Hello, everyone. This is Kenji from Hong Kong, where the pandemic seems to be abating and the social-distancing rules will be further relaxed from Friday to allow six people to dine together until 2am. While the virus may be weakening here, the Sino-US tech rivalry is definitely not — a theme our Big Story digs into with the latest development in China’s digital currency. Here, China seems to be ahead of the pack but this could be another reason why Washington is trying to hold back Beijing’s chipmaking dream (Mercedes’ top 10). 

We also witness a number of windfalls from the ongoing rivalry, such as Taiwan’s embrace of Microsoft (Mercedes’ list). But there are a few who buck the trend, such as Yukio Sakamoto, a 73-year-old Japanese chip expert helping China establish its own Dram business (Best of comment). We also have a nice read on a fight between Indian tycoon Mukesh Ambani and US tech giant Amazon (Art of the deal). On a final note, I wish to send my condolences to the family of the man who brought Samsung to the centre of the global tech stage, which you can read about in the Spotlight section.

The Big Story

China is leading the world in efforts to launch a national digital currency. A trial using the central bank’s digital prototype has found many willing participants while authorities are rolling out new usage features and devising standards for “digital wallets” to combat counterfeits, write Nikkei staff writers Iori Kawate and Yuta Saito.

In a test in Shenzhen from October 12 to 18, 47,573 participants spent more than Rmb8.76m ($1.3m) of the digital currency. Such trials are due to go ahead in 28 cities, including Beijing, Tianjin, Shanghai, Guangzhou and Chongqing. China aims to officially launch the digital renminbi before it hosts the 2022 Winter Olympics. 

Key implications: China’s efforts to digitise the renminbi, with the People’s Bank of China filing more than 80 patents, have galvanised other countries to follow suit.

The FT’s Martin Sandbu predicted that a digital euro would be launched by the end of 2025. The US Federal Reserve is also working on a central bank digital currency. The Bank of Japan has said that it will start testing a central bank digital currency in early fiscal 2021.

Upshot: China’s lead in devising and popularising its digital currency has raised alarm in the US, Europe and Japan that Beijing could become the dominant force behind the technologies and frameworks involved in digital currencies.

Mercedes’ top 10

  1. The Trump administration’s chokehold on Chinese tech groups is threatening Beijing’s multibillion-dollar push to develop its domestic chip sector.

  2. Chinese smartphone maker Realme is only two years old but has already surpassed players such as Sony and LG — and it has its eyes on Europe.

  3. Chinese fintech giant Ant Group’s IPO values the company at a whopping $313bn.

  4. Microsoft plans to build its first cloud data centre in Taiwan. The move follows predictions that Hong Kong’s attractiveness for data-reliant companies will be reduced under a new security law.

  5. A scoop in Nikkei Asia says ByteDance is considering listing Douyin, its domestic version of TikTok, in Hong Kong or Shanghai.

  6. China’s internet watchdog is cracking down on popular local mobile browsers in an ominous sign of self-censorship.

  7. Meanwhile, TikTok’s “apolitical” aspirations face a crucial moderation test in the US election.

  8. Japan Inc has found a new purpose for automation: business continuity in the uncertain era of Covid-19.

  9. The Wall Street Journal has a good sector-by-sector deep dive into the high cost of the US-China tech war.

  10. Japan’s army of bots has arrived. Convenience stores in Tokyo have put prototypes of robots to work stocking shelves with goods.

When sages speak

  • This “China Forecast 2025” by think-tank MacroPolo has a good tech section by Matt Sheehan which forecasts that China will largely succeed in deploying highly capable new infrastructure such as cloud computing, 5G networks, smart cities and surveillance networks by 2025. US semiconductor sanctions will slow China’s development only modestly.

  • Here is an interesting interview with Plamen Tonchev of the Institute of International Economic Relations on “greening” China’s Belt and Road Initiative.

  • More on India and 5G telecoms here by Gautam Chikermane, vice-president of the Observer Research Foundation in New Delhi. “China Tech is becoming a pariah, isolated because of the aggressive actions of Xi Jinping and his Chinese Communist Party,” he writes.

Best of comment

Yukio Sakamoto, a 73-year-old Japanese chipmaking business veteran, last fall took a senior vice-president position at Tsinghua Unigroup, a leading Chinese high-tech conglomerate affiliated with the renowned Tsinghua University, writes Ken Koyanagi, Nikkei Asia’s editor-at-large. His role is to oversee the launching of a Dram memory-chip manufacturing business.

It looked like a bold decision and perhaps an ill-conceived move considering the US-China technology rivalry was growing nastier. The US continues to throw one punch after another at Chinese tech groups Huawei and Semiconductor Manufacturing International Corp, making the idea of launching a new chipmaking business in China appear daunting.

But Mr Sakamoto remains optimistic.

“We are living in a world where latecomers have a better chance to catch up with incumbent leaders,” he told Nikkei Asia. “Because semiconductor technology is progressing more slowly today as the smallness of transistors is approaching limits in terms of physics and optics.”

Mr Sakamoto is talking about the longer-term prospects for China to develop its own silicon wafer fabrication skills and technological capabilities for domestically supplying chipmaking materials, equipment and software.

In the spotlight

He was known simply as “the chairman” among Samsung employees, who rarely caught sight of him. But for 26 years, the publicity-shy Lee Kun-hee, who has died aged 78, held unchallenged authority over the South Korean group.

Lee is credited with turning Samsung into a world leader in multiple sectors but especially in technology and mobile phones. He was no stranger to drastic action, as shown by his burning of defective phones in a bonfire.

The company was a minor player in the global tech scene when he took control in 1987 but it became the biggest of South Korea’s chaebol. Less than two years after being written off as an also-ran in the race to manufacture smartphones, Samsung overtook Apple in 2011 to become the global leader by unit sales.

Most analysts say his 52-year-old son Lee Jae-yong will find it almost impossible to oversee growth matching that of the past two decades.

Art of the deal

When a typical middle-class Indian kid shops online, he thinks of Amazon, not local billionaire Mukesh Ambani’s Reliance Retail or Jio Mart. Mr Ambani knows it, which is why his Reliance Industries has tried to buy the retail stores and warehouses of Future Group, India’s second-largest retailer, write Stephanie Findlay and Anjli Raval for the FT.

But Jeff Bezos, determined to maintain Amazon’s dominant position in a crucial growth market, has other ideas. The US tech group filed a complaint connected to the $3.4bn deal that Reliance struck with Future Group in August. On Sunday, the Singapore International Arbitration Centre granted an emergency interim order in Amazon’s favour. The deal is now on hold until a final decision is given.

Amazon, which acquired an indirect minority stake in the retail and fashion conglomerate last year, alleged that Future’s sale of its retail, wholesale, logistics and warehousing businesses to Reliance breached its pre-existing contract with Amazon, which included a right of first offer and a non-compete clause. The deal is now on hold until a final decision is given.

One thing is clear, Mr Ambani is after what Mr Bezos has. The arbitration buys the US billionaire time but the skirmish is another setback for Amazon in India. Reliance, which is making big moves in the country of 1.3bn, has the advantage of being on the right side of a growing tide of protectionist policies in India. Mr Bezos may find that slowing down the Reliance expansion winds up as a Pyrrhic victory.

Smart data

South Korean companies grab more than half of global NAND and DRAM production

Last week #techAsia profiled the $9bn sale of Intel’s Nand memory business to South Korea’s SK Hynix as more evidence of the flurry of M&A activity in the semiconductor sector. Here Nikkei Asia breaks down the acquisition further.

The consolidation could also nudge the Nand flash memory sector towards being more profitable for players. It is difficult for manufacturers to make a decent profit with six players competing fiercely. By contrast, the market for Dram memory chips, which are widely used in computers to store data temporarily, is dominated by three manufacturers — South Korea’s Samsung and SK, and Micron Technology of the US. All three generally make healthy profits from that segment.

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