|Bid||293.00 x 0|
|Ask||293.50 x 0|
|Day's Range||292.00 - 296.00|
|52 Week Range||206.50 - 296.00|
|Beta (3Y Monthly)||1.48|
|PE Ratio (TTM)||23.13|
|Earnings Date||Oct. 17, 2019|
|Forward Dividend & Yield||12.50 (4.43%)|
|1y Target Est||262.88|
Aug.27 -- U.S. chip maker Globalfoundries is suing rival Taiwan Semiconductor for alleged patent infringement. It’s seeking an import ban that has the potential to disrupt the supply chain for everything from smart phones to PCs. Bloomberg’s Vlad Savov reports on “Bloomberg Markets: Asia.”
Yesterday, AMD launched its low-end Navi-based Radeon RX 5500 GPU. Industry rumors indicate that NVIDIA’s Ampere GPUs could arrive by mid-2020.
Taiwan Semiconductor Manufacturing Co Ltd (TSMC) said that in lawsuits filed on Monday it has asked for injunctions to stop GlobalFoundries' manufacture and sale of chips that infringe the patents. TSMC, the world's largest contract chipmaker, said in a statement on Tuesday it was seeking "substantial monetary damages from GlobalFoundries" but did not specify an amount.
AMD has delayed the September launch of Ryzen 3950X to November. There are rumors that the delay might be either due to constraints or clocking issues.
(Bloomberg) -- Samsung Electronics Co. and Huawei Technologies Co. took turns announcing new mobile processors at the IFA technology show in Berlin last week, and the big thing the new chips have in common is an integrated 5G modem.In a market dominated by U.S. rival Qualcomm Inc., the world’s two biggest smartphone manufacturers asserted a lead in delivering one of the keys to unlocking widespread availability of 5G devices. A system-on-chip that integrates the applications processor and a fifth-generation wireless modem significantly reduces the space and power requirements compared to existing solutions that use two separate chips.Qualcomm has such models on its 2020 road map, but this past week Samsung announced it’s planning mass production for its alternative at the end of 2019 and Huawei is moving even faster, promising to release its most advanced processor with the Mate 30 Pro smartphone on Sept. 19.The Kirin 990 5G from Huawei subsidiary HiSilicon is built at Taiwan Semiconductor Manufacturing Co. and packs more than 10.3 billion transistors into a space the size of a fingernail. It includes a graphics processor, an octa-core CPU, and the all-important 5G modem, along with dedicated neural processing units for accelerating artificial intelligence tasks.At Huawei’s Berlin launch event, consumer group Chief Executive Officer Richard Yu showed the high-end 990 5G achieving real-world download speeds on China Mobile’s network in excess of 1.7Gbps. That’s fast enough to download high-definition movies and demanding 3-D games in a matter of seconds.Samsung’s approach with its Exynos 980 is to target the mid-range. Along with 5G capabilities, this new chip integrates 802.11ax fast Wi-Fi along with Samsung’s own NPU. It won’t run apps and games quite as quickly as flagship chips, but should help the South Korean company garner a slice of the more mainstream market before Qualcomm brings out an armada of new 5G-capable chips next year.Samsung’s emphasis on this part of the mobile market was also signaled by its launch of the Galaxy A90 this month, one of the earliest examples of a mid-range device with 5G.Huawei’s Next Flagship Phone Set to Sink Without Google Apps (1)For its part, Qualcomm is promising to cover the entire range of price points and mobile device types with its 5G portfolio in 2020, however the world’s premier mobile chip designer is finding itself behind its faster-moving rivals.While Huawei is “pushing to show tech leadership,” the company has “made sacrifices in order to make an integrated SOC,” said Anshel Sag, mobile industry analyst at Moor Insights & Strategy. He cited the chip’s lack of support for mmWave -- the high-frequency 5G favored by U.S. carriers AT&T Inc. and Verizon Communications Inc. plus some European ones -- as an example. The Kirin 990 5G is fast by today’s standards and a great upgrade for Huawei’s upcoming devices in China, but Sag said it’ll find itself outpaced by rivals in 2020.The silver lining to the trade war for Qualcomm, however, is that Huawei’s Mate 30 Pro will struggle to sell in Europe so long as the Trump administration prevents it from offering Google services on new phones. Irrespective of how fast and advanced its Kirin 990 5G may be, the trade war will prevent Huawei from fully capitalizing on its capabilities and may, in fact, push the company to license the chip out to other smartphone vendors, such as Lenovo Group, which is not subject to the same sanctions.If the U.S. keeps Huawei on its blacklist, preventing it from buying American technology, the company faces further chip challenges. To develop successors to the Kirin 990, it needs to license the latest designs from SoftBank Group’s ARM, but that company discontinued work with Huawei because of the U.S. ban.(Updates with analyst comment in the third from last paragraph.)To contact the reporter on this story: Vlad Savov in Tokyo at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, Nate Lanxon, Peter ElstromFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Chipmakers have spent two decades pouring investment into a revolutionary new technique to push the limits of physics and cram more transistors onto slices of silicon. Now that technology is on the cusp of going mainstream, thanks to a secretive Japanese company that’s mastered the skill of manipulating light for applications from squid fishing to cinema projection.Ushio Inc. announced July it had cleared a key milestone, perfecting the powerful, ultra-precise lights needed to test chip designs based on extreme ultraviolet lithography or EUV, the process through which the next generation of semiconductors will be made. With that, the Japanese company became a major player in future chipmaking.“The infrastructure is now mostly ready,” Chief Executive Officer Koji Naito said in an interview. “Testing equipment was one of the things holding back EUV. With that piece in place, production efficiency and yields can go up.”Read more: How an Obscure Rubber Company Became a Linchpin of Tech IndustryUshio’s advances cement its position among a coterie of little-known Japanese companies indispensable to the production of the world’s consumer electronics. The Tokyo-based company developed a light source for equipment used to test what are known as masks: glass squares slightly bigger than a CD case that act as a stencil for chip designs. These templates have to be absolutely perfect, as even a tiny defect in one of them can render every chip in a large batch unusable.That’s where Ushio comes in. Its technology uses lasers to vaporize liquid tin into plasma and produce light closer in wavelength to X-rays than the spectrum visible to the human eye. That light helps chipmakers spot potential defects in the product. This process takes a room-sized machine that looks like a sci-fi death ray and requires a team of people to operate. After 15 years in development, the EUV business will start contributing to profit from the next fiscal year, Naito said, without giving further details.The move to EUV is the culmination of a decades-old trend. The push for smaller geometries that started when integrated circuits replaced vacuum tubes in the 1970s is approaching its final stages, and the number of companies that can compete in that space has been whittled down to a handful. Only Intel Corp., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. have plans to use EUV to go smaller than the 7-nanometer processes that are the current cutting edge of CPU design. All three will use lithography machines from ASML Holding NV, and for a few specialist suppliers like Ushio, that means a chance to have a 100% share of their respective markets.“We don’t chase the mass market, even though there is potentially a ton of money to be made in home lighting or automotive,” Naito said. “Instead, we want to focus on niche areas and do things that others can’t.”Naito believes Ushio is positioned to control the market for light sources used in testing of patterned EUV masks, while a small group of fellow Japanese companies specialize in other aspects of the technology. JSR Corp. and Tokyo Ohka Kogyo Co., for instance, control production of the light-sensitive resins required to print the designs, while the blank masks are made by only two companies, AGC Inc. and Hoya Corp., which both use Lasertec Corp.’s machines to test for flaws. All are based in the greater Tokyo area and espouse an almost artisanal commitment to high-precision manufacturing.Why Japan and South Korea Have Their Own Trade War: QuickTakeThe fact that much of the EUV supply chain hails from a single country was seized upon by Japan in its trade spat with South Korea. Tokyo slapped export restrictions on key materials heading to Korea, giving undesired attention to companies that prefer to operate behind the scenes. While Ushio’s machines were not targeted, photo-resists made by JSR and Tokyo Ohka made the sanctions list. The government has since relented, but concern lingers that the industry’s delicate balance may be again disrupted in the future.“There hasn’t been a direct impact for us yet,” Naito said. “But because we have such a high market share for our products, we feel a responsibility to absolutely make sure our customers’ production lines do not stop.”Alongside its EUV ambitions, Ushio commands an 80% share of the market for lithography lamps used to make liquid crystal displays and controls 95% of the supply of excimer lamps used in silicon wafer cleaning. The key to its success is balancing mass production with craftsmanship. Materials like quartz glass are difficult to handle and have different thermal expansion properties from metals like the molybdenum in which they are housed. Some of the lamps still have to be finished by hand.“Wherever you have a manufacturing process that needs to shine a very bright light, you will find Ushio,” said Damian Thong, an analyst at Macquarie Group Ltd.Ushio’s expertise also extends beyond semiconductors. Founded in 1964, it was the first Japanese company to develop and produce halogen lamps. From 1973, fishermen began to use its lights to catch squid -- -- a controversial technique in many countries. Finding new uses for its technology, from tanning salons to movie projectors, helped Ushio more than triple its sales over the past 25 years. The company is now experimenting with the use of sodium lamps to nurture plants and using ultraviolet light calibrated to such a precise wavelength as to kill bacteria without damaging human skin.“For Japanese firms with strong legacy manufacturing technology, the bigger danger is being trapped in them,” Thong said. “You have to give Ushio credit for moving further downstream, away from manufacturing toward something that requires more system integration.”To contact the reporters on this story: Pavel Alpeyev in Tokyo at email@example.com;Yuki Furukawa in Tokyo at firstname.lastname@example.orgTo contact the editors responsible for this story: Edwin Chan at email@example.com, Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
For the last few years, Intel (INTC) has been shifting its focus away from PC to data-centric businesses. It's looking to tap future technologies such as AI.
Contract chipmaker GlobalFoundries sued larger rival and Apple supplier TSMC for patent infringement, seeking to stop imports into the United States and Germany of products made with the allegedly infringed technologies. In lawsuits filed on Monday in the United States and Germany, GlobalFoundries also sought unspecified "significant" damages from Taiwan Semiconductor Manufacturing Co (TSMC) based on the Taiwanese firm's unlawful use of its technology in its "tens of billions of dollars of sales".
(Bloomberg) -- Globalfoundries Inc. sued larger rival Taiwan Semiconductor Manufacturing Co. for using its patented chip technology and requested a U.S. trade agency impose import bans that could roil the market for crucial components of a huge swath of electronics, including the iPhone.The U.S.-headquartered chipmaker, which like TSMC manufactures semiconductors for other companies, on Monday filed patent-infringement complaints at the U.S. International Trade Commission in Washington, as well as civil lawsuits at federal courts in the U.S. and Germany.The complaints cite TSMC and customers including Apple Inc., Broadcom Inc., Qualcomm Inc., Xilinx Inc., Nvidia Corp. and their device-maker customers including Cisco Systems Inc., Google and Lenovo Group Ltd. TSMC makes chips designed by companies like Qualcomm and Nvidia that are then used in devices including Apple iPhones, Lenovo laptops and Cisco routers.The broad-ranging legal assault threatens to disrupt the supply of everything from smartphones to personal computers to vital infrastructure like switches and routers that are the backbone of the internet. It highlights the importance of TSMC as a maker of the components that keep modern electronics running. It also comes at a time when the worldwide supply chain is being disrupted by a trade dispute between China and the U.S.TSMC spokeswoman Elizabeth Sun said her company hasn’t been served with any court papers and it isn’t familiar with the details of the suit."TSMC has always respected intellectual property and we have developed all our technologies by ourselves," Sun said.Globalfoundries is positioning the case as U.S. and European inventions being illegally used by an Asian company that has an increasing stranglehold on crucial parts of the technology industry.“Someone had to do something, the world needs a competitive semiconductor industry,” said Sam Azar, senior vice president of corporate development at Globalfoundries. “We’re using courts in the U.S. and Europe that care about protecting manufacturing.”Globalfoundries has factories in upstate New York and Dresden, Germany. Its headquarters is in Silicon Valley. The closely held company is owned by Mubadala, the investment arm of the government of Abu Dhabi.Globalfoundries, like other so-called contract chipmakers, has struggled to keep pace with TSMC whose factories are now rated the best in the industry. The U.S.-based company is seeking "substantial" damages from its Taiwanese rival which it alleges is using Globalfoundries’ technology to help it win tens of billions of dollars of sales, it said in a statement.German courts work quickly, and are known for ordering a halt of imports of products even before litigation is completed to protect patent owners. The ITC in Washington, which protects U.S. markets from unfair trade practices, also has a reputation for speed, with investigations completed in 15 to 18 months. It has the ability to block products entering the world’s largest economy. It has occasionally opted not to do that if it decides a ban would be counter to the public’s best interest. The American civil suits, filed in federal courts in Delaware and Texas, would take longer but could result in large damage awards.Throughout the complaint, Globalfoundries cited products including iPhones, AirPods, Apple TV and iPad models. It also mentioned Cisco’s switch boxes as using infringing chips and Lenovo computers that are based on Nvidia graphics chips.Globalfoundries argued that a ban would not hurt consumers because Samsung Electronics Co. is a licensee and other companies such as Sony Corp., LG Electronics Inc. and Vizio Inc. are not included in the litigation. That means there will be an adequate supply of smartphones and other consumer electronics, it said in the court filings. Samsung and Globalfoundries had a chipmaking technology partnership.The patents Globalfoundries is asserting cover the fundamentals of how semiconductors are manufactured. Some are U.S. patents and others are European covering esoteric but important areas like “structures of and methods and tools for forming in-situ metallic/dialectric caps for interconnects.” They involve the most advanced technique, called 7 nanometer, that TSMC is currently using.Meanwhile, GlobalFoundries announced a year ago that it would halt development of 7-nanometer chips and focus on more mature technology as the company struggles to match TSMC’s annual capital expenditure of some $11 billion.Globalfoundries’ Azar said his company wants TSMC to stop using the patented technology, which will be difficult to work around, or ask for a license and pay for the right to continue using the inventions.Companies like Apple, Cisco and Nvidia are named in the complaints because TSMC doesn’t import the chips or sell them to consumers; the only way to stop the chips from entering the U.S. and Germany is to block the products that use them.Trump Aides Say He Has Power to Force Companies From China (2)Global Foundries filed the complaint after U.S. President Donald Trump issued a tweet on Aug. 23 saying American companies “are hereby ordered to immediately start looking for an alternative to China.” His administration claims he has the authority to impose such an order though trade experts disagree.(Updates with Samsung and other companies not included in the litigation in 13th paragraph.)\--With assistance from Debby Wu.To contact the reporters on this story: Ian King in San Francisco at firstname.lastname@example.org;Susan Decker in Washington at email@example.comTo contact the editors responsible for this story: Jillian Ward at firstname.lastname@example.org, Alistair Barr, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- In the semiconductor industry, bigger is not usually better. For 60 years, chip companies have strived to make the brains of computers as tiny as possible.Startup Cerebras Systems will turn this maxim on its head on Monday when it unveils a processor measuring roughly 8 inches by 8 inches. That’s at least 50 times larger than similar chips available today.The logic behind going big is simple, according to founder Andrew Feldman. Artificial intelligence software requires huge amounts of information to improve, so processors need to be as fast as possible to crunch all this data -- even if that means the components get really chunky.The company’s Wafer Scale Engine chip is large because it has 1.2 trillion transistors, 400,000 computing cores and 18 gigabytes of memory. (A typical PC processor will have about 2 billion transistors, four to six cores and a fraction of the memory).“Every square millimeter is optimized for this work,” Feldman said. “AI work is growing like crazy. Our customers are in pain.” The biggest limitation of current AI systems is that it takes too long to train software, he added.Feldman has experience and industry backing that’s essential to tackling an engineering problem of this magnitude, he said. He co-founded server maker SeaMicro Inc. and sold it to chipmaker Advanced Micro Devices Inc. for more than $300 million in 2012. Cerebras has raised over $100 million from Silicon Valley investors including Benchmark, Andy Bechtolsheim and Sam Altman. Feldman has a team of 174 engineers and Taiwan Semiconductor Manufacturing Co. -- Apple Inc.’s chipmaker of choice -- is manufacturing the massive Cerebras processor.Cerebras won’t sell the chips because it’s so difficult to connect and cool such a huge piece of silicon. Instead, the product will offered as part of a new server that will be installed in data centers. The company said it has test systems working at several large potential customers and will start shipping the machines commercially in October.The AI chip market includes Nvidia Corp., Intel Corp. and U.K. startup Graphcore Ltd. Google has been so keen to speed up AI progress that the internet giant developed its own special chips called Tensor Processing Units.Nvidia was the last company to successfully bring new semiconductor technology into servers, the machines that run data centers that Google, Facebook Inc. and others use to run internet services. Nvidia now gets almost $3 billion a year in revenue from the business, which took years and thousands of engineers to build, according to Chief Executive Officer Jensen Huang.“It takes a long time to be successful in data center,” he said in an interview last week.To contact the reporter on this story: Ian King in San Francisco at email@example.comTo contact the editors responsible for this story: Jillian Ward at firstname.lastname@example.org, Alistair Barr, Mark MilianFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Huawei Technologies Co. on Friday offered the first glimpse of an in-house software that may someday replace Google’s Android, an important step toward reducing its reliance on American technology.“HarmonyOS,” previously code-named “Hongmeng,” is a long-gestating operating system that could soon find its way into smart TVs and lower-end phones. The OS embodies Huawei’s shift toward self-reliance as American sanctions cut it off from vital technology, and escalating U.S.-Chinese tariffs jeopardize a carefully orchestrated global supply chain. Huawei’s efforts actually mirror Apple Inc.’s: to develop vertically-integrated supply and production lines that help reduce exposure to inclement market forces, unreliable suppliers and unpredictable events like international trade disputes.The newly hostile environment is putting to the test not just Apple’s “Designed in California, Assembled in China” slogan, but the overall preparedness of two smartphone-making giants as the decades-old made-in-China model fractures. Here’s a look at how dependent Apple and Huawei are on external suppliers.OS: Apple’s strength has always been the integration of software with hardware, and it has absolute control over iOS. Huawei is trying to do the same with HarmonyOS, but it has everything left to prove, starting today. For the foreseeable future, Huawei remains dependent on Android for its mainstream smartphones, especially outside China. Advantage: Apple.Software ecosystem: The enormous fortress of iTunes, the App Store and a dedicated following of enthusiastic app developers is a huge and profitable edge for Apple’s mobile business. Huawei will need developers to build valuable apps for its ecosystem, which is another major question mark. Advantage: Apple.Processors: Both design their own processors but neither controls their actual production. Instead, they rely on Taiwan Semiconductor Manufacturing Co. to put them together and on SoftBank Group Corp.’s Arm for the licenses they need to design semiconductors. Advantage: Neither.Memory and storage: SK Hynix Inc., Samsung Electronics Co. and Micron Technology Inc. anchor the two smartphone makers’ storage needs. The Korean duo have a significant lead on RAM modules. Neither Apple nor Huawei has the capability to produce their own storage chips, though Huawei recently launched the Nano Memory Card. Advantage: Neither.Display: Samsung is the biggest supplier of the organic light-emitting diode displays that Apple uses for its iPhone X and XS top-tier devices. Others such as Japan Display Inc. and LG Display Co. provide liquid-crystal display panels for the likes of the iPhone XR and earlier models. While Huawei is in much the same boat, it’s increasingly relying on home-team vendor BOE Technology Group Co. for its OLED panels, which are starting to win customers beyond China. In short, neither is capable of doing the manufacturing itself. Advantage: Neither.Modems: Essential to mobile connectivity, modems are only going to become more important with the transition to next-generation 5G technology. Apple recently agreed to buy Intel’s modem division, a step toward designing its own 5G chips. But Huawei is already among the leaders on this front, having announced the Balong 5G01 modem in February. As with processors, neither has its own silicon facilities so they’ll again be reliant on specialist foundries. Advantage: Huawei.Assembly: Apple and Huawei are heavily reliant on assemblers such as Hon Hai Precision Industry Co., also known as Foxconn. Both also tap other Taiwanese contract manufacturers -- such as Pegatron Corp., Compal Electronics Inc. and Quanta Computer Inc. -- to varying degrees, while Huawei also relies on Flex Ltd. But unlike Apple, which decided years to outsource much of its global production in China, Huawei operates a few highly automated lines to make top-tier P series phones. Advantage: Huawei.Others: Apple and Huawei rely on a plethora of companies elsewhere in their smartphone production. U.S. companies Skyworks and Qorvo provide radio-frequency modules to facilitate 3G and LTE communications. Dutch semiconductor company NXP is the go-to supplier of NFC parts required for contactless payments. Sony Corp. is the undisputed leader in camera sensors and modules. And Apple-funded Corning Inc. supplies toughened glass. Advantage: Neither.Apple and Huawei appear to be the brains orchestrating a huge, international body of engineering muscle. They design their own software, processors, modems and phones, but ultimately have to hand those plans off to a legion of transnational suppliers and manufacturers.(Updates with OS’s unveiling from first paragraph.)To contact Bloomberg News staff for this story: Vlad Savov in Tokyo at email@example.com;Gao Yuan in Beijing at firstname.lastname@example.orgTo contact the editors responsible for this story: Edwin Chan at email@example.com, Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- The worst may soon be over for an electronics slump that has dogged Asia’s export-driven economies.Goldman Sachs Group Inc. economists said a rebound in technology exports is overdue, citing gradual improvement in South Korean trade and evidence the memory-chip cycle is reaching its low point.While South Korean semiconductor shipments plunged 28% by value in July, they rose 15% by volume. The nation’s inventories of semiconductors fell a second straight month in June, a sign that orders are picking up.“The question is when South Korea’s exports will bottom out,” said Stephen Lee, an economist at Meritz Securities Co. in Seoul. “It could be the third quarter, either August or September.”The slump in tech exports has been one of the biggest drags on Asia’s manufacturing base. Key gauges for factory sentiment continue to show contractions for output in Japan, South Korea, Malaysia and Taiwan. Real investment growth across Asia slowed to 2% in the first quarter from 7% a year ago, according to S&P Global Ratings.Industry announcements across Asia signal a possible recovery, which is good news for a region that accounts for more than 60% of global economic growth.Samsung Electronics Co., the world’s biggest memory-chip maker, said Wednesday that data centers -- its biggest customers -- have started buying again, causing demand to increase.The world’s largest contract chip maker, Taiwan Semiconductor Manufacturing Co., surprised analysts last month when it projected current-quarter revenue ahead of estimates. TSMC’s business has bottomed out and should begin to rebound, Chief Executive Officer C. C. Wei said. The Apple Inc. supplier sees “very, very strong demand” in the second half of 2019, he said.Smartphone DemandApple’s suppliers -- dominated by Asia-based factories -- are preparing to produce components for up to 75 million new iPhones in the second half, roughly the same number as a year earlier, Bloomberg News reported.Apple’s sales forecast of $61 billion-$64 billion for the current quarter not only topped analysts’ estimates but also signaled year-over-year revenue could grow, thanks to healthy demand for iPhones.Another reason for optimism is that Samsung will begin selling its Galaxy Fold smartphone in September. The world’s biggest handset maker hopes the foldable phones, coupled with fifth-generation wireless networks, will kick the mobile industry back into a boom by giving consumers a compelling reason to upgrade their devices.“It’s been pretty awful but probably not as bleak going forward as it has been,” Sian Fenner, lead Asia economist at Oxford Economics, said of the tech cycle.Early DaysFor sure, it’s too early to say for certain the worst is over.After all, Singapore’s electronics exports fell in June to their lowest since at least 1997. In Japan, shipments of electronic components and chip-making equipment to China both dropped by well over 20% in June.Tuuli McCully, head of Asia-Pacific economics at Scotiabank in Singapore, said that while the electronics sector may bottom late this year, “significant downside risks remain.”In addition to the U.S.-China trade war and a slowing global economy, demand for new smartphones is plateauing. Rising tensions between Japan and South Korea could also hurt. Japan has already slapped curbs on exports to South Korea of materials vital to manufacturing of semiconductors and displays, and things could get worse.“Even before the trade war hit, there was a bit of a moderation in the tech cycle,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd. in Singapore. “Smartphones have reached a saturation point.”Still, optimists argue that comparisons with robust growth numbers for electronics exports from a year ago is making the weakness look worse than it is.Beyond smartphones, Asia is also leading spending on the Internet of Things, accounting for around 36% of global spending this year, followed by the U.S. and Western Europe with 27% and 21%, respectively.“Initial shocks from the trade war might be behind us,” Goldman economists wrote in a note.\--With assistance from Debby Wu.To contact the reporters on this story: Enda Curran in Hong Kong at firstname.lastname@example.org;Michelle Jamrisko in Singapore at email@example.com;Sam Kim in Seoul at firstname.lastname@example.orgTo contact the editors responsible for this story: Malcolm Scott at email@example.com, Henry Hoenig, Nasreen SeriaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The processor giant released a better-than-feared earnings report on July 25 that bodes well for the semiconductor industry’s second half of 2019.
(Bloomberg) -- Advanced Micro Devices Inc., the No. 2 maker of computer processors, gave a disappointing third-quarter sales forecast, indicating lower-than-expected orders for game-console chips from Microsoft Corp. and Sony Corp., two of its biggest customers.Revenue in the current period will be about $1.8 billion, Santa Clara, California-based AMD said Tuesday in a statement. That missed the average of analysts’ projections of $1.94 billion, according to a survey by Bloomberg. The company also pared its forecast for annual revenue, and shares tumbled in extended trading.Chief Executive Officer Lisa Su is trying to remake her company into more than just a purveyor of cut-price alternatives to Intel Corp.’s PC chips. While sales of PC-related products are improving, the company said revenue is taking a hit because demand from game-console makers is falling short of its original forecasts this year. In the second quarter, revenue in the division that includes server processors and custom chips for consoles declined 12%, AMD said.Console sales are dropping as the current versions of Microsoft’s Xbox and Sony’s PlayStation are in their seventh year of life and the companies have started talking about their replacements.Su, the chip industry’s first female chief executive officer, said her company is where she had hoped it would be in terms of unveiling competitive chips, and AMD is ready to take back share from Intel, whose products still garner 90% of revenue in the processor market. As the year progresses, she said, more of AMD’s recently announced chips will be available in electronic devices, boosting the company’s market footprint.“There’s a real pull for the products,” Su said. “I feel really good about the customer engagements.”The company’s second-quarter net income fell to $35 million, or 3 cents a share, compared with $116 million, or 11 cents, a year earlier. Excluding certain items, profit in the recent period was 8 cents, matching analyst predictions. Revenue in the period was $1.53 billion, 13% lower than a year earlier but topping analysts’ average projection of $1.52 billion.Gross margin, or the percentage of sales remaining after deducting the cost of production, widened to 41% in the second quarter, in line with the average analyst estimate. A year earlier, that measure of profitability came in at 37%.AMD said it now expects full-year revenue to gain at a percentage in the mid-single digits, compared with an earlier prediction for annual sales to rise in the high single digits. Analysts had projected an annual sales increase of about 6%. At the same time, the company slightly raised its forecast for gross margin for all of 2019, to 42%.The company’s shares fell about 5% in extended trading following the report, after earlier climbing 1.2% to $33.87 at the close in New York. The stock has been on a tear this year, gaining 83% so far.Last week, Intel gave an upbeat forecast and said second-quarter demand had exceeded its earlier outlook. Buyers of computer components stocked up ahead of the potential for tariffs to be levied on trade between the U.S. and China, Intel said. Still, executives warned that the temporary boost can’t be expected to continue. Demand for servers from corporations and government agencies was weak, particularly in China.Under Su, AMD has been staging a comeback in the lucrative business of chips for servers, machines that are the backbone of corporate networks and the internet. The company owned about a quarter of that market a decade ago, until delays to new chips and lagging performance allowed Intel to banish AMD to less than 1% market share. AMD’s new Epyc range of server processors is aimed at clawing back those lost orders.AMD is also trying to exploit Intel’s delays in shifting production to more advanced technology. AMD now outsources manufacturing of its best chips to Taiwan Semiconductor Manufacturing Co., which analysts calculate is now more than a year ahead of Intel in implementing new processes.Su’s efforts have had an impact. At the end of last year, AMD had 3.2% of the market for server chips, up from 0.8% 12 months earlier. AMD has made faster progress in laptops and desktop computers, where it has more than 10% share of shipments, according to Mercury Research.(Updates with CEO comment in sixth paragraph.)To contact the reporter on this story: Ian King in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Jillian Ward at email@example.com, Dan ReichlFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Apple Inc.’s suppliers are preparing to produce components for up to 75 million new iPhones in 2019’s second half, roughly the same number as a year earlier, according to people familiar with the matter.The volumes planned for the next iPhone launch cycle would signal steady demand for the company’s most important product, despite U.S.-China trade tensions and a decline in the overall smartphone market. The Cupertino, California-based technology giant stopped divulging iPhone shipment numbers in the holiday quarter last year as unit growth turned negative and started providing metrics to highlight the growth of services such as Apple Music. Analysts estimate Apple sold 70 million to 80 million new iPhones in the second half of last year.The company’s Asian suppliers are gearing up to produce components for three new iPhone models to meet holiday-season demand, the people said, asking not to be identified citing internal estimates. The U.S. company’s Asian partners could ramp production up to 80 million new phones if needed, one of the people said. Main iPhone assembler Foxconn Technology Group has stepped up hiring in Shenzhen and is offering staff about 10% more than a year ago to secure a peak-period workforce, another person familiar with the matter said.The iPhone assembler Pegatron Corp. added to gains and closed 2.3% higher, while lens maker Largan Precision Co. rose 2.6%. Taiwan Semiconductor Manufacturing Co. pared earlier losses and closed unchanged.Apple has announced new iPhones each September since 2012 and the new models typically go on sale in the final weeks of that month. The company reports third quarter earnings on July 30, and the firm’s guidance could indicate its expectations for iPhone sales at the end of the fourth quarter ending in September. Apple still provides iPhone revenue figures, with the company generating $52 billion from iPhones last holiday quarter, a 15% decline, and $37 billion from new iPhones in the last fourth quarter, a 27% increase. Those numbers, however, include a mix of both last year’s new models and earlier versions of the iPhone.Jeff Pu at GF Securities estimates that shipments of newly released iPhones will rise to 74 million in the second half, up about 7% from his estimate of 69 million last year, while TF International analyst Ming-Chi Kuo forecast that Apple would sell 75 million to 80 million new iPhones in the second half of 2018. This year’s volumes may signal stabilization after a year of uncertainty, though that’s a far cry from the double-digit growth numbers of years past.Of course, the fact that Apple suppliers plan to produce parts for 75 million new iPhones doesn’t necessarily mean the company will sell that many. Apple will assess sales after launch and the total shipments may not reach that mark. The company declined to comment.Apple is struggling with soft smartphone demand as people take longer to replace their gadgets and Chinese rivals like Huawei Technologies Co. grab market share. The trade war is also denting Chinese economic growth while souring consumers there on American brands. Analysts have been betting on a 13.3% drop in iPhone shipments to roughly 189 million in fiscal 2019, according to average projections compiled by Bloomberg.“Apple’s growth has become more cyclical and slowed along with the global smartphone market, leaving it dependent on iPhone upgrades to drive sales,” Bloomberg Intelligence analysts John Butler and Boyoung Kim said. “Apple’s inability to raise iPhone prices much higher is constraining growth. Weakness in China due to competition and the trade war with the U.S. remains an issue.”While Apple is relying on services to take up the slack, sales of the gadget remain its largest revenue driver and the U.S. company needs to get the latest devices into the hands of its users so they can actually download and subscribe to new services like the upcoming Apple Card, Apple Arcade gaming service, and Apple TV+, a Netflix rival.The major attraction in this year’s models lies in enhanced cameras: the two high-end models to replace the iPhone XS and iPhone XS Max will include three back cameras, up from two, and a successor to the iPhone XR will include a second back camera. The third camera will serve as an additional ultra-wide lens, Bloomberg News reported in January, allowing the phone to automatically repair parts of an image that may be initially chopped out of a frame. It will also enable a wider range of zoom. All three new models will also include faster A13 processors built by TSMC, Bloomberg News reported in May.Beyond the additional rear cameras, the new iPhone models will look similar to the 2018 versions, which looked like the 2017 iPhone X. Apple is planning a more extensive revamp of the iPhone with an updated design, 5G connectivity, and new augmented reality cameras for 2020, Bloomberg has also reported.Read more: Apple’s 2019 and 2020 iPhone and iPad PlansWall Street sentiment on Apple may be starting to brighten somewhat after a prolonged period of investor-pessimism. Morgan Stanley boosted its target price on the stock this week, days after another firm upgraded the shares. Apple may benefit from a U.S. ban on the sale of American technology to Huawei, not to mention Japanese exports curbs to Korea that threaten Samsung Electronics Co. Apple’s main chipmaking partner, TSMC, also helped allay fears of a protracted industry slump when it projected current-quarter revenue ahead of estimates. Longer term, investors hope Apple can rejuvenate its most iconic gadget.(Add share price changes in fourth paragraph.)To contact the reporters on this story: Debby Wu in Taipei at firstname.lastname@example.org;Gao Yuan in Beijing at email@example.com;Mark Gurman in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Edwin Chan at email@example.com, Peter ElstromFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.