Turkey's homemade fighter poised to storm global markets - Asia Times

Turkey’s Kaan Next-Generation Fighter, previously known as the TF-X, has made its first flight, giving rise to geostrategic speculation the fighter jet may soon be available for export to a range of states, according to multiple news outlets.

The aircraft was airborne for 13 minutes, reached an altitude of 8,000 feet and a speed of 230 knots while flying alongside an F-16D for support, the reports said.

The TF-X cum Kaan project, launched in 2016, aims to replace Turkey’s fleet of US-made F-16s, which will be phased out starting in the 2030s. The Kaan’s design philosophy has evolved since Turkey left the US-led F-35 consortium following the country’s controversial procurement of Russia’s S-400 missile defense system in 2019.

The Kaan will be the flagship of Turkey’s military aerospace industry, with the country working on a project to produce locally manufactured jet engines and the design being considered for a sixth-generation fighter replete with artificial intelligence-powered capabilities.

Popular Mechanics notes in a March 2023 article that the Kaan is in the same league as South Korea’s indigenously made KF-21 Boramae fighter. This 4.5 generation jet falls short of being a 5th generation aircraft, although a complete stealth configuration and indigenous engines are planned for a third production batch.

Popular Mechanics mentions that the Kaan is expected to meet performance benchmarks for modern fighter jets, with a top speed between Mach 1.8 to 2.2, a service ceiling of 55,000 feet, a 700-mile range on internal fuel and supersonic capability without afterburners. However, the report assesses those capabilities are still more aspirational than assured.

The Kaan features an indigenous, bird strike-resistant canopy, single-wheel landing gears, 7050-grade aluminum nose and cockpit, titanium central fuselage and lightweight carbon composite thermoplastic coatings on the engines and surface inlets to reduce radar reflectivity.

While the Popular Mechanics report says Turkey claims up to 85% indigenous parts for the Kaan, it features imported components such as two General Electric F110-GE-129 turbofan engines and a Martin-Baker ejection seat.  

Popular Mechanics says the Kaan is expected to feature an indigenous Aselsan AESA-class multimode radar that can scan and jam simultaneously, increasing resistance to jamming, and will have twice as many transmit-receive elements on the AN/APG-77 radar used on the US F-22.

It also says the Kaan has a nose-mounted forward infrared search and track (IRST) sensor, an electro-optical system with 360-degree coverage. Turkish firms have already built various laser, missile and radar warning receivers, including digital radio frequency memory (DRFM) jammers, for integration in the Kaan.

Turkish Defense Minister Hulusi Akar at a Kaan unveiling ceremony. Image: Turkish Defense Ministry

The Kaan can reportedly store four weapons in an internal weapons bay and four more in its side fuselage bays alongside an autocannon. It also has four underwing hardpoints for non-stealth options.

While the Kaan may be a sound design, Turkey’s economic woes may prevent it from getting past the prototype technology demonstrator stage or limit the actual number of production airframes.

In an article for The National Interest (TNI) this month, Stavros Atlamazoglou notes that the Kaan’s reliance on key imported parts and Turkey’s poor economic prospects may jeopardize the aircraft’s future. Atlamazoglou mentions that the weak Turkish lira could result in extreme cost overruns for advanced projects like the Kaan.

While Turkey can still spread out costs over several years of production, such attenuation may result in capabilities that are obsolete on delivery, as Turkey plans to have an operational capability by 2040 with a fleet of 300 aircraft.  

Nevertheless, Turkey likely aims to pitch the Kaan on the international fighter jet market. Aside from longtime strategic partner Azerbaijan, the UAE, Indonesia and Pakistan have been cited as potential customers.

Asia Times reported in January 2022 that Russia and the UAE have entered into talks to co-produce the former’s Su-75 Checkmate fighter, following US restrictions on F-35 sales to the UAE due to its telecoms contracts with Huawei that Washington believes could compromise the F-35’s technology.

However, the Su-75’s future is uncertain. Paul Iddon mentions in a June 2023 Business Insider article that unconfirmed reports state the UAE has stopped funding for the Su-75, with the threat of secondary sanctions and import restrictions on microelectronics to Russia serving as strong disincentives for continued participation in the program.

Iddon also states the possibility that the UAE’s involvement in the Su-75 program was more bluff than intent in a negotiating tactic to pressure the US into eventually selling F-35s.

While Ashley Roque notes in a February 2023 Breaking Defense article that the US has not completely ended the possibility of F-35 sales to the UAE, the latter’s close relations with China is still a sticking point. Should the US refuse to sell F-35s to the UAE and the Su-75 fails to materialize, Turkey’s Kaan fighter could be a viable alternative candidate.

While Indonesia participates in South Korea’s KF-21 Boramae project, Asia Times reported in July 2023 that Jakarta is struggling to pay its share of the venture, which is reported at 20% of the total cost. Those late payments could force South Korea to look for new partners for its KF-21, such as the UAE, Malaysia and Poland.

Indonesia has been struggling to modernize its air force, with cost constraints and strategic concerns driving a multi-pronged acquisition approach that includes acquiring 24 US-made F-15EX jets, 42 French-made Rafales, sourcing used F-15 engines from Japan for its F-16 fleet, and buying used ex-Qatari Mirage 2000-5 jets.

The KF-21 Boramae at its roll-out ceremony. Photo: KAI

Turkey’s Kaan could be a viable replacement for the KF-21, offering some of the capabilities of Western 5th-generation fighters at a fraction of the cost while keeping in line with Indonesia’s strategy of diversifying its military equipment suppliers to maintain strategic autonomy.

While Pakistan is building up its air force with Chinese fighters, those jets may not perform as expected in a high-intensity conflict. Asia Times noted in January 2024 that while Pakistan is a repeat customer for China’s fighter jets, the JF-17, which makes up the backbone of Pakistan’s fighter fleet (alongside US-made F-16s), is not designed to compete with 5th-generation fighters and is better equipped for low-intensity conflicts such as insurgencies or basic air defense.

Significantly, the TF-X project, which led to the Kaan, is a joint Turkish-Pakistani project. The Kaan may allow Pakistan to alleviate concerns that its dependence on China for sophisticated weapons could lead to the subjugation of its foreign and defense policies to China’s interests. However, the troubled Turkish and Pakistani economies call into question the viability of such cooperation.

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Carousell fined S$58,000 over data leaks that affected more than 2.6 million users

FIRST BREACH

The first data breach took root in July 2022 when Carousell implemented changes to its chat function.

The changes were meant to be limited to users in the Philippines who were responding to property listings. When the users provided prior consent, their first name, email address and phone number would be automatically sent to the owner of the property listing.

Due to human error, however, the email addresses and names of guest users were automatically appended to all messages sent to the listing owners of all categories in all markets.

For guest users in the Philippines, their telephone numbers were also appended to the messages.

Carousell did not pick up on this bug at the time. Instead, a month later, it implemented a fix to resolve an unrelated issue with the pre-fill functionality of the chat function.

This worsened the effect of the original bug. The email addresses and names of registered users were then automatically appended to messages sent to listing owners of all categories in all markets as well.

For users in the Philippines, their telephone numbers were also appended.

On Aug 24, 2022, Carousell fixed the bugs after a user sent in a report.

The bugs led to the personal data of 44,477 people being leaked. This comprised the email addresses of all affected users as well as the mobile phone numbers of users in the Philippines.

While names associated with users’ accounts were also disclosed, the PDPC did not consider this relevant in assessing how Carousell breached the Personal Data Protection Act (PDPA).

The commission accepted Carousell’s explanation that these names were not necessarily indicative of the users’ actual names, and were already listed on the users’ public profiles.

SECOND BREACH

As for the second data leak, the PDPC alerted Carousell to it on Oct 13, 2022 when someone offered about 2.6 million users’ personal data for sale.

The breach arose when Carousell launched a public-facing application programming interface (API) during a system migration process on Jan 15, 2022. An API allows computer programmes to communicate with each other.

However, Carousell inadvertently failed to apply a filter on the API it had launched.

The filter would have ensured that only publicly available data of users who were followed by, or following, a particular Carousell user would be called up.

Because the filter was not present, the API was able to call up the users’ private data comprising email addresses, telephone numbers and dates of birth.

This vulnerability was exploited by a threat actor who scraped the accounts of 46 users with large numbers of users following them, or who were following many other users. This occurred in May and June 2022.

Carousell’s internal engineering team discovered the API bug on Sep 15, 2022 and deployed a patch that same day.

When the company conducted internal investigations to find out if users’ personal data had been accessed without authorisation in the 60 days before it discovered the bug, it did not detect any anomalies.

Carousell remained unaware of this breach till the PDPC informed them of the data sale advertisement.

The judgment did not indicate whether the data was actually sold.

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Edotco Cambodia appoints Ashok Muthu as country managing director

An Edotco pioneer with varied leadership roles in Operations, Engineering, and Technology
Will lead efforts to enhance connectivity and accelerate telco infrastructure development

Edotco Cambodia, a leading telecommunications infrastructure services provider, has appointed Ashok Muthu (pic) as its new country managing director. With extensive industry experience, Ashok will lead efforts to enhance connectivity and accelerate telecommunications…Continue Reading

China unveils guidelines for brain chip research - Asia Times

Aiming to keep pace with what American entrepreneur Elon Musk’s Neuralink has achieved, China has recently unveiled a set of ethical guidelines for companies wishing to do invasive brain chip research on humans,.

For example, the Artificial Intelligence Ethics Subcommittee of the National Science and Technology Ethics Committee, a unit of China’s State Council, says in the guidelines that technology firms must have written consent, either from those who plan to receive implanted brain-computer interfaces (BCIs) in their heads or from their guardians.

 The guidelines came after Neuralink successfully implanted a brain chip to a person for the first time in January. 

Musk said on Monday that the human patient seems to have made a full recovery from the surgery and is able to move a mouse around the screen just by thinking.

Last September, Neuralink said it had received approval from US regulators to recruit human beings for the trial of its brain chip experiments. The patient, whose identity has not been released, is believed to be a person with quadriplegia due to cervical spinal cord injury or to amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s Disease.

Musk’s latest human experiment. Photo: YouTube

Chinese President Xi Jinping said earlier this month that the country should build “new productive forces” to upgrade its manufacturing sectors. According to the plan, China will nurture its own technology firms and research institutions that are engaged in work on artificial intelligence, the next iteration of the internet (termed the “metaverse”) and the making of humanoid robots and BCIs.

China’s Neuralink 

There are three types of BCIs in the markets. Non-invasive BCIs refer to headbands that detect brainwave signals. Invasive BCIs require brain surgery while semi-invasive ones are located under the skull but are not attached to the brain. 

Last May, the United States Food and Drug Administration approved human trials for invasive BCIs. According to an online database of active clinical trials in the US, there are more than 40 BCI trials under way. 

Neuralink has tested out its brain chips on pigs and monkeys. Media reports said some monkeys died or suffered from paralysis, seizures and brain swelling but the company said none of them died as a result of their implants. 

In April 2021, Neuralink released a video showing a monkey playing Pong video games with his brain. 

NeuroXess, a Shanghai-based company established in 2016, said last July that it had implanted a chip in a monkey’s brain in May, allowing the animal to play a Pong video game with its mind. 

The company also said it achieved 85% accuracy when analyzing the monkey’s brain cells to predict how it will pull the joystick. It said the delay time was within 30 milliseconds. 

NeuroXess’s Peng Lei. Photo: PR Newswire Credit: NeuroXess

Peng Lei, founder and chief executive of NeuroXess, said in the China Entrepreneurs Forum on Thursday that Neuralink’s brain chip can help the patient control a mouse, meaning that it can decode up to a hundred channels of neurons. He said he expects that Neuralink’s future patient will soon be able to use a brain chip to control a robot arm or a wheelchair.

He said in a previous interview that his company will take the same approach as Neuralink to implant neuropixels, or next-generation electrodes that can record the activity of hundreds of neurons, to human’s brains. But he said the neuropixels will be surrounded with biodegradable silk protein to reduce tissue damage and lower the risks of rejection reaction. 

He said he expects the number of channels that a BCI can decode to double by every 18 months, creating a new Moore’s Law. In 1965, Intel co-founder Gordon Moore predicted that the number of transistors in an integrated circuit would double about every two years. 

Apart from NeuroXess, key BCI startups in China include NeuraHua, NeuraMatrix, Shanghai StairMed Technology and BringUp Technology.

According to China’s newly-launched guidelines, companies need approval from the government for doing BCI research on humans. They need to finish clinical trials in animals before implanting brain chips into patients.

The guidelines also say:

  • Companies should ensure that people’s privacy and personal information are well-protected.
  • Technology companies should not conduct illegal activities, infringe people’s legitimate rights, undermine social stability or falsely advertise the capabilities of their products.
  • The country encourages research on restorative brain-computer interfaces, which are aimed at helping patients or disabled people restore their missing sensory, limb and language functions.
  • The country also encourages the development of non-medical BCI products for regulating attention, sleep and memory, as well as controlling robotic exoskeletons.
  • BCI product developers will be penalized if they violate the nation’s law and standard practices.

The guidelines were drafted by the National Science and Technology Ethics Committee, together with a group of research institutions including Peng Cheng Laboratory, Peking University and Zhejiang University, Xinhua reported. The committee has sought opinions from high schools, scientific research institutions and companies.

Government’s support

In 2021, China’s Ministry of Science and Technology announced the Brain Science and Brain-like Intelligence Technology Development Plan, which outlined the country’s roadmap to develop neuroscience by 2030.

The plan said the government will provide support to companies and research institutions to develop their BCI projects and encourage the sharing of databases. 

“Like many other countries, China attaches great importance to research in neuroscience. The development of this technology has already become China’s national strategy in recent two years,” Zhu Yashu, a researcher at the National Institute of Finance, Tsinghua University, says in an article published last year.

However, Zhu points out that China does not have commercialized neuropixels and has to import them from the US. She says China also needs to purchase high-end semiconductors from Global Foundries and Taiwan Semiconductor Manufacturing Co and metal wires from TE Connectivity and Furukawa Electric.

She says China has started developing its signal processing and machine-learning algorithms for BCIs but is still lacking behind Google’s Deepmind, BrainGate and the Howard Hughes Medical Institute in the US.

Read: SMIC to sell Huawei costly, inefficient 5nm chips

Follow Jeff Pao on Twitter at @jeffpao3

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Rockwell Automation promotes Mariya Prempeh to oversee operations in Singapore, Malaysia and Brunei

The promotion underscores Rockwell’s commitment to regional growth
Prempeh will oversee business operations and direct sales in the three countries

Rockwell Automation, the company dedicated to industrial automation and digital transformation, has announced the promotion of Mariya Prempeh (pic) as country manager, Singapore, Malaysia and Brunei, expanding her current role from Singapore. 
In her…Continue Reading

China bond outperformance tells a bigger story - Asia Times

China’s stock investors could be excused for feeling like President Xi Jinping is disinterested in their plight as market valuation losses mount.

Bond punters seem ascendant, though, as Beijing officialdom makes clear it has their backs in the way few international funds saw coming.

The hyper-targeted nature of policy rescue efforts by the People’s Bank of China (PBOC) and other arms of the state explain why yuan-denominated corporate bonds were among the globe’s best-performing asset classes last year.

The dollar bonds of local government financing vehicles (LGFV) were also big winners in 2023. Unlikely, too, given all the hand-wringing about the US$9 trillion LGFV debt mountain.

The borrowing binge has credit rating companies worried that municipal debt will be China’s next crisis, one that could dwarf today’s huge property troubles.

The reason bonds are winning: Xi’s team understands that a vibrant sovereign bond market is needed to defuse the property crisis and head off a local government debt meltdown. The same goes for achieving Xi’s bigger goal of replacing the dollar as the linchpin of trade and finance.

That’s not to say Xi’s team has given up on putting a floor under China’s stock markets or gross domestic product (GDP). In 2023, inflation-adjusted GDP beat Beijing’s target to grow at 5.2%. But nominal GDP slipped to 4.6% from 4.8% a year earlier as deflationary pressures mount.

To economist Zhang Zhiwei at Pinpoint Asset Management, nominal GDP trailing real output “suggests China is likely growing below its potential growth. More supportive fiscal and monetary policies would help China to restore its growth potential.”

Economist Duncan Wrigley at Pantheon Macroeconomics says news that domestic loan growth only expanded by 10.4% year-on-year in January, the slowest pace since 2003, suggests more stimulus is coming.

The downshift indicates “still-relatively sluggish credit demand, despite net new social financing and net new loans beating market expectations.”

But the longer-term goal of increasing China’s financial footprint is the bigger priority. Beijing has made significant inroads into making the yuan a major reserve currency.

The endeavor shifted into higher gear in 2016 when China secured a place in the International Monetary Fund’s “special drawing-rights” program. It was then that Xi won the yuan entry into the globe’s most exclusive currency club along with the dollar, euro, yen and the pound.

In 2023, the yuan topped the yen as the currency with the fourth-largest share in international payments, according to financial messaging service Swift. It overtook the dollar as China’s most used cross-border monetary unit, marking a first.

The yuan is supplanting the dollar in certain spaces. Photo: Facebook Screengrab

Also last year, Chinese government bonds performed better than US Treasuries in terms of total returns. Adding in the outperformance by corporate bonds, 2023 was a milestone year for China’s emergence as a debt-market superpower.

Yet the dollar continues to dominate despite the US national debt topping $34 trillion and as extreme political polarization in Washington has Moody’s Investors Service threatening to yank away America’s last AAA credit rating.

Xi’s reform team is looking to borrow from Washington’s model for luring waves of capital into local assets. Doing so is vital to financing China’s development and sustaining the giant infrastructure projects driving economic growth.

At the moment, foreign investors hold about 30% of the $26 trillion of US public debt outstanding. In China, it’s 10% at most. Xi, in other words, hopes to get foreign governments and the globe’s top asset managers to fund his economy the same way they long have the US’s.

That means building more vibrant and transparent capital markets. Though the magnitude of China’s total debt liabilities isn’t in the same orbit of the US, China’s public IOUs also exceed GDP. In China’s case, the IMF estimates the burden to be about 116% of GDP when you add in local governments’ off-balance-sheet borrowings.

For China, municipal governments are vital to meeting Beijing’s ambitious annual growth targets. Yet following years of runaway investment in infrastructure, fallout from Covid-era downturns, fewer windfalls from land sales and soaring pandemic-related costs, local government debt is now a top financial risk.

Economists agree that Xi and Premier Li Qiang should lean into increasing global demand for Chinese debt. The end of Federal Reserve tightening signals that interest rate differentials between the US and China have peaked. At the same time, China’s deflation trend means investors buying today could be looking at big returns as bond prices rise.

Already, Beijing has increased and widened the channels to welcome foreign investors, including benchmarks like FTSE Russell.

What’s needed now is a top-to-bottom revamp of market mechanisms from efficient pricing to hedging tools to allowing for capital to enter and leave markets easily. Beijing must make its national balance sheet more transparent and move its fiscal management practices more in line with global norms.

Xi also must resist the urge to weaken the yuan for short-term gain. As economic headwinds intensify, nothing would boost Chinese GDP faster than a weaker exchange rate to boost exports. That might turn off global investors who think in dollar terms.

Hence the Chinese central bank’s reluctance to ease policy. Earlier this month, the PBOC cut the amount of cash banks must keep in reserve by 0.5 percentage points. That pumped 1 trillion yuan ($140 billion) in long-term liquidity into markets.

It was enough to tame bond market dynamics but not stabilize Shanghai stocks. Equity investors have been waiting for Xi’s team to launch a giant new stock stabilization fund – so far, to no avail.

Part of the rationale seems to be that China can do the bare minimum to stabilize stocks and keep GDP as close to 5% as possible. The restrained nature of policy moves, though, appears positive for bond markets and negative for stocks.

“This pattern of new lows in bond yields and resumption of declines in equities highlights to us that the market is concerned that stimulus is not sufficient to address the current deflationary environment,” notes strategist Jonathan Garner at Morgan Stanley. “Our economists continue to argue that a major fiscal package targeting the consumer is needed.”

At the same time, it’s possible “policymakers may start shifting their focus from foreign exchange stability toward more monetary easing” as the need for a stable yuan “has become less necessary,” says Jingyang Chen, strategist at HSBC Holdings.

The overriding focus, though, must be fixing the cracks in China’s financial system. Trouble is, the “ongoing news flow” points to a property crisis that’s “still hot and not easy to resolve,” says analyst Kieran Calder at Union Bancaire Privee.

The bottom line, he adds, is that investor confidence “cannot return” until the property sector is finally fixed. Indeed, the longer the default troubles at China Evergrande Group and Country Garden make global headlines, the more challenging it will be for Asia’s biggest economy to attract enough capital.

At the moment, Xi and Li also are stepping up efforts to head off a local government debt reckoning. Moves include pulling some of the leverage built up by prefectures around the nation onto Beijing’s own balance sheet.

It’s a delicate process. Xi’s Ministry of Finance must maintain confidence among investors that they won’t sustain massive losses. This perception is vital to attracting healthy demand for new debt issues to finance cleaning up older ones.

Here, it’s vital to get right the mix of banks upping lending in the short run and address local government imbalances in the long run.

Beijing is indeed making some progress. As analysts at UBS argue in a note, “continued local government financing vehicle debt swaps using the previous issuance of special refinancing local government bonds in 2023 may have reduced some existing bank loans, corporate bonds and shadow credit.”

In the long run, the ends could justify the means of China prioritizing bond over stock markets. Yet in other ways, the challenges involved in buttressing confidence among global investors is growing.

This week, Xi’s regulators tightened curbs on China’s rapidly growing quant trading industry. Both the Shanghai and Shenzhen exchanges are increasing monitoring of such dealing, particularly in the leveraged products space, after freezing the account of a major fund for three days.

Such regulatory uncertainty has been a constant worry for global investors since Xi’s tech crackdowns beginning in 2020. Those moves, and myriad others since then, tarnished Xi’s 2013 pledge to let market forces play a “decisive” role in Beijing decision-making.

For all Xi’s promises, China today is fending off worries it’s a buyer-beware market.

In March, Xi entrusted the reform process to Premier Li, who has since promised to accelerate moves to diversify growth engines. One key priority is creating deeper and trusted capital markets so that households invest in stocks and bonds in addition to property.

Chinese President Xi Jinping and Premier Li Qiang in a file photo. Image: NTV / Screengrab

Such retooling is needed to change the narrative that Chinese markets. Too many foreign investors still fear that Chinese markets are underpinned by a developing economy with limited liquidity and hedging tools, a giant and opaque state sector, and an immature credit-rating system that obscures risk and enables the chronic misallocation of capital.

In recent years, foreign investors wondered whether China might be facing a Lehman Brothers-like reckoning. Or a crash akin to the 1997-98 Asian financial crisis. For some, the property-overhang dynamic plaguing China’s 2024 echoes Southeast Asia’s predicament 26 years ago.

As top-heavy economies from Bangkok to Jakarta to Seoul hit a wall, investors fled and crashed currencies in their wake. That made dollar-denominated debt impossible to manage as default rates exploded across the region.

China’s property crisis has caused unpredictable challenges for local governments as tax revenues dry up. To Logan Wright, director of China markets research at Rhodium Group, “a collapse in local government investment would be comparable to the economic impact of the crisis in the property market.”

He notes that the “most important variable impacting” the world’s second-biggest economy “will be the success or failure of local government debt restructuring.”

You can’t restructure much, though, if China’s debt capital markets aren’t up to the task. The good news is that Xi’s team is focused on raising China’s bond market game and at least some global investors appear to be getting the memo.

Follow William Pesek on X at @WilliamPesek

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Renesas putting Japan on global chip-making map - Asia Times

TOKYO – Renesas Electronics plans to acquire printed circuit board electronic design company Altium and gallium nitride power device maker Transphorm with a third major acquisition reportedly in the works, the latest big moves by Japan’s largest integrated semiconductor device maker.

These and previous acquisitions are key to the company’s drive to build a large, profitable and globally competitive semiconductor business spanning automotive, industrial, infrastructure, Internet of Things (IoT), cloud computing, data center and space and defense applications.

In combination with the rationalization of existing operations, the moves to date have been profitable. Since 2016, the company’s consolidated sales have increased by 2.3 times to 1.5 trillion yen (US$9.8 billion) while operating profit margin has risen from 11.0% to 26.6%.

Renesas is a world leader in microcontrollers for the auto industry and also possesses embedded processing, analog, power management, radio frequency, sensor, system-on-chip (SOC) and other semiconductor technologies.

It has its own front-end wafer fabrication capacity in Japan, and some in Florida, but also outsources production to Taiwan’s TSMC and Global Foundries. Its back-end assembly, packaging and test operations are located in Japan, China and Malaysia.

On January 11, Renesas announced the purchase of 100% of Transphorm, an American producer of gallium nitride (GaN) power semiconductor devices with more than 1,000 related patents. The acquisition is likely to be completed in the second half of 2024.

GaN is expected to be the next widely used power semiconductor material after silicon carbide (SiC). Both have applications in electric vehicles (EVs), data centers, renewable energy and industrial power conversion.

Renesas, which signed a 10-year SiC wafer supply agreement with Wolfspeed last summer, plans to start mass production of SiC power devices in 2025. Wolfspeed is the world’s leading producer of silicon carbide wafers.

On February 15, Renesas announced the 100% purchase of Altium, a developer of PCB electronic design software, a deal that is scheduled to close in the second half of 2024. Altium, which pioneered this technology, was established in Australia in 1985 and moved its headquarters to the US in 1991.

The acquisition will facilitate the design and integration of Renesas embedded microcontrollers, analog, power management and network devices, a process that is becoming increasingly complicated.

The plan is to create an “electronics system design and lifecycle management platform” open to third-party vendors using Altium’s cloud computing system for efficient collaboration across component, subsystem and system-level design.

In Japan, Altium competes with Zuken while worldwide it competes with SolidWorks, Autodesk, Synopsis, Cadence Design, Shanghai Tsingyue and several other companies. Collaboration with Renesas should make Altium more competitive and vice versa.

Renesas has growing global ambitions. Image: X Screengrab

On February 20, Renesas extended the expiration date of its tender offer to acquire all the shares of Sequans Communications to March 4. Sequans is a designer of telecom integrated circuits (ICs), transceivers and modules headquartered in Paris. Its 5G/4G solutions are optimized for massive broadband Internet of Things (IoT) applications.

Sequans’ target markets include industrial sites, logistics, enterprise routers, networked vehicles, smart city services, electronic healthcare services and smart homes – in short, almost everything but smartphones. Sequans has worked with telecom carriers Verizon, AT&T, Sprint, T-Mobile, NTT DoCoMo and KDDI.

Since 2017, Renesas has completed seven acquisitions, greatly accelerating its technological advance and penetration of diverse markets while boosting sales, profits and profit margins.

Intersil, a US provider of power management and analog semiconductor devices, was the first of these acquisitions. The two companies’ products are complementary and, like Renesas, Intersil has a strong presence in automotive and industrial markets.

Intersil also makes radiation-tolerant ICs for space and defense applications, from low-earth orbit to the Mars Perseverance rover. These devices are made in Florida.

Spirit Electronics, an IC distributor and test service provider headquartered in Arizona, writes that nearly every satellite in space has a Renesas component on board.

In 2019, Renesas acquired Integrated Device Technology (IDT), a US supplier of analog and mixed-signal (analog and digital on the same chip) ICs and sensors for the communications, computing, consumer, automotive and industrial markets.

This was followed by the acquisition of Dialog Semiconductor and Celeno Communication in 2021. Dialog Semiconductor is a UK-based provider of battery and power management, Wi-Fi, Bluetooth short-range wireless and IoT devices. Celeno is an Israeli provider of Wi-Fi chipsets and software for home and corporate networks, autos, smart buildings and factories.

In 2022, Renesas acquired Reality AI and Steradian. Reality AI is a US developer of software for non-visual sensing in automotive, industrial and commercial environments. Its signal processing, machine learning, monitoring and anomaly detection software enhances the performance of Renesas processors.

Steradian is an Indian semiconductor design company that specializes in 4D imaging radar solutions for automotive, industrial, home security and other applications. 4D radar uses echolocation and time-of-flight measurement to track moving objects.

These are combined with Renesas SoCs for Advanced Driver Assistance Systems (ADAS). The acquisition complements the partnership established by Renesas and India’s Tata Motors and Tejas Networks in 2022.

Last year, Renesas acquired Panthronics, an Austrian semiconductor design company specializing in near-field communications (NFC) chipsets and software. NFC is a short-range technology that enables wireless connections between electronic devices within a few centimeters. Examples include card readers, cell phone payments, boarding passes and wristband healthcare monitoring.

All in all, the acquisitions have transformed Renesas into a truly multinational company. About half of the members of its senior management team are from acquired companies and more than half of its employees are foreign.

Executive meetings are generally held in English while its outside directors have worked overseas, many with foreign companies. CEO Hidetoshi Shibata, formerly executive managing director of Innovation Network Corporation of Japan (INCJ), a Japanese sovereign wealth fund, has an MBA from Harvard Business School.

The Japanese semiconductor industry is not, as it is often portrayed (especially by the Japanese), a failing enterprise desperately seeking its last chance in tie-ups with TSMC and IBM. On the contrary, it is the highly integrated, second-largest piece of the global semiconductor industry, with Renesas at its fast-expanding core.

Follow this writer on X: @ScottFo83517667

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Japan's main stock index closes above 1989 record high

Pedestrians walk past a display showing the Nikkei Stock Average after surpassing the record closing of 38,915.87 points marked at the end of December 1989, during a morning trade session in Tokyo, Japan, 22 February 2024.EPA-EFE/REX/Shutterstock

Japan’s main stock index has hit an all-time closing high, surpassing the previous record set 34 years ago.

The Nikkei 225 rose 2.19% on Thursday to end the trading day at 39,098.68.

That topped the previous record closing high of 38,915.87 set on 29 December 1989, the last day of trading that year.

Asian technology shares were boosted after US chip giant Nvidia revealed strong earnings, driven by demand for its artificial intelligence processors.

Global investors are returning to the benchmark index thanks to strong company earnings, even as the country’s economy has fallen into a recession.

The weakness of the Japanese currency has also helped to boost share prices of Japan’s exporters as it makes their products cheaper in overseas markets.

The Nikkei 225 hit its previous record high after years of soaring stock and property prices.

Less than three years after that peak the benchmark index had lost almost 60% of its value as the Japanese economy was engulfed in an economic crisis.

Since then the Japan has struggled with little or no economic growth and falling prices, known as deflation.

Deflation is bad for an economy as persistent price declines mean that consumers tend to hold off from buying big ticket items due to the expectation that they will be cheaper in the future.

Last week, official figures showed that the Japanese economy had unexpectedly slipped into recession in the last three months of 2023.

The country’s gross domestic product (GDP) contracted by a worse-than-expected 0.4% in the last three months of 2023, compared to a year earlier.

It came after the economy shrank by 3.3% in the previous quarter.

The figures from Japan’s Cabinet Office also indicate that the country has lost its position as the world’s third-largest economy to Germany.

The latest figures were the first reading of Japan’s economic growth for the period and could still be revised.

Two quarters in a row of economic contraction are typically considered the definition of a technical recession.

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Fashionable but wrongheaded shots at globalization - Asia Times

So we now know that it is both fashionable and acceptable to criticize globalization, for even Mario Draghi is doing it.

In his speech in the United States to a prestigious economics association, he joined all the many much less expert voices who are blaming populism and illiberal trends in Western democracies on the effects of globalization. But this is not quite right, as he ought to know.

Giving a speech in the land of President Joe Biden’s protectionist industrial subsidies and of the threat of an even more protectionist Donald Trump in November’s election, it was undoubtedly correct to acknowledge some of the genuine social and economic problems that these illiberal, anti-trade policies are seeking to address.

Yet is globalization really to blame for those problems? As a good economist, Draghi must know that it is not.

The essence of the problem, he rightly said, is that both income inequality and job insecurity have grown, leaving large numbers of middle- and working-class people to feel they have been “left behind” not only in the United States but also in many European countries and even Japan.

This phenomenon has manifested itself in a declining share of “labor income,” as economists call it, or “wages” as normal people say, and a rising share of company profits.

This, however, is not the result of globalization. Primarily, economic research tells us that it is the result of technology – the automation of manufacturing and, more recently, of services, too.

In addition, it is the result of government policies that have deliberately reduced welfare entitlements and have reduced the bargaining power of labor unions as well as removing protective regulations from labor markets.

Another way of looking at this is to say that as inequality and job insecurity increased during the 1990s and 2000s, governments should have been introducing measures to mitigate this trend.

That is what had happened many times during the postwar decades: As competition and innovation threatened to divide society, public efforts were made to counter or at least soften those divisions.

But during the 1990s and into the 21st Century, too many governments either failed to act to manage these impacts or introduced policies that made things worse.

The important question to ask is: Why? One answer is probably that they didn’t understand what was happening until it was too late. Another is a traditional problem for democracies: Powerful companies and groups of billionaire owners lobbied against policies to manage inequality and insecurity, often using their political donations to enforce their desires.

Democracy was being bought, first by big industrial companies and now, especially, by technology companies.

What about globalization, then? Draghi is correct to say that free trade can work properly and sustainably only when there are agreed rules to govern it and agreed methods to enforce those rules and to settle disputes.

Yet the reason why the foundation of the World Trade Organization in 1995 was celebrated was precisely the fact that, under the WTO, at last trade was going to be governed by a dispute settlement system and according to agreed rules.

When China joined the WTO and yet paid huge subsidies that did not follow those rules, this was clearly a problem, as Draghi said. The right question to ask is why other governments, including those of the United States and the European Union, did not enforce those rules.

Was it, as some Americans claim and as Draghi hints in his speech, because they expected globalization to turn China into a rule-obeying democracy? Or was the reason, in fact, a blend of complacency and, again, the pressure of powerful lobbies that wanted to make billions in the Chinese market?

The fact is that globalization, and with it the general economic phenomenon that this fancy word glamorized, namely competition, is getting unfair and misleading criticism. The problem facing liberal democracies results from the failure of governments to take action to deal with inequality and insecurity, inaction that is entirely a domestic political matter, not one to do with trade, China or indeed globalization.

Yes, as Draghi says, globalization is changing, partly thanks to geopolitics and the war in Ukraine. But it is not going away. Plenty of countries are benefiting from new patterns of production and trade, including India, Indonesia and much of Southeast Asia, which are now growing more rapidly than China. Capitalism is always inventive and technology facilitates that inventiveness even further.

Where Western liberal democracies have a problem is in the distortion of their political systems by concentrated corporate power, but also in the high level of their public debts. With such high debts, and with aging populations requiring more health care and social spending, they are going to find it hard to manage inequality and the impact of technology. That is where they need to find solutions.

To blame globalization serves to divert attention from the real problems – which is why populists like to do so.

Formerly editor-in-chief of The Economist, Bill Emmott is currently chairman of the Japan Society of the UK, the International Institute for Strategic Studies and the International Trade Institute.

Originally published on his Substack, Bill Emmott’s Global View, this is the English original of an article published on February 17 in Italian by La Stampa, following Mario Draghi’s speech at the National Association for Business Economics on February 15. It is republished here with kind permission.

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