TSMC secures US$11.6b for Arizona chip plants

Good morning. Here's what happened overnight and what you need to know today.

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1.

Chips are down: The world’s largest chipmaker, Taiwan Semiconductor Manufacturing Co. (TSMC), will make its most advanced chips in Arizona, US, after the US Commerce Department agreed to grant the chipmaker a USD6.6 billion ($10 billion) subsidy for advanced semiconductor production and up to USD5 billion in low-cost government loans. TSMC confirmed that with the proposed funding, it will produce the world’s most advanced 2 nanometre technology at its second Arizona fabrication plant from 2028. It also committed to build an additional plant in the country by the end of the decade. The US Department of Commerce said that TSMC’s USD65 billion investment is the largest foreign direct investment in a greenfield project in US history. US President Joe Biden said: “These facilities will manufacture the most advanced chips in the world, putting us on track to produce 20% of the world’s leading-edge semiconductors by 2030.” (Capital Brief)(NIST press release)

2.

VC fund launch: Five of the globe’s leading grocery retailers, including Woolworths, have launched a venture capital fund, W23 Global, to invest in start-ups and scale-ups that aim to address the industry’s tech and sustainability challenges. Each retailer is an equal funder and partner in W23 Global, which will deploy $190 million over the next five years. W23 Global members include Ahold Delhaize, Tesco, Empire Company Limited/Sobeys Inc., Shoprite Group and Woolworths Group. The CEO of each retailer will sit on the VC’s investment committee. The fund will be led by Ingrid Maes as CEO and CIO, who currently leads Woolworths Group’s innovation fund, W23 Australia. While it will be legally based in the UK, the fund will be run out of W23’s domestic office in Sydney. (Capital Brief)(Ahold Delhaize press release)

3.

Location, location, location: Oil major Shell is considering shifting its listing from the London Stock Exchange to New York, according to a report from Bloomberg. Shell is the largest company on the FTSE 100, and has a current market value of around £180 billion. Wael Sawan, chief executive of Shell, told Bloomberg the oil and gas giant is looking at “all options” for its listing amid concerns it is under-appreciated by investors. He said: “I have a location that clearly seems to be undervalued.” While Sawan explained that the plan is not to immediately relocate the listing, if by mid-2025 the valuation gap remains in place, Sawan said that no option is off the table (including a listing shift): “If we work through the sprint, and we are doing what we are doing, and we still don’t see that the gap is closing, we have to look at all options.” (Bloomberg)

4.

JAUKUS?: AUKUS members, Australia, the UK and US have confirmed discussions that will consider widening its collaboration to include Japan under Pillar II. Last week an Australian government source told the ABC that Japan would collaborate on specific defence technology projects with the three countries under AUKUS, but would not necessarily join the partnership as a full member. A joint statement published by the AUKUS partners on Monday says that the group’s objective remains to further the delivery of advanced military capabilities to respective defence forces, in support of regional stability and security. It continues: “Recognising Japan’s strengths and its close bilateral defence partnerships with all three countries we are considering cooperation with Japan on AUKUS Pillar II advanced capability projects.” (Capital Brief)(AUKUS joint statement)

5.

Private property: Asset manager Blackstone has announced it will take rental housing firm Apartment Income REIT, known as AIR Communities, private in a USD10 billion deal. The asset manager will acquire all outstanding common shares of AIR Communities for USD39.12 per share in an all-cash transaction. The purchase price represents a premium of 25% to AIR Communities’ closing share price on the NYSE on the April 5, and a 25% premium to the volume weighted average share price on the NYSE over the previous 30 days. Blackstone has been increasing its focus on the rental housing market as the supply of US apartments is expected to fall due to a slowdown in construction. AIR Communities’ portfolio comprises 76 high-quality rental housing communities primarily in western and eastern US coastal markets, and Blackstone says it will invest over USD400 million to maintain and improve the existing communities. It may also inject additional capital for further growth. (Capital Brief)(Blackstone press release)

6.

Good as gold: Gold hit a new all-time high on Monday, as it continued a rally it has maintained over the past month. The safe haven asset hit a high of USD2,353.79 a troy ounce on Monday morning, up from about USD2,000 an ounce in mid-February. The prices mark a record high for the seventh straight session, after central bank purchases and geopolitical tensions continue to fuel the strength of bullion. China's central bank added 160,000 troy ounces of gold to its reserves in March, while Turkey, India, Kazakhstan and some eastern European countries have also been buying gold this year. (Financial Times)(Reuters)

7.

Top trader: The world’s largest independent commodity trader, Vitol, posted USD13 billion of net profit in 2023, far exceeding its closest rival and bolstering its position as one of the most powerful players in energy markets. While the figures are down on the USD15.1 billion Vitol reported in 2022, it is over three times higher than its USD4 billion profit earned in 2021. Lower commodity prices meant that Vitol’s turnover fell from USD505 billion in 2022 to USD400 billion in 2023, however, its total volume of energy products traded increased 4% year-on-year. Last month, CEO Russell Hardy said that the scale of the realignment caused by Russia’s invasion of Ukraine in 2022 should not be underestimated, and that the rerouting of Russian product and Houthi attacks in the Red Sea had “resulted in all-time highs of oil products on-water.” (Financial Times)

8.

DJT dives: USD2.8 billion in value has been wiped out from Trump Media & Technology Group stock, as retail traders who bought heavily into the company when it listed on March 22 have begun to sell. In total, the company has slumped 37% since its close on March 26. Shares in the company, which owns Donald Trump’s ‘Truth Social’ platform soared on market debut, but have since struggled to maintain their appeal. The windfall for Trump as the stock slides has taken a hit, having dropped USD1.6 billion to around USD2.8 billion, and the Presidential hopeful has to wait six months before he can start selling shares under a lock-up agreement. (Bloomberg)