- Jury orders egg suppliers to pay $17.7 million in damages to Kraft, other suppliers for price gouging New York Post
- Federal jury awards $17.7 million to Kraft, other suppliers after major price-fixing conspiracy Fox Business
- Egg suppliers ordered to pay $17.7 million by federal jury for price gouging in 2000s CBS News
- Federal Jury In Illinois Hits Egg Suppliers With $17.7 Million Penalty For Price Gouging Conspiracy Daily Caller
- Jury awards $US17.7 million to suppliers after major price-fixing conspiracy Sky News Australia
- View Full Coverage on Google News
Tag Archives: suppliers
New suppliers race to plug in to electric car market
WOKING, England, Jan 23 (Reuters) – The global auto industry has committed $1.2 trillion to developing electric vehicles (EVs), providing a golden opportunity for new suppliers to grab contracts providing everything from battery packs to motors and inverters.
Startups specialising in batteries and coatings to protect EV parts, and suppliers traditionally focused on niche motorsports or Formula One (F1) racing, have been chasing EV contracts. Carmakers design platforms to last a decade, so high-volume models can generate large revenues for years.
The next generation of EVs is due to hit around 2025 and many carmakers have sought help plugging gaps in their expertise, providing a window of opportunity for new suppliers.
“We’ve gone back to the days of Henry Ford where everyone is asking ‘how do you make these things work properly?’,” says Nick Fry, CEO of F1 engineering and technology firm McLaren Applied.
“That’s a huge opportunity for companies like us.”
Bought from McLaren by private equity firm Greybull Capital in 2021, McLaren Applied has adapted an efficient inverter developed for F1 racing for EVs. An inverter helps control the flow of electricity to and from the battery pack.
The silicon carbide IPG5 inverter weighs just 5.5 kg (12 lb) and can extend an EV’s range by over 7%. Fry says McLaren Applied is working with around 20 carmakers and suppliers, and the inverter will appear in high-volume luxury EV models starting January 2025.
Mass-market carmakers often prefer to develop EV components in-house and own the technology themselves. After years of pandemic-related parts shortages, they are wary of over-reliance on suppliers.
“We just can’t afford to be reliant on third parties making those investments for us,” said Tim Slatter, head of Ford (F.N) in Britain.
Traditional suppliers, such as German heavyweights Bosch and Continental (CONG.DE), are also investing heavily in EVs and other technologies to stay ahead in a fast-changing industry.
But smaller companies say there are still opportunities, particularly with low-volume manufacturers that cannot afford huge EV investments, or luxury and high-performance carmakers seeking an edge.
Croatia’s Rimac, an electric hypercar maker part-owned by Germany’s Porsche AG (P911_p.DE) that also supplies battery systems and powertrain components to other automakers, says an undisclosed German carmaker will use a Rimac battery system in a high-performance model – with annual production of around 40,000 units – starting this year, with more signed up.
“We need to be 20%, 30% better than what they can do and then they work with us,” CEO Mate Rimac says. “If they can make a 100-kilowatt hour battery pack, we must make a 130-kilowatt pack in the same dimensions for the same cost.”
NO TIME TO LOSE
Some suppliers like Cambridge, Massachusetts-based Actnano have had long relationships with EV pioneer Tesla (TSLA.O). Actnano has developed a coating that protects EV parts from condensation and its business has spread to advanced driver-assistance systems (ADAS), as well as other carmakers including Volvo (VOLCARb.ST), Ford, BMW (BMWG.DE) and Porsche.
California-based startup CelLink has developed an entirely automated, flat and easy-to-install “flex harness”, instead of a wire harness to group and guide cables in a vehicle. CEO Kevin Coakley would not identify customers but said CelLink’s harnesses had been installed in around a million EVs. Only Tesla has that scale.
Coakley said CelLink was working with U.S. and European carmakers, and with a European battery maker on battery wiring.
Others are focused on low-volume manufacturers, like UK startup Ionetic, which develops battery packs that would be too expensive for smaller companies to make themselves.
“Currently it costs just too much to electrify, which is why you see some manufacturers delaying their electrification launch,” CEO James Eaton said.
Since 1971, Swindon Powertrain has developed powerful motorsports engines. But it has now also developed battery packs, electric powertrains, e-axles and is working with around 20 customers, including carmakers and an electric vertical take-off and landing (eVTOL) aircraft maker.
“I realized if we don’t embrace this, we’re going to end up working for museums,” said managing director Raphael Caille.
But time may be running out.
Mate Rimac says major carmakers scrambled in the last three years to roll out EVs and now have strategies largely in place.
“For those who haven’t signed projects, I’m not sure how long the window of opportunity will remain open,” he said.
($1 = 0.8226 pounds)
Reporting by Nick Carey
Editing by Mark Potter
Our Standards: The Thomson Reuters Trust Principles.
Apple has a huge problem with its supplier’s iPhone factory in China
Hong Kong
CNN Business
—
A violent workers’ revolt at the world’s largest iPhone factory this week in central China is further scrambling Apple’s strained supply and highlighting how the country’s stringent zero-Covid policy is hurting global technology firms.
The troubles started last month when workers left the factory campus in Zhengzhou, the capital of the central province of Henan, due to Covid fears. Short on staff, bonuses were offered to workers to return.
But protests broke out this week when the newly hired staff said management had reneged on their promises. The workers, who clashed with security officers wearing hazmat suits, were eventually offered cash to quit and leave.
Analysts said the woes facing Taiwan contract manufacturing firm Foxconn, a top Apple supplier which owns the facility, will also speed up the pace of diversification away from China to countries like India.
Daniel Ives, managing director of equity research at Wedbush Securities, told CNN Business that the ongoing production shutdown in Foxconn’s sprawling campus in the central Chinese city of Zhengzhou was an “albatross” for Apple.
“Every week of this shutdown and unrest we estimate is costing Apple roughly $1 billion a week in lost iPhone sales. Now roughly 5% of iPhone 14 sales are likely off the table due to these brutal shutdowns in China,” he said.
Demand for iPhone 14 units during the Black Friday holiday weekend was much higher than supply and could cause major shortages leading into Christmas, Ives said, adding that the disruptions at Foxconn, which started in October, have been a major “gut punch” to Apple this quarter.
In a note Friday, Ives said Black Friday store checks show major iPhone shortages across the board.
“Based on our analysis, we believe iPhone 14 Pro shortages have gotten much worse over the last week with very low inventories,” he wrote. “We believe many Apple Stores now have iPhone 14 Pro shortages … of up to 25%-30% below normal heading into a typical December.”
Ming-Chi Kuo, an analyst at TF International Securities, wrote on Twitter that more than 10% of global iPhone production capacity was affected by the situation at the Zhengzhou campus.
Earlier this month, Apple said shipments of its latest lineup of iPhones would be “temporarily impacted” by Covid restrictions in China. It said its assembly facility in Zhengzhou, which normally houses some 200,000 workers, was “currently operating at significantly reduced capacity,” due to Covid curbs.
The Zhengzhou campus has been grappling with a Covid outbreak since mid-October that caused panic among its workers. Videos of people leaving Zhengzhou on foot went viral on Chinese social media in early November, forcing Foxconn to step up measures to get its staff back.
To entice workers, the company said it had quadrupled daily bonuses for workers at the plant this month. A week ago, state media reported that 100,000 people had been successfully recruited to fill the vacant positions.
But on Tuesday night, hundreds of workers, mostly new hires, began to protest against the terms of the payment packages offered to them and also about their living conditions. Scenes turned increasingly violent into the next day as workers clashed with a large number of security forces.
By Wednesday evening, the crowds had quieted, with protesters returning to their dormitories on the Foxconn campus after the company offered to pay the newly recruited workers 10,000 yuan ($1,400), or roughly two months of wages, to quit and leave the site altogether.
In a statement sent to CNN Business on Thursday after the protests had wound down, Apple said it had a team on the ground at the Zhengzhou facility working closely with Foxconn to ensure employees’ concerns were addressed.
Even before this week’s demonstrations, Apple had started making the iPhone 14 in India, as it sought to diversify its supply chain away from China.
The announcement in late September marked a major change in its strategy and came at a time when US tech companies were looking for alternatives to China, the world’s factory for decades.
The Wall Street Journal reported earlier this year that the company was looking to boost production in countries such as Vietnam and India, citing China’s strict Covid policy as one of the reasons.
Kuo said on Twitter that he believed Foxconn would speed up the expansion of iPhone production capacity in India as a result of Zhengzhou lockdowns and resulting protests.
The production of iPhones by Foxconn in India will grow by at least 150% in 2023 compared to 2022, he predicted, and the longer term goal would be to ship between 40% and 45% of such phones from India, compared to less than 4% now.
— Chris Isidore contributed to this report.
U.S. Suppliers Halt Operations at Top Chinese Memory Chip Maker
BEIJING–U.S. chip equipment suppliers are pulling out staff based at China’s leading memory chip maker and pausing business activities there, according to people familiar with the matter, as they rush to assess the impact of Commerce Department semiconductor export restrictions.
State-owned Yangtze Memory Technologies Co. is facing a freeze in support from key suppliers including
KLA Corp.
KLAC -1.18%
and
Lam Research Corp.
LRCX -0.35%
, the people said. The suspensions follow last week’s sweeping curbs imposed by the U.S. on China’s chip sector, ostensibly to prevent American technology from advancing China’s military power, though the impact might reach further into the industry.
The U.S. suppliers have paused support of already installed equipment at YMTC in recent days and temporarily halted installation of new tools, the people said. The suppliers are also temporarily pulling out their staff based at YMTC, the people said.
U.S. chip equipment manufacturers have dozens of employees stationed at YMTC’s factory. They play a crucial role in operating the factory and developing its manufacturing capabilities, as they bring in expertise on highly technical chip production tools, people familiar with the situation said. If the halt is extended, customers such as YMTC face being cut off from upgrades, maintenance expertise and future technology they need to develop chips.
YMTC, KLA and Lam Research didn’t respond to requests for comment.
While the moves might be temporary, they are immediate signs of business disruptions facing Chinese chip makers and U.S. technology suppliers as Washington escalates its efforts to stifle China’s emerging semiconductor industry. The U.S. export control measures, which restrict companies sending chips and chip-making equipment to China, are some of the broadest the U.S. has enacted against China’s semiconductor industry. They veer from previous actions that often targeted individual companies and a narrower subset of technology.
The new rules, announced Friday by the Commerce Department, add new license requirements for advanced semiconductors and chip-making equipment destined to a facility in China. Licenses for facilities owned by U.S. and U.S.-allied firms would be decided on a case-by-case basis, while Chinese-owned facilities would face a presumption of denial.
Some foreign companies in ally countries are expected to get exemptions to keep their China-based facilities running, with South Korea’s
SK Hynix
the first to reveal such an approval on Wednesday.
U.S. tool makers are assessing what they need to do to comply with the new restrictions in working with Chinese clients, and the longer-term impact is still unclear, people familiar with the matter said.
American companies dominate certain areas of the global chip production equipment supply chain, with a combined share of 41%, while China’s is 5% or lower, according to a Boston Consulting Group analysis.
The Commerce Department’s measures are far reaching because they restrict the ability of “U.S. persons” to support the development or production of some of the most cutting-edge chips in China.
“U.S. persons” would include those with American passports and green-card holders as well as U.S. companies, said
Kevin Wolf,
a former Commerce Department official and a partner at Akin Gump Strauss Hauer & Feld LLP.
KLA is known for its testing equipment and Lam Research for etching machines. Another major American supplier to China’s chip industry,
Applied Materials Inc.,
produces tools including those that deposit layers of materials on wafer surfaces—all critical steps in producing chips. China, the biggest market for the three U.S. chip equipment suppliers, contributes around 30% of the companies’ revenues.
Share prices of Applied Materials, KLA and Lam Research have all dropped by more than 20% over the past month.
Applied Materials didn’t respond to a request for comment.
Beyond the broad new restrictions targeting China’s chip sector, the U.S. last week placed YMTC on a list of companies the Commerce Department is concerned about, called an unverified list. Companies on the list could be added to a more restrictive export blacklist if its concerns aren’t allayed.
Based in China’s central Hubei province, YMTC is a maker of flash memory chips used for storage and China’s largest maker of memory chips overall. It is responsible for about 6% of global memory output, according to market tracker TrendForce.
The company last year began shipping a type of advanced memory chip containing 128 layers, putting it within the scope of new U.S. restrictions. More layers allow a chip to store more data.
YMTC is controlled by the Hubei government and China’s national integrated circuit fund. Previously, it was a unit of Chinese chip conglomerate Tsinghua Unigroup Co., which in recent years has been heavily indebted and completed a yearlong asset restructuring in July.
—Asa Fitch contributed to this article.
Chip-Industry Developments, Selected by the Editors
Write to Yoko Kubota at yoko.kubota@wsj.com and Raffaele Huang at raffaele.huang@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Apple considering more chip suppliers including China: report
Here are your FOX Business Flash top headlines for March 30.
The chip shortage has Apple looking at other suppliers, including China.
Apple is looking at options for the chips that go into iPhones since a production disruption at a Japanese partner exposed the risks to its global supply, according to Bloomberg.
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Kioxia Holdings lost a batch of product due to contamination in February.
A line-up of the Apple iPhone on display. (AP Photo/Richard Drew, File / AP Newsroom)
Apple’s suppliers include Micron Technology and Samsung Electronics.
Samsung and SK Hynix are expected to pick up the slack.
APPLE CEO TIM COOK CELEBRATES CODA’S HISTORIC OSCAR WINS
The iPhone maker is testing sample NAND flash memory chips made by Yangtze Memory Technologies, according to people familiar with the private deliberations who asked not to be identified.
Yangtze is owned by Beijing-backed chipmaking company Tsinghua Unigroup.
No final decision has been reached after months of discussions.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AAPL | APPLE INC. | 177.77 | -1.19 | -0.66% |
Tying up with Yangtze could open Apple to criticism, given the state of tension between Washington and Beijing over China’s ambiguous stance on the Ukraine war as well as China’s technology growth.
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Representatives for Yangtze Memory and Apple declined to comment to Bloomberg.
Huawei, SMIC suppliers received billions worth of licenses for U.S. goods -documents
WASHINGTON, Oct 21 (Reuters) – Suppliers to Chinese telecoms giant Huawei and China’s top chipmaker SMIC got billions of dollars worth of licenses from November through April to sell them goods and technology despite their being on a U.S. trade blacklist, documents seen by Reuters showed on Thursday.
According to the documents, 113 export licenses worth $61 billion were approved for suppliers to ship products to Huawei (HWT.UL) while another 188 licenses valued at nearly $42 billion were greenlighted for Semiconductor Manufacturing International Corp (SMIC) (0981.HK).
The data also showed that more than 9 out of 10 license applications were granted to SMIC suppliers while 69% of requests to ship to Huawei were approved over the same period.
The U.S. House of Representatives Foreign Affairs committee on Thursday voted to grant a request by its top Republican member Michael McCaul to release the licensing data, which it received from the Commerce Department in May.
House Republicans on the committee provided the documents to Reuters following the authorization, at Reuters request. The documents are expected to be posted publicly soon.
The numbers could enrage China hawks in Washington, who have made a concerted effort to deprive Chinese companies of access to advanced U.S. technology.
“It’s clearly in our national interest to increase transparency and public scrutiny on how our nation transfers its technology to an adversary,” McCaul said in a statement.
Republican senator Marco Rubio told Reuters he thinks President Joe Biden needs to explain why the companies have continued to receive “waivers.”
“It is just another example of President Biden not taking the economic and security threat posed by the Chinese Communist Party seriously,” he said.
The Commerce Department said in a statement that the release of an arbitrary snapshot of license approvals “risks politicizing the licensing process and misrepresenting the national security determinations” made by the government.
It also stressed that approved license applications do not represent actual shipments and around half of all licenses are used. It added that license applications involving Huawei and SMIC are processed under policies developed by the Trump administration and maintained by the Biden administration.
Huawei declined to comment, while SMIC did not respond to a request for comment.
Huawei was placed on a trade blacklist in May 2019 over national security concerns, forcing its U.S. suppliers and others to obtain a special license to ship goods to it. SMIC was added to the so-called entity list in December 2020, over fears it could divert advanced technology to military users.
A majority of the licenses granted did not authorize shipments of sensitive items. Of the 113 licenses approved for Huawei during the period, 80 were for non-sensitive items that only required a license because the recipient was blacklisted. For SMIC, the figure was 121 of 188.
Licenses are generally good for four years.
Reuters reported earlier this year that, during the Trump administration, $87 billion worth of licenses for Huawei were approved after it was blacklisted.
Reporting by Karen Freifeld and Alexandra Alper, Editing by Chris Sanders and Rosalba O’Brien
Our Standards: The Thomson Reuters Trust Principles.
Retailers’ Latest Headache: Shutdowns at Their Vietnamese Suppliers
After a bruising 18 months of the pandemic, this fall represented a fresh start for the apparel company Everlane. It was preparing to release a slew of new products, with September marking the beginning of an ambitious marketing campaign around its denim.
Instead, Everlane has spent this month scrambling just to get jeans — along with other products like bags and shoes — out of Vietnam, where a surge in coronavirus cases has forced factories to either close or operate at severely reduced capacity with staff living in on-site bubbles.
“At this point, we have factories in 100 percent lockdown,” Michael Preysman, Everlane’s chief executive, said in an interview. “Do we fly things over? Do we move things? Do we adjust in the factory? It’s a nonstop game of Tetris.”
The crisis in Vietnam, which has grown in recent years to become the second-biggest supplier of apparel and footwear to the United States after China, is the latest curveball to be tossed at the retail industry, which has been battered by the pandemic. Vietnam made it through the first part of the pandemic relatively unscathed, but now the Delta variant of the coronavirus is on a rampage, highlighting the uneven distribution of vaccines globally and the perils that new outbreaks pose to the world’s economy.
With the holiday season fast approaching, many American retailers are anticipating delays and shortages of goods, along with higher prices tied to labor and already skyrocketing shipping costs. Everlane said it was facing delays of four to eight weeks, depending on when factories it worked with in Vietnam had closed. Nike cut its sales forecast last week, citing the loss of 10 weeks of production in Vietnam since mid-July and reopenings set to start in phases in October.
“We weren’t anticipating a full lockdown,” said Jana Gold, a senior director with Alvarez & Marsal’s consumer and retail group, who has been helping retailers with supply chain issues. “We’re going to continue to see a high demand for goods from highly vaccinated countries or regions, but who are getting the goods from highly unvaccinated countries that could be struggling.”
The logjam has put a spotlight on Vietnam’s key role in outfitting American consumers. Many retailers moved their manufacturing to the country from China over the past decade because of rising costs. New tariffs on China instituted under former President Donald J. Trump accelerated the shift.
Contract factories in Vietnam manufactured 51 percent of total Nike brand footwear last year. Lululemon and Gap, which also owns Old Navy, have said a third of their merchandise comes from factories in Vietnam. Everlane said the country supplies 40 percent of its wares.
As the coronavirus tore across the globe, Vietnam was hailed as a bright spot for its rock-bottom caseload and strong economy. Over 15 months, only 3,000 infections and 15 deaths were reported in the country. But during the summer, the Delta variant erupted among a population that was almost entirely unvaccinated. Now, the caseload has surged past 766,000 and the death toll is nearing 19,000.
The densely packed industrial hub of Ho Chi Minh City, the country’s virus epicenter, has experienced a series of increasingly stringent lockdowns, with many factories temporarily closing in July. That paralyzed commercial activity and added stress to a strained global supply chain. Although new cases have started to decline, the government extended the lockdown through the end of September, as it struggles to vaccinate its residents.
At the beginning of September, only 3.3 percent of the country’s population was fully vaccinated, while 15.4 percent had received one shot.
The American apparel and footwear industry has asked the Vietnamese government to prioritize shots among factory workers. Executives from roughly 90 companies, including Nike and Fruit of the Loom, asked the Biden administration in a letter in mid-August to accelerate vaccine donations, saying that “the health of our industry is directly dependent on the health of Vietnam’s industry.” The group said the industry employed about three million U.S. workers.
On a visit to Vietnam last month, Vice President Kamala Harris said the United States would send an additional one million vaccine doses, on top of the five million already donated, along with $23 million in emergency aid and 77 freezers to store the vaccine.
“The situation in Vietnam is exactly why we need to be accelerating our efforts to provide donations of vaccines around the world,” said Steve Lamar, president of the American Apparel & Footwear Association, a trade group. Retailers have been setting up vaccination sites at factories to help administer shots once doses are obtained and are trying to keep manufacturing going through “three-in-one place” policy, where workers eat, sleep and work at factories, he said.
According to the latest figures from the government, nearly everyone in Ho Chi Minh City has received the first shot.
Jason Chen, chairman and founder of Singtex, a garment factory owner, said last week that the company’s 350-person factory in Binh Duong Province was down to 80 people, who were living on the premises to comply with government restrictions. The factory erected a tent to serve dinner to workers and has been shifting some retail orders to Singtex’s factories in Taiwan. Mr. Chen said he was prepared for the Vietnamese factories to remain closed until November.
Business & Economy
“This year in the U.S.A., everybody wants to go shopping,” Mr. Chen said. “Some goods cannot be delivered in the right time. So it really will affect the holiday.”
He added that administrators at the factory were calling workers who were in lockdown to see if they needed financial and other assistance. But many are struggling.
Le Quoc Khanh, 40, who assembles electronic home appliances at Saigon Hi-Tech Park, said the rigidity of the government lockdown had been “very hard” for him and his wife, who have three small children and rent their home in Ho Chi Minh City. His employer is not yet able to bring him back, even though he is vaccinated, and he said he had been forced to borrow money at high interest rates to pay for electricity, diapers and food.
“On Sept. 15, when I heard that anyone who had two doses could go to work, my wife and I were so happy that we burst into tears, but now the government says to wait until the end of September,” he said. “My wife and I are so worried. It’s like we are sitting on fire — we really need money for living now.”
The pandemic’s continuing impact on crucial supply chains may have a longer-lasting impact on future investment decisions in Vietnam and other emerging economies. Companies choosing where to invest abroad have always evaluated a broad slate of conditions, like taxes, regulatory requirements and labor force availability.
“All of a sudden, they have to start thinking about the public health response,” said Chad P. Brown, an economist at the Peterson Institute for International Economics.
Huong Le Thu, a senior analyst at the Australian Strategic Policy Institute, added: “The Delta wave is just one of the variants. Vietnam, just like other countries, will have to prepare for the long game and potentially more outbreaks even after mass vaccination.”
Hoping that restrictions will be eased in October, some factories in Ho Chi Minh City that have been closed since July are preparing to resume production.
At the moment, though, American companies are looking outside Vietnam, often returning to Chinese factories that they worked with previously or finding partners in other countries that are not in the middle of a surge.
Whether they will have enough time to shift before the holidays is questionable. “September is a bad time to reposition things,” said Gordon Hanson, an economist and urban policy professor at Harvard Kennedy School.
Vietnam has been a regular topic on recent earnings calls for retailers, and concerns have probably ballooned as reopenings have been pushed. Adidas, based in Germany, said last month that delays that started with closings in mid-July were among issues that could cost the company more than 500 million euros in sales in the second half of the year.
Restoration Hardware cited the shutdowns as a key factor in its decision to push the introduction of a new collection to next spring and to delay fall catalogs. Urban Outfitters said that while it would normally replenish best-selling products during the holiday season, its top concern now was simply getting products into the United States.
The outbreak emerged just as the United States appeared to be regaining its economic footing and retailers were seeing a rebound in sales after a difficult 2020.
“In mid-June, the world looked like a pretty good place, at least in the U.S., and we anticipated this great recovery and here we are,” said Gihan Amarasiriwardena, president and co-founder of Ministry of Supply, a small apparel brand.
Production delays aren’t the only problem. Ocean freight costs have soared during the pandemic, ports are crowded and demand for air shipping has jumped so significantly that Ms. Gold of Alvarez & Marsal said some retailers had chartered their own airplanes to transport goods.
Since last year, the cost of shipping a container from East Asia to the West Coast of North America has leapt to $20,000 from $4,000, according to the transportation company FreightCo.
Mr. Amarasiriwardena said Ministry of Supply had paid about $1.50 in transportation costs for a $125 shirt before the pandemic. Now, the cost is nearly $6 per shirt.
Macy’s chief executive, Jeff Gennette, said, “This is the one keeping me up at night,” referring to supply chain issues at ports and in Vietnam. For the company, “it’s a bigger potential problem in the near term than where Covid is right now,” he said.
Retailers are already trying to prepare customers. L.L. Bean just added a banner to its website warning customers about holiday shipping delays and shortages and urging early shopping. Stephen Smith, the company’s chief executive, said that the messaging was “unprecedented” for mid-September and that the company normally started talking about holiday orders and shipping cutoffs “deep into October or even November.”
Mr. Preysman of Everlane said he anticipated that the supply chain would not rebound to its prepandemic health for several years.
“You have to live in a new normal where the stability of 2019 doesn’t come back for three to five years,” he said. “This is going to take a long time to sort out.”
Chau Doan contributed reporting.
Apple and Tesla Suppliers Hit By Global Energy Crisis. What to Know.
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A sign outside an Esso filling station informs the public that it has no fuel on Sept. 25, 2021 in London, England.
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A worldwide energy shortage is threatening to develop into a full-blown crisis.
The scenes in the U.K. over the weekend were reminiscent of the 1970s, as drivers queued at thousands of filling stations amid fears of a fuel shortage, sparked by a lack of truck drivers. But the panic at the pumps is really a sideshow. Natural-gas prices in Europe and around the world have skyrocketed amid shortages, leading to higher household bills and suppliers collapsing.
China is experiencing its own energy crunch as shortages have led to record coal prices and soaring natural-gas costs. It’s beginning to have an impact; production at a number of factories—including some supplying
Apple
and
Tesla
—has been halted.
Nomura
and
China International Capital Corp
have already downgraded Chinese growth forecasts as a result.
Meanwhile, oil prices and energy stocks are gaining early on Monday.
Goldman Sachs
raised its year-end Brent crude price forecast to $90 from $80, also lifting its West Texas Intermediate forecast to $87. Most notably, the bank’s analysts said Hurricane Ida should prove to be “the most bullish hurricane in U.S. history.” They added that the global oil supply-demand deficit is larger than they expected, with the recovery in demand from the Delta coronavirus variant impact faster than anticipated. Throw in the global gas shortage and winter oil demand is firmly skewed to the upside, they said.
The bigger question is whether the energy disruptions will derail the economic recovery or not. In any case, for all the talk of a green energy transition, the unfolding events show the economy is still very much powered by traditional fossil fuels.
—Callum Keown
***Join Barron’s senior managing editor Lauren R. Rublin and deputy editor Ben Levisohn today at noon to discuss the outlook for financial markets, industry sectors, and individual stocks. Sign up here.
***
In Congress This Week: Debt Ceiling, Infrastructure Spending
Congress faces several major initiatives this week, including Monday’s Senate vote on federal government funding and the debt ceiling, a House vote on the $1 trillion bipartisan infrastructure bill later this week, and ongoing negotiations on the $3.5 trillion bill Democrats expect to pass by reconciliation.
- House Speaker Nancy Pelosi said the first priority is to avert a government shutdown on Oct. 1. Senate Republicans vowed to block a vote on the House-approved bill to extend government funding through Dec. 3 and suspend the debt limit until late next year.
- An alternative is to pass a short-term government funding extension—something Republicans could support—and address the debt ceiling in the $3.5 trillion bill, which is focused on President Joe Biden’s social spending and climate change agenda.
- Pelosi told ABC’s “This Week” that the House will pass the $1 trillion infrastructure bill this week. She also said it’s “self-evident” the $3.5 trillion bill will get smaller during negotiations. Even some Democrats oppose the bill’s size.
- Pelosi said that despite clashes over details, Democrats “overwhelmingly” support Biden’s economic agenda, including lowering middle class taxes, measures to fight climate change, and tax rises on corporations and the wealthy to pay for it.
What’s Next: The House voted to suspend the debt limit through December 2022, but Republicans want to absolve themselves of the matter, saying Democrats pushed through $1.9 trillion in spending without GOP votes this spring. Democrats say raising the debt limit should be a bipartisan effort, as it was in the past.
—Janet H. Cho
***
German Elections Leave No Clear Winner to Succeed Merkel
Germany’s Social Democrats seemed to have won a narrow plurality of votes in Sunday’s parliamentary election, but months of tough negotiations with other smaller parties lie ahead for a coalition government to be formed.
- Olaf Scholz, the current finance minister and Social Democratic candidate for chancellor, led his SPD party to a 26% victory, according to the latest results. He said he would now attempt to form a government before Christmas with the Green and the Liberal parties, which received 15% and 11.5% of the votes, respectively.
- Angela Merkel will step down when her successor is appointed. Her conservative party only received 24% of the vote, its worst-ever election result. But conservative candidate Armin Laschet nonetheless hinted he might also try to form a government supported by a majority of the Bundestag, the lower house of Parliament.
- The various parties have different stances on taxes, fiscal policy, the green transition and economic reforms, so analysts think workable compromises will take weeks, if not months, of tough bargaining.
What’s Next: One of the first results of the election might be that Merkel’s 16-year rule is extended until the end of the year. And that the SPD, if Scholz becomes chancellor, will have to row back on some of its proposals on taxes, and the way to finance the fight against climate change.
—Pierre Briançon
***
Chinese Agencies Take Steps to Shield Consumer Funds from Evergrande Crisis
Local governments in China are taking control of
Evergrande
’s
property sales revenue amid an unfolding liquidity crisis at the developer, the Financial Times reported. Stalled development projects this summer sparked complaints and public protests.
- In a district near Guangzhou, a housing agency asked an Evergrande subsidiary to put presale proceeds from the stalled Sunshine Peninsula residential development into a state-owned custodia account, the report said.
- An agency in Zhuhai, near Macau, also asked Evergrande to put sales revenue in a government account. As many as eight other provinces have asked Evergrande, since August, to put presale revenue into custodial accounts as it put hundreds of unfinished developments on hold.
- Evergrande has $300 billion in debt, including $20 billion held offshore. Last week, Evergrande missed a payment on $2 billion of debt, reports said. Separating presale revenue prevents it from being used for debt payments.
- Federal Reserve Chair Jerome Powell has said China is highly levered for a developing economy but that there isn’t a lot of derelict U.S. exposure to Evergrande debt.
What’s Next: Wall Street is worried how an Evergrande failure would affect markets. Property contributes a quarter of China’s economic activity and is a major source of household wealth there. A drop in property prices could hurt consumer confidence and worsen China’s economic slowdown.
—Liz Moyer
***
Congestion at Busiest U.S. Ports Causing Shipping Delays Nationwide
The busiest U.S. ports at Los Angeles and Long Beach, Calif., are experiencing unprecedented backlogs, with thousands of shipping containers to move and more than 60 ships waiting to dock, contributing to shipping delays nationwide, The Wall Street Journal reported.
-
Shipping demands have increased as businesses replenish their pandemic-depleted inventory, but supply shortages are worsening at apparel maker
Nike
,
and retailer
Costco
,
which is limiting paper towel sales. - Unlike ports in Asia and Europe that are open around the clock, U.S. ports operate in two shifts on weekdays, because overnight or Saturday shipping is more expensive. Trucking companies are short of drivers to haul boxes, or to load or unload containers from freight trains.
- In the U.K., thousands of gas stations ran dry Sunday and supermarket shelves were sparsely stocked after a truck driver shortage delayed the delivery of fuel and groceries. The government will issue 5,000 temporary visas for foreign drivers. The British Retail Consortium called it “too little, too late.”
-
To attract more supply-chain workers, logistics providers are raising pay, increasing shift flexibility, and bringing in robots to help with surging e-commerce volumes.
Walmart
,
Amazon
and
United Parcel Service
are offering signing bonuses, including college tuition help.
What’s Next: Worker shortages are speeding up automation in what were largely manual warehouse and fulfillment operations.
GXO Logistics
added 40% more robotics and automation systems in North America in 2021, with plans to open nine new automated U.S. sites this year for e-commerce.
—Janet H. Cho
***
WHO Reviving Investigation Into Origins of Covid-19 With New Scientists
The World Health Organization is reviving its investigation into the origins of Covid-19, which has killed more than 4.7 million people worldwide, assembling a new team of about 20 scientists to search for new clues in China and elsewhere before critical evidence disappears.
- The U.S. and its allies have urged the WHO to proceed with the investigation, while China has argued that new inquiries should focus on other countries. A previous WHO-led inquiry that visited Wuhan, China, said data from Chinese scientists could not determine when, where and how the virus began.
- Previous WHO-led teams urged their Chinese counterparts to analyze blood banks, test farmworkers, and study the earliest cases. China and its allies say the investigation should scrutinize other possible sources such as Italy, or a U.S. military bioresearch facility in Fort Detrick, Md.
- Columbia University professor Jeffrey Sachs disbanded a task force of scientists investigating the origins of Covid-19, saying its links to the nonprofit EcoHealth Alliance risked perceptions of bias, because it used U.S. funds to study bat coronaviruses with the Wuhan Institute of Virology.
-
Demand for and questions about boosters have increased since the Centers for Disease Control and Prevention recommended them for people 65 and older, those with underlying medical conditions, and those at higher risk of infection who received the
Pfizer
–
BioNTech
vaccine. More than 2.6 million Americans have received boosters.
What’s Next: New York Gov. Kathy Hochul may bring in the National Guard and out-of-state medical workers to fill hospital staffing shortages, as thousands of unvaccinated workers could lose their jobs with Monday’s mandated healthcare worker Covid vaccination deadline looming.
—Janet H. Cho
***
MarketWatch Wants to Hear From You
My 76-year-old mother recently moved into assisted living, and she may need to sell her house to cover her expenses. Is there something we can do now to reduce the capital gains on the house in the future, should she outlive her savings?
A MarketWatch correspondent will answer this question soon. Meanwhile, send any questions you would like answered to thebarronsdaily@barrons.com.
***
—Newsletter edited by Liz Moyer, Camilla Imperiali, Steve Goldstein, Rupert Steiner
Some Apple, Tesla suppliers suspend production in China amid power pinch
Sept 27 (Reuters) – Several Apple Inc (AAPL.O) and Tesla Inc (TSLA.O) suppliers have suspended production at some Chinese factories for a number of days to comply with tighter energy consumption policies, putting supply chains at risk in the peak season for electronics goods.
Two major Taiwanese chipmakers, however, said their China facilities are operating as normal.
The development comes as tight coal supplies in China and toughening emissions standards have triggered a contraction in heavy industry in several regions, dragging on the country’s economic growth rate, analysts have said. read more
Apple supplier Unimicron Technology Corp (3037.TW) late on Sunday said three of its China subsidiaries stopped production from midday on Sept. 26 until midnight on Sept. 30 to “comply with the local governments’ electricity limiting policy”.
The Taiwanese maker of printed circuit boards said it did not expect significant impact as other plants would make up production.
Eson Precision Ind Co Ltd (5243.TW), an affiliate of Taiwan’s Hon Hai Precision Industry Co Ltd (Foxconn) (2317.TW), in a statement said it suspended production from Sunday until Friday at facilities in the Chinese city of Kunshan.
Concraft Holding Co Ltd (4943.TW), a supplier of speaker components for Apple’s iPhone and which owns manufacturing plants in Suzhou city, said it would suspend production for five days until noon on Thursday and use inventory to meet demand.
Chipmakers United Microelectronics Corp (UMC) (2303.TW) and Taiwan Semiconductor Manufacturing Co Ltd (2330.TW), told Reuters there was no impact at their China plants.
“UMC’s Hejian fab in Suzhou is currently running at full capacity utilization of 80,000 plus wafers per month,” said the Taiwanese firm, whose clients include Qualcomm Inc (QCOM.O).
Two people familiar with the matter told Reuters that facilities in Kunshan of contract manufacturer Foxconn have seen a “very small” impact on production.
Foxconn had to “adjust” a small part of its capacity there, which includes the manufacture of non-Apple notebook computers, one of the people said, adding that the company has not seen any impact at other major production hubs across China.
The second person said the company had to move some of the Kunshan workers’ shifts in late September to early October.
Foxconn, a major Apple supplier, declined to comment.
Reporting by Kanishka Singh in Bengaluru, and Ben Blanchard and Yimou Lee in Taipei; Editing by Kim Coghill and Christopher Cushing
Our Standards: The Thomson Reuters Trust Principles.
Bloomberg: Apple asks suppliers to build 90 million ‘iPhone 13’ units by the end of 2021
Almost two months ahead of the announcement, Apple is asking its suppliers to speed up production of the next-generation iPhone. The company expects to ship 90 million units of the so-called “iPhone 13” by the end of this year, according to a new report from Bloomberg.
As mentioned by the report, citing sources familiar with the matter, Apple usually orders about 75 million units of a new iPhone for its launch period, which usually runs from September-October to the end of the year. This year, however, the company wants to increase its production by 20%.
The main reason for ordering more iPhone units is that the company probably believes that this year’s phones will have stronger sales as the COVID-19 vaccination progresses around the world. This will also be the second iPhone update with support for 5G networks, which may push even more people to upgrade.
Bloomberg, which had previously revealed multiple details about the next-generation iPhone, now reinforces that the changes to this year’s models will be “more incremental” when compared to the iPhone 12, which was announced with a new flat-edge design.
iPhone 13 (or iPhone 12S) will remain available in the same sizes as the current generation, ranging from 5.4 inches to 6.7 inches. Codenamed D16, D17, D63, and D64, the company is expected to keep two entry-level models and two more advanced models, which are known as the “Pro” lineup.
The report corroborates that at least one of this year’s new iPhones will have an LTPO display, which is capable of offering variable refresh rate. Rumors suggest that the iPhone 13 Pro will have a 120Hz display for the first time, just like the iPad Pro. Although the external design will remain pretty much the same, Apple is working on a smaller TrueDepth camera to reduce the size of the notch.
The next-generation iPhone will also get camera upgrades, including improved optical zoom and new video recording capabilities. The new System-on-Chip (SoC) will keep the same six cores as the A14 Bionic, but with faster performance. Bloomberg says that Apple has been testing iPhone versions without a notch and with Touch ID under the screen, but these features are not expected in 2021.
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