Posts Tagged ‘Samsung’

Germany Is Soft on Chinese Spying

December 10, 2018

Huawei has deep ties to the Chinese government. Berlin might let it build the country’s next generation of communications infrastructure anyway.

The logo of Chinese electronics company Huawei on Sept. 2, 2015 in Berlin. (John Macdougal/AFP/Getty Images)

The logo of Chinese electronics company Huawei on Sept. 2, 2015 in Berlin. (John Macdougal/AFP/Getty Images)

Last week, New Zealand decided to exclude the Chinese technology company Huawei from providing equipment to operate its 5G high-speed mobile network due to “significant national security risks.” The country follows Australia and the United States, which have also excluded Chinese companies from supplying 5G infrastructure.

In Germany, meanwhile, security has so far hardly played any role in the debate over the fifth generation of cellular technology. In the terms of reference published last week by the German Federal Network Agency for its 5G auction, security was not even included in the conditions for awarding the contract. In October, the government announced: “A concrete legal basis for the complete or partial exclusion of particular suppliers of 5G infrastructure in Germany does not exist and is not planned.”

That is dangerously misguided. As Australia’s intelligence chief has pointed out: “5G is not just fast data, it is also high-density connection of devices—human to human, human to machine and machine to machine.” 5G will carry communications we “rely on every day, from our health systems … to self-driving cars and through to the operation of our power and water supply.” 5G will be the backbone of our industries and societies. “Critical infrastructure” hardly gets more critical. And the security risks are accordingly high. Wherever Chinese technology companies supply 5G infrastructure, they will have access to huge volumes of sensitive data and industrial secrets—and there’s reason to think they would eventually be forced to spy on behalf of Beijing. The Chinese government could also use these companies to disrupt other countries’ infrastructure in a future conflict.

Given the massive cybersecurity and national security risks, the only responsible decision is for Berlin to follow the Australian, New Zealand, and U.S. lead and ban Chinese providers from the German 5G network. In doing so, Europe’s strongest economy would send a crucial signal to the rest of the European Union members that are grappling with the same decision.

Contrary to Huawei’s claims, the decisions by Australia, New Zealand, and the United States were not motivated by crude protectionism. In none of these three countries will domestic suppliers be the primary beneficiaries. The anomaly of the 5G market is that there is no leading U.S.-based supplier covering the full technological spectrum. The companies profiting from a ban on Huawei and ZTE are mainly two European companies: Nokia and Ericsson.

Still, those calling for banning Huawei face an uphill battle across Europe. Huawei has strong supporters (not least due to its very professional lobbying operation and deep ties within the political scene). It markets itself as a private company, which is organized as a cooperative and is in no way under the control of the Chinese state. Network operators such as Deutsche Telekom are among Huawei’s cheerleaders. Deutsche Telekom warns against excluding “high-performance suppliers” such as Huawei if the country wanted to build its 5G network quickly and at cost. Huawei already supplies much of the existing German 3G and 4G infrastructure.

For Deutsche Telekom and other network operators, the situation is clear: Huawei offers innovative and reliable products at highly competitive prices. Legally, Deutsche Telekom does not bear any liability for the security risks associated with Huawei technology. And the company does not care about the fact that Huawei’s price advantage is the result of a highly skewed playing field in China. In the world’s largest market, domestic providers control 75 percent of the market, giving them unbeatable economies of scale.

Remarkably, Huawei’s defenders also include the Federal Office for Information Security (BSI), Germany’s cybersecurity agency. Its president, Arne Schönbohm, believes the agency has the capabilities to check on whether suppliers meet security requirements, providing “technically substantiated statements of trust.” Huawei, for its part, describes itself as “the most audited company in the world.” The company offers to put its equipment through any inspection in testing centers jointly run with governments. Last month, they put one such center into operation in Bonn in cooperation with the BSI. Schönbohm was enthusiastic: “We welcome the opening of this laboratory, which enables a further and deeper technical exchange between Huawei and the BSI.”

His ebullience is misguided. The Bonn center follows the British model, where the Huawei Cyber Security Evaluation Centre has existed since 2010 controlled by the British intelligence service GCHQ, among others. Yet just this year, the British inspection report could give “only limited assurance” that Huawei products do not pose any risks to national security. This prompted the government to warn network operators that current rules could be changed and that certain suppliers (i.e., Huawei) could be excluded. Speaking about building Britain’s 5G network, just this week MI6 chief Alex Younger said the UK needs to take decision on “the extent to which we are going to be comfortable with Chinese ownership of these technologies.”

The final British decision is still pending, but the conclusion for Germany should be clear. If the British GCHQ, which is technically far superior to the German BSI, cannot issue a clean bill of health for Huawei, we don’t have to wait for the BSI’s own efforts. In the future, the testing centers will be in an even worse position. Checking for possible hardware backdoors will only be a small part of the job. Virtualization (and related software) will play a central role for 5G. And with weekly software updates, infrastructure operators will have a front door to compromise systems. No testing center would be able to check weekly software updates in advance.

For good reasons, the German intelligence services, unlike the BSI, take a far more critical view of the Huawei risk. They share the Australian intelligence community’s negative assessment, which, according to anonymously sourced reports in November, is based on at least one case of Chinese intelligence agents using Huawei employees to obtain access codes for a foreign network.

Source:https://foreignpolicy.com/2018/12/09/germany-is-soft-on-chinese-spying/

Related:

Advertisements

Germany Resists Pressure to Abandon Huawei

December 7, 2018

German officials were reportedly pushing earlier this year for their government to follow other countries’ lead and slap a ban on Chinese IT firm Huawei. But Berlin doesn’t seem inclined to bow to US pressure.

    
Logo von Huawei (Reuters/H. Hanschke)

Chinese multinational tech giant Huawei Technologies opened a new information security lab in the German city of Bonn last month. Some observers see the move as designed to butter up German regulators ahead of the country’s 5G mobile spectrum auction.

The German network regulator (BNetzA) is finalizing the terms for the 5G licensing round it plans to hold in the first quarter of 2019.

The total cost of building Germany’s 5G networks could be €80 billion ($91 billion) and this means high stakes for Huawei and its rivals Ericsson, Nokia, ZTE and Samsung.

Not too bothered

Germany doesn’t have its own indigenous telecoms hardware industry to speak of and maintains close trade and investment ties with Beijing.

The German interior ministry has said there is no legal basis to exclude foreign equipment providers from the country’s 5G system and no such measure is planned.

Read more: China’s Huawei finance chief arrested in Canada, faces extradition to US

There is no formal bilateral agreement on preventing commercial cyber espionage between Germany and China, but the number of known China-originated commercial cyber espionage attacks on German companies has dropped in the past two years, according to the Australian Strategic Policy Institute (ASPI).

This is corroborated by the Federal Office for the Protection of the Constitution (BfV), Germany’s domestic intelligence agency. The fall has been linked to an increase in Chinese foreign direct investment in high-tech and advanced manufacturing industries in 2016.

Former BfV head Hans-Georg Maassen has linked the decline to an increase in the use of legal tools for obtaining the same information, such as corporate takeovers.

“Industrial espionage is no longer necessary if one can simply take advantage of liberal economic regulations to buy companies and then disembowel them or cannibalize them to gain access to their know-how,” Maassen said.

But things may be changing. “The German public discourse around China has changed in the last year or so, not primarily rushed by the US,” cyber security specialist Raffaello Pantucci told DW. “The Germans have seen several cases where the Chinese have crossed a line.”

Read more: Exit the Dragon? Chinese investment in Germany

Pantucci believes the Chinese will now have difficulty winning the 2019 5G auction. “This puts the cat among the pigeons. No country can avoid this dilemma and I think it’s now very unlikely a Chinese firm will win.”

Huawei Australien (Imago/ZumaPress//Imago/M. Schwarz)Australia has cited national security risks with regard to Huawei

Issues in the UK, Australia and New Zealand

Britain’s BT Group said this week it will remove Huawei Technologies’ equipment from its core 4G network within two years and has also excluded Huawei from bidding for contracts to supply equipment for use in its core 5G network.

However, a ban remains unlikely in the UK, due to the advanced stage of Huawei’s involvement in 5G development in the country.

New Zealand has also rejected Huawei’s first 5G bid, citing national security risks while earlier this year, Australia banned Huawei from supplying 5G equipment for the same reason.

US pressure

The US is putting increased pressure on its political allies, including Germany, to exclude Huawei from their next-generation mobile networks. Washington has long said Huawei and ZTE, another Chinese hardware maker, are potential menaces to security and privacy.

US authorities have pointed to China’s national intelligence law, which they say could force Chinese companies to facilitate spying efforts in other countries. US authorities cited the issue when they blocked Broadcom’s hostile takeover of Qualcomm earlier this year.

In 2013, the US Commission on the Theft of American Intellectual Property estimated that the theft of Intellectual Property was $300 billion (€257 billion) annually, with 50 to 80 percent of the thefts attributed to China.

But why is it all such a big deal?

“Many states are concerned about using Chinese telecommunications and technology companies in critical infrastructure companies for a range of reasons,” Daniella Cave, a specialist on cyber security at ASPI, told DW.

Firstly, she says, the Chinese state has a history of aggressive and wide-ranging espionage and intellectual property theft.

Secondly, the national intelligence law they introduced in 2017 compels organizations and individuals to participate in intelligence activities and to keep secret the intelligence activities they are aware of.

Thirdly, there have been allegations that Chinese companies have been complicit, knowingly or unknowingly, in the theft of secrets and valuable government data, Cave says.

A double-edged sword

“I think the Chinese state’s introduction of the national intelligence law is going to place suspicion on the international activities of most of China’s large companies going forward,” Cave says.

“But it’s a double-edged sword for China, as the Chinese Communist Party has made it virtually impossible for Chinese companies to expand without attracting understandable and legitimate suspicion,” she adds.

Cave believes most developed states will be looking at ways in which they can move away from the use of Chinese products in their critical infrastructure.

“A lot of companies have already, and will continue, to look at ways in which they can minimize the risks to their supply chain by closely scrutinizing the hardware and software in their systems.”

https://www.dw.com/en/pressure-on-germany-as-uk-telecoms-company-shuns-huawei/a-46609010

Asian markets tumble, China tech hit after Huawei arrest

December 6, 2018

Shares across Asia plunged Thursday, with technology firms in Hong Kong and Shanghai battered after the arrest of a top executive at Chinese telecoms giant Huawei that has also fuelled fears about the recent China-US trade deal.

As Donald Trump and Xi Jinping’s tariffs ceasefire last weekend — which sparked a one-day rally — fades to a distant memory, investors are back in selling mood as they fret over a range of issues including the state of the world economy, oil prices and Brexit.

The chances of trade peace between the US and China took a blow Thursday as it emerged Huawei chief financial officer Meng Wanzhou had been held in Canada and faces extradition to the United States over alleged Iran sanctions breaches by the firm.

Image result for Huawei, BBC, picture

Meng is also the daughter of company founder Ren Zhengfei, a former Chinese People’s Liberation Army engineer.

The company had been investigated by US intelligence, who deemed it a national security threat.

However, the arrest drew a swift response from China, which said it “firmly opposes and strongly protests” the move, adding it had urged Canada and the US to “immediately correct the wrongdoing”.

The news sent shudders through Hong Kong and Shanghai markets, where tech firms were hammered.

Hong Kong-listed ZTE, which was subject to a US banning order earlier his year over security fears before that was reduced to a massive fine, was almost five percent down. Market heavyweight Tencent was two percent lower and AAC Technologies was five percent off.

And in Shanghai, Wingtech Technology was four percent down, Raisecome Technology sank 2.8 percent and Fujian Raynen Technology lost 2.6 percent.

Taipei-listed tech firms were also hurt. Taiwan Semiconductor Manufacturing Company lost 2.2 percent and Hong Hai Precision was 2.7 percent lower.

– ‘Significant’ –

There were also losses for other tech firms in the region, with Sony down three percent in Tokyo and Samsung almost two percent lower. The sector was already under pressure from concerns about future growth and following a surge in recent years.

“This headline is quite significant as the US government is attempting to persuade allies to stop using Huawei equipment due to security fears,” said Stephen Innes, head of Asia-Pacific trade at OANDA.

“Recall that over 100 Chinese companies traded limit down (last month) when news broke the US urged allies to blacklist Huawei?”

On broader markets Hong Kong was down more than two percent while Shanghai lost more than one percent and Tokyo shed 1.8 percent by the break. Taipei was two percent off, while Manila and Jakarta also took a hit.

Sydney fell 0.5 percent, Singapore gave up 1.2 percent and Seoul was one percent lower.

“This is what you call playing hard ball,” said Michael Every, head of Asia financial markets research at Rabobank in Hong Kong.

“China is already asking for her release, as can be expected, but if the charges are serious, don’t expect the US to blink.”

Oil prices extended losses ahead of the weekend’s meeting of OPEC and non-OPEC production giants, with investors unsure about how much and for how long they plan to reduce output.

The commodity has come under selling pressure, having soared Monday and Tuesday, owing to uncertainty about the reduction plans while Trump has called on OPEC to lift output to keep prices low.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 1.8 percent at 21,514.98 (break)

Hong Kong – Hang Seng: DOWN 2.3 percent at 26,193.09

Shanghai – Composite: DOWN 1.1 percent at 2,620.84

Euro/dollar: UP at $1.1346 from $1.1312 at 1700 GMT

Dollar/yen: UP at 112.84 yen from 113.47

Pound/dollar: DOWN at $1.2725 from $1.2745

Oil – West Texas Intermediate: DOWN 26 cents at $52.63 per barrel

Oil – Brent Crude: DOWN 19 cents at $61.37 per barrel

New York – Dow Jones: CLOSED for day of mourning

London – FTSE 100: DOWN 1.4 percent at 6,921.84 (close)

AFP

Asian markets take a break a day after big gains

December 4, 2018

Nikkei on pace to snap 7-day win streak; Chinese stocks flat

By DOW JONES NEWSWIRES

Asian equities were broadly lower following Monday’s jumps across the region, with a number of indexes sitting near session lows as the day’s action progressed.

Image result for samsung, signage, pictures

A pause may have finally arrived for Japanese stocks. After gaining in seven straight sessions, the Nikkei NIK, -1.73%   was down 1%. Nissan shares 7201, -0.70%   slipped after a Reuters report that the auto maker’s board will meet Tuesday to discuss a replacement for former Chairman Carlos Ghosn, who was arrested last week. Elsewhere, Nintendo 7974, -4.31%   fell around 4% while Kobe Steel 5406, -5.99%   fell about 5%. Konica Minolta 4902, +1.25%   was among the biggest gainers%.

Hong Kong’s Hang Seng Index HSI, -0.26%   pulled back from its highest close since late September. Energy stocks fell following yesterday’s surge in oil prices, with Sinopec 0386, -2.17%   down more than 1.5%. Tech, financials and property shares were also weak while typical safe-haven utilities outperformed.

After leading the region’s gains Monday, Chinese equities were little changed in morning trading. Both the Shanghai Composite SHCOMP, +0.04%   and the smaller-cap Shenzhen Composite 399106, +0.04%   were fractionally higher.

South Korea’s Kospi SEU, -0.90%   was down 0.5%, as chip makers Samsung 005930, -2.77%   and SK Hynix 000660, -2.41%   each fell more than 2%. Singapore’s Strait Times Index STI, -0.95%   was off almost 1%, while Taiwan’s Taiex Y9999, -0.49%   edged down, with Taiwan Semiconductor c 2330, -0.43%   dipping despite an upgrade from Daiwa, which predicted big gains in the chip maker’s AI business by 2020.

Australia’s ASX 200 XJO, -0.85%   dropped 0.8%, as the financial sector fell again. Australia & New Zealand Banking Group ANZ, -1.03%   was down nearly 1%, along with Commonwealth Bank CBA, -0.98%   and National Bank of AustraliaNAB, -0.85%  . Additionally, the Reserve Bank of Australia left interest rates unchanged at their historic low of 1.5%. New Zealand’s NZX-50 NZ50GR, -0.12%  slipped 0.2%.

https://www.marketwatch.com/story/asian-markets-take-a-break-a-day-after-big-gains-2018-12-03

Apple Will Wait Until at Least 2020 to Release a 5G iPhone

December 3, 2018
  • Next IPhone won’t connect to new faster networks, people say
  • Company risks falling behind as rivals push speedier service
Photographer: Simon Dawson/Bloomberg

Apple Inc. plans to hold off until at least 2020 before offering an iPhone that can connect to the next generation of high-speed phone services coming next year, according to people familiar with its plans.

The delay may make it easier for rivals like Samsung Electronics Co. to win over consumers to phones that connect to 5G networks, which will provide a leap forward in mobile data speeds when they are introduced in 2019.

As with 3G and 4G, the two previous generations of mobile technology, Apple will wait as long as a year after the initial deployment of the new networks before its main product gets the capability to access them, said the people, who asked not to be identified discussing the company’s plans.

Apple’s previous calculations — proven correct — were that the new networks and the first versions of rival smartphones would come with problems such as spotty coverage, making consumers less compelled to immediately make the jump. This time, 5G boosters argue the switch is a much bigger speed upgrade, making Apple’s decision to wait riskier. The networks will open the floodgates to new types of mobile computing, 5G advocates say.

The decision to sit on the sidelines may be related to the company’s feud with Qualcomm Inc., the leader in 5G-enabled chips, and its alliance instead with Intel Corp., which won’t have chips available in time to support 2019 phones.

Apple didn’t respond to requests for comment.

In the past, it hasn’t been a problem for the Cupertino, California-based company to wait a year after much of its competition to release phones compatible with the latest wireless networks. The original iPhone in 2007 was so far ahead of rivals that its slower connection, known as 2G EDGE, wasn’t a deal breaker for early adopters. Even the iPhone 4S with its flashy features like a stainless steel frame and the promise of Siri were enough for some to ignore its lack of true 4G LTE speeds.

But going into 2019, the stakes have changed: the leap from 4G to 5G is significant enough that it may become a major selling point for new devices. Samsung plans to have 5G phones in its Galaxy range next year. And in China — the largest market for smartphones — major producers Oppo and Huawei Technologies Co. also have indicated they plan to offer 5G phones.

“Apple has always been a laggard in cellular technology,” said Mark Hung, an analyst at Gartner Inc. “They weren’t impacted in the past, but 5G is going to be much easier to market. But if they wait beyond 2020, then I think they’ll be impacted.”

Apple also is under more pressure to keep its iPhone customer base. The company has lost a fifth of its value the past two months amid a tech stock rout and reports of suppliers cutting forecasts, signaling the new models introduced in September aren’t selling as well as anticipated. While the global smartphone market has declined for four consecutive quarters, according to industry analyst IDC, the iPhone accounts for almost 60 percent of Apple’s revenue and is the foundation of the company’s push for sales in consumer services such as music, video and cloud storage.

Wireless carriers like Verizon Communications Inc. and AT&T Inc. are likely to prioritize the marketing of 5G phones in order to get customers to migrate over as soon as possible. The new networks will take advantage of a greater range of radio frequencies and be capable of carrying much higher-speed data. That provides an incentive to move traffic to the speedier networks because it will lower the costs for the wireless carriers. Think of the difference in the number of cars a multi-lane freeway can accommodate versus a single-lane regular road.

To be sure, for some existing Apple customers, the lack of 5G connectivity next year won’t be a deterrent. A portion of consumers upgrade their current iPhones to the new models regardless of the changes to the device. Given that hardware upgrade cycles are slowing overall, a 2020 launch for 5G could create a super cycle of upgrades from iPhone users who would still be using an iPhone X or XS two years from now.

Since 2011, Apple has debuted all major new iPhone models in either September or October. The company, however, has released mid-cycle updates like the Verizon iPhone 4 in February 2011, geared toward specific networks. It also launched a smaller model, the iPhone SE, in March 2016.

Huawei and Samsung can build 5G modems — not just Intel and Qualcomm. But Apple is unlikely to use chips from competitors, and the companies may also struggle to produce enough supply for the iPhone’s huge volumes — more than 200 million a year.

China alleges ‘massive’ antitrust violations by chipmakers

November 19, 2018

Image result for Samsung Electronics, microchips, photos

Beijing vows to deepen antitrust probe of chipmakers Samsung, Micron and SK Hynix

By Bryan Harris and Song Jung-a in Seoul and Emily Feng in Beijing

Authorities in China have alleged “massive evidence” of antitrust violations by the world’s top three memory chip manufacturers, in the latest industrial spat that threatens to upset global trade relations. Officials in Beijing said an investigation into South Korea’s Samsung Electronics and SK Hynix and US-based Micron Technology had made “important progress”, and vowed to deepen their probe into the trio, which account for more than 95 per cent of the world’s supply of DRAM chips.

The probe casts a shadow over Samsung, the world’s largest chipmaker by sales, whose soaring profits in recent years have been fuelled almost entirely by the memory chips required by evermore powerful computer servers and cryptocurrency mining devices.

But Beijing’s interest in nurturing domestic technology groups, including chipmakers, also threatens to hollow out business in neighbouring South Korea, where semiconductors this year accounted for 20 per cent of all exports.

“The anti-monopoly investigation into these three companies has made important progress . . . [It] has yielded massive evidence,” said Wu Zhenguo, head of China’s anti-monopoly bureau under the State Administration for Market Regulation.

The inclusion of Micron has sparked fears the probe could form part of a counteroffensive by China in its trade war with the US.  “This seems to be part of Beijing’s negotiating tactic amid the ongoing trade war. Beijing may be using this as a bargaining chip for its trade talks with the US,” said Daniel Kim, an analyst at Macquarie.

China last year accounted for 51 per cent of Micron’s semiconductor sales, 40 per cent of Samsung’s sales and 33 per cent of SK Hynix’s, according to SK Securities. The three companies named in the investigation, which kicked off in June, are serious competition for nascent state-backed Chinese groups.

Image result for Micron, semiconductor, photos

In 2015, Beijing unveiled a national initiative to become a global high-tech superpower in key sectors including semiconductors. Chinese firms have received massive state subsidies for the research and manufacture of memory chips. That has also fuelled complaints that Chinese state-owned companies are stealing US technology to further that goal, accusations that have featured prominently in the US-China trade war.

This month, Washington filed criminal charges against Fujian Jinhua, a Chinese state-owned company, for the alleged theft of trade secrets from Micron as Washington ratchets up its fight against Chinese economic espionage, and it has banned the Chinese group from buying US-made components.

The semiconductor investigation also reflects China’s increasing wiliness to exert its antitrust powers over multinational companies. The anti-monopoly bureau within the commerce ministry has worldwide jurisdiction over any deal above a certain size if the regulators judge that it will have a broad effect on Chinese consumers and suppliers.

Kim Young-woo, an analyst at SK Securities, said Beijing could impose fines of more than $2.5bn on each the three chipmakers in the worst-case scenario.

“This would create additional pressure to cut DRAM prices and build more wafer factories as joint ventures with local Chinese companies to spur the transfer of technology to China,” he said.

Additional reporting by Kang Buseong

https://www.ft.com/content/d626833a-ebb5-11e8-89c8-d36339d835c0

China battles ‘unfair’ trader image with import expo — “A diversion that allows China to delay lifting barriers.”

October 31, 2018

President Xi Jinping opens a huge Shanghai import fair next week at which armies of Chinese companies will shop for billions of dollars in foreign goods as China seeks to counter charges that its markets aren’t open.

But not everyone is buying it.

China’s trade war adversary, the United States, is pointedly snubbing a gathering that will draw several overseas leaders, and foreign business figures privately dismiss it as a diversion that allows China to delay lifting barriers that protect its markets.

It remains unknown whether Xi will use the China International Import Expo to announce new reforms, but Beijing insists the event already shows its willingness to reduce the surpluses it enjoys with trading partners.

Xi has called it “no ordinary exhibition” and a sign of China “actively opening up markets”.

© AFP | The China International Import Expo will draw 3,000 foreign companies from 130 countries, including Ford, Samsung and Tesla, officials say

But the November 5-10 expo also sends another signal: as China pivots from an exports-based economy toward one based on the consumer buying power of its 1.4 billion people, other countries will need to play ball if they want a piece of that action.

“It’s China saying ‘we are an increasingly important import market, and you’re welcome to deal with us,” said Gary Liu, president of the China Financial Reform Institute.

“But if you want to start a trade war, then we can just trade with other countries.”

– Aggressive lobbying –

Organisers say more than 3,000 foreign companies from 130 countries will come, including General Motors, Ford, Microsoft, Samsung, Walmart, Tesla, and Foxconn.

Even tech giants Facebook and Google are signed up. Facebook is blocked in China, while Google pulled out years ago over censorship and cyber-attacks, but both are seen as eyeing new ways into the giant market.

With the all-powerful Xi personally touting the expo, foreign business and diplomatic sources told AFP that China has aggressively recruited attendees, with some saying they are participating largely to please their hosts.

Microsoft founder Bill Gates will join a business forum, but the touchy optics of attending a China import expo amid trade tension means few big-name American CEOs are confirmed, and most major companies contacted by AFP declined detailed comment.

There are no plans for a “high-level” American government presence, the US embassy said.

An embassy spokesman instead called for concrete Chinese steps to “level the playing field” for US companies.

Foreign government and business groups have long complained over preferential treatment for Chinese firms, market access barriers, restrictive red tape, inadequate intellectual property protection and forced technology transfer — issues US President Donald Trump has seized upon.

– Buying alliances –

“China needs to make the necessary reforms to end its unfair trade practices that are harming the world economy,” the embassy spokesman told AFP.

That prompted a retort from China’s foreign ministry, which said that snubbing the expo while asking for market access was “extremely contradictory and hard to understand”.

China, meanwhile, has corralled thousands of businesses nationwide into “buying alliances”, with organisers and state media playing up expectations for headline-grabbing deals.

Shanghai’s “buying alliance” alone will include more than 18,000 companies armed with 12 billion yuan ($1.7 billion) of “intended” spending, an official with the city’s alliance told AFP.

Jacob Parker, who heads the Beijing office of the US-China Business Council — which represents US companies doing business in China — said the expo could help some companies improve their networking and create more business.

“There is nothing negative about the expo,” Parker said.

But from the standpoint of reducing trade barriers, “I don’t know if it’s meant to be a means to that end”, he added.

“We would certainly appreciate any announcements (about market reforms) next week, but when I talk to our members, the sense is that we have heard a lot of promises to date, but we need to see measurable progress on that front.”

AFP

Tech-Led Selloff Tears Through Asian Stock Markets

October 25, 2018

Japan’s Nikkei 225 fell to a six-month low; South Korea’s Kospi could enter a bear market

.

Image result for china stock market, photos

.

.

A wave of selling slammed Asian stocks Thursday following steep declines in the U.S., threatening to send South Korea’s technology-heavy benchmark into bear-market territory.

The moves came after tech stocks in New York tumbled Wednesday, wiping out the gains for the year in the Dow Jones Industrial Average and S&P 500.

Every major market slumped in Asia on Thursday. Japan’s Nikkei 225 fell the most, dropping 3.9% to a more-than six month low.

South Korea’s Kospi retreated 2.2%, bringing its decline to roughly 21% since Jan. 29, its highest this year. If the index closes around these levels, it will enter a bear market, defined as a 20%-plus drop from a recent high.

In doing so, it would join indexes in mainland China and Hong Kong. That is a stark illustration of how severely concerns about the escalating U.S.-China trade spat and the ability of emerging markets to withstand higher U.S. rates have hit Asia.

The U.S. and China have imposed tariffs on billion of dollars of each other’s goods, dimming the outlook for a range of economies heavily involved in global supply chains, including Taiwan and South Korea. The International Monetary Fund this month lowered its forecasts for global growth this year and next, partly due to trade protectionism.

The October swoon in global stocks has marked a turnaround from September, when many indexes rose. Investors have also apparently lost conviction that a strong economy in the U.S. was enough to insulate it from gloom elsewhere.

Japan’s Nikkei 225 fell to a six-month low Thursday.
Japan’s Nikkei 225 fell to a six-month low Thursday. PHOTO: EUGENE HOSHIKO/ASSOCIATED PRESS
.

“It seems like people are finally coming to a point where they are questioning if the U.S. is very different from global markets,” said Felix Lam, a portfolio manager at BNP Paribas Asset Management. “We are still quite globally linked,” he said, adding that trade tensions will ultimately affect the U.S. as well.

Shares of Asian tech companies dropped sharply.

Japan’s Sony Corp. , the electronics and entertainment group, fell more than 5%, while industrial robot-maker Fanuc Corp. dropped 4.1%. In South Korea, Samsung Electronics Co. shares slumped 3.8% to their lowest in a year and a half. The country’s biggest company by market value has been hit by worries over memory chips and smartphone sales.

Hong Kong-listed Chinese internet giant Tencent Holdings Ltd. dropped 3.2%. Overnight, U.S.-listed shares in rival Alibaba Group Holding Ltd. dropped 4.8%, while so-called American depositary receipts for smaller Chinese tech concerns such as NetEase Inc. and Ctrip.com International Ltd. had fallen even more sharply.

A broader gauge of American-listed Chinese stocks, the BNY Mellon China Select ADR index, has fallen 16% so far this month, including a 4.1% slide Wednesday.

Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com and Ben Eisen at ben.eisen@wsj.com

https://www.wsj.com/articles/tech-led-selloff-tears-through-asian-stock-markets-1540439166

Related:

China investors fear too much stock is being used as collateral, a big market drag

https://www.marketwatch.com/story/china-investors-fear-too-much-stock-is-being-used-as-collateral-a-big-market-drag-2018-10-23

and

Asia markets tumble following Wall Street sell-off

https://www.cnbc.com/2018/10/25/asia-markets-wall-street-sell-off-geopolitics-currencies-in-focus.html

The 5G Race: China and U.S. Battle to Control World’s Fastest Wireless Internet

September 10, 2018

At stake are billions of dollars in royalties, a head start in developing new technologies and national security

Image result for MIGUEL CANDELA, photos, china, commuters

5G networks are expected to be as much as 100 times faster than current networks. MIGUEL CANDELA/LIGHTROCKETGETTY IMAGES

.

.

The early waves of mobile communications were largely driven by American and European companies. As the next era of 5G approaches, promising to again transform the way people use the internet, a battle is on to determine whether the U.S. or China will dominate.

Equipment makers and telecom operators in both countries are rushing to test and roll out the next generation of wireless networks, which will be as much as 100 times faster than the current 4G standard. Governments are involved as well—with China making the bigger push.

The new networks are expected to enable the steering of driverless cars and doctors to perform complex surgeries remotely. They could power connected appliances in the so-called Internet of Things, and virtual and augmented reality. Towers would beam high-speed internet to devices, reducing reliance on cables and Wi-Fi.

At the Shenzhen headquarters of Huawei Technologies Co., executives and researchers gathered in July to celebrate one of its technologies being named a critical part of 5G. The man who invented it, Turkish scientist Erdal Arikan, was greeted with thunderous applause. The win meant a stream of future royalties and leverage for the company—and it marked a milestone in China’s quest to dominate the technology.

At a Verizon Communications Inc. lab in Bedminster, N.J., recently, computer screens showed engineers how glare-resistant window coatings can interfere with delivering 5G’s superfast internet into homes. A model of a head known as Mrs. Head tested the audio quality of new wireless devices. Verizon began experimenting with 5G in 11 markets last year.

Nearby, in Murray Hill, N.J., Nokia Corp. engineers are testing a 5G-compatible sleeve that factory workers could wear like an arm brace during their shifts to steer drones or monitor their vital signs. The company began its 5G-related research in 2007.

At a Verizon lab in New Jersey, engineers use a model called Mrs. Head in their tests.
At a Verizon lab in New Jersey, engineers use a model called Mrs. Head in their tests. PHOTO: VERIZON COMMUNICATIONS INC.
.

While the economics of 5G are still being worked out, boosters say the potential payoffs are immense. Companies that own patents stand to make billions of dollars in royalties. Countries with the largest and most reliable networks will have a head start in developing the technologies enabled by faster speeds. The dominant equipment suppliers could give national intelligence agencies and militaries an advantage in spying on or disrupting rival countries’ networks.

“As we face the future, we know deep down that the birth of 5G standards represents a new beginning,” Huawei’s chairman, Eric Xu, told the audience at the company event.

Hans Vestberg, Verizon’s chief executive officer, speaks of the technology in equally dramatic terms. “We are strong believers that 5G [will have] a very transformative effect on many things in our society,” he said. “Consumer, media, entertainment…whole industries.”

By some measures, China is ahead. Since 2013, a government-led committee has worked with China’s mobile carriers and gear-makers on testing and development. The state-led approach, combined with an enormous domestic market, ensures that Chinese companies such as Huawei will sell large quantities of 5G equipment and gain valuable experience in the process.

An engineer checked broadband at a trial 5G base station on Feb. 5 in Wuhan, China.
An engineer checked broadband at a trial 5G base station on Feb. 5 in Wuhan, China. PHOTO: XIONG QI/XINHUA/ZUMA PRESS
.

In the U.S., where the government typically avoids mandating and coordinating efforts by the private sector, much of the experimentation has been led by companies such as AT&T Inc., Verizon, Samsung Electronics Co. and Nokia. Last week, tech companies including Intel Corp. and Cisco Systems Inc. argued in comments filed to the U.S. Trade Representative that proposed tariffs would raise the cost of routers, switches and other goods, slowing development of 5G.

Three of the major carriers plan to roll out 5G service in select cities later this year, though most mobile devices compatible with the new network won’t be ready until early 2019.

The race to 5G has come with tit-for-tat regulatory moves aimed at securing each country’s advantage. In March, the Trump administration blocked Singapore-based Broadcom’s acquisition of U.S. chip giant and 5G leader Qualcomm Inc., citing concerns that Broadcom would cut the company’s research and development funds and allow Chinese companies to pull ahead in 5G.

In July, China squelched Qualcomm’s planned acquisition of Dutch chip maker NXP Semiconductors NV, a deal that would have helped Qualcomm profit from 5G investments in new markets such as connected cars.

Much of the U.S. unease stems from the rising clout of Huawei, which was labeled a national-security threat, along with ZTE Corp. , by a Congressional panel in 2012 that said those firms’ equipment could be used for spying on Americans. In August, aligning itself with the U.S., Australia said it was banning Huawei and ZTE equipment from its 5G network. Other U.S. allies are studying similar bans.

Huawei and ZTE have consistently denied providing government agencies with backdoor access to their products. Beijing has likewise pushed to replace or sideline U.S. high-tech firms within China’s networks on fears of espionage.

China has made 5G a priority after failing to keep pace with Western countries in developing previous generations of mobile networks. The U.S. dominated 4G, built in the late 2000s, much in the same way Europeans controlled 3G standards. The American lead in 4G has been a boon to companies such as Apple Inc. and Qualcomm, and helped give rise to a host of consumer smartphone applications from the U.S.

Mixed SignalsDense networks of antennas are required for5G, and China is ahead of the U.S. on thatmeasure.Wireless antenna sites per 10,000 people,2017Source: Deloitte
JapanChinaGermanyU.S.CanadaIndiaMexico05101520

Since 2015, China has built about 350,000 cell sites, compared with fewer than 30,000 in the U.S., according to an August study by consulting firm Deloitte. It also noted China has 14.1 sites for every 10,000 people, compared with 4.7 in the U.S. That matters for 5G, because the new networks will require much larger numbers of cell sites than 4G.

The physical manifestation of China’s push is a government-run 5G lab near the Great Wall north of Beijing. The sprawling facility is festooned with base stations and prototype mobile devices, with indoor and outdoor facilities for each of the major Chinese carriers and equipment makers, according to engineers and executives who have visited the site.

Trials are coordinated by a consortium of tech firms, universities and research institutes that operate under China’s Ministry of Industry and Information Technology. The group aims to wrap up tests by the end of the year.

After those trials conclude, state-run carrier China Mobile , the world’s largest mobile operator by subscribers, will follow up with its own tests in 17 cities, according to Chih-Lin I, a former Bell Labs researcher and the company’s chief scientist of mobile technologies. China’s 5G service is expected to be ready for commercial use by 2020.

The faster generation of networks relies on sophisticated technology that allows wireless airwaves to be used more efficiently. Plans call for it to run on high-frequency millimeter waves, which can handle more data but can’t travel as far as lower-frequency waves used by older networks. That means 5G will rely on clusters of antennae as well as decentralized data centers close to consumers and businesses—requiring big investments in infrastructure. The networks are expected to have the speed and responsiveness needed for advances such as driverless cars, which must instantaneously communicate with traffic signals, other cars and their surroundings.

*Including smartphones, tablets, laptops and other devices

Sources: China’s Ministry of Industry and Information Technology (China subscribers, data); CTIA (U.S. connections)

China’s bid to steer the 5G future depends heavily on setting technical standards the rest of the world will have to follow—and pay royalties and licensing fees to use. It has played an aggressive role in the international telecom industry collective that sets global standards.

Experts inside and outside China expect Qualcomm and other Western firms to end up with a majority of the essential patents once the standards are fully determined, but China is making progress.

In 2009, as Huawei’s 5G push began, it recruited Tong Wen, a former senior researcher at now-defunct equipment maker Nortel Networks Corp., to set up a research lab in Ottawa. While flipping through an academic journal, Mr. Tong had stumbled on “polar coding,” a novel method for correcting errors in data transmission invented by Mr. Arikan, the Turkish scientist.

Huawei poured resources into developing it, and the government leaned on Chinese companies to vote for it en masse at a key standard-setting meeting at the Peppermill Resort in Reno, Nev., in 2016. The result was a tense fight that lasted past midnight with proponents of a rival technology favored by most Western firms, according to one standards expert who was there.

“The Chinese decided this was important,” the expert said. “This was one of the biggest political battles we’ve ever seen.”

The meeting ended with a compromise: Polar codes will be adopted for part of the standard, giving Huawei ownership of a critical patent. The company has spent more than $1 billion on 5G research and development so far.

Richard Yu, Huawei’s chief executive officer, presented 5G equipment on Feb. 25 in Barcelona.
Richard Yu, Huawei’s chief executive officer, presented 5G equipment on Feb. 25 in Barcelona. PHOTO: SIMON DAWSON/BLOOMBERG NEWS
.

The U.S. government has stopped short of mandating efforts by the private sector, opening the door to more diffuse outcomes determined by the work of individual companies. In January, a senior National Security Council official floated the idea of rivaling Beijing with a government-led effort to build a nationalized wireless network, but regulators and officials said it was too expensive and unrealistic.

Earlier this month, the Federal Communications Commission announced a plan to speed up the build-out of 5G networks by overriding some local rules and fees governing the deployment of small cellular transmitters, an important component of the infrastructure. The plan is expected to win approval in late September.

The government has funded some academic research that has paved the way for commercial technologies. One agency, the National Science Foundation, is coordinating an effort to build test beds for 5G and future generations of wireless networks.

“The United States is very much behind in this space” relative to Europe, South Korea, Japan and China, said a 2015 internal NSF report on 5G network development.

Thyaga Nandagopal—a former researcher at Bell Labs who is a director at the foundation—is leading the test bed project, in which companies, academics and government agencies will be able to test 5G and other wireless network applications in tandem. Nearly 30 U.S., European and Asian companies have committed $50 million of capital and equipment over the next seven years, while the U.S. government has pledged to invest another $50 million. In New York, an NSF-funded site run by academic institutions including Columbia University aims to launch a small pilot phase by the beginning of January.

Mr. Nandagopal said that China’s coordinated investments have put it in a “pretty good pole position” but that the NSF’s efforts are focused on wireless developments after 2020, rather than the early years of 5G deployment.

“We can invest our money strategically and still get better results than anyone else,” he said.

Some American telecom companies are staking claims to rooftops and light poles where they can position small cells that enable the faster networks, and pressing equipment and device makers to create 5G-compatible products.

Verizon’s Hans Vestberg at the Consumer Electronics Show on Jan. 10 in Las Vegas.
Verizon’s Hans Vestberg at the Consumer Electronics Show on Jan. 10 in Las Vegas. PHOTO: STEVE MARCUS/REUTERS
.

For all the investment, industry experts note the standards for 5G aren’t fully written and wireless carriers are still figuring out how they can best profit from the service.

At a 5G forum in Santa Clara, Calif., in July, Henning Schulzrinne, a former chief technology officer at the FCC, said operators would also have to find a way to drastically reduce the cost of data to make applications such as augmented or virtual reality affordable enough to sell to consumers over 5G. Some of those applications could work using 4G or Wi-Fi instead.

“Who’s going to stream AR or VR if it’s going to cost them $10 per minute?” he said.

John Donovan, chief executive of AT&T’s communications business, said the company’s researchers have been among the most prolific writers of 5G standards, but it is being cautious as it puts the technology in the field.

“To deploy technology in advance of need, before the use cases are there—you’re wasting money,” he said.

Executives at Huawei have also sought to temper 5G expectations. Before an audience of analysts at an annual meeting at the Shenzhen headquarters in April, Mr. Xu, Huawei’s chairman, said that “the entire industry and also governments around the world have regarded 5G too high, to the extent that it’s going to be the digital infrastructure for everything.”

Huawei and China Mobile will push ahead with 5G on a large scale regardless, according to executives from both companies.

“5G is such an important strategic project for China—kitchen sink, all the resources,” said Edison Lee, a telecom analyst at investment bank Jefferies in Hong Kong. “Because if they get their foot in the door for 5G, they get their foot in the door of 6G, 7G, 8G.”

Write to Josh Chin at josh.chin@wsj.com, Sarah Krouse at sarah.krouse@wsj.com and Dan Strumpf at daniel.strumpf@wsj.com

Appeared in the September 10, 2018, print edition as ‘U.S. and China Battle for 5G Dominance.’

https://www.wsj.com/articles/the-5g-race-china-and-u-s-battle-to-control-worlds-fastest-wireless-internet-1536516373

Quantum computing: the power to think outside the box 

September 3, 2018

With potential applications in healthcare and finance, the technology promises an exponential gain in computing power

Image may contain: night and text

By Richard Waters in San Francisco and John Thornhill in London


As a keen player of the board game Go, Mark Griswold was enthralled by the 2016 contest between the world’s top player and a computer — a milestone in the history of artificial intelligence. He still recalls move 102 in the opening game with awe. The computer, developed by the Alphabet subsidiary DeepMind, placed a white piece in a position that surprised even the experts.
It turned out to be a stroke of genius that human players would have had trouble planning, and a key moment in a contest that resulted in the victory of machine over man.People are limited in the range of possibilities they can perceive and analyse, forcing them to think inside “boxes”, he says now. “We humans are innovative — we do get outside our boxes. But we can’t do it at the rate that computers can.”

A professor of radiology in Cleveland, Ohio, Mr Griswold has just had his own encounter with a computer that thinks outside the box. The machine in question: one programmed to simulate the behaviour of a quantum computer, a technology that could revolutionise computing.

Humans rely on a mix of experience and intuition when tackling a problem too complex for them to analyse completely, he says. In his case, that involves adjusting the settings on an MRI machine to get the best possible scan from any particular situation — something he compares with coaxing the best sound from a musical instrument.

After only a few weeks of experimenting with quantum technology, however, Mr Griswold says he has already seen a computer come up with MRI results that have exceeded those of his own expert “feel” — much as the DeepMind machine came up with the unexpected on the Go board.

 

The IBM Q quantum computer, which can be accessed by companies via IBM’s cloud operation © Connie Zhou/IBM


It is, he claims, an intimation of a new era, when quantum computers challenge much of what we think we know about the world: “We’re going to see these things all the time, that are against our intuition. It’s so overwhelming we can’t understand it, we don’t know how much power is there,” says Mr Griswold.
Quantum machines, which tap into the weirdness of quantum mechanics — a branch of physics that deals with the behaviour of sub-atomic particles — are a long-held dream in the tech world. By harnessing properties that extend beyond the limits of classical Newtonian physics, they hold the promise of exponential gains in computing power.After decades in the labs, the technology is starting to make the transition from science experiment to rudimentary prototype sparking interest in fields as diverse as chemicals and banking, and prompting research efforts at companies stretching from Samsung to Daimler-Benz and JPMorgan Chase.

“It takes as much as 30 years for this basic research to become viable — in the case of quantum computing, that time really has passed,” says Mladen Vouk, a computer science professor at North Carolina State University. The result is that researchers at universities like NC State are now getting their first chance to try the technology out.

Image may contain: night

A dilution refrigeration unit used to supercool qubits so that they can function reliably © Graham Carlow/IBM


According to tech groups such as IBM and Microsoft, as well as specialist start-ups such as Rigetti Computing, the first real benefits from quantum computing could be seen within five to 10 years — a timeframe that raises tantalising possibilities for the companies that hope to be first to harness the technology.
JPMorgan Chase began committing some of its research effort to quantum computing two years ago. Asked if being one of the first in the field would bring clear advantages over rivals, Bob Stolte, a managing director at JPMorgan’s corporate and investment bank, says: “I think there could be, potentially” — though he cautions: “It’s too early to say that.”The results could far exceed even the most high-powered AI systems of today. Referring to the specialised chips, called graphics processing units, used in many of today’s most advanced machine learning systems, Mr Stolte says: “If you weren’t limited to the number of GPUs you can get in a data centre, what problems would you be able to solve, and what products would you be able to offer customers?”

Researchers trying to harness the power of the new hardware are homing in on three main types of problem that quantum machines are expected to be particularly well suited to handling.

The first involves analysing the natural world, using computers to model the behaviour of molecules with the kind of precision that today’s computers could never match.

“Nature is quantum mechanical so, if you have a computer that worked on quantum principles, it would be mapping apples to apples,” says Bob Sutor, a researcher at IBM.

Ilyas Khan, chief executive of Cambridge Quantum Computing, a start-up that is designing applications for the technology, suggests that one of the first sectors to benefit will be the chemicals industry. The massive increase in computing power will enable the discovery of new materials, he says.

The Future is Quantum: solution to the world’s problems

“Computational chemistry is the single biggest area right now. Over the past two years quantum computers have been increasingly valuable replacing guesswork with more and more empirical evidence,” he adds.
Traditional computers could never handle this kind of task. Modelling a relatively basic molecule such as caffeine would require a traditional computer with 10 to the power of 48 bits, says Mr Sutor — or about 10 per cent of the number of atoms in planet Earth. Penicillin, meanwhile, would require 1086 bits — more than all the atoms in the observable universe.

In the quantum realm, calculations like these suddenly become possible. In theory, a quantum computer with 160 quantum bits (or qubits) could model caffeine, according to Mr Sutor, while it would take 286 qubits to handle penicillin.

That could make it easier to design new materials, or find better ways for handling existing processes. Microsoft, for instance, predicts that it could lead to a more efficient way of capturing nitrogen from the atmosphere for use in fertilisers — a process known as nitrogen fixation, which currently eats up huge quantities of power.

At first glance, it might appear that the technology is advancing rapidly towards these levels. After stringing together the first basic systems out of a small number of qubits two years ago, companies such as IBM, Rigetti and Google are quickly moving on to computers comprising dozens of qubits.

The numbers, however, do not tell the full story.

Today’s qubits are unstable — they only hold their quantum state for a tiny fraction of a second — and as increasing numbers are linked together, unpredictable interactions between them lead to high error rates. Learning how to coax results out of these “noisy” systems is already a huge challenge, and scaling them up to computers of 100 qubits is far beyond today’s capabilities.

.
.

The promise of being able to handle simple molecules is close enough, though, that chemicals companies have been among the first to start experimenting with the technology. They include JSR Corporation, the Japanese materials multinational, which has taken a 5.5 per cent stake in Cambridge Quantum Computing, and is also one of the first companies to work with IBM since the US computer company began trialling its version of the technology with a small number of companies late last year.

Pharmaceutical groups, which might see similar benefits from quantum technology in the long term, are still on the sidelines. “They are trying to understand when we’ll have sufficient qubits to handle the molecules they deal with,” says Mr Sutor, since these are far larger and more complex. He estimates that timeframe, “very broadly”, at five to 10 years.

Quantum computing is also expected to bring early benefits to machine learning. Rather than simply adding more raw computing power to speed up the training of today’s machine learning systems, the technology is well-suited to tackling particular problems that present a challenge for traditional computers, says Peter Wittek, an assistant professor at the University of Toronto.

“The real question is not so much speed-up, but whether they can give you a qualitative advantage with certain models,” he says.

Quantum machines are particularly well suited to certain types of probabilistic algorithms, he and other experts say — calculations that don’t proceed through a logical sequence of steps, like those carried out by today’s so-called “classical” computers, but instead rely on a certain element of chance to alight on the best result.

A third area of focus involves complex optimisation problems that have too many variables for today’s computers. This is the case with Mr Griswold’s MRI machines. Using a technique known as quantum annealing, optimisation problems are turned into the equivalent of a 3D landscape, comprising mountains and valleys: the challenge is to find which point is the lowest.

Though each of these classes of quantum calculation seem narrow, together they could cover a range of real-world problems, making the technology more broadly applicable in its early years than might at first seem apparent. The new systems should be able to tackle any difficult mathematical problems that can be translated into a form that the specialised quantum algorithms can handle, says Mr Sutor.

“The future quants” on Wall Street for instance will “map financial problems to similar problems in physics and then map them back”, he says.

That helps explain why a handful of banks have been among the first to dip their toes into the water.

Lee Braine, from the Investment Bank CTO office at Barclays, says that the bank is already actively investigating potential uses for quantum computing. He suggests the technology is in a similar place to where blockchain, which many banks are looking to exploit, was 10 years ago.

A 49-qubit test chip built by Intel and unveiled at this year’s Consumer Electronics Show in Las Vegas © Walden Kirsch/Intel Corporation
He predicts its first uses for the bank will be to build ever better models of financial markets, strengthen cryptography by inventing new numbers, and improve operational efficiencies in messy and complicated areas, such as clearing and reconciliation of trades. “We are playing at toy solutions at the moment,” he says.

Mr Stolte adds that pricing derivatives, optimising investment portfolios and managing risk in highly complex and constantly shifting situations are all things that quantum systems could handle.

“When you look at what financial services is, and quantum computing promises — which is essentially a significant increase in the availability of processing power for probabilistic algorithms — that matches really well,” he says.

Yet the technology is in its infancy, and the entirely new field of computer science needed to harness the power of the machines has yet to be developed. Dan McCaskey, a researcher at the US energy department’s Oak Ridge National Laboratory, compares the current state of the art to the first efforts to program classical computers in the 1950s and early 1960s — though he adds that “the field is moving very fast”.

“It’s not as universal as classical computing,” he adds, echoing a cautious view held by others in the field. “Personally I think this will be a technology that will be available for very specific problems.”

Qubits v bytes: how quantum computing works

Image may contain: 1 person

Albert Einstein


Quantum computing taps into the quirky behaviour of sub-atomic particles, which bend our normal understanding of physics.
One of these properties, called superposition, involves a particle being in two states at the same time. So unlike the most basic binary elements, or bits, in a classical computer, which represent either ones and zeros, quantum bits — or qubits — can be a 1 and a zero at the same time.By stringing together dozens or even hundreds of these qubits, the number of states they could represent would rise exponentially, making it possible to compute millions of possibilities instantly.

A second quantum property these machines draw on is entanglement: two quantum bits can influence each other, even when they aren’t physically connected, something Albert Einstein called “spooky action at a distance”.

In theory, by harnessing this property, it will be possible to write algorithms that take short-cuts around the usual sequential logic processes in computers, making it possible to rule out incorrect answers and home in on the correct ones far more quickly.

Harnessing this computing power will require an entirely new form of programming.

“The way you think about algorithms is wildly and completely different,” says Bob Sutor of IBM. Unlike “classical” computing, where each step in a calculation follows logically from the one before it, quantum programming is “much more three-dimensional”, he says. “There are very unusual correlations and linkages between qubits.” As a result, “you can figure out solutions that don’t work, and things that could solve the problem are magnified.”

https://www.ft.com/content/154a1cf4-ad07-11e8-94bd-cba20d67390c