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US investigates Made-in-China Huawei chip as alarm in Washington grows

US investigates Made-in-China Huawei chip as alarm in Washington grows

by | Sep 8, 2023 | Technology



By Mackenzie Hawkins


The US government has begun an official probe into an advanced made-in-China chip housed within Huawei Technologies Co.’s latest smartphone, a revelation that’s set off a debate in Washington about the efficacy of sanctions intended to contain a geopolitical rival.


The Commerce Department, which enacted a series of restrictions against Huawei and China’s chip industry over the past two years, said it’s working to get more information on a “purported” 7-nanometer processor discovered within the Mate 60 Pro. The chip was made by China’s Semiconductor Manufacturing International Corp., which like Huawei is blacklisted by the US and restricted from accessing American technology.


Huawei’s quiet reveal of a mobile phone utilizing technology the US has sought to keep out of Beijing’s hands threatens to derail recent efforts of outreach by the Biden administration. The phone went on sale online while Commerce Secretary Gina Raimondo was on a trip to China last week, the latest in a series of high-level diplomatic visits to Beijing.

The debate now centers around whether it represents a failure of US efforts — led by Raimondo’s department — to hamstring China’s tech sector, which Washington fears will give it a military edge. It’s also raised questions about whether the main US mechanisms to do that — controls on exports of key materials, tools and knowhow — need to be tightened. 

Also Read: Apple grapples with turmoil in China days before iPhone 15 launch


“We are working to obtain more information on the character and composition of the purported 7nm chip,” a Commerce spokesperson said in a statement. “Let’s be clear: export controls are just one tool in the U.S. government’s toolbox to address the national security threats presented by the PRC. The restrictions in place since 2019 have knocked Huawei down and forced it to reinvent itself — at a substantial cost to the PRC government.”


The Mate 60 Pro smartphone employs an unusually high proportion of Chinese parts, in addition to its main processor, an ongoing teardown by TechInsights conducted for Bloomberg News revealed, a sign of the country’s progress in developing domestic tech capabilities. 


US National Security Advisor Jake Sullivan has said he would withhold comment until the US gets more information.


“There’s a number of different methods to try to sort of come to an understanding of what exactly it is that we’re dealing with here,” Sullivan told reporters aboard Air Force One on Thursday. “I can’t give you an exact number of days but this is not going to be months down the road. We’re going to want to look at this carefully, consult with our partners, get a clearer sense of what we’re looking at, and then we’ll make decisions accordingly. “



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Apple grapples with turmoil in China days before iPhone 15 launch

Apple grapples with turmoil in China days before iPhone 15 launch

by | Sep 8, 2023 | Technology



By Mark Gurman

Apple Inc. is looking to stave off a crisis in China just days before the launch of its next iPhone, an already high-stakes event that will test whether new features can shake the smartphone industry out of the doldrums. 


The product unveiling, set to stream globally from the company’s headquarters on Tuesday, risks being overshadowed by multiple controversies in China — Apple’s largest international market. The tech titan is contending with a growing ban on iPhone use among government workers, and a contentious new phone from China’s Huawei Technologies Co. is providing homegrown competition.


But the biggest potential threat to Apple may be something more nebulous: a resurgence in Chinese nationalism that spurs everyday consumers to shun the iPhone and other foreign-branded devices.

It’s something the company has confronted before. Almost five years ago, Apple fell short of holiday forecasts for its just-released iPhone XS and XR because of weak sales in China. Publicly, Apple blamed the US-China trade war and the local economy. But in an internal email to the company’s board, Chief Executive Officer Tim Cook also cited Chinese nationalism and growing competition from local rivals.

Also Read: China seeks to broaden Apple iPhone ban to state firms and agencies

 


At the time, the Trump administration had recently blacklisted Huawei, and simmering US-China tensions made life harder for companies deeply reliant on the Asian nation. Apple’s Chinese revenue fell in fiscal 2019 and 2020, before rebounding in 2021. The company generates about a fifth of its sales from China, which is also the heart of Apple’s supply chain. 


The question now is whether Apple will face a repeat of 2019. The growing government bans are an ominous sign. Workers at agencies and state-owned companies are increasingly barred from using iPhones at the office. The news has sent Apple’s shares sliding the past two days, erasing $190 billion from its valuation.


A spokesman for Cupertino, California-based Apple declined to comment. 


US lawmakers also are renewing scrutiny of Huawei suppliers, with some calling for a halt to all US exports to the controversial Chinese tech company. The latest outcry centers on China’s top chipmaker, Semiconductor Manufacturing International Corp., which appears to have violated American sanctions by supplying advanced components for the new Huawei phone, US lawmakers said. Legislators also have proposed bans of TikTok, owned by China’s ByteDance Ltd.


Against that backdrop, anti-Apple sentiment has spread on Chinese social media. There was even speculation that China Mobile Ltd., the country’s wireless carrier, wouldn’t stock the iPhone 15 — something the state-owned company denied. 


A video published online Wednesday showed strong foot traffic at an Apple store in Guangzhou, but the post’s comments quickly filled up with anti-Apple rhetoric. “As long as the job seekers use an Apple phone, I won’t hire them,” one said. Other users wrote that they will “never buy an Apple phone” and “take pride in buying a Huawei.” Another added, “Why can’t we ban sales of Apple while Americans have banned Huawei?”


Last year, China ordered its government agencies and state-owned companies to replace foreign computers with domestic alternatives by 2024. So far, that move hasn’t led to much suffering for Apple, which saw its Mac business in the second quarter grow 17% in China, according to data from Canalys.


“Party officials have likely avoided using American products in the workplace for long before the official ban was enacted,” Evercore ISI analyst Amit Daryanani said in a report Thursday.


If consumers in China are looking to dump Apple, the new Huawei phone could provide an alternative. It sports a larger display and battery than the upcoming highest-end iPhone 15 Pro. The device also has higher-resolution cameras and a price that undercuts its US-based rival.


Still, there’s no sign yet of a broad shift away from Apple in the phone market. In fact, the company was one of the few smartphone sellers to see sales grow in the second quarter, according to research firm IDC. The only other major manufacturing to post an increase was Huawei, which finished the period with a smaller market share than Apple.


For now, the Chinese market has been a bright spot for Apple during a difficult stretch. Its overall sales have dropped for three quarters in a row, and revenue is poised to dip again in the latest period — marking the company’s longest string of decreases in two decades. The iPhone 15 line, with niceties like a titanium frame and enhanced camera, is meant to help pull the company out of that funk.


Ultimately, China has an incentive not to push an iPhone ban too far. Apple supports millions of workers in the country, and it would hard for the government to punish the company without hurting its own people.



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Apple gets warning from top US consumer watchdog on Tap To Pay tech

Apple gets warning from top US consumer watchdog on Tap To Pay tech

by | Sep 7, 2023 | Technology



By Paige Smith


The US government’s top consumer watchdog, which is in the process of writing rules around the sharing of consumer financial data, warned tech giants about being overly restrictive in access to payments apps, taking a shot at Apple Inc.’s proprietary tap-to-pay technology.

 


Because Apple and Alphabet Inc.’s Google Pay dominate the mobile-device tap-to-pay market, the constraints they impose on app developers’ ability to use the technology could inhibit consumer choice, the Consumer Financial Protection Bureau said. Apple requires iOS device users to turn to Apple Pay for tap-to-pay transactions, barring direct integration with apps such as Venmo, while Google’s Android operating system does not, but the concern is that Google “could reverse this position in the future,” the bureau said.


“The CFPB will continue to work with these entities and take appropriate steps to ensure that Big Tech companies do not impede the development of open ecosystems for digital payments,” the agency said in a report published Thursday.


Tap-to-pay transactions have exploded in recent years as mobile devices became ever-present, making paying via a smartphone more and more desirable. Almost 56 million consumers used Apple Pay for an in-store payment in April 2023 alone, the CFPB estimated.


In coming months, the bureau is preparing to release regulations on open banking, which would essentially dictate how financial firms share consumer data. Large technology companies such as Apple and Google impact whether consumers can make payments using third-party apps, said Rohit Chopra, the agency’s director.


“We are carefully evaluating Big Tech’s role in our banking and payments system,” Chopra said in a statement announcing the report. Almost two years ago, the CFPB told big tech companies to turn over information on their payments systems, foreshadowing further actions by the bureau.


Representatives for Apple and Alphabet didn’t immediately respond to requests for comment Thursday.


“Any frictions either company imposes on access to essential hardware or software could impede the shift towards open banking and, ultimately, negatively impact consumers — e.g., by reducing competition, innovation, choice and ease of access,” the CFPB said in its report.


Apple is also facing a a fresh round of European Union antitrust scrutiny after the bloc’s competition investigators dispatched a series of questions to retailers as part of an ongoing probe into the iPhone maker’s closely guarded payments chip. The move, confirmed by a European Commission spokesperson in May, comes on the heels of formal EU antitrust charges against Apple a year earlier, which claimed that its actions restricted competition in the market for mobile wallets on iOS devices.


Earlier this year, Apple confirmed plans to let merchants accept payments through Apple Pay, credit cards and digital wallets without additional hardware, giving them an alternative to Block Inc.’s Square technology. Consumers using iOS devices are still restricted to Apple Pay when tapping to pay.



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Will protect customers of AI products from copyright lawsuits: Microsoft

Will protect customers of AI products from copyright lawsuits: Microsoft

by | Sep 7, 2023 | Technology



By Dina Bass


Microsoft Corp. says it will defend buyers of its artificial intelligence products from copyright infringement lawsuits, an effort by the software giant to ease concerns customers might have about using its AI “Copilots” to generate content based on existing work. 

 


The Microsoft Copilot Copyright Commitment will protect customers as long as they’ve “used the guardrails and content filters we have built into our products” Hossein Nowbar, General Counsel, Corporate Legal Affairs and Corporate Secretary at Microsoft, said in a blog post Thursday. Microsoft also pledged to pay related fines or settlements and said it has taken steps to ensure its Copilots respect copyright.  


“We believe in standing behind our customers when they use our products,” Nowbar said. “We are charging our commercial customers for our Copilots, and if their use creates legal issues, we should make this our problem rather than our customers’ problem.”


Generative AI applications scoop up existing content such as art, articles and programming code and use it to generate new material that can simplify or automate a range of tasks. Microsoft is baking the technology, developed with partner OpenAI Inc., into many of its biggest products, including Office and Windows, potentially putting customers in legal jeopardy. 


Artists, writers and software developers are already filing lawsuits or raising objections about their creations being used without their consent. In one complaint, lawyer and computer programmer Matthew Butterick accused Microsoft’s GitHub partner of allegedly violating open-source software development licenses. A group of anonymous individuals seeking class action status also has filed suit against OpenAI and Microsoft, claiming they’re stealing “vast amounts” of personal information to train AI models in a heedless hunt for profits.


News organizations are mulling their own complaints, comedian Sarah Silverman has filed suit against OpenAI and Meta Platforms Inc.,  and artists are suing AI image generators Stability AI and Midjourney in a San Francisco court, although the judge has expressed skepticism about aspects of the case.


Generative AI could raise novel questions about the fair use of copyrighted materials, a legal defense that allows the use of content in certain cases. Fair-use doctrine itself has been further complicated by a May Supreme Court ruling in favor of a photographer who accused the Andy Warhol estate of improperly using her work to create 16 images of the late musician Prince.


It’s not the first time Microsoft has deployed a legal shield to keep customers loyal. In the 2000s, the company offered indemnification to partners and later customers using or reselling its software, a bid to differentiate Microsoft from Linux and other open-source software makers. In 2017, Microsoft, by then a seller of open-source software itself, offered to protect customers of its Azure cloud products from legal claims. 


The company in June announced a program to help customers ensure the AI programs they run on Microsoft platforms meet global laws and regulations. Earlier this year, Adobe Inc. also offered subscribers of its AI tools legal protection against copyright infringement. 



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Apple gets warning from top US consumer watchdog on Tap To Pay tech

Apple selloff deepens to $194 billion on China plans iPhone curbs

by | Sep 7, 2023 | Technology



By Subrat Patnaik




Apple Inc. shares tumbled in premarket trading Thursday, on track to wipe out $194 billion of market value in just two days, as China plans to expand a ban on the use of iPhones to government-backed agencies and state companies. 

 


Shares of the Cupertino, California-based company fell as much as 3.2% premarket, after slumping 3.6% Wednesday. Apple is the biggest component in major US equity indexes, adding to a broader selloff sparked in part by a litany of woes in China.


The world’s second-biggest economy has been slumping amid a protracted crisis in its real estate market, threatening demand for everything from commodities to consumer electronics. The iPhone maker counts China as its biggest foreign market and global production base. Adding to Apple’s woes are rising US Treasury yields as bonds selloff on worries the Federal Reserve will have to step up its fight against inflation as the US economy remains resilient.


If Beijing goes ahead, the unprecedented blockade might also affect several other US technology companies that rely on sales and production in China. Apple suppliers across continents were trading lower on Thursday as multiple reports confirmed China’s latest changes. 


However, bullish analysts like Wedbush Securities’ Daniel Ives think the effect of an “iPhone ban is way overblown” as it would affect less than 500,000 iPhones of the roughly 45 million he expects to be sold in the country over the next 12 months.


“Despite the loud noise Apple has seen massive share gains in China smartphone market,” Ives, who has an overweight rating on the stock, wrote in a note. 

First Published: Sep 07 2023 | 7:11 PM IST



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‘Dear Mr Pichai’: Google CEO recalls first email his father had sent him

‘Dear Mr Pichai’: Google CEO recalls first email his father had sent him

by | Sep 7, 2023 | Technology


Sundar Pichai, CEO, Alphabet


As Google turned 25 this month, Alphabet’s chief executive officer (CEO) Sundar Pichai recounted how he had to wait for two days for a response from his father in India to a mail he sent from the US. In a blog post, Pichai recalled the time when he sent his father an email message when he was a student in the US.




“Years ago, when I was studying in the US, my dad — who was back in India — got his first email address. I was really excited to have a faster (and cheaper) way to communicate with him, so I sent a message,” Pichai wrote in his blog. “And then I waited… and waited. It was two full days before I got this reply: “Dear Mr Pichai, email received. All is well.”




Confused by the delay, the Google CEO asked his father why it took him so long to reply to his mail. Pichai’s father told him that a colleague had to bring up the email on their office computer, print it out, and then deliver it to him.




 “My dad dictated a response, which the guy wrote down and eventually typed up to send back to me,” Sundar Pichai wrote in the blog.




Discussing the advances technology has made over the years, Pichai said he sees his son exchange photos and messages with his friends “faster than the time it would take me just to pull out my phone”.




“How I communicated with my dad all those years ago compared with how my son communicates today shows just how much change can happen across generations,” he added.




Larry Page and Sergey Brin founded Google while they were PhD students at Stanford University in California. It was launched in September, 1998. Google is one of the most visited websites worldwide in the world. 

First Published: Sep 07 2023 | 5:26 PM IST



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