China

Hyundai and WeRide plan to fuel self-driving with hydrogen in China • ZebethMedia

By zebethcontrolPosted on October 26, 2022Posted in autonomous driving, China, Climate, Hydrogen, hyundai, Transportation, werideNo Comments

While hydrogen is still relatively niched as a fuel for electric vehicles, a startup in China is jumping ahead to embrace it for autonomous driving scenarios. WeRide, one of the most funded robotaxi operators in China with investors including Renault-Nissan-Mitsubishi Alliance, said Tuesday it is joining hands with Hyundai to launch a “self-driving hydrogen-powered vehicle pilot zone” in Guangzhou, the southern metropolis where it’s headquartered. The collaboration comes at a time when the research and production of clean hydrogen increasingly becomes a focal point for China, which has been striving to decarbonize its economy. Details are scant from the announcement. It’s unclear when the pilot will kick off, what the scale of the trial is, or what exactly is being powered by hydrogen, which is considered one of the cleanest fuels as it is combined with oxygen to produce just water vapor and energy. But it won’t be surprising to see unmanned hydrogen vehicles roaming about the pilot zone since Hyundai has been betting big on the fuel. Indeed, the announcement says that WeRide, Hyundai, and Hengyun, a Chinese power generation and supply company, will work together to “create demand for the use of hydrogen fuel cell battery in unmanned street cleaning and ride-hailing.” In September last year, Hyundai said it planned to offer hydrogen cell fuel versions for all of its commercial vehicles by 2028. The tie-up with WeRide could expand the use case of its hydrogen products to robotaxis. Hydrogen-fuelled vehicles can recharge within minutes, making them an ideal medium for taxi operations if there’s enough refueling infrastructure. Guangzhou is a natural choice for the experiment given Hyundai has been producing hydrogen fuel cell systems in the city since March 2021. When the facility opened last year, the South Korean auto giant set an annual target to produce “6,500 units, with a goal to gradually expand production capacity in line with Chinese market conditions and central government policies.” China has made a big push to electrify its public transportation. In Shenzhen, the hardware capital of the world, nearly all buses and cabs run on lithium-ion battery packs. While the city has grown quieter with fresher air thanks to the initiative, battery safety and recycling remain big sticking points for the local authorities. Long lines often form at charging stations as it can take hours to fully refuel lithium-ion batteries.

US charges two alleged Chinese spies over plot to obstruct Huawei prosecution • ZebethMedia

By zebethcontrolPosted on October 24, 2022Posted in China, Huawei, Security, us governmentNo Comments

The U.S. Department of Justice (DOJ) has unsealed charges against two alleged DPRC spies who are accused of attempting to obstruct a federal prosecution against Chinese telecommunications giant Huawei. In a criminal complaint dated October 20 and made public on Monday, the U.S. claims that two Chinese intelligence officers, Guochun He (known as “Dong He”) and Zheng Wang (known as “Zen Wang”), attempted to bribe a U.S. law-enforcement official to obtain what they believed was inside information about the U.S. criminal case against a “global telecommunications company based in China.” The complaint doesn’t name the company, but the details match up with the known prosecution of the company. Huawei did not respond to a request for comment. The complaint alleges that He and Wang “attempted to direct a person they believed they recruited as an asset” inside a U.S. government law enforcement agency “to obtain confidential information regarding potential new charges to be brought against [Huawei] for the purpose of obstructing justice.” The government alleges He and Wang first cultivated their relationship with the law enforcement employee, who is not named, in February 2017, but that person “subsequently began working as a double agent for the U.S. government.” The men are accused of attempting to extract confidential information about witnesses and trial evidence in the Huawei case and paid the double agent, referred to as “GE-1”, $61,000 in bitcoin, cash and jewelery for what they believed was insider information about the Justice Department’s pending prosecution of the China-based company. At one point in October 2021, the indictment alleges, the undercover agent passed a single-page document to one of the Chinese intelligence officers, classified as “SECRET”, that detailed U.S. plans to arrest two principals from Huawei living in China. They paid the undercover agent $41,000 just for that single page. “Far more than an effort to collect information or intelligence, the actions of the PRC intelligence officers charged in this case must be called out for what they are: an extraordinary intervention by agents of a foreign government to interfere with the integrity of the U.S. criminal justice system, compromise a U.S. government employee and obstruct the enforcement of U.S. law to benefit a PRC-based commercial enterprise,” said Assistant Attorney General for National Security Matthew G. Olsen. “The Department of Justice will not abide nation-state actors meddling in U.S. criminal process and investigations, and will not tolerate foreign interference with the fair administration of justice.” If convicted, He and Wang face up to 60 years and 20 years in prison, respectively. The case was one of three unsealed on Monday relating to alleged Chinese interference in the U.S. justice system. One in New Jersey charges three Chinese intelligence agents with conspiring to act in the U.S. as illegal agents on behalf of a foreign government, while another in the Eastern District of New York accuses several people working on behalf of the Chinese government of “engaging in a multi-year campaign of threats and harassment to force a U.S. resident to return to China,” Attorney General Merrick Garland said Monday.

The seas are getting even rougher for Chinese startups • ZebethMedia

By zebethcontrolPosted on October 24, 2022Posted in China, Chinese venture capital, EC East Asia, EC News Analysis, EC venture capital, startup fundraising, Startups, VentureNo Comments

The third quarter was far from favorable for Chinese startups looking to raise money. Data shows that for upstart tech companies in the country, Q3 2022 was the worst time to raise venture capital since Q1 2020, with far less capital invested than either the rest of 2020 and 2021, or for most of 2018 and 2019. China is hardly alone in seeing its domestic startup scene see slowing capital inflows, but recent news puts the country-specific information into new context: Given today’s Chinese tech share sell-off, there is fresh pressure on technology companies’ valuations in the country, and that could impact startup fundraising. If China saw fundraising decrease 10% in Q4 2022 from Q3 2022 — measured in dollar terms, not the number of funding events — we’d see startups facing the slowest quarter since the onset of 2018, according to CB Insights data. A steeper decline would put Q4 2022 as the nadir in the nation for the last five years. Why are Chinese tech stocks suffering today? After a period when the sale of the nation’s equities onshore was at least somewhat meddled with, the value of major and minor Chinese tech companies fell today in the wake of the Chinese Communist Party’s every-five-year confab. This time ’round, current Chinese Premier Xi Jinping secured not only another five years in power, he also solidified a cabinet of like-minded allies. The context is clear: The Xi method of managing China remains ascendant. And investors in tech companies, still licking wounds brought on by a regulatory barrage led by Xi — which included some reasonable ideas like dismantling certain anti-competitive practices along with some less enticing policies — are not enthused. The result? A bloodbath (American share price changes as of the time of publishing):

Taylor Swift’s ‘Midnights’ is the priciest digital album Tencent has sold • ZebethMedia

By zebethcontrolPosted on October 21, 2022Posted in China, Media & Entertainment, music streaming, Spotify, Tencent, tencent music, tencent music and entertainment, tmeNo Comments

Taylor Swift’s latest album “Midnights” has dropped, and it might be setting a new standard for China’s digital music industry. Within a day of its release, the 13-track album, priced at 35 yuan or $4.83, has racked up nearly 200,000 copies on Tencent’s QQ, one of the largest music streaming platforms in China. While $4.83 doesn’t seem much — the album starts at $11.99 on the artist’s own online store — it’s the highest price ever set for digital albums in the market, which could indicate two things: the upstream cost of making albums has risen, or Chinese users are increasingly willing to pay for online music. China’s digital music industry has taken quite a different route from the Western one. For a long time, music piracy was rampant across online and offline media, so streaming platforms like QQ came up with a variety of perks to get people to foot the bill. A lot of QQ Music’s paid users are in effect signed up for bundle deals that give them access to other Tencent-affiliated products, such as video streaming, manga, or membership to Tencent-backed JD.com’s online mall. Subscribers get all sorts of value-added services within QQ Music’s platform as well, such as hi-fi streaming, access to online concerts, and customized app layouts. It’s hard to say whether the $4.83 pricing is the new pricing norm or simply a reflection of the fandom for Swift in China. After all, the American artist is one of the few foreign celebrities who reach 10 million followers on Weibo, China’s answer to Twitter. So far only Jay Chou, the mandopop (Mandarin pop music) king whose songs are known to everyone from my generation, has matched Swift’s pricing power at 30 yuan per album copy. In the wake of Beijing’s crackdown on internet monopolies, Tencent’s bargaining power on licensing deals might have weakened. For years, Tencent Music Entertainment, the firm’s music arm, bled money on securing exclusive rights from UMG, Warner Music, and Sony Music Entertainment. That’s no longer the case. Swift’s latest digital release is also available through QQ Music’s archrival NetEase Music, for instance. The good news is an increasing number of users are paying for Tencent’s music offerings, though the penetration rate remains modest. In Q2, TME reported 82.7 million subscribers across its three music streaming apps, up 25% year-over-year; a total of 593 million people use these services every month, meaning only 14% of them are paying. In comparison, 188 million, or 43%, of Spotify’s 433 million users are premium subscribers in Q2. Spotify also has a more profitable product. Looking strictly at their music services (TME is a more profitable business overall thanks to its more lucrative live streaming platform that lives off virtual gift sales), Spotify’s premium average revenue per user (premium ARPU) from Q2 was €4.54 ($4.48). TME’s average revenue per paying user (ARPPU) was 8.5 yuan or $1.17.

Biden’s new restrictions on exporting semiconductor tools hit China where it hurts • ZebethMedia

By zebethcontrolPosted on October 18, 2022Posted in China, EC Hardware, export laws, Government & Policy, Hardware, semiconductorsNo Comments

Chinese semiconductor manufacturers and their U.S. suppliers should have seen the Biden administration’s latest export restrictions coming. It’s possible they did. The question is whether they’re prepared. Years ago, the Trump administration sent the first shot across the bow, first cutting off Huawei from advanced chips and later successfully pressing the Dutch government to bar the sale of EUV lithography machines made by Netherlands-based ASML to leading Chinese semiconductor firm SMIC. The EUV ban kept SMIC and, by association, China, from getting a chance at producing leading-edge chips with smaller transistors. Smaller transistors make for faster, more energy-efficient chips, and there were concerns that EUV-made Chinese chips would have facilitated myriad military and surveillance applications, including hypersonic missiles and AI-powered video and cyber monitoring tools. Though SMIC said it could produce chips that were similar to some of its competitors’ second-best designs, the yields were reportedly atrocious. Without EUV, the process was unlikely to be profitable anytime soon. China is likely trying to develop its own version, but it’ll be a long road. Even if Chinese companies could get their hands on EUV and related technologies, whether through espionage or some other means, they still would have to duplicate ASML’s global supply chain of more than 5,000 suppliers, some of which are the only ones that have the expertise to make those specific parts.

Chinese chipmakers, U.S. suppliers caught in crosshairs of new export restrictions • ZebethMedia

By zebethcontrolPosted on October 17, 2022Posted in China, export laws, Government & Policy, Hardware, semiconductorsNo Comments

Over the last week and a half, the Chinese semiconductor industry’s circumstances have taken a sharp turn for the worse. The Biden administration announced on October 7 a sweeping set of export restrictions that prevent the export of certain chips and, more important, the sale of tools using certain technologies to Chinese chipmakers. The rules go well beyond those introduced during the Trump administration and are likely to keep Chinese companies several generations behind the leading edge. The goal of the new rules is to “protect our national security and prevent sensitive technologies with military applications from being acquired by the People’s Republic of China’s military, intelligence, and security services,” Alan Estevez, Undersecretary of Commerce for industry and security, said in a statement. Previously, semiconductor equipment manufacturers were prevented from supplying companies that sold to Huawei, which had the effect of cutting the device maker off from the most advanced chips. The Trump administration also barred the sale of EUV lithography tools that are required to make chips with features under 10 nanometers in size. Leading edge chips today are at least two generations more advanced than that. The new rules leverage the United States’ dominance of the semiconductor equipment market, using it as a choke point to prevent Chinese firms that supply the country’s military from advancing too rapidly. Specifically, the rules restrict companies using U.S. technology from selling to factories and R&D centers that focus on a handful of technologies, including so-called non-planar designs like FinFET and GAAFET at 14 to 16 nanometers, which have enabled increasingly denser transistor counts, DRAM memory made at the 18-nanometer node or smaller, and NAND flash memory with 128 layers or more. The export restrictions prevent sales to any Chinese facility by default. Foreign companies that operate factories in China, like Intel, TSMC, or SK Hynix, must apply to receive exemptions from the rules. Both Intel and SK Hynix have reportedly obtained exemptions, and other companies from the U.S. and its allies that have Chinese factories will probably receive waivers, too. Already, U.S. suppliers including KLA and Lam have halted deliveries and support for existing tools provided to Yangtze Memory Technologies Co., also known as YMTC, The Wall Street Journal reported. YMTC and 30 other companies were added to the “unverified list,” which doesn’t explicitly prevent U.S. companies from dealing with them, but it does heighten scrutiny of any deals and transactions. Semiconductor Manufacturing International Corporation, also known as SMIC, is also thought to be a key target of the new rules. Already, Apple has reportedly pulled out of plans to use YMTC’s memory chips in upcoming iPhones, despite having completed a lengthy certification process, according to Nikkei Asia. American executives at Chinese chipmakers may also fall in the crosshairs. The Wall Street Journal said that at least 43 senior executives might be barred from working at 16 publicly listed Chinese companies. The financial ramifications could be far-reaching, and not just for Chinese companies. Applied Materials, for example, cut its fourth-quarter sales projections by $400 million as a result of the new rules. Semiconductor makers and suppliers have long said that revenues from sales to Chinese firms help bankroll R&D efforts that help keep American companies on the leading edge. But critics have said that those sales risk American competitiveness by helping Chinese firms more quickly climb the ladder. Exemptions may temper the blow somewhat, and while the breadth of the new restrictions caught the industry by surprise, they continue the trend of using U.S. chip prowess as lever to control the rate of progress at Chinese semiconductor companies.

Shein owner fined $1.9M for failing to notify 39M users of data breach • ZebethMedia

By zebethcontrolPosted on October 14, 2022Posted in China, Commerce, eCommerce, SheinNo Comments

A data breach from 2018 is putting Shein under the spotlight as the ultra-fast fashion e-commerce platform continues to conquer Gen-Z markets across the world. Zoetop, the firm that owns Shein and its sister brand Romwe, has been fined $1.9 million by New York for failing to properly handle a security incident, according to a notice from the state’s Attorney General office this week. New York doesn’t publicly release data breach notifications like Maine, New Hampshire, California, or other states, which is why the AG came so much later than when the cyberattack happened. Shein, which was founded in China and recently moved its core assets to Singapore, saw explosive growth during the pandemic as the virus prevention pushed consumers to shop online. Its jaw-dropping affordability and vast clothing options have made it one of the fastest-growing consumer internet platforms worldwide in the past two years. The firm’s meteoric rise puts the once low-key fashion exporter from China on the spot. It went from having no dedicated PR personnel just a few years ago to now scrambling to handle mounting media inquiries about supply chain transparency and alleged design theft as it further grows and gears up for an IPO. The data breach brings it yet another PR problem. The company claims it’s significantly stepped up its security measures since. “We have fully cooperated with the New York Attorney General and are pleased to have resolved this matter. Protecting our customers’ data and maintaining their trust is a top priority, especially with ongoing cyber threats posed to businesses around the world. Since the data breach, which occurred in 2018, we have taken significant steps to further strengthen our cybersecurity posture and we remain vigilant,” Shein says in a statement. What happened? A cybersecurity attack that originated in 2018 resulted in the theft of 39 million Shein account credentials, including those of more than 375,000 New York residents, according to the AG’s announcement. An investigation by the AG’s office found that Zoetop only contacted “a fraction” of the 39 million compromised accounts, and for the vast majority of the users impacted, the firm failed to even alert them that their login credentials had been stolen. The AG’s office also concluded that Zoetop’s public statements about the data breach were misleading. In one instance, the firm falsely stated that only 6.42 million consumers had been impacted and that it was in the process of informing all the impacted users. A lot has changed since 2018. Shein has risen from an up-and-coming online fast fashion seller at the time to an all-encompassing e-commerce platform that is threatening Amazon. In the second quarter of this year, the app’s U.S. downloads surpassed Amazon’s for the first time. The data breach might be dated, but keep in mind that Shein has been operating since 2008, so four years is quite recent in the firm’s history of existence. Cost-saving, trend-seeking Gen-Z consumers might continue to shop on Shein despite its publicity issues, but to win the trust of regulators and the general public, there’s still much to be done.

Volkswagen to plough €2.4B into vehicle automation in China and form JV with Horizon Robotics • ZebethMedia

By zebethcontrolPosted on October 13, 2022Posted in ADAS, auto, autonomous driving, China, chip, nvidia, Robotics & AI, semiconductor, Transportation, volkswagenNo Comments

Volkswagen is accelerating the pace to automate its electric vehicles for Chinese customers. CARIAD, a wholly-owned automotive software company of the German auto behemoth, intends to set up a joint venture with Horizon Robotics, one of China’s most serious auto chip developers, the company said on Thursday. The German automaker plans to deploy around €2.4 billion to its cooperation with Horizon Robotics, a transaction that’s expected to be completed by 2023 and is subject to regulatory approval. Following the deal, CARIAD will hold a majority stake of 60% in the JV. It wasn’t until 2020 that China moved to ease the rules that had previously barred foreign companies from owning majority stakes in local auto firms. The tie-up comes at a time of global chip shortage and surging semiconductor costs. A handful of automakers are already moving some of their chip production in-house to counter supply chain uncertainties. China’s electric vehicle upstarts Xpeng and Nio have both assembled sizable teams to develop auto-grade chips, according to Chinese tech business publication LatePost. The deal came just weeks after Horizon announced it had received a strategic investment from China’s state-owned automaker Chery Automobile. Together with Horizon Robotics, Volkswagen will be working on full-stack advanced driver assistance systems and autonomous driving solutions for the Chinese market. The goal is to “drive forward the integration of numerous functions on one chip, increasing the stability of the system, saving costs, and reducing energy consumption.” The vision is reminiscent of Nvidia’s recently announced next-generation auto-grade chip that’s designed to unify autonomous driving and in-car technologies. It’s interesting to see Volkswagen forming close ties with a Chinese startup, while Nvidia’s state-of-the-art auto chip is widely recognized as the most cutting-edge in the industry. Given the escalation of U.S. chip limits on China, it won’t be surprising that supply chain diversification is on the mind of VW executives. The question is whether Horizon can deliver something that’s up to par with its American counterpart. In any case, having an on-the-ground partner will likely help VW create more customized solutions for the world’s largest auto market. As Ralf Brandstätter, member of the management board of Volkswagen AG for China, remarks in a statement: “Localized technology development grants the region more autonomy to further expand its position in the dynamic automotive market. Cutting-edge technology comprising the full software and hardware stack, which the new joint venture will develop, will enable us to tailor our products and services even faster and more consistently to the needs of our Chinese customers. Teaming up with Horizon Robotics will allow Volkswagen to accelerate the development of automated driving solutions as part of our NEW AUTO strategy and drive the repositioning of our China business.”

China’s once-popular crypto exchange Huobi Global bought by About Capital • ZebethMedia

By zebethcontrolPosted on October 9, 2022Posted in China, Crypto, HuobiNo Comments

Huobi Global, once China’s top crypto exchange, has been retooling itself since exiting from the home market following Beijing’s crypto ban. Now the company is nearing a takeover by an investment firm. Huobi Global announced today that its controlling shareholder has completed the transaction to sell its entire stake to About Capital, a Hong Kong-based fund management firm started by Ted Chen, who founded China’s hedge fund giant Greenwoods Asset Management. This confirms an earlier report by Bloomberg saying the founder Leon Li was looking to sell his majority stake for over $1 billion, valuing the exchange at $3 billion. Founded in 2013, Huobi Global rode China’s crypto boom before Beijing declared all crypto transactions illegal in 2021. The parent firm Huobi Group now operates an umbrella of crypto-related entities, including its flagship exchange Huobi Global, its venture capital arm Huobi Ventures and a crypto cloud service. Huobi Global and rival Binance said they’ve stopped servicing China-based customers since the ban. While Binance kicked off global expansion well before the crackdown, Huobi Global appears to have been hit hard by the regulatory change as a big chunk of its users were still in China. The trading platform was reportedly laying off 30% of its workforce this summer after its retreat from China dampened revenues. About Capital’s buyout won’t affect Huobi’s “core operation and business management teams,” the announcement says. The exact amount of the deal wasn’t disclosed, but it looks like the new parent is providing the much-needed capital to help the exchange ride out its financial troubles and go global in the midst of a crypto rout. According to About Capital, Huobi Global will “embrace a series of new international brand promotion and business expansion initiatives, including a global strategic advisory board led by leading industry figures, the injection of sufficient capital in margin and risk provision fund, as well as measures to further enhance competitiveness.” “Following Huobi’s exit from the Chinese mainland market in 2021, we have accelerated our globalization push amidst a challenging market environment, which adds to the impetus for Huobi to seek a new shareholding structure with a global vision and international resources,” Li says in a statement. “We believe the successful acquisition by About Capital vehicle will contribute to Huobi’s global expansion in both aspects.”