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2-8 Happy Lantern Festival: Sony is concerned that the outbreak may disrupt its supply chains of CIS; Huwaei has sued Verizon in two U.S. District courts in Texas; etc.

Chipsets

According to JP Morgan, ramp of 5G to meaningful increase RF market opportunity primarily on new sub-6 GHz content, will millimeter wave also additive over the next few years: (1)  ~USD6-7 of incremental sub-6 GHz content;  (2) >>USD10 of incremental mmWave content. (JP Morgan report)

Touch Display

Taiwan’s shipments of small- to medium-size LCD panels are expected to fall 23.6% on quarter and 2.7% on year in 1Q20 due to high inventory levels of smartphones, particularly Huawei’s models, in the sales channels in China, according to Digitimes Research. Taiwan’s panel makers shipped a total of 234M small- to medium-size panels in 4Q19, up 16.6% on quarter but down 2.6% on year. (Digitimes, press, Digitimes)

Overall, panel fabs in Wuhan are estimated to account for 4.1% of global large size panel capacity and 5.2% of global small and medium size panel capacity in 2020. Morgan Stanley estimates that the Coronavirus outbreak could potentially impact global panel capacity by 0.5%-1.0% in 2020, assuming 2 months of production disruption at panel fabs located in Wuhan, China. (Morgan Stanley report)

As an augmented reality (AR) glasses, the imaging effect is very important for user experience. According to Vittimes, the current cost of AR glasses optical display modules accounts for about 50% of the total cost of AR glasses. Visible optical system performance is a key factor in determining the imaging performance of AR glasses. (Huatai Securities report)

Camera

Samsung has filed a trademark application of Nonacell, which likely applies for its upcoming Galaxy S20 Ultra with 108MP main camera of ISOCELL Bright HMX sensor. It features 9-in-1 pixel-binning technology. (GSM Arena, LetsGoDigital, CN Beta)

OPPO has filed a patent with China National Intellectual Property Administration (CNIPA) showing a phone with 7 cameras at the back with a hexagonal or circular camera module. (91Mobiles, Android Headlines, Sina, ZOL)

Sony CFO Hiroki Totoki has indicated that Sony is concerned that the outbreak may disrupt its supply chains, potentially disrupting its image sensor and electronic businesses, both of which could be ‘affected enormously’. (Laoyaoba, DIY Photography, DP Review, Nikkei)

Memory

In terms of production capacity planning, according to the data from TrendForce, the storage capacity of the Yangtze Memory Technologies (YMTC) in 4Q19 is 20K pieces / month (12”), and it is expected to expand to 70K pieces / month by the end of 2020, which is close to Intel’s capacity. Looking at the longer-term plan, the YMTC’s target is to expand its production capacity to 300K pieces / month by 2023, reaching a global market share of 20%, and the yield rate also catches up with the mainstream level in the world. According to this plan, YMTC is expected to become the world’s third largest NAND Flash manufacturer. (GF Securities report)

According to GF Securities, in terms of capacity planning, Hefei-based ChangXin Memory Technologies (CXMT) currently has a total of 3 phases planned. After completion, the production capacity will be 360K pieces / month (12”). The overall investment is expected to exceed CNY150B, of which the designed capacity for the first phase is 120K pieces / month. Currently more than CNY22B has been invested, and the production capacity has reached 20K pieces / month. It is expected to reach 40K pieces / month by the end of 1Q20. The subsequent expansion of production will depend on the R&D process, product yield and market demand. Judging from the completion of the 3 phases, GF Securities estimates that CXMT’s market share will be more than 10% by then, making it the fourth largest DRAM manufacturer in the world. (GF Securities report)

Phone

Huwaei has sued Verizon in two U.S. District courts in Texas, alleging the company has been using 12 Huawei patents without authorization in areas such as computer networking, download security and video communications. (Android Authority, Reuters, CN Beta)

Counterpoint Research expects 2020 shipments of Samsung Galaxy S20 series to exceed 40M units, driven by the rumored camera and hardware spec improvements, default 5G, and competitive retail pricing.  (Counterpoint Research, Gizmo China)

At the beginning of the new year, with the emergence of 2019-nCoV in China, it has greatly affected the domestic phone market in 1Q20. According to IDC, China’s smartphone shipment in 4Q19 is about 86.2M units, a YoY decrease of 15.6%. For the full year of 2019, the overall market shipments is about 370M units, a YoY decrease of 7.5%. IDC expects that the overall domestic market Jan-Feb 2020 will face a sharp decline of about 40% YoY. In Mar 2020, if the situation is under stable control, the overall market will gradually enter a recovery period, but it will still be difficult to recover to the same level in 2019. Throughout 1Q20, the domestic market is expected to experience a YoY decline of more than 30%. (IDC, My Drivers, Laoyaoba)

Barclays’ analysis has suggested that the 2019-nCoV’s impacted demand could be 10M~15M units in China for 1Q20, creating additional inventory pressure for the following quarters. In the past 3 years, the Mar-quarter sell-through demand for smartphone is the range of 99M~111M, averaging 103M, of which about 73M is sold through offline channels. Within the 73M units, Barclays estimates 20M is sold during the Chinese New Year 10-day period, which could see 40%-50% drop in 2020 (i.e., potentially 8M units). (Barclays report)

Due to the weaker demand outlook in China, Barclays is reducing smartphone forecasts for 2020 and 2021 by 2% and 1%. For 1Q20, they lower their unit estimate by 9% to 303M given the impact in smartphone upgrade demand in China as well as excess inventory in the channel. For 2Q20, they lower their estimate by 5% to 318M, as the industry digest inventory. (Barclays report)

Barclays has trimmed their estimate on 5G smartphone units in 2020 from 200M to 191M units, with 14% penetration. Given the current uncertainties in handset demand in China, elevated channel inventory, as well as delays in 5G built-out in some provinces and cities, they see increasing possibilities Android OEMs may push 5Glaunches and mass volume shipment into 2H20. (Barclays report)

Canalys forecast a 7% decline in smartphone shipments between 4Q19 and 1Q20, and an 8% fall for PCs. But given currently available information of the coronavirus, Canalys is dramatically revised forecasts to a 40%-50% drop for smartphones and 20% for PCs, with the proviso that the situation recovers to pre-outbreak levels by the end of Feb 2020, giving the market a full month to recover in Mar 2020. (Canalys)

vivo Y91C (2020) is launched in Bangladesh – 6.22” 1520×720 HD+ IPS, MediaTek Helio P22, MT6762R, rear 13MP + front 5MP, 2+32GB, Android 8.1, no fingerprint scanner, 4030mAh, BDT9,990 (USD117). (Gizmo China, GSM Arena, vivo)

Moto G Stylus and G8 Power are announced, featuring 6.4” 1080×2300 FHD+ HiD IPS, Qualcomm Snapdragon 665: G Stylus – rear tri 48MP-16MP ultrawide-2MP macro + front 16MP, 4+128GB, Android 10.0, rear fingerprint scanner, 4000mAh 10W, Stylus Pen, USD299. G8 Power – rear quad 16MP-8MP telephoto-8MP ultrawide-2MP macro + front 16MP, 4+64GB, Android 10.0, rear fingerprint scanner, 5000mAh 18W, USD249. (Gizmo China, GSM Arena, CN Beta)

Artificial Intelligence

Square, the San Francisco financial services and mobile payment company, has announced that it is acquiring Toronto-based AI research startup Dessa (formerly known as DeepLearni.ng). The company has indicated that the purchase will bolster its machine learning and AI capabilities. (VentureBeat, Square)

Payment

By 2025, millennials will become the customer segment with the greatest aggregate personal income, reaching over USD8T, representing 75% of the workforce and over 45% of total US income. Macquarie Research believes real-time push payments will be a strong driver of future debit growth. They estimate the overall opportunity in the US at USD10T, which includes P2P (USD1T) and business disbursements (USD9T). (Macquarie Research report)

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