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The UK government is collaborating with Boston-based Moderna to build the country’s first manufacturing centre for messenger RNA vaccines in a deal worth £1bn as it seeks a lead in responding to the current and future pandemics.
The government is aiming to secure homegrown supplies of a technology that has proved crucial in the fight against Covid-19 and offers the potential to transform treatment for other conditions such as cancer.
The centre will manufacture up to 250mn doses per year, including some for export. The 10-year deal, which will be finalised this summer, also includes co-operation on research and development.
Health secretary Sajid Javid said the government had drawn Moderna with a long-term supply agreement for vaccines as well as the UK’s strong life sciences ecosystem.
“I think what this shows is that in post-Brexit Britain, when it comes to inward investment, and particularly in this case, the life sciences, the UK is the leader in Europe,” he told the Financial Times.
Go deeper: BioNTech’s chief executive has called on health regulators to decide by the end of the month whether to approve Covid vaccines targeting the most recent strains without first requiring clinical data, warning that “time is ticking”.
Thanks for reading FirstFT Europe/Africa. Here is the rest of the day’s news — Jennifer
1. UK rail bosses push for job cuts Network Rail called on unions to accept almost 2,000 job losses as the two sides prepared to resume negotiations today after the largest transport strike in a generation brought much of Britain to a grinding halt. Do you support the rail strike? Let us know by voting in our poll or sharing your thoughts with firstname.lastname@example.org. We may feature your response in an upcoming newsletter.
2. Scholz aide points to future Russia ties Politicians in Berlin reacted with dismay after Jens Plötner, Chancellor Olaf Scholz’s foreign policy adviser, chastised the media’s coverage, saying Germany’s future relationship with Moscow was “at least as exciting and relevant an issue” as supplying Ukraine with heavy weapons.
In Europe: Russia has threatened Lithuania with serious consequences if the Baltic nation stops it from exporting EU-sanctioned goods to Kaliningrad by rail.
Opinion: Russia’s invasion has underscored the need for permanent Nato eastern defences, writes Henry Foy. Constanze Stelzenmüller argues Angela Merkel’s lack of regret illustrates the fallacies of her policy towards Moscow.
3. Kellogg’s to split into three food businesses Kellogg is splitting into three public companies, keeping its core global snacking business while spinning off the North American cereal brands where the Corn Flakes maker’s origins lie and a business selling plant-based foods.
4. UK weighs forcing Arm to pursue London IPO The government has debated using national security legislation to convince SoftBank to list Arm in London, as the Japanese investor reconsiders holding an IPO for the chip designer exclusively in the US.
5. Crypto exchange manager accused of illicit trading Chen Boliang, a former senior manager at Huobi, one of the world’s largest crypto exchanges, is being prosecuted in Hong Kong after accusations that he made $5mn by secretly trading against a company account he controlled.
Industry turmoil: Sam Bankman-Fried, chief executive of crypto exchange FTX, has delivered his second bailout of a digital assets company in as many weeks.
UK-Gulf trade talks The UK is seeking a significant increase in trade while skirting the issue of human rights as discussions kick off with the six Gulf Cooperation Council states at the Arab bloc’s headquarters in Riyadh.
UK bill of rights Dominic Raab, deputy prime minister, will introduce measures before parliament that would allow British courts to diverge from human rights rulings by the European Court of Human Rights.
Elsewhere in the continent: The European Commission will formally agree rules that would allow it to impose trade sanctions against countries that breach conditions on labour rights and climate change in deals with the bloc.
Paramount Plus comes to the UK The company’s flagship streaming service, with hits such as the TV shows SpongeBob SquarePants and Yellowjackets and the Top Gun films, launches for £7 a month.
Fed chair testifies Federal Reserve chair Jay Powell begins two days of testimony in Congress by delivering his semi-annual monetary policy report to the Senate banking committee after the US central bank last week raised its main interest rate by 0.75 percentage points, its biggest increase since 1994.
Economic data The EU publishes flash consumer confidence figures, and the European Central Bank’s governing council holds a non-monetary policy meeting in Frankfurt. Consumer price indices are out for May in Canada and the UK, which also has producer price data.
The big mistakes of anti-globalisers Globalisation is not dead. It may not even be dying. But it is changing, writes Martin Wolf. From treating trade as optional to overstating the merits of self-sufficiency, here are the errors we should avoid as we head into a new world.
The private equity groups that buy companies they own A growing number of privately owned companies are being bought and sold by the same firm. Such deals are partly a consequence of the tidal wave of cash that flooded private markets during the long era of low interest rates. But critics point to conflicts of interest.
A corporate feud over satellites pits the west against China In February, European financiers and entrepreneurs gathered for a late-night online meeting to resolve a boardroom dispute over prized satellite permits. At its core was the question: who controls an asset in orbit? Here’s how a clash of cultures and geostrategic interests sank a German-Chinese joint venture.
Anarchy is a likelier future for the west than tyranny The story of our species is mostly one of disorder, not too much order. Even now, the state, a recent invention, is patchy and provisional in much of the world. Janan Ganesh argues that the trend of events is not towards strongmen but towards ungovernability.
How boards can keep up with climate action expectations HSBC’s bus stop adverts. BlackRock’s investment plans. BP and Microsoft’s carbon offsets. Green policy is turning into the fast-fashion of business strategy, constantly evolving to meet competing demands. Pilita Clark explains how to navigate this shifting landscape.
Earlier this year, we published a rundown of private libraries around the globe. It promoted a flurry of responses regarding remarkable reading rooms. Here are some of your favourites.
Nato is to agree an overhaul of its plans to offer better protection to the alliance’s eastern flank, tearing up a model that could have meant relinquishing Baltic states and then attempting to recapture them in the event of a Russian invasion.
Jens Stoltenberg, Nato secretary-general, told the Financial Times that the military blueprint, to be agreed at an annual leaders’ summit that begins in Madrid tomorrow, would drastically upgrade the alliance’s eastern defences, shifting focus from deterrence to a full defence of allied territory.
Estonia’s prime minister has claimed that under the current doctrine, Baltic states would be “wiped off the map” by a Russian assault before Nato attempted a counter-attack to liberate them after 180 days.
The alliance will “significantly reinforce” its defences in eastern Europe, Stoltenberg said, pledging that Russia would not be able to capture the Estonian capital Tallinn “just as they have not been able to seize the city of Kirkenes in northern Norway or West Berlin during the cold war”.
Military developments: Russian missiles struck residential buildings in central Kyiv yesterday. Ukraine’s retreat from the eastern city of Severodonetsk was a “tactical” move to avoid a repeat of the siege in Mariupol, the country’s military intelligence chief said.
Energy politics: G7 leaders meeting in the Bavarian Alps are seeking a deal to impose a “price cap” on Russian oil to curb Moscow’s ability to finance its war.
Thanks for reading FirstFT Europe/Africa. To start your week, here’s the rest of the day’s news. — Jennifer
1. EY valued NSO Group at $2.3bn The Big Four accounting firm valued the secretive Israeli spyware company at $2.3bn, months before the maker of the Pegasus cyberweapon needed emergency bailout funding. By contrast, Berkeley Research Group, which represents NSO’s private equity owners, said this year that the company’s equity was “valueless”.
2. BIS: leading economies at risk of high-inflation trap The Bank for International Settlements warned yesterday that major economies were close to “tipping” into a high-inflation world in which rapid price rises dominate daily life and are difficult to quell, and urged central banks not to be shy about inflicting short-term pain and even recessions to prevent it.
3. RWE: UK windfall tax could risk £15bn in renewables The head of one of the country’s largest power producers has warned that Germany’s biggest utility will reconsider £15bn of investment in the UK’s renewable energy sector if the country imposes a windfall tax on electricity generators.
4. UBS courts US investment heavyweights The Swiss lender, the world’s biggest wealth manager, has begun courting investment houses to become top shareholders as it tries to improve its market value to be closer aligned with Wall Street peers and project an image as a global bank.
5. UK Treasury takes stake in sex party planner The British taxpayer has become a shareholder in Killing Kittens, known for its exclusive and hedonistic events, under the Future Fund, a scheme set up by Chancellor Rishi Sunak to support innovative firms during the pandemic under which loans are converted into equity.
UK lawyers on strike Members of the Criminal Bar Association begin a walkout in an escalating dispute with the government over funding, which is expected to cause widespread disruption to hearings across England and Wales.
UK changes N Ireland trading regime MPs will have their first vote on Boris Johnson’s legislation to unilaterally rip up parts of Northern Ireland’s post-Brexit trading arrangements, despite fierce criticism from Brussels.
Economic indicators The annual European Central Bank Forum on Central Banking begins in Sintra, Portugal. In the US, durable goods orders may show whether inflation, rising interest rates and economic uncertainty weighed on demand in May. (FT, WSJ)
UN Ocean Conference The week-long conference on ocean conservation and sustainability starts and is co-hosted by Kenya and Portugal.
Companies developments Nike posts fourth-quarter results. Disney’s board meets for two days less than a week after giving under-fire chief executive Bob Chapek a vote of confidence.
Wimbledon begins The tennis tournament starts at the All England Lawn Tennis and Croquet Club in south-west London without the men’s top player or women’s reigning champion. Daniil Medvedev is ineligible after a ban on Russian players, while Ash Barty has retired. “Retiring aged 25 seems like filing for divorce while on honeymoon. But Barty’s decision reveals various truths,” writes Henry Mance.
Grim times lie ahead for UK The country is in the throes of the kind of labour unrest not seen for decades. The explanation for it is clear. Unanticipated inflation delivers losses everybody wants to recoup. This triggers social conflict, writes Martin Wolf. Yet if inflation is bad, so is the cure.
The road to rolling back Roe vs Wade As the Supreme Court overturns the landmark 1973 ruling enshrining the constitutional right to abortion, Lyz Lenz documents the rise of the Christian right and how it reached this historic moment. In response to the ruling, Democratic lawmakers are stepping up efforts to establish “sanctuary states” for reproductive rights.
Crypto and meme corporate bonds follow their own path The crash of some of the flagbearers of the equity bubble has been painful for investors. Less noticed are the losses of their bonds. Such gaps illuminate differences in the ownership and returns for stocks versus bonds, writes Ellen Carr at Barksdale Investment Management.
How the beauty industry left tortoise-like Revlon trailing Once a behemoth of the beauty industry, Revlon has been sidelined by modern influencer- and social media-driven make-up brands. The 90-year-old group’s bankruptcy filing reveals how competitive and fast-paced the sector has become.
There’s no such thing as an accidental plagiarist The acclaimed Australian novelist John Hughes claims that many of the 58 instances of plagiarism in his new book were by accident. Everyone steals when they write, but where does “good” theft end and clumsy rip-off start?
Whether you are looking for a book on urbanism, a literary thriller, a tome on the royal family or something else unexpected, you will want to take a look at these must-read titles recommended by FT writers and editors.
Anyone who wants to better understand the costly economic and political externalities that come with cheap food should spend some time in America’s Midwestern farm country. I did last week, driving from Wisconsin to Missouri through hundreds of miles of corn and soyabeans, the vast majority of which is grown not as food but as feed for cattle.
It was easy to find fast food and red meat in the small towns I passed, but it was often tough to find a decent supermarket with fresh fruits and vegetables. What a terrible irony that some of the richest farmland in America is often where you are most likely to find a “food desert”, or a place where it is challenging to source the components of a healthy diet.
Nearly a century on from the Great Depression, we still farm as we did then, trying to produce cheap calories for growing numbers of hungry people — and using huge amounts of fossil fuels — rather than providing better nutrition for an overfed yet undernourished population in ways that might support the planet and local communities.
Consumers have become used to cheap food. But it’s a model that makes little sense environmentally, and has led to tremendous consolidation on the production side.
Consider that in the middle of the biggest commodity price spike since the 1970s, some farmers are still struggling to stay in the black. Texas A&M University research shows that two out of three rice farmers will lose money this year, since input costs including fuel and fertiliser are rising even faster than commodity prices. Corn and soyabean producers will make money, but not as much as you’d think.
As Joe Outlaw, a professor at Texas A&M, put it in his testimony on the topic to the House Agricultural Subcommittee, consumer inflation may be 8.5 per cent but farmers have been hit with price increases at double that rate on seed. For other inputs, inflation is even higher. Herbicide is up 64 per cent from 2021 to 2022, and nitrogen fertiliser, perhaps the most important input of all, is up a whopping 133 per cent. Corn, meanwhile, is up only 4.84 per cent per bushel, and soyabeans are up a little over 7 per cent year on year.
Farmers have tried to hedge and hoard to account for these spikes, but they are outgunned by large, highly concentrated companies that control much of the agriculture supply chain. As Outlaw explained: “Simply put, the input suppliers would not lock in a price until the producers [meaning farmers] agreed to take delivery.”
The result is that many farmers, particularly small and medium-sized ones, will scale back on inputs this planting season, which will in turn hurt their future harvest. Grain trading giants such as Cargill are getting rich, as are many multinational energy companies. But growers themselves are barely in the black.
All of this speaks to a model that no longer works. Farming in America has been about cheap food for nearly a century. The New Deal encouraged the production of massive amounts of subsidised cereal grains to feed an influx of urban dwellers. The Reagan revolution encouraged further consolidation — as an illustration, consider that four companies control up to 85 per cent of the meat market.
Democratic President Bill Clinton then passed the “Freedom to Farm” act, which eliminated any government management of supply and demand. This is one reason farmers were dumping milk after the pandemic; overproduction encourages boom and bust cycles. It also makes it difficult to get food inflation under control now. While the US has strategic petroleum reserves, it has no grain reserves for domestic buyers despite being one of the world’s largest producers.
The “pile it high, sell it cheap” paradigm assumes that simply driving down prices will create a healthy market. But it comes with obvious costs for the planet, our health, and in some parts of the country, for politics. One would think that a state like Missouri, for example, would be fertile ground for Democrats campaigning on a message of corporate greed. In fact, the state voted for Donald Trump in the last election — in part because the failed industrial farming model hasn’t been replaced by much else, creating a disenchanted population that’s ripe for the former president’s dog whistles and his brand of populism, with its empty promises of help for the white working class.
Plenty of neoliberal economists might shrug at all this and note that farmers make up less than 2 per cent of the labour force (the agricultural sector as a whole is slightly over 10 per cent). They might even shrug at the fate of a state like Missouri, since they tend to think about overall numbers, not individual people in so-called flyover states. But in America’s electoral college system, states like this still matter — a lot. Taken together, they can make the difference between winning or losing.
So, what’s to be done? The Biden administration is correct to go after concentration in agriculture and energy, as in other industries. Indeed, the discrepancy between input costs and raw commodity prices makes me think that the White House has a point about corporate price gouging. If the commerce department gets its way, more rural broadband would help too. But ultimately, we are going to have to rethink the entire way we farm in America. Like so much of our economic system, it was built for a different era.
The Chinese memory chip producer Yangtze Memory Technologies plans to bring online a second plant in its home city of Wuhan as early as the end of this year, sources familiar with the matter say, in a move that could further close the company’s technology and output gap with global leaders such as Samsung of South Korea and Micron Technology of the US.
The company, also known as YMTC, needs to expand production after a growth spurt that put it on the world’s semiconductor map and delivered a notable success in Beijing’s attempt to reduce China’s reliance on imported chips.
Its original plant has been running near capacity and churned out 100,000 wafers a month at the end of 2021, two people told Nikkei Asia.
YMTC held a global market share of nearly 5 per cent last year, according to analyst and industry estimates. It has become the world’s sixth-largest Nand flash memory maker behind Samsung, SK Hynix, Kioxia, Western Digital and Micron, and the only one from China.
About 40 per cent of its output at present is 128-layer 3D Nand flash memory, the most advanced produced so far by a Chinese chipmaker. But that is one or two generations behind global leaders Samsung, SK Hynix and Micron. The rest of YMTC’s output is of older 64-layer 3D Nand flash memory.
This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, the economy, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan.
The new plant would first build mainly 128-layer flash memory and could later shift to even more cutting-edge chips, such as 196-layer or 232-layer 3D Nand flash memory, assuming development goes smoothly in 2023 and 2024.
Apple has been testing YMTC’s flash memory products since last year and could place its first order for “limited quantities” as soon as this year, two people familiar with the matter told Nikkei Asia. The US tech giant has been talking with the Chinese chipmaker since 2018 in hopes of finding a cost-effective source of storage components.
Securing a deal with Apple would be a milestone, highlighting the quality of Yangtze Memory’s chips, industry executives say. Apple’s Chinese suppliers, including those from Hong Kong, already outnumber those from Taiwan, making China the largest source of suppliers to the US company, according to a Nikkei Asia analysis. Apple also has close ties with several Chinese electronics manufacturers, including Luxshare, Goertek and BYD.
Yangtze Memory’s success is also viewed as a victory for China, as the world’s second-largest economy strives to localise semiconductor production and build industry champions. Yangtze Memory is backed by the China Integrated Circuit Industry Investment Fund, Beijing’s most important chip investment funding vehicle. And YMTC is bullish on its growth prospects, increasing its investment budget from $24bn in 2016 to the equivalent of $32.8bn this year.
The Chinese chipmaker is currently installing equipment at the new chip plant, a key step before it goes into production. The factory will eventually have twice the capacity of the first, several people briefed on the matter said. The total capacity for the two factories will reach 300,000 wafers per month and could help YMTC expand its market share to more than 10 per cent globally.
The company is split into two parallel teams composed of hundreds of top engineers tasked with developing 196-layer and 232-layer flash memory, one of the people said. Its aim is to catch up with foreign rivals.
The most advanced products on the market, which Samsung, Micron and SK Hynix have all succeeded in producing, are 176-layer 3D Nand flash memory chips. They are now racing to create chips composed of more than 200 layers. Kioxia and Western Digital said they will be making 162-layer 3D Nand flash memory by the end of the year.
The more layers a flash memory chip has, the more advanced the chips are — and the harder they are to develop and produce commercially. Nand flash memory is a vital storage component used in all kinds of electronic devices, from smartphones and PCs to data centre servers and connected cars.
Most YMTC flash memory is currently used to make consumer-grade solid-state drives (SSDs), mainly for the Chinese market. Its clients include leading storage makers Lenovo, Longsys and Kimtigo of China, as well as Adata of Taiwan. YMTC has also introduced its own brand, ZhiTai, to sell SSDs directly to consumers.
Its share of the global flash memory market has risen quickly from 1.3 per cent in 2019, when it first put 64-layer Nand flash memory into production, according to Counterpoint Research, which believes it could grab nearly 6 per cent of the market by 2023, up from 4.8 per cent in 2021.
Brady Wang, an analyst at Counterpoint, told Nikkei Asia that Yangtze Memory had been working on its technology even before the company was formally launched in 2016. It had demonstrated its capabilities and gradually become a viable global player after years of effort, Wang said. It had also more than doubled its payroll in four years, to about 8,000 employees currently.
“It recruits many engineers and veterans who have Chinese backgrounds but used to work for multinational tech and chip companies,” Wang said. “Managing a plant, however, is different from managing several plants at a massive scale. It remains to be seen if it [can] successfully ramp up production.”
Political tension between the US and China also increases uncertainties for Chinese companies like YMTC, Wang said.
Washington has slowed the advance of China’s semiconductor industry by adding the country’s top chipmaker, Semiconductor Manufacturing International Co, and the telecom equipment group Huawei, to a trade blacklist to restrict their use of American technology. Yangtze Memory has been among the most aggressive companies in pushing ahead with the development of domestic chipmaking equipment, but it continues to maintain good relationships with US and other foreign vendors to ensure its expansion plans come to fruition.
YMTC declined to comment for this story.
A version of this article was first published by Nikkei Asia on June 23, 2022. ©2022 Nikkei Inc. All rights reserved.
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