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Oppo India Says Reviewing Rs. 4,389 Crore Notice, Will Take Appropriate Steps

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By Press Trust of India | Updated: 13 July 2022

Chinese phone maker Oppo’s India unit has been slapped with a notice for alleged Rs. 4,389 crore import duty evasion, the Finance Ministry said on Wednesday.

A show-cause notice (SCN) has been slapped on Oppo India on July 8 after the recovery of documents during searches on its premises that indicated wilful misdeclaration in the description of some imports and remittance of royalty and license fees to various MNCs, including those based in China.

During an investigation of Oppo Mobiles India, a subsidiary of Guangdong Oppo Mobile Telecommunications Corporation, the Directorate of Revenue Intelligence (DRI) has detected Customs duty evasion of around Rs. 4,389 crore, the ministry said in a statement.

Reacting to the development, Oppo India said it has a “different view” on the charges mentioned in the SCN and will take appropriate steps, including legal remedies.

“We have a different view on the charges mentioned in the SCN. We believe it’s an industry-wide issue many corporates are working on. Oppo India is reviewing the SCN received from DRI, and we are going to reply to the notice, presenting our side, and will be working further with the related government departments.

“Oppo India is a responsible corporate and believes in the prudent corporate governance framework. Oppo India will take appropriate steps as may be needed in this regard including any remedies provided under the law,” Oppo said in an email response.

Oppo India is engaged in the business of manufacturing, assembling, wholesale trading, distribution of mobile handsets and accessories thereof across India. It deals in various brands of mobile phones, including Oppo, OnePlus, and Realme.

During the investigation, searches were conducted by the DRI at the office premises of Oppo India and residences of its key management employees, which led to the recovery of “incriminating evidence, indicating wilful misdeclaration in the description of certain items imported for use in the manufacture of mobile phones”. This misdeclaration resulted in wrongful availment of ineligible duty exemption benefits by Oppo India, amounting to Rs. 2,981 crore.

Senior management employees and domestic suppliers of Oppo India questioned by the DRI officers accepted the submission of wrongful description before the customs authorities at the time of import, the ministry said.

The investigation also revealed that Oppo India had remitted/made provisions for payment of ‘royalty’ and ‘licence fee’ to various multinational companies, including those based in China, in lieu of the use of proprietary technology/brand/IPR license etc.

The said ‘royalty’ and ‘licence fees’ paid by Oppo India were not being added to the transaction value of the goods imported by them, in violation of provisions of the Customs Act. The alleged duty evasion by Oppo India on this account is Rs 1,408 crore.

The ministry further said that Oppo India has voluntarily deposited Rs. 450 crore as partial differential customs duty short paid by them.

“After completion of the investigation, a show-cause notice has been issued to Oppo India demanding Customs duty amounting to Rs. 4,389 crore. The notice also proposes relevant penalties on Oppo India, its employees and Oppo China, under the provisions of the Customs Act, 1962,” the Ministry said.

In December last year, the Income Tax department too had conducted searches against Chinese handset manufacturing companies, including Oppo, and their linked persons and claimed to have detected alleged unaccounted income due to violation of the Indian tax law and regulations.

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Apple Announces End-to-End Encrypted iCloud Backups, Security Keys Support for Apple ID, More

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Apple will not be able to help users recover photos, notes, voice memos, and about 20 other types of data if they forget their password.
By Reuters | Updated: 8 December 2022

Apple plans to allow users to more tightly lock down photos and notes stored on its iCloud service and require a physical security key when logging in from a new device, it said on Wednesday.

The forthcoming options, along with another security measure for Apple’s iMessage chat program, are particularly aimed at celebrities, journalists, activists, politicians, and other high-profile individuals heavily targeted by hackers, the company said.

The iPhone maker said that though it was not aware of breaches to iCloud servers or iMessage exchanges, hacking attempts are increasing.

According to Apple, iCloud currently protects 14 sensitive data categories with end-to-end encryption technology. These include passwords in iCloud Keychain and Health data. The company has announced support for end-to-end encrypted backups, which will bring the total number of data categories protected to 23, including iCloud Backup, Notes, and Photos.

US users will be able to activate the free Advanced Data Protection for iCloud storage by the end of the year. When turned on, Apple cannot help users recover photos, notes, voice memos and about 20 other types of data if they forget their password. It will expand globally next year.

The option to require plugging a security fob into a new device to access an Apple account is expected to roll out next year. Rival Alphabet’s Google already supports such hardware keys, which are certified by industry body FIDO and cost about $25 (roughly Rs. 2,000).

On iMessage, conversations between users who enable the new Contact Key Verification next year would receive automated alerts about unrecognised devices potentially snooping on the exchange. Users can manually verify their communication is secure by matching up security codes, too. Secure chat services such as Signal offer comparable features.

© Thomson Reuters 2022

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Foxconn Said to Expect iPhone Production at COVID-Hit China Plant to Fully Resume by Early January

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Foxconn and the local government are said to be working hard on a recruitment drive to hire new staff.
By Reuters | Updated: 5 December 2022

Apple supplier Foxconn expects its COVID-hit Zhengzhou plant in China to resume full production around late December to early January, a Foxconn source said on Monday, after worker unrest disrupted the world’s biggest iPhone factory. The Zhengzhou plant has been grappling with strict COVID-19 restrictions that have fuelled discontent among workers over conditions at the factory. Production of the Apple device was disrupted ahead of Christmas and January’s Lunar New Year holidays, with many workers either having to isolate to combat the spread of the virus or fleeing the plant.

“The capacity is now being gradually resumed” with new staff hiring underway, said the person with direct knowledge of the matter. The person declined to be named as the information was private.

“If the recruitment goes smoothly, it could take around three to four weeks to resume full production,” the person said, pointing to a period around late December to early January.

Foxconn and the local government are working hard on the recruitment drive but many uncertainties remain, according to the source. The person cited “fears” some workers might have about working for the company after the plant was hit by protests last month that sometimes turned violent.

The labour unrest at the Zhengzhou plant last month marked rare scenes of open dissent in China which workers say was fuelled by claims of overdue pay and frustration over severe COVID-19 restrictions.

The unrest came at a time when China is logging record numbers of COVID-19 infections and grappling with more and more lockdowns that have fuelled frustration among citizens across the country.

“We are firing on all cylinders on the recruitment,” the person said.

Foxconn declined to comment.

Shares of Foxconn were up 0.5 percent on Monday morning, in line with the 0.6 percent rise in the broader market.

© Thomson Reuters 2022

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iPhone 14 Pro Shipments Could Fall 20 Million Units Short of Market Estimates After China Factory Unrest: Kuo

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By Reuters | Updated: 30 November 2022

Apple’s iPhone 14 Pro and Pro Max model shipments could miss market expectations by up to 20 million units in the holiday quarter due to labour unrest at a major Chinese factory, TF Securities analyst Ming-Chi Kuo said.

Kuo is the latest to flag a hit to the world’s most valuable company from protests over pay and strict COVID-19 curbs at the world’s biggest iPhone factory, the Foxconn-operated plant in the central city of Zhengzhou.

He trimmed his estimate for quarterly iPhone shipments by about 20 percent to between 70 million and 75 million units, compared with the market consensus of 80 million to 85 million units.

Apple shares were trading down more than 2 percent, set to add to the 6 percent decline so far this month as worries grow over shipments in the all-important holiday sales season.

Kuo, in a blog post on Tuesday, also predicted that the supply shortfall could erase demand for the more popular Pro models, instead of deferring sales, as consumers also grapple with a weakening economy.

In contrast, other Apple analysts expect sales to pick up once production constraints ease and more Pro models become available.

“We note that Pro devices are sold out into early January, but we expect some of the missed revenue to trickle in the March-quarter,” CFRA Research analyst Angelo Zino said on Monday.

The constraints are coming at the worst possible time and are the most severe since the early days of the pandemic, Zino said.

Some analysts signaled the possibility of the challenges extending into 2023.

“I can’t imagine 2023 will be a solid year for Apple iPhones,” said Zeno Mercer, research analyst at investment advisory firm ROBO Global.

“Those looking to make an upgrade have, and otherwise disposable income for next-gen phones should be down.”

© Thomson Reuters 2022

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Huawei, ZTE Sale, Import Banned in US After Being Listed as Threats by FCC

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By Agence France-Presse | Updated: 26 November 2022

US authorities announced a ban Friday on the import or sale of communications equipment deemed “an unacceptable risk to national security” — including gear from Chinese giants Huawei Technologies and ZTE.

Both firms have been on a roster of companies listed as a threat by the Federal Communications Commission (FCC), and the new rules bar future authorizations of their equipment.

The move is the latest in a series of actions to limit the access of Chinese telecoms firms in United States networks, and comes amid a long-running standoff between the world’s two biggest economies.

US officials have shown growing wariness in recent years of Chinese telecommunications companies and technology.

“The FCC is committed to protecting our national security by ensuring that untrustworthy communications equipment is not authorized for use within our borders,” said the commission’s chairwoman Jessica Rosenworcel in a statement.

She added that the new rules are a part of ongoing work to guard against security threats.

The order also affects companies including video surveillance equipment firms Hangzhou Hikvision and Dahua Technology.

The FCC said Friday that it was also seeking comment on future action relating to existing authorizations.

Previously, Washington had banned Huawei from supplying US government systems and strongly discouraged the use of its equipment in the private sector, with fears that Huawei equipment could be compromised by Chinese intelligence.

In 2019, it put Huawei on a trade blacklist that barred US suppliers from doing business with it, cutting the Chinese firm — also a top smartphone brand — off from Google’s Android mobile operating system.

The US has cited national security fears as well to restrict the operations of China’s big three state-owned mobile carriers.

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iPhone November Shipments to See Further Decline at Foxconn’s Plant in China

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By Reuters | Updated: 26 November 2022

Foxconn’s flagship iPhone plant in China is set to see a further reduction in November shipments after the latest bout of worker unrest this week, a source with direct knowledge of the matter said on Friday, as thousands of employees quit.

The world’s largest Apple iPhone factory has been grappling with strict COVID-19 restrictions that have fuelled discontent among workers and disrupted production ahead of Christmas and January’s Lunar New Year holiday, as many workers were either put into isolation or fled the plant.

Following Wednesday’s escalation that saw workers clash with security personnel, Foxconn could now see more than 30 percent of the site’s November production affected, up from an internal estimate of up to 30 percent when the labour issues erupted in late October, the source said.

The factory is the only one that makes premium iPhone models, including the iPhone 14 Pro, and the source said it is unlikely to resume full production by the end of this month.

Foxconn, formally known as Hon Hai Precision Industry, declined to comment. Apple, which said on Thursday it had staff at the factory, did not respond to a request for comment on Friday.

“The worker unrest at Foxconn’s plant in China could weigh on Apple’s November iPhone shipments,” Victoria Scholar, head of investment at Interactive Investor said, as concerns grow over Apple’s ability to deliver products for the busy holiday period.

Apple shares were down 1.9 percent in late morning trade on Friday, while the benchmark Nasdaq index was down 0.3 percent.

“Apple is still viewed as one of the more resilient stocks in the tech sector… However, Apple continues to hold off from providing official guidance given the macroeconomic uncertainty,” Scholar added.

US Best Buy said on Tuesday it expected high-end iPhones to be in short supply at stores this holiday season. Analysts said iPhones at Apple stores in the United States during the Black Friday shopping season were also down from a year earlier, and it was taking longer to replenish stocks, Reuters reported this week.

Lower Shipments

KGI Securities analyst Christine Wang said if the current issue lasts through December, around 10 million units of iPhone production will be lost, which translates to 12 percent lower iPhone shipment in the last quarter of 2022.

Wedbush Securities estimates many Apple stores now have 25 percent to 30 percent fewer iPhone 14 Pros than normal heading into the holiday shopping season.

In a statement on November 7, Apple said it expected lower iPhone 14 Pro and iPhone 14 Pro Max shipments than previously anticipated.

Some new recruits hired in recent weeks by Foxconn claimed they were misled over compensation benefits at the factory, and others complained about sharing dormitories with colleagues who had tested positive for COVID.

Foxconn on Thursday apologised for a pay-related “technical error” when hiring and later offered CNY 10,000 (nearly Rs. 1,14,000) to protesting new recruits who agreed to resign and leave.

The source said more than 20,000 workers, mostly new hires not yet working on production lines, took the money and left. Videos posted on Chinese social media on Friday showed crowds and long lines of luggage-laden workers queuing for buses.

“It’s time to go home,” one person posted.

The plant, before its troubles began, employed more than 2,00,000 staff. It has dormitories, restaurants, basketball courts and a football pitch across its sprawling roughly 1.4 million-square-metre (15 million-square-foot) facility.

Another Foxconn source familiar with the matter said some new hires had left the campus but did not elaborate on how many. This person said that because the people leaving had not yet been trained or begun to work, their departures would not cause further harm to current production.

“The incident has a big impact on our public image but little on our (current) capacity. Our current capacity is not affected,” the source said.

“There’s only so much corporate can do on pandemic prevention… It’s been a problem for a while. This is a problem faced by everyone,” the person said, pointing to other worker unrest triggered by rigid COVID restrictions, including upheaval at another Apple supplier, Quanta, in May.

Foxconn shares closed down 0.5 percent, lagging the broader market, which ended flat.

© Thomson Reuters 2022

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iPhone Factory Workers’ Protest: Over 20,000 New Hires Said to Leave Foxconn’s Zhengzhou Plant

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By Reuters | Updated: 25 November 2022

More than 20,000 employees, most of them were new hires not yet working on the production line, have left Apple supplier Foxconn’s Zhengzhou plant in China, a Foxconn source familiar with the matter told Reuters on Friday. The person said the departures would complicate the company’s previous target of resuming full production by the end of November, following worker unrest that rocked production at the world’s largest iPhone factory.

Foxconn declined to comment. The worker departures come after the Taiwanese firm offered on Thursday CNY 10,000 (roughly Rs. 1,14,000) to employees who wanted to resign and leave the chaos-hit plant.

It had apologised for committing a pay-related “technical error” when hiring new recruits, which workers say was a factor that led to protests involving clashes with security personnel.

Videos posted on Chinese social media on Friday showed crowds and long lines of luggage-laden workers queuing for buses. “It’s time to go home,” said one of the posters.

The labour unrest at the Zhengzhou plant that began on Wednesday marked rare scenes of open dissent in China which workers say was fuelled claims of overdue pay and frustration over severe COVID-19 restrictions.

A second Foxconn source familiar with the matter said some new hires had left the campus but did not elaborate on how many. The person said the departures had no impact on current production, as the new staff still needed to take training courses before working online.

The unrest comes at a time when China is logging record numbers of COVID-19 infections and grappling with more and more lockdowns that have fuelled frustration among citizens across the country. But it has also exposed communication problems and a mistrust of Foxconn management among some staff.

Foxconn launched a hiring drive earlier this month promising bonuses and higher salaries after it had to enact measures to curb the spread of COVID-19 in October. The curbs forced the company to isolate many employees and the plant’s conditions prompted several to flee.

© Thomson Reuters 2022

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