TSMC and Pokemon Go!

As Pokemon Go invades the world, let me give you a firsthand player’s description of the game and why the next generation of augmented reality apps will energize the fabless semiconductor ecosystem and greatly benefit TSMC.

While I am not a “gamer” per say, I am a technologist and am always looking for new semiconductor market drivers. I am also a father of four and uncle of many more so I get to pretend I’m a kid again on a regular basis.

My 13 year old nephew came to visit last month and introduced me to Pokemon Go. I was already familiar with Pokemon since I have 4 millennial children and have suffered through years of Pokemon cartoons, video games, cards, and even Pokemon Halloween costumes that we still have in the attic somewhere.

Getting my gamer nephew outside is always a challenge so I jumped at this opportunity to combine three things that I enjoy: Walking for miles and miles, researching semiconductor applications, and beating my nephew at a video game.

Loading the app was easy, free, and from what I have read more than 100 million people have already done it. The app is true to the Pokemon series: You walk around and toss Pokeballs at Pokemon characters that pop up around town. There are designated PokeStops where you can get more balls and other items that help you in the game. There are also PokeGyms where you can train your captured Pokemon by battling others. Funny thing, there is a PokeGym right outside my regular gym so you can see the commercial applications already. In fact, I’m a bit surprised that all Starbucks are not PokeStops.

The PokeStops are a great example of the power of crowdsourcing and have clear commercial applications. Most of the hundred plus stops (Danville is lousy with them) I have visited were created by the crowd and connected with the app via the camera and GPS so you get an augmented reality Google map to follow. If you really want to know what augmented reality is download the Pokemon Go application and see for yourself. You can also turn the Pokemon Go AR off to compare.

You get experience points for doing PokeThings and credit for the miles you have PokeWalked. To be clear this only works while you are walking. I left my app on during a 3 hour car drive and also a 40 mile bike ride and got no walking credit. My nephew did catch a couple of Pokemon in the car when I drove him home so hopefully they will disable that for safety’s sake.

Of course there is a PokeStore where you can buy things which has raked in more than $200M during the games limited release in July. Pokemon Go just went worldwide (with the exception of China, India, and Iran) so expect a PokeBank rush in the coming days. Nintendo stock has also jumped adding billions of dollars in valuation.

Bottom line: Pokemon Go is a work in progress but a great example of augmented reality on your smartphone which is a preview of things to come, absolutely. Pokemon Go and other AR apps will push the sales of smartphones into the double digits again in the not too distant future (my opinion).

In regards to semiconductors, this app absolutely consumed my iPhone 6 and my data plan. Most serious PokePlayers have portable chargers because PokeWalking also dramatically reduces battery life.

This also reminds me of two keynotes I attended many years ago. First it was Andy Grove saying that software was the limitation with PCs not hardware followed by Bill Gates saying the complete opposite. Both men were right of course because as we build smartphones the software will consume them forcing us to build bigger and better smartphones. It is a never ending race that has driven the semiconductor industry since the beginning, right?

So what does this all have to do with TSMC? TSMC dominates the smartphone wafer business and that will not change for the next few years (28nm, 16nm, 10nm, and 7nm). In fact, I am betting the iPhone 7 (which is full of TSMC chips) will exceed sales expectations thanks in part to AR applications like Pokemon Go.