Hello, This is Bien Perez from the South China Morning Post’s Technology desk, with a wrap of our leading stories this week.
The Trump administration has put the brakes on Huawei Technologies’ expansion plans by making it tougher for the world’s largest telecommunications equipment vendor to acquire chips made with US technology.
New rules issued by the US Commerce Department on Monday prohibit Huawei from bypassing earlier sanctions by sourcing products via third-party suppliers. It essentially blocks the company’s ability to buy semiconductors, developed or produced using US technology, from anywhere.
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With Huawei’s avenues for sourcing critical chips to power its 5G base stations, smartphones and cloud computing business shut off, analysts said China’s biggest tech company has very few options left.
“All the power of one company cannot build the entire industrial chain by itself,” said Yang Guang, director of service provider research at Strategy Analytics. “It is impossible.”
The latest measures intensify the Trump administration’s crackdown on major Chinese tech firms over national security concerns. Washington put Huawei on the US trade blacklist in May last year.
While expressing anger at the US government’s move, Beijing has not announced any measures to hit back, including curbs on American businesses operating in the world’s second biggest economy.
“Huawei is an important company, but Beijing is engaged in an aggressive campaign to sweet-talk big American firms to stay in China,” said Dan Wang, an analyst at consultancy Gavekal who had earlier described the new US rules as a “death sentence” for Huawei. “It still needs American technology, and it needs US business as an ally in its effort to temper the hostility of the US government.”
Shenzhen-based Huawei did not immediately reply to a request for comment.
Still, others are not so pessimistic about Huawei’s long-term prospects. “US suppliers to Huawei are no doubt going to lobby against this [new rule] or fight for a licence [so they will] be exempt again,” said Art Dicker, director at R&P China Lawyers, a Shanghai-based law firm.
Oracle eyes TikTok acquisition – but deal could be a bridge too far
Software giant Oracle’s interest in buying TikTok’s US business marks the latest twist in the Trump administration’s efforts to get ByteDance to divest its ownership of the short video app operator over national security concerns.
Oracle has held preliminary talks with Beijing-based ByteDance on acquiring TikTok’s operations in the US, Canada, Australia and New Zealand, according to a Financial Times report. TikTok’s US investors, including General Atlantic and Sequoia Capital, were also involved in the talks, the report said.
Securing such a sale, however, is easier said than done owing to an array of legal and technical issues, including the auditing of all software code and servers.
“The details of a potential split would be complex to say the least,” said Patrick Jackson, a former National Security Agency researcher who is now chief technology officer at software company Disconnect. “I suspect this could take several months at least – maybe even years.”
Oracle, ByteDance and TikTok did not immediately respond to separate requests for comment.
TikTok could be an anchor tenant for Oracle’s Cloud Infrastructure unit, which hosts client information, but has struggled to keep up with rivals Amazon Web Services and Microsoft’s Azure.
Alibaba, JD.com post solid quarterly earnings on strong China market
China’s two-largest e-commerce companies reported solid quarterly results this week on the back of strong domestic sales, as the country continues to lead the global economy out of a coronavirus-induced economic slump.
Alibaba Group Holding, parent company of the Post, reported 153.7 billion yuan (US$21.8 billion) in revenue in the June quarter, up 34 per cent from a year ago, that was ahead of the 148 billion yuan consensus from analysts’ estimates compiled by Bloomberg.
Rival JD.com posted 201.1 billion yuan in revenue during the same period, a 33.8 per cent increase from a year earlier. That was ahead of the 190.7 billion yuan consensus estimate.
China’s e-commerce industry has shown strong vitality and resilience amid the coronavirus pandemic. The country’s online retail sales reached 5.15 trillion yuan in the first six months of this year, up 7.3 per cent from the same period last year, according to data from the Ministry of Commerce.
And that is all for this week. Until next time.
More from South China Morning Post:
- China reluctant to hit back at US firms over Washington’s new Huawei ‘death sentence’
- Huawei faces ‘impossible’ challenge after latest US tech sanctions, say analysts
- US further tightens restrictions on Huawei’s access to chips
This article Inside China Tech: US sanctions leave Huawei all shook up first appeared on South China Morning Post