Cisco Systems Inc is set to invest more than US$10 billion in China during the next few years, a costly tactic to get back in the government’s good graces and stay competitive with Huawei Technologies Co (華為).
Cisco’s investment agreement, sealed with China’s state economy planner, comes as the government promotes local firms at the expense of US companies such as Qualcomm Inc and Microsoft Corp. China said it was concerned with the security of US technology since Edward Snowden revealed details of spying by the US National Security Agency.
Cisco is losing market share in the networking business to Huawei and ZTE Corp (中興), both based in Shenzhen and has said it is open to forming partnerships in China. Cisco chief executive officer John Chambers said he is optimistic Cisco would benefit from improved relations between the US and China, yet the company risks investing US$10 billion and not generating significantly more business there.
“Cisco’s been hit about the hardest of all the tech companies,” business consultancy APCO Worldwide chairman James McGregor said. “Where this all leads to, nobody knows.”
Cisco’s agreement was with the Chinese National Development and Reform Commission, the same organization that extracted a US$975 million fine from Qualcomm after starting an antitrust investigation.
The US$10 billion investment would create jobs, fund research and development, spur innovation and equity investment, Cisco said on Wednesday in a statement. Cisco also signed agreements to help 100 colleges advance training.
Chambers made the announcement after meeting with Chinese Vice Premier Wang Yang (汪洋) and other government leaders in Beijing. Revenue from China plunged 20 percent in the quarter ending April from a year earlier.
Cisco shares rose 0.8 percent to US$28.93 in New York, widening their gain to 4 percent this year.
Cisco is the latest technology company to spend billions trying to gain a share of the world’s biggest market even as the government promotes homegrown competitors.
Microsoft pledged billions of dollars in investments during the past decade, urged the government to tackle piracy and in September last year started selling the Xbox One video-game console there.
Hewlett-Packard Co this year sold a controlling stake in its local networking and server business to a Chinese rival, hoping to boost its contract win rate.
“People are adapting the best they can because the market matters so much, but what this looks like in 5 or 10 years is anybody’s guess,” McGregor said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day