Connect with us

One of Huawei’s booths at MWC Barcelona 2019.

Elizabeth Schulze | CNBC

China has plenty of ways it can make retaliate against the U.S. treatment of Huawei, and U.S. companies could feel the brunt of it.

Both the White House and Commerce Department Wednesday took actions against the telecom company, which would essentially ban it from selling technology in the U.S. market and also stop it from buying the Qualcomm chips it needs for its production. Huawei was put on the Commerce Department’s Entity List which would require companies to apply for a license to sell technology to Huawei, thus limiting its access to U.S. technology.

The U.S. may see the action against Huawei as a lever in its China trade negotiations, which have hit a rough spot and now could take several more months. China’s possible reactions range from encouraging boycotts of U.S. products; favoring other companies over American companies, and conducting nuisance regulatory enforcements and inspections.

China could also use the same tactics it might use if trade talks become more difficult or fall apart, such as limiting purchases of U.S. Treasurys or selling them or weakening its currency. The biggest holder of U.S. Treasurys, China recently reduced its holdings to the lowest level in two years.

Eurasia Group analysts said there’s only now a 15% chance of a deal by the time President Donald Trump and China President Xi Jinping meet at the G-20 meeting at the end of June. They see a 45% chance that negotiations will be extended, and 40% chance there will be no deal or truce.

Citigroup economists still expect a trade deal within the next couple of months, regardless of where Huawei stands. “This is consistent with our view that the tensions between the U.S. and China go beyond trade. What we thought before this event was these issues regarding the technology sector were mostly taken on a different path, so they’re not that tied to having a trade deal,” said Cesar Rojas, global economist at Citigroup.

Analysts speculated one of China’s first responses to the Huawei actions was to formally charge two Canadians Thursday with espionage. The two were arrested in December, and the charges against them were viewed as pay back for Canada’s help in the arrest of Huawei CFO Meng Wanzhou, who is fighting extradition to the U.S.

‘Mobilizing patriotic consumers’

In January, the U.S. charged Huawei and its Meng with wire fraud, obstructing justice, conspiring to launder money and violating the International Emergency Economic Powers Act by doing business with sanctioned Iran. Meng is the daughter of Hauwei’s founder and faces extradition to the U.S. The U.S. has also discouraged the adaption of Huawei technology in other countries, for fear its equipment is not secure and could be used for cyberespionage.

“There has been some signaling about maybe mobilizing patriotic consumers, so you could maybe see a boycott of U.S. products. That’s been pretty limited so far. That’s been the main response,” said Adam Segal, director of digital and cybersecurity at the Council on Foreign Relations.

He said Apple would be the most likely target because it’s products are sold directly to consumers, but China may not want to rev up consumers too much. “There is a worry that if you mobilize too much nationalist sentiment, that you can’t control it,” said Segal.

Segal said China could use anti-competition inspections on China-based operations of U.S. companies, as it did with Microsoft several years ago. “They could search your factory. At 5 o’clock in the morning, inspectors show up and demand to see your books,” he said.

China would likely move toward developing its own sources for chips. “It will reinforce the sentiment of the Chinese leadership that they have to double down on their own investment, longer term investing in AI, 5G, and all the other technologies that we’re worried about,” he said. 5G is essentially the next generation of mobile networking that should result in faster internet and allow users to conduct a whole new operations linking smart phones to more everyday tasks.

Analysts noted that Oracle is one company, now moving operations from China. It is reported to be laying off 900 people at its research center in Beijing.

“Oracle has a toe hold in China, and given the noise, that’s a smart move for them to take a step away,” said Dan Ives, managing director and technology analyst at Wedbush. He said Oracle can do business cheaper elsewhere because of the tariffs.

Ives said Apple is the company at most risk for retaliation, but China may not want to be too hard on Apple since it employes 1.4 million people there including at Foxconn. “But realistically, I think that could only impact 3 to 5% iPhone purchases in the country. That’s what i would call a pretty contained issue for Apple.”

Chip companies are even less at risk since they are not as vulnerable to consumer boycotts, he said. “There’s limited strategic moves China can do because Qualcomm on 5G is so integral on the smart phones, ” said Ives.

“Qualcomm is as integral to the Chinese smart phone market as Tiger Woods is to golf. It’s that intertwined. Micron and Skyworks are also key, especially Micron, but it also speaks to the semi food chain. China needs to handle that with kid gloves, if they went after it, it would have worse implications domestically that would far outweigh the benefits of retaliation..China knows that and that’s why the U.S. knows when it comes to Huawei, that they know that ‘s a card they could play,” Ives said.

The pain for Huawei will clearly be greater than for U.S. suppliers. “Our assessment is Huawei, just like all large tech companies, remains highly dependent on a global supply chain, and possibly will experience a notable disruption without a continuous supply from the US. For suppliers, losses of Huawei may be mitigated by the gain of Huawei’s rivals, but short-term setbacks are hard to avoid,” Bernstein analysts wrote. Analysts believe Huawei has been stockpiling chips, and that could help it for awhile.

Eurasia Group analyst said since Trump reversed a similar action against Huawei rival, ZTE, last year, it may be that Huawei is permitted to buy some U.S. technology.

“It is still not clear the extent which the administration is using this as a new weapon in its campaign against Huawei (our preliminary take) or a negotiating tactic in trade talks,” the analysts wrote. They noted Huawei could be ultimately crippled and denied access to its hardware and software suppliers for moblie infrastructure and handsets.

“This would also quickly put at risk both the company itself and the networks of Huawei customers around the world, as the firm would be unable to upgrade software and conduct routine maintenance and hardware replacement. It would hit virtually all of Huawei’s products, including high-end smart phones, mobile infrastructure, data centers and cloud services, and have immediate global implications for any company utilizing Huawei’s products or services. European carriers, in particular, are likely to be affected quickly,” the Eurasia Group analysts noted.

Stocks of Qualcomm and other Huawei suppliers, Skyworks and Micron were all moving sharply lower on Thursday.

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

World

England will ban plastic stirrers, straws and cotton swabs from 2020

Published

on

saulgranda | Moment | Getty Images

A ban on plastic drinks stirrers, straws, and plastic-stemmed cotton swabs will come into force in England next April.

“Urgent and decisive action is needed to tackle plastic pollution and protect our environment,” Environment Secretary Michael Gove said in a statement Wednesday.

“These items are often used for just a few minutes but take hundreds of years to break down, ending up in our seas and oceans and harming precious marine life,” he added.

The ban follows on from a consultation which found that more than 80% of respondents supported a ban on the distribution and sale of plastic straws, with 90% backing a ban on drinks stirrers and 89% in favor of a ban on cotton swabs. The consultation ran from October 22, 2018 to December 3, 2018, and had 1,602 respondents.

Outlining details of the ban, the U.K. government said there would be exemptions to make sure that people with a disability or medical requirements could continue using plastic straws.

In practice, this means that while restaurants and bars will not be allowed to display plastic straws or “automatically hand them out” they will be able to provide them upon request.

Another exemption will apply to the use of plastic-stemmed cotton swabs for “medical and scientific purposes” where such items are “often the only practical option.”

The CEO of Surfers Against Sewage, Hugo Tagholm, said the charity welcomed the ban. “Stopping the production and distribution of these single-use plastic menaces will prevent them from polluting beaches nationwide,” he added. “It’s a really positive and bold step in the right direction in the battle against plastic pollution.”

Several major businesses are already looking to move away from using plastic in their stores. Fast food giant McDonald’s is rolling out paper straws to stores in the U.K. and Ireland, while upscale supermarket Waitrose now only offers paper straws in its cafes.

The issue of plastic pollution is a big problem. Europeans produce 25 million tons of plastic waste per year, according to the European Commission. Less than 30% of this is collected for recycling.

Source link

Continue Reading

World

Twitter exchange with Elon Musk lands a British man a job at Tesla

Published

on

Elon Musk, chairman and CEO of Tesla, addresses a press conference in Beijing on October 23, 2015.

ChinaFotoPress | Getty Images

Tesla has hired a British man behind a viral tweet that caught the attention of Elon Musk last month.

Adam Koszary, who engineered a viral Twitter exchange between Musk and an English museum, will begin a new role as Tesla’s social media manager in July.

Back in April, Koszary, the digital lead for the Museum of English Rural Life (MERL), tweeted a photo of a ram with the caption: “Look at this absolute unit.”

The picture has been liked more than 100,000 times to date – and its popularity really took off when Elon Musk used the image as his own profile picture on Twitter.

“I’m an absolute unit too,” he said in a tweet, temporarily changing his Twitter bio to “absolute unit.”

In response, the MERL switched its own picture for one of Elon Musk, sparking an ongoing exchange between the two accounts.

Koszary, who had been due to start a new job at the U.K.’s Royal Academy of Arts (RAA), announced on Twitter on Tuesday that he had instead accepted a role with Tesla.

“I’m no longer moving to the Royal Academy. Instead, I’ll be Tesla’s Social Media Manager from July,” he said.

The RAA said in a tweet on Tuesday that it was “very sad that the lovely and talented Adam now won’t be joining us, but know he’ll do a great job at Tesla.”

A spokesperson for Tesla was not immediately available for comment when contacted by CNBC.



Source link

Continue Reading

World

People in these cities earn world’s highest salaries, research says

Published

on

San Francisco, California

RICOWde | Getty Images

Average salaries in San Francisco have risen by 31% since 2018, with the city taking the crown for the highest-paying city in the world this year, according to Deutsche Bank research.

In 2019, people in San Francisco can expect to be paid an average of $6,526 per month — that’s 142% more than the average New Yorker’s income.

Deutsche Bank’s analysis, which compared incomes and living costs in 56 cities worldwide, found that average earnings in San Francisco, where residents had the strongest purchasing power in the world, had increased by 88% over the last five years.

Zurich, Switzerland, came in second, offering an average monthly income of $5,896, although it lost the top spot this year after seeing average earnings decline by 18% over the last five years.

New York City, with average monthly earnings hitting $4,612, was the third highest-paying city in the world. Monthly salaries saw a year-on-year increase of 12% in New York, helping the city hold onto the third spot in the ranking.

Boston and Chicago, which both offer monthly incomes in excess of $4,000, were also ranked among the 10 highest paying cities.

The 10 highest paying cities

  1. San Francisco, U.S.
    Monthly salary: $6,526
  2. Zurich, Switzerland
    Monthly salary: $5,896
  3. New York, U.S.
    Monthly salary: $4,612
  4. Boston, U.S.
    Monthly salary: $4,288
  5. Chicago, U.S.
    Monthly salary: $4,062
  6. Sydney, Australia
    Monthly salary: $3,599
  7. Oslo, Norway
    Monthly salary: $3,246
  8. Copenhagen, Denmark
    Monthly salary: $3,190
  9. Melbourne, Australia
    Monthly salary: $3,181
  10. London, U.K.
    Monthly salary: $2,956

A number of the cities paying the highest salaries had seen a decline in earnings, the data showed. Sydney, Australia, was ranked sixth on the list, but its residents’ incomes decreased 8% year-on-year and were nearly 20% lower than they were five years ago. Meanwhile earnings in Oslo lost 11% since 2018 and were a third lower than five years previous, and London’s incomes were 13% lower than they were last year.

The biggest year-on-year losses were seen in Buenos Aires, Argentina, where a decline of 45% left monthly incomes at $527.

Salaries in Johannesburg, South Africa, fell by 26% and came in at $1,223 per month in 2019, while the Turkish city of Istanbul saw earnings tumble 31%, leaving residents with $433 each month.

Cities offering the lowest monthly incomes were Cairo, Egypt, where residents earned $206, and Lagos, Nigeria, where residents were paid $236 per month, according to Deutsche Bank.

Monthly rent

Hong Kong, which has notoriously high housing costs, was the most expensive city for renting a mid-range two-bedroom apartment. Average earnings came in under $2,500, but rent costs were $3,685 — that’s 127% higher than the cost of renting a similar apartment in New York.

San Francisco and New York were the next most expensive cities for apartment rentals, while Cairo, Bangalore and New Delhi were the cheapest.

  1. Hong Kong
    Monthly rent for average 2-bedroom apartment: $3,685
  2. San Francisco, U.S.
    Monthly rent for average 2-bedroom apartment: $3,631
  3. New York, U.S.
    Monthly rent for average 2-bedroom apartment: $2,909
  4. Zurich, Switzerland
    Monthly rent for average 2-bedroom apartment: $2,538
  5. Paris, France
    Monthly rent for average 2-bedroom apartment: $2,455

Disposable income

Despite being one of the most expensive cities in the world for housing costs, San Francisco’s residents had the most disposable income leftover after paying their rent, with the analysis assuming two working people were sharing a two-bedroom apartment.

According to the researchers, San Franciscans could have $4,710 left to spend each month after paying their rent, which is 149% more than New Yorkers were expected to have leftover.

Residents of Zurich had the second highest disposable incomes, with $4,626 per month leftover after rent. U.S. cities dominated the top five, with Chicago, Boston and New York rounding out the list.

  1. San Francisco, U.S.
    Disposable income after rent: $4,710
  2. Zurich, Switzerland
    Disposable income after rent: $4,626
  3. Chicago, U.S.
    Disposable income after rent: $3,298
  4. Boston, U.S.
    Disposable income after rent: $3,188
  5. New York City, U.S.
    Disposable income after rent: $3,157
  6. Sydney, Australia
    Disposable income after rent: $2,615
  7. Melbourne, Australia
    Disposable income after rent: $2,485
  8. Oslo, Norway
    Disposable income after rent: $2,342
  9. Copenhagen, Denmark
    Disposable income after rent: $2,285
  10. Wellington, New Zealand
    Disposable income after rent: $2,075

Despite being low down when it came to housing costs, people who live in Cairo, Egypt, Dhaka, Bangladesh and Philippine capital Manila had the least disposable income left after paying rental costs, according to Deutsche Bank.

Source link

Continue Reading

Trending