Kioxia Holdings, the former Toshiba memory unit, and the world’s second largest NAND flash memory chipmaker has announced that it has postponed its initial public offerings plan amid US-China trade tensions.

According to Nobuo Hayasaka, Kioxia CEO and President, “While we received significant interest from many investors, the lead underwriters and Kioxia do not believe it is in the best interest of current or prospective shareholders to proceed with the IPO at this time of continued market volatility and ongoing concerns about a second wave of the pandemic.” In other words, the company is bracing for the impact of the US sanctions on Huawei alongside the ongoing pandemic.

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As per a Nikkei report, the recent reinforcement of regulations against the Chinese tech giant, Huawei, had also affected the decision for the Japanese company. For those unaware, Huawei is a known client of Kioxia. Furthermore, the IPO itself had also garnered a lot of criticism from investors as the company was planned to list at a value of around 14 billion US Dollars, which would have been Japan’s largest IPO this year. However, the company was only actually offering just over 800 million US Dollars for the initial prospectus, which is nowhere near the funding it requires for its planned investments.

Kioxia has said that it would not give up on its IPO and would reschedule for the end of this year or the beginning of 2021. However, a source close to the matter stated that the “Huawei concerns will hardly be solved in the next three to four months.” 40 percent of all Kioxia sales are contributed by smartphone memory chips, and with the US sanctions taking effect from 15th September 2020, the company will lose a notable customer that made up just under 10 percent of its total sales.

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The recent US sanctions against Huawei Technologies might have a far reaching impact on the entire US tech industry as a whole. While the Chinese company has lost its chip supply from TSMC, US based companies fear that this move from the Government might end up scaring away its customers.

Back in 2019, Huawei had faced a trade ban by the US Commerce Department. This move caused the Chinese tech giant to lose billions of dollars in revenue. Moving forward by a year, the situation has still not gotten any better with recent sanctions restricting the company’s supply as well. But now, this move may create a bigger gap between the US and Chinese supply chains.

According to an executive of a California-based semiconductor company, “securing new clients in China, or even in Asia, could be more challenging from now on as prospective clients would think twice before they buy American equipment or technologies like ours.” The Chinese market accounted for more than 60 percent of the global semiconductor consumption in 2019. So, the shift away from the US suppliers could potentially hard domestic businesses in America.

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The executive also added that despite the California based company does not directly supply Huawei, “a lot of Chinese tech companies, those buying from us included, have some sorts of relationships with Huawei. There is no way to know whether what we sell to a non-Huawei company will not eventually become part of a Huawei product.” In other words, the US products may eventually be reaching the blacklisted Chinese company.

This translates to potential complications with the US government since the new sanctions dictate that a special license must be obtained to provide products to blacklisted companies. Thus, the unclear nature of the entire transaction and trade could harm the US based companies if their technology is found being used by companies like Huawei later on.

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Huawei, the smartphone manufacturer, has been facing complications with the US Government. It first started out as data security accusations that affected the Chinese tech giant’s operations in the western nation and soon even saw it being banned from accessing various US based technological components and software as well. The restrictions had seemed to ease up by a bit at the end of 2019 but are now expected to become even more strict in 2020

Ren Zhenfei, Co-Founder of Huawei group has previously stated that he expects US to take severe actions against the Chinese OEM in 2020, which has now turned out to be true. Since, US Commerce department’s Secretary, Wilbur Ross, revealed that plans are underway to step up the trade ban against Huawei. This will further prevent trade relations with more firms that are based in the US.

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Reportedly, companies from the US can export products and components to Huawei only if 75 percent of the end product is sourced and made in foreign lands. However, the US Commerce Department is hinting that it would raise this number to 90 percent, which means Huawei can only source 10 percent of its product from US based corporations. The restrictions do not end there since more actions are expected to soon follow as reports suggest that the US Government is considering a separate regulation for the Chinese OEM altogether.

The founder of Huwaei has stated that the company is better equipped than last year to survive further attacks from the US Government. But we will have to wait and see how the situation pans out for the company and what impacts the US-China trade deals bring to the deteriorating trade relations between the East and West.

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According to a new report, Huawei will seek to continue developing and diversifying its supply chains. Bloomberg brought on Timothy Danks, the Vice President of risk management at Huawei Technologies, for an interview in which they discussed the future prospects of the company.

2020 for Huawei

2020 is going to be a challenge for the company, according to Danks who stated that the company has always had risk management in place for years that helped them cope with unforeseen complications. He even accredited the companies survival of 2019 to its smart future planning; a year which had seen the company face many complications in western regions like the US and a few European countries.

Political Obstacles

One of the main focus of 2020 for the company will be to address and mitigate the challenges it had faced in 2019. In other words, it plans to reduce and turn over the loses incurred due to political issues and move forward with the innovative development of its products.

Danks mentioned that the company hopes the situation doesn’t worsen for Huawei. However, the senior risk management executive also stated that the Chinese tech giant has prepared “Plan B” for events against the best interests of the company or its operations. These back-up strategies are claimed to cover various scenarios.

Licensing in the US

According to Danks, Huawei wishes to continue working with its western partners, namely Google and it’s Android OS support. Furthermore, Huawei has even planned contingencies if licensing agreements in the US fall short since the company is not informed regarding the entire licensing process.

For those unaware, US-based companies that wished to partner with blacklisted firms like Huawei have to gain official licenses issued by the US Government. Reportedly, over 290 companies from the US have applied for such licenses, which is indicative of the $12 billion the company buys from these companies in the form of products, services and more.

Huawei Android Smartphone Lineup

Notably, the risk management VP was also questioned about the viability of its Android smartphones outside of China without Google support. To answer this, Danks stated that Huawei Mate 30 Pro, a vanilla Android smartphone released without Google support, sold over 7 million units. The large figure apparently surpassed even its predecessor, the Mate 20 Pro. Thus, it can be surmised that the company will release otehr vanilla Android devices in the future if they need to.

Phase One Deal: The US and China Trade War

The senior executive also commented on the ongoing US-China trade disputes and the position of the company within the crossfires. Danks said its an unfortunate position for Huawei but is hopeful that the Phase One deal being signed between the two superpowers on 15th January 2020 would ease rising tensions.

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The resolution between the two nations could also prove to be a boon for the company. It may even revitalize its position to a more healthier stance in the US markets as well.

Reducing reliance on the West

Huawei has been seeking to reduce its reliance on western-based corporations for a while now. The best example of it would be the development of its HiSilicon processing chips that its smartphones are equipped with. Previously, these were manufactured by ARM which has its roots based in the US. Now, the chipsets are manufactured without any US-based partnerships or technologies and are developed by non-US based suppliers.

Investment in AI

Artificial Intelligence (AI) is an emerging field in the IT sectors. Reports have claimed it to soon have a $15 trillion impact on various GDPs’ of nations all over the world. Huawei is not specifically developing AI but on how it can be applied for its vast variety of products including smartphones and other IoT devices, according to Danks.

Lastly, the Vice President of risk management also disclosed that Huawei had invested about $18 billion in AI in 2019 alone; and is planning to increase the investment in the arriving years. The company also plans on dedicating a large portion of the investment to AI development.

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ByteDance, the parent company behind TikTok, is reportedly looking into options to address the concerns regarding the alleged national security allegations from the US Government.

Previously, we had reported on news regarding the US Government suing TikTok, the popular short video app, for harvesting user data and sending it back to China. Now, it seems that ByteDance is considering multiple options for its defense against this accusation. It ranges from an aggressive denial and trial in courts to operational separation from TikTok itself.

According to a report, ByteDance selling the majority stake in TikTok could have it rake in about 10 Billion US Dollars. This evaluation was calculated after the app’s valuation surged in 2019 as it gained popularity on a global scale. A few news agencies have also stated that the company is currently one of the world’s most valuable startups. Unfortunately, the tensions between the US and China in the form of trade disputes are threatening its operations and future growth.

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If ByteDance were to sell TikTok, the most logical option would be to offer up a majority stake in TikTok to financial investors. Notably, companies like SoftBank, Sequoia Capital, and Susquehanna International are large financial firms that were one of the early investors in the social media app. Thus, a sale of its majority stake could allow the parent company to cash in when the app is extremely popular and avoid any future difficulties.

Recently, the US Army has even launched an investigation into the app stating its handling of user data puts military information and practices at risk as well. Additionally, there is an abundance of evidence regarding the app censoring data in accordance with Chinese censorship standards which also point towards its accused allegiance.

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Earlier this morning (23rd December 2019), China announced that it would cut import taxes and tariffs on a range of over 850 products. The changes will be implemented with effect starting from 1st January 2019 and are being made to boost imports amidst a slowing economy and a trade war with the US.

China’s Customs Tariff Commission of the State Council has stated that the move is aimed at promoting a “high quality development of trade.” According to a Chinese news agency, Xinhua, the new adjustments are being made to further the coordinated plans of development of trade and environment by the country.

From the list of 859 total products seeing an effective change, a few of the notable ones include frozen imported meats (pork, as China is one of the largest consumer of the meat and the country was hit with a recent virus that affected indigenous animals), essential pharmaceuticals (asthma inhalers and diabetic drugs), paper products and crucial components of electronic products (integrated circuits and key semiconductors components).

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Furthermore, the products from Australia, New Zealand, South Korea, Singapore, Switzerland, Pakistan, and a few Latin countries will be charged with even lower tariffs under the new free-trade agreements. So far, the move does not seem to be directly caused by the aftermath of the US-China trade disputes. Earlier this month, both sides had announced a minor agreement to reduce a few of the tariffs levied to prevent further impact on the global trade growths for either side.

Previously, China had also exempted a list of US based chemicals from import tariffs, which included variants of industrial glue and other adhesives, industrial polymers and types of paraffin which is used in both cosmetics and food products. Notably, it is stated that China plans on further reducing import tariffs on some technology products as well from the 1st of July 2020.

Thus, it could mean that in 2020, trade relations have a better chance of being revitalized in China. This could also imply that the import of semi-assembled smartphones and its crucial components will be levied lower tariffs allowing for foreign companies like Apple to be a bit more competitive with its pricing in the East.

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According to Richard Yu, the CEO of Consumer Business of Huawei, the global shipments for smartphones from Huawei will reach around 230 million by the end of 2019. The statement was made by the Senior Executive at an internal conference.

Back in 2018, the Chinese tech giant had its smartphone sales surpass the 200 million mark, reaching about 206 million units shipped in total. By the time 2018 ended, the President of Huawei, He Gang, mentioned that the global smartphone market was not in an optimal state, pointing at the company’s own figures. Thus, the President mentioned that Richard Yu’s expectations are high and estimated that the target for 2019 would be between 230 million to 250 million shipments.

Earlier this year, Huawei faced complications with the US Government when its Commerce Department put the company under the Entity List which limited its operations in the country. This marked the smartphone maker as a national security threat with data security in mind and has since also faced similar accusations in European regions as well. Undoubtedly, all of these had a major hand to play in its overall global smartphone shipments.

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Huawei had many obstacles on its way to achieving its yearly goals. Many key companies like Google, ARM, and more had to end their business ties with the Chinese company due to the US Government’s actions. So the fact that the company is still set on the preconceived speculations is a testament of its own efforts.

Previously, Huawei announced that it had reached its goal 64 days in advance by selling more than 200 million smartphones by just 22nd October 2019. Thus, it is highly likely that the large 230 million shipments will be met by the end of this year. Notably, the shipments are also very likely to exceed Apple’s full year sales in 2019.

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According to a new report, Huawei is set to play a role in the building of 5G networking in the European country Norway. The company is expected to work with other industry experts on networking in the country despite pressures from the US.

The Chinese tech giant will work alongside Ericsson which is one of the few companies that still operate with the former despites its western complications. Huawei is still suffering from the aftershocks of the US ban and is facing difficulties in European operations as well.

Over the past 10 years, Telenor (a Norwegian telecommunications company) has worked with Huawei for 4G networking in Norway, according to Telenor VP for communications. The senior executive also went on to state that, “Ericsson has been introduced as a new vendor for 5G RAN, but we will also work with Huawei both to maintain the 4G network and also upgrade to 5G coverage in selected areas of Norway.”

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Notably, Petter-Boerre Furberg, the head of Telenor Norway, stated that the operator would gradually phase Huawei network components in the country over a 4-5 years modernization period. This points to a broader image of Huwaei facing increasing difficulties in European regions amidst the US accusations regarding security threats. The security concerns have also risen in countries like Spain and are hampering the company’s operations in the area.

To sum things up, Norway will utilize Ericsson’s technology for the newer and faster bandwidth while having Huawei maintain the existing 4G networking. However, the latter will also help in developing 5G in a few selected areas.

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The short video making app, TikTok, is facing a lawsuit charge which claims that it harvests users’ data and sends it back to China. Reportedly, American users of the app have come forward with numerous allegations regarding its recent censorship misconduct as well. The Chinese social networking platform has denied these claims as it faces a national security probe in Washington.

Last week, a consumer class action lawsuit was filed against TikTok in California, USA. ByteDance, the Beijing-based company behind TikTok, is facing charges for harvesting user data without notice or consent and sending it back to China. Furthermore, it was also claimed in the lawsuit that the app “includes Chinese surveillance software.” This allowed it to access user data and send it to Chinese servers, including those run by Tencent and Alibaba Group Holdings.

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This arrives after a user in New Jersey was locked out of her TikTok account after posting a video spreading awareness of Beijing’s mass detention of Uighurs in Xinjiang. TikTok removed the video once it went viral and later claimed it was by mistake. Currently, TikTok’s parent company, ByteDance, is facing pressure from the US Government, facing an investigation by the Committee on Foreign Investment in the United States. CFIUS could force ByteDance to divest TikTok’s US operations if it is found that the company poses a national-security threat.

In the west, there is a pattern of increasing distrust over Chinese brands or those backed by Chinese companies. Huawei is one such example that faced similar allegations during the US-China trade disputes. Recently, TikTok claimed that it stores its US user data within the country and does not censor political content in line with Beijing’s instructions. Furthermore, ByteDance is reportedly considering moves to distance the TikTok brand from China.

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Following the US-China trade disputes, the US Government has started to ease off on Chinese based companies. The issuing of licenses to firms to perform business partnerships with banned companies like Huawei is one such example. This has allowed American companies to resume their relations with the Chinese tech giant but it might be too late as Huawei is now building its smartphones without US-based parts.

Earlier this year, Huawei was placed on the ‘Entity List.’ After this, the Chinese company was forced to end ties with many of its American based partners after being issued a ban by the US Commerce Department. Initially, the move proved to cripple the company that relied on western companies like Google for Android OS support, ARM for its chipsets and other companies like Intel and Qualcomm as well. However, a new report suggests that the company no longer requires US-based chipsets anymore.

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Huawei’s Mate 30 smartphone is a symbol of this new breed of smartphones which doesn’t feature any US parts. This was proven once the device was taken apart by analysts from UBS and Fomalhaut Techno Solutions which is a Japanese technology lab. The Chinese company has made great strides in distancing themselves and their reliance on the US.

Note: Huawei still uses US-based company’s chipsets but they are manufactured and synthesized in foreign countries.

According to analysts, Huawei made a big statement with the release of the aforementioned flagship smartphone that shipped with no US-made internals. Furthermore, even with Huawei previously announcing its move to do away with American parts, the company is currently in a great position owing to how quickly the shift actually came about.

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According to data obtained from the website of the U.S.-China Economic and Security Review Commission, as of February 25, 2019, there were 156 Chinese companies listed on the U.S. exchanges with a total market capitalization of $1.2 trillion. These companies are at risk of getting delisted as three sources familiar with the lingering US/China trade dispute hint that Donald Trump’s administration is considering delisting Chinese companies from US stock exchanges.

This would definitely take the dispute to an entirely new level, the outcome of which we can’t predict. The move is said to be part of a broader effort to limit US investment in Chinese companies, two of the sources said. One said it was motivated by the Trump administration’s growing security concerns about the companies’ activities.

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The news has triggered a reaction from the stock exchange as major US stock indexes slipped. Shares of some of the Chinese companies listed on the US stock exchanges dropped as a result. Alibaba shares closed at 5.15% lower while that of JD.com fell 5.95% and Baidu Inc declined 3.67%. The iShares China Large-Cap ETF shed 1.15%. Shares of New York Stock Exchange-owner Intercontinental Exchange Inc ended down 1.88% and shares of Nasdaq Inc declined 1.70%.

Delisting a listed company will not be an easy thing to do and at present, it is no clear how that would be done.

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In another blow, US has cut off the trade exports for Chinese semiconductor firm Fujian Jinhua. The commerce department in the US has put the company on the US export ban list citing significant risks which will threaten the viability of American suppliers of chips for the military. It means Fujian Jinhua cannot purchase such products from U.S. firms. This new escalation will deepen the trade war between the US and China.

Amid of hard sanctions from both the countries, international companies are bearing the pain. Similarly, Fujian Jinhua is barred from getting any kind of components for its semiconductor business from Micron Technology in the US. Further, the sanctions can also be seen as an action to recent allegations from Micron Technology which accused Jinhua of stealing intellectual property. Last year, after the accusations from Micron, the Commerce Department came into action and since then Jinhua was on the US radar. The commerce department has given the reason of  “significant risk” which might infringe on national security.

“When a foreign company engages in activity contrary to our national security interests, we will take strong action to protect our national security,” he said. “Placing Jinhua on the Entity List will limit its ability to threaten the supply chain for essential components in our military systems.”

This is a major blow for Jinhua which relies on components from American companies for its semiconductors business. It would definitely impact the Chinese state-owned firm growth and will bear the brunt in the upcoming few months. Further, it may lead to a more intensive trade war between both the countries.

• Read More: US-China Trade War: Huawei doesn’t expect to be affected

Fujian Jinhua is based in East China’s Fujian province, was founded in 2016 and is backed by the provincial government. Fujian Jinhua is coming up with a new factory in China with the cost of $5.7 billion. It’s a next step from the company to become a global leader in the semiconductor business.

A similar action by the Commerce Department was also seen last time on ZTE when the US blocked components sale to the Chinese firm. Though, the things have been little relaxed after the intervention of China’s President Xi Jinping in May this year.

We expect that the tensions between both the countries should resolve as soon as possible because these are impacting various companies around the Globe.

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