China's Planned Crypto Mining Ban Won't Affect Nvidia and AMD Much
China's economic planning agency has included cryptocurrency mining on a newly-issued list of industries it wants to "eliminate." Among other things, the agency cites the resource consumption and environmental impact of crypto mining, whose energy needs have often been criticized.Crypto traders were unfazed by the move, calling it widely expected. And even if a Chinese ban leads to a major drop in mining activity -- hardly a given, since a lot of mining also happens in places such as Russia and Iceland -- that's unlikely to have a major effect on the top lines of Nvidia ( NVDA) and AMD ( AMD) , each of which have already seen their GPU sales to crypto miners plummet. Nvidia has already said it's modeling no contribution from crypto-related sales going forward, and AMD has likewise suggested it's expecting little or no crypto-related revenue in the coming quarters.
If there's a potential loser here, it's China's Bitmain, the top supplier of custom-designed chips (ASICs) used to mine Bitcoin and various other cryptocurrencies. Bitmain was valued at $15 billion in a 2018 funding round, and filed for a Hong Kong IPO not long afterwards. However, with the crypto bubble having burst and Bitmain continuing to see sizable losses, the IPO filing expired in March without an offering happening. Unless the crypto bubble surprisingly reinflates, Bitmain will be hard-pressed to match its 2018 valuation in any public offering.
Apple Keeps Pushing the Envelope For LCD Display Tech
Long-time Apple (AAPL) analyst Ming-Chi Kuo is out with another product scoop: He reports Apple will launch new iPads and MacBooks in late 2020 and early 2021 that feature LCD displays containing mini-LED backlighting. The company is also reportedly prepping a 31.6-inch, 6K-resolution monitor with mini-LED backlighting for launch in Q2 or Q3 of this year.
Mini LEDs, which shouldn't be confused with microLEDs (a more futuristic display technology that Apple might leverage further down the line), deliver improvements in areas such as color gamut and contrast relative to LCDs featuring traditional LED backlighting, and also support localized backlight dimming. As such, they give Apple another option for improving the performance of the LCDs used by its iPads and Macs, as opposed to switching to OLED panels the way it has for its flagship iPhones.
Apple has also rolled out its True Tone display tech, which adjusts a display's white balance in response to an environment's lighting, across various products (both LCD and OLED-based) in recent years. And recent iPad Pros also feature Apple's ProMotion technology, which delivers display refresh rates of up to 120Hz (and lower rates when such refresh speeds aren't needed).
Whether due to the cost of larger OLED panels and/or concerns about their performance, Apple seems averse for now to using OLEDs within its iPad and Mac lineups. Instead, it's focusing on pushing the envelope in terms of what LCD panels can deliver.
Goldman's Near-Term Caution on Chip Equipment Might Be JustifiedChip equipment stocks are slipping after Goldman's Toshiya Hari reinstated coverage on KLA-Tencor ( KLAC) with a Sell rating and cut his forecast for 2019 wafer fab equipment (WFE) spending growth to negative 25% from negative 20%. He maintained Neutral ratings for Applied Materials ( AMAT) and Lam Research ( LRCX) .
Regarding WFE spend, Hari, whose 2019 forecast is worse than Lam's January outlook for a mid-to-high teens percentage decline, is worried that memory capex will remain pressured during the back half of the year.
Given that DRAM and NAND flash memory prices have fallen sharply thus far in 2019, and that memory has been accounting for a large percentage of semiconductor capital spending, Hari's WFE outlook doesn't seem unreasonable. The DRAM industry, which has largely consolidated around three companies (Samsung (SSNLF) , Micron (MU) and SK Hynix) that badly want to avoid seeing the kind of brutal down-cycles the industry once witnessed, is especially likely to take a cautious approach to capex. Micron, for example, is just a few weeks removed from cutting its fiscal 2019 capex budget for the second time.
In the long run, trends such as the growing capital-intensiveness of memory manufacturing, investments by the likes of Intel (INTC) and Taiwan Semiconductor (TSM) in cutting-edge manufacturing processes, China's fab-building spree and steady growth in global chip consumption still position the chip equipment industry to see moderate growth. But 2019 is still shaping up to be a rough year, and -- at a time when many chipmakers are forecasting a second-half recovery -- equipment sales might take longer to recover than sales of many of the the chips manufactured with that equipment.At a time when a majority of chip equipment names are up over 40% from their December lows, that's a good argument for at least waiting for better entry points. As I discussed in a recent column, this feels like a good time to get more selective with chip stocks. Analog, microcontroller (MCU) and RF chip names featuring low valuations -- some notable names include Skyworks ( SWKS) , Cypress Semiconductor ( CY) and ON Semiconductor ( ON) -- look like good defensive plays.
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