Untitled

2011

Prepared by

Ferhat Ünlükal

7/31/2011

BUSINESS AND TECHNOLOGY REPORT


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BUSINESS AND TECHNOLOGY REPORT JULY 2011

Consumer Electronics (CE)

Samsung

Financial

Samsung Electronics' profitability slumped in the second quarter as strong performance in fast-growing smartphones could not overcome weakness in liquid crystal displays. Operating profit for the three months that ended June 30 will fall to between 3.5 trillion won and 3.9 trillion won ($3.7 billion) from 5.01 trillion won a year earlier, Samsung said in a statement. Consolidated revenue for the period is expected at between 38 trillion won and 40 trillion won. The company recorded sales of 37.89 trillion won in the same period last year. Samsung Electronics Co. will release a full earnings report including net profit on July 29 when it will provide reasons for the performance, spokesman Nam Ki-yung said.

Samsung Electronics reported second-quarter sales up 4 percent from a year earlier to KRW 39.44 trillion. Operating profit was down 25 percent to KRW 3.75 trillion, and net profit fell 18 percent to KRW 3.51 trillion. The drop in profits was mainly due to its semiconductor and LCD activities, while the telecom business performed strongly. Telecom sales rose 43 percent year-on-year to KRW 12.18 trillion, and

operating profit rose to KRW 1.67 trillion from KRW 0.63 trillion. Samsung did not release figures on handset shipments, but said growth was in the high teens year-on-year and high single digits versus Q1. This was led by growth across its smartphone range, offset by lower sales of traditional feature phones. The average selling price was up in the low teens versus Q1 thanks to the higher smartphone share. Samsung said it expects the handset market to grow 15 percent in the second half of the year compared to the first six months. In the third quarter, sequential growth is forecast in high single digits. This is led by continued strong demand for smartphones in both developed and emerging markets as well as the launch of LTE devices. Demand for feature phones is also expected to grow, but this market will suffer from price pressure as smartphones become more mass market, Samsung expects.

Samsung’s stock performance

Connected TV

PlayJam, the world's largest TV games network, has launched its global games service for Samsung Smart TV. PlayJam aims to create the richest environment for games on TV. Now live on Samsung’s 2010 range, the games network will roll out across Samsung Smart TV and blu-ray players.


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Samsung have this afternoon confirmed that its Smart TV and Blu-ray player range now have access to three new apps, including one for the ABC’s catch-up television service iView.

Patent Lawsuit

Samsung Electronics said late Wednesday night that it has filed a complaint with the U.S. International Trade Commission to ban U.S. imports of Apple products.

Spanish antenna developer, Fractus has just announced that it won a patent lawsuit against Samsung last month and was awarded US$23 million in damages.

3D Effects

3D displays cause extra eye fatigue, according to a study published by the Journal of Vision today that was funded in part by Samsung's R&D arm. A group of researchers from the University of Califonia-Berkeley found that when test subjects watched 3D displays, they reported more eye strain and fatigue and less vision clarity afterward than when they watched 2D video. The disparity between the depth of the screen and the depth of the 3D image caused the most problems, though researchers also found the relationship between image depth and nearness of the screen also played a role in eye strain.

Medical Devices

Samsung Electronics Co. is in talks to buy makers of medical devices such as MRI scanners and X-ray machines, Bloomberg reports. Samsung plans to challenge Siemens and General Electric in the medical device market. The company has said it plans to spend 1.2 trillion won ($1.1 billion) in the medical-equipment business by 2020, according to Bloomberg.

LG

Business

LG Electronics, a top global manufacturer of mobile phones and flat-screen TVs, said second-quarter net profit plunged as sales declined and its mobile phone business remained in the red. LG earned 108.4 billion won ($103.3 million) in the three months ended June 30, the company said Wednesday. That was down 87.3 percent from net profit of 856.4 billion won a year earlier. The result snapped two straight quarters of net losses for the Seoul, South Korea-based company, which has been making a push into 3D TVs and smartphones. LG has been trying to turn around its mobile phone business amid tough competition in the fast growing global smartphone market. LG Electronics Inc. ranks No. 2 globally in flat screen televisions behind South Korean rival Samsung Electronics Co. LG trails global leader Nokia Corp. of Finland and Samsung to rank No. 3 in mobile phones. Sales in the second quarter fell 0.2 percent to 14.4 trillion won. LG's mobile communications business, which includes phones, suffered its fifth straight quarterly operating loss in the second quarter. But in a sign of improvement the scale of red ink declined sharply on higher smartphone sales and cost-cutting. The mobile business racked up an operating loss of 54 billion won, sharply lower than 101 billion won in the first quarter and 119 billion won in the second quarter last year. Sales fell 4.6 percent from last year to 3.25 trillion won. LG said it sold 24.8 million mobile phones during the quarter, up slightly from 24.5 million in the previous three-month period. The company sold over 10 million Optimus smartphones in the first half of this year, according to company spokesman Ken Hong.


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LG’s stock performance

3DTV

LG Electronics (LGE) expects its share in Taiwan's 3D TV market to reach 50% by the end of 2011, compared to 22% in May and 41% in the first half of June. Sales of 3D TVs in Taiwan topped 4,000 units in April and increased to 5,000 units in May, with LGE and Samsung Electronics combined accounting for 70% of the segment, according to data released by local channels. Citing data compiled by GFK, LGE ranked as the top vendor in Taiwan's LCD TV market, accounting for a 16% share in terms of sales volume. Sony followed with a 11-12% share, Chimei at 10% and Tatung at 9%.

OLED TV

LG has announced that it will be tossing a 55-inch OLED TV onto the market in mid-2012. LG’s CEO noted that the company would not focus on small and medium size OLED screens for the tablet and smartphone. CEO Kwon Young-Soo thinks that the AH-IPS panels currently in use are best suited to those smaller screens. That leaves the OLED for TVs like the 32-inch set that surfaced back during CES from LG. The initial production of the OLED sets will be in the tens of thousands due to the limited production faculties. LG makes the glass sheets that are used in the panels and plans to expand its production to

12,000 sheets in the second half of 2011 from the 4,000 sheets of glass produced now each month for OLED panels. LG competitor Samsung is set to test production for 32-inch panels for OLED sets in the second half of 2012.

Lawsuit

LG Electronics Inc said on Friday it had filed a complaint with the South Korean trade commission to ban imports of LED products from Siemens lightbulb unit Osram in response to patent infringement litigation by the German firm.

IPTV solutions for Hotel Industry

Smart Systems for Buildings, Hotels and Airports Solutions Co, the exclusive distributor and provider for LG Electronics Business Solutions in Jordan, will be providing the InterContinental Hotel Aqaba with IPTV solutions: the first-of-its-kind technology on a global level. This technology comes as an all-inclusive comprehensive solution for the hospitality sector, offering high flexibility at a low cost, due to its high quality uninterrupted interface. The system is a unified database that is linked directly to the TV with no need for wires, and is highly manageable, user-friendly and easily maintained. The IPTV technology is specifically designed for television transmission through the internet; it is the ideal solution for hotels, hospitals, institutions, ships, telecommunication companies, showrooms and laboratories. The IPTV technology is also considered to be a solid investment, especially in the hotel sector, where it offers the latest developments, programs and events created by the hotel. It also allows for viewing the hotel bill, transaction, easy booking, room changing and several other functions.


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Carbon Free-Green Product

LG Electronics is hoping to appeal to the more climate-savvy consumer when it launches next year the first TV, fridge and other products to carry the CarbonFree logo. Created by the Carbonfund.org Foundation, the certification means that a product is carbon neutral, achieved by a company reducing or offsetting related emissions. LG is taking both tacks for shrinking the carbon footprint of its products, including an $18-billion investment by its parent LG Group to research and develop energy efficient and renewable energy products. The results will be on display next year, when LG will release the first products in six categories -- an LCD TV, an LCD computer monitor, a refrigerator, a clothes washing machine, an LED lamp and several solar panel products -- to carry CarbonFree certification. "For customers in the know, who are environmentally conscious, who understand the effects of carbon dioxide emissions, understand how carbon fits into our world, I think (the certification) it going to be meaningful," said John Taylor, LG's vice president of public affairs and communications. To determine the emissions caused by each product, LG had life cycle analyses conducted for specific product models, looking at everything from the extraction of raw materials to product disposal. One model from each product category was considered, except for solar panel products; LG had a few solar items analyzed. "We wanted to choose something that was a representative sample of our product line, and also something that is attractive to our customers," Taylor said. The CarbonFree products include a 42-inch TV and 26-inch monitor.

Sony

Busines

Sony Corp. sank to a 15.5 billion yen ($199 million) quarterly loss, hurt by the disasters in northeastern Japan, a massive online security breach and plunging TV prices. The Tokyo-based electronics and entertainment company said Thursday it had lowered its profit forecast for the fiscal year ending March 2012 to 60 billion yen ($769 million) from 80 billion yen ($1 billion) it gave in May.

Sony’s stock performance

3DTV

As of today, Sony launched a free “3D Experience” service for anyone that purchased a 3D Bravia television since 2010. The new channel is loaded onto the Bravia television (assuming the television is connected to the Internet) and provides access to 3D movie trailers as well as sports clips likely provided from the partnership with ESPN 3D.

E-book readers

Sony Corp., Japan’s largest exporter of consumer electronics, plans to introduce a line of upgraded digital book readers in the U.S. as early as next month to challenge Kindle maker Amazon.com Inc.


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Growth in India

Sony India was targeting a sales turnover of Rs 7,400 crore this fiscal, a 35% growth from the previous year, a top official today said.

MiniDisc Walkman

Due to shrinking demand, Sony will cease production of MiniDisc Walkman devices this coming September, Nikkei reported today. This marks yet another blow to the dying format, which experienced a roller-coaster ride of popularity during its 20-year lifetime.

Wi-fi

Sony Corporation has joined the board of directors of the Wireless Ethernet Compatibility Alliance (WECA). Sony is the first of WECA's board members to be headquartered in Asia. WECA was formed in 1999 to create a standard way for Wi-Fi equipment to operate. Its seal of approval is on Wi-Fi equipment made by at least 82 different companies, including Microsoft, Proxim and Cisco.

Audio

Sony has signed a joint development agreement with Australian audio technology company Audio Pixels Holdings. The deal will see Sony funding the lion's share of costs associated with turning Audio Pixels' technology patents into a mass-manufacturable product. ASX listed Audio Pixels chairman Fred Bart said the he anticipated that once the development phase and testing has been completed, "the parties will enter into a formal commercial licence agreement". Audio Pixels Holdings owns 100 per cent of Audio Pixels Limited, an unlisted Israeli corporation which developed the technological platform for reproducing sound which enables the production of a new generation of speakers that can be

used in products for mobile phones, televisions or stereo systems. Audio technologies employ techniques to generate sound waves directly from a digital audio stream using low cost micro-electromechanical structures (MEMS) rather than conventional loudspeaker elements which can create products that are 1 millimetre thick.

Toshiba

Growth in India

Toshiba Corporation (TOKYO: 6502) and Toshiba India Private Ltd. (TIPL) on Thursday unveiled a digital products business strategy and new product line-up that will reinforce the Toshiba brand and Toshiba's presence in one of the world's most dynamic and promising markets. This year will see Toshiba move forward in India as TIPL establishes an R&D Centre at its Gurgaon headquarters to localize and develop new products for India in India; opens one-stop call centre supporting all digital products; starts to stretch its nationwide netwok of Toshiba stores to 6,000; begins to localize production of LCD TVs; and expands its line-up of products that combine technology with innovation and add user-friendly functionality. India’s economy continues to surge and key markets are recording dynamic growth. The laptop market will enjoy a CAGR of 20% from FY2010 to FY2013, growing from 3.8 million units to 6.5 million, and in TVs the figures are even more impressive: a CAGR of 59% from FY2010 to FY2013, with unit sales climbing from 3 million to 12 million units.


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Toshiba’ stock performance

Patent Agreements

Rovi Corporation (Nasdaq:ROVI - News) and Toshiba Corporation have signed a multi-year agreement for use of Rovi TotalGuide and its interactive program guide (IPG) patent portfolio in Toshiba televisions, Blu-ray players and recorders, as well as mobile and tablet devices in the United States and Europe, expected to be sold in Spring 2012.

Panasonic

Connected TV

Panasonic Corporation announced today the launch of VIERA Connect Developers (http://developer.vieraconnect.com), a public web portal, to invite IPTV application developers to write applications for its VIERA Connect cloud-based TV service. The new portal allows developers to take advantage of quick response and rich multimedia HD expression capabilities of its VIERA Connect platform. Applications built for the platform can be deployed* in VIERA Connect, which has become available worldwide from this spring. VIERA Connect, which is available in approximately 100 countries around the world since spring this year, offers a wide range of applications, such as video-on-demand services, music, sports, games, health and fitness, to meet the needs unique to each market.

By launching this site, Panasonic will significantly expand its lineup of innovative applications and will provide new TV viewing experience and entertainment in their living rooms.

Panasonic’s stock performance

Energy Efficient Products

Panasonic Corp. (6752) may build homes in Japan with power-saving devices on sites of factories it closed as the appliance maker looks to tap demand for energy-efficient products after the March 11 earthquake. Homes in so-called smart towns, where Panasonic plans to sell to consumers directly, may include solar panels, energy- efficient refrigerators and rechargeable batteries, Teruhisa Noro, a director for Panasonic’s systems and equipment business promotion division, said in an interview yesterday. The plans are part of Panasonic’s effort to expand business built on energy-related products and to cut its reliance on television sales, as intensified competition erodes prices. Japan’s worst earthquake and tsunami cut power supplies across the country and boosted demand for energy-saving devices. Sales from the energy-efficient homes and buildings may reach at least 100 billion yen ($1.3 billion) in the year ending March 2013, President Fumio Ohtsubo said in May. The annual revenue may triple two years after that, he said.


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Green technology

“By 2018, when Panasonic will be

celebrating its 100th birthday, we want green technology to account for 30 per cent of our business. At the moment it is 1 to 2 per cent,” says Abadie. “We are entering an era where energy solutions are becoming more and more important. Our products will fit very well with this change.”

E-Book reader

Panasonic Corp. said Friday it will launch an e-book reader handset on Aug. 10 with a price tag of 34,800 yen.

B2B Products

Panasonic Solutions Company, provider of collaboration, information-sharing and decision-support solutions for government and commercial enterprises, today announced the PT-AE7000U, its first Full HD 3D home theater projector with 1080p (1,920 x 1,080 pixel) resolution. The PT-AE7000U is also the world’s first*1 3D projector to use transparent LCD panels driven at 480Hz that, combined with Panasonic’s original Overdrive Technology, realize significantly low crosstalk. Thanks to the newly-developed optical engine, which produces an incredible 300,000:1 contrast ratio and 2,000 lumens of brightness, the PT-AE7000U delivers both stunning 2D images and a comfortable and immersive 3D viewing experience at home.

Philips

Business

Frans van Houten, chief executive officer of Royal Philips Electronics NV, discusses the company's second-quarter loss of 1.34 billion euros ($1.88 billion) reported today. Philips plans to cut an additional 500 million euros in

costs after reporting its biggest loss in almost a decade.

Philips’ stock performance

B2B - Hospitality Solutions

Today, Philips, the leading provider of TV solutions to the hospitality industry, launches MediaSuite - a new internet enabled TV range allowing guests to access a world of online entertainment and information from within the comfort of their hotel room. Philips’ MediaSuite TVs are the latest addition to Philips’ portfolio of products specially designed for the hotel sector. This new range allows hoteliers to cost-effectively offer guests previously unaccessible interactive services via a wealth of online NetTV apps without the need for a set-top box. Philips MediaSuite enables guests to experience the full functionality of the internet without the need to unpack a laptop or netbook to access the web. Catch-up TV, online apps such as local weather and news, Facebook and Twitter can now be accessed through the TV, meaning guests can be as connected in their hotel room as they are at home. The easy-to-use system includes an innovative remote control specifically designed for intuitive navigation through the range of interactive services.


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Amtran – Vizio

LED lighting

Taiwan-based LCD TV maker Amtran Technology has cut into the LED lighting market in North America through partnership with Vizio, according to company chairman Alpha Wu. Amtran has launched LED bulbs designed to replace conventional incandescent light bulbs of 40W and 60W, and will offer models to replace 75-100W incandescent bulbs after the LED lighting market takes off, Wu indicated. Since prices for LED lighting products are about 5-10 times those for conventional equivalents, the LED lighting market will not take off until the price gap shrink to two times, which may occur in two years, Wu said.

Amtran’s stock performance

JVC cooperation

AmTRAN Video Corporation (AVC), a subsidiary of AmTRAN Technology Co., Ltd. (AmTRAN), a top manufacturer of flat-panel TVs globally, today announced the launch of a new JVC high-definition television (HDTV) line for the North America market. The new BlackCrystal™ series of JVC HDTVs are the first products to be made available under a licensing agreement announced in October 2010 between AmTRAN and Victor Company of Japan, Limited (JVC), an operating company of JVC KENWOOD Holdings, Inc. (JVC Kenwood.)

SRS –Audio Technology

SRS Labs, Inc. (NASDAQ: SRSL), officially recognized as one of America’s Greatest Brands and the industry leader in surround sound, audio and voice technologies, today announced that it has entered into a partnership with AmTRAN, a leading global manufacturer of flat-panel displays, to feature SRS StudioSound HD™, the industry’s most advanced all-in-one audio enhancement solution suite, in JVC branded flat-panel TVs throughout the North American market.

Compal

Production in Mexico

Compal Electronics has announced that one of its subsidiaries has signed an agreement to acquire Toshiba's TV assembly subsidiary Toshiba Electromex in Mexico with the transaction to be completed in the third quarter. Compal, which declined to reveal the financial aspects of the deal on confidentiality of the business contract, stated the new investment is made to cope with the competition in the global TV market, business adjustment at clients, and to strengthen its global deployment.

Compal shipped 600,000 TVs in June, bringing total TV shipments for the second quarter to 1.45 million units compared to 1.35 million shipped in the first. However, first-half TV shipments of 2.8 million units accounted for only 35% of the company's 2011 TV shipment goal of eight million units. The acquisition of Toshiba's TV plant will help Compal achieve its goal for the year, according to industry sources. The sources also pointed out that Japan-based players are expected to further reduce their in-house production and step up outsourcing to save costs, which should significantly boost Taiwan's OEM/ODM orders in the future.


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Compal’s stock performance

Haier

Business – Emerging Markets (India)

Consumer durables firm Haier India today said it expects to double revenue from its refrigerator business to around Rs 650 crore this year with more products being introduced into the market. The company, which today launched a range of frost free refrigerators in India, said it plans to sell around 7 lakh units this year as against 3.9 lakh in 2010.

Haier’s stock performance

Arçelik

Acqusition of Defy Appliances

Arcelik AS (ARCLK), Europe’s third-largest home appliances maker, agreed to buy South African appliance maker Defy Appliances (Pty) Ltd. for $327 million. The price includes $229 million of equity value and about $98 million of

a shareholder loan provided by Franke Holding AG, a Swiss home appliance maker that owns Defy, Arcelik said in a filing with the Istanbul Stock Exchange today. Defy Appliances has an enterprise value of 2.24 billion South African rand ($324 million), it said. The agreement for the purchase was signed yesterday, Arcelik said. “The proposed acquisition will crystallize the opportunity for Arcelik to expand in South Africa and sub-Saharan Africa using Defy as a platform,” Levent Cakiroglu, chief executive officer of the Istanbul-based company, said in an e-mailed statement.

SRS Agreement – Audio Solutions

SRS Labs, Inc. (NASDAQ: SRSL), officially recognized as one of America’s Greatest Brands and the industry leader in surround sound, audio and voice technologies, today announced a multiyear agreement with Arçelik, one of Europe’s largest flat-panel display manufacturers, to license multiple audio technology solutions, including TruSurround HD™, TruVolume®, and SRS’ all new StudioSound HD™ solution, for inclusion throughout their entire FPTV model line-up. “After careful consideration, we incorporated the SRS audio solutions in our entire product line-up in order to provide our customers with the utmost quality in their home entertainment experience,“ added Mr. Erkan Duysal, Director of Electronics Arçelik.”

Fridge Freezers faulty

Some faulty Beko fridge-freezers began catching fire as long ago as 2007, the BBC has learned. Nevertheless most consumers were only warned this week that some of their appliances were potentially lethal. The Fire Brigade said 15 people had been injured, and one person had died, as a result of fires in London alone. Beko said it deeply regretted the incidents, and was doing all it could to address the issues,


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contacting 11,000 customers so far. More than 500,000 potentially dangerous fridge-freezers have been sold in the UK, and Beko is in the process of writing to its customers to arrange modifications. At fault in some models is a defrost timer switch which can become waterlogged and then overheat.

Vestel

Military Video Surveliance Systems

Visiongain's latest defence report - The Military Video Surveillance Systems Market 2011-2021: Full Motion Video for ISR - assesses the business opportunities presented by this critical marketplace driving the growth in intelligence, surveillance and reconnaissance (ISR). Our study examines the 15 leading national markets for military video surveillance systems by sales, as well as assessing the wide range of factors that are driving sales growth around the world. Visiongain's analysis has concluded that worldwide government spending on military video surveillance systems will reach $8.09bn in 2011.

CE Market

LCD TV

LCD television demand is weaker than expected in 2011, especially in developed markets, Goldman Sachs analyst Michael Bang noted in a research report. The analyst writes that he he now sees overall unit growth this year of 8%, down from a previous forecast of 10%.

Global sales of LCD televisions this year will be well below earlier market estimates of 220 million units, flat-screen maker LG Display's chief executive said, due to economic uncertainty. "Some research firms now estimate growth at around 215 million units but we see growth will be even below that level," Y.S. Kown told

reporters late on Thursday but didn't provide his new estimate. "There are so many competing TV technologies from Smart TV (Internet TV) to different types of 3D TVs of shutter-glass (SG) and FPR (film patterned retarder). Consumers simply don't see the value for the 50-60 percent premium they have to pay for such products, and thus they are delaying purchases." Kwon's comments was embargoed until Friday morning. LG, which vies for the top position in LCD flat screens globally with home rival Samsung Electronics Co , reported its third consecutive quarterly loss on Thursday and declined to provide an outlook, citing mounting economic uncertainty. "TV demand will definitely improve as we move into the August and September period because TV makers prepare for holiday sales in China and elsewhere but the visibility is very low on how strongly demand will pick up," Kwon said. Kwon also said his firm was likely to miss its earlier target of FPR-based 3D TV panel shipment because adoption rate of the new display by TV makers was slow as they had to clear unsold inventories of the conventional SG type panel. Samsung is the dominant producer of SG type panel. Samsung and LG control around 25 percent of the global LCD market each. Panel makers are bracing for a weaker-than-usual seasonal demand recovery in the second half as an uncertain global economy further slows TV demand and output continues to outpace demand. Demand for large-sized displays such as TV screens and computer monitors, which together account for around 70 percent of LG's revenue, is also taking a hit as consumers opt for smaller smartphones and tablets

Connected TV

The era of needing a game console or other set top box to get interactive content on a TV may be coming to an end, as a new report predicts 500 million TVs with built-in internet


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connectivity will have been shipped by 2015. That means, by 2015, 35 percent of all TVs 46" and up used in North America will have internet connectivity built in, according to DisplaySearch's Quarterly TV Design and Features report. These connected TVs will make up 25 percent of all worldwide TV shipments in 2011, a proportion that will rise to 47 percent by 2015.

3DTV

TV brands such as LG, Vizio and Toshiba have been focusing on polaroid type of 3D TVs while Samsung, Sony, Panasonic and Sharp have been focusing on the shutter type.

Over 2010, 3D television ownership reached 1.1 million U.S. homes and is expected to enter another 1.8 million by the end of 2011. However, ESPN 3D is broadcast to over 65 million households meaning less than 5 percent of those homes can watch sporting events in 3D.

STB

The Asia-Pacific region will lead set-top box growth for the next five years, with shipments approaching 50% of the set-top boxes sold worldwide in 2013-2015 before falling off slightly. According to ABI Research, established players delivering cable boxes to China, including Jiuzhou and Coship, stand to gain in market share as unit shipments and ASP increase in Asia. Huawei (through Huawei Devices) is also engaging service providers in the region, and ABI Research expects they will see success in this market. “This trend, in which Asia-Pacific countries see continued strong STB adoption, is driven by the completion of digital transitions in North America and Western Europe, coupled with the digitization of cable systems in China occurring through 2015-2016. Subscriber growth in India is strong, but no clear timeline for digitization is being pursued, which is hampering

digital set-top box growth in the subcontinent,” said ABI Research practice director Jason Blackwell. Worldwide, video operators’ desire to offer more channels and high definition channels has been evident. Worldwide, cable services remain the most popular pay-TV platform although they continue to lose market share, primarily to Telco TV (IPTV) platforms, with Satellite (DBS) and Terrestrial (DTT) platforms gaining customers but maintaining their market shares.

OEM/ODM Manufacturing

TV brands have been adjusting their 2011 LCD TV business plans downward at a rapid pace, in acknowledgement of the fact that end-market demand is not what they had expected. However, TV brands and OEM/ODM makers are still planning to increase their Q3’11 production plans in order to meet demand for the upcoming holiday season. According the latest DisplaySearch MarketWise-LCD Industry Dynamics, the combined production plans for the top sixteen LCD TV brands will increase from 14.4 million in July to 16.9 million in August, and then 19.4 million in September. At the same time, LCD TV subcontract manufacturers (OEM/ODM) are planning to increase their production from 3.9 million in July to 4.7 million in August, and then 5.4 million units in September.

Worldwide production of LCD TVs conducted by contract manufacturers is expected to nearly double from 2010 to 2015, as plummeting prices and eroding margins force many brands to outsource their factory operations, according to the recent report from IHS iSuppli. The two major segments of the outsourced electronics business – electronics manufacturing services (EMS) providers and original design manufacturer (ODM) companies – together will produce 127.9 million LCD TVs in 2015, up from 65.1 million in 2010. The EMS and ODM companies


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will account for 43% of LCD TV unit production in 2015, up from 36.2% in 2010. "The continued growth of the LCD TV industry during the last couple of years, in spite of the economic downturn, has further intensified the competition among television brands and contract manufacturers," said Jeffrey Wu, senior analyst for EMS and ODM at IHS. "However, even amid this growth, prices have fallen, causing profit margins to dwindle and prompting brands to increase outsourcing to achieve greater cost efficiency." LCD TVs clearly have become the dominant segment in the flat-panel TV market and will continue to drive growth of the flat-panel TV industry. From the 2010 to 2015 period, LCD TV shipments are projected to rise at a CAGR of 10.6%, expanding from 179.8 million units to 297.6 million units. In comparison, plasma television shipments will decrease from 19.6 million units to 8.6 million units, equivalent to negative 16.5% CAGR during the same period. Beyond cost reductions, a host of other benefits can be obtained by manufacturers in outsourcing LCD TV brands, IHS iSuppli report stated.

Source: IHS iSuppli,compiled by Digitimes, July 2011

DLNA

The Digital Living Network Alliance said it certified more than 1,000 models of TV sets in North America, Europe, Korea and Japan for its media-sharing specification in the first three months of

the year -- more than the total certified in the first four years of the program. With a DLNA-certified television, consumers can access content from an array of other DLNA-certified products including set-top boxes, mobile phones, tablet computers, digital cameras and laptops. There are now more than 4,000 DLNA-certified television models available.

HomePlug

As the HomePlug standard gains popularity, In-Stat's new research has forecasted that HomePlug node shipments will surpass 30 million units by 2014. The standard is currently the market leader for powerline networking, despite tough competition with other powerline solutions such as HD-PLC and UPA.


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ICT Industry

HP

Ultrabooks

HP reportedly is planning to release two "ultrabooks" ahead of launches by such OEMs as Asus, LG, Lenovo and Acer. Ultrabooks are a new category of ultra-thin notebooks proposed by Intel. According to a report on the Taiwanese Website DigiTimes, HP could launch two or more models of ultrabooks before Asus comes out with its UX21 devices in September. Quoting “sources at Taiwan-based suppliers for parts and components,” DigiTimes said July 11 that the HP ultra-thin laptops will use Intel’s 1.8GHz Core i7-2677M and 1.7GHz Core i7-2637M dual-core processors.

HP’s stock performance

Small and Midsize Business

HP today announced new solutions, advanced technology and an expanded entrepreneur program to enable small and midsize businesses (SMBs) to drive growth, improve employee productivity and protect assets. Representing an estimated $234 billion in total addressable market,(1) SMBs are faced with daily challenges that include controlling costs, managing employee productivity and gaining access to credit. HP is committed to delivering solutions and programs that allow

clients to realign resources toward growth and innovation. HP also has expanded its investment with 40 new training centers in its global program, HP Learning Initiative for Entrepreneurs (HP LIFE), which empowers microenterprises and SMBs to create new revenue streams. In Asia Pacific, there are 63 training centers in Australia, China, India and Korea. Since 2007, HP has invested more than $20 million into the program, resulting in the creation of more than an estimated 20,000 jobs and more than approximately 6,500 new businesses.

IBM

Cloud Computing

Computing and services giant IBM has boosted its cloud computing offerings in Japan with the opening of two data centers in that country, the company will announce today.

IBM’ stock performance

Toshiba

3D Laptop

Toshiba UK will begin selling what it calls the first glasses-free 3D laptop next month.

Toshiba has adopted 15.6-inch lenticular lens-based panels developed by Taiwan-based AU Optronics (AUO) for its naked-eye 2D/3D switchable notebook model to be launched in


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August at about US$2,100, according to industry sources.

Samsung

Patent Lawsuit

Microsoft is seeking $15 for each Android device Samsung sells, highlighting the potentially lucrative profits patent litigation can gain in the tech industry. In targeting Samsung, the second largest handset maker in the world, Microsoft stands to pull in a windfall from the deal. If the deal also demands restitution for Samsung's back sales, the company may also have to shell out about $45 million to Microsoft for past Galaxy S 2 sales. Samsung is hoping to negotiate a lower fee of $10, in exchange for a deeper partnership with Microsoft to create smartphones using the Windows Phone platform. The South Korean company isn't Microsoft's only target. Microsoft, which accumulated a vast stable of patents over the years, often uses patent suits to rake in money from other tech companies. In April 2010, the company settled with Taiwan-based HTC over intellectual property infringement. Under the terms of the deal, HTC agreed to pay $5 for every Android device it shipped. Since the agreement was put in place, HTC has sold 30 million handsets, thus putting about $150 million in Microsoft's pocket.

LG

Smartphones

LG Electronics Inc., the world's third-largest mobile-phone maker, lowered its full-year smartphone sales target by 20 percent after losing customers to competitors led by Apple Inc. and Samsung Electronics Co. The company expects to sell 24 million smartphones this year, Park Jong Seok, head of the mobile business, said at a media

briefing today in Seoul. The company had previously forecast 30 million. LG's mobile-phone division had an operating loss of 100.5 billion won ($94 million) in the first three months of the year, contributing to a second straight quarterly loss for the company. While the business is "slowly" improving, it's unclear when it will turn around, Park said.

Handset Shipments

LGE has lowered its handset shipment goal for the year from 150 million units to 114 million, with the volume of smartphones being reduced from 30 million units to 24 million, according to LGE.

3D Smartphone

LG Electronics is touting 3-D smartphones as an alternative to dedicated handheld game devices. The company launched its LG Optimus 3-D phone Thursday in South Korea after beginning a global release last month covering more than 60 markets including Spain and Britain. No special glasses are required to view 3-D content on the phone.

Sony

Growth in emerging market – India

Digital major Sony India on Wednesday announced its strategy to double VAIO sales in India by selling 5 lakh laptop units in FY11. VAIO is already the fastest growing laptop brand in India (according to IDC report 2010) with more than 100% growth, said the company.

Apple

Business

Apple has surged past Acer and Toshiba to become the third largest PC vendor in the U.S. with a 10.7%


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market share, the latest data from Gartner suggests. In Q2 2011, Apple has experienced a solid 8.5% year-over-year growth in the U.S. market; Toshiba grew 3.3%, and Acer fell 22.6% in that same period.

Apple’s stock performance

Nortel Patents

Apple is contributing more than half the total $4.5 billion price tag for Nortel patents, with partners including Microsoft and Sony combined kicking in the rest.

HTC

Business

Taiwan smartphone maker HTC Corp expects revenue and shipment growth in the third quarter to slow for the first time in four quarters in the face of faltering demand and stiff competition from rivals such as Apple Inc and Samsung Electronics .

HTC’s stock performance

Acer

Business

Acer announced non-consolidated revenues of NT$31.94 billion (US$1.11 billion) for June, down 10.63% on month and 28.09% on year, and the company's weak performance also affected its major upstream notebook manufacturing partner Compal Electronics' June notebook shipments, which stayed flat on month and it was the only top-four notebook maker that had flat performance, according to market watchers.

Acer will swing back to profitability in the third quarter of 2011 and perform even better in the fourth, with the possibility that Acer will still be able to generate profits for all of 2011, according to company chairman JT Wang. Acer's second-quarter losses were caused by a high level of inventory in the pan-Europe market, and now the inventory has dropped to a safe level, with the number of inventory turnover days to be lowered to 10-20 days in the third quarter, Wang stated. In view that a decline in Acer's ranking from second to fourth-place in the global PC market in the second quarter of 2011, Wang stressed that Acer will adopt a new strategy to create more value instead of pursuing volume growth. Acer plans to launch the world's first notebook powered by a dual-core Tegra 2 CPU in July and will also release new models running on Android 3.2, said Wang, adding that Acer also plans to launch Intel-based Ultrabooks in December. The global notebook market will stage a single-digit growth in 2011 as compared to the level in 2010, while the netbook market is expected to decline 10-20% during the same period, Wang predicted.


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Acer’s stock performance

Cloud Computing

Acer said Thursday it plans to acquire iGware, a cloud technology company in the U.S., for US$320 million, as part of a plan to allow users to more easily share content across the PC maker's products. The cloud-based products of iGware in California are currently said to support more than 100 million consumer devices, including Nintendo's gaming devices. Acer will use iGware technology to build its new platform called Acer Cloud, while continuing to service existing customers, and build new relationships, the company said. It plans to begin launching products that will use Acer Cloud services starting next year. The new platform will allow Acer products, including its PCs, tablets and smartphones, to connect to a "safe and secure environment", it said.

ARM based Notebook

Acer plans to introduce the first laptop with an NVIDIA Tegra 2 dual-core processor, as well as an Intel-based Ultrabook, and new tablets running Android 3.2, according to DigiTimes. The choice of the NVIDIA Tegra processor is peculiar, but might help Acer get ahead in the race to flood the market with ARM-based laptops.

Growth in China

After switching up its Touch Business Group chief back in April, Acer has decided to set up an office for its mobile products in China, to better take

advantage of the country’s growing smartphone and tablet market. Acer has long been a beast in the Chinese PC market, but has yet to fully establish its presence as a smartphone or tablet maker. As the third place PC maker, Acer holds 9.2 percent of the PC market in China, whereas its smartphone share was too small for research firm Analysys to calculate. Former HP exec, Dave Chan, will take over the new Touch Business Group in China.

Tablet PC

Acer has slashed the price of its 10-inch Iconia Tab A500 tablet PCs in the US market from US$449.99 to US$395 aiming to achieve its goal of shipping a total of 2.5-3 million tablet PCs in 2011. The price reduction apparently aims to take on Asustek Computer's Eee Pad Transformer tablets which are priced at US$399 for the US market, pointed out industry sources. Acer in June lowered its 2011 shipment target for tablet PCs from 5-7 million units to 2.5-3 million units following a corporate restructuring in the second quarter. But some market watchers expect Acer to ship only two million tablet PCs as a best case scenario in 2011.

Asus

Cloud Computing

Asustek Computer has revealed that it has been looking for partners to jointly develop cloud computing technology. It also does not rule out the possibility of setting up a cloud computing subsidiary of its own. Asustek made the remarks after Acer announced plans to acquire iGware for US$320 million. Given that the cloud computing application market is set to become a main battle field for the IT industry soon, Asustek has strengthened its base infrastructure in networks, computing and storage as


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well as in OS, application platform and network services.

Asus’ stock performance

Lenovo

Business

Lenovo nudged out Acer to become the world's third-largest PC maker, and is inching closer to taking the second spot from Dell, according to IDC research released on Wednesday. Lenovo benefitted from stable PC growth in Asia-Pacific and an expansion of its distribution channel in more regions, IDC said. Acer tumbled into fourth place after a management shakeup ousted Gianfranco Lanci as the company's CEO in March and after mismanagement of inventory in the company's distribution channel in Europe, Middle East and Africa. Lenovo's shipments grew by 22.9 percent during the second quarter, which bucked the slower-than-expected PC growth during the quarter, according to IDC. Worldwide PC shipments totaled 84.4 million units during the second quarter, growing by just 2.6 percent compared to the year-ago quarter, IDC said. Hewlett-Packard and Dell were the world's top two PC makers. Lenovo's worldwide PC shipments totaled 10.3 million units during the quarter, while Acer's shipments totaled 9.2 million units, declining by 10.1 percent. Lenovo's market share during the quarter was

12.2 percent, closing in on Dell, which maintained a 12.9 percent market share. Dell shipped 10.9 million units, growing by 2.8 percent. HP held an 18.1 percent market share, with shipments totaling 15.2 million units during the second quarter, growing by 3 percent.

Lenovo’s stock performance

Blackberry

Home Entertainment STB

Research In Motion is reportedly going into the home entertainment business with a rumored set-top box in the works intended to rival Apple TV.

RIM’s stock performance

Foxconn

Tablet PC & SmartPhone

Foxconn Electronics (Hon Hai Precision Industry) has reportedly landed orders for 10.1-inch tablet PCs from Amazon with shipments to begin in 2012, while


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Quanta Computer has begun shipping a 7-inch model to Amazon. Foxconn declined to comment on market speculation.Foxconn has been producing the Kindle e-book readers for Amazon and therefore is able to land tablet PC orders also from Amazon, according to sources at the tablet supply chain. In addition to the new tablet PC orders, Foxconn currently is also likely to produce 12 million units of Kindles for Amazon, and 38-40 million units of iPads as well as 80-85 million iPhones for Apple a year, the sources indicated.

Foxconn’s stock performance

Automation

Taiwanese technology giant Foxconn, which was hit hard by workers’ suicides in China last year, plans to deploy one million robots in three years to cut rising labour costs and improve efficiency. The robots will be used to do simple and routine work such as spraying, welding and assembling, which are now mainly conducted by workers, Mr Terry Gou, founder and chairman of the company, said. Foxconn, the world’s largest maker of computer components which assembles products for Apple, Sony and Nokia, is in the spotlight after a string of suicides of workers at its massive Chinese plants, which some blamed on tough working conditions. The company currently employs 1.2 million people, with about one million of them based on the Chinese mainland. The company

currently has 10,000 robots and the number will be increased to 300,000 next year and 1 million in three years, Mr Gou said at a dance party organised for workers at Shenzhen, state-run news agency Xinhua reported today.

Retail Stores

Hon Hai Precision, which owns the massive Apple manufacture Foxconn, is making a move into retail. The company announced it'll spend $1.6 billion to open up hundreds of stores in China that will sell Apple products.

Taiwan-based electronics manufacturing service provider Foxconn Electronics (Hon Hai Precision Industry) reportedly is considering to acquire motherboard maker Elitegroup Computer Systems (ECS) and is said that the consideration is mainly aiming at ECS' China-based retail channel subsidiary Orbbit. However, both Foxconn and ECS refuted the rumor. Orbbit's headquarters are located in Beijing, China and has branch offices in major cities in Taiwan, Hong Kong and China and its businesses are mainly with DIY, OEM and B2C retail channels and has a complete system for marketing, logistic and after-sales services. Source from retail channel pointed out that Orbbit has been operating in China retail market for many years, and is one of the few Taiwan-based players having retail channel capability in China, but since the company's market share is still trailing several China-based local players, even if Foxconn acquires ECS and Orbbit by a lower-than net value price, ECS's weak operation performance since 2007 may not make the transaction worth a while. Sources from motherboard makers pointed out that ECS is one of the few subsidiaries of Tatung Group that did not suffer from losses; therefore, Tatung is not in hurry to sell it shareholding in ECS unless there is an urgent need for cash; however, Pouchen, which would welcome an exit from the IT industry,


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may look to sell its shareholding of ECS.

iPad 3 contract

Foxconn has lost the production

contract for the Apple iPad 3, with the Cupertino company opting for rival Taiwanese manufacturer Pegatron instead. According to Taiwan Economic News, Pegatron (which sounds like one of the Transformers) underbid Hon Hai - Foxconn's parent company - for the exclusive rights to build Apple's next generation tablet device, and therefore breaks the hold that its Chinese rival had with iPads 1 and 2. It comes after Pegatron has recently boasted that it is manufacturing the iPhone 5 in massive quantities. Sources at the beginning of July said that the firm was contracted to build no less than 15 million devices. Its only previous work for Apple was to supply 4 million CDMA iPhone 4s.

Compal

Business

Compal Electronics Inc (2324) expects shipments of notebooks in the second half of the year to rise 15 percent to 20 percent compared with the first half, Chairman Rock Hsu said at the company’s annual shareholders’ meeting today in Taipei. Hsu reiterated the company’s full-year forecast of shipping 48 million notebooks, 8 million televisions and 3.8 million tablets this year. China will see the strongest notebook shipment growth during the second half, he said.

R&D Team

Foxconn's R&D team of 100-200 staff responsible for developing Dell notebooks have reportedly left and joined Compal Electronics due to Foxconn making adjustments in its notebook business operations, according to industry sources.

However, both Foxconn and Compal declined to comment and pointed out that they have never heard such a rumor. Foxconn has adjusted its notebook strategy and will no longer adopt fierce price cuts to gain orders starting from the recent round of request for quotation (RFQ) for 2012 notebook orders. Notebook brand vendors worldwide are currently processing RFQs for 2012 and Dell's enterprise notebook orders are mostly complete with 90% of the volume being handled by Compal. The sources believe the orders of 10 million enterprise notebooks from Dell will help boost Compal's annual notebook shipments to 53 million units, up 12% on year. Meanwhile, Dell's consumer notebook models are mostly handled by Wistron.

Quanta

Notebook shipments

Quanta Computer saw notebook

shipments increase 6.38% sequentially to five million units in June, while Wistron's notebook shipments grew 14.29% to 2.8 million, according to the companies. Quanta will invest US$1 million to establish a logistics operator in Chongqing City, western China. Wistron's board of directors on July 8 decided to issue 3-year zero-interest unsecured convertible bonds worth up to US$550 million.

Quanta’s stock performance


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ICT Market

Notebook shipments

Taiwan-based notebook makers, facing an impact from Japan's earthquake, competition from tablet vendors and the fact brand vendor significantly cleared inventory, saw their notebook shipment volumes see only sequential growth of 5-6% in the second quarter. Compared to the same quarter last year, the volume dropped 4-5%, according to sources from notebook makers. The sources pointed out that consumers are more willing to purchase tablets and such demand has directly impacted sales of consumer notebooks. With the top-five notebook makers saw their combined shipment drop 4% sequentially in both the first and second quarters, it indicated that the notebook market has been impacted significantly by tablet sales. The sources also estimate that their combined shipments are likely to only achieve sequential growth of 7-8% in the third quarter. Although sales in emerging markets in the second half will turn strong, the increased sales are unlikely to cover the gap created by weakening demand in Europe and the US. Taiwan-based Quanta Computer was originally expected to face a 15-20% sequential shipment drop in the first quarter because of Foxconn Electronics (Hon Hai Precision Industry) has taken down several of Quanta's original orders from HP, but due to Intel's defective 6 series chipset delaying HP's orders, Quanta was able to achieve a sequential drop of only 9% in the quarter. With Quanta already starting to ship Apple's new MacBook Air at the end of the second quarter, the sources expected the new MacBook Air will help Quanta to maintain its shipment level for the second half. Quanta is expected to ship more than 31 million notebooks in the second half with annual shipments aiming at 58-59 million units. Although Compal also had a sequential notebook shipment drop of

9% in the first quarter, Compal's clients have been adjusting their order volumes, Compal's notebook shipment volume is expected to remain at the same level as in the first, weaker than the original forecast of 5-6%. Compal's notebook shipments of only 3.4-3.5 million units in June are also the major driver for the lower-than-expected performance in the second quarter. Wistron and Inventec both had stable notebook shipments in the second quarter with Pegatron seeing its average monthly shipments drop to only 1.05 million due to Asustek shifting away its orders to Quanta. However, with Asustek's Eee Pad Transformer having a chance to ship over four million units each quarter in the second half plus Apple's next-generation iPhone orders, Pegatron is still expected to have excellent performance in the second half.

Tablet PC

IDC increased its worldwide tablet shipment outlook to 53.5 million units, up from the previous forecast from 50.4 million units. IDC raised its forecast despite a drop in shipments during the first quarter this year compared to the fourth quarter last year. Tablet shipment during the first quarter this year totaled 7.2 million units, a 28 percent drop compared to the fourth quarter last year. Research firms have been comparing tablet shipments on a sequential basis as Apple's original iPad started shipping in April last year. IDC projected worldwide e-reader shipments to total 16.2 million units this year, growing by 24 percent compared to last year.

In 2010, global tablet computer sales volume was 17 million, in which sales volume of Apple iPad exceeded 14 million, occupying major shares of over 80% of market shares in the entire global table computer market. There were over 50 brands in Chinese tablet computer market, but users' attention


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to tablet computers was mainly centered on Apple.

In 2010, Chinese tablet computer market mainly possessed 9 specifications of screen sizes, among which 7-inch tablet computer products occupied over 30%, mainly because Samsung, Hanvon and other brands initially involved in the tablet computer field mostly adopted this specification of screen size. In 2010, sales volume of Chinese tablet computers was about 1.50 million. The annual growth rate is expected to reach 80%-150% in the next few years, and a considerable part of the market will be occupied by emulational tablet computers.

ARM based solutions

IHS (El Segundo, Calif.) said it expects that ARM-based systems will account for 22.9 percent of global notebook PC unit shipments in 2015, up from 3 percent in 2012. The firm said it expects total ARM-based notebook shipments to hit 74 million in 2015, up from 7.6 million next year.

Stock Clearance before Cedar Trail

Acer, Asustek Computer, Hewlett-Packard (HP), Lenovo and Toshiba have lowered retail prices for their netbooks in the Taiwan market to clear out inventories before Intel launches its new netbook platform, Cedar Trail, in September.

Femtocell & LTE

According to a research by Frost & Sullivan, femtocell- and picocell-based solutions will form the core of LTE deployment strategies. The enhanced profile of femtocell and picocell has created the concept of small cell for the integration of femtocell/picocell and macrocell solutions. These integrated solutions can offer LTE network service providers faster returns on their infrastructure investments.

Fiber to the Home

While DSL’s domination of wireline broadband subscribers in Asia-Pacific continues, FTTH and FTTB combined is forecasted to surpass DSL in 2014 and beyond, according to Ovum. In a new study conducted for the FTTH Council Asia-Pacific, the telecoms analyst predicts that wireline broadband subscribers in Asia-Pacific will exceed 285 million in 2014. Asia-Pacific FTTx (FTTH/FTTB) will lead the growth of wireline broadband and is expected to exceed 129 million subscribers in 2014, with a CAGR of 26 per cent over four years, compared to zero per cent for DSL and five per cent for cable modem.


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Flat Panel Industry

LG Display

Production in China

Rumors in China indicate LG Display will begin construction of a panel plant in Guangzhou, China, with mass production likely to begin in 2013. Currently, all major capacity expansion plans have been set in China. China-based panel maker, BOE, began mass production at its 8.5G production line at end of June 2011. Another China-based panel maker, TCL, anticipates its 8.5G production line to begin mass production by the end of 2011. The construction of Samsung's 7.5G plant began in May 2011 and is expected to start production by the second half of 2012. AU Optronic's (AUO) joint venture 8.5G plant in China has set for production in fourth-quarter 2012.

LG Display’s stock performance

Sharp

Cooperation with Foxconn

Sharp Corp. and Hon Hai Precision Industry Co. agreed on July 2 to form a venture to procure parts for liquid-crystal-displays. The companies will also supply LCDs to one another, Miyuki Nakayama, a spokeswoman for Sharp, said by telephone today.

A report from Japanese wire Nikkei said that flat panel giant Sharp and ODM

giant Foxconn have formed a joint venture partly aimed at keeping Korean manufacturers of LCD glass out in the cold.

Sharp’s stock performance

Sony

JV with Samsung

Sony Corp. (6758.TO) said Wednesday that the company is not in any talks with Samsung Electronics Co. (005930.SE) about discontinuing their liquid crystal display panel joint venture.

AUO

Financial

Taiwan-based panel maker AU Optronics (AUO) on July 7 reported consolidated revenues of NT$31.273 billion (US$1.08 billion) for June, slipping 6.93% on month and 28.34% on year. AUO saw consolidated revenues of NT$98.050 billion for the second quarter rising by 5.2% on quarter but dropping 23.7% on year, while its January-June consolidated revenues of NT$191.279 billion decreased 20.35% on year.


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AUO’s stock performance

Business

AU Optronics (AUO) currently ranks as the largest among Taiwan-based makers of touch panels used in tablet PCs, followed by HannStar Display and Chimei Innolux (CMI), according to industry sources. AUO's touch panels are used in non-iPad tablet PCs, HannStar has Asustek Computer and China-based white-box vendors as clients and CMI is a third supplier for iPad 2 next to LG Display and Samsung Electronics, the sources pointed out. With clients including Acer, HTC and Lenovo, AUO shipped more than 1.5 million touch panels in the second quarter of 2011, the sources indicated. CMI was in the process of improving yield rates and shipped only 500,000 touch panels for use in iPad 2 in the second quarter.

LED Lighting

Taiwan-based panel makers such as AU Optronics (AUO) and Chimei Innolux (CMI) have both been driving LED subsidiaries into the market of LED lighting. One of CMI's subsidiaries, GIO will be responsible for LED packaging and lighting while CMLT to produce LED epitaxy and chips. Lextar, AUO's LED business unit reported the share of LED lighting sales reached double digits in June. According to GIO, the LED packaging business has been accounting for 67% of total revenues.

CMI

Business

Chimei Innolux (CMI) shipped 12.319 million large-size and 34.964 million small- to medium-size LCD panels in June, growing on month by 1.3% and by 14.2% respectively, according to the company. CMI brought in consolidated revenues of NT$41.028 billion (US$1.42 billion) in June, rising by 1.61% on month but dipping by 9.71% on year. Its January-June consolidated revenues increased 15.37% on year to NT$246.023 billion. Fellow makers Chunghwa Picture Tubes (CPT) and HannStar Display have also reported June results, with the former's consolidated revenues of 4.822 billion dropping by 10.34% on month and by 39.39% on year and the latter's non-consolidated revenues of NT$3.703 billion slipping by 6.05% on year and 31.40% on year.

Market Leader in China

Taiwan-based panel maker Chimei Innolux (CMI) current holds approximately 30% of the market share in China, the biggest LCD TV market in the world. The top-four panel makers, Samsung, LG Display, AU Optronics (AUO) and CMI supply up to 94.7% of TV panels to China currently. From February 2011, shipments of TV panels to China continued to grow until June. According to statistics, shipments of TVs from the top-six brands in China reached 3.4 million units in June, representing an on-month decrease of 5.4%. According to DisplayBank, TV panels supplied to Changhong, TCL and Skyworth in June all showed above 10% of on-month decreases. CMI and LG Display currently are leading in market share with 29.3% and 25.9% respectively. Despite that the total supply of TV panels


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decreased in June, brands other than Skyworth all increased procurement of CMI's panels pushing its market share close to 30%. Furthermore, shipments of TV panels from Sharp to China also increased. After the Labor Day holidays in May, panel makers have been expecting China TV brands to increase inventory, however, due to increases in price and uncertain demand for the October holidays, TV vendors have been delaying procurement.

LED backlit 3D

Chimei Innolux (CMI) is developing LED-backlit 3D LCD TVs through cooperation with Taiwan-based LED chip maker Epistar for China-based vendors to launch in the China market in September 2011, while Taiwan-based ODM Amtran Technology will begin shipments of LED-backlit 3D LCD TVs to China-based vendor Haier in July-August, according to industry sources. Retail prices for 3D LCD TVs in the China market dropped by more than 20% in the first half of 2011 and are expected to further drop in the traditional sales peak in early October, the sources indicated. An estimated 5.7-6 million 3D LCD TVs will be shipped in the China market in 2011, accounting for 14% of the total for all LCD TVs, the sources pointed out. Demand for 3D LCD TVs in the China market is taking off and will peak in three to five years, the sources added.

Touch sensors

Taiwan-based TFT-LCD panel maker Chimei Innolux (CMI) in June shipped 400,000-500,000 touch sensors for iPad 2, signaling its success of improving yield rates for the product since the first quarter of 2011, according to industry sources. In June, the Taiwan supply chain shipped nearly five million iPad 2-use touch sensors in total,

including 1.4-1.5 million units from TPK Holding and Wintek, 1-1.1 million from Cando, and 400,000-500,000 units from Sintek photronic, the sources indicated.

eMargin

OLED

eMagin Corporation (NYSE Amex: EMAN), the leader in the development, design and manufacture of Active Matrix OLED microdisplays for high resolution imaging products, announced today that revenue for the second quarter of fiscal 2011 will be approximately $7.4 million.

eMargin’ stock performance

Flat Panel Market

LCD shipments

Total shipments of large-size LCD panels in June 2011 reached 59.53 million units with on-month regression of 2.8% and on-year growth of 8%, according to WitsView. However, as indicated by the WitsView, if shipments of tablet PC panels are excluded and only shipments of TV, monitor, notebook and netbook panels are considered, the on-year decrease will be -1.2% and -3.3% in May and June respectively. According to WitsView, on-year growths were seen in May and June from 2006-2010. Therefore, the on-year decreases in May and June of


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2011 are an indication of the lack of consumer confidence in Europe and US markets in the first half of 2011 due to the debt crisis in Europe and high unemployment rate and pending debt ceiling issue in the US, while the worsening global inflation issue has also led to weak buying power in the end market. In the current gloomy atmosphere, downstream customers have been much more conservative than usual. Sales performance of all TV brands have been mediocre amid slow economic recovery in Europe and the US. TV panel shipments in June were around 16.76 million units, flat compared to the volume in May. The latest prediction of global LCD TV demand by WitsView has been lowered to 203-205 million units from 211 million units. The IT market has also been weak with monitor panel shipments at 16.13 million units in June, down 7.2% on month. Shipments of notebook panels came to 15.71 million units with a on-month decrease of 4.3%. The only application with shipment growth is the tablet segment, with shipments of 7.23 million units and on-month growth of 8%. The shipment of netbook panels totaled 3.68 million units with a 8.9% decrease on month.

Panel stocks

Weak demand in the LCD TV market has been putting great pressure on panel makers. According to industry sources, While the third quarter has been the traditional high season for LCD displays, sales of LCD TVs has not increased as expected causing the inventory of TV panels to grow. Panel makers hope that by reducing production during the high season, coupled with growth in consumption during Christmas holidays in the fourth quarter can bring back effective demand. Industry sources noted that demand of panels for monitors and notebooks has been flat but the shipment of TV panels has been not as

good as expected. The economies in Europe and US continue to struggle in their recoveries causing the consumption of TVs to be weak. The average selling price (ASP) of 32-inch LCD TV panels has reached US$150/unit and US$230/unit for 42-inch panels, added industry sources. The price of TVs has been falling rapidly with gross margins getting smaller, said industry sources. Furthermore, the penetration of LCD TVs in developed economies has been high, hence the market has been focusing on demand from newly-developed economies. However, such economies have higher sensitivity to prices, which limits the increase of the prices of TV panels. Many firms have been decreasing capacity because the inventory of TV panels has been increasing in the supply chain. The panel makers hope the return of effective demand in the fourth quarter during the Christmas shopping season which will facilitate the panel price to return to reasonable levels.

3D Panel

The top five panel makers, Samsung, LG Display, AU Optronics (AUO), Chimei Innolux (CMI) and Sharp have been increasing supply of panels for 3D TVs and expect the penetration of 3D TVs to reach 20% by the end of 2011. AUO and LG Display have been the main suppliers of polaroid type of 3D TV panels while Samsung and CMI have been the panel suppliers for the shutter type. The competition between the two types will help to lower the price of 3D TVs. Value-added TV products have become the main development direction for panel makers. The 3D experience has been seen as the main force to stimulate the demand for the TV market by panel makers.

CMI targets a shipment of 3D TV panels that will reach 20% of total shipments. AUO predicts 3D TV panels to account for more than 10% of the


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total TV panel shipment target. Other firms such as Samsung, LG Display and Sharp all set the shipments of 3D TV panels to account for 10-20% of total shipments.

Taiwanese Panel Makers

Shipments of small- to medium-size TFT LCD panels by Taiwan makers are expected to top 340 million units in the third quarter of 2011, showing a sequential growth of 4.2%, the lowest on-quarter growth for the third quarter since 2005, according to data collected by Digitimes Research. Since the fourth quarter is traditionally an off-peak season for panel makers, Taiwan's shipments of small- to medium-size flat panels are likely to drop to 320 million units in the fourth quarter, down a 4.4% from a year earlier. For 2011, shipments of small- to medium-size flat panels by Taiwan makers will post an on-year growth of 9.6%, the first annual growth rate of below 10% since 2005.

AMOLED

Taiwan-based panel makers have been behind other leading panel firms in the development of AMOLED technology, but the Taiwan makers estimate that AMOLED will not seriously threaten the TFT LCD market in the next three years but its potential is great. The application of AMOLED panels on smartphones has been thriving causing a shortage of the panels. Meanwhile, AMOLED has been seen as the next mainstream technology for TVs over LCD in the near future, therefore, South Korea-based panel makers have been developing such technology with great ambitions. The 5.5G AMOLED production by Samsung Mobile Display (SMD) has been operating since the second quarter and will expand through various phases. The production capacity is expected to 48,000 units in a single month by end of 2011 and to

90,000 units by first half of 2012. Although AMOLED panels have been popular, there are problems that need to be overcome such as lack of resolution. The highest resolutions for AMOLED panels so far are 270 and 275ppi while non-silicon TFT LCD panels can achieve resolutions up to 300ppi. However, AMOLED panels have strengths in thickness and lack of need for backlight modules, according to AUO. The AMOLED panel technology is still under development, according to CMI. Sintek, one of Hannstar's investment company, will begin production of AMOLED panel sensors in first quarter 2012. The beginning monthly capacity is expected at 50,000 glass substrates mainly for SMD. SMD has been trying to self-produce AMOLED materials as vertical integration has always been the strategy of Samsung.

Lowered Capacity Utilization

Taiwan- and South Korea-based TFT-LCD panel makers have lowered capacity utilization to decrease output since the beginning of June, hoping large-size panel prices will rebound at the end of third-quarter 2011, according to industry sources in Taiwan. Prices for large-size panels rose in May as China-based LCD TV vendors replenished inventories after the May 1 Labor Day holiday, the sources indicated. However, global demand for TVs has remained weak, forcing Taiwan- and South Korea-based panel makers to reduce supply to keep prices from falling, the sources said, adding the cut in output will continue in July and maybe August as well.

Prices

Prices for LCD panels with a size greater than 10 inches is believed to have climbed in June, despite continued weak consumer demand. According to IHS iSuppli, the problem is still the impact of a disruption of manufacturing in Japan. The market


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research firm said that June prices climbed by average about 0.2%, the first time all three major segments - desktop, notebook and TV - experienced an increase in prices in 14 months. Desktop displays were up 0.1%, TV LCDs 0.2% and notebook displays 0.5%. While these increases seem to be moderate, iSuppli noted that they are average numbers and that there have been considerable increases in some individual segments (which were not mentioned.)

Lower Profits

Panel makers continued to generate profits lower than market expectations in the second quarter. It is likely such conditions will continue throughout the year into the first half of 2012. The year-long losses might be comparable to the losses incurred during the financial crisis in 2009. The disappointing second quarter revenues reported by Samsung and LG Display indicated the possibility for panel makers to incur losses for the entire year until the first half of 2012. Demand continues to be weak causing downstream vendors to make careful orders to control inventory. The price of large-size panels continues to be flat. Taiwan- and South Korea-based panel firms have been lowering capacity utilization to maintain the price of panels. Growing demand from developing markets has not yet been able to cover the weak demand from developed markets such as US and Europe. Market observers predict the price of panels to increase slowly in the third quarter as panel firms are controling the supply of panels by lowering capacity utilization rates. However, the possibility of generating positive profits is likely to disappear as condition of the market continues to be cloudy. Panel makers are likely to decrease utilization rate below 80% in July. Rumors in the market have also indicated a possible delay of Samsung's investments in its 7.5G plant in Suzhou,

China. In addition, the scheduled mass production of LG Display's second 8.5G plant is also likely to be pushed back. Hence, the oversupply condition might be eased for a short while.

Taiwan Based large size panel shipments

The shipments of Taiwan-based large-size TFT LCD panels (above 9-inch, including panels for tablet devices) in second quarter 2011 was 70.72 million units, showing an on-quarter growth of 8.5% and on-year growth of 0.8%. The growth would be negative if the figure excludes shipments of tablet device panels. The capacity utilization of South Korea-based panel makers was affected by the adjustments to production process, however, the firms have regain the strength hence the global market share of Taiwan-based large-size panel makers will decrease to 39.1%.The growth of panels for tablet devices showed the largest growth. Hannstar's 10-inch panels have been aiming at white-box devices in China, therefore, it is difficult to determine the end use for its shipments. Overall, the total shipment of tablet device panels from AU Optronics (AUO), Chimei Innolux (CMI) and HannStar showed more than 300% of on-quarter growth. The tablet device panels accounted for approximately 10.8% of total large-size panel shipments in second quarter for Taiwan-based firms. Panels for tablet devices has become the segment of the market that firms began to focus on. The shipments of Taiwan-based panels for monitors showed a slight on-quarter growth of 4.5% in second quarter 2011. However, CMI reached double-digit growth means the market share of large-size panels for AUO has been decreasing. The global sales of LCD TV have been less than expected, but the sales in China's market showed on-quarter growth plus Japan-based LCD TV firms increased the percentage of OED all contributed to CMI's increase in shipments for TV panels.


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China TV Brands

According to statistics, the top six China-based TV brands purchased up to 3.61 million panels in May, representing a 24% on-month and 64% on-year growth. The panel firms that supply the most panels to China-based TV brands are South Korea-based LG Display and Taiwan-based Chimei Innolux (CMI), each accounting for 28%. The number of panels supplied by Samsung has been increasing as well. Most TV brands in China increased purchases of panels in May. TCL and Skyworth topped others with on-month purchase increase of 54% and 43% respectively. According to industry sources, 40-inch panels accounted for 44% of TCL's total panel procurement and LED panels accounted for 52%. However, procurement has been decreasing since June, which means the inventory level of the TV brands is not low. Panel makers believe panel prices will depend on the magnitude of the purchases from China-based firms to prepare for the long holiday in October.

Semiconductor & Component Industry

Intel

Business

Analysts are expecting Intel to report a

profit of 51 cents a share, in line with earnings reported a year earlier. Revenue is estimated to increase to $12.8 billion from $10.8 billion a year ago, according to a poll of analysts by Thomson Reuters. Overall enterprise strength and PC demand from emerging market consumers is expected to fuel second quarter earnings. The following is taken from a first-quarter report published by TheStreet Ratings, an independent-research unit of TheStreet that uses a quantitative model to evaluate stocks. The revenue growth for Intel in the first quarter came in higher than the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 25%. Growth in the company's revenue appears to have helped boost earnings.

Intel’ stock performance

New Processors

Intel has released new low-voltage versions of its second-generation Core processors designed to power a new class of so-called Ultrabooks from the likes of Asus, Lenovo and LG Electronics.

The chipmaker on Monday launched the Pentium 4-M, the first mobile


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version of its flagship Pentium 4 processor. Intel said the new chip offers clock speeds of 1.6GHz to 1.7GHz, increases the speed of the front side bus from 133MHz to 400MHz and adds faster Double Data Rate SDRAM memory technology for an overall performance increase of as much as 49 percent compared with its top-of-the-line 1.2GHz Pentium III-M chip.

New processor technology

Intel Corp. is increasing its capital expenses this year to pave the way for its own 7nm process technology. The company hopes that this move will bolster its efforts in tablets and its ultrabooks. Intel also announced that it is planning to extend its x86 instruction set architecture for security. Intel lowered its expectations of its overall PC market unit growth for this year to 8–10 percent. But the company believes that its revenue growth would be stronger, projecting growth as high as 12 percent. However, analysts' forecast it to be just around 5 percent this year. Intel said that it plans to spend around $16.2 billion on a wide range of internal investments. This is $500 million more than earlier forecasts. The investments are intended to fuel Intel's efforts in several areas including servers, notebooks, tablets and smartphones. The company is also upgrading its 14nm fabs that are under construction.

Ultrabooks

Intel is banking on the Ultrabook to breathe new life into the PC, but what exactly makes a laptop an Ultrabook hasn’t been clear. Now Intel is providing more details on how the Ultrabook will evolve. In an era of smartphones and tablets, Intel is banking on the Ultrabook to breathe new life into the PC. Intel execs have said this new class of powerful, affordable ultra-thin notebooks could

represent as much as 40 percent of consumer laptops by the end of next year.

Cloud computing Acquisition- Fulcrum

Intel Corp. has announced that it has signed a definitive agreement to acquire Fulcrum Microsystems Inc. Fulcrum is a privately held fabless semiconductor company that designs Ethernet switch silicon for data center network providers. The acquisition of Fulcrum could give Intel a head start on an end-to-end solution for data centers. Cloud computing is driving the convergence of server, storage and network technologies and solutions based around Intel Xeon processor solutions. IP data center customers need faster and more flexible networking solutions. The Fulcrum acquisition will fulfill an important component in Intel's strategy to deliver comprehensive data center building blocks, from server processors and technologies to storage and networking.

Samsung

NAND

Samsung Electronics is expected to open a new memory semiconductor fabrication plant in September, according to industry sources. Dubbed Line-16, the facility will be focused on the production of NAND chips, the sources said. Samsung broke ground on the new fab located at its Nano City Complex in Hwaseong, Gyeonggi Province (South Korea) in May 2010. The company previously revealed that Line-16 would be capable of processing 200,000 12-inch wafers a month.


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Toshiba

HDD

Toshiba Corp. will open in Japan two new R&D facilities for its hard disk drive business. The move amounts to a shot across the bow of Toshiba's larger competitors in the consolidating hard drive business. In March, Western Digital said it would acquire Hitachi GST to become the world's largest hard drive maker. In April, Seagate countered by bidding $1.4 billion to buy Samsung's hard drive business in an effort to hold on to its position as the top HDD vendor. Toshiba said it will open on July 16 its HDD Advanced Technology Center to accelerate development of products with higher aerial density, a term referring to the ability to pack more bits on a square inch of a drive. The company will open the same day its HDD Manufacturing Technology Center to develop enhanced drive-making capabilities.

Toshiba’s hard disk drive division has been a technology leader in new hard disk drive technology introductions due to its access to advanced magnetic head and disk technology from TDK and Showa Denko (SDK). The recent announcement by Toshiba of two new technology centers in association with TDK and SDK gives the company the means to remain technologically competitive in the fast moving HDD industry.

CMOS

Toshiba America Electronic Components, Inc. (TAEC)*, a committed leader that collaborates with technology companies to create breakthrough designs, today announced the launch of a new CMOS image sensor that offers the industry's smallest pixel size (1.12 micrometers)(1) with enhanced sensitivity and improved imaging performance though the use of back-

side illumination technology (BSI). Thanks to their ability to conform to tight form factors and still capture high-definition images, Toshiba expects BSI CMOS image sensors to become a mainstream technology in a variety of portable digital devices, ranging from mobile phones and digital cameras to smartphones and tablets.

NAND

Toshiba and SanDisk on Tuesday announced the opening of a chip fabrication plant in Japan that was designed to withstand earthquakes. The factory, which is in Yokkaichi, Mie Prefecture, will make chips such as NAND flash for devices like smartphones and tablets. Factory construction started last year, and the facility is being opened just a few months after a devastating earthquake and ensuing tsunami, which killed thousands and caused extensive damage to buildings and factories along Japan's eastern coast.

MRAM

Japan's Toshiba Corp and South Korea's Hynix Semiconductor said on Wednesday they have agreed to jointly develop Magnetoresistive Random Access Memory, or MRAM, products. Once the technology development is completed, the two companies intend to establish an MRAM manufacturing joint venture, they wrote in a statement. MRAM uses magnetism to store data requiring less power than products using traditional electrical circuitry.

ARM based MCU for automotive electronics

Toshiba America Electronic Components, Inc. (TAEC)*, a committed leader that collaborates with technology companies to create breakthrough designs, today announced two new 32-bit ARM® Cortex®-M3 core-based microcontroller (MCU) devices designed for use in


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automotive electronic control units, the electronic sub-systems within a car that control functions like power steering or the drive motor in hybrid and electric cars. Additionally, the TMPM350FDTFG and TMPM354F10TFG MCUs are both manufactured in compliance with the latest draft of the automotive industry's upcoming ISO 26262 safety standard.

ARM

Mobile Phone Processors

The chip designer, whose architecture dominates mobile phone processors, is seen being hurt by reports of rising chip inventories and lower handset demand. LG Electronics sees weakening demand for phones loaded with features and trimmed 2011 targets. A JPMorgan report also said semiconductor inventories, ex memory chips, are 4% higher than the three-year seasonal average. ARM Holdings (NASDAQ:ARMH - News) fell 2.3% to 29.78.

ARM’s stock performance

Broadcom

Business

The Irvine, Calif.-based company, Broadcom reported second-quarter net income, excluding items, of $418 million, or 72 cents per share, compared to net income of $418 million, or 74 cents a share during the

year-ago period. Analysts were expecting second-quarter earnings, excluding items, of 63 cents per share on sales of $1.8 billion, according to Thomson Reuters. Revenues rose 12% to $1.8 billion from $1.6 billion for the year-ago period. Guidance was also ahead of the Wall Street consensus: Broadcom said it expects third-quarter sales of between $1.9 and $2 billion, unadjusted gross margins “flat to up slightly,” and unadjusted R&D and SG&A expenses to “flat to down,” from $10 million in the second quarter.

Broadcom’s stock performance

MediaTek

Combo chip design

MediaTek Inc., a leading fabless semiconductor company for wireless communications and digital multimedia solutions, today announced its most advanced wireless combo chip designed to enrich multimedia experience with small footprint and long battery life for smartphones, tablets and portable devices. The MediaTek MT6620 integrates 802.11n Wi-Fi, Bluetooth 4.0+HS, GPS, and FM transmitter/receiver on a single chip with superior size and power benefits, making it the best solution for smartphones, tablets, and portable devices.


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Mediatek’ stock performance

Share Purchase Agreement

Spice Digital Limited, one of the largest Mobile Value Added Services (mVAS ) players in India, and MediaTek Inc., a leading fables semiconductor company for wireless communications and digital multimedia solutions, on Friday announced a share purchase agreement. In connection with this agreement, MediaTek expects to invest approximately USUSD 20 million.

Trident

Patent Licence Agreement

Trident Microsystems, Inc. (NASDAQ: TRID), a leader in semiconductor and software solutions for the digital TV and set-top box markets, today announced that it has entered into a non-exclusive patent license agreement with Sunplus Technology Co., Ltd., a leading multimedia system-on-a-chip (SoC) design company for home entertainment solutions. The agreement provides Sunplus and its affiliate, Orise Technology Co. Ltd., with access to Trident's current portfolio of patents related to motion estimation and motion compensation (MEMC). MEMC technology has become a de facto standard by enabling superior picture quality when displaying high-definition and 3D video on televisions, computer monitors, tablet computers, and other video-enabled

consumer electronics devices throughout the connected home.

Maxim

Sensors

Maxim Integrated Products has acquired SensorDynamics, an expert company for semiconductor-based sensors targeting automotive, industrial and consumer markets. With the move, Maxim plans to open new market opportunities for inertial sensors in consumer markets, said Maxim Group Vice President Vijay Ullal.

Maxim’ stock performance

Spreadtrum Communication

Acquiring of Telegent

Spreadtrum Communications Inc. has announced that it has agreed to buy software and silicon developer for live broadcast television signals, Telegent Systems Inc. Spreadtrum, on the other hand, is a fabless developer of baseband and RF chips for the wireless communications market.

Semiconductor Market

MEMS based Sensors

According to market research firm IHS iSuppli, the total market for MEMS-based sensors is expected to be $7.7 billion in 2011, of which


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SensorDynamics gyroscope inertial sensor technology addresses about $900 million. IHS iSuppli estimates this specific market will grow at a three-year compound annual growth rate (CAGR) of 14 percent from 2011 to 2014. Longer term, Maxim will address selected portions of the broader MEMS-based sensor market.

LCD Driver IC

Taiwan-based TFT LCD driver IC firms are expected to post around 10% sequential revenue growth in the third quarter of 2011, buoyed by demand for small-size driver ICs from the handset sector, according to industry sources. Sales of small-size driver ICs will outperform those of large-size devices in the third quarter as slower-than-expected LCD TV sales have constrained demand for large-size parts, the sources indicated.

Zigbee chipset

ZigBee/802.15.4 chipsets nearly doubled last year and the market is set to increase by up to 800% in five years, according to ON World. Smart Energy made up 44% of the ZigBee/802.15.4 units shipped in 2010. The pace of ZigBee product certification has accelerated by 140% over the past 12 months. The Smart Home is one of the largest ZigBee/802.15.4 markets and wireless systems could reach 34 million homes worldwide in 2015. Wireless lighting controls are set to increase by 724% over the next five years. There are currently dozens of ZigBee/802.15.4 component suppliers and several new entrants such as Accent and Analog Devices. There are several key standards that are nearing completion including ZigBee Smart Energy version 2 (SE 2.0); IEEE 802.15.4e (a MAC enhancement for reliability in harsh environments); and IEEE 802.15.4g (Smart Utility Networks). In 2015, global annual

revenues for ZigBee/802.15.4 modules—including drop-in RF modules and the equivalent OEM costs for chipset designs-- will reach $1.7 billion from an aggressive viewpoint, up from $429 million in 2010.


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Software Industry

Microsoft

Android

With allegations that Google infringed on several patents in its Android operating system, two of the biggest beneficiaries of sales of mobile devices that use the technology could well be Oracle and Microsoft. Both companies are seeking as much as a $20 licensing fee per device from handset makers that choose to use Android. That'd be roughly double the amount that Google makes in search revenue, on average, from every Android device, according to Deutsche Bank analyst Jonathan Goldberg. Google gives away the Android operating system in hopes of generating that revenue.

Microsoft’s stock performance

NDS

STB Software

NDS, the leading provider of technology solutions for digital pay-TV, today announced that BSkyB has deployed a customised implementation of NDS’ advanced set-top box software for its Sky+HD boxes.

Service Industry

Comcast

Zigbee

Comcast appears to be a favorite to include a ZigBee wireless standard for consumer-electronics control in its upcoming set-top boxes. Comcast is part of the ZigBee RF4CE steering committee, and Cees Links, the founder and chief executive of ZigBee chip provider GreenPeak and marketing chair for ZigBee, said that he was "very confident" that Comcast would use the technology in upcoming boxes.

Comcast’s stock performance


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Payment Industry

Verifone

Pay-at-the table

VeriFone Systems, Inc. (NYSE: PAY), today announced an agreement to supply a managed services pay-at-the-table solution to the Rossopomodoro restaurant chain in Italy. Rossopomodoro is part of the Sebeto Group. “This is a very prestigious win for VeriFone’s managed service pay-at-the-table solution and we hope to expand on our relationship with Rossopomodoro in the future” Utilizing Wi-Fi enabled VeriFone Vx 670 mobile payment acceptance systems that are managed through the VeriFone PAYware Express gateway service, Rossopomodoro staff are able to accept payment at the table, with check amounts automatically generated from the restaurant chain’s existing POS system.

Verifone’ stock performance

Cooperation with Micros

We have reiterated our long-term Neutral recommendation on MICROS SYSTEMS, Inc. (NasdaqGS: MCRS - News), which designs, manufactures, markets, and services enterprise information solutions for the hospitality and specialty retail industries.

Partnership agreements, product innovation and acquisitions underscore MICROS’ growth strategy. The company expanded its mobile payment applications by entering a partnership agreement with VeriFone Systems Inc. (PAY'>PAY) and Tabbedout.

Transportation System

The Metropolitan Transportation Authority (MTA) awarded a four-year, $6.9 million contract to VeriFone Systems, Inc. (NYSE: PAY), for delivery, installation, and warranty and maintenance services for 1,000 TransitPAY systems to provide real-time bus information to customers on Staten Island buses. “VeriFone is committed to development of new mobile solutions for taxis and buses, and self-service solutions for areas like mass transit and parking.” VeriFone will provide ruggedized on-bus hardware, software development, project management, installation, and warranty and maintenance services across Staten Island’s fleet of buses. The TransitPAY solution from VeriFone enables bus tracking via real-time information, with the added benefit of supporting future fare payment applications across a common “open standards” hardware platform. TransitPAY provides real-time bus location details then wirelessly communicates to an MTA-hosted server. Bus route details are shared with riders via SMS text message, website or bus shelter display to alert riders of next bus arrival time.

Ingenico

Growth in US

Ingenico, the leading worldwide provider of payment devices and services, and ScanSource, Inc. (NASDAQ:SCSC), the leading international distributor of point of sale, AIDC (automatic identification and data capture), communications, and physical security products for the reseller


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market, today announced a joint non-exclusive partnership to co-market and distribute Ingenico's POS products by leveraging ScanSource's extensive reseller/VAR network in the U.S. According to the agreement, ScanSource, Inc. will start carrying, marketing and distributing Ingenico's industry-leading POS devices to its extensive reseller network. As a result, Ingenico will significantly expand the distribution channel and shorten its time-to-market cycle for its integrated multi-lane retail POS products in the U.S.

Ingenico’ stock performance

Hypercom

Payment Processing Services

Hypercom Corporation (NYSE:HYC - News) today announced that Collective Point of Sale Solutions Ltd., a major Canadian provider of payment processing services and secure point-of-sale solutions, has selected and will deploy a minimum of 2,000 Optimum T4220 countertop point of sale terminals with the SPOS32 magnetic stripe and EMV software application. Collective POS has also selected Hypercom’s Term-Master® Suite terminal management software system to streamline terminal set-up and management. Hypercom’s systems were selected in head-to-head competition with other global payment device providers.

Hypercom’s stock performance

NCR

Acquisition of Radiant

NCR is buying Radiant Systems, a company that develops point-of-sale systems and software to the hospitality and specialty retail industries, for $1.2 billion in cash, or $28.00 per share. The deal is expected to close during the third quarter of 2011. NCR says it will raise approximately $1.1 billion of new funded debt to finance the transaction.

NCR’s stock performance

Indirect Business Growth

As part of its strategy to significantly grow its indirect business, NCR Corporation (NYSE: NCR) today announced the appointment of Kathleen Curry as vice president, North American channel sales, across the


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retail, hospitality, financial services, travel and healthcare industries. A 15-year channel veteran, Kathleen has held senior leadership roles with some of the world's largest channel organizations, including Cisco Systems, BMC Software and Oracle. She joins NCR from Motorola Solutions, Inc. where she was vice president of the North American Channel Sales team. "NCR is on a truly transformational journey to develop a world-class indirect sales organization," commented Curry. "We have a company-wide focus on designing innovative self-service and assisted-service solutions that are channel-ready, combined with new support programs to help partners accelerate the sales and deployment process and achieve profitable growth. Together, NCR and our channel partners have a tremendous opportunity ahead of us." NCR collaborates with its channel partners to offer market leading self-checkouts, kiosks and digital signage networks, point-of-sale terminals, ATMs, Teller Cash Recyclers and self check-in solutions.

Sharp

e-Payment

Sharp Electronics Singapore and e-payment provider the Network for Electronics Transactions Singapore (Nets) will co-develop a new dual-interface smartcard, or "combicard", equipped to support more advanced applications. The card will have both contact (card in slot) and contactless (card in proximity) functionalities, and could possibly be the first to offer 1MB of flash memory (compared with the current 2KB standard). The higher memory capacity and support for multiple embedded operating systems will enable the new smartcard to support a wider range of sophisticated applications, including electronic payment, electronic keycard, loyalty

programs, and other consumer and industrial applications. For example, a consumer can pay for public transport, make a purchase, open a door, register for an appointment with a doctor, as well as activate a payphone--all with a single combicard

Google

Social Networking

Google+, the web giant's latest social-networking experiment, is officially 10 million users strong.

Google’s stock performance

Acquiring of IBM patents

Google has acquired 1,000 patents from IBM. Google's acquisition of IBM's patents is a consolation prize for the search giant. Late last month, Apple, Microsoft, Research In Motion, and a few other companies announced that they had acquired 6,000 patents and patent applications from bankrupt telecom-equipment company Nortel Networks. Google had initially offered $900 million for that patent portfolio.

eBay

Mobile Payment

eBay announced that it has purchased mobile payments company Zong for $240 million, to integrate into PayPal. By buying Zong, eBay is attempting to position PayPal to be a leader in mobile payments for the years to come. Mobile


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payments are expected to be a $670 billion industry by 2015 according to report from Juniper Research. Zong is a middleman connection between merchants and telephone companies that allows users to make mobile purchases with carrier billing.

Ebay (NasdaqGS: EBAY - News) has agreed to acquire a Chinese mobile carrier billing payment company Zong for $240 million in cash. The transaction is expected to close in the third quarter of 2011 and is pending Chinese regulatory approval. According to a new Chinese regulation, foreign ownership is restricted in e-payment companies, so eBay might face some issues. Zong provides a mobile payment platform through direct carrier billing. Consumers can easily pay for their purchases from mobile phones or computers by entering their mobile phone number, which is then verified by Zong. Subsequently, the payment is cleared on the customer's existing mobile service account. eBay’s existing payment platform, PayPal, enables individuals or businesses with an email address to send and receive payments online. Currently, Paypal handles around $10 million a day in mobile payments and expects to transact more than $3 billion in mobile payments in 2011. PayPal processed about $3.4 billion in digital goods purchases last year.

eBay’s stock performance

PayPal - Mobile payment

PayPal announced on Wednesday that it will begin supporting peer-to-peer payments to allow its customers to pay each other directly via their mobile phones.

T-Mobile & Orange

Mobile Payment

T-Mobile and Orange, which are now part of Everything Everywhere after merging last year, are collaborating with Vodafone and O2 to develop a “wave and pay” system on network handsets. According to TheSalesPro of the UK on Wednesday, June 29, T-Mobile UK and Orange UK are joining forces with two more of the UK’s largest mobile phone operators to develop a mobile handset payment technology. This type of “wave and pay” technology transforms mobile phones of subscribers of participating networks into mobile virtual wallets. The “wave and pay” technology is called Near-Field Communication (NFC), and is quite popular in countries such as Japan and South Korea. In the United States, residents of Austin, Texas hope to experience NFC-driven mobile commerce in early 2012. With NFC, people will pay for goods and services by placing their mobile phones near a reader.

ISIS

Mobile Payment JV

Isis, the mobile payment venture backed by AT&T, Verizon and T-Mobile, has teamed up with Visa, MasterCard, American Express and Discover, in a move that help pushes the adoption of e-wallets in an increasingly-crowded field of titans.


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MobilePayUSA

Mobile Payment

MobilePayUSA enables mobile payments using existing hardware and improves security. Merchants will appreciate the savings without having to upgrade to terminals equipped with NFC (Near Field Communication) wallet technology.

E-future

POS Supply Chain Management

eFuture Information Technology Inc. (Nasdaq:EFUT - News) (the "Company", or "eFuture"), a leading provider of software and services in China's rapidly growing retail and consumer goods industries, today announced that it has signed a contract to provide its eFuture ONE POS-ERP Department Chain Store Solution ("the solution") to Yansha Outlets Shopping Center ("Yansha Outlets"), which is the first outlet center in China. The solution consists of headquarters management, store operation and supply chain management systems.

iSend

Mobile Payment

iSend, a leading U.S. electronic payment service for people who support family members in other countries, announced today that it has added the largest mobile service providers in El Salvador and Guatemala to its growing roster of mobile phone top-up partners. Consumers in the U.S., the UK and Canada can now visit more than 80,000 retail locations to purchase pre-paid mobile phone minutes for family members who are customers of Tigo El Salvador or Tigo Guatemala; consumers worldwide can arrange the same top-ups online at

iSend’s online portal, http://www.aryty.com.

ISISPOS

iPad Based solution for restaurants

ISISPOS developers of the most advanced Apple based iPad for Restaurants POS for announces support for both the iPod touch and iPhone allowing servers to take orders and process payments directly table side. Included in this release will be the ISISPOS iPhone mobile manager application, Mobile Manager allows owners and managers to access to all their operational and management functions via their iPhone at any time from anywhere.

Payment Market

Mobile Payment

NFC payments are expected to account for an estimated $367 billion of the $1.1 trillion global market for mobile phone payments by 2014, according to IE Market Research.

A new study from Juniper Research has determined that the total value of mobile payments for digital and physical goods, money transfers and NFC (Near Field Communications) transactions will reach $670bn by 2015, up from $240bn this year. These forecasts represent the gross merchandise value of all purchases or the value of money being transferred. The new Mobile Payments Strategies report revealed that all segments will exhibit 2x to 3x growth over the next five years. This growth will be driven by the rapid adoption of mobile ticketing, NFC contactless payments, physical goods purchases and money transfers as people in both developed and developing countries use their devices for everyday transactions. Some 20 countries are expected to launch NFC services in the next 18 months,


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resulting in transactions approaching $50 billion worldwide by 2014. Meanwhile the need for financial access in developing countries is such that active mobile money users will double by 2013 and drive transaction values accordingly. The top 3 regions for mobile payments (Far East & China, W. Europe and N. America) will represent 75% of the global mobile payment gross transaction value by 2015. Digital goods payments will account for nearly 40% of the market in 2015. The study provides the big picture of mobile payments, providing forecasts of the main market segments of digital and physical goods purchases, contactless NFC and domestic and international money transfers and remittances, providing regional forecasts of gross transaction values.

E-commerce service provider, eBay Inc. The total value of mobile payments will reach $670 billion by 2015, up from $240 billion in 2011, according to Juniper Research. That includes transactions for digital and physical goods, money transfers and payments using near field communication - a wireless technology that lets users tap their phones against a reader to make a purchase.

Worldwide mobile payment users is expected to increase by 38.2 per cent to surpass 141.1 million in 2011, as compared to 102.1 million last year, according to Gartner. Worldwide mobile payment volume is forecast to total 86.1 billion dollar, up 75.9 per cent from 2010 volume of 48.9 billion dollar, the research firm said.

Alternative Payments

Credit card’s share of online payments is expected to decline from 60% today to 44% by 2012 and already 41% of online consumers prefer alternative payment options over credit cards*. Fraud-conscious consumers are increasingly reluctant to provide credit card details and alternative payment

options such as eWallets are seen as more secure.

China Mobile Payment

Chinese mobile payment industry has progressed rapidly since 2011. The penetration rate of Chinese mobile payment market was merely 18.5% in 2010, and it will hit 25.8% in 2011; while the market size and transaction value turned out to be respectively RMB2.845 billion and RMB10.42 billion in 2010, but the former will rise 97.7% to RMB5.625 billion and the latter is predicted to expand 308.6% to RMB42.16 billion in 2011.

Turkish eCommerce

According to the Interbank Card Center (in Turkish: BKM), the Turkish eCommerce had a volume of 24.4 B TL (16.3 B USD) in 2010. The growth from 2006 to 2010 was 325% and the first half year of 2011 generated a volume of 15.9 B TL (10.6 B USD). Huge numbers and huge growth rates even if taken into account that the Interbank Card Center includes also some mail order revenues into the total number.


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Energy Industry

Sharp

Solar Panel

Enel SpA (ENEL), STMicroelectronics NV (STM) and Sharp Corp. opened Italy’s biggest solar-panel plant to benefit from the Mediterranean basin’s growing renewable energy market. The three spent a total of 300 million euros ($428 million) to 400 million euros on the venture to produce Sharp’s so-called multi-junction thin-film panels near Catania in Sicily. Initial capacity of 160 megawatts a year will rise to 480 megawatts.

LG

JV in Water Business

LG Electronics Inc. (066570: KS "LGE"), and Hitachi Plant Technologies Ltd. ("Hitachi Plant Technologies") have agreed to establish a joint venture in the water business. LGE, Hitachi Ltd. (TSE: 6501/NYSE: HIT "Hitachi"), and Hitachi Plant Technologies will combine LGE's strength in marketing, planning and manufacturing technology with the Hitachi Group's technological and engineering strengths in water treatment systems and information control systems, to expand in the water business. The joint venture company, LG-Hitachi Water Solutions Co., Ltd. is scheduled to be established in October 2011, with LGE providing 51% of the capital and Hitachi Plant Technologies 49%. The new company will initially focus on manufacturing and sales of water treatment equipment, EPC(1) for water treatment systems and O&M(2) for water treatment facilities, centered mainly on wastewater treatment facilities and drinking water and sewage treatment facilities in Korea, and research and development of water treatment technology. The joint venture will also plan for future

expansion in the water business in other countries.

Toshiba

Solar Energy

Japanese company Toshiba intends to continue its investments in the construction of a 10 MW solar park near the Southeastern Bulgarian town of Yambol.

AUO

Solar Energy

Intersolar North America -- SolarBridge Technologies (SolarBridge), the leading developer of module-integrated microinverters for the solar industry, announces a partnership with AU Optronics Corporation (AUO) [TAIEX: 2409; NYSE: AUO] to deliver the AUO AC Unison integrated AC module to the North American market. AUO and SolarBridge have been working closely together to develop this game-changing solution. The AUO AC Unison, a high-efficiency AC module with a preinstalled SolarBridge Pantheon™ microinverter, will be sold by AUO through its network of distribution partners.

Bosch

Electric Cars

The German auto manufacturer

Daimler and one of the biggest auto electronics supplier Robert Bosch GmbH also from Germany have established a joint venture last year and will move forward in a technology-sharing pact that will have them jointly develop EV technology. According to reports, Daimler plans to begin using the jointly developed technology in Mercedes-Benz and smart cars in 2012.


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The reports quoted Daimler's Herbert Kohler as saying "Like lithium-ion batteries, electric motors are key components for our electric vehicles. It is extremely important that competence in this field is maintained in Germany." It was also reported that the joint venture will operate as EM-motive GmbH and will be responsible for the development, production and sale of traction motors for EVs. The venture will operate from two sites at Hildesheim and Stuttgart and employ a workforce of about 100 staff. EM-motive will supply electric motors to both Daimler and Bosch, while Bosch will handle sales to third party customers. The venture seeks to produce more than one million electric motors by 2020, it was reported.

Solar Cell Production

Bosch said on Friday that it had inaugurated a plant in Arnstadt, central Germany that took two years to build at a cost of 530 million euros ($760 million). Some 1,000 jobs are expected to be created at the site by 2012, a statement said. The new facility will comprise research and development activities, solar cell production and the manufacturing of installation equipment destined for European markets. Bosch has also plans to build a solar panel factory in Malaysia at a cost of 520 million euros that will employ 2,000 people, in addition to a site in Venissieux, central France that is to begin operations in early 2012. This year, the group's Solar Energy division should post sales of more than one billion euros for the first time, it said. That remains modest however with respect to the group's overall activities, which employ 285,000 people worldwide and posted 2010 sales of 47.3 billion euros.

GM

Electric Car

General Motors and OnStar will launch the first real-world pilot of smart grid solutions for electric vehicles this year, paving the way for utilities to increase energy efficiency and offer lower charging costs to customers.

GM’ stock performance

Solar Energy

Now it has been reported that the American automobile giant General Motors Co venture capital arm has invested $ 7.5 million in solar energy company Sunlogics Inc. which will invest $30 million to open its global headquarters and a factory in Rochester Hills. It was reported that the move is expected to create 200 Metro Detroit jobs and support another 110 jobs in Ontario, where the solar firm wants to add another manufacturing site. According to reports, GM Ventures LLC picked Sunlogics to provide solar-powered charging stations at the carmaker's facilities and North American Chevrolet dealerships, where it sells the plug-in Chevy Volt. Sunlogics will use part of GM's funding to establish its headquarters in a 140,000-square-foot building once owned by auto supplier Dana Holding Corp. The reports quoted County Executive L. Brooks Patterson as saying "The GM Ventures investment clearly demonstrates that technology


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and innovation continue to thrive in Oakland County. We appreciate GM Ventures' significant commitment to Sunlogics and Sunlogics' decision to locate its headquarters in Rochester Hills and Oakland County."

Mitsubishi

Electric Cars

Mitsubishi Motors Corp., which makes electric-vehicle batteries through an in-house joint venture, wants to source more lithium ion power packs from outside to guarantee supply as it begins a product blitz of electric cars and plug-in hybrids. The Japanese carmaker, which will launch its i EV in November in the United States, is considering lithium ion batteries from Toshiba Corp. and South Korean brands among others, said Yoshikazu Nakamura, Mitsubishi's global head of EV strategy. Mitsubishi uses Toshiba-supplied batteries for its upcoming Minicab compact commercial van and a less-expensive, shorter-range version of the i to be offered in Japan.

Mitsubishi’s stock performance

Dupont

Solar Cells

DuPont today announced that it has acquired Innovalight, Inc., a company specializing in advanced silicon inks and process technologies that increase the efficiency of crystalline silicon solar cells. The acquisition further strengthens DuPont's position as a clear leader in materials for the solar energy market, enabling a broader and more integrated photovoltaic materials and technology offering from DuPont. Financial terms of the acquisition were not disclosed. DuPont exceeded $1 billion in revenue from sales into the photovoltaic market in 2010, and has set a goal to reach $2 billion by 2014 based on continued growth supported by new innovations that improve solar module efficiency, lifetime and overall system costs.

Dupont’s stock performance

Zigbee Alliance

Smart Grid

The ZigBee® Alliance, a global ecosystem of organizations creating wireless solutions for use in energy management, residential, commercial and consumer applications, today announced a revised Smart Energy version 2.0 standard is available for public review and comment.


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Smart Energy

The ZigBee(R) Alliance, a global ecosystem of organizations creating wireless solutions for use in energy management, residential, commercial and consumer applications, today announced that an update to ZigBee Smart Energy(TM) version 1, the first and only widely available Advanced Metering Infrastructure standard, is now available for product development and public download.

Energy Market

Solar Panel

As government incentives shift focus to rooftop installations, many international solar firms have been targeting this type of installation in recent years. Governments such as those in Germany and Italy have been making cuts in incentives for solar power farms, but the incentives for rooftop systems remain. Large-size solar power farms have been dwindling ever since Spain made huge incentive cuts in 2008. The government in Italy also made similar cuts to large-size solar systems. The solar market has been transferring targets to rooftop installations for households. However, the difference in sizes for rooftop and solar power farm installations is huge. Industry sources pointed out that many think downstream system vendors have been benefiting from the rapid price decrease of solar products in the second quarter. However, obstacles lie in the changes in demand which are hardly recognized. The marketing strategy for solar power farm and individual household customers needs to be very different.

Smart Energy

Pike Research projects a $26.1 billion global market for smart energy devices and appliances by 2019, and anticipates that ZigBee will lead in

wireless connections to smart appliances. Additionally, ON World estimates that ZigBee Smart Energy will account for half of global revenues for home energy management equipment and services, aggressively projected at $3.3 billion by 2014, among both wired and wireless systems.

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