FOOD AND BEVERAGE
Afternoon Tea to withdraw
President Chain Store Corp (PCSC, 統一超商), the nation’s largest convenience store chain operator, yesterday confirmed that one of its food and beverage reinvestment units is to withdraw from the domestic market. The firm said it has decided not to renew Afternoon Tea Taiwan Corp’s (統一午茶風光) contract with Tokyo-based Sazaby League Ltd this year, citing a deteriorating business operating environment. Introduced into the local market in 2007, Afternoon Tea Taiwan has 15 outlets nationwide, PCSC said, declining to provide an exact date for the unit’s exit.
Taipower reports losses
State-run Taiwan Power Co (Taipower, 台電) yesterday said that it had slipped into a loss in the first four months of the year due to a spike in the cost of power generation. The company posted NT$5.4 billion (US$179.3 million) in losses from January to last month, compared with NT$17.8 billion in pretax profit in the same period last year. The losses in the first four months of the year were due to higher costs for fuel and natural gas to generate electricity amid increased demand and a shortfall in nuclear power supply, Taipower said, adding that its bottom line was also squeezed by a more than 26 percent increase in coal prices. It attributed the increased electricity demand to relatively higher temperatures so far this year. Taipower said it had been profitable from 2014 to last year, adding that pretax profit totaled NT$39.61 billion for the whole of last year. Taipower was the only one of the four enterprises run by the Ministry of Economic Affairs to report a loss for the four-month period.
CPC profit up on crude costs
State-run CPC Corp, Taiwan (台灣中油) yesterday said it has benefited from higher international crude oil prices and generated more than NT$10 billion in pretax profit in the first four months of the year, outperforming other companies also run by the Ministry of Economic Affairs. It reported pretax profit of NT$10.89 billion for the four-month period, a sharp rise from NT$4.2 billion in the same period last year, citing an increase in international crude oil prices that boosted its product prices. CPC last year posted NT$35.4 billion in pretax profit and reported a loss of NT$1.4 billion in 2015. Separately, Taiwan Sugar Corp (Taisugar, 台糖) posted NT$1.46 billion in pretax profit for the four-month period, down from NT$2.32 billion a year earlier. Taisugar cited a decline in revenue from property development for the yearly decline. Meanwhile, Taiwan Water Corp (台水) reported a year-on-year increase from NT$195 million to NT$525 million in pretax profit in the first four months of the year, amid greater water consumption in the industrial sector. Taisugar and Taiwan Water are also run by the economic ministry.
ASE to proceed with merger
Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), the world’s biggest chip tester and packager, yesterday said it would push ahead with a merger with local rival Siliconware Precision Industries Co (矽品精密), as the US Federal Trade Commission does not oppose the combination. The commission has wrapped up its investigations of the merger and decided that no further action is needed, ASE said in a filing with the Taiwan Stock Exchange. The decision would help remove hurdles to the merger agreement inked in June last year. The proposed merger has been met with either approval or a neutral view from competition bodies in Taiwan and China.
STAYING AHEAD: Fitch said that TSMC remains technologically ahead of others, but Samsung is building a new chip fab, while China is investing in its domestic industry As escalating US-China tensions and COVID-19-related production disruptions force US technology supply chains to transform, Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) US$12 billion chip fabrication plant in Arizona would be key to spurring greater US production of core semiconductor components, Fitch Ratings said. “We view the US-TSMC alliance as a first step in building a more autonomous US technology supply chain, given high barriers to entry, specifically related to the significant capital and design capability required for leading-edge semiconductor manufacturing,” Fitch said in a statement on Tuesday. “By working with TSMC, US chipmakers will not face the financial burden of incremental investment
DIVERSIFICATION: Although COVID-19 would push more companies to produce in emerging markets, DBS said that it was unlikely that firms would totally leave China Geopolitical tensions and supply disruptions are expected to accelerate the migration of manufacturing out of China, as concerns about the risk of production concentrated in one country increase, S&P Global Ratings said. Although its economic expansion might be weaker than previous levels due to the accelerated relocation of manufacturing, China’s economic growth would still be stronger than that of most other economies, the ratings agency said. “While absolute growth rates will moderate, we believe China’s economic performance will continue to be a key sovereign credit support,” S&P Global Ratings credit analyst Tan Kim Eng (陳錦榮) said in a statement on Thursday. “Its growth
Taiwan’s corporate landscape has changed significantly over the past 20 years, with Hon Hai Precision Industry Co (鴻海精密) replacing Formosa Plastics Corp (台塑) as the revenue leader, while Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) has emerged as the most profitable firm, a survey of Taiwan’s 50 largest companies published on Tuesday last week showed. The Chinese-language CommonWealth Magazine survey ranked Taiwan’s 50 largest companies based on their revenue last year, and compared them with the results of a similar survey it conducted in 2000. Only 33 companies on the original list remained in this year’s rankings, the survey found, following two
GEOPOLITICAL RISKS: Beijing announced plans to strengthen ‘enforcement’ in Hong Kong, sparking losses across Asia led by the Hang Seng’s 5.6 percent plunge Local shares on Friday ended sharply lower amid renewed tensions between the US and China over Chinese telecommunications equipment giant Huawei Technologies Co Ltd (華為) and China’s plan to introduce a national security law in Hong Kong. The TAIEX on Friday finished down 197.16, or 1.79 percent, at 10,811.15 on turnover of NT$177.183 billion (US$5.9 billion), almost flat from a close of 10,814.92 on May 15. The market was down across all major sectors, in particular electronics shares, which finished down 1.99 percent from Thursday’s close. Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest wafer foundry and a chip supplier