APPAREL
Uniqlo cuts profits forecast
Uniqlo owner Fast Retailing Co lowered its full-year operating profit outlook by 41 percent, joining a string of global retailers caught up in shutdowns aimed at slowing the spread of the COVID-19 pandemic. Asia’s largest apparel company yesterday said it now expects profit of ¥145 billion (US$1.3 billion) for the fiscal year ending August. That compares with its prior forecast of ¥245 billion and analysts’ average projection of ¥198 billion, according to estimates compiled by Bloomberg. It also marks the second guidance cut; the retailer reduced its forecast in January, citing geopolitical turmoil in South Korea and Hong Kong that hurt sales. For the quarter that ended in February, operating profit was ¥45 billion. Net sales fell 6.1 percent to ¥585 billion, compared with analysts’ average prediction of ¥573 billion.
FOREIGN EXCHANGE
Reserves fall highlights risk
The decade-long surge in foreign-exchange reserves among emerging markets is coming to an end, highlighting the danger posed by future currency depreciation. China’s holdings fell by US$46.1 billion last month, the most since late 2016, official data showed late on Tuesday. The drawdown accounted for the largest share of the US$110 billion that 11 emerging-market central banks, including those in Turkey, India, Brazil and Egypt, yanked from their reserves last month to stem currency losses. The declines underscore the clamor for US dollars that rocked foreign-exchange markets around the world last month, driving the MSCI Emerging Markets Currency Index to its biggest retreat since May 2012. With commodity prices and export earnings in the doldrums as the COVID-19 crisis deepens, the outlook for the currencies of many emerging markets is not much better.
AIRLINES
EU firm extends suspension
Air France-KLM yesterday said it expects more than 90 percent of its capacity to remain suspended through the end of next month as the coronavirus pandemic paralyzes the travel industry worldwide. For the next two months, the airline aims to continue serving only some key city pairs with a “skeleton operation,” it said in a statement, adding that projections beyond that time are too difficult to provide. Traffic last month was “strongly impacted” by the spread of COVID-19 across the globe and subsequent reductions in capacity, it said. Group passenger traffic plunged 51 percent, while the load factor dropped 20 percentage points to 67 percent. The French government, which along with the Netherlands owns a stake in Air France-KLM, has vowed to prop up the former flag carrier.
AUTOMAKERS
Toyota cutting 5,000 jobs
Toyota Motor Corp is laying off about 5,000 temporary staff employed by partner agencies as it extends the shutdown of its North American auto plants a third time, citing the pandemic and weak demand. The Japanese automaker will continue to provide benefits for what it refers to as its variable workforce, and they might be eligible for unemployment, it said in an e-mailed statement. Toyota’s North American unit now intends to reopen factories in the US, Canada and Mexico on May 4, two weeks later than planned. Toyota initially announced plans to resume operations as early as March 25, but has pushed back its planned restart date three times. It is joining Japanese peers Honda Motor Co and Nissan Motor Co, and German automaker BMW AG in cutting off pay to thousands of US workers as social distancing measures force companies to stay shut.
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