What Display Daily thinks: Apple, Nvidia, Intel, AMD, and a host of other technology companies are going to bear the brunt of the impact of sanctions on China by the US government and the knock-off effect on sales of displays will be felt because the display is the face of AI. You just have to look at things that way or bury your head in the sand.
Whether you agree with the extent of the restrictions, the implications are not only for sales opportunities in China, but also in pressures that will come to bear on the supply chain. Smartphones and IT products take the hit, and so do display supplies.
The very same analysis also shows that companies like Xiaomi and Huawei are set to benefit, which is good news for Chinese panel suppliers, but that means the competition is going to be shut out of any growth opportunities at a time when there are tremendous downward pressures on demand. It doesn’t make for great projections for a rebound in markets in 2024. The electrification of the automotive business is going to play a big role in that, and Continental’s divestment of its automotive display business is a good indication of how EVs are reshaping display business opportunities and investments.
The US presidential election in 2024 provides further uncertainty as tech policies toward China are going to be at the center of debates. Add to that the general atmosphere of concern about wars in the Middle East and the Ukraine, cutbacks in spending, a drop in VC funding, and you have an almost perfect storm of inertia. Not a good time to be planning for the future and I sympathize with everyone who is having to take a stab at what this could all mean to future performance in the industry.
Ming-Chin Kuo Predicts Apple 2024 Computing Woes and Muses on AI Sanction
Financial analyst, Ming-Chin Kuo, does a pretty good job of summarizing technology trends and has been spot on with most of his takes on Apple in particular. In a flurry of posts on Twitter and his blog, he raises a number of issues that bear consideration. The smartphone industry in China is recovering, with Xiaomi poised for strong growth in China and emerging markets as competitors move away from pricing wars. Xiaomi’s globalization and focus on emerging markets gives it a competitive edge to replicate its past growth model.
Kuo believes that Huawei’s better-than-expected sales of its M7 EV symbolizes a shift in China’s auto industry towards manufacturing specialization and a focus on software, autonomy, marketing and distribution. This favors new entrants like Xiaomi, whose first car in 2024 will leverage its ecosystem and distribution advantages. In general, Chinese manufacturers are going to have a free hand to develop their local sales and leverage their developments to open up sales opportunities in other regions. That should help Chinese automotive display suppliers.
At the same time, the U.S. ban on AI chip sales to China will negatively impact Nvidia and Intel most, as they have significant China revenue exposure. AMD may benefit short-term as its focus is on North America, but monitoring demand shifts will be important. ASML has said that it doesn’t expect the new round of AI chip sales bans to impact its sales in the short-term and Nvidia is looking to take countermeasures to circumvent the limitations it faces in getting its products to the Chinese market. AI hardware sales is the biggest growth factor for Nvidia, and China is its biggest market after North America. There are obvious ramifications for IT product sales while many companies are cutting spending on purchases and looking at tightening belts in the face of economic headwinds.
As for Apple, MacBook demand has dropped significantly post back-to-school sales with shipments expected to be down 30% YoY. With no new products in Q4’23, Apple aims to clear inventory and reformulate strategy. Kuo predicts that Apple will release a 24-inch iMac in 2024, and a MiniLED 32-inch iMac in 2025. However, work-from-home tailwinds are fading, and the appeal of Apple silicon and MiniLED is uncertain. The M3 chip expected in 2024 models may boost shipments, but success is not guaranteed. Apple’s costs are typically three times that of Windows-based systems. That means key suppliers will be impacted by reduced volumes and profits.
