WCA November 2007

From the americas

Alcoa International (Asia) Ltd, a wholly-owned subsidiary of Alcoa, of the US, announced on 12 th September that it had sold its holdings in Aluminium Corp of China Ltd (Chalco) for approximately $2 billion. Pittsburgh-based Alcoa was an investor in Chalco since its initial public offering in 2001, and held a 7% stake. Alcoa – the world’s leader in alumina production, with operations in 44 countries – reiterated its commitment to the aluminium industry of China and said it would continue to pursue opportunities there. Alain Belda, Alcoa’s chairman and CEO, cited Chalco’s healthy financial position as the reason for the divestiture. He said: “[Alcoa can now] redeploy its capital into other value-adding options, including projects in China.” Lifting of import ban in the Qualcomm- Broadcom case is good news for Motorola and other cell phone makers In response to a request by Motorola Inc and several other mobile phone manufacturers to stay an order issued by the federal government in June, a US Court of Appeals judge on 12 th September halted the import ban on mobile phones made with semiconductors from Qualcomm Inc. In August, the White House refused the request to overturn the ban. The US International Trade Commission had barred imports of new mobile phone models with chips made by Qualcomm (San Diego, California) on grounds that the company violated a patent held by another California chip maker, Broadcom Corp (Irvine), on technology that conserves battery power. The ruling applied to chips for use in expensive phones that transmit video and data at high speeds. The order to halt the ban applies to the seven companies that sought the relief: wireless carriers AT&T and T-Mobile USA Inc, and cell phone makers Motorola, Samsung Electronics Corp, LG Electronics, Kyocera Wireless Corp, and Sanyo Fisher Co, Samsung and LG are believed to have had the most to lose if the ban remained in effect. Both primarily make phones, utilising Qualcomm chips, for sale in the US. But Motorola (Schaumburg, Illinois) would also have suffered. Motorola and the other appellants argued that, since Broadcom filed its complaint against only Qualcomm, the trade commission lacked authority to block imports by companies other than Qualcomm. The judge agreed with them. Chicago Tribune staff reporter Mike Hughlett noted that wireless carrier Sprint Nextel had avoided the ban by selling phones reliant on alternative software designs that apparently do not infringe the Broadcom patents. ❖ Telecom

Verizon Wireless, another major network, dodged the ban by concluding its own licensing agreement with Broadcom, in July. Qualcomm makes almost all of its chips overseas. If the ban had stood, it could have delayed the launch of high-end cell phones in the US during the Christmas season, vitally important to retailers.

Economics

‘Globalization and Its Discontents’ author sees East Asia as less vulnerable to America’s fiscal woes The US could face a prolonged economic downturn but is unlikely to plunge into a recession, Nobel economics laureate Joseph E Stiglitz said on 30 th August. In Chicago to attend a conference, the former World Bank chief economist observed that East Asian countries may withstand the US fallout well, as the region has built up large reserves and is much more resilient after rebounding from its own financial crisis a decade ago. Mr Stiglitz, who won the Nobel Prize for economics in 2001 and is author of ‘Globalisation and Its Discontents,’ is a professor of economics in the School of International and Public Affairs of Columbia University, in New York City. He cited the defaults on US sub-prime mortgages – which roiled global financial markets in the summer – as having increased the risks to the economy. Some 1.7 million Americans are threatened with the loss of their homes to foreclosure or bankruptcy, placing even greater pressure on a weak housing market. Wages have stagnated, despite the fact that the gross domestic product of the US is some 20% higher than it was six years ago. As reported in the Chicago Tribune (30 th August), Mr Stiglitz told reporters on the sidelines of the conference that the credit crunch was a ‘totally predictable disaster,’ attributable to Bush administration policies of cutting taxes for higher-income taxpayers even as the Federal Reserve reduced interest rates. The effect was to encourage Americans to borrow beyond their means. Broadening his theme, Mr Stiglitz observed that the entire country is living beyond its means, borrowing heavily even as household savings are negligible. “The magnitude of total government borrowings in the eight years of [the current administration] will be over $4 trillion,” he said. “President Bush has put America in an impossible place.” Mr Bush’s term runs until January 2009. Mr Stiglitz warned that the next US president faces the daunting task of restoring fiscal sanity.

Dorothy Fabian – Features Editor

35

Wire & Cable ASIA – November/December 2007