Business

NEW YORK — Advanced Micro Devices said on Tuesday it had struck a deal to buy computer chipmaking rival Xilinx in a $35 billion megadeal that consolidates the sector which is being transformed by the global pandemic.

The tie-up will help AMD ramp up its challenge to Intel for personal computer chips and broaden its portfolio to products for data centers, industrial systems and other sectors.

“The combination will create the industry’s leading high performance computing company, significantly expanding the breadth of AMD’s product portfolio and customer set across diverse growth markets where Xilinx is an established leader,” a statement said.

AMD revenue has climbed this year, with the COVID-19 pandemic fuelling demand for computers and video game consoles as people rely on the Internet to work, learn, and play more at home.

“Our acquisition of Xilinx marks the next leg in our journey to establish AMD as the industry’s high performance computing leader,” AMD Chief Executive Lisa Su said.

Under the agreement, Su will lead the combined company as CEO and Xilinx president and CEO Victor Peng, will join AMD as president responsible for the Xilinx business and strategic growth initiatives.

Xilinx, founded in 1984, is known for adaptive chip processing systems used in an array of industries including telecommunications, automotive and defence.

The deal follows another blockbuster tie acquisition by US-based Nvidia for British-based Arm, the dominant player in mobile chipmaking.

The combined AMD-Xilinx with create a company with an enterprise value of some $135 billion and 13,000 engineers.

California-based AMD separately reported its third quarter profit more than tripled from a year ago to $390 million as revenue grew 56 per cent to $2.8 billion.

The company saw growth in chips for computer gaming graphics applications and in its Ryzen chips for personal computers.

AMD said it sees ongoing momentum and growth in revenue of around 40 per cent for 2020.

The acquisition of Xilinx could bolster AMD as the industry seeks processors for new 5G technologies such as automated driving systems and for artificial intelligence for systems being developed by giants like Google, Amazon, Microsoft or Samsung for cloud computing and data centers.

The deal “is not coming out of weakness for AMD, it’s coming out of strength”, said Patrick Moorhead of Moor Insights and Strategy in a Six Five podcast.

The deal has been approved by boards of both firms and the companies expect regulatory approval sometime next year.

AMD shares slipped four per cent in premarket trade on the news while Xilinx rose 10 per cent.

LAHORE, Pakistan — Pakistan's first metro line began operations on Monday in the eastern city of Lahore.

 Stretching 27 kilometres and dotted with more than two dozen stations, the Chinese-backed "Orange Line" will cut travel time across the perennially congested city in Punjab province from two-and-a-half hours by bus to 45 minutes on the metro.

"This project will provide world-class facilities to the public in Lahore," Punjab's Chief Minister Usman Buzdar said during an inauguration ceremony on Sunday.

The line's opening follows years of delays, in a country that needs public transport and modern infrastructure.

The metro cost approximately 300 billion rupees ($1.8 billion). 

However, critics blasted the project for endangering numerous historical sites across Lahore.

Despite the delays and controversies, authorities are hopeful the new line will reduce traffic congestion in the city of more than 11 million, where commuters frequently spend hours in cars or buses daily due to grinding traffic.

Officials expect about 250,000 people will be able to travel on the metro system daily. Much of Pakistan suffers from poor public transport infrastructure making daily commutes in urban areas difficult and costly for many low-wage workers.

Beijing has been steadily pouring cash into Pakistan, investing more than $50 billion as part of the China-Pakistan Economic Corridor that has upgraded infrastructure, power and transport links across the country.

Chinese news agency Xinhua praised the opening of the metro line, calling it the beginning of "a new stage for the South Asian country in the public transportation sector".

AMMAN — Arab Bank Group reported net income after tax of $215.2 million for the nine months of 2020, compared to $668.9 million for the same period last year, recording a drop of 68 per cent.

In a statement, the Arab Bank Group attributed the drop to the build up of higher provisions, driven by current and envisaged economic conditions.

According to Nemeh Sabbagh, the increased provisions booked across the Group are in accordance with the guidelines of International Financial Reporting Standard #9, and as per the bank’s internal expected credit loss model, and include general provisions built due to the current economic situation in Lebanon.

The results also reflect the deterioration in the macroeconomic environment in the region and globally, the statement added, in addition to lower revenues because of the impact of the COVID-19 outbreak, lower market interest rates and weakening oil prices.

The Group’s net operating income stood at $808 million, recording a drop of 22 per cent as a result of a decrease in net interest and commission income, in addition to a drop in the profit of the bank’s associates in the Arab Gulf countries.

Customer deposits grew by 8 per cent to $37.5 billion compared to $34.7 billion, while loans grew by 2 per cent to reach $26.7 billion compared $ 26.1 billion, said the statement.

In the statement, Sabih Masri, chairman of the Board of Directors said the pandemic has had, and continues to have, a significant impact on businesses around the world.

Sabbagh added that the global and regional banking sectors will continue to face challenges because of the economic contraction, the higher cost of risk, and lower interest rates.

He noted that growth in the Arab Gulf countries has also declined sharply due to the plunge in oil prices. 

The Group maintains robust capital base with equity of $9.3 billion and with a capital adequacy ratio of 16.7 per cent calculated in accordance with Basel III regulations, it indicated. It enjoys high liquidity with a loan-to-deposit ratio of71.1 per cent, while credit provisions held against non-performing loans continue to exceed 100 per cent.

SAN FRANCISCO — Big Tech is bracing for a tumultuous week marked by quarterly results likely to show resilience despite the pandemic, and fresh attacks from lawmakers ahead of the November 3 US election.

With backlash against Silicon Valley intensifying, the companies will seek to reassure investors while at the same time fend off regulators and activists who claim these firms have become too dominant and powerful.

Earnings reports are due this week from Amazon, Apple, Facebook, Microsoft, Twitter and Google-parent Alphabet, whose combined value has grown to more than $7 trillion dollars.

They have also woven themselves into the very fabric of modern life, from how people share views and get news to shopping, working, and playing.

Robust quarterly earnings results expected from Big Tech will "highlight the outsized strength these tech behemoths are seeing" but "ultimately add fuel to the fire in the Beltway around breakup momentum", Wedbush analyst Dan Ives said in a note to investors.

The results come amid heightened scrutiny in Washington of tech platforms and follow a landmark antitrust suit filed against Google which could potentially lead to the breakup of the internet giant, illustrative of the "techlash" in political circles.

Meanwhile, Senate Republicans have voted to subpoena Jack Dorsey and Mark Zuckerberg, the chief executives of Twitter and Facebook respectively, as part of a stepped-up assault on social media's handling of online political content, notably the downranking of a New York Post article purported to show embarrassing information about Democrat Joe Biden.

CEOs of Twitter, Facebook and Google are already slated to testify at a separate Senate panel on Wednesday examining the so-called Section 230 law which offers liability protection for content posted by others on their platforms.

Business models questioned 

The four giants drawing the most scrutiny — Apple, Amazon, Facebook and Google — have been wildly successful in recent years and have weathered the economic impact of the pandemic by offering needed goods and services.

Google and Facebook dominate the lucrative online ad market, while Amazon is an e-commerce king.

Apple has come under fire for its tight grip on the App Store, just as it has made a priority of making money from selling digital content and services to the multitude of iPhone users.

The firms have stepped up lobbying, spending tens of millions this year, and made efforts to show their social contributions as part of their campaign to fend off regulation. 

"For the most part, tech companies know how to do this dance," said analyst Rob Enderle of Enderle Group.

"They don't spend a lot of time bragging about how well they have done any more."

Ed Yardeni of Yardeni Research said the outlook for Big Tech may not be as rosy as it appears.

"For one, regulators at home and abroad are gunning to rein in some of the largest US technology names," Yardeni said in a research note.

"Also, the COVID-induced tech spending enjoyed over the past six months won't likely be replicated."

Ebbing ads? 

Of interest to the market short-term will likely be whether backlash about what kind of content is left up and what is taken down by online titans causes advertisers to cut spending on the platforms.

Organisers of a Facebook ad boycott vowed early in the third quarter to continue their campaign, saying the social network's top executives failed to offer meaningful action on curbing hateful content.

At the same time, political conservatives have accused Facebook and others of political bias as social platforms step up their content moderation. President Donald Trump has threatened new regulatory measures which could impact the business models of platforms.

Pandemic punch 

Economic and social disruption from COVID-19 also looms over tech firms, which benefitted early in the pandemic as people turned to the internet to work, learn, shop and socialise from home.

"Performance will be best for those providing solutions for people working at home," analyst Enderle said.

Amazon, Google and Microsoft each have cloud computing divisions that have been increasingly powering revenue as demand climbs for software, services and storage provided as services from massive data centres.

Amazon has seen booming sales on its platform during the pandemic, and viewing surge at its Prime streaming television service.

Enderle expressed concern that with COVID-19 cases and a lack of new stimulus money in the US, tech companies could reveal in forecasts that they are bracing for poorer performance in the current quarter. 

"The second wave of the pandemic has got a lot of folks spooked," Enderle said,

"Those stimulus checks aren't going out and people are afraid of what is happening with their jobs; so that cuts spending and buying confidence."

Even though Microsoft is well positioned in a booming video game market with a new Xbox console coming in November, its arrival could be soured if people worried about money cut back on such luxuries.

SHANGHAI — Huawei's revenue growth slowed significantly in the first nine months of 2020, the Chinese telecom giant said on Friday, citing "intense pressure" on operations during the coronavirus and as the US moves to cut off its access to vital components.

Huawei, the leading global supplier of telecoms networking equipment and a top smartphone producer, said it grossed 671.3 billion yuan ($100.7 billion) in revenue in January-September, up 9.9 per cent year-on-year.

That's down from 24.4 per cent growth over the same period last year, while its profit margin fell to 8 per cent from 8.7 per cent last year.

Washington views Huawei, founded in 1987 by former People's Liberation Army engineer Ren Zhengfei, as a Chinese espionage threat and has lobbied allies to shun its gear while attempting to block its access to global semiconductor supplies.

"As the world grapples with COVID-19, Huawei's global supply chain was put under intense pressure and its production and operations saw increasing difficulties," the company said.

It vowed to "do its best to find solutions, to survive and forge ahead". 

The brief announcement made no direct reference to the US pressure, nor did it include a performance breakdown for its various segments, such as smartphone sales. Privately held Huawei provides such details only for half-year and full-year earnings.

But during the online launch of the company's latest smartphone on Thursday, Huawei's CEO of consumer products Yu Chengdong said the company was "suffering" from the escalating US pressure, which he called "unfair".

"For Huawei, nowadays we are in a very difficult time," Yu said.

Bad news has been mounting for Huawei, which the United States alleges is controlled by Beijing. 

Washington says Huawei equipment could contain security holes that China could exploit for spying, but the firm and the Chinese government reject the claim, saying the US has never provided evidence.

Washington has essentially barred Huawei from the lucrative US market and pressured allies to do the same.

Britain in July banned mobile providers from using Huawei equipment in their new 5G networks, giving British companies until 2027 to rip out any existing hardware.

France has also placed heavy restrictions on use of Huawei gear and Sweden this week banned the company and Chinese rival ZTE from its own 5G network.

Writing on the wall 

Much of the full impact from the US measures to cut off access to semiconductors and other components has been postponed so far by the Trump administration's granting of a series of waivers delaying full implementation while it carried out long-running talks on a trade deal with China.

But analysts said the writing is on the wall for Huawei, which may need to make major business adjustments.

US moves to prevent Huawei's access to much of the Google Android system could damage its global market position on smartphones, said Marc Einstein, Chief Analyst at ITR Corporation in Tokyo.

But it should remain strong in China's domestic market, and Huawei maintains a solid foothold in Latin America, the Middle East and Africa, even if more developed markets such as Europe appear to be closing.

"It's completely feasible that if a huge [US-China] trade deal is reached, some of these challenges could recede," Einstein said.

"Huawei is not going anywhere."

Huawei overtook Samsung as the world's top smartphone seller in the second quarter on strong domestic demand, industry tracker Canalys said in July, adding that it was the first quarter in nine years that a company other than the South Korean giant or Apple held the top spot.

Huawei said last month that its nascent homegrown operating system could be available on smartphones from early next year as it rushes to build an alternative app ecosystem.

Phil Marshall, chief research officer with Tolaga Research, said Huawei may "lose some of the edge" that it enjoys in networking gear and 5G technologies, but that it had racked up so many 5G patents over the years that it should remain a global player.

The US pressure also will force Huawei to achieve tech self-reliance by making its own chips.

"We know how successful they have proven to be at developing technology. You just can't rule them out," Marshall said.

FRANKFURT AM MAIN — Greenpeace on Tuesday criticised the European Central Bank (ECB) for "bias" in its bond purchases that favour "carbon-intensive sectors" when the institution is looking for ways to address climate change. 

According to a study by the environmental pressure group and the UK-based think-tank New Economics Foundation, 63 per cent of bonds held by the ECB at the end of July were attached to fossil fuels, energy-intensive manufacturing, non-renewable utilities and carbon-intensive transport.

"The ECB needs a climate-friendly realignment," said Greenpeace economist Mauricio Vargas, arguing that the bank must set "the framework for a green European financial system".

As the bank tees up a wide-ranging strategy review, due to conclude next year, "the ECB now has the chance to listen and to correct its monetary-policy misstep," Vargas says. 

The report recommended that the ECB stop buying bonds issued by fossil fuel and energy-intensive companies, and instead buy bonds from the green and renewable sectors as part of its multitrillion-euro (dollar) asset-purchase programme.

"Its corporate purchases are structurally misaligned with EU commitments to the Paris Climate Agreement and do not adequately reflect climate-related financial risks," the authors said.

The study also argued that the Frankfurt-based institution needs to row back on market neutrality, the principle that guides asset purchases.

Intended to not favour one industry over another, the authors said it instead "hardwires a carbon bias" by in effect subsidising the companies' debt. 

Sectors with a heavy carbon footprint such as energy companies and airlines have benefited from the ECB's bond-purchase policies, the study said. 

Last week, ECB President Christine Lagarde said that the bank might revise its rules on neutrality in its strategy review. 

Implementing these policies would be "in line with the climate emergency that we are currently facing but would also support climate-related financial stability objectives", the report said. 

The move would also encourage more financial institutions to move away from business models that harmed the environment, it added.

The study comes ahead of a crunch monetary-policy meeting at the central bank next week.

The Paris climate pact, signed in 2015, commits countries to keep temperature rises below 2ºC compared with pre-industrial levels by cutting their use of fossil fuels. 

BEIJING — China's super wealthy have earned a record $1.5 trillion in 2020, more than the past five years combined, as e-commerce and gaming boomed during pandemic lockdowns, an annual rich list said on Tuesday.

An extra 257 people also joined the billionaires club in the world's number-two economy by August, following two years of shrinking membership, according to the closely watched Hurun Report.

The country now has a total of 878 billionaires. The US had 626 people in the top bracket at the start of the year, according to Hurun in its February global list.

The report found that there were around 2,000 individuals with a net worth of more than 2 billion yuan ($300 million) in August, giving them a combined net worth of $4 trillion.

Jack Ma, founder of e-commerce titan Alibaba, once again topped the list after his wealth surged a whopping 45 per cent to $58.8 billion as online shopping firms saw a surge in business owing to people being shut indoors for months during strict lockdowns to contain the virus.

He was followed by Pony Ma ($57.4 billion), boss of gaming giant and WeChat owner Tencent who made an extra 50 per cent despite concerns about his firm's US outlook after it was threatened with bans there over national security fears.

First-time list member Zhong Shanshan, 66, best-known for his bottled water brand Nongfu, parachuted into third spot with $53.7 billion after a Hong Kong IPO in September, the report found.

'Never seen this 

much wealth' 

"The world has never seen this much wealth created in just one year," Hurun Report chief researcher Rupert Hoogewerf said in a statement.

This year's list shows China was "moving away from traditional sectors like manufacturing and real estate, towards the new economy", he added.

Wang Xing, founder of food delivery app Meituan, quadrupled his wealth and jumped 52 places to 13th in the list with $25 billion, while Richard Liu, the founder of online shopping platform JD.com doubled his money pile to $23.5 billion.

Healthcare entrepreneurs also moved up the list on the back of the pandemic, with Jiang Rensheng, founder of vaccine-maker Zhifei, tripling his value to $19.9 billion.

China shut down major cities around the country in late January and February to contain the virus that first emerged in Wuhan, causing an unprecedented economic contraction in the first quarter.

With infections appearing to be under control, the country is on track to become the only major economy to expand this year, according to the International Monetary Fund.

On Monday, data showed the economy expanded 4.9 per cent in the third quarter but away from the glittering figures many ordinary workers and fresh graduates are struggling to find jobs.

The urban jobless rate inched down to 5.4 per cent in September, although analysts have warned of higher unemployment than officially reported this year.