Hewlett-Packard Co (HP) is selling a controlling stake in its China server and storage unit, a move that comes as the Chinese government, apparently worried about US cyberspying, has encouraged the use of local companies.
HP said on Thursday it would sell the 51 percent stake in the business for about US$2.3 billion to Tsinghua Holdings Co (清華控股), part of state-owned Tsinghua University. The sale is planned to create a partnership to be called H3C Technologies Co (華三通信技術).
HP said the move would accelerate growth in the country.
“HP is making a bold move to win in today’s China,” HP CEO Meg Whitman said. “Partnering with Tsinghua, one of China’s most respected institutions, the new H3C will be able to drive even greater innovation for China, in China.”
Analysts have noted that the Chinese government has been increasingly restrictive about international tech companies amid growing concerns that the US has been spying on China remotely.
Although no official restrictions have been confirmed, some big companies in China have stopped using tech services from US companies like Symantec Corp and IBM Corp over the past few years.
Cantor Fitzgerald analyst Brian White said in a note to clients that the partnership is a positive step for HP “in light of the growing backlash against US IT companies selling into China that has further accelerated sharply in recent months.”
HP is to maintain ownership of its other businesses in China, including business services, software, HP Helion Cloud and other operations.
“We believe the deal [with Tsinghua] will help HP become more competitive in the China market given the recent Chinese government preference to purchase technology from local vendors,” Wells Fargo analyst Maynard Um said in a research note.
Gartner Inc analyst Neil MacDonald said the tension goes both ways, with the US House Intelligence Committee issuing a report in 2012 alleging Chinese telecom equipment makers Huawei Technologies Co (華為) and ZTE Corp (中興) are potential security threats that the US should avoid doing business with.
“We’ve seen the increased fracturing of IT along geopolitical lines [in general],” he said. “This is one way to address the ownership concerns.”
H3C would have about 8,000 employees and US$3.1 billion in annual revenue. HP said the change would allow it to better serve customers in China.
HP is undergoing a broader restructuring as it prepares to split into two companies by Oct. 31.
The deal with Tsinghau Holdings is expected to close by the end of the year.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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