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Samsung warns supply chain upsets may hit chip demand, profit at 3-year high

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Samsung Electronics Co Ltd said on Thursday it expects component shortages to affect chip demand from some customers in the final three months of the year, after reporting its highest quarterly profit in three years.

The warning comes as producers of goods from televisions to cars have faced a host of supply chain issues ranging from a shortage of logic chip parts, manpower shortages, logistics snarls, and delays at parts plants due to power cuts in China.

“A longer-than-expected component supply issue may need to be monitored” for potential impact on devices that use memory chips, Samsung said, although it added there was “strong fundamental demand” for server chips.

“There is much uncertainty due to various macro issues including the effect of ‘back-to-normal’, component supply and raw material price hikes,” said Han Jin-man, executive vice president of memory business.

“But… component supply issues seem to stem more from mismatches in supply chain management rather than from an absolute lack of supply… So the situation may improve from the second half of next year.”

Samsung said demand for server DRAM chips, which temporarily save data, and NAND flash chips that serve the data storage market, is expected to stay robust in the fourth quarter due to expansion of data centre investments, while personal computer manufacturing growth is expected to hold in line with the previous quarter.

Although supply chain issues could limit demand from some mobile chip customers in the fourth quarter, demand for server and personal computer chips is expected to be robust in 2022 despite uncertainties, it said.

Samsung said falling memory chip prices were not a huge cause of concern because the chips are now used in a wider variety of devices than just personal computers, making cyclical price fluctuations weaker and shorter than in the past. Chipmakers were also carrying lean inventory levels, leaving room for a build-up without being forced to sell at a low price.

Falling memory prices have weighed on the company’s shares as investors expect prices to have peaked in the third quarter before falling until mid-2022.

“There seems to be a clear gap in memory price outlook between chipmakers and the market. Companies are expressing a firm will to not sell chips at low prices,” said Park Sung-soon, analyst at Cape Investment & Securities.

“However, even server chip demand is not guaranteed at this point as the component supply issues are also affecting them.”

Analysts expect Samsung’s fourth quarter earnings to be level or below its third quarter result, largely depending on memory chip prices.

Smaller rival SK Hynix on Tuesday struck a more bullish note than U.S. peers and forecast steady demand for memory chips. Earlier, chipmakers Intel and Micron had said shortages of some components were stopping their customers from shipping PCs.

THREE-YEAR HIGH

The world’s top maker of memory chips and smartphones posted a 28% jump in operating profit in the July-September quarter to 15.8 trillion won ($13.48 billion) on the back of an 82% on-year profit surge in its chip business, where earnings rose to 10.1 trillion won.

Rising memory chip prices, plus a jump in profitability at Samsung’s chip-contract manufacturing business boosted the chip business’ operating profit.

Operating profit at Samsung’s mobile division slid about 24% on-year to 3.36 trillion won on the third quarter, as sales of Samsung’s new foldable smartphones were tempered by marketing costs.

Net profit rose 31% to 12.3 trillion won. Revenue rose 10% to a record 74 trillion won.

Samsung’s shares rose 0.3% in afternoon trade on Thursday, compared with the wider market’s 0.2% rise. It shares have fallen about 13% year-to-date.

($1 = 1,172.0500 won)

 

(Reporting by Joyce Lee and Heekyong Yang; Editing by Richard Pullin)

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Tentative deal between union workers and beef producer Cargill struck | CTV News – CTV News Calgary

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With less than a week to go before workers were set to go on strike at Cargill’s High River, Alta. beef processing plant, the company says a tentative deal has been reached.

The company announced the development on Wednesday and says it is “encouraged by the outcome” of recent talks.

“After a long day of collaborative discussion, we reached an agreement on an offer that the bargaining committee will recommend to its members. The offer is comprehensive and fair and includes retroactive pay, signing bonuses, a 21 per cent wage increase over the life of the contract and improved health benefits,” Cargill wrote in a statement to CTV News via email.

The company adds it also “remains optimistic” a deal can be finalized before the strike deadline.

“(We) encourage employees to vote on this offer which recognizes the important role they play in Cargill’s work to nourish the world in a safe, responsible and sustainable way. While we navigate this negotiation, we continue to focus on fulfilling food manufacturer, retail and food service customer orders while keeping markets moving for farmers and ranchers,” it wrote.

The United Food and Commercial Workers’ Union (UFCW) Local 401 was expected to go on strike on Dec. 6.

It rejected the most recent attempt at a deal on Nov. 25 by a 98 per cent margin.

‘FAIR OFFER’

According to a statement from UFCW Local 401, the negotiating team engaged in “a marathon day” of talks with the company on Tuesday.

“Late in the evening, our bargaining committee concluded that they were in receipt of a fair offer and that they were prepared to present that offer to their coworkers with a recommendation of acceptance,” it wrote in a statement.

The union says the tentative deal will “significantly improve” the lives of Cargill workers and will be the ‘best food processing contract in Canada.”

Highlights from the deal include:

  • $4,200 in retroactive pay for many employees;
  • $1,000 signing bonus;
  • $1,000 COVID-19 bonus;
  • More than $6,000 total bonuses for workers three weeks before Christmas;
  • $5 wage increase for many employees;
  • Improved health benefits; and
  • Provisions to facilitate a new culture of health, safety, dignity and respect in the workplace

While UFCW Local 401 president Thomas Hesse calls the deal “fair,” he will support workers on the picket line if they decide to reject the proposal.

“If they do accept it, I’ll work with them every day to make Cargill a better workplace,” Hesse said in a statement. “I will do as our members ask me to do.

“I respect all of the emotions that they feel and the suffering that they have experienced.”

Employees are expected the vote on the new deal between Dec. 2 and 4.

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Afterpay delays vote on $29 billion buyout as Square awaits Spain’s nod

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Afterpay Ltd will delay a shareholder meet to approve Square Inc’s $29-billion buyout of the Australian buy now, pay later leader, as the Jack Dorsey-led payment company awaits regulatory nod in Spain.

The investor meet was set for Dec. 6, but Afterpay said it would likely take place next year as Square, which has rebranded itself to Block Inc, is likely to get an approval from the Bank of Spain only in mid-January.

The delay is unlikely to impact the completion of Australia‘s biggest deal, which is set for the first quarter of 2022, Afterpay said.

“We continue to believe the risks of the transaction closing are minimal,” RBC Capital Markets analyst Chami Ratnapala said in a brief client note.

Meanwhile, Twitter Inc co-founder Dorsey is expected to focus on Square after stepping down as chief executive of the social media platform as it looks to expand beyond its payment business and into new technologies like blockchain.

Afterpay shares fell more than 6%, far underperforming the broader Australian market, tracking Square’s 6.6% drop overnight in U.S. market on worries over the Omicron variant.

 

(Reporting by Nikhil Kurian, Sameer Manekar and Indranil Sarkar in Bengaluru; Editing by Anil D’Silva, Rashmi Aich and Arun Koyyur)

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Canada Goose under fresh fire in China over no-return policies

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China’s top consumer protection organisation has warned Canada Goose Holdings Inc against “bullying” customers in China with its return policies, just three months after the winterwear brand was fined for false advertising.

The premium down jacket manufacturer has been a hot topic on Chinese social media in recent days over its handling of a case involving a customer who wanted a refund of her purchases amounting to 11,400 yuan ($1,790.17) after finding quality issues.

She said she was told by Canada Goose that all products sold at its retail stores in mainland China were strictly non-refundable, according to her account which went viral online.

State-backed media such as the Global Times newspaper later cited Canada Goose as denying that it had a no-refund policy and that all products sold at its retail stores in mainland China were refundable in line with Chinese laws. The company did not respond to Reuters’ request for comment.

That has not failed to quell criticism of the brand.

“No brand has any privileges in front of consumers,” the government-backed China Consumer Association (CCA) said in an opinion piece posted on its website on Thursday morning.

“If you don’t do what you say, regard yourself as a big brand, behave arrogantly and in a superior way, adopt discriminatory policies, be condescending and bully customers, you will for sure lose the trust of consumers and be abandoned by the market,” the CCA said.

Representatives of the brand were summoned for talks on Wednesday by the Shanghai Consumer Council to explain its refund policy in China.

The dressing down of Canada Goose comes as tension between China and Western countries has fuelled patriotism and driven some shoppers to turn to home-grown labels.

Canada Goose was also fined 450,000 yuan in September in China for “misleading” consumers in its ads.

($1 = 6.3681 Chinese yuan renminbi)

 

(Reporting by Sophie Yu, Brenda Goh; Editing by Kim Coghill)

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