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Friday, October 23, 2026

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Convequity on X

The AI memory squeeze is hitting Android chip suppliers harder than the phone market. Counterpoint says global smartphone shipments fell 20% in the third quarter from a year earlier, the lowest third quarter since 2012. AI data centres are taking more of the memory supply, and higher DRAM and NAND prices left most phone makers short. 1. The fall is in cheaper phones. Xiaomi's shipments fell more than 30%, and OPPO's and vivo's more than 20%, as they cut low-priced models and raised prices. Samsung's fell 3%, and Apple ($AAPL) reached a 22% share, its first third quarter above 20%. 2. Chip suppliers fell further than phone makers. In the second quarter, phone shipments fell 21%, while MediaTek's and Qualcomm's ($QCOM) phone chip shipments each fell more than 30%, per Counterpoint. 3. Qualcomm is exposed too. Counterpoint ties MediaTek's decline to its entry-level and mainstream chips, and Qualcomm's to its Snapdragon 600 and 400 lines. Qualcomm also lost some premium volume as Samsung used its own Exynos 2600 chip in base Galaxy S26 models in some regions. Samsung's Exynos shipments rose in the second quarter. The phone maker that held up best is making more of its own chips. The third-quarter phone data shows the same pattern, so I expect MediaTek's and Qualcomm's phone chip volumes to fall faster than phone shipments again when they report the quarter.
@aleabitoreddit

Serenity on X

So spent some more time to look at more DBS conference material: - "Two semiconductor giants, $AVGO and $INTC, both stated that breakthroughs in AI will keep demand for chip investment elevated for at least another 2 years. As current supply is insufficient to meet market demand." - "Current chip production capacity is already far from sufficient to meet demand, and $AVGO CEO expects the shortage to become even more severe in the future." (HKEJ) - "Regarding OpenAI, Hock Tan stated that the market had misinterpreted the company because its underlying fundamentals remained strong. He argued that investors who sell based on a single short-term data point [$50B ARR] are "essentially no different from people gambling in a casino." (eg. Hong Kong Economic Journal): - Commenting on investors' disappointment in OpenAI’s latest revenue forecast: "by itself, not that bad" on their $50B ARR. (Business Times) And connected investors' disappointment to a failure to understand the business and excessive expectations like a casino. - Tan rejected the proposition that OpenAI was overvalued. It quotes him saying: "It’s almost like they are in a casino gambling" in regards to investors' unrealistic expectations and lack of understanding on OpenAI. - Hock Tan if OpenAI and Anthropic achieve widespread market adoption: their attractiveness would substantially strengthen their bargaining power when raising capital. But cautioned elevated global interest rates could make capital requirements a constraint for future growth. - The real driver, he said, is whether frontier AI companies can create models that generate enough value and returns to justify the buildout. (which is fair) - Most companies are wasting money on tokens. He also warned that most companies just waste money spending tokens like kids in a video arcade. This part was the most badly worded by Hock Tan given he's running $AVGO. But Western media commentary narrowed this down to: - "Shortage of capital now, AI Investors are gamblers". In the conference, Broadcom's CEO was actually defending frontier lab valuations and giving cautiously bullish statements about AI infrastructure demand. While citing rising interest rates as a potential constraint that larger revenue or adoption could overcome. Cherry picking quotes out of context disorts the actual messaging. TLDR: - Large and elevated AI semi demand, semi supply insufficient to meet market demand. At least another 2 years of elevated spend - OpenAI valuations defensible, people who sell based on extreme expectations for the company are like casino gamblers. - Tan stated markets had misinterpreted OpenAI's ARR because its underlying fundamentals remained strong. - Frontier labs if they achieve widespread adoption / revenue would strengthen capital raising, which overpower headwinds from raising interest rates. Lot of $AVGO CEO remarks looks heavily nuanced, which Western media coverage distored.
@aleabitoreddit

Serenity on X

What oversupply? Even in the lower end ranges that they're focusing on, Chinese pluggable makers like Innolight are still bottlenecked for 70-100mW ranges from ECOC channel checks. Cambridge wouldn't be going out financing suppliers with convertible loans for scarce laser capacity. Suppliers wouldn't be raising ASPs if there was overcapacity. Also not all CW lasers are the same. China is a ways away from from scaling UHP lasers needed for CPO, which is why there's still premiums given to $LITE, $COHR, $SIVE. $LITE lasers are sold out into 2029 and they're starting negotiations into 2030. I don't think anyone genuinely believes that China will flood the laser markets medium term, even both $LITE / $AAOI CEO said there was a difference between comments made and what they're actually seeing. From AOI on China: "of them, they are working maybe 70 mW or very few can really do 100 mW. For 300 mW laser, especially DWDM spec, we don't see that." "Not in the next two, three years, especially the demand is so big. Okay? Even combined AOI, Lumentum, Coherent, Broadcom all together, it's still very tough to meet the customer demand in the next few years" From Lumentum last month: "At least at the moment, we see no impact from any Chinese laser supply." But whenever markets want a correction people just blindly point to China with memory or optics while ignoring what's actually occurring with demand imbalances + LTAs spanning many years and constantly extending.

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