World

Taiwan’s GlobalWafers on Monday unveiled plans to establish a massive plant in northern Texas to produce a component vital to making semiconductors with an investment of up to $5 billion.

However, the plan to produce silicon wafers, which would reinforce fragile supplies of computer chips, is contingent largely on legislation pending in the US Congress.

“With the global chips shortage and ongoing geopolitical concerns, GlobalWafers is taking this opportunity to address the United States semiconductor supply chain resiliency,” GW Chairman and CEO Doris Hsu said in a statement.

“Instead of importing wafers from Asia, GlobalWafers USA (GWA) will produce and supply wafers locally.”

The material is used to produce chips needed for everything from cars to smartphones, and the global shortage in recent months has been a factor in driving up US prices.

Construction of the new facility — the first of its kind in more than two decades — is due to begin this year in Sherman, Texas, with the first production coming off the line as early as 2025, creating as many as 1,500 jobs, the statement said.

However, GW President Mark England said the impasse in Congress over the $52 billion “CHIPS Act” designed to boost the US industry could hinder the plans.

“The size and possibly the actuality of the Texas investment” are at stake, he said in an email to AFP.

Democrats and Republicans are wrangling over the differing versions passed by the Senate and House of Representatives and have not agreed on the final form of the legislation that would provide subsidies to manufacturers.

England said in a statement that the legislation would help “level the global incentive playing field,” and would be instrumental in ensuring semiconductor investments and supply.

US and state officials cheered the announcement but Commerce Secretary Gina Raimondo urged quick passage of the CHIPS Act.

“We are at a make-or-break moment to expand domestic semiconductor production,” she said. “Moving quickly to pass this bill will demonstrate America’s commitment to robust domestic semiconductor capacity and provide more companies throughout the supply chain the confidence they need to move forward with investments here.”

The 300-millimeter silicon wafers are the starting material for all advanced semiconductor fabrication sites (or fabs), including recently announced US expansions by GlobalFoundries, Intel, Samsung, Texas Instruments and TSMC, but most are imported from Asia.

Indigenous protesters in Ecuador met with the government on Monday in an attempt to end nationwide demonstrations against high living costs that have rocked the country for two weeks.

The meeting came after protesters rejected a fuel price cut announced by the government as insufficient and vowed to continue demonstrations. 

President Guillermo Lasso on Sunday announced a 10-cents-per-gallon reduction to the fast-rising diesel and gasoline prices that sparked the uprising, now in its fifteenth day and severely hampering the oil-dependent economy.

The cut was not nearly as much as protesters had demanded and the powerful Confederation of Indigenous Nationalities of Ecuador (Conaie), which has been blockading roads and occupying oil wells since June 13, said the gesture was “not enough, it is insensitive.”

It showed, said a statement signed by Conaie leader Leonidas Iza, that the government “does not sympathize with the situation of poverty faced by millions of families.”

“Our struggle is not over,” the group added.

But later on Monday, Conaie met with the government in a meeting that was broadcast online.

Iza said the group’s aim was to agree “a policy that can benefit the poorest,” while reiterating that Indigenous people had been “insulted” by Lasso’s gesture.

Indigenous people make up more than a million of the South American nation’s 17.7 million people, and Conaie is credited with unseating three presidents between 1997 and 2005.

Fuel prices, which are subsidized in oil-producing Ecuador, have risen sharply since 2020, almost doubling for diesel from $1 to $1.90 per gallon and swelling from $1.75 to $2.55 for gasoline.

Conaie wants the price to be lowered to $1.50 per gallon for diesel and $2.10 for gasoline.

– ‘Critical’ level –

An estimated 14,000 protesters are taking part in a nationwide show of discontent against rising hardship in an economy dealt a serious blow by the coronavirus pandemic.

Most of the ire is concentrated in the capital Quito, where some 10,000 people are gathered, mainly from other parts of the country.

Other than fuel price cuts, the protesters also want jobs, food price controls, and more public spending on healthcare and education.

The action has been costly, with losses of some $50 million per day to the economy, and production of fuel — Ecuador’s biggest export — halved from about 520,000 barrels per day, according to the energy ministry.

Hundreds of wells are besieged.

On Sunday, the ministry said oil production had reached a “critical” level and could be halted entirely within 48 hours if the protests continued.

Ecuador’s economy is highly dependent on oil revenues, with 65 percent of output exported in the first four months of 2022.

The demonstrations have also crippled transportation, with roadblocks set up in 19 of the country’s 24 provinces, blocking the delivery of food and flowers — another key export — and dealing a blow to tourism.

Shortages are already being reported in the capital, where prices have soared and irate workers and shop owners have launched counter-protests against the disruption of their lives and livelihoods.

– ‘Full force’ –

Lasso, an ex-banker who took office last year, finds himself in a tough spot between the protesters and politicians who blame him for the drawn-out standoff.

At the request of opposition parties, parliament started an impeachment hearing for the president over the weekend, suspended until Tuesday.

Once the hearings conclude, lawmakers will have 72 hours to vote.

Impeachment would require 92 of the 137 possible votes in the National Assembly, where the opposition holds a fragmented majority.

Seeking to appease protesters, Lasso on Saturday lifted a state of emergency that had been in place in six provinces, with Quito under a night-time curfew.

There was also a first meeting between protesters and the government, although no details emerged of what was discussed.

In two weeks of protests to date, five people have died in clashes with police, and hundreds have been injured on both sides.

International organizations and rights bodies have called for an end to the violence, while Pope Francis on Sunday urged “dialogue.”

Both sides have accused each other of intransigence.

Lasso insisted Sunday that those seeking a peaceful settlement would find an “outstretched hand,” adding, however, that “those who seek chaos, violence and terrorism will face the full force of the law.”

The board of directors at Brazilian oil giant Petrobras on Monday approved President Jair Bolsonaro’s pick to be the state-controlled company’s chief.

Caio Paes de Andrade will be the company’s fourth president in less than four years. His mandate is due to run until April 2023 but his predecessor Jose Mauro Coelho only lasted 40 days.

Coelho had been due to stay in place until his successor was appointed but resigned last week following harsh criticism by Bolsonaro over a new hike in fuel prices.

The two previous Petrobras presidents, Joaquim Silva e Luna and Roberto Castello Branco, also left the post following stinging Bolsonaro criticism.

Bolsonaro, who is up for re-election later this year, has repeatedly tried in vain to change Petrobras’ price policy, which is tied to the international market.

Rising fuel prices are affecting Bolsonaro’s popularity with elections just three months away.

“Today, Caio (Paes de Andrade) is taking over Petrobras, we will have a new dynamic in fuels in Brazil. Everything will be analyzed on the basis of the law… without interfering in anything,” Bolsonaro said Monday at a ceremony in Brasilia.

The new appointment was welcomed by the markets, with Petrobras shares up 6.75 percent at closing on the Sao Paulo stock exchange.

Paes de Andrade has been a civil servant since Bolsonaro came to power, first in the public technology and information company Sepro, and then in the economy ministry.

Lower sales in North America and China dented Nike’s quarterly results as the sports giant on Monday projected modest revenue growth amid the strong dollar, rising inflation and other headwinds.

The Oregon company — which has enjoyed strong pricing at times during the pandemic but also faced Covid-19 factory lockdowns in Asia that have crimped its inventories — reported lower profits for its fiscal fourth quarter.

For the quarter ending May 31, Nike reported profits of $1.4 billion, down five percent from the prior year on a one percent dip in revenues to $12.2 percent.

Neil Saunders, managing director of GlobalData, a retail consultancy, said the results were “reasonably good” but with some unfortunate “devils in details.”

These include the tough North American inflationary environment, which has led some consumers to cut back on discretionary investments.

Another issue is China where lockdowns “are creating sudden swings in consumer behavior,” Saunders said in a note.

“In theory there should be a recover as China reopens, but this could quickly be reversed if further lockdowns are imposed.”

Shares retreated as Nike forecast revenues of flat to “slightly up” in the coming quarter.

Nike Chief Financial Officer Matthew Friend said the company was monitoring consumer behavior over “implications of high inflation” and adopting a “cautious approach” to Greater China given the country’s restrictive Covid-19 policies.

Friend also said the forecast reflects a drag from the strong dollar in overseas markets, as well as the continued hit from lofty freight costs and supply chain investments.

Shares dropped 3.0 percent to $107.20 in after-hours trading.

The UK government’s bid to scrap parts of post-Brexit trade arrangements in Northern Ireland cleared its first hurdle on Monday, despite EU warnings it is illegal and could spark a trade war.

MPs in the House of Commons voted through the controversial Northern Ireland Protocol Bill by 295 votes to 221 after a debate, allowing it to progress to the next stage of scrutiny in parliament.

Prime Minister Boris Johnson, in Germany for a G7 leaders meeting, earlier insisted the legislation was needed to remove “unnecessary barriers to trade from Great Britain to Northern Ireland.

“All we’re saying is that you can get rid of those, whilst not in any way endangering the EU single market,” he told reporters.

MPs voted as Johnson socialised at the G7 with top EU leaders, including European Commission chief Ursula von der Leyen, German Chancellor Olaf Scholz and French President Emmanuel Macron.

Irish premier Micheal Martin rejected Johnson’s attempts to play down the planned changes to the protocol, which was agreed as part of the UK’s Brexit withdrawal from the European Union.

Martin said “any unilateral decision to breach international law is a major, serious development.

“There can be no getting out of that,” he said in Dublin, also warning against another government bill to revamp human rights in the UK that could affect a 1998 peace deal for Northern Ireland.

In parliament, Johnson’s predecessor as prime minister Theresa May, who quit after failing to get parliamentary backing for her own Brexit divorce deal, said she could not back the bill.

It was “not legal… will not achieve its aims and… will diminish the standing of the United Kingdom in the eyes of the world”, she told MPs.

– ‘Legal and necessary’ –

The UK government unveiled its plan to unilaterally change trading terms for the politically fraught British province earlier this month, prompting the EU to pledge legal action.

Brussels says overriding the deal it struck in 2019 with Johnson’s government breaches international law, and has warned of trade reprisals, which Britain can ill-afford as prices surge on the back of the war in Ukraine.

Days of further scrutiny and subsequent votes now loom, and despite winning the vote, Johnson is facing criticism among some of his own Conservatives after he only narrowly survived a no-confidence vote this month.

Launching the debate, Foreign Secretary Liz Truss said problems were “baked in” to the protocol and wholesale change was needed to entice pro-UK unionists back to a power-sharing government in Belfast.

“It is both legal and necessary,” she said, denying the UK was breaching international law and stressing the need to prioritise the peace process.

“We continue to raise the issues of concern with our European partners, but we simply cannot allow the situation to drift,” Truss added.

– ‘Unrealistic’ –

There was no immediate response from Brussels.

But on Sunday, the bloc’s ambassador to Britain, Joao Vale de Almeida, said the legislation did break international, EU and UK law, and was “unrealistic”.

“We are committed to find the practical solutions on implementation, but we cannot start talking if the baseline is to say everything we have agreed before is to be put aside,” he added.

The protocol requires checks on goods arriving into Northern Ireland from England, Scotland and Wales, to track products that could be potentially headed to the bloc via the Republic of Ireland.

This creates a customs border down the Irish Sea, keeping Northern Ireland in the EU’s customs orbit to avoid a politically sensitive hard border between the territory and EU member Ireland.

Unionist parties and the UK government argue the protocol is threatening the 1998 Good Friday Agreement that ended three decades of violence over British rule in Northern Ireland.

They want checks to be removed on goods, and animal and plant products, travelling from Great Britain through the creation of a “green channel” for goods intended to stay in Northern Ireland.

Oil prices bounced and Wall Street stocks declined Monday, reversing the most recent trends as markets eye the end of a bruising second quarter.

After positive sessions for several leading European and Asian bourses, Wall Street stocks were in the red most of the day, and finished modestly lower.

The broad-based S&P 500, which has fallen about 14 percent since the end of the first quarter, shed 0.3 percent on Monday.

Wall Street last week enjoyed a rare positive performance amid talk that weakening economic data may have set the stage for central banks to tighten less aggressively than they have been suggesting.

But the first session of the week also revealed angst over the current macroeconomic backdrop.

Economists are increasingly pessimistic about the potential for US policymakers to engineer a “soft landing” as central banks tighten monetary policy, reversing a after a long period of rock-bottom borrowing rates due to surging inflation.

The yield on the 10-year US Treasury note, a proxy for interest rate expectations, climbed to around 3.20 percent.

Beth Ann Bovino, chief economist for S&P Global Ratings, said she remained relatively hopeful about the 2022 outlook but that 2023 “is the bigger worry.” 

Earlier, Asia continued a rally on Monday while London and Frankfurt closed higher and Paris retreated.

Hong Kong led gainers, climbing more than two percent thanks to a strong performance in Chinese tech firms. 

Indications that China’s crackdown on the sector could be coming to an end added to the upbeat mood in the city.

Oil prices rose after sharp falls last week, with analysts pointing to limited crude supply as a continued worried in spite of the uncertain oil demand outlook. 

“The world is increasingly vulnerable to disruptions in energy output given critically low inventories and spare capacity,” said commodities analysts at TD Securities.

“We think that oil prices are on a runaway train, and expect that the state of the world’s energy supply is so constrained that even in a recession, oil prices could remain elevated.” 

– Key figures at around 2040 GMT –

New York – Dow: DOWN 0.2 percent at 31,438.26 (close)

New York – S&P 500: DOWN 0.3 percent at 3,900.11 (close)

New York – Nasdaq: DOWN 0.7 percent at 11,523.83 (close)

London – FTSE 100: UP 0.7 percent at 7,258.32 (close) 

Frankfurt – DAX: UP 0.5 percent at 13,186.07 (close)

Paris – CAC 40: DOWN 0.4 percent at 6,047.31 (close)

EURO STOXX 50: UP 0.2 percent at 3,538.88 (close)

Tokyo – Nikkei 225: UP 1.4 percent at 26,871.27 (close)

Hong Kong – Hang Seng Index: UP 2.4 percent at 22,229.52 (close)

Shanghai – Composite: UP 0.9 percent at 3,379.19 (close)

Euro/dollar: UP at $1.0583 from $1.0553 Friday

Pound/dollar: FLAT at $1.2268

Euro/pound: UP at 86.24 pence from 86.02 pence

Dollar/yen: UP at 135.48 yen from 135.23 yen

Brent North Sea crude: UP 1.7 percent at $115.09 per barrel

West Texas Intermediate: UP 1.8 percent at $109.57 per barrel

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