Month: January 2019

SHANGHAI (Reuters) – Chinese chipmaker Fujian Jinhua Integrated Circuit Co Ltd said on Friday it has notified the Unites States that it plans to file a complaint to be taken off the export control list, according to a statement on social media.

The firm added that it does not pose any security risk to the United States.

Earlier this month, the company said it had pleaded not guilty to U.S government charges that it stole trade secrets.

The U.S Justice Department had last year launched an indictment against Fujian Jinhua and United Microelectronics Corp (2303.TW), alleging they attempted to steal trade secrets from memory chip maker Micron Technology Inc (MU.O).

The U.S. Commerce Department had put Fujian Jinhua on a list of entities that cannot buy components, software and technology goods from U.S. firms.

NEW YORK (Reuters) – General Electric Co is advising some buyers of its big power turbines to switch out faulty blades sooner than expected and has disclosed that a blade broke in 2015, according to a presentation reviewed by Reuters and people briefed on the matter.

The second blade break, which has not been previously reported, involved an earlier turbine model and was similar to a break last September that severely damaged a turbine in Texas and shut it down for two months of repairs.

The defective blade issue affects GE’s newest turbine technology, which cost billions of dollars to develop, and is among the challenges facing new Chief Executive Larry Culp as he tries to revive the profits and share price of the 127-year-old conglomerate.

GE’s advice for fixing the problem can curb turbine use by utilities, according to the sources and utilities that use GE turbines, potentially threatening the revenue streams at the power plants.

At private meetings in Florida and London last month, GE executives said the company is offering extended warranty coverage and making spare parts available to ease concerns of insurers, lenders and utilities interested in buying turbines, according to a GE executive’s slideshow presentation and three people who attended the meetings. Some said they signed non-disclosure agreements.

GE told participants that turbines with at-risk blades should run for fewer than about 7,000 hours depending on individual plant circumstances, before shutting down for blade replacement, according to two people who attended the meetings. GE said it had advised customers of the change. GE’s previous guidance for blades was after 25,000 hours.

The executives also said in the meetings that the blade that broke in 2015 at an undisclosed power plant was in a GE 9FB turbine, which has similar technology to the HA turbine that broke in Texas. The 2015 break prompted GE to work on new protective coatings and alter a heat treatment process for the parts, a second presentation showed.

(GE turbine outage data: tmsnrt.rs/2Rs5mU3)

GE told Reuters that after the blade broke in 2015, GE did not know at first that the problem would also afflict its HA models.

“The HA components were in development before the initial 9FB issue occurred, and the HA units began to ship while the root-cause analysis was in process and before it was determined that it was a component issue that impacted the 9FB fleet and the HA,” GE said in a statement to Reuters.

GE declined to provide more detail about the 2015 blade break or usage restrictions, saying some of the information is proprietary.

“We are executing the plan we laid out to fix the (blade) issue,” GE said in a statement to Reuters. “The feedback from customers has been positive, and they continue to choose the HA, which remains the fastest-growing fleet of advanced technology turbines in the world today.”

The details from GE’s meetings come as GE is installing new blades in about 50 9FB and 52 HA turbines, according to a person familiar with the matter, fewer than the 130 estimated after the blade break in Texas prompted it to warn that other turbines are at risk for blade failure.

Reuters previously reported that GE found an oxidation problem, not a break, in 2015 and developed a fix before the failure in Texas.

Scaling back use of GE turbines reduces how much electricity they produce, a threat to revenues and profits for Exelon Corp, PSEG Power LLC, Chubu Electric Power Co Inc and others with the 400-ton GE machines that form the core of modern gas-fired power plants, according to utilities and industry experts.

Japan’s Chubu Electric said it learned about the blade problem with its six new GE turbines last October. It is restricting operation time at one of the two plants that use GE’s HA turbines, but expects to have “enough reserve capacity to generate sufficient electricity to meet demand during this winter,” a spokesman told Reuters. He said Chubu will tally the financial impact “depending on how long the plants would be shut down” to replace blades. It expects repairs to be completed by the end of February.

PSEG Power and Exelon, based in the United States, declined to comment on how restrictions would affect them.

GE is continuing to sell turbines in a slumping market for big power plants, where it has lost share to rivals Mitsubishi Hitachi Power Systems and Siemens AG. GE has said it booked orders for three large turbines last month.

GE’s share price fell after GE revealed a blade issue in Texas on September 19, saying such “teething problems” are not uncommon with new technology and would require “minor adjustments” to fix. GE has said it would set aside $480 million for repairs and warranty claims.

Three days after the break in Texas became known, Electricite de France SA shut down its HA turbine to replace blades. EDF did not respond to requests for comment.

At the London meeting, about 100 insurance industry people gathered in the oak-paneled Old Library room of Lloyd’s of London on December 13, according to the sources, who spoke on condition of anonymity to discuss confidential information.

GE power executives Marcus Scholz and Tom Dreisbach gave presentations about GE’s turbine technology. In its turbine documentation, GE has advised its power customers to inspect turbines with so-called “Generation 1” blades after 25,000 hours of use. GE said its improved blades, known as “Generation 2,” are designed to last 25,000 hours or more before being replaced.

According to page 11 of his presentation, Dreisbach said the Generation 1 blade that broke in 2015 failed after 22,000 hours. New parts treated with a special coating were inspected by technicians after about 12,000 and 16,000 hours and “cracking (was) still observed,” the presentation said.

GE inspected other turbines at about 7,000 hours and “early stages of cracking (were) observed,” the presentation said.

SAN FRANCISCO (Reuters) – Top U.S. universities are ditching telecom equipment made by Huawei Technologies and other Chinese companies to avoid losing federal funding under a new national security law backed by the Trump administration.

U.S. officials allege Chinese telecom manufacturers are producing equipment that allows their government to spy on users abroad, including Western researchers working on leading-edge technologies. Beijing and the Chinese companies have repeatedly denied such claims.

The University of California at Berkeley has removed a Huawei video-conferencing system, a university official said, while the UC campus in Irvine is working to replace five pieces of Chinese-made audio-video equipment. Other schools, such as the University of Wisconsin, are in the process of reviewing their suppliers.

UC San Diego, meanwhile, has gone a step further. The university in August said that, for at least six months, it would not accept funding from or enter into agreements with Huawei, ZTE Corporation (000063.SZ) and other Chinese audio-video equipment providers, according to an internal memo. The document, reviewed by Reuters, said the moratorium would last through February 12, when the university would revisit its options.

“Out of an abundance of caution UC San Diego enacted the six-month moratorium to ensure we had adequate time to begin our assessment of the equipment on campus and to prevent the campus from entering into any agreements that could later be viewed as inconsistent with the NDAA,” UC San Diego spokeswoman Michelle Franklin said in response to Reuters’ questions about the memo.

These actions, not previously reported, signal universities’ efforts to distance themselves from Chinese companies that for years have supplied them with technical equipment and sponsored academic research, but which are now in the crosshairs of the Trump administration.

The moves are a response to the National Defense Authorization Act (NDAA), which President Donald Trump signed into law in August. A provision of that legislation bans recipients of federal funding from using telecommunications equipment, video recording services and networking components made by Huawei or ZTE. Also on the blacklist are Chinese audio-video equipment providers Hikvision, Hytera, Dahua Technology and their affiliates.

U.S. authorities fear the equipment makers will leave a back door open to Chinese military and government agents seeking information. U.S. universities that fail to comply with the NDAA by August 2020 risk losing federal research grants and other government funding.

That would be a blow to public institutions such as the sprawling University of California system, whose state funding has been slashed repeatedly over the last decade. In the 2016-2017 academic year, the UC system received $9.8 billion in federal money. Nearly $3 billion of that went to research, accounting for about half of all the university’s research expenditures that year, according to UC budget documents.

HUAWEI UNDER SIEGE

The new law is part of a broader Trump administration strategy to counter what it sees as China’s growing threat to U.S. economic competitiveness and national security.

The president has slapped tariffs on a slew of Chinese goods and made it tougher for foreign companies to purchase minority stakes in U.S. tech companies, causing Chinese investment in Silicon Valley to plunge.

In addition, Trump last year signed legislation prohibiting the U.S. government from buying certain telecom and surveillance equipment from Huawei and ZTE. And he is considering a similar ban on Chinese equipment purchases by U.S. companies.

At the center of the storm is Huawei, a global behemoth in smartphones and telecom networking equipment. The company’s chief financial officer has been under house arrest in Canada since December for allegedly lying about Huawei’s ties to Iran. Another Huawei employee was arrested this month in Poland on espionage allegations.

Huawei did not respond to a request for comment.

U.S. universities have already felt the sting of Trump’s China policies. The State Department shortened the length of visas for certain Chinese graduate students. And the administration is considering new restrictions on Chinese students entering the United States. Chinese students are by far the largest group of international students in the United States and provide a lucrative source of revenue for universities.

Pressure to dump Huawei and other Chinese telecom suppliers is adding to the strain.

In addition to the University of Wisconsin, a half dozen institutions, including UC Los Angeles, UC Davis and the University of Texas at Austin, told Reuters they were in the process of reviewing their telecommunications equipment, or had already done so and determined they were NDAA compliant.

At Stanford University, Steve Eisner, the director of export compliance, told Reuters the school did a “scrub” of the campus, but “luckily” did not find any equipment that needed to be removed.

But for Stanford and other academic institutions, Huawei is more than an equipment vendor. Huawei participates in research programs, often as a sponsor, at dozens of schools, including UC San Diego, the University of Texas, the University of Maryland and the University of Illinois Urbana-Champaign.

In addition to an explicit equipment ban, the NDAA calls for creating regulations that would limit research partnerships and other agreements universities have with China. The law requires the Secretary of Defense to work with universities on ways to guard against intellectual property theft and create new regulations aimed at protecting academics from exploitation by foreign countries. Universities that fail to comply with those rules risk losing Defense Department funding.

UC San Diego highlighted this section of the law in a campus newsletter in September.

Fears of a more rigorous crackdown from Washington would seem to be justified. In June, 26 members of Congress sent a letter to Education Secretary Betsy DeVos, sounding an alarm over Huawei’s research partnerships with more than 50 U.S. universities that “may pose a significant threat to national security.”

The lawmakers called on DeVos to require universities to turn over information on those agreements.

Separately, a White House report from June points to a research partnership on artificial intelligence between UC Berkeley and Huawei as a potential opening for China to gather intelligence that could serve Beijing’s military and strategic ambitions. That partnership started in 2016.

“COOLING” RELATIONS WITH HUAWEI

UC Berkeley spokesman Dan Mogulof said the university does not participate in research involving trade secrets. He said the school only enters research partnerships whose findings can be published publicly. Such open-source research is not subject to federal regulations.

Mogulof said UC Berkeley has no plans to change any of the research partnerships it has with Huawei. The company is involved in at least five UC Berkeley research initiatives, including autonomous driving, augmented reality and wireless technology, in addition to artificial intelligence.

Still, a person with knowledge of the matter said the university’s relationship with Huawei had “cooled,” and that some Berkeley researchers are choosing not to proceed with their research agreements with the company to avoid scrutiny from university and government officials.

The chill is spreading. The United Kingdom’s Oxford University this month cut ties with Huawei, announcing it would no longer accept funding for research or philanthropic donations.

“The decision has been taken in the light of public concerns raised in recent months surrounding UK partnerships with Huawei,” a university spokesman said in a statement.

SAN FRANCISCO (Reuters) – Alphabet Inc’s Google disclosed in a quarterly filing on Tuesday that it spent a company-record $21.2 million on lobbying the U.S. government in 2018, topping its previous high of $18.22 million in 2012, as the search engine operator fights wide-ranging scrutiny into its practices.

In its filing to Congress on Tuesday, Facebook Inc disclosed that it also spent more on government lobbying in 2018 than it ever had before at $12.62 million. That was up from $11.51 million a year ago, according to tracking by the nonpartisan Center for Responsive Politics.

Google’s spent $18.04 million on lobbying in 2017, according to the center’s data.

Google and Facebook declined to comment beyond their filings.

U.S. lawmakers and regulators have weighed new privacy and antitrust rules to rein in the power of large internet service providers such as Google, Facebook and Amazon.com Inc. Regulatory backlash in the United States, as well as Europe and Asia, is near the top of the list of concerns for technology investors, according to financial analysts.

Microsoft Corp spent $9.52 million on lobbying in 2018, according to its disclosure on Tuesday, up from $8.5 million in 2017 but below its $10.5 million tab in 2013.

Apple Inc spent $6.62 million last year, compared to its record of $7.15 million in 2017, according to center data going back to 1998.

Apple and Microsoft did not respond to requests to comment. A filing from Amazon was expected later on Tuesday.

Google disclosed that new discussion topics with regulators in the fourth quarter included its search technology, criminal justice reform and international tax reform. The company is perennially among the top spenders on lobbying in Washington along with a few cable operators, defense contractors and healthcare firms.

Google Chief Executive Sundar Pichai, who testified in December before a U.S. House of Representatives panel for the first time, has said the company backs the idea of national privacy legislation. But he has contested accusations of the company having a political bias in its search results and of stifling competition.

Susan Molinari, Google’s top U.S. public policy official, stepped down to take on an advisory role this month.

Facebook said discussing “election integrity” with national security officials was among its new lobbying areas in the fourth quarter. The filing said the company continued to lobby the Federal Trade Commission, which is investigating its data security practices.

BEIJING (Reuters) – Tesla Inc (TSLA.O) has signed a preliminary agreement with China’s Tianjin Lishen to supply batteries for its new Shanghai car factory, as it aims to cut its reliance on Japan’s Panasonic (6752.T), two sources with direct knowledge of the matter said.

The companies had yet to reach a decision on how large an order the U.S. electric car company would place, and Lishen was still working out what battery cell size Tesla would require, one of the sources said.

While Panasonic is currently Tesla’s exclusive battery cell supplier, Tesla Chief Executive Elon Musk said in November the U.S. company would manufacture all its battery modules and packs at the Shanghai factory and planned to diversify its sources.

“Cell production will be sourced locally, most likely from several companies (incl Pana), in order to meet demand in a timely manner,” Musk said in a tweet in November.

Other battery makers in the running for contracts could include Contemporary Amperex Technology Co Ltd (300750.SZ) and LG Chem Ltd (051910.KS).

Tesla broke ground on the $2 billion so-called Gigafactory, its first in China, earlier this month and plans to begin making Model 3 electric vehicles (EV) there by the end of the year.

Musk has said the factory will produce “more affordable” vehicles for the Chinese auto market, the world’s biggest, where the firm is facing mounting competition and risks from U.S.-China trade tensions.

Tesla declined to comment, while Lishen did not immediately respond to a request for comment.

Panasonic said in a statement it was studying various possibilities with regards to Tesla’s Shanghai plant, but nothing had been decided. It declined to comment on the possibility of losing exclusive-supplier status with Tesla.

The sources declined to be identified because the discussions are private.

APPLE SUPPLIER

Lishen, which says its clients range from Apple (AAPL.O) and Samsung Electronics (005930.KS) to Geely (0175.HK) and Hyundai Motor (005380.KS), has joined other battery makers in aggressively pursuing contracts with the rapidly growing EV industry.

The Chinese company started mass production of the same type of cylindrical battery made by Panasonic for Tesla’s Model 3 in 2017, in the city of Suzhou about 100 kms (60 miles) away from Shanghai.

Reuters reported on Monday that Panasonic and Toyota Motor Corp (7203.T) were set to launch a joint venture next year to produce EV batteries in an effort to compete with Chinese rivals.

A joint venture would build on the agreement that the pair announced in late 2017 on joint development of batteries with higher energy density in a prismatic cell arrangement.

It would also help Panasonic cut its heavy reliance on Tesla, whose production delays have weighed on the Japanese company’s earnings.

Panasonic planned to shift most of its prismatic battery-related equipment and facilities in Japan and China to the joint venture, while those producing batteries for Tesla would remain under the company, a source said.

SAO PAULO (Reuters) – Amazon.com Inc is launching its long-awaited in-house fulfillment and delivery network in Brazil after months of delays caused by complicated logistics and a highly complex tax system in the largest Latin American economy.

Amazon, which some rivals had expected to kick off direct sales of items beyond books as soon as the Christmas selling season, said it will directly sell 11 categories of merchandise from over 800 suppliers from L’Oreal to Black & Decker as of Tuesday.

Its shift to stocking and delivering goods itself from acting mostly as a marketplace is expected to intensify competition for fast delivery of goods in Latin America’s largest economy as it exits a painful recession.

“We are launching (our direct sales platform) with 320,000 different products in stock, including 200,000 books… Our obsession is always to increase this catalog and to have everything Brazilian consumers seek and want to buy on the internet”, Amazon’s Brazilian country manager Alex Szapiro told Reuters.

In November, Reuters reported that Amazon’s attempt to advance with its so-called Fulfillment by Amazon program in Brazil had run into difficulties such as the nations’s tangled tax system, complicated logistics and testy relations with some prominent vendors.

“As in every negotiation, you take a seat at a table and you want to agree on the best possible terms”, said Szapiro when asked on the tone of conversations with suppliers, without entering in details.

Amazon entered Brazil quietly in 2012, selling e-readers, books and then streaming movies in the fast-growing Brazilian market. The company made its first big move into merchandise in October 2017, when it began offering the use of its Brazilian website to third-party merchants to sell electronics.

The company does not reveal the number of sellers in its marketplace, which it has slowly expanded over the past year, adding new categories while laying the ground for a direct sales platform.

As part of the fulfillment program, Amazon leased a 47,000 square-meter (505,904-square-foot) warehouse just outside of Sao Paulo, as first reported by Reuters almost a year ago.

Szapiro, who previously worked as Brazil country manager for Apple Inc, declined to say how much the company is spending on the new distribution center or how many people it is hiring, but said Amazon employs directly and indirectly over 1,400 people in Brazil.

In a report published on Monday, analysts at investment bank BTG Pactual said the expected direct sales launch signaled the company was ready “to strengthen investments, potentially via more partnerships with fulfillment operators and last-mile carriers.”

Even though the bank predicted Amazon would take a “gradual approach” and was likely to vye for a “low double-digit market share,” shares of Brazilian retailers reacted negatively to BTG’s report, with B2W, Magazine Luiza e Lojas Americanas among the biggest losers in Monday’s session.

Dumpster diving. A huge trove of data spilled onto the web and has been helpfully uploaded to HaveIBeenPwned, a leaked password-checking database for consumers, by security researcher Troy Hunt, the site’s proprietor. The leak, dubbed “Collection #1,” contains nearly 773 million unique email addresses and more than 21 million unique passwords—making it Hunt’s largest-ever upload. It’s unclear where exactly the data originated, although the anonymous person(s) who posted them online claim they came from many different sources. Best use the opportunity to clean up your password hygiene.

Be yourself. Facebook is still combatting disinformation. Nathaniel Gleicher, Facebook’s head of cybersecurity policy, said the media giant booted two Russian operations—including one involving Sputnik, a Moscow-based news agency—off Facebook and Instagram on Thursday. Facebook suspended hundreds of accounts and pages that he said engaged in “coordinated inauthentic behavior.” He noted that the fight against fakers is “an ongoing challenge.”

Chinese finger trap. Federal prosecutors are probing Huawei for allegedly stealing intellectual property from U.S. companies, including components from a T-Mobile phone-testing robot called “Tappy,” reports the Wall Street Journal. The investigation is “at an advanced stage and could lead to an indictment soon,” the Journal’s unnamed sources said. Add this development to the mess of controversies entangling the Chinese company.

Demand a recount. The Financial Times said it discovered evidence of “huge fraud” in the Democratic Republic of Congo’s December presidential election. The paper claims that its own independent tally of votes, based on data leaked by an unnamed source close to Martin Fayulu, the contest’s loser (but actual winner?), exposes the fraud. The report corroborates the view of the Catholic Church, which earlier denounced the election’s “results” after conducting its own audit.

Look; don’t touch. A California judge recently ruled that police officers are not authorized, even in possession of a search warrant, to force suspects to unlock their phones using biometrics, like a fingerprint or facial scan, Forbes reports. Judges had already ruled that passcodes were protected against such coercion, meaning people could refuse to supply them, thereby preventing self-incrimination. The judge, who called the original law enforcement request “overbroad,” wrote, “If a person cannot be compelled to provide a passcode because it is a testimonial communication, a person cannot be compelled to provide one’s finger, thumb, iris, face, or other biometric feature to unlock that same device.”

Just your friendly neighborhood NSA. 

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