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Our top story today is a scoop on Arm. The UK-based company is looking to raise prices for its chip designs in a bid to boost revenues ahead of a hotly anticipated initial public offering in New York this year.
Several industry executives and former employees said Arm informed customers of plans to stop charging chipmakers royalties for using its designs based on a chip’s value and instead charge makers of devices such as smartphones based on the value of the device.
This means the SoftBank-owned group stands to earn several times more for each design it sells, as the average smartphone is vastly more expensive than a chip.
The move is one of the biggest business strategy shake-ups in decades for Arm, which designs blueprints for semiconductors found in more than 95 per cent of all smartphones. One former senior employee said owner SoftBank was “testing the market value of the monopoly that Arm has” by asking to be paid more money “for broadly the same thing”.
In other chip news, semiconductor companies including Intel are fighting US clampdowns on so-called forever chemicals that are used in myriad products but are slow to break down in the environment.
For today, I’ll be closely watching the Bank of England’s decision on interest rates, which comes after the US Federal Reserve pressed ahead with a quarter-point increase. The UK decision is complicated not just by recent turmoil in banks but also by an unexpected jump in inflation to 10.4 per cent in February (see the breakdown in our Chart below).
I’m also keeping tabs on:
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Economic data: The EU has flash consumer confidence figures for this month and the US has weekly unemployment claims.
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Results: Accenture, Lloyd’s of London, Inchcape and Wickes report. See the full list in our Week Ahead newsletter.
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EU meeting: The European Council begins a two-day meeting in Brussels to discuss Russia’s invasion and the bloc’s support for Ukraine.
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Five more top stories
1. Commercial property is among the biggest perceived risks for US banks, joining deposit flight and bond portfolios. Soaring borrowing costs from rising interest rates have strained the $5.6tn market for commercial real estate loans. Now, the threat of a credit crunch has overtaken inflation as investors’ biggest worry.
2. The Bank of England warned US regulators about the risks at Silicon Valley Bank well before its collapse, central bank governor Andrew Bailey told a British parliamentary committee. The letter published yesterday cited “concentration risk” and the “overlap of clients” between SVB’s lending and deposit books.
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US banks: Treasury secretary Janet Yellen ruled out a broad expansion of deposit insurance to protect savers, fuelling a sell-off in shares of smaller US banks.
3. Angry US bondholders and lawyers are preparing to sue the Swiss government over its decision to write down $17bn of Credit Suisse additional tier one bonds as part of the bank’s shotgun marriage with UBS. One chief investment officer likened Switzerland to a “banana republic”.
4. French president Emmanuel Macron defended his unpopular plan to raise the retirement age but acknowledged public anger over the move, which he called “a necessity for the country”, in his first public remarks since his government forced the change through parliament.
5. Germany risks running out of gas next winter, says its energy watchdog. The Federal Network Agency has warned that companies and households will need to cut gas use further if the country is to avoid an energy crunch next winter.
The Big Read
The EU wants to make solar power its single biggest source of energy by 2030. That would mean almost tripling its solar power generation capacity over the next seven years. The problem is more than three-quarters of the EU’s solar panel imports in 2021 came from a single country: China.
We’re also reading . . .
Chart of the day
The unexpected jump in UK inflation to 10.4 per cent in February, coupled with turmoil in the global banking sector, leaves the Bank of England with an even tougher decision today. The latest data has reinforced fears that price rises are increasingly being driven by domestic pressures rather than external shocks.
Take a break from the news
Unlike Logan Roy, Succession creator Jesse Armstrong knows when to call it a day. In its fourth season, the final act of the peerless comedy, Succession reaches new highs, lows and some surprising human emotions, writes critic Dan Einav. Read his review ahead of the season 4 premiere this week.
Additional contributions by Gordon Smith and Emily Goldberg
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