The European Commission is considering a possible ban on rating agencies from publishing their assessments of EU countries in difficulty, the Financial Times Deutschland reported yesterday.
European Commissioner for Internal Market and Services Michel Barnier has drawn up a draft proposal empowering the new European Securities and Markets Authority to “temporarily prohibit” agencies from publishing their analyses on a country’s solvency, the newspaper said.
Financial Times Deutschland said it had obtained a copy of the confidential draft.
Barnier is concerned that the publication of a rating at an “inopportune moment” for a country when it was negotiating financial aid from the EU’s bailout fund or the IMF could have “negative effects for that country’s financial stability and possible destabilizing effects for the global economy.”
Politicians accuse rating agencies such as Moody’s, Standard & Poor’s and Fitch of totally misrepresenting the financial situation of individual countries, thereby intensifying the crisis further.
A downgrade of its sovereign debt rating has enormous consequences for a country, pushing up its borrowing costs and its loan repayments. Earlier this week, Moody’s warned France that it could place a negative outlook on its cherished “Aaa” credit rating in the coming months as the government’s financial strength “has weakened.”
Barnier is to officially table his proposals by next month at the latest, and some amendments are possible, Financial Times Deutschland said.
Meanwhile, European banks need recapitalization totaling 80 billion euros (US$110 billion) according to an EU estimate that is far lower than analyst forecasts, the Financial Times reported yesterday.
The EU’s estimate compares with a 100 billion to 200 billion euro hole in banks’ balance sheets according to the IMF and 300 billion euros estimated by US investment bank Goldman Sachs.
The Financial Times cited people familiar with the outcome of an emergency stress test of Europe’s banks by the European Banking Authority.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to