Hello, hello! 👋🏻👋🏻
Welcome back to another edition of Tidbits covering all the recent things worth talking about in business, media, and technology.
🗺 World Affairs + Geopolitics
#1 North Korea Claims Successful Test Of Hypersonic Missile
North Korea said Wednesday its leader Kim Jong Un oversaw a successful flight test of a hypersonic missile he claimed would remarkably increase the country’s nuclear “war deterrent.”
The Korean Central News Agency said Tuesday’s launch involved a hypersonic glide vehicle, which after its release from the rocket booster demonstrated “glide jump flight” and “corkscrew maneuvering” before hitting a sea target 1,000 kilometers (621 miles) away.Source: AP News
North Korea joins China and Russia in successfully developing hypersonic capabilities (which the US currently does not possess).
While hypersonic capabilities do not mean everything, it means just enough for North Korea, China, and Russia to possibly take a little more risk than they would otherwise. I would be on alert for more aggressive posturing from all three in the coming months / years, at least until the US has the potential to counter. Aggressive posturing in geopolitics (especially during a time when Biden appears weak both internationally and domestically) could create left-tail risks for capital markets.
From my understanding, hypersonic missiles fly fast enough to evade current missile defense systems (like the Iron Dome system employed in Israel), allowing for nuclear first-strike (though it is not clear the hypersonic missile tests conducted so far are capable of carrying nuclear warheads). Nuclear war is likely not something any country is angling for, but having that capability as a negotiating card can be advantageous.
#2 Destructive Hacks Against Ukraine Echo Its Last Cyberwar
For weeks, the cybersecurity world has braced for destructive hacking that might accompany or presage a Russian invasion of Ukraine. Now, the first wave of those attacks appear to have arrived. While so far on a small scale, the campaign uses techniques that hint at a rerun of Russia’s massively disruptive campaign of cyberwar that paralyzed Ukraine’s government and critical infrastructure in years past.
Data-destroying malware, posing as ransomware, has hit computers within Ukrainian government agencies and related organizations, security researchers at Microsoft said Saturday night. The victims include an IT firm that manages a collection of websites, like the same ones that that hackers defaced with an anti-Ukrainian message early on Friday. But Microsoft also warned that the number of victims may still grow as the wiper malware is discovered on more networks.
Administrators found PCs locked and displaying a message demanding $10,000 in Bitcoin, but the machines’ hard drives were irreversibly corrupted when an admin rebooted them.
In the 2015 and 2016 waves of those attacks, a group of hackers known as Sandworm, later identified as part of Russia’s GRU military intelligence agency, used malware similar to the kind Microsoft has identified to wipe hundreds of PCs inside Ukrainian media, electric utilities, railway system, and government agencies including its Treasury and pension fund.Source: Wired
The more I study Russia and Putin, the more masterful Putin seems. Putin is incredibly skilled in moving the chess board in his favor, even though he started with a very weak position / set-up, and he is very good at engaging at low-heat asymmetric war. Hot war is just an option. Whether he exercises the hot war option or not, he is already harassing and hobbling his opponents technologically and psychologically.
Long cybersecurity sector / companies.
🤑 Economics + Markets
#3 Jamie Dimon Takes High View of Fed Hikes: ‘It Could Be Six or Seven’
The head of Wall Street’s biggest bank is among those bracing for the possibility that the Federal Reserve will need to lift interest rates more than the market is currently pricing in, warning that policy tightening won’t necessarily be as “sweet and gentle” as some might expect.
“I expect more interest rate increases than is in the implied curve,” Dimon said Friday on a conference call with analysts after JPMorgan released its fourth-quarter results. “My view is a pretty good chance there will be more than four. It could be six or seven.”
“The consumer is very strong” and businesses “are in very good shape,” Dimon said. “The table is set pretty well” in terms of growth “with obviously the negative being inflation.” He also said that it would be a mistake to assume the economy won’t grow during a period in which interest rates are increasing.Source: Yahoo / Bloomberg
As mentioned in the last edition, the markets have been rapidly repricing the pace of Fed tightening in the last few weeks and negatively impacting capital markets. The markets have gone from assuming 0 or 1 rate hikes about 3 months ago to now 3 or 4, BUT there are certainly a subset of people that now expect even more such as Jamie Dimon.
If 7 rate hikes do indeed come to pass (in 2022), the markets are likely not ready for it. It may or may not solve the inflation problem since a meaningful portion of inflation is due to stressed supply chains, but it would certainly decelerate the economy and economic growth.
This would not be good for (value) cyclical stocks or high-multiple (growth) stocks. (My bet would still be on secular growers, but it would pay to be highly selective…or catalyst-driven special situations that do not necessarily depend on the overall macro situation).
Such a scenario would rhyme with the much-feared “stagflation” environment experienced in the 1970s where people experienced a toxic mixture of oil supply-induced inflation, high interest rates, and slow economic growth.
#4 Cathie Wood Outflows Grow as Diehard Fans Face Biggest Test
The loyalty of Cathie Wood’s legion of fans may be finally waning, as the new year bloodbath in speculative technology stocks hands the star money manager a miserable start to 2022.
The withdrawals come as ARKK languishes at the lowest in about 18 months. ARK Investment Management’s main exchange-traded fund dropped more than 15% since the start of the year through Thursday as top holdings like Roku Inc., Zoom Video Communications Inc. and Teledoc Health Inc. got caught in the tech-share rout.Source: Yahoo / Bloomberg
ARK’s unwind continues to be a headwind for high-growth “disruptive” stocks. She doesn’t own every high-growth disruptive stock, but she owns enough to damage the sentiment across the entire space. And her weakness is likely attracting short sellers / vultures.
Objectively, it’s very fair to question the prices she has paid for many companies, especially the ones that are highly immature with limited revenues and traction. But at the same time, some of her holdings are fairly established companies that are now also being dragged down.
The first bucket is still quite risky, but the second bucket is starting to look interesting for potential investment opportunities. Vultures are circling what appears to be a dying herd, but not every beast will eventually die.
#5 Won’t Somebody Please Think of the ARK Structured Notes?
Noah’s Ark was a biblical port in the storm, providing shelter as a vengeful God wreaked havoc with devastating floods.
Today’s ARK is not only sinking in the face of higher interest rates, it may also end up being the proximate cause of a structured product storm.
That’s because big investment banks from JP Morgan Chase & Co. to Goldman Sachs Group Inc. have been issuing structured notes tied to the value of Cathie Wood’s famous ARK family of exchange-traded funds.Source: Bloomberg
A good reminder that there is a lot more capital riding on ARK than just the family of ETFs. ARK’s issues further feeds into this broader web of structured notes and derivatives.
👻 Cryptocurrencies + NFTs
#6 The Associated Press Is Launching an NFT Marketplace for Its Award-Winning Photography
AP’s first NFT collection will include photography from present and former photojournalists at the company and feature a selection of Pulitzer Prize-winning images.
The NFTs will range across images of space, climate, war and various other topics, and each will arrive with original metadata, providing owners with the image’s “time, date, location, equipment and technical settings,” according to the company. Price points for each NFT will vary, though all proceeds will support AP’s journalism.Source: Hypebeast
Seems like everyone and their grandma is eventually going to launch an NFT / NFT collection.
But makes sense! It’s basically free money (for now).
While I can sort of wrap my head around why someone would want to own a buzzy NFT like Cryptopunks or Bored Apes or even NFTs from brands like Adidas, there will eventually be a line where people will ask “what is the point?”.
In the traditional art world, Art is valuable, but I wouldn’t go paying Art prices for any of your or your child’s random doodles. No one even pays Art prices for nice drawings from no-name hobbyists.
#7 Fashion Giant Gap Launches Gamified NFTs on Tezos
The San Francisco-headquartered retailer said Wednesday it’s rolling out a gamified digital experience allowing customers to purchase a limited-edition Gap hoodie.
Gap’s NFT collaboration is designed by Brandon Sines, the artist behind Frank Ape, a cartoon mythical creature, and will be built on the Tezos blockchain.Source: Coindesk
These seem pretty cool.
But I’ll echo what I wrote above for the AP News.
#8 Coinbase’s Path To Creating A Robust And Regulated Crypto Derivatives Market
Today, we’re announcing the acquisition of FairX, a CFTC-regulated derivatives exchange or Designated Contract Market, which represents our next step toward creating the robust and holistic trading environment investors are seeking. Through this acquisition, we plan to bring regulated crypto derivatives to market, initially through FairX’s existing partner ecosystem. Over time, we plan to leverage FairX’s infrastructure to offer crypto derivatives to all Coinbase customers in the US. We want to make the derivatives market more approachable for our millions of retail customers by delivering an easy-to-use user experience that Coinbase is known for.Source: Coinbase
This is interesting. What people like about crypto is the volatility and the idea (which is any combination of its limited supply, decentralized natured, perhaps security aspects, etc). What people seem to like a lot less at the moment is actually figuring out how to buy and use it. BUT crypto derivatives give you all of the desirable aspects (volatility and the idea of crypto) without actually having to deal with the bad parts (figuring out how to buy and use it).
Coinbase offering crypto derivatives will be a very interesting thing to watch. Crypto derivatives are already available to institutional investors, but offering it through Coinbase could dramatically expand the number of participants engaged with crypto derivatives.
#9 World’s Biggest Crypto Fortune Began With a Friendly Poker Game
With $96 billion, Binance CEO Changpeng Zhao is closing in on tech titans including Facebook’s Mark Zuckerberg and Google’s Larry Page and Sergey Brin.
The Abu Dhabi Grand Prix draws princes, movie stars and world-famous athletes every year to party on Yas Island, the entertainment hub about 30 minutes from the center of downtown.
Mingling among them last month was a figure charting an unlikely ascent: a former McDonald’s burger-flipper and software developer who, practically overnight, has vaulted into the ranks of the world’s wealthiest people — cryptocurrency pioneer Changpeng Zhao.
His road to crypto riches began in Shanghai in 2013 during a friendly poker game with Bobby Lee, then CEO of BTC China, and investor Ron Cao, who both encouraged him to put 10% of his net worth into Bitcoin.
After spending some time studying it, he took the plunge and ended up selling his apartment for Bitcoin. In 2017, he founded Binance (a portmanteau of binary and finance) and it quickly blossomed into a crypto powerhouse. Zhao even got the company’s logo tattooed on his arm.Source: Bloomberg
Amazing story. This is the fastest and largest fortune ever created in history. Even Elon’s fortune took longer to create. And if crypto reclaims its highs and powers higher, CZ could overtake Elon.
#10 Crypto Creeps Into U.S. Politics as Candidates Offer NFTs
Congressional candidates are beginning to break into the world of cryptocurrency by selling non-fungible tokens to help finance their campaigns in the midterm elections.
Kurani, who said she was the first to distribute NFTs to campaign donors through a digital marketplace called SolSea, said she’s offering NFTs to seek support from a younger generation the way former President Donald Trump has used MAGA hats to raise millions of dollars from his supporters.
Fundraising consultants say crypto is still a ways off from becoming a regular source for contributions, and there are still questions about how easily campaign finance regulations could be skirted.
Critics have raised concerns that cryptocurrency donations could easily avoid the donor-disclosure required under federal campaign finance laws. Democrats on the FEC said in discussing a 2014 advisory opinion that Bitcoin campaign contributions should be limited to $100 each, similar to the legal limit on cash contributions, because they are difficult to trace. FEC Republicans disagreed, and the ruling was approved without the $100 limit. Under the ruling, crypto just had to abide by the same disclosure requirements and limits as other contributions.Source: Bloomberg
The subject is crypto but this is really about society and politics. Political donations / contributions is a very delicate matter. I question the unforeseen left-tail risks of allowing politicians to accept donations through crypto, especially since crypto space has very poor KYC (“know your customer”) standards. This could open the door for foreign interference in elections / campaign finance since it would be possible for Russia (for example) to support their favorite candidates through crypto donations.
#11 US Army Offers Up To $50K Bonus To New Recruits
The US Army is offering a bonus up to $50,000, the largest amount ever, to some new recruits who enlist for six years in an effort to increase its ranks amid the coronavirus pandemic.
“This is an opportunity to entice folks to consider the Army,” Brig. Gen. John Cushing, deputy commanding general for operations at the US Army Recruiting Command (USAREC), said in a statement. “We’ve taken a look at the critical (military occupational specialties) we need to fill in order to maintain the training bases, and that is where we place a lot of our emphasis.”Source: CNN
The US has a labor shortage. This includes the military.
Ideally, you would want people to feel enough loyalty and allegiance to the country to want to fight for it. You would want enough people whose primary motivation is honor. Honor is valuable but free. Money is not.
#12 Reddit ‘Antiwork’ Forum Booms As Millions Of Americans Quit Jobs
Ford is an early pioneer of the “antiwork” movement, which encourages followers to work as little as possible in traditional jobs or abandon them altogether for self-employment, with the goal of prioritising leisure time.
She is also a moderator of r/antiwork, the influential thread on internet forum Reddit. Its membership has ballooned from 180,000 in October 2020 to 1.6m this month as the coronavirus crisis leads many to re-evaluate their careers.
“Idlers”, as members of the antiwork movement call themselves, largely believe that people should strive to work as little as possible and preferably for themselves. Many who have stopped working say they operate their own microbusinesses, like Ford, or work as few hours as possible in part-time jobs in order to survive. Some take on roommates or raid dumpsters for food to reduce their cost of living, according to Ford.
The antiwork movement traces its ideology back to Marxist texts suggesting that humanity could evolve beyond the requirement to work for a living. A parallel has emerged in the popular “lay flat” trend among Chinese millennials, where they swear off ambitious careers in favour of simpler, less materialistic lives.Source: FT
In a way, there is an increasing risk that a portion of Americans is systematically rejecting Capitalism.
This is bad for inflation and bad for economic growth. Economic growth certainly isn’t everything, but it’s the most useful tool for the advancement of society. There is something really broken about how the economy is working for many people. We need to fix it soon before a meaningful portion of society decides to stop playing the game.
#13 These TikTok Stars Made More Money Than Many of America’s Top CEOs
TikTok stars are dancing their way to the bank. Some are making more than America’s top chief executives.
Charli D’Amelio, who started posting videos of herself dancing on TikTok in 2019, brought in $17.5 million last year, according to Forbes, which recently ranked the highest-earning TikTok stars of 2021. With 133 million followers on TikTok, she makes her money from a clothing line and promoting products in TikTok videos and other ads.
Ms. D’Amelio’s compensation was higher than several CEOs of big publicly traded companies, including Exxon Mobil Corp. ’s Darren Woods ($15.6 million in 2020), Starbucks Corp. ’s Kevin Johnson ($14.7 million), Delta Air Lines Inc. ’s Ed Bastian ($13.1 million) andMcDonald’s Corp. ’s Chris Kempczinski ($10.8 million), according to the Journal’s analysis of their recent compensation figures.Source: WSJ
Every grade school student everywhere likely goes through an exercise at one point in their life of imagining their ideal job when they grow up. Years and years ago, when I was in 5th grade, I went through such an exercise. Some of my classmates would answer…Nurse! Police! Astronaut! Garbage man!
I never quite understood why the answer wasn’t always the same for everyone – the highest paying job (that I knew at the time) – Surgeon or President.
Now that I know more about life and how the world works, it’s never been clearer that society simply cannot function if we all wanted exactly the same high paying job. It’s even more interesting that many of the highest paying jobs in our society today are not the most useful or most important ones.
There are a number of studies that have shown that “influencer” is now the most desired profession among kids (I would bet serial start-up founder is a close 2nd). This cannot be healthy for society…interestingly, China is taking a really hard line against “influencers” at the moment, while also trying to push more and more kids into STEM fields.
A society full of only STEM people is also not likely a well functioning one…society ultimately needs a balance. How can this be achieved without equalizing pay? In the past, money was important but it wasn’t the ultimate decision factor. This allowed more dispersion in professions as we all answer to our own interests + differences in skills. Increasingly, money is the only factor in decision making in our society. And that’s a problem.
#14 Hospitals Cut Beds as Nurses Call In Sick With Covid-19
Rising numbers of nurses and other critical healthcare workers are calling in sick across the U.S. due to Covid-19, forcing hospitals to cut capacity just as the Omicron variant sends them more patients, industry officials say.
The hospitals are leaving beds empty because the facilities don’t have enough staffers to safely care for the patients, and a tight labor market has made finding replacements difficult.
Staff shortages prompted the Mass General Brigham hospital system in Boston to keep 83 beds empty on Friday. The University Hospitals system in Ohio has closed as many as 16% of its intensive-care beds recently, while Parkland Health & Hospital System in Dallas has shut 30 of 900 beds.
Limiting capacity is a last resort for hospitals, doctors and healthcare officials say. The facilities do it to preserve the proper care and safety of current patients, though it means leaving people in limbo in emergency rooms, making ambulances wait and postponing treatment for cancer, heart disease and other conditions.Source: WSJ
I’m concerned about the long-term state of healthcare services. Why would anyone want to be nurses or doctors after this whole COVID-19 fiasco? Not only are service providers putting their own lives at risk, many of the people that end up in the hospitals are precisely the ones that are least likely to be pleasant about it despite needing help.
There’s a longer term story here when it comes to society, services, and markets. I can’t quite put it all together, yet, but it’s there.
Simplistically, I would short services and go long robotics. People are not dependable. It’s not entirely the service provider’s fault. A lot of times, it’s unrealistic expectations from the people demanding the services.
#15 ‘Magic’ Multigenerational Housing Aims to Alleviate Social Isolation
The U.S. is facing an aging population, a shortage of caregivers, a dearth of affordable housing and an increase in social isolation that threatens well-being. Some think what we really need is Magic.
That is, multi-ability, multigenerational, inclusive co-living, or communities where young and old, families and singles, live side by side, supported by inclusive design, technology and neighbors. Rethinking community in this way could reshape how and where older adults and people with disabilities live and receive care, while building symbiotic relationships between people of all ages, supporters say.
Magic is the brainchild of geriatrician William Thomas, who spent decades working to improve long-term care. Spurred by a belief that segregating older adults, as well as people with special needs, negatively impacts their well-being, Dr. Thomas co-founded Kallimos Communities to develop neighborhoods based on Magic principles. Groundbreaking is expected to begin in the second half of 2022 on two neighboring 7.5-acre communities in Colorado—the first of what he hopes will be many across the country.Source: WSJ
Another way that our society is changing.
Interestingly, this multi-generational model is a tried-and-true model in many parts of the world like Asia.
The most obvious benefit of multi-generational housing is reducing the burden of raising children (a very important issue all developed societies today).
But I think an even more important benefit is creating intergenerational dialogue. Older people are more likely to have accumulated wisdom that can be useful for younger families and kids. The dominant western model of kicking the kids out at 18 ends up depriving younger generations of the valuable knowledge that older folks have when it comes to life, career, family, etc. And to the extent that young people interact with old people at all, it’s usually only parents and bosses. It’s nigh impossible for young people to interact with older folks in a serendipitous way. Each generation sort of lives in their own separate societal bubble.
A meaningful portion of societal division today is very much due to differences in generational views on various subjects. I think society would have been less divisive if people grew up in multi-generational households / neighborhoods over the last 50 years. Issues will still be issues, but at least they would have been discussed for years rather than everyone suddenly discovering differences in opinion via social media.
💬 Media + Games
#16 Tencent Nears Deal for Smartphone Maker in Major Metaverse Push
Tencent Holdings Ltd. is nearing a deal to acquire Chinese gaming handset maker Black Shark, a move that could help the tech behemoth further its ambitions for the metaverse, people with knowledge of the matter said.
Tencent has begun talks to buy Black Shark, a niche maker of gaming phones and accessories, according to the people, asking not to be identified as the information hasn’t been made public. The smaller firm, whose investors include Xiaomi Corp., will pivot to making virtual reality headsets for its new parent after the deal, one of the people said.Source: Bloomberg
Tencent has held out on investing in hardware. Now it is joining the party alongside Bytedance, Baidu, Alibaba, Apple, Facebook, Google, Microsoft, Snap.
#17 Cash App Launches Free Tax Filing
#18 The Future of the Point of Sale Is Here: Visa Pioneers Cloud-based Payment Acceptance
Today Visa (NYSE: V) announced a new platform, Visa Acceptance Cloud (VAC), set to revolutionize the way businesses accept payments from their customers. Following the success of the company’s popular “Tap to Phone” solution, VAC will let acquirers, payment service providers, point of sale (POS) manufacturers, and Internet of Things (IoT) players move payment processing software from being embedded in each hardware device to being universally accessible in the cloud.
Already live across six geographies, VAC will help innovators transform almost any device into a cloud-connected payment terminal, while providing seamless, cloud-based software updates, robust analytics, and network services from Visa. Since VAC runs on Visa’s data centers, it also offers leading data security capabilities.
Expanding beyond phones, Visa Acceptance Cloud enables any POS or connected device to seamlessly accept payments and to incorporate a range of added services, including buy now, pay later, fraud management, Rapid Seller Onboarding, and advanced data analytics. The ongoing pilots in North America, South America, Europe, Africa, Asia and Australia cater to a variety of use cases, including retailers and restaurants in Australia through Visa’s work with U.S.-based fintech, Bleu, NOBAL Technologies’ smart mirror and public trains in Brazil.Source: Businesswire
Back in Tidbits #16, we discussed Visa’s launch of “tap-to-phone” capabilities, which basically transforms any phone into a point-of-sale (POS) system. Now Visa is expanding this to more devices beyond phones. The ability to accept payments is now a cloud function, which means any device that can interact with Visa’s cloud is able to accept payments.
As we discussed then, the merchant acquiring landscape is changing dramatically. In the past, the whole point of merchant acquiring is to acquire the merchant (meaning get a merchant to sign up for a POS machine to accept cards). If any device can become a POS, any device maker (or integrated software provider) can become a “merchant acquirer”. The payments landscape could shift dramatically in the coming years. The value continues to shift up the stack towards software. Software-centric players like Stripe and Adyen should continue to benefit.
#19 [Translated] Official Shopee [Brazil] Surpasses 100 Major Brands And Gets A New Look With Exclusive Campaign
Shopee, an e-commerce platform that connects sellers, brands and consumers, announces the presence of over 100 major brands in the Official Shopee, a section that brings together stores of companies such as Emporium Nestlé, Unilever, Nivea, Danone, Faber-Castell, Mondelez, Motorola, Duracell, Polo Wear, Colcci Underwear, Jequiti, L’Oréal among others.
The page debuts a new look and more benefits for consumers who now have exclusive discount coupons and free shipping for more than 60,000 products with the Official red seal and an extended period of 30 days for the return of the purchase. In addition, users will have a special week with additional advantages for purchases in these stores such as offers by categories each day and free shipping coupon* with no minimum purchase value, which can be used between January 10 and 16.Source: New Trade
Seems like pretty rapid progress towards broadening the offering beyond cheap cross-border goods.
#20 Cloudflare DDoS Attack Trends for Q4 2021
The first half of 2021 witnessed massive ransomware and ransom DDoS attack campaigns that interrupted aspects of critical infrastructure around the world (including one of the largest petroleum pipeline system operators in the US) and a vulnerability in IT management software that targeted schools, public sector, travel organizations, and credit unions, to name a few.
The second half of the year recorded a growing swarm of one of the most powerful botnets deployed (Meris) and record-breaking HTTP DDoS attacks and network-layer attacks observed over the Cloudflare network.
In December alone, one out of every three survey respondents reported being targeted by a ransom DDoS attack or threatened by the attacker.
The Manufacturing industry was the most attacked in Q4 ’21, recording a whopping 641% increase QoQ in the number of attacks. The Business Services and Gaming/Gambling industries were the second and third most targeted industries by application-layer DDoS attacks.Source: Cloudflare
Interesting report from Cloudflare on DDoS attacks throughout 2021.
Very, very interesting that the manufacturing sector is facing the highest proportion of attacks. It never occurred to me that they could be prime targets, but it makes a lot of sense: Supply chains are currently in disarray…if you can do a ransom DDoS attack, it’s an excellent way to extort value out of a struggling sector.
Also a good reminder of why Cloudflare is valuable since it is one of the most capable entities at stopping DDoS attacks.
🍪 Semiconductors + Chips
#21 Microsoft Hires Key Apple Engineer to Work on Custom Chips
The shift threatens to undercut Microsoft’s longtime processor partners, Intel and Advanced Micro Devices Inc., which currently supply chips for Azure servers. Intel fell as much as 2% on the news Wednesday, while AMD dropped 1.1%.
For Apple, Filippo’s exit marks another loss of a high-profile engineer. He joined Apple in 2019 as a chip architect after serving as a top designer of semiconductors at Arm for a decade. He was at Intel for about five years before that. Filippo is credited with advancing the capabilities of Arm’s underlying technologies in phones and other devices.Source: Bloomberg
Apple recently also lost a key chip engineer to Intel. Chip experts are in very high demand.
#22 TSMC to Spend at Least $40 Billion to Address Chip Shortage
Taiwan Semiconductor Manufacturing Co. raised its growth projections and unveiled record spending plans for 2022, signaling that the voracious demand for chips that has fueled a months-long supply chain squeeze will persist for years. The shares surged in U.S. trading.
Apple Inc.’s most important chipmaker is now projecting average sales growth of 15% to 20% annually — as much as double its previous expectation. The company foresees sales of $16.6 billion to $17.2 billion in the first quarter alone, at least 5% ahead of estimates. It intends to spend $40 billion to $44 billion expanding and upgrading capacity in 2022.
With the crunch showing no signs of abating, TSMC has been running at near-full capacity over the past year and is now investing heavily in new fabs from its home island to Japan and the U.S.TSMC’s 2022 spending target is up at least $10 billion from last year and at least 43% higher than the $25 billion to $28 billion that Intel has set aside this year to regain its once-dominant position in the industry.Source: Bloomberg
These capex numbers are just off the charts, but the demand for chips is also off the charts.
Intel is trying to claw back its leadership position, but it’s going to be a very tough journey, especially since TSMC is now outspending Intel by quite a bit.
#23 Chip Makers Contend for Talent as Industry Faces Labor Shortage
The world’s largest chip makers are fighting for workers to staff the billion-dollar-plus facilities that they are building around the world to address a shortage of semiconductors.
A dwindling supply of qualified workers has worried semiconductor executives for years. Now that concern has been amplified by a global labor shortage, the pandemic-fueled demand for all things digital and a race among governments to bolster their local chip-manufacturing capabilities, according to industry officials.
Many industries are experiencing labor shortages. While chip makers have an advantage because their processes are among the most-automated, the high-tech equipment used at their facilities still requires skilled staff to operate it. The scale of expansion taking place now is creating exceptional demand for personnel, often in niche fields.
Exacerbating the concern is that interest in chip manufacturing has waned among college graduates in recent years, engineering professors said, since many prefer to find jobs in software or internet services and are reluctant to pursue doctorate degrees without a substantial salary payoff.Source: WSJ
Chip talent is in very high demand.
Maybe we should do a comparison of chip engineer pay packages vs TikTok influencers. Maybe that might change some minds about what profession to pursue.
🚘🌽 “Nuts and Bolts” Tech
#24 GM Takes Aim at Carvana, Vroom With Used-Car Website
The Detroit auto maker is launching a new website called CarBravo that will help U.S.-based GM dealers market and sell used cars online, competing directly with Carvana Co.CVNA -4.06% and other retailers that have embraced virtual sales in the past couple of years.
GM dealers would sell both GM and non-GM vehicles through the site.Source: WSJ
I owned GM almost a decade ago and sold after a brief holding period. I have to admit the GM story has evolved a lot! Not only are they the majority shareholder in Cruise (one of the leading autonomous car players), they are now also launching a Carvana competitor.
I also didn’t know this until I looked, but Ford and GM have outperformed Tesla over the last 12 months.
#25 We’re One Step Closer To Self-Farming Farms
More specifically, it’s the self-driving John Deere 8R tractor that can plow fields, avoid obstacles, and plant crops with minimal human intervention. It looks a lot like any other John Deere tractor — it’s green and yellow — but there are six pairs of stereo cameras that use artificial intelligence to scan the surroundings and maneuver accordingly. The farmer doesn’t need to be anywhere near the machine to operate it, either, as there’s a smartphone app that controls everything. The tractor goes on sale later this year, just in time for an extra special robotic harvest season.
This is clearly a big deal for John Deere, but it also represents a huge step forward for the precision agriculture movement as a whole. Simply put, precision agriculture is a concept that utilizes computers, data gathering, and satellite imagery to build a strategy for maximizing the output of a farm. Autonomous farming equipment like soil sensors, specialized drones, and self-driving tractors are key to a future where we can produce more crops with less effort and less environmental impact.
John Deere isn’t the only one working on autonomous farming equipment, and it’s not even clear that big self-driving tractors are the best use of the technology. Case has an autonomous tractor concept that doesn’t even have a cab for a human driver, and AGCO, which owns farm equipment brands like Fendt and Massey Ferguson, is testing smaller autonomous machines, including a seed-planting robot that’s the size of a washing machine. DJI, the popular drone maker, now has an entire division devoted to flying farming robots that can help with anything from crop monitoring to targeted pesticide spraying.Source: Vox
Autonomous vehicle conversations are almost always an exclusively urban, consumer discussion. BUT it actually makes way more sense to try autonomous tractors and farming equipment. It’s out in the open. It won’t kill anyone. And it’s obviously very useful if it works.
#26 EHang Opens 5G-Connected Vertiport For Evtols In Guangzhou, China
Chinese company EHang has opened a new, 5G enabled, electric vertical takeoff and landing (eVTOL) vertiport and maintenance facility in Guangzhou, China – it’s just the latest new project in China’s “official” urban air mobility (UAM) test city.
The Chinese city of Guangzhou was been chosen as a first-of-its-kind “pilot city” for a low-altitude aviation, eVTOL-powered transportation network that would shuttle passengers and goods around back in 2019. It’s a proof of concept, in other words, to prove whether eVTOL vehicles can safely, reliably, and efficiently keep the economy of a city going. This new hub is the latest addition to the ever-expanding project.
…the early tests seem promising, with the EHang Falcon UAV reportedly reducing DHL’s delivery time for an 8 km trip in Guangzhou from 40 minutes to eight minutes – significant time savings!Source: Electrek
💉🔬 Health + Science
#27 First-Ever Pig-To-Human Heart Transplant Offers Hope For Thousands In Need Of Organs
A Maryland man has lived for three days with a pig heart beating inside his chest.
The surgery, at the University of Maryland Medical Center, marks the first time a gene-edited pig has been used as an organ donor.
Scientists have worked for decades to figure out how to save human lives with animal organs. More than 100,000 people sit on organ transplant waitlists, suffering terrible symptoms and side effects. About 6,000 of them die every year waiting in vain for someone else’s tragedy to provide them with a kidney, heart or lung.
Three genes were turned off that might otherwise have triggered an immediate immune rejection – the recognition of a pig organ as coming from a different species. Six human genes were added to prevent blood from coagulating in the heart, improve molecular compatibility and reduce the risk of rejection.Source: USA Today
Could be transformative.