TRADE
Japan industrial output falls
Japan’s industrial output dropped more than forecast last month as production of transport equipment and cars slowed, sapping a recovery in the world’s third-largest economy. Output fell 2.2 percent from April, when it rose 1.2 percent, the Japanese Ministry of Economy, Trade and Industry said yesterday. Economists had forecast a 0.8 percent decline. Retail sales rose 1.7 percent from the previous month, more than estimated. The rebound from recession last year is showing signs of losing momentum at a time when global uncertainty is increasing with a slowdown in China and financial turmoil in Greece. “Japan’s economic growth will probably slow considerably in the second quarter, reflecting weak exports and production,” Meiji Yasuda Life Insurance Co economist Yuichi Kodama said.
MANUFACTURING
GE announces Element deal
General Electric Co (GE) agreed to sell the bulk of its vehicle fleet-management business to Canada’s Element Financial Corp for US$6.9 billion, as the US company accelerates the disposal of its finance operations. Element is to acquire GE Capital’s fleet assets in the US, Mexico, Australia and New Zealand, the maker of turbines and medical scanners said in a statement. Separately, GE signed a provisional accord with Arval, a subsidiary of BNP Paribas, to sell the European portions of the business. “We continue to demonstrate speed and execution on our strategy to sell most of the assets of GE Capital,” GE Capital chief executive officer Keith Sherin said yesterday in the statement. “We are on track to execute sales of US$100 billion by the end of 2015 and expect to be substantially done by the end of 2016.” The Fairfield, Connecticut-based company plans to shed about US$200 billion of lending assets to refocus on industrial operations after GE Capital’s struggles during the 2008 financial crisis imperiled the parent company.
MACROECONOMICS
Japan cash, deposits rise
Japan Inc is piling up record levels of cash, bucking Japanese Prime Minister Shinzo Abe’s calls to plow more resources into reviving the world’s third-biggest economy. Corporate cash and deposits rose 3.6 percent in March from a year earlier to ¥241 trillion, the highest ever and a 26th straight quarter of increase, the Bank of Japan (BOJ) said yesterday. Reluctance to shift capital from safe assets into fresh investment and higher wages is challenging Abe’s effort to sustain a recovery that is showing signs of slowing. Industrial production dropped more than forecast last month, data showed, at a time when global uncertainty is increasing. “Companies have not changed their conservative stance,” BOJ economic statistics division head Ko Nakayama said. “It would be nice if companies use their cash and deposits for business investment.”
REAL ESTATE
Australia tightens rules
Australia yesterday tightened rules on requiring overseas investors to declare holdings of agricultural land in order to strengthen oversight, amid concerns that the country is losing control over its own food security. Foreign ownership of Australian land has become a touchy issue. Official estimates put foreign ownership at 10 percent, but there are concerns that it is far higher. Australian Treasurer Joe Hockey said foreign owners should declare their interests with the nation’s tax office from tomorrow. The tax office is to collect information on the location and size of property, size of interest acquired and country of origin of the foreign investor.
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