U.S.-China Fight Over Chip Kingpin Rattles Tech Industry - Yahoo Canada Finance | Canada News Media
Connect with us

Business

U.S.-China Fight Over Chip Kingpin Rattles Tech Industry – Yahoo Canada Finance

Published

4 years ago

 on


U.S.-China Fight Over Chip Kingpin Rattles Tech Industry

(Bloomberg) —

Since its founding more than three decades ago, Taiwan Semiconductor Manufacturing Co. has built its business by working behind the scenes to make customers like Apple Inc. and Qualcomm Inc. shine. Now the low-profile chipmaker has landed squarely in the middle of the U.S.-China trade war, an incalculably valuable asset that both sides are vying to control.

The Trump administration opened up a new front in the conflict on Friday by barring any chipmaker using American equipment from supplying China’s Huawei Technologies Co. without U.S. government approval. That means TSMC and rivals will have to cut off Huawei unless they get waivers from the U.S. Commerce Dept. TSMC has already stopped accepting new orders from Huawei, the Nikkei newspaper reported Monday.

The move threatens to wreak havoc throughout the complex ecosystem that produces technology for consumers and companies around the world. An attack on Huawei threatens not just its workers and its standing as a world leader in making smartphones and telecom equipment, but also hundreds of suppliers. The Chinese government has vowed to protect its national champion, with threats of retribution against U.S. companies that depend on China like Apple Inc. and Boeing Co.

“China likely will retaliate, and investors should brace themselves for a possible trade war escalation,” Sanford C. Bernstein & Co. analysts led by Mark Li wrote in a research note on Friday.

Read more: U.S. Tightens Rules to Crack Down on Huawei’s Chip Supply

Huawei suppliers across Asia fell on Monday, with AAC Technologies Holdings Inc., Q Technology Group Co., Sunwoda Electronic and Lens Technology all sliding 5% or more. TSMC, which gets an estimated 14% of its revenue from Huawei, dropped as much as 2.5%.

The U.S. already blacklisted Huawei last year, preventing American companies from supplying the Chinese company unless they got a license. The latest move tightens those restrictions to prevent chipmakers — American or foreign — from working with Huawei and its secretive chip-design unit HiSilicon on the cutting-edge semiconductors they need to make smartphones and communications equipment. The Trump administration sees Huawei as a dire security threat, an allegation the company denies.

“We must amend our rules exploited by Huawei and HiSilicon and prevent U.S. technologies from enabling malign activities contrary to U.S. national security and foreign policy interests,” Commerce Secretary Wilbur Ross said in a tweet.

Huawei countered by accusing the U.S. of ulterior motives.

“The so-called cybersecurity reasons are merely an excuse,” Richard Yu, head of the Chinese tech giant’s consumer electronics unit wrote in a post to his account on messaging app WeChat. “The key is the threat to the technology hegemony of the U.S” posed by Huawei, he added.

The U.S. decision is likely to hurt not just Huawei and TSMC, but also a clutch of American players including gear-makers Applied Materials Inc., KLA and Lam Research Corp. themselves, Morgan Stanley analysts wrote. Disruptions to Huawei’s production will also hurt U.S. customers from Micron Technology Inc. and Qorvo Inc. to Texas Instruments Inc., they said. But “it bears repeating that any escalation of trade tensions is negative for the stocks overall,” they wrote in a research report.

It would have been impossible to imagine TSMC becoming such a coveted chit between the world’s great powers when it was founded in 1987. Morris Chang, born in China and trained in the U.S., started the company as a so-called foundry, manufacturing semiconductors for any customer that didn’t want to construct its own fabrication facility, or fab.

At the time, the business wasn’t nearly as glamorous as making chips yourself. Dominating the industry at the time were companies like Intel Corp. and Advanced Micro Devices Inc., which made processors for personal computers. “Real men have fabs,” AMD co-founder Jerry Sanders would say, making clear that was an insult.

But in the intervening years, the foundry industry has become far more strategic for the technology industry. Customers from Apple and Huawei to Qualcomm and Nvidia Corp. have found they can innovate more quickly if they focus on chip designs and then turn to foundries like TSMC to produce them. Innovators in emerging technologies like artificial intelligence or the internet of things also depend on foundries to crack open new markets.

Today, many of the chips for mobile phones, autonomous vehicles, artificial intelligence and any other key technology are made at foundries. TSMC has become the leading foundry in the world by investing heavily in ever more advanced fabs, with annual capital spending of about $16 billion this year.

It can now manufacture at 5 nanometers, about twice the width of human DNA, while China’s top foundry, Semiconductor Manufacturing International Corp., or SMIC, is at 14 nanometers. That makes TSMC’s chips far more powerful and energy efficient.

Huawei and HiSilicon will have few good options if they are cut off from TSMC. One possibility is to procure off-the-shelf chips from Taiwan’s MediaTek Inc. and South Korea’s Samsung Electronics Co., an option Huawei’s rotating Chairman Eric Xu mentioned in late March. But even that may no longer be viable under the new Commerce restrictions.

SMIC itself is keen on moving up the technology ladder, eyeing a secondary share listing that could raise more than $3 billion on top of a large capital infusion from the state.

Read more: China Injects $2.2 Billion Into Local Chip Firm Amid U.S. Curbs

But that’s a longer-term endeavor and Huawei’s products meanwhile are likely to suffer, putting them at risk of falling behind those of rivals like Apple or Xiaomi Corp.

For TSMC, it’s growing ever more difficult to remain neutral amid the growing tensions between the U.S. and China. The company brands itself “everybody’s foundry,” effectively the Switzerland of the tech industry. It supplies Chinese customers like Huawei and the American military, while relying on U.S. producers of semiconductor-making equipment like Applied Materials and Lam Research.

TSMC did take one step closer to the U.S. last week, saying it would build a $12 billion chip plant in Arizona. The Department of Defense has expressed concern that overseas fabs may be vulnerable to cyberattacks and domestic manufacturing would assure a more reliable supply of chips.

The proposal appears to be carefully calculated to address such security issues without too much damage to profits or its political balancing act. Suppliers to the military, such as Xilinx Inc., would be able to use the U.S. fab, but the facility would likely account for less than 5% of revenue so margins won’t be compromised.

It’s not clear if the plans for a U.S. plant will win TSMC leniency in supplying Huawei, however.

“TSMC will not be granted or granted a license based on their intent to build a 5 nanometer fab here in the United States. That’s not part of it at all,” Keith Krach, undersecretary for economic growth, energy and the environment at the State Department, told reporters on a call. “There’s no assurance on that and we don’t anticipate that.”

Meanwhile, China appears to be preparing to retaliate for the new restrictions on Huawei. On Friday, the Global Times — a Chinese tabloid run by the flagship newspaper of the Communist Party — reported Beijing was ready to initiate countermeasures, including imposing restrictions on Apple, suspending the purchase of Boeing airplanes and putting U.S. companies on an ‘unreliable entity list.’

The list will cover “foreign entities that cause actual or potential damage to Chinese companies and industries,” the newspaper said.

(Updates with Nikkei report in second paragraph)

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For more articles like this, please visit us at bloomberg.com” data-reactid=”56″>For more articles like this, please visit us at bloomberg.com

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Subscribe now to stay ahead with the most trusted business news source.” data-reactid=”57″>Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.

Let’s block ads! (Why?)



Source link

Related Topics:
Continue Reading

Business

Dollarama keeping an eye on competitors as Loblaw launches new ultra-discount chain

Published

1 day ago

 on

September 11, 2024

By

 

Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.

“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.

“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”

Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.

However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.

The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.

Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.

“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.

Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.

“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.

The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.

The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.

The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”

“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.

Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.

Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.

She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”

Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.

To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.

“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”

The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.

“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.

“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”

This report by The Canadian Press was first published Sept. 11, 2024.

Companies in this story: (TSX:DOL)

Source link

Continue Reading

Business

U.S. regulator fines TD Bank US$28M for faulty consumer reports

Published

1 day ago

 on

September 11, 2024

By

 

TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.

The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.

It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.

CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.

TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.

The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.

This report by The Canadian Press was first published Sept. 11, 2024.

Companies in this story: (TSX:TD)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Business

Amazon rejects plea to stop selling taxi roof signs as cab scam spreads across Canada

Published

2 days ago

 on

September 10, 2024

By

After a long day at a work event in July, Kathryn Kozody was relieved when she spotted a car with a lit-up taxi sign.

She thought it was odd when the driver told her she’d have to pay her fare with a debit card. Still, a tired Kozody hopped in the car.

“I was like, ‘Fine, it’s kind of weird, but let’s go home,'” said Kozody, who lives in Calgary.

Nothing else seemed off — until the next day when she discovered that almost $2,000 was missing from her bank account. On top of that, her debit card had someone else’s name on it.

Kozody concluded that the taxi driver was a fraudster who, during the debit card transaction, recorded her PIN, stole her card and handed her back a fake.

“I started freaking out,” she said. “It’s terrifying when they have your debit card.”

It took Kozody about two weeks to get her money back from her bank, and she’s still rattled by the experience.

The day after taking what she thought was a ride in a taxi, Kathryn Kozody of Calgary found out someone had withdrawn almost $2,000 from her bank account. (James Young/CBC News)

“It really felt like an invasion of privacy and a violation to be a victim of this scam,” she said. “I really don’t want it to happen to anybody else.”

The taxi scam isn’t new; Toronto and Montreal have been seeing it for years. But the crime is becoming more widespread.

This summer, police in Calgary, Edmonton and at least five cities in southern Ontario, including Kingston and Ottawa, posted warnings online that they had received multiple reports of the scam.

Police and the Canadian Taxi Association say the fraudsters have a helping hand: with the click of a button, they can purchase a generic — but official looking — taxi roof sign on e-commerce sites like Amazon.

Edmonton Police posted this alert on Facebook in July, warning people about an ongoing taxi scam. The city’s police department says that it received about 10 reports of the scam that month. (Edmonton Police/Facebook )

The taxi association has asked Amazon, by far Canada’s most popular online shopping site, to stop making the roof signs so easily available.

“They do have a moral responsibility to at least sell the signs to individuals that are properly licensed,” said association president Marc André Way.

However, the U.S.-based company continues to sell the product to all customers.

“These lights are legal to sell in Canada,” Amazon told CBC News in an email.

‘Eye-popping’ numbers

The taxi scam has several variations but typically ends the same way: the victim pays with a debit card, then the scammer secretly steals it and hands the victim a similar but fake card. Shortly thereafter, money disappears from the victim’s account.

Ron Hansen, deputy chief of police in Sarnia, Ont., said his department received 12 reports of the scam in July, with one victim losing $9,900.

Toronto police report that since June 2023 the department has received 919 reports of the taxi scam, totalling $1.7 million in losses.

Jessica Chin King of Toronto said after a recent cab ride, she got a suspicious activity alert from her bank. She learned $600 had been withdrawn from her account. (Craig Chivers/CBC)

The numbers are “eye-popping,” said Toronto police detective David Coffey.

“When they do get a victim, they are quick to go right into the bank accounts. They’re quick to empty them out.”

Jessica Chin King of Toronto said just 15 minutes after a recent cab ride, she got a suspicious activity alert from her bank. Turns out, $600 had been withdrawn from her account.

“I was like, ‘Wow, I can’t believe that just happened.’ I was in shock,” said Chin King, whose bank later reimbursed the cash.

She said she too was fooled by the taxi sign atop the car.

“I was in the car with somebody who wasn’t a taxi driver. Anything could have happened,” she said. “I was thankful that it was only my bank [account] that was compromised.”

Taxi light for $35 on Amazon

CBC News bought a taxi sign from Amazon for $35. It has a magnetic strip on the bottom, so it easily sticks to the top of a car.

To power the light, an attached wire can be run through the driver’s window and plugged into the car’s auxiliary power outlet, also known as the cigarette lighter outlet.

The taxi association says licensed taxi drivers typically get their roof signs from speciality suppliers, and they are hardwired to the car — not powered via the cigarette lighter.

“When you see that … it’s obvious that it’s not a legitimate taxi,” said Way, the association president.

Last month, Way sent Amazon a letter on behalf of the Canadian Taxi Association, asking it to stop selling the product.

“This is not a safe, practical way to distribute the trusted ‘Taxi’ signs,” he wrote.

CBC News ordered this $35 taxi sign on Amazon. The attached wire can be run through the driver’s window and plugged into the car’s auxiliary power outlet, while the lights for licensed drivers are hardwired into the vehicle. (Sophia Harris/CBC News)

But Amazon told Way — and CBC News — the signs will remain on its site, because the company isn’t breaking any rules.

“It’s going to be quite difficult, I think, for anyone to stop Amazon from selling a product that is perfectly legal to sell,” said Toronto criminal lawyer, Daniel Goldbloom. “It’s true that these taxi signs can be used to commit scams, but kitchen knives can be used to commit murder — and we don’t stop retailers from selling those.”

But Way isn’t giving up hope.

He says the taxi association also plans to ask other online retailers, such as Temu and eBay, to stop selling the taxi signs and will lobby provincial governments for legislation that regulates the sale of the product.

However, Coffey said he believes the best way to fight the taxi scam is to educate people about it.

“Never, never give another person control of your debit card,” the detective said.

Victims Chin King and Kozody also want to spread the word.

“The more people know, the less likely it is to happen again to somebody else,” Kozody said.

Source link

Continue Reading

Trending

Exit mobile version