Apple’s Newest OLED Supplier
asianometry.substack.com
asianometry.substack.com
This is why legislation such as the CHIPS Act should not be seen as corporate welfare but rather as leveling the playing field.
What are your thoughts on affirmative action?
A better comparison if you really insist on comparing treatment of companies to actual people would be to take two identical companies working in the same market. Force one of them to close. After the second has been established for a few hundred years, allow the one you shut down to reopen, but tell them that they can't charge more than 50% of the price of the established firm, and also say that suppliers don't have to provide goods to that firm, and if they do then those suppliers don't have to provide goods at the same level of quality. Those suppliers also charge more, for the lower quality goods. To be safe, you also don't allow the company to build anywhere near existing commercial or industrial zones, so they also have to pay more for shipping and transit, despite being less conveniently placed.
After a while you say "ok, you can sell to everyone and we aren't going to limit what you can charge, etc". Then you turn around and say "see everything is equal now".
Of course by this point entire industries are built around the version of the product sold by the established firm, the established firm has more resources, the subsidiaries of the established firm have more resources, as do their subsidiaries, because all those subsidiaries have been getting the same preferential treatment. Meanwhile the historically penalized firm has been given a bad rap because the quality of a lower quality of goods, because they got worse materials to start with, they couldn't afford the same quality of workers (in fact they were functionally prohibited from employing the best).
Now people say "of course we pay less for goods from that company, they're lower quality".
It may be a true statement, but the reason isn't because the company is fundamentally flawed, just that the established company has had unending advantages, and those advantages continue to apply even after the original penalties were removed.
Of course this is a gross simplification of what actually happened to the victims of the various repressive laws and policies of various countries, because again, companies are not people.
I am a coloured South African(an ethnic group that was previously disadvantaged due to apartheid era racial policies) we in South Africa have Affirmative action policies called Black Economic Empower(BEE) (Its open to all previously advantaged racial groups ie Black, Coloured, Indian they just call it BEE) that has led to mass corruption and cronyism.
>Start with crony capitalism, which in South Africa goes by the euphemism “black economic empowerment”. The idea behind it seemed laudable enough—to right a historical wrong. Under apartheid, the country produced white titans of industry such as the Oppenheimer family (owners of DeBeers), while making it hard for black South Africans to own businesses. The ANC(Ruling political party) felt it only fair that there should be black billionaires, too. To give them a leg-up it insisted that mining companies should hand at least 26% of their shares to the “historically disadvantaged”. Mining companies (as well as banks and insurers) did so willingly, diluting existing shareholdings when they transferred stakes to the likes of Cyril Ramaphosa, now the president, along with Patrice Motsepe, his brother-in-law, and Bridgette Radebe, his sister-in-law.[1]
I and alot of South Africans could stomach a one-off payment or one-off percentage equity stake in firms(in South Africa the government instituted a policy that South African Corporate firms would sell shares preferential)to disadvantaged groups but after these shares were sold, the government wanted to continuously repeat it.
>If these handouts had been a one-off tax, their harm would by now have been forgotten. But once the new black shareholders had sold their holdings, the government drafted regulations to repeat the process. And so capital investment in mines fell by 45% between 2010 and 2018, with output falling by 10% and employment by 50,000—a tenth of direct employment in the industry in 2010.[1]
When the government gives support not based on merit and competence but gender, race, religion or ethnicity you undermine industrial policy(Instead of support based on a person's potential ability or ability to do things)With affirmative action you end up institutionalising incompetence.
>Black Economic Empowerment, a policy that incentivises firms to give equity to black investors or business to black-owned suppliers, has created a new generation of Randlords with more political acumen than entrepreneurial talent. “Cadre deployment”, whereby ANC party(Ruling political party) members get jobs on the basis of factional fealty rather than merit, has degraded the state. These appointees steer contracts towards chosen “tenderpreneurs”, who in turn donate to the party. By 2007 Kgalema Motlanthe, a party grandee, said: “This rot is across the board...Almost every project is conceived because it offers opportunities for certain people to make money.”[2]
Many South African feel that our counrty has become "a cappuccino society, A vast, huge, black majority at the bottom with a layer of white cream and a few chocolate sprinklings at the top of it" referring to the small black elite who have gained great riches from the post-apartheid years - from a failed attempt to rebalance the wealth among the many.
Yes, I acknowledge the present-day inequities that racist, sexist, etc policies can cause, but if a Government was serious about addressing historical inequalities then you need to invest in education and skills development. Affirmative action never works in the long term, instead of making people competent and self-reliant,it makes them dependent on handouts.
Industrial policy can sometimes work in South Korea, Taiwan, Certain Industries in China, or it can fail spectacularly and end up being a waste of time and resources Malaysia and South Africa(instead of giving equity stakes and handouts you could have used those same resources to invest in everyone, not just a particular race, ethnicity, gender or religion.)
Affirmative action policies can actually be self-defeating and harm the industrial policies you have.
Contrast Taiwan and Malaysia's Industrial Policies and Outcomes
Taiwan's has currently a healthy semiconductor industry with many successful and impressive firms ie TSMC, etc.
And Malaysia with its affirmative action laws favouring certain ethnicities that ultimately undermined their industrial policies. The corruption and shenanigans that result from affirmative action policies happened in South Africa also happened in Malaysia and undermined their long term industrial goals.
Appropriating a quote from Deng Xiaoping "It doesn't matter whether a cat is black or white, as long as it catches mice." This is taken to mean that as long as the economy works, it is a good economy.
Affirmative action is equality of outcome. Do people think they have godly powers that can guarantee certain outcomes or results? There is an inherent risk of failure in all ventures and endeavours.
A correct criticism of capitalism is when it does not provide equal opportunity and so we should always strive to provide equal opportunity, but people confuse that with the equal outcome when, equal outcome can only be enforced through violence because different people, free people make different choices and when they make different choices they have different outcomes if you don't let them suffer the consequences of bad choices or reap the rewards from good choices then you have to use force or violence to get a prefered outcome
If people are really serious about freedom and equality then you should want not just the freedom to succeed, but also the freedom to fail.
[1]https://www.economist.com/leaders/2021/07/24/end-of-the-line...
[2]https://www.economist.com/middle-east-and-africa/2021/07/24/...
This is like saying rain is bad because it only fell on one farm out of a hundred.
> if a Government was serious about addressing historical inequalities then you need to invest in education and skills development.
So you agree that affirmative action can work. Your objection is to the way that the political elite pretended to implement affirmative action for the many while really only being interested in enriching themselves.
> Affirmative action is equality of outcome.
Nonsense. It can be whatever you want it to be. If you gave scholarships to impoverished black kids, that isn't a guarantee of a good outcome. Just that those poor black kids have the same opportunity than the rich whites. Now if you said that n% of all board seats of stock exchange listed companies had to be POC, then that would be equality of outcome.
Just because your South African politicians fucked your country over, doesn't make affirmative action bad.
2020: $20.9B [0]
2019: $21B [0]
2018: $21.1B [1]
2017: $9.6B [1]
2016: $10.3B [2]
$6B is a low single digit percentage of their profit going back 28 years. BOE has been subsidized on a whole other level and they're still not consistently profitable.
[0] https://www.intc.com/news-events/press-releases/detail/1439/...
[1] https://www.intc.com/news-events/press-releases/detail/1092/...
[2] https://www.intc.com/news-events/press-releases/detail/1102/...
There's nothing wrong with subsidising Intel. They're competing against countries like South Korea whose government recently announced a package of chip manufacturer subsidies worth $450bn after all. They won't be able to compete if they're aren't given a little help.
China probably sees things as leveling the playing field too. To find high tech industry that emerges through pure Ayn Rand search through Mogadishu, various favelas, etc., not developed or rapidly developing places.
it used to be common sense not to hand over your nation's strategic assets to potential foreign adversaries, common Americans all intuitively knew shipping manufacturing to China was bad. Wall Street greed and bribed politicians allowed this to happen. Evil is selling out your nation for profit
It's like American capitalism wants itself to fail. It's pretty much self sabotage at this point.
What is food stamps for Walmart and Amazon workers if not an unaccounted for government subsidy?
Because I see subsidizing exports through the nose as a way of dumping on foreign markets.
Evaluating the tech stack is very important and usually at the very top you find trivial technologies that are not difficult to replicate. This is where you find brand, trademarks, and marketing.
Maybe in other markets, anything related with semiconductors has a HUGE capital barrier to entry. Exhibit A: ASML's EUV machines.
I understand that an EUV machine is much more complex than a chisel but how difficult (in time) would be to clone one? Did anybody already start doing it?
A scenario is: China invades Taiwan, the chip factories blow up so China doesn't get them, it takes years to build them somewhere else for the rest of the world but China won't have those machines from ASML ever (embargoes.) But can they buy one now and clone it in a reasonable time?
China has barely 10 years of experience in chip industry and it's not necessarily the most profound one. China's most successful foundry SMIC was made possible by former top TSMC engineers (many with PhD's from top US universities) and it's generally understood that SMIC's most cutting edge 14nm node is really a clone of TSMC N16FFC. Many also suspect 14nm is their limit and can't advanced any further without access to the chip manufacturing supply-chain in the US/Japan/EU, who collectively own 95% of the market. Shanghai Micro Electronic Equipment, SMEE, recently announced that they developed their own 28nm lithography machines, but that's also with help and components from Japan. The 28nm processing is hardly a cutting edge tech and that's not even under US sanction. Even Taiwan/South Korea depend almost entirely on supply-chain from the US/Japan/EU (except wafer).
Now, the key idea here is "outsider's help." It's not impossible if China is allowed to poach engineers from their suppliers/competitors, steal IP, or import highly sensitive, cutting-edge components and materials from the US/JPN/EU. The problem as I see it is, there is obviously no shortage of American multinational companies, such as Apple, Nike, etc,... willing to sell out America's national security or economic interests to make more doh's in China. And Apple isn't just a very profitable US company with the largest market cap in the world, but also it's very well politically connected -- just look at the shenanigan Apple pulled against Qualcomm with their operatives at FTC. The orange man was somewhat of an anomaly and managed to stop this flow, but I'm not so sure about Biden or whoever comes next. The recent revelation, or $270B deal between Tim Apple and Xi, clearly shows what Apple intends to do and where this is going to go if Apple is left unchecked.
Americans are richer than ever. The problem in America, however, is that the distribution of that wealth has become completely lopsided so it’s concentrated in a few hands. That’s a domestic policy issue.
Outsourcing manufacturing is different, however, from shopping away strategic assets and not investing in keeping strategic manufacturing capacity alive, which once again is a failure of US domestic policy.
"Poverty and economic inequality are not identical. When the city is turning off your water because you can't pay the bill, it doesn't make any difference what Larry Page's net worth is compared to yours. He might only be a few times richer than you, and it would still be just as much of a problem that your water was getting turned off."
Except outside of the most abject poverty that is fairly rare in the developed world, utility/disutility is more a function of relative economic status than absolute economic status. So, in the only sense that matters, this is at least oversimplified; you have to improve absolute wealth on the lower end considerably just to offset the disutility of increased equality and break even. It is possible to increase inequality and have everyone better off in utilitarian terms, but improvements in the usual economic measures are not sufficient to show that because those are poor proxies for utility.
If we're just making handouts to support big companys competing to make their own chips, then yeah, it's boring & "evil". But there's a lot to be gained if America could reopen not just companies but foundries, places that take orders. If a nation can get it's citizens access to domestic chipmaking capabilities at competitive prices, that nation can start spawning all kinds of firms specialized in all manners of chips, can create a massive amount of intellectual & market leadership for itself.
I propose that creating silicon foundries again, as a public good, would be enormously enormously beneficial for the intellectual & economic prosperity of a nation.
If the world were well served by chip-making, then I think your disregard would be due. But we seem to be well well well into a period of mass consolidation, of less & less accessibility to chip-making. America & many other places that have been hotbeds of intellectual knowledge & creativity will surely languish & die unless the environment can be improved, unless access to the means of production can be secured & made available to the people, to the students, to the upstarts. Ignore that "stragedy" at your nation's mortal peril, imo.
I think it's a bit telling that the Google/SkyWater collaboration is still on 130nm. It's great that some patron is out there trying to encourage novel chip making, trying to reboot a general knowledge in a dying decaying sector. And there's some reasons why perhaps like 40nm or so might be un-strategic a choice. But generally I think access to even vaguely-quasi-modern chipmaking is falling away, is collapsing. The strategy of keeping this industry accessible is, to me, a defining battle.
(That said, OLED making is not where I think accessible, competitive silicon foundries are needed. But this thread, this story is a telling indicator to me.)
Capitalism doesn't exist in a vacuum, nor is it magical in the way you imply. You youngsters
You all have it so ingrained that market forces are the only way things should work that you even end up using absolute categories such as good and evil.
Is that not true? Does the US constitute only 13% of world chip making because most chips sold are cheap, low powered chips? And if that is the case, does it really matter that we aren't making the cheap stuff?
These chips are not cheap by anyway, US has lost advanced chipmaking ground
Instead of propping up our own companies, a better response might be to ban imports of these government subsidized products. Apple wouldn't be harmed in the slightest, this move is just a cost savings for them.
If China is going to do this we either have to do the same or levy corresponding import duties on the product. If we do nothing at all we lose all our industries to China.
Edit: yes the US does this too in other industries like aerospace. That just illustrates the point.
Pretty much for each unit they sell, they not only receive payment from customer, they also receive government payment for the same amount. As a result, they were able to keep the price unreasonably low.
CCP is as a matter of fact the largest VC in China.
Interesting trivia: BOE was considered the most successful example of municipal government VC by Hefei and Chengdu. Hefei bet on both plasma display and LCD, only BOE survived.
Not everyone thinks Apple's profit should come before America's national or economic interest.
Several decades ago it was food security - the idea that a nation must produce enough of its own food to feed its populace - that was the concern of import policy. Today the field is much, much broader.
China will dump out their OLEDs, I’ll get cheaper OLEDs, my nation will make other things and exchange them for OLEDs. China may come to dominate the OLED market, but OLEDs will be displaced by micro-LEDs.
China will never completely control any particular technology simply because, wealthy as they are, they don’t have the resources to afford such a thing. They may be able to buy their way to market dominance, but there will always be alternative sources. Not least, because of the fact they’re not the only country pursuing a strategy of national champions.
Food security is also a bit of a joke. Well not a joke, a cudgel used by the farming lobby to shut down reasoned discussions about whether we should reduce some of the largesses currently extended to farmers. Nations don’t need ‘food security’, they need a functioning global supply chain and reasonable leaders that can restrain the dogs of war.
Notions of things like food security only make wars more likely because nations feel like they’d be more likely to win in the event of one occurring. But really, we all know nobody would win in a war where America got to the point where food security was in question.
So yeah basically what Trump did to China during the trade war.
This has been long time in the making. The next step is probably using NAND from YMTC and DRAM from CXMT. Although both seems to be quite far off.
these types of "splits" have always confused me a bit. I guess Apple provides certain constraints - brightness, color accuracy, etc - and both manufacturers must meet those requirements.
But OLED displays are such complex things! Surely there must be some noticeable/functional difference between a "Samsung-display iPhone" and a "BOE-display iPhone" ? Slightly different viewing angle? Blues are a bit less saturated? Burn-in happens a few dozen hours sooner? 5% difference in power efficiency?
Apple is still using Qualcomm as their supplier but it wouldn't surprise me if they pull an M1 with their modem. For now they're at least using it as a bargaining chip with Qualcomm.
Infineon was a laggard and many who bought iPhones with Infineons modems thought they were laggard. I don't anticipate any breakthrough from this. I don't think Qualcomm is that worried either.
Apple alleged that it was being charged 4x other suppliers for access to Qualcomm modems. What came out during all the trials was that Apple wanted privileged access to next generation Qualcomm IP without making purchase commitments. Qualcomm's business model is to charge you for access to the IP and then to give it back as rebates on future purchases of chips. This ensured that you don't take the IP and run without buying chips, which is what Apple was basically trying to do.
Qualcomm counter-sued Apple and alleged they violated an MSA by providing privileged info to Intel who they were using as their second supplier to try and squeeze Qualcomm. The lawsuit alleged they provided Intel with Qualcomm IP to improve their Infineon purchased modems that were not performing well.
Apple however is playing 4D chess. It's known that they've been developing their own Modems for a long time. I suspect their whole lawsuit barrage against Qualcomm was an attempt to either invalidate patents or force Qualcomm to license patents out individually.
Intel had bought Infineon in the hopes of supplying both CPUs and Modems to Apple, but they couldn't make the modems perform and Apple dropped them which decimated their modem business. What Intel didn't know was Apple had been secretly developing the M1 to dump Intel entirely. The Apple purchase of Intel's modem business makes more sense as an IP grab to build out a war chest of Patents against Qualcomm because it happened around the time all their lawsuits with Qualcomm were finishing up and they basically lost.
Often times patents are used as a war chest to dissuade patent litigation from competitors or to get favorable cross licensing agreements. Up until Apple purchased the Intel/Infineon modem business, they likely didn't have those patents to defend against a Qualcomm lawsuit if they launched their own modem. You saw something similar happen when Apple and Microsoft purchased Nortel's patent portfolio 2 decades ago.
Sure, cross-licensing can sometimes be used as a negotiation chip in different situations, but, considering what Samsung and LG, who are among the top LTE patent holders were getting in return for cross-licensing with QUalcomm, I doubt that Infineon's patent portfolio was much of value. Also remember that the wireless SEP royalties are collected at the end of the supply-chain, ie, handset OEMs -- Qualcomm is not a handset OEM and has little or nothing to gain from such negotiation. Infineon's patents had very limited utility (and I'm pretty sure Apple's lawyers knew that too).
And Apple was the largest stakeholer in the Rockstar Consortium and, from the very getgo, Apple never intended to use them as a defense against Qualcomm (or any potential patent lawsuit). The Rockstar was a patent troll operation concocted by Apple to harasse Apple's competitors -- ie, Google and Android OEMs. It's just too bad that, despite Judge Gilstrap's heroic defiance to keep the case in Texas, judge Wilkens in the California court correctly saw through Apple's garbage and brought back the case home where all parties and witnesses, including Apple, would have been required to testify. Of course, the Rockstar dropped the lawsuit like a rock to prevent public disclosure of Apple's shenanigan.
Having observed Apple's lawsuits past 10+ years, I think it's silly to describe Apple's patent strategy as anything other than "predatory;" I certainly wouldn't call it "defensive."
I was never suggesting Apple planned to us patents from Rockstar/Nortel to go after Qualcomm. I was suggesting that Apple acquired Infineon IP as a means to defend itself if it were sued when it released it's own modem.
> The Rockstar was a patent troll operation concocted by Apple to harasse Apple's competitors
I don't think it was that cut and dry. Apple's two main offensive lawsuits during the Smartphone wars were against HTC and Samsung and didn't involve patents from Rockstar.
Each member of the Rockstar consortium had their own motivations but ultimately it was a defensive move to outbid Google who acquire over 14000 patents from Motorola and IBM that year. Most of the lawsuits Apple was involved in at that time were a result of litigation against them, not litigation they initiated.
After I returned the 2nd laptop, I started opening the laptop in store to check for the issue and went through 4 more additional laptops before I got the Samsung display.
A couple of months later, in their repair catalog, Apple apparently created a new part number consisting only of Samsung displays and started replacing with a Samsung screen for all repairs.
So? People get the base compatibility. What are they gonna do, compare micro-differences with another guy's device and complain?
And I say that as an Apple fan.
For example two or three years ago the top-of-the-line iPhone had either an Intel or a Qualcomm modem in it. People figured out the Qualcomm modem was faster. And some of them complained or tried to figure out a way to get a Qualcomm model.
Of course no normal user would care. Apple‘s standards are so high that even if you got the “bad“ OLED screen it would still be very very good.
Once you are selling to customers like that, you have left the realm of the so-called economically rational customer which has a value curve that seeks a good product at a fair price. Instead they feel entitled to the best product because they can/have paid the top price for it.
Thus there is going to be a subset that will deeply care that they have "the bestest of the best", and so micro differences become an obsession.
As long as all the providers meet a given spec, if some of them are better that isn't inherently a problem. This applies to having different suppliers as well as variance within a manufacturing process.
Now, of course if all reviewers happen to get the better version this could be an issue, as seen with lots of SSDs recently with components getting swapped out after-the-fact.
Of note, Samsung use different chips in different markets. The US version of the Galaxy S20 uses a Snapdragon chip which is generally considered better than the EU version's Exynos chip, particularly when it comes to power efficiency. That caused some anger.
I would say that as long as a manufacturer handles it correctly with reviewers so consumers see the minimum they could get, not a best-case, it's fine. Otherwise, it should probably be sold under a different name.
But presumably such an OEM must [often?] reward multiple suppliers with splits on orders.
Apple could split by model or destination market if there's a significant difference in quality or price, or just shuffle and you get what you get (or you return it until they change the return policy)
Most of these differences can be adjusted for in software, which would be trivial considering Apple's competency in color science.
The display industry was previously dominated by Japan; then is by South Korea. Both countries are close US allies -- or America's "lapdogs" if you prefer. The mobile OLED as we know today is mostly Samsung's achievement -- they were the first to successfully develop, commercialize and mass-produce with large market share, both as producer (95+%) and consumer (95+%) until a few years ago.
I guess the US Trade Rep Katherine Tai can rescinde tariff exemptions granted for almost all Apple products -- the company's iPhones and laptops now make up one of the largest import categories in trade with China.
I have heard that we would need to build an entire Pear River Delta supercluster of manufacturing and supplier capacity, to "level the playing field".
Not just one company. All the companies.
Is the US willing to build anything at that scale?
"Two suppliers that make components for Apple in China employ forced labor, according to a report published Sunday. The Washington Post says BOE Technology Group, which supplies screens to Apple, and O-Film, which makes iPhone cameras, both use Uighur labor, either directly or through contractors. Apple lists both companies on its latest supplier list."
https://www.cultofmac.com/688515/2-apple-suppliers-allegedly...
(The original Washington Post report:
"Apple is lobbying against a bill aimed at stopping forced labor in China"
https://www.washingtonpost.com/technology/2020/11/20/apple-u... )
"Apple wants to water down key provisions of the bill, which would hold U.S. companies accountable for using Uighur forced labor, according to two congressional staffers"
It doesn't imply the proposed law is well written, or even likely to achieve its stated goals. Just that Apple is lobbying against such a law.
Yes Apple should be sued for not doing enough. Keeping me feeling happy for and proud of the devices I use is why I pay them the Apple premium!
Yes I want the best hardware and software but most importantly I want zero guilt. To help get myself to zero guilt I’m currently buying (literally) the promise of Apple products in 2030 being net zero carbon and waste (99+% recycled from previous devices).
If Apple can’t provide me the least possible guilt with a product purchase, I will use any other company that will even if that means a higher premium. And if I find out Apple lied (even by omission) to me when I bought the product, I feel I’m owed a refund for now needing to feel guilt. And trust me when I say I feel a lot of guilt finding out my purchases knowingly/unknowingly relied on forced labor.
i think the assertion is a company like Apple or Dell etc has to repeatedly reverify that a contract manufacturer is still acting like they said they would.
This is the power of state-backed capitalism. You can make heads-I-win tails-you-lose bets (because if they lose you can just devalue the currency of the citizens).
Fascinating considering tech economies as proxy wars though…
I should remind us that the original "Doctrine of Fascism" (by Mussolini, not the German Nazi stuff) was very much about blending corporate and state power: it openly declares that "fascism is corporatism".
Or if it fails, you witness ghost cities and ghost industrial parks.
A Trinitron like curvature would be nicer than an obviously flat LCD panel.