Though being capable of running AI features may be the primary focus for global smartphones this year, due to restrictions on AI products’ usage in China, the Wall Street Journal reports that the upcoming new iPhone, expected at the end of the year, will not be able to use ChatGPT in China. Apple has reportedly been in discussions with companies like Baidu for potential partnerships, but no progress has been made yet.

China is Apple’s largest market for iPhones outside the United States. While smartphones from various brands will integrate AI this year at full throttle, incorporating apps like OpenAI’s ChatGPT, these apps from Western countries are not permitted for use in the Chinese market. According to the Wall Street Journal, industry insiders indicate that Apple is still searching for a Chinese AI partner. However, with the new iPhone set to launch in a few months, no progress has been made.

Notably, as per a report from TrendForce, in the first quarter, Apple faced a decline in sales in the Chinese market, resulting in a  drop in annual production to 47.9 million units.

In China, companies must obtain government approval to release AI devices. As of March this year, the Office of the Central Cyberspace Affairs Commission has approved 117 generative AI products, none of which are from brands outside of China.

The Wall Street Journal, citing industry sources, reported that Apple had tentatively inquired with Chinese authorities earlier this year about the possibility of allowing foreign language AI models on their smartphones. While believing approval to be unlikely, Apple has reportedly sought partnerships with local companies instead.

One of Apple’s main competitors, Samsung, has already launched the Galaxy S24 this year, featuring real-time translation and AI-enhanced photo editing and search capabilities. Samsung’s phone includes its own generative AI and also collaborates with Google. However, since Google’s AI tool Gemini is not permitted for use in China, Samsung has shifted to partnering with Baidu and Meitu AI.

It is not new for global tech companies to adjust their product and service offerings to cater to the Chinese market. For example, Apple uses state-owned enterprise servers for iCloud in China, and the recently launched Vision Pro cannot stream Apple TV+ in the country.

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• Q1 Smartphone Production Increases Due to Low Base Last Year, Expected to Decline 5–10% in Q2, Says TrendForce
• [News] Continued Slump in iPhone Demand in China – February Shipments Reportedly Plunge by 33%

(Photo credit: Apple)

Novatek, a major driver IC manufacturer in Taiwan, entered the iPhone 16 supply chain early this year and secured certification ahead of its competitor LX Semi. However, according to a report from Commercial Times citing sources, its Korean competitor, LX Semi, recently also obtained certification and, with strong support from foundries, is challenging Novatek’s exclusive supply position.

The same report continues to cite sources indicating that LX Semi remains the exclusive supplier for iPhone 16 Pro/Pro Max’s LG Display (LGD) OLED screens in the second half of the year, with significant acceleration in chip production starting in September. It is estimated that the order allocation between Novatek and LX Semi will be 55:45.

Industry sources cited by Commercial Times reveal that LX Semi has a closer partnership with leading foundries, compared to Novatek’s previous strategy of relying on established foundries. Reportedly, another sources confirms as well that LX Semi has recently been certified and, with support from foundries, will begin significant wafer production by the end of the third quarter.

Other industry sources cited by the report further pointed out that Apple’s OLED panels are supplied by Korean manufacturer LGD, while LX Semi was originally LG Group’s subsidiary. Therefore, after LX Semi obtained certification, they increased orders from LGD, thereby reducing the originally planned procurement of OLED driver ICs from Novatek. However, for Novatek, they still heavily rely on Apple orders. If shipments go smoothly, they are expected to further secure opportunities in other product lines, such as iPad OLED DDIs and Apple Watch.

Yet, concerns are also noted, as the report brought up that the momentum in TV applications accompanying sports events is expected to slow down. Additionally, subdued sales during China’s 618 shopping festival and a conservative attitude among brand manufacturers in the second half of the year may affect demand for components like DDICs.

Therefore, Novatek keeps investing in establishing OLED production lines in order to seek new breakthroughs, such as IT TCON (timing controller) products. These products are manufactured using a 12-nanometer advanced process to create efficient computing units, integrating UHD 240Hz LCD and OLED panel display compensation functions, targeting high-end laptops.

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(Photo credit: Novatek)

Apple is reportedly shifting its mixed reality (MR) device strategy by abandoning the development of its existing high-end Vision Pro headset in favor of launching an affordable MR device expected to debut next year. According to a report from Economic Daily News, it’s rumored that Foxconn is likely to replace Luxshare as the manufacturer for Apple’s affordable MR device, although Foxconn typically refrains from commenting on order specifics and client relationships.

Alongside this move, Apple reportedly plans to incorporate AI capabilities into the product, which is anticipated to significantly boost sales of the affordable MR device. Per the sources cited by the same report, they are optimistic that companies like Genius Electronic Optical (GSEO) and GIS Industries are poised to benefit from the opportunities.

According to a report from tech media outlet The Information citing sources, Apple initially planned to release two versions of the Vision device, akin to the standard and Pro versions of the iPhone. However, Apple is said to have informed at least one supplier to halt the development of the next-generation high-end Vision Pro headset.

Recently, Apple has planned to launch the USD 3,500 Vision Pro in eight new markets, including China and Japan. However, The Information, citing a source from a supplier, reported that after receiving Apple’s forecast of weakened demand for the Vision Pro by August, the supplier cut production by half in May.

The sole supplier, which has no competitors, produced approximately 460,000 Vision Pro components in the first four months of this year and plans to produce an additional 100,000 components from May to August. This suggests that Apple expects to produce at most around 500,000 units this year, with no significant production increase before August.

The Information revealed that Apple started developing a more affordable version of the Vision product in 2022, internally codenamed “N109.” According to the report, Apple is also trying to reduce the weight of the budget version by at least one-third compared to the Vision Pro. It is further reported that Foxconn will replace Luxshare as the manufacturer for Apple’s affordable MR device.

Industry sources cited by the same report indicated that Apple has already announced Apple Intelligence, confirming that AI applications will be integrated into all future devices. The next generation of MR devices, featuring more AI functions and applications along with a more affordable price, is expected to boost demand and significantly increase shipment volumes, benefiting Foxconn.

Other Taiwanese collaborators are also poised to benefit. GSEO has gradually been obtaining orders from the supply chains of Sony, Meta, and Apple, providing lenses and components for VR/MR headsets. GSEO expects VR-related applications to account for 20-30% of its revenue this year.

GIS plays a crucial role in the Vision Pro supply chain, handling the most technically challenging lens bonding tasks. Its production base is located in Chengdu, China, and it is generally anticipated to be part of the supply chain for Apple’s affordable MR headset as well.

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(Photo credit: Apple)

According to a report by the Korean media outlet The Chosun Daily on June 16th, Samsung’s “Galaxy Tab S10” series tablets will be equipped with MediaTek’s Dimensity 9300+ application processor (AP) from Taiwan, marking the first instance of MediaTek’s AP being adopted by Samsung’s flagship tablet.

The report highlights that MediaTek’s APs have primarily been used in Samsung’s mid-to-low-end smartphones. The decision to use MediaTek’s AP in the Galaxy Tab S10 series, instead of Qualcomm’s or Samsung’s own APs, is a significant shift for Samsung.

The sources cited in the report believe that Samsung’s move is a butterfly effect caused by TSMC’s price hikes. TSMC’s price increases have potentially led to a rise in the cost of Qualcomm’s Snapdragon chips, which are manufactured by TSMC. After price negotiations, Samsung’s Mobile Communications Business (MX) decided to equip the Snapdragon 8 Gen 3 chips only in the Galaxy Tab S10 Ultra series, while using MediaTek’s Dimensity chips in the Plus and base models.

The same report further indicates that from Samsung’s perspective, choosing Dimensity to reduce costs and diversify the supply chain is a sensible decision. However, for Samsung’s foundry division which manufactures Exynos, this development is somehow unwelcome. While Exynos used to have price advantages over Snapdragon in supplying Samsung’s flagship products, the use of Dimensity jeopardizes Exynos’ competitive edge in its bargaining power for future flagship product pricing negotiations.

Samsung Electronics’ upcoming AP, the “Exynos 2500,” set for release next year, will also face similar challenges. With TSMC recently rumored to increase price for its 3nm process, costs for Qualcomm’s Snapdragon 8 Gen 4, slated for release in October, are expected to sharply increase. Industry source cited by the report further suggests the cost of this chip could rise from over USD 200 in the previous generation to more than USD 250.

TSMC Chairman C.C. Wei recently stated that, almost all companies interested in AI-related demand are willing to work with TSMC. From the yield rates obtained by customers, TSMC offers the best cost-effectiveness solutions, hence there is room for price increases. Per a report from Liberty Times, the wafer order prices for TSMC in 2025 are expected to be finalized in September and October this year.

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• [News] Samsung Reportedly to Challenge Apple/TSMC with 3nm Exynos W1000
• [News] MediaTek Announces 4nm Dimensity 7300 Series Chips, Supporting Foldable Devices

(Photo credit: MediaTek)

Following US sanctions in August 2019, Huawei’s internal operating system backup, HarmonyOS, emerged and has been in development for nearly 5 years. Currently, HarmonyOS is widely recognized, and its native version is set to launch on June 21st, marking the cornerstone of Huawei’s ambitious HarmonyOS project.

According to a report from UDN, Huawei is pursuing a dual-track development strategy for HarmonyOS. Internally, it focuses on its “1+8+N” terminal business strategy: “1” refers to smartphones, “8” includes large screens (TVs), tablets, PCs, wearables, car units, and more, while “N” covers a wide range of IoT devices. This approach aims to expand and flourish the HarmonyOS ecosystem.

In essence, HarmonyOS follows two main paths, while the first shares similar market positioning with current market leaders Android and iOS in the consumer sector, primarily focused on Huawei’s own terminal devices, aiming to expand the HarmonyOS ecosystem within the consumer domain.

The second path is OpenHarmony, also known as Open Source HarmonyOS. Reportedly, this initiative involves Huawei’s ecosystem partners leveraging Huawei’s donated OpenHarmony code base to develop their own commercial versions of HarmonyOS. These partners utilize their industry expertise and resources to vertically expand into sectors such as education, finance, transportation, and more. OpenHarmony primarily targets industrial applications.

Vertically, Huawei is reportedly looking to integrate HarmonyOS and OpenHarmony through foundational technology, establishing interoperability and connectivity to create an unified HarmonyOS. This strategic integration is designed to position HarmonyOS as a world-class operating system for the future IoT, aligning with Huawei’s ultimate goal of establishing HarmonyOS as a global IoT OS.

Recently, the unified device interconnection technology standards for OpenHarmony were officially released. Huawei’s Consumer Business Group Chairman, Richard Yu, recently disclosed plans to unify application and service ecosystems across Harmony OS and the commercial versions of OpenHarmony. This initiative aims to enhance consumer and industry experiences by sharing a unified HarmonyOS ecosystem that includes programming languages, compilers, and tools, thereby constructing a comprehensive smart terminal operating system.

Huawei is also said to be advancing another significant vertical initiative: the native HarmonyOS. Currently, Huawei has successfully developed the entire stack of HarmonyOS as an independent Chinese-made operating system, contrasting with the majority of global operating systems such as Android and iOS, which are based on the Linux or Unix kernel.

Huawei’s recent strides not only shape the future of HarmonyOS and OpenHarmony but also bolster Huawei’s autonomy and control. These developments are crucial for China’s tech enterprises, providing resilience against potential US sanctions. Whether in consumer or industrial sectors, the Mega HarmonyOS can be activated promptly, underscoring why numerous Chinese companies are joining the HarmonyOS ecosystem.