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Amazon shares fall after Trump bashes company for fourth time in a week



President Donald Trump took to Twitter for the fourth time in one week to bash e-commerce company Amazon on Tuesday.

This time, the president reinforced his assessment that Amazon’s business is costing taxpayers “many billions of dollars” through subsidized rates at the United States Post Office.

“I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy,” Trump tweeted. “Amazon should pay these costs (plus) and not have them bourne [sic] by the American Taxpayer.”

Shares of Amazon turned negative shortly after the president’s tweet. At the latest reading, shares were down 0.7 percent.

The president has claimed in prior Twitter messages that the Post Office loses “a fortune” thanks to Amazon’s large shipping volumes while the company benefits from the government’s postal service.

Many would argue, however, that Amazon has been a positive for the postal service, which has suffered from bleak finances for more than a decade as other means of communication replace first class mail.

Still, Trump categorized Amazon’s relationship with the post office as a “scam” on Saturday.

The president’s extraordinary criticism of Amazon has also centered on the company’s policy of not collecting state and local taxes from the vast majority of its third-party sellers. The practice, Trump alleges, puts “many thousands of retailers” out of business, unable to survive against Jeff Bezos’ ever-growing consumer titan.

The president underscored his feelings toward the company in a tweet Monday morning, saying: “Our fully tax paying retailers are closing stores all over the country … not a level playing field!”

Amazon already collects state sales taxes on products it sells directly, but the company does not collect state sales taxes for its third-party platform outside of a handful of states. The third-party business represents roughly half of Amazon’s unit sales, according to multiple Wall Street firms.

Shares fell last week after Axios reported last Wednesday that Trump was considering changes to the retailer’s tax treatment, in part because of anger over how Amazon has hurt the commercial real estate industry because of its negative effect on brick-and-mortar retailers.

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Powell says it’s ‘highly unlikely’ the Fed will raise rates this year, despite stronger economy



Federal Reserve Chairman Jerome Powell

Kevin Lamarque | Reuters

Despite what he sees as a rapidly recovering economy, Federal Reserve Chairman Jerome Powell on Sunday reaffirmed the central bank’s commitment to keep loose monetary policy in place.

That includes a statement of near-certainty that interest rates won’t be going anywhere as inflation remains tame and millions of Americans remain in need of assistance as the nation rebuilds from the damage caused by the Covid-19 pandemic.

“I think it’s highly unlikely that we would raise rates anything like this year,” Powell told “60 Minutes” journalist Scott Pelley in a broadcast Sunday evening.

“I’m in a position to guarantee that the Fed will do everything we can to support the economy for as long as it takes to complete the recovery,” he added.

That support includes near zero short-term borrowing rates and $120 billion a month in bond purchases put in place following a sharp rebound from the plunge in activity between February and April 2020.

Though the economy has recovered more than 13 million jobs since the depths of the crisis, there remain about 9 million more still sidelined. As states and localities have loosened restrictions, more people have gone back to work.

But Powell said more needs to be done, particularly for those in the lower income brackets who have suffered the most.

“We don’t have the answer to everything, but the job that we do for the benefit of the public is incredibly important, and we do understand that if we get things right, we can really help people,” he said. “If the people who are at the margins of the economy are doing well, then the rest of it will take care of itself.”

In their most recent economic projections, Fed officials saw GDP rising in 2021 by 6.5%, which would be the fastest growth rate since 1984.

“We and a lot of private sector forecasters see strong growth and strong job creation starting right now,” Powell said. “Really, the outlook has brightened substantially.”

That doesn’t mean there are not substantial risks.

Powell said he worries about rising Covid cases, and said people should continue to wear masks and physically distance to keep the recovery going. While he said he does not worry about financial system stability, he is concerned about ongoing cyberattacks that one day could cause serious damage.

One thing he’s not worried about is inflation, which is running around 1.6% now and remains well below the Fed 2% target. The central bank has pledged to keep rates low even if inflation would run somewhat above the target rate for a period of time.

When it comes to inflation, Powell said he “like to see it on track to move moderately above 2% for some time. When we get that, that’s when we’ll raise rates.”

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Asia-Pacific stocks struggle for direction; investors watch Alibaba shares after massive fine



Chinese regulators slapped Alibaba with a 18.23 billion yuan ($2.8 billion) fine in an anti-monopoly probe of the tech juggernaut.

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US semiconductor policy looks to cut out China, secure supply chain



A close up image of a CPU socket and motherboard laying on the table.

Narumon Bowonkitwanchai | Moment | Getty Images

GUANGZHOU, China — If you talk about chipmaking, two companies usually spring to mind — Taiwan’s TSMC and South Korea’s Samsung Electronics. The two Asian firms combined control more than 70% of the semiconductor manufacturing market.

The U.S., which was once a leader, lags behind in this space after monumental shifts in the business models in the semiconductor industry.

But a global semiconductor shortage and geopolitical tensions with China have bolstered Washington’s scrutiny of the supply chain, which is concentrated in the hands of a small number of players, and has created a drive to bring manufacturing back to American soil to regain leadership.

The U.S. has earmarked billions of dollars and is reportedly looking at alliances with other nations.

Semiconductors are critical to everything from cars to the smartphones we use. And they have also been thrust into the center of U.S.-China tensions.

“One characteristic of US policy is that it has heavy emphasis on China. This has now become a national imperative to enhance self-sufficiency in semis production, accelerated by the recent chip shortages and the ‘tech war’ against China,” Bank of America said in a note published Wednesday.

How Asia came to dominate manufacturing

The key to understanding the geopolitics of semiconductors, which countries dominate and why the U.S. is trying to boost its domestic industry, lies in coming to grips with the supply chain and business models.

Companies like Intel are integrated device manufacturers (IDMs), which design and manufacture their own chips.

Then there are the fabless semiconductor firms, which design chips but outsource manufacturing to so-called foundries. The two biggest foundries are TSMC in Taiwan and Samsung Electronics in South Korea.

Over the last 15 years or so, companies began shifting to this fabless model. TSMC and Samsung took advantage as they began to invest heavily in leading-edge manufacturing technology. Now if a company like Apple wants to get the latest chip for their iPhone produced, they have to turn to TSMC to do it.

TSMC has 55% foundry market share and Samsung has 18%, according to data from Trendforce. Taiwan and South Korea collectively have 81% of the global market in foundries, highlighting the dominance and reliance on these two countries as well as on TSMC and Samsung.

“In 2001, 30 companies manufactured at the leading edge however as semi manufacturing grew in cost and difficulty, this number has fallen to just 3 firms” — TSMC, Intel and Samsung, according to a note from Bank of America published in December.

However, Intel’s manufacturing process is still behind that of TSMC and Samsung.

“Taiwan and South Korea have become leaders in wafer fabrication which requires massive capital investment; and part of their success over the last 20 years is due to supportive government policies and access to skilled labour forces,” Neil Campling, head of technology, media and telecoms research at Mirabaud Securities, told CNBC by email.

The complex supply chain

What is the U.S. planning and why?

So, the U.S. is not necessarily falling behind in the semiconductor industry as a whole. Some of its firms are integral to the supply chain. But one area it has lagged in is manufacturing.

Under President Joe Biden, the U.S. is looking to regain leadership in manufacturing and secure supply chains.

In February, Biden signed an executive order which involves a review of the semiconductor supply chain to identify risks. As part of a $2 trillion economic stimulus package, $50 billion was earmarked for semiconductor manufacturing and research. A bill known as the CHIPS for America Act is also working its way through the legislative process and aims to provide incentives to enable advanced research and development and secure the supply chain.

Meanwhile, U.S. firm Intel last month announced plans to spend $20 billion to build two new chip factories and said it will act as a foundry. This could offer a domestic alternative to the likes of TSMC and Samsung.

Part of that scrutiny on the supply chain has been prompted by a global chip shortage that’s hit the automotive industry. The coronavirus pandemic accelerated demand for personal electronics like laptops and games consoles just as industrials and automakers wound down production. But a rebound in production plus heightened demand for chips in various sectors has triggered a shortage.

The concentration of production in the hands of TSMC and Samsung has worsened the problem.

The semiconductor supply shortage “has probably made the U.S. administration realise they aren’t in control of their own destiny,” according to Mirabaud Securities’ Campling.

But there are also geopolitical factors at play, informing U.S. policy.

“Over the longer-term, the Biden administration wants to continue to encourage both foreign and U.S. semiconductor manufacturers to expand capacity in the U.S., to reduce dependence on manufacturing in geopolitically sensitive areas such as Taiwan, and create high paying engineering jobs in the U.S.,” Paul Triolo, head of the geo-technology practice at Eurasia Group, told CNBC by email.

Part of the U.S. policy in the semiconductor space involves forming alliances. Earlier this month, the Nikkei reported that the U.S. and Japan will cooperate on supply chains for critical components like semiconductors. The two sides will aim for a system where production is not concentrated on specific regions like Taiwan, the Nikkei said.

“The U.S. is trying to cut China out of the equation,” Abishur Prakash, a geopolitical specialist at the Center for Innovating the Future, a Toronto-based consulting firm, told CNBC via email.

“It is trying to redesign how the world’s chip industry works in the face of a rising China. This is not necessarily about self-sufficiency, although Washington would welcome this. Instead, it is about building up critical sectors — from AI to chips — that are insulated from geopolitics. And, because several nations share U.S. concerns about China, the U.S. is taking a chunk of the world with it.”

China’s push for self-sufficiency

China meanwhile is trying to push self-sufficiency amid U.S. moves to cut it off from key supplies. Over the past few years, China has tried to boost its semiconductor industry through huge investments and incentives like tax breaks.

But China remains well behind everywhere else and that goes back to the supply chain. SMIC is China’s largest foundry, a competitor to the likes of TSMC and Samsung. But SMIC’s technology is several years behind that of its Taiwan and South Korean rivals.

And even if it wanted to advance, it’s extremely difficult due to U.S. sanctions and actions. Washington put SMIC on a blacklist known as the Entity List last year. That restricts American companies from exporting certain technology to SMIC, holding back the chipmaker due to the key role U.S. firms play in the semiconductor supply chain. Roughly 80% or more of SMIC equipment comes from U.S. vendors, according to Bank of America.

Last year, Reuters reported that the U.S. pressured the Netherlands government to stop the sale of an ASML machine to SMIC. The Dutch firm is the only company that makes the so-called extreme ultraviolet (EUV) machine that is needed to make the most cutting-edge chips. That machine has still not been shipped to China.

“If China wants to manufacture leading edge chips, it is virtually impossible without equipment from the US or allies,” Bank of America said in its December note.

“We remain skeptical about a meaningful progress in China’s progress due to US restrictions as it is materially behind in IP (intellectual property) and has limited access to IP given the US restrictions,” Bank of America said in a separate note last week.

“Our team expects a delay of around 5+ years before it makes a more significant progress.”

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