Pre-release inventory: welcome to the never-ending shortage of chips
“As I expect the shortages to hit bottom in the second half [of the year], it will take another one to two years before the industry is able to fully catch up with demand, ”CEO Patrick Gelsinger told analysts on Thursday.
Ouch. This is terrible news for automakers, many of whom have been forced to close their factories this year because they cannot get enough chips, limiting the supply of new vehicles at a time when car prices are falling. opportunity is skyrocketing.
Large pickups and SUVs are the best-selling and most profitable vehicles of American automakers. General Motors and other companies have tried to keep manufacturing them, shifting their supply of available chips away from less popular vehicles.
“These most recent programming adjustments are due to temporary parts shortages caused by semiconductor supply constraints in international markets facing restrictions related to Covid-19,” General Motors said. “We expect this to be a problem in the short term.”
Not so fast: While General Motors’ supply problems may ease in the coming weeks, the industry must remain vigilant. Intel and other chipmakers are struggling to expand their production capacity, but new factories can take years to start up.
“The company assumes that the global semiconductor component supply shortage will also affect business in the second half of the year,” he warned investors. “The company also recognizes that visibility on how the supply situation will actually develop is currently low.”
Next step: Smartphones could be the next industry to be crushed, according to Iris Pang, chief economist of ING Greater China.
India gets its first unicorn IPO
India’s first billion dollar tech startup to go public on Friday got off to a good start, reports my CNN Business colleague Diksha Madhok.
“India is a tough market to operate in, but if you are building to be successful in India, you are already exceptional,” Zomato founder Deepinder Goyal wrote in a blog post on Friday. “We are going to focus relentlessly on 10 years and beyond, and we are not going to change our course for short-term profits at the expense of the long-term success of the business.”
As Indian stock markets have traded near all-time highs, Zomato’s listing has been a big test of investor appetite for loss-making tech startups. Zomato reported revenue of 19.93 billion rupees ($ 266 million) for the fiscal year ended March 31, 2021, and a loss of 8.16 billion rupees ($ 109 million).
The country has a ton of so-called unicorns – tech startups valued at over $ 1 billion – but none of them have ever been made public in India or abroad before. Analysts had previously expressed concern that startups – many of which have raised hundreds of millions of dollars from private investors at extremely high valuations – were to start posting consistent profits.
“The huge response to our IPO gives us confidence that the world is full of investors who appreciate the scale of the investments we make and who have a long-term view of our business,” Goyal wrote.
Vaccines = economic recovery?
For the vaccinated, it is tempting to think that the pandemic is under control.
But this is not the case. In most countries of the world, economic recovery still depends on sending more fire to more weapons, and it is not happening fast enough. Meanwhile, the Delta variant continues to spread, including among fully vaccinated people.
See here: IHS Markit lowered its global growth forecast for 2021 by 0.2 percentage point to 5.8%.
“In 2021 and 2022, economic growth will be linked to progress in vaccination against COVID-19. Countries with low vaccination rates face increased risks of the Delta variant of the virus, adding to the urgency of scaling up international vaccination campaigns, ”said Sara Johnson, executive director of the global economy at IHS Markit.
Warning, warning: July PMI data provided by IHS Markit showed that Britain’s economic recovery has slowed significantly, as the Delta variant caused a sharp increase in the number of cases and forced a large number of workers to stay at their home. And this despite one of the highest vaccination rates in the world.
“Those reporting a drop in production mainly commented on severe shortages of raw materials and the impact of the COVID-19 isolation on staff availability,” IHS said in its report.
Coming next week: What does the Federal Reserve think about the threat posed by the Delta variant? The central bank gives its next policy update on Wednesday.