​According to comments by a Foxconn (2354.TT) manager, the company plant in Zhengzhou, known as “iPhone City” has worked its way back to ~90% of its peak capacity, or so says local state media.  As we have previous noted, the factory was faced with both worker protests and a rapid loss of workers as the country’s leadership remained steadfast in its COVID-19 lockdown policies last year.  Foxconn has been offering pay and bonus incentives to draw back workers or hire new ones, but until the government loosened lockdown policies, the factory remained underutilized and large customers, particularly Apple (AAPL), faced shortages as production slowed.
 
November sales for Foxconn were down 11%, with the Zhengzhou plant and while that is important to the company, the production numbers from that plant contributed ~60% of the import/export flow for the entire Henan province and ~80% of the same for the capital city of Zhengzhou, with half of the province’s import/export value being from mobile phones during the 1st three quarters of 2022.  That said, the December number from Foxconn will prove out whether the return to near full production rings true, as state media tends to paint a rosy picture, but the Chairman of Foxconn did tell employees in his New Year address that 2022 was a challenging year but warned that 2023 “…may see a more difficult and challenging path…”

​While we have mentioned the issues that Apple is facing in the EU in relation to the fact that Apple uses a proprietary charging and data transfer connector/system, the reality is that those issues will likely change the way Apple connects to the outside world globally.  With a hard deadline of 12/27/24, Apple will then be required to support the USB-C standard in the EU and considering the additional cost of producing some Apple devices with USB-C and others with Apple’s Lightning connector, we expect the change will be made for all Apple devices. Apple already uses the USB-C connector on its MacBooks and iPads, so the concept is not new to the company, but the iPhone remains the target for the EU, which will have to change its connector by the deadline.
 
There have been rumors on a regular basis since 2020 that Apple will shift some (premium likely) models to USB-C before the deadline, however there seems to be no rush on Apple’s part to make the change.  With Europe overall averaging  ~24.1% of Apple’s total revenue, second only to the Americas (46.3%), over the last two years, Apple can ill afford to continue to fight the change, but there is another way Apple can avoid the issue, even after the deadline date.  Apple does have the option of going wireless, meaning that both charging and data transfer would be done without a wired connector, and would thus avoid the controversy.  This would be a far more radical step and could have implications for those with older iPhones who want to preserve data when transferring to a new iPhone, but it is certainly not out of the realm of possibility for Apple, and would likely be a positive longer-term solution given that the concept of wireless charging has been developing since 2012, and over 1B smartphones(installed base) have wireless capabilities. 
As of the end of last year 22% of smartphones in Europe had wireless charging capabilities (21% in North America), and while the elimination of any other means of charging would be a big step, it is not as radical as it might seem.  We have no knowledge that Apple is pursuing that path, so we cannot make such an assumption, but we would expect that the general direction would be to eliminate any connector over the long run, if for no other reason than to reduce costs and create space for other hardware features.

​Apple (AAPL) has been a leader in promoting customer privacy and back in 2014 moved from a security system that had a master key to one where a user passcode was combined with a unique encrypted key that was not accessible to Apple.  The thought was that this would remove Apple form situations where the previous master key was being requested by local or governmental authorities to unlock phones owned by lawbreakers, terrorists, or serious felons.  By championing privacy, the company hoped to sidestep controversies involving the collection of private data by the government, such as those leaked by Edward Snowden, and moved the responsibility for personal data security to the consumer who became the responsible party for individual data security.
Apple has made continued improvements to its personal information security over the years and the controversies flared again during the early days of the COVID-19 pandemic when health officials wanted to use Apple devices for contract tracing, particularly location data, which was again refused by Apple.   In recent months Apple has added options such as ‘lockdown mode’, which can be implemented if a user suspects that his data security has been compromised.  The system limits areas where attacks might occur, blocking many functions, particularly shared functions, to limit access from outside penetration. 
Apple has just added a number of new security functions, some of which are for those in sensitive positions, such as journalists, politicians, or other government officials, but all can be implemented if a user wants another layer of security.

• Message Contact Key Verification – This option automatically alerts the user if an ‘adversary’ breeches cloud servers, even though the server data is encrypted.  The service can also be used to verify a contact code through a 2nd secure call, in order to make sure the primary contact is valid.
• Security keys for Apple IDs – This service adds 3rd party hardware to the 2 factor authentication already in place, to ensure that an attacker who is able to phish the 2 factor security, will face an additional hardware device, such as a plug-in fob or NFC device held by the user that would be impossible to phish unless physically stolen.
• Advanced data protection for iCloud – Apple adds end-to-end encryption to nine more categories of data stored on iCloud servers, including device backups, message backups, notes, photos, and voice memos, as a default, but there are still a number of iCloud storage types that are not fully encrypted.  iCloud mail, contacts, and calendars are not fully encrypted as they need to operate with global systems that would not be able to work through such security protocols.

We do not expect these extensions of Apple’s already obvious personal privacy policies will change the potential for the battle between law enforcement and Apple’s focus on privacy, but with each privacy improvement Apple moves more of the security responsibility from itself to the consumer and that does make it considerably more difficult for legitimate law enforcement to utilize data held by perpetrators on Apple products.  No matter what system is devised to find a balance between personal data security and preventing serious crimes or terrorism, some will try to abuse that balance for personal or political gain, making its legitimate use all the more difficult. 
Apple is right in assuming that corporations should not be the ones making personal security decisions, but at the same time, putting it in the hands of the government is not a wonderful alternative, and while personal data and information security should be controlled by the user, it is easy to see how that can also be abused.  We certainly don’t have the answer, but this battle is really over the value of individual rights and that has been an ongoing question in the US since way before 1776 so a few moves by Apple are unfortunately not going to answer any questions or change minds, but they should make users more cognizant of how their personal data is stored, if nothing else.

​As we noted previously Foxconn’s (2354.TT) smartphone assembly plant in Zhengzhou has faced continuing COVID restrictions that have limited its ability to assemble the iPhone 14 family.  In October the wait for delivery of some iPhone 14 models was extended by two weeks and in November, extended for another week.  It seems that while the iPhone 14 and the iPhone 14+ are available for store pickup or same day delivery in China, the iPhone 14 Pro and Pro Max are seeing delivery dates that extend in January.  The iPhone 14 and iPhone 14 + displays are produced by Samsung Display (pvt), LG Display (LPL), and China’s BOE (200725.CH), while the iPhone 14 Pro and Pro Max displays are produced by Samsung Display and LG Display.
With ~15% of iPhone sales occurring in China, and the same issue facing both orders placed on the Apple store (on-line) and other local e-commerce sites, potential customers have been vocal about the delays on social media, especially as most are used to Apple delivering before the promised date in previous years.  Foxconn’s plant, which employs up to 300,000 workers during peak season, is said to be short by ~100,000 currently as many left at the onset of the lockdown last month.   Apple’s warning about delays in shipments seems to have not satisfied Chinese consumers but little data as to cancellations has appeared, so we expect most will complain about their deliveries being pushed past the end of the year, but there is little that can be done until Foxconn is able to restore full service in Zhengzhou. 

It has been a difficult year for smartphone component prices and a difficult year for smartphones in general, following a number of slow growth years for the overall smartphones space.  Apple (AAPL) has been a standout in that the company has been able to grow share over the last few years while volume leader Samsung (005930.KS) has seem no appreciable share growth.  Apple plays a more subtle marketing game in the smartphone space, limiting offerings to a very small number of models each year and paying little attention to the ‘feature race’ that is common among smartphone brands.  Rather than try to ‘out-feature’ its competitors, especially its biggest competitor, Samsung, who is also the leading smartphone display supplier to Apple, the company focuses more on style, performance, and building a large ecosystem that both feeds iPhone sales and is also fed by the same.

The ‘feature race’ is a function of the fact that the cost of components for a steady state smartphone built in 2018, should decline over time as new suppliers compete against entrenched suppliers for Apple share, and along with that axiom, comes consumer attitudes that tend to see lesser values in features as they become commonplace and are therefore less willing to pay a premium for features that are ‘last year’.  Brands, particularly Samsung, given its vast resources (captive display, captive semiconductor memory, etc.), are constantly adding features, especially to high-end or flagship models to entice consumers with the latest, greatest, or most talked about features.
Apple tends to be a laggard when it comes to features, with the company’s adoption of OLED, a slow process that was years behind other leading brands, but at the same time the company does considerable research in key areas and has bought a number of companies over the years that allow Apple to develop some of what it believes are key components, or at least have a prized research team/IP.  An example is Apple’s focus on its “Face ID” system which it unveiled in 2017 on the iPhone X.  Over 10 years ago Apple began working on developing the technology, purchasing PrimeSense (pvt) in 2013 and InVisage (pvt) in 2017 and has maintained its use since.  On that same premise, Apple has spent years working toward developing its own processor and in 2020 it replaced incumbent Intel (INTC) with its own M1 chip, produced by Taiwan Semiconductor (TSM).
By bringing the chip design in house Apple can better control both its capabilities relative to the demands of iOS and key Apple applications, and its overall performance, one of Apple’s ‘differentiators’, and while iPhone performance has always been a selling point, better performance is a key driver for the devoted Apple fan base that is always ripe to criticize competitor brands’ more generic applications, slower performance, and overcompensation with features that are plentiful but are little used.  While the A Chip series certainly is a differentiator, it also carries a cost, and Apple’s relentless push toward higher performance goals adds a bit to the BOM relative to a more generic processor or even its own predecessor.
Given that component costs have been on the rise over the last 18 months one would expect Apple to pass on those rising costs to consumers, however the high-end smartphone market has become less elastic as prices moved above $1,000 in 2017, however when looking at the iPhone Pro Max, the top end of the iPhone line, the price has not changed between 2018 and the current iPhone 14 Pro Max and remains at $1,099 base price.  During that time, the BOM has varied, with more sophisticated communication hardware, larger batteries, and more plentiful suppliers.  Apple has had to make up the margin impact of these component BOM changes in other places, such as negotiating lower assembly and shipping costs by establishing production closer to fast growing markets or by redesigning the physical aspects of the iPhone line, but in 2020 Apple stopped supplying chargers with new iPhones, which rang the bell indicating that Apple was pushing hard to maintain iPhone margins.
Component BOM for the iPhone Pro Max has varied between -4.4% and +5.2% from the mean during the period between 2018 and 2021, but soaring component costs this year have pushed the component BOM of the iPhone 14 Pro Max up 14.1% from the 2018/2021 mean, or 2.7 times the largest change over the period. Some of this can be attributed to the A16 processor that Apple is using in the iPhone Pro and Pro Max (iPhone 14 and iPhone 14+ use last year’s A15 processor), which is produced by TSM on a 4nm node[1].  While reviews seem to indicate that the faster clock speed and other features of the A16 give it a slight edge over the A15, most say the differences are negligible.  With the A16 system cost rising from ~$45 (A15) to ~$110 (A16), based on recent teardown analysis, the performance boost is an expensive one and coupled with other more expensive components, the base component cost has reached new heights.


[1] Actually a 3rd Generation 5um node

 Apple will need to make up this incursion into iPhone Pro Max margin in other places, as materials and component prices, while having come down from recent peaks, are still a cost burden.  We expect that Apple has negotiated price concessions with a number of key component suppliers by committing to higher unit volumes, which led to headlines a few months back about Apple increasing order volumes for older iPhone models along with the pre-release orders for the iPhone 14 line, a viable strategy at the time.  That said, as the macroeconomic picture deteriorated over the last few months it is getting more difficult for any smartphone brand to develop an increasingly optimistic view of the remainder of the year, which could lead to Apple having to reduce 4Q supplier expectations and lessen those volume discounts. 
There is still time for a big iPhone 14 advertising push into the holiday season, but it looks like it will be a bit more difficult for Apple to maintain iPhone 14 margins at the same level as the iPhone 13, especially as the performance differences between the iPhone 14/14+ and the iPhone 14 Pro/Pro Max seem to have encouraged consumers to lean toward higher than expected volumes of the Pro/Pro Max, which likely carry lower overall margins relative to the lower-end iPhone 14/14+.  There is one positive behind all of these component machinations, and while it will do little to help Apple financially, a look at the source of the iPhone 14 Pro Max components reveals that 32.4% of the total component BOM are sourced in the US, up from 22.6% last year, while all other regions saw component share declines.

Samsung Display (pvt) has been the exclusive supplier of LTPO based displays to Apple (AAPL) since the company began using the more advanced TFT process for two models of the iPhone 13 last year.  As high screen refresh rates are desired by consumers to keep fast moving images from smearing, device designers also had to deal with the fact that those higher refresh rates mean the images on the screen are redrawn more often each second, with draws more power from the device’s battery.  LTPO (Low-temperature Poly-Oxide) is a combination of LTPS (Low-temperature poly-silicon) and IGZO (Indium Gallium Zinc Oxide) backplane solutions, and is able to allow high refresh rates as well as low refresh rates, which gives the device designers the ability to create a ‘variable rate’ device.  Such systems can sense the resolution of an image stream and tailor the display’s refresh rate to meet that need, so the device can run high resolution images when necessary, but can also throttle the refresh rate to very low levels for text or other slow moving images, saving considerable battery resources.
Apple is credited with the development of LTPO and has used it in the Apple Watch since 2018, but it was used in Samsung (005930.KS) smartphones (Note 20 Ultra) in 2020 and a number of Chinese brands before Apple began to migrate to the technology last year.  The process for producing LTPO is more complex than either of the two processes from which it is derived and that complexity gave Samsung Display the first mover advantage for LTPO, especially in 2021 when it was the sole supplier for the iPhone 13.  This year however, LG Display (LPL) has been working toward adding LTPO to the displays it provides to Apple and had to go through Apple’s rigorous qualification process to join rival SDC, which took longer than expected, leaving Samsung Display as the sole OLED display supplier to the iPhone 14 Pro Max and the iPhone 14 Pro until the end of October.  From that date forward LG Display can now provide LTPO displays for those models, in addition to the two LTPS models it previously supplied, which will reduce SDC’s shipment levels and give a boost to LG Display’s mobile OLED display business, which took a hit when parent LG Electronics bowed out of the mobile phone business last year, especially as the two LTPO models have proven more popular than expected.
BOE (200725.CH) remains a supplier of the iPhone 14’s two LTPS models, but has been working toward improving yields on its LTPO production, although we expect they will likely not qualify this year.  That said, there is the possibility that BOE could get LTPO qualified for the iPhone 15, which would eat further into SDC’s dominant position.  While this is certainly a factor, yield is still a major consideration, and SDC’s long experience as an LTPO producer will likely leave them as the highest volume supplier, but the addition of LG Display and potentially BOE will likely put pricing pressure on SDC going forward.  We expect this will trickle down through the component supply chain in 2023, with purchasing leverage moving from SDC to LGD and BOE, and Apple able to make progress in lower display costs.
 

​In June we noted that Foxconn (2354.TT) had been offering aggressive bonuses to workers at its Zhengzhou assembly plant known as “iPhone City”, where it employs over 200,000 to assemble iPhones and similar Apple (AAPL) products.  The incentives were offered to assuage worker fears that COVID restrictions might keep them at the plant for an extended period of time and limit their ability to travel to their homes when not working.  Last week we noted that the Zhengzhou government had done just as the worker’s feared and locked down the city, with many workers having anticipated the move and left the plant days earlier.  Foxconn provides for the workers that remain on campus with dormitories, food, and a few stores, but communal meals and other typical amenities are restricted.
Early indications pointed to Foxconn’s ability to transfer some of the Zhengzhou workflow to its assembly plant in Shenzhen, which faced its own closings in March and July, but was still operating at normal capacity.  In our note last week we calculated that while the issues in Zhengzhou could push out delivery times, they would not substantially impact 4th quarter iPhone shipments, though in worst case could push some sales into 1Q ‘23.  It seems that we were wrong as Apple made the following announcement this morning:
“We continue to see strong demand for iPhone 14 Pro and iPhone 14 Pro Max models.  However, we now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated and customers will experience longer wait times to receive their new products.” 
While we expect there might be a bit of the general economic macro malaise built into that statement, it seems more workers than expected anticipated the lockdown and took off before the restrictions began, leaving the factory at lower capacity than we had expected.  Apple did not give specific targets for 4Q iPhone shipments, but street expectations seem to be concentrated between 50m and 55m units for this year.  Apple’s previously had an optimistic view of iPhone shipments, as in June the company was said to have increased orders for iPhone components from suppliers by 5%, and during the pre-order period that started September 9, early pre-orders, especially for the iPhone 14 Pro and Pro Max, were said to be ahead of the corresponding iPhone 13 models released last year.  With this morning’s iPhone statement and what is likely another week+ of lockdown in Zhengzhou, the lockdown seems to be having a greater impact than we originally thought.  Our estimation of an 11.2m unit shortfall seemed high at the time and a bit extreme, but today’s comments from Apple make it less so.

​Taiwan based Foxconn (2354.TT) is a massive employer in China with 12 factory complexes, the largest of which is located in Longhua Town in the city of Shenzhen, which has come to be named “Foxconn City” and covers 1.2 mi2 within its walls.  Many workers live in the dormitories and walk to the 15 factories within the ‘city’, which has its own stores, restaurants, banks, and hospital, and while numbers vary considerably, the lowest worker count we have seen is ~200,000.  Foxconn also has a similar ‘city’ in Zhengzhou, said to also employ ~200,000 workers, which is also known as “iPhone City”, as much of Apple’s (AAPL) iPhone line is assembled at the Zhengzhou complex.
Late last week the local government informed the management of the Zhengzhou complex that the city would be placed on lockdown due to an outbreak of COVID-19, limiting travel.  This forces workers to stay ‘on campus’ in the dormitories, as the factories are allowed to continue production under a ‘closed loop’ system, meaning no one leaves the complex.  As this was a situation that developed rapidly, it seems Foxconn was caught off guard and did not have the resources needed to feed and house the entire staff of workers.  Under lockdown rules workers were not allowed to eat communally in the company cafeteria, and were forced to eat in the dorms, which caused conditions to be difficult early on. 
There have been a number of news stories and videos about workers jumping over fences in order to leave the plants for fear of being caught in a COVID outbreak or unhappy about the poor living conditions, so Foxconn began to increase weekly bonuses to workers from ~$14/wk. to ~$55/wk., and for those that worked for more than 25 days, the bonus was increased from ~$205 to ~$685.  Those that put in “full effort”, meaning remained on campus for the entire period, could earn a potential ~$2,054 bonus, against a typical worker salary of between $410 and $550/month.
Over the last two days there have been videos circulating social media saying that there have been 8 deaths at the Foxconn Zhangzhou plant during the lockdown, which Foxconn denies under the premise that the videos were ‘doctored’, but the real question is how much the issues at Foxconn will affect iPhone 14 family production.  Recent estimates indicate that the plant’s output could be reduced by as much as 30%, due to staff shortages caused by workers leaving, but some of that shortfall can be transferred to the Shenzhen facility, which faced two closings this year in March and July but is currently not under lockdown. 
Quick math based on historic Apple iPhone shipments would indicate that Apple would typically ship 85.97m iPhone units in the 4th calendar quarter, as each quarter this year has been up between 2.5% and 3.2% y/y.  Taking the mid-point of that spread generates the 85.97m units for 4Q (cal.).  As a check, 4Q shipments for the iPhone typically represent 36.5% of the full year’s shipments, and the number above would represent a slightly more conservative 35.6% of full year, so it is certainly within reason.  As Foxconn assembles ~70% of iPhones, that would represent 60.17m units in 4Q, or 20.06m units/month.  Assuming the lockdown lasts for one month and that Foxconn’s production rate is reduced by 30%, that would represent a shortfall of 14.04m units for the quarter, or 16.3% of 4Q (cal.) unit volume.  Again this assumes a one month lockdown, a 30% volume reduction, and no shift to another Foxconn plant, all of which would likely be the worst case scenario. 
We would expect that with the unusually large ‘incentive’ payments Foxconn is offering, the volume reduction will be less than 30%, and while the lockdown could last a month, we expect it will last 2 to 3 weeks, as the company and the city are testing virtually everybody on a regular basis.  We expect Foxconn can offload ~10% of the ‘missed’ volume to the Shenzhen plant, and, in worst case, Apple could shift another 10% to other assemblers, bringing the shortfall to ~11.2m units spread across the globe.  While this is still a substantial shortfall, iPhone buyers have faced order fulfillment delays before, with two weeks not being uncommon during periods of high demand.  As Apple has been the only smartphone brand to see shipment growth last quarter, iPhone 14 family customers could see longer than usual delivery delays, but good logistics could shorten that time a bit by pulling inventory from slower sales regions.  All in the worst case scenario for iPhone 14 shipments and delivery is likely less of an issue than the news stories seem to hint at, and even our quick calculations assume a positive y/y iPhone shipment number, which is certainly not a guarantee given the macro environment, so unless the lockdown is sustained or spreads to Shenzhen, we expect it will do little to hinder Apple sales for the 4th calendar quarter, and in worst case push some shipments into 1Q ‘23

Sounds like a novel you read as a young teen, but it represents the evolution of mobile devices that we can use to make our daily lives easier.  Of course this comes with a dependency that has become ‘the silent epidemic’, but that is for another day, while right now we seem to be on the verge of a potential transition to the next level of mobile ‘convenience’ devices, the smart ring.  While smart rings are currently available from a number of brands, most of which are not recognizable names and are privately funded, but the big boys are just around the corner, sort of.
Apple (AAPL) filed its first ‘ring’ patent back in 2015, followed by Samsung Electronics (005930.KS) just two month later, with both adding follow-up filings over the years, but both were beaten by Amazon (AMZN) who released the “Echo Loop” in September 2019, only to kill the product before year-end 2020.  Apple’s ring development is said to be linked to its potential XR device while Samsung’s development path is more toward being a ‘control’ center for a variety of devices, but the ‘rings’ that are currently available are more like smart watches in that they typically measure and track a number of body functions, and potentially offer advice as to how to ‘live your best life’, meaning staying healthy, while others are far more specific to the needs of specific user types.
For instance, the Oura (pvt) Gen 3, a $349 device made from titanium and weighing between 4g to 6g, comes with 6 month of free ‘membership’ ($5.99/month thereafter) and includes an optical heart rate sensor, a blood oxygen sensor, a skin temperature sensor, and a PPG sensor that measures HRV (Heart rate variability aka Photoplethysmography), a substitute for ECG that has recently been incorporated in a number of commercially available devices, along with an accelerometer.  The devices lasts between 4 and 7 days before recharging and the membership software, aside from the data itself, gives you an in-depth sleep analysis every morning, personalized health insights and recommendations, live heart rate monitoring, and skin temperature readings to let you know if you are sick or heading into a menstrual cycle.

While the Oura is at the top of ring pricing, there are a number of other less expensive ring devices that offer more specific functions, such as the $100 McLear (pvt) ring that is designed to execute “RingPay” transactions, essentially a wallet that allows the user to make contactless purchases as if they were using a contactless card.  The company offers cash back rewards to users, which increase if you become a member, and allows multiple ‘rings’ and the ability to transfer between them, but no sensors for bodily function measurements.  One step further from the ‘measurement rings is the $58 ArcX (pvt) ring that serves as a Bluetooth joystick that allows you to control a smartphone, camera, and similar devices, while keeping the controlled device in a pocket or backpack.  You can use it to control music during a workout and even accept calls, all using one hand.

But Samsung and likely Apple seem to be taking the ring concept further and a 2021 South Korean filing by Samsung shows a far more sophisticated ring device that includes a display and is oriented toward being a control center for a variety of devices, and while it could have a variety of sensors, including photodiodes, LEDs, and a PPG sensor, the objective is to give the user easy access and control over their devices, without touching the device, through various touch and mechanical switches and dials built into the ring.  According to the patent documents the ring is able to pass on any sensor information to other devices when necessary or to evaluate sensor data and can be charged wirelessly.
The smartwatch market, the most similar to the rings described above was roughly $30b last year, so the development of any device that can feed into such a market is a given for major CE companies, and with the current crop of smart watches ranging from $60 (OnePlus (pvt)) to ~$800 (Apple Ultra), there seems to be enough interest in what is now a small and underserved market to attract some spending.  We expect much of the market evaluation at major CE companies is based on whether the smart ring market will eat into the smart watch market, but we believe the evaluation is much more complex and is oriented toward the impact it might have on the smartphone market, a cash cow for many CE companies. 
As brands face the constant battle to differentiate their smartphones, features become an important part of that differentiation, but as smartphones mature, it becomes more of a game to find something ‘new’, such as Samsung’s focus on foldable devices.  If smart rings can perform smart watch functions and allow you to keep your smartphone in your pocket for much of the day, it lessens the value of those two devices, not something major CE companies want to face.  That said, a good marketing department could latch on to a smart ring as an adjunct to a smartphone sale, as a $50 or $100 accessory.  Tablets were feared to have the potential to destroy the laptop market and yet they both exist, and foldable smartphones have been said to be the demise of tablets, but all still exist and find a niche where they provide the user with convenience, they key to CE popularity.  As we noted, a good marketing department can find a purpose for even the most worthless of CE products and based on what we have seen so far, there are certainly applications where smart rings make more sense than watches or even smartphones in some cases.