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Choosing Chip Supply Chains; Betting on Stores; Paring Electronics Stocks

By Paul Page

 

SK Hynix Solid State Drive modules. The South Korean company has invested billions in China and plans a new advanced-chip packaging plant in the U.S. PHOTO: SEONGJOON CHO/BLOOMBERG NEWS

Semiconductor companies looking for federal support to expand in the U.S. may face a tough supply-chain decision. The companies seeking grants under the Chips Act may have to decide whether to take Washington’s help or preserve their ability to expand in China. The WSJ’s Yuka Hayashi and Jiyoung Sohn report that some of the proposed rules include restrictions that chip makers would face on operations in China and other countries if they accept taxpayer funding. Some of the rules were tougher than industry executives, lawyers and national-security analysts say they had expected, and they are particularly onerous for East Asia companies that figure prominently in global chip supply chains. Those include South Korea’s Samsung Electronics and SK Hynix and contract chip maker Taiwan Semiconductor Manufacturing. Each of those companies have substantial investments in China, and have disclosed plans for big U.S. manufacturing operations.

  • The U.S. and Japan reached a trade agreement on electric-vehicle battery minerals. (CNBC)
  • Exports of semiconductor manufacturing equipment to China plummeted in 2022. (Nikkei Asia)
 
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E-Commerce

GameStop is the latest retaler to see its stores as potential fulfillment centers. PHOTO: CAM POLLACK/THE WALL STREET JOURNAL

The original meme stock is back into brick-and-mortar stores. Video-game retailer GameStop is back to relying more on its mall-based locations, and is even using its stores as mini fulfillment centers for its scaled-down e-commerce business. The WSJ’s Sarah E. Needleman and Dana Mattioli write the latest moves mark a sharp reversal in the strategy that billionaire Ryan Cohen undertook in 2021, when he took control of the business and vowed to transform the faltering videogame retailer into an e-commerce juggernaut. Since last year, with little fanfare, the company has slashed costs, scrapped plans for more warehouses to handle online orders and shuttered an e-commerce customer-service center while refocusing on its roughly 4,400 physical stores. The turnabout highlights the complications of pivoting to e-commerce, and that the move may in fact not work for some merchants. At GameStop, e-commerce sales are falling, but profits are once again growing.

  • Macy’s CEO Jeff Gennette is retiring next year after steering the retail chain through several crises and overhauling its supply chain. (WSJ)
 

Quotable

“Our stores, in particular, are a differentiator that will help us maintain direct connectivity to customers and position us to have localized order fulfillment capabilities across more geographies.”

— GameStop CEO Matt Furlong, in an internal memo
 
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Supply Chain Strategies

A Micron Technology automotive chip manufacturing plant in Manassas, Va. PHOTO: STEVE HELBER/ASSOCIATED PRESS

Declining demand for consumer electronics is causing deeper financial pain for the sector’s big suppliers. Memory-chip maker Micron Technology took a $1.4 billion write-down on its piled-up inventory in its latest quarter, the WSJ’s Dan Gallagher writes in a Heard on the Street column, the latest sign of the steep roller-coaster semiconductor manufacturers have been riding. Micron’s quarterly revenue plunged 53% and it lost a record $2.3 billion on an operating basis. The company cut its inventories slightly from the previous quarter to $8.1 billion even as broader market forces took a toll. Prices for memory chips have weakened and chip makers can’t fully shut down fabrication facilities that are packed with expensive and sensitive equipment. There’s little relief in sight: Gartner projects worldwide shipments of PCs, tablets and mobile phones will decline 4.4% this year after dropping 11.9% in 2022, while PC vendors continue to pare inventories.

 
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Number of the Day

11.9%

Year-over-year decline in Vietnam’s exports in the first quarter, including a 15% drop in smartphone shipments.

 

In Other News

U.S. pending-home sales rose in February for the third month in a row. (MarketWatch) 

The Biden administration is pushing for American businesses to invest in Africa to counter China’s reach on the continent. (WSJ)

Russia and India are in talks to expand development of the Arctic Northern Sea shipping route. (Reuters)

U.S. electricity produced from renewable energy sources surpassed coal-generated electricity last year for the first time. (Progressive Railroading)

Hong Kong-based on-demand logistics and delivery service Lalamove filed for a public stock offering in Hong Kong after dropping plans for a U.S. listing. (South China Morning Post)

Denmark’s Monjasa has lost contact with one of its product tankers after the crew reported the vessel was being boarded by pirates off the west coast of Africa. (Maritime Executive)

South Korea appointed advisors to prepare for the privatization of container line HMM. (ShippingWatch)

U.S. regulators grounded Asia Pacific Airlines, the only airline providing international cargo service to the Marshall Islands. (The Loadstar)

A federal court in Tennessee approved a $13 million settlement in a class-action suit alleging that trucker U.S. Xpress misled investors in 2018. (Transport Dive)

DHL struck an agreement with workers at a Jaguar Land Rover plant to avert a walkout at the Merseyside, U.K., site. (Motor Transport)

A second bidder for Travel Centers of America raises the prospect of a bidding war for the truck stop operator. (Commercial Carrier Journal)

 

About Us

Paul Page is editor of WSJ Logistics Report. Reach him at paul.page@wsj.com.

Follow the WSJ Logistics Report team: @PaulPage, @bylizyoung and @pdberger. Follow the WSJ Logistics Report on Twitter at @WSJLogistics.

 
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