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GlobalFoundries announces new Singapore plant

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SINGAPORE — U.S.-headquartered semiconductor manufacturer GlobalFoundries announced Tuesday that it will build a new fabrication plant in Singapore to meet the unprecedented global demand for chips.

The new facility will be developed in partnership with the Singapore Economic Development Board and with co-investments from committed customers, GlobalFoundries said. More than $4 billion will be invested into the development, according to the company.

“Our new facility in Singapore will support fast-growing end-markets in the automotive, 5G mobility and secure device segments with long-term customer agreements already in place,” GlobalFoundries CEO Tom Caulfield said in a statement.

A global shortage of semiconductor microchips is causing havoc, delaying car production and affecting operations at some of the largest consumer electronics manufacturers.

A virtual groundbreaking ceremony for the plant was attended by Singapore’s Transport Minister S Iswaran as well as Mubadala Investment Company Managing Director and Group CEO Khaldoon Khalifa Al Mubarak, among others.

Mubadala, a United Arab Emirates state investment company, owns GlobalFoundries.

“The semiconductor industry is a key pillar of Singapore’s manufacturing sector, and
GlobalFoundries’ new fab investment is testament to Singapore’s attractiveness as a global node for advanced manufacturing and innovation,” Beh Swan Gin, chairman of the Singapore Economic Development Board said in a statement.

Importance of foundries

Semiconductors are critical components that power all kinds of electronics, from smartphones to computers to the brake sensors in cars. Their production involve a complex network of firms that design the chips, companies that manufacture them as well as those that supply the technology, materials and machinery to do so.

GlobalFoundries is a so-called “pure” foundry, with factories in the U.S., Germany and Singapore. Foundries are companies that are contracted by semiconductor firms to build chips. GlobalFoundries manufactures semiconductors designed by the likes of AMDQualcomm and Broadcom.

The global chip shortage has highlighted the importance of foundries, which are investing billions in new production lines and upgraded equipment to meet the surge in demand.

Taiwan Semiconductor Manufacturing Company, or TSMC, is the world’s biggest foundry by market share and revenue, according to TrendForce. It has about 56% market share, followed by Samsung (18%), UMC (7%) and GlobalFoundries (7%).

Semiconductor designers and manufacturers are trying to make chips smaller and better. At the moment, only TSMC and Samsung have the ability to manufacture the most advanced chips.

For his part, Caulfield told CNBC this year that GlobalFoundries is planning to invest $1.4 billion in its foundries to address the shortage. The company plans to expand capacity at all its manufacturing sites.

CNBC’s Kif Leswing contributed to this report.

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U.S. jobs, Australia’s trade data, currencies and oil

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SINGAPORE — Shares in Asia-Pacific looked poised for a lower start on Thursday, following declines overnight on Wall Street that saw the Dow Jones Industrial Average dropping more than 300 points.

Futures pointed to a lower open for Japanese stocks. The Nikkei futures contract in Chicago was at 27,530 while its counterpart in Osaka was at 27,490. That compared against the Nikkei 225’s last close at 27,584.08.

Shares in Australia also looked set for an opening slip, with the SPI futures contract at 7,398.0, versus the S&P/ASX 200’s last close at 7,503.20.

Australia’s trade data for June is set to be out at 9:30 a.m. HK/SIN on Thursday.

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Overnight stateside, the Dow dropped 323.73 points to 34,792.67 while the S&P 500 slipped 0.46% to 4,402.66. The Nasdaq Composite outperformed as it rose 0.13% to 14,780.53.

The moves on Wall Street came after jobs data from payroll processing firm ADP came in well below expectations. The ADP private payroll survey showed a gain of 330,000 jobs for July, well below the consensus estimate of 653,000. The more closely watched Labor Department nonfarm payrolls release is set to be out on Friday.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 92.27 following a recent bounce from below 92.

The Japanese yen traded at 109.49 per dollar following a weakening yesterday from levels below 109 against the greenback. The Australian dollar changed hands at $0.7381, still higher than levels below $0.735 seen earlier in the trading week.

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GM confirms new electric truck and van for commercial customers

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General Motors plans to launch a new all-electric van called the EV600 by the end of this year. The first 500 vehicles will be sold to FedEx.

GM

General Motors on Wednesday confirmed that it will add two new electric vehicles to its commercial lineup in the coming years, outside of its recently launched BrightDrop business.

GM CEO Mary Barra said the automaker plans to add a full-size battery electric cargo van for Chevrolet as well as a medium-duty truck for service and utility vehicles such as school buses and bucket trucks.

“Both will complement BrightDrop and keep our commercial fleet market share growing,” Barra told investors Wednesday during an earnings call. “We’ll share more details about these products as we move forward.”

Barra did not disclose timing or other details about the vehicles. The company is investing in the products as part of a previously announced plan to increase spending on electric and autonomous vehicle by 30% to $35 billion through 2025. But the vehicles aren’t expected to launch until after that timeframe, according to a person familiar with the plans.

The medium-duty truck will be offered as a battery-electric vehicle with GM’s Ultium Cells as well as its Hydrotec fuel cells, Barra said. The van will “exceed the expectations” of its customers who have purchased small GM vans in recent years, she said.

The commercial market is expected to be a major growth area for EVs. Other start-up automakers like Amazon-backed Rivian as well as legacy automakers such as Ford Motor and Daimler have announced plans to enter the segment.

GM announced BrightDrop in January as a new wholistic EV commercial and logistics business, separate from its current commercial business that focuses on small vans and pickups.

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What to know about the Ethereum London hard fork EIP-1559 upgrade

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Ethereum, the blockchain that runs ether, the second-largest cryptocurrency under bitcoin, will undergo a major upgrade this week.

Slated for Thursday, the upgrade, called London, includes Ethereum Improvement Proposal (EIP) 1559, which aims to change the way transaction fees, or “gas fees,” are estimated.

Currently, users must bid for how much they’re willing to pay to have their ether transaction picked up by a miner, which can be extremely costly. Under EIP-1559, this process will be handled by an automated bidding system with a set fee amount that fluctuates based on how congested the network is.

“This is great for Ethereum casual users and makes the protocol less intimidating to use,” Eric Conner, a co-author of EIP-1559 and co-founder of EthHub, tells CNBC Make It.

Another major change under EIP-1559 is that part of every transaction fee will be burned, or removed from circulation, which will begin to reduce the supply of ether and potentially boost its price.

That’s why, in part, “EIP-1559 is one of the most significant upgrades to Ethereum since the network’s launch,” says Meltem Demirors, CoinShares chief strategy officer.

Here’s what investors should know as the upgrade rolls out.

What EIP-1559 means for investors

While EIP-1559 aims to strengthen the ecosystem of Ethereum ⁠— which is known for its smart contract capabilities that power DeFi, or decentralized finance, apps and NFTs, or nonfungible tokens, among other things ⁠— it isn’t likely that there will be much short-term impact on investors, Demirors says.

Long-term, however, the proposal’s co-authors hope to make ether deflationary by reducing the supply. This would be “extremely beneficial” for investors, Conner says, especially “with all the recent talk of inflation in the United States.” It would give crypto investors an option to hold a deflationary asset.

Read more about cryptocurrencies from CNBC Pro

But the EIP-1559 proposal alone will not make ether deflationary, Demirors says.

“Many of these expectations are likely too optimistic in the short-term, and will become more material in the long-term,” she says. That’s because “the nominal amount of gas burned won’t outpace network inflation.”

EIP-1559 also wouldn’t lower gas fee prices or the cost of transactions on the network, which can be very high.

Still, the upgrade is important since it has the potential to improve Ethereum’s user experience and may boost the price of ether.

Other innovations surrounding Ethereum are in the works as well, Demirors says. That includes the planned migration from a proof of work (PoW) model to a proof of stake (PoS) model later this year or early 2022.

Under the PoS model, a person can mine or validate transactions according to how many coins they hold. In a PoW model, miners must compete to solve complex puzzles in order to validate transactions. Supporters of the PoS model say it will use less energy and better the blockchain’s efficiency.

“Taken together, EIP-1559 and the move to PoS will have a major impact on miners and the economics of Ethereum,” Demirors says, “but at the moment, the upgrade alone does not.”

Overall, “I think the most important thing that EIP-1559 shows to investors is that Ethereum is still an actively developed project which refuses to stagnate and become obsolete,” Conner says.

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