Apple’s 2024 fall event officially took place earlier, highlighting the launch of the new iPhone 16 series, along with other products like the Apple Watch Series 10 and AirPods 4. According to CEO Tim Cook, the next generation of iPhone has been designed for Apple Intelligence, marking the beginning of an exciting new era.

Apple and global tech companies are in a race to integrate AI into their products, with smartphones anticipated to be one of the key competitive arenas.

Apple’s AI software, Apple Intelligence, is set to enhance Siri and improve functionalities like object recognition and identification through the phone’s camera, per sources cited in a report from Reuters.

A test version of Apple Intelligence will launch next month for U.S. English users, with other localized English versions set to follow in December. Additional language versions, including Chinese, French, Japanese, and Spanish, are anticipated for next year. It is worth noting that Apple has not yet announced an AI partner in China for the iPhone 16 series.

Apple stated that improvements, including enhancements to Siri, will be phased in over time but did not provide a timeline for moving beyond the test phase.

Notably, Apple’s event occurred just hours before Huawei’s launch of a tri-fold phone, highlighting the competitive challenge Apple faces.

In contrast, Huawei’s website revealed on Monday that it had already received over 3 million pre-orders for its Z-shaped tri-fold phone before its official release.

This underscores Huawei’s ability to withstand U.S. sanctions and bolsters its competitive position against Apple in China, where consumers are enthusiastic about AI features and willing to pay a premium for them, according to a Reuters report.

• iPhone16

The iPhone 16 features a 6.1-inch display, while the iPhone 16 Plus has a 6.7-inch screen. Both models are equipped with the A18 chip built on TSMC’s advanced 3nm process, which reportedly offers a 30% boost in CPU performance compared to the A16 chip used in iPhone 15. Additionally, they come with increased battery capacity and enhanced cooling capabilities.

Moreover, the latest iPhone chips are based on the newest Arm architecture, which includes specialized features aimed at accelerating AI applications.

Notably, Apple has introduced an “Action Button” on the iPhone 16 and iPhone 16 Plus, which supports various functions like camera, flashlight, Focus mode, translation, magnifier, and voice memos.

The higher-end iPhone 16 Pro and 16 Pro Max are crafted from titanium and come with enhanced AI features, including suggestions for optimizing photo shoots and advanced audio-editing tools designed for professional video production.

Still, a previous report from Bloomberg has also addressed concerns over the slow rollout with its AI platform, which may put iPhone 16 “Supercycle” in doubt.

• New Apple Watches and Airpods

Apple also unveiled new Watches and AirPods with health-focused capabilities, as well as hardware-design improvements.

Apple highlighted the Watch’s ability to discover longer-term health conditions such as sleep apnea as well as detecting and responding to emergencies such as a fall.

For the new AirPods, there are two versions: a standard model and a version with active noise cancellation. As part of the AirPods update, Apple’s introduced hearing-aid features are under review by U.S. regulators.

Read more

• [News] iPhone 16 “Supercycle” in Doubt? Concerns Rise Over Slow Rollout with its AI Platform
• [News] Fuelled by AI Features, Apple’s iPhone 16 Shipments Reportedly to Increase by 10%

(Photo credit: Apple)

China has long been the preferred location for tech companies to establish their supply chains. However, in recent years, the decline in population dividends has led to rising labor costs, and the need for tech companies to mitigate the impact of geopolitical risks has prompted them to accelerate the relocation of supply chains out of China, with some shifting production capacity to Southeast Asia and South Asia.

Recently, as per a report from TechNews citing sources, it’s indicated that HP is considering moving more than half of its personal computer production away from China to countries like Thailand and Vietnam.

This move is primarily aimed at significantly reducing its reliance on China’s supply chain, as well as addressing global trade dynamics and the need to lower costs.

In addition to HP, several well-known tech companies are also shifting their supply chains to Southeast Asian and South Asian countries.

• Apple

One notable example of supply chain relocation is Apple. Having long relied on China’s supply chain, Apple is now finding that the era of full dependence on China is coming to an end due to political and commercial pressures.

iPhone

As one of Apple’s most important products, iPhone has been a key focus in this shift.

Although supply chain diversification was always part of Apple’s strategy, the plan has been accelerated following a series of disruptions at Foxconn’s Zhengzhou plant during the pandemic. These events have compelled Apple to expedite its efforts to diversify its supply chain.

According to a report from Business Standard, since April of this year, Apple has assembled iPhones worth USD 14 billion in India, with 14% of iPhones now being manufactured there.

Rajeev Chandrasekhar, India’s former Union Minister of State for Electronics and Information Technology, also stated on the X platform that by 2028, it is estimated that up to 25% of iPhones will be made in India.

iPad

In addition to iPhone, Apple has also started shifting part of its iPad production to Vietnam. Foxconn is responsible for manufacturing iPads in Vietnam, where mass production and shipments are already underway.

MacBook

Similarly, the MacBook production line has been partially moved out of China and relocated to Vietnam, which is primarily produced by Quanta and Foxconn in their Vietnamese facilities.

Earlier rumors cited by Nikkei have suggested that Apple was considering shifting some of its production to Thailand as well. However, Thailand’s supply chain for key components is not yet fully developed, with many parts still reliant on imports from China.

The associated transportation costs and the risk of potential damage during transit have led Apple to prioritize setting up production lines in Vietnam first.

Nevertheless, Thailand’s strong electronics manufacturing infrastructure and cost advantages make it a potential future production site for Apple.

Following Apple’s cancellation of the Micro LED watch project, the associated supply chain has been further impacted. According to a report from TechNews citing MicroLED-Info, the latest one is KLA Corporation, which has announced a complete exit from the flat panel display (FPD) equipment business.

KLA recently announced its complete withdrawal from the FPD market. The company, which acquired Israeli automated optical inspection (AOI) system supplier Orbotech for USD 3.4 billion, had entered the Micro LED market opportunistically through this acquisition, as Orbotech is a developer of inspection equipment for the semiconductor and display industries.

Due to slowdowns in investment and demand in the consumer electronics market, Orbotech’s performance has been lackluster in recent quarters, with the entire division accounting for only about 3% of KLA’s revenue, totaling USD 283 million in 2023, a decline of 48%. As per the same report, it’s believed that KLA’s decision to shut down this division is linked to the cancellation of a major project with a key customer, likely Apple.

As FPD is one of Orbotech’s main divisions, with KLA announcing its withdrawal from the FPD market, more than 100 employees from this division will face layoffs. KLA stated that exiting the FPD equipment business will not impact the company’s revenue expectations for this quarter, which are projected to be USD 2.3 billion with a variance of plus or minus USD 12.5 million.

Apple’s decision in March to cancel the Micro LED watch project sent shockwaves through the display industry and Micro LED developers.

German LED giant Osram is still considering its next steps, with expected losses of USD 650-900 million; electronic assembly solutions provider Kulicke & Soffa also announced losses of USD 110-130 million due to the cancellation of its collaboration with Apple. Additionally, LG Display’s Micro LED development team within the Strategic Customer (SC) department has started downsizing.

Read more

• [News] Why Apple “Unexpectedly Cancels” Micro LED Watch Project?
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(Photo credit: Apple)

In late December 2023, Apple faced sales suspension of certain Apple Watch models in the United States due to concerns over patent infringement with Masimo’s blood oxygen detection technology.

Despite Apple’s appeal for reinstatement, regulatory authorities will review updated designs presented in mid-January 2024 to determine whether sales suspension persists. The potential financial and time costs associated with settlement or redesign may prompt Apple to reassess the necessity of incorporating blood oxygen detection.

TrendForce’s insight:       

Apple and Masimo’s Prolonged Legal Battle Set to Conclude in Mid-January 2024, Verdict on Blood Oxygen Monitoring Patent Infringement

Since the introduction of the S6 in 2020, Apple Watch has featured blood oxygen monitoring technology, addressing the demand for detecting hidden hypoxia and hypoxemia, particularly in the context of the COVID-19 pandemic. Many smartwatches released during the same period also incorporated this functionality.

The blood oxygen monitoring technology in Apple Watch utilizes traditional pulse oximetry. The built-in sensor consists of red, green, infrared LEDs, and a photodiode sensors that converts light into electric current.

In essence, the technology relies on shining light onto wrist blood vessels to capture data on the difference between oxygenated and deoxygenated blood. Algorithms are then employed to determine the blood oxygen content.

Hence, this technology involves not only software-related analytical applications but also hardware configurations and usage considerations.

In fact, the infringement dispute between Apple and Masimo has been ongoing. Since 2020, Masimo has accused Apple of patent infringement. The legal battle continued until October 2023 when the U.S. International Trade Commission (ITC) ruled in favor of Masimo, determining that Apple had indeed infringed. Consequently, in late 2023, a sales ban was imposed on certain models of Apple watches.

Despite Apple’s appeal allowing them to resume sales, regulatory authorities will reassess Apple’s redesigned models in mid-January 2024 to determine if improvements have been made.

Currently, the most severe impact of the ban is on models with blood oxygen functionality from the S6 onwards, including the S8, while only the SE series, without this feature, remains unaffected.

Diminished Need for Blood Oxygen Monitoring in Temporal Context – Apple May Reconsider Necessity

Given the current situation, there are several possible developments. Firstly, Apple may reapply for approval of a redesigned model by regulatory authorities, allowing them to resume sales after making necessary adjustments.

However, this approach involves not only software modifications but also hardware changes, encompassing testing, review processes, and relaunching, which could take several months. Considering Apple’s usual product release schedule in September each year, the company faces significant time pressure.

Secondly, Apple may opt for a settlement with Masimo. In the past, Apple has resolved disputes over chip technology and intentional slowdown of older devices with Qualcomm and in collective lawsuits with users.

However, settlement amounts were substantial, approximately $4.5 billion with Qualcomm and potentially up to $500 million in the case of collective user lawsuits. Compared to Apple Watch’s annual revenue in 2023, which may not have reached $20 billion, such outcomes may be less favorable for Apple.

If Apple cannot bypass Masimo’s patent through updates, settlement and payment of ongoing patent fees may become a necessary consideration. However, this to some extent may prompt Apple to reevaluate the necessity of the blood oxygen monitoring feature.

After all, for smartwatches equipped with blood oxygen monitoring is intended for health, not medical purposes. Besides Withings’ products, most smartwatches with this feature have not obtained approval from the U.S. Food and Drug Administration (FDA). In other words, they cannot be used for medical purposes.

While having more features at the same price would enhance the product value for consumers, the current context of the post-pandemic era and Apple’s user loyalty suggest that the demand for additional functionalities may vary.

If Apple does not intend to further integrate blood oxygen data with other physiological data, there might be room to reconsider the necessity of redeveloping the technology and the continued existence of the blood oxygen monitoring feature in future Apple Watches. The value of incorporating such functionality may be subject to greater flexibility in this scenario.

Read more

• [News] Apple Reportedly Accelerates Production of MR Headset “Vision Pro” for Potential February Launch
• [News] Apple Could Introduce Micro LED into Vision Pro, Replacing Existing Micro OLED Technology

(Photo credit: Apple)

1. Gloomy Global Economy Affects Smartwatch Sales, Predicted 2023 Shipments at 130 Million

In 2023, the trajectory of the smartwatch industry is shaped by two major forces. On one hand, it’s driven by the shift in demand from the smart wristband market, becoming a gateway for brand manufacturers to create market momentum on a global scale. However, it also grapples with the impact of the sluggish economy, which affects consumers’ disposable income, leading to a reduction in market demand.

It’s estimated that the market will grow to 130 million units by the end of 2023. Brand manufacturers’ share of shipments hasn’t seen significant changes, and they continue to introduce innovative products. Apple leads with over 30%, followed by Samsung at nearly 10%, alongside Huawei, Garmin, Fitbit and others.

2. Manufacturers Opt for More Cautious Strategies, Focusing on Minor Upgrades and Diversified Research

Given the uncertain landscape, major smartwatch manufacturers like Apple, Samsung, and Huawei are expected to embrace a more conservative development approach. While they will keep innovating and introducing new products, their design philosophy leans towards incremental upgrades.

High-end watch models will be introduced with caution, targeting well-defined niche markets. Furthermore, some brands are likely to venture into other smart wearable devices, but many of these new devices face challenges in terms of data analysis, application integration, and market maturity, which means it will take time before they become commercially viable.

3. AI Focus: Major Manufacturers Prioritize AI Integration for Accuracy and Innovation

Without making substantial changes to their existing structure, companies are proactively utilizing AI technology as the cornerstone of their development strategy. This approach yields benefits such as fine-tuning existing sensor data for more precise measurements and the creation of applications that cater to consumer needs.

As AI applications heavily rely on chip performance and battery life, companies like Apple are upgrading their chips. This move aims to elevate past auxiliary functions into mainstream operations through AI. Moreover, this technology may further integrate with their Vision Pro devices’ gesture controls, enhancing the overall user experience.