Your semi-weekly dose of China's tech
April 20, 2022
Read this email in your browser 

"Chinese fabs and fabless companies potentially face the most delays in getting products to market."

Stewart Randall on China's lockdown measures hitting the country's semiconductor industry
If this email was forwarded to you, subscribe here. Otherwise, send it to your friends—they'll be grateful.

TechNode stories

What's going on at TechNode

1. SILICON | How Shanghai’s semiconductor industry is coping with lockdown (Views)
The semiconductor supply chain faces a new problem: the Shanghai lockdown. Shanghai is an important center for the semiconductor industry in China holding a complete supply chain of design, fabrication, and ATP (assembly, test, and packaging). In each of these verticals, Shanghai accounts for roughly 20% to 25% of China’s sales. The city is also famous for SMIC, China’s premier chip fabrication company.

In addition, Shanghai’s semiconductor industry is connected to its own electronics industry as well as nearby tech zones in Kunshan and Suzhou, which house electronics manufacturers such as Luxshare, Wistron, Pegatron, Foxconn, Logitech, Bosch, and Plantronics, among others. Many of these companies are customers of the semiconductor companies and also have operations or factories in Shanghai linked with the international ports there.

2. Ant expands in Asia and Europe as more countries begin to reopen
Ant Group, the company behind China’s popular mobile payment service Alipay, is seeing an accelerated adoption rate for its payment services outside of China, less than two years after launching a pilot cross-border payment project. 

The company has pushed to expand in Asia and Europe as countries begin to reopen and offline shopping activities recover. 

3. Apple’s supply chain in China hit hard by lockdowns in eastern China
Apple’s supply chain companies in China face major production disruptions as Chinese cities follow the country’s strict covid policies with full and partial lockdowns since late March to tackle a new wave of Covid-19 outbreaks. Although Shanghai and nearby cities have recently begun to assist manufacturers in resuming operations, analysts still expect major disruptions to Apple’s shipments. 

China plays a vital role in Apple’s supply chain and its global shipments, with Chinese factories accounting for almost half of Apple’s total supply chain. iPhone shipments could fall behind by 6 to 10 million units, according to one analyst quoted by 9to5mac, an Apple daily news site. Meanwhile, expected arrival times for some iPad and Mac models have also been disturbed by weeks-long delays. 

4. The Big Sell | Will Shanghai lockdown change the game for community group buying? (Paywall)
In locked-down Shanghai, Zhang Chen was standing by her community gate, waiting to pick up apples to be delivered to her apartment compound. She reveled in her luck at striking the apple deal because fruit had become a rare treat in the metropolis locked down since late March in response to a new Covid-19 outbreak. The city authorities prioritize delivering essential foods like rice and vegetables to the city’s 25 million residents. 

A neighbor who bought 15 kilograms of apples through a community group’s bulk buy last week was willing to split the order with her, saving Zhang days of waiting in this challenging time. 

Some Shanghainese have been locked in their homes since early March, when the city was only doing partial lockdowns. Shanghai began a two-stage city-wide lockdown on March 28 and promised to reopen by April 5, which never happened. The lockdown has been extended, and as of the time of writing, most of the city is still under lockdown. The unexpected long locking period has left many residents unprepared and scrambling to find food and supplies.  

News feed

Bite-sized news updates on China’s tech world

Monday, April 18
  • JD is relocating 3,246 delivery and sorting workers to Shanghai to alleviate delivery pressures in the Covid-hit metropolis, local media outlet 36Kr reported. Labor shortages have cut into the online retailer’s plan to fulfill delivery orders for Shanghai residents who have been facing a food shortage due to a city-wide lockdown that began in April. On April 9, JD launched livestreaming sessions to sell daily groceries to Shanghai residents. The company faced major online backlash, however, after it walked back on its words, delaying deliveries for many users. JD’s delivery capacity in Shanghai has started to recover gradually, hitting 40% of its pre-pandemic delivery force last week, and 80% this week. [36Kr, in Chinese]

  • TikTok owner ByteDance released its latest VR headset, the Pico Neo 3 Link, at the industry event Laval Virtual Europe on April 12. Priced at EUR 449 ($484.63), the new VR headset features four cameras and similar specs to a mainstream Android phone. It also supports streaming wirelessly to PCs to play titles listed on SteamVR and Pico Store. In 2021, the company shipped 150,000 VR units and is hoping to dramatically increase that number to 1.8 million this year. ByteDance acquired Pico for about RMB 5 billion ($771 million) last August. [ITHome, in Chinese]
  • Shanghai municipal government released a guideline on April 16 to facilitate local industrial companies to restart production as the majority of the city has been under a lockdown since early April to prevent the spread of the coronavirus. According to Chinese media Caixin, 666 companies in the key industries are waiting to restart production. The companies are in the industries of semiconductor, auto manufacturing, equipment manufacturing, and biomedicine. The guideline asked manufacturers to submit operational plans to the government before producing again. Companies with proper management plans in place will be allowed to restart as long as they do so under strict anti-covid countermeasures, such as limiting employees’ movements and ensuring all staff wears KN95 masks in areas that are still facing covid-related restrictions. [SMCEI statement, in Chinese]
  • Didi said on April 16 that its shareholders will vote on delisting the company from the New York Stock Exchange on May 23 and that it will not prepare for a listing on other exchanges before the process of delisting is completed. The Chinese ride-hailing platform added that the move is meant to help it “better cooperate with the cybersecurity review and rectification measures,” after unveiling plans in December to drop its US listing and pursue another one in Hong Kong. Chinese regulators responded to the news by saying that Didi’s delisting would not interfere with their current talks with US counterparts over the audit inspection of US-listed Chinese companies. [Caixin, in Chinese]
  • Chinese online education platform Zuoyebang is expanding into the printer market and has set up a business arm for developing a printer business as it seeks new revenue sources. This new business arm now employs around 100 people, consisting mainly of former employees of traditional printer manufacturers, such as Canon, HP, and Epson. The Beijing-based company plans to launch a new printer product on Wednesday, local media outlet 36Kr reported. China’s clampdown on the private tutoring industry has brought nearly every major player in the sector to its knees since last year. As a result, these companies are now seeking alternative business avenues. For example, New Oriental founder and president Yu Minhong launched a livestream e-commerce project last November. [36Kr, in Chinese]
Tuesday, April 19
  • Auto manufacturers and suppliers account for more than a third of the first 666 companies prioritized to resume operations by the Chinese government following Shanghai’s Covid-19 lockdown, according to a “whitelist” created by the Ministry of Industry and Information Technology last week and seen by Chinese media Caixin. Besides giants such as Tesla and Volkswagen’s partner SAIC, others on the list include German auto supplier ZF and China’s Yanfeng Automotive Interiors. No official restart date has yet been issued, however, Tesla reportedly began preparing for the reopening of its Shanghai facilities on Monday, while SAIC began conducting stress tests at its plants on the same day. [Caixin, in Chinese]
  • LenzTech, a Chinese computer vision and data analytics services for the retail industry, has secured RMB 125 million ($20 million) in funding, the company announced Tuesday. Investors for the round include Tiantu Capital, robot maker Ecovacs, Yunqi Partners, and Zoo Capital. The proceeds will be used to ramp up the company’s efforts to digitalize the offline retail industry, optimize in-store inspection robots, and upgrade other AI and IoT technologies. The retail AI and big data firm merged with Singapore-headquartered peer Trax in 2019 with the goal of digitizing China’s physical world of retail. [Trax press release, in Chinese]
  • The Shanghai municipal administration for market regulation summoned 12 e-commerce platforms, including Meituan and Alibaba’s, to discuss price irregularities during the epidemic, the market regulator said in a Monday statement. The platforms were told to further crackdown on illegal retail behavior, strengthen reviews on product prices, and warn delivery drivers against raising delivery fees. Both Meituan and vowed to strengthen their management in order to stabilize grocery prices during a challenging period for the food supply chain. [Government announcement, in Chinese]
  • On Tuesday, Chinese storage chip maker Yangtze Memory (YMTC) released a new high-speed flash storage chip, which can be used in high-end smartphones, tablets, and AR and VR devices. The new UC023 comes with UFS 3.1, a mainstream storage standard for high-end devices, and can reach 1,250MB per second in ideal conditions, supporting the playback of 8K resolution videos. YMTC has adopted an upgraded TLC 3D chip in the UC023, featuring optimized random data writing and lower battery consumption. The flash chip is available in three storage volume options: 128GB, 256GB, and 512Gb. [YMTC, in Chinese]
  • China’s National Bureau of Statistics released national industry production data for 2022 Q1 on Monday, saying the country produced 80.7 billion integrated circuits during the period, a decline of 4.2% compared to the same period last year. Chip production has been falling since August last year, but the latest figures are thought to have been further impacted by Covid-related lockdowns across the country. The Bureau’s official figures also noted that overall production across all industries saw a growth of 5% year-on-year in March, slightly lower than February’s 7.5%. [National Bureau of Statistics, in Chinese]
Wednesday, April 20
  • Ant Group’s online bank MyBank will stop supporting money transferred from Ant’s mobile payment service Alipay starting Thursday, as China continues to tighten regulations on fintech companies. Alipay users will lose the option to transfer funds to class two MyBank accounts with no transaction fees. They will have to transfer funds to other Chinese banks and pay 0.1% transactions fees. Founded in 2015, MyBank is one of the first batches of Chinese private banks. [MyBank, in Chinese]
  • Tesla’s Shanghai plant resumed production on Tuesday after being temporarily shut down for more than three weeks due to recent omicron outbreaks in the city, state-owned news agency Xinhua reported. Tesla will ramp up production and aim to hit maximum output for a single shift over the next three to four days as more than 8,000 employees have come back to work, the report said, citing Song Gang, a senior director at Tesla. The Shanghai Gigafactory is normally able to produce 2,000 vehicles each day over the course of two shifts when at full capacity. The plant lost 22 days of output due to its closure from March 28 to April 18. [Xinhua, in Chinese]

That's all! We're already lining up our next edition.

Thanks for reading and supporting us.

If you have any feedback for us, please feel free to reply directly to this email.

The TechNode Team

Follow TechNode everywhere

Twitter Twitter
Facebook Facebook
LinkedIn LinkedIn
You’re on a free subscription to TechNode Briefing. For the full experience, including one premium newsletters a week, join TechNode Squared.

Don't forget to check out our podcast series on your favorite audio service!
Copyright © 2022 TechNode, All rights reserved.

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.

Email Marketing Powered by Mailchimp