As reported by the South Korean tech media outlet TheElec, South Korean smartphone giant Samsung is said to be planning to increase the production of phones manufactured by joint development manufacturers (JDM) in China from 4.4 million to 6.7 million units this year. The increased output from its JDM partners indicates that outsourced orders will account for 25% of Samsung’s smartphone production target for the year.

Reportedly, its JDM partners typically handles the production of low-end smartphones, being responsible for design and component procurement while Samsung provides the brand. For the past couple of years, the company has used JDM partners like Wintech to reduce its production cost for smartphones.

Furthermore, collaborating with JDM partners also enables Samsung to leverage the local manufacturers’ expertise in understanding trends. For instance, with the assistance of JDM partnerships, the Galaxy C55 was optimized locally for the Chinese market.

The number of Samsung smartphones produced by these JDM partners has also been steadily increasing in recent years. Data indicates that in 2019, JDM-produced phones accounted for less than 7% of Samsung’s smartphone output, but this year, that proportion has risen to 25%.

Regarding the current smartphone market in China, the China Academy of Information and Communications Technology (CAICT) has released its April 2024 analysis of the Chinese mobile phone market, showing a year-on-year increase of 28.8% in mobile phone shipments to 24.071 million units during the period.

According to the data from CAICT, in terms of brands, local brands dominated with 85.5% of the shipments, approximately 20.576 million units, while overseas brands, including Apple, accounted for nearly 3.5 million units.

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• [News] Continued Slump in iPhone Demand in China – February Shipments Reportedly Plunge by 33%

(Photo credit: Samsung)

Google has reportedly collaborated with TSMC on the upcoming Tensor G5 chip, slated for use in the Pixel 10 series smartphone to be released next year, according to media outlet Android Authority, based on information it spotted in trade databases.

Google has been cooperating with Samsung on its self-developed Tensor processors since 2021, including the Tensor G4 used in the Pixel 9.

The US tech giant’s latest strategic move is reportedly making Tensor G5 the first Google smartphone chip not produced by Samsung.

According to industry insiders cited by the aforementioned report, despite Google’s relatively low smartphone market share, the act would signify TSMC’s leading position in advanced nodes, and is expected to foster closer collaboration between the two companies in the future.

According to the market share data released by Trendforce in March, in 4Q 2023, Apple ranked as 1^st in global smartphone production, with a 23.3% market share, while Samsung (15.9%) and Xiaomi (12.8%) ranked as 2^nd and 3^rd, respectively. Google, on the other hand, has not made it to the top six.

Regarding other major smartphone players’ product roadmaps next year, in addition to Google’s Pixel 10, Apple is also rumored to cooperate with TSMC on the A19 Pro chip in the iPhone 17 Pro and iPhone 17 Pro Max, based on a previous report from Wccftech.

Samsung, on the other hand, is reportedly planning to use its 2nm process on the latest Exynos 2600 chip, which is expected to start mass production in 2025, and be used in the Galaxy S26 series smartphone, according to a previous report by the Korea media outlet ET News.

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• [News] Samsung Reportedly to Challenge Apple/TSMC with 3nm Exynos W1000

(Photo credit: Google)

The market was originally concerned that NVIDIA might face a demand lull during the transition from its Hopper series GPUs to the Blackwell series. However, the company executives clearly stated during the latest financial report release that this is not the case.

According to reports from MarketWatch and CNBC, NVIDIA CFO Colette Kress stated on May 22 that NVIDIA’s data center revenue for the first quarter (February to April) surged 427% year-over-year to USD 22.6 billion, primarily due to shipments of Hopper GPUs, including the H100.

On May 22, during the earnings call, Kress also mentioned that Facebook’s parent company, Meta Platforms, announced the launch of its latest large language model (LLM), “Lama 3,” which utilized 24,000 H100 GPUs. This was the highlight of Q1. She also noted that major cloud computing providers contributed approximately “mid-40%” of NVIDIA’s data center revenue.

NVIDIA CEO Jensen Huang also stated in the call, “We see increasing demand of Hopper through this quarter,” adding that he expects demand to outstrip supply for some time as NVIDIA transitions to Blackwell.

As per a report from MoneyDJ, Wall Street had previously been concerned that NVIDIA’s customers might delay purchases while waiting for the Blackwell series. Sources cited by the report predict that the Blackwell chips will be delivered in the fourth quarter of this year.

NVIDIA’s Q1 (February to April) financial result showed that revenue soared 262% year-over-year to USD 26.04 billion, with adjusted earnings per share at USD 6.12. Meanwhile, NVIDIA’s data center revenue surged 427% year-over-year to USD 22.6 billion.

During Q1, revenue from networking products (mainly Infiniband) surged more than threefold to USD 3.2 billion compared to the same period last year. Revenue from gaming-related products increased by 18% year-over-year to USD 2.65 billion. Looking ahead to this quarter (May to July), NVIDIA predicts revenue will reach USD 28 billion, plus or minus 2%.

NVIDIA’s adjusted gross margin for Q1 was 78.9%. The company predicts that this quarter’s adjusted gross margin will be 75.5%, plus or minus 50 basis points. In comparison, competitor AMD’s gross margin for the first quarter was 52%.

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(Photo credit: NVIDIA)

On May 20th, Intel announced that the release date for its next-generation processor, Lunar Lake, has been moved up, with official shipments expected in the third quarter. The NPU performance is set to reach 45 TOPS. However, per a report from Economic Daily News, the industry is puzzled by the fact that this chip is bundled with 16GB and 32GB memory, with Intel holding the specification control tightly. Reportedly, this move has disrupted the industry order, and PC manufacturers are said to be privately expressing their dissatisfaction.

It is expected that 20 brands will release 80 models featuring this processor. Combined shipments of Metro Lake and Lunar Lake this year are projected to reach 40 million units. Unlike the previous generation, Lunar Lake’s packaging design integrates LPDDR5x memory into a single package, emphasizing low power consumption.

On May 20th, Microsoft launched its next-generation AI PCs, equipped with a more powerful AI assistant, Copilot, and new features. It also established a new standard for AI PC architecture, “Copilot+ PC.” The initial products all feature Qualcomm’s “Snapdragon X Elite” processors designed with Arm architecture.

Qualcomm’s CPUs in the new PCs are equipped with a Neural Processing Engine (NPE) designed specifically for AI applications, boasting 45 TOPS. This, as per another report from the Economic Daily News, results in a 58% increase in speed and extended battery life compared to Apple’s latest top-tier MacBook, which uses the M3 chip. Additionally, they support Microsoft’s AI chatbot, Copilot.

Intel, on the other hand, made a rare announcement, revealing that its next-generation Lunar Lake will have a total performance exceeding 100 TOPS, with the NPU alone exceeding 45 TOPS—nearly three times that of the previous generation. Additionally, the CPU and GPU combined computing power will exceed 60 TOPS, making it the second qualified processor for Microsoft’s Copilot+ PC platform.

However, it is important to note that according to Intel’s plans, the new generation processors Ultra 5/7/9 will be bundled with memory and shipped together with the CPU. Specifically, the high-end Ultra 9 will be bundled with 32GB of memory, while the Ultra 5 and Ultra 7 will have 16GB and 32GB versions. Per Microsoft’s recommendations, AI PCs need at least 16GB of memory. While Intel’s approach meets this requirement, it limits the ability of brands to adjust specifications and leaves memory manufacturers out of the loop.

In simpler terms, there is still a demand for 8GB memory in lower-end notebooks, and high-end laptops can require more than 64GB of memory. However, Intel’s Lunar Lake constraints make it difficult to plan both high-end and entry-level versions. Industry sources cited in the same report from Economic Daily News indicate that Intel’s next-generation Arrow Lake will not be bundled with memory.

Reportedly, industry sources also state that procurement contracts with memory suppliers have traditionally been long-term, accounting for annual memory requirements. Now, Intel’s bundling of memory with its single platform changes the industry’s ecosystem. Previously, PC brands would develop various combinations (CPU + memory + SSD capacity) for their product lines. However, with Intel defining five laptop CPU + memory specifications, it limits the customization capabilities of PC brands.

With Intel launching Lunar Lake early, AMD is set to counter with its next-generation AI processor Ryzen series named Strix Point in the fourth quarter. The Strix Point processor will feature AI processing power exceeding 50 TOPS, and there will also be an APU, Strix Halo, expected to launch around the end of the year with performance exceeding 60 TOPS, making it a significant player in AI computing power.

CEO Pat Gelsinger recently demonstrated the performance of the Lunar Lake processor, emphasizing that its total AI workload exceeds 100 TOPS, with the NPU contributing 45 TOPS. The CPU features Lion Cove architecture P-cores and Skymont architecture E-cores, while the GPU and CPU together provide over 60 TOPS of computing power. This means Intel’s chip AI performance will be more than three times that of current products, with a total combined performance exceeding 100 TOPS.

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(Photo credit: Intel)

Just as generative AI is revolutionizing industries worldwide today by creating new opportunities, the concept of the Metaverse in 2021 was similarly embraced by technology giants as a strategic goal and vision for the future of the entire tech sector.

Microsoft, for instance, targeted the corporate segment of the Metaverse, showcasing the use of its mixed reality (MR) device, HoloLens 2, in manufacturing operations. NVIDIA introduced the Omniverse platform for image simulation, thereby facilitating the development of virtual environments within the Metaverse. There were also rumors about Google and Apple launching new virtual reality (VR) head-mounted devices. Perhaps most notably, Facebook’s name change to Meta was a clear indication of its commitment to this emerging field.

As Hype Fades, More Hardware and Content Are Needed to Strengthen the Foundation of the Metavers

Despite initial market optimism, the reality was that wearable technology had not reached maturity, and the quality of virtual content experiences fell short of expectations. As a result, there was insufficient momentum to drive the Metaverse forward in subsequent market developments. Many tech companies established departments dedicated to the Metaverse, but due to lackluster results and issues with resource allocation, these departments often faced workforce reductions, downsizing, or even complete dissolution.

Declining enthusiasm for the Metaverse primarily stems not from a flaw in the idea of blending virtual and real worlds, but from the grandiosity of its concept. The essence of Industry 4.0, after all, revolves around enhancing production efficiency through the data-driven integration of physical and digital realms.

This is a proven approach. Nevertheless, the challenge with the Metaverse lies in its ambitious scale. Without adequate software and hardware support, efforts to expand and implement it often fall short, yielding minimal benefits and, thus, diminishing its commercial appeal.

Essentially, the widespread adoption of technologies like head-mounted devices and a rich content library are vital for industry growth. In response, companies that develop VR and augment reality (AR) in recent years have pivoted their focus from the broader environmental framework towards improving wearable devices and creating engaging content. In doing so, they aim to boost the practical value of adopting VR and AR.

From Virtual Interaction to Spatial Computing, the Scope of Applications for Head-mounted Devices Continues to Expand

In 2023, according to TrendForce’s analysis, Meta’s Quest series dominated the global VR and MR device market, securing nearly 70% of total device shipments. This significant market share places Meta at the forefront, with Sony’s PS VR series ranking second, followed by other manufacturers like PICO and HTC. Entering the fray in 2024, Apple introduced its Vision Pro, which is expected to claim a 6% share of the global market.

Meta’s latest offering, the Quest 3, has adopted pancake lenses that enhance image clarity while slimming down the device’s profile. It is powered by the Qualcomm Snapdragon XR2 Gen 2, a (SoC) tailored for head-mounted devices that significantly boosts GPU and AI processing capabilities.

The Quest 3 marks a pivotal shift for Meta from VR to MR. Equipped with dual front-facing RGB cameras and advanced features like depth projection and room mapping, the Quest 3, alongside the higher-end Quest Pro, supports a range of MR applications. Additionally, the tracking capabilities of the Quest 3 are augmented by computer vision and machine learning technologies. With Meta’s ongoing collaboration with LG on new product development, the focus is now on extended reality (XR) applications linked with the television ecosystem.

Apple’s Vision Pro, which was launched in February 2024, has reignited market interest in VR.

This device fills a previously unaddressed gap in Apple’s portfolio by offering a VR head-mounted device that integrates seamlessly with iPhones, iPads, and other devices within Apple’s ecosystem, thereby enabling functions like image and video projection onto larger screens. The introduction of the Vision Pro brought the concept of spatial computing into the limelight, enabling users to interact with virtual objects in a natural and intuitive way and thus infusing fresh perspectives into the industry.

Moreover, at CES 2024, Sony unveiled an XR head-mounted device dubbed a “spatial content creation system.” Like the Apple Vision Pro, this device leverages the advantages of spatial computing. It’s designed as a commercial tool for developing 3D content, offering users precise and intuitive control over virtual objects, thereby simplifying the process of creating 3D models.

From Taiwan, ASUS has recently introduced its first AR glasses, the AirVision M1. These glasses are designed to function as a secondary screen, ideal for use outdoors or in situations where extra screens are necessary at home.

Taiwan-based Companies Expand into the Supply Chain for Headsets, Focusing on Optics, Chips, and Assembly

TrendForce analyst P. K. Tseng said that a critical aspect of the transformation for VR head-mounted devices is the increasing need for key components that are lighter and more compact, particularly pancake lenses, which are gaining importance due to their contribution to volume reduction.

However, the technological complexity and higher cost of manufacturing these advanced optical components mean that suppliers, such as GSEO and Young Optics, are relatively limited. This presents a blue ocean market opportunity, likely attracting more manufacturers to develop pancake lens components.

Furthermore, the trend is expected to drive demand for smaller-sized panels. While mainstream LCD panels continue to be widely used, the advent of devices like the Apple Vision Pro is anticipated to increase the adoption rate of Micro OLED panels.

Additionally, as standalone virtual devices become more mainstream in product design, and as the need for processing large volumes of image and sensor data independently by SoCs grows, demand will rise for dedicated chips used in VR and AR devices. For instance, MediaTek is rumored to be developing an exclusive AR chip for Meta.

System or device assembly is a key area of focus for Taiwan-based companies, particularly evident in the efforts of major ODMs like Quanta and Foxconn. These companies are enhancing their VR and AR hardware manufacturing through various strategies, including partnerships, mergers and acquisitions, and investment initiatives.

In the VR device supply chain, the strength of system assemblers lies in their ability to offer comprehensive product solutions, which expands the options available to prospective clients. The assembly of VR and AR devices presents unique challenges due to the necessity for high-quality image rendering and real-time motion capture. Numerous components are involved in the process.

Not all VR and AR device brands can develop head-mounted devices completely in-house, as demonstrated by companies like Meta and Sony. For newer market entrants, securing a comprehensive product solution that allows for future customization is a more desirable strategy. This demands that system assemblers have significant expertise in relevant technologies and ODM capabilities. As such, as opportunities in the VR and AR market continue to emerge, these assemblers are well-prepared to offer solutions for head-mounted devices.

Generative AI and Added-Value from Applications Will Sustain Future Growth Momentum

Beyond hardware, the focus on creating more content and valuable applications will be a major topic in the next phase of VR industry’s development, with generative AI poised to play a pivotal role.

Taking gaming as an example, VR game development is known to be exceedingly time-consuming, requiring developers to dedicate substantial amounts of time to coding. As a result, the games often lack diversity, customization, and meaningful game mechanics.

However, leveraging generative AI can expedite the game development process without sacrificing quality or increasing costs. Recent market analyses suggest that the adoption of generative AI could significantly reduce the time required to create XR learning modules from the 5-10 days typically seen in 2021 to less than 30 minutes today.

Consequently, major game engine providers like Unity are seizing this business opportunity. In mid-2023, Unity introduced a suite of generative AI development solutions tailored for VR game production. These solutions can be employed to create characters, objects, assets, and sound effects, thus significantly reducing development costs.

According to TrendForce’s research, global shipments of VR head-mounted devices are projected to register a slight year-on-year drop of 1.8%, but the annual total is still expected to surpass 9.3 million units.

Furthermore, with the releases of many new products ranging from chips and peripherals to complete systems, many of which were showcased at this year’s CES and MWC, there is strong bullish sentiment regarding the development of the VR industry. The strategies of major manufacturers for VR and AR devices also demonstrate intense efforts to explore new use cases beyond existing applications, or to expand into other commercial sectors such as remote assistance, virtual learning, and simulation training.

Additionally, in many countries, VR and AR are now being incorporated into medical treatments, such as psychological therapy and physical rehabilitation. Although the progress in promoting VR and AR technologies still depends on factors like pricing, specifications, and user experience, the expansion into new application markets is a positive development, particularly given the current shortage of content.

Therefore, the added-value provided by new applications will be a key determinant of the VR market’s growth momentum. Furthermore, the efficiency of using generative AI in content production holds the potential to propel device manufacturers into the next technological generation.

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(Photo credit: Apple)