wu’s case is that Arm Ltd. and partner Hopu Investment Management Co., which together are major backers of the venture, already have one of these funds. Wu’s move put him in direct competition with his employers, the people said.The tussle between Wu and U.K.-based Arm Ltd. is playing out against the backdrop of escalating tension between China and the U.S. over leadership in key technologies. Arm Ltd., whose semiconductor designs underpin the majority of the world’s mobile devices, relies on Chinese companies including Huawei Technologies Co. for a large portion of its global revenue, and leans on Arm China to help it conduct business in the world’s biggest smartphone market.Arm China called the allegations against Wu’s fund “inaccurate and misleading.” “Arm China has been pursuing an innovative business model which has consisted in building an ecosystem of downstream businesses to support its growth. Investments associated to our ecosystem have not created any conflict to Arm China,” the unit said in a statement emailed to Bloomberg News.Read more: SoftBank’s Arm Says China CEO Fired for Major Irregularities (1)The rationale for Wu’s dismissal was also outlined in a document, reviewed by Bloomberg, from SoftBank Chairman Masayoshi Son and Arm Ltd. Chief Executive Officer Simon Segars to Hopu Chairman Fang Fenglei. The document cited breach of contract and the decision to set up the fund. Arm Ltd. and Hopu previously explained Wu’s dismissal by saying he was removed after an investigation uncovered rule violations and conflicts of interest that it didn’t specify. Bloomberg first reported the firing this month.What followed was a public, acrimonious clash between Arm Ltd. and Wu, who refused to budge and used the Chinese venture’s WeChat account to amplify his defiance. That Arm and Hopu have been unable to assert their will reflects the intricacies of Chinese rules that confer an advantage to Wu as the holder of key registration documents. As the legal representative of Arm China, Wu holds the company’s registration documents and the company seal, or stamp. Changing the legal representative requires taking possession of the company stamp -- something Wu has refused to give up. Arm Ltd. and Hopu could go through the courts, but the process could take years.Arm Ltd. and Hopu plan to use the document to lobby government officials in Beijing in what will be a test of China’s interest in reassuring overseas investors.Arm Ltd.’s management dispute constitutes another headache for SoftBank, which in May reported a record operating loss triggered by the writedown of portfolio companies at its Vision Fund arm. Many Vision Fund investments, including Uber Technologies Inc., tumbled in the wake of the global coronavirus pandemic, which has curtailed demand for ride hailing and other sharing economy players that Son has long favored.Read more: SoftBank’s Masa-Misra Partnership Strained by Losses, InfightingIn 2016, SoftBank bought Arm Ltd. -- which then operated under a different name -- for $32 billion, its second-largest acquisition after Sprint Corp., initially gaining full control over the Chinese subsidiary. SoftBank ceded a majority stake in 2018 and now owns 49% through Arm Ltd. The consortium that bought 51% of Arm China includes China Investment Corp., the Silk Road Fund and Singaporean state investment firm Temasek Holdings Pte.Following the investigation of Wu by Arm Ltd. and Hopu, the Arm China board voted 7-1 to dismiss Wu. Given Wu’s refusal to vacate his role, Arm Ltd. is growing anxious over the security of Arm China’s intellectual property, assets and finances, according to the people with knowledge of the matter. If it can’t dislodge Wu in a timely manner, Arm Ltd. would consider suspending support to Arm China. Such a step would be a last resort, said the people.Arm Ltd. licenses the fundamentals of chips for companies that make their own semiconductors. It also sells processor designs and is trying to expand into servers and PCs. Arm typically maintains a low profile, licensing its designs and collecting royalties via consumer brand corporations from Apple Inc. to Samsung Electronics Co.The dispute over Wu’s status, however, thrust it into the spotlight, igniting a plethora of stories online about how the U.S.-educated executive was still Arm China’s legal head honcho. Wu himself was cited several times in local media pledging to work with Huawei Technologies last year, when Washington first banned the sale of American software and circuitry to the Chinese tech champion.Read more: Arm Offers Faster, Customizable Design to Help Android Phones(Updates with Arm China’s comments in from the fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Samsung Electronics is planning to shift much of its display production from China to Ho Chi Minh City this year, Vietnamese state media reported on Friday, although the South Korean tech giant said those reports were untrue. The newspaper Tuoi Tre reported the relocation of Samsung's display production from China citing an announcement on the website of Samsung Vietnam, but the parent company in Seoul said the reports were "groundless".
In a direct assault on Apple's (NASDAQ: AAPL) low-cost iPhone SE2, Samsung Electronics announced the Galaxy A71 5G smartphone will begin shipping later this week. Later in the summer, it will be available through AT&T, Verizon Wireless, and other carriers. "5G represents a new generation of connectivity that unleashes entirely new mobile experiences, including the ability to transfer data more efficiently, stronger network reliability, and faster downloads," wrote Samsung in the press release.
Samsung Electronics should get tax and other incentives from India's northern state of Uttar Pradesh as the South Korean company looks to invest some 53.67 billion rupees ($705.75 million) in a smartphone display manufacturing plant in the state, India's lead investment promotion body said in a letter. Samsung, one of the top smartphone sellers in India, signed a memorandum of understanding with Uttar Pradesh in 2019 on the project. The letter, seen by Reuters, was sent to Uttar Pradesh's state government by Invest India in April.
(Bloomberg) -- Global trade data in the Covid-19 era has been generally abysmal, but look a little closer and the electronics sector that fires Asia’s trade engines could be headed for a pretty good year.In South Korea, semiconductor exports rose in May and imports of equipment used in producing semiconductors surged 168%, trade ministry data show. Taiwan’s electronic-component exports, which include chips, grew 13.2% in May to $10.2 billion, even as total exports fell 2% from a year earlier.The electronics industry is holding up relatively well amid the pandemic as companies adopt new technologies -- including 5G equipment and automation tools -- that make it easier for employees to work remotely. A sustainable boost will depend on whether consumers return with similar vigor, and whether other factors such as U.S.-China tensions don’t interfere with digital demand and supply.“The tech industry seems to have decoupled from the overall economy somewhat, as the tech industry is still growing well” and has been “relatively immune to Covid-19,” Mark Liu, chairman of Taiwan Semiconductor Manufacturing Co., said at a shareholder meeting June 9.Read More: Little-Known Data Show Signs of a Tech Bounce: Tim CulpanTSMC, the main chipmaker for Apple Inc. and Huawei Technologies Co., still plans to spend as much as $16 billion on capacity upgrades and technology this year, and expects revenue gains in the mid- to high-teens, Liu said. Covid-19 has helped drive some budding technologies related to remote work and education and social distancing, he added.TSMC shares have risen 25% since their lowest close for the year on March 19, less than the 30% gain in Taiwan’s benchmark Taiex stock index in that time. TSMC shares were down 2.2% as of 1:32 p.m. Monday, compared to a 0.98% drop in the Taiex.Amid generally awful export figures from the region, “the one bright spot is semiconductors,” said Trinh Nguyen, a senior economist at Natixis SA in Hong Kong. “A lot of this reflects the product cycle and also the global lockdown and suppression that favor the ‘digitalization’ of economic activities, driving demand for electronic goods like chips.”Budding TechnologiesFor economies like South Korea and Taiwan that rely on tech exports, “the upturn in demand for electronics has been a pillar of support amid the coronavirus pandemic,” said Lloyd Chan, an economist at Oxford Economics Ltd.“However, the improvement in the tech sector won’t be able to offset significant demand weakness in non-electronic exports,” he said, adding that even the surge in PC demand “could be a one-off,” attributable to the sudden shift to telecommuting during the pandemic.Still, it helps that some of Asia’s most tech-focused economies have had relative success in containing the virus: Taiwan has reported just seven virus deaths, South Korea flattened its curve fairly early and Singapore’s fatality rate is among the world’s lowest. That gives momentum to efforts to restart tech engines and get consumers used to new ways of doing business.“We’re seeing more countries pledging economic reforms, and there’s increased urgency for a stronger technology push to lead the economic recovery,” said Zhao Defa, an economist at Continuum Economics in Singapore. “Given that South Korea and Taiwan are the world’s main semiconductor producers, they will be beneficiaries.”Some of the boom is specific to the health crisis, amid a global scramble for medical equipment and demand for video-conferencing and other technologies as work and school shift more to people’s homes.China’s medical exports and shipments of high-tech electronics jumped in both April and May, for example, while Singapore’s pharmaceutical shipments surged 174% in April from a year earlier. Further gains may not be as pronounced.Consumer demand is still lagging, though. South Korean shipments of computer products jumped 83% in May, their eighth straight monthly gain, but sales of smartphones dropped 22% and consumer appliances fell 37%. Globally, smartphone shipments are expected to fall 11.9% this year -- their biggest annual drop ever, according to data from research firm IDC.While 5G, high-performance computing and artificial intelligence will all create demand for Taiwan’s exports, setbacks from Covid-19 and U.S.-China tech tensions could constrain that progress, Beatrice Tsai, director-general of the statistics department at Taiwan’s Ministry of Finance, said June 8.Still, analysts at Citigroup Inc. see a risk that U.S.-China tensions will weigh on chip demand. China’s buildup of chip inventories was intended partly to get ahead of a U.S. ban on Huawei set to take effect later this year.China’s export orders have taken a hit from lockdowns in the U.S. and key European markets, said Rajiv Biswas, APAC chief economist at IHS Markit. A second-half recovery in those economies, as well as Christmas orders, could drive a rebound in tech exports, he said.Governments have tried to stay focused on the long view, aiming to take advantage of the tech sector’s relative advantage in the pandemic by providing special support for electronics firms and new technologies. Singapore pledged S$500 million ($360 million) last month to help businesses in their digital transformations, including moving hawker center stalls to e-payments, and is spending another S$3.5 billion on information and communications technology to mitigate the virus outbreak.When the virus’s spread threatened Vietnam’s burgeoning tech industry, the government granted an exception to its otherwise strict lockdown measures: Samsung Electronics Co., which makes about half of its smartphones in factories near Hanoi and is one of Vietnam’s largest investors, was allowed to shuttle in more than 1,000 engineers from South Korea.“The recovery will be digital,” Anand Swaminathan, senior partner and head of McKinsey Digital in Asia, said in a June 9 interview. Asian governments are “all starting to figure out what their investment strategy is on digital.”(Updates market levels in sixth paragraph, adds analyst quote in eighth and ninth paragraphs.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Fifth-generation networking hype has been in full force since Qualcomm Inc. declared “5G is here, and it’s time to celebrate” in February of last year. The reality, however, has required patience from consumers due to the time needed to roll out the new networks and the dearth of applications to put additional speed to compelling use.A year after South Korea launched the world’s first full commercial 5G network and months after China opened the world’s biggest, Bloomberg News reporters tested the leading carriers in both countries to see how far 5G has gotten. Tests in Hong Kong and Tokyo showed similar results -- gaps in coverage that could leave most early adopters waiting for networks to reach full speed.Smartphone makers have swept in with a flood of 5G devices this year, with Samsung Electronics Co., Huawei Technologies Co. and Xiaomi Corp. all pushing the new technology without asking for much higher prices or design compromises. Millions of 5G phones have already been sold, and for the billions of people not yet on the bandwagon, the new wireless standard will soon be the default option anyway.Carriers aren’t moving quite as fast. They’re investing billions of dollars to set up and expand their 5G networks, but the technical design of this new standard demands high network density to provide the advertised stratospheric speeds. Once they have enough masts in place, they aim to recoup the initial costs by offering more bandwidth-hungry add-ons, such as Nvidia’s GeForce Now game-streaming service, which SoftBank Corp. launched in Japan on June 10.Where it’s available, even without hitting its max theoretical speeds, 5G is an impressive upgrade for most consumer applications. For example, at a gigabit per second (1Gbps), a user could download a 9-hour audiobook in less than 1 second, according to Fastmetrics, a U.S.-based internet service provider. Even at 1/10 of that speed, 100 megabits per second, a 45-minute TV show takes only 16 seconds, Fastmetrics estimates.Carriers in North America, Europe and Australia have also set up 5G, with so far underwhelming results for consumers. In March tests conducted by RootMetrics in the U.S., the choice appeared to be between fast speed with negligible availability -- Verizon Wireless Inc. recorded a max speed of 846Mbps with 3.1% availability in Chicago -- or wider availability without much of a speed bump -- T-Mobile US Inc. covered 57% of Washington but at a less impressive 148Mbps.While 5G uptake has been incremental, companies that make parts for the phones are betting on a wave of upgrades to drive smartphone demand and help spur economies from Taiwan to South Korea.Read more: 5G Report Card: T-Mobile Has Widest Coverage, Verizon Is FastestTo test download speeds and coverage, we sent four reporters out into Seoul, Beijing, Tokyo and Hong Kong with 5G phones and speed-measuring apps. Here’s what those tests showed:SeoulKT, the No. 2 South Korean carrier, has improved 5G service since the commercial debut in April 2019, though it still lacks the high-frequency airwaves necessary to reach top download speeds in the range of 20Gbps. SK Telecom Co., the country’s largest carrier, achieves a download speed of 1.5Gbps inside its headquarters, which drops to 1Gbps in the same building’s lobby.KT’s average 5G data speed ranges between 800Mbps to 1Gbps, the company said in an email. “It is hard to simply compare data speeds in South Korea, which has nationwide services, with other countries that only have test services or have services in a few cities,” the company said.BeijingIn Beijing, tests using a Huawei P40 Pro phone showed 5G service was consistent enough to play high-definition (1080p) video while riding in a car. There was no 5G signal inside the subway and the shopping mall in Guomao, where luxury brands from Tiffany to Vacheron Constantin are sold. Most of the Zhongnanhai district, home of the central government, has no 5G coverage, according to a map provided by China Mobile.A China Mobile representative in Beijing emailed a video showing download speed exceeding 1.1Gbps at Beijing Daxing International Airport. The representative had no further comment.Hong KongTests using a Huawei P40 Pro showed streaming of high-resolution 4K video was smooth outdoors even in a moving vehicle. The fastest download speed was recorded in the carrier’s flagship store in the city’s central business district.The carrier expects its 5G network to “penetrate deeply” in Hong Kong, Alex Cheng, China Mobile principal engineer, said in an email.TokyoAt two locations in the city, the 5G signal was strong inside the Docomo shop but became unstable a short distance away from it, using a Samsung Galaxy S20 phone and Netflix’s speed test app. Both of Tokyo’s main airports, two Olympics facilities and Tokyo Sky Tree are among the covered spots. Two more waves of 5G network expansion are planned by the end of July and end of October, the carrier said.“The initial rollout is going as planned,” Docomo said in an email.(Adds that anticipated 5G smartphone demand is driving chipmakers in seventh paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
An outside panel will weigh the validity of an investigation into Samsung Group heir Jay Y. Lee over a 2015 merger and alleged accounting fraud, the Seoul Central District Prosecutors' Office said on Thursday. The planned panel's recommendations could help pave the way for Lee's attorneys to challenge the legality of the prosecution's claims. The Supreme Prosecutors' Office will form the panel composed of 15 experts from fields including legal circles, academia and civic groups, the ministry of government legislation said.
(Bloomberg) -- Arm Ltd.’s Chinese joint venture rejected allegations against its top executive and accused a prospective replacement of “major violations,” escalating a dispute with the semiconductor industry linchpin owned by SoftBank Group Corp.The tit-for-tat duel began Wednesday when SoftBank’s Arm Ltd. said the board of Arm China voted to oust Chief Executive Officer Allen Wu, and appointed Ken Phua and Phil Tang the venture’s interim co-CEOs. But the Chinese firm then said Wu remained in charge and the board’s decision carried no legal weight. Arm China is jointly owned by Arm and investors, including China’s sovereign wealth fund, an unwieldy group that has left unclear who ultimately makes leadership decisions.After Wu refused to step aside, Arm Ltd. disclosed to Bloomberg News it had conducted an investigation of the CEO that uncovered conflicts of interest and violations of employee rules. On Thursday, the Chinese venture responded by calling the allegations against Wu groundless. And in a new twist to the dispute, it said Tang himself had been dismissed May 26 for unspecified “major violations,” and no longer held any position within the company.“Arm’s public announcements are groundless and caused significant damage to the company and Allen Wu’s reputation,” according to a statement posted to its WeChat social media account. “We’ve engaged lawyers to explore our legal options.”Read more: SoftBank’s Arm Says China CEO Fired for Major IrregularitiesArm Ltd. spokesman Phil Hughes said Thursday the British company stood by previous statements on the matter. Tang wasn’t immediately available for comment. And Wu himself hasn’t responded since Wednesday to multiple emails and messages seeking comment. “The Arm China board investigated and found no evidence to support the allegations made by Mr. Wu against Phil Tang. Phil Tang was therefore reinstated by the Board of Arm China,” Hughes said in an emailed statement.SoftBank Group shares slid 3.2% in Tokyo trading.Control over the Arm China business is complicated because of its convoluted ownership structure. SoftBank’s acquisition of Arm in 2016 originally gave it full control over the Chinese subsidiary, but SoftBank ceded a majority stake in 2018 and now owns 49% through Arm Ltd. The consortium that bought 51% includes China Investment Corp., the Silk Road Fund and Singaporean state investment firm Temasek Holdings Pte.The spat comes at a sensitive time, when Western companies are struggling to navigate an escalating clash between Washington and Beijing over technology leadership. Any prolonged conflict could also have ramifications for Arm, whose semiconductor architecture underpins the majority of the world’s mobile devices. The British firm relies on Chinese names like Huawei Technologies Co. for a large portion of its global revenue, and leans on Arm China to help it conduct business in the world’s biggest smartphone market.Arm typically maintains a low profile, licensing its designs and collecting royalties via consumer brand corporations from Apple Inc. to Samsung Electronics Co. The dispute over Wu’s status, however, thrust it uncharacteristically into the spotlight, igniting a plethora of stories online about how the U.S.-educated executive was still Arm China’s legal head honcho. Wu himself was cited several times in local media pledging to work with Huawei last year, when Washington first banned the sale of American software and circuitry to the Chinese tech champion.Read more: Arm Offers Faster, Customizable Design to Help Android PhonesSoftBank acquired Arm for $32 billion in one of its largest acquisitions, a deal intended to further Masayoshi Son’s ambition of creating a global Internet of Things ecosystem. The company licenses the fundamentals of chips for companies that make their own semiconductors, and also sells processor designs. Most of the world’s smartphones depend on Arm’s technology, and it is trying to expand into servers and PCs.It’s unclear how the public dispute would affect Arm’s relationships in the world’s No. 2 economy. Arm China now operates offices in Shenzhen, Beijing and Shanghai and acts as an intermediary between Arm in the U.K. and clients like Huawei.The company has been ensnared in Washington’s campaign against Huawei because of its central role in semiconductor architecture. The U.S., home to many of the world’s chipmakers and a chunk of Arm’s operations, wants to block Huawei’s access to key chip technology after labeling the company a national security threat -- something the Chinese firm has consistently denied.The British company has said it will comply with the so-called U.S. Entity List restrictions. It continues to supply technology to Huawei’s HiSilicon, but it’s unclear if it can license future designs to the Chinese company.Read more: Silicon Valley’s Next Revolution Is Open Source Semiconductors(Updates with SoftBank shares in sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.