Taiwan's MediaTek Signs Huawei Deal
MediaTek, a Taiwan-based semiconductor development firm, has signed a letter of intent to provide 120 million chips to Huawei. This deal boosted MediaTek's share price on the Taiwan Stock Exchange by 5% on Tuesday, lifting the firm's market valuation to RMB13.6 billion ($1.96 billion), CHINAFUND reported.
Huawei hasn't commented on the collaboration, while MediaTek's financial officer said they could not disclose customer information, in accordance with companh policy.
Analysts estimate that MediaTek chips will now comprise two-thirds of Huawei's total supply, based on Huawei's average production of 180 million cellphones annually over the past two years, beating out its rival, Qualcomm.
MediaTek saw RMB16.1 billion in revenues in the second quarter this year, a rise of 9.8% year-on-year, with net profit topping RMB1.74 billion, a rise of 12.4% year-on-year, according to MediaTek's fiscal report in July.
Digitimes Research revealed that Huawei had increased its acquisitions of MediaTek's 800 5G SoC since the second quarter and will likely purchase MediaTek's high-end 5G chips in the second half of the year through the beginning of the next year.
The 5 nanometer 5G chips MediaTek provides will likely support the supply chain for Huawei's flagship handsets, including the P and Mate series. This will mark the first time MediaTek chips will be used in phones retailing above US$1,000, according to China-based data company 36Kr Media.
Beijing Aims To Lift Integrated Circuit And Software Industry
In response to Washington's burgeoning bans on Chinese tech companies, Beijing is calling for domestic innovation and development within the integrated circuit and software industry.
The State Council released on Tuesday evening a notice to promote development of qualified integrated circuit and software industries with eight incentives related to tax, finance, research and development, import and export, talent acquisition, intellectual property, market practice and international collaboration.
In particular, enterprises operating no less than 15 years that are making integrated circuits no bigger than 28 nanometers will be offered a 10-year tax exemption on enterprise income tax. There are also other tax incentives covering less cutting-edge producers.
The policies encourage qualified integrated circuit and software enterprises to list and raise money both domestically and abroad, and speed up the domestic listing review process, said the State Council.
The State Council also called for a ban on selling computers that infringe copyrights, and said it would establish a long-term effective system to protect intellectual property of software. It also pledged to strengthen higher education in tech-related fields.
Regulators Ramp Up Financial Crime Crackdowns
As of Tuesday, China's top securities regulator had conducted investigations leading to a total of 123 fines so far this year, with 23 of them receiving the maximum penalty. The highest fine topped RMB3.625 billion (US$520 million), according to the official website of the China Securities Regulatory Commission (CSRC).
Of the penalties, six of the fines topped RMB10 million. Misuse of information violations accounted for 70% of the fines amount assessed, with 48 illegal disclosures of information and 35 insider trading cases, according to the CSRC.
New technology has allowed the CSRC greater speed and more effective oversight in inspections and legal enforcement. In the past two years, the CSRS has decreased the time needed to conduct an investigation to an average of 133 days, said Deheng Law Firm of Shanghai.
At its recent midyear conference, the CSRC stressed a zero-tolerance policy, emphasizing that it would crack down on financial fraud, fraudulent stock issuance, stock price manipulation and insider trading. Meanwhile, China's Supreme Court released provisions last Friday for representative securities litigation, marking the launch of a class-action lawsuit system for securities investors in China.
The Supreme Court said the system will be a "convenient and low-cost claim channel" for small- and medium-volume investors and will form a strong deterrent to financial crimes.
Frozen Pork Reserve Cools Consumers Demand
China will conduct online bidding for 20,000 tons of frozen pork reserves on Friday, the 27th time such an auction has been held this year, according to China Merchandize Reserve Management Center.
Pork is a major part of the Chinese diet, with an average consumption of 30kg per capita. China's pork production continues to reel from African Swine Flu, which decimated up to 40 percent of domestic livestock, encompassing millions of animals nationwide. Pork imports for the first five months of the year reached 1.72 million tons, the General Administration of Customs said, up by 146% year-on-year. Imports of offal totaled 510,000 tons in this period, up 62%, according to Reuters.
Bidders at Friday's auction have to pay a guarantee deposit of RMB1,000 per ton and operation fees of RMB10 per ton by 5pm on Thursday. The online bidding will start at 1pm Friday via the website of China Merchandize Reserve Management Center, mrm.com.cn.
A Ministry of Agriculture and Rural Affairs spokesman said that pork prices usually rise from June to September, with the second half representing the year's highest sales. The ministry expects one million additional tons of pork will be imported in 2020 compared to the previous year.
There were 9,371.7 tons of reserved frozen pork traded at the previous session on July 30, at an average price of RMB23,487.28 per ton.
Private Airline Becomes State-Owned Asset
Wuxi Communications Industry Group, a wholly state-owned company of the Wuxi municipal government, has purchased privately owned low-cost carrier Ruili Airlines, with Ruili becoming the second private aviation company in Yunnan Province to change ownership this year, China Business Network reported.
Wuxi Communictions announced on Tuesday that it had signed an agreement with Yunnan Jincheng Group regarding the equity transfer framework of Ruili Airlines. The agreement didn't refer to the specific shareholding structure of the airline.
Established in 2014, Ruili Airlines, which is based at Kunming Changshui International Airport, provides both domestic and international services to destinations covering 43 cities around the world. As of this June, the airline had 74 flight routes with 20 Boeing 737 aircrafts.
One month ago, Air Travel in Yunnan Province became majority-owned by the Hunan government and changed its name to Hunan Air Travel.
Analysts said that in recent years, in order to develop the local economy, many local governments have attempted to gain ownership of airlines, as small and medium-size airlines struggle to maintain profitability while facing insufficient resources and high operational costs. Mergers and restructuring have become inevitable now that airlines face increasing fuel costs, weak exchange rates and tepid demand.
