02/06/2026

BIZ & FINANCE TUESDAY | JUNE 2, 2026

17

China issues new rules to tighten overseas investments

Global smartphone market faces record annual decline, says research firm BEIJING: The global smartphone market is heading for its steepest annual contraction on record, with shipments projected to slump by 13.9% this year to 1.08 billion units, Counterpoint Research said yesterday, citing a worsening shortage of memory chips. The forecast is a downgrade from the 12.4% decline projected in February, with the squeeze in global chip supply exacerbated by the Iran war. The impact is being felt most acutely in lower-end smartphones as chipmakers shift production capacity to AI-related chips, making entry-level devices less economical to produce. Global smartphone wholesale prices rose 14% in the first quarter while shipments fell 3.1% year on year. That trend is expected to continue as inventory built before the supply shock becomes depleted, with some models priced below US$150 (RM595) likely to disappear from the market. “Smartphone makers in the low and mid-tier are caught between cost increases they cannot absorb and consumers with limited spending power,” said Wang Yang, a principal analyst at Counterpoint, an inde pendent research company that publishes quarterly smartphone shipment data. “The question is no longer how to grow shipments or market share, but whether to remain in the market at all.” The memory chip shortage is the most severe supply-side disruption the smartphone industry has faced, Wang said, adding that manufacturers are unable to offset the impact through pricing or product changes. The premium segment has proven more resilient. Apple posted record revenue for the first three months of the year, helped by customers upgrading to its iPhone 17 series. Apple’s 2026 shipments are expected to remain flat before rising 5% next year, Counterpoint projections show. With more stable chip supply and stronger margins than many rivals, Apple is well placed to gain market share and could face less pressure to raise prices. Samsung Electronics kept volumes steady in the first quarter and is expected by Counterpoint to register only a 4% decline in shipments over the full year, outperforming the wider market thanks to stable supply and a consistent product line-up. Transsion, which is heavily exposed to the market for smartphones priced below US$150, is forecast to suffer a 32% drop in shipments this year. Rivals Xiaomi and Honor, meanwhile, are projected to post full-year declines of 28% and 20% respectively, Counterpoint said. – Reuters

technical personnel across borders, organising personnel to work in other countries (regions), providing technical guidance across borders, or arranging cross-border training”. They also give the State Council, China’s Cabinet, authority to conduct security reviews of overseas investments or asset transfers that may affect national security, order investors to dispose shares or cease investment, and impose fines for non- compliance. The regulations also give Beijing the power to ban foreign entities from trading with China if their home countries restrict Chinese investment. For example, if the US government puts a Chinese tech firm on a sanctions list, Beijing can retaliate by blocking a US firm’s unrelated acquisition of a Chinese-linked entity. The rules did not specify which types of deals or asset transfers would be banned due to national security considerations. The new regulations follow two new supply chain security decrees published by the State Council in April, which grant Beijing the power to impose exit bans on employees of foreign companies involved in enforcing foreign sanctions against China. – Reuters

risks for global investors in sensitive sectors like Chinese tech and AI. Chinese authorities previously said the Meta Manus deal violated unspecified outbound investment laws, which analysts said discouraged stake transfers by home-grown companies to foreign investors without Beijing’s approval. Beijing views AI as a sensitive sector critical to national security and has made efforts to control outbound flows of technology, intellectual property and talent. The new rules specifically ban cross-border talent transfers in sensitive sectors without approval, targeting the kinds of moves Manus made when it shifted employees and operations to Singapore before the Meta acquisition - a practice commonly known as “Singapore washing”. They could affect Chinese firms wishing to move capital and operations abroad to attract investment in more liquid overseas capital markets and to escape intense domestic competition. Investors “shall not transfer goods, technologies, services and related data that are prohibited from export ... by means of sending

o Beijing outlines legal basis for unwinding completed deals, rules designed to prevent talent transfer in sensitive sectors BEIJING: China issued sweeping new rules yesterday tightening control of overseas deals that involve Chinese investors, technology, data and national security, a month after Beijing ordered Meta to unwind its acquisition of AI startup Manus. The rules, published by the State Council, or Cabinet, will take effect from July 1. One of the most significant articles requires authorisation for exports of restricted Chinese goods, technologies, services or related data. The regulations provide for the first time a comprehensive and formalised legal basis for China to force the unwinding of completed overseas transactions – heightening compliance The surveys came after the heads of the International Energy Agency, International Monetary Fund, World Bank and World Trade Organization warned the war in the Middle East was straining global energy supplies and hitting vulnerable economies hardest. Factory activity expanded in most Asian economies, with some like South Korea, Japan and Taiwan getting a helping hand from surging demand for artificial intelligence-related investment. China’s private sector gauge grew for a sixth straight month and South Korea’s hit the fastest pace in five years, highlighting a broad push to build buffers against conflict-led disruptions. The RatingDog China General Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 51.8 in May from 52.2 in April, but was slightly better than analysts’ forecast of 51.6 and above the 50.0 level that signals expansion from contraction. The outcome contrasted with an official survey showing factory activity in the world’s second-largest economy stalled last month as new orders contracted and input costs kept rising. Japan’s factory activity also expanded with the PMI at 54.5 in May, slowing from April’s more than four-year high of 55.1, though firms there reported the sharpest rise in input costs since September 2022 due to higher raw material prices driven by the Middle East war.

Asia’s factory output expands as firms stockpile buffers TOKYO: Asia’s factory activity expanded steadily in May on stockpiling by some companies to get ahead of supply shocks from the Middle East conflict, private surveys showed yesterday, a sign that the war’s economic fallout is broadening across the region.

A visitor photographs samples displayed in a section devoted to rare earth elements production at the exhibition on China’s manufacturing achievements at the National Museum in Beijing on March 24. The RatingDog China General Manufacturing PMI compiled by S&P Global fell to 51.8 in May from 52.2 in April, still above the 50.0 level that signals expansion from contraction. – REUTERSPIC

fastest pace in three months even as cost pressures were among the most intense in nearly four years. The PMI rose to 55.0 last month from April’s 54.7, and up from a preliminary estimate of 54.3. In Vietnam, the factory PMI gauge rose to 52.8 from 50.5 in April, while that for Taiwan rose to 56.1 from 55.3, the surveys showed. The index for the Philippines also rose to 50.8 from 48.3 in April. – Reuters

against product shortages and mitigate price risks driven by the war in the Middle East,“ said Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence. South Korea’s PMI rose to its highest since March 2021 at 54.8 in May, up from 53.6 in April, again underlining firms’ drive to lock in supplies as shipping disruptions tied to the Iran war jolt global trade. India’s manufacturing sector expanded at its

“The current period of expansion is being partly driven by stock building among manufacturers and their clients, as companies looked to safeguard SoftBank overtakes Toyota as Japan’s most valuable company

TOKYO: Japan’s tech investor SoftBank Group overtook Toyota yesterday to become the country’s most valuable company, as the benchmark Nikkei index briefly reached a new high amid the AI boom. SoftBank, a major backer of ChatGPT maker OpenAI, soared more than 11% in the afternoon

The third largest is chipmaker Kioxia, formerly the semiconductor unit of engineering giant Toshiba. It jumped more than eight percent. Global demand for the chips has been driven by the growth of AI technology. The Nikkei index briefly surpassed 67,000 for the first time in the morning trade. – AFP

SoftBank said last month its annual net profit quadrupled to more than US$30 billion (RM119 billion), mainly thanks to its investment in OpenAI. The company’s market capitalisation swelled yesterday to more than ¥47 trillion (RM1.168 trillion), while that of Toyota fell to just under ¥46 trillion after its shares dropped nearly 5%.

trade, after its founder announced a €75 billion (RM346 billion) investment in AI infrastructure in France. Masayoshi Son told La Tribune Dimanche weekly on Saturday that it “will be the largest investment in Europe in infrastructure related to artificial intelligence”.