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The recent earnings calls of the world’s two largest memory chipmakers signaled that weak demand may have finally bottomed out.

Samsung’s operating profit in the third quarter jumped 262.6% as compared to the second quarter. This followed a 85.15% drop in first quarter operating profit from the previous quarter and a small 4.68% improvement in second-quarter operating profit from the first quarter.

SK Hynix in its quarterly report said that its dynamic random-access memory business returned to profit in the third quarter, after losses in the first two quarters of this year.

“One of the big drivers of memory price recovering is industry-wide supply reduction and thus falling inventories,” James Lim, senior research analyst at Dalton Investments, told CNBC.

“Inventories at personal computer and mobile customers seem to have come down a lot and very low memory prices tend to induce restocking or having more memory content per device,” said Lim.

The South Korean companies are the world’s two largest makers of DRAM chips, according to data from market research firm TrendForce, with U.S.-based Micron trailing in third place. Such memory chips are found in consumer devices such as laptops and smartphones.

“We received numerous purchase inquiries amid widening awareness of the industry reaching a bottom, following the industry-wide production cuts,” Samsung said in its earnings report last week. Chipmakers have been running down excess inventories by scaling back production.

During the pandemic, companies stockpiled memory chips to meet record electronics demand, but were left with excess inventory when that pressure eased. Inflation has caused consumers to rein in spending and cut back on purchases of consumer devices, driving down demand and prices for memory chips.

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Kazunori Ito, director of research at Morningstar, said that “earnings calls confirmed that the memory industry has bottomed out as expected.”

“DRAM average selling prices, or ASPs, rose by midsingle digits for Samsung and 10% for SK Hynix, sequentially, and it was the first time in eight quarters that Samsung experienced a price increase,” Ito said in a Nov. 1 report.

“We have made minor adjustments to our earnings forecasts for South Korean memory suppliers,” Ito said. The financial services firm added that Samsung’s shares are “undervalued” while SK Hynix’s shares “have about 18%-20% upside to our fair value estimate.”

Other chipmakers have also projected strong outlooks.

The world’s largest contract chipmaker Taiwan Semiconductor Manufacturing Company exceeded analysts’ expectations and predicted the worst could soon be over for the chip industry. TSMC makes the most advanced processors for companies like Apple and Nvidia based on Arm‘s architecture.

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U.S.-based Qualcomm also gave a strong forecast for the current quarter, pointing to a chip recovery. Qualcomm makes the processors at the heart of most high-end Android devices and many lower-end phones as well.

“Although inventory levels peaked in mid-2023, they are still at the high levels, especially for NAND [flash memory],” Ito of Morningstar said.

NAND is another important memory chip that often works together with DRAM in PCs, servers and smartphones. It stores data but does not require power like DRAM.

“As a result, memory suppliers are expected to continue maintaining lower capacity utilization and to remain cautious about increasing production capacity next year, which should be favorable for memory prices due to limited supply,” Ito said.

TrendForce said it expects memory suppliers to continue “scaling back production of both DRAM and NAND Flash in 2024,” in particular in the “financially struggling NAND Flash sector.” The research firm also projected DRAM and NAND Flash demand to increase by 13% and 16% respectively in 2024.

AI boom to uplift profits

In the third quarter, strong demand for advanced, high-performance chips in generative AI has helped offset a slowdown for chips found in computers and smartphones, SK Hynix said in its earnings report.

“On servers, AI demand has been another strong driver,” said Lim of Dalton Investments.

ChatGPT and other large language models need a lot of advanced memory chips, which enable such generative AI models to remember details from past conversations and user preferences in order to generate humanlike responses.

“DRAM business … is expected to continue to improve along with the generative AI boom. The NAND flash business, which continues to suffer losses, is also showing signs of improvement,” SK Hynix said in a statement.

On the outlook for memory demand, Samsung said it expects fourth-quarter demand to pick up with year-end promotions, new product launches by its major customers as well as strong demand for generative AI.

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E-commerce firm Shopee agreed to adjust its practices in Indonesia after watchdog says it violated competition law

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E-commerce firm Shopee agreed to adjust its practices in Indonesia after watchdog says it violated competition law

BRAZIL – 2022/03/22: In this photo illustration, a woman’s silhouette holds a smartphone with a Shopee logo in the background. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)

Rafael Henrique | Sopa Images | Lightrocket | Getty Images

Shopee and its courier service Shopee Express agreed to adjust its current practices after admitting to breaching a competition rule in Indonesia, the country’s watchdog said on Wednesday.

Shopee is the e-commerce arm of Southeast Asian tech giant Sea Limited.

“Shopee and Shopee Express admitted that they had violated Law no. 5 of 1999, regarding delivery (courier) services on the Shopee platform by agreeing to various behavioral change points determined by the KPPU Council in the hearing yesterday,” Indonesia Competition Commission Komisi Pengawas Persaingan Usaha said in a Google-translated statement.

KPPU said Shopee proposed adjustments to its current practices on June 20 which were approved by the commission council.

“Shopee Indonesia attended a meeting with KPPU on 25 June to discuss points of the integrity pact that was shared by KPPU last week. On 20 June, Shopee proposed changes to our user interface to enhance our services and demonstrate our compliance in providing the best services to our users, in accordance with the feedback provided and approved by the KPPU,” Radynal Nataprawira, head of public affairs at Shopee Indonesia, told CNBC in emailed comments.

“Shopee is always committed to complying with all applicable regulations and laws in the Republic of Indonesia in conducting our business operations,” said Nataprawira.

Last month, KPPU revealed its preliminary investigation found that Shopee allegedly prioritized Shopee Express in every package delivery to consumers.

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The watchdog also accused Shopee of “discriminatory behavior,” saying Shopee Express and another delivery service J&T Express were “automatically activated en masse on the seller dashboard” while other companies that also have good service performance did not get selected automatically.

KPPU investigators also named an employee who held director positions in both Shopee Indonesia and Shopee Express, saying this “dual position” has the ability to influence competition and control the behavior of both companies.

KPPU is also probing Shopee rival Lazada, the Southeast Asian e-commerce arm of Chinese tech giant Alibaba, saying it has found indications of similar violations.

“If it is later proven to have violated, Lazada can be subject to a fine of a maximum of 50% of the net profit or 10% of the total sales it earned in the relevant market during the period of the violation,” KPPU said in a statement last month.

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Europe is at risk of over-restricting AI and falling behind U.S. and China, Dutch prince says  

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Europe is at risk of over-restricting AI and falling behind U.S. and China, Dutch prince says  

Prince Constantijn is special envoy to Techleap, a Dutch startup accelerator.

Patrick Van Katwijk | Getty Images

AMSTERDAM — Europe is at risk of falling behind the U.S. and China on artificial intelligence as it focuses on regulating the technology, according to Prince Constantijn of the Netherlands.

“Our ambition seems to be limited to being good regulators,” Constantijn told CNBC in an interview on the sidelines of the Money 20/20 fintech conference in Amsterdam earlier this month.

Prince Constantijn is the third and youngest son of former Dutch Queen Beatrix and the younger brother of reigning Dutch King Willem-Alexander.

He is special envoy of the Dutch startup accelerator Techleap, where he works to help local startups grow fast internationally by improving their access to capital, market, talent, and technologies.

“We’ve seen this in the data space [with GDPR], we’ve seen this now in the platform space, and now with the AI space,” Constantijn added.

European Union regulators have taken a tough approach to artificial intelligence, with formal regulations limiting how developers and companies can apply the technology in certain scenarios.

The bloc gave final approval to the EU AI Act, a ground-breaking AI law, last month.

Officials are concerned by how quickly the technology is advancing and risks it poses around jobs displacement, privacy, and algorithmic bias.

The law takes a risk-based approach to artificial intelligence, meaning that different applications of the tech are treated differently depending on their risk level.

For generative AI applications, the EU AI Act sets out clear transparency requirements and copyright rules.

All generative AI systems would have to make it possible to prevent illegal output, to disclose if content is produced by AI and to publish summaries of the copyrighted data used for training purposes.

But the EU’s Ai Act requires even stricter scrutiny for high-impact, general-purpose AI models that could pose “systemic risk,” such as OpenAI’s GPT-4 — including thorough evaluations and compulsory reporting of any “serious incidents.”

Prince Constantijn said he’s “really concerned” that the Europe’s focus has been more on regulating AI than trying to become a leader innovating in the space.

“It’s good to have guardrails. We want to bring clarity to the market, predictability and all that,” he told CNBC earlier this month on the sidelines of Money 20/20. “But it’s very hard to do that in such a fast-moving space.”

“There are big risks in getting it wrong, and like we’ve seen in genetically modified organisms, it hasn’t stopped the development. It just stopped Europe developing it, and now we are consumers of the product, rather than producers able to influence the market as it develops.”

Between 1994 and 2004, the EU had imposed an effective moratorium on new approvals of genetically modified crops over perceived health risks associated with them.

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The bloc subsequently developed strict rules for GMOs, citing a need to protect citizens’ health and the environment. The U.S. National Academies of Sciences says that genetically modified crops are safe for both human consumption and the environment.

Constantijn added that Europe is making it “quite hard” for itself to innovate in AI due to “big restrictions on data,” particularly when it comes to sectors like health and medical science.

In addition, the U.S. market is “a much bigger and unified market” with more free-flowing capital, Constantijn said. On these points he added, “Europe scores quite poorly.”

“Where we score well is, I think, on talent,” he said. “We score well on technology itself.”

Plus, when it comes to developing applications that use AI, “Europe is definitely going to be competitive,” Constantijn noted. He nevertheless added that “the underlying data infrastructure and IT infrastructure is something we’ll keep depending on large platforms to provide.”

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Waymo opens robotaxi service to all San Francisco users

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Waymo opens robotaxi service to all San Francisco users

A Waymo rider-only robotaxi is seen during a test ride in San Francisco on Dec. 9, 2022.

Paresh Dave | Reuters

Waymo robotaxis are now open to all users in San Francisco, expanding the self-driving ride-hailing service, which has been available in the city to a limited number of riders.

In a blog post on Tuesday, Waymo said nearly 300,000 people have signed up for the service, called Waymo One, since the Alphabet-owned company opened its waitlist. The company began commercial passenger operations in August after a period of testing.

“We’re committed to growing our service gradually and responsibly,” Waymo said in the post. “We work closely with city and state officials, first responders, and advocates for road safety to ensure our service helps local communities gain access to reliable, safe, environmentally friendly transportation and has a positive impact on mobility.”

It is the second citywide rollout for Waymo, following Phoenix in 2020. Waymo One also operates in limited capacity in Los Angeles and Austin, Texas. As of February, the company had approximately 700 vehicles in the Waymo One fleet, including about 300 cars as part of its San Francisco service.

Driverless vehicles have faced some public backlash in recent months following collisions and other accidents. In October, General Motors’ Cruise autonomous vehicle unit paused all driverless operations after collisions led to investigations and a suspension of its licenses in California.

However, Waymo has experienced less controversy. The company has a large public affairs operation and communicates closely with the National Highway Traffic Safety Administration and local first responders.

In total, the 15-year-old project, which became Waymo in 2016, has driven about 20 million fully autonomous miles and nearly two million paid ride-hail trips, Waymo said. The company said it has logged 3.8 million rider-only miles in San Francisco as of the end of March.  

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