Technology

Apple taps Taiwan’s TSMC for key iPhone tech


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Hello, Mercedes here from Singapore. One of the most consequential effects of the global semiconductor shortage is the shifting and, in some cases, deepening alliances between tech companies across the world. This week we feature the strengthening partnership between Apple and Taiwan’s TSMC. Elsewhere we are tracking the fallout on India’s tech sector from Paytm’s disastrous share issue and don’t miss the FT’s podcast on Demetri Sevastopulo’s scoops on China’s new hypersonic missile technology that have stunned the world. Until next week !

The Big Story — Exclusive

Apple is going with TSMC to reduce reliance on Qualcomm. The US maker of iPhones plans to adopt the Taiwan chip titan’s technology to mass produce Apple’s first in-house 5G modem chip by 2023, according to this exclusive in Nikkei Asia.

In the latest iPhone series, these components are provided by Qualcomm of the US.

Key developments: Apple has been seeking to reduce its reliance on Qualcomm and gain more control over vital semiconductor components for several years. The two US companies settled a lengthy legal battle over patent royalties in 2019, and Qualcomm recently confirmed that its share of iPhone modem orders will drop to about 20 per cent in 2023.

In addition to saving money on fees it pays to Qualcomm, developing its own modem would pave the way for Apple to integrate TSMC’s chip with its in-house mobile processor. This would give the US tech giant more control over its hardware integration capability as well as boost the chips’ efficiency.

TSMC has been a vital partner for Apple in its strategy of designing more of its own components and is the sole producer of iPhone processors and M1 Mac processors. The Taiwanese company also has hundreds of engineers stationed in Cupertino, California, to support Apple’s chip development road map, sources said.

Upshot: The deepening alliance between Apple and TSMC is a high consequential trend in the global semiconductor industry.

Mercedes’ top 10

  1. Demetri Sevastopulo’s scoops on China’s new hypersonic missile technology have stunned the world. Podcast here and story here. (FT)

  2. As foreshadowed by this newsletter, Apple won’t be meeting some Christmas wish list demands as the chip shortage bites. The iPad is the main casualty. (Nikkei Asia)

  3. South Korea’s Samsung has chosen Taylor, Texas for its planned $17bn US chip plant, responding to Washington’s aim of more domestic semiconductor production. (FT)

  4. India this week reignited a push to ban cryptocurrencies while Indonesia’s top Islamic body has told Muslims in the world’s fourth most populous country to steer clear of the products. (Reuters, Nikkei Asia)

  5. But other countries are going all in. A new digital currency backed by bank deposits and involving more than 70 companies is set for a test run in Japan. (Nikkei Asia)

  6. Supercharging demand: Japan is doubling subsidies for electric vehicles to as much as $7,000, putting it on par with the US and Europe. (Nikkei Asia)

  7. Lower Chinese consumer spending and tax threats are hitting Alibaba’s share price. (FT)

  8. Spacs are back: Singapore superapp Grab gears up in the US for the biggest merger globally with a blank-cheque vehicle. (Nikkei Asia)

  9. Binance’s Singapore-based founder is in talks with sovereign wealth funds about them taking a stake in the world’s largest cryptocurrency exchange. (FT)

  10. A Japanese group develops a new method to cheaply extract copper, nickel, cobalt and lithium from used EV batteries. (Nikkei Asia)

Japan is set to launch a new digital currency backed by bank deposits as countries rapidly diverge in their stance on cryptocurrencies. © REUTERS

Our take

Just a few weeks ago, SoftBank founder Masayoshi Son was heralding Paytm’s IPO as a “great event” for the Japanese conglomerate. SoftBank took a sizeable stake in the Indian fintech company — holding about 18.5 per cent before the IPO — and had high expectations for its public debut.

Paytm fell at the first hurdle. The company had one of the worst debuts for a newly listed company in recent history. The blame game between the company, investors and bankers has already started. An overambitious valuation, weak demand from wealthy individuals, and a cap on retail exposure due to Paytm’s lack of profit are some of the reasons being cited.

What of SoftBank? The prolific tech investor made a decent chunk of money selling some Paytm shares as part of the listing. Moreover, despite its falling share price, the Indian company is still worth more than the $16bn valuation at which SoftBank last bought shares.

In an interview following the IPO, SoftBank Vision Fund’s chief financial officer had this to say: “The stock’s down, but we got in much, much earlier, at a lower valuation. We invested in them three or four years ago, so it’s OK.”

All this puts the spotlight firmly on upcoming India tech listings by SoftBank-backed companies. The Japanese group is in pole position to receive a multibillion-dollar windfall from IPOs such as PolicyBazaar and Oyo. Including Paytm, SoftBank’s two Vision Funds have invested about $11bn in Indian start-ups.

Retail investors might stay away if lofty valuations and subsequent falling share prices continue to hit them harder than they do SoftBank.

— Mercedes

Smart data

A treemap showing where 14 major crypto mining companies have sent their Chinese machines

Fourteen of the biggest crypto mining companies in the world have moved more than 2m machines out of China in the months following the country’s move to ban mining, according to FT data. Where did they end up? Mostly in Russia — although eight out of the 10 largest public mega farms based in the US have expanded the number of machines in their fleets since China’s ban. What’s also interesting is how Asia is absent from the equation. Read more here.

Spotlight

Ahmed Mazhari says that Microsoft is on a mission to support Asia’s female tech entrepreneurs.

“Talent is going to be the strategic advantage that will differentiate companies,” said Mazhari, Microsoft president for Asia. “And [yet] we have by choice selectively excluded half the talents . . . enabling more men than women in the past.”

Under a new initiative, Microsoft plans to use its early-stage venture capital investment arm, M12, to co-invest with a fund managed by She Loves Tech, which provides mentorship and networks for female tech entrepreneurs. It organises a community of more than 8,000 entrepreneurs in more than 50 countries, with partnerships with global venture capital firms and angel investors.

Microsoft and She Loves Tech announced a multiyear partnership where Microsoft will provide Azure cloud computing services and other technology tools to start-ups that She Loves Tech supports.

When sages speak

China intends to become a “cyber superpower”, projecting its influence far beyond its borders. This cracking new report from researchers at ASPI, the Australian think-tank, shows how Beijing is working to build a consensus on the future of who will set the rules, norms and values of the internet.

The tech regulation onslaught in China has been so rapid and broad it can seem dizzying. This round-up from Kai von Carnap and Valarie Tan at Merics, a Berlin-based think-tank, puts it all clearly into perspective.

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