Tariffs “remain the wrong solution to real problems” in thwarting allegedly unfair Chinese trade and IP practices, said the Internet Association in comments posted in docket USTR-2018-0026. The comments previewed testimony that Jordan Haas, the group’s director-trade and international policy, gave at hearings Wednesday. Haas testified on the same panel as a Telecommunications Industry Association representative, who said tariffs would “handicap” the U.S. in its 5G “contest” against China (see 1808130051).
The U.S. economy will take a $2.4 billion annual hit if the Trump administration imposes 25 percent tariffs on connected devices and printed circuit assembles in a third tranche of duties against Chinese imports, said a CTA study released Friday and by Trade Partnership Worldwide. An earlier study said duties on $50 billion worth of Chinese imports, coupled with Chinese retaliation, would reduce U.S. GDP by nearly $3 billion (see 1805010062). Tariffs of 25 percent on IoT-critical connected devices imported to the U.S. from China would cost the U.S. economy $1.8 billion yearly, said the new study. “This single tariff line captures products needed by data centers to make the internet work, networking equipment that most businesses need to connect to the internet and operate office networks, as well as products that consumers need to access the web and enjoy its content.” Without tariffs, CTA forecasts smart speakers will grow to a $3.8 business in terms of 2019 factory sales, with unit shipments of 44.4 million. The association estimates 25 percent tariffs will reduce shipments by 5.3 million units. Bluetooth earbuds, which CTA forecasts will be a $1.4 billion business in 2019 on 14.2 million in factory unit shipments, would take a $588 million revenue hit. Unit shipments would be cut 1.7 million. The Coalition for a Prosperous America stands behind the administration’s plan to “consider” raising the third tranche of duties to 25 percent from 10 percent, and backs software levies, commented the conservative think tank Thursday in docket USTR-2018-0026. Well more than 1,200 comments were posted in the docket Friday, the vast majority opposed to tariffs. BSA|The Software Alliance didn’t comment. Wilson Electronics was burned in the first two tranches of tariffs on RF components and semiconductors it imports to make cellphone signal boosters in Utah, it commented Friday. Now, Wilson supports imposing 25 percent tariffs in the third tranche on finished boosters imported from China under the same heading as connected devices because Chinese competitors use “extremely aggressive pricing tactics to undercut Wilson’s sales." Tariffs on Audio-Technica's Bluetooth headphones and wireless mic systems would "have a significant negative impact on our business," commented its Vice President-Operations Richard Sprungle.
"Pilot testing" will begin next year in Silicon Valley on the Daimler-Bosch “collaboration” using Nvidia’s Drive Pegasus artificial-intelligence “brain” for Level 4- and Level 5-scale autonomous vehicle “fleets,” said Nvidia Chief Financial Officer Colette Kress on a Thursday earnings call on quarterly results. Nvidia recently started shipping “development systems” for Drive Pegasus, an “AI supercomputer designed specifically for autonomous vehicles,” said Kress. It's capable of 320 trillion operations a second, so it can handle “diverse and redundant algorithms” in self-driving cars, she said.
If Lenovo ships on schedule a 5G “mod” for the Motorola Moto Z3 smartphone in the U.S. early next year, it will be “the first company to provide the 5G mobile experience to customers,” said CEO Yang Yuanqing on an earnings call last week. The goal for the year ending June 30 is to “control” to under $1 billion the annual operating expenses of the Motorola business, he said. If successful, that means Lenovo will have reduced Motorola’s operating expenses by $800 million since buying it from Google for $2.91 billion nearly four years ago (see 1410300029), said Yang. Also last week, Lenovo reported sales in the quarter ended June 30 rose 19 percent to $11.9 billion as a small profit reversed a year-ago quarterly loss.
Tech startups are among the many hundreds of innovators from various industries opposing a third proposed tranche of 25 percent levies on Chinese imports (see 1808150018), comments in docket USTR-2016-0026 show. Cao Gadgets develops wireless sensor tags for a variety of IoT uses and markets the tags through its own online store, commented owner Mike Cao. It develops the “software/firmware portion of our products” entirely in the U.S., and buys integrated circuits and other electronic components from American producers like Intel, Microchip and ON Semiconductor, he said. His company then exports its goods to printed circuit board assembly (PCBA) contractors in China, he said: PCBA is a “labor intensive process,” with virtually no low-cost, high-volume U.S. PCBA contractors. Jie Qi and Andrew Huang started Chibitronics, making educational electronics for schools and libraries, they commented Wednesday. Additional “tariffs on electronic parts will deprive American children of access to technology education,” they said.
Cree estimates the first tranche of 25 percent tariffs on Chinese imports that took effect July 6 will reduce earnings by about 2 cents a share in Q1 ending late September and by about 3 cents a share each future quarter, said outgoing (see personals section of the July 24 issue) Chief Financial Officer Mike McDevitt on a Tuesday earnings call. Cree argued unsuccessfully in the first round to defeat tariffs on LEDs it reimports from China and took an additional hit when the second tranche of tariffs to take effect Aug. 23 included other duties. Quarterly guidance doesn’t include “any potential impact of any tariffs” that take effect Aug. 23 or later, said McDevitt. Cree is “evaluating ways” to further reduce the damage, he said. It expects a 6 percent Q1 revenue decline sequentially. Tech interests continue opposing the levies (see 1808140047). The stock closed down 7.8 percent Wednesday at $46.26.
Micro Electronics and GlobiTech were among the tech interests joining many hundreds of companies asking to testify during four days of hearings beginning Aug. 20 against the proposed third tranche of tariffs on an estimated $200 billion worth of Chinese imports. Requests were due Monday in docket USTR-2018-0026 under the deadline U.S. Trade Representative Robert Lighthizer extended when he announced Aug. 1 he'll “consider,” at President Donald Trump’s direction, raising the third tranche of proposed duties to 25 percent from 10 percent (see 1808010073). Lighthizer in an Aug. 7 notice said he reserves the option to “extend the length of the hearing depending on the number of additional interested persons who request to appear.” Micro Electronics CEO Richard Mershad wants to testify for removing six Harmonized Tariff Schedule line items, said comments posted Tuesday. Computers and parts it identified aren't available in big quantities outside China, said the parent of an electronics retailer. GlobiTech wants to testify against tariffs on the raw materials it imports from China under HTS 3818.00.00 to manufacture silicon epitaxial wafers, said the company. Those wafers are a $3 billion “subset” serving the global semiconductor industry, it said. “As the world's largest supplier of silicon epitaxial products, chances are that smartphone that you are holding has ‘some GlobiTech in it.’"
The proposed third tranche of 25 percent Trade Act Section 301 tariffs on Chinese imports targets equipment “critical for the build-out” of 5G, IoT and “big data,” says K.C. Swanson, Telecommunications Industry Association director-global policy, in prehearing testimony posted Monday in docket USTR-2018-0026. Swanson is scheduled to testify Aug. 21, day two of four days of Office of U.S. Trade Representative hearings. Requests to testify were due Monday under the deadline USTR Robert Lighthizer extended when announcing Aug. 1 he will “consider,” under President Donald Trump’s direction, raising the third tranche of proposed duties to 25 percent from 10 percent (see 1808010073). The “network-based technologies” in which U.S. companies lead the world “depend on underlying hardware,” said Swanson. “Taxing that hardware,” as tariffs on network servers, gateways and modems would do, will raise costs for consumers, she writes: That "stands to discourage U.S. adoption of advanced technologies in a period of growing global competition.” Duties "will hit so many of the telecom products essential to the operation of the internet,” Swanson says. More than 10 million Americans use the computer networking products Zyxel Communications sources from China under certain tariffs hearings for home internet access and for “network computers in the workplace,” commented the company. Its largest customers include CenturyLink, Cincinnati Bell and Hawaiian Telecom, it said. Zyxel’s router products “are used to proliferate broadband throughout the U.S.,” it said. With 34 million Americans lacking "an affordable and reliable broadband connection,” government levies would run counter to DCC and other broadband initiatives, the company said.
3D-sensing facial recognition, beginning with the iPhone X, “is gradually becoming a new industry trend” in smartphones, said Himax CEO Jordan Wu on a Thursday earnings call. Major Android smartphone OEMs are beginning to integrate 3D-sensing into their “flagship models,” though most such projects are still in the “development stage,” he said. The company announced the feature last year in collaboration with Qualcomm. The leading Android smartphone makers are trying to “strike a good balance” between cost and performance in choosing among the “various 3D-sensing technologies” available, said Wu. More software players also are entering the “ecosystem” to develop new 3D-sensing apps in the fields of facial recognition, online payments and “camera performance enhancement,” he said. Himax is “in partnership with several leading smartphone names” to help enable their 3D-sensing initiatives, “depending on the customer’s needs and their in-house capabilities,” he said. Himax hopes “these efforts will facilitate a broader adoption of 3D sensing” on Android smartphones starting next year, he said, and is targeting “premium” smartphones for product launches scheduled for 2019's first half, he said. Of the various 3D-sensing technologies available, Wu thinks the active stereoscopic camera option has a “better chance” than others of “accelerating 3D-sensing adoption” for facial recognition on Android smartphones.
Tech interests virtually struck out in their attempts to persuade U.S. Trade Representative Robert Lighthizer to spare their products and components from a second tranche of 25 percent Trade Act Section 301 tariffs on imports from China. Despite heavy industry lobbying to exclude semiconductors and other key parts from the second round of new levies, the list Lighthizer released Tuesday contains 279 tariff lines of goods worth about $16 billion in trade value, a mere 2 percent reduction from 284 lines in the originally proposed list released June 15 (see 1806150030). The new tariffs will take effect Aug. 23, said Lighthizer, who soon will announce a "process" for seeking exclusions from the new duties.