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| Hello Insiders, Happy 4th of July. Today's newsletter focuses on new China’s export restrictions, which industries will be impacted, and why AAA predicts a record number of Americans to travel by car this holiday. Plus, the new deal between Samsung Biologics and Pfizer. Make sure to continue reading for Quick Hits and the Knowledge Hub. Shriram
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| 1 | | China has put export limits on gallium and germanium products with widespread applications in semiconductors and electric vehicles in reaction to U.S. efforts to impede their technological advancement, which might disrupt the global supply chain. The export restrictions can increase prices and force semiconductor manufacturers to look into alternate materials. More: - China's move may impact leading importers of gallium and germanium products, including Japan, Germany, France, and the U.S.
- Given that China is the world's top producer of rare earth metals, industry experts have expressed worries about the likelihood of further limitations on rare earth exports.
- To lessen the effects of the limitations, businesses are scrambling to acquire supplies and submit applications for export licenses.
- Nyrstar, an international miner, announced that it might produce germanium and gallium in Australia, Europe, and the U.S.; this restriction positively affected Teck Resources shares (1% up), the largest North American germanium producer.
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What the numbers say: According to WSJ, regular unleaded gas prices have declined to $3.49 a gallon, making it around 30% cheaper than the record high of $5.03 last year. Crude oil prices have decreased by approximately one-third in the past year. AAA expects a record number of 43.2 million Americans to travel by car for the Fourth of July. Relevance: With the decrease in oil prices due to a potential global recession and decreased demand, consumers can now save on fuel costs, resulting in more people traveling by car over the holiday season than ever before. Prices have fallen below the national average in about 30 states. More Info: Gas prices remain 35% higher than 2019 levels, with OPEC production cuts and U.S. crude inventories dropping more than expected, according to Energy Information Administration, which could boost prices. Companies like Exxon Mobil and Valero Energy have added more refining capacity this year but still less than pre-COVID times. | | | |
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| 3 | | Pfizer and Samsung Biologics have agreed on two manufacturing contracts for $897M that will be produced in Samsung Biologics' Plant 4 in South Korea through 2029. The agreements concern the development of biosimilar medicines for Pfizer, including those for oncology, inflammation, and immunotherapy. More: - Pfizer has placed orders worth $1.08B with Samsung Biologics this year, comprising a new $704M contract and a $193M follow-up order revealed in March.
- Samsung Biologics sees these strategic orders as an expansion of its strategic alliance with Pfizer.
- The volume of contracts for the South Korean biotechnology company's entire calendar year has surpassed the prior year's.
- With plans to invest $1.54B in a new factory in South Korea through September 2025, Samsung Biologics had previously agreed to contracts with Eli Lilly Kinsale and GlaxoSmithKline.
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| 4 | | The automaker Stellantis said that second-quarter sales of new vehicles in the U.S. were up 6.4% from last year, and shares were up by 1.5% after this announcement. The increased demand for the Jeep Compass, Dodge Durango, and Chrysler Pacifica SUVs led to more significant sales. More: - While the industry is anticipated to have raised sales by 16% to 18%, Stellantis' sales gain is expected to be one of the lowest in the second quarter.
- Stellantis announced second-quarter sales of 434,648 vehicles, up from the sales from last year's 408,521 vehicles.
- In the second quarter of 2023, the Dodge Durango, Chrysler Pacifica minivan, and Jeep Compass saw a triple, 40%, and 28% increase in sales, respectively, while other Stellantis vehicles' sales declined.
Zoom Out: - In June, The industry's full-year new vehicle sales prediction from Cox Automotive was upped to 15 million, an 8% increase from 2022 (13.7 million).
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| 5 | | Within nine months of acquiring Romeo Power, a battery manufacturer, for about $144M shares, Nikola Corporation decided to sell off the company's assets. Due to the high cost of commodities and the company's limited access to cash, Nikola has had difficulty meeting investor expectations, which prompted this decision. More: - Nikola has started legal action under the California Assignment for the Benefit of Creditors (ABC) statutory structure.
- Other EV businesses have faced similar difficulties, including Arrival and Lordstown Motors, with Arrival planning to dissolve its merger and Lordstown Motors declaring bankruptcy.
- As a result of pricing reductions and U.S. federal subsidies that reduced the cost of their electric vehicles, Tesla, on the other hand, surpassed forecasts for their deliveries during the second quarter.
- Along with LG Energy Solution and Proterra Inc., Romeo Power is one of the battery manufacturers used by Nikola in the creation of his electric truck prototypes.
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| 6 | | The core business model of Meta may be in jeopardy due to the European Union's Court of Justice's decision that Facebook must get user consent before sending personalized adverts. For the three months ending March 31, Meta earned $28B in advertising income, with 22% of that coming from the continent of Europe. More: - Meta is currently appealing a privacy decision in Ireland ($425M fine) and has switched its legal justification for personalized ads under E.U. privacy law to the "legitimate interest" provision.
- The decision also affirms that competition regulators may consider data protection rules, which opens the door to potential new antitrust investigations into significant technology giants.
- A 2019 directive from the German Federal Cartel Office to avoid merging user data from different platforms without user agreement must be complied with by Meta.
- The upcoming E.U. Digital Markets Act, which will put comparable regulations on Meta, may restrict the decision's influence.
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- Deutsche Bank has hired Morgan Stanley's Samuel Kim as Asia's M&A Chairman, based in Hong Kong and reporting to Elalingam, to join them in the coming months.
- According to Bloomberg, Haleon, spun off from GSK last year with a market value of $37.5B, is considering a sale of its Nicotinell gum business which could be worth up to $800M, and is seeking buyers with the help of advisers.
- L3Harris, the aerospace and defense company, is exploring the potential sale of its $1B avionics unit, which could attract buyout and strategic suitors.
- Medicare has revised its guidance to allow drug companies to disclose information regarding drug negotiation processes at their discretion, following a lawsuit against the federal government for violating the First Amendment.
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 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Christopher Hachey | |
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