Page 129 - Bloomberg Businessweek - November 19, 2018

Bloomberg Businessweek The Year Ahead 2019 Technology
China

▷ An awful year for the country’s tech leaders may have been just a warmup

For a few shining moments, Tencent and the rest of China’s ● ALIBABA GROUP HOLDING LTD. ● ZTE CORP.
national champions seemed on the verge of upstaging The other primary symbol of The maker of networking equipment
Silicon Valley. Then everything went to hell. Early salvos China’s internet success has lost and downmarket smartphones said
in a trade war with the U.S. and whispers about stretched about 17 percent of its value in in October that it expected to post
2018, or about $71 billion, and in
a 2018 loss of about $1 billion after
valuations in smoky Shanghai parlors gave way to serious early November downgraded its the U.S. Department of Commerce
trauma for just about every major Chinese tech company. projections for the rest of its fiscal briefly banned its purchase of
year ending next March, as the
parts from American suppliers last
Now that the pace of mega- fundraisings has ebbed, and effects of the trade war with the spring. (ZTE sold equipment to Iran
Beijing is going to hitherto-unseen extremes to censor the U.S. have sapped spending money and North Korea in violation of U.S.
from China’s middle class. “You can
sanctions, then violated the terms
last bit of fun left on China’s servers, the industry is primed blame Donald Trump,” says Mitchell of a settlement and lied about it.) As
for more pain. �Edwin Chan and Lulu Chen Green, a founding partner of a condition of lifting the ban, ZTE
Alibaba investor Lead Edge Capital dismissed much of its top leadership,
28 generation wireless networks Management LLC. and it remains to be seen whether the
● TENCENT HOLDINGS LTD. while preparing to take on some replacements are up to the challenge
of rebuilding. The company’s market
of America’s biggest chipmakers. Alibaba market cap
Once the strongest of China’s Trump’s administration invoked its value is about half what it was at the
national champions, the social media name in blocking a Qualcomm Inc.- $ 600b beginning of 2018.
giant has lost about 43 percent of Broadcom Inc. merger that would’ve
its market value, some $245 billion, been the largest deal ever, saying it
since peaking in January. Chinese would hand the lead in 5G to China. ZTE market cap
regulators have choked off the Huawei has been blocked from selling 450 $25b
country’s pipeline of video games, its gear in Australia, got frozen out
a principal source of Tencent’s of a Korean contract, and now faces
revenue, amid concerns about U.S.-led competition even in Papua
game addiction. A stopgap approval New Guinea.
process ended in late October 300
without a new channel for game
revenue licenses, leaving Tencent Six top companies by worldwide 1/2/18 11/13/18
and other publishers in limbo. smartphone shipments 20
● XIAOMI CORP.
Tencent market cap
$ 600b The smartphone giant, once thought
Samsung to be worth $100 billion, went public

72m at about half that in July as tensions
between Washington and Beijing rose.
450 Since then, rocky recent performance 15
in its home market has raised
questions about Xiaomi’s expansion
Huawei 54m in India, which has more promising

competitors than it did even a year
300 ago. And the company’s share price
has slid about 23 percent from its
1/23/18 11/13/18 initial public offering value.
Apple 41m
10
Xiaomi share price
● HUAWEI TECHNOLOGIES CO. Xiaomi 32m
Oppo 29m $ 3
Perhaps no company better Vivo 27m
personifies the perceived trade threat
than Huawei. Once a purveyor of
unremarkable telecommunications
equipment, it’s overtaken Apple 5
Inc. in smartphone shipments and 1
is shooting for the lead in fifth-
Q1 2016 Q2 2018 7/9/18 11/13/18 1/2/18 11/13/18