Welcome back,
Tension is the theme of this week’s newsletter, with governments going after each other and major companies as the war to reign supreme on technology ratchets even further.
We’re not just talking about the impending US ban on TikTok, but news emerged this week of ways the Chinese government is reportedly trying to curtail India’s development as a manufacturing hub. In recent years, firms like Apple have diversified their reliance on China to build their hardware with India and Vietnam among those benefitting. India, it would seem, is the one that concerns Beijing the most.
Elsewhere, the US has gone after Tencent and the Chinese firm that makes batteries for Tesla, and Apple is still stuck in limbo with Indonesia, which rejected a proposed $1 billion investment that would create an Airtag factory in the country.
All that and more is in this week’s Asia Tech Review—have a great week,
Jon
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Foxconn is in the middle of a diplomatic fallout after it halted sending new workers to its India-based factories on rotation, according to reports. Instead, the company has sent Taiwanese workers.
On the face of it, workers are workers, but it has raised concerns that the Chinese government is trying to slow India’s development as a manufacturing hub and preserve its status, which has been chipped away by firms moving operations to markets like India and Vietnam.
Other reports have suggested that the slowdown includes delays in shipment of specialised manufacturing equipment from Chinese ports:
While production remains unaffected for now, prolonged delays could hinder Apple’s manufacturing expansion plans in India, sources said.
If China escalates such actions, it could create significant challenges for India’s handset and electronics industry, which is focusing on component manufacturing to strengthen its capabilities, one of the sources cited above said.
India has previously responded aggressively to China over technology, with more than 50 Chinese apps including TikTok banned from the country since 2020. There’s also been action taken against Chinese lending apps operating on Indian soil, too.
This situation is developing but it is reported that Apple and Foxconn have enlisted the help of the Indian government to smooth things over. Watch this space.
One saga that isn’t showing signs of ending is Apple vs Indonesia.
So you’ll recall that Indonesia banned sales of the latest Apple smartphone, the iPhone 16, in October because it did not comply with local rules around manufacturing which require 40% of its components to come from local parts. The ban didn’t affect older versions of the iPhone and Indonesia is a predominantly Android market, with just 10% of devices estimated to be running iOS. But still it remains a huge market with a population of over 270 million people and Southeast Asia’s largest economy based on GDP.
Apple’s response has escalated from an initial $10 million “sweetener”, which would see it invest in a factory in Indonesia to create accessories components for Apple gadgets, to the latest $1 billion investment plan that would include building an AirTag factory.
That’s quite a jump but it isn’t enough as the offer has been rejected because it would see Apple still fall short of its requirements since AirTags are “accessories not core smartphone components.”
But there is more. Apple dispatched a senior executive—VP of Global Affairs Nick Amman—who appeared to have secured the deal with President Prabowo indicating the $1 billion was enough. But Ammann is said to have left Jakarta “empty handed” after a last-minute reversal on the proposal.
It would appear that Apple will either need to sweeten the deal further, or find a solution that meets local component requirements and gives the government a result that goes beyond the $1 billion package.
We know Indonesia negotiates hard, just look at TikTok’s purchase of Tokopedia two years ago. Parent company ByteDance was ultimately left with little choice but to fork out on the $1 billion-plus deal which also found a safe home for one of Indonesia’s marquee tech companies. Apple will need to summon similar puzzle-solving skills.
Key questions to consider are whether Indonesia has the supply chain infrastructure necessary for phone manufacturing and whether this is fundamentally a pipeline issue. India’s experience has shown that replicating China’s capabilities demands significant time and investment, with considerable resistance expected along the way.
RuPay, India’s national alternative to Visa and Mastercard, is gaining significant traction in the country. Key to that is a connection to UPI, the national payment system, which means RuPay card transactions only incur fees to merchants when worth ₹2,000 ($23), that’s more than double the average spend of a UPI transaction.
Some key data points come from TechCrunch, which cites a Bernstein report:
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These figures now account for 28% of all credit card transactions in India, up from 10% last year, according to Bernstein. (RuPay’s credit card figures don’t include swipes at merchant outlets and some other transactions, as that data isn’t available, so its market share is likely even higher.)
Bernstein forecasts RuPay will emerge as the dominant card network in India, already it accounted for half of all new credit cards issued in India in June 2024 thanks to changes that include requiring lenders to allow customers to choose their preferred card network—and equal rewards for RuPay compared with Visa or Mastercard
The US department of defense added a number of Chinese firms including Tencent and Tesla partner CATL to its list of entities that aid Beijing’s military.
Tencent’s share price has dropped over 10% since the move, stoking fears that the US-China tech war may escalate further. Tencent and CATL are both reportedly considering legal action in response. However there is a strong argument that being on the list is little more than negative PR since it carries no penalties or bans.
Officially, the company pledged to work with the Pentagon to cover any misunderstanding, but it also used the occasion to process its largest share buy back since 2006. The company snapped up $193M of its Hong Kong shares as it became the most traded stock in the country last Tuesday in a show of strength and confidence to the market.
Interestingly, during the same week, the US trade office removed Tencent’s WeChat app from its list of counterfeit sellers.
A fascinating new report shed light on how Chinese VCs are aggressively pursuing failed founders’ personal assets and adding them to a national debtor blacklist, a move that’s seen to be disrupting the startup funding ecosystem link
EV battery firm CATL was added to the US government’s black list of military linked companies which is making it tricky for US banks that want to be part of the firm’s $7.7B Hong Kong listing link
Meanwhile cloud-computing and IT infrastructure firm Unisplendour is preparing for a second listing in Hong Kong that could raise about $1B link
The China Integrated Circuit Industry Investment Fund, or Big Fund, has launched a $47B round to strengthen its chip supply chain amid potential US export restrictions link
TikTok is pushing US-based users to its Lemon8 as a looming US ban moves closer to reality, even though the ban would apply to all apps owned by ByteDance link
TikTok has expanded its e-commerce operations into Mexico in response to the ban link
Akamai Technologies will end its CDN services in mainland China from mid-next year, citing geopolitical challenges link
Alibaba Cloud is providing its Tongyi Qianwen large language model to Transsion, Africa’s top smartphone vendor, to power GenAI features on its new device link
Apple has established a $35M data-processing subsidiary in Shanghai which will focus on software development, big data, storage, and data processing, according to Chinese business records link
Microsoft will invest $3B to expand its AI and Azure cloud services in India, aiming to drive revenue growth link
A day after that pledge, Microsoft announced AI partnerships across key sectors, including agreements with the Ministry of Electronics and IT to support the IndiaAI Mission and train 500,000 people by 2026 link
India’s top retail stockbroker platform, is reportedly lining up a domestic IPO this year that could value its business as high as $8B, a big jump on the $3B valuation it got when it last raised venture capital in 2021 link
India may offer new subsidies and tariff cuts to boost local electronics manufacturing, especially for smartphone makers like Apple—the IT ministry has proposed $2.7B in support for components such as batteries and cameras, along with lower tariffs to reduce production costs, sources said link
Foxconn and Dixon Technologies are seeking billions of rupees in subsidies from India’s production incentives program, arguing they qualify for unallocated funds after some firms missed production targets link
After much speculation, it seems Flipkart has now hired Dunzo co-founder Kabeer Biswas to lead its quick commerce push through its Flipkart Minutes service—Flipkart had been in talks to buy Dunzo outright a year ago but a deal fell through due to rival Reliance’s presence as an investor link
Singapore has banned crypto-focused prediction market platform Polymarket as part of a national crackdown on online gambling sites link
Lim Der Shing is a long-time startup investor in Singapore and his annual roundups always make for insightful reading: this year’s theme suggests the bottom may be in but there’s no obvious sign of new investment. That said, he does note that founders are generally operating more conservatively and early-stage/angel funding is growing positively link
Singapore’s Data Edge raised $1.6B, including $1B in debt financing, for its data centre business, which spans 21 facilities across Asia link
GoTo CEO Patrick Walujo will lead the company until 2029, extending his efforts to turn around its unprofitable business—his tenure has seen job cuts and divestments that have cut some of the bleed, but the share price has tumbled 40% during that period link
Malaysia is reviewing whether LinkedIn needs a social media license—officials are assessing if the platform exceeds the 8 million user licensing threshold link
Chinese smartphone maker Honor targets Indonesia’s growing appetite for premium handsets link
Singapore is considering minimum-age laws for social media use and is in talks with Australia, which recently banned under-16s from platforms like Facebook link
Bukalapak will stop selling physical goods, citing fierce competition from TikTok Shop and Shopee—it will shift to virtual products like mobile credits and electricity tokens and end orders for physical goods in February link
GCash, the Philippines’ largest fintech platform, has reportedly selected banks for a potential IPO this year, following on from rumours last year link
Thai police have seized 996 Bitcoin miners from a company that allegedly stole huge amounts of electricity to run the devices link
Chinese state-sponsored hackers breached the Philippine government’s executive branch, stealing sensitive data in a yearslong campaign, according to sources link
South Korea is leading the global robotics race, with factories deploying 1,012 robots per 10,000 employees—over six times the global average, according to the International Federation of Robotics link
Samsung’s quarterly profit missed estimates, with a 6.5 trillion won ($4.5 billion) operating profit for Q4, below the projected 8.96 trillion won, as it struggles to regain market share in AI chips and smartphones link
South Korea is reportedly looking to lift its ban on institutional trading of cryptocurrencies link
Toyota plans to move the first 100 residents, mostly employees and their families, into its futuristic Woven City near Mount Fuji this fall, expanding to about 2,000 residents in initial phases link
Toyota is exploring rockets and has made its first investment into Interstellar Technologies link
Japan accused Chinese hacking group MirrorFace of breaching dozens of government bodies, companies, and individuals since 2019 link
Apple is reportedly doubling down with a second chip at TSMC’s Arizona facility, according to friend of ATR Tim Culpan’s newsletter (which you should already subscribe to) link
Foxconn beats estimates with record fourth-quarter revenue on AI demand link
TSMC’s fourth-quarter revenue beats market forecast on AI demand link
The number of Chinese cyberattacks on the Taiwanese government averaged a staggering 2.4M a day in 2024, double the previous year, according to a report link
Dublin-based Nomupay raised $37M at a $200M valuation to grow its payment business which focuses on cross-border payments in markets across Asia and the Middle East which are overlooked by the likes of Adyen and Stripe—Nomupay claims to have doubled revenue annually for the last two years and it is forecasting $20M in ARR which will make it profitable this year link
The US DoJ announced the indictments of Russian citizens Roman Vitalyevich Ostapenko, Alexander Evgenievich Oleynik, and Anton Vyachlavovich Tarasov who are accused of operating services that help criminals launder cryptocurrency link
