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Capital flows to Philippines seen to recover by 2021

By Beatrice M. Laforga, Reporter

FOREIGN INVESTMENTS into the Philippines may return to pre-pandemic levels by 2021, the Institute of International Finance (IIF) said.

“We expect total non-resident capital flows to the Philippines to recover back to 2019 levels in 2021,” Elina Ribakova, deputy chief economist at the IIF, said in an e-mail last month.

The IIF last week projected capital flows into the Philippines will drop by 41%, equivalent to $7 billion, in the second half of 2020, as the two-week lockdown in August hampered recovery prospects.

This is the biggest decline among the Asia-6 grouping, which includes India, Indonesia, South Korea, Malaysia and Thailand.

Ms. Ribakova cited the country’s robust macroeconomic fundamentals and its exposure to the global supply chains as key factors to attract foreign investments.

“We still see the Philippines becoming one of the fastest-growing economies in Asia due to the solid macro fundamentals and the significant role the country already plays in the global supply chains (this is also the reason behind the sharp contraction in growth in 2020, failure to control the pandemic caused significant shutdowns in manufacturing),” she said.

The Philippine economy grew by 6% last year. However, the pandemic pushed the economy into a recession in the second quarter, after contracting by a record 16.5%.

Ms. Ribakova said the Philippines can woo investors by promoting private sector investment through public-private partnerships, improving infrastructure and promoting the digital economy.

In the first nine months of 2020, net inflow of foreign direct investments to the Philippines fell 11% to $3.795 billion.

However, Ms. Ribakova said the portfolio flow outlook is “more challenging,” although the Philippines is not as reliant on these investments as its neighbors in the region.

“For portfolio flows outlook is more challenging. The Philippines experienced exceptionally high non-resident portfolio inflows of $7.5 billion in 2019 (down to forecasted $3 billion in 2020) and we expect a partial recovery to $5.9 billion in 2021. However, the Philippines do not rely on portfolio investments as much as other countries in the region (particularly Indonesia),” she said.

Short-term foreign portfolio investments, or referred to as “hot money” saw an eight-month net outflow of $3.889 billion, up 254% year on year.

The IIF projected a 7.5% contraction for the Philippine economy this year due to the impact of the pandemic, and a 7% growth next year driven by low base effects and further relaxation of lockdown restrictions.

“Recovery of 7% in 2021 will be largely driven by reopening and base effects. Ultimately, pace of the economic recovery will depend on how quickly the government can control the COVID-19 and whether there will be additional fiscal stimulus. More lockdown measures in the future will be the major downside risks,” Ms. Ribakova said.

Economic managers projected the economy to shrink by 4.5% to 6.6% this year.

“Compared with peers in the region, the policy support from the government remains low. We expect the central bank to stay pat and the focus now is on fiscal policy support,” Ms. Ribakova added.

MPIC sees 36% profit fall in 2020, recovery in 2022

By Denise A. Valdez, Senior Reporter

METRO PACIFIC Investments Corp. (MPIC) anticipates its full-year core net income to end at a little over P10 billion, down from its P15.6-billion finish last year, as recovery from the coronavirus pandemic is seen to take until 2022 to go back to 2019 levels.

It likewise reported core net earnings of P2.4 billion in the third quarter, about 37% lower from a year ago, although better than the previous quarter’s P1.9 billion.

In a virtual media briefing on Wednesday, MPIC President and CEO Jose Ma. K. Lim said the traffic at its toll roads has improved to close to its 2019 average since quarantine rules were eased in June.

“The performance in the third quarter was mainly improved due to the resumption of traffic in the tollroads,” Mr. Lim said. “In the case of power and water, volumes are still recovering… There has been more improvement in toll roads.”

In a statement to the stock exchange, MPIC said its year-to-date attributable earnings dropped 58% to P5.01 billion, which it pinned on the economic contraction stemming from the government’s response to the pandemic.

Core net income for the nine months fell 38% to P7.7 billion, as all MPIC’s business units recorded bottomline declines, while rail, hospital and logistics posted losses.

“With the continuing economic recovery, albeit slower than any of us would want, we guide core net income to be in excess of P10 billion for the full year. This will be substantially lower than in 2019,” MPIC Chairman Manuel V. Pangilinan said.

The power business contributed P7.6 billion or 67% to the company’s net operating income for the period. Water added P2.6 billion or 23%, toll roads pitched in P1.6 billion or 14%, while the rest, namely rail, hospitals and logistics, posted a consolidated loss of P413 million.

“This earnings mix reflects our growing dependence on Meralco (Manila Electric Co.) until our tollway network expansion is completed and Maynilad (Water Services, Inc.) is able to resume paying dividends,” Mr. Lim said in the briefing.

“We will aspire by 2022 to be somewhere around 2019 profit levels,” MPIC Chief Finance Officer David J. Nicol added.

By business segment, MPIC’s power business posted a 15% lower income contribution of P7.6 billion, because of the continuing reduced operations of commercial and industrial facilities.

Despite the quarter-on-quarter improvement of toll roads, its income contribution of P1.6 billion for the nine months is still down 56% year-on-year. This is due to a breakeven in the second quarter when the business recorded zero profits.

The water businesses’ P2.6 billion income contribution is likewise down 19% from a year ago. MPIC linked this to the lower average tariff for residential consumers against commercial and industrial customers.

“Q3 core net income is P2.4 billion,… and we hope to be better than that in the fourth quarter,” Mr. Nicol said.

In a separate stock exchange disclosure on Wednesday, MPIC said its board of directors has approved entering into a P14.5-billion 10-year loan from Philippine National Bank. The proceeds from the facility will be used to refinance the company’s existing loans.

MPIC shares closed at P4.04 apiece on Wednesday, up four centavos or 1% from the last session.

DoE to companies: Start work in contested seas

EXPLORATION companies in the Philippines should proceed in surveying and drilling in parts of the West Philippine Sea, the Energy chief said on Wednesday, as he reminded them that China’s approval is not needed.

“Based on the lifting of the moratorium, they should resume the survey…They should start working. We gave them already the notice to proceed, and they should work based on the work plan that they have submitted,” Department of Energy (DoE) Secretary Alfonso G. Cusi said in a virtual press briefing.

His directive comes weeks after he announced on Oct. 15 that President Rodrigo R. Duterte approved the recommendation of the DoE to lift the suspension of activities and the resumption of petroleum exploration in the contested seas.

Mr. Cusi had said the impending depletion of the country’s only source of natural gas — the offshore Malampaya reserve — makes exploration in the country’s exclusive economic zone an “urgent imperative” to ensure continuity of supply of indigenous resources.

“We’re going to make them accountable to it,” Mr. Cusi said during the briefing, referring to the exploration companies’ work plan. “If they fail to do it, we will take the necessary action.”

According to the official, local exploration firms can go ahead and start drilling in the West Philippine Sea, without securing permission from China.

“That is a decision that they have to make, whether they want to proceed with the work or not. … We are not prohibiting that, they can do that,” Mr. Cusi said.

Mr. Cusi earlier said that this is unlikely to affect its joint oil development discussions with China.

In November 2018 after the visit of China’s President Xi Jinping to the Philippines, Mr. Cusi said the two countries were to hold immediate discussions to arrive at a common position on joint exploration within the disputed offshore areas.

In June this year, the DoE said it was working with the Foreign Affairs department in seeking ways to resume exploration activities in the disputed sea, citing the need to assert the country’s sovereignty.

Last month, Mr. Cusi said the resume-to-work notices were sent to the contractors of Service Contract (SC) 59, 72 and 75 in the West Philippine Sea. SC 59 is operated by state-led Philippine National Oil Co.-Exploration Corp. SC 72 and SC 75 are operated by Forum Ltd. and PXP Energy Corp., respectively. — Angelica Y. Yang

PXP told to resubmit work program

THE Department of Energy (DoE) has asked PXP Energy Corp. to resubmit its work program for oil exploration activities in the West Philippine Sea, the chairman of the listed company said on Wednesday.

“We have been asked by the DoE to resubmit our work program… I think (the team) has given some preliminary (submission) pero hindi pa kumpleto (but it’s not complete yet),” PXP Chairman Manuel V. Pangilinan said in a virtual press briefing for another company that he also chairs.

PXP currently has operating interests in the area through Service Contract (SC) 75 northwest Palawan block and SC 72 in Recto Bank. It received a resume-to-work notice from the DoE last month.

This relates to the recent lifting of the ban on oil and gas exploration in contested seas, which was imposed by former President Benigno S.C. Aquino III in 2014 due to increasing tensions between the Philippines and China.

“We haven’t done anything in the area at all. So we now have to rehash our work program to conform to current conditions,” Mr. Pangilinan said. “We’re preparing that work program both for 72 and for 75. Once we submit that, of course we don’t know whether that will be approved or not.”

PXP posted a net loss of P52.1 million as of September this year due to a double-digit decline in revenues from its petroleum business. Its shares grew 32 centavos or 2.56% to P12.80 each on Wednesday. — Denise A. Valdez

SM Group profits down 54% in nine months; Q3 picks up

SM INVESTMENTS Corp. (SMIC) saw its net income shrink by more than half in the year-to-date period, despite improving its top line during the third quarter of 2020.

In a disclosure to the exchange Wednesday, the Sy-led conglomerate said its consolidated net income stood at P15.2 billion for the nine months ending September, down 54% from the same period a year ago.

Its revenues for the nine months declined 18% to P350.7 billion, despite a 36% improvement to P101.1 billion in the July-to-September period.

“We are encouraged by marked improvements in our results quarter-on-quarter as we saw renewed consumer activity. We remain watchful of underlying demand as we continue to face headwinds in the economy in areas such as employment and remittances,” SMIC President Frederic C. DyBuncio said in the statement.

The banking business of the group, operated by BDO Unibank, Inc. and China Banking Corp., contributed half of the SMIC’s earnings for the nine-month period. The property segment made up 41% of the net income, while the retail segment accounted for 9%.

BDO Unibank reported P16.6 billion net income, down 48% from a year ago, due to provisions in the second quarter as it anticipated delinquencies due to the pandemic. But this was offset by the 23% income growth of China Bank, which generated P8.2 billion net income for the period.

The property segment, which accounts for SMIC’s operations of malls and residences, among other real estate, posted a 48% income decline to P14.4 billion. Revenues were also lower by 29% to P60.7 billion.

This is mainly attributable to the 57% drop in mall revenues, which stood at P18.3 billion at the end of the nine months. It outpaced the 7% growth of residential revenues to P34.2 billion.

SMIC’s retail segment posted an income of P2.2 billion, falling 73% from the same period last year. Revenues dropped 15% to P216.3 billion at the end of September.

The company linked this to the 11% revenue growth of food retail, particularly from its Alfamart convenience stores. SMIC aims to end the year with over 250 new Alfamart stores.

The department store and specialty store segments likewise delivered quarter-on-quarter growth, with department store revenues doubling to P10.5 billion and specialty store revenues growing 93% to P14.2 billion.

By the end of the nine months, SMIC’s total assets rose 2.1% to P1.2 trillion, with 38% net debt to 62% equity.

“In aid of reviving economic activity, SM has undertaken many programs for micro, small and medium enterprises (MSMEs) across the group such as through marketing campaign support and by waiving fees to help our MSMEs sustain their operations as well as credit support and improved cash access to our many banking clients across the country,” Mr. DyBuncio said.

SMIC shares at the stock exchange closed at P996 apiece on Wednesday, up P21.50 or 2.21% from the last session. — Denise A. Valdez

Globe’s net income down 22% 

GLOBE TELECOM, Inc. on Wednesday reported a 22% drop in its attributable net income for the third quarter to P4.39 billion.

In a disclosure to the stock exchange, Globe said its service revenues declined 3% to P36.68 billion, driven by the sustained drop in traditional voice and mobile SMS, but partly mitigated by the increase in the mobile data segment.

The company also saw its costs and expenses increase 2% to P33.97 billion. Costs and expenses include general, selling and administrative expenses, depreciation and amortization, cost of inventories sold, interconnect costs, finance costs, impairment and other losses.

But compared with the second quarter, Globe said its service revenues, which include mobile, home broadband, corporate data, fixed line voice, and other services, improved 3% to P36.68 billion in the third quarter. Non-service revenues also surged 97% to P4.10 billion quarter-on-quarter.

“The improvement in the third quarter was due to the upturn in prepaid top-ups and subscriber acquisitions, as Metro Manila and majority of the country was placed under General Community Quarantine, which was less restrictive and allowed more businesses to reopen and public transportation to be made available, enabling more public mobility,” Globe said.

Quarter-on-quarter, Globe said its costs and expenses, which include cost of sales and operating expenses, increased 16% to P22.91 billion.

Ernest L. Cu, president and chief executive officer of Globe, said at an online briefing on Wednesday that the company is sticking with its capital expenditure guidance of P50 billion for 2020.

“In 2021, we will build fiber-to-the-homes more aggressively to address demand,” he added.

Mr. Cu also expects competition to “intensify” next year.

He added that Globe is hoping that its fourth-quarter performance will be better than the third quarter as the economy gradually reopens.

“We are pleased with the performance Globe delivered this period, especially considering the extraordinary circumstances our country is facing. Driving this result was the resiliency of our network, and the unwavering dedication of our employees, which allowed us to sustain the growth of our data-related products and continue to serve our customers during this period of transition and adjustment to the new normal,” Mr. Cu said.

Shares in Globe on Wednesday closed 0.89% lower at P2,002 apiece. — Arjay L. Balinbin

ICTSI posts 23% earnings rise after cost measures

INTERNATIONAL Container Terminal Services, Inc. (ICTSI) saw its third-quarter net income attributable to equity holders grow by 23% to $69.2 million, after it benefitted from cost preservation measures to mitigate the effects of the pandemic, its top official said.

“Our actions, together with improvements in global trade, a diversified portfolio, and high levels of customer service have helped to deliver an improved performance compared with the same period in the previous year,” ICTSI Chairman and President Enrique K. Razon, Jr. said in an e-mailed statement on Wednesday.

The listed global port management company also reported a 7% improvement in its gross revenues for the third quarter to $379.3 million.

The company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) grew 13% to $226.8 million.

Also for the third quarter, ICTSI’s total consolidated throughput was 3% higher at 2,626,542 twenty-foot equivalent units (TEUs) compared with the 2,548,175 TEUs last year.

For the nine months ending September, ICTSI posted gross revenues of $1.10 billion, 0.3% lower than the $1.11 billion it reported in the same period last year.

The decline was due to the “generally lower trade activities globally mainly as a result of the lockdown restrictions imposed by most governments to try to address the rising infection rate of the COVID-19 virus, partially tapered by the contribution of ICTSI Rio, tariff adjustments and new services at certain terminals,” the company said.

ICTSI handled a consolidated volume of 7,426,307 TEUs in the first nine months, 20% less than the 7,590,090 TEUs handled in the same period in 2019.

“The decrease in volume was primarily due to the decline in trade activities which resulted from the impact of the COVID-19 pandemic on global trade and lockdown restrictions,” it said.

The company also said it had spent $128.6 million in the first nine month of the year, mainly for the expansion projects at Manila International Container Terminal in Manila, Philippines; Contecon Manzanillo S.A. in Manzanillo, Mexico; Contecon Guayaquil S.A. in Guayaquil, Ecuador; Basra Gateway Terminal in Umm Qsar, Iraq; and ICTSI DR Congo in Matadi, Democratic Republic of Congo.

The company had reduced its capital expenditure plan for 2020 to about $160 million due to the pandemic crisis.

“The pandemic continues to present uncertainties and we are very mindful of how unpredictable the environment is, as certain parts of the world move to a secondary lockdown, and we remain cautious. However, ICTSI is well positioned to benefit further should global trade continue to show signs of recovery, underpinned by our stringent cost management, ability to swiftly respond to changing situations and our diverse geographical presence,” Mr. Razon said.

Shares in ICTSI on Wednesday closed 0.43% higher at P115.50 apiece. — Arjay L. Balinbin

SMFB income drops 37% as beer, food businesses contribute less

SAN MIGUEL Food and Beverage, Inc. (SMFB) posted a 37% decline in earnings for the nine months through September due to lower contributions from its beer and food segments.

In a statement on Wednesday, the company said its net income stood at P14.36 billion for the January-to-September period, down 37% from the P22.92 billion it reported a year ago.

Revenues also dropped 14% to P194.56 billion, as signs of recovery in the third quarter failed to offset the slowdown in the first two quarters of the year.

San Miguel Brewery, Inc., which accounts for the SMFB’s beer business, posted a net income of P11.08 billion, down 44% from last year’s P19.84 billion. Its revenues likewise fell 30% to P72.48 billion.

The company said this is due to the continued closure of on-premise channels, limiting the recovery of beer demand despite the lifting of the liquor ban.

The food segment, through San Miguel Foods, posted a net income of P1.55 billion, lower by 13% from last year’s P1.78 billion. Revenues dipped 4% to P96.74 billion despite increased demand for canned meats and hotdogs.

What tempered SMFB’s bottomline was its spirits business through Ginebra San Miguel Inc. The company posted a 67% jump in net income to P2.21 billion, as revenues rose 18% to P25.34 billion.

“This is an encouraging development that proves we are on track to recovery. We came out of the quarter confident in the resilience of our businesses and determined to deliver on our commitment to continue helping fight the pandemic and the country heal,” SMFB President and CEO Ramon S. Ang said in the statement.

SMFB shares closed at P63.40 each on Wednesday, up 60 centavos or 0.96%. — Denise A. Valdez

Team building via cupcakes

WHEN a company’s employees are stuck at home and all communication is virtual, how can managers keep their team’s spirits up? Why, by getting them together (safely online of course) and icing cupcakes.

Customer service outsourcing company Telus International Philippines, with the cooperation of M Bakery, held a cupcake icing class last Oct. 20, which employees and some members of the media attended.

“Most of our team members are actually working at their homes and have been there since the beginning of the pandemic. One of the most important things we’ve learned is to actually establish connection,” said Carlos Giammattei, Brand, Marketing and Culture Director at TELUS International Philippines. “We continue to develop programs for our team members to help them cope with the current situation, feel a sense of safety and security at work, and allow them to continue achieving the goals they set out for themselves.”

Thus, the classes. There are fun classes of this kind which encourages entrepreneurship, but there are also classes and programs for effective homeschooling for parents, mental health, foreign languages, and social media use. According to Mr. Giammattei, over 1,000 team members have signed up for the various programs. “All of these are geared towards making sure that team members are strong and prepared.”

That afternoon, the class participants were sent a box of vanilla cupcakes, icing bags and tips, and every child’s dream: bags and bags of rich buttercream frosting. One of M Bakery’s icing experts talked about how to make a hydrangea, a daisy, a rose, a magnolia flower, leaves and vines, and a cupcake inscription, all in buttercream frosting. The hydrangea was simple enough with a squirt then a pull to make the shape, except I exerted too much pressure on the icing bag and decided to eat the resulting disaster instead. The same can be said for the rest. This was all done with my camera turned on during the webinar as the icing experts wanted to see our progress. They did reassure me that the M Bakery signature swirl takes 40 hours to train for, so I was not to worry. The perfect roses on my screen from the other guests were enviable.

“With our icing classes at M Bakery, we are helping people learn the art of designing cupcakes that will prove a useful skill if you’re a baker or homepreneur looking into catering, gender reveals, or even theme parties,” said Stewart Ong, managing partner of Phil Jacobe Ventures, Inc., M Bakery’s franchisee in the Philippines. “Prior to the pandemic, we’d usually hold a class every Saturday. It’s open to everyone. Kids or adults are welcome to join. We also do private icing classes for groups of four or five people. Sometimes we get invited to kiddie parties. So we go there and it’s a fun activity during the children’s party. We also do that.”

“To share this experience through different courses has been the key to keep our team members happy and engaged even while not at the office,” Mr. Giambattei said.  — JLG

DFNN unit gets nod to acquire Australian casino operator

A SUBSIDIARY of gaming and technology firm DFNN, Inc. has received a letter of no objection from the Foreign Investment Review Board (FIRB) of Australia on its planned acquisition of a casino operator listed on the Australian Stock Exchange.

In a disclosure to the stock exchange on Wednesday, DFNN said HatchAsia, Inc.’s letter from Australia’s FIRB removes the obstacle regarding government regulatory procedures on foreign investments and contributes to the company’s plan to acquire 92% interest in Silver Heritage Group Ltd.

DFNN said the FIRB letter is an important step under HatchAsia’s recapitalization under the Deed of Company Arrangement as permitted by the Australian Stock Exchange, and is subject to the approval of Silver Heritage shareholders.

The transaction will take effect through the acquisition of shares amounting to 92% of the issued share capital of Silver Heritage via the consolidation of shares of existing shareholders and the new issuance of ordinary shares to HatchAsia subsidiary Hatch Australia Holdings Pty Ltd.

“The successful conclusion would eventually result in the HatchAsia shareholder-controlled entity being listed on the Australian Stock Exchange and DFNN owning part of the listed entity,” the disclosure said.

In September, DFNN said the transaction was worth P18.74 million or some AU$530,000 in cash and 3% of the issued shares in Silver Heritage.

DFNN owns 18.98% of HatchAsia. Meanwhile, Silver Heritage is an Australia-listed casino operator that has two casinos in Nepal and has businesses in Laos and Cambodia.

On Wednesday, shares of DFNN in the stock exchange rose 21.61% or 67 centavos to close at P3.77 per piece. — Revin Mikhael D. Ochave

Where’s the meat: UK’s first vegan butchers launched

LONDON — In a corner of north London, a new gleaming butchers opened on Nov. 1.

The only thing it lacks is meat.

To coincide with Sunday’s World Vegan Day, Britain’s first permanent vegan butcher, Rudy’s, opened, selling meat-free versions of traditional products such as baycon, soysage and turk’y.

Demand for vegan products has surged in recent years in Britain, with increasing numbers of people cutting out animal-derived ingredients completely, while others reduce the amount of meat and dairy they consume each week.

“People understand what it is that we’re selling,” co-founder Matthew Foster told Reuters.

“It’s all designed to emulate meat. It tastes like meat, it’s got meat-like texture.”

Law firm EMW reported a 128% jump in new trademarks registered for vegan food in the UK last year, with both large corporates and small companies registering such trademarks as vegan ice cream and pastries.

The team behind the new butchers started out in 2017 with a vegan diner and are now looking to offer goods, including whole dinner kits to be made in the home.

The substitutes, set out in the brightly lit shop with white walls and sketches of animals on the walls, are made from soya and seitan.

The surge in demand for alternative food products has recently sparked a debate over whether restaurants and shops should be allowed to label products as “veggie burgers” or “vegan sausages” or whether it can confuse the consumer.

Lawmakers in the European Union (EU) ruled earlier in October that banning such terms, as advocated by farmers, would discourage consumers from shifting to more plant-based diets. — Reuters

Apple to launch MacBooks with own chips at next week’s event

APPLE, INC.’s 15-year relationship with Intel Corp. will officially begin to unwind next week when new Mac computers are revealed.

The Cupertino, California-based technology giant said on Monday that it will hold an online event dubbed “One more thing” on Nov. 10. That “thing” will be Macs with main processors designed by Apple for the first time, replacing Intel chips that have been a mainstay since 2006. An Apple spokesman declined to comment.

Apple and overseas suppliers are ramping up production of three Mac laptops with Apple processors: new 13-inch and 16-inch MacBook Pros and a new 13-inch MacBook Air, according to people familiar with the matter. Foxconn, known also as Hon Hai Precision Industry Co., is assembling the two smaller laptops, while Quanta Computer, Inc. is building the larger MacBook Pro. The smaller models are further ahead in production and at least those two laptops will be shown at next week’s event. Beyond the processor switch, the devices won’t have significant design changes.

Apple has less than 10% of the market for personal computers, so the direct impact on Intel sales may be limited. However, the change highlights a crisis engulfing the world’s largest chipmaker. It has delayed a new manufacturing process, giving rivals a chance to catch up. These problems are at least partly behind Apple’s decision to move to in-house chips, although the company has been steadily shifting to this approach for years.

The partnership between Apple and Intel started in 2005, when Steve Jobs outlined a move away from PowerPC processors. Intel helped Apple catch up to Windows computers, some of which were more powerful at the time. In tandem, though, Apple was working on more energy-efficient chips for mobile devices based on Arm Ltd. designs and continues to use those to power the iPhone and iPad.

On Apple’s recent earnings call, Chief Executive Officer Tim Cook hinted at the Mac launch by saying, “without giving away too much, I can tell you that this year has a few more exciting things in store.” The company generated a record $9 billion in revenue from the Mac in its fiscal fourth quarter.

The first Mac processors from Apple will be based on the A14 chip found in the latest iPhones and iPad Air, and tests inside Apple indicate improved power efficiency over the Intel parts they are replacing. The new machines will also have Apple-designed graphics and machine-learning processors.

Apple said in June that the transition away from Intel chips will take two years. After updating its laptop line, Apple will still have until 2022 to update desktop computers — the iMac, iMac Pro, Mac Pro and Mac mini — with its own processors.

The company is already at work on a redesigned iMac, the company’s all-in-one desktop, and a new Mac Pro model, Apple’s highest-end desktop, other people familiar with the company’s plans said.

Apple engineers are currently developing a new Mac Pro that looks like the current design at about half the size. It’s unclear if that Mac will replace the current Mac Pro or if it’s an additional model. Apple’s chip designs could help the company reduce the size of its computers due to increased power efficiency, but the current Mac Pro is large, in part, to fit components like additional storage drives and graphics chips.

Apple’s test Mac for developers to write apps for the new processors is a Mac mini with an iPad Pro processor, but the company will still need to roll out a proper update to that model with a Mac-specific chip. The new Macs require macOS Big Sur, a redesigned Mac operating system that makes the software more like iPhones and iPads.

When announcing the transition in June, Apple said the move would provide a common architecture across all of its devices. That means future iPhones, Macs, iPads and Apple Watches will run a variation of the same chip. That will allow devices to work together better and let iPhone apps run natively on Macs for the first time.

Bloomberg first reported on the transition away from Intel in 2018 and again in April. The new Macs will mark Apple’s third major product release this fall. In September, the company announced new Apple Watches and iPads. The iPhone 12 and HomePod mini lines debuted in October. — Bloomberg

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