Big Tech Firms Seek Federal Funding for Chip Manufacturing: Live Updates
Semiconductor companies and big businesses that use chips have formed a new coalition to push for tens of billions of dollars in federal funding for semiconductor research and manufacturing in the United States.
The new group, the Semiconductors in America Coalition, announced its formation on Tuesday amid a global semiconductor shortage that has caused disruptions throughout the economy. Its members include chip makers like Intel, Nvidia and Qualcomm and companies that rely on semiconductors, like Apple, Google, Amazon Web Services, Microsoft, Verizon and AT&T.
The coalition is calling on Congress to provide $50 billion for semiconductor research and manufacturing, which President Biden has proposed as part of his $2.3 trillion infrastructure package.
“Leaders from a broad range of critical sectors of the U.S. economy, as well as a large and bipartisan group of policymakers in Washington, recognize the essential role of semiconductors in America’s current and future strength,” said John Neuffer, the president and chief executive of the Semiconductor Industry Association, a trade group.
In a letter to congressional leaders, the new coalition noted the shortage of semiconductors and said that in the long term, federal funding “would help America build the additional capacity necessary to have more resilient supply chains to ensure critical technologies will be there when we need them.”
The shortage has been acutely felt in the auto industry, forcing carmakers to idle plants. Ford Motor expects the shortage to cause profit to be about $2.5 billion lower this year and to cut vehicle production by about 50 percent in the second quarter.
The new coalition does not include any automakers, which have their own ideas for how the government should encourage domestic semiconductor manufacturing. In a letter to congressional leaders last week, groups representing automakers, automotive suppliers and autoworkers expressed support for Mr. Biden’s $50 billion proposal but emphasized the need to increase production capacity for automotive grade chips as part of the effort.
The letter — from the American Automotive Policy Council, the Motor & Equipment Manufacturers Association and the United Automobile Workers union — suggested providing “specific funding for semiconductor facilities that commit to dedicating a portion of their capacity to motor vehicle-grade chip production.”
In a letter to congressional leaders last month, technology trade groups argued against setting aside new production capacity for a specific industry, saying that such a move would amount to “unprecedented market interference.”
L Brands has decided to spin off Victoria’s Secret rather than sell it, the DealBook newsletter was the first to report.
The company said last year it was considering separating Victoria’s Secret from the rest of its business, and it tested the interest of private equity. Ultimately, L Brands decided to split itself into two independent, publicly listed companies: Victoria’s Secret and Bath & Body Works. The deal is expected to close in August.
L Brands received several bids north of $3 billion, sources familiar with the situation said, requesting anonymity because the information is confidential. It turned the offers down, because it expects to be valued at $5 billion to $7 billion in a spinoff to L Brands shareholders. Analysts at Citi and JPMorgan recently valued Victoria’s Secret as a stand-alone company at $5 billion.
“In the last 10 months, we have made significant progress in the turnaround of the Victoria’s Secret business, implementing merchandise and marketing initiatives to drive top line growth, as well as executing on a series of cost reduction actions, which together have dramatically increased profitability,” Sarah Nash, chair of the company’s board, said in a statement.
“The board believes that this path forward will return the highest value to shareholders and that the separation will allow each business to achieve its best opportunities for growth.”
The pandemic torpedoed a sale last year for much less. That agreement, announced in February 2020 with the investment firm Sycamore Partners, valued Victoria’s Secret at $1.1 billion.
Apart from a pandemic that upended the retail industry, Victoria’s Secret was dealing with a series of challenges: a brand that had fallen out of touch, accusations of misogyny and sexual harassment in the workplace and revelations about the ties between Les Wexner, the company’s founder and former chairman, and Jeffrey Epstein. (Mr. Wexner stepped down as chief executive last year and said in March that he and his wife were not running for re-election on the company’s board.)
As the pandemic shuttered stores and battered sales, Sycamore sued L Brands to get out of the deal, and L Brands countersued to enforce it, heralding a spate of similar battles between buyers and sellers. Eventually, in May 2020, the sides agreed to call off the deal.
A lot has changed since then. The retailer has overhauled its brand, de-emphasizing the overtly sexy image and products that customers saw as exclusionary. It has become “less focused on a specific demographic target and more focused on being broadly inclusive of all women of all shapes and sizes and colors and ethnicities and genders and areas of interest,” Martin Waters, the retailer’s chief executive, said on a recent earnings call.
The company also closed more than 200 stores and focused on improving profitability, which rose sharply at the end of last year, surpassing its prepandemic results.
Victoria’s Secret operating income
Victoria’s Secret is one of the retailers transformed by the pandemic, along with others like Dick’s Sporting Goods and Michaels, accelerating digital overhauls that may have otherwise taken years. Direct sales at Victoria’s Secret in North America rose to 44 percent of the total last year, from 25 percent the year before.
It’s unclear whether pandemic shopping trends will stick, and “it would be reasonable to expect some reversion,” Stuart Burgdoerfer, the L Brands chief financial officer, said at a March event. “But I also think that people have very much enjoyed some of the benefits that were forced on us or triggered through the pandemic.”
Macy’s is proposing the construction of a commercial office tower on top of its flagship Herald Square store in New York as part of a broader redevelopment plan that would aim to improve the surrounding area and its subway stations.
The retailer said in a statement on Monday that it would commit $235 million to help improve the Herald Square subway stations and to “transform Herald Square and Broadway Plaza into a modern, car-free pedestrian-friendly urban space for New Yorkers and visitors,” according to a website it created for the proposed project.
Before Macy’s proposal can move ahead, the area needs to be rezoned to allow the new structure to be built atop the retailer’s iconic Herald Square store, which opened more than 100 years ago and would remain open during any new construction. The project would also need to go through an approval process with the city.
Macy’s added that it was eager to begin a public review process on the project and that it would “work closely with local officials, Manhattan Community Board 5, the 34th Street Partnership and other community stakeholders on final designs.”
Macy’s, which released renderings of the proposed building and pedestrian area, said that it supported the construction of the office space as part of an expected boom in new office jobs in New York this year. The beleaguered retailer added that the city was expecting a return to prepandemic office employment levels by the fourth quarter, and it estimated that its proposal would generate more than $250 million in new tax revenue for the city while supporting nearly 16,300 jobs.
For millions of retirement savers, the pandemic was a gut punch. There was the jarring stock market drop in March 2020, then millions lost their jobs, health insurance and ability to fund their savings.
The pandemic stymied adults who hadn’t started saving for retirement, the number of workers taking withdrawals from their 401(k)s last year jumped, and some companies cut their 401(k) matching contributions.
John F. Wasik, a writer for The New York Times, spoke with financial advisers about the seven steps people can take now to catch up on their retirement savings:
Track your total spending. Spending has the biggest impact and is the input you have the most control over, said Clari Nolet, a certified financial planner and certified divorce financial analyst.
Focus on health insurance. When many people lose their jobs, they lose health insurance coverage for themselves and family. Those laid off can often continue their insurance under a COBRA plan, said Lori Price, a certified financial planner — but it can be onerously expensive.
Make catch-up contributions. If you’re 50 or older, the Internal Revenue Service gives you a little savings plum: You can save as much as an extra $6,500 annually in your defined contribution plans (which include 401(k)s, 403(b)s and 457s).
Automate your savings. If you’re working and offered a 401(k) with automatic payroll withdrawals, you can simply increase your contribution. Want to save even more? Many plans allow you to increase your 401(k) savings when you get a raise.
Adjust your portfolio. Just socking more money into a bank money-market account won’t help you catch up much at all. Yields on money markets are awful — the top rate nationally was 0.60 percent, according to Bankrate.com.
Retire later. If you’re able, one simple strategy is to retire after the “normal” age for Social Security benefits, which is 66 for most Americans. That will give you more time to save. Social Security will even pay you more each month if you wait until 70 to collect benefits.
Set up your own plan. Small-business owners or those who are self-employed can set up their own plans, from Simplified Employee Pension I.R.A.s to 401(k)s.
As employers race to hire before an expected summertime economic boom, they are voicing a complaint that is echoing all the way to the White House: They cannot find enough workers to fill their open positions and meet the rising customer demand.
Many managers are unwilling to raise wages and prices enough to keep up, as they worry that demand will ebb in a few months and leave them with permanently higher payroll costs. They are instead resorting to short-term fixes, like cutting hours, instituting sales quotas and offering signing bonuses to get people in the door, Jeanna Smialek and Jim Tankersley report for The New York Times.
In and around Rehoboth Beach, Del., at least 10 people, managers and workers alike, cited expanded payments as a key driver of the labor shortage, though only two of them personally knew someone who was declining to work to claim the benefit.
In Delaware, Wawa gas stations sport huge periwinkle blue signs advertising $500 signing bonuses, plus free “shorti” hoagies each shift for new associates. A local country club is offering referral bonuses and opening up jobs to members’ children and grandchildren. A regional home builder has instituted a cap on the number of houses it can sell each month as everything — open lots, available materials, building crews — comes up short.
Scott Kammerer oversees a local hospitality company that includes a brewery and restaurants. He has been able to staff adequately by offering benefits and taking advantage of the fact that he retained some workers because his restaurants did not close fully or for very long during the pandemic.
But he has also raised wages. The company’s starting non-tip pay rates have climbed to $12 from $9 two years ago. Mr. Kammerer has not been forced to raise prices to cover increasing costs, because business volume has picked up so much — up 40 percent this year compared with a typical winter — that profits remain solid.
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