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10 Nov 18. Statement by Secretary of Defense James N. Mattis on Refueling Saudi Coalition Aircraft. Statement by Secretary of Defense James N. Mattis. “We support the decision by the Kingdom of Saudi Arabia, after consultations with the U.S. Government, to use the Coalition’s own military capabilities to conduct inflight refueling in support of its operations in Yemen. We are all focused on supporting resolution of the conflict, led by UN Special Envoy, Martin Griffiths. The U.S. and the Coalition are planning to collaborate on building up legitimate Yemeni forces to defend the Yemeni people, secure their country’s borders, and contribute to counter Al Qaeda and ISIS efforts in Yemen and the region. The U.S. will also continue working with the Coalition and Yemen to minimize civilian casualties and expand urgent humanitarian efforts throughout the country. Recognizing continued bipartisan interest from Congress, the Administration is appreciative of the continued dialogue we have had with key members on this issue and look forward to working together to support the United Nations’ ongoing efforts on this new phase in Yemen.” (Source: US DoD)
09 Nov 18. British firms hitch onto China’s aerospace boom as Brexit looms. British electronics manufacturing company TT Electronics (TTG.L) is hoping its first attendance at China’s biggest air show with support from UK authorities will help it land a front-seat role in the production of the world’s next wide-body jet. The Woking-based company is in the vanguard of British companies scouting for business in China this week as part of a charm offensive sponsored by the British government, four months before Britain is due to exit the European Union. Its interest has been piqued by plans for a wide-body jet to be developed jointly by China and Russia, who unveiled the first life-sized model of their CR929 at Airshow China in a bid to break open the duopoly of Airbus and Boeing.
“If the next twin-aisle aircraft is going to be a Chinese aircraft, we either get involved or we forget about China’s market of twin-aisle for the next 10-15 years,” Ben Fox, business development manager at TT Electronics, told Reuters.
The maker of sensors for planes, trains and hybrid vehicles supplies parts for the Boeing 777 and Airbus A350. But few major new projects are on the horizon and competition is cut-throat in the $800bn aerospace parts industry. Britain’s Department for International Trade for the first time set up a UK presence at Zhuhai’s air show, leading a team of seven mostly small and medium-sized companies in the hopes of tapping into China’s rising manufacturing ambitions.
British Prime Minister Theresa May has said Britain wants a free trade agreement with China, as it tries to reinvent itself as a global trading nation after the 2016 Brexit referendum.
The air show coincided with a trade expo in Shanghai where Chinese President Xi Jinping promised to import more amid mounting frictions with the United States and others.
STERLING DROP
Zhuhai’s UK Pavilion “is a demonstration to our Chinese host that we are serious. We put in quite a considerable sum of money to support this and that’s government money,” said Andrew Massey, deputy director for China in the aerospace and aviation division of the Department for International Trade.
Many companies face uncertainty about post-Brexit trade relations with continental Europe, a major outlet for UK-made aerospace parts, and the status of regulation after Brexit.
“There is an element of Brexit forcing people to broaden their horizons which brings opportunity,” said Paul Adams, head of aerospace at consultancy Vendigital.
Britain has the world’s second largest aerospace industry after the United States and is anxious to tout skills and knowledge. Tangerine, a London-based consultancy that has worked with British Airways, helped design interiors for the CR929 display. Massey said British companies have also been helping the Chinese to fast-track the FAA/EASA certification process for its smaller C919 jet, which did not appear at this week’s show. But their trump card may be an 11 percent drop in the value of sterling against the dollar since the 2016 Brexit vote, which has added a hard-nosed dimension to Britain’s global sales drive. One small British aerospace supplier told Reuters that even though it already sold in 55 countries, the Brexit referendum served as a wake-up call to push for more global markets.
“We’ve done nine exhibitions this year. Brexit is something that will happen and business will get round it but from our point of view we’ve done our first exhibition in Japan and China this year and that’s been very successful, and we’re pushing for markets around the world.” (Source: Reuters)
09 Nov 18. Aerospace suppliers play down spying row in chase for China riches. Western suppliers have tightened security precautions at China’s largest air show after U.S. accusations of industrial espionage rather than miss the chance to vie for a slice of the country’s heavy aerospace spending.
The U.S. Department of Justice has brought three recent cases alleging Chinese attempts to gain access to aerospace and defence secrets. Engine technology – in which China remains dependent on Russia – is a particular target, U.S. filings said.
Beijing has called the charges “pure fiction and totally fabricated”.
“I have no paper. I write nothing down, certainly not figures,” said a senior executive with one of the dozens of companies at Airshow China in Zhuhai this week. “You have to be very careful, but it’s life and you get used to it. It’s not only China; it’s Russia, Turkey, many places.
“It’s important to be here. It’s an important show for meetings, for signings, for showing your presence.”
Measures deployed by foreign aerospace companies when doing business range from powerful cyber-security systems designed to shield commercial as well as classified defence secrets to tactics as straightforward as not bringing a computer.
“As you can imagine we have quite a strong security policy, so our capability of being secure is pretty high. So we don’t worry about this,” Alessandro Profumo, head of Italian contractor Leonardo, said on the sidelines of a Shanghai expo that coincided with the Zhuhai aerospace event.
In Zhuhai, Peter Anderton, technical director at British industrial engineering company Rhodes Interform, said: “We do have our own IP (intellectual property) on our products but we are fairly flexible with that. By the end of the day, we want to sell our machines.”
China’s Russian partner in several projects, including a new CR929 wide-body jetliner, played down the espionage row.
“Some people are speaking in terms of stealing, other people are saying copycat; I would say China is fast-learning,” Viktor Kladov, Russian conglomerate Rostec’s director for international cooperation and regional policy, told Reuters. “They’ve changed their ways a lot. There is a great respect towards intellectual property in China.”
China also sells its products internationally and has set up new laws and agencies as it tackles the same problems of protecting intellectual property, Kladov said. “So we don’t blame our Chinese partners on copying … They’re just learning, and they’re very good learners.” (Source: Reuters)
08 Nov 18. Saudi makes $1bn bid for partnership with South Africa defense group Denel. Saudi Arabia has made a $1bn bid for a broad partnership with South African state-owned defense group Denel that would include acquisition of a minority stake in a joint venture with Germany’s Rheinmetall (RHMG.DE), a source familiar with the offer said. Currently heavily dependent on imports, Saudi Arabia, the world’s third-largest defense spender, is seeking partnerships to develop its own domestic defense industry with the goal of localizing half of its military spending by 2030.
Saudi Arabian Military Industries (SAMI), the kingdom’s state defense company, told Reuters last month that it was in discussions with all major South African firms and aimed to conclude the first deals by the end of this year. According to the source, who asked not to be named due to the sensitivity of the talks, Saudi Arabia was targeting Denel’s 49 percent stake in Rheinmetall Denel Munition (RDM).
RDM is a South African-based joint venture formed in 2008 between Denel and Rheinmetall Waffe Munition GmbH, which holds the remaining 51 percent stake. It specializes in the development, design and manufacture of medium and large-caliber ammunition including artillery shells.
A Rheinmetall spokesman declined to comment. The German government is currently reviewing all arms sales to Saudi Arabia after the killing of journalist Jamal Khashoggi in the Saudi consulate in Istanbul.
Industry sources said RDM operates independently and is subject to South African law, which means exports from the unit are not subject to German government oversight. The sources said they did not expect that a change in the ownership of the venture would require a German government review.
Under the Saudi offer, SAMI would also finance research and development in other Denel divisions including Denel Dynamics, which develops and produces tactical missiles and precision guided weapons.
Denel and SAMI would share intellectual property and under a new joint venture would target defense export markets in the Middle East and North Africa.
Finally, Saudi Arabia – already a top Denel customer for military vehicles, artillery munitions and radar equipment – would purchase a certain amount of the group’s production. The Saudis expect an answer from the South African authorities by the end of December.
“Saudi Arabia has made a unique business proposition to the South African government. As our discussions are not finalised yet we cannot provide any comment,” SAMI CEO Andreas Schwer wrote in response to Reuters’ questions.
“RIPE FOR PARTNERSHIPS”
South African President Cyril Ramaphosa last week said Denel was “ripe for joint-venture partnerships”. But he added that the government had not yet weighed the Saudi bid or proposals from what he said were a number of other suitors looking to partner with Denel.
A Denel spokesperson would not comment on any specific bid, saying that such negotiations take place on a state-to-state basis.
Ramaphosa’s spokeswoman Khusela Diko said the president would only make a decision on the Saudi offer to partner with Denel once it was discussed by cabinet.
“No decision has been made yet,” Diko told Reuters.
The source with knowledge of the Saudi bid told Reuters that Rheinmetall informally approached Denel’s board last year aiming to deepen its collaboration with the company.
The source said Rheinmetall had, like Saudi Arabia, expressed interest in acquiring Denel’s minority stake in RDM and other Denel divisions but was rebuffed.
Rheinmetall declined to comment.
Denel is grappling with an acute liquidity crunch and is struggling to pay salaries and deliver on roughly 18bn rand ($1.29bn) of outstanding orders. Following seven years of modest profits, the company said last week it had made an operating loss of 1.7bn rand in the 2017/18 financial year. Sector observers say finding an equity partner is essential to Denel’s survival. However, the interest in the company from Saudi Arabia, which is accused of committing abuses in the war in Yemen and has admitted responsibility for Khashoggi’s death, has spawned public debate in South Africa.
South African Foreign Minister Lindiwe Sisulu said last month human rights would be considered in any deliberations over a potential Saudi deal. (Source: Reuters)
07 Nov 18. LDP, Defense Ministry Tussle Over Plan for Japanese New Fighter Jet. With Finance Ministry officials lurking in the background, hawkish lawmakers in the ruling Liberal Democratic Party continue to battle the Defense Ministry over development of the next-generation fighter jet to replace the F-2. The LDP lawmakers’ initial plan to have development conducted entirely by Japanese companies was scrapped because of expected high costs and possible engineering pitfalls. But they have not given up the fight, and are now arguing that Japanese companies should play a leading role in any joint development of the new fighter jet. However, Finance Ministry officials want to keep spending under control no matter what decision is made on the development project. The F-2 was jointly developed with the United States and first deployed in fiscal 2000. The shelf life of the fighters is expected to expire around 2030. The Defense Ministry initially had three options for the next-generation fighter jet: to fully develop it domestically; to develop it jointly with other nations; or to extend the life of the F-2 through various modifications. The third option was jettisoned because modifications alone would not obtain the required capabilities. As for full domestic development, Finance Ministry officials said it would be too expensive. That left joint development as the course taken by the Defense Ministry, but the LDP members are not taking that decision lying down. (Source: defense-aerospace.com/The Asahi Shimbun)
08 Nov 18. Partnerships are key. The eighth edition of Indo Defence was officially opened by Indonesian vice president Jusuf Kalla on 7 November, welcoming and inviting domestic and foreign delegations and industry to work together to develop partnerships that will prove fruitful for international defence relations. The deputy premier welcomed Indonesia’s partners to the show, which will see 193 official delegations from 33 countries visit Indo Defence. Official representatives from a number of nations were welcomed to stand by Kalla as the show was opened, namely from Australia, Brazil, Brunei, Czech Republic, Denmark, Fiji, Iran, Singapore, Thailand, Turkey and Vietnam. In a multi-agency effort, the army, the police and members of parliament are joining forces to represent the show, which has increased in size with the addition of two extra halls at this year’s iteration of the exhibition. The show has grown by some 15 per cent this year since 2016, the organisers say, and there is an increase in the number of participants that want to take part in the show. A total of 867 exhibitors from 60 countries are here, with 30 dedicated pavilions having been set up. Local and international companies, plus the government, media outlets and academia, are all encouraged to work together during the exhibition, co-operating to ensure that the most effective technologies and relationships are developed.
Over the four days of the show, some 2,500 visitors are expected, and official delegations from Indonesia are to include the ministry of business and finance, education, foreign relations, research and testing, and communications. The government claimed that Indo Defence is effectively utilised when it takes place every two years to strengthen product offerings, as well as to bolster the relationships between the Indonesian military and foreign delegations. Into Defence is now considered the biggest defence show in Asia as a result of this growth, Menurut Menhan, Indonesia’s defence minister says, adding that it is also in the top 10 worldwide. (Source: IHS Jane’s)
06 Nov 18. China scales back its biggest air show as trade war forces cost cuts.
- Less extravagant displays and absent performers consistent with a toning down of previous shows’ confident style
- Lack of new warplanes this year compared with recent editions of the show
The six-day Airshow China, held every two years in the southern coastal city of Zhuhai, continued to attract a number of top Chinese military officials to its opening on Tuesday but put on a more subdued aerial display and offered simulations of hardware rather than real weapons systems. The show has traditionally been a platform for Beijing to parade its growing aviation prowess and advanced weapons in front of aerospace executives, diplomats and international arms buyers since it began in 1996.
However, military insiders said the trade war and a lack of funding in the aftermath of the nationwide anti-corruption campaign driven by President Xi Jinping’s military overhaul forced organisers to try to lower costs this year.
Among the senior officials attending the opening were People’s Liberation Army Air Force General Xu Qiliang, who is a vice-chairman of the powerful Central Military Commission, and Air Force commander Ding Laihang.
Ding said the air force would use the air show as a platform “to enhance military exchanges with their counterparts from 41 countries”, adding that the show’s finale on Sunday would also mark the force’s 69th anniversary. The opening day featured a half-hour display by the air force’s August 1st aerobatic team, and a six-minute show by three J-20 fighter jets.
Saudi and Pakistani pilots also conducted a fly-past in the afternoon but there was no sign of the Russian, European or British teams of previous years.
“The organisers did not invite the [Russian] Knights and Swifts teams this year, nor the Red Arrows from Britain, just because of a lack of funding,” a source familiar with the air show said.
“A more low-profile air show indicates the Beijing leadership wants to tone down its previous ‘overconfident’ propaganda style and return to its original taoguang yanghui[lie low] policy during the ongoing trade frictions with the US.”
Zhang Changhong, a spectator from state-owned China Aerospace Science and Technology Corporation, said: “I was hoping to see the Russian performance, which would be stunning. It was a bit disappointing that they aren’t here.”
Organisers said that more than 140 aircraft from home and overseas would be shown in the exhibition centre.
But many of the planes were displayed only on the ground in reduced simulation models, including the FC-31, which military experts have speculated might be developed into China’s second carrier-based fighter jet after the J-15.
Unlike past editions of the show in 2012, 2014 and 2016, when many new fighter jets and cutting-edge weapons were on display, military enthusiasts could not find any new warplanes this year.
“The budget was cut this year just because of the ongoing trade war between Beijing and Washington, which would definitely drag down China’s economic growth,” a military insider said.
“The previous one in 2016 was too high-profile, so leaders in Beijing believe this year’s should be restrained.”
About 770 exhibitors from 43 countries are taking part, according to organisers.
Compared with past editions that put more emphasis on flying and static displays, this year’s exhibition has focused mainly on dual-use military and civilian products, including the debut of an active phased array airborne early-warning radar called the “Silk Road Eye” – a new device to promote China’s “Belt and Road Initiative”.
The radar will be mounted on the KJ-2000 early-warning aircraft based on an IL-76 design, according to its developer, the 14th Institute of China Electronics Technology Group Corporation. Guangdong governor Ma Xingrui announced that the next air show would be held in November 2020 in Zhuhai. Tuesday’s opening was also attended by State Councillor Wang Yong, Guangdong Communist Party chief Li Xi, former PLA Air Force general Ma Xiaotian and former general staff chief Chen Bingde, as well as Leung Chun-ying and Edmund Ho Hau-wah, respectively the former chief executives of Hong Kong and Macau. (Source: Defense News Early Bird/www.scmp.com)
07 Nov 18. Indonesian Fighter talk. The touchdown of Indonesia’s first two of 11 Sukhoi Su-35S ‘Flanker-Es’, or ‘Super Flankers’, on Indonesian soil in August next year will mark the latest stage in the 20-year plan to 2024, designed to develop and improve the strength of the Tentara Nasional Indonesia Angkatan Udara (TNI AU), the air force branch of the Indonesian National Armed Forces. Together with the recent delivery of 24 Lockheed Martin F-16 Fighting Falcons, the still on-track joint development with South Korea of the KF-X/IF-X, and other types on the present inventory, the Russian super-manoeuvrable aircraft will form part of eight squadrons of 16 fighter jets each, as quoted by Air Force Chief of Staff, air chief marshal Yuyu Sutisna, published in Antara News.
The Su-35 is being acquired to replace the air force’s ageing Northrop F-5E Tiger fleet and was chosen in preference to the Eurofighter Typhoon, Dassault Rafale, F-16 and Saab Gripen, most likely to consolidate its familiarity with the Su-27SK and Su-30MK2. A purchase contract was signed on 14 February 2018. The first deliveries were initially due in August, but that date has been pushed back into next year. The delay is not due, as reported in some media, to the threat of US sanctions being applied to Indonesia under the recently implemented anti-Russian CAATSA (Countering America’s Adversaries Through Sanctions Act) that could have threatened the spares supply for Indonesia’s US-built aircraft, but rather to delays arising from the complex part-barter agreement under which the aircraft are being acquired, at least according to Wahid Supriyadi, Indonesia’s ambassador in Moscow.
To be based at Iswahyudi, the Su-35 single-seat 4.5-generation heavy fighter is powered by two AL-37FU/117S thrust-vectoring turbofan engines rated at 142kN, capable of a speed of Mach 2.26 at altitude, with a ceiling of 60,000ft and a range of 3,400km. Its Tikhomirov NIIP Irbis-E passive phased-array radar can reportedly detect and track up to 30 air targets, simultaneously engaging up to eight. It is believed to be a match for all Western fighters, with the exception of the Lockheed Martin F-22 Raptor. The Su-35s are being acquired through a barter arrangement in exchange for palm oil, coffee and other agricultural goods, a deal that could not be matched by Western competitors.
The barter element accounts for around half of the contract’s value. Hard cash, however, will be needed to progress the KF-X/IF-X mid-level stealthy fighter jet with South Korea, in which Indonesia has a 20 per cent stake. This has been a sticking point up to now, with Indonesia said to have missed the payment deadlines in the second half of 2017 and the first half of 2018, brought about by a worrying economic downward spiral that has seen the rupiah plummet to a near all-time low.
As the biggest economy in the ASEAN area, these are major concerns, but economic forecasts from the International Monetary Fund and the OECD remain positive. Nevertheless, Indonesia has indicated it is seeking to renegotiate the financial arrangement with South Korea to ease the pressure on the state budget, and to review the technological benefits to Indonesia through the programme. South Korea has indicated its willingness to renegotiate Indonesia’s contributions, but requires that a new agreement be completed within 12 months. Contributions to development costs, production expenses, technology transfers, intellectual property rights and marketing are all up for re-evaluation, but the Ministry of Defence stressed that the programme remains on track and confirmed that it had been making some payments.
Indonesia and South Korea agreed in 2014 to develop a fighter jet, and under a finance agreement signed in 2015, Indonesia committed to contribute 20 per cent of the development costs, which are estimated at about USD8bn.
The South Korean government will cover 60 per cent, while the remaining 20 per cent will be provided by prime contractor Korea Aerospace Industries. In return for its investment, Indonesia has joint developer status and has integrated engineers from the state-owned aerospace company, PT Dirgantara Indonesia into the project in South Korea. It is envisaged to produce six prototypes and a first flight in 2022, with initial operating capability in 2025. Indonesia is expected to receive at least 50 aircraft.
The advanced multirole 4.5-generation fighter is powered by two General Electric F414-KI afterburning turbofans with a thrust of 90kN plus, giving it a top speed of Mach 1.97. The engines will be assembled, installed and integrated by Hanwha Techwin. The 10 hardpoints will carry air-to-air missiles such as the MBDA Meteor, Diehl IRIS-T, AIM-120 AMRAAM and AIM-9 Sidewinder. Its avionics include an active electronically scanned array radar by Hanwha Systems, infrared search and track, electro-optical targeting system and radio frequency jammer. The Indonesian IF-X will have greater range, boom refuelling system and a different datalink to allow communications with its fleet of Russian Su-27/30/35 ‘Flankers’.
On 28 February 2018, TNI AU marked the final delivery of 24 Lockheed Martin F-16 Fighting Falcon aircraft. The 19 single-seat F-16Cs and five F-16D two-seaters were gifted by the US from former US Air Force and Air National Guard aircraft that were surplus to requirements. The jets were upgraded from Block 25 to Block 52 at the USAF’s Ogden Air Logistics Complex in Utah. Indonesia already operates 10 earlier F-16 models. The US generosity is part of its attempt to strengthen bilateral ties and protect Indonesian air space, with an eye on China’s growing military capability and its territorial ambitions in the region. (Source: IHS Jane’s)
07 Nov 18. Dassault pulls out of race to supply Canada with jets: sources. France’s Dassault Aviation SA (AVMD.PA) has withdrawn its Rafale fighter from the race to supply Canada with 88 new military jets, three sources familiar with the matter said on Tuesday. The move means that four manufacturers are left in the competition, which Canadian officials say will be worth between C$15bn ($11.4bn) and C$19bn. Canada is due to issue its final requirement for the fleet next May. Defense sources have long said the Canadian air force favors a U.S. plane, either the Lockheed Martin Corp (LMT.N) F-35 or Boeing Co’s (BA.N) F-18 Super Hornet.
Canada’s Liberal government, stung by a series of procurement mishaps over previous decades, insists the contest will be an open one despite the armed forces’ close links to the U.S. military and widespread use of American equipment. The three sources, who declined to be identified given the sensitivity of the situation, said Dassault was not convinced it could meet the necessary security requirements. France does not belong to the so-called Five Eyes group of nations that share top secret intelligence – Canada, the United States, Britain, Australia and New Zealand. This would have made operating with U.S. forces complicated, the sources said.
Sweden’s Saab AB (SAABb.ST), one of the four remaining contenders, faces the same challenge with its Gripen jet.
The Airbus (AIR.PA) consortium, makers of the Eurofighter, includes Five Eyes member Britain.
The office of federal Procurement Minister Carla Qualtrough, in overall charge of major military purchases, said it was looking into the reported withdrawal. Canada has been trying unsuccessfully for almost a decade to buy replacements for its aging F-18 fighters, some of which are 40-years old. The former Conservative administration said in 2010 it would buy 65 F-35 jets but later scrapped the decision, triggering years of delays and reviews. Canada is a member of the international consortium that developed the F-35. Canadian Prime Minister Justin Trudeau came to power in 2015 vowing not to buy the plane on the grounds that it was too costly, but Ottawa has since softened its line. ($1 = 1.3130 Canadian dollars) (Source: Reuters)
07 Nov 18. China’s ties with Taiwan chip firms under scrutiny as U.S. trade war heats up. Washington’s decision to cut off U.S. supplies to a Chinese chip-maker spotlights mounting tensions over China’s drive to be a global player in computer chips and the ways in which Taiwan companies are helping it get there. Shut out of major global semiconductor deals in recent years, China has been quietly strengthening cooperation with Taiwan chip firms by encouraging the transfer of chip-making expertise into the mainland.
Taiwan chip giant United Microelectronics Corp (UMC) (2303.TW) last week halted research and development activities with its Chinese state-backed partner Fujian Jinhua Integrated Circuit Co Ltd, following the U.S. move.
Taiwan firms such as UMC have helped supply China with a steady pipeline of chip expertise in exchange for access to the fast-growing chip market there.
China has faced a shortage of integrated circuit (IC) chips for years. In 2017, it imported $270bn worth of semiconductors, more than its imports of crude oil. At least 10 joint ventures or technology partnerships have been set up in the last few years between Chinese and Taiwanese firms, according to industry experts, luring Taiwanese talent with hefty salaries and generous perks.
“Such companies will need to also take care to ensure no patent or IP infringement is involved as the U.S. has export control means to restrict support of critical technology,” said Randy Abrams, an analyst at Credit Suisse in Taipei.
Among the most valuable cross-strait partnerships for China would be ones that strengthen its foundry services and memory chip production. Those two sectors require much-needed help from overseas firms due to the complexity of the manufacturing technologies and intense capital requirements, analysts have said.
TRADE TENSIONS
But the technology transfer between China and self-ruled Taiwan has raised concerns amid the Sino-U.S. trade war and escalating tensions across the Taiwan Strait.
China has aggressively used “market-distorting subsidies” and “forced technology transfers” to capture traditional and emerging technology industries, Brent Christensen, the director of America’s de facto embassy in Taipei, told a business gathering in late September.
“These actions are harming the United States’ economy, Taiwan’s economy, and other economies.”
Taiwan is one of the largest exporters of IC globally and many worry the island could lose a key economic engine to its political foe.
Taiwan’s government views the island’s chipmakers’ cooperation with China cautiously and has implemented policies to ensure Taiwan’s most advanced technology is not transferred.
“When businesses go to the mainland to invest in wafer production, they must accept controls including one that requires the manufacturing technology to be a generation behind,” the economics ministry’s industrial development bureau said in a statement to Reuters.
INTELLECTUAL PROPERTY CONCERNS
Cooperation between UMC and Fujian Jinhua came under scrutiny last month, when the U.S. government put the Chinese company on a list of entities that cannot buy components, software and technology goods from U.S. firms amid allegations it stole intellectual property from U.S.-based Micron Technology. Fujian Jinhua denied the allegations.
Fujian Jinhua now faces big challenges to reach commercial high volume production as expected in 2020, industry observers say.
Last week, both UMC and Fujian Jinhua, which was only founded in 2016, were charged with conspiring to steal trade secrets from Micron in a U.S. Justice Department indictment.
“Taiwanese tech companies need to carefully re-evaluate their positions and supply chain arrangements as the tension between the two super powers escalates,” Bernstein analyst Mark Li said.
While China will need at least six years before it can catch up in chip manufacturing, according to some estimates, the scale of its chip-making abilities is already seen as a threat in other parts of the chip supply chain.
Barely 2-1/2 years after breaking ground on a 12-inch wafer plant in China, Nexchip, a joint venture between the Chinese city of Hefei and Taiwan DRAM maker Powerchip, started producing 8,000 wafers a month. Wafers are thin pieces of material, usually consisting of silicon, used to make semiconductor chips.
Nexchip’s main goal is to produce liquid crystal display driver ICs for flat-panel makers.
Using Powerchip’s resources and Taiwanese talent, which make up a quarter of its 1,200 employees, Nexchip is helping reduce China’s reliance on foreign chip suppliers.
With an aim to become “the world’s No.1 chipmaker for display drivers,” Nexchip plans to build three more 12-inch wafer plants and ramp up its monthly production to 20,000 wafers by 2019, according to a person with direct knowledge of the matter.
After visiting Nexchip late last year, researchers from Taiwan’s chip hub, Hsinchu Science Park, said progress at the Hefei plant was a “breakthrough”.
“This will likely increase Taiwan firms’ needs to invest in the China market, and it will be a test for the (Taiwan) government’s industrial policy.” (Source: glstrade.com/Reuters)
05 Nov 18. UK announces joint Omani-British military training base. Britain announced on Monday it would open a joint military training base in Oman in March 2019 as it looks to bolster its relationships with allies in the region. At a time of rising tension in the oil-producing Gulf region, Britain is diplomatically entwined in overlapping conflicts and disagreements involving Yemen, Saudi Arabia, Iran and others.
Defence secretary Gavin Williamson announced the British-Omani training base as he visited the country to observe the end of a large-scale joint military exercise involving thousands of personnel practicing desert combat.
“Our relationship with Oman is built on centuries of cooperation and we are cementing that long into the future with the opening of our new joint base,” Williamson said in a statement released by his department.
“This has never been more important as malign activity by hostile states and violent extremist organisations seek to undermine stability and subvert the rules based order on which we all rely.”
Earlier this year, Britain also opened a permanent military base in Bahrain. Williamson also signalled in meetings with Omani leaders his intent to sign a new bilateral agreement early next year which would cover enhanced defence ties and broader cooperation, the Ministry of Defence said. (Source: Reuters)
05 Nov 18. Russia sends new frigate with cruise missiles onboard to Mediterranean. Russia said it deployed its new frigate with long-range Kalibr cruise missiles to the Mediterranean Sea on Monday, a few months after Moscow had reinforced its naval forces off Syrian cost.
“The Black Sea Navy Fleet’s frigate Admiral Makarov left (Navy base) Sevastopol and laid a course for the Black Sea straits. The vessel will be acting in the standing naval force of the Russian fleet in the Mediterranean,” the Russian Defence Ministry said in statement.
Russia has in the past fired Kalibr cruise missiles from frigates and submarines stationed in the Mediterranean Sea at militant targets to support Syrian army offensives.
The ministry did not say whether the frigate was supposed to take part in the military operation in Syria where Moscow has backed President Bashar al-Assad since entering the war in 2015.
Russian President Vladimir Putin said in May that Russian military vessels with Kalibr cruise missiles would be on permanent standby in the Mediterranean to counter what he said was the terrorist threat in Syria.
Russia deployed several warships to the Mediterranean this summer, including the Admiral Grigorovich, Admiral Essen and Pytlivy frigates, along with landing ship Nikolai Filchenkov and the Vishny Volochek missile corvette.
The Izvestia newspaper said in August that Russia had gathered its largest naval group in the Mediterranean Sea since 2015, including 10 vessels, most of them armed with long-range Kalibr cruise missiles. More vessels were on the way, the newspaper said, and two submarines had also been deployed. (Source: Reuters)
05 Nov 18. U.S. backs disarmament steps along Korean demilitarised zone – general. The outgoing commander of American troops in South Korea voiced support on Monday for controversial measures to reduce military activity along the border with North Korea, as U.S. Secretary of State Mike Pompeo prepared for talks with North Korean officials on denuclearisation and plans for a second leaders’ summit. Writing in a South Korean military publication, U.S. General Vincent Brooks said recent steps by South and North Korea to disarm areas along the so-called demilitarized zone between the two nations have “the support and agreement of the United States.”
Last week a no-fly zone went into effect along the border, despite private concerns by U.S. officials that the move could restrict training and the ability to monitor the border. Other steps included disarming some areas of the border and removing some landmines and guard posts.
“Together, these activities demonstrate a shared commitment to positive action and work to develop the trust essential to the next steps along the road to a lasting and stable peace,” Brooks wrote.
Pompeo previously expressed “discontent” with the deal that created the no-fly zone, which South Korean sources said became a key sticking point for the United States because it would effectively prevent close air support drills.
Brooks’ comments came as U.S. and South Korean marines conducted military drills under the Korean Marine Exchange Program for the first time in months, according to the South Korean ministry of defence. The exercises were among the training drills indefinitely suspended in June after U.S. President Donald Trump met North Korean leader Kim Jong Un in Singapore and promised to end U.S.-South Korea military exercises. Although larger exercises were suspended, the two countries have continued small-scale drills, the South’s Ministry of National Defence said on Monday, adding that the marines were holding a training round near the southern city of Pohang.
Pompeo, interviewed on broadcaster CBS’s “Face the Nation” programme said on Sunday he would be in New York at the end of this week to meet his North Korean counterpart, Kim Yong Chol.
“I expect we’ll make some real progress, including an effort to make sure that the summit between our two leaders can take place, where we can make substantial steps towards denuclearisation,” he added.
North Korea has not tested a ballistic missile or nuclear weapon for nearly a year, and has said it has shuttered its main nuclear test site and plans to dismantle several more facilities.
In recent weeks, North Korea has pressed harder for what it sees as reciprocal concessions by the United States and other countries.
Over the weekend, Kim hosted President Miguel Diaz-Canel of Cuba – another country under U.S. sanctions – during a lavish visit in Pyongyang, where the two leaders vowed to boost their cooperation.
During a banquet on Sunday, Kim said the “two countries are in the same trench in the struggle for defending sovereignty and dignity of their countries and safeguarding international justice,” according to a state media report.
Diaz-Canel, meanwhile, “voiced his will to meet all challenges by the hostile forces” alongside North Korea, according to the report.
‘NO ECONOMIC RELIEF’
On Friday North Korea warned that it could resume development of its nuclear programme if the United States did not drop its campaign of “maximum pressure” and sanctions.
“The improvement of relations and sanctions are incompatible,” a foreign ministry official said in a statement released through state-run KCNA news agency.
“The U.S. thinks that its oft-repeated ‘sanctions and pressure’ lead to ‘denuclearisation.’ We cannot help laughing at such a foolish idea.”
South Korea hopes the North and the United States will make “big progress” during the talks set for this week, presidential spokesman Kim Eui-kyeom said on Monday, but declined to comment on the North’s Friday statement.
American officials have remained sceptical of Kim’s commitment to give up his nuclear arsenal, however, and Washington says it will not support easing international sanctions until more verified progress is made.
Pompeo, interviewed on television’s “Fox News Sunday,” said the Trump administration wants a full, verifiable denuclearisation of the Korean peninsula, adding that Trump insisted on “no economic relief until we have achieved our ultimate objective.”
South Korean President Moon Jae-in’s continuing efforts to engage with North Korea have fanned U.S. concerns that Seoul could weaken pressure on North Korea to give up nuclear weapons.
In Washington last week, South Korea’s defence minister said the two countries would decide by December on major joint military exercises for 2019. Vigilant Ace, suspended this month, is one of several such exercises halted to encourage dialogue with Pyongyang, which has criticised joint U.S.-South Korea exercises in the past.
The biggest combat-readiness war game ever staged in and around Japan has gone ahead, however, with nuclear-powered aircraft carrier USS Ronald Reagan joining Japanese destroyers and a Canadian warship in the ocean off Japan, another key player in the effort to pressure North Korea. (Source: Reuters)
05 Nov 18. Nato Mission Iraq begins work to boost security institutions. A Nato-led mission has started in Iraq that is intended to further develop and strengthen the country’s security institutions. Called Nato Mission Iraq, the effort was launched in July during the Nato Summit in Brussels, Belgium. Initiated following a request by the Government of Iraq, the mission is led by Canadian Armed Forces major general Dany Fortin and is expected to be running in early next year. A Nato-led mission has started in Iraq that is intended to further develop and strengthen the country’s security institutions. Designed to function as a non-combat mission, the new Nato Mission Iraq will involve advisers who would work in close cooperation with officials of the Iraqi Ministry of Defence (MoD) and the Office of the National Security Advisor. Together, they intend to develop a more effective, sustainable, inclusive and transparent defence sector in the country.
Nato Iraq deputy senior civilian Jana Kotorova said: “Nato’s prior efforts in Iraq have laid the foundations for this follow-on mission, by developing training models that fit with Iraqi requirements for the reform of Iraq’s national security structures and institutions.
“Until now, about 1,000 Iraqi soldiers have been trained to become instructors at different Iraqi military schools. Nato advisers have been working side by side with Iraqi officials, in a spirit of close coordination and partnership. With the establishment of the new mission, Nato will contribute to the stability of the country by providing further training and advice to Iraqi security institutions and structures.”
Furthermore, the mission will help train Iraqi instructors at military schools and academies, covering aspects such as countering explosive devices, civil-military planning, armoured vehicle maintenance, and military medicine.
The Nato-launched effort will also support the collaboration between the Alliance and many other actors on the ground, including the Global Coalition to Defeat ISIS, the UN, the EU, and concerned Iraqi Ministries and representatives of the country’s civil society. (Source: army-technology.com)
04 Nov 18. Trade War, Spy Claims Cloud Horizon for China Airshow. Trade frictions with the United States and accusations of industrial espionage are set to cast a cloud over China’s largest aerospace meeting this week, as suppliers consider what the country’s slowing economy could mean for booming jet demand. J-20 stealth fighters of Chinese People’s Liberation Army Air Force (PLAAF) are seen during a test flight ahead of the China International Aviation and Aerospace Exhibition, or Zhuhai Airshow in Zhuhai, Guangdong province, China November 3, 2018. The biennial Airshow China, to be held in the coastal city of Zhuhai during Nov 6-11, is traditionally an event for Beijing to parade its growing aviation prowess in front of aerospace executives, diplomats and arms buyers from over 40 countries. But analysts say they are not expecting many headline announcements or big deals this year as a bruising trade war between Beijing and Washington and a slowing Chinese economy cause companies to be cautious. While the tarmac will be filled with planes from the likes of Airbus SA and Embraer, the main symbol of China’s own commercial aviation ambitions, the Commercial Aircraft Corp of China’s (COMAC) C919 narrowbody jet, will not be there. A senior executive said it was undergoing test flights. Boeing Co, which is opening a 737 completion plant in China, will not display any of its planes but only models at its exhibition stand. (Source: defense-aerospace.com/Reuters)
04 Nov 18. Korea, Spain Discuss Swap Deal Between Trainer, Cargo Jets: Report. Korea and Spain are in talks to hold a joint committee meeting for a possible swap deal involving trainer jets and cargo planes this month, local media reported, Sunday. According to government sources, Sunday, officials are on track to hold a planned joint military defense committee meeting between the defense forces of Korea and Spain in Madrid in the middle of this month. The sources said the agenda is not finalized but there is a possibility it will be decided sooner and its schedule finalized by this week. Military and defense industry officials say the subject will likely be a swap deal for Korea’s trainer and cargo aircraft. Korea Aerospace Industries (KAI), the nation’s largest private defense company, is competing with a Swiss company to win a deal to supply trainer jets to Spain’s air forces. The Korean Air Force, meanwhile, is known to be considering Spain’s Airbus A400M or the U.S.’s Boeing C-17 as its future cargo plane. Spain hopes to sell four to six Airbus A400M planes to Korea while buying about 30 KT-1 basic trainer jets and 20 T-50 advanced trainer planes from Korea in exchange. The deal, worth 2trn won ($1.78bn), includes trainer planes, additional military munitions and ground equipment. If it materializes, it will be the first time that Korea has exported local jets to a European country, as well as a breakthrough for KAI, which failed recently to win a big deal with the U.S. Air Force. A consortium of Lockheed Martin and KAI lost a bid for a jet contract from the U.S. Air Force due to a failure to compete with the low-price strategy from its rival Boeing. The U.S. aerial warfare unit said it awarded the $9.2bn (10.2trn won) Advanced Pilot Training (APT) contract to a consortium led by Boeing and Saab. The Lockheed-KAI consortium submitted its final proposal with the T-50A trainer jet worth $19.7bn. The sources said Spain is willing to offer a 15 percent discount on the price of the A400M, which costs about 300bn won for one plane. In January, Spain’s defense minister visited Korea and had discussions with then Korean Defense Minister Song Young-moo, agreeing on bilateral cooperation by holding regular committee meetings. Song urged the Spanish government to buy KAI’s KT-1 trainer jets.
(defense-aerospace.com EDITOR’S NOTE: Contrary to what is reported above, South Korea is not considering the C-17 because its production line has been shut down, and the US Air Force is jealously guarding its own C-17s. Spain, which has ordered 27 A400Ms but only needs 14, is looking to re-sell 13 of them, and so would probably offer Korea a favorable price.)(Source: defense-aerospace.com/Korea Times)
05 Nov 18. Australian PM reaffirms commitment to defence capability and regional security. Prime Minister Scott Morrison has used his ‘The Beliefs that Guide Us’ address to the Asia Society Australia to strengthen the government’s pledge to enhance the capability of the ADF and Australia’s engagement with Asia. The Asia Society Australia, established in in 1997, focuses on broadening Australia’s engagement and understanding of Asian countries, their politics, business and culture.
Prime Minister Morrison has used his key note address, ‘The Beliefs that Guide Us’, to outline his vision for Australia’s foreign policy engagement with our region and the government’s continuing commitment to enhancing Australia’s defence capability in light of the rapidly changing strategic environment.
“Our foreign policy defines what we believe about the world and our place in it … I fear foreign policy these days is too often being assessed through a narrow transactional lens. Taking an overly transactional approach to foreign policy and how we define our national interests sells us short,” the PM said, establishing his central thesis for Australia’s engagement with Asia.
The Prime Minister stressed the importance of the nation’s strategic partnerships and Australia’s concept of ‘mateship’ as one of the core foundations for the nation’s enduring strategic partnerships with key regional and global partners like the US, UK, Japan, Singapore, Canada, New Zealand and South Korea.
“We believe in standing by our mates, side by side with nations that believe the same things we do. From the United Kingdom and the democracies of Europe to the United States and Canada. From the state of Israel to the city state of Singapore. From Japan and South Korea in north Asia to New Zealand, across the ditch,” PM Morrison expanded. “The alliance with the United States is a choice we make about how best to pursue our security interests. And US economic engagement is as essential to regional stability and prosperity as its security capabilities and network of alliances.”
In responding to growing domestic and regional concerns about China’s continuing reclamation of land in the South China Sea, the growing military assertiveness throughout the region and colonisation through debt, the Prime Minister was clear in saying that the government was committed to strengthening the Comprehensive Strategic Partnership with China to avoid potential hostilities.
Furthering these comments, Prime Minister Morrison was quick to state that while the Australia-China relationship was critical to ensuring regional peace and security, the relationship between the rising superpower and the US was the most pivotal bilateral relationship to ensuring continuing peace and prosperity in the region, and that of Australia.
“Inevitably, in the period ahead, we will be navigating a higher degree of US-China strategic competition. A strong America – centrally engaged in the affairs of our region – is critical to Australia’s national interests. At the same time, it is important that US-China relations do not become defined by confrontation,” he said.
The Prime Minister then went on to discuss the importance of the nation’s relationships with key regional partners, including Indonesia, Japan and the broader ASEAN community, and the role each has served in securing peace, prosperity and stability throughout the region. Expanding upon this, Prime Minister Morrison stated that Australia’s vision of Indo-Pacific Asia placed ASEAN at its very core.
“We also need to think about how our national power can be applied to protect and advance our interests. This begins with our substantial investments in building a more capable, agile and potent Australian Defence Force,” he said.
Discussing the government’s vision for the ADF, the Prime Minister reiterated the critical role the ADF would play in securing both the domestic economic future of the nation, but also its strategic future, reinforcing a commitment to engage in a more meaningful manner with Australia’s Asian partners.
“We are now undertaking the largest regeneration of the Royal Australian Navy since the Second World War, including the doubling of our future submarine fleet, a new fleet of nine frigates and a new fleet of 12 offshore patrol vessels to ensure our borders remain secure,” he said.
“The F-35 Joint Strike Fighter program will give the Air Force unprecedented air capability to combat future threats. And the Army is being backed in with new Armoured Reconnaissance Vehicles and new weapons, as well as new body armour and night fighting equipment.”
Finally, the Prime Minister focused on the importance of not giving in to isolationism, stating that while Australia may be an island, viewing ourselves as disconnected from the economic, political and strategic reality of both Asia and the broader world would be to our detriment. Rather, the PM reinforced his commitment to engage with our region, to build robust, fruitful and reliable strategic partnerships, to the benefit of all.
“While we live on an island — the best one on earth — we can’t afford to have an island mentality. We embrace free trade, global engagement and an international system where we agree to rules, stick to them and honour our commitments. We embrace an open, stable and prosperous Indo-Pacific region. Because shrinking into ourselves will never work,” he said. (Source: Defence Connect)
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