As we noted in our 9/29/21 note (“Walking the Tightrope”), Samsung Display and its largest ‘unrelated’ customer Apple (AAPL) do not always agree.  In that note we detailed a conflict between the two over how a potential Apple OLED product would be structured, with Apple wanting what is called a ‘dual stack’ or ‘tandem stack’ configuration developed, while Samsung Display thought a single stack OLED display would suffice.  At the time it was indicated that SDC had walked away from the development of a 10.86” dual stack OLED display reportedly for a new iPad, leaving Apple to find other suppliers who were willing to follow Apple’s guidelines.  It seems that SDC has changed its mind about the idea of a tandem stack structure and is now working toward the development of such a design to woo Apple back to the fold.
SDC’s reluctance comes from the fact that developing a dual stack OLED structure is not as easy as placing two stacks on top of each other, but has some inherent issues that make it more complex and more costly to produce, including a number of changes that would have to be made to existing production lines.  What might have spurred SDC into returning to such development is the fact that local competitor LG Display (LPL) has production capabilities for a dual stack OLED architecture and that China’s BOE (200725.CH), newly qualified as an OLED supplier to Apple, has been making modifications to its B12 – P3 line that would allow it to produce such tandem OLED displays.
Without taking a deep dive into the details, the problem facing tandem stack OLED structures is that the material connecting the two OLED stacks, called a charge generation layer, which allows both ‘stacks’ to be triggered at the same time, must be of a very precise thickness and material composition.  A thin CGL will cause the two stacks to be out of sync, which could cause a cancellation effect, while a CGL that is too thick causes an electrical field that can spread the light from the structure in the wrong direction.  As the whole purpose of the tandem stack structure is to create a brighter display (or a normal display that has a longer lifetime), either alternative works against the process.  While it was SDC’s original contention that the development of such a display would not be feasible at a reasonable cost, it seems that business over science is the winner here, and that SDC’s scientists and engineers have been told to make it work.
SDC is expected to be using a new material stack (‘T’) for this project, different from the updated material set (M12) as described in our 2/25/22 note, with that material set going into production next year and an updated (‘T2’) set in 2024, but such development timelines are certainly subject to change and Apple’s acceptance of the new materials could extend that timeframe, although we expect SDC to pitch the T1 or T2 stack to parent Samsung Electronics (005930.KS) for use in its tablet line in the hope that such a deal would justify the cost of modifications and give SDC additional production experience before any Apple product release.  All in, while it was surprising to hear that SDC had cancelled the development project earlier, the fact that there are two potential competitors who are willing to go the distance for Apple, makes it far less surprising that SDC has changed its mind.

​Taiwan’s State-run power company reported that an ‘incident’ at a major power plant caused a blackout that affected ~5m of the country’s ~24m residents.  Problems at a power plant in Kaohsiung triggered the blackout but an investigation is underway with company executives ‘not ruling anything out’ until completed.  The timing of the blackout, a day after the US Air Force made a public demonstration of its military air power at an airbase in Japan as the Russian invasion of Ukraine caused increased fears of a similar move by China toward Taiwan, who China considers to be a part of the People’s Republic of China and not a sovereign country.
Much of the power grid was restored within an hour as alternative sources were brought on line and the downtime at display and semiconductor manufacturing fabs was covered by back-up power common at such facilities, however even millisecond transition times to backup power can cause steps to be missed during a number of processes, which takes a bit of time to evaluate.  With Taiwan Semi (TSM) the globe’s leading producer, having production capacity in affected regions, the company will need to evaluate production before it can accurately estimate any potential losses.  Taiwan is known to have occasional blackouts, but those are typically during the summer months when the heat causes demand spikes across a grid that was designed to meet ‘average’ power consumption.

The OLED lighting world is a quieter, gentler place than it was back in 2016 when LG Display (LPL) announced it would build the world’s first OLED lighting fab, a Gen 5.5 production line that would churn out 15,000 sheets/month of panels to be used for both task lighting and in high-end retail lighting.  The fab was an outgrowth of LG Display’s R&D development program with affiliate LG Chem (051910.KS) all the way back in 2000, which resulted in various prototypes being shown through the end of 2009 when parent LG Electronics (066570.KS) bought Kodak’s (KODK) OLED business (Kodak was the ‘inventor’ of OLED years before) and began development of a commercial OLED product and lighting line.  While Sony (SNE) was the first to produce a commercial OLED TV (11” XEL-1)  in 2007 (only a few thousand were produced), LG was still a bit cautious about OLED, adding relatively small production capacity primarily for small panel OLED development, but within a year the company was on its way to becoming the leader in OLED TV and in 2013 affiliate LG Chem began producing OLED lighting panels in 2013, with a consolidation of LG’s OLED businesses into one company under LG Display, along with the abovementioned OLED lighting fab.
Unfortunately the OLED lighting business did not develop as quickly as expected, and along with a number of other early OLED lighting company projects (Panasonic (6752.JP), Philips (PHG), GE (GE), OSRAM (OSR.GR), etc.) the company pulled the plug on the OLED lighting business in early 2019, converting production to automotive OLED development.  Since then the OLED lighting world has been a quieter one, with a few companies still producing OLED lighting panels, particularly OLEDWorks (pvt), Kaneka (4118.JP), Konica Minolta (4902.JP), and Lumiotec (7717.JP) while a number of lighting manufacturers, particularly Acuity Brands (AYI) incorporate OLED lighting offerings in their broad lighting product lines. 
OLED lighting has been used a bit more extensively in the automotive space given its ability to be shaped, its light weight, a wide viewing angle, and its broad surface as opposed to a point light source, which give it an edge over incandescent and LED tail and signal lighting in high-end automotive taillight and signaling applications and makes it able to be ‘programmable’ down to the pixel level, allowing for truly customizable lighting patterns, as seen below, and OLED lighting has been used in a wide variety of architectural applications and commercial products.
That said, OLED lighting has faced a number of issues since its first lighting applications, with both cost and lifetime being the big stumbling blocks to mass adoption, and that has pushed the technology into more of a niche mode that it rightly deserves.  Cost is still an issue as an OLED light source is more expensive than an LED light source, but when placed in a package (luminaire), where an LED luminaire would need a diffuser, heat sinks, and other components, the cost of OLED lighting becomes more comparable as it needs little else other than a driver to operate.  While the lifetime issue has been a problem in the past, OLED lighting panel producers have worked around that issue by developing OLED lighting panels with multiple OLED ‘stacks’ (6 for some of OLEDWorks panels), that increase the panel lifetime to over 100,000 hours, which is more than comparable to LED lighting.
While all of the improvements in OLED lighting, and its innate abilities and characteristics should give it some momentum in the lighting world, there is such an infrastructure built around LED lighting and so little for OLED lighting that the technology tends to be used for lighting applications that are specific to its unusual characteristics.  One such unusual application we found is a test of OLED lighting on the USS William Lawrence, a Guided Missile Destroyer.  Typical Navy lighting is a two tube fluorescent fixture which operates on 120 Volt AC, which requires chassis bonding and grounding to prevent shock.  OLED lighting operates on low-voltage DC current which does not have the potential power losses across long distances onboard and can be worked on without cutting power.  More important is the fact that equivalent OLED lighting panels are 75% smaller and weigh 50% less than MIL Spec lighting, and are able to withstand the same vibration and shock tests as their fluorescent counterparts.  OLED shipboard lighting’s smaller size gives it an advantage in narrow compartments and passageways and can more directly conform to bulkheads, increasing clearance, and the fact that it is cool to the touch adds to its advantage over fluorescent and LED equivalents, which generate more heat that must be eliminated.
The OLED lighting project on the USS William Lawrence has been jointly developed by OLEDWorks, a Rochester, NY company, and Atlanta based Acuity Brands in order to test the viability of OLED shipboard lighting, but the bottom line for the project is the relative cost of OLED lighting when compared to typical MIL Spec.  While we have not seen the data, the companies involved have calculated that when including all of the advantages mentioned above, installation and maintenance, spare storage, and weight considerations, the cost of OLED lighting is 15% less than existing fixtures and saves 9 tons of weight. 
The only issue that remains is the OLED panels tested in the lab fell short of the candlepower requirements by between 10% and 20% although in physical mock-up trials for offices, workshops and compartments the panels met specifications, and in areas that needed red or amber lighting OLED panels provided the same glare-free light which can be included in a white light OLED fixture and easily switched from white to color as opposed to fluorescents that would need separate fixtures.  OLED light panel producers expect that they will be able to increase the light output for shipboard lighting within the next year or so, making OLED lighting an effective replacement for shipboard fluorescent lighting, and while military applications require an extensive qualification process, there are few applications that have a longer tail, which gives OLED lighting producers hope that the overall OLED lighting market will develop from niche applications to a large scale production market over the next few years. 
While competing with LED lighting in the broad illumination market is a difficult game, such specialized applications can become the lifeblood of an industry and can provide the demand needed to expand OLED lighting and reduce costs.  OLED lighting is still a niche product but as the OLED display market continues to expand, the OLED lighting market will take advantage of some of those production techniques and processes and adopt others that are more specific to lighting, such as roll-to-roll deposition, new OLED materials, or more efficient light extraction methodologies.  Given the ability of OLED lighting to conform to any shape OLED lighting panels represent a transformative approach to traditional lighting and as costs are reduced should find its way into non-traditional lighting solutions where architecture become lighting.
 

Solving problems should be a goal for consumer electronics products, making life easier for consumers, but rarely do you find a product that solves more than one problem at the same time, but smart poles can.  No not ‘smart Poles’ like Marie Curie or Copernicus, but smart light poles.  Smart lighting has been around for a long time, with daylight or motion sensors telling the lights when to be on or off, saving energy and extending lighting source lifetimes, but today’s versions of smart poles are far more sophisticated.   Lighting poles are a necessary adjunct to any roadway, especially at pedestrian cross-points, and are a requirement in parking and public spaces in most cities and countries.  That said, why use a light pole just for lighting when it can be used for much more?
5G is a developing service that will eventually replace 4G LTE as 4G did with 3G.  5G has lower latency, higher speed, and wider bandwidth than 4G, but has a few limitations that keep the service from living up to full expectations.  Currently there are two ‘flavors’ of 5G, sub-6 and mmWave., however 5G transmission characteristics are different from those of 4G and are less able to be transmitted over long distances, the reason why carriers typically piggyback 5G signals on existing 4G infrastructure.  To make this worse, as 5G frequencies move higher, meaning moving from low and mid 5G (sub6) bands where much 5G infrastructure is currently, to mmWave (higher frequencies) where 5G truly delivers what carriers have been promising, the transmission distance gets even smaller (~500 meters or a circle around a transmission source of about 2/3 of a mile in diameter).  If carriers are serious about offering ‘real’ 5G (mmWave) to fixed and mobile consumers, they will need to populate the world with a grid of transmitters a bit less than a mile apart, which, even using 1 mile apart, would equal 4.43m 5G cell towers in the US for full coverage.
Of course that will never be the case given the vast un-populated spaces in the US, but you get the idea, however in more densely populated areas, such as towns and cities, because mmWave 5G signals are blocked by buildings and even trees, even more transmitters would be needed.  Since no one is going to allow such a density of cellular towers, where can such necessary equipment reside?   How about on lighting poles?  They already have power so additional wiring would not be necessary and 5G base station equipment can be made small enough to easily fit on a pole and they are already in place.  What could be easier?  But wait there’s more… Of course such lighting poles would have IoT capabilities far beyond the simplistic sensors used currently and could transmit weather, traffic, and other data using 5G, but as we look into the future and automobiles become autonomous, or at least electric, how about using the lighting pole as a power source for charging your vehicle while it is parked?
Suddenly the simple light pole goes from this:

​To this:

As always, solving problems in the CE space requires cooperation and while there will be innumerable iterations of smart poles across the US and across the globe, without some basic standards, things could get complicated.  China has just implemented the country’s first national standard for smart light poles, South Korea implemented standards last year, and Taiwan has recently formed an alliance for the same purpose, while here in the US things are a bit more fragmented, sooner or later the various governmental organizations needed (FCC, DOT, etc.) will get together and try to come up with a plan that will likely be criticized by state and local governments who do not want the Federal government telling them what they can or cannot put on their light poles.  That said, industry will likely come up with real standards that will at least give a starting point for suppliers, but as 5G proliferates and 6G (even higher frequencies) begins to take shape, the US will either revert back to the days of antennae on every chimneys or utilize the infrastructure already in place, the lowly light pole.  It make sense and solves problems.

Perception of cryptocurrencies ratchets back and forth between good and bad on an almost daily basis.  On the positive side tales of vast fortunes being made and hints that ‘the world will be all crypto’ in years to come are balanced with negative press about money laundering, wallet stealing, and virtual real estate scams, leaving the average person thinking, “This sounds cool, but I don’t have a clue about what it is.”  Cryptocurrency is such a broad topic that we approach it by looking for metrics that can help us understand more about whether much that we hear about cryptocurrencies is promotion or fact and how the governments of the world view the application of same.

One metric we look at is where the cryptocurrency is being used and who is using it as its use in places with meager assets and unreliable fiscal reliability can indicate a different mindset than its use by a highly capitalized nation or organization.  The kind folks at Chainalysis.com have shared with use some of the data that they have derived concerning an attempt to measure where cryptocurrencies are getting the most traction, a more sophisticated task than just measuring the transaction volume.  Transaction volume would be skewed toward professional or institutional players and would leave out much individual participation.  The data ranks countries by a number of metrics, the first being crypto value weighted by purchasing power/capita, taking into consideration the ‘wealth’ of the average person in each country.   The second metric does the same with retail values, and the 3rd by peer-to-peer exchange trade volume, which is where much cryptocurrency activity occurs, especially in emerging markets, with the index score the total of the three
While our conclusions might differ a bit from others looking at the data, it seems to us that cryptocurrencies still have a long way to go to prove themselves as a legitimate  substitute for hard currency, with a number of countries with known ‘bad actors’ in the security world ranking high on the list.  Given that in some of these countries there is little else than peer-to-peer cryptocurrency trading, as centralized exchanges are not accessible, we temper that caution, also understanding that some emerging markets face currency devaluation, which pushes residents to use cryptocurrency to ‘preserve value’, which is done on P2P networks, and a number of emerging markets limit the amount of national currency that individuals can transfer to other countries, further encouraging the use of P2P networks, which allow residents to bypass such restrictions.  That said, we view the data skeptically, even the fact that during the period between 3Q 2019 and 2Q 2021 (after a few quarters of flat growth) the index totals showed that cryptocurrency adoption grew 2300% and 881% over the last year.  As cryptocurrency prices have risen, the attractiveness of such increases, both to institutional investors and individuals, but we expect the extreme volatility seen, particularly over the last few days, (up 14.6% as of this writing as Russia’s Swift sanctions push the government to use cryptocurrencies for payments) will bring cryptocurrency prices down to a more reasonable level of trading when the Ukrainian crisis is over, and temper some of the political enthusiasm that has been seen for cryptocurrencies.
While we show only the top 20 in the table below, in the P2P category, Kenya comes up in the #1 position, meaning the most P2P use/capita, while South Korea comes up last.  China is first in the retail category, and the Cayman Islands is last.

Samsung Electronics’ (005930.KS) Vice-Chairman announced during a meeting with reporters at Mobile World Congress, that the company is preparing devices for the Metaverse platform, such as AR glasses.  He noted that ‘it is difficult to specify the release date right now, but the development is in progress with a focus on completeness.’  When pressed if that meant a product sometime this year he replied, ‘The quality of the product is important’, adding the general comment that ‘It is important to create mutual experiences between products and to give value to consumers’, all of which leads to no answer to any of the important questions concerning Samsung’s actual plans for the Metaverse.
While we would not expect much from Samsung executives in the way of product release dates, such replies were so vague as to be distracting and annoying, but given Samsung’s premier place in the CE space, it would be difficult for the company to not have a number of Metaverse related projects in development, particularly given their expertise in a number of areas that are key to AR/VR hardware development.  In 2015, in cooperation with Oculus (FB), Samsung released a VR ’quasi-headset’, a device that used a Samsung smartphone as the display, more to show what VR’s possibilities were to both developers and consumers.   In 2017/2018 Samsung released the Odyssey and Odyssey+ VR headsets, both of which were PC powered and based on Windows Mixed-Reality and Steam (pvt) VR, neither of which are still being produced.  The headsets were $500 each with controllers and had two OLED displays (1440x1600) that had an odd pixel configuration that had alternating pixels of red and green and red and blue. 
Despite favorable reviews Samsung terminated support for the Odyssey VR headsets in September of 2020 and the original Samsung XR website is no longer but Samsung has been developing a number of technologies that are applicable to VR, such as holographic devices, that the company has been quietly demoing for years and micro-OLED and micro-LED displays that have potential for AR/VR product development.  That said, Samsung would have to compete with Facebook’s Oculus brand, which is the most popular VR headset due to its relatively low price and admirable specifications.  As Facebook is obviously seeding the market and losing money on every device, Samsung will face the difficult task of creating a device that can compete, as we expect Samsung will not consider sustaining losses on a new product category for an extended timeframe.
Samsung is involved in the development of many display oriented projects, not only through its affiliate Samsung Display (pvt), but through affiliations with many companies and institutions with whom it has partnered.  On such that is still in the development stage has developed a way to produce displays with ultra-high resolutions, up to 10,000 pixels/inch, which is far above the more typical 400/500 ppi seen in most smartphones.  While such a project is still far from mass production, Samsung is one of the premier image sensor producers, has extremely sophisticated semiconductor capabilities, and has already developed Micro-LED displays for larger systems.  While each of these projects and the multitude of others that Samsung is participating in do not individually guarantee a commercial AR/VR product, we would expect that Samsung has little choice but to hop on the Metaverse train with at least some hardware this year or next.  Perhaps initially as a component or module supplier, but as the AR/VR market develops, it would be hard for Samsung not to participate.  The biggest stumbling block in our view would not be the hardware, but making the devices ultimately compatible with Samsung’s other devices, as while Samsung is big on advancing technology, they are there to sell stuff by ‘creating mutual experiences between products’, as noted above.

​The trade prohibitions that have been placed on Russia in light of its Ukrainian incursion are a burden for US companies that buy or sell in Russia, but they are even more of a conflict for Chinese companies that buy or sell with both the US and Russia.  Chinese companies face two problems with the US/Russian sanctions.  First, the Chinese government’s distaste for supporting such sanctions, which could lead to pressure from the Chinese government to maintain trade with Russia, and second, the potential for sanctions by the US for those Chinese companies that ignore the sanctions.
When the US placed sanctions on Huawei (pvt) for allegedly doing business with Iran, Canada held Huawei’s CFO under house arrest for 1,000 days once the US asked for extradition, and a multitude of foreign companies that supply tools, software, and production capabilities in other countries have joined with the US in its further sanctions against Chinese companies placed on the ‘entities list’ by the DOC.  We expect similar cooperation from foreign companies in reference to the Ukraine conflict, but those Chinese companies that routinely trade with Russia could face severe financial repercussions if they continue to do business in the Soviet Union, both as fines for US trade violations and the loss of business with US companies as a result of such violations.
Lenovo (992.HK), based in Hong Kong, quickly joined the US in halting sales to Russia but faced considerable backlash in country and has yet to confirm its official cooperation with the US, and China’s foreign ministry spokesman commented that ‘China is not in favor of using sanctions to solve problems and furthermore opposes unilateral sanctions that have no basis in international law’, making clear the Chinese government’s official position.  That said, while Russia’s semiconductor market is relatively small for Chinese manufacturers, there are many other products, such as high-end computers, automotive parts, and smartphones sold to Russia, amounting to ~$146.9b last year and many such items include parts made in the US, designed with US equipment or based on US IP, and on the other side, Russia is a supplier of a number of energy and agricultural products to China, so the conflict will not be an easy one to solve.   Much will depend on the Chinese government’s resolve in maintaining a strong stance against sanctions while looking at the possibility of serious (more serious than those already existing…) problems with the US that could further deflate the Chinese economy and expand the already growing number of companies on the US entities list.

​On Monday Toyota (TM) shut down all of its plants in Japan because of a cyber-attack on a supplier that was linked directly to Toyota’s parts management supply system.  While Toyota was able to bring the plants back up the next day, full restoration at the digital level will take more time.  This type of cyber-attack has become more commonplace both in Japan and in other regions and is based on a piece of malware called Emotet that is considered by the US Department of Homeland Security as one of the most costly and destructive forms of malware, costing ~$1m per incident to clean up.
This malware is a Trojan that in simpler forms has been around since 2014 and was intended to be used to steal information in banking systems, but has morphed into a more flexible Trojan that looks like an e-mail or similar clickable document.  Once the document is opened, Emoet can use a number of different methods to spread across computer systems, using contact and other lists to generate e-mails that look even more realistic than the original, indicating “Your Invoice”, “Payment Details”, or an upcoming shipment from a well-known company.
Emotet is smart however and can recognize when it is in a ‘sandbox’, essentially a security tool that allows the observation of malware without letting it loose on a computer system, and it also gives the attacker the ability to upgrade the malware while it is installed on a system, giving it the ability to stay a step ahead of security trackers, which is why an attack using Emotet on the city of Allentown, PA needed Microsoft’s (MSFT) response team to come in and  clean up the mess the program caused.
While Emotet is a sophisticated piece of malware and can also be used to deliver other viruses or Trojans while it collects information or executes a ransomware attack, it is identifiable, which should keep most sophisticated computer users from accidentally infecting systems, however once it has infected a system, it can use some of the data it has collected to product even more realistic looking e-mails that are harder to recognize and easy to mistake for legitimate communication from a friend or supplier  The answer is to keep all computers updated and patched, while being extremely careful about opening any e-mail that is not easily identifiable as legitimate.  Looking at the address of the sender is at least a start and any deviation from the norm like ‘[email protected]’ or ‘[email protected]’ should keep you from being tempted, even when the e-mail looks legitimate, and it is better to have missed an e-mail than to open one that sets off a chain reaction that could shut down the production of 13,000 cars for a day or two and possibly drain your bank account or cyber wallet.