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Westlake Legal Group > Corporations

How Shareholder Democracy Failed the People

Westlake Legal Group 19db-sorkin1-facebookJumbo How Shareholder Democracy Failed the People Stocks and Bonds Pensions and Retirement Plans Jones, Paul Tudor II Income Inequality Friedman, Milton Fink, Laurence D Dimon, James Council of Institutional Investors Corporations Business Roundtable

Democracy is a messy thing. Shareholder democracy may be even messier.

For nearly a half-century, corporate America has prioritized, almost maniacally, profits for its shareholders. That single-minded devotion overran nearly every other constituent, pushing aside the interests of customers, employees and communities.

That philosophy was rooted in an idea that has an air of nobility about it. Shareholder democracy was the name given to investors asserting themselves in corporate governance. The idea was that investors would wrest control of companies from entrenched managers, letting the actual owners set their corporate priorities. But what we really got was something else: an era of shareholder primacy.

That may have a chance — a chance — of changing now that 181 chief executives have lent their signatures to a new “Statement on the Purpose of a Corporation” that was published by the Business Roundtable on Monday. The statement from the leaders of companies including JPMorgan Chase, Apple, Amazon and Walmart affirms that the nation’s largest companies have a “fundamental commitment” to all their stakeholders: putting employees, suppliers and communities on a pedestal that once belonged only to shareholders.

The companies’ statement is a significant shift and a welcome one. For years, businesses have resisted calls — including from this column — to rethink their responsibility to society. In response, corporations typically dismissed hot-button topics like income inequality, climate change, gun violence and more as political issues unrelated to them.

Some will doubt the sincerity of these business leaders’ words, and it remains an open question whether their companies will be held accountable — and by whom. But what we may be at the start of is less a new era and more a return to the past.

For nearly 50 years — following the publication of a seminal academic treatise in 1932 called “The Modern Corporation and Private Property” by Adolf A. Berle Jr. and Gardiner C. Means — corporations, for the most part, were run for all stakeholders. It was a time defined by organized labor, corporate pension programs, gold-watch retirements and charitable gifts from companies that invested heavily in their communities and the kind of research that promised future growth.

It is a period often referred to — sometimes derisively — as “managerialism.”

But by the 1970s, managerialism became synonymous in investment circles with immovable executives who were running bloated businesses more for their own benefit than for their shareholders.

It also coincided with the ascent of Milton Friedman, the University of Chicago economist who preached a gospel of profits-as-purpose and mocked anyone who thought that businesses should do anything else.

“What does it mean to say that ‘business’ has responsibilities?” Mr. Friedman wrote in this newspaper in 1970. “Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.”

That began the rise of shareholder democracy, an idea that the public and news media embraced. Shareholders and, in turn, a new class of investors known as corporate raiders convinced executives to slash any and all fat from their budgets or risk being taken over or voted out. Layoffs increased, research and development budgets were cut, and pension programs were traded for 401(k)s. There was a rush of mergers driven by “cost savings” that grabbed headlines while profits soared and dividends increased.

And here we are. Americans mistrust companies to such an extent that the very idea of capitalism is now being debated on the political stage. Populism has been embraced on both ends of the political spectrum, whether in the trade protectionism of President Trump or the social-net supremacy of Senator Bernie Sanders.

It is against that backdrop that the Business Roundtable released its statement on Monday. The group should be commended for coming around — and no one wants to criticize progress — but it is undeniably late.

Make no mistake, it wasn’t shareholder democracy that created this new enlightened moment. Public outrage pushed this forward. So did anger in Washington and regulatory scrutiny that is finally coming to bear.

Shareholders — with some exceptions — did not come around until they had no choice but to realize that these forces could have an impact on their investments.

And in an echo of managerialism, there are some corporate executives who deserve credit for this change.

Larry Fink, the chairman of BlackRock, deserves to be doing laps for putting these ideas into his annual letters years ago, when some of those who signed Monday’s statement laughed at the idea.

Credit should go, too, to Howard Schultz, the former chief executive of Starbucks, whose company embraced its employees as stakeholders from the beginning. And companies like Patagonia and Ben and Jerry’s, which are so-called B Corporations, committed to community principles early.

The investor Paul Tudor Jones II has been talking about this for years. So has Judith F. Samuelson, an executive director at the Aspen Institute who has pressed corporate leaders to embrace a view of service to society, and told me about a dinner where she and others leaned on Jamie Dimon, the JPMorgan chief executive and chairman of the Business Roundtable, to change the group’s mission statement.

And there was Prof. Klaus Schwab, who founded the World Economic Forum, drafting the Davos Manifesto of 1973: “The purpose of professional management is to serve clients, shareholders, workers and employees, as well as societies, and to harmonize the different interests of the stakeholders.”

If you suspect that the Business Roundtable’s statement changes little, there may be reason for skepticism. Some big companies didn’t sign on, including the Blackstone Group, General Electric and Alcoa.

And the Council of Institutional Investors — which represents many of the same companies as Business Roundtable and many of the nation’s largest pension funds — distributed a response that forcefully disavowed the ideas set forth in the roundtable’s statement.

“Accountability to everyone means accountability to no one,” the council said. “It is government, not companies, that should shoulder the responsibility of defining and addressing societal objectives with limited or no connection to long-term shareholder value.”

For whatever progress may have been made Monday, it is hardly clear the debate is over. In fact, the fight for corporate identity is just beginning.

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U.S. and China Resume Trade Talks Amid Dim Prospects for Deal

Westlake Legal Group merlin_157355691_1f2dfecb-a98b-41c9-8ed8-790707a01c41-facebookJumbo U.S. and China Resume Trade Talks Amid Dim Prospects for Deal Xi Jinping United States Politics and Government United States Economy Trump, Donald J International Trade and World Market Foreign Investments Economic Conditions and Trends Customs (Tariff) Corporations China Agriculture and Farming

WASHINGTON — Trade talks between the United States and China resumed on Monday with prospects dimming for a transformative deal, as both sides appeared more focused on preventing tensions from escalating before the 2020 presidential election than on making concessions.

Negotiators from both countries are continuing to press for an agreement, but months of meetings have so failed to yield consensus on the most difficult issues and there is little to suggest that a compromise is within reach. Instead, the United States and China appear to be trying to find a path to keep the talks moving forward and to avoid a breakdown that could rattle stock markets and hurt President Trump’s chances of re-election.

Mr. Trump and his advisers are playing down the likelihood of reaching an agreement in the short term, and the president suggested on Friday that China was trying to drag out the negotiations in the hope that someone else might occupy the Oval Office come January 2021.

“Meeting after meeting,” Mr. Trump told reporters at the White House. “I think that China will probably say: ‘Let’s wait. It’s 14, 15 months till the election. Let’s see if one of these people that give the United States away, let’s see if one of them could possibly get elected.’”

“I don’t know if they’re going to make a deal,” he added, referring to the Chinese government. “Maybe they will, maybe they won’t. I don’t care, because we’re taking in tens of billions of dollars’ worth of tariffs.”

Mr. Trump’s advisers have echoed his stance. Larry Kudlow, the director of the White House National Economic Council, tried to lower expectations that any big announcements would come out of the talks in Shanghai this week between Robert Lighthizer, the United States trade representative, and Steven Mnuchin, the Treasury secretary, and their Chinese counterparts.

“I wouldn’t expect any grand deal,” Mr. Kudlow said on CNBC on Friday. “I think, talking to our negotiators, they are going to kind of reset the stage and, hopefully, go back to where the talks left off last May.”

Negotiators appeared to be on the cusp of making a deal earlier this year. But talks faltered suddenly in May, as Beijing made significant changes to a draft outlining the potential terms of an agreement, and the Americans accused China of reneging on commitments.

Since then, the path toward reaching a trade agreement has been unclear. Talks are highly secretive, but there still appear to be significant differences over how China would enshrine new protections for American intellectual property, how many American products China would agree to buy and how many of Mr. Trump’s tariffs on $250 billion in Chinese goods would remain in place.

The two sides also appear to differ over how explicit the agreement should be. Chinese negotiators previously objected to demands that certain provisions be enshrined in Chinese law, and have pushed for a more vaguely worded text.

Michael Pillsbury, a China expert at the Hudson Institute, said that leaving more uncertainty in the agreement could foster more trade fights between the world’s two largest economies, particularly given a complex enforcement mechanism the two sides previously agreed to establish to ensure both countries lived up the agreement.

“If there are loopholes and gray areas subject to interpretation, then the extensive appeal process the Trump administration has designed will be a recipe for a decade of acrimony,” he said.

Negotiators for the United States insist that China must wind the clock back to where it was before the talks stalled in order for things to progress. Yet the objections to the agreement appear to have come directly from China’s president, Xi Jinping.

“The real question in the next week is, ‘Will they go back to where we were before they changed their mind?’” Wilbur Ross, the commerce secretary, said in an interview on Fox Business Network on Friday. “That’s what’s the important thing, because we were very close to a transaction before.”

In June, Mr. Trump and Mr. Xi agreed on the sidelines of the Group of 20 gathering in Osaka, Japan, to try to get negotiations back on track. Mr. Trump emerged from the meeting saying that China had agreed to buy some American farm goods. In return, he said, the United States would hold off on imposing additional tariffs and approve the sale of some nonsensitive goods to Huawei, the Chinese telecommunications giant that the United States government has blocked from buying American technology over national security concerns.

Even that truce has not unfolded as Mr. Trump planned. China has been preparing to make agricultural purchases, and on Sunday the state-run Xinhua News Agency reported that millions of tons of American soybeans had been shipped to China. But elsewhere, Chinese officials have continued to insist that they are not making purchases as a condition of the talks.

“In order to better meet the needs of the domestic market, some Chinese enterprises are willing to purchase some agricultural produce from the United States,” a spokesman from the Chinese Commerce Ministry said in a briefing on Thursday. He added that there was “no direct relationship” between the resumption of trade talks and the purchases.

The Trump administration has continued to follow through on the agreements the president made in Osaka. Mr. Trump has temporarily backed off his threat to impose tariffs on an additional $300 billion of Chinese imports. And his administration is considering granting waivers that would allow American companies like Google and Micron Technology to sell Huawei nonsensitive goods like handset components that are widely available on the international market.

But it remains unclear exactly what type of American products Huawei would be allowed to buy, and if the limitations would cripple its business.

“China is looking to go back to the status quo before the trade war started, and to rewind the clock” to before Huawei was blacklisted from purchasing American goods, said Andy Mok, a trade specialist at the Center for China and Globalization in Beijing. “The biggest threat right now is what happens on Huawei.”

Some Trump administration officials believe the president would benefit politically by holding out for a tougher deal. Democrats would be quick to criticize any agreement with China, and politicians of both parties have warned about the national security threat of permitting further sales to Huawei.

But while Mr. Trump insists that the American economy is still insulated from the trade war, economic data suggests that the tensions with China, America’s largest trading partner, are taking a toll.

Data released on Friday showed that the American economy slowed in the second quarter of the year, with gross domestic product expanding at an annual rate of just 2.1 percent as net exports and business investment slumped. The Federal Reserve has frequently cited the trade war as a problem for the economy, and it is expected to cut interest rates on Wednesday to help keep the economic expansion going.

Big American companies whose performance has faltered are also citing tariffs and trade tensions on both sides of the Pacific as a reason. Caterpillar cited cooling activity in China, a major market, when it reported falling sales growth for the second quarter, while Hasbro, Nintendo and other companies have discussed plans to move part of their supply chains out of China to countries like Vietnam.

The trade war is also dragging on the Chinese economy. The shift of multinational companies out of China, a trend that was already underway as a result of rising Chinese wages, could have a corrosive effect on growth.

But a sense has emerged in China that the country can afford to wait for a better trade deal from the Trump administration, or from another president. The Chinese economy is decelerating, but the process has been gradual. Further increases in the country’s already huge amount of infrastructure spending have cushioned the shock.

China’s exports to the United States have dipped, but they have not plunged during the trade war, falling 8.5 percent in the first half of this year compared with the same period last year. But exports to the rest of the world have been up slightly.

“At this point, I don’t think people worry so much about the trade war anymore,” said Weijian Shan, a prominent Chinese economist and financier in Hong Kong. “Most of them don’t see a real negative effect on their businesses. The panic has subsided.”

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As Nations Look to Tax Tech Firms, U.S. Scrambles to Broker a Deal

Westlake Legal Group merlin_148265940_3d34f4ca-6938-496a-86fd-8da1c7681316-facebookJumbo As Nations Look to Tax Tech Firms, U.S. Scrambles to Broker a Deal United States Politics and Government United States International Relations United States Economy Trump, Donald J Treaties tax evasion Mnuchin, Steven T International Trade and World Market Income Tax Great Britain Google Inc France Federal Taxes (US) Facebook Inc Customs (Tariff) Corporations Corporate Taxes Amazon.com Inc

WASHINGTON — For most of the 21st century, wealthy nations have engaged in a race to the bottom on corporate taxes, cutting rates in an effort to poach business activity across borders. Very quickly, that script has flipped.

Developed countries are now moving to impose new taxes on technology companies, like Facebook and Google, that have large presences in their citizens’ daily lives but pay those countries little tax on the profits they earn there.

France moved on Thursday to become the first country to impose a so-called digital tax of 3 percent on the revenue companies earn from providing digital services to French users. It would apply to large companies, numbering more than two dozen, with robust annual sales in France, including United States-based Facebook, Google and Amazon. British leaders also detailed plans on Thursday to impose a similar tax, of 2 percent, on tech giants. And the European Union has also been mulling a digital tax.

The digital revenue grab is pitting traditional allies against one another, threatening to set off a cascade of tax increases and tariffs unless political and economic leaders work out a multinational agreement to avert them. Late Wednesday, the Trump administration said it would pursue an investigation into whether France’s tech tax amounted to an unfair trade practice that could be punishable with retaliatory tariffs. Administration officials, including Treasury Secretary Steven Mnuchin, have also raised concerns about Britain’s move.

The French tax, which would exact a bigger toll on foreign companies than French ones, has been denounced by the American tech industry, along with Democratic and Republican leaders, who are looking for ways to avoid such one-off decisions by more closely coordinating international digital tax arrangements.

Administration officials have tried to shape an effort being led by the Organization for Economic Cooperation and Development to broker an international system for taxing digital profits. A lobbying flurry has broken out in Washington to influence the negotiations.

And in its attempts to show international leadership — and not go it alone, as Mr. Trump has in his trade wars with China and other partners — the administration is pushing the Senate to vote next week on a package of long-foundering updates to international tax treaties, which could demonstrate to allies that it is serious about leading the effort to broker a digital armistice.

Countries have competed to reduce corporate tax rates, and attract business activity both physically and on paper, for two decades. The average rate tracked by the Organization for Economic Cooperation and Development has fallen seven percentage points since 2000, to just over 21 percent today. France and the United States both cut rates substantially for 2018, with Mr. Trump’s signature tax cuts bringing the American rate of 21 percent right to the international average.

Technology companies’ revenue has surged worldwide, but not their tax payments, prompting many wealthy governments to complain that digital businesses are not paying their fair share. The European Union calculates that digital company revenue is growing more than four times as fast as revenue for other multinational companies, partly from ad sales to European consumers.

Because the firms have relatively light physical presences in Europe, they benefit from the current system, which taxes companies based on where their operations and assets are — and not where their sales are generated. The European Union has said this has allowed tech companies to pay less than half the effective tax rate of other multinationals, and European leaders want to tax them in a way that takes into account where their users are.

Mr. Mnuchin has spent much of his time discussing the issue at international forums with finance ministers from around the world.

During meetings of the International Monetary Fund and the World Bank in April, Mr. Mnuchin said it was a “priority” to find an international solution, and he pressed France and Britain to abandon their own tax plans once a compromise is reached.

At the Group of 20 finance ministers meeting in Japan in June, Mr. Mnuchin underscored his concerns, and the finance ministers agreed in their communiqué to work toward finding a common set of rules to close loopholes that global technology companies have been using to reduce their tax bills.

“I’m not in favor of the current digital tax that has been proposed by France and the U.K.,” Mr. Mnuchin said, warning a system of unilateral digital taxes would not work. “We have significant concerns with both of those.”

The United States has called for a tax that is based on companies’ income, not sales, and said specific industries should not be singled out with a different standard. The Treasury secretary has dispatched his deputy, Justin Muzinich, to help broker an agreement. The Organization for Economic Cooperation and Development released a “road map” in May, agreed to by nearly 130 countries, toward finding agreement on a global digital tax plan.

France has said that it will repeal its tax once a group agreement is reached. The subject will come up again when finance minsters gather in Chantilly, France, for the summit of the Group of 7 industrialized nations next week. Bruno Le Maire, the French finance minister, has suggested that France’s tax will help accelerate an international pact.

“We are willing, especially with Steven Mnuchin, to give new impetus during the G7 in Chantilly on the very specific topic of minimum taxation,” Mr. Le Maire said in an interview last month.

The Treasury Department said in a letter to the Senate Finance Committee on Thursday that it is considering a range of responses to the French tax.

“We have and will continue to urge France to forbear from such unilateral actions and join with us in an intensive effort to reach a comprehensive, multilateral solution,” wrote Kimberly J. Pinter, deputy assistant secretary in Treasury’s office of legislative affairs.

As negotiations persist, administration officials and Republican Senate leaders have worked together to break a decade-long logjam on updating international tax treaties, some of which were negotiated in the early years of the Obama administration.

Senator Mitch McConnell of Kentucky, the majority leader, moved on Thursday to set up a vote on the quartet of treaties next week, in what would be a bipartisan victory for multinational companies. The package is expected to succeed in garnering the support of two-thirds of senators voting on the issue.

The so-called tax protocols would update existing tax treaties with Spain, Japan, Luxembourg and Switzerland. They would allow companies with operations in those countries to avoid some previous tax penalties for transferring money to their operations abroad, in a provision proponents say would encourage multinationals to invest more in the United States. They would also update the existing treaties to allow for more detailed sharing of information among countries on individual and corporate taxpayers.

The treaties were held up for years by Senator Rand Paul, Republican of Kentucky, who objected to that information sharing. But the Senate Foreign Relations Committee overrode his complaints and voted to advance the treaties last month.

A host of large and powerful trade groups, including the Semiconductor Industry Association and the Business Roundtable, has been urging Senate leaders to approve the measures. “Tax treaties help the U.S. economy by allowing U.S. companies to more efficiently conduct their businesses abroad and by making the U.S. more hospitable to foreign investment,” the groups wrote this spring in a letter to Senator Jim Risch, the Idaho Republican who leads the Foreign Relations Committee.

One of the companies that stands to benefit is a Spanish-owned steel maker with a large plant in Kentucky, North American Stainless, which has been pushing Mr. McConnell and other senators to schedule a vote.

North American Stainless is the subsidiary of Acerinox, and employs more than 1,300 workers in Kentucky. A company executive told a Senate panel in 2014 that ratifying the tax protocol with Spain could boost Acerinox’s investments in Kentucky, by ending a 10 percent tax on dividend payments from the American subsidiary to the parent company.

In pushing for the tax treaties, Treasury officials have argued that they would promote fair and efficient taxation by the United States and treaty partners, reduce the risk of double taxation and help combat tax evasion by improving the flow of information among tax authorities.

A Treasury spokeswoman said the tax treaties were a priority for Mr. Mnuchin and Mr. McConnell and that the Senate’s bipartisan work on the issue would fuel economic growth.

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Julie Sweet to Run Accenture, Adding a Woman to the Ranks of Corporate C.E.O.s

Westlake Legal Group 11accenture-facebookJumbo Julie Sweet to Run Accenture, Adding a Woman to the Ranks of Corporate C.E.O.s Women and Girls Sweet, Julie Nanterme, Pierre (1959-2019) Hiring and Promotion Corporations Cloud Computing Appointments and Executive Changes Accenture Ltd

Julie Sweet will become the new chief executive of Accenture, the consulting firm announced on Thursday, adding another female leader to the senior-most ranks of the corporate world.

With Ms. Sweet’s appointment, 27 women will be leading companies in the S&P 500. That figure is up slightly from a year ago, but still means that just slightly more than 5 percent of the most valuable public companies in the United States are led by women.

Ms. Sweet, a former lawyer who is currently Accenture’s head of North America, will bring a measure of stability to the firm, which has been without a permanent leader for most of the year. In January, Pierre Nanterme stepped down as chief executive, citing poor health. Mr. Nanterme led the company for eight years, significantly enlarging Accenture’s market value, influence and head count.

Accenture’s chief financial officer at the time, David Rowland, was tapped to serve as interim chief executive while the board conducted a search for a full-time replacement. Mr. Nanterme died in January.

Mr. Rowland will become executive chairman of Accenture. KC McClure, who took over as chief financial officer from Mr. Rowland in January, will continue in her role, making Accenture the rare company to have women in both the chief financial officer and chief executive roles.

“On this day, I am focused on the fact that I am the fifth C.E.O. of Accenture since we became a public company,” Ms. Sweet said in an interview. “I represent all our employees, which includes over 200,000 women.”

A former lawyer at Cravath, Swaine & Moore, Ms. Sweet was recruited to become Accenture’s general counsel in 2010. After five years in that role, she became chief executive for North America, Accenture’s largest market, with annual revenues of $17.8 billion.

Accenture’s work increasingly focuses on helping large corporations adopt new technologies such as artificial intelligence and cloud computing. The firm works with most of the biggest companies in the United States, and Ms. Sweet’s clients include Marriott, Halliburton and the Golden State Warriors.

“Julie is the right person to lead Accenture into the future, given her strong command of our business and proven ability to drive results in our largest market,” Mr. Rowland said in a statement.

In an effort to expand its offerings and bolster its growing marketing division, Accenture bought the advertising agency Droga5 this year.

Though Accenture has grown rapidly in recent years, the consulting business remains unpredictable. The company has forecast strong full-year earnings, but last month, Accenture reported a 9 percent drop in quarterly bookings.

Ms. Sweet said that was the nature of the consulting business. “Bookings are lumpy quarter to quarter,” she said, noting that Accenture reaffirmed its guidance on Thursday.

Ms. Sweet, who grew up in Southern California, decided she wanted to be a lawyer in eighth grade. She attended Columbia Law School, then started working at Cravath, one of Wall Street’s most prestigious law firms.

She was only the ninth woman to be named partner at Cravath and developed a strong roster of corporate clients. But when a recruiter called her about the Accenture job, she decided to go for it, in part because her career had become somewhat predictable.

“I could see my future,” she said in an interview with The New York Times this year.

In addition to her duties running the business at Accenture, Ms. Sweet has emerged as a leading voice on diversity and inclusion in the workplace. She is pragmatic in her approach to developing more female leaders in the corporate world, and pushes for developing mentorship programs, setting goals and measuring progress to systematically expand the number of women and minorities in senior leadership roles.

“I have an unwavering commitment to inclusion and diversity,” she said this week. “We already have a very robust global program around inclusion and diversity. Wherever it’s legally available, we have benefits available for our L.G.B.T.Q. community.”

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McDonald’s Thinks Developing a Chicken Sandwich Will Help Them Compete with Chick-fil-A, but It’s Off by Miles

Westlake Legal Group ChickFilAMBStadium McDonald’s Thinks Developing a Chicken Sandwich Will Help Them Compete with Chick-fil-A, but It’s Off by Miles mcdonalds Front Page Stories Featured Story fast food Culture Corporations chicken sandwich Chick-Fil-A Business & Economy Business Allow Media Exception

The Chick-fil-A at Mercedes Benz Stadium in Atlanta, GA. Screen grab via CFA.

The number one fast food chain on the planet is seeing a major threat on the horizon, and it smells like chicken sandwiches and waffle fries.

Chick-fil-A is fast becoming America’s most well known and most loved fast food chain. It’s on track to become the third most successful store in its class, surpassing other national brands like Wendy’s and Sonic and falling behind only Starbucks and the most famous chain on the planet.

McDonald’s has noticed Chick-fil-A’s rise, and it wants to make sure that the Christian chain can never step on its toes. With that in mind, McDonald’s has decided that it’s going to begin creating a sandwich that could possibly compete with America’s current chicken sandwich champion.

“A Chicken Sandwich at McDonald’s should be our top priority,” the National Owners Association board said in an email addressed to fellow operators on Tuesday according to MSN.

“Chick Fil A’s results demonstrate the power of chicken,” the board added.

In any other kind of business environment, McDonald’s would be making the right move. The problem for McDonald’s is that while Chick-fil-A’s food is nigh unbeatable in the fast food market, the chain is so much more than chicken, shakes, and fries.

Chick-fil-A is backed by a Christian philosophy that drives their business. It’s corporate mission is “to glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come into contact with Chick-fil-A,” as stated by Chick-fil-A’s about its corporate purpose. This Christian drive for being a positive influence makes them focus on hospitality and good service.

Chick-fil-A’s vice president David Farmer described the company’s approach to the customer’s experience as “[NASCAR] pit crew efficiency, but where you feel like you just got hugged in the process.”

And they do this very well. The chicken sandwich chain is so good at getting customers in and out with all the friendliness and warmth of a church door greater on Sunday that it’s become an internet meme. As it happens, I had a semi-jocular conversation with my RedState colleague Bonchie about it today, recalling the fact that I actually had to leave a Chick-fil-A drive-thru line solely out of fear that I’d be hit by cars due to the fact that the drive-thru line had spilled into the road and extended into the intersection before it.

This isn’t a rare occurrence, either, as this is a phenomenon that happens all around the country. People are willing to queue up in these lines because they know they’re not going to be waiting long thanks to the swiftness of Chick-fil-A’s employees.

Air traffic controllers don’t operate this efficiently.

I’ve been to many a McDonald’s in my day. Going in there is usually a hit or miss experience. I might get a friendly employee who takes my order and sends me on my way after only a few moments. I might also get a bored employee who clearly doesn’t want to be there and shows it in their attitude toward me. I’m one more obstacle in their quest to sit around and do nothing while they run down the clock.

Hopefully your order is complete, and after all that, you still have to eat McDonald’s. I haven’t been in one in years except to use it as an impromptu stop for a restroom on road trips.

McDonald’s thinks this is about a chicken sandwich. Yeah, the sandwich helps, but Chick-fil-A feels like a business with weight and substance to it. Meanwhile, McDonald’s feels like every other sterilized corporation that is more concerned with money than good service. They served food that was unfit for humans until Jamie Oliver uncovered what kind of meat they were serving to humans, and then quietly stopped doing it.

Meanwhile, Chick-fil-A has walked through fire and came out unburnt like some kind of Christian Khaleesi. After LGBT activists attempted to punish Chick-fil-A for its leaders daring to say it believed in traditional marriage — like any Christian would — Chick-fil-A walked away more popular and wealthy than ever. Even today, no matter how hard they try, left-leaning activists can’t seem to stop the juggernaut.

This endeared Chick-fil-A to the masses, not only because it stood tall against the bullies, but because it came out on top afterward.

It’s a proven corporation with classic American values, Christian principles, solid food, and customer service that many corporations only dream of.

McDonald’s doesn’t have a chicken sandwich problem, it has a “it’s nothing like Chick-fil-A” problem.

The post McDonald’s Thinks Developing a Chicken Sandwich Will Help Them Compete with Chick-fil-A, but It’s Off by Miles appeared first on RedState.

Westlake Legal Group ChickFilAMBStadium-300x171 McDonald’s Thinks Developing a Chicken Sandwich Will Help Them Compete with Chick-fil-A, but It’s Off by Miles mcdonalds Front Page Stories Featured Story fast food Culture Corporations chicken sandwich Chick-Fil-A Business & Economy Business Allow Media Exception   Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Proof YouTube Is Censoring Viral Independent News Videos In Favor of Lukewarm Cable News Network Videos

Westlake Legal Group youtube-logo-620x317 Proof YouTube Is Censoring Viral Independent News Videos In Favor of Lukewarm Cable News Network Videos youtube tim pool Politics News Internet Front Page Stories Featured Story David Pakman Corporations Censorship Allow Media Exception

FILE – This March 20, 2018 file photo shows the YouTube app on an iPad in Baltimore. YouTube is updating its hate speech policies to prohibit videos with white supremacist and neo-Nazi content. (AP Photo/Patrick Semansky, File)

Every day, YouTube pushes a list of news videos into my feed that they term “Top News.”

As you can see from the screenshot I took, they are nothing but mainstream and cable channels from different countries. The subjects include the announcement of Ross Perot’s death, a dancing cockatoo, and a car that caught on fire during a gender reveal. Westlake Legal Group tweeten-1562710364207 Proof YouTube Is Censoring Viral Independent News Videos In Favor of Lukewarm Cable News Network Videos youtube tim pool Politics News Internet Front Page Stories Featured Story David Pakman Corporations Censorship Allow Media Exception

Now let’s take a look at some independent news personalities and their videos.

Tim Pool’s latest videos far and away outclass any of these videos by miles, and some of this stuff is hard hitting news. Pool’s coverage of the border crisis and politicians involved with it has been majorly watched videos.

Westlake Legal Group Capture1 Proof YouTube Is Censoring Viral Independent News Videos In Favor of Lukewarm Cable News Network Videos youtube tim pool Politics News Internet Front Page Stories Featured Story David Pakman Corporations Censorship Allow Media Exception

Now, you may say that the videos from the “Top News” picks are only hours old, and fair enough. However, going over the video content of channels like CBS News, the majority struggle to crack 10,000 views. Those that do go beyond still very rarely ever top Pool’s selection of news videos.

Westlake Legal Group Capture3 Proof YouTube Is Censoring Viral Independent News Videos In Favor of Lukewarm Cable News Network Videos youtube tim pool Politics News Internet Front Page Stories Featured Story David Pakman Corporations Censorship Allow Media Exception

Compare that to progressive independent news source David Pakman whose recent offering outclasses CBS News as well.

Westlake Legal Group Capture-4 Proof YouTube Is Censoring Viral Independent News Videos In Favor of Lukewarm Cable News Network Videos youtube tim pool Politics News Internet Front Page Stories Featured Story David Pakman Corporations Censorship Allow Media Exception

The Quartering on YouTube, which primarily covers cultural news, also consistently outperforms the major news networks.

Westlake Legal Group Capture4 Proof YouTube Is Censoring Viral Independent News Videos In Favor of Lukewarm Cable News Network Videos youtube tim pool Politics News Internet Front Page Stories Featured Story David Pakman Corporations Censorship Allow Media Exception

Despite these channels consistently discussing news, it’s not considered good enough to be “Top News” according to YouTube. A dancing cockatoo, however, is.

Pakman posted a video discussing this push of YouTube’s for more mainstream news to take center stage, where in he discusses just how bad it’s become. In the video he points to a graph that shows the recommendations from YouTube toward independent news, and you can see for yourself the recommendations generated from the YouTube algorithm push mainstream news channels far more than independent news channels.

Pakman notes that he spent the weekend researching this and attempted to see who was gaining the recommendations that would have otherwise gone to these independent channels. Pakman shows us a graph generated by monitoring YouTube’s algorithm that shows the recommendations “dive off a cliff” at May 1st, where as CNN, Fox News, and other corporate news channels skyrocketed.

Pakman wanted to stress that this wasn’t just affecting conservative news channels, but news channels across the ideological spectrum. In other words, if you’re not a corporate entity, YouTube probably won’t recommend you.

Pool also posted a graph that shows what Pakman is talking about.

YouTube is likely abandoning creators and personalities that base themselves on their platform due to the fact that it’s become too “dangerous” for it to do otherwise.

Enjoy dancing parrots as your “Top News” in your sterile YouTube experience.

 

The post Proof YouTube Is Censoring Viral Independent News Videos In Favor of Lukewarm Cable News Network Videos appeared first on RedState.

Westlake Legal Group youtube-logo-300x153 Proof YouTube Is Censoring Viral Independent News Videos In Favor of Lukewarm Cable News Network Videos youtube tim pool Politics News Internet Front Page Stories Featured Story David Pakman Corporations Censorship Allow Media Exception   Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Trade War Has Damaged U.S. Chip Industry in Ways a Deal May Never Fix

SAN FRANCISCO — Alex Lidow has sold semiconductors in China for decades, starting at a company, called International Rectifier, that his father and grandfather founded in the Los Angeles area in 1947.

Now Mr. Lidow runs Efficient Power Conversion, which makes chips that manage electrical power in cars and other products. Efficient Power has a strong foothold in China, but has lately run into resistance from customers there that he traces to moves in Washington.

Mr. Lidow is among the semiconductor executives in the United States who have become concerned that the trade war with China — particularly the Trump administration’s ban on selling chips to some prominent Chinese customers — won’t just squeeze current revenue. He fears that recent events have convinced Chinese companies that American component makers can no longer be seen as dependable partners and are permanently shifting away from them.

“In my 40 years in this business, I’ve had friends in China that viewed me as a trusted supplier,” Mr. Lidow said. “They can’t now.”

His experience is part of the fallout affecting the American chip industry, one of the tech sectors hardest hit by the tit-for-tat between the United States and China over trade and national security.

In May, President Trump ordered American companies on national-security grounds to stop selling components to companies like Huawei, China’s big maker of mobile phones and networking equipment. And the administration placed five other Chinese entities on the same blacklist this month, including the computer maker Sugon and three subsidiaries. China has responded by saying it would put together its own “unreliable entities list,” including many American tech companies.

Even if a new trade deal eases tensions — Mr. Trump is set to meet with President Xi Jinping of China in Osaka, Japan, on Saturday — American chip executives and others said lasting damage had already been done. They said Chinese officials and companies would step up efforts to design and make more chips domestically. And Chinese customers seem likely to turn to vendors from countries like Japan, South Korea and Taiwan if no homegrown chips are available.

“The U.S. is in danger of becoming the vendor of last resort for China,” said Walden Rhines, chief executive emeritus of Mentor, a unit of Siemens that sells software for designing chips.

Already, big American chip makers have taken a financial hit from the China bans. Micron Technology, which sells two of the most widely used varieties of memory chips, disclosed Tuesday that the Huawei ban had lowered sales in its most recent quarter by nearly $200 million. Huawei is Micron’s largest customer, accounting for around 13 percent of its revenue.

ImageWestlake Legal Group 4aae7eca34d74ab390fa065f174c452c-articleLarge Trade War Has Damaged U.S. Chip Industry in Ways a Deal May Never Fix United States Politics and Government Politics and Government Micron Technology Inc International Trade and World Market Huawei Technologies Co Ltd Embargoes and Sanctions Efficient Power Conversion Corporations Computers and the Internet Computer Chips Company Reports Broadcom Corporation alex lidow

Chips and equipment at Efficient Power Conversion. “The U.S. is in danger of becoming the vendor of last resort for China,” one industry executive said.CreditRozette Rago for The New York Times

To ease the blow, Micron appears to have found a workaround. It said it had recently resumed some shipments to Huawei based on its interpretation of the Trump administration’s restrictions, noting that some goods produced by American companies overseas are not always considered American-made.

Broadcom, which makes chips for smartphones and networking equipment, also recently pointed to the Huawei sales ban as the biggest factor in a reduction of about $2 billion in its annual sales forecast. Broadcom had been on track to sell more than $1 billion of components to Huawei in its current fiscal year, analysts said.

Yet even beyond Huawei, customers have begun cutting their chip inventories and are putting off new orders because of general uncertainty over the ban, Hock Tan, Broadcom’s chief executive, said in a conference call with analysts on June 13.

“We’ll see a very sharp impact,” he said, calling the situation a compression of the electronics supply chain. “And it’s broad based.”

The disruption has been even more dramatic at smaller companies. One is NeoPhotonics, a maker of optical components for communications, which cut its financial guidance last month after the Huawei ban.

The Silicon Valley company drew nearly 46 percent of its revenue in 2018 from Huawei, said Alex Henderson, a senior analyst at Needham & Company. Though NeoPhotonics has a factory in Japan that may allow it to do some business with Huawei, Mr. Henderson estimated that its third-quarter revenue would drop 40 percent.

NeoPhotonics, which has presented a plan to analysts for cutting costs and is evaluating its options, declined to comment.

Another example is Semtech, which makes communications chips for smartphones and optical components used in networking. The company, based in Camarillo, Calif., revealed last month that business with Huawei in its latest quarter was 16 percent of its total revenue. But with the restrictions now in place, Mohan Maheswaran, Semtech’s chief executive, predicted that sales would be roughly $7 million lower in the current quarter.

Semtech declined to provide additional comment. Few executives were willing to discuss how they are coping with the restrictions, fearing retribution or criticism from American or Chinese officials.

“Everybody is laying low. No one wants to be on the radar,” said Jodi Shelton, a co-founder and the president of the Global Semiconductor Alliance, which represents American and foreign chip companies.

A board for testing chips at Efficient Power Conversion. Mr. Lidow said he expected his company’s revenue from China to decline about 20 percent this year.CreditRozette Rago for The New York Times

Besides cutting into sales, the recent tensions have interrupted routine patterns of doing business at some chip companies. Some have limited travel to China, halted some software updates and even reconsidered international conference calls.

“I think what has shocked a lot of players is that normal supply-chain communication has now been politicized,” said Christian Lanng, chief executive of Tradeshift, a San Francisco company that manages an electronic trading network for global customers.

Not all the news is dire. Many American chip makers are experiencing strong sales to customers other than Huawei. Over time, they also expect to pick up more sales from Huawei’s rivals as those companies increase market share. And some analysts predict a new trade pact with Beijing in coming months.

“I really think it’s an 85 percent probability,” said Pierre Ferragu, an analyst with New Street Research.

Nor do all semiconductor veterans see lasting harm from the China sanctions. T. J. Rodgers, who led Cypress Semiconductor for 34 years before leaving the company in 2016, said the impact would be temporary and was a reasonable price to pay if China could be compelled to trade more fairly.

“I don’t think it’s a big deal,” Mr. Rodgers said. “There is always somebody to whine.”

Mr. Lidow built Efficient Power, starting in 2007, around the idea of making chips with gallium nitride, a semiconductor widely used in LED lights, on silicon wafers to handle jobs like converting voltage in automotive radar, wireless battery charging and infotainment systems. The company, which uses factories in Taiwan, originally projected it would get 70 percent to 80 percent of its revenue from China, he said.

Mr. Lidow said it still might reach that goal eventually, but he expects revenue from China to decline about 20 percent this year because of the trade tensions.

One major sign of trouble, he said, is that some customers in China have backed away from plans to ask Efficient Power to customize its chips to meet their specifications. They are still buying some standard products, he said, but have decided to avoid technical relationships that would cause a longer-term dependence on his company.

Customers in China believed “up to now that the U.S. democratic process was a force that couldn’t be compromised by an individual,” Mr. Lidow said. But not now, he said.

“You can never regain that confidence,” he added.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Trade War Has Damaged U.S. Chip Industry in Ways a Deal May Never Fix

SAN FRANCISCO — Alex Lidow has sold semiconductors in China for decades, starting at a company, called International Rectifier, that his father and grandfather founded in the Los Angeles area in 1947.

Now Mr. Lidow runs Efficient Power Conversion, which makes chips that manage electrical power in cars and other products. Efficient Power has a strong foothold in China, but has lately run into resistance from customers there that he traces to moves in Washington.

Mr. Lidow is among the semiconductor executives in the United States who have become concerned that the trade war with China — particularly the Trump administration’s ban on selling chips to some prominent Chinese customers — won’t just squeeze current revenue. He fears that recent events have convinced Chinese companies that American component makers can no longer be seen as dependable partners and are permanently shifting away from them.

“In my 40 years in this business, I’ve had friends in China that viewed me as a trusted supplier,” Mr. Lidow said. “They can’t now.”

His experience is part of the fallout affecting the American chip industry, one of the tech sectors hardest hit by the tit-for-tat between the United States and China over trade and national security.

In May, President Trump ordered American companies on national-security grounds to stop selling components to companies like Huawei, China’s big maker of mobile phones and networking equipment. And the administration placed five other Chinese entities on the same blacklist this month, including the computer maker Sugon and three subsidiaries. China has responded by saying it would put together its own “unreliable entities list,” including many American tech companies.

Even if a new trade deal eases tensions — Mr. Trump is set to meet with President Xi Jinping of China in Osaka, Japan, on Saturday — American chip executives and others said lasting damage had already been done. They said Chinese officials and companies would step up efforts to design and make more chips domestically. And Chinese customers seem likely to turn to vendors from countries like Japan, South Korea and Taiwan if no homegrown chips are available.

“The U.S. is in danger of becoming the vendor of last resort for China,” said Walden Rhines, chief executive emeritus of Mentor, a unit of Siemens that sells software for designing chips.

Already, big American chip makers have taken a financial hit from the China bans. Micron Technology, which sells two of the most widely used varieties of memory chips, disclosed Tuesday that the Huawei ban had lowered sales in its most recent quarter by nearly $200 million. Huawei is Micron’s largest customer, accounting for around 13 percent of its revenue.

ImageWestlake Legal Group 4aae7eca34d74ab390fa065f174c452c-articleLarge Trade War Has Damaged U.S. Chip Industry in Ways a Deal May Never Fix United States Politics and Government Politics and Government Micron Technology Inc International Trade and World Market Huawei Technologies Co Ltd Embargoes and Sanctions Efficient Power Conversion Corporations Computers and the Internet Computer Chips Company Reports Broadcom Corporation alex lidow

Chips and equipment at Efficient Power Conversion. “The U.S. is in danger of becoming the vendor of last resort for China,” one industry executive said.CreditRozette Rago for The New York Times

To ease the blow, Micron appears to have found a workaround. It said it had recently resumed some shipments to Huawei based on its interpretation of the Trump administration’s restrictions, noting that some goods produced by American companies overseas are not always considered American-made.

Broadcom, which makes chips for smartphones and networking equipment, also recently pointed to the Huawei sales ban as the biggest factor in a reduction of about $2 billion in its annual sales forecast. Broadcom had been on track to sell more than $1 billion of components to Huawei in its current fiscal year, analysts said.

Yet even beyond Huawei, customers have begun cutting their chip inventories and are putting off new orders because of general uncertainty over the ban, Hock Tan, Broadcom’s chief executive, said in a conference call with analysts on June 13.

“We’ll see a very sharp impact,” he said, calling the situation a compression of the electronics supply chain. “And it’s broad based.”

The disruption has been even more dramatic at smaller companies. One is NeoPhotonics, a maker of optical components for communications, which cut its financial guidance last month after the Huawei ban.

The Silicon Valley company drew nearly 46 percent of its revenue in 2018 from Huawei, said Alex Henderson, a senior analyst at Needham & Company. Though NeoPhotonics has a factory in Japan that may allow it to do some business with Huawei, Mr. Henderson estimated that its third-quarter revenue would drop 40 percent.

NeoPhotonics, which has presented a plan to analysts for cutting costs and is evaluating its options, declined to comment.

Another example is Semtech, which makes communications chips for smartphones and optical components used in networking. The company, based in Camarillo, Calif., revealed last month that business with Huawei in its latest quarter was 16 percent of its total revenue. But with the restrictions now in place, Mohan Maheswaran, Semtech’s chief executive, predicted that sales would be roughly $7 million lower in the current quarter.

Semtech declined to provide additional comment. Few executives were willing to discuss how they are coping with the restrictions, fearing retribution or criticism from American or Chinese officials.

“Everybody is laying low. No one wants to be on the radar,” said Jodi Shelton, a co-founder and the president of the Global Semiconductor Alliance, which represents American and foreign chip companies.

A board for testing chips at Efficient Power Conversion. Mr. Lidow said he expected his company’s revenue from China to decline about 20 percent this year.CreditRozette Rago for The New York Times

Besides cutting into sales, the recent tensions have interrupted routine patterns of doing business at some chip companies. Some have limited travel to China, halted some software updates and even reconsidered international conference calls.

“I think what has shocked a lot of players is that normal supply-chain communication has now been politicized,” said Christian Lanng, chief executive of Tradeshift, a San Francisco company that manages an electronic trading network for global customers.

Not all the news is dire. Many American chip makers are experiencing strong sales to customers other than Huawei. Over time, they also expect to pick up more sales from Huawei’s rivals as those companies increase market share. And some analysts predict a new trade pact with Beijing in coming months.

“I really think it’s an 85 percent probability,” said Pierre Ferragu, an analyst with New Street Research.

Nor do all semiconductor veterans see lasting harm from the China sanctions. T. J. Rodgers, who led Cypress Semiconductor for 34 years before leaving the company in 2016, said the impact would be temporary and was a reasonable price to pay if China could be compelled to trade more fairly.

“I don’t think it’s a big deal,” Mr. Rodgers said. “There is always somebody to whine.”

Mr. Lidow built Efficient Power, starting in 2007, around the idea of making chips with gallium nitride, a semiconductor widely used in LED lights, on silicon wafers to handle jobs like converting voltage in automotive radar, wireless battery charging and infotainment systems. The company, which uses factories in Taiwan, originally projected it would get 70 percent to 80 percent of its revenue from China, he said.

Mr. Lidow said it still might reach that goal eventually, but he expects revenue from China to decline about 20 percent this year because of the trade tensions.

One major sign of trouble, he said, is that some customers in China have backed away from plans to ask Efficient Power to customize its chips to meet their specifications. They are still buying some standard products, he said, but have decided to avoid technical relationships that would cause a longer-term dependence on his company.

Customers in China believed “up to now that the U.S. democratic process was a force that couldn’t be compromised by an individual,” Mr. Lidow said. But not now, he said.

“You can never regain that confidence,” he added.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Trade War Has Damaged U.S. Chip Industry in Ways a Deal May Never Fix

SAN FRANCISCO — Alex Lidow has sold semiconductors in China for decades, starting at a company, called International Rectifier, that his father and grandfather founded in the Los Angeles area in 1947.

Now Mr. Lidow runs Efficient Power Conversion, which makes chips that manage electrical power in cars and other products. Efficient Power has a strong foothold in China, but has lately run into resistance from customers there that he traces to moves in Washington.

Mr. Lidow is among the semiconductor executives in the United States who have become concerned that the trade war with China — particularly the Trump administration’s ban on selling chips to some prominent Chinese customers — won’t just squeeze current revenue. He fears that recent events have convinced Chinese companies that American component makers can no longer be seen as dependable partners and are permanently shifting away from them.

“In my 40 years in this business, I’ve had friends in China that viewed me as a trusted supplier,” Mr. Lidow said. “They can’t now.”

His experience is part of the fallout affecting the American chip industry, one of the tech sectors hardest hit by the tit-for-tat between the United States and China over trade and national security.

In May, President Trump ordered American companies on national-security grounds to stop selling components to companies like Huawei, China’s big maker of mobile phones and networking equipment. And the administration placed five other Chinese entities on the same blacklist this month, including the computer maker Sugon and three subsidiaries. China has responded by saying it would put together its own “unreliable entities list,” including many American tech companies.

Even if a new trade deal eases tensions — Mr. Trump is set to meet with President Xi Jinping of China in Osaka, Japan, on Saturday — American chip executives and others said lasting damage had already been done. They said Chinese officials and companies would step up efforts to design and make more chips domestically. And Chinese customers seem likely to turn to vendors from countries like Japan, South Korea and Taiwan if no homegrown chips are available.

“The U.S. is in danger of becoming the vendor of last resort for China,” said Walden Rhines, chief executive emeritus of Mentor, a unit of Siemens that sells software for designing chips.

Already, big American chip makers have taken a financial hit from the China bans. Micron Technology, which sells two of the most widely used varieties of memory chips, disclosed Tuesday that the Huawei ban had lowered sales in its most recent quarter by nearly $200 million. Huawei is Micron’s largest customer, accounting for around 13 percent of its revenue.

ImageWestlake Legal Group 4aae7eca34d74ab390fa065f174c452c-articleLarge Trade War Has Damaged U.S. Chip Industry in Ways a Deal May Never Fix United States Politics and Government Politics and Government Micron Technology Inc International Trade and World Market Huawei Technologies Co Ltd Embargoes and Sanctions Efficient Power Conversion Corporations Computers and the Internet Computer Chips Company Reports Broadcom Corporation alex lidow

Chips and equipment at Efficient Power Conversion. “The U.S. is in danger of becoming the vendor of last resort for China,” one industry executive said.CreditRozette Rago for The New York Times

To ease the blow, Micron appears to have found a workaround. It said it had recently resumed some shipments to Huawei based on its interpretation of the Trump administration’s restrictions, noting that some goods produced by American companies overseas are not always considered American-made.

Broadcom, which makes chips for smartphones and networking equipment, also recently pointed to the Huawei sales ban as the biggest factor in a reduction of about $2 billion in its annual sales forecast. Broadcom had been on track to sell more than $1 billion of components to Huawei in its current fiscal year, analysts said.

Yet even beyond Huawei, customers have begun cutting their chip inventories and are putting off new orders because of general uncertainty over the ban, Hock Tan, Broadcom’s chief executive, said in a conference call with analysts on June 13.

“We’ll see a very sharp impact,” he said, calling the situation a compression of the electronics supply chain. “And it’s broad based.”

The disruption has been even more dramatic at smaller companies. One is NeoPhotonics, a maker of optical components for communications, which cut its financial guidance last month after the Huawei ban.

The Silicon Valley company drew nearly 46 percent of its revenue in 2018 from Huawei, said Alex Henderson, a senior analyst at Needham & Company. Though NeoPhotonics has a factory in Japan that may allow it to do some business with Huawei, Mr. Henderson estimated that its third-quarter revenue would drop 40 percent.

NeoPhotonics, which has presented a plan to analysts for cutting costs and is evaluating its options, declined to comment.

Another example is Semtech, which makes communications chips for smartphones and optical components used in networking. The company, based in Camarillo, Calif., revealed last month that business with Huawei in its latest quarter was 16 percent of its total revenue. But with the restrictions now in place, Mohan Maheswaran, Semtech’s chief executive, predicted that sales would be roughly $7 million lower in the current quarter.

Semtech declined to provide additional comment. Few executives were willing to discuss how they are coping with the restrictions, fearing retribution or criticism from American or Chinese officials.

“Everybody is laying low. No one wants to be on the radar,” said Jodi Shelton, a co-founder and the president of the Global Semiconductor Alliance, which represents American and foreign chip companies.

A board for testing chips at Efficient Power Conversion. Mr. Lidow said he expected his company’s revenue from China to decline about 20 percent this year.CreditRozette Rago for The New York Times

Besides cutting into sales, the recent tensions have interrupted routine patterns of doing business at some chip companies. Some have limited travel to China, halted some software updates and even reconsidered international conference calls.

“I think what has shocked a lot of players is that normal supply-chain communication has now been politicized,” said Christian Lanng, chief executive of Tradeshift, a San Francisco company that manages an electronic trading network for global customers.

Not all the news is dire. Many American chip makers are experiencing strong sales to customers other than Huawei. Over time, they also expect to pick up more sales from Huawei’s rivals as those companies increase market share. And some analysts predict a new trade pact with Beijing in coming months.

“I really think it’s an 85 percent probability,” said Pierre Ferragu, an analyst with New Street Research.

Nor do all semiconductor veterans see lasting harm from the China sanctions. T. J. Rodgers, who led Cypress Semiconductor for 34 years before leaving the company in 2016, said the impact would be temporary and was a reasonable price to pay if China could be compelled to trade more fairly.

“I don’t think it’s a big deal,” Mr. Rodgers said. “There is always somebody to whine.”

Mr. Lidow built Efficient Power, starting in 2007, around the idea of making chips with gallium nitride, a semiconductor widely used in LED lights, on silicon wafers to handle jobs like converting voltage in automotive radar, wireless battery charging and infotainment systems. The company, which uses factories in Taiwan, originally projected it would get 70 percent to 80 percent of its revenue from China, he said.

Mr. Lidow said it still might reach that goal eventually, but he expects revenue from China to decline about 20 percent this year because of the trade tensions.

One major sign of trouble, he said, is that some customers in China have backed away from plans to ask Efficient Power to customize its chips to meet their specifications. They are still buying some standard products, he said, but have decided to avoid technical relationships that would cause a longer-term dependence on his company.

Customers in China believed “up to now that the U.S. democratic process was a force that couldn’t be compromised by an individual,” Mr. Lidow said. But not now, he said.

“You can never regain that confidence,” he added.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

U.S. Tech Companies Sidestep a Trump Ban, to Keep Selling to Huawei

SHANGHAI — A number of the United States’ biggest chip makers have sold millions of dollars of products to Huawei despite a Trump administration ban on the sale of American technology to the Chinese telecommunications giant, according to four people with knowledge of the sales.

Since the Commerce Department enacted the ban in May, American companies including Intel and Micron have found ways to sell technology to Huawei, said the people, who spoke on the condition they not be named because they were not authorized to disclose the sales.

The components began to flow to Huawei about three weeks ago, the people said. Goods produced by American companies overseas are not always considered American-made, and the suppliers are taking advantage of this. The sales will help Huawei continue to sell products such as smartphones and servers.

The deals underscore how difficult it is for the Trump administration to clamp down on companies that it considers a national security threat, like Huawei. They also hint at the possible unintended consequences from altering the web of trade relationships that ties together the world’s electronics industry and global commerce.

ImageWestlake Legal Group merlin_149714850_de19f104-878f-40b3-ba6d-28b0db38a918-articleLarge U.S. Tech Companies Sidestep a Trump Ban, to Keep Selling to Huawei United States Politics and Government Trump, Donald J Micron International Trade and World Market Intel Corporation Huawei Technologies Co Ltd Fedex Corporation Corporations Computer Chips Commerce Department China

American companies like Intel may sell technology supporting current Huawei products until mid-August.CreditAly Song/Reuters

The Commerce Department’s move to block sales to Huawei, by putting it on a so-called entity list, set off confusion within the Chinese company and its many American suppliers, the people said. Many executives lacked deep experience with American trade controls, leading to initial suspensions in shipments to Huawei until lawyers could puzzle out which products could be sent. Decisions about what can and cannot be shipped were also often run by the Commerce Department.

American companies may sell technology supporting current Huawei products until mid-August. But a ban on components for future Huawei products is already in place. It’s not clear what percentage of the current sales were for future products. The sales have most likely already totaled hundreds of millions of dollars, the people estimated.

While the Trump administration has been aware of the sales, officials are split about how to respond, the people said. Some officials feel that the sales violate the spirit of the law and undermine government efforts to pressure Huawei, while others are more supportive because it lightens the blow of the ban for American corporations. Huawei has said it buys around $11 billion in technology from United States companies each year.

Intel and Micron declined to comment.

“As we have discussed with the U.S. government, it is now clear some items may be supplied to Huawei consistent with the entity list and applicable regulations,” John Neuffer, the president of the Semiconductor Industry Association, wrote in a statement on Friday.

“Each company is impacted differently based on their specific products and supply chains, and each company must evaluate how best to conduct its business and remain in compliance.”

The Idaho-based Micron competes with South Korean companies like Samsung to supply memory chips that go into Huawei’s smartphones.CreditKai Pfaffenbach/Reuters

In an earnings call Tuesday afternoon, Micron’s chief executive, Sanjay Mehrotra, said the company stopped shipments to Huawei after the Commerce Department’s action last month. But it resumed sales about two weeks ago after Micron reviewed the entity list rules and “determined that we could lawfully resume” shipping a subset of products, Mr. Mehrotra said. “However, there is considerable ongoing uncertainty around the Huawei situation,” he added.

A spokesman for the Commerce Department, in response to questions about the sales to Huawei, referred to a section of the official notice about the company being added to the entity list, including that the purpose was to “prevent activities contrary to the national security or foreign policy interests of the United States.”

The fate of Huawei, a crown jewel of Chinese innovation and technological prowess, has become a symbol of the economic and security standoff between the United States and China. The Trump administration has warned that Chinese companies like Huawei, which makes telecom networking equipment, could intercept or secretly divert information to China. Huawei has denied those charges.

President Xi Jinping of China and President Trump are expected to have an “extended” talk this week during the Group of 20 meetings in Japan, a sign that the two countries are again seeking a compromise after trade discussions broke down in May. After the talks stalled, the Trump administration announced new restrictions on Chinese technology companies.

While the Trump administration has pointed to security and legal concerns to justify its actions, some analysts have worried that Huawei and other Chinese tech companies were becoming pawns in the trade negotiations. Along with Huawei, the administration blocked a Chinese supercomputer maker from buying American tech, and it is considering adding the surveillance technology company Hikvision to the list.

The SK Hynix plant in Icheon, South Korea. American companies are worried about losing market share to foreign rivals.CreditPool photo by Kim Min-hee

Kevin Wolf, a former Commerce Department official and partner at the law firm Akin Gump, has advised several American technology companies that supply Huawei. He said he told executives that Huawei’s addition to the list did not prevent American suppliers from continuing sales, as long as the goods and services weren’t made in the United States.

A chip, for example, can still be supplied to Huawei if it is manufactured outside the United States and doesn’t contain technology that can pose national security risks. But there are limits on sales from American companies. If the chip maker provides services from the United States for troubleshooting or instruction on how to use the product, for example, the company would not be able to sell to Huawei even if the physical chip were made overseas, Mr. Wolf said.

“This is not a loophole or an interpretation because there is no ambiguity,” he said. “It’s just esoteric.”

In some cases, American companies aren’t the only source of important technology, but they want to avoid losing Huawei’s valuable business to a foreign rival. For instance, the Idaho-based Micron competes with South Korean companies like Samsung and SK Hynix to supply memory chips that go into Huawei’s smartphones. If Micron is unable to sell to Huawei, orders could easily be shifted to those rivals.

Beijing has also pressured American companies. This month, the Chinese government said it would create an “unreliable entities list” to punish companies and individuals it perceived as damaging Chinese interests. The following week, China’s chief economic planning agency summoned foreign executives, including representatives from Microsoft, Dell and Apple. It warned them that cutting off sales to Chinese companies could lead to punishment and hinted that the companies should lobby the United States government to stop the bans. The stakes are high for some of the American companies, like Apple, which relies on China for many sales and for much of its production.

A FedEx warehouse in Kernersville, N.C. “FedEx is a transportation company, not a law enforcement agency,” the company said in a complaint against the government.CreditTravis Dove for The New York Times

Mr. Wolf said several companies had scrambled to figure out how to continue sales to Huawei, with some businesses considering a total shift of manufacturing and services of some products overseas. The escalating trade battle between the United States and China is “causing companies to fundamentally rethink their supply chains,” he added.

That could mean that American companies shift their know-how, on top of production, outside the United States, where it would be less easy for the government to control, said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics.

“American companies can move some things out of China if that’s problematic for their supply chain, but they can also move the tech development out of the U.S. if that becomes problematic,” he said. “And China remains a large market.”

“Some of the big winners might be other countries,” Mr. Chorzempa said.

Some American companies have complained that complying with the tight restrictions is difficult or impossible, and will take a toll on their business.

On Monday, FedEx filed a lawsuit against the federal government, claiming that the Commerce Department’s rules placed an “impossible burden” on a company like FedEx to know the origin and technological makeup of all the shipments it handles.

FedEx’s complaint didn’t name Huawei specifically. But it said that the agency’s rules that have prohibited exporting American technology to Chinese companies placed “an unreasonable burden on FedEx to police the millions of shipments that transit our network every day.”

“FedEx is a transportation company, not a law enforcement agency,” the company said.

A Commerce Department spokesman said it had not yet reviewed FedEx’s complaint but would defend the agency’s role in protecting national security.

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