As we get closer to the holiday season we focus more resources on CE spending and with the amount of uncertainty that overhangs the CE market, getting a handle on consumer sentiment is an important goal.  Most important is how that sentiment is influenced by  trade rhetoric and politics and how much is strictly financial.  We try to base conclusions on broad surveys that are able to pinpoint sentiment, particularly relating to consumer electronics, and how it has changed over the course of the year.  The survey we highlight below (excerpts) was taken in June of this year, roughly one quarter past, which we use as a baseline for understanding how and by how much the current view of consumers has remained the same or changed.  Over the next few weeks we will be digging further into the spending plans of consumers during the holidays, in order to get a better picture of how the actual holiday season will play out in the CE space.
Data
In June of this year the consumer electronics market in the Americas saw a 22% y/y increase in  traffic which translated into an 18% y/y increase in sales.  In EMEA the traffic increase was 12% but was fully converted into a 12% increase in sales.  APAC saw the least traffic growth at only 3% but was able to convert that traffic into 12% sales growth.  Most surprising were the consumer electronics growth categories, as the CE category that grew the most between June 2024 and June 2025 was refrigerators with 19% growth y/y, followed by a somewhat more expected category, smartphones, which grew 12% y/y.  Here are the rest:

More specifically, the June survey asked whether, over the last six months, you have spent more or less on consumer electronics.  The survey was a bit cagey with the answers as they combined “Spent More” with “Spent the Same”, giving only the total for the combination.  This makes the data a bit less useful but does give a hard number for “Spent Less”.

The follow-up to that question was the same but referencing the next two months July & August, typically relatively slow months for CE spending).

Certainly a more conservative outlook from global consumers for the summer months, and  indicating a bit of CE ‘gloom’ that seems to develop after the relatively robust 1st half.
 
The June survey data on consumer confidence was a bit trickier in terms of classifying the responses.  The survey asked which of these 5 categories would you, as a purchaser of consumer electronics, fit into?  We tried to combine the 5 into three (Up, Flat, Down) but they don’t quite fit the broader categories, so here’s the actual data.

As this survey was done in June, tariff talk was at a different stage than it is currently.  This prompted the question, “Have you made any big-ticket purchases in consumer electronics in preparation for upcoming tariffs?”.  Those having already made big purchases in anticipation of tariff issues were in the minority globally and on a country basis, with the US being the highest.  Here’s the data:

​All in, while there was no indication of a rapid decline in consumer electronics spending there were signs that the mood was slowly souring a bit from the consumer’s perspective.  While tariff talk were still a major factor, we believe the constant pressure of inflation continued to weigh on consumer’s CE spending, especially as the only real ‘new product’ enveloping the CE space was AI, and thus far, while many use it regularly, few seem willing to pay for it, other than businesses or those with very specific needs (Illustrators, Video content producers, etc.).  What was (and still is) is needed is something to catch the eye of consumers and get them excited about something more than a slightly larger camera or a cobalt blue phone instead of a Prussian Blue phone.  Smart glasses could do the trick, but it might take another major player to push that over the top this year…more to come.

​Back in May after trade discussions with China in Geneva, it was stated by both the President and a WH officials that a preliminary framework was reached with China concerning rare earths.  While the details were never revealed, the objective was to remove a number of export restrictions that the Chinese government had placed on the export of rare earth materials, particularly magnets containing rare earths.  Those trade restrictions were implemented by China in response to tariffs the administration had placed on Chinese goods entering the US.  The implication was that China would be resuming shipments of these materials to the US based on the US lowering tariffs on Chinese goods. 
It seems those negotiations did not produce the desired results as last night China reinstated a number of those trade restrictions, requiring a case-by-case review for and Chinese entity trying to export a number of rare earth materials, including the equipment needed to mine, process, or refine the materials themselves, and added a few new ones.  Specifically singled out were magnets:

• Neodymium/Iron/Boron magnets, which are the key component in hard drives.  They are also present in speakers, smartphones, and wind turbines.
• Samarium/Cobalt magnets which are used in high-temperature applications such as aerospace, military and medical
• Cerium, which is not a primary magnet material but is a primary component of Nickle Hydride batteries used in hybrids and portable tools.

The Chinese rules seem to indicate that all requests for export licenses for these materials will be denied if the destination has any overseas military implication or if the intended recipient is on China’s own control or watch lists.  That is an indication that these rules are in response to the US extension of its Entity List to include all subsidiaries of any company on the list.  Along with the rare earth restrictions, the Chinese edict includes restrictions on all logic chips 14nm or smaller and all memory chips with 256 layers or more.  Many of the restrictions go into effect immediately with the remainder starting 12/1/25.
While some of this could be Chinese and US posturing before the proposed meeting between President Trump and Xi Jinping, leaving some room for concessions, the necessity for rare earth materials and magnets is profound in the US with a number of major industries critically dependent on a constant supply .  As China is the primary source of US rare earth imports (2024 – 74% by value & 84% by volume) China has substantial leverage, and while it seemed, according to the WH, that a deal had been reached previously, it does not seem to have resonated with the Chinese government who has now more closely linked rare earth trade to China’s objectives in the semiconductor space.  The more the US limits China’s access to advanced semiconductors and tools, the tighter the limitations on rare earths become. 

It seems that its time for Jeff Bezos to retire.  He has been very successful and changed the way the world shops, but according to tech press pundits, it’s over.  It all because ChatGPT (pvt) announced “Instant Checkout” last week that some imply will put Amazon (AMZN) out of business.  Behind the hype is OpenAI’s ‘revolutionary’ application, which allows the user to ask the chat to recommend an item, and (drumroll) purchase it without leaving the chat!  No more does one have to open another window to buy the product, they just have to press the ’BUY” button in the chat and of course, pay for it, without all of that additional stress of opening a new window (“Having to do all that work makes me very sad and nervous!”)

Currently Amazon has 1.9m active sellers, 9.7m 3rd party sellers and, by some estimates almost1m 1st party sellers that operate under Amazon fulfillment.   ChatGPT has Etsy (ETSY), and while the make-up of the merchant base of Amazon and Etsy could not be more different, Etsy is thought to have over 5.6m active sellers.  If you want to buy a TV you can on Amazon but not on Etsy, unless it’s a home-made TV, but if you want to buy a sweater for a German Shepard with the word “Woof” on the side, you would go to Etsy, so the difference is night and day.
On Amazon, you have some idea of the criteria used for product placement and ranking, which are essentially recommendations; Sponsorship, reviews, and some mysterious Amazon algorithm.  ChatGPT is a black box, which makes it considerably more difficult to know if the recommendation is tailored to you or to another agenda, but be that as it may, in either case you have to make the final choice.  That said, you can buy as many items as you want on Amazon, while the ChatGPT service is single item only, at least for now.  ChatGPT is also working with Shopify (SHOP) to add their sellers to the service through Stripe (pvt), but as yet Shopify is in the ‘supported’ mode and not quite available to the public through the chat.
From the merchant’s standpoint the big selling point is ChatGPT’s ~800m MAUs, an attractive proposition, although more than likely all of those users have access to the vendor’s website directly, so it is hard to value that connection.  Vendors will also have to find their way in the ChatGPT recommendation ranking to become meaningful, and that is a difficult job, especially against a hoard of other vendors.  If a vendor knows it is rarely or never going to be the ChatGPT recommendation, its almost not worth the sign-up, or the ‘small fee’ that OpenAI will charge (unpublished amount) the vendor if the transaction is completed.
We don’t mean to be critical, but just because OpenAI developed the application doesn’t mean it will change the world.  Not everybody huddles into a ball and hides in a corner when they have to do something like opening a 2nd window on their phone and Amazon makes it very easy and convenient to make purchases, so we shouldn’t expect Amazon to shrivel up a die a quick death, especially if Amazon is able to develop its own version of the Instant Checkout app, or even decide to absorb the ‘small fee’ OpenAI charges and become an Instant Checkout vendor.  The OpenAI product is once again, a convenience (aka ‘productivity improvement’), not a game changer, and a good agentic system should be able to improve your shopping workflow even better.
Here are the instructions you give you Ai agent to do the same thing:
“I am interested in purchasing a 65” TV.  I am not sure whether to buy an LCD TV or an OLED TV and I don’t know what brand to choose.  Can you do the research, make 5 recommendations, listing the pros and cons of each.  When I make the choice, please go to the site and fill out the purchase form.  I will enter the credit card info and you can execute the purchase and send the receipt to my e-mail.  The price should be between $900 and $1600 and it should be deliverable within 5 days.”
 It will do a better job on the research….

Samsung (005930.KS), as the leader in both OLED display and semiconductor memory production, is the envy of competitors and the object of those wishing to take a shortcut to success by stealing sensitive information from the company.  Most recently three former Samsung employees were indicted in South Korea for leaking Samsung’s DRAM manufacturing process to Chinese semiconductor memory producer ChangXin Memory Technologies (pvt), China’s largest domestic DRAM producer.  We note that Changxin is a state controlled entity with the Hefei Industrial Investment Fund and the National Integrated Circuit Industry Investment Fund (aka ‘The Big Fund’)[1] as the largest shareholders.
The indictment indicates that the employees were recruited by CXMT to join a team that was verifying and testing DRAM manufacturing processes and were promised salaries that were up to 5 times higher than what they were earning, up to $2.14m/year according to the court documents.  The processes they were testing were allegedly stolen from Samsung by the Samsung employees and passed on to CXMT. 
This is not something new for Samsung, despite its numerous precautionary measures, which include HDAs and non-competes, no data transferred to flash drives, strict physical access control, the disabling of smartphones upon entry to all Samsung facilities, and most recently a limit of prompt size to 1024 characters for AI (after an accidental leak through ChatGPT (pvt).  Here are a few other Samsung breeches.

• 9/2024             Two Samsung execs accused of stealing 20nm DRAM technology and setting up a company in China with the data – Value $3.2b
• 7/2024             Samsung Display engineer convicted of stealing optical system plans for laser annealing and OCR tech to set up competing company – Value $24.5m
• 6/2023             Samsung exec and 6 employees accused of stealing factory blueprints and clean room designs. Attempted to duplicate the factory in Xian, China – Value $233m
• 2/2023             Seven employees of SEMES (pvt), a Samsung equipment affiliate, stole blueprints and component lists for a semiconductor cleaning tool.  Formed company and sold 14 units to Chinese customers – Value $60m
• 11/2021           Samsung researcher photographed 17 automated factory operation and digital display IP documents with a phone – Value $180m
• 11/2018           Executives of Toptec (108230.KS), a Samsung supplier, sold 3D lamination tech for flexible OLED displays to a Chinese company – Value $134m

What makes the most recent breech interesting is that CMXT announced in 2023 that it had become the first Chinese semiconductor company to produce 18nm DRAM, which was seen as a big step forward for the Chinese semiconductor industry.  The prosecutors in the current case, which originally took place in 2018, allege that CXMT’s technology announcement was not based on their own development but the DRAM process that was stolen from Samsung,  It’s hard to prove such an allegation without hard data from CXMT, which might be difficult to come by, but be on the lookout for a former employee of Samsung named Park, currently the subject of an Interpol Red Notice, who was suspected of copying hundreds of Samsung’s DRAM process steps for CXMT.


[1] ‘The Big Fund’  is a mandatory investor in all strategically important Chinese semiconductor projects.  It is financed and controlled by the central government.

Smartphone brands are constantly trying to adapt to what is an extremely competitive environment.  Each year almost every brand has at least one major model release, and those with more extensive lines, can have two or three, with a number of brands also developing sub-brands  to maintain a certain brand image, while broadening their reach with consumers.  For instance Chinese smartphone producer Xiaomi (1810.HK) produces it own ‘Redmi’ smartphone line but also produces the ‘POCO’ brand of mid-range smartphones and the ‘Black Shark’ line of high-end gaming phones.
As consumers’ wants evolve, brands must adapt and offer a more or less diverse line of phones to broaden their customer base.  In some cases this means segmenting price points or feature sets, but shipments and share are the goalposts in the smartphone business and new models must perform or they drag down the brand and eat into profits.  The planning for new models is a complex issue as it rests on both the expertise of the brand’s marketing department and the company’s technical ability to satisfy evolving customer needs.  While brands can test new devices internally, using staff and focus groups, given the competitive nature of these products and the number of folks trying to get a peek before release, much depends on the expertise of the internal organization and even the most experienced product developers sometimes miscalculate, as it is very easy to convince oneself that such decisions are correct when your job depends on it.  The table below shows how Samsung’s Galaxy line models have evolved over the years.

Last year, years of progressively disappointing sales of the Galaxy S Plus series pushed Samsung to develop the Galaxy S25 Edge with the intention of substituting the Galaxy Edge for the Galaxy S Plus in 2026.  Unfortunately the sales of the Edge, which was a modified Galaxy S25+ that was 1.5mm. thinner, 27 grams lighter, had a bigger main camera, and a bigger battery for $100 more than the S25+.  Expectations were high pre-release, but early sales were disappointing, and Samsung seems to have set very low production volume for the remainder of the year for the S25 Edge, especially relative to the Galaxy S25+, which it was thought to be replacing next year, and the top Galaxy sellers, the S25 and the S25 Ultra.
According to industry sources here are the expected production volumes for the period between September and December:

• Galaxy 25 Edge                         300,000
• Galaxy S25+                               500,000
• Galaxy S25                                 2,900,000
• Galaxy S25 Ultra                       3,400,000

This substandard performance for the S25 Edge seems to have put the Galaxy S26+ program back into next year’s development lineup.  The question is whether Samsung has enough long-term confidence in whether the S26 Edge will sell more if the S26+ is not released.  Right now it seems they are hedging their bets by developing all four models, but it seems counterintuitive to release both the S26+ and the S26 Edge next year as they are quite close in price and function. 
Actual mass production for the displays begins later this month, although both the Galaxy S26+ and the Galaxy S26 Edge will use the same display, making early orders less dependent on a final decision.  That said, Samsung usually announces the upcoming Galaxy S series line in late January to early February, so a decision does need to be made soon.  The default would be to produce all four, but with the company trying to squeeze as much margin as possible out of the mobile division, three would likely be more profitable if they could boost sales for whichever model is chosen.  As both the S+ and the Edge sit between the Ultra and the standard Galaxy S, price will be more difficult to maneuver, which means features will likely be the selling point without overshadowing the Ultra.   No pressure…

Buying a TV is a chore.  TV brands list dozens of features many of which are esoteric and undecipherable for the average buyer and having sold TVs and stereos many years ago, one learns that there are many tricks retailers use to ‘enhance’ the look of in-store TV demos. Salespeople range from overly technical  (an 82 year-old grandmother, replacing a 24” CRT TV does not need to know about the quality of the upscaler) to overly folksy (My cousin bought this one and his wife loves it), with fiscal influences always in the back of the salesperson’s mind.  Even in stores where salespeople do not work on commission, memos about certain brands with ‘more attractive margins’ tend to influence recommendations and don’t always jive with what might be best for the customer.  We are not saying that salespersons are misleading, but bias is not easily controlled and can be a silent influencer.
Doing research on TVs for the average consumer usually consists of finding one or two sites that list ‘the best of…’ and jotting down a few names and model numbers, or (hopefully not) reading product reviews on Yelp (YELP) or Amazon (AMZN).  Most disconcerting to us are the TV ads that point to ‘Huge discounts’ or ‘big price drop’ that are meant to give the consumer the impression that they need to buy right away or they will lose those discounts.  The common practice is to always state the current ‘discounted’ price against the MSRP (Manufacturers Suggested Retail Price).  This tends to be the price point of the model’s initial release, which in most cases is the highest price the TV will ever see, so a ‘30% price drop’ rarely means a drop from wherever the set was priced most recently, but more likely a 30% drop from the MSRP.  Technically, despite how misleading it might be, this 30% discount could put the set at a higher price than its previous price point but it is still considered legitimate advertising (read the small print).
All of this makes one wonder  how much timing really matters when buying a TV, as it seems many influences can move prices up and down in an almost random pattern, yet nothing can be further from the truth.  TV pricing has a very specific yearly trajectory and pattern, which consumers should understand in order to make the ideal TV purchase.  Here are a few points to remember:

• Don’t buy on product release
• New TV models are typically released in 2Q, which means last year’s models tend to be the most attractively priced in 1Q
• Holidays are your friends when buying a TV
• Short-term discounts tend to be less important than the time of year
• Lowest price points for TVs (Premium) occur between day 300 (~October 28) and day 330 (November 26).
• TV set prices can go up quickly in December

We have been tracking all models of Samsung’s (005930.KS) Premium TV line (8K & 4K Mini-LED/QD, QD Only, and both QD/OLED and WOLED) since 2021 and the data proves this out.  So unless you are looking to buy a set for a specific event, it makes sense to have patience.  On a normalized basis, across Samsung’s entire TV line (Excluding OLED) from 2021 to 2024, having the patience to wait until late October/Early November would result in  a 26.8% average savings.  We note also that the 2025 year, as can be seen above, has been an anomaly, as even normalized prices have run above the average for the first half and below the average for the 3rd quarter.  Attribution for this unusual behavior is hard to pin down to a particular source, but we expect the bulk of the higher pricing is a result of both the monetary and psychological impact of US tariffs; less so from the tariffs themselves and more so on collective impact, with a dash of “everyone is expecting prices to go up, so let’s increase them.”  That said, we expect that prices across the Samsung line will decline in-line or greater than the norm for the remainder of the year.

​Note:  In order to compensate for new and deleted models and  feature changes we bring each year’s starting MSRP to a single point.  This normalization tracks throughout the year and allows for a better comparison as to how line price changes are occurring throughout the year and how they compare to previous years.  Again, this data is for Samsung’s Mini-LED/QD, QD only lines and does not include OLED.  OLED data is available on request.
While the data is helpful to consumers, it is also helpful to inventors who own public panel producer and display infrastructure investments, however we note that panel producer performance is greatly influenced by the build cycle rather than the buy cycle, with each product category having  specific periods during the year as to when new products enter production and inventories are being built for sale points during the remainder of the year.

The US National Defense Authorization Act (H.R. 3838 -119th Congress) is a massive appropriations bill that sets policies and authorizations for fiscal 2026 for the DOD, security programs for the Department of Energy and the Maritime Administration, and authorizes appropriations for the Defense Nuclear Facilities Safety Board and the Naval Petroleum Reserves.  Most importantly here, it modulates the US defense acquisition system to expedite the delivery of capabilities and materials to our Armed Forces.  The House of Representatives recently passed an amendment to this vast appropriations bill that could have relevance to the CE space.
While the final wording has yet to be published, what we have seen indicates that the bill could bar the Armed Forces from purchasing displays, particularly ‘advanced displays’, such as OLED or more specialized display modalities, if they are backed by the Chinese or Russian government.  Again the exact wording is important and yet to be revealed, but that could easily mean that any Chinese display producer that is receiving government subsidies could be considered to be ‘supported’ by the Chinese government and banned, and we believe all Chinese panel producers receive at least some government subsidies.
Using this amendment, the government could ban all display purchases from Chinese panel producers, giving an advantage to Samsung Display (pvt), LG Display (LPL), both based in South Korea, Sharp (6753.JP), based in Japan, and AU Optronics (2409.TT) and Innolux (3481.TT), both based in Taiwan, along with a number of small panel producers outside of China.  More specifically,  relating to OLED, the amendment would allow the US to ban both large and small OLED displays from all six Chinese OLED producers.  While the DOD categorizes display purchases by program, making it difficult to get a total display spending budget for a particular year, estimates for this year are substantially over $1b. Whether the US government will choose to use this amendment as a bargaining chip in its ongoing trade negotiations with China is yet unknown, but they have it in their pocket if the need it.

Smartphone brands are always under pressure.  They need to compete with other smartphone brands on a feature-by-feature basis and are often unpleasantly surprised by a new feature from a competitor that they had not prepared for.  The success or failure of a particular feature or application can make or break a model for an entire selling cycle and can give a new brand a blackeye that they never recover from (see sidebar).  Given the pressure facing designers and the deadlines involved, it can be seen that some of said problems are the fault of overpromising features that failed to live up to the hype or others that have been pushed out to consumers in a not-quite-ready state in order to meet a deadline or compete.

Red Hydrogen
Red was a highly regarded  professional video camera producer.  The assumption after a year of delay, was that the company’s initial smartphone would blow away the competition with a spectacular camera and a holographic display.  It turned out to have a mediocre camera, a fuzzy display, and a $1,300 price tag.  It ended the RED smartphone line at one model.

​Blackberry Storm
Blackberry ruled the smartphone world until Apple released the first iPhone on late 2007.  Blackberry’s had built-in physical keyboards, while the iPhone had a virtual keyboard.  The Blackberry Storm, released in 2008 was the first Blackberry to have a virtual keyboard.  The unit sold well initially but the keyboard did not work properly and almost all 1.5m had to be replaced by Verizon.

In some cases, usually software related problems, fixes were made with OS updates relatively quickly, while others, with more pressing hardware issues, required more ‘stringent’ fixes.  This is not a company issue, as it has happened to almost all smartphone brands, leader Apple (AAPL) and Samsung (005930.KS) included, along with smaller or long-past brands (see sidebar).  That said, while all brands fall pray to these problems, brands tend to react to them differently, and with the influence of social media, things can escalate very quickly into a marketing nightmare.
Apple faced one back in 2010 with the iPhone 4 (Antennagate).  It seems that by holding the phone in your left hand your finger ‘connected’ two parts of the internal antenna causing the signal to fail.  Apple never reported the number of units replaced but we expect it was a substantial number.
In 2016 Samsung released the Galaxy Note 7, and within a few weeks there were reports of the device overheating and catching fire.  This prompted a recall of 2.5m units and the replacement of 500k devices.  Samsung eventually recovered over 96% of that model after cancelling it entirely.
Since then there have been many smartphone release issues, and we expect the need to meet deadlines has shortened the time brands are able to test phone hardware and applications in real world situations, so these issues will never go away.  That said, Ai adds a new flavor to the mix, and one that will be even harder to control than in the past.  As AI is both a standalone application and embedded in applications, the core AI architecture is pervasive across the smartphone and an issue with the AI function can be magnified by that connection.  Apple is facing such an issue now, with the release of the iPhone 17 line which includes Apple intelligence.  Only days after the release reports of three issues have surfaced.

• Scratch issues – It has been reported that the anodized aluminum frame on the iPhone Pro models is prone to chipping and scratching as the anodizing is weak at corners.  Keys or coins can cause bits of the anodizing to come off.  This year’s models saw a return from titanium frames to aluminum, and it seems the anodizing process is not perfect.  Apple acknowledged the issue but says that what users are seeing is not permanent scratching but a ‘material transfer’, essentially residue from other objects (keys and coins again) could leave marks, some of which can be wiped away.   No comment on the ones that cannot be wiped away.
• Connectivity (iPhone 17) – Wi-Fi issues which can cause skips in audio and disconnections when using iPods.  The problems is thought to be an issue with Apple’s N1 chip, which means an immediate fix is unlikely but certainly a relatively small problem.
• Apple Intelligence – Apple Intelligence, which normally would supply ‘smarter suggestions’, ‘contextual insights’, and empower other creative tools, does not seem to be working for everyone.  This is common to all four models.  The AI continually askes users to download the application even though it is already present, with some stating that it started when the asked the system to revert back to the Siri animation from the previous version.  Apple is aware of the bug and is thought to be working on an update but has advised users to try reinstalling Apple Intelligence, forcing the ‘settings’ application to close, or re-signing in to their Apple ID, although none of those fixes seems to work for all users.

All in, every new smartphone has some issues, but brands tend to be quite defensive about them, rather than defuse the situation by making things right with a ‘We acknowledge that there might be an issue with XYZ, but we are working on a fix that will satisfy the small number of users who are experience the issue.”  Rather than evade the problem or belittle the users that reported it, this says the company understands that there is an issue, but it only affects a small number of users and is being worked on presently.  If it is big problem, like that with the Note 7, that is another story.

75 years ago a disc jockey in LA, NY or Chicago could latch on to an unknown record and play it over and over as part of the regular rotation.  Folks would call the station asking who that was and where could they get it, and within a few days the record was a local hit.  As the record industry grew more sophisticated promotion became a faster and more expansive way to gain a following and local hits became regional hits.  Today it is not uncommon for promotion to start far in advance of the actual release.  Then there is social media, where almost anything can gain cult status if it happens to appeal to the ‘share’ crowd.
While Ai is certainly a topic on social media, AI models have yet to reach social media in that same ‘share’ mode, or have they?  As avid users of image generators, we are constantly looking at the improvements made in consumer image generators, and on a practical basis we test those models almost daily.  Most are free and easy to use, but few make headlines and rarely do image generators become the topic of conversation on social media.  But that has changed recently with Nano-banana, the code name for the most recent consumer oriented image generator imbedded in Google’s Gemini AI.
Nano-banana’s real name is Gemini 2.5 Flash Image, the successor to Gemini 2.0 Flash which was the successor to Gemini Imagen 3 and Imagen 2.  We note that Imagen 2 was released at the end of 2023, Imagen 3 in August of last year, Flash 2.0 in February of this year and Flash 2.5 (Nano-banana) in June, so the releases are getting closer together and are constantly being leapfrogged by their own developers.  We also note that other than Flash 2.5 (the banana) none of these releases or the models behind them became social media sensations, most likely as when it comes to a discussion about image generation models or what your BFF said to the head cheerleader at the last big game, the models don’t usually win out.
So we flash back to the old days and how a mixture of timing, a good beat, and repetitive promotion could take a song to the top of the charts.  All three had to be working for the record to click.  So what made nano-banana a hit, and by hit we mean usage far surpassed any of the other Gemini image generator releases in just weeks?  It didn’t cost anything, but neither did the previous models.  It was accessible as part of Gemini, but so were the others, and it was a natural language model making it easy to use, as were the others.  Nano-banana had one feature that changed it from a footnote in the lore of image generation models to a social media hit with a funny name and that was consistency.
Before Nano-banana when one entered a prompt into an image generator, say “Create an image of a man and a woman sitting beside a pool with a large mansion behind them” that’s what you got.  But if you realized that the mansion needed some foliage and perhaps some outdoor furniture, when you added that request to the prompt, you got the foliage and the furniture but the man and woman were usually different, sometimes even after you said, “keep everything else the same”.  The models lacked consistency from one image to the next and that was a significant challenge for the average user. 
Nano-banana has the ability (most of the time) to maintain things like faces across multiple iterations of an image, which allows even an unsophisticated user to place their face on a runway model image or keep the man and woman by the pool consistent while you adapt the background details.  When images using the Flash 2.5 model began to appear on social media, they created a sensation that not only made Nano-banana the most popular image generator to date, but also brought new users to Gemini.
Does this mean that a new industry will develop dedicated to the promotion of new AI models?  Stranger things have happened, but what it really means is that a unique function and promotion (in this case social media) can create a hit in the same way local disc jockey’s could in the 1950’s and 60’s.  So rather than always searching ‘faster than the competition’ or ‘smarter than the competition’, model builder should be searching for ways to remove the simple bottlenecks in applications that make using them a chore or a ‘learning process’.  Make it easy to use and it will generate its own media attention with just a bit of gentle social media stimulation, and if it is really good, its name will change from Image generator 3.65b to a flasher “Pixel Pear” or “Binary Blueberry”.  It’s a strange world…

Component lead times are among the best indicators of the balance between supply and demand and present an undeniable picture of how those trends develop.  As an adjunct to our note on component pricing from last week, we point to the data on automotive and non-automotive lead times presented by TechInsights which shows how automotive component lead times, that were so long during the COVID epidemic as to halt automobile production, reached ~15 weeks last year and have continued to slowly decline during 2Q to 12 weeks, after a small rise (12.9 weeks) in 1Q.  Non-automotive component lead times rose a bit in 2Q, from 12.7 weeks in 1Q to 13.2 weeks but remain above the 12 week level.  In 2Q every individual automotive component group saw declining lead times, with RF Semiconductors and desecrates showing the least declines (2% to 3%) and power MOSFETS and clock timing semis showing the greatest, between 12% and 13%.
New vehicle sales are the primary driver for automotive semiconductors, however this is a global market, meaning a pickup or decline in US new car sales is not the only driver of the automotive semiconductor market as sales in other markets, such as China (#1 position in units), Japan, India, and Germany can offset trends in the US market.  However, the automotive component debacle during the COVID crisis has caused component buyers to change their philosophy from JIT (Just-in-time) during the pre-COVID era to JIC (Just-in-case), a more conservative philosophy that leads to higher inventory levels to ensure component availability regardless of circumstances.  These higher inventory levels have led to the shorter lead times seen in the last 18 months and continues to keep lead times from expanding drastically during short-term demand cycles.

All in, automotive components are a special class of electronic devices that have unique applications in vehicles, especially hybrid or all-electric vehicles.  Components like SiC MOSFETs, DC-to-DC converters, or MCUs are among the highest value components outside of the battery pack and motor, and might have longer lead times (typically closer to 20 weeks or more) than more generic automotive components, but the general tone of lead times for automotive components has changed as buyers and supply chain managers still have a strong impression of the COVID years to keep them focused on JIC, and while automotive component lead times still react to global and local automotive sales trends, the overall lower lead times reflects that lasting impression.