It’s a bad time to invest in China. After the escalating feud between ZTE and the US, more Chinese companies are feeling the brunt of tense Sino-American relations.
Presently, Chinese phone maker Xiaomi has made a lackluster debut on the stock market. Expecting a valuation of over US$ 100 billion, the company has punched in only US$ 54 billion in valuation, making only US$ 4.7 billion in the IPO.
As for individual stocks, Xiaomi opened to a tepid HK$ 16, much less than their expected HK$ 17.
Prior to the debut, controversies have mired the Chinese market. Just from the company’s perspective, Xiaomi has notoriously expanded their product lineup to include the divisive lifestyle market, most of which have not seen overwhelmingly positive returns yet.
Additionally, ZTE’s troubles with the American government have signaled that Chinese products still aren’t welcome in the West. So far, the issue has affected sales of other Chinese companies including Xiaomi and Huawei, despite their popularity in other countries. Of note, both companies still top the charts all over the world.
Regardless, Xiaomi CEO Lei Jun remains confident that their disappointing IPO is only a minor setback to their overall plans. More importantly, he cites that Xiaomi’s goal of maintaining only a five percent profit is still on track.
However, the IPO trouble will undoubtedly cause speed bumps with the company’s plans to expand to the US later this year.
Update (7/10/2018): After the tumultuous debut, Xiaomi’s stocks showed signs of life the day after. During afternoon trading, the shares’ value rocketed up by 9 percent. As a result, their price increased by as much as HK$ 18.56, well above the company’s expectations.
The jump came as Xiaomi announced its inclusion into the Hang Seng Composite Index. The move allows investors from mainland China to invest in Xiaomi’s stocks. Arguably, Chinese investors show more interest toward the company’s future compared to other foreign investors looking at the political issues in the US.
Xiaomi had already decided on the inclusion in the past. However, the company opted to postpone the move in favor of the Hong Kong debut.
OPPO wants to build its own chipsets, hires talent from MediaTek
Also trying to tap Qualcomm and Huawei talent
In the last few years, the US war against Huawei has ramped up considerably with no end in sight. However, though the crackdown was against only a few Chinese companies, other seemingly innocent companies have found themselves just as affected as Huawei. For one, American companies, like Google and Qualcomm, have to deal with the loss of a valued client. On the other side of the Pacific, other Chinese companies are also feeling the heat from Huawei’s troubles.
For example, OPPO has started developing its own processors in the wake of Huawei’s chip problem. Last year, the Chinese company filed a new trademark — named the OPPO M1 — through the European Union Intellectual Property Office, according to LetsGoDigital. Presumably, the new property corresponded to an upcoming in-house processor. However, the M1 has since faded into oblivion.
Today, according to Nikkei Asian Review, OPPO has not abandoned its processor project. In fact, the company has started ramping up its efforts for an in-house chip. “OPPO has been aggressively recruiting chip talent since last year as they realized that owning the chip design capability will give it more control over its supply chain,” Nikkei’s source said.
OPPO has reportedly acquired high-ranking executives from MediaTek including a former executive for Xiaomi. Further, the company has tried tapping developers from Qualcomm and Huawei’s HiSilicon.
Much like Huawei’s efforts, OPPO’s aggressive hiring aims to build a team for in-house development. Currently, OPPO still relies on third-party suppliers to build its phones like Qualcomm and MediaTek. With Huawei being attacked on all fronts, OPPO is in as much risk if the US implements a wider ban against Chinese companies. Recently, the US wants to take away Huawei’s ability to make its own in-house chips.
iPhone 12 series will get almost all its OLED screens from Samsung
Around 80 percent!
By now, it’s no surprise that Apple sources some of its components from its competitors. Notably, the company obtains a portion of its screens from Samsung, one of the world’s most prominent screen suppliers. However, an upcoming report predicts a larger ratio than expected.
As reported by MacRumors, Apple will supposedly source around 80 percent of its OLED supply for the upcoming iPhone 12 series from Samsung. Meanwhile, the remaining 20 percent will come from LG and BOE. According to previous rumors, Apple was already talking with Samsung and LG prior to the report.
Of course, this isn’t the first time Samsung took a majority of the iPhone’s main supply line. Notably, the iPhone X obtained all of its OLED screens from Samsung Display. The iPhone X was the company’s first OLED smartphone.
Previously, rumors predicted five new iPhone models coming this year. Earlier this year, Apple launched the first model, the new iPhone SE. Naturally, because of the model’s budget-friendly positioning, the iPhone SE only had an LCD screen.
Hence, after the iPhone SE, Apple is still slated to launch four more models this year — presumably from the entire iPhone 12 series. According to more rumors, Samsung will provide the screens for three of these models, leaving the final model for LG and BOE.
If no further delays hamper Apple, the iPhone 12 series will still launch later this year.
Philippines wants to tax Netflix, Spotify to increase coronavirus relief funds
Might add 12 percent to current prices
After two months of community lockdowns, the Philippines’s response to the pandemic remains controversial at best. At the time of publishing, the country has 14,035 confirmed cases of COVID-19 and 868 deaths.
Recently, Congressman Joey Salceda, currently chairing the Committee on Ways and Means, has proposed a new tax aimed against the country’s biggest social media and entertainment platforms: Facebook, Google, Netflix, YouTube, and Spotify.
Currently, the globally recognized companies are not taxed for putting up ads for goods on online marketplaces in the Philippines. Meanwhile, other entities still pay the 12 percent value-added tax.
As reported by Reuters, the proposed tax will siphon more funds into the country’s pandemic response, including a “national broadband project and digital learning [programs].” However, the bill’s provisions are not available to the public yet.
According to the Philippine Daily Inquirer, the tax is against both currently untaxed advertising and services. For merchants selling goods and advertising online, “only 50 percent… pay VAT.” Further, Salceda proposes that digital advertising, especially those done by foreign companies, must course through an official country representative.
For services, Salceda suggest an additional 12-percent tax on entertainment subscriptions. However, a big question lies on who will ultimately carry the blow of the new tax. Is it the company itself or the consumers through higher subscription fees? Right now, Netflix and Spotify subscriptions are slightly lower than their American counterparts. Netflix Philippines has declined to comment.
However, as a bill is still just a bill, no one knows if and when the new tax will push through.
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