Tag: Business

When was Waymo approved?

In 2017, Texas passed a bill to allow driverless cars on the road.

Later that year, Waymo started to bring driverless cars to the road in Texas.

California introduced rules around driverless testing on public roads in Feb 2018.

Waymo won the first driverless permit to test in California in Oct 2018 for ~3 dozen cars.

…

In 2020, Waymo started to open its fully driverless service to the general public in Phoenix.

…

In 2024, Waymo offered the service to anyone in SF.

Lots of small steps.

Each state/city can be different. Requirements can be different & definition of “driverless” can be different.

Area can be limited.

Target passengers can be limited.

etc.

Where was Waymo’s technology at?

In 2018, Waymo’s miles per disengagement was 11,154 miles.

In 2023, Waymo’s miles per disengagement was 17,311 miles.

On average, people may drive 10k+ miles per year in the US.

So on average you will only experience one “Disengagement” in a year in 2018, which is a decent rate.

Where is Tesla FSD at?

The latest 12.5 seems to have 1 critical disengagement per 123 miles?

This needs to iterate & improve over time to be fully driverless.

Every Chinese companies’ overseas story needs a regulatory check if involves the US

Every company needs to go through this process.

Ask this question – has the overseas business been challenged?

Quality companies should welcome the challenge and prove themselves to overseas regulators.

Only if the company passes the test, the international story is fair and square.

PDD/Temu is going through this process; the challenge just came up around de minimis exemption.

CALT’s licensing agreements in the US is also being questioned to some extent.

Wuxi Bio is going through this process (US Biosecure Act) and hasn’t proved itself yet.

Beigene is being challenged over IP by Abbvie.

No need to mention ByteDance/TikTok.

etc.

Chinese companies need be prepared to fight uphill battles in overseas if they want the US market. Behaving better then a local company seems to be a minimum; be careful about anything that may seem “unfair” for overseas regulators.

New era for Chinese liquor

1/ Post pandemic, the growth rate of various food consumption products did not meet the expected rapid increase. Additionally, government consumption is strictly limited, reducing the scenarios that support alcohol consumption, leading to insufficient effective market demand.

2/ Under the guidance of leading brands like Moutai directly increasing sales volumes and strictly controlling retail price hikes, the price increase room for high-end to sub-high-end products has been compressed, and the main business revenue and profitability of well-known products have declined.

3/ Key enterprises and traditional key production areas continue to expand brewing facility construction, and the production capacity of solid-state raw liquor is gradually being released. Inventories of raw liquor and finished liquor continue to increase.

4/ Well-known brands are accelerating their expansion to broader sales regions and nationwide layouts, penetrating into third- and fourth-tier markets and through omni-channel, both online and offline. The regional brands’ baijiu market has visibly shrunk.

5/ After the revised standards for beverage alcohol classification and baijiu industrial terminology were issued, they affected the raw materials of liquid baijiu. The labeling of food tags has increased the cost of some low-end baijiu.

6/ The adjustment of the national industrial structure catalog lifted restrictions on baijiu production lines. Various regions, especially traditional baijiu-producing areas, have successively approved the establishment of a number of new baijiu enterprises, leading to a slight increase in the total number of baijiu enterprises. However, due to the current macroeconomic environment, the number of large-scale baijiu enterprises has not increased but decreased. We have now entered an era where there is neither a shortage of alcohol nor a shortage of good alcohol.

see the other post for Chinese Baijiu consumption – already quite high volume, hard to grow, likely decline IMO.

Nvidia revenue problem

While investors mostly focus on below whispered q3 guidance, or that revenue beat is smaller than recent quarters, a less discussed problem seems to be declining contribution from the US.

Singapore revenue contribution to Nvidia is rising qoq to 19%, while the US declined to 43% from 52%.

In absolute number, US revenue declined from $13.5bn to $13bn and Singapore rose from $4bn to $5.6bn.

Sure Nvidia says it’s not an indication for the end location. But Malaysia/Indonesia is likely, where end users include ByteDance or US CSP services (whose end user is ByteDance).

See the other post for ByteDance capex – it’s probably $10bn+ per year on data centers, or 1GW of IT load assuming $1mn per MW.

Tencent’s 3A games problem

Black Myth: Wukong is hot. Tencent is a shareholder in Game Science (developer of Wukong), a distributor for Wukong in China, and a significant shareholder in Epic Games (Wukong uses Epic Games’ Unreal Engine).

However, Tencent might have more problems with the rise of 3A games.

1/ For game development, mobile game are too profitable for Tencent. 3A games incurs more costs and is hard to monetize over the long run if can’t develop a long lasting IP.

2/ For game investment, Tencent can’t leverage its powerful Wechat/QQ as much in distribution, which can help increase portfolio value by a lot. In addition, 3A games take much longer to develop and can fail – Tencent is hard to wait that long with unknown result. So overall, the investments become more unpredictable for Tencent in 3A studios.

 

Macau gaming – why bother?

Concerns for those names.

1/ what’s the long-run prospect for gambling? 

seems that the rich shall just go to Singapore etc.; too risky in Macau

mass market? why would the PRC gov wants gambling to grow?

for certain people (mainland gov officials etc.), it’s hard to go to Macau.

there is the licensing renewal issue every 10 years

2/ luxury shopping?

near-term most Chinese middle class families are still not in the mode of spending on luxury stuff.

shopping in tier-one cities like Shanghai, Beijing etc. is very convenient, although a bit pricer; if it’s in the $3k range, there’s not much difference (say 10% cheaper so saving $300 in shopping, but need to spend on flights & hotel)

the rich can go to Japan for shopping for weak Yen.

3/ food?

Portuguese egg tart? it’s very good indeed!

but you can try the KFC version of Portuguese egg tart in China; it’s about the same.

How much should ByteDance spend on data centers?

ByteDance has deep wallet: in 2023, it generated $40bn+ EBITDA.

To compare, Meta had over $60bn in EBITDA during the same period.

Meta will grow to $80bn ebitda in 2024, while capex guidance is as much as $40bn – half of its EBITDA.

Assuming half of Meta’s capex goes to data centers -> $20bn. And half of that goes to GPUs > $10bn; building out those data centers etc. will be $5-10bn for Meta.

ByteDance is also growing, say at a similar rate as Meta, so $50bn+ EBITDA in 2024. And assume ByteDance invests at a similar ratio as Meta, then it needs to spend ~$25bn in capex, or ~$12bn (or 60% of $20bn) for data centers – $6bn  for GPUs, and $3-6bn to build out data centers etc.

An underrated growth driver for Spotify

Not sure if it’s been widely seen as a growth driver, but Spotify is actually not blocked in China!

Yes, you can use Spotify w/o VPN in China, including podcasts.

If you are on a short trip to China, you can use Spotify for 14 days (no payment needed, just regular account). This corresponds to the visa-free 15 day stay in China for several countries – that list is expanding.

If you are staying in mainland China longer, you need a premium account. With Spotify Premium in mainland China, you don’t need VPN.

This is rare – for any “foreign” internet service provider to provide service in its original format.

How will Elon Musk do? (Trump trade)

While EV is not popular, Musk did pivot to Republican by moving headquarters of Tesla, and more recently, SpaceX and X.com.

Musk also donates to Trump.

But problem is that his companies are not something Trump likes.

Besides electric vehicles, Optimum, which can replace factory workers in the future, is probably not what Trump wants. Trump wants blue-collar jobs in the US.

Plus, although Musk bought Twitter and lifted the ban on Trump’s account, Trump hasn’t been active on X.com besides a post in Aug 2023.

On top of these, Musk might be too close to China, which would be frowned upon.