SUPPLY CHAIN RESEARCH Computex 2019: Focus on tech

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit
Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
6 June 2019 Asia Pacific
Equity Research
Randy Abrams, CFA
Computex 2019: Focus on tech innovation
beyond trade war Figure 1: Intel’s Project Athena targets an expanding creator segment
Source: Intel, Credit Suisse Estimates
Focus on driving new demand. The 39 th annual Computex in Taiwan
over 28-31 May featured 1,685 exhibitors and 42,300 overseas visitors,
including keynotes and events from Intel, AMD, Microsoft, NVIDIA, ARM,
Mediatek, Qualcomm, Acer, and Asustek, and forums discussing 5G, AI,
IoT, and automotive electronics. While trade-war-related concerns loomed,
the event’s focus was on driving product cycles with innovation.
Trade conflict and inventory overhang; but product innovation
persists. Major trends include: (1) Data centre stays slow in 1H19, mild
pick-up still expected for 2H19; (2) IoT remains healthy, led by audio; (3)
memory inventory depletion supply slowed by an uncertain macro; (4) 5G
commercialisation moving ahead for now despite Huawei’s ban; (6)
notebooks pushing high-end creator lines; (7) PC builds still impacted by
CPU shortages into 3Q19; (8) foundry 7nm reaffirming a second driver from
high performance compute; (9) inventory stays elevated across the chain.
Company updates focus on 5G, IoT and high-end creator notebooks.
AMD launched its 7nm server, desktops, and graphics using TSMC 7nm,
while Intel and NVIDIA focused on Creator/Studio PCs. Asian fabless
focused on mobile, connectivity, and IoT, with Mediatek announcing its 5G
SoC and voice assistant upgrades, and Realtek showcasing its high-growth
audio and IoT integrating Wifi, Bluetooth, and Audio. In hardware, Acer,
Asus, Compal, Gigabyte, and MSI launched high-end creator PCs and
upgraded display further to Full HD+, OLED, and dual-screen concepts.
Stock picks. We recently cut TSMC TP to NT$270 to reflect Huawei risks,
but maintain OUTPERFORM on it, reflecting share gains in compute and
content increase from 5G. We maintain OUTPERFORM on Mediatek,
which is on track for 5G and growing in non-mobile. We maintain
OUTPERFORM on Realtek, which is boosted by its IoT business and TV
gains. In downstream, our top picks are Compal (NB share gain, better
iPad builds, and Apple Watch share gain); E Ink (electronic shelf label
growth); and Razer (Peripherals/Services driving long-term growth).
Vendor Acer Dell HP Lenovo
Model name Swift 5 Dell XPS 13" 2-in-1 Envy 13" Wood Yoga S940
Project Athena 1.0 key specs
Ready to go
Form factor & interaction Ultra-slim, 2-in-1, clam-shell / 12-15" at 1080p+ display, 3-side narrow bezel, touchpad/stylus support
Biometric login (fingerprint/face recognition) / wake from sleep within 1 sec
Core i5/i7, >8GB DRAM dual-channel, >256GB SSD
Far field voice services / OpenVINO/WinML support
1) 16+ hours of local video playback; 2) 9+ hours of real-world performance; 3) quick-charging
Thunderbolt 3 / WiFi 6 Gig+ / Gigabit LTE option
6 June 2019
Asia Semiconductor Sector 2
Focus charts Figure 2: Hyperscale capex decelerating in 2019 Figure 3: Voice assistant growth remains healthy
Source: Company Data, Credit Suisse Estimates Source: Digtiimes
Figure 4: DRAM still in oversupply through 2019 Figure 5: Fabless and IDM inventory high
Source: Trendforce Source: Company Data, Credit Suisse Estimates
Figure 6: Intel Project Athena for high-end laptops Figure 7: AMD 7nm server/desktop/graphics: 3Q19
Source: Intel Source: AMD
Figure 8: 5G moving ahead across geographies Figure 9: Qualcomm mobile PC platform
Source: Keysight Source: Qualcomm
2013 2014 2015 2016 2017 2018 2019F 2020F 2021F
Facebook Google Amazon Microsoft Baidu Alibaba Tencent Apple IBM eBay Paypal Oracle SAP LinkedIn Twitter Salesforce Mercadolibre Top 7 YoY 2nd Tier YoY Total YoY
Internet Company capex YoY
Internet Company capex US$mn
Global voice assistant shipment (mn units) Global voice assistant YoY
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
f In
Fabless, 94.8
Computex 2019: Focus on tech innovation beyond trade war The 39
th annual Computex, the largest technology show in Asia, was held in Taiwan over 28-
31 May , featuring 1,685 exhibitors, 5,500 booths, and 42,300 overseas visitors, including
keynotes and events from Intel, AMD, Microsoft, NVIDIA, ARM, Mediatek, Qualcomm, Acer,
and Asustek, and forums discussing 5G, AI, IoT, and automotive electronics. While the trade
war concerns around tariffs and its impact on demand and supply chain costs loomed, the
event’s focus was on continued innovation on the above themes.
Industry themes: Trade conflict and inventory an
overhang, but product innovation persists
Then event’s major themes: (1) Data centre stays slow in 1H19, mild pick-up still on track
for 2H19; (2) IoT demand remains healthy, led by audio; (3) memory inventory depletion
and oversupply slowed by an uncertain macro; (4) 5G commercialisation moving ahead
despite the Huawei ban; (6) notebook channel pushing high-end creator platforms; (7) PC
builds still impacted by CPU shortages into 3Q19; (8) foundry 7nm reaffirming a second
driver from high-performance compute; and (9) inventory stays elevated across the chain.
Company updates focus on 5G, IoT and creators
We attended company-hosted events, product suites, and booths, and highlight company
takeaways for semiconductors (AMD, ARM, Elan, Intel, Mediatek, NVIDIA, Realtek),
components (Delta), ODMs (Compal, Wiwynn), brands (Acer, Asus, Gigabyte, and MSI),
and OS (Microsoft). AMD launched its 7nm server, desktops, and graphics, while Intel and
NVIDIA focused on Creator/Studio PCs. The Asian fabless focused on mobile, connectivity
and IoT—Mediatek announced its 5G SoC and enhancements to its voice assistants;
Realtek showcased its high-growth audio and IoT solutions integrating Wifi, Bluetooth, and
Audio; Elan discussed touchpad and PC fingerprint adoption. For hardware, Acer, Asus,
Compal, Gigabyte, and MSI launched high-end creator PCs and upgraded display further
to Full HD+, OLED, and dual-screen concepts.
Forum Presentations span the industry leaders
We also attended the Taipei 5G Summit, Keysight World Taiwan, AI and IoT session, and
Disruptive Trends Session. The AI and IoT presenters included Advantech, Alibaba,
Amazon Web Services, ARM, Avnet, E-Ink, Google, IBM, Imagination, Microsoft, NViDiA,
Qorvo, Qualcomm, Siemens, and Silicon Labs. 5G and Keysight forums featured a good
cross-section of the mobile ecosystem, including Cisco, Hon Hai, Intel, Keysight, Mediatek,
Ofcom, Japan’s MIC, Qualcomm, RedHat, RJio, Supermicro, and Viavi. The key takeaway
from the 5G forum is commercialisation efforts remain on track for 2020 volume
deployments, with participants not slowing efforts post Huawei’s addition to the entity list.
Stock outlook from Computex
We recently cut TSMC’s TP to NT$270, reflecting Huawei risks, but maintain
OUTPERFORM, reflecting share gains in servers and high-end networking and content
increase from 5G, with strong balance sheet, yield, and a very low breakeven helping it
weather the trade war. We maintain OUTPERFORM on both: Mediatek, which is on track
for 5G development and continuing to grow in non-mobile; and Realtek, which is boosted
by strong IoT business, digital TV share gains, and robust product development to
maintain outgrowth. In downstream, our top picks are Compal (NB share gain, better iPad
builds, and Apple Watch share gain); E Ink (long-term ESL proliferation); and Razer (solid
Peripheral expansion and Services driving long-term growth).
Computex features 1,685 exhibitors and 42,300
overseas visitors
2019 seeing slow demand continue in data center and slow memory inventory, but innovation
continuing in IoT and high-end notebooks
Companies updates focus on 5G, IoT, edge compute and high-end
creator notebooks
trends
Stock picks: TSMC, Mediatek, Realtek, e-Ink and Compal, raising TP
on Quanta
Industry themes: Trade conflict and inventory an overhang, but product innovation persists The 39
th annual Computex, the largest technology show in Asia, was held in Taiwan over
28-31 May, featuring 1,685 exhibitors, 5,500 booths, and 42,300 overseas visitors,
including keynotes and events from Intel, AMD, Microsoft, NVIDIA, ARM, Mediatek,
Qualcomm, Acer, and Asustek, and a number of industry forums discussing the outlook for
5G, AI, IoT, and automotive electronics. While the trade-war-related concerns around
tariffs and its impact on demand and supply chain costs loomed, the event’s focus was on
innovation in the supply chain around AI and IoT, 5G, cloud, and edge computing, and
notebook innovation for gamers and creators.
We also conducted CS-hosted meetings and booth-tours with IC companies, ODMs, and
branded companies which we profile in the report.
We highlight some of the major themes at the show, including latest developments on data
center, IoT, memory, 5G status, notebooks, foundry, and supply chain inventory.
Data centre spending stays slow in 1H19, mild pick-up in 2H19. The capital spend
for the data centre has had a disappointing start to the year. The Top 7 hyperscalers’
capex was US$16.3 bn, -11% YoY/-24% QoQ; and the total Internet capex was
US$20.7 bn, -17% YoY/-24% YoY. Spending in 1Q19 has only reached 18% of full-
year budgets of US$116 bn, which would be up 15% YoY and still a slowdown from the
supercharged +48% YoY growth in 2018.
Figure 10: Hyperscale capex decelerating in 2019 Figure 11: Cloud service healthy but moderating
Source: Company Reports, Credit Suisse Estimates Source: Company Reports, Credit Suisse Estimates
Chipset suppliers and ODMs at Computex are seeing the soft spend continuing from
both US and China hyperscale brands through 2Q19, as customers are still digesting
the capacity put in place last year. Most suppliers also view the Cascade Lake
(refreshed power/performance) and next Cooper Lake platforms (multi-chip package
architecture) from Intel as more modest upgrades relative to last year’s Purley Skylake
refresh. Most vendors anticipate a milder refresh cycle until Intel’s Ice Lake server
platform moves to PCI Express 4.0 and Intel’s 10nm platform in mid-2020 which could
be more meaningful and also tied to more of the commercial 5G launches.
Despite a slow 1H19, chipset and server vendors still see 3Q19 demand picking up for
the normal peak season for both China and US hyperscale suppliers. The slow start
may have hyperscale track 10% YoY growth in units (Quanta, Inventec, and Lenovo up
over 10%, and Wistron/Wiwynn down slightly), though lower than the +15-20% YoY
growth forecasts at the start of the year. Enterprise server demand remains mature,
with vendors expecting slightly down shipments this year.
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$0
$50,000
$100,000
$150,000
2013 2014 2015 2016 2017 2018 2019F 2020F 2021F
Facebook Google Amazon Microsoft Baidu Alibaba Tencent Apple IBM eBay Paypal Oracle SAP LinkedIn Twitter Salesforce Mercadolibre Top 7 YoY 2nd Tier YoY Total YoY
Internet Company capex YoY
Internet Company capex US$mn
Cloud Sales YoY Growth
Cloud Division Sales US$mn
5G, IoT and AI from semiconductor, PC
brands and ODMs and component suppliers
Data center spending will only pick up mildly in
2H19
Figure 12: Intel server platforms: Ice Lake in mid-2020 the next notable refresh
Source: Anandtech, Company Data
IoT market remains healthy, led by audio. The IoT theme remains pervasive with
several forums devoted to industry participants (Advantech, Avnet, ARM, AWS, IBM,
Alibaba, Microsoft, Siemens) rolling out industrial and consumer IoT platforms
incorporating sensing, processing, and connectivity with AI features to add intelligence
and cloud capture of data with analytics. Mediatek cited voice assistant growth
continuing to pace +50% YoY to approach 90-100 mn units this year (Digitimes
forecasts +30% YoY to 89 mn), and Realtek noted strong sales approaching 20% for
its Bluetooth/Wifi IoT solutions, vs 3-5% in 2017, led by its strength in true wireless
stereo earpods. The IoT wave has fueled acquisitions of two US suppliers of
connectivity chips at a premium valuation in the past week, demonstrating the
importance of connected devices in the next wave of semiconductor growth.
Figure 13: Voice assistant growth remains healthy Figure 14: Realtek true audio in more China brands
Source: Digitimes Source: HonLu Technology
Memory inventory depletion slowed by an uncertain macro. The memory market
remains pressured by elevated inventory from the slowdown in data centre and high-
end smartphones, and now there’s added risk as Huawei is starting to pull back orders
for its export smartphones by 20-25% and the chain is growing nervous about further
tariffs on China exports of PCs, smartphones, and TVs in late June.
Family Branding Skylake-SP Cascade Lake-
SP/AP
Process Node 14nm+ 14nm++ 14nm++ 10nm+ 10nm++ 7nm
Platform Name Intel Purley Intel Purley Intel Whitley Intel Whitley Intel Eagle
Stream
LGA 3647 LGA 4189
BGA 5903 BGA 5903
38.5 MB L3
66 MB L3
Channel
PCIe Gen Support PCIe 3.0 PCIe 3.0 PCIe 3.0 PCIe 4.0 PCIe 5.0 PCIe 5.0
TDP Range 140W-205W 165W-205W TBD Up To 230W TBD TBD
3D Xpoint Optane DIMM N/A Apache Pass Barlow Pass Barlow Pass Crow Pass Donahue Pass
Competition AMD EPYC
Max Core Count Up To 28 TBA TBD TBD
Socket LGA 3647 LGA 4189 TBD TBD
Max Thread Count Up To 56 TBA TBD TBD
TBD
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Global voice assistant shipment (mn units) Global voice assistant YoY
IoT market growth continues, with main
drivers from audio headsets and voice
assistants
Trendforce’s recent industry update for 2Q19 points to continued sharp declines in
1H19 and some moderation in 2H19 across both NAND and DRAM. NAND flash
contract prices in 2Q19 declined 15-37% for client SSD and eMMC, 23-28% for PCIe
SSDs and UFS prices fell 15-20%. The over-supply is expected to continue in 2H19
but pace of declines moderating due to the high season for servers and smartphones.
Figure 15: DRAM still in oversupply through 2019 Figure 16: NAND oversupply to narrow in 2H19
Source: Trendforce Source: Trendforce
The DRAM market also saw steady declines, with PC DRAM, server DRAM and
consumer DRAM all down 20-30% QoQ. The average price of mainstream 8GB
modules fell 6% to US$32 in May and could reach US$30 in June, down 50% from the
US$60 at the end of 2018 and US$70 at the peak. DRAM eXchange still estimates six-
week inventory at the manufacturers and over seven weeks at the server and PC
customers, requiring a couple more quarters to bring back to balance. Due to
continued impact from Huawei, Trendforce on 5 June revised its 3Q19 price
assumption to be down 15% QoQ for PC/Server, down 10-15% for specialty, down
10% for graphics, and down 5-10% for mobile. 4Q19 now is projected down 10%
overall, with PC/Server in-line, and mobile/graphic/specialty down 5-10%, bringing
2019 ASPs -50% YoY.
Figure 17: DRAM prices projected to continue declining through 2H19
Source: Trendforce
5G ecosystem moving ahead despite the Huawei ban. Computex held a 5G Summit
and Digitimes Forum on 5G Innovation and Keysight World Taipei followed the Monday
after to bring together industry presenters from across OEMs, chip makers, test
suppliers, software vendors and regulators to discuss the status of 5G licensing,
deployments and use cases. Despite Huawei’s entity list addition and constraints
building infrastructure gear, forum presentations focused on the growing early
commercial activity, potential benefits, and challenges to overcome in bringing
technology to market.
Sufficiency Ratio
Supply ( 16Gb M. Equiv.) Demand ( 16Gb M. Equiv.) Sufficiency ratio (RS)
Unit: 16Gb M.
but still in mild oversupply in 2H19
6 June 2019
Pace of adoption is consistent with tone from MWC, with limited launches happening
now in Korea, US and some European countries (Switzerland, Estonia and Finland)
and Japan and China following in 2020. Xinhua announced that the MIIT will issue 5G
licenses in the near future, with full commercial licenses expected in 2H19,
demonstrating that market will move ahead despite Huawei’s constraint. Sprint also
followed T-Mobile, AT&T and Verizon in launching initial 5G service this week in four
cities on its 2.6GHz spectrum.
The event also featured regulators discussing timelines to active 5G, including the UK’s
Ofcom noting each carrier launching select cities this year and auctioning 700MHz in
the 3.4-4.2GHz bands by 2020, India’s RJIO expecting auctions by August 2019
(700MHz, 3.5GHz, 24GHz and 28GHz) for trials in 2020, and Japan’s MIC indicating
spectrum already allocated in the 3.7GHz, 4.5GHz, and 28GHz bands, with plans to
have 50% of the population meshes covering 98% of the population by 2025. With the
accelerated pace of activity, Dell O’ro earlier in the year upgraded its 5G radio access
revenue projection from US$5 bn to US$10 bn in 2020, and from US$7 bn to US$13 bn
in 2021, based on the faster deployment pace.
Figure 18: 5G moving ahead across geographies Figure 19: Dell Oro raised 5G radio access forecasts
Source: Keysight Source: Intel, Dell ‘Oro
Notebook channel pushing high-end platforms for creators. The notebook
ecosystems led by Intel and NVIDIA are pushing for development of a new class of
high-end notebooks designed for creators (video editing, architects, animators,
industrial designers). The high-priced notebooks will address the upper price points of
notebooks over US$1,000, which IDC estimates is 26% of notebook demand and grew
at a 22% pace in 2017 and 12% pace in 2018, outpacing sluggish +3%/+2% growth for
the total notebook market.
Figure 20: New notebook platforms targeted at the faster growing high-end
Source: IDC
Intel’s Project Athena is a marketing programme driving high-end notebooks
incorporating advanced specs: 12”-15” Full HD or better display, with touch screen and
3-side narrow bezel, Intel i5 or i7 processor, 8GB or more DRAM, 256GB NVMe SSD
or optional Intel Optane XPoint SSD, Thunderbolt 3 connection, Wifi 6 802.11ax,
backlit keyboard, precision touchpad, pen support, biometric or face ID login, 9+ hours
of web browsing, and 4 hours of charge in under 30 minutes.
Notebook 2013 2014 2015 2016 2017 2018
units (K)
Total 177,521 173379 161438 155398 160166 163575
YoY %
Total -2% -7% -4% 3% 2%
5G ramp may be slower due to Huawei’s ban although the supply
chain continues to work toward 2020
commercialization
addition to gaming
6 June 2019
Figure 21: NVIDIA Studio PC concept for Creators Figure 22: Intel Project Athena for high-end laptops
Source: NVIDIA Source: Intel
NVIDIA also launched its new concept for Studio laptops starting from US$1,599,
noting that many creators purchase a gaming PC for the high-end graphics rendering
but are not necessarily gamers. NVIDIA’s Studio laptops also have aggressive
“minimum specifications” including high-end Ray Tracing GPU (RTX 2060 or Quadro
RTX3000 or higher), Intel Core i7 or higher, 16GB or higher DRAM, 512GB or higher
SSD, and Full HD or 4K display. NVIDIA announced 17 different RTX Studio laptops
across the major PC vendors launching in June.
CPU supply constraint to ease by late 3Q, graphic card demand remains soft.
Our checks with PC and ODM makers suggest CPU supply for mid- to low-end
segment still facing constraint and might continue into 3Q19. Based on the current
forecast, we believe CPU shortage for top tiered PC makers will start to alleviate in late
3Q19, while smaller brands would still suffer until late 4Q19. This would impact PC
brands and ODM's shipment targets for 2019, with only Lenovo and Compal could see
positive shipment growth YoY, while shipments for other brands (Acer and Asus) and
ODMs (Quanta, Inventec, and Wistron) might decline low-single-digit YoY.
Gaming remains the bright spot and likely to be the only segment that will continue to
grow in 2019 with several brands (Acer, Asus, MSI, Gigabyte, etc.) introducing new
gaming PCs at the Computex. According to IDC, gaming laptop shipments are
expected to enjoy double-digit-YoY growth in 2019-20E.
Figure 23: CS PC forecast (notebooks up slightly,
desktops down slightly)
growing 10-15%, desktops growing in single-digits
Source: Company data, IDC, Credit Suisse estimates Source: IDC, Credit Suisse estimates
Foundry 7nm reaffirming a second driver from high-performance compute. The
advanced foundry market has been driven by smartphones, at 40-50% of sales across
TSMC, UMC and SMIC. High-performance computing has been a second driver the
past couple years but stalled with the slowdown in the data centre and collapse (until
recently) in bitcoin prices. The next wave of applications led by notebooks, desktops
and servers is now approaching for TSMC. AMD announced at Computex plans to ship
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Global DT units Global NB units Global DT YoY % Global NB YoY %
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2016 2017 2018 2019E 2020E 2021E 2022E 2023E
Gaming NB units (000) Gaming DT units (000) Gaming NB YoY % Gaming DT YoY %
6 June 2019
its Navi Graphics in July, and both Ryzen third-generation desktop and Epyc second-
generation server in 3Q19. The move shifts significant business toward TSMC’s 7nm,
with potential to grow that customer from US$1.5 bn to US$2.7 bn even with limited
AMD share gains, and to US$4.8 bn in a scenario AMD takes 15% market share
across desktops, servers, and notebooks.
Figure 25: AMD continues to gain share in past few quarters
Source: IDC, Credit Suisse
Qualcomm also continued its push as an alternative to x86 notebooks, with further
development for its Snapdragon connected notebooks running Windows 10. Lenovo is
introducing a 5G notebook using Qualcomm’s Snapdragon 8cx processor and x55 5G
modem built on TSMC’s 7nm which can also be equipped with up to 16GB of DRAM,
up to 1TB SSD, 802.11ac Wifi 6, Bluetooth 5.2, and 2G-4G CAT 22 with the x55
modem. Qualcomm also announced it would have a coming 7cx processor that could
support ARM based laptops for US$300-800.
Figure 26: Qualcomm mobile PC platform on 7nm
Figure 27: AMD 7nm server/desktop/graphics in
3Q19
Source: Qualcomm Source: AMD
Inventory levels remain high in the supply chain. Our 25-year global tech supply
chain inventory survey of 167 companies (99% of total inventory), including Taiwan
and China, shows inventory rising further to post-crisis high levels for total tech and
record-high levels for fabless and overall semiconductors. Total semiconductor
inventory was 99.4 days, up 17.3 days QoQ and top of its 70-100-day range, while total
tech inventory was 49 days, also the top end of its 32-50-day range.
The supply chain inventory is elevated due to disappointing sales across major tech
end markets (servers, smartphones, automotive, graphics, TVs) and some buffer built
up ahead of the trade war. While the foundries faced a well below seasonal period in
1Q19, normally the impact from the lower wafer production has a 1-2-quarter lag effect
working down inventory. With tariffs now being added in Mexico and threatened for
remaining products in China and potentially impacting US$100 bn of smartphones,
PCs and TVs from late June, we could see continued dampened demand delaying the
work-down of supply chain inventory or triggering another round of order cuts to the
foundries exiting the 3Q19 peak season.
PC CPU units market share (%) 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
Intel 90.6% 91.6% 91.3% 90.6% 90.2% 89.8% 88.0% 86.1%
AMD 9.3% 8.2% 8.5% 9.1% 9.6% 10.0% 11.8% 13.6%
Others 0.2% 0.2% 0.1% 0.3% 0.2% 0.2% 0.1% 0.3%
Total 100% 100% 100% 100% 100% 100% 100% 100%
Foundry’s 7nm opportunity will be
supported by graphics and 5G SoCs
6 June 2019
Figure 28: Supply chain inventory elevated Figure 29: Fabless and IDM inventory high
Source: Company Data, Credit Suisse Estimates Source: Company Data, Credit Suisse Estimates
The Asian supply chain is also at elevated for both the Taiwan and China tech chains.
Taiwan inventory increased 42 days to 57 days, versus 35-55-day post-crisis average.
China tech inventory has also been steadily increasing and is now 85 days, high-end of its
50-85-day range. The elevated levels also should lead to a below seasonal build-up of
new components, particularly with trade tensions remaining elevated and threats of further
tariffs on tech products staying on.
Figure 30: Taiwan inventory high Figure 31: China inventory elevated
Source: Company Data, Credit Suisse Estimates Source: Company Data, Credit Suisse Estimates
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Fabless, 94.8
time to digest
6 June 2019
Company updates: Product launches focus on IoT, edge compute and high-end creators We attended company-hosted events, product suites, and booths around Computex, and
highlight company-level takeaways for semiconductor companies (AMD, ARM, Elan, Intel,
Mediatek, NVIDIA, Realtek), components (Delta), ODMs (Compal, Wiwynn), brands (Acer,
Asus, Gigabyte, and MSI), and OS (Microsoft).
AMD Computex Press Event
AMD Presenters: Lisa Su, AMD CEO
AMD OEM Partner Presenters: Acer - Jerry Kao, Co-Chief Operating Officer, Asus - Joe
Hsieh, Chief Operating Officer, GM of the Motherboard and Intelligent Robot BU,
Microsoft - Roanne Sones - CVP.
Key takeaways: AMD held a standing-room-only press event to discuss updates across
its desktop, notebook, graphics, and data-centre businesses. Key for the company is to
offer its four platforms for high-performance computing: Ryzen CPUs, Radeon GPUs,
Epyc servers, and Radeon Instinct for machine learning, GPU compute, and AI. The
company used the event to roll out more of its 7nm families of products, announcing that
its 7nm third-generation Ryzen, second-generation Epyc server, and Navi graphics would
all be shipping in 3Q19 using TSMC.
The future of high-performance computing. AMD showcased an opening video
showcasing recent highlights: (1) world’s fastest processor for ultra-thin notebooks, (2)
the world’s most powerful desktop processor (Threadripper), (3) pioneering 7nm
leadership, (4) gaming with Stadia, PS4, and XBOX, and (5) exascale data centre
processing with Epyc.
AMD’s heritage. AMD has come to Computex every year as the heart of the
computing ecosystem, but the first time as a keynote at the event. AMD is celebrating
its 50th year and has always had a vision to push the technology to the limits with
industry firsts. AMD highlighted milestones such as the 1st GHz CPU, GPU, first 4k
game consoles, first 32-core data centre CPU, and the first 7nm data center GPU.
Demand drivers for the industry are now for better experiences (voice, gesture and
face, super-high resolution displays, and AR/VR) and compute (big-data analytics,
high-performance computing, and machine learning).
AMD’s goal to lead the industry. AMD targets high-performance markets of the data
centre, gaming and PCs, which are all growth areas where new technologies make a
huge difference. To lead, AMD’s goal is to make big bets to win, including: (1)
advanced process technologies (7nm) - extremely proud to partner with TSMC for the
best technology in the industry; (2) high-performance cores (Zen 2, Radeon and Navi) -
making the engines as modern and as capable as possible; and (3) chiplet architecture
- putting the best technology, in the past silicon in the best package for the best system.
Computex developments. AMD is providing an update for its keynote on its next-
generation 7nm products: (1) AMD Epyc Rome, (2) Navi family of GPUs, (3) third-
generation AMD Ryzen CPUs, and (4) high-performance ecosystem updates.
Epyc traction. Epyc now is on more than 60 platforms and in more than 50 cloud
instances including Azure, AWS, Baidu, Tencent, Dropbox, Packet, Oracle, OVH, and
Hetzner. AMD was also selected a few weeks ago by Oak Ridge National Laboratory,
US Department of Energy and Cray for a 1.5+ Exaflop supercomputer using AMD Epyc
and AMD Radeon Instinct for the world’s fastest supercomputer by 2021. AMD also
announced a new development to bring supercomputing scale to the Azure cloud. The
company will have its first Epyc HPC cloud offering, with over 10,000 CPUs in a cluster
and 7,500x speed-up to its Azure cloud.
AMD announced shipping of 7nm desktop,
graphics and server products in 3Q19
6 June 2019
Figure 32: AMD 7nm Epyc servers on 60 platforms Figure 33: AMD 7nn Epyc Servers launching in 3Q19
Source: AMD Source: AMD
AMD Epyc processor (Rome) second-generation update. AMD showed its first
public demo of its 2P Rome platform and mentioned it will launch the second-
generation product in 3Q19. The Rome processor offers 64 cores, leadership compute,
I/O and bandwidth, 2x performance per socket and I/O bandwidth on PCIe 4.0 vs its
first-generation and up to 4x floating-point workload capability per socket vs its first-
generation. AMD compared its dual 64-core AMD Epyc vs dual 28-core Intel Xeon
Platinum Cascade Lake 8280, with 19.6ns/day vs 9.68ns/day on molecular simulations.
AMD claims 2x performance of Intel Xeon 8280 and 2x platforms in development vs its
first generation.
AMD gaming introduction. AMD will have offerings for PC, console and cloud with
designs in PCs, notebooks, Apple, XBOX One, PS4 and Google Stadia. AMD said 400
mn gamers are now playing on its Radeon graphics systems. AMD will introduce its
Radeon VII first 7nm gaming GPU and Instinct MI60 first 7nm data-centre GPU.
Gaming opportunity. AMD said the market opportunity is over 2 bn gamers, including
PCs, consoles, cloud, and mobile and requires social interaction, control &
responsiveness, performance, resolution, streaming and efficiency. AMD’s Navi was
announced last month to power the next-gen Sony Playstation with its AMD Radeon
Navi and Ryzen Zen 2 processor.
Navi graphics for PCs introduced. Key features: (1) new 7nm Radeon DNA (RDNA)
architecture, (2) faster clock speed/gaming performance at lower power, and (3) first
gaming GPU with PCIe 4.0. The RDNA architecture is a gaming engine architecture for
the next decade. The architecture offers: (1) new compute unit design for improved
efficiency and IPC; (2) multi-layer cache hierarchy for lower latency, higher bandwidth,
and lower power; and (3) streamlined graphics pipeline to optimise performance per
clock and reach a higher clock speed. RDNA offers 1.25x performance per clock from
better architectural performance, with a new compute engine and optimised pipeline
and 1.5x or higher performance per watt vs its prior Radeon Vega platforms.
Figure 34: 7nm Navi graphics launched at Computex Figure 35: Radeon 7nm Navi available in July 2019
Radeon RX 5000 family introduced for July 2019 launch. AMD launched its
RX5000 named after the company’s 50 th anniversary for availability globally in July
2019. The new chip is built on 7nm and is “pretty small” - which the company likes, but
has incredible performance. The company demoed vs NVIDIA RTX 2070 on Strange
Brigade with 10% better performance with its Navi preview. It will livestream on June
tenth at 3PM PST from E3 for more details on its Radeon RX5700.
6 June 2019
PC market overview. The PC market is now 1.5 bn units, with demand drivers for its
processors from performance, energy efficiency, upgradeability, gaming, content
creation and streaming, indicating more innovation to be had in the market for
consumers (thin, light, productivity), enthusiasts (best CPU, GPU and specs), and
creators (tool for their work/imaginations), each requiring different technology and a
tremendous ecosystem.
Ultrathin notebooks. AMD’s second-generation Ryzen was introduced at CES for
mobile for ultra-thin notebooks, offering up to 14% faster webpage load, up to 27%
faster editing and over 12 hours of battery. Designs featured include Acer, Lenovo,
Asus, Dell, and HP.
AMD third-generation Ryzen platform launched. The third-generation Ryzen is
based on 7nm Zen 2 core, third-generation architecture and first PCI express 4.0
platform. The Zen 2 core offers 2x floating point (fastest for creative workloads), 2x
cache size (lower latency for gaming), and 15% faster instructions per clock (IPC)
(better performance across applications. At launch AMD expects 100+ third-generation
Ryzen motherboards vs 56 on the prior generation.
Ryzen 3700x introduced. The first product is Ryzen 3700X with eight cores, 16
threads, 4.4 GHz boost frequency, 3.6 GHz base frequency, 36MB of cache, and a 65
watt TDP. Ryzen 3700x claims 15% better single-thread performance, 18% better
multi-thread performance and power-down from 105 watts to 65 watts. The company
claims lower power vs Intel’s 9700K core i7 at 95W and 1% better single-thread and
28% better multi-thread performance.
Ryzen 3800x also introduced. The Ryzen 3800x offers 3.9GHz base and 4.5GHz
boost processor performance, eight cores, 16 threads, and 105 W TDP. The
improvement on gaming from Ryzen 7 2700 moving up to Ryzen 7 3800x of 11-34%.
The processor is joined by Radeon RX5700 graphics, x570 motherboard, and up to 40
lanes of PCIe 4.0.
AMD Ryzen 9 family launched for higher performance. AMD is bringing Ryzen 9
with two cores on its Chiplet architecture. The 3900X is the first mainstream desktop
with 12 cores, 24 threads, 3.8GHz base and 4.6GHz boost, 70MB cache in a 105 W
TDP. AMD compared its Ryzen 9 3900X vs Intel core i9 9920X (US$1,200 processor),
with demo run in 32 seconds vs Intel’s 38 seconds, with 18% faster performance. AMD
cited benchmarks with 14% better single-thread, and 6% multithread performance with
a 105 W TDP vs Intel at 165W TDP.
Competitive price points. AMD’s entry price is US$329 for the 8-core 3700X, 8-core
gamer/content creator 3800X at US$399, and Ryzen 9 3900X product with best-in-
class performance (12 core/24 threads, 105W and 3.8/4.6GHz) for US$499 (vs Intel at
US$1,100). Availability of Ryzen 7. Ryzen third-generation products will be on sale on
7 July.
Figure 36: AMD Ryzen 3 to have broad OEM support Figure 37: AMD Ryzen price points
Partner updates:
ASUS ROG ecosystem. Asus powers gaming notebooks by AMD with motherboard,
gaming desktop, graphics card and notebook. Asus launched in April the latest Ryzen
CPU on its ultra-slim notebook and at Computex will launch the ROG Strix GL10DH
with one of the first systems with third-generation AMD Ryzen systems. Asus is also
designing its X570 series motherboard which includes memory tuning, dedicated
power for high core count CPUs and 30 designs for customers.
AMD endorsement from Acer. AMD means “astonishing miracle delivery”. Acer
launched its Predator Helios 500 notebook last year with AMD CPU and CPU inside. It
recently launched 2nd Gen Ryzen Mobile Nitro 5 notebook powered by both AMD
Ryzen and Radeon CPU and graphics, noting that as an advantage over the
competition with just a CPU (Intel) or CPU (NVIDIA) - they tried but they all failed, with
synergies of 1+1 is greater than 2. Acer has predator for hardcore gaming, nitro for
casual gaming with AMD help on both systems.
Acer is also expanding AMD in other products and with the upcoming third-generation
desktop. Acer also uses AMD across its product lines in education (TravelMate), thin
and light (Swift), Chromebook, and Aspire (over 10 mn/year with AMD a sizeable
share). Acer will also offer third-generation AMD Ryzen and Navi graphics for its
upcoming gaming desktops for Predator and Nitro.
Microsoft partnership. Microsoft now has 800 mn Windows 10 active users. The
AMD-MSFT partnership extends from console, PCs and cloud, with adoption by OEMs
Acer, Asus, Dell, HP, Lenovo, and Samsung across all price points. The company has
noted 12% higher ASPs and 6 month faster refresh. Coming next will be a new game
console being driven by AMD.
ARM Computex Press Event: Delivering Next
Generation AI Experiences for the 5G World
ARM Presenters: Rene Haas, President of IPG of ARM
Key takeaways: ARM introduced ARM Cortex A77 CPU, Mali-G77 GPU and a new
machine learning processor for better performance and lower power consumption.
Progress in the past 12 months. ARM highlighted the solutions it delivered in the
past year for the edge and cloud computing to enable the convergence of 5G, IoT, AI
and automotive, including Project Trillium (machine learning for edge devices),
Neoverse (infrastructure platform for cloud to edge optimized for 7nm), automotive
enhanced processors (higher level of safety) and Pelion IoT platform (IoT security).
Cortex-A77 delivering better mobile device performance. ARM introduced Cortex-
A77 CPU featuring a 20% performance improvement over A76. The company claims
new processor will be able to deliver 35x better machine learning and AR/VR
performance and believes the performance will be comparable to the mainstream
notebooks.
and a new machine learning processor
6 June 2019
Figure 38: Cortex A77 +20% performance on 7nm Figure 39: ARM CPU performance up 4x since 2011
Source: ARM Source: ARM
New GPU Mali-G77 supports better gaming experience. ARM estimates the global
gaming market will reach US$150 bn. To address the fast-growing mobile gaming
demand, the company announced its Mali G77 GPU featuring the new Valhall
architecture and delivering 40% performance improvement compared with Mali-G76.
The new GPU will also enhance the performance in engine, texture pipes, and load
store caches, allowing 30% better energy efficiency, 30% more performance density
while supporting 60% improvement in machine learning performance. The upgrades
allow better capability for inference and neural networking performance, and enable
more immersive gaming experience of mobile platforms.
Figure 40: Mali G77 for better power/performance Figure 41: Mali G77 graphics energy efficiency
Source: ARM Source: ARM
Heterogeneous machine learning platform further enhanced. ARM highlighted its
Project Trillium, a heterogeneous machine learning compute platform, including ARM's
machine learning processor and open source neural network framework, has already
been adopted in 250 mn+ Android smartphones. The company announced a major
improvement in its machine learning capability, including better energy efficiency (5
TOPs/W, 2x better than 2018), memory compression (3x better than 2018) and
performance (up to 8 cores for 32 TOP/s computing power).
Figure 42: ARM has improved its machine learning accelerator by 35x
Source: ARM
Acer: Focusing on content creators and gamers
Focus on content creators demand in 2019 - Concept D. Acer launched a new
platform designed to meet the low-noise and high-display spec for creators at its Spring
event in April in NYC and showcased these products at this year's Computex. The new
Concept D brand leverages its resource from gaming PC but with upgrades on display
(Delta E less than 1) and self-designed thermal system for better cooling with lower
noise. It has already started the shipment of Concept D laptops since May 2019.
New Predator design to improve heat dissipation. Acer also upgraded its high-end
gaming product lines with new Predator Helio series featuring 17.3” FHD IPS display
with 144Hz refresh rate and 3ms response time, Intel Gen 9 Core i9 CPU and NVIDIA
RTX 2080 graphics card. Its HyperDrift keyboard deck could slide forward along a rail
and reveal the laptop’s cooling fans to improve heat dissipation and sound effects.
Acer cited by pulling the keyboard forward and pressing special “Turbo” button, users
could see 18-20% boost in performance on better thermal management. Helio 700
keyboard's ‘WASD’ keys use Magforce design, which are designed to respond and
actuate at various levels of pressure and travel deeper than traditional key switches.
These four keys and switches will be replaceable with traditional key switches easily.
Acer would start shipping new Predator Helio 700 in 2Q19 with EUR 2,700.
New Swift with Intel's 10nm Gen 10 CPU. Acer also launched its upgrades Swift 5
with Intel's latest 10 nm Gen 10 “Ice Lake” CPU (from Gen 8), and expects to start
shipping by year-end 2019. As a close partner to Intel, Acer’s thin and light Swift series
notebooks are one of the four PC brands to launch new products with Intel’s Project
Athena 1.0. It would include key specs such as WiFi 6 and Thunderbolt 3, at least Intel
Core i5 level CPU, over 8GB memory/256 GB SSD, touch screen/stylus pen, narrowed
bezel design and last but not least, the powerful battery with high-speed charging
function. Acer cited the Swift 5 could be the lightest 14” notebook with a graphics card
inside and targets to start shipping before year-end holiday season.
Figure 43: Acer released laptops for creators in April 2019
Source: Company data, Credit Suisse estimates
Asus: ZF6 seems more interesting than the laptops
ScreenPad 2.0 and dual-screen are the key focus on notebooks. Asus introduced
its new notebook products, including ZenBook Pro Duo/ZenBook Duo, new ZenBook
13/14/15 and new VivoBook S14/S15—all of these are equipped with upgraded
ScreenPad 2.0. The ScreenPad 2.0 enabled larger space on its secondary display,
with at least 5.65” FHD touch-screen and shortcuts to improve multi-tasking. The
Vendor Acer Acer Acer Apple
Model name Concept D 9 Concept D 7 Concept D 5 Macbook Pro 15"
Form factor:
Height 23.5 mm 17.9 mm 16.9 mm 15.5 mm
Weight 4.1 kg 2.1 kg 1.5 kg 1.83 kg
Display 17.3" LCD touch display 15.6" IPS LCD 15.6" IPS LCD 15.4" IPS LCD
Resolution 4K (3840*2160) 4K (3840*2160) 4K (3840*2160) FHD (1920*1200)
Key specs
CPU Up to Gen 9 Intel Core i9 Up to Gen 9 Intel Core i7 Up to Gen 8 Intel Core i7 Up to Gen 9 Intel Core i9
GPU NVDA RTX 2080 NVDA RTX 2080 AMD Radeon RX Vega M GL Up to Radeon Pro Vega 20
Memory up to 32 GB DDR4 up to 32 GB DDR4 8/16 GB DDR4 up to 32 GB DDR4
Storage Up to 1 TB SSD Up to 1 TB SSD Up to 1 TB SSD Up to 4 TB SSD
Delta E 0.7 1.1 1.2 1.2
Noise (dB) 39 39 31 46.8
Pricing US$4,999 US$2,299 US$1,699 US$2,799
Launch 3Q19 Jun-19 Jun-19 May-19
Acer introduced new platforms and PC models
for the growing creator demand with Intel’s Gen
10 CPU
and a ZenFone refresh
ScreenPad 2.0 is also more power-saving because it’s directly driven by Intel
integrated GPU. It also released 15.6” ZenBook Pro Duo and 14" Zen Book Duo, both
with secondary displays (14" UDH and 12.6" FHD, respectively), targeting for 3Q19
launch at the earliest. It will reveal its pricing afterwards.
Laptops for content creators. Asus also announced a series of StudioBook laptops
to meet the rising demand from creators. The new StudioBook W500 features 15.6” 4K
IPS display, Intel Core i7 CPU, NVIDIA Quadro RTX 5000 GPU, multiple I/O designs
with RJ45 port, allowing creators to upload videos in a more efficient way. It is also
qualified as professional-grade color performance display by PANTONE, with its Delta
E less than 2 vs Acer Concept D's less than 1 (smaller the better). We think the higher
pricing and disadvantage on specs could result in share loss at the premium segment.
Figure 44: Asus launched laptops for creators in Computex 2019
Source: Company data, Credit Suisse
Zenfone 6 new flip camera and large battery design. Asus also presented its
Zenfone 6 featuring a 6.4” IPS LCD display (vs 6.2” in Zenfone 5) with 2340x1080
resolution and 92% screen-to-body ratio, and an innovative flip-top dual-cameras
(48MP+13M). The flip-top camera design enables users to take pictures and selfies on
the same camera, improving the resolution/image quality for selfie and panorama
mode. It began shipping in the end of May, prices starting at €499.
Figure 45: Asus launched Zenfone 6 featuring flip-up camera
Source: Company data, Credit Suisse
Vendor Asus Asus Asus Asus
Model name ZenBook Pro Duo ZenBook Duo ZenBook 15/14 Vivobook S15/S14
Form factor:
Height 24 mm 19 mm 18.9/16.9 mm 18 mm
Weight 2.5 kg 1.8 kg 1.65/1.26 kg 1.8/1.4 kg
Display 15.6' OLED 14" LCD 15.6/14" LCD 15.6"/14" LCD
Resolution 4K (3840*2160) FHD (1920*1080) Up to 4K/FHD Full HD
Key specs
CPU Up to Intel Core i9 Intel Core i7 Up to Intel Core i7 Up to Intel Core i7
GPU NVDA RTX 2060 NVDA MX 250 NVDA GTX 1650/MX250 NVDA MX250/Intel UHD 620
Memory 8/16/32 GB DDR4 8/16 GB DDR3 8/16 GB DDR3 Up to 16 GB DDR4/DDR3
Storage Up to 1 TB SSD Up to 1TB SSD Up to 1TB SSD Up to 1TB SSD
ScreenPad 14" 4K touch display 12.6" FHD touch display 5.65" FHD+ IPS display 5.65" FHD+ IPS display
Vendor Asus Asus Xiaomi OPPO VIVO
Model name Zenfone 6 Zenfone 5 Redmi K20 Reno S1 Pro
Fore factor:
Display size: 6.4" IPS LCD 6.2" IPS CLD 6.4" AMOLED 6.4" AMOLED 6.4" AMOLED
Resolution: 2340 x 1080 2246 x 1080 2340 x 1080 2340 x 1080 2340 x 1080
Height x Width x Depth 159 x 75 x 9.2 mm 153 x 76 x 7.7 mm 157 x 74 x 8.8 mm 157 x 74 x 9 mm 157 x 75 x 8.2 mm
Weight 190 g 165 g 191 g 185 g 185 g
Battery 5000 mAh 3300 mAh 4000 mAh 3765 mAh 3700 mAh
Key specs
Processor: QCOM Snapdragon 855 QCOM Snapdragon 636 QCOM Snapdragon 730 QCOM Snapdragon 710 QCOM Snapdragon 675
Memory: 6/8 GB 4/6 GB 6/8 GB 6/8 GB 6/8 GB
Storage: up to 256 GB up to 64 GB up to 256 GB up to 256 GB up to 256 GB
Main Camera: Dual-camera 48/13 MP Dual-camera 12/8 MP Triple-camera 48/8/13 MP Dual-camera 48/5 MP Triple-camera 48/8/5 MP
Selfie Camera: Motorized flip-up camera 8 MP wide camera Motorized pop-up 20MP
camera
6 June 2019
Motherboard upgrades and ZenScreen Touch. Asus also launched its motherboard
Prime Utopia, with graphics cards moved to the back side of the motherboard, Asus’s
new water-cooling system and enhanced Hydra Cortex fan header, which could
connect up to four fans on the board, to optimise heat dispassion/thermal management.
Prime Utopia also has modularized I/O for different users’ demand and an advanced 7”
OLED monitor with touch screen to control the cooling system (i.e. water cooling and
fans). Besides, Asus’s ZenScreen Touch with 15.6” IPS panel and the 10-point touch
screen could allow users to connect their Android smartphones to improve productivity
when they are on their way on Asus’s ZenScreen Touch app.
Compal: 5G and dual-screen NB key PC themes
New NB focus on 5G and dual-screen. Compal highlighted it is the first NB ODM
launching a 5G enabled notebook reference design powered by ARM-based
Qualcomm Snapdragon 8cx SoC, announced at the end of 2018 exclusively for
notebook and tablets. Compal explained its 5G notebook solution has built in nine 5G
enabled antennas, providing support for 5G connectivity on both Sub-6 GHz and
mmWave. Despite the inclusion of the additional antennas, it is capable to still achieve
narrow-border design for an over 90% screen-to-body ratio.
Compal also showcased its dual-screen notebook solution which further enhances
productivity for users. It highlighted, despite a dual-screen design, the notebook is
capable of over 10 hour of operations, supported by dual AMOLED display and AI
technology which tracks users eyes gaze direction for direct display on/off control.
Interestingly, the unique hinge stand design on this dual-screen notebook also provides
better acoustics and heat dissipation. Nevertheless, it admitted that there is currently
limited applications support before Microsoft roll-out ecosystem support by 2H20.
Figure 46: Compal’s 5G-enabled notebook Figure 47: Compal’s dual-screen notebook
Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates
Increasing contribution from smart-devices, with key highlight in wearables.
Compal has entered into Apple Watch supply chain since 2017 for the Watch Series 1
model and further entered into the new Watch Series 4 last year. Despite no related
products are being showcased in the showroom, we believe this area has been
increasingly important segment for Compal as efforts to diversify away from its PC-
centric business. Aside from Apple, Compal is also the exclusive supplier for premium
smart watches for premium brands, including Folli Follie and Fossil Group which also
include Michael Kors, Tory Burch, Kate Spade under the Group. Notably, Compal also
showcased its new wireless headphone wearable solution, allowing heart beat
monitoring supported by embedded PPG (Photoplethysmogram) sensor.
Expanding smart medical solutions. Compal invested in Avalue in 4Q14 through
private placement and became the largest shareholder, with 22% stake. Compal said
its partnership with Avalue focuses on the smart healthcare area where Avalue
Compal showcased a 5G and dual screen
notebook
provides solutions including surgical grade display, while Compal also showcased
medical grade bed-side care total solution, and solutions for rehab and baby smart
diaper, etc., for medical vertical. Compal highlighted its efforts in building
server/storage business as well as 5G capability (will launch new 5G module next
month for over 1 Gbps) will serve to enhance its long-term competitive, providing total
solutions ultimately for long-distance operation. According to the company, it has
already been able to reduce the overall latency to less than 5 ms, a key leading edge
against peers.
headwinds on automation
We visited Delta’s booth at Computex 2019, where it showcased (1) the smallest USB type C adaptor; (2) 8K Green Theater and other premium projector; (3) building automation technology; (4) EV charger (V2H/V2B/V2H and AC mini plus); (5) PV inverter and energy storage; and (6) Data centre infrastructure solution. We also discussed with the company on the impact from rising demand uncertainty, and their vision on 5G.
Delta offers a total solution for data centre customers, including power supply, power management system, UPS, thermal solution (including fans, VC and other components), cooling system and racks design. Data centre generates mid-single-digit revenue contribution. It supplies to both hyper scale data centre and enterprise customers, but smaller share in hyper scale data centres. Despite a weak start in 2019, it still expects itself to outgrow the market and data centre to be one of the drivers this year, with its share gains and enterprise recovery in 2H19. During our visit at Wiwynn, the company pointed out the increasing interests for 48V solution, driven by rising computing power demand, which we view to benefit power supply companies.
For 5G, Delta expects the volume growth from small cell layout to offset the shrinking wattage from power supply (from at least 100W and higher to double-digit level), but we note that intense competition in the lower-wattage design could lead to heavier margin pressure. Telecom infrastructure generates 10-11% of sales.
EV delivered 50% YoY growth in 1Q19 from a high base in 2018, and represents 3-4% of sales. The inclusion of DET will bring more exposure of in-car application to Delta, as Delta still generates more automotive sales from EV chargers. We continue to see it well positioned in the car electrification trend with its broad product portfolio and decent content dollar per car. However, we also note that the overall auto market weakness due to rising trade tensions might put heavier margin pressure on this business unit, given its heavy investments in the early stage.
Another growth area for the company will be its thermal components, driven by increasing computing power demand especially in the ICT infrastructure. It supplies fans (mostly), heat pipes and VC to infrastructure mainly and other applications such as smartphone. These components represent 10% of their sales.
We still think Delta is well positioned in 5G/car electrification, but we see rising OPM risks with potential reversal of cost benefits (in 3Q19), dilution from DET (2Q19), and its aggressive expansion and opex rigidity amid rising macro uncertainties.
E Ink: Near-term momentum impacted by macro
uncertainty
Slower ePaper momentum since 2018. E Ink is the exclusive ePaper module
supplier for Amazon’s eReader since the onset of the product launch. The overall
momentum was slower than expected due to the push-out launch of the new gen
product, Kindle Oasis, given prolonged channel inventory adjustment. Despite the new-
Gen product already launched toward the end of 2018, it highlighted the end-demand
has still been soft given increasing macro-economic-led uncertainty, specifically from
the ongoing US-China trade tension, though components are currently not included in
the tariff list. In addition to Amazon new eReader, E Ink sees increasing use-cases
Delta showcased its position for smart city
and smart home as well as its progress on 5G
E Ink noted the demand turns slower since 2018 but stays positive on the
addressable market in low power consumption
applications in IoT era
demonstrating various new products adoption including Hisense A6 Dual Screen
smartphone, Docomo Card Smartphone KY-01L, Xiaomi Mi Hygrothermograph Gen 3,
AliPay Smart Card, etc.
Figure 49: Hisense A6 Dual Screen smartphone vs
Docomo Card Smartphone KY-01L
Source: Company data Source: Company data
Expanding addressable market in IoT. E Ink highlighted its latest progress on new
product development including color e-paper ACeP, add-on luggage tag, and
JustTint/JustWrite/JustPrintIt. It first introduced ACeP in 2H in 2018 and indicated its
second-generation product has greatly improved the key bottleneck, reducing the
response time to 3s from 20s with long-term goal for the adoption into CE products on
eReader/eNote, although it said it still needs time before mass production. In addition,
E Ink introduced a new eLuggage tag using NFC to harvest electricity removing the
need for battery. It is currently in negotiation with multiple airlines for potential adoption
in 2H19 or 2020. It also introduced JustTint variable transmission light control film for
architecture and on-demand privacy, helping it enlarge the addressable markets, as
well as JustWrite e-paper without the need of backplane or electricity, creating paper-
like writing experience. Lastly, JustPrintIt allows image printing through high-voltage
plasma ion on E Ink proprietary material of re-writable card for various applications
including badges, gift card, credit card, etc. Aside from its new initiatives, E Ink
highlighted its continued focus on expanding etag in retails, transportation in smart city,
and smart-hospital, along with others.
Figure 50: E Ink’s second-gen ACeP allowing faster
response rate at 3s vs 20s in first-gen
Figure 51: New eLuggage tag removes need for
battery harvesting electricity with NFC
6 June 2019
Elan: CPU shortages impacting momentum
Largest NB touchpad supplier globally. Elan highlighted it is the world’s largest
supplier for Windows based touchpad as well as Chromebook touchpad with 45%
share in 2018. Despite its leadership, it still has been impacted by Intel CPU shortage
since 2H18, but expects overall situation to improve gradually into 2H19. It showcased
its Smart-Touchpad solution, integrating fingerprint, lighting, NFC and haptics into one
module. Currently, 90% of its NB touchpad shipment is based on PCBA, while the
remaining 10% for more advanced design such as cover glass design, lighting pad,
fingerprint enabled, etc. Elan believes it will continue to gain share given its edge in this
area as NB supply chain consolidates, along with improving profitability, given the
increasing penetration of more advanced touchpad adoption.
Figure 52: Asus’ latest models with lighting
touchpad powered by Elan
Elan’s touchscreen and stylus solution
Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates
Stylus may see increasing adoption in smartphones. Elan is the world’s leading
supplier for Windows and Chromebook touch supplier, as it has been working closely
with Microsoft for the establishment of Pen Protocol MPP 1.51/2.0. Its solution allows
both AES and MPP pens on OLED display capable of simultaneous pen and touch, as
well as tilt-detection for 4096 pressure level enabled. The company also highlighted its
progress in smartphone, having been working with panel makers, including BOE, for
foldable touch IC on both metal mesh and SNW. Elan also remains optimistic for Apple
ultimate adoption of stylus on iPhone, given all iPad models now support Apple Pencil,
while similar function has also been enabled on iPhone's iOS.
Fingerprint key focus in share expansion. Currently, Elan’s primary clients for
fingerprint in NB include Acer, Asus and Xiaomi, but it is looking to expand its shares in
Dell, HP and Lenovo with Synaptics as the key competitor. It highlighted its leading
know-how in 3D-matching algorithm for enhanced security preventing 2D-spoofing with
improved matching speed at 0.2 second. Despite the fingerprint only penetrates into
20% of the global non-Apple NBs, it remains optimistic on continuous share gain, as
well as increasing fingerprint penetration on NB given facial recognition has higher cost
structure, limited use-case, and will not be able to support a narrow-bezel design.
Limited impact from Huawei-ban. According to the company, it should see limited
impact from ongoing Huawei case given it has no exposure in Huawei’s smartphones
with limited exposure to Huawei's PC products. Currently, it estimates only ~2% of
sales exposure for Huawei’s NBs and tablets, while their shipment is continuing without
seeing cuts at this moment. Based on IDC, Huawei shipped slightly over 1 mn NB and
14.6 mn tablets in 2018 or less than 1% share and 10% shares, respectively.
Elan believes the near term NB demand is
dampened by continued CPU shortage but it will
continues to diversify into fingerprint for higher addressable market
6 June 2019
Gigabyte: Gaming still the key targeting market
Gaming demand continues to drive revenue growth. Despite the overall PC market
maturation, Gigabyte still expects its notebooks, desktops and monitors to outgrow the
industry due to its strong growth from gaming. At Computex, Gigabyte upgraded its
AORUS 15 series, featuring Intel Gen 9 Core i7 processor, up to 15.6” Full HD 240 Hz
thin bezel IGZO display, up to NVIDIA RTX 2070 GPU, NAHIMIC 3 sound technology
and Gigabyte claimed it to be their best-performance laptop. AORUS 15 series are now
available and starting from US$1,600 and Gigabyte expects to launch AORUS 17 with
a larger 17” display in late-2019 to early-2020.
Launching AERO family for content creators. Gigabyte launched a new 17.3”
AERO 17 at Computex, which features up to Intel Gen. 9 Core i9 processor, up to
NVIDIA RTX 20 series GPU and 4K LCD display. Gigabyte cited its AERO brand is a
product series which was built for professionals/content creators with high-end
processing power in a highly portable form factor. Gigabyte expects to start shipping
new AERO 17 in 3Q19, with its key advantages of multiple I/O supports, X-Rite
Pantone certification to enhance its color performance which could improve Delta E to
less than 1. Pricing for AERO 17 has not yet being released but is expected to be
higher than US$1,800, which is the price of AERO 15, another AERO member with
smaller display.
Figure 54: MSI and Gigabyte’s gaming and creator laptop solutions in
Computex
2019 Intel keynote at Computex: Come together to
deliver the next wave of innovation
Speaker: Gregory Bryant, Senior Vice President and General Manager of the Intel
Client Computing Group
Intel used its keynote to introduce (1) launch of Ice Lake on 10nm for mainstream
notebooks, (2) high-end X-Series core i9 for gaming and creator PCs, (3) Project Athena
roll-out with a new class of advanced laptops, and (4) a new entry Xeon for Workstations.
Delivering a new class of compute performance and Intelligence. Intel cited 90%
of the data created in the past two years, but only 2% of that data is analysed to create
any value, so Intel sees a significant opportunity in developing better data-centre
systems to take advantage of big-data analytic capabilities. Intel can leverage a large
Vendor MSI MSI Gigabyte Gigabyte
Model name WS 75 GT 76 Titan Aero 17 Aorus 15
Form factor:
Height - 33-42 mm - 24.4 mm
Weight - 4.5 kg - 2.4 kg
Display 17.3" LCD 17.3" IPS LCD 17.3" IPS LCD 15.6" IPS/IGZO LCD
Resolution 4K (3840*2160) 4K (3840*2160) 4K (3840*2160) FHD (1920*1200)
Key specs
CPU Up to Gen 9 Intel Core i9 Up to Gen 9 Intel Core i9 Up to Gen 9 Intel Core i9 Up to Gen 9 Intel Core i7
GPU NVDA Quadro RTX 4000 NVDA RTX 2080 NVDA RTX 20-series NVDA RTX 2070
Memory up to 64 GB DDR4 up to 128 GB DDR4 - Up to 32 GB DDR4
Delta E < 2 - < 1 -
Pricing US$3,200 US$4,700 - US$1,800
Gigabyte believes gaming will continue to
be the main revenue driver in 2019 but it also
targets to expand into more high-end creator
markets through its AERO family
Intel’s keynote highlighted its Ice Lake
for mainstream notebooks, high-end X-
Series core i9 for gaming and creator PCs, Project Athena and a new entry
Xeon for Workstations
6 June 2019
ecosystem with 12mn Intel architecture developers, 300k gaming developers, 100k
ISVs, and 1,000’s of channel partners to improve that.
Introduction of Intel’s ninth-generation VPro. Intel at Computex launched 14 high-
performance desktop and notebook SKUs for business and a high-end core i9 for VPro.
VPro is Intel’s purpose built platform for professionals and enterprise that adds in better
manageability features. Alongside the new desktop and notebook processors launched,
HP, Dell, Asus, Acer, and Lenovo announced new systems based on the new platform.
Intel at the event demonstrated a Dell Precision with Core i9 in a consumer slim factor,
HP Elite 1 in an All-in-One with pop-up camera, and a Lenovo X1 with OLED display
and under 4 pounds.
VPro platforms installed at Advantech. Intel brought in an executive guest from
Industrial PC supplier Advantech, (Stephen Huang, associate VP) to discuss the use of
Intel’s managed VPro systems. The company uses it for trust, manageability and
collaboration. Advantech can remotely manage the systems and uses the platform also
to remotely manage its meeting rooms on the campus.
Xeon EE systems launching for entry level workstations. Intel also announced 14
new Xeon E platforms for entry level workstations and desktops. The Xeon E has up to
8 cores and 16 threads, 5GHz of single core turbo, Wifi 6, and 128GB-266 memory
and Intel Octane support. The company showed Acer, HP and Dell systems launching
at Computex with the new Xeon entry level workstation chipset.
Figure 55: Intel Project Athena for advanced laptops Figure 56: Intel X-Series targeted for creator PCs
Source: Intel Source: Intel
Acer increasingly focused on content creation and gaming. Intel invited executive
guest Acer CEO Jason Chen to discuss its ramp-up of gaming platforms. Acer has
successfully grown its gaming business, doubling each year to US$1.2 bn in 2018. The
company noted 50% of its gaming PC purchasers also do business work and 15% of
buyers only use it for creation and not at all for gaming as they need that for the
graphics and storage capability.
Acer concept D PCs for creators rolling out. Acer introduced the creator PC called
Concept D for users and developers that need performance, graphics and color
accuracy for vivid displays, and also low noise (<40 decibels) since they are used late
at night. Acer’s Concept D7 laptop uses top of the line Intel storage, and i9 CPU for
developers/creators.
New X Series processors for creator PCs launching this fall. Intel also launched its
next generation X-series processors around the compute intense performance with
higher memory, CPU frequency (beyond 2 cores) and will deliver in fall 2019. Intel
showed creator PCs from HP, MSI, Boxx, Lenovo, and Asus, with the X Series
launched at the last Computex and will be upgrading this year with the new processors
this fall.
Gaming PCs - Dell launching new Alienware systems. Intel noted 1.2 bn gamers
globally and 580 mn gaming enthusiasts, and now generates more revenue than the
global motion picture/film industries. Intel invited a guest speaker from Dell to discuss
their use of Intel processors in their gaming systems. Dell indicated it has led for 23
6 June 2019
years with Alien Wear and is now a US$4 bn business for Dell. Dell launched at
Computex its Alienware M15 and M17 thin-and-light laptop, with Intel’s 9th Gen Intel
core. The laptop claims to be fastest thin-and-light laptop with 6-phase voltage
regulators for the CPU and 8-phase voltage regulators for graphics to run at higher
thermals, while overclocking is 4.7 pounds, up to 240Hz refresh, OLED display and
narrow bezel.
Mobile processors launching across the ecosystem. Intel also launched its first
mobile 5GHz processor out of the box with 8 cores, 16 threads, Optane memory, and
Wifi 6. Intel is seeing launches across its OEMs including Gigabyte, MSI, HP, Lenovo,
Acer, Asus and Dell.
I9-9900KS processor launching for high-end gaming. Intel launched “the world’s
fastest gaming processor” its i9-9900KS with 5GHz all core turbo out of the box. The
product is coming for the holiday 2019.
Intel performance maximizer. The automated overclocking tool will be available for
download from mid-June. The software can evaluate and test every core to determine
the maximum frequency they can reach. Intel was able to get overclocked 5.2GHz
frequency on all cores with its 9700 system (listed at 4.6GHz).
Project Athena - new class of advanced laptops. Intel’s Project Athena offers
systems for high-end mobile users that are (1) smart and adaptable, (2) always ready,
and (3) focused on the tasks that matter. Intel has over 100 companies committed to
the platform for launch from holiday 2019. Companies include major OEMs, software
makers, IC design, display makers and chip makers.
Athena specification launched. Intel’s Athena 1.0 specification includes requirements
for: (1) performance/responsiveness, (2) connectivity, (3) Artificial Intelligence, (4) all-
day battery life, (4) instant action, and (5) form factor. The laptops from launch will
have 16-hour video playback, 9-hour battery life in real-world scenarios, and 4 hours of
charge in 30 minutes.
Lenovo Yoga S940 Project Athena laptop. Lenovo’s Johnson Jia, senior VP of
Lenovo Consumer Devices, launched a new class of always on and connected laptops
using Intel for delivery of the CPU, graphics, Wifi and logic. Lenovo will launch for the
2019 holidays a premium S940 Yoga based on Project Athena (12.2mm thin, 1.2KG,
contour glass with super-slim bezel, and long-lasting battery). Yoga 940 is the first PC
with Lenovo Smart Assist, a suite of AI features. The product will also be powered by
the new Ice Lake processor.
Ice Lake processor - 10th-generation Intel Core processor on 10nm now shipping.
Intel launched its 10th-gen Ice Lake processor on 10nm with up to 2.5x accelerated AI,
2x graphics improvement and the company is in production and now shipping to
customers. The company announced 11 new SKUs from Core i3 up to Core i11 at the
event. Features include first AI instructions, Gen 11 graphics engine, new CPU core
architecture, integrated Wifi 6 and Thunderbolt 3. The processor claims up to 2.5x
accelerated AI performance, 2x graphics improvement and nearly 3x faster wireless
connectivity. Intel also showed Wi-Fi 6 (802.11ax) integration using its own 14nm for
the digital media access control and UMC 28nm for the analog RF. The company
showed an Acer Swift 5 and HP notebook model as a couple of the products shipping.
6 June 2019
Figure 57: Intel’s Ice Lake notebook CPU launched Figure 58: Intel WiFi integration with UMC analog RF
Source: Intel Source: Intel
Intel Ice Lake Demos. Intel showed some demos of a Dell notebook using the Ice
Lake processor: (1) Unreal Engine showing a realistic video rendered with its graphics,
(2) Destiny 2 smooth gameplay running on the Gen 11 graphics, (3) sharp home video
enhancement, (4) AI photo enhancement, and (5) fitness body tracking.
Highlights models with its AI acceleration in the Ice Lake processor. Intel showed
a video highlighting other usage models with its AI acceleration in the Ice Lake
processor: (1) microphone auto mute, (2) blur backgrounds for better focus, (3) save
time in photo editing with auto subject selection, (4) photo keyword search, (5)
personalised workouts, and (6) AI with deep-learning boost and Intel graphics.
Lenovo: 5G PC and Project Athena NB stands out
Lenovo ACPC – Always connected PC to be launched. Lenovo unveiled the world’s
first 5G notebook, with its chipmaker partner Qualcomm’s new 7nm Snapdragon 8cx
CPU. Lenovo’s new 5G PC is named as Project Limitless and key advantages of the
device are “always connected” and all-day battery life, leveraging the mobile modem
inside supported by a larger battery. Lenovo has not revealed pricing, availability and
details about other specifications but cited these Project Limitless devices would arrive
in early 2020, with Qualcomm’s Snapdragon X55 5G modem.
Figure 59: Qualcomm mobile PC platform Figure 60: Lenovo first 5G PC – Yoga S940 by 2020
Yoga S940 launched with Intel Gen 10 CPU. Lenovo, as one of the closest PC
partners of Intel, expects to launch a upgraded 14” FHD IPS display Yoga S940 with
Intel’s 10 nm Gen 10 “Ice Lake” CPU (from Gen 8), and targets to start shipping by
year-end holidays of 2019. Lenovo’s thin and light Yoga series notebooks are one of
the four PC brands to launch new products with Intel’s Project Athena 1.0, which
targets to establish a new standard for next generation all-day battery- lasting laptops.
Lenovo announced its 5G PC with Qualcomm and Project Athena NB
with Intel
Key specs including WiFi 6, Thunderbolt 3, at least Intel Core i5 level CPU, over 8GB
memory/256GB SSD, touch screen or stylus pen, narrowed bezel design and the
powerful battery with high-speed charging function.
Figure 61: Intel partners project Athena 1.0 laptops to launch by year-end
holiday
Mediatek focuses Computex on its 5G SoC launch
and diversification with IoT, data centre and auto
Mediatek's President and BU heads in the digital home and automotive, ASIC and IoT
division provided an update on the company's strategy and positioning across product
lines at an event for the press and analysts. AI integration was a central theme across
applications to enhance device capabilities using image, speech, and voice recognition to
enhance device and application performance and drive growth across its platforms.
Main updates from the event: (1) 5G Mobile SoC launching for 3Q19 sampling and 1Q20
first devices and mmWave for 2H20, (2) automotive first designs from late 2018 in radar
sensing, late 2019 in infotainment and in certification for 4G telematics, (3) smart home
focus on integrating AI and moving toward 8k TV support, (4) ASICs ramping in data
centre switch using 7nm solution integrating 56Gb Serdes, and (5) voice assistants market
growing 50% to 90 mn-100 mn, with Mediatek having ~60% share.
Figure 62: Mediatek launches its 5G SoC Figure 63: Mediatek’s 5G integrates third-party RF
Source: Mediatek Source: Mediatek
In addition to the Computex briefing, Mediatek also set up a product suite to showcase its
connected home and IoT products. Key products on display included its smart speakers,
i300/i500 product development kits for smart connected devices, home gateways and
routers including Wifi 6 (802.11ax) and smart robotic vacuum.
5G Mobile SoC details released
Mediatek unveiled its first integrated system on a chip for 5G, integrating (1) Helio M70
modem for sub-6GHz 5G frequencies for Asia, North America, and Europe at competitive
Vendor Acer Dell HP Lenovo
Model name Swift 5 Dell XPS 13" 2-in-1 Envy 13" Wood Yoga S940
Project Athena 1.0 key specs
Ready to go before you are
Performance & Responsiveness
Adaptive intelligence
Always fast, reliably connected
Form factor & interaction Ultra-slim 2 in 1/clamshell, 12-15" at 1080p or better touch display, 3 side narrow bezel, touch pad/pen support
Biometric login - fingerprint/face recognition, wake from sleep within 1 sec.
Core i5 or i7, > 8 GB DRAM dual-channel, > 256 GB SSD
Far field voice services, OpenVINO/WinML support
16+ hours of local video playback, 9+ hours of real-world performance, quick-charging
Thunderbolt 3, WiFi 6 Gig+, Gigabit LTE option
Mediatek introduced its 5G SoC for device in 1H20 and its effort to
diversify into IoT, data center and auto
6 June 2019
4.7Gbps download speeds and 2G-4G; (2) latest ARM cores including A77 CPU and Mali-
G77 GPU; and (3) support for 4k video at 60fps and 80mp cameras.
Figure 64: 5G mobile chipsets announced – Mediatek introduces its first SoC
The company will sample for first commercial launches in 1Q20 which could place these
around next year's MWC, with plans to introduce a new high-end class of segmentation
different from current Helio p/x series. Mediatek is collaborating on RF with Qorvo,
Skyworks and Murata and device makers Oppo and Vivo. We model 10 mn out of
Mediatek's 367 mn smartphone units in 2020 as 5G, with consumers in China traditionally
pulled by the new mobile generation branding but other emerging markets having a long
tail on 4G.
Product suite highlights its IoT and connected home products
Mediatek also set up a product suite to showcase some of its connected home and IoT
products:
Smart-home access. Mediatek showed a solution for home access that allows secure
entrance to a house combining face ID and voice ID to check families faces to get
entrance permission. The device integrates either its i500 (MT8385) chipset with ARM
Cortex A73, ARM Mali G72 GPU, AI processing unit (APU), full HD+ support with
multimedia decode/encode and support for Wifi 5 and Bluetooth 5.0 or MT8175 chipset,
which is Mediatek’s platform for voice assistant devices that includes smart-displays
and smart-cameras.
Smart-speakers and smart-displays. Mediatek showcased its smart-speaker
platforms that can support Google, Xiaomi, Baidu, Alibaba, and Amazon using the
MT8175 chipset, and a MT8518 AI voice SoC for low-power wake-up, streaming
playing, far-field commands. The device has added video display, with a demonstration
showing a smart-speaker capable of a video conference format in cooperation with
Baidu. Mediatek was also demoing a smart-mirror that can control other appliances
using Wifi and an LG soundbar smart-speaker.
Wifi routers. Mediatek was also demoing high-end 4x4 routers now capable of
supporting 802.11ax (Wifi 6.0) and Bluetooth 5.1. The chipset was launched at CES
and is now being integrated into access points, routers, gateways and repeaters.
Mediatek also is sampling its WiFi 5 10GPON with 30Gbps engine and enterprise
grade access point routers.
Smart robot vacuum. The company also demonstrated its smart robot vacuum with
AI processing unit capable of object detection to avoid walls and objects in the room.
The smart robot can be built with either i500 with a 0.5TOPS APU or MT8175 with
voice DSP and 0.3TOPS APU also capable of building an indoor map with vSLAM (AI
feature extraction and positioning) and object recognition.
Qualcomm Qualcomm Huawei Mediatek Spreadtrum Intel (cancelled) Samsung
Modem x50 x55 Balong 5000 M70 SoC Ivy510 XMM 8160 Exynos 5100
Foundry Samsung 10nm TSMC 7nm TSMC 7nm TSMC 7nm TSMC 12nm TSMC 7nm? Samsung 10nm
Shipment status Multiple designs Sampling Huawei Mate X 1Q20 devices Sampling 1H20 devices Galaxy S10 5G
Spectrum Sub 6, mmWave Sub 6, mmWave Sub 6, mmWave Sub 6GHz Sub 6GHz Sub 6, mmWave Sub 6, mmWave
Support NSA SA, NSA SA, NSA SA, NSA SA, NSA SA, NSA SA, NSA
Sub-6GHz bandwidth 100MHz 200MHz 200MHz 200MHz N/A N/A 200MHz
mmWave bandwidth 800MHz 800MHz N/A No support No support N/A 800MHz
Downlink Speed mmWave 5.0Gbps 7.0Gbps 6.5Gbps No support No support 6.0Gbps 6.0Gbps
Downlink Speed sub6GHz N/A N/A 4.6Gbps 4.7Gbps N/A N/A N/A
Downlink MIMO 4x4 4x4 4x4 4x4 N/A N/A 4x4
Uplink Speed N/A 3.0Gbps 2.5Gbps 2.5Gbps N/A N/A N/A
6 June 2019
Figure 65: Mediatek Smart Access System Figure 66: Mediatek IoT development kit
Source: Mediatek Source: Mediatek
Near-term on track, management conservative on Huawei
Mediatek’s 2Q19 sales are on track for sales +13-21% QoQ improvement and GMs within
the 39-42% range. The company's Helio P90 should ramp in a Tier 1 customer very
shortly to support mix, with overall devices rebounding from the low 4Q/1Q base.
Management is still conservative on the Huawei implications, noting the potential market
demand impact and technology adoption pace triggered by a major vendor's restriction
carries more monitoring than micro-market-share shifts. We believe Mediatek has decent
low-end Huawei share still but would net out a bit higher at other top-tier Chinese brands
and the smaller local brands if overall demand holds reasonably well.
Figure 67: Mediatek: Revenue diversifying between handsets, home and growth
2019 Microsoft keynote at Computex: Enabling
innovation and opportunity on the Intelligent Edge
Speaker: Nick Parker, Corporate Vice President, Consumer and Device Sales;
Roanne Sones, Corporate Vice President of Microsoft OS Platforms; Rodney Clark,
Vice President of IoT Sales
NT$mn unless noted 1Q19 2Q19E 3Q19E 4Q19E 2016 2017 2018 2019F 2020F 2021F
3G Smartphones (mn) 5.1 4.6 4.6 4.1 168.2 113.5 55.8 18.3 11.0 9.3
4G Smartphones (mn) 67.1 83.8 92.2 87.6 336.8 297.5 307.7 330.7 346.4 307.5
5G Smartphones (mn) 0.0 0.0 0.1 0.1 0.0 0.0 0.0 0.2 10.0 65.0
Smartphones (mn) 72.1 88.4 96.9 91.8 505.0 411.0 363.5 349.2 367.4 381.7
ASPs (US$) $8.48 $8.65 $8.54 $8.39 $9.08 $8.19 $8.39 $8.52 $8.62 $8.86
Tablets (mn) 6.6 6.9 7.4 7.1 41.9 36.3 28.2 28.0 27.4 27.5
ASPs (US$) $6.54 $6.61 $6.68 $6.74 $7.53 $6.77 $6.48 $6.65 $6.57 $6.32
Handset/Tablets 20,229 25,043 27,103 25,283 158,150 110,509 97,469 97,658 103,474 109,816
Handset/Tablet YoY 32.2% -30.1% -11.8% 0.2% 6.0% 6.1%
Smartphone % of sales 35.8% 38.2% 37.4% 36.5% 50.3% 43.2% 38.6% 37.0% 37.0% 36.6%
Tablet % of sales 2.5% 2.3% 2.2% 2.3% 3.7% 3.2% 2.3% 2.3% 2.1% 1.9%
Connected Home products 17,403 18,723 20,480 19,659 80,050 74,627 76,378 76,265 76,631 78,298
Mature Products % of sales 33.0% 30.3% 30.0% 30.2% 29.1% 31.3% 32.1% 30.7% 28.9% 27.4%
Mature YoY 7.6% 9.4% -4.0% 8.8% -6.8% 2.3% -0.1% 0.5% 2.2%
Growth products 15,089 18,062 20,734 20,256 37,310 53,079 64,210 74,141 84,806 97,628
Growth Products % of sales 28.6% 29.2% 30.4% 31.1% 13.5% 22.3% 27.0% 29.9% 32.0% 34.2%
Growth YoY 19.7% 14.8% -2.3% 86.3% 42.3% 21.0% 15.5% 14.4% 15.1%
Total Sales 52,722 61,827 68,317 65,198 275,510 238,216 238,057 248,063 264,911 285,742
GM % 40.7% 40.9% 41.2% 41.2% 35.6% 35.6% 38.5% 41.0% 41.5% 41.5%
Op M% 23.3% 31.5% 27.4% 14.2% 8.4% 4.1% 6.8% 9.6% 11.1% 12.2%
Pro Forma EPS $18.14 $34.10 $28.46 $12.52 $14.47 $8.49 $11.05 $14.58 $17.41 $20.25
EPS growth -13.6% -41.3% 30.1% 32.0% 19.4% 16.3%
6 June 2019
Good business progress on system. Microsoft Corporate VP of Consumer Device
Sales Mr. Nick Parker opened the keynote highlighting good progress the company
has made along with the ecosystem partners the past year. Key highlights included
amassing 800 mn Windows 10 monthly active users (vs 700 mn in 2017) and 180 mn
monthly active users of Office 365 (vs 165 mn in 2017). In addition, it also gave
especial highlights to the cloud momentum with 95% of Fortune 500 companies using
Azure, delivering 75% YoY in Azure sales growth and 24% YoY in server products and
cloud service sales growth.
IoT, Gaming and Ultraslim to be growth areas. For the next few years, Microsoft
expects proliferation of IoT devices, forecasting 32% YoY growth in 2019 for 5.9 bn
total IoT devices, and 20 bn connected devices by 2020, creating massive market
opportunity for both Microsoft and ecosystem partners. Lastly, Microsoft cited forecasts
from IDC, highlighting market opportunity in the gaming segment for 51% gaming sales
growth from 2018 to 2023 with gaming PC representing over 20% of total PC volume.
Ultraslim is also a key growing segment with 9% YoY growth from 1Q19 to 1Q20.
Delighters key foundation of modern OS. Ms. Sones indicated a modern operating
system requires a number of enablers including seamless updates, security, always
connectivity and sustainable performance. Nevertheless, these key features are must-
have to satisfy customer basic needs but will not create the future OS it envisions.
Microsoft highlighted some of the delighters, including cloud-connectivity; AI capability;
multi-sensing (stylus, voice, touch, gaze, etc.); and form-factor agility. Specifically,
cloud connectivity serves to enhance user experience with cloud computing and is the
top delighter according to its survey. It introduced the availability of Your Phone App to
be launched for next updates, allowing seamless communication between Android
Phone and PC through Bluetooth connection. Secondly, Ms. Sones highlighted the
importance of AI computing for modern users. It noticed 47% of the Windows based
PC users edit their photos on the PC and thus has offered AI management and search
functionality for users powered by machine learning at local machines and in-picture
facial recognition. For multi-sensing, it announced extending Ink support covering
Asian characters for both writing and simultaneous translation. Lastly, it indicated the
future OS should also be able to detect the posture of the device with the right sensor
support working seamlessly on new form-factors its ecosystem partners offer.
Figure 68: Microsoft’s modern OS vision
Source: Company data
Realising market opportunity in IoT along with ecosystem partners. Microsoft
announced new services and software supports, allowing easier development of IoT
solutions fo

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SUPPLY CHAIN RESEARCH Computex 2019: Focus on tech