TSMC's smartphone warning points squarely at Apple: analysts

(Reuters) – Shares in Apple Inc (AAPL.O) and its suppliers fell on Thursday after a raft of analysts read a prediction of softer smartphone sales from Taiwan Semiconductor Manufacturing Co Ltd (2330.TW) as driven chiefly by concern about demand for iPhones.

FILE PHOTO: A logo of Taiwan Semiconductor Manufacturing Co (TSMC) is seen at its headquarters in Hsinchu, Taiwan October 5, 2017. REUTERS/Eason Lam/File Photo

TSMC, the world’s largest contract chipmaker and a major Apple supplier, revised its full-year revenue target to the low end of its earlier forecast.

“Apple represents nearly 20 percent of TSMC’s revenue so the outlook potentially points to weaker-than-anticipated iPhone demand,” Atlantic Equities analyst James Cordwell told Reuters.

Others, some asking not to be quoted, said baldly that the warning was “exactly” about Apple.

Mizuho Securities USA said in a client note that its checks continue to point to soft demand for iPhone X, the Cupertino-based firm’s tenth anniversary phone released last November, in addition to a steady fall in iPhone 8 and 8 Plus orders.

Apple’s shares were last down 2.5 percent and were the biggest drag on the tech-heavy Nasdaq index.

Shares of Apple suppliers including Qualcomm Inc (QCOM.O), Intel Corp (INTC.O), Qorvo Inc (QRVO.O), Skyworks Solutions Inc (SWKS.O) and Broadcom Inc (AVGO.O) fell by 2 percent to 5 percent.

“Until the new iPhones in the Fall start driving the production food chain in Q3, mobile’s going to be weak,” Elazar Advisors analyst Chaim Siegel said.

TSMC, also a supplier to Qualcomm and Nvidia Corp (NVDA.O), said it expects growth this year of 5 percent for the global semiconductor industry, weaker than an earlier forecast of 5-7 percent.

Data provider TrendForce had earlier estimated 2018 global smartphone production at around 1.5 billion units, 2.8 percent up on 2017 but down from a previously expected 5 percent.

TSMC on Thursday estimated 8 percent growth for contract chipmakers, compared with its previous forecast of 9-10 percent.

U.S.-listed shares of TSMC (TSM.N) were down 6 percent, while other chip equipment makers such as Applied Materials Inc (AMAT.O) and Lam Research Corp (LRCX.O) fell about 5 percent and ASML Holding NV (ASML.O) lost 3.6 percent.

Another big industry bellwether, chip equipment maker Lam Research, said on Wednesday its shipments missed consensus estimates for the first time in five years.

Chipmakers Analog Devices Inc (ADI.O), Micron Technology (MU.O) and Xilinx Inc (XLNX.O) were also down by 3 percent to 4 percent.

Reporting by Sonam Rai in Bengaluru; Editing by Maju Samuel and Patrick Graham

Welcome to the Wikipedia for Terms of Service Agreements

Most people spend very little time thinking about the terms of service that govern life online. The agreement appears in a flash, we affirm that “I agree to the terms of service,” and then it’s all quickly forgotten.

Until, of course, something goes wrong. Last week, when Mark Zuckerberg appeared before Congress to defend Facebook, more than one senator pointed to the company’s terms of service. Could Facebook’s users be reasonably expected to understand what they’re signing up for? “I would imagine probably most people do not read the whole thing,” Zuckerberg responded. “But everyone has the opportunity to and consents to it.”

What if, before you consented, you could at least read the SparkNotes? That’s the goal of ToSDR—short for Terms of Service; Didn’t Read—a website that turns lengthy terms of service agreements into bulleted summaries, and then rates those terms from Class A (very good) to Class F (very bad). It functions as a sort of Wikipedia for terms of service agreements. Anyone can submit a bullet point and share their analysis of a service’s terms, which get turned into a rating of a site’s overall policy. The site, which has existed since 2012 but is relaunching next month on a new platform, hopes to create a broad network of shared knowledge.

“If nobody can individually read these terms,” says Hugo Roy, who helped create ToSDR, “then we have to figure out a collective solution.”

At Your (Terms of) Service

The idea for ToSDR came about in 2011. Roy, then a law student, had been hanging around the Berlin hacker scene when he met Michiel de Jong, a programmer, and Jan-Christoph Borchardt, a designer. The three shared an interest in digital rights activism and marveled, one day, about how easy it was for websites to change their terms of service without notifying users. What’s more, it was near impossible to make sense of how those changes would affect you as a user or make informed decisions about using certain sites. For years, the European Union had issued grades to commercial appliances to make it easier for consumers to understand which machines were most energy efficient. “You don’t have to know about how electricity works or how a washing machine works. You just have a rating which will tell you this is good, this is bad,” says Roy. What if they created a similar system for services on the internet?

The trio brought the idea to Chaos Communication Camp, a quasi-Burning-Man for hackers in the German countryside. The festival gave them the opportunity to hash out what a site like ToSDR might look like, and how it would translate dense terms of service into useful bits of information. Borchardt, the designer, took inspiration from the EU’s energy label and created a color-coded scale to show which services had the most and least user-friendly terms. But unlike the EU’s system, ToSDR wouldn’t have a dedicated agency to issue grades. Instead, they’d let the group decide. The fact that Github’s terms allow users to request indefinite removal of your personal information? Great. The fact that Instagram can retain your content even after you delete your account? Not so great. “It’s a collective of users organizing themselves to discuss and rate and try to come up with an agreement on what’s good term and what’s not,” says Roy.

The idea went over well, and after Chaos Communication Camp, the trio decided to turn idea into reality. Jong and Borchardt were both working full-time on other projects, but Roy had taken the year off from law school for an eight-month internship, which left him with four months of free time to work on ToSDR. While Jong and Borchardt created a prototype of the site, Roy started in on legal analysis. He also formed a Google Group where people could submit summarized terms of services that Roy would enter into a database.

One day, Roy brought up the project at “Hack and Tell,” a weekly event in a Berlin café for hackers to share what they’d been working on. He hadn’t planned to announce the project officially—it was still mostly an idea—but the next day, he got a call from a German journalist who wanted to write about ToSDR. The press attention led to a jolt of public interest. People started emailing Roy, Borchardt, and Jong, asking how they could get involved. “For me, I just wanted to see what we could come up with and show how it could be done,” says Roy. “And then because of all of this interest, we were like, ‘Whoa!’ How do we make this more stable?”

It was a question the trio wasn’t prepared to answer. Roy was running out of time before he had to return to law school; with Borchardt and Jong both working full-time, the Google Group quickly became unmanageable. The submissions began to pile up, and ToSDR began to to languish.

Coming to Terms

By 2016, ToSDR was barely even a side project for Roy, who had moved on to a career as a lawyer. Then he met a software developer named Chris Talib at a party in Paris. Talib considered himself something of an internet optimist, interested in projects that improved the web, so when Roy told him that no one had continued developing TosDR, it didn’t take long to convince him to take up the mantle.

In his spare time, Talib has worked to create a more functional version of ToSDR. The biggest problem? There was no easy way to contribute to the site. If ToSDR was going to look like Wikipedia, it needed the equivalent of a software tool like Wikimedia. “We didn’t have software to make it easy to contribute,” says Roy.

So Talib, along with programmer Madeline O’Leary, developed a platform called Phoenix, which makes it easy to submit and search information in the ToSDR database. In the new platform, you can quickly enter the service, the summary, the analysis, and the rating, along with a link to the original language in the terms of service agreement. Talib says he plans to introduce the platform to ToSDR next month—around the same time that the General Data Protection Regulation, a new standard for consumer data protections, goes into effect across the European Union.

If you ask Talib, the refresh marks the “second age” for ToSDR. The project didn’t quite take off back in 2012—not because of lack of interest, but because of lack of tools. Since then, someone has created a browser extension that brings up the abbreviated terms of service when you open a website like Facebook or YouTube, and a group of developers are building on a scraper tool called ToSBack that tracks how terms of service change over time. With Talib and O’Leary working in Phoenix to streamline submissions, they hope ToSDR can grow into something big.

ToSDR isn’t without its faults. It’s not designed to be a legal resource. It doesn’t use sophisticated software or artificial intelligence to translate the full terms of service. All the content is user-generated, which means the information is only as good as the humans who submit it. Some people misunderstand the terms they’re reading, or submit inaccurate descriptions of a service’s terms. (When you search Facebook on ToSDR, you’ll find a bullet point that says “Facebook UI induces oversharing.” Maybe true, though definitely not part of the site’s terms.) But the system is designed to correct itself. ToSDR users can have discussions about what’s listed there, just like Wikipedia editors collectively decide how history is summarized. The more people share, the better the resource becomes.

In its ideal form, ToSDR would become a place not only to review the terms of services we’re agreeing to, but to discuss what they mean. Does it matter if a site can delete your content at any time? What does it mean if there’s a broad copyright license? Where’s all that data going anyway? Roy sees this kind of collective conversation as part of a larger movement to democratizing information online. Whether the terms are good, or bad, or somewhere in between, the more we know, the better chance we have of one day demanding the terms we deem fit.