Taiwan Semiconductor Manufacturing Co. business increased slightly in Q2 as 5G deployments offset other weakness, said CEO C.C. Wei on a Thursday investor call. COVID-19 “continues to bring some level of disruption to the global economies,” he said: TSMC is observing “weak consumer demand.” It expects 2020 global smartphone unit shipments to decline by a “low teen” percentage year-over-year, he said. But supply chains are making efforts to build back stability in “actively preparing for new 5G smartphone launches,” he said. The chipmaker is upgrading its 2020 forecast for 5G smartphone penetration to the “high teens” of the total smartphone market in 2020 from 5%-10% penetration in its April forecast, said Wei. TSMC thinks the long-term “underlying megatrend” of 5G remains “intact,” he said: Supply chains will “adjust and rebalance.” There "may be some impact” from the Commerce Department’s May 15 increased export control restrictions on Huawei (see 2005150027), he said. TSMC doesn’t plan to ship Huawei wafers after Sept. 14, said Chief Financial Officer Wendell Huang. TSMC remains on track to build an “advanced semiconductor fab” in Arizona, said Wei: Production is “targeted” to begin in 2024 with monthly capacity of 20,000 wafers.
Thursday's ruling tossing out Privacy Shield must result in a speedy replacement, industry groups said (see 2007160014). The European Court of Justice nixed the personal data transfer regime because of what it considered overzealous U.S. surveillance and inadequate ombudsman protections. The decision throws trans-Atlantic data flows into turmoil, stakeholders said. Industry urged both parties to return immediately to negotiations, while privacy advocates and consumers pressed the European Commission to do more to protect citizens in future talks.
It takes a lot for companies to move supply chains, and 5G, COVID-19 and trade tensions are some factors, a Flexport webinar was told Tuesday. Strong government action requiring companies to move supply chains would be limited to "a few select sectors,” said John Murphy, U.S. Chamber of Commerce senior vice president-international policy. For manufacturers, producing in China was a way of “wringing costs out of the supply chain,” said Flexport Chief Economist Phil Levy. Price pressure has intensified, said Ryan Petersen, Flexport CEO. “Consumers are always going to want the cheapest thing, and if anything, the internet’s made price pressure insanely competitive because consumers are in control now.” They can “go find the cheaper thing from whoever’s got it, wherever they might be,” he added. Asked about prospects for national industrial policy, Murphy referenced a bill introduced last month by Sens. John Cornyn, R-Texas, and Mark Warner, D-Va., that would incentivize U.S. semiconductor manufacturing, provide more federal support for R&D and secure the supply chain. “This isn’t the U.S. becoming China,” Murphy said, comparing the initiative to efforts in Singapore, Ireland and Israel.
The U.S. government has been slow to incentivize R&D in the semiconductor industry, ceding ground to foreign governments that have been heavily investing in advanced technologies for “decades,” said Semiconductor Industry Association CEO John Neuffer. He praised a recent push by Congress and the administration to provide more such federal funding and said much more is needed. “These would be very, very important first steps,” Neuffer said in an American Enterprise Institute interview Monday. “But when you compare to some other governments, it’s insufficient.” The Trump administration has taken what it says are significant measures to attract semiconductor manufacturing and counter rising competition from China, including convincing Taiwan Semiconductor Manufacturing Co. to build a factory in Arizona (see 2006240045) and increasing license restrictions for foreign exports of semiconductors to Huawei. Instead of more restrictions on China, Neuffer said he wants more domestic spending to aid U.S. companies. He said other governments “identified semiconductors as strategic industries long ago” and “they’ve been plowing substantial amounts into attracting semiconductor manufacturing.” Neuffer said the administration “has been working behind the scenes” on incentives for the semiconductor industry, and encouraged it and Congress to move faster and raise funding levels. The White House didn't comment Tuesday.
The House Armed Services Committee advanced its FY 2021 National Defense Authorization Act (HR-6395) Wednesday on a 56-0 vote. The committee added two anti-Ligado amendments to the measure (see 2007010070). Additional amendments House Armed Services advanced include several that would implement March recommendations of the Cyberspace Solarium Commission (see 2003110076). Senate Armed Services Committee Chairman Jim Inhofe, R-Okla., meanwhile, was able reach a deal on a manager’s amendment to that committee’s FY21 NDAA (S-4049), which also has anti-Ligado language. The manager’s amendment now includes language from the Utilizing Strategic Allied (USA) Telecom Act (HR-6624/S-3189) and the Open Technology Fund Authorization Act (HR-6621/S-3820). HR-6624/S-3189 aims to fund creation of an NTIA-managed open radio access network R&D fund to spur movement to open-architecture, software-based wireless technologies (see 2001140067). The modified text would repurpose $75 million from the FCC Digital Television Transition and Public Safety Fund for R&D purposes. The original HR-6621/S-3189 would have provided more, which would have been drawn from spectrum auction proceeds. HR-6621/S-3820 would establish the Open Technology Fund as an independent grantee of the U.S. Agency for Global Media charged with “countering internet censorship and repressive surveillance and protecting the internet as a platform for the free exchange of ideas." The new Inhofe manager's amendment, as earlier, includes language from at least three other tech and telecom bills: the Developing Innovation and Growing the Internet of Things (Digit) Act (S-1611), Deepfake Report Act (S-2065) and Harvesting American Cybersecurity Knowledge through Education (Hacked) Act (S-2775). Senate leaders agreed to vote once the Senate returns from a two-week recess on an amendment to attach the text of the Creating Helpful Incentives to Produce Semiconductors (Chips) for America Act. S-3933 would allocate $10 billion to match state and local incentives and direct the Commerce Department to establish a $3 billion grant program.
Dish Network entered the retail wireless business after completing its $1.4 billion purchase of Sprint's Boost Mobile (see 2007010017), it said Wednesday. Some 9.3 million customers are involved, T-Mobile said. Dish's buy of Sprint's prepaid business was a government condition for T-Mobile's Sprint acquisition. "T-Mobile followed through on fulfilling one of the most significant commitments we made as part of this merger process," said T-Mobile CEO Mike Sievert. "Today’s action is a key step towards promoting vigorous competition in the wireless marketplace, particularly for price-conscious consumers in our nation’s cities," said FCC Chairman Ajit Pai. "With this divestiture and its existing spectrum resources, DISH has the potential to make a big impact on a wireless marketplace that is transitioning to 5G." Pai vowed to stay vigilant to ensure "T-Mobile and DISH comply in the coming months and years" with FCC conditions. Antitrust Division Chief Makan Delrahim said: “This deal is a significant milestone in realizing" DOJ’s remedy "designed to strengthen competition for high-quality 5G networks.” Dish said it will keep the Boost brand, and reinstituted a popular payment plan that Boost ended six years ago. Dish said its "$hrink-It!" plan starts at $45 monthly for 15 GB and goes down by $5 after three on-time payments and another $5 after six. Dish is introducing a $35 monthly 10 GB plan. Bill Ho, analyst at 556 Ventures, said he's optimistic about Dish's short-term prospects in wireless provided it spends to keep prepaid customers. Companies "can buy any customer," he said, but it takes subsidies to keep them or gain new ones. Incompas CEO Chip Pickering predicted Dish will price Boost competitively and succeed at keeping and building that customer base and could use the cash flow to help fund its 5G network. Pickering said the prepaid mobile business is more valuable during the COVID-19 pandemic because there's more demand for low-cost service and new public policy in the works to subsidize it. New Street's Blair Levin expected Dish will attempt to "leapfrog" competitors with new technology and spectrum capacity when it transitions to its own 5G network. The Utility Reform Network, "always happy to see a new competitor," remains skeptical whether Dish can competitively affect the facilities-based market, said Managing Director Christine Mailloux.
The House Armed Services Committee voted Wednesday to include in its FY 2021 National Defense Authorization Act (HR-6395) two amendments aimed at hindering the FCC’s approval of Ligado’s L-band plan, as expected (see 2006260051). The Senate continued to consider its Armed Services Committee-cleared NDAA version (S-4049) with anti-Ligado language intact (see 2006110026). Senate Armed Services Chairman Jim Inhofe, R-Okla., attempted but failed to advance by unanimous consent a manager’s amendment to S-4049 containing additional telecom and tech language.
The end of the FCC's Keep Americans Connected (KAC) pledge -- which was to have expired Tuesday -- won't necessarily mean a universal end of ISPs offering a safety net of modified broadband subscriber terms during the pandemic, companies and consumer advocates told us. They expect a patchwork response of a rollback of some terms and more emphasis on setting up payment plans. Resumption of data caps is expected, as reported in a previous installment in this series of stories about the novel coronavirus (see 2006180002).
Federal Election Commissioner Caroline Hunter stepping down, effective July 3, joining legal team of Stand Together; FEC spokesperson confirms her departure would leave commissioners without a quorum, if there's no replacement by Saturday ... CyrusOne directors elect real estate executive Bruce Duncan president-CEO and board member, succeeding interim President-CEO Tesh Durvasula ... Iconectiv taps Michael O’Brien, ex-Syniverse, for chief product officer ... LegalShield hires Cameron Scott, ex-GoDaddy, as chief marketing officer, new post ... Global Cloud Xchange appoints Anja Blumert, ex-Millicom International Cellular, chief financial officer.
The Committee on Foreign Investment in the U.S. is focused on sectors including semiconductors, monitoring Chinese firms that could try to evade recent stricter U.S. license restrictions on sales of chips and other technology to China and Huawei, trade lawyers said on a Crowell & Moring panel. Another expert called for a balanced U.S. approach to China, speaking on a podcast also released Tuesday. Adelicia Cliffe of Crowell & Moring said CFIUS is increasing scrutiny in an attempt to catch Chinese investors that “may take advantage of vulnerable companies that have been affected by the pandemic.” Cliffe expects “a lot of scrutiny, particularly in the technology sector, for smaller emerging companies that may be desperate for capital during this time.” CFIUS also is taking a closer look at transactions involving personal information and customer data sets, said Caroline Brown, also of the law firm. “But semiconductors, as we know, are front and center,” she said. “It'd be surprising if any deal involving a semiconductor target would not receive scrutiny on the basis of its critical technology.” Increasingly stringent CFIUS reviews and tight export controls against China are expected to continue regardless of the outcome of the upcoming presidential election, said Maria Alejandra del-Cerro, also of Crowell & Moring. “We've seen bipartisan support for export controls on new commercial technology to China. We've seen Democratic leaders just as active and questioning the Commerce Department's decision to issue certain export licenses … for Huawei,” she said. “That pressure on China would continue.” CFIUS didn't comment Wednesday. In Samm Sacks' work on Chinese issues, she keeps in mind that there's a paradox, she told the newly released Technology Policy Institute podcast. "How do we maintain the openness of the U.S. system" while "knowing that that openness has been exploited," asked New America Cybersecurity Policy and China Digital Economy Fellow Sacks. "Are we putting those guardrails in the right places? And I would argue that we probably aren’t right now, but we need them." She mentioned U.S. actions involving Huawei, chips and CFIUS investigating TikTok. TPI President Scott Wallsten called the latter company "a particularly fascinating case." The Chinese platform, which didn't comment now, "falls into all of these debates," noted Wallsten, the podcast's co-emcee. "On the other hand, it is providing direct competition to Facebook and Instagram and all of these companies that so many of the same people who are critical of China, those same people also worry about competition among big tech companies."