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  • Chip wars: How ‘chiplets’ are emerging as a core part of China’s tech strategy

    Chip wars: How ‘chiplets’ are emerging as a core part of China’s tech strategy

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    July 13 (Reuters) – The sale of struggling Silicon Valley startup zGlue’s patents in 2021 was unremarkable except for one detail: The technology it owned, designed to cut the time and cost for making chips, showed up 13 months later in the patent portfolio of Chipuller, a startup in China’s southern tech hub Shenzhen.

    Chipuller purchased what is referred to as chiplet technology, a cost efficient way to package groups of small semiconductors to form one powerful brain capable of powering everything from data centers to gadgets at home.

    The previously unreported technology transfer coincides with a push for chiplet technology in China that started about two years ago, according to a Reuters analysis of hundreds of patents in the U.S. and China and dozens of Chinese government procurement documents, research papers and grants, local and central government policy documents and interviews with Chinese chip executives.

    Industry experts say chiplet technology has become even more important to China since the U.S. barred it from accessing advanced machines and materials needed to make today’s most cutting edge chips, and now largely underpins the country’s plans for self-reliance in semiconductor manufacturing.

    “U.S.-China competition is on the same starting line,” Chipuller chairman Yang Meng said about chiplet technology in an interview with Reuters. “In other (chip technologies) there is a sizeable gap between China and the United States, Japan, South Korea, Taiwan.”

    Barely mentioned before 2021, Chinese authorities have highlighted chiplets more frequently in recent years, according to a Reuters review. At least 20 policy documents from local to central governments referred to it as part of a broader strategy to increase China’s capabilities in “key and cutting-edge technologies”.

    “Chiplets have a very special meaning for China given the restrictions on wafer fabrication equipment,” said Charles Shi, a chip analyst for brokerage Needham. “They can still develop 3D stacking or other chiplet technology to work around those restrictions. That’s the grand strategy, and I think it might even work.”

    Beijing is rapidly exploiting chiplet technology in applications as diverse as artificial intelligence to self-driving cars, with entities from tech giant Huawei Technologies to military institutions exploring its use.

    More major investments in the area are on the way, according to a review of corporate announcements.

    CHINA’S CHIPLET ADVANTAGE

    Chiplets, or small chips, can be the size of a grain of sand or bigger than a thumbnail and are brought together in a process called advanced packaging.

    It is a technology the global chip industry has increasingly embraced in recent years as chip manufacturing costs soar in the race to make transistors so small they are now measured in the number of atoms.

    Bonding chiplets tightly together can help make more powerful systems without shrinking the transistor size as the multiple chips can work like one brain.

    Apple’s high-end computer lines use chiplet technology, as do Intel and AMD’s more powerful chips.

    About a quarter of the global chip packaging and testing market sits in China, according to Dongguan Securities.

    While some say this gives China an advantage in leveraging chiplet technology, Chipuller chairman Yang cautioned the proportion of China’s packaging industry that could be considered advanced was “not very big”.

    Under the right conditions, chiplets that are personalised according to the needs of the customer can be completed quickly, in “three to four months, this is the unique advantage China holds,” according to Yang.

    Needham’s Shi said according to import data published by China’s customs agency, China’s purchase of chip packaging equipment soared to $3.3 billion in 2021 from its previous high of $1.7 billion in 2018, although last year it fell to $2.3 billion with the chip market downturn.

    Since early 2021 research papers on chiplets started surfacing by researchers of the Chinese military People’s Liberation Army and universities it runs, and state-run and PLA-affiliated laboratories are looking to use chips made using domestic chiplet technology according to six tenders published over the past three years.

    Public documents by the government also show millions of dollars worth of grants to researchers specializing in chiplet technology, while dozens of smaller companies have sprouted throughout China in recent years to meet domestic demand for advanced packaging solutions like chiplets.

    CHIPLETS ON THE TABLE

    Against the backdrop of escalating U.S.-China tension, Chinese company Chipuller acquired 28 patents either owned by zGlue or invented by people whose names are on zGlue’s patents, according to an analysis using IP management technology firm Anaqua’s Acclaim IP database.

    The acquisition was through a two-step transfer, first through British Virgin Islands-registered North Sea Investment Co Ltd, according to documents seen by Reuters and confirmed by Yang.

    The Committee on Foreign Investment in the United States (CFIUS), a powerful Treasury-led committee that reviews transactions for potential threats to U.S. security, did not respond to a Reuters request for comment about whether such sales would require their approval.

    CFIUS lawyers Laura Black at Akin’s Trade Group, Melissa Mannino at BakerHostetler and Perry Bechky at Berliner Corcoran & Rowe say patent sales alone would not necessarily give CFIUS authority over the deal, as it depends whether the assets purchased constitute a U.S. business.

    Representative Mike Gallagher, an influential lawmaker whose select committee on China has pressed the Biden administration to take tougher stances on China, told Reuters zGlue’s case highlights the “urgent need to reform CFIUS”.

    “(People’s Republic of China) entities should not be able to act with impunity to take advantage of distressed U.S. firms to transfer their IP to China,” he said in an emailed statement.

    Chipuller’s Yang said zGlue’s lawyer communicated with both CFIUS and the Department of Commerce to ensure the sale to North Sea would not fall foul of export controls.

    These discussions did not include mention of Chipuller or the possibility of a Chinese entity ending up in possession of the patents, according to a Chipuller spokesperson.

    “Everything was done very transparently and in accordance with (U.S.) law,” Yang said.

    Yang said he considered himself a founder of zGlue as he became an investor in the company in 2015, soon after its formation, and later became a director and chairman.

    CFIUS visited zGlue offices in 2018 to conduct an investigation because the company’s largest non-U.S. investor, Yang, was from China, the chairman said.

    “So we have spent a lot of time communicating with CFIUS,” Yang said, adding that Chipuller currently does not supply any Chinese military or U.S.-sanctioned entities.

    Chipuller isn’t the only firm with chiplet technology.

    Huawei, China’s tech and chip design giant that has been put on the U.S.’s most restricted list, has been actively filing chiplet patents.

    Huawei published over 900 chiplet-related patent applications and grants last year in China, up from 30 in 2017, according to Anaqua’s director of analytics solutions Shayne Phillips.

    Huawei declined to comment.

    Reuters identified over a dozen announcements over the past two years for new factories or expansions of existing ones from companies using chiplet technology in manufacturing across China’s tech sector, representing an investment totalling over 40 billion yuan.

    They include domestic giants TongFu Microelectronics (002156.SZ) and JCET Group (600584.SS), as well as fast-growing startups such as Beijing ESWIN Technology Group, which spent 5.5 billion yuan on a factory for its chiplet-focused subsidiary that began operating in April.

    One article published in May by an outlet run by China’s Ministry of Industry and Information Technology (MIIT) urged big Chinese tech firms the use of domestic packaging companies such as TongFu to help build China’s self-sufficiency in computing power.

    “Use Chiplet technology to break through the United States’ siege of my country’s advanced process chips,” it said.

    MIIT did not respond to a request for comment.

    Chipuller chairman Yang puts it this way: “Chiplet technology is the core driving force for the development of the domestic semiconductor industry,” he said on the company’s official WeChat channel. “It is our mission and duty to bring it back to China.”

    ($1 = 7.2205 Chinese yuan renminbi)

    Reporting by Jane Lanhee Lee and Eduardo Baptista; Additional reporting by Echo Wang and Stephen Nellis; editing by Kenneth Li, Brenda Goh and Lincoln Feast.

    Our Standards: The Thomson Reuters Trust Principles.

    Reports on global trends in computing from covering semiconductors and tools to manufacture them to quantum computing. Has 27 years of experience reporting from South Korea, China, and the U.S. and previously worked at the Asian Wall Street Journal, Dow Jones Newswires and Reuters TV. In her free time, she studies math and physics with the goal …

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  • Hong Kong police issue arrest warrants for eight overseas activists

    Hong Kong police issue arrest warrants for eight overseas activists

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    HONG KONG, July 3 (Reuters) – Hong Kong police on Monday accused eight overseas-based activists of serious national security offences including foreign collusion and incitement to secession and offered rewards for information leading to their arrest.

    The accused are activists Nathan Law, Anna Kwok and Finn Lau, former lawmakers Dennis Kwok and Ted Hui, lawyer and legal scholar Kevin Yam, unionist Mung Siu-tat, and online commentator Yuan Gong-yi, police told a press conference.

    “They have encouraged sanctions … to destroy Hong Kong and to intimidate officials,” Steve Li, an officer with the police’s national security department, told reporters.

    Issuing wanted notices and offering rewards of HK$1 million ($127,656) each, police said the assets of the accused would be frozen where possible and warned the public not to support them financially.

    The notices accused the activists of asking foreign powers to impose sanctions on Hong Kong and China.

    The activists are based in several countries, including the United States, Britain and Australia. Yam is an Australian citizen. They are wanted under a national security law that Beijing imposed on the former British colony in 2020, after the financial hub was rocked by protracted anti-China protests the previous year.

    The United States on Monday condemned the move through a U.S. State Department spokesman, who said it set “a dangerous precedent that threatens the human rights and fundamental freedoms of people all over the world.”

    British Foreign Secretary James Cleverly criticised the decision to issue the arrest warrants and said his government “will not tolerate any attempts by China to intimidate and silence individuals in the UK and overseas”.

    Australian Foreign Minister Penny Wong said her government was “deeply disappointed.” Australia, she said, has consistently expressed concern about the broad application of the national security law.

    Some countries, including the United States, say the law has been used to suppress the city’s pro-democracy movement and has undermined rights and freedoms guaranteed under a “one country, two systems” formula, agreed when Hong Kong returned to Chinese rule in 1997.

    Chinese and Hong Kong authorities say the law has restored the stability necessary for preserving Hong Kong’s economic success.

    ACTIVISTS DEFIANT

    Several of the accused activists said they would not cease their Hong Kong advocacy work.

    “It’s my duty … to continue to speak out against the crackdown that is going on right now, against the tyranny that is now reigning over the city that was once one of the freest in Asia,” Yam, a senior fellow with Georgetown University’s Center for Asian Law, told Reuters by telephone from Australia.

    “I miss Hong Kong but as things stand, no rational person would be going back,” added Yam, who police accused of meeting foreign officials to instigate sanctions against Hong Kong officials, judges and prosecutors.

    Former Democratic party lawmaker Ted Hui told Reuters the “bounty” adds to the arrest warrants already issued for him under the national security law, but “free countries will not extradite us”.

    “The bounty … makes it clearer to the western democracies that China is going towards more extreme authoritarianism,” he said in Australia, where he has lived since 2021 on a bridging visa.

    Anna Kwok, executive director of the Hong Kong Democracy Council, told Reuters from Washington she would not back down.

    “One key thing I urge President Biden to do immediately is to say a strong and firm NO to (Hong Kong chief executive) John Lee’s possible entry into the United States for November’s APEC meeting in San Francisco,” Kwok wrote.

    “He’s the man who has orchestrated the far-reaching transnational repression,” she said. “Bar John Lee.”

    Finn Lau, an activist based in London told Reuters the reward was motivated by the fact that many democratic countries had suspended extradition treaties with Hong Kong.

    Nathan Law, who obtained refugee status in the UK two years ago, said that people in Hong Kong should not cooperate. “We should not limit ourselves, self-censor, be intimidated, or live in fear,” he said on Twitter.

    Police told the press conference 260 people had been arrested under the national security law, with 79 of them convicted of offences including subversion and terrorism, but admitted that the chances of prosecution were slim if the defendants remained abroad.

    “We are definitely not putting on a political show nor disseminating fear,” Li, the police official, said.

    “If they don’t return, we won’t be able to arrest them, that’s a fact,” he said. “But we won’t stop wanting them.

    Reporting by James Pomfret and Jessie Pang; additional reporting by Kirsty Needham in Sydney and Dan Whitcomb in Los Angeles; Editing by Robert Birsel, Alison Williams and Conor Humphries

    Our Standards: The Thomson Reuters Trust Principles.

    Jessie Pang

    Thomson Reuters

    Jessie Pang joined Reuters in 2019 after an internship. She covers Hong Kong with a focus on politics and general news.

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  • As companies bring more jobs to Mexico, US wants labor rights safeguards

    As companies bring more jobs to Mexico, US wants labor rights safeguards

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    MEXICO CITY, July 3 (Reuters) – The U.S. wants Mexico’s government to build strong institutions to protect worker rights as companies aiming to avoid supply chain disruptions in far-off production spots bring more jobs to the country, a top U.S. labor official told Reuters.

    Mexico has begun to benefit from “nearshoring” in which companies seek to move production closer to the U.S. market while maintaining competitive costs.

    The trend is further testing a trade deal known as the U.S.-Mexico-Canada Agreement (USMCA), in effect since July 2020.

    The pact has tougher labor rules than its 1994 predecessor and underpins new Mexican laws that empower workers to push for better wages and conditions after years of stagnant salaries and pro-business union contracts.

    Three years into the deal, experts say, some workers have begun to benefit but broad impacts are still far off.

    “Hopefully that will ensure that Mexico doesn’t become a dumping ground for companies looking for cheap labor and lax regulations,” said Thea Lee, U.S. Deputy Undersecretary for International Labor Affairs who polices USMCA compliance.

    She said in an interview that Mexico was working to fulfill its commitments, backed by leadership keen on helping workers.

    Mexico’s new regulations favor companies taking on higher ethical standards, she said.

    “Maybe 20 years ago it was okay for a multinational corporation to throw up their hands and say, ‘we have no idea what’s in our supply chain, what the labor conditions are,’” she added.

    “That doesn’t seem to be acceptable anymore.”

    Mexico has made progress improving labor courts, resolving worker complaints faster and easing union organization, but needs to do more, Lee said.

    “Our hope is that Mexico will be well-poised to take advantage of nearshoring … if they continue on the path towards really building labor institutions that work, where workers can have confidence.”

    Since 2020, several U.S. labor complaints in Mexico have paved the way for independent unions to land pay raises and even expand. Lee said such examples inspire workers who in the past may have feared threats or dismissals for trying to organize.

    Four more cases are under review: At a garment factory, an auto parts plant, a Goodyear tire plant, and a mine owned by conglomerate Grupo Mexico.

    Yet one employer that faced two USMCA complaints, U.S.-based VU Manufacturing that makes interior car parts in the northern city of Piedras Negras, recently dismissed dozens of employees just months after a new union, La Liga, pressed for better wages. VU did not respond to a request for comment.

    Lee said the company risks penalties if it does not uphold an agreement around worker rights. But La Liga members have already been laid off, and fear the company aims to discourage organizing, said union leader Cristina Ramirez, who lost her job.

    “It’s very disappointing and frustrating,” Ramirez said. “We wanted to fight for things to improve.”

    Reporting by Daina Beth Solomon; Editing by David Gregorio

    Our Standards: The Thomson Reuters Trust Principles.

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  • Titanic sub firm’s late CEO was committed to safety, says co-founder

    Titanic sub firm’s late CEO was committed to safety, says co-founder

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    MADRID, June 23 (Reuters) – The co-founder of OceanGate Expeditions, which owned the submersible that imploded during a dive to the Titanic wreck, defended on Friday the chief executive’s commitment to safety and risk management after he died with four others on the craft.

    Guillermo Söhnlein, who co-founded OceanGate with Stockton Rush in 2009, left the company in 2013, retaining a minority stake. Rush was piloting the Titan submersible on the trip that began on Sunday. Debris from the vessel was found on Thursday.

    “Stockton was one of the most astute risk managers I’d ever met. He was very risk-averse. He was very keenly aware of the risks of operating in the deep ocean environment, and he was very committed to safety,” Söhnlein told Reuters.

    Questions about Titan’s safety were raised in 2018 during a symposium of submersible industry experts and in a lawsuit by OceanGate’s former head of marine operations, which was settled later that year. This incident has prompted further debate.

    “I believe that every innovation that he took … was geared toward two goals: One, expanding humanity’s ability to explore the deep ocean. And secondly, to do it as safely as possible,” he said in video interview from his home in Barcelona.

    The Titan submersible, operated by OceanGate Expeditions to explore the wreckage of the sunken SS Titanic off the coast of Newfoundland, dives in an undated photograph. OceanGate Expeditions/Handout via REUTERS/ File Photo

    Söhnlein said he completely trusted Rush, even though they did not always see “eye-to-eye on things”.

    OceanGate has not addressed queries by industry experts about its decision to forgo certification from industry third parties such as the American Bureau of Shipping or the European company DNV.

    “There’s this tendency in the community to equate classification with safety. While that could be the case, it doesn’t mean that you can’t be safe without classification,” he said, adding that people should wait for an official report analyzing the incident rather than speculate.

    “There’s going to be a time for (making assessments), and I don’t think right now is the right time to do that,” he said.

    Despite the tragedy, he said continuing with deep-sea exploration was vital for humanity and that it was the best way to honor those who died in the submersible.

    “Let’s figure out what went wrong, learn some lessons and let’s get down there again,” he said.

    Reporting by David Latona; Editing by Aislinn Laing and Edmund Blair

    Our Standards: The Thomson Reuters Trust Principles.

    David Latona

    Thomson Reuters

    Madrid-raised German-American breaking news in Spain and Portugal. Previously covered markets in Germany, Austria and Switzerland, with a special focus on chemical companies and regular contributions to Reuters’ German-language service. Worked at Spanish news agency EFE (Madrid/Bangkok) and the European Pressphoto Agency (Frankfurt).

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  • Mexico City mayor to step down to pursue historic bid for presidency

    Mexico City mayor to step down to pursue historic bid for presidency

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    MEXICO CITY, June 12 (Reuters) – Mexico City Mayor Claudia Sheinbaum said she will step down on Friday to pursue the ruling party’s candidacy for the 2024 presidential election, bidding to become the country’s first female leader.

    President Andres Manuel Lopez Obrador’s leftist National Regeneration Movement (MORENA) on Sunday agreed that on Sept. 6 it would announce the winner of its internal selection process. Sheinbaum is one of the two favorites.

    MORENA is heavily favored to win the June 2024 presidential election, lifted by Lopez Obrador’s personal popularity.

    He cannot seek re-election because Mexican presidents are restricted by law to a single six-year term. Close aides to Lopez Obrador have told Reuters they believe he would like Sheinbaum to succeed him. He denies having any favorite.

    Announcing her resignation plan at a press conference on Monday, the 60-year-old Sheinbaum underlined her credentials as a scientist and environmentalist, saying she would continue Lopez Obrador’s “transformation” of Mexico with her “own stamp.”

    “I have made the decision to leave the post definitively on June 16, with the goal of becoming the first woman in the history of Mexico to lead the fate of the nation,” she said.

    MORENA’s leadership at the weekend agreed that the contenders should step down this week to compete.

    [1/3] Outgoing Mexico City Mayor Claudia Sheinbaum, one of the leading candidates for the presidential nomination of the ruling MORENA party, gestures during a press conference in Mexico City, Mexico June 12, 2023. REUTERS/Raquel Cunha

    Most opinion polls have tended to give Sheinbaum a slight advantage in the race over her rival Marcelo Ebrard, who stood down as foreign minister earlier on Monday to compete.

    Sheinbaum highlighted that past polling had put her ahead and said she was confident it would remain that way.

    Five polls open to the general public are due to determine MORENA’s presidential nominee.

    Sheinbaum also cited a study published last month by the national statistics agency showing that over two-thirds of Mexicans strongly backed a woman holding the presidency.

    “It’s time for women,” she said.

    Ebrard had argued that prospective candidates should leave their posts to ensure a level playing field. Interior Minister Adan Augusto Lopez, another contender, is also expected to resign.

    Ebrard, speaking to reporters after his resignation, said improving security was his first priority, and stressed the need to beef up public healthcare and education.

    In an earlier radio interview, he argued that Mexico had a “golden opportunity” to double “or more” economic growth, spurred by companies’ bringing manufacturing capacity to the country due to economic tensions between China and the United States.

    Reporting by Dave Graham in Mexico City; Writing by Sarah Morland and Brendan O’Boyle; Editing by Matthew Lewis and Leslie Adler

    Our Standards: The Thomson Reuters Trust Principles.

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  • No China, no deal: Bid to break sovereign debt logjams gets weary thumbs up

    No China, no deal: Bid to break sovereign debt logjams gets weary thumbs up

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    LONDON, April 13 (Reuters) – The latest bid by the world’s leading institutions and creditors to speed up debt restructurings and get bankrupt countries back on their feet has been greeted by a mix of cautious optimism and weary scepticism by veteran crisis watchers.

    Standoffs between major Western-backed lenders like the International Monetary Fund (IMF) and the world’s top bilateral creditor, China, have been blamed for keeping countries such as Zambia mired in default for nearly three years.

    The somewhat loose framework around sovereign restructurings has seen Beijing seek to influence the traditional rules of engagement in these processes.

    The renewed push to overcome the logjams came after a “roundtable” at the IMF Spring Meetings and included pledges from the Fund and World Bank to share assessments of countries’ troubles more quickly, provide more low-interest and grant funding and stricter timeframes on restructurings overall.

    The idea is that Beijing would then drop its insistence that the multilateral lenders take losses, or “haircuts”, on the loans they have provided or underwritten in crisis-hit countries.

    Beijing has not commented directly on the demand for multilateral lender haircuts, but in remarks published on Friday People’s Bank of China Governor Yi Gang reiterated China’s willingness to implement debt talks under the Common Framework, the platform introduced by leading G20 nations in 2020 to streamline talks with all creditors.

    “If the multilateral development banks are now making real commitments to provide fresh grants to distressed countries this is a breakthrough,” said Kevin Gallagher, director of the Boston University Global Development Policy Center.

    But he added that as the new plans lacked specific mention of China’s intentions it suggested the “lack of a strong and clear consensus” in Washington.

    The IMF’s managing director Kristalina Georgieva has stressed that with around 15% of low income countries already in debt distress and dozens more in danger of falling into it, far more urgency is needed.

    Besides members of the Paris Club of creditor nations such as the United States, France and Japan, cash-strapped nations now have to rework loans with lenders such as India, Saudi Arabia, South Africa and Kuwait – but first and foremost China.

    Beijing is now the largest bilateral creditor to developing nations, extending $138 billion in new loans between 2010 and 2021, according to World Bank data, and some estimates put total lending at almost $850 billion.

    Reuters Graphics

    HEADWINDS

    Global headwinds are about to get stronger too.

    Financially weaker countries with “junk”-grade sovereign credit ratings need to repay or refinance $30 billion worth of government bonds next year between them, compared to just $8.4 billion for the remainder of this one.

    The rise in global borrowing costs, though, means that many countries under the greatest stress are now unable to borrow in the international capital markets or, if they can, only at unsustainably high interest rates.

    The Chinese debt, meanwhile, is often opaque and muddied by arguments about whether the loans have been given by “official” entities – i.e by the government – or by “private” entities.

    Authorities in Beijing also prefer to roll over debt payments rather than write them off, and given it is an increasingly dominant creditor, it has little incentive to follow co-operative Paris Club-like principles.

    “It would be great to have China on board (with the push to speed up restructurings) but I don’t really have high hopes because there is a lot of geopolitics involved,” said Viktor Szabo, an emerging market debt manager at Abrdn in London.

    Select IMF loans to low and middle income countries by date of Board approval

    COMMON PROBLEMS

    Recent research by Boston University estimated that up to $520 billion in debt needs to be written off to help developing nations at greatest risk of default return to a sounder fiscal footing.

    But lengthy delays in Zambia, and more recently in Sri Lanka, have elicited widespread criticism of the Common Framework.

    Wednesday’s promises by the IMF to provide its assessments more quickly was an admission that the Common Framework was currently failing, Szabo added.

    “You have to make it functional. The fact that it’s been in place for three years and there is nothing to really show for it, that is really appalling.”

    Anna Ashton, director of China research at Eurasia Group, said this week’s developments underscored the benefits for China to give some ground on some of its concerns.

    “Being willing to compromise and facilitate debt restructuring right now is likely crucial to China’s continued credibility with the developing world writ large,” Ashton said.

    Patrick Curran, senior economist with Tellimer, added that China dropping demands for the big multilateral development banks (MDBs) to swallow losses on their loans could also be “a major breakthrough”.

    “There is likely to be broad support for the alternative proposal that MDBs mobilize their resources more aggressively, especially at a time when most low-income countries are locked out of the market,” Curran said.

    Germany’s finance minister Christian Lindner on Thursday too said all the talk now needed to be converted into action.

    The group that took part in Wednesday’s roundtable plans to meet again in coming weeks to address remaining issues, including how various creditors are treated, principles for cut-off dates and suspending debt payments.

    Ultimately, whether the new terms help Zambia, and countries like Sri Lanka, Ghana and Ethiopia that are also in the midst of bailout talks, finalise deals will be the only proof of whether the new terms work.

    “China is a difficult partner to talk to but we need China at the table for the solution of debt problems, because otherwise we won’t see any progress,” Lindner said.

    Reuters Graphics

    Additional reporting by Rodrigo Campos in New York and Joe Cash in Beijing
    Editing by Mark Potter

    Our Standards: The Thomson Reuters Trust Principles.

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  • Adani slashes growth targets amid rout sparked by Hindenburg – Bloomberg News

    Adani slashes growth targets amid rout sparked by Hindenburg – Bloomberg News

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    Feb 13 (Reuters) – India’s Adani Group has halved its revenue growth target and plans to scale down fresh capital expenditure, Bloomberg News reported on Sunday.

    Listed companies controlled by billionaire Gautam Adani have lost more than $100 billion in market value since Jan. 24, when U.S. short-seller Hindenburg Research accused the conglomerate of stock manipulation and improper use of offshore tax havens.

    The group has rejected the allegations and denied any wrongdoing.

    The Adani Group will now shoot for revenue growth of 15% to 20% for at least the next financial year, down from the original target of 40%, Bloomberg News said citing people familiar with the matter.

    Holding back on investments for even as little as three months could save the conglomerate as much as $3 billion, the report said, adding that the plans are still imminent.

    A spokesperson for the Adani Group said the report was “baseless, speculative”, without elaborating further.

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    The group has also been a part of India’s market regulator’s investigation into its links to some of the investors in its scrapped $2.5 billion share sale.

    Earlier this month, India’s ministry of corporate affairs started a preliminary review of the group’s financial statements and other regulatory submissions made over the years, Reuters reported, citing two senior government officials.

    Reporting by Mrinmay Dey in Bengaluru; Editing by Kim Coghill and Savio D’Souza

    Our Standards: The Thomson Reuters Trust Principles.

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  • Adani’s market losses top $100 bln as crisis shockwaves spread

    Adani’s market losses top $100 bln as crisis shockwaves spread

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    • Market rout deepens in Indian tycoon Adani’s shares
    • Adani Enterprises loses $26 bln in value since report
    • Falls after Adani pulled share sale, investors spooked
    • Analysts say signals confidence crisis in Indian market

    NEW DELHI/MUMBAI, Feb 2 (Reuters) – Adani’s market losses swelled above $100 billion on Thursday, sparking worries about a potential systemic impact a day after the Indian group’s flagship firm abandoned its $2.5 billion stock offering.

    Another challenge for Adani on Thursday came when S&P Dow Jones Indices said it would remove Adani Enterprises from widely used sustainability indices, effective Feb. 7, which would make the shares less appealing to sustainability-minded funds.

    In addition, India’s National Stock Exchange said it has placed on additional surveillance shares of Adani Enterprises <ADEL.NS>, Adani Ports <APSE.NS> and Ambuja Cements <ABUJ.NS>. read more

    However, Adani Group Chairman Gautam Adani is in talks with lenders to prepay and release pledged shares as he seeks to restore confidence in the financial health of his conglomerate, Bloomberg News reported on Thursday. read more

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    The shock withdrawal of Adani Enterprises’ share sale marks a dramatic setback for founder Adani, the school dropout-turned-billionaire whose fortunes rose rapidly in recent years but have plunged in just a week after a critical research report by U.S.-based short-seller Hindenburg Research.

    Aborting the share sale sent shockwaves across markets, politics and business. Adani stocks plunged, opposition lawmakers called for a wider probe and India’s central bank sprang into action to check on the exposure of banks to the group. Meanwhile, Citigroup’s (C.N) wealth unit stopped making margin loans to clients against Adani Group securities.

    The crisis marks an dramatic turn of fortune for Adani, who has in recent years forged partnerships with foreign giants such as France’s TotalEnergies (TTEF.PA) and attracted investors such as Abu Dhabi’s International Holding Company as he pursues a global expansion stretching from ports to the power sector.

    In a shock move late on Wednesday, Adani called off the share sale as a stocks rout sparked by Hindenburg’s criticisms intensified, despite it being fully subscribed a day earlier.

    “Adani may have started a confidence crisis in Indian shares and that could have broader market implications,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

    Adani Enterprises shares tumbled 27% on Thursday, closing at their lowest level since March 2022.

    Other group companies also lost further ground, with 10% losses at Adani Total Gas (ADAG.NS), Adani Green Energy (ADNA.NS) and Adani Transmission (ADAI.NS), while Adani Ports and Special Economic Zone shed nearly 7%.

    Since Hindenburg’s report on Jan. 24, group companies have lost nearly half their combined market value. Adani Enterprises – described as an incubator of Adani’s businesses – has lost $26 billion in market capitalisation.

    Adani is also no longer Asia’s richest person, having slid to 16th in the Forbes rankings of the world’s wealthiest people, with his net worth almost halved to $64.6 billion in a week.

    The 60-year-old had been third on the list, behind billionaires Elon Musk and Bernard Arnault.

    His rival Mukesh Ambani of Reliance Industries (RELI.NS) is now Asia’s richest person.

    [1/4] Indian billionaire Gautam Adani addresses delegates during the Bengal Global Business Summit in Kolkata, India April 20, 2022. REUTERS/Rupak De Chowdhuri

    Reuters Graphics

    BROADER CONCERNS

    Adani’s plummeting stock and bond prices have raised concerns about the likelihood of a wider impact on India’s financial system.

    India’s central bank has asked local banks for details of their exposure to the Adani Group, government and banking sources told Reuters on Thursday.

    CLSA estimates that Indian banks were exposed to about 40% of the $24.5 billion of Adani Group debt in the fiscal year to March 2022.

    Dollar bonds issued by entities of Adani Group extended losses on Thursday, with notes of Adani Green Energy crashing to a record low. Adani Group entities made scheduled coupon payments on outstanding U.S. dollar-denominated bonds on Thursday, Reuters reported citing sources.

    “We see the market is losing confidence on how to gauge where the bottom can be and although there will be short-covering rebounds, we expect more fundamental downside risks given more private banks (are) likely to cut or reduce margin,” said Monica Hsiao, chief investment officer of Hong Kong-based credit fund Triada Capital.

    In New Delhi, opposition lawmakers submitted notices in parliament demanding discussion of the short-seller’s report.

    The Congress Party called for a Joint Parliamentary Committee be set up or a Supreme Court monitored investigation, while some lawmakers shouted anti-Adani slogans inside parliament, which was adjourned for the day.

    ADANI VS HINDENBURG

    Adani made acquisitions worth $13.8 billion in 2022, Dealogic data showed, its highest ever and more than double the previous year.

    The cancelled fundraising was critical for Adani, which had said it would use $1.33 billion to fund green hydrogen projects, airports facilities and greenfield expressways, and $508 million to repay debt at some units.

    Hindenburg’s report alleged an improper use of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debt and the valuations of seven listed Adani companies.

    The Adani Group has denied the accusations, saying the allegation of stock manipulation had “no basis” and stemmed from an ignorance of Indian law. It said it has always made the necessary regulatory disclosures.

    Adani had managed to secure share sale subscriptions on Tuesday even though the stock’s market price was below the issue’s offer price. Maybank Securities and Abu Dhabi Investment Authority had bid for the anchor portion of the issue, investments which will now be reimbursed by Adani.

    Late on Wednesday, the group’s founder said he was withdrawing the sale given the share price fall, adding his board felt going ahead with it “will not be morally correct”.

    Reporting by Chris Thomas, Nallur Sethuraman, Tanvi Mehta, Ira Dugal, Aftab Ahmed, Sumeet Chatterjee, Anshuman Daga, Summer Zhen, Ross Kerber and Bansari Mayur Kamdar; Editing by Muralikumar Anantharaman, Jason Neely and Alexander Smith

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  • Adani crisis ignites Indian contagion fears, credit warnings

    Adani crisis ignites Indian contagion fears, credit warnings

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    • Both houses of parliament adjourned amid row
    • Flagship Adani firm plunges 35% at one point
    • Moody’s warns will find it harder to raise capital

    NEW DELHI, Feb 3 (Reuters) – Financial contagion fears spread in India on Friday as the Adani Group’s crisis worsened, with ratings agency Moody’s warning the conglomerate may struggle to raise capital and S&P cutting the outlook on two of its businesses.

    Chaotic scenes in both houses of India’s parliament led to their adjournment on Friday as some lawmakers demanded an inquiry after a dramatic meltdown in the stock market values of Indian billionaire Gautam Adani’s companies.

    The crisis was triggered by a Hindenburg Research report last week in which the U.S.-based short-seller accused the Adani Group of stock manipulation and unsustainable debt.

    Adani Group, one of India’s top conglomerates, has rejected the criticism and denied wrongdoing in detailed rebuttals, but that has failed to arrest the unabated fall in its shares.

    In the latest sign of the crisis widening, India’s ministry of corporate affairs has begun a preliminary review of Adani Group’s financial statements and other regulatory submissions made over the years, two government officials told Reuters.

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    Although shares in Adani companies recovered after sharp falls earlier on Friday, the seven listed firms have still lost about half their market value, totalling more than $100 billion since Hindenburg published its report on Jan. 24.

    Moody’s warned the share plunge could hit the Adani Group’s ability to raise capital, although fellow credit ratings agency Fitch saw no immediate impact on its ratings.

    “These adverse developments are likely to reduce the group’s ability to raise capital to fund committed capex or refinance maturing debt over the next 1-2 years. We recognise that a portion of the capex is deferrable,” Moody’s said.

    For Adani, a former school drop-out from Gujarat, the western home state of Indian Prime Minister Narendra Modi, the crisis presents the biggest reputational and business challenge of his life, as his firm struggles to assuage investor concerns.

    Amid fears the turmoil could spill over into the broader financial system, some Indian politicians have called for a wider investigation, and sources have told Reuters the central bank has asked lenders for details of exposure to the group.

    “Contagion concerns are widening, but still limited to the banking sector,” Charu Chanana, a market strategist with Saxo Markets in Singapore, said on Friday.

    The Reserve Bank of India said the country’s banking system remains resilient and stable. State Bank of India said it was not concerned about the exposure to Adani Group, but further financing to its projects would be “evaluated on its own merit”.

    Adani Enterprises shares closed 1.4% higher, after earlier slumping 35% to hit their lowest since March 2021. That low took its losses to nearly $33.6 billion since last week, a 70% fall.

    Shares fell 5% in Adani Total Gas (ADAG.NS), a joint venture with France’s TotalEnergies (TTEF.PA), which said its exposure to Adani companies was limited.

    Traffic moves past the logo of the Adani Group installed at a roundabout on the ring road in Ahmedabad, India, Feb. 2, 2023. REUTERS/Amit Dave

    Adani Ports and Special Economic Zone (APSE.NS) was up 8%, while Adani Transmission (ADAI.NS) and Adani Green Energy (ADNA.NS) were both down 10%.

    “There is a risk that investor concerns about the group’s governance and disclosures are larger than we have currently factored into our ratings,” S&P said, as it cut its outlook on Adani Ports and Adani Electricity to negative from stable.

    India’s divestment secretary Tuhin Kanta Pandey told Reuters that Life Insurance Corp (LIC) shareholders and customers should not be concerned about its exposure to the Adani Group.

    State-run LIC (LIFI.NS) has a 4.23% stake in the flagship Adani Enterprises, while its other exposures include a 9.14% stake in Adani Ports.

    Reuters Graphics

    ‘ONE INSTANCE’

    Adani, 60, has in recent years forged partnerships with, and attracted investment from, foreign giants as he pursued global expansion in industries from ports to power.

    The market and financial crisis means foreign investors, many already underweight on India as they consider its stock market overpriced, are reducing exposure.

    “One instance, however much talked about globally it may be … is not going to be indicative of how well Indian financial markets are governed,” Indian Finance Minister Nirmala Sitharaman told Network18 when asked about the market weakness.

    Reuters Graphics

    Hindenburg’s report said key listed Adani companies had “substantial debt” and shares in the seven listed firms had a downside of 85% due to what it called sky-high valuations.

    The Adani Group has called the report baseless and said over the past decade, its companies have “consistently de-levered”.

    The listed Adani firms now have a combined market value of $107.5 billion, versus $218 billion before the report.

    That has forced Adani to cede the crown of Asia’s richest person to Indian rival Mukesh Ambani of Reliance Industries Ltd (RELI.NS), and he has slid to 17th in Forbes’ list of the world’s wealthiest people.

    He had ranked third, behind Elon Musk and Bernard Arnault.

    Reporting by Aditya Kalra, Chris Thomas, Ankur Banerjee, Bansari Mayur Kamdar, Shivam Patel, Tanvi Mehta and Rae Wee in Singapore; Editing by Clarence Fernandez, Mark Potter and Alexander Smith

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  • Analysis: Ukraine’s new weapon will force a Russian shift

    Analysis: Ukraine’s new weapon will force a Russian shift

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    WASHINGTON/KYIV, Feb 2 (Reuters) – The United States has answered President Volodymyr Zelenskiy’s plea for rockets that can strike deep behind the front lines of the nearly year-long conflict with Russia.

    Now Russian forces will need to adapt or face potentially catastrophic losses.

    The new weapon, the Ground Launched Small Diameter Bomb (GLSDB), will allow Ukraine’s military to hit targets at twice the distance reachable by the rockets it now fires from the U.S.-supplied High Mobility Artillery Rocket System (HIMARS). If included as expected in an upcoming weapons-aid package first reported by Reuters, the 151 km (94 mile) GLSDB will put all of Russia’s supply lines in the east of the country within reach, as well as part of Russian-occupied Crimea.

    This will force Russia to move its supplies even farther from the front lines, making its soldiers more vulnerable and greatly complicating plans for any new offensive.

    “This could slow down [a Russian assault] significantly,” said Andriy Zagorodnyuk, Ukraine’s former defence minister. “Just as HIMARS significantly influenced the course of events, these rockets could influence the course of events even more.”

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    GLSDB is GPS-guided glide bomb that can manoeuvre to hit hard-to-reach targets such as command centres. Made jointly by SAAB AB (SAABb.ST) and Boeing Co (BA.N), it combines the GBU-39 Small Diameter Bomb (SDB) with the M26 rocket motor, both of which are common in U.S. inventories.

    It is not yet compatible with HIMARS, but the United States will provide Ukraine new launchers for the rockets, said sources. GLSDB could be delivered as early as spring 2023, according to a document reviewed by Reuters.

    VULNERABLE SUPPLY LINES

    When the United States first sent HIMARS launchers in June, it supplied rockets with a 77 km (48 mile) range. This was a major boost for the Ukrainian military, allowing it to destroy Russian ammunition dumps and weapons storage facilities.

    Once Ukraine has the new glide bombs, say military experts, Russia will need to push its supplies even farther away.

    “We are currently unable to reach Russian military facilities more than 80 kilometres away,” said Ukrainian military analyst Oleksandr Musiyenko. “If we can reach them practically all the way to the Russian border, or in occupied Crimea, then of course this will lower the attacking potential of Russian forces.”

    Crucially, Ukraine will soon be able to reach every point of the occupied overland route to Crimea via Berdiansk and Melitopol. That will force Russia to redirect its supply trucks to the Crimean bridge, which was badly damaged in an attack in October.

    “Russia is using Crimea as a big military base from which it sends reinforcements for its troops on the southern front,” said Musiyenko. “If we had a 150km (munition), we could reach that and disrupt the logistical connection with Crimea.”

    Beyond the logistical impact, the addition of a longer-range weapon to Ukraine’s arsenal could help shake Russian confidence.

    Tom Karako, a weapons and security expert at the Center for Strategic and International Studies said that while Ukraine would benefit from an even longer range weapon, GLSDB is “a really important step to give the Ukrainians longer reach and to keep the Russians guessing.”

    NO ATACMS – YET

    For the Biden administration, the decision to send GLSDB to Ukraine represents a step toward meeting Ukraine’s demand for the 185-mile (297km) range Army Tactical Missile System (ATACMS) missile, which the administration has so far declined to provide, fearing a further escalation of the conflict.

    The glide bombs, while not as powerful, are much cheaper, smaller and easier to deploy than ATACMS, making them well suited for much of what Ukraine hopes to accomplish: disrupting Russian operations and creating a tactical advantage.

    Still, said Karako, it is possible the Ukrainians could end up receiving an even longer range weapon in the future.

    “Time and again, we’ve seen the administration say that they would go up to a certain point, but not beyond,” he said. “Then, as the situation has deteriorated, they’ve found the necessity to, in fact, go further.”

    This was the case with HIMARS, the Patriot missile defence system, and, just this month, Abrams tanks, all initially off-limits to Ukraine before the administration ended up approving shipments.

    But for now, the focus will be on how quickly the new glide bombs can arrive in Ukraine, said Zagorodnyuk.

    “If they speed it up…this could hugely change the situation on the field of battle.”

    Editing by Don Durfee and Peter Graff

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  • Southwest Airlines is sued for not providing refunds after meltdown

    Southwest Airlines is sued for not providing refunds after meltdown

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    NEW YORK, Jan 3 (Reuters) – Southwest Airlines (LUV.N) has been sued by a passenger who said it failed to provide refunds to passengers left stranded when an operational meltdown led the carrier to cancel more than 15,000 flights late last month.

    In a proposed class action filed on Dec. 30 in New Orleans federal court, Eric Capdeville accused Southwest of breach of contract after a fierce winter storm that swept across the United States shortly before Christmas upended the carrier’s schedule.

    Though Southwest has promised to reimburse passengers for expenses, Capdeville said it offered only a credit to him and his daughter after scrapping their Dec. 27 flight to Portland, Oregon from New Orleans and being unable to book alternative travel.

    Affected passengers “cannot use their airline tickets through no fault of their own and they are not getting the benefit of their bargain with defendant,” the complaint said.

    Capdeville, a Marrero, Louisiana resident, is seeking damages for passengers on Southwest flights canceled since Dec. 24, and who did not receive refunds or expense reimbursements.

    In a statement on Tuesday, Southwest had no comment on the lawsuit, but said it had “several high priority efforts underway to do right by our customers, including processing refunds from canceled flights, and reimbursing customers for expenses incurred as a result of the irregular operations.”

    Capdeville’s lawyer did not immediately respond to requests for additional comment.

    The meltdown at Dallas-based Southwest has been blamed on staffing shortages and outdated flight scheduling software.

    Southwest has said it would reimburse affected passengers for reasonable expenses such as last-minute hotel, rental car and dining costs, but it might take several weeks.

    The carrier largely restored normal operations on Dec. 30, several days after other airlines had recovered from the storm.

    In a Dec. 29 letter to Southwest Chief Executive Bob Jordan, Transportation Secretary Pete Buttigieg called the disruptions “unacceptable” and said the law requires refunds when carriers cancel flights unless passengers accept rebooking.

    The case is Capdeville v Southwest Airlines Co, U.S. District Court, Eastern District of Louisiana, No. 22-05590.

    Reporting by Jonathan Stempel in New York; Editing by Nick Zieminski

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  • U.S. FDA allows abortion pills to be sold at retail pharmacies

    U.S. FDA allows abortion pills to be sold at retail pharmacies

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    WASHINGTON, Jan 3 (Reuters) – The U.S. Food and Drug Administration (FDA) will allow retail pharmacies to offer abortion pills in the United States for the first time, the agency said on Tuesday, even as more states seek to ban medication abortion.

    The regulatory change will potentially expand abortion access as President Joe Biden’s administration wrestles with how best to protect abortion rights after they were sharply curtailed by the Supreme Court’s decision to overturn the landmark Roe v Wade ruling and the state bans that followed.

    Pharmacies can start applying for certification to distribute abortion pill mifepristone with one of the two companies that make it, and if successful they will be able to dispense it directly to patients upon receiving a prescription from a certified prescriber.

    The FDA had first said it would be making those changes in December 2021 when it announced it would relax some risk evaluation and mitigation strategies, or REMS, on the pill, that had been in place since the agency approved it in 2000 and were lifted temporarily in 2021 due to the COVID-19 pandemic.

    The changes included permanently removing restrictions on mail order shipping of the pills and their prescription through telehealth.

    The agency finalized the changes on Tuesday after reviewing supplemental applications from Danco Laboratories and GenBioPro, the two companies that make the drug in the United States.

    “Under the Mifepristone REMS Program, as modified, Mifeprex and its approved generic can be dispensed by certified pharmacies or by or under the supervision of a certified prescriber,” the agency said on its website on Tuesday.

    Mifeprex is the brand name version of mifepristone which, in combination with a second drug called misoprostol that has various uses including miscarriage management, induces an abortion up to 10 weeks into a pregnancy in a process known as medication abortion.

    Abortion rights activists say the pill has a long track record of being safe and effective, with no risk of overdose or addiction. In several countries, including India and Mexico, women can buy them without a prescription to induce abortion.

    “Today’s news is a step in the right direction for health equity,” Planned Parenthood President Alexis McGill Johnson said in a statement.

    “Being able to access your prescribed medication abortion through the mail or to pick it up in person from a pharmacy like any other prescription is a game changer for people trying to access basic health care,” Johnson added.

    NO EQUAL ACCESS

    The regulatory change will, however, not provide equal access to all people, GenBioPro, which makes the generic version of mifepristone, said in a statement.

    Abortion bans, some targeting mifepristone, have gone into effect in more than a dozen states since the U.S. Supreme Court overturned the constitutional right to terminating pregnancies when it scrapped the 1973 Roe v. Wade ruling last year.

    Women in those states could potentially travel to other states to obtain medication abortion.

    The president of anti-abortion group SBA Pro-Life America, Marjorie Dannenfelser, said the latest FDA move endangers women’s safety and the lives of unborn children.

    “State lawmakers and Congress must stand as a bulwark against the Biden administration’s pro-abortion extremism,” she said in a statement.

    FDA records show a small mortality case number associated with mifepristone. As of June 2021, there were reports of 26 deaths linked with the pill out of 4.9 million people estimated to have taken it since it was approved in September 2000.

    Retail pharmacies will have to weigh whether or not to offer the pill given the political controversy surrounding abortion, and determine where they can do so.

    A spokesperson for CVS Health (CVS.N) said the drugstore chain owner was reviewing the updated REMS “drug safety program certification requirements for mifepristone to determine the requirements to dispense in states that do not restrict the dispensing of medications prescribed for elective termination of pregnancy.”

    A spokesperson for Walgreens (WBA.O), one of the largest U.S. pharmacies, said the company was also reviewing the FDA’s regulatory change. “We will continue to enable our pharmacists to dispense medications consistent with federal and state law.”

    Reporting by Ahmed Aboulenein; Additional reporting by Eric Beech in Washington, Shivani Tanna, Rahat Sandhu, and Kanjyik Ghosh in Bengaluru; Editing by Himani Sarkar

    Our Standards: The Thomson Reuters Trust Principles.

    Ahmed Aboulenein

    Thomson Reuters

    Washington-based correspondent covering U.S. healthcare and pharmaceutical policy with a focus on the Department of Health and Human Services and the agencies it oversees such as the Food and Drug Administration, previously based in Iraq and Egypt.

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  • Twitter lays off staff, Musk blames activists for ad revenue drop

    Twitter lays off staff, Musk blames activists for ad revenue drop

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    • Musk axes around half of Twitter’s workforce
    • Employees file class action against Twitter
    • Staff lose access to systems
    • Major advertisers pull ads

    Nov 4 (Reuters) – Twitter Inc laid off half its workforce on Friday but said cuts were smaller in the team responsible for preventing the spread of misinformation, as advertisers pulled spending amid concerns about content moderation.

    Tweets by staff of the social media company said teams responsible for communications, content curation, human rights and machine learning ethics were among those gutted, as were some product and engineering teams.

    The move caps a week of chaos and uncertainty about the company’s future under new owner Elon Musk, the world’s richest person, who tweeted on Friday that the service was experiencing a “massive drop in revenue” from the advertiser retreat.

    Musk blamed the losses on a coalition of civil rights groups that has been pressing Twitter’s top advertisers to take action if he did not protect content moderation – concerns heightened ahead of potential pivotal congressional elections on Tuesday.

    After the layoffs, the groups said they were escalating their pressure and demanding brands pull their Twitter ads globally.

    “Unfortunately there is no choice when the company is losing over $4M/day,” Musk tweeted of the layoffs, adding that everyone affected was offered three months of severance pay.

    The company was silent about the depth of the cuts until late in the day, when head of safety and integrity Yoel Roth tweeted confirmation of internal plans, seen by Reuters earlier in the week, projecting the layoffs would affect about 3,700 people, or 50% of the staff.

    Among those let go were 784 employees from the company’s San Francisco headquarters and 199 in San Jose and Los Angeles, according to filings to California’s employment authority.

    Roth said the reductions hit about 15% of his team, which is responsible for preventing the spread of misinformation and other harmful content, and that the company’s “core moderation capabilities” remained in place.

    Musk endorsed the safety executive last week, citing his “high integrity” after Roth was called out over tweets critical of former President Donald Trump years earlier.

    Musk has promised to restore free speech while preventing Twitter from descending into a “hellscape.”

    President Joe Biden said on Friday that Musk had purchased a social media platform in Twitter that spews lies across the world.

    “And now what are we all worried about: Elon Musk goes out and buys an outfit that sends – that spews lies all across the world… There’s no editors anymore in America. There’s no editors. How do we expect kids to be able to understand what is at stake?”

    Major advertisers have expressed apprehension about Musk’s takeover for months.

    Brands including General Motors Co (GM.N) and General Mills Inc (GIS.N) have said they stopped advertising on Twitter while awaiting information about the new direction of the platform.

    Musk tweeted that his team had made no changes to content moderation and done “everything we could” to appease the groups. Speaking at an investors conference in New York on Friday, Musk called the activist pressure “an attack on the First Amendment.”

    [1/9] Owner and CEO of Twitter, Inc. Elon Musk arrives at the 29th Annual Baron Investment Conference in Manhattan in New York City, New York, U.S., November 4, 2022. REUTERS/Andrew Kelly

    Twitter did not respond to a request for comment.

    ACCESS TO SYSTEMS CUT

    The email notifying staff about layoffs was the first communication Twitter workers received from the company’s leadership after Musk took over last week. It was signed only by “Twitter,” without naming Musk or any other executives.

    Dozens of staffers tweeted they had lost access to work email and Slack channels overnight before receiving an official layoff notice on Friday morning, prompting an outpouring of laments by current and former employees on the platform they had built.

    They shared blue hearts and salute emojis expressing support for one another, using the hashtags #OneTeam and #LoveWhereYouWorked, a past-tense version of a slogan employees had used for years to celebrate the company’s work culture.

    Twitter’s curation team, which was responsible for “highlighting and contextualizing the best events and stories that unfold on Twitter,” had been axed, employees wrote.

    Shannon Raj Singh, an attorney who was Twitter’s acting head of human rights, tweeted that the entire human rights team at the company had been sacked.

    Another team that focused on research into how Twitter employed machine learning and algorithms, an issue that was a priority for Musk, was also eliminated, according to a tweet from a former senior manager at Twitter.

    Senior executives including vice president of engineering Arnaud Weber said their goodbyes on Twitter on Friday: “Twitter still has a lot of unlocked potential but I’m proud of what we accomplished.”

    Employees of Twitter Blue, the premium subscription service that Musk is bolstering, were also let go. An employee with the handle “SillyRobin” who had indicated they were laid off, quote-tweeted a previous Musk tweet saying Twitter Blue would include “paywall bypass” for certain publishers.

    “Just to be clear, he fired the team working on this,” the employee said.

    DOORS LOCKED

    Twitter said in its email to staffers that offices would be temporarily closed and badge access suspended “to help ensure the safety of each employee as well as Twitter systems and customer data.”

    Offices in London and Dublin appeared deserted on Friday, with no employees in sight. At the London office, any evidence Twitter had once occupied the building was erased.

    A receptionist at Twitter’s San Francisco headquarters said a few people had trickled in and were working in the floors above despite the notice to stay away.

    A class action was filed on Thursday against Twitter by several employees, who argued the company was conducting mass layoffs without providing the required 60-day advance notice, in violation of federal and California law.

    The lawsuit asked the San Francisco federal court to issue an order to restrict Twitter from soliciting employees being laid off to sign documents without informing them of the pendency of the case.

    Reporting by Sheila Dang in Dallas, Katie Paul in Palo Alto, California, and Paresh Dave in Oakland, California; Additional reporting by Fanny Potkin, Rusharti Mukherjee, Aditya Kalra, Martin Coulter, Hyunjoo Jin, Supantha Mukherjee and Arriana McLymore; Writing by Matt Scuffham and Katie Paul; Editing by Kenneth Li, Jason Neely, Matthew Lewis and William Mallard

    Our Standards: The Thomson Reuters Trust Principles.

    Paresh Dave

    Thomson Reuters

    San Francisco Bay Area-based tech reporter covering Google and the rest of Alphabet Inc. Joined Reuters in 2017 after four years at the Los Angeles Times focused on the local tech industry.

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  • Adidas ends Ye deal over hate speech, costing rapper his billionaire status

    Adidas ends Ye deal over hate speech, costing rapper his billionaire status

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    • Adidas ends partnership immediately
    • To take about $250 mln hit to 2022 net income
    • Gap, Balenciaga have also cut ties with Ye

    Oct 25 (Reuters) – Adidas AG (ADSGn.DE) terminated its partnership with rapper and fashion designer Ye on Tuesday after he made a series of antisemitic remarks, a move that knocked the musician off the Forbes list of the world’s billionaires.

    Adidas put the tie-up, which has produced several hot-selling Yeezy branded sneakers, under review this month.

    “Adidas does not tolerate antisemitism and any other sort of hate speech,” the German company said on Tuesday.

    “Ye’s recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness,” it said.

    Forbes magazine said the end of the deal meant Ye’s net worth shrank to $400 million. The magazine had valued his share of the Adidas partnership at $1.5 billion.

    The remainder of Ye’s wealth comes from real estate, cash, his music catalogue and a 5% stake in ex-wife Kim Kardashian’s shapewear firm, Skims, Forbes said.

    Representatives for Ye, formerly known as Kanye West, did not immediately respond to a request for comment.

    For Adidas, ending the partnership and the production of Yeezy branded products, as well as stopping all payments to Ye and his companies, will have a “short-term negative impact” of up to 250 million euros ($248.90 million) on net income this year, the company said.

    Ye has courted controversy in recent months by publicly ending major corporate tie-ups and making outbursts on social media against other celebrities. His Twitter and Instagram accounts were restricted, with the social media platforms removing some of his online posts that users condemned as antisemitic.

    In now-deleted Instagram posts earlier this year, the multiple Grammy award-winning artist accused Adidas and U.S. apparel retailer Gap Inc (GPS.N) of failing to build contractually promised permanent stores for products from his Yeezy fashion line.

    [1/3] Singer Kanye West walks past models after presenting his Fall/Winter 2015 partnership line with Adidas at New York Fashion Week February 12, 2015. REUTERS/Lucas Jackson/File Photo

    He also accused Adidas of stealing his designs for its own products.

    On Tuesday, Gap, which had ended its partnership with Ye in September, said it was taking immediate steps to remove Yeezy Gap products from its stores and that it had shut down YeezyGap.com.

    “Antisemitism, racism and hate in any form are inexcusable and not tolerated in accordance with our values,” Gap said in a statement.

    European fashion house Balenciaga has also cut ties with Ye, according to media reports.

    “The saga of Ye … underlines the importance of vetting celebrities thoroughly and avoiding those who are overly controversial or unstable,” said Neil Saunders, managing director of GlobalData.

    Adidas poached Ye from rival Nike Inc (NKE.N) in 2013 and agreed to a new long-term partnership in 2016 in what the company then called “the most significant partnership created between a non-athlete and a sports brand.”

    The tie-up helped the German brand close the gap with Nike in the U.S. market.

    Yeezy sneakers, which cost between $200 and $700, generate about 1.5 billion euros ($1.47 billion) in annual sales for Adidas, making up a little over 7% of its total revenue, according to estimates from Telsey Advisory Group.

    Shares in Adidas, which cut its full-year forecast last week, closed down 3.2%. The group said it would provide more information as part of its upcoming Q3 earnings announcement on Nov. 9.

    ($1 = 1.0044 euros)

    Reporting by Mrinmay Dey, Uday Sampath and Aishwarya Venugopal in Bengaluru and Lisa Richwine in Los Angeles; Editing by Tomasz Janowski, Sriraj Kalluvila, Bernadette Baum, Anil D’Silva and Cynthia Osterman

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  • Biden disappointed by ‘shortsighted’ OPEC+ cut, more SPR releases possible

    Biden disappointed by ‘shortsighted’ OPEC+ cut, more SPR releases possible

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    WASHINGTON, Oct 5 (Reuters) – President Joe Biden called on his administration and Congress to explore ways to boost U.S. energy production and reduce OPEC’s control over energy prices after the cartel’s “shortsighted” production cut, the White House said on Wednesday.

    The Saudi Arabia-led OPEC+ cartel at a Vienna meeting on Wednesday ignored pleas from the White House to keep oil flowing and agreed to cut output by 2 million barrels per day, its deepest cuts in production since the 2020 COVID-19 pandemic.

    The move drew a sharp response from Biden that underscores the growing rift between the United States and Saudi Arabia on energy policy.

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    “The President is disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of (Russian President Vladimir) Putin’s invasion of Ukraine,” national security adviser Jake Sullivan and National Economic Council Director Brian Deese said in a statement.

    Biden warned that he will now continue to direct releases from the nation’s Strategic Petroleum Reserve “as necessary,” a shift from the White House’s previous comments that it would end the drawdown in the coming weeks.

    Earlier this year, the Biden administration announced the largest sale ever from the reserve: 180 million barrels for six months beginning in May. Last month it extended that historic sale into November as only about 155 million barrels had been sold. It now aims to sell 165 million through November.

    As a result, the amount of oil in the reserve has fallen to the lowest level since July 1984. It now holds about 416 million barrels of oil, well above what the United States is required by its membership in the International Energy Agency, at sites on the Texas and Louisiana coasts.

    Rising oil and fuel prices are a risk to Biden’s fellow Democrats as they seek to keep control of Congress in the Nov. 8 midterm elections.

    Biden also pledged to consult with Congress on additional tools to cut OPEC’s control over energy prices, a potential reference to a decades-long effort to open the cartel to antitrust lawsuits for orchestrating supply cuts.

    The so-called NOPEC bill, which has brought up numerous times over the past 20 years but never enacted, easily passed a Senate committee in May.

    The White House has previously expressed concerns about unintended consequences of the bill.

    The White House is also worried about the cut cementing Saudi Arabia’s closer cooperation with Russia, also a member of OPEC+, as oil revenues fund Moscow’s war machine in Ukraine.

    “Look it’s clear that OPEC Plus is aligning with Russia with today’s announcement,” White House spokesperson Karine-Jean Pierre told reporters aboard Air Force One on Wednesday.

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    Reporting by Susan Heavey and Jarrett Renshaw; editing by Tim Ahmann and David Gregorio

    Our Standards: The Thomson Reuters Trust Principles.

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  • White House signals Biden may address filibuster reform soon

    White House signals Biden may address filibuster reform soon

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    WASHINGTON, Oct 22 (Reuters) – The White House on Friday offered a strong signal that it is preparing to seek changes soon to a long-standing Senate tradition that has allowed Republicans to block voting rights legislation and other major Democratic initiatives.

    Democratic President Joe Biden, who spent 36 years in the Senate, has previously opposed any significant overhaul of a Senate rule known as the filibuster, which requires 60 of the 100 senators to agree on most legislation. read more

    His opposition has angered Democrats and activists who say an arcane rule should not stand in the way of important issues such as voting rights and immigration.

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    “I expect you’ll hear more from the president about it in the coming weeks,” White House spokesperson Jen Psaki told reporters on Friday about the filibuster. Asked what more he would want to address with filibuster reform beyond voting rights, Psaki said to “stay tuned.”

    During a televised town hall event on Thursday, Biden said the Senate should “fundamentally alter” the filibuster process, but did not offer specifics on how.

    The White House’s potential shift on the issue comes after the latest successful effort by Republicans to block Democratic legislation aimed at thwarting restrictive new voting laws enacted in Republican-led states. On Wednesday, Republicans used the filibuster to block beginning a debate on the measure.

    When Republicans control the White House and the Senate, Democrats have used the filibuster as well.

    Psaki suggested Biden had lost patience with Republican resistance to Democrats’ ideas on voting rights, saying the president is “frustrated” and “disappointed.”

    “When a hand has been extended by Democrats to work together to protect the fundamental right, Republicans have not only recoiled, they have blocked the … ability to make any semblance of progress,” Psaki said.

    While Democrats are united on voting rights, they are not unified in whether to overhaul the filibuster. U.S. Senator Joe Manchin, a moderate Democrat from West Virginia, has publicly opposed eliminating the filibuster, even for specific issues.

    With a 50-50 split in the Senate, Democrats would need all of its members to support changes.

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    Reporting by Jeff Mason and Jarrett Renshaw; additional reporting by Steve Holland; Editing by Jonathan Oatis and Bill Berkrot

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  • Ex-Giuliani associate Parnas found guilty of violating U.S. campaign finance law

    Ex-Giuliani associate Parnas found guilty of violating U.S. campaign finance law

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    NEW YORK, Oct 22 (Reuters) – Lev Parnas, a onetime associate of Donald Trump’s former personal lawyer Rudy Giuliani, was found guilty on Friday of violating U.S. campaign finance laws during the 2018 elections.

    Parnas, a Ukraine-born American businessman, and his former associate Igor Fruman had been accused of soliciting funds from Russian businessman Andrey Muraviev to donate to candidates in states where the group was seeking licenses to operate cannabis businesses in 2018.

    Parnas also concealed that he and Fruman, who pleaded guilty in September, were the true source of a donation to a group supporting Republican then-President Trump, prosecutors said. Giuliani’s attorney has said the Parnas case is separate from a probe into whether violated lobbying laws while representing Trump.

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    Giuliani, a U.S. prosecutor in the 1980s before he was elected New York’s mayor in 1994, has not been charged with any crimes and denies wrongdoing.

    Parnas was found guilty on all six counts of federal election law violations that he faced, which included illegally helping a foreigner contribute to a U.S. election campaign, making contributions in the names of others, and lying to the Federal Elections Commission (FEC).

    Andrey Kukushkin, a Muraviev associate and California resident who was tried alongside Parnas, was found guilty on Friday of two counts of campaign finance violations. Kukushkin is also a Ukraine native.

    The trial in U.S. District Court in Manhattan has drawn attention because of the role Parnas and Belarus-born U.S. citizen Fruman played in helping Giuliani, who was Trump’s personal attorney while he held office, to investigate Democrat Joe Biden during the 2020 presidential campaign. Biden won the election, denying Trump a second term.

    Parnas, dressed in a blue suit, stared straight at the jury as the verdict was read. Kukushkin, wearing a grey sweater, shook his head after he was pronounced guilty on the second count.

    “I’ve never hid from nobody,” Parnas said as he left court wearing a black “Combat COVID” mask. “I’ve always stood and tried to tell the truth.”

    His attorney Joseph Bondy said they would be filing a motion to vacate the verdict “in the interest of justice.”

    Lev Parnas, Ukrainian-American businessman and former Giuliani associate, walks to the United States Court in Manhattan in New York City, New York, U.S., October 18, 2021. REUTERS/Mike Segar

    “It’s obviously a very difficult time for Mr. Parnas and his wife and his children,” Bondy said.

    U.S. District Judge J. Paul Oetken denied a request from prosecutors to detain Parnas and Kukushkin. “The defendants have sufficiently established that they’re not a risk of flight,” Oetken said after the jury left.

    Oetken set a sentencing date of Feb. 16 for Kukushkin. He did not set a sentencing date for Parnas, who faces another possible trial on separate fraud charges.

    ‘IN WELL OVER HIS HEAD’

    The case provided a glimpse into the inner workings of political fundraising in the United States.

    “You saw the wires from Muraviev,” Assistant U.S Attorney Hagan Scotten told the jury during closing arguments on Thursday. “You saw how that money came out on the other side, finding its way into American elections, where the defendants thought they had bought influence to further their business.”

    Parnas’ defense lawyers countered that Muraviev’s funds went toward business investments, not campaign contributions, and that the donation to the pro-Trump group was from a company founded by Parnas and broke no laws.

    In his closing statement Parnas attorney Bondy characterized his client as a passionate proponent of marijuana legalization who was “in well over his head.” He argued that Muraviev’s money funded business operations, not campaign contributions.

    Deliberations in the trial began on Friday morning and lasted about five hours.

    Fruman, who lives in Florida, pleaded guilty to one count of soliciting campaign contributions from a foreign national. His sentencing is scheduled for Jan. 21.

    Parnas and Kukushkin had faced two counts of conspiring to make donations from a foreign national, and making the donations. Parnas had also been charged with four other counts, including making false statements to the Federal Elections Commission.

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    Reporting by Tom Hals in Wilmington, Delaware; Editing by Franklin Paul, Grant McCool and Jonathan Oatis

    Our Standards: The Thomson Reuters Trust Principles.

    Jody Godoy

    Thomson Reuters

    Jody Godoy reports on banking and securities law. Reach her at jody.godoy@thomsonreuters.com

    Luc Cohen

    Thomson Reuters

    Reports on the New York federal courts. Previously worked as a correspondent in Venezuela and Argentina.

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