In the news: iTunes' books and movies get blocked, AMD signs China chip-making JV, Alibaba and Baidu help struggling SOEs and outbound M&A figures top charts

AMD signs chip-making JV in China

Advanced Micro Devices Inc. has just signed a deal to set up a new joint venture in China to produce chips using key technology long considered the crown jewel of the company and its rival Intel Corp. The deal highlights AMD's search for new revenue as it struggled in the microprocessor market as well as China's ongoing quest to become less dependent on foreign tech. California-based AMD said it had licensed x86 chip technology to a JV formed with Tianjin Haiguang Advanced Technology Investment Co., which will use the knowhow to develop chips for server systems to be sold only in China. AMD will receive $293 million in licensing fees plus royalties on sales of any chips developed by the venture. AMD's partner is an investment consortium led by the Chinese Academy of Sciences, the institution responsible for creating Lenovo. The deal follows moves by Qualcomm and IBM to work with local firms in China to create non-x86 chips (Qualcomm invested $280 million in a JV with the Guizhou government). And in 2014, Intel spent $1.5 billion on two Chinese chipmakers owned by Tsinghua Unigroup, which is part of the state-owned corporation that bought a 15% stake in Western Digital last year. Bottom line: AMD was reporting straight losses while all its competitors were making money and inking deals with China. If you can't beat them, join them.

China's top internet firms give SOEs a boost

China's top technology companies are teaming up with struggling state-owned enterprises (SOEs) that the government is pressing to modernize. A venture capital unit of Alibaba is investing Rmb300 million ($46 million) in the e-commerce arm of Minmetals Development, of which the flagship unit is looking to Alibaba's Taobao.com as a model for its steel sales site. Last week, China's biggest oil refiner Sinopec launched an e-commerce platform, which it dubbed the “Taobao of industry”, aiming to link oil-and-gas and other suppliers with manufacturers. It called on Alibaba to help with cloud-computing functions including big data analysis and storage. In November, Baidu said it would team up with China Citic Bank to launch Baixin Bank, which could use Baidu's location and behavior data to evaluate customers' credit profiles and fraud risk. JD.com also took a 12.5% stake in an e-commerce unit of Shanghai Pharmaceuticals, and the two are cooperating on a B2B platform for retail pharmacies and SME medical institutions. As the reform deepens, China's tech leaders will hand-hold SOEs—many of which are known to be bloated, sprawling and unprofitable—though the dieting process. Critics have often been quick to point out the contrasting levels of efficiency between China's public and private sectors. It's hard to imagine the likes of Minmetals and Sinopec in realm of modern e-commerce, but these arrangements show that concrete efforts are being made to reinvigorate SOEs.

China outbound M&A close to breaking record

Chinese companies are closing in on last year's record for outbound M&A. They spent $101.1 billion on overseas deals between January and March 2016 alone, according to Thomson Reuters. This accounted to roughly 20% of the global total and is close to the $109.5 billion logged for the entire year of 2015. KPMG data also showed that in the second half of 2015, the number of cross-border M&A deals by Chinese buyers exceeded the number of foreign companies' deals in China for the first time. Big ticket transactions that make up a good chunk of this figure include ChemChina's $43 billion bid for Syngenta in February, which shows an appetite for high tech and IP, as well as Haier's $5.4 billion deal with GE for its appliances unit and Dalian Wanda's $3.5 billion acquisition of Legendary Entertainment, both signed in January. China's transition to a consumption-driven economy is driving domestic companies to snap up assets that they can use to target the middle class. In addition to the above deals involving consumer products and entertainment businesses, there has been appetite for hotel chains, as can be seen in Anbang and Marriott's recent Starwood bidding war (though Anbang eventually bowed out). Chinese firms are also on the lookout for manufacturing, cutting-edge technology and knowhow to build global brands. The uncertain economic conditions and concerns of a depreciating currency back home may be additional factors fueling this overseas activity, but the government itself is pushing its home-grown businesses to venture abroad—the NDRC is set to relax outbound approval rules even further.

Apple's iTunes Movie, iBooks Store blocked in China

The blocking of its mobile entertainment services in China creates new challenges for Apple as the company prepares to report its first-ever drop in iPhone sales. On Thursday, Apple's iBooks Store and iTunes Movie services had gone dark in China, its second-largest market by revenue, just over six months after their launch. iTunes Music, however, appears to be running without issue. It wasn't made public exactly why regulators asked the company to halt these services. Many have pointed to the recent online publishing regulations, which required companies with servers in the country to have a license to post online content in China, and included books and movies in their scope. But the decision seems to be more cultural-related. Apple began working with state-owned China Telecom last August to store Chinese customer data in onshore relay servers, a move that Apple said was for improving the speed and reliability of its iCloud service. This probably includes Apple ID information (all users need an Apple ID to access Apple's services, such as the App Store, iTunes, iCloud, iMessage and FaceTime). The company has a strong track record of working with local officials and even launched its Apple Pay service in China two months ago. The government has largely been tolerant of Apple, but this move shows there are lines that can't be crossed, regardless of how well-behaved a company is. As The New York Times said, Apple may just be “immune no more”.

AMD signs chip-making JV in China

Advanced Micro Devices Inc. has just signed a deal to set up a new joint venture in China to produce chips using key technology long considered the crown jewel of the company and its rival Intel Corp. The deal highlights AMD's search for new revenue as it struggled in the microprocessor market as well as China's ongoing quest to become less dependent on foreign tech. California-based AMD said it had licensed x86 chip technology to a JV formed with Tianjin Haiguang Advanced Technology Investment Co., which will use the knowhow to develop chips for server systems to be sold only in China. AMD will receive $293 million in licensing fees plus royalties on sales of any chips developed by the venture. AMD's partner is an investment consortium led by the Chinese Academy of Sciences, the institution responsible for creating Lenovo. The deal follows moves by Qualcomm and IBM to work with local firms in China to create non-x86 chips (Qualcomm invested $280 million in a JV with the Guizhou government). And in 2014, Intel spent $1.5 billion on two Chinese chipmakers owned by Tsinghua Unigroup, which is part of the state-owned corporation that bought a 15% stake in Western Digital last year. Bottom line: AMD was reporting straight losses while all its competitors were making money and inking deals with China. If you can't beat them, join them.

China's top internet firms give SOEs a boost

China's top technology companies are teaming up with struggling state-owned enterprises (SOEs) that the government is pressing to modernize. A venture capital unit of Alibaba is investing Rmb300 million ($46 million) in the e-commerce arm of Minmetals Development, of which the flagship unit is looking to Alibaba's Taobao.com as a model for its steel sales site. Last week, China's biggest oil refiner Sinopec launched an e-commerce platform, which it dubbed the “Taobao of industry”, aiming to link oil-and-gas and other suppliers with manufacturers. It called on Alibaba to help with cloud-computing functions including big data analysis and storage. In November, Baidu said it would team up with China Citic Bank to launch Baixin Bank, which could use Baidu's location and behavior data to evaluate customers' credit profiles and fraud risk. JD.com also took a 12.5% stake in an e-commerce unit of Shanghai Pharmaceuticals, and the two are cooperating on a B2B platform for retail pharmacies and SME medical institutions. As the reform deepens, China's tech leaders will hand-hold SOEs—many of which are known to be bloated, sprawling and unprofitable—though the dieting process. Critics have often been quick to point out the contrasting levels of efficiency between China's public and private sectors. It's hard to imagine the likes of Minmetals and Sinopec in realm of modern e-commerce, but these arrangements show that concrete efforts are being made to reinvigorate SOEs.

China outbound M&A close to breaking record

Chinese companies are closing in on last year's record for outbound M&A. They spent $101.1 billion on overseas deals between January and March 2016 alone, according to Thomson Reuters. This accounted to roughly 20% of the global total and is close to the $109.5 billion logged for the entire year of 2015. KPMG data also showed that in the second half of 2015, the number of cross-border M&A deals by Chinese buyers exceeded the number of foreign companies' deals in China for the first time. Big ticket transactions that make up a good chunk of this figure include ChemChina's $43 billion bid for Syngenta in February, which shows an appetite for high tech and IP, as well as Haier's $5.4 billion deal with GE for its appliances unit and Dalian Wanda's $3.5 billion acquisition of Legendary Entertainment, both signed in January. China's transition to a consumption-driven economy is driving domestic companies to snap up assets that they can use to target the middle class. In addition to the above deals involving consumer products and entertainment businesses, there has been appetite for hotel chains, as can be seen in Anbang and Marriott's recent Starwood bidding war (though Anbang eventually bowed out). Chinese firms are also on the lookout for manufacturing, cutting-edge technology and knowhow to build global brands. The uncertain economic conditions and concerns of a depreciating currency back home may be additional factors fueling this overseas activity, but the government itself is pushing its home-grown businesses to venture abroad—the NDRC is set to relax outbound approval rules even further.

In the news: iTunes' books and movies get blocked, AMD signs China chip-making JV, Alibaba and Baidu help struggling SOEs and outbound M&A figures top charts

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