Why is there a global chip shortage and why should you care?

RAM memory chips are shown in this illustration photo. (REUTERS files)
RAM memory chips are shown in this illustration photo. (REUTERS files)
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Updated 02 April 2021

Why is there a global chip shortage and why should you care?

Why is there a global chip shortage and why should you care?
  • Consumers have stocked up on laptops, gaming consoles and other electronic products during the pandemic, leading to tighter inventory.
  • Sanctions against Chinese tech companies have further exacerbated the crisis

BENGALURU, India: From delayed car deliveries to a supply shortfall in home appliances to costlier smartphones, businesses and consumers across the globe are facing the brunt of an unprecedented shortage in semiconductor microchips.

The shortage stems from a confluence of factors as carmakers, which shut plants during the COVID-19 pandemic last year, compete against the sprawling consumer electronics industry for chip supplies.

Consumers have stocked up on laptops, gaming consoles and other electronic products during the pandemic, leading to tighter inventory. They also bought more cars than industry officials expected last spring, further straining supplies.

Sanctions against Chinese tech companies have further exacerbated the crisis. Originally concentrated in the auto industry, the shortage has now spread to a range of other consumer electronics, including smartphones, refrigerators and microwaves.

With every company that uses chips in production panic buying to shore up stocks, the shortage has squeezed capacity and driven up costs of even the cheapest components of nearly all microchips, increasing prices of final products. Automobiles have become increasingly dependent on chips — for everything from computer management of engines for better fuel economy to driver-assistance features such as emergency braking.

The crisis has forced many to curtail the production of less profitable vehicles. General Motors Co. and Ford Motor Co. are among the big carmakers who said they would scale down production, joining other automakers including Volkswagen AG, Subaru Corp, Toyota Motor Corp. and Nissan Motor Co.

A shortage of auto semiconductor chips could impact nearly 1.3 million units of global light vehicle production in the first quarter, according to data firm IHS Markit.

IHS said a fire at a Japanese chip-making factory owned by Renesas Electronics Corp, which accounts for 30 percent of the global market for microcontroller units used in cars, has worsened the situation.

Severe winter weather in Texas has also forced Samsung Electronics Co. Ltd, NXP Semiconductors and Infineon to shut down factories temporarily. Infineon and NXP are major automotive chip suppliers, and analysts expect the disruptions to add to the shortfalls in the ailing sector.

At the root of the squeeze is the under-investment in 8-inch chip manufacturing plants owned mostly by Asian firms, which means they have struggled to ramp up production as demand for 5G phones and laptops picked up faster than expected.

Qualcomm Inc, whose chips feature in Samsung phones, is one major chipmaker struggling to keep up with demand. Apple Inc’s major supplier Foxconn also warned of the chip shortage affecting supply chains to clients.

The majority of chip production occurs in Asia currently, where major contract manufacturers such as Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and Samsung handle production for hundreds of different chip companies.

US semiconductor companies account for 47 percent of global chip sales, but only 12 percent of global manufacturing is done in the United States.

Factories that produce wafers cost tens of billions of dollars to build, and expanding their capacity can take up to a year for testing and qualifying complex tools.

US President Joe Biden has sought $37 billion in funding for legislation to supercharge chip manufacturing in the country.

Currently, four new factories are slated in the country, two by Intel Corp. and one by TSMC in Arizona, and another by Samsung in Texas.

China has also offered a myriad of subsidies to the chip industry as it tries to reduce its dependence on Western technology.


Egypt to sell minority stake in state payments firm e-finance

Egypt to sell minority stake in state payments firm e-finance
Updated 7 sec ago

Egypt to sell minority stake in state payments firm e-finance

Egypt to sell minority stake in state payments firm e-finance

CAIRO: Egyptian state-controlled payments firm e-finance for Digital and Financial Investments said on Sunday it would offer up to 14.5 percent of its capital in an initial public offering in the fourth quarter of 2021.

Founded in 2005, e-finance said in a statement it is the sole entity authorized to operate the government’s financial network, including processing and settling payment and collection transactions.

The sale is one of several planned for this year.

In May, Egypt sold a 51 percent stake in state-owned Arab Investment Bank to privately owned EFG Hermes, its first sale of a majority bank stake since 2006.

The government announced in 2018 it intended to sell minority stakes in nearly two dozen companies, but those sales have been delayed repeatedly by market downturns and more recently by the coronavirus pandemic.

e-finance said it would float 177.8 million new shares on the stock exchange and 80 million shares owned by current shareholders, to both institutional and retail investors.

Among its shareholders are three state-owned banks: National Investment Bank, with 63.64 percent, and the National Bank of Egypt and Banque Misr, each with 9.09 percent, according to e-finance’s 2019 annual report.

Egyptian Banks Co., a payments operator led by the central bank, and a firm called Egyptian Company for Investment Projects each own another 9.09 percent.

e-finance's revenue rose to 1.23 billion Egyptian pounds ($78 million) in 2020 and 904 million pounds in the first half of 2021, a 2018-20 compound annual growth rate of 30 percent, it said.

The sale is subject to market conditions and regulatory approvals, the statement added.


Saudi ministry launches initiative to implement global financial practices in govt entities

Saudi ministry launches initiative to implement global financial practices in govt entities
Updated 5 min 35 sec ago

Saudi ministry launches initiative to implement global financial practices in govt entities

Saudi ministry launches initiative to implement global financial practices in govt entities

RIYADH: Saudi Arabia’s Finance Ministry on Sunday launched an initiative to ensure implementation of the latest global financial practices in the government sector to increase its efficiency in line with the Vision 2030, said a ministry statement.
Prior to the launch of the Financial Control and Support and Development Initiative, the ministry launched a self-assessment pilot program on selected government entities, it said.
The pilot project conducted field studies on the feasibility of self-assessment tools in government entities. The project sought to assess the efficiency of the entities’ internal control systems, level of transparency, and overall control measures.
The program aims to strengthen financial control procedures, improve governance, and switching to automation.


KSA’s grains storage capacity rises by 37% with 2 new silos


KSA’s grains storage capacity rises by 37%  with 2 new silos

Updated 26 min 49 sec ago

KSA’s grains storage capacity rises by 37% with 2 new silos


KSA’s grains storage capacity rises by 37%  with 2 new silos


RIYADH: Saudi Arabia has added two new silos to its existing infrastructure increasing its strategic grain storage capacity by 37 percent, according to an Al-Eqtisadiyah report.

The Saudi Grains Organizations completed the Yanbu Silos Project with a storage capacity of 120,000 tons and it is working on adding a new one with the same capacity in Duba port, the reported said citing SAGO Gov. Ahmed Al-Faris.

Al-Faris said that Saudi strategic storage capacity of grains increased by 900,000 tons to 3.4 millions between 2015 and 2021.  

The SAGO chief said that the Kingdom has reached self-sufficiency in many products such as fresh milk, eggs, dates and white corn etc.

SAGO is one of the leading national institutions tasked with ensuring availability of key food commodities in Saudi Arabia.


Skeptics fail to deter companies from entering crypto fray: Market wrap

Skeptics fail to deter companies from entering crypto fray: Market wrap
Updated 59 min 53 sec ago

Skeptics fail to deter companies from entering crypto fray: Market wrap

Skeptics fail to deter companies from entering crypto fray: Market wrap
  • Paypal Crypto is now available to its UK customers

RIYADH: Paypal has completed the first international expansion of its cryptocurrency offering outside the US. 

Paypal Crypto is now available to its UK customers allowing them to buy, hold and sell four types of cryptocurrencies.

The official account of Paypal UK tweeted: “We are delighted to share that all eligible customers in the UK can now buy, hold and sell cryptocurrencies such as: Bitcoin, ethereum, bitcoin cash and litecoin from their Paypal account.”

Meanwhile, Laos has allowed a series of cryptocurrency mining and trading projects in the country in contravention of the policies of its central bank which issued warnings against cryptocurrencies just a month ago. The move to allow bitcoin mining is part of the government’s efforts to compensate for the losses caused due to a decline in tourism due to the coronavirus disease pandemic. 

Six companies have been authorized to start cryptocurrency trading and mining operations in the country, according to the Prime Minister’s Office.

Laos could also try to attract some of the miners who were expelled from China.

Skepticism

Sergei Shvetsov, deputy chairman of the board of directors of the Bank of Russia, stated that the bank remains skeptical about the acquisition of cryptocurrencies and will not support increased access to crypto markets for Russian investors, most of whom are not certified, according to media reports.

Russia’s central bank is now working with commercial banks to delay payments made on digital asset exchanges.

The move aims to limit cryptocurrency purchases that Russian investors make based on emotion and are not qualified to do so. The move is likely to affect peer-to-peer and over-the-counter trading platforms.

Speaking at the International Banking Forum, the senior official explained: “When it comes to buying cryptocurrency for investment purposes, we are skeptical about this idea. We believe it’s different from traditional assets, it’s highly risky and has signs of a pyramid scheme.”

Trading

Bitcoin, the leading digital currency, traded lower on Sunday and slipped by 1.57 percent to $47,690.80 at 5:52 p.m. Riyadh time.

Ether, the second most-traded cryptocurrency, was down by 3.46 percent at $3,357.70, according to data from CoinDesk.

 

 


UAE economy minister to visit Britain seeking trade deal

UAE economy minister to visit Britain seeking trade deal
Updated 19 September 2021

UAE economy minister to visit Britain seeking trade deal

UAE economy minister to visit Britain seeking trade deal
  • Trade between the two countries was worth almost $8.1 billion in 2020

DUBAI: The UAE’s economy minister will lead a high-level delegation to Britain this week, the ministry said on Sunday, as the Gulf state seeks to deepen trade ties.

Abdulla bin Touq Al-Marri and the delegation will meet British ministers, officials and representatives from the private sector to discuss recently announced UAE economic policies.

One of those policies includes the UAE seeking to seal what it calls a comprehensive economic agreement covering trade and foreign investment with Britain and seven other countries.

The delegation would also discuss ways to develop economic ties and strengthen cooperation in trade, investment, healthcare and energy, among other sectors, the ministry said.

The UAE last week announced it had expanded an investment partnership with the British government, committing  £10 billion ($13.7 billion) to invest in the UK over five years.

The UAE delegation will also include local government, investment company and private sector representatives, the ministry said.

Britain is the UAE’s third largest non-oil trade partner in Europe, with trade between the two countries worth almost $8.1 billion in 2020, it said.