Supply chain stability and greener ride hailing

Hello, from Taiwan! I am writing this on the high-speed train back to Taipei from Hsinchu after Taiwan Semiconductor Manufacturing’s annual general meeting. Like last year, TSMC booked a hotel and asked its hundreds of shareholders to divide into small groups and watch a live stream of the event in separate guest rooms. The management team hosted the event from the hotel’s otherwise empty ballroom.

TSMC’s caution reflects the fact that Taiwan is still in the grip of its most serious Covid wave, with more than 2mn people contracting the virus in the past two months alone. The Taiwanese chip titan — which has managed to keep production going smoothly through three years of the pandemic — continues to keep a tight rein on interactions between its executives and the outside world.

Some things, however, are proving more difficult to control. Chairman Mark Liu acknowledged for the first time that costs for building its cutting-edge US chip plant are higher than expected, while hiring is also proving more of a challenge. TSMC said it is also keeping a close eye on inflation, though it still expects healthy revenue growth this year.

Happy at home

Two of the most pressing questions in the chip industry these days are whether and where to expand production. For Tokyo Electron, the answers are clear, writes Nikkei Asia’s Shoichiro Taguchi.

President and CEO Toshiki Kawai says his company — Japan’s leading chip equipment maker — will maintain its focus on Japan, where its four main factories churn out tools for some of the world’s biggest semiconductor companies. Tokyo Electron plans to invest over $7bn in research and development over the next five years, most of it in Japan.

It is a sharp contrast to its clients, including the likes of Taiwan Semiconductor Manufacturing and Samsung Electronics, who are under increasing pressure to expand their manufacturing presence overseas.

Morris Chang, the founder and former chairman of TSMC, has repeatedly argued that concentrating its operations in its home market has been fundamental to its success. Shifting away from that model, according to Chang, would be economic folly.

It is an argument that would surely sit well with Kawai.

Connection issues

With tangles of wires strung up across the capital, Cambodia’s internet infrastructure may not be pretty but it gets the job done, writes Shaun Turton for Nikkei Asia. The country enjoys some of the cheapest and fastest internet connections among its economic peers.

The sector’s runaway growth, however, came amid a near total lack of regulatory oversight, according to several industry players. License terms went unenforced and fees to the government uncollected.

Now, regulators are cracking down. The sudden shift has caught many internet service providers by surprise, and some warn that Cambodia’s gains in internet connectivity could be at risk.

GoTo’s ‘pay later’ play

Apple made headlines globally this week when it announced it was diving into the buy now, pay later (BNPL) market. But in Indonesia, it may be bigger news that major platform provider GoTo is doing the same thing, writes the Financial Times’ Oliver Telling.

After unveiling its “GoPayLater” service in October, the company will launch more lending products to capitalize on Indonesia’s significant population of consumers who lack access to traditional credit, president Patrick Cao said in an interview.

Superapp providers like GoTo dominate the Southeast Asian market. In the West, consumers may use Amazon for online shopping, Uber for ride-hailing and Deliveroo for food delivery. But Indonesians use GoTo’s app for all these services.

The company’s expansion into the BNPL market therefore has the potential to shake up the credit industry in Indonesia. “Credit card penetration ranges from 3% to 6% and financial inclusion has a lot of room to grow,” Cao said.

GoTo is not the only company in the region boosting investment in online BNPL services, as growing internet use drives demand for alternative sources of credit. But amid growing scrutiny of the risks globally, the bid to offer these loans to consumers in emerging markets will undoubtedly raise a few eyebrows.

Green dreams

Tech companies around the world are setting ambitious environmental targets, from using more recycled materials to cutting emissions. One of the latest examples comes from Southeast Asia, where ride-hailing and food delivery service giant Grab has pledged to reach carbon neutrality by 2040, writes Tsubasa Suruga with Nikkei Asia. Grab says it will transition all of its ride-hailing fleet to low-emission vehicles in Singapore by sometime in the following decade. Indonesian rival GoTo will have a fully electric fleet of vehicles by 2030.

Laying out aggressive carbon reduction blueprints is popular with many shareholders as pressure to move away from fossil fuels mounts. They also dovetail with government initiatives, such as Singapore’s plan to abandon internal combustion vehicles by 2040. Indonesia has set a similar goal for 2050.

Aggressive plans, however, are one thing. Realizing them is another.

“Full EV conversion is something that could make sense in cities with an aggressive ramp-up of EV charging infrastructure, like Singapore,” said professor Walter Theseira, an associate professor of economics at Singapore University of Social Sciences. “It may not make sense elsewhere yet.”