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Hans India
13-05-2025
- Business
- Hans India
German Companies Rethink U.S. Investments Amid Trump's Tariff Strategy
German companies, historically among the largest foreign investors in the United States, are starting to pull back amid growing concerns over President Donald Trump's escalating tariff policies. The shift comes despite Germany investing over $657 billion in the U.S. economy in 2023—more than three times the U.S. investment in Germany. Recent surveys show a noticeable decline in German corporate confidence in the U.S. market, with only 19% of firms now planning new investments in North America—down from 25%—according to data from Deloitte and the German Chamber of Commerce and Industry. Tariffs Spark Strategic Reassessment Since President Trump imposed a new wave of tariffs on April 2, sentiment among German manufacturers with U.S. operations has dropped significantly. Volker Treier, head of foreign trade at the German Chamber, called tariffs 'poison,' warning they could undercut decades of transatlantic economic cooperation. Germany's automotive sector has been particularly affected, with companies like BMW, Mercedes-Benz, and Volkswagen engaging in talks with Washington to ease import duties. While some firms consider relocating production to the U.S. to bypass tariffs—a move praised by the White House—many others are holding back or redirecting investments back home. Investing at Home as a Safer Bet The recent election of German Chancellor Friedrich Merz, who has promised to slash bureaucracy and lower energy costs, has made domestic investment more attractive. A planned €500 billion infrastructure investment by the German government over the next 12 years is further encouraging companies to focus on opportunities at home. Still, the investment outlook could shift again before the 90-day tariff suspension ends in July, especially if Germany and the U.S. reach a broader trade agreement. Fairness and the Trade Gap The trade imbalance between the two nations remains a central issue. Germany exports significantly more to the U.S. than it imports, fueling tensions that Trump has vowed to address. But German business leaders argue that their long-standing contributions—like job creation and local manufacturing—should be factored into negotiations. 'We've invested more, and created more jobs in the U.S. than American companies have in Germany,' said Treier. 'That's the true benchmark for fairness.' Locally Focused Strategies Offer Protection Some firms, like Stihl and Haribo, have long embraced a local production model. Stihl, which opened a Virginia factory in 1974, has been shielded from the worst of the new tariffs. Yet the company warns that supply chain costs will still rise, especially for imported components. 'Tariffs are taxes,' said Stihl chairman Michael Traub. 'In the end, it's consumers who pay the price.' Haribo, meanwhile, opened its first U.S. plant in Wisconsin in 2023. 'We are pursuing a long-term local strategy, regardless of customs policy,' said Christian Bahlmann, a senior VP at the company. What's Next? Trade negotiations between Washington and Berlin could shape the future of German investment in the U.S., with both sides signaling a willingness to resolve disputes. However, without a deal, the looming tariff deadline could further strain economic ties between two of the world's largest industrial powers.
Straits Times
24-04-2025
- Business
- Straits Times
Boeing ready to resell China-bound jets if trade war worsens
SEATTLE – Boeing is prepared to find alternative buyers for China-bound aircraft that are mired in a trade dispute with the United States, as the planemaker seeks to reduce the fallout on its jet deliveries and earnings recovery. China has stopped taking deliveries from Boeing, chief executive Kelly Ortberg confirmed in an interview with CNBC on April 23, after the company reported better-than-expected results. The move, first reported last week by Bloomberg News, has left in doubt the fate of about 50 jets that were slated to go to the country in 2025. 'We are in close communication with our China customers and we are actively assessing options for remarketing already built or in-process airplanes,' Mr Ortberg said during Boeing's earnings call. The impasse underscores the tough situation that Boeing faces as the largest US exporter of manufactured goods after President Donald Trump unveiled tariffs with most of America's trading partners. So far, only China has retaliated with tariffs that have priced Boeing jets out of the market for the country's carriers. Mr Ortberg conceded that the turnaround under way at Boeing could become rocky if more nations were to follow suit. Echoing comments by General Electric chief executive Larry Culp this week, the Boeing chief said he and his staff have stressed to the Trump administration the importance of aerospace exports to the US economy. 'I don't think a day goes by where we aren't engaged with someone in the administration, including Cabinets, secretaries and up to POTUS himself,' Mr Ortberg said, using the acronym for President of the United States. For now, the fallout is manageable for Boeing, which is able to offset any cost increases its pays for higher goods and services on jets that are exported. Executives pegged the planemaker's exposure at less than US$500 million (S$657 million), with the planes bound for China putting another US$1 billion or so of revenue in jeopardy. But the continued strong demand for new jetliners, combined with delivery constraints at rival Airbus, should work in Boeing's favour. Among airlines that are willing recipients of the aircraft rejected by China is Air India. Through the end of March, the airline had accepted 41 737 Max jets originally built for Chinese airlines, and the carrier has signalled that it is eager to take more, Bloomberg reported this week. 'Looking ahead, if China decides to defer or cancel orders, Boeing should have little difficulty reallocating the aircraft to other airlines that need additional capacity,' Mr Ron Epstein, an analyst at Bank of America, said in a note to clients. The possible tariff fallout has cast a pall on an otherwise upbeat recent performance by Boeing, highlighted in the first-quarter report that showed improvements on earnings and cash consumption. Another possible negative outcome from the trade dispute is the effect it will have on suppliers, particularly smaller shops already struggling to absorb higher costs from Boeing's planned rate increases. Mr Ortberg said the company is keeping a close eye on parts makers but has not detected any weakness yet, as it prepares to raise output of its 737 Max and 787 models in coming months. Boeing is already working on plans to reach a monthly cadence of in the mid-50s for its 737 Max aircraft, Mr Ortberg said. For now, the company wants to get to a 38-unit monthly cap instilled by the Federal Aviation Administration, before eventually moving up to 42 and beyond, provided that the metrics that measure the health of its factories and suppliers remain stable. The rate increases will help improve cash flow, with Mr Ortberg reiterating that Boeing aims to reverse the drain in the first half into cash generation in the latter part of 2025. 'We are well on track for that recovery to return to positive cash flow in the second half of the year,' he said. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
Yahoo
21-04-2025
- Business
- Yahoo
MACOM Technology Solutions Holdings Inc (MTSI) Q1 2025 Earnings Call Highlights: Record Revenue ...
Revenue: $218 million for Q1 fiscal 2025. Adjusted EPS: $0.79 per diluted share. Free Cash Flow: Approximately $63 million for Q1. Cash and Short-term Investments: Approximately $657 million at quarter end. Revenue by End Market: Industrial and defense: $97.4 million; Data Center: $65.3 million; Telecom: $55.4 million. Sequential Revenue Growth: Data Center up 16%, Telecom up 7%, Industrial and Defense up 5%. Book-to-Bill Ratio: 1.1:1 for Q1. Adjusted Gross Profit: $125.3 million or 57.5% of revenue. Adjusted Operating Expense: $69.9 million. Adjusted Operating Income: $55.4 million. Adjusted Net Income: $59.5 million. Accounts Receivable: $91.8 million, down from $105.7 million in Q4 2024. Inventory: $198.4 million at quarter end. Cash Flow from Operations: Approximately $66.7 million for Q1. Capital Expenditures: $5.3 million for Q1. Warning! GuruFocus has detected 3 Warning Sign with MTSI. Release Date: February 06, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI) reported a record high revenue of $218 million for the first fiscal quarter of 2025, with an adjusted EPS of $0.79 per diluted share. The company achieved a strong free cash flow of approximately $63 million in Q1, contributing to a cash and short-term investments balance of $657 million. The data center market segment showed significant growth, with revenues up 16% sequentially, driven by strong demand for 800 gig optical products. MACOM's book-to-bill ratio was 1.1:1, indicating strong order activity and a record-level backlog. The company is strategically positioned to capture market share in its targeted end markets, with plans to introduce new product lines and technologies in 2025. Gross margins for the first quarter were below targets at 57.5%, impacted by lower wafer volumes and underabsorbed costs in the Lowell fab. The telecom market segment experienced some weakness, affecting overall utilization and contributing to lower gross margins. Despite strong growth in the data center segment, there is a potential slowdown in 800 gig demand as customers transition to 1.6T, which could impact future growth rates. The company faces challenges in maintaining high utilization rates in its Lowell fab, which is crucial for improving gross margins. There is uncertainty regarding the impact of government funding and CHIPS Act initiatives on MACOM's long-term investment plans and financial performance. Q: Can you update us on the progress with ACC in the data center market and the potential inflection point in mid-2025? Also, what are your thoughts on LPO and its opportunities compared to ACC? A: Stephen Daly, CEO: The data center market is performing well, with significant growth driven by our optical portfolio, particularly the 800 gig products. We anticipate a slowdown in 800 gig as customers transition to 1.6T. ACC remains a game changer, with interest from a broad customer base, despite some architecture changes. LPO, a solution without DSP, is also gaining interest, especially at higher data rates like 800 gig and 1.6T, and is expected to contribute in late 2025 and 2026. Q: Could you provide more color on the DoD satellite programs and the revenue opportunity in the satellite communication space over the next few years? A: Stephen Daly, CEO: We see strong demand from both established and new satellite manufacturers, driven by global broadband services and DoD needs. Opportunities exist in high-frequency bands like E-band, V-band, and Ku-band, where MACOM can provide leading RF and microwave solutions. Our involvement spans analog mixed-signal devices, optical solutions, and linearized SSPAs, with significant growth potential in both commercial and defense sectors. Q: How do you view the spending expectations in the data center market over the next few years, given industry changes? A: Stephen Daly, CEO: We remain bullish on data center expansion and capital spending. We support customers with high data rate products and plan to provide more optical solutions. Our strong 200 gig per lane PD and CW laser products will add revenue in 2025 and 2026. We also see opportunities in PCIe 6 and PCIe 7 connectivity, where we offer both electrical and optical solutions. Q: Can you discuss the impact of the Lowell fab modernization and North Carolina fab expansion on your operations and gross margins? A: Stephen Daly, CEO: The Lowell fab modernization will improve infrastructure, replace antiquated equipment, and add a small six-inch GaN on silicon carbide line, enhancing yields and capacity. The North Carolina expansion will address capacity issues by installing a six-inch line and an MOCVD reactor for advanced epi. These long-term investments, supported by the CHIPS program, will strengthen MACOM's market position without immediate P&L impact. Q: What are your expectations for the data center business in fiscal 2025, particularly regarding the transition from 800 gig to 1.6T and the role of LPO? A: Stephen Daly, CEO: We expect strong growth in the data center market, driven by the transition to 1.6T and continued contributions from LPO and ACC. While 800 gig has been a significant revenue driver, we anticipate a shift to 1.6T in the back half of the year. LPO solutions will also contribute, with interest primarily at higher data rates. Overall, we foresee a record year for MACOM in this segment. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
