Chip shortage deals big blow to auto sector

Chip shortage deals big blow to auto sector
Carmakers were planning to rev up production this year to meet an expected surge in demand but without enough chips those hopes are fading. (File photo)
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Updated 26 April 2021

Chip shortage deals big blow to auto sector

Chip shortage deals big blow to auto sector
  • Carmakers expect improvement in the situation by the end of 2021

PARIS: What was initially downplayed as a brief hiccup in the supply of semiconductors looks more and more like a shortage that may last throughout the year in what would be a big blow to automakers.

They were planning to rev up production this year to meet an expected surge in demand from consumers as the pandemic wanes and to recover from last year’s losses. But without enough chips those hopes are fading.

The shortage of chips has pushed automakers to idle production lines for brief periods when they temporarily run out of supplies.

Toyota, Volkswagen, Ford, Peugeot, Fiat, Jeep, Honda, Jaguar Land Rover and even the Chinese startup Nio have had to pause production in their factories in the past months.

Automakers have reduced the stocks of parts they keep on hand in recent years as part of cost-cutting measures, so delivery delays can quickly force an entire shutdown.

Renault CEO Luca de Meo told shareholders this past week that “the semiconductor shortage could cause a drop in production volume this year of at least 100,000 vehicles.” In Germany, thousands of autoworkers were on reduced work hours or temporary unemployment as Volkswagen and Mercedes factories were forced to halt production.

Fiat slowed production at its Brazilian factory in Betim for the second time this month.

The Stellantis factory in Rennes-La Janais in France, where 2,000 people work, was also nearly idle.

Computer processors are a key element in today’s vehicles, which can easily have several dozen to control elements such as the engine, automatic braking system, airbags, automatic parking system and the infotainment system.

The main manufacturers are located in Asia, such as TSMC in Taiwan and Samsung and SK Hynix in South Korea, although there are still some factories in the US and Europe. The surge in demand for electronic devices during the pandemic is the main cause of today’s shortage of chips. A fire in a Japanese factory did not help and now a drought in Taiwan may force a reduction in output.

Automakers say they are managing the situation on a day-by-day basis and are trying to avoid shutting down production lines completely.

Due to the chip shortage, “GM is building some vehicles without certain modules when necessary,” the US carmaker said in a statement.

“They will be completed as soon as more semiconductors become available,” it added.

Stellantis was able to resume production of the new Peugeot 308 at half the normal pace after a three-week halt. It went back to a dashboard console that uses an analogue speedometer.

Most automakers say they hope to make up lost production during the second half of the year.

Current shortages of semiconductor chips that are slowing car production worldwide “can be compensated for by the end of the year,” Daimler CEO Ola Kallenius said in a statement.

Others are more pessimistic.

“An improvement in the short term is not to be expected,” said Volkmar Denner, the CEO of Bosch, which is a major supplier of components for automakers.

French auto component maker Faurecia does not expect an improvement before the very end of the year as the consumer electronics industry is gearing up for its peak manufacturing period.


Emaar EC appoints Assim Alsuhaibani new Chairman

Emaar EC appoints Assim Alsuhaibani new Chairman
Updated 24 sec ago

Emaar EC appoints Assim Alsuhaibani new Chairman

Emaar EC appoints Assim Alsuhaibani new Chairman
  • New appointments are to be effective as of October 25, 2021

RIYADH: Emaar The Economic City Company (Emaar EC) appointed Assim Alsuhaibani as new Chairman and Jamal Bin Thaniah as new Vice-Chairman, a bourse filing revealed on Monday.

New appointments are to be effective as of October 25, 2021 until the current session of the company's board of directors, on September 25, 2023, the company said on Saudi Stock Exchange (Tadawul).

Emaar EC recently announced a change in the board membership as a result of the completion of the share subscription agreement between the company and a number of its major shareholders with the Public Investment Fund (PIF), according to Argaam.

Alsuhaibani is a Senior Director at the PIF.


Investments in Saudi fintech scene hit $347m in a year

Investments in Saudi fintech scene hit $347m in a year
Updated 35 min 12 sec ago

Investments in Saudi fintech scene hit $347m in a year

Investments in Saudi fintech scene hit $347m in a year
  • Fintech companies in the Kingdom grew by 37 percent, and the total investments in the industry reached SR1.3 billion

DUBAI: Saudi Arabia’s financial technology sector saw an increase in the number of companies and investments over the last 12 months, a new government report revealed.

According to Fintech Saudi’s annual report, fintech companies in the Kingdom grew by 37 percent, and the total investments in the industry reached SR1.3 billion ($347 million). 

“As we emerge from the challenges of COVID-19, it is clear that the digitalization experienced during the pandemic is here to stay,” Nejoud Malik, director of Fintech Saudi said. 

Clarity in regulation has “attracted more investment in the sector driving the growth,” she explained. 


CEOs, investors and policymakers to debate how to ‘invest in humanity’ at FII conference in Riyadh

CEOs, investors and policymakers to debate how to ‘invest in humanity’ at FII conference in Riyadh
Updated 26 October 2021

CEOs, investors and policymakers to debate how to ‘invest in humanity’ at FII conference in Riyadh

CEOs, investors and policymakers to debate how to ‘invest in humanity’ at FII conference in Riyadh
  • Future Investment Initiative summit to identify avenues for contributing in a way that creates both value and impact
  • Annual event provides platform for global leaders, investors and innovators to explore solutions to society’s challenges

RIYADH: At the first Future Investment Initiative (FII) forum in Riyadh in 2017, one of the attending billionaire entrepreneurs urged Saudi Arabia, then just embarking on the Vision 2030 strategy of transformation, to follow the example of Nike and “just do it.”

On Tuesday, at the start of the fifth FII, the Kingdom, and the FII itself, have certainly gone for “it” in a big way.

Despite the challenges of the pandemic and other global issues, in the past five years there has been a big change in the Saudi economic scene, with the pace of the Vision transformation accelerating as social, cultural and economic measures take effect in the Kingdom.

The FII itself has also undergone a transformation, becoming a permanent institute and a fixture on the international forum scene, though still under the auspices of the Public Investment Fund (PIF), Saudi Arabia’s multi-billion-dollar sovereign wealth fund.

At the first FII, as billionaires, entrepreneurs and senior policymakers from around the world made their way to the Ritz-Carlton, Riyadh, and the adjoining King Abdulaziz Conference Center, some smart commentator with an eye for a catch-phrase came up with “Davos in the Desert” to describe the scene.

Despite the annoyance of the World Economic Forum, which organizes the extravaganza in the Swiss mountains, the phrase stuck, and FII has increasingly taken on the trappings of the annual Alpine gathering.

Among the nearly 4,000 attendees were such luminaries as then-IMF Managing Director Christine Lagarde, US Treasury Secretary Steven Mnuchin, and Larry Fink, chief executive of giant investment group BlackRock, who remains a regular at FII — all inquisitive to learn details of the Vision 2030 strategy Crown Prince Mohammed bin Salman had unveiled the previous year.

The crown prince set the tone for the event, and for subsequent years, with a keynote speech that unveiled the central message of what life would be like in the Saudi Arabia of the Vision 2030 era.

He promised a “return to moderate Islam that is open to all religions,” and to eradicate promoters of extremist thoughts, adding: “We are returning to what we were before — a country of moderate Islam that is open to all religions and to the world.”

The show-stealer of that first forum was Masayoshi Son, the chairman and CEO of Japan’s SoftBank. Earlier in the year, Son had unveiled the Vision Fund, the biggest start-up investment enterprise in the world, with a budget of $100 billion — including $45 billion from the PIF — to invest in cutting-edge technology that would transform the world.

Sharing a stage with Sophia the Android, the first robot to be “awarded” Saudi citizenship in a light-hearted ceremony, Son told the audience: “Every industry will be redefined. These computers, they will learn, they will read, they will see by themselves. That’s a scary future but anyway that’s coming,” he said.

The first FII was also notable for two other landmark announcements which have left an enduring mark on the Saudi economy and the global investment scene.

Crown Prince Mohammed bin Salman unveiled the master concept of NEOM, the $500 billion city-of-the-future to be built in the northwest of the Kingdom, which has since become the flagship project of the Vision 2030 strategy.

Carbon neutral and sustainable, the new metropolis would be served by an army of robots and driven by state-of-the-art digital technologies and artificial intelligence.

It would also create a new urban hub for innovation and enterprise in an under-populated part of Saudi Arabia. Other mega-projects followed, like the Red Sea development, the Qiddiya resort complex, the AlUla desert oasis with its historic cultural roots, and the Diriyah Gate development on the outskirts of Riyadh.

The second big announcement of that first FII was the unveiling of a financial road map for the PIF, aiming to make it the biggest sovereign wealth fund, with a target of $2 trillion assets under management by 2030.

The PIF was to be the main vehicle for the implementation of the Vision 2030 transformation, and also raise significantly the Kingdom’s profile in the international financial community.

The second FII forum, in October 2018, was overshadowed to some degree by the tragic murder of journalist Jamal Khashoggi in Istanbul earlier in the month, which led some top-level executives and media organizations to stay away, but for which regrets and condemnation were expressed by the crown prince from the stage at the opening keynote.

It was difficult for a visitor to see much difference. The attendance figures were as good as the inaugural launch; while some familiar faces were missing from the big set-piece plenary sessions, an army of more junior executives from many of the big banks, financial institutions and other global investors were happily doing deals at the event.

Some $60 billion in deals and Memorandums of Understanding (MoUs) were signed in 2018, across a range of sectors including energy, housing, health and technology.

The 2018 event attracted eight heads of state, 20 international ministers and was watched by 2.8 million viewers worldwide.

By 2019, when Yasir Al-Rumayyan, the PIF governor, declared the FII to be “one of the top three gatherings in the world,” it was business as usual, with an even bigger turnout of around 6,000 at the event and millions more tuning in worldwide from more than 110 countries.

Like most international events of last year, FII 2020 was impacted by the outbreak of the COVID-19 pandemic, which prevented it from being held in its customary October slot.

Instead, the fourth FII was held virtually in January this year, organized from Riyadh with the help of satellite hubs in New York, Paris, Beijing and Mumbai.

The theme was “The Neo Renaissance,” referring to the rebirth of global economic life after the shock of the pandemic the previous year. The event also developed what was to be an enduring theme, and a prominent element of the fifth event starting today in Riyadh: The importance of ESG — environmental, social and governance — standards in global finance.

In the five years since the first “Davos in the Desert,” much has changed. The FII itself is now a non-profit organization run by the PIF under Chief Executive Richard Attias, who is a prominent figure at the annual events.

Its one-item agenda consists of “Impact on humanity.” Meanwhile, the Saudi economy has developed and progressed with the FII.

It has emerged from the shock of the pandemic last year, and, in particular, Saudi Arabia has helped steer global energy markets through their most severe crisis for many years through its leadership, along with Russia, of the OPEC+ organization.

All the economic indicators in the Kingdom are heading in the right direction, with GDP this year forecast to show a strong recovery from the doldrums of the pandemic recession.

Higher oil prices will make a big contribution to stronger government revenues, which can also be used to finance the ongoing Vision 2030. Non-oil growth is also expected to rise sharply.

Despite the challenges of the past two years, the FII has become an integral part of the global investment scene and the international forums circuit.

The FII has “just done it,” and will do it again in Riyadh starting on Tuesday.


Cryptocurrencies post record inflows in latest week

Cryptocurrencies post record inflows in latest week
Updated 25 October 2021

Cryptocurrencies post record inflows in latest week

Cryptocurrencies post record inflows in latest week

NEW YORK: Cryptocurrency products and funds had record inflows last week to the tune of $1.5 billion, their 10th straight week of investments, as optimism soared with the trading of bitcoin exchange traded funds, a report from digital asset manager CoinShares showed on Monday.

Inflows so far this year hit $8 billion, far exceeding the record set for the whole of 2020 of $6.7 billion, the data showed as of the week ended Oct. 22.

Total assets under management also hit a new record of $79.2 billion, although it ended the week at $76.7 billion.

The bulk of inflows for the sixth straight week went to Bitcoin, with $1.45 billion, data showed. Inflows to the world’s largest cryptocurrency year-to-date amounted to $6.1 billion.

The ProShares Bitcoin Strategy ETF and the Valkyrie Bitcoin Strategy ETF debuted last week, a defining moment for the crypto industry that is expected to lure more inflows from big institutional investors.

That pushed bitcoin to an all-time peak of $67,016.50 . It was last up 4.6 percent at $63,682.

“Bitcoin hitting new all-time highs shows both how far we've come and the capacity bitcoin has to upend the financial system and create a global economy, linking the developed and emerging markets like never before,” said Ray Youssef, co-founder and chief executive officer of Paxful, a global peer-to-peer fintech platform.

"While this recent price rally can be attributed to movements like the approval of the first bitcoin ETF for institutional investors, we can't ignore the impact of significant development and adoption in emerging markets," he added.

Ethereum, meanwhile, saw outflows for a third consecutive week totaling $1.4 million. 

CoinShares believed that the outflows were due to minor profit-taking as the price approaches record highs. Ether, the currency for the Ethereum blockchain, last exchanged hands at $4,224.30, up 3.5%.

Other altcoins saw inflows. Solana, Cardano and Binance posted inflows totaling $8.1 million, $5.3 million and $1.8 million, respectively.

Assets under management at Grayscale and Coinshares, the two largest digital asset managers, climbed last week to $54.6 billion and $5.2 billion, respectively. 


Greenhouse gas levels reach record amid COP26 worries

Greenhouse gas levels reach record amid COP26 worries
Updated 25 October 2021

Greenhouse gas levels reach record amid COP26 worries

Greenhouse gas levels reach record amid COP26 worries

GENEVA/GLASGOW: Greenhouse gas concentrations hit a record last year and the world is “way off track” in capping rising temperatures, the UN said on Monday in a stark illustration of the tasks facing UN climate talks in Scotland.

A report by the UN World Meteorological Organization showed carbon dioxide levels surged to 413.2 parts per million in 2020, rising more than the average rate over the last decade despite a temporary dip in emissions during COVID-19 lockdowns.

WMO Secretary-General Petteri Taalas said the current rate of increase in heat-trapping gases would result in temperature rises “far in excess” of the 2015 Paris Agreement target of 1.5 degrees Celsius above the pre-industrial average this century.

“We are way off track,” he said. “We need to revisit our industrial, energy and transport systems and whole way of life,” he added, calling for a “dramatic increase” in commitments at the COP26 conference beginning on Sunday.

The city of Glasgow was putting on the final touches before hosting the climate talks, which may be the world's best remaining chance to cap global warming at the 1.5-2 degrees Celsius upper limit set out in the Paris Agreement.

Under countries’ current pledges, global emissions would be 16 percent higher in 2030 than they were in 2010, according to a separate analysis by the UN Framework Convention on Climate Change.

That is far off the 45 percent reduction by 2030 that scientists say is needed to cap warming at 1.5 degrees and avoid its most devastating impacts.

“Overshooting the temperature goals will lead to a destabilized world and endless suffering, especially among those who have contributed the least to the (greenhouse gas) emissions in the atmosphere," said Patricia Espinosa, executive secretary of the UNFCCC.

“We are nowhere near where science says we should be,” Espinosa said.