A week in tech, July 13 - July 20

China

Internet
• Baidu.com revealed that it will close its search software unit, causing the layoff of 30 people, in a move to concentrate more on its core business. The company said the decision was made amid intense market competition. The layoffs will affect workers in Beijing, Shanghai and Shenzhen. Despite this decision to lay off workers, Baidu said it is looking to maintain its lead over its rivals, which include Yahoo and Google. According to data by Analysys International, Baidu’s market share hit 43.9% at the end of the first quarter, compared with Yahoo's 21.1% and Google's 13.2%. Baidu reported revenue of $16.8 million for the first quarter, 97% of which was generated by online marketing services, including search, advertising, and e-commerce.

• Tom Online predicted that a policy change made by China Mobile for subscription services on its Monternet platform will have a negative impact on its wireless Internet business. Tom Online indicated that it was assessing the potential effects of policy changes on its business, which contributed some 94% of its revenue in the first quarter, citing the possible reduction of the effectiveness of its subscriber acquisition campaigns as one of them. The company said changes may also lower the average duration of subscriptions to less than 3 months. China Mobile, for its part, said that wireless value-added service providers would have to confirm new subscriptions twice before charging could be initiated.

Mobile/Wireless
• Motorola announced the opening of its flagship retail outlet in Shanghai. The mobile manufacturer’s store in a trendy shopping district will enable potential clients to try features and accessories on its mobile phones, Bluetooth receivers and PDAs. Motorola joins Nokia, Samsung Electronics, LG Electronics and Sony Ericsson in fighting for market share in China. Unlike in the US and some other leading markets, consumers in China pay separately for their mobile phones and phone service, with quality handsets costing from Rmb500 ($62). Motorola has been pushing its trendy Razr line of phones in developing markets like China.

Media, Gaming and Entertainment
• Sun Media Investment Holdings Ltd., announced it will buy 100% of Entertainment Today. Sun Media is the second-largest privately owned media company in the nation. The firm said the acquisition is expected to boost its library of international content. Analysts see the acquisition as enhancing the prestige of Sun Media.

Software
• TechnoConcepts Inc. announced that it has licensed ANT Software Limited's browser solution for use in the IPTV set-top box manufactured by its subsidiary, China Jinshilin Techno Ltd. IPTV set-top boxes provide delivery of digital television programming received from the Internet to conventional television sets. Jinshilin anticipates shipping more than 100,000 units by the end of this calendar year in China, Taiwan and Japan, generating revenue in excess of $15 million.

The IPTV set-top box market is rapidly expanding in Asia, with industry analysts projecting sales for China alone of between 20 million and 50 million units in 2006, growing to 60 million to 100 million units by the end of 2007. ANT is the market leader in software and solutions for IPTV, hybrid TV, and digital home products.

Hardware
• Altrua Technologies, Inc., the pioneer and foremost developer of Intelligent Touch Controls for mobile devices, announced the expansion of its global operations with the opening of a new development and support center in Shanghai and the appointment of Lunji Qiu as the new vice president and general manager of Atrua China. Atrua said its China office will play a significant role in improving the design and usability of these new devices and will support Altrua’s rapidly growing base of customers in that region. The report said Mr. Qiu has over 15 years of technical leadership in China. Most recently, he was the general manager of Broadcom China where he was responsible for product development, operations and customer support.

• TCL Multimedia Technology Holdings posted a first-half profit warning, which sent its shares tumbling to a near five-year low. The company, which reported a net loss of HK$139 million ($17.8 million) for the first quarter this year, compared with a loss of HK$48 million in the same period last year, said its six-month results will be "much worse than expected" and it may record "substantial losses." Analysts have warned that the company's loss from its European operations could widen this year. They also remain pessimistic on TCL's earnings despite a plan to sell its computer division for HK$337 million ($43.3 million) and focus on television manufacturing.
The European and North American markets provided 46% of the company's first-quarter revenue of HK$8 billion ($1 billion), with China’s share amounting to 38%. The company said it is looking to reorganize its European operation in order to counter the losses. A TCL Multimedia official also noted that the company will need to refinance its total debt of HK$2 billion ($257.2 million) through the equity market.

Ventures
• A study made by Zero2IPO Group revealed that venture capitalists invested $772 million in the mainland in the first half this year. Of these funds, about 70% went to IT firms. The report indicated that venture capitalists spent divided their funds on 121 mainland firms, a figure that represents a 128% increase over the same period in 2005. In 2006 as a whole, the research group estimated venture capitalists would invest a record $1.5 billion. In a related development, Walden International, which manages $1.6 billion globally, disclosed plans to invest 50% of a new fund to be launched this month in the mainland.

Taiwan

Mobile/Wireless
• BenQ said it will cut more than 500 jobs in Germany, with about half coming from BenQ Mobile’s headquarters in Munich. The final numbers will be decided when the firm terminates its partnership with external suppliers. BenQ has more than 3,000 employees in Germany. Last year, BenQ acquired the mobile phone handset business of Siemens, which gave it a 3.5% share of the global handset market.

Semiconductors
• Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chipmaker, reported a 36% increase in its June sales, which it attributed to growing demand for new consumer products. TSMC registered sales of NT$27.2 billion ($845 million) last month, which took its second-quarter sales to NT$81.2 billion ($2.4 billion), a 39% improvement from a year ago.

• Motech Industries, the country’s largest solar cell-maker, said its output for this year is expected to decline compared to earlier forecasts as a result of a failed plan to enter into a strategic alliance with US-based silicon-wafer supplier MEMC Electronic Materials. The US firm had signed a letter of intent to supply solar wafers to Motech in a deal that fixed the price of the product for eight years. However, the deal collapsed after the two companies failed to reach an agreement. Industry sources said the failed deal would diminish Motech’s control over raw materials in coming years. Analysts predict the company’s earnings will be 10% lower than the market consensus as a result of the failure of the partnership.

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