Tech firms caught in US-China geopolitical chess game

Opening Bell 🔔 is Tech in Asia’s free newsletter that brings you the biggest news and latest trends around Asia’s publicly listed tech companies. [Read from your browser]( Opening Bell 🔔 Welcome to the Opening Bell! Delivered every Monday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and latest trends on Asia’s publicly listed tech companies. If you’re not a subscriber, get access by [registering here](. --------------------------------------------------------------- Written by Rachel Chitra Journalist Hello {NAME} Geopolitical tensions have always had the potential to make things awkward for businesses. Take the Russia-Ukraine war for example. In Russia, fast-food chain McDonald's (MCD, NYSE) and coffee giant Starbucks (SBUX, NDAQ) had [to shut down]( hundreds of outlets while pulling out. And the war had implications across segments, from lifestyle to commodities. Cosmetics brands like L'Oreal (OR, EPA) and Estee Lauder (EL, NYSE) pulled out. Fast-fashion retailers including H&M (HM-B, STO) and luxury houses such as Burberry (BRBY, LON) have temporarily halted operations in Russia. In oil and gas, Shell (SHEL, LON) was among the companies having pledged to cut its investments in Russia. And the tech world was no exception - Apple (AAPL, NDAQ) chose to leave, while Facebook (META, NDAQ) got blocked. Moving east, this week, my colleague Melissa looks at how the cold war between the US and China has impacted tech companies like ultra-fast fashion titan Shein and TikTok owner ByteDance. -- Rachel  ---------------------------------------------------------------  THE BIG STORY [Mapping the tech firms ensnared in rising US-China tensions]( From AI and semiconductor firms to ecommerce platforms and electronics manufacturers, these are the pawns in the US-China trade war. ---------------------------------------------------------------  3 TRENDS TO KEEP EYE ON Hot stocks, earnings reports, restructuring, pressure from activist investors, and more. 1️⃣ 10k McDonald’s in China?: Carlyle Group Inc. (CG, NDAQ) and Trustar Capital, which own the China and Hong Kong branches of McDonald’s, are reportedly in talks for a US$4 billion partial exit, which will help the fast-food chain take its store count to up to 10,000, [reported Bloomberg](. The Hong Kong and mainland China operations of NYSE-listed McDonald’s will be partially sold to two sovereign wealth funds, GIC of Singapore and Mubadala Investment Company of Abu Dhabi, in a deal that values the entire business at up to US$10 billion including debt, sources told Bloomberg. Shareholders have also agreed to the plan and asset managers hope to close the deal by the fourth quarter of 2023. Forming a special purpose acquisition company has become a preferred mode of investment in recent years in markets that US investors deem “risky.” 2️⃣ Tesla to power half a million EVs in India: Will Nasdaq-listed Tesla (TSLA, NDAQ) become the first electric vehicle (EV) manufacturer from the US to set up shop in India? It could be, as the entry barrier for US carmakers has been India’s exorbitant import taxes on cars (70% to 100%) and on raw materials (10% to 15%) for EV manufacturing. Ford (F, NYSE), for instance, dropped its plans to manufacture EVs in India due to rising geopolitical tensions such as the Ukraine war and the pandemic lockdowns in China, leading to a massive increase in input costs for EVs. But Tesla now hopes to overcome such hurdles with its talks with the Indian government to build a factory that can produce half a million electric vehicles annually, the [Times of India reported](. The Elon Musk-led company is also looking at making India an export base to ship cars to countries in Asia Pacific. With a starting price of 2 million rupees (US$24,400), Tesla’s cars will be 2x more expensive than MG Comet - India's cheapest EV - and is US$6,000 costlier than Tata Motors’ Tata Nexon EV, which is currently [the best seller]( in the country. 3️⃣ Biggest tech slump in 10 years hits TSMC, Foxconn: Chip manufacturing giant TSMC (2330, TPE) and electronics contract manufacturer Foxconn (2354, TPE) are among those hit as Taiwan’s semiconductor industry faces its [worst slump]( in 10 years. Sales of the industry’s 19 major semiconductor companies fell 20% in June as demand for smartphones and computers still hadn’t picked up post-pandemic. Analysts at [Goldman Sachs]( which maintains TSMC on its buy list despite cutting the price target, have said that the company is currently in recovery mode and is “[better-positioned than peers]( to capture the industry’s long term structural growth”. 2 EYE-POPPING NUMBERS Tech in Asia scours the internet to bring you head-turning numbers from the world of business. - [US$6 billion]( This marks Temasek’s loss for the 2023 fiscal year due to challenging global market conditions, among other reasons. - [US$2 billion]( This is the value of Japanese electronic giant Sony’s (6758, TYO) R&D spending on live-service games to take on larger rival Microsoft (MSFT, NDAQ). THE ONE YOU DIDN'T SEE COMING We spotlight the story that had everyone talking and social media buzzing during the past week. Cheapest, the best?: Helmed by Asia's richest man Mukesh Ambani, Reliance Jio will now be launching [the world's cheapest phone]( priced at 999 rupees (US$12). Public Opinion remains divided on the internet - with some feeling this could be a game changer, while others feel it might flop. But why? In 2016, Reliance Jio launched its 4G services at dirt-cheap rates. This had a cataclysmic effect on consumers and the telecom industry. Within six months, India became the world's top mobile data user, consuming over 1 billion GB of data every month, according to the Mary Meeker [2017 internet trends report](. It also sent many of Reliance Jio's telecom rivals like BSNL and Aircel into bankruptcy, or into billions of dollars in debt like in the case of Airtel (BHARTIARTL, NSE) and Vodafone. Even today, data is cheaper in India - 1GB costs just US$0.26, compared to the global average of about US$7.30, [a study by Cable.co.uk]( showed. And Reliance Jio has cornered more than [50% of the telecom]( market in India with its "cheapest in the market" strategy. So will this US$12 phone - preinstalled with the company's streaming and payment apps - see the same success its parent saw when rolling out data for the masses? If cost were the only factor for a smartphone's success, it might. It comes bundled with a 4G connection at just US$1.50 per month, which is - 30% cheaper than what is offered by Reliance Jio’s rivals while offering seven times more data. Also, at US$12, the phone is much cheaper than smartphones with a starting price of $60 or feature phones sold at $15. This could be a chance for millions of underprivileged workers in India to finally get a decent phone, resulting in high sales for Reliance Jio. Others feel this phone might meet the fate of Tata Nano - which was once marketed as the world's cheapest car at [US$2,500](. The car didn’t really catch on in popularity as for most Indians, [cars are a status symbol]( and nobody really wanted to be seen with the cheapest car in the market.  That’s it for this edition - we hope you liked it! Not your cup of tea? You can unsubscribe from this newsletter by going to our preference center at the bottom of this email. Happy investing and see you next week! Disclaimer: This content is for informational purposes only. Kindly do not construe any such information as legal, tax, investment, financial, or other advice. [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. 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