White House's National Economic Council head hints China may have stolen Apple tech
The director of the White House's National Economic Council, Larry Kudlow, suggested on Friday that China may be stealing Apple technology secrets, without offering any examples or evidence.
"I don't want to surmise too much here, but Apple technology may have been picked off by China and now China is becoming very competitive with Apple. You've got to have rule of law," Kudlow said in a Bloomberg interview. "There are some indications from China['s government] that they're looking at that, but we don't know that yet. There's no enforcement -- there's nothing concrete."
Earlier this week Apple slashed its guidance for the December quarter from between $89 billion and $93 billion to just $84 billion, linking the whole of its expected revenue shortfall to weak Chinese sales. Local smartphone makers like Huawei, Xiaomi, and Oppo have eaten into the iPhone's marketshare by improving the quality of their devices while selling for hundreds of dollars less.
Intellectual property theft is a problem many foreign companies have had to cope with in China, and better enforcement has been a key demand of U.S. President Donald Trump in his trade war. At the same time, there haven't been any other recent allegations involving Apple.
It could be that like South Korea's Samsung, Chinese smartphone vendors have simply imitated the look and features of the iPhone to keep up. That might still imply patent violations, something which Samsung ended up paying stiff penalties for, but many traits that were unique to the iPhone in 2007 have since become industry standards. In the current era, Apple and other vendors regularly leapfrog each other.
"I don't want to surmise too much here, but Apple technology may have been picked off by China and now China is becoming very competitive with Apple. You've got to have rule of law," Kudlow said in a Bloomberg interview. "There are some indications from China['s government] that they're looking at that, but we don't know that yet. There's no enforcement -- there's nothing concrete."
Earlier this week Apple slashed its guidance for the December quarter from between $89 billion and $93 billion to just $84 billion, linking the whole of its expected revenue shortfall to weak Chinese sales. Local smartphone makers like Huawei, Xiaomi, and Oppo have eaten into the iPhone's marketshare by improving the quality of their devices while selling for hundreds of dollars less.
Intellectual property theft is a problem many foreign companies have had to cope with in China, and better enforcement has been a key demand of U.S. President Donald Trump in his trade war. At the same time, there haven't been any other recent allegations involving Apple.
It could be that like South Korea's Samsung, Chinese smartphone vendors have simply imitated the look and features of the iPhone to keep up. That might still imply patent violations, something which Samsung ended up paying stiff penalties for, but many traits that were unique to the iPhone in 2007 have since become industry standards. In the current era, Apple and other vendors regularly leapfrog each other.
Comments
And given how far behind their processors are, I don't think they did a very good job of stealing anything.
Pretty much everything you listed is integrated directly into the processor, or is tightly tied to it.
Why leak chips when anyone can simply go out and buy an iPhone and examine it?
Remember the iPhone 5S and the A7 processor? Nobody knew it was going to be 64bit until Apple surprised everyone at the keynote. Likely because A) nobody had early access to the processor and iOS is developed in-house and therefore much easier to keep things secret.
This is why China has demand if you are going to manufacture in china it is done with a Chinese own business or it has to be a JV with 51% ownership by a Chinese entity. It is very difficult to sell non-Chinese product in China and not have it made there and the fact Apple has had good success, means they knowingly allowed this information to be transferred and have not say anything about it. They made a deal with China for market access in exchange for the know-how transfer. There is no evidence to back this up, but all the indicators point in this direction.
I see things coming out of China today which they could not do 10 yrs ago, there is no way these companies advance this fast without steal the know how. I have work with Chinese company for over 20 yrs and the hardest thing to do with them is to follow a process or do things a particular way, they had the good enough attitude, no reason to improve or make something better. Most time they are like this because they did not have skill and know how to do it any other way. Today this is not the case they turn out as good or not better than most US counter parts.
I think Cook made it worse for Apple by Blaming Trump. I would not be surprised if he puts a 20% Tariff on all iPhones.
Once the trade issues are ironed out (and it may take weeks or months) the effect on Apple stock will be short-lived.