In today’s top stories, Samsung ramps up investment, semiconductor prices surge and EV makers race to compete in the battery production market. Meanwhile, Broadcom is set to buy VMware for $60bn and hedge funds see the worst start to the year on record.
Samsung’s innovation investment.
The South Korean conglomerate Samsung [005930.KS] is betting big on innovation in chips, biotech and robotics by ramping up its investment of 450 trillion won ($356bn) over the next five years, with the aim of creating 80,000 jobs in the process. Though the company didn’t give an exact breakdown, it stated that 80% of the investment pledge would be spent domestically.
Broadcom to buy VMware.
Chip maker Broadcom [AVGO] is to acquire software firm VMware [VWM] for around $60bn or $140 per share, the Wall Street Journal reported. The VMware share price closed 24.8% higher at $119.43 on Monday on the back of the news. Intel [INTC] boss Pat Gelsinger, who spent eight years as VMware CEO, told Bloomberg: “If it helps VMware be a more compelling, innovative growth story, then it’s good.”
EV battery production plays.
Auto makers are spending billions on battery production, and while Tesla [TSLA] arguably leads the charge, there are others in the race. Bernstein analysts, led by Neil Beveridge, believe Chinese manufacturer Contemporary Amperex Technology [300750.SZ] is positioned to take a 30% share of the EV battery market, according to CNBC. LG Energy Solutions [051910.KS] and Samsung SDI are other picks.
Rising chip prices.
Electronics are set to get even more expensive if semiconductor foundries hike prices, as analysts believe they will. Speaking to CNBC, Bain’s Peter Hanbury explained that foundries, including Taiwan Semiconductor Manufacturing Company [TSM], Intel [INTC] and Samsung, have already raised prices by 10– 20%, and he expects a smaller increase of 5–7% to come. Forrester’s Glenn O’Donnell sees a rise in line with inflation.
Hedge funds endure worst start.
After nursing major losses in their tech holdings, hedge funds have endured the worst start to a year on record, reported Bloomberg. Rising interest rates and recession fears, coupled with declining equity prices, have made the investment environment challenging, Goldman Sachs strategist Ben Snider wrote in a research note. There are indicators that the selling could continue “if the macro outlook doesn’t improve”.
As the rising cost of living squeezes household budgets, investors will be hoping Marks & Spencer [MKS.L] has coped well when full-year results are reported today. The premium retailer is generally less sensitive to inflation pressures given the type of customers it attracts. Barclays analysts expect it to keep performing because it’s “more in the quality than price camp within the retail sector”.
Demand for lithium is currently outstripping supply as the pace of extraction and refinement is too slow. Miners of the metal dubbed ‘white gold’ are poised to fill the supply gap. Albemarle [ALB] has raised its 2022 guidance, Allkem [AKE.ASX] is putting its cash to work to triple production capacity by 2026 and Kodam Minerals [KOD.L] is planning to construct the first lithium mine in Mali.