Microchips have macro problems

Semiconductor makers, already finding themselves being used as chips in the high-stakes trade game between the US and China, are now suffering the effects of another macro event - the sliding appeal of smartphones.

There was a widespread sell-off on Friday after an update from one of Apple’s biggest suppliers, Taiwan Semiconductor, raised expectations of a sharper slowdown in smartphone sales this year. It said in an earnings update that second-quarter revenues would be hit by “weak demand from the mobile sector”.

Analog Devices, Cirrus Logic, Dialog Semiconductor, Qualcomm and Qorvo fell between 3 per cent and 6 per cent during Friday trading. TSMC ended the trading day down 6 per cent.

It had been a tough week already - telecoms group ZTE said on Friday that the Trump administration's ban on chipmakers selling components to it, announced on Monday, would not only seriously jeopardise its survival but also harm the interests of its partners, including a large number of US companies. Leading mobile chipmaker Qualcomm on Thursday disclosed that it was cutting 1,500 jobs across its California offices as part of a plan to reduce annual costs by $1bn. 

It could get worse. A senior US Treasury official has confirmed the Trump administration is considering declaring a national economic emergency to impose new restrictions on Chinese investment as part of a trade crackdown on Beijing.

Heath Tarbert, assistant Treasury secretary for international markets and investment policy, told a Washington conference the administration was looking at invoking the International Emergency Economic Powers Act. It would give the president broad powers to restrict Chinese investment in sensitive sectors such as semiconductors, thereby restricting the US industry's access to funds.

Flag as Important

Ericsson shares surge 15 per cent
There was one bright spot in telecoms today - the Swedish network equipment maker, which has cut 18,000 jobs in the past year, revealed signs that its turnround efforts were working. Its net loss in the first quarter was just SKr300m ($35.6m) compared with a SKr11.3bn ($1.3bn) loss a year earlier, and analyst forecasts of a SKr2.4bn deficit. Its shares rose 15 per cent to SKr64.10, close to their highest in almost two years.

This week's Person in the News: Telegram's Pavel Durov
A few days before Russian authorities moved to shut down the encrypted-messaging app this week, Telegram's founder posted a photo of himself on Instagram, clad in black, gazing at the horizon as he rode a white horse through the Arabian Desert. “To be truly free, you should be ready to risk everything for freedom,” he wrote.

How Dell should go public again
The neatest way, writes Tom Braithwaite, would be to merge with VMware. Importantly, that would finally allow Dell to access VMware’s impressive cash flow. Dell already owns 82 per cent of VMware and consolidates its accounts. Unfortunately for Dell, VMware shareholders are not taken by the idea.

Forwarded

StingRays - once stung, twice shy
It may not have the same dismal reputation as Facebook, but the StingRay—also known as a cell-site simulator or IMSI catcher—is a pervasive surveillance technology that might be even scarier. (Quartz Obsession)

Bird is building the Uber of scooters
Electric scooter company Bird is beginning to look a lot like Uber, with an on-demand transportation service that is ubiquitous on San Francisco streets, a business model that gets ahead of local regulations, and a competitive streak that ruffles feathers. This isn't a coincidence, as Bird founder and CEO Travis VanderZanden is a veteran of both Uber and Lyft. (Axios)

Tech tools you can use - Nintendo’s cardboard piano

Investors pushed Nintendo’s share price up almost 4 per cent on Friday, to the surprise of Lex, after the Japanese gaming company launched a series of cardboard accessories to work with its fast-selling Switch console, writes Leo Lewis in Tokyo.

The Nintendo Labo introductory pack went on sale and lets the Switch’s tablet-like screen work with devices that include a cardboard piano and a fishing rod that enables virtual angling. A second more complicated pack will become a wearable robot suit whose movements are reproduced on a television.  Read more