A quarter of UK home-owners are worried about renewing their mortgage during the pandemic according to a poll.
A third said their income was less secure now than before the pandemic according to the poll.
While more than 1 in 10 mortgagees have had to take a payment holiday on their mortgage during COVID according to the poll of 2,000 British adults by Yonder (formerly Populus).
The proportion of those feeling less financially secure during COVID rises to 63 percent among the self-employed.
The government’s mortgage support scheme allowing people to take mortgage holidays comes to an end on October 31.
From next month lenders can start repossessing homes of those who have been unable to pay.
Those who have taken mortgage holidays will have their missed payments spread over the rest of the payment term meaning larger payments from next month.
Wesley Ranger, Managing Director of Willow Private Finance, who commissioned the poll, said: “This is a ticking time bomb waiting to explode. Millions of mortgage holders in Britain are up for renewal in the next 12 months with changed circumstances.
“On top of all the other fears at the moment they are having sleepless nights worrying if they will be able to renew or even pay they bill.
“We are calling on the industry to show leniency for people with changed circumstances and for the government to extend its mortgage support scheme with urgency.”
KELOWNA, BC, Oct. 14, 2020 /CNW/ – The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) (the “Company,” “The Valens Company” or “Valens”), a global leader in the end-to-end development and manufacturing of innovative, cannabinoid-based products, is pleased to report its third quarter financial results for the period ended August 31, 2020.
Key Financial Highlights
Net revenue for the third quarter of 2020 was $18.1 million, a 10% increase from $16.5 million in the third quarter of 2019.
Product sales(1) for the third quarter of 2020 made up 83% of net revenue at $15.1 million, a 52% increase from $9.9 million in the second quarter of 2020.
Gross profit was $7.3 million, or 39.5% of revenue, for the three months ended August 31, 2020, compared to $12.8 million, or 77.8% of revenue, in the same period in fiscal 2019. The reduction in gross profit can be attributed to the continued pullback in toll extraction volumes, as the Company shifts its focus toward driving greater white label and custom manufacturing product volumes and sales.
Adjusted EBITDA(2) was $1.4 million, or 7.8% of revenue, for the third quarter of 2020, compared to $9.8 million, or 59.4% of revenue, in the third quarter of 2019. Adjusted EBITDA was impacted by the reduction in gross profit discussed above and an increase in operating expenses as the Company continues to scale its operations and build out its manufacturing platform.
Strong balance sheet with $30.3 million in cash and a net working capital position of $83.5 million as of August 31, 2020.
“In the third quarter we saw our pipeline of manufacturing agreements begin to come to fruition, having manufactured a record-breaking 56 SKUS that span four product categories, with formats ranging from disposable vape pens, vape cartridges, oils and oral sprays, to beverages and concentrates,” said Tyler Robson, Chief Executive Officer of The Valens Company. “This was driven by both new brand partnerships, and white label and custom manufacturing agreements and existing contracts. We expect to see further product revenue growth in Q4 as we continue to ramp up these manufacturing agreements to bring a wide variety of 2.0 products to domestic and international markets. As we approach year-end, we will focus on gaining market share within existing and upcoming product verticals to prepare for the Cannabis 3.0 market and the opportunities for growth it will provide proven third-party operators like Valens with the differentiated IP and scale to execute.”
Corporate and Operational Highlights
In the third quarter, The Valens Company continued to execute on its corporate strategy and advance its platform, as illustrated by the following milestones and initiatives:
Grew product sales by 52% in Q3 2020, clearly demonstrating both the Company’s core capabilities and strength of its platform as a leading cannabis products company.
Manufactured a record number of 56 SKUs in the third quarter of 2020, representing a 56% increase from 36 SKUs in the second quarter of 2020.
Made itsfirst international shipment of oils to Australia as part of the Company’s distribution agreement with Cannvalate Pty Ltd., Australia’s largest medicinal cannabis distributor and clinical research organization. Valens also expects to make an additional shipment in the fourth quarter, subject to shipping permit approvals.
Entered into a syndicated credit facility (the “Credit Facility”) on May 29, 2020, with CIBC as Co-Lead Arranger and Administrative Agent, and ATB Financial as Co-Lead Arranger (together, the “Lenders”). Under the terms of the Credit Facility, the Lenders have provided The Valens Company with up to C$40 million of secured debt financing to further strengthen Valens’ balance sheet and allow for the continued expansion of its operations, and execution of its corporate strategy both domestically and internationally.
Completed the final step in Valens’ rebrand to ‘The Valens Company’ to better reflect the strategic vision of the business and further solidify its position as a global leader in the end-to-end development and manufacturing of cannabinoid-based products.
Announced its participation in a Medical Cannabis Real-World Evidence Study led by Dr. Hance Clarke of the University Health Network (UHN) in partnership with Shoppers Drug Mart. The study will explore the therapeutic effects of medical cannabis in adults with chronic pain, sleep, or anxiety issues, and will leverage the blockchain secure technology of the Medical Cannabis by Shoppers online product portal of both tested and verified cannabis products, including Nuance oils created exclusively for the platform.
Received its Health Canada Research Licence through its wholly-owned subsidiary, Valens Agritech Ltd, to conduct human administration trials for sensory and taste evaluation of products. This licence provides added credibility to Valens’ one-stop shop platform and offers a competitive advantage for Valens to use proprietary research findings at the product development stage through to the manufacturing process.
The Valens Company applied for a licence amendment for its K2 facility at the end of July with the expectation to be approved in the coming months, pending Health Canada review. The expansion of the Company’s facility will significantly increase its manufacturing capabilities and optimize production and quality assurance efficiencies. The 42,000 square foot facility is built to EU GMP standards and will be the first of its kind in the cannabis space, positioning Valens as a leader with a breadth of capabilities to execute not only domestically, but globally.
Construction on the Company’s GTA facility was delayed by a few months as a result of logistical challenges due to the COVID-19 pandemic. The GTA facility is currently on track to be operational in the first half of 2021, with updated timelines to be provided as construction progresses.
White Label and Custom Manufacturing Partnerships
In the third quarter, the Company entered into the following agreements with industry brand houses to develop and manufacture derivative products to meet continued demand in the Canadian 2.0 market:
Subsequent to quarter end:
The Company introduced Summit 10, a new higher potency cannabis-infused beverage containing 10mg of THC, under an existing white label agreement with A1 Cannabis Company (a subsidiary of Iconic Brewing).
Of the vape brands sold through the Ontario Cannabis Store in September 2020, Valens’ manufacturing partners account for 4 of the top 15 brands by dollar value with products from two of the partners establishing that spot despite only being in the market for a few weeks after launching partway through the month of September.
Since launching on the Ontario Cannabis Store in late September 2020, the 1.0g crumble offering under the Verse Concentrates line already ranks fifth by dollars sold amongst SKUs in the concentrates category.
Jeff Fallows, President of The Valens Company, said, “In the third quarter, the aggressive acceleration of our product commercialization efforts for the 2.0 market was in full swing and resulted in both strong product sales growth as well as increased production efficiencies. Through the end of the year, we will continue to focus on our diverse pipeline of product launches in partnership with our customers and executing on the white label and custom manufacturing agreements that have been gaining momentum throughout Canada and now reaching the Australian medical market. Additionally, as we move forward with the development of our large-scale manufacturing facility in Kelowna, we look to pursue other growth opportunities globally with the added ability to mass produce consumer-friendly derivative products.”
The following table of financial highlights is presented in thousands of Canadian dollars, except per share, biomass extracted amounts and number of SKUs.
Three-months ended August 31, 2020; Q3 2020
Three-months ended May 31, 2020; Q2 2020
Three-months ended February 29, 2020;
Three-months ended November 30, 2019; Q4 2019
Three-months ended August 31, 2019; Q3 2019
Net Revenue $
Gross Profit $
Gross Profit %
Adjusted EBITDA $ (2)
Adjusted EBITDA(2) % (2)
Net income (loss) $
Net income (loss) %
Basic / diluted income (loss) per share $
Cash and short-term investments $
Biomass extracted (Kilograms) (3)
Number of SKUs
Product sales include bulk winterized and distillate oil, and white label and customized product sales.
Adjusted EBITDA is a non-GAAP measure used by management that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Management defines adjusted EBITDA as income (loss) and comprehensive income (loss) from operations, as reported, before interest, tax, depreciation and amortization, and adjusted for removing share-based payments, realized gains and losses from short term investments and liabilities and other one-time and non-cash items including impairment losses. Management believes adjusted EBITDA is a useful financial metric to assess its operating performance on an adjusted basis as described above. See reconciliation of “Adjusted EBITDA (non-GAAP measure)” in the Company’s Management’s Discussion and Analysis for the period ended August 31, 2020 for additional information.
Biomass extracted includes input from Licensed Producer partners for toll processing, in addition to the Company’s own biomass inventory for 2.0 products.
The management’s discussion and analysis for the period and the accompanying financial statements and notes are available under the Company’s profile on SEDAR at www.sedar.com.
Conference Call Details
The Company will host a conference call tomorrow, Thursday, October 15, 2020 at 11:00 am Eastern Time / 8:00 am Pacific Time to discuss the financial results and business outlook.
Participant Dial-In Numbers:
Toll-Free: 1-877-407-0792 Toll / International: 1-201-689-8263 *Participants should request The Valens Company Earnings Call or provide confirmation code 13710892
The call will be webcast on the Valens Investor page of the Company website at https://thevalenscompany.com/investors/ or at this link. Please visit the website at least 15 minutes prior to the call to register, download, and install any necessary audio software. A replay of the call will be available on the Valens Investor page approximately two hours after the conference call has ended.
Tyler Robson, Chief Executive Officer, Chris Buysen, Chief Financial Officer, Jeff Fallows, President, and Everett Knight, Executive Vice President of Corporate Development and Capital Markets, will be conducting a question and answer session following the prepared remarks.
About The Valens Company
The Valens Company is a global leader in the end-to-end development and manufacturing of innovative, cannabinoid-based products. The Valens Company is focused on being the partner of choice for leading Canadian and international cannabis brands by providing best-in-class, proprietary services including CO2, ethanol, hydrocarbon, solvent-less and terpene extraction, analytical testing, formulation and product development and custom manufacturing. Valens is the largest third-party extraction company in Canada with an annual capacity of 425,000 kg of dried cannabis and hemp biomass at our purpose-built facility in Kelowna, British Columbia which is in the process of becoming European Union (EU) Good Manufacturing Practices (GMP) compliant. The Valens Company currently offers a wide range of product formats, including tinctures, two-piece caps, soft gels, oral sprays and vape pens as well as beverages, concentrates, topicals, edibles, injectables, natural health products and has a strong pipeline of next-generation products in development for future release. Finally, The Valens Company’s wholly-owned subsidiary Valens Labs is a Health Canada licensed ISO 17025 accredited cannabis testing lab providing sector-leading analytical services and has partnered with Thermo Fisher Scientific to develop a Centre of Excellence in Plant-Based Science. For more information, please visit http://thevalenscompany.com. The Valens Company’s investor deck can be found specifically at http://thevalenscompany.com/investors/.
Notice regarding Forward Looking Statements
All information included in this press release, including any information as to the future financial or operating performance and other statements of The Valens Company that express management’s expectations or estimates of future performance, other than statements of historical fact, constitute forward-looking information or forward-looking statements within the meaning of applicable securities laws and are based on expectations, estimates and projections as of the date hereof. Forward-looking statements are included for the purpose of providing information about management’s current expectations and plans relating to the future. Wherever possible, words such as “plans”, “expects”, “scheduled”, “trends”, “indications”, “potential”, “estimates”, “predicts”, “anticipate”, “to establish”, “believe”, “intend”, “ability to”, or statements that certain actions, events or results “may”, “could”, “would”, “might”, “will”, or are “likely” to be taken, occur or be achieved, or the negative of these words or other variations thereof, have been used to identify such forward-looking information. Specific forward-looking statements include, without limitation, all disclosure regarding future results of operations, economic conditions and anticipated courses of action.
The risks and uncertainties that may affect forward-looking statements include, among others, regulatory risk, United States border crossing and travel bans, reliance on licenses, expansion of facilities, competition, dependence on supply of cannabis and reliance on other key inputs, dependence on senior management and key personnel, general business risk and liability, regulation of the cannabis industry, change in laws, regulations and guidelines, compliance with laws, reliance on a single facility, limited operating history, vulnerability to rising energy costs, unfavourable publicity or consumer perception, product liability, risks related to intellectual property, product recalls, difficulties with forecasts, management of growth and litigation, many of which are beyond the control of The Valens Company. For a more comprehensive discussion of the risks faced by The Valens Company, and which may cause the actual financial results, performance or achievements of The Valens Company to be materially different from estimated future results, performance or achievements expressed or implied by forward-looking information or forward-looking statements, please refer to The Valens Company’s latest Annual Information Form filed with Canadian securities regulatory authorities at www.sedar.com or on The Valens Company’s website at www.thevalenscompany.com. The risks described in such Annual Information Form are hereby incorporated by reference herein. Although the forward-looking statements contained herein reflect management’s current beliefs and reasonable assumptions based upon information available to management as of the date hereof, The Valens Company cannot be certain that actual results will be consistent with such forward-looking information. The Valens Company cautions you not to place undue reliance upon any such forward-looking statements. The Valens Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Nothing herein should be construed as either an offer to sell or a solicitation to buy or sell securities of The Valens Company.
Terry Wallace has described the third quarter in Saturday night’s semi-final between Geelong and Collingwood as a “complete snore fest” and the “worst quarter of football” for season 2020.
The game was over as a contest at half-time when the Cats took a 54-point lead into the main break after a nine-goal-to-one first-half demolition.
Just three behinds were scored in what was an uninspiring third quarter with both clubs seemingly playing out time as the match fizzled out.
“Last week we witnessed the best of finals while on Saturday night we had to get through comfortably what I thought was the worst quarter of football for season 2020,” Wallace told SEN’s Dwayne’s World.
“The third quarter on Saturday night looked like neither side actually wanted to be there.
“I honestly think if it had of been cricket you would have had the two captains come together and they would have called it stumps and walked off the ground.
“What we had was a weird situation where uncontested marks had been bad enough in the first two quarters, but it soared to a massive 45 in the third quarter.
“Uncontested possessions had been bad enough in the first half, it went up again to 74 and most of that was back-half play where they were just keepings off … and what made it worse was the Pies really didn’t seem like they wanted to get the ball back and it just became a nightmare.
“So what did we end up with? A back-half game of keepings off where it ended up two points to one in a what was a complete snore fest.
“It was a disaster.”
Geelong’s 68-point win over the Magpies saw them book a date with Brisbane in Saturday night’s preliminary final at the Gabba.
Vue said in a statement that it had safely reopened its cinemas across Europe this summer but would now only operate from Friday to Monday at 21 sites across the UK to ensure it was “financially well placed” for the uncertainty ahead.
“We remain committed to ensuring that Vue has a long-term future, to protecting the livelihoods of our staff and keeping our doors open to ensure our cinemas continue to serve the communities they operate in,” it said.
“We came into this pandemic in a very strong position after a record 2019 and a record start to 2020, and we are looking forward to returning to full steam as soon as Hollywood studios start releasing the content which audiences are clamouring for.”
Vue’s move follows the delay to the next James Bond film, No Time To Die, until April next year. The Marvel film Black Widow, the sci-fi blockbuster Dune, and Jurassic World: Dominion are also among the high-profile titles delayed as a result of the Covid-19 crisis.
Vue’s chief exective, Tim Richards, said last week that the Bond delay had caught the company by surprise.
“We reopened on the basis that we were going to be getting movies that then didn’t arrive. There are a lot of players that do not have the size and scale Vue does that will not survive,” he said.
“We will survive, we just need movies.”
Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk The rival chain Odeon has also confirmed that about 30 of its 120 cinema sites will shut from Monday to Thursday. The AMC-owned cinema chain recently emailed loyalty customers to notify them that some cinemas will operate on a weekend-only model for the time being.
Five of the Vue branches with reduced opening hours are in London, including the chain’s large cinema in Leicester Square.
Melbourne’s property market has proved resilient in the face of COVID-19, with 97.1 per cent of houses selling for a profit in the June quarter.
Outer regions Melton and the Mornington Peninsula and inner west area Hobsons Bay were Melbourne’s most successful spots, where about 98 per cent of properties transacted for more than their previous sale price, according to CoreLogic’s latest Pain & Gain report.
Profitable properties in Hobsons Bay and the Mornington Peninsula had median hold periods of 10.9 and 9.4 years and collected median profits of $375,000 and $375,500 respectively.
Melton vendors enjoyed a median profit of $250,000 from a median hold period of 6.8 years.
Yarra Ranges was another buoyant market, with 97.6 per cent of sales turning a profit for a median of $321,259.
“We’ve found the area is tracking really well, even throughout COVID. It’s almost gotten stronger with the lack of listings around,” said Barry Plant Lilydale agent Ashley Hutson.
Mr Hutson said a number of buyers from inner-city suburbs like Prahran had now set their sights on the Yarra Ranges.
“There’s a certain amount of local buyer interest but we are seeing a lot of activity and pent-up demand from those inner-city buyers.”
CoreLogic head of residential research Eliza Owen said an upswing in property values before the pandemic, plus mortgage holidays and other government incentives, had “helped to insulate” Melbourne from more property price losses.
But she acknowledged more sales could have resulted in a loss during the September quarter, after tough coronavirus restrictions dampened Victoria’s economy.
“Even though mortgage repayment deferrals have been put in place, there has been signalling from the big banks more recently that they would be encouraging people with an inability to service their mortgage to think about selling,” Ms Owen said.
The report showed unit prices had taken a turn for the worst, with 15.4 per cent of all apartment and townhouse stock selling at a loss.
Melbourne’s CBD took the biggest hit, with almost 40 per cent of transactions at a loss with a median of $50,000.
The report stated “around 80 per cent of loss making sales (in the CBD) were investor-owned units.”
Harcourts Melbourne agent Dionne Wilson said the trend was due to Melbourne’s “split market” where an oversupply of newer properties had dragged the market down.
“Anything in the more modern genre has been in decline since before lockdown, and has taken a bit more of a nose dive,” Ms Wilson said.
“The properties which are brand new and off-the-plan are unfortunately struggling, because there just isn’t enough differentiation between them.”
She said heritage buildings or unique listings in the city were “still holding their value well, or in a slight growth period” despite the coronavirus-driven downturn.
Port Adelaide midfielder Tom Rockliff has credited a spray from coach Ken Hinkley for the club’s dominant second half in the Qualifying Final win over Geelong.
The game was even on the scoreboard at half-time thanks mostly to the Cats’ inaccuracy in front of goal.
However, the third quarter was all Port, kicking three goals and locking the ball in their forward half.
Geelong’s only goal came from an incredible Patrick Dangerfield play, beating multiple Power defenders in the middle of the ground and running into an open goal.
Rockliff said they played close to the “perfect” quarter of footy.
“I think every team had a mulligan at some stage and ours was against (Geelong) so we knew that we had to go to school on what they did that night and what we did and I think we executed it pretty well,” Rockliff told SEN Breakfast.
“I think Geelong played some really good footy in that first half, all night really, but they were definitely on top in that first half.
“Then in that third quarter Kenny (Hinkley) came down and told the midfielders we needed a little lift and we got our fair bake at half-time and I think we turned it around and played front-half footy.
“I think at one stage (in the third quarter) we were at 85 per cent in our front half. We almost played the perfect quarter of finals footy, bar that one goal that Dangerfield got through that we feel like probably should have been stopped at half back.”
Rockliff was dropped earlier in the year by the Power, but has been in strong form since returning to the side.
The former Brisbane captain says he is playing with a desperation to keep his spot in the team.
“(I was) obviously disappointed, you always want to play senior footy. I had a quiet game against Brisbane and Ryan Burton was coming back into the team and we wanted to play Dan Houston in the midfield at that stage as well so I knew I was in a bit of strife,” Rockliff said.
“I just had to go back and show him how hungry I was and I think I did that. It was obviously challenging because we didn’t have a reserves competition to go back and perform in.
“We played a 15 on 15 against the Crows and I felt like I played pretty well and I knew when I got my opportunity to come back in I just had to grab it.
“We played Melbourne and for me it was just making sure I set up the stoppage the right way and I think that’s a strength of mine, I see the game reasonably well and I can help others out in that and also play that defensive type mid for us that just gets a hand in or gets a tackle and try to get the ball to bobble around so we can get it to the outside.
“That’s my game in a nutshell, it’s inside the contest and making sure I feed it to the outside runners and get them involved. It’s never going to be me streaming down the wing taking three or four bounces.
“I’ve just got to make sure my game is where it needs to be. At AFL level there’s so much pressure you’ve got to be one-touch and for a little period I wasn’t that.
“I wasn’t taking the ball as cleanly as I would have liked and so I made that a focus since I came back in to make that a strength of mine.”
Port Adelaide will take on the winner of St Kilda and Richmond’s Semi Final in the third week of finals.
Cinema chain Odeon is to switch to weekend-only opening at a quarter of its 120 UK sites – with audience figures slow to pick up after the coronavirus lockdown.
The chain, owned by US-based giant AMC, will close 30 cinemas from Monday to Thursday for the time being.
Odeon emailed loyalty customers to notify them of the change.
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Vue: Studios too focused on COVID-19 in US
The company declined to comment when asked by Sky News whether jobs would be affected or which screens would be shut.
It comes as rival Cineworld reveals that it is temporarily suspending operations entirely at 536 cinemas in the US and 127 in the UK, affecting thousands of jobs.
Cineworld pointed to delays in the release of the latest blockbusters – in particular the announcement on Friday that the new James Bond film was to be pushed back to next year.
Odeon’s decision to switch to weekend-only showings at some of its sites was understood to have been taken before the James Bond announcement.
The company’s Chinese-controlled parent company AMC, which is based in the US, is saddled with around £4bn worth of debt.
Ratings agency S&P said on Friday that it could run out of liquidity within six months unless it can raise more capital.
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Cineworld CEO: ‘We had no alternative’
AMC and Cineworld both temporarily banned films from Hollywood studio Universal – which is owned by Comcast, the ultimate parent company of Sky News – during the lockdown after it released the film Trolls World Tour directly to streaming platforms.
FILE PHOTO: A Trenes Argentinos (Argentinian Trains) employee cleans ticket machines as a protective measure against the outbreak of the coronavirus disease (COVID-19), at the Constitution train station, in Buenos Aires, Argentina March 17, 2020. REUTERS/Agustin Marcarian/File Photo
September 22, 2020
By Hernan Nessi and Jorge Iorio
BUENOS AIRES (Reuters) – Argentina’s economy contracted a record 19.1% in the second quarter versus the same period a year earlier as the coronavirus pandemic crippled production and demand, though was slightly better than analyst forecasts.
The steep fall, deeper than a 16.3% drop during Argentina’s major 2002 crisis, came as the South American country imposed a strict lockdown in mid-March to stem the virus. The country has over 640,000 confirmed COVID-19 cases, and nearly 13,500 deaths.
Argentina, a major grains producer, has been in recession since 2018 and is just emerging from default on its sovereign debt, with investors again growing concerned about prospects for its economic recovery and dwindling foreign currency reserves.
The government imposed the lockdown on March 20, and while it has been eased it remains in place until at least Oct. 11, with Argentina still at its peak in terms of daily case numbers. The country recorded over 400 deaths in 24 hours on Monday.
“The key is the lockdown, which restricted supply and was a blow to demand, which pummeled economic activity in the second quarter of 2020,” said consultancy Ecolatina.
A Reuters poll of 14 local and foreign analysts ahead of the data had forecast a 19.9% average contraction for the April-June period and a median estimate of a 19.6% drop. The Q2 fall was deeper than neighbor Brazil, though better than hard-hit Peru.
“The strong isolation restrictions imposed from the second half of March and that lasted until August had a significant economic cost for the entire country,” said economist Natalia Motyl of consultancy Libertad y Progreso.
Motyl added that services, construction and manufacturing had been the hardest hit, while the important farm export sector had been less affected by the lockdown, that had taken a hit from global commodities prices.
Argentina’s economy, which declined a revised 5.2% in the first quarter of the year, is estimated to contract around 12% this year, according to a central bank poll and government forecasts.
THANKS TO ITS high quality and low prices, Huawei’s telecoms gear is popular around the world. Not in America, where the Chinese giant is banished over (unsubstantiated) fears that it could be used by spies in Beijing to eavesdrop on Americans. But expelling Huawei from the United States—and pressing allies like Australia and Britain to do the same—was not enough for the Trump administration. It seems to want Huawei dead.
Last year the Department of Commerce (DoC) barred American firms from selling Huawei chips made in America, which oxygenate swathes of the global semiconductor industry. In May the DoC added a rule banning domestic and foreign firms from using American-built chipmaking equipment to create custom-made processors for Huawei.
On August 17th the DoC tightened the noose once again—this time, many experts think, for good. Its new rule prohibits anyone from selling any chips to Huawei, custom or not, if these were produced with American technology. This covers practically every chipmaker in the world, including those in China, thus closing loopholes that the global chip industry’s high-powered lawyers have found in the earlier edicts. The share price of MediaTek, a Taiwanese company which was hoping to sell Huawei generic components, plunged by 10% on the news.
The changes take effect on August 20th. After that, Huawei will start running down its stockpile of chips. It has been amassing them for months and probably has enough to last it into 2021, reckons Dan Wang of Gavekal Dragonomics, a research firm. But its customers, including European mobile operators using Huawei kit and in need of spares, will start panicking before then. And who would buy new network kit from a firm which may be unable to fulfil orders?
Huawei’s options are limited. It could sue, claiming that the DoC’s actions contravene America’s own laws, but its two ongoing lawsuits against the American government already look like long shots. Its suppliers, particularly Chinese ones, may sell it chips in breach of DoC rules. Yet that could provoke American ire—and Huawei-like sanctions against them, too.
America’s chip firms are also in a bind. The Semiconductor Industry Association said it was “surprised and concerned by the administration’s sudden shift” from an approach that balanced national security with corporate interests. Besides lost sales to Huawei, which bought $19bn in components from American firms last year, technology bosses fret that their government’s actions will drive investment away from them to rivals in other countries.
If Beijing retaliates with a counter-claim of jurisdiction over any product made in China, that would devastate the supply chains of Apple and other American technology firms. On August 18th China’s government accused America of “violating international trade rules”. But it has so far resisted striking back, perhaps counting on Mr Trump’s defeat in November’s presidential election by Joe Biden, who may take a softer stance against China.
The DoC can still issue licences to firms that want to keep supplying Huawei with components. American trade negotiators may want to use this power to extract concessions from China in ongoing trade talks to boost Mr Trump’s re-election chances, diminished by his mishandling of the covid-19 pandemic. Given the supposed threat Huawei poses, it may be odd to let it live in exchange for a few extra tonnes of soyabean sales to China. Then again, policy inconsistency has not been an obstacle for the Trump administration in the past. Many Western technology firms hope that remains the case.■
This article appeared in the Business section of the print edition under the headline “No more quarter”
THE STATISTICS landed like fists in a one-two punch. First came the news that India had counted 78,000 new cases of covid-19 on August 30th alone—more than any other country has tallied in a single day since the pandemic began. The next day came the bill for the two-month lockdown that the government imposed in late March at only four hours’ notice. The National Statistical Office said that India’s output between April and June was 23.9% lower than in the same period the year before.
India had never recorded a quarter of negative growth since it began issuing such data publicly in 1996. No other big economy has shrunk so much during the pandemic. In the same period America’s GDP fell by 9.1%. India’s economy had been stumbling before covid-19. But what had seemed a dismally low rate of growth in 2019 is now the stuff of fond memory.
In hindsight, India’s government may have locked down too soon. The country had detected barely 600 cases of covid-19 by March. The ban on commercial activity and movement outside of the home was nearly total for two months. Test-and-trace programmes worked in some areas, notably the southern state of Kerala, but nationwide they have fallen far short of the standards set by some East Asian countries. Hospitals rushed to get ventilators and free up beds in intensive care, but they were starting from a woefully low level. India had 0.7 hospital beds per 1,000 people; South Korea had more than 16 times as many. Lacking health care, people resorted to makeshift remedies. Around 140m people were thrown out of work. Millions trudged on foot to ancestral villages.
The pain was so great that hardly anyone can stomach the thought of reimposing strict controls, even though infections are rising more swiftly than ever. Public transport is resuming this month. Public gatherings are to be subject to looser rules. Eventually schools will reopen. An edict declares that state and municipal governments may no longer impose stricter rules than the central government. Kerala, once a model for the rest of the country, has been unable to stop travellers from other Indian states bringing the virus with them. It is now counting over 1,000 new cases a day.
The number of Indians dying of the virus appears to be lower than might be expected, given the number of infections. The country’s 3.8m detected cases have led to just 67,000 known deaths. That is a low rate by global standards, although many covid-related deaths are thought to be going unrecorded around the world, making comparisons unreliable. A paper by Minu Philip, Debraj Ray and S. Subramanian of the National Bureau of Economic Research suggests that few Indians are dying because its covid-19 sufferers are younger than those elsewhere. After taking patients’ ages into account, the difference all but disappears.
More startling are the results of surveys that analyse blood serum. They suggest that a fairly high proportion of urbanites may have already had covid-19. The relevant antibodies were detected in 41% of samples collected in Mumbai in July and in nearly 57% of samples from its slums. They were also found in 23% of tests in Delhi in June and in more than 28% in August. In Pune, a prosperous city of 7.4m in Mumbai’s hilly hinterland, the proportion of those with antibodies was more than half.
Many in India are growing stoical about the virus’s spread. The national media are once again full of celebrity tittle-tattle. When Pranab Mukherjee, a former president, died on August 31st, the government declared a seven-day period of mourning. That he had been on a ventilator suffering from covid-19 for the last three weeks of his life was barely mentioned.■
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This article appeared in the Asia section of the print edition under the headline “Double whammy”