US-China trade enters new era after overnight Huawei, Foxconn and TSMC announcements

There has been a steady drumbeat of news on the U.S.-China trade front since the start of the Trump administration. President Trump has made decoupling from China’s economy on on-again, off-again proposition. There was the trade conflict with weekly changes in American tariff policy, the threats against ZTE and Huawei, the responses from China against Qualcomm and NXP and the launch of new restrictions on China investment in U.S. startups and telecom infrastructure.

With COVID-19 and the ensuing global economic collapse, much of that conflict was put on the back burner. A tentative agreement between the U.S. and China — agreed to before the worst of the pandemic — seemed to get even broader support as the economic indicators from the globe’s two superpowers started to trickle out.

Then this week happened, and in almost no time at all, the U.S.-China trade detente has been torn apart.

Overnight, there were three critical stories that are going to reshape U.S.-China trade for the foreseeable future, with plenty more stories lurking beneath the surface.

First, you have the announcement this morning from the Department of Commerce that the Trump administration is going to ban Huawei from using U.S. software and hardware in certain strategic semiconductor processes, a move designed to limit the leading Chinese chip manufacturer from growing its market power and technological capabilities. Earlier yesterday, the administration also announced an extension to the government’s export ban on Huawei and ZTE.

The Trump administration has threatened moves like this since almost the president’s first day in office, and Commerce even couched the language, saying that it is “narrowly and strategically” targeting the Chinese company. Nonetheless, Huawei’s importance as one of China’s leading technology companies can’t be overstated, and the two moves combined is already being perceived as a direct assault on China’s recovering economy.

Second, you have a major announcement overnight from TSMC — the world’s largest chip foundry and one of the only foundries that can handle the manufacturing of the most advanced chips — that the Taiwanese company will invest and launch a major, $12 billion factory in Arizona. The release says that the factory will be capable of producing the world’s most advanced 5-nanometer chips when it launches in a couple of years. The announcement came after weeks of debate in Washington aimed at cutting off TSMC’s ability to build chips for mainland Chinese companies like Huawei — a move that TSMC argued would dramatically hurt its profitability and ability to invest in further R&D.

Third, you had the announcement this morning that Foxconn’s profits dived 90% due to COVID-19 and declining smartphone shipments. Foxconn, a Taiwanese hardware assembly company (among many other things), has been caught in the smoldering U.S.-China trade conflict, and even attempted at one point to build its own $10 billion manufacturing facility in Wisconsin with Trump’s felicity only to scuttle that plan entirely in an embarrassing setback.

Meanwhile, the trade deal that had calmed tensions between DC and Beijing appears increasingly in doubt.

And that’s just what happened overnight.

There are so many individual data points on U.S.-China trade that it can be hard to see the patterns. Policies have hardened, policies have softened, but at its core the U.S. and China have attempted to keep the trade flowing, if only to maintain growth in their economies. That’s what coupling has been all about: while there can be massive disagreements between the two sides, each has something the other wants. China wants to build and grow, while America wants to design and buy.

The past few months of COVID-19 have changed that calculus, as has an election year in the United States, where wariness of China has hit record, bipartisan highs, according to polls. The intense conflagration of the American economy, with tens of millions jobless and growth stalled for the time being, means that even more intense scrutiny is being placed on anything that might be harming the country’s financial math. We are now seeing the fruits of that new normal.

There will be more decoupling maneuvers in the coming weeks. There will also almost certainly be a renegotiation of the U.S.-China trade deal, despite comments that neither side is interested in reopening those discussions.

Yet, the real interesting dynamic to watch is going to be Taiwan, which is home to strategically critical sectors of the chip industry. TSMC’s announcement accepts the reality of decoupling, but attempts to work around it by recoupling the United States to the safety of Taiwan. Taiwanese companies and the island’s politicians have avoided ceding its technology to other countries, creating a dependence that they have hoped would protect the island in the event of a mainland Chinese invasion. After all, if the Pentagon can’t get its chips, it’s going to have to intervene, or so the thinking holds.

In this new world though, TSMC building an American factory doesn’t undermine that narrative, it actually strengthens the bonds between the U.S. and Taiwan. More jobs, more trade, more travel and, ultimately, a deeper appreciation of the importance of each other. The question is how far the Trump administration is willing to go here. Taiwan is bidding to rejoin the World Health Organization, where it was an observer up to 2016. How deep are those ties? Will the U.S. go beyond its own diplomatic framework to intensely push for Taiwan’s reentry in spite of Chinese opposition?

That’s what is next, but what is clear today is that the world of semiconductors, of internet infrastructure, of the tech ties that have bound the U.S. and China together for decades — they are frayed and are almost gone. It’s a new era in supply chains and trade, and an open world for new approaches to these huge existing industries.

Foxconn’s profits plunged nearly 90% due to COVID-19 shutdown

As earnings season winds down, we’re getting a solid picture on just how profoundly the COVID-19 pandemic has impacted corporations’ bottomline. Taiwan-based manufacturing giant Foxconn is among those companies that were utterly walloped over the previous quarter. Plant shutdowns — particularly in China — led to a 90% year-over-year drop in profits for the quarter.

Foxconn had already attempted to brace investors for bad news back in March. At the time, the company failed to give a clear indication of how its profits would look for the rest of the year, owing to the unprecedented uncertainty of the virus. “Prevention of outbreak, resumption of work and production are our top priority,” Chairman Liu Young-Way said at the time.

Two months later, uncertainty remains. “The visibility of our outlook for the whole year is limited,” Liu added on this week’s call. “Right now, there is no way I can offer the outlook for the latter half of this year.” The executive added, however, that the company expect revenue declines to be far less pronounced over the next quarter.

That’s due, in part, to the fact that it has resumed normal production at most of its China plants following the late-January shutdown. The country comprises around three-quarters of Foxconn’s production capacity. There will, however, continue to be less than optimal numbers, as smartphone sales are expected to continue to decline or stagnate for many companies — driving down demand for Foxconn’s services.

Apple, one of Foxconn’s key clients, is believed to be delaying the release of its next flagship over issues of consumer demand and supply chain shortages.

Xiaomi, Samsung and others begin to resume smartphone production in India

Xiaomi, Vivo, Samsung, Oppo and other smartphone companies have received approval from some state governments in India to partially resume manufacturing and assembling of devices amid the ongoing lockdown in the world’s second largest handset market that completely shut operations at these plants in late March.

The companies said that they have secured permission to kick start their manufacturing operations in the country, though several restrictions such as operating with limited workforce are still in place. (The federal government allowed the resumption of smartphone production earlier this month, but state governments have the final say on whether the local conditions are safe enough to enforce the relaxation.)

New Delhi’s decision comes days after it extended the lockdown by two weeks earlier this month but eased some restrictions to revive economic activity that’s been stalled since the stringent stay-at-home orders were imposed across the nation in late March.

Earlier this week, the government permitted e-commerce firms and ride-hailing services to resume services in green and orange zones, districts that have seen less severe outbreak of the coronavirus, across the country. Green and orange zones account for 82% of India’s 733 districts.

Xiaomi, which launched a range of gadgets in India today including its Snapdragon 865-powered Mi 10 smartphone, said earlier this month that it only had inventory to meet demand for up to three weeks.

Manu Kumar Jain, a VP at Xiaomi who oversees the Chinese firm’s business in India, said today that the company, which has been the top smartphone vendor in the country for more than two years, would restart operations in its contract partner Foxconn’s facility in the state of Andhra Pradesh.

A person familiar with the matter told TechCrunch that Wistron, a contract partner of Apple, has started limited operations for the iPhone-maker in Bangalore.

Vivo, the second largest smartphone vendor in India, said the company will resume production at 30% of their capacity. “We shall begin production with around 3,000 employees,” a Vivo spokesperson said.

Like Vivo, Oppo will also resume production at its Greater Noida facility with around 3,000 employees who would work in rotation, it said. Samsung, which opened the world’s biggest smartphone factory in India in 2018, said it will restart production in that factory.

“On Thursday, the factory started limited operations, which will be scaled up over a period of time. Employee safety and well-being remaining our absolute priority, we have ensured that all hygiene and social distancing measures are maintained at the premises, as per government guidelines,” said a Samsung spokesperson.

The coronavirus outbreak has severely disrupted several businesses. India did not see any handset sale last month, according to research firm Counterpoint. Counterpoint estimated that the smartphone shipments in India will decline by 10% this year, compared to a 8.9% growth in 2019 and 10% growth in 2018.

Every top smartphone maker in India has either established its own manufacturing plant or partnered with contract vendors to produce units locally in recent years to avail the tax benefits that New Delhi offers.

Apple’s Magic Keyboard Review: Laptop class typing comes to iPad Pro

Over the past two years, I’ve typed nearly every word I’ve written while traveling on the iPad Pro’s Smart Keyboard Folio. For more on why you can see my iPad Pro review here.

For the purposes of this look at the new Magic Keyboard, though, you should probably just know two things:

  1. It was reliable, incredibly durable and never once failed me.
  2. It kind of stunk in every other way.

The Keyboard Folio’s plastic coated surface made it impervious to spills, but it also made the keys much less responsive. It rendered them unable to give your fingers the feedback necessary to confirm that a key had been struck, leading me to adopt a technique where I just hit every key with maximum strength at all times.

The new Magic Keyboard is as different from that device as the new MacBook Pro keyboards are from the low profile ones that dominated headlines over the last couple of years. It’s a huge jump forward in usability for the iPad Pro — and for last year’s model too.

I am very relieved I don’t have to slam my fingers onto the plastic keyboard anymore, because over long and fast typing sessions I could feel a numbness that would begin to radiate from the tips of my fingers a bit. An enervation of sorts. It wasn’t precisely painful but it was noticeable.

The Magic Keyboard offers a lovely, backlit deck that holds its own against the 16” MacBook Pro and the new MacBook Air for best portable keyboards. The key travel is excellent — in between the two laptops in my opinion — and the feel is tight, responsive and precise. This is a first class typing experience, full stop.

I’ve been testing the three keyboards alongside one another for the past few days and I can’t stress enough how stable the keys are. Even the MacBook Air allows a tiny bit of key shift if you touch your finger to it and gently circle it — though the MacBook Pro is better. There’s such a small amount of that here that it’s almost imperceptible.

It’s a tad spongier than the 16” MBP but more firm than the MacBook Air, which has a bit more return and travel. In my opinion, this keyboard is ‘louder’ (due to the plastic casing being more resonant than the aluminum), than the 16” MBP, but about the same as the MacBook Air. The throw feels similar to the 16” though, with the Air being slightly deeper but ‘sloppier’.

So a hybrid between those two keyboards as far as feel goes, but a clear descendant of the work that was done to turn those offerings around.

Construction

Among my biggest concerns was that Apple would get overly clever with the hinge design, making the the typing an exercise in wobble. Happy to say here that they took the clear path here and made it as sturdy as possible, even if that was at the cost of variability.

The hinge is a simple limit stop design that opens far less than you’d expect and then allows a second hinge to engage to open in an arc between the 80 and 130 degrees. The 90 degree and fully open positions basically mimic the angles that were offered by the grooves of the Keyboard Folio — but now you can choose any in-between position that feels natural to you.

Apple has obviously put this hard stop fold out limit in place to maintain balance on tables and laps, and its clever use of counter opposing forces with the second hinge combines to limit tipping and to make typing on a lap finally a completely viable thing to do. The fact that you don’t have to hammer the keyboard to type also makes this a better proposition.

For typing, these positions should be just fine for the vast majority of users. And the solid (very high friction) hinge means that the whole thing is very sturdy feeling, even with more moving parts. I have been quite comfortable grabbing the whole assembly of the 12.9” iPad Pro plus Magic Keyboard by the deck of the keyboard and carrying it around, much in the way I’d carry a laptop. No worries about accidental floppiness or detachment.

At the same time, the new design that floats the iPad in the air allows you to quickly pop it off with little effort by either your left or right hand. This makes the Magic Keyboard take on the use case of a desktop based dock, something that never felt right with the Keyboard Folio.

The touchpad physically moves here, and is not a haptic pad, but it is clickable across its entire surface. It’s also a laptop-class trackpad, proving that Apple’s engineering teams still have a better idea about how to make a trackpad that works crisply and as expected than any other hardware team out there.

I do love the soft touch coating of the case itself, but I believe it will wear in a similar fashion to these kinds of surfaces on other devices. It will likely develop shiny spots on either side of the trackpad on the hand rest areas.

The responsive half arrow keys are extremely welcome.

Some other details, quirks and upper limits

The camera placement situation is much improved here, as you’re less likely to hold the left side of the iPad to keep it stable. The lift of the keyboard (at times about an inch and a bit) means that the eye line, while still not ideal, is improved for zoom calls and the like. Less double chin up the nose action. Apple should still move the iPad Pro’s camera on future versions.

The keyboard’s backlight brightness is decent and adjustable in the settings pane once it’s attached to iPad Pro. The unit did use more battery in my tests, though I haven’t had it long enough to assign any numbers to it. I did notice during a recent Facetime call that the battery was draining faster than it could charge, but that is so far anecdotal and I haven’t had the time to reproduce it in testing.

This is not the case that artists have been waiting for. This case does not rotate around backwards like the keyboard folio, meaning that you’re going to be popping it off the case if you’re going to draw on it at all. In some ways the ease of removal feels like an Apple concession. ‘Hey, we couldn’t fit all this in and a way to position it at a drawing angle, so we made it really easy to get it loose.’ It works, but I hope that more magic happens between now and the next iteration to find a way to serve both typing and drawing in one protected configuration.

A little quirk: when it’s tilted super far back to the full stop I sometimes nick the bottom edge of the iPad with my fingers when hitting numbers — could be my typing form or bigger hands but I thought it worth mentioning.

It’s a bit heavy. At 700g for the 12.9” keyboard, it more than doubles the weight of the whole package. The larger iPad Pro and keyboard is basically the weight of a MacBook Air. Get the 11” if weight is a concern. This keyboard makes the iPad 12.9″ package feel very chunky. The

The fact that this keyboard works on the older iPad Pro (the camera just floats inside the cutout) means that this is a fantastic upgrade for existing users. It really makes the device feel like it got a huge upgrade without having to buy a new core unit, which fits with Apple’s modular approach to iPad Pro and also stands out as pretty rare in a world where the coolest new features are often hardware related and new device limited.

At $300 and $350 for each size of Magic Keyboard, the price is something you must think about up front. Given that it is now easily the best keyboard available for these devices I think you need to consider it a part of the package price of the device. If you can’t swing that, consider another option — it’s that good.

I’d love more angles of use here and I’m hoping that they include more — that said! If you work seriously with the iPad and that work is based on typing, the Magic Keyboard is essentially mandatory. It’s the dream keyboard for all of us who found ourselves crossing the Rubicon into iPad as primary computer over the past couple of years. It’s not without its caveats, but it is a refreshingly straightforward and well executed accessory that makes even older iPads feel like better laptops than laptops.

Foxconn and Fiat Chrysler partner to develop EVs and an “internet of vehicles” business

Foxconn Technology Group, the Taiwanese electronics giant best known for its iPhone manufacturing contract, is forming a joint venture with Fiat Chrysler Automobiles to build electric vehicles in China.

The joint venture was disclosed in a regulatory filing. Nikkei was first to report the joint venture.

According to the filing, each party will own 50% of the venture to develop and manufacture electric vehicles and engage in an IOV, what Foxconn parent company Hon Hai calls the “internet of vehicles” business. Hon Hai’s direct shareholding in the subsidiary will not exceed 40%, the filing says.

The venture will initially focus on making electric vehicles for China. But these vehicles could be exported at a later date, according to Foxconn.

The wording in the regulatory filing suggests these will be new vehicles that are designed and built from the ground up and not a project to electrify any of the vehicles in FCA’s current portfolio.

The venture could give FCA a better path to capturing more business in China, the world’s largest market for electric vehicles.

Foxconn has invested in other electric vehicle ventures before, although this appears to be the first tie-up in which the company will develop and build the product. EV startup Byton was originally started as Future Mobility Corporation as a joint venture between Harmony Auto, Tencent and Foxconn. And Foxconn is also an investor in XPeng Motors, the Chinese electric vehicle startup that recently raised a fresh injection of $400 million in capital and has taken on Xiaomi  as a strategic investor.

China Roundup: Alibaba’s Hong Kong listing and Tencent’s new fuel

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. The earnings season is here. This week, long-time archrivals in the Chinese internet battlefield — Alibaba and Tencent — made some big revelations about their future. First off, let’s look at Alibaba’s long-awaited secondary listing and annual shopping bonanza.

Forget about the number

It’s that time of year. On November 11, Alibaba announced it generated $38.4 billion worth of gross merchandise value during the annual Single’s Day shopping festival, otherwise known as Double 11. It smashed the record and grabbed local headlines again, but the event means little other than a big publicity win for the company and showcasing the art of drumming up sales.

GMV is often used interchangeably with sales in e-commerce. That’s problematic because the number takes into account all transactions, including refunded items, and it’s by no means reflective of a company’s actual revenue. There are numerous ways to juice the figure, too, as I wrote last year. Presales began days in advance, incentives were doled out to spur last-minute orders and no refunds could be processed until November 12.

Even Jiang Fan, the boss of Alibaba’s e-commerce business and the youngest among Alibaba’s 38 most important decision-makers, downplayed the number: “I never worry about transaction volumes. Numbers don’t matter. What’s most important is making Single’s Day fun and turning it into a real festival.”

Indeed, Alibaba put together another year of what’s equivalent to the Super Bowl halftime show. Taylor Swift and other international big names graced the stage as the evening gala was live-streamed and watched by millions across the globe.

Returning home

Alibaba is going ahead with its secondary listing in Hong Kong on the heels of reports that it could delay the sale due to ongoing political unrest in the city-state. The company is cash-rich, but listing closer to its customers can potentially ease some of the pressure arising from a new era of volatile U.S.-China relationships.

Alibaba is issuing 500 million new shares with an additional over-allotment option of 75 million shares for international underwriters, it said in a company blog. Reports have put the size of its offering between $10 billion and $15 billion, down from the earlier rumored $20 billion.

The giant has long expressed it intends to come home. In 2014, the e-commerce behemoth missed out on Hong Kong because the local exchange didn’t allow dual-class structures, a type of organization common in technology companies that grants different voting rights for different stocks. The giant instead went public in New York and raised the largest initial public offering in history at $25 billion.

“When Alibaba Group went public in 2014, we missed out on Hong Kong with regret. Hong Kong is one of the world’s most important financial centers. Over the last few years, there have been many encouraging reforms in Hong Kong’s capital market. During this time of ongoing change, we continue to believe that the future of Hong Kong remains bright. We hope we can contribute, in our small way, and participate in the future of Hong Kong,” said chairman and chief executive Daniel Zhang in a statement.

Missing out on Alibaba had also been a source of remorse for the Stock Exchange of Hong Kong. Charles Li, chief executive of the HKEX, admitted that losing Alibaba to New York had compelled the bourse to reform. The HKEX has since added dual-class shares and attracted Chinese tech upstarts such as smartphone maker Xiaomi and local services platform Meituan Dianping.

Tencent’s new fuel

Content and social networks have been the major revenue drivers for Tencent since its early years, but new initiatives are starting to gain ground. In the third quarter ended September 30, Tencent’s “fintech and business services” unit, which includes its payments and cloud services, became the firm’s second-largest sales avenue trailing the long-time cash cow of value-added services, essentially virtual items sold in games and social networks.

Payments, in particular, accounted for much of the quarterly growth thanks to increased daily active consumers and number of transactions per user. That’s good news for the company, which said back in 2016 that financial services would be its new focus (in Chinese) alongside content and social. The need to diversify became more salient in recent times as Tencent faces stricter government controls over the gaming sector and intense rivalry from ByteDance, the new darling of advertisers and owner of TikTok and Douyin.

Tencent also broke out revenue for cloud services for the first time. The unit grew 80% year-on-year to rake in 4.7 billion yuan ($670 million) and received a great push as the company pivoted to serve more industrial players and enterprises. Alibaba’s cloud business still leads the Chinese market by a huge margin, with revenue topping $1.3 billion during the September quarter.

Also worth your attention…

Luckin Coffee, the Chinese startup that began as a Starbucks challenger, is starting to look more like a convenient store chain with delivery capacities as it continues to increase store density (a combination of seated cafes, pickup stands and delivery kitchens) and widen product offerings to include a growing snack selection. Though bottom-line loss continued in the quarter, store-level operating profit swung to $26.1 million from a loss in the prior-year quarter. 30 million customers have purchased from Luckin, marking an increase of 413.4% from 6 million a year ago.

Minecraft is on the brink of 300 million registered users in China, its local publisher Netease announced at an event this week. That’s a lot of players, but not totally unreasonable given the game is free-to-play in the country with in-game purchases, so users can easily own multiple accounts. Outside China, the game has sold over 180 million paid copies, according to gaming analyst Daniel Ahmed from Niko Partners.

Xiaomi founder Lei Jun is returning a huge favor by backing a long-time friend. Xpeng Motors, the Chinese electric vehicle startup financed by Alibaba and Foxconn, has received $400 million in capital from a group of backers who weren’t identified except Xiaomi, which became its strategic investor. The marriage would allow Xpeng cars to tap Xiaomi’s growing ecosystem of smart devices, but the relationship dates further back. Lei was an early investor in UCWeb, a browser company founded by He and acquired by Alibaba in 2014. A day after Xiaomi’s began trading in Hong Kong in mid-2018, He wrote on his WeChat feed that he had bought $100 million worth of Xiaomi shares (in Chinese) in support of his old friend.

Chinese EV startup Xpeng Motors raises $400 million, takes on Xiaomi as strategic investor

Xpeng Motors, the Chinese electric vehicle startup backed by Alibaba and Foxconn, has raised a fresh injection of $400 million in capital and has taken on Xiaomi as a strategic investor, the company announced.

The Series C includes an unidentified group of strategic and institutional investors. XPeng Motors Chairman and CEO He Xiaopeng, who also participated in the Series C, said the received strong support from many of its current shareholders. Xiaomi founder and CEO Lei Jun previously invested in the company.

“Xiaomi Corporation and Xpeng Motors have achieved significant progress through in-depth collaboration in developing technologies connecting smart phones and smart cars,” Xiaomi’s Jun said in a statement. “We believe that this strategic investment will further deepen our partnership with Xpeng in advancing innovation for intelligent hardware and the Internet of Things.”

The company didn’t disclose what its post-money valuation is now. However, a source familiar with the deal said it is “better” than the 25 billion yuan valuation it had in its last round in August 2018.

The announcement confirms an earlier report from Reuters that cited anonymous sources.

XPeng also said it has garnered “several billions” in Chinese yuan of unsecured credit lines from institutions such as China Merchants Bank, China CITIC Bank and HSBC. XPeng didn’t elaborate when asked what “several billions” means.

Brian Gu, Xpeng Motors Vice Chairman and President added that the company has been able to hit most of its business and financing targets despite economic headwinds, uncertainties in the global markets and government policy changes that have had direct impact on overall auto sales in China.

The round comes as XPeng prepares to launch its electric P7 sedan in spring 2020. Deliveries of the P7 are expected to begin in the second quarter of 2020.

Xpeng began deliveries of its first production model the G3 2019 SUV in December and shipped 10,000 models by mid-June. The company has since released an enhanced version of the G3 with a 520 km NEDC driving range.

The company plans to launch the P7 sedan in the spring 2020 and will start delivery in 2Q 2020.

XPeng has said it wants to IPO, but it’s unclear when the company might file to become a public company. No specific IPO timetable has been set and a spokesperson said the company is monitoring market conditions closely, but its current focus is on building core businesses.

Startups Weekly: SoftBank’s second act

Hello and welcome back to Startups Weekly, a weekend newsletter that dives into the week’s noteworthy startups and venture capital news. Before I jump into today’s topic, let’s catch up a bit. Last week, I noted some challenges plaguing mental health tech startups. Before that, I wrote about Zoom and Superhuman’s PR disasters.

Remember, you can send me tips, suggestions and feedback to [email protected] or on Twitter @KateClarkTweets. If you don’t subscribe to Startups Weekly yet, you can do that here.

Anyway, onto the subject on everyone’s mind this week: SoftBank’s second Vision Fund.

Well into the evening on Thursday, SoftBank announced a target of $108 billion for the Vision Fund 2. Yes, you read that correctly, $108 billion. SoftBank indeed plans to raise even more capital for its sophomore vehicle than it did for the record-breaking debut vision fund of $98 billion, which was majority-backed by the government funds of Saudi Arabia and Abu Dhabi, as well as Apple, Foxconn and several other limited partners.

Its upcoming fund, to which SoftBank itself has committed $38 billion, has attracted investment from the National Investment Corporation of National Bank of Kazakhstan, Apple, Foxconn, Goldman Sachs, Microsoft and more. Microsoft, a new LP for SoftBank, reportedly hopped on board with the Japanese telecom giant as part of a grand scheme to convince the massive fund’s portfolio companies to transition to Microsoft Azure, the company’s cloud platform that competes with Amazon Web Services . Here’s more on that and some analysis from TechCrunch editor Jonathan Shieber.

News of the second Vision Fund comes as somewhat of a surprise. We’d heard SoftBank was having some trouble landing commitments for the effort. Why? Well, because SoftBank’s investments have included a wide-range of upstarts, including some uncertain bets. Brandless, a company into which SoftBank injected a lot of money, has struggled in recent months, for example. Wag is said to be going downhill fast. And WeWork, backed with billions from SoftBank, still has a lot to prove.

Here’s everything else we know about The Vision Fund 2:

  • It’s focused on the “AI revolution through investment in market-leading, tech-enabled growth companies.”
  • The full list of investors also includes seven Japanese financial institutions: Mizuho Bank, Sumitomo Mitsui Banking Corporation, MUFG Bank, The Dai-ichi Life Insurance Company, Sumitomo Mitsui Trust Bank, SMBC Nikko Securities and Daiwa Securities Group. Also, international banking services provider Standard Chartered Bank, as well as “major participants from Taiwan.”
  • The $108 billion figure is based on memoranda of understandings (MOUs), or agreements for future investment from the aforementioned entities. That means SoftBank hasn’t yet collected all this capital, aside from the $38 billion it plans to invest itself in the new Vision Fund.
  • Saudi and Abu Dhabi sovereign wealth funds are not listed as investors in the new fund.
  • SoftBank is expected to begin deploying capital fund from Fund 2 immediately, and a first close is expected in two months, per The Financial Times.
  • We’ll keep you updated on the Vision Fund 2’s investments, fundraising efforts and more as we learn about them.

On to other news…

iHeartMedia And WeWork's "Work Radio" Launch Party

IPO Corner

WeWork is planning a September listing

The company made headlines again this week after word slipped it was accelerating its IPO plans and targeting a September listing. We don’t know much about its IPO plans yet as we are still waiting on the co-working business to unveil its S-1 filing. Whether WeWork can match or exceed its current private market valuation of $47 billion is unlikely. I expect it will pull an Uber and struggle, for quite some time, to earn a market cap larger than what VCs imagined it was worth months earlier.

Robinhood had a wild week

The consumer financial app made headlines twice this week. The first time because it raised a whopping $323 million at a $7.6 billion valuation. That is a whole lot of money for a business that just raised a similarly sized monster round one year ago. In fact, it left us wondering, why the hell is Robinhood worth $7.6 billion? Then, in a major security faux pas, the company revealed it has been storing user passwords in plaintext. So, go change your Robinhood password and don’t trust any business to value your security. Sigh.

Another day, another huge fintech round

While we’re on the subject on fintech, TechCrunch editor Danny Crichton noted this week the rise of mega-rounds in the fintech space. This week, it was personalized banking app MoneyLion, which raised $100 million at a near unicorn valuation. Last week, it was N26, which raised another $170 million on top of its $300 million round earlier this yearBrex raised another $100 million last month on top of its $125 million Series C from late last year. Meanwhile, companies like payments platform Stripesavings and investment platform Raisintraveler lender Uplift, mortgage backers Blend and Better and savings depositor Acorns have also raised massive new rounds this year. Naturally, VC investment in fintech is poised to reach record levels this year, according to PitchBook.

Uber’s changing board

Arianna Huffington, the CEO of Thrive Global, stepped down from Uber’s board of directors this week, a team she had been apart of since 2016. She addressed the news in a tweet, explaining that there were no disagreements between her and the company, rather, she was busy and had other things to focus on. Fair. Benchmark’s Matt Cohler also stepped down from the board this week, which leads us to believe the ride-hailing giant’s advisors are in a period of transition. If you remember, Uber’s first employee and longtime board member Ryan Graves stepped down from the board in May, just after the company’s IPO. 

Startup Capital

Unity, now valued at $6B, raising up to $525M
Bird is raising a Sequoia-led Series D at $2.5B valuation
SMB payroll startup Gusto raises $200M Series D
Elon Musk’s Boring Company snags $120M
a16z values camping business HipCamp at $127M
An inside look at the startup behind Ashton Kutcher’s weird tweets
Dataplor raises $2M to digitize small businesses in Latin America

Extra Crunch

While we’re on the subject of amazing TechCrunch #content, it’s probably time for a reminder for all of you to sign up for Extra Crunch. For a low price, you can learn more about the startups and venture capital ecosystem through exclusive deep dives, Q&As, newsletters, resources and recommendations and fundamental startup how-to guides. Here are some of my current favorite EC posts:

  1. What types of startups are the most profitable?
  2. The roles tools play in employee engagement
  3. What to watch for in a VC term sheet

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That’s all, folks.

SoftBank announces AI-focused second $108 billion Vision Fund with LPs including Microsoft, Apple and Foxconn

SoftBank Group announced today that it will launch its second Vision Fund with participation from Apple, Foxconn, Microsoft and other tech companies and investors. Called the Vision Fund 2, the fund will focus on AI-based technology. SoftBank said the fund’s capital has reached about $108 billion, based on memoranda of understandings. SoftBank Group’s own investment in the fund will be $38 billion.

It is worth noting that the second Vision Fund’s list of expected limited partners does not currently include any participants from the Saudi Arabia government (the first Vision Fund’s close ties to people, including Crown Prince Mohammed bin Salman, who have been implicated in the murder of journalist Jamal Khashoggi, has understandably been a major source of concern for investors, companies and human rights observers).

But SoftBank Group also said is still in discussions with other participants and that the total amount of the fund is expected to increase. The full list of participants who have signed MOUs so far are: “Apple, Foxconn Technology Group, Microsoft Corporation, Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd., The Dai-ichi Life Insurance Company, Limited, Sumitomo Mitsui Trust Bank, Limited, SMBC Nikko Securities Inc., Daiwa Securities Group Inc., National Investment Corporation of National Bank of Kazakhstan, Standard Chartered Bank, and major participants from Taiwan.”

SoftBank’s intention to launch Vision Fund 2 was first reported earlier this week by the Wall Street Journal. The new fund is expected to decrease SoftBank’s reliance on Saudi Arabian investment and also potentially change the relationship between startups, corporate giants like Microsoft and investors.

Terry Gou resigns as Foxconn’s chairman to run for president of Taiwan

Terry Gou said at Foxconn’s annual general meeting today that he is leaving the electronics manufacturing giant as he prepares to run for president of Taiwan. Gou, who founded Foxconn (also known as Hon Hai Precision Industry Co.) 45 years ago and is also its biggest shareholder, will remain on the company’s board. Young Liu, the head of Foxconn’s semiconductor business, will succeed him as chairman and the company will also transition to a committee-directed management structure.

Gou first officially announced in April that he plans to resign as chairman to focus on his campaign for the nomination of Taiwan’s opposition party, the Kuomintang. If he succeeds against other KMT candidates, including Kaohsiung mayor Han Kuo-Yu, Gou will be challenging President Tsai Ing-wen, a member of the Democratic Progressive Party, for the election next January.

Foxconn (one of Apple’s biggest suppliers) is China’s largest private employer and the Kuomintang supports a closer relationship with the Chinese government, despite its stance that Taiwan is a rogue province. Gou’s ties to the country will be scrutinized during the campaign as he opposes Tsai and the DPP, advocates of Taiwan’s sovereignty. The issue is especially fraught after the recent large-scale demonstrations in Hong Kong against a bill that would have allowed extradition to China.

Last month Gou, who has never held political office before, tried to assuage critics by saying he has no plans to meet with Chinese President Xi Jinping after the head of Taiwan’s Mainland Affairs Council of the Executive Yuan, Chen Ming-Tung, claimed Gou had said Taiwan was part of China. Gou also said that during a recent meeting with Donald Trump he had asked the president of the United States to work on improving the relationship between all three countries.

Gou’s campaign has also been marred by other controversies, such as when he said “the harem should not meddle in politics” after his wife, Delia Tseng, objected to his candidacy. Gou later apologized for the remark.