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Speaker 2: Intel making a custom chip for Amazon Web Services for
Speaker 2: use in artificial intelligence computing. A lot more on this story,
Speaker 2: we will cover it now with Ian King, Bloomberg News
Speaker 2: US Semiconductor reporter. So Ian investors really seem to like
Speaker 2: this story in that obviously Aws a very big customer,
Speaker 2: the largest cloud operator, and this will help the foundry business,
Speaker 2: which Intel has been pushing. And then the postponing of
Speaker 2: the foreign plants kind of helps on the cost side.
Speaker 2: So it's seems like a good step. But my question
Speaker 2: for you is how long will it take for some
Speaker 2: of these gains to be reaped?
Speaker 3: Quite a while, that's the issue at hand here. I mean,
Speaker 3: the cost cutting should help actually closer to sort of
Speaker 3: bring the company into sort of alignment with what it
Speaker 3: can afford. The foundry wins from companies like a WS.
Speaker 3: It's kind of in the future next couple of years
Speaker 3: when those kind of things will kick in and hopefully
Speaker 3: start to have those new plants pay for themselves a
Speaker 3: bit more so.
Speaker 4: Ian.
Speaker 1: This is the Intel eighteen A microprocessor, right, or is
Speaker 1: it more kind of like a GPU that in Nvidia
Speaker 1: produces for a lot of these functions of using kind
Speaker 1: of the data server as a way to process AI functionality.
Speaker 3: Yeah, And eighteen A is the name of the process
Speaker 3: technology that it is both using itself and offering for
Speaker 3: use from external customers. So it's basically saying, hey, this
Speaker 3: is our latest and greatest production technology. This comes in
Speaker 3: to use kind of around now and into next year.
Speaker 3: And guess what we've got a customer, what Amazon? The
Speaker 3: only detail we've got is that it is what's called
Speaker 3: a fabric chip that is usually a kind of chip
Speaker 3: that links other chips together. So it's not the absolute
Speaker 3: pinnacle of high volume or importance, but it's nonetheless an
Speaker 3: important part of an overall computer network that would perhaps
Speaker 3: link things like a GPU to other parts of the computer,
Speaker 3: maybe to a CPU, the kind of thing that Intel
Speaker 3: specializes in. So we need more details. We need volume,
Speaker 3: and we need to see revenue. But having Amazon's name
Speaker 3: associated with their founder is definitely something that helps Intel
Speaker 3: sort of prove the naysayers wrong.
Speaker 2: It's a big deal. Intel's been under a lot of pressure.
Speaker 2: Must have been a very tough board meeting last week.
Speaker 2: I'm wondering does this buy Pat Gelsinger some more time?
Speaker 4: Yeah?
Speaker 3: I mean we spoke with Pat earlier and asked, you know,
Speaker 3: about his plan, about their support for it, and he
Speaker 3: was very clear that it had been a rigorous board meeting.
Speaker 3: You know, people had asked him tough questions and so forth,
Speaker 3: but that you know, he has their support, that they
Speaker 3: accepted his prognosis for how things are going to play out,
Speaker 3: and that they are behind him.
Speaker 1: So what does this do. I know there was some
Speaker 1: concern that Intel may not qualify for funds being distributed
Speaker 1: from the Chips and Science AEC. Does this help in
Speaker 1: any way?
Speaker 3: Well, the important thing to point out there is they
Speaker 3: are qualified, right, but that doesn't mean they're going to
Speaker 3: get the money. The US government, which is good for
Speaker 3: taxpayers like me, has said yeah, yeah, here's you know,
Speaker 3: eight billion dollars that will set aside for you, but
Speaker 3: you have to do certain things before we give you
Speaker 3: that money.
Speaker 4: So that's still a work in progress. Right.
Speaker 3: It's got some the local grants from places like Ohio
Speaker 3: and Arizona, but the federal money has not been handed
Speaker 3: over yet.
Speaker 2: So I'm curious what this means that. You know, we
Speaker 2: mentioned the Germany and the Poland plants who be postponed,
Speaker 2: and that will help on the cost side. The Malaysia
Speaker 2: plant goes continues, but you know, may maybe postpone. The
Speaker 2: actual usage maybe postponed. Does does Intel lose anything by
Speaker 2: moving slowly?
Speaker 4: Now on the Germany and.
Speaker 3: Poland plants, Yes and no, right, I mean in Europe
Speaker 3: they were set to get a lot more state money
Speaker 3: and obviously this decision to postpone throws that into.
Speaker 4: Debate whether they'll ever get that.
Speaker 3: But at the same time, these things are not cheap, right,
Speaker 3: as soon as you build one, as soon as you
Speaker 3: put that equipment in there, you've got twenty thirty billion
Speaker 3: dollars of capex that within five years will be obsolete.
Speaker 3: So if you're going to do that, then you have
Speaker 3: to be ready and you have to be sure you're
Speaker 3: going to fill it. So in that sense, it's a
Speaker 3: prudent move to move, you know, sort of moss ball
Speaker 3: these ideas, So you're keeping the option open, but at
Speaker 3: the same time you're not risking that massive cash strain.
Speaker 1: So the news on Intel making this custom chip for
Speaker 1: AWS for use in AI computing, that was just one
Speaker 1: story involving Intel today. Bring us up to speed on
Speaker 1: where this company is with respect to building chips for
Speaker 1: the Pentagon for the US military.
Speaker 3: Yeah, I mean that was another piece of positive news.
Speaker 3: There's some money being set aside for what's called the
Speaker 3: Trusted Foundry type operation, where the US government is reserving
Speaker 3: capacity in a factory or multiple factories that it will
Speaker 3: be for the exclusive uses of military type chips.
Speaker 4: Obviously there's a national security thing. There.
Speaker 3: There a lot of debates backwards and forwards about whether
Speaker 3: this should be Intel, whether it should be a number
Speaker 3: of companies, or we got today was affirmation of news
Speaker 3: that we actually broke last week that it didn't it
Speaker 3: will indeed be Intel and now the major beneficiary of that.
Speaker 4: So that's a big help. Ian.
Speaker 2: I want to ask you kind of a lofty question here.
Speaker 2: Just just after reading Chip War by Chris Miller. Both
Speaker 2: Doug and I read the book and loved it and
Speaker 2: you know, I think you know this move by Intel
Speaker 2: into trying to bring home production and to stand on
Speaker 2: its own on the global stage as a sort of
Speaker 2: barometer for American manufacturing. Is there a lot at stake
Speaker 2: here or is this just one company? And you know,
Speaker 2: every company is different.
Speaker 3: I would separate the two that the issue for Intel
Speaker 3: as a company is we all think of Intel as
Speaker 3: this omnipotent force in the chip industry and in technology,
Speaker 3: and it's trying to get back to that. If it
Speaker 3: was just an ordinary company that kind of did okay
Speaker 3: in some years and and others, we'd have different standards.
Speaker 3: Intel has held to the standards, said it will get
Speaker 3: back to them, and that is clearly harder than anybody
Speaker 3: had imagined. So that's why people are looking at them.
Speaker 3: In terms of bringing manufacturing to this country. Intel would
Speaker 3: be the champion if you wanted a local company to
Speaker 3: do it. But guess what, TSMC, Samsung they're building here too,
Speaker 3: and they're not having anything like the amount of problems,
Speaker 3: if indeed no problems at all in TSMC's case. So
Speaker 3: if you want high in manufacturing here, of course Intel
Speaker 3: should be the first look. But that's very much a
Speaker 3: backward look right, Intel has to prove itself again.
Speaker 2: Yeah, we've seen power in this industry shift a lot
Speaker 2: over the past sixty years, and it seems like it
Speaker 2: has definitely shifted. Listening to Jensen Wong talk about TSMC
Speaker 2: the other day was unbelievable the praise that he was
Speaker 2: giving to their manufacturing processes. All right, Ian, thank you
Speaker 2: so much for joining us here in king Bloomberg News
Speaker 2: US Semiconductor Reportal Michael Dyer, Investment Director Equities at Multi
Speaker 2: Asset at MNG Investments. Michael, thanks very much for coming
Speaker 2: into our studios here in Hong Kong. You wonder a
Speaker 2: little about a cautious FED and whether or not they
Speaker 2: send a little bit of a message to investors. You
Speaker 2: might worry investors with a fifty basis point gut. I
Speaker 2: know they've tried to prepare the ground a little bit,
Speaker 2: but your thoughts on whether fifty might speak a few people.
Speaker 5: I think, coming into a week ago that was the
Speaker 5: case that equity markets had certainly not started to think
Speaker 5: about a fifty basis points cut. Seeing futures markets rally
Speaker 5: to where they are now, maybe it's in their sphere
Speaker 5: of influence, but the bomb market and the equity markets
Speaker 5: certainly seemed to be set up for different courses of
Speaker 5: policy from here. The bomb market very much saying that
Speaker 5: the FED is behind the curve, and the equity market
Speaker 5: ready to sort of enjoy increasing gains. So let's feel
Speaker 5: like there's some unresolved issues as we move through this week.
Speaker 1: So in terms of the overall view on the American economy,
Speaker 1: do you think the FED has been able to engineer
Speaker 1: soft landing.
Speaker 5: I think it's too soon to say. We try and
Speaker 5: avoid making too much of a forecast in going into
Speaker 5: twenty twenty five. Instead, we're very much valuation lead investors.
Speaker 5: So looking back over the past few months, you know,
Speaker 5: April was really the time to put the trade on
Speaker 5: to look at the two year and the five year
Speaker 5: part of the curve. And now we're more interested in
Speaker 5: the long end of the curve because the threat does
Speaker 5: seem to be that, you know, if this hire for
Speaker 5: longer has played through there are these variable lags, then
Speaker 5: we do get a bit of a slow down there,
Speaker 5: and the longer end of the curve isn't pricing that.
Speaker 5: So we don't have a forecast, but I would say
Speaker 5: we're set up for a more cautious look into the
Speaker 5: rest of twenty four and into twenty five.
Speaker 2: One of the interesting developments of late with this idea
Speaker 2: of sliding from twenty five to fifty basis points, is
Speaker 2: that you've had breadth in the market advance, and you've
Speaker 2: seen quite a pretty strong rally here of late.
Speaker 4: A lot of.
Speaker 2: Companies that you know are not among the top tech company,
Speaker 2: not among the the twenty biggest companies in the world,
Speaker 2: that have benefited so much of le Do you buy
Speaker 2: that line that this is going to be much better
Speaker 2: for them? I think the thinking is it will lower
Speaker 2: their costs and runnings haven't been then great without it.
Speaker 5: I think the sentiment coming into this has really been
Speaker 5: the equity markets have shown a willingness to take on
Speaker 5: risk and bounce back, whereas the fundamental scene they may
Speaker 5: be more challenged. So I would say that we are
Speaker 5: more cautious on equities. Within that we only really talk
Speaker 5: about the headline industries here. We're big pitch and macro,
Speaker 5: so we're looking at that as being preferring the rest
Speaker 5: of the world to the US.
Speaker 1: So I'd like to get your view on China. We
Speaker 1: had the monthly activity data recently both industrial production, retail
Speaker 1: sales a little disappointing. I mean there was positivity there.
Speaker 1: The latest readings that we have seen when it comes
Speaker 1: to government figures on inflation show this economy is still
Speaker 1: struggling with deflation. Is is China a market that you
Speaker 1: want to dabble in right now or the risks simply
Speaker 1: too great.
Speaker 5: China's been a market that we've been active in for
Speaker 5: the past couple of years, and it's really been one
Speaker 5: where being a traaring has been fruitful. So being willing
Speaker 5: to step in when sentiment is as low and valuations
Speaker 5: as cheap, such as you know late January, has been rewarded.
Speaker 5: And perhaps taking profits in the sort of April to
Speaker 5: May space when things have felt better has been the
Speaker 5: way to trade it. And the reason for that really
Speaker 5: is that I think every client that we speak to
Speaker 5: wants to know if China's turned the corner. So while
Speaker 5: everyone's waiting for the turnaround story the data to look better,
Speaker 5: there's these tactical opportunities. A sentiment really fluctuates around a lot,
Speaker 5: so the data over the weekend and the day trail
Speaker 5: yesterday is further confirmation that, you know, China does have
Speaker 5: some material headwinds. You know, these deflationary challenges don't go
Speaker 5: away overnight. The policy response has been somewhat underwhelming to
Speaker 5: international investors. But within that, you know that the markets,
Speaker 5: you know, Hong Kong particularly, still trade on a single
Speaker 5: digit multiple, and that's attractive. Gives you some of the
Speaker 5: level of margin of safety going in there. If you
Speaker 5: can pair that up with finding the guts or the
Speaker 5: intestinal fortitude to make those trades when it feels difficult.
Speaker 2: Yeah, yeah, it's valuation helps a lot. So you're not
Speaker 2: really that fond of equities, although you know you're sort
Speaker 2: of picking and choosing in China, it seems like you're
Speaker 2: a little bit more interested in the bond market at
Speaker 2: the moment. So if we look more broadly at fixed income,
Speaker 2: is it sovereigns, is it credit? And inside credit? I mean,
Speaker 2: would you be you know, looking at high yield or
Speaker 2: investment grade?
Speaker 5: For us, it's really been the case the last few
Speaker 5: years of where the big swings in emotion and markets
Speaker 5: have really come in the bond market. You know, like
Speaker 5: we've seen people run from one side to the other
Speaker 5: several times and you get these points such as April,
Speaker 5: as I mentioned, after the CPI came in hot in
Speaker 5: the US where everyone was back to thinking about twenty
Speaker 5: twenty two again and maybe race even to go higher.
Speaker 5: So that's where we feel you get good odds, good
Speaker 5: asymmetry in entering these positions. Today is one of those
Speaker 5: markets where everyone's fixated on what's going to happen on Wednesday.
Speaker 5: With the FED, it's too close to cool. I'm not
Speaker 5: even sure that the FMC members quite know what the
Speaker 5: results going to be even now, maybe not until they
Speaker 5: drive to the meeting. So placing your chips on that
Speaker 5: right now as a small point feels like it's destined
Speaker 5: to try and be a hero with that one, and
Speaker 5: you know it's probably not good odds. So government bonds
Speaker 5: have come a long way, so we feel there's more
Speaker 5: to do there, but it's more in the long end
Speaker 5: of the curve. Sorry, just on your credit point, we
Speaker 5: don't have a lot of risk in credit right now.
Speaker 5: Years look attractive, but spreads are very tight.
Speaker 1: Maybe we can talk a little bit about Japan. The
Speaker 1: dynamics between the FED and the BOJ created an enormous
Speaker 1: amount of volatility in the end within the last several weeks,
Speaker 1: and right now, I mean we're looking at a one
Speaker 1: forty handle, which seems somewhat hard to believe. The velocity
Speaker 1: of change, how this is accelerated has just been kind
Speaker 1: of amazing to watch. What is your view first on
Speaker 1: the currency? I mean, are we to kind of accept
Speaker 1: yen volatility for a while longer?
Speaker 4: Yeah?
Speaker 5: I mean August was fun, wasn't it. I mean we
Speaker 5: saw quite the moves in markets, and they certainly as
Speaker 5: a tactical multi asset investor, that was interesting for us.
Speaker 5: I think what happened there was there was a lot
Speaker 5: of sentiment build up and then people got caught off side.
Speaker 5: The end has continued to power higher, and that really
Speaker 5: does look like it is rates driven. So as those
Speaker 5: thread futures have moved in towards fifty basis points, yend strengthened.
Speaker 5: So if we do get fifty basis points on Wednesday,
Speaker 5: that sort of moves past and maybe we see it
Speaker 5: flattening out of that yen volatility a little bit. On
Speaker 5: the twenty thirty of view, the yen is still competitive
Speaker 5: versus it has been. The Japanese economy is still attempting
Speaker 5: to reflate, So I think on a fundamental view, over
Speaker 5: five year period. You can still be positive on the
Speaker 5: en but it does feel like those interest rate moves
Speaker 5: are more or less in the price for what is expected.
Speaker 2: So if the FED does get moving here and has
Speaker 2: a little flourish with it, can the dollar become a
Speaker 2: kind of kerry currency.
Speaker 5: Ah, that's a good question. I mean, I think there's
Speaker 5: a lot of stays strong for the time being. I
Speaker 5: think there's too much of the reserve currency nature of it,
Speaker 5: but we have seen it weaken off a little bit
Speaker 5: from here that the yeend actually still looks like a
Speaker 5: attractive funding currency is part of a diversified basket, so
Speaker 5: I wouldn't necessarily rule that off the table despite the
Speaker 5: spot appreciation that we've seen.
Speaker 1: Best opportunity very quickly, Michael, that you are seeing across
Speaker 1: the APAC right now is what.
Speaker 5: In APAC. I think China is something we're looking at.
Speaker 5: We've taken a little bit of capital away from that,
Speaker 5: but we're seeing how the sentiment evolves. And again, if
Speaker 5: we get a better entry point where things feel depressed,
Speaker 5: I think we could see us adding to that and
Speaker 5: Japan on the long run. You know, the structural coase
Speaker 5: is still very much intact, but we've seen maybe a
Speaker 5: slightly better entry point over the past few weeks.
Speaker 2: All right, Michael, thank you very much for coming into
Speaker 2: our studios here, sitting down with us at the table.
Speaker 2: Michael Dyer, Investment Director, Equity and multi Asset at MG Investments.
Speaker 1: So let's take a closer look at the attempt on
Speaker 1: Donald Trump's life and other assassination attempt. Joining us now,
Speaker 1: Bill Ferries, Bloomberg Senior Editor. He's with us from our
Speaker 1: studios in Singapore. Does it surprise you, Bill that the
Speaker 1: former president is trying to capitalize on this event?
Speaker 6: No, not at all. Listen, after that first assassination attempt,
Speaker 6: and it's hard to believe we're talking about too now,
Speaker 6: but after that first one, you saw the president get
Speaker 6: a bump in the polls. There was there was a
Speaker 6: lot of people had, you know, sympathy, and what came
Speaker 6: at a time when when Joe Biden's campaign was basically imploding,
Speaker 6: and you know, the past week or so leading into
Speaker 6: this second assassination attempt had been a really rough one
Speaker 6: for the former president. It was coming off off that
Speaker 6: debate with Kamala Harris Tuesday last week that didn't go
Speaker 6: particularly well for the former president and a lot of
Speaker 6: the political discussion since then had been focused on whether
Speaker 6: immigrants in Ohio were eating people's pets or not, not
Speaker 6: really a winning issue for the Republicans. So this latest
Speaker 6: news out of Florida is essentially a chance for the
Speaker 6: Trump campaign to kind of turn the page, start new
Speaker 6: with seven weeks to go, literally seven weeks from today,
Speaker 6: and try to focus on issues that are a little
Speaker 6: more important to voters. And they're going to do that
Speaker 6: by attacking the Harris campaign, and I would assume by
Speaker 6: starting to focus on things like the economy.
Speaker 2: Assassination attempts are not really all that common. It's a
Speaker 2: little surprising we've had a couple here just of late.
Speaker 2: Prior to that, it seemed like we've gone through a
Speaker 2: fairly long period. I remember thinking just on a walk
Speaker 2: recently that you know that we we'd move beyond that
Speaker 2: in the world, obviously more so in the United States
Speaker 2: because you have had assassinations elsewhere, But kind of belaboring
Speaker 2: the point, what's changed. Why are we seeing this now? Bill?
Speaker 6: You know, I think it's there's been this process over
Speaker 6: over maybe the last decade where the political rhetoric has
Speaker 6: become more heated. People's views of politics have have become
Speaker 6: more hardened.
Speaker 4: Uh.
Speaker 6: You know, I think you see that in a lot
Speaker 6: of you know, even families, see that within within their
Speaker 6: own family, but within communities. Between red states and blue states,
Speaker 6: you know, people's views are are a lot more fixed,
Speaker 6: and they're a lot more strident. Uh. There doesn't seem
Speaker 6: to be quite as much. Uh, there's not quite as
Speaker 6: much vote. There aren't quite as many voters who you know,
Speaker 6: sometimes are with Democrats and sometimes with Republicans. People are
Speaker 6: are sticking to their sides now, so uh. And I
Speaker 6: think the online you know, the Twitter wars, the social
Speaker 6: media wars, feeds into some of that. So, you know,
Speaker 6: you often have people who get worked up about it
Speaker 6: and go, you know, much too far with their political
Speaker 6: political actions.
Speaker 1: With yesterday's event, I was struck by the fact that, Okay,
Speaker 1: it was mid July that the first attempt was made,
Speaker 1: Yesterday made the second. It was nineteen seventy five when
Speaker 1: Gerald Ford survived two assassination attempts in California. Brian probably
Speaker 1: remembers this. I think he was in southern California at
Speaker 1: the time. At that time, I don't think that there
Speaker 1: was much in the way of criticism on the Secret Service.
Speaker 1: Different story these days, particularly in the incident that happened
Speaker 1: in July and Butler, Pennsylvania. How do you feel the
Speaker 1: Secret Service has been able to deal with this? What
Speaker 1: do we know about what we have heard from from
Speaker 1: Secret Service authorities? Bill Well?
Speaker 6: According to the Secret Service, they did ramp up security
Speaker 6: for the former president in the aftermath of that first attempt,
Speaker 6: where they were widely criticiz Eyes for, you know, leaving
Speaker 6: the roof of that building with a direct line of
Speaker 6: sight of the stage unprotected. This time, you know, the
Speaker 6: initial reports are that, you know, the Secret Service agent
Speaker 6: who was one hole ahead of Donald Trump on the
Speaker 6: golf course did a great job spotting a rifle coming
Speaker 6: through the fence and directing fire that way may have
Speaker 6: prevented a tragedy, but there's still going to be some
Speaker 6: very hard questions about how the gunman was able to
Speaker 6: apparently camp out on that fence line for about twelve
Speaker 6: hours ahead of time with an AK forty seven type
Speaker 6: rifle and not be detected. We're learning now The New
Speaker 6: York Times is just reporting that the Secret Service says
Speaker 6: it didn't scout out the perimeter of the golf course
Speaker 6: before Trump went out to play. There's I think going
Speaker 6: to be almost inevitably a focus on whether the Secret
Speaker 6: Service needs some more financial resources, whether they need more
Speaker 6: agents out there, and and I wouldn't be surprised if
Speaker 6: the security perimeter around both Donald Trump and Kamala Harris
Speaker 6: gets built up even more.
Speaker 1: Bill, thank you for making time for us. I'm sure
Speaker 1: you've got a lot on your plate there at the
Speaker 1: Bloomberg News offices in Singapore. Bill Ferries, Bloomberg Senior Editor,
Speaker 1: as we try to get the latest on this assassination
Speaker 1: attempt that he occurred over the weekend here in the US.
Speaker 1: That would be US Sunday on a golf course very
Speaker 1: near by Donald Trump's marl Lago property in southern Florida.
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