News You might have missed: Week July 6th, 2018

Intel 5G Chips allegedly dropped by Apple

Ctech reported on Thursday that Intel documents they reviewed indicated that Intel will not be providing 5G modems to Apple in 2020. Apple has notified Intel it would not use a mobile modem developed by the chipmaker in its next-generation mobile device, Intel executives said in the communications. Further development of the modem component internally called “Sunny Peak” has been halted and the Intel team that’s working on the product will be redirected to other efforts, the executives said.

Neither Apple nor Intel commented on the report.

Via Ctech

  • “Sunny Peak” is the 5G modem that Intel was developing and of course Apple was supposed to be the volume driver for Intel who thus far has not been able to secure a long list of customers for its modems.
  • Intel did comment to the Verge on the back of the Ctech report saying: “Intel’s 5G customer engagements and roadmap have not changed for 2018 through 2020. We remain committed to our 5G plans and projects.”While this contradicts the part of the report that states intel has halted developments for Sunny Peak it says nothing about Apple’s commitment. No surprise there.
  • Earlier in the year, Bloomberg reported that Apple was looking to move away from Intel in favor of MediaTek’s modems. There is still skepticism that MediaTek will be able to have a competitive 5G solution by 2020.
  • Given that Apple will have to have 5G in its devices by 2020, there are two alternative solutions to Intel and Mediatek:
    • Apple might be confident that an agreement with Qualcomm will be reached before then
    • Apple might be working on its own modems as it has been working on its own chipsets so that it will have full control of its own hardware
  • I am skeptical to see Apple betting on Mediatek, especially for its flagship iPhone. This is unless Mediatek shows an acceleration in its developing cycle.
  • Qualcomm being able to secure all of Apple’s future business might be enough of an incentive to get to the negotiating table sooner rather than later.
  • Ultimately, of course, Apple controlling its own faith by controlling every aspect of its products seems inevitable but maybe not quite possible for 2020.

Samsung’s 2Q18 Earnings Guidance

Samsung’s released earnings guidance of 14.8 trillion won ($13.2 billion) in operating profit of 58 trillion won ($51.8 billion) in revenue for Q2, which would represent a 0.7-percent decline in sales and an 11-percent increase in profit. Last quarter Samsung made 15.64 trillion won in profit from revenue of 60.56 trillion won, its strongest results ever.

Via Samsung

  • According to most financial analysts, the weaker performance, the first decline in over a year, has a lot to do with the poorer than expected performance of the Galaxy S9. Some even point to a performance that is an all-time weakest for a flagship.
  • With little differentiation in the look and feel of the Galaxy S9 over its predecessor, Samsung might have been feeling more pressure than in the past. This is particularly true in Europe and China where Chinese brands have been getting stronger.
  • Such a pressure impacts Samsung’s performance at a world-wide level, closing the gap with Apple although not taking market leadership away just yet.
  • Financially, Samsung might benefit later in the year from Apple adding OLED to more models. Of course, Apple has been said to be adding LG as a second OLED panel supplier. However, if Apple were also to add OLED to the iPad Pro there might be enough to go around.
  • Competition on the OLED side is likely to put some price pressure on Samsung which will need to secure higher volumes for balance.
  • Samsung is due to announced the Note 9, next month in New York City. As it did last year, I expect the Note to positively impact ASAP but make only a modest contribution to overall sales. This is because of the higher price the Note has as well as the more limited audience it commands.

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Carolina Milanesi

Carolina is a Principal Analyst at Creative Strategies, Inc, a market intelligence and strategy consulting firm based in Silicon Valley and recognized as one of the premier sources of quantitative and qualitative research and insights in tech. At Creative Strategies, Carolina focuses on consumer tech across the board. From hardware to services, she analyzes today to help predict and shape tomorrow. In her prior role as Chief of Research at Kantar Worldpanel ComTech, she drove thought leadership research by marrying her deep understanding of global market dynamics with the wealth of data coming from ComTech’s longitudinal studies on smartphones and tablets. Prior to her ComTech role, Carolina spent 14 years at Gartner, most recently as their Consumer Devices Research VP and Agenda Manager. In this role, she led the forecast and market share teams on smartphones, tablets, and PCs. She spent most of her time advising clients from VC firms, to technology providers, to traditional enterprise clients. Carolina is often quoted as an industry expert and commentator in publications such as The Financial Times, Bloomberg, The New York Times and The Wall Street Journal. She regularly appears on BBC, Bloomberg TV, Fox, NBC News and other networks. Her Twitter account was recently listed in the “101 accounts to follow to make Twitter more interesting” by Wired Italy.

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