A Chinese turnaround story

Hey, this is Sarah and Vlad in Hong Kong. This year two of China’s biggest tech companies went in opposite directions. But first...Three thi [View in browser]( [Bloomberg]( Hey, this is Sarah and Vlad in Hong Kong. This year two of China’s biggest tech companies went in opposite directions. But first... Three things you need to know today: • Sony’s video game plans were [leaked by hackers]( • Amazon’s AI product [reviews have flaws]( • TSMC’s chair [stepped down]( The misfire and the firestorm If you tried to guess a year ago which among China’s top tech companies would stage the biggest resurgence this year, you’d probably have been wrong. Alibaba Group Holding Ltd. would’ve been a top candidate. Huawei Technologies Co., on the other hand, seemed fated to [languish](under the effects of US sanctions as it had for the previous three years. Things started well enough for Alibaba. China was reopening after Covid-19, and regulatory [pressure](on Jack Ma’s Ant Group Co. was loosening. Investors were then taken on a roller-coaster ride, first with a March announcement that the e-commerce giant would [split](into six units, then with the replacement of its leader, Daniel Zhang, with Ma’s old lieutenants. Zhang was supposed to lead the promising cloud division after the break, but in September he said he was quitting the company altogether. Alibaba [called off]( a public listing of the cloud business, citing US curbs on advanced chips, and suspended an initial public offering for its grocery unit. Flagging morale prompted rare comments from Ma seeking to rally the troops and institute [major changes]( to the company. Huawei let its actions — and more specifically, its devices — do the talking. In late August, just as US Commerce Secretary Gina Raimondo was visiting China, the company released a phone powered by an advanced,[ made-in-China chip]( that the sanctions were meant to prevent. It kicked off a patriotic buying spree across China, an investigation in Washington and a reevaluation of the effectiveness of US trade rules. Huawei sprang back to the top among domestic mobile brands, [reclaiming](some market share from Apple Inc.’s iPhone in the process. And it outpaced other local competition this year, such as Xiaomi Corp. Even McDonald’s Corp. started building an app tailored to Huawei’s operating system. Huawei’s efforts to source tech locally extended to 5G radios, components typically the domain of a few US specialists, signaling a degree of self-sufficiency that even Apple has yet to achieve. As Beijing has made the pursuit of advancing domestic technology an overriding priority, the company has become a national [champion](. Alibaba’s path was complicated by the emergence of Temu, a PDD Holdings Inc. brand that went from zero to the fastest-growing online retailer in the US thanks to a cheesy Super Bowl ad and other heavy spending. Temu’s success boosted the value of PDD past that of Alibaba. PDD’s sudden rise also suggests that as the Chinese economy sputters along, the path to growth for its up-and-coming tech stars may well lie abroad. The divergence in Alibaba’s and Huawei’s fortunes encapsulate both China’s economic turbulence and the power of its leaders to decide winners and losers. Beijing years ago made it plain Alibaba was a target, and Huawei a favorite — particularly after US sanctions thrust it squarely into the technological contest with Washington. The events of 2023 suggest the fading of one generational icon, and the revival of another. In a year that didn’t promise much dramatic change in China tech, we saw a lot of it. —[Sarah Zheng](mailto:szheng244@bloomberg.net) and [Vlad Savov](mailto:vsavov5@bloomberg.net) The big story You’ll still be able to buy an Apple Watch at Best Buy after the ban, but Apple [doesn’t want its retail employees]( to tell customers that. The legal dispute over the watches [put Apple in a jam](, but the head of the company responsible for the ban said he’s [open to a settlement](. Get fully charged Google reached a $700 million settlement over claims that its app store [unlawfully dominates the Android market](. Hamas’s cheap, makeshift drones are outsmarting [Israel's high-tech military](. The photonic computing startup Lightmatter hit a [$1.2 billion valuation](. The gold retailer Kitco’s website was [disrupted in a cybersecurity incident](. The US seized websites belonging to a notorious Russian-speaking [ransomware group called BlackCat](. An AI robot outmaneuvered humans in a [maze run](. More from Bloomberg Get Bloomberg Tech weeklies in your inbox: - [Cyber Bulletin]( for coverage of the shadow world of hackers and cyber-espionage - [Game On]( for reporting on the video game business - [Power On]( for Apple scoops, consumer tech news and more - [Screentime]( for a front-row seat to the collision of Hollywood and Silicon Valley - [Soundbite]( for reporting on podcasting, the music industry and audio trends - [Q&AI]( for answers to all your questions about AI Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Tech Daily newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](