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YOUR WEEKLY TECH INSIGHT FROM ACROSS THE GLOBE

Friday May 19 2023

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Alibaba misses expectations, plans to list cloud division, as Tencent posts fastest jump in quarterly revenue

Alibaba announced plans on Thursday to spin off its cloud division as a separate, publicly traded company, while the Chinese e-commerce titan’s quarterly revenue missed expectations.

Here’s how Alibaba did in the quarter, which ended March 31, 2022, compared with Refinitiv consensus estimates:

Revenue: 208.2 billion Chinese yuan ($29.6 billion) vs. 210.2 billion yuan expected, up 2% year on year
Non-GAAP diluted earnings per share: 1.34 yuan vs. 2.08 yuan expected, up 35% year on year

The report is Alibaba’s first since splitting into six units and is also the first whose numbers reflect China’s reopening. The country in December abruptly ended its strict Covid controls, such as lockdowns and travel restrictions.

U.S.-listed shares of Alibaba fell 5.4% on the news, while Hong Kong-listed shares were last down 5.2%.

Bounce back to growth

Tencent also reported earnings Wednesday. The company saw an 11% jump in quarterly revenue Wednesday, marking its fastest growth in more than a year, boosted by a big rebound in payment volumes, ad sales, and gaming.

Here’s how Tencent did in the first quarter, versus Refinitiv consensus estimates:

Revenue: 150 billion Chinese yuan ($21.4 billion) vs. 146.09 billion yuan expected, a rise of 11%% year on year.
Profit attributable to equity holders of the company: 25.8 billion yuan vs. 31 billion yuan expected, a rise of 10% year on year.

The results mark a strong bounce back to growth for Tencent after a succession of negative and flat quarters. The company said in its earnings that it benefited from a solid recovery in domestic consumption in China, which finally began easing its aggressive Covid-19 restrictions in December.

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Britain launches $1.2 billion semiconductor plan after U.S. and EU splurge on chips

The U.K. on Friday announced up to £1 billion ($1.24 billion) of support for its semiconductor industry, seeking to boost its domestic chipmaking capabilities and prevent further disruptions to supply after cries for help from bosses at some of the country’s leading firms.

The investment will form part of a 20-year strategy on semiconductors — which has faced lengthy delays — outlining the U.K.’s plan to secure its chip supplies and protect against national security risks.

Increased international collaboration

The U.K. will look to increase cooperation with international partners as part of its strategy. This week, Britain struck a deal with Japan to boost collaboration on defense and semiconductors.

“Our new strategy focuses our efforts on where our strengths lie, in areas like research and design, so we can build our competitive edge on the global stage,” British Prime Minister Rishi Sunak said in a statement.

Different approach

Rather than match some of the mega spending commitments tabled by regions like the U.S. and EU, the U.K. is setting out a different approach that aims to boost the areas it has expertise in.

Officials admitted it wouldn’t make sense for the U.K. to build its own massive fabrication plants, such as those operated by Taiwan’s chipmaking giant TSMC for making the most advanced chips.

Instead, they are focusing on other parts of the semiconductor industry, such as intellectual property and design and producing non-silicon chips.

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Ex-Apple employee accused of stealing trade secrets is exec at Baidu self-driving car joint venture

On Tuesday, the U.S. government accused a former Apple employee, Weibao Wang, of stealing trade secrets from the company’s self-driving car division, including the entirety of Apple’s “autonomous” source code.

The U.S. government did not identify in the charging documents who Wang works for now, but according to Reuters and several company profiles, Wang is an executive at Jidu, an electric vehicle joint venture between Chinese internet company Baidu and Chinese car maker Geely.

Attempts to ‘corrupt insiders’

Wang worked as a software engineer at Apple from 2016 to 2018, a DOJ indictment said. Wang worked on Apple’s Annotation Team and was granted “broad access” to databases which the Justice Department said could only be accessed by 2,700 of Apple’s 135,000 employees.

The U.S. government is concerned that Beijing is using various tactics to steal proprietary information from American companies, including “corrupting insiders.” Tuesday’s announcement was part of a Department of Justice task force designed to “counter efforts by hostile nation-states to illicitly acquire sensitive U.S technology.”

Third former Apple employee

Wang is the third former Apple employee to be accused of stealing autonomous trade secrets for China.

The allegations against Wang come after another Apple employee, Xiaolang Zhang, pleaded guilty in San Jose federal court to a similar theft involving trade secrets in Apple’s car division.

Both Zhang and Wang were working at Apple’s autonomous division at the same time, and both left their employment at Apple in 2018.

Another employee, Jizhong Chen, was also facing federal charges over his alleged 2019 theft of sensitive information.

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Tether buys bitcoin with a portion of its net profit to back USDT stablecoin

Cryptocurrency giant Tether said on Wednesday it would invest 15% of its net profit into bitcoin to “diversify” the reserves that back its USDT token, which aims to stick to a 1-to-1 peg to the U.S. dollar.

That would amount to roughly $222 million, based on the company’s last attestation report, which provides a breakdown of the assets that make up its USDT reserves as well as excess reserves and profits.

Perceived strength of Bitcoin

USDT is the largest stablecoin in the market, with a circulating supply of more than $82.8 billion, according to CoinGecko data.

A Tether spokesperson clarified the bitcoin it purchases would amount to only a small portion of its overall net profit, with the bulk of excess income being spent on running the business, including bank fees.

“The decision to invest in Bitcoin, the world’s first and largest cryptocurrency, is underpinned by its strength and potential as an investment asset,” Tether CTO Paolo Ardoino said in a statement.

Crypto as gambling?

Separately, the Treasury Select Committee of the U.K. said the heightened volatility and potential to lose huge sums of money mean that cryptocurrencies pose significant risks to consumers.

“Given retail trading in unbacked crypto more closely resembles gambling than a financial service, the MPs call on the Government to regulate it as such,” U.K. lawmakers said.

The Treasury committee said it was concerned by government proposals to regulate consumer crypto trading as a financial service, which might lead people to believe crypto trading is safe and protected, when this is not the case.

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Three decades after inventing the web, Tim Berners-Lee has some ideas on how to fix it

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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