Friday, August 28, 2009

Ctrip takeover as a window on Taiwan's debate on China

Some have assumed under Ma Yingjiu's leadership further substantial economic integration with Mainland China was a given for Taiwan. At least they did until Ma's ratings were thrashed by the ramshackle government response to Typhoon Morakot. However, even before this natural disaster, the media commentary on Ctrip's (China's Travelocity/Expedia) unannounced effective takeover of a controlling share of ezTravel, its Taiwanese equivalent, demonstrates the deep fissures in Taiwan on the issue of economic integration. The narrowly focused economics media, such as CENS, treated this news without alarm (link here) and the China Times, which occupies the middle ground in Taiwan's political specturm with a slight tinge of KMT blue, even heralded it as creating a Chinese travel services brand (link here) but the very green (i.e. pro-Taiwanese independence) Liberty Times treated it with alarm as an invasion by a Chinese company which was just masquerading as a foreign firm (link here).

Wednesday, August 26, 2009

China Solar Hype?

Keith Bradsher's piece in the New York Times yesterday (link here) suggests that China solar panel makers are going to take over the US market even as the US federal government subsidizes investment in solar energy. He makes the good point that some of these Chinese solar panel operators are heavily government supported i.e. subsidized, but there are some reasons not to count out US competitors just yet. While the Chinese use crystalline silicon to make their panels, the world's largest solar module maker, Arizona's First Solar, uses thin film technology to remain the world's cheapest panel maker per KWH.
Meanwhile EE Times has suggested that Centron Solar will provide the organization that links disparate Chinese solar panel makers to its own sales operation in the US (link here). However, there are questions about Centron's scale as a company and how many panel makers it actually represents (link here).

Wednesday, August 19, 2009

Inspur (Langchao) and Qimonda

Inspur (浪潮) has now publicly confirmed (link) that it is buying Qimonda's design center, reports of which I wrote about in my August 11 post. The rationale of realizing synergies and expanding across the value chain offered by Inspur for the purchase still seems rather dubious to me.

Friday, August 14, 2009

Jingxin and Freescale

A report on Netease claims that Jingxin, a fabless design subsidiary of Techfaith, has bought Freescale's mobile chip unit (link). If true, this represents a major coup for Techfaith and Jingxin. The acquisition will bolster the value of the design services Techfaith can offer and Jingxin through its ties to Techfaith will present a strong challenge to likes of Spreadtrum.

Wednesday, August 12, 2009

CAS and Legend Holding's Corporate Governance

Given that the Chinese Academy of Sciences (CAS) has over 500 corporations under its umbrella, the announced goal to reduce the CAS' shares in each firm to 35% or less makes some sense since CAS can't possibly monitor all 500 firms effectively. Still, it was amusing to hear CAS state that one of the reasons it wants to sell 29% of Legend Holdings (CAS' total stake is 65%) is to improve corporate governance when it also insists that the buyer of the stake must to commit to not pressing for any change in the management or strategy of Legend Holdings for the next five years.

Tuesday, August 11, 2009

Buying Qimonda's China Assets

According to Taiwan's China Times newspaper(link), the Shandong-based Langchao Group will buy Qimonda's R&D facility in Xi'an and the Huarun Group will buy Qimonda's assembly and testing plant in Suzhou. The Taiwanese newspaper sees this as a strategic move for China to occupy upstream and downstream memory technologies and complete the DRAM production chain in China if one includes Korean Hynix's fab in Wuxi. There are several problems with this analysis. First, who cares about completing the production chain within one country. The critical segment of memory, the fabrication--which itself is hard to separate cleanly from the design in these memory products, is still in Korean hands. Second, it is really unclear what use the R&D facility in Xi'an will be to Langchao. Can this group of engineers in Xi'an create a manufacturing-ready cutting edge DRAM design? Probably not. And even if they could, would Langchao be able to do anything with it?

Perhaps Langchao's move is related to the rumors of the Shandong provincial government's own plans to build an IDM or pureplay foundry in the provincial capital of Jinan (see my very unromantic February 14 post). Combining this R&D facility with an actual fab makes the most sense in terms of utilizing a memory design R&D facility, but entering the memory business at this stage seems foolish from both a public policy and commercial perspective. Unfortunately, that may not stop Shandong and Langchao from investing.

Saturday, August 8, 2009

Lenovo's Retreat to the China Market

In my July 11 post, I asked if Lenovo's efforts to consolidate its sway in rural China and the domestic market more generally were creating a position from which it would try to compete again in the global market or simply represented a retreat from the global marketplace. Second quarter results are suggest a tentative answer. On the surface, Lenovo appears to be regaining global market share, but the reality is that Lenovo is gaining in China while losing more the global market in Europe and North America (link). As Bruce Einhorn observed recently at his BW blog, Lenovo appears to be sliding back to the very China-oriented market position it had before purchasing IBM's PC division (link).

Friday, August 7, 2009

One Chairman, Two Companies? More Signs of a Grace-Hua Hong Merger

Hua Hong after four months of reorganization has announced that Mr. Wenbiao Fu will be the new chairman of the firm (link). This appointment suggests that the Grace-Hua Hong merger (see my post from November 1 2008) is finally going to reach fruition as Mr. Fu is already serving as chairman of Grace, a post he assumed on February 12 after stepping down as Chairman of the powerful municipal government agency, the Shanghai Municipal Informatization Committee.