Apple selects Chinese giant for critical iPhone role

Hi, Kenji from Tokyo this week, now under Covid-19 home quarantine. We have another scoop on Apple from Nikkei Asia for our Big Story. A Chinese state-owned company has become a supplier of displays for the latest flagship iPhone. This exemplifies how far China has come in its tech capabilities, including artificial intelligence, as the Pentagon’s ex-chief software officer warned (Mercedes’ top 10). Meanwhile, China is building up and diversifying its sources of strategic mineral resources including lithium, a crucial ingredient for its world-leading electric vehicle industry (Our take, Smart data and Spotlight). Take care until next week!

Join the FT’s Asia Insurance Summit on October 28 and discuss how accelerated digitalisation is affecting the industry.

The Big Story — Exclusive

A Chinese company has clinched a coveted role supplying displays for Apple’s latest flagship iPhone, according to this exclusive in Nikkei Asia.

The breakthrough for BOE Technology represents a big boost to Beijing’s technology ambitions — and throws down a challenge to the likes of Samsung Display and LG Display.

Beijing-based BOE began shipping a small number of organic light-emitting diode displays for the 6.1-inch iPhone 13 in late September. It is scheduled to increase shipments soon pending a final verification process, several people familiar with the matter said.

Key implications: This is the first time BOE has supplied OLEDs for a flagship iPhone. It had previously supplied OLEDs for repaired and refurbished iPhones.

“It is in the process of final testing, but based on the results of earlier samples, BOE should have no problem passing the tests,” an executive-level source told Nikkei Asia. “The foundation of the collaboration between Apple and BOE is based on their previous project on the iPhone 12, and both Apple and BOE want this to happen soon.”

BOE will initially split orders for the 6.1-inch iPhone 13 displays with Samsung Display, with the Chinese company accounting for up to 20 per cent of the total, sources said. Under the most optimistic scenario, BOE aims to grab 40 per cent of orders for the model from the South Korean display giant, the people added.

Upshot: Beijing has been pushing to upgrade China’s manufacturing capability and has positioned BOE as a future challenger to Samsung Display and LG Display, which have dominated the supply of OLEDs to iPhones since 2017.

Mercedes’ top 10

1. India is delivering Covid-19 vaccines to remote and hard-to-reach locations using locally made drones. (Nikkei Asia)

2. US shareholders won a rare victory against a Chinese company with a $300m settlement over allegations of corporate misconduct by Renren, which was once known as the “Facebook of China”. (FT)

3. The US has already lost the artificial intelligence fight to China, according to the Pentagon’s first chief software officer. (FT)

4. But not so fast! This piece says China’s campaign to replace foreign tech with domestic challengers will take much longer than Beijing planned. (Nikkei Asia)

5. TSMC confirmed that it is going ahead with its long-rumoured $7bn chip plant in Japan. Here is how Tokyo wooed the Taiwanese company. (Nikkei Asia)

6. China’s power outages are reigniting a push by suppliers to Apple, Amazon and others to shift supply chains out of the country ahead of the holiday season. (Nikkei Asia)

7. A proposed $1.6bn takeover of a local media company by Japan’s Sony has prompted a rare case of foreign shareholder activism in India. (FT)

8. Japanese giant Hitachi is applying quasi-quantum computing to automate train operations. The country has lagged behind the US and China in the technology. (Nikkei Asia)

9. An interesting interview here with one of KKR’s Singapore-based executives on the private equity giant’s plans for investing in south-east Asia tech. (DealStreetAsia)

10. Tech companies wield powers once enjoyed only by governments. This FT op-ed argues a global Bill of AI Rights cannot come soon enough. (FT)

Our take

The lustre of lithium — referred to as “white gold” — is as alluring as ever, as demand for electric vehicles surges. China, the largest consumer of this crucial ingredient for electric vehicle batteries, has set its sights on the “Lithium Triangle”, a region spanning the border areas of Argentina, Bolivia, and Chile, to expand its supplies.

Zijin Mining Group, a leading gold and copper producer, has announced it is acquiring a full stake in Toronto-listed Neo Lithium, the owner of a lithium brine lake project in north-western Argentina. The Chinese state-owned enterprise offered C$960m ($768m) for an expected annual yield of 18,000 tonnes of battery-grade lithium carbonate over the mine’s 35-year lifespan.

CATL, China’s leading battery maker, which holds 8 per cent of Neo Lithium’s shares, previously agreed to pay C$377m to acquire another Toronto-listed company, Millennial Lithium, which controls a separate Argentine lithium mine. CATL outbid Chinese peer Ganfeng Lithium on the deal, but the latter already possesses two other big lithium projects in the region.

Turning to Chile, Tianqi Lithium invested $4.1bn in 2018 in SQM, the country’s largest lithium miner, to become its second-biggest shareholder.

Ryan C Berg, a senior fellow at the Center for Strategic and International Studies, has been raising the alarm over China’s incursion into South America’s lithium-rich countries, traditionally deemed a “backyard” of US influence.

“Not only has China increased its investment in the Lithium Triangle countries, but it has also strengthened its bilateral relationships through its vaccine diplomacy,” Berg warned in a paper. “As China furthers its influence in the Lithium Triangle countries through increased investment, but also through its aggressive vaccine diplomacy, it will likely continue its dominance of the emerging lithium industry.” He exhorts Washington to take countermeasures, but for now, Beijing seems to be moving ahead.

— Kenji

Smart data

These charts elaborate on some of the themes Kenji explored in this week’s Our take, above. They are also relevant to the FT Big Read that forms the basis of this week’s Spotlight, below.

Note the bullish long-term outlook for battery-powered vehicles and the expectations surrounding lithium, as shown in the share price of Neo Lithium. This Lex analysis goes into greater detail.

A few pertinent facts: new energy vehicle sales, both battery-powered and plug-in hybrids, rose 150 per cent last month from a year earlier. This happened as overall auto sales fell by a fifth. Neo Lithium owns and mines some of the biggest lithium deposits in the world.

Spotlight

For more than a decade, Chinese carmakers have tried to export their vehicles outside the country, with limited success. Wang Chuanfu, the founder of Chinese electric vehicle maker BYD, has gone further than most.

BYD is now the world’s second-largest producer of electric buses and the fourth-largest maker of electric vehicles. This summer, it shipped its red Tang sport utility vehicles to Norway, the country which has seen the quickest uptake of battery-powered cars.

Wang has been critical to its success. Warren Buffett is one of the biggest backers of the company after spotting Wang’s potential a decade ago. Buffett’s right-hand man, Charlie Munger, described the Chinese businessman as a mix between Thomas Edison and former General Electric chair Jack Welch. Wang once publicly drank battery fluid to prove how safe it was.

BYD has said it is preparing to build a battery factory in Europe to “provide supporting facilities for European auto customers” as part of its global expansion drive. But its potential to compete against revolutionary and disruptive companies such as Tesla remains to be seen.

When sages speak

• The Heritage Foundation’s podcast “China Uncovered” has several episodes that focus on tech issues. This episode featuring Emily Weinstein goes into some depth on technology transfer. The latest episode with Fergus Ryan discusses China’s “chokepoint technologies” and tech giants.

• In the week that a senior US official said that Washington was losing the AI race to China, read more from the excellent Jeffrey Ding’s ChinAI newsletter. The section on Beijing’s efforts to grapple with ethics and AI struck us as particularly insightful.

• This analysis from Saranya at the Observer Research Foundation in New Delhi shows how China is intent on controlling internet services through algorithms, further consolidating Beijing’s power over Big Tech companies.