EUROPE
Inflation hits all-time high
Eurozone inflation climbed to another all-time high, supporting calls for the Central Bank to follow up its first interest rate increase since 2011 with another big move. Consumer prices so far this month jumped 8.9 percent from a year earlier — up from 8.6 percent last month and driven once again by soaring energy and food costs. The number overshot the expectations of economists surveyed by Bloomberg, who saw a gain of 8.7 percent. After slowing last month, a gauge of underlying inflation that excludes energy and food also hit a record of 4 percent. The intensifying price pressures prompted the Central Bank to surprise economists by delivering a half-point increase in its deposit rate this month.
ELECTRONICS
Sony downgrades outlook
Sony Group Corp downgraded its profit outlook for the fiscal year, with its PlayStation division expected to contribute less than previously forecast. The Tokyo-based entertainment conglomerate yesterday said that it now expects ¥1.11 trillion (US$8.3 billion) in operating profit, down from ¥1.16 trillion previously. The gaming and network services group, which houses the PlayStation business, accounted for the full revision, which was down from ¥305 billion to ¥255 billion. Sony cited costs related to its acquisition of Bungie Inc and lower expectations for third-party software sales on the platform as reason for the change. Sony’s second-quarter operating profit beat estimates, coming in at ¥307 billion, higher than the average analyst estimate of ¥286.7 billion. The outlook downgrade came after Sony’s hardware production was limited by supply chain bottlenecks exacerbated by COVID-19 lockdowns in China.
TECHNOLOGY
Smartphone shipments fall
Global smartphone shipments last quarter fell to their lowest in two years after consumer confidence was sapped by inflation and recession fears. The quarter saw a 9 percent drop to about 290 million units shipped, market trackers Canalys and Counterpoint said, with Chinese vendors leading the declines. Market leader Samsung Electronics Co retained the top spot with about 62 million units, while Apple Inc held second, followed by Xiaomi Corp (小米), Oppo Mobile Telecommunications Corp (歐珀) and Vivo Communication Technology Co (維沃). The Chinese trio each registered double-digit percentage drops in shipments, with Xiaomi down 25 percent. Prolonged COVID-19 lockdowns in Shanghai and Beijing took a toll on domestic sales in China, while the wider market is now challenged by a glut of lower-priced devices and reluctant consumers, the analysts said.
UNITED STATES
Economy contracts in Q2
The economy contracted for a second straight quarter between April and last month, official data released on Thursday showed, adding fuel to recession fears and creating a headache for President Joe Biden ahead of midterm elections. GDP declined at an annual rate of 0.9 percent in the second quarter, following a bigger drop in the first three months of the year, the Department of Commerce said. Biden said the economy is “on the right path,” despite the slowdown, touting the strong labor market. After a 1.6 percent decline in the first quarter, the report said the slowdown in the second quarter was largely due to drops in government spending and private spending in vehicles and housing, despite an increase in exports. Personal consumption expenditures continued to rise, although slower than in the previous quarter, the data showed.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure