Thursday Tech Briefing: Alibaba, Baidu, Chip Industry

BIG TECH COMPANIES

1. Alibaba Taps Digital Display Market With Focus Media Stake

What: E-commerce giant Alibaba has agreed to invest 15 billion yuan ($2.2 billion) in digital advertising service provider Focus Media, Focus Media said Wednesday.

Why it’s important: The move is Alibaba’s latest effort to integrate online and offline commerce. Focus Media, China’s largest digital marketing firm, has a liquid crystal display-screen advertising network covering 300 Chinese cities, and will work with Alibaba to explore digital marketing and combine online and offline services. (Source: Caixin)

2. Baidu Exits Brazil After Five Years of Operation

What: Chinese internet giant Baidu is closing down its Brazil office and will offer services to Brazilian users from its China offices, according to Brazilian financial newspaper Valor Economico.

Why it’s important: The shutdown is believed to be part of Baidu’s broader strategy shift, as the company moves from away from businesses like web advertising and financial services, in order to pour more resources into artificial intelligence development. During its five years in Brazil, Baidu rolled out mobile and desktop products and acquired a local e-commerce platform, employing 400 staff at its peak. (Source: ZDNet)

POLICY

3. Nanjing, Hangzhou Unveil Plans to Support Integrated Circuit Sector

What: Eastern Chinese city Nanjing will set up a $20 billion fund to support local chip manufacturers, city authorities announced on Wednesday. Similar plans were announced by Hangzhou, capital of Zhejiang province and home to Alibaba, the previous day.

Why it’s important: The announcements follow a series of recent efforts by Chinese governments to lift research in the chip sector, whose development requires enormous and sustained input of capital and talent. The state-backed China Integrated Circuit Industry Investment Fund, for instance, has initiated a funding round that could raise 200 billion yuan ($29.8 billion) for investment in domestic chip makers.

Big picture: With a sluggish domestic chip industry, China has long depended on chips imported from developed countries for "Made in China" electronics. This weakness recently came to surface again and attracted public attention, after telecom equipment maker ZTE was left almost frozen by a U.S. ban on component purchases in April. (Sources: ChinaNews, China Securities Daily, link in Chinese)

PRODUCTS

4. Baidu’s Blockchain-Powered Image Copyright Platform Goes Online

What: Pic-chain, a blockchain-powered image rights management platform developed by Chinese search giant Baidu, began operation on Wednesday. The platform enables image creators to trace the production, circulation, and potential rights infringement of images.

Why it’s important: The product is Baidu’s latest effort to build up its blockchain capacity, an area that fellow internet giants like Alibaba, JD.com, and Tencent have made moves into but have yet to establish dominance over. Earlier this year, Baidu launched a few blockchain games and started to log its Wikipedia-like Baike entries using blockchain. (Source: Sohu, link in Chinese)

DEALS & FUNDRAISING

5. U.S. Chipmaker Xilinx Buys Chinese Machine Learning Startup

What: Nasdaq-listed chipmaker Xilinx has acquired 2-year-old Chinese AI start-up DeePhi Tech, the two companies announced Wednesday. The financial details of the deal were not disclosed.

Why it’s important: Xilinx is the largest manufacturer of field-programmable gate arrays, a type of processor that provides the increased computing power needed by machine learning applications. The deal will enable DeePhi Tech, which has already been utilizing Xilinx's platform, to further develop their machine learning solutions in autonomous and assisted driving.

Big picture: DeePhi Tech is one of a number of Chinese AI-related startups that have emerged in recent years, with backing from both state and private institutions. Other players in the emerging sector include state-backed Cambricon Technologies and Alibaba-backed SenseTime, which raised $1.2 billion from investors in May. (Source: Caixin, link in Chinese)

6. Online Tutoring Platform Raises $350 Million

What: Online tutoring platform Zuoyebang has secured $350 million in funding from a group of investors led by technology-focused hedge fund Coatue Management.

Why it’s important: Offering online streaming courses and remote tutoring to K-12 students, Zuoyebang is reportedly the most-downloaded service provider in China’s online education sector. The Baidu-incubated company has launched four rounds of fundraising since 2015.

Big picture: China’s K-12 online education market will continue to expand at 40% annually into 2019, after growing at 52% in 2017. Other major players in the field, such as 17 Zuoye and Yuantiku, have also been searching for capital. (Source: Caixin)

Compiled by He Shujing.