Tag: China

Intel builds new Xanadu in China

intel_log_reversedIntel has said that it will write a $1.6 billion cheque to upgrade its factory in the city of Chengdu in western China.

The surprise move shows how Chipzilla is deepening ties in a market that is proving increasingly troublesome for rivals like Qualcomm.  It also is unlikely that Intel got the sort of sweeteners for the deal which it expects from the US and Israeli governments to set up shop.

Intel said it will receive local and regional government support for construction, but it would be less likely to be the sort long term tax perks that Intel is used to.

Intel executive vice president William Holt said in the statement. “The fully upgraded Chengdu plant will help the Chinese semiconductor industry and boost regional economic growth.”

The announcement comes three months after Intel purchased a minority stake in a government-controlled semiconductor company to jointly design and distribute mobile chips, an industry that China considers to be of strategic importance.

Intel is doing better in China than Qualcomm which is expected to announce that it is writing a huge cheque to make Chinese antitrust regulators go away.

China’s investigation into Qualcomm and Microsoft have prompted an outcry from foreign business lobbies. They say the Chinese government is increasingly adopting strong-arm tactics to yield technology-sharing or other arrangements beneficial to domestic industry.

Analysts say there is a broad recognition that foreign companies must do more to stay in China’s good graces.

Chipzilla has taken the approach that if you want the Chinese government to like you, you have to invest in the local industry.

China cracks down on porn

android-china-communistThe Chinese government is to levy fines on 11 internet companies for promoting violence and pornography, according to government owned news agency Xinhua.

Baidu, Tencent and nine more companies will be fined for breaking Chinese government rules on gambling, violence and pornography.

The internet companies have breached moral values, according to the Culture Ministry.

The revenue division of the ministry hasn’t said how much the companies will be fined but expressed the hope that big companies will offer “healthy, quality, cultural products”, according to Xinhua.

China has been engaged in its “moral crusade” since April this year, and has already levied fines on Sina, while it told Baidu to clean its Augean Stables of pornography in August.

The authoritarian government has already clamped down on online discussion sites, following the appointment of Xi Jinping as the state’s autocrat.

Microsoft done for tax evasion in China

fb_share.af4030d35be0Chinese mandarins have the pip at Microsoft and fined the software giant more than $140 million in back taxes.

The case is being seen as the first major case concerning cross-border tax evasion in the country, as regulators ramp up pressure on US corporations doing business there.

According to China’s Xinhua official news agency, Microsoft must pay the Chinese government $137 million in back taxes and interest, as well as more than 100 million yuan in additional taxes a year in the future.

Microsoft did not confirm the report but said that in 2012 the tax authorities of China and the United States agreed to a bilateral advanced pricing agreement about Microsoft’s operations in China.

China receives tax revenue from Microsoft consistent with the terms of the agreed advanced pricing agreement.

An advanced pricing agreement sets the tax treatment of transfer pricing, or methods of booking prices and sales between subsidiaries, which Microsoft uses across the globe.

According to its fiscal 2014 annual report, Microsoft’s overall effective tax rate was 21 percent still lower than the US corporate rate of 35 percent because it funnels earnings through “foreign regional operations centres” in Ireland, Singapore, and Puerto Rico.

China was less patent than Western powers about this sort of thing. Microsoft was reporting losses for six years in China of more than two billion yuan while peers enjoyed profits. The taxman decided that this was unreasonable. It said the US company fessed up to tax evasion and its mainland subsidiary had agreed to pay the central government.

US warns of Chinese cyberwar again

HQ of the National Security AgencyThe head of the NSA told politicians at the House of Representatives Intelligence Committee on cyber threats that China could invade and close down vital American computer systems.

Admiral Michael Rogers,who runs the NSA, told the committee that China and one or two other countries could attack power utilities, aviation and financial firms.

China and other countries have the ability to enter these kind of systems and to shut down the networks.

This isn’t the first time the USA has accused China of mounting cyber attacks, but it’s something that the Chinese government resolutely denies.

According to Reuters, a foreign ministry representative said that China absolutely banned cyber hacking and accused the USA of making cyber attacks on it and other nations.

The NSA still harvests phone records in the USA but earlier this week a bill to regulate surveillance failed and the agency will wait until a law is passed before making any major changes in its strategies and tactics.

China firewalls the cloud

great wallChina has expanded its Great Firewall of China to include a major hosting and cloud services company.

According to internet freedom watchdog GreatFire.org, the EdgeCast content delivery network (CDN), which “provides cloud services to thousands of websites and apps in China”, has been partially blocked.

A number of major international companies have been affected by the block, including The Atlantic, Sony Mobile, and websites related to the Firefox web browser.

Filtering escalated this week with an increasing number of popular web properties impacted and even many domains being partially blocked.

The blocking of a major CDN such as EdgeCast marks a significant escalation in the efforts of Chinese censors to keep the country’s internet free of unwanted outside influence.

Charlie Smith, founder of GreatFire, told the South China Morning Post that taking down so many sites in one go will have a huge economic impact – online commerce, trade, even academia will all be affected by this.

“While the economic cost is huge, the authorities are also risking upsetting Chinese netizens who suddenly wake up to find out that they cannot access a plethora of websites.”

The problem, as far as China is concerned, is that free speech activists and anti-censorship groups such as GreatFire have been using cloud services to create mirrors of sensitive information which cannot be blocked.

This included the International Consortium of Investigative Journalists (ICIJ) report on the use of offshore tax havens by Chinese businessmen and officials. The report was uploaded to Amazon’s cloud servers, which, because of their design and encryption, are impossible to block on an individual website or page basis.

However killing off the entire cloud domain would cause significant harm to the businesses of the thousands of Chinese websites, including major corporations, who  depend on its services for database management and other cloud computing.

GreatFire said in a blog post since the Great Firewall cannot distinguish traffic to our mirror sites and other traffic to the cloud provider which means they cannot block access to its mirror sites without blocking access to all the sites hosted by the CDN.

It sees this as a form of ‘collateral freedom’ which hinges on the gamble that the Chinese authorities will not block access to global CDNs because they understand the value of China being integrated with the global internet.

It looks like the authorities do not care and are just going to cut China off from the global internet, rather than letting that work around happen.

Ironically, China hosted the World Internet Conference in Zhejiang province. Talks include “An interconnected world shared and governed by all” and “Cross-border e-commerce and economic globalisation.”

Android open source project falters

Android building, WikimediaWhile Android Open Source Project (AOSP)  smartphone growth was  a staggering 211 percent in 2013, things are slowing right down, and a projection is growth will fall to 18 percent in 2015.

ABI Research said the previous growth figures were driven by the rise of Indian and Chinese handset vendors targeted at the domestic market, growth in the Chinese market is slowing.

And Google’s Android One move is attracting Indian manufacturers to become members of the certified Android camp, said Nick Spencer, an analyst of mobile devices at ABI.

He said that Google had engaged with chipset vendors such as Qualcomm and Mediatek to put together an Android One low cost reference design, the search corporation is worried about its market becoming too fragmented.

Android One is set to push Google’s attempt to commoditise the smartphone market, but AOSP is a threat to its own mobile strategy, showing that you can sometimes create too many initiatives and confuse your customers.

ABI has provided a table showing smartphone unit shipments by operating system:
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US splashes out on two more supercomputers

15013The US is going to spend $325 million on two new supercomputers, one of which may eventually be built to support speeds of up to 300 petaflops.

Deeply embarrassed by the fact that China has been ruling the super computer league tables for a while now, the US government is taking steps to unseat them from the top.

The US Department of Energy, the major funder of supercomputers used for scientific research, wants to have the two systems, each with a base speed of 150 petaflops, possibly running by 2017. Going beyond the base speed to reach 300 petaflops will take additional government approvals.

The DOE also announced another $100 million in “extreme” supercomputing research spending.

The funding was announced at a press conference at the US Capitol attended by lawmakers from both parties.

The two systems, which will be built at the DOE’s Oak Ridge and Lawrence Livermore National Laboratories, “will ensure the United States retains global leadership in supercomputing”.

Republican Chuck Fleischmann said, supercomputing was one of those things that that the US could step up and lead the world again,” he said. The Oak Ridge lab is located in his state.

Republican Bill Foster warned that the US’s technology lead is not assured and he blamed that most chip making was done over overseas.

Foster believed there is good bipartisan support for supercomputing research, but the research may face a problem if GOP budget proposals in the House slash science funding by double-digit percentages.

The US government is under pressure to abandon science funding because some constituents think it is better that people learn more about Jesus.

China has the top-ranked system, the Tianhe-2, at about 34 petaflops, and Japan and Europe have major investments underway in this area.

The new system to be built at Oak Ridge will be called the Summit. It will use about 10 megawatts of power, which is close to the power usage of Oak Ridge’s existing supercomputer, the Titan, which is ranked No. 2 in the world. The Summit will run five times faster than the Titan, despite using the same amount of power.

The new system to be built  at the Lawrence Livermore lab in California will be known as Sierra.

These systems will use IBM Power CPUs and Nvidia’s Volta GPU, the name of a chip still in development.

Intel expects Chinese small chipmaker rebellion

1900-intl-forces-including-us-marines-enter-beijing-to-put-down-boxer-rebellion-which-was-aimed-at-ridding-china-of-foreigners-Intel boss Brian Krzanich has been consulting his i Ching and expects ARM to be a spent force in China within a few years.

He claims that new semiconductor partners in China will migrate to Intel and give up on ARM technology more widely used in smartphones and tablets.

Intel this year signed deals with Rockchip and Spreadtrum Communications to use Intel’s technology to make chips for low-cost smartphones and tablets aimed at China’s fast-growing consumer market.

Spreadtrum and Rockchip specialise in smartphone and tablet platforms that are easy for manufacturers to use. At the moment they use ARM technology.

Intel has been writing agreements with the Chinese chipmakers which still allow them to make ARM-based chips, but Krzanich thinks that in a couple of years they will not see the point.

With Qualcomm offering high-end chips based on ARM and Taiwan’s MediaTek attacking the Chinese market with inexpensive chips also designed using ARM, adopting Intel’s architecture is the only way that anyone can offer a way to differentiate with better performance and features.

The only way for small manufacturers to compete is by going to Intel, he reasons.

Intel and Rockchip are working on an Intel-branded tablet SoC, with Rockchip contributing expertise on connectivity, graphics and its experience in China’s domestic market. Spreadtrum, is working with Intel on SoCs expected out next year.

Since both outfits are small, they lack the resources to make separate chips based on Intel and ARM technology over the long term.

Krzanich said Intel might collaborate with more companies there.

Chinese hack US post

postman_file_640_4806bc074ad1dChinese government hackers are suspected of breaching the computer networks of the United States Postal Service, compromising the data of more than 800,000 employees — including the postmaster general.

According to the FBI, the intrusion was discovered in mid-September, said officials, who declined to comment on who was thought to be responsible.

The announcement comes just as President Barak Obama arrived in Beijing for high-level talks with his counterpart, President Xi Jinping.

China has consistently denied accusations that it engages in cybertheft and notes that Chinese law prohibits cybercrime. But China has been tied to several recent intrusions, including one into the computer systems of the Office of Personnel Management and another into the systems of a government contractor, USIS, that conducts security-clearance checks.  Of course the US spooks have been doing the same thing in China, so it is a matter of all is fair in love and cold war.

The only question is why did the Chinese spooks think that hacking a the postal service was a good idea.

Postmaster General Patrick Donahoe said in a statement that it was an unfortunate fact of life these days that every organisation connected to the Internet is a constant target for cyber intrusion activity. “The United States Postal Service is no different. “Fortunately, we have seen no evidence of malicious use of the compromised data and we are taking steps to help our employees protect against any potential misuse of their data,” he said.

The compromised data included names, dates of birth, Social Security numbers, addresses, dates of employment and other information, officials said. The data of every employee were exposed.

No customer credit card information from post offices or online purchases at usps.com was breached, officials said.

While the OPM and USIS breaches involved data of people who had gone through security clearances and so could be useful to a foreign government seeking to gain access to individuals in sensitive government work, it is not clear why Postal Service employees would be of such interest.

Qualcomm has China crisis

china-syndrome-one-sheet1Qualcomm is facing a little trouble in Big China as it is starting to look like its antitrust investigation is going pear shaped. Meanwhile problems collecting royalties could harm its business in China next year.

To make matters worse it is facing similar investigations in the United States and Europe.

Qualcomm should be making a large profit in China. The country is expanding high-speed 4G network is driving demand for smartphones with leading-edge technology.

But it looks like Qualcomm could face a fine of more than $1 billion in China as a result of the National Development and Reform Commission (NDRC) investigation, and the company could be forced to make concessions that would hurt its highly profitable business of charging royalties on phones that use its patents.

Qualcomm admitted that it faces a new probe by the European Commission about rebates and other financial incentives in the sale of its chips. Another preliminary investigation by the U.S. Federal Trade Commission concerns a potential breach of licensing terms.

Qualcomm President Derek Aberle said that his company was co-operating with the Chinese to come up with potential ways to resolve the problem.

Qualcomm has also been struggling to collect licensing revenue from some device makers in China, including local manufacturers the US chipmaker has done little or no business with in the past.

But the fear is that concessions on royalties that Qualcomm is forced to make in China could spread to manufacturers in other countries.

Qualcomm said it was difficult to predict the outcome of the U.S. and European investigations.

The European probe is separate from a four-year-old complaint to the European Commission from a subsidiary of Nvidia over alleged patent-related incentives and exclusionary pricing by Qualcomm.

Qualcomm forecast revenue for fiscal 2015 of between $26.8 billion and $28.8 billion. Analysts on average expected $28.91 billion.

The chipmaker reported revenue of $6.69 billion for its fiscal fourth quarter, ended Sept. 28, up 3 percent from the year-ago period. Analysts on average had expected $7.016 billion.

Qualcomm posted fourth-quarter net income of $1.89 billion, up 26 percent from a year ago.

Xiaomi gets into TV content

tv58China’s Xiaomi, the world’s third-largest smartphone manufacturer, is stepping sideways and getting into television.

Writing in its official Weibo microblog the company said it will invest $1 billion in building television content.

The big idea is that providing TV content will help enrich the company’s content and becoming a ‘leading bellwether for the industry.’

Details of the move are sketchy at the moment, but Xiaomi is entering a rocky sea where many leading bellwethers, including Microsoft, Intel and Apple have run aground.

It most likely that the content that the company is thinking of creating will be for the Chinese market, and might provide a different sort of service to what has been attempted in the West.

However, the company’s business model does require it to provide more content. The company sells their phones at cost, stating that the hardware is the delivery vehicle for the software. It has its own ecommerce platform, which is the third largest in China and pushes itself as a form of social media.

Samsung turns to metal in China crisis

Iron_Maiden_2010Samsung has released two premium designed, mid-tier handsets designed to give its low-priced Chinese rivals a good kicking.

The company has been suffering lately and its global market share down on year for the third straight quarter and its profit scraping at a three-year low.

Samsung suffered the most in China which is the world’s biggest smartphone market and it was knocked off its number one slot by Xiaomi.

The Chinese seemed to have a problem that Samsung’s lower-end products were pricey and not different enough compared to Xiaomi and Lenovo.

The Galaxy A3 and A5 are seen by analysts as Samsung’s first counter-attack. Initially launching in China in November, they will be Samsung’s first devices to feature fully metallic bodies and its thinnest smartphones so far.  The A3 and A5 are comparable to those of the top-of-the-line Galaxy S5, but have a lower screen resolution quality.

Samsung classified the new phones as mid-tier, and said they will be launched in other “select markets”, without disclosing the pricing.

However, it still might have problems and much depends on price. In comparison to the A5, Xiaomi’s Mi4 device is thicker but has a  faster processor and better display.

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US companies take down Chinese hacker group

1220aAn alliance of US tech companies including Novetta and Microsoft hasbeen targeting the Hikit malware and have worked out a way to disrupt the Chinese cyber espionage gang Axiom’s antics.

Dubbed Operation SMN, the coalition of security companies has apparently given the hackers a Chinese burn after it detected and cleaned up malicious code on 43,000 computers worldwide infected by Axiom.

The effort was led by Novetta and included Bit9, Cisco, FireEye, F-Secure, iSIGHT Partners, Microsoft, Tenable, ThreatConnect Intelligence Research Team (TCIRT), ThreatTrack Security, Volexity, and was united as part of Microsoft’s Coordinated Malware Eradication (CME) campaign against Hikit.

Hikit is custom malware often used by Axiom to burrow into organisations and nick data. It works quietly and evades detection, sometimes for years.

Axiom used a variety of tools to access and re-infect environments including Derusbi, Deputy Dog, Hydraq, and others. Ludwig says, they expanded the group and its scope “so that we absolutely did the best possible job of clean-up and removal” and rolled it all into a Microsoft Malicious Software Removal Tool (MSRT) released Oct. 14.

Novetta thinks that while the MSRT was comprehensive, it may be only a temporary setback for Axiom, which will just work out another way of doing the same thing.

Novetta says it has “moderate to high confidence” that Axiom is a well-resourced and well-disciplined subgroup of the state-backed “Chinese Intelligence Apparatus.”

Axiom has been found in organisations that are of strategic economic interest, that influence environmental and energy policy and that develop integrated circuits, telecommunications equipment and infrastructure.

The target organisations are often related in some way, and once Hikit has burrowed its way into a computing environment, it can create a “mini-network,” communicating laterally with other Hikit installations within the organisation or related outside groups. What makes it difficult to track is that it uses proxies and never communicates with the command-and-control server directly. Hikit talks to companies in such a way that the traffic does not look dodgy.

 

Great Firewall of China attacks Apple

great wallChinese authorities are staging a man-in-the-middle (MITM) attack on Apple’s iCloud after previous attacks on Github, Google, Yahoo and Microsoft.

The man-in-the-middle attack is a form of spying in which the attacker makes independent connections with the victims and relays messages between them, making them believe that they are talking to each other.

According to Great Fire  the Chinese are using their Great Firewall security system to gain access to usernames and passwords and consequently all data stored on iCloud such as iMessages, photos, contacts, etc.

Unlike the recent attack on Google, this attack is nationwide and appears to be after personal data. This may also related to images and videos of the Hong Kong protests being shared on the mainland.

 

 

Internet users in China should first use a trusted browser on their desktops and mobile devices.  Firefox and Chrome will both prevent users from accessing iCloud.com when they are trying to access a site that is suffering from a MITM attack. Qihoo’s popular Chinese 360 secure browser loads the page without question.

Apple does provide security warnings, but users often ignore these – after all, they believe they are connecting to the Jobs’ Mob site itself and have been told that their software and system is totally secure.

In fact the Tame Apple Press claims that Apple is being targeted because it now offers encryption on the phone, which would keep the spooks out.  It is better for the Chinese to steal users’ passwords so they do not have to worry about having to decode the hard-drive.

EU lets Huawei off the hook

huawei-liveChina and the European Union have decided to bury the hatchet over subsidies made to telecoms giant Huawei and others.

The EU was worried that the government of China was subsidising Huawei and ZTE, so threatening European vendors’ ability to compete.

But, reports Reuters, EU trade commissioner Karel De Gucht said the telecoms matter has now been resolved.

De Gucht said that the EU takes every opportunity “to level out the playing field” for European vendors.

Both China and the European Union are expected to hammer out a free trade deal in the near future.

Huawei was started by a former member of the Chinese PLA.  It has come under repeated criticism in the USA because of fears by some politicians that its gear is embedded in American infrastructure.