It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Sunday, July 31, 2022
Richer nations fall short on climate finance pledge
Climate activist Vanessa Nakate, second right, and other activists engage in a 'Show US The Money' protest at the COP26 U.N. Climate Summit in Glasgow, Scotland, Nov. 8, 2021. Richer countries failed to keep a $100 billion-a-year pledge to developing nations to help them achieve their climate goals, according to an analysis by the Organization for Economic Cooperation and Development, or OECD, released Friday, July 29, 2022. (AP Photo/Alastair Grant, File) WANJOHI KABUKURU Fri, July 29, 2022 at 11:46 AM·2 min read
Richer countries failed to keep a $100 billion-a-year pledge to developing nations to help them achieve their climate goals, according to an analysis by the Organization for Economic Cooperation and Development, or OECD.
$83.3 billion in climate financing was given to poorer countries in 2020, a 4% increase from the previous year, but still short of the proposed goal. The United Nations-backed payment plan was first agreed in 2009 to help poorer nations adapt to the effects of climate change and reduce emissions.
The pledge, which was originally set up as an annual commitment from its inception until 2020, has never been fulfilled.
“We know that more needs to be done" to address the shortfall, admitted OECD Secretary-General Mathias Cormann.
Who pays for tackling and adapting to climate change has been a key sticking point between richer nations and poorer ones since international climate negotiations began 30 years ago.
Harsen Nyambe, who heads the African Union climate change and environment division, told the Associated Press the continent will continue to put pressure on richer nations to ensure the $100 billion-a-year agreement is fulfilled. He added that the funds will give the continent better access to required technology and will help nations transition to green energy in a fair way.
But others believe that after decades of unmet promises, it's unlikely that richer countries will start to step up.
"They do not have the money. They are over-committed with issues such as Ukrainian crisis and that is why they have been unable to meet any of their pledges,” said Godwell Nhamo, a climate research professor at the University of South Africa.
“Africa should move on and find other sources of funding,” he added.
A report released by the British charity Oxfam in 2020 warned that the recent increase in funding came in the form of loans, not grants, with climate-related loans increasing from $13.5 billion in 2015 to $24 billion in 2018. The charity said at the time that reaching the $100 billion goal in this way “would be cause for concern, not celebration.” It’s unclear whether the latest year-on-year increase in climate funding came in the form of loans or grants.
In recent years, climate financing has helped fund greener energy and transport sectors for poorer nations, as well as adaptation measures for the agriculture and forestry industries which are threatened by land degradation, according to the OECD. ___ Associated Press climate and environmental coverage receives support from several private foundations. See more about AP’s climate initiative here. The AP is solely responsible for all content.
Amazon Shrinks Staff by 100,000, Joining Netflix and Google in Hiring Slowdown
Martine Paris Fri, July 29, 2022
(Bloomberg) -- With recession fears mounting—and inflation, the war in Ukraine and the lingering pandemic taking a toll—many tech companies are rethinking their staffing needs, with some of them instituting hiring freezes, rescinding offers and making rounds of layoffs.
Amazon.com Inc. was the latest company to discuss its belt-tightening efforts this week. During its quarterly earnings call Thursday, the e-commerce giant said it’s been adding jobs at the slowest rate since 2019. After relying on attrition to winnow its staff, Amazon now has about 100,000 fewer employees than in the previous quarter. Here’s a look at the companies tapping the brakes.
Alphabet Inc., Google’s parent company, has been decelerating its recruiting efforts. Chief Executive Officer Sundar Pichai told employees this month that—although the business added 10,000 Googlers in the second quarter—it will be slowing the pace of hiring for the rest of the year and prioritizing engineering and technical talent. “Like all companies, we’re not immune to economic headwinds,” he said. The hiring pause is part of that slowdown, Google said, “to enable teams to prioritize their roles and hiring plans for the rest of the year.” It had nearly 164,000 employees at the end of March.
Amazon said in April that it was overstaffed after ramping up during the pandemic and needed to cut back. “As the variant subsided in the second half of the quarter and employees returned from leave, we quickly transitioned from being understaffed to being overstaffed, resulting in lower productivity,” Chief Financial Officer Brian Olsavsky said at the time. Amazon has been subleasing some warehouse space and paused development of facilities meant for office workers, saying it needed more time to figure out how much space employees will require for hybrid work. The company now has 1.52 million full- and part-time workers and is still the largest employer in the tech world, despite the reduction in headcount.
Apple Inc. is planning to slow hiring and spending at some divisions next year to cope with a potential economic slump, according to people familiar with the matter. But it’s not a companywide policy, and the iPhone maker is still moving forward with an aggressive product-release schedule. Apple had 154,000 employees in September, when its last fiscal year ended.
Carvana Co., an online used car retailer, laid off 2,500 people in May, about 12% of its workforce. In an unusual move, the executive team will forego salaries for the rest of the year to pay severance to those who were let go, according to a filing with the Securities and Exchange Commission. The company had more than 21,000 full-time and part-time employees at the end of last year.
Coinbase Global Inc., a cryptocurrency exchange, told employees it was cutting 18% of staff in June to prepare for an economic downturn. It also rescinded job offers. “We appear to be entering a recession after a 10+ year economic boom,” CEO Brian Armstrong said in a blog post. “While it’s hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment,” he said. The company ended the quarter with about 5,000 employees.
Compass Inc., a real estate brokerage platform, is eliminating 450 positions, about 10% of its staff, according to a filing last month. The company had nearly 5,000 employees at the end of 2021.
Gemini Trust Co., a cryptocurrency exchange founded by Bitcoin billionaires Cameron and Tyler Winklevoss, announced a 10% staff reduction in June. TechCrunch reported that the company laid off another 7% on July 18 and said a leaked plan showed it was seeking to cut a total of 15%, bringing it from 950 employees to 800 employees.
GoPuff, a grocery delivery app, is laying off 10% of its workforce and closing dozens of warehouses. The cuts will affect about 1,500 staff members—a mix of corporate and warehouse employees.
Lyft Inc. told employees it was reining in hiring in May after its stock dropped precipitously. The company went further on July 20, announcing plans to shutter its car-rental business and cut about 60 jobs. Lyft had about 4,500 employees in 2021. Archrival Uber Technologies Inc., meanwhile, has been more upbeat. CEO Dara Khosrowshahi told Bloomberg in June that his company was “recession resistant” and had no plans for layoffs.
Meta Platforms Inc., the parent of Facebook, slashed plans to hire engineers by at least 30%. CEO Mark Zuckerberg told employees that he’s anticipating one of the worst downturns in recent history. The company had more than 77,800 employees at the end of March.
Microsoft Corp. told workers in May that it was slowing down hiring in the Windows, Office and Teams groups as it braces for economic volatility. The company had 181,000 employees in 2021. More recently, the software maker cut some jobs—less than 1% of its total—as part of a reorganization. On July 20, the company said it began eliminating many job openings—a freeze that will last indefinitely.
Netflix Inc., the streaming giant, has had several rounds of highly publicized layoffs since it reported the loss of 200,000 subscribers in the first quarter. In April, it began scaling back some marketing initiatives, then cut 150 employees in May and 300 in June. Last quarter, it reported $70 million in expenses from severance and shed an additional 970,000 subscribers. Netflix had 11,300 employees in 2021.
Niantic Inc., maker of the Pokemon Go video game, fired 8% of its team in June. It was an effort to streamline operations and position the company to weather economic storms, CEO John Hanke told staff in an email. Niantic had around 800 employees at the end of last year.
OpenSea, an NFT marketplace, laid off 20% of its staff on July 14. CEO Devin Finzer tweeted, “We have entered an unprecedented combination of crypto winter and broad macroeconomic instability, and we need to prepare the company for the possibility of a prolonged downturn.”
Peloton Interactive Inc. announced plans to cut about 2,800 jobs globally, roughly 20% of its corporate roles, as part of a surprise shake-up in February that saw its CEO John Foley and several executive team members step down. In 2021, the company reported having nearly 9,000 employees.
Redfin Corp., another real estate brokerage, cut 8% of its staff in June. “We don’t have enough work for our agents and support staff,” CEO Glenn Kelman wrote in a blog post, saying that May demand was 17% below projections and that he expected the company to grow more slowly during a housing downturn. Redfin had about 6,500 employees at the end of last year.
Robinhood Markets Inc., the online brokerage, terminated 9% of its workforce in April. It had about 3,800 employees at the end of last year and racked up more than $2 billion of losses since going public last July.
Rivian Automotive Inc. is planning to cut hundreds of non-manufacturing jobs and teams with duplicate functions. The Southern California electric-vehicle maker, which has more than 14,000 employees, could make an overall reduction of around 5%. In a memo to employees, CEO RJ Scaringe said, “We will always be focused on growth; however, Rivian is not immune to the current economic circumstances and we need to make sure we can grow sustainably.”
Salesforce Inc., the cloud computing platform, has been slowing hiring and reducing travel expenses, according to a leaked memo reported in May by Insider. It had nearly 78,000 employees as of the end of April.
Shutterfly, a maker of personalized photo items, laid off 100 staffers in June, CEO Hilary Schneider told Bloomberg. The company, which has 7,000 employees, is making hiring adjustments to weather the economic uncertainty. “Clearly we’re going through a period of economic choppiness on a global level,” she said. “When you look at the supply chain, it certainly is driving inflation and impacting consumer confidence.”
Shopify Inc., an e-commerce platform, is laying off 1,000 employees, 10% of its workforce, CEO Tobi Lutke said in a letter to employees on July 26. The affected jobs included recruiting, support and sales. The company is offering 16 weeks of severance, career coaching, a laptop and internet allowance, home-office furniture and a free Shopify account for those who want to launch their own storefront. Shopify has 10,000 employees, according to its website.
Spotify Technology SA, the audio service, is cutting employee growth by about 25% to adjust for macroeconomic factors, CEO Daniel Ek said in a note to staff in June. “I do believe only the paranoid survive,” he said on a conference call this week. “And we are preparing as if things could get worse, but it’s hard to be anything but optimistic given what I am currently seeing.” Spotify has more than 6,500 employees, according to its website.
Stitch Fix, an online personalized styling service, said in June that it was pursuing a 15% reduction in salaried positions—about 4% of its workforce—with the majority coming from non-technology corporate jobs and styling leadership roles. It’s coping with higher expenses and weaker demand. According to its website, the company has 8,900 employees.
Tesla Inc., the electric-vehicle maker, cut 200 autopilot workers as it closed a facility in San Mateo, California, in June. CEO Elon Musk said earlier that layoffs would be necessary in an increasingly shaky economic environment. In an interview with Bloomberg, he said that about 10% of salaried employees would lose their jobs over the next three months, though the overall headcount could be higher in a year. The company had 100,000 employees globally at the end of last year.
Tonal Systems Inc., the home fitness startup backed by sports celebrities Steph Curry and Serena Williams, laid off 35% of its 750 employees on July 13, according to CNBC.
Twitter Inc. initiated a hiring freeze and began rescinding job offers in May, amid uncertainty surrounding Elon Musk’s acquisition of the company, according to an internal memo obtained by Bloomberg. More recently, it said it would be paring back office space, but without job cuts. The company had 7,500 employees in 2021.
Unity Software Inc., which makes a video-game engine, surprised employees in June when it sent pink slips to 200 of its 5,900 workers, amounting to 4% of its workforce. Its CEO had assured staff there would be no layoffs, according to Kotaku.
Vimeo, a video sharing platform, cut 6% of the company in July. CEO Anjali Sud said in a blog post that it had slowed hiring since the beginning of the year. “The reality is that the challenging economic conditions around us have impacted our business. We must assume that these conditions will remain challenged for the foreseeable future, and that we aren’t immune. So while we’ve intentionally taken action across other expense areas first, it’s become clear that we also have to look at our largest area of investment, our team,” Sud said.
Wayfair Inc., the online furniture retailer, initiated a 90-day hiring freeze in May. The company had 18,000 employees as of March.
Whoop Inc., a fitness wearable startup, laid off 15% on July 22 and now has about 550 employees, according to a company statement reported by the Boston Globe.
(Updates with more on Amazon starting in second paragraph.)
Most Read from Bloomberg Businessweek
If the Economy Is Shaky, Why Are Company Profits Still Strong?
Builders have been able to sell homes at ever higher prices, even though demand is falling. (Philip Cheung/The New York Times)
Consumers are gloomy, the economy is shrinking, the Federal Reserve wants it to keep slowing and economists now say the whole world could be sliding toward recession.
At the same time, a lot of strong numbers are still coming out of many large American companies, which have been releasing their quarterly earnings reports and discussing their outlooks with Wall Street.
“We had an outstanding quarter,” American Express CEO Stephen Squeri said after the company reported record revenue. “As our second-quarter results demonstrate, we have a lot to be proud of,” Hilton Worldwide CEO Christopher Nassetta said, noting that revenue per room in most major regions of the world was now above 2019 levels.
The blustery corporate optimism may seem at odds with the Fed’s grim determination to hold back the economy to get inflation down. But the economy is both what the Fed does and how companies and consumers are behaving. And the full picture of this strange economic moment is perhaps better captured by considering both sides together, central bankers and CEOs, no matter how divergent they seem.
Some big companies — Meta, for example — have reported disappointing numbers, and their CEOs are downbeat about the future. Other tech giants, Alphabet, Amazon, Apple and Microsoft included, all released results that, though hardly stellar, were enough to persuade investors that their businesses were not falling off a cliff.
Indeed, so far, with roughly half of all large companies having reported their numbers, this earnings season has not provided much evidence that the economy is entering a big crackup, and almost no CEOs talked about doing mass layoffs on earnings calls.
The lack of really bad news in earnings in part explains why the S&P 500 stock index has bounced about 12% from its low point in June and why Wall Street analysts still predict that earnings for the companies in the S&P 500 will grow 10% this year, according to data from FactSet. Although much of that growth is expected to come from energy companies, which have benefited from higher oil and gas prices, analysts expect profits to rise in eight of the 11 industries represented in the index.
It’s an awfully rosy picture when “recession” is on people’s minds. That’s why for some on Wall Street, that optimism is absurd. Michael Burry, an investor who foresaw the 2008 mortgage meltdown, wrote on Twitter on Tuesday that the earnings reports coming in felt like a “last hurrah.”
Not done with fighting inflation, central banks are expected to continue pushing up the cost of borrowing, which would make corporate investments more expensive and dampen demand for companies’ products and services. Europe, a big market for U.S. corporations, could have a nightmare winter if natural gas prices continue rising. And supply chains are still dysfunctional for many companies, meaning they can’t even make and sell products for which there is demand.
“All those headwinds that created the downturn, they’re still intact and arguably getting worse,” said Mike O’Rourke, chief market strategist at JonesTrading.
Things could go into reverse quickly, the pessimists say. Many companies have for some time lived in a sort of nirvana in which they could keep hoisting their prices and customers would keep paying them, creating blowout profits.
Now there are signs that consumers are balking at what companies charge, and if they pull back hard, their sales and earnings could take a big hit and lead CEOs to lay off workers and slash investments to protect profit margins and balance sheets. Early signs of this dynamic are emerging, according to some analysts.
Homebuilding companies, for instance, have been able to sell homes at ever-higher prices over the past two years, but as the Fed has raised interest rates, their senior executives say demand has fallen.
PulteGroup, a large homebuilder that reported earnings this past week, said the average price of its homes in the second quarter was $531,000, a 19% increase from a year earlier. The company forecast that the average would keep rising this year. At the same time, Pulte said, net new orders plunged 23% from a year earlier, which the company blamed on the increase in mortgage rates.
“We’ll have to see how well the sector is able to hold on to those price increases that they’ve accumulated over the last couple of years,” said Brian Barnhurst, co-head of credit research for PGIM Fixed Income, a division of Prudential, referring to homebuilders.
Pulte did not respond to requests for comment.
Although well-off consumers show few signs of cutting back, the second-quarter earnings contain plenty of evidence that some households are getting squeezed as inflation pushes up their bills.
AT&T said its customers were taking two days longer on average to pay their bills, which caused a hit to the phone company’s second-quarter cash flow of almost $1 billion. AT&T CEO John Stankey said on the earnings call that bad-debt levels were slightly higher than before the pandemic. But, he added, “We view this cycle no differently and still expect customers will pay their bills, albeit a little less timely.”
On the earnings call for McDonald’s, the company’s chief financial officer said some of its customers were choosing “value” offerings over others. On Chipotle’s earnings call, CEO Brian Niccol said: “The low-income consumer definitely has pulled back their purchase frequency. Fortunately, for Chipotle, that is not the majority of our customers.”
Big retailers such as Walmart have said their customers are spending so much on must-have items such as food and fuel that they’re eschewing higher-cost merchandise, including clothes and home goods. Since shoppers are still spending at Walmart for the staples, the company — and to a certain extent, the economy — still benefits from their purchases, although the shift has hit its profit margins and helped pummel its stock.
Banks earnings are a good place to get an early read on how consumers are faring. Overall, there are few signs at lenders that borrowers are having trouble repaying their loans, analysts say.
“You would have come away from the quarterly earnings thinking that the consumer was generally in good shape,” said Moshe Orenbuch, an analyst who covers finance companies at Credit Suisse.
Because of pandemic stimulus payments, low unemployment and rising wages, the levels of past-due loans and bad debt fell to historical lows, but lenders have expected them to rise as borrowers reduce cash holdings and their balance sheets look more like they did before the pandemic. The finance industry has started calling that process “normalization.”
It appears to have begun among lower-income borrowers.
Richard Fairbank, CEO of Capital One, a big credit-card lender, said on the company’s earnings call that this normalization was more evident in the bank’s subprime loans than in those made to borrowers with stronger credit. But Capital One declined to provide past-due loan numbers for its subprime loans, making it impossible to chart the extent of any deterioration.
In its earnings report, Ally Bank, a big auto-loan maker, provided data on past-due auto loans in the second quarter for borrowers at a range of income levels. Past-due loans were either at or close to pre-pandemic levels for borrowers with lower incomes.
Ally declined to provide the same data for earlier quarters, making it impossible to know how quickly past-due loans might have risen. On its earnings call, Jenn LaClair, Ally’s chief financial officer, said, “We have continued to invest in talent and technology to enhance our servicing and collection capabilities and remain confident in our ability to effectively manage credit in a variety of environments.”
Some analysts think the pullback in spending could spread to wealthier households.
“You’re going to see it go up the income scale as the year unfolds with people sitting there, saying, ‘I’ll go without rather than spend this much on that’ or ‘I’ll trade down to something more affordable,’” said O’Rourke, the JonesTrading strategist. He added that he was waiting for earnings from Macy’s and Nordstrom, which are scheduled to report in August, to see if that was happening.
The concern is that the heavy summer spending that has recently bolstered the earnings of the hospitality industries and the airlines is not sustainable. “There’s a faction of the market that’s quite convinced that when we get to the fall and the bills from the summer spending come home to roost, the consumer will be in a much trickier spot,” said PGIM’s Barnhurst.
An exchange this earnings season reveals how CEOs and companies can keep the economy going, even when they fear that a downturn may be at hand.
JPMorgan Chase CEO Jamie Dimon warned in May that storm clouds were gathering over the economy. On JPMorgan’s second-quarter earnings call, Mike Mayo, an analyst at Wells Fargo, asked Dimon why the bank had committed to investing such large sums this year if things could turn dire.
“It’s like you’re acting like there’s sunny skies ahead,” Mayo said, “You’re out buying kayaks, surfboards, wave runners just before the storm. So is it tough times or not?”
Dimon’s response: “We’ve always run the company consistently, investing, doing this stuff through storms.”
UK energy company Shell reported record quarterly profits earlier this week.Google Streetview
Energy providers Centrica and Shell both just booked record profits as fuel costs rise.
Europe is experiencing a gas crisis, with one key benchmark doubling in two months.
British households' energy bills could have tripled by the end of the year, according to the consultancy firm BFY.
Soaring gas prices are bad news for consumers - but they're helping major energy companies to rake in record-breaking profits.
UK-listed oil and gas major Shell and Centrica, a utility, reported record-breaking quarterly profits this week.
Shell posted quarterly profits of 11.5 billion pounds ($13.6 billion) - up 92% from a year ago - while British Gas owner Centrica hauled in 1.3 billion pounds ($1.6 billion).
Soaring oil and gas prices have helped the two firms to achieve those historic results. Brent crude and WTI crude have both spiked over 30% year-to-date, while benchmark Dutch TTF natural gas futures have risen by 112% since the start of June.
"It comes as no surprise that Centrica and Shell have performed very strongly again this quarter, with earnings resulting in an $11.5 billion profit, a new record for Shell," Infosys Consulting strategist Simon Tucker said. "It's clear we are currently in a commodities super cycle with supply limited and demand high – and this is likely to be the case for the next three to five years."
European prices for natural gas, coal and power have surged this year, largely because of disruption to fuel supply from Russia, which provides around 40% of the region's gas needs alone. EU sanctions on Moscow over the war in Ukraine have resulted in tit-for-tat closures of key sources of energy supply, which has driven inflation to multi-year highs, squeezing consumers, but bringing a windfall to fuel providers.
And it isn't just UK energy companies that have seen their profits soar.
"We expect European gas prices will ultimately be driven higher once again during summer 2023, as price-driven demand destruction becomes top of mind once more," a team led by the bank's head of natural gas research Samantha Dart said in a recent research note. "A more sustained lower-price environment is not likely in Europe in our view until 2025."
But the record-breaking profits come as consumers grapple with soaring fuel costs.
The energy consultancy firm warned this week that UK households could see their fuel bills rise to just under 3,500 pounds ($4,280) by the end of 2022 - meaning the figure would have tripled in the space of a year.
Analysts called for the oil and gas firms to reinvest their sky-high profits to help boost supply, which could be one route to easing Europe's energy crisis.
"Every effort possible must be made to reduce energy use and improve supply," Infosys's Tucker said. "Investment can also be directed towards the clean-up of bad industry practices like flaring and spillage of oil, which will open up significant waste reduction potential."
BP expected to report soaring profit days after Shell and Centrica slammed
Pa City Staff - Friday
Bosses at BP will likely be nervously eyeing the headlines that fellow energy giants Shell and Centrica generated this week as they prepare to present their own set of bumper profits.
The oil giant is expected to have made far more than twice of what it pocketed in profit a year ago.
It comes as bosses at Centrica and Shell were branded “money-grabbing” on one front page on Friday. “Profits in misery,” another said.
The businesses both combed in big profit increases as they benefited from higher prices for oil and gas around the world.
BP will continue to reap the reward of elevated oil prices in the second quarter with healthy profits expected this time round
Analyst Laura Hoy
The amount that Shell was able to sell its gas for more than tripled in the last year from 4.31 dollars to 13.85 dollars per thousand standard cubic feet.
Undoubtedly some of this will rub off on BP, one of Shell’s big rivals, though just how much, and how much anger it stokes, remains to be seen.
The answers will come on Tuesday.
Analysts expect underlying replacement cost profit – a measure that BP likes to use – to reach 6.8 billion dollars (£5.6 billion) for the second quarter. It would be an increase from 2.8 billion in the same period a year ago.
“BP will continue to reap the reward of elevated oil prices in the second quarter with healthy profits expected this time round,” said Hargreaves Lansdown equity analyst Laura Hoy.
“Capital expenditure in oil and gas is on the decline as BP marches forward with its transition to renewables.
“The recent Windfall Tax imposed by the UK government is still looming over the industry.
“But given that projects within the industry take years – or even decades – to set up, it should have little impact on the group’s investment plans. Still, any update from management on potential implications will be welcomed.
“Aggressive spending on lower carbon assets means this will also be an area of focus for investors.
“These yet unproven projects could become a cash furnace to oil profits, so any update on BP’s aims to generate returns of 8-10% in this part of the business could move the needle.”
She said investors will also be looking for extra information on BP’s exit from Russia. It has decided to sell off its 20% stake in Rosneft, which the company jointly owned with the Kremlin.
But it could be easier said than done. “Eager buyers are not expected to emerge any time soon,” Ms Hoy said.
“That means continuous write-downs are anticipated as the value of this asset declines.”
From news to politics, travel to sport, culture to climate – The Independent has a host of free newsletters to suit your interests. To find the stories you want to read, and more, in your inbox, click here.
Taiwan says 'key position' in semiconductors won't be shaken as US passes chip act
FILE PHOTO: Two chips are on display at the Taiwan Semiconductor Research Institute (TSRI) in Hsinchu
TAIPEI (Reuters) - Taiwan's "key position" in making semiconductors will not be shaken and production on the island is the most efficient way of doing things, the Economy Ministry said on Friday in response to the U.S. Congress passing a major new chips act.
The U.S. House of Representatives passed the sweeping legislation on Thursday to subsidise the domestic semiconductor industry as it competes with Chinese and other foreign manufacturers.
Taiwan is a major chip producer, home to Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world's largest contract chipmaker, which is also investing $12 billion in a new plant in Arizona.
The Economy Ministry noted that it is "happy to see" Taiwanese firms being able to access "resources on the ground" when they operate around the world, and to establish good relations in the U.S. supply chain.
At the same time, Taiwan is an advanced global semiconductor manufacturing centre with the most resilient and competitive production model, it added.
"After 50 years of continuous innovation, investment and generations of talent, our country's semiconductor manufacturing efficiency, supply chain integrity and innovation energy have always been at the world's top, and Taiwan's key position in semiconductors will not be shaken."
Taiwan has always been a partner of the world, as shown by its efforts to alleviate auto chip supply chain problems, and the "made in Taiwan" model of manufacturing semiconductors is the most efficient and reliable way of doing things, it said.
"Whether in the past, present or future, Taiwan will continue to play the role of an indispensable partner in the global supply chain."
Taiwan has been keen to show the United States, its most important international backer at a time of rising military tensions between Taipei and Beijing, that it is a reliable friend as a global chip crunch impacts auto production and consumer electronics.
But Taiwan's government is also determined to keep the majority of advanced chip manufacturing at home.
China had lobbied against the U.S. semiconductor bill, calling it reminiscent of a "Cold War mentality" and "counter to the common aspiration of people" in both countries.
(Reporting by Taipei newsroom; Writing by Ben Blanchard; Editing by Kirsten Donovan)
U.S. says it will limit size of semiconductor chips grants
Fri, July 29, 2022
By David Shepardson
WASHINGTON (Reuters) - The U.S. Commerce Department said late on Friday it will limit the size of government subsidizes for semiconductor manufacturing and will not let firms use funding to "pad their bottom line."
On Thursday, the U.S. House of Representatives gave final approval to legislation that provides $52 billion in government funding to boost semiconductor manufacturing and research. President Joe Biden is expected to sign the legislation early next week.
The Commerce Department Friday told chips companies awards will be "no larger than is necessary to ensure the project happens here in the United States" and added it will discourage "race-to-the-bottom subsidy competitions between states and localities."
Congressional Progressive Caucus chair Pramila Jayapal said the group backed the legislation after lengthy negotiations with Commerce Secretary Gina Raimondo after the group expressed concerns chips companies would use funding for stock buybacks or pay dividends.
A caucus spokeswoman said Friday "progressives were able to vote for the bill yesterday, confident that the department would be ensuring the funding could not be used for corporate self-enrichment."
Commerce said applicants must supply detailed financial information and projections for proposed projects and capital investment plans: "The department will go over these with a fine-tooth comb and make sure that companies are not padding their models to ask for outsized incentives."
A Commerce Department spokesperson declined to comment beyond the web posting.
The department vowed to "give preference in awards to companies who commit to make future investments that grow the domestic semiconductor industry ... and not engage in stock buybacks."
The legislation does not prohibit stock buybacks by companies receiving government funding but does prohibit the use of grant funds for the buybacks.
Companies winning funding will be prohibited for 10 years "from engaging in significant transactions in China or other countries of concern involving any leading-edge semiconductor manufacturing capacity or material expansions of legacy semiconductor manufacturing capacity designed to export to the U.S. and other countries."
(Reporting by David Shepardson; Editing by Chris Reese)
COUNTING ON CHIPS FOR BAIL OUT
What Intel’s Disastrous Earnings Tell Us About the Chip Sector and Competitors
We’re talking about Intel (INTC) June-quarter results. The company not only delivered a disappointing quarter but reset its 2022 guidance meaningfully lower, putting its shares under pressure Friday.
For the current quarter, the chip company now sees earnings of $0.35 per share vs. the $0.84 consensus. It is now guiding for third-quarter revenue of $15 billion-$16 billion vs. the $18.67 billion consensus. As for full-year 2022, its EPS expectation is now $2.30, down from its prior forecast of $3.60 and the $3.39 consensus. In terms of revenue for the year, Intel now expects $65 billion-$68 billion, down from $76 billion and well below the $74.4 billion consensus.
What do we make of this?
Some of it can be accounted for by the weakening PC market, which Intel said it is seeing for the consumer market even though the enterprise and high-end PC market remains strong. That matches comments we’ve collected from Microsoft (MSFT) , Logitech (LOGI) , and Samsung in recent days. Indeed, during the June quarter, there were enough data points on the PC market that a good deal of that news was already priced into chip companies, including our own Advanced Micro Devices (AMD) .
In terms of Intel’s data center business, the company now expects to grow slower than the overall data center market, which in plainer English means it will continue to experience market-share loss as AMD and Nvidia (NVDA) continue to eat its lunch. Comments on cloud and data center spending continue to be vibrant, and that suggests both AMD and Nvidia will deliver June quarters that were better than feared. AMD will report its quarterly results this coming Monday (August 1) after the market close.
Turning to Intel’s capital spending, the company is cutting its 2022 forecast to $23 billion from its $27 billion target earlier this year. Despite the reduction, Intel is still spending roughly $5 billion more than it did last year. At the same time, the CHIPS bill has passed, which should result in Intel’s capital spending remaining at elevated levels in 2023 as it adds additional foundry capacity.
During the earnings call, Intel discussed its recent win with MediaTek and commented it is talking with several other fabless chip companies. We are not surprised by this considering the supply-chain issues during the pandemic and those with China during the June quarter. How quickly companies like Qualcomm (QCOM) , Nvidia, AMD, and others will be willing to use Intel’s foundry services remains to be seen, however. We suspect they will be more inclined to use newfound domestic capacity from Taiwan Semiconductor (TSM) . That said, all this forthcoming domestic capacity is a positive for semi-cap equipment companies, including our own Applied Materials (AMAT) .
Samsung seeks to reassure markets about the competitiveness of semiconductors
Samsung Electronics reassured markets about the competitiveness of its semiconductor business, after a series of warnings from investors, analysts and employees that the Korean company is losing its technological edge.
The South Korean conglomerate is the global market leader in memory chips, harboring ambitions of bridging the gap in its main competitor, Taiwan Semiconductor Manufacturing Company, in the plumbing sector, where companies are contracted to produce chips designed by others.
To illustrate the company’s importance to the global economy, US President Joe Biden visited its semiconductor plant in Pyeongtaek during a visit to South Korea in May.
But earlier this year, the company lost its two largest plumbing customers, Qualcomm and Nvidia, to TSMC, according to analysts, who noted that the companies were disappointed by Samsung’s inability to offer fixed sizes of 4nm chips and 5 nanometers that make up the central processing units of computers.
TSMC captured 54 percent of the foundry market in the first quarter of 2022, more than triple Samsung’s market share, according to market researcher TrendForce.
Last year, Samsung announced a 171 trillion won ($151 billion) investment plan for foundry chips by 2030. But its Taiwanese rival plans to invest up to $44 billion this year compared to Samsung’s estimated $12 billion, according to SK Securities and Exchange headquartered in Seoul.
And in the D-Ram business, traditional strengths Samsung, competitors Micron Technology and SK Hynix have been quicker to unveil some of its more advanced chips. D-Ram technology enables short-term storage for graphics, mobile and server memory chips.
Problems with its flagship Galaxy S22 smartphone, which was launched in February, indicates that the South Korean conglomerate is also lagging behind Apple in hardware competitiveness, while the performance and sales of Samsung’s Exynos 2200 mobile processor chips, launched this year, It was disappointing.
Investors, including hedge funds Petra Capital Management and Dalton Investments, have raised concerns about what they describe as Samsung’s tough corporate culture under Lee Jae-yong, Samsung’s vice president and de facto leader.
They argue that the company has prioritized rapid development and cost savings over quality and innovation.
“Designing their chips required creative and engineering ingenuity, but Samsung’s risk aversion culture deepened under Lee Jae-yong’s leadership, with engineers shunning new attempts at innovation,” said Chan Lee, managing partner at Seoul-based Petra Capital Management.
In April, a junior engineer who worked on Samsung’s semiconductor technology development team wrote a letter to the company’s leadership complaining that Samsung researchers were under enormous time pressure to achieve “impossible” goals to develop new technology and products, and that this “feeling of failure” permeated the organization.
“It seems that the top decision maker is unable to understand the root cause of the problems,” the engineer added. “I’ve heard quite a few stories about the ‘crisis’ but I think this moment is more dangerous than ever.”
“Cultures in the design house and luxury division are critical to success. SemiAnalysis senior analyst Dylan Patel wrote in a recent report: He attributed Samsung’s problems to a “toxic” culture where different business units blame each other “in the face of bugs” for their weakness in the sector. Not related to memory.
Samsung’s share in the smartphone application processor market has almost halved since 2019, and it ranked fourth last year at 6.6 percent, compared to 37.7 percent by Qualcomm, MediaTek 26.3 percent, and Apple 26 percent, according to a research firm. Market Strategy Analytics.
“[Samsung’s] “Technological advantages are crumbling,” Patel wrote. “Samsung is falling behind in all aspects of technology development including the one area where they have historically crushed all competitors, D-Ram.”
Samsung Electronics reported lower-than-expected operating profit for the second quarter of 2022 as inflation dented consumer demand for electronic devices.
It is also preparing for a fall in demand in response to higher global prices following the pandemic-driven boom in the technology sector over the past two years.
But company executives argue that its memory business still has a technological advantage over its competitors, citing its faster adoption of UV lithography to produce memory chips and its dominant D-Ram market share of about 40 percent.
Kang Moon-soo, Samsung’s foundry vice president, called market concerns about losing key customers “exaggerated,” telling analysts in April that it has backlogged orders for the next five years, or eight times last year’s revenue from the business.
Analysts said TSMC’s faster transition to mass production of 4nm and 5nm chips has affected the Korean company’s ability to produce high-end chips in sufficient sizes for its high-profile customers.
But Samsung told the Financial Times that it is now able to produce fixed quantities of chips and will “maximize” supply. The company is “reorganizing” its chip design business to boost its long-term competitiveness, an executive told analysts Thursday.
Earlier this week, the company held a gala to celebrate its first shipment of 3nm chips, after beating TSMC to bring the next generation of memoryless chips to market.
“Samsung still has a chance to attract customers back if it can increase the rate of return on advanced chips,” said James Lim, an analyst at hedge fund Dalton Investments in California. “No one wants to take the risk of being completely dependent on TSMC.”
Samsung also said it was making efforts to create a “comprehensive challenge culture” through “open communication” with employees. She said she continued to talk to employees about the company’s vision and business direction.
There is optimism within the company that Lee, a scion of the company’s founding family, will receive a pardon from President Yoon Seok Yeol next month.
Lee was released from prison on parole last year, having served 60 percent of his sentence for bribing former president Park Geun-hye to secure his family’s control of Samsung Electronics.
But he is still subject to restrictions related to his job and business activities, which effectively complicate his ability to oversee the management of the sprawling Samsung conglomerate. Presidential pardons are traditionally granted before South Korean Independence Day in mid-August.
Alaa Abdel Fattah, left, a leading Egyptian pro-democracy activist walks with his mother Laila Soueif, a university professor who is an also an activist, outside a court, in Cairo, Egypt, Oct. 26, 2014. A leading human rights watchdog on Thursday, July 28, 2022, urged Egyptian authorities to allow the family of a jailed activist access to him and reiterated calls for his immediate release. For nearly 10 days, Abdel-Fattah's family members had not received any word from him and were told by prison officials that he is refusing to meet with them, Amnesty International reported.
(AP Photo/Hussein Tallal, File)
Fri, July 29, 2022
CAIRO (AP) — Egyptian prosecutors are denying allegations of torture and ill-treatment leveled by a prominent imprisoned activist and claim he is in good condition, years after the allegations were made.
For nearly 10 days, Alaa Abdel-Fattah's family members say they have not heard from him and have been told by prison officials he's refusing to meet with them. Amnesty International has urged Egyptian authorities to allow the family access to the 40-year-old programmer and father serving a five-year sentence.
He was sentenced in December on charges of spreading false news, a charge often used to sentence opposition and pro-democracy activists in Egypt. His family says he has been on hunger strike since April to protest his detention and has voiced serious concerns for his health.
His imprisonment has come to symbolize the broad crackdown on dissent that has targeted not only Islamists from the outlawed Muslim Brotherhood but also secular activists, economists, writers and others under the government of President Abdel-Fattah el-Sissi.
A statement released late Thursday by the Public Prosecution Office said a senior prosecutor was dispatched on Wednesday to Wadi el-Natrun Prison to investigate nearly three-year-old claims that Abdel-Fattah was beaten and denied basic rights. Abdel-Fattah's complaints stem from when he was previously held at the Tora prison complex in southern Cairo.
After examining Abdel-Fattah, the prosecutor concluded that he showed no marks of torture, the statement said.
“The inmate is in good health and a doctor examines him regularly, along with other inmates. He never had any health complaint,” read the statement.
Abdel-Fattah's sister, Mona Seif, wrote on Twitter that the prosecutor's statement provides the family with proof that her brother is alive.
“That is the most important update now,” she said.
His aunt, award winning novelist Ahdaf Soueif, cast doubt on the seriousness of the prosecutors’ investigation.
“They are examining Alaa and concluding that they cannot see any signs of beatings that actually took place two years and nine months ago,” she wrote on Twitter.
Abdel-Fattah, an outspoken dissident, rose to prominence during the 2011 pro-democracy uprisings that toppled longtime autocrat Hosni Mubarak and has spent most of the past decade behind bars.
His family has filed multiple complaints since 2019 about him being denied access to books, exercise time outside his cell, regular visits and proper medical care. In May, authorities transferred him from Tora Prison to the newly-inaugurated Wadi el-Natrun prison, located about 100 kilometers (62 miles) north of Cairo.
Earlier this year, Abdel-Fattah gained British citizenship through his mother, Laila Soueif, a math professor at Cairo University who was born in London. The family said at the time they sought a British passport for Abdel-Fattah as a way out of his “impossible ordeal.” The family has been asking authorities to grant him access to a consular visit.
On Friday, the U.K. Foreign Office said Foreign Secretary Liz Truss raised Abdel-Fattah’s case during a meeting with her Egyptian counterpart earlier this month in London. It said Britain is working to secure his release and called on Egyptian authorities to ensure his welfare needs are met while in prison.
ZIONIST ETHNIC CLEANSING
Palestinians say Israeli fire kills teen in West Bank rally
Palestinians say Israeli fire kills teen in West Bank rally
Palestinian protesters block an Israeli army vehicle as they block the street that bypasses the West Bank village of Mughayer, north of Ramallah, Friday, July 29, 2022. Palestinians protesting against Israeli settlements activities blocked a main street and scuffled with Israeli settlers and army soldiers who used teargas to disperse them. (AP Photo/Nasser Nasser IMAD ISSEID Fri, July 29, 2022
RAMALLAH, West Bank (AP) — Israeli forces opened fire at Palestinian protesters in the occupied West Bank on Friday, killing a 16-year old and wounding five people, the Palestinian Health Ministry said.
According to the ministry, Amjad Abu Alia was shot in the chest by a live bullet and pronounced dead after he was brought to the hospital. He was shot as some 250 Palestinians gathered to protest against Israeli settlement expansion in the village of Mughayer, north of the city of Ramallah.
There was no immediate statement from the Israeli military.
The protesters closed a road used by settlers with burning tires, after which scuffles erupted with the settlers, according to an Associated Press reporter at the scene. The Israeli military stepped in, firing stun grenades and tear gas to disperse the protesters.
Shortly after, both settlers and soldiers fired live shots, according to Wafa, the official Palestinian news agency.
Abu Alia was shot as he was running away with a group of protesters. The ministry said five protesters were wounded; three by live fire and two by rubber-coated bullets.
Demonstrations against Israeli settlement expansions are a weekly occurrence in several parts of the West Bank, which Israel occupied in the 1967 Mideast war.
The Palestinians want the West Bank and the Gaza Strip for a future state, along with a capital in east Jerusalem. They say the building of settlements, which house half a million settlers, hinders an independent, contiguous Palestinian state in the future.
Most of the international community does not recognize settlements and considers them illegal.
