Arming up with AR
Battling chip shortages, Automakers calling it quits, and NFT craze hits artists.
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Market summary: 📊
Decent midweek bounce back in India, kicking off the new fiscal year on a high. US markets showed some strength too, slowly getting past a rather choppy first 3 months.
US:
S&P 500 - up 1.18%
Nasdaq 100 - up 1.82%
India:
Nifty 50 - up 1.20%
Sensex - up 1.05%
Shot of espresso ☕
✅ Battling chip shortages—global semiconductor pioneer TSMC will pump a massive $100 billion over the next 3 years to set up new plants and increase capacity to make up for the global semiconductor shortage, leveraging the situation to secure itself more market share in the long run. Also, the move is meant to counter Intel’s recent plans of investing $20 billion in turning around its own business.
✅ Cashing in on the short-video craze—OnMobile, a diversified digital media company (essentially works with smartphone OEMs and carriers to help them monetize their subscriber base through ads or via pre-installed software as well as a bunch of other carrier services), just led a $13 million round in short-video platform Chingari, buying out a 10% of the business. It's a fascinating combo—OnMobile could leverage its existing relationships with smartphone makers to bring Chingari as one of the default-apps across millions of generic Android smartphones sold in India, overnight giving Chingari’s 50 million or so current reach a massive boost. And now you got a legit way to invest in the short video game through the public markets! Go $ONMOBILE.
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US Army breathes life into Augmented Reality wearables 🥽
Microsoft signed an unprecedented $22 billion, 10 year contract to supply the US Army with over 120,000 augmented reality Hololens headsets, marking probably the first large scale commercial AR-glasses order for any organization globally.
Armed with thermal night sensors, these headsets leverage fancy machine learning to create lifelike combat situations, helping soldiers train, while offering post-combat analysis, improving decision-making, awareness, and data capture. The deal had been baking since 2018, when the Army had purchased $480 million worth of 100,000 prototype headsets for testing from Microsoft. Now they’re back for more.
Meanwhile, some woke Microsoft employees weren’t too pleased with the arrangement—tech being used to kill people yada yada. But when Uncle Sam hands you a gorgeous looking $22 billion check… dare you say no.
Most importantly, this is the second time MSFT has managed to woo the men in uniform—just 2 years ago they won a $10 billion contract to completely migrate the Army’s systems to Azure Cloud.
Bottomline: the US defense force’s confidence in spending $22 billion gives the market immense confidence that wearable AR technology has reached a level of fidelity and utility that perhaps a consumer grade application isn’t that far out.
Far as Microsoft goes, US defense spending is a $700 billion annual gambit, and Nadella and his team’s continued success in winning contracts here throws a massive addressable market at the company’s disposal that only a few had ever expected.
Quick auto-industry update 🤷♀️
Ford and Mahindra are calling it quits in India.
The duo had joined hands to extensively collaborate on 3 major SUV projects in India, as well as agreeing to share technology more widely around drivetrain, key components, manufacturing processes, and sharing suppliers to help each other chip away a larger share of the Indian automotive market.
But the deal sadly went sour before seeing the daylight. There’s no clue why, but we suspect either Mahindra was asking for too much control, or the unit economics simply weren’t working out in Ford’s favor.
What matters: foreign companies, especially Americans, have found it extremely difficult to make headway into the price-conscious, size constrained, yet feature-max demands of the Indian auto consumer. With less than 2% market share for Ford in India, and a hard EV pivot awaiting its global business, we see limited options for the company’s business here in India.
IT giants continue to arm up 💪
Wipro made another splashy purchase, acquiring an Australian cybersecurity company called Ampion for $117 million, as old school IT aggressively retools to solve problems of the modern cloud-first computing era.
Ampion with its 500 or so employees, serves an elite base of 150 clients, offering specialized services on remote cybersecurity software, devops and maintenance, and broad cloud implementation services. Wipro is counting on the acquisition to bolster its cloud services offering in Australia, with a wider integration of Ampion’s services into the Wipro catalog in due time.
Key takeaway: over the last 12 months or so, leading IT companies have easily made 30-35 acquisitions to tune their operations for a cloud and remote future. Now as enterprises begin to slowly open up their wallets on IT spending in recovery, growth is expected to considerably accelerate for the leaders.
Closing out—moving back on them rates 📈
Mid week, GOI had released a new set of lower interest rates for basic savings products popular among the middle class, including papa’s favorite provident fund, and the national savings certificate which barely matches inflation!
For example, annual returns on provident funds were slashed from 7.1% to 6.4%, announcing a cut of 1.1% for the new business quarter.
But then the next day the finance minister abruptly decided to roll back the cuts, maintaining rates from the previous quarter instead, claiming the release was actually erroneous. Opposition quickly smelt a political rat, alleging the theatre was part of the ongoing election-campaigning agenda to placate middle class households.
Meanwhile, if you’ve been hatching your eggs on the market’s EPIC rally for the last 12 months… can’t blame ya for not caring too much.
What else are we snackin’ 🍿
💪 More traditional artists jump on NFT bandwagon - popular musician The Weeknd is teaming up with Nifty Gateway to auction off a piece of digital art for $6.6 million - including an unreleased song which is not be available on any other platform. The song deal is super intriguing and could potentially open the door for other artists to follow.
😷 Still not done with lockdowns - With rising COVID cases in the country, France will enter a four-week lockdown again starting Saturday. Schools, offices, public places will be closed and a curfew will be imposed during the night. It's a nightmare for small businesses and the economy.
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