[Adobe Stock]
On a different note, big U.S.-based tech firms are continuing to invest heavily in AI infrastructures, despite the threat of imposing tariffs, noting that this technology increase is a “once in a lifetime” occurrence and they would be remiss to avoid their heavy billion dollar investments. Only a significant economic slowdown would cause these companies to back down on their investments, according to an interview with Amazon’s CEO Andy Jassy.
Government & Policy
[Image licensed from Adobe Stock]
1. Semiconductor and electronics tariffs create market confusion
The Trump administration adjusted its tariff policy, exempting semiconductor chips but outlining implementation via Section 232, which involves a lengthy national security review process. This created uncertainty among analysts regarding the timing and likelihood of these levies. Simultaneously, tariffs on electronics such as phones and laptops were temporarily paused but could resume within months as part of the semiconductor tariff evaluation. Commerce Secretary Howard Lutnick indicated these tariffs are exempt from reciprocal actions but fall under the broader semiconductor tariffs expected soon.
2. DuPont faces China probe following U.S. tariff actions
Shortly after the U.S. announced increased tariffs on Chinese imports, regulators in Beijing initiated a probe into DuPont, Wilmington, Delaware, citing unspecified monopolistic behavior. This action coincided with China’s announcement of new tariffs on U.S. goods and export controls. DuPont, which generated nearly 20% of its 2024 revenue in China, also encountered Chinese regulatory challenges during the previous Trump administration.
Technology & Electronics
3. STMicroelectronics to cut nearly 3,000 jobs by 2027
STMicroelectronics, Geneva, Switzerland, announced last week that it would cut nearly 3,000 jobs through 2027 as the company seeks to revamp its operations following months of lackluster sales. Up to 2,800 employees will leave the company by 2026 and 2027. The company employed 49,600 people at the end of 2024. The company said it would handle the staff departures through voluntary measures. While demand for chips to power data centers for artificial intelligence (AI) applications continues to expand, demand for legacy semiconductors used in cars and industrial equipment has been subdued in recent months.
4. Why Apple saw its worst stock performance in 25 years
An analysis by Techinsights revealed that newly proposed U.S. tariffs could add nearly $300 to the cost of RDW Index member Apple’s iPhone 16 Pro assembled in China (54% levy) compared to India (26% levy). Apple is working to increase production capacity in India, though it’s projected to reach only about half of China’s rate by 2027. The tariff news contributed to a 19% drop in Apple’s share price over three days, its worst performance in 25 years. Assembling the iPhone in the U.S. would reportedly incur costs exceeding the potential China tariff. The iPhone accounts for roughly half of Apple’s total revenue.
Corporate Actions & Life Sciences
5. Pfizer sells San Diego research campus for $255 million
RDW Index member Pfizer, New York City, announced last week that it has sold its five-building research campus located on Science Center Drive in San Diego, California, to life sciences real estate firm BioMed Realty, San Diego, for $255 million. The five buildings sit on 25 acres and total more than 500,000 square feet of facilities. BioMed plans to offer a best in class setting at the campus in support of their clients’ missions to advance human health.
Automotive & Manufacturing
[Image from Northvolt]
6. Scania acquires Northvolt’s heavy industry battery business
Truck maker Scania, Sodertalje, Sweden, announced last week that it has acquired the heavy industry business from Northvolt, Stockholm, Sweden which had filed for Chapter 11 bankruptcy. Norhtvolt’s industrial division produces batteries for customers in material handling, construction equipment and mining. The business has production facilities, an R&D center, and a team of about 260 employees across sites in Gdansk, Poland, and Stockholm. The Scania deal ensures continuation of battery production operations.
7. Report indicates automotive R&D slowdown amid challenges
A recent report by Kotak Securities, Mumbai, India, reveals that automotive companies are dealing with several major challenges, including shifts in technology, changing customer needs, and new government rules and regulations. It is unclear how these changes will play out and for now, many automotive companies have put a pause on their R&D investments and spending. Most original equipment manufacturers (OEMs) have indicated some taper off in R&D investments from elevated levels in CY2024. The lower R&D investments also do not even include the possible impact of new U.S. tariffs which would lead to further cutback, according to the report. Some large global carmakers are already adjusting their supply chains, using more local parts and factories to serve nearby markets and reduce the risk from trade barriers. A Monte Carlo simulation from R&D World projected that auto R&D could fall by about one-third at one year.
The R&D World Index
R&D World’s R&D Index is a weekly stock market summary of the top international companies involved in R&D. The top 25 industrial R&D spenders in 2020 were selected based on the latest listings from Schonfeld & Associates’ June 2020 R&D Ratios & Budgets. These 25 companies include pharmaceutical (10 companies), automotive (6 companies) and ICT (9 companies) who invested a cumulative total of nearly 260 billion dollars in R&D in 2019, or approximately 10% of all the R&D spent in the world by government, industries and academia combined, according to R&D World’s 2021 Global R&D Funding Forecast. The stock prices used in the R&D World Index are tabulated from NASDAQ, NYSE, and OTC common stock prices for the companies selected at the close of stock trading business on the Friday preceding the online publication of the R&D World Index.
