Nippon Steel Corp and Sumitomo Metal Industries plan to choose a single partner in India to avoid project duplication, as they prepare to combine to create the world’s second-largest steelmaker.
“We cannot compete in the same countries or same regions” within the new company, Nippon Steel executive vice president Shinichi Taniguchi said in an interview.
The Tokyo-based company is building a plant with Tata Steel, while Sumitomo Metal is in construction talks with Bhushan Steel.
Nippon Steel, Japan’s biggest mill, and Sumitomo Metal are seeking regulatory approval to combine to speed global expansion. They are racing against rivals, including JFE Holdings Inc, South Korea’s Posco and ArcelorMittal, to tap demand for steel in India, the second-fastest growing major economy.
The two companies will hold talks on overseas partners as soon as they sign a contract in April next year, Taniguchi said on Friday in Tokyo.
“We will examine how much compensation will need to be paid to each partner if a contract is called off,” Taniguchi said.
India’s consumption of the alloy is forecast to grow 13.3 percent this year and growth will accelerate to 14.3 percent next year, more than twice the pace of global demand, according to an April 18 report by the World Steel Association.
Nippon Steel and Sumitomo Metal have yet to hold talks because they are still unable to study each other’s contracts with overseas partners, Taniguchi said. The bigger company will have more resources to expand in targeted markets including India, Southeast Asia and Brazil, he said. The merger is set for completion by October next year.
“Our target is to expand globally,” he said. “The most important part of the merger is to combine the two companies’ managerial resources, then invest in growing markets and see returns.”
The Japanese steel merger, unveiled on Feb. 3, is backed by the government and business leaders, including Japanese Minister of Economy, Trade and Industry Banri Kaieda, Chief Cabinet Secretary Yukio Edano and Hiromasa Yonekura, the head of Japan’s biggest business lobby. Japanese Prime Minister Naoto Kan’s Cabinet approved a bill to encourage takeovers a week after.
Nippon Steel and Sumitomo Metal are seeking to expand overseas as they no longer expect high growth in Japan, where the March 11 earthquake and tsunami exacerbated the outlook of the stagnating economy.
Efforts to rebuild devastated areas won’t likely create enough demand for steel anytime soon and the size of the demand might be smaller than he initially anticipated, Taniguchi said.
Still, the pace of recovery at automakers is faster than Nippon Steel forecast, he said, after the quake disrupted supply chains of companies from Toyota Motor Corp to chipmaker Renesas Electronics Corp.
Steel output at Nippon Steel may return to “normal levels” as soon as the next quarter as carmakers boost output to make up for shortfall in the current three months, he said.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to