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Friday Tech Briefing: ZTE, Mobike, Micron

BIG TECH COMPANIES

1. ZTE Names New CEO in Quest to Lift U.S. Ban

What: Chinese telecom company ZTE Corp. has named Xu Ziyang, who joined the company in 1998, as its new chief executive officer, according to company filings on Thursday. ZTE said its board has appointed Wang Xiyu, Gu Junying and Li Ying as executive vice presidents, while Li Ying will serve as the company’s new chief financial officer.

Why it’s important: On June 7, ZTE agreed to comply with U.S. requests that the company overhaul its top management, pay a $1 billion fine and meet other conditions before the U.S. would lift sanctions barring ZTE from buying American components. Late last week, the company announced it had replaced its entire board, which was one of the conditions of the agreement.

Big picture: Even though China and the U.S. are heading toward a trade war, ZTE is getting temporary relief from the U.S. ban and has a new management team in place to resume operation. (Source: Company announcement, link in Chinese)

2. Mobike Discards Deposits in Bid for Bike-Sharing Supremacy

What: Mobike announced Thursday that it has stopped taking deposits from users for its popular bike-sharing platform in an attempt to pedal further ahead of its rivals. New Mobike users no longer have to put up a 300 yuan ($45.20) deposit, and the platform’s 105 million existing users are now eligible to get their deposits refunded, the company said at a media event in Beijing.

Why it’s important: The change comes just months after Mobike merged with China’s largest online booking platform Meituan-Dianping. The decision is expected to pose a serious challenge to cash-strapped rival Ofo, which has struggled to find a wealthy backer to maintain its business. (Source: Caixin)

3. Micron ‘Disappointed' With China Ban

What: U.S.-based memory chip maker Micron is “disappointed” by a Chinese court’s decision to ban the sale of certain Micron products in China, but the company will comply with the ruling while requesting that the Fuzhou Intermediate People's Court reconsider or stay its decision, Micron said in a statement. Micron said it strongly believes that its products do not infringe the patents of state-owned Fujian Jinhua Integrated Circuit Co. Ltd., which sued Micron in China in January.

Why it’s important: After the ruling came out on Tuesday, Micron’s stock price dropped by 5.5%. Investors are worried that this may be part of the ongoing trade dispute between China and the U.S.

Big picture: Micron has faced serious challenges in China after becoming a target of Chinese antitrust regulators in May. The company also accused Taiwan’s second-biggest chipmaker United Microelectronics Corp. (UMC) of attempting to steal its intellectual property and transfer it to UMC’s Chinese partner Fujian Jinhua. Analysts believe UMC and Fujian Jinhua sued Micron for patent infringement in order to settle the case with Micron. (Source: Company announcement)

DEALS AND FUNDRAISING

4. Tencent, Geely Form Train Wi-Fi Venture With China Railway

What: State-owned China Railway Corporation (CRC) has unveiled Guotie Jixun, a new joint venture that will run Wi-Fi services on China’s high-speed trains. Guotie Jixun is a joint venture between CRC, which holds 51%, carmaker Zhejiang Geely Holding Group, which owns 39%, and internet giant Tencent, which owns a 10% stake. Liu Jinliang, Chairman of Geely’s ride-hailing platform CaoCao Car, was appointed the joint venture’s vice chairman, suggesting that Geely could soon operate ride-hailing services from China’s train stations.

Why it’s important: China Railway Corp. revealed in April its plan to sell a 49% stake in a joint venture to provide Wi-Fi services on selected bullet trains. Multiple tech heavyweights including Alibaba Group Holding Ltd. and Baidu Inc. had expressed interest in the stake. Geely and Tencent won the bid with a combined offer of 4.3 billion yuan ($646 million).

Big picture: The partial sale of the Wi-Fi business is CRC’s latest move to bring in private investors to reduce its immense debt. Last year, the rail operator signed a 40.9 billion yuan deal with a consortium led by private equity giant Fosun International Holdings Ltd. to build and operate the country’s first privately controlled rail line. (Source: Caixin, link in Chinese)

PRODUCTS

5. Film Applauded for Frank Portrayal of Generic-Drug Smuggling Case

What: “Dying to Survive,” inspired by a real-life leukemia drug-smuggling case, has become China’s most-discussed film of the summer. The movie debuted Thursday and is expected by box office tracker Maoyan to bring in 2.8 billion yuan ($422 million), even more than “Avengers: Infinity War.” Shares of the movie’s Shenzhen-listed distributor, Beijing Jingxi Culture & Tourism Co. Ltd., surged to 14.52 yuan on Thursday, up by 40% from Friday’s trading close.

Why it’s important: The movie is based on the real story of Chinese leukemia patient Lu Yong. Lu was arrested for smuggling cheap, life-saving generic medicines to China for himself and other patients, who were struggling to afford the expensive brand-name versions approved for sale in the country. Film regulators usually demand that movies depict a harmonious China marked by “positive energy”, and the producers had difficulty getting the green light to release the movie. (Source: Caixin)

POLICY

6. South Korean Court Bans Ex-Samsung Employee From Working for Chinese Rival

What: A local court in South Korea issued a ruling that bans a former Samsung Display Co. researcher from working for Chinese competitors on Thursday. The court said this is intended to protect Samsung’s sensitive technologies and that the researcher must not work for Samsung’s rivals or their subcontractors for two years.

Why it’s important: The researcher left Samsung Display in August 2017 after signing a non-disclosure agreement. He then took a position at a Chinese company with connections to Beijing Oriental Electronics, one of Samsung’s competitors. The case shows Samsung’s determination to stop Chinese rivals from catching up with the company. (Source: The Korea Herald)

Compiled by Zhang Erchi and Zhang Yidi


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