Daily Brief: Intel Misses Life At The Top, But The Chipmaker Knows How To Get There

Daily Brief: Intel Misses Life At The Top, But The Chipmaker Knows How To Get There

about 2 years ago3 mins

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Intel announced on Tuesday that it’s buying Tower Semiconductor for $5.4 billion, in hopes the Israeli chip manufacturer will take it straight to the top.

What does this mean?

Intel lost its title as the biggest chipmaker by revenue last year, and it’s been looking for ways to build up its business and reclaim that top spot ever since. And it seems to be hoping that Tower Semiconductor – which specializes in making chips for cars and medical sensors – can help it do just that. The move, after all, will allow the company to make chips for businesses other than its own, pushing the company into the contract chip manufacturing space that Taiwanese rival TSMC currently dominates. It won’t be starting from scratch, either: Tower already has decades of experience making a wide variety of chips for a wide variety of customers, from Broadcom to Analog Devices.

Why should I care?

For markets: Plan B.

Another of Intel’s revenue-pumping plans involves building more factories across Europe and the US. Then again sprawling infrastructure and massive acquisitions are expensive, and they could ultimately take their toll on the chipmaker’s profit. That might be why Intel’s stock has underperformed an index tracking the world’s biggest chipmakers by 28% in the last twelve months. But Intel’s sticking to its guns: it’s expecting its profit margin to get back to normal when these investments start to pay off within the next five years.

Intel stock
Source: Google Finance

The bigger picture: Plan C.

Intel’s got one more trick up its sleeve: the company’s branching out from its trusty computer chips. It just launched a semiconductor that should make cryptocurrency mining more energy efficient – a growing concern within a booming market. It’s doubling down on its self-driving business too: Mobileye announced plans earlier this week to roll out self-driving electric shuttles in the US by 2024.

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Job Vacancies In The UK Hit A Record High

UK jobs image

Data out on Tuesday showed that job vacancies in the UK hit an all-time high last month, as Brits ditch the heels and leave the corporate world behind them.

What does this mean?

The UK added 108,000 new jobs in January, bringing the number of workers in the country to a record high of nearly 30 million. But that’s a drop in the ocean: job openings rose to their own record high of 1.3 million last month, as companies try to plug the gap left by the 400,000 people who stopped working or looking for work during the pandemic. And sure, some of those might be older workers who want to embrace their golden years, but some of them are probably just the burned-out millennials who were tired of the nine-to-five.

UK job vacancies

Why should I care?

The bigger picture: Brits could get thrifty.

There is one way companies could bring disillusioned Brits back to work: pay them the big bucks. So that’s exactly what they’ve been doing, sending the average wage in the country up 3.6% in December from the year before. Thing is, the prices of goods and services have been rising quicker than that, so “real wages” – i.e. those adjusted for inflation – actually fell by 1.2%. Keep in mind too that the government is planning to raise taxes in April, which could empty those pay packets even quicker.

UK wages

Zooming out: Relaxed rules, uptight economists.

The Japanese have certainly been spending their hard-earned paychecks: data out on Tuesday showed that shoppers spent even more last quarter than the quarter before, helping the country’s economy grow 1.7% in 2021. That’s the first time it’s grown in three years, but the country’s not off to a good start if it wants a repeat performance: some economists are expecting Omicron to stall economic growth all over again this quarter.

Japan GDP
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