JAPAN
Surplus could draw US ire
The country’s swelling current-account surplus in February might be good news for Japan’s finances, but not so much for its relationship with the US. “The current-account balance above ¥2 trillion (US$18.68 billion) is the sort of level that makes it easier for Japan to become the target of attacks from the US amid a backdrop of increasing trade frictions,” Life Insurance Co Yuichi Kodama chief economist Meiji Yasuda said. As trade tensions escalate between the US and China, other countries with trade surpluses against the US are nervously wondering who US President Donald Trump might target next — and Trump has already put Japan on notice for what he sees as taking advantage of the US. While much of the current-account surplus is driven by Japan’s income from overseas, the trade surplus with the US grew to a hefty ¥631 billion in February.
AUTOMAKERS
Rolls-Royce sells L’Orange
British engine maker Rolls-Royce yesterday yesterday said it has sold German division L’Orange for 700 million euros (US$859.48 million) to US group Woodward. Stuttgart-based L’Orange, which supplies fuel-injection technology for engines, employs 1,000 people mostly in Germany. The announcement marks the biggest disposal under the tenure of Warren East, who has been Rolls-Royce chief executive since July 2015. “This transaction builds on the actions that we have taken over the last two years to simplify our business,” East said in a statement unveiling the news. “The divestiture of L’Orange enables Rolls-Royce Power Systems to focus on other long-term, high-growth opportunities and allows our company to allocate our capital to core technologies and businesses that drive greater returns for the group.”
ALUMINUM
Rusal stock falls on sanctions
Russian aluminum maker United Co Rusal’s stock plunged about 40 percent, while prices of the metal surged, after US sanctions on the company and its billionaire owner Oleg Deripaska prompted the producer to warn of potential debt defaults and “materially adverse” consequences. Aluminum prices jumped as much as 2.5 percent to US$2,092 per tonne on the London Metal Exchange, extending a 1.6 percent gain in the previous session, as investors bet on supply disruptions. The US Treasury on Friday included Rusal and seven other Deripaska-linked firms in a list of 12 Russian companies hit with sanctions that it said were intended to punish the country for actions in Crimea, Ukraine and Syria, and attempting to subvert Western democracies. The company, also listed in Moscow, is the biggest aluminum maker outside China, and the measures could hurt access to financial markets and disrupt shipments to world buyers.
CHINA
Foreign-currency holdings rise
Foreign-currency holdings increased last month as the government kept capital curbs in place and the yuan capped its best quarter in a decade. Reserves rose US$8.34 billion to US$3.143 trillion last month, the People’s Bank of China said on Sunday. China’s stockpile, the world’s largest, increased last year for the first time since 2014 as robust economic growth boosted confidence in the yuan and trade remained strong. Still, rising trade tension with the US might lead to slower growth of the holdings, and even renew capital outflow pressure on emerging-market economies, including China.
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