Paul Gluckman

Netflix ruled out streaming competition for Q1's subscriber forecast miss (see 2104200076), said co-CEO Reed Hastings. “We really looked through all the data, looking at different regions where new competitors are launched, are not launched, and we just can't see any difference in our relative growth.” The business is “intensely competitive, but it always has been,” he told investors Tuesday. “We've been competing with Amazon Prime for 13 years, with Hulu for 14 years. It's always been very competitive with linear TV, too. So there's no real change that we can detect in the competitive environment.” It “really boils down” to COVID-19, said Chief Financial Officer Spencer Neumann. The pandemic continues to have a big global impact “and for us, at a minimum, creates just some short-term kind of choppiness in some of the business trends that we see,” he said. The stock closed down 7.4% Wednesday at $508.90.

The Patent and Trademark Office approved CTA’s second deadline extension request on filing a statement of use (SOU) for the association’s NextGenTV logo as a certification mark on ATSC 3.0-compliant TVs, agency records show. CTA has until Oct. 21 to file the SOU and is entitled to three more deadline extension requests of six months each. It must file by April 21, 2023, the third anniversary of the logo’s notice of allowance, or risk abandonment of the application. PTO requires the SOU as a final condition for issuing a registration certificate to prevent applicants from intentionally hoarding trademarks with no plan to deploy them commercially. CTA told us six months ago that it anticipated filing for no additional extensions because NextGenTVs were prevalent on the market and the logo was plainly in commercial use (see 2010270018). “We don’t anticipate further delays in the PTO process," said Brian Markwalter, CTA senior vice president-research and standards, when asked Wednesday about CTA's apparent reversal. The association is glad the NextGenTV logo "is now in the market -- and we expect sales of these products to grow exponentially," he said.

Differences abound between the contract then-Wisconsin Gov. Scott Walker (R) signed with Foxconn in November 2017 to build an LCD fab and bring 13,000 jobs (see 1711130023) and the curtailed deal that Walker’s successor, Gov. Tony Evers (D), renegotiated with Foxconn this week. Under the contract with Walker, Foxconn would have collected up to $2.85 billion in cash credits from Wisconsin if it brought the project full scale by 2022. The agreement with Evers caps Foxconn’s cash credits at $80 million, based on a projected workforce of 1,454 employees. The only constant between the two deals is the $53,875 average wage that Foxconn is obligated to pay to qualify for cash credits.

Netflix had 3.98 million paid net additions in Q1, nearly 34% short of its Jan. 19 projection of 6 million and nearly 75% below the 15.77 net adds in Q1 2020, when the service thrived amid lockdowns. It’s forecasting a million Q2 paid net adds. Netflix finished Q1 with 208 million paid memberships, up 14% year over year but below its January guidance forecast of 210 million, it said Tuesday. “We believe paid membership growth slowed due to the big Covid-19 pull forward in 2020 and a lighter content slate in the first half of this year, due to Covid-19 production delays,” said the shareholder letter. “We continue to anticipate a strong second half with the return of new seasons of some of our biggest hits and an exciting film lineup. In the short-term, there is some uncertainty from Covid-19; in the long-term, the rise of streaming to replace linear TV around the world is the clear trend in entertainment.” The stock fell 10.4% to $492.34 at 5 p.m. EDT.

CTA “urges caution” as lawmakers weigh tech mandates to curb app store antitrust practices, President Gary Shapiro will tell a Senate Competition Subcommittee hearing Wednesday. “New legal requirements for app store providers and consumers could have major unintended consequences affecting national competitiveness, privacy and security, entrepreneurs and even the retirement accounts of millions of Americans as the companies potentially hurt by the proposed policies are owned by millions of Americans.” There are 20-plus mobile app stores, “facilitating a $1.7 trillion ecosystem led almost entirely by U.S. companies,” he says. “Avoid adopting policies that pick winners and losers in the app market.” Competition is “alive and well” in relevant markets, ACT|The App Association wrote the subcommittee, noting lack of small-business witnesses.

Fraunhofer and Sinclair will partner to bring the Digital Radio Mondiale “framework” to the ATSC 3.0 suite of TV standards, said the companies Tuesday. The collaboration aims to bring DRM listeners “a seamless and full-featured digital radio experience across all broadcast platforms” on fixed home receivers and mobile and automotive reception devices, they said. Fraunhofer owns the trademark to DRM’s xHE-AAC next-generation audio codec and is a licensor in the xHE-AAC patent pool that Dolby-affiliated Via Licensing created in 2016. Dolby AC-4 and MPEG-H are the designated 3.0 audio codecs for TV services in North America and South Korea, respectively. ATSC signed an agreement last month with the Telecommunications Standards Development Society, India on deploying 3.0 broadcast services to mobile devices in India (see 2103290016). Sinclair has made no secret of its ambitions to bring 3.0 reception to mobile devices and is sourcing receiver chips from India's Saankhya Labs (see 1908070024)

Federal funding and public private partnerships and subsidies are keys to building long-term U.S. competitiveness in the semiconductor industry, commented PC market share leaders HP and Dell Technologies, plus contract manufacturer Foxconn, in postings Tuesday in docket BIS-2021-0011. Comments were due Monday in the Commerce Department’s Bureau of Industry and Security inquiry to help shape recommendations to the White House on President Joe Biden’s Feb. 24 executive order to relieve semiconductor supply chain bottlenecks (see 2103110054). Public and private sector investments in “people and education” are a good “first step” in developing “a ready and trained workforce that can sustain a U.S. semiconductor ecosystem,” said Foxconn in a rare public policy statement. “Decades of outsourcing has taken its toll on a semiconductor ready workforce,” said the self-described world’s largest electronics manufacturer. SIA also commented (see 2104060064)

Pearl TV Managing Director Anne Schelle “absolutely” expects one more TV brand to join LG, Samsung and Sony on ATSC 3.0-enabled NextGenTV by the end of 2021, with a fifth brand to follow in 2022’s first quarter, she told us, though nondisclosure agreements bar Schelle from discussing specifics. She’s “hopeful” the year-end product will be announced at October’s NAB Show, and the Q1 product at CES 2022 in January, she said. The “scale that we’re starting to see” in 3.0’s rollout is what’s pulling the additional TV brands into NextGenTV, including the “broadcast push on transitioning stations,” said Schelle. “We’ll have over 65% of households covered by the end of this year, and we’re continuing to drive investment.”

Semiconductors are more “strategically important to the global economy than at any time in history, and this is driving new waves of silicon consumption,” Applied Materials CEO Gary Dickerson told his company's virtual investor meeting Tuesday. His prepared remarks noted factors driving unprecedented semiconductor demand without mentioning the resulting industry chip shortages. “As an industry, we’re in a privileged position where our combined technologies can drive a huge positive impact on a global scale,” said Dickerson. “As the world navigates COVID-19 and prepares for a post-pandemic era, the digital transformation of the economy is accelerating.” Digital transformation is “built upon semiconductor innovation, and has significant implications for the electronics ecosystem,” he said. “As everything gets smarter, from our phones to our cars to our homes, we’re seeing increasing silicon content.” The transition to 5G “is driving a richer mix of high-end phones that feature more cameras and sensors, combined with specialized AI computing,” he said. “All this adds up to more leading-edge and specialty silicon content per handset.”

The U.S. should adopt “smart policies” to eliminate or reduce “vulnerabilities” in the global semiconductor supply chain “and enhance the U.S. economy, national security, and supply chain resilience,” the Semiconductor Industry Association told the Commerce Department’s Bureau of Industry and Security. Comments due Monday in docket BIS-2021-0011 will help shape recommendations to the White House on President Joe Biden’s Feb. 24 executive order to relieve supply chain bottlenecks (see 2103110054). Though “geographic specialization” in semiconductor production “served the industry and its consumers well, it has also created potential vulnerabilities in the global value chain,” said SIA. The industry features more than 50 “points” across the value chain “where one region holds more than 65% of the global market share,” it said. About three-quarters of global chip manufacturing capacity is concentrated in China and East Asia, “a region significantly exposed to high seismic activity and geopolitical tensions and lack of fresh water and power,” it said: Virtually all the world’s “highly advanced” semiconductor manufacturing capacity is based in Taiwan (92%) and South Korea (8%). The global value chain features “single points of failure” susceptible to “natural disasters, infrastructure shutdowns, or geopolitical conflicts and may cause large-scale interruptions in the supply of essential chips,” said SIA. “Geopolitical tensions may result in trade restrictions that impair access to crucial providers of essential technology, unique raw materials, tools, and products that are clustered in certain countries.” The association fears those restrictions could result “in a significant loss of scale and compromising the industry’s ability to sustain the current levels of R&D and capital intensity needed to maintain the current pace of innovation.” The smart policies the U.S. government will need to deploy to mitigate the multiple vulnerabilities should include “targeted investments to fill high-risk gaps,” plus collaborating with “allies and partners globally to strengthen supply chains,” said SIA. “The semiconductor industry needs targeted government policies and incentives.” The U.S. government should work through existing “multilateral and plurilateral forums,” including the World Trade Organization and the Organisation for Economic Co-operation and Development, “to coordinate key semiconductor supply-chain related issues,” it said: Supply-chain resilience, cybersecurity, joint R&D, export controls, intellectual property protection, subsidies and market access barriers should top the list of priorities. SIA urged a U.S. goal of achieving “a more diversified geographical footprint by building additional semiconductor and unique raw material manufacturing capacity in the U.S. and expanding the production sites and domestic sources of supply for unique and critical materials.”