AFP

Taiwanese electronics giant Foxconn will invest $19.4 billion to make semiconductors in India with local conglomerate Vedanta, backed by New Delhi’s push to boost tech self-reliance after a global chip shortage.

Semiconductors are an essential component of nearly all modern electronics, from smartphones to kitchen appliances and cars, but the coronavirus pandemic kneecapped global production and leading manufacturers are still struggling to meet demand.

India approved a $10 billion incentive plan last December to kickstart its own domestic industry by covering up to half of all project costs.

The deal announced Tuesday is the scheme’s most ambitious investment to date and will see a manufacturing facility built in Prime Minister Narendra Modi’s home state of Gujarat.

“India’s own Silicon Valley is a step closer now,” Vedanta group chairman Anil Agarwal tweeted on Tuesday, thanking the government for helping “tie things up so quickly”.

Vedanta, one of India’s biggest mining companies, will take a 60 percent share in the joint venture for its first step into chip-making.

Foxconn, the world’s top iPhone assembler, will take the minority stake.

“The improving infrastructure and the government’s active and strong support increases confidence in setting up a semiconductor factory,” Foxconn vice president Brian Ho said in a statement.

The facilities will be operational by 2024 and will also manufacture display screens for phones and tablets, the companies said.

Shares in Vedanta rose six percent in Mumbai a day after the announcement.

India has sought to boost its domestic production capacity in a range of strategic sectors, including military hardware and advanced technology. 

“In the current geopolitical scenario, trusted sources of semiconductors… are key to the security of critical information infrastructure,” India’s technology ministry said earlier.

The government’s semiconductor incentive scheme has already successfully wooed several investors, with Singapore’s IGSS Ventures announcing $3.2 billion in July to make chips in Tamil Nadu state.

Another partnership between NextOrbit of the UAE and Israel’s Tower Semiconductor signed on in May for a $2.9 billion plant in Karnataka state.

The vast majority of the world’s top chips are made by just two companies — TSMC of Taiwan and South Korea’s Samsung — both of which are running at full capacity to alleviate the ongoing global shortage.

Club Med owner Fosun, one of China’s largest private-sector conglomerates, saw billions wiped off its value on Wednesday as jittery investors reacted to a media report that the group was under regulatory scrutiny.

There has been growing concern about the debts of Chinese companies, particularly after a run of high-profile defaults in the property sector last year that rippled through the wider economy.

Bloomberg News on Tuesday cited unnamed sources as saying that regulators, including China’s banking watchdog and the local commission overseeing state investments, have told large lenders and state-owned enterprises to closely examine their exposure to Fosun.

Shares in Fosun International Limited, the conglomerate’s flagship company, slid as much as 9.6 percent in Hong Kong to HK$4.41 on Wednesday, the lowest level since November 2012.

Fosun’s Chief Financial Officer Alex Gong rejected the Bloomberg report as “completely false”.

“Neither the China Banking and Insurance Regulatory Commission (CBIRC) nor the Shanghai Banking and Insurance Regulatory Commission have asked commercial banks to find out about Fosun’s financial exposure, and those institutions have not received any notice of this,” Gong told the South China Morning Post.

The public had a “one-sided interpretation” of Fosun’s recent reductions in shareholdings and divestments and failed to see that they were part of a long-term financial strategy, the Shanghai-based company added in a statement.

– Circus and football –

Co-founded by tycoon Guo Guangchang in 1992 during the heady days of China’s initial “reform and opening” period, Fosun started off in pharmaceuticals and real estate but has since built a sprawling business empire that includes tourism and finance. 

A prolific buyer of global assets, Fosun owns French brand Club Med and has a controlling stake in the fashion house Lanvin.

It owns English Premier League football club Wolverhampton Wanderers and has a major stake in Canadian circus producer Cirque du Soleil.

In 2020, Fosun struck a deal with Germany’s BioNTech to manufacture its coronavirus vaccine in China and later became its exclusive distributor to the Greater China region.

Chinese companies have faced growing scrutiny over their debt exposure, especially those in the property sector. 

Multiple construction giants, including Evergrande, have defaulted on debts and been forced into major restructuring.

Beijing has also launched regulatory investigations in multiple sectors, including education and technology businesses, clipping their growth.

In recent months China’s economy has been reeling from a debt crisis in its massive property sector, mortgage boycotts, as well as disruptions from coronavirus lockdowns in finance and manufacturing hubs.

Fosun faces as much as $8 billion in bond repayments through 2023, according to Bloomberg News.

The CBIRC’s request to banks to check their exposure to Fosun debt does not mean it wants lenders to change their financing, and the regulator’s move may not result in any action, Bloomberg reported.

The Beijing branch of the State-owned Assets Supervision and Administration Commission was also among the regulators who asked institutions it oversees for closer scrutiny regarding Fosun, the report added.

Fosun’s debt stood at 261 billion yuan ($37.7 billion) as of June 30, up from 237 billion yuan at the end of last year, according to an earnings report last month.

Moody’s last month downgraded Fosun, citing weak liquidity and a weakening portfolio amid asset sales.

South Korea has fined Google and Meta more than $71 million collectively for gathering users’ personal information without consent for tailored ads, regulators said Wednesday, the country’s highest-ever data protection fines.

Investigations into the two US tech giants found they had been “collecting and analysing” data on their users, and monitoring their use of websites and applications, the Personal Information Protection Commission said.

The data was used to “infer the users’ interests or used for customised online advertisements”, it said, adding that neither Google nor Meta had clearly informed South Korean users of this practice or obtained their consent in advance.

As a result, Google was fined 69.2 billion won ($49.7 million) and Meta 30.8 billion won ($22.1 million).

“It is the largest fine for the violation of the Personal Information Protection Act,” the commission said in a statement.

Regulators said the majority of the users in South Korea — 82 percent for Google and 98 percent for Meta — had unknowingly allowed them to collect data on their online use.

“It can be said that the possibility and the risk of infringement of the rights of the users are high,” the statement said.

Last year, South Korea fined Google nearly $180 million for abusing its dominance in the mobile operating systems and app markets, saying it was hampering market competition.

Giant US tech companies are regularly criticised for dominating markets by elbowing out rivals, with multiple governments globally seeking to rein them in.

The European Union has slammed Google with record antitrust penalties, and also gone after Apple and Microsoft.

Japan’s central bank on Wednesday conducted an operation often seen as a precursor to currency intervention, local media said, as the yen continues to crater against a strengthening dollar.

The financial daily Nikkei and other local media said the Bank of Japan (BoJ) carried out a “rate check”. A Bank spokesman contacted by AFP declined to comment.

A rate check involves asking market participants about their foreign exchange trading, said Toshikazu Horiuchi of IwaiCosmo Securities.

“Basically it’s a warning, which is the next best thing to an intervention when the exchange rate is fluctuating,” he told AFP.

The yen has tumbled from around 115 per dollar in March to lower than 140 in recent weeks, as the BoJ maintains its monetary easing policies despite sometimes sharp rate hikes elsewhere, including from the Federal Reserve, to tackle inflation.

In early Tokyo trade, a dollar fetched 144.94 yen, after worse-than-expected US inflation data raised the prospect of even steeper US rate hikes to tame prices.

The rate check reports saw the yen strengthen quickly, with the dollar touching a low of 143.53 within an hour.

Earlier Wednesday, Japanese government officials sought to calm the waters by insisting they were monitoring the currency swings and would not rule out any option to prevent further falls.

Masato Kanda, vice finance minister for international affairs, told reporters that the yen’s move was “rapid” and “concerning”.

“When a rate check is conducted, sometimes it evolves into an intervention, so that’s why the market reacts very sensitively,” Horiuchi said.

“But its actual impact hinges on whether an intervention is really possible.”

A weaker yen can help Japanese companies to sell products overseas, but the levels seen in recent weeks are starting to put pressure on households and businesses due to higher import prices.

Inflation more broadly has risen to seven-year highs in Japan, partly due to the impact of the war in Ukraine on energy prices, though it is still less severe than in many major economies.

Japan’s central bank has been in no hurry to shift course on its ultra-loose monetary policy, viewing the measures as necessary to achieve its long-standing goal of sustained two percent inflation.

The bank sees recent price increases as temporary, and linked to exceptional factors like the Ukraine conflict and pandemic-related supply chain issues.