Qualcomm & Microsoft – Dream with caveats.

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Some space left for this proposition

  • Windows on ARM is back for another crack at the PC market and while I can see a place for it, it is unlikely to cause Intel too much grief.
  • Microsoft and Qualcomm have launched a series of laptops that are running Windows 10 on Qualcomm’s SnapDragon 835 chipset.
  • In addition to offering better battery life, the presence of the chipset enables the always-on functionality and connectivity that users are used to with smartphones and tablets.
  • If that were all that there was to this story, then I would be pretty sure that Qualcomm would quickly take over the PC market but, as always, the devil is in the details.
    • First: Software compatibility: Many of the devices will ship with Windows 10S (for which they are best suited) but will be upgradeable to the full version of Windows 10.
    • Microsoft has compiled Windows 10, Edge and shell to run natively on ARM and had also recompiled a series of DLLs (dynamic link libraries) to ensure that the major desktop applications run properly.
    • For everything else, Microsoft has created an emulator (generally a big drain on performance) that will allow other third-party apps to run with some exceptions.
    • These are: 64bit apps won’t work yet, kernel mode drivers are not supported which means that most antivirus and games that use DRM or anti-cheat software wont work properly.
    • This means that buyers of these devices will not be able to be 100% certain that everything they might want to run will work.
    • I see this as a big sticking point, as failure to perform as expected will infuriate users and create a lot of bad press around these products.
    • This is the same concern that I had around the launch of Windows 10S which I continue to think makes some sense in the classroom but nowhere else (see here).
    • Second: performance. These devices need to perform as well as Intel devices in their pricing tier otherwise buyers are likely to be put off.
    • Given that Intel has much higher gross margins than Qualcomm in silicon, this might be achievable, but it will also depend on the quality of the implementation by the PC makers themselves.
    • Third, market dynamics: The PC market has changed dramatically over the last few years as casual users have deserted the platform.
    • This is because, these users predominantly used a PC for browsing, email and media consumption and smartphones and tablets offer a more convenient and better way to conduct these activities.
    • Consequently, these users have ditched the PCs that they owned and replaced them with smartphones and tablets instead.
    • It is this that I have long believed has been mostly responsible for the softness that has been observed in the PC market over the last 5 years.
    • This trend also means that the users that are left are much more focused on the functions that PCs do really well like content creation and high-end gaming.
    • For these users, performance is critical, and I suspect that Windows 10 on ARM will not be powerful enough for them.
  • This leaves Windows 10 on ARM somewhat in limbo but for students, schools and very price sensitive users, this may represent a good option.
  • Hence, if Intel is going to feel any heat from this, it is going to be at the very low end of the market which is not where it makes most of its money.
  • The amount of traction that these devices get depends mostly on their price and the quality of the implementation by the PC makers but I think that it is pretty clear that the performance driven end of the PC market is almost certain to remain Intel’s

Apple – Tick in the box.

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Hacking of Face ID proves its security.

  • The inevitable hacking of Face ID has been achieved but I think that the lengths that the hackers had to go to crack the system proves that, for all practical purposes, it is a worthy upgrade from fingerprint recognition.
  • Vietnamese cyber security firm and Android phone maker, Bkav Corp, has managed to reliably bypass Face ID (see here) by creating a 3D mask of the user’s face with special attention being paid to the eyes, nose and mouth.
  • However, it is pretty clear that a huge amount of work went into the creation of this mask as:
    • First: it was designed using expert cyber security knowledge and an intricate understanding of how Face ID works.
    • Bkav first demonstrated a bypass of facial recognition on laptops in 2008 and has been a player in the field ever since.
    • Second: 3D printing, 2D printing and hand-made artistry was used to create the mask indicating just how intricate the process was.
    • Third: each mask costs $150 to produce.
    • Fourth: it took 9 days to crack (even with at least 10 years’ experience) and I suspect Bkav was working on this flat out.
  • The net result is that Bkav continues to advocate for the fingerprint being the best method of authentication for an electronic device.
  • However, I think that the intricacy and cost of this hack combined with the fact that a detailed 3D scan of the user’s face is required, is actually an endorsement of Face ID as a verification system.
  • Taking this with surveys that suggest that 60% of users prefer the system over fingerprint (9to5 Mac) and the fact that there few reported issues with the reliability and speed of the system leads me to think that Apple has successfully ticked this box.
  • However, fast and reliable Face ID is clearly quite difficult and expensive to achieve (Samsung’s is awful) which leads me to think that Apple has set a standard for high end devices going forward.
  • I think that this will trickle down through the tiers with time, but it looks like fingerprint sensors may have a limited life span.
  • Furthermore, Apple now has a clear point of hardware differentiation over its competitors that is likely to last for a generation or two.
  • In the ecosystem, Apple is still miles ahead largely due to Google’s inability to deal with the endemic fragmentation, security and updating issues that continue to hamper the Android user experience.
  • Hence, I remain unconcerned for Apple’s iPhone gross margins for the next 12 to 18 months.
  • That being said, I think the shares continue to price in a larger iPhone X driven cycle of replacement than I see as likely.
  • This combined with excellent price appreciation so far this year, leaves me indifferent to the shares.

Apple FQ4 17 – All things X.

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X hits the spot.

  • Apple reported good results and guided strongly for FQ1 18 as it has managed to deal with some of the production problems with the iPhone X which will result in slightly better than expected shipments in FQ1 18.
  • FQ4 17 revenues / EPS were $52.6bn / $2.07 compared to estimates of $50.7 / $1.87.
  • Slightly soft iPhone 8 demand has been offset by a 25% jump in Mac shipments and a 14% jump in iPad.
  • Both of these products have clearly gained some share as the end markets for PCs and Tablets have remained quite soft.
  • The big problem with the iPhone X has been the facial recognition system where suppliers have struggled to produce enough components to the specification demanded by Apple.
  • I suspect that the slight relaxation of the original security requirement has enabled more of the 3D sensors to meet the grade enabling the slightly better supply underpinning FQ1 18 guidance.
  • As a result, guidance for FQ1 18 was slightly ahead of expectations with revenues / gross margins of $84bn – $87bn / 38.0% – 38.5% forecast compared to expectations of $84bn / 38.5%.
  • The traditional lines outside the stores that were completely absent when the iPhone 8 / 8+ became available, have formed for the availability of the iPhone X leading me to believe that the company is on track for a pretty good replacement cycle.
  • However, I do not think that the iPhone X will offer a cycle nearly as big as the iPhone 6 and my concern is that this is what the market is looking for.
  • In expectation of this super cycle, the valuation of Apple as expanded materially leaving me concerned that much of these heady expectations has already been priced into the stock.
  • Consequently, the valuation argument for Apple is not nearly as strong now as it was 12 months ago, leaving somewhat less inclined to hold the shares for the long-term.
  • I continue to prefer Tencent which has some upside left given its global leadership in Digital Life coverage and Baidu which represents the cheapest way to invest in the trend of AI.
  • Microsoft continues to be steady albeit much less exciting than the other two.

 

Huawei – The AI of others

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Huawei needs its own algorithms to succeed in AI.

  • Huawei abandoned its habit of launching a new phone at IFA 2017 and instead focused on a new chipset called the Kirin 970 that promises all usual the bells and whistles as well as artificial intelligence.
  • Huawei made some bold claims regarding its hardware performance as well as power efficiency thanks to its 10nm geometry but I get the impression that it intends to drive differentiation through its embedded neural processing unit (NPU).
  • This is a part of the chipset that has been specifically designed to run AI algorithms more quickly and more efficiently than running them on the CPU or in the cloud.
  • The result should be faster processing of AI tasks resulting in better services that drain the battery less.
  • This is all well and good but what really matters is what users of Huawei devices will notice, to whom they will attribute the value created and for what they will pay.
  • The Kirin 970 NPU supports Huawei’s own APIs as well as Google’s TensorFlow and Facebook’s Caffe 2 meaning that AI created by these two ecosystems will also run optimally on the NPU.
  • The idea is that the algorithms are created in the cloud, downloaded to the device where they run locally improving both speed as well as privacy as the data will not leave the device.
  • I have long believed that this type of AI will be limited to functions where the algorithms are very well established.
  • In the early days this is likely to be image processing such as facial recognition or computer vision.
  • This is where I think Huawei will begin to struggle as I believe that it has very little AI of its own meaning that the Kirin 970 will spend almost all of its time processing the AI of others.
  • The AI of others will be running on the devices of all of Huawei’s competitors meaning that Huawei will be competing purely in hardware performance.
  • When other chipmakers come to market with their own NPUs, it will then be a straight fight based on hardware performance.
  • When it comes to AI, users are going to place value of the depth, richness and intuitiveness of the services themselves meaning that to improve its differentiation, this is where Huawei needs to compete.
  • Of this there is no sign meaning that while the Kirin 970 may help Huawei increase market share, it will do nothing to enable it to increase the prices of its phones.
  • The net result is that until Huawei can outsell Samsung by a factor of 2 to 1 in terms of volume, it will really struggle to increase its margins beyond the 2-4% that everyone else (except Samsung) is stuck with.
  • Google is the only company that really makes money from Android but I continue to be cautious as its valuation is already pretty full.
  • Tencent, Baidu and Microsoft remain my top choices.

 

Qualcomm FQ3 17 – Strong stomach

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Qualcomm has the stomach for a fight.

  • Despite the seemingly challenging situation the company is currently experiencing, I think the company has a better chance of beating Apple than it did of beating Nokia back in 2006.
  • FQ3 17A revenues / Adj-EPS were $5.3bn / $0.83 compared to consensus at $5.3bn / $0.85.
  • This was in line with consensus which has now been adjusted to account for the fact that royalties from the iPhone are no longer forthcoming.
  • Technology licencing revenues (QTL) fell by 42% YoY and 48% QoQ while QTL EBIT fell by 51% YoY and 56% QoQ highlighting just how significant the revenue generated by the iOS ecosystem is to Qualcomm.
  • Guidance for fiscal FQ4 2017 will be similarly impacted with revenues / Adj-EPS of $5.4bn – $6.2bn / $0.75 – $0.85 compared to consensus $5.6bn / $0.95.
  • While, Qualcomm has been transparent for many years about how QTL generates a disproportionately high share of profits, the market appears to have got its spreadsheets in a muddle and misread the impact of the lower revenues on QTL EBT margins.
  • These are expected to be around 66% which is the main reason why the EPS guidance is below consensus.
  • Included in this are the legal expenses that are being incurred to defend its business model, which I think in the long-run will be money well spent.
  • Most of the arguments that Apple is making to explain why it has an issue with Qualcomm’s business model have been made off and on for the last 15 years so the case it is bringing is nothing new.
  • These arguments were made most vocally by Nokia in 2006 and while the companies did come an eventual settlement, this time around the situation is quite different.
  • I think that these differences strengthen Qualcomm’s hand as:
    • First Contract validity: The dispute that arose between Nokia and Qualcomm in 2006 occurred because Nokia’s contract had come to an end and the companies were unable to reach agreement on terms for the renewal.
    • Nokia stopped paying Qualcomm as it had no idea how much to pay and instead accrued an estimate of the cost in its balance sheet.
    • The contracts upon which Apple has ceased payment have not expired and I can’t see any contractual grounds upon which to cease making payments.
    • As a result, I do not think that it will not be difficult to show to a court that Apple is acting in bad faith and to win an enforcement order.
    • Second: Third party suppliers. Apple does not pay Qualcomm directly as the payment is made by its manufacturing partners who make its products.
    • This means that Apple is getting involved in contracts that are in place between entities that have nothing to do with Apple other than it being the end buyer.
    • I do not think it will be difficult to argue that Apple has no real grounds to be involved in these contracts and is acting in bad faith.
    • Third: Non-standard essential patents. As Apple is no longer paying Qualcomm for its IP, it is not unreasonable for Qualcomm to sue Apple and its contract manufacturers for patent infringement.
    • Standard Essential Patents (SEPs) are those patents that have to be used to get a standard (like LTE) to work properly. One cannot design around them.
    • It is easy to prove infringement of a SEP (assuming that its valid) but patent holders are not allowed to be nasty when it comes to licensing terms.
    • When one contributes standard essential IPR, one agrees to license the technology to anyone who wants it.
    • This has to be done at a fair price and one agrees not to seek injunctions.
    • Historically, Qualcomm has tended to assert SEPs but this time it is asserting implementation patents against Apple and its manufacturers.
    • Implementation IPR is another kettle of fish entirely.
    • It is much more difficult to prove infringement as this IPR can be designed around, but when infringement is proved, the holder can pretty much do what it likes.
    • There is no limit to the royalties that can be charged, injunctions can be sought and the holder can force the infringer to redesign his product to get around the innovation.
    • If there is one thing that Qualcomm knows it is patents and I am certain that it has asserted implementation IPR that Apple is most likely to have infringed as well as patents that are fiendishly difficult to design around.
    • However, I am pretty sure that the engineers at Apple are now beavering away to work out how to do just that.
  • The net result is that I think of all the battles that Qualcomm has fought in the past (and there have been many), it has the best chance of winning this one.
  • However, to slug it out is going to take a long time it could easily be 2020 before this issue is fully resolved.
  • I think that this creates an excellent long-term investment opportunity in the stock but timing of entry is difficult to gauge and it is going to be a bumpy ride.

Samsung Q2 17A – Just chipper.

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Samsung heading for No. 1.

  • A truly mighty performance from Samsung puts it well on track to promoted to being the largest semiconductor company in the world by revenues this year.
  • Samsung has reported preliminary results for Q2 17 with revenues / EBIT expected at KRW 60tn / KRW 14tn nicely ahead of consensus of KRW 58.4tn / KRW 13.0tn respectively.
  • As always with Samsung, the market has already taken into account the discrepancy between published expectations and the real figures, resulting in no meaning movement in the shares after the announcement.
  • Despite the recovery of the handset business following the Note 7 disaster, these results are primarily driven by semiconductors where Samsung is extending its dominance while its competitors flounder.
  • The difficulties that Toshiba is going through and the uncertainty surrounding the future of its flash memory business has certainly done Samsung no harm so far this year.
  • This combined with a rapid move away from magnetic hard drives to solid state storage has meant that demand has been so strong that both volumes are growing very quickly and price declines have slowed.
  • I suspect that around 50% (if not more) of EBIT has been derived from the semiconductor business while the handset business has remained solid but much more pedestrian.
  • The outlook remains very strong as the smartphone market is seeing a temporary blip in growth while the trend towards solid state storage looks set to continue for some time to come.
  • Consequently, it looks pretty certain that the next two quarters are likely to see Samsung post two more record levels of profit and cash generation.
  • However, this has been widely flagged already and with the shares at KRW2.4m, the valuation argument for holding a big position it not nearly as great as it was.
  • Consequently, I remain pretty ambivalent to Samsung, preferring Tencent, Baidu and Microsoft.

 

Smartphone hardware – Sticky fingers.

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Fingerprint sensors define the market this year.

  • The problem with covering the whole of the front of a smartphone with glass is that it creates a problem for fingerprint ID on the home button.
  • Samsung got around this by inconveniently locating fingerprint ID on the back of the device ensuring that it gets used much less than it otherwise would.
  • Another option is to put the fingerprint ID sensor on the power button which can be used to turn the screen on.
  • I think that this is currently the lead contender for the iPhone 8 as I have seen no indication that Apple has cracked the problem of putting the sensor under thick protective glass and still have it working reliably.
  • Qualcomm has just announced a solution that uses ultrasound that is capable of reading a fingerprint beneath an OLED display with a thickness up to 1.2mm as well as up to 0.8mm of glass.
  • Assuming the sensor is reliable, this specification should be more than enough to offer fingerprint recognition on any smartphone regardless of whether it uses the Snapdragon chipset.
  • Qualcomm is demonstrating the technology on a retrofitted Vivo smartphone and I suspect that Vivo will be the first to deploy it in a commercial device.
  • Apple and Samsung are working on their own solutions but I do not believe that they have solved the problems created by placing the sensor under the glass.
  • Fingerprint sensors have become part of everyday life on smartphones and with Samsung, Xiaomi and Essential Products setting the standard when it comes to screens, Apple has little choice but to follow.
  • Hence, with the upper and lower bezels of the device being no longer available, by far the best solution remains to place it under the screen on the virtual home button.
  • I think that anything else, including the power button, diminishes its usability and therefor its overall appeal.
  • Fortunately for Apple, the draw of its ecosystem is still very strong meaning that even if the sensor is on the power button or even the back, it is unlikely to meaningfully impact demand for the device.
  • This is because despite improvements, the user experience on Android remains meaningfully adrift of that on iOS which is so far keeping users very loyal to iOS.
  • Hence, I don’t see Apple rolling out this technology until it is rock solid in terms of reliability.
  • I think that the availability of under screen fingerprint sensors will have a significant impact on the handset market in Q4 17 as they enable an optimal user experience.
  • Anyone who can bring this to market by Q4 17 is likely to enjoy a temporary gain in market share, most likely over Samsung, but even the Qualcomm solution will not really be available until next year.
  • Consequently, I see Q4 17 continuing to be dominated by Samsung and Apple once again.
  • Samsung’s shares continue to be very strong, but I think that the valuation opportunity has now passed.
  • Consequently, I still prefer Tencent, Baidu and Microsoft.

ARM vs. Intel – Pause for thought.

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Intel shoots at Asia rather than at home.

  • With another attempt to replace Intel chips in PCs on the cards, Intel has moved to protect its position with a not so subtle reminder that its instruction set is covered by a large number of patents.
  • The 40th anniversary of the x86 processor is approaching and to celebrate, Intel has published an editorial extolling the innovation that has made x86 by far the dominant processor in both PCs and servers.
  • The problem has always been that the x86 was never designed to run on battery powered devices meaning that it consumes meaningfully more power than its ARM equivalent.
  • Consequently, there has always been a desire to allow battery powered PCs (laptops) to use the ARM processor as this would, in theory, meaningfully extend their battery life.
  • The first attempt to do this was Windows RT which involved adapting the Windows software to run on the ARM instruction set which failed miserably.
  • The current effort involves an emulator which takes the ARM instruction set and translates it into x86 so that the regular Windows software and applications can run with no modification.
  • However, this proposition already has question marks around implementation and performance (see here) and now Intel is muddying the waters further with its patent pool.
  • Intel has filed around 1,600 patents (533 families) on its x86 instruction set of which around 1,000 (333 families) I estimate are still enforceable.
  • It seems pretty likely that an emulator that makes use of the x86 instruction set will infringe these patents and hence would need a licence from Intel to operate.
  • There are two reasons why I think this warning is not aimed Qualcomm and Microsoft but rather others who may be considering taking a similar route.
    • First: Qualcomm knows and understands more about IP licencing than almost anybody and consequently I think that it will have foreseen this issue.
    • Hence, I think that, together with Microsoft, it will have sorted these issues out with Intel before officially announce its progress down this route.
    • Second: in its 8th June comment, Intel states that “there have been reports that some companies may try to emulate Intel’s proprietary x86 ISA without Intel’s authorization”.
    • At the time of writing, the co-operation between Microsoft and Qualcomm to use an emulator to get Windows running on x86 was not a report, it was an announced fact.
  • This combined with my view that Qualcomm is likely to have sorted the IP issues out in advance, leads me to believe that this warning is targeted elsewhere.
  • Hence, I do not think that this will impact the effort by Qualcomm and Microsoft which, in my opinion, remains completely dependent on the implementation.
  • Emulators have a very bad track record in terms of consuming extra resources which to date, has rarely resulted in any real benefit accruing to the user.
  • I still think that to succeed, these devices must perform at least as well as an Intel powered device at the same price point and have better battery life.
  • I think that this is the minimum requirement as without this, there is no incentive for a user or an institution to purchase the device.
  • This is what I think Microsoft and Qualcomm will be most concenred about but for the other chipmakers in Asia Intel’s comments will have given them pause for thought.

ARM vs. Intel – Silver bullet pt. II

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Implementation and performance will be everything.

  • The second lap of trying to get Windows to work on ARM processors is in full swing but the key to success will be the performance of the devices.
  • At the Computex trade show in Taipei, ASUS, Lenovo and HP have all announced that they will be producing Windows 10 devices that are powered by Qualcomm’s Snapdragon 835.
  • This is the final piece of the puzzle to get devices into the hands of users after Qualcomm and Microsoft announced that they would be giving Windows on ARM another try (see here).
  • ASUS, Lenovo and HP will be using Qualcomm’s Snapdragon 835 to provide both the horsepower to run the device as well connectivity to ensure and always on experience.
  • With its first attempt, Microsoft modified Windows 8 such that it would work on an ARM processor and in the process killed flexibility and backwards compatibility to legacy software.
  • The result was a platform that was shunned by both developers and users, completely killing any hope that ARM would gain penetration in Intel’s home turf of PCs.
  • This time the approach is completely different as Qualcomm and Microsoft have produced an x86 emulator that fools the software into thinking that there is an x86 chip present.
  • The net result is that any Win32 and Universal Windows Apps (UWP) will run on the device with no modifications being required by the developer.
  • I understand that UWP apps will run natively on the Snapdragon 835 but the emulator will be required for everything else.
  • This is where the success or failure of this venture will be determined.
  • The computing devices will lightweight, low cost with a long battery life making them ideal candidates to run Windows 10S (see here).
  • This device category is ideally suited for schools but for students who have their own devices, the appeal is less clear.
  • This is because the majority of the kind of apps that I think students will want on their PCs are not available as UWPs.
  • Students tend not to have a lot of spare cash and therefore will rely heavily on free software which if they are using Windows 10S needs to be on the store.
  • Taking the top free PC software as recommended by TechRadar, I found that 3 apps were available as UWPs compared to 10 that were not but of which, for 2 or 3 there was something similar.
  • Google Chrome, iTunes, Google Drive or any BitTorrent clients are available as UWPs, all which I suspect are pretty important for cash strapped students.
  • Therefore, the performance of the emulator will be critical as I think it will be heavily used in these devices.
  • On bench tests, the Snapdragon 835 is perfectly capable of running Windows 10, but there is a huge difference between performance in the lab and performance in the hands of real world consumer.
  • Furthermore, emulators always incur a performance overhead meaning that apps running via the emulator can never perform as well as those running natively.
  • The key questions are:
    • First: How well will Windows 10 be implemented on the ASUS, HP and Lenovo hardware to ensure the Snapdragon 835 can perform to the best of its ability.
    • Second: How much performance drag will the emulator incur?
  • The answers to these questions will only be apparent once the devices are available but I think it is quite easy to draw a line in the sand.
  • To succeed, I think these devices must perform at least as well as an Intel powered device at the same price point and have better battery life.
  • I think that this is the minimum requirement as without this, there is no incentive for a user or an institution to purchase the device.
  • I also think that always on connectivity is not a requirement for a Windows 10 device because all of the Digital Life activities that require this kind of connectivity have long since moved to smartphones.
  • Hence, I do not consider it to be a valid selling point of the devices.
  • The launch of these devices is obviously a negative for Intel but it is worth remembering that every attempt to dislodge Intel to date has been a miserable failure.

 

Samsung Q1 17 – Roaring 40s

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Semis is a powerhouse with growth and margins in the 40s.  

  • Samsung reported a superb set of results driven largely by semiconductors but announced that it would not be re-organising into a holding company much to the dismay of some activists.
  • Q1 17 revenues / EBIT were KRW50.6tn / KRW9.9tn compared to consensus forecasts at KRW49.5tn / KRW9.18tn.
  • At the same time Samsung announced its first ever dividend of KRW28,000 (annualised) giving a yield of around 1.4%.
  • It also announced that it would keep its promise to cancel all of the treasury shares that it has bought resulting in a further return to shareholders of KRW40tn.
  • This is a promise that many US and European companies implicitly make when they ask s for permission to buy back shares but in practice, rarely keep.
  • For me, this is far more important to shareholder value than re-organising into a holding company.
  • I view holding companies as conglomerates where good intentions are, more often than not, ground down into inefficiency, bureaucracy and slowness.
  • Consequently, I do not see Samsung’s reticence to become a holding company as a bad thing for shareholders.
  • Semiconductors was the powerhouse of these results posting 40% YoY growth with EBIT margins of 40% making up 63% of total profits.
  • The handset business was much less exciting with a 17% YoY decline in revenues and EBIT margins of 9.2%.
  • Even if I reverse out the KRW1.0bn hit that was taken during Q1 17 in the handset business for the Note 7 disaster, I still have only 14% EBIT margins.
  • While Samsung’s margins in Android are exemplary compared to its Android competitors, its semiconductor margins are industry leading, handsomely beating even Intel at the operating level.
  • Consequently, I think that it is this business that will be the main driver of performance for the balance of 2017.
  • In that regard, the outlook remains good with steady demand coming from servers and handsets and no imminent threat to its domination of the memory industry.
  • The implosion of Toshiba and potential change in ownership can only continue to benefit Samsung Semi in 2017.
  • This could be further enhanced should Apple decide to move to OLED in its next iPhone generation for which Samsung is the most likely supplier.
  • This should help provide some stability to the display business which is notorious for its wild swings between profit and loss.
  • The net result is that the outlook for Samsung this year remains very healthy with only one uncertainty on the horizon.
  • This is the unquantified damage that has been done to the brand following the Note 7 disaster raising questions with regard to shipments of the Galaxy s8.
  • Despite this, the initial signs are good as the reviews of the device are overwhelmingly positive despite the software shortcomings (see here) and pre-orders are pointing to no lasting damage having been done.
  • Admittedly, I put the brakes on this one too early by deciding to call time in Q4 16 when the scale of the Note 7 disaster became apparent.
  • Now with the share price above KRW2m, the opportunity for further upside is less obvious leaving me to continue preferring Microsoft, Tencent and Baidu.