Cameras are a mainstay feature for smartphones and we have followed the trend toward multiple cameras on such devices for years, with the first adding a second main camera in 2014.  Little changed for a few years, but in 2018 a 3rd main camera was added to a number brands and by October, Samsung had one-upped the industry by adding a 4th main camera. In 2019 12.8% of all smartphone models had 4 or more main cameras which increased to 39.2% the following year, while last year that share dropped to 24.7% as smartphone pricing became a more serious factor, making 4 main cameras a bit more superfluous.
We believe much of the smartphone industry’s push to add multiple cameras on smartphones was generated by the industry itself and less so by consumers, so the lesser share of 4 or more main cameras last year strikes us a good thing, but at the same time the resolution of smartphone cameras has also improved, a more important metric than the number of cameras on a device.  It is estimated that in 2021 more than 50% of main cameras fell within the 13Mp to 48Mp range, while ~20% were 49Mp to 64%, and those numbers are limited a bit by the iPhone, whose main cameras have relatively small pixel counts (12Mp) that are enhanced by software and TOF.  Last year there were 32 models, representing 5.6% of all smartphone models that had main cameras with over 100Mp, up from 10 in 2020, so we see the trend moving to quality rather than quantity.
That’s the good news, but we are concerned about the growth rate of the mobile camera market in light of the change in focus, and while camera module shipments increased by 5.8% last year, expectations are closer to 2% to 2.5%, which seems a bit low but at least is reflective of what we expect will be the continued focus on mid-tier and low-end phones where camera counts are a more sensitive issue and higher quality cameras on flagship and foldables.  Some of this has already been revealed in relatively weak forecasts for some Chinese camera component manufacturers, but the sales of the camera modules last year grew by 8.2% and is expected to see a CAGR (2020 – 2026) of 14.8% through 2026, with the slowest growing sub-segment, image sensors, still growing at a CAGR of 6.7% over the period.  Leaders in the module space (2020) are LG Innotek (011070.KS), Sunny Optical (2382.HK), O-Film (002456.CH), Sharp (6753.JP), and Semco (009150.KS), as indicated in Fig. 3.

Over the last few years we have mentioned the use of TOF (Time of Flight) sensors as a feature that would improve a user’s ability to take and adapt picture taken in a number of environments.  The information provided by TOF sensors in smartphones creates a ‘depth map’ of the scene, and by evaluating depth information (colors in the picture below) a relatively simple system can be developed that will be able to adjust focus on a layer-by-layer basis, allowing the background to be less focused, drawing attention to the closest image.
TOF sensors are also components used in automotive LIDAR, mapping systems, and industrial vision systems, but were seen as a welcome addition to smartphone camera systems when they began to be included in smartphones back in 2018 after Apple sparked interest in facial identification using a technique called ‘structured light’ that replaced fingerprint identification in the iPhone X.  Samsung and a number of other Android based smartphones followed the trend and released devices using TOF instead of structured light systems in 2018.  Samsung, once a strong proponent of the technology seemed to be moving away from using TOF in its Galaxy series in 2020 after criticism that the type of TOF sensors that Samsung was using were inferior to those used in other devices (See our 10/14/21 note), which would have forced Samsung to move from its own TOF production to that of rival Sony (SNE).  Since then interest in TOF has waned, and few if any (other than Apple) smartphones are expected to use TOF technology this year. 
While Samsung’s decision was based on more in-house issues, the real problem for TOF was the lack of applications that used the data, giving consumers little incentive to see the value in the technology or pay a premium for its addition.  There are applications that use the TOF data to make adjustments to images and video as mentioned above, but without a ‘killer’ application, TOF sensors were looked at as a low return cost burden by smartphone designers.  While we admit that we were wrong about the potential for TOF sensors, there is some potential for their return, perhaps not immediately, but in the next year or so, and that is AR/VR, particularly AR where it is necessary to have a depth map in order to place virtual objects in a real-time image or video.  Without such information, it would be guesswork as to where you might place a piece of virtual furniture when looking at your living room through AR glasses, but with that information the virtual object could be placed in the correct position to see if it fit the room and the décor.
That said, we are not expecting such a change overnight and it will still be a few years before you can walk around with a pair of glasses that include full AR ability, but given the sudden interest in the Metaverse, there could be a bit of renewed interest in TOF sensors, in anticipation of their use as part of an AR system.  While that will likely do little for their use in 2022 smartphones, we expect it will continue to push TOF sensor and system development now that there is the possibility of a commercial ‘killer’ application outside of the automobile market.  We were still wrong, but we might be right a few years down the road.  “Auch ein blindes Huhn findet mal ein Korn” – Loosely translated, “Even a blind chicken finds a kernel of corn”

We mentioned in our note yesterday that the hardware focus on Apple’s (AAPL) potential AR/VR products is missing the big picture surrounding the long-term viability of such a product’s ecosystem.  For others, especially smaller companies, AR/VR is a hardware game, and there is considerable competition between VR development teams and companies to provide the latest technology to differentiate their products and justify entering a smaller and likely less robust AR/VR environment.  As we have noted previously, we keep an AR/VR database, separating out those products that have been released from those that have been announced, given that some announced products are still unreleased more than a year after being announced.
One AR/VR product from a Prague based company called VRgineers (pvt), who showed their XTAL 3 Mixed Reality and Virtual Reality headsets at CES, and while both are still in pre-order mode, they have a release date of April 2022, only a few weeks away.  These headsets are the next generation following the company’s XTAL 8K headset released in 2020, with much of the design oriented toward the use of VR headset in pilot training.  While gaming VR headsets do have to meet demanding specifications, VR headsets used in pilot training are a bit more specific in use but more demanding in terms of their ability to interface with physical cockpit training systems, and in the case of the XTAL 8K and XTAL 3 headsets, they were designed in cooperation with the USAF and the Royal Air Force and interface with a wide variety of cockpit simulation hardware and software, something not part of most VR headset specifications.
These are not your typical $500 headsets, as the older XTAL 8K (currently on sale) model sells for $4,800, while the two newer versions sell for $8,900 and $11,500, so they are really at the top end of the AR/VR universe, but also not out of the range of some of the AR headsets that have been developed for industrial use.  That said, they have some interesting features that make them a bit different than other VR headsets and justify the price in the right environment, particularly eye and hand movement tracking and 4K resolution.
A number of VR headsets employ eye tracking, a technique that uses internally mounted cameras to measures the position of a reflection on the cornea of the eye (Fig. 1) (red arrow) against the center of the pupil (blue arrow) and calculates where the user is looking, regardless of head movement.  In most VR systems the data is used to move the user’s field of view in game software, so when the user looks to the side, the game view shifts the same way.  In the VR headsets mentioned above, not only does the eye tracking data re-locate the FOV, but the data is recorded and used to measure how long it takes a pilot to notice something appearing in the periphery, or how often they look at controls or other external objects.  Similar data is collected from controllers that evaluates hand motions and can give insight into how quickly a pilot reacts physically to visual stimuli.
Taking eye tracking out of the aerospace environment and into the Metaverse, eye tracking information can be used to give game developers ways to help you improve your gaming ability.  By tracking where you are looking during a game, the eye tracking information can adjust where you are throwing or shooting to more accurately align the shot.  But eye tracking information also gives clues as to emotion and reaction to various situations, which is the kind of data that can help data collectors build a more accurate model of you in the Metaverse, although when we say model, we don’t mean your avatar but more things like your level of excitement when viewing a new smartphone or piece of clothing, data that helps them ‘improve the user experience’ or in real terms produce a better selling environment.
This is just one small aspect of why on-line data collectors like Facebook (FB) and Google (GOOG) are excited about and promoting the Metaverse.  By increasing the amount of information a user generates, the value of the data is also increased, and while there will be much said about selling virtual real estate and other virtual items that don’t exist in the real world, the game remains the same as it is in the 2 dimensional internet, collect more data and sell it to folks so they can sell more stuff, whether its virtual or physical.

​The debate over whether Samsung Electronics (005930.KS) will buy OLED TV panels from rival LG Display (LPL) continues with the most recent ‘information’ coming from The Elec, a South Korean Tech rag that reports that the two companies have agreed on price and volumes, although the sets using the WOLED displays will not be released until June at the earliest, later than originally planned.  While the story goes that Samsung’s Business Support Group, the top of the decision tree at Samsung, approved the purchase late last year, the company is now looking at the contract “with a working-level perspective” (whatever that means) and that is causing the delay in product release, which was why Samsung did not inform its global distributors of its plans and discuss marketing for the OLED TV product at CES, which it had originally intended.
Where this gets even more opaque is that Samsung is said to have agreed to buy the panels at a price that is the same as that offered to LG Electronics (066570.KS), LG Display’s parent, despite the fact that a recent story in the same paper indicated that the delay was due to Samsung’s unwillingness to accept LG Display’s panel pricing, which was said to be at a discount to that of LG Electronics.  It is hard to imagine that Samsung would have agreed to the higher price without some other incentive, as the number of units (2m) seems to have remained the same, which is why we put little credence in such stories, especially as they seem to change weekly.  All in, if such a deal were to be had, Samsung Electronics is expected to ship ~1.5m of the 2m units in 2022, along with .5m QD/OLED TVs, and ~3m Mini-LED/QD sets, as much of its premium TV line. 

In December almost all metrics in the 5G ecosystem saw increases, most of which were greater than 5% m/m, with only new form factors (at 22 the same for most of 2021) flat and new hotspots up only 3.8% m/m.  The number of 5G devices increased 8.9% m/m, the strongest m/m improvement since 3/21, and the number of 5G phones increased by 7.3%, while CPE devices, an indicator of non-mobile 5G use, increased by 8.2% m/m.  All three indicators remain above trend lines, which has been the case since July ’21.
In December on a y/y basis the number of 5G product vendors increased 66.7% in December, while the number of 5G devices increased 124.9% y/y.  5G smartphone models increased 120.9%, while CPE devices increased by 94.4% y/y.  The number of laptops and tablets that are 5G enabled has increased from 17 last December to 56 currently (possibly more that we might have missed at CES), and on an overall basis the number of 5G devices has increased 531.7% over the last two years while 5G smartphones have increased 874.6% over the same two year period.  Unfortunately (or fortunately) the growth rates of most 5G devices is so high during the last two years that seasonality data means little at this point in the 5G timeline, but as we accumulate 2022 data we should be able to get a better sense of sales and growth patterns and how they might differ from those of smartphones generally.  As it stands currently, the average m/m growth rate for 5G devices was 7.0% for the 2021 year, while it was 6.9% for 5G phones and 5.7% for CPE devices

With 14 VR headsets from 8 brands being actually released in 2021, and the term “Metaverse” maintaining a near 100 (reference) search level since October, there has been considerable attention paid to the potential for the creation of VR and AR based hardware and content that can be used to focus attention on a 3 dimensional virtual ecosystem that can ‘enhance the user experience’ and allow anyone to visit an almost infinite number of worlds dreamed up by content creators and game designers.  There are big players like Facebook (FB), Steam (pvt) and Microsoft (MSFT) and literally hundreds of small players, with names like VRgineers (pvt) or XRspace (pvt), and while some CE companies have been a bit shy about eulogizing the absolute necessity of the Metaverse, many companies on the periphery of the CE space have somehow included the Metaverse in their public business plans, either by reference to some future development project or how the Metaverse will cause their existing business to expand.
There is one player who has been quiet about any direct plans for the Metaverse, and that is Apple (AAPL), whose entry into the space would be the hallmark of the Metaverse’s future with consumers.  Apple is not a technology leader in the sense of releasing product with the latest and most advanced features, but tends to start development early and continue such until they have been able to both justify a commercial product and have been able to find a way to put a differentiating Apple ‘stamp’ on the company’s foray into a new product market.
The less Apple says about its AR/VR technology development the more rumors circulate and Project T288 and other project names seem to ebb and flow like the Bay of Fundy tides, but other than making a number of AR/VR related acquisitions over the last few years, Apple has been quiet about its plans to enter what is now called the Metaverse, and while Apple’s acquisition focus might not have seemed as ‘Metaverse’ oriented back in the 2013’s and 2014’s, such acquisitions have all contributed to what are now AR/VR development projects. 
Much of the speculation about Apple’s entry into the AR/VR market is based on hardware.  We see speculation about processors, cameras, optics, displays, and ‘sleek designs’ almost daily, but what we believe is most important to Apple is the ecosystem that can and must be created around the hardware, as the company has done with many of its other products.  While the sales of AR/VR headsets will be important to Apple and to investors, what should be the driving force behind Apple’s VR/AR development projects is how that hardware will drive an Apple Store AR/VR segment.  Apple will make a profit on the hardware, and it will likely be a premium priced product relative to what is available at the time of release, but the real long-term game is not to have the best-selling AR/VR headset, but to have the highest secondary sales numbers for each headset sold and to sustain customer loyalty to build that base.
As with the iPhone, customer loyalty is developed by offering a better looking and better performing device, even if it is not entirely ‘bleeding edge, so while the eventual Apple AR/VR headset might not actually be as sophisticated as some that have been developed by competitive brands, Apple’s entry into the VR/AR market will signal another step function in the development of the industry that surrounds the Metaverse.  That said, we try to focus less on speculating on what hardware Apple might be developing or using and more on what users can do with the device.
Items such as development tools for an Apple VR OS, particularly porting existing VR games to such a platform will be essential, as will be Apple’s own Metaverse world development, which is a bit different than what has driven Apple store sales in the past.  Apple has relied on much outside development for applications and user content, and has built a large infrastructure around such content, however Apple has the option to create in-house VR/AR content, less like iTunes and more like “Appleverse” where Apple VR users can explore, and of course buy stuff.  This would be a bit more of a conflict with potential external Apple Metaverse content developers, but the ‘space’ in the Metaverse is so wide that Apple might stake a few claims and leave the door open to developers  to fill in areas of less interest.
For example, if you would be an Apple AR/VR headset user and subscriber, you could visit Apple’s iAvatar Metaverse, where you could wander down aisles of avatar parts, clothing, hairstyles and accoutrement, giving you the avatar ‘you always dreamed of’ for your own Metaverse site (that operates under a proprietary Apple Metaverse OS).  Perhaps Apple has designed the iAvatar Store itself, while offering ‘avatar-related products’ that have been developed by outside developers under the Apple Metaverse OS.  As an avatar developer, you would certainly want to tap into the potential Apple AR/VR base, just as developers do currently for IoS, and as, say a virtual furniture developer, you would want to find a good spot in Apple’s iFurniture store in the same way.  So there is far more to Apple’s entry into the VR/AR Metaverse space than just the hardware and speculation on how many 6DoF tracking cameras might be on such a device. This is interesting but rather limited in scope.  More to Apple’s long-term success in the Metaverse would be what Apple builds out alongside the release of an AR/VR headset as in the end having a fancy headset and not much to do with it is not going to generate the revenue that pays for a slew of acquisitions over the years.  Once again, content is king. “Can’t see the forest for the trees” – John Heywood

Other than as to how coal might limit power generation and therefore cause mandated blackouts as it has in China, we don’t really track coal resources, but we do for some of the metals that are commonly used in consumer electronics.  What brought coal to our attention, other than the China situation, was the fact that the Indonesian government has issued a ban on coal exports, which began on January 1 and continues through the end of the month.  Indonesia was the 2nd largest coal exporter in 2020 behind Australia, and that year exported 17.6% of total coal exports.  The export ban was instituted when mines failed to meet a government requirement that 25% of their annual production must go to the state-owned electric company PT PLN at a maximum price of $70/ton.  By halting coal exports the government is trying to ensure that domestic power generation will continue uninterrupted.
In itself, the Indonesian coal export ban is only tangentially relevant to the CE space, however this week the President of Indonesia indicated that it is reviewing export restrictions on other mineral resources, with indications that copper and bauxite (85% of bauxite is converted to aluminum) among the one being considered.  While these metals are well traded on a number of exchanges, lessening availability issues, copper is up 6.9% over the last 30 days and 26.5% over the last year, while aluminum is up 13.0% over the last 30 days and up 48.2% over the last year.  Indonesia was the world’s 6th largest copper exporter in 2020 with a 4.2% share and the 5th largest bauxite exporter last year, so such potential bans would only serve to tighten the market further and add to the rising cost of CE products.
While the Indonesian coal mandate seems plausible in order to maintain a consistent supply of power across the country, limiting the export of metals like copper and aluminum seems considerably less so and more of a political issue, but we already hear that some of the countries that are major producers of CE products are looking to diversify their copper and aluminum import sources to avoid being caught in any new restrictions  The Indonesian ban on coal exports is in place but others are still in the realm of political rhetoric and speculation, so we expect it is doing little other than upsetting the Indonesian mining industry and pushing some importers away from Indonesian suppliers.  Maybe the end game in the government’s mind is to ratchet up prices for the country’s natural resources, but price elasticity is funny in how it tends to even things out in the long run, while politicians tend to be relatively short-term.
 

While the lack of Samsung Electronics’ (005930.KS) promotion of it’s affiliate Samsung Display’s (pvt) QD/OLED was a story that made tech press headlines,  SDC’s QD/OLED displays did get recognition from Sony (SNE), who will likely be the first to adopt the new technology in a retail oriented TV.  But more of a specialty item was the announcement from Alienware (DELL), the high-end monitor and laptop line from Dell, that they also have adopted the QD/OLED panels from SDC for what would be the first QD/OLED gaming monitor (Model AW3423DW).  While the price has not been established (most speculation is ‘expensive’ to ‘quite expensive’) Alienware did give an actual release date of March 29 for North America and April 5 for UK and Europe, which gives some indication as to where Samsung Display might be in the production ramp timeline.
The panel for this laptop is 34”, one of three sizes (55” & 65”) being produced by SDC, generating a 3440 x 1440 resolution (known as Ultra-Wide QHD), with an aspect ratio of 9:21 and a moderate curve.  The refresh rate is 175Hz, the static contrast ratio is 1,000,000:1 (essentially infinite), and 10 bit color is supported, which means the display can image up to 1.07b colors, not something you would need if you were just posting Facebook (FB) videos, but something video editors or high quality content creators would need to make sure color transitions are smooth.  Luminence is 250 cd/m2, which is typical for monitors, with a peak brightness of 1,000 cd/m2 with 99.3% of the DCI-P3 color space covered.
All in, at least from the specifications, the AW3423DW is a high quality monitor, but the real differentiator here will be how ‘pure’ the colors look to those sitting in front of the monitor.  The use of quantum dots to shift blue or green OLED light to very narrow RED and Green wavelengths should give this monitor very precise color representation, making it ideal for those in the cinema editing business or video production.  The relatively high cost (we assume) will likely limit more typical gamers, but we expect SDC will be working toward bringing the cost down to a point comparable with other high-end monitors as quickly as possible.  High-end gaming monitors can run from ~$500 to over $2,000 and video reference monitor between $2,000 and ~$10,000.

There have been a number of blogs and tech press spouting the headline, “Breakthrough could help you 3D print OLED screens at home”,  “You would be able to 3D print OLED displays at home with this tech”, or “It’s not hard to imagine in just a few short years you could see this approach applied at home or on the road…with small portable printers”, all of which seem to have come from an article published in “Science Advances”, the journal of the American Association for the Advancement of Science, the world’s largest multidisciplinary scientific society and publisher of the “Science” family of journals.  The article entitled “3D Printed flexible organic light-emitting diode displays” (Ruitao, Hyun-Park, Ouyang, Ahn, & McAlpine, 2022), whose authors are associated with the University of Minnesota, describes a process for 3D printing all components of a flexible OLED display, hence the extrapolation that one day you will be able to print flexible OLED displays in your home workshop.
The production of flexible OLED displays is a complex process, typically involving spin-coating, sputtering, and plasma based deposition tools.  In some cases ink-jet printing is used to lay successive layers of organic and inorganic encapsulation material to keep air and water vapor from destroying OLED materials that are particularly sensitive to these elements.  There are a small number of OLED display manufacturers that use ink-jet printing to pattern the OLED materials themselves and the recently described QD/OLED displays from Samsung Display use IJP to pattern quantum dots on OLED materials.
However these commercial ink-jet printers are far removed from what one might call a home 3D printer, and the ability to pattern structures using metallic nanoparticles dissolved in liquids, pastes, or resins, which would form the electrodes for such a n OLED display are already far beyond the abilities of most 3D printers available to consumers.  But let’s say you are able to secure the proper metallic nanoparticles, correctly dissolve them in a solvent, curing agent, and wetting agent, and ink-jet print them on a substrate, once you have UV cured such material, you would have to find a conductive polymer that would be able to be printed on the nanoparticles to create the anode, among the simplest part of the OLED display.
Printing the ‘active’ layers of the OLED display would involve using a special nozzle for your 3D printer that could atomize the inks into droplets that are in the tens of micrometers, and you would have to precisely control the concentration of the ink and spray timing to make sure your layers are uniform, so this is not done with an EasyBake Oven.  We could go on about successive layers, light extraction, the OLED materials themselves, and the fact that the entire printing process described in the article was done on a 143 lb. robotic gantry, involved significant additional equipment owned by the college, and was only 64 x 64 pixels in size, but even the article itself did not point to the concept that by creating a completely ink-jet printed flexible OLED display under laboratory conditions, it meant in any way that this technology could be transferred to the average basement tinkerer.  It is a disservice to the OLED industry and the billions of dollars spent on both R&D and mechanical engineering to lead blog readers along such a path.  Someday there might be a way to commercially ink-jet print all of the structures in a flexible OLED display, but we expect it will take quite some time for that process to find its way into the basement, but if it does, don’t forget to keep those droplets uniform!