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August Technology Insights

August 24, 2022

Intel Seals $30BN Partnership With Brookfield to Fund Chip Factories

Intel strikes a partnership with an infra fund to finance development of a $30bn semiconductor plan in Arizona. Brookfield Infrastructure Partners is investing $15bn for a 49% stake in Intel's expansion of a site in Arizona.

Intel describes the partnership as "a new funding model to the capital-intensive semiconductor industry".

Analyst Takeaways

• The CHIPS ACT will provide incentives to the JV and financial justification to the private equity partner which will likely exit many years later as the investment generates positive cashflows
• Will this new funding model spread to the broader semis industry? It's likely, yes.
• But with government subsidies, I think we can expect to see more co-ops and co-investments too during this expansion cycle.
• Examples from earlier this year include GlobalFoundries/STM in France and TSMC/Sony.

Dale Gai

August 19, 2022

Xiaomi Posts 20% Revenue Fall, Hurt by China COVID Curbs

Xiaomi posts 20% revenue fall, with smartphone sales declining 29%.; net income fell further by 67%.

Analyst Takeaways

There are several reasons we see for Xiaomi's struggles:

• HONOR's offline channel sales in China account for around 70% of overall domestic sales - this part of its business is tapering and COVID-lockdowns are obviously making things very tough.
• Regionally, Xiaomi is getting especially squeezed in China and Europe, where it's portfolio and pricing are missing the sweet spot
• From a competitor OEM perspective, Xiaomi is getting squeezed by Samsung and HONOR. Samsung has seen a global resurgence after resolving production issues in Q2 2021, while HONOR's growth momentum in China is hitting Xiaomi domestically.
• With global inventories at high levels, expect to see aggressive sales campaigns in Q3 and Q4.
• Sustained issues on the smartphone side will be problematic for long-term growth areas such as EV - which it's planning to put into mass production in H1 2024 - and other businesses like robotics. Automotive in particular, is a big cash burn and the R&D spend requirements are already rising significantly.

Ivan Lam and Archie Zhang

August 18, 2022

Apple Targets Sept. 7 for iPhone 14 Launch in Flurry of New Devices

"According to people with knowledge of the matter" Apple to hold it's annual launch event on Sept. 7. It will reportedly be unveiling its iPhone 14 line, along with multiple new Macs, iPads, and three Apple Watch models.

Analyst Takeaways

• A 6.7-inch 'budget premium' model with a more powerful camera really brings the fight to Android, where a big chunk of devices have these spec
• With the elimination of the mini and addition of the non-Pro 6.7" model, the iPhone portfolio has evolved to the point where it's addressing broader consumer demand with compelling product
• Of course, Android is bringing foldables but even through the end of 2022 we still see it as a niche segment

Ivan Lam

August 16, 2022

Chipmakers’ Pandemic Boom Turns to Bust With Recession Looming

The '"treachery of the semiconductor cycle" is being driven home with the signing of the $52 billion Chips act - on the very day that Micron, the US' biggest chipmaker reported demand was fading. The sector is bracing for a sever shift - from a massive run-up in orders during the pandemic to what is now a situation of growing inventory and shrinking demand.

Analyst Takeaways

• It will take 4-6 years for most of the excess capacity from investments mentioned in the article to come online.
• Over the short-to-medium term, inventories should normalize - the cycle of under and oversupply is a fact of life, though it is especially pronounced in some sectors like memory.
• But this time around, subsidy intervention could disrupt these cycles. I think we'll see the real impact of this long term, with the potential exit of one or more uncompetitive 'big' players.

Brady Wang

July Technology Insights

July 18, 2022

 Battery makers seek price hikes on lack of Russia rare metals

Global supply chain disruption and the war in Ukraine are creating shortages of rare or otherwise scarce materials.

Japan's Envision AESC Group, a maker of lithium-ion batteries for electric vehicles, has mentioned there would be price hikes. Kawasaki Heavy Industries is looking to other suppliers for titanium, switching from Russia who is the top supplier. The rise in prices for resources and disruptions to their supplies could potentially have extended impacts on a range of industries.

EV batteries rely on high purity lithium and this material is in very short supply. Price for this metal have soared almost tenfold over the last year. Nickel and copper prices in addition to other metals are also rising. This pressure on battery makers is now being passed on in the form of higher costs on to customers.

July 16, 2022

July 13, 2022

Chinese battery maker powers SAIC's economy EV

July 12, 2022

Samsung slips further behind TSMC in chipmaking race

Samsung said on June 30 that it has started to mass produce 3-nm chips, the first company to achieve the feat. It appeared the conglomerate had moved a step ahead in the advanced chip race. But the announcement stopped short of telling the full story.

"Who are the clients?" said a source in Yeouido, Seoul's financial district. The answer to that question can prove crucial. While circuit line width is a key indicator of technical capabilities, who is buying the chips adds an extra level of substantiation.

Analyst Takeaways

• The industry is hungry for the production capacity of 3-nm, which Samsung was first to provide, and TSMC will bring along in the second half of 2022.
•  The applications of 3-nm are not only on smartphone SoCs, but also on PC/laptop, computing, XR, smart cockpit, etc.
• TSMC is still the leading foundries, and Samsung may be the only powerful rival at the current stage.
• For the OEM side, it is risky to make the choice to assign foundry partners, but it is also fair to bring in a second option to the vendor list. However, due to the previous experience, smartphone chip providers like Qualcomm and MTK, may have to be more careful in choosing the partner to make flagship chipsets.

Ivan Lam

July 6, 2022

 Chinese Chipmakers Surge After US Pushes for More Industry Curbs

Washington’s latest move to restrain Beijing from fostering its chipmaking industry is powering China’s semiconductor stocks as US restrictions could ramp up support for homegrown technology.

China chipmakers were one of the few bright spots in the markets Wednesday after Bloomberg News reported that the US is pushing the Netherlands to ban ASML Holding NV from selling to China technology essential in making a large chunk of the world’s chips.

Analyst Takeaways

• The global consumer electronics market demand is rapidly changing by facing macroeconomic headwinds, the Russian-Ukrainian conflict, local epidemics and other factors. The semiconductor industry continues its unbalanced development, which is dragged into a downward cycle, probably until the second half of 2023.
• Post-sanctions, China government and local enterprises have invested resources into the semiconductor sector in every positive aspect and pulled international key players into the development. At the same time, the international specialization model has been changing, and countries or regions are trying to catch up to take or secure a more vantage spot in the manufacturing food chain. This is applied to regions like APAC, European, and US.
• (EUV) photolithography machine providers are just one playing production node in this industry. The application market scaling can bring a rich return on investment and the power driver to the technology iteration. The semiconductor industry is not a solo play but a systematic project involving global synergy. Geopolitics will cause some interrupts, but technology always finds its way to develop and evolute.

Ivan Lam

• I believe that China's major semiconductor companies (such as SMIC and YMTC) are attempting to avoid violating the international prohibition because they realize that it would be difficult for China to produce semiconductors completely using local equipment or raw materials in the near future.
• China's objective has always been to nationalize its semiconductor manufacturing equipment, whether with or without the ban.
• With the restrictions, China will invest more resources. However, it may not necessarily receive a comparable return because it cannot learn from the outside, .
• 4. The EUV was previously prohibited; I believe this limitation pertains to the DUV and others.
• China is likely to achieve large-scale adoption of local equipment and materials in mature technologies. but advanced technology is unlikely.
• I think this ban will be difficult to implement. Nonetheless, if it comes to pass, it may fix the current high inventory levels in the short term, but in the long run, it may bring back the nightmare of shortages.

Brady Wang

July 5, 2022

Chinese automakers dominate booming Thai EV market

Chinese automakers have grabbed a big chunk of Thailand's rapidly growing electric vehicle market, thanks to government subsidies that have lowered prices for buyers and increased up sales more than 4X this year.

China's Great Wall Motor is the best known EV brand in Thailand. The company has sold more than 2,000 cars to Thai drivers since entering the market a year ago. More than 3,000 people this year are waiting to take delivery of Great Wall EVs.

Analyst Takeaways

• In Thailand's passenger vehicle (PV) market, Japanese players are dominating, being top 4 (Toyota, Honda, Renault-Nissan Alliance, Mazda) out of 5 companies are from Japan. SAIC Group is the only Chinese player which is standing at 5th position with a little over 6% market share in 2021. Moreover, the Thailand PV market is concentrated with the top 5 players capturing nearly 80% of shipments.
• Electric vehicle (EV) penetration is still in a niche base with a 0.35% market share in 2021. In the EV market, important players such as MG Motor (part of SAIC Group), Mitsubishi, FOMM, Nissan and Hyundai are already operating and trying to increase market share in the overall PV market.
• We think that Thailand is a way behind in mainstream EV adoption. EV price and infrastructure are not attractive for EV business. Government has to provide more incentives to encourage consumers and parts suppliers to purchase and develop technology respectively. Currently, there are around 6000 charging stations. For mass adoption of EVs, there should be nearly 100,000 charging stations in Thailand which are a long way to go.
• Moreover, Thailand's household debt exceeded 90% of GDP which isn’t a favourable condition for investing in EVs for consumers. Thailand's government is trying to increase gross national income per person from 290,000 baht in 2019 to 360,000 baht in 2023 which seems a challenging one considering the current Covid situation and supply shortages across industries.
• Thailand aims for 50% of locally produced vehicles by 2030 which looks realistic as more domestic conglomerates such as PTT Group and new players like Great Wall are entering into EV space. Thailand Board of Investment (BoI) has approved a THB57 billion investment for 31 electrified vehicle projects in the first four months of 2022 which is a good sign for the country’s long-term EV dream.

Soumen Mandal

June Technology Insights

June 30, 2022

Samsung begins mass production of 3nm chips

Samsung Electronics Co. has begun mass production of 3-nanometer semiconductors, stepping up its game in the most advanced chipmaking process node and beating its foundry rival and industry leader TSMC.

June 28, 2022

South Korea struggles to decouple from Japan in key chipmaking materials

Almost three years since export controls were imposed by Japan on a trio of high-tech materials, South Korea has yet to create domestic supply chains that are fully independent of Japanese producers.

Outgoing South Korean President Moon Jae-in mentioned the trade frictions fairly early in his roughly 10-minute farewell address on May 9.

"I won't forget how the entire nation united to overcome the crisis posed by Japan's unfair export controls," Moon said.

Analyst Takeaways

• Japan is a major supplier of high-tech semiconductor materials -- hydrogen fluoride, EUV (extreme ultraviolet) photoresists, and fluorinated polyimide, which is used in making circuits and organic light-emitting diode panels for smartphones.
• South Korean chipmakers are bigger buyers of these materials along with fab equipment such as coater, developers and etching equipment.
• Korean manufacturers developing and producing equipment with support from government in terms of subsidies to promote research and development of high-tech materials will require some time for domestic suppliers to grow, till then dependency on imports from Japan is inevitable.
• Further, replacing products from Japanese suppliers in the short term will be difficult as it requires existing production lines to be halted and proving them suitable for current manufacturing systems will take months and not economically viable.
• Korean manufacturers account for more than half of the global memory market and yield being an important factor in memory chip manufacturing along with higher cost associated with alternate sourcing of these materials, chip makers will be reluctant to adopt products from other vendors in the short term.
• Korean chip makers have already started using extreme ultraviolet (EUV) lithography equipment in advanced technology and are in mass production.
• Disruption in photoresists supply chain, a key raw material needed in adoption of EUV technology will have long-term consequences operating its EUV machines and meeting the demand will be difficult which could stagger Korean chip makers efforts to catch up with competitors in advanced technology.

Aswath Rao

• It will be not easy for Korean companies to catch up with the materials technology in just one or two years that Japan has accumulated for decades.
• What is more noteworthy here is not that Korea has not achieved any major changes in just one or two years, but that top semiconductor companies such as Samsung and SK Hynix are deeply aware that there may be risks in the material supply chain, and they began to prepare for it. In fact, I saw a Korean article mentioning several achievements. Liquid hydrogen fluoride was virtually 100% localized by a local company, and SK Materials succeeded in localizing high-purity gaseous hydrogen fluoride in the middle of 2020. Samsung, together with another local company, has developed a photoresist that can be used in the EUV process, and various other attempts are being made.
• Although these attempts may be difficult to commercialize in a short time, I do not think there is any doubt that it will gradually expand in the long term. Not only localization, but also the attempts to reduce dependence on Japan through diversification of supply chains to other countries are continuing. Anyway, it will take much time.

Sujeong Lim

June 26, 2022

Why LFP batteries are poised to bring down entry-level EV prices

A raft of patents for lithium-iron-phosphate (LFP) chemistries are due to expire in 2022. This could cause a major shift in the face of battery production in the U.S. and Europe.

China has owned the market for nearly a decade due to an agreement with patent holders that let Chinese manufacturers use them to supply local markets. Manufacturers outside China, however, have focused on developing other lithium-ion chemistries to power their EVs because their higher energy density translates into longer range on the road.

Analyst Takeaways

• LFP battery technology is now poised to reshape battery manufacturing worldwide and boost EV sales in the US. Multiple patents for LFP chemistries due to expire in 2022 could shift the face of battery production in the US and Europe.
• China has owned the market for almost a decade due to an agreement with patent holders that let Chinese manufacturers use them to supply local demand. Meanwhile, manufacturers outside China have focused on developing other lithium-ion chemistries because their higher energy density translates into a longer driving range.
• The universal access to patents, coupled with a surge in prices of raw battery materials, is driving many automakers to home in on the advantages of LFP batteries. The COVID pandemic led to the semiconductor shortage, and the conflict in Europe has disrupted the supply of raw materials. Soaring prices for nickel, lithium and other materials have reversed the decades-long decline in battery prices. However, LFP batteries do not use scarce raw materials like cobalt and nickel, and cost less. Even if a lithium bottleneck slows production, its battery chemistry remains easier to produce than the NCM and NCA, as those metals are in short supply, too.
• We believe that LFP batteries are expected to play a larger role than initially expected. Due to the lower cost, LFP batteries for low to mid-end EVs are growing in popularity along with the macro uncertainty and economic downturn. Tesla began embracing LFP batteries for its standard range models to improve margins and keep costs down. Other OEMs such as VW, Ford, Stellantis and Rivian, have also announced that they will use LFP in lower-priced models. Chinese players like CATL and BYD, the leading manufacturers of LFP batteries, stand to benefit tremendously.

Liz Lee

June 23, 2022

BMW starts production at new $2.2 bln China plant to ramp up EV output

BMW has formally begun production at a new plant in China with an investment of 15 billion yuan ($2.24 billion) as the it accelerates electric vehicle (EV) production.

The Lydia plant, BMW's third car assembly facility in China, located in the northeastern city of Shenyang, Liaoning province is aimed at increasing its annual output in the world's biggest auto market to 830,000 vehicles from 700,000.

The first model that will roll off the Lydia plant's production lines is the i3, a pure electric mid-sized sports sedan, increasing the number of its EV models for Chinese customers to 13 next year.

Analyst Takeaways

• It will be the third plant for BMW in China. Still, it is struggling to get significant market share in the largest electric vehicle (EV) market, China. Even, new startups such as NIO, XPeng Motor and Li Auto sold more EVs in 2021 than BMW.
• As BMW is mainly focused on the premium segment, we expect it wouldn’t be able to increase the overall EV market significantly in China but surely it can improve its position in the premium EV market.
• Moreover, building its own battery ecosystem will help to have better control of the battery supply chain and increase profit share on vehicle sales as well.
• BMW is aiming for 25% of passenger vehicle sales in China to be electric by 2025 which was at 10% in 2021. The new battery plant will help BMW in transitioning from traditional vehicles to EVs but wouldn’t help much in increasing its market position there.

Soumen Mandal

June 21, 2022

June 18, 2022

India Seeks to Globalize Payment Systems, Keep Processing Local

The Reserve Bank of India will support internationalization of the country’s popular UPI digital payments system, part of its vision for the coming years.

“Enhanced interest evinced by major countries across the globe in India’s UPI could accelerate growth in trade and commerce with partnering countries while reducing speed and cost of remittances,” the central bank said in a Vision 2025 document. It will also explore expanding the SFMS financial messaging system across jurisdictions.

Analyst Takeaways

• VISA and Master are two major global payment systems, settled in US dollars. The ask for local-global settlements from non-USD-based countries always exists, because it will shorten the transaction process and time and reduce transaction charges.
• In the past, China-based UnionPay has been developing very fast. With the local transaction port unifying, the Chinese banks have a faster development period in China internal. At the same time, China-based fintech businesses or payment gateway solutions are well penetrating nationwide, such as Alipay and WeChat Pay ecosystems. With the globalization of UnionPay, given multiple types of promotion and cooperation, Asia, Europe and even US markets, the UnionPay transactions have developed into a great size, with the Chinese people willing to pay via UnionPay, and the local banks and merchants willing to accept the payment via UnionPay. Alipay and WeChat Pay’s globalization also push the UnionPay localization and expansion.
• Given the existing success of Chinese UnionPay, UPI India can also be developed into a Rupee-based payment system with global scale, enhancing regional, and bilateral relationships of various countries. Furthermore, a high probability that this development can be driven by daily consumption and ToB activities. Before that, the replacement of USD-based transactions with Rupee-based transactions will take years, and the settlement between both currencies has to be aligned globally.
• Moreover, developing a local currency payment system can be an alternative to lower the risk of regional distributions, as never too much to be well prepared.

 Ivan Lam

In India, UPI digital payment system has been consistently experiencing success. COVID has accelerated the digital payment aspect of fintech and made everyone realize the potential it holds.

With the improving purchasing power, India has been witnessing the preference for UPI digital payment over other modes like cash and cards despite it being rooted deeper in the economy. With India’s central bank (Reserve Bank of India) decision to support the internationalization of the country’s popular UPI digital payment system, India has taken a futuristic step and will yield a prominent benefit for India in the long run.

• This decision will not just make ensure a smooth, convenient and seamless mode of payment but will encourage the adoption of holding a bank account in Indian banks.
• Alongside, India will be known for its movement towards exploring and radiating benefits in fintech space at a global level.
• India’s association with Nepal, France, Singapore, and UAE for setting up the UPI digital payment will improve and strengthen India’s relations with these countries and encourage smooth tourism. These countries will further bridge India’s relationship with other potential countries in the future.
• India will take the first-mover advantage in the case of many economies by introducing UPI and encouraging digital payment

Nepal was the first country to deploy India’s UPI which can prove to be a catalyst for Nepal’s digital payment growth. France will soon be launching India’s UPI along with the Rupay card. This is a good strategy to enter the European digital payment market. The partnership between Mashreq Bank NEOPAY and NPCI, People holding an Indian bank account in UAE will be able to make UPI payments. The monetary authority of Singapore and RBI have planned to link PayNow and UPI.

Arushi Chawla

June 17, 2022

 Taiwan Semiconductor Manufacturing Co. executives said on Thursday the world's biggest chipmaker will have the next version of ASML Holding NV's most advanced chipmaking tool by 2024.

Analyst Takeaways

• Compared to first generation EUV machines, a High NA machine provides a bigger lens capable of printing smaller patterns, enabling efficient manufacturing of chips with higher performance.
• With High NA chip makers will be able to pattern in a single layer resulting in faster turnaround time and better process flexibility rather than going with double patterned EUV for smaller dimensions.
• ASML has announced earlier that integration of the first EUV High-NA system in the new fab at Veldhoven in Q1 2022 is progressing well.
• TSMC will incorporate High-NA tool in R&D and will use it for high volume manufacturing in 2025 after optimizing other parts of High-NA eco-system including photoresists and metrology which are challenging.
• Chip makers will have to strike a balance between better performance and greater costs associated with more sophisticated High-NA machine.
• Further, drastic reduction in process steps will result in less defects, improved yield and enable faster time to market.

Ashwath Rao

• The high-NA EUV machine will help in production of chips turn with smaller geometries and much smaller pitches, increasing density hence chips to be fabbed on 2nm and beyond.
• TSMC will receive the machine in 2024 and company has clarified it will be used for research purposes and will go in for mass production in 2025.
• Intel has claimed to receive the first machine for its Intel 18A node and enter mass production in 2025.

The two foundries will go head to head to claim for leadership in chip manufacturing in Angstorm era of manufacturing.

• TSMC getting the machine will offset the edge that Intel is getting with the first shipment of high-NA EUV. This gives the company time to improve the yield and adopt new processes that come along with the high-NA EUV lithogrpahy machines. It also helps in streamlining the production process and efficiencies whilst it gets the second generation EUV machine delivered which will help in mass production of Angstorm chips.

Akshara Bassi

June 15, 2022

Foxconn breaks ground on first EV battery plant

Foxconn broke ground on its first battery cell plant on Wednesday, marking the latest move by the key iPhone assembler to make inroads into the booming electric vehicle industry.

"We plan to build a localized ecosystem for the battery supply chain, from materials to battery cells and battery packs, in Kaohsiung," Foxconn Chairman Young Liu said at the groundbreaking ceremony in the southern Taiwanese city. "The city will become an important base for Foxconn's EV global footprint.

Analyst Takeaways

• Foxconn is looking to diversify its business beyond smartphone. The electric vehicle (EV) market is still at a nascent stage and it will be the right moment for other players (beyond automotive background) to enter this market.
• The battery is one of the key components in EVs and contributes nearly 40% of the total cost of an EV. Hence, every player is trying to have some sort of control over the battery value chain.
• Foxconn has an ambitious plan to produce 3 million EVs per year by 2027 or capture 10% of the total global EV market. For achieving this target, they should target the mass market and they will not be able to cut down on battery costs until they have control of battery value chain.
• In the future, Foxconn can also support Apple if they enter into the car business. However, it will be challenging for Foxconn to find more suppliers for batteries and compete with established players.

Soumen Mandal

June 15, 2022

India Plans 5G Airwaves Auction by End-July to Spur Rollout

Bloomberg

In the latest as well as an important development, the Cabinet has approved the 5G spectrum auction. The government plans to kick-start the 5G spectrum auction towards the end of July and expects first 5G call in August-September timeframe.

Analyst Takeaways

Positives (+) for Telcos

• Scrapped the mandatory requirement of upfront payment and spectrum payment can be made in 20 equal annual instalments. This will be beneficial in easing out cash flow requirements considering the stressed financial health of the telecom sector in India.
• Operators can surrender the spectrum after 10 years with no future liabilities of payments. This decision appears to be taken from a long-term perspective by making it more viable for the operators to prepare for upcoming technologies such as 6G without having the financial burden/liabilities from the older technologies.

Negatives (-) for Telcos

• Operators have been stressing on not allowing direct allocation of spectrum to enterprise for private networks as it will impact their 5G services business case and they will potentially lose out on enterprise revenues. However, the Cabinet has cleared direct spectrum allocation to non-telcos. It means enterprises planning to deploy private 5G networks can obtain the spectrum directly from Department of Telecommunications (DoT) and set-up their own networks.
• The telecom regulator, TRAI, had earlier recommended a price cut of 36% to 40% in base price of 5G spectrum. Although it was a welcoming step, but operators have been demanding a 90% cut in the reserve price. India’s spectrum prices remain expensive compared to many other countries such as UK, France, Germany etc. and operators expected further cuts from the govt. However, the reserve price of 5G airwaves remain unchanged.

Bidding Intensity

Jio, Airtel and Vi are expected to participate in the upcoming auction. We saw intense competitive bidding last decade when Jio entered the space and acquired big blocks of spectrum to rollout 4G services. It may not be the case this time but Jio is still expected to be the highest bidder, given its healthy financials. Vi bidding intensity can remain muted as the operator has not yet closed its much-needed external funding. Lastly, operators’ sentiments on spectrum allocation to non-telcos can also have an adverse impact to some extent. Nevertheless, the auction would be a big stimulus for revenue generation and digitalisation in India.

Charu Paliwal

June 14, 2022

BMW to test ONE's advanced battery in its iX electric SUV

Reuters

BMW isset to install and test a long-range battery developed by Michigan-based startup Our Next Energy (ONE) in the German automaker's iX electric SUV.

ONE's Gemini battery will incorporate two types of battery cells, including one with advanced chemistry that can store more energy and enable vehicle range of 600 miles (965 km) or more between charges, the battery maker said. The prototype vehicle is expected to be completed by year-end, ONE said.

Analyst Takeaways

• BMW is testing Our Next Energy’s (ONE’s) long range battery for its iX electric SUV which can run 600 miles (~965km) with one charge. Surely, a driving range of nearly 1000 km will solve the range anxiety issues of consumers.
• However, the battery-pack cost hasn’t decreased much due to supply chain bottlenecks of metals like lithium, nickel and cobalt. The increased driving range will increase the price of the vehicle too. This may be one of the barriers to mass adoption of iX SUV.
• Last year, Tesla Model S achieved 752 miles (~1210 km) driving range with ONE’s battery. The partnership with leading players will be key to the success of ONE. The most important thing is that ONE is using a similar space with increased battery capacity which also reduces design-related problems for auto OEMs.
• BMW is performing well in plug-in-hybrid vehicle (PHEV) market and this type of partnership will also help BMW for reaching its electrification goal.

Soumen Mandal

June 3, 2022

New York state passes first-ever ‘right to repair’ law for electronics

The Verge

The electronics Right to Repair bill has been passed by the New York state legislature. Effective mid-2023, consumers and independent repair shops will have the most to gain from this bill as tools, information, parts, and software will be made available to consumers and independent repairers for devices being sold in the New York state area. This is a big first step in the US towards achieving sustainability goals like reducing e-waste.

Analyst Takeaways

• A bill passed in June 2022 for a limited category of electronics will be binding after 1 year for a single state in the US. The procedure and bureaucracy are painfully slow for environmental issues showing compounding effects globally. If several states collectively enforce this bill at the earliest, we should be able to see faster growth in electronics repairs leading to longer hold times and less churn among consumers.
• The Refurbished market in the US and globally has been booming for some time now. Refurbished smartphone volumes for example, made up 11% of the new smartphone market in the US in 2021. Imagine the ease of growth and additional momentum because of a unanimous law across several states in the country. This is sure to reduce the US e-waste by a notable volume in the next 3-4 years if 2023 witnesses this bill become reality in at least a half the states.
• The global secondary markets have seen increase in number of repair businesses. Many established repair businesses have shown a marked increase in volumes as well. This has been evident since last year as 'Right to Repair' caught momentum. In the coming months, we are bound to see secondary market players rally up, gain capital, increase marketing, and focus on collection through multiple channels. Consumer awareness and preference will decide on the percentage growth we will witness in 2022. Right now, it looks slow but promising.

Glen Cardoza

June 2, 2022

China's Geely launches first nine low-orbit satellites for autonomous cars

Reuters

China's Zhejiang Geely Holding Group conducted its first successful satellite launch on Wednesday, sending nine into low earth orbit to assist with building out a satellite network to provide more accurate navigation for autonomous vehicles.

The self-designed and manufactured GeeSAT-1 satellites, were launched from the Xichang Satellite Launch Center in the southwestern province of Sichuan. Geely is now the second major automaker to have an allied space business. SpaceX, owned by Tesla, has more than 2,000 satellites in orbit for its Starlink network that offers commercial internet services.

Analyst Takeaways

• With policy support from governments and rising application areas such as drones, smart cities, vehicles, asset tracking, and environmental protection, we will witness increasing investment in the lower earth orbit (LEO) network. The competition in this space will rise in future course time as well. However, Tesla is ahead of other private players including automakers in satellite space.
• For autonomous vehicles, connectivity will play a crucial role. The unavailability of a network can lead to a fatal accident. Satellite-based connectivity can solve this problem by providing uninterrupted connectivity.
• We expect Geely will look for other application areas beyond the automotive industry. There are already nearly 3 billion people who aren’t using internet and most of them live in remote areas. The traditional ground infrastructure will require huge investment and it doesn’t provide a commitment to providing high-speed internet. LEO satellites have an advantage here and may help in achieving universal connectivity.

Soumen Mandal

May 31, 2022

Foxconn predicts more stable supply chain in the second half of 2022

Reuters

Foxconn announces 2H 2022 is heading "in a better direction", as they express confidence in the stability of their supply chain moving forward.

Their chairman Liu Young-way also stated the company is looking to become the first EV maker which is "not short on material supplies", underlining the company focus on mitigating production hiccups that have plagued the broader industry.

Analyst Takeaways

• Most EV manufacturers shall learn from the Q1-Q2 lockdown in China even though they should have better contingency response options from the burst-out of COVID starting from 2019.
• EV manufacturing requires a comprehensive and robust supply chain, similar to or more crucial than smartphone manufacturing. And EV has less flexibility.
• Foxconn is probably the best EMS for consumer electronics, with one of the most vital supply chains and advanced manufacturing facilities. However, the EV business requires an almost entirely different supply chain set and manufacturing facility from consumer electronics. Foxconn will and shall take more attention and resources on this.

Ivan Lam

May 30, 2022

 How a cheap component could help kill off combustion cars

Reuters

The humble wire harness, a cheap component that bundles cables together, now poses a challenge to the auto industry.

Supplies of the auto part were severely constrained by the war in Ukraine, where a significant chunk of the world's production, with wire harnesses made there and fitted in hundreds of thousands of new vehicles every year.

These low-tech and low-margin parts - made from wire, plastic and rubber with lots of low-cost manual labour - may not garner as much attention as other more expensive components, however, they are vital and cars cannot be manufactured without them.

Analyst Takeaways

• Ukraine was the major supplier of wire-harness to almost 70% of the European auto industry and Ukraine relied on cheap labor for the production of harnesses. If the production of the component has been globalized this type of supply crisis would have been avoided.
• Moreover, the sales of vehicles will increase in the coming days and labour-intensive production process won't be enough to keep a continuous supply process. For these reasons, players are stepping up to set up automated wire-harness manufacturing units globally.
• The new startups supporting fully automated wiring harnesses will not be able to sustain with total wiring harness demand. We expect the shortage will continue till next year until automakers are relocating wiring harness production or ramping up production capacity.

Soumen Mandal

May 25, 2022

Spain to spend 12.25 bln euros on microchip industry

Reuters

Spain's government has approved a plan to spend 12.25 billion euros ($13.12 billion) on the semiconductor and micro chip industry by 2027, Economy Minister Nadia Calvino said on Tuesday, including 9.3 billion euros to fund the building of plants.

"The aim is to comprehensively develop the design and production capacities of the Spanish microelectronics and semi-conductor industry, covering the entire value chain from design to chip manufacturing," Economy Minister Calvino said during a news conference after the weekly cabinet meeting.

An unexpected surge in demand amid the pandemic and supply chain problems had created a worldwide shortage of micro chips and forced a wide array of global manufacturers to slow down output last year.

Analyst Takeaways

• In recent years, the successive outbreak of trade sanctions for countries or enterprises and global key components shortages coming along with the pandemic has changed the thinking logic of the global semiconductor supply chain, and the "globalization and professional division of labour" model pursued in the past is diminishing. The governments of large countries regard semiconductors as the industry's top priority and have launched favourable subsidy programs to attract the world's leading semiconductor manufacturers to invest locally.
• Strategically enhancing the semiconductor sector's capabilities is performing globally, such as China, pan-Europe, APAC traditional developed and new emerging economic bodies.
• Semiconductor capabilities are essential for the next decades because of the penetration among industries of the chipset and its strong linkage to advanced technologies and productivities.
• However, semiconductor development requires years of accumulated efforts, including infrastructure, high-end talent education and utilization, industrial circulations and regional/global integration, and still solid global synergies.
• Countries like Spain, and previously other European countries, Germany, England, etc., have been planning or investing enormous resources into semiconductor sector constructions. APAC countries like Japan and Korea also are trying to boost up, and Singapore's putting effort to regain the past glory in Asia.

Ivan Lam

• Spain's main source of income is from the tourist industry. But COVID is making it hard for Spain to make money from tourism. So, Spain is trying to build up other industries so it doesn't have to rely so much on tourism.
• Spain is the second largest car-making country in Europe and the fourth largest in the world. But the lack of vehicle chips has also hurt Spain's ability to make cars.
• Europe is spending a lot of money on chip-making.
• Spain would like to build production lines for MCUs, primarily for its vehicle industry.
• At the moment, Spain does not have a business in semiconductor manufacturing, and most of its semiconductor companies are design-house. So, starting a company to make chips might be hard and definitely wouldn't be cost-effective.

Brady Wang

May 23, 2022

Computer chip giant ASML places big bets on a tiny future

Reuters

ASML is now preparing to launch a new $400 million machine for next-generation chips which it hopes will be its flagship by the late 2020s but for now remains an engineering challenge.

Executives at ASML's headquarters mentioned that a prototype was on track to be completed in the first half of 2023. The company and longtime R&D partner IMEC were setting up a test lab on the spot - a first - so top chipmakers and their suppliers can explore the machine's properties and prepare to use production models as early as 2025.

The fortunes of the project are also important for ASML's customers, chipmakers racing to expand production amid a global shortage. They include U.S. player Intel, South Korea's Samsung and Taiwan's TSMC, the biggest, which makes chips for the likes of Apple, AMD and Nvidia.

Analyst Takeaways

DUV (Deep Ultraviolet) and EUV (Extreme Ultraviolet) lithography systems are widely used for patterning the Si as we scale down below 7nm technology node. Chips are made up of many layers stacked on top of one another, and lithography machines are used to produce these layers. In advanced chips, there may be one or two more complicated layers that are made using an EUV lithography machine, but the rest can often be printed using ‘DUV lithography systems.

With the adoption of EUV technology, scaling is more affordable for chip makers as it enables semiconductor industry to keep up with Moore’s Law.

The EUV technology is currently unique to ASML. ASML has significantly invested in the next major technology change on the EUV roadmap, the High-NA systems. These systems will allow chip manufacturers make chips below 3nm. The new High-NA EUV shifts from a 0.33 aperture lens to a sharper 0.55 aperture lens to enable higher resolution. The NA (Numerical Aperture) enables realise smaller geometries and smaller pitches thereby increasing density and smaller chip features. Chip makers normally print smaller features through double or triple patterning technology which is time consuming. Further, the overlay accuracy needs to be very good (since two masks are needed for double patterned layers), and with extra steps the manufacturing cycle-time is slower and also yields will be lower since these extra steps are opportunities for defects to get introduced.

EUV will remain complex and expensive at 3nm and beyond, and it’s unclear how many chipmakers can afford it. The chip industry is preparing for the next phase of extreme ultraviolet (EUV) lithography i.e High NA systems at 3nm and beyond, but the challenges still persists.

Vendors are still working on an assortment of new EUV technologies, such as scanners, resists, and masks to enable High NA systems. These will be necessary to reach future process nodes, but they are more complex and expensive than the current EUV systems. Other new equipment, new photomasks, and different photoresists are required to enable high-NA EUV. Various vendors are working on these technologies, but at this point some gaps remain.

With High NA they will be able to pattern in a single layer resulting in faster turnaround time and better process flexibility. Intel does not want to go for double patterned EUV and might go for High-NA.

ASML has received multiple orders for High-NA EXE:5200 (EUV 0.55 NA), ASML’s next model High-NA systems, from three logic and two memory customers.

Integration of the first EUV High-NA system in the new fab at Veldhoven has already begun in Q1 2022 and is progressing well. Besides the EUV scanner, other parts of the EUV ecosystem, namely the photoresists and metrology is challenging.

Aswath Rao

May 21, 2022

 Ericsson, Deutsche Telekom harness wind power for mobile masts as energy costs soar

Reuters

Ericsson and Deutsche Telekom are harnessing the power of the sun and the wind at an energy-intensive 5G mobile site in Germany. This is an effort to potentially safeguard against soaring electricity costs.

With high electricity bills only rising further, energy-intensive European companies are looking for innovative ways to secure reliable, low-carbon energy.

Analyst Takeaways

• In short "Every little bit help" to quote Tesco's slogan.
• This is a hot topic right now. There are lots of ways of reducing power, from using new-generation ASICs, liquid cooled basebands, software solutions such as "extended deep sleep" a software feature that puts (some, but not all) base stations in deep sleep mode at night. Some pretty impressive power savings quoted by the big vendors.
• Also lots of new things like AI-network controllers, which can reduce overall network power consumptions. Lots of other new features coming up in 3GPP Release 18, i.e. 5G-Advanced.
• Then a lot of MNOs use single RAN base stations, which integrate 2G-5G into one radio, one antenna and baseband. This saves power and also physical space on the tower - which is priced according to the size and weights of hardware on the tower. So big savings here.
• Overall total power consumed will still increase as 5G requires denser cells.
• The power per base station however, is falling quite dramatically.

Gareth Owen

May 20, 2022

Malaysia's biggest telcos seek majority stake in 5G agency - document

Reuters

Four of Malaysia's largest telecommunications firms are seeking a majority stake in a state 5G agency, countering a proposal by the government to offer them minority ownership.

The four dominant providers - Celcom Axiata Bhd (AXIA.KL), DiGi Telecommunications (DSOM.KL), Maxis Bhd (MXSC.KL) and U Mobile - also want a review of the pricing model and network access plan offered by the agency.

Analyst Takeaways

• The objective of having the state built single national wholesale network, Digital Nasional Bhd (DNB), was to drive 5G rollouts and save billions of dollars for operators. DNB will itself own the spectrum and build out the network infrastructure. Operators will pay to DNB to access this 5G network.
• The model has its advantage but brings-in more complications. It can lead to reduced competition and innovation among operators and can also bring along operational challenges.
• Operators insist on majority stake in DNB to have better control of the network and to maintain a competitive edge.
• Single wholesale network model is not a popular model and usually deployed for rural connectivity where returns are low. Malaysia’s 5G plans can take a hit if the ongoing objections by telcos on pricing and shareholding structure are not resolved soon and the whole model may fall flat before it takes off.

Charu Paliwal

May 16, 2022

Lithium Sector Needs $42 Billion as Pivot From China Adds Costs

Bloomberg

There might be as much as $42 billion of investment need by the end of the decade for the global lithium industry. This is order to meet demand for the material that is crucial to make batteries and attempts to build supply chains outside of China subject to much higher costs, according to a data and market-intelligence provider.

Analyst Takeaways

• As a semiconductor shortage has hampered the auto industry over the past year, we could have another issue with the bottleneck of lithium in the future a key element in EV batteries. Considering the surge in EV demand, we are not sure if enough lithium is available. It is known that there is no shortage of the element itself as lithium is almost everywhere on Earth. However, the problem is that pace of extraction and refinement is quite slow as extracting lithium is complicated, involving mining the ore and then separating the metal or pumping underground water deposits to the surface and then extracting the metal from pools.
• The lithium supply crunch must be the most pressing concern for all participants along the value chain - mining companies, refiners, battery manufacturers, and automotive OEMs. Currently, China controls the lithium market - Most lithium mines and reserves are located in Latin America and Australia, with China mostly in control of global supply chains. The US plans to ramp up domestic lithium production but currently produces only 1~2% of the world’s supply.
• Multiple projects will likely introduce new players and geographies to the lithium-mining map, including Western/Eastern Europe, Russia/CIS and the US. However, private and public sectors in major countries with high exposure to the EV industry need to work together in urgent need of measures of lithium procurement to diminish China’s dominance by encouraging investment in lithium resources and diversifying viable battery options.

Liz Lee

May 13, 2022

Foxconn outshines rivals hit hard by China’s Covid-19 lockdowns

Financial Times

Foxconn yesterday reported it's highest 1Q net income in eight years as it capitalized on the turmoil caused by COVID lockdowns which impacted its competitors more. Current quarter guidance was also raised.

Analyst Takeaways

• Foxconn outshines thanks to the rigid control policy in Guangdong and Zhengzhou Henan.
• Pan-shanghai lockdown eased. However, China is facing heavy economic pressure due to the zeroing, and even worst if the gov executes a higher frequency of COVID testing. Logistic challenges still exist, even for Foxconn.
• Foxconn made proven success in the service portfolio enriching and production facilities diversification.
• The vehicle sector will be the next cash cow in growth.
• Other sectors such as servers, PC & Notebook, and optical products will continue growing.

Ivan Lam

May 12, 2022

Google Debuts Smartwatch to Rival Apple as It Expands Devices

Bloomberg

Google announces its first branded smartwatch - Google Pixel Watch - which has a circular screen and developed by Fitbit, which was acquired by Google early last year. The watch will have Fitbit-based health tracking features integrated.

Analyst Takeaways

• Google has finally unveiled its first smartwatch, the Pixel Watch. In fact, this has been predicted since 2019, when Google announced its acquisition of Fitbit, so it's not surprising, but it's true that there has been a lot of market interest in the details.
• Although Google did not mention the price or detailed specs in this I/O, user-friendly software such as Google Maps, Google Wallet, and Emergency SoS, and the body designed in the shape of a circular dome are enough to be attractive options for users in many ways.
• In the smartphone market, Google has gained strong influence with the Android OS, but Wear OS, its wearable operating system, has not shown a significant presence in the market.
• Starting with the use of Wear OS on the Galaxy Watch 4 through a partnership with Samsung last year, Google has now laid a firm foundation for improving and optimizing its wearable OS with its own Pixel Watch. And through this, it is expected that Google can also grow its influence in the wearable market as well.
• In terms of hardware, it may be a stepping stone for entering the healthcare market with high growth potential in the future, as smartwatches are evolving into healthcare devices rather than simply auxiliary devices for smartphones.
• However, it is expected that Google will be more likely to consider growing revenues from health care services such as disease prediction or customized exercise suggestions based on health data collected through its smartwatches rather than depend on the hardware business itself through device sales.

Sujeong Lim

May 11, 2022

GlobalFoundries Tops Earnings Estimates in Sign Chip Demand Persists

Bloomberg

Global Foundries 1Q 2022 earnings and revenues beat analyst estimates highlighting chip demand continued to be strong during the first quarter. The company stated new uses for chips would mean a sustained period of growth in demand for chips.

Analyst Takeaways

• The "new uses" in semiconductors refers to emerging and growing chips such as 5G RF, IoT processors, AI processors and specific silicon photonics which are GlobalFoundrie's focus areas for business opportunities in the next few years.
• There is a general consensus in the industry about secular growth drivers around 5G migration, IoT proliferation, automotive electrification and edge computing, which results in more cellular, connectivity and processing content in each device. However, given the rising macroeconomy uncertainty, the growth path may not be smooth, especially in the short term.
• On a positive note, consumer wearables and the transition from passive to 'Smart' devices across verticals including industrial, automotive is leading to increased demand from matured node chips which is GlobalFoundries' majority of offerings.

Dale Gai & Akshara Bassi

May 3, 2022

Cloud Sales Are a Tech Bright Spot In a Dark Time

Bloomberg

In the latest earnings season many major global tech companies took a beating on Wall Street last week. Despite this, the demand for cloud services and chipmaking remained a silver lining. In a tumultuous quarter - Russia's invasion of Ukraine, spiking inflation and China's Covid Zero lockdowns, internet infrastructure sales did not slow down, whether as a service or as physical memory to fill up server farms.

Microsoft Corp.'s Azure revenue rose 46%, Alphabet Inc.'s cloud unit sales increased 44% and Amazon.com Inc.'s AWS scored a 37% increase plus, a 68% jump in future AWS purchase commitments to $88.9 billion.

Analyst Takeaways

• Cloudification of Services has necessitated expansion of Data Centers to fulfill the demand for data storage and analytics arising from the SaaS business model transformation opted by a majority of enterprises
• Most of the companies are opting for Hybrid Cloud deployments - i.e. mix of Public cloud and on-prem infra and that is reflecting in stronger revenues of public CSP's
• 5G deployment Infratsructure - vRAN, ORAN and at Edge has bolstered Edge computing resulting in need of decentralized data servers at edge and center
• 'Metaverse' investments by companies to enable Web 3.0 has contributed to Data Center infrastructure growth. This includesbuilding supercomputers and AI/ML workload specific Data centers to enable technologies such as Digital Twin, Virtual Robot, Immersive gaming etc.

Akshara Bassi

May 2, 2022

Japan, U.S. to deepen cooperation in securing cutting-edge chips

Nikkei

Japan and the United States are set to  work closer together in building supply chains for cutting-edge semiconductors, amid growing rivalry between Washington and Beijing.

The two governments are close to agreeing on cooperation in producing 2-nanometer chips and even more advanced semiconductors. They are also working on a framework that should mitigate technology leakage keeping China in mind.

Analyst Takeaways

• Post Huawei's sanction and the outbreak of chipset shortage coming along with the COVID 19, the importance of the semiconductor sector has surfaced in many countries, especially countries that have been or are on the way to advanced manufacturing.
• China, the US, Europe, and some allies, had planned and will invest billions of dollars in the semiconductor industry. Japan is still a country with leading advanced and precision technologies.
• The semiconductor industry involves a series of complicated workflow and cooperations, years of production experience accumulation, and tons of skilled labor source investment.
• TSMC is leading in the advanced nanometer technology and will keep the most developed part in Taiwan's homeland. But rivals are also catching up.
• The current horizon will not be changed in a short period. However, things are developing faster post-Moore era.

Ivan Lam

April Technology Insights

April 29, 2022

Apple sees bigger supply problems after strong start to year

Reuters

Apple's record fiscal second quarter results were overshadowed by comments on the tough supply chain outlook, which are expected to hurt sales in the current quarter by $4-$8bn, "substantially larger" than the amount in FYQ2.

 Analyst Takeaways

• We believe that COVID issues are "transitory" and will "get better over time", as Tim Cook hopes. Important production cities like Zhengzhou are seeing single-digit positive cases popping up but manufacturing facilities are said to be secure with very strict access controls.
• In Shanghai, numbers are finally easing and it's looking increasingly like May will be when the resumption to normal happens.
• Apple experienced the shortages of PMICs, touch controller ICs, audio codec ICs, connectivity ICs, and IC substrates in Q4 2021. iPhone supply is still tight but much improved. The shortage cases have been much improved in 1H 2022.

Ivan Lam

April 28, 2022

Qualcomm Gains After Chipmaker Gives Upbeat Sales Forecast

Bloomberg

Qualcomm pleasantly surprised yesterday giving a strong sales forecast for the current quarter, saying revenue and profit would come in $10.5-$11.3bn and $2.75 -$2.95 a share - both above average projections of $9.97bn and $2.60, respectively.

Two key things helping to drive the positive outlook - the company's move into new markets, and a surging handset division riding on Samsung demand and gains at Chinese OEMs; though overall demand is expected to wane, this will not impact Qualcomm's business as much of the declines are expected in cheaper phones.

 Analyst Takeaways

• We've been covering the diversification story since last year (here is our first note on that).
• Their automotive segment has been comparatively small but growing quickly and we were intrigued to hear about the $16bn "design win pipeline".
• From the smartphone perspective it seems like even during the slow seasonal Q1 increasing smartphone ASPs is what helped drive revenue.
• Best example is the 75% mix for Samsung's Galaxy S22, up from approximately 40% for the Galaxy S21.
• Additionally, Snapdragon is going strong within mid to premium with respect to revenue share.
• As mentioned in the earnings, supply has improved and Qualcomm has managed to meet more of the demand from China.
• Finally, 4G-5G transition favoring Qualcomm with more silicon content per phone.

Tarun Pathak

April 25, 2022

Honda developing three new electric vehicle platforms by 2030 

Reuters

Honda is aiming to build millions of EVs by 2030 based on three dedicated platforms - one of which will be developed in partnership with GM. Further, according to Honda's global head of electrification, an electric mini commercial vehicle launch in 2024 will be followed by a full-size electric model - on a new large platform - in North America in 2026; both of these platforms will be used for other models.

Analyst Takeaways

• Our latest research shows one in two cars will have an electric powertrain by 2030.
• There is an increasing demand gap traditional OEMs like Honda will struggle to fill over the short-to-medium term, but the company has revealed some ambitious EV targets towards the end of the decade.
• Are they achievable? The timeframe is long so I don't think it's impossible, but it will be challenging.
• Obviously having production line and supply chain infrastructure and know how in place helps, but the EV market is also ushering in a new generation of players and eight years is a long time for tech disruption to occur.

Soumen Mandal

April 23, 2022

The iPhone 14 Is Less Than Six Months Away. Here’s What to Expect

Bloomberg
Bloomberg's take on the new iPhone 14 - which, barring any delays, is less than six months away.

This generation likely to re-use current platform but have a larger camera bump, enhanced colors, 6.1" and 6.7" on offer for both regular and pro models as well as ability to send emergency text via satellite.

14 Pros to also get new A16 chip and a 48MP lens upgrade.

Analyst Takeaways

• Our current Mobile Device Outlook, March 2022 (Model Level Forecast) for the iPhone 14 Series trails equivalent period iPhone 13 Series by low double digits.
• From a consumer standpoint, people will welcome the advanced camera tech, less obtrusive screen cutouts and battery improvements. But signs are pointing to an overall slowdown in high-end flagship smartphones.
• So we're expecting volumes to fall, but looking at the kit outs for the 14 Pro and Pro Max, I think these models will be a key focus for Apple in order to support revenues and buoy margins. The new A16 chip is expected to be one of the first 4nm chips in market and should provide a serious power boost over the 5nm A15 Bionic, enabling smoother graphics, quicker responses to gestures and slicker 3D maps.
• The distinctions in chips and cameras (48MP for the Pros) could be Apple's way of justifying a potential expansion of what has historically been a $300 difference between the base model and Pro Max, to possibly a $400 spread or more.

Liz Lee

April 18, 2022

China’s Chip Output Shrinks as Lockdowns Hurt Production

Bloomberg

China's quarterly production of semiconductors actually shrunk for the first time in three years on softening consumer electronics demand and lockdown impacts.

The country's biggest chipmakers - from SMIC to Hua Hong Semiconductor - are struggling to source some components because of traffic controls being imposed by local governments.

Analyst Takeaways

• I wrote about this today and my note touches on the last point in the article about smartphones being a meaningful part of semi demand and the question around how long it will take for weakness to transmit to foundries.
• We're seeing normalization of inventories happen as prior build ups are now dovetailing with declines in smartphone demand.
• Shortage levels are significantly lower for key components like mainstream 5G SoCs, camera modules and DDIC/TDDIs.
• Of course, we're not seeing this happen across the entire board - critical components like power management ICs will still be tight, as will be older 4G SoCs.
• But the main issue now is not shortages but shock to the system from lockdowns, which inevitably has domino effects across the supply chain.

William Li

April 16, 2022

China’s Zhengzhou Locks Down Areas Near Major iPhone Plant

Bloomberg

here continues to be lots of news on lockdowns - especially in areas where Apple-related factories operate. State media and local sources are saying Foxconn's plants are operating normally.

The news is especially significant as this area - the Zhengzhou Airport Economy Zone - houses the world's largest iPhone assembly plant.

In an earlier Reuters article last week, Apple supplier Pegatron said they would suspend plants in Shanghai and Kunshan where a range of iPhones are produced.

Analyst Takeaways

• We believe Shanghai will retain both production and COVID control. Basically the infections/suspected infections have been isolated in Shanghai.
• Both Shanghai and Kunshan governments have already issued policy and guidelines for resumption of work and production.
• With the 'learnings' from Shanghai, tier 2 cities have been very strict with their policies and execution. Factory zones require full testing.
• Foxconn's Zhengzhou factory is operating at normal, with full compliance of government regulations.
• Their Zhengzhou facility is massive accounting for 50-80% of all iPhone production globally - certainly a big risk factor.
• However, Foxconn also has other facilities in Chengdu and Guangdong where things are normal at the moment.

Ivan Lam

April 11, 2022

Apple’s Big Bet on India Gets Bigger Still

WSJ

India is coming forth as Apple's top manufacturing bet in Asia outside of China with the company on Monday announcing it has begun producing the iPhone 13 in the country. Several hurdles remain, however, for it to become a force and significantly raise its current share of Apple's global manufacturing base from 3.1%.

Analyst Takeaways

• Diversifying the manufacturing base has certainly come to the forefront for many with lockdown risks plaguing China.
• To really accelerate things India needs to continue making meaningful material investments at the country level, with coordinated support from local governments - this includes things like more tax breaks, land/lease subsidies, labor support, training and education.
• Combined efforts across national and municipal governments has been a key factor in helping bring facilities to other markets and will be critical to attracting the EMS giants and global component manufacturers necessary to support further expansion for Apple in India.

Ivan Lam

April 9, 2022

Analysis: Samsung's reputation hit as prices slashed at home for new premium phone

Reuters

Just weeks since launch, there are many complaints amongst South Korean consumers around performance management software they claim significantly slows processor intensive applications.

Samsung's Game Optimising Service (GOS), software, which limits handset performance during gaming and other demanding applications to prevent overheating and preserve battery life, has come under scrutiny.

Analyst Takeaways

• GOS has been around since Galaxy 7, but its implementation this time has been particularly controversial because: 1) the performance degradation has gotten worse from the S22; and 2) users were unable to disable it.
• Samsung's failure to notify users in advance or ask for consent were two main reasons for this controversy, which reminds me of Apple's issue with CPU performance degradation due to battery life in 2017.
• Even with the best intentions around safety, one-sided actions with no user options are not always welcome.
• Samsung often has over-heating issues whenever new products are launched, and it seems that they have focused more on software rather than hardware to solve this problem.
• Samsung's strategy of pursuing a slimmer design while being the first in the industry to be equipped with the latest processor - my sense is there must have been a limit to solving these issues through hardware.
• To settle this controversy, Samsung lifted performance limits through a software update, gave the option to run GOS, and in addition increased discounts for the device.
• In the long term, Samsung is expected to either install MediaTek's latest Dimensity chipset, which is known to have better at managing heat, or develop a custom AP.

Sujeong Lim

April 8, 2022

Apple supplier BOE goes full throttle on OLED offensive

Nikkei Asia

China's leading display maker BOE is expanding OLED panel production by nearly 70% this year to over 100m units from 60m in 2021.

They are also considering building a new OLED facility in Chengdu.

Analyst Takeaways

• BOE's planned product portfolio is definitely heading in the right direction to align with its customers.
• The biggest uncertainly, however, comes from short-term supply chain bottlenecks from COVID lockdowns. China is in the fifth and arguably most disruptive wave since the start of the pandemic, and the government's adherence to zero COVID will continue to be a factor.

Ivan Lam

April 7, 2022

White House warns of 'escalating vulnerabilities' to U.S. from semiconductor issue

Reuters
The White House held a briefing on Wednesday with some US lawmakers around escalating risks to the US economy from semiconductor supply issues.

It estimates chip shortages "...probably took a full percentage point off of GDP in 2021."

Analyst Takeaways

• China’s semis manufacturing industry (IDM and foundry) when compared to the leaders in global geometry technologies, is behind by roughly 2-3 generations in memory and three generations in logic foundry.
• The immediate issue, however, is that the focus tech in China remains the legacy nodes while the lack of experienced talent pools in manufacturing engineering and dearth of solid IP libraries are big hurdles to advancement.
• Compounding the situation are the high turnover ratios across major domestic foundries due to lack of attractive compensation or incentives.

Dale Gai

April 5, 2022

Surging price of battery materials complicates carmakers’ electric plans 

Financial Times

Battery costs have been declining for years, falling from $1,000 per KWH for the first EVs launched more than a decade ago to around $130 in 2021. The war in Ukraine is causing the cost of commodities used in the manufacture of batters - nickel, lithium, and cobalt - to skyrocket. For context, the price of these metals used in a large SUV has gone up from $1,395 a year ago to more than $7,400 in March.

Analyst Takeaways

Prices of battery raw materials have risen about 5x in the last year, which throws a spanner in the assumption of ever-declining battery prices that many car makers were assuming pre-pandemic and pre-Russian invasion of Ukraine. However, the prices of all metals and many other raw materials have also increased, so ICE cars are not relatively any cheaper than BEVs and PHEVs. Furthermore, with fuel prices high, the lure of electric power continues to generate demand for EVs of all types.

Peter Richardson

April 4, 2022

South Korea's Vast 5G Coverage Offers Little New Content

Nikkei Asia

Korea has more than 90% urban 5G coverage with the three telecoms heavily investing since 2018. 5G download speeds are about 10x faster than 4G according to the government, but telcos are not taking full advantage in rolling out new products. When asked, replies are mostly about live broadcast streams or enterprise networks.

Analyst takeaways:

• It is generally accepted that Europe's 4G rollout did not go to plan. Europe was the first to develop 4G but was late and slow in deploying it compared to other regions such as the USA and South Korea. A delayed and fragmented assignment of radio spectrum had a negative impact on 4G coverage and penetration in Europe.
  • I'm not sure about other European countries, but 4G in the UK is a very mixed bag. While coverage is ok (rural areas struggle, but that's true with 2G and 3G too), speeds are poor, and capacity is a serious problem when anywhere even slightly busy. Much of the time, 4G doesn't really work for anything more than basic internet use.
  • The comment in the article stating that "4G is good enough to watch videos" isn't really true in the UK, unless one is in a fairly quiet area.
• Unfortunately, it seems that lessons haven't really been learned, and the same problems are hampering 5G rollout. 5G solves some 4G problems, but only in certain areas where 5G has coverage and uses the right spectrum.
• Some challenges are the same, though, such as finding the right use case for 5G, particularly for consumers. Much of 5G at the moment is just a speed upgrade on 4G. And with many consumers using wi-fi a lot of the time anyway, the challenge is in getting them to pay more for a service that they, at the moment at least, may not really want or need.

Jan Stryjak

March Technology Insights

March 31, 2022

Apple Working to Bring More Financial Services In-House

Bloomberg

Apple reportedly working on a multi-year plan to develop its own payment processing technology and infrastructure to support future financial products which could include payment processing, risk assessment for lending, fraud analysis, credit checks and other customer-service functions like dispute handling.

Analyst takeaways:

• This move will help to reduce its interdependence on other financial services partners.
• This could be a disruption in the financial service industry as it opens up huge opportunities for Apple to build its own set of financial products and expand its future services to additional countries. Currently, some of its products and services like Peer to Peer Payments, Apple Card, and Apple Cash are limited to US users only.
• Earlier Apple faced some hurdles in developing its own financial services product, so the actual launch might take longer than expected.
• Apple has advantages in terms of its excellent customer support which could be beneficial when entering this new segment. The ultimate aim is to drive more revenues from the hardware subscription plan.

Anshika Jain

March 28, 2022

Apple to cut iPhone, AirPods output amid Ukraine war uncertainty

Nikkei

Sources have told Nikkei that Apple is planning to cut iPhone SE production next quarter by 20% on Ukraine war and inflation impact to consumer demand.

Also mentioned is Apples order reduction on AirPods, and it's request to suppliers to make a couple of million fewer units of the entire iPhone 13 range than planned.

Analyst takeaways:

• iPhone 13 Series may face an impact from the ongoing Ukraine crisis and high inflation. That explains the reported cut in iPhone 13 production.
• iPhone SE 2020 contributed 14% and 10% to Apple iPhone shipments in 2020 and 2021, respectively. We believe there will be lesser demand for iPhone SE 2022 as compared to its predecessor.
• This is because of the outdated design with almost the same features except for 5G connectivity. Potential Android users' upgrades will remain low as this segment is conscious of a combination of specs and design (larger screen).
• iPhone SE 2022 will be driven by a niche user base that is interested in compact phones.

Hanish Bhatia

March 25, 2022

Apple Is Working on a Hardware Subscription Service for iPhones

Bloomberg

According to people with knowledge of the matter, Apple is working on a subscription service for its hardware products, including the iPhone. Similar to car leasing programs, this could bring another growth area for Apple and make it easier for more buyers to afford its premium devices.

Analyst takeaways:

• Apple is unique in that it has the largest app store, soon to be pushing an installed base of two billion users (all hardware), a payment system, a credit card, and a loyal base. All ready.
• However, there is not much to see here. Apple may be able to skim off a tiny percentage of regular upgraders (who upgrade yearly), but Apple already has these users locked in.
• Apple already has the tailwind of global mobile operators and retailers discounting its hardware because iOS subscribers are so valuable with uniquely high ARPU. It is difficult to improve on margins when sellers are doing the promos for Apple.
• For the masses, this is a non-story. The average iPhone user holds onto their phone over 3.3 years. The vast majority will not be looking to get locked into a hardware subscription when Apple devices are of high quality, durable, and last for years.
• Finally, Apple already has an upgrade program. Many global mobile operators have an early upgrade program (very low take rates). This concept is already available with limited success.

Jeff Fieldhack

March 23, 2022

Xiaomi beats estimates with 21.4% rise in Q4 revenue

Reuters

Xiaomi surprised with a bigger-than-expected 21.4% increase in Q4 2021 revenues, displaying "resilience" during a quarter and year plagued with supply shortages.

Smartphone shipments rose 4.4% YoY to 44.1m units and net income increased almost 40%.

Analyst takeaways:

• Smartphone shipments actually fell by 7% YoY from 48.5 to 45.0 million units in Q4 2021.
• However, Xiaomi's smartphone ASPs rose YoY due to consistent quarterly increases throughout the year.
• To quickly summarise each quarter:
  • The launch of Mi11 increased the 5G ASP. Further, the increase in the share of 5G shipments has led to a $17 QoQ increase in overall ASP in Q1.
  • Both LTE and 5G ASPs increased in Q2. Note 10s ($161) and Mi 11 Lite ($291) contributed to a price rise in LTE smartphones. Mi 11 Pro ($687) led to a little increase in 5G ASP.
  • In Q3, while 5G ASPs reduced for Xiaomi, LTE prices increased as a result of the very inexpensive Redmi models such as the 5A and 6A having a reduction in their sales.
  • Q4 saw a return of ASP increases in both LTE and 5G smartphones. LTE prices went up in SEA ($212 to $232) but decreased in India ($124 to $118). However, globally, LTE prices went up because of the contribution as well as the ASP of pricier models such as the Mix 4 going up QoQ. 5G ASPs increased a bit due to the 12 series.

Harmeet Singhwalia

March 18, 2022

Apple’s Latest iPhone Sidelines Carriers From Buying Process

Bloomberg

New iPhone SEs are equipped with eSIMs (Download our eSIM  Adoption Opportunities & Benchmarking Whitepaper) which allow customers to activate their plans without inserting a physical SIM card.

This "on-device authentication" enables faster purchase experience and, the article suggests, gives Apple more control over the end-user by cutting wireless carriers out of the process.

Analyst takeaways:

• With this move, Apple can now own the entire customer journey and improve it by shifting the activation from MNO to Apple. This is only applicable for AT&T and T-Mobile for now, I expect to see it later for other MNOs as well.
• By using to On-device-activation, Apple is testing consumer experience and shoring up retail preparedness for the rumoured eSIM only iPhone.

Ankit Malhotra

March 15, 2022

Apple Ends Below Key Level After Foxconn Closes China Plant

Bloomberg

Apple shares react heavily to halt of Foxconn operations at its Shenzhen sites on COVID lockdowns.

Analyst takeaways:

• It's possible the delays will be around 10 days to two weeks.
• Three rounds of testing needed before workers get the green light (1 week) combined with prep at the front-end and some cooldown on the back.
• Obviously the bigger concern is recurrence, which is likely to happen especially as we move into spring when the flu tends to peak in southern China.
• For now, Foxconn and other major manufacturers have likely re-allocated priority production to other facilities.

Ivan Lam

March 14, 2022

Apple Supplier Foxconn in Talks to Build $9 Billion Factory in Saudi Arabia

WSJ

Foxconn in talks with KSA on a joint $9bn factory making chips, EV components and other electronics.

Specifically, it would be a dual-line foundry in Neom - a tech-focused city being developed in the desert, according to reports.

Analyst takeaways:

• Lots of inquiries around why Saudi Arabia; on the face of it, seems like a strange location choice.
• My guess is it's related to the Kingdom's plans to diversify its economy away from oil i.e. Saudi Vision 2030.
• One of the ways to realize the vision is to embed the country in the global tech supply chain. The other is to attract investment by using state subsidies.
• There is related business happening already, like PIF's $1bn Lucid Motors investment last year.
• I could see Foxconn looking at financial incentives such as financing, co-investments, tax breaks, subsidies, export credits, guarantees on infra like power, water, raw materials - the list goes on.
• The Neom tech city project has received some skepticism, and a Foxconn win would also be a great PR win.
• Finally, Foxconn is also in talks with the UAE, so there's probably some subsidy comparison shopping going on here.

Yang Wang

March 12, 2022

Russia's attack on Ukraine halts half of world's neon output for chips

Reuters

Ingas and Cryoin, Ukraine's two leading neon suppliers which produce around half of the world's supply have halted operations as Russian attacks intensify.

Analyst takeaways:

• Obviously a big blow for chipmakers but this should be manageable over the short-term.
• Chipmakers have learned to optimize gas purging processes to increase efficiencies - cutting total neon gas usage by 20-40% during the 2014 Crimean crisis.
• A prolonged shutdown brings broader industry risk, as it will hamper makers of DUV lithography systems - the machines used to make semiconductors.
• Assuming manufacturers have not built up massive stockpiles, we could see major delays in equipment scheduled for delivery in late 2023 for foundry adoption in mass production by 2025.

Ashwath Rao

March 11, 2022

Big Tech Raises Its Bets On Chips

Financial Times

Interesting opinion piece highlighting performance gains the likes of Apple, Google, Tesla et. al are enjoying by designing key chips chips in-house. There's been an evolution in the chip industry's complex supply chain enabling big tech to more easily design for themselves.

Ultimately, the ability to integrate chip design into wider tech development gives these companies competitive advantage within their own industry - and is increasingly a challenge for traditional chipmakers.

Analyst takeaways:

• Custom Silicon is preferred by big players - predominantly hyperscalars, because of the workload processing efficiencies derived from custom chips due to synergies derived from own SW & HW
• The custom silicon also acts as a safeguard to protect their offerings in x-aaS, preventing business models to be easily copied by any player in the market.
• Impact on traditional chip makers may take years if not a decade to change market dynamics to lean in favor of custom versus off shelf products.
• Interestingly, Nvidia is trying to create a closed system à la Apple wherein it is focusing on providing a platform of services (SW) fed by its own HW solutions and claiming better outputs.
  • Case in point: In automotive; Nvidia has leveraged the HW portfolio by getting customers for E2E solutioning and preventing them from going to hyperscalars/3rd party companies for SW expertise.

Akshara Bassi

March 9, 2022

Apple Unveils New iPad Air, iPhone SE and Desktop Mac

Bloomberg

Apple unveiled 5G versions of its iPhone SE and iPad Air, along with a redesigned Mac desktop and processer; 2022 is likely to be one of Apple's most prolific for new product releases.

Analyst takeaways:

• We covered the new iPhone SE launch in our PR (link here)
• Key points:
  • The 5G network support opens up a lot of markets and segments for Apple, especially in China, Europe, SE Asia and Korea.
  • And of course, Japan and the US will continue to be major drivers
  • Pricing was a bit of a surprise to the upside, but improved processor and 5G support gives this product a really long runway so there is a lot of time and room for Apple to introduce tactical price cuts

Sujeong Lim

March 8, 2022

Intel's Mobileye confidentially files for U.S. IPO

Reuters

Intel's Mobileye file for IPO in what is expected to be one of the biggest floats this year.

Mobileye uses a camera-based system and eventually plans to build its onw "lidar" sensor to help its cars map three-dimensionally; its current lidar units in its initial robotaxis are built by Luminar Technologies.

Analyst takeaways:

• There are two key similarities here to Tesla, which has been able to demand the highest valuations in the future autonomous driving space.
• Intel has all the pieces of the puzzle as it makes the components, collects the data (Moovit) and writes the software operating AVs
• Product portfolio spanning HW and SW allows Intel the possibility of recurring revenue stream through subscription pricing by offering MaaS to customers.

Akshara Bassi

March 5, 2022

Samsung Suspends Shipments of Phones, Chips to Russia

Bloomberg

Samsung suspends shipments of all products to Russia including chips, smartphones and consumer electronics according to a person familiar with the matter.

“Our thoughts are with everyone who has been impacted and our priority is to ensure the safety of all our employees and their families,” Samsung said in a statement.

Analyst takeaways:

• Russia has been a bright spot for Samsung's smartphone business, with a market-leading 31% market share and 23% annual growth in 2021. A big proportion of that growth came from the important premium segment.
• Despite Russia accounting for 3.7% of Samsung's annual smartphone sales in 2021, Samsung joined Apple in its stance that global reputation is more important than company performance.
• Chinese OEMs, including Russia's second largest smartphone vendor Xiaomi, have so far refrained from making similar announcements, and are unlikely to do so unless China's official stance changes. However, they will need to play the situation carefully given their desire to grow their reputation and market share in Western Europe.

Jan Stryjak

March 3, 2022

Apple Confirms Plans for March 8 Event; 5G iPhone SE Expected

Bloomberg

Apple announced Wednesday its first product unveiling will happen on March 8.

The company is expected to announce the low-cost iPhone SE with 5G, a new iPad Air and updated Macs.

Analyst takeaways:

• A low-cost iPhone will have a key role in iOS installed base growth, especially in China, India and other emerging markets.
• Apple premium branding and high aspirational value also positions it well to capture void created by Huawei.
• Those Android dominated markets present a massive growth opportunity for Apple across the mid-range price band.
• The company could go quite low on the price considering a low-cost iPhone can potentially capture much higher customer lifetime value with the piggy-backing of services.
• If Apple can absorb inflationary costs and retain or hit below previous pricing, iPhone SE 2022 could become a real sleeper hit for them globally.

Hanish Bhatia

March 2, 2022

Apple says it halts all product sales in Russia

Reuters

Apple on Tuesday paused product sales in Russia in response to their invasion of Ukraine.

"We are deeply concerned about the Russian invasion of Ukraine and stand with all of the people who are suffering as a result of the violence," Apple said in a statement. "We are supporting humanitarian efforts, providing aid for the unfolding refugee crisis, and doing all we can to support our teams in the region."

It also outlined it would stop all exports into sales channels, limit Apple Pay and other services; state media RT News and Sputnik News are no longer available for download from Apple Store outside Russia.

Analyst takeaways:

• Chip companies such as Intel and AMD were banned from selling chips to Russia.
• Consumer devices were not impacted.
• However, Apple, Dell, Netflix, Ford and many other US companies have stopped selling or stopped JV's in Russia.
• This was not an easy decision for companies. In Apple's case, there will be many Chinese OEMs happy to move in and grab market share.
• Apple also closed off its app store and will lose out on services revenue as well as revenues from other hardware. But, Russia is responsible for under 2% of Apple's global iPhone volumes.
• In Apple's view, this is a small price to pay to stand up to the violence and suffering in the region.

Jeff Fieldhack

February Technology Insights

February 25, 2022

Ukraine war flashes neon warning lights for chips

Reuters

Russia’s invasion of Ukraine (read more) by land, air and sea risks reverberating across the global chip industry and exacerbating current supply-chain constraints. Ukraine is a major producer of neon gas critical for lasers used in chipmaking and supplies more than 90% of U.S. semiconductor-grade neon, according to estimates from research firm Techcet. About 35% of palladium, a rare metal also used for semiconductors, is sourced from Russia. A full-scale conflict disrupting exports of these elements might hit players like Intel , which gets about 50% of its neon from Eastern Europe according to JPMorgan.

Analyst takeaways:

• Short-term supply risk is certainly high, but I don't think a temporary shortage will be a major issue.
• Unlike chip manufacturing or that of critical materials, the degree of technology in neon production or purification is not high, but the price will rise, inevitably.
• Having said that, additional costs from neon price increases will be very minor compared to the overall BOM.
• What's more concerning is currency deprecation, with the situation likely to deteriorate further if the G7 decides to remove Russia from the global SWIFT network, making it even more difficult for chipmakers to purchase neon supplies.

Brady Wang

February 16, 2022

Google to overhaul ad tracking on Android phones used by billions

Washington Post

Google announced it will begin the process of getting rid of long-standing ad trackers on its Android operating system, upending how advertising and data-collection work on phones and tablets used by more than 2.5 billion people around the world.

Google contrasted its plan with Apple’s, saying it would make the changes over the next two years, working closely with app developers and the advertising industry to craft new ways of targeting ads and measuring their effectiveness before making any drastic changes.

Analyst takeaways:

• Though the rules have not been made clear, they look similar to what Apple has done where it restricts third parties from accessing personal information. This is why the article argues that Google may, on the contrary, become more dominant in providing personalized ads.
• As Xiaomi's overseas phones all preinstall GMS, its self-developed pre-installed apps are where it can earn profits. If my guess above is correct, as one of the third parties, Xiaomi should also be affected rather than gaining advantages.

Archie Zhang

February 15, 2022

Intel expands in specialty chipmaking with $5.4 bln deal for Israel's Tower

Reuters

Intel Corp is buying Israeli chipmaker Tower Semiconductor (TSEM.TA) for $5.4 billion, the companies said on Tuesday, giving it access to more specialised production as it positions to take advantage of soaring semiconductor demand. The acquisition deepens Intel's presence in a sector dominated by Taiwan-based TSMC , the world's largest chipmaker, at a time when the global semiconductor shortage has hampered the production of everything from smartphones to cars.

Tower has been investing in Israel, Texas and Japan to boost capacity for 200 and 300 millimetre chips. It serves "fabless" companies - which design chips but outsource manufacturing - and integrated device manufacturers. Tower, previously known as TowerJazz, has capacity for more than 2 million wafer starts a year. Tower's power management chips draw "extraordinary interest from customers but (Tower) simply don't have the scale to meet the market demands," Gelsinger told a conference call.

Analyst takeaways:

• Intel's action supports their commitment to IFS (Intel Foundry Service), not only in leading-edge nodes but also in legacy technologies such as those Tower focuses on.
• It's core products include PMICs, which are widely used in consumer products to automotive, and mobile RF.
• The acquisition should strengthen Intel's position in competing with the likes of Globalfoundries, UMC and Vanguard.

Dale Gai

February 10, 2022

Samsung Unveils Galaxy S22 and Galaxy Tab S8 Series Devices at Unpacked Event

Samsung

At the virtual Galaxy Unpacked event, Samsung announced the new Galaxy S22 line of flagship smartphones, along with three Galaxy Tab S8 models. Of the six products, the Galaxy S22 Ultra and the Galaxy Tab S8 Ultra are the most appealing devices that pack the best productivity features that Samsung has to offer. The Galaxy S22 Ultra comes with S Pen support with a built-in slot and is positioned as a Note successor. The Galaxy Tab S8 Ultra, on the other hand, is a 12.9-inch iPad Pro competitor, featuring a massive 14.6-inch Super AMOLED display.

Analyst takeaways:

• Qualcomm showcased a strong set of design wins with the Galaxy S22 series. The Snapdragon 8 Gen 1 Mobile Platform, X65 5G Modem-RF System, FastConnect 6900 for WiFi 6E/BT5.2, and even the 3D Sonic Sensor Gen2 which is built into the S22 series' displays, all demonstrate a continued strong partnership and integration effort between Samsung and Qualcomm
• As expected the Galaxy S22 Ultra looks to be the Note replacement at a price point of $1,199. Just like the Note predecessors, it has a similar boxy design and comes with an S Pen. This is a good move by Samsung to consolidate its different premium flagship line-ups, and can now focus on the S series and its foldables going forward, providing clear marketing strategies between the two line-ups while still serving that consumer segment interest in the largest possible smartphone packed with productivity and creativity tools.
• The Galaxy Tab S8 Ultra boasts a 14.6-inch AMOLED screen and 120Hz refresh rate, promising heightened gaming experiences, and better multitasking via split screening for up to three apps. This makes these devices a strong alternative for laptops and positions the device as an iPad Pro alternative.

Maurice Klaehne

February 9, 2022

Apple to Launch Tap-to-Pay Feature in Challenge to Square

Bloomberg

Apple Inc. plans to release a much-anticipated Tap to Pay feature on the iPhone later this year, giving merchants an alternative to Block Inc.’s Square technology. The option will let sellers accept payments through Apple Pay, credit cards and digital wallets without additional hardware, the company said in a statement. The system relies on near field communication or NFC. Apple’s plan, which was previously reported by Bloomberg, sent shares of Block down as much as 3.2% after it was announced Tuesday.

Analyst takeaways:

• After the launch of the Apple pay and Apple card, it makes more sense to enable iPhone to be used as Tap to Pay.
• This will enable Apple to easily enter the enterprise market without a POS and gain more enterprise users.
• It will be generating a lot of valuable data related to user spending and preferences which it can use to advertise and also understand not only enterprises but also consumers.

Parv Sharma

February 8, 2022

Nvidia, SoftBank Call Off Blockbuster Arm Deal

WSJ

Nvidia Corp. and Japan’s SoftBank Group Corp. are abandoning a blockbuster deal for the U.S. semiconductor giant to acquire chip-design specialist Arm after regulators raised antitrust concerns. The two companies said in a joint statement on Tuesday that they had agreed not to move forward with the transaction “because of significant regulatory challenges.”

SoftBank, which owns Arm, said that it plans to pursue a public listing for the U.K.-based chip business. The U.S. graphics chip giant in September 2020 agreed to buy Arm for $40 billion from SoftBank in what would have been the chip industry’s biggest deal ever. The nominal value of the deal had risen along with Nvidia’s share price amid booming semiconductor demand.

Analyst takeaways:

• Arm will remain independent, autonomous & cash-rich post successful IPO. Arm is also under-valued, and IPO will drive its true potential.
• With leadership in client computing space (SP, PC, IoT, etc), Cloud, DCs, Infra & auto remains the key growth areas.
• Walk away with $3B+ as consolation, though huge loss, since the M&A is called off, IPO remains the only safe, neutral option, though possibly less lucrative vs NVIDIA M&A. It will take some time for Softbank to reach NVIDIA M&A level ROI.

Neil Shah

February 8, 2022

Apple Buys Startup That Makes Music With Artificial Intelligence

Bloomberg

Apple Inc. acquired a startup called AI Music that uses artificial intelligence to generate tailor-made music, according to a person with knowledge of the matter, adding technology that could be used across its slate of audio offerings. On its LinkedIn page, AI Music said its goal is to “give consumers the power to choose the music they want, seamlessly edited to fit their needs or create dynamic solutions that adapt to fit their audiences.”

Analyst takeaways:

• There's obviously big potential for the technology to be leveraged across Apple's services and devices - royalty-free workout tracks or compositions for just-shot Cinematic clips are just the beginning.
• A music feature that 'just works' across broad usage scenarios could be a powerful tool providing even more stickiness to the iOS platform.

Harmeet Singhwalia

February 7, 2022

What to expect from Samsung’s Galaxy Unpacked event

Engadget

Later this week, Samsung’s big smartphone showcase will likely reveal the next iteration of its flagship Galaxy S line, almost definitely called the Galaxy S22...Samsung skipped the Note line in 2021, but in all but name, the Galaxy S22 Ultra will be the Note 20 successor fans have been waiting to see for nearly two years.

Analyst takeaways:

• There are several reasons we're expecting the Galaxy S22 Series to perform better than its last two predecessors, as this launch occurs in a more normalized environment with respect to COVID-19.
• The S22 Ultra could be a legitimate successor to the existing Note series with a good chance the stylus will be built-in. The S20 and S21 Series shipped 23.6m and 27.0m units (preliminary estimate) during their initial launch years; we expect the S22 Series to reach 25-30m.
• There's been a slight delay in the release, so we're already seeing the impact of component shortages. Securing key parts has not been smooth, but we believe supply is stable for them now and should ease further as we move into 2H.

Jene Park

February 5, 2022

Apple Aims to Debut a New Low-Cost 5G iPhone and iPad in Early March

Bloomberg

Apple Inc. is targeting a date on or near March 8 to unveil a new low-cost iPhone and an updated iPad, according to people with knowledge of the matter, kicking off a potentially record-setting year for product launches.

...Given that the planned timing is still more than a month away, the company’s plans may change in the face of production delays or other changes, the people said. An Apple spokeswoman declined to comment on the company’s plans.

The new phone will be the first update to the iPhone SE model in two years, adding 5G network capabilities, an improved camera and a faster processor. But the design itself is expected to be similar to the current version, which debuted in April 2020.

Analyst takeaways:

• A big segment the new SE is aiming for is the huge installed base of iPhone 6-8 users.
• The device will help Apple make further inroads into the $200-$500 mid-segment dominated by Android.
• China is likely to continue being difficult to get Apple in this segment as its offline channel penetration is comparatively weak.

Ivan Lam

February 3, 2022

Facebook loses users for the first time in its history

Washington Post

Facebook parent Meta’s quarterly earnings report on Wednesday revealed a startling statistic: For the first time ever, the company’s growth is stagnating around the world. Its newest ambition is off to a slow start, at least by one key metric. Facebook showed for the first time on Wednesday how much of a money-losing proposition its investment in virtual- and augmented-reality hardware is — the suite of products the company dubs the metaverse. It spent more than $10 billion on building its hardware division, Facebook Reality Labs (FRL), in 2021...The company has made significant investments toward its aspiration of becoming a hardware giant, including hiring over 10,000 people and rebranding itself to Meta.

But that transition is still in its early days. “Last year was about putting a stake in the ground for where we are heading; this year is going to be about executing,” CEO Mark Zuckerberg said on the company’s earnings call. Executives hope that the company can reinvent itself with a focus on hardware, and that doing so will distract from its political problems.

Analyst takeaways:

• FB’s daily active users today is 1.93bn.
• XR hardware installed base currently adds up to only 18.25mn. Add the 261mn more headsets we’re expecting to be sold by 2025 from this year, and the company still has a comparatively small addressable market in the metaverse.
• Combining this with more intense competition, multiple constraints of transmission and interaction technology and regulatory factors, there are more questions than answers around Meta’s vision.

Ivan Lam

February 2, 2022

Qualcomm forecasts current-quarter revenue above estimates

Reuters

Qualcomm Inc on Wednesday forecast second-quarter revenue above Wall Street estimates amid soaring demand for its chips used in devices from phones to internet-run gadgets on the back of an uptick in 5G and cloud adoption. "Android is driving the growth. Android is over 60% revenue growth year over year in our results, there is tremendous opportunity with the change in the OEM mix in China, and we're capitalizing on it," Qualcomm chief financial officer Akash Palkhiwala told Reuters.

Analyst takeaways:

• Qualcomm is really delivering on what they've been messaging the last couple of months. Huawei woes helping them in China, with premium Android a big revenue driver.
• Great diversity story which we covered in detail last month. Apple loss (expected) so negatives already baked in.
• Virtually all OEMs taking Snapdragon 8 Gen 1 are also taking RF front-end ($$$). Supply constraints helped by dual sourcing (Samsung + TSMC).

Jeff Fieldhack

January Technology Insights

January 31, 2022

Vodafone teams up with Intel on OpenRAN in challenge to network suppliers

Reuters

Vodafone has teamed up with Intel Corp and other silicon vendors to design its own chip architecture for nascent OpenRAN network technology, aiming to weaken the grip of traditional telecoms equipment suppliers. OpenRAN allows operators to mix and match suppliers in their radio networks, posing a challenge to the likes of Ericsson, Huawei and Nokia that dominate the global telecoms equipment market with their proprietary technologies.

The development of OpenRAN has taken on greater prominence since some governments either banned or discouraged the use of China's Huawei in national networks. Vodafone's initiative, based at its digital innovation and R&D centre in Malaga, will also contribute to the European Union's efforts to bolster its chip industry and double its share of global production to 20% after it lost ground to Asian and U.S. suppliers.

Analyst takeaways:

• A disruptive open RAN ecosystem requires a variety of merchant silicon solutions if it is going to be able to compete against proprietary RAN products optimised for performance, power and cost from the likes of Ericsson and Nokia.
• Although Vodafone's first 5G open RAN base station based in Bath in the UK uses Intel's FlexRAN architecture, the operator has stated several times that it will use other silicon solutions from rival chip vendors for high traffic, urban base stations.
• We believe that this announcement is part of Vodafone's efforts to engage more closely with chip vendors in a bid to get them to design products that better meet Vodafone's requirements - rather than an attempt to set itself up as a chip designer. The operator is already working closely with Intel's ARM-based rivals such as Qualcomm as well as RISC-V players such as Lime Systems.

Gareth Owen

January 28, 2022

Apple Posts Highest-Ever Quarterly Earnings in Sign It Tamed Supply Crisis

Bloomberg

Apple Inc. rallied in late trading after quarterly revenue sailed past Wall Street estimates, marking a victory against a supply-chain crunch fuelled by the pandemic and chip shortages. Sales climbed 11% to a record $123.9 billion in the fiscal first quarter, the company said Thursday. Analysts had predicted $119.1 billion on average. Profit also beat projections, and the company predicted that sales would grow by a double-digit percentage in the March quarter.

Analyst takeaways:

• Apple has several competitive advantages in the supply chain like massive scale (few SKUs/many common parts) which help it lock in supplier capacities better than most competitors.
• But common mature node chips were tough to secure even for Apple hence the dip in iPads.
• Q1 2022 will bring a slight breather so supply can begin to catch up; but we don't see a significant dip as they'll need to refill channels.

Jeff Fieldhack

January 21, 2022

iPhone maker Foxconn seals EV partnership with Indonesia

Reuters

Taiwan-based Foxconn said it has partnered with Indonesia's Investment Ministry and several companies to support the development of electric cars in the Southeast Asian country, adding to a string of such deals by the iPhone assembler. Foxconn said it has signed a memorandum of understanding for a wide scope of investment on EVs including battery manufacturing with the Indonesian Ministry of Investment as well as Indonesia Battery Corporation, energy firm PT Indika Energy (INDY.JK) and Taiwanese electric scooter vendor Gogoro.
The cooperation, which aims to build a "new energy ecosystem" in Indonesia, also includes the development of EV supporting industries such as energy storage systems, battery exchange stations and recycling, Foxconn said in a statement. Under the partnership, an open "MIH platform" that provides both hardware and software services will be available to companies in Indonesia, the statement said, without giving details of the size of the investment or production plans.

Analyst takeaways:

• Foxconn is planning to start EV production in Europe, India and either North America or Latin America by 2024. We expect regional manufacturing will be key for success to Foxconn in the global EV market. Last year, Foxconn also made a partnership with Thailand oil supplier PTT PLC to start EV manufacturing there.
• The recent announcement by Foxconn to invest in EVs including battery manufacturing with the Indonesian Ministry of Investment isn’t surprising as Foxconn was discussing this from the last year. This will also help Foxconn to support “Build, Operate, Localize” (BOL) business model in diversifying its business into the SEA region.
• The presence of natural resources for battery raw materials and aggressive infrastructure development supported by the government are encouraging global players to start production in Indonesia. Moreover, promising market potential, growing middle-class people and availability of productive workforce at cheaper rate are some of the important factors for manufacturing companies to choose Indonesia over other SEA countries for new production plants.

Soumen Mandal

January 20, 2022

TikTok owner ByteDance dissolves its investment arm

CNBC

TikTok owner ByteDance has disbanded its investment department, a company spokesperson told CNBC on Wednesday. Following an assessment at the beginning of the year, ByteDance decided to “strengthen the focus of the business, reduce investments with low connection (to the main business) and disperse employees from the strategic investment department to various lines of business,” the spokesperson said in a Chinese-language statement translated by CNBC.

Analyst takeaways:

• This is a surprising new development. Investment activities by internet giants are now in the crosshairs of China's regulators.
• Interestingly, a widely circulated "operating specifications" piece published yesterday morning stated that platform companies with more than 100 million users or annual gross revenues of more than 10 billion yuan would need Cyberspace Administration of China (CAoC) approval for acquisitions and investments. The article goes on to state that most of the holdings of Alibaba, Tencent, ByteDance et al. would not pass antitrust laws. However, the CAoC published a blog in the evening stating the article to be fake.
• Government tightening of the Internet sector in China is a story that has been developing for several quarters now; this latest news merely assures us key players will have to continue their delicate dance around regulatory risk through 2022. Furthermore, investments from internet giants are an important source of funding for China's startups. Regulation on investment activities could ripple through China's fledgling tech industry.

Yang Wang

January 19, 2022

Ericsson sues Apple again over 5G patent licensing

Reuters

Sweden's Ericsson has filed another set of patent infringement lawsuits against Apple in the latest salvo between the two companies over royalty payment for use of 5G wireless patents in iPhones. Both companies have already sued each other in the United States as negotiations failed over the renewal of a seven-year licensing contract for telecoms patents first struck in 2015.

Ericsson sued first in October, claiming that Apple was trying to improperly cut down the royalty rates. The iPhone maker then filed a lawsuit in December accusing the Swedish company of using "strong-arm tactics" to renew patents. "Ericsson has refused to negotiate fair terms for renewing our patent licensing agreement, and instead has been suing Apple around the world to extort excessive royalties. We are asking the court to help determine a fair price," an Apple spokesman said on Tuesday.

Analyst takeaways:

• Ericsson has a great track record of coming out on top in these lawsuits.
• The risk for Apple is that this could lead to an import ban in some countries, the first being Germany, where most IP lawsuits are fought.
• However, we are very likely to see a settlement here before it gets to that stage.

Hanish Bhatia

January 18, 2022

Samsung Partners With AMD to Power Up Mobile Chips

Bloomberg

Samsung Electronics Co. introduced its first mobile processor powered by Advanced Micro Devices Inc. graphics as the company tries to better compete with the gaming prowess of archrival Apple Inc.’s iPhones. The new Exynos 2200 processor is built using Samsung’s most advanced 4nm fabrication process and is the industry’s first mobile chip with hardware support for ray tracing, an advanced approach to high-fidelity graphics that has been gaining traction in PC graphics cards. The graphics chip built on AMD’s RDNA 2 architecture, dubbed Xclipse, is described in Samsung’s announcement as bridging the gap between console and mobile performance.

Analyst takeaways:

• Samsung’s Exynos 2200 SoC, on paper, checks all the boxes when compared to flagship competitors like the Qualcomm Snapdragon 8 Gen 1 and the MediaTek Dimensity 9000. The key differentiator here is the AMD Xclipse GPU which brings hardware-accelerated ray tracing and variable rate shading to mobile. Samsung, I believe will reap the benefits from the AMD partnership and further improve ACPCs and tablets segment. The modem is almost similar to Exynos 2100, this is where Qualcomm has an advantage.
• On the market share, Samsung will follow a similar 60-40% split for Exynos vs Qualcomm in Galaxy S series keeping Exynos 2200 shares stable. Historically there has been a disparity in the Qualcomm vs Exynos solution in the Galaxy S series across regions but Samsung has managed it.
• Exynos had a tough 2021 with shares declining due to design wins from Qualcomm and MediaTek in the galaxy A series. Qualcomm also has design wins for Samsung Galaxy Z Fold series for the next two years. The market share gain for the Exynos will come from the mid-end 5G portfolio (for the Galaxy A series) as Samsung is expected to refresh its Exynos series in 2022.

Parv Sharma

January 17, 2022

Apple’s New VR/AR Headset Risks Being Delayed Until 2023

Bloomberg

Apple Inc. is considering pushing back the debut of its mixed-reality headset by at least a few months, potentially delaying its first major new product since the Apple Watch in 2015, according to people familiar with the situation. The headset -- a high-end device that blends virtual and augmented reality -- was targeted for an unveiling at Apple’s annual Worldwide Developers Conference in June, followed by a release later in the year. But development challenges related to overheating, cameras and software have made it harder to stay on track, said the people, who asked not to be identified because the matter is private. That could push the announcement until the end of 2022 or later, with the product hitting shelves by 2023, the people said. A spokeswoman for Cupertino, California-based Apple declined to comment.

Analyst takeaways:

• Apple always launches the first-generation product in the September slot, with shipments around the October-November time frame. It’s very good timing for boosting the sales in this Q4 period, which is a high sales season in most regions.
• AR Headset is one part of the hardware that belongs to the ecosystem. And it’s main target consumers will be the current iPhone/iPad users.
• The AR headset will not go alone, and will likely be paired with New Content (streaming and gaming). The delay in the launch will buy Apple more time to get the content ready. It will further boost the content for existing Apple One subscribers, which already includes Apple TV+ & Arcade.

Ivan Lam

January 13, 2022

China’s Omicron Outbreak Is Even Worse News for Global Supply Chains

Bloomberg

An omicron outbreak in China is sending jitters through supply chains as manufacturers and shippers brace for disruption inside the world’s-biggest trading nation if it can’t contain the fast-spreading variant. It’s likely even tougher restrictions will be needed to curb omicron’s spread, with knock-on consequences for ports and factories as more cities lock down.

In recent weeks, sporadic outbreaks scattered across the country of both the delta and omicron variants have already triggered shutdowns to clothing factories and gas deliveries around one of China’s biggest seaports in Ningbo, disruptions at computer chip manufacturers in the locked-down city of Xi’an, and a second city-wide lockdown in a different province Tuesday.

Analyst takeaways:

• Tightening Zeroing policy is for better. Without this policy, China will be spending much more resources on dealing with the number of infections. And the medical system will face much more pressure, which will highly likely bring system crashes in Tier 3 and above cities. At the current stage, Zeroing policy is proved to be the best practice before a better vaccination scheme comes out.
• China is not the only one facing Omicron wave impact. But China system is still performing the best in dealing with this. They tested the whole Shenzhen citizens within a week, over 22 million citizens. Chinese are also co-operative and this is in everyone’s best interest.
• With the VUCA situation at the moment, China is trying its best to keep the order, and manufacturing is one of the highest priorities.

- Ivan Lam

January 10, 2022

HONOR announces the Magic V, its first foldable smartphone

The Verge

The Magic V is the first foldable flagship smartphone from HONOR powered by the most advanced mobile computing platform – Snapdragon 8 Gen 1; and featuring a 7.9-inch in-folding screen supplied by its long-term partner BoE. It uses a similar folding form factor to Samsung’s Galaxy Z Fold devices, combining a large internal folding display with a smaller external display that can be used while the device is folded. Its price starts at ¥9,999 (around $1,569) for the 256GB storage model. It will go on open sale on January 18th.

Analyst takeaways:

• The adoption of a waterdrop shaped hinge structure helps in reducing the crease in the middle and also improves the endurance (supports 200000 times of folding). HONOR also managed to reduce the thickness to 14.3mm.
• Taking about the rear imaging system, the Magic V consists of three 50MP high-resolution cameras, along with an 8x8 dToF based laser-focusing module. Out of the three main cameras, the one in the middle is a so-called light spectrum enhancement camera which HONRO claims to help in capturing images with richer and vivid colors.
• • The HONOR Magic V also brings enhanced security by adding a standalone secure storage chip and supporting both HTEE and QTEE systems.

- Ethan Qi

January 7, 2022

General Motors taps three Qualcomm chips to power its Ultra Cruise feature

Reuters

General Motors said a trio of chips from Qualcomm Inc will power the "Ultra Cruise" driver-assistance feature on a luxury Cadillac sedan next year. The Qualcomm chips will provide the computing power for the all-electric Celestiq, the company's planned flagship sedan. The automaker says that Ultra Cruise will allow for hands-free driving on both surface streets and freeways to account for up to 95% of roads in the United States and Canada, going beyond GM's current Super Cruise feature that only works on highways.

Analyst takeaways:

• This is a significant win for Qualcomm and underscores the potential of its saleable 'Snapdragon Digital Chassis' which aims to transform vehicle connectedness, intelligence, autonomy and safety.
• It also highlights how the entire automotive architecture is being redefined as the industry undergoes a “CASE”-centric transformation: (Connectivity, Autonomy, Services & Electrification).
• At CES 2022, Qualcomm announced the Snapdragon Ride Vision SoC expanding its offerings to cover the entire ADAS/AD stack directly or indirectly giving it the potential to offer system-level optimization to customers and to capture maximum value.

- Neil Shah

January 6, 2022

Google to Rival Apple by Further Deepening Ties Among Devices

Bloomberg

Alphabet Inc.’s Google used the annual CES technology conference to showcase upcoming deeper ties among its devices and preview support for unlocking more cars with Android phones. The enhancements announced Wednesday included more quickly pairing accessories with devices running Google’s Android and Chromebook laptop software, unlocking devices with Google software via smartwatches running Google’s Wear OS and sharing content across products.

Analyst takeaways:

• Google is supposed to lead this enhanced interconnection of ecological hardware products way before the other smartphone OEMs. It has all the advantages to make this happen earlier and to be a role model.
• Getting back to what Google really is after, is not trying to increase the hardware sales, but open the gates for partners in the Android, ChromeOS and WearOS ecosystem to move the ecological hardware product with deeper OS integration.
• Why now? Because ChromeOS and WearOS installed based and shipment forecast is making it the right time as Android is already leading the OS installed base among competitors.

- Ivan Lam

January 5, 2022

PlayStation VR2 and PlayStation VR2 Sense controller: the next generation of VR gaming on PS5

Playstation Blog

At CES 2022, Sony unveiled its next-gen hardware, that PlayStation VR2 to unlock new virtual reality experiences. It will be accompanied by the VR2 Sense controllers featuring haptic feedback to feel and interact with the games in a more immersive way. The controller will use a single cable that will connect with the PS5 console, eliminating the need of having multiple cables like before.
It will offer a high-fidelity visual experience, 4K HDR resolution and 110-degree FOV (field-of-view). To make things more realistic, Sony has also added new sensory features for 3D audio and headset feedback. The eye-tracking feature has also been added to detect the motion of your eyes to create additional input for the game character.

Analyst takeaways:

• The Oculus Quest has had early success in the VR market because of its well-developed ecosystem and reasonable costs. Both its own app store (Oculus) and PCVR gain market share. However, in the next step, the VR industry must address a number of issues, which will necessitate hardware advancements. These specific issues include display contrast in dark gaming situations, body mass index, FOV and resolution.
• Body tracking and spatial audio, for example, can enhance the user experience. For the see-through function to imitate the functionalities of AR, several cameras are also required.
• Furthermore, the bulk of VR video footage and games, along with the necessity for high resolution, will cause a bottleneck in data transfer, necessitating the use of eye-tracking and a high-speed, high-bandwidth SoC. However, because these extra features are costly, they must be reflected in the price.

- Brady Wang

January 4,2022

Apple becomes first company to hit $3 trillion market value, then slips

Reuters

Apple Inc became the first company to hit a $3 trillion stock market value, before ending the day a hair below that milestone, as investors bet the iPhone maker will keep launching best-selling products as it explores new markets such as automated cars and virtual reality. Some investors worry Apple is hitting the limits of how much it can expand its user base and how much cash it can squeeze from each user, with no guarantees that future product categories will prove as lucrative as the iPhone.

Analyst takeaways:

• Apple is in middle of its second "super cycle" with strong demand not only for its iPhones but also the new Macs, iPads, AirPods, Watch and above all its lucrative Services business.
• Since the last super cycle in 2015/2016 with iPhone 6 series launch, Apple was heavily dependent on iPhones which contributed to almost 70% of revenues, but this time with a stronger ecosystem, demand across portfolio and robust user base has helped Apple build a fast-growing "services" business and no longer just dependent on iPhones which investors are loving.
• This strong demand across hardware, software and services and with significant new offerings in pipeline addressing Metaverse (Apple Glass) and Mobility (Apple Car), has made Apple the world's 'favorite and valuable stock' pushing its market cap to $3 Trillion. If Apple Car is successful, this could push Apple's market cap beyond $5 Trillion towards the end of this decade.

- Neil Shah

December Technology Insights

December 15,2021

Samsung Gets Competition in Foldables From a $1,250 China Phone

Bloomberg

OPPO took the wraps off a foldable smartphone that’s more than $500 cheaper than Samsung Electronics Co.’s Galaxy Fold, launching its maiden attempt to stake out a spot in the nascent category. The OPPO Find N sports a 7.1-inch inner display co-developed with its Korean rival and an exterior 5.5-inch screen. It will start at 7,999 yuan ($1,250) in China from Dec. 23, undercutting the $1,799 Galaxy Z Fold 3. Like the latest iPhones, the inner display of the Find N has an adaptable refresh rate, speeding up when necessary and slowing with static images to preserve battery. OPPO says it has almost no crease in the inner fold, a big distinction from its pricier competitor.

Analyst takeaways:

• As the first commercial foldable smartphone by OPPO, it comes with a special water drop shaped hinge, which is co-developed and based on high - precision micro-fabrication.
• The new structure significantly improve the crease between the two halves of the foldable screen, which has been an issue in previously launched foldable models
• It also features a Snapdragon 888 processor, Sony 50MP large-area image sensor powered main camera, X-axis linear vibrator and balanced dual speaker, which make up a flagship specification configuration.

- Ethan Qi

December 14,2021

China’s OPPO Touts Smartphone Photo Breakthrough With New Chip

Bloomberg

OPPO unveiled the MariSilicon X Tuesday, which it says can process real-time RAW images -- the raw storage format that contains the most information but also requires more computing power to handle. That’s a break from other smartphones that first compress the image captured before applying artificial intelligence to filter and improve picture quality, which saves time but may sacrifice fidelity.

The 6-nanometer part, produced by Taiwan Semiconductor Manufacturing Co., works as much as 20 times faster and halves energy consumption for some tasks relative to OPPO’s previous top-of-the-line smartphone, the company said in a statement. It will debut in the Chinese firm’s flagship Find X line in the first quarter of 2022.

Analyst takeaways:

• Xiaomi and OPPO are trying to close the gap which Huawei has left and wants to be vertically integrated. This will help them to develop an ecosystem and expand outside smartphone business like IoT, XR and more.
• OPPO and Xiaomi have started by developing their own co-processors either Image Signal Processor (ISP), imaging (Neural Processing Unit) NPU, security chip or power management etc. This is the first step towards developing a custom SoC.
• To begin with, they can use these ISPs or imaging NPUs to have differentiation on the camera and imaging. The main goal is to differentiate their hardware and smartphone offerings which are very difficult to achieve with dependence on chipset vendors and Google (OS).

- Parv Sharma

December 13,2021

Intel shows research for packing more computing power into chips beyond 2025

Reuters

Research teams at Intel Corp (INTC.O) on Saturday unveiled work that the company believes will help it keep speeding up and shrinking computing chips over the next ten years, with several technologies aimed at stacking parts of chips on top of each other. While Intel CEO Pat Gelsinger has laid out commercial plans aimed at regaining that lead by 2025, the research work unveiled Saturday gives a look into how Intel plans to compete beyond 2025.

One of the ways Intel is packing more computing power into chips by stacking up "tiles" or "chiplets" in three dimensions rather than making chips all as one two-dimension piece. Intel showed work Saturday that could allow for 10 times as many connections between stacked tiles, meaning that more complex tiles can be stacked on top of one another.

Analyst takeaways:

• While CEO's comments on its technology roadmap are nothing new to us, it implied Intel's visible plan to catch up industry leader in both leading node wafer technology and the popular 3D-IC packaging.
• TSMC and Samsung all have solutions, as TSMC is likely to lead the market by launching its system-on-integrated-chips (SoIC) packaging service to AMD in 2022.
• In the next 2-3 years, under Intel's roadmap, it actually needs more foundry resources from TSMC to produce the major tiles in its CPU/GPU packaging.

- Dale Gai

December 7,2021

Samsung Replaces CEOs, Merges Mobile and Consumer Electronics Businesses

WSJ

Samsung Electronics Co., in a surprise move, replaced the heads of its three major business units and merged the company’s mobile and consumer electronics businesses into a single unit. The shake-up leaves two co-CEOs atop the world’s largest maker of smartphones, televisions and semiconductors. Samsung has ambitious investment plans to compete against Taiwan Semiconductor Manufacturing Co. on advanced chipmaking, while striving to fend off Chinese rivals with phones and other gadgets.

Kyung Kye-hyun, 58 years old, will lead the company’s powerhouse components business, after having previously been CEO of another Samsung affiliate that makes other types of tech parts. Han Jong-hee, 59, and a veteran of Samsung’s TV business, will run the combined mobile and consumer-electronics unit.

Analyst takeaways:

• Samsung's integration of its CE and IM divisions supports our assumption that the boundaries between digital devices are blurring now.
• It is no longer meaningful to divide mobile devices separately, and that this trend will intensify further.
• Clearly, it can be said that this is Samsung's full-fledged preparation for the IoT world: the growth limit to smartphone business and the need for integration with other digital devices and services to overcome this.

- Sujeong Lim

December 6,2021

Apple’s iPhone Successor Comes Into Focus

WSJ

If you thought the hullabaloo about Facebook, virtual reality, and the metaverse was a lot, wait till next year. Apple is expected to unveil in 2022 something at least as attention getting: a head-mounted device that has the potential to be the next biggest thing after the iPhone.

Meta Platforms, as Facebook’s parent is now known, is focused on an alternative to our current reality, one we can disappear into on our couch. Apple is raising the stakes with what analysts say are plans for a headset or smart glasses that will offer access to a layer of information, objects and data spread across our view of the real world like so much digital pixie dust—a so-called augmented reality, or AR.

Apple’s first AR device could be announced by the end of 2022. Apple, though, will bring some unique advantages to its alternate-reality play that could quickly vault it ahead of those who were earlier to market.

Analyst takeaways:

• The entire industry is waiting for Apple to launch its first XR headset for that "iPhone moment" in XR segment. This will set the tone for the industry as Apple drives the in-built technologies, components, design approaches and form-factor at scale and setting a benchmark.
• Obviously, the initial XR headset will likely be tethered to the most powerful compute devices - the iPhones / Macs - especially the Pro series. And, will also closely follow the Apple's tight vertical stack optimization from its own chips to OS to app SDKs, services and cloud.
• Apple Watch has been driving stickiness and pull for iPhones, similarly, the XR headset will aim to corner the gamers and/or creative professionals attached to the iPhone/Mac Pro series.

- Neil Shah

December 2,2021

Qualcomm Announces Snapdragon 8cx Gen 3, 7c+ Gen 3 Compute Platforms to Catalyze Windows 11 on ARM laptop market

Qualcomm

At the Snapdragon Tech Summit on Day 2, Qualcomm announced the next-gen mobile compute platforms for Windows 11 laptops. First is the Snapdragon 7c+ Gen 3 platform designed for entry-level laptops. The second is a more powerful and premium Snapdragon 8cx Gen 3, which is also the world’s first 5nm compute platform for Windows 11 laptops.

Designed for always-on, always-connected laptops, significant upgrades on the compute platforms include faster AI and 5G connectivity, enhanced security, audio and camera improvements. Devices powered by the new chipsets are expected in H1 2022.

Analyst takeaways:

• With the new Snapdragon 8cx and 7c+ gen 3 platforms, Qualcomm now has a very broad and highly differentiated portfolio of Windows on Snapdragon (ARM) chipsets easily addressing the majority of the laptops market and with unique features. We believe based on the configuration and target geography, the 8cx based laptops could span from $500 to $1200 laptop segments and 7c+ from $300 to $800 segments.
• Most of the traditional PC laptop OEMs have committed to expanding their portfolio with the latest Snapdragon-based solution and with current awareness created by Arm-based MacBooks will further push these OEMs to dedicate more resources in marketing and channels to see the adoption of Snapdragon-based ACPCs.
• Another big opportunity is where Qualcomm’s existing key customers the smartphone OEMs and operators which are racing to launch connected devices such as laptops can adopt these 3rd generation Qualcomm-based Windows laptops. This move should drive an inflection point for Qualcomm in this multi-billion-dollar segment in the near- to mid-term.

- Neil Shah

December 1,2021

Qualcomm leans into cameras, gaming with new flagship smartphone chip

Reuters

Qualcomm Inc (QCOM.O) on Tuesday released its new top-tier smartphone chip aimed at premium-priced Android phones with features like sharper photos and graphics than handsets using chips from rivals.

The Snapdragon 8 Gen 1 chip released Tuesday will have similar computing cores to rivals like MediaTek, which this month announced a chip aimed at premium phones. But almost every other part of the chip are custom designed by Qualcomm, including those playing a role in the visual quality of photos and graphics-intensive apps like games.

Analyst takeaways:

• 18-bit Triple ISP, a dedicated bokeh engine for 4K video capture, always-on camera, and 8K HDR are some key camera features that will differentiate Snapdragon 8 Gen 1 powered Android smartphones from the competition.
• 4th gen Snapdragon X65 5G modem with support for mmWave with peak download speeds of up to 10Gbps, upload speeds of 3.5Gbps, and Sub-6GHz carrier aggregation are some of the key features to showcase 5G advancements Qualcomm is bringing to Android smartphones.
• Support for CD Quality, 16-bit lossless audio streaming over Bluetooth will pave way for headphones and TWS earbuds to deliver music in its purest form, especially when listening on platforms like Apple Music and Amazon Music HD.

- Jeff Fieldhack

November Technology Insights

November 29,2021

Apple’s Car and VR Headset Are Poised to Alter the Typical Product Rollout Strategy

Bloomberg

Apple’s next major product categories—a virtual and augmented reality headset and a self-driving car—will likely mark a change in how the company rolls out new devices. In Apple Inc.’s ideal scenario, it surprises the world with a product announcement and then releases it in stores just days later. With the company’s next round of major product categories, that likely won’t be the case.

When Apple releases the first version of a major, new product, however, consumers typically need to wait. Here are three recent examples:

• Original iPhone: Introduced Jan. 9, 2007; released June 29, 2007 (171 days)
• Original iPad: Introduced Jan. 27, 2010; released April 3, 2010 (66 days)
• Original Apple Watch: Introduced Sept. 9, 2014; released April 24, 2015 (227 days)

Analyst takeaways:

• Virtual reality is a relatively straightforward hardware development process. The supply chains exist and Apple can optimise them in its own unique way. The software ecosystem is more challenging and will require the release of an application framework and the participation of multiple third-party developers. This is not something that can be accomplished under any kind of secrecy.
• Augmented reality is much more complicated. No company has yet cracked the multiple challenges, of which optics is the thorniest. Unlike with VR, there is no established hardware of software ecosystem that Apple can tap in to. It will have to be a true pioneer if it is to produce a product that a consumer can easily adopt into their everyday lifestyle.
• Cars offer an altogether different set of challenges; not least being their low profitability compared to all of Apple's other products. None of these products will be introduced shortly after launch because they mark departures from Apple's current product realm of varying magnitudes.

- Peter Richardson

November 25,2021

More Chips Will Be Made in America Amid a Global Spending Surge

WSJ

Investment in U.S. chip production is on the rise. But so too, is semiconductor spending elsewhere. Samsung Electronics Co.’s planned $17 billion chip factory in Texas is expected to crank out top-end semiconductors that are essential to 5G cellular networks, self-driving cars and artificial intelligence. It follows hefty bets on U.S. soil by Intel Corp., Taiwan Semiconductor Manufacturing Co. and Texas Instruments Inc.

The new factories won’t be operational for years. But the investment promises to boost America’s production foothold in advanced chip making after decades of ceding ground to locations in Asia like Taiwan, South Korea and China. It comes at a time, though, when chip makers are investing heavily in these locations, too.

Analyst takeaways:

• There is a discussion regarding whether recent huge investments from semiconductor manufacturing vendors would result in an oversupply. In my opinion, Yes, it will.
• However, certain foundries with modest technological advancements will suffer more than the big vendors. It's true that not all devices require 10nm or below technology. However, winners take all.
• Companies that spend more and earlier capital (like TSMC and Samsung) must have lower costs and better quality.

- Brady Wang 

November 24,2021

Xiaomi’s Growth Withers After Chip Shortages, Rivals Hurt Sales

Bloomberg

Xiaomi Corp.’s quarterly sales growth slowed markedly after the Chinese smartphone giant weathered a resurgent Apple Inc. and supply chain mayhem choked off the flow of vital components.

The Beijing-based company expects shortages of the chips that go into its devices and smart appliances to persist well into 2022 before easing around the second half of the year. Despite the supply crunch, which has walloped adjacent industries from cars to PCs, Xiaomi expects to ship roughly 190 million smartphones in 2021 -- a rise of about 29% from last year.

Analyst takeaways:

• The drop in Xiaomi's smartphone shipment is bigger than the revenue of smartphones. This reflects that Xiaomi has made fair progress in selling higher-end products. Its ASPs have increased more than 7% YoY. Looking forward, the ASP will continue to rise as the company doubles down on premium products strategy. Also, components shortages will play out as well.
• Internet Services revenue is a silver lining, reporting RMB7.2 billion which is a quarterly record high. Xiaomi's management highlighted the service revenue from overseas markets, which reached almost 20% of the overall service revenue. The overseas part will continue to increase but Xiaomi needs to more to improve the efficiency in commercializing overseas data. ARPU has dropped to RMB15.1 for 5 quarters.
• Looking forward, components shortages are huge uncertainties for Xiaomi. Its products are famous for low margins. If the company increased phone prices, will budget customers stay with it?

- Archie Zhang 

November 23,2021

Europe’s Urgent Need to Invest in a Leading Semiconductor Ecosystem

Semiconductor Digest

Today’s chip shortage has put a spotlight on the degree to which the European economy depends on semiconductors. With limited local production capability and capacity, Europe risks its technological sovereignty and needs to correct course to maintain long-term competitiveness.

Analyst takeaways:

• Most European semi-investment is focused in Germany. We saw Bosch recently open a factory in Dresden and Intel plans to spend $20bn in Europe, with Germany the leading contender.
• The EU wants to double its global share of semis production by 2030, but it is chasing a moving target as demand grows rapidly.
• Meanwhile, other markets like the US and South Korea are planning big semi-investments of their own, so it looks like Europe's target is very ambitious.

- Jan Stryjak

November 22,2021

Apple Accelerates Work on Car Project, Aiming for Fully Autonomous Vehicle

Bloomberg

Apple Inc. is pushing to accelerate development of its electric car and is refocusing the project around full self-driving capabilities, according to people familiar with the matter, aiming to solve a tec1hnical challenge that has bedeviled the auto industry.

For the past several years, Apple’s car team had explored two simultaneous paths: creating a model with limited self-driving capabilities focused on steering and acceleration -- similar to many current cars -- or a version with full self-driving ability that doesn’t require human intervention.

Analyst takeaways:

• Apple's path to autonomous vehicles is going to be a marathon and not a spring and completely iterative as we have seen in iPhones until the autonomous technology, infrastructure, regulations are fully favorable for the "north star" experience.
• Apple still can eye considerable opportunities where it could shape the future "smart car" from Apple-centric approach to design to electrification to bringing world-class cockpit, infotainment and safety-centric experiences than going fully autonomous and completing with Waymo or Cruise directly.
• Foxconn's expansion into EV+Autonomous manufacturing capabilities and its readiness is a leading indicator to Apple's production roadmap and timeline, assuming Foxconn will be one of the EMS partners for Apple Auto.

- Neil Shah

November 19,2021

MediaTek Announces Dimensity 9000: Supercharged Flagship SoC on 4nm

Anandtech

The Dimensity 9000 is MediaTek’s latest effort in creating a no-compromise flagship SoC, with the designers throwing in everything but the kitchen sink at it in terms of specifications, representing a lot of industry firsts, such as the first Armv9 SoC with Cortex-X2, A710’s and A510’s CPUs, a new Mali-G710 GPU, first LPDDR5X compatible SoC, astounding camera ISP claims, and the first outright publicly announced TSMC N4 silicon design in the industry. The list of features and capabilities is extensive, and the announcement today definitely represents MediaTek’s largest effort in generations and years.

Analyst takeaways:

• With the Dimensity 9000 SoC, MediaTek seems to be making efforts in entering the competitive $600-$800 smartphone segment. Design wins will be key, possibly at least one model per vendor from realme, OPPO, vivo and Xiaomi in 2022. Could see decent adoption across emerging markets & parts of developed markets.
• While it’s good to see MediaTek claiming lots of firsts with the new SoC, if shipping in late Q1 2022, competitor solutions might beat in some aspect on "1st" to actually ship devices before Dimensity 9000 in early Q1 2022.
• The premium Dimensity 9 series has a real shot at "volumes" in the premium market (possibly) beyond 2nd gen & 2023 when (if) it comes with good mmWave support adopted by brands in key markets: US, JP, KR, etc. which contribute to majority of the premium volumes.

- Neil Shah

November 18,2021

Apple Will Sell Parts for Customers to Make Their Own Repairs

Bloomberg

Apple Inc. will begin making parts and tools available for customers to fix their own devices, a significant shift in longstanding policies over who can make repairs to the costly gadgets.

The Self Service Repair program announced Wednesday will initially allow people to fix the display, battery and camera for their iPhone 12 and iPhone 13. Later, customers will be able to repair Mac computers with M1 chips. The service will only be available in the U.S. starting early next year but will expand to more countries throughout 2022.

Analyst takeaways:

• Consumers only think of spending on repairs when the need arises, iPhone 12 and 13 series owners in US and other mature markets will have a choice to either buy the parts, tools and manuals or give it directly to the authorized service center. Either way, Apple stands to gain from sale of equipment or service charges.
• The most valuable modules (Battery, display and camera) could be tricky for a lay person to handle even with manuals and tools. The lack of confidence and the need to carefully handle a premium smartphone might encourage the consumer to opt for an Apple authorized center.
• This step is not really encouraging for independent repairers; it might just work for the consumers, but it definitely works for Apple. As of Q3 2021, iPhone 12 & 13 series phones make up almost 80% of Apple's smartphone portfolio globally.

- Glen Cardoza

November 17,2021

$8 Billion Takeover Offer Could Avert One of China's Biggest Potential Corporate Failures

Bloomberg

A consortium led by Alibaba Group Holding Ltd., has emerged as the frontrunner to take over Tsinghua Unigroup Co., a deal that could fetch more than 50 billion yuan ($7.8 billion) to help keep China’s indebted chip champion afloat.

The Chinese central government is leaning towards the Alibaba-led offer given the e-commerce giant’s financial heft and the potential synergies with its own cloud and semiconductor business, people familiar with the matter said. The consortium, which includes funds backed by the Zhejiang government, is edging out several competitors for Beijing-based Unigroup, several other people said, asking not to be identified as the information is private.

Analyst takeaways:

• A successful deal potentially averts one of the biggest corporate failures in China, and given the economic slowdown and problems in the real estate sector, the government would be keen to boost some confidence in the market
• The Unigroup assets are likely to contribute to 18 billion annual revenues should the deal go ahead. The main assets in the sale will include: Guoxin Micro (security chips, DRAM), YMTC (NAND) and Unisoc (mobile SoC). These are useful assets but limited in synergies with Alibaba's semiconductor priorities, namely server chips.
• However, regulators will potentially look at this deal more favorably than competing offers, due to Alibaba's financial heft and innovative zeal, ensuring continued investment into the business. This would boost China's semiconductor industry's resilience and self-reliance, a key concern for the Chinese regulators.

- Yang Wang

November 16,2021

Meta’s Oculus Quest 2 has shipped 10 million units, according to Qualcomm

The Verge

At the company’s 2021 investor day, Qualcomm CEO Cristiano Amon mentioned that Meta has sold 10 million Oculus Quest 2 headsets. This gives the best benchmark yet for sales of Meta’s standalone VR platform since it launched last October. “Our technologies are the ticket to the metaverse,” Amon said, highlighting Qualcomm’s efforts to establish itself as a key player in VR and AR platforms, especially as the tech industry at large is so heavily emphasizing the metaverse concept.

Quest 2 relies on Qualcomm’s Snapdragon XR2 chipset to power its standalone VR hardware. The 10 million mark for the Quest 2 is also particularly significant given Meta’s goals for growing a comprehensive VR platform: back in 2019, Meta CEO Mark Zuckerberg commented alongside the launch of the original Quest headset that 10 million users was a key threshold before the “ecosystem will just explode.”

Analyst takeaways:

• VR Standalone has become the device type of choice in the gaming segment driven primarily by the success of Oculus’s Quest 2.
• Gaming is the biggest consumer use case currently with the presence of major players such as Sony and Meta-owned Oculus. While the gaming segment is mostly dominated by VR headsets, consumer use of AR has thus far largely been confined to smartphone displays via applications.
• Technological advancement and consequently improving user experience are expected to continue driving growth of this segment.

- Karn Chauhan

November 15,2021

Nvidia £30 billion takeover of ARM faces national security inquiry

The Times

Ministers are poised to pull the trigger on a full-blown investigation into the sale of ARM, Britain’s biggest technology company, in a move that threatens to scupper the controversial $40 billion (£30 billion) deal. Nadine Dorries, digital and culture secretary, will this week order a “phase 2” probe into US chip giant Nvidia’s acquisition of the Cambridge-based semiconductor design company from Japan’s SoftBank. She will instruct the competition watchdog to carry out an in-depth inquiry into antitrust concerns, as well as scrutinise national security fears raised by the takeover, which was agreed in September 2020.

Arm is thought of as a UK company, but the reality is that it has been owned by, Softbank, a Japanese company, since 2016. Most of the concerns aroused by Nvidia's proposed acquisition in the UK government's initial review concerned the potential for Nvidia to disturb Arm's existing relationships with its customers - many of which are Nvidia's rivals. Nvidia has proposed methods for distancing itself from Arm's business, but the UK government's initial view is that the proposed methods are insufficient. It is therefore going to investigate in even more depth.

Analyst takeaways:

• The UK Competition and Markets Authority is likely to be extremely thorough and if it's not fully satisfied, it may well block the deal. The EU is also investigating based on similar concerns as the UK government.
• Another issue causing a hindrance to the Nvidia takeover deal center on Arm's China subsidiary that is developing its own technology and is seen by some as having 'gone rogue'.
• All-in-all, these regulatory and other issues are slowing the acquisition process against an already tight March 2022 deadline originally imposed by Nvidia. It is unlikely that deadline will be met, either forcing a revision to the acquisition timeline or an abandonment of the deal.

- Peter Richardson

November 12,2021

China’s Top Chipmaker Loses Second Senior Executive

Bloomberg

Semiconductor Manufacturing International Corp. said its Vice-Chairman Chiang Shang-Yi resigned less than a year after joining China’s biggest chipmaker, the second departure of a senior executive in two months.

Chiang, who is in his mid-70s, has left the Shanghai-based company to spend more time with his family, according to a company filing Thursday. The chip industry veteran joined SMIC in December last year, after having helped to turn Taiwan Semiconductor Manufacturing Corp. into the world’s most influential contract chip manufacturer more than a decade ago. The stock dropped as much as 4.5% on Friday in Hong Kong.

Analyst takeaways:

• The impact of Vice Chairman Chiang's resignation will be limited as the company's development of 14nm (and below, N+1; N+2) nodes have been led by Dr. Laing for years. The major bottleneck of SMIC's leading technology production is the equipment ban due to the political level under US-China tension.
• With or without the ban, SMIC technology is chasing behind the first-tier foundry group (TSMC, Samsung, IFS) by at least 5 years to develop the most cutting-edge nodes. Current production scale on 14nm is still small in SMIC, as building the next phase technology is challenging. However, SMIC's matured nodes are running well during 2020-2021, as the local market leader benefiting from strong consumer and automotive IC demand.
• For SMIC, without EUV tools, migrating to 10nm below nodes is highly unlikely. Under the existing equipment, it is not economical to produce chips under many layers of lithography patterning. Local procurement of equipment looks still a long way to go in China. China IC design customers are SMIC's focus clients, as the prospects on existing local products (CIS, MCU, embedded memory, connectivity) are still promising.

- Dale Gai

November 11,2021

A Chastened Alibaba Tones Down Its Singles Day Retail Bonanza

NYT

This Singles Day, an annual Nov. 11 tradition, Chinese shoppers are still likely to buy a lot of stuff. But this year’s bash is looking a little more abashed. Beijing has not let up in its efforts to make internet companies behave less rapaciously. Regulators have told companies to stop blocking links to one another’s services. They have ordered e-commerce sites not to bombard users with marketing messages ahead of Singles Day.

Analyst takeaways:

• Marketing efforts are as usual, though SMS messages appear relative less than those in the previous years. Online ads, which are more important these days, are ubiquitous. Looking at major OEM's social media accounts, they are promoting their sales activities almost every day.
• We are still long on online-focus brands which mean Xiaomi, IQOO, realme and HONOR. realme just announced that it recorded 10 million units' sales during this year's Singles' Day shopping season.
• This year’s Singles' Day sale is more important for Android OEMs as they have had a relatively quiet few months as the China smartphone market retreated marginally, and they were counting on sales to pick up towards the end of the year. While excitement around premium smartphones would be the priority, the iPhone 13 could spoil their party, as it is doing extremely well and capturing much mindshare.

- Archie Zhang & Yang Wang

November 10,2021

Apple Adds Johnson & Johnson CEO to Board in Health Push

Bloomberg

Apple Inc. named outgoing Johnson & Johnson Chief Executive Officer Alex Gorsky to its board, underscoring a push to become a bigger force in health services. Gorsky, 61, will become the ninth member of Apple’s board and the second new director named this year.

Gorsky, who has worked at Johnson & Johnson since 1988, is stepping down from the CEO job in January. He has overseen efforts to innovate in pharmaceuticals, medical devices and consumer health services -- experience that could be useful to Cupertino, California-based Apple. The tech giant has increasingly made health products a central part of its offerings. That’s included adding health sensors to the Apple Watch and creating new health apps, research tools and fitness-related services.

“Gorsky will bring decades of experience in corporate leadership and health technologies, and a long track record of leading innovative and diverse teams around the world,” Apple said in a statement. Arthur Levinson, a longtime health executive and Apple’s board chairman, said that Gorsky’s “voice and vision will help Apple continue to make a positive impact on people’s lives through the power of technology.”

Analyst takeaways:

• Health is the killer application for wearables like smartwatches. Chronic diseases are also a huge and growing issue in many countries. The biggest killers are heart disease, cancer, strokes, respiratory diseases, type-2 diabetes and more. All are to a greater or lesser extent lifestyle diseases - they can be controlled by the individual.
• The modern healthcare industry does little to resolve chronic diseases; at best it allows people to manage the conditions but rarely solve them long term. This means it's down to the individual to manage their own health.
• Apple likely understands this and is building a franchise in the sector to help people, help themselves. An executive from the pharmaceutical industry should have a clear understanding of the shortcomings of the existing healthcare industry and can therefore help Apple navigate a successful path.

- Peter Richardson

November 9,2021

All Major Chipmakers Pledge to Give U.S. Requested Data

Bloomberg

Semiconductor supply has become a geo-political issue. The root causes of the current supply constraints go back several years, before COVID-19 and before a lot of the current East-West tensions arose. For example, lack of investment in more mature semiconductor nodes limited the total capacity of some critical components like PMICs and DDICs. This, combined with poor demand forecasts from some industry players through the initial period of the pandemic, has brought us to this point.

Now, according to Bloomberg report, “every major semiconductor company has pledged to comply with a U.S. request for information pertaining to the global chip shortage, Commerce Secretary Gina Raimondo said on the day of a deadline set by the government.”

Analyst takeaways:

• While we have good supply of some components, other lower profile, but no less critical components, are in shortage. This lack of balance is causing different supply chain actors to behave rationally for themselves, but collectively in a way that can be seen to disrupt the overall industry.
• It is doubtful whether the submissions made to the US government will clarify the situation, and they're also unlikely to result in an easing of supply restrictions.
• The risk is that trying to manipulate the comprehensive, interconnected web of supplier relationships could cause the entire fabric to unravel in unforeseen ways.

- Peter Richardson

November 8,2021

What’s Harder to Find Than Microchips? The Equipment That Makes Them

WSJ

The great chip shortage of 2020 and 2021 has crimped the world’s ability to produce everything from automobiles to smartphones. And according to many analysts and semiconductor makers, the lack of secondhand equipment for making microchips is one reason the chip shortage has become so acute.

These [older types of] chips that use more mature technology go into cameras and other sensors in our phones and cars; power-handling electronics; the logic controllers of factory equipment; the chips that enable wireless communication. It’s a shortage of these chips that is at the root of shutdowns of automobile manufacturing and Apple’s inability to meet demand for the latest iPhone, alike.

While chipmakers look to ramp up manufacturing of chips to meet demand, expanding the fab capacity isn’t easy and takes months due to the complexity of the process. Thus, having control over supply chain is important here. But what does it mean for smartphone makers like Apple and Samsung with higher ASP expectations from their premium portfolio?

Analyst takeaways:

• As the component shortage has affected everyone, there will be no winner among the original smartphone device manufacturers.
• Apple is less affected since its profit margins are higher than those of other corporations. The benefit of Apple's self-designed SoCs brings an unmatched position.
• Apple also has a superior supply chain control over other firms, and its close and well-developed OS ecosystem can bring rising service income.

- Brady Wang

November 5,2021

T-Mobile Seen Benefiting From AT&T, Verizon Delay on 5G

Bloomberg

T-Mobile US Inc. could benefit from a delay in rolling out 5G service announced Thursday by its chief competitors in response to concerns over interference with aviation equipment. AT&T Inc. and Verizon Communications Inc. said they would push back to Jan. 5 the debut of their 5G service on some airwaves after U.S. aviation regulators said it might interfere with aircraft electronics.

T-Mobile certainly has an advantage due to the acquisition of Sprint, and already having mid-band spectrum, which has helped the carrier in terms of 5G roll-out achievements. However, customers in the US are not that particular about having a 5G phone or not. T-Mobile will use this setback for ATT and Verizon to market their 5G network more aggressively over the holidays to create greater mindshare, which will help their customer satisfaction and retention.

Analyst takeaways:

• This will not have a big overall effect on smartphone sales in the short term. Customers are buying devices out of necessity or because they are finding good upgrade deals.
• In the low-end segment, 5G has not proliferated strongly enough yet to help move a large portion of the population over to 5G.
• We are now seeing a handful of devices enter the market that are priced sub $300, but to truly get major adoption, full retail pricing of devices needs to hit sub $150.

- Maurice Klaehne

November 4, 2021

Qualcomm Shares Pop After Company Reports Earnings Beat, 56% Rise in Smartphone Chip Sales

CNBC

Qualcomm’s earnings and revenue beat Wall Street expectations. Its chip sales for smartphones were up 56% year over year. The chipmaker also offered strong guidance for the current quarter, which ends in December. This suggests that Qualcomm is weathering the global chip shortage that has affected other chipmakers and customers. While global chip shortage might persist into 2022, especially in matured node products, Qualcomm should improve to manage the supply chain issues with more outsourcing partners

Qualcomm has noted the risks of Apple's modem business, without forecasting it into long-term growth model. We believe Apple's in-house modem might not be in mass production before H2 2023 as the earliest, and the impact to Qualcomm is manageable.

Analyst takeaways:

• All major segments, including QCT, IoT and RF, delivered high YoY sales increase as both vertical expansions (in smartphones, from processors to RFFE) and horizontal diversification (tablets, IoT to automotive processors) bear the fruits in sales growth.
• Qualcomm started to diversify its foundry sources for new products in H2, with more orders to TSMC in its 6nm and 5nm. We observed it regained market shares in China during current quarter, driven by some strong selling Android models.
• Qualcomm continued to see mmWave on track, with all major Japan carriers adopting mmWave and China's first steps in testing for Beijing Winter Olympics. It's a good sign for Qualcomm's dollar content increase on RF business.

- Dale Gai

November 3,2021

Apple Wants iPhones to Detect Car Crashes, Auto-Dial 911

WSJ

Beginning next year, iPhone users who are in a car accident could have their phone dial 911 automatically. Apple plans next year to roll out a product feature called “crash detection” for iPhones and Apple Watches, according to documents reviewed by The Wall Street Journal and people familiar with the feature.

Crash detection uses data from sensors built into Apple devices including the accelerometer to detect car accidents as they occur, for instance by measuring a sudden spike in gravity, or “g,” forces on impact.

The feature would mark the latest move by Apple and its competitors to use motion-sensor technology to build safety functions into their devices. Apple introduced a fall-detection feature in its smartwatch several years ago that senses when wearers have taken a hard fall and dials 911 if they don’t respond to a notification asking if they are OK. The company this year added a feature to the newest version of its iPhone operating system that assesses the walking steadiness of users.

Analyst takeaways:

• With a burgeoning installed base of more than a billion iPhones equipped with several advanced sensors, Apple is thus in a driver’s seat to unlock newer features by collecting data from these sensors.
• The sensors on these devices are a window into what happens to you, and around you. Scaling the successful algorithms developed for Apple Watch to a broader environment will help Apple introduce differentiated features and experiences to further increase the overall value proposition for an Apple user.
• Further, developing clever algorithms to leverage the data emanating from host of sensors across the Apple Watch, iPhone and in future Apple Glass including camera sensors and merging with technologies such as UWB, NFC, Bluetooth LE could take the feature and use-cases to the next level. These could offer benefits across better health, society and environment making the smart devices really "smart and useful."

- Neil Shah

November 2,2021

What We Know About Alibaba’s 11.11 Sales Bonanza So Far

Morning Brew

By the numbers: In 2020, the event generated about $74.1 billion in gross merchandise volume for Alibaba from November 1 to 11. In comparison, US online sales for Thanksgiving, Black Friday, and Cyber Monday altogether totaled $25 billion last year.

Out of the 250,000 brands that participated in Alibaba’s Singles Day in 2020, about 31,000 were international; US–based companies emerged as the top sellers, after China. This year, with 290,000 brands—a new record—taking part, Tmall predicts 14+ million deals will be up for grabs for 900 million Chinese consumers. And like in 2020, Singles Day won’t be relegated to just one day, with Alibaba kicking off its official sales bonanza today.

Analyst takeaways:

• No surprise most e-commerce centric brands pledging huge subsidies with Xiaomi offering the biggest price cuts.
• HONOR, which has been a game-changer in the domestic market this year, budging the least on price.
• With even lower iPhone prices during the sales period, all competitor premium models may see sluggish sales this year.

- Archie Zhang

October Technology Insights

October 29,2021

Samsung Tops Profit Estimates After Chip Crunch Lifts Prices

Bloomberg

Samsung Electronics Co. said the tight supply of chips that’s hurting industries worldwide is set to persist through next year, as it reported quarterly profit boosted by rising prices at its semiconductor business. The South Korean giant, both a major producer and consumer of chips that go into computers and mobile devices, said net income rose to 12.06 trillion won ($10.3 billion) in the three months ended September.

The world’s biggest maker of memory chips and smartphones has benefited from strong demand as the global economy recovers from the Covid-19 pandemic, with a resulting shortage boosting semiconductor prices. While Samsung and its chipmaker rivals are spending more to add production capacity, the crunch isn’t abating soon as consumers and companies continue to invest in technology. Samsung is preparing for a major technology shift to so-called DDR5 memory chips that are faster than the previous generation while improving power efficiency.

Analyst takeaways:

• The cost of DDR5 is higher than that of DDR4.
• The success of Intel's new chipsets, I believe, will determine the migration from DDR4 to DDR5.
• If demand is great, the transition from DDR4 to DDR5 will be accelerated.

- Brady Wang

October 28,2021

Sundar Pichai sees JioPhone Next as crucial to Google’s India business

ET Telecom

During an earnings call, CEO Sundar Pichai mentioned that Alphabet Inc. sees demand in India coming from users who are looking to upgrade from feature phones to smartphones. Pichai added saying the Reliance Jio partnership is exciting as the telco is investing beyond English to add support for more local languages for regional users to take advantage of the smartphone. The JioPhone Next smartphone is set to launch in India during Diwali festival on November 4.

Analyst takeaways:

• The JioPhone Next aims to connect the unconnected and upgrade the 2G subscriber base to the 4G network, mostly consisting of users from Tier 3/4 towns and rural areas. This smartphone launch will further strengthen Google’s focus on the India market and is in line with its India Digitization Fund. With its investment in Jio Platforms, Google is in prime position to expand its Android user base in the rural parts of the country.
• With Pragati OS, Google aims to add new users and penetrate the regional language consumer base. Also, with right subsidies and attractive data options, the JioPhone Next can be a pivotal point in the India smartphone growth story. User interface and experience will be the critical factors for the JioPhone Next success.
• As per our estimates, India has 320 million feature phone users which the JioPhone Next is targeting. Google is eyeing this high feature phone user base as well as the unconnected India to bolster its Android user base.

- Prachir Singh

October 27,2021

Tesla surpassed $1 Trillion Market Capital from Orders Placed by Hertz

Reuters

Hertz, one of the largest car rental companies placed an order of 100,000 Tesla Model 3 which will be available for rental service from early November 2021 in both Europe and the USA. The completion of delivery will happen by end of 2022. For this Hertz has paid Tesla nearly a trillion USD. Hertz also mention this order is an initial order pointing that more EVs either from Tesla or other players will be available in the company’s folio for rental.

Analyst takeaways:

• It is a good initiative from car rentals and cab sharing companies that will push the EV penetration.
• With this order, it is expected that 20% of global rental vehicles will be EVs by end of 2023.
• Before getting the complete delivery of 1,00,000 Tesla Model 3, Hertz will develop a composite charging infrastructure which will be a big boost to break the chicken-egg problem [EV Chargers to Cars problem].
• With so many people using Tesla (Model 3 bring the most sold vehicle in Europe in September), Tesla might redesign or open up its proprietary charging gun design so that more vehicles are sold.

- Abhik Mukherjee

October 26,2021

Sony Xperia Pro-I Brings 1.0-inch Sensor and Variable f/2.0-4.0 Aperture

GSM Arena

Sony has launched a new $1800 Xperia Pro-I smartphone (where 'I' stands for 'Imaging') is the first phone outside Japan delivering a 1.0-inch camera sensor along with phase-detection autofocus. That 1.0-inch type sensor is taken straight from the company's RX100 VII compact camera and has been 'optimized for a smartphone'. The Xperia Pro-I uses a big chunk of that sensor (but not all of it) to produce 12MP images with a 2.4µm pixel pitch – which is about 20% larger than the iPhone 13 Pro Max' pixels. It is also the same size as those from the Galaxy S21 Ultra's 108MP main camera, after binning. Despite not using the full 1.0-inch sensor area, the Xperia Pro-I do end up with a huge sensor only really bested by the Xiaomi Mi 11 Ultra and its 2.8µm binned pixels.

Analyst takeaways:

• The main camera with a 1-inch CMOS image sensor, featuring 12 megapixels and 2.4µm pixel size enables much greater light sensitivity and larger dynamic range, making the camera a better fit for low-light environments.
• The customized wide-angle (24mm focus length), 1G5P lens module, and adoption of Zeiss Tessar Optics T* should help to eliminate the distortion around the view corners. It also supports two optical aperture options: where wider f/2.0 can be helpful in clicking brighter low-light photos, whereas the narrower f/4.0 aperture can come handy when clicking day-light photos with a good dynamic range.
• In terms of image processing, Sony has applied the mobile edition of BIONZ X image processor in the new design, which should bring some impressive computing performance in continuous AF (auto focus) and AE (auto exposure), real-time object tracking, and 4K video recording.

- Ethan Qi

October 22,2021

Xiaomi Announces Restructured Product Portfolio on Investor Day

At Xiaomi’s Investor Day event, the company announced a restructured product portfolio where the MIX series will be focusing on tech-savvy and premium customers. There is a new Digit series that will aim at high-end customers, whereas the newly added CIVI series will mostly target female users, and directly compete with OPPO’s Reno Series. Then there is Redmi K series for budget techy customers, the Redmi G series for mobile gaming users, and finally Redmi Note series for students.

Analyst takeaways:

• The restructuring covers more price bands especially premium and luxurious. Xiaomi re-confirmed that the MIX series will resume regular product launches. The series will strengthen the company’s position in price above $1000.
• Xiaomi will keep making chip-related investments but didn’t directly answer the question of whether it would make its own chipsets. But Xiaomi did confirm that this investment will be related to bringing improved camera performance. This could likely be ISP (image signal processor) chips, just like vivo has V1 on the X70 Pro Plus to enhance low-light performance.
• Xiaomi believes that smartphone innovations to focus on should be fast charging, smartphone appearance (foldable, rollable etc.), and the camera performance.

- Archie Zhang

October 21,2021

Why Big Tech Companies are Designing Chips In-house

Google announced the Pixel 6 and Pixel 6 Pro smartphones that come with big improvements over the previous generation. From new industrial design to high-resolution primary camera and a telephoto lens with periscope style zoom camera on the Pixel 6 Pro, there are lots of interesting things that the new Pixels bring. But one of the biggest highlights is the custom Tensor SoC that powers the smartphones. With Samsung already designing its Exynos chipsets, and OPPO reportedly working on its own chipset, should incumbents like Qualcomm be worried?

Analyst takeaways:

• Designing own chipset gives full control to the smartphone makers like Samsung and Google to add their own customizations while reducing dependency on chipmakers.
• Through Tensor, Google aims to have full control of the entire stack from chip to OS to middleware to cloud.
• Google knows Android OS better than others, and as smartphone users demand cutting edge features, Google is trying to leverage on-device AI and ML to meet the expectations while also unlocking new experiences for Pixel users.
• These AI and ML based features helps Google differentiate its Pixel offering compared to competitors, while also showcasing full capabilities of the platform.

- Tarun Pathak

October 20,2021

Apple HomePod mini now comes in striking new colors

Apple’s entry-level Siri smart speakers will now come in three new colors – Blue, Orange and Yellow. This is in addition to the existing White and Space Gray options. There is no change in the pricing, and you can buy one for $99.

Apple also debuted a new “Voice Plan” at $4.99 per month. The ad-free subscription plan is aimed towards HomePod users where they will be able to access the Apple Music library and play songs with their voice commands. Users will get access to playlists based on activities, moods, genre, and more. They will simply have to say, “Hey Siri, start Apple Music Voice.” How well the voice commands work in playing a specific song, playlist, artist, or genre of your choice will be interesting to see.

Analyst takeaways:

• Apple’s new HomePod Mini will certainly appeal to the masses considering its competitive price point of $99 and attractive colors.
• Apple is going to utilize its growing smartphones user base to convert them into more frequent smart speaker users.
• Adding the voice plan will help to increase sales considering that the Siri assistant now supports a lot of smart home devices as well.
• With the new plan, Apple will be able to drive more revenues from its subscription-based model.

- Anshika Jain

October 19,2021

Regulation to Prevent Handset Snooping in India

ET Telecom

Skepticism towards all things tech from one particular market continues to grow. During the same time last year, we witnessed banning of over 200 apps on the lines of safe guarding privacy of its users in the country. In the light of ongoing situation around PLI Scheme, 5G trials running in the country, ongoing discussion for PDP Bill 2019 in the Parliament and overall sentiment of becoming 'self reliant India' – such a regulation can be crucial.

Analyst takeaways:

• The Indian government is expected to come out with a regulation that may mandate teardown or in-depth testing of handsets to ensure that devices and installed apps are not snooping on the citizens.
• Government is compiling a list of trusted sources and companies for telecom equipment and networking products to check alleged cyber snooping.
• The regulation is focused on keeping Chinese players such as Huawei and ZTE out of critical areas of telecom networks.
• Under this investigation, companies are even being asked to show their bill of materials along with thorough analysis is being done on where the components are being sourced for the devices. Even preinstalled apps on the phones are said to be under radar.

- Priya Joseph