SUPPLY CHAIN

Chips Wanted

We’ve faced a number of shortages over the past year—toilet paper, GrapeNuts, joy. But one shortage continues to stand above the rest in its ability to damage the global economy: semiconductors. 

Senior execs from almost 20 companies are heading to the White House today to discuss the current chip shortage and ensure more supply chain chaos doesn’t break out in the future.

• The roster includes leaders of Ford, Intel, and Alphabet, highlighting how a tiny piece of technology is critical for the everyday operations of a wide range of industries. 

How did this start? 

As the world went into hibernation in spring 2020, manufacturers called up their chip suppliers and said, “Welp, looks like we won’t be needing much of your stuff in the near future.” 

But the economic crisis took a very different shape than originally projected, and demand, instead of dipping...spiked. People loaded up on electronics as they worked/studied/gamed at home. Flush with stimulus checks and wary of public transportation, Americans kept buying cars.

But because they dramatically lowered their chip orders, car manufacturers were stuck making jigsaw puzzles with a missing piece. 

• You can’t put 100% of the blame on Covid. That wild weather in Texas and other factory hiccups also knocked out chip production, compounding the problem. 

But it’s a big problem

The chip shortage has affected “virtually every major car company in recent months,” according to the WSJ, forcing automakers to halt production of their most popular cars. 

• Both GM and Ford said the shortage could knock profits by at least $2 billion. 
• Sony said the chip shortage is the reason why there are so few PS5s available.

Looking ahead...don’t expect today’s WH meeting to conclude with a “mission accomplished” banner. Covid-19 exposed deeper, systemic issues within the semiconductor supply chain (over-reliance on China, simply not enough chipmakers). Those will take years and hundreds of billions worth of investments to resolve. 

C-SUITE

Post-Pandemic CEOs Definitely Add Avocado

A new analysis from the Wall Street Journal found that chief executives’ median pay at 322 major public US companies rose to $13.7 million last year, up from $12.8 million in 2019. 206 of the 322 CEOs surveyed received a raise, with a median increase of nearly 15%.

It’s more than a simple pay bump. Salary accounts for less than 10% of most major CEOs' total comp, and many trimmed those salaries early in the pandemic to boot. Instead, CEOs are forming new money piles with equity and bonuses. 

Case in point: Paycom CEO Chad Richison

He’s the newly crowned highest-paid CEO in the S&P 500 with a total compensation of $211 million in 2020. And that package is covered with the human equivalent of catnip to keep Richison motivated: 1.61 million restricted shares that will vest if the company hits stock price targets. 

It’s not just CEOs securing the bag: Chris Cox was awarded about $69 million to take back his title of Chief Product Officer at Facebook in 2020, and will receive $4 million more on his one-year anniversary.

SPORTS

Sports Roundup

It was a busy weekend in the wide world of sports biz. Cue the SportsCenter theme music. 

The future of college football? The University of Central Florida allowed its players to wear their social media handles on the backs of their jerseys during the spring game on Saturday. “This is a new age of personal branding. We’re going to embrace it,” said UCF coach and verified cool dad Gus Malzahn.  

The Timberwolves are getting new owners: Fresh off losing a bidding war for the NY Mets, baseball star-turned-businessman Alex Rodriguez is teaming up with e-commerce legend Marc Lore to buy the NBA’s Minnesota Timberwolves and the WNBA’s Minnesota Lynx. The current owner of both teams, Glen Taylor, bought the Timberwolves in 1994 for $88 million...he’s selling it for $1.5 billion.

Golf history: With his victory at the Masters, Hideki Matsuyama became the first male Japanese golfer to win a major tournament. Japan is very into golf—it has as many courses as the UK + Ireland combined.

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GRAB BAG

Key Performance Indicators

Stat: Nearly 70% of US teens own AirPods, according to a new survey from Piper Jaffray. 88% have an iPhone. 

Quote: Chinese vaccines “don’t have very high protection rates.” 

Gao Fu, the director of the China Centers for Disease Control, admitted on Saturday that the country’s vaccines don’t exactly give Covid-19 a knockout blow. One study from Brazil found that the vaccine from the Chinese company Sinovac was 50.4% effective, compared to Pfizer’s 97%. Fu said the government is looking for ways to boost effectiveness.  

Read: America is about to go Botox wild. (The Atlantic)

CALENDAR

The Week Ahead

Economic data: The biggest report of the week is Tuesday’s Consumer Price Index, which will reveal how worried we should actually be about inflation. Retail sales (Thursday) and housing starts (Friday) are two other data points to watch.

Earnings: Earnings season is upon us—get hyped. Big banks including JPMorgan and Wells Fargo kick off the festivities on Wednesday; other companies reporting quarterly financials this week include PepsiCo and Delta Air Lines. Side note: Corporations have trounced analyst expectations for the past three quarters.

Everything else:

• Coinbase will go public on Wednesday
• Ramadan begins today
• On Saturday, all US National Parks will be free to enter

WHAT ELSE IS BREWING

• More than 100 business leaders hopped on a Zoom call to talk about voicing more criticism of controversial voting bills, per the WaPo. 
• Iran called a blackout at one of its nuclear sites "nuclear terrorism." We don't have many details, but experts are suggesting it may have been a cyberattack carried out by Israel.
• The Chinese government fined Alibaba a record $2.8 billion as it ramps up antitrust oversight of its own tech giants. 
• LG Energy and SK Innovation, two South Korean battery makers, agreed to settle a dispute that could have threatened the US’ electric vehicle ambitions.
• Microsoft is in talks to buy AI company Nuance Communications for $16 billion, per Bloomberg. 
• The WSJ is at a crossroads.

BREW'S BETS

We’ll take our burger medium robot. Flippy is the burger flippin’ robot set to revolutionize the QSR industry, helping businesses increase margins by about 300%. Don’t flip out, but you can invest in this cash cow of a robot here.*

Meet this free meat. ButcherBox delivers only the highest quality meat directly to your door. And now new members can get The Essentials Bundle—that’s 7 lbs of chicken breast, pork chops, and ground beef—for free with their first box. Sign up here.*

Life hacks: Someone on Reddit asked about life hacks that seem fake but are actually real. Check out the answers.

Dive back into the week: 

• Shallow dive: When the most famous people on Earth lived and died
• Medium dive: What makes Bezos, Bezos
• Deep dive: A long thread on where we stand with Covid
• Cannonball: Epic Tim Ferriss pod

GAMES

Logo Quiz

The company Blue Yonder just filed confidentially to go public. Can you guess what it does from its logo? 

ANSWER

Supply chain software