Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stenovic on Bloomberg Radio.
Speaker 2: Folks, one of the major stories on the geopolitical front,
Speaker 2: didn't I want to see the markets front as well,
Speaker 2: is semiconductors. It's chips. It has everything to do with
Speaker 2: President Biden's kind of plan to bring back a lot
Speaker 2: of the production state side. So we decided we would
Speaker 2: speak to an industry expert who could shed a little
Speaker 2: bit more light on that very story. We are joined
Speaker 2: by Jonathan Clampkins, CEO of Aluma from Santa Barbara, California.
Speaker 2: First off, Santa Barbara, California. Oh my gosh, so jealous,
Speaker 2: it sounds amazing. We're gonna get his travel tips in
Speaker 2: just a second. But let's give a little bit of
Speaker 2: information on what Aluma actually is. Almu is the stock symbole,
Speaker 2: It's a semiconductor company. But I'm gonna let him get
Speaker 2: into the nitty gritty in a second. To me, what
Speaker 2: really stands out, Jonathan about your company is when you
Speaker 2: talk about production, your exposure to China is zero. You
Speaker 2: are making it right here in the United States. Talk
Speaker 2: to us a little bit about how that affects your pricing.
Speaker 1: Yeah, that's sort of been our strategy from the onset,
Speaker 1: and Aluma is a unique company. We have a very
Speaker 1: disruptive technology. We do a piece of the manufacturing process
Speaker 1: in house in Santa Barbara, California, and then we also
Speaker 1: work with external foundries that currently are all US based.
Speaker 1: We're an early stage company. We're at that point where
Speaker 1: we're transitioning from R and D to production, so we're
Speaker 1: not in mass production. But I do think there's a
Speaker 1: benefit to building your semiconductor chips on shore. For one,
Speaker 1: we can protect our technology to a greater degree, and
Speaker 1: I think this puts US in a good position moving forward,
Speaker 1: given all the incentives to do manufacturing on shore via
Speaker 1: the Chips and Science Act.
Speaker 3: Okay, but not to be the debbie downer here, Jonathan.
Speaker 3: As you know, a lot of production has taken overseas
Speaker 3: in order to scale and of course keep cost down.
Speaker 3: So what is your solution to that, particularly on the
Speaker 3: labor side for keeping costs down.
Speaker 1: So what's interesting about our technology is we're not building
Speaker 1: the advanced node semiconductors that you hear about in the
Speaker 1: news quite a bit. So now there are incentives to
Speaker 1: bring some of that manufacturing back on shore, some of
Speaker 1: the incentives to build advanced node semiconductor large semi fabs
Speaker 1: in the US, we focused on what are known as
Speaker 1: mature node technologies, high performance compound semiconductors. Today, they're extremely
Speaker 1: expensive regardless of where you manufacture them, and what Aluma
Speaker 1: has is the ability to mass manufacture those high performance technologies.
Speaker 1: So we're already showing our customers that we have the
Speaker 1: potential to reduce costs by a factor of ten x
Speaker 1: regardless of where our chips are manufactured.
Speaker 2: Are you concerned at all about tariffs, whether that's in
Speaker 2: terms of importing materials or exporting your final product.
Speaker 1: No, I don't think so. I mean we do worry,
Speaker 1: of course about export laws. That's very critical, and I
Speaker 1: think we're going to see export laws become more and
Speaker 1: more strict as we forward, for fear of losing some
Speaker 1: of our technologies to our adversary. So it's something that
Speaker 1: we invest resources in understandingstanding export law, ensuring that if
Speaker 1: we were to send technologies to other countries, to customers
Speaker 1: and other countries, that we have the proper export licenses.
Speaker 1: For now, all of our manufacturing is done in the US.
Speaker 1: All of our customers are in the US or at
Speaker 1: least have US offices that we're directly selling to, So
Speaker 1: not a major concern for us today.
Speaker 3: Yeah, I wonder to what extent I guess what you
Speaker 3: are worried about when it comes to not just I
Speaker 3: know you're in the semiconductor space, and that's a key
Speaker 3: indicator of big tech overall. Are you concerning yourself with
Speaker 3: some of the macro headwinds that we talk about all
Speaker 3: the time here at Bloomberg that are impacting some of
Speaker 3: those megacap tech companies. For sure.
Speaker 1: I mean we're a small, early stage company, but we
Speaker 1: of course worry about what's happening in the broader economy,
Speaker 1: in the broader industry, Like, for example, we hear about
Speaker 1: all the issues in the banking industry. We weren't doing
Speaker 1: any direct banking with the banks that were impacted, but
Speaker 1: we do worry about what that does to investor confidence.
Speaker 1: We rely heavily on our investor to keep our company afloat.
Speaker 1: We want our customers to be doing well, otherwise they'll
Speaker 1: retract and sort of the global economy. We do worry
Speaker 1: about security. We've heard a lot in the context of
Speaker 1: chips about security, about national security, about economic security, about
Speaker 1: apply chain security, which are all very important, but we
Speaker 1: also wonder and worry about what I referred to as
Speaker 1: innovation security. If we offshore our manufacturing, we're handing technologies off,
Speaker 1: we're handing manufacturing, we're also handing over the intellectual property
Speaker 1: and that doesn't come back. That's an issue. I also worry,
Speaker 1: for example, about our country and the fact that we're
Speaker 1: so inventive. But if we're not doing as much manufacturing,
Speaker 1: if we're not doing things, if we're not building hardware,
Speaker 1: we won't invent or innovate as much, and that's critical,
Speaker 1: especially for high tech, and we're part of that ecosystem.
Speaker 3: Well, I know that you're a company. Part of the
Speaker 3: reason that you are part of the major team responding
Speaker 3: to the Chips Act initiatives is everything that you just mentioned.
Speaker 3: I wonder if I can get your take on the
Speaker 3: Chips ACT. If you had to give it a letter
Speaker 3: grade in terms of potential impact, what would you give it?
Speaker 1: Can I give it a plus? At least in context?
Speaker 1: I think it's great. There's so much more interest in semiconductors.
Speaker 1: There was a lull there for a few years where
Speaker 1: investors weren't looking at hardware, weren't looking at semiconductors as much.
Speaker 1: They were looking more at software companies. But semiconductors are
Speaker 1: so important. They fuel essentially everything that we do. We're
Speaker 1: relying on semiconductors to speak right now, So I think
Speaker 1: fundamentally the Chips and science that's is great. We're starting
Speaker 1: to see roll out of some of the solicitations that
Speaker 1: teams are responding to. We've already responded the one of
Speaker 1: the solicitations that's come out through the Department of Defense,
Speaker 1: and there's many more to come. So we're very excited
Speaker 1: about what the Chips Act is going to do. And
Speaker 1: in terms of public funding and support for research and
Speaker 1: development for semiconductor manufacturing, this is bigger than anything I've
Speaker 1: seen in my career, and it's really once in maybe
Speaker 1: fifty year opportunity for the semiconductive industry. So I think
Speaker 1: this is a great thing that's happening.
Speaker 2: Jonathan, of course you'd give it an A plus. That's
Speaker 2: like if I could give ward myself a grade, I
Speaker 2: would also give myself an A plus. But Jonathan, talk
Speaker 2: to me a little bit about kind of how becomes
Speaker 2: a bell weather to some extent. Maddie was talking a
Speaker 2: lot about how chips are, at the end of the day,
Speaker 2: extremely exposed to the macro atmosphere and the macro environment.
Speaker 2: In my eyes, they are a bigger bell weather for
Speaker 2: recession than Caterpillar or Exon or some of these other
Speaker 2: kind of more value specific companies. Talk to us about
Speaker 2: your recessionary call here, when do you expect it?
Speaker 1: Yeah, I think, well, we saw this in this specific
Speaker 1: industry that we work in. We build very advanced sensor
Speaker 1: chips that can be used, for example, in the automotive industry,
Speaker 1: in cell phones, in ARVR and others. But in particular
Speaker 1: in the automotive industry, there was some retraction. For the
Speaker 1: last couple of years. There was a supply chain shortage.
Speaker 1: Car manufacturers were worried about getting sort of the conventional
Speaker 1: chips that they needed to put on board in their
Speaker 1: vehicles so they could get the cars off the manufacturing line.
Speaker 1: And the technology that we're building is sort of a
Speaker 1: next generation technology that's going to go on cars, advanced
Speaker 1: sensors to enable more driving safety, to enable autonomish driving.
Speaker 1: So if some of these macro issues are at play,
Speaker 1: our customers are not going to invest as readily in
Speaker 1: sort of the next generation technology and adding technology to cars.
Speaker 1: They're going to worry about the technology that's already there.
Speaker 1: But I think things are looking up in our industry.
Speaker 1: The automotive OEMs, the car manufacturers are all very dedicated
Speaker 1: and committed to deploying this technology, and we're seeing increases
Speaker 1: in the number of chips and sensors that are being
Speaker 1: demanded by those automotive oms. So we're very excited for
Speaker 1: what's to come.
Speaker 2: Yeah, a lot of pieces to digest. Jonathan Clampkin, the
Speaker 2: CEO of Aluma. ALMU is a ticker on the New
Speaker 2: York Stock Exchange. I believe we thank you as always
Speaker 2: for your time and insight on a chip sector. Matty.
Speaker 2: That is I still think driving the conversation. I mean,
Speaker 2: this was the entire story of twenty twenty one, right
Speaker 2: that there are no chips, How are we going to
Speaker 2: make washing machines and cars and phones? And what will
Speaker 2: Tesla do? And right, what happened to that?
Speaker 3: I mean, it's exactly what Jonathan said. It's part of
Speaker 3: everything that we touch, including how we're having this conversation,
Speaker 3: and it's also a really key component of what we're
Speaker 3: going to see from these big tech companies. We keep
Speaker 3: having the conversation about how Apple is looking to diversify,
Speaker 3: going into Ireland, India, even here in the US. So
Speaker 3: as those geopolitical tensions continue with the US and China,
Speaker 3: it's a very tenuous situation.
Speaker 2: And how some of the big tech companies, to your point,
Speaker 2: Apple were making their own chips certainly something that's going
Speaker 2: to be a hot topic this week. Folks were still
Speaker 2: not done stick with us. This is Bloomberg