ZTE replaces its CEO and other top execs

ZTE replaces its CEO and other top execs

A number of top executives are out at ZTE as the phone maker works to fulfill the requirements of U.S.-imposed restrictions. Among the big changes up top is new CEO Xu Ziyang, who formerly headed up the company’s operations in Germany. A new CFO, CTO and head of HR have been named, as well, according to The Wall Street Journal.

The move comes a few days after company slowly began to resume some business operations on a one-month waver, following a seemingly D.O.A. seven-year export ban. The ban was announced back in April, after the company failed to appropriately punish top employees over Iran/North Korean trade violations.

Trump, however, was quick to toss the company a lifeline, citing potential job loss in China. The President’s willingness to bail out ZTE has been met with staunch criticism by many, including members of his own party. A bipartisan push in Congress to reinstitute the ban began in Congress last month. Many of the issues appear to stem from ties to the Chinese government that also put Huawei in hot water with U.S. security orgs.

For now, however, the company appears to be springing back to life, as it rushes to comply with the most recent laundry list of restrictions. The moves come in the wake of a $1 billion fine and the effective freeze on operations as the company mulled a way forward without relying on products from U.S. businesses like Google and Qualcomm.

In that time, ZTE has lost billions, and grappled with other…inconveniences. Of course, even with these changes, the company isn’t out of the woods just yet. In addition to on-going financial issues, security and other concerns could be enough to put consumers in the U.S. and other countries off the company altogether.

Source: Mobile – Techcruch

Xiaomi posts $1.1B quarterly loss ahead of much-anticipated IPO

Xiaomi posts .1B quarterly loss ahead of much-anticipated IPO

A month after it filed for a much-anticipated Hong Kong IPO, Xiaomi has revealed a little more financial information after a monster 621-page document disclosed a $1.1 billion (seven billion RMB) loss for the first quarter of the year.

The IPO, which could raise up to $10 billion value Xiaomi at high as $100 billion, is set to be the largest IPO raise since Alibaba went public in the U.S. in 2014. That prospect got a boost with a dose of positive financial growth despite a loss incurred by one-off payments.

The document filed was an application to issue a CDR as part of a dual-listing that would include Mainland China, showed that Xiaomi’s revenue for the quarter jumped to 34 billion RMB, or $5.3 billion. That’s compared to 114.6 billion RMB ($17.9 billion) in total sales for all of last year, according to digging from TechCrunch partner site Technode.

While Xiaomi posted a loss for the quarter, the firm actually posted a 1.038 billion RMB ($162 million) profit for the period when one-time items are excluded. Xiaomi previously registered a 43.9 billion RMB ($6.9 billion) loss in 2017 on account of issuing preferred shares to investors (54 billion RMB) but it did post a slim profit in 2016.

The company is ranked fourth based on global smartphone shipments, according to analyst firm IDC, and it is one of the few OEMs to buck slowing sales in China.

China is, as you’d expect, the primary revenue market but Xiaomi is increasingly less dependent on its homeland. For 2017 sales, China represented 72 percent, but it had been 94 percent and 87 percent, respectively, in 2015 and 2016. India is Xiaomi’s most successful overseas venture, having built the business to the number one smartphone firm based on market share, and Xiaomi is pledging to double down on other global areas.

Interestingly there’s no mention of expanding phone sales to the U.S., but Xiaomi has pledged to put 30 percent of its IPO towards growing its presence in Southeast Asia, Europe, Russia “other regions.” Currently, it said it sells products in 74 countries, that does include the U.S. where Xiaomi sells accessories and non-phone items.

Despite its design progress, relative age as an eight-year-old company and the fact it is shooting for a $100 billion, Xiaomi left some spectators disappointed when it wheeled out a very iPhone X-looking new device earlier this month. While the company claims the Mi 8 is packed with new technology, it’s hard to look past the fact that a number of its visual designs are identical to Apple’s flagship smartphone. Xiaomi could have made a stronger statement of intent with the launch, but it will hope its financials can do the talking as it moves into the last moments of preparation before its public listing.

Source: Mobile – Techcruch

Google’s Duo and Cisco’s Webex Teams among the VoIP apps pulled from the China App Store

Google’s Duo and Cisco’s Webex Teams among the VoIP apps pulled from the China App Store

Earlier this week, it came to light that Apple had removed a number of VoIP-based calling apps from the App Store, at the request of the Chinese government. The apps had been using CallKit, Apple’s new developer toolset that provides the calling interface for VoIP apps, freeing up developers to handle the backend communications. China’s government asked developers, by way of Apple, to remove CallKit from their apps sold on the China App Store, or they can remove their apps entirely.

Notices Apple sent out to the developers were first spotted by 9to5Mac, who shared a snippet from of one of the emails.

The email states that the Chinese Ministry of Industry and Information Technology (MIIT) “requested that CallKit be deactivated in app apps available on the China App Store,” and informed the developer they would need to comply with this regulation in order to have their app approved.

The regulation only impacts apps distributed in the China App Store.

We understand that the apps can still use CallKit and be sold in other markets outside the region.

Apple is not publicly commenting on the matter.

The pushback against CallKit is another means of discouraging people from developing or using VoIP services in China, without having to go so far as to ban the apps directly. It wouldn’t be the first time China has cracked down in this area. In November, Microsoft’s Skype was also pulled from the Apple and Android app stores.

The government also last year ordered VPN apps, which help users route around the Great Firewall, to be pulled from app stores – another order with which Apple complied.

Other social media apps, like WhatsApp and Facebook, are also disrupted at times, and newspapers’ apps like those from The NYT and WSJ are blocked, too.

According to data pulled by app store intelligence firm Sensor Tower, two dozen apps with CallKit had been removed during the week prior to the news reports.

That list, along with the date removed and publisher name, is below:

Sensor Tower notes it’s possible that there are other apps removed from additional stores, but doesn’t have that data.

In addition, this list only includes those apps that have been downloaded enough times to rank in the top 1,500 of an app category at some point – beyond that Sensor Tower wouldn’t pick it up. But an app that wasn’t ranked would have had so few downloads that the impact of its removal would be minimal.

Nevertheless, you can see list includes a few well-known names, including Cisco’s Webex Teams and Google’s Duo video calling app, among those from other operators and VoIP calling providers.

The full text of Apple’s email is below:

From Apple
5. Legal: Preamble
Guideline 5.0 – Legal

Recently, the Chinese Ministry of Industry and Information Technology (MIIT) requested that CallKit functionality be deactivated in all apps available on the China App Store. During our review, we found that your app currently includes CallKit functionality and has China listed as an available territory in iTunes Connect.

Next Steps

This app cannot be approved with CallKit functionality active in China. Please make the appropriate changes and resubmit this app for review. If you have already ensured that CallKit functionality is not active in China, you may reply to this message in Resolution Center to confirm. Voice over Internet Protocol (VoIP) call functionality continues to be allowed but can no longer take advantage of CallKit’s intuitive look and feel. CallKit can continue to be used in apps outside of China.

Source: Mobile – Techcruch

China closing in on massive new chip fund in bid to dominate US semiconductor industry

China closing in on massive new chip fund in bid to dominate US semiconductor industry

China’s government has made technological independence from the United States one of its highest priorities. And now it appears to be putting its money where its messaging has been.

According to The Wall Street Journal, China is close to finalizing a $47 billion investment fund that would finance semiconductor research and chip startup development. The fund, formally the China Integrated Circuit Industry Investment Fund Co., appears to be underwritten predominantly by government capital sources.

Such a fund has been rumored for months, with the size of the fund ranging widely. Just two weeks ago, Reuters reported the fund would be $19 billion, while Bloomberg reported $31.5 billion two months ago. The exact number appears to be under intense negotiation among the Chinese leadership, and is also responsive to the increasingly tense trade negotiations with the United States.

If the $47 billion number pans out, it would be identical in size to a $47 billion fund that was financed by Tsinghua University, China’s leading engineering university, to spur the development of an indigenous semiconductor industry back in 2015.

China is highly dependent on foreign tech in its semiconductor industry, importing 90 percent of its chips in order to power its fast-growing economy. The Chinese government has always been wary of that dependency, but its fears were heightened in recent weeks after the United States banned American companies from selling components to ZTE, a prominent Chinese telecom equipment manufacturer.

Chinese President Xi Jinping has gone on something of an indigenous innovation tour in recent weeks, visiting factories across the country and encouraging further investment in the country’s technology industry. From the Communist Party of China’s official newspaper the People’s Daily two weeks ago, “National rejuvenation relies on the ‘hard work’ of the Chinese people, and the country’s innovation capacity must be raised through independent efforts, President Xi Jinping said on Tuesday.”

While the numbers discussed are eye-popping, so are the costs of developing leading-edge semiconductor technology. As semiconductors have grown more complex, costs have skyrocketed to maintain Moore’s Law. Intel spent more than $13 billion on R&D expenses alone in 2017, according to IC Insights, with Qualcomm, Broadcom, and Samsung each spending more than $3 billion.

While China may try to play catchup in the broad category of semiconductors, it is strategically placing its money on new areas like 5G wireless and artificial intelligence-focused chips where it might become a leading provider of technology. Concerns over 5G in particular have galvanized American attention on Qualcomm and its ability to compete in what is rare virgin territory in the telecom equipment space.

For American companies like Intel and Qualcomm, which are used to holding de facto monopolies on entire swaths of the semiconductor market, the renewed competition from China is going to pressure them to push their tech forward faster.

Source: Mobile – Techcruch

China said to be discussing ZTE ban with U.S. officials

China said to be discussing ZTE ban with U.S. officials

The Chinese government is reportedly going to bat for ZTE over a seven-year ban that would have broad ranging consequences for the phone maker. According to a new report from Reuters, the subject was broached during a meeting with between senior Chinese and U.S. officials in Beijing this week.

The ban imposed by the Department of Commerce is the result of a violation against U.S. Iranian sanctions. ZTE pled guilty, agreeing to pay a fine and penalize employees. After the DOC insisted it failed to do the latter, it barred US companies from selling software or components to the phone maker for seven years. Between chip makers like Qualcomm and software providers including, most notably, Google, the restrictions will prove next to impossible for ZTE to circumvent.

For many, the steep penalty appears to be part of a larger looming trade war between the two countries that’s also found ZTE and Huawei caught in the crosshairs over ties to the Chinese government. U.S. officials, however, have insisted that the ban isn’t related to trade issues between the two countries.

Earlier this week, the Pentagon banned the sale of both companies’ phones on military bases — just the latest in a long line tough breaks here in the States.  ZTE has largely weathered the broader U.S. spying concerns better, due in part to a broader footprint in the States than Huawei, but the company admitted that this latest ban would be downright devestating. 

“The Denial Order will not only severely impact the survival and development of ZTE,” the company told TechCrunch, “but will also cause damages to all partners of ZTE including a large number of U.S. companies.”

ZTE has also reportedly been in talks with U.S. companies like Google and has suggested it will take judicial action, if necessary. 

Source: Mobile – Techcruch

Chinese government admits collection of deleted WeChat messages

Chinese government admits collection of deleted WeChat messages

Chinese authorities revealed over the weekend that they have the capability of retrieving deleted messages from the almost universally used WeChat app. The admission doesn’t come as a surprise to many, but it’s rare for this type of questionable data collection tactic to be acknowledged publicly.

As noted by the South China Morning Post, an anti-corruption commission in Hefei province posted Saturday to social media that it has “retrieved a series of deleted WeChat conversations from a subject” as part of an investigation.

The post was deleted Sunday, but not before many had seen it and understood the ramifications. Tencent, which operates the WeChat service used by nearly a billion people (including myself), explained in a statement that “WeChat does not store any chat histories — they are only stored on users’ phones and computers.”

The technical details of this storage were not disclosed, but it seems clear from the commission’s post that they are accessible in some way to interested authorities, as many have suspected for years. The app does, of course, comply with other government requirements, such as censoring certain topics.

There are still plenty of questions, the answers to which would help explain user vulnerability: Are messages effectively encrypted at rest? Does retrieval require the user’s password and login, or can it be forced with a “master key” or backdoor? Can users permanently and totally delete messages on the WeChat platform at all?

Fears over Chinese government access to data held or handled by Chinese companies has led to a global backlash against those companies, including some countries (including the U.S.) banning Chinese-made devices and services from sensitive applications or official use altogether.

Source: Mobile – Techcruch

Report: Chinese smartphone shipments drop 21% to reach lowest level since 2013

Report: Chinese smartphone shipments drop 21% to reach lowest level since 2013

Analysts have long-warned of a growth crunch in China’s smartphone space, and it’s looking like that’s very much the case right now.

China’s smartphone growth has been the feel-good story for domestic OEMs who have clocked impressive figures as the billion-plus population has rushed online via mobile devices. However, the market reached saturation point in 2017 — when sales stopped growing for the first time — and the first quarter of this year is already showing savage results.

In a report released today, Canalys claimed that shipments across the industry fell by 21 percent year-on-year in Q1.

The total number of mobile devices shipped in China dropped below the 100 million mark in a quarter for the first time since late 2013, the firm added.

“Eight of the top 10 smartphone vendors were hit by annual declines, with Gionee, Meizu and Samsung shrinking to less than half of their respective Q1 2017 numbers,” the report read.

Ouch.

Of the field, only Xiaomi the firm tipped for an IPO at a $100 billion valuation — was able to post positive momentum as its numbers grew by 37 percent to reach 12 million. That was enough to see it overtake Apple into fourth place, but Xiaomi numbers are still heavily reliant on its $150 Redmi range, which isn’t as lucrative as its higher-end products.

Huawei, Oppo and Vivo led the market. Somewhat incredibly, those three firms plus Xiaomi now account for a very dominant 73 percent of all shipments, which Canalys believes is bad for consumers and smartphone aficionados in China.

“The level of competition has forced every vendor to imitate the others’ product portfolios and go-to-market strategies,” analyst Mo Jia said in a statement. “While Huawei, Oppo, Vivo and Xiaomi must contend with a shrinking Chinese market, they can take comfort from the fact that it will continue to consolidate, and that their size will help them last longer than other smaller players.”

There might be a bright spark coming soon. Canalys anticipates growth in the second quarter as Oppo, Vivo and Huawei trot out new flagship devices. But China’s once-booming industry is now having to contend with the same issue as the U.S.: consumers don’t upgrade their phone as frequently as carriers would like.

Source: Mobile – Techcruch

Xiaomi promises to give money back to customers if its profits get too high

Xiaomi promises to give money back to customers if its profits get too high

Xiaomi, the Chinese smartphone maker tipped for a public listing this year, has made a unique pledge: if it makes too much money, it’ll give a chunk of its profits back to its customers.

Yes, that’s right.

The company said today it will forever limit to just five percent the net profit margins after tax for smartphones, smart home devices and other hardware. If it makes more money than planned over a calendar year, it plans to “distribute the excess amount by reasonable means to its users.”

It’s hard to know exactly what “reasonable means” Xiaomi is referring to, but here are some thoughts.

Spoiler number one alert !! — Most companies in mobile make a scant profit, if any at all, on hardware.

Firms like LG and Samsung rely on component divisions and other consumer brands to record the bulk of the revenue that makes them profitable. More broadly, the competitive market means there’s not much money to claim in selling phones. Apple is estimated to account for a whopping 87 percent of all smartphone profits despite just 18 percent market share.

Xiaomi Mi Mix 2 was widely lauded when it launched last year

Spoiler number two alert !! — Selling hardware with a low net profit has always been a component of Xiaomi’s strategy.

Indeed, former head of international Hugo Barra previously said it didn’t make money on hardware sales. That approach may have changed, but Xiaomi had never put a figure on its take-home margin before.

This pledge aligns itself neatly with the company’s core focus of providing cutting-edge tech, or as close to, at affordable prices. Much has been said over the years of the bang-for-buck of its $150 Redmi range, while countless comparisons of its higher-end Mi phones — which typically sell for $150-$300 — and flagship products from Apple and Samsung have graced the internet.

Xiaomi has said from the get-go that smartphones are just one part of its wider ecosystem — which includes Xiaomi-branded smart home and “lifestyle” devices from third-parties, and, crucially, services that link all the hardware together. Those include services such as online video, e-commerce, financial products and other digital services.

“From the beginning, we embarked on a relentless pursuit of innovation, quality, design, user experience and efficiency advances, to provide the best technology products and services at accessible prices. We hope that our products and services will help our users to achieve a better life,” CEO and co-founder Lei Jun said in the money statement that accompanies today’s announcement.

Xiaomi is widely tipped to go public this year in an IPO that could value its business as high as $100 billion, according to Bloomberg. Chinese media recently claimed that the company is planning a dual-IPO that would see it list both in Hong Kong and on Mainland China, as our sister site Technode explained.

Such a double-headed IPO would be unique but, as Xiaomi showed today, it has no intention of sticking to so-called convention.

Source: Mobile – Techcruch

Chinese police foil drone-flying phone smugglers at Hong Kong border

Chinese police foil drone-flying phone smugglers at Hong Kong border
Dozens of high-tech phone smugglers have been apprehended by Chinese police, who twigged to the scheme to send refurbished iPhones into the country from Hong Kong via drone — but not the way you might think.
China’s Legal Daily reported the news (and Reuters noted shortly after) following a police press conference; it’s apparently the first cross-border drone-based smuggling case, so likely of considerable interest.
Although the methods used by the smugglers aren’t described, a picture emerges from the details. Critically, in addition to the drones themselves, which look like DJI models with dark coverings, police collected some long wires — more than 600 feet long.
Small packages of 10 or so phones were sent one at a time, and it only took “seconds” to get them over the border. That pretty much rules out flying the drone up and over the border repeatedly — leaving aside that landing a drone in pitch darkness on the other side of a border fence (or across a body of water) would be difficult to do once or twice, let alone dozens of times, the method is also inefficient and risky.
But really, the phones only need to clear the border obstacle. So here’s what you do:
Send the drone over once with all cable attached. Confederates on the other side attach the cable to a fixed point, say 10 or 15 feet off the ground. Drone flies back unraveling the cable, and lands some distance onto the Hong Kong side. Smugglers attach a package of 10 phones to the cable with a carabiner, and the drone flies straight up. When the cable reaches a certain tension, the package slides down the cable, clearing the fence. The drone descends, and you repeat.
I’ve created a highly professional diagram to illustrate this technique (feel free to reuse):
It’s not 100 percent to scale. The far side might have to be high enough that the cable doesn’t rest on the fence, if there is one, or not to drag in the water if that’s the case. Not sure about that part.
Anyway, it’s quite smart. You get horizontal transport basically for free, and the drone only has to do what it does best: go straight up. Two wires were found, and the police said up to 15,000 phones might be sent across in a night. Assuming 10 phones per trip, and say 20 seconds per flight, that works out to 1,800 phones per hour per drone, which sounds about right. Probably this kind of thing is underway at more than a few places around the world.

Source: Gadgets – techcrunch