Hello, this is Kenji from Hong Kong. I have been involved in the #techAsia newsletter since its inception in April 2019, and am excited to continue my engagement in its latest incarnation.
Despite the changes in the format, the mission of the newsletter remains the same: to deliver the latest and deepest stories from the Asian tech scene, written by reporters with deep connections across the region.
This week, our top story is a literal deep dive into the latest smartphone by Honor, the former Huawei unit. We also have an exclusive story on Arm, and we take a look at the trouble of finding the right successor for a one-of-a-kind tech entrepreneur.
I hope you enjoy this issue of #techAsia. We will take a break next week for holidays in Japan and China, and be back on your inbox on May 12.
Chips on the side
Are made-in-China chips good enough for the country’s own smartphone makers? To find out, Nikkei’s Norio Matsumoto took a look inside the latest offering from Honor, the former budget arm of Huawei Technologies.
A teardown of Honor’s X30 showed that 39% of the components by value came from US companies. This is a sharp increase from just 10% for the previous 30S model, when Honor was still under Huawei.
Most of the core parts, namely the processor and 5G chipsets, were provided by American manufacturers like Qualcomm rather than Chinese suppliers such as Huawei chip unit HiSilicon. The overall proportion of Chinese components, moreover, dipped to about 10% from 37.5%.
Huawei sold off Honor to shield the unit from Washington’s sanctions and enable it to keep using key US parts. Honor remained a Chinese company, being bought out by a consortium led by an asset manager controlled by the city of Shenzhen.
The teardown underscores how important American tech remains, despite Beijing’s extensive efforts to boost its chip industry.
Given their political importance, the use — or not — of homegrown chips could be a sensitive topic for Chinese companies. Yang Yuanqing, chairman and CEO of Lenovo Group, said in an online earnings call in February that “as long as these chips are competitive, definitely we will use them in our products.” But he was silent on one crucial point: how many local chips his company actually uses.
Arm could finally be on the verge of regaining control of its renegade China unit after a two-year stand-off with its chief executive Allen Wu, Ryan McMorrow and Anna Gross write for the Financial Times.
The U.K. chip designer will submit paperwork this week to the Chinese government in an effort to replace Wu, according to two people with direct knowledge of the matter. Arm plans to put forward two individuals to act as co-chief executives of its China joint venture.
Arm’s struggle to regain control of its China unit has dragged on for nearly two years, after Wu disregarded a 7-to-1 board vote for his removal and unilaterally took control of the company.
He did so by taking possession of the company chop, the stamp-like object used to authorise all documents in China. It helped that Wu was also the joint venture’s legal representative. Chinese law holds that only the legal representative can get a new chop made, while appointing a new legal representative requires a chopped document, leaving Arm and its JV partners in a never ending bureaucratic loop.
While people close to the situation caution that prior deals to resolve the stand-off have fallen through at the last minute, they are more optimistic this time.
The only way out is through either a court order — the two sides have three suits under way but Communist Party-controlled courts have yet to hold a hearing — or by way of intervention from powerful officials. Arm seems to have finally spurred those high-level Shenzhen officials to act with a plan to give its holding in the local unit to its owner SoftBank Group.
The business and economic fallout from Russia’s invasion of Ukraine has been far-reaching. A case in point is the slump in high-tech mergers and acquisitions in the Asia-Pacific region, writes Dylan Loh, Nikkei Asia’s Singapore correspondent.
Such deals in the region (excluding Japan) totalled just $27.6 billion in the first quarter, down 41.7% from a year ago, according to data from Refinitiv.
The tech sector — including internet services, ecommerce and semiconductors — had a bumper year in 2021, as more people had to stay home due to the pandemic, stimulating demands for those services. This year, the war, rising interest rates and a resurgence in COVID-19 have combined to cast a shadow over dealmaking activities.
Return, part two
Nidec Chairman Shigenobu Nagamori is coming back as CEO — again. For a second time, the 77-year-old founder of the Japanese motor maker will return and replace his own handpicked successor as chief, Nikkei Asia’s Mitsuru Obe writes.
Nagamori is an exceptional case in corporate Japan: an entrepreneur who established a truly global business from scratch, and not from the ashes of the post-WWII recovery period. While many corporate empires like Sony and Honda emerged after the war in a time of vast opportunities for start-ups, Nagamori and his three partners started their company in 1973, when the country already boasted the world’s second-biggest economy.
His capability and passion have undoubtedly transformed a small factory in Kyoto into the world’s largest motor manufacturer and positioned it as a vital player in the electric vehicle era. But his outsize influence has also made Nidec one of the rare Japanese listed companies to officially cite “any sudden departure” of the founder as one of its risk factors. One of the other few examples is SoftBank Group, where Masayoshi Son is similarly wrestling with the issue of succession.
Back in 2001, Nagamori said in an interview he favours “itanji,” a term that roughly translates to maverick, nonconformist, or dissenter — not a particularly positive attribute in Japan. Two decades later, it seems he is still looking for a successor who is as much of a maverick as he is.
Vietnam’s VinFast takes the EV battle to Tesla with US push (Nikkei Asia)
DHL chief warns China lockdowns pose risk for global economy (Nikkei Asia)
US to probe claims that top Chinese chipmaker violated ban on Huawei (FT)
Skadden loses top lawyer to ByteDance amid China IPO chill (FT)
Tata superapp offers everything from salt to luxury hotels (Nikkei Asia)
Taiwan’s rise as chip design hub threatens US dominance (Nikkei Asia)
SoftBank’s main lender Mizuho ‘unconcerned’ about tech group’s financial health (FT)
China’s EV battery materials industry set for $11bn capacity buildup (Nikkei Asia)
US-China Tech Race: brave new world (FT)
Von der Leyen seeks to deepen military and tech ties with India visit (FT)
#techAsia is co-ordinated by Nikkei Asia’s Katherine Creel in Tokyo, with assistance from the FT tech desk in London.
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