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Semiconductor crisis forces top-level action. Source: freepik.com

The world’s semiconductor industry sales hit $40 billion for the month of January – a rise of 13.2 per cent on-year, revealed the Semiconductor Industry Association.

Now, consumers are having to deal with price hikes and a lack of products from automobiles and videogames to TVs and smartphones as a global shortage in semiconductors grows.

The shortage in chips, the so-called “brain” within every electronic device, has been slowly getting worse since last year, according to The Guardian. Temporary delays in supplies as factories shut down due to the coronavirus pandemic caused initial issues. However, although production is somewhat back to normal, surges in the demand driven by new habits stemming from the pandemic is causing the situation to worsen.

Mainly, a boom in sales of TVs and computers, the launch of brand new videogame consoles, and arrival of 5G-enabled mobile phones have all driven the demand.

The crisis has even affected Apple, the biggest buyer of semiconductors at $58 billion annually. It was forced to delay the launch of the iPhone 12 by two months last year as a result of the shortage.

“Chips are everything,” said Neil Campling, media and tech analyst at Mirabaud. “There is a perfect storm of supply and demand factors going on here. But there is a new level of demand that can’t be caught – everyone is in crisis and it is getting worse.”

In possibly the most shocking development, Samsung – the world’s second-largest buyer of chips – last month said it might have to postpone the launch of a high-end smartphone, despite also being the world’s second-largest producer of chips.

“It is incredible that Samsung sells $56 billion of semiconductors to others, and consumes $36 billion of them itself, finds it may have to delay the launch of one of its own products,” said Campling.

Ford meanwhile recently cancelled shifts at two car plants and said profits could be hit by up to $2.5 billion this year due to chip shortages, while Nissan is delaying output at plants in both the United States and Mexico. General Motors also said it could face a $2 billion profit hit.

In February Sony, which along with other console makers has struggled with stock shortages over the last year, said it might not hit sales targets for the new PlayStation 5 this year. Its rival, Microsoft’s Xbox, forecasts supply issues continuing at least until the second half of the year.

In a bid to unblock the jam, governments are now getting involved. CNBC reported a fortnight ago that US President Joe Biden is looking to place $37 billion into the sector in an attempt to lower America’s reliance on overseas supply chains. Biden said at the end of March, “We shouldn’t have to rely on a foreign country to provide for our people. We need to sharpen America’s competitive edge by investing here at home.”

But countries including the US and Germany have also reached out to Taiwan to help remove bottlenecks in production. Along with the pandemic, the new administration believes the semiconductor shortage was exacerbated by the previous president’s actions against China.

“Manufacturing of microelectronics in the US has reached a historic low, and this is a big problem for us,” said Terry Halvorsen, IBM’s general manager for Client and Solutions Development.

Taiwan dominates the outsourcing of semiconductor manufacturing. Its contract manufacturers together accounted for more than 60 per cent of total global revenues in the field in 2020, according to Taipei-based research firm TrendForce. Much of its dominance is due to Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC), the world’s largest foundry. TSMC accounted for 54 per cent of all revenues via outsourcing of semiconductor manufacturing globally last year.

Dan Wang, a technology analyst at research firm Gavekal said, “Looking at market share, TSMC manufactures around 50 per cent of all semiconductors in the world – and I think that still understates how important it is because these are some of the most advanced chips out there.”

At the start of March, TSMC said it plans to invest $100 billion over the next three years to increase capacity. The move came after Intel Corporation’s announcement to spend $20 billion on the expansion of advanced chip-making capacity.

“Ultimately, securing the microelectronics supply chain of the US and its allies is a challenge they need to face now,” Halvorsen of IBM noted. “It’s the only way we can ensure sustainable long-term capability in this critically important area.”

The last big supply shock for the industry was a decade ago after the Fukushima earthquake damaged operations at Renesas Electronics, the number three supplier of auto chips.

By Quang Hai

The “Huong Thom Que Me” (The Fragrance of Motherland) exhibition, held April 14- 26, displays 100 works of calligraphy in various languages including Vietnamese, English, French and Chinese.

The works reflect the Zen master’s love for Mother Earth, who nurtures and protects all sentient beings.

The exhibition takes its name from the title of a new book that features Thich Nhat Hanh calligraphy.

According to Eve Yuen, a Hongkong-based art critic, Hanh’s works are choreographic calligraphy that exude exquisite qualities, incorporating straight and solid lines as well as flowing curves in a balanced composition.

The works were earlier displayed in France, Germany, Canada, the U.S., Thailand, Taiwan, Hongkong, and Ho Chi Minh City.

Calligraphy works by Thich Nhat Hanh. Photo by VnExpress/Thanh Tuyen.

The Zen master said he has done more than 10,000 calligraphic works since 1994. They have helped him demonstrate the art of mindful living to his students. They have become a source of donations supporting humanitarian projects in many developing countries.

“Writing calligraphy is a practice of meditation,” the Master has said.

“The way I do calligraphy, I do it in a certain way that can generate the energy of mindfulness, concentration, insight, and compassion during the time of practice.”

Thich Nhat Hanh, considered the second most influential Buddhist leader in the world after the Dalai Lama, studied and practiced Zen Buddhism from 1942.

Born in 1926, he became a monk at the age of 23 after studying Buddhism for seven years.

In the 1960s he spearheaded a movement by Buddhists in southern Vietnam that called for a negotiated end to the Vietnam War.

He left the country in 1966 and lived in Plum Village in southern France for decades, traveling regularly throughout North America and Europe to give lectures on mindfulness and peace.

Thich Nhat Hanh is also a celebrated poet and peace activist. He was nominated for the Nobel Prize by Martin Luther King, Jr. in 1967, and is the author of more than 100 books, including several bestsellers like the “The Miracle of Mindfulness.”

However, this figure is a bit lower than the Asia Pacific and global average of 65 percent and 64 percent, respectively, according to a survey conducted by PricewaterhouseCoopers (PwC), which interviewed 2,800 family business leaders in 87 economies, including 33 from Vietnam.

For 2022, 33 percent of surveyed family business leaders from Vietnam expect quick, aggressive growth, higher than the regional average of 28 percent and the global figure of 21 percent.

Business expansion and technology adoption are the key priorities of Vietnamese family businesses in the coming years, the survey found. While 55 percent said they would focus on creating new products and services, 52 percent mentioned increased use of new technology.

Over half (52 percent) of the Vietnamese respondents expect that the next generation to become majority shareholders within five years’ time, but just 36 percent said they have a formal succession plan in place.

Vietnamese family businesses seemed to lag behind in terms of digital capabilities, with just 30 percent saying they were strong in this area against the global average of 38 percent.

Family businesses are a core economic factor in any country, including Vietnam. The 100 largest family businesses contribute about 25 percent of the country’s GDP, Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), has noted.

Among the 50 best listed companies in Vietnam are many family businesses, including Vietnam’s biggest listed company Vingroup, budget airline Vietjet Air, major education company Thanh Thanh Cong, and Vietnam’s largest ice-cream producer Kido.

As many as 95 percent of Vietnamese enterprises are family businesses and the majority are led by the first generation or the first two generations, he added.

Rice exporters gear up to penetrate EU arena

On September 22, Loc Troi Group JSC exported the first batch of 126 tonnes of fragrant rice to the EU. To reach this, LocTroi upped its planting methods and quality control for the EU market in 2018. So far, the company has exported over 10,000 tonnes of rice to the EU market.

Backed by the tariff exemptions under the new EU-Vietnam Free Trade Agreement (EVFTA), LocTroi chairman Huynh Van Thon said that the group aims to become one of the major rice exporters to the EU. The company will mobilise all its resources to satisfy the EU’s strict quality requirements, expanding its growing area and export volume and diversifying varieties.

Meanwhile, at the end of August Trung An Hi-Tech Farming JSC also exported its first batch of fragrant rice in line with EVFTA commitments. Pham Thai Binh, the company’s general director, said that the shipment is part of the company’s current contract to export 3,000 tonnes of rice to Europe.

Binh said the company made early preparations during the EVFTA negotiation process to increase its rice exports. Among them, food safety standardss were Binh’s focus as the bloc refuses products exceeding pesticide residue limits. Therefore, Trung An focused on international standards for planting, harvesting, preserving, and processing.

Elsewhere in 2019, Vinaseed also exported over 2,000 tonnes of rice to the EU with turnover of $2 million. The group inaugurated the Centre of Seed and Agricultural Product Processing Industry in Dong Thap province last year. Covering five hectares, the centre has capacity to process and preserve 100,000 tonnes of rice and 50,000 tonnes of seeds per year.

Nguyen Quang Truong, general director of Vinaseed said, “With modern lines and technology from Japan, the new centre can help us to produce rice meeting the EU’s rigorous inspection procedures, while preserving its natural taste.”

In addition, Vinaseed has also purchased an 800ha forest in Kien Giang’s Hon Dat district. The company will spend 3-4 years on preparing the land for agricultural use.

According to statistics from the Ministry of Planning and Investment, Vietnam’s rice exports to the EU reached over $1.2 million in August, up 93.5 per cent against July and 35.6 per cent on-year. Currently, many Vietnamese rice producers are negotiating new contracts with European partners.

While these efforts show the hard work of domestic companies in trying to raise their exports to the EU, it will remains tough to conquer the market for some time.

Quach The Phong, co-chair of the Food, Agri, and Aqua Business Sector Committee under EuroCham, said that rice and products thereof are a sensitive category in the EVFTA. The agreed export quota from Vietnam to the EU is set at 80,000 tonnes per year, including all types of rice. For comparison, in 2018 Vietnam exported only around 20,000 tonnes to the EU.

The EVFTA only helps with a fraction of the Vietnam’s total export volume, which is expected to reach 7 million tonnes this year. In the short-term, it is expected that there will be a positive price impact for the country’s rice exports. However, over the medium and long term, benefits include many aspects for improving technology transfer and trusts for a larger quota.

In addition to consumption rates, Vietnamese rice is facing tough competition from Thailand and Cambodia. Between September 2019 and March, the EU imported 30 per cent of its rice from Thailand and 27 per cent from Cambodia as well as 16 per cent from Pakistan, 15 per cent from India, and only 6 per cent from Vietnam, according to a report by the European Commission in April.

“Even though Vietnamese rice has advantages in terms of pricing, it is still difficult to change the consumption habits of European customers, which is likely to pose obstacles for local producers to fully take advantage of the EVFTA,” Binh said.

On the same note, Phong added that some firms able to export to the EU will have opportunities to strengthen their production locally as well as to understand and further adapt to EU standards as both the Ministry of Agriculture and Rural Development (MARD) and the Ministry of Industry and Trade are closely observing and regulating the export process to follow commitments.

“With the help of government bodies here, this can become a reality to improve the entire rice export industry. This initiative is also important since the MARD has identified that a value-based export direction for rice will be the future for Vietnam, rather than a volume-based one,” Phong stated. VIR

Thanh Van