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Lenovo Reports First Revenue Drop in 10 Quarters Amid Weakening Global PC Market

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By Reuters | Updated: 3 November 2022

China’s Lenovo Group reported its first revenue decline in 10 quarters as a pandemic-fuelled computer sales boom comes to an end, with sales especially falling in China as COVID lockdowns took a toll.

The world’s largest maker of personal computers said on Thursday that total revenue during the July-September quarter was $17.09 billion (roughly Rs. 1.41 lakh crore), down 4 percent from the same quarter a year ago, but coming above an average Refinitiv estimate of $16.74 billion (roughly Rs. 1.38 lakh crore) drawn from seven analysts. That was the first decline since the March 2020 quarter.

Lenovo had already seen growth for its first-quarter revenue grind to a halt, at only 0.2 percent. Together with its second-quarter result, the company reported a 2 percent decline for its fiscal first half.

Lenovo’s struggles reflect a weakening market for PCs globally. Global PC shipments declined 15 percent year-over-year in the third quarter, according to a report published by data firm IDC last month.

But the company continues its trajectory towards better profit as it expands its non-PC business. Net income attributable to shareholders for the quarter rose 6 percent to $541 million (roughly Rs. 4,500 crore).

Lenovo is hit particularly hard in China due to the country’s Covid containment measures, the company said. Revenue from China fell 12 percent from the same quarter last year.

Yang Yuanqing, Lenovo’s chairman and chief executive, told Reuters in an interview that the revenue decline in China is due to weakening demand from commercial clients rather than consumers, unlike in many other markets around the world where consumer demand is being dampened by rising inflation.

“In China, consumer is better than commercial,” he said, “Actually in the rest of world, it’s the reverse (where) consumer is impacted by inflation.”

But Yang said that Lenovo’s factories in China have not been impacted by the country’s battle with Covid.

“Most factories are still operating very well,” he said.

The IDC report showed that Lenovo, HP, and Dell saw year-over-year shipments fall by 16 percent, 28 percent and 21 percent, respectively. The Chinese company maintained its leadership in the global PC market with a 22.7 percent share. Lenovo did not give shipment numbers.

Chipmaker Qualcomm expects a slump in sales as its forecast for holiday-quarter revenue fell about $2 billion (roughly Rs. 16,600 crore) short of Wall Street estimates.

Lenovo has been working over the past several quarters to improve its non-PC businesses such as smartphones, servers and information technology services, which together now make up about 37 percent of its revenue.

Yang said he expects Lenovo’s non-PC business will account for more than half of the company’s revenue in the future.

When asked about recent US government export controls on semiconductors to China, Yang said it will have a limited impact on Lenovo’s business.

“It will have an impact only on the high-performance computers. But that business accounts for a very tiny portion of our total revenue,” he said.

On semiconductor supply, Yang said that the company is seeing a normal supply of chips for PCs and smartphones but shortages persist in its infrastructure business.

© Thomson Reuters 2022

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TSMC Expects Annual Revenue of $10 Billion From US Chip Plants; Apple to Use New Chips, Tim Cook Says

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TSMC says it is more than tripling its planned investment in the chip factories to $40 billion (roughly Rs. 330 crore)
By Reuters | Updated: 7 December 2022

TSMC on Tuesday estimated annual revenue of $10 billion when its two planned chips fabrication plants open in Arizona. The Taiwanese chipmaker said it was more than tripling its planned investment in the factories to $40 billion. The first fab will be operational by 2024 while the second facility nearby will produce advanced chips by 2026. US President Joe Biden and others, including the CEOs of major TSMC customers, are attending a “tool-in” ceremony for the symbolic moving of the first equipment onto the shop floor of the new $12 billion (roughly Rs. 99 crore) facility.

“When completed with both fabs, we will manufacture over 600,000 wafers a year, representing $10 billion (roughly Rs. 82 crore) yearly revenue and with our customers product sales over $40 billion (roughly Rs. 330 crore) a year,” said TSMC Chief Executive Mark Liu.

The projects will result in 31,000 construction jobs and “create an additional 13,000 high pay high tech jobs including the 4,500 direct TSMC employees,” Liu added.

Apple, Nvidia, and Advanced Micro Devices, all major TSMC customers, said they expected their chips to be made in the new Arizona plants.

“We work with TSMC to manufacture the chips that help power our products all over the world. And we look forward to expanding this work in the years to come as TSMC forms new and deeper roots in America,” said Apple CEO Tim Cook.

“AMD expects to be a big customer, of both fabs and we’re committed to working closely with TSMC and the entire ecosystem,” said AMD CEO Lisa Su.

At least a dozen major cranes are still set up around the first factory which is dubbed Fab 21. The factory is in the northern part of Phoenix, surrounded by brown hills and empty land.

With the new TSMC factory in the backdrop with the flag and a drape reading “A Future Made in America Phoenix, AZ,” TSMC executives led by founder Morris Chang, 91, along with CEOs of key machine suppliers and Apple, Nvidia and AMD, toasted the factory opening with sparkling wine.

At least a dozen major cranes are still set up around the first factory which is dubbed Fab 21. The factory is in the northern part of Phoenix, surrounded by brown hills and empty land.

With the new TSMC factory in the backdrop with the flag and a drape reading “A Future Made in America Phoenix, AZ,” TSMC executives led by founder Morris Chang, 91, along with CEOs of key machine suppliers and Apple, Nvidia and AMD, toasted the factory opening with sparkling wine.

© Thomson Reuters 2022

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US Senators Lobbying for Ban on Government Deals With Chinese Chipmakers: Report

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By Reuters | Updated: 18 November 2022

US Senate Majority Leader Chuck Schumer and Republican Senator John Cornyn are lobbying hard for a ban on government business with Chinese chipmakers, Politico reported on Thursday, citing three people familiar with the matter. The senators want to get their amendment which blocks federal access to semiconductor products and services made by Chinese firms into the final version of this year’s National Defense Authorization Act (NDAA), the report said.

The measure would broaden provisions in Section 889 that already prohibit government agencies from doing business with Chinese telecommunications companies or contractors who use their technologies, according to a report by Politico.

Schumer and Cornyn got their proposal added to the Senate NDAA last month in the October managers package and are now working to convince their colleagues, the report added.

The fiscal 2023 NDAA must pass the Senate and House of Representatives later this year before it can be sent to the White House for US President Joe Biden to sign into law.

Last month, the Biden administration published a sweeping set of export controls, including a measure to cut off China from certain semiconductor chips made anywhere in the world with US tools.

On August 9, Biden signed a landmark bill to provide $52.7 billion (roughly Rs. 430 crore) in subsidies for US semiconductor production and research and to boost efforts to make the US more competitive with China’s science and technology efforts.

At the time, Biden had touted investments that chip companies are making even though it remains unclear when the US Commerce Department will write rules for reviewing grant awards and how long it will take to underwrite projects.

The legislation authorises $200 billion (roughly Rs. 16,34,700 crore) over 10 years to boost US scientific research to better compete with China. Congress would still need to pass separate appropriations legislation to fund those investments.

© Thomson Reuters 2022

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Nvidia Working With Microsoft to Build ‘Massive’ Cloud AI Computer Using Several Thousand GPUs

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By Reuters | Updated: 17 November 2022

US chip designer and computing firm Nvidia on Wednesday said it is teaming up with Microsoft to build a “massive” computer to handle intense artificial intelligence computing work in the cloud.

The AI computer will operate on Microsoft’s Azure cloud, using tens of thousands of graphics processing units (GPUs), Nvidia’s most powerful H100 and its A100 chips. Nvidia declined to say how much the deal is worth, but industry sources said each A100 chip is priced at about $10,000 (roughly Rs. 8,15,400) to $12,000 (roughly Rs. 9,78,500), and the H100 is far more expensive than that.

“We’re at that inflection point where AI is coming to the enterprise and getting those services out there that customers can use to deploy AI for business use cases is becoming real,” Ian Buck, Nvidia’s general manager for Hyperscale and HPC told Reuters. “We’re seeing a broad groundswell of AI adoption … and the need for applying AI for enterprise use cases.”

In addition to selling Microsoft the chips, Nvidia said it will partner with the software and cloud giant to develop AI models. Buck said Nvidia would also be a customer of Microsoft’s AI cloud computer and develop AI applications on it to offer services to customers.

The rapid growth of AI models such as those used for natural language processing have sharply boosted demand for faster, more powerful computing infrastructure.

Nvidia said Azure would be the first public cloud to use its Quantum-2 InfiniBand networking technology which has a speed of 400 gigabits per second. That networking technology links servers at high speed. This is important as heavy AI computing work requires thousands of chips to work together across several servers.

© Thomson Reuters 2022

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Micron Begins Mass Production of Advanced DRAM Memory Chip in Japan

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By Reuters | Updated: 16 November 2022

Memory chip maker Micron on Wednesday kicked off mass production of its new high-capacity low-power 1-beta dynamic random access memory (DRAM) chips at its plant in Hiroshima, Japan. Both the US Ambassador to Japan, Rahm Emanuel, and Japanese officials attended a ceremony in Hiroshima to mark the start of the large-scale output, highlighting the growing political importance of semiconductors for the two allies.

Earlier this month, Micron said it started shipping samples of its most advanced DRAM chip based on the LPDDR5X, low-power double data rate 5X, standard to smartphone makers to test out.

At the time, the company said it was able to get to the 1-beta manufacturing technology without using the expensive extreme ultraviolet, or EUV, lithography tools, which are used in the latest processor chips in top-end smartphones.

The production of Micron’s most advanced chip, which can store a third more data than older chips, comes as Japan tries to revive and modernise its once-mighty chip industry.

Emanuel said on Twitter that Wednesday’s launch was an example of how the two countries “are committed to strengthening semiconductor supply chains” and national security together.

The former Chicago mayor who has focused on bolstering commercial ties between both countries to safeguard supply chains and cut reliance on China.

Tokyo worries that growing trade friction between the United States and China could cause shortages of semiconductors needed by automakers and other manufacturers.

The Japanese government in September offered Micron a JPY 46.5 billion (roughly Rs. 2,709 crore) to boost production capacity at its plant.

In July it gave a JPY 93 billion (roughly Rs. 5,417 crore) subsidy to rival memory chip makers Kioxia and Western Digital to help it expand output at their joint factory in Japan.

DRAM chips are widely used in data centres, personal computers and other devices.

© Thomson Reuters 2022

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Mahindra Q4 Profit Up 46 Percent as Vehicle Sales Soar 75 Percent YoY to Over 1.7 Lakh Units

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By Reuters | Updated: 11 November 2022

Mahindra reported a better-than-expected second-quarter profit on Friday, driven by strong demand for its passenger vehicles and farm equipment. The Indian automaker posted a sharp 46 percent jump in profit as total vehicles sold soared 75 percent from a year ago to 174,098 units, while it had open bookings for more than 260,000 sports utility vehicles. Mahindra reported a profit after tax of 20.9 billion Indian rupees for the three months ended September 30, up from 14.33 billion a year earlier.

Analysts were expecting a profit of Rs, 1,988 crore, according to Refinitiv IBES data.

The company’s farm equipment sector saw the highest second-quarter volume while the auto segment achieved the highest-ever quarterly volume, Mahindra said in a statement, adding that exports for both vehicles and tractors remained strong.

Mahindra reported a better-than-expected second-quarter profit on Friday, driven by strong demand for its passenger vehicles and farm equipment. The Indian automaker posted a sharp 46 percent jump in profit as total vehicles sold soared 75 percent from a year ago to 174,098 units, while it had open bookings for more than 260,000 sports utility vehicles. Mahindra reported a profit after tax of 20.9 billion Indian rupees for the three months ended September 30, up from 14.33 billion a year earlier.

Analysts were expecting a profit of Rs, 1,988 crore, according to Refinitiv IBES data.

The company’s farm equipment sector saw the highest second-quarter volume while the auto segment achieved the highest-ever quarterly volume, Mahindra said in a statement, adding that exports for both vehicles and tractors remained strong.

Earlier, rival Maruti Suzuki India reported a four-fold jump in quarterly profit, while Tata Motors saw its loss narrowing from a year ago on strong demand.

Meanwhile, German-based Mutares has offered to acquire a controlling stake of 80 percent in Mahindra-owned Peugeot Motocycles, the companies said on Thursday.

Earlier this week, Mahindra announced that it has tied up with three electric vehicle infrastructure partners – Jio-bp, Statiq, and Charge+Zone – to offer charging solutions for its upcoming range of passenger electric vehicles. With these partnerships, Mahindra EV users will get seamless access to a robust fast charging infrastructure and e-mobility solutions spanning across discovery, availability, navigation and transactions, the Mumbai-based automaker said.

© Thomson Reuters 2022

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Rapidus Project Gains Japanese Government Backing Ahead of Goal to Mass Produce Advanced Chips by 2027

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By Agence France-Presse | Updated: 11 November 2022

The Japanese government will pour half a billion dollars into a new project to develop and make next-generation microchips, chief cabinet secretary Hirokazu Matsuno said Friday.

Eight major companies including Sony, SoftBank, Toyota, and telecoms giant NTT have joined forces for the venture, Japanese media reports said.

The new firm, named Rapidus, will develop and mass produce next-generation semiconductors by 2027, according to major media outlets including national broadcaster NHK and the Mainichi Shimbun.

The pandemic has fuelled a global shortage of memory chips, with governments scrambling to secure supplies as carmakers and tech companies have been forced to make production cuts.

Each company has invested around JPY one billion (roughly Rs. 57 crore), with MUFG Bank investing JPY 300 million (roughly Rs. 17 crore), according to the industry ministry.

The investor companies are expected to officially announce the project later on Friday.

The ministry will grant JPY 70 billion (roughly Rs. 4,000 crore) to Rapidus to lead a research and development project for next-generation semiconductors, Matsuno said without elaborating.

“Semiconductors are a key technology that supports digitalisation and decarbonisation,” Matsuno said at a regular briefing.

“We hope these steps will help improve the competitiveness of our country’s semiconductor industry.”

The chip shortage has prompted calls for the government and businesses to secure semiconductor supplies for Japan’s economic security, as geopolitics become increasingly volatile – especially concerning Taiwan, which has a huge chip-producing capacity.

The United States recently introduced new measures to limit China’s access to high-end semiconductors with military uses, a move that has wiped billions from chip companies’ valuations worldwide.

The German economy ministry also has recommended that the sale of a chip factory to a Chinese-owned firm should be blocked as it poses a security threat, government sources said Tuesday.

Last year, Taiwanese chip giant TSMC and Sony said they would tie up on a new $7 billion (roughly Rs. 400 crore) plant in Japan.

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