Many tech firms in Taiwan have shown growing interests in working with and investing in startups. But for startups to survive the competition, according to Morgan Lai, a parnter of Silicon Valley-based Foundation Capital, they need strong marketing capability.Lai, who is setting up Formulate Ventures under Foundation Capital, recently talked to Digitimes about why many venture capital funds are shifting their investment strategies, and what it takes for startups to succeed. She also pointed out business opportunities from some latest tech trends.Q: You have been managing enterprise B2B for two years. How do you identify targets for venture capital investment?A: Foundation Capital focuses on various industries with developmental potential. For example, it has invested in Netflix and startup companies engaged in satellite technology. Enteperprise B2B targets companies rather than individuals. We select investment targets by looking at whether they can generate revenues and can grow fast. A criteria for measuring the success of an investment is whether the company can make it to IPO or be acquired at prices several times the initial value. Enterprise B2B mainly focuses on software and finance sectors.You need to have a firm grasp of the macroeconomic trends, then identify the sub-trends through research and analysis, and then list startup firms under each sub-trend from which you can pick your investment targets.A startup for seed-round financing would be valued at US$3-4 million 10 years ago but now the best target is possibly valued at US$25-30 million, nearly 10 times as much. This doesn't necessarily mean present targets are better than those 10 years ago, but because there is too much capital hunting for limited numbers of good investment targets after 10 bullish years in stock markets.The higher valuation means that available funds can invest in fewer startup companies. A 3-year fund used to be able to invest in about 30 startups each year in search of a potential unicorns, but as startups in series A round are now too expensive, there has been a strategic shift to those in earlier stages.Therefore, almost all Silicon Valley-based large venture capital funds, such as Foundation Capital, now focus on startups in the seed round or an earlier stage. I am setting up Formulate Ventures, a fund particularly for venture capital investment in startups in pre-seed or seed stage with Foundation Capital being a shareholder.Successful investment in startups in an early stage hinges on choosing right targets. Five startup companies established by my friends at MIT have seen their corporate valuation expand to the unicorn level of US$1 billion in six years, and this motivated me to set up Formulate Ventures.It is usually difficult to decide on investments in early-stage startups due to relatively limited company information. There are more and more venture capital funds and managers, and the key to staying competitive is to keep doing in-depth market studies in emerging fields and formulate one's own investment strategies.Q: What is your insight into the startup ecosystem in Taiwan? What are your recommendations for Taiwan-based startups planning to tap overseas markets?A: There are three industry sector with large development potential in Taiwan: Semiconductor materials, biomedicine and software infrastructure/cybersecurity.While there were possibly fewer than 10 AI inference IC design houses 10 years ago, there are more than 100 now. Foundation Capital has invested in two of them, Graphcore and Cerebras, with both having R&D collaboration with TSMC.Computing capability of AI inference ICs has been pushed up fast, but there are limitations to computing speed and memory capacity because of the materials used. IC design houses in this area must have innovative solutions in order to survive the competition. We've seen a design house replace crystalline silicon with other materials.For biomedicine, Taiwan has two advantages: its sufficient talent and its abundant centralized data available for use in biomedical AI, plus a well-developed biomedical research ecosystem.Software infrastructure/cybersecurity, unlike software application, does not need to be modified to cater to local markets. Nor does it require intensive capital input. Its therefore suitable for young entrepreneurs.For Taiwan-based startups planning to tap overseas markets and seek venture capital investment abroad, they have to prove that their products or services are marketable in their target markets, and ready strong marketing plans. The founder of the startup must know how to sell the products and services and build a strong marketing team. In the US, it is very important that you can communicate with and convince your clients in the B2B sector. You can't expect your app to sell by just making it available online.Q: COVID-19 has changed what was taken for granted in the past. What is your view of trends in the future?A: There are three interesting trends. The first is remote working. Because of the pandemic, many enterprises need to use cloud computing to allow employees to work at home or remote locations, collaborate or receive training online.The second trend is automation. There have been many B2B automation software products, mostly customized solutions to meet large enterprises' needs, in the US, such as those developed by UiPath and Automation Anywhere. However, small- to medium-size enterprises' demand for automation will emerge. Unlike big companies that need customized automation solutions that have to supported by in-house IT resources for operation and maintenance, SMBs will need new-generation automation software that is not customized and can be operated using notebooks without in-house IT staff.The third trend is B2B automation software for financial teams, such as AI-based automatic cost estimation and forecasting models.(Note: This is part of Women in Venture series, a collaboration with Digitimes strategic partner Anchor Taiwan, a platform to connect the world with Taiwan focusing on corporate innovation and cross-border expansion. The Women in Venture Roundtable is a network of 80+ female investors and bi-monthly sessions featuring world-class guest speakers. More info: Anchor Taiwan.)Foundation Capital partner Morgan LaiPhoto: Michael Lee, Digitimes, July 2020

A tri-party group consisting of Chunghwa Telecom (CHT), Kingwaytek Technology and Tamsui Bus has begun autonomous passenger transport services on a dedicated section along a light rail line in New Taipei, according to sources at CHT.The services leverage an autonomous driving platform that integrates C-V2X (cellular vehicle-to-everything) wireless communication system, self-driving buses, roadside sensors and a cloud monitoring system, said the sources.As related IoV services are emerging as one of the most important 5G applications, CHT is striving to integrate related technologies, including AiOV, C-V2X, LiDAR and 5G to develop technologies and solutions enabling smart transportation, the sources added.To support self-driving platform, CHT has established a monitoring center in an area adjacent to the light rail line to handle real-time location information about the self-driving buses and images of surrounding environments, traffic signals, traffic flows and weather conditions through C-V2X applications, noted the sources.The self-driving buses are developed and built by Kingwaytek, a provider of digital maps for car navigation and other autonomous solutions, said the sources.A self-driving bus developed by KingwaytekPhoto: Yihan Li, Digitimes, August 2020

Apple seems to be looking to build a supply chain consisting of China-based makers for iPhones specifically for the Chinese market. Chinese maker Luxshare has already taken manufacturing plants in China from Taiwan's Wistron. Luxshare and another Chinese company, Lens Technology, are reportedly also looking to buy metal chassis plants from Taiwanese firms, as they seek to expand their presence in the iPhone ecosystem with approval from Apple. The US vendor has already disclosed that its 5G iPhone will come later than usual, and Digitimes Research estimate that global 5G smartphone shipments will reach more than 250 million units in 2020. Digitimes Research also expects global server shipments to shrink 5.6% sequentially in third-quarter 2020 as demand decelerates.Apple keen to recruit more Chinese suppliers for iPhone: Apple is seemingly continuing to recruit more Chinese suppliers for iPhones, judging from Chinese EMS provider Luxshare Precision Industry and handset cover glass maker Lens Technology's aggressive moves seeking to acquire metal chassis plants operated in China by Taiwan-based makers, reportedly under the nod from the US vendor, according to industry sources.Global 5G smartphone shipments to top 250 million units in 2020, estimates Digitimes Research: Global shipments of 5G-enabled smartphones are expected to reach over 250 million units in 2020, accounting for over 20% of global smartphone shipments for the year, according to Digitimes Research's latest estimation.Global server shipments to contract 5.6% sequentially in 3Q20, says Digitimes Research: Global shipments of servers are estimated to contract 5.6% sequentially in the third quarter of 2020 due to a deceleration in demand for cloud servers from datacenter operators and for enterprise servers, according to Digitimes Research.

EMS provider Qisda has worked with affiliated BenQ Guru Software to develop an AI-based platform for monitoring chain retail store operationss, according to Michael Lee, general manager for Qisda's Business Solutions Group.The platform integrates AI-based data analysis, analysis of operational performance, visual analysis of images, environmental quality monitoring, and flexible allocation of human resources, with all data and information displayed on a dashboard to facilitate the headquarters' decision-making, Lee said.Qisda has also worked with MoMagic Technologies, a startup specializing in AI-based mobile advertising, to develop online monitoring of public opinions and digital footprint, with the results on the platform.Public opinions and keywords from leading social networks are colelcted and analyzed, providing clouds of keywords for reference for precision marketing and helping enterprises cope with public relation risks.Digital footprint provides visualized data on differences among weekly volumes of visitors at a retail store and distribution of visitors' stay at the store.

Global tablet shipments are expected to move at full throttle to reach a level not seen in recent years in the third quarter of 2020 after seeing such shipments shoot up 60.5% sequentially and 21.3% on year to 39.65 million units a quarter earlier, according to Digitimes Research.Factors including sufficient production capacities available at ODMs, rush orders that are deferred from the second quarter to third, and re-stocking demand from channel operators will help drive shipment momentum for the third quarter.Looking back to the second quarter, Apple remained the top vendor, followed by Samsung Electronics and Huawei. Amazon outraced Lenovo to take fourth palce and could become number three in the third quarter thanks to seasonal effects.In terms of product size, 10-inch and above models accounted for 80% of total tablet shipments in the second quarter, with the ratio of 7-inch ones being reduced further, Digitimes Reseach figures show. The proportion of 7.x-8.x-inch models is expected to edge up by 2pp in the third quarter due to increased shipments of smaller-size products by Amazon.As the sequential growth for Apple's iPad devices, which feature GF2 touch solutions, was higher than that of non-Apple products, the ratio of tablets that come with GF2 touch edged up in the second quarter. However, models featuring GFF touch solutions will gain a larger share in the third quarter as tablets coming from Amazon will mostly be based on GFF touch.Shipments from Foxconn Electronics alone accounted for over 50% Taiwan's ODM tablet shipments in the second quarter thanks to a ramp-up in its shipments of iPad mini and iPad Air 3 products.

Smartphone application processor (AP) shipments to China are expected to grow 9.3% sequentially in the third quarter of 2020, driven by a pick-up in shipments of 5G-enabled phones in China and a mild improvement in overseas demand for smartphones, according to Digitimes Research.Shipments of smartphone APs to China totaled 170 million units in second-quarter 2020, up 25.8% on quarter but down 20.2% on year, Digitimes Research figures show.The sequential AP shipment growth was lower than the staggering growth in handset shipments to the Chinese market in the second quarter, as Chinese vendors' handset shipments to the Indian market declined, curbing the growth for AP shipments to China for device production. The annual decline resulted from the higher base built up a year earlier by Huawei advancing AP purchases ahead of the US trade ban.In terms of second-quarter smartphone AP shipments by suppliers, MediaTek secured the top spot with a 38.3% share, bolstered by strong buying from Huawei. Qualcomm ranked second with a 37.8% share and HiSilicon Technologies followed with a 21.8% share.MediaTek is expected to see its share in China's smartphone AP market move higher in second-half of 2020 thanks to Huawei stepping up purchases of its 4G and 5G SoCs at the expense of HiSilicon's share.While smartphone AP shipments in China are expected to post a sequential gain in the third quarter, the quarterly AP shipments will still see a contraction of 12.7% annually as the lingering pandemic continues to dampen consumer demand for handsets.In terms of process technology, the share of smartphone APs shipped to China made on the 6/7/8nm nodes dropped to 32.4% in the second quarter and will continue to fall in second-half 2020 with Qualcomm and HiSilicon rolling out more 5nm chips.

Global shipments of 5G-enabled smartphones are expected to reach over 250 million units in 2020, accounting for over 20% of global smartphone shipments for the year, according to Digitimes Research's latest estimation.Digitimes Research also maintains its April forecast that global smartphone shipments for 2020 will contract 15.2% to 1.15 billion units as global economic activities remain weak amid the lingering impacts of the pandemic.Shipments of 5G phones in the China market alone will total 170 million units in 2020 as Chinese handset vendors have been keen on rolling out entry-level and mid-tier 5G models to spur replacement demand in the local market.5G models will account for 52.7% of total smartphones shipped to China in 2020 and two-thirds of the total 5G phone shipments shipped worldwide in the year, Digitimes Research's figures show.Bolstered by stronger-than-expected 5G phone sales, China's smartphone shipments are likely to stay flat or fall slightly in second-half 2020 as compared to a year earlier, finishing out the year with a 10.3% decline in its smartphone shipments.5G phone shipments outside China will reach only 82.3 million units or below 10% of global smartphone shipments in 2020 as the rollouts of 5G networks in most other parts of the world have been delayed by the pandemic.Overall smartphone shipments outside China also took a hit from the virus experiencing a 25.9% on-year decline in second-quarter 2020 and are expected to come out the year with an on-year decline of 17.1%.

Hantop Intelligence Tech has developed ultrasonic machining module for CNC processing of various composite materials, according to company founder and CTO Michael Chen.Many new materials have come into use, such as SiC and GaN for automotive semiconductors, Chen said. Composite materials are increasingly used in place of traditional aluminum alloy to reduce aircraft weights and more wearable and harder materials are used to make artificial joints and dentures, he added.Conventional CNC machine tools are designed to process metallic materials, and using them to process new materials, mostly with fragile textures, will result in high friction, reducing efficiency and quality of processing, Chen noted.Ultrasonic machining technology, in addition to high-speed rotation of main axes, features reciprocation of cutting tools in a fixed direction at frequencies of 20,000-40,000 times per second to let resonance effect disperse cutting force to reduce resistance, Chen explained.The Taiwan-based firm adopts non-contact power transmission technology, similar to wireless power charging in principle, for its machines, Chen indicated.The modular design enables users to add modules onto any CNC machine tools without purchasing entire machine tools to save cost, Chen indicated.Hantop was spun off from National Chung Hsing University under sponsorship of Ministry of Science and Technology (MOST) in 2018.Hantop founder and CTO Michael ChenPhoto: Chloe Liao, Digitimes, August 2020

Taiwan makers' share of global notebook panel shipments is expected to rise further in second-half 2020 after hitting a high of 43% in the second quarter of the year, according to Digitimes Research.Taiwan's panel makers have been making headway in the notebook segment, leveraging their advantages in the manufacture of mini LED-backlit notebook panels and other models for gaming and Chromebook applications.Overall, shipments of large-size LCD panels (9-inch and above) by Taiwan-based makers (excluding Sharp) totaled 64.38 million units in second-quarter 2020, up 35% sequentially and 10.8% on year, driven by growing demand for IT devices supporting remote work, study and entertainment, Digitimes Research figures show.With stay-at-home activities becoming a new normal in the wake of the pandemic, panel demand for Chromebook devices alone will more than double on year in the second half of 2020, with Taiwanese makers being the primary suppliers.Taiwan's makers also have advantages in the manufacture of monitor panels, particularly those for gaming and curved monitor applications, with AU Optronics (AUO) alone seeing its shipments of curved monitor panels spike over 40% on year in the second quarter.AUO, which ranks second for curved monitor panel shipments globally, will benefit from the top vendor Samsung Electronics' decision to withdraw from the LCD panel market.Notebook applications as a proportion of Taiwan's large-size panel shipments will increase to 38.1% in second-half 2020 from 36.6% a year earlier; monitor panels will remain at over 20%; and TV panels will drop by 2pp.

Global shipments of servers are estimated to contract 5.6% sequentially in the third quarter of 2020 due to a deceleration in demand for cloud servers from datacenter operators and for enterprise servers, according to Digitimes Research.In second-quarter 2020, worldwide server shipments spiked 27% on quarter to 4.55 million units, driven by fulfillment of orders deferred from the first quarter and strong demand for cloud service and remote work applications amid the coronavirus pandemic.But server shipments to Microsoft, Facebook, Google and Amazon are expected to trend downward in the third quarter as their inventories still stay at high levels following strong pull-ins of shipments in the second quarter. In addition, enterprise server vendors Dell, Lenovo, Inspur and Supermicro will also see their clients in the US and China cut expenses in second-half 2020.Digitimes Research estimates global server shipments for the first three quarters of the year to grow 17% on year due to a low comparison base for the same period in 2019, though first-quarter 2020 shipments were disrupted by the outbreak in China and third-quarter demand is slowing down.As datatcenter operators and enterprise users are expected to further cut their server shipment pull-ins in the fourth quarter, overall global server shipments for 2020 are expected to grow at only 6.8% to over 16 million units.