Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. We continue our
Speaker 1: global coverage of the Russian invasion of Ukraine, and we
Speaker 1: thought we'd wrap up our broadcast today with some thoughts
Speaker 1: on the global technological implications Baksha. Chuck Poverty is the
Speaker 1: Dean of Global Business at the Fletcher School at Tufts University,
Speaker 1: and he joins us on the phone from Boston. UM
Speaker 1: Dean Jack Poverty, it is good to have you here
Speaker 1: with Paul and myself. We've had a lot of conversations today,
Speaker 1: certainly market implications, supply chain implications, political implications, military implications.
Speaker 1: How do you think about it when it comes to
Speaker 1: the technological side of this, Yeah, absolutely, First, thank you
Speaker 1: for having me, and as we all are thinking about
Speaker 1: the implications of the invasion in the Ukraine, the natural
Speaker 1: industry to go to his energy, but of course energy
Speaker 1: is going to be affective, but there's another industry that
Speaker 1: is going to be deeply affected in that technology and UM,
Speaker 1: I fear that there are sor three fronts where technology
Speaker 1: is going to be affected. One is the Ukrainian I
Speaker 1: T sector, which is a pretty significant player in the
Speaker 1: I T space. They are the top I T destination
Speaker 1: for you know, in Eastern Europe, and there are many
Speaker 1: international companies that have got their I T work being
Speaker 1: done there by an excellent group of tech professionals in Ukraine,
Speaker 1: and many of those operations are going to get disrupted
Speaker 1: as the invasion moves further and further into the major cities,
Speaker 1: and certainly into into Kiev. And so that's the first
Speaker 1: place that I think we're going to see an immediate impact,
Speaker 1: and then there's a longer term impact, and that has
Speaker 1: to do with the semiconductor chip industry. The Biden administration
Speaker 1: is already threatened that if Putting invades Ukraine, he would
Speaker 1: put a chip blockade on Russia. And the impact of
Speaker 1: that could be a lot of uncertainty in the semiconductor sector,
Speaker 1: which is already suffering from massive supply chain bottlenecks and shortages.
Speaker 1: And what this is gonna do is it's going to
Speaker 1: create additional chaos in semiconductors, which is not good for
Speaker 1: certainly not good for Russia, it's not good for the
Speaker 1: rest of the are not good for the United States.
Speaker 1: Last year, the US last one percent of his GDP
Speaker 1: because of chip shortages, and this is going to make
Speaker 1: things worse. And the other issue regarding chips is that
Speaker 1: Ukraine is the largest supplier of a critical gas called
Speaker 1: neon that is used for semiconducted lithography and that's going
Speaker 1: to get cut off. Russia spotifive pent supplier of palladium,
Speaker 1: another very important ingredients in semiconductors. So we're looking at
Speaker 1: a pretty significant crisis is if this war goes on
Speaker 1: for a long time. And then the Toyle issue that
Speaker 1: I worried about it is cyber attacks because when putting
Speaker 1: back against the wall, the one thing that he is
Speaker 1: really probably the world leader in is in cyber weapons.
Speaker 1: And you can see the semi the cyber security firms
Speaker 1: UH stock prices of all valid which is a signal
Speaker 1: that everybody needs to prepare for cyber attacks across the board.
Speaker 1: So do you believe that US companies, global companies, international
Speaker 1: companies have and have they been prepared for this? Do
Speaker 1: you think? Or is this just so much out of
Speaker 1: left field? Yeah? This is you know, of course this
Speaker 1: has been building up for a while and companies have
Speaker 1: been preparing. But the problem is that there isn't that
Speaker 1: much wiggle room. I mean, everybody's still trying to recover
Speaker 1: from all the dislocations that were caused by COVID. So
Speaker 1: we just think about the displace meant of the I
Speaker 1: T work. I mean, where is this work going to go?
Speaker 1: We are facing a massive I T talent shortage globally,
Speaker 1: and so you wonder, you know, if the Ukrainian chech
Speaker 1: whizzes are out of commission, where is this these jobs
Speaker 1: going to be taken. In other parts of Eastern Europe
Speaker 1: are pretty saturated, places like India are are are full,
Speaker 1: you know, remote workers in different parts of the world.
Speaker 1: They already operate in circumstances that are not particularly conducive
Speaker 1: to doing a lot of high end I T work.
Speaker 1: So I worried that there isn't a lot of slack
Speaker 1: in the system and companies haven't really built contingency plans
Speaker 1: across the bold. Is there a sense that you know,
Speaker 1: I think Wall Street might be telling you today, Is
Speaker 1: it like the financial markets came back so dramatically here
Speaker 1: in the afternoon that perhaps this will be a short
Speaker 1: lived issue in terms of disruption. Um, how long does
Speaker 1: this have to go on before you get really concerned
Speaker 1: about some of these some of these issues supply chain issues. Yeah.
Speaker 1: So you know, if there is a war, UH and
Speaker 1: and as we all know, wars can UH can take
Speaker 1: different forms. I mean, right now we're seeing you know,
Speaker 1: some of the initial cities where you know, Russian armaments
Speaker 1: are moved in their primarily uh, you know, setting off
Speaker 1: explosions in the UH in the fringes of the cities
Speaker 1: and not in the commercial centers because Russia doesn't necessarily
Speaker 1: want to take those up. So it's possible that you
Speaker 1: could still continue to get work done as long as
Speaker 1: people can get to work, or you know, things settle
Speaker 1: down and there's just a siege as opposed to an
Speaker 1: all out war. So it all depends on the extent
Speaker 1: to which this gets violent, the extent to which power
Speaker 1: goes out, the extent to which lives get lost and
Speaker 1: people have to start fleeing. So this is and, as
Speaker 1: we all know, an explosive situation. You know, it's interesting
Speaker 1: and I think about here we are coming off the pandemic,
Speaker 1: and here's something that I don't think it was on
Speaker 1: everybody's worry list heading into UM dean that I do
Speaker 1: wonder UM this move to make sure that you've got
Speaker 1: domestic production of masks or semiconductors or you name it
Speaker 1: has to some extent. Do we need to kind of
Speaker 1: roll back globalization? Can we? Or we have no other
Speaker 1: choice that we kind of need to because of what
Speaker 1: we've seen over the last couple of years and then
Speaker 1: again what happened this week. Yeah, you know, of course
Speaker 1: this is going to cause everybody to start thinking about
Speaker 1: how do we reduce our exposure to some of these
Speaker 1: more volatile parts of the world. Unfortunately, the semiconductor industry
Speaker 1: we just use as an example. Uh, you know, American industry,
Speaker 1: it's manufacturing of semiconductors has gone down significantly in the
Speaker 1: last couple of decades, just down to about now. Much
Speaker 1: of America's contribution is in chip design and R and
Speaker 1: D and so, and you know, we are this talk
Speaker 1: about investing in American manufacturing. But as far as the
Speaker 1: Ukraine Russia situation is concerned, the primary contribution of Ukraine
Speaker 1: Russia is in critical gases that go into a semiconductors photography.
Speaker 1: I feel like we're not going to go to produce
Speaker 1: those gases at home. I mean, that's that's a natural resource.
Speaker 1: That's a good point, right, those are natural resources, and
Speaker 1: we may not have a choice. Um buckhar thank you
Speaker 1: so much, really appreciated, bukshar Chuk Vorty. He is the
Speaker 1: Dean of Global Business at the Fletcher School at Tufts University.
Speaker 1: On the phone from Boston. So when you wake up tomorrow,
Speaker 1: what are you be looking for? Let me push my
Speaker 1: blue button. I'm gonna be looking at oil. How less
Speaker 1: oil is gonna be trading. Yeah, and I'm gonna be
Speaker 1: watching the futures market coming off of China and into
Speaker 1: the early hours pulse. We need a pleasure to have
Speaker 1: you here. Thanks for having this fun all right, everybody,
Speaker 1: have a good and safe evening.