Hi, this is Kenji in Hong Kong.
Lenovo on Wednesday became the latest company to hold its first in-person annual earnings report since the pandemic.
Speaking at a hotel in central Hong Kong, management, including President and CEO Yang Yuanqing, tried to focus on the positives: revenue and profit growth in two non-PC segments, and the prospect of an early recovery in its core PC business. , which suffered from weak demand and excess inventory.
But the spotlight was stolen by the less optimistic news after it was revealed during the press conference that the company had cut at least 5 percent of its workforce. Earlier in the day, news broke that Alibaba’s cloud computing business would cut its workforce by 7 percent.
But job cuts like this are just one problem for the technology sector. Politics is another. One of the major outcomes of the recent G7 summit in Hiroshima was to show renewed cohesion among Western leaders against China. This included adopting – for the first time ever – a statement condemning Beijing’s “economic coercion”.
China directly objected to Japan’s G7 presidency, and Vice Foreign Minister Sun Weidong summoned Japan’s Ambassador Hideo Tarumi to Beijing on Sunday to express his country’s “strong dissatisfaction and firm opposition” to these remarks. Tarumi responded by saying that the G7 response was “only normal” and that it was China that needed to change course.
The tech world has good reason to worry about this kind of diplomatic relationship. Political tensions are already hampering what should be a relatively straightforward endeavor: building and improving the undersea cables needed to maintain Internet connectivity.
high pressure cables
Multimillion-dollar submarine cable projects have become the latest focal point of geopolitical tensions in Asia as China ramps up its hotly contested claims over the South China Sea, writes Nikkei Asia’s Singapore-based correspondent. Tsubasa Suruga.
These cables are essential to maintaining the flow of information throughout the region and across the Pacific Ocean. Most countries require builders to obtain approval if they plan to lay cables in their territorial waters, but not in their exclusive economic zone, which extends 200 nautical miles from the nation’s coast.
However, China insists that projects within the “nine-point line” – an area that effectively includes the entire South China Sea – need Beijing’s approval. A letter of no-objection must be obtained from the People’s Liberation Army of China before you begin the formal application process. Beijing enforces this policy despite an international tribunal finding in 2016 that the nine-point line lacked legal basis.
“It’s no secret that the entire industry faces politics more,” said Takahisa Ohta, senior manager of the Submarine Network Division at NEC Corporation, one of the world’s three largest submarine cable providers.
Some of the companies involved, such as Singtel, are looking for ways to diversify their paths. Tai Yang Hui, a 30-year industry veteran who heads subsea cable development for the Singapore telecoms provider, said it is “exploring alternative paths” to connect data centers, but admits it is “very difficult” to avoid the South China Sea as a whole.
China’s semiconductor industry fears that Japan’s restrictions on exports of chipmaking equipment are so broad that it risks hurting its production of low-quality silicon used in everything from cars to washing machines, according to the Financial Times. Keaner Liu, Kana Inagaki And Anna Gross.
Tokyo plans to limit exports of 23 types of chipmaking equipment from July, as it aligns with the United States and the Netherlands in tightening controls that could limit China’s access to cutting-edge chips. Chinese foundries rely on chip-making tools imported from the United States and Japan.
Chinese executives said Japan’s specifications include core chips made at 45 nanometers, exceeding the 14/16 nanometer threshold in Washington’s controls set in October. The China Semiconductor Industry Association warned last month that Tokyo’s controls on exporting equipment were “too broad” and appealed to Beijing to respond.
The nanoscale knot refers to the generation of chip production technology. As a general rule, the smaller the number, the more advanced the chip.
The planned regulations suggest that even Nikon-supplied immersion lithography used to make 45-nanometer chips could be restricted from being sold to China because some of the technology could be needed in producing advanced chips.
For sale or not for sale
Beijing’s move to ban purchases of some products made by US chipmaker Micron Technology due to “serious network security risks” has left the company’s South Korean rivals – Samsung Electronics and SK Hynix – with a dilemma.
The question is whether to fill the supply gaps left by the micron ban and upset the US, or refrain from doing so and upset China, according to Kim Jaewon, Lauly Li, and Cheng Ting-Fangtechnology correspondents for Nikkei Asia in Seoul, Taipei, and London.
On paper, the South Korean duo and other Western players could take advantage of the situation to expand their market share in China, but experts say they are unlikely to do so given their reliance on US chip production equipment.
Samsung and SK Hynix both make memory chips in China, but to keep those facilities running they need American equipment, which they can only continue to import thanks to special permission from Washington — which could be revoked at some point.
Alibaba’s cloud arm is cutting about 1,000 employees, or 7 percent of its workforce, as it prepares for an initial and final public offering, according to Nikkei Asia’s publication. Sissy Chu in Hong Kong.
Alibaba as a group has embarked on a historic restructuring that will see the tech giant split into six major business groups, with the cloud arm being one of them.
Like its peers, Alibaba has had to cut costs and cut staff recently. Last year, it cut nearly 20,000 jobs, and another 4,500 employees left during the first three months of the year, bringing it to a total employee count of 235,216 as of the end of March.
Alibaba is the largest public cloud service provider in China, and the business is its second largest source of revenue after e-commerce. But renewed competition from rivals such as Huawei and the country’s three telecom operators has forced it to cut prices.
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#techAsia is coordinated by Catherine Creel of Nikkei Asia in Tokyo, with assistance from the FT Technical Office in London.
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