The Economic Ministers of the ASEAN Member States, Australia, China, Japan, South Korea, and New Zealand have recognised the critical importance of the Regional Comprehensive Economic Partnership (RCEP) Agreement in light of ongoing uncertainties brought about by the COVID-19 pandemic.

A joint statement by the ministers, who met today, said the signing of the RCEP Agreement would enhance business confidence, strengthen the regional economic architecture and maintain the stability of the regional and global industrial and supply chains, as well as demonstrate the region’s support for an open, inclusive, and rules-based multilateral trading system.

“The ministers also underscored the significant role that the RCEP Agreement could play in post-pandemic recovery efforts, as well as in contributing to the growth and stability of the regional and global economy,” the statement said.

The ministers also acknowledged that the challenge, brought on by the COVID-19, had affected the trade and investment performance among the RCEP participating countries (RPCs).

“This challenge made it imperative for countries in the region, including those participating in the RCEP negotiations, to not only keep their markets open, particularly for essential goods and services, but also boost joint cooperation and collaboration in the fight against the COVID-19 global pandemic,” it said.

It said the ministers were pleased with the significant progress made towards finalising the RCEP Agreement for signing at the Fourth RCEP Summit in November 2020.

“They also reiterated that the RCEP remains open for India, given that not only had it participated in the RCEP negotiations since they were launched in 2012, but also in recognition of the potential of India to contribute to the region’s prosperity,” it added.

Source: Bernama 

ASEAN, partners recognise RCEP’s importance amid COVID-19 uncertainties

For many foreigners living in China’s capital city, the Sanyuanli Market is a unique cure for their homesickness.

With all kinds of imported food products such as French cheese, Maghreb couscous and vegetables popular with Western families, the market meets the needs of foreign residents searching for a taste of home.

The market’s success has mainly been attributed to China’s opening up in recent decades, during which trade between China and the rest of the world has not only remarkably altered people’s lifestyles but also tremendously boosted the global economy.

Before returning to her hometown of Toulouse, France, two years ago, Estelle Garneau had lived in Beijing for five years.

Recalling her life in the country, Garneau said visiting the Sanyuanli Market almost every week is part of her most delightful memories of her time in China.

“It’s a market where you can find ingredients from all over the world,” she said, adding the market allowed her to taste the flavors of her country and discover more from other cuisines.

Opened in the early 1990s, the market is located in one of Beijing’s most international areas near the embassy district.

Yuan Meirong, 45, is one of the market’s earliest business owners and she has run a grocery specializing in imported dairy products in the market for almost 20 years.

“Half of our customers are foreigners and some of them have become our friends,” said Yuan, adding that cheese imported from Europe is one of her best-selling products.

According to government data, by the end of 2018, the number of overseas institutions in Beijing had reached 37,000, with a total of 142,000 foreign residents.

The unexpected COVID-19 outbreak interrupted operations for many sellers.

This year has not been an easy one for Zhang Mei, for instance, a fishmonger who started her business in the market in 1998.

In June, several confirmed cases linked to imported seafood forced Zhang’s stall to close for a week. Compared to last year, the turnover of Zhang’s business fell by over 50 percent during the first half of this year.

Since mid-July, business in the Sanyuanli Market has started to regain momentum, raising the hopes of Zhang.

“Thanks to everyone’s efforts, the epidemic is under better control, and we can get back to our businesses,” Zhang said. “Many of our foreign customers have returned to Beijing after the borders reopened and our business has picked up, although summer is normally the off-season.”

This revival is emblematic of China’s economic recovery from the adverse impacts of the pandemic, which has infected millions of people and claimed more than 810,000 lives worldwide.

The country’s gross domestic product expanded 3.2 percent year-on-year in the second quarter of 2020, according to China’s National Bureau of Statistics.

Martin Raiser, World Bank country director for China, said the country’s economic rebound was better than expected in light of the pandemic.

“It is indeed higher than what we had projected back in June when we released our Global Economic Prospects report, and we have upgraded our forecast accordingly,” said Raiser.

Noting the pandemic previously impaired business confidence in China, Alicia Garcia Herero, chief economist for Asia at Paris-based investment bank NATIXIS, highlighted the resilience of the Chinese economy.

“China has shown great resilience over the coronavirus outbreak and is among the first major economies to recover,” said Herero, who is also a senior research fellow at Bruegel, a Brussels-based think tank.

Sylwester Szafarz, former consul general of Poland in Shanghai, said China’s economic recovery has brought confidence in the recovery of the world economy amid both the pandemic and a tough global recession.

The country became the first major economy to resume growth since the outbreak of the epidemic, Szafarz said, adding “this will play a positive role in the reconstruction of the world economy in the post-epidemic era.”

Even though the pandemic has stoked anti-globalization sentiment and fueled protectionism across the world, China has never wavered in its resolve to build an open economy.

“The most important part of the Chinese economic policy today, in my view, is the commitment of the government to widening the door to the world, despite the difficulty arising from the coronavirus crisis,” said Rudolf Minsch, chief economist at Swiss national business federation Economiesuisse.

In addition to helping achieve a swift economic recovery, China’s commitment to an open economy has injected fresh impetus into the struggling global economy.

During the January-June period, ASEAN remained China’s largest trading partner, with trade up 5.6 percent year-on-year, accounting for 14.7 percent of China’s total foreign trade.

Wellian Wiranto, an economist at OCBC Bank, said China’s economic growth is likely to benefit Southeast Asian nations as the country commands the “lion’s share” of regional exports. The uptick would rekindle hopes that China’s economy can help to pull others along, Wiranto said.

Source: China Daily 

Open world economy key to recovery amid pandemic

ASEAN and its partners of the Regional Comprehensive Economic Partnership (RCEP) should push for the signing of the RCEP agreement to combat the threat of COVID-19 pandemic on the economy.

MCA International Communication and Diplomacy Bureau chairperson Dr Tee Ching Seng said while ASEAN must maintain a common front for the post-pandemic era, there is no better time than now for it to push for the signing of the RCEP as the agreement would bolster strong regional economic ties and support integration of regional sectors.

“Since the 1997 Asian financial crisis to the 2008 global economic recession, cooperative efforts from regional partners have been the guiding light.

“Hence, there is no better time than now for ASEAN to push for the signing of the Regional Comprehensive Economic Partnership (RCEP) agreement,” he said in a statement.

He added that if the RCEP can be endorsed by ASEAN partners by the end of 2020, it shall be “a strong bolster to the region” which has suffered from the significant slowdown in trade due to the preventative measures taken to contain the virus.

“This is because the RCEP will cement the pact for the largest regional partnership worldwide, spurring the birth of the biggest free-trade zone globally, which will surely provide the much-needed catalyst for the ASEAN region to thrive in the post-pandemic era,” said Tee.

The text-based negotiations of the RCEP, which is set to be the largest regional free trade agreement covering almost half of the world’s population and contributing one-third of the global Gross Domestic Product, was concluded at the 35th ASEAN Summit in Bangkok in November last year.

Besides the 10-member ASEAN countries, other participating countries are Australia, China, Japan, South Korea and New Zealand. India withdrew from the trade agreement following concerns that the deal might hurt its domestic industry.

In early August, International Trade and Industry Minister Datuk Seri Mohamed Azmin Ali said RCEP-participating countries are expected to sign the agreement in November (2020).

Source: Bernama 

ASEAN must push RCEP signing to expedite regional economy’s recovery

International Business Machines Corp announced on Monday a new processor chip for data centers that it says will be able to handle three times the workload of its predecessor.

The IBM-designed Power10 chip will be manufactured by Samsung Electronics Co Ltd and is meant for use by businesses inside data centers, IBM said.

The chip will use Samsung’s 7-nanometer chip manufacturing process, which is similar to the 7-nanometer technology that Advanced Micro Devices Inc uses to have its chips made by Taiwan Semiconductor Manufacturing Co Ltd.

Both IBM and AMD use outside chip factories to compete against Intel Corp, the dominant provider of central processor chips in data centers and one of the few players left that both designs and manufactures its own chips.

Intel recently said its next generation of manufacturing technology faces delays, which analysts believe will allow its rivals to gain market share.

IBM has long focused on high-performance computing systems, with three of the world’s top-ten fastest supercomputers using its chips. The company said Monday that the Power10 chip has been designed to be faster at artificial intelligence computing tasks than its predecessor, doing such work up to 20 times faster than its previous generation of chip.

Source: Reuters

IBM rolls out newest processor chip, taps Samsung for manufacturing

The first commercial deal under an Africa-wide free trade zone will take place on Jan. 1 as outstanding talks are set to move online, the African Union said.

While the African Continental Free Trade Area entered into force legally last year, transactions that were due to start on July 1 were delayed as the virus set back negotiations on the protocol for trade in goods, including tariff concessions.

The outstanding negotiations will be finalized through a new African Virtual Trade-Diplomacy Platform that is being developed as a public-private partnership between the African Union Commission and more than 20 African multinational companies, the African Union said in a statement published on its website. The trade deal is being led by the continental body.

Set to be fully operational by 2030, it could be the world’s biggest free trade zone by area, with a potential market of 1.2 billion people and a combined gross domestic product of $2.5 trillion. Fifty-four of the 55 nations recognized by the African Union have signed to join the area — Eritrea is the exception — while 28 have ratified the agreement.

Africa lags other regions in terms of internal trade, with intra-continental commerce accounting for just 15% of the total, compared with 58% in Asia and more than 70% in Europe. The agreement aims to change that by lowering or eliminating cross-border tariffs on 90% of goods, facilitating the movement of capital and people, promoting investment and paving the way for a continent-wide customs union.

Source: Bloomberg

World’s Biggest Free-Trade Pact Targets First Deal in 2021

Wind turbines and solar panels produced a record 10% of the world’s electricity in the first half of 2020 as coal-power declined, but steeper change is needed to meet targets set under the 2015 Paris climate agreement, a report said on Thursday.

Scientist say huge cuts to greenhouse gas emissions from the power sector are required over the next decade to limit global warming and curb the worst impacts of climate change such as floods, droughts and loss of species.

Generation from wind and solar rose by 14% during the first half of 2020 compared with the same period in 2019 while output from coal plants fell by 8.3%, the report by independent climate think tank Ember said.

Overall electricity demand fell by 3% during the six months due to coronavirus lockdowns, the report said.

Despite the drop, coal plants still produced 33% of the world’s electricity during the period.

“To keep a chance of limiting climate change to 1.5 degrees, coal generation needs to fall by 13% every year this decade,” Ember senior analyst Dave Jones said in a statement with the report.

Europe and the UK saw the largest contributions from wind and solar, at 21% and 33% respectively during the first half of the year, with China at 10% and the United States at 12%, the report said.

Coal power generation in the U.S. and Europe fell by 31% and 32% respectively while coal power in China was down just 2%, the report said.

Wind turbines and solar panels produced a record 10% of the world’s electricity in the first half of 2020 as coal-power declined, but steeper change is needed to meet targets set under the 2015 Paris climate agreement, a report said on Thursday.

Scientist say huge cuts to greenhouse gas emissions from the power sector are required over the next decade to limit global warming and curb the worst impacts of climate change such as floods, droughts and loss of species.

Generation from wind and solar rose by 14% during the first half of 2020 compared with the same period in 2019 while output from coal plants fell by 8.3%, the report by independent climate think tank Ember said.

Overall electricity demand fell by 3% during the six months due to coronavirus lockdowns, the report said.

Despite the drop, coal plants still produced 33% of the world’s electricity during the period.

“To keep a chance of limiting climate change to 1.5 degrees, coal generation needs to fall by 13% every year this decade,” Ember senior analyst Dave Jones said in a statement with the report.

Europe and the UK saw the largest contributions from wind and solar, at 21% and 33% respectively during the first half of the year, with China at 10% and the United States at 12%, the report said.

Coal power generation in the U.S. and Europe fell by 31% and 32% respectively while coal power in China was down just 2%, the report said.

Ember’s report examined data from 48 countries which make up 83% of global electricity production.

Source: Reuters

Wind and solar produced 10% of global electricity in first half of 2020: report

Telecom companies bank on cost-effective infrastructure to speed up the use of superfast tech in more industries

China has taken the lead in global 5G development, with nearly half of worldwide investment by the country this year, according to the latest reports.

A newly-launched report by market consultancy Gartner Inc said the country leads the world in 5G development and is expected to contribute 49.4 percent of 5G investment globally this year.

“Cost-effective infrastructure manufactured in China is paving the way for major communications service providers in the country to quickly build 5G coverage,” said Kosei Takiishi, senior research director at Gartner.

Due to the COVID-19 pandemic, investment growth rates in 5G will be slightly lower worldwide this year but will rebound modestly next year, the report said.

” (The rebound next year comes) as communications service providers seek to capitalize on changed behaviors that are sparked by populations’ elevated reliance on communication networks,” it added.

The comments echo a recent survey by Swedish telecom equipment maker Ericsson which said that China’s 5G development is speeding up this year, which was a contrast to the slowdown of 5G rollout and growing subscription rates in many markets.

Nearly 89 percent of Chinese consumers surveyed believe that 5G is set to play an increasingly bigger role in the future, while 59 percent showed willingness to buy 5G-related products and services, the survey said.

Currently, the country’s three major telecommunications carriers－China Mobile, China Unicom and China Telecom－are spending big and plan to invest more this year in 5G construction.

The total expenditure budget of the three major operators this year is 334.8 billion yuan ($48.1 billion). Of that amount, the 5G-related capital expenditure budget hit 180.3 billion yuan. The 5G expenditure accounted for 53.9 percent of the total budget and will be a 337.6 percent increase year-on-year.

“China has actively promoted 5G construction and local consumers are also holding an open mind to embrace the technology, which laid a relatively solid foundation for 5G development in the country,” said Zhang Jin, a researcher from the China Center for International Economic Exchanges.

While China remains the world’s largest 5G market, Zhang pointed out that the country’s efforts in driving 5G-related industrial funds and industrial chain development have also boosted the nation’s competitiveness in the sector.

A report by the China Academy of Information and Communications Technology pointed out that China’s efforts in 5G commercialization will directly drive an investment of 900 billion yuan this year.

While total 5G investment will reach 1.5 trillion yuan over the next five years, it will help create more than 3.5 million jobs by then. By 2030, the superfast 5G will help create a total economic output of 6.3 trillion yuan, the report said.

To gear up new growth engines, China also called for new infrastructure construction including 5G, artificial intelligence and the industrial internet. Such efforts are in line with the nation’s drive to ensure stability in domestic and foreign investment.

“New infrastructure comes with huge opportunities,” said Kaifu Lee, a prominent AI expert who is chairman and CEO of venture capital firm Sinovation Ventures.

“During the process, AI, together with other core areas of new infrastructure such as 5G, big data and the industrial internet, will integrate much more closely with each other. This will take the digitalization of the nation’s traditional industries to a new level,” he said.

Source: China Daily

China leads peers in 5G investments

The US-China trade war does not have a major impact on Malaysia’s trade performance with both countries, even though it has impacted the global economy.

The Ministry of International Trade and Industry (MITI) said Malaysia’s trade with the US in January to June 2020 registered an increase of 3.1% to RM80.41 billion compared with the same quarter of the previous year. 

The country’s exports to the US also rose by 2.4% to RM46.15 billion, while its imports edged 4.1% to RM34.26 billion.

Almost 80% of Malaysia’s exports to the US were contributed by electrical and electronics products, rubber products, optical and scientific equipment, timber products and other manufacturing products.

About 76% of imports from the US were made up of electrical and electronics products, chemicals and chemical products, machinery and equipment, optical and scientific equipment and steel products.

Meanwhile, Malaysia’s trade with China in January to June this year, according to the MITI, saw a 0.3% increase to RM149.16 billion compared with the corresponding period in 2019.

The country’s exports to China during that period rose 8.3% to RM69.43 billion, supported mainly by electrical and electronics, chemicals and chemical products, petroleum products, metal manufacturing and other manufacturing products.

MITI said Malaysia’s imports from the Asian country decreased by 5.8% to RM79.73 billion, with major imports comprising electrical and electronics, machine, equipment, chemicals and chemical products, petroleum products and metal manufacturing.

The ministry also highlighted that Malaysia’s trade performance contracted slightly in January to June 2020 due to the Covid-19 pandemic, with total trade declining by as much as 7% year-on-year (y-o-y) to RM833.36 billion.

“Exports contracted by 6.8% y-o-y to RM448.99 billion and imports fell by 7.2% y-o-y to RM384.38 billion, while trade surplus was 4.1% lower y-o-y at RM64.61 billion,” it said in a written reply to Datuk Seri Dr Ahmad Zahid Hamidi’s (BN-Bagan Datuk) question about the US-China trade war and the Covid-19 pandemic’s impact on Malaysia’s imports and exports this year.

MITI noted that there were several business opportunities in certain sectors, citing the substantial 40.3% increase in rubber glove exports, following robust demand in the global market due to the Covid-19 pandemic.

“Exports of medical devices, such as test kits and disinfectants, also increased,” it said.

Due to the ongoing US-China trade war and the unabating pandemic, MITI said it had taken proactive steps through its trade promotion agency, Malaysia External Trade Development Corp (Matrade), to address the trade impact on Malaysia.

This includes focusing on the usage of digital technology to reduce the cost of export promotion so that Malaysian exporting companies can stay competitive.

It said that from Jan 1 to July 31, 2020, the eBizMatch business matching digital platform saw 576 business matchings, involving 395 foreign buyers and 538 Malaysian companies, registering RM461.35 million potential sales.

Matrade has also expanded its Market Development Grant (MDG) to include virtual trade promotion activities.

The MDG has also allowed for the reimbursement of up to 30% of total logistic cost, including transportation and warehousing costs for the delivery of products overseas to alleviate the financial burden on Malaysian exporting companies due to the impact of the Covid-19 pandemic.

“From Jan 1 to July 31, 2020, 1,427 applications from 962 companies were processed and a grant totalling RM14.56 million was disbursed,” the ministry said.

It added that Matrade had also collaborated with Malaysia Productivity Corp (MPC) and other relevant bodies to organise the Virtual Trade Clinic, a trade advisory service platform to assist companies in meeting the requirements and overcoming challenges in the export market.

Source: Bernama

US-China trade war does not have major impact on Malaysia’s trade — MITI

In the fight against the coronavirus, a vaccine trial is almost always a boost for pharma stocks.

Chongqing Zhifei Biological Products Co. shares have surged 80% since the vaccine maker disclosed at the end of June that China’s drug regulator approved clinical human testing of a Covid-19 vaccine. With a 256% rally this year through Wednesday, the stock is the best performer in the ChiNext Index. It slipped 7.6% as of the midday break on Thursday.

The gains have pushed the fortune of Jiang Rensheng, Zhifei’s chairman, to US$19.4 billion, putting him close to entering the exclusive club of China’s 10 richest people that’s dominated by tech and real estate moguls, according to the Bloomberg Billionaires Index. His net worth more than doubled in July alone, the fastest surge among the world’s 500 wealthiest people, and is up by US$14.4 billion this year. Jiang, 66, owns about 56% of Zhifei.

Wealth isn’t the true measure of success, social responsibility is, Jiang told students at his alma mater in May 2019. His company sells vaccines for diseases such as the flu and meningitis and is China’s sole marketer of a Merck & Co. treatment to prevent cervical cancer.

Zhifei reported net income of 1.5 billion yuan for the first six months of 2020, up 30% from last year. It said its coronavirus vaccine is going through phase 1 and 2 clinical trials.

The company has produced at least another billionaire. Wu Guanjiang, a former director with an 8% stake in the company, has more than doubled his fortune to US$4.5 billion this year. Wu left Zhifei’s director board in 2015, according to a filing.

Zhifei didn’t respond to a request for comment.

With the virus outbreak, shares of drugmakers have been on a tear this year, lifting the wealth of their founders and chairmen. A 171% rally in Shenzhen Kangtai Biological Products Co. took Chairman Du Weimin’s fortune to US$5.4 billion, while his ex-wife, Yuan Liping, is now Canada’s third-richest woman with $5.5 billion.

Beijing Wantai Biological Pharmacy Enterprise Co., whose Covid-19 test got approved by the U.S. Food and Drug Administration, has jumped 30-fold since an initial public offering in April, bringing the wealth of its chairman to US$19.4 billion.

In the U.S., biotech company Moderna Inc., which is working on a Covid-19 vaccine, has produced at least three billionaires, including professors from Massachusetts Institute of Technology and Harvard University. Its shares have almost quadrupled this year.

While Jiang’s net worth rose the fastest among the world’s 500 richest people in July, Jeff Bezos, Elon Musk and Mukesh Ambani all amassed more money than him. They added more than US$14.5 billion each to their fortunes last month, according to the Bloomberg wealth index.

Source: Bloomberg

World’s fastest growing fortune is a Chinese pharma tycoon

Japan’s quiet push to protect its supply chains in the era of Covid-19 may prove a boon to Southeast Asian nations looking to gain from the growing backlash against China.

The Japanese government is paying about ¥12 billion yen (US$114 million or RM476.69 million) to 30 companies to increase production in Southeast Asia, in the first round of a multibillion dollar programme to diversify supply chains after Covid-19 and worsening relations between the US and China. Japan wants to cut its reliance on China or any other individual nation and the money will hasten the trend of firms moving out of China and into cheaper neighbours like Vietnam or Thailand.

Fujikin Inc makes parts used in semiconductor manufacturing and is one firm benefiting from the incentives. The Osaka-based manufacturer will receive subsidies worth two-thirds of its costs to shift production out of China and into Vietnam.

“We’d been thinking about increasing our capacity in Vietnam before the subsidy was announced, and it fit right in,” said company president Shinya Nojima.

When the virus shut down Fujikin’s suppliers in China earlier this year, their customers became worried about shipments of parts. “Our customers were asking us: Is the China procurement happening? Are we going to be able to meet the deadline?” Nojima said on Monday.

China rethink

The coronavirus outbreak, and the lockdowns that followed, have forced businesses and government officials around the world to rethink their supply chains in order to reduce reliance on China as a manufacturing source.

Japan had already been a key player in Southeast Asia, home to some of Asia’s fastest-expanding economies before the pandemic and a growing and youthful population. Japanese investment in five of the region’s economies — Vietnam, the Philippines, Malaysia, Indonesia and Thailand — rose at nearly double the pace into China over the past decade.

Infrastructure development formed a big chunk of that investment, with Japanese firms vying with Chinese ones to build railways and hospitals in countries like Indonesia, the Philippines and Vietnam.

The US-China trade war and worries about China’s growing dominance in Southeast Asia have fostered stronger economic ties between Japan and the region.

Japan is considered the most trusted major power among Southeast Asian nations, according to an annual survey by the Singapore-based ISEAS-Yusof Ishak Institute, released in January. Of the 1,308 people surveyed across five professional sectors, 61.2% said they had confidence Japan would “do the right thing” to provide public goods.

That trust goes both ways, with Japan putting a net US$139 billion into Vietnam, Thailand, Indonesia, Malaysia and the Philippines over the past decade.

“Even before coronavirus and the US-China trade war struck, there was a shift away from production in China,” said Satoshi Kitashima, a deputy director at the Japan External Trade Organization.

Vietnam has emerged as the clear favourite for many manufacturers over the years, given its proximity to China, relatively low labour and power costs, and its openness to foreign investment. Kitashima, who had previously spent nine years in Vietnam facilitating business between the two countries, said there’s been a clear upward swing in Japanese direct investment in Vietnam since the global financial crisis more than a decade ago.

Vietnam’s boom

Fujikin’s Nojima says Vietnam’s wages are a 10th of Japan’s and lower than in China, while Kitashima says many firms are now moving to Vietnam with their focus on the nation’s young and rapidly growing domestic market. Investors also credit Vietnam for its stable political leadership and ability to contain the coronavirus outbreak, although the nation has recently seen a spike in cases again.

Of the 30 firms that secured Japanese government subsidies to expand production abroad to protect their supply chains, half of them will be using that money in Vietnam.

One of them is Showa International Co, a Tokyo-based business, that’s been making clothes in Vietnam for 25 years. The pandemic has seen it ramp up production of medical gowns and masks, with Kazuo Nishizawa, the head of the company, projecting it should be able to produce up to 150,000 gowns a month.

“There’s still a large shortage of gowns and masks,” he said. With demand surging across the world, “we have a mission to first be able to provide stable supplies to Japan,” he said.

In the first round of the new subsidy programme, 57 companies shared ¥57.4 billion to boost output in Japan, and the 30 companies shared about ¥12 billion to increase output in other nations. That leaves around ¥174 billion that firms can apply for in the next round.

Indonesia investment

Indonesia, Southeast Asia’s largest economy and the world’s fourth most-populous nation, is another country that’s benefited from a surge in Japanese investment, including in Jakarta’s first underground rail network. Indonesia announced in June that seven foreign companies will relocate their plants from China to Indonesia with a total investment value of US$850 million. Three of them were from Japan, including electronics giant Panasonic Corp and auto parts maker Denso Corp.

“FDI (foreign direct investment) from Japan will remain high or even higher, especially because the second phase of the mass rapid transit construction project in Jakarta will soon begin,” said Yuliot, a deputy chairman at the Indonesian Investment Coordinating Board, who goes by one name. Another reason is “the relocation trend of Japanese plants from China to Indonesia”, he said.

Within Japan, pressure is growing to secure supply chains.

“In the past supply chains were put together solely from the perspective of economic rationale,” Akira Amari, a confidante of Prime Minister Shinzo Abe and a senior ruling party official, said in an interview last month. “Amid the coronavirus crisis, the thinking is shifting toward diversifying risk from the perspective of national economic security.”

Source: Reuters

Japan push to cut China reliance may be boost for Southeast Asia

The 11 members of the Trans-Pacific Partnership free trade pact agreed Thursday to take the lead in global rule-making for the digital economy and bolster efforts to make resilient supply chains amid the novel coronavirus pandemic.

“We strongly believe that given the current circumstances, it is more important than ever to counter protectionism and reinforce an open, effective, fair, inclusive and rules-based trading system to restore economic growth worldwide,” said a statement issued by the member states following an online meeting.

The delegates agreed to work toward setting up a subsidiary body dedicated to addressing the use of digital technologies, which have been increasingly utilized in the wake of the pandemic.

“Discussions on rule-making for the digital economy are being held globally and I hope the 11 TPP members will play a central role,” Yasutoshi Nishimura, state minister in charge of the TPP, told reporters after taking part in the meeting chaired by Mexico.

Multilateral regulation of the digital economy has been discussed at the World Trade Organization but a consensus is yet to be reached. Countries remain divided due to differences over consumer privacy protection and restrictions on the transfer of data across borders.

They also agreed to strengthen supply chains in the region to facilitate the flow of essential goods. The issue has increasingly come into focus as the pandemic has disrupted parts supplies, affecting manufacturing activities.

“We are committed to ensuring that supply chains remain open and connected so that international markets can continue to function,” the statement said.

The trade pact, officially named the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, covers around 13 percent of the world economy and is designed to cut tariffs on agricultural and industrial products, ease investment restrictions and enhance intellectual property protection.

It took effect in December 2018 with the 11 members after the United States withdrew from the original TPP in January 2017.

Seven members — Australia, Canada, Japan, Mexico, New Zealand, Singapore and Vietnam — have ratified the pact, while Brunei, Chile, Malaysia and Peru have yet to do so.

The TPP members said Thursday they “warmly welcome” the interest shown by several economies in joining the pact. Britain, which left the European Union on Jan. 31, and Thailand and have so far expressed interest.

Source: Japan Times

TPP members agree to bolster digital rules and supply chains amid virus

Global sales of semiconductors rose 5.1% year-on-year in June to US$34.5 billion from US$32.9 billion a year earlier, said the U.S.-based  Semiconductor Industry Association (SIA).

In a statement on its website Aug 3, SIA however said on a month-on-month basis, sales dipped 0.3% from the May sales of US$34.6 billion.

SIA said sales during the second quarter of 2020 were US$103.6 billion, an increase of 5.1% over the second quarter of 2019, but a small decrease of 0.9% compared to the first quarter of 2020.

Monthly sales are compiled by the World Semiconductor Trade Statistics (WSTS) organisation and represent a three-month moving average.

SIA president and CEO John Neuffer said second-quarter semiconductor sales were roughly flat compared to the first quarter, and the global industry continues to post year-to-year sales increases, but significant uncertainty remains for the second half of the year due to ongoing macroeconomic headwinds.

“Sales into the Americas stood out in June, increasing nearly 30% year-to-year,” he said.

SIA said regionally, sales increased on a year-to-year basis in the Americas (29.0%), China (4.7%), and Asia Pacific/All Other (0.4%), but decreased in Japan (-2.2%) and Europe (-17.1%).

On a month-to-month basis, sales increased slightly in the Americas (3.1%) and Japan (1.1%), but decreased in China (-0.4%), Asia Pacific/All Other (-1.5%), and Europe (-6.0%).

Source: The Edge Markets

Global semicon sales up 5.1% y-o-y in June to US$34.5b, says SIA

Ministers from a trans-Pacific trade bloc have agreed to fight protectionism and avoid food and medicine shortages during the coronavirus pandemic, they said in a joint statement published on Wednesday.

“We strongly believe that given the current circumstances, it is more important than ever to counter protectionism,” said the statement, released after a virtual ministerial meeting of the 11 members hosted by Mexico.

It also expressed support for modernizing the World Trade Organization (WTO), and said it supported expanding the bloc by adding new members.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), comprises Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Together they have a combined economy of US$13.5 trillion.

The pandemic has exacerbated a trend towards protectionism on the global stage, with a number of European countries taking steps to favour domestic investments, and ongoing sabre-rattling between the United States and China.

Lockdowns around the world temporarily shattered the web of suppliers central to modern manufacturing.

“I am convinced we must take action to strengthen existing regional supply chains and to develop new ones” in the face of the coronavirus pandemic, Mexican economic minister Graciela Marquez said in her speech that inaugurated the meeting.

The joint statement, issued by the Mexican economy ministry, said open and connected supply chains play “an instrumental role in avoiding food shortages and ensuring global food security.”

The members pledged to “facilitate the flow of essential goods and services during the pandemic, including medical supplies and equipment.”

’21st century issues’

The statement said the WTO should demonstrate an ability to deliver “outcomes on 21st century issues,” in an apparent dig at the global trade organization’s more than decade-long deadlock in trade negotiations.

The world’s two largest economies are not members of the CPTPP bloc, which was established in part as a counterweight to China’s growing clout. US President Donald Trump withdrew the United States from the agreement soon after he took office in 2017.

Other countries want in, including the United Kingdom, which is keen to strike new trading partnerships after its exit from the European Union.

Britain’s ambassador to Mexico, Corin Robertson, said the process of accession would take time and no major announcements were expected about the matter during the ministerial meeting.

“It’s still very much our intent to join CPTPP. We see it as a great opportunity for the UK as part of a more ambitious trade agenda post-Brexit,” Robertson told Reuters on Wednesday.

Japanese Economy Minister Yasutoshi Nishimura told the video conference that Tokyo would welcome new members in the bloc.

“As a matter of principle, Japan welcomes those economies who are willing to meet the high standards of the agreement,” he told the meeting. 

Source: Reuters

CPTPP bloc says to ensure food, medicine supplies amid pandemic

Johnson Matthey (JM) has been selected by China’s Ningxia Baofeng Energy Group as licensor for the third methanol synthesis plant at its coal to olefins complex near Yinchuan in Ningxia Province PRC.

With a planned capacity of 7,200 mtpd, the methanol plant will be the world’s largest single train methanol plant upon completion, according to a statement.

Under the agreement, JM will be the licensor and supplier of associated engineering, technical review, commissioning assistance, catalyst and equipment supply. The JM methanol plant will take synthesis gas as a feed and utilise JM radial steam raising converters in a patented Series Loop.

Together with JM catalysts, to produce stabilised methanol as a product that is used to produce olefins downstream, the plant will provide enhanced energy efficiency along with low OPEX, CAPEX and emissions.

Upon startup, this will represent JM’s eighth operating licence in China with a plant capacity greater than 5,500 mtpd.

The licence award demonstrates Baofeng’s recognition of JM’s technical leadership and is testament to the latter’s commitment and dedication to large-scale methanol production delivery.

“We are very proud of our ongoing collaboration with Ningxia Baofeng Energy. It is testament to their confidence in JM’s engineering expertise and ability to successfully design and help deliver their large-scale methanol plants”, said JM Managing Director, John Gordon.

“In just over six years, it has been exciting to see our strong partnership result in the commissioning of two large scale plants with increasing volumes and a third world-scale plant on the way.”

JM is a global leader in science that enables a cleaner and healthier world. For more information, visit www.matthey.com

Source: Bernama

Johnson Matthey technology selected for world’s largest single train methanol plant

Asean members including Malaysia must work hand-in-hand to curb the spread of the COVID-19 pandemic and minimise the socio-economic impact to countries, said Health director-general Datuk Dr Noor Hisham Abdullah.

In his Facebook post today, he said as the widespread effect of the pandemic goes beyond borders, by extension, cooperation at the regional level must be built upon consultation with regional constituents.

“There are no shortcuts out of this pandemic and given the current rate of COVID-19 vaccine development – an empowered, engaged community that takes individual behaviour measures in the interest of each other is very critical to bring this pandemic under control.

“…in Asean level we need to have common standards and avoid costly duplications. Together we stand strong in this region for a better prepared tomorrow,” he said.

He also calls for Asean members to be on top of the situation; science on top of politics, science thrives over politics, as well as to continue to enhance strategic communication and public adhering to the standard operating procedure (SOP).

Earlier, Dr Noor Hisham said this during a webinar titled “How Can Asean Bounce Back: Fostering Public Health Safety & Economic Resilience for a Borderless Community in Asean”, organised by CIMB Asean Research Institute (Cari).

The discussion centred on Malaysia’s management of the COVID-19 pandemic, the country’s cooperation with Asean and the international community in addressing COVID-19, as well as how to strike a balance between public health safety and the survival of the economy.

Source: Bernama

Asean must work together to curb COVID-19, minimise socio-economic impact – Dr Noor Hisham

Apple Inc’s stock hit a record high on Friday after reporting blockbuster quarterly results, helping the iPhone maker briefly overtake Saudi Aramco to become the world’s most valuable publicly listed company.

Apple’s stock surged to as high as US$412.22 a share, putting its market capitalization at US$1.762 trillion, according to the share count provided by Apple in a regulatory filing on Friday.

Saudi Aramco, which has been the most valuable publicly listed company since going public last year, had a market capitalization of US$1.760 trillion as of its last close, according to Refinitiv data.

Last up 6.2% at US$408.78 in midday trading, Apple’s market capitalization stood at US$1.748 trillion. After Apple bought back US$16 billion worth of shares in the June quarter, it had 4,275,634,000 outstanding shares, as of July 17, according to the filing.

With Friday’s stock gain, Apple’s has surged about 40% year to date, with investors betting that it and other major US technology companies will emerge from the coronavirus pandemic stronger than smaller rivals.

In its quarterly report, Apple announced a four-for-one stock split, with trading on a split-adjusted basis starting on Aug 31. It will be Apple’s first share split since 2014.

Source: Reuters

Apple briefly overtakes Saudi Aramco to become the world’s largest company

Online travel is starting to boom in Japan, where the novel coronavirus is spreading at an alarming pace, with some tour products allowing participants to view countryside scenery and interact with local people, and others offering virtual travel experience and local specialties.

Travel companies are trying to meet growing needs from consumers who are refraining from long-distance trips amid the epidemic but want to feel like they are making trips while staying at home, Jiji Press reported.

Hankyu Travel International Co. sells an online tour featuring sightseeing spots in Chiba Prefecture. When an image of Kameiwa Cave in the city of Kimitsu in the eastern Japan prefecture is shown on the screen of a personal computer, the voice of a guide says: “In the stream are Japanese rice fish, and tree leaves are green and beautiful. The scenery looks cool.”

The tour is gaining popularity, with one participant saying, “I felt as if I was actually in the place, so it was fun.”

The tour product also introduces Mount Nokogiri, where people can have a panoramic view of the Boso Peninsula, which covers a large part of the prefecture.

Some tour products are designed to support local businesses struggling with plunges in the number of tourists due to the coronavirus crisis.

Tokyo-based Autabi sells online travel packaged with local specialties. The firm created the tour products “to support farmers and sake brewers hit by decreases in shipments of their products to hotels and ‘ryokan’ (Japanese-style inns)” amid the epidemic, its head, Masahiro Karasawa, said.

Autabi started the virtual tours in April, attracting more than 1,000 participants in total. It also has many repeat customers.

Prices of online tours generally start at less than 3,000 yen. Many products allow participation by a small number of people so that every one of them can have interactive experiences.

Online travel is good for people seeing actual travel difficult due to time constraints or in terms of physical strength, a Hankyu Travel official said.

Even after the coronavirus epidemic subsides, online travel is expected to continue attracting demand, Autabi’s Karasawa said.

Source: Bernama

Covid-19 creating online travel boom in Japan

As the world shifts to more environmentally friendly ways to power cars and trucks, electric vehicles and fuel cell vehicles have grabbed much of the spotlight. But perhaps another type of fuel should be added to that list as a green alternative to gasoline: e-fuel.

Europe has been looking at carbon neutral e-fuel and plans to have it play a crucial role in many modes of transport, from planes and ships to large trucks, as it works toward a goal of carbon neutrality by 2050.

Japanese automakers have also been conducting basic research on e-fuel as a possible major green alternative to EVs as Europe is set to introduce tougher vehicle emissions standards in 2030, industry sources say.

With that background, it’s timely to take a closer look at e-fuel.

What is e-fuel?

E-fuel is a liquid fuel made from water and carbon dioxide in a process powered by renewable energy. Hydrogen, produced via water electrolysis using renewable energy such as solar power, reacts with carbon dioxide using innovative technologies to make e-fuel. The use of renewable power and capturing carbon dioxide from the atmosphere makes it a carbon-neutral fuel when it is burned, producing no net greenhouse gas emissions.

What’s the advantage of using e-fuel?

Because the energy density is much higher than that of the rechargeable batteries used in EVs, sustainable e-fuel can improve the range of cars, planes, ships and trains. E-fuel also could play an integral role in Japan’s goal of becoming a “hydrogen society.”

It can be transported safely over long distances and kept in storage for an extended period of time. Unlike biofuel, e-fuel does not compete with the food chain and can be industrially produced in large quantities.

Why are Japanese carmakers studying e-fuel?

Japanese automakers are eyeing e-fuel as an alternative to EVs. They believe e-fuel has an edge over biofuel as biofuel production runs the risk of destroying forests and ecosystems, especially in developing countries. E-fuel will also lead to the sustained use of advanced technology within internal combustion engines and existing infrastructure such as pipelines and gas stations. Japanese automakers, however, are unlikely to start producing their own e-fuel.

Electric has been pushed for all means of transport globally in recent years, but there is a growing consensus that e-fuel will be indispensable when it comes to bigger transportation modes such as airplanes, ships and heavy-duty trucks due to the massive weight and size of the batteries that would be required.

For example, a truck that can haul up to 27 tons of cargo would need a 25-ton battery, reducing the maximum cargo weight to only 2 tons. Charging a battery of that size could take half a day or longer. Japanese truckmakers are keenly interested in using e-diesel for bigger trucks, an industry source familiar with the matter said on condition of anonymity.

Fuel cell vehicles are also eyed for heavy-duty trucks as hydrogen tanks can be filled in minutes and more cargo capacity is available. But the limited fuel station infrastructure remains a big obstacle.

Why is the e-fuel initiative advancing in Europe?

While EVs and FCVs enjoy zero tailpipe carbon emissions on the road, their advantage over hybrid vehicles shrinks when the carbon footprint is measured on a well-to-wheel basis, which takes into account emissions from power generation and fuel mining. Charging an EV with power derived from coal-fired power plants, for example, can make its carbon footprint higher than a hybrid vehicle.

Europe is looking a step further than the well-to-wheel emissions and is considering requiring the evaluation of vehicles’ emissions over the full life cycle including the production stage, which would undercut the relative advantage of EVs further.

That’s because when EVs roll out on the roads, the emissions from manufacturing EVs including lithium batteries and other parts would be much higher than those from internal combustion engine vehicles, accounting for up to about half of full life-cycle emissions in Europe, according to the International Council on Clean Transportation.

E-fuel is also gaining momentum in the EU as a way of reducing carbon footprints in the transportation sector, which accounts for around a fifth of global energy-related carbon dioxide emissions. It’s a key part of the European Union’s goals for net-zero emissions by 2050.

The European Union last year approved tighter restrictions to reduce greenhouse gas emissions from new cars by 37.5 percent by 2030 from 2021 levels. The new law also demands that the full life-cycle analysis be applied to calculating car emissions. The European Commission is also considering developing the model for calculating life-cycle carbon dioxide emissions for cars by 2023.

According to the European oil refining industry’s research organization Concawe, e-fuels are not likely to play a significant role in the transport sector in 2030, but various sources project that it could account for up to 30 percent of the expected transport fuel demand in the EU by 2050.

When will e-fuel be introduced in Japan?

It’s unclear, industry sources say, but the high cost from consuming vast amounts of energy in production and the expected limited production capacity are likely to push back the introduction.

According to German Energy Agency (Dena), the price of e-fuel is up to €4.5 (¥557) per liter now, but efforts are under way to lower the cost to around €1 in the future.

German carmaker Audi, a pioneer in e-fuel, said in 2018 that it and its partners would set up a new pilot plant for the small-scale production of e-diesel in Switzerland, using hydroelectric power.

A trade ministry panel said in a report in June last year that it would be desirable for Japanese oil refiners to conduct research and development on e-fuel at home and abroad as part of efforts to decarbonize.

But due to land constraints and a high cost of renewable energy, large-scale production of cheap e-fuel or its feedstock hydrogen via renewable power in Japan is seen as difficult. For the introduction of vast amounts of e-fuel, Japan would likely have to rely on imports from big projects overseas that harness solar power from desert climates, for example, industry sources say.

E-fuel will likely be mixed with gasoline or diesel initially due to the limited production capacity, they added.

Source: Japan Times

Japanese automakers eye e-fuel as alternative to EVs

Microsoft reported rising revenues in the past quarter amid strong demand for cloud computing services from pandemic-hit businesses and consumers and big gains in its Xbox gaming operations.

Profits in the quarter ending June 30 fell 15 per cent to US$11.2 billion (RM47.7 billion), the result of increased tax charges compared with a year ago.

Revenue meanwhile rose 13 per cent to US$38 billion, led by strong gains in its cloud computing and its Xbox gaming services.

Chief executive Satya Nadella said Microsoft was equipped to deal with the coronavirus pandemic with its “integrated, modern technology stack.”

“We are seeing businesses accelerate the digitisation of every part of their operations from manufacturing to sales to customer service,” Nadella told a conference call.

Microsoft shares dipped some 2.5 per cent in after-hours trade on the results, which were largely ahead of forecasts.

Its shares have been trading at near record levels amid a surge of some 50 per cent since March, giving it a market value of more than US$1.6 trillion.

Revenue from Microsoft’s “intelligent cloud” division which includes its Azure enterprise business rose 17 per cent to US$13.4 billion in the fiscal fourth quarter.

In the personal computing segment including the Windows operating system, revenues were up 14 per cent to US$12.9 billion.

Within that segment, Xbox gaming service revenues rose 65 per cent and sales for its Surface devices were up 28 per cent.

Xbox hardware revenue increased 49 per cent, as Microsoft boosted the number of consoles sold even with a newer version expected later this year.

“This was a breakthrough quarter for gaming,” Nadella said.

“We saw record engagement and monetisation… as people everywhere turned to gaming to connect, socialise and play.”

Microsoft saw a more modest six percent revenue rise in its productivity and business operations which include the Office software suite and LinkedIn.

Daniel Ives at Wedbush Securities called the Microsoft results “robust,” led by its cloud computing that benefits from the work-from-home trend.

“This current remote work from home environment is further catalyzing more enterprises to make the strategic cloud shift with Microsoft the main beneficiary as evidenced by the solid results this evening,” Ives said.

Earlier yesterday, the workplace messaging platform Slack filed an EU antitrust complaint against Microsoft, alleging that the integration of the “Teams” service into the Office software suit represented unfair competition.

Microsoft said Teams was growing because it offers video, which Slack does not.

Source: AFP

Microsoft sees growth amid pandemic computing demands

The global economy is expected to return to pre-Covid-19 levels by 4Q2020, with developed markets (DMs) recovering by 4Q2021, say Morgan Stanley analysts in a July 15 report.

The report comes on the back of an embattled US, where Covid-19 infections have reached record highs over consecutive days. Six months after the pandemic first reached the US, over 3,754,000 cases have been reported, with at least 137,000 deaths.

That said, the American investment bank remains upbeat on the economy’s resilience. “The status of Covid-19 in the US today differs from the early days of the outbreak: the median age of those infected is lower, treatment options are better and fatality rates have declined,” say Morgan Stanley analysts.

“While we expect rolling and selective lockdowns to manage clusters of infections, we don’t expect a return to the strict statewide [or] nationwide lockdown conditions we saw earlier this year.”

That said, the forecast acknowledges a downside of the possibility of new cases, “particularly in the US”, rising out of control past September.

“Large numbers of Covid-19 cases coinciding with the traditional flu season, which starts in October and accelerates from mid-November onwards, will add to strains on hospital capacity which could lead to another strict lockdown.”

The report outlines three factors that will shape global recovery: virus dynamics, treatment and vaccine developments, and policy support.

“Overall, the global economy is largely on or ahead of the V-shaped trajectory we laid out in our mid-year outlook. Given that many economies have made up [for] significant lost ground over May-June, the pace of the sequential increases in the high frequency indicators is likely moderate, and we see scope for the upside surprises to shift toward Europe and EMs excluding China.”

On the US, Morgan Stanley points out that the country has avoided a return to broad lockdown measures thus far. Asia and Europe as well as select US states have achieved higher levels of economic activity without aggressive lockdowns, helping to sustain improvement in US and global growth, note the report.

The work for a cure is also underway, say analysts, and the progress has been “promising”.

“Results of antibody treatment studies could come in August [or] September and our US biotechnology analyst Matthew Harrison believes that we could see positive Phase III results by early to mid-November,” note analysts.

Last week, Reuters reported that drug-makers partnered with the US government are on track to begin actively manufacturing a vaccine for Covid-19 by the end of the summer.

Citing an anonymous senior US official, the report placed US vaccine production at just four to six weeks away.

“The Trump administration has helped finance the development of four Covid-19 vaccines so far though its Operation Warp Speed Program, which aims to produce 300 million vaccine doses by the end of 2021,” said the July 13 report.

On policy support, timely, sizeable and coordinated easing has helped support the recovery, note Morgan Stanley analysts.

“We expect an additional US$1 trillion ($1.39 trillion) fiscal stimulus in the US (with risks skewed towards a bull case scenario of $1.6-2.4T) and approval for the European Recovery Fund before the August break.” 

Source: The Edge Singapore

Global economy on track to recover by 4Q20, barring Covid-19 spike before flu season – Morgan Stanley

Taiwan Semiconductor Manufacturing Co Ltd (TSMC) has become the world’s largest chip company by market capitalisation, according to a list produced by Yonhap News Agency.

Citing a report from electronics europe News on its website, the U.S.-based Semiconductor Equipment & Materials International (SEMI) said TSMC has overtaken Samsung to become the world’s largest chip company by market capitalisation.

It said the list is based on share values on Thursday July 16, when TSMC’s market capitalisation measured US$306.3 billion.

It said this eclipsed second-ranked Samsung Electronics Co. Ltd. Samsung’s market value was US$261.9 billion.

US fabless graphics processing units (GPU) developer Nvidia in third also overtook Intel with a market value of US$257.7 billion.  

The report said the ranking includes a mixture of chip company types.

TSMC is a pure-play foundry, while Samsung is part foundry, part Integrated Device Manufacturer (IDM) and Nvidia and Qualcomm are fabless chip companies and therefore customers for foundries such as TSMC and Samsung.

The report said Nvidia’s market capitalisation has soared by 75% in the last seven months due to demand for its GPUs in data centers amid the coronavirus pandemic.

Source: The Edge Markets

TSMC overtakes Samsung as world’s largest chip company

Global sales of semiconductor manufacturing equipment by original equipment manufacturers are projected to log a record high revenue of US$70 billion in 2021 on the strength of double-digit growth, said the US-based Semiconductor Equipment & Materials International (SEMI).

In releasing its mid-year total semiconductor equipment forecast at the annual SEMICON West exposition event, SEMI said chip manufacturing equipment are expected to increase by 6% to US$63.2 billion in 2020 from US$59.6 billion in 2019, before logging a record high in 2021.

It said growth across a number of semiconductor segments is expected to power the expansion.

Specifically, SEMI expects the wafer fab equipment segment to rise 5% in 2020 followed by 13% growth in 2021 driven by a memory spending recovery and investments in leading edge and China.

It also said foundry and logic spending, accounting for about half of total wafer fab equipment sales, will see single-digit increases in 2020 and 2021.

“Both DRAM and NAND spending in 2020 will surpass 2019 level and is projected to grow over 20%, respectively, in 2021,” it said.

Meanwhile, SEMI expects the assembly and packaging equipment segment to grow 10% to US$3.2 billion in 2020 and 8% to US$3.4 billion in 2021, driven by advanced packaging capacity build-up.

It also said the semiconductor test equipment market is expected to increase 13%, reaching US$5.7 billion in 2020, and to continue the growth momentum in 2021 on the back of 5G demand.

In terms of region, SEMI said China, Taiwan and South Korea are expected to lead the pack in spending in 2020.

“Robust spending in China in the foundry and memory sectors is expected to vault the region to the top in total semiconductor equipment spending in 2020 and 2021.”

As for Taiwan, after seeing 68% growth of equipment spending in 2019, SEMI expects the country to contract this year but bounce back with 10% growth in 2021, with the region maintaining the second spot in equipment investments.

It also expects South Korea to rank third in semiconductor equipment investments in 2020 by outstripping its 2019 level, making it the third top spender in 2020.

“Korea equipment spending is projected to grow 30% in 2021, powered by the memory investment recovery. Most other regions tracked will also see growth in 2020 or 2021,” it said.

Source: The Edge Markets

SEMI: Chip manufacturing equipment spending to hit record US$70b in 2021 after strong 2020

Germany’s Robert Bosch GmbH, the world’s largest auto parts supplier, said on Tuesday it is consolidating its software and electronics expertise in a single division, in order to get new digitalized vehicle functions on the road significantly faster.

Bosch is the latest large automotive company to shift its emphasis from hardware to software as vehicles continue their transformation into mobile devices that combine transportation with digital services from e-commerce to infotainment — a trend driven heavily by electric car maker Tesla Inc.

Starting in early 2021, Bosch will draw together parts of its automotive electronics, chassis and powertrain divisions and combine them with its car multimedia division, with 17,000 employees in more than 20 countries.

“Supplying software from a single source is our response to the enormous challenge of making cars ever more digitalized,” said Bosch board member Harald Kroeger, a former Daimler AG executive and onetime Tesla board member who is spearheading the new division.

Bosch is joining a move by automakers such as Tesla, Volkswagen AG and General Motors Co and large suppliers such as Aptiv PLC to consolidate many of the vehicle’s functions into a single digital “architecture.” Similar to what Tesla has been doing for more than five years, the consolidated system will oversee computers, control units and sensors, and can be more easily and quickly revised through wireless over-the-air updates.

Bosch said centralized computers and software in the vehicle will link such functions as automated driving, advanced driver assistance, digital dashboards and Internet connectivity.

Bosch supplies key components to many of the world’s automakers, from Tesla to Daimler.

Source: Reuters

Bosch creates single unit to oversee software, systems development

Unmanned traveling cranes unloading steel coils at midnight – which is a normal scene at a hot galvanizing workshop of a cold rolling mill of Baoshan Iron & Steel Co Ltd (Baosteel), Shanghai.

The digitalized workshop, which needs no manual attendance, is able to operate automatically in the off hours, enabling the gigantic factory to function non-stop all day.

“The upgraded smart workshop can improve 30 percent of labor efficiency and 20 percent of capacity,” said an employee of the cold rolling mill. Smart manufacturing has become a sharp weapon for enterprises to improve quality and efficiency, contributing to their stable operation during the COVID-19 epidemic.

The unmanned workshop is just a miniature of the accelerated digitalization of the Chinese manufacturing sector.

According to a white paper on the development of China’s digital economy issued by China Academy of Information and Communications Technology (CAICT) on July 3, China’s digital economy embraced development with greater depth and breadth last year, and witnessed further enhancement of digital technology’s role in promoting the growth and efficiency of traditional industries. A total of 28.8 trillion yuan ($4.12 trillion) of added value was generated by industries through applying digital technologies, a nominal increase of 16.8% year-on-year.

Behind the 28.8-trillion-yuan performance is the in-depth integration of traditional industries and new technologies.

In Lvliang, North China’s Shanxi province, the last 5G base station of Pangpangta Coal Mine was installed after three months of efforts made by the employees of China Unicom, one of the largest telecommunication carriers in China. At present, over 100 kilometers of the shafts at the coal mine are covered with 5G network.

The network largely improves the safety and efficiency of mining activities. “Thanks to the 5G network, we are now able to record videos in the shafts, manage our equipment and conduct smart analysis of the work. Smart mining is no longer a dream,” said an employee of the Huozhou Coal and Electricity Group that runs the coal mine.

The new generation of information technology, including 5G and artificial intelligence, is not benefitting only the mining industry, but also the digitalization of many industrial sectors.

As of the end of 2019, 47.1 percent and 49.5 percent of the production equipment and key manufacturing procedures of Chinese enterprises above designated size had been digitalized, and 41 percent of these enterprises’ digital devices had been connected to the internet. Besides, digital R&D and design tools accounted for 69.3 percent of the total in industrial enterprises. Such performance offered strong support for the in-depth digital transformation of the manufacturing sector.

Behind the 28.8-trillion-yuan performance is the released potential for digital transformation of small and medium-sized enterprises.

For instance, digital upgrading has brought unexpected changes to Qingdao Huanqiu Garments Corporation Limited based in East China’s Shandong province. “By cooperating with the COSMOPlat (the world’s largest mass customization solution platform to support global industry upgrades) of Haier, we established customized service platform. It enabled us to receive customized orders from across the world,” said Yang Zhiqiang, general manager of the garment corporation.

The COSMOPlat mirrors the efforts of China’s industrial internet platforms to help with the digital transition of Chinese SMEs. Statistics indicate that the added value of China’s industrial internet hit 2.13 trillion yuan last year, surging 47.3 percent from a year ago. The integration of industrial internet into different sectors drove an economy of 1.6 trillion yuan, gradually revealing its acceleration for economic development.

Behind the 28.8-trillion-yuan performance are the emerging new business models and vitality for entrepreneurship.

QuadTalent, a digital transformation solution provider recently launched a livestream marketing event for Chinese shoemaker Topscore, innovatively broadcasted how shoes were made on the production line. Customers’ orders, once placed, were directly manufactured, and the manufacturing process was completely visible.

“The invisible barriers between the manufacturer and the clients were thus torn down,” said Min Wanli, CEO of QuadTalent.

The accelerated integration of the new generation of information technology and the manufacturing sector is constantly promoting new products, models and businesses. According to statistics, 35.3 percent, 25.3 percent and 8.1 percent of the Chinese enterprises launched internet-based collaborative manufacturing, service manufacturing and customization, respectively.

“The manufacturing sector, supported by the digital technology on the whole chain, is rising as a new ground for China’s digital economy,” said Sun Ke, director of the digital economy research department of the Policy and Economics Research Institute, CAICT.

Source: China Daily

Digitalization makes manufacturing smarter

A large proportion of companies in Asia Pacific say they are planning to divest to reposition for growth, according to the EY 2020 Global Corporate Divestment Study.

The annual study surveyed over 400 executives in the APAC region, including close to 100 in SEA in the period before and after the onset of the Covid-19 pandemic.

The study found that some 79% of executives in Southeast Asia (SEA), and 75% of executives in Asia Pacific (APAC) have indicated that they are planning to divest within the next two years. The figures came in higher than the 70% and 74% registered just before the pandemic set in.

Over half of SEA executives (65%), and executives in APAC (59%) say they intend to divest their companies in the next 12 months.

Some 53% of SEA executives, and 56% of APAC executives indicate that they are more likely to divest to fund investments in technology. This is an increase from the 37% of respondents (30% for APAC) before the Covid-19 crisis.

With social distancing measures put in place, the pandemic has forced companies to rely on digital means to communicate and function. Divestments, respondents say, are an attractive option to fund such investments.

“This study comes at a pivotal moment when business executives are facing unprecedent[ed] disruption. Interestingly, SEA companies are showing a high intention to divest to help reshape their portfolios and reposition for growth beyond the crisis,” says Abhay Bangi, Asean sell and separate co-lead at EY.

“Sellers are also looking to fund new technology investments, especially digital enablers, as they reimagine their business models and prepare for the new normal,” he adds.

According to EY, companies with more constrained access to capital markets due to the Covid-19 outbreak, may need to turn to divestments. Over half of the respondents – 53% in SEA, and 54% in APAC – say they will need to raise capital in response to the potential impact of Covid-19 on their businesses.

The respondents indicate that they are also reducing debt through divestments, and reshaping their portfolio for a post-crisis world.

Respondents say they may also expect to see an increase in distressed divestitures over the next 12 months for companies that have been hard-hit by the pandemic.

The global outbreak also highlighted the potential vulnerability of global supply chains. According to the survey, 36% of global respondents plan to put more emphasis on their supply chains prior to divesting, up from 27% prior to the COVID-19 crisis.

According to the most recent EY Global Capital Confidence Barometer, 50% of SEA (APAC 67%) respondents say they have already taken active steps to restructure their supply chains.

Asset portfolios will also need to be reshaped for many companies in preparation for a post-COVID-19 world. This is an action 70% of respondents in SEA, and 54% in APAC say they will take, as companies make adjustments based on macroeconomic scenarios moving forward.

According to the survey, companies are actively preparing their assets for sale as part of their medium-term divestment strategies, although respondents say the strategies need to be adjusted.

Around half of respondents (50% in SEA, and 53% in APAC) say the economic impact of the pandemic will increase the price gap between what sellers expect, and what buyers are offering. In addition, respondents say (50% in SEA, and 52% in APAC) say the impact would create more uncertainty on the assets to divest – a sentiment that has increased from 32% in SEA, and 28% in APAC before the Covid-19 pandemic.

“Companies that are considering to sell their assets will benefit from dedicating more time and resources to prepare for scenario planning and assessing the implications of changing demand projections for strategy and capital reallocation,” says Daniel Tan, Asean sell and separate co-lead at EY.

Source: The Edge Singapore

Over 75% of Southeast Asia companies intend to divest in repositioning for growth — EY