Mad Hedge Technology Letter
November 1, 2024
Fiat Lux
Featured Trade:
(WILL THE TRIFOLD PHONE SAVE TECH?)
(HUAWEI), (AAPL)
Mad Hedge Technology Letter
November 1, 2024
Fiat Lux
Featured Trade:
(WILL THE TRIFOLD PHONE SAVE TECH?)
(HUAWEI), (AAPL)
Silicon Valley is usually on top of the innovation game, and as Huawei announced the launching of its trifold smartphone, one must ask whether Silicon Valley is late to the party or if this technology is even worth their time.
My guess is that foldable devices won’t move the needle, and these announcements aren’t really about moving revenue but to offer bluster in a global game of cat and mouse.
In general, the smartphone super cycle is about tapped out, and I don’t see a foldable phone as a reason for another re-acceleration of revenue.
There is a higher chance that in the next few years, this foldable technology is adapted for some other technology and written off on the balance sheet.
To think it could be some revolutionary new trend is beggars’ belief.
To be honest, many consumers are tired of screen time and can’t get off their screen because work duties connect them to the screen.
When needing a bigger screen to watch global sporting events, many would prefer a large-screen TV that doesn’t fold. This phone has no TV screen – not by a long shot.
It is a little difficult for me to understand the use case here for Huawei going big in the foldable screen business.
It’s not like the new phone will be cheap either, the new trifold smartphone will start at around $2,800, which is more expensive than most premium laptops.
Huawei announced its foldable product on the same day as Apple unveiling the new iPhone.
Apple announced its iPhone 16 Pro Max will start at $1,199 and the iPhone 16 at $799.
The first set of Apple Intelligence AI features will be available in a free software update next month.
Huawei’s Mate XT also comes with artificial intelligence features, such as text translation and cloud-based content generation.
The device is 3.6 millimeters thick when unfolded, with a 10.2-inch screen.
More than 3.5 million people had pre-ordered Huawei’s trifold Mate XT smartphone as of midday Tuesday.
The Chinese company has sought to make a comeback in the smartphone industry, which was hard hit after the U.S. slapped sanctions on the company in 2019. The U.S. in October 2022 imposed broader restrictions on American sales of advanced chips to Chinese businesses.
Apple fell out of the list of top five smartphone vendors in China in the second quarter of this year. It was the first time that domestic players held all five spots.
Clearly, Chinese tech views Apple as the top dog to compete against, but I would say that Apple’s star is waning in China.
They are being pushed out by the Chinese government, who are indirectly suggesting to Chinese consumers to go with domestic alternatives.
National champions and protecting them are the modus operandi in the age of deglobalization, and that will not change anytime soon.
As for the tech, foldable screens are a mediocre and lateral upgrade.
The size of a screen has a size limit to its usefulness, and building gargantuan screens does not suggest that it could trigger some new wave of untapped profits.
I believe Apple is smart in not aggressively pursuing foldables, and the quest continues to find the new killer tech that will take over.
Until then, tech stocks should grind up, but not in a dramatic fashion.
Mad Hedge Technology Letter
September 13, 2024
Fiat Lux
Featured Trade:
(ALTERNATIVE TECH GETS HAMMERED)
(BTC), (ETH), (COIN), (NVDA), (ADA), (XRP)
Mad Hedge Technology Letter
September 11, 2024
Fiat Lux
Featured Trade:
(IS THE TRIFOLD SMARTPHONE A GENIUS IDEA?)
(HUAWEI), (APPL)
Silicon Valley is usually on top of the innovation game and as Huawei announced the launching of its trifold smartphone, one must ask whether Silicon Valley is late to the party or if this technology is even worth their time.
My guess is that foldable devices won’t move the needle and these announcements aren’t really about moving revenue, but to offer bluster in a global game of cat and mouse.
In general, the smartphone super cycle is about tapped out and I don’t see a foldable phone as a reason for another re-acceleration of revenue.
There is a higher chance that in the next few years, this foldable technology is adapted for some other technology and written off on the balance sheet.
To think it could be some revolutionary new trend is beggars’ belief.
To be honest, many consumers are tired of screen time and can’t get off their screen because work duties connect them to the screen.
When needing a bigger screen to watch global sporting events, many would prefer a large-screen TV that doesn’t fold. This phone is no TV screen – not by a long shot.
It is a little difficult for me to understand the use case here for Huawei going big in the foldable screen business.
It’s not like the new phone will be cheap either, the new trifold smartphone will start at around $2,800 which is more expensive than most premium laptops.
Huawei announced its foldable product on the same day as Apple unveiling the new iPhone.
Apple announced its iPhone 16 Pro Max will start at $1,199, and the iPhone 16 at $799.
The first set of Apple Intelligence AI features will be available in a free software update next month.
Huawei’s Mate XT also comes with artificial intelligence features, such as text translation and cloud-based content generation.
The device is 3.6 millimeters thick when unfolded, with a 10.2-inch screen.
More than 3.5 million people had pre-ordered Huawei’s trifold Mate XT smartphone as of midday Tuesday.
The Chinese company has sought to make a comeback in the smartphone industry, which was hard hit after the U.S. slapped sanctions on the company in 2019. The U.S. in October 2022 imposed broader restrictions on American sales of advanced chips to Chinese businesses.
Apple fell out of the list of top five smartphone vendors in China in the second quarter of this year. It was the first time that domestic players held all five spots.
Clearly, Chinese tech views Apple as the top dog to compete against, but I would say that Apple’s star is waning in China.
They are being pushed out by the Chinese government who are indirectly suggesting to Chinese consumers to go with domestic alternatives.
National champions and protecting them are the modus operandi in the age of deglobalization and that will not change anytime soon.
As for the tech, foldable screens are a mediocre and lateral upgrade.
The size of a screen has a size limit to its usefulness and building gargantuan screens does not suggest that it could trigger some new wave of untapped profits.
I believe Apple is smart in not aggressively pursuing foldables and the quest continues to find the new killer tech that will take over.
Until then, tech stocks should grind up but not in a dramatic fashion.
Mad Hedge Technology Letter
October 31, 2022
Fiat Lux
Featured Trade:
(MAYBE NEXT GENERATION)
(JD), (BABA), (HUAWEI), (GOOGL), (TENCENT)
For all the China lovers out there who think buying Chinese tech after the dip is a good idea – I have bad news for you – it’s just a dead cat bounce.
Don’t be fooled into thinking just because Chinese tech stocks became cheap, it’s a good entry point into corporate China.
It’s not.
The truth is that this isn’t your father’s China.
The situation has dramatically changed in the last 10 days so much so that I will say with conviction to stay away from Chinese technology stocks perhaps forever, almost, like it’s the black plague.
The place is totally done after China’s Chairman Xi Jing Ping was “re-elected” for his 3rd successive five-year term as the authoritarian leader of the East Asian nation.
Investors have also listened to my advice as Chinese tech shares have been thrown out with the bath water from Hong Kong to mainland China.
Many investors want no more part of China Inc. which is ironic since this was the place they couldn’t get enough of just a few years ago.
Why have investors been so jittery anyway?
Essentially, Chairman Xi packed the Politburo standing committee, the core circle of power in the ruling Communist Party of China, with his friends, poker buddies, and allies.
It was only just recently when China was tightening the tech environment before with examples littered around the country such as putting the shackles on the founder of ecommerce firm Alibaba (BABA) Jack Ma.
The Chinese communist party blocked his IPO of Alibaba’s finance arm Ant Group resulting in mass shareholder losses.
The backdrop has only soured significantly since then.
Under Xi’s leadership, China has implemented a raft of policies that have tightened regulation on the tech sector in areas from data protection to governing the way in which algorithms can be used.
JD.com (JD), Alibaba, and Tencent laid off thousands of employees in April due to tightened regulations and a slowing economy.
What are the rest of the unintended consequences?
A stronger dollar and weaker Chinese yuan just for starters.
It’s no secret that China hoovers up as many dollars as it can find, but in the meantime, the Chinese yuan is under relentless pressure from its underperforming economy, poor government policies, and gargantuan federal debt load.
Tech innovation will drop off a cliff.
Before, Chinese tech innovation meant stealing ideas and IP from Americans, but it will be harder now that this is a bipartisan issue in the US Congress.
China will also slow down the rollout of new tech products simply because they can’t acquire the advanced chips they need to build their products.
Just look at Huawei that was once counted as one of the most popular smartphones in Europe. Nobody buys their phones anymore because Google-based apps are banned on Huawei phones.
Most chilling of all, Chinese tech workers won’t be incentivized to take any risk in an environment that will penalize them by who knows what at this point.
That means many of these firms will be playing it safe yet be pushed by boss, CEO, and the communist party to beat America in the tech race for global hegemony.
In short, America has won and China faces a stark future of mediocrity in the tech space. They churn out a high volume of tech employees but industry can only develop so far by copying. It’s impossible to out-copy oneself or others into the lead.
It’s getting so bad in China that even investor Ray Dalio has stopped cheerleading for the Mandarins.
Mad Hedge Technology Letter
November 2, 2020
Fiat Lux
Featured Trade:
(IS CHINA CATCHING UP?)
(HUAWEI)
Heading into a fresh Presidential term, the tech war against China must be addressed or the U.S. faces the prospect of falling behind China by the next U.S. Presidential election.
By that time, the U.S. might not be able to recover.
China’s political leaders have endorsed a five-year growth plan focused on reducing the economy’s reliance on foreign investment and technology.
And this squarely means the U.S.
Following a Communist Party’s Central Committee Meeting, the Chinese have hatched a grand “vision” for the economy as far off as 2035.
“It is the first time ever in the history of our party’s five-year plans…that China is placing the plans on science, technology, and innovation before all other sectors,” Said Wang Zhigang, China’s minister of science and technology.
This specifically means that China is done being “factory of the world” and is gunning for Silicon Valley’s milk and honey.
Chinese tech giants such as Huawei Technologies, the nation’s largest telecommunications equipment manufacturer, and Semiconductor Manufacturing International Corp., China’s largest semiconductor maker are two central figures that will execute the plans for Chinese Communist’s pivot to technology.
But according to a Financial Times report, Huawei has run out of supply of chips and is looking into manufacturing their own without any experience doing so.
This situation is brutal for the Chinese simply because they don’t have the wherewithal to achieve this great task.
Total self-reliance may remain elusive because China’s communist apparatus is not conducive to producing top-class engineers.
Remember that much of their technology is “borrowed” and they will have to drive forward that same strategy if they want to surpass the U.S. in technological prowess.
I just don’t believe China can organically outgun the U.S. in technology, they simply aren’t built to deliver that result.
Chips aren’t as easy to make as a pair of running shoes or a plastic rubber ducky - these are tough technologies to master.
Part of the blame must be shared with the pitiful Chinese education system that is a pay-to-play type of structure.
The coronavirus has translated into foreign government being extra careful in the technologies they harness and now allowing China to raid these precious secrets.
China is now officially classified as a strategic adversary and it will be a tough slog for China moving forward because the low-hanging fruit has already been harvested.
There also exists the possibility that Democratic Presidential hopeful Joe Biden will be even more staunch against the economic and technological onslaughts of the Chinese Communist Party.
The green shoots have already started to show up as legislation for tech investment takes root.
This summer, a bipartisan group of legislators led by the Democratic senator Chuck Schumer and the Republican Todd Young introduced the Endless Frontier Act. It calls for investing $100 billion over five years to expand the NSF and to fund research in key fields, such as AI, quantum computing, biotech, advanced energy, and materials science.
Biden has proposed spending even more—$300 billion over four years—on federal investments in R&D. His plan calls for major increases in technologies such as AI, 5G, and advanced materials.
The Trump administration has increased investment in five key “industries of the future”—AI, quantum computing, 5G, advanced manufacturing, and biotechnology—albeit not on the scale Biden is calling for.
Made in China 2025 was launched in 2015, and in that year alone, the Chinese government created about $220 billion of state-backed investment funds to support it.
The U.S. would likely dip into their debt instruments to release unlimited capital to deal with developing emerging technologies.
I wholeheartedly believe that China’s encroachment will inspire a technological revolution in the U.S. that is first fueled by government institutions and the peripheries supported by the venture capitalists.
On a microeconomic level, the U.S. has far too large of an edge in semi chip engineers than the Chinese, although China has closed the gap.
The attractiveness of the U.S. from the fiscal side is evident as Chinese tech companies still dream of going public in New York and not Hong Kong or Shenzhen.
Much of the hype around Chinese technology is still hype and that’s all.
Just take for instance the newest Huawei premium smartphone that was billed to be better than the iPhone.
The truth is that it’s a poorly operating smartphone and performs as a mid-level phone.
The Chinese Communist Party has been great at controlling the media narrative around their economical and technological rise, but I am here to call it out to the point where I believe they are still a “paper tiger.”
Many people “in the know” tell me that China’s economy hasn’t been growing for the past 7 years and their “superior” technology is repurposed technology borrowed from western countries that is already outdated in the West.
Just because media suppression is insane in Beijing and any negative journalistic take will be squashed in seconds, it doesn’t mean they have the best technology in the world.
I heard that Chinese tech is “ahead” in 5G, artificial intelligence, and autonomous driving but I have seen nothing that would verify this claim.
Peel back the layers and I do believe the Chinese tech scene is closer to a Potemkin’s Village than Moscow’s Red Square.
In the next four years, the U.S. will visibly surge in front of China as the real tech dominator.
This means that investors should be long technology stocks after this short-term consolidation.
Mad Hedge Technology Letter
January 22, 2020
Fiat Lux
Featured Trade:
(THE HOLLOW VICTORY FOR TECH IN THE CHINA TRADE DEAL)
(MSFT), (AMZN), (HUAWEI)
Legal Disclaimer
There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.
This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies.
OKLearn moreWe may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.
Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.
These cookies are strictly necessary to provide you with services available through our website and to use some of its features.
Because these cookies are strictly necessary to deliver the website, refuseing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.
We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.
We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.
These cookies collect information that is used either in aggregate form to help us understand how our website is being used or how effective our marketing campaigns are, or to help us customize our website and application for you in order to enhance your experience.
If you do not want that we track your visist to our site you can disable tracking in your browser here:
We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.
Google Webfont Settings:
Google Map Settings:
Vimeo and Youtube video embeds: