Paul Gluckman

The optical fiber that Corning supplies is a “critical enabler” for U.S. 5G deployment, and fiber networks “are the path forward to transmitting petabytes of data to people and devices instantly,” said the company in comments posted after hours Friday in docket BIS-2021-0021. The Commerce Department’s Bureau of Industry and Security sought industry comment to help the secretaries of Commerce and Homeland Security prepare a report to the White House by the one-year anniversary of President Joe Biden’s Feb. 24 executive order on supply chain disruptions in the “critical sectors and subsectors” of the information and communications technology “industrial base” (see 2111050041). Wireless networks “are moving from one optical connection per hundreds of thousands or even a million clients to one optical connection for fewer than 100” mobile phones, IoT devices or homes, said Corning. It continues to invest in R&D “at a much higher rate than our peers,” it said. The document is heavily redacted to hide information the company said “is not publicly available, pertaining to Corning’s business or trade secrets.” Also expunged are pages of Corning’s policy recommendations for identifying ICT supply chain risks and fixing the bottlenecks, except for a single sentence in a “workforce needs” section. Hiring, developing and retaining a high-skilled workforce, said Corning, is “paramount to the continued success” of ICT manufacturing. Q3 revenue in Corning’s optical communications business grew 24% year over year to $1.1 billion. It recently expanded its AT&T collaboration to bolster investments in fiber infrastructure, widen the availability of U.S. fiber-to-the-home broadband networks and speed 5G deployment.

Qorvo sees the industry "working through” chip shortages, even if the crunch forces 5G smartphone OEMs to leave some business on the table for calendar 2021, said CEO Bob Bruggeworth on a call Wednesday for fiscal Q2 ended Oct. 2. Chip shortages for tech devices are most acute in SoCs for MacBooks, not “RF front-ends” for 5G smartphones, “at least not from us,” said Bruggeworth, who chairs the Semiconductor Industry Association board. Chief Financial Officer Mark Murphy said the outlook for fiscal Q3 ending early January is for an 11% revenue decline sequentially even at the high end of guidance, reflecting “broad-based challenges in supply,” he said. “Our external supply chain is still recovering from disruptions in September, including shutdowns in Southeast Asia. Beyond that, select materials, products and production capacity remain tight.” In smartphones, “even where channel inventory for certain parts is healthy, customers lack silicon chips” to produce finished handsets, he said. “Given the supply and demand effects, we now see 5G smartphone volumes coming in below” the previously targeted 550 million handset shipments globally in calendar 2021, he said.

Qualcomm CEO Cristiano Amon had a relatively positive take on the semiconductor industry’s demand-supply imbalance when he said on a call Wednesday for fiscal Q4 ended Sept. 26 that the company expects “material improvements” to its supply by Dec. 31. He credited increases in capacity at Qualcomm’s suppliers, plus the company’s successful execution of its “second-sourcing initiatives.” Assurances of better supply are reflected in Qualcomm’s guidance for fiscal Q1 ending late December, he said. The company expects 16% sequential revenue growth at the high end of its guidance, plus 32% year-over-year revenue growth in its handset business. Android at the premium tier “is the primary growth driver in our handset business right now,” said the CEO. Like virtually all in the tech industry, Qualcomm in its September quarter endured supply constraints “really across the board,” said Chief Financial Officer Akash Palkhiwala. It’s conjecture “how the demand would have played out if there was supply across the industry, but we feel pretty comfortable that the overall supply picture is playing out exactly as we had planned,” he said. Qualcomm now has three parts that are “dual-sourced, that are available,” he said. There also are “capacity expansions with our suppliers that were previously being planned,” he said. The company continues to have “pockets” of the business in which “we would ship more, if we had more, but we see a lot of improvements,” said Amon. The industry will still face “some shortage” in calendar 2022's first half, “but as we get to the second part the year, in general, supply and demand are going to be aligned,” he said. The stock closed 12.7% higher Thursday at $156.11 after Qualcomm reported 56% year-on-year revenue growth in its handset business.

Members of five tech and business groups “raised concerns” about the “sensitive data” the Commerce Department seeks in its Sept. 24 request for information about risks in the semiconductor supply chain (see 2109230038), the associations wrote Commerce Secretary Gina Raimondo Wednesday. Members also worry “how the U.S. government intends to use the data it collects,” said the Computer and Communications Industry Association, the Information Technology Industry Council, the Security Industry Association, TechNet and the U.S. Chamber of Commerce. The RFI seeks especially sensitive information from chip companies and their partners upstream and downstream in the supply chain, including confidential sales and sourcing data, plus rundowns on order backlogs and an accounting of specific product shipments in the past month. The associations urge Commerce to treat the information submitted “with the sensitivity and anonymity necessary to avoid jeopardizing the dealings of any given business,” they told Raimondo. Much of the information requested also is “dynamic, with bottlenecks changing on a frequent basis, so we caution that the RFI may not yield information that presents an accurate picture of the semiconductor supply chain,” they said. They encourage Commerce “to consider the nature of this unique challenge and how the information requested through this RFI may unintentionally distort the realities of the semiconductor supply chain,” they said. “This underscores why the ongoing exchange of information and coordination between government and the private sector is vital.” Commerce didn’t comment. With RFI submissions due Monday in docket BIS-2021-0036, ITI, which took the lead in publicizing the letter, didn’t respond to questions about why the groups took more than a month to air their concerns publicly with Raimondo.

Dish Network Chairman Charlie Ergen is unfazed by investor skepticism about the company’s capability to build out its 5G network in time to meet regulatory deadlines and do so within the $10 billion budget it allocated for the rollout, he said on a Q3 call Thursday. With supply chain bottlenecks so widespread, Ergen dismissed an analyst’s suggestion that Dish should consider asking the FCC to postpone its 5G buildout deadline for 2022.

The U.S. and its trade allies increasingly worry about the “digital authoritarianism” by China and other “undemocratic” countries, including “intrusive surveillance and censorship,” U.S. Trade Representative Katherine Tai said in Q&A at a Georgetown Law Center virtual conference Wednesday. Their practices can “influence the ability of Americans to enjoy their civil liberties right here at home,” she said. “We will have to ask ourselves hard questions,” including whether digital commerce can “facilitate imports that are made with forced labor,” or if it can “exacerbate problems in illegal trade,” she said. The Chinese Foreign Affairs Ministry didn’t comment. Answering tough questions about digital commerce “is part of making sure that our domestic and foreign policies are aligned,” said Tai. "A lot of our thinking around traditional trade policies is still extremely relevant when applying the digital trade context.” Tai's prepared remarks are here. Also Wednesday, the Bureau of Industry and Security said it's adding companies including NSO to a list restricting exports due to surveillance concerns (see 2111030042).

Automaker production shortfalls induced by the global chip shortage sent SiriusXM “new car trial stats” tumbling 21% in Q3 from the second quarter's “record high,” said CEO Jennifer Witz on a call Thursday. Used car trial stats fell 6% sequentially. “This means that in the fourth quarter, we'll see more than a million fewer conversion opportunities than we saw in the third quarter,” she said. “Most automakers and industry forecasters believe the timeline to recover from supply chain-related issues is sometime between mid-year 2022 and early 2023. Most expect recovery from these issues to be gradual next year, as opposed to a sharp bounceback.”

The chip shortage "could extend into 2023," though at reduced "scope and severity," said Ford Chief Financial Officer John Lawler on a Q3 call Thursday. The automaker's Q4 financial metrics will be lower than “previously assumed in the back half of the quarter, and that's the result of chip constraints," he said. This past quarter, metrics "were all sharply higher" over Q2 on "high demand for must-have new products," the company said. The stock closed up 8.7% at $16.86.

Sony couldn't meet demand for some consumer tech in fiscal Q2 ended Sept. 30 “because the resurgence of the COVID-19 pandemic in Southeast Asia led to limitations on our factory operations and on the supply of components,” Chief Financial Officer Hiroki Totoki told a Tokyo briefing. “Limitations on the supply of components, especially semiconductors, have recently become apparent.” Sony Pictures has “gradually” resumed releasing major films in U.S. theaters, said Totoki. Venom: Let There Be Carnage generated box office revenue of about $90 million globally on the opening weekend of its Oct. 1 release, “which is the best opening performance of any film during the pandemic,” he said. “We are planning to release other compelling IP from Sony to theaters,” he said, including Ghostbusters: Afterlife, debuting Nov. 19, and Spider-Man: No Way Home on Dec. 17. Sony will stick with monetizing "family-oriented films,” at least for the fiscal year, “by directly licensing them to video streaming services, as we do not believe they will draw sufficient theatrical audiences during the pandemic,” said Totoki. He cited Hotel Transylvania: Transformania, debuting Jan. 14 on Amazon Prime Video. Sony Pictures is the only major studio not tethered to a streaming service. Also Thursday, Imax reported a cinema resurgence (see 2110280057).

Nokia believes the 5G market “still may be two to three years away from the peak,” said CEO Pekka Lundmark on a Q3 earnings call Thursday. “The 4G market peaked and then it started to decline quite quickly after that,” but there are “good reasons to believe” that 5G’s peak “could actually last for a longer period of time,” he said, because “there will be so many new use cases compared to the previous generations.”