Tidbits #67 – World’s Factory on Break, Kazakh Chaos, Deltacron, Bividend + More

Hello, hello! 👋🏻👋🏻

Welcome back to another edition of Tidbits covering all the recent things worth talking about in business, media, and technology.

With the first week of the year all wrapped up, 2022 seems to be as wild as 2021 and 2020 so far…

🗺 World Affairs + Geopolitics

#1 Xi’an Lockdown Rattles World’s Largest Chipmakers

Samsung Electronics and Micron Technology are experiencing staff shortages at their manufacturing sites as the city imposes strict controls on people’s movement amid its worst outbreak. The companies together account for 67% of the global dynamic random access memory (DRAM) chips market and 45% of the supply of NAND flash chips.
Source: Caixin

Western countries, especially the US, know the challenges of having mixed pandemic responses. In the US, half of the population wants one thing (vaccines + maybe masks) and half of the population wants another (no vaccines + likely no masks). Unfortunately, viruses don’t care about our values, governance systems, culture, your mental cost of dealing with it, etc. Mixed pandemic responses are a recipe for continued chaos.

Unfortunately, this problem is not isolated to any given country. We live in a globalized world. Our supply chains are global. Mixed pandemic responses are a recipe for disaster when it comes to our supply chains.

China took a stringent approach to stamp out the virus early on. But its ability to continue to stay true to such a strategy is obviously challenged if external countries that it works with (e.g. US and Europe) do not follow the same approach. Because interacting with US and Europe which have more relaxed approaches to the pandemic obviously creates risk for China’s strategy. The cost of such divergence in strategy is that the US and Europe will have to suffer the impact of China’s action on supply chains. And from China’s perspective, they obviously would think it would be better for us to follow their approach, but that is not easy for Western governments to do (since Western governments seemingly have no ability to enforce anything).

Mixed pandemic responses are a recipe for continued chaos…

#2 China Tests Thousands in iPhone City as Covid Cases Spread

Hundreds of thousands of workers at iPhone maker Foxconn Technology Group and Huawei Technologies Co. are being tested for Covid-19 as China’s latest outbreak shows no signs of easing, with cases cropping up across the country and technology hub Shenzhen on high alert.
The government in the eastern metropolis of Zhengzhou, known to locals as iPhone City, required that all residents be tested on Friday, including hundreds of thousands of employees on the local Foxconn campus. Huawei’s research campus in Dongguan, meanwhile, started mandatory Covid testing Friday afternoon for all employees, along with staff from at least one manufacturing site in the southern city.
Source: Bloomberg

More potential chaos #2.

#3 Dan Wang 2021 Letter

I’ve by now lived in each of China’s main megaregions. It is time to make assessments.
…
China is like the thinking ocean in Stanislaw Lem’s Solaris: a vast entity that produces observations personalized for every observer. These visions may be a self-defense mechanism, allowing leftists to see socialism and investors to see capitalism; or, as Lem’s ocean might be doing, China is vastly indifferent to foreign observers and generates visions to play with them. Whatever the case, we need a better understanding of this country. Too many commentators have been interested in the story of China’s collapse. When the collapse doesn’t come, they lose interest and move on. It’s a more important and more subtle skill to figure out how this country can succeed, because that is the exercise the Chinese leadership is engaged in.
Source: Dan Wang

Dan Wang’s 2021 Letter is a must-read. He’s one of the most thoughtful China writers with direct living experience in both China and western societies.

#4 After Starlink Satellites’ Irregular Operations, SpaceX’s Connection With Us Military Arouses Concerns

This is not the first time that Starlink has come close to causing an accident in space or cause trouble for people on Earth. Since it launched the first batch of satellites in May 2019, many organizations and individuals across the world have complained about Elon Musk’s ambitious project for its risks of interfering with astronomical research, colliding with other satellites or space crafts, and creating dangerous space debris.
Worse still, Starlink and SpaceX, which announced to launch as many as 42,000 satellites into orbit, have reportedly initiated frequent instances of cooperation with the US military. Observers worry about this “space enclosure movement” of SpaceX and the Pentagon and say that it can pose a hidden danger to space missions of other countries, and may even threaten global security.
“It is a certain fact that they will increase the actual combat capability of US’ space force and other military services,” Song Zhongping, a Chinese military and aerospace industry expert, told the Global Times.
Source: Global Times

We discussed Starlink’s close encounter with China’s space station back in Tidbits #66 when the news was hot off the press. Now The Global Times is out with a piece that questions Starlink’s work with the US military and whether the recent encounters may have ulterior motives.

I think this issue is worth watching because trust between US and China is at decades low, and we may be in the foothills of a new Space Race between US and China. More importantly, Elon historically tends to be a bit loose with operations and quality. This could create potential accidents that are interpreted as malicious acts with intent.

And even from just a pure markets angle, if Elon / Tesla runs into problems in China as retaliation for this (or other related events in the future), that could impact TSLA stock, one of the largest components of US equity market indices now.

The irony of course is that the US often complains about Chinese civil military fusion (where private companies work with the military). Now China is complaining about the same with regards to Starlink and the US military.

#5 Kazakh President: Forces Can Shoot To Kill To Quell Unrest

Kazakhstan’s president authorized security forces on Friday to shoot to kill those participating in unrest, opening the door for a dramatic escalation in a crackdown on anti-government protests that have turned violent.
The Central Asian nation this week experienced its worst street protests since gaining independence from the Soviet Union three decades ago, and dozens have been killed in the tumult. The demonstrations began over a near-doubling of prices for a type of vehicle fuel and quickly spread across the country, reflecting wider discontent with authoritarian rule.
…
Concerns grew in recent days that an even broader crackdown might be coming, as internet and cellphone service was severely disrupted and sometimes totally blocked, and several airports closed — making it difficult to know what was happening inside the country and for images of the unrest to reach the outside world.
Adding to those fears was Tokayev’s request for help from a Russia-led military alliance, the Collective Security Treaty Organization, whose troops began arriving Thursday.
Source: AP News

Kazakhstan is a former Soviet satellite state. The geopolitical implications will be fascinating. It’s right in the underbelly of Russia, and it borders Western China.

We are in a chaotic era, an era of change.

And channeling some Hemingway here…change happens two ways, “gradually, then suddenly”.

🤑 Economics + Markets

#6 Fed Minutes Flag Chance of Earlier Hikes, Balance-Sheet Rundown

Federal Reserve officials said a strengthening economy and higher inflation could lead to earlier and faster interest-rate increases than previously expected, with some policy makers also favoring starting to shrink the balance sheet soon after.
…
Fed officials were also unanimous in expecting they would need to begin raising rates this year, according to anonymous projections published after the meeting. That marked a shift from the previous round of forecasts in September, which had shown the FOMC at the time was evenly divided on the question.
Source: Bloomberg

Markets are off to a very volatile start in 2022. Long duration, high multiple growth stocks continue to take a beating, while cyclicals continue to gain momentum. While the sell-off this week really started back in December, it was accelerated by the release of minutes from a recent Federal Reserve meeting suggesting members of the Fed would like to accelerate tightening, including shrinking the balance sheet.

#7 Cyprus Reportedly Discovers A Covid Variant That Combines Omicron And Delta

A researcher in Cyprus has discovered a strain of the coronavirus that combines the delta and omicron variant, Bloomberg News reported on Saturday.
Leondios Kostrikis, professor of biological sciences at the University of Cyprus, called the strain “deltacron,” because of its omicron-like genetic signatures within the delta genomes, Bloomberg said.
So far, Kostrikis and his team have found 25 cases of the virus, according to the report. It’s still too early to tell whether there are more cases of the strain or what impacts it could have.
Source: CNBC

I’d also be remiss to not mention the impact of Omicron on markets since late November. While investors initially reacted poorly, investors warmed up to Omicron in early December as data pointed towards milder infections compared to prior strains.

However, the risk, of course, is that with more and more people being infected due to Omicron’s faster spread, we may get new strains that may be more problematic.

We’ll have to see what this new “deltacron” means.

#8 Scoop: Manchin Returns To Build Back Better Negotiations With Demands

Sen. Joe Manchin (D-W.Va.) is open to reengaging on the climate and child care provisions in President Biden’s Build Back Better agenda if the White House removes the enhanced child tax credit from the $1.75 trillion package — or dramatically lowers the income caps for eligible families, people familiar with the matter tell Axios.
The holdback senator’s engagement on specifics indicates negotiations between him and the White House could get back on track, even after Manchin declared he was a “no” on the package on Dec. 19.
…
His belief that it could cost more than $4 trillion over 10 years extends beyond the CTC issue, and he continues to tell colleagues he’s concerned about the inflationary effects of so much government spending, Axios is told.
Source: Axios

Lost in all the hullabaloo, Biden’s Build Back Better agenda is on ice, but there might be some hope for a breakthrough.

With the Fed pulling back on monetary policy, fiscal policy is becoming more important for the stimulus efforts. But for the same reason that the Fed is pulling back, the fiscal policy agenda is also getting harder to rationalize in the face of rapid inflation. Unfortunately, a significant chunk of the inflation is driven by supply chain stress, which is really in the hands of China, global shipping, and US ports / truckers now and not in the hands of the Fed or Congress.

👻 Cryptocurrencies + NFTs

#9 Bitcoin Lingers Near September Lows Amid Drop of 40% From Record

Bitcoin traded near the lowest levels since September after an earlier swoon extended its weeks-long decline from an all-time high to about 40%.
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“Bitcoin and crypto are acting like risk assets right now,” said Callie Cox, investment analyst with eToro. “Investors are viewing Bitcoin as a play on the economic outlook, and right now that’s pretty murky.”
…
Bitcoin gained about 60% last year, outperforming other asset classes amid a narrative that included institutional adoption, inflation protection and investment diversification. It’s struggled in recent weeks, though, amid a volatile period for financial markets. Spiking inflation is leading central banks to tighten monetary policy, threatening to reduce the liquidity tailwind that lifted a wide range of assets.
Source: Bloomberg

One of the key narratives for Bitcoin (and crypto) is that it’s a hedge against central bank money printing all over the world.

Well now central banks all over the world are starting to tighten. It will be interesting to see if Bitcoin (and crypto) can hold up when one of the key narratives is now reversing. Central banking tightening also just means less fiat money sloshing around, the key fuel that underpins all speculative assets.

#10 Nasdaq-Listed Firm Says It Will Offer the First Bitcoin Dividend

BTCS Inc., a small Nasdaq-listed blockchain technology-focused company, said it is the first to offer investors the option of receiving a dividend issued in Bitcoin.
The Silver Spring, Maryland-based firm said in a statement Wednesday that investors will have the option to receive a cash dividend of 5 cents a share or the Bitcoin equivalent based on the price on a given date. The “Bividend” will be payable March 17.
Source: Bloomberg

🤔🤔🤔

Wonder how this works. For people that own the stock, you hold the stock in an equity account. How do you receive this Bitcoin dividend? Your equity account presumably cannot hold crypto directly. Do you connect a crypto wallet?

#11 How Cybercriminals Are Using Bitcoin’s Blockchain to Make Botnets Stronger Than Ever

Last week, Google announced that it had partially disrupted the operations of a massive botnet—a gargantuan network of over one million malware-infected Windows computers. In the world of cybersecurity, that would be news on its own, but this particular network was using an alarming blockchain integration that makes it tough to beat.
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But, as is the undying problem with botnets, the real issue isn’t necessarily how to knock down parts of an infected network, but how to keep them down. At the same time that Google said it had disrupted Gluteba, it also had to admit that the infected network would soon reconstitute and return itself to full strength through an innovative resilience mechanism based in the Bitcoin blockchain.
…
Plante seems similarly pessimistic. “It’s certainly a model that, if it were replicated to ransomware or other cybercriminal activities, it’s a scary possibility,” she said. “At this point, besides taking down a single C2 domain only to have it spin up again a few days later, no one has been able to find out a way to stop this.”
Source: Gizmodo

Technology is amoral. Technology is a tool. It can be used for good or bad. Having a tool that is not controllable is useful for fighting authoritarianism, but it also makes it hard for authorities to stamp out real issues.

#12 In El Salvador, Bitcoin’s Libertarian Streak Meets an Autocratic Regime

Bukele’s June Bitcoin announcement came as he tightened his grip on power. The first sign of an up-and-coming strongman appeared a year earlier when, after losing a legislative vote, he entered the country’s Legislative Assembly flanked by armed police and soldiers. Seated in the chair reserved for the president of the legislature, Bukele prayed to God, who he later said told him to have patience. He did not need to wait long. In May, after securing a supermajority in the legislature, Bukele’s coalition voted to remove the attorney general and all five members of the country’s constitutional court and replace them with loyalists. Soon after, Bukele engineered an extension of his presidential term beyond the usual limits.
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Bitcoin enthusiasts—some of them shaping Bukele’s policy behind the scenes—are left in an awkward position. Created in the wake of the global financial crisis, Bitcoin’s fans have held it up as a symbol of freedom, an open financial technology free of government control that would give people more autonomy. Now, they are helping to prop up an increasingly autocratic regime, one that could offer a roadmap for others around the world.
Source: Wired

Technology is amoral. Technology is a tool. It can be used for good or bad. Having a tool that is not controllable is useful for fighting authoritarianism, but what happens when it is used by an authoritarian government?

#13 BTS’s NFT Venture Hits Sour Note With Fans

When BTS unveiled plans last month to break into the NFT business, the South Korean boy band’s supporters revolted online, threatening boycotts and lodging environmental concerns.
In its first public comments after the fan backlash, BTS’s management agency HYBE Co.352820 -3.14% said it wouldn’t bow to the pressure, vowing to move forward with plans for nonfungible tokens, or NFTs. The initial endeavor will center on digital photo cards of BTS members and will launch within the first half of 2022, said John Kim, project lead of HYBE America overseeing the NFT business, in a statement to The Wall Street Journal.
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“We all love BTS, but destroying the environment in any way is not how we want to support them,” said Mel Palmer, a 31-year-old BTS fan from Philadelphia, who has a large TikTok following and has helped mobilize online criticism.
Source: WSJ

This is interesting. Very similar to the reaction Ubisoft received from gamers when Ubisoft announced the launch of NFTs discussed back in Tidbits #65.

Crypto and NFTs is kind of like a religion. BTS is also kind of like a religion! And as all of the old Gods know, mixing religions have never worked out.

BTS fans want music. Not religion of a different kind. And crypto and NFT enthusiasts want people to worship their crypto gods. When it comes to religious mingling, there is never space for collaboration…it is always a struggle to convert.

#14 Tech Startup Wants To Gamify Suing People Using Crypto Tokens

A new tech startup plans to become “the stock market of litigation financing” by allowing everyday Americans to bet on civil lawsuits through the purchase (and trade) of associated crypto tokens. In doing so, the company hopes to provide funding to individuals who would otherwise not be able to pursue claims.
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However, on its website, Ryval focuses all of its attention on the potential return for investors. “Buy and sell tokens that represent shares in a litigation and access a multi-billion dollar investment class previously unavailable to the public,” the company states. Ryval also promises “50%+ Annual Returns,” though Roche admitted the figure “may be a little high” when Motherboard asked him about it.
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“What we do is: tell the story, vet the legal claim, and then allow the public to invest and give you the funds to go and litigate your case,” Roche explained. “And what does the public get in return? The public gets an interest in the outcome of your suit.”
Source: Vice

🤔🤔🤔

I guess I’ll keep an open mind here, but seems like a lot of ways this can go wrong.

#15 The Truth About Nfts — The Hoops People Jump Through To Get JPEGs Will Shock You

Many “How to Buy an NFT” guides will direct you to OpenSea, Rarible and Mintable, but the truth is, the best place to purchase NFTs are at backdoor pre-sale events that typically occur on Discord. On top of that, not everyone can participate in these exclusive transactions — only whitelisters have this privilege.
Securing a spot on the whitelist, dear reader, is one of the best ways to maximize one’s chances of making profits from Bored Apes, or whatever silly, cartoonish NFTs are popular these days. I know what you’re thinking: “What the heck is a whitelist?” Like courtside NBA seats or the club’s VIP section, it’s the place everyone wants to be, but only a select few have access to it.
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As such, you can infer that landing on a whitelist means you have access to special privileges. In the NFT world, securing a whitelist spot means that you are among the select few that can buy NFTs at a discount before the public gets their hands on them. To show you a real world example, Mutant Mingos, an NFT art project that features odd-looking, colorful flamingos, offered its whitelist the opportunity to purchase an NFT for only 0.035 ETH ($140, as of this writing). A few days after the whitelisters minted their NFTs, Mutant Mingos then allowed the public to purchase NFTs at a price tag of 0.07 ETH ($280, as of this writing). That’s the benefit of the whitelist — you secure NFTs at discounted prices so that you can sell them to the general public for a profit.
Source: Laptop Mag

That sounds like a sure win and a good strategy. But seems kind of like the NFT version of front-running?

🎭 Society

#16 U.S. Population Growth Has Nearly Flatlined, New Census Data Shows

America’s population size is standing still, according to new data from the U.S. Census Bureau. Population growth over the 12-month period from July 1, 2020 through July 1, 2021 stood at unprecedented low of just 0.12%. This is the lowest annual growth since the Bureau began collecting such statistics in 1900, and reflects how all components of population change—deaths, births, and immigration levels—were impacted during a period when the COVID-19 pandemic became most prevalent.[i]
Source: Brookings

The US is supposed to be one of the healthiest western countries when it comes to demographics and population growth. Bad things happen when populations start to shrink…

It’s incredible that immigration is now the largest driver of population growth. And it’s unfortunate that this has been declining over the last 5 years. Given how much damage has been sustained on the immigration front, the US may need to get creative to get domestic population growth back on track.

#17 NASA ‘Looks To The Heavens’ For Help: Agency Enlisted 24 Theologians To Assess How The World Would React To The Discovery Of Alien Life On Distant Planets And How It Might Change Our Perception Of Gods And Creation

The program, which started in 2016, aimed to answer questions that have baffled us since the begging of time such as what is life? What does it mean to be alive? Where do we draw the line between the human and the alien? What are the possibilities for sentient life in other places?
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The Rev Dr Andrew Davison, a priest and theologian at the University of Cambridge with a doctorate in biochemistry from Oxford, was among 24 theologians who participated in Societal Implications of Astrobiology from 2016 to 2017, The Times reports.
‘Religious traditions would be an important feature in how humanity would work through any such confirmation of life elsewhere,’ Davidson shared in a blog post on the University of Cambridge site.
Source: Daily Mail

🤔🤔🤔

💬 Media + Games

#18 Good gamers, good managers? A proof‐of‐concept study with Sid Meier’s Civilization

Human resource professionals increasingly enhance their assessment tools with game elements—a process typically referred to as “gamification”—to make them more interesting and engaging for candidates, and they design and use “serious games” that can support skill assessment and development. However, commercial, off-the-shelf video games are not or are only rarely used to screen or test candi- dates, even though there is increasing evidence that they are indicative of various skills that are professionally valuable. Using the strategy game Civilization, this proof-of-concept study explores if strategy video games are indicative of managerial skills and, if so, of what managerial skills. Under controlled laboratory conditions, we asked forty business students to play the Civilization game and to participate in a series of assessment exercises. We find that students who had high scores in the game had better skills related to problem-solving and organizing and planning than the students who had low scores. In addition, a preliminary analysis of in-game data, including players’ interactions and chat messages, suggests that strategy games such as Civilization may be used for more precise and holistic “stealth assessments,” including personality assessments.
Source: Good gamers, good managers? A proof‐of‐concept study with Sid Meier’s Civilization. Review of Managerial Science (2021) 15:957–990

Something I’ve firmly believed for a long time – Games can help you learn (when used correctly).

🍪 Semiconductors + Chips

#19 Intel announces 5.5GHz capable 12th Gen CPU

The full name of the chip is the Core i9-12900KS, and Tom’s Hardware notes the “S’’ suffix suggests it’ll be a limited edition. As well as hitting a maximum of 5.5GHz on a single core (a 300MHz improvement over what we saw with the i9-12900K), an onstage demonstration of the new CPU powering Hitman 3 showed the processor running at a sustained 5.2GHz across all its performance cores. No details were given on what sort of power draw or cooling solution was needed to achieve these results.
Source: The Verge

Impressive! Especially since speeds have sort of hit a wall for the last decade…though this chip seems to be more of a demo product than for widespread mainstream commercial use.

#20 Apple Loses Lead Apple Silicon Designer Jeff Wilcox To Intel

Apple Silicon leader and T2 security processor developer Jeff Wilcox has left Apple to rejoin Intel and oversee architecture for all Intel System-on-a-Chip (SoC) designs.
As Apple heads to the end of its self-imposed two-year transition from Intel to its own Apple Silicon, the company has lost the leader of its M1 development team. Jeff Wilcox originally joined Apple from Intel in 2013, and is now returning to that company as it works on introducing new processors.
Source: Apple Insider

Wow.

#21 TSMC’s Arizona Culture Clash

Taiwan Semiconductor Manufacturing Co. (TSMC) faces challenges managing employees at its new fab in Arizona who are unaccustomed to the long work hours and management culture that in Taiwan have helped make the company the world’s largest chip foundry.
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“The reality for people from Taiwan is that they are doing even more than 12-hour days often,” said the American engineer on Glassdoor. “There’s also the night shifts and weekend shifts on duty and/or on call.”
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TSMC is often likened to a well-disciplined army. The company has the perhaps undeserved reputation for using Ph.Ds to monitor a single piece of equipment on a production line.
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Arizona employees are mainly recent graduates who have “zero working experience,” according to Gao.
Source: EE Times

Seems like the same story every other business that has tried to onshore manufacturing into the US has told.

People don’t work as hard as elsewhere (not entirely their fault because the laws are different). And labor costs a lot more. And this labor is now much less experienced than the cheaper labor available elsewhere. It’s a hard problem to reverse.

🚘🌽 “Nuts and Bolts” Tech

#22 BMW Debuts Color-Changing SUV

Wow. People are getting creative now that feet are held to the fire.

💉🔬 Health + Science

#23 mRNA Patent and Competitive Landscape: 2021 Year in Review and 2022 Outlook

In this post we provide a 2021 year in review update on mRNA pioneers and key players and offer additional conclusions and outlook for 2022 and beyond.
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A number of significant changes have taken place over the past nine months of 2021 relating to the competitive landscape. The two lead—and only—mRNA products on the market have already generated tens of billions of dollars in revenues for Moderna and BioNTech, with such revenue levels certain to continue into 2022 and potentially rise as the companies distribute booster shots and develop vaccines for the Omicron variant that each company says could be ready in months. The two companies’ efforts resemble a modern day “space race” to determine who can develop and distribute vaccines faster and more widely. The combination of global need, market competition, and advanced technological tools for drug discovery and development (including artificial intelligence (AI), CRISPR, and other technologies) is spurring innovation in the mRNA space at an exponential rate. This could all lead to major growth for these and other well-positioned mRNA market players especially if the predictions of BioNTech founders Ugur Sahin and Ozlem Tureci that “in 15 years, one-third of all newly approved drugs will be based on mRNA” holds true.
Source: LexBlog

Fantastic review of where the mRNA landscape stands today.

🤔 Hmm… / 😮 Much Wow

#24 Eternal Change for No Energy: A Time Crystal Finally Made Real

In a preprint posted online Thursday night, researchers at Google in collaboration with physicists at Stanford, Princeton and other universities say that they have used Google’s quantum computer to demonstrate a genuine “time crystal.” In addition, a separate research group claimed earlier this month to have created a time crystal in a diamond.
A novel phase of matter that physicists have strived to realize for many years, a time crystal is an object whose parts move in a regular, repeating cycle, sustaining this constant change without burning any energy.
…
Google’s quantum computing team made headlines in 2019 when they performed the first-ever computation that ordinary computers weren’t thought to be able to do in a practical amount of time. Yet that task was contrived to show a speedup and was of no inherent interest. The new time crystal demo marks one of the first times a quantum computer has found gainful employment.
Source: Quanta Magazine

I’m not really sure I understand the physics behind this, but the more interesting takeaway is that this is one of the first discoveries made by a quantum computer that likely could not have been made through classical computers.