Tech.pinions

When Apple introduced the Apple Watch, they initially positioned it as jewelry that also told time and a few health features.

However, over the last three years, Apple has added many health and fitness features to the Apple Watch, most recently adding ECG and Blood Oxygen monitoring.

Since Apple introduced the Apple Watch and made health monitoring a reason for it to exist, I have wanted two other distinct health features.

The first is related to blood sugar readings for people with diabetes. I have been a diabetic for over 25 years, and at least three times I day, I had to prick my finger to see what my blood sugar readings were and adjust my insulin dose accordingly.

About five years ago, I began using the Dexcom Continuous Glucose monitor to monitor my blood sugars electronically and do away with the pinpricks.

The Dexcom Glucose monitor consists of a sensor patch that I place on my stomach with two tiny prongs that get inserted into my belly that analyzes the interstitial fluids to read my blood sugars. That sensor is connected to a Bluetooth transmitter that then sends that reading to my iPhone, and through the Dexcom app on my Apple Watch, I can see what my blood sugar readings are 24/7.

Three years ago, Apple hinted that this type of blood sugar reading might be able to be done via some special light sensors in an Apple Watch someday, and I admit that I got excited about this prospect. Although my medical insurance covers 50% of the Dexcom product cost, I will pay about $1500 a year for my share of the Dexcom bill.

At CES, a Japanese startup, Quantum Operation, put a glucometer into a watch. Although this was a prototype if indeed Quantum Operation has solved how-to but a blood sugar sensor that uses light to get blood sugar readings, this would be a breakthrough.

Three years later, Apple still has not found a way to add this feature to the Apple watch, although I have seen recent reports that this feature could be in the new Apple Watch later this year.

Samsung is also planning to add blood sugar testing light sensors to their watch shortly.

This would be a promising development that suggests a light sensor-based blood sugar solution could be built into smartwatches in the future.

The second feature that I wanted in the Apple Watch has been for it to read my blood pressure. I had a triple bypass in 2012 and need to take my blood pressure daily. Some attempts to do this with smartwatch bands make the smartwatch bulky since it uses the band like a BP cuff to expand like traditional blood pressure readings you get in a dedicated blood pressure monitor.

At CES, Biospectal showed off its Biospectal OptiBP, which lets a person use a smartphone camera to measure blood pressure. This technology was introduced last fall, and Forbes did a great piece on this product launch of what I consider a highly important health monitoring technology.

If you have been to any doctor, you know that taking your blood pressure is one of the first things they do in any visit. This is because it can tell them a great deal about a person’s heart health at the center of many medical conditions.

This company used CES 2021 to highlight it. The company said a recent independent large-scale clinical study from Scientific Reports in Nature validated Biospectal’s OptiBP ability to measure blood pressure with the same degree of accuracy as the traditional blood pressure cuff. It uses the smartphone’s built-in optical camera lens to record and measure a user’s blood flow at the fingertip in half the time it takes with a traditional cuff (about 20 seconds). I could not find the minimum smartphone camera requirements to allow for this type of BP test. However, I suspect more recent smartphone cameras could be used for this. OptiBP’s proprietary algorithm and optical signal capture methods turn light information into blood pressure values by optically measuring blood flow through the skin.

The Biospectal OptiBP for Android app is in public beta and available now in the US, UK, France, Germany, Spain, and Switzerland. Biospectal OptiBP for the iOS app is planned for release later this year. The company said that interested participants could register for the public beta or sign up to be notified once Biospectal OptiBP becomes available in their country.

These are breakthrough developments that bode well for wearable health monitors and gives me hope that sometime soon, Apple, Samsung, and others may be able to add these two new health-monitoring features to eventual smartwatches and even fitness trackers.

Helping Intel stay in the semiconductor manufacturing game should be among one of the highest priorities for all US-based technology companies. While TSMC is the leader in manufacturing process technology, they remain a geo-political risk should China decide to enforce its will on the region. Samsung is not far behind, but being a Korean company, again, future politics guarantee no safe bets. Having a leading semiconductor company founded and based in the US is incredibly strategic given how critical semiconductors are to our digital future. Apple may be one of the only companies that can help Intel right the ship.

Why Intel is in this Position
It took a combination of slowing CapEx spends for leading-edge fabs and technical hurdles transitioning from one process node to the next for Intel to now be two process nodes behind TSMC and Samsung. As I wrote for subscribers last week, there are reasons for Intel to hold out hope internally that their process and their architecture are good enough to keep their current course. But when you analyze how Intel got here, it hangs heavily on the volume of premium and cutting edge semiconductors moving to Arm and not x86.

At its best, the x86 market is a 330-350m a year in total shipments for client and server CPUs. Arguably, only a small fraction of that market sells at premium price points necessary to justify the investment in cutting edge process technology. Once upon a time, Intel was increasing their CapEx annually and roughly every 18-24 months, building out a new foundry for cutting edge process. As the PC market matured and refresh rates dramatically slowed, it made it harder for Intel to justify the CapEx for leading-edge nodes on a two-year cycle, and thus they moved more to a 3.5 to a four-year cycle.

The story is a bit different with Arm. When you see the economics of smartphones and the sheer volume of annual smartphone shipments ~1.2 billion, with premium smartphone sales being ~300-350 million (compared to 60-70m for PCs), it is easier to see how this market was large enough and economically stable enough for TSMC to keep investing in leading-edge process technology so aggressively. But, while few may want to admit it, Apple is a big reason TSMC is able to confidently keep investing in cutting edge process technology. Because the bottom line is, you need to have a customer(i.e., product demand) to justify the investment. Apple is a big enough customer of premium smartphone chips and thus worth it for TSMC. Intel alone is no longer a big enough customer of premium PC and server chips, and thus their ability to spend on leading-edge fabs suffered.

The hard truth for Intel is the x86 market alone is not big enough for Intel to justify the CapEx for leading-edge foundries. And that challenge is compounded by the fact that Apple was Intel’s largest customer for premium x86 chipsets, and now Apple has moved to Arm, and x86 chips are not Apple’s future. If Intel continues in the foundry business, they have no choice but to make chips for other customers, AND they need to be a full Arm foundry. Something they attempted and failed at for a variety of reasons. There is where a joint venture between Apple and Intel could be strategically beneficial to both companies.

How Apple Helped TSMC Achieve Process Leadership
I don’t want to dismiss the technological achievement of TSMC by being the first foundry to 7nm, 5nm, and likely the first to 3nm. Anyone who knows transistor designs knows how hard it is, at a micro level, to keep shrinking silicon. However, Apple helped make it easier for TSMC to justify the RND and CapEx costs and to continually invest in leading-edge process technology by being their largest customer, always committing to the latest node. I am not convinced TSMC would have the clear lead they do in process tech without Apple.

As a customer of supply chain components, Apple likes to buy in advance, in bulk, and write big checks to secure pricing and inventory. This played a role in TSMCs confidence to keep striving and investing in cutting edge foundries. While there is no official joint venture between Apple and TSMC at a foundry level, it is a deep partnership. TSMC has committed space, equipment, and supply to Apple. Even if not a JV or partnership on paper, it is very close to that in reality. But, TSMC is the only game in town for Apple to build their A series and M series chips on the leading-edge process. And this is where the real risk comes in and why Apple may want to have Intel as a plan B.

TSMC and Geopolitics
There is no secret among semiconductor insiders that TSMC, based in Taiwan, is a strategic technology asset for both the US and China. It is also no secret, China is spending large sums of dollars trying to develop semiconductor independence, and a lot of that strategy hangs on their own local foundry, SMIC.

If you follow the news, there are worries of increased tension between China and Taiwan. Taiwan is independently governed. But China considers it part of its territory. While a lot of my logic is game theory at this point, should China consider TSMC essential to their plans for semiconductor independence, which would also grant them semiconductor leadership, it is not out of the realm of possibility that China could officially reclaim the region. Nearly every technology executive dealing with the supply chain I know has been worried about this and I’m sure it is on Tim Cook’s radar as well given his deep knowledge of the Asian supply chain.

In that scenario, the risk for Apple and the many other companies who manufacture their semiconductors with TSMC is China either prioritizing their needs at TSMC over others or cutting off supply as a whole. Again, not a great business, but not out of the realm of possibility given how central semiconductors are to our digital future.

Samsung is another option as Samsung Semiconductors is rolling out their 5nm solution, and it appears to be quite good. Samsung Semiconductors also makes chips in the US at a foundry based on US soil, and Samsung as a backup is a viable option. Unless, of course, semiconductors’ importance does indeed become a national strategic asset for the future, and thus Korea decides to pull Samsung back locally. Even if one doesn’t buy Samsung is geopolitical risk, should the worst-case scenario happen with TSMC, Samsung would be in a position to be the only leading-edge fab companies like Apple, Qualcomm, Nvidia, AMD, could use and could create price hikes and supply constraints.

Back to Intel
What I’m laying out is a worst-case scenario, but it is a plausible scenario. Intel is the only future-forward guarantee to a foundry from the perspective of US-based companies making computing devices. And because Apple is the largest purchaser of premium semiconductors on the cutting-edge process, Apple is the best positioned to do a joint venture with Intel to help them invest in future nodes and secure space in their foundries for all their future Arm-based products. This would position Apple to make their Arm-based chips on US soil with a US company.

A move like this would be highly strategic and beneficial for both Apple and Intel, and the US. Of course, Apple could be a part of a JV between TSMC and Intel where TSMC 5 or 3nm chips are made for Apple and Intel foundries, but there is still a risk and no guarantee Apple would have continued access to TSMC technology should China be aggressive. As I said, Intel is the only guarantee in what may become an actual chip war between nations.

In the late 1990s, I had the privilege of working with the State of Hawaii to help push the State to accelerate its rollout of high-speed internet connections for their schools.

Although I was born and grew up in Silicon Valley, many of the Filipino side of my family all lived in Hawaii. I was concerned about this State’s understanding of how important I felt the Internet would be for their schools.

I admit my concern was a bit selfish as I had many nieces and nephews in the Hawaii school system. I wanted them to have the same accessibility to high-speed Internet connections that had already become prevalent in California and other states on the mainland by 2000.

I worked directly with the Hawaii Governor at that time, Benjamin Cayetano, to help him and the Hawaii legislature understand the importance of the Internet to its schools and businesses. To his credit, Governor Cayetano moved swiftly to expand Internet connections to all of Hawaii’s schools and became a champion of various high tech initiatives to help the state expand its various tech programs.

An interesting side note to this is that a high-tech exec I know, who grew up on Lanai, knew that the schools there did not have Internet connections, let alone computers for their students. He personally bought computers for a computer lab in the one school Lanai has so that the kids there could have the benefits of their counterparts on the other islands.

Since that time, all States in the US have expanded their high-end internet networks to almost all of their schools and it has become a backbone technology for all education systems in the US and around the world.

However, the coronavirus has shown how unequal access to technology itself divides us. And the implementation of telecommuting has made these issues even worse and disproportionately harm Black and Hispanic Americans.

When people work from home or are forced to home school, they typically need access to a computer, internet speedy enough to handle video calls, and space to work without distractions — and there’s a clear racial divide when it comes to having these things.

Axios recently pointed out these disparities and listed the following data points-

• Per a 2019 report from Pew Research Center, 58% of Black adults and 57% of Hispanic adults have a laptop or desktop computer, compared with 82% of white adults.
• 66% of Black adults and 61% of Hispanic adults have broadband access at home. Among white adults, the share is 79%.
• According to a recent survey from WayUp, Black and Hispanic job applicants are 145% more likely than their white counterparts to be concerned about their ability to do a job remotely.

Solving this type of disparity needs to become a priority sooner than later in the current presidential administration. I realize they have higher priorities to deal with immediately related to the Covid-19 Pandemic, the economy, and other areas that are needed to get our nation back on track.

But making sure that all Americans have high-speed access to the Internet as well as the types of devices and tools needed to help them learn and work, regardless of race or creed, also needs serious attention.

From an industry standpoint, the prices of laptops and especially Chromebooks making it more feasible for even low-income families to have a least one device in the home that can connect to the Internet.

However, here in Silicon Valley, perhaps the most tech-literate area in the US, I have been told by at least two friends that some students in East San Jose’s less affluential region do not have computers of their own unless their school district supplies them.

We are in a digital age that demands connectivity and devices that connect to the Internet and equality mean that the US government, private agencies, and even corporate support need to take this challenge seriously and make sure all workers, as well as students, have equal chances for success.

To the casual observer, the excitement around Apple Silicon is concentrated around the specific benefits to Apple and the competitive advantage awarded to Apple thanks to their efforts in custom silicon. There are, however, much wider industry implications.

I have been extremely bullish on Apple’s custom silicon efforts since before Apple silicon began showing up in iPhones. My analysis at Apple’s time acquiring PA Semiconductor stated the writing was on the wall for deeper vertical integration by Apple into more of their products. I vividly recall being at Intel not weeks after Apple’s acquisition of PA Semiconductor. The consensus was quickly established that Apple would make custom silicon a cornerstone of their differentiation and competitive advantage.

Since Apple has now proven they are a force to be reckoned with when it comes to custom silicon, a trend I’ve long predicted is about to accelerate.

Competing in the Race Requires Components Built In-House
A great analogy came to me as I was watching AMD’s CES keynote. AMD CEO Lisa Su invited to the stage, virtually, Formula One race car driver Lewis Hamilton. Hamilton’s presence on stage was mostly to talk about his love of gaming and how AMD helps push the bar in PC and console gaming. While trying to affirm AMD as an innovative technology company, he also made a fascinating point by remarking on how his own industry consists of highly customized components. He stated that all Formula One cars, which extend to all professional race cars, consist largely of components all built in house. The obvious reason for this is a competitive advantage. Every race car driver wants an edge above the competition, and the industry itself has established the only way to do that is with highly customized parts, not stock ones.

To establish this analogy more clearly to the tech industry, Apple products are more like Formula One race cars, which compete against a field of competitors using off the shelf components. As Apple goes deeper into in-house parts for their products, it will inevitably cause others to follow whether they compete with Apple or not.

This is the trend that will accelerate that I mentioned above. While it will be harder for most tech companies to go as deep as Apple in verticalization, I anticipate a much more widespread move to customization.

In an article last year, I dug into this broad semiconductor trend where I highlighted the importance of specific purpose chips over general-purpose ones. The computer industry was built largely on general-purpose silicon. The increased need to differentiate and compete on different planes drives the need away from general-purpose silicon and more to specific purpose chips that are used uniquely by product companies.

I made the point that I don’t think other tech companies will go as deep as Apple in semiconductor customization. Still, I think companies will be at a strategic disadvantage if they don’t include some custom or specialized chips that enable some unique product advantages.

Examples of this trend starting to accelerate have been popping up more often. Microsoft has worked closely with Qualcomm and AMD to offer specific customization to the chipsets that run in certain Surface products. The goal of that work was to differentiate these devices from the pack. Microsoft has even been rumored to be looking more deeply at designing, or co-designing, their own Arm processors, which could have both server and client impact. For many generations of Xbox, Microsoft has created some custom components and co-processors for years as well.

Amazon and Google have become more aggressive in custom/specialized processors to differentiate their cloud platforms. Amazon with its Gravitron processors, and Google with Tensorflow. Both key initiatives to help them compete more uniquely with specialized components and set themselves apart from competitors who use generic parts.

Qualcomm made some news recently that emphasizes this trend when they acquired Nuvia last week. Ex-Apple silicon engineers founded Nuvia, and they created a custom Arm architecture they intended to use for the server market. With their Kryo architecture, Qualcomm used a semi-custom design from Arm but mostly using a more generic Arm IP. Qualcomm recognized their ability to compete depends on more deep customization of technology at every SoC level. This Nuvia acquisition puts them back on the path to more deeply customized semiconductor offerings.

Years ago, the belief that more custom or specialized components were not needed because all computing would be in the cloud someday had never manifested and proven to be a much far off future even if it happens. What has become exceedingly clear is that differentiation at the software level is no longer enough for the tech sector’s biggest competitors. The idea of a “full-stack” company must now extend into components as well.

The race car analogy could not be more apt for the tech industry as the competitive environment increases in every market. The simple truth is companies will need to invest more in specialized components because the nature of competition will demand it.

The bottom line is the more companies create “in-house” technology that extends down into components, the better their chances at competing. The more companies rely on generic solutions, the more they run the risk of falling behind.

Early in 2020, TSMC announced that they would build a $12 billion Fab in Arizona. In December, TSMC purchased the land it will be built on for $89 million.

I admit that I am still in the camp that believes broad manufacturing coming back to the US is a pipe-dream. However, I do see some specialized manufacturing in the US is feasible, and TSMC’s Fab project is a good example. While the actual push to build this Fab in Arizona is ripe with political overtones, it may turn out to be one of the better strategic moves for the US as it deals with multiple threats from China in the future.

The biggest threat I see on the horizon is China’s desire to nationalize Taiwan and bring it back under Chinese control. As I have written here in the past, I have spoken to top execs in Taiwan, and they are on high alert over the potential of China making a concentrated move to secure Taiwan and make sure it is part of China again.

This Dispute between China and Taiwan has been going on for decades ever since Taiwan broke away from China’s political stranglehold in 1949-1950. Under Taiwan’s leadership, Taiwan has developed a strong economy and is the home of the top tech manufacturers like Foxconn, Quanta, Compal, and TSMC, among others. In 1977, the US fundamentally agreed to back Taiwan and help them keep China at bay.

But given China’s recent moves in Hong Kong, Taiwan’s political and business leaders are deeply concerned that China will make some type of move towards trying to bring Taiwan back under Chinese rule as early as 2021.

One of the Taiwanese business leader’s concerns is if China is successful in nationalizing Taiwan, they could exert more control of their businesses. And it seems that one of the bigger prizes that could come out of the Chinese rule of Taiwan would be to get control of TSMC., or at the very least try and legislate who TSMC could make products for in the future.

One Taiwanese tech contact I spoke with at the end of last year told me that China’s national strategy to have products made in China and used especially in Chinese goods could be one other objective besides the political goal to unite Taiwan under the Chinese flag. This contact speculated that China could dictate where chips can be used and make Chinese products the priority.

This has huge ramifications for many US companies who use TSMC to make their processors. AMD, Apple, Samsung, and many others rely on TSMC for their chips. That is why putting a TSMC Fab on US soil is not only good for the US but a strategic one. It could be critical for keeping the flow of custom processors to US and European companies and keep TSMC’s growth moving forward.

I realize that the building of this Arizona Fab will only start sometime in 2021 and could take up to three years to build. In the meantime, the stakes in the US-China relationship are very high. Taiwan and its ties to the global tech supply chain are critical for the success of our tech industry. Allowing China to control this global supply chain through Taiwan could pose huge problems for tech companies in the future.

Taiwan and its ties to the global tech supply are critical for the success of our tech industry. Allowing China to control this global supply chain through Taiwan could pose tech companies’ problems in the future. There is another important point we need to consider a new Fab being constructed now.
The demand for processors for all industries is growing exponentially, and we are already seeing shortages impacting the Auto industry.

Engadget noted this week that ” Ford and Nissan are scaling back production in response to semiconductor shortages. Ford is idling an SUV factory in Kentucky this week, moving up downtime previously scheduled for later in 2021. Nissan, meanwhile, is reducing output at one of its plants in Japan.
Other carmakers may face trouble as well. Volkswagen said in December that it was altering production in China, Europe, and North America due to the shortage. Given the increased demand for semiconductors, it is good that another new fab is being constructed to help meet this growing need.
And it is even better, as well as strategic, that it is being built in the US.

This global hot spot will be one of the biggest issues to follow in 2021.

Years ago, I stopped doing a predictions article, generally because they seem ridiculous, and most readers view them as fiction. I considered doing a predictions article of things I don’t think will happen, and I still think that is an interesting article but have yet to attempt it. But we still do get questions from clients and media about what we expect in the coming year. As analysts, we get to view the industry from a 20,000-foot view, and there is some benefit to that view in seeing broader trends and connecting macro trends to the microelements of tech.

The challenge for many who try to predict the future is the desire to make a bold prediction, something that will happen that could change a paradigm or bring something dramatically new. A new market, a new technology, etc., is what excites people, but it is not what I expect in 2021. Rather, the challenge we saw in 2020 and the rapid movement of digital transformation happening in both enterprise and consumer markets put a giant spotlight on the reality that tech still has a long way to go. There are still huge numbers of pain points, frustrations, less than elegant solutions that need to be fixed.

So for 2021, the tech industry’s mission is to double down on solving the significant pain points that exist all around us as we use digital devices. I expect this to be able to happen much sooner than years before, largely because of the incredible progress of cloud computing. When you look at the core reason many tech companies were able to make the adjustment to work from home, even if it was not perfect and inelegant, the reality was if this COVID-19 pandemic would have hit a few years earlier, many companies would have had no chance at a transition and many businesses would have come to a screeching halt.

In many ways, I remember how the continual advancements in Internet infrastructure of the 2000 decade led to the massive industry opportunities that hit all at once. Most of the decade was more evolution and solving pain points, and that work led to the mobile era. In many ways, I view the cloud infrastructure and the underlying innovation in silicon as a similar laying of the groundwork for what’s next. But what is next is not coming this year, and that is ok. As I said, there are still many pain points to solve.

Which areas can we expect more digital transformation and a continued emphasis on solving pain points? Well, nearly all of them, but the tech industry’s journey has always been one that is a transition from analog to digital. This is why every company will someday be a tech company, if not by-product then by the process. All processes move from analog to digital, and many products similarly will include more digital elements. This is one reason why the auto industry, and in particular Tesla, has been talked about so much. That is an industry whose products have all but abstained from modern technology. Tesla brought the auto industry into the digital age, and there is no going back. I include this industry in solving pain points, which leads to many opportunities ahead.

I expect more companies to embrace direct-to-consumer, and the number of new brands and new products to increase thanks to the ease of services like Shopify for brands to control their storefronts and go direct to consumers. 2020’s e-commerce surge will no doubt assist this effort going forward, and shopping and buying online for everything is now an ingrained habit for many consumers. While e-commerce has made great progress, there are still pain points to solve in the total experience, automation, delivery, and more.

This point on D2C includes entertainment content. We already see movies go straight to digital services, and I expect this to be the new norm and offer a wide range of new experiences and new content. However, the current unbundled streaming landscape is a hot mess, and while our research and many others proves more consumers are leaving cable bundles for other content services, they find themselves leaving one set of frustrations and finding a whole batch of new ones. There is a huge opportunity here for someone, and as of now, I’d bet on Disney to become the new super aggregator in some way.

Enterprise software is another example where many pain points remain. While many companies embraced the latest technologies to enable their workforce to remotely, it was inelegant to put it kindly. There is still tremendous work ahead to more seamless blend workflows for individuals and teams, and that effort will pay off even when people start going back to the office. I expect big leaps ahead in solving these pain points for this category in 2021.

Lastly, Healthcare is another where I hope more tech companies can make an impact. If anything, the COVID-19 pandemic has certainly shown how broken much of healthcare is in the US but has also shown a further opportunity for digital, like Telehealth and other digital services stand to benefit and bring new opportunities.

While I highlight a few areas, and I’m sure there are more we will see pop up in 2021, the bottom line is, while not sexy, the tech industry’s focus and main push will focus more on solving pain points than pushing brand new inventions, or innovations. This is a good thing because, in order to bring about the new computing paradigm, we need to solve current problems rather than just create new ones.