Chronicle - Sep 10, 2023
We spot some intriguing company updates. Whether this is mere noise or a lasting impact, the judgement is yours.
Apple’s iPhone Ban in China
AAPL 0.00%↑ stock price fell following news that China will prohibit government personnel from using iPhones. Initially, the news was restricted to officials from central government agencies. However, there are discussions about including officials from other agencies and state-owned employees as well. China has more than 55 million state-owned employees, and Apple sold 225 million iPhones in 2022. It means that Apple will lose a considerable number of potential customers.
What's more, the news came just a few days after Huawei unveiled its Mate 60 Pro smartphone. SMIC, a Chinese chipmaker, developed the superior 7 nanometer (nm) technology used in the Mate 60 Pro. Previously, SMIC produced 14-nm chips using ASML's machinery, which the US prohibited in 2020 as part of the chip war. Some are wondering how SMIC might produce the more advanced 7-nm chips.
China is committed to developing its own semiconductor industry. They launched a new $40 billion investment fund last week to boost the chip sector. Similar-sized funds were also launched in 2014 and 2019.
NVIDIA Related-Party Transaction Takes Center Stage
The focus is on NVDA 0.00%↑ $2.6 billion chip sales to Coreweave, a related-party GPU cloud vendor. NVIDIA owns a small stake in Coreweave. Coreweave is using the chips as collateral for a $2.3 billion loan from Blackstone Inc. and Magnetar Capital. Some people are overly concerned about these related-party transactions.
However, it is very normal for suppliers to become invested in their clients. The goal is usually to keep customers from acquiring another offer from a competitor and to keep them loyal to the suppliers. In NVIDIA's case, they also invest in numerous other smaller startups that may utilize their products, such as Hugging Face, a machine learning collaboration platform.
So, nothing to see here, folks.
Problems at Disney
DIS 0.00%↑ stock price has dropped to COVID's lows in the $80s. A lot of things went wrong at Disney. The number of visitors to theme parks is decreasing. Wait times have decreased from 47 minutes in 2019 to 27 minutes in 2023, according to the Wall Street Journal. The number of Disney+ subscribers is decreasing. Disney lost 11 million (7%) subscribers in the third quarter of 2023 alone. Despite the well-known brands, more films also flopped.
The latest dispute with Charter Communications doesn't help either. Disney and Charter are arguing over whether Charter bundle subscribers should have access to ESPN (a Disney-owned television network). ESPN may lose around 20% of its subscribers due to Charter.
To make matters worse, Disney has become embroiled in cultural wars in the last three years.
Take caution with this one. While it's tempting to hope for a mean reversion, Disney will require a significant shift in management to regain its mojo.
IPO — A Chinese Investor-Focused Securities Brokerage Companies
SWIN 0.00%↑ Solowin Holdings, Ltd. is a holding company with no material operations of its own. It conducts its operations primarily through its wholly owned subsidiary, Solomon JFZ, a securities brokerage companies in Hong Kong. Solowin Holdings received aggregate gross proceeds of $8 million from this IPO, before deducting underwriting discounts and other related expenses.