On 11/19/21 we noted that both AT&T (T) and Verizon (VZ) agreed to defer the launch of 5G services on C-Band spectrum (3.7 to 3.98 GHz), a portion of the 5G spectrum that they acquired during the last auction, until early January, the 2nd time such a postponement had been made.  It seems that both companies have once again bowed to pressure from the FAA and are ‘temporarily deferring 5G rollout’ in locations around airports.  This 3rd postponement comes as the FAA and a number of airlines feel that 6G towers near runways could cause interference problems with altimeters used on aircraft and could cause reading to be incorrect or not work at all.  This differs from testing results done by the FCC, who approved the use and auction of the C-Band, which raised almost $70b.
While the US government has intervened (again) to smooth things over between the affected parties, the question remains as to why things have gotten to this point given the fact that for almost two years telecom carriers, airport administrators, airlines, and US regulators were unable to come up with a plan that would satisfy both safety concerns and the use of 5G C-Band.  Making it more embarrassing is the fact that the C-Band is being used in ~40 countries for 5G, with no reported altimeter problems, and the FAA, along with altimeter suppliers, have been working to determine which altimeters are reliable under 5G and which need to be retrofitted or replaced for months.
Carriers are not without some blame in this situation, having known that this was a potential issue when they were bidding on C-Band spectrum, and the FAA proposal for a 5G buffer zone (~1 mile) only affects ~50 airports across the US, where over 5,200 public and 14,700 private airports operate.  But there are other factors, such as the higher power 5G transmitters used in the US and the larger  buffer zones used in other countries (France has a 96 second buffer zone, while the FAA proposal is for a 20 second buffer) that are still being regaled by carriers.
According to statements made by the FAA on January 13 - 16, aircraft that are operating with untested altimeters ort those that are in need of retrofitting or replacement will be unable to perform low-visibility landings where 5G is deployed, although they have cleared ~45% of the US commercial fleet for low-visibility landings at ‘many’ airports.  In particular two altimeter models that were installed in a wide variety of  Boeing (BA) and Airbus (AIR.FP) aircraft have been approved, which opens runways on up to 48 of the 88 airports most directly affected by the 5G interference question.
All in, now that the controversy has made its way to CNN and other news media and a few foreign airlines were said to be planning to limit flights to the US if the 2nd 5G deferment was not extended, traveler interviews and aviation specialists will get their day in the sun until carriers figure they have waited long enough for the FAA to finish its evaluation and for the industry to adapt its equipment to the ever-changing technology environment and press for an end to the moratorium or final regulations, including upgrading or replacing altimeters that are affected..
Altimeters come in 4 types.  The first is based on barometric pressure and temperature.  These would not be affected by 5G.  The second are radio altimeters that measures the time it takes for a pulsed signal to be reflected from the surface.  As the pulse time is very short, separate transmit and receive antennas are needed.  We believe these could be affected by 5G signals.  The third type are GNSS (Global Navigation Satellite Systems) that use radio waves that are bounced off of satellites rather than the ground.  We believe these types could also be affected by 5G signals.  He fourth type are laser altimeters that use laser light instead of radio waves to measure distance similar to the way TOF works for short distances.  The most common of the 4 types is a barometric altimeter.
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RBK is Russia’s first (and only) 24 hour business news network, broadcasting a variety of Russian economic, political, and business programs to over 100m viewers (coverage) in Russia, Georgia, and a number of Baltic countries, with an average monthly audience of ~17m.  Little would seem unusual about the channel, with breaking news, thematic programs, and updates on global and local markets, but all is not right with the host of the Markets and Investor Calendar show that appears regularly, as Elena, the host does not exist in the real world.
Elena (see below) was designed by Sber Devices (pvt), a subsidiary of the Russian State-owned Sberbank (SBER.MCX) , who created the avatar using its Visper development platform that allows users to create virtual avatars from the simple to the life-like Elena.  Nikkei Innovation Labs (pvt), the R&D arm of Japanese media giant Nikkei (pvt), owner of Nikkei Asia and the Financial Times, also has such a platform that allows users to pick from a variety of ‘individuals’ that can be programmed to do or say whatever producers enter as copy, while mimicking the movements and lip-syncing of actual newscasters.  But it doesn’t stop there, as Nestle’s (NESN.SW) “Ruth, the Cookie Coach” (named after Ruth Wakefield, said to be the investor of the chocolate chip cookie) can guide you through baking the perfect chocolate chip cookie, responding to questions and adjusting movements when cooks want on-line help with baking questions.
Adding to the fray of companies involved in designing virtual personalities and avatars for on-line and off-line media is Chinese giant Baidu (BIDU), who recently released its own digital avatar platform Xiling, which can provide a variety of services covering virtual hosts, virtual idol, and brand spokesperson for almost any type of media.  There are many simplistic avatar platforms with names like “The Character Creator”, “MojiPop”, “Zmoji”, or “Boo”, most of which can create an avatar from a menu or a photograph, but the heavy lifting takes a combination of expertise in AI, voice recognition, 3D modeling, and a host of other software skills in order to make a successful ‘human clone’, which seems to be the objective of Baidu and others.
While questions arise over the use of virtual humans in the media needs to be considered using ethical guidelines, the Metaverse is likely to have no such necessity, as the internet has already taught us that fact checking and truthfulness are secondary to generating eyeballs, so we expect the race to create the ‘perfect virtual human’ to increase as the Metaverse removes most ethical shackles.  We expect to see more such virtual avatar generation development over the next year or two as the Metaverse tries to wriggle out of its chrysalis and into the real (?) world, but again we have been here before (3D) and the limitations of AR/VR must be watched carefully as technology that is not appealing to the general population tends to burn brightly, as it is now, and burn out quickly if it is not easily accessible.  Much of what we see now as the Metaverse is relatively simple and should be considered as black and white TV when compared to color TV that would represent the potential for such technology down the road, but getting there will take lots of money and lots of technology improvements, and above all time, so while we might become used to a virtual Wolf Blitzer on CNN, the Metaverse will still be under development for a while.

On 12-10-21 and 01-07-22 we updated readers on the status of one of the more important components in current CE products, MLCCs or Multi-Layer Ceramic Capacitors and back in August of last year we noted that Murata (6981.JP), the world’s largest producer of MLCCs (between 31% and 45% share depending on inclusions) had shut down its plant in Takebu, Japan for a week due to COVID-19.   It seems that once again Murata has been plagued with COVID-19, but this time the plant, which accounts for ~20.7% of the company’s capacity has been only partially affected, given some measures taken after the shutdown last year.  Expectations are that the partial shutdown will affect MLCC production for some high-end smartphones and servers but current inventory is able to make up for the shortfall.
While MLCCs are typically quite small, ranging from ~0.8” x 0.6” to 0.01” x 0.005” (.254mm x .127mm) they are integral to many CE devices, particularly smartphones, and even more so 5G smartphones.  Murata’s production capacity is primarily in Japan (56%), China (36%), Singapore (3%), and the Philippines (5%), although production in the Philippines is primarily for the automotive space.  Singapore is focused on high-end specification MLCCs for smartphones, while China is focused more on consumer oriented (lower spec) MLCC production, leaving Japan as the primary for servers, 5G base stations, notebooks, and additional automotive production.  With the recent outbreak of the COVID-19 Omicron variant, MLCC production at Murata is again at risk, with Japan and the Philippines the current hotspots for the company.  With the relatively high price of MLCCs and moderate inventory levels, we expect little additional pressure on the MLCC market as the Omicron surge seems to be relatively short-lived thus far.

​We get a lot of questions concerning who will benefit from the “Metaverse wave”, particularly when it comes to headsets, and that is a hard question to answer considering VR headset development, despite lots of hype about how easy it will be for VR users to spend hours and hours visiting new worlds, playing games with friends, and buying things that do or don’t exist in the real world.  This year’s crop of announced but unreleased VR headsets sport a wide range of display types, ranging from LCD to QD?LCD to Mini-LED and Micro-LED, so there is little agreement on just this one aspect of VR.  But there is one component, out of all we track, that seems to be the de facto standard in almost all VR headsets.
The chipset that sits in every headset that we are able to disaggregate, going back as far as 2017 seems to be made by Qualcomm (QCOM), starting with Snapdragon 835, a mobile platform produced on the 10nm node, released in late 2016, up to the current Snapdragon VR2, a more specialized chipset designed for AR/VR.  It is unusual to see almost any component show up with such regularity in the CE space as competition from at least a few competitive offerings finding their way into devices, but not so in the VR space, where the continued migration to more robust and focused chipset designs has kept all others from breaking into the VR headset space.  We have seen VR chipsets from Huawei’s (pvt) HiSilicon (pvt), although not in any product as of yet, and we expect there are development projects underway at Mediatek (2454.TT) and others, but there has been little in the way of real competition for Qualcomm, who continues to upgrade its platform every two+ years.  For reference, of the 53 VR headset models released between 2019 and 2022, we have been able to identify 22 chipsets.  Of the 22, all were Qualcomm Snapdragon chipsets.  So far we have seen no other major component in VR headsets come anywhere close to that ratio.  More to follow…

Kosovo is not a wealthy country, considered one of the poorest in Europe, based on mining and energy production, giving it one of the lowest electricity prices/household globally, said to be close to that of Kyrgyzstan at $0.010/KWh.  Because of that low energy cost, bitcoin miners forced to leave China after government bans over energy consumption, migrated to Kosovo to take advantage of such low energy prices to mine cryptocurrencies.  Unfortunately bitcoin miners are on the move again, as the country issued a ban earlier this month halting all bitcoin mining for 60 days, due to power plant closures (Kosovo has two) and the high cost of importing energy.
According to the University of Cambridge, the amount of power required to generate 1 bitcoin is 150,000 KWh, or roughly the power requirements of 170 US households per month, and spread out across the globe, the power needed to generate bitcoin is 118.8 TWh/year, more than the total energy consumption of Argentina, so bitcoin miners tend to be focused on locations with cheap energy.  However, with coal production issues facing a number of countries, including China, and COVID-19 limiting available staff, even those countries that might have invited bitcoin miners before the pandemic, are now limiting or outright banning energy use for bitcoin mining.  Where will bitcoin miners go next?
Here’s where electricity is cheap, as of 6/2021:

Now that CES has come and gone and Samsung Electronics (005930.KS) has revealed a few (very few) details about its 2022 TV lineup, we went back to the  company’s 2021 line of Mini-LED/QD and QD only TVs that we have been tracking since their release in May of last year.  Without details from Samsung as to potential new sizes or model tiers, consumers remain locked in to last year’s models so we took a quick look at where prices are currently to see if things had changed over the last few weeks.  Of the 35 models in our list, only 8 remain at their lowest price since release, with 4 at their highest, and only one model saw a decline in price, while 17 of the 35 (48.6%) saw an increase since 12/21/21. 
The biggest increase was $1,000 (18.2%) for the 85” top-of-the-line 8K Mini-LED/QD set (900A), while the largest percentage increase was 33.3% for a 43” QD only model, which rose from $450 to $600.  In fact every 4K QD only model in Samsung’s lowest price tier for that category (60A) saw price increases, ranging from 4.5% to the aforementioned 33.3% increase.  Across all Samsung’s Mini-LED/QD and QD only TVs the average increase was 5.9%, leaving the entire line still down 18.7% from the original release prices.
Looking at the line on a price/m2 basis, the price has declined from $1.37/m2 to $1.00/m2 currently across the entire line, but each segment has seen its own changes from day one pricing on a $/m2 basis and on an absolute basis, as seen below.  We note that the 90A (Tier 3) was affected by the inclusion of a 98” model which was originally priced at $15,000 and remains at that price, which would account for the smaller rate of price decline, both on a $.m2 and an absolute basis seen in that tier.
All in, on a general basis, prices have been inching up since the low point in November for most models.  Given the tighter margins on tier 5 – 7 models, we expect them to more closely reflect the increased cost of materials and components, offset by declining panel prices.  Sets being sold today are likely to have been produced ~45 days ago, so they still reflect older inventory, so the question remains whether TV set manufacturers will bring down prices to reflect declining LCD panel prices or will they try to capture the cost difference now that 2021 unit volumes are set.  We expect the latter.

Epistar, a division of Ennostar (3714.TT), has indicated that it will be expanding its Mini-LED chip capacity again, this time in China, bringing the new capacity on-line by the end of 2Q this year.  Last year Epistar added ~20% capacity in Taiwan, which it completed during the 4th quarter, so this new capacity is incremental, bringing total capacity from 1.2m units/yr. to 1.5m units/yr., up 25%.  Revenue from the Mini-LED segment is expected to increase from ~30% to almost 40% in 2022, although the company is expecting to see a sequential decline in sales in 1Q ’22, although a y/y increase is expected.
Fittech (6706.TT), among the top LED testing companies, is also expanding capacity, with between 20% and 30% of sales currently accounting for the company’s testing and binning services, which is expected to remain at that level this year, although sales are expected to be up in 1Q on a y/y basis.  Mini-LED production continues to expand as the technology, which improves existing LCD display characteristics, allowing the older technology to better compete with OLED displays, and has migrated down to laptops and monitors, particularly with Apple’s (AAPL) adoption of the technology in the iPad Pro (April 2021) and the 14”/16” MacBook Pro (October 2021), although the Apple XDR Pro Display came close to Mini-LED backlighting in 2019. 
While Taiwan based LED producers, packagers and attesting companies expand production, they face considerable competition from Chinese producers who entered the space a bit later than those involved with Apple’s Mini-LED supply chain, but in typical Chinese fashion, have pushed aggressively to build out  the necessary infrastructure to maintain a leading position in the LED space.  Much of China’s LED capacity however is oriented toward LED lighting and Sanan (600703.CH), China’s largest LED producer has been working toward inclusion as an Apple supplier but has yet to meet Apple’s criteria, which in the case of LEDs is quality, especially the consistency of the LEDs across a wafer or production volume generally.  Some question Sanan’s patent status, leaving Apple open to potential litigation, as another hurdle Sanan must cross if it is to be added to Epistar (Ennostar) and AMS OSRAM (AMS.SW), Apple’s current Mini-LED suppliers.
See our 2021 notes on Epistar and Fittech for more information:
12-17-21 – A Bulb by Any Other Name
12-02-21 – Apple Invests in PlayNitride
10-22-21 – Mini-LEDs – More
08-09-21 - Coincidentally
08-02-21 – Apple Revving up Mini-LED Supply Chain
04-23-21 – New Technology, New Problems
04-12-21 – Apple Mini-LED Hints
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Each year “Twice” (aka This Week in Consumer Electronics) hands out awards, particularly ‘Picks’, the best and most influential consumer technology at CES 2022 (their words), but more important are the awards given for top CE brands, as judged by brand strategy experts, managements of top industry brands, ‘authoritative 3rd party organizations’, and renowned media in the industry (again their words), with criteria including brand strength, overseas sales, global share, export value, promotional budget, patents, and brand innovation  With all of that out of the way, here’s he list for 2021/2022, which is just a snippet from the full list of 50.

More interesting is the list of top 10 TV brands and top 10 smartphone brands that are more representative of the CE space as we see, rather than the broader CE space that the magazine sees.  While Samsung and LG still hold the top two positions Chinese TV brands hold 5 positions and Japan 2 positions, but in the smartphone arena Chinese brands hold 7 of the top 10 spots.  While these lists are not based solely on financial or unit volume results and are qualitative in nature, they do reflect the nature of both CE segments and how, despite attempts to reduce China’s influence by the US government, China remains a significant player in almost all of the global CE markets.  Whether it is good promotion or value oriented products, the battle continues...  

As we noted in yesterday’s graphic, Samsung Electronics (005930.KS) is the leader in the foldable smartphone market, and that leadership continues into the foldable laptop/notebook market, an even newer subset of the overall mobile CE market.  Along with these actual foldable products, Samsung and its display affiliate Samsung Display (pvt), have filed many patent applications for a slew of potential products that will continue to broaden the scope of foldables over the next few years, some of which we have taken a look at in our notes.  That said, filing a patent application has little bearing on whether the device(s) shown in the IP will become actual products, as much IP is used to keep others from heading down a similar development path, but, some do get translated into viable products, so we try to keep an open mind and look at the ones that seem ultimately practical or, at the least, unusual.
On 02/07/2021 Samsung Electronics filed a patent application for a “Multi-Folding Electronic Device” with WIPO (World Intellectual Property Organization), a United Nations agency that includes members from 93 countries (including the US and China) and has been administering international IP since 1967 and helps to connect IP systems from member countries to a global system (patentscope).
The patent shows a number of ‘embodiments’ or potential physical set-ups that look like a typical laptop in they have a screen and a keyboard, but then allows both the screen and the keyboard to be folded on hinges reducing the size of the device to 25% when closed.  Extrapolating on such a device would allow for a typical 15.6” (diagonal) folded laptop to have a screen (unfolded) that is 7.65” tall and 27.2” wide, along with a similar size keyboard, which could then be folded into a 7.65” x 13.6” form, the same as a typical laptop, or, if you wanted to go in the other direction, a typical 15.6” laptop could be folded into a 7.65” x 6.8” rectangle, ¼ of the size when fully open, making it much easier to carry.
Most foldable laptops that exist currently either have a virtual keyboard that takes up the bottom of the screen when unfolded, reducing viewing real estate, or uses an attached keyboard that is separate from the device.  Samsung’s patent allows for a real keyboard, something quite desirable for those who write rather than play games, and a large screen that could act as a virtual desktop.  Of course, such a device would not be cheap, if it appeared at all, but would be quite practical in either configuration, which makes it notable in our view.

​2021 was a difficult year for smartphone brands, facing relatively weak demand and supply chain and production problems.  Samsung had set a goal of shipping 300m smartphone units in 2021, an ambitious goal considering how things looked in early 2021, but Samsung held steadfast to its original goal.  That said in terms of actual shipments, they likely fell a bit short of that goal, given the ~45 day average time it takes for produced product to reach distributors or consumers, but they did at least meet that goal in terms of production, with the company itself producing 238.9m units and OEM/ODMs producing another 60m+, totaling just over 300m produced.
The chip shortage caused production bottlenecks, but more troubling were COVID-19 outbreaks that limited or halted device production, particularly for Samsung’s OEMs, whose assembly plants in India and Vietnam saw periodic work stoppages and production limitations.  Sporadic travel limitations in China also affected OEM smartphone production, but China was not a place where Samsung’s influence was felt, even with the ebb of former market leader Huawei’s (pvt) smartphone business, with the company selling fewer units than almost any of China’s top smartphone brands.
That said, Samsung was still the top global brand, at least through 3Q, even with the challenges, and relatively weak flagship (Galaxy S21 Series) sales of ~24m to 27m units, the second year where that series underperformed compared to earlier years (35m to 40m).  By focusing on mid-tier lines, the company was able to offset the S series shortfall and bring in production numbers above goal.  With the confidence of being able to meet those (production) goals in such a difficult year, Samsung is expecting to produce 285m units in 2022 internally, and an additional 48m to 50m from OEMs, an increase of roughly 10%.  As with most CE companies enthusiasm is quite abundant, regardless of the circumstances, especially early in the year, so who are we to rain on their parade this early in the year…