Telecom chips move in-house and the US takes aim at TikTok

Hi all, this is Lauly from Taipei.

I’m still slowly recovering from a very bad cold that I caught at the Mobile World Congress in Barcelona two weeks ago — but at least I’ve got my voice back! After conducting more than 30 interviews in less than a week, including some with my colleague Cheng Ting-Fang, my voice was so deep I sounded like a less musical Miley Cyrus. By the end of the industry event, I could barely squeeze out a sound.

And that wasn’t the only mini-drama. On the first day of the trade show, just as I was heading into the metro station, a staff member asked everyone to leave because the train had “unexpectedly” halted operation. My mind went blank for a few seconds. I had to get to the venue for an interview with the CEO of HPE, the world’s second-largest server provider. Many other people, most of them apparently heading to the MWC as well, looked as shocked as I was.

A very kind Chinese man offered to share an Uber with me, though we had to wait 20 minutes for a car. The man turned out to be an executive with Huawei in Europe. We talked about 5G, 6G and low Earth orbit satellite communications on the way. In contrast to the optimism of HPE, Dell, Microsoft and others, he was more conservative about the prospects for 5G this year. His view was there are no signs of a global economic recovery and telecom operators are becoming more cautious in their spending.

Back in Taipei, Acer chairman Jason Chen is also looking for signs of a recovery, in this case in the PC market.

Speaking to reporters this week, he said his company’s most immediate challenge was the volatile prices of displays, which have been fluctuating violently due to supply gluts. The PC industry has been in a downturn for two years and has yet to show a robust recovery despite the recent buzz about AI-powered PCs.

“If we don’t control our key component procurement properly, we might have to log loss of inventory valuation. So we have to be extremely careful,” Chen said.

Telecom goes custom

Ericsson and Nokia, the world’s two leading telecom equipment suppliers, are following their Chinese rival Huawei Technologies in stepping up their chip design capabilities to better compete in the 5G era, Nikkei Asia’s Lauly Li and Cheng Ting-Fang write.

In-house chip development will give the equipment makers more control in programming the features and performances they wish to have, further differentiating their products from competitors. However, such efforts are not easy or cheap.

“We saw that with 5G, it becomes much more important to do [chip development] in-house than it used to be,” said Freddie Sodergren, Ericsson’s head of technology and strategy for business area networks.

Sodergren said the company has been expanding its investments in semiconductors in the past six or seven years, including a new site in Austin, Texas, and an expanded team in Sweden. It now has “several hundreds” of engineers dedicated to chip development, he added.

Ericsson’s Finnish rival Nokia has taken a similar approach, launching its ReefShark line of system-on-chip (SoC) products in 2018.

“We are aware that from 4G moving to 5G and now to 6G, the capabilities and understanding of what the requirements are are very much linked to how we can actually deliver a greater performance with lower power consumption,” said Jane Rygaard, Nokia’s global head of corporate partnerships. “Of course, we could continue to go out and buy [chips], but when it comes to how we want to have the performance and how we want to have the stability, that means the design [needs] to be in-house.”

The price of quitting

After graduating from a Shanghai university in 2022, self-described introvert Yao joined the grocery operations of the city’s fastest-rising tech giant, Pinduoduo.

A year later, he left and joined a rival. He was soon put under surveillance by his former employer. A subsequent labour arbitration case means he now owes the Pinduoduo around double the amount he earned during his year of working there.

Yao is one of at least a dozen former Pinduoduo employees who have found themselves trapped by non-compete agreements they claim they were required to sign, according to an investigation by the Financial Times’ Nian Liu and Ryan McMorrow.

Chinese labour lawyers say domestic tech companies have turned to abusing such contracts to discourage even the lowest-level employees from leaving for rivals.

Pinduoduo-related cases reviewed by the FT suggest the company has repeatedly used surveillance on former workers and then lawsuits to enforce non-competes.

Former employee Aaron said Pinduoduo hired a team of private investigators to stalk him. “They’d follow me from my home, from when I went out in the morning . . . all the way to where I work, and take videos of me entering the building,” he said.

A place in the shake-up

VinFast, the Nasdaq-listed Vietnamese electric vehicle maker, has set a target of wooing drivers in 50 markets, from the US to India, an ambitious goal given many of them have likely not heard of the company, writes Nikkei Asia’s Lien Hoang.

Chairwoman Le Thi Thu Thuy shared her reasons for optimism at the Nikkei and Financial Times’ Asia Green Tech Summit.

“Honestly, we feel like there’s an opportunity for a company from Vietnam like us to be a global company when the auto industry is going through a very structural change,” Thuy said.

VinFast’s share price has plunged since August, and the company acknowledges the window to act won’t remain open for long as investors’ patience for losses wears thin. Its shares traded at around $5 on Tuesday versus a peak of $82 in August.

The global EV crown is up for grabs as brand loyalty towards gas-powered cars fades. But even giants like Tesla and Toyota must prove themselves in this new field, and VinFast, which began making EVs in 2021, has gotten off to a rocky start. Despite its blockbuster Nasdaq debut, it has faced poor industry reviews and a recall that followed its entry into the US in 2023.

The US vs TikTok

The US House of Representatives has passed a bill that would ban TikTok in the country unless it cuts ties with its Chinese parent company ByteDance within six months, Nikkei Asia’s Yifan Yu reports.

But the fate of TikTok, which 170mn Americans use to share and flip through short videos, is far from certain as the bill heads to the Senate. The legislation also faces an unlikely but powerful opponent: Donald Trump. The former president once tried to ban the video app himself but now says doing so would benefit Facebook, a platform he considers an “enemy of the people”.

The bipartisan bill, titled Protecting Americans from Foreign Adversary Controlled Applications Act, calls for a ban of TikTok and any “successor applications” developed by ByteDance unless the Chinese tech group divests its shares.

If the Senate passes the bill, it will then go to President Joe Biden’s desk to be signed into law. Biden has vowed to sign the bill if it passes.

TikTok critics have long argued that ByteDance would share data on US users with the Chinese government or pressure TikTok to promote Beijing’s views. TikTok has said it would not comply with such demands if they were made.

Suggested reads

1. South Korean chipmakers halt old equipment sales over fears of US backlash (FT)

2. Space One’s Kairos rocket explodes just after lift-off in Japan (Nikkei Asia)

3. Japan chip stocks slump amid signs of overheating (Nikkei Asia)

4. Malaysia: the surprise winner from US-China chip wars (FT)

5. China’s love affair with Apple and Tesla hits rocky patch (FT)

6. China’s lidar technology faces intensified scrutiny in U.S. (Nikkei Asia)

7. Washington pushes allies to tighten China chipmaking restrictions (FT)

8. Alibaba to improve stock options and other incentives for employees (Nikkei Asia)

9. Anyone for crickets? Vietnam company aims to serve up insects in Singapore (Nikkei Asia)

10. US lawmakers tune out TikTok lobbying to advance bill to ban app (FT)

#techAsia is co-ordinated by Nikkei Asia’s Katherine Creel in Tokyo, with assistance from the FT tech desk in London.

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