- ‘Risky’ Level Reached in Chip Crisis
- Yellen Asked for Support from the Business World
- Cryptocurrency Ban on Financial Institutions in China
‘Risky’ Level Reached in Chip Crisis
Shortages in the semiconductor industry are worsening, complicating the global economy’s rebound from the coronavirus pandemic.
According to research by Susquehanna Financial Group, the gap between ordering a chip and taking delivery increased to 17 weeks in April, indicating users are getting more desperate to secure supply. That is the most extended wait since the firm began tracking the data in 2017, in what it describes as the “danger zone.”
While the chip supply shortage continues to spread in many sectors, auto manufacturers are expected to suffer $110 billion in losses this year due to declining sales.
In the statement made by Fitch, it was stated that automotive demand is strong. Further, it was noted that manufacturers prioritized the most profitable models and helped balance the impact of a loss of production on cash flow.
In the statement, which pointed out that the chip shortage will probably take longer, it was noted that the effects of this would be more significant than the markets anticipate.
Yesterday Fitch published a statement on the website, noting that: ‘Chip shortages will cost automakers 3.8 million units in lost production, or 5% of estimated annual sales in 2021, Fitch Ratings says. However, automotive demand is strong, and manufacturers prioritize the most lucrative models, helping to offset the impact of lost production on carmakers’ cash flow.”
”Therefore, we do not expect rating pressures resulting from these shortages unless their scale increases materially and demand weakens, ” they added.
Yellen Asked for Support from the Business World
Speaking at the Global Forum event organized by the U.S. Chamber of Commerce on economic recovery, Yellen said their urgent priority is to end the coronavirus outbreak and address its economic devastation.
Noting that they are aware that the return of the infrastructure project is uncertain like any private sector investment, Yellen said that the plan they proposed would have a significant positive return for the American people. She emphasized that they also offered to reorganize the corporate tax system fundamentally and that this would help cover the cost of the proposed public investments.
“We are confident that the investments and tax proposals in the Jobs Plan, taken as a package, will enhance the net profitability of our corporations and improve their global competitiveness. We hope that business leaders will see it this way and support the Jobs Plan,” she said.
“With corporate taxes at a historical low of one % of GDP, we believe the corporate sector can contribute to this effort by bearing its fair share: we propose simply to return the corporate tax toward historical norms,” Yellen said in prepared remarks for the Chamber’s Global Forum on Economic Recovery.
However, following Yellen’s remarks, Chamber CEO Suzanne Clark stated that tax hikes would create an obstacle to the economy’s recovery from the Covid-19 pandemic.
“The data and the evidence are clear; the proposed tax increases would greatly disadvantage U.S. businesses and harm American workers,” said Clark.
More traditional capital funding methods, such as higher fuel taxes and other user fees, have been preferred by the Chamber.
Cryptocurrency Ban on Financial Institutions in China
In China, financial and payment institutions have been banned from conducting cryptocurrency transactions. In addition, investors were warned against speculative transactions.
In the joint statement of the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China, it was reported that banks and online payment channels could not provide a service related to cryptocurrencies to their customers.
The statement emphasized that the sharp movements and speculative transactions in cryptocurrencies had increased recently, and it was stated that this situation threatens the security of individuals’ assets.
“Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order,” they said in the statement.
It was stated that cryptocurrencies are not supported with ‘real value,’ and Chinese laws do not protect transaction contracts.
China has outlawed cryptocurrency exchanges and initial coin offerings, but not cryptocurrency ownership.
According to the statement, the institutions must not provide cryptocurrency saving, trust, or pledging services nor issue financial products related to cryptocurrency.
