Business

SAN FRANCISCO — US chip titan Intel said on Tuesday it will invest $20 billion in building two new plants in Arizona as part of a plan to ramp up production in the United States and Europe.

The move comes as a global chip shortage has countries and companies in those regions looking to reduce reliance on plants in Asia for semiconductors, which are used in a growing array of products such as cars.

"Intel's investment will help to preserve US technology innovation and leadership, strengthen US economic and national security, and protect and grow thousands of high-tech, high-wage American jobs," Secretary of Commerce Gina Raimondo said in a statement.

Intel chief executive, Pat Gelsinger, announced the investment during a webcast about the company's strategy, as it faces pressure to come up with ways to fend off fierce competition.

"Intel is the only company with the depth and breadth of software, silicon and platforms, packaging, and process with at-scale manufacturing customers can depend on for their next-generation innovations," Gelsinger said.

He stressed that Intel intends to continue doing most of its chip making at its own plants while also building on relationships with third-party manufacturers for some of its product line.

As part of a vision to be a major producer of chips in the United States and Europe, Intel is establishing a new manufacturing unit called "Foundry Services," according to the Silicon Valley company.

"Gelsinger's disclosure gave me many reasons to believe Intel is 'back' if the company can execute its plans," said analyst Patrick Moorhead of Moor Insights and Strategy.

"The $20 billion doubling down of manufacturing is bold."

Moorhead expected more investment by Intel given the need expressed by the United States and European governments for on-shore, leading-edge chip making.

"This isn't Intel hedging its manufacturing bets — it looks to me as if the company is all-in", the analyst said of tech giant's plan.

Intel said it took in $20 billion in revenue during the final quarter of last year, little changed from a year earlier, amid robust sales of personal computers.

The company reported net income of $5.9 billion in the quarter, down a billion dollars from the same period a year earlier.

Intel early this year approved an increased cash dividend of $1.39 per share in what may have been a move to placate activist investor Dan Loeb of Third Point, who has called on Intel to bolster its weakening position in the chip market.

The hedge fund has told the company it should consider outsourcing its manufacturing operations to keep pace with rivals in the sector such as Taiwan-based TSMC and South Korean giant Samsung.

While Intel remains one of the world's leading chip companies, it has lagged behind rivals in the fast-growing segment of mobile devices, and its chips are being phased out by Apple, which is developing its own microprocessors for its Mac computers.

By Farid Farid
Agence France-Presse

CAIRO — Tug boats worked on Wednesday to free a giant container ship stuck in the Suez Canal after it veered off course in a sandstorm, creating huge tailbacks on one of the world's busiest trade routes.

Egypt's Suez Canal Authority (SCA) said it was doing all it could to refloat the Taiwan-run but Panama-flagged MV Ever Given, a 400 metre long and 59 metre wide vessel, which was lodged at an angle across the waterway.

Historic sections of the canal have been reopened in a bid to ease the bottleneck of backed up marine traffic, with dozens of ships waiting on both the Mediterranean and Red Sea sides.

The SCA said the ship was caught up in a gale-force sandstorm, a common occurence in Egypt's Sinai desert at this time of year, which blotted out light and limited the captain's ability to see.

It was "mainly due to the lack of visibility due to the weather conditions when winds reached 40 knots, which affected the control" of the ship, the SCA said in a statement.

Ship operator Evergreen Marine Corp. said that the Rotterdam-bound vessel "ran aground after a suspected gust of wind hit it".

Storms with dense dust clouds carrying fine sand have swept across much of the Middle East since Tuesday.

'Stuck sideways' 

Shipping monitors MarineTraffic recorded that the vessel had been in the same position since at least Tuesday afternoon.

SCA Chairman Admiral Osama Rabie said in a statement on Wednesday morning that "rescue and tug units are continuing their efforts" to free the MV Ever Given, involving at least eight tugs.

Bloomberg reported it had caused a build-up of more than 100 ships seeking to transit the canal. 

"There was a grounding incident," Alok Roy, fleet director of BSM Hong Kong, the Ever Given ship manager, told the news agency.

Photographs released by the SCA also showed excavators onshore digging soil from the canal's bank, with the earth-moving equipment dwarfed by the giant hull towering above.

The canal, which links the Mediterranean to the Red Sea, was opened to navigation in 1869, and was expanded in 2015 to accommodate larger ships.

MarineTraffic showed a map with large clusters of vessels circling at both ends of the canal — in the Mediterranean off Port Said, and stretching far southwards into the Red Sea.

Instagram user Julianne Cona posted a photo of the grounded ship from the Maersk Denver, which was forced to wait behind the Ever Given.

"Ship in front of us ran aground while going through the canal and is now stuck sideways," she wrote. "Looks like we might be here for a little bit."

The Suez Canal is one of the world's most important trade routes, providing passage for 10 per cent of all international maritime trade.

The journey between ports in the Gulf and London, for example, is roughly halved by going through the Suez — compared to the alternate route via the southern tip of Africa.

'Domino effect' 

Even a short closure of the route has a big impact on "just in time" logistic chains, said Camille Egloff, transport and logistic expert at Boston Consulting Group.

While Egloff said the ship was in a "hyper-controlled environment" and suggesting it would be "a matter of hours" before traffic was moving freely again, the costs would add up.

"It costs a lot of money, because it blocks the traffic behind," she said.

"There will be a domino effect in all the European ports in the coming days."

Nearly 19,000 ships passed through the canal last year carrying more than 1 billion tonnes of cargo, according to the SCA.

It has been a boon for Egypt's struggling economy in recent years, with the country earning $5.61 billion in revenues from the canal in 2020.

President Abdel Fattah Al Sisi unveiled plans in 2015 for an expansion designed to reduce waiting times and double the number of ships using the canal daily by 2023.

Container ships account for more than half of the canal's total traffic, with some of them being among the largest in the world.

Most of the cargo travelling from the Gulf to Western Europe is oil.

In the opposite direction, it is mostly manufactured goods and grain from Europe and North America headed to the Middle East and Asia.

By Roland Jackson

Agence France-Presse

LONDON — Oil prices surged on Wednesday following the blockage of the Suez Canal while stock markets traded mixed.

A grounded ship that has temporarily blocked the key transit route for oil, along with the latest supply data from the United States, helped the price of the main US oil contract spike by five per cent.

The US benchmark contract, West Texas Intermediate, then quickly eased back to a gain of 4.6 per cent, while the European benchmark, North Sea Brent oil, was 4.6 per cent higher.

Bitcoin rose to $56,530 after Tesla boss Elon Musk tweeted that the carmaker now accepts the virtual currency as payment in the United States.

Continued concerns that Europe's worsening coronavirus crisis could derail economic recovery were balanced by survey data showing the eurozone economy had returned to growth in March for the first time in six months.

In the background, investor fears are growing over another deadly wave of Covid-19 and concerns over a stimulus-fuelled global inflation spike have not abated.

Frankfurt stocks lost 0.5 per cent and the Paris stock index was flat in afternoon trading.

"Once again, concerns about another wave of Covid-19 cases in Europe and worries that economies will reopen later than initially predicted are weighing on stocks," said CMC Markets analyst David Madden.

Europe's two biggest economies, Germany and France, have been forced along with other countries to impose new restrictions to battle the disease, as they also struggle to get vaccination programmes rolling properly.

Outside the eurozone, London's FTSE 100 edged up 0.3 per cent on Britain's rapid vaccination drive and news of easing UK inflation.

In New York, the Dow Jones index climbed 0.9 per cent, while the Nasdaq Composite shed 0.4 per cent.

In Asia, Hong Kong was among the biggest losers, dropping by two per cent on news that the government had suspended its Pfizer/BioNTech vaccine programme over concerns about packaging, dealing a blow to the city's already slow inoculation programme.

Hong Kong's Hang Seng Index has now fallen into a correction having lost more that 10 per cent from its recent high.

Tokyo also shed two per cent, while Shanghai, Mumbai and Jakarta each lost more than one per cent.

RAS AL KHAIMAH — The 2021 Arab Aviation Summit concluded with stakeholders unanimous in their call for stronger collaboration to drive faster recovery of the aviation industry.

They emphasised the need for stronger collaboration to enhance confidence among the public and to work towards impactful strategies that will support the revival of the aviation sector.

Experts highlighted the role of the tourism sector as a catalyst for post-pandemic growth. They urged the need for unified travel guidelines to support the industry, and expressed optimism that with more vaccinations being administered, there will be greater confidence among the public to travel.

Adel Al-Ali, CEO of Air Arabia Group, expressed hope that the sector would start to recover during the second quarter of the year, especially in light of the vaccination campaigns, which restore confidence for travellers along with easing restrictions on travel between different countries.

He predicted a positive outcome in the months to come as he highlighted the need for industry and regulators to work together on contingency plans to address the current challenges and develop recovery plans for the entire aviation industry.

“It is very important that the concerned and responsible parties meet to find a common ground that will contribute to advancing the recovery of the aviation sector, so that we can discuss the conditions the aviation sector is going through in the current period and what is required to support recovery efforts and future growth and to overcome the pandemic,” he said.

"We all know that we will not return with the same strength, but we are seeking success and recovery, and we are trying to strengthen the necessary support to overcome the pandemic, and we expect movement and travel to return,” he noted. 

Egypt Air’s Chairman & CEO, Rushdi Zakaria’s said: “The summit fostered a platform for discussion on the current situation of the aviation sector and reiterated that health and safety remain the number one priority.”

Sunil John, president – Middle East of BCW and founder of ASDA’A BCW, said the aviation sector’s current challenges cannot be addressed by airlines, airports, or tour operators alone but “global organisations such as IATA that must bring a commonality of approach and an industry-wide response regarding the safety and vaccine protocols to benefit the sector”.

Peter Morris, chief economist at Flight Ascend Consultancy, said the success of the industry calls for commercial solutions. “Only business models that meet the needs of customers will be successful. You cannot force people to travel and there are different sets of parameters for business and leisure.”

The summit was the first in-person aviation event to be held since the pandemic, and was organised by following all safety protocols, sending a strong message of confidence for the industry and the travel community.

 More than 300 participants attended the panel discussions and live presentations on topics such as airline strategies to navigate through the new normal, sustainability outlook, according to the organisers.

WASHINGTON — Federal Reserve Chair Jerome Powell on Tuesday acknowledged that the United States will see inflation rise this year, but the uptick in prices will not be substantial.

Stock markets and some economists have grown nervous in recent weeks that the US economy's expected recovery this year as the COVID-19 pandemic recedes coupled with trillions of dollars in government stimulus could push prices upwards.

Speaking to the House Financial Services committee, Powell acknowledged that scenario could indeed play out, but the price increase would likely be temporary.

"We do expect that inflation will move up over the course of this year," said the central bank chief, noting that this would be partly due to major economic sectors recovering from the deep slumps of March and April 2020, when business restrictions to stop COVID-19 were at their most intense.

"Our best view is that these effects on inflation will be neither particularly large nor persistent."

The Fed slashed its benchmark lending rate to zero last March as the pandemic began, and later in 2020 unveiled a new inflation targeting policy that will keep rates low until inflation hits 2 per cent and stays there, in a bid to maximise employment.

The bottomed-out rates are viewed as one of the reasons for the boom on Wall Street over the past months, and markets have grown nervous that an uptick in inflation could cause the Fed to raise rates sooner than expected.

Also fueling the concerns are a series of relief packages approved by Congress to support the economy through the downturn, the latest of which is a $900 billion measure passed in December, and a $1.9 trillion bill approved this month.

RAS AL KHAIMAH — The aviation industry has suffered most during the COVID-19 pandemic, due to the lockdowns imposed by most countries, experts agreed at the 2021 Arab Aviation Summit.

Under the theme, “Arab Aviation in the New Normal”, the 2021 Arab Aviation Summit, which started on Monday brought together experts to evaluate the impact of the COVID-19 pandemic on the industry and provide ways to overcome it.

Experts agreed on how “catastrophic” the pandemic’s impact has been on the aviation industry, describing it as “the most brutal and most challenging crisis the aviation industry has ever faced”. 

 The International Air Transport Association (IATA) said earlier that airlines would lose $84.3 billion in 2020.

“Aviation has a huge contribution into every country’s economy. Most of the businesses were impacted negatively by the pandemic, but the pandemic’s impact on the aviation sector is the most difficult, as we have the most expensive liabilities.” Adel Al-Ali, Air Arabia Group CEO, said during his opening remarks.

Al-Ali said the aviation sector is resilient and agile, as people want to travel.

 “It is about connecting; people want to be connected which is our job, to connect people together,” he explained.

“The Arab Aviation Summit was created to promote the knowledge of aviation to the public as people know a little about aviation,” he added.

“In the MENA region, people have the need to travel because everybody has someone in another city or country and that dictates for us to travel. People travel for all kinds of purposes. This need brings creativity, so our goal is not to go back to the way things were before but to adapt and have a new norm,” Al-Ali said.

“The industry is fighting for profitable growth, which will allow us to face all the challenges. I have no doubt that life ahead will be better and our industry will bounce back…,” according to Al-Ali.

Raki Phillips, Ras Al Khaimah Tourism Development Authority CEO, said: “The COVID-19 pandemic has been very challenging for the aviation and tourism industry. As an industry, social distancing is not ideal for us. But right now we are hopefully moving in the right direction.”

“During my career, I have experienced many tragedies which affected our industry, but I can proudly say that the tourism sector always made a comeback with the aviation partners as it is a resilient sector,” Phillips added.

As an industry, aviation was able to “pivot and adapt to the new norm” in a short time on such a short notice, according to Phillips.

“Tourism and aviation will create a much stronger cooperation together, to help tourists travel by air safely.” Phillips noted.

“The past year has been one of the hardest days of my working career even though I have been through many other crises, but this pandemic had been the most frustrating as it is uncontrollable. And it got more frustrating especially when employees ask what will happen next, we do not want anyone to lose their job,” Al-Ali noted.

Voicing optimism, he said: “I think we will reach the end in a positive way”. 

 IATA predicted that the aviation industry would be in a recovery mode in 2021, but still well below pre-crisis levels.

The recovery will be long and progressive, according to IATA.

ROME — Amazon workers in Italy held their first nationwide strike on Monday as unions claimed employees were being pushed harder than ever during the coronavirus pandemic. 

The US e-commerce giant employs around 9,500 people in Italy, but unions say the protest also involves suppliers and delivery drivers.

In a joint statement, unions said employees are called "indispensable" but "are not treated as such", calling them "an army of some 40,000 workers who never stop".

The Filt Cigl, Fit Cisl and Uiltrasport unions claimed that an average 75 per cent of workers stayed out, rising to 90 per cent in some areas.

"Amazon made huge profits thanks to the pandemic-era boom in online commerce and it is right that it should share part of these profits," the unions said in a statement.

Workers should have lower work burdens, better pay, more union rights and an indemnity in case they fall ill with COVID-19, unions said, accusing Amazon of refusing to talk to them.

Drivers, they said, have come under huge pressure as online orders boom during the pandemic, delivering as many as 180-200 packages per day.

As its profits have continued to rise, Amazon has come under increasing pressure over the past year to improve pay and working conditions.

Amazon country manager Mariangela Marseglia said the company respected workers' right to "express their position."

The Seattle-based company, she said, offers "a safe, modern and inclusive workplace, with competitive salaries that are some of the highest in the industry, benefits, and great opportunities for career growth".

Last month, Amazon said profit in the fourth quarter of 2020 more than doubled to $7.2 billion from the year-ago period, while revenue climbed 44 per cent to a record $125.6 billion.

In Italy, the company announced last week the opening of a new distribution centre in the north and the creation of 900 new jobs, expanding its workforce to 10,400.