Pat Gelsinger, the former chief executive of Intel, has criticized Taiwan Semiconductor Manufacturing Company’s (TSMC) decision to invest an additional $100 billion in advanced chip manufacturing plants in the United States, arguing that the move does little to help the country regain its leadership in semiconductor production.

His remarks come shortly after the White House praised TSMC’s investment as a milestone in efforts to bring production of advanced semiconductors back to US soil. However, Gelsinger insists that without research and development (R&D) capabilities in the US, the country cannot expect to achieve long-term leadership in semiconductor manufacturing.

“If you don’t have R&D in the US, you will not have semiconductor leadership in the US,” Gelsinger said. “All of the R&D work of TSMC is in Taiwan, and they haven’t made any announcements to move that.”

Trump’s Tariff Pressure Beneficial to US Chip Industry

Despite his skepticism about TSMC’s investment, Gelsinger acknowledged that President Donald Trump’s tariff policies had been “incrementally beneficial” in incentivizing chip manufacturers like TSMC to expand their presence in the United States. The Trump administration has pushed for greater US-based chip production amid concerns about Intel’s ability to compete with its Taiwanese rival.

Intel, once the undisputed leader in semiconductor manufacturing, lost its technological edge to TSMC over a decade ago. Under Gelsinger’s leadership, the company had embarked on an ambitious turnaround plan aimed at regaining that position, but his abrupt departure late last year underlines the board’s loss of confidence in his strategy.

“I wasn’t done with the five-plus years when the board made a directional change,” Gelsinger said, hinting at disagreements over Intel’s long-term vision. His successor, Lip-Bu Tan, appointed earlier this month, has yet to outline his strategy for Intel’s future.

TSMC to Keep R&D in Taiwan

TSMC has confirmed that its US expansion will focus solely on existing process technology rather than the development of next-generation semiconductor innovations. Gelsinger argues that without cutting-edge research in the US, the country will remain at a disadvantage.

“Unless you’re designing the next-generation transistor technology in the US, you do not have leadership in the US,” he said.

While Intel has struggled to regain its manufacturing lead, the US still maintains a technological edge in areas like artificial intelligence (AI) and quantum computing. Gelsinger, who has since joined Silicon Valley venture capital firm Playground Global, is now focusing on investments in “deep tech” innovations, including quantum computing and advanced semiconductor technologies.

Dismissing DeepSeek’s Threat, Advocating Cost Reductions for AI

Addressing concerns about China’s growing AI capabilities, Gelsinger dismissed recent fears surrounding DeepSeek, a Chinese AI company that made waves with its low-cost AI technology. He argued that while the company’s work was solid engineering, it did not represent any groundbreaking innovations.

“DeepSeek was good engineering, it wasn’t core innovations. It wasn’t major breakthroughs,” he said.

Gelsinger also pointed out that while AI has revolutionized technology, its current high costs remain a barrier to broader adoption. He stressed that significant cost reductions in AI inference—the process of running AI models—are necessary for the technology to be fully integrated into everyday life.

“AI, as exciting as it is, is much too expensive,” he said. “We have to have dramatic reductions in the cost of inference for it to be truly deployed in every aspect of humanity.”

Silicon Valley’s Future Investments in Chip Technologies

Gelsinger’s new role at Playground Global positions him at the forefront of emerging semiconductor innovations. The firm backs start-ups such as xLight, which develops advanced lasers for future chip-making lithography, and PsiQuantum, which is building large-scale quantum computing systems. Another investment, d-Matrix, is attempting to surpass Nvidia in AI chip development.

While his tenure at Intel did not yield the intended results, Gelsinger’s continued involvement in deep technology suggests he remains committed to shaping the future of semiconductor and AI advancements. However, he didn’t attempt to answer the broader question: can the United States regain its semiconductor leadership, or will it continue to rely on foreign companies like TSMC without securing the critical R&D capabilities needed for long-term dominance?

Nigerian banks increasingly rely on short-term commercial papers (CPs) to navigate liquidity challenges as the Central Bank of Nigeria (CBN) enforces stringent cash reserve policies, significantly driving up the cost of deposits.

The move highlights the growing pressures on financial institutions in the face of aggressive monetary tightening measures by the apex bank.

Access Holdings Plc, the country’s largest bank by assets, along with at least three other financial institutions, have either recently issued or are in the process of issuing commercial papers to bolster liquidity. The decision to embrace CPs comes as banks struggle to attract deposits while grappling with rising funding costs imposed by the CBN’s policies aimed at stabilizing the naira and curbing inflation.

Since the central bank raised the cash reserve ratio (CRR) to 50% in September 2023, it has withdrawn approximately N26.6 trillion in liquidity from the banking system. The CRR policy effectively doubles the cost of raising deposits for financial institutions, as a significant portion of customer deposits is locked away at the CBN rather than being available for lending or investment.

Data from January 2024 shows that while the average rate for a six-month deposit stood at 19%, banks faced an effective cost of 36% due to the high CRR. Analysts point out that this reality significantly limits lenders’ ability to operate efficiently.

Chika Mbonu, Chief Executive Officer of KSBC Advisory Partners Ltd., explained that the effective cost soars to 36% because only half of the total deposits are available for lending.

“Assuming the customer deposit was obtained at 18%, the effective rate will be 36%, because of the high CRR rate, he told Bloomberg.

This situation has left banks searching for alternative funding mechanisms to keep their operations running smoothly.

CBN’s Interest Rate Hikes Intensify Liquidity Squeeze

Beyond the high CRR, Nigerian banks are also feeling the heat from the CBN’s sustained monetary tightening. Since early 2023, the apex bank has raised its benchmark interest rate by 875 basis points, bringing it to 27.5%. Additionally, the standing lending facility rate—a key tool used by banks to access short-term liquidity—has surged to 31.75%.

These measures, while intended to curb inflation and stabilize the currency, have made it increasingly difficult and expensive for banks to secure funding through traditional deposits. As a result, commercial papers, that offer short-term financing without the burden of CRR deductions, have become a more attractive option for banks seeking liquidity relief.

Commercial Papers Gain Favor Over Certificates of Deposit

The banking sector’s shift towards commercial papers reflects the rising cost of wholesale deposits and the need for more flexible funding options. Unlike certificates of deposit (CDs), which are subject to CRR deductions, CPs provide a workaround that allows banks to access funds without additional liquidity restrictions.

Samuel Sule, CEO of Renaissance Capital Africa, noted that CPs are becoming an increasingly preferred funding tool for banks. He explained that wholesale deposit rates are currently higher than commercial paper rates, and wholesale deposits often come with shorter tenors, making CPs a more viable alternative for liquidity management.

With CPs gaining traction, it is expected that more Nigerian banks will follow suit in issuing these short-term instruments to cushion the impact of CBN’s tightening measures.

“Other banks will follow to issue commercial papers as this is one of their funding tools,” he said.

Wider Implications for the Nigerian Banking Sector

The rising cost of funding and persistent liquidity constraints are poised to reshape Nigeria’s banking industry. Analysts suggest that the CBN’s aggressive monetary policies may continue to exert pressure on financial institutions in the near term.

While issuing commercial papers offers a temporary solution, the long-term sustainability of this approach remains uncertain. Banks will need to adapt to the evolving regulatory environment by exploring innovative financing models and diversifying their funding sources.

The continued reliance on costly short-term debt instruments such as CPs could also impact banks’ profitability and lending capabilities, potentially leading to reduced credit availability for businesses and consumers.

The Nigerian National Petroleum Company Limited (NNPC Ltd) is in the final stages of listing on the capital market as it prepares for an Initial Public Offering (IPO) in line with the provisions of the Petroleum Industry Act (PIA) 2021.

The move marks a significant shift in Nigeria’s oil and gas industry, positioning NNPC Ltd among global energy giants that have successfully transitioned from state-owned enterprises to publicly traded companies.

Olugbenga Oluwaniyi, NNPC Ltd’s Chief Finance, and Investor Relations Officer, disclosed this during a consultative meeting with prospective partners at the NNPC Towers in Abuja on Thursday. He revealed that the company had commenced an “IPO Beauty Parade,” a strategic engagement with potential partners aimed at ensuring compliance with capital market regulations ahead of its planned listing.

“The Nigerian National Petroleum Company Limited (NNPC Ltd) is at the final stage of getting listed in the capital market, in keeping with the provisions of the Petroleum Industry Act (PIA) 2021,” Oluwaniyi stated.

An IPO allows institutional investors to purchase shares in a company for the first time, officially introducing it to the stock market. This development signals a major transition for NNPC Ltd, which has operated as a government-owned entity for decades.

Roadmap for NNPC Ltd’s Public Listing

The IPO Beauty Parade, according to Oluwaniyi, is focused on selecting key partners to guide NNPC Ltd through the capital market process. The company is looking for expert advisors in three critical areas: Investor Relations, IPO Readiness, and Investment Banking Partners.

The selection of partners will be based on the strength of their proposals and their ability to provide comprehensive support in these areas. The goal is to determine the best offers in terms of project partnership, ensuring a smooth transition to public listing while maintaining compliance with capital market regulations.

The transformation of NNPC Ltd is in accordance with the PIA 2021, which mandates the national oil company to operate as a fully commercial enterprise. The PIA also requires compliance with the Company and Allied Matters Act (CAMA) 1990, reinforcing transparency, efficiency, and profitability in NNPC Ltd’s operations.

What This Means for Nigeria’s Oil and Gas Industry

NNPC Ltd’s move to become a publicly traded company represents a major reform in Nigeria’s oil and gas sector. The company aims to enhance corporate governance, attract private sector investment, and improve operational efficiency by opening up to investors.

A successful IPO would increase the company’s access to capital, allowing it to fund critical energy projects, expand exploration activities, and improve refinery operations. Additionally, the transition could boost investor confidence in Nigeria’s oil sector, demonstrating the government’s commitment to fostering a competitive and transparent petroleum industry.

NNPC Ltd’s planned IPO follows a global trend in which state-owned oil companies transition into publicly traded entities to attract investment and improve financial accountability. Several national oil firms have successfully gone public and achieved global success.

Saudi Aramco, the world’s largest oil company, raised $25.6 billion in its 2019 IPO, making it the largest in history. China National Offshore Oil Corporation (CNOOC) and Sinopec, both Chinese oil and gas giants, are also publicly listed. Russia’s Gazprom, a leading natural gas company, operates as a publicly traded entity, while Petrobras, Brazil’s state-owned oil company, has been a publicly listed firm for years. The National Iranian Oil Company (NIOC) has also taken steps towards commercial operations.

In March 2024, the Group Chief Executive Officer (GCEO) of NNPC Ltd, Mele Kyari, hinted that the company’s anticipated public listing would soon commence, in line with the PIA. He emphasized that NNPC Ltd was undergoing a transformation process that would see it become a fully commercial entity.

Kyari explained that previously, NNPC operated as a government-owned corporation, but it lacked the financial independence and commercial flexibility to compete in global markets. With the reform triggered by the PIA, the company has now transitioned into a limited liability company that functions as a profit-making business.

“As a corporation owned by the government, NNPC was not a commercial company. But we needed to move away from that structure. The transformation process has now made NNPC Ltd a full limited liability company that is commercially driven,” Kyari stated.

He further noted that at maturity, some of NNPC Ltd’s shares would be divested, allowing broader participation by private investors.

The IPO process is expected to generate significant interest from both local and international investors. However, the listing comes with several challenges, including market volatility, regulatory compliance, and corporate governance expectations. The global oil market remains unpredictable, and fluctuations in crude oil prices could impact investor sentiment. Additionally, the transition from a government-owned enterprise to a publicly traded company will require strict compliance with Nigeria’s capital market regulations. Investors will also closely monitor how NNPC Ltd improves its governance framework, ensuring that transparency and accountability are upheld in its operations.

However, the listing is expected to unlock billions of dollars in investment, enabling the company to expand production capacity, modernize refineries, and invest in renewable energy projects.

The ongoing IPO Beauty Parade is seen as a crucial step in selecting the right partners to guide NNPC Ltd through this transformation. If successful, the public listing of NNPC Ltd could mark a new era in Nigeria’s oil and gas sector, paving the way for increased private sector participation, improved efficiency, and long-term profitability.