Chip shortages are forcing German automakers to cut production.

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Daily Business Briefing

July 21, 2021 at 7:59PM ET

July 21, 2021 at 7:59PM ET

A Daimler factory in Germany.  The automaker is trying to deal with chip shortages by prioritizing its most expensive and most profitable models.
Credit…Kai Pfaffenbach/Reuters

global semiconductor shortage Demand is recovering strongly from the pandemic-induced downturn, interrupting production in the German auto industry.

Automakers Daimler and BMW said this week that a lack of sawdust is forcing assembly lines to slow or halt, reducing production by tens of thousands of vehicles and leading to longer wait times for customers.

The company said this week that BMW is temporarily halting production or reducing the number of shifts at three plants in Germany and one in the UK, as well as suppliers-owned and contract vehicle assembly plants in the Netherlands and Austria.

As a result, a BMW spokesperson said on Wednesday that production fell short with 10,000 vehicles this week, and a similar shortage is likely next week.

Daimler is trying to cope with the shortage of sawdust by prioritizing its most expensive and most profitable models. But CEO Ola Källenius said in a conference call with journalists Wednesday that even they were impressed.

Daimler had to briefly stop assembly lines at a factory in Sindelfingen, near Stuttgart, that produces new cars alongside Mercedes-Benz S-Class luxury cars. EQS electric vehicle, said Mr. Källenius. One reason was the closure of a chip supplier in Malaysia.

“We could certainly make more cars if we had more chips,” said Harald Wilhelm, Daimler CFO. He added that he could not predict when semiconductor supply would meet demand.

“We have to work with uncertainty,” Mr. Källenius told reporters.

That said, the semiconductor drought doesn’t seem to hurt profits. Wednesday Daimler reports profit 3.6 billion euros, or $4.2 billion, for the second quarter, followed by sales, up 44 percent to 43.5 billion euros. In the same period last year, when many showrooms were closed due to the pandemic, Daimler reported a loss of 2 billion euros.

In 2018, Kenneth C. Frazier, former CEO of pharmaceutical giant Merck, will join General Catalyst as head of health assurance initiatives.
Credit…Mike Cohen for The New York Times

Kenneth C. Frazier stepped down as Merck’s CEO last month, but has remained busy ever since. He remains the chairman of the pharmaceutical giant’s board of directors and is the leader of OneTen, an initiative aimed at creating one million jobs for Black Americans. now, DealBook newsletter He was the first to report, adding another role: venture capitalist.

Mr. Frazier will join General Catalyst as head of health insurance initiatives, a new position where he will focus on healthcare initiatives. This is an area of ​​focus for General Catalyst’s managing partner, Hemant Taneja, who recently spearheaded a project. 600 million dollar fund dedicated to the industry.

Mr Frazier was brought aboard by his friend Kenneth I. Chenault. Joined General Catalyst As president of the venture firm after retiring as president and CEO of American Express in 2018. The two first met at Harvard Law School and among a few people Black CEOs of Fortune 500 companies. The most recent two feature hundreds of corporate leaders publicly Opposing states’ efforts to limit voting rights.

“As you can imagine, he had numerous options for what to do,” Mr. Chenault said of Mr. Frazier. “Obviously, our personal relationship was important, but that wouldn’t have been enough if Ken didn’t believe in vision and what we’re trying to do in healthcare.”

Mr Frazier said he has dealt with people “at the intersection between technology and the life sciences” throughout his career. In my experience these people are very fluent in digital technology and data science, analytics, machine learning.”

But what is needed is “people who understand empathy,” he said: “We need people who have both data-driven approaches and more people-centred approaches.”

Morgan Stanley recalled most of its bankers to office. He wants his lawyers out there to do the same.

Late last week, the bank’s chief legal officer, Eric Grossman, sent a message urging the leading law firms he works with to bring back their employees, according to a memo viewed by The New York Times. He expressed “serious concern” about the possibility of long-term remote work and said working in-office provides better training, helps staff build relationships and gives it an edge over competitors working from home.

“I feel the need to make a warning in light of what I have observed in general about the lack of urgency to return lawyers to office,” the note said. “I firmly believe that the most productive meetings are in-person, and now that we’re already largely back in the office at Morgan Stanley, it’s now clear to me that a mixed meeting of live and Zoom attendees is challenging at best.”

The message echoed that of James P. Gorman, CEO of Morgan Stanley, emphasizing the face-to-face nature of finance. Many of the bank employees are already back in the field, and most of the others are too. waiting for feedback until September. Banking giants like JPMorgan Chase and Goldman Sachs call back Wells Fargo said this would allow for more flexibility.

At least one recipient of the note acknowledged Mr. Grossman’s sentiments. “It’s so much easier to be in a courtroom, in a negotiation, in a meeting when we’re together,” said Richard Rosenbaum, chairman of Greenberg Traurig’s board. “It’s where your most important work is done.”

Hacks carried out by Chinese People's Liberation Army units are now handled by an elite network of satellite contractors.
Credit…Alex Plavevski/EPA via Shutterstock

China has long been one of the biggest digital threats to the US. But ten years ago, breaches were made by units of the People’s Liberation Army through spearphishing emails that were sloppyly worded.

According to US officials, these are now run by an elite network of satellite contractors at shell companies and universities working for the Chinese Ministry of State Security.

Monday, US blames China again cyber attacks. The Biden administration’s indictment of cyber attacks, as well as interviews with dozens of current and former American officials, show how China is reorganizing its hacking operations. Nicole Perlroth reported to The New York Times.

“It’s a level-up that we’ve seen by China over the last two or three years,” said George Kurtz, CEO of cybersecurity firm CrowdStrike. “They operate more like a professional intelligence service than the fragment and container operators we have seen in the past.”

China’s new tactics include exploiting “zero-day” or unknown vulnerabilities in widely used software. Like Microsoft’s Exchange email service and Pulse VPN security devicesHarder to defend, allowing China’s hackers to operate undetected for longer periods of time.

China has restricted research into vulnerabilities in widely held software and hardware that could potentially benefit government surveillance, counterintelligence and cyberespionage campaigns. Last week, announced a new policy It requires Chinese security researchers to notify the government within two days when they find vulnerabilities, such as “zero days” that the country relied on to breach Microsoft Exchange systems.

  • The White House administration said on Tuesday it would nominate the nomination. Jonathan Kanter will be the top antitrust officer in the Justice DepartmentA move that would add another long-time critical move of Big Tech and corporate concentration to a strong regulatory position. President Biden’s plan to appoint Mr. Kanter, an antitrust lawyer who has made a career in representing rivals to American tech giants like Google and Facebook, shows how strongly the administration is taking sides in the growing field of lawmakers, researchers and regulators who call it Silicon. Valley has gained immense power over the way Americans talk to each other, buy products online, and consume news.

  • Steve Doocy, the conservative host of “Fox & Friends” on Fox News, He intensified his warnings about the coronavirus. “It will save your life,” he said on Tuesday. And he’s not the only one: Sean Hannity urged viewers on Monday to “please take Covid seriously – I can’t say it enough”. Fox News didn’t change overnight—other personalities continued to air counterpoint. But some prominent Republicans are alarmed at the deadly toll of the virus in conservative states and territories.

United Airlines announced on Tuesday lost $434 million in three months It ended in June, but said it did better-than-expected during the quarter and expects profits in the second half of the year. The airline reported revenue of $5.5 billion in the quarter, about half of what it collected in the same quarter in 2019.

“Thanks to the professionalism and perseverance of United employees who have worked hard to take care of our customers throughout the pandemic, our airline has reached a meaningful milestone: We hope to return to profit once again.” The airline’s CEO, Scott Kirby, said in a statement.

United said profitable corporate and international travel is recovering faster than it anticipated. The airline expects pre-tax profits in the third quarter, which will be the first time since the end of 2019. United also predicted that capacity for this quarter, which ends in September, will drop by about 26 percent from the same quarter two years ago.

The optimistic tone mirrors that of United’s peers. Last week, Delta Air Lines reported a profit of $652 million – removed by federal stimulus funds – first profitable quarter since the start of the pandemic, for the three months ending June. American Airlines, which is expected to report earnings on Thursday, previewed its financial results last week, saying it could report a slight profit for the quarter.

The industry has seen a boom in summer travel within the United States, driven by coronavirus vaccines that are widely administered in the spring. Airline shares fell on Monday amid fears the Delta variant threatened that recovery, but have since rebounded.

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