Wed, Jan 30, 2019 - Page 10 News List

China weakness spreads from bulldozers to chips

Bloomberg

Caterpillar Inc manufactures huge yellow bulldozers. Nvidia Corp makes minuscule computer chips. Their products have little in common, but their earnings on Monday pointed to the same direction: Demand in China is slowing down for a widening range of goods.

The world’s second-largest economy, which contributes about one-third of global growth, has been weakening for years after averaging more than 10 percent growth for three decades through 2010.

The pace of expansion cooled to 6.6 percent last year, the slowest since 1990, while retail sales grew 9 percent, the least since 2003.

Since Apple Inc early this month shook investors with a warning, a picture is starting to emerge on where the tempering of the US$12.2 trillion economy is to hurt in the coming year.

It includes Stanley Black & Decker Inc’s tools, PPG Industries Inc’s automotive coatings, Intel Corp’s processors and Trinseo SA’s synthetic rubber tires.

Nvidia and Caterpillar are the latest examples of this anecdotal evidence. Here is a rundown of what we have heard so far from US, European and Asian businesses:

Caterpillar, an industry bellwether, on Monday sent a gloomy signal when it posted its biggest quarterly profit shortfall in a decade, and provided a yearly forecast that trailed some of Wall Street’s estimates.

Sales of excavators are to be flat year-on-year in China, the Deerfield, Illinois-based company said.

Shares of Japanese rivals Komatsu Ltd and Hitachi Construction Machinery Co each lost more than 4 percent in Tokyo yesterday. In China, Sany Heavy Industry Co (三一重工) and other heavy equipment makers fell.

Stanley Black & Decker CEO Jim Loree was not shy about raising the alarm bells on China last week, saying it was facing slowing economic growth there, along with most of the rest of the world.

The previous week, paint maker PPG talked about “sluggish industrial activity in China” among pressures that the company would hit the first half of the year.

Santa Clara, California-based Intel Corp, whose processors are the main component in most of the world’s personal computers and servers, cited softness in China among the reasons for its lower-than-expected full-year forecast last week.

Nvidia, the biggest maker of chips for computer graphics cards, on Monday echoed those comments, saying that “deteriorating macroeconomic conditions, particularly in China, impacted consumer demand” for its products.

Nidec Corp, a Japanese maker of precision motors used in computer drives, cut its profit outlook by 26 percent for the year ending on March 31, blaming it on the US-China trade war. It reported a 43 percent drop in operating profit for the quarter through last month.

Samsung Electronics Co’s quarterly profit and revenue missed estimates on sputtering demand for memory chips during the last three months of last year, the same period Apple saw anemic sales in China.

The South Korean company has been losing share for its smartphones for years in China, but the slowdown there is now threatening to hurt its crucial chips business.

Yesterday in Japan, Alps Alpine Co, a supplier of electronic parts to automakers and Apple, cut its operating profit forecast for the year by 24 percent, blaming the US-China trade dispute and Brexit.

This story has been viewed 1712 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top