May 19, 2024
Here are the stories for the week…
1: Chinese flying taxi takes global lead thanks to regulations
Summary: A Chinese flying taxi company is flying ahead of the competition due to regulatory support, tech breakthroughs, and fierce competition.
Analysis: Chinese companies working on flying taxi’s are “taking off” around the country. Aided by the opening of some of the airspace around the big cities (the PLA technically controls all airspace), this new form of transportation is being tested and prototypes produced. Perhaps this will become the new Didi (or Uber)?
2: Is the South Korean miracle over?
Summary: The old model of cheap energy and labor is coming to an end. Add to this industrial subsidies that are running out of steam or lack funds, and lower worker productivity and headwinds are hitting the industry.
Analysis: South Korea has been complacent and relied on its traditional powerhouse industries and companies such as shipbuilding and Samsung, but with global competition barreling down on the country, especially from China, Japan, and SE Asia, it is becoming more challenging to maintain the pace. Add to this a lack of innovation, there are few ways firms in the country will be able to stay competitive on a global scale.
3: Certifying factories in China is becoming more challenging
Summary: Some factory inspectors are refusing to go to China and/or Chinese facilities out of concerns they will be denied entry, run afoul of local regulations, or be accused of spying. Some are even refusing due to fears of being arrested.
Analysis: Overseas firms are struggling to certify or provide oversight for factories and processes, which is putting at risk medical supply chains, amongst others. A fear of the newly updated “National Security Law” in China is adding to the challenge, but to date no Western inspectors have been arrested for espionage under the new rules.
4: A South African mine becomes a battleground
Summary: With all of the talk of rare earths, a mine in South Africa that produces several of them is being put to the test as commodity prices fall, and investment dries up. A US fund to find and support rare earth capacity outside of China’s control is one of the investors of the SA mine, but due to a lack of other support, its future is in question.
Analysis: When you build out an ecosystem, you need to include long-term demand support. In this case, the US government is helping to open and keep a mine in operation, but there is no long-term plan to keep it open. For example, a long-term contract that regularly orders materials and products would help ensure business viability and encourage SA to keep updating and supporting the mine.
5: TSMC charges companies more for chips made outside of TW
Summary: Due to generally higher costs outside of TW to produce semiconductors, TSMC’s CEO stated “If a customer requests to be in a certain geographical area, the customer needs to share the incremental cost…”.
Analysis: The more complex the technology and ecosystem to produce products, the higher the costs will be. Add to this geopolitical tensions and TSMC is going to charge whatever it can. This is part of the “resiliency” drive, but it will cost much more than what is expected.
Something unique….
Bananas are bad on a boat? In the historical era of global shipping, bananas are often seen as bad luck on a ship because they would often be the only things left floating after a ship sinks, could carry spiders or other insects, and fishermen sometimes fell ill after eating them.