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(Bloomberg) -- Huawei Technologies Co. founder Ren Zhengfei called the sale of its Honor budget smartphone division a “clean break” that should free it from U.S. restrictions and create a new powerhouse in the world’s largest mobile arena.Ren, blasting Trump administration tactics to contain his company, assured employees in a memo Honor will rapidly resume production after regaining access to American circuitry and software. His missive comes days after Huawei unveiled a deal to sell the business to a consortium of more than 30 Chinese corporations, assembled by government-backed Shenzhen Smart City Technology Development Group Co.“Facing wave upon wave of attacks from the U.S., we finally realized that American officials weren’t trying to fix us. They were seeking to kill us,” Ren said. “Once we’re divorced, there’ll no longer be any under-the-table relations with Honor. We’re handling the separation in an adult manner, and will rigorously adhere to regulations and international norms.”Huawei’s leader appeared to be addressing uncertainty over whether the spinoff will trigger a resumption of American chip supply to Honor under new ownership or if there’re U.S. regulatory steps required first.Citing national security concerns, the U.S. has waged a far-ranging campaign against Huawei since 2018 that landed its chief financial officer under house arrest in Canada and fomented bans against the use of the company’s 5G equipment in countries from the U.K. to Japan. The final blow came when the White House enacted sweeping restrictions against suppliers this year, closing off loopholes that let Huawei procure ready-made semiconductors to keep its consumer business afloat.Read more: Huawei Sells Budget Phone Brand After U.S. Cuts Chip SupplyHonor was an integral part of Huawei’s smartphone business, once larger than Samsung Electronics Co.’s but now struggling to secure enough crucial components and software for production. Access to American technology will breathe new life into a brand that’s gained popularity among younger budget-conscious users in recent years and made headway in overseas markets like Europe. It could create a rival to the likes of Xiaomi Corp. and Oppo, who compete in the same price segments.The sale illustrated the uneven impact of White House sanctions on China’s largest technology company, whose consumer business is ailing even as its networking unit soldiers on. Shenzhen-based Huawei is said to have safeguarded its core telecom equipment business by stockpiling critical components to continue supplying its home country’s 5G rollout through at least 2021.Honor’s new owners include local city-backed corporations such as Shenzhen Expressway and Shenzhen Energy. It can also lean on Suning.com Co., the country’s largest electronics chain backed by Alibaba Group Holding Ltd., to help enhance distribution.“Under its new leadership, Honor will very quickly resume production and resolve issues affecting its upstream and downstream partners,” Ren said in his memo. “The U.S. is a technology superpower that has many excellent companies. You should firmly and boldly work with them.”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.K. will spend 250 million pounds ($333 million) to diversify its sources of 5G wireless equipment after banning China’s Huawei Technologies Co. from supplying the next-generation technology.Huawei is set to be excluded from British 5G networks by 2027 due to security concerns, leaving phone carriers reliant on a supply duopoly of Finland’s Nokia Oyj and Sweden’s Ericsson AB.Around 50 million pounds of the total will be spent next year to help build “a secure and resilient 5G network” according to documents published Wednesday as part of Chancellor of the Exchequer Rishi Sunak’s spending review.The resulting reduction in competition could hurt security and push up prices, so U.K. Digital Secretary Oliver Dowden has started a task force to increase the number of suppliers. He’s set to publish more details before the end of the year.Britain’s crackdown on Huawei came in July after U.K. officials said U.S. sanctions made it impossible to verify the security of Huawei’s supply chain. The White House accuses Huawei of being a security risk, which the company has always denied.Since then, Nokia and Ericsson have already won major contracts from British carriers like BT Group Plc and CK Hutchison Holdings’s Three UK.The phone industry is banking that longer-term initiatives such as OpenRAN -- a project to make mobile network equipment more inter-operable and encourage new suppliers -- will eventually introduce more competition.Other large global suppliers like Korea’s Samsung Electronics Co Ltd don’t currently offer the right kind of equipment to win immediate big deals with British carriers.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 Korea is adding a new artificial intelligence chip to its arsenal of semiconductors as the nation seeks a bigger slice of the global tech market and an upgrade of its industrial capabilities.The Sapeon X220, unveiled Wednesday by the largest local carrier SK Telecom Co., is designed to speed up servers that cater to a growing number of mobile devices -- from drones to self-driving vehicles -- that perform better with AI. It’s the latest product of the nation’s decade-long push to broaden its dominance beyond memory chips, where Samsung Electronics Co. and SK Hynix Inc. control roughly two-thirds of the global market.South Korea sees data-processing chips as a major engine for future economic growth, along with fifth-generation wireless networks. The government has provided more than 600 billion won ($542 million) in support to develop such chips and plans to invest another trillion won over the next decade, viewing them as crucial in automating factories and improving the competitiveness of the country’s exports.“As we teamed up with the government, we said, ‘Let’s make AI available and affordable for all of our companies,’” said Lee Jong-min, an SK Telecom vice president overseeing the chip development. “South Korea has the demand, the full stack of tech needed to meet the demand, and the ability to take it to the next level.”Semiconductors account for about one-fifth of South Korea’s exports, most of them memory chips. The country is now turning to application-specific integrated circuits, or ASICs, such as the X220, which is tailored for AI operations. It follows a similar $1 billion investment plan announced by the U.S. government this summer, which also emphasized AI and public-private collaboration.As the first country in the world to roll out commercial 5G last year, South Korea believes it also can lead in adopting and optimizing AI by virtue of the nation’s compact size, wide broadband coverage and smartphone penetration.Competition is heating up in the AI semiconductor space, with the likes of Amazon.com Inc. and Alphabet Inc.’s Google investing in their own bespoke server silicon. As more devices than ever come online, companies are betting they can unlock value and insights from the resulting trove of data through machine learning and analysis at scale.Like SK Telecom, U.S. competitors offer such cloud services to other companies, and the investment in designing the chips makes sense when factoring in the cost of electricity and the chips’ ability to handle greater volumes of data more efficiently.Read more: Chip Industry Sees Danger of AI in Explosion of Electricity UseSK Telecom’s chip, the size of a postage stamp, is the first Korean ASIC for data centers to be commercialized, according to the company. It represents the latest push by the Seoul-based carrier to expand beyond its traditional mobile and broadband businesses and keep up in an era of AI-driven innovation.The global AI chip market is currently led by Nvidia Corp., a graphics-card giant whose market value has eclipsed that of Intel Corp., the company historically most associated with semiconductor breakthroughs. Demand for Nvidia’s GPUs has spiked in recent years, as the perennially increasing demands of high-resolution video games have been joined by a boom in cryptocurrency mining and other data-intensive applications that benefit from massively parallel processing. Even smartphone processors from the likes of Apple Inc. and Huawei Technologies Co. now come with dedicated cores for handling AI tasks, and the need for more ASICs like the Sapeon X220 is forecast to rise as artificial intelligence gains more ground in global technology.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.