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Semiconductor chip shortage could extend through 2022: Marvell CEO

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The semiconductor chip shortage that is hamstringing the production of products ranging from cars and computers to appliances and toothbrushes will extend into 2022 and potentially beyond that, the CEO of semiconductor company Marvell Technology said.

“Right now, every single end market for semiconductors is up simultaneously; I’ve been in this industry 27 years, I’ve never seen that happen,” said Marvell CEO Matt Murphy during a CNBC Technology Executive Council event on Thursday. “If it stays business as usual, and everything’s up and to the right, this is going to be a very painful period, including in 2022 for the duration of the year.”

While several chip producers have announced plans to expand factory capacity, Murphy, who noted his firm is fabless and works with contract manufacturers on its designs, said “that’s not going to kick in until 2023 and 2024 — so there’s this painful period.”

That is a more pessimistic view than some of Murphy’s chip industry peers, who have recently said they expect the shortage to wane next year as new factories open.

“We’ve always gone through cycles of ups and downs, where demand has exceeded supply or vice versa,” AMD CEO Lisa Su said Monday at the Code Conference in Beverly Hills, California. “This time, it’s different.”

Su said that while she expects the first half of 2022 to be “likely tight,” the second half will be less severe as manufacturing capacity opens.

“It might take, you know, 18 to 24 months to put on a new plant, and in some cases even longer than that,” Su said. “These investments were started perhaps a year ago.”

AMD rival Intel is one of the companies that has looked to double down on manufacturing, announcing in March that it would invest $20 billion in two new chip factories in Arizona.

TSMC, which is the biggest manufacturer of semiconductors on contract and works with companies including Marvell, is also building a $12 billion factory in Arizona. The company announced in April that it would invest $100 billion over the next three years to increase factory capacity.

“Massive pockets of inventory”

Murphy said the shortage may be addressed as the demand for certain chip-using products finally falls.

“I think there’s no way, from my point of view, that every segment of the electronics industry stays up and to the right, ripping demand for another 12 months; it doesn’t make any sense,” Murphy said. “I think something’s got to give. And when it gives that should free up the capacity in aggregate for the rest of the industry to go consume and ultimately align it with the true demand.”

Slowing of demand could come from areas such as the personal computer market, Murphy said, citing Micron Technology‘s lower-than-expected sales guidance for its upcoming quarter.

Micron Technology CEO Sanjay Mehrotra said on CNBC’s “Mad Money” on Wednesday that while PC end user demand is strong, “some of the PC customers are not able to fulfill their demand because they’re not getting sufficient all components that are needed to build the PCs.”

More than 300 million personal computers were sold in 2020, according to market intelligence firm IDC, up from 268 million in 2019.

That led some analysts to project upwards of 400 million PC sales in the coming years, but it is a sales trajectory which Murphy expressed doubts about during the CNBC TEC event.

Eventually, Murphy said he expects there to be “massive pockets of over inventory when this is all done.”

“If you look at how many masks or hand sanitizers or toilet paper that is flowing around, there was a panic, and there’s a panic buy on semiconductors right now,” he said. “At some point, you order an order and it goes the other way.”

Auto industry still being hit hard

Any chip inventory relief would be welcomed by the automotive industry, which has perhaps been the hardest hit by the lack of semiconductors.

General Motors said Friday that U.S. vehicle sales during the third quarter fell by more than 30% year-over-year as the chip shortage interrupted production and reduced available inventory at dealerships.

Last month, the automaker shut down production at most of its North American plants again as it dealt with a lack of semiconductor chips. That short supply has forced General Motors to shift its available chips to only its most popular and profitable vehicles, such as pickup trucks.

Overall, U.S. auto sales are expected to drop at least 13% in the third quarter due to disrupted production tied back to the chip shortage, according to industry estimates.

Still, several automakers suggested those issues could be absolved soon.

“The semiconductor supply disruptions that impacted our third-quarter wholesale and customer deliveries are improving,” Steve Carlisle, GM president of North America, said in a statement. “As we look to the fourth quarter, a steady flow of vehicles held at plants will continue to be released to dealers, we are restarting production at key crossover and car plants, and we look forward to a more stable operating environment through the fall.”

Tesla CEO Elon Musk recently called the semiconductor chip shortage a “short-term” problem, saying that “there’s a lot of chip fabrication plants that are being built and I think we will have good capacity by next year.”

Refocusing the supply chain

Murphy said the shortage of semiconductors has shifted some of the thinking as it relates to the supply chain.

“Even before the pandemic hit there was tightening that was going on,” he said. “The chip companies actually have to take a different view now of supply entry, it’s a strategic imperative in terms of how you plan your capacity, your relationships with your suppliers.”

There is more willingness from buyers to pay for capacity in advance or to sign up for take-or-pay agreements, which would mean the company would take the product from the supplier or pay a penalty, Murphy said.

“We’re viewing this as a strategic shift to capacity being strategic, not just an afterthought,” he said.

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N26 triples valuation to $9 billion, now worth more than Commerzbank

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N26’s logo seen displayed on a smartphone.

Rafael Henrique | SOPA Images | LightRocket via Getty Images

LONDON — German digital bank N26 said on Tuesday it has raised $900 million in a new funding round that values the firm at $9 billion.

That’s nearly three times N26’s valuation in its last private fundraising round and means it’s now worth slightly more than Commerzbank, Germany’s second-largest lender. Frankfurt-listed Commerzbank has a market cap of 7.6 billion euros ($8.8 billion).

N26, which counts billionaires Peter Thiel and Li Ka-Shing as investors, raised the fresh cash from Third Point, the hedge fund led by U.S. billionaire investor Dan Loeb, and Coatue, while Dragoneer also invested.

Founded in 2013, N26 is one of several start-ups in Europe seeking to challenge established banks with app-based checking accounts and little to no fees. Competitors include Revolut, which was recently valued at $33 billion, and Monzo.

Maximilian Tayenthal, N26’s founder and co-CEO, said the company plans to spend the extra cash on hiring 1,000 people globally and on launching new features like cryptocurrency trading.

“We want to bring in more people with a focus on product, technology and security,” Tayenthal told CNBC in an interview.

IPO ambitions

N26 now has 7 million customers across Europe and the U.S. and is on track to process $90 billion in transactions this year. The company recently acquired a banking license in Brazil, with a team of 40 employees already on the ground in São Paulo. N26 expects to roll out its app publicly in the country within the next year, Tayenthal said.

N26 now has enough “financial leeway” to prepare for an initial public offering, Tayenthal said, adding that he expects the firm to be “structurally IPO-ready” within the next 12 to 18 months.

“We have no hurry to go public,” Tayenthal said. “With increasing profitability, the kind of money we are raising right now, it really takes away any time pressure.”

With plenty of money available in private equity markets, many tech companies are opting to stay private for longer. Stripe, for example, raised funds at a $95 billion valuation earlier this year, making it one of the most valuable start-ups in the U.S.

Several European fintechs have managed to reach multibillion-dollar valuations amid surging investment activity. Revolut was recently valued at $33 billion in a funding round led by SoftBank, for example.

However, some investors have expressed concern about their ability to make a profit.

N26 is still loss-making, racking up losses of 216.9 million euros in 2019. Its European business lost 110 million euros in 2020, down from 165 million a year earlier. Tayenthal said N26 isn’t under pressure from investors to make a profit anytime soon.

Growing pains

Like other fintech companies, N26 has dealt with growing pains lately. The firm faced outcry from staff at its Berlin office last year, who at the time said that trust in management was at an “all-time low.”

Meanwhile, N26 was fined $5 million by BaFin, Germany’s financial services regulator, for being late to submit suspicious activity reports that are used by authorities to investigate money laundering.

On Tuesday, the bank said it had reached an agreement with BaFin to limit how many customers it onboards each month to a maximum of 50,000 to 70,000. The watchdog is expected to publish the decision in an upcoming order, N26 said.

Tayenthal warned the move is likely to slow N26’s growth significantly in the short term.

“For a couple of months, it will be material to the business,” he said.

As for work culture, Tayenthal says the firm has worked to improve employee representation at the company over the past year. The company has also begun to foster a shift toward flexible work during the Covid-19 pandemic, he added.

“We were actually very strong believers in having everyone in the office as much as possible. We are moving away from that,” Tayenthal said.

“There [are] obviously certain roles where you need to be in the office more regularly. And we also believe in bringing people together occasionally, but we are going to move to a more flexible model.”

N26 isn’t the only fintech embracing remote work. Revolut has said it will allow employees to work overseas for up to 60 days a year. Such moves are in contrast with major Wall Street banks like JPMorgan and Goldman Sachs, which are encouraging workers to return to the office. Some big European lenders are taking a more flexible approach.

N26 said it would expand its staff equity ownership scheme to cover all employees. Germany last year unveiled plans to reform its rules on employee stock options, a typical perk at many tech start-ups.

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Vestas to install prototype of ‘most powerful wind turbine’

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The shadow of a turbine from a wind farm is seen on a field in Brandenburg, Germany. As technology develops, the size of wind turbines is increasing.

Patrick Pleul | picture alliance | Getty Images

Vestas has announced plans to install a prototype of its 15 megawatt offshore wind turbine at a facility in Denmark.

In a statement, the company said the prototype, known as V236-15 MW, would be installed in the second half of 2022 at a test center in Western Jutland, Denmark. It is expected to start generating electricity in the fourth quarter of 2022.

The scale of the V236-15 MW is considerable. According to Vestas, it will stand 280-meters tall, with prototype blades measuring 115.5 meters in length. The prototype will be installed onshore in order to make access easier when it comes to testing.

Read more about clean energy from CNBC Pro

The turbine’s production output is expected to be 80 gigawatt hours a year. Vestas said this would be able to power roughly 20,000 European households, displacing over 38,000 metric tons of carbon dioxide in the process.

While Vestas claims its prototype “will be the tallest and most powerful wind turbine in the world once installed,” other companies are also developing their own massive turbines.

In August, MingYang Smart Energy released details of a huge new offshore wind turbine. Dubbed the MySE 16.0-242, MingYang’s turbine will have a height of 264 meters, a rotor diameter of 242 meters and a blade length of 118 meters. Its capacity will be 16 MW.

The Chinese company is aiming to install a prototype in 2023 before starting commercial production the year after.

Meanwhile, at the beginning of October, GE Renewable Energy said its Haliade-X prototype, which has been installed in the Dutch city of Rotterdam, had started to operate at 14 MW.

“The ability to produce more power from a single turbine means fewer turbines need to be installed at each wind farm,” the company said at the time. “In addition to less capital expenditure, this also simplifies operations and maintenance.”

The development of huge wind turbines has generated excitement in some quarters, but there are undoubtedly challenges too.

According to a recent report from industry body WindEurope, European ports will require new infrastructure and significant investment over the next few years to cope with the growth of the region’s offshore wind sector and its turbines.

In its report, published in May, the Brussels-based organization said Europe’s ports would have to invest 6.5 billion euros (around $7.54 billion) by 2030 in order to support the expansion of offshore wind.

Among other things, the report addressed the new reality of bigger turbines and the effect it could have in relation to ports and infrastructure.

“Upgraded or entirely new facilities are needed to host larger turbines and a larger market,” it said.

“They will need to cater for operating and maintaining of a larger fleet (including training facilities), for upcoming decommissioning projects and to host new manufacturing centres for bottom-fixed and floating offshore wind.”

Further to this, ports would need to “expand their land, reinforce quays, enhance their deep-sea harbours and carry out other civil works.”

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Ford to convert British factory into electric vehicle plant

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A general view of the Halewood Ford transmission assembly plant after Ford announced a 230 GBP investment on October 18, 2021 in Halewood, England.

Christopher Furlong | Getty Images

LONDON – Ford announced Monday that it intends to spend $315 million (£230 million) transforming a factory in northwest England into a site that will make components for electric vehicles.

The vehicle transmission facility in Halewood, Merseyside, will be turned into an electric power unit production plant, the U.S. motor giant said.

Ford stressed that the investment is subject to and includes U.K. government support, which reportedly amounts to £30 million.

“This is an important step, marking Ford’s first in-house investment in all-electric vehicle component manufacturing in Europe,” said Stuart Rowley, president of Ford Europe, in a statement.

“It strengthens further our ability to deliver 100% of Ford passenger vehicles in Europe being all-electric and two-thirds of our commercial vehicle sales being all-electric or plug-in hybrid by 2030,” he added.

Ford said it will start making the electric power units at Halewood in mid-2024, adding that it plans to produce around 250,000 of them at the site each year.

Last year, the U.K. government created a £500 million pot to try to persuade electric vehicle manufacturers and battery makers to expand their operations in the U.K. It wants sales of new petrol and diesel cars to end in the U.K. by 2030.

Elsewhere this year, Nissan and Stellantis, the world’s fourth biggest car maker, have also announced electric vehicle investments at their U.K. plants. BMW already makes the electric Mini at a site in Oxford.

U.K. Business Minister Kwasi Kwarteng said in a statement: “Ford’s decision to build its first electric vehicle components in Europe at its Halewood site is further proof that the UK remains one of the best locations in the world for high-quality automotive manufacturing.”

Ford said 500 jobs at the factory will be safeguarded as a result of the investment.

 

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