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The exodus of manufacturing from China

Asia Tech Review: 10 April 2023

Jon Russell
Apr 10, 2023
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The exodus of manufacturing from China

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Good morning,

This week’s issue is a little lighter than usual on account of the long Easter weekend—if you celebrated it, I hope you had a great holiday.

Don’t forget you can follow ATR for the latest news in the Telegram channel, while there are also accounts on Twitter and now LinkedIn to keep you updated.

See you again next week!

Jon


Links in focus

Rather than the usual of section of analysis on three top stories, this week we’re highlighting a number of links that show how China is increasingly drifting from the rest of the world, or at least where China used to be:

On supply chain, Bloomberg has a deep look at how Apple—a bellwether for manufacturing—is laying the foundations to manufacture phones outside of China, including the tricky politics of how CEO Tim Cook is navigating the challenge of staying on side with the Chinese government

  • Apple’s Complex, Secretive Gamble to Move Beyond China

An assembly line at Foxconn’s Shenzhen factory. Photo: AFP
Image via SCMP

The Information has an opinion piece that profiles India—Apple’s key alternative to China—as “the world’s next tech manufacturing hub” albeit with the challenge of lacking necessary infrastructure and expertise to reach the high bar that China has set 

  • India Is the world’s next tech manufacturing hub

Finally, India and Southeast Asia (Vietnam, Thailand and Cambodia) are among the early winners of the shift in semiconductor production away from Taiwan and China due to political and economics reasons, as Bloomberg (again) reports

  • Four Asian countries lead in US chip diversification move

To drill home the point about political challenges when working with China or being reliant on the market, there’s two notable pieces of news that provide broader context

China appears to be using a security review of Micron Technology, a US semiconductor firm with deep roots in China, to “strike back” at America’s hostile approach to Chinese tech and chipmakers

In other words, companies can easily get caught in political crosshairs link

While Chinese regulators have reportedly slowed down their merger reviews of a number of proposed acquisitions by US companies—indicating that collateral damage can be wider than just the semiconductor industry link


China

Following that big week for TikTok, there’s plenty more from ByteDance’s big hitting app:

TikTok got a lot of support in China link

In an information campaign primarily run on Twitter, Chinese officials and state media organizations widely mocked the United States in the days before and after the hearing, accusing lawmakers of hypocrisy and even xenophobia for targeting the popular app, according to a report released on Thursday by the Alliance for Securing Democracy, a nonpartisan initiative from the German Marshall Fund.

While advertisers are said to be increasing their spending despite the threat of a US ban link

Meanwhile Lemon8, ByteDance’s latest app for creators in the US, is again leaning on its China playbook link

Lemon8 screenshot
Image via TechCrunch

The information reports that US VC funds and many US-based LPs are indirectly financing a range of Chinese AI startups that aspire to rival OpenAI—potentially raising national security and political issues on both sides in the future link

Chinese state-owned telecom firms are developing a $500M undersea fiber-optic internet cable network that would link Asia, the Middle East and Europe to rival a similar US-backed project link

How China is winning the race for Africa’s lithium—a crucial resource for EV batteries link

There’s concern that Alibaba’s break-up will mean a prioritisation on all things e-commerce, and not its other bets link

Alibaba, meanwhile, unveiled its answer to ChatGPT link

Tencent and Douyin have ended years of copyright disputes with an agreement on content distribution link

China’s SJ Semiconductor raised a $340M extended Series C link

Binance reportedly turned down an offer to acquire Justin Sun’s ownership stake in Huobi apparently due to its ties to mainland China. link


India

Rest of World argues that cheap smart speakers are a key reason behind the rise of digital payments in India link

Vedanta—a local venture with Foxconn—is seeing its plan to build a $19B chip-making plant in India “floundering” due to a lack of local tech partners and limited government support link

Vedanta-Foxconn's pact invited ire from Opposition | Mumbai news -  Hindustan Times
Things aren’t going quite as planned…

Reliance’s next startup act is a Meesho­-like zero-commission retail marketplace from its Ajio division link

Zyod, which enables apparel sourcing and manufacturing for fashion brands, raised $3.5M link

India does not plan to regulate the growth of AI, which the government has identified as a “significant and strategic” area of opportunity link

Apple is gearing up to (finally) open its first physical retail store in India later this month link

Saas fund Iron Pillar has made a final close of its $129M fund link

Google will prohibit personal loan apps from accessing user photos and contacts following concern that apps had taken users hostage by using social links and friend groups to apply pressure link

India’s central bank has halted its plans for a high-profile project intended to rival the nation’s dominant UPI payment system link

A worrying amendment to India’s IT law will now require social media firms like Facebook and Twitter to rely on government fact checking and prohibit the publishing of anything deemed to be “false information” link

New online gaming rules announced by the government are expected to curb the menace of illegal offshore betting and gambling websites link


Southeast Asia

The FT looks at how Singapore is drawing startup founders and talent from China by positioning itself as a gateway to Southeast Asia link

Tencent is among the backers of Singapore’s Horizon Quantum Computing via a new $18M round which includes Sequoia and SGInnovate among others link

The number of QR code-based payment transactions has tripled each year in Indonesia since being introduced in 2020 link


Japan

Japan is poised to sharply raise its chip-gear spending in an attempt to boost its position in the global semiconductor market link

Electronics firm Kyocera will spend $470M to build its first new domestic production facility in two decades link


South Korea

Samsung Display will invest $3.1B in OLED production in South Korea link

But group parent Samsung will cut chip production after carding a worse-than-expected 96% plunge in quarterly operating profit as a global semiconductor market downturn deepens link


Elsewhere in Asia

Brazil is going after Asian e-commerce giant that operate on its soil with a new tax push link

Hackers posed as reporters in attacks on North Korea experts, according to a report from Google link


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The exodus of manufacturing from China

www.asiatechreview.com
Michael Spencer
Writes AI Supremacy
Apr 10

Very bullish on Vietnam, India and Mexico here

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