The word this week is that Apple (AAPL) is going into the display business.  Headlines that Apple will be producing its own displays in order to reduce its dependance on current display suppliers, particularly Samsung Display (pvt), who is the company’s primary high-end display supplier for the iPhone.  The stories are based on Apple’s Micro-LED R&D, which is supposed to lead them to producing Micro-LED displays for the Apple Watch series in 2025 and leading to the adoption of the technology for the iPhone line in subsequent years.  The sources, based in Japan, are touting Apple’s R&D efforts in Japan and at their ‘secret’ facility in Taiwan, that has been working on Micro-LED development for a number of years., and where “…they have designed not only the driver ICs for the Micro-LED screens, but also some of the production equipment itself to better control the transfer process…”
We agree that Apple has been researching Micro-LEDs for a number of years, working with AU Optronics (2409.TT), Ennostar (3714.TT), and a number of other suppliers to develop a cost-effective way to use the technology, as it did with OLED technology, and it does with almost all other potential display technologies.  Spending ~8.3% of sales on R&D such programs at Apple are and have been extremely comprehensive, with considerable time spent evaluating the current state of display technologies, and doing original research to see if some of the stumbling blocks to mass production can be removed.  This certainly carries over into silicon, where Apple designs its own processors and a number of other more specialized chips as shown in Figure 1.
Apple, whether you are a fan or not, is known for setting high quality standards for its components, particularly displays, and those high standards have led to Samsung Display’s dominance as an Apple display supplier, given their many years of experience   in RGB OLED technology.  Apple has been especially slow to bring in new display technologies, waiting until early products have shown flaws and technical miscalculations, to avoid tarnishing the Apple image.  During the ‘learning’ period, Apple has consistently worked with such new technologies and partnered with display producers, both to develop specifications and to improve the manufacturing process.  In that regard, Apple engineers have developed tools and equipment for pilot lines and specifically approve key tools used by suppliers before approving production.
But we note that Apple is a design and marketing company, and contracts production and assembly to others.  In some cases they contribute to that production by funding the construction of dedicated facilities as an advance against future production, but rarely, if ever, is Apple a mass producer of its own components, and the silicon mentioned above is designed by Apple but produced by others, such as Taiwan Semiconductor (TSM), Samsung Electronics (005930.KS), Intel (INTC), IBM (IBM), and Global Foundries (GFS).  While we would expect that Apple will eventually move its Micro-LED R&D from the lab to use in a product, we expect Apple will source the Micro-LED display to an outside supplier, likely someone who has contributed to R&D.  As Micro-LED displays are produced using technology that is different from LCD or OLED technology and more similar to the production of LEDs, which are grown on sapphire or GaN (Gallium Nitride) and then transferred to a glass substrate, Apple’s choice of suppliers will depend entirely on both the experience of the Micro-LED producer and their ability to produce such displays in large quantities.
Given that the technology for Micro-LEDs is still being developed and mass production techniques are changing almost daily, it would be hard to know who Apple might choose to produce their first commercial Micro-LED displays, and more important, who would be able to sustain that production.  With the playing field that wide open, it is up to current display producers as to how much they would invest in the technology to reap the benefits of being a major supplier to Apple, along with LED producers who might develop the technology as an adjunct to their current LED production businesses.  If Apple were to decide it needed absolute control over Micro-LED display production, it would have to make additional investments in building a mass production facility, likely costing billions, and would be taking on the risk of managing more leverage to the macro environment.  They would lose the ability to pit one supplier against another, which they have now, that allows them pricing leverage, and they would have to carry much larger PPE on their balance sheet, so in the long run, that loss of absolute control over pricing, process, etc. would be counterintuitive to Apple’s mandate.
More to the point would be the timeline that Apple might use to develop and commercialize what it has learned about Micro-LED display production, and that will likely happen more slowly than expected, as Apple is less of a technology pioneer than a reputation marketer.  A blot on that reputation from a product glitch or a move that could alienate a loyal customer base would upset the apple cart (sorry) far more than having to maintain an over-the-shoulder position with your key suppliers, or deal with a supplier that pushes back a bit because of their dominant technological or manufacturing position.  Apple is among the most customer-centric companies in the CE space and its reputation is far more valuable than its technology in our view.  Apple’s supply chain is among the best in the space and its control over its suppliers is legendary.  Why change it to gain a bit more control?

At the end of last month we noted (4/27/23) that while there was still time for Samsung Display to decide to make its investment in a Gen 8 OLED fab a reality, time was beginning to run out.  It seems that, according to Korean sources, has created an internal organization to begin to execute plans for said Gen 8.6 OLED fab, and has begun to order equipment for same.  The new fab would be oriented toward the production of IT OLED products, with a potentially large consumer company () a likely customer over the next few years, along with parent Samsung Electronics.  When this fab is completed, it will be the first of its kind, producing RGB OLED displays on a substrate that is over double the surface area of the current Gen 6 fabs that are producing RGB OLED displays for smartphones and IT products, giving Samsung Display a volume and efficiency advantage over its competitors.
The project is expected to cost ~$3.1b US, and purchase orders are said to be released this month, starting the construction process, which has been in development for many months.  The heart of the fab will be the deposition tools, which pattern OLED materials on the substrate through fine metal masks.  These tools are typically designed for Gen 6 substrates, so tools for this larger base will have to be custom built, and as we have noted before, there has been some question as to who will be contracted to build such tools.  LG Display has aligned itself with Sunic Systems (171090.KS), but Samsung Display has yet to place an order with Sunic or the market leader Canon-Tokki (7751.JP), who developed a system that can automate a number of deposition functions, including cathode metal and organic material deposition, and encapsulation.  Samsung was said to be trying to negotiate a price that does not include development costs, which Canon wants to include.  Smaller Gen 6 systems start at ~$100m, likely putting the cost of a Gen 8 mass production system between $200m and $250m.

average guy or gal in the street might not know much about this 5-day event, or even care.  In most instances there is little reason for the average Apple user to pay much attention to what is discussed at the conference, as they will likely not see the actual changes to their devices until much later in the year if they notice them at all.  But this year could be different in that not only will Apple present developers with a new version of iOS (iOS 17), and new versions of iPad OS, MacOS, Watch OS, and TV OS, as they typically do, but the company is expected to announce the long-awaited XR headset that has been rumored for years.
Apple’s XR development program has been around in its current form since 2017, but Apple has been making acquisitions relating to AR/VR since 2014 (see below) and allows developers access to a number of tools and resources that they can use to create AR and VR applications for iOS and iPad OS and have access to the Apple Store.  But Apple itself has not championed a physical XR headset, disappointing developers and fans a number of times in the past.  The most recent ‘rumored’ device, the Apple Reality Pro, would be Apple’s entry into the XR hardware space, and would be a driver for the industry, that in the long run, would likely have even more impact than Meta’s (FB) Quest series of VR headsets, as Apple’s
hardware following, with over 2 billion active devices, to Meta’s ~20m Quest headsets sold.  Of course, Meta has over 2b active Facebook users, along with Instagram, Messenger, etc., but hardware is Apple’s thing.
If Apple does decide to make an announcement concerning an XR device, it will be to stimulate developers to build or modify apps to operate under what will likely be a new sub-OS specifically designed for Apple’s XR hardware, seemingly called xrOS.  This code will work under iOS and will allow the device to communicate and process applications that reside on a secondary device, such as an iPhone or iPad.  Making the headset a ‘non-standalone’ device, reduces the bulk, weight, and computing power on the headset itself, making it more comfortable to wear, a concept not lost to Apple developers who are likely following many Apple design mantras that are consumer oriented over technology oriented, while tethering also means at least one other Apple device must be purchased or owned for the headset to be operated.
Expectations are that the headset battery, which in some headsets is in the headset itself, will likely be external, perhaps a belt or pocket clip-on, with a cable to the headset, while the communication between the headset and the paired device could be a cable or wireless, but the Apple XR device is also expected to not sport controllers, which would be a departure from the norm.  It has been suggested that Apple will use gestures to control the headset, with a large number of cameras scanning body movements, eye movements, area mapping, and even facial expressions for information that the xrOS can use to keep the user’s field of view correct.
The displays are expected to be something close to 4K micro-OLED displays, with on-board processing through Apple’s own SoC, either the M2 or a specially designed processor, with a focus on power efficiency given the battery-driven nature of the device, but while developers will be interested in the internals, consumers will be more concerned with how it looks, how it feels, and can it do things other AR/VR headsets cannot, and the idea that the device can operate as both a VR and AR device is not new.  Other VR headsets allow a black mask to be removed from the headset, allowing it to operate as an AR device through cameras, so the proof will be in the applications themselves and how easily the headset operates. 
​As we have noted recently eye-tracking is becoming  more popular as it facilitates foveated rendering, and movement tracking are common, so it will be incumbent on Apple to devise a gesture system that is intuitive for consumers, but on an overall basis, for Apple to have a successful product, especially on that is expected to cost between $2,500 and $3,000, it must be able to provide functionality, as while there will be an initial rush from ‘I always buy the newest Apple product’ people, it better provide more than ‘coolness’, and much of that will come from applications.  While the iPhone is a well-designed device, as are most Apple products, it also serves as a communication hub for its users, and while we do not expect an Apple XR headset to become as ubiquitous as an iPhone in the near future, it has to be able to do more than play games or allow you to buy things in the Metaverse.  We keep our expectations low but our hopes high.

​It has not been lost to the press that Apple (AAPL) has been working toward moving more of its product line toward OLED displays, and all sorts of timelines for the iPad, Macbooks, and potentially other products’ OLED adoption have been bandied about.  Given that there are only a few potential OLED suppliers who are both qualified by Apple and can deliver the volumes necessary, much of the discussion around Apple’s transition has been concerning Samsung Display (pvt), LG Display, and China’s BOE (200725.CH).  With current production of OLED IT panels limited to Gen 6 OLED fabs, all three OLED producers (and some others) have indicated or hinted that they would be making investments in new capacity to support Apple’s transition, of course, without naming Apple itself as a customer.
In order to improve efficiency and volume, there has been considerable speculation that such new facilities would be Gen 8 RGB OLED fabs, which currently do not exist (LG Display has Gen 8 OLED fabs but they use a non-RGB process that is not viable for Apple’s specifications), so considerable R&D has been, and still has to be done to design the equipment necessary to make the transition to Gen 8 OLED production for Apple’s (and others’) IT products. 
Up until the beginning of this year, most predictions included Samsung Display starting construction on a Gen 8 RGB OLED fab this year, either converting an idle Gen 8 LCD fab or converting a Gen 6 line to Gen 8.  LG Display, while a bit less specific, has been expected to do the same, and BOE, has hinted that they will follow a similar path ‘as the market demands’, but the ever-shifting sands of the CE space have begun to cast askance at those plans and concomitant timelines.  The equipment needed to deposit OLED materials on the larger Gen 8 substrates takes considerable R&D to develop, and as we have noted previously, there are only a few companies with the expertise to develop such tools.  Sunic Systems (171090.KS) is working with LG Display, and at one time Samsung Display was working with ULVAC (6728.JP) on such tool development, but has since abandon that project, and is looking at the industry leader Canon-Tokki (7751.JP) as a potential Gen 8 deposition tool supplier.  However, Canon does not want to bear the cost of the tool’s development, as Gen 8 OLED adoption is still an unknown, and expects Samsung Display to pay for the development as a part of the tool price.
With the objective of reducing costs/m2, a boost to tool costs will eat away at the process BOM, and SDC has been hesitating to place the order with Canon, with a cut-off of the end of 2Q if it is to meet the goal of Gen 8 production for Apple in 2024.  But it seems not only has the cost of building out Gen 8 OLED capacity been an issue, but the trade press has taken Apple’s recent Mac sales declines as an omen that is adding additional hesitation to the Gen 8 OLED build-out for all potential participants.  We differ.
As with almost all CE products, the COVID-19 pandemic changed what was previously a relatively stable demand picture for Apple products.  Mobile devices saw some early positive momentum, but the need to communicate online became the driver for tablet, laptop, and PC sales that set volume records.  We look at the years between 2020 and 2022 as ‘aberrational’ in terms of demand and look to more normalized unit volumes as a better indicator of what we should expect going forward.  In the case of Apple, particularly the Apple Mac, a tool that is known for its use among content developers who require high quality displays, the logic holds that Apple would like to make the transition to OLED for its color purity, high contrast, and color gamut, but recent headlines from overseas are decrying the fact that Apple’s Mac sales are declining and adding to OLED panel producers’ hesitation concerning spending for Gen 8 RGB OLED fabs. 
However looking at Apple’s Mac sales going back to 2018, they average $6.35b per quarter, including the heady COVID years, which puts the last two quarters above the LTY average, despite the decline from 2022.  More specifically, Apple’s 2Q Mac sales of $7.168b, which seemed to trigger the recent press concerns, are only 1.14% lower than the average of all 2Q results since 2018, including those in the COVID years, and just looking at the pre-COVID years (2018 – 2020), 2023 2Q Mac sales are 28.7% higher than the average.
We expect SDC and LGD are most concerned about the cost of making the conversions to Gen 8 against other larger substrate transitions, rather than Apple’s near-term results, and if either company has been assuming that demand during COVID was ‘real’, we have misjudged both companies.  Spending the billions necessary to build out a Gen 8 OLED infrastructure for IT was a risky business before COVID, during COVID, and will be after COVID, but those decisions tend not to be made on near-term issues, as they are bets that will play out over many years.  SDC does have the cost issue to settle with Canon, especially as LGD has aligned with Sunic Systems, but we expect that has more to do with the timing of Samsung Display’s decision than the relative decline in Apple’s Mac sales over the last two quarters.

According to sources in South Korea, which does tilt the story a bit, China’s largest panel producer, BOE (200725.CH) will only be supplying OLED displays for one model of the iPhone 15 to be released later this year.  While both Samsung Display (pvt) and LG Display (LPL) will be producing LTPO displays for the iPhone 15 Pro Max and iPhone 15 Pro, BOE is expected to be supplying displays only for the iPhone 15 model, rather than both the iPhone 15 and the iPhone 15+.  Samsung will be taking up the slack with the iPhone 15+.
BOE has had an up and down relationship with Apple (AAPL) concerning OLED displays, with a number of failed attempts to get on Apple’s OLED display provider list, which has been the exclusive territory of Samsung Display and LG Display.  BOE did supply Apple with replacement OLED displays, sort of a test run for inclusion and was able to convince Apple that it had the technical and volume capabilities to supply LTPS OLED displays for the iPhone 13, released in September 2021, and the iPhone 14, released in September of last year, a point that has been emphasized by the Chinese press innumerable times.  That said, BOE made a catastrophic mistake by changing the design of a TFT backplane in order to improve yield, without getting the change approved by Apple.  We assume that the change was made in order to bring yields to levels necessary to satisfy Apple’s demand requirements.  This caused BOE to be put in the penalty box for the iPhone 14, limited to only producing OLED displays for the iPhone 14 6.1” model and that seems to still be the case with the iPhone 15.
It had not been expected that BOE would be supplying OLED displays for the high-end iPhone 15 models (Pro Max & Pro), as they require LTPO backplanes, a process for which Samsung Display has the most expertise and capacity, along with LG Display, who also has LTPO capacity, but it was expected that BOE would expand its OLED display supply to both LTPS models (iPhone 15 and iPhone 15+), which, at least at this time, does not seem to be the case.   
While there is still time for things to change, as production for this year’s iPhone release does not usually start until July/August, there is also the fact that Samsung has warned BOE that it has been infringing on certain of its OLED patents, and while Apple would therefore be involved in an infringement case, if SDC were to bring the dispute to the courts, there is the possibility that Apple has limited BOE’s participation in the iPhone 15 for both reasons..  While we expect the Chinese press will spin the less than expected participation in the iPhone 15 in a more positive light, and BOE could stack the deck a bit by lowering its quote on the iPhone 15+ displays, but Apple has always been a stickler for suppliers meeting their stringent specifications, both technical and volume related, so it might be a bit more difficult for BOE to change the situation that with other customers, but we note that BOE is about as determined to challenge SDC’s and LGD’s OLED leadership as anyone could be and seems to have a massive amount of energy and will toward making its relationship with Apple continue to grow.  Essentially, they don’t seem to take no for an answer and rejection only seems to spark the company to work harder toward achieving that goal.

​Key = Light Blue – LTPO -  Gray – LTPS

​Rumors and speculation continue to swirl around Apple’s (AAPL) plans for its entry into the world of AR/VR, with a multitude of hardware and options ranging from a relatively expensive (neighborhood of $3,000) and/or a low-priced alternative to compete with mass market VR headsets such as the Oculus (FB) Quest 2 or the Pico (pvt) Neo 3.  Apple’s entry into the AR/VR market will be a watershed event for the industry, but we see a trend that will blur the lines between AR and VR over the next year or two.  Currently there is a distinctive difference between headset designs for AR and VR, with AR headsets trending toward almost normal looking eyeglasses and VR headsets still more massive and obtrusive.  The technology behind AR was developed to combine the user’s view of the outside world, and an artificial image that can be superimposed on a normal visual image.  VR systems do not use external visual images, and in fact, require a darkened, enclosed space inside the headset to be fully effective.
This dichotomy is obvious in most cases but we have noticed that both VR and AR headset developers are more extensively looking over their shoulders and wondering if they each might be missing out on something.  In the vase of AR, we have seen a few systems that include technology that can darken the image an AR user sees, emphasizing the artificial overlay and reducing the impact of the pass-through image.  As the display overlay systems become more sophisticated in AR headsets, it seems AR developers are trying to gain at least some access to VR, albeit in a rudimentary way, as the AR market develops broader applications.
The same seems true for VR, where a number of systems either allow the user to remove the light blocking cover typically seen on VR headsets, which allows the system to function like an AR device, at least in a limited capacity and other systems use pass-through cameras to mix the outside world with VR.  While it might seem that giving a VR headset the ability to be used for AR is overkill, we expect the VR case is more likely used to allow a VR user the ability to intermittently ‘see’ someone or something in the user’s location, without removing the headset, but we expect the trend toward such mixed use devices will continue, making data collection a bit more difficult as AR and VR devices move toward each other’s home ground.
We believe both AR and VR headset developers will continue to improve this ‘mixed reality’ feature set and over the next two years, while there will still be dedicated AR and VR headsets, a greater number of new releases will gravitate toward becoming mixed reality devices, in order not to miss an unexpected growth path of application classification, and while Apple’s entry into the space seems to be inevitable, we expect Apple will be careful not to limit their market specifically to AR or VR.  Perhaps that might not be the case with the company’s first AR/VR iteration, but we believe Apple is smart enough not to pick a side and hope that consumers agree.

Trackers have always been a part of history, with the tracking of animal food sources playing a pivotal part of human existence, but as technology has developed, particularly after the Russian satellite Sputnik was launched in October 1957, scientists and engineers realized that they could calculate location based on satellite location, and eventually launching atomic clocks into space that laid the groundwork for GPS satellite systems that are used today.  The global GPS system relies on satellites that are placed precisely 11,000 miles above the earth and therefore orbit once every 12 hours, but there are a number of global  satellite systems beside GPS (run by the US Department of Defense), such as GLONASS (run by the Russian Federal Space Agency), Galileo (run by a number of EU countries), Beidou (run by the Chinese government), IRNSS (run by the Indian government), and QZSS (run by the Japanese government).  Many of these systems have both military and civilian users and have become essential to the military as they are the basis for many targeting systems, while in civilian use, they tend to be used for geo-location and asset tracking.
As technology continued to develop, particularly with the popularity of smartphones, other tracking systems have been developed, although there are many GPS tracking devices and systems available to both individuals and commercial users for a variety of uses and prices, ranging from ~$30 for a 2.3” tracking disc and software, to larger and more powerful devices that can be used to track assets such as cars and shipping containers.  As these devices are powered internally, they have a finite lifespan, which runs from 1-2 weeks for a device that is always on and sending notifications, to 6 months for those that operate in low-power mode, with more limited communication ability.
A small company, Tile (LIFX) had been producing consumer tracking devices using Blue-tooth low-energy tracking since 2013, which had a range of ~100’ but included a system where any Tile user who was within 100’ of a lost Tile device would trigger an anonymous message to the owner, giving the location without the non-owner knowing (known as “crowd GPS”).  The idea was to attach a Tile tracker to common devices, such as keys or a TV remote, to make sure they were always able to be found, however, in 2019 it became apparent to developers that Apple (AAPL) had included in its iOS 13 release, a number of references to a product then known as B389, which fit with rumors that Apple had been developing a personal tracking device that would operate under iOS and use Apple’s in-house U1 chip that appeared in the iPhone 11. 
The Apple system used a different technology called UWB or Ultra-Wideband, which differs from standard radio transmission and Bluetooth, both of which use narrow frequency bands and transmit data continuously.  UWB broadcasts a signal that is pulsed but occupies a large frequency band, allowing it to be more powerful and carry more information without interfering with other devices.  This increased power is spread across a wide frequency band and appears as noise to other receiving devices but allows the system greater range as shown in the table below.

While other major CE brands have come out with their own UWB trackers, and a number of smaller companies continue to supply devices,  Apple is so ubiquitous that we expect they dominate the space, although we are hard pressed to find accurate shipment numbers for the entire UWB tracker space or for Apple’s AirTags.  Most estimates center around 20m units in 2021 and an expected 35m units last year, but there is little hard data that can be verified.  That said, there seems to be a resurgence in the idea that Google (GOOG) will be joining the UWB tracker race with its own tracker. 
The project, supposedly titled “Grogu” or G10, after the character in “The Mandalorian” TV series, is part of the company’s “Find My Device” initiative.   As Google purchased Nest (pvt) in 2014, the idea of a more connected home is essential to Nest’s success and in a 2022 Android update, Google included code that made obvious the company’s intention to popularize UWB by giving Android developers UWB hooks into the OS.  That said, we suspect the initial UWB focus was to enable connectivity between Nest and Google devices, such as to allowing a Google smartphone used as a music source, to move from one room to another, with speakers in each room able to instantly recognize the source and seamlessly continuing to play the music. 
We note also that the Google Pixel 7Pro (10/22) and the Pixel 6 Pro (10/21) smartphones are both UWB enabled, and while we have no real timetable for Google’s entry into the UWB tag market, the logic seems apparent.  With Android supporting ~70% of the of the smartphone world, Google has a more reasonable chance of encroaching on Apple’s personal tracker dominance than most others, and while the iPhone network gives life to Apple’s AirTag abilities, if Google releases its own tracking device, it will eventually have access to all Android phones that have UWB capabilities.  It is a bit of a chicken and egg scenario, but Google’s Android share gives them a good shot going forward.

​Yesterday we noted that an ITC judge had issued a preliminary final decision concerning a patent infringement case brought against Apple (AAPL) by Masimo (MASI), a major producer of pulse oximetry sensors.  In the ruling, Apple was said to have violated one of four Masimo patents with the ITC ordering a ban on the importation of the Apple Watch 6.  The ruling now goes to President Biden for his review, and should he sign the ruling after the 60 day review period ends, Apple will be forced to agree to a royalty arrangement with Masimo, or stop selling the Apple Watch 6 in the US.  It seems that on December 22 of last year the ITC also ruled in favor of a patent infringement suit against Apple by AliveCor (pvt), the producer of the KardiaMobile™ heart monitoring device that is advertised on TV, determining that Apple had violated two AliveCor patents and issuing both a cease & desist order and a $2 bond on any devices that are imported during Apple’s PTAB (Patent Trial & Appeal Board) hearings.
The Masimo suit seems like it is coming to a conclusion however we expect considerable lobbying to avoid an outright ban on the Apple Watch 6 before the President’s decision, and Apple will have the right of appeal with PTAB again if the president does sign off on the ban, so things could take some time before they are resolved.  The ITC bond is suggestive of what Apple might wind up paying per unit if the infringement is upheld, and Masimo has another suit against Apple in Federal Court concerning an additional 10 patents it believes Apple has infringed upon, so there is considerable pressure on Apple to resolve the Masimo ITC issue with an agreement that would include any other potential infringement legalities.
While license fees for both suits will do little to reduce Apple’s massive cash position, it seems that Apple’s licensing practices are a bit unusual in that before they wind up licensing a patent, they incur years of legal fees in addition to the eventual per unit license fee that would be backdated to the original violation date.  Its hard to know how the legal fees compare to the license payout, but it seems that reaching an agreement before the product is released seems a better plan.  Of course, every small company with IP will try to squeeze money out of a company with such vast resources, but we expect most would rather negotiate down a bit than spend years and considerable cash litigating against Apple’s legal team that will be happy to appeal any unfavorable decision ad infinitum. 

On Tuesday, a US International Trade Commission issued a determination in the case of Masimo/Ceracor vs. Apple (AAPL) that was part of an investigation requested by Masimo (MASI) in June of 2021.  The case involved the pulse oximeter sensor system in the Apple Watch 5, which Masimo and Ceracor (pvt) believed violated certain patents that the companies held.  The original complaint indicates that Masimo, who is said to have discovered how to reliably measure arterial oxygen saturation without drawing blood and developed and sold a number of pulse oximeters using the technology, met with Apple in 2013 in reference to integrating the technology into the Apple Watch.  After the meeting Apple began hiring Masimo employees, including the company’s Chief Medical Officer, and in 2020 released the Series 6 Watch, which Apple claims can measure arterial oxygen saturation.
Masimo has been seeking an order from the US ITC barring the importation of the Apple Series 6 watch or components and any other wearable devices that use light-based pulse oximetry from Apple.  The company alleged that Apple has infringed on one or more of 5 patents held by Masimo, as has requested a cease and desist order prohibiting Apple from ‘engaging in the importation, sale for importation, marketing and/or advertising, distribution, offering for sale, sale, testing, use after importation, sale after importation, or other transfer within the United States of those devices and components.’  The suit goes on to specify that the Series 6 watch claims to measure blood oxygen, giving it ‘the appearance of a medical device’ but hid the fine print that indicated that the blood oxygen measurements should not be relied upon for medical purposes, which the suit alleges is concerning to public health and safety.
While the initial final ruling is confidential, all 343 pages of it, we believe the judge ruled that Apple had violated one of Masimo’s patents which puts the importation of the Apple Watch 6 in jeopardy, although the remaining 4 patents were clear of violations.  What makes this case a bit unusual is that last November the US District Court for the Central District of California ruled that Dr. Marcelo Lamego, a Masimo engineer that also served as the CTO at Ceracor, a Masimo spin-off, was guilty of violating his employment agreements concerning confidentiality, having stolen multiple Masimo trade secrets, when he left the company in 2014 to work for Apple. , eventually starting his own company that developed a wireless wearable pulse oximeter.  The ruling force Dr. Lamego to abandon 12 patent applications that contained Massimo trade secrets and enjoined the sale of his company’s wireless devices, as the trade secrets were the foundation for the device’s sensing features.
While the case remains open with Apple, there is an investigation as to the relationship  between Apple CEO, Tim Cook and Dr. Lamego, with attorneys for the plaintiff requesting that Mr. Cook testify in court in March, while Apple is requesting a full review by the ITC.  It is not an easy task to get the courts to take such drastic action as to stop the importation of a popular consumer device, but Masimo has at least one the first round in what will likely be a drawn out battle.  In the interim, Masimo says it will take on Apple in the consumer market by providing an ‘accurate and continuous health tracking’ device of its own to the public, as seen in Figure 1.

​Taiwan-based Wistron (3231.TT) is said to be in talks with India’s largest conglomerate Tata Group (pvt) to sell its 2.2m ft2 factory outside of Bangalore that it has used to assemble iPhones for Apple (AAPL).  The deal, which is rumored to be worth ~$600m, would give Tata access to the Indian government’s next round of incentives, which begin in April.  The plant employs over 10,000 workers and while ownership would pass to Tata if the deal is completed, Wistron would remain an iPhone service partner in India. 
Tata has been working toward both increasing its technology exposure and its ties to Apple, having expanded operations at its component factory in Hosur, where it produces components for the iPhone, and committing to opening 100 Apple stores across India, the first of which opening this quarters.   Tata is working toward assisting the India government’s plan to build out the country’s manufacturing capabilities to compete against China’s manufacturing dominance, which has been hindered by its stringent COVID-19 rules and other anti-China sentiment.   The Wistron deal would move at least some iPhone assembly from Taiwanese assemblers to in-country production, although the majority of iPhone assembly in India is done by Foxconn and Pegatron (4938.TT).  Wistron is selling the facility to further its transition away from low-margin assembly toward higher margin server-related manufacturing.