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| Here’s your daily business briefing. - 🏭 U.S. offers TSMC $6.6B for Arizona chip plant
- 🛒 Deep Dive: Temu's U.S. entry concerns Etsy & Wayfair
- 💼 Tradeweb acquiring ICD for $785M
Thanks for reading! Shriram
p/Shriram | |
| 1 | | The Biden administration is providing TSMC's Arizona subsidiary with up to $6.6B in direct funding and a potential $5B in loans under the CHIPS Act, supporting the company's investment of over $65B in three advanced fabrication plants in Phoenix. This move aims to enhance domestic semiconductor production and bring the manufacturing of cutting-edge chips to the U.S. More: - In Arizona, where TSMC ($TSM) has already generated over 25,000 employees, $50M will be used for local talent development and training.
- TSMC's investment in Arizona represents the most significant foreign investment in the state's history and underscores U.S. leadership in semiconductor technology.
- From its facilities in Arizona, TSMC, a pioneer in the world of semiconductor manufacture, is anticipated to provide chips to clients like Advanced Micro Devices and Apple.
- Other beneficiaries of the CHIPS Act funding include GlobalFoundries, Microchip, BAE Systems, and Intel, with Intel slated to receive up to $8.5B in direct funding and $11B in loans.
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What the numbers say: Etsy and Wayfair witnessed successive declines in gross merchandise sales over the past few years, with Etsy's sales falling for the second year and Wayfair's for the third. During this period, Etsy's ($ETSY) shares dropped by 67%, while Wayfair's ($W) plummeted by 82%. Additionally, Temu, a Chinese online marketplace, achieved approximately $9B in U.S. gross merchandise value in 2023, with plans to significantly increase its marketing expenditure from $1.7B to $3B this year. Relevance: Temu's U.S. market debut presents a formidable challenge to entrenched online marketplaces like Etsy and Wayfair, buoyed by its substantial marketing budget and prospective expansion into U.S.-based seller listings. With both Etsy and Wayfair grappling with dwindling gross merchandise sales and faltering share prices, they face heightened vulnerability to competition from emerging platforms such as Temu. More data: While Temu has seen early triumphs, doubts linger about its sustainability, including issues with retaining customers and potential regulatory hurdles. Etsy and Wayfair face compounded difficulties from Temu's emergence, leading to cost-saving efforts and investor anxieties regarding their future growth potential. | | | |
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| 3 | | Tradeweb Markets Inc. ($TW) has acquired Institutional Cash Distributors (ICD) for $785M, marking its largest acquisition as it expands beyond its core rates-trading business. With this deal, Tradeweb gains entry to one of the largest U.S. institutional money-market fund portals, catering to approximately 500 corporate treasury organizations. More: - Since Billy Hult became CEO in 2023, Tradeweb has made three acquisitions, indicating a deliberate move into new asset classes.
- Tradeweb's revenue has increased over the past five years, and since its 2019 launch, its stock has soared 280%, valued at almost $24B.
- Recent acquisitions include YieldBroker's expansion into Australia and New Zealand and technology supplier r8fin.
- ICD, specializing in short-term investment management software for corporate treasurers, managed average daily balances exceeding $230B last year.
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| 4 | | Gatorade, a long-standing leader in the sports drink industry, faces rising competition and is diversifying into new segments, such as unflavored water. Its main rivals, including Powerade from Coca-Cola and Bodyarmor, are intensifying efforts to challenge Gatorade's dominance, yet Gatorade managed to retain a 63.5% share of the U.S. sports drink market in 2023. More: - PepsiCo streamlined its brand portfolio by integrating labels such as Propel and Muscle Milk into the Gatorade lineup.
- Propel's sales are predicted to exceed $1B, and Gatorade has grown its market share YTD in every hydration category it competes in.
- Increased competition has driven Gatorade to innovate, launching new products to sustain its market position.
- Influencers such as Logan Paul's Prime Energy have impacted Gatorade's market share, yet the brand remains robust.
- Gatorade adapts to evolving consumer preferences through offerings such as Gatorade Zero Sugar, immune support tablets, and alkaline water.
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| 5 | | Kimberly-Clark ($KMB) is offloading its personal protective equipment (PPE) division to Ansell for $640M in cash. Ansell will take over a business segment from Kimberly-Clark responsible for producing and selling gloves, eyewear, and other protective apparel under the Kimtech and KleenGuard brands. More: - The deal aligns with a shift by U.S. hospitals and healthcare buyers to international PPE suppliers, reversing a surge in domestic sales during the early COVID-19 phase.
- The personal protective equipment production firm sees the acquisition as a chance to increase its investment in PPE and generate savings by expanding its clientele.
- The manufacturing company anticipates finalizing the acquisition between July and December, with the deal valuing Kimberly-Clark's PPE assets at 9.7 times earnings before interest and tax.
- Ansell plans to fund the acquisition by raising up to $306M through a fully underwritten placement of new shares to institutional investors, a share purchase plan, and an additional $377M in debt.
Zoom Out: - Kimberly-Clark announced a restructuring initiative to streamline its business and supply chain, projecting approximately $1.5B in associated charges over the next three years.
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| 6 | | Spotify ($SPOT) introduces AI-generated playlists in beta, enabling users to craft custom playlists through written cues, initially rolling out in the U.K. and Australia for Android and iOS, with expansions expected. Users can tailor playlists based on diverse prompts such as genres, moods, activities, movie characters, colors, and emojis. More: - Spotify employs large language models (LLMs) to personalize playlist creation by understanding user intent and preferences through their history.
- Users can fine-tune generated playlists by issuing commands such as "less upbeat" or "more pop" and removing songs with a left swipe.
- AI playlists are in the "Your Library" tab, offering prompt suggestions to inspire users.
- Spotify implements safeguards to avoid offensive or current events-related prompts and those associated with specific brands.
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| 7 | | Quick HIts: - When it's time to grow your company, make Ohio your competitive advantage with better sites, sharper talent, earlier funding, and less red tape.*
- Spotify appoints Christian Luiga, a former Saab executive, as its new CFO, who is set to join the music-streaming platform in the third quarter.
- Digi Communications NV has agreed to sell part of its fiber networks in Spain to a consortium led by Macquarie Group Ltd. for up to $814M to fund its expansion in the country.
- Riddell, the NFL helmet maker, receives a $400M investment from BC Partners, facilitating a payout to Fenway, its private equity owner, after earlier sales efforts fell short of Fenway's price expectations.
- Elon Musk, known for his enthusiasm for self-driving vehicles, declared that Tesla would reveal its robotaxi on August 8, after years of anticipation and delays.
*This is a sponsored listing. | | | |
| Upcoming Events | | APR
10 | | Ask email experts from Google and Yahoo your most important questions at SocketLabs' interactive webinar on April 10. | | | | | | * This is a sponsored event | | | |
 | 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 Shriram Jeevakumar | |
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