“Technological progress has merely provided us with more efficient means for going backwards.” – Said English writer and philosopher Aldous Leonard Huxley
Mad Hedge Technology Letter
January 6, 2020
Fiat Lux
Featured Trade:
(THE FUTURE IS HERE)
(USHIO)
Transistor capacity has always put the kibosh on semiconductor chip performance.
Chipmakers have for decades drained investment into a revolutionary Japanese technique to stretch the limits of physics and cram more transistors onto pieces of silicon.
A secretive Japanese company that mastered the skill of manipulating light for applications is about to go mainstream with cutting-edge technology.
Ushio Inc. achieved the once thought impossible task of refining powerful, ultra-precise lights needed to test chip designs based on extreme ultraviolet lithography (EUV), a process through which the next generation of semiconductors will be made.
The milestone means that the Japanese company will become a prominent player in future chipmaking and the technology that harnesses it.
“The infrastructure is now mostly ready,” said CEO Koji Naito in an interview.
Testing equipment was primarily holding back extreme ultraviolet lithography (EUV), but with that hold-up dealt with, production efficiency and yields can finally go up setting the stage for electronic manufacturers with the possibilities of producing substantially better consumer products.
The Tokyo-based company developed a light source for equipment used to test what are known as masks: glass squares slightly bigger than a CD case that act as a stencil for chip designs. These templates must be picture-perfect, even an iota of error in one of them can render every chip in a large batch unfit.
That’s where Ushio seamlessly slots in.
Its technology operates lasers to vaporize liquid tin into plasma and produce light closer in wavelength to X-rays than the spectrum visible to the human eye.
That light aids chipmakers in detecting errors in the product.
This process takes a room-sized machine that looks like a sci-fi death ray and requires a phalanx of workers to operate.
After 15 years of industrious development, the EUV business will generate profits next year.
Only Intel Corp. (INTC), Samsung Electronics Co., and Taiwan Semiconductor Manufacturing Co. (TSM) desire to go smaller than the 7-nanometer processes that are the current status quo of central processing unit (CPU) design.
The focus on niche areas and creating things that others can’t is set to pay dividends for Ushio.
Ushio is poised to seize control of the market for light sources used in the testing of patterned EUV masks, there are several boutique tech companies in the Tokyo area that are incessantly focused on high-precision manufacturing.
Ushio dominates lithography lamps used to make liquid crystal displays with 80% market share and controls 95% of the supply of excimer lamps used in silicon wafer cleaning.
Their secret sauce is balancing mass production with craftsmanship.
Materials like quartz glass are arduous to work with and possess peculiar thermal expansion properties from metals like the molybdenum in which they are housed.
I know this stuff seems like out of the realm of science fiction, but Japanese-specialized firms have always been at the vanguard of the semiconductor technology and that is still the same today.
Ushio was established in 1964, and it was the first Japanese company to develop and produce halogen lamps.
Starting from 1973, fishermen used its lights to catch squid in Tokyo Bay.
The firm has succeeded in more than tripling its sales over the past 25 years.
The company is now venturing into the use of sodium lamps to nurture plants and using ultraviolet light calibrated to such a precise wavelength to kill bacteria without damaging human skin.
“If you can't make it good, at least make it look good.” – Said Founder of Microsoft Bill Gates
Mad Hedge Technology Letter
January 3, 2020
Fiat Lux
Featured Trade:
(IS THE WORLD YOUR OFFICE?)
Digital nomads are frequently typecast as tech-savvy Millennials remotely working via an Internet connection while living as an expatriate.
However, they come in all shapes and sizes.
The charming Baltic country of Estonia is offering a visa targeted at digital nomads and other countries will likely copy this progressive type of visa.
Estonia’s revolutionary visa allows digital nomads to work in Estonia all year round.
This visa also includes 90 days of travel in the Schengen Zone of mainland Europe.
This visa isn't targeted at EU citizens who already reap the benefits of freedom of movement within the EU.
Estonia is on a mission to stockpile innovative minds in a country that prides itself as a start-up hub.
More importantly, jacking up the volume of tech workers is becoming an existential issue for many sovereign countries as developed countries reap the monetary rewards from such new cutting-edge technology.
The Baltic nation of Estonia was an architect of tech innovation in the past, rolling out Skype before Facebook and Twitter existed.
Skype was entirely comprised of local Estonian developers who achieved this in the early 2000s.
Quite a feat for such a small population.
These digital nomads create communities that harness an enormous flow of tech know-how.
Tallinn, Estonia has erupted into a top 10 digital stronghold attracting hordes of digital nomads.
If technical issues arise, help is on the way!
The message is that simple.
Estonia does not care if you drink kombucha lattes or if you eat green tea ice cream.
Their main concern is if you know how to use a computer well or not - plain and simple.
The global tech talent shortage is a leading issue in many megacities, and this is just the beginning of a world led by digital nomads.
Try hiring an experienced artificial intelligence engineer on the cheap, and headhunters will just hang up and delete your contact information.
Better not to low-ball an offer or skimp with benefits.
The world has moved on from outdated visa policies.
Expect more exotic visa targeting immigrants who bring value-added computer skills in topics such as machine learning, software engineering, and fintech.
Many of these Baltic countries bleed huge swaths of youth that migrate to higher-wage countries in Western Europe.
Sadly, they never come back unless visiting relatives, in effect crushing the local birth rate.
The Estonian government has been bold and is, in some ways, acting with a start-up mentality itself.
This young, audacious government looks to scale up as fast as possible. The visionary policy is seen as the solution to maneuvering around long-lasting social problems.
These pro-growth tech policies could invigorate local youth offering them a lifeline in their own country.
Rebranding itself as the digital nomad epicenter is a risky move that most governments wouldn't dare to do.
It's easy to ignore the brain drain in the Baltics while I am based in the Bay Area.
Silicon Valley has been drawing in the Rolls Royce of tech talent for generations.
How can diminutive Estonia engineer tech growth?
They must learn how to crawl before they can walk.
If this visa experiment gains momentum, it could be a game-changer while nudging the Baltics closer into the developed West’s orbit of influence, reinvigorating the local birth rate, and rising income levels.
A win-win situation.
As for me, I won't be taking a $200 flight to Estonia to work in a coffee shop.
I prefer Incline Village, Nevada, and Zermatt, Switzerland, as my favorite digital nomad strongholds.
If it's not broke, don't fix it.
“A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well.” – Said CEO and Founder of Amazon Jeff Bezos
Mad Hedge Technology Letter
December 30, 2019
Fiat Lux
Featured Trade:
(TECH TALENT PUTS THEIR FOOT DOWN ),
(EA), (ADBE), (TSLA), (GOOGL), (TWTR)
Enough is enough that conditions are such – Americans are leaving California in droves.
The verdict is out, and California isn’t as attractive of place to live as it once was and tech talent isn’t blindly moving there based on the allures of tech stardom.
In an era of minimal regulation, Silicon Valley grew at breakneck speeds right into families' living quarters and it was a win-win proposition for both the consumer and Silicon Valley.
That was then, and this is now.
The San Francisco Bay Area is the mecca of technology, but recent indicators have doom and gloom written all over it.
In general, a healthy and booming local real estate sector is a net positive creating paper wealth the local population and attracting money slated for expansion.
The net positive has flipped, and housing is now a buzzword for the maladies young people face to sustain themselves in the ultra-expensive California megacities.
The loss of tax deductions in the recent tax bill makes conditions even more draconian.
Monthly rental costs are deterring tech's future minions. Without the droves of talent flooding the area, it becomes harder for the industry to incrementally expand.
After surveying a collection of HR staff, there is a shortage of artificial intelligence (A.I.) programmers and coders to fill internal projects.
And it’s not just a domestic brain drain; the international talent pool is drying up as well.
Compounding the housing crisis is the change of immigration policy that has frightened off many future Silicon Valley workers.
The best and brightest foreign minds are trained in America, and a mass exodus would create an even fiercer deficit for global dev-ops talent.
These U.S.-trained foreign tech workers are the main drivers of foreign tech start-ups.
Dangling carrots and sticks for a chance to start an embryonic project in the cozy confines of home is hard to pass up.
Ironically enough, there are more A.I. computer scientists of Chinese origin in America than there are in all of China.
There is a huge movement by the Chinese private sector to bring everyone back home as China vies to become the industry leader in A.I.
Silicon Valley is on the verge of a brain drain of mythical proportions.
If America allows brilliant minds to fly home, America is just training these workers to compete against American workers.
More than 70% of tech employees in Silicon Valley and more than 50% in the San Francisco Bay Area are foreign, according to the 2018 census data.
Adding insult to injury, the exorbitant cost of housing is preventing burgeoning American talent from migrating from rural towns across America and moving to the Bay Area.
They make it as far West as Salt Lake City, Reno, or Las Vegas.
This trend is reinforced by domestic migration statistics.
Ultimately, if VCs think it is expensive now to operate a start-up in Silicon Valley, it will be costlier in the future.
Yes, the FANGs will continue their gravy train, but the next big thing to hit tech will not originate from California.
VCs will overwhelmingly invest in data over rental bills. The percolation of tech ingenuity will likely pop up in either Nevada, Arizona, Texas, Utah, or yes, even Michigan.
Even though these states attract poorer migrants, the lower cost of housing is beginning to attract tech professionals.
Salt Lake City, known as Silicon Slopes, has been a tech magnet of late with big players such as Adobe (ADBE), Twitter (TWTR), and EA Sports (EA) opening new branches there while Reno has become a massive hotspot for data server farms. Nearby Sparks hosts Tesla's Gigafactory 1 along with massive data centers for Apple, Alphabet, and Switch.
The half a billion-dollars required to build a proper tech company will stretch further in Austin or Las Vegas, and most of the funds will be reserved for tech talent - not slum landlords.
The nail in the coffin will be the millions saved in state taxes.
The rise of the second-tier cities is the key to staying ahead of the race for tech supremacy.
"Twitter is about moving words. Square is about moving money," - said CEO of Twitter, Jack Dorsey, to The New Yorker, October 2013.
