A senior U.S. lawmaker who labeled TikTok a national security threat due to its alleged ties to the Chinese government, said Wednesday that his bill designed to prohibit federal employees from downloading the short video app onto government devices had unanimously passed the Senate Homeland Security and Governmental Affairs Committee.

The move is a new blow for the ByteDance-owned app, which has been making efforts to ease American policymakers’ concerns over how it handles user data. Several U.S. government agencies including the Department of Homeland Security and the Transportation Security Administration have already banned their workers from using TikTok on government devices, claiming that Beijing may be able to monitor their activity.

“TikTok is an immediate security threat that no has place on government devices,” said Senator Josh Hawley, who originally introduced the bill in March 2020, in a statement. He described the app as part of “Beijing’s covert data collection campaign.” TikTok has consistently denied that it hands over data to the Chinese government. The app has also set up a transparency center in the U.S. to give external experts a peek at how it moderates content uploaded onto its platform.

Last year, TikTok was on the verge of death in the U.S. as the former Trump administration threatened to block it if its parent ByteDance refused to sell the app’s American assets. The risk still exists in the era of Joe Biden, whose government is still reviewing his predecessor’s policies toward Chinese-owned apps.

The U.S. lost its position in a SensorTower-issued list of TikTok’s major download contributors for April, in a sharp contrast with the same month of last year, when the country was the app’s second-largest source of downloads after India, which in January imposed a permanent ban on TikTok due to national security concerns.

Contact reporter Ding Yi (yiding@caixin.com)

Related: TikTok Begins Testing In-App Shopping to Challenge Facebook

Alibaba’s fintech arm Ant Group has reportedly signed an agreement to buy a 5% stake in Dotz, a Brazilian loyalty program with 20 million active users.

Loyalty programs are designed to enhance consumers’ brand loyalty by providing rewards, discounts and other special incentives.

According to the deal terms, Ant will appoint an executive to Dotz’s board and a co-head of the company’s strategy committee, Reuters reported on Thursday, citing a securities filing.

Dotz recently launched an IPO of roughly 815 million reais ($146 million) with plans to start trading its shares in Sao Paulo next month. The Brazilian company said that the deal depends on the conclusion of the IPO, adding that it will also grant Ant an option to buy an additional 10% stake up to 24 months after the IPO, according to Reuters.

In addition, a business cooperation agreement has been inked, which will see the two companies explore new opportunities for digital financial services in Brazil, Reuters said.

The news comes as Ant implements a massive rectification plan at the behest of China’s regulators, which has tightened its oversight of the country’s sprawling fintech giants since the Shanghai Stock Exchange’s suspension of Ant’s blockbuster IPO on its tech-focused STAR Market in November.

Contact reporter Ding Yi (yiding@caixin.com)

Related: Update: Ant Group to Remake Itself to Fall in Line With Regulators

Tesla said that cameras installed in its vehicles are not activated outside of North America, playing down a previous report of Tesla cars being denied entry into Chinese military compounds due to security concerns.

On March 19, Bloomberg reported that Tesla vehicles had been barred from entering Chinese military complexes and residences because of fears about their in-built cameras and sensors possibly collecting sensitive data.

“Even in the U.S., car owners can freely choose whether to turn on their cameras. Tesla cars are fitted with a network security system featuring world-leading security levels to ensure user privacy protection,” the U.S. electric carmaker said on Wednesday in a statement on Weibo, a Twitter-like social media platform in China.

Wednesday’s statement came after Tesla CEO Elon Musk defended his company’s position on automotive cameras in a speech delivered at a virtual forum which was held by China’s State Council and not long after the Bloomberg report of the ban.

“If a commercial company did engage in spying, the negative effects to that company would be extremely bad … For example, if Tesla used the cars to spy in China — or anywhere, any country — we will get shut down everywhere,” Musk said at the forum.

Counting the Chinese market as one of its most important sales drivers, Tesla currently runs a plant in Shanghai where it assembles the Model 3 and Model Y, and is deepening localization of component manufacturing in the country to further reduce costs.

Last week, Tesla announced that it delivered 184,800 vehicles worldwide in the first quarter, which the company said was helped by “the strong reception of the Model Y in China.” It did not break out sales by geography, but the U.S. and China are its largest markets and nearly all sales were contributed by the Model 3 and Model Y.

Contact reporter Ding Yi (yiding@caixin.com)

Related: Musk Says Tesla Would Be Shut Down If Cars Used for Spying

China’s Xiaomi and Oppo are both forecast to grow their presence in the UK smartphone market in the first quarter of 2021 with high single-digit market shares, helped by Huawei’s decline and their deeper partnerships with local mobile carriers.

In the three months through March, Xiaomi and Oppo are likely to take the third and fourth spots respectively in the UK smartphone market, putting them ahead of Huawei, which started suffering a sharp contraction in sales from the second half of last year as a result of component shortages caused by the U.S. sanctions, according to Strategy Analytics.

Besides Huawei’s decline, the research firm also attributed the rise of Xiaomi and Oppo to their strategies of prioritizing the shipping of their 4G and 5G-enabled smartphones directly to local British mobile operators including O2, Vodafone, EE/BT and Three, which are increasing their 5G service coverage and showing more interest in sourcing price-competitive 5G smartphones.

Strategy Analytics did not specify exactly how large a share of the UK smartphone market Xiaomi and Oppo may grab during the period.

The crippling U.S. policy of cutting off Huawei’s access to handset chips made with American technology has given other Chinese smartphone makers an opportunity to raise their market shares at home or overseas, not just on the UK.

In Latin America, Xiaomi for the first time became one of the top three smartphone sellers in the fourth quarter of 2020 with a market share of 6.7%, while Huawei dropped out of the top five, according to a report by Counterpoint Research.

In China, Oppo for the first time overtook Huawei to be the biggest smartphone vendor in January with a market share of 21%, while Huawei fell to the third spot tied with Apple and Xiaomi, another Counterpoint Research report showed.

Contact reporter Ding Yi (yiding@caixin.com)

Related: Xiaomi Expected to Consolidate Position as World’s Third-Largest Smartphone Vendor in 2021, Research Firm Says

The CEOs of Facebook, Google and Twitter came under the congressional microscope Thursday over extremism and misinformation on their platforms, including content accused of fueling hate crimes against people of Asian descent in the U.S.

Facebook's Mark Zuckerberg, YouTube owner Google's Sundar Pichai and Twitter's Jack Dorsey were brought in as witnesses for the House Energy and Commerce Committee's virtual hearing.

Lawmakers asked about the companies' responsibility for rising anti-Asian sentiment and violence in the U.S., including the killings of six women of Asian descent at Atlanta-area massage spas earlier this month.

On top of anti-vaccine sentiment, the Jan. 6 rioting at the Capitol, and domestic violent extremism, "crimes against Asian Americans have risen by nearly 150% since the beginning of the COVID-19 pandemic," said the committee's chairman, Democratic Rep. Frank Pallone of New Jersey. "Each of these controversies and crimes have been accelerated and amplified on social media platforms through misinformation campaigns, the spread of hate speech, and the proliferation of conspiracy theories."

The U.S. social media giants took criticism at the hearing for failing to stop anti-Asian hate speech, such as through Facebook and Twitter continuing to allow the spread of such hashtags as "China virus," "Kung Flu" and "Wuhan virus."

Stop AAPI Hate logged 503 anti-Asian incidents in the U.S. in January and February alone.

While acknowledging the spread of hate speech against minorities on social media as an alarming problem, the Big Tech chiefs did not detail additional measures they will take to address it.

Rising anti-Asian hate is "a really big issue" and "something that I do think that we need to be proactive about," Zuckerberg said.

But "we need to be clear about when someone is saying something because they're using it in a hateful way versus when they're denouncing it," he said.

The three CEOs have testified to U.S. lawmakers before. But Thursday's hearing was their first since the Jan. 6 rioting, which multiple committee members blamed on social media.

Committee members also pressed the trio on their efforts to crack down on misinformation about COVID-19 and its vaccines.

In written testimony, Zuckerberg said Facebook has removed more than 12 million pieces of false content, including from foreign leaders, about the virus and vaccines. Pichai wrote that Google has "removed 850,000 videos related to dangerous or misleading COVID-19 medical information, and in total, we blocked nearly 100 million COVID-related ads throughout 2020." Dorsey's written testimony pointed to Twitter's warning labels for tweets with vaccine misinformation and its permanent ban on serial violators of its COVID-19 policy.

Contact editor Marcus Ryder (marcusryder@caixin.com)

Related: Americans Condemn Attacks on Asians After Atlanta Killings

Japanese industrial robot maker Fanuc will make its largest investment in China to date, pouring 26 billion yen ($240 million) into fortifying its Shanghai plant.

The outlay will be made through a joint venture operated with local player Shanghai Electric Group. The Shanghai site will expand fivefold from its existing land space to 340,000 sq. meters, and the new facilities are planned to go online in 2023.

After overcoming the immediate setback of COVID-19, China's manufacturing sector is going full steam ahead in modernizing plants, and Fanuc sees an opportunity to tap into the demand for factory automation through robots.

Fanuc is the largest player in China, with a 12% share in industrial robots as of 2019, according to Chinese research company MIR. It intends to defend that position with the large-scale investment, holding off such rivals as ABB and Yaskawa Electric, which had 11% and 8% shares. Fanuc is also conscious of Chinese robot makers as the Chinese government aims to cultivate national champions.

The main body of the robots will continue to be manufactured in Japan, at Fanuc's headquarters in the Yamanashi Prefecture village of Oshino. Fanuc believes that the country still offers the best-quality parts needed for the robots.

From there, the robots will be exported to Shanghai, where the products will be tailored -- adjusting arms, modifying sensors -- to the needs of each client.

China is experiencing a factory automation boom. Robots have been prominent in automobile production for years, but now everything from the production of electronic devices and construction machinery to the operation of logistics facilities is increasingly handled by robots, giving Fanuc a wide horizon for business.

China had more than 780,000 industrial robots active in 2019, the most in the world, according to the International Federation of Robotics.

Yet on a robot-to-person ratio in factories, China is only half of Japan's, creating ample room to grow. Rising Chinese labor costs are further pushing the trend. Minimum wages have increased 13% from 2016 levels in Shanghai and 14% in Jiangsu, for example.

Fanuc's competition has been spending big in China, too. Yaskawa is building a new plant next to an existing one in Jiangsu Province with a nearly $50 million investment. It is scheduled to begin production in fiscal 2022.

ABB will open a roughly $150 million plant in Shanghai this year.

Beijing, meanwhile, wants its own robot builders to flourish. It has a stated goal of raising the domestic market share of local players to 70% in 2025 from between 30% and 40%.

Chinese appliance maker Midea Group acquired Germany-based industrial robot manufacturer Kuka in 2017.

Contact editor Marcus Ryder (marcusryder@caixin.com)

Related: Japan Inc. Prepares for Automation Bonanza in China

Xiaomi is expected to consolidate its position as the third-largest smartphone seller globally this year, largely benefiting from the decline of Huawei, which started suffering a sharp contraction in sales from the second half of last year as a result of component shortages caused by U.S. sanctions, according to Strategy Analytics.

In 2021, Xiaomi is projected to grow its share of the global smartphone market by 2 percentage points to a record 13%, which would put it in third place behind Samsung and Apple, which are expected to be the world’s No. 1 and No. 2 smartphone vendor with respective market shares of 20% and 16%, flat from 2020, Strategy Analytics said.

While its home market of China is still Xiaomi’s biggest source of revenue, the company has been aggressively expanding its global footprint for years. The company has dominated India’s smartphone market for 13 consecutive quarters due to its phones’ affordability. In the fourth quarter of last year, it overtook Samsung and Huawei to become the largest vendor in Russia’s online smartphone market amid the second wave of the Covid-19 pandemic.

Much of Xiaomi forecasted success is predicated on Huawei’s continued global troubles. Huawei is likely to fall out of the world’s top five smartphone sellers in 2021, also leaving room for another two Chinese peers - Vivo and Oppo – which are expected to rank fourth and fifth with respective global market shares of 11% and 10%, according to Strategy Analytics.

Overall, the global smartphone shipments may jump 6.5% year-on-year to reach 1.38 billion units in 2021, helped mostly by the improved economic situation as the pandemic weakens, a growing stock of aging smartphones and the push to switch to 5G, according to Strategy Analytics.

Contact reporter Ding Yi (yiding@caixin.com)

Related: Xiaomi and Huawei Make Top Five List of Global Wearable Device Sellers Dominated by Apple

Samsung Electronics Co. warned it’s grappling with the fallout from a “serious imbalance” in semiconductors globally, becoming the largest tech giant to voice concerns about chip shortages spreading beyond the automaking industry.

Samsung, one of the world’s largest makers of chips and consumer electronics, expects the crunch to pose a problem to its business next quarter, co-Chief Executive Officer Koh Dong-jin said during an annual shareholders meeting in Seoul. The company is also considering skipping the introduction of a new Galaxy Note -- one of its best-selling models -- this year, though Koh said that was geared toward streamlining its lineup.

Industry giants from Continental AG to Renesas Electronics Corp. and Innolux Corp. have in recent weeks warned of longer-than-anticipated deficits thanks to unprecedented Covid-era demand for everything from cars to game consoles and mobile devices. Volkswagen AG said this week it’s lost production of about 100,000 cars worldwide. In North America, the silicon shortage and extreme weather have combined to snarl more production at Toyota Motor Corp. and Honda Motor Co. The fear is the crunch, which first hit automakers hard, may now disrupt the much larger electronics industry.

“There’s a serious imbalance in supply and demand of chips in the IT sector globally,” said Koh, who oversees the company’s IT and mobile divisions. “Despite the difficult environment, our business leaders are meeting partners overseas to solve these problems. It’s hard to say the shortage issue has been solved 100%.”

Samsung, the world’s largest smartphone maker, is working with overseas partners to resolve the imbalance and avert potential setbacks to its business, its co-CEO said. Its shares slid 0.6% in Seoul on Wednesday, while suppliers and Asian chipmakers including Taiwan Semiconductor Manufacturing Co. and SK Hynix Inc. also fell.

Chipmakers like Samsung and TSMC are at the forefront of a global effort to plug a shortfall in supply of semiconductors, the building blocks of a plethora of consumer gadgets. The deficit has closed auto plants around the world and now threatens supply of other products. While the Korean company is the leading maker of made-to-order silicon after TSMC, it relies on external suppliers and manufacturers for certain parts like power management and radio chips.

Larger-than-anticipated Covid-era demand for smartphones has also stretched stores of Qualcomm Inc.’s Snapdragon chips, the go-to processors for mobile devices. Qualcomm designs the chips, known as app processors, but relies on Samsung and TSMC to produce them and the Taiwanese chipmaker’s capacity has been strained.

“The tightened supply of Qualcomm AP chips produced by TSMC is affecting everybody except Apple,” said MS Hwang, analyst at Samsung Securities. “PCs will soon be hit due to the short supply of display driver ICs, and the profitability of TV will be affected by soaring LCD panel prices.”

Compounding matters, Samsung’s own production got sideswiped last month. Its fab in Austin, Texas -- which makes chips both for internal and external consumption -- was sidelined in February by statewide power outages and hasn’t resumed full production. The resulting shortfall in production of Qualcomm 5G radio frequency chips could reduce global smartphone output by 5% in the second quarter, research firm Trendforce estimates. But the outage there is likely to affect Samsung’s mid-tier phones and laptops more than its top-of-the-range models or server chips, said Greg Roh, a senior vice president at HMC Securities.

“If Samsung is publicly talking about future products, you know that the silicon crunch is serious,” said Avi Greengart, analyst and founder of consultancy Techsponential.

Carmakers got hit first by the chip crunch in part because of poor inventory planning and are expected to miss out on $61 billion of sales this year alone. Honda Motor Co. on Wednesday said it will temporarily suspend some production next week at a majority of U.S. and Canada plants, underscoring the deepening crisis.

Some analysts say shortages could get mostly ironed out in coming months. But the concern is that tight supply in certain segments -- such as in more mature semiconductors where it takes time to build capacity -- could eventually throttle the broader consumer electronics industry and jack up prices if it persists. Semiconductors are now near the top of official agendas from Washington to Brussels.

At the same time, China’s insatiable appetite for chips -- fueled in part by its rapid recovery from the pandemic -- and inventory stockpiling by local companies is fueling demand. Sales for the country’s chip industry climbed 18% to 891.1 billion yuan ($137 billion) in 2020, China Semiconductor Industry Association Chairman Zhou Zixue told a conference in Shanghai Wednesday.

“The IC shortage will be a problem to frustrate the supply chain in next six months,” said Charles Shum, an analyst with Bloomberg Intelligence.

On Tuesday, Hon Hai Precision Industry Co. -- the assembler of most of the world’s iPhones -- joined a chorus of industry executives stressing it’ll take time to resolve imbalances in demand and supply.

“We see a shortage, we feel it. But the impact for most of our customers is not that big,” Hon Hai Chairman Young Liu told reporters in Taipei. “For certain customers that have better than expected orders, then there’s some impact. For major customers that plan well, where there’s no big surge on orders, those customers are doing fine.”

Koh said Samsung may decide not to introduce its Galaxy Note during 2021’s second half, breaking a years-long streak of annual launches for the marquee line. The Note series contributed roughly 5% of Samsung’s smartphone shipments over the past two years, IDC estimates, but accounts for a more significant chunk of revenue because it’s one of the priciest in the lineup.

“Note series is positioned as a high-end model in our business portfolio,” he said. “It could be a burden to unveil two flagship models in a year so it might be difficult to release Note model in 2H. The timing of Note model launch can be changed but we seek to release a Note model next year.”

Contact editor Marcus Ryder (marcusryder@caixin.com)

Related: Taiwan's Acer says component shortage squeezes PC makers

United Group has become the latest European telecoms company to consider completely or partly removing Huawei’s equipment from its network, deepening the Chinese tech giant’s woes in Europe where Washington is pressing more allies to take similar actions.

“I think a gradual and measured switch to something that is more U.S.-approved is the right approach, and it is one that we are considering,” United Group chairman Nikos Stathopoulos told Reuters recently.

The move may wreak havoc on Huawei’s businesses in Europe as the Balkan telecoms giant operates in several European countries including Bulgaria, Croatia, Slovenia, Greece and Serbia providing a wide range of services including mobile, cable TV, broadband internet and fixed telephony.

Stathopoulos also said that his company “should also receive financial help (from governments) for switching to new infrastructure.”

According to Reuters, many mobile operators in East and Southeast Europe had traditionally preferred Huawei’s equipment to those from the likes of Nokia and Ericsson for cost-saving reasons.

In recent years, European governments have toughened their positions on Chinese-built 5G networks, following a call from the U.S., which labels Huawei’s telecoms equipment a threat to its national security, an allegation Huawei strongly denies.

A week ago, Bloomberg reported that phone companies including Altice Europe NV’s SFR unit and Bouygues Telecom had begun removing Huawei’s wireless equipment from France’s densely populated areas.

Contact reporter Ding Yi (yiding@caixin.com)

Related: France’s Huawei Ban Begins to Kick In With Purge in Urban Areas

U.S. President Joe Biden has set the country’s broad national security priorities recently, with a strong focus on China that included investing in American competitiveness and strengthening alliances, just as Beijing said it would pour money into research on technologies such as semiconductors and AI.

The White House on Wednesday released an interim national security strategic guidance paper, which was read closely for signs of how the administration will engage with the world.

“(China) is the only competitor potentially capable of combining its economic, diplomatic, military, and technological power to mount a sustained challenge to a stable and open international system,” the paper said.

Read the full story on Caixin Global.

Contact reporter Timmy Shen (hongmingshen@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)

Related: Two Sessions 2021: China Targets Tech Self-Reliance With Massive Research Spend

SK Innovation Co.’s destruction of documents in a trade-secret case brought by a rival electric-vehicle battery maker was “extraordinary,” a U.S. trade agency said in a strongly worded opinion that could undermine the company’s bid for a reprieve from the Biden administration.

LG Chem Ltd.’s LG Energy Solution Co. unit last month won a 10-year ban on imports of SK Innovation batteries, which the International Trade Commission imposed as punishment for SK’s destruction of emails and other documents. The commission issued a public version of its opinion Thursday in the dispute between the two South Korean companies which are the world’s largest makers of EV batteries.

“The destruction was ordered at a high level and was carried out by department heads throughout SK,” the commission said in the opinion.

The import ban goes into effect in mid-April unless SK Innovation can persuade President Joe Biden to overturn it because it would harm the administration’s efforts to reduce emissions linked to climate change. SK Innovation has denied stealing any trade secrets and said its actions were appropriate.

The commission said it had already taken the president’s policies into account and was “cognizant of the contribution EVs make to reducing automobile emissions and the contribution reduced automobile emissions make in efforts to combat climate change and its adverse impacts on public health and welfare.”

It also said the carve-outs, in which SK Innovation can bring in components needed for Ford Motor Co.’s EV F-150 pickup for four years and for Volkswagen AG’s American MEB line for two years, will permit a Georgia factory near completion to make batteries while the automakers look for a new supplier.

In a Feb. 23 presentation to the U.S. Trade Representative’s office, SK Innovation said the import ban would force the shutdown of the Georgia plant and lessen America’s competitiveness with China when it comes to EV batteries.

The commission said it picked the 10-year period because it was estimated it would have taken SK Innovation that long to develop its own batteries without the stolen secrets.

“When SK completes independent development of its battery technologies, it can request commission proceedings to end the exclusion period,” the commission said.

LG said the public version of the opinion lays out SK Innovation’s efforts to cover up its actions and “the combination of the scope of spoliation with its frequency.”

“SK Innovation stole a technology that required tens of thousands of hours of careful and costly engineering,” Denise Gray, president of the LG Energy Solution Michigan Inc. Tech Center, said in a statement. “The release of the ITC’s decision puts to rest any questions of whether SK Innovation did anything wrong -- they did, repeatedly, and now they must be held accountable.”

SK Innovation told the commission that documents were destroyed as part of a routine company policy before litigation began and it provided “extensive” information once it was sued, according to the opinion.

In a statement, the company pointed out that the commission said LG’s complaint “failed to identify specific trade secrets misappropriated by SK” and called it an “open question.”

The case is In the Matter of Certain Lithium Ion Batteries, Battery Cells, Battery Modules, Battery Packs, Components Thereof and Processes Therefor, 337-1159, U.S. International Trade

Contact editor Marcus Ryder (marcusryder@caixin.com)

Related: China’s Electric-Vehicle Makers Switching to Cheaper Batteries as Subsidy Cut Looms

Xiaomi rose to the third spot in terms of smartphone shipment in Latin America in the fourth quarter of 2020, capitalizing on the decline of its Chinese peer Huawei, which dropped out of the top five largely due to the U.S. sanctions triggering a supply shortage.

In the three months through December, Xiaomi controlled 6.7% of Latin America’s smartphone market, up from 4.4% in the same period of 2019, marking the first time it has entered the top three, according to a recent report released by Counterpoint Research.

Xiaomi entered the Latin American market for a few years, where it has gained a reputation as an affordable brand. Xiaomi emerged as the No. 2 and No. 3 smartphone vendors in Peru and Chile respectively in the fourth quarter, according to Counterpoint Research.

“Looking at the trend, it (Xiaomi) will surely remain (the position as) the third-biggest player in Latin America in 2021, Samsung, Motorola and Xiaomi all took advantage of Huawei’s weakening position due to the U.S. ban,” said Monika Sharma, a research associate at Counterpoint Research.

However, Xiaomi still lagged significantly behind market leader Samsung and second-placed brand Motorola, which held respective shares of 36.9% and 18.4% in Latin America’s smartphone market during the period. Overall, Latin America’s smartphone shipments dropped 10.3% year-on-year in the fourth quarter, according to Counterpoint Research.

Despite falling out of the top five in last year’s final quarter, Huawei was still the third-biggest smartphone seller in Latin American for the whole year, with a market share of 7.5%, compared with 12.9% in 2019. In November, Huawei sold its budget smartphone brand Honor to a government-backed consortium in exchange for an opportunity to keep Honor’s industry chain alive amid the U.S. tech export restrictions.

Contact reporter Ding Yi (yiding@caixin.com)

Related: Xiaomi Rebuffs Rumors It Wants to Make Smart Cars

India has gone on the charm offensive to attract Tesla to produce cars in the country, offering incentives that would deliver lower manufacturing cost than in China, where the U.S. electric carmaker has gained popularity for its Shanghai-assembled Model 3.

“The government will make sure the production cost for Tesla will be the lowest when compared with the world, even China, when they start manufacturing their cars in India,” Indian transport minister Nitin Gadkari told Reuters recently.

Gadkari also promised “five higher concessions” if Tesla can establish a completely localized manufacturing process in India, instead of just an assembly facility that uses imported components, without providing details as to what those incentives would be, according to Reuters.

The remarks come just weeks after Tesla registered a company in India which sources close to the matter said will be engaged in sales rather than production.

India, however may struggle to attract serious investment from Tesla. According to Reuters, only 5,000 out of the total 2.4 million vehicles sold in India last year were electric, as consumers have so far been put off due to a lack of charging infrastructure and the high costs of battery-powered cars.

In comparison, Tesla sold 137,459 Model 3s in China in 2020, making the car the country’s most popular new energy car model of the year, according to the China Passenger Car Association. Tesla’s popularity in China is expected to continue this year as the company is set to start deliveries of the Model Y, its second Shanghai-built car model, in the second quarter at the earliest.

Contact reporter Ding Yi (yiding@caixin.com)

Related: Tesla Recalls More Than 36,000 U.S.-Built Cars in China over Potential for Touchscreen Failures

Computer maker Acer and key tech suppliers are warning that the global shortage of electronic components is worsening, potentially hampering the PC industry's growth this year despite strong demand.

"We are continuously facing a condition that demand always exceeds supply," Acer Chairman and CEO Jason Chen said on Wednesday. "We feel growing pressure because of the component shortages, and our staff are working with additional efforts to chase all the components needed every day."

Global tech supply chains have been grappling with shortages of semiconductors and other components since last year, when the "stay-at-home economy" of the coronavirus pandemic began fueling demand for computers, servers, gaming consoles and other devices. The problem is particularly acute for automakers, which failed to anticipate a rebound in demand at the end of last year.

"You see the auto industry now cry for more chips, and you see the game console makers also ask for more chips . . . That all happened together, as all the industries are recovering. That will definitely cause a crowding-out effect," Chen added.

Chen said the situation is still a "happy problem" for Acer, as the PC industry is expected to continue growing in 2021. However, he declined to provide a specific growth forecast given the supply uncertainties.

"It's really a phenomenon that the industry has never seen in the past. The shortages are not about core chips such as central processing units [CPUs] and graphic processors, which are worth $100 or $200, but mainly about companion chips that are only worth 80 cents or even 50 cents per unit," Chen said. "But devices and computers still need these companion chips to be complete."

Chen added that the component shortage is likely to last until at least the last quarter of this year. "It's not only about chips, either. The tightness is also in logistics and transportation, including fighting for containers and fleets," he said.

Taiwan's Acer, the world's fifth-largest PC maker, commands just under 7% of the global market and logged 23% growth in shipments last year. The overall PC industry grew 13%, its best performance since 2010, according to data from IDC.

The PC industry began to suffer shortages of a wide range of components late last year, ranging from WiFi and power management chips to image sensors, audio-related components and displays. Demand from the auto industry at the beginning of this year for more chips has tightened supplies further.

Other major PC makers, including top U.S. players HP and Dell, are also fighting to secure more chips to maintain their growth momentum.

"We also see that gap between supply and demand," an industry manager with knowledge of Dell's production told Nikkei Asia. "The company has to decide wisely on the allocation of the chips that it has, and it does need to adjust some of the business plans and forecasts."

Local Taiwanese media, meanwhile, reported that HP CEO Enrique Lores and the company's top procurement director Kee K. Chang will visit Taiwan this week as part of an effort to secure HP's supplies. HP did not respond to Nikkei Asia's request for comment as of publication time.

The CEO of chipmaker Xilinx previously told Nikkei Asia that the component shortage has already gone beyond semiconductors to encompass substrate materials such as ajinomoto build-up film, known as ABF. These are essential for packaging high-end chips used in cars, servers and base stations.

Taiwanese display maker Innolux, a supplier to HP, Dell and Acer, estimates the constraint on display supplies will last until at least the end of this year, driven by solid demand for notebook computers. Components for making displays also remain in short supply, the company said.

"Key components such as polarizers, ICs [integrated circuits], glass and even water in Taiwan are in short supply," Innolux President James Yang told an investors conference in Taipei on Wednesday. "There is a firm demand for displays [used in PCs] because of the stay-at-home economy, but there are uncertainties clouded on the outlook as 5G, electric vehicles and automobiles are all fighting over chip resources."

The president said Innolux has no time to build up display inventories, as clients are picking up their finished products soon after production.

Yang said Innolux has been reallocating its stocks of large sizes of glass to cut it into smaller sizes to meet demand, and optimizing the company's "buffer component inventories" to ensure its production remains unaffected. The display supplier, which ranks No. 4 in the market for monitor displays, recently expanded its water storage facility and signed a contract with rental water tank operators to secure its water supply amid Taiwan's worsening drought, the president said.

The chip supply, however, is still the biggest issue. "In the past, the lead time for driver ICs was around four months, but now even with six months some of our suppliers still cannot give us a solid, confirmed yes for shipment," Yang said, referring to chips that serve as an interface between displays and other processors.

Clark Tseng, industry research director with SEMI, an industry association, said he expects all segments of the chip industry to grow this year but the widespread component shortage raises questions over how quickly.

"The shortage and tightness also extend to various chip packaging materials, and even the waiting time for the production equipment to make these materials has become much longer. It's a chain reaction," Tseng said. "Even if many companies are thinking about expanding production capacity, it's not fast enough for them to solve the shortage issue right in front of them."

Contact editor Marcus Ryder (marcusryder@caixin.com)

Related: Chip Shortage Will Continue to Disrupt Auto Production in China, Industry Warns

China has captured the top spot in 2020 among international patent applications for the second consecutive year, a United Nations ranking released Tuesday shows, demonstrating once again how Asia is leading the tech innovation in the new normal.

Chinese applicants submitted 68,720 patent requests last year, up 16% from 2019 despite the coronavirus pandemic, according to data from the World Intellectual Property Organization (WIPO). China's Huawei Technologies, the world's leading telecommunications equipment manufacturer, remained the top applicant for the fourth straight year.

The U.S. remained in second place, with filings inching up 3% to 59,230. The numbers show clear signs of peaking out. Both the administrations of President Joe Biden and former President Donald Trump have found fault with China's infringement of intellectual property rights and forced technological transfers. The battle for hegemony in advanced technology will likely ramp up.

Japan stood in third place, although like the U.S., patent filings have plateaued. Applications declined by 4% last year to 50,520.

"It's not as if filings from the traditional parts of the world like the U.S. or Europe have decreased, it's just that the rate, the acceleration, has become a lot stronger in Asia," Daren Tang, WIPO director-general, said at a news conference.

China first topped the U.S. last year, filing about 1,000 more applications than the U.S., which lost its crown for the first time since 1978. Driving this trend is Beijing's program to modernize industry, dubbed "Made in China 2025." Launched in 2015, the program funnels generous state subsidies to domestic enterprises with the objective of turning China into an intellectual property superpower.

A similar pattern can be seen in South Korea, which surpassed Germany to take fourth place in patent filings. The South Korean government last year rolled out a New Deal initiative, which concentrates investments into 5G communications and artificial intelligence. Patent applications from South Korea stood at 20,060 filings.

Asian nations have become the center of technological innovation. Not only is Japan in third place in patent filings, Singapore and Saudi Arabia have gained momentum as well.

Among the top 50 companies in terms of patent applications, businesses hailing from Japan, China and South Korea captured more than 60% of the spots. South Korea's LG Electronics jumped to fourth place from 10th place thanks to its efforts to sharpen its technological prowess, especially in the mainline appliance segment.

China also features prominently in educational institutions that applied for patents. Among the top 10 schools, nine are located in either China or the U.S. Shenzhen University, located in the heart of China's Silicon Valley, ranked third among educational institutions, while the University of California system took the lead.

In Japan, Mitsubishi Electric took third place among global companies while Sony placed ninth. For schools, the University of Tokyo ranked 10th.

The rankings are based on filings made under WIPO's Patent Cooperation Treaty. A patent filed within a member state is seen as a patent submitted across multiple nations. WIPO's data serves as an international benchmark for gauging a company or a school's technical innovation.

Patent filings worldwide climbed 4% to 275,900 applications -- an all-time high. Among the most conspicuous are filings related to computer technology and digital communications.

Applications for virtual reality, augmented reality and other audiovisual tech in particular soared by 30%. This suggests that social distancing demands necessitated by the pandemic accelerated technological development.

Trademark applications worldwide dipped slightly to 63,800 filings. The economic downturn due to the coronavirus pandemic slowed the output of new goods and services, which would be protected by trademarks, WIPO said in its release. It appears that corporate budgets are hard-pressed to fund trademark applications due to the tough business environment.

Contact editor Marcus Ryder (marcusryder@caixin.com)

Related: Baidu Leads China in AI Patent Applications and Ownership

Tencent’s cloud computing arm has unveiled plans to launch an internet data center in the Kingdom of Bahrain this year, marking the Chinese tech giant’s first public cloud infrastructure in the Middle East and North Africa (MENA) region.

Tencent Cloud and the Bahrain Economic Development Board (EDB) have signed a memorandum of understanding for the project, which is a part of the kingdom’s efforts to become a regional cloud computing hub, according to a joint statement issued on Monday.

The memorandum of understanding will pave the way for Tencent Cloud’s ambition to widen the use of its services across the MENA region by using Bahrain’s regional position and the EDB’s ties with local and regional partners, the statement said.

Additionally, Tencent Cloud will explore the possibility of establishing training initiatives with the kingdom’s universities and educational institutions for talent cultivation, according to the statement.

The internet data center’s launch is in line with Bahrain’s “Cloud-First” policy which sees cloud computing as a weapon to modernize the government’s information and communication technologies, reduce the cost of deploying information technology infrastructure and increase the efficiency of citizen services.

The Middle East’s cloud market is expected to grow from $2 billion in 2019 to $4.5 billion by 2024, climbing at a compound annual growth rate of 17.5% during the forecast period, according to MarketsandMarkets.

Tencent Cloud operates mostly in China and the Asia Pacific region, but also has data centers in Silicon Valley, Virginia, Toronto, Moscow and Frankfurt, according to its website.

Contact reporter Ding Yi (yiding@caixin.com)

Related: Health-Care Big Data Provider Yidu Cloud Raises $529 Million in HK IPO

A European consumer rights group has filed an official complaint accusing the popular short-video app TikTok of violating the rights of the app’s users and exposing underage viewers to inappropriate material.

The complaint, filed to the European Commission Wednesday, jeopardizes TikTok’s access to the 27-nation market, which supplies roughly one-seventh of the ByteDance Ltd.-owned app’s total users worldwide.

It also puts the company at risk of being fined as much as 4% of its annual global sales under some of the world’s strictest data protection rules.

The European Consumer Organization also urged the European Commission and several consumer protection authorities to launch investigations into TikTok. “They must act now to make sure TikTok is a place where consumers, especially children, can enjoy themselves without being deprived of their rights,” its statement said.

Related: TikTok to Make Layoffs Following Permanent Ban in India

Read the full story here.

Contact editor Marcus Ryder (marcusryder@caixin.com)

Chinese electronics giant Xiaomi overtook Samsung and Huawei to become the largest seller in Russia’s online smartphone market in the fourth quarter of 2020, as the second wave of the Covid-19 pandemic in the country led to more online purchases.

In the final quarter of last year, Xiaomi accounted for 31% of Russia’s online smartphone sales, up from 19.2% a year ago, according to Counterpoint Research.

Samsung came in second with an online market share of 27%, but the South Korean giant was still the most popular brand in the overall Russian smartphone market in the quarter.

Apple made it into the top three in regards to online shipments for the first time with a market share of 15.5%, which Counterpoint Research attributed to the increased popularity of its iPhone 12 series and Huawei’s supply shortages largely caused by U.S. sanctions.

Huawei controlled 14.8% of Russia’s online smartphone market in the fourth quarter, claiming the fourth spot, compared with a year ago when it was the country’s biggest online smartphone seller with a 31.2% share.

Counterpoint Research analyst Soumen Mandal said that Huawei “is planning to introduce some flagship models along with some mid-range devices” to provide more options for consumers in Russia in order to regain market share there.

Although Russia’s total smartphone sales fell 11% year-on-year in the fourth quarter, online sales continued to rise, accounting for 35% of the total, Counterpoint Research said, without providing the specific shipment figures.

Contact reporter Ding Yi (yiding@caixin.com)

Related: Xiaomi Leads Indian Smartphone Market Despite Falling Numbers

Chinese electronics giant Xiaomi retained its status as the biggest smartphone vendor in India last year despite a modest contraction in shipments.

In 2020, Xiaomi shipped 41 million smartphones in India, down 6% year-on-year, giving it a market share of 27%, according to research firm IDC.

“Xiaomi’s performance in 2020 was led by its affordable Redmi 8 series, gradually replaced by the Redmi 9 series in the second half of 2020,” IDC said, attributing its annual shipment decline to supply shortages.

Xiaomi’s three Chinese peers — Vivo, Realme and Oppo — all made the top five list of smartphone suppliers, ranking third, fourth and fifth respectively with market shares of 18%, 13% and 11%. Unlike Xiaomi all three saw their shipments grow last year, with Realme enjoying the biggest year-on-year growth of 19%, according to IDC.

South Korea’s Samsung took the second spot with a market share of 20% although its shipments declined 4% year-on-year to 29.7 million units.

Overall, India’s smartphone market logged a year-on-year decline of 2% in shipments to 150 million units in 2020, which IDC largely attributed to sluggish demand in the first half, when shipments nosedived 26% year-on-year due to the Covid-19 pandemic. In the second half of 2020, shipments rebounded with a year-on-year increase of 19%, as markets gradually reopened, IDC said.

Contact reporter Ding Yi (yiding@caixin.com)

Related: In Depth: Chinese Firms Take U.S. Government to Court to Undo Trump-Era Bans

Smartphone maker Xiaomi is joining a growing queue of Chinese tech firms fighting Trump-era bans against them in U.S. courts.

The company filed a lawsuit last Friday in Washington, D.C., asking a judge to block a ban that would bar U.S. investors from trading in Xiaomi’s stock effective March 15. Xiaomi was named to a U.S. Defense Department list last month accusing it of having ties to China’s military, which meant American investors could no longer trade in its shares based on conditions laid out in an earlier Trump executive order.

In its lawsuit, Xiaomi says its inclusion on the Defense Department list “did not provide any explanation for (the department’s) decision to designate Xiaomi as a (Communist Chinese military company), let alone identify the factual basis on which the designation was based.”

Xiaomi reiterated it is a private company that is “not owned or controlled by, or otherwise affiliated with the Chinese government or military,” and asked a judge to provide injunctive relief to halt a ban that could cause the company “immediate and irreparable harm.”

In taking the action, Xiaomi has become the latest Chinese firm turning to the U.S. courts in an attempt to block Trump-era prohibitions those companies believe are illegal. Others taking similar action include instant messaging app WeChat and short-video app TikTok, both of which were banned over national security concerns; and Huawei, which was cut off from its U.S. suppliers after Washington earlier determined the company violated U.S. prohibitions on selling American products to Iran.

Read the full story here.

Contact reporter Yang Ge (geyang@caixin.com)