Tiny pure-gold pin is ‘pulsing heart’ of European space mission
Staff Writer | August 10, 2022 |

Gold pin. (Image courtesy of ESA-Remedia).

A pure-gold pin not much bigger than the tip of a pencil is the ‘pulsing heart’ of the European Space Agency’s Low Earth Orbit Facility, LEOX.


The pin is being produced at a jewelry shop in Italy that offered to manufacture it, using their experience supplying miniature mechanical gold parts for clockmakers and other industries.

The device is part of the materials being developed to withstand the highly-erosive individual oxygen atoms prevailing at the top of the atmosphere, the result of standard oxygen molecules of the same kind found just above the ground being broken apart by powerful ultraviolet radiation from the sun.

All missions that orbit less than about 1,000 kilometres above earth’s surface must be designed to resist atomic oxygen. To realistically simulate the low-earth orbit environment, the LEOX atomic oxygen facility generates atomic oxygen travelling at 7.8 km/s.

Atomic oxygen is not easy to generate on earth because it is very reactive. This means that the materials used to make the simulator must be as robust as the materials flown in space.

The sturdy gold pin is used to inject tiny pulses of oxygen gas molecules into a vacuum chamber, where the molecules are split into atoms using a powerful laser.

Pure gold, though expensive, is one of the few materials that can resist the combined impact of the laser and the highly erosive atomic oxygen, allowing the simulator to pulse millions of times during each test campaign.

The pins, however, do eventually erode and need to be replaced.

Chile rethinks mine safety after worker deaths and expanding sinkhole
Reuters | August 10, 2022 

Workers at Chuquicamata mine, Chile. Credit: Codelco

Chile is taking another look at health in safety in its mines after two workers died on a mining construction project in July and a giant sinkhole more recently opened up near a copper mine.


Chile President Gabriel Boric said on Wednesday he wants to ratify an International Labor Organization (ILO) convention on health and safety in mines. The rules were issued in 1995 and first adopted by Botswana, Finland, Spain and Sweden. Brazil adopted the rules, known as convention 176, in 2006 and Peru in 2008.

Trade associations and legislators have requested government support for convention 176, which includes guarantees for workers, while requiring the state to adopt certain legislative standards.

“Although accident rates have decreased in the last 10 years, we still have a lot to do,” Boric said during a speech commemorating Chile’s Miner Day.

The president said that there were 20 accidental deaths in the mining industry last year and wants to reach a goal of zero.

In July, two workers died in separate accidents at different construction projects for state-owned Codelco, the world’s largest copper producer.

Chile’s mining regulator Sernageomin found “deficiencies” in both cases, noting that the deaths could have been prevented, bringing attention to compliance with industry safety standards in Chile, the world’s No.1 copper producer.

Ratifying the convention would mean stricter safety measures, more government oversight and allow workers to file lawsuits to the ILO.

Boric also mentioned the recent sinkhole that occurred near a copper mine in northern Chile that is still being investigated.

“What if that sinkhole happened in a town? What if it happened in a work site?” Boric said. “What would we be lamenting today? It could perfectly have happened.”

(By Fabián Andrés Cambero and Alexander Villegas; Editing by Lisa Shumaker)

Glencore takes heat in Quebec for smelter that spits out arsenic

Bloomberg News | August 10, 2022 | 

Credit: Glencore Canada

Quebec’s public health director took aim at Glencore Plc for toxic emissions at a copper smelter in the province’s northwest, saying the level of pollution must be brought down quickly because of evidence it’s causing increased risk of cancer and other health problems.


The Horne Smelter in Rouyn-Noranda, a remote city about 600 kilometers (373 miles) northwest of Montreal, is emitting 165 nanograms of arsenic per cubic meter of air on site, according to a recent study by public health authorities in the Canadian province. That’s 55 times the standard safe level of 3 nanograms.


It must be brought down to 15 nanograms, according to Luc Boileau, who was appointed this year as Quebec’s top public health official.

“The actual situation from the Horne Smelter is not acceptable,” Boileau said. “At a threshold of 15 nanograms, the protection objectives will be achieved. It reduces the risk of lung cancer for the general population.” In a neighborhood near the plant, arsenic pollution is 90 nanograms, or 30 times the standard.

The smelter, in operation since 1926, has taken center stage in Quebec’s news media after data showed the population of Rouyn-Noranda has a higher percentage of chronic obstructive pulmonary disease than the provincial average. More than 50 health professionals from the region signed a letter calling on the government to apply air-quality standards.

“We take note of the recommendation issued today by the National Director of Public Health regarding air quality in Rouyn-Noranda, and are sensitive to the concerns expressed about the well-being of the community,” Glencore spokesperson Alexis Segal said in an emailed statement.

“We are more determined than ever to minimize our environmental footprint and offer our full cooperation to reduce our emissions to a minimum,” Segal said, adding that the company will unveil an action plan “in the coming days.”

In July, the Institut National de Sante Publique du Quebec, an agency that assists in public health decisions, said that the risk of cancer due to arsenic and cadmium in the air “exceeds the value considered negligible.”

Quebec’s environment ministry is in talks with Glencore about its plan to lower emissions. Premier Francois Legault threatened to close the plant if the company doesn’t act, though he didn’t exclude the possibility the government may offer financial help to modernize the facilities.

The Syndicat des Metallos, a union representing more than 1,500 Glencore employees in Quebec, has been told by the company it will invest C$1.5 billion ($1.2 billion) in the smelter over the next 10 years to reduce arsenic and greenhouse gas emissions.

According to Glencore, the Horne plant is the only copper smelter still operating in Canada, contributes C$500 million to Quebec’s gross domestic product and represents more than 650 direct and 1,850 indirect jobs.

(By Mathieu Dion, with assistance from Erik Hertzberg)

CRIMINAL CAPITALI$M

JPMorgan gold traders found guilty in Chicago spoofing trial
Bloomberg News | August 10, 2022 | 

Credit: Wikimedia Commons.

The former head of the JPMorgan Chase & Co. precious-metals business and his top gold trader were convicted in Chicago on charges they manipulated markets for years, handing the US government a win in its long crackdown on bogus “spoofing” orders.


Michael Nowak and Gregg Smith were found guilty Wednesday by a federal jury after a three-week trial and more than eight days of deliberations. Prosecutors presented evidence that included detailed trading records, chat logs and testimony by former co-workers who “pulled back the curtain” on how Nowak and Smith moved precious-metals prices up and down for profit from 2008 to 2016.


A salesman on the desk, Jeffrey Ruffo, was acquitted of charges he participated in the conspiracy.

The case was the biggest yet by the US Justice Department, which alleged the precious-metals business at JPMorgan was run as a criminal enterprise. Nowak, the managing director in charge of the desk, and Smith, its top trader, were convicted of fraud, spoofing, market manipulation.

“They had the power to move the market, the power to manipulate the worldwide price of gold,” prosecutor Avi Perry said during closing arguments.

US District Court Judge Edmond Chang said Nowak and Smith will be sentenced next year. Each faces decades in prison, though it may be far less. Two Deutsche Bank AG traders convicted of spoofing in 2020 were each sentenced to a year in prison.

Lawyers for Nowak, Smith and Ruffo didn’t immediately respond to messages seeking comment.

JPMorgan, the largest US bank, agreed in 2020 to pay $920 million to settle Justice Department spoofing allegations against it, by far the biggest fine by any financial institution accused of market manipulation since the financial crisis.

The criminal case against some of the biggest players in the precious-metals markets was closely watched. Spoofing became illegal with the passage of the Dodd-Frank Act in 2010.

“It’s something that’s been on the minds of many people that were involved in the precious-metals markets in that point in time, and I would say this verdict closes a chapter,” said Phil Streible, the chief market strategist at Blue Line Futures. “This kind of thing had been going on for at least 15 years or more with people waiting for justice, and I never thought it would ever get closed.”

Dennis Kelleher, co-founder and Chief executive officer at Better Markets, an organization advocating stricter financial regulation, said the verdict “should signal to Wall Street’s biggest financial firms and executives that they are not above the law.”

The star witnesses at the criminal trial were former co-workers who said they participated in the spoofing activity over years. Traders John Edmonds and Christian Trunz testified about market manipulation by all three defendants at JPMorgan, while trader Corey Flaum described similar behavior when he worked with Smith and Ruffo at Bear Stearns, before it was acquired by JPMorgan in 2008.

The JPMorgan case wasn’t a complete victory for prosecutors. All three defendants were acquitted of violating the Racketeer Influenced and Corrupt Organizations Act, a law more commonly used against gangs or mafias. Jurors didn’t agree with prosecutor claims that the JPMorgan precious-metals desk was run as a criminal enterprise. No witnesses or chat logs presented during the trial showed the defendants openly discussing their intent to spoof.

Previous convictions of former precious-metals traders at Deutsche Bank and Bank of America Corp.’s Merrill Lynch unit involved only spoofing-related crimes.

Racketeering charges also are part of the federal government’s case against Bill Hwang, whose Archegos Capital Management collapsed last year and cost banks billions.

The case is US v. Smith et al, 19-cr-00669, US District Court, Northern District of Illinois (Chicago)

(By Kim Chipman and Joe Deaux, with assistance from Tom Schoenberg and Eddie Spence)

IMF Calls For Global Guidelines On Climate Reporting

By City A.M - Aug 09, 2022, 

• The European Central Bank and IMF are calling on more consistent global standards for corporate climate reporting.
• 
  
• The warnings come after the London Stock Exchange Group said multiple standards at the same time risked splintering the supply of information to investors.
• 
  
• Scrutiny of ESG-labelled products for investors has grown in the past year over fears of greenwashing and a lack of standardization in the industry.

Global guidelines on corporate climate reporting must fall in line with those in Europe and the US or investors could be hit by fragmented and inconsistent information, the European Central Bank and IMF have warned.

Financial institutions globally are looking to establish standards for corporate climate reporting in a bid to stamp out ‘greenwashing’, with Frankfurt-based International Sustainability Standards Board (ISSB) proposing global “baseline” measures.

But the European Union and the US Securities and Exchange Commission are already drafting standards for climate guidelines, prompting the International Monetary Fund to warn there needed to be coordination and alignment between the sets of rules.

“Interoperability between the forthcoming ISSB standards and jurisdictional requirements remains one of the largest challenges that harmonization work ultimately faces,” the IMF said.

“It is important to avoid further fragmentation.”

The warnings come after the London Stock Exchange Group, which required listed firms to comply with ISSB disclosures, said multiple standards at the same time risked splintering the supply of information to investors. 

The group has warned it has identified several key differences in definitions used in climate terms by the EU and ISSB.

The ECB added to calls and said that in order to meet users’ expectations, the ISSB and other standard setters needed to “iron out” differences and come up with baseline standards that are widely implemented globally.

Related: Dodgy Demand Data? The Oil Price Collapse Conspiracy

Watchdogs in the UK have issued similar warnings and backed internationally aligned standards as they look to clamp down on the prevalence of greenwashing and bring ‘environmental, social and governance’ (ESG) ratings under regulation.

The FCA said in June that it would “strongly support” an internationally coordinated approach to the regulation of ESG data and ratings.

Scrutiny of ESG-labelled products for investors has grown in the past year over fears of greenwashing and a lack of standardization in the industry.

By City AM

BP agrees to sell stake in Ohio refinery to Cenovus for $300M


A joint venture of BP PLC and Husky Energy Inc., which was acquired by Cenovus Energy in 2021, has owned the Toledo refinery since 2008. Standard Oil of Ohio first opened the refinery in 1919.
BP PLC


By Emily Burleson – Reporter, Houston Business Journal
Aug 10, 2022

BP PLC’s (NYSE: BP) crude refining business in the U.S. is shrinking now that the London-based supermajor has agreed to sell its stake in a Toledo, Ohio, refinery to its joint venture partner.

Calgary-based Cenovus Energy Inc. (NYSE: CVE) agreed to pay about $300 million in cash to buy out BP’s 50% stake in the 160,000-barrels-per-day refinery, known as BP-Husky Toledo Refinery, the companies said Aug. 8. The two companies also said they would enter a long-term supply agreement.


The deal is expected to close before the end of 2022. At that point, Cenovus will own and operate the entire refinery, which had been a joint venture between BP and Husky Energy Inc., another Canadian oil company, since 2008. Cenovus inherited Husky’s 50% stake in early 2021 when its acquisition of the integrated oil and gas company closed.

BP said it expects that Cenovus will rehire the 580 employees at the Toledo refinery.

Standard Oil of Ohio first opened the Toledo refinery in 1919. In recent years, the joint venture completed a maintenance turnaround on the facility's isocracker and reformer units and also spent more than $130 million on projects that reduced certain units' emissions, according to BP.

Following the Toledo refinery’s sale, BP will be left with just two refineries in the U.S., which make up about half of its global refining capacity: the massive Whiting refinery in Indiana with the capacity to refine 435,000 barrels per day and the 240,000-barrels-per-day Cherry Point refinery in Washington. BP’s five other refineries are in other countries.

Other major companies are also reducing the number of refineries they own in the U.S., like Shell PLC (NYSE: SHEL), or trying to exit the refining business altogether, like LyondellBasell Industries NV (NYSE: LYB).

Meanwhile, BP's refinery deal with Cenovus is just the latest in a series of assets changing hands between the two companies.

In June, BP agreed to sell Cenovus its 50% non-operated stake in the Sunrise oil sands project in northern Alberta. In return, BP will receive $600 million Canadian dollars as well as Cenovus’ 35% non-operated stake in the undeveloped Bay du Nord project offshore Newfoundland and Labrador. That deal is expected to close in the third quarter of 2022.

The several discoveries within the Bay du Nord project have recoverable reserves estimates of about 300 million barrels of oil, BP said.

BP CFO Murray Auchincloss said Bay du Nord was a “fantastic discovery” during the company’s second-quarter earnings call with investors on Aug. 3.

“It's a lovely reservoir,” Auchincloss said. “We're happy to take the 35% interest in that and work with the operator, Equinor. And we'll talk to you more about it once we close because then we can actually say stuff. Right now, we're on the outside.”

BP North America, which is based in Houston, is one of the city’s 10 largest energy industry employers, according to Houston Business Journal research.

Column: Tax provisions may be Democrats' most unexpected victory in the inflation bill


Michael Hiltzik
Wed, August 10, 2022

The new budget bill championed by President Biden and congressional Democrats will give the IRS more funding than it has received in decades. 

(Pablo Martinez Monsivais / Associated Press)

The budget reconciliation bill just passed by the Senate and heading for final congressional approval offers dramatic improvements in American policies aimed at fighting global warming and improving healthcare.

There's too much in this legislative smorgasbord that Democrats have dubbed the Inflation Reduction Act to cover in one sitting, so I'll focus on one topic that's sure to interest almost everybody: taxes.

The measure addresses tax policy in two major ways. One is a steep increase in funding for the Internal Revenue Service.

These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans.

IRS Commissioner Charles Rettig, assuring the Senate that he'll use agency funding to go after rich tax avoiders

The IRS has been on a congressionally imposed starvation diet virtually since the 1970s, which has been a get-out-of-paying ticket for corporations and the wealthy for all that time.

Scoffing at the tax laws won't be so easy for them going forward, because the act almost doubles the IRS budget, providing $80 billion in new funds over the next 10 years.

The second provision imposes a minimum income tax of 15% on the nation's richest corporations, specifically those reporting profits of $1 billion a year, beginning in 2023. The measure also imposes a 1% tax on stock buybacks, also starting next year.

More on the corporate tax in a moment. First, let's examine the importance of the new IRS funding, which would partially go toward hiring as many as 87,000 new agents and other employees.

The sheer scale of the funding and workforce increase has made anti-tax conservatives' heads explode. "Why would Congress, in one bill, increase the IRS workforce by something like 92%?" asks Byron York of the Washington Examiner. "It doesn't seem possible. It certainly doesn't seem wise."

You might ask: "Why not?" York has an answer, though it certainly doesn't seem cogent. He asserts that the increase is based on the idea "that Americans are evading all sorts of taxes, creating a 'tax gap,'" the difference between taxes owed and taxes paid.

"The Biden administration says tax cheats are primarily 'high-income,'" York writes. Well, not the Biden administration alone. The conclusion has also come from economists at the IRS, Carnegie Mellon University and UC Berkeley, who showed last year that America's tax-cheats-in-chief are the 1%, who consistently concealed as much as 21% of their income from tax collectors.

Of the unreported income, about 6 percentage points is hidden by “sophisticated evasion that goes undetected in random audits,” their paper said.

York and his conservative fellows have been attacking the IRS funding by suggesting that the army of some 80,000 new agents and other employees will turn their firepower on middle- and upper-middle-class Americans and small businesses, not on the wealthy. But that's just scare-mongering.

IRS Commissioner Charles P. Rettig assured senators in an Aug. 4 letter that the IRS would honor its directive from the Biden White House not to raise audit rates on taxpayers making less than $400,000 a year.

Regarding the funding and workforce increases, he wrote: "These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans," but for targeting "large corporate and high-net-worth taxpayers [who] often engage teams of sophisticated representatives who pursue unsettled or sometimes questionable interpretations of tax law."

That's where the money is. The Congressional Budget Office has estimated that the new IRS funding could produce more than $200 billion in higher collections over the next decade, or about $2.55 in gain for every dollar spent.

Others say the CBO was thinking too small. "The benefit could be $500 billion or even possibly, if they do a great job, $1 trillion,” former Treasury Secretary Lawrence Summers said on Bloomberg Television last week. “I’m pretty optimistic about the fiscal potential here if the administration really steps up.”

The IRS budget has long come under pressure in part because of a series of fabricated scandals designed to undermine its credibility. Remember the 2012-13 version promoted by Rep. Darrell Issa? His claim was that the agency had targeted conservative nonprofit groups for special scrutiny at the behest of the Obama White House.

Turned out that this didn't happen — the agency was trying to be tough on all nonprofits that were breaching the tax law by engaging in political activities, and was even tougher on progressive organizations.

But Issa achieved his and his conservative pals' real goal, which was to intimidate the IRS out of enforcing the nonprofit rules at all. The agency's budget was collateral damage — the Republican-controlled Congress gutted its budget in 2014, appropriating $1.5 billion less than what the Obama administration had requested.

Each budget cut, whether measured in real or inflation-adjusted dollars, hamstrung the agency's ability to do its job. Taxpayer services shrank, callers with even ordinary questions were placed on hours-long holds — if they could get through at all. This lowered the agency's public reputation to a subterranean level.

Who benefited? The rich, that's who. Audits of the wealthy became an endangered species. In 2010, the audit rate of personal tax returns reporting income of $10 million or more was 21.2%. By 2019, the Government Accountability Office reported, it had fallen to 3.9%. This in a period when the number of those returns nearly doubled, rising from 13,000 to 24,000.

The low water mark may have been reached in 2019, when the IRS received more than 23,450 tax returns from households reporting $10 million or more in income for 2018. It audited seven. (Not a misprint.)

The trend toward lower audit rates was seen in almost every income segment, but of course the opportunity for tax avoidance and evasion is greater at the top — the wealthy tend to receive more of their income from sources that need to be reported voluntarily, such as investment gains, rather than from wages, which are reported by employers.

At this moment, Rettig told the senators, "the IRS has fewer front-line, experienced examiners in the field than at any time since World War II, and fewer employees than at any time since the 1970s."

The impact on enforcement is direct, he wrote, because examining the returns of wealthy individuals requires specialized skills and experience that the agency can't bring to bear. "As a result," he wrote, "the IRS has for too long been unable to pursue meaningful, impactful examinations of large corporate and high net worth taxpayers to ensure they are paying their fair share."

That brings us to the second key tax provision in the reconciliation measure, the corporate minimum tax. This has also come under fire from agents for the rich and corporate managements, such as the American Institute of Certified Public Accountants.

The minimum tax is aimed at some of the scores of rich corporations paying zero in federal taxes — 55 of them in 2020, according to research by the Institute on Taxation and Economic Policy. These companies aren't necessarily breaking the law; they're just taking advantage of tax loopholes begging to be closed. The reconciliation act's drafters say the tax will apply to 150 to 200 corporations.

What seems to stick in the craw of corporate taxpayers most about this provision is how it defines income.

Rather than allowing corporate taxpayers to apply all the myriad tax breaks that make income reportable to the IRS disappear — such as research credits, meal and entertainment expenses, net operating losses carried forward into later years and so on — the minimum tax will be based on the profit that a company declares to its shareholders. That's known as "book" or "financial statement" income and is typically much higher.

Companies like to minimize what they report to the IRS and maximize what they report to shareholders; now those subject to the minimum tax will have to give the same number to both.

The accounting profession is scandalized by the very idea. The American Institute of Certified Public Accountants says the principle "violates numerous elements of good tax policy and may result in unintended consequences," although it would seem that the main consequence, which is higher tax collections from corporations, is quite openly intended by the drafters of the act.

The organization asserts that "imposing tax according to financial statement income takes the definition of taxable income out of Congress’ hands and puts it into the hands of industry regulators.... Public policy taxation goals should not have a role in influencing accounting standards or the resulting financial reporting."

This point is a little hard to parse. Accounting standards don't arrive on the wings of a dove or derive from natural forces; they're based on what the law requires.

In this case, the law requires that the same standards will apply to financial disclosures filed with the Securities and Exchange Commission and the tax returns filed with the IRS. Both reports tend to be overseen by CPAs, so where's the problem?

Another sheaf of complaints was issued by the National Taxpayers Union, an anti-tax think tank. The NTU grouses that raising taxes by an estimated $260 billion to $313 billion over 10 years is a mistake when the economy "may already be in a recession or soon tipping into one."

Leaving aside that whether the economy is at risk of a recession seems to be a doubtful proposition just yet, the tax bite is at best a "nibble." That's the term used by Princeton economist Alan Blinder, a former vice chairman of the Federal Reserve, in a Wall Street Journal opinion piece rebutting the hand-wringing about the minimum tax sounded by, among others, the Wall Street Journal editorial board.

Not only is the proposed tax increase tiny, Blinder wrote, but to the extent it affects corporate decision-making, it will prompt companies to use "more labor, not less." Good for job growth, in other words.

"You’ll probably need a magnifying glass to see any damage to investment or jobs, and any such damage will surely be dwarfed by the bill’s job-creating provisions on climate change and prescription drugs," Blinder wrote.

None of this will keep Republicans and conservatives from attacking the reconciliation bill with smoke, mirrors and persiflage. But the salient point remains that the bill represents a major advance in policies that help all Americans, not merely corporations and the wealthy. In its own way, it's a new deal.

This story originally appeared in Los Angeles Times.

Demand for chips is collapsing just as Joe Biden signs bill to jump-start more U.S. chipmaking

Nicholas Gordon

Wed, August 10, 2022

U.S. President Joe Biden signed the CHIPS and Science Act on Tuesday, ending an almost yearlong saga to spend $52 billion to attract chip manufacturing back to the U.S.

Surrounded by members of Congress from both parties and representatives from the chipmaking industry, Biden called the act “a once-in-a-generation investment in America itself” that would bring jobs back to the U.S. and lower costs for consumers.

Biden also shared news that Micron Technology, which manufactures memory chips, would invest $40 billion over 10 years in U.S.-based manufacturing. The company said the investment would create 40,000 jobs.

But Idaho-based Micron delivered a far more somber message in a regulatory filing that same day, warning investors that its fourth-quarter sales would come in at the low end, if not below, previous forecasts. Micron had earlier predicted sales of $7.2 billion, which was already lower than the $9.1 billion predicted by analysts.

Micron’s lower forecast helped drag chip stocks down Tuesday despite the good news from the White House. The Philadelphia Semiconductor Index, which tracks chipmaking companies like Micron, Intel, Nvidia, and [hotlink]Taiwan Semiconductor Manufacturing Co.[/hotlink] (TSMC), fell by 4.6%.

Micron’s warning reflects a slowdown in demand for chips across the industry that’s arriving just as the CHIPS Act passes and chipmakers prepare to break ground on new U.S. plants. The poor timing provides an unfortunate backdrop to the long-awaited legislation, which all parties—chip CEOs, lawmakers, and Biden himself—are eager to tout as a huge win.

Softer demand

For much of the COVID pandemic, semiconductors—tiny chips that power not just computers and smartphones, but cars, home appliances, and countless other electronic devices—were in short supply, as stuck-at-home consumers bought more devices to get them through lockdown. The shortage paralyzed manufacturing, but also led to record profits for chipmaking companies.

But now chip CEOs are worried that an oversupply of chips will drag down sales and profits for the rest of 2022 and into 2023. Consumers, returning to normal life in this stage of the pandemic and worried about inflation, are buying fewer consumer electronic devices, lowering demand for the semiconductors that power them.

Semiconductor sales will increase only 7.4% this year, predicts consulting firm Gartner, far below the 26% growth reported in 2021.

Micron CEO Sanjay Mehrotra told Bloomberg that the drop in chip demand was now expanding beyond consumer electronics to hit other sectors that seemed to be more resilient, like data centers and the automotive sector.

Other U.S.-based chip companies are struggling, too. On Monday, Nvidia slashed its revenue guidance for the current quarter by 17%, led by a 33% decline in gaming-related revenue. (Nvidia will officially publish its second-quarter earnings on Aug. 28)

Intel earlier reported a net loss of $454 million for the second quarter of 2022, and warned that PC sales would fall by 10% this year.

Both Micron and Intel—which hope to receive government funding under the CHIPS and Science Act—say their plans to invest in the U.S. would not change as a result of these short-term struggles.

Asian chipmakers have largely weathered the demand slowdown better than their U.S. counterparts. TSMC reported a record 76.4% year-on-year increase in second-quarter profits. Korean chipmaker SK Hynix also reported a 56% year-on-year increase in profits in the second quarter.

But even Asian chipmakers are warning that demand is softening. In its second-quarter earnings call, TSMC told investors that its customers might work through their stockpiles, built up during the shortage, rather than place new orders. SK Hynix is also reportedly considering shrinking its 2023 capital expenditure plans owing to the expected drop-off in demand.

For now, chipmakers are only warning about demand in the near future. The CHIPS Act is aimed at the long term. Chip factories can take years to build; Intel expects to open its $20 billion facility in Columbus by 2025. Plus, lawmakers and the administration have framed the chips legislation as a national security issue, not necessarily as a way to meet current demand, arguing that the U.S. needs domestic manufacturing to safeguard its own supply of chips for advanced devices, like leading-edge military technology.

CHIPS Act China provision

The CHIPS Act, passed on a bipartisan basis by Congress and signed by Biden on Tuesday, spends $280 billion to expand U.S. research and development. Lawmakers and Biden administration officials said the bill would solidify the U.S.’s technological advantage against rivals like China.

Congress delayed approving the money for chipmaking subsidies for over a year, frustrating chipmakers who argued that their U.S. projects required public money.

Yet the conditions attached to government subsidies may lead to long-term changes to the chip supply-chain globally. The CHIPS and Science Act bars companies that receive U.S. subsidies from expanding manufacturing of advanced chips in China.

Both Samsung and SK Hynix are reportedly evaluating shifting manufacturing out of China to other locations. On Friday, Samsung CEO Roh Tae-moon announced that the company would invest $3.3 billion in semiconductor manufacturing in Vietnam.

This story was originally featured on Fortune.com

Credit Suisse's top investor Harris Associates discloses 10% stake

Wed, August 10, 2022 

FILE PHOTO: The logo of Swiss bank Credit Suisse is seen in Bern

(Reuters) - Credit Suisse's top shareholder Harris Associates on Wednesday disclosed a stake of more than 10% in the Swiss bank.

The investment firm said in a filing that it owned 266 million shares, or a 10.1% stake, in the company as of end-July.

Harris Associates previously held a stake of around 5.2%, according to Credit Suisse's website. The bank's second-largest shareholder is Qatar Holding - a unit of the Qatari sovereign wealth fund - with a stake of about 5% as of Nov. 17. https://bit.ly/3PfMWmA

Credit Suisse is in the middle of what it has described as a "transition" year with a new CEO, restructuring aimed at curtailing risk-taking in investment banking and the bulking up of wealth management. Its shares have declined nearly 40% in 2022.

The company last month launched its second strategic review in less than a year to evaluate options for its securitised products business to attract third-party capital.

In May, when Reuters first reported about the strategic review, David Herro of Harris Associates said in an interview that there was no need for the bank to raise fresh equity capital.

(Reporting by Akanksha Khushi in Bengaluru; Editing by Aditya Soni)

Coinbase Under SEC Scrutiny Over Its Crypto-Staking Programs

Yueqi Yang Wed, August 10, 2022 

(Bloomberg) -- Coinbase Global Inc. said it’s being probed by the US Securities and Exchange Commission over its staking programs, which allow users to earn rewards for holding certain cryptocurrencies.

The company “has received investigative subpoenas and requests from the SEC for documents and information about certain customer programs, operations and existing and intended future products,” according to a quarterly regulatory filing. The requests relate to Coinbase’s staking programs, asset-listing process, classification of assets and stablecoin products, the company said.

Staking services are offered by many crypto exchanges as a key way to diversify revenue from trading, which tends to drop during market downturns. It allows users to generate yield on certain crypto holdings by delegating them to help verify transactions and secure the blockchain network.

At Coinbase, blockchain-rewards revenue, primarily from staking, accounted for 8.5% of net revenue in the second quarter. It fell 16% sequentially to $68.4 million during the quarter, less than the decline in trading revenue.

In a shareholder letter Tuesday, Coinbase said the SEC in May sent a voluntary request for information, including about its listings and listing process, and it doesn’t know yet if the inquiry will become a formal investigation. The crypto exchange is under scrutiny by the SEC for potentially making unregistered securities available for trading, Bloomberg previously reported.

“As with all regulators around the world, we are committed to productive discussion with the SEC about crypto assets and securities regulation,” Coinbase said in the letter.