Pelosi’s Taiwan trip puts the world's biggest chipmaker back in the spotlight of U.S.-China rivalry | Big Indy News
Connect with us

Business

Pelosi’s Taiwan trip puts the world’s biggest chipmaker back in the spotlight of U.S.-China rivalry

Published

on

Taiwan Semiconductor Manufacturing Company (TSMC) is the biggest contract chipmaker in the world. But it has been thrust in the middle of U.S.-China geopolitical tensions. logo displayed on the screen.

Rafael Henrique | Sopa Images | Lightrocket | Getty Images

U.S. House Speaker Nancy Pelosi may have left Taiwan but the visit has cast a spotlight once again on the island’s critical role in the global chip supply chain and in particular on the world’s biggest chipmaker, Taiwan Semiconductor Manufacturing Co., or TSMC.

The controversial visit, which angered Beijing, saw Pelosi meet with TSMC Chairman Mark Liu, in a sign of how critically important semiconductors are to U.S. national security and the integral role that the company plays in making the most advanced chips.

Semiconductors, which go into everything from our smartphones to cars and refrigerators, have become a key part of the U.S. and China’s rivalry over technology in the past few years. More recently, a shortage of semiconductors has spurred the U.S. to try to catch up with Asia and maintain a lead over China in the industry.

“Taiwan’s unresolved diplomatic status will remain a source of intense geopolitical uncertainty. Even Pelosi’s trip underlines how important Taiwan is for both countries,” Reema Bhattacharya, head of Asia research at Verisk Maplecroft, told CNBC’s “Street Signs Europe” on Wednesday.

“The obvious reason being its crucial strategic importance as a chip manufacturer and in the global semiconductor supply chain.”

Pelosi’s visit to Taiwan and meeting with TSMC show the U.S. can’t do it alone and will require collaboration with Asian companies that dominate the most cutting-edge chips.

TSMC’s crucial role

TSMC is a foundry. That means it manufactures chips that other companies design. TSMC has a long list of clients from Apple to Nvidia, some of the world’s biggest technology companies.

As the U.S. fell behind in chip manufacturing over the last 15 years or so, companies like TSMC and Samsung Electronics in South Korea, pushed ahead with cutting-edge chipmaking techniques. While they still rely on tools and technology from the U.S., Europe and elsewhere, TSMC in particular, managed to cement its place as the world’s top chipmaker.

TSMC accounts for 54% of the global foundry market, according to Counterpoint Research. Taiwan as a country accounts for about two-thirds of the global foundry market alone when considering TSMC alongside other players like UMC and Vanguard. That highlights the importance of Taiwan in the world’s semiconductor market.

When you add Samsung into the mix, which has 15% of the global foundry market share, then Asia really dominates the chipmaking sphere.

That’s why Pelosi made it a point to meet with TSMC’s chairman.

Taiwan invasion fears

China views democratically, self-ruled Taiwan as a renegade province that needs to be reunified with the mainland. Beijing spent weeks telling Pelosi not to come to Taiwan.

During her visit, China ratcheted up tensions by carrying out military drills.

There is a concern that any kind of invasion of Taiwan by China could massively affect the power structure of the global chip market, giving Beijing control of technology it had not previously had. On top of that, there is a fear that an invasion could choke off the supply of cutting-edge chips to the rest of the world.

“Most likely, the Chinese would ‘nationalize it,’ (TSMC) and begin integrating the company, and its technology, into its own semiconductor industry,” Abishur Prakash, co-founder of advisory firm the Center for Innovating the Future, told CNBC via email.

What is the U.S. doing?

How does China stack up?

SMIC is crucial to China’s ambitions, but sanctions have cut it off from the key tools it requires to make the most cutting-edge chips as TSMC does. SMIC remains years behind its rivals. And China’s semiconductor industry still relies heavily on foreign technology.

TSMC does have two chipmaking plants in China but they are producing less sophisticated semiconductors unlike the manufacturing facility in Arizona.

Chipmaking alliances

The U.S. has been looking to form partnerships on semiconductors with allies in Asia including Japan and South Korea as a way to secure supply of the crucial components and maintain a lead over China.

TSMC meanwhile is caught in the middle of the U.S.-China rivalry and could be forced to pick sides, according to Prakash. Its commitment to an advanced semiconductor plant in the U.S. could already be a sign of which country it is siding with.

“In fact, a company like TSMC has already ‘picked sides.’ It’s investing in the U.S. to support American chip making, and has said it wants to work with ‘democracies,’ like the EU, on chip making,” Prakash said.

“Increasingly, companies are striking an ideological tone in who they work with. The question is, as tensions between Taiwan and China increase, will TSMC be able to maintain its position (aligning with the West), or will it be forced to recalibrate its geopolitical strategy.”

Read the full article here

Business

Robinhood to pay a 1% ‘match’ on customer contributions to retail individual retirement accounts

Published

on

Rafael Henrique | Sopa Images | Lightrocket | Getty Images

Robinhood is bringing the concept of a 401(k)-style contribution match to its retail customers who may not have access to a retirement plan through the workplace.

The retail brokerage will pay a 1% “match” on contributions its customers make to a Robinhood individual retirement account, the firm said Tuesday.

The firm is billing it as the first-ever match paid to retail IRA customers (i.e., outside of a workplace retirement plan.) Robinhood has more than 12 million active monthly users and 23 million funded accounts, said Stephanie Guild, head of investment strategy.

More from Personal Finance:
Tech layoffs may not be a bad omen for U.S. economy at large
Men participate less often in 401(k) plans than women, unless they are automatically enrolled
Supreme Court likely to rule that Biden student loan plan is illegal, experts say

It’s rolling out its Robinhood Retirement service broadly in January. Customers may also sign up for a waitlist starting Tuesday and get access on a rolling basis in coming weeks.

A 401(k) match is a common retirement benefit offered by employers that sponsor a workplace retirement plan. It’s a financial incentive for workers who save for retirement.

Some experts view Robinhood’s IRA match as a benefit that may encourage and boost savings, particularly among gig workers, younger investors and people of color — groups more likely not to have access to retirement savings at work.

Others are skeptical whether the relatively small dollar amounts at stake will amount to a positive behavioral shift, and wonder if it’s more a marketing effort to stand out amid ample competition.

“There is no free lunch, ever,” said Philip Chao, principal and chief investment officer at Experiential Wealth in Cabin John, Maryland. “You always need to ask the motivation of the entity or the individual giving you a free lunch.

“Why are you buying me lunch?” he added. “I think that is the central question.”

How the match works

A 401(k) match is generally structured as a share of employee contributions. Let’s say a worker saves 6% of their annual salary in a 401(k); an employer might match 50% or 100% of that dollar total, up to a federal limit.

Robinhood’s concept is similar. The firm will match 1% of new contributions in a pre-tax or Roth account, up to the annual IRA contribution limit. Some IRAs — like SIMPLE IRAs, which are offered through the workplace — allow employers to give a match to employees; the Robinhood match arrangement, however, is not tied to workplace savings.

But there are some key differences in how the match works. A typical 401(k) match is generally a percentage of a worker’s compensation, while Robinhood’s is a share of an investor’s contribution.

There is also a lower annual cap: In 2023, savers can’t contribute more than $6,500 to an IRA, per federal rules. That total includes any match from Robinhood.

If it gets people in the habit of saving, that could be the big impact.

John Scott

director of retirement savings at The Pew Charitable Trusts

So, an investor who contributes $6,435 in 2023 would get about $64.35 in matching funds from Robinhood — for a total balance of almost $6,500.

By comparison, the dollars at stake are much higher in a 401(k) plan. Savers can contribute up to $22,500 to a 401(k) in 2023. Total contributions (including employee contributions and employer match, for example) are capped at $66,000.

There aren’t any contribution or account minimums to get the Robinhood match, and trades don’t carry commissions. Savers can invest in the universe of stocks and investment funds available on Robinhood’s platform, or opt to get a one-time asset-allocation recommendation that includes up to about 10 exchange-traded funds.

Why Americans are finding it more difficult to retire

While investors would receive the match money right away, they must keep their Robinhood IRA account open for at least five years to permanently retain the matching funds — a concept that’s similar to 401(k) vesting.

Rollovers from a 401(k) or IRA to a Robinhood Retirement account don’t count toward the IRA match, the firm said in an e-mail, adding that it is “exploring a separate match option for rollovers in the future.”

Marketing gimmick or positive savings impact?

Robinhood expects the money to add up over time. A long-term investor who gets a $60 match each year and earns a 10% annual return would have an additional $26,000 after 40 years, according to the firm’s analysis.

“I think any sort of offset to [investment] fees or any sort of small addition [to savings], it all adds up over time,” said John Scott, director of retirement savings at The Pew Charitable Trusts.

“I think the big question will be, what’s the behavioral effect?” Scott said.

In other words: To what extent will the financial incentive encourage people to save? Many employers have adopted automatic enrollment to combat relatively low 401(k) participation despite the availability of matching funds.

I can’t imagine trying to build up an IRA business and not having a program like this to kind of fuel the prospecting efforts.

Neil Bathon

founder and partner of FUSE Research Network

To date, most policy initiatives to encourage savings have focused on the workplace. A lack of access to 401(k) plans at work is among the U.S. retirement system’s primary shortfalls. States have passed legislation in recent years establishing automatic-enrollment IRAs for workers who don’t have a retirement plan at work, for example.

“Maybe it’s just a marketing gimmick, the 1%,” Scott added. “But if it gets people in the habit of saving, that could be the big impact.”

Retirement experts likened the match to banks that used to offer “free” toasters and other perks to customers who opened a certificate of deposit.

Here, Robinhood is likely aiming to grow its customer base — and then likely make money elsewhere by trying to sell them to other services, experts said.

Robinhood has seen growth reverse as a pandemic-era boom in retail trading lost steam. The firm has announced a few tranches of layoffs this year.

“It just keeps getting harder to get in front [of customers] and break through the clutter,” said Neil Bathon, founder and partner of FUSE Research Network, an asset-management market researcher. “I can’t imagine trying to build up an IRA business and not having a program like this to kind of fuel the prospecting efforts.”

Robinhood alluded to meeting demand for current customers and expanding its footprint, but declined to offer a forecast for growth or total cost.

“We have heard from our existing customer base that they have a strong interest in Robinhood expanding into the Retirement space,” the company said in an e-mail. “We want to provide great value for an expanded base of customers through a platform that supports investing for the long term, and Retirement is just the beginning.”

It may be difficult to entice people to take the steps to open an account when the incentive might amount to $50 or $60 a year in dollar terms, Chao said.

“One percent sounds nice, but do you think that 1% will incentivize people to save anyway, when 3% doesn’t get them to save in a 401(k)?” he said.

Read the full article here

Continue Reading

Business

Indonesia to ban insults against president under new criminal code

Published

on

Indonesia has legislated to outlaw insults against the president and sex outside marriage as part of an extensive overhaul of its criminal code.

The revised code, which was approved by the parliament on Tuesday, will apply to both foreigners and locals in the south-east Asian nation, the world’s third-biggest democracy and home to its biggest Muslim population.

Activists, business figures and analysts said the revised code was a setback for human rights and that it threatened Indonesia’s attempts to improve its global reputation and attract more foreign investment for its fast-growing economy.

The sweeping changes include new defamation articles and a bar on insulting the president. Blasphemy and promoting apostasy also become criminal offences.

President Joko Widodo, or “Jokowi” as he is known in his country, in 2019 suspended plans for revision of the code, which is based on Dutch colonial law from 1918, after widespread protests by students and activists against what they said was infringement of their civil rights.

However, there were only a few small protests this week against the revisions, which received less attention than the 2019 proposals.

Andreas Harsono, an Indonesia researcher for Human Rights Watch, said the new legislation could endanger sexual, religious and ethnic minorities and was a “sad day for freedom of expression and press freedom”.

“The problem with this oppressive law is it cannot be broadly enforced,” Harsono said. “It can only be enforced selectively, meaning that it will provide an avenue for extortion. It is a political weapon to jail opponents and creates an atmosphere of fear.”

The revised code criminalises sex outside marriage and cohabitation between unmarried couples, with punishment including fines and prison time. However, any charges must be filed by a parent, spouse or children.

Indonesia’s justice ministry defended the new code as protecting the institution of marriage and national values.

The revisions are expected to be implemented over the next three years. Opponents could seek to petition the constitutional court to revoke some of the articles, but analysts said such an effort was unlikely to succeed.

The US ambassador to Indonesia, Sung Kim, said in a speech on Tuesday the new rules could have a “negative impact on the investment climate”.

Other observers argued that Widodo needed to replace the current antiquated criminal code and that an ebbing in the political prominence of more extremist Islamic groups made this a good time to do so.

Kevin O’Rourke, a Jakarta-based analyst and principal at consultancy Reformasi Information Services, said there had been dispute over changes to the criminal code since the 1960s.

“This is actually not as broad as feared in terms of anybody being able to file charges,” O’Rourke said of the criminalising of sex outside marriage. “[The revision] goes against the grain of international trends, but is being denounced by Islamic hardline groups advocating for stricter changes.”

Read the full article here

Continue Reading

Business

Oversight Board Criticizes Meta for Preferential Treatment

Published

on

Meta was harshly criticized by an internal oversight board on Tuesday for policies that give celebrities, politicians and business partners special treatment compared with the vast majority of Facebook and Instagram users.

People with a high number of followers have been able to say and share things on Facebook and Instagram that would otherwise be quickly removed for violating company policies, according to the Oversight Board, created by the company to adjudicate thorny policy questions related to free speech, human rights and content moderation.

A program called cross-check ensured that high-profile users received additional review from a human moderator before they had their posts removed for running afoul of Meta’s terms of service. In a report, the oversight board criticized Meta for a lack of transparency about the program, which the board said provided “unequal treatment” to Facebook and Instagram’s most influential and powerful users at the expense of its human rights and company values. Meta has taken as long as seven months to reach a final decision on a piece of content posted by an account in the cross-check program, the report said.

“The board is concerned about how Meta has prioritized business interests in content moderation,” the report said. The program, it said, “provided extra protection for the expression of certain users.”

The board began investigating the cross-check program last year after its existence was reported by The Wall Street Journal and a whistle blower, Frances Haugen.

Nick Clegg, Meta’s vice president of global affairs, said Tuesday that the cross-check system was created to prevent erroneously removed posts from having an outsize impact. He said the company would respond to the oversight board’s report within 90 days.

Read the full article here

Continue Reading
Advertisement

Newsletter

Subscribe to our newsletter to get the latest news directly to your inbox.


Trending