December 12, 2018
Category archive


Huawei, Google, and the tiring politics of tech

in Asia/China/Delhi/Google/Government/huawei/India/London/Meng Wanzhou/Oath/Policy/Politics/Sheryl Sandberg/Sundar Pichai/Verizon/Verizon Communications by

The defining question of the 21st century is pretty simple: who owns what? Who owns the telecommunications infrastructure that powers our mobile devices? Who owns the OS that powers those devices? Who owns our data?

Today, we see these intersecting arcs with two prominent tech leaders mired in legal and political processes.

TechCrunch is experimenting with new content forms. This is a rough draft of something new – provide your feedback directly to the author (Danny at danny@techcrunch.com) if you like or hate something here.

In Canada, we have day three(!) of the bail hearing for Huawei head of finance Meng Wanzhou (孟晚舟), who was arrested at the request of the U.S. a little more than a week ago. And on Capitol Hill today, Sundar Pichai, the CEO of Google, is testifying in front of the House Judiciary Committee, starting a few minutes ago at 10am.

These may be pedestrian proceedings, but they are riven with deep debates over the meaning of ownership. Meng was arrested for supposedly selling equipment to Iran through intermediaries in violation of U.S. sanctions. Huawei is a Chinese company, but uses American intellectual property in its products. Thus, America claims worldwide jurisdiction over the company, since it owns the patents beneath Huawei’s products.

Meanwhile, Pichai is testifying over a number of concerns, including data privacy (i.e. data ownership) and Project Dragonfly, the company’s attempt to re-enter China. He also has to contend with another data breach bug discovered yesterday in Google+. Is Google an American “owned” company (as Pichai will attempt to paint it today), or is it a global company owned by shareholders with obligations to enter China?

These aren’t simple questions, which is why the broader question of ownership will be so important for this century. Despite the win-win attitude of free traders, the reality is that much of technology ownership is monopolistic owing to barriers to entry – there are only a handful of telco equipment manufacturers, public clouds, mobile OSes and search engines out there. Whoever owns that property is going to get rich at the expense of others.

That’s why the US/China trade conflict is an irreconcilable tug-of-war.

For China, a developing country by most metrics even if it has glittering cities like Shanghai, owning that technological wealth is crucial for it to reach the zenith of its growth. It cannot become rich without becoming a technology power, a manufacturing power, and a consumer market capital all at once. And it views with deep suspicion American blocks on wealth transfers. Isn’t this just a way to keep the country down, to replay the century of humiliation all over again?

For the U.S., China’s constant conniving to pilfer American intellectual property undermines U.S. economic hegemony. China does want to steal plans for airplanes, and semiconductors, and other high-tech goods. Of course, it eventually wants to have the human capital and know-how to build these themselves, but first it has to catch up. America, fundamentally, doesn’t want it to catch-up.

As more and more wealth derives from technology, technology = politics becomes the bedrock law.

That’s frankly tiring for someone who just loves great products and wants to see massive technological progress for everyone regardless of nationality. But political symbolism is increasingly a language that Silicon Valley and the tech industry writ large have to understand.

Why Oath keeps Tumblring (now with a price tag)

Last week, I wrote a bit of a screed on why TechCrunch’s parent company, Oath, is struggling so badly:

Oath has a problem:* it needs to grow for Wall Street to be happy and for Verizon not to neuter it, but it has an incredible penchant for making product decisions that basically tell users to fuck off. Oath’s year over year revenues last quarter were down 6.9%, driven by extreme competition from digital ad leaders Google and Facebook.

Now, we know the costs of those product decisions, as well as the greater challenges in the digital advertising market. Verizon announced today that it will write down the value of Oath by $4.6 billion. That will change Oath’s goodwill value from $4.8 billion to $0.2 billion in the fourth quarter. Yikes.

This was a necessary accounting valuation change, and one that recognizes the challenges that Oath faces. As the filing said:

Verizon’s Media business, branded Oath, has experienced increased competitive and market pressures throughout 2018 that have resulted in lower than expected revenues and earnings. These pressures are expected to continue and have resulted in a loss of market positioning to our competitors in the digital advertising business. Oath has also achieved lower than expected benefits from the integration of the Yahoo Inc. and AOL Inc. businesses.

The upside is that Oath still has many, many millions of users every month. It just needs to figure out what to do with all of those eyeballs to build a sustainable business.

Can the West build anything?

Photo by VictorHuang via Getty Images

Seriously, from the Financial Times:

The capital should have been celebrating the opening of the east-west London railway, the biggest construction project in Europe, this week. But Crossrail announced in August that it would not begin operation until autumn 2019 at the earliest.

Even that now seemed “wildly optimistic”, one person close to the project said, given the problems with signals, trains and stations leading to “growing panic” among TfL executives. A number of people close to the project now say it may not be ready until late next year.

Crossrail is one of the most important subway projects in the world, designed to dramatically increase capacity in London’s Underground on the east-west axis. But it is just one of a series of major setbacks in infrastructure costs in the West. Meanwhile in California from Connor Harris at City Journal:

Ten years later, supporters have ample cause to reconsider. CAHSR’s costs have severely escalated: the California High-Speed Rail Authority (CHSRA) now estimates that the train’s core segment alone, from San Francisco to Los Angeles, will cost from $77 billion to $98 billion. Promises that private investors would cover most of the costs have fallen through. Forecasts for the project’s completion date and travel times have also slipped. The fastest trains in the CHSRA’s current business plan have a running time of over three hours, and the first segment of the line—San Jose to Bakersfield, almost 200 miles short of completion—won’t open until 2029.

I want high-speed rail, and I want new subways. I just don’t want new subways that cost billions of dollars per mile, and I don’t want high-speed rail at $100 billion.

The inability of Western countries to build infrastructure within any period of time and within any sort of budget is just mesmerizing. What we are left with is raising the speed limits on subways in New York City from 15 MPH to something a bit more reasonable.

I have talked previously about the need for more startups in this space:

California is home to two very different innovation worlds. For the readers of TechCrunch, there is the familiar excitement of the startup world, with startups working on longevity and age extension, rockets to Mars, and cars that drive themselves. Hundreds of thousands of entrepreneurs, engineers, and product managers are building these futures every day, often on shoestring budgets all in the hope of seeing their solution come to fruition.

Then, there is the “innovation” world of California’s infrastructure. Let’s take the most prominent example, which is the bullet train connecting southern to northern California. The train, first approved in a bond authorized by voters in 2008, is expected to have its first passengers in 2025 — three years after the original target of 2022.

That’s roughly 17 years start to finish, or older than the ages of Facebook (14 years) and the iPhone (10 years) are right now. Given that environmental reviews aren’t even slated to come in until 2020, it seems hard to believe that the route will maintain its current schedule.

Startups, we need your innovation in this space desperately. It’s a trillion dollar market ready for anything that might make these projects move faster, and cost less.

Quick Bites

My quick bites turned into full bites above.

What’s next

I am still obsessing about next-gen semiconductors. If you have thoughts there, give me a ring: danny@techcrunch.com.

Thoughts on Articles

The Increasingly United States – I read this book this weekend. Probably best to just read the reviews for most readers, although if you like modern political science research, this has about all the techniques you can do in American studies these days.

The core thesis is that the notion that “all politics is local” is completely bunk on two dimensions. Voters increasingly vote for candidates at every level of government using the same litmus tests, and they also get their information about politics exclusively from national sources. That basically means city councilors are debating immigration policy (which they have zero control over) rather than trash policy. It also explains the rising polarization in Congress — with less local issues to debate, there are just no opportunities afforded to build coalitions.

The book charts the pathways through which this nationalization takes place, and they will be intimately familiar to most readers (campaign finance changes, national media markets, nationalized policy planning, etc).

The thesis though raises a number of questions. First, how will local issues (zoning, trash pickup, etc.) get the attention they need to make our cities livable and thriving? Second, how can we fund local media so that voters have differentiated visibility into what is happening in their own backyard? These questions aren’t easy to answer, but we must if we want our federal-style system to function the way the founders intended.

The Death of Democracy in Hong Kong by Jeffrey Wasserstrom. A short and emotional look back at the failure of Hong Kong’s Umbrella Movement in 2014 and its ramifications.

Lean In’s Sheryl Sandberg Problem by Nellie Bowles. What does an organization do when the reputation of its founder and major icon turns sour? Lean In is trying to find out. Good if a bit lengthy, but I’m starting to get tired of the constant anti-Sandberg coverage.

Reading docket

What I’m reading (or at least, trying to read)

News Source = techcrunch.com

Move over notch, the hole-punch smartphone camera is coming

in Apple/Asia/Canada/CFO/China/computing/Delhi/electronics/Europe/Gadgets/huawei/India/mobile/Paris/Politics/Samsung/Samsung Electronics/samsung galaxy/selfie/Sina/smartphones/TC/Technology/United States/Xiaomi by

First it was the notch, now the hole-punch has emerged as the latest tech for concealing selfie cameras whilst keeping our smartphones as free of bezel as possible to maximize the screen space.

This week, Samsung and Huawei both unveiled new phones that dispense with the iconic ‘notch’ — pioneered by Apple but popularized by everyone — in favor of positioning the front-facing camera in a small “Infinity-O” hole located on the top left side of the screen.

Dubbed hole-punch, the approach is part of Samsung’s new Galaxy A8s and Huawei’s View 20, which were unveiled hours apart on Tuesday. Huawei was first by just hours, although Samsung has been pretty public with its intention to explore a number notch alternatives including the hole-punch, which makes sense given that it has persistently mocked Apple for the feature.

The Samsung Galaxy S8a will debut in China with a hole-punch spot for the camera [Image via Samsung]

Don’t expect to see any hole-punches just yet though.

The Samsung A8s is just for China right now while the View 20 isn’t being fully unveiled until December 26 in China and, for global audiences, January 22 in Paris. We also don’t have a price for either, but they do represent a new trend that could become widely-adopted across phones from other OEMs in 2019.

That’s certainly Samsung’s plan. The Korea firm is rolling the hole-punch out on the A8s, but it has plans to expand its adoption into other devices and series. The A8s itself is pretty mid-range, but that makes it an ideal candidate to test the potential appeal of a more subtle selfie camera since Samsung’s market share has fallen in China where local rivals have pushed it hard. It starts there, but it could yet be adopted in higher-end devices with global availability.

As the View 20, Huawei has also been pretty global with its ambitions, except in the U.S. where it hasn’t managed to strike a carrier deal despite reports that it has been close before. The current crisis with its CFO — the daughter of the company’s founder who was arrested during a trip to Canada — is another stark reminder that Huawei’s business is unlikely to ever get a break in the U.S. market: so except the View 20 to be a model for Europe and Asia.

Huawei previewed its View 20 with a punch-hole selfie camera lens this week [Image via Huawei]

Samsung hasn’t said a tonne about the hole-punch design, but our sister publication Engadget — which attended the View 20’s early launch event in Hong Kong — said it was mounted below the display “like a diamond” to maintain the structure.

“This hole is not a traditional hole,” Huawei told Engadget.

Huawei will no doubt also talk up the fact that its hole is 4.5mm versus an apparent 6mm from Samsung.

Small details aside, one important upcoming trend from these new devices is the birth of the ‘mega’ megapixel smartphone camera.

The View 20 packs a whopping 48-megapixel lens for a rear camera which something that we’re going to see a lot more of in 2019. Xiaomi, for one, is preparing a January launch for a device that’ll have the 48-megapixels, according to a message on Sina Weibo from company co-founder Bin Lin. There’s no word on what camera enclosure that device will have, though.

Xiaomi teased an upcoming smartphone that’ll sport a 48-megapixel camera [Image via Bin Lin/Weibo]

News Source = techcrunch.com

Mogu’s long journey: From rejecting Alibaba’s advances to US IPO

in alibaba/alibaba group/Asia/China/Delhi/digital magazine/e-commerce/eCommerce/Fashion/India/JD.com/Mogujie/online fashion/online marketplaces/pinduoduo/Pinterest/Politics/taobao/TC/Tencent by

Mogu, a Tencent-backed service that offers fashion content and products to young women, has joined a string of Chinese tech companies pressing ahead to sell their shares through initial public offerings in the US before the year-end.

Mogu priced its sale at $14 per share on Wednesday, toward the lower end of a marketed range. That values the unprofitable company at $1.3 billion, a drop from the estimated valuation of $3 billion after Mogujie acquired its chief competitor Meili to form Mogu in 2016.

The firm is poised to raise $66.5 million from the IPO, which will help it fund content and technological development to vie for a piece of China’s $390 billion online fashion market.

While Alibaba has long dominated how people buy clothes online, a few smaller players including Pinduoduo and Mogu have managed to carve out a niche.

According to a September report by mobile analytics firm QuestMobile, Mogu controlled an 8.1 percent penetration rate among ecommerce apps targeting women under 24 years old. Alibaba led the game at 98 percent.

Now a formidable rival, Alibaba has played a key role in Mogu’s early day growth.

Under the giant’s shadow

In 2009, Chen Qi, a former engineer and designer at Alibaba, founded Mogujie — which means “mushroom street” in Chinese — with the aim to create a digital magazine for young women.

The firm’s initial incarnation was a Pinterest -type pinboard that let users share fashion items with links to third-party ecommerce platforms. Back then, a majority of the products on display came from Taobao, Alibaba’s marketplace for small and medium-sized merchants.

“We have to recognize Taobao’s dominance in the retail space. It was inevitable that most of our products came from there,” Chen told TechCrunch.

Chen Qi, co-founder and CEO of Mogu / Credit: Mogu

As such, Mogujie generated a big chunk of its revenues from Taobao’s referral commissions early on.

In return, Alibaba also benefited from the traffic that the social ecommerce startup sent over to Taobao. It came as no surprise when the titan made an investment offer to Mogujie in hope of adding a community component to its ecommerce busienss. But Mogujie rejected the advances.

“Our visions were very different. We wanted to be a fashion destination,” Chen said of Mogujie, which allowed all kinds of retailers to promote as a magazine does.

Alibaba, on the other hand, wanted Mogujie to be a vertical ecommerce service that would focus on attracting merchants, touting things, and locking users in instead of sending them to third-party platforms.

“If our content creators wanted to share something that happened to be from [Alibaba’s] rivals, we would need to stop them. That clearly ran against our value proposition of a fashion destination,” said Chen.

A new ally

The rejection soon followed by a ban from Taobao as Alibaba wanted full control of where its traffic came from. Meili, which made money by directing shoppers to Taobao as Mogujie did, also lost the ability to link to Alibaba. Both firms started building their own ecommerce platforms soon after breaking up with their main revenue driver.

Before long, Mogujie got a new partner from its acquisition of Meili, which counted Tencent as an investor. Tencent does not directly manage any ecommerce businesses but has scooped up shares in a few prominent players, including Pinduoduo and JD.com, arming them with tools to take on Alibaba.

Pinduoduo, for instance, has taken off on Tencent’s popular WeChat messenger by letting shoppers arrange group bargains among each other.

Similarly, WeChat has fueled growth for Mogu in recent months. WeChat mini programs — a type of stripped down apps that run within larger platforms — contributed 31.1 percent of Mogu’s total sales for the six months ended September 30, up from 14.4 percent a year ago, according to a regulatory filing.

Like Alibaba, Tencent strategically chooses what allies it lets into its turf. Links to its rival Alibaba have long been inaccessible on WeChat, which had more than 1 billion monthly active users as of September.


Mogu has adopted a new live streaming strategy to grow ecommerce sales. / Credit: Mogu

The caveat of having a powerful teammate like Tencent is that an eroding relationship may do harm to the smaller player, as Mogu experienced with Alibaba. But Mogu isn’t worried about its reliance on the gaming and social behemoth.

“Customers who like us will end up downloading our native app, which delivers a much better user experience. As most WeChat partners would agree, mini programs are an effective way to attract new users, rather than a threat,” argued Chen.

By the numbers

Mogu lost $81 million for the year ended March 31, down from $136 million year-over-year. Revenues, however, slipped from $161 million to $142 million. Chen ascribed the drop to the firm’s “particularly strong performance” in 2017 following the merger, which compelled competition between merchants on Meili and Mogujie to double down on marketing expenses.

Meanwhile, total sales for the fashion ecommerce firm grew by 24.6 percent from $1.71 billion to $2.14 billion.

Marketing services, which consist of display advertisements, accounted for nearly half of Mogu’s revenues but are fading in favor of ecommerce commissions, which stood at 43 percent of revenues compared to 30 percent a year ago.

The new development signifies Mogu’s shift to growing a community of influencers selling clothes to followers via live streams. This segment brought in 11.8 percent of Mogu’s total sales, compared to only 1.4 percent in 2017.

The appeal of live broadcasting, according to Chen, is that it improves efficiency in apparel manufacturing. A traditional procedural goes like this: Make clothes, sell them, and items that don’t sell get discounted, eating into margins and jacking up retail prices.

Selling through live streams, on the other hand, help merchants determine how popular a design is in real time.

“The manufacturers won’t even have to make the clothes up front. Our live broadcast host will show a sample to her audience, aggregate orders, and tell the factory of how many to make and in what sizes,” said Chen. “This significantly speeds up the production process and lowers prices for consumers.”

News Source = techcrunch.com

The trust dilemma of continuous background checks

in Artificial Intelligence/Asia/background check/Checkr/China/CrunchBase/Delhi/Government/India/intelligo/Masayoshi Son/Meng Wanzhou/Policy/Politics/privacy/Ren Zhengfei/SoftBank/Softbank Vision Fund/Startups/Venture Capital/zte by

First, background checks at startups, then Huawei’s finance chief is arrested, SoftBank’s IPO is subscribed, and I am about to record our next edition of TechCrunch Equity. It’s Thursday, December 6, 2018.

TechCrunch is experimenting with new content forms. This is a rough draft of something new – provide your feedback directly to the author (Danny at danny@techcrunch.com) if you like or hate something here.

The dilemma of continuous background checks

My colleague John Biggs covered the Series A round for Israel-based Intelligo, a startup that provides “Ongoing Monitoring” — essentially a continuous background check that can detect if (when?) an employee has suddenly become a criminal or other deviant. That’s a slight pivot from the company’s previous focus of using AI/ML to conduct background checks more efficiently.

Background checks are a huge business. San Francisco-based Checkr, perhaps the most well-known startup in the space, has raised $149 million according to Crunchbase, driven early on by the need to on-board thousands of contingent workers at companies like Uber. Checkr launched what it calls “Continuous Check” which also actively monitors all employees for potential problems, back in July.

Now consider a piece written a few weeks ago by Olivia Carville at Bloomberg that explored the rise of “algorithmic auditors” that actively monitor employee expenses and flags ones it feels are likely to be fraudulent:

U.S. companies, fearing damage to their reputations, are loath to acknowledge publicly how much money they lose each year on fraudulent expenses. But in a report released in April, the Association of Certified Fraud Examiners said it had analyzed 2,700 fraud cases from January 2016 to October 2017 that resulted in losses of $7 billion.

Here’s a question that bugs me though: we have continuous criminal monitoring and expense monitoring. Most corporations monitor web traffic and email/Slack/communications. Everything we do at work is poked and prodded to make sure it meets “policy.”

And yet, we see vituperative attacks on China’s social credit system, which …. monitors criminal records, looks for financial frauds, and sanctions people based on their scores. How long will we have to wait before employers give us “good employee behavior” scores and attach it to our profiles in Slack?

The conundrum of course is that no startup or company wants (or can) avoid background checks. And it probably makes sense to continually monitor your employees for changes and fraud. If Bob murders someone over the weekend, it’s probably good to know that when you meet Bob at Monday’s standup meeting.

But let’s not pretend that this continuous monitoring isn’t ruinous to something else required from employees: trust. The more heavily monitored every single activity is in the workplace, the more that employees feel that if the system allows them to get away with something, it must be approved. Without any checks, you rely on trust. With hundreds of checks, policy is essentially etched into action — if I can do it, it must meet policy.

In China, where social trust is extremely low, it likely makes sense to have some sort of scoring mechanism to substitute. But for startups and tech companies, building a culture of trust — of doing the right thing even when not monitored — seems crucial to me for success. So before signing up for one of these continuous services, I’d do a double take and consider the potentially deleterious consequences.

If I was a startup employee, I would think twice (maybe thrice?) before traveling to China

Photo by VCG/VCG via Getty Images

Last weekend, Trump and Xi agreed to delay the implementation of tariffs on Chinese goods, which led to buoyant Chinese (tech) stocks Monday in Asia time zones. I wrote about how that doesn’t make any sense, since delaying tariffs doesn’t do anything to solve the structural issues in the US/China conflict:

To me the market is deeply misjudging not only the Chinese economy, but also the American leadership as well.

And specifically, I wrote about constraints on Huawei and ZTE:

In what world do these prohibitions disappear? The U.S. national security agencies aren’t going to allow Huawei and ZTE to deploy their equipment in America. Like ever. Quite frankly, if the choice was getting rid of all of China’s non-tariff barriers and allowing Huawei back into America, I think the U.S. negotiators would walk out.

So it was nice to learn (for me, not for her) that the head of finance of Huawei was arrested last night in Canada at the United States’ request. From my colleague Kate Clark:

Meng Wanzhou, the chief financial officer of Huawei, the world’s largest telecom equipment manufacturer and second-largest smartphone maker, has been arrested in Vancouver, Canada on suspicion she violated U.S. trade sanctions against Iran, as first reported by The Globe and Mail.

Huawei confirmed the news with TechCrunch, adding that Meng, the daughter of Huawei founder Ren Zhengfei, faces unspecified charges in the Eastern District of New York, where she had transferred flights on her way to Canada.

If you wanted to know how the Trump administration was going to continue to fight the trade war outside of tariffs, you now have your answer. This is a bold move by the administration, targeting not just one of China’s most prominent tech companies, but the daughter of the founder of the company to boot.

China has since demanded her return.

Here is how this is going to play out. China is preventing the two American children of Liu Changming from leaving the country, essentially holding them hostage until their father returns to the mainland to face a criminal justice process related to an alleged fraud case. America now has a prominent daughter of a major Chinese company executive in their hands. That’s some nice tit-for-tat.

For startup founders and tech executives migrating between the two countries, I don’t think one has to literally worry about exit visas or extradition.

But, I do think the travel security operations centers at companies that regularly have employees moving between these countries need to keep very keen and cautious eyes on these developments. It’s entirely possible that these one-off “soft hostages” could flare to much higher numbers, making it much more complicated to conduct cross-border work.

Quick Bites

SoftBank’s IPO raises a lot of dollars


Takahiko Hyuga at Bloomberg reports that SoftBank has sold its entire book of shares for its whopping $23.5 billion IPO. The shares will officially price on Monday and then will trade on December 19. This is a critical and important win for Masayoshi Son, who needs the IPO of his telecom unit to deleverage some of the risk from SoftBank’s massive debt pile (and also to continue funding his startup dreams through Vision Fund, etc.)

SoftBank Vision Fund math, part 2

Arman and I talked yesterday about the complicated math behind just how many dollars are in SoftBank’s Vision Fund. More details, as Jason Rowley pointed out at Crunchbase News:

In an annual Form D disclosure filed with the Securities and Exchange Commission this morning, SBVF disclosed that it has raised a total of approximately $98.58 billion from 14 investors since the date of first sale on May 20, 2017. The annual filing from last year said there was roughly $93.15 billion raised from 8 investors, meaning that the Vision Fund has raised $5.43 billion in the past year and added six new investors to its limited partner base.

I said yesterday that the fund size should be “$97 billion or $96.7 billion with precision, assuming this $5 billion reaches a final close.” So let’s revise this number again to $99 billion or $98.6 billion with precision, since it seems the $5 billion did indeed close.

What’s next

I am still obsessing about next-gen semiconductors. If you have thoughts there, give me a ring: danny@techcrunch.com.

Thoughts on Articles

Hopefully more reading time tomorrow.

Reading docket

What I’m reading (or at least, trying to read)

  • Huge long list of articles on next-gen semiconductors. More to come shortly.

News Source = techcrunch.com

Chinese stocks plummet as Huawei CFO arrest raises trade fears

in Asia/China/Delhi/Hardware/Honor/huawei/India/Iran/Meng Wanzhou/mobile/North Korea/Politics/Ren Zhengfei/shanghai/Shanghai Stock Exchange/shenzhen/us government/zte by

A string of Chinese stocks fell hard on Thursday after the arrest of Huawei’s chief financial officer Meng Wanzhou in Vancouver deepened concerns over US-China trade tensions.

The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong was off 2.76 percent as of 12:40 p.m. On the Mainland side, the CSI 300 index of the top 300 stocks trading in Shanghai and Shenzhen fell 2.1 percent. The US stock market is closed Wednesday to honor former US President George H.W. Bush.

The crash arrived after Canadian officials detained Meng, daughter of Huawei’s founder and chief executive officer Ren Zhengfei, on suspicion that Huawei has violated American sanctions on Iran. Meng is facing extradition to the US.

Shares of Huawei’s main rival ZTE nosedived nearly 6 percent in Hong Kong by midday. Meng’s news also hit the suppliers of employee-owned Huawei across the Asian stock markets. Among the worst performers is Shennan Circuit, which slipped nearly 10 percent in Shenzhen as of this writing.

zte stock huawei

Huawei and its main rival ZTE have been targets of the US government that worries about the alleged ties between the telecom equipment makers and the Chinese governemnt. The US’s ban on ZTE sparks concerns that Huawei will face a similar fate. In April, the US Department of Commerce announced a seven-year ban that would restrict American component makers from selling to ZTE, which in 2017 pleaded guilty to violating sanctions on Iran and North Korea.

Chinese stocks had been on a downward trend prior to Meng’s arrest as a result of rising US tarrifs over the last few months. In October, the Shanghai benchmark index dropped to a four-year low.

Updated with charts on HSCEI and ZTE.

News Source = techcrunch.com

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