Shifting Tech Fortunes: AI, Chip Wars, and Market Maneuvers

Samsung’s AI Surge, Apple’s China Struggles, and Global Tech Trends to Watch This Week

Asia Chip Stock Leadership Shifts as SK Hynix Loses AI Spotlight - Bloomberg

• Foreign investors are driving gains in shares of Samsung Electronics Co. amid a search for the next top performers in the artificial intelligence trade.

• Samsung is expected to win more business with Nvidia Corp. for its next-generation HBM3E chip, which will help it catch up to smaller Korean rival SK Hynix Inc. in the memory-related stock market

• The gap between the two stocks is likely to soften from here, with Samsung expected to increase its HBM output and pass the qualification test for Nvidia in two to four months

• Apple Inc. predicted that its new AI features will spur iPhone upgrades in coming months, helping the company reemerge from a sales slowdown that has hit its China business

• TSMC fell 3.3% in July, its first monthly loss since last September, as global funds sold a net $5.8 billion of Taiwan Semiconductor Manufacturing Co. shares last month

• Sell-side analysts remain bullish on both Korean memory makers, with 41 buy recommendations on SKHynix and 39 for Samsung

• SKHYNix still looks slightly overvalued, according to Morningstar Inc.

Apple Pressures Tencent and ByteDance Over App Fees in China - Bloomberg

• Apple is pressuring Tencent Holdings and ByteDance to close loopholes that their in-app creators use to bypass Apple's commission.

• The US firm has warned Tencent it may reject essential WeChat updates unless the developer eradicates links that mini-game developers use to accept payment off Apple's platform.

• Apple has also asked Tencent to disable a key in-game messaging feature that diverted users and plug similar payment loopholes in Douyin (TikTok's Chinese cousin).

• A standoff with Tencent over WeChat could add a new flashpoint for Apple, which is already facing multiple edicts and fines around the world. - Apple reported a 6.5% slide in Greater China revenue for the June quarter, underscoring challenges in its largest market outside of the US.

China’s Proposed Digital ID System Stokes Fears of Overreach - Bloomberg

• China plans to introduce a nationwide digital identification system to verify identity online without giving up personal details to internet service providers.

• The move has been met with criticism of government overreach in a country that already closely monitors and censors speech

• Legal experts and users in the world's largest internet market have questioned the goal of protecting privacy

• Users may voluntarily request a unique ID and digital certificate to confirm their identity

• Internet platforms shouldn't ask for other personal information once a user is authenticated

• More than 50 popular apps have tested the proposed authentication system, and the draft rules are open to public feedback until August 25.

Do Kwon Should Be Extradited to S. Korea, Montenegro Court Rules - Bloomberg

• Montenegro Appellate Court upholds ruling that Terraform Labs Pte. co-founder should be sent to South Korea.

• The court also upholds a fast-track extradition procedure.

Intel’s Sales Slump Shows Price of Falling Behind in AI Race - Bloomberg

• Intel will have a loss of 3 cents a share in Q3, compared to expectations for a profit of 30 cents

• The company plans to cut more than 15% of its workforce of around 110,000 people and suspend dividend payments until cash flows improve

• CEO Pat Gelsinger is struggling to improve the company's products and technology fast enough to retain customers

• Intel is reducing spending on new plants and equipment in 2024 by more than 20%, and budgeting between $25 billion and $27 billion

• Shares fell more than 13% in late trading, with the company still more than $20 billion below its peak in 2021

• Competitors in the industry, including Nvidia and Advanced Micro Devices, are outperforming Intel.

GLAAD Paid For CEO’s Lavish Spending, Documents Reveal - New York Times

• GLAAD, a leading L.G.B.T.Q. advocacy group, paid for its CEO Sarah Kate Ellis to travel for work to the World Economic Forum in Davos.

• The group, which has an annual budget of roughly $30 million, also paid for a day of skiing and other luxuries, according to internal documents reviewed by The New York Times.

• Ms. Ellis did not declare the money spent on the home office renovation as income on her tax forms, which may have violated I.R.S. rules. ��- The expenses, such as first-class flights, luxury hotels, expensive car services, and a home office remodel, may be inappropriate for a nonprofit organization with about 60 employees.

Trump Promises Lower Interest Rates, but the President Doesn’t Control Those - New York Times

• The Federal Reserve sets interest rates independently of the White House

• Trump has promised lower interest rates if elected

• He has suggested that the Fed will lower rates because inflation is likely to be lower on his watch

• Economists suggest that some of his proposed policies may speed up inflation

• The Fed is unlikely to lower rates just because a president wants them to come down

• Independent central banks are more successful at controlling price expectations and inflation.

Elon Musk Blasts Venezuela’s Maduro in an Escalating War of Words - New York Times

• Elon Musk has made controversial comments about Venezuela's President Nicolás Maduro, calling him a dictator and comparing him to a donkey.

• He has also suggested that the US could become like Venezuela if voters backed the Democratic Party in November

• Musk is using the Venezuelan election to reinforce his belief that socialist and leftist forces are degrading global society

• Maduro has responded by calling Musk a "murderer" and accusing him of financing protesters in Venezuela

• The United States and other countries have denounced Venezuela's election results, which the country's electoral authority claimed showed Maduro as the clear winner

• Mr. Musk has previously involved himself in Latin American politics through his X platform, which he owns and has used to influence global politics

• Tesla and SpaceX have a significant demand for their products in Venezuela, where lithium is a crucial component in car batteries

Seeking Your First Job After College? Share Your Story. - New York Times

• The New York Times is seeking feedback from recent college graduates, young job seekers, and hiring managers about the job market this year.

• The job market is not as hot as it used to be, with younger applicants feeling the pinch and hiring projections for college graduates below last year's levels.

• Hiring downturns are notable in fields like finance, insurance, marketing, and real estate, while unemployment is low but not as high as in previous years.

• Respondents are encouraged to share their experiences and thoughts to help the Times gain a fuller understanding of the broader job market trends. The Times will read every response and will verify the submission before publishing it without publishing the name or any part of it without hearing back from the recipient.

Bank of England Cuts Interest Rates for First Time Since 2020 - New York Times

• The Bank of England has cut interest rates to 5% for the first time in over four years due to slower inflation.

• The decision was made by a slim margin among its policymakers, with five out of nine members voting to lower rates.

• Policymakers had been concerned about stubborn price pressures from higher wages and the services sector that could push inflation back above their target of 2%.

• Interest rates were held at 5.25% in the past year, the highest level since 2008, but the current rate cut is likely to bring relief to mortgage holders and business owners.

US probes Nvidia’s acquisition of Israeli AI start-up - Financial Times

• The US Department of Justice is investigating Nvidia's acquisition of Run:ai for potential antitrust violations.

• The probe includes whether the deal could quash emerging competition in the up-and-coming sector and entrench Nvidia's dominant market position.

• Nvidia has said the company “wins on merit and follows all laws.

Amazon earnings jump on cloud computing strength but margins narrow - Financial Times

• Amazon's cloud computing sales rose 19% to $26.3bn in Q2, beating analyst forecasts of $26bn.

• Margins at Amazon Web Services narrowed by 2 percentage points to 36% due to a 50% increase in company-wide capital spending of $17.6bn compared to the same period last year.

Intel shares fall 20% on plans to cut 15,000 jobs - Financial Times

• Intel plans to cut its workforce by 15% and scrap its dividend to shore up its weakening finances.- The company will cut about 19,000 jobs, with most positions set to go this year.- Intel also announced a surprise reversal in its surging capital spending, with investment this year likely to be 20% less than forecast.- CEO Pat Gelsinger has been less successful in recapturing market share lost to rival AMD or cashing in on the booming demand for AI chips.

• Intel reported earnings of 2 cents per share for the second quarter, below the 10 cents analysts expected, reflecting gross margin headwinds from the accelerated ramp of its AI PC product.

• Revenue fell 1% to $12.8bn in Q2, with a pro forma loss of 3 cents a share.

Apple revenues rise on strong services business and iPad sales - Financial Times

• Apple's revenue increased 5% in Q2 2023 to $85.8bn, beating analysts' expectations of $84.5bn

• Net income rose 8% to $21.4bn, while earnings per share were up 11% year-on-year to $1.40

• Revenue for the greater China region declined by 7% due to competitive pressure from local handset makers and a ban from governmental use

• Apple saw a 24% jump in iPad sales to $7.2bn, offsetting a decline in iPhone sales and a continued slowdown in China

• The company is bullish on the prospect of customers upgrading to the newest iPhone models to gain access to new artificial intelligence features, known as "Apple Intelligence"

• A deal with OpenAI will also give Apple users free access to ChatGPT and partnerships with other big model providers such as Google

• Research and development expenses rose to $8bn in the quarter, with a focus on AI-enhanced iPhone models.

Meta’s shares soar after revenue growth reassures investors on AI plan - Financial Times

• Meta's core advertising business drove revenue growth of 22% to $39.1bn in Q3, surpassing analysts' expectations and the high end of its own forecast.

• The company raised its full-year capital expenditure guidance to between $37bn and $40bn as it continues to invest in its AI ambitions.

Meta's AI Costs Surge as Digital Advertising Revenue Grows - Wall Street Journal

• Meta Platforms saw rapid growth in digital advertising while investments in AI and metaverse weighed on profits

• CEO Mark Zuckerberg says Meta AI is on track to be the most used AI assistant in the world by the end of the year

• Meta released its latest large language model, Llama 3.1, and made Meta AI available in more languages and markets

• Sales increased to $39.1 billion, up 22% compared with a year prior, with advertising making up 98% of revenue

• Third quarter revenue is expected to be between $38.5 billion and $41 billion, ahead of analyst expectations

• Operating losses in Meta's Reality Labs unit are set to increase meaningfully in the remainder of 2024

• Microsoft and Google-parent Alphabet saw their share prices dip as they reported rising AI costs.

T-Mobile Has a New Side Gig: Fiber Internet - Wall Street Journal

• T-Mobile has formed partnerships with fiber-optic internet providers to potentially serve millions of customers in the future.- The company has already served roughly five million homes and businesses linked to its 5G broadband service over the air.

• Analysts say it is a land grab for telecom companies to reach neighborhoods where cable providers are not yet available or residents are unhappy with their cable service. T-Mobile recently paid $4.9 billion for a stake in Midwestern broadband provider Metronet through a joint venture with KKR, following a $950 million investment with EQT and Lumos earlier this year.

• The wireless market has shifted to a more defensive posture, presenting an opportunity for companies willing to invest in home internet service to reach tens of millions of U.S. households with fewer options for home-internet service. Bundling broadband with mobile-phone service is a trend that industry players call "convergence" that helps AT&T's bottom line.

3D Printers Are Having a Moment Thanks to the U.S. - Wall Street Journal

• 3D-printing companies in the US are benefiting from efforts by the White House to incentivize onshore manufacturing jobs and incentivize U.S. emissions reductions. These companies are using additive manufacturing technology as a buffer against supply chain uncertainty and geopolitical tensions. The process of 3D printing is less wasteful and more adaptable than traditional manufacturing. Additive manufacturing allows the creation of items that would otherwise be too complex, slow or expensive to make domestically. The US Navy has stated that additive manufacturing is essential for both construction and maintenance of attack submarines. Australia-based AML3D has secured several defense sub-contracts and signed a 64-month lease on a site in Ohio to set up a manufacturing facility to support the US Navy. The company is currently hiring welding, software and robotics engineers for the facility. The proportion of its revenue coming from the US has increased from about a third to about two thirds over the past two years.

Apple Intelligence: Here's When the New AI Features Come to the iPhone and iPad - Wall Street Journal

• Apple will release Apple Intelligence tools in iOS 18.1, which is expected later this fall.

• The first wave of AI tools, including text-summarization tools and Siri enhancements, will not be available in the initial iOS 18 release this fall

• Developers will have to sign up for the Apple Intelligence wait list to test the new tools

• Only those with iPhone 15 Pro, 15 Pro Max, and iPads and Macs with M chips will be able to get Apple Intelligence

• Siri will get ChatGPT integration and the ability to tap into personal context before the New Year's Eve ball drops

• Other promised AI features, such as Photos Clean Up and Writing tools, will arrive in software updates this year and next year

• Apple has not committed to when the rest of the promised features will arrive

Amazon Paid Almost $1 Billion for Twitch in 2014. It's Still Losing Money. - Wall Street Journal

• Amazon.com has received little financial return from its acquisition of Twitch Interactive, a live-video startup, despite paying nearly $1 billion for it in 2014.

• Twitch remains unprofitable despite periods of explosive popularity, and its biggest-paying users are opening their wallets less, and growth in new users and engagement has slowed

• Staffers at Twitch worry it is at risk of becoming a "zombie brand" at Amazon, with internal projects or acquisitions that haven't lived up to expectations

• Amazon Chief Executive Andy Jassy has led a profitability review at Twitch and shown little tolerance for unprofitable businesses

• Short-form live video doesn't align well with selling ads, and the company has had to invest in tools to moderate the content

• Broader trends aren't in Twitch's favor, with spending on videogames slowing down and consumer preferences shifting towards short, concise videos spanning a range of topics

• Dan Clancy became Twitch's CEO in 2023.