MALAYSIA
GDP shrinks 17.1% in Q2
The economy contracted by the most since the Asian financial crisis more than two decades ago, with the central bank sharply downgrading its outlook for this year. GDP fell 17.1 percent in the second quarter compared with a year earlier, its worst showing since the fourth quarter of 1998, the central bank said yesterday. The data show the severe knock the trade-reliant economy has taken during the COVID-19 pandemic. Exports plunged because of the disruption to supply chains, while consumer spending slumped amid an extended lockdown. The central bank now expects the economy to fall 3.5 percent to 5.5 percent this year, compared with a previous forecast range of 0.5 percent to minus-2 percent.
AUTOMAKERS
Daimler settles US claims
Daimler AG, the maker of Mercedes-Benz cars, on Thursday said it has reached an agreement in principle to settle US claims over emissions from its diesel vehicles for more than US$2.2 billion. The Stuttgart, Germany-based automaker said the agreement with various US authorities concerns civil and environmental claims involving about 250,000 diesel vehicles and vans. The company said the civil cases related to a consumer class action lawsuit pending before the US District Court for the District of New Jersey. The settlement would result in costs of about US$1.5 billion, while the civil suit would incur a one-off charge of about US$700 million, it said. Daimler estimated that “further expenses of a mid three-digit-million” euros would be required to fulfill requirements of the settlements.
TECHNOLOGY
Apple sells US$5.5bn bonds
Borrowing costs are so cheap that not even Apple Inc could resist, becoming the latest to join a boom in issuance from the world’s biggest technology companies. Apple, which had not borrowed in US dollars more than once in a calendar year since 2017, tapped the investment-grade market for US$5.5 billion in its second trip since May. It was cheap to issue debt then and is even better now, with cash-rich companies like Amazon.com Inc and Google parent Alphabet Inc getting in on the action, outdoing each other to set a new floor for yields. The iPhone maker sold bonds in four parts, a person with knowledge of the matter said. The longest maturity, a 40-year security, would yield 118 basis points above US Treasuries, after initially discussing around 135 basis points, the person said, asking not to be identified as the details are private. That debt will come cheaper for Apple than it did for Amazon, which priced at 130 basis points over Treasuries, but is still slightly more expensive than Google’s spread of 108 basis points.
SEMICONDUCTORS
Applied Materials upbeat
Applied Materials Inc on Thursday gave a bullish forecast for the fiscal fourth quarter on increasing orders for equipment used by computer chipmakers. Revenue in the quarter ending in October would be about US$4.6 billion, the company said in a statement. Analysts, on average, estimated US$4.36 billion, according to data compiled by Bloomberg. Profit, on an adjusted basis, would be US$1.11 to US$1.23 per share, the firm said. That compares with an average estimate of US$1.02. Fiscal third-quarter net income was US$841 million, or US$0.91 a share, compared with US$571 million, or US$0.61 a share, a year earlier, the company said. Revenue gained 23 percent to US$4.4 billion in the period that ended on July 26. Applied Materials is operating at pre-COVID levels of productivity, he said.
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
Taiwanese manufacturers have a chance to play a key role in the humanoid robot supply chain, Tongtai Machine and Tool Co (東台精機) chairman Yen Jui-hsiung (嚴瑞雄) said yesterday. That is because Taiwanese companies are capable of making key parts needed for humanoid robots to move, such as harmonic drives and planetary gearboxes, Yen said. This ability to produce these key elements could help Taiwanese manufacturers “become part of the US supply chain,” he added. Yen made the remarks a day after Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) said his company and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) are jointly
United Microelectronics Corp (UMC, 聯電) expects its addressable market to grow by a low single-digit percentage this year, lower than the overall foundry industry’s 15 percent expansion and the global semiconductor industry’s 10 percent growth, the contract chipmaker said yesterday after reporting the worst profit in four-and-a-half years in the fourth quarter of last year. Growth would be fueled by demand for artificial intelligence (AI) servers, a moderate recovery in consumer electronics and an increase in semiconductor content, UMC said. “UMC’s goal is to outgrow our addressable market while maintaining our structural profitability,” UMC copresident Jason Wang (王石) told an online earnings
MARKET SHIFTS: Exports to the US soared more than 120 percent to almost one quarter, while ASEAN has steadily increased to 18.5 percent on rising tech sales The proportion of Taiwan’s exports directed to China, including Hong Kong, declined by more than 12 percentage points last year compared with its peak in 2020, the Ministry of Finance said on Thursday last week. The decrease reflects the ongoing restructuring of global supply chains, driven by escalating trade tensions between Beijing and Washington. Data compiled by the ministry showed China and Hong Kong accounted for 31.7 percent of Taiwan’s total outbound sales last year, a drop of 12.2 percentage points from a high of 43.9 percent in 2020. In addition to increasing trade conflicts between China and the US, the ministry said
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