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An aerial view of Tesla Shanghai Gigafactory on March 29, 2021 in Shanghai, China.

Xiaolu Chu | Getty Images News | Getty Images

From handshakes with Chinese officials to visits to China’s top ministries, Elon Musk’s visit to Beijing is putting the spotlight on China’s place in the global electric vehicle market.

The Tesla CEO’s visit to China is a “very important one” for him, said Anthony Sassine, senior investment strategist at investment manager Kraneshares.

China accounts for 50% of Tesla’s vehicle sales and 20% of its production capacity, and this visit would “set the story straight, to make sure he was on the same page as the [Chinese Communist Party],” Sassine told CNBC’s “Street Signs Asia.”

During Tesla’s earnings call in April, Musk identified U.S.-China tensions as a risk to the company’s projections for 2023.

Politics and macroeconomics

Sassine said the visit could also be seen as a “political statement” to China, where business leaders like Musk and JPMorgan chief Jamie Dimon are “telling politicians on both sides of the Pacific that business needs political stability.”

Elon Musk's visit to China shows how important the market is for Tesla, strategist says

Politics is not the only reason. Sassine pointed out that the macro environment for EVs in China has been “tough,” and highlighted China’s ending of subsidies on new EV purchases, as well as rising interest rates in the U.S.

In the face of such conditions, companies have slashed prices to boost sales, and this will hurt their profits, he said.

Price wars

Tesla slashed prices for its EV sales in China last October and January, but subsequently raised prices again in May. Still, the price of Tesla’s cars remains lower than at the start of 2023 due to several rounds of price cuts across the world.

The fact that Tesla was forced to slash prices in the first place shows how important the China market is to the U.S. electric carmaker, said Bill Russo, founder and CEO of strategy and investment advisory firm Automobility.

“It signals how important the China market is to defend and how important it is to your global system, you need the scale of China working for you,” he said on CNBC’s “Squawk Box Asia.”

Russo said Tesla needs the economies of scale that China provides to maintain its cost advantage globally, “but in order to sustain that, you need to make sure that you maintain your relevance here.”

China's BYD has a 'weapon' that Tesla doesn't have, says investment advisory firm

It won’t be easy for Tesla, however. He noted that China the most competitive market for EVs, with Tesla competing with multiple local companies for supremacy. “Tesla is, unlike other places in the world, not the only top dog in this market,” he added.

When asked if Tesla’s strategy of cutting prices is appropriate, Russo said Tesla is “fighting with an older portfolio” — Model 3 was launched three years ago and Model Y two years ago.

Read more about electric vehicles from CNBC Pro

As such, it has had to use price to compete against Chinese EV companies that are introducing new models and to counter the aging of its product portfolio.

Russo pointed out that Chinese EV maker BYD sells extended range hybrids. This is “a weapon that Tesla doesn’t have,” he said adding that BYD also outsells Tesla two to one in the pure battery electric business.

As such, Tesla has to rely on pricing to maintain its competitiveness, unlike other places around the world where it doesn’t face such stiff competition.

“The problem is Tesla everywhere else in the world represents ‘premium EV,’ but in order to fight the battle here in China, you’ve got to wage a price war,” he said.

“Generally price wars are won by companies who can outprice you and right now Tesla is not the lowest price competitor in the market.”

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Apple exec Eddy Cue set to testify in Google trial about $19 billion search deal




Apple exec Eddy Cue set to testify in Google trial about  billion search deal

Eddy Cue, senior vice president of services at Apple Inc.

David Paul Morris | Bloomberg | Getty Images

Apple senior vice president of services Eddy Cue is expected to testify all day Tuesday in federal court where the U.S. Department of Justice is accusing Google of using licensing agreements to monopolize online search.

Under scrutiny is a deal in which Google pays Apple billions of dollars to be the default search engine on the iPhone’s browser and other settings. Google could pay Apple as much as $19 billion this year, according to an estimate from Bernstein.

Cue, who negotiated the deal with Google from Apple’s side, is expected to testify that Apple picked the Google search engine as an iPhone default because it was the best product. He’s also expected to say that Apple doesn’t see a reason to create a new Apple search engine because Google already exists, according to a person familiar with Cue’s anticipated testimony.

Cue will also say that Apple has revenue-sharing agreements with competing search engines Yahoo, Microsoft Bing, DuckDuckGo and Ecosia, and that Apple users can change their default search engines, according to a person familiar with Cue’s anticipated testimony.

The testimony could shed some light on one of the highest-profile deals in the technology industry, which has been shrouded in secrecy for the past decade. The money Google pays to Apple for default placement is one of its biggest costs, and the advertising revenue Apple collects from Google is a major part of Apple’s profits.

Apple reports its payments from Google as advertising revenue, reported in its services business, which totaled $78.1 billion in sales in Apple’s fiscal 2022.

“I think their search engine is the best,” Apple CEO Tim Cook said when asked about using Google as the iPhone’s default search engine in 2018.

Google on trial

Much of Cue’s testimony and related financial documents could remain under seal, which means they won’t be released to the public.

Last week, Apple machine learning executive John Giannandrea testified. Before Apple, he worked at Google on its search engine.

The D.C. District Court judge, Amit Mehta, has said he wants to be conservative about how many documents are released to the public, and last week’s Giannandrea testimony was entirely sealed except for 15 minutes, where Giannandrea revealed a new search engine setting on the most recent iPhone operating system.

The DOJ previously had a page on its website where it would post documents and exhibits from the trial, and it was taken down last week on Google’s request.

The Google trial, expected to last 10 weeks, is the biggest technology monopoly trial since the DOJ took on Microsoft more than 20 years ago. The DOJ alleges Google has violated anti-monopoly law by striking exclusive agreements with mobile phone makers for its Android operating system and browser companies for default placement. The government alleges that the practice creates barriers to entry for competing search engines.

“This case is about the future of the internet and whether Google’s search engine will ever face meaningful competition,” the DOJ’s lawyer, Kenneth Dintzer, told the court in opening statements. He alleged that Google has more than 89% of the market for general search.

Google said before the trial kicked off earlier this month that it sees licensing agreements as a standard business practice that brings its products to consumers and creates a better experience for users. Google also argues that consumers can easily change default search engines on Android and Apple phones.

The DOJ is expected to present its case for about four weeks, then a coalition of attorneys general will present their case, followed by Google. Google CEO Sundar Pichai is also expected to testify, the DOJ said.

CNBC’s Steve Kovach contributed to this story.

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AI chip firm Kneron raises $49 million as it looks to rival Nvidia, with Foxconn among backers




AI chip firm Kneron raises  million as it looks to rival Nvidia, with Foxconn among backers

Albert Liu, founder and CEO of Kneron.

Harry Murphy | Sportsfile | Getty Images

Kneron, a U.S.-based semiconductor startup, said on Tuesday it raised a fresh round of funding as it looks to ramp up the commercialization of its artificial intelligence chips, which it hopes will rival Nvidia’s.

The company said it raised an additional $49 million, bringing its total round of funding to to $97 million.

Taiwanese giant Foxconn, the company that assembles Apple’s iPhones, and Alltek, a communications tech company, were among the investors in the round.

Kneron is looking to capitalize on massive investor interest in artificial intelligence and the chip technology that underpins it — underscored by Nvidia’s 180% rally this year and the initial public offering of semiconductor designer Arm in the U.S. last week.

Nvidia makes graphics processing units, or GPUs, which run in servers and data centers and can handle the massive computing power required to use huge amounts of data to train artificial intelligence systems. Many AI services today, such as ChatGPT, are run from the cloud.

In contrast, Kneron designs a chipset that goes into devices like consumer electronics and cars that allow AI on the “edge.” That means AI runs on a device rather than in the cloud. Advocates say this is better for security and speed as the AI application doesn’t need to come from the cloud.

Kneron calls its semiconductors neural processing units, or NPUs. Its latest product is called the KL730. This chip is designed for cars and the company says that it can be used to support autonomous driving.

Albert Liu, CEO of Kneron, told CNBC’s “Street Signs Europe” that GPUs are expensive to run which could help demand for its NPUs.

“So that will force people to switch into the more low cost (NPUs),” Liu said.

“With this tranche in funding, Kneron is specifically focused on expanding its efforts in enabling AI to make autonomous driving a reality,” Kneron said in a press release.

Kneron has no shortage of competitors from giants like Qualcomm and MediaTek — which are aiming for on-device AI with their chips — and startups developing AI semiconductors.

Foxconn’s semiconductor push

Manufacturing diversifcation

Kneron’s chips are manufactured by TSMC, the world’s largest contract chip manufacturer.

However, TSMC and semiconductors more broadly have been caught in the geopolitical battle between the U.S. and China. There are continued fears that China could invade Taiwan, where TSMC is headquartered, which could cut the world off from supplies of the company’s semiconductors.

To mitigate the risk, Liu said that from next year, Kneron will have a more distributed production footprint in the U.S. and Europe “to de-risk.”

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Meta’s Threads struggles to grow amid rivalry with Elon Musk’s X, ranking ahead of only Tumblr




Meta's Threads struggles to grow amid rivalry with Elon Musk's X, ranking ahead of only Tumblr

Thilina Kaluthotage | Nurphoto | Getty Images

Meta’s Threads real-time messaging app is struggling to attract new users like it did during its blockbuster July debut.

The Twitter clone now ranks near the bottom of the most popular social media platforms, ahead of only Tumblr, as measured by the number of U.S. users, according to Insider Intelligence’s first Threads forecast, published Tuesday.

Insider Intelligence said it expects Threads to have 23.7 million U.S. users in 2023, far behind Facebook, Instagram and TikTok, which have 177.9 million, 135.2 million and 102.3 million users, respectively. Its closest rival, X, will have 56.1 million U.S. users in 2023, the forecast said, which means that Threads will have less than half of the U.S. user base of the messaging app formerly known as Twitter.

For the U.S. market, the analyst firm said Threads will continue to “rank second-to-last among social networks” through 2025.

Meta did not respond to a request for comment.

The new forecast joins a growing list of third-party estimates from mobile analytics firms such as Sensor Tower and Similarweb that have recently documented declining usage of Threads.

When Threads debuted, it rapidly gained millions of users due in part to its easy sign-up process for existing Instagram users. The messaging app also benefited by being a mainstream alternative to X, which several analyst firms including Insider Intelligence have said is losing users amid the ownership of Tesla chief Elon Musk.

“Threads received an initial boost from Twitter’s missteps, but it can’t rely on X defectors to continue to grow,” Insider Intelligence principal analyst Jasmine Enberg said in a statement.

If Musk decides to charge all X users a monthly subscription fee, as he said during a recently livestreamed talk with Israeli Prime Minister Benjamin Netanyahu, Meta could have a “clearer avenue to monetize Threads,” Enberg said.

“Assuming Musk doesn’t backtrack, the move will likely alienate more X users and potentially increase advertiser interest in Threads,” Enberg added.

Still, Meta CEO Mark Zuckerberg has previously said that the company has no plans to monetize Threads until it’s bigger and more established.

The social networking giant has been releasing several new features for Threads intended to make it more compelling, such as a desktop version and a search tool. Indeed, both advertisers and creators have previously told CNBC that Threads needs certain features such as analytics tools to become a more robust platform that they will invest time and money into.

Enberg said Threads needs to establish an identity that’s “more than an extension of Instagram or an alternative to X” in order to become a major player in the social media market.

“TikTok was able to break through largely because it offered users a unique new social experience,” Enberg said, referring to the ByteDance-owned short-video app’s rise to prominence.

Watch: Are the Threads unraveling?

Are the Threads unraveling? Meta looks into 'hooks' to keep users on Twitter rival

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