NucTech, Namibia and State Procurement

The corruption scandal in Namibia involving NucTech (link), a firm spun-off from Tsinghua and run by Hu Jintao's son (Hu Haifeng) until he was promoted to head Tsinghua Holdings last May, reminds me of my visit to NucTech a number of years ago when it still had Tsinghua attached to its name. The company seemed to be reliant on state procurement rather than leveraging any internal capabilities just like many other xiaoban qiye (school-run enterprises). The ongoing probe by the EU to look into allegations that NucTech used soft loans from the Chinese government to win customers in the EU (link) suggests that state backing is still critical to its business.

Globalfoundries as an Emerging Competitor?

The announcement that ST will sign on as Globalfoundries' first major outside (i.e. non-AMD) customer (link) could be seen as a sign that the Big Four pureplays (TSMC, UMC, SMIC and Chartered) are headed towards an even more competitive foundry market. The speculation that ST is turning to Globalfoundries because ST was disappointed with TSMC's problems with 40nm technology reinforces the image of Globalfoundries as a serious competitor. I suspect the hype around the ST signing will prove to be just that and Globalfoundries will remain more of a niche player.

Tencent's Search Engine as Competition Policy?

Rumors are floating about that Tencent and Alibaba will release their own search engines. More intriguing still, according to the Marbridge Daily, Tencent's search engine has significant government support because the government wants a domestic competitor to Baidu. My guess is that the government's concern has to do with the lack of competition in this market rather than any dissatisfaction with Baidu's ability to keep the foreigners, well really just Google, at bay.

Lenovo Reinforces Rural Position

Lenovo's new "1+N+N" strategy of having county-level stores, plus township-level retailers and village-based "convenience windows" appears to be a bid to retain its strong hold over channels in rural China. Whether this market will be a base upon which Lenovo can leverage to compete in urban China and abroad or is the beginning of a long slow retreat to the periphery of the PC market to be seen.

WAPI's reappearance

China has once again submitted an application to make WAPI a global standard after several years of quieit on the wireless standards front (link). At least two of China's three major telecom service providers, China Mobile and China Telecom, are requiring WAPI support for all new wireless LAN gear. At least one Chinese report (link) claims that ISO is reconsidering WAPI because WAPI has proven to be far superior in its performance to the IEEE 802.11i standard. I remain sceptical of that claim and the standard (or at least the motives behind it).

China's brands gaining in China

The FT reported this week that Best Buy's Shanghai stores have witnessed a rapid turn away from Japanese and Korean brands and a move towards Chinese ones. Lenovo, Haier and TCL were mentioned specifically. It would be interesting to find out what products are involved in this trend. I suspect foreign brand mobile phones remain strong, but perhaps Chinese consumer are moving towards cheaper Chinese brands in computing.

Morris is Back!

Morris Chang is once again CEO of TSMC. While chairman and CEO of TSMC since its founding, Chang gave up the CEO role to Rick Tsai in 2005. A quick reading of this breaking news would suggest some troubling implications. First and foremost, TSMC may have an Apple problem. Apple without Steve Jobs has proven to be an ineffective company. Is TSMC dependent on Chang in the same manner? Probably not, but does this mean that Tsai is not the answer at CEO for future? If so, then TSMC may face a problematic search for a successor to replace the irreplaceable. Understandably it is hard to replace a semicon industry icon like Chang who is rightfully called the father of the foundry industry, but Tsai did not do too shabby of a job until the worldwide downturn hit. If they aren't happy with Tsai's performance as successor, who will make the board and Morris happy?