Paul Gluckman

Micron halted shipments to Huawei Sept. 14 to comply with the newest Trump administration export restrictions imposed mid-August on the Chinese company (see 2008170043), said CEO Sanjay Mehrotra on a call for the quarter ended Sept. 3. Huawei was 10% of Micron fiscal Q4 sales, he told investors Tuesday. The memory-chip supplier “had a one-month notice before halting shipments,” so there was “limited ability to shift supply to other customers,” said Mehrotra. Micron expects a “negative impact” to sales from the suspension in Q1 and “to a lesser extent” in Q2, he said. “Our well-established relationships with mobile customers worldwide will allow us to offset the impact of these restrictions by the end of fiscal Q2.” Micron applied for Commerce Department licenses to sell to the Chinese telecom gearmaker, the CEO said: It wants a “growing opportunity to engage again with Huawei.” The “nature” of the semiconductor supply chain is “it does take awhile to shift that production," said Mehrotra. Though Micron is “well-positioned to win” in 5G as a memory-chip supplier to smartphone OEMs, demand was “impacted by the pandemic in a meaningful way in calendar 2020,” said Mehrotra. The company expects a 10% global decline in unit shipments this year compared with 2019, he said. “As we look ahead to calendar 2021, we expect a rebound.” Micron expects 5G handset volume could grow to about 500 million units globally in 2021, from 200 million in 2020, said Mehrotra. That’s on par with Qualcomm’s forecast. Chief Financial Officer Dave Zinsner said Q4 revenue of $6.1 billion was up 24%. Micron expects about a 15% sequential revenue decline in Q1 to $5.2 billion. The pandemic is affecting the company in other ways (see 2009300040). The stock closed down 7.4% Wednesday at $46.96.

Photoshop inventor Adobe is promoting its “content authenticity initiative” as an open, voluntary standard to thwart content manipulation for nefarious or criminal purposes, said Dana Rao, Adobe general counsel. “You can make videos and images that could be very lifelike” and difficult to differentiate between truth and fake, he told an Axios webinar Wednesday. “Everyone should be concerned," he said. “The basis of a democracy is a shared understanding of facts. If we can’t agree on what the facts are, we can’t do anything about policies like climate change.” It’s easy to edit videos and images “and create a fiction from a fact,” said Rao. “The problem with images and video is that people believe them. They believe them more than the written word.” People “can’t always trust what they see,” he said. “Years ago, you might have gotten an email from a bank. It asked you for your Social Security number, and you may have just typed it in and sent it away. You know better now. You know that some of these emails are fake, even if they have beautiful letterheads. People need to think that way about online content.”

“The work-from-home trend drove strong demand for notebooks” in the quarter ended Sept. 3, “with pockets of non-memory component shortages in the supply chain,” said CEO Sanjay Mehrotra on a call. The unanticipated spike in consumer demand for laptops as telework and remote-learning connectivity tools crimps CPU and LCD display panels supply. “End-market component shortages” in the PC supply chain have “some impact on the demand” when OEMs aren't “able to procure all the components they need for their notebook and Chromebook builds,” Mehrotra said Tuesday. Desktop PC sales are weak “due to pandemic-driven changes to customer buying patterns,” said Mehrotra. “Laptop demand continues to be healthy, supported by the work-from-home and shop-from-home trends." Gaming PC demand is “robust,” he said. Micron’s “short-term outlook has weakened due to a combination of factors," he said. “The ongoing pandemic is taking a toll on certain segments of the economy,” including the physical workspace, he said. Enterprise demand has weakened due to lower tech spending and “somewhat higher inventories at certain customers,” he said. The stock closed down 7.4% Wednesday at $46.96. Executives also discussed Huawei (see 2009300035).

The International Trade Commission should deny Realtek’s request for “early adjudication” that a domestic industry doesn’t exist, in DivX’s patent complaint against major TV brands and chip companies, because of the allegedly questionable TV assembly operations of licensee Element Electronics (see 2009280034), DivX replied (login required) in docket 337-3489. Realtek based its petition on “unsubstantiated allegations” of deceptive ad claims against Element that the FTC declined to investigate, said DivX. Another DivX reply Monday said Samsung raised “no compelling public interest issues” when it argued Thursday against an exclusion order on LG, Samsung and TCL smart TVs (see 2009250060). DivX’s Sept. 10 complaint alleges the smart TVs and their video processors infringe four DivX adaptive bitrate streaming patents. Components suppliers MediaTek, MStar and Realtek are also named as proposed respondents. Element is the only company assembling TVs in the U.S., said DivX. Realtek and Samsung didn’t comment Tuesday.

Google wireless audio devices infringe five Sonos multiroom audio patents, complained Sonos Tuesday (in Pacer), further escalating their bitter intellectual property brawl. “In the face of Google’s unrelenting infringement, Sonos has no choice but to bring this suit,” said the complaint in U.S. District Court in Waco, Texas. “Sonos has already sued Google for infringing patents on its first group of inventions involving the set-up, control, playback, and synchronization of wireless playback devices.” The new case involves a “second group” of inventions that “tackle the novel technological challenges of how to stream music from a cloud-based service,” plus configuring how “multiple playback devices work together,” it said. The new body of patents also describe “how to dynamically adjust the equalization of a playback device based on the environment in which the playback device is operating,” it said. Sonos’ first complaint is pending in U.S. District Court in Los Angeles (see 2001070041). Google responded in June, alleging in U.S. District Court in San Francisco that Sonos stole “substantial volumes” of Google’s patented search, audio processing and streaming technology (see 2006110024). The companies remain in a fight at the International Trade Commission that shows no sign of abating over the same patents at play in Los Angeles (see 2002060070). The new complaint “illustrates the depth and breadth of our intellectual property as well as our continued innovation, and indicates the degree to which we believe Google has copied our innovations,” emailed a Sonos spokesperson. “Google has chosen to double down on its disregard for IP and smaller American inventors and we believe it is vitally important that Sonos, both for its own sake and for that of other smaller innovative companies, stand up to monopolists who try to copy and subsidize their way to further domination.” Sonos has made "misleading statements about our history of working together," emailed Google spokesperson Jose Castaneda. "Our technology and devices were designed independently. We deny their claims vigorously, and will be defending against them.”

Though the Small Business Administration coordinates with the Patent and Trademark Office to provide intellectual property training to small enterprises and inventors, “it has not fully implemented some statutory requirements that can further enhance this coordination,” and the work is “inconsistent,” reported GAO Monday. The 2017 Small Business Innovation Protection Act requires Small Business Development Centers to work with PTO on IP training programs at the local level, but only two of the 12 centers that GAO interviewed had done so, said the report. SBA officials told GAO they're in the process of implementing the statute’s requirements. “Incorporating selected leading practices for collaboration, such as documenting the partnership agreement and clarifying roles and responsibilities,” could help SBA and PTO “fully and consistently communicate their existing resources to their partners and programs, enabling them to refer these resources to small businesses and inventors,” it said. SBA didn't respond to questions. "As the report points out," PTO offers "multiple programs that help small businesses and inventors with acquiring intellectual property protections, which can help protect creative works or ideas,” emailed spokesperson Paul Fucito. “These programs, such as the Inventors Assistance Center, are aimed at assisting the public, especially small businesses and inventors, with intellectual property protections. We continue to seek out new ways to improve our reach into the small business.”

Sonos filed a confidential motion Thursday for an International Trade Commission order compelling Google to produce physical samples of the device “redesigns” claimed to be built without the embedded source code that Sonos alleges infringe its multiroom audio patents. Sonos maintains the redesigns are “hypothetical,” not real, and should be struck from the Section 337 investigation into the allegations because Google refuses to produce the physical samples for Sonos to test (see 2009110007).

Granting DivX its requested exclusion order on LG, Samsung and TCL smart TVs “could negatively impact competitive conditions," commented Samsung in Friday’s posting (login required) in docket 337-3489 at the International Trade Commission. DivX Sept. 10 sought a Tariff Act Section 337 investigation on its allegations the TVs’ video processors infringe patents on adaptive bitrate streaming (see 2009160052). The significant TV market share that LG, Samsung and TCL collectively control, plus their “broad product offerings,” make it “very unlikely that any third parties would have the capacity to replace such a substantial percentage of the U.S. market, or that they could do so in a commercially reasonable time,” said Samsung. Statisa reported Wednesday the three brands make 58% of smart TVs sold in the U.S. Consumers may prefer a Samsung smart TV because it’s more compatible with other Samsung devices that support apps, enabling “easy streaming of content,” the manufacturer said. More and more streamed video is viewed on TV screens rather than mobile devices, “particularly during the pandemic,” it said. Smart TVs are “far more versatile” than DivX depicted when it described them as “simply devices for consumer entertainment,” said Samsung. “During the early months of the COVID-19 pandemic in the U.S. when school districts were scrambling to devise remote learning on the fly, public television stations began providing at-home learning programs that aired in all 50 states. According to some, this initiative was the largest remote learning program in the U.S.”

Costco shuns buy online, pick up in store. “We continue to look at what others do” in BOPIS, said Chief Financial Officer Richard Galanti on a quarterly call. “We continue to scratch our heads a little bit.” Some offer BOPIS “because they feel they have to,” he said. “We have people here that study it, and maybe we'll surprise you one day.” NPD estimates more than a third of Q2 online sales were BOPIS. Costco’s “40,000-foot view” of the supply chain amid the pandemic shows most factories in China are “up and running,” said the CFO. “Some production challenges” persist due to component shortages “downstream," especially in high-demand electronics and computers, he said. Costco sells Dell and HP, both recently reporting some shortages (see 2008280054). Costco is "doing very well" procuring additional tech supply, Galanti said Thursday. "We've added some different vendors in some cases." E-commerce sales at the retailer soared 91% in fiscal Q4 ended Aug. 30 from the year-ago period, with TVs, laptops and tablets among “stronger deployments,” said Galanti. “Our e-com sites ran relatively smoothly during the quarter despite the dramatic volume increases,” he said. “We were able to improve our delivery times throughout the quarter as we adjusted to the ramped-up order volumes.” Revenue increased 13% to $52.28 billion.

Jabil’s $7.3 billion in revenue for fiscal Q4 ended Aug. 31 exceeded the high range of its guidance, reported the contract manufacturer Thursday. There were fewer supply chain disruptions than anticipated, Chief Financial Officer Mike Dastoor told investors, meaning “higher than expected throughput in our plants.” The stock closed up 6.5% at $34.41. Jabil’s diversified manufacturing services segment includes mobility and connected devices, while electronics merchandising services include 5G wireless and cloud infrastructures, said Dastoor. “Teams in both segments quickly moved to capitalize on upside demand, mainly in the mobility, 5G and cloud end markets.” As more people worked and learned from home, Jabil had “good demand for products such as tablets, headphones and smartwatches,” he said. “We expect this dynamic to remain” well into fiscal 2021, he said. “Adoption of 5G will provide a further catalyst for future growth.” The launch of 5G devices “is going extremely well,” he said. Pandemic costs in Q4 at the 100 factory "sites" Jabil runs in 30 countries were $25 million lower than the company expected, said Dastoor. They exceeded $55 million in February when “things were blowing up,” said CEO Mark Mondello. Costs began to “dissipate” in July and improved further through August, he said. Mondello expects the trend to continue, “assuming that the whole road doesn’t blow up again,” at which point “all bets are off."