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…

​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…

​Recently we noted that Samsung (005930.KS) was one of the only major CE manufacturer that does not offer Dolby (DLB) Vision™ across its TV line, instead developing its own HDR 10+ high-definition video format in conjunction with 20th Century Fox (DID) and Warner (WBD).   These systems increase image brightness and contrast relative to SDR (Standard Definition), along with increasing the color palette, and adjust image parameters on a frame-by-frame basis, rather than fixing a group of settings for the entire content duration, as is the case in SDR.  What makes the Samsung and Dolby systems different is that Dolby Vision has to be licensed by the content creator (typically a one-time fee) and by the device manufacturer (typically a per unit fee), while the Samsung system is open source and therefore free to use.
It seems that Samsung is taking this concept further and has just announced that it will be including Eclipsa™, its open-source spatial audio system, across its entire TV line in 2025.  This system is in direct competition to Dolby’s Atmos™ spatial audio system and similar ones from DTS (DTSI), Sony (SNE) and others, including Apple (AAPL), although Apple’s Spatial Audio is primarily used in its own products as it is closely tied to the OS. 
These audio formats are object oriented, meaning that they isolate each sound, whether it is a voice, music, thunder, gunshot, etc. and allow it to be placed in a three-dimensional space, as opposed to the left/right two-dimensional space used in stereo recordings.  By adding the dimensions of ‘height’ and depth to the audio, a more realistic portrayal of the sounds can be created.  In a typical stereo (2 channel) playback system the sounds are placed horizontally between a left and a right speaker at the time of mixing, or can be mixed in a  ‘surround’ format, typically adding a set of rear left and right channels.  Systems such as Atmos or Eclipsa take that information and make each sound into an object by sampling the audio 48,000 times each second and breaking the audio into objects rather than forcing them into two or four channels.  The systems can then place each object anywhere left/right, front/back, and above/below, creating a more realistic 3-dimensional playback that more closely matches the screen.
These systems typically use speaker systems that include the usual left and right front (and a center speaker as most dialogue originates from center stage), a pair (L & R) of rear speakers, and a height speaker, but they also have to be able to be used on generic stereo systems, such as the TVs own two speakers or headphones. In order to do this, these systems use a number of tricks to fool the human brain.  Delaying (Milliseconds) some objects in one speaker can make it seem like it is further ‘back’ on one side than the other and reducing the volume of an object can have a similar effect, while filtering (changing the tone) of an object can seem to move its location, but the full effect of object-oriented audio is found on the type of speaker set-up described above.
Samsung’s Eclipsa system is an outgrowth of IAMF (Immersive Audio Model & Formats), an audio format it has been developing with Google (GOOG) since 2020 to improve on the ability of other object-oriented audio systems, particularly when used on 2 speaker systems.  At least that is the stated objective, but the fact that Dolby (and others) charge a license fee to use their systems seems to be a big factor, with Samsung unwilling to pay to license such systems when it believes it can produce its own. 
However, while 3D audio market statistics are few and far between, we believe Dolby has had the dominant share and the only way a new competitor can make any headway in said market would be with an open source, and therefore free offering, which is the route Samsung has taken.  Of course Samsung will offer the system across its own TV set lines but will have to convince other CE brands that it can do at least what Atmos can do, without the fees.  Industry organizations, particularly the Alliance for Open Media, have been advocating for royalty free codecs for almost 10 years but has focused primarily on video codecs so Samsung and Google, both AOM Steering Committee members, must get the ball rolling. 
Should their members get behind the Samsung/Google IAMF framework, it would stand as a direct competitor to Dolby Atmos, and since the Alliance for Open Media has participated in the development of IAMF, there is such a possibility.  That said, we note that it is ultimately up to content creators to decide what format they  wish to use, so it will take more than sponsorship from the AOM steering committee members or rank-and file supporters before real adoption is afforded to the new system, but the good news is that it is free, making it available to hardware and software manufacturers, who will not have to pay to build encoders and for CE brands to build decoders into their products, as Samsung is doing.  Its hard to battle an incumbent as entrenched as Dolby, but ‘free’ usually helps.

On January 2, the Chinese Ministry of Commerce added 28 US companies to its ‘Dual-use Export Control List’, prohibiting the export of said ‘dual-use’ items to any on the list.  Dual-use items are any goods, technologies, or software that has both civilian and military applications.  Examples would be navigation and avionics systems, electronics and communications equipment, biotechnology and biomedical equipment, and certain tools and materials.  In December we noted that China had restricted exports of additional rare earths and materials that are used in the manufacturing of advanced semiconductors and weaponry, while also having broad applications in consumer products.  We expect that the Chinese government will continue to add to this restricted list as the US does to its trade limitations with China.  As of yesterday, all exporting of Chinese product to these companies is halted and any Chinese company that considers exporting to these US companies as essential has to submit an application to the Ministry of Commerce.  If China holds to the same mindset as the US, it will be denied.
Here’s the list:

• General Dynamics (GD)
  • General Dynamics Ordnance and Tactical Systems
  • General Dynamics Information Technology
  • General Dynamics Mission Systems:
• L3 Harris Technologies (LHX)
• Intelligent Epitaxy Technology (IntelliEPI): 4971.TT
• Clear Align LLC: (pvt)
• Boeing Defense, Space & Security: (BA)
• Lockheed Martin Corporation: LMT
  • Lockheed Martin Missiles and Fire Control
  • Lockheed Martin Aeronautics
  • Lockheed Martin Missile System Integration Lab
  • Lockheed Martin Advanced Technology Laboratories
  • Lockheed Martin Ventures
• Raytheon Missiles & Defense – (RTN)
  • Raytheon/Lockheed Martin Javelan Joint Venture
  • Raytheon Missile Systems
• Iron Mountain: IRM
• Inter-Coastal Electronics: pvt
• System Studies & Simulation: pvt
• Applied Technologies Group: pvt
• Axient: pvt
• Anduril Industries: pvt
• Maritime Tactical Systems: pvt
• Pacific Rim Defense: pvt
• AEVEX Aerospace: pvt
• LKD Aerospace: pvt
• Summit Technologies Inc.: pvt