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Technology Bulletin

    • Google in Talks With ShareChat as Latter Scouts fo...
    • Aug 25, 2020
    • Google is in talks with ShareChat for investing in the Bengaluru-based social media firm, two people familiar with the matter told ET.  ShareChat is looki... View More
      Google is in talks with ShareChat for investing in the Bengaluru-based social media firm, two people familiar with the matter told ET.  ShareChat is looking to raise $150-200 million and is holding discussions with investors and technology companies, as it prepares to battle it out with over a dozen rivals to fill the gap left by banned Chinese apps, including TikTok and Helo. ShareChat owns a regional language social media platform that competed with ByteDance's recently banned Helo and a new short-video app Moj, which was released soon after TikTok's exit from the market. (Economic Times, August 17) Tarun Pathak's key takeaways: ShareChat is a perfect fit to Google’s strategy of increasing exposure to India’s rising digital adoption.  Beyond growing ad revenue, a deal could provide richer local insight around the next half billion first-time internet users, helping to shore up its domestic social networking ambitions over the long term.   We’re already seeing a close partnership between the two, with ShareChat’s recent infrastructure migration to Google Cloud. 
    • Commerce Department Further Restricts Huawei Acces...
    • Aug 25, 2020
    • The Bureau of Industry and Security (BIS) in the Department of Commerce (Commerce) today further restricted access by Huawei Technologies (Huawei) and its non-U... View More
      The Bureau of Industry and Security (BIS) in the Department of Commerce (Commerce) today further restricted access by Huawei Technologies (Huawei) and its non-U.S. affiliates on the Entity List to items produced domestically and abroad from U.S. technology and software. In addition, BIS added another 38 Huawei affiliates to the Entity List, which imposes a license requirement for all items subject to the Export Administration Regulations (EAR) and modified four existing Huawei Entity List entries. BIS also imposed license requirements on any transaction involving items subject to Commerce export control jurisdiction where a party on the Entity List is involved, such as when Huawei (or other Entity List entities) acts as a purchaser, intermediate, or end user. These actions, effective immediately, prevent Huawei’s attempts to circumvent U.S. export controls to obtain electronic components developed or produced using U.S. technology. (U.S. Department of Commerce, Aug 17) Brady Wang's key takeaways:  A huge blow on Huawei (HiSilicon) and its supply chain stakeholders.  Major impacts:  Huawei can no longer get commercial chips from suppliers like MTK and other commodity memory vendors. Huawei’s temporary general license (TGL) has expired and is not being extended. This could lead to difficulties in selling older models. If production started before Aug 17, there is no need to apply for the license, but the final shipment date needs to be Sep 14. Only non-5G items will be reviewed on a case-by-case basis – with some possibility of approval. All other license applications (including 5G) will be reviewed, but the presumption is denial. Huawei has significant inventory of key components but it probably did not expect the new restrictions to also cover commercial chips. The company may have been caught on the back foot and might not have the right parts to complete production. Worst case, its smartphone business could turn to zero by Q4. 
    • DT Gets Boost From Sprint Merger, but Warns Agains...
    • Aug 18, 2020
    • The merger of Spring and T-Mobile is still going to plan, says Deutsche Telekom (DT), but the prospect of a Huawei ban gives them cause for concern in their dom... View More
      The merger of Spring and T-Mobile is still going to plan, says Deutsche Telekom (DT), but the prospect of a Huawei ban gives them cause for concern in their domestic market…Last month, DT signed an agreement with Ericsson for 5G RAN, but the company is nonetheless somewhat reliant on the Huawei, with documents published in June suggesting that a removal of their Huawei kit would cost around €3 billion, a scenario likened to ‘Armageddon’…Meanwhile, he extolled the virtues of open, cloud-based technology – also known as Open RAN – which would help to expand the RAN ecosystem and circumvent the problem of Huawei altogether. (Total Telecom, August 13 ) Gareth Owen's key takeaways: The Chinese vendor is supplying around two-thirds of its RAN equipment, with Ericsson responsible for the remaining sites. Most of Deutsche Telekom’s existing 30,000 5G cell sites are believed to be equipped with Huawei equipment, which would need to be replaced if a ban was enforced by the German government. A decision is expected soon. Despite pressure from the US, an outright ban is thought unlikely, primarily due to the economic ramifications on the German economy, particularly the automotive and chemicals sectors, which depend heavily on exports to China. However, the German government may choose to limit the amount Huawei equipment and/or introduce other measures. In a bid to minimise government intervention with respect to Huawei, Deutsche Telekom’s CEO is trying to appease the German government by calling for the introduction of statutory open RAN mandates, opening up the RAN market.  An open RAN mandate rather than an outright ban on Huawei could be a politically acceptable solution for the German government as it could potentially exclude, or at the very least, significantly minimise the presence of Chinese vendors in Germany during the next few years. Of the Big Three incumbents, Huawei is the most opposed to open RAN and potentially has the most to lose, although it has slightly softened its stance recently. In contrast, Nokia and Samsung are the most amenable to the new technology with Ericsson somewhere in the middle. If the German government does not enforce a complete ban, as expected, the likelihood is that Deutsche Telekom will stick with current vendors Huawei and Ericsson. Yet this is another indication that the trend towards open RAN is gaining strength and is being driven by geopolitical rather than market forces.
    • 5G Absent From VW's Big Manufacturing Plant Upgrad...
    • Aug 18, 2020
    • Volkswagen is embarking on a major technological upgrade of more than a dozen of its European auto manufacturing plants. The company's goal is to connect a... View More
      Volkswagen is embarking on a major technological upgrade of more than a dozen of its European auto manufacturing plants. The company's goal is to connect all of its major manufacturing equipment to the cloud so it can use technologies like artificial intelligence to compute things like predictive maintenance of machines and to reduce reworking of vehicles. But 5G is nowhere to be found in Volkswagen's massive upgrade project, despite the fact that the effort appears to be a perfect fit for the technology.  (Light Reading, August 10) ​ Gareth Owen's key takeaways: Volkwagen (VW) together with Amazon Web Services (AWS) and integration partner Siemens is deploying an Industrial IoT (IIoT) Cloud that will connect all the company’s 30,000 facilities, its 122 manufacturing plants plus its global supply chain partners. VW’s IIoT Cloud is the perfect example of a use case routinely touted by mobile operators and infrastructure vendors as ideal for 5G private networks.  Although VW recognises the potential of 5G, the company does not have any concrete plans to use LTE/5G cellular networks, including in its manufacturing plants, and maintains that connectivity will be provided via Wi-Fi and wired networks. In recent years there has been a lot of focus on the use of 5G as the optimum wireless solution for industrial IoT type applications. However, the introduction of new Wi-Fi technologies over the next two to three years may level the playing field and provide an alternative solution. The latest Wi-Fi technology, Wi-Fi 6E, incorporates many new, advanced technologies, which makes it significantly superior to previous Wi-Fi generations. These game changing technologies will enable Wi-Fi to compete against 5G in many of the more demanding applications currently being targeted by the cellular industry, particularly for indoor applications. Wi-F is ubiquitous and will remain a more cost-effective solution than cellular for many local area applications. It may well become the network of choice for small, medium - and as VW demonstrates - even large enterprises rather than cellular-based private networks.
    • Fortnite Maker Epic Games Sues Apple, Google After...
    • Aug 18, 2020
    • Apple and Alphabet's Google on Thursday removed popular video game Fortnite from their app stores for violating the companies' in-app payment guidelines... View More
      Apple and Alphabet's Google on Thursday removed popular video game Fortnite from their app stores for violating the companies' in-app payment guidelines, prompting developer Epic Games to file federal antitrust lawsuits challenging the two companies' rules. Apple and Google cited a direct payment feature rolled out on the Fortnite app earlier on Thursday as the violation. Epic sued in US court seeking no money from Apple or Google but rather injunctions that would end many of the companies' practices related to their app stores. (Gadgets 360, August 14) Ankit Malhotra's key takeaways: An epic battle indeed, magnified by the bad press Apple has gotten lately from the likes of Facebook, Spotify, Airbnb and ClassPass.   An Epic win would be a gamechanger for many developers across the community, allowing them to reroute some of the flow of cash directly to their own payment gateways – resulting in dilution of control and services revenue for Apple. 
    • Foxconn Planning for 'Inevitable' Split Between US...
    • Aug 18, 2020
    • Foxconn, the world's largest contract manufacturer and Apple's most important supplier, said nearly one-third of its production capacity is now outside ... View More
      Foxconn, the world's largest contract manufacturer and Apple's most important supplier, said nearly one-third of its production capacity is now outside of China, a figure that will likely keep growing due to the "inevitable" decoupling of Chinese and American supply chains. (Nikkei Asian Review, August 12) Brady Wang's key takeaways:  The trend to shift production outside China will continue, but key questions are by how much and how fast.  Hon Hai publicly stated it’s gone from 25% in June last year to 30% today.  Tough to put an exact figure of where we’ll end up, but if we were to look at Apple products, we can see what parts would make sense for ex-China prioritization:  iPhone: Low degree of automation makes it difficult to expand non-Chinese production quickly,  but it could meet US demand by 2021. iPad: High degree of automation and low demand in the US, so easier to expand outside China. Mac: Although production automation is higher than the iPhone, I think we’d still need to wait until 2021 to meet US demand, which is high. Apple Watch: Likely see ex-China production bases from this year. AirPods: The future design of AirPods from SMT to SiP can improve the level of production automation; some are already being ‘Assembled in Vietnam’. 
    • Here's How Micromax Co-Founder Rahul Sharma Plans ...
    • Aug 18, 2020
    • Home-bred handset maker Micromax will invest Rs 500 crore towards manufacturing and research and development (R&D) as it plots a comeback in India's sma... View More
      Home-bred handset maker Micromax will invest Rs 500 crore towards manufacturing and research and development (R&D) as it plots a comeback in India's smartphone market, backed by the government's incentive scheme…Micromax, which at its peak in 2014 rose to No. 2 in smartphones, has practically been wiped out of the market by the Chinese onslaught, which began to take shape in 2016. (Economic Times, August 14) Shilpi Jain's key takeaways: The new PLI scheme will be a big help for local brands like Micromax to compete more effectively with the Chinese on the pricing front.  We could also see more component players coming to India as other brands work to increase local contribution.  Long term, we could see a complete ecosystem of connected devices being launched.  Bigger picture, PLI could become a key driver of exports as more brands set up production bases in India.
    • Signs of Growth as Nokia Reports Surprise 2Q Profi...
    • Aug 4, 2020
    • Nokia delivered a strong improvement in Q2, with better-than-expected profitability, significant improvement in cash generation, clear indications of a return t... View More
      Nokia delivered a strong improvement in Q2, with better-than-expected profitability, significant improvement in cash generation, clear indications of a return to strength in mobile radio, and a year-on-year increase in earnings-per-share, despite the challenges of COVID-19. (Nokia Earnings, 2Q 2020) Gareth Owen's key takeaway: We believe Nokia has turned a corner and growth is returning driven predominantly by the Mobile Access business.   As the Reefshark FPGA-to-SoC chipset transition accelerates, Nokia’s RAN products are becoming more competitive and profitable.  Other positives included continued growth at the young Nokia Enterprise division, which recorded an 18% increase in revenues; Nokia announced that it now 180 private network customers. During the new few months, Nokia looks likely to benefit from the Huawei restrictions with a likely increase in market share. The company confirmed that it has received new interest from numerous MNOs, particularly in Europe. Interestingly, there are also signs that Nokia’s diversification strategy into software, IP routing and optical networking is finally beginning to pay off.  Although revenues fell at all these businesses, Nokia was awarded data center contracts by several blue-chip tech companies during the quarter, including Apple, Baidu and Tencent – surely a vote of confidence in its optical networking technologies and a good omen for the future?
    • Paypal: Second Quarter Results
    • Aug 4, 2020
    • -    Total Payment Volume (TPV) of $222 billion, growing 29% YoY -    Revenues of $5.26 billion, growing 22% YoY -   &... View More
      -    Total Payment Volume (TPV) of $222 billion, growing 29% YoY -    Revenues of $5.26 billion, growing 22% YoY -    Cash flow from operations of $2.4 billion, growing 103% YoY, with a free cash flow of $2.2 billion, growing 112% YoY. -    21.3 million Net New Active Accounts (NNAs) added; strongest quarter for NNAs in PayPal’s history (Paypal Earnings, 2Q 2020) Arushi Chawla's key takeaway: 2020 Q2 proved to the strongest quarter for PayPal. The widespread roots of PayPal have reflected its strength during government restrictions and lockdowns.   In the midst of the pandemic, the company’s stellar consumer and merchant support was considered a key success factor.  The proactive nature of the company towards collaboration/partnership and the introduction of new payment options has helped it sustain growth. These initiatives include:  Deployment of QR code technology in 28 markets globally. Entered commercial relationship with Gojek. Enabled direct deposit for Venmo users. Venmo also launched Business Profiles, a new offering that allows sole proprietors and casual sellers to have a professional presence on Venmo’s platform. Now available as a payment option within Mercado Pago’s online checkout for shoppers in Brazil and Mexico. Expanded its Visa Direct partnership globally to accelerate real-time access to funds for small businesses, consumers and partners across PayPal’s platform.
    • 3 Months of Hell: U.S. Economy Drops 32.9% in Wors...
    • Aug 4, 2020
    • The Coronavirus pandemic triggered the sharpest economic contraction in modern American history, the Commerce Department reported Thursday. Gross domestic produ... View More
      The Coronavirus pandemic triggered the sharpest economic contraction in modern American history, the Commerce Department reported Thursday. Gross domestic product — the broadest measure of economic activity — shrank at an annual rate of 32.9% in the second quarter as restaurants and retailers closed their doors in a desperate effort to slow the spread of the virus, which has killed more than 150,000 people in the U.S. The economic shock in April, May and June was more than three times as sharp as the previous record — 10% in 1958 — and nearly four times the worst quarter during the Great Recession. (NPR, July 30) Maurice Klaehne's key takeaways: We are seeing the smartphone market rebound in May, June, and even July due to pent up demand, but given how we still have millions of unemployed people and rising COVID-19 cases, the economic outlook has been dire. Re-opening the country has helped some states regain economic activity close to the levels they had in 2019, but the spikes in Texas, Florida, and California put a damper on this. In addition, July was the last month where Americans could get up to $600 in extra unemployment money. Congress is trying to work out another economic stimulus package which includes extra unemployment benefits and another round of stimulus checks, but have not come to an agreement yet. The US is heavily looking towards vaccines to help alleviate the economic impact that COVID-19 is having. Other methods such as social distancing, mask-wearing, shutdowns, all have not been successful and have even been met with federal and state opposition. No federal mask mandates with states continuing to re-open restaurants, bars, and even schools all suggest additional risks and a continued high case count. This will continue affecting smartphone sales, although as we have seen with Apple, those OEMs who offer services can still increase their revenues in these pandemic times.

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