1 00:00:02,360 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,840 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:35,840 Speaker 2: Terminal and the Bloomberg Business app. 10 00:00:36,320 --> 00:00:39,840 Speaker 1: Joining us now is Terry Haynes of Pangaea Policy. Terry, 11 00:00:39,920 --> 00:00:41,680 Speaker 1: Dave and I were talking about this at the top 12 00:00:41,720 --> 00:00:44,760 Speaker 1: of the hour, Mark Carney of Canada saying that this 13 00:00:44,840 --> 00:00:47,400 Speaker 1: is not a transition, this is a rupture. To what 14 00:00:47,479 --> 00:00:49,880 Speaker 1: degree did you see the events of the past five 15 00:00:49,960 --> 00:00:51,080 Speaker 1: days a rupture? 16 00:00:52,440 --> 00:00:58,880 Speaker 3: I saw it mostly as political noise. Frankly, Danny, You've 17 00:00:58,880 --> 00:01:01,520 Speaker 3: got a situation here where, you know, sort of Trump's 18 00:01:02,040 --> 00:01:07,960 Speaker 3: Trump's dismissal and abuse serves Trump's political purposes. Carney's responses 19 00:01:08,280 --> 00:01:11,839 Speaker 3: serve Carney's political purposes as well. As Tyler points out, 20 00:01:12,600 --> 00:01:17,240 Speaker 3: this was integral to exactly why Carney is Canada's Prime 21 00:01:17,240 --> 00:01:21,000 Speaker 3: minister right now. But you know those you know, the 22 00:01:21,319 --> 00:01:24,600 Speaker 3: most important speech out of Davos for me this week 23 00:01:24,959 --> 00:01:29,040 Speaker 3: was Zelenski's in no small part because what Zelensky did 24 00:01:29,200 --> 00:01:32,520 Speaker 3: was validated the United States view of the world of Trump, 25 00:01:32,520 --> 00:01:35,920 Speaker 3: and I think by extension, Candida to some extent isn't 26 00:01:36,000 --> 00:01:38,759 Speaker 3: living up to its commitments and had better start. 27 00:01:39,600 --> 00:01:42,280 Speaker 4: Interesting criticism from Zelenski there about how Europe is focused 28 00:01:42,280 --> 00:01:44,399 Speaker 4: on the future, not on the present. Let me go 29 00:01:44,440 --> 00:01:46,160 Speaker 4: back to Mark Carney if I could, because yes, that 30 00:01:46,240 --> 00:01:49,280 Speaker 4: speech at Davos was the capstone to a big trip 31 00:01:49,280 --> 00:01:50,640 Speaker 4: that he took. He was in China in the Middle 32 00:01:50,680 --> 00:01:52,040 Speaker 4: East before that, and that's kind of where I want 33 00:01:52,080 --> 00:01:53,960 Speaker 4: to go with you, Terry's we kind of play this out. 34 00:01:54,000 --> 00:01:55,960 Speaker 4: He seems very proud about the fact that Canada is 35 00:01:56,000 --> 00:01:58,680 Speaker 4: a middle country and is calling on middle countries to 36 00:01:58,760 --> 00:02:02,400 Speaker 4: kind of get together. And I wonder, okay, I'll give 37 00:02:02,400 --> 00:02:03,720 Speaker 4: you what you say there that maybe this was some 38 00:02:03,720 --> 00:02:05,960 Speaker 4: political noise. How about the substance of the trade deals 39 00:02:06,000 --> 00:02:07,440 Speaker 4: that he broke it and announced on the course of 40 00:02:07,440 --> 00:02:09,280 Speaker 4: that trip leading up to Davos. What does that tell 41 00:02:09,320 --> 00:02:11,760 Speaker 4: you about the way that he and other world leaders 42 00:02:11,760 --> 00:02:14,920 Speaker 4: are pursuing alliances, in light of what we've heard from 43 00:02:14,960 --> 00:02:16,840 Speaker 4: from President Trump, in light of the behavior from President 44 00:02:16,840 --> 00:02:18,200 Speaker 4: Trump over the course of this week. 45 00:02:18,600 --> 00:02:23,360 Speaker 3: Speaking David, it's vastly overblown to assume that because there's 46 00:02:23,360 --> 00:02:26,720 Speaker 3: some elbowing under the basket or elbowing in front of 47 00:02:26,760 --> 00:02:31,000 Speaker 3: the goal in Canada's case, between the United States and 48 00:02:31,040 --> 00:02:35,320 Speaker 3: a variety of European leaders, that the Western Alliance is 49 00:02:35,320 --> 00:02:39,880 Speaker 3: going to rupture. It's not as if China is kind 50 00:02:39,880 --> 00:02:43,880 Speaker 3: of just another country out there that you know, will 51 00:02:44,040 --> 00:02:47,520 Speaker 3: be interested in having Canada pursue its course just as 52 00:02:47,560 --> 00:02:52,600 Speaker 3: the United States economic and every geopolitically and in every 53 00:02:52,600 --> 00:02:55,720 Speaker 3: other way. Just as the United States does. The Chinese 54 00:02:55,760 --> 00:02:59,480 Speaker 3: playbook is very different. And you know, Carney, I think, 55 00:02:59,520 --> 00:03:02,079 Speaker 3: wants to say himself up as Vaklov Hovel for his 56 00:03:03,200 --> 00:03:06,520 Speaker 3: domestic audience and maybe part of a world audience. But 57 00:03:06,639 --> 00:03:09,480 Speaker 3: what he's flirting with is turning into Fidel Castro, where 58 00:03:09,520 --> 00:03:15,359 Speaker 3: he's picking superpowers, and that will create a larger problem 59 00:03:15,480 --> 00:03:19,639 Speaker 3: for Carney specifically on the world stage. You know, as 60 00:03:19,680 --> 00:03:22,639 Speaker 3: of Europe. Europe is having a hard time getting out 61 00:03:22,639 --> 00:03:26,600 Speaker 3: of its own way as Zelenski famously said, and one 62 00:03:26,639 --> 00:03:29,640 Speaker 3: thing that's happening with Europe is you know they've they 63 00:03:29,639 --> 00:03:33,040 Speaker 3: spent twenty five years, twenty five years negotiating a South 64 00:03:33,080 --> 00:03:36,520 Speaker 3: American trade agreement called Mircosore, and as soon as it's 65 00:03:36,560 --> 00:03:39,120 Speaker 3: done being negotiated, they slough it off to the European 66 00:03:39,120 --> 00:03:42,360 Speaker 3: Court of Justice to try to try to pick it apart. 67 00:03:42,440 --> 00:03:46,960 Speaker 3: Yet again, these are not people that are serious about 68 00:03:46,960 --> 00:03:50,720 Speaker 3: picking themselves up off and round, and that's unfortunate. 69 00:03:50,440 --> 00:03:53,760 Speaker 4: On the issue of serious men. I want to get 70 00:03:53,800 --> 00:03:56,080 Speaker 4: your perspective on what we've been through here visa VI 71 00:03:56,200 --> 00:03:58,880 Speaker 4: Greenland terry. So we had the president causing this storm, 72 00:03:58,920 --> 00:04:02,000 Speaker 4: causing this story at coming to some sort of framework 73 00:04:02,040 --> 00:04:05,840 Speaker 4: agreement with the NATO Secretary General. Those conversations will continue. 74 00:04:06,440 --> 00:04:08,280 Speaker 4: Why did he put us through this? We know about 75 00:04:08,280 --> 00:04:11,600 Speaker 4: the agreement that's in place with Greenland. How much better 76 00:04:11,760 --> 00:04:13,400 Speaker 4: or how far have we advanced this story here? As 77 00:04:13,400 --> 00:04:14,880 Speaker 4: a result of all of this happened when it comes 78 00:04:14,920 --> 00:04:19,400 Speaker 4: to the US staking some claim to or advancing some 79 00:04:19,520 --> 00:04:22,680 Speaker 4: projects in Greenland and using it to secure more more 80 00:04:22,720 --> 00:04:23,640 Speaker 4: security in the Arctic. 81 00:04:24,560 --> 00:04:26,760 Speaker 3: Well, a couple of things. One, I think markets are 82 00:04:26,800 --> 00:04:30,839 Speaker 3: not so concerned about the how. They're much more concerned 83 00:04:30,880 --> 00:04:34,480 Speaker 3: about the what and the why. You know, they've been through, 84 00:04:34,960 --> 00:04:39,200 Speaker 3: They've been through ten years of Trump and Trump's methods, 85 00:04:39,800 --> 00:04:48,360 Speaker 3: So that's I think that gets overblown elsewhere, and I 86 00:04:48,400 --> 00:04:51,240 Speaker 3: think it's important, by the way, but it gets overblown 87 00:04:51,279 --> 00:04:53,200 Speaker 3: compared to what markets care about, which is you know, 88 00:04:53,279 --> 00:04:56,800 Speaker 3: where are we going next? Number one? Number two. You 89 00:04:56,839 --> 00:05:00,960 Speaker 3: have two choices on why the United States harazon fire 90 00:05:01,040 --> 00:05:04,480 Speaker 3: about Greenland. The one is that Trump's a fool, an 91 00:05:04,480 --> 00:05:08,520 Speaker 3: idiot and all the rest. I think that's largely self comforting. 92 00:05:08,800 --> 00:05:11,240 Speaker 3: The other is that we've had, at least for the 93 00:05:11,279 --> 00:05:15,360 Speaker 3: past four years, the highest geopolitical risk in fifty years, 94 00:05:15,680 --> 00:05:17,920 Speaker 3: and the United States is scrambling on a lot of 95 00:05:17,920 --> 00:05:26,400 Speaker 3: different fronts economically, defense, industrial base, taking stakes in companies 96 00:05:26,440 --> 00:05:29,440 Speaker 3: that are interested they're rare earths and minerals, and all 97 00:05:29,480 --> 00:05:33,960 Speaker 3: the rest, kind of realigning its economy to deal with 98 00:05:34,000 --> 00:05:37,800 Speaker 3: the competition from China, and markets are just now catching 99 00:05:37,839 --> 00:05:40,880 Speaker 3: up to that. They seem to be generally surprised by it, 100 00:05:41,440 --> 00:05:44,440 Speaker 3: but they shouldn't be, and a lot of that's the 101 00:05:44,440 --> 00:05:45,880 Speaker 3: way it's going to be going forward. 102 00:05:46,560 --> 00:05:46,880 Speaker 5: Terry. 103 00:05:47,200 --> 00:05:49,760 Speaker 1: I just wonder that in your mind, does this week 104 00:05:49,839 --> 00:05:53,919 Speaker 1: solidify that Trump will back off the most hawkish, the 105 00:05:53,960 --> 00:05:56,720 Speaker 1: most extreme, the most concerning of his policies. 106 00:05:58,279 --> 00:06:00,080 Speaker 3: I'm not sure what you mean by that. 107 00:06:00,279 --> 00:06:02,479 Speaker 1: Here in this case. I mean, I mean using force 108 00:06:02,560 --> 00:06:05,680 Speaker 1: in Greenland. Is this market when it sells off and 109 00:06:05,720 --> 00:06:08,479 Speaker 1: then people by the dip, assuming a taco trade or whatever, 110 00:06:08,880 --> 00:06:10,279 Speaker 1: is that play still at hand? 111 00:06:11,440 --> 00:06:14,719 Speaker 3: I think I think anybody that's in this and thinks 112 00:06:14,800 --> 00:06:19,080 Speaker 3: that what's been happening is taco or backing office has 113 00:06:19,160 --> 00:06:23,120 Speaker 3: kind of lost the plot. Frankly, the United States interest 114 00:06:23,520 --> 00:06:26,680 Speaker 3: has been consistent throughout and it's not different than the 115 00:06:26,680 --> 00:06:32,880 Speaker 3: interest in Venezuela. Frankly, there were two priorities in Greenland. First, 116 00:06:32,960 --> 00:06:36,200 Speaker 3: to improve the United States and Western national security in 117 00:06:36,240 --> 00:06:39,760 Speaker 3: what's now being called the Far North. Secondly, was to 118 00:06:39,800 --> 00:06:43,880 Speaker 3: gain greater access to minerals and rare earths. That's the 119 00:06:43,920 --> 00:06:48,520 Speaker 3: through line, and that's been the Trump administration's interest, and 120 00:06:48,600 --> 00:06:53,080 Speaker 3: that's how they're going forward. As to Trump's methods, I 121 00:06:53,279 --> 00:06:57,839 Speaker 3: don't defend them. At the same time, I'll look back 122 00:06:57,839 --> 00:06:58,360 Speaker 3: at Europe. 123 00:06:58,360 --> 00:06:58,800 Speaker 6: I think for. 124 00:07:00,480 --> 00:07:05,120 Speaker 3: Justification it has taken ten years, nine years really, but 125 00:07:05,800 --> 00:07:10,360 Speaker 3: ten years of the United States jab owning saying, look, 126 00:07:10,720 --> 00:07:13,880 Speaker 3: you need to meet your NATO commitments, your defense commitments. 127 00:07:14,080 --> 00:07:18,520 Speaker 3: Get yourselves together. Still hasn't happened. What ends up happening 128 00:07:18,600 --> 00:07:20,760 Speaker 3: at the end of this is that you know they 129 00:07:20,800 --> 00:07:25,400 Speaker 3: want to they Europe want to say Slava Ukraine and say, well, 130 00:07:25,440 --> 00:07:27,920 Speaker 3: you know, we're with Ukraine till the end, and Ukraine's 131 00:07:27,960 --> 00:07:30,160 Speaker 3: own leader says, you could be doing twice as much 132 00:07:30,160 --> 00:07:33,440 Speaker 3: as you're doing right now. You're not doing it. You 133 00:07:33,440 --> 00:07:36,440 Speaker 3: know you're putting us in peril. You know you'd better 134 00:07:36,480 --> 00:07:40,240 Speaker 3: get your acts together. That's why I say Zelenski's speech 135 00:07:40,360 --> 00:07:42,520 Speaker 3: was the most important of the week because it validates 136 00:07:42,560 --> 00:07:45,040 Speaker 3: the United States frustration with Europe. 137 00:07:45,480 --> 00:07:48,920 Speaker 2: Stay with US. Mulplinberg surveillance coming up after this. 138 00:07:58,360 --> 00:08:02,160 Speaker 1: Intel shares plunge after the chip maker's revenue and earnings 139 00:08:02,240 --> 00:08:06,720 Speaker 1: came in well below expectations. Intel also gave a disappointing forecast, 140 00:08:06,800 --> 00:08:10,760 Speaker 1: with CEO the Bhutan warning of ongoing struggles with manufacturing. 141 00:08:11,160 --> 00:08:14,200 Speaker 5: What do we main focus on the long term objective 142 00:08:14,680 --> 00:08:19,240 Speaker 5: of building a work class wafer and advance packaging foundry. 143 00:08:19,360 --> 00:08:24,320 Speaker 5: Building a foundry business will take time and considerable effort 144 00:08:24,480 --> 00:08:25,400 Speaker 5: and resources. 145 00:08:25,680 --> 00:08:28,880 Speaker 1: Frankly of HSBC upgrading the stock earlier this week to 146 00:08:28,960 --> 00:08:31,800 Speaker 1: hold from reduced, but writing we have been cautious on 147 00:08:31,840 --> 00:08:35,199 Speaker 1: Intel's foundry business, driven by execution issues and lack of 148 00:08:35,280 --> 00:08:39,320 Speaker 1: visibility on its external customer pipeline. Frank joins us now 149 00:08:39,360 --> 00:08:41,760 Speaker 1: and Frank, you and I were just talking about this yesterday, 150 00:08:41,760 --> 00:08:45,079 Speaker 1: the fact you wanted to see more of that visibility. 151 00:08:45,120 --> 00:08:47,559 Speaker 1: Were you too much like this market let down by 152 00:08:47,559 --> 00:08:49,559 Speaker 1: the results we got from Intel yesterday? 153 00:08:50,679 --> 00:08:50,920 Speaker 5: Yeah. 154 00:08:51,080 --> 00:08:53,720 Speaker 7: I think the key thing was we were bullish about 155 00:08:53,800 --> 00:08:57,080 Speaker 7: server overall demand, a CPU demand, and I think they 156 00:08:57,160 --> 00:09:00,160 Speaker 7: reiterated that message. But I think what was disappointing was 157 00:09:00,240 --> 00:09:02,920 Speaker 7: the guidance was disappointing given the fact that demand is 158 00:09:02,920 --> 00:09:05,960 Speaker 7: still good, especially in data centers, expected to be down 159 00:09:06,000 --> 00:09:09,520 Speaker 7: sequentially quarter and quarter. So I think that speaks to 160 00:09:09,520 --> 00:09:11,559 Speaker 7: the fact that they are still having some of their 161 00:09:11,559 --> 00:09:15,400 Speaker 7: own production issue execution induce They've also maybe hampered by 162 00:09:15,480 --> 00:09:19,320 Speaker 7: ongoing component issues such as memory prices have continued to 163 00:09:19,320 --> 00:09:21,640 Speaker 7: go up and continues to remain quite tight. So I 164 00:09:21,640 --> 00:09:23,760 Speaker 7: think if you look at it, the overall results was 165 00:09:23,760 --> 00:09:26,240 Speaker 7: this pointing on the guide. The positive part is that 166 00:09:26,320 --> 00:09:28,400 Speaker 7: demand is good, but they have me able to deliver 167 00:09:28,520 --> 00:09:30,199 Speaker 7: so far on the execution and say. 168 00:09:30,080 --> 00:09:32,680 Speaker 1: Usually it's a good problem to have when demand is 169 00:09:32,760 --> 00:09:35,800 Speaker 1: so strong that you can't meet it. Frank, how much 170 00:09:35,840 --> 00:09:39,760 Speaker 1: of it is about that piece versus execution problems. 171 00:09:40,600 --> 00:09:40,800 Speaker 5: Yeah. 172 00:09:40,840 --> 00:09:43,640 Speaker 7: I think the other thing that also perhaps the market 173 00:09:43,679 --> 00:09:46,080 Speaker 7: got a bit over excited was the foundry piece. This 174 00:09:46,120 --> 00:09:48,720 Speaker 7: is an area where we've generally been more cautious. I 175 00:09:48,760 --> 00:09:50,920 Speaker 7: know there's been a lot of speculation the last couple 176 00:09:50,960 --> 00:09:53,840 Speaker 7: of months about more companies want to sign with Intel 177 00:09:53,840 --> 00:09:56,760 Speaker 7: and want it deals with them, and we've acknowledged that 178 00:09:56,760 --> 00:10:01,240 Speaker 7: there's engagement, but engagement and actual orders and actual revenues 179 00:10:01,360 --> 00:10:03,800 Speaker 7: are two different things, and I think this time around 180 00:10:04,440 --> 00:10:07,600 Speaker 7: they con express that they're not looking to invest in 181 00:10:07,640 --> 00:10:10,400 Speaker 7: the Intel fourteen A until they have something more solid. 182 00:10:10,559 --> 00:10:12,480 Speaker 7: So I think that is one of the other issues 183 00:10:12,559 --> 00:10:15,200 Speaker 7: the stock is. Some of it could also be expectation 184 00:10:15,320 --> 00:10:17,600 Speaker 7: behind a foundry business got a little ahead of itself. 185 00:10:17,720 --> 00:10:20,600 Speaker 4: Frank, This is an existential question, but I'm curious Fintel 186 00:10:20,679 --> 00:10:22,760 Speaker 4: knows what it wants to be going forward, so it 187 00:10:22,760 --> 00:10:25,800 Speaker 4: still has pretty relatively new leadership here. I think a 188 00:10:25,880 --> 00:10:29,520 Speaker 4: Royland question has been should have produce chips and design chips? 189 00:10:29,520 --> 00:10:31,199 Speaker 4: Can do both of these things. If it's same as 190 00:10:31,200 --> 00:10:34,520 Speaker 4: to compete with its rivals, how do you see this 191 00:10:34,559 --> 00:10:36,720 Speaker 4: company's effort to kind of go through again that existential 192 00:10:36,800 --> 00:10:39,400 Speaker 4: question of what Intel is in the year twenty twenty six. 193 00:10:40,640 --> 00:10:42,800 Speaker 7: Yeah, I think the part of the issues the story 194 00:10:42,800 --> 00:10:46,640 Speaker 7: has gotten complicated because they have this boundary business, which 195 00:10:46,679 --> 00:10:49,280 Speaker 7: has been very questionable in terms of whether that's the 196 00:10:49,320 --> 00:10:51,520 Speaker 7: right business to do. But there's also I think a 197 00:10:51,559 --> 00:10:54,200 Speaker 7: lot of pressure from a geopolitical point of view to 198 00:10:54,280 --> 00:10:58,280 Speaker 7: have a domestic boundary player in the US. So I 199 00:10:58,320 --> 00:11:00,520 Speaker 7: think that's the difficulty, is that if it's just about 200 00:11:00,520 --> 00:11:03,280 Speaker 7: the core business, the CPU business itself is a much 201 00:11:03,320 --> 00:11:05,400 Speaker 7: simpler story because that means, like you know, they are 202 00:11:05,440 --> 00:11:09,079 Speaker 7: benefiting from strong demand. We're talking about server demand also 203 00:11:09,160 --> 00:11:12,320 Speaker 7: being now more and more linked with AI and with 204 00:11:12,440 --> 00:11:15,760 Speaker 7: Dentek AI. But because of the complexities of having this 205 00:11:15,800 --> 00:11:18,200 Speaker 7: burden up doing founderies, I mean that continues to be 206 00:11:18,200 --> 00:11:19,240 Speaker 7: an ongoing drag for them. 207 00:11:19,400 --> 00:11:21,520 Speaker 4: Talk a bit more about that pressure, because there is 208 00:11:21,559 --> 00:11:23,880 Speaker 4: a lot of interest here, I say, from sixteen hundred 209 00:11:23,880 --> 00:11:26,920 Speaker 4: Pennsylvania Avenue other folks in Washington in making sure this 210 00:11:27,040 --> 00:11:30,800 Speaker 4: company can compete. Obviously taking a stake in the company 211 00:11:30,800 --> 00:11:32,960 Speaker 4: as well. How is that manifest in the earnings that 212 00:11:32,960 --> 00:11:34,880 Speaker 4: we got here, how's it manifest in the business today 213 00:11:34,880 --> 00:11:37,640 Speaker 4: sort of? How are you seeing that kind of show 214 00:11:37,760 --> 00:11:39,600 Speaker 4: up in the way the business is being run right now? 215 00:11:40,720 --> 00:11:42,720 Speaker 7: Yeah, it's just too early to tell. I mean, I 216 00:11:42,760 --> 00:11:44,800 Speaker 7: think you know that's that's one of the issues is 217 00:11:44,800 --> 00:11:47,000 Speaker 7: that you know, as you build out the foundry business, 218 00:11:47,120 --> 00:11:49,840 Speaker 7: it's a very long lead time. It takes several years. 219 00:11:50,520 --> 00:11:53,800 Speaker 7: This current generation of their No to eighteen A. We're 220 00:11:53,840 --> 00:11:56,560 Speaker 7: not seeing very much progress. For fourteen A, which is 221 00:11:56,559 --> 00:12:00,719 Speaker 7: probably the next real milestone. We're probably at least two 222 00:12:00,800 --> 00:12:04,160 Speaker 7: years away from seeing any book contribution, so it's still 223 00:12:04,200 --> 00:12:06,080 Speaker 7: going to be quite a bit of a long road. 224 00:12:06,600 --> 00:12:09,280 Speaker 7: I think one positive light is that they did highlight 225 00:12:09,480 --> 00:12:12,600 Speaker 7: the packaging. Now, part of the issue with AID in 226 00:12:12,600 --> 00:12:14,800 Speaker 7: the last two years been the packaging has been one 227 00:12:14,800 --> 00:12:17,200 Speaker 7: of the greatest areas of tightness. So we may see 228 00:12:17,200 --> 00:12:20,640 Speaker 7: an earlier breakthrough there in terms of external customers, but 229 00:12:20,720 --> 00:12:23,040 Speaker 7: the revenue opportunity for packaging is still going to be 230 00:12:23,080 --> 00:12:25,040 Speaker 7: much smaller than what they would get on the front 231 00:12:25,080 --> 00:12:25,680 Speaker 7: end foundry. 232 00:12:25,960 --> 00:12:29,280 Speaker 1: Hey, Frank, only a few moments ago our reporters on 233 00:12:29,320 --> 00:12:33,040 Speaker 1: the tech team at Bloomberg signaling that China has told 234 00:12:33,120 --> 00:12:35,880 Speaker 1: Ali Baba, they've told ten Cent and byte Dance that 235 00:12:35,920 --> 00:12:38,720 Speaker 1: they can start to prep orders for each two hundreds 236 00:12:38,800 --> 00:12:41,000 Speaker 1: from in Nvidia. There's been a lot of back and 237 00:12:41,040 --> 00:12:43,640 Speaker 1: forth reporting on this, whether China would allow or not 238 00:12:43,720 --> 00:12:46,680 Speaker 1: allow it. How much faith do you take in China 239 00:12:46,880 --> 00:12:49,160 Speaker 1: making this move, and how much does it change for 240 00:12:49,200 --> 00:12:50,960 Speaker 1: you your view on in Vidia sales. 241 00:12:52,600 --> 00:12:54,839 Speaker 7: Yeah, that's a good question. We've generally taken to view 242 00:12:54,880 --> 00:12:58,319 Speaker 7: that it's too difficult to take a stance on the 243 00:12:58,440 --> 00:13:02,000 Speaker 7: China situation because of the certainties around the geopolitic side, 244 00:13:02,000 --> 00:13:05,000 Speaker 7: around the trade side. So we have generally not included 245 00:13:05,240 --> 00:13:08,040 Speaker 7: the upside in China into our revenue numbers, and we've 246 00:13:08,040 --> 00:13:10,240 Speaker 7: been saying that, you know, in Vidio, well, China is 247 00:13:10,360 --> 00:13:14,080 Speaker 7: nice to have, it doesn't contribute as much to the 248 00:13:14,120 --> 00:13:16,319 Speaker 7: overall growth as people think. I think in Video will 249 00:13:16,320 --> 00:13:19,440 Speaker 7: have a very strong year with or without China, But 250 00:13:19,520 --> 00:13:21,640 Speaker 7: I know, obviously the China part of the business does 251 00:13:21,720 --> 00:13:25,720 Speaker 7: tend to have a more big impact in a near sentiment, 252 00:13:25,880 --> 00:13:27,280 Speaker 7: But as far as our numbers, and I think for 253 00:13:27,440 --> 00:13:29,320 Speaker 7: most of the street, we think they can get to 254 00:13:29,360 --> 00:13:31,640 Speaker 7: three hundred and fifty billion in data center revenue here 255 00:13:31,920 --> 00:13:33,920 Speaker 7: with really without even considering the China part. 256 00:13:34,679 --> 00:13:36,720 Speaker 4: Frick, how is Nvidia kind of looking at this? We 257 00:13:36,760 --> 00:13:38,640 Speaker 4: know that they haven't been in talks with the Chinese 258 00:13:38,679 --> 00:13:41,520 Speaker 4: directly here. They're kind of sitting idly bias all of 259 00:13:41,520 --> 00:13:43,440 Speaker 4: this unfold. Its obviously make a huge difference to the 260 00:13:43,440 --> 00:13:45,720 Speaker 4: business if this were allowed to happen here, But as 261 00:13:45,760 --> 00:13:47,400 Speaker 4: Danley pointed out the top of the show, you look 262 00:13:47,400 --> 00:13:50,720 Speaker 4: at the last earnings from Nvidia, they're not taking anything 263 00:13:50,720 --> 00:13:53,280 Speaker 4: for granted here when it comes to China. Give us 264 00:13:53,320 --> 00:13:55,440 Speaker 4: a sense of the psychology within video when it comes 265 00:13:55,520 --> 00:13:57,199 Speaker 4: to to China, how they're thinking about this in the 266 00:13:57,240 --> 00:13:59,000 Speaker 4: prospects of it affecting their business. 267 00:14:00,600 --> 00:14:02,840 Speaker 7: I think I think they definitely would like to see 268 00:14:02,880 --> 00:14:05,800 Speaker 7: that opportunity. I think it's a big tam opportunity part 269 00:14:05,840 --> 00:14:08,880 Speaker 7: of but I think there's also realistic that it is 270 00:14:08,920 --> 00:14:12,440 Speaker 7: not entirely in their hands. You know that in terms 271 00:14:12,480 --> 00:14:15,000 Speaker 7: of being able to tap that market. I also think 272 00:14:15,000 --> 00:14:18,560 Speaker 7: that there's also a recognition that the Chinese is going 273 00:14:18,640 --> 00:14:22,320 Speaker 7: to look to develop their own in house chip making 274 00:14:22,360 --> 00:14:25,240 Speaker 7: abilities over time, like they have with other areas, So 275 00:14:25,360 --> 00:14:27,280 Speaker 7: there is always going to be on the backdrop that 276 00:14:27,480 --> 00:14:29,280 Speaker 7: you know, while we're able to get into China, at 277 00:14:29,280 --> 00:14:31,800 Speaker 7: the same time, the Chinese are going to look increasing 278 00:14:31,840 --> 00:14:34,480 Speaker 7: our self sufficiency over time, So that is I think 279 00:14:34,600 --> 00:14:36,120 Speaker 7: is always going to be there. You know, even if 280 00:14:36,160 --> 00:14:38,480 Speaker 7: they can start selling to China, that doesn't take away 281 00:14:38,520 --> 00:14:39,560 Speaker 7: that longer term overhang. 282 00:14:40,320 --> 00:14:42,200 Speaker 1: That's kind of where I wanted to leave this on 283 00:14:42,440 --> 00:14:45,400 Speaker 1: this idea that this not just being a move of 284 00:14:45,440 --> 00:14:49,760 Speaker 1: easing geopolitics, but rather a China tech sector that needs 285 00:14:49,760 --> 00:14:52,840 Speaker 1: in video. How far does it seem to realizing that 286 00:14:52,920 --> 00:14:56,000 Speaker 1: goal of China to having a home grown chip maker 287 00:14:56,480 --> 00:14:57,640 Speaker 1: that can displace in VideA. 288 00:14:59,400 --> 00:15:01,600 Speaker 7: It's not going to be be quick and I know 289 00:15:01,640 --> 00:15:03,840 Speaker 7: it's not going to be a different but what China. 290 00:15:04,160 --> 00:15:06,400 Speaker 7: I think that a lot of the AI language models, 291 00:15:06,440 --> 00:15:08,800 Speaker 7: what they're proving to do is they've been looking at 292 00:15:08,800 --> 00:15:11,200 Speaker 7: being more efficient and not being able to rely on 293 00:15:11,240 --> 00:15:14,840 Speaker 7: the highest end chips to be more efficient. So that's 294 00:15:14,880 --> 00:15:16,600 Speaker 7: going to be something we need to continue to watch. 295 00:15:16,680 --> 00:15:19,560 Speaker 7: I mean, that was basically a deepseek moment last year, 296 00:15:19,960 --> 00:15:21,880 Speaker 7: was that they were able to make them breakthroughs. So 297 00:15:22,240 --> 00:15:24,720 Speaker 7: I think this is something that we can't that we'll 298 00:15:24,760 --> 00:15:27,040 Speaker 7: have to watch and I think you know, while you 299 00:15:27,040 --> 00:15:29,960 Speaker 7: know it is an important it is a big headline 300 00:15:30,160 --> 00:15:32,600 Speaker 7: our thesis, and I think most of the analysts their 301 00:15:32,640 --> 00:15:36,960 Speaker 7: thesis around Nvidia is still largely just the ongoing AI 302 00:15:37,080 --> 00:15:40,160 Speaker 7: data spend globally, not just really on the China party. 303 00:15:40,800 --> 00:15:44,320 Speaker 2: Stay with US Mulblinberg surveillance. Coming up off to this. 304 00:15:53,680 --> 00:15:56,320 Speaker 1: Turning to trade, the EU is planning to ratify its 305 00:15:56,320 --> 00:15:59,600 Speaker 1: trade deal with the US after President Trump walked back 306 00:15:59,680 --> 00:16:03,600 Speaker 1: his threat to impose tariffs on European allies. Duncan Edwards, 307 00:16:03,640 --> 00:16:06,840 Speaker 1: the CEO of British American Business, writing quote, while a 308 00:16:06,920 --> 00:16:10,480 Speaker 1: positive outcome to end the week, the episode itself has 309 00:16:10,560 --> 00:16:13,880 Speaker 1: been concerning for business, and Duncan joins US now, Duncan, 310 00:16:13,880 --> 00:16:15,720 Speaker 1: thank you so much for being here. To be here, 311 00:16:16,080 --> 00:16:18,800 Speaker 1: you have a lot of companies that fall under your umbrella, 312 00:16:19,000 --> 00:16:21,880 Speaker 1: around five hundred, both here in the US and in 313 00:16:21,920 --> 00:16:25,000 Speaker 1: the UK. What has been the mood among the members 314 00:16:25,000 --> 00:16:27,320 Speaker 1: that you've spoken to after the events of this week. 315 00:16:27,720 --> 00:16:29,760 Speaker 6: Well, I think first of all, people are relieved, of 316 00:16:29,800 --> 00:16:34,040 Speaker 6: course that there's the additional tariffs that were at least 317 00:16:34,120 --> 00:16:36,480 Speaker 6: threatened by the President at the start of the week, 318 00:16:36,520 --> 00:16:40,280 Speaker 6: aren't going to happen. You know, Honestly, I think in hindsight, 319 00:16:40,360 --> 00:16:44,040 Speaker 6: we never really believe that those tariffs were going to happen. 320 00:16:44,360 --> 00:16:49,040 Speaker 6: I mean, the premise for them was so tenuous, nothing 321 00:16:49,080 --> 00:16:52,040 Speaker 6: to do with trade at all. So given that the 322 00:16:52,440 --> 00:16:57,200 Speaker 6: IPA tariffs are being challenged anyway through a case in 323 00:16:57,240 --> 00:17:01,400 Speaker 6: the Supreme Court, this always felt like a real stretch. So, 324 00:17:02,600 --> 00:17:04,600 Speaker 6: you know, when I was talking to media on Monday, 325 00:17:04,640 --> 00:17:06,760 Speaker 6: I said, I didn't think these were these were going 326 00:17:06,800 --> 00:17:09,399 Speaker 6: to be introduced, and that's you know, everyone's relieved that 327 00:17:09,440 --> 00:17:11,640 Speaker 6: they haven't. I mean, you have to take the threat seriously, 328 00:17:12,359 --> 00:17:14,720 Speaker 6: but in the end, it was it was unlikely. 329 00:17:14,920 --> 00:17:17,240 Speaker 4: How could are companies getting or how good are they 330 00:17:17,400 --> 00:17:20,520 Speaker 4: at dealing with these threats of additional tariff so, as 331 00:17:20,520 --> 00:17:22,359 Speaker 4: you point out, are kind of mercurial, maybe not grounded 332 00:17:22,480 --> 00:17:25,439 Speaker 4: national security risks. Believe That'supreme Court to decide what is 333 00:17:25,480 --> 00:17:27,960 Speaker 4: and what isn't. But we've now been through it, Yes, 334 00:17:28,000 --> 00:17:30,800 Speaker 4: the first term, now a year of the second, our 335 00:17:30,880 --> 00:17:34,040 Speaker 4: executive is navigating that particular kind of uncertainty. 336 00:17:34,359 --> 00:17:37,080 Speaker 6: Well, I think there's two parts to answers to that question. 337 00:17:37,160 --> 00:17:40,840 Speaker 6: The first is I think everyone is now pretty certain 338 00:17:40,880 --> 00:17:43,160 Speaker 6: that the tariffs some level of tariffs are going to stay. 339 00:17:43,520 --> 00:17:47,639 Speaker 6: So business models have been rebuilt to assume that the 340 00:17:47,680 --> 00:17:50,800 Speaker 6: cost of exporting to the US is now kind of 341 00:17:50,840 --> 00:17:53,640 Speaker 6: permanently or at least semi permanently higher than it used 342 00:17:53,680 --> 00:17:57,359 Speaker 6: to be. So business models have been rebuilt around that. 343 00:17:58,480 --> 00:18:02,080 Speaker 6: You know, the threats of increases on tars, there's not 344 00:18:02,160 --> 00:18:05,080 Speaker 6: really much you can do about that in the short term. 345 00:18:05,600 --> 00:18:08,800 Speaker 6: You know, people can try and time shipments and things 346 00:18:08,840 --> 00:18:10,639 Speaker 6: like that. That was never going to be possible in 347 00:18:10,640 --> 00:18:14,520 Speaker 6: this case. You know, ten days notice, you can't rearrange shipping. 348 00:18:14,880 --> 00:18:19,840 Speaker 6: And there has been i think a longer term reevaluation 349 00:18:19,920 --> 00:18:23,560 Speaker 6: of supply chains, So that part is absolutely real. So 350 00:18:23,680 --> 00:18:28,879 Speaker 6: there has been some moves to increase manufacturing inside the 351 00:18:29,000 --> 00:18:32,000 Speaker 6: US that is real. Maybe not as much as the 352 00:18:32,240 --> 00:18:36,199 Speaker 6: administration is claiming, but there's definitely some there. So there 353 00:18:36,240 --> 00:18:39,359 Speaker 6: has been some de risking of supply chains in order 354 00:18:39,400 --> 00:18:42,000 Speaker 6: to mitigate what is seen as a potentially longer term 355 00:18:42,400 --> 00:18:47,000 Speaker 6: trend to having more protectionist policies, both here and potentially 356 00:18:47,080 --> 00:18:49,560 Speaker 6: in other blocks like the EU as well. 357 00:18:50,320 --> 00:18:52,119 Speaker 4: Prime Minister Mark Corney i think gave a lot of 358 00:18:52,119 --> 00:18:54,679 Speaker 4: professors of political theory and opportunity to stroke their beers 359 00:18:54,680 --> 00:18:57,159 Speaker 4: maybe rates and books and dissertations about what he had 360 00:18:57,160 --> 00:19:00,640 Speaker 4: to say in terms of broader geopolitics the corporate level 361 00:19:00,680 --> 00:19:03,840 Speaker 4: in the private sector. How did what he said resonate, 362 00:19:03,880 --> 00:19:06,840 Speaker 4: particularly about the role that these middle economies middle countries 363 00:19:06,840 --> 00:19:09,720 Speaker 4: can play here, the way that trade relationships and multilateral 364 00:19:09,720 --> 00:19:12,600 Speaker 4: relationships are going to be kind of redefined or change 365 00:19:12,640 --> 00:19:14,159 Speaker 4: over the course of these next many years because of 366 00:19:14,200 --> 00:19:14,840 Speaker 4: what we've seen happen. 367 00:19:14,920 --> 00:19:17,639 Speaker 6: Yeah, honestly, I would be guessing to try and answer 368 00:19:17,640 --> 00:19:21,399 Speaker 6: that on behalf of the executives of corporation. So I 369 00:19:21,440 --> 00:19:25,720 Speaker 6: think there is a reevaluation going on amongst corporations about 370 00:19:25,760 --> 00:19:28,240 Speaker 6: how they deal with government. And you know, I think 371 00:19:28,280 --> 00:19:30,119 Speaker 6: most people are trying to keep their heads down, to 372 00:19:30,160 --> 00:19:34,600 Speaker 6: be honest. You know, most business leaders want to get 373 00:19:34,600 --> 00:19:38,719 Speaker 6: on with business. And I think, you know, you can 374 00:19:38,760 --> 00:19:42,240 Speaker 6: see the sort of activist approach of this president, which 375 00:19:42,280 --> 00:19:46,640 Speaker 6: is so unusual. You know, you mentioned the issue with 376 00:19:47,280 --> 00:19:50,359 Speaker 6: JP Morgan and Jamie Diamond recently. I mean, if you 377 00:19:50,480 --> 00:19:53,199 Speaker 6: can keeping your head down seems to be the right approach. 378 00:19:53,440 --> 00:19:55,000 Speaker 4: That's not to go to court if you don't have any. 379 00:19:55,040 --> 00:19:56,439 Speaker 1: Yah, I was going to say, as a member of 380 00:19:56,440 --> 00:19:59,760 Speaker 1: the media, I, you know, somewhat foolishly think that everybody 381 00:19:59,760 --> 00:20:01,359 Speaker 1: wants to come on with us and talk about their 382 00:20:01,400 --> 00:20:05,600 Speaker 1: business and be outspoken. The reticence that you're experiencing of 383 00:20:05,640 --> 00:20:07,480 Speaker 1: wanting to keep their head down. It was something that 384 00:20:07,560 --> 00:20:09,680 Speaker 1: Ken Griffin pushed back on this week and speaking with 385 00:20:09,760 --> 00:20:12,639 Speaker 1: our Eric Shatsker, saying that they should be more vocal 386 00:20:12,680 --> 00:20:16,480 Speaker 1: that they need the President's here. Are any businesses willing 387 00:20:16,560 --> 00:20:19,000 Speaker 1: to do that or is it literally across the board 388 00:20:19,119 --> 00:20:21,480 Speaker 1: everyone you're speaking to is like, I do not want 389 00:20:21,520 --> 00:20:22,160 Speaker 1: to get involved. 390 00:20:22,320 --> 00:20:27,199 Speaker 6: I think the contrast between you know, in previous years 391 00:20:27,240 --> 00:20:33,000 Speaker 6: when companies and CEOs have felt they need to contribute 392 00:20:33,040 --> 00:20:36,760 Speaker 6: to the debate about social issues or cultural issues completely gone. 393 00:20:36,880 --> 00:20:38,800 Speaker 1: Do you think that's a batter a good turn for BIL. 394 00:20:38,880 --> 00:20:42,320 Speaker 6: You know, my instinct is it's probably a good thing. 395 00:20:42,359 --> 00:20:44,720 Speaker 6: I think businesses should focus on business. I mean that's 396 00:20:44,800 --> 00:20:48,480 Speaker 6: my natural instinct as a kind of former executive, so, 397 00:20:49,680 --> 00:20:52,080 Speaker 6: you know, and trade associations like us we have a 398 00:20:52,160 --> 00:20:54,840 Speaker 6: role to play in that. So we our job is 399 00:20:54,880 --> 00:20:58,240 Speaker 6: to try and represent the views of business on some 400 00:20:58,359 --> 00:21:00,840 Speaker 6: of these issues. But for us to we're trying to 401 00:21:00,840 --> 00:21:03,199 Speaker 6: focus on kind of the business issues rather than the 402 00:21:03,200 --> 00:21:04,359 Speaker 6: social or cultural issues. 403 00:21:04,400 --> 00:21:06,000 Speaker 4: I guess up to speed on where things stand with 404 00:21:06,080 --> 00:21:07,960 Speaker 4: US UK trade. I think it's been about six or 405 00:21:08,000 --> 00:21:10,879 Speaker 4: seven months since I was in Kenanaskis watching Cure Stormy 406 00:21:10,920 --> 00:21:13,959 Speaker 4: there with Donald Trump as Donald Trump dropped that trade agreement. 407 00:21:14,000 --> 00:21:14,359 Speaker 6: I put it on. 408 00:21:14,359 --> 00:21:16,600 Speaker 4: Instagram at the Venny Hill themes they kind of picked 409 00:21:16,640 --> 00:21:18,560 Speaker 4: up the pieces and put it back together. Where do 410 00:21:18,640 --> 00:21:20,760 Speaker 4: things stand now and how would you kind of grade 411 00:21:20,760 --> 00:21:23,480 Speaker 4: the quality of that relationship? Cure Stormer wasn't front and center, 412 00:21:23,520 --> 00:21:25,639 Speaker 4: I don't think at Davos, but certainly what's critical of 413 00:21:25,640 --> 00:21:27,480 Speaker 4: what the present said with his adventurism when it comes to. 414 00:21:27,560 --> 00:21:32,359 Speaker 6: Ye didn't go to Davos this year? Yeah, I would 415 00:21:32,400 --> 00:21:35,199 Speaker 6: grade it like a sort of B stroke C. I 416 00:21:35,200 --> 00:21:39,719 Speaker 6: mean there were there was an agreement signed, the so 417 00:21:39,840 --> 00:21:45,000 Speaker 6: called Economic Prosperity Deal back in May, which set the tariffs, 418 00:21:45,080 --> 00:21:49,160 Speaker 6: the ten percent baseline tariffs. But in that agreement, which 419 00:21:49,240 --> 00:21:52,560 Speaker 6: was effectively an MoU aheads of terms rather than a 420 00:21:52,600 --> 00:21:56,600 Speaker 6: properly paper document, it set out a lot of future 421 00:21:56,920 --> 00:22:02,880 Speaker 6: negotiations that were intended to happen, and quite broad ranging 422 00:22:03,240 --> 00:22:07,080 Speaker 6: and potentially ambiguous statements in that document, and since then 423 00:22:07,400 --> 00:22:11,000 Speaker 6: both sides have been trying to turn that MoU into 424 00:22:11,800 --> 00:22:16,520 Speaker 6: a proper legal treaties and it's been very difficult because 425 00:22:16,720 --> 00:22:22,399 Speaker 6: the expectations around what that actually meant, what that implied 426 00:22:22,880 --> 00:22:25,840 Speaker 6: are quite different. So from the US side, I think 427 00:22:25,920 --> 00:22:28,359 Speaker 6: there was an expectation that there would be a wholesale 428 00:22:28,520 --> 00:22:35,399 Speaker 6: change of attitude towards some areas of UK policy around standards, 429 00:22:37,840 --> 00:22:45,800 Speaker 6: food and agricultural product, imports, data issues, the relationship with 430 00:22:45,840 --> 00:22:48,840 Speaker 6: the EU, a whole range of things, whereas I think 431 00:22:48,840 --> 00:22:50,879 Speaker 6: from the UK side thought, no, no, this is just 432 00:22:50,920 --> 00:22:53,600 Speaker 6: a sort of we'll tweak things, but there's no kind 433 00:22:53,600 --> 00:22:58,320 Speaker 6: of wholesale readjustment, and so that's led to Frankli an impass. 434 00:22:58,400 --> 00:23:01,480 Speaker 6: So there's a lot of There was then a Technology 435 00:23:02,000 --> 00:23:08,400 Speaker 6: Prosperity deal which was again two PAGEMU when the President 436 00:23:08,480 --> 00:23:14,600 Speaker 6: was in Checkers, which again hasn't been negotiated properly. And 437 00:23:14,640 --> 00:23:18,160 Speaker 6: then finally there's a farmer deal which was announced before Christmas, 438 00:23:19,280 --> 00:23:22,080 Speaker 6: which looked extremely promising, but again we haven't seen the 439 00:23:22,800 --> 00:23:26,640 Speaker 6: details of this agreement. We've seen two contrasting press announcements 440 00:23:26,640 --> 00:23:30,040 Speaker 6: from each side which almost described two different deals, so 441 00:23:30,920 --> 00:23:32,920 Speaker 6: I think there's a bit of frustration on both sides. 442 00:23:34,080 --> 00:23:36,679 Speaker 6: On a practical level, Camp business is just getting on 443 00:23:36,720 --> 00:23:39,679 Speaker 6: with it, so trade and investment continues to happen. 444 00:23:40,600 --> 00:23:44,160 Speaker 2: This is the Bloomberg Semendents podcast, bringing you the best 445 00:23:44,200 --> 00:23:47,280 Speaker 2: in market economics, Angie at Politics. You can watch the 446 00:23:47,280 --> 00:23:50,280 Speaker 2: show live on Bloomberg TV weekday mornings from six am 447 00:23:50,440 --> 00:23:53,600 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, 448 00:23:53,880 --> 00:23:56,720 Speaker 2: Spotify or anywhere else you listen, and as always on 449 00:23:56,720 --> 00:23:59,240 Speaker 2: the Bloomberg Terminal and the Bloomberg Business app.