Global Industry Trends, Aug.-Sept., 20172018/07/17

 

1. Information and communications industry

l   5G to drive demand for RF demand

With the maturity of 5G technology, RF front-end chips will bring new market opportunities. Demand for RF PAs is expected to grow further. The traditional metal oxide semiconductor process will be replaced by GaN (Gallium Nitride) process. As 5G technology requires support for more components and higher frequency, GaAs manufacturing process will see steady growth.

The introduction of new RF technology will lead to RF PAs based on new manufacturing processes. GaN processes will become the mainstream manufacturing technology for RF PAs with an output power above 3W.

l   Development of mobile VR devices

Since 2015, a large number of vendors have been engaged in developing mobile VR devices. Although these vendors capitalized on consumer curiosity about VR and employed a low-cost strategy, the industry has failed to thrive. Google launched Daydream in 2016 to create a VR ecosystem and expand product offerings and applications by working with mobile device partners. However, these efforts failed to deliver the expected outcomes. As a result, the mobile VR market has faced extremely challenging times.

The main reasons for the failure include scarce resources invested in hardware and software by vendors, high product similarity, and poor consumer experience. Therefore, vendors must enhance the casings of the products and ergonomic design instead of focusing on cost reduction. However, new design will boost product prices. The estimated product price is US$100. In addition, Google must lower Daydream’s requirements to speed up the development of devices support this platform.

 

 

 

2. Pharma & biotech industry

l   The latest development of cancer drugs

At the 2017 ASCO (American Society of Clinical Oncology), drugs that received the most attention included nivolumab, pembrolizumab, bevacizumab, ipilimumab, trastuzumab, durvalumab, paclitaxel, cisplatin, gemcitabine, and carboplatin. These drugs are used to treat breast cancer, lung cancer, colorectal cancer, gastrointestinal stromal tumor, leukemia, melanoma, prostate cancer, myeloma, and ovarian cancer.

There are four other important developments. 1. A variety of IO (Immuno-Oncology) combinations are expected to deliver long-term outcomes. 2. With new drugs costing more than US$100,000 for a single course of treatment, cancer treatment will become more and more expensive. Hence, observational cancer research will become increasing important in clinical decision-making in order to reduce the financial burden on cancer treatment. 3. CAR T-cell therapy continues to expand. Novartis and Kite have filed for approval of their new CAR-T cell therapy in the US. 4. Genomic sequencing approach will play an important role in the development of cancer drugs. Applying genomic sequencing in patient selection will become the norm.

 

3. Fintech industry

l   Taiwanese third-party payment service providers consider adopting fingerprint recognition technology

Regulations for e-payment (third-party payment) security in Taiwan are divided into four types, depending on the amount of the transaction. For transactions under Type C, biometric authentication is allowed. However, the government currently forbids vendors to authenticate identity using the fingerprint recognition function on a mobile phone. Instead, they have to collect fingerprint data by themselves and use specific apps for authentication.

The Bankers Association is planning to ask the Financial Supervisory Commission to amend the regulations. To facilitate transactions, the Bankers Association hopes the biometric authentication methods stipulated in Regulations Governing the Standards for Information System and Security Management of Electronic Payment Institutions will allow the use of the fingerprint recognition function on a smartphone.

For consumers, providing their fingerprint data for e-payment service providers poses a high risk for data leakage. Most e-payment transactions in Taiwan fall under Type A and B, so users tend to use a fixed set of password and a one-time passcode sent via text message for authentication. According to TRI, about 50% of smartphones have provided fingerprint recognition function. As international mobile payment brands (Apple Pay and Samsung Pay) have supported authentication via Smartphones’ fingerprint recognition function, the amendment to the regulations will enhance the convenience of e-payment and benefit the development of Taiwanese third-party payment service providers.

Europe and the US place a high focus on regulating the security of authentication. In emerging countries where traditional financial services have not prevailed, Internet financing and financial inclusion has seen rapid progress. In addition, privacy protection regulations in emerging countries are less strict. As a result, emerging countries have led Europe and the US in the development of biometric recognition.

l   China to regulate P2P lending

P2P (Peer to Peer) lending is booming in China. In August 2017, CBRC (China Banking Regulatory Commission) released the Guide to the Disclosure of Information on Business Activities of Peer-to-peer Lending Information Intermediaries to standardize the disclosure of information by P2P lending companies. The Guide requires P2P lending companies to disclose their backup plans as well as how they manage and approve loans. During the first five days of every month, they must reveal information on their balance, the number of loans granted, and overdue loans on their websites, Weibo accounts, and mobile apps. They also need to provide lenders with information regarding their borrower’s overdue loans and loans on other platforms to prevent them from borrowing across multiple platforms.

As of July 2017, there were 2090 P2P lending companies in China and 700 of which have signed custody agreements with banks. However, only 450 companies’ custody systems have come online. Less than 10% of the total platforms have met the custody regulations. Although this Guide will significantly increase P2P lending companies’ compliance costs, it will also improve the transparency of P2P lending.

The Internet Finance Information Disclosure Standards for P2P Lending created by NIFA (The National Internet Finance Association of China) in October 2016 established 96 information disclosure indexes. As these are self-regulatory standards without legal effect, the outcomes are poor. In addition, it is hard for P2P lending companies to prevent a borrower from borrowing across multiple platforms if he/she intends to conceal it.

 

4. E-commerce industry

l   Warehouse and logistics robots become a trend

Amazon has introduced Kiva robots that help with picking tasks at its US logistics warehouses to improve logistics efficiency. The company is also devoted to developing logistics automation technology. Chinese company JD.com has developed its own picking robots which it started testing in a Shanghai distribution center. JD.com is likely to open a fully automated warehouse in 2018. Alibaba’s affiliate Cainiao Network Technology established an automated warehouse which started operation in August 2017. Hundreds of AGV (Automated Guided Vehicle) robots have been used inside the warehouse to move goods together or independently. Alibaba has also collaborated with Chinese car vendors SAIC Motor, Dongfeng Motor, and Weifang Rainchst Automobile on developing new energy vehicles and smart logistics.

A robot picker currently works at only half the speed of a human. Using robots to tackle all picking tasks can cut down 20% of labor cost for e-commerce vendors. However, Kiva robots can move goods to the pickers, but cannot sort, pack, and ship the goods. Therefore, advanced robot technology will remain the focus of future development.

5. Startups industry

l   Taiwanese vendors chase after the UAV market aggressively 

With enormous business opportunities, the UAV (Unmanned Aerial Vehicle) market has continued to grow. The market is expected to reach US$6 billion in late 2017 and exceed US$11.2 billion in 2020. Taiwanese vendors capable of providing customized models as well as system integration services and components have geared up to capture the huge potential of the commercial UAE market. For example, industry giants GEOSAT Aerospace & Technology, Thunder Tiger, and AVIX Technology have unveiled their new technology.

GEOSAT uses NEC’s facial recognition technology to expand the use of its drones to public safety and anti-terrorism operations. With the ability to provide customized products rapidly, AVIX Technology has developed variable-pitch multi-rotor drones with a GPS autopilot flight system to provide automatic flight guidance. Thunder Tiger has developed coaxial dual-rotor drones and high-precision RTK (Real Time Kinematic) positioning technology.

In terms of applications and market segments, most Taiwanese vendors have aimed at mapping and agricultural spraying. There are significant business opportunities for traditional drone helicopters in the agricultural spraying market. Among the 12000 pesticide companies in Taiwan, almost every company needs agricultural spraying services. Crop-spraying helicopters not only increase operation efficiency but also reduce the risk of exposure to pesticides.

l   Opportunities for the Taiwanese AI industry

Taiwan has been criticized for lacking the capacity to develop AI as Taiwan has missed the revolutions of software, Internet, search engine, and social media. In fact, the development of a valuable and predictive AI system relies on the quality and quantity of data. What kinds of data are needed? How much data is needed? There are no answers to these questions until the purpose of the AI system is determined. Without vision and planning, the data collected will not meet the requirements of an AI system due to absence of key data or low quality.

Most Taiwanese vendors trying to exploit big data have difficulty using or extracting value from the data after deploying sensors in large scale to collect big data. Without systematic collection of data and deployment of sensors in line with their goals, these vendors have wasted their money.

AI is a means to enhance services and products. Therefore, TRI believes creating a quality business model before making inroads into the AI market is the right way to do. Vendors must integrate different industries’ domain knowledge before introducing the technology. After evaluating the competitive advantages of their business models, they can collect data and choose the algorithm and hardware to use based on their purposes. This is the only way to successfully expand into the market or achieve economic benefits.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Department of Economic Development, Taipei City Government

Publication Date: October, 2017



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