Tag Archives: Foxconn

Supplier Report: 6/23/2017

It feels like Amazon is taking over the world – they are buying Whole Foods, they are Gartner’s #1 IaaS provider, they are building a new cloud region in Hong Kong, and they managed to get Wal-mart so mad that the ol’ mart is banning suppliers from doing business with AWS.

I guess it’s good to be the king?

Red Hat is thinking about the future as they grow their services business while Oracle beat market expectations and had quite the stock rally.

Acquisitions

  • Amazon to Buy Whole Foods for $13.7 Billion

    Amazon.com Inc. said on Friday it would buy Whole Foods Market Inc. for $13.7 billion, including debt, instantly transforming the online giant into a major player in the bricks-and-mortar retail sector it has spent years upending.

    The acquisition, Amazon’s largest by far, gives it a network of more than 460 stores that could serve as beachheads for in-store pickup and its distribution network. It would make Amazon an overnight heavyweight in the all-important grocery business, a major spending segment in which it has struggled to gain a foothold because consumers still largely prefer to shop for food in stores.

    https://www.wsj.com/articles/amazon-to-buy-whole-foods-for-13-7-billion-1497618446?mg=prod/accounts-wsj

  • Tokyo Takes Lead in Toshiba Chip-Unit Sale Over China Fears

    The Japanese government-led group wasn’t the highest bidder, according to people briefed on the bids. Taiwan-based iPhone assembler Foxconn Technology Group, formally known as Hon Hai Precision Industry Co. , was ready to offer more, but Japanese government officials said its large China operations raised the risk that technology would leak.

    Toshiba said the Japanese government-led plan is the “best proposal, not only in terms of valuation, but also in respect to certainty of closing, retention of employees, and maintenance of sensitive technology within Japan.”

    https://www.wsj.com/articles/toshiba-picks-government-led-group-as-preferred-bidder-for-chip-unit-1498015576

Artificial Intelligence

  • SAP Ariba and IBM – Global Strategic Alliance to Deliver Cognitive Procurement Solutions
  • Inside Microsoft’s AI Comeback

    Indeed, Microsoft first rolled out its developer tools for bots in the spring of 2016, as did other large tech companies like Facebook. They were billed as a replacement for apps, and many stakeholders really wanted that to be the case. By last spring, most people used the same small group of apps on their smartphones; the promise of bots was that developers and brands could reach new users again, much like they could in the early days of mobile via the app store. But users didn’t play along. And the deep learning that enabled bots to perform the equivalent of magic was improving faster than a paradigm for how to use them could evolved. “Bots are like apps before the file menu existed,” says Cheng. She explains there isn’t a common set of commands, so users are confused about where to find them and how they work. “Web pages, for example, all have back buttons and they do searches. Conversational apps need those same primitives. You need to be like, ‘Okay, what are the five things that I can always do predictably?’” These understood rules are just starting to be determined.

    https://www.wired.com/story/inside-microsofts-ai-comeback

Cloud

  • Wal-Mart to Vendors: Get Off Amazon’s Cloud

    Wal-Mart is telling some technology companies that if they want its business, they can’t run applications for the retailer on Amazon.com Inc.’s leading cloud-computing service, Amazon Web Services, several tech companies say.

    Amazon’s rise as the dominant player in renting on-demand, web-based computing power and storage has put some competitors, such as Netflix Inc., in the unlikely position of relying on a corporate rival as they move to the cloud.

    https://www.wsj.com/articles/wal-mart-to-vendors-get-off-amazons-cloud-1498037402

  • As Amazon, Microsoft and Google Keep Taking Cloud Share, Rivals Are Learning to Specialize

    But whereas Google was alone in the Challengers quadrant last year — everyone besides the big-3 was labeled a Niche Player — Alibaba Group (BABA) , IBM Corp. (IBM) and Oracle Corp. (ORCL) managed to break into the quadrant this year. Some of this may be due to a more lenient attitude towards ranking smaller players on Gartner’s part. But it also might say a thing or two about how each company has learned how to stand out.

    IBM’s ranking appears to have gotten a boost from its efforts to create a next-gen cloud infrastructure for enterprises that relies on proprietary IBM hardware and management software. Gartner also took note of IBM’s ability to use its global footprint to set up cloud data centers in 16 countries, and the potential to use its developer ecosystem to drive adoption of infrastructure services built on top of its Bluemix platform, which initially focused just on cloud app platform (PaaS) services for developers.

    http://realmoney.thestreet.com/articles/06/19/2017/amazon-microsoft-and-google-keep-taking-cloud-share-rivals-are-learning-specialize

  • Amazon announces new AWS Region in Hong Kong

    Amazon announces plans to open an Amazon Web Services Region in Hong Kong next year to make the eighth AWS Region in Asia Pacific.

    https://www.investing.com/news/stock-market-news/amazon-announces-new-aws-region-in-hong-kong-497816

  • Oracle co-CEO Mark Hurd says you need these three things to transition to the cloud

    “We historically used to write big contracts,” Hurd gave as an example. “Now we’re going to do a contract with a company that’s a startup. We’re going to go contract with Lyft for financials, but Lyft doesn’t have a procurement department. They don’t have even an IT department, per se. We can’t show up with a bunch of lawyers and a big, thick document. So we changed our process to go to ‘click to accept.’”

    “That single decision, around here, is like, ‘You’ve got to be kidding,’” he added. “It’s just the way we’ve been trained, it’s what’s in our DNA.”

    https://www.recode.net/2017/6/19/15826776/oracle-co-ceo-mark-hurd-says-you-need-these-three-things-transition-cloud-recode-decode

Datacenter/Hardware

Other

  • Microsoft says “fireball” threat overblown

    Today, Microsoft countered Check Point’s initial analysis that 250 million computers and 20 percent of corporate networks were infected with Fireball.

    “While the threat is real, the reported magnitude of its reach might have been overblown,” said Hamish O’Dea of the Windows Defender research team. Check Point said today that it has been working with Microsoft since being notified of the new analysis.

    “We tried to reassess the number of infections, and from recent data we know for sure that numbers are at least 40 million, but could be much more,” said Maya Horowitz, Group Manager, Check Point Threat Intelligence.

    https://threatpost.com/microsoft-says-fireball-threat-overblown/126472/

  • Oracle leaps to record as cloud transition hits turning point

    Oracle Corp. was late to the cloud revolution, allowing upstarts like Salesforce.com Inc. to find significant market share with software delivered over the internet, and has suffered while making an acquisition-fueled push into the space.

    The Band-Aid appears to have come off Oracle’s wound, however, and the company seems assured that its healed finances will be better than ever. Investors showed belief after Oracle’s fiscal fourth-quarter earnings report Wednesday evening, sending shares that had never cracked $47 in regular trading, adjusted for splits, to more than $51 in after-hours action. If that move holds, Oracle would be worth more than $200 billion.

    http://www.marketwatch.com/story/oracle-leaps-to-record-as-cloud-transition-hits-turning-point-2017-06-21

  • Former EMC Chief Joe Tucci Is Joining This VC Firm

    Joe Tucci, who left his long-time gig as chairman and CEO of EMC after selling the company to Dell, is now special adviser to 83North, an investment firm focusing on European and Israeli startups.

    83North, formerly known as Greylock IL, has offices in London, New York, and Tel Aviv. It has backed startups including Hybris, the German e-commerce company bought by SAP in 2013, and Israeli storage startup ScaleIO, which EMC acquired the same year.

    http://fortune.com/2017/06/19/emc-joe-tucci-vc-83-north/

  • Meg Whitman Cedes One of Her HPE Titles To This Exec

    Hewlett-Packard Enterprise has promoted a 22-year veteran of the company to president. The move comes as HPE continues to sort out its businesses after a series of acquisitions, divestitures, and layoffs.

    The new president, Antonio Neri, was most recently executive vice president and general manager of HPE’s Enterprise group, which sells data center servers, storage, networking to corporate customers.

    http://fortune.com/2017/06/21/meg-whitman-names-new-hpe-president/

  • Red Hat’s comeback rolls on, thanks to a surging application development business

    The Raleigh, North Carolina-based company actually quickened growth in sales of subscriptions for application development tools from the pace it set in its fiscal first quarter. Application development-related and other emerging technology subscription revenues were $139 million, up 41 percent year-over-year and slightly above the previous quarter’s 40 percent growth pace. Subscription revenue for Red Hat’s core infrastructure business rose 14 percent, to $458 million, an impressive gain on top of an already large base.

    Chief Executive Jim Whitehurst  said Red Hat is shifting its business from being a low-cost provider of open-source alternative software to a strategic platform for cloud migration. “We’ve moved from having a seat the table with the purchasing department to having a seat at the table with the CIO,” he said. Sales of core infrastructure platforms like Red Hat Enterprise Linux and OpenStack, he added, “provides a tailwind for our other offerings.”

    https://siliconangle.com/blog/2017/06/20/red-hat-continues-comeback-strong-quarterly-results-driven-surging-application-development-business/

Photo: Benjamin Davies

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SourceCast: Episode 66: Toshiba’s Turmoil

Toshiba is not having a good week.  As the company struggles to survive, political pressures from the Japanese government are complicating an already messy situation.

Photo: Amos Bar-Zeev

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China: Bust or Boom?

sn_china_Travel Coffee Book

China is a country that captures imaginations and can fill the role of the exotic destination, land of adventure and opportunity, and in some cases, it can be painted as a villain.

As Americans, we bemoan the loss of manufacturing and scowl at the influx of affordable gadgets and exploding hover-boards that have flooded into our homes. We fret over Chinese businessmen coming into this country and snapping up all of the available real estate:

Between 2010 and 2015, Chinese buyers put more than $17bn into US commercial real estate, with half of that spent last year alone. Unlike many countries, there are very few restrictions on what foreigners can buy in the US.

But during the same period at least $93bn went into US homes. And in the 12 months to March 2015, the latest period for which relatively comprehensive data could be gathered, home purchases totaled $28.5bn.

China’s economic advancement has come at a cost to the country and its 1.35 billion people. This post highlight some of those issues to give my readers a better understanding of difficulties China will face in the coming years.

Population

Everyone knows that China has an enormous population, but you might not be aware that 194 million people in China are over the age of 60. That is close to 15% of their population.

You might say to yourself, 15% doesn’t sound too bad. From a percentage view, the United States has a similar age distribution.  However…

Until last year, China had a population control methodology in place that limited couples to only one child. The policy started in 1978 and impacted an entire generation of Chinese families.

Thanks to modern medicine, people are living longer. China is no different.  But the unintended consequence of the population control measures and people living longer is that China doesn’t have enough people to care for their elderly population (yes, that is ironic)

This dynamic is called the 4-2-1 problem: 4 grandparents, 2 parents, all being looked after by 1 child who is also the person who is expected to earn an income.

Another interesting wrinkle in the 4-2-1 problem is the lack of brides. Due to the one child policy and China’s cultural preference towards male children, there are almost 40 million men in the country that will remain bachelors:

Today, an estimated 35 to 40 million women are “missing” from China’s population. For years, demographic experts have predicted the huge surplus of young men would cause a rise in sexual violence and social instability. Now the first generation of children born since 1980 has reached marriageable age, and problems such as bride-kidnapping and forced prostitution are soaring.

The bachelors in areas like Da Xin are the least likely of all to find love. As the gap between rich and poor widens in China, uneducated rural men have little means of upward mobility. “I don’t have any money to move away to look for a wife,” says Jin. “I must stay here to work our land and support my elderly mother.”

Think about these 30-something men (basically men my age) who work all day, not to come home to a wife or child (and a reason to get up everyday and go to work), but to their aging parents and grandparents. Knowing that the only way to change things is to abandon their family.
sn_china_paygap_rural_urban

Working Conditions

Some people do leave their villages and their families in the hopes of finding better jobs and better romantic prospects.

Manufacturing represents 44% of China GDP and is supported by an estimated 100 million workers. In the video above, you can see hundreds of people waiting outside the factory every day with the hopes of finding work inside the plants.

sn_china_employ_manufacturing

Once they do get jobs, employees might find themselves working 12 hour days, 6 or 7 days a week, and living in cramped dorm rooms.

The conditions became so bad at some factories that administrators had to put up nets to prevent employees from jumping off the buildings:

The Foxconn suicides occurred at the so-called “Foxconn City” industrial park in Shenzhen, China. The 18 attempted suicides by Foxconn employees resulted in 14 deaths—the company was the world’s largest contract electronics manufacturer at the time. The suicides drew media attention, and employment practices at Foxconn were investigated by several of its customers, including Apple and Hewlett-Packard (HP). Foxconn is a major manufacturer that serves high-profile consumer electronics firms such as Dell, Motorola, Nintendo, Nokia, and Sony.

Chinese workers are concluding that perhaps factory work is not for them and are shunning that life:

Finally, many first-generation migrant workers have worked in the cities for 10-15 years, yet they are still denied entitlement to any social benefits. While government policies now require employers to pay benefits for their employees, implementation is still at a primitive stage and differs vastly across the country. Naturally, migrant workers would prefer to work in regions where social-welfare policies are better implemented.

In addition to potentially poor and cramped working conditions, Chinese workers are also rejecting factory work due to the health issues…

Environmental Problems

Why has the rest of the world outsourced their manufacturing to China? Yes the labor is cheap and (mostly) abundant, but they are also very lax in their regulation of pollution.  Yes, our beloved gadgets are a result of some very toxic manufacturing processes.

So toxic in fact, that many employees have been poisoned:

In mid-July, Long found herself unable to move her legs. “I was just lying on my bed all day and needed help to eat,” she says. Long ended up in a hospital in Guangzhou with more than 30 other Fangtai Huawei workers. Doctors found they’d been exposed to n-hexane, presumably in the “banana oil.” It’s an industrial solvent that causes neurological damage at just 50 parts per million. Workers using it are supposed to wear respirators and operate in a ventilated area. As treatment, Long endured daily injections—she says they “hurt more than anything else in the world.”

Not only does making the stuff cause pollution, but keeping the lights on at all of these manufacturing cities takes energy… lots of it.  And like many other countries (including the United States), China’s primary sourcing of energy is burning coal

sn_china_energy

Burning coal is dirty (as seen in the video above)

China’s apparent demand for crude oil will reach 550 million tonnes (11 million barrels per day) and apparent demand for natural gas will hit 205 billion cubic meters, Nur Bekri, head of the National Energy Administration (NEA), said, according to Xinhua.

Electricity consumption will rise to 5.7 trillion kilowatt-hours and coal consumption will be 3.96 billion tonnes.

Burning coal and running factories is such dirty business that China has a tendency to shut down production when visitors arrive. They shut down factories for the Beijing Olympics, and they are planning to do so again for the G20 Summit in September.

Since this is a supply chain focused webpage, I am curious to see how the supply chain will be impacted by this production shut down. If you think you could be impacted, check to see which of your suppliers (n-Tier) are receiving goods from the affected region (especially from chemical, electro mechanical, building material, and pharmaceutical industries).

Conclusion
This is not a condemnation of China. America has a long and horrible history of mistreating workers and our natural resources:
sn_cleveland_river_fire
Cuyahoga River Fire (Cleveland), 1952

In the coming years, Americans won’t be moaning about China taking their jobs, because the Chinese don’t want them. Those jobs will taken by automation and robots.

There is actually an opportunity for America to re-emerge as a manufacturing leader, but powered by the same robots and AI that will replace Chinese workers.

China is at a critical point in their own history: they have a massive population with needs that are going unmet and they don’t have the infrastructure in place to address those needs. Additionally, the poor treatment of their own natural environment is going to lead to even more medical and social distress.

As the country grows and becomes more connected with the rest of the world, the people who are making the stuff you love, are going to want stuff to love for themselves. It is already happening.

China is going to grow and evolve regardless of what I type here.  But will the country continue to be the hands and feet of the global economy or will they clean up their cities, open their borders (for workers and for brides), and create something new?

It is going to very interesting to see how this plays out.

Note: Here is the Fair Labor Report referenced in the video.

Photo: Travel Coffee Book

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