Technology Bulletin

    • VW Approves Alliance With Ford
    • Jun 2, 2020
    • Volkswagen’s supervisory board has approved several projects in a multibillion-dollar alliance with Ford, first announced last July.   (VW News... View More
      Volkswagen’s supervisory board has approved several projects in a multibillion-dollar alliance with Ford, first announced last July.   (VW Newsroom) Vinay's key takeaways:  Among the shared projects specified by VW are a midsize pickup to be developed by Ford; a city delivery van to be developed by VW; a larger commercial van to be developed by Ford, and a new electric vehicle for Ford of Europe, to be built on VW's electric vehicle architecture.  VW's planned $3.1 billion investment in Argo is also said to be on track.  It helps that Ford and Volkswagen had agreed to pool in their respective expertise and leverage each other’s strengths in a strategic alliance last year. With global car sales and production having slowed even further with the COVID-19 pandemic impact, hard-pressed carmakers have little choice but to join forces now to recover.  We should expect more such collaborative alliances, on similar lines, among other automakers, in the months ahead. We also covered this in our earlier article: VW and Ford: The New Wave of Transformations has Begun 
    • Digital Payment Volumes on NPCI Channels Rebound i...
    • Jun 2, 2020
    • Transaction volumes recorded on channels such as Unified Payments Interface (UPI), Immediate Payment System (IMPS), Bharat Bill Payment System and National Elec... View More
      Transaction volumes recorded on channels such as Unified Payments Interface (UPI), Immediate Payment System (IMPS), Bharat Bill Payment System and National Electronic Toll Collection (NETC) inched towards pre-covid levels signifying a slow revival in commercial activities and early signs of consumer appetite to spend. (Economic Times, June 1)   Parv Sharma's key takeaways: Looking more closely at the numbers, May’s rebound is encouraging, at least for digital payments. Clearly one of the major drivers is no one wants to be touching cash, which has become “the new Typhoid Mary”. But a lot of hurdles still remain. For example: Cultural resistance – many people still don’t trust or understand digital. Retailers still prefer cash, whether for tax reasons or otherwise. Illiteracy is high (26% vs 3% in China, for example) and this correlates to smartphone usage. It could also disproportionately impact take-up outside metros. Nevertheless, ecosystem players are in place, the opportunity is huge, and, importantly, the country’s open digital payments infrastructure is robust, fair and enjoys low barriers to entry. 
    • Huawei's Terrible Week
    • Jun 2, 2020
    • When news broke Friday morning that Britain is looking to propose an alliance of democracies to build a 5G alternative to Huawei, you might think that that was ... View More
      When news broke Friday morning that Britain is looking to propose an alliance of democracies to build a 5G alternative to Huawei, you might think that that was the worst thing to happen to the controversial Chinese telecoms giant this week. In fact, it just caps off a series of fast-moving events that surely makes this one of the most decisive weeks yet in the global fight over next-generation 5G networks. (Tech Crunch, May 31) Key takeaways: This could be the first step towards a US-centric 5G, and result in dual standards moving forward.    This gives more legs to Deutsche Bank's suggestion of a coming tech cold war, which "has the potential to split the world into two halves by a “Tech Wall” – two parallel tech regimes – a US centric one and a Chinese centric one, with little or no inter-operability".
    • Revamped PLI Scheme Aims to Boost Local Smartphone...
    • Jun 2, 2020
    • The new production-linked incentive scheme has removed an existing clause that evaluated production machinery brought to India at 40 percent of its value...this... View More
      The new production-linked incentive scheme has removed an existing clause that evaluated production machinery brought to India at 40 percent of its value...this was one of the clauses to which Apple had raised an objection to...To further ease the rules and make local manufacturing of smartphones in India seem attractive, the committee has chosen to remove certain valuation caps from the production process, and also de-link the payout of the local manufacturing incentive from the government’s financial condition.  (News 18 Tech, May 30) Tanvi Sharma's key takeaways: The government is clearly motivated, ensuring key “irritants have been resolved”, paving the way for iPhone makers and others to open shop in the country.  Further assurances like industry-inclusive decision processes show longer-term commitment.  The schemes earmark around $5.5bn for both foreign and domestic manufacturers of smartphones, SMT components including semiconductors, PCBs and assembly units.   The government is hoping smartphone exports rise from $3bn currently to $100bn in five years. For this to happen, more incentives may be needed to fully develop the component ecosystem within the country. 
    • Samsung Surprise As World’s First Smartphone With ...
    • May 26, 2020
    • The futuristic-sounding device is the result of a partnership between Samsung and South Korea’s SK Telecom, and is the world’s first 5G smartphone w... View More
      The futuristic-sounding device is the result of a partnership between Samsung and South Korea’s SK Telecom, and is the world’s first 5G smartphone with a quantum random number generator (QRNG) chipset...By pairing the system with a compatible online service, the connection is unhackable, claims SK Telecom, though it only works with the company’s services right now. The firm said that going forward, it “will expand its footprint in the quantum security business by integrating QRNGs to more devices and networks.” (Forbes, May 15) Ankit Malhotra's key takeaways: I believe most consumers are not ready to pay the premium for this device, yet.  But privacy and security continue to make headlines; expanded services presence and appearance on Samsung’s flagships could help this catch on.  Introduction of this chip seems partly a case of turbo-charged catch up with Google and Apple, which both have dedicated security chips (Titan M in the Pixel and the T2 in iPhone).  
    • Apple Outlines Plan to Reopen More Retail Stores
    • May 26, 2020
    • Apple is reopening more than 25 retail stores in the U.S., though some will only offer curbside “Genius” support services or in-store pick-up option... View More
      Apple is reopening more than 25 retail stores in the U.S., though some will only offer curbside “Genius” support services or in-store pick-up options...All stores appear to be operating at reduced hours, though the services available vary depending on location... This fits with Apple’s strategy for opening doors again, outlined in a letter by Apple SVP of People and Retail Deirdre O’Brien, which stressed that decisions are made on a location-by-location basis and could change depending on the situation in the local community. (Fierce Wireless, May 18)   Tarun Pathak's key takeaways: Apple’s approach to store re-openings includes looking “...at every available piece of data — including local cases, near and long‑term trends, and guidance from national and local health officials...” and does not preclude possibility of re-closing should local conditions warrant. The requisite face masks, limited occupancy, and temperature checks combined with store ‘deep cleanings’ and enhanced customer needs fulfilment (curb-side pickup/drop off and home delivery) further bolsters Apple’s customer service oriented retail experience. Customers have been shaken, but an assured post-COVID offline experience coupled with Apple’s strong online presence will do much to restore consumer confidence, at least for Apple.
    • TSMC Halts New Huawei Orders After US Tightens Res...
    • May 26, 2020
    • Taiwan Semiconductor Manufacturing Co., the world's biggest contract chipmaker, has halted new orders from Huawei Technologies in response to tighter U.S. e... View More
      Taiwan Semiconductor Manufacturing Co., the world's biggest contract chipmaker, has halted new orders from Huawei Technologies in response to tighter U.S. export controls aimed at further limiting the Chinese company's access to crucial chip supplies, multiple sources told the Nikkei Asian Review. (Nikkei Asian Review, May 18) Brady Wang's key takeaways: We’ll have to wait and see how China could react, but a Global Times editorial stated the following: As part of the countermeasures, China is prepared to put certain US companies on its "unreliable entity list," imposing restrictions on or launching investigations into US companies like Qualcomm, Cisco and Apple in accordance with Chinese laws like the Cybersecurity Review Measures and Anti-monopoly Law, and suspending the purchase of Boeing airplanes, a source close to the Chinese government told the Global Times. As for the impact to TSMC business? Short term it should not be significant as the US Bureau of Industry and Security gave enough buffer time for TSMC to clear its WIP inventory. And we believe continued demand from the likes of Xiaomi, Oppo and Vivo will likely fill the gaps. Longer term, however, could bring strategic consequences. Shutting out Huawei could hamper the chipmaker’s ability to finance development of new processes (3 and 2 nm), as Huawei has done in the past.
    • Weekly Census Bureau Survey Provides Timely Info o...
    • May 26, 2020
    • 47% either lost employment income or another adult in their household had lost employment income since March 13.  Being unable to pay rent or mortgage... View More
      47% either lost employment income or another adult in their household had lost employment income since March 13.  Being unable to pay rent or mortgage on time was reported by 10.7% of adults, while another 3.2% reported they deferred payments. 38.7% of adults report that over the last four weeks, they delayed getting medical care because of the coronavirus pandemic (U.S. Census Bureau Household Pulse Survey (n=74,000), May 20)   Tarun Pathak's key takeaways: What this means is that Americans are facing severe socio-economic impacts due to COVID-19.  Over 39m Americans are now unemployed and the loss of income and mental health impacts of the pandemic are showing their faces.  This has an effect on demand and purchasing behavior as seen by Americans delaying getting medical care during the pandemic. The less affluent are likely to be more affected, which could result in the non-premium segment of the market disproportionately affected.  In contrast, Apple’s growing online presence, great post-COVID offline experience and significantly lower entry device price points with new iPhone SE 2020 (rumored $650 for the 12) positions it well for a great rest of year.  
    • Panasonic in Talks With Tesla to Expand Nevada Pla...
    • May 19, 2020
    • Panasonic recently lost its status as Tesla’s exclusive battery supplier, but has been able to turn around the U.S. joint battery business as demand for T... View More
      Panasonic recently lost its status as Tesla’s exclusive battery supplier, but has been able to turn around the U.S. joint battery business as demand for Tesla’s electric cars soar. (Reuters) Aman's key takeaways:  EV batteries are a positive for Panasonic which is seeing slower growth in other segments including laptops.  Both Tesla and Panasonic's Nevada plant registered profits in the last couple of quarters.  Growing sales and profitability of Tesla is encouraging Panasonic to invest in the Gigafactory despite the uncertainty surrounding the pandemic.  Panasonic also wants to diversify its current portfolio and remain the biggest third-party supplier to Tesla by expanding the capacity of Gigafactory.
    • Hertz Nearing Bankruptcy
    • May 19, 2020
    • The company’s most obvious avenue for raising cash would be to sell down parts of its rental car fleet, which numbers above 560,000 cars in the U.S., not ... View More
      The company’s most obvious avenue for raising cash would be to sell down parts of its rental car fleet, which numbers above 560,000 cars in the U.S., not counting its international operations. (Autoweek) Aman's key takeaways:  Hertz needs to find $400M by May 22nd for holders of its asset-backed securities to avoid bankruptcy. Securing bank loans at this time is tough, given the uncertain near-term future of the car rental industry amidst lockdown of air travel and hotels.  If Hertz decides to sell its rental car fleet at low prices to raise cash, it will adversely impact new car sales in the country.  Smaller companies like Zoom Car could also come under increasing investor scrutiny, further lowering investor confidence.  

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