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2021 will be a calmer year for semiconductors and chips (except for Intel)

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If ever there was a typically quiet tech industry that seemed to drive massive headlines this year, it was semiconductors. From record-setting M&A purchases to prodigious venture capital financing, the decline of major players and huge international trade fights, semiconductor companies found themselves in the crosshairs of inventors, VCs, regulators, politicians and, well, Apple.

2020 was a banner year, mostly since it was the culmination of patterns we’ve been watching in the industry for years now. It’s dangerous to predict that there will be “less news” in any tech industry, but these patterns have in many ways worked themselves out, and it seems highly probably that 2021 will be a quieter year for semiconductors than the past year has been.

Here’s a snapshot of four of the largest story lines of 2020, and what may happen next as we enter 2021.

Chip consolidation is in process. The question is whether it will all be approved

The biggest story this year in chips was the rapid consolidation of the industry in just the span of a few months. That consolidation was headlined by Nvidia’s $40 billion purchase offer of Arm, the chip design firm that supplies the blueprint for almost all smartphones and is also starting to encroach on the desktop world with Apple’s launch of its M1 processor.

Nvidia wasn’t unique in throwing around big money to consolidate. AMD spent $35 billion to buy Xilinx, which makes reprogrammable chips known as FPGAs that are increasingly vital in tech stacks like 5G, where technologies change faster than silicon can be replaced. Intel sloughed off its memory unit to SK Hynix for $9 billion as it fights for survival, and Analog Devices bought Maxim for $21 billion in a bid to consolidate the embedded chips market in areas like sensors and power management. Beyond the major headlines of course, there were many smaller acquisitions made across the industry.

The chips industry isn’t unique in its heavy consolidation — plenty of other industries have also taken the M&A route given the relatively lenient antitrust policy in place and the abundant capital from the public markets at their disposal. Yet, there are also unique forces pushing semis to head this direction.

First, the cost of staying competitive in the chip industry have been rising rapidly. For the most high-performance chips, fabs cost tens of billions of dollars to construct and require years of lead time. R&D costs remain high, which is one reason why VC financing of the industry has been limited in the past (although that has changed – read below). It’s just tough to make it in chips if you are small and don’t have the capital to burn to stay competitive.

Perhaps even more importantly though, there has been consolidation on the customer side, and that monopsony is also forcing general consolidation for suppliers. Among the largest buyers of high-performance compute and storage today are the big cloud platforms like AWS, Google Cloud and Microsoft Azure. Apple and a few other manufacturers control most of the market in smartphones, and even in embedded systems, the number of buyers is apparently consolidating. Customer consolidation forces supplier consolidation, fighting markets demand power with market supply power.

Those two trends have been around for years, but they culminated this year with the M&A frenzy we saw. That’s not to say that there is nothing left to buy in the market, but big players like Nvidia and AMD have made their biggest bets and are unlikely to make any more major acquisitions in the meantime.

What to watch for in 2021: The big story next year is which of these massive acquisitions actually receives approval. Antitrust regulators have been remarkably sanguine about consolidation in the sector, but now that consolidation is reaching its logical end, with only a few players — or even just one — existing in their respective markets.

These antitrust concerns are most notable with Nvidia/Arm, which has to receive simultaneous approval from four authorities (United States, Britain, Europe and China). Experts in the industry that I have talked to have been divided on their predictions, with some feeling that the parties can “work out a deal” and others feeling that China in particular is unlikely to approve a deal. We can expect some signs of how this is going in 2021, although approval of the deal might well head into 2022.

AMD/Xilinx has also raised some eyebrows among experts, but hasn’t gotten nearly the press that Nvidia/Arm has. As for Analog Devices and Maxim — which is pretty much classic horizontal consolidation — shareholders approved the merger in October, and the company said in its press release then that the period for the U.S. to intervene on antitrust grounds had expired. It still faces regulatory approvals in other regions and could close by summer 2021.

Given the huge spike in antirust concerns in the United States among both Democrats and Republicans around platform companies like Google and Facebook, the big question is whether those concerns spill over into other technology industries like chips. So far, that hasn’t been the case, but the new Biden administration might have other ideas when it sets up shop in January.

Venture capital activity in chips flourished in 2020. How much more investment can the industry take though?

2020 was another major year for VC dollars in next-generation silicon, after huge investment in 2019 and 2018. I’ve covered a lot of the exciting startups in the space, including Nuvia (which announced $240 million in September for its Series B), SiFive, EdgeQ, and Cerebras, and there are even more companies in the sector, including Graphcore and Mythic that are working on exciting products. Aggregate dollars in the sector are hard to calculate, since most chip companies stay very quiet about their funding for years due to concerns about competition. Nonetheless, even just the rounds that have been announced are staggering in scale.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Paytm claims top spot in India’s mobile payments market with 1.2B monthly transactions

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Paytm, India’s most valuable startup, said on Monday it processed 1.2 billion transactions in the month of February, illustrating the level of penetration it has made in one of the world’s fastest-growing payments markets where it competes with Google, Facebook, Amazon, and Flipkart-backed PhonePe.

Paytm said its users made 1.2 billion transactions last month across several payments modes including wallets, plastic cards, internet banking, and UPI. This is the largest volume of transactions reported by any payments firm in India and Paytm claimed that it has consolidated its leadership position.

A Paytm spokesperson told TechCrunch that the startup clocked over 1 billion transactions in the month of January as well. A PhonePe spokesperson told TechCrunch that its app crossed a billion transactions in December, and its last month’s transacting volume was “over a billion” across UPI, wallet, and credit and debit cards.

Paytm’s figure shows how the SoftBank-backed startup has continued to grow despite not being a dominant player in the UPI ecosystem.

A payments railroad built by a coalition of retail banks and backed by the government, UPI has emerged as the most popular way users transact online in recent years though it does not offer any business model.

Last month, UPI services processed 2.29 billion transactions, the governing body NPCI said on Monday. PhonePe and Google Pay are the dominant UPI players in India, commanding over 85% of the person-to-person payments market. PhonePe processed about 970 million UPI transactions in February. (NPCI has said that it will enforce a market share cap on its member firms.)

Unlike Paytm, which leads among wallet players, and PhonePe, Google Pay and relatively new entrant WhatsApp solely operate on UPI.

Paytm has expanded to cater to merchants in recent years as several international firms launched their offerings to solve person-to-person payments in India. The startup claimed that its service dominates in offline merchant payments and is growing 15% month-on-month. The startup, led by Vijay Shekhar Sharma, said it serves over 17 million merchants. PhonePe told TechCrunch it serves over 17.5 million merchants.

Paytm said it has been “the main driving force behind building and expanding digital villages and now empowers over 6 lakh (600,000) villages in India with digital payments.” The startup said over 50% of its merchant partners have an account with Paytm Payments Bank — the startup’s digital bank — and it also commands the market with its digital wealth management service, Paytm Money.

At stake is India’s payments market that is estimated to be worth $1 trillion in the next three years, up from about $200 billion last year, according to Credit Suisse.

“We are humbled by the trust India has shown in us & made Paytm their preferred digital payments & financial service provider. We have consistently maintained industry-leading market share & growing at an impressive rate,” said Narendra Yadav, Vice President of Paytm, in a statement.

“We have been promoting all digital payment methods giving multiple-choices to consumers that have helped us in consolidating our leadership position. In fact, a large percentage of our users who started their digital journey with Paytm, have now adopted & embraced our financial services.”

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Lime unveils new ebike as part of $50 million investment to expand to more 25 cities

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Lime said Monday it has allocated $50 million towards its bike-share operation, an investment that has been used to develop a new ebike and will fund its expansion this year to another 25 cities in North America, Europe, and Australia and New Zealand. 

If the company hits its goal, Lime’s bike-share service will be operational in 50 cities globally by the end of 2021.

The latest generation e-bike, known internally as 6.0, has a swappable battery that is interchangeable with Lime’s newest scooter. Additional upgrades to the e-bike include increased motor power, a phone holder, a new handlebar display, an electric lock that replaces the former generation’s cable lock and an automatic two-speed transmission. The new bikes are expected to launch and scale this summer. 

The hardware upgrade builds off of the 5.8, a bike developed by Jump that was supposed to be deployed in 2020. That never happened at scale because Uber, which owned Jump, offloaded the unit to Lime as part of a complex $170 million investment round announced in May.

“Jump made great hardware,” Lime President Joe Kraus said in a recent interview. “And we made some further improvements on top with the new bike.”

The hardware upgrades and expansion were funded from its own operational funds, not new financing from outside investors, Kraus said. The funding was possible as a result of Lime achieving its first full quarter of profitability in 2020, according to the company.

“We have figured out how to be profitable and we are funding this,” Kraus said.

Lime not only added a new motor to the bike, it moved its location in an aim to make it easier to handle at low speeds and enough power to climb hills, Kraus said. The swappable battery was perhaps its most important upgrade directly tied to its drive towards profitability, Kraus added.

“When our operations teams is roaming around the city, they take can care of bikes and the scooter fleet, which allows us to both operate profitably and continue to have affordable pricing,” he added.

Lime’s investment in its ebike operation comes a month after it announced plans to add electric mopeds to its micromobility platform as the startup aims to own the spectrum of inner city travel from jaunts to the corner store to longer distance trips up to five miles. Lime is launching the effort by deploying 600 electric mopeds on its platform this spring in Washington D.C. The company is also working with officials to pilot the mopeds in Paris. Eventually, the mopeds will be offered in a “handful of cities” over the next several months.

“This idea of how to service more trips five miles within a city is part of why we continue to do multi modality,” Kraus said. “When we add a new modality like bikes into a scooter city, or when we add scooters to a bike city both modalities go up in usage.”

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Istanbul’s Dream Games snaps up $50M and launches its first game, the puzzle-based Royal Match

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On the back of Zynga acquiring Turkey’s Peak Games for $1.8 billion last year and then following it up with another gaming acquisition in the country, Turkey has been making a name for itself as a hub for mobile gaming startups, and specifically those building casual puzzle games, the wildly popular and very sticky format that takes players through successive graphic challenges that test their logic, memory and ability to think under time pressure.

Today, one of the more promising of those startups, Istanbul-based, Peak alum-founded Dream Games, is announcing the GA launch of its first title, Royal Match (on both iOS and Android), along with $50 million in funding to double down on the opportunity ahead — the largest Series A raised by a startup in Turkey to date.

While Dream Games will focus for the moment on building out the audience for puzzle games with more innovative ideas, it also has its sights set on a bigger goal.

“We’re building this as an entertainment company,” CEO Soner Aydemir said in an interview, where he described Pixar as a key inspiration not just for size but for quality in its category. “What they did for animated movies, we want to do for mobile gaming. We are focusing on casual puzzle games first because everyone plays these, but we will also move forward with other genres. We want to be a huge interactive entertainment company that builds high quality games.”

The Series A is being led by Index Ventures, with participation also from Balderton Capital and Makers Fund. The latter two backed Dream Games previously, in a $7.5 million seed round in 2019. Index, meanwhile, is a notable VC to have on board: other successful gaming startups it has backed include Discord, King, Roblox and Supercell.

Interestingly, this is not Index’s first investment in a gaming startup founded by Peak Games alums: in December it led a $6 million round for another Istanbul mobile casual puzzle gaming startup founded by ex-Peak employees: Bigger Games.

Dream Games is not disclosing its valuation with this round.

Dream Games raising $57.5 million ahead of launching any games — or proving whether they get any traction — may sound like a risky bet, but there is some context to the story that sets up the odds in this startup’s favor.

The founding team all come from Peak Games, the Istanbul gaming startup that was so nice, Zynga bought it twice — first, in the form of one small acquisition of some specific titles, and then the whole company some years later.

CEO Soner Aydemir is Peak’s former director of product who built the company’s two biggest hits, Toy Blast and Toon Blast. Ikbal Namli and Hakan Saglam were Peak’s former engineering leads. And Peak product manager Eren Sengul and an ex-Peak 3D artist Serdar Yilmaz round out the rest of the founding team.

(Aydemir notes that the team left and formed Dream Games in 2019, about a year before Zynga’s full acquisition.)

The other indicators that Dream Games is on to something are its metrics for its limited test run of Royal Match.

Royal Match — in which players are tasked with helping King Robert restore his royal castle “to its former glory” by rebuilding it through a series of match-3 levels and obstacles, with new rooms, royal chambers and gardens making up the different levels of the game — was launched first as a limited test on iOS and Android in the U.K. and Canada in July leading up to this launch. In that time, Aydemir said it saw 1 million downloads and 200,000 daily average users.

“We think the numbers are very promising compared to previous experiences,” he said.

While Aydemir likes to describe Dream as an “entertainment” company, there is a lot of technology going into the product, from the graphics and the mechanics of the puzzles themselves through to the data science behind them.

“If you want to create an iconic game, you need to combine engineering, art and data science together with high quality user acquisition and a strong marketing approach,” he said.

And he believes that when you focus on these it will inevitably lead to quality, which means you no longer have to focus on simply trying to find a hit.

“We don’t like that approach,” he said. “We don’t want to find a hit.”

That was also the mix that Index also wanted to back.

“Building iconic titles requires a harmonious mix of craft, science and flawless execution,” said Index Ventures partner Stephane Kurgan, who led the round together with Index’s Sofia Dolfe. “The Dream Games team has perfected this mix over many years of working together, and has put it on full display in Royal Match. We could not be more excited to work with them in their journey to build the next global casual champion.”

While Dream Games’ long-term ambition is to build out interactive experiences around different audiences and genres, Aydemir said that casual games, and puzzles in particular, have proven to be a huge hit with consumers.

The strength of that trend has up to now meant that puzzle games generally have proven to have more staying power than other genres in mobile games, which have soared in popularity but also somewhat fizzled out.

“Every year we see the bigger market of users growing by 20%,” he said. “It will remain for decades.”

Interestingly, the focus on casual gaming startups in Turkey seems like a perfect storm of sorts. Undeniably, the proven success of Peak has brought in more punters, but it has also shown the way to developers: you can build a successful and global consumer tech startup out of Turkey, and perhaps puzzles — which focus on shapes — are especially good at transcending different language barriers.. Alongside that, Aydemir pointed out that the country is strong on engineers and developers but slim on opportunities with bigger tech companies.

“Mobile gaming is a younger industry, so that presents an opportunity,” he said.

Updated to correct that Index is not an investor in Rovio, and that the limited test had 200,000, not 200, DAUs.

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