What’s up with… TSMC, European telco M&A, Microsoft

• TSMC signals a return to global chip sector growth
• Telenor’s CEO anticipates European consolidation 
• Microsoft may have the answer to the upcoming lithium drought

In today’s industry news roundup: TSMC brings cheer to the global chip sector; Telenor’s CEO anticipates some telco M&A action; Microsoft and partners appear to have an answer to an impending lithium shortage, something that would hamper the smartphone sector; and much more! 

In reporting its fourth-quarter financials, chip giant Taiwan Semiconductor Manufacturing Company (TSMC) has clearly signalled a reversal in fortunes for 2024. While the company’s fourth-quarter revenues were down slightly year on year, by 1.5% to $19.62bn, this was slightly better than expected. And while the company noted in its earnings press release that it expects its sales in the first quarter of 2024 to be “impacted by smartphone seasonality, partially offset by continued HPC-related demand,” it also told investors that it expected full year 2024 revenues to be up to 25% higher year on year, driven by demand for advanced chips for high-performance computing and AI applications. It’s worth noting that AI chip giant Nvidia, which is experiencing very high demand for its products, is one of its marquee customers. The news sent TSMC’s share price up by 6.5% during Friday trading to 626 Taiwanese dollars on the Taipei exchange and signalled a sea change in the global chip sector, which shrunk by 11% in 2023, according to Gartner.  

The World Economic Forum in Davos is proving fertile ground for telecom-related tidbits this week… We’ve already reported on what Verizon’s CEO has been discussing – about AI here and the telco’s business wireless assets here – and how India has major chip production ambitions, and now Telenor’s boss has been getting in on the action. Speaking at a Reuters Global Markets meeting, Sigve Brekke, who has been CEO at the Norwegian operator since August 2015, said he very much looks forward to a strong wave of consolidation across the European telecom sector during 2024. He claimed there is a “growing sense” in Europe that the telecom market is “too fragmented”, though provided no evidence to support his assertion. He did, however, note that “we see now some consolidation attempts in Spain, the UK and in Italy,” and added that he, along with the CEOs of other European telcos, are waiting on regulators to decide what and where consolidation will be allowed before making their own moves. In the near term, approval of a major telco M&A deal in Spain looks the most likely, with Orange and MásMóvil seemingly set to be granted the go-ahead for their €18.6bn merger by European antitrust regulators, as we previously reported. In the UK, Vodafone and Three are awaiting a decision from the competition authorities regarding their planned £16.5bn merger, while the potential consolidation in Italy, where Iliad is in merger talks with Vodafone, is at a much earlier stage. When Brekke took up his post, Telenor and the Swedish operator Telia were in advanced negotiations to merge their Danish operations in a 50/50 joint venture. That plan came to nothing and was abandoned in September 2015 on the grounds that “the companies have not been able to agree with the European Commission on acceptable conditions to go ahead with their plan to create a robust mobile operator” in Denmark. In his speech at Davos, Brekke acknowledged that failed initiative, saying, “We did try to consolidate in Denmark a few years ago”, and then went on to admit that despite his enthusiasm for consolidation, Telenor has “no concrete projects [for mergers etc] right now”. Telenor remains a majority state-owned company with a government shareholding of 54.5%, which is managed by the Norwegian Ministry of Trade, Industry and Fisheries. The telco has some 200 million subscribers across the Nordic markets and through its various joint ventures in Asia – Malaysia, Bangladesh and Thailand. It recently agreed to sell its operation in Pakistan.  

Microsoft staff working in collaboration with scientists from the Pacific Northwest National Laboratory (PNNL), sited in Richland, Washington, have used AI and supercomputing to discover a new “material” which, it is claimed, could dramatically reduce the need to use the increasingly rare, expensive and ever-harder-to-procure chemical element lithium (Li) by up to 70%. As reported by the ever-excellent scientific website Interesting Engineering, lithium is heavily used in mobile phone batteries and other electronic devices, such as electric vehicles, (EV) digital cameras, laptops and tablets, as well as for backup power storage. The PNNL, which is part of US Department of Energy, says that by combining AI with supercomputing it was able to narrow down a massive field of 32 million inorganic materials, any of which may have had some potential to be a complete or partial replacement for lithium, to a short list of just 18 “promising candidates” in less than seven days, a task that would have taken 20 years using traditional research methods. The entire investigation from identifying the 32 million possible candidate materials and winnowing them down to the less than 20 that showed genuine potential, and then on through to the development of a working battery prototype using the new substance took less than nine months from start to finish. The hunt for new materials to at least minimise the use of lithium in batteries is now very urgent, with the International Energy Agency warning that there could be a global shortage of lithium by as early as 2025. That’s a state of affairs that would have profound economic and social repercussions, given that the US Department of Energy forecasts the demand for lithium-ion batteries will increase to 10 times its current level by 2030. Microsoft and the PNNL are being coy about the exact identity of the new substance. It is referred to as N2116, but scientists say those letters and numbers are not connected to the material itself. All that is known at the moment is that it is a solid-state electrolyte (SSE), which is a rigid  ionic conductor and electron-insulating material with direct application in the field of electrical energy storage where it can be used as a substitute for the liquid or gel electrolytes that are intrinsic to lithium-ion batteries. An SSE will be extremely safe as there can be no leakages of toxic organic solvents. And they are non-volatile and of extremely low flammability as well as mechanically and thermally stable and easy to process. Furthermore, their self-discharge rates are very low whilst providing a higher achievable power density. They are also very fast to charge and can be re-charged thousands of times without the material suffering deterioration. No wonder interested parties are falling over themselves to be the first to introduce powerful new batteries containing very much less lithium than is possible today, but with much better performance: There’s money to be made!

New research suggests that the number of cellular IoT connections will hit the 5.4 billion mark by 2030. The Cellular IoT Market Tracker 2023-2030 from research house Omdia reveals that the cellular IoT sector will undergo “significant transformation over the next seven years”, driven predominantly by the spread and greater usage of 5G technologies. The shipments will mainly be driven by the adoption of 5G RedCap, 5G Massive IoT, and 4G LTE Cat-1bis modules, and concludes that the global total will grow even further after 2030 as 5G gains greater acceptance and utility. The report finds that the new 5G RedCap standard (short for 5G Reduced Capability) will see the beginning of mass adoption this year as it establishes itself as a mid-tier gap-spanning connectivity solution for 5G devices that do not require such high specifications as ultra-reliable low latency communications (uRLLC) and enhanced mobile broadband (eMBB). 5G Massive IoT is also known as “massive machine-type communications (mMTC)”. It defines applications with multiple endpoints that continuously serve small amounts of data, usually infrequently to remote locations. Meanwhile, LTE Cat 1bis is a variant of LTE developed specifically for IoT applications. It was introduced within 3GPP Release 13. It uses existing 4G/LTE networks but, importantly, is designed to operate with a single antenna whereas LTE Cat 1 requires IoT devices to have two antennas. Alexander Thompson, senior IoT analyst at Omdia, noted that “2024 will be a pivotal year for 5G RedCap growth. This will begin in China, where most volume is expected and in due course subsidies will bring the module average selling price (ASP) down to similar pricing as LTE Cat-1.”

Telecom Italia (TIM) is to reduce the size of its board from its current 15 members to just nine, the Italian telco has announced. The move comes as the company continues to fend off legal challenges from its largest single shareholder, French media giant Vivendi, which deems the telco’s decision to sell its NetCo access unit to private equity firm KKR for €18.8bn “unlawful.” In just the past few days, Telecom Italia received approval from the Italian government for the NetCo sale.  

- The staff, TelecomTV