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Huawei Chairman Urges US to Reconsider ‘Attack’ on Global Supply Chain

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By Reuters | Updated: 23 September 2020

Chinese telecom giant Huawei said on Wednesday its supply chain was under attack from the United States and called on Washington to reconsider its trade restrictions which were hurting suppliers globally.

The world’s biggest maker of mobile telecommunications equipment and smartphones is under pressure from US trade curbs designed to choke Huawei’s access to commercially available chips.

“The US has modified their sanctions for the third time and that has indeed brought great challenges to our production and operations,” Huawei Chairman Guo Ping told reporters in Shanghai.

Washington says Huawei is a vehicle for Chinese state espionage and from September 15 imposed new curbs barring US companies from supplying or servicing the company. Huawei has repeatedly denied being a national security risk.

Guo said that although Huawei had sufficient chips for its business-to-business operations, including its 5G network enterprise, it was feeling the pinch of the US restrictions on its smartphone chip stocks.

It understood that suppliers such as Qualcomm were applying for US licences which would allow them to continue serving Huawei, he added.

Intel has already received licences to supply certain products to Huawei, while China’s Semiconductor Manufacturing, which uses US-origin machinery to produce chips for Huawei, has applied for a licence, Reuters has previously reported.

Huawei was willing to use Qualcomm chips in its smartphones should Qualcomm get a licence to sidestep the restrictions, Guo added. Qualcomm did not immediately respond to a request for comment.

“We hope the US government can reconsider its policy and if the US government allows it we are still willing to buy products from US companies,” Guo said on the sidelines of its annual Huawei Connect conference.

Huawei has said that from September 15 it would stop manufacturing its most advanced chips under its Kirin line which power its high-end phones. Analysts expect its existing supply of Kirin chips will run out next year.

Consumers have rushed to buy Huawei phones amid concerns its mobile division is about to fold. Vendors say that prices have spiked by as much as CNY 500 (roughly Rs. 5,400) for some devices.

Washington has shown little sign that it is willing to back down from its fight with Huawei, which comes at a time when relations between the United States and China are at their worst in decades.

The United States said last month it would expand a programme it called “Clean Network” to prevent various Chinese apps and telecoms companies from accessing sensitive information on American citizens and businesses.

David Wang, a Huawei executive director, said the company hoped that countries would introduce “rational standards” for 5G. Huawei had yet to see any adverse impact on its global 5G business from the US programme, he added.

© Thomson Reuters 2020

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Technology

Marvell to Buy Inphi in $10 Billion Chip Deal to Bolster Data Centre, 5G Business

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By Reuters | Updated: 30 October 2020

Chip supplier Marvell on Thursday said it has agreed to buy peer Inphi Corp in a $10 billion (roughly Rs. 74,600 crores) cash-and-stock deal aimed at broadening Marvell’s footprint in data centers and 5G network infrastructure.

Data centers and 5G infrastructure “are our two key markets” Marvell Chief Executive Matt Murphy told Reuters in an interview. “They are right in there,” Murphy said of Inphi, “so the fit is really good.”

The deal comes amid a flurry of tie-ups in the semiconductor industry this year. Advanced Micro Devices on Tuesday said it would buy Xilinx in a $35 billion (roughly Rs. 2,57,900 crores) deal, following Nvidia’s $40 billion (roughly Rs. 2,93,600 crores) purchase of SoftBank’s Arm and Analog Devices’s $21 billion (roughly Rs. 1,56,700 crores) acquisition of Maxim.

Under the deal, Marvell will give Inphi shareholders $66 (roughly Rs. 5,000) in cash and 2.32 shares of stock in the combined company for each share of Inphi. After the deal, Marvell shareholders will own about 83 percent of the combined company, with Inphi shareholders owning about 17 percent.

Marvell plans to use balance sheet cash and debt to fund the deal, taking on about $4 billion (roughly Rs. 29,900 crores) in new debt in connection with the transaction with financing commitments from JPMorgan Chase.

While Marvell is headquartered in Silicon Valley, it’s currently domiciled in Bermuda. After the transaction, both Marvell and Inphi will become subsidiaries of a new US-domiciled holding company. The deal is expected to close in the second half of 2021.

© Thomson Reuters 2020

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Apple

Instagram Pauses Recent Search Listings in US to Stop Fake Election News

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By Reuters | Updated: 30 October 2020

Facebook’s Instagram said on Thursday it was making changes to its image sharing platform for US users to prevent the spread of misinformation around the November 3 presidential election.

For users in the United States, Instagram will temporarily remove the Recent tab from hashtag pages starting Thursday, it said in a statement on Twitter.

“We’re doing this to reduce the real-time spread of potentially harmful content that could pop up around the election,” the statement added.

Instagram’s Recent tab arranges hashtags in chronological order and amplifies content. Researchers have cautioned that automated amplification can lead to the rapid spread of misinformation on the platform.

The development comes as social media companies face increasing pressure to combat election-related misinformation and prepare for the possibility of violence or poll place intimidation around the November 3 vote.

Earlier this month, Twitter said it will remove tweets calling for people to interfere with the US election process or implementation of election results, including through violence.

Twitter has recently announced several temporary steps to slow amplification of content: for example, from October 20 to at least the end of the US election week, global users pressing “retweet” will be directed first to the “quote tweet” button to encourage people to add their own commentary.

Twitter said it will also stop surfacing trending topics without added context. Its decision to hit the brakes on automated recommendations contrasts with the approach at Facebook, which has previously boosted promotion of its groups product.

Separately on Thursday, Facebook acknowledged that a technical error in its systems caused a number of ads from the Republican and Democratic parties to be improperly paused.

It was the result of a policy change Facebook announced last month to block new political advertisements in the week prior to the elections. Facebook said it has made updates to enable the affected advertisements to run.

© Thomson Reuters 2020

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Apps

TikTok Countersues Rival Video App Triller in Patent Defence

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By Agence France-Presse | Updated: 30 October 2020

TikTok and its parent firm ByteDance have fired back in court against a patent lawsuit by rival video-sharing app Triller, in a move aimed at heading off infringement claims.

The complaint filed in federal court in California seeks to quash the lawsuit filed in July in a Texas federal court alleging the Chinese-owned app infringed on Triller’s software patents.

The litigation comes with both apps seeing robust growth.

Triller claims some 65 million active users worldwide and is weighing a plan to list its shares publicly.

TikTok, which has at least 100 million in the United States and is one of the fastest-growing social platforms, is battling a Trump administration effort to ban the app because of its ties to China or put it in American hands.

The TikTok suit filed Wednesday seeks to move the case from Texas to California, where Triller is based. The company is asking the court to rule that its app does not infringe Triller’s patents.

“A judicial declaration is necessary to resolve the real, immediate and justiciable controversy concerning these issues and to determine the respective rights of the parties regarding the… patent,” TikTok’s lawyers wrote in the complaint.

Triller’s earlier lawsuit alleges that TikTok improperly used a patented system for synchronizing music videos with an audio track.

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Netflix Raises Monthly Subscription Charges for US Customers

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By Reuters | Updated: 30 October 2020

Streaming video service Netflix on Thursday raised monthly charges in the United States for its standard and premium subscription plans, a move that sent the company’s shares climbing nearly 5 percent.

Netflix increased the cost of its standard subscription by $1 (roughly Rs. 74) a month to $14 (roughly Rs. 1000), and the price for the premium tier rose by $2 (roughly Rs. 150) per month to $18 (roughly Rs. 1,300). The standard plan, the company’s most popular, enables two streams at the same time, while the premium plan allows for four simultaneous streams.

The price increase was the first for US customers since January 2019.

Shares of Netflix jumped 4.8 percent to $509.53 (roughly Rs. 38,000) in afternoon trading on Nasdaq.

Netflix, the world’s dominant streaming service, enjoyed a boom in subscriptions at the beginning of the year as viewers around the world were told to stay at home to help fight the coronavirus pandemic. The company expects to end 2020 with more than 200 million streaming subscribers around the world, with 73 million of those from the United States and Canada.

It also is facing a growing list of competitors including Walt Disney’s Disney+, HBO Max from AT&T and Apple’s Apple TV+.

After the company’s earnings report last week, Chief Operating Officer Greg Peters said the company saw an opportunity to increase prices in countries “where we’ve delivered that extra value.”

On Thursday, a Netflix spokesperson said the company was raising prices “so that we can continue to offer more variety of TV shows and films, in addition to our great fall line up.”

Netflix’s basic plan, which allows only one stream at a time, will remain at $8 (roughly Rs. 600) a month in the United States.

© Thomson Reuters 2020

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Mobiles

Apple Reports Falling iPhone Sales Due to Late Launch, Sees Services Revenue Rise

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By Reuters | Updated: 30 October 2020

The late launch of new 5G phones caused Apple customers to put off buying new devices, leading the company on Thursday to report the steepest quarterly drop in iPhone sales in two years.

Apple fell over 5 percent at one point in after-hours trade, wiping $100 billion (roughly Rs. 7,45,300 crores) from its stock market value.

Since 2013, Apple has delivered new iPhone models each September like clockwork. But pandemic-induced delays pushed the announcement back a month, with some devices still yet to ship.

Even as booming sales of Mac products and AirPods boosted overall revenue and profit above what analysts had expected, iPhone sales dropped 20.7 percent to $26.4 billion (roughly Rs. 1,96,759 crores).

Investors anticipated lower sales from the Cupertino, California company’s bestselling product, but the hold-back was worse than expected, especially in China, where more consumers have access to 5G than in the United States or Europe.

Apple has mostly beaten sales expectations this year and released a slew of new products and services that its customers have embraced while largely homebound during the pandemic.

Apple said revenue and profits for the fiscal fourth quarter ended on September 26 was $64.7 billion (roughly Rs. 4,82,209 crores) and 73 cents (roughly Rs. 50) per share, compared with analyst estimates of $63.7 billion (roughly Rs. 4,74,756 crores) and 70 cents (roughly Rs. 50) per share, according to IBES data from Refinitiv.

But the flagship iPhone 12’s announcement was delayed until October 13, several weeks later than usual, meaning no opening-weekend iPhone sales are included in the fourth-quarter results.

In an interview with Reuters, Apple Chief Executive Tim Cook said that he was “optimistic” about the iPhone 12 cycle based on the first five days of shipping data.

“5G is a once-in-a-decade kind of opportunity. And we could not be more excited to hit the market exactly when we did,” Cook said. “At least in the US, the carriers are being very aggressive.”

The iPhone 12 release timing drove down sales in Greater China by 28.5 percent to $7.95 billion (roughly Rs. 59,310 crores). Cook said he expects the new 5G devices to help iPhone sales recover in China.

“What we’re seeing in the early going in the first five days gives us a lot of confidence that China will return to growth in our fiscal Q1,” Cook told Reuters.

Apple did not provide a revenue growth forecast, but Chief Financial Officer Luca Maestri said revenue from services and non-iPhone products would grow by double-digit percentages in the fiscal first quarter, in line with analyst expectations. He said iPhone revenue would also grow, implying the rate would be in the single digits. Analysts expect iPhone revenue to rise 6.45 percent to $59.56 billion (roughly Rs. 4,44,347 crores) in the first quarter, according to Refinitiv data.

Logan Purk, an analyst with Edward Jones, said that “while iPhone sales will grow this cycle, it will be disappointing compared to elevated expectations, as we do not believe the 5G presents a compelling reason for a wave of upgrades.”

Apple has offset volatile iPhone sales in recent years with steady growth in its services segment, which includes streaming music and television. Services revenue rose 16.3 percent to $14.5 billion (roughly Rs. 1,08,170 crores), compared with analyst estimates of $14 billion (roughly Rs. 1,04,440 crores). Cook told Reuters that Apple One, a bundle of Apple’s paid services, will launch on Friday.

Cook told Reuters that Apple has 585 million paying subscribers across its platforms, up from 550 million the previous quarter and closer to the goal of 600 million subscribers that the company set out for the end of calendar 2020.

Apple’s shares have soared in the past two years as it has diversified its revenue streams to lessen its dependence on the iPhone. The share tumble on Thursday raises the question of whether Apple is still more dependent on iPhone sales than some investors had hoped.

“Apple needs to be able to keep the upgrade cycle going or the share price will wobble because there’s no real room for forgiveness in the current valuation,” said Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown.

Apple said revenue from its accessories segment was up 20.8 percent to $7.9 billion (roughly Rs. 58,934 crores), compared with analyst estimates of a 13.5 percent rise to $7.4 billion (roughly Rs. 55,204 crores), according to Refinitiv data. Mac and iPad sales rose to $9 billion (roughly Rs. 67,140 crores) and $6.8 billion (roughly Rs. 50,733 crores), compared with estimates of $7.92 billion (roughly Rs. 59,089 crores) and $6.12 billion (roughly Rs. 45,659 crores), according to Refinitiv data.

© Thomson Reuters 2020

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Internet

Alphabet Posts Strong Results as Google, YouTube Ads Rebound

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By Agence France-Presse | Updated: 30 October 2020

Google-parent Alphabet said Thursday its profit climbed to $11.2 billion (roughly Rs. 83,300 crores) in the latest quarter, beating expectations, as ad spending rebounded after being hit by the pandemic.

Money made from cloud computing offerings and from its Google Play shop for smartphones powered by its Android software also helped fuel the 42 percent jump in revenue to $46.2 billion (roughly Rs. 3,44,802 crores) in the quarter, the company said.

“We had a strong quarter, consistent with the broader online environment,” said chief executive Sundar Pichai.

Blockbuster revenue in the quarter was led by an increase in ad spending at Google’s search engine and video streaming platform YouTube, according to chief financial officer Ruth Porat.

Alphabet has spent years evolving YouTube from its roots as a free video-sharing to an online television platform competing with titans such as Netflix and Amazon Prime.

“We expected Google’s ad revenues to recover across search, YouTube, and Network Members (in the quarter), and all three segments outperformed our expectations,” said analyst Nicole Perrin of eMarketer.

She said the gains were especially true of YouTube and pointed to ‘notable increases in political ad spending during the quarter.”

Google’s cloud computing business revenue grew nearly 50 percent to $3.4 billion (roughly Rs. 25,369 crores) as the pandemic boosted a trend toward working, playing, shopping and learning online.

Alphabet shares jumped more than 8 percent in after-hours trading before giving up some of the ground.

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