YOUR WEEKLY TECH INSIGHT FROM ACROSS THE GLOBE
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Chinese authorities are likely to announce a fine of at least 8 billion yuan ($1.1 billion) on Ant Group as soon as Friday, sources with direct knowledge of the matter said, bringing an end to the fintech company’s years-long regulatory overhaul.
The People’s Bank of China, which has been driving the revamp at Ant after its $37 billion IPO was scuttled in late 2020, is expected to disclose the fine in the coming days, the sources told Reuters.
Revival of IPO?
The penalty, which would be one of the largest ever fines for an internet company in the country, will help pave the way for the fintech firm to secure a financial holding company license, seek growth, and eventually, revive its plans for a stock market debut.
For the broader technology sector, an Ant fine would mark a key step towards the conclusion to China’s bruising crackdown on private enterprises that began with the scrapping of Ant’s IPO and which has subsequently wiped billions off the market value of several companies.
Ant restructuring
Since April 2021, Ant has been formally undergoing a sweeping business restructuring, which includes turning itself into a financial holding company that would subject it to rules and capital requirements similar to those for banks.
Any announcement of the fine on Ant would come soon after China’s ruling Communist Party appointed central bank Deputy Governor Pan Gongsheng as the bank’s party secretary, a move two policy sources told Reuters would be a prelude to appointing him governor.
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China is restricting the exports of two metals key to the manufacturing of semiconductors, its commerce ministry said late Monday, a warning to Europe and the United States in their escalating technological trade war over access to microchips.
These new regulations — imposed on grounds of national security — will require exporters to seek a license to ship some gallium and germanium compounds starting Aug. 1, China’s commerce ministry said.
Applications for these export licenses must identify importers and end users and stipulate how these metals will be used.
Gallium and germanium
Germanium has several uses, including in solar products and fiber optics. The metal is transparent to infrared radiation and can be employed in military applications, such as night-vision goggles.
The solar panels that contain germanium have applications in space.
Gallium is used for manufacturing the gallium arsenide chemical compound, which can make radio frequency chips for mobile phones and satellite communication, for example. That compound is also a key material in semiconductors.
Battle in the chip war
This move is part of an intensifying global battle for technological supremacy — with China as the world’s largest source of both metals, according to a European Union study on critical raw materials this year.
“It is a shot across the bow intended to remind countries including the United States, Japan, and the Netherlands that China has retaliatory options,” Eurasia Group analysts, Anna Ashton, Xiaomeng Lu and Scott Young wrote in a note.
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Samsung Electronics said it expects a 96% profit plunge in the second quarter of 2023 as weak demand for memory chips persists.
The world’s largest dynamic random-access chip maker estimates operating profit in the quarter from April to June to be 600 billion Korean won ($459 million), down from 14.1 trillion Korean won in the same period last year.
Possibly the lowest profit in 24 years
This would be the company’s lowest quarterly profit since the 590 billion won recorded in the first quarter of 2009, according to the company’s past earnings data.
The second-quarter profit forecast is largely in line with analysts’ expectations for 555 billion Korean won, Reuters reported, citing a Refinitiv SmartEstimate.
Samsung also estimated revenue in the second quarter to be 63.75 trillion Korean won, down 17.4% from 77.2 trillion Korean won a year ago.
The company is set to release its full earnings report on July 27.
May benefit from Micron ban
In April, Samsung said it would be making a “meaningful” cut in memory chip production, following the lead of smaller rivals such as SK Hynix and Micron.
“With that, we assume that the prices can rebound the end of this year or early next year,” SK Kim, executive director of Daiwa Securities Capital Markets, told CNBC.
Kim furthered added that Samsung may benefit from the additional demand resulting from the U.S. barring sales of Micron products in China. U.S.-based Micron is the third-largest DRAM chipmaker after Samsung and SK Hynix.
Samsung shares fell 2% in Friday morning trade.
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The European Commission said Thursday that it’s opened a comprehensive and “in-depth” investigation into Amazon’s planned $1.7 billion acquisition of Roomba maker iRobot.
The executive arm of the EU said it was concerned the transaction might restrict competition in the market for robot vacuum cleaners, and would further strengthen Amazon’s position as an online marketplace provider.
The Commission, like its U.S. antitrust counterpart, has the power to block the proposed acquisition. Shares of iRobot were little changed on the news.
iRobot vs Shark
Among the Commission’s concerns are that Amazon would be able to engineer search results in favor of iRobot, leaving competitors like Shark and Dyson at a disadvantage in marketing to Amazon’s millions of users.
Concerns were also raised about Amazon’s use of iRobot user data, which the Commission said might provide the company “with an important advantage” over rivals and “raise barriers to entry and expansion” for current or future competitors.
Under review by FTC
Amazon announced the iRobot deal last year as part of an effort to expand its presence in the smart home.
The Competition and Markets Authority, Britain’s antitrust watchdog, cleared the deal in June. It’s still under review by the U.S. Federal Trade Commission, which has requested information from iRobot multiple times on the deal, according to regulatory filings.
“We continue to work through the process with the European Commission and are focused on addressing its questions and any identified concerns at this stage,” an Amazon spokesperson told CNBC in a statement.
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Three decades after inventing the web, Tim Berners-Lee has some ideas on how to fix it
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The internet landscape is now disempowering for individuals, and its inventor Tim Berners-Lee and Inrupt CEO John Bruce share their visions for the future of the web.
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