21/08/2025

BIZ & FINANCE THURSDAY | AUG 21, 2025

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US govt eyes equity stake in chip makers

UK inflation rises to 3.8%, highest since early 2024

LONDON: British inflation hit its highest in 18 months in July when it increased to 3.8% from 3.6% in June, official data showed yesterday, once again leaving the country with the biggest price growth problem amongst the world’s big rich economies. As well as the rise in the headline rate, which was the highest since January 2024, inflation in Britain’s services sector – which is watched closely by the Bank of England (BoE) – accelerated to 5% from 4.7% a month earlier. The BoE had expected headline inflation to rise to 3.8% in July with services prices rising by 4.9%. Economists polled by Reuters had mostly expected rates of 3.7% and 4.8% respectively. Sterling rose slightly after the data was published. The BoE cut interest rates this month but only after a narrow 5-4 vote by policymakers and the Monetary Policy Committee suggested it would slow the already gradual pace of its reduction in borrowing costs due to inflation’s persistence. “Today’s inflation data will reinforce the Monetary Policy Committee’s cautious approach to cutting interest rates going forward,” Martin Sartorius, principal economist at the Confederation of British Industry, said. “While inflation is projected to ease next year, the risk of second-round effects means that the MPC will not race to loosen policy in the near term.” Inflation in Britain is running higher than in the United States, where it held at 2.7% in July, and in the euro zone where it is expected to remain around the

European Central Bank’s 2% target over the coming years. By contrast, the BoE thinks British inflation will hit 4% in September, double its target, and stay above 2% until mid-2027. Some of the difference with inflation in other countries reflects how energy and other utility prices are regulated in Britain. Big increases in utility bills in April have boosted year-on-year inflation comparisons. Britain’s relatively tight labour market, which economists say has become more rigid since Brexit, is also putting upward pressure on prices. Wage growth in Britain has slowed but at about 5% it is too high for the BoE to feel comfortable about consumer price inflation returning rapidly to 2%. Furthermore, employers say that a tax increase on them in April and a big jump in the minimum wage are forcing them to put up prices. Wednesday’s data showed the biggest contributor to the rise in inflation in July was from transport, particularly air fares. Food and non-alcoholic drink prices – which the BoE says are big influences on how the public thinks about the inflation outlook – were 4.9% higher than a year earlier, the biggest rise since February 2024. ONS data published last week painted a picture of an economy with enough momentum to keep inflation high. Output grew by more than expected in the second quarter and the labour market, while still losing jobs, showed signs of stabilisation. – Reuters

SoftBank Group agreed to invest US$2 billion in Intel, which has struggled to compete after years of management blunders. “The Biden administration literally was giving Intel money for free and giving TSMC money for free, and all these companies just giving the money for free, and Donald Trump turned it into saying, ‘Hey, we want equity for the money,” Lutnick said. “If we’re going to give you the money, we want a piece of the action for the American taxpayer.’” South Korean presidential adviser Kim Yong-beom said neither the government nor the potentially affected companies have heard about such a plan. He added that foreign companies like Samsung needed “predictability” for their US investments. A Korean chip industry official, meanwhile, said it would be hard for chipmakers to accept American government equity stakes, and some may either decide not to invest or delay investments unless Washington provides incentives like increasing funding. Taking lawmaker questions in Taipei yesterday and asked whether the US government could take a stake in TSMC, Taiwan Economy Minister Kuo Jyh-huei said his ministry would consult with the company, which he pointed out was private and not a state-owned enterprise. “We will also discuss with the National Development Council, as it is a shareholder of TSMC. “We will thoroughly understand the underlying meaning of the US Commerce Secretary’s remarks, but this will require some time for discussion and assessment,” Kuo said. – Reuters

o Trump administration wants ‘a piece of the action’ in return for CHIPS Act grants

WASHINGTON: Commerce Secretary Howard Lutnick is looking into the government taking equity stakes in Intel and other chipmakers in exchange for grants under the CHIPS Act, which aims to spur factory-building in the US, two sources said. As part of a plan to revive US manufacturing – a key agenda of Donald Trump – Lutnick said earlier on Tuesday the US government wants an equity stake in Intel in exchange for cash grants approved by the administration of former president Joe Biden. Now Lutnick wants to expand that plan to other companies, according to a White House official and a person familiar with the situation. The Trump administration has recently made unusual deals with US firms, including allowing AI chip giant Nvidia to sell its H20 chips to China in exchange for the US government receiving 15% of those sales. The Pentagon is slated to become the largest shareholder in a small mining company to boost output of rare earth magnets. The government’s intervention in corporate matters has worried critics who say Trump’s actions create new categories of corporate risk and that a bad bet could mean a hit to taxpayer funds. Much of the funding under the CHIPS Act has not yet been dispersed for companies such as Micron, Taiwan Semiconductor Manufacturing Co, Samsung and Intel. US In a statement to the Istanbul Stock Exchange regulator (KAP), the Turkish flag carrier said “the binding offer submitted has been accepted by Air Europa” and procedures to close the deal had started. “The transaction involves an investment of €300 million, the majority of which is in the form of a capital increase” which would then be converted into a stake whose share would be finalised in the coming months. “The minority shareholding ratio to be acquired will be finalised following technical and financial adjustments to be made at the closing,“ it said. Media reports in Spain and Turkiye gave a figure of some 26%. Turkish Airlines said the process was due to be completed within six to 12 months, subject to approval by the relevant regulatory authorities, including the Spanish government. The airline submitted its binding offer on Tuesday to Globalia, the

TSMC and Intel declined to comment. Micron, Samsung and the White House did not respond to requests for comment on whether Lutnick is considering more stakes. The two sources told Reuters on Tuesday that Treasury Secretary Scott Bessent is also involved in the CHIPS Act discussions, but that Lutnick is driving the process. The Commerce Department oversees the US$52.7 billion CHIPS Act money. Lutnick has been pushing the equity idea, the sources said, adding that Trump likes the idea. White House press secretary Karoline Leavitt confirmed earlier that Lutnick was working on a deal with Intel to take a 10% government stake. “The president wants to put America’s needs first, both from a national security and economic perspective, and it’s a creative idea that has never been done before,” she told reporters. Speaking on CNBC, Lutnick said the US wants a return on its “investment”. “We’ll get equity in return for that ... instead of just giving grants away.” Trump has previously said he wanted to kill the CHIPS Act programme. Lutnick’s comments suggested any stake would be non-voting, meaning it would not enable the US government to tell the company how to run its business. His comments came a day after

Turkish Airlines says offer to buy stake in Spain’s Air Europa accepted ISTANBUL: Turkish Airlines on Tuesday said Air Europa had accepted its €300 million (RM1.5 billion) offer to purchase a minority stake in the indebted Spanish airline. A Turkish Airlines Airbus A350-941 comes in to land at Heathrow Airport in west London. – AFPPIC

the Latin American market” and create new revenue channels. Last year, IAG dropped a bid for a full takeover of the Spanish carrier owing to regulatory constraints. – AFP

It said the complementary nature of its own global passenger and cargo network and Air Europa’s strong position in the Iberian Peninsula and Latin America would “contribute to achieving scaled and rapid growth in

France-KLM dropped out of talks to take a stake in the Spanish airline. Turkish Airlines had on Aug 7 informed KAP it had decided to submit a binding offer to acquire a minority stake in Air Europa.

Spanish tourism group which holds an 80% stake in Air Europa. The other 20% is held by British Airways owner IAG. The move comes two weeks after rival bidders Lufthansa and Air