Monthly POMO evolution

I was digging into the Permanent open market operations (POMO) this August, trying to understand the impact of the FED in the stock market.

Now that some months after the turmoil have passed, I have looked into the numbers in a monthly basis.

The amount injected by the Fed in the market during these 9 first months of 2020 is:

To see the evolution of the last 4 months in a better way, I have removed March and April. This is how data looks like:

What about the 2.3T$ promised by the FED?

In March the FED announced a stimulus program of 2.3T$ for the market through POMO. Right now they have spent 1.84T$ which is around 80% of the program.

What’s coming during next 6 weeks?

Well the main events are:

  • US President election.
  • Q3 results of the majority of the main companies of the indexes.

 

 

What is Digital Silk Road?

What is the DSR?

Launched in 2015, the digital silk road is a mainly private-sector-driven program, supported by the state, with the aim of enhancing China’s digital presence abroad, and thereby extending its commercial and political influence. It is so far going well, particularly in the emerging world.

This subset program comes from Belt Road Initiative (BRI) announced in 2013. The BRI represents a significant shift in global trade, laying the foundations for a paradigm shift in supply chain and logistics management.

The long term vision is that Belt Road Initiative is the vehicle by which China is restoring the ancient Silk Road.

Three main drivers

  • Chinese telecoms equipment makers,
  • Data Centre and Storage Infrastructure along the economic corridors,
  • Chinese companies using this to export interpretation of smart city sensors and data platforms.

Geography

  • Asia, the Middle East, Europe, Africa and Latin America.

Some projects of the program:

  • Optic fiber projects in Latin-America, Africa and South Africa (initial budget 7B$).
  • In Africa, Huawei and ZTE have built much of the digital infrastructure, including health care connectivity.
  • Huawei 5G expansion, that will enable a basis for Internet of the Things projects.
  • Smart shipping, which goal is optimize operations through enabling just in time operations as well as acting as information centers that enables optimized transport mode choices that connect with the port.
  • Smart city projects.
  • Build submarine and terrestrial optic fables
  • Building of data centers.
  • BeiDou satellite navigation system have been identified as key asset for DSR.
  • China’s Blockchain Services Network (BSN)

China Standards 2035

It is a roadmap that will be published in 2020 Q4 for defining the set of standards that private and public companies from China should be addressing. This blueprint will be updated (I did not found the frequency).

The landscape

Some schedules found

Some readings:

  • The China – EU rail network: direct China-Europe rail link between Hefei and Dourges in France and the difficulties to solve issues in Alataw Pass in the Xinjiang Uygur Autonomous Zone.

A Wardley map of the company NVIDIA 2020

This map tries to visualize the situation of this company in 2020. Focusing on trying to understand its current situation and where its investments are going.

The map

The Players

I’ll use this 2018 and 2019 billing table as a reference to see who the top players in the industry are.

NVIDIA is in position 10 of the ranking

We can see that companies like AMD are not in this table of 15 companies. And that others like TSMC are doing very well and are not known.

Well, let’s focus on NVIDIA, the tenth on the list.

Point 1.- Area where the market is mature, war zone

In this market for computers and graphic display and video games are in a high degree of industrialization and maturity.

The war is focused on:

  1. Be the fastest to release the next versions of chips with less size (now the struggle is to get the 7nm one in a stable way and producing massively).
  2. The struggle to shrink lithography always fills the media covers, but this is not a definite competitive aspect (there are many others).
  3. Note that TSCM plans to release the 3nm lithography at the end of 2021, which is when Intel plans to release the 7nm one.
  4. To continue to be a benchmark differentiated from competitors (Intel, Samsung, Micron, Qualcomm, AMD).
  5. Continue to work with large, higher-order manufacturers and shield these large customers from other competitors.
  6. It is in this area where companies are making the most money right now and where margins are slowly falling.

The computer market is a market in decline due to the use of tablets and mobiles. That’s why the focus for billing growth is on data centers.

Point 2.- Data centers

The number of services and the volume of data processing continues to grow exponentially and it is recognized that the data center business is one of the areas that still has the capacity for growth with a not negligible volume.

This is where the entire industry is making a lot of effort, both organically and through acquisitions.

To consider:

  1. Acquisition of Mellanox Technologies , which provides end-to-end connectivity solutions for servers and storage that optimize data center performance. (2019 – 6.9B $).
  2. Acquisition of SwiftStack , its innovations power private cloud storage for enterprises, offering the benefit of the public cloud, but at the IT controls of the infrastructure.
  3. Acquisition of Cumulus Networks , a software company, designs and sells Linux operating systems for network hardware.
  4. Amazon acquired Annapurna Labs in 2016 to be able to dispose of its semiconductor area, recognizing the need to be present in this area of ​​the business that is critical for them. Facebook announced intentions to make investments in this regard in 2019, but at least I have not read more about it.
  5. Google and NVIDIA have announced improvements in the execution speeds of their Machine Learning systems, these types of close collaborations are very relevant and provide value, billing and brand image.

By comparing with Intel (the leader in the market), they acquired Habana Labs , which is a semiconductor company that focuses on developing disruptive solutions for the data center and cloud efficiency. They also acquired Rivet Networks , which is a technology and products company focused on creating the best possible network experience for users.

AMD for its part has not made any acquisitions since 2017 and Qualcomm since 2014 (I know, I’m just focusing on US market, and I’m ignoring Asian players).

3.- Emerging market, innovation programs

In a market that evolves as fast as that of semiconductors, it is necessary to pay attention to the quality of the innovation programs that companies are doing. The software giants are making great strides on things like bid data, machine learning, neural networks, and artificial intelligence. For this software to be able to function in a reasonable time, it is necessary that there be electronics that allow the massive treatment of data and computing needs.

Points to consider:

  1. Business development in artificial intelligence is the final goal to be achieved by all companies.
  2. The development of artificial intelligence depends on the final objective: cars, genetics, retail … here NVIDIA is already developing activities in the automotive sector and the acquisition of Parabricks  provides development capacity in genomic analysis (they analyze the complete human genome in less of an hour compared to other competitors who do it in days).
  3. Development in simulation activities is important for the automotive industry and for video games. Here NVIDIA is carrying out important developments.
  4. By comparison, AMD is not investing as much in these areas as NVIDIA is. There is a lot of talk about the 7nm competition between Intel and AMD, but in a period of 5 – 10 years, there will be a very wide market in these areas of Artificial Intelligence where the combination of software and hardware is key and where Intel and NVIDIA are key. they are doing much better than AMD.

 

This review is not all that you could do. If you know specific aspects that could improve this map and the analysis (or correct something that is not right), please tell me, there is no perfect map and talking about a map, is how you can improve the understanding of the context and improve details if proceeds.