Today’s top stories

• French luxury group LVMH became the first European company to reach a $500bn Market value as the return of Chinese customers drove up its share price.

• UK chancellor Jeremy Hunt admitted that UK business taxes were too high but insisted the best way to lower them would be to expand the economy.

• A European Central Bank policymaker told the FT that investors were underestimating how high eurozone interest rates might have to rise unless wage growth started to fall alongside core inflation.

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Good evening.

The semiconductor showdown between the US and China stepped up a notch today as Washington tried to rally allies for its battle with Beijing against a backdrop of growing mutual suspicion and geopolitical tensions.

As South Korean president President Yoon Suk Yeol arrives in DC for a state visit, the White House has asked his country’s chipmakers not to fill market gaps in China if Beijing bans the sale of chips from America’s Micron, one of the three big companies in the DRam memory chip market alongside South Korea’s Samsung and SK Hynix. China’s move is retaliation for US attempts to prevent it from obtaining or producing advanced semiconductors and is seen as a litmus test of how far Beijing is willing to take action against US businesses.

The US at the same time is attempting the difficult task of breaking its dependence on China by reshoring production, an exercise described by the founder of Taiwan’s TSMC, the world’s largest chip producer, as a “very expensive exercise in futility”. 

Semiconductor companies meanwhile have signalled that the industry’s current slowdown is lasting longer than expected as weakening demand for car parts adds to a slump in sales of smartphones and personal computers after the boom times of the pandemic era.

The developments follow a sell-off in Asian markets this morning that was prompted by expectations that China will announce wider restrictions on US investment at next month’s G7 summit.

Investors also have the jitters over tensions in the South China Sea. The US at the weekend held war games in the Philippines, a potential front line in a possible future conflict over Taiwan, while Australia today unveiled its biggest strategic shift in defence since the second world war as a reaction to China’s military build-up in the region.

Tensions between China and Europe are also simmering after Beijing’s ambassador to France questioned the legal status of former Soviet nations Estonia, Latvia and Lithuania and Ukraine’s sovereignty over Crimea, before Beijing disowned the remarks. Relations with China are on the agenda at today’s meeting of EU foreign ministers in Luxembourg as they seek to “recalibrate” their approach to Beijing.

The EU’s problem, says FT commentator Martin Sandbu, is that it is too often willing to subordinate political strategy to its economic ambitions, with many business leaders still salivating at the size of the Chinese market. “It is time for Europe to learn that what is good for VW is not necessarily good for Europe,” he concludes.

Need to know: UK and Europe economy

Work has begun on the UK’s largest solar and battery storage plant near Faversham in Kent, which is forecast to generate enough power each year to service about 100,000 homes.

UK policymakers are worried that shoppers’ concerns over food price inflation — which last week hit its highest level in more than 45 years — could fuel demand for higher pay settlements, embedding higher overall inflation. Nothing — yet — however compares with grocery prices in the US, home of the $29 ham and cheese sandwich.

In Spain meanwhile, a lack of rain has pushed olive oil prices to record levels. The country is Europe’s largest producer and accounts for around half of world supplies.

Another of our Big Reads examines France’s attempts at delivering a second nuclear era as an ambitious reactor construction programme comes up against a shortage of skilled workers.

Need to know: Global economy

President Joe Biden’s Inflation Reduction Act may help reindustrialise the US and create new jobs, but it will not stop rising prices, critics argue. A scramble for workers for these new projects could trigger another bout of inflation, complicating the Federal Reserve’s efforts to cool the economy.

A somewhat surreal legal battle over mackerel in the Pacific has reached London’s high court. Vanuatu, a tiny nation of islands, is challenging an obscure Panamanian company over the acquisition of its fishing rights “in perpetuity” for a fraction of their market value.

Countries rushed to evacuate nationals from Sudan as fighting between armed forces and paramilitaries intensified. Here’s our profile of Hemeti, the paramilitary leader.

Need to know: business

Credit Suisse was hit by outflows of SFr61.2bn ($68.6bn) in the first quarter as clients fled the stricken bank, highlighting the challenge ahead for new owners UBS. Here’s a new Big Read on how multiple warnings were missed at Silicon Valley Bank in the US ahead of an official postmortem on its collapse.

Are the banking sector’s difficulties a good opportunity for Apple to test its mettle as a financial institution? Although there is a debate about whether a marriage between Big Tech and big banks is good for competition, columnist Rana Foroohar says the company is well placed to solve some of the industry’s ongoing problems.

Profit warnings at UK companies surged in the first quarter, particularly among tech businesses, as economic uncertainty left them facing “recession-like conditions”. UK-listed companies are also increasingly losing their chief executives.

It is still unclear when — or if — business travel will return to pre-pandemic health, writes columnist Pilita Clark, pointing to high air fares, flexible working patterns and concerns over climate change.

Florida governor Ron DeSantis launched new salvos in his battle against “woke” Disney, the state’s biggest employer, ahead of an expected run for the 2024 Republican presidential nomination.

With global supply chains under threat, 3D printing could be vital to the future of US manufacturing. Watch our new video.

The World of Work

Employers are using psychological tests to resolve disputes and diversify their workforce but their accuracy is not guaranteed, writes management editor Anjli Raval. Headhunters say people lie, responses can change depending on the day and practice tests mean you can beat the system.

Tech companies are laying off droves of middle managers in a phenomenon dubbed “the flattening”. Carving out a layer of staff could speed up decisions but some argue it removes a vital link between bosses and staff.

Proposed new UK laws on sexual harassment in the workplace look likely to fail thanks to a series of amendments from Tories in the House of Lords including for example the exclusion of “vexatious, frivolous or malicious” claims.

Andrew Hill takes issue with the idea that bullying should have a threshold level for action, as suggested by Dominic Raab who resigned as UK deputy prime minister on Friday after allegations were upheld against him. Bosses don’t have to swear and shout to undermine or intimidate their staff, Hill argues.

Some good news

Researchers in Abu Dhabi have created a new nanomaterial that they say can clean up trillions of gallons of waste water from the textile industry that flows untreated into rivers and streams, loaded with harmful chemicals and dyes. (CNN)