Samsung profit is halved, company guidance warns

Samsung, the world’s largest smartphone and memory chip maker, warned the market its quarterly profit would drop by 56%, prior to the official result announcement later this month.

Samsung Electronics told the market that the operating profit generated in the quarter ending 30 June amounted to KRW 6.5 trillion ($5.55 billion), which would be a 4% sequential improvement on Q1 this year, but would represent a 56% drop from the same quarter a year ago. The total revenue is expected to be around KRW 56 trillion ($47.8 billion), a 7% sequential growth, but 4% year-on-year decline. The continued depressed profitability (operating margin almost unchanged from last quarter at 12%, compared with 25% a year ago) indicates Samsung’s main business has not turned the corner.

The semiconductor sector, where Samsung has generated the highest profit among all of its business units, remains weak. Last month investment analysts from the private fund Evercore reported that the inventory of memory chips by downstream device makers continued to be at excessively high level, therefore the investors did not see the sector recover before 2020.

The IT & Mobile communication unit, which has generated the highest revenue for Samsung, is still in trouble. Samsung has braced intensive competition particularly from the Chinese competitors, and its Galaxy S10 series have not been able to turn its fortune. The troubled launch of the Fold version of S10, which had been slated for Q2, has still yet to happen. A new Unpacked event has just been announced for August, but is likely to unveil its new tablet, the Galaxy Note 10, to consider the stylus featured on the event invitation.

When faced with pressure on profit, companies often turn to control cost. That looks to be what Samsung has been doing. A few days ago The Economic Times of India reported that Samsung will cut 1,000 jobs from the company’s smartphone functions. This is after 150 jobs are already gone in Samsung’s telecom infrastructure team.

5G RAN market analysis has Huawei in the lead

Analyst outfit GlobalData has claimed the first competitive landscape assessment  of the 5G RAN vendor market, naming Huawei as the clear leader.

The methodology isn’t detailed, but it seems to consist of giving each of Ericsson, Huawei, Nokia, Samsung and ZTE marks out of five on the following criteria:

  • Baseband capacity
  • Radio unit portfolio
  • Installation ease
  • Technology evolution

Nobody scores less than three in any category but, as you can see from the table below, Huawei gets top marks across the board. GlobalData then aggregates those to make an aggregate score, with everyone getting four except Huawei on five. This seems a bit generous to Samsung and ZTE, both of whom averaged 3.5/5.

globaldata 5g

“The 5G RAN market is extremely competitive in these early stages,” said Ed Gubbins, Principal Analyst at GlobalData. “Operators’ decisions today will direct the next decade of global telecom investment and ultimately usher in fundamental changes to the way we live and work in the 5G era.”

“The first wave of 5G RAN equipment, called ‘non-standalone 5G’ relies on existing 4G LTE infrastructure for some functions. So in the race to win 5G deals with operators, each vendor has a strong advantage with operators that already use their 4G gear.

“Standalone 5G, which requires a 5G core, will give vendors a better chance to penetrate new operator accounts and grow their global market share. We expect the standalone 5G RAN market to start ramping up in 2020.”

Conspicuously absent from all this analysis are geopolitical considerations. It’s all very well Huawei having the best offering, but if much of the western world won’t allow it to be involved in its 5G markets that doesn’t count for much. It’s also interesting to note that the report suggests Nokia’s radio unit portfolio is much better than Ericsson’s, which in turn is easier to install.

Xiaomi is meeting Huawei domestic aggression head on

Smartphone manufacturer Xiaomi plans to increase the investment in channel and retail development in the Chinese market by $725 million, to improve its position and to counter the expected aggression from market leader Huawei.

Bloomberg cited its source at Xiaomi that the Chinese smartphone company has decided to invest CNY 5 billion ($725 million) over the next three years to shore up its channel and retail position in China’s contracting smartphone market. This will come on top of its current budget and will be spent on channel expansion, partner incentive, and sales force financing, according to the report.

The decision is also made in anticipation of Huawei’s aggressive channel and retail movements in China in the near future, the source told Bloomberg. Huawei, the smartphone market leader in China admitted recently that its business will suffer from the US sanctions and the severance of business relations by companies like Google. In the consumer segment, which now accounts for more than half of Huawei’s total revenue, the impact will mainly in the overseas market with the disappearance of Google services from its smartphones posing the biggest impediments to consumers’ purchasing decision. This will drive Huawei to further strengthen its grip on the Chinese market, where it is already supplying one out of ten of the smartphones being sold.

Xiaomi has reaped the benefits after investing heavily in the overseas markets in recent years, having broken into the top five in a number of European markets while also well received in growth markets like India. It has the ambition to become the market leader in its home market too, but so far, the company has been vying for the fourth position with Apple, trailing Huawei, OPPO, and Vivo.

Huawei and Xiaomi also adopt different retail strategies. In addition to smartphones, Huawei also sells its full line of consumer products in the retail outlets including PCs, tablets, and other consumer devices.  Xiaomi, on the other hand, has carried the “ecosystem” concept from online, which used to its exclusively channel, to offline retail. In addition to its own branded products, centred around the smartphones, partner products on its IoT ecosystem are also offered in the retail outlets, in line with its strategies.

HMD moves Nokia phone user data storage to Finland

HMD Global, the maker of Nokia-branded smartphones, announced that it is moving the storage of user data to Google Cloud servers located in Finland, to ease concerns about data security.

The phone maker announced the move in the context of its new partnership with CGI, a consulting firm that specialises in data collection and analytics, and Google Cloud, which will provide HMD Global with its machine learning technologies. The new models, Nokia 4.2, Nokia 3.2 and the Nokia 2.2, will be the first ones to have the user data stored in the Google Cloud servers in Hamina, southern Finland. Older models that will be eligible for upgrading to Android Q will move the storage to Finland at the upgrade, expected to take place from late 2019 to early 2020. HMD Global commits to two years’ OS upgrades and three years’ security upgrades to its products.

HMD Global claims the move will support its target to be the first Android OEMs to bring OS updates to its users, and to improve its compliance with European security measures and legislation, including GDPR. “We want to remain open and transparent about how we collect and store device activation data and want to ensure people understand why and how it improves their phone experience,” said Juho Sarvikas, HMD Global’s Chief Product Officer. “This change aims to further reinforce our promise to our fans for a pure, secure and up to date Android, with an emphasis on security and privacy through our data servers in Finland.”

Sarvikas denied to the Finnish news outlet Ilta-Sanomat that the move was a direct response to privacy concerns triggered by the controversy earlier this year when Nokia-branded phones sold in Norway were sending activation data to servers in China. At that time HMD Global told Telecoms.com that user data of phones purchased outside of China is stored in AWS servers in Singapore, which, the company said, “follows very strict privacy laws.” However, according to GDPR, to take user data outside of the EU, the company would have had to obtain explicit consent from its EU-based users.

Sarvikas claimed that the latest decision to move storage to Finland has been a year in the making and is part of the company’s overall cloud service vendor swap from Amazon to Google. “Staying true to our Finnish heritage, we’ve decided to partner with CGI and Google Cloud platform for our growing data storage needs and increasing investment in our European home,” Sarvikas added in the press release.

Francisco Jeronimo, Associate VP at IDC, saw this move a positive action by HMD Global, calling it a good move “to address concerns about data privacy” on Twitter.

Finland’s Uros flies Europe’s flag in Qualcomm smart city program

Qualcomm launched its Smart Cities Accelerator Program with over 40 partners, but fast-growing Finnish company Uros is the only European representative.

Qualcomm recently joined hands with 45 companies that have been using its technologies to set up a community called “Smart Cities Accelerator Program”. The program aims to provide cities, municipalities, government agencies, and enterprises around the world with ecosystem solutions for Smart Cities applications. The member companies included “hardware and software providers, cloud solution providers, system integrators, design and manufacturing companies, as well as companies offering end-to-end solutions with Smart Cities in mind”, the world’s leading chip maker said in a statement.

“The Qualcomm Smart Cities Accelerator Program is a central hub for Smart Cities solution providers,” said Sanjeet Pandit, senior director of business development and head of Smart Cities at Qualcomm. “By working with proven expertise and deployed solutions, cities, municipalities, government agencies and enterprises can speed the realization of their Smart Cities visions. This program aims to foster a rich ecosystem of B2B collaborations that we hope will speed the development and deployment of Smart Cities solutions around the globe.”

Most of the companies are based out of North America and Asia, including familiar names like Compal or Verizon. The sole representative of Europe is Uros, a Finnish private company that has undergone fast growth in recent years. According to the Finnish publication Talouselämä, the company’s turnover grew from €2.7 million in 2015 to €1.3 billion in 2018, an increase of nearly 500 times in three years. Uros is based in Oulu in northern Finland, dubbed the country’s “Radio Valley” which used to be Nokia’s heartland to develop radio technologies and produce base stations. The owner and the current CEO were both Nokia veterans.

Uros unbelievable growth 2015-2018

Uros started its business with a roaming application to help consumers save roaming cost, by which it developed an extensive network with the world’s mobile operators. It then saw the opportunities in IoT, which, though still predominantly short-range, will see wide range, especially cellular IoT gaining share and outpacing the other types of connectivity. Ericsson estimated that over 22.3 billion IoT connections will be on the internet by 2024, including 4.1 billion cellular IoT. The smart city sector will benefit from 5G in a big way.

In addition to smart connectivity solutions, including its industrial products and sensors, Uros will also bring to the table its expertise in data analytics in natural resources management, waste reduction in industrial processes, and turnkey IoT solutions. Its participation in the Qualcomm program must also have to do with its long collaboration with the chip maker, which has been respected by Qualcomm. “Whenever we have a new chip, we will call them about it. They will come up with a new way of using it,” Qualcomm’s Pandit told Talouselämä. “It is not that others can’t develop the same technologies, but they are always the first because they think ‘out of the box’, in their own original way.”

Uros was set up in 2011 and has about 60 employees.

Microsoft and Sony join up on AI and cloud gaming

Microsoft and Sony have signed a memorandum of understanding to jointly develop cloud systems for game and content streaming, and to integrate Microsoft’s AI with Sony’s image sensors.

This is another step on Sony’s journey to transform from a console and title seller to a game streaming service platform. Microsoft’s leadership in both cloud computing, its Azure cloud platform, and the global footsteps of its datacentres makes it an ideal partner to Sony.

The collaboration will also cover semiconductors and AI. Sony has been a leader in image sensors (among its clients is the iPhone including the latest XS Max model), and the integration of Microsoft Azure AI will help improve both the imaging processing in the cloud and on device, what the companies called “a hybrid manner”. Microsoft’s AI will also be incorporated in Sony’s other consumer products to “provide highly intuitive and user-friendly AI experiences”, the companies said.

“Sony has always been a leader in both entertainment and technology, and the collaboration we announced today builds on this history of innovation,” said Satya Nadella, CEO of Microsoft, in a statement. “Our partnership brings the power of Azure and Azure AI to Sony to deliver new gaming and entertainment experiences for customers.”

Kenichiro Yoshida, president and CEO of Sony agreed. “I hope that in the areas of semiconductors and AI, leveraging each company’s cutting-edge technology in a mutually complementary way will lead to the creation of new value for society,” he said.

Looking to the future of the PlayStation platform, Yoshida said, “Our mission is to seamlessly evolve this platform as one that continues to deliver the best and most immersive entertainment experiences, together with a cloud environment that ensures the best possible experience, anytime, anywhere.”

Gaming is following the trend of video and music from one-off ownership selling to access streaming. But gamers are more sensitive to the visual quality and, above everything else, lagging. So to provide good experience to convert gamers to long-term streaming subscribers, the platform needs to guarantee superb connection. This is where Microsoft’s datacentre footsteps and the upcoming 5G networks will fit well with the “game” plan.

Another key success factor, similar to video streaming market, is the content. Gamers’ taste can be fast changing and frivolous. That is why the companies also stressed the importance to “collaborate closely with a multitude of content creators that capture the imagination of people around the world, and through our cutting-edge technology, we provide the tools to bring their dreams and vision to reality.”

No information on the size of investment or the number of staff involved in the collaboration is disclosed, but the companies promised to “share additional information when available”.

Nokia laments a weak first quarter

Finnish telecom vendor Nokia reported a disappointing Q1 of flat revenue and expanding loss. The company blamed competition and slow ramp-up of 5G.

Nokia reported a modest 2% net sales growth to reach €5.032 billion over €4.924 billion of Q1 2018, which would be down by 2% on constant currency basis. The gross margin was at 31.3%, down from 36.7% a year ago. The operating loss increased from €336 million (or -6.8% of net sales) to €524 million (-10.4%). Net cash was depleted by more than half from €4.179 billion to €1.991 billion. Earnings per share went from positive €0.02 to negative €0.02.

Nokia Q1 2019

Rajeev Suri, the President and CEO of Nokia, conceded that “Q1 was a weak quarter for Nokia.” Meanwhile, the company believes that its fortunes will improve in the rest of the year, especially in the second half.  “As the year progresses, we expect meaningful topline and margin improvements. 5G revenues are expected to grow sharply, particularly in the second half of the year, driven by our 36 commercial wins to date.”

In addition to the slow start of the year, Suri also saw risks in intensified competition and customers reassessing their investment. He said in the statement that “competitive intensity has slightly increased in certain accounts as some competitors seek to be more commercially aggressive in the early stages of 5G and as some customers reassess their vendors in light of security concerns, creating near-term pressure but longer-term opportunity.”

When looking at the results by business lines, Networks, by far the biggest segment of Nokia’s business, grew by 4%, both Software and Nokia Technologies kept flat, while sales from the Group Common and Other unit (including Alcatel Submarine, Bell Labs, Radio Frequency Systems, etc.) went down by 13%. Geographically, North America, which overtook Europe to become Nokia’s biggest market in the last quarter, fell back to below Europe in Q1 despite registering an impressive 9% year-on-year growth. Europe was largely flat with the sales keeping at €1.5 billion level. Asia Pacific grew by a decent 6% to get closer to the €1 billion mark, but the biggest loss was in Greater China, where the sales plunged by 10%, now only marginally bigger than Middle East & Africa.

To say things have not been going smoothly for Nokia recently would be an understatement. In late March, the company first announced that it had discovered certain “compliance issues” in the Alcatel-Lucent business it acquired years ago which might have “material adverse effect” on its business, causing a rush sell in the financial market, only to retract a couple of hours later to declare those issues would not have materials impact. More recently it was reported that the company has been struggling to fulfil its business contracts in Korea.

This must be a painful moment for the Nokia management and shareholders (it’s shares were down around 9% at time of writing), who have to watch its two major competitors reporting strong results while sitting on its own disappointments. Ericsson has just delivered an encouraging quarter, and Huawei, despite all the headwind, has reported a particularly impressive Q1. As Light Reading, our sister publication, said earlier, Huawei’s woes may not necessarily mean good fortunes for its two main competitors. So far they have not translated into good fortunes for at least one of them.

Comparing the numbers with Ericsson we could see that despite Ericsson’s total sales in Q1 was about 10% smaller than Nokia’s, it was considerably more profitable (gross margin at 38.4% vs. Nokia’s 31.3%), and its operation more efficient (€1.3 billion operating cost vs. Nokia’s €2.1 billion).

These are also the two key aspects the Nokia management are focusing on to turn things around. On the profitability side, Suri said “we will continue to take a balanced view, and are prepared to invest prudently in cases where there is the right longer-term profitability profile.” On the efficiency side, the company is “also progressing well with our previously announced EUR 700 million cost savings program,” Suri said in his statement.

AT&T will stick with 5GE after settling with Sprint

US operator Sprint has settled the case it brought against AT&T for unfair competition with the 5GE marketing gimmick with apparently little to show for it.

The legal trade publication Law360 reported that Sprint and AT&T have reached a settlement of the case Sprint brought to a federal court in New York in February. A short statement was mailed to the media, “The parties have amicably resolved this matter,” it said. A source told Law360 that AT&T will continue to use “5G Evolution” or 5GE in its marketing and ads materials. No details on the terms of settlement have been disclosed.

In the court case, Sprint complained that AT&T was conducting false advertising, therefore misleading consumers, and in turn, directly harming Sprint’s business interest. In addition to the law suit, Sprint also took out a full-page ad in the New York Times in March to warn consumers “Don’t be fooled. 5G Evolution isn’t new or true 5G. It is fake 5G.”

The other big US operators were not holding back from attacking AT&T’s antics either. Verizon’s CTO wrote an open letter calling on the industry “to commit to labeling something 5G only if new device hardware is connecting to the network using new radio technology to deliver new capabilities,” as well as promised that Verizon “won’t take an old phone and just change the software to turn the 4 in the status bar into a 5.” T-Mobile, on the other hand, in keeping with its CEO’s maverick spirit, uploaded a video showing someone taping over the LTE indicator on the phone with a sticker labelled “9G”.

Even the OEMs would not let go the chance to mock AT&T’s shenanigans. Xiaomi, when launching its 5G smartphone before MWC in Barcelona, pointedly highlighted the 5G network by Orange it used for the demo was real 5G, “not fake 5G”.

A few days before the announcement of settlement AT&T defended itself at the court that consumers were not fooled into believing the 5GE is actually 5G. On the other hand, for the purists like the EU-backed 5G Infrastructure Association or Qualcomm, none of the 5G networks launched so far in Korea and the US can be called “real 5G”.

Apple capitulates to end war with Qualcomm

Qualcomm and Apple agreed to settle all the ongoing litigations with the iPhone maker paying the chipset maker an undisclosed amount and signing a six-year licensing agreement.

On Monday, Qualcomm and Apple went to court over the allegation that Qualcomm has been abusing its monopoly position to over-charge for its chips. The stakes could have run up to tens of billions of dollars, with the OEMs Foxconn and Pegatron already demanding compensation of $9 billion dating back to 2013. The case at the Southern District Court of California in San Diego was meant to last for five weeks.

On Tuesday, the two companies released a brief statement to announce a settlement. “Qualcomm and Apple today announced an agreement to dismiss all litigation between the two companies worldwide. The settlement includes a payment from Apple to Qualcomm. The companies also have reached a six-year license agreement, effective as of April 1, 2019, including a two-year option to extend, and a multiyear chipset supply agreement.”

This is definitely good news for the two companies especially for Qualcomm, and good for the industry and consumers. Specifically, for Qualcomm it means its business model will remain intact and the company can put an end to a multi-year legal saga; for Apple, in addition to avoiding the punitive $31 billion penalty, this settlement will be able to quicken its steps to launch a 5G iPhone, making up the gap already expanding between itself and the leading pack.

A few hours later, Intel announced that it intends “to exit the 5G smartphone modem business and complete an assessment of the opportunities for 4G and 5G modems in PCs, internet of things devices and other data-centric devices. Intel will also continue to invest in its 5G network infrastructure business. The company will continue to meet current customer commitments for its existing 4G smartphone modem product line, but does not expect to launch 5G modem products in the smartphone space, including those originally planned for launches in 2020.”

It must have been a blow to Intel’s mobile ambition, especially after it announced only late last year that it would bring the launch of its first 5G modem forward by half a year to the second half of this year, an act to prove the doubters wrong. That originally planned 5G modem to be launched in 2020 referred to in the announcement, presumably a second generation, was supposed to power the first 5G iPhone, after Apple all but officially declared that it would enter into an exclusive relationship with Intel.

Putting the two things together it may be reasonable to infer that Apple agreed to settle after it had realised that it does not have other options than coming back to Qualcomm for the supply of 5G modems (assuming Intel had updated Apple about its imminent decision to withdraw from the market).

In addition to leaning in on Intel, Apple has also been reported to be strengthening its in-house modem development capability, ultimately aiming to rid itself of reliance on external suppliers. Based on the terse announcement released together with Qualcomm, it looks Apple does not believe the home-grown modems will be good enough to compete with Qualcomm in the next few years. Huawei is another supplier that has launched its own 5G modem, but it may be safe to estimate that the chance of Apple going for Huawei chips is slim.

In keeping with the normal practice of settlement cases like this, the companies did not disclose the amount Apple will pay. However, Qualcomm updated the SEC shortly after the settlement announcement was made, as the settlement would have material impact on the earnings. The company expected an EPS incremental of about $2 “as product shipments ramp” without giving a specific timespan. As a reference, in the quarter ending 30 December 2018, Qualcomm delivered an EPS of $0.87 on the back of a total revenue of $4.8 billion. Therefore, assuming Qualcomm’s operational efficiency remains largely constant, the payment Apple will make could run into the $10 billion range.

Payment aside, there must be some soul-searching going on inside Apple, including by Tim Cook, the CEO, who came from a supply chain management background: how could Apple have let itself be cornered so badly in the first place? It’s hard to view this as anything other than complete humiliation for Apple, especially when you consider how aggressively it pursued this case.

On top of the millions it will have paid to lawyers Apple’s negotiating position in arriving at this settlement, considering what was widely assumed about its 5G modem situation, must have been very weak. So it’s quite possible Apple has ended up paying considerably more for Qualcomm’s chips than it would have if it had never initiated this war. Having said that, Apple’s share price seems completely unaffected by the news, probably indicating offsetting relief that it’s back in the 5G game. Qualcomm’s share’s however, surged 23% on the news.

New research claims employees do not own Huawei

Two academics researched the ownership and control structure of Huawei and concluded the company is not owned by employees, contrary to what the company has officially claimed.

Christopher Balding, an Associate Professor of Economics at Fulbright University Vietnam, and Donald Clarke, a Professor of Law at George Washington University’s Law School, published a preprint paper titled “Who Owns Huawei?” on SSRN, the online sharing platform for scholars. The scholars combed the publicly available information, from both China and overseas, and pieced together a picture of Huawei’s ownership and control structure.

Huawei has repeatedly stated that the company is jointly owned by Ren Zhengfei, the founder, who has 1.14% of the share, and the 100,000 or so employees who own the rest. “Huawei is a private company wholly owned by its employees”, says the company’s annual report. The company “involves 96,768 employee shareholders”. The founder repeated the message at his interview with a group of journalists from the global media earlier this year. The scholars dug into the opacity and found the reality is more complex and less clear.

They started with distinguishing the different entities enshrined in the name. Huawei Technologies is the company that produces and sells products and services, and employs around 188,000 people (according to Huawei’s 2018 Annual Report). This entity is 100% owned by a holding company called Huawei Investment & Holding Co., Ltd., which employs no more than a couple of hundred people. Ren Zhengfei owns 1.14% of the holding company, the rest is owned by an organisation called Huawei Investment & Holding Company Trade Union Committee (the scholars abbreviated the name to “Huawei Holding TUC”).

Huawei ownership

There is no information on how Huawei Holding TUC is constituted or what the governance model or decision-making process is. Probably more importantly, the TUC is associated with the holding company (which employs a couple of hundred people), not with Huawei Technologies (which employs 188,000 people). Even if all the employees under Huawei Technologies are represented by the TUC, according to the labour law in China, “trade union officials are appointed by management or by the administratively superior trade union organization, not chosen by the members.” (P.9) In other words, the employees cannot decide who can sit on the committee, less how they make decisions.

The authors of the paper also attempted to separate ownership from control, or in a hypothetical case of insolvency, right to claim to company’s residual assets. Again, according to the law in China, “residual assets of a trade union go up, not down, to the trade union organization at the next highest administrative level” (P.9), theoretically all the up to the “All-China Federation of Trade Unions at the central level. The Communist Party controls the ACFTU, with the head of the ACFTU sitting on the Politburo.” (P.10)

There is further opacity related to how the boards are created. In the official transcript of the founder’s interview distributed afterwards, one can read that recently Huawei underwent a year-long voting process among the “96,768 shareholding employees” to select the 115 members to the Representatives’ Commission, which, according to the owner, “is the highest decision-making authority in Huawei”. This Commission then would select Huawei Holding’s Board of Directors and Board of Supervisors. But here is another ambiguity, as the authors of the paper pointed out: if the shareholding employees vote as shareholders, then their votes should be weighted; if they vote as employees, then all employees shareholding (about 100,000) or not (about 90,000) should have the chance to vote.

This points to the true nature of the “shares” the 100,000 or so employees own. The scholars found that, after a few stages of historical morphing, the shares are no more than stock options public listed companies incentivise their employees with. In other words, the employees do not own a part of the company through their “shares”. Instead, the “virtual stock is a contract right, not a property right; it gives the holder no voting power in either Huawei Tech or Huawei Holding, cannot be transferred, and is cancelled when the employee leaves the firm, subject to a redemption payment from Huawei Holding TUC at a low fixed price.” (P.5). The owner said in his interview that shareholding employees also include “retired former employees who have worked at Huawei for years.”

The two factors put together, the opaque governance model of Huawei Holdings and the lack of ownership associated with the shares half of the employees own, led the scholars to the key conclusions. First, though they could not be sure who actually owns Huawei, they are pretty sure the employees do not. Second, the lack of transparency of the governance model of Huawei Holdings looks to put Huawei between a rock and hard place.

On one side, the authors commented, “if Huawei Holding is in fact controlled by a trade union committee, then given the way such bodies are supposed to operate in China, it makes sense to think of it as state-controlled and even state-owned.” (P.12). Otherwise, if Huawei Holding is not actually owned and controlled by the trade union or its committee, Huawei has not been telling the truth. Then it is up to Huawei to make its case. “The information necessary to do so is in Huawei’s control,” the scholars said. (P.11)