Tag Archives: Technology Equipment (TRBC)

Apple unlikely to meet revenue guidance due to coronavirus impact

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(Reuters) – Apple Inc (AAPL.O) said on Monday it would not meet its revenue guidance for the March quarter because of the coronavirus outbreak slowing iPhone production and weakening demand in China.

FILE PHOTO: The Apple Inc. logo is seen hanging at the entrance to the Apple store on 5th Avenue in Manhattan, New York, U.S., October 16, 2019. REUTERS/Mike Segar/File Photo

Apple’s manufacturing facilities in China have begun to reopen, but they are ramping up more slowly than expected, the technology company said in a statement to its investors.

Global supplies of Apple’s iPhones will be limited as the sites work toward operating at full capacity, the company said.

“These iPhone supply shortages will temporarily affect revenues worldwide,” the company said.

In January, Apple forecast $63 billion to $67 billion in revenue for the second quarter ending in March, ahead of estimates of $62.4 billion.

The company said it would provide more information during its next earnings call in April.

Apple also said that store restrictions due to coronavirus precautions had affected its sales in China, with most retail stores either closed or operating at reduced hours.

“We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can,” the company said.

The disruptions follow a strong December quarter for iPhone sales, which were up for the first time in a year.

Analysts have estimated that the virus may slash demand for smartphones by half in the first quarter in China, the world’s biggest market for smartphones.

“While we have discussed a negative iPhone impact from the coronavirus over the past few weeks, the magnitude of this impact to miss its revenue guidance midway through February is clearly worse than feared,” Wedbush analyst Daniel Ives wrote in a note.

Apple’s stock is expected to face a knee-jerk reaction on Tuesday, when Wall Street reopens after the Presidents Day holiday, Ives said.

Wedbush said it remained optimistic that Apple would be able to recover from the coronavirus setback.

“While trying to gauge the impact of the iPhone miss and potential bounce back in the June quarter will be front and center for the Street, we remain bullish on Apple for the longer term,” Ives said.

The outbreak is expected to intensify pressure on China’s economy, with multiple companies struggling to restart production after an extended Chinese New Year holiday.

Fiat Chrysler, <FCHA.MI, Hyundai Motor Co (005380.KS) and General Motors Co (GM.N) have all said their auto production lines were, or could be, hit by Chinese factories that are slow to restart because of the virus.

Reporting by Neha Malara in Bengaluru and Laila Kearney in New York; Editing by Dan Grebler and Peter Cooney

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U.S. judge expected to rule in favor of merger of Sprint, T-Mobile: sources

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(Reuters) – A U.S. district judge is expected to rule in favor of allowing Sprint and T-Mobile to merge over the objections of a group of state attorneys general, according to two sources familiar with the matter.

A smartphones with Sprint logo are seen in front of a screen projection of T-mobile logo, in this picture illustration taken April 30, 2018. REUTERS/Dado Ruvic/Illustration

Shares of Sprint surged 69% in after hours trade and T-Mobile stock rose 8%.

U.S. District Court Judge Victor Marrero is expected to make his decision public on Tuesday, one source said.

Approval of the deal would be a high profile defeat for state attorneys general, led by New York and California, who had argued that a merger of the No. 3 and No. 4 U.S. wireless carriers would lead to higher prices, especially for customers who use prepaid plans popular with people with poorer credit.

The deal has already been approved by federal regulators.

The companies had said the deal was needed to help them build out next generation of wireless, called 5G, and better compete with sector leaders Verizon Communications Inc and AT&T Inc.

Executives from the companies, including outspoken T-Mobile Chief Executive John Legere, testified during the trial that Sprint’s business was deteriorating and would not survive if it did not merge with T-Mobile.

The two companies are expected to start talks on renegotiating the terms of their $26.5 billion merger in the next few days, two sources said.

T-Mobile parent Deutsche Telekom is keen to cut the price of the deal, arguing that Sprint’s fortunes have deteriorated since they inked their agreement, the sources added.

However, Sprint, in which Japan’s Softbank Group has a major stake, is expected to argue that T-Mobile needs Sprint in order to grow its cashflow and to boost its capacity using its spectrum, according to the sources.

There is no certainty that there will be a renegotiated deal, the sources cautioned.

The Court did not immediately respond to a request for comment. Sprint and T-Mobile both declined to comment.

One merger opponent, Gigi Sohn, a former telecoms regulator now at Georgetown Law, tweeted her displeasure with reports of the decision. “If #antitrust law doesn’t even block a 4-3 merger like this, we need to start from scratch,” she tweeted, referring to the market shrinking to three from four competitors. “I’ll have more to say tomorrow after I read the judge’s decision (through my tears).”

While a group of states decided to fight the deal in court, the federal government approved it with conditions, a decision which remain in effect.

The U.S. Justice Department approved the deal in July after the carriers agreed to sell some assets to satellite provider Dish Network Corp, which would create its own cellular network to ensure that there would still be four competitors in the market. The Federal Communications Commission signed off on the deal in October. Dish shares rose 2% after hours.

The states maintained that Dish was ill-equipped to become a competitive fourth wireless carrier.

The Wall Street Journal earlier reported that the court was expected to approve the deal on Tuesday.

Reporting by Diane Bartz in Washington and Greg Roumeliotis in New York, David Shepardson in DC and Arundhati Sarkar in Bengaluru; Editing by Shailesh Kuber, Uttaresh.V and Lincoln Feast.

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Exclusive: iPhone app makers questioned in U.S. antitrust probe of Apple – sources

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WASHINGTON (Reuters) – The U.S. Justice Department has reached out to app developers as part of its investigation into Apple Inc (AAPL.O), one of the four big tech companies being probed for alleged anti-competitive behavior, according one of the developers and another person familiar with the investigation.

FILE PHOTO: An Apple logo hangs above the entrance to the Apple store on 5th Avenue in the Manhattan borough of New York City, July 21, 2015. REUTERS/Mike Segar/File Photo

The chief executive of developer Mobicip, Suren Ramasubbu, told Reuters he was interviewed in November by a U.S. investigator who asked about the company’s interactions with Apple. The app, which has nearly a million users worldwide, allows parents to control what their children see on their iPhones.

Ramasubbu said the Mobicip app was temporarily removed from the iPhone app store last year for a failure to meet requirements imposed by Apple.

A source familiar with the Justice Department’s investigation said a handful of app developers had been contacted in what is the first indication of what officials are pursuing involving Apple since the investigation was revealed by Reuters in June.

U.S. President Donald Trump has criticized Apple’s Silicon Valley neighbors for other reasons, calling for closer scrutiny of social media companies and Google and accusing them of suppressing conservative voices online, without presenting any evidence.

U.S. Attorney General William Barr said in December that he hoped to have the Justice Department investigations into the big tech platforms – Facebook Inc (FB.O), Alphabet Inc’s (GOOGL.O) Google, Amazon.com Inc (AMZN.O) and Apple – wrapped up this year.

Apple declined comment, but pointed to a statement on its website that says its app store was designed to hold apps “to a high standard for privacy, security and content.”

“Since 2016, we have removed over 1.4 million apps from the App Store because they have not been updated or don’t work on our most current operating systems,” the site says.

Apple’s ability to do just that has been a point of contention in the courtroom. The company was accused in lawsuits last year of abusing its clout in the app market. In one case, the U.S. Supreme Court gave the go-ahead last May to an antitrust lawsuit that accused Apple of forcing consumers to overpay for iPhone software applications.

SCREEN TIME CONTROL

Apple introduced its Screen Time app, which includes parental controls, in June 2018. At the start of 2019, Ramasubbu told Reuters, his company was contacted by Apple and warned that Mobicip’s app violated the iPhone-maker’s rules relating to technical elements that had previously been acceptable.

The app was removed from the app store for about six months, during which time it was updated to be compliant with Apple rules, Ramasubbu said. It was reinstated in October 2019, but he estimates his company’s business has shrunk by half.

Six executives of parental control app companies interviewed by Reuters said they had a comfortable relationship with Apple until mid-2018. That is when Apple introduced its own, similar software giving parents oversight of their children’s phone screen time and searches.

Apple has said that it had been concerned about parental control apps using technology which gave developers access to sensitive data, and that they declined to approve apps that used the technology if they did not also commit to not sharing data on children.

As the arbiter of who is allowed to sell in the app store, Apple says it has the power to ensure that only the highest quality apps are sold there.

But some developers say it also allows Apple to push out apps that compete with its own products, thus strengthening its profits at a time with its device sales have stagnated and it is seeking new sources of revenue.

Reporting by Diane Bartz; Editing by Chris Sanders and Edward Tobin

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Huawei CFO’s arrest at airport to be focus of Vancouver listening to

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VANCOUVER (Reuters) – Legal professionals for Huawei Chief Monetary Officer Meng Wanzhou will probably be in a Canadian courtroom on Monday to press for particulars surrounding her arrest at Vancouver’s airport practically 10 months in the past.

FILE PHOTO: Huawei’s Monetary Chief Meng Wanzhou leaves her household house in Vancouver, British Columbia, Canada, Could 8, 2019. REUTERS/Lindsey Wasson/File Photograph

Meng, 47, was detained on Dec. 1 on the request of america, the place she is charged with financial institution fraud and accused of deceptive HSBC Holdings Plc (HSBA.L) about Huawei Applied sciences Co Ltd’s [HWT.UL] enterprise in Iran. Meng, who is anticipated in court docket, has mentioned she is harmless and is preventing extradition.

The arrest has strained China’s relations with each america and Canada.

At Monday’s 10 a.m. (1700 GMT) listening to earlier than Justice Heather Holmes of the British Columbia Supreme Court docket, Meng’s protection group will request extra disclosure surrounding her detention on the airport, together with contacts between U.S. and Canadian authorities.

Meng’s attorneys argue she was unlawfully detained, searched and questioned for over three hours after she landed on a flight from Hong Kong. Below the ruse of an immigration examine, the protection claims, Canadian officers delayed her arrest and picked up proof for U.S. authorities.

Extradition proceedings in opposition to Meng ought to be halted if officers abused the method, the attorneys say. Moreover accusations of misconduct associated to her detention, they argue america is utilizing Meng for financial and political achieve, noting that after her arrest, U.S. President Donald Trump mentioned he would intervene if it might assist shut a commerce deal.

Legal professionals for Canada will reply to the demand for extra details about Meng’s arrest in court docket, in response to a Canadian Division of Justice spokesman, who added that Meng had already been supplied with “intensive disclosure, past what’s required.”

Canadian police and border officers, in response to a civil declare Meng filed earlier this yr, have mentioned they acted “lawfully and in good religion.”

Vancouver lawyer Gary Botting, who has seen a video of Meng being detained on the airport, mentioned immigration officers got here throughout as “Keystone Cops.”

“There are actual questions on whether or not her rights had been violated,” mentioned Botting, who briefed Meng’s protection group on Canada’s extradition regulation after her arrest however is not concerned with the case.

The extradition listening to itself is just not scheduled to begin till January.

Meng, the daughter of Huawei founder Ren Zhengfei, spent 10 days in jail in December however was then launched on C$10 million ($7.5 million) bail and resides in considered one of her two multimillion-dollar houses in Vancouver. She is required to put on an digital ankle bracelet and pay for safety guards.

Huawei, the world’s largest telecommunications gear maker, has been accused by america of actions opposite to nationwide safety or overseas coverage pursuits.

U.S. and Chinese language officers resumed commerce talks final week, because the world’s two largest economies attempt to negotiate a approach out of their 14-month commerce warfare.

Reporting by Karen Freifeld; Modifying by Chris Sanders and Tom Brown

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Apple faucets recycled uncommon earth components for iPhone components

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Sept 18 (Reuters) – Apple Inc’s new iPhones will used recycled uncommon earth components in a key part, the corporate stated on Wednesday.

Apple stated it’ll used recycled uncommon earths in its “Taptic Engine,” a component that lets iPhones mimic a bodily button click on regardless of being a flat pane of glass. The half is about one-quarter of the uncommon earth components contained in the iPhone fashions.

Uncommon earths, a gaggle of 17 specialised minerals, have turn out to be a flash level in commerce tensions between the US and China. The weather are utilized in weapons, shopper electronics and different items.

China dominates the processing of the uncooked minerals, and has implied via its state-controlled media that it may prohibit uncommon earths gross sales to the US, simply because it did to Japan after a diplomatic dispute in 2010.

Lisa Jackson, Apple’s vice chairman of atmosphere, coverage and social initiatives, stated Apple’s use of recycled uncommon earths was “not associated” to commerce tensions however may assist it keep a gentle provide.

“That is a kind of completely satisfied coincidences the place what is nice for the planet is actually good for enterprise on the identical time,” Jackson advised Reuters. “One of many issues we discuss rather a lot internally, simply generally, is how way more resilient this makes our provide chain.”

In shopper electronics, uncommon earths reside in tiny audio system and actuators. The components are so small that gathering them for recycling is troublesome and costly.

For now, Apple will use recycled uncommon earths from an outdoor provider, not from beforehand used iPhones. Apple declined to call the provider or say what merchandise the uncommon earths have been recovered from.

However Jackson stated that Apple’s scale – new iPhone fashions are usually promote tens of hundreds of thousands of models per 12 months – helped make the challenge economically viable.

“Now we have primarily made a marketplace for this entrepreneur, this innovator, who discovered a strategy to recycle uncommon earths,” Jackson stated.

Apple usually goals to reuse components from its previous units.

Apple stated on Wednesday that aluminum from enclosures recovered via its trade-in applications will likely be melted down and made into new MacBook Air laptop computer computer systems. The corporate beforehand disclosed that cobalt recovered from iPhone batteries disassembled by robots at its recycling labs in Texas is put into new iPhone batteries.

Apple is experimenting with methods to get well uncommon earths from its telephones utilizing its robots, which may take away tiny components and separate them into assortment bins to combination sufficient materials to make recycling viable.

The corporate can also be researching ways in which standard recyclers, who shred units and separate out the assorted supplies, may tweak their traces to get well the weather, info that Jackson stated Apple is open to sharing.

“There are some improvements of ours that we truly need individuals to repeat. In order a lot as doable – so long as it doesn’t give away a few of our different design and engineering innovation – we’re completely satisfied to convey alongside the recycling trade,” Jackson stated. “Now we have began to be way more clear round this expertise improvement than we often are.” (Reporting by Stephen Nellis in San Francisco; Modifying by Greg Mitchell and Sonya Hepinstall)

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Huawei unveils new OS to be used in smartphones, different units

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FILE PHOTO: A Huawei gadget is pictured within the Manhattan borough of New York, New York, U.S., July 22, 2019. REUTERS/Carlo Allegri/File Picture

DONGGUAN, China/HONG KONG (Reuters) – Huawei Applied sciences [HWT.UL] unveiled on Friday its proprietary working system to be used in smartphones and different units, as U.S. commerce curbs imposed in Could threaten to chop the Chinese language agency’s entry to essential U.S. applied sciences akin to Android.

“Concord OS is totally totally different from Android and iOS,” stated Richard Yu, head of Huawei’s client enterprise group, referring to working programs developed by Alphabet Inc’s (GOOGL.O) Google and Apple Inc (AAPL.O).

“You’ll be able to develop your apps as soon as, then flexibly deploy them throughout a variety of various units,” he advised a builders’ convention held in Dongguan in southern China, the place Huawei has constructed a lavish new campus modeled after European cities.

Concord, referred to as Hongmeng in Chinese language, is prepared to be used in smartphones however Huawei prefers to stay to Android for now to help its app builders, Yu stated, including the Honor sensible display product it plans to unveil on Saturday would be the first product utilizing the Concord OS.

He stated it could be tough for Huawei to satisfy its earlier purpose of changing into the world’s largest smartphone maker by shipments this 12 months because of the U.S. curbs.

The corporate would have been capable of ship 300 million smartphones this 12 months with out such restrictions, Yu stated.

Reporting by Sijia Jiang; Enhancing by Miyoung Kim and Muralikumar Anantharaman

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Wall Avenue jumps, with tech main the advance

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NEW YORK (Reuters) – U.S. shares jumped on Thursday, led by a greater than 2% achieve in know-how shares, whereas better-than-expected financial knowledge in the US and China helped to offset worries concerning the commerce battle.

FILE PHOTO: Merchants work on the ground on the New York Inventory Trade (NYSE) in New York, U.S., August 6, 2019. REUTERS/Brendan McDermid

The S&P 500 know-how sector, which was on the coronary heart of the current selloff, offered the largest increase to the benchmark S&P 500 index, which was heading in the right direction for its third day of features.

Superior Micro Units Inc gained 14.7% after the chipmaker launched its second era of processor chip and mentioned that it had landed Alphabet Inc’s Google and Twitter Inc as prospects.

Symantec Corp jumped 11.6% after sources mentioned chipmaker Broadcom Inc was in superior talks to purchase the cybersecurity firm’s enterprise enterprise.

“The in a single day motion was constructive. That, together with the bounceback yesterday, gave us a pleasant tailwind coming into the market right now, each for high-frequency merchants who have been shopping for the development and in addition for cut price hunters who had seen shares that have been on the watchlist come all the way down to a stage that appeared enticing,” mentioned Bucky Hellwig, senior vice chairman at BB&T Wealth Administration in Birmingham, Alabama.

“So we’ve seen numerous the tech names pop after they bought hammered. There’s cash coming again into these as a result of buyers have determined it created a chance.”

U.S. knowledge pointed to a sturdy labor market because the variety of People submitting functions for unemployment advantages unexpectedly fell final week, allaying some worries a couple of recession and serving to U.S. Treasury yields rise.

That adopted better-than-expected export numbers out of China and a few enchancment for the nation’s yuan forex, whose slide over the weekend spurred Wall Avenue’s worst day thus far this 12 months on Monday.

The Dow Jones Industrial Common rose 285.32 factors, or 1.1%, to 26,292.39, the S&P 500 gained 45.67 factors, or 1.58%, to 2,929.65 and the Nasdaq Composite added 154.78 factors, or 1.97%, to eight,017.61.

On the down aspect, Kraft Heinz sank after it pulled its full-year forecast and wrote down the worth of a number of enterprise items by over $1 billion, capping a tough few months for the corporate.

Lyft Inc superior 4.1% after the ride-hailing service raised its annual outlook and hinted on the finish of its worth battle with Uber Applied sciences Inc. Uber, on account of report after the bell and a high-profile loser since its market launch this 12 months, rose 7.5%.

Advancing points outnumbered declining ones on the NYSE by a 4.32-to-1 ratio; on Nasdaq, a 3.52-to-1 ratio favored advancers.

The S&P 500 posted 38 new 52-week highs and a pair of new lows; the Nasdaq Composite recorded 77 new highs and 84 new lows.

Extra reporting by Medha Singh and Arjun Panchadar in Bengaluru; Modifying by Anil D’Silva, Arun Koyyur and David Gregorio

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Xilinx resumes some Huawei gross sales, however decrease forecast sends shares down

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(Reuters) – Xilinx Inc (XLNX.O) mentioned it had resumed some gross sales to Huawei Applied sciences Co Ltd however forecast current-quarter income under Wall Road estimates on Wednesday, citing the affect of U.S. restrictions on promoting to the Chinese language telecommunications agency.

FILE PHOTO: A chip of Xilinx is displayed by means of a magnifying glass through the China Worldwide Import Expo (CIIE), on the Nationwide Exhibition and Conference Heart in Shanghai, China November 6, 2018. REUTERS/Aly Tune

The forecast and despatched the chipmaker’s shares down 5.78% to $125.50 in prolonged buying and selling. Xilinx makes programmable chips which might be utilized in knowledge facilities to hurry up duties like synthetic intelligence work, in addition to chips which might be utilized in 5G telecommunications base stations.

Firm executives didn’t disclose how a lot income the Xilinx derives from Huawei, however mentioned no single buyer accounted for greater than 10% of its income and that Xilinx has minimize its gross sales expectations for Huawei by greater than half.

Chief Govt Victor Peng mentioned that Xilinx stopped all gross sales to Huawei in Could when U.S. restrictions took impact. Peng mentioned that through the fiscal first-quarter ended June 29, Xilinx decided that a few of its merchandise, comparable to its older, 28-nanometer chips and a few chips not designed for 5G gear, may legally may very well be bought to Huawei.

Xilinx resumed transport these chips and has additionally utilized for licenses with the U.S. Commerce Division to renew promoting different merchandise to Huawei.

On a convention name, analysts pressed the corporate on whether or not Huawei may pace the transition to completely customized chips made by its HiSilicon unit to interchange Xilinx’s chips. Peng advised analysts he didn’t suppose that may occur shortly.

“They’re actually not going to surrender on 5G,” Peng mentioned. “They’ve architected it in sure methods. That’s not one thing that anyone may simply change on a dime.”

The corporate mentioned it expects second-quarter income of between $800 million and $850 million, under analysts’ common estimate of $852.5 million, in response to IBES knowledge from Refinitiv.

Peng advised analysts that the corporate continues to ship chips to different firms constructing out networks for 5G, the following technology of wi-fi knowledge communications, together with ZTE Corp (000063.SZ), which had beforehand been the goal of U.S. restrictions however has since had them eliminated.

Different chipmakers, comparable to Broadcom Inc (AVGO.O), have mentioned they anticipate different electronics makers to step in and ultimately fill in misplaced Huawei gross sales, however Peng advised Reuters that’s much less prone to occur available in the market for 5G gear.

“Infrastructure is simply completely different. There’s not as many individuals who can do it,” Peng advised Reuters in an interview. “It’s a well known indisputable fact that the Chinese language operators have favored the home suppliers” comparable to Huawei and ZTE, amongst others.

Flores mentioned that the corporate was “not reiterating or updating our full-year steering” for the complete fiscal 2020 yr and that its outlook was “considerably moderated by trade-related considerations.” In Could, the corporate mentioned it anticipated between $3.45 billion and $3.6 billion in income. Xilinx it’s going to give extra particulars on its full-year forecast in October.

Reporting by Munsif Vengattil in Bengaluru and Stephen Nellis in San Francisco; Modifying by Sriraj Kalluvila and Lisa Shumaker

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FedEx Express cuts ties with Amazon for domestic contract

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(Reuters) – FedEx Corp said on Friday it has decided to not renew its contract with Amazon.com Inc for U.S. cargo delivery through FedEx Express.

FILE PHOTO: A FedEx delivery worker carries a package for a delivery in Wilmette, Illinois, October 27, 2015. REUTERS/Jim Young

The decision does not impact any existing contracts between Amazon.com and other FedEx business units or relating to international services, the package delivery company said.

Amazon accounted for less than 1.3% of FedEx’s revenue for last year, the company said in a statement.

FedEx Express refers to the company’s delivery via planes.

Amazon has steadily grown its fleet of delivery aircraft in recent years, which Air Transport Services Group Inc (ATSG) and Atlas Air Worldwide Holdings have operated. The company is investing $1.5 billion to build an air cargo hub in northern Kentucky, setting it up to rely less and less on others for air shipping.

Amazon has 40 leased cargo planes and has signed an agreement to induct 10 more planes to join the fleet in the next two years.

A task force set up by President Donald Trump recommended in December that the United States Postal Service should have more flexibility to raise rates for packages, a move that could hurt profits of Amazon and other large online retailers.

Shares of FedEx pared gains and were up nearly 1% at $158.01 in afternoon trading.

Amazon shares were up 2.6% at $1,800.19.

Amazon did not immediately respond to request for comment.

Reporting by Akanksha Rana in Bengaluru; Editing by Shinjini Ganguli

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Huawei’s $105 billion business at stake after U.S. broadside

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HONG KONG/BEIJING (Reuters) – The latest U.S. broadside against Huawei that puts the Chinese firm on an exports blacklist threatens to rattle the global tech supply chain, linked closely to the $105 billion business of the world’s top supplier of telecoms network equipment.

The Trump administration has said it would add Huawei Technologies and 70 affiliates to its “Entity List” – a move that will likely ban the firm from acquiring U.S. components and technology without government approval, adding another incendiary element to the U.S.-China trade war.

The ban is not yet effective.

A similar U.S. ban on China’s ZTE Corp had almost crippled business for the smaller Huawei rival early last year before the curb was lifted.

Such sanctions on Huawei are, however, likely to have ramifications beyond the company itself, analysts said.

It would disrupt Huawei’s business at a minimum and all but put it out of business in an extreme, while its U.S. suppliers would also be hit, they said.

Out of $70 billion Huawei spent for component procurement in 2018, some $11 billion went to U.S. firms including Qualcomm, Intel Corp and Micron Technology Inc, and they could see that revenue disappear.

On the other hand, U.S. companies like Apple face the risk of severe retaliation from China, a key market.

“This is going to be very messy,” a China-based source at a U.S. tech company said.

It will be tough for Huawei too, the person said, noting none of its U.S. suppliers “can be replaced by Chinese ones, not within a few years, at least. By then, they are already dead”.

Revenue for the company, also the world’s second-biggest maker of smartphones, touched 721 billion yuan ($105 billion) last year, eight times ZTE’s and half the annual sales of South Korea’s Samsung Electronics Co.

But its business has come under pressure over the past year given mounting international scrutiny, led by U.S. allegations that its equipment could be used by Beijing for spying, a concern the company has said is unfounded.

Huawei’s American suppliers: tmsnrt.rs/2LO1Kxp

STOCKPILING

A range of Asian and European suppliers would also be hurt if Huawei was forced to curb production, while telecom carriers that rely on Huawei, and have largely resisted U.S. calls to bar the company, would be left scrambling just as countries race to roll out next-generation 5G mobile networks.

“Huawei being unable to manufacture network servers, for example, because they can’t get key U.S. components would mean they also stop buying parts from other countries altogether,” said an executive at a Huawei chip supplier.

“They can relatively better manage component sourcing for mobile phones because they have their own component businesses for smartphones. But server and network, it’s a different story,” the executive said.

According to brokerage Jefferies, the sanctions would mean a “nightmare for China’s 5G” too. The country, which is targeting a nationwide rollout next year, will very likely slow down its 5G push as a result, it added.

However, industry participants pointed out that Huawei had been stockpiling components such as chips to ease disruptions.

Its initial target was to build inventories of six to nine months, and it has recently been raised to 12 and, in some cases, 24 months, Jefferies said.

Shares in Huawei suppliers fell across in Asia on the news of the U.S. blacklist.

South Korea’s Samsung dropped 2.4%, SK Hynix fell 3.5%, while China’s Luxshare Precision Industry fell as much as 6.1%. Shares in ZTE also tumbled.

Huawei has said it is “ready and willing to engage with the U.S. government and come up with effective measures to ensure product security”.

Its rotating Chairman Eric Xu also told Reuters in a recent interview that “in case of unforeseen events … we definitely have our contingency plan. What we have prepared has already been used in some of our products in the Chinese market”.

Huawei has spearheaded China’s campaign to develop its own high-end technologies to reduce reliance on imports and such efforts have taken on urgency after U.S. sanctions on ZTE.

The ZTE case led to some “benefits” and “external pressures have developed into internal drivers” in China, said Wan Gang, vice chairman of China’s parliamentary advisory body.

TRADE TALKS

The pain for Huawei’s supply chain would be redoubled if the trade war put a damper on the Chinese technology industry.

“The bigger concern would be U.S. allies that used to buy Huawei’s components may not continue businesses with Huawei, because of fear of possibly upsetting the United States,” said Doh Hyun-woo, an analyst at NH Investment & Securities in Seoul.

The Trump administration’s rhetoric toward China had cooled in recent days after another round of tariffs between the world’s top two economies and a selloff on global stock markets.

Tensions escalated on Wednesday after U.S. President Donald Trump signed an executive order barring American companies from using telecommunications equipment made by firms deemed to pose a national security risk.

While the president’s order did not specifically name any country or company, U.S. officials have previously labeled Huawei a “threat”.

FILE PHOTO: Visitors walk past Huawei’s booth during Mobile World Congress in Barcelona, Spain, February 27, 2017. REUTERS/Eric Gaillard/File Photo

“The U.S. seems to have already decided to nail Huawei down,” said the China-based U.S. tech company source.

“The problem is that because there doesn’t seem to be a prospect for a trade deal in the near future, the U.S. has expedited the process of killing Huawei.”

(Story refiled to amend headline)

Reporting by Sijia Jiang in Hong Kong, Josh Horwitz in Shanghai, Ju-min Park and Heekyong Yang in Seoul, Michael Martina and Cate Cadell in Beijing, Makiko Yamazaki in Tokyo; Writing Miyoung Kim; Editing by Himani Sarkar

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