|Bid||43,950.00 x 0|
|Ask||44,050.00 x 0|
|Day's Range||43,650.00 - 44,200.00|
|52 Week Range||36,850.00 - 48,450.00|
|Beta (3Y Monthly)||1.14|
|PE Ratio (TTM)||N/A|
|Earnings Date||Oct 29, 2019 - Nov 5, 2019|
|Forward Dividend & Yield||1,416.00 (3.21%)|
|1y Target Est||54,903.00|
(Bloomberg) -- Qualcomm Inc. won’t have to renegotiate its patent licenses while appealing an antitrust ruling won by the U.S. Federal Trade Commission, a federal appeals court ruled.Qualcomm has raised “serious questions” about the merits of the trial court’s ruling, a panel of the U.S. Court of Appeals for the Ninth Circuit said Friday in an order putting the May 21 decision on hold.Forcing the chipmaker to enter into new contracts imposes changes that “cannot be easily undone should Qualcomm prevail on appeal,” the three-judge panel in San Francisco said in a seven-page order that was unusually detailed. There’s no guarantee the three judges who considered Qualcomm’s request will be on the panel hearing the appeal in JanuaryU.S. District Judge Lucy Koh found in May that Qualcomm’s “no license, no chips” policy unfairly leveraged the company’s market position to force customers to pay inflated prices for chips and royalties for their technology. She ordered the company to end the policy and renegotiate some of its contracts.Read More: Judge’s Conundrum: Is Qualcomm a Monopolist, or Merely a Bully?Qualcomm has argued that Koh’s order would undermine its entire business. Under the original ruling, the company would be forced to renegotiate patent-licensing contracts with phone makers, a process that could slash its largest source of profit. It would create binding arrangements that wouldn’t be reversed, even if Qualcomm got the ruling overturned on appeal.The San Diego-based chipmaker is unusual in the chip industry because it gets the majority of its profit from fees on patents that cover the fundamentals of how modern phone systems work. Apple Inc., Samsung Electronics Co. and all of the world’s biggest phone makers have to pay whether or not they use its chips. That arrangement has caused intense legal fights and regulatory scrutiny around the world for Qualcomm.The case has split the U.S. government, especially the two agencies charged with antitrust matters. While the FTC -- an independent agency -- argued that Qualcomm harmed competition, the U.S. Justice Department said Koh’s ruling harmed consumers.Qualcomm also got the backing of other areas of the Trump administration, as both the Defense Department and Department of Energy said the order threatens national security and America’s lead role in 5G, the next-generation of wireless technology that promises to transform everything from robotic surgery to autonomous vehicles.“Whether the district court’s order and injunction represent a trailblazing application of the antitrust laws, or instead an improper excursion beyond the outer limits of the Sherman Act, is a matter for another day,” the appeals panel said, referring to the federal antitrust law.The language of the ruling has improved Qualcomm’s chance of winning the appeal or reaching a settlement with the agency, said Jennifer Rie, an analyst with Bloomberg Intelligence.Ankur Kapoor, an antitrust lawyer with Constantine Cannon in New York who’s not involved in the case, said the panel’s detailed ruling may be an attempt to “explain their thinking” in a case with high stakes for the company. He said the court wanted to maintain the status quo, especially considering the potential impact to Qualcomm’s long-term business and the fact that the appeal is being expedited, with a decision expected shortly after January arguments.In some ways, Qualcomm’s licensing program “appears significantly impaired regardless” because of the legal strains on the company and the slowdown in the “horrendous” chip market, said Stacy Rasgon, an analyst with Bernstein Research.FTC ‘Disappointed’FTC Bureau of Competition Director Bruce Hoffman said he was disappointed in the court’s ruling and noted that only part of the court’s ruling was put on hold. Qualcomm still can’t enter into exclusive deals on modem chips, can’t interfere with any customer’s ability to communicate with government agencies and must submit to monitoring, which the FTC said promotes competition. Qualcomm didn’t ask the appeals court to put those aspects on hold.“The Bureau of Competition will monitor Qualcomm’s conduct relating to the on-going injunctive provisions, and we stand ready to evaluate any information from industry participants relating to whether Qualcomm is complying with its obligations,” Hoffman said.The court order previews some of the arguments that Qualcomm is expected to make when it files its written arguments with the Ninth Circuit later Friday. Qualcomm will argue that Koh stretched the definition of antitrust rules under U.S. law and ignored evidence that showed there was competition.Koh had no right to decide that Qualcomm’s rates were unreasonable, order the company to give licenses to its competitors or decide whether or not it has to supply chips to handset makers, the San Diego-based company contends.The case is Federal Trade Commission v. Qualcomm, 17-220, U.S. Court of Appeals for the 9th Circuit (San Francisco).To contact the reporters on this story: Susan Decker in Washington at firstname.lastname@example.org;Ian King in San Francisco at email@example.comTo contact the editors responsible for this story: Jon Morgan at firstname.lastname@example.org, Peter Blumberg, Steve StrothFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- HP Inc. said Chief Executive Officer Dion Weisler is leaving the company to attend to a family health matter. Enrique Lores, head of the printing business, will take over and is already looking to make changes at the world’s second-largest personal computer maker.Lores, 54, has been working with HP’s board on a "comprehensive global review of the company’s strategy and business operations” over the past year, according to a statement. He will share some of his conclusions and plans on Oct. 3 at a company event."The need for us to keep reinventing is more important than ever," Lores said. "I have great confidence in the direction we’re going to be taking on the company."HP shares fell in after-hours trading on concern HP’s profitable supplies business is still struggling. Toner and cartridge sales have been crimped by third-party suppliers, particularly in China, that sell cheaper alternatives."Clearly printing is under pressure," said Shannon Cross, an analyst at Cross Research. "The question is how much of this is inventory and how much of this in an ongoing secular challenge?"The change in leadership should be seamless and it will help to have a representative from the printer unit running the whole company and making that business a priority, Cross added.HP has been trying to transform itself in the midst of a stagnant PC market and a printer business that faces an uncertain digital future in which offices use less paper. The company has tried to sell more expensive computers and sign up customers for subscriptions.Born in Madrid, Lores is currently head of the the Imaging, Printing and Solutions business. In the latest fiscal quarter, sales from this division fell 5%, including a 7% drop in printer supplies, highlighting the challenges Lores is taking on.HP shares fell 6% in extended trading, after closing at $18.93 in New York. The stock is down about 8% so far this year.Printer supplies revenue was worse than the company expected, Weisler said on a conference call with analysts. The unit’s performance was hurt by changes in company leadership outside of the U.S. and a weaker economy, he explained. Supplies revenue won’t grow next year and the printer market will remain "soft," Chief Financial Officer Steve Fieler said on the call. Investors will see his successor take "significant" action to reduce the company’s cost structure, Weisler told analysts. A 30-year veteran, Lores worked his way up from an engineering intern position to roles that included running the office that managed the split from Hewlett Packard Enterprise in 2015. He’s been instrumental in improving the company’s cost structure and organization which has helped profitability, the company said. He becomes CEO officially on Nov. 1.Lores also held senior roles in the commercial PC business and in sales. He led the 2017 acquisition of Samsung Electronics Co.’s printer business.Weisler, 52, took over when the split with HPE became official on Nov. 1, 2015. Since the start of trading on Nov. 2, HP shares have gained 55%, outperforming the S&P 500 index. Revenue has climbed 19%.“There were many that doubted us,” he said in an interview. “We’ve reinvigorated and reinvented this company.”He declined to give details of his family situation but said he needs to move back to his home country of Australia. “I really need to go and tend to that,” Weisler said.(Updates with comments from conference call in 10th paragraph.)To contact the reporter on this story: Ian King in San Francisco at email@example.comTo contact the editors responsible for this story: Jillian Ward at firstname.lastname@example.org, Alistair Barr, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
South Korea's Supreme Court said it will rule next Thursday on whether to uphold the reduced sentence given to Samsung Group heir Jay Y. Lee or ask an appeals court to revisit a case that was part of a graft scandal that brought down the country's then-president in 2017. The 51-year old Lee was convicted of bribing Choi Soon-sil, a close friend of former President Park Geun-hye. Both Lee and state prosecutors appealed to the Supreme Court, leaving the top court with the options of either upholding the appeals court's ruling or asking it to reconsider its judgment, legal experts say.
(Bloomberg) -- Apple Inc. is readying a clutch of new hardware for the coming weeks and months, including “Pro” iPhones, upgrades to iPads and its largest laptop in years.The Cupertino, California-based technology giant is planning to announce three new iPhones at an event next month, according to people familiar with the situation. The handsets will likely go on sale in September, contributing to fiscal fourth-quarter sales. But the real test will come in the crucial holiday season. That’s when the company is banking on a combination of new hardware, software and services to drive revenue higher, following a huge miss at the end of last year. Also coming in 2019: refreshed versions of the iPad Pro with upgraded cameras and faster chips, an entry-level iPad with a larger screen, new versions of the Apple Watch, and the first revamp to the MacBook Pro laptop in three years, the people said. Updates to key audio accessories, including AirPods and the HomePod speaker, are in the works, too, these people added. They asked not to be identified discussing private plans. An Apple spokeswoman declined to comment. Beyond these unannounced products, Apple is gearing up to launch a refreshed Mac Pro and its accompanying monitor, iPhone, iPad, Apple TV, Mac, and Apple Watch software updates, as well as its Apple TV+ video and Apple Arcade gaming subscription services.Here’s what to expect:iPhone:Apple is planning to launch three new iPhones, as it has done each year since 2017: “Pro” iPhone models to succeed the iPhone XS and iPhone XS Max as well as a successor to the iPhone XR. The main feature of the Pro iPhones will be a new camera system on the back with a third sensor for capturing ultra-wide-angle photos and videos. The extra camera will let users zoom out and capture a larger field of view. The sensors will capture three images simultaneously and use new artificial intelligence software to automatically correct the combined photo if, for example, a person is accidentally cut out of one of the shots. The new system will also take higher resolution pictures rivaling some traditional cameras. Photos taken in very low-light environments will improve, too. The high-end handsets will have significantly upgraded video recording capabilities, getting them closer to professional video cameras. Apple has developed a feature that allow users to retouch, apply effects, alter colors, reframe and crop video as it is being recorded live on the device. Another notable new feature: A reverse wireless charging system so that a user can power-up the latest AirPods in the optional wireless-charging case by leaving it on the back of the new Pro phones. This is similar to a capability that Samsung Electronics Co. rolled out for its Galaxy handsets earlier this year. The high-end iPhones will look nearly identical to the current models from the front and feature the same size screens, but at least some colors on the back will have a matte finish versus the existing glossy look. The new models should hold up better when they’re dropped due to new shatter-resistance technology. The phones will include a new multi-angle Face ID sensor that captures a wider field of view so that users can unlock the handsets more easily – even when the devices are flat on a table. Apple has dramatically enhanced water resistance for the new models, which could allow them to be submerged under water far longer than the 30-minute rating on the current iPhones. The new models will have updated OLED screens that lack the pressure-sensitive 3D Touch technology. Apple is replacing this with Haptic Touch, which essentially mirrors 3D Touch’s functionality with a long press, as it did with the iPhone XR last year. The iPhone XR’s successor will gain a second back camera for optical zoom, the ability to zoom in further without degrading quality, and enhanced portrait mode. Apple is also adding a new green version. All of the new iPhones will have faster A13 processors. There’s a new component in the chip, known internally as the “AMX” or “matrix” co-processor, to handle some math-heavy tasks, so the main chip doesn’t have to. That may help with computer vision and augmented reality, which Apple is pushing a core feature of its mobile devices. None of the new models will include 5G, but next year’s will. They’ll also have rear-facing 3-D cameras that will boost augmented reality capabilities. iPad:After launching new mid-tier iPad Air and iPad mini models earlier this year, Apple is planning to refresh the iPad Pro and its low-end iPad for schools. The 11-inch and 12.9-inch iPad Pros will get similar upgrades to the iPhones, gaining upgraded cameras and faster processors. Otherwise, the new iPads will look like the current versions. The low-end iPad’s screen will be 10.2-inches. That means Apple will likely no longer sell a new model with a 9.7-inch display, discontinuing the original display size after using it for nearly a decade. Apple Watch, AirPods, and HomePod:After revamping the Apple Watch last year with a new design and bigger screens, this year’s changes will be more muted, focusing on the watchOS 6 software update, and new case finishes. References to new ceramic and titanium models have been found in an early version of iOS 13, Apple’s latest mobile operating system. Apple is working on new AirPods that are likely to be more expensive than the current $159 model. New features will include water resistance and noise cancellation with a launch planned by next year. Apple introduced a new version of the entry-level AirPods in March with hands-free Siri support and longer battery life. Apple is also working on a cheaper HomePod for as early as next year. The current $300 model hasn’t sold very well. The new model is likely to have two tweeters (a type of loudspeaker), down from seven in the current HomePod. Mac: Apple is planning a revamped MacBook Pro with a screen over 16-inches diagonally. The bezels on the new laptop will be slimmer so the overall size of the laptop will be close to the current 15-inch models. The new laptop would mark Apple’s largest since the 17-inch MacBook Pro was discontinued in 2012. It’s part of an effort by Apple to retain and woo professional computer users. Apple is also launching the previously announced Mac Pro and 32-inch XDR Pro Display later this year. To contact the authors of this story: Mark Gurman in Los Angeles at email@example.comDebby Wu in Taipei at firstname.lastname@example.orgTo contact the editor responsible for this story: Alistair Barr at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
South Korea's Supreme Court is to rule next Thursday on whether to uphold a reduced sentence given to Samsung Group heir Jay Y. Lee or ask an appeals court to revisit a case that was part of a graft scandal that brought down the president in 2017. The ruling will be a test of South Korea's pledge to reform dominant conglomerates criticised for cozy relationship with political leaders, at a time when the Asia's fourth-biggest economy is facing a series of headwinds. The 51-year old Lee was convicted of bribing Choi Soon-sil, a close friend of former President Park Geun-hye.
Apple Inc is in the final stages of certifying advanced screens from Chinese display maker BOE Technology Group Co Ltd for its iPhones, as it attempts to reduce reliance on Samsung Electronics, the Nikkei reported on Wednesday. Apple will decide by the end of this year whether to take BOE on as a supplier of organic light-emitting displays (OLED), the Japanese business daily reported, citing sources. Apple did not immediately respond to a request for comment.
Apple is reportedly in the final stages of signing off on new advanced screens for its iPhones from China's top display maker, BOE Technology Group.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. JSR Corp., one of the Japanese materials makers hit by government restrictions on exports to South Korea, has received a permit to resume shipments, according to a person familiar with the matter.The Tokyo-based maker of photo-resist, a light-sensitive liquid used by semiconductor manufacturers to imprint circuits on silicon wafers, was granted the license on Monday, the person said, asking not to be identified because the details are private. The material is a key ingredient in Samsung Electronics Co.’s plans for chips with 7 nanometer line-widths or less, which are made via the so-called extreme ultra-violet (EUV) process.JSR’s shares were little changed at the close in Tokyo on Wednesday, reversing an earlier decline of as much as 1.3%. The Topix Chemicals Index, of which JSR is a member, slid 0.9%.Key InsightsThe permit covers about 5 to 6 months of supply and has to be renewed for each successive grade of the material, the person said.JSR spokesman Nobuhiko Kuwashima and a spokesman at Tokyo Ohka Kogyo Co., a rival photo-resist maker, declined to comment. Samsung Electronics also declined to comment.This month, South Korean Prime Minister Lee Nak-yon said the Japanese government had signaled it would approve exports of EUV photo-resist at some point.In addition to photo-resists, Japan has targeted fluorinated polyimide and hydrogen fluoride, essential ingredients for the manufacture of the displays and semiconductors that go into almost every piece of modern consumer electronics. The move came after South Korean courts ruled that Japanese companies must compensate Koreans conscripted to work in factories and mines during the 1910-45 colonization of the peninsula.(Updates with share reaction in the third paragraph)\--With assistance from Sohee Kim.To contact the reporter on this story: Pavel Alpeyev in Tokyo at firstname.lastname@example.orgTo contact the editors responsible for this story: Edwin Chan at email@example.com, Peter ElstromFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Apple Inc. plans to roll out the Apple TV+ movie and TV subscription service by November, part of a drive to reach $50 billion in service sales by 2020. The company will introduce a small selection of shows and then expand its catalog more frequently over several months, people familiar with the matter said. A free trial is likely as Apple builds up its library, said the people, who asked not to be identified because the plans aren’t public.The iPhone maker is entering an increasingly crowded field, led by streaming pioneer Netflix Inc. and Amazon.com Inc. In the coming months, Walt Disney Co., AT&T Inc. and Comcast Corp.’s NBCUniversal will debut new offerings -- all targeted at the growing ranks of viewers who are canceling cable-TV subscriptions or watching on mobile devices.With its first foray into video subscriptions, Apple is weighing different release strategies for shows. The company is considering offering the first three episodes of some programs, followed by weekly installments, the people said. Netflix tends to release whole seasons at once for bingeing, while AT&T’s HBO and Disney’s Hulu often release episodes weekly. The service will launch globally in over 150 countries. Apple TV+ will be one of five major digital subscription services in Apple’s portfolio, along with Apple Music, the upcoming Apple Arcade gaming service, Apple News+ and iCloud storage subscriptions. The company also generates recurring revenue from products like AppleCare extended customer service and its bank-operated iPhone upgrade program. It will also likely start pulling in revenue from the Apple Card, which began rolling out earlier this month. An Apple spokesman declined to comment.Apple hasn’t announced pricing for Apple TV+, but is weighing $9.99 a month, the people said, which would match Apple Music and Apple News+. Netflix and Amazon Prime charge as little as $8.99, while Disney+ plans to seek $6.99 when its service debuts in November.The Financial Times reported on Tuesday that Apple has set aside $6 billion for original shows and movies, without saying where it got the information. The budget for the first year of content was $1 billion, but has since expanded, it said. That’s far less than what Netflix is expected to spend this year. Analysts forecast it will lay out more than $14 billion on films and TV shows.Revenue DriveApple is pushing into services to generate added revenue from its large base of iPhone, iPad, Mac and Apple Watch users. Consumers have been slower to replace hardware recently due to higher prices, market saturation, economic headwinds and a lack of new, breakthrough features. Read More: Apple Faces Life After IPhone But Still Banks on the IPhoneThe company could head off a revenue slowdown by coaxing users to subscribe to the new services. Cupertino, California-based Apple could also potentially boost revenue by tying services to the iPhone upgrade program, which lets customers update to new models annually via monthly payment plans.Apple’s initial slate of shows will include “The Morning Show,” Steven Spielberg’s “Amazing Stories,” “See” with Jason Momoa, “Truth Be Told” with Octavia Spencer, and a documentary series about extravagant houses called “Home.” On Monday, the company released the second trailer for “The Morning Show,” starring Jennifer Aniston, Reese Witherspoon and Steve Carell. The TV service will be part of Apple’s TV app, which comes installed on the company’s devices, and will also be accessible from third-party products, like Roku and Amazon Fire TV boxes, and Samsung televisions.In the fiscal third quarter, services represented a record 21% of Apple’s sales, while the iPhone continued to dip below 50% of the total.Analysts have suggested Apple TV+ could top 100 million subscribers in the next half-decade, which would make it a major challenger to Netflix and Amazon.The company is making a big commitment to video, including around $300 million alone to two seasons of “The Morning Show,” according to people familiar with the matter.(Updates with budget details in 8th paragraph.)\--With assistance from Nate Lanxon.To contact the reporters on this story: Mark Gurman in San Francisco at firstname.lastname@example.org;Anousha Sakoui in Los Angeles at email@example.com;Lucas Shaw in Los Angeles at firstname.lastname@example.orgTo contact the editors responsible for this story: Nick Turner at email@example.com, Thomas PfeifferFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Huawei Technologies Co.’s founder Ren Zhengfei warned in an internal memo the company is at a “live or die moment” and advised underutilized employees to form “commando squads” to explore new projects. Workers who fail will have their salaries cut every few months and may lose their jobs, the billionaire said yesterday.Since May, Huawei has occupied the uncomfortable position of being both an established global technology brand and a member of the United States Entity List, which bars it from trading with American suppliers. Despite a series of 90-day reprieves, the latest of which came yesterday, the uncertainty caused by American sanctions has already cost the company a great deal. Even if Huawei is eventually brought in from the cold, the impact of this summer’s upheaval will be widespread and painful.The most immediate of Huawei’s losses is the international smartphone market. The company’s internal estimates show it expects to sell 60 million fewer phones in 2019 than it would have done without the U.S. impositions. In 2018, Huawei grew its mobile shipments by 34% to 206 million, according to IDC data, and in the first quarter of 2019 its pace accelerated to a 50% improvement while rivals Samsung Electronics Co. and Apple Inc. both saw shrinking sales. By the second quarter, partially affected by U.S. sanctions, Huawei’s growth had been slashed to 8.3%.Having successfully penetrated the European mobile market, Huawei was on a path to becoming the world’s biggest phone vendor, however the loss of Google’s Android, the brains inside its handsets, and the related Play Store app ecosystem made Huawei devices undesirable outside of China.Ren warned in his memo that redundant staff need to find a way to make themselves useful.“They either form a ‘commando squad’ to explore new projects -- in which case they could be promoted to company commander if they do well,” he wrote. “Or they can find jobs in the internal market. If they fail to find a role, their salaries will be cut every three months.”Read more: Huawei’s Founder Wants an ‘Invincible Iron Army’ to Fight U.S.The consumer division is, according to Huawei itself, its growth engine. Accounting for 45% of its revenue last year, the business that sells phones and other gadgets is instrumental to Huawei’s future health, and it’s taken a substantial reputation blow from all the allegations and sanctions levied against Huawei. That won’t be repaired anytime soon.On the same front is Huawei’s loss of software engineering time as it’s had to scramble to create a potential Android substitute. In the wake of the U.S. ban, the company switched to 24-hour days, working as many as 10,000 developers across three shifts and three offices to eliminate the need for American software and circuitry. Huawei ended up hurrying its HarmonyOS out this month, just to demonstrate it can code its own operating system, though it convinced very few people that it has anything approaching an Android alternative waiting in the wings.Less quantifiable but still significant will be the talent drain that Huawei suffers from the tarnishing of its global reputation and the overwork that’s resulted from its efforts to recover. The company has downsized its workforce in response to its new circumstances.Ren wrote that the company’s priorities are for employees to make “meritorious deeds” and for management “to promote outstanding employees as soon as possible and infuse new blood to our organization.”In explaining the fresh extension to Huawei’s reprieve from U.S. sanctions, Commerce Secretary Wilbur Ross said that some American telecoms are “dependent” on Huawei tech and need time to wean themselves off it. So while the Washington authorities are giving Huawei a little more breathing room, the company’s situation is still very much precarious, as its founder has indicated.Without the U.S. trade intervention, Huawei would be threatening Samsung for the crown of the world’s most prolific smartphone vendor and it would be capitalizing on its lead in 5G technology instead of counting the cost of lost customers. The company remains in a strong position, but the dynamism of its growth and the luster of its cutting-edge technology have both been diminished by the measures taken by the American government.To contact the reporters on this story: Vlad Savov in Tokyo at firstname.lastname@example.org;Gao Yuan in Beijing at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, Peter Elstrom, Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Japan has approved shipments of a high-tech material to South Korea for the second time since imposing export curbs last month, two sources said, ahead of talks by government officials this week to resolve a dispute stemming from their wartime past. In early July, Japan tightened controls on shipments to South Korea of three materials used in chips and displays, threatening to disrupt the global tech supply chain. Japan also announced a plan to remove South Korea's fast-track export status from later this month.
(Bloomberg) -- South Korean financial regulators will start a probe into sales of derivative products that carry the risk of individual investors losing almost all their money depending on moves in overseas market rates.Those products include 127 billion won ($105 million) of securities tied to the German 10-year government bond yield, according to a statement from the Financial Supervisory Service. While they offer high returns if the German yield stays above a certain level, the securities expose investors to losses that increase as the yield falls more and more below that level.After the recent plunge in global bond yields, investors in the German rate product stand to lose 95.1% of their principal on average if it matures with interest rates around current levels, according to the FSS. The outstanding amount of such securities linked to overseas interest rates was about 822 billion won as of Aug. 7, and individual investors accounted for 89.1% of that total, according to the regulator.The sale of such a high-risk product mainly to individuals highlights how low interest rates in Korea are making investors desperate for extra return, to such an extent that they are willing to buy a product that will cause them to lose almost everything they put in if the market moves the wrong way. The regulator said that after the probe it will seek to reconcile a dispute about whether the products were sold without providing enough information.A law firm called Hannuri Law, which is talking to investors, said on its website that most of the investors are known to be elderly people, retirees and housewives, who typically are risk averse.FSS said it will investigate relevant parties -- banks, brokerages, and asset management firms.Among the products tied to overseas rates, 401 billion won of the securities were sold by Woori Bank, while 388 billion won was sold by Hana Bank, according to the FSS. Spokespeople for both lenders said they will faithfully take part in the probe.One of the German rate-linked products offers a return of 2% on the six-month securities if the 10-year yield is minus 0.25% or higher, according to the FSS. But if it falls below that level, investors lose 2.5% of their principal every time the yield drops one basis point. They stand to lose as much as 98% of their investment if the rate falls 40 basis points or more from the target level, under the product’s terms. The German sovereign yield was minus 0.69% last week.Another 696 billion won of securities are linked to the U.S. dollar five-year constant maturity swap rate and U.K. pound seven-year constant maturity swap rate. Investors may lose 56.2% of their principal on average if the rates stay at levels as of Aug. 7, according to the FSS.The market for such products in South Korea is big.The outstanding amount of so-called derivatives-linked securities and funds tied to non-equity assets such as interest rates and exchange rates was about 40.8 trillion won, while those linked to equity-related products came to 74.9 trillion won, according to data from Korea Securities Depository.“Retail investors will now consider those products risky and they will likely take a conservative approach,” said Jun Gyun, a derivatives analyst at Samsung Securities Co. in Seoul. “Issuance of such products may dwindle due to soured investor sentiment.”(Updates with analyst comment in last paragraph.)To contact the reporter on this story: Kyungji Cho in Seoul at email@example.comTo contact the editors responsible for this story: Andrew Monahan at firstname.lastname@example.org, Ken McCallumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. When Japan decided to step up its fight with South Korea last month, it dug deep into the supply chain to impose sanctions on three obscure materials made by a handful of Japanese companies few have ever heard of.The most powerful weapon in Tokyo’s campaign against its neighbor turned out to be a half-dozen or so niche firms with names like JSR Corp., Shin-Etsu Chemical Co. and Tokyo Ohka Kogyo Co. They make fluorinated polyimide, hydrogen fluoride and photo-resist: essential ingredients for the manufacture of the displays and semiconductors that go into every piece of modern consumer electronics, from Apple Inc. iPhones and Dell Technologies Inc. laptops to the full range of Samsung Electronics Co. devices. Japan prohibited the export of those materials, allowing an exception only if suppliers secure a license and renew that license regularly.How did they become so indispensable? And how did they manage to stay on top even after their Japanese clients ceded the chip and display markets to Taiwanese and South Korean rivals? The answer lies in a series of well-timed investments decades ago, combined with a willingness to explore foreign markets and an unceasing refinement of manufacturing standards too exacting for anyone else to try and match.“JSR is an interesting case in that they became big in photo-resists because they succeeded overseas first,” said Damian Thong, an analyst at Macquarie Group Ltd. “And much of this success was because of the strategy of one man — Mitsunobu Koshiba.”The JSR chairman’s story shows just how hard it would be for a newcomer to fill the shoes of one of these suppliers. Koshiba spearheaded the company’s pivot into photo-resists, a light-sensitive liquid used to imprint circuits as narrow as a few strands of DNA onto silicon wafers in a process called lithography. Gadgets keep getting slimmer, more powerful and cheaper because chip companies are able to etch ever smaller circuit patterns onto silicon. When it comes to the most advanced chip processes, JSR is one of the few that can deliver the goods.When 25-year-old Koshiba joined JSR in 1981, the company’s biggest business was still tire rubber. (The name is an abbreviation of Japan Synthetic Rubber.) As luck would have it, photo-resist at that time used resins that JSR had access to for its existing business, and the company saw an opportunity to break into a new growth industry. Japanese semiconductor makers were just beginning their rise to global dominance, and suppliers were positioning themselves to go along for the ride.The problem for JSR was it didn’t belong to any of the local keiretsu, a grouping of suppliers that receives preferential access to contracts. And the company was also up against Tokyo Ohka or TOK, the first in Japan to manufacture photo-resist. By the mid-1980s, TOK controlled as much as 90% of the domestic market.“As a neutral company without keiretsu affiliations, we had to look outside Japan,” Koshiba said in an interview, outlining JSR’s decades-long rise but declining to talk in detail about sensitive trade negotiations now underway between Tokyo and Seoul.JSR’s decision to get into that market was bold but Koshiba seemed like the right person for the job. He’d spent two years studying materials science at the University of Wisconsin-Madison on a Rotary Club scholarship, was one of the few English speakers at the company and was eager to work abroad. In 1990, JSR sent him to Belgium to set up a photo-resist joint venture with the country’s biopharmaceutical giant UCB SA. The goal was to target the American market.As timing would have it, JSR was going overseas just as Japan was approaching the peak of its semiconductor prowess. That same year, NEC Corp., Toshiba Corp. and Hitachi Ltd. were the world’s biggest chipmakers, pushing aside Intel Corp. and Texas Instruments Inc. Japanese firms occupied six spots in the industry’s top 10 ranking by revenue, a level of concentration that hasn’t been matched by any country since, according to IC Insights.Japan’s seemingly unshakable control of the computer memory market gave the country renewed national confidence. The mood was reflected in the book “The Japan That Can Say No,” in which right-wing politician Shintaro Ishihara and Sony Corp. co-founder Akio Morita argued for a more muscular foreign policy. In an eerie echo of recent events, the authors contended that the Japanese government had the power to determine the outcome of the Cold War just by directing its national companies to sell the chips used in intercontinental ballistic missiles (ICBMs) to the Soviets instead of the U.S.But the Cold War ended before that theory could be tested. Over the following decade, personal computers overtook ICBMs as the primary destination for chips and demand shifted to prioritize low unit costs over military-spec quality. By 2006, Samsung had risen to No. 2 on the list of the world’s biggest chipmakers, with Korean compatriot SK Hynix Inc. ranking seventh and only three Japanese names remaining among the top 10.For JSR, the turning point came in 2000. Koshiba, who was based in California at that time, recalls being dragged into an emergency meeting on a Sunday wearing a T-shirt and shorts. Word was a rival company was about to clinch an agreement with IBM for joint research on a next-generation photo-resist material. “Get it back,” he was told. Koshiba leaned on the network of American industry contacts he had spent a decade building, people who had known him through the worst of U.S.-Japanese trade tensions. Within a month, IBM signed with JSR.“Without that deal, we wouldn’t have gotten to No. 1,” Koshiba said.In lithography, the formula for shrinking transistors has only two levers: increase the light power or use a lens that lets more light through. Every time the chip process shifts to a higher-energy band of light, resist makers have to go back to the drawing board, opening up new opportunity. The research partnership with IBM ushered in the fourth such shift since integrated circuits replaced vacuum tubes in the 1970s, and JSR rode it all the way to the top.The company now commands about 40% of the market for the latest generation of resist used in mass production. It also supplies more than 30% of the photo-resist for 3D NAND, the most advanced flash memory chips, which are among the few product lines where Japan still competes with Korean rivals. In 2019, JSR is expected to generate about three times the revenue and five times the profit it did in the early ‘90s.What makes this business inaccessible to newcomers is the extreme degree of purity and quality demanded by customers. TOK says a single drop of coffee in two Olympic-sized swimming pools would be considered an unacceptable defect. JSR’s analogy is to a handful of tainted golf balls being enough to spoil a batch the size of the entire Japanese archipelago.In addition to being technically challenging, the markets these companies operate in are small and don’t promise fantastic growth. According to research firm Fuji Keizai Group, the industry’s sales rose just shy of 8% last year to $1.3 billion. Koshiba jokes that even the market for ramen noodles is bigger than that.“To recreate JSR, you basically need to spend as much as they did in the past 20 years on R&D and relationships, and also rebuild their reputation,” Macquarie’s Thong said. “These materials are used in such moderate quantities that to rebuild the whole infrastructure is probably not worth the investment.”And that’s the irony of the current situation. By stoking trade tensions, Japan may encourage its neighbor to subsidize competition to JSR and TOK that wouldn’t make sense under normal market conditions. It’s a matter of survival: Korean corporations now depend on Japan for over 90% of all the fluorinated polyimide and resists they need, and 44% of hydrogen fluoride requirements, Societe Generale estimates.Read more: Japan Grants South Korea Export License, Lessening Trade FearsFor the time being, JSR and TOK retain dominance over one prized material that keeps the consumer electronics industry ticking. According to South Korean Prime Minister Lee Nak-yon, Japan has approved exports of photo-resist for the next-generation of lithography currently under development by Samsung and Taiwan Semiconductor Manufacturing Co. But one of Japan’s last strongholds of tech industry domination may be under threat.“They have the engineers, and once national pride is involved they can possibly make it even if it loses money,” Koshiba said. “We don’t have an impregnable wall.”\--With assistance from Jason Clenfield.To contact the reporters on this story: Pavel Alpeyev in Tokyo at email@example.com;Yuki Furukawa in Tokyo at firstname.lastname@example.orgTo contact the editors responsible for this story: Peter Elstrom at email@example.com, Vlad Savov, Edwin ChanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Japan has approved shipments of a high-tech material to South Korea for the second time since imposing export curbs last month, two sources said, ahead of talks by government officials this week to resolve a dispute stemming from their wartime past. In early July, Japan tightened controls on shipments to South Korea of three materials used in chips and displays, threatening to disrupt the global tech supply chain.
Kim Sung-joo was seemingly handed a poisoned chalice two years ago when he was appointed chair of South Korea’s National Pension Service — the world’s third-largest pension fund. The sovereign fund, which has Won700tn ($578bn) under management, had just been embroiled in a corruption scandal that led to the jailing of Mr Kim’s predecessor as well as South Korea’s former president Park Geun-hye and Lee Jae-yong, heir-apparent to the Samsung group. Now the NPS is embarking on a drive to boost foreign assets — a move that will see it hunt for hundreds of billions of dollars in offshore deals over the next five years — and Mr Kim is at pains to reassure that worries over undue influence from South Korea’s political and business elite are in the past.
Trump said Cook "made a good case" that tariffs could hurt Apple, given that Samsung's products would not be subject to those same tariffs. Tariffs on an additional $300 billion worth of Chinese goods, including consumer electronics, are scheduled to go into effect in two stages on Sept. 1 and Dec. 15.
President Donald Trump said on Sunday that he had spoken with Apple Inc's Chief Executive Tim Cook about the impact of U.S. tariffs on Chinese imports as well as competition from South Korean company Samsung Electronics Co Ltd. Trump said Cook "made a good case" that tariffs could hurt Apple, given that Samsung's products would not be subject to those same tariffs.
(Bloomberg) -- Sign up for Next China, a weekly email on where the nation stands now and where it's going next.President Donald Trump said Apple Inc. Chief Executive Officer Tim Cook voiced concerns about chief competitor Samsung Electronics getting an edge because its products, unlike Apple’s, won’t be subject to tariffs when imported by the U.S.Cook and Trump had dinner on Friday night, while the president was at his golf club in Bedminster, New Jersey. Trump described the conversation to reporters as he prepared to travel back to Washington.The majority of Apple’s products are due to be hit with 10% tariffs in the next weeks or months. Levies on the iPhone, iPad, and Apple laptops have been pushed back to Dec. 15, but the tariff hit on the Apple Watch, AirPods, and many accessories is still planned for Sept. 1.Trump said Cook made a “good case” about the difficulty in competing with Samsung if Apple products are subject to import tariffs. “I thought he made a very compelling argument.”Apple will be hit by tariffs because it makes the majority of its devices in China before importing them to the U.S. and other parts of the world.Samsung, however, builds its products across several countries, including Vietnam and South Korea in addition to China. That means their tariff impact will be far less than the impact to Cupertino, California-based Apple.“It’s tough for Apple to pay tariffs if it’s competing with a very good company that’s not,” Trump said.Apple needs to incorporate the cost of tariffs into the cost of goods, while Samsung currently won’t, putting Apple at a competitive disadvantage. Samsung is launching its latest device, the Note 10, later this month, while Apple is planning upgrades to the Apple Watch, iPhone, and its computers for later this year.To contact the reporters on this story: Jennifer Jacobs in Washington at firstname.lastname@example.org;Mark Gurman in San Francisco at email@example.comTo contact the editors responsible for this story: Alex Wayne at firstname.lastname@example.org, Ros Krasny, Matthew G. MillerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
It’s true, you’ve got the Galaxy Note to thank for your big phone. Of course, much of the mainstreaming of larger phones comes courtesy of a much improved screen to body ratio, another place where Samsung has continued to lead the way. Samsung didn’t do the product any favors by dropping the pretense of distinction between the Note and its Galaxy S line.
South Korean panel maker Samsung Display said on Friday it is considering suspending one of its liquid crystal display (LCD) production lines at home due to a supply glut. Samsung Display, a unit of Samsung Electronics Co Ltd, currently operates two LCD production sites in South Korea and one in China. "Samsung Display has been adjusting the production output and facility operation due to oversupply and worsening profitability, and we are still considering the suspension of the line, but nothing has been decided," the company said in a statement.
Aug.19 -- Apple Inc. Chief Executive Officer Tim Cook shared his concerns with President Donald Trump about Samsung Electronics gaining an edge due to impending tariffs on products imported to the United States. Bloomberg's Derek Wallbank reports on "Bloomberg Surveillance."