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Whither STMicroelectronics after Annus Horibilis?

Whither STMicroelectronics after Annus Horribilis?

By Bolaji Ojo

What’s at stake:

STMicroelectronics has had an interim revenue goal of $20 billion in focus for some time. It had hoped to reach this number quickly after clocking record sales of $17.3 billion in 2023. The company concedes this objective may not be achievable until the end of the decade due to a drastic sales slump in 2024 and amidst fears this will continue at least through 2025. What will happen to manufacturing plans, capex, R&D, and the workforce as the company struggles to climb back uphill?

STMicroelectronics NV had its plans nicely laid out. It was going to become a $20 billion semiconductor behemoth by mid-decade and march aggressively towards even higher revenue, larger operating margins, and much fatter profits by 2030.

Halfway through the decade, though, ST’s management, bewildered, is headed back to the drawing board. The lofty plans are in tatters, shredded by massive disruptions in several key markets, including automotive, its largest segment, industrial and personal electronics. The disruptions have forced ST to push out the timeline for its $20 billion revenue goal to 2030, a target that even now appears doubtful.

How Europe’s second-largest semiconductor company navigates its way through the debris of its shattered ambitions over the next years will determine whether it will be anywhere close to its sales and margins objectives by the end of the decade. Manufacturing plans, R&D, capital expenditure, product development, investments, and product portfolios must be overhauled, some even pruned. Expansion goals for new markets may have to be curtailed due to reduced cash flow and some senior executives may be shown the door, their briefs merged with those of survivors’.

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Tech Execs Must Act to Avoid Chip Tariff Trap;

Tech Execs Must Act to Avoid Chip Tariff Trap

By Mike Markowitz

Donald Trump’s latest proposal to impose tariffs as high as 100 percent on semiconductors imported from Taiwan may sound like a straightforward solution to boosting domestic manufacturing, but for those who understand the complexities of the industry, it’s a reckless move that could do more harm than good.

Tech executives cannot afford to stay silent. Now is the time to engage with policymakers and educate them on the severe consequences such tariffs would have on the very companies they claim to be protecting.

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DeepSeek: Stop the Panic

DeepSeek: Stop the Panic

By Bolaji Ojo

What’s at stake:

DeepSeek nearly sank Nvidia and other AI model players. Except DeepSeek itself is barely known by anyone, its true story still a mystery, and the likely impact on the artificial intelligence market undetermined. It won’t be the last enterprise to put a dent on the AI market, however, according to Market Traction’s Steve Carr who says many more such surprises are waiting in the wings, both in the West and in China.

The race for leadership of the artificial intelligence market got scrambled last week. The debut of China’s DeepSeek AI model sparked a selling frenzy on Wall Street as spooked investors dumped Nvidia and other AI-related stocks. The implications of DeepSeek’s platform are not clear, however. Not enough is known about how it was developed, meaning a full assessment of its market implications are months away.

What is clear is that DeepSeek’s AI model isn’t a result of any mega innovation in semiconductor or software processing, considering the Chinese company is leveraging resources from other models, including ChatGPT, and depended on chips from Nvidia Corp., the market’s leading vendor of AI semiconductors. This doesn’t take away from the disruptive effects DeepSeek has had on the market already, though. Other questions were raised in a webcast discussion with Steve Carr, founder of Markettraction.io and TalkingIoT.

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Eloy: The Future of Automotive is being Created in China

Eloy: The Future of Automotive is being Created in China

By Bolaji Ojo

Jean-Christophe Eloy has been closely involved in the electronics and semiconductor industries for several decades, during which period the founder and CEO of the Yole Group has observed a handful of transitions in the sector.

Another one is taking place now, according to Eloy, who says the current transformation of the technology world is multifaceted and deeper than previous ones because it encompasses most segments of the global economy. To further complicate the situation, the industry is also trying to wrangle down the disruptive impacts of geopolitical disputes and the uncertainties associated with the applications, investments and access to innovations in artificial intelligence, he noted.

In a webcast interview with editors of the Ojo-Yoshida Report, Eloy explored diverse topics of interest to the industry, ranging from AI to the increasing role of China in the semiconductor supply chain and the outlook for leading players like Nvidia and TSMC. He also delved into the fractious issue of how Taiwan’s relationship with China and the West will be resolved, suggesting that he sees a peaceful, negotiated resolution that while not pleasing to everyone would still be acceptable on a longer-term basis.

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Has US Export Control Lurched Towards AI Tyranny?

Has US Export Control Lurched Towards AI Tyranny?

By Peter Clarke

What’s at stake:

The future of the technology-based society and the world’s super-power landscape hang in the balance. A belief that control of AI development could determine winners and losers for decades has driven US bureaucrats to lay down an interim final rule (IFR) that seeks to control global access to AI technology. But in a globalized era, it is not clear that such measures will work. They may even be counterproductive.

One of the last acts of the Biden Administration was to issue yet another export control ruling – an interim final rule (IFR) – on AI chips, published on January 13, just days before the inauguration of President Trump.

This has not been debated in the US Congress, as the Department of Commerce has the authority to issue and enforce export control regulations under existing laws.

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Intel: The Market Awaits Bigger News

Intel: The Market Awaits Bigger News

By Bolaji Ojo

Soon, the electronics world will be treated to a special news conference to be hosted by Intel Corp. When this event will take place is uncertain, but it will hopefully occur soon. What we are certain about is that it will be more consequential and involve more than what the semiconductor supplier announced this week.

Intel Capital is being set free, the company said. As an independent firm, Intel Capital “will have the flexibility to attract external capital,” the press statement noted.

That wasn’t the news anyone was expecting to hear from Intel, hence the flaccid market response.  However, “this step supports our broader strategy to maximize the value of our assets while driving greater focus and efficiency across the business,” David Zinsner, interim co-CEO and CFO of Intel said, in a statement.

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Mitsubishi Deal Boosts Seeing Machines in SDV Market

Mitsubishi Deal Boosts Seeing Machines in SDV Market

By Bolaji Ojo

What’s at stake:

First, Seeing Machines scored a big lifeline, improving its balance sheet and its competitiveness. More importantly, the company’s profile received a huge boost, making it an even more notable player in the software-defined vehicles (SDV) market and in applications for driver and vehicle occupant monitoring.

Seeing Machines wrapped up 2024 in grand style, scoring a much-needed investment from Japan’s Mitsubishi Electric Mobility that executives believe will help the company further penetrate the automotive industry while boosting its balance sheet.

Japan’s Mitsubishi framed the transaction, in which it has purchased approximately 19.9 percent of Seeing Machines, as part of its efforts to comply with growing regulatory requirements in Europe and elsewhere to improve driver and passenger safety in automotives.

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China isn’t for Everyone, maybe not Even Nvidia

China Isn’t for Everyone, Maybe Not Even Nvidia

By Bolaji Ojo

What’s at stake:

Nvidia stands at a crossroads. Its business is growing fast but it must satisfy hard taskmasters (China and US) with conflicting objectives. It must pick one of them, abandon the second and accept that fate has given it the opportunity to make that choice. Nvidia’s exponential growth means it can afford to exercise this option in a tech world being driven bonkers by nationalism and geopolitics. All signs point to a worsening of the unsustainable situation. Companies will eventually be forced to pick a side. Nvidia must lead the way. Will it be that bold?

Nvidia Corp. needs an urgent China exit strategy. The alternative is to abide by strangulating and conflicting requirements being imposed upon the global electronics industry by rivals America and China.

The American semiconductor and artificial intelligence (AI) systems builder may be one of the world’s most valuable companies, but in the hands of both the US and China it is a mere pawn in an increasingly fractious geopolitical game.

It’s time to exercise a different, and drastic option, for China.

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