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Following the U.S. government’s announcement that would further thwart Huawei’s chip-making capability, the Chinese telecoms equipment giant condemned the new ruling for being “arbitrary and pernicious.”

“Huawei categorically opposes the amendments made by the U.S. Department of Commerce to its foreign direct product rule that target Huawei specifically,” said Huawei Monday at its annual analyst summit in Shenzhen.

The new curbs, which dropped on Friday, would ban Huawei from using U.S. software and hardware in certain strategic semiconductor processes. This will affect all foundries using U.S. technologies, including those located abroad, some of which are Huawei’s key suppliers.

Earlier on Monday, the Nikkei Asian Review reported citing sources that Taiwanese Semiconductor Manufacturing Co., the world’s largest contract semiconductor that powers many of Huawei’s high-end phones, has stopped taking new orders from Huawei, one of its largest clients. Huawei declined to comment while TSMC said the report was “purely market rumor”.

Decisions from TSMC point to its attempt to strengthen bonds with the U.S. though, as it’s planning a new $ 12 billion advanced chip factory in Arizona with support from the state and the U.S. federal government.

At the Monday conference, Huawei’s rotating chairman Guo Ping admitted that while the firm is able to design some semiconductor parts such as integrated circuits (IC), it remains “incapable of doing a lot of other things.”

“Survival is the keyword for us at present,” he said.

Huawei stated the latest U.S. ban would not only affect its own business in over 170 countries, where it has spent “hundreds of billions of dollars,” but also the wider ecosystem around the world.

“In the long run, [the U.S. ban] will damage the trust and collaboration within the global semiconductor industry which many industries depend on, increasing conflict and loss within these industries.”

Huawei has announced a raft of contingency measures ever since the Trump administration began slapping technology sanctions on it, including one that had cut it off certain Android services from Google.

Huawei said at the summit that it had doubled down on investment in overseas developers in an effort to lure them to its operating system. Some 1.4 million developers have signed up for Huawei Mobile Services or HMS, a 150% jump from 2019. In its search to identify alternatives to Google’s app suite in Europe, it has partnered up with navigation services TomTom and Here, search engine Qwant and news app News UK. 


TechCrunch

Hours after security researchers at Citizen Lab reported that some Zoom calls were routed through China, the video conferencing platform has offered an apology and a partial explanation.

To recap, Zoom has faced a barrage of headlines this week over its security policies and privacy practices, as hundreds of millions forced to work from home during the coronavirus pandemic still need to communicate with each other.

The latest findings landed earlier today when Citizen Lab researchers said that some calls made in North America were routed through China — as were the encryption keys used to secure those calls. But as was noted this week, Zoom isn’t end-to-end encrypted at all, despite the company’s earlier claims, meaning that Zoom controls the encryption keys and can therefore access the contents of its customers’ calls. Zoom said in an earlier blog post that it has “implemented robust and validated internal controls to prevent unauthorized access to any content that users share during meetings.” The same can’t be said for Chinese authorities, however, which could demand Zoom turn over any encryption keys on its servers in China to facilitate decryption of the contents of encrypted calls.

Zoom now says that during its efforts to ramp up its server capacity to accommodate the massive influx of users over the past few weeks, it “mistakenly” allowed two of its Chinese data centers to accept calls as a backup in the event of network congestion.

From Zoom’s CEO Eric Yuan:

During normal operations, Zoom clients attempt to connect to a series of primary datacenters in or near a user’s region, and if those multiple connection attempts fail due to network congestion or other issues, clients will reach out to two secondary datacenters off of a list of several secondary datacenters as a potential backup bridge to the Zoom platform. In all instances, Zoom clients are provided with a list of datacenters appropriate to their region. This system is critical to Zoom’s trademark reliability, particularly during times of massive internet stress.”

In other words, North American calls are supposed to stay in North America, just as European calls are supposed to stay in Europe. This is what Zoom calls its data center “geofencing.” But when traffic spikes, the network shifts traffic to the nearest data center with the most available capacity.

China, however, is supposed to be an exception, largely due to privacy concerns among Western companies. But China’s own laws and regulations mandate that companies operating on the mainland must keep citizens’ data within its borders.

Zoom said in February that “rapidly added capacity” to its Chinese regions to handle demand was also put on an international whitelist of backup data centers, which meant non-Chinese users were in some cases connected to Chinese servers when data centers in other regions were unavailable.

Zoom said this happened in “extremely limited circumstances.” When reached, a Zoom spokesperson did not quantify the number of users affected.

Zoom said that it has now reversed that incorrect whitelisting. The company also said users on the company’s dedicated government plan were not affected by the accidental rerouting.

But some questions remain. The blog post only briefly addresses its encryption design. Citizen Lab criticized the company for “rolling its own” encryption — otherwise known as building its own encryption scheme. Experts have long rejected efforts by companies to build their own encryption, because it doesn’t undergo the same scrutiny and peer review as the decades-old encryption standards we all use today.

Zoom said in its defense that it can “do better” on its encryption scheme, which it says covers a “large range of use cases.” Zoom also said it was consulting with outside experts, but when asked, a spokesperson declined to name any.

Bill Marczak, one of the Citizen Lab researchers that authored today’s report, told TechCrunch he was “cautiously optimistic” about Zoom’s response.

“The bigger issue here is that Zoom has apparently written their own scheme for encrypting and securing calls,” he said, and that “there are Zoom servers in Beijing that have access to the meeting encryption keys.”

“If you’re a well-resourced entity, obtaining a copy of the internet traffic containing some particularly high-value encrypted Zoom call is perhaps not that hard,” said Marcak.

“The huge shift to platforms like Zoom during the COVID-19 pandemic makes platforms like Zoom attractive targets for many different types of intelligence agencies, not just China,” he said. “Fortunately, the company has (so far) hit all the right notes in responding to this new wave of scrutiny from security researchers, and have committed themselves to make improvements in their app.”

Zoom’s blog post gets points for transparency. But the company is still facing pressure from New York’s attorney general and from two class-action lawsuits. Just today, several lawmakers demanded to know what it’s doing to protect users’ privacy.

Will Zoom’s mea culpas be enough?


TechCrunch

Several months back, we invited HTC cofounder and CEO Cher Wang to appear on stage at TechCrunch Disrupt. Sometimes, however, life happens. Two weeks ago, the company announced that Wang would be stepping down from the role, which would immediately be filled by longtime telecom vet, Yves Maitres. Thankfully, the former Orange exec also agreed to appear on stage at this week’s event.

Maitres took the stage immediately following a one on one with OnePlus cofounder, Carl Pei. The contrast of the two companies couldn’t be more stark. In six short years of existence, OnePlus has managed to buck a number of industry trends with a controlled growth that flies in the face of wider industry smartphone trends.

HTC, meanwhile, has been struggling for years. In Q2, the Taiwanese hardware maker posted its fifth consecutive quarterly loss. Last July, it laid off around a quarter of its staff. It’s been a precipitous fall. In 2011, the company comprised around 11 percent of global smartphone sales, per analyst figures. Now its figures are routinely classified among the “Others” in those reports.

Speaking to Maitres at an event such as this offers a rare opportunity for insight from a newly minted exec who has spent years watching his new company from the outside. As such, he addressed HTC’s struggles with a refreshing candidness.

“HTC has stopped innovating in the hardware of the smartphone,” he told the audience. “And people like Apple, like Samsung and, most recently, Huawei, have done an incredible job investing in their hardware. We didn’t, because we have been investing in innovation on virtual reality. When I was young, somebody told me, ‘to be be right at the wrong time is to be wrong and to be wrong at the right time is right.’ I think we’ve been right at the wrong time and now we have to catch up. We made a timing mistake. It is very difficult to anticipate the time. HTC made a mistake in terms of timing. It is a difficult mistake and we are paying for that, but we still have so many assets in terms of innovation, team and balance sheets that I feel we are recovering from the timing mistake.”

‘Timing,’ here, is primarily a reference to the company’s decision to move much of its R&D money into XR (primarily VR through its Vive wing). Maitres said he anticipates that HTC’s XR offerings will overtake the mobile side in about five years.

“We’ll do our best to make it shorter, but customer adoption is key,” he explained. “How people are adopting your technology. And we all know know it is absolutely critical. And the end of the day, we have human beings in front of us, and they’re dealing with something total new and totally unusual, which is virtual.”

On the mobile side, Maitres sees 5G as the primary bottleneck to growth. Contrary to suggestions that the company’s best play is in developing nations, he says HTC’s play going forward will be more premium handset focused on “countries with higher GDP.”

“The competition is changing,” he says. “We’re all having a situation where worldwide marketshare is going down and the customer is disappointed in not being to have the latest Huawei phone anymore. How to give our customers the ability to come back to what they wish, in terms of best in class hardware and photography that HTC to will to solve in the next few months.”

While figures will largely be dependent on decisions Brough to HTC’s board, Maitres maintains optimistic projections when it comes to returning the company profitability.

“I truly believe that it is going to depend on the way carriers deploy 5G,” he says. “And you know that 2020 will bee the starting point for 5G. Usually it takes two years to deploy a network. So 2023 will have significant coverage. That’s why I believe that 2025, probably even earlier will be the turning point. We are dependent on carrier deployment speed.”


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