Intel's plight 🤞
China's EV, BABA summons, and Big Tech's hearing.
Hi 👋, Tanvi here.
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China’s play in the EV races 🚗
Li Auto, a prominent Chinese EV maker, is going public and raising up to $950 million, in one of the biggest US listings by Chinese companies this year.
Although operating in China, the company will follow the footsteps of other Chinese tech firms and will trade in the US markets by offering American depository receipts (ADRs).
Global companies tend to list on US stock exchanges like the New York Stock Exchange or the Nasdaq Exchange to get better investor access and easy and wider distribution on Wall Street. Infosys, TCS, HDFC are some Indian companies that do this as well.
Chinese companies taking this route however have hit a speed bump because of geopolitical tension between the US and China. Also, a negative sentiment is developing towards Chinese firms after the debacle of Luckin Coffee - a brand that was believed to be the next Starbucks but was caught up in a major financial fraud.
Key takeaway here: EV car makers are rapidly going mainstream. Increasing competition should improve the industry overall, taking quality higher, and prices lower. Also, interesting to note that Tesla went public exactly 10 years ago. Imagine how early and trailblazing the company is in the EV space. Read more.
BABA and Ma summoned by Indian court 🧐
Admitting the complaint of a former employee, Gurugram’s district court has summoned Alibaba and its founder Jack Ma for a court appearance in a case where the former employee claims he was wrongfully fired after objecting to what he saw as censorship and fake news on BABA’s apps in India.
Court filings show the complainant alleging that Alibaba would censor content that was seen as unfavorable to China on its apps UC Browser and UC News, while doing little to stop false news that would “cause social and political turmoil” in India.
India had recently banned Alibaba's UC News, UC Browser and 57 other Chinese apps citing security issues after border skirmish between the countries.
The judge in this particular case has sought written responses from Alibaba management within 30 days. The complainant is also seeking $268,000 in damages.
Tech CEOs will visit principal’s office 🖥️
A congressional antitrust hearing scheduled for Wednesday will feature Amazon’s Jeff Bezos, Apple’s Tim Cook, FB’s Mark Zuckerburg and Google’s Sundar Pichai, as US Congress looks to turn the heat up on big technology firms.
The hearing will take place virtually and the testimony is part of an antitrust investigation about the dominance of digital platforms.
Objective of the hearing:
Basically, the subcommittee is looking to ascertain whether these companies seek to harm and eliminate smaller rivals. Since June, several hearings have been held with smaller rivals who have testified against the monopolistic practices of the tech giants.
What to expect:
Pichai will answer about Google’s dominance in the advertising and search business, as well as profiteering from toxic and hate content on its platforms. Congress may also bring up the antitrust investigation Google is currently facing from several other states.
Apple’s restrictive rules for app store developers which imposes a 15-30% tax on in app purchases will be questioned.
Facebook will likely face scrutiny over its past acquisitions and its measures to stop misinformation and online hate.
Amazon could face questions about its treatment of third party sellers on its platforms and gaining proprietary information to make its own private label products, safety of its frontline workers as well as the surge in online orders during the pandemic.
So far, US regulators have been soft on Big Tech while counterparts across the world, particularly Europe, have been fining them aggressively. Remains to be seen what comes out of this hearing.
Intel’s got some problems 👎
There was a time when Intel was one of the most revered hardware tech companies globally, and was perhaps one of the last remaining displays of US’s manufacturing prowess. Those distinctions were challenged last week when the company announced complications in its 7nm fab manufacturing process, pushing timelines out to 2023 even.
An otherwise brilliant second quarter business performance went ignored and stock was slammed almost 20% by investors.
Basically, 7nm or 10nm is the size of the transistors that make up a CPU (billions of such). Lower the sizes, lesser the power needed, better the ability to create good devices. Let’s not try to teach you engineers. 😎 But Intel now is lagging its rivals AMD, Taiwan’s TSMC, and even Apple by a full process.
Over the years, Intel’s previous silicon processes including 14nm or 10nm had been somewhat behind rivals already but Intel was hoping to make a comeback with 7nm. Now the company believes it may even have to outsource the technology to Taiwan based TSMC for production to help limit the delays and kick-start production ASAP. Obviously, that would eat into Intel’s margins and profits and their long term edge.
Why does this matter so much?
While most global semiconductor firms decided to outsource their manufacturing, Intel was steadfast in holding control over its foundries, many of which are in the US. Control over chip manufacturing can be a national security concern, particularly given how Intel’s chips often receive precedence in US government and defense applications and other mission-critical use cases. Outsourcing, although guarantees speed to market now, could eliminate Intel’s dominance and start a decade long erosion of internal R&D capabilities.
Also, Intel’s stock is very widely held by institutions for its rock solid business and these events could prompt investors to abandon ship. End of an era? Read more.
Tweet of the day -
Here’s how a $100 Billion company looked like in 2006. The first versions are never perfect, so don’t hold yourself back and go put something out there. 🤜
What else are we snackin’ 🍿
☹️ COVID’s IT casualty - Tata Technologies has put about 400 employees on the bench citing a changed business environment due to COVID-19, as new projects have stalled. Good on TATA for not laying off people.
👏 MacD’s mandates masks - McDonald’s Corp will require customers to wear face masks in its U.S. restaurants starting next month, as new coronavirus cases surge across the country. After the government is shying away from mandating masks nationally, companies are taking it on themselves to take action locally.
😷 Florida becomes COVID hotbed - the coastal state of the US has reported more confirmed coronavirus cases than New York now, as the epicenter of the pandemic shifts south to the US's sunbelt and heartland. Thank you summer party goers!
💊 Cipla approved - Drug Controller General of India (DCGI) has granted Cipla regulatory approval to launch COVID-19 treatment drug Favipiravir in the country. The drug will be called Ciplenza and will be used to treat COVID-19 patients with mild or moderate symptoms.
🛒 JioMart 1, Competition 0 - 2 months after launching its hyperlocal delivery service, early numbers show Jio has beaten Amazon and Big Basket in daily order volume. Jio is generating 250,000 daily orders which is more than Amazon’s 150,000 and Big Basket’s 220,000 daily orders. Just wow!!
💉 Covaxin shows encouraging results - after phase 1 trials of domestically made potential vaccine, Covaxin showed promising results. The serum institute of India has now sought permission from Drugs Controller General of India to proceed with phase 2 and 3 human trials of the vaccine.
Hope you took a thing or two away from today’s edition. 😀
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The link "Read more" in Key takeaways is mistakenly placed I guess. It takes us to news related to some other section