Japan is an early winner in the global semiconductor battle
Drama at Byju's, a look inside China's hacking network, and cassettes are big again in Japan
Welcome back,
Half term, a long weekend and an unfortunate trip to hospital for one of my kids. It was quite a week irrespective of the news. But the newsletter is here, better late than never, as they say. That’s actually quite an apt phrase for this week’s lead focus on Japan.
Once the place for futuristic technology and manufacturing, Japan fell behind as smartphones rose to dominate consumer electronics over the last decade or so. Now, though, it is making a comeback as a manufacturing hub once again. The government is doling out billions of dollars to attract chipmakers who are caught in the headlights of the US-China trade spat/technology war. Better late than never.
This week we also look at China’s state hacking apparatus, the chaos at Byju’s—an edtech startup once worth over $22B—and the potential extradition of Do Kwon to the US.
Elsewhere, Alibaba is ‘back,’ Netflix is upsetting Korea’s showbiz industry, and India has a new player who wants to build its own app store—a narrative we’ve seen plenty of before, without success.
That’s all for this week—see you next week,
Jon
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News in focus
Japan is an early winner in the global chip battle
Japan was once a manufacturing titan. It churned out consumer technology until the smartphone, with dominant engineering roots in China, took and made a lot of gadgets obsolete. Japan’s industry didn’t die but it did die down, now though it is making a comeback as a location for chips—which, most importantly, is because it simply isn’t China.
This week, we present a series of stories that dig into Japan’s chip ascendancy:
Bloomberg looked at how Japan’s government plans to spend $67B reviving domestic chip production—leaning on US supply chain concerns is key, as is efforts to lead industry breakthroughs such as AI chip firm Rapidus
Meanwhile established chip firms from Taiwan are “flocking” to Japan from China, Reuters reports, in response to the US seeking new partnerships among its allies
The Nikkei focuses on one of the key reasons for Japan’s early success: US trade tension with China
Of the companies, TSMC (Taiwan Semiconductor Manufacturing Company) is a key player Tokyo is wooing:
TSMC just opened its first chip plant in Japan, paving the way for it to begin making smartphone and auto-related chips for top local clients Sony and Renesas by the end of this year:
Japan is making a major push to revive its semiconductor industry, once the world's No. 1, offering generous subsidies to entice global chipmakers. It passed its version of subsidies for semiconductor projects later than the U.S. Chips Act, but has already had several projects receiving financial aid from the Japanese government. For several projects such as TSMC, Micron and Samsung Electronics' new investment in Japan, the Japanese government quickly granted up to 50% of the subsidies to shoulder the costs, setting a competitive example in terms of speed and the scale of subsidy that other nations cannot compete with.
Indeed, Tokyo is pledging a further $4.9B to help TSMC expand its Japan production
It’s still early days, but Japan’s potential revival is the newest chip narrative to keep an eye on. Particularly with luminaries including TSMC founder Morris Chang predicting a Japanese “chip renaissance.”
Inside China’s surveillance network
Hundreds of internal files attributed to the Shanghai-based cybersecurity vendor I-Soon, which works with Chinese government clients, were posted to GitHub this week. The documents appeared to reveal successful attacks on a series of high-value government targets in 2021 and 2022 from the UK foreign office to the Royal Thai Army.
The New York Times dug into what we need to know about the leak
China’s spy agency is now warning that these everyday acts are increasingly being exploited by foreign actors to harm the country’s national security. It’s the latest sign of increasing scrutiny of data flows, one that is likely to heighten risks for businesses operating in the world’s second-largest economy.
But one byproduct of exposure of China’s hacking operations is the fact that it relies on a vast network of contractors and independent firms rather than a centralised organisation:
As China Expands Its Hacking Operations, a Vulnerability Emerges link
The new revelations underscore the degree to which China has ignored, or evaded, American efforts for more than a decade to curb its extensive hacking operations. Instead, China has both built the cyberoperations of its intelligence services and developed a spider web of independent companies to do the work.
Byju’s CEO stands firm as investors vote for his removal
Paytm had dominated India’s startup news but things are accelerating at Byju’s—which was once the world’s highest valued edtech startup at $22B. The startup just concluded a $200M rights issue, an emergency fundraise designed to breathe much-needed finance into the startup albeit at a heavily (99%) reduced valuation.
But the future that the capital is designed to support may be one that doesn’t include founder Byju Raveendran after the company’s investors voted (unanimously) to remove him as CEO:
At an emergency general meeting (EGM) that concluded earlier today, a group of investors including Prosus Ventures and Peak XV Partners voted to change the leadership at the startup. The participating shareholders — whose combined ownership in Byju’s exceeded 60%, according to an investor source familiar with the matter — also passed the resolution to reconstitute Byju’s board. (Two people close to Byju’s disputed that participating shareholders held over 60% ownership in the firm. Neither of the sides have issued an official statement on the figures.)
Raveendran countered by claiming the meeting and agreement did not follow agreed protocol. He told employees in an internal note that rumours of his firing “greatly exaggerated.” More soon, no doubt.
Luna founder Do Kwon set for US extradition
A quick note on disgraced cryptocurrency entrepreneur Do Kwon after a court in Montenegro, where he surfaced and was detained last year, decided that he should be extradited to the US to face trial on fraud charges. The alternative destination had been his native South Korea.
The collapse of Do Kwon’s Terraform Labs, which operated stablecoin pair Luna and Terra, is thought to have resulted in losses of $40B for investors.
China
Under intensifying scrutiny from lawmakers, top US VC firms have pulled back from investing in Chinese startups despite a number of firms seeing huge returns from China over the past decade link
China’s rush to dominate remains dependent on US technology link
Nvidia identifies Huawei as top competitor for the first time in filing link
Shein is reportedly considering the possibility of switching its IPO to London from New York because of hurdles to the listing in the US link
Alibaba disclosed a wider web of Chinese government stakes in its business units than previously known, following an inquiry from the US Securities and Exchange Commission—filings in US and Hong Kong disclosed that more than a dozen of its entities are partially owned by Chinese state-owned enterprises or foreign sovereign wealth funds link
Taobao China Software will sell its 20% stake in Suning.com to another Alibaba affiliate at a loss of around 90% link
After doubts about Alibaba's future, co-founder Joe Tsai says: 'We're back' link
Ant has outbid Citadel Securities to a deal to buy Credit Suisse’s China unit link
Moonshot AI raised $1B led by Alibaba and VC HongShan amid strong interest for OpenAI-type startups link
Rest of World found that while Chinese livestream agencies promise influencers fame and money, they often end up trapping them in multi-year contracts link
Chip maker Ningbo Semiconductor International vows no mercy for former chairman sentenced to four years in prison for abuse of funds and bribery link
Alat, a newly formed entity owned by Saudi Arabia's PIF, announced a $200M partnership with Chinese surveillance company Dahua Technology to manufacture surveillance hardware in Saudi Arabia—Alat also announced a $150M partnership with Japan's SoftBank Group to manufacture advanced robotics link
Backed by Chinese carmaker Great Wall, Haomo raises $14M for autonomous driving tech link
The rapid rise of fast-fashion e-commerce retailers such as Shein and Temu is upending the global air cargo industry link
Meituan and Didi Chuxing are in the spotlight as China stresses rights of delivery and ride-hailing gig workers link
India
Founder Vijay Shekhar Sharma stepped down from Paytm Payments Bank board link
Meanwhile, The Reserve Bank of India (RBI) has allowed Paytm to migrate its UPI payment business to other banks link
Following the Paytm saga, the RBI is intensifying oversight of fintech firms after inspections revealed lapses in customer due diligence—it has increased meetings with executives and invested in better technology to monitor regulatory compliance link
PhonePe launches its Android app store with Amazon, Meta and Microsoft apps as it bids to unlock a greater share of India’s growing smartphone market link
Amazon India is setting up Amazon Bazaar, a new vertical featuring low-priced, unbranded fashion and lifestyle products to compete with SoftBank-backed Meesho link
Google Pay takes its QR soundbox to small merchants in India after trial run link
A consortium backed by Mukesh Ambani’s Reliance and India’s top engineering schools aim to launch its first ChatGPT-style service next month, a big step in the country’s ambitions to become a player in the field of artificial intelligence link
Flipkart has reportedly considered acquiring Reliance-backed instant delivery startup Dunzo link
Netflix, Amazon and others could face new tariffs on digital trade as Indonesia and India look to end tax moratorium link
Disney and Reliance have reportedly signed a binding merger pact link
Uber CEO in India
Uber CEO Dara Khosrowshahi was in India this past week, where he spoke of the challenges of competing in India—claiming Uber must always be on its toes in the country.
His visit also saw Uber make a number of announcements:
It is testing prepaid-item pickup from local stores in India link
It plans to explore integration with India’s ONDC, a so-called open commerce network link
Uber also wants to quicken an expansion into the cheaper but potentially larger market for two- and three-wheeled rides in India—a move that would extend its long-running rivalry with Ola link
Southeast Asia
Grab forecasted weak 2024 revenue after a second ‘profitable’ quarter—it also announced a buyback plan but that didn’t prevent shares dropping in value link
Indonesia issued regulations requiring digital platforms to pay media for content—they’re vague, unclear and won’t come into force for some time so the jury is out on their potential impact link
But already Meta has stepped up and said it believes that it is not required to pay for Indonesia news content posted voluntarily link
Rest of World looks at how Gojek keeps its gig riders close and away from unions link
Xalts, which helps institutions adopt blockchain technology, acquired Contour Network, a digital trade platform set up by eight major banks including HSBC, Standard Chartered and BNP to digitise trade link
Thailand’s police have targeted the country’s largest and oldest torrent site link
Indonesian online lending startup Julo is working toward an IPO as its annual revenue nears $100M link
How SpaceX was boosted in Indonesia by a Chinese rocket failure link
South Korea
Korea’s streaming sites struggle to keep pace with Netflix link
Netflix commands about 50% of local customers, Tving holds just 13% and Wavve has about 8.6%, according to Korea Creative Content Agency—Tving and Wavve combined lost more than 200B won ($165M) last year.
Wavve and Tving are considering a merger that their owners and the government hope will give them enough scale to better compete with Netflix—the idea is one service with shows from all the biggest local studios and three major broadcasting stations.
SK Telecom partnered with AI search startup Perplexity to offer the artificial intelligence-based search engine to its users as an alternative to Google link
Samsung and LG join forces against Chinese rivals in battle for display dominance link
South Korean AI Chip startup DeepX is reportedly close to raising $90M link
Across the rest of Asia
One firm not put off by Netflix is France’s Canal Plus, which has increased its stake in Viu—the Hong Kong streaming service that’s active across Asia, to 30% link
Canal Plus invested $200M for an initial 26% last year
Now it has added a further $100M
And it retains the option to raise its ownership to 50%
Mark Zuckerberg is poised for a packed week in Asia, with stops in Japan, South Korea and India to work on artificial intelligence services and forge ties with business and government leaders in the region link
Hong Kong financial affairs chief vows to move ahead with regulating stablecoins and over-the-counter crypto trading link
Investigators have traced $100M in crypto payments to a Myanmar scam syndicate link
And finally, cassette tapes are making a surprise comeback in Japan link