Chips drop at five day supply
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The semiconductor shortage that crippled industries from cars to consumer electronics is far from over.
The US Commerce Department has just warned that chip inventories held by manufacturers have fallen to an average of just five days of supply, down from 2019 levels of 40 days. Since then, the pandemic demand for devices and the disruptive sanctions imposed on China have created the chip crisis.
US Commerce Secretary Gina Raimondo said some US businesses could be forced to temporarily close and lay off workers in the event of even minor disruptions. “It shows you how fragile this supply chain is,” she said. “Five days of inventory, no room for error.”
She urged Congress to pass the Chip Act, which has stalled in the House of Representatives but would unlock $52 billion in grants to encourage domestic chip manufacturing.
It’s a long-term solution, given how long it will take to build “fabs,” like the two Intel announced last week in a $20+ billion investment in Ohio, subject to subsidies. These will be aimed at high-end processors and more details on the chipmaker increasing its manufacturing capacity may come with its fourth quarter earnings call after the market closes today.
The most mundane chips are currently the rarest – those made by Texas Instruments, a little-known silicon maker. Last night it reported fourth quarter revenue about 10% higher than analysts’ expectations, with gross margins two percentage points better than expected at 69.3%. It is increasing spending to increase capacity, with new production facilities planned as early as the second half of this year.
Meanwhile, #techAsia reports that China’s semiconductor blueprint for self-sufficiency has suffered a major blow. State-backed giant Tsinghua Unigroup has scrapped major memory chip projects in two Chinese cities after the debt-ridden firm was hit by US restrictions on access to vital technology, according to this Nikkei exclusive Asian.
The Internet of (five) things
1. Microsoft gaming is under its cloud
Microsoft’s cloud revenue jumped 32% to $22.1 billion in its latest quarter, but game sales were up just 8%, compared to revenue that had jumped six months ago. six months ago, when there was pandemic demand at home. Lex says investors are more interested in higher-growth companies than Microsoft’s gaming ambitions with its deal with Activision Blizzard.
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2. Amazon Ambassadors Recalled
Amazon has scrapped its much-maligned campaign of paying employees to share positive messages on social media, removing online posts meant to boost the tech giant’s image among potential workers it needs to continue its growth.
3. Meta’s Diem to die?
Former Facebook digital currency chief David Marcus left in late 2021, predicting there was still “greatness ahead” for Diem. But Bloomberg reports that the project formerly known as Libra is considering selling its assets and trying to find a new home for the engineers who developed it.
4. LG Energy Solution hopes the IPO will boost its batteries
LG’s battery business completed South Korea’s largest-ever initial public offering last week, but can the floater challenge CATL’s dominance in the industry, Song Jung-a asks in Seoul and Hudson Lockett in Hong Kong.
5. Lynch loses his last legal round
Mike Lynch, the British software entrepreneur, has lost the final round of a legal battle against his extradition to stand trial in the United States for criminal fraud in the $11 billion sale of his company Autonomy to Hewlett-Packard. Priti Patel, Britain’s Home Secretary, will have to decide by Friday whether to approve Lynch’s extradition from Britain to the United States.
Technological tools — Chinese smartphones
Apple reclaimed the top spot among smartphone sellers in China for the first time in six years, with a 23% market share in the fourth quarter, reports Ryan McMorrow in Beijing. Expect domestic handset makers to retaliate this year, both at home and abroad. There were three announcements from them today: Huawei launched the P50 Pro, Realme announced the 9 Pro and 9 Pro+, and Xiaomi unveiled the Redmi Note 11 series.
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