Chips: Negative 2016, only +3% last five years (Datapoint)

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Published: 10 June 2016 10 June 2016

Outside of China, the entire industry may have been negative for years. I knew the chip business was struggling but this chart is startling. For the last five years, growth has been only ~3%. For the last ten, only ~4%. After inflation, everything stagnant. 

For 2016, the new forecast is -2.4%, with the largest drop in the Americas. They forecast +2% in each of 2017 & 2018. 

China has committed $60B plus to the domestic chip industry and is sure to take market share. Including Taiwan, that's the industry future. There are virtually no interesting chip startups in the U.S. The San Jose area continues booming with Google, Facebook and software/web companies but no hardware. 

Silicon Valley is dying.

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Cisco: Historic fall in Internet growth to (as low as) 15%

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Published: 08 June 2016 08 June 2016

U.S. & Canada fixed 2016 +22%, 2020 +15%. The 2016 growth in U.S. & Canada mobile data looks to be 49%; the 2020 prediction is 38%. The VNI sees a major slowdown in both fixed and wireless growth around the world. Cisco estimates 2016 worldwide mobile growth to be 68%. They expect that to fall to 41% in 2020 when most people will have smartphones. Remember the world turns so no five-year forecast is certain.

Check the chart below and extremely rich data here and here. There's so much information I could spend a week in the analysis and still not catch all the inferences. Accuracy can't be perfect but they are clearly the best in the business.

The 100% mobile growth was an artifact, driven by people first getting smartphones. The average smartphone user is increasing data usage ~40%/year, per AT&T.

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Hock Tan: Broadcom's worrying about shortages

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Published: 04 June 2016 04 June 2016

Careful: Shortage fears can lead to over-ordering and create a real shortage. Unless people panic, the problem is unlikely to be more than a few weeks delay in an order. Tan's comment in the financial call ("We're also working on resolving a few potential supply constraints in this particular segment." Details below) is likely circulating in the industry, and this article might. The instinctive action is to panic and double order, which is a pattern we see in chips on a regular basis.

Broadcom is the largest supplier of chips for both DSL & cable. The comment surprised me because the primary foundry, TSMC, is missing sales targets and generally has capacity. I haven't seen any huge increase in demand for broadband chips. Broadband subscriber growth in Europe and the United States is modest. Liberty Global is just getting started on increasing their cable coverage. Deutsche Telekom is two years behind schedule on it's big vector expansion. 

China added an unbelievable 50M fiber connections in 2015 and Hock says that trend is continuing.

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Q1: 5.6M China Mobile Wireline Broadband Adds; 61M Total (Brief)

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Published: 16 May 2016 16 May 2016

March's 2.65M new subscribers at China Mobile is almost certainly a broadband record. I don't remember anything close. I checked 10 years of data from China Telecom, by far the world's largest broadband provider and didn't find a peer. Most of them are on fiber. China Mobile consolidated wireline subsidiary China Tietong and now is going full speed ahead.  China Telecom added 3m to 116M; China Unicom 1.1M to 73M. Add 18M cable modems and a few small players and the current Chinese subscriber base is over 270M. 

Most new Chinese connections are on fiber: China added 50M fiber subs in 2015 and entered 2016 with 130M fibered. China Mobile consolidated wireline subsidiary China Tietong and now is going full speed ahead. With 800M mobile customers, they have plenty of prospects. 

Q1 in the U.S. was 1.1M 

Update 7/22 Removed total of fiber customers. Looking at new data, I'm not sure how many are fiber home and how many fiber/DSL and didn't want to provide a figure. 

AT&T looking to cut 80,000 jobs in five years

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Published: 16 May 2016 16 May 2016

"Executives estimate that eventually AT&T could get by with one-third fewer workers," and, "senior executives say shrinking the work force by 30 percent is not out of the question." Quentin Hardy buried those quotes in a New York Times article. 30% of AT&T's 280,000 employees is over 80,000. My guess is that 50,000-60,000 is more likely, but I believe even 50,000 would be the largest cutback since Elisha Gray and Alexander Graham Bell invented the telephone. I hope this story will prove inaccurate but the sources are solid. In addition, moves like this may be necessary for AT&T to increase profits. 

Randall and his team have often seen trends before the rest of us. They are now cutting back to prop up earnings for a few years and get the stock price up. The analytic question is why and how. I have some of that below but I'd welcome opinions.

This is one of the biggest telecom stories of the decade and no one picked it up. When I mentioned it in an article, I got a disbelieving email from a senior executive at AT&T. The New York Times could have made a mistake, but Hardy is a veteran reporter who had more than one source. 

CEO Randall Stephenson in the same article preached the importance for AT&T workers to "Learn new skills or find your career choices are very limited."

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U.S. Q1: Cable fine, Verizon and AT&T go negative

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Published: 16 May 2016 16 May 2016

Cable added 1,000,000 DSL/telco fiber 10,000. The data below are from Bruce Leichtman, who has been consistently accurate. The trend to cable is clear in the 50M homes that are still running DSL versions that are ten years out of date. AT&T & Verizon are doing fine in U-Verse and FiOS territory but are getting clobbered elsewhere.

DSL beats cable in Canada, France, and England. The U.S. policy types who say a cable monopoly is almost inevitable are uninformed. AT&T & Verizon have decided to go wireless-only across about 25% of their homes. They virtually stopped investment in those areas and have been very open with Wall Street about their plans. The wireline business is profitable in those areas but wireless-only makes more money. Or so they expect. 

China Mobile added 2.65M new wired subscribers in March.

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AT&T's $10 for the poor. Thank you Jim, Ralph, Randall, John. & John

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Published: 13 May 2016 13 May 2016

Scrooge Verizon! AT&T did the right thing, offering $5 and $10 packages for the poor. Anyone in the food stamp program qualifies. Speeds are 10 megabits down where AT&T can deliver that speed, ~75% of their homes. It's 3 megabits or 5 megabits where that's the fastest AT&T can provide. Where AT&T doesn't have DSL (about 10%,) they do not offer discounted wireless. Of course a higher speed is preferable, but this is decent for a basic service. About 40M Americans are eligible for food stamps. More than a third of them live in AT&T territory.

With HD TV looking pretty good these days at 3 megabits, people will be able to access 90% or more of all Internet functionality. The main thing that is impractical at those speeds is keeping lots of music and video in the cloud. I'm finding that very convenient, especially because Amazon offers unlimited storage for $55.year. I have 6 terabytes now backed up. 

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G.fast comes of age with 10M lines for Britain

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Published: 11 May 2016 11 May 2016

It works, finally. As always, the telcos were cautious and the vendors promised too much. The dam has broken now, with BT going at 3M homes passed each year. http://bit.ly/BThalffast CEO Patterson will keep going until “almost all” Brits can get what he’s calling ultrafast broadband.

AT&T looks to be the next big order, millions of lines with fiber to the basement and G.fast to each apartment. http://bit.ly/GfastATT. Chunghwa in Taiwan is covering almost the entire country. In Australia, Parliament is debating how much of the National Broadband network should switch to G.fast. Rio de Janeiro, Panama, Belgium, and Switzerland are on the way.  

Much more at Gfastnews.com