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Gamers visit Sony’s PlayStation booth at the annual China Joy gaming conference in Shanghai on July 30, 2021.
Arjun Kharpal | CNBC

GUANGZHOU, China — For 14 years, gaming consoles from the likes of Sony, Microsoft and Nintendo were banned in China.

The ban was finally lifted in 2014.

While these consoles were available on the so-called “grey market” — places that would sell imported devices for a high price — the prohibition led to the surge in popularity of PC and mobile games.

Chinese developers, like giants Tencent and NetEase, poured their efforts into making hit titles for those platforms during the more than a decade-long ban.

Now things are changing. China’s tech giants, alongside a new breed of gaming developers, are looking to tap the growth of videogame consoles in China and target players overseas who have grown up with those devices.

For the global market, the console is huge — roughly like 30% revenue. But in China, it’s only 1% and so there’s a huge potential opportunity for the console game developer inside China.
Daniel Ahmad
senior analyst, Niko Partners

Sony, Microsoft and Nintendo have all launched their next-generation gaming consoles in China.

“For the global market, the console is huge — roughly like 30% revenue. But in China, it’s only 1% and so there’s a huge potential opportunity for the console game developer inside China,” Frank Mingbo Li, the founder of Studio Surgical Scalpels, a Tencent-backed game studio, told CNBC.

Studio Surgical Scalpels is making an outer-space based “first-person shooter” game called “Boundary” for PC and Sony’s PlayStation 4 and PlayStation 5.

China’s games console hardware and software market hit $1.84 billion in 2020 and is expected to reach $2.46 billion in 2025, according to market intelligence firm Niko Partners. But that’s eclipsed by both mobile and PC game revenue. Mobile game revenue alone stood at $29.2 billion in 2020.

Globally, the console market is expected to rake in revenue of $49.2 billion, accounting for 28% of the worldwide games market, according to market research firm Newzoo.

That’s where the opportunity lies.

“Despite consoles being banned between 2000 and 2014, we are seeing high demand for consoles in China, and there is an even larger market for console outside the country,” Daniel Ahmad, senior analyst at Niko Partners, told CNBC.

Li, who is a gaming industry veteran, said “Boundary” was designed from the “very first day” for the global market, underscoring the Chinese developer’s ambitions.

“Boundary” is just one of several high-profile console games coming out of China. Another upcoming game is “Black Myth: Wu Kong” which is being developed by Chinese studio Game Science.

Gaming giants eye console market

The world’s largest gaming company, Tencent, along with rival Chinese firm NetEase, are also eyeing the console market.

NetEase launched a high-profile game on Thursday called “Naraka: Bladepoint” — a 60-person battle royale style game like popular title “Fortnite.” The Hangzhou, China-based company is also developing the game for consoles but hasn’t revealed a release date yet.

In 2019, NetEase opened a gaming outfit in Montreal, Canada, to help with international expansion and another studio in Japan dedicated to console game production last year.

In an interview with CNBC this month, Hu Zhipeng, vice president at NetEase, called the console market “pretty attractive.”

“Our Sakura Studio in Japan and in Montreal are dedicated to developing games on consoles, as one third of overseas market shares is taken by console games,” Hu said.

Tencent’s growth in gaming over the years has been driven a lot by acquisitions of or investments into game studios. That has been focused heavily on mobile but is now shifting to companies making games for PC and console.

“Nearly half of the 51 investments in 2021 are in companies with experience developing PC and console games. Many of these are domestic,” according to a Niko Partners report published in May.

Until 2020, most of Tencent’s domestic investments went into mobile gaming while PC and console investments were done overseas, the report noted.

And Tencent-owned developer TiMi Studio has opened offices in Montreal and Seattle to focus on PC and console games.

“Chinese studios are looking to match their overseas peers in game development by standardizing tools, creating advanced production processes, and investing in large teams to ensure they can create large scale AAA quality titles that provide a competitive edge, meet evolving player demands, and reach a broad audience both in terms of geographies and platforms,” Ahmad from Niko Partners said.

AAA is an unofficial term to denote high-quality and popular games.

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Nvidia to join Dow Jones Industrial Average, replacing rival chipmaker Intel

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Nvidia to join Dow Jones Industrial Average, replacing rival chipmaker Intel

CEO of Nvidia, Jensen Huang, speaks during the launch of the supercomputer Gefion, where the new AI supercomputer has been established in collaboration with EIFO and NVIDIA at Vilhelm Lauritzen Terminal in Kastrup, Denmark October 23, 2024.

Ritzau Scanpix | Mads Claus Rasmussen | Via Reuters

Nvidia is replacing rival chipmaker Intel in the Dow Jones Industrial Average, a shakeup to the blue-chip index that reflects the boom in artificial intelligence and a major shift in the semiconductor industry.

Intel shares were down 1% in extended trading on Friday. Nvidia shares rose 1%.

The switch will take place on Nov. 8. Also, Sherwin Williams will replace Dow Inc. in the index, S&P Dow Jones said in a statement.

Nvidia shares have climbed over 170% so far in 2024 after jumping roughly 240% last year, as investors have rushed to get a piece of the AI chipmaker. Nvidia’s market cap has swelled to $3.3 trillion, second only to Apple among publicly traded companies.

Companies including Microsoft, Meta, Google and Amazon are purchasing Nvidia’s graphics processing units (GPUs), such as the H100, in massive quantities to build clusters of computers for their AI work. Nvidia’s revenue has more than doubled in each of the past five quarters, and has at least tripled in three of them. The company has sginaled that demand for its next-generation AI GPU called Blackwell is “insane.”

With the addition of Nvidia, four of the six trillion-dollar tech companies are now in the index. The two not in the Dow are Alphabet and Meta.

While Nvidia has been soaring, Intel has been slumping. Long the dominant maker of PC chips, Intel has lost market share to Advanced Micro Devices and has made very little headway in AI. Intel shares have fallen by more than half this year as the company struggles with manufacturing challenges and new competition for its central processors.

Intel said in a filing this week that the board’s audit and finance committee approved cost and capital reduction activities, including lowering head count by 16,500 employees and reducing its real estate footprint. The job cuts were originally announced in August.

The Dow contains 30 components and is weighted by the share price of the individual stocks instead of total market value. Nvidia put itself in better position to join the index in May, when the company announced a 10-for-1 stock split. While doing nothing to its market cap, the move slashed the price of each share by 90%, allowing the company to become a part of the Dow without having too heavy a weighting.

The switch is the first change to the index since February, when Amazon replaced Walgreens Boots Alliance. Over the years, the Dow has been playing catchup in gaining exposure to the largest technology companies. The stocks in the index are chosen by a committee from S&P Dow Jones Indices.

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Super Micro’s 44% plunge this week wipes out stock’s gains for the year

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Super Micro's 44% plunge this week wipes out stock's gains for the year

Charles Liang, chief executive officer of Super Micro Computer Inc., during the Computex conference in Taipei, Taiwan, on Wednesday, June 5, 2024. The trade show runs through June 7. 

Annabelle Chih | Bloomberg | Getty Images

Super Micro investors continued to rush the exits on Friday, pushing the stock down another 9% and bringing this week’s selloff to 44%, after the data center company lost its second auditor in less than two years.

The company’s shares fell as low as $26.23, wiping out all of the gains for 2024. Shares had peaked at $118.81 in March, at which point they were up more than fourfold for the year. Earlier that month, S&P Dow Jones added the stock to the S&P 500, and Wall Street was rallying around the company’s growth, driven by sales of servers packed with Nvidia’s artificial intelligence processors.

Super Micro’s spectacular collapse since March has wiped out roughly $55 billion in market cap and left the company at risk of being delisted from the Nasdaq. On Wednesday, as the stock was in the midst of its second-worst day ever, Super Micro said it will provide a “business update” regarding its latest quarter on Tuesday, which is Election Day in the U.S.

The company’s recent challenges date back to August, when Super Micro said it would not file its annual report on time with the SEC. Noted short seller Hindenburg Research then disclosed a short position in the company and wrote in a report that it identified “fresh evidence of accounting manipulation.” The Wall Street Journal later reported that the Department of Justice was in the early stages of a probe into the company.

Super Micro disclosed on Wednesday that Ernst & Young had resigned as its accounting firm just 17 months after taking over from Deloitte & Touche. The auditor said it was “unwilling to be associated with the financial statements prepared by management.”

A Super Micro spokesperson told CNBC that the company “disagrees with E&Y’s decision to resign, and we are working diligently to select new auditors.” Super Micro does not expect matters raised by Ernst & Young to “result in any restatements of its quarterly financial results for the fiscal year ended June 30, 2024, or for prior fiscal years,” the representative said.

Analysts at Argus Research on Thursday downgraded the stock in the intermediate term to a hold, citing the Hindenburg note, reports of the Justice Department investigation and the departure of Super Micro’s accounting firm, which the analysts called a “serious matter.” Argus’ fears go beyond accounting irregularities, with the firm suggesting that the company may be doing business with problematic entities.

“The DoJ’s concerns, in our view, may be mainly about related-party transactions and about SMCI products ending up in the hands of sanctioned Russian companies,” the analysts wrote.

In September, the month after announcing its filing delay, Super Micro said it had received a notification from the Nasdaq indicating that its late status meant the company wasn’t in compliance with the exchange’s listing rules. Super Micro said the Nasdaq’s rules allowed the company 60 days to file its report or submit a plan to regain compliance. Based on that timeframe, the deadline would be mid-November.

Though Super Micro hasn’t filed financials with the SEC since May, the company said in an August earnings presentation that revenue more than doubled for a third straight quarter. Analysts expect that, for the fiscal first quarter ended September, revenue jumped more than 200% to $6.45 billion, according to LSEG. That’s up from $2.1 billion a year earlier and $1.9 billion in the same fiscal quarter of 2023.

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Apple to buy Pixelmator, the iPhone image editing app with AI features

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Apple to buy Pixelmator, the iPhone image editing app with AI features

Peopl walk outside Steve Jobs Theater at the Apple Park campus before Apple’s “It’s Glowtime” event in Cupertino, California, on Sept. 9, 2024.

Nic Coury | AFP | Getty Images

Apple will buy Pixelmator, the creator of image editing apps for Apple’s iPhone and Mac platforms, Pixelmator announced Friday in a blog post.

Pixelmator, a Lithuanian company, was founded in 2007, and in recent years has been best known for Pixelmator and Pixelmator Pro, which compete with Adobe Photoshop. It also makes Photomator, a photo editing app.

Apple has highlighted Pixelmator apps over the years in its keynote product launches. In 2018, Apple named Pixelmator Pro its Mac App of the year, citing the company’s enthusiastic embrace of Apple’s machine learning and artificial intelligence capabilities, such as removing distracting objects from photos or making automated color adjustments.

We’ve been inspired by Apple since day one, crafting our products with the same razor-sharp focus on design, ease of use, and performance,” Pixelmator said in its blog post.

Apple does not acquire as many large companies as its Silicon Valley rivals. It prefers to make smaller acquisitions of companies with products or people that it can use to create Apple features. Neither Pixelmator nor Apple provided a price for the transaction.

Pixelmator said in its blog post that there “will be no material changes to the Pixelmator Pro, Pixelmator for iOS, and Photomator apps at this time.”

Earlier this week, Apple released the first version of Apple Intelligence, a suite of features that includes photo editing abilities such as Clean Up, which can remove people or objects from photos using AI.

Apple has acquired other popular apps that received accolades at the company’s product launches and awards ceremonies.

In 2020, Apple bought Dark Sky, a weather app that eventually became integrated into Apple’s default weather app. In 2017, it bought Workflow, an automation and macro app that eventually became Shortcuts, the iPhone’s scripting app, as well as the groundwork for a more capable Siri assistant.

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