Tech Brew Ride Home - Wed. 02/01 – The Memory Chip Rout (Again)

Episode Date: February 1, 2023

You think things are bad in your corner of the tech sector? Wait until I tell you about the memory chip industry. OpenAI releases a tool to let you check if something was created by OpenAI. Netflix might be going a tad overboard on this password sharing crackdown. Meta wins round one against the FTC. And the interesting new app from the founders of Instagram. Sponsors: Portant.co code techmeme (Listener!) Podcast Guru App (Listener!) Links: Hynix Posts Record Loss on Slump in Memory-Chip Prices (Bloomberg) Historic Crash for Memory Chips Threatens to Wipe Out Earnings (Bloomberg) OpenAI releases tool to detect machine-written text (Axios) Google is asking employees to test potential ChatGPT competitors, including a chatbot called ‘Apprentice Bard’ (CNBC) Confirmed: Netflix Unveils First Details of New Anti-Password Sharing Measures (The Streamable) Meta Wins Court Nod to Buy Virtual Reality Startup in Loss for Khan’s FTC (Bloomberg) Meta Plans to Shut Down One of Its Most Popular and Long-standing Multiplayer VR Games (Road To VR) Instagram's co-founders are mounting a comeback (Platformer) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Wednesday, February 1st, 2023. I'm Brian McCullough today. You think things are bad in your corner of the tech sector. Wait until I tell you about the memory chip industry. OpenAI releases a tool to let you check if something was created using OpenAI. Netflix might be

going a tad overboard on this password-sharing crackdown. Meta wins round one against the FTC and the interesting new app from the founders of Instagram. Here's what you missed today in the world of tech. This will seem a weird one to start with, but go with me for a second. Memory chip maker S.K. Heenix reported around a $1.4 billion Q4 operating loss, its biggest quarterly operating loss ever, and a 38% year-over-year drop in revenue. Thirty-eight percent drop in revenue in one quarter is significant. Quoting Bloomberg. Slammed by a more than 50% slide in memory chip prices from a recent peak, the Apple supplier said Wednesday it is slashing output, CAPEX, and costs as it awaits a recovery in the second half of the year.

The world's number two DRAM maker reported a deeper than expected operating loss of $1.7 trillion or $1.4 billion for the three months ended in December on a 38% drop in revenue. Despite rivals Micron Technology and Kioxia holdings also cutting output, sector-wide inventory levels will keep growing, hitting a peak in the first quarter before gradually falling towards the bottom half of the year, executive said. Hennix's larger rival Samsung Electronics had earlier dashed hopes for a large pullback in 2023 supply by saying it would keep KAPX at 2022's level.

For months, the $160 billion memory industry has been reeling from a large imbalance between supply and demand. Memory makers are sitting on three to four months worth of inventory while clients have yet to use up their stockpiles. South Korea's exporters have been hitting the brakes in response to slumping consumer spending worldwide. The entire country's exports declined 17% in January from a year earlier, largely due to a 44.5% drop in semiconductor exports, end quote. Yeah, this isn't the only memory chip headline this morning even. Western Digital has apparently raised $900 million from private equity firms Apollo Global and Elliott.

sources say as a precursor to a merger with Japan's Kyoxia, largely due to memory chip industry doldrums. Here's the thing. The memory chip industry is notoriously boom and bust. There are entire famous business school and business theory books and case studies on this very topic, but this is maybe the worst we've ever seen in this industry, quoting Bloomberg again, but from a different article earlier in the week. The unprecedented crisis isn't just wiping out cash at industry leaders, but also destabilizing their suppliers, denting Asian economies that rely on tech exports and forcing the few remaining memory players to form alliances or even consider mergers. It's always been difficult for memory makers to handle spikes and troughs in demand,

bringing new factories online takes years and billions of dollars, so it's hard to get the timing right. Already, Samsung Electronics and its rivals are losing money on every chip they produce. Their collective operating losses are projected to hit a record $5 billion this year. inventories, a critical indicator of demand for memory chips, have more than tripled to record levels reaching three to four months worth of supply. Samsung looks to be the only one that will escape relatively unscathed, thanks to its heft and diversified business, but even the South Korean Giants Semiconductor Division is headed toward losses. Quote, chip equipment companies sales are plunging by around 30 to 50 percent. This is not a normal situation, said Greg Rowe, head of technology research at HMC investments and securities.

end quote. OpenAI has debuted a free web-based tool to help you determine if text you're looking at was written by a machine. It rates the text that you put into it as very unlikely to unlikely, to unclear to possible, or likely to have been written by itself. OpenAI and ChatGBTGBT, quoting Axios. Open AI cautions the tool is imperfect and performance varies based on how similar the text being analyzed is to the types of writing OpenAI's tool was trained on. It has both false positives and false negatives. Open AI head of alignment, Jan Likey told Axios, cautioning the new tool should not be relied on alone to determine authorship of a document. How it works. Users copy a chunk of text into a box and the system

will rate how likely the text is to have been generated by an AI system. It works best on text samples greater than a thousand words and in English, with performance significantly worse in other languages. And it doesn't work to distinguish computer code written by humans versus AI. That said, OpenAI says the new tool is significantly better than a previous one it had released, end quote. CNBC says Google has been asking employees to test potential chat GPT competitors, including Apprentice Bard, a chatbot that uses its Lambda conversational tech. Quote, the alphabet company is working on a project under its cloud unit called Atlas, which is a code red effort to respond to chat GPT, the large language chatbot that took the public

by storm when it went public late last year. year. Google is also testing a chat bot called Apprentice Bard, where employees can ask questions and receive detailed answers similar to chat GPT. Another product unit has been testing a new search desktop design that could be used in a question and answer form. As a result of chat GPT, the Lambda team has been asked to prioritize working on a response to chat GPT, read one internal memo viewed by CNBC. In the short term, it takes precedence over other projects. The email continued, warning that some employees should stop attending certain unrelated meetings. Apprentice Bard looks similar to ChatGPT. Employees can enter a question in a dialogue box and get a text answer, then give feedback on the

response. Based on several responses viewed by CNBC, Apprentice Bard's answers can include recent events, a feature that ChatGPT doesn't have yet. Apprentice Bard replaced Mina, a previous version of a smart chatbot that had launched internally but was later discontinued. Employees have noticed Apprentice Bard's responses becoming more advanced in recent weeks. The company is also testing an alternate search page that could use a question and answer format according to designs viewed by CNBC. One view showed the home search page offering five different prompts for potential questions placed directly under the main search bar, replacing the current I'm Feeling Lucky bar. It also showed a small chat logo inside the far right end of the search bar. When a question is entered, the search results show a gray bubble

directly under the search bar, offering more human-like responses than typical search results. Directly beneath that, the page suggests several follow-up questions related to the first one. Under that, it shows typical search results, including links and headlines. It's unclear just which experiments Google plans to incorporate in future product launches, end quote. But they're coming. Believe me, they're coming. This year's Google I.O. stands to be maybe the most important in the company's entire history, I imagine. Netflix is adding spatial audio to its $20 per month premium plan, available for over 700 of its most popular titles, as a way to entice people to pay up to this more expensive plan. Standard and basic plans will get limited support for the same, but they really want you on the premium plan.

The headline for Netflix that I found most interesting today, though, was that Netflix has listed its rules and exemptions that it is putting in place to prevent password sharing, and they include a clause saying that all devices, should be on the same primary Wi-Fi network at least once every 31 days. I'm going to tell you why I think this is a problem in a minute, but quoting the streamable. These measures seem like cautious first steps to avoid a massive exodus of account-sharing users. If they do not meet Netflix's expectations and curbing password sharing, harsher measures such as charging users who continue to give out their login information, could follow. Netflix began testing methods to charge users $3 when someone outside their home accessed their account

in several Latin American countries in 2022. Among the items on the new list, can you still use Netflix while traveling? Answer, signing into Netflix outside your home may lead to the device in use being blocked from Netflix. This could prevent you from signing into new devices while traveling, but Netflix has devised a workaround. Traveling users who want to use Netflix on a hotel smart TV, company laptop, etc., can request a temporary code from the service when signing in. This will give them access to their account for seven consecutive days. question, how can you prevent Netflix from blocking your devices? Answer. Signing into home Wi-Fi at least once every 31 days on your devices will make them trusted devices, which Netflix will remember and leave unblocked. If your device has been blocked incorrectly, you'll need to

contact Netflix in order to get it unblocked, end quote. And it's that last bit that has me worried. I know I'm probably in the minority in terms of my Netflix usage, but I'm quite sure that I will often go more than a month without signing into Netflix at all. This household is more of a YouTube and Disney Plus household in terms of what we use the most. So if when I were to casually try to sign in someday and realized I was blocked and then discovered there was even the slightest bit of friction getting myself unblocked, I would probably just say forget it and watch something else. Who wants to have remembering to sign in to Netflix as a new monthly household chore? Something tells me they're going to have to walk this back pretty soon. Interesting.

Sources are telling Bloomberg that a U.S. judge has rejected the FTC's bid for a preliminary injunction to block META's acquisition of the VR company within. And the judge is giving the FTC one week to decide whether or not to appeal. Quote, in a sealed decision early Wednesday morning, U.S. District Judge Edward Davila in San Jose, California, denied the FTC's request for a preliminary injunction to block the proposed transaction while the agency presues a separate case in its in-house court. He separately issued a temporary restraining order pausing meta from closing the transaction for a week while the FTC decides whether to appeal his ruling. The decision represents the first major loss for FTC Chair Lena Kahn, who was appointed by President Joe Biden to reinvigorate antitrust enforcement as a key tenant of his administration's economic policy. Khan has taken a more aggressive approach to mergers than her predecessors and stepped up the agency's focus on technology giants in particular because of their potential to quickly dominate budding markets. The FTC sued meta in July, arguing that its purchase of Within, the maker of Supernatural, a popular VR fitness app, would aid

the social networking giant in dominating the emerging virtual reality industry. Top meta executives, including Chief Executive Officer Mark Zuckerberg and VR head Andrew Bosworth, testified during an eight-day hearing in December. The FTC has also challenged Microsoft's proposed $69 billion merger with gaming publisher Activision Blizzard on concerns the deal could harm competition in the nascent cloud gaming market. That case is slated for trial in August, end quote. Meanwhile, Meta's ready at dawn VR studio has announced plans to shutter Echo VR, which is odd because that is one of the best rated and most popular free games on the Quest platform currently. Quoting Road to VR. Echo VR has had a story journey, having originally launched as an Oculus

Rift exclusive title all the way back in 2017. In 2020, the game made the lead to the quest, allowing crossplay multiplayer between Rift and Quest players. Shortly thereafter, Meta announced that it had acquired the game's developer Ready at Dawn. And though it stands as one of the best rated and most popular free titles on the Quest store, Meta has announced it plans to shut the game down for good on August 1st. According to the announcement from Ready at Dawn, the main reason behind the plan shuttering is because the studio is, quote, coming together to focus on our next project, end quote. Although not mentioned specifically, it's hard to imagine that the broader layoffs at Meta and other major tech companies has nothing to do with the announcement,

especially considering that Ready at Dawn released its last game, Lone Echo 2, more than a year ago. Ostensibly, the studio has been well at work on its next project for quite some time now. In addition to being one of the platform's most popular free multiplayer games, Echo VR also had one of the most robust in-app purchase offerings of any VR title so far with a Battle Pass style system that allowed players to pay for the chance to unlock cosmetic rewards over the course of seven seasons. Unfortunately, the studio has confirmed that refunds for in-game content will not be offered, end quote. So I wanted to share this again because I'm having trouble figuring out where VR is going. If meta is shutting down, the closest thing VR has to Fortnite, does that sound good to you?

And finally, today, an interesting launch. Instagram co-founders Kevin Sistram and Mike Krieger have launched events. to explore what they're calling next generation social apps. And the first that they've launched is called Artifact, a TikTok-like app for news articles. Sounds right up my alley. Quoting platformer. Artifact, the name represents the merging of articles, facts, and artificial intelligence, is opening up its wait list to the public today. The company plans to let users in quickly, Sistram says you can sign up yourself on the web. The app is available for both Android and iOS. The simplest way to understand artifact is as a kind of TikTok for text, though you might also call it Google Reader Reborn as a mobile app or maybe even a surprise attack on Twitter.

The app opens to a feed of popular articles chosen from a curated list of publishers ranging from leading news organizations like the New York Times to small-scale blogs about niche topics. Tap on articles that interest you and artifacts will serve you similar posts and stories in the future. Just as watching videos on TikTok's For You page tunes its algorithm over time. Users who come in from the waitlist today will see only that centrally ranked feed. But Artifact beta users are currently testing two more features that Sistram expects to become core pillars of the app. One is a feed showing articles posted by users that you have chosen to follow, along with their commentary on these posts.

You won't be able to post raw text without a link, at least for now. The second is a direct message inbox so you can discuss the post you read privately with friends. Sistram and Krieger first began discussing the idea for what became Artifact a couple years ago, he told me. Sistram said he was once skeptical of the ability of machine learning systems to improve recommendations, but his experience at Instagram turned him into a true believer. Throughout the years, what I saw was that every time we use machine learning to improve the consumer experience, things got really good, really quickly, he said. The breakthrough that enabled artifact was the transformer, which Google invented in 2017. It offers a mechanism for

systems to understand language using far fewer inputs than had previously been required. The transformer helped machine learning systems improve at a much faster pace, leading directly to last year's release of chat GPT and the attendant boom in interest around AI. Transformers are the T in chat GPT, end quote. Yes, I am well aware of the fact that there is a big Samsung event today, announcing the new Galaxy S23 lineup, and apparently a whole bunch of laptops, but that's the thing. It's happening right now. It's just getting started at 1 p.m. Eastern, right when the show is publishing, so instead of waiting the 90 minutes or so for it to end, we'll just cover it tomorrow. Talk to you then.