UNITED STATES
GDP growth misses target
The economy last year missed the 3 percent growth target of the administration of President Donald Trump for a second straight year, posting its slowest annual growth in three years as a slump in business investment deepened amid damaging trade tensions. The 2.3 percent expansion last year reported by the Department of Commerce on Thursday suggested the White House and Republicans’ massive US$1.5 trillion tax cut package had provided the economy only a temporary boost. Moderate growth undercuts the argument by Trump and his fellow Republicans that strong growth would pay for the tax cuts, which are expected to help push the federal budget deficit to US$1.02 trillion this year. Growth last year was the slowest since 2016 and followed the 2.9 percent notched in 2018.
AUTOMAKERS
VW offers Navistar US$2.9bn
Volkswagen AG (VW) offered to buy the rest of Navistar International Corp in a US$2.9 billion bid to secure a bridgehead in the the US’ heavy-truck market and step up its challenge to global rivals Daimler AG and Volvo AB. Volkswagen’s Traton SE unit has offered Navistar holders US$35 a share in cash, 45 percent higher than its Thursday closing price. Navistar, which builds International-brand trucks, school buses, defense vehicles and engines, said its board would review the proposal, adding that there is no assurance the deal would take place. Volkswagen already owns a stake of almost 17 percent.
RETAIL
Perssons get fortune boost
Hennes & Mauritz AB (H&M) chairman Stefan Persson just received a hefty retirement gift from investors. Persson, who on Thursday announced he is stepping down in May, added US$1.4 billion to his fortune, as the clothing retailer’s shares rose 9.4 percent in Stockholm. His son Karl-Johan, the CEO, is to take over as chairman and hand the CEO role to chief operating officer Helena Helmersson, making her the first woman to run H&M. The jump in share price reinforces the Perssons’ standing as Sweden’s richest family,with a fortune of more than US$20 billion, according to the Bloomberg Billionaires Index. Stefan Persson, 72, said it was a “natural change” to hand control to his son after two decades as chairman. He said the family, which owns about half of the business, would remain committed owners of the world’s second-largest garment retailer.
MACROECONOMICS
France, Italy post declines
The French and Italian economies unexpectedly shrank at the end of last year, casting a shadow over expectations the eurozone was on a firmer footing. The French economy contracted 0.1 percent amid a decline in exports and a huge drag from companies using up stocks rather than increasing production. All of the economists surveyed by Bloomberg had predicted growth. Without the inventory effect, growth would have been about 0.3 percent, according to Bloomberg Economics. Italy’s GDP fell 0.3 percent, the most in almost seven years. Neighboring Spain fared significantly better at the end of last year, reinforcing its position as one of Europe’s outperformers. Faster-than-anticipated growth of 0.5 percent was driven by buoyant exports and a strong increase in services. France’s unexpected contraction is a sting for French President Emmanuel Macron, who is already facing mass protests and strikes against his pension reforms that have disrupted household spending.
EXPECTATIONS: The firm, which is on track to outpace global foundry industry revenue growth, said it expects constrained advanced process capacity amid stronger AI demand Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday increased its projected revenue growth for this year to above 25 percent, as stronger-than-expected demand for premium smartphones and artificial intelligence (AI) devices are to drive greater utilization of cutting-edge 3-nanometer and 5-nanometer chips. In April TSMC estimated 21 to 24 percent annual growth. The firm’s revenue growth is on track to greatly outpace the global foundry industry, which is expected to rise about 10 percent this year. “Over the past three months, we have observed stronger AI and high-end smartphone demand from our customers, which is to boost the overall capacity utilization for our leading-edge
INVESTMENT: The company’s planned complex in Texas would be the first 12-inch silicon wafer fab built in the US in more than 20 years, a GlobalWafers official said GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said it secured up to US$400 million in direct funding from the US Department of Commerce under the CHIPS and Science Act for the construction of two new advanced fabs in the US. Its subsidiaries GlobalWafers America and MEMC LLC are to build a 12-inch silicon wafer fab in Sherman, Texas, and another one in Missouri to produce silicon-on-insulator (SOI) wafers used to make leading-edge chips. “With the support of the [US President Joe] Biden Administration, we are honored to be bringing to American shores the world’s most cutting-edge 12-inch semiconductor
Powerchip Semiconductor Manufacturing Co (力積電) yesterday said that net losses ballooned to NT$1.96 billion (US$60.1 million) in the second quarter, as heavy manufacturing costs from a new fab outweighed the improvement in customer demand and factory utilization. That compared with losses of NT$439 million in the first quarter. The company posted a net profit of NT$617 million a year earlier. Gross margin plummeted to 5.3 percent last quarter, from 15.4 percent in the previous quarter and 16.8 percent in the same period last year. It was the weakest since the fourth quarter of last year. The chipmaker blamed heavy depreciation and higher manufacturing
Nikon Corp is fielding strong demand for its legacy chipmaking machines in China, which is mobilizing resources to build its own semiconductor supply chain. Inquiries for the Japanese precision maker’s lithography tools have surged in China, Nikon president Muneaki Tokunari said. The company is set to revamp a lithography machine geared for decades-old manufacturing processes. Its NSR-2205iL1, launching this summer, would serve the market for mature chip technology and Nikon expects to sell more than 10 units of the machine annually, said Tokunari, who is also chief operating officer and chief financial officer. New companies are sprouting up in China to make