Trade War with China

Status
Not open for further replies.

Hendrik_2000

Lieutenant General
The beginning of an end to Qualcomm reign as the king of chip set for mobile devices
Please, Log in or Register to view URLs content!


Qualcomm's Nightmare Continues as U.S. Regulators Slam ZTE
Please, Log in or Register to view URLs content!
Leo Sun, The Motley Fool,Motley Fool Fri, Apr 20 8:04 PM CDT

China has been a tough market for Qualcomm (NASDAQ: QCOM) over the past few years. Chinese regulators fined the chipmaker nearly $1 billion in late 2015 over its licensing practices, and forced it to lower its licensing fees for Chinese OEMs. Even then, some Chinese OEMs allegedly underreported their shipments to pay lower licensing fees, forcing Qualcomm to sign new licensing agreements with each device maker.

Qualcomm's long-delayed takeover of NXP Semiconductors (NASDAQ: NXPI)
Please, Log in or Register to view URLs content!
as China's Ministry of Commerce takes its time with its decision. Qualcomm tried to curry the favor of the Chinese government by working with Chinese companies to develop new chips for connected cars, Internet of Things (IoT) devices, and 5G technologies. Unfortunately, President Trump then proposed tough tariffs against China, turning Qualcomm into a potential target for retaliation from Chinese regulators.

26294f4be31e25effe2b9fb047c151f0

Image source: Qualcomm.

Those headwinds were already brutal, but the U.S. Department of Commerce recently dealt Qualcomm another blow by banning all component shipments from American companies to Chinese telecom giant ZTE (NASDAQOTH: ZTCOY) for seven years. ZTE was found guilty of violating trade sanctions by shipping products to Iran, and pleaded guilty to the charges in late March.

Why the ZTE ban hurts Qualcomm
ZTE sells a wide variety of communication devices, including telecommunications gear, networking equipment, and smartphones. The company shipped an estimated 46.4 million smartphones last year, according to IHS Markit.

Qualcomm, the largest mobile chipmaker in the world, supplies chips to "almost half" of those devices, according to Counterpoint Research's Neil Shah. Shah estimates that at about $25 per chip, Qualcomm generates "close to half a billion dollars" in annual revenues from ZTE. Research firm Canalys estimates that Qualcomm supplies chips for 65% of ZTE's smartphones.

Analysts expect Qualcomm's revenue to fall 4% to $22.2 billion this year, so ZTE orders of $500 million would be about 2.2% of that. That blow seems manageable, but it comes at a terrible time for Qualcomm. Qualcomm's chipmaking business, which generates most of its revenues, is being challenged by cheaper chipmakers and first party OEMs like Huawei. Its licensing business, which generates most of its profits, is being targeted by regulators and OEMs, which claim that its fees are too high.

8e2ddbc5719713810323fef815974e74

ZTE's Axon M. Image source: ZTE.

The decision to block Qualcomm from supplying chips to ZTE also leaves the door wide open for rival chipmakers like Taiwan's MediaTek and China's own HiSilicon (a subsidiary of Huawei) to fill the void. Samsung (NASDAQOTH: SSNLF), which has
Please, Log in or Register to view URLs content!
to sell its Exynos SoCs to third-party device makers, could also swoop in.

Between the third quarters of 2016 and 2017, Qualcomm's market share in application processors rose from 41% to 42%, according to Counterpoint. But with the loss of ZTE, its year-over-year growth could reverse.

A weird move that helps Chinese chipmakers
The ZTE ban is an odd move that hurts American companies while helping Chinese ones. The ban already crushed the stock price of U.S. fiber optic companies like Acacia Communications (NASDAQ: ACIA), which generated 30% of its sales from ZTE's orders last year.


Locking out companies like Qualcomm and Acacia merely encourages ZTE to order more components from Chinese manufacturers. Other Chinese OEMs, realizing that their supply of American components could be abruptly cut off, would likely do the same.


The Chinese government, which is already focused on reducing the company's dependence on foreign technologies, will likely pour more money into domestic chipmakers to aid major companies like ZTE. Meanwhile, American companies might think twice before accepting bulk orders from Chinese OEMs.


What's next for Qualcomm?
Qualcomm has a lot on its plate right now. It's still reeling from Broadcom's
Please, Log in or Register to view URLs content!
, its legal battles against Apple are escalating, the future of the NXP deal remains murky, and its former CEO is reportedly trying to
Please, Log in or Register to view URLs content!
.

The Commerce Department's decision to block U.S. companies from supplying components to ZTE marks another escalation of trade tensions between the U.S. and China. Qualcomm, once again, is stuck in the crossfire and forced to deal with the consequences.
 

taxiya

Brigadier
Registered Member
The beginning of an end to Qualcomm reign as the king of chip set for mobile devices
Please, Log in or Register to view URLs content!


Qualcomm's Nightmare Continues as U.S. Regulators Slam ZTE
Please, Log in or Register to view URLs content!
Leo Sun, The Motley Fool,Motley Fool Fri, Apr 20 8:04 PM CDT

China has been a tough market for Qualcomm (NASDAQ: QCOM) over the past few years. Chinese regulators fined the chipmaker nearly $1 billion in late 2015 over its licensing practices, and forced it to lower its licensing fees for Chinese OEMs. Even then, some Chinese OEMs allegedly underreported their shipments to pay lower licensing fees, forcing Qualcomm to sign new licensing agreements with each device maker.

Qualcomm's long-delayed takeover of NXP Semiconductors (NASDAQ: NXPI)
Please, Log in or Register to view URLs content!
as China's Ministry of Commerce takes its time with its decision. Qualcomm tried to curry the favor of the Chinese government by working with Chinese companies to develop new chips for connected cars, Internet of Things (IoT) devices, and 5G technologies. Unfortunately, President Trump then proposed tough tariffs against China, turning Qualcomm into a potential target for retaliation from Chinese regulators.

26294f4be31e25effe2b9fb047c151f0

Image source: Qualcomm.

Those headwinds were already brutal, but the U.S. Department of Commerce recently dealt Qualcomm another blow by banning all component shipments from American companies to Chinese telecom giant ZTE (NASDAQOTH: ZTCOY) for seven years. ZTE was found guilty of violating trade sanctions by shipping products to Iran, and pleaded guilty to the charges in late March.

Why the ZTE ban hurts Qualcomm
ZTE sells a wide variety of communication devices, including telecommunications gear, networking equipment, and smartphones. The company shipped an estimated 46.4 million smartphones last year, according to IHS Markit.

Qualcomm, the largest mobile chipmaker in the world, supplies chips to "almost half" of those devices, according to Counterpoint Research's Neil Shah. Shah estimates that at about $25 per chip, Qualcomm generates "close to half a billion dollars" in annual revenues from ZTE. Research firm Canalys estimates that Qualcomm supplies chips for 65% of ZTE's smartphones.

Analysts expect Qualcomm's revenue to fall 4% to $22.2 billion this year, so ZTE orders of $500 million would be about 2.2% of that. That blow seems manageable, but it comes at a terrible time for Qualcomm. Qualcomm's chipmaking business, which generates most of its revenues, is being challenged by cheaper chipmakers and first party OEMs like Huawei. Its licensing business, which generates most of its profits, is being targeted by regulators and OEMs, which claim that its fees are too high.

8e2ddbc5719713810323fef815974e74

ZTE's Axon M. Image source: ZTE.

The decision to block Qualcomm from supplying chips to ZTE also leaves the door wide open for rival chipmakers like Taiwan's MediaTek and China's own HiSilicon (a subsidiary of Huawei) to fill the void. Samsung (NASDAQOTH: SSNLF), which has
Please, Log in or Register to view URLs content!
to sell its Exynos SoCs to third-party device makers, could also swoop in.

Between the third quarters of 2016 and 2017, Qualcomm's market share in application processors rose from 41% to 42%, according to Counterpoint. But with the loss of ZTE, its year-over-year growth could reverse.

A weird move that helps Chinese chipmakers
The ZTE ban is an odd move that hurts American companies while helping Chinese ones. The ban already crushed the stock price of U.S. fiber optic companies like Acacia Communications (NASDAQ: ACIA), which generated 30% of its sales from ZTE's orders last year.


Locking out companies like Qualcomm and Acacia merely encourages ZTE to order more components from Chinese manufacturers. Other Chinese OEMs, realizing that their supply of American components could be abruptly cut off, would likely do the same.


The Chinese government, which is already focused on reducing the company's dependence on foreign technologies, will likely pour more money into domestic chipmakers to aid major companies like ZTE. Meanwhile, American companies might think twice before accepting bulk orders from Chinese OEMs.


What's next for Qualcomm?
Qualcomm has a lot on its plate right now. It's still reeling from Broadcom's
Please, Log in or Register to view URLs content!
, its legal battles against Apple are escalating, the future of the NXP deal remains murky, and its former CEO is reportedly trying to
Please, Log in or Register to view URLs content!
.

The Commerce Department's decision to block U.S. companies from supplying components to ZTE marks another escalation of trade tensions between the U.S. and China. Qualcomm, once again, is stuck in the crossfire and forced to deal with the consequences.
NXP deal is the key. China should not let it pass. Put it in the light of ZTE case, Chinese company can (for now) have NXP chips in the supply chain without U.S. blackmailing. If the deal go through, the chips will be in the arsenals in the blackmailing trade and political and strategic wars.

Add to this NXP deal, the Toshiba selling semiconductor business to Qualcomm is also dead very recently "
Please, Log in or Register to view URLs content!
"
 
now I read
ZTE says it is seeking solution to U.S. export ban
Xinhua| 2018-04-22 22:02:46
Please, Log in or Register to view URLs content!

Chinese telecom equipment maker ZTE Corp. is taking steps to comply with a U.S. denial order, the company said in a statement Sunday.

The company is making active communications with relevant parties and is seeking a solution to the issue, the company said in a statement to the Shenzhen Stock Exchange.

The statement came after the U.S. Department of Commerce activated a denial of export privileges against ZTE for alleged violations of the U.S. Export Administration Regulations.

ZTE attaches significant importance to the work on export control compliance, the company said in the statement.

Compliance is regarded as foundation to the company's strategy and condition and bottom-line for the company's operations, it said.

ZTE has established the compliance management committee led directly by the chief executive officer and built a team with global coverage composed of senior export control compliance experts, it said.
 

Phead128

Captain
Staff member
Moderator - World Affairs
so US embargos China for military tech in 1989.

Now less than 28 years later, China is pumping out 5th gen fighters, AEGIS-type warships, Aircraft carriers, GPS Beidou, Advanced missiles.

This will only make China realize that dependency on foreign technology imports is a liability and encourage China to become fully independent.

Basically this will only merely delay China's inevitable rise, US is shooting itself in the foot.
 
now I read
Alibaba denies 'bullying' brands into exclusivity deals
2018-04-23 16:41 GMT+8
Please, Log in or Register to view URLs content!

Chinese e-commerce giant Alibaba has firmly denied reports that it “punished” several major Western brands for failing to sign exclusivity deals with its Tmall platform, amid allegations that it purposely caused the brands' sales to plummet by as much as 20 percent.

In a statement, Alibaba called the AP report “completely false,” adding that “Alibaba and Tmall conduct business in full compliance with Chinese laws.”

Addressing the issue of exclusivity deals, Alibaba’s statement underlined that “like many e-commerce platforms, we have exclusive partnerships with some of the merchants on Tmall. The merchant decides to choose such an arrangement because of the attractive services and value Tmall brings to them.”

The AP report is based on a series of interviews, including five US executives that fail to give their names, with three purportedly representing companies with sales worth billions of US dollars. The five brands claim that after refusing to sign exclusivity deals with Alibaba and signing up to promotions on JD.com – Alibaba’s biggest e-commerce rival in China – their sales plummeted.

The report also suggests one of the brands saw its Tmall sales drop by 10 to 20 percent compared to the previous year, after its advertising was suddenly removed from the e-commerce platform, and its products were forced to the bottom of search results.

The AP claims the report was the result of a months-long investigation involving more than 30 people. It has been backed by JD.com, which claims more than 100 Chinese brands left its platform for Tmall in the past year.

In November, JD.com’s chief financial officer Huang Xuande said the exodus from his platform to Tmall was down to Alibaba’s “coercive tactics… which if proven true would be illegal and clearly against the merchants' will.”

Describing the rivalry between Alibaba and JD.com as “the great cat and dog war,” the AP claims it has seen Tmall contracts that demand merchants “must not operate storefronts on other e-commerce platforms without Tmall's written permission.”

JD.com has previously made official complaints against Alibaba over unfair competition. In 2015, JD.com went to the State Administration for Industry and Commerce to register a complaint over Tmall forcing companies into exclusivity during lucrative sales campaigns like Singles’ Day.

Alibaba responded at the time by saying while JD.com was focused “on groundless complaints to explain why they are losing brands, we at Alibaba are squarely focused on making our platform the best for our merchants."
 

advill

Junior Member
The Trump Administration's Economic (or is it Trade?) Secretary impending visit to Beijing should learn this phrase, & advise Trump to "Jaw Jaw" (negotiate) & NOT "War War" on Trade!!! ----- No winners in any trade or military war as shown in History.
 
now I read
EU seeks to join U.S.-China talks on steel, aluminum tariffs at WTO
Xinhua| 2018-04-24 19:02:58
Please, Log in or Register to view URLs content!

The European Union (EU) has sought to join the consultations at the World Trade Organization (WTO) requested by China with the United States on the recent U.S. steel and aluminum tariffs, the WTO said on Monday.

The EU notified the United States, China and the WTO's Dispute Settlement Body that it wishes to join the consultations since it has substantial trade interests in the matter.

Despite opposition from business groups and trading partners around the world, U.S. President Donald Trump on March 8 signed proclamations to impose a 25-percent tariff on imported steel and a 10-percent tariff on aluminum.

Though the EU is temporarily exempt from the tariffs, "should the exclusion not continue to be in place, then the EU's exports would be impaired significantly by the U.S. measures," the EU said.

In 2017, the 28-nation bloc exported 5.99 billion U.S. dollars worth of steel products to the United States, and 1.25 billion dollars of aluminum, making it the top exporter of steel to the United States and fifth aluminum exporter.
 

taxiya

Brigadier
Registered Member
now I read
EU seeks to join U.S.-China talks on steel, aluminum tariffs at WTO
Xinhua| 2018-04-24 19:02:58
Please, Log in or Register to view URLs content!
It is very strange that EU did NOT initiate the talk with U.S. in WTO when EU is much larger steel exporter than China to U.S. It gives me the feeling that EU is hiding behind China and have China do the heavy lift work.:rolleyes:

But on a broader and long-term sense, China does look more like a leader of world order than EU in shaping the rules.:)
 
Status
Not open for further replies.
Top