According to local press, the Indian government is looking to limit Chinese smartphone brands from selling devices priced below 12,000 rupees, the equivalent of ~$150 in order to preserve local manufacturers.  While the Indian market is based on a wide variety of brands, very low-end phones are predominantly produced by Indian brands, with prices running as low as $7.30 for a 2G dual camera (0.3MP) phone with a 1.8” display.  Roughly 1/3 of sales volume thus far this year in India is with phones under $150.
The first 3G offering starts at ~$20.75 and there are many models to choose from in those price ranges, so the government, while encouraging smartphone brands to enter the Indian market and manufacture locally, seem to be reserving the low-end market for those that produce at home.  Chinese brands do offer some of those very low-end phones but popular Chinese brands like Xiaomi (1810.HK), Oppo (pvt) and Vivo (pvt) rely on phones in the $100 to $200 range given the average price of a smartphone in India was $211 in 1Q of this year.  High end brand names will likely not be affected to any large degree.
 

​Samsung Electronics (005930.KS) has agreed to sign a contract with the labor unions that were formed by employees after many months of negotiations and potential strike threats.  The unions, formed in 2018, represent ~5,000 of Samsung’s ~110,000 employees and have been pushing to get Samsung to change compensation provisions and negotiate wage increases that reduce the pay gap between line employees and management.  The new package, which is expected to be signed in a few days after 10 months of negotiations, puts in a 7.5% wage increase for 2021 and a 9% increase for this year, the highest in 10 years and the first time in the company’s history that they have signed an agreement with a labor union.
As p[art of thye agreement a task force is to be set up to rework a number of Samsung wage policies, one in particular that progressively lowered employee salaries in the years leading up to retirement in order to ‘encourage’ senior employees to push out retirement as far as possible.  The union was also seeking to change the rules regarding pay incentives for those employees who work during holidays and pushed the company to agree to pay employees for unused holiday time, and not to include overtime pay as part of an overall wage package, which essentially meant there was no overtime pay.
Over the years Samsung has paid employees ‘incentives’, which were based on calculations by management that were not disclosed to employees, while other South Korean companies tend to use a fixed percentage of net profit as the incentive pool.  Samsung has promised to provide more transparency into how the calculations were made and the union relinquished on their original request for a 25% share of the profits.   This was a long battle (31 bargaining sessions) to at least begin the unionization of Samsung and one that was not without the use of ‘leverage’ on both sides, but it seems that a final agreement has been made and at least those in the union have the ability to collectively bargain with management, something they have never been able to do previously.

With over 1.7m 5G base stations across the Mainland, China is the leader in 5G on a unit volume basis, with 70% of the global total 5G base station count on the Chinese Mainland, according to the Chinese Ministry of Industry & Information Technology, and Beijing alone is said to have almost 52,000 5G base station, essentially 20.8 for every 10,000 residents.   Guangzhou (formerly Canton), one of the three largest cities in China and the most populous metropolitan area on the globe, has a 5G based bus rapid transit dispatch system and both a 5G based ‘smart’ railway station system and 5G internet service for consumers across eight stations on Line 18 of the Guangzhou rapid transit system, which travels at ~100 mph.
It can be assumed that given the size of Guangzhou  (~14m), a bit smaller than Beijing (~21m), there are ~35,000 5G base station across the city proper, helping to create a 5G network that covers much of the city.  That said, aside from companies that produce, install, or maintain that 5G equipment, there are some who wish to profit from the 5G expansion in Guangzhou, and one Wu Moumou, a 30 year old resident seems to have found a way to do this, albeit short-lived. In early July it was found that a local carrier was alerted to the fact that a base station in the Nansha district of Guangzhou has become damaged and coverage in that location had become ‘paralyzed’ (their words) according to the investigation.  When a team was sent to assess the problem it was discovered that the baseband processing modules were missing, causing the service shutdown.
Upon a police investigation it was discovered that two other cases of module theft had occurred nearby, with a total of a bit over $45,000 worth of equipment being stolen during the three incidents.  With further investigation it was found that Mr. Moumou was ‘familiar’ with all three sites and was arrested.  The eight most recent stolen modules were discovered but it was also found that most of the ~$890 he received for the stolen goods has already been spent on gambling and little was left.  The police indicated that public facility theft, particularly copper network cables was serious problem years ago but as those lines were upgraded to fiber thieves began looking for new targets and Mr. Moumou was able to relatively easily gain access to the information he needed to figure out what parts of the base stations were most valuable, although poor fencing and a gambling habit were his eventual downfall, along with a meager 2% return on his ‘investment’.  Since license plates are particularly hard to come by in China, Mr. Moumou should have focused on something a bit more profitable, although he might now be might be making the same plates he should have been appropriating.

Universal Display (OLED) reported 2Q revenue results ($136.6m) that were down 9.2% q/q but up 5.3% y/y and short of consensus of between $149.6m and $151.2m, with OLED material sales of $71.9m, down 17.1% q/q and down 7.2% y/y, while royalty &^ license revenue ($60.3m) increased slightly (0.8%) q/q and was up 25.0% y/y.  OLED material margin declined slightly to 65.2% while overall margin increased from 78.0% to 80.1%.  UDC lowered their full year guidance from a range of $625m to $650m to $600m single point, with a range of $540m to $660m while guiding material margins to the low end of the previous range of 65% to 70% and OP Ex increase also to the low end of the 10% to 15% previous range.  The ratio between material sales and license/royalty revenue is estimated to be 1.3 to 1 as deferred revenue is recognized from contracts that are near EOL.
From a customer standpoint, we believe Samsung Display (pvt) reduced material purchases slightly q/q while LG Display  (LPL) increased, with royalty/license up on increased unit volumes, while BOE (200725.CH) saw a 6.7% drop in combined sales, and China sales down 7.6% q/q but still up 41% y/y.  While macro issues are certainly in play in China, along with COVID lockdowns, we expect overall material and license revenue to continue to grow as Chinese panel producers, particularly BOE, expand their small panel OLED customer base, despite the occasional bumps.  On an overall basis, while we look specifically at quarterly red and green emitter sales, we feel smoothing the numbers across 6 quarters gives a better understanding of material sales growth by filtering out quarterly ordering inconsistencies.  We do note that raw material inventory levels increased substantially in 2Q (see Figure 2 & Figure 3) although the price of iridium, a metal on which UDC’s phosphorescent emitters are based, seems to have stabilized, however given the 3Q release of the new iPhone line, we expect UDC is making sure they have enough raw material to supply Apple’s (AAPL)  three iPhone display suppliers, all of whom are UDC’s largest customers, which is similar to what occurred in 2Q 2020.
Given the obvious macro issues that are facing the CE space, the weakness in UDC’s sales is not surprising and the days of OLED production capacity growth masking macro or seasonality are long gone, but we do note that revenue across the large panel LCD space declined by 17.6% q/q in 2Q, so a decline of 9.2% would seem to imply that overall OLED growth is still able to provide some protection from the full effects of weakening demand and high inventory levels, while the guidance also implies a bit over 8% sales growth for the full year.  While management looks at the current conditions as short-term, with a strong focus on 2024 when a number of planned OLED capacity additions are expected to come on-line, we expect that a weak 2H and 2023 Chinese New Year might slow those plans.  There are considerations as to deposition equipment ordering, which must be done far in advance of actual production to insure delivery schedules, but even those can slip by a quarter or so if things deteriorate further or Chinese finding becomes more difficult.
There is still considerable play in full-year sales for UDC, although we now expect sales of $597m, which implies hefty 4Q y/y revenue growth of 17.5% and a relatively flat 3Q as Apple releases the iPhone 14 family and a variety of smaller volume but higher surface area products are released for the holidays, with the potential for some of the growth to be pulled into 3Q.  We still believe there is growth in the OLED display space but with the higher macro risk level that comes from a more mature infrastructure and exposure to rising costs.  That said, we believe if there is some degree of safety in the display world, it is in the OLED space and as the primary material supplier to the industry UDC has the most exposure..

There has been an unending stream of stories both in the press and media about how the excessive build-up of inventory levels in the CE space are the root cause of the ills that face the industry currently, along with a large helping of inflationary malaise.  While we look at many companies on a daily basis, most are either highly specific to a product category or technology and take on the characteristics of those products, not reflecting a broader sense of what is occurring in the CE space.  As we were updating our LG Electronics (066570.KS) model, we took a peek at LG’s inventory as the company has a broad line of CE products that span everything from ovens and refrigerators to TVs and projectors, a number of which are the leading brand in the category.
As seen in Figure 9 LGE’s inventory levels have been increasing since 2Q 2020, with the spread between initial cost and carrying cost relatively stable, and when inventory levels are compared to sales, that ratio has actually been declining, contrary to popular belief.  That said, when digging a bit deeper in Figure 11, it becomes apparent that the cost of raw material inventory is rising faster than sales, particularly since 2020, pushing the value of raw material inventory from 14.0% of sales in early 2018 to 16.7% in 1Q of this year, with some 18%+ peaks over the last two years.  Finished goods as a percentage of sales has also been rising, albeit not as much as raw materials, which puts LGE in the unenviable position of having to raise prices or live with lower margins.
What this seems to imply is that while there was certainly over-ordering in the CE space to protect brands from being unable to provide product to a demanding consumer base, the issue of raw material price increases seems to have had a bigger effect on inventory balances than a build-up of excess units.  That said, there are still many points in the CE supply chain where there is excess unit inventory, but we see the bigger issue as being the high cost of that inventory and how to market it to consumers, especially given the reduced buying power consumers are currently facing.  Do companies like LG dump the high-priced inventory at a big loss, figuring the year is going to be a write-off anyway and its good to clear the decks, or do they hold or even raise prices to maintain margins, likely extending the inventory glut and reduced production levels into 2023?
We expect that perspective has been changing over the last few weeks, with the idea that holding margins, even if it means carrying higher inventory levels, giving way to the idea of aggressive discounts to move high-cost units.  We still don’t believe CE companies are convinced that the current macro environment is ‘real’, with managers kneeling by their bedsides each night praying for a return to the ‘new normal’ demand they became used to in late 2020 and much of 2021, but we expect reality will catch up by the end of 3Q, especially if 3Q ends as poorly as it began.  If that mindset is translated into a heavily discounted holiday season will consumers respond?  We believe so, but not with the same vigor that was seen a few quarters back, as the need for a new smartphone, TV or laptop has been sated, leaving only a customer base of true bargain hunters, rather than a customer base that is willing to pay up for immediate gratification. 
This leaves CE brands betwixt and between, willing to take the quick hit to move inventory but unable to finish the job, dragging sales weakness into 1Q 2023, but that does give us hope that there is still potential for a better balance between CE supply/demand for much of next year, and we rarely take the optimistic view this far out, although to us, this is the least radical scenario we could expect.  Of course there is still plenty of time for deleterious world events or another outbreak of something to throw a monkey-wrench into the whole megillah, but it could happen.
 

We have noted that Samsung Electronics continues to limit the use of TOF (Time of Flight) sensors in its smartphones after championing their use a number of years ago.  The reasons for this change are a bit complex, as discussed in previous notes[1] but Samsung’s decision does not affect our expectations for VCSELs, the basic building block for TOF and other applications, as we believe there is still considerable long-term growth for VCSEL technology as demand from consumer products and automotive applications continues to grow.  Both TOF and Structured Light applications in consumer devices are based on VCSEL sensors, with imaging and security Identification being the most common applications in consumer products, particularly smartphones and other mobile devices, but LIDAR applications, essential to autonomous or ADAS applications are also based on VCSEL technology and as the cost decreases and power increases, the demand for VCSEL application in automotive and logistics will also increase.
Estimates from Yole Development indicate that broad-based growth for VCSELs will have a CAGR of 13.6% during the period between 2021 and 2026, with sub-segments growing between 5.6% and 121.9% as indicated i9n the table below.  While growth is highest in smaller segments mobile/consumer remains the largest segment, growing 3x faster than telecom, the 2nd largest, although the automotive/mobility segment sees considerable growth over the period due to the development of higher power VCSEL arrays for LIDAR and applications for in-factory electric vehicles and similar pallet moving equipment that would be outfitted with collision avoidance systems.
While most VCSEL sensors emit at near-IR frequencies of 850 or 940nm, Sony (SNE) has developed a sensor that covers the range between 400nm and 1700nm by adding a layer of Indium Gallium Arsenide (InGaIn) to the Indium Phosphide (InP) that covers the near-IR spectrum.  The additional layer expands the range of the sensor into the visible light range, but more importantly it reaches the frequencies at which OLED display materials become transparent, which implies that a sensor can be placed within the OLED display area, rather than in a separate ‘notch’ as is done with the typical 940nm VCSELs used currently, and at the same time reduces the chance of ocular injury from VCSEL arrays as power continues to increase while reducing background ‘noise’, leading to improvements in resolution and range.
While VCSEL material and process advancements also come with challenges such as lower die count, manufacturing retooling and requalification from customers, VCSEL volumes will continue to increase and overall manufacturing costs will continue to decline.  There are a number of VCSEL die level producers, such as Samsung, Sony, ST Micro (STM), and AMS (AMS.SW) but much of the press goes to companies like Lumentum (LITE), II-VI (IIVI), Vertilite (pvt), and Trumpf (pvt) who are more visible in the consumer space.
While there is much data on the characteristics of VCSELs, there is little data on pricing, as widely differing applications generate a vast number of VCSEL modalities, sizes, source counts, power levels, spectrum,  and packaging, but more to the point is that price and characteristics are closely aligned with improving characteristics commanding premium pricing while more generic modules decline.  There are step function improvements, such as when the shift from 4” to 6” wafers was made years ago that increased the die count by over 2x and reduced cost/die significantly, but we expect overall VCSEL pricing to be more of a function of the number of emitters and power capabilities, so we look more toward the growth in unit volume for indications as to how the industry is progressing.  While estimates 5 years out tend to be adjusted yearly even a 10% CAGR for the industry out 5 years would be considered formidable, even without Samsung’s help.  


[1] 7/20/22, 1/13/22, 10/14/21, 4/19/21, 3/5/21
​

​The US ‘Entities’ list, a subset of the US Export Administration Regulations (EAR), has been a thorn in the side of Chinese semiconductor manufacturing since it gained public notoriety during the Trump administration as a way to focus attention on China’s competitive aspirations in the semiconductor space.  The concept of the list, which is maintained by the US Bureau of Industry & Security, a part of the US Department of Commerce, was to regulate US companies that might be providing product or services to foreign entities that might be used for military applications.  By listing those militarily sensitive areas, the list forced US companies to undergo a review of the products and the foreign end-user in order to obtain a license for the transaction.
As the US Department of State began to play a larger role in the DOC’s day to day operations, the list became a vehicle that the government could use to limit trade with parties it believed had connection with “activities contrary to US national security and/or foreign policy interests”, and the list became a way for the US government to withhold technology from certain entities by naming them to the list.  We don’t imply that the government uses the list arbitrarily, but as there is little public discourse as to what might put a person or entity on the list, other than a connection with a military organization, the effect is essentially blocking US technology from being sold to certain foreign companies, which can limit the overall growth of that technology segment in the target country.
Such has been the case with China, who has been targeted, rightly or wrongly, by the DOC, with the list being used to selectively limit US semiconductor technology from sale to a number of key Chinese companies that limits China’s ability to compete with the US and its allies in the semiconductor space.  Over the last few years the list and the target segments have been expanded, including the concept that not only would US companies fall under these licensing restrictions, but any company outside of the US that used any US equipment (hardware, software, services, etc.) would fall under the same guidelines, and while the US government technically has no control over foreign corporations, the pressure the US can exert on those companies and governments is considerable.
The list has long included Huawei (pvt), China’s largest telecom company and at one time the largest globally, with its equipment being used by carriers everywhere, including the US, but by inclusion on the list, semiconductor foundries were unable to supply Huawei with chips that were produced using advanced nodes and Huawei’s ability to compete, particularly in the smartphone space was severely limited.  More directly the inclusion of SMIC (688981.CH) and a number of other Chinese semiconductor design and production entities has put even greater limitations on the Chinese semiconductor industry, particularly a restriction on the sale of EUV (Extreme Ultraviolet) semiconductor process tools, which are necessary for process nodes below 7nm and sold only by ASML (ASML).
The restrictions do not cover DUV (Deep Ultraviolet) tools, which are used in more mature nodes and produced by ASML, Canon (CAJ), and Nikon (7731.JP), but it seems the US is not happy just to cut the legs off of the Chinese semiconductor industry but is examining the idea of adding DUV tools to the list of restricted tools, which would cut the heart out of any expansion hopes for Chinese semiconductor manufacturers, but would present a major challenge to ASML’s tool business, which was heavily weighted toward DUV last quarter.. 
One point that has been irking the US government is the fact that Chinese companies are still able to buy chip design software made by US companies that allows them to design some of the more advanced types of semiconductors, such as GAA (Gate-all-around), and advanced process that Samsung (005930.KS) is using to produce 3nm node chips, and while Chinese foundries are unable to produce at such mature nodes, the thought is that a ban on such design software will push China’s semiconductor development further into the future.  With three companies occupying ~80% of the EDA market, and both Synopsys (SNPS) and Cadence (CDNS) being US companies[1], inclusion would further limit China’s hopes for maintaining any chance of competing at such advanced product levels.
While the US has not instituted these additional bans, discussions seem to be ongoing, including those with the government of the Netherlands, where ASML is located and the government is even considering tightening export rules on equipment used to produce advance memory, an area that has faced less restrictions than foundry processes, as a recent announcement that Shanghai PanSic Semi (pvt), a crypto mining chip design company is to be Samsung’s first 3nm GAA customer seems to have alerted officials to China’s potential in the memory space.  But it seems that Chinese semiconductor manufacturers have been anticipating a tightening of US restrictions for some time and have been purchasing as much US sourced semiconductor process equipment as possible during the 1st half of 2022, with $36.5b of semiconductor equipment purchased from US companies, second only to Japan’s $48.8b, and while that was down 4% y/y because of more specific restrictions, it seems Chinese semiconductor producers are trying to get as much equipment delivered as possible before any new constraints are added.
We note that the passage of the Chip Act is certainly a step toward the US expanding its direct semiconductor production involvement over the next few years, but the analogy we most subscribe to is whether you decide to win a race by running faster than your opponents or by tripping them before they finish.  We prefer the former and while the entities list does limit US technology access to companies, entities and individuals who have direct and indirect links to military and subversive organizations, using it to ‘trip’ China’s semiconductor industry seems to be a bit of an ethical misstep.  Perhaps the Chips Act will help to focus the government more on encouraging the development of the US semiconductor and less on limiting development in other countries as the semiconductor industry has proven itself to be a global one, needing the resources of many countries to maintain balanced growth, ample supply, and reasonable pricing.


[1] The 3rd is Siemens EDA, formerly Mentor, is based in the US but owned by Siemens

​Last year Samsung Electronics (005930.KS) shipped 270.5m mobile units, up 5% y/y and had high hopes for smartphone shipments this year, at least at the end of last year, but the most recent prognostications from the share leader now call for mobile shipments to be down slightly for the year, after a 14.4% decline in shipments in 2Q and the specter of excessive inventory both at Samsung and across much of the smartphone industry.  Samsung indicted that it is focusing on the premium smartphone segment and expects to see sales and ASPs increase in that category as it garners increasing shipments of its foldable smartphone line, but it is still competing with Chinese smartphone brands in the mid-range price tier, where the highest unit volumes take place.  
In that regard, Samsung reduced orders from component suppliers in 2Q and has hinted about other cost saving measures some of which relate to cameras and camera module reductions in mid-tier models.  While the full impact of those changes has not been felt, the overall component order reductions are just coming to the surface as South Korean camera and related component suppliers begin to report 2Q results.  Most recently Partron (091700.KS), a long-time Samsung camera module supplier, reported a 21% drop in sales q/q and a 5% drop y/y/, with operating profit declining 61% q/q and 45% y/y, and Samsung Electro-Mechanics (009150.KS), 23.7% of which is owned by Samsung Electronics, saw its optical solutions division’s 2Q sales decline 10% q/q and 4% y/y.  SEMES has focused on supplying its parent with camera modules for its high end lines, such as the Galaxy S and Note series, but has more recently been supplying modules for the A series, again a mid-tier line where the competition is quite intense.
There are a number of other similar suppliers in Korea that have likely faced the same challenges in 2Q as suppliers of optical components and cameras to Samsung but have not yet reported results, such as MCNEX (097520.KS), Power Logics (047310.KS), Cammsys (050110.KS), Namuga (190510.KS), and Coasia Optics (196450.KS), but more to the point will Samsung’s longer cost cutting measures magnify the slower sales of smartphones for the remainder of the year and into next year?  We expect that the ‘camera wars’ which have led to the proliferation of multiple cameras, with some models having 5 or 6 front and rear cameras, has come to an end, although we expect the focus to now shift to ever higher resolution cameras and better image stabilization systems rather than an excessive number of cameras.  That said, it would seem that at least the next few quarters will be bumpy for Samsung’s local camera component supply chain as Samsung and the industry readjust order levels to lower demand.

​While we waxed optimistically about Micro-LED in yesterday’s note we feel obligated to put some of that optimism in perspective.  Leyard (300296.CH), one of the two companies mentioned in reference to the new production level Micro-LED chip that was the basis for our note, has been developing production capabilities toward offering a number of chips and modules with progressively smaller pitch (the space between Micro-LEDs) implying the higher pixel densities needed for AR/VR applications.  That said, the company’s public display business, its primary revenue source, has seen business deteriorate (net profit down between 5% and 9% in 1H) as lockdowns in China reduced tourism traffic and signage demand by ~50%, while the company’s VR related business increased by 14% y/y, although it remains a relatively small part of the company’s net profit.
Leyard did indicate that great progress has been made with the company’s Micro-LED products, as we indicated yesterday, and that the yield rate on Micro-LED mass transfers increased from 98.9% to 99.995%, a substantial increase, but to put that into perspective, if we were to look at the transfer of Micro-LEDs from wafers to substrates for a 4K display, a 98.9% yield would leave 91,238 pixels unusable, while a 99.995% yield would generate 415 bad pixels. If we look at the fact that each pixel is made up of three sub-pixels, those numbers increase to 273,715 bad sub-pixels at 98.9% and 1,244 bas sub-pixels at 99.995%. 
What makes these numbers significant is that these bad pixels/sub-pixels need to be repaired, and that cannot be done using the same mass transfer techniques used to bring large quantities of Micro-LEDs from a wafer to a substrate.  Each bad Micro-LED must be removed and replaced, a far more tedious and expensive process than the initial transfer, so step function improvements in transfer yield are directly related to process cost.  There are techniques that can be used to offset the replacement of bad Micro-LEDs, such as creating non-operating duplicates for each sub-pixels during the initial transfer to act as spares that can be activated if needed, but the cost of same is equally prohibitive, leaving the ultimate goal to reduce the number of defective pixels/sub-pixels to near zero[1].
We are certainly not criticizing Leyard or other Micro-LED manufacturers about yield improvements, which have been significant over the last year, but investors should understand that while a defective segment of a memory IC can be ‘closed’ with the device being sold with lesser specs, in a visual device bad pixels are far more obvious and must be repaired, , keeping comparative costs high until yields approach 6 or 7 nines or other Micro-LED techniques are found.  While Micro-LEDs an interesting and potentially lucrative display technology that will get increasing press coverage over the next few years, it will take some time before it is able to stand as the basis for a consumer oriented display product that is within the affordability of the average consumer.  Progress yes, ready for Prime Time, not quite yet…


[1] A Micro-LED with only 1 bad sub-pixel would have a yield of 99.999996%

At least in the US, we are bombarded by advertisements extoling the need for consumers to attach themselves to 5G networks, with a similar situation in Europe and Latin America, while in China all three 5G carriers are state-owned, and while they compete for customers, that competition is overseen by the government.  With the considerable pressure the US has put on Huawei (pvt), once the largest telecom supplier globally, it has been difficult for the company to maintain its lead in the 5G base station market, but recent data from Trendforce indicates that Huawei maintained that lead in the 5G space last year and despite the US pressure, is expected to maintain that lead again this year.
The data also suggests how narrow the 5G base station market is in terms of vendors, with the top 3 5G base station brands capturing 73.5% of the market last year, increasing to 74.5% this year, even with a 1% share decrease for Huawei this year, and when including the top 5 5G base station providers, the share increases to 89.5% last year and 89.0% this year.  There has been a drive to reduce the global reliance on this relatively limited number of 5G base station suppliers by creating ‘Open RAN’ alliances that would enable the use of COTS hardware and non-proprietary software, however given the concerns over security fomented by anti-Chinese politics in the US, such movements have difficulty addressing security protocols that would create open RAN networks that would be considered as safe as those developed by those indicated in Figure 1, along with the fact that not every country implementing 5G is convinced that Chinese 5G base station providers (Huawei and ZTE (000063.CH)) have created a system by which the Chinese government may eavesdrop on conversations or data moving across the network, and with China growing its base station count and coverage faster than any other country, Huawei and ZTE and be assured they have access to a growing market, even if they are excluded from the US and other allied countries.  Its good to have a population of 1.45b in some cases.