In recent times, Transsion Holdings, often referred to as the “African King” in the smartphone industry, has voluntarily disclosed a performance forecast on its official website. According to estimates from its financial department, Transsion is projected to achieve a net profit attributable to the parent company owner of approximately 1.58 billion Chinese Yuan (CNY) in the second quarter of 2023, marking a substantial 84% increase compared to the same period in 2022.

Perspective from TrendForce:

• Improved conditions in certain regional markets have facilitated Transsion’s growth, though the growth rate is approached with caution.

In contrast to most Chinese brands that primarily target the domestic market, Transsion has maintained a sales focus on overseas markets. Building on its pioneering advantage by being among the first to enter the African market, Transsion established its position as the market leader. To mitigate the risks associated with dependence on a single market, the company also expanded into emerging markets like India. This strategic approach has contributed to Transsion’s potential for profit growth this time.

Based on the disclosed information, Transsion attributes the increase in profitability primarily to improvements in emerging markets’ economic conditions, leading to increased product sales. However, from a market perspective, the internally estimated 84% growth rate might be based on a relatively optimistic scenario.

Further analysis suggests that the term “emerging markets” here likely refers not to the Middle East and Africa, which have historically represented a significant portion of Transsion’s revenue, but more likely points to the Indian market.

Despite adjustments made by the World Bank and the International Monetary Fund (IMF) in their economic outlooks for the Middle East and Africa, factors like high inflation in countries such as Turkey in the Middle East and Egypt in North Africa have weakened consumer purchasing power. In such an economic environment with declining growth, consumers are likely to feel pessimistic about their future disposable income, resulting in reduced non-essential expenditures such as buying smartphones.

In the case of the Indian market, it has benefited from an economic recovery following a slowdown caused by the pandemic, coupled with a trend of foreign investment shifting away from China as a manufacturing hub. Increased exports have driven GDP growth in India, translating to higher disposable incomes for consumers.

However, despite the seemingly promising outlook for India’s smartphone market, competition is fierce, with brands like Samsung and Xiaomi already occupying a significant market share. As a newcomer to the market, Transsion faces challenges in achieving substantial performance growth amid this intense competitive landscape.

• China remains the largest market for smartphones, indicating short-term market recovery remains challenging.

Transsion’s focus on expanding into overseas markets outside of China has opened doors for potential growth. When examining global smartphone revenue by regional markets, China still reigns as the largest single-country market, contributing nearly a quarter of the company’s revenue. However, a closer look at China’s recent macroeconomic performance reveals a youth unemployment rate surpassing 20%, reaching a staggering 21.3%.

Given the rising unemployment rate, it can be inferred that consumers may hold pessimistic expectations for their future disposable income. Moreover, as the smartphone market matures and innovation becomes scarce, the lack of growth momentum in China’s market suggests that the overall smartphone market may continue to struggle to recover in the short term.

(Photo credit: Transsion)

According to the news from Commercial Times, in a recent press conference, the four major American cloud service providers (CSPs) collectively expressed their intention to expand their investment in AI application services. Simultaneously, they are continuing to enhance their cloud infrastructure. Apple has also initiated its foray into AI development, and both Intel and AMD have emphasized the robust demand for AI servers. These developments are expected to provide a significant boost to the post-market prospects of Taiwan’s AI server supply chain.

Industry insiders have highlighted the ongoing growth of the AI spillover effect, benefiting various sectors ranging from GPU modules, substrates, cooling systems, power supplies, chassis, and rails, to PCB manufacturers.

The American CSP players, including Microsoft, Google, Meta, and Amazon, which recently released their financial reports, have demonstrated growth in their cloud computing and AI-related service segments in their latest quarterly performance reports. Microsoft, Google, and Amazon are particularly competitive in the cloud services arena, and all have expressed optimistic outlooks for future operations.

The direct beneficiaries among Taiwan’s cloud data center suppliers are those in Tier 1, who are poised to reap positive effects on their average selling prices (ASP) and gross margins, driven by the strong demand for AI servers from these CSP giants in the latter half of the year.

Among them, the ODM manufacturers with over six years of collaboration with NVIDIA in multi-GPU architecture AI high-performance computing/cloud computing, including Quanta, Wistron, Wistron, Inventec, Foxconn, and Gigabyte, are expected to see operational benefits further reflected in the latter half of the year. Foxconn and Inventec are the main suppliers of GPU modules and GPU substrates, respectively, and are likely to witness noticeable shipment growth starting in the third quarter.

Furthermore, AI servers not only incorporate multiple GPU modules but also exhibit improvements in aspects such as chassis height, weight, and thermal design power (TDP) compared to standard servers. As a result, cooling solution providers like Asia Vital Components, Auras Technology, and SUNON; power supply companies such as Delta Electronics and Lite-On Technology; chassis manufacturers Chenbro; rail industry players like King Slide, and PCB/CCL manufacturers such as EMC, GCE are also poised to benefit from the increasing demand for AI servers.

(Source: https://ctee.com.tw/news/tech/915830.html)

Last week, major power semiconductor manufacturer Infineon announced plans to invest up to 5 billion euros over the next five years to construct the world’s largest 8-inch SiC power wafer factory in Kulim, Malaysia. This expansion will raise the total investment in the Kulim plant from 2 billion euros to 7 billion euros.

Interestingly, in February of this year, Wolfspeed announced its own plans to build what is touted as the world’s largest 8-inch SiC factory in the Saarland region of Germany. Infineon’s significant investment in the Malaysian 8-inch SiC factory sets the stage for potential competition with Wolfspeed, sparking an impending battle for Silicon Carbide production capacity.

In fact, driven by the rapid growth of industries like electric vehicles, the space for SiC power devices is expanding, attracting both Chinese companies and international enterprises to ramp up production.

According to statistics from TrendForce, aside from Wolfspeed, the first half of this year saw numerous companies, including STMicroelectronics, Mitsubishi Electric, Rohm, Soitec, and ON Semiconductor, expanding their production capacities. STMicroelectronics, for instance, announced a $4 billion investment in January to expand 12-inch wafer production. In June, they partnered with San’an Optoelectronics to establish a joint venture for 8-inch SiC device manufacturing, with an estimated total investment of around $3.2 billion.

On the Chinese front, there have been seven expansion projects related to Silicon Carbide. CRRC is investing 11.12 billion yuan to establish a project for the industrialization of medium and low-voltage power devices. YASC is also planning to construct a Compound Semiconductor power device production project, encompassing epitaxial growth, wafer manufacturing, packaging, and testing lines. Upon completion, the facility will have an annual production capacity of 360,000 6-inch SiC wafers and 61 million power device modules.

Additionally, BYD plans to invest 200 million yuan to establish a SiC epitaxial trial production and mass production project at its automotive production base in Shenzhen. The expansion will add 6,000 SiC epitaxial wafers per year, bringing the total capacity to 18,000 wafers per year.

(Photo credit: Tesla)

TV brands are gearing up for year-end promotions in August, driving the continued surge in TV panel prices seen in recent months. Despite concerns over rising costs and potential procurement reductions, panel manufacturers believe that strategic production control based on demand can maintain price momentum. August is expected to bring price increases of USD 2~10 for various TV panel sizes.

In the monitor segment, August might see moderate price increases. Commercial demand remains weak, while consumer demand surged in Q2, with modest growth projected for Q3. Price hikes for Open Cell panels are expected to be around USD 0.1~0.2. Quotations for panel modules indicate a USD 0.1 increase for 21.5-inch, 23.8-inch, and 27-inch sizes.

Notebook panel prices are slightly rising in August. However, due to strong second-quarter shipments and limited Q3 growth, price adjustments will likely focus on entry-level HD TN models. Manufacturers aim for comprehensive adjustments, projecting a USD 0.1 increase for both HD TN and FHD IPS models. The extent of these changes will depend on negotiations between manufacturers and brands.

According to the news reports from money.udn, which indicate that Foxconn, the prominent tech manufacturer, has clinched a substantial contract to supply Apple with AI servers, marking a monumental stride into the Apple AI server market. Notably, these servers will be dispatched from Foxconn’s manufacturing facility in Vietnam, positioning it as a pivotal player in Taiwan’s burgeoning AI sector.

While Foxconn traditionally refrains from commenting on individual clients and order specifics, market insiders reveal that Foxconn is not only the foremost assembler of Apple iPhones but also a crucial supplier of data center servers. As Apple charges ahead in the realm of AI applications, necessitating heightened support from AI servers, Foxconn’s stronghold in the AI server market has positioned it as Apple’s preferred collaborator due to its longstanding partnership.

Insiders indicate that Apple’s directive has prompted Foxconn to exclusively ship AI servers to Apple via its subsidiary, Foxconn Industrial Internet (FII), stationed in Vietnam.

Market research firms report that Foxconn currently holds a substantial global server market share of approximately 43%. This prominence not only establishes Foxconn as a manufacturing leader but also as the primary supplier to Amazon, the global cloud services (CSP) frontrunner. Having already supplied AI servers for ChatGPT and NVIDIA, and with primary customer Google rapidly venturing into generative AI, along with Apple’s recent strategic foray, Foxconn is poised for a surge in server business orders.

Apple’s CEO, Tim Cook, recently confirmed Apple’s longstanding involvement in various AI technologies, including generative AI, while emphasizing the current surge of resources into AI development. With Apple’s R&D expenditure rising to $22.61 billion last quarter, experts speculate that a significant portion has been allocated to AI development.

Moreover, international sources report that Apple is discreetly crafting the “Ajax” large-scale language model, potentially heralding the arrival of the generative chatbot “SiriGPT” in the near future. With Apple’s vast user base across the globe, abundant data resources could pose a threat to rivals such as Google and Microsoft.

Industry pundits assert that Apple’s extensive global user feedback from devices like iPhones, iPads, and Macs, combined with the mature ecosystem of the App Store, endows it with a strategic advantage in AI application development. Swiftly advancing AI server and data center deployment could enable Apple to navigate the curve and surge ahead in this competitive race.

Foxconn’s Chairman previously expressed optimism in the growth potential of CSP and AI servers. With Foxconn’s server revenues reaching $1.1 trillion last year, the company’s status as a server manufacturing leader naturally aligns with this burgeoning demand. Industry estimates underscore the dramatic increase in Foxconn’s AI server-related orders, reaching several billion dollars. This positions Foxconn as the definitive victor in the current AI wave, solidifying its place at the forefront of global AI server leadership.

(Source: https://money.udn.com/money/story/5612/7351082)