In April, in the Daxing District of Beijing, 12,000 runners will participate in a 13-mile half-marathon sponsored by the Beijing Economic-Technological Development Area, known as E-Town.  What will make this marathon different than the hundreds of marathons that take place all over the world is that the runners will be joined by 20 teams of humanoid robots for the first time, although a humanoid robot named Tiangong (translates to ‘God’) joined the last 100 meters of another half-marathon in Beijing as a pacer, to encourage humans to finish the race.
In the upcoming race the humanoid robots will run the entire race for the first time.  They must be bi-pedal and able to walk or run upright, resemble humans, and are not allowed to have wheels.  They can be anywhere from 20 inches to 6.5 feet tall but cannot have the distance between the hip joint and foot (sole) being more than 15.7”.  They can be remotely controlled or fully autonomous but are able to take a break to have batteries replaced if needed.  Other than that there are no restrictions as to the mechanics, with entries expected from robotics companies from all over the world, and they will not have to get up at 4AM to train, drink gallons of protein-powder shakes, or buy expensive running shoes..  
E-town believes that this will be the first time humanoid robots and humans will compete in a full half-marathon competition and will award the top three winners a prize, although we are unsure what the prize will be for any robot winners, but the competition is another visible step for China’s robotics industry, much of which is located in Beijing.  The district has more than 140 robotic ecosystem companies, whose output is valued at ~$1.4b US and is focusing on building AI into high-end humanoid robots and further building the local robotics environment.  While there are many robotic development projects, humanoid robots seem to get particular attention, despite fears that they will someday collectively decide to replace humans entirely, but the little cat robot developed by Yukai Engineering (pvt) in Japan that blows air to cool your food, doesn’t look particularly formidable, although with 15m to 20m cats in Japan, a robotic cat/feline takeover could signal the beginning of the end for humanity.

Yesterday we spent some time examining the effect of Chinese TV set consumer subsidies, and as part of that note mentioned the substantial growth seen in China for large and ultra-large TV sets.  While we appreciate the desire among Chinese consumers to fill their living rooms with the largest TV set possible, that desire is not always the case in the US and other countries. CNET did a survey last December, polling almost 1,200 respondents with two questions.

• If money were not an issue, what is the largest TV you’d put in your house?
• How much are you willing to spend on your next TV?

The responses to the first question were weighted and calculated against four age groups, Gen Z (13 – 28 yrs.), Millennials (29 – 44), Gen X (45 – 60), and Boomers (61-79), along with an ‘all’ category (red).  Surprisingly, the TV size with the highest response rate overall was 65”, smaller than we might have expected, followed by 75”, both of which were popular with older consumers (45 -79), while Gen X’ers seemed to favor 85” sets considerably more than other age groups.  Millennials stood out in the 100”+ category, but more telling was the “No TV” category, where younger consumers were the most likely not to have a TV at all.
The second question, the more valuable of the two in our view, reflected the current spending ‘potential’ of US consumers.  40% of the consumers surveyed indicated that they were only willing to spend under $500 for a new TV, which, in most cases, rules out the ‘premium’ TV category that includes most OLED and Mini-LED/QD TVs, but does include a number of 75” LCD TVs.  While the overall share of those who will be willing to spend between $500 and $1,000 drops from 40% to 33%, the combined share of those who will be willing to spend up to $1,000 is 73%, leaving only 19% willing to spend above $1,000 and 8% not will to spend anything on a new TV.  Millennials stood out as those most willing to spend over $1,000 (26%), although that was not significantly above the average. 

Based on the data from the survey, we were curious to see if retailers matched their TV set offerings with consumer spending expectations.  Our quick survey of TV set models at Best Buy (BBY), Walmart (WMT), Amazon (AMZN), and Samsung’s (005930.KS) on-line site makes it quite easy to see what customer price point each retailer is trying to appeal to.  Amazon, the volume leader, is close to being as price agnostic as possible, offering roughly the same number of models in each price category, essentially an all-things-to-all-people retail approach.   Best Buy is focused on high-end consumers, with by far, the largest number of model offerings in the over $2,000 category, while Samsung’s offerings are a bit more balanced, although certainly more oriented to the middle and upper price tiers.  Walmart’s approach is most closely aligned with the survey results, with almost 70% of its offerings priced at $1,000 or less, similar to the 73% of survey respondents in that same category, so it seems not only does Walmart know its customer base but would be the logical destination choice for the most number of TV set buyer.

The rivalry between South Korean panel producers (Samsung Display (pvt) and LG Display (LPL)) and Chinese panel producers has been ongoing for a number of years as Chinese producers have pushed South Korean producers out of the large panel LCD business.  As it became obvious that Chinese producers had the advantage of significant government construction and operating subsidies, South Korean producers began shifting from LCD display production to OLED production, a relatively new technology at the time.  While Chinese large panel producers eventually won the battle for LCD display domination, South Korean producers went on to establish OLED as a higher quality technology, particularly for small panel displays.  Not to be outdone, Chinese panel producers have been building OLED capacity to challenge South Korean dominance in the OLED space, and while there are a multitude of CE brands that use OLED displays, the top of that list is Apple (AAPL).
Apple’s transition from LCD to OLED starting with the iPhone X, released om November 3, 2017, is expected to continue for the next few years as they migrate much of their product line to OLED.  Samsung Display and LG Display have been the primary small panel OLED suppliers to Apple but are continuingly being challenged by China’s largest panel producer BOE (200725.CH), who has made some inroad with Apple, supplying replacement displays for earlier iPhones and as a 3rd supplier for some later models.  While BOE has had its own issues with Apple, they continue to challenge SDC and LGD, along with a number of smaller Chinese OLED producers, and SDC has gone to the US ITC alleging patent infringement, with BOE, and other Chinese OLED producers (Chinastar (pvt), Tianma (000050.CH), and Visionox (002387.CH)) responding by challenging the validity of those patents in US Patent Court.
As the ITC investigation continues (target date 3/17/25) the patent challenges also continue, and the US Patent Review Board has ruled on one of the 4 patents that Samsung claims were infringed upon.  The ‘683’ patent, filed by Samsung Display on 11/13/17 in the US and 3/6/12 in Korea makes 15 claims concerning OLED pixel structure, particularly Samsung’s ‘diamond’ pixel structure shown on the left side of  Figure 1.  The PTAB has decided that 10 of the 15 claims made in the original patent are not valid, while leaving 5 intact.  Samsung will have the opportunity to appeal that decision. 
Limiting the broad scope of a patent is not an unusual outcome in patent review cases, but narrowing the patent will also narrow the ITC’s investigation scope, making SDC’s case a bit harder, and could open one of the other patents included in the investigation to further scrutiny as it is essentially a continuation of the ‘683’ patent mentioned above.
All in, the validity of the ‘shape’ characteristics of the pixels (polygon, Octagon, or non-quadrilateral) as specified in the ‘683’ patent, remain in effect, which is a key point in terms of the infringement, but spacing between pixels, size, and arrangement, the other ‘683’ claims, are invalidated, reducing the points that SDC can cite in the ITC investigation.  We expect SDC will appeal the PTAB decision, but this ruling and any potential appeal will likely push out the final ITC decision and the battle for OLED supremacy will continue in both the consumer space and the courts for another year.  That’s how lawyers put their kids through college.

[Note: The US Patent Office considers a patent unpatentable when the difference between claimed subject matter and prior art would have been obvious at the time of invention by a person having ordinary skill in the art to which subject matter pertains, where ‘ordinary skill’ means a degree in electrical engineering, material science, physics, or similar disciplines, along with 2 years of professional experience working with display design, including OLED displays or an equivalent level of skill, knowledge, or experience.]

​We are always a bit skeptical when it comes to CE industry estimates, as inclusions and exclusions can have an enormous effect on totals.  When such estimates come from industry associations, we also have to take into consideration the potential positive bias members who supply the  information might bring, balanced against the richness of such industry data.  The Consumer Technology Association produces a US technology industry revenue estimate based on their analysis of over 200 hardware products and services, and while we don’t have inclusionary data, we present it as incremental information for 2024 and 2025.
The forecast for 2025, based on the accuracy of the 2024 final estimate, calls for a 3.2% increase in US Consumer Technology spending in 2025, comprised of 2.6% hardware growth and 4.6% software & services growth after 2024’s 2.5% growth (1.1% hardware and 5.2% software & services).  The optimism for the hardware segment, which comprised 66.2% of total spending in 2024, is based on the replacement cycle for hardware purchased during the COVID pandemic, the ending of support for Windows™ 10, and, of course, AI, as well as new wearable form factors.  While software & services are expected to see less growth in 2025 than in the previous year, the main driver is also AI, under the heading of AIaaS, or AI as a service.

​That’s the good news, however the CTA also commissioned a study that attempts to quantify the impact of incoming President Trump’s proposed tariffs, using two scenarios, one with a 10% across the board tariff on all goods imported into the US and a 70% tariff on all Chinese imports, and the second based on a 20% general import tariff and a 100% Chinese product tariff.  While we expect that whatever tariffs are actually put in place will be far more complicated than these scenarios, at least these ‘best’ (?) and ‘worst’ scenarios set the bar as to the impact they will have on various US CE product categories.
The study predicts that the greatest decline in demand, in either scenario, would be felt in the laptop and tablet segment, along with monitors and gaming consoles, where the best-case scenario generates a 40%+ decline in demand.  Other product categories, again in the best-case scenario, see declines from 26% (smartphones) to 14% (desktop PCs), while the worst-case declines run between 22% (laptops and tablets) to 7% higher than the best-case scenario for Li-Ion batteries.  We note that these are very difficult calculations to make, and we expect have included a relatively small, if any, contribution from the negative psychology that such tariffs might foist on US CE consumers, which we expect will further dampen demand as near-term inventory pricing gives way to tariffed inventory as the year progresses 
That said, we expect brands to enter the CE space in 2025 extremely cautiously, as planning production against the potential variability of US CE demand is an unenviable task.  More likely, that hesitancy will lead to a weak 1Q, with the hope for a better 2H, as country-by-country tariff deals are worked on by the new administration.  We expect any resolution on trade with major partners will sound good when they are announced but will have to be carefully monitored as the year progresses to avoid a large ‘catch-up’ 4th quarter or missed targets, so we give credit to anyone willing to take a stab at tariff impact, knowing that the scenario could change in a minute and likely will.

Lenovo (992.HK) did it.  They have been showing a rollable laptop at various shows for two years, teasing reviewers with a ‘demo’ or ‘prototype’ and an unanswered question about when it will become a real product.  At this year’s CES show Lenovo has actually taken those demos and made them into a real product that you can buy, or will be able to sometime in 1Q.  When we say ‘rollable’ here, we mean a laptop with a 14” display (2000x1600 resolution) that can extend itself upward to become a 16.7” laptop in only a few seconds.
This slight-of-hand is accomplished by pulling the bottom of the flexible OLED screen, made by Samsung Display, inside the device when in 14” mode and having motors slide the screen upward as the internal portion is pulled into view when needed.  Just to get this mechanism to work smoothly, as those who have seen it in action say it does, is a feat of engineering and we give kudos to both the design and engineering staff at Lenovo, but there is also a practical side to this device.
First, there are lots of things to go wrong.  Foldable display develop creases at the fold and while the display is not rolled up inside the chassis when not in use, it sits at an angle to the 14” screen, a point where a crease is likely to form.  With motors, rollers, and mechanicals to expand the display come new components and new issues when used in real life, and while Lenovo says the laptop is rated for 30,000 openings and closings and 20,000 up and down screen movements (11x per day for 5 years), real-world usage is usually more rigorous than lab testing that is typically done in a controlled environment. Oh, and we forgot to mention that this all comes with a price, actually $3,500, quite a bit more than the specs for this 14” laptop would normally cost, but you do get to show your friends how watching the screen expand and listening to the sound of the motors calms that nervous tic that has developed since you spent this month’s rent on your new laptop.
A number of reviews we have seen are praising this device because it provides a 50% increase in screen space.  This comes from the idea that when the device is in expanded mode you can see 50% more of the lines of code you are working on or 50% more of the document you are editing.  However, when calculating screen area one finds that the ‘closed’ screen has 89 in2 of area and when ‘open’ has 108.1 in2 of area, or 21.5% more screen space.  It seems that Lenovo has taken some liberties with how it describes the display, not surprising given the need to find a reason for consumers to pay up for this first-of-its-kind device.  But again, we applaud Lenovo for having the guts to take the plunge into the world of rollable laptops (Note that LG’s (066570.KS) rollable TV is no longer being produced), but as a practical device you are paying quite a bit more than 21% for the extra 21% of screen space.
Here's a video of the device being opened and closed.  The important stuff is in the first 1:25.

​https://youtu.be/f2T-Yu9KEAk

​ Smartphones are incredible feats of technology, squeezing innumerable parts into a rectangle typically under 20 in2 and ~ 1/3 of an inch thick.  Most smartphone owners rarely see what is on the inside of their phones, making purchase decisions (hopefully) on matching specifications to their use profile.  But inside those rectangles, packed in like sardines, are literally hundreds of ICs and other components, along with a battery, display, and assorted cameras.  

There are those that relish the thought of purchasing smartphones and then taking them apart, piece by piece, in order to quantify structure and cost.  Such a group is TechInsights, who are known for their detailed teardowns of various CE devices.  They have been kind enough to afford us a detailed look at one of their smartphone teardowns, which we summarize below.
The phone being disassembled here is the Sony (SNE) Xperia 1V, a device released in July of 2023.   Sony is not a major smartphone brand but is known for the high quality of their phones, so the example below should be a guide as to what to look for in a high-end smartphone.  We note that when the Xperia 1V was released, it sold for $1,399.  The phone weighs 188 grams, runs on Android, and has a 6.48” OLED display, along with four cameras, and runs on a Qualcomm (QCOM) Snapdragon 8 Gen 2 processor.
While the greatest share of the BOM is the broad category of integrated circuits (45.7%), the camera subsystem captures 23.7%, due to the fact that it covers 4 cameras and associated electronics, lenses, etc.  The display subsystem, which is a single 6.48” OLED display and a touchscreen, along with a polarizer and cover glass (total of 70 components), is next at 7.5%, followed by non-electronic parts (frame, etc.) at 7.2%.  More relevant to the investment community would be the breakdown of the total component types and the IC category on a branded basis.  As can be seen in the table below, the IC category carries the largest cost share by a large margin, putting significant weight on the brand share shown in the table that follows.  

​Qualcomm supplies not only the phone’s Application and Baseband Processor (Snapdragon 8 Gen 2), but also supplies the audio codec, a number of power management chips, saw filters, RF tuners, and a number of multi-function front-end modules.   We note that Sony’s share is higher than usual, as it uses its own branded components wherever posible, with SK Hynix supplying both DRAM and NAND.  While the details of the lower level components are less important and carry relatively small type or brand share, it is interesting to note that the phone contains 7 PCB/flex boards which contain, in total, 1,708 components, all packed into something that fits into your pocket.  While we knock smartphone brands for releasing new phones each year that are almost duplicates of what came before, it is a great feat of engineering that smartphones work at all, given the number of components that could fail.  Credit where due.

​There are many ways to produce OLED displays. Small OLED displays can be produced using a red, green, and blue stripe to produce a pixel that can reproduce millions of colors. Some create small OLED displays by patterning RGB OLED material dots in a variety of configurations, each with its own positives and negatives, but large OLED displays, such as those for TVs or monitors are another story.  LG Display stacks a number of OLED materials on top of each other across the entire TV and uses a color filter to create colored sub-pixels.  Samsung Display does something similar, but uses different OLED materials and then uses quantum dots to convert the light into colors.
While the techniques for creating small and large OLED displays are different, they both have to compete with other display technologies, particularly LCD and its more recent kin, Mini-LED TV.  OLED TVs tend to have richer colors and higher contrast than LCD TVs but they tend to be less bright than LCD TVs, and are more expensive to produce, so large panel OLED producers are always looking for ways to improve brightness.  There are micro-lenses that can be used to pull more light from the display and dozens of other techniques that will work toward improving brightness, but the most important focus for improving large panel OLED display brightness are the emitting materials themselves.
OLED material producers are constantly working to improve characteristics, and while new OLED materials with better characteristics are always being developed, brightness improvements are often a tradeoff against material lifetime or color accuracy and cost, yet the competitive nature of the display business forces OLED display producers to keep making improvements to counter the competition.  One way of doing such is to use more OLED material.  LG Display’s original WOLED displays were formed of three stacks of OLED materials in layers.  Each stack was composed of blue and yellow/green emitters.  That combination produced white light, which was then passed through a color filter of red, green, and blue phosphors, each removing the opposing colors.  The prolem with this method is that it is subtractive and results is considerably less light reaching the viewer.
Over time a red emitter was added to the stacks to improve the quality of the white light, but in order to maintain brightness after the color filter, a blank space is left on the color filter, allowing a white sub-pixel to be added to each pixel.  While this improved the overall brightness, it also washed out some of the colors.  LG Display has now decided to add a fourth stack to its upcoming displays by separating some of the emittercolors in the stacks into there own stacks.  This concept adds additional emitter material, which adds to the light outrput (brightness) and allows for more control over the ‘tuning’ of each layer.
Samsung Display (pvt) has a different method for producing large panel OLED displays.  They coat the entire panel with OLED emitter materials, in the same way LGD does, but the combination of materials produces blue light rather than white light.  The blue light is passed to red and green quantum dots, which shift the blue light to red and green, and  a space allow the blue light to pass through unchanged.  While there is some loss from the qualntum dot conversion, they convert rather than filter, so a white pixel is not needed and the colors tend to be truer.
That said, LCD displays are based on backlights and OLED displays are self-generating, so regardless of the method used, OLED displays tend to be less bright, and driving them harder with a higher current just reduces their lifetime, so Samsung Display is doing the same thing as LG Display and adding an additional stack of blue  light generating OLED material to its QD/OLED displays, starting with its smaller OLED monitors.  Consumers will benefit from the extra stacks from both producers, as will the OLED material suppliers, although the uptake will not be overnight, however the bigger question will be how the additional stack will affect the price of the displays.  OLED emitter materials are expensive so we expect producers will have to eat the cost at the onset, but if the concept of adding stacks makes enough difference that consumers are more comfortable with OLED, than it will be worth the cost.  We expect the answer will take at least a year to surface, and while the idea of adding stacks might seem nuanced to the average user, if it is able to increase the brightness of an OLED display by 20% or 25%, it will make a big difference in the battle between OLED and LCD over time.

Smartphones are incredible feats of technology, squeezing innumerable parts into a rectangle typically under 20 in2 and ~ 1/3 of an inch thick.  Most smartphone owners rarely see what is on the inside of their phones, making purchase decisions (hopefully) on matching specifications to their use profile.  But inside those rectangles, packed in like sardines, are literally hundreds of ICs and other components, along with a battery, display, and assorted cameras. 
There are those that relish the thought of purchasing smartphones and then taking them apart, piece by piece, in order to quantify structure and cost.  Such a group is TechInsights, who are known for their detailed teardowns of various CE devices.  They have been kind enough to afford us a detailed look at one of their smartphone teardowns, which we summarize below.
The phone being disassembled here is the Sony (SNE) Xperia 1V, a device released in July of 2023.   Sony is not a major smartphone brand but is known for the high quality of their phones, so the example below should be a guide as to what to look for in a high-end smartphone.  We note that when the Xperia 1V was released, it sold for $1,399.  The phone weighs 188 grams, runs on Android, and has a 6.48” OLED display, along with four cameras, and runs on a Qualcomm (QCOM) Snapdragon 8 Gen 2 processor.
While the greatest share of the BOM is the broad category of integrated circuits (45.7%), the camera subsystem captures 23.7%, due to the fact that it covers 4 cameras and associated electronics, lenses, etc.  The display subsystem, which is a single 6.48” OLED display and a touchscreen, along with a polarizer and cover glass (total of 70 components), is next at 7.5%, followed by non-electronic parts (frame, etc.) at 7.2%.  More relevant to the investment community would be the breakdown of the total component types and the IC category on a branded basis.  As can be seen in the table below, the IC category carries the largest cost share by a large margin, putting significant weight on the brand share shown in the table that follows.  

​TV brands are notorius for aggressive marketing, and that sometimes leads to marketing that is on the edge of being deceptive.  Last year Samsung added a number of models to its OLED line that used a technology that was significantly different from Samsung’s own QD-OLED display technology.  These sets were, and still are, based on WOLED technology, and purchased from LG Display (LPL), who has been using that technology for years, while those based on Samsung’s QD/OLED technology function completely differently.  Samsung has said little about the fact that the company markets both technologies as OLED line, but does not specify which technologies are used in each of the company’s three OLED lines and various OLED TV sizes.  In fact, certain models and sizes can have different technologies based on the location where purchased, without the customer knowing which technology they are purchasing., and while Samsung says it guarentees the quality of all of its OLED TVs, if one is looking to purchase a QD/OLED Samsung TV, they could wind up with something else.
Of course, Samsung is certainly not the only one who plays these marketing games and with the announcements of new 2025 TV lines at CES, it seems that LG (066570.KS) has declided that product names do not necessarily mean what they seem.  LG has been marketing its high-end LCD TVs as ‘QNED TVs’ for a number of years, which implies that they are quantum dot enhanced (the Q in QNED), yet it seems that this years QNED TV lines are not quantum dot enhanced but rather use software to enhance color reproduction and contain no quantum dots.  Consumers, who assume that QNED still means quantum dot enhanced, will find no quantum dot films, bars, polarizers, or color converters in their new LG LCD TVs, despite the fact that they continue to be sold under the QNED name.
It seems that in November of last year Hansol (014680.KS), a Korean specialty chemical producer and supplier of quantum dots for displays to both South Korean display producers, filed a complaint with the South Korean FTC alleging that a number of TCL’s (000100.CH) LCD TV sets, which are labeled as ‘QD’ models, do not contain the elements necessary for quantum dots.  While TCL denies the claim, they are being investigated under false advertising statutes. 
All in, every time a TV brand tries to slip something past consumers, it erodes both individual brand trust and trust in the CE space overall, giving consumers another reason to hesitate when making purchases.  With a number of TV technologies available to consumers currently, decision-making has become far more difficult than just a few years ago, and brands that keep things simple for consumers will likely maintain a steady user base that will return in each cycle.  When we spend time in retail stores listening to consumers speak with salespersons about TV buying choices, it becomes evident that most are buying based on price, and are taking the word of the salesperson or something they read on the internet in terms of the technology, so even the hint that they might have made a bad decision once the set is home can cause the consumer to abandon that brand forever.  It is hard to imagine that a salesperson could not make a case for or against quantum dots, WOLED, QD-OLED, or Mini-LED when trying to close a sale, so it would seem that there is little point in trying to hide the facts from consumers, but that’s our opinion, not that of brand executives or marketing teams…