France braces for government collapse

Good morning. Here's what happened overnight and what you need to know today.

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1.

French collapse: French Prime Minister Michel Barnier’s government is poised to collapse after far-right and left-wing parties confirmed plans to back no-confidence motions, with voting expected on Wednesday. National Rally (RN) leader Marine Le Pen declared “The French have had enough,” as her party pledged to propose and support no-confidence motions alongside the left. Investors reacted swiftly: the CAC 40 index fell 1% before closing flat, the euro also dropped 1%—its sharpest decline since early November—and 10-year French bond yields rose. Barnier’s coalition, reliant on RN support since its September formation, fractured over his push for a €60 billion ($97.39 billion) deficit-reduction bill. Attempts to pass the social security bill without a parliamentary vote failed. Le Pen and Barnier’s camps blamed each other for the breakdown, with Barnier’s team citing major concessions made to RN. If toppled, it would mark the first no-confidence ousting of a French government since 1962. (Reuters)

2.

Intel shakeup: Intel CEO Pat Gelsinger abruptly stepped down, effective immediately, after the board reportedly lost confidence in his turnaround plans, ending a nearly four-year tenure during which Intel fell behind rivals in the AI semiconductor race. Gelsinger, who became CEO in February 2021, will be replaced by CFO David Zinsner and Products CEO Michelle Johnston Holthaus as interim co-CEOs while a search committee finds a permanent successor. Gelsinger turnaround efforts focused on regaining Intel’s manufacturing lead from Taiwan’s TSMC, expanding into contract chipmaking, and investing heavily in new factories. However, his tenure was marked by manufacturing delays, lost ground to Nvidia in AI chips, reliance on government subsidies for factory expansions, USD7 billion ($10.84 billion) in 2023 chipmaking losses, and a 60% drop in share price. Bloomberg reported the board, frustrated with Gelsinger’s progress, gave him the option to retire or be removed. (Intel)(Reuters)(Bloomberg)

3.

Biden’s pardon: US President Joe Biden issued a "full and unconditional" pardon for his son Hunter Biden, who had pleaded guilty to tax violations and was convicted on firearms-related charges. The pardon includes clemency for any offenses in a window from 1 January 2014 to 1 December 2024. Joe Biden justified the pardon by citing "selective and unfair" prosecution driven by his political opponents. He claimed his son’s charges were politically motivated, arguing others in similar situations typically received non-criminal resolutions. Donald Trump and other Republicans criticised the move, calling it an "abuse of justice." The decision marks a reversal of Biden’s earlier statements to stay out of Hunter’s legal matters. The pardon spares Hunter from sentencing hearings initially scheduled for mid-December. (Biden statement)(CNN)

4.

Chip curbs: The Biden administration unveiled its third sweeping crackdown on China’s semiconductor industry in as many years, imposing export restrictions on 140 entities to curb the country's progress in AI and military technologies. The measures go into effect on 31 December and include export bans on high-bandwidth memory chips (HBM2 or higher), 24 chipmaking tools and three software tools used to develop chips. The rules target 16 key companies seen as critical to China's chipmaking ambitions, including Semiconductor Manufacturing International, some Huawei affiliates, investment firms Wise Road Capital and Wingtech. But the prolonged negotiations to secure ally cooperation, spanning over a year, gave China the opportunity to build up its equipment reserves. The resulting regulations incorporate exceptions that reflect industry lobbying from prominent chipmakers who advocated for rules that maintained some of their access to the profitable Chinese market. US toolmakers and global rivals will still face export challenges due to expanded restrictions under the foreign direct product rule (FDPR). The FDPR curbs exports to China of goods made overseas – for example in countries like Singapore, South Korea, Taiwan, Malaysia and Israel – that use even small amounts of US technology. (Capital Brief)(NYT)(FT)(Bloomberg)(Reuters)

5.

Apple spies: Apple was sued in California for allegedly surveilling employees’ personal devices and barring discussions about pay and working conditions, Reuters reported. In the complaint, digital advertising employee Amar Bhakta claims Apple’s mandatory software for work devices accesses personal data, including emails, photos and health records. Bhakta also alleges Apple’s confidentiality policies hinder whistleblowing, free speech and limit employee mobility in the job market. Bhakta, employed by Apple since 2020, says he was told to remove details about working conditions from his LinkedIn profile and was prohibited from discussing his work on podcasts. Apple denied the claims, stating workers are trained annually on their rights to discuss workplace conditions. The lawsuit was filed under a California law allowing workers to sue on behalf of the state. Apple is also contesting separate lawsuits and complaints over alleged pay discrimination, sex bias, and employee discussion restrictions. (Reuters)

6.

US factories: US manufacturing contracted at a moderate pace in November, with the ISM manufacturing PMI rising to 48.4 from 46.5, a five-month high but still below 50, reflecting ongoing contraction. New orders expanded for the first time since March, climbing to 50.4, as manufacturers reported sluggish demand, weak backlogs and concerns about potential tariffs on imports from China. A construction slowdown created a surplus of finished goods in some sectors, while fabricated metals producers cited customer destocking and uncertainty about demand. Primary metal manufacturers noted increased inquiries for reshoring production after the US election, and food, beverage and tobacco makers flagged inflation concerns. Factory employment and input costs showed improvement but remained subdued. (ISM)(Reuters)(Bloomberg)

7.

VW freeze: Workers at nine Volkswagen plants in Germany staged two-hour strikes on Monday, halting assembly lines in protest against the company’s demands for a 10% wage cut and threats of plant closures. The affected sites included Wolfsburg, Hanover, and Zwickau, Reuters reported, with output disruptions impacting hundreds of vehicles. The actions follow the end of a no-strike agreement on Saturday, amid Volkswagen’s efforts to cut costs in response to weak demand, high production expenses, competition from Chinese automakers and a slower-than-expected EV transition. The IG Metall union warned of 24-hour or indefinite strikes if wage negotiations on 9 December fail to resolve the dispute. Volkswagen said it respects the right to strike and is working to minimise supply disruptions. (Reuters)

8.

Super (Micro) scandal: Super Micro Computer said an independent review found no evidence of misconduct by management or its board. The review, conducted by Cooley LLP and Secretariat Advisors, recommended appointing new financial and legal leaders, including a CFO to replace David Weigand. The investigation addressed concerns raised by former auditor Ernst & Young, which resigned in October citing transparency issues. EY’s concerns were deemed unsupported, but lapses included failing to notify EY about a consulting deal with a former CFO, which has since been terminated. No evidence of bad faith or improper motives were found, the company said, adding it is working to comply with Nasdaq requirements. “The board has instructed management to add additional experienced, senior talent commensurate with the Company’s size and complexity today and to prepare for its future growth,” it said in the statement. Shares rose over 35% after the announcement. (Bloomberg)