Note: Global Morning Briefing is a roundup of international news compiled by Seoul Economic Daily.
Night Curfews in Paris and Elsewhere; State of Emergency Possible
The French government has turned to night curfews to quell large-scale violent protests that have spread nationwide. Prime Minister Lecornu sent implementation guidelines to regional authorities on the 19th, and Paris police banned demonstrations in parts of the city from 8 p.m. while restricting movement at locations including Place de la République from 11 p.m. to 6 a.m. Limited curfews were also imposed in Lille and Douai, and the prime minister said he would not rule out declaring a state of emergency if conditions deteriorate.
The damage has been extensive. About 2,400 people have been arrested and roughly 1,000 security personnel injured, while retail industry groups estimate that some 3,000 shops were damaged, with property losses running into the hundreds of millions of euros. The Yellow Vests have announced a second round of protests on the 24th and major labor unions have called a strike for the 5th of next month, raising the prospect of prolonged disruption.
Criticism of the government's handling of the protests has been intense. Authorities had expected 200,000 participants, but 550,000 turned out, according to official counts, and 800,000 by organizers' estimates. With six months left in his term, President Macron faces a deepening lame-duck period and even calls for an early departure. The yield on France's 10-year government bond rose 0.12 percentage point to 4.9%, widening the spread over German bunds to 1.45 percentage points.
Micron's Taiwan Union to Strike on the 22nd Over Profit-Sharing Demand
Workers at the Taiwan operations of U.S. memory chipmaker Micron will go on strike on the 22nd. According to Reuters, the union at the company's Taoyuan plant said it would launch the walkout after consulting with the Taichung union on the 20th. The Taoyuan union represents about 15% of Micron's employees in Taiwan, and 88.3% of its members voted in favor of a strike. The Taichung union, which represents the remainder, has not yet held a vote and is negotiating with management, with a decision expected on the 22nd — making that day the turning point for a full walkout.
The union is demanding up to 15% of operating profit as a performance bonus. Micron last month offered production workers in Taiwan a compensation package equivalent to 35 to 68 months of base pay, but the union wants a one-time bonus worth 83 months of pay along with a permanent system that distributes 15% of operating profit. The aim is to create an earnings-linked profit-sharing framework similar to those at Samsung Electronics and SK hynix.
Taiwan is a key production base for Micron, which makes DRAM and HBM chips that are core components for AI servers there. The island accounts for roughly 50% to 60% of the company's total output and employs about 15,000 people. With the two unions representing more than 80% of local staff, a strike would inevitably affect production.
Big Tech's Free Cash Flow to Hit Record Lows Next Year, Morgan Stanley Says
Morgan Stanley said in a report on the 19th that cash flows at AI-focused big tech companies will reach their worst levels next year as spending on AI infrastructure surges. Capital expenditures by hyperscalers — operators of large-scale data centers — and neoclouds, or AI-specialized cloud providers, will jump 60% to $1.58 trillion next year from $980 billion this year, the bank projected. The analysis covered Microsoft, Amazon, Alphabet and Meta as well as Oracle, SpaceX, CoreWeave and Nebius.
The problem is that revenue is not keeping pace with the speed of investment. Operating cash flow is expected to rise by only $240 billion next year, leaving a free cash flow deficit of $540 billion including leases — the largest on record. In a transcript of an internal AWS meeting obtained by Business Insider, an executive in charge of AI infrastructure said the free cash flow deficit in the AI business could persist for the next two years. Amazon posted its first free cash flow deficit in the second quarter of this year.
Analysts worry that credit risk at heavily leveraged neoclouds has obscured the debt problems facing hyperscalers. S&P said hyperscalers' debt may be larger than publicly known, and Goldman Sachs noted last week that hedge funds had cut their exposure to technology stocks at the fastest pace in a decade.
U.S. Sanctions Five Chinese Firms Over Theft of 1,000 Google AI Files
The U.S. State Department said on the 19th that it was sanctioning five Chinese entities under the Protecting American Intellectual Property Act over the theft of Google trade secrets. The targets are Shanghai Zhisuan Technology, founded by former Google engineer Ding Linwei; venture capital firm Miracle Plus; two Miracle Plus funds; and one corporate management entity. The measures include asset freezes, bans on transactions with U.S. individuals and entities, and restrictions on financial services and foreign exchange licenses. Ding was sentenced in a first trial in September to 12 months in prison and about $198,000 in restitution for transferring more than 1,000 confidential files related to Google's supercomputing operations, including its TPU chips, to a personal cloud account. He was acquitted on economic espionage charges for lack of evidence.
Despite a U.S.-China summit in September, the technology rivalry is sharpening as it spills into security matters. Britain's MI5 issued a report on the 30th of last month saying Chinese AI startup Zhipu AI may be linked to China's Ministry of State Security, a claim the Chinese embassy rejected as baseless. The U.S. Department of Homeland Security has released guidelines barring federal agencies from using DeepSeek entirely and ordering its removal from IT systems, with third-party services built on DeepSeek models also covered. The Trump administration has banned imports of Chinese-made drones and home routers, and the Federal Communications Commission is set to vote on the 29th on excluding all Chinese laboratories from electronics testing.
Deepfake Campaign Ads Flood U.S. Midterms, With Republicans Behind 80%
At least 220 AI-generated political advertisements have circulated ahead of the November 3 midterm elections, with spending reaching $137 million, far above the $50,000 spent during the 2024 presidential race, according to a report by the Wesleyan Media Project. Production costs are about 10% of those for conventional ads, and there is little regulation. Most are deepfake ads that distort opposing candidates. In Texas, the campaign of Republican Paxton circulated a video showing Democratic candidate Talarico scribbling on a Bible and making fabricated remarks. In Michigan, a conservative super PAC is spreading a synthetic video showing Democratic candidate El-Sayed playing a card game featuring phrases such as "death to America."
Republican candidates and Republican-aligned political action committees produced 81% of the AI ads, compared with 12% for Democrats. Republicans also accounted for 88% of spending, a gap attributed to Democrats' reluctance given their advocacy of AI regulation.
With Democrats seen as all but certain to take the House and Republicans' hold on the Senate increasingly in doubt, President Trump posted 15 messages over an hour on the evening of the 19th, arguing that a Democratic victory would leave the United States in the same predicament as France. The mood within the administration and the party is uneasy. According to The Wall Street Journal, senior administration officials are retaining personal attorneys in preparation for corruption investigations by a Democratic Congress. On expectations that a planned $500 billion increase in the defense budget could stall, defense stocks have weakened, with a U.S. defense ETF falling 16% from early July through mid-October.
