Tech Insider: Singapore’s Temasek Halts Investment in Chinese Internet Firms; AutoX Lets Robotaxi Loose in Shenzhen
Welcome to Caixin’s Tech Insider, your twice-weekly wrap on the movers, shakers and deal-makers in China’s tech scene.
AutoX extends driverless robotaxi service to entire district of Shenzhen
AutoX said on Tuesday that its driverless robotaxi pilot service that launched in January will now operate across Shenzhen’s entire Pingshan district, an area of 168 square kilometers (64.8 square miles), in a move that differentiates it from rivals that use semi-closed areas like industrial parks.
In tandem with the announcement, the Alibaba-backed startup released a video on social media to illustrate how its robotaxi navigates other cars and intersections, avoids barricades and responds to traffic lights for 10 minutes, all without human intervention.
Tesla supplier CATL to invest in battery material producer
Zhejiang Yongtai Technology Co. Ltd. said in a Monday exchange filing (link in Chinese) that Tesla battery supplier Contemporary Amperex Technology Co. Ltd. (CATL) plans to buy a 25% stake in Yongtai’s lithium-producing subsidiary from a shareholder for 500 million yuan ($78.4 million). Yongtai agreed to waive its preemption right for the stake, and said that the deal will deepen its cooperation with customers in the lithium battery business.
Temasek halts internet platform investment in China due to uncertainty over Beijing crackdown
Singapore’s state-owned investor Temasek Holdings Pte Ltd. will halt new investment in China’s internet sector until Beijing gives clarity on rules defining how such firms can operate, it confirmed on Tuesday.
Temasek is taking a more cautious stance in the area of Chinese “internet platforms, where we will probably wait for regulatory clarity before we can deploy much more capital,” Chief Investment Strategist Rohit Sipahimalani said in a statement which sought to deny a Nikkei Asia report Monday that said it was scotching broader investment in Chinese tech.
The statement came in the form of Temasek’s transcript of the Nikkei Asia interview, in which Sipahimalani said the firm would continue to invest in areas such as Chinese medtech and biotech, electric vehicles and renewable energy.
“The Chinese government wants to address things like monopoly power of internet platforms… data privacy… [and] income inequality,” Sipahimalani said, predicting that regulatory clarity would come in the next few months, which will “shape some winners and losers out there.”
“In China the way that is being executed is a little more blunt and quick, and that is why it has created a lot of shocks out there,” Sipahimalani said, according to the Temasek transcript.
Citing the investor’s July performance report, Nikkei Asia’s Monday report said Temasek’s exposure to China by underlying assets dropped by 2 percentage points to 27% of its total, while Singapore’s share remained unchanged at 24%. Temasek is a backer of Alibaba, Tencent and Didi Chuxing, all of which are in the Chinese regulators’ crosshairs.
Sohu.com returns to profit as online gaming revenue surges
Chinese internet stalwart Sohu.com Ltd., which has been outshone by much younger peers in recent years, became profitable in the third quarter of 2021, largely helped by strong growth in its online gaming business.
In the three months through September, the Beijing-based company logged a non-GAAP net profit of $17 million, compared with a net loss of $7 million in the same period of last year, according to its earnings report released on Monday.
The reversal came as the company’s total revenue grew 37% year-on-year to $216 million, nearly 77% of which came from its online gaming business that generated revenue of $167 million, up 65% year-on-year, according to the report. Another major revenue source is the advertising business, which generated $34 million, down 18% year-on-year.
SMIC reports growth in both revenue and profit amid semiconductor crunch
The Chinese mainland’s biggest contract chipmaker, Semiconductor Manufacturing International Corp. (SMIC), posted a 30.7% year-on-year revenue increase to $1.4 billion in the third quarter of 2021 amid a global microchip shortage.
The Shanghai-based company also raked in $321.4 million in profit in the third quarter, up 25.3% year-on-year, according to its earnings report released last week.
The report was released the day before SMIC announced the resignation of Vice Chairman Chiang Shang-Yi in a second management change at the company in two months. In September, the chipmaker’s Chairman Zhou Zixue left SMIC, citing health reasons.
Robotic automation firm Cyclone raises $150 million
Cyclone Robotics, a Chinese startup that develops robotic process automation (RPA) systems, said on Monday that it has raised $150 million in a series C funding round co-led by CMC Capital and Goldman Sachs Asset Management.
Net proceeds will be used to boost its R&D capabilities and accelerate its efforts to serve more small and midsize corporate clients, the Shanghai-based firm said in a statement (link in Chinese).
Founded in 2015, Cyclone said that it uses artificial intelligence and natural language processing to develop RPA tools designed to carry out repetitive workplace tasks like keyboard strokes and mouse clicks to help businesses enhance productivity.
Tencent Music expands global exposure of its musicians with Apple Music deal
Tencent Music Entertainment Group (TME), a subsidiary of internet behemoth Tencent Holdings Ltd., last week announced a deal that will allow record labels and artists who use its TME Music Cloud music distribution platform to launch their works on Apple Music.
“Bringing TME’s premium music content from Chinese labels and creators to Apple Music users worldwide will enable music lovers to explore China’s unique music culture and genres, further enhancing the global discovery of Chinese music and assisting in the international development of Chinese musicians,” said Tencent Music in a statement.
The partnership came as TME has relinquished all its exclusive music licensing deals to meet a government order aimed at curbing monopoly in the music streaming sector.
Missfresh and Dingdong grocery platforms both see widening losses in third quarter
Missfresh Ltd. and Dingdong Maicai, the two Chinese online grocery platforms that went public in the U.S. this summer, both suffered widening losses in the third quarter of 2021 even as their revenues grew.
In the three months through September, Missfresh’s net loss attributable to ordinary shareholders swelled to 973.7 million yuan ($151.1 million) from 616.2 million yuan a year ago, while its revenue rose 47.2% year-on-year to 2.1 billion yuan, according to its earnings report released last week.
Its rival Dingdong also reported a net loss attributable to ordinary shareholders of 2 billion yuan in the third quarter, compared with a 917.6 million yuan loss in the same period of last year, even as its revenue more than doubled to 6.2 billion yuan, according to its financial report published on Monday.
The widening losses came as operating expenses at Missfresh and Dingdong increased 70% and 117% year-on-year, respectively, to the tune of 1.2 billion yuan and 8.2 billion yuan, according to their earnings reports.
The two companies said they will increase the shares of self-run brands on their platforms and improve their supply chains in the future in order to increase gross margin, a key indicator of profit-earning ability.
This story has been updated to reflect Temasek’s denial that it is ceasing China tech investment. In a Tuesday statement, Temasek said it was only ceasing investment in Chinese internet platforms.
This Caixin Tech Insider was compiled by Ding Yi (firstname.lastname@example.org) and edited by Heather Mowbray (email@example.com). Send us your tips and feedback.
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