WEBVTT - Reddit IPO, Intel Chips, Boeing's Cash Drain, Gucci Sales Fall 0:00:01.480 --> 0:00:05.360 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:00:05.440 --> 0:00:08.159 weekdays at ten am Eastern on Apple card Playing and 0:00:08.240 --> 0:00:11.160 Broun Auto with the Bloomberg Business app. Listen on demand 0:00:11.200 --> 0:00:15.280 wherever you get your podcasts, or watch us live on YouTube. 0:00:16.600 --> 0:00:19.680 Busy twenty four hours or so. Here in the ipo market, 0:00:19.680 --> 0:00:22.239 we've got Esteri Labs that price last lane at thirty six, 0:00:22.960 --> 0:00:25.319 indicating to open at fifty six, so that would be 0:00:25.360 --> 0:00:27.520 good for the ipo market. And then we've also got 0:00:27.520 --> 0:00:31.400 Reddit looking to price tonight. And we saw some Bloomberg 0:00:31.440 --> 0:00:34.080 reporting earlier today. It says they are considering the high 0:00:34.159 --> 0:00:36.640 end or perhaps even above it abobove the range. So 0:00:36.720 --> 0:00:38.640 let's break it all down with Bailly Lipschaltz. She covers 0:00:39.040 --> 0:00:41.560 the equity markets, including the new issue markets. So Billy, 0:00:41.640 --> 0:00:44.360 let's sell with Astera Labs. Boy, if this would open 0:00:44.720 --> 0:00:47.120 we had fifty six dollars again after pricing at thirty six, 0:00:47.159 --> 0:00:49.280 that would be huge news for the ico market. 0:00:49.360 --> 0:00:51.959 The even more interesting thing this is an ipo that 0:00:52.200 --> 0:00:55.640 bumped up its rage, increased the allocation and number of shares, 0:00:55.680 --> 0:00:57.680 and then priced above. So we're already talking about it 0:00:57.720 --> 0:00:59.360 pricing almost twenty six. 0:00:59.200 --> 0:01:02.320 Percent of government for this kind of bump necessarily. 0:01:01.840 --> 0:01:04.360 No, and this is the deal that everyone had circled. 0:01:04.400 --> 0:01:06.319 We're all talking about Reddit. But when I talk to 0:01:06.360 --> 0:01:08.920 bankers and investors, they say a stair Labs, they're backed 0:01:08.959 --> 0:01:12.480 by Intel, they make AI chips, they fit into every 0:01:12.520 --> 0:01:15.280 tailwind that you want in this market. That's the deal 0:01:15.280 --> 0:01:16.240 that you want to keep an eye on. 0:01:16.319 --> 0:01:18.679 And they're profitable, but they don't do the weight lossing. 0:01:19.800 --> 0:01:22.400 As far as I know, they're profitable, which begs the 0:01:22.480 --> 0:01:24.119 question is Reddit profitable? 0:01:24.319 --> 0:01:24.720 They are not. 0:01:24.880 --> 0:01:27.880 They've been on the path to profitability, if you will. 0:01:27.920 --> 0:01:30.520 They talked up kind of the fact that they tightened spending. 0:01:30.560 --> 0:01:34.440 They have AI licensing, data licensing partnerships that really kind 0:01:34.480 --> 0:01:38.280 of bolstered numbers in three Q really four Q of 0:01:38.400 --> 0:01:41.720 last year. But when you talk to investors in some 0:01:41.760 --> 0:01:44.479 of the skeptical analysts, the big question is it's almost 0:01:44.520 --> 0:01:47.840 two decades old, it's not profitable. It operates in social media, 0:01:47.920 --> 0:01:50.840 which has its own flurry of issues. You look at 0:01:50.840 --> 0:01:53.720 Snapchat and Pinterest, who are the two best comps publicly traded? 0:01:53.840 --> 0:01:55.920 Those docks aren't doing too well. But if it does, 0:01:55.960 --> 0:01:57.480 price at the top of the range. That'd be a 0:01:57.520 --> 0:02:01.080 six point four billion dollar valuation haircut from the ten 0:02:01.120 --> 0:02:03.880 billion it raised at in twenty twenty one, but still 0:02:04.240 --> 0:02:05.960 maybe a bit of a green shoot. It does remind 0:02:06.000 --> 0:02:08.320 me quite a bit of the instacart ipo in the 0:02:08.360 --> 0:02:11.919 fall of last year, which took a quote unquote down round, 0:02:12.000 --> 0:02:14.120 but right now is trading up about twenty three percent 0:02:14.160 --> 0:02:17.160 from that IPO price, despite some choppy aftermarket performance. 0:02:17.360 --> 0:02:20.520 So when Reddit, I also understand in addition to the 0:02:20.639 --> 0:02:23.480 advertising component, which again we've seen before as you mentioned 0:02:23.480 --> 0:02:28.400 with Pinterest and others Snapchat, there's also a data component 0:02:28.440 --> 0:02:30.440 to it, and they're trying to tie it into a 0:02:30.480 --> 0:02:33.079 little bit of an AI situation. You can explain what 0:02:33.120 --> 0:02:33.639 that pitch is. 0:02:33.760 --> 0:02:35.120 Yeah, So I talked to one of the pitch book 0:02:35.120 --> 0:02:37.200 analysts who laid it out, I think pretty easily. 0:02:37.240 --> 0:02:37.560 He said. 0:02:37.600 --> 0:02:41.960 Basically, they're trying to license data for AI makers, so 0:02:42.000 --> 0:02:44.560 they have exactly what some of these AI companies want, 0:02:44.600 --> 0:02:47.560 which is engagement and human beings posting and talking to 0:02:47.639 --> 0:02:50.440 each other. He basically said, though the question is it's 0:02:50.480 --> 0:02:51.440 still in the early stages. 0:02:51.560 --> 0:02:52.680 Well, exactly the human. 0:02:52.520 --> 0:02:53.760 Beings, and that's one of the things I talked to 0:02:53.800 --> 0:02:56.519 a number of Wall Street Bets moderators about whether or 0:02:56.520 --> 0:02:57.800 not they're buying into the IPO. 0:02:58.240 --> 0:02:59.440 They were very much divided. 0:02:59.440 --> 0:03:01.320 But the big quest question for them, the boal case 0:03:01.680 --> 0:03:05.800 for these believers of Reddit, these redditors, is that as 0:03:05.880 --> 0:03:07.800 of now where we are in kind of the AI 0:03:07.919 --> 0:03:12.200 technology landscape, you need data, you need input, you need 0:03:12.320 --> 0:03:15.040 humans to create something. So that's one of the big 0:03:15.120 --> 0:03:17.560 kind of pitches from Reddit is that if you open 0:03:17.600 --> 0:03:21.120 up a partnership with Google or whoever and say, hey, 0:03:21.160 --> 0:03:24.240 here's the thousands and millions of people actively engaging with 0:03:24.320 --> 0:03:26.240 each other, do with it what you want. Though, that 0:03:26.280 --> 0:03:29.239 does kind of raise questions for users and whether or 0:03:29.280 --> 0:03:30.920 not they would maybe taper. 0:03:30.680 --> 0:03:31.440 Off their usage. 0:03:31.480 --> 0:03:33.720 Well also yes, and also I was going to say, 0:03:33.760 --> 0:03:36.360 like I've never been on Reddit. Do we want language 0:03:36.400 --> 0:03:40.080 models to know Reddit? Really like, do we like that relationship? 0:03:40.200 --> 0:03:41.360 That's the big question. 0:03:41.480 --> 0:03:44.640 I mean, I lurk, So I don't, Alex, I don't 0:03:44.640 --> 0:03:45.880 have a Reddit account, but I do. 0:03:45.960 --> 0:03:48.560 You know, I lurk. 0:03:48.600 --> 0:03:51.080 You know you're planning a trip, you kind of want 0:03:51.080 --> 0:03:53.000 to see what people recommend or if you're looking to 0:03:53.000 --> 0:03:54.480 make a purchase, see what what. 0:03:54.360 --> 0:03:55.680 The forums are talking about. 0:03:56.000 --> 0:03:58.760 But I think even if you talk to Reddit users, 0:03:58.840 --> 0:04:01.080 a lot of their content is not safe for work. 0:04:01.120 --> 0:04:04.080 A lot of it is shall we say, not family friendly, 0:04:04.360 --> 0:04:06.800 and they call each other a lot of names and taking. 0:04:06.880 --> 0:04:09.920 Actually I did go on Reddit. I went down the 0:04:10.000 --> 0:04:11.600 Kate Middleton reddit rabbit hole. 0:04:11.760 --> 0:04:13.840 Oh okay, did you find good content? 0:04:14.200 --> 0:04:14.360 No? 0:04:14.440 --> 0:04:16.120 I didn't know what to trust. I didn't know what 0:04:16.240 --> 0:04:16.679 was real. 0:04:16.920 --> 0:04:19.479 I got really confused, and then I got scared and 0:04:19.520 --> 0:04:22.320 I left. But that's a great example of like what 0:04:22.560 --> 0:04:24.200 what reddit is? 0:04:24.400 --> 0:04:27.080 It sounds about right, Yeah, And Reddit is built on 0:04:27.520 --> 0:04:29.920 so called karma points. So you get karma points when 0:04:29.920 --> 0:04:33.600 people upvote your comments or upvote your posts vote, which 0:04:33.640 --> 0:04:36.360 is just basically liking. It's liking, but you can also 0:04:36.400 --> 0:04:38.480 dislike it. I actually trying to get people to talk 0:04:38.520 --> 0:04:40.000 to me and said I was a Bloomberg reporter and 0:04:40.000 --> 0:04:42.800 wanted to talk about the IPO. Immediately had negative karma like. 0:04:44.400 --> 0:04:45.440 That hurts. 0:04:45.520 --> 0:04:47.800 Yeah, and then you can't comment. So then I couldn't 0:04:47.800 --> 0:04:51.600 comment anything. I couldn't respond to people because I know exactly. 0:04:51.920 --> 0:04:53.520 And then yeah, I got hit with some of the 0:04:53.600 --> 0:04:56.760 Steve Belushia giffs and memes of like hey, cool, fellow 0:04:56.880 --> 0:04:58.960 fellow friends like what's going on? 0:04:59.120 --> 0:04:59.400 Which? 0:04:59.720 --> 0:05:03.479 All right, how important are these two IPOs to the 0:05:03.520 --> 0:05:05.640 new issue market here? I mean, do we have a 0:05:05.640 --> 0:05:08.040 whole bunch backed up and we're just looking for some 0:05:08.120 --> 0:05:11.280 good karma in the IPO market? How important these two 0:05:11.360 --> 0:05:14.400 names here? They're critical? And it's really because they both 0:05:14.640 --> 0:05:18.279 are in the tech space. They are what we would 0:05:18.320 --> 0:05:20.920 call kind of down the middle of the fairway IPOs 0:05:21.000 --> 0:05:23.479 in that five hundred to a billion dollar raise in 0:05:23.560 --> 0:05:24.760 terms of cash being funded. 0:05:24.880 --> 0:05:27.600 You look at arm and armor sports, Yeah, big deals, 0:05:27.600 --> 0:05:29.480 they're their own thing. The big thing though, when I 0:05:29.520 --> 0:05:31.279 talked to bankers is that at this point in time, 0:05:31.680 --> 0:05:34.479 the new issue market is going to be idiosyncratics. So 0:05:35.080 --> 0:05:38.080 the reason for Asteria Labs going public is very different 0:05:38.120 --> 0:05:40.320 than the reason that Rerdeup's going public. And they're they're 0:05:40.400 --> 0:05:43.080 kind of trying to take or at least trying to 0:05:43.120 --> 0:05:45.679 read the signals from investors on who's willing to pay 0:05:45.960 --> 0:05:48.680 what multiple. But if these deals price as they are 0:05:48.800 --> 0:05:51.800 indicated and trade strongly, I definitely think, at least from 0:05:51.800 --> 0:05:54.200 my channel checks and conversations, that people will be drawn 0:05:54.240 --> 0:05:55.000 from the sidelines. 0:05:55.320 --> 0:05:57.480 Is it do you think that these companies and I 0:05:57.480 --> 0:05:59.680 appreciate their all different companies. Do they need the money 0:05:59.720 --> 0:06:02.720 to go stuff? Is it a commentary on while this 0:06:02.839 --> 0:06:04.880 market's awesome when we get a piece of it, or 0:06:05.000 --> 0:06:07.000 is it we need investors need to cash out or 0:06:07.000 --> 0:06:08.960 employees have shares and they need a vehicle? 0:06:09.120 --> 0:06:10.320 Like what is the reasoning? 0:06:10.480 --> 0:06:12.160 A little bit of both, so you have in both 0:06:12.200 --> 0:06:15.080 cases insider selling is part of the IPO, so trying 0:06:15.120 --> 0:06:16.680 to get some form of a return. But when you 0:06:16.680 --> 0:06:19.279 look at a Steri Labs taking those proceeds and being 0:06:19.279 --> 0:06:22.159 able to kind of bolster on their operations. Again to 0:06:22.200 --> 0:06:24.080 your point, they're writing the AI wave. So if you 0:06:24.080 --> 0:06:27.560 can have Jensen wang As filming a video for your roadshow, 0:06:27.680 --> 0:06:29.040 that's going to get people excited. 0:06:29.040 --> 0:06:30.400 So why not go public now? 0:06:30.560 --> 0:06:33.160 Whereas write it again, you look at the business, the 0:06:33.200 --> 0:06:36.599 evolution of the business on that path to profitability. It's 0:06:36.640 --> 0:06:39.479 been private, it's about nineteen years old, so it's kind 0:06:39.480 --> 0:06:42.279 of due time for it to go public again, similar 0:06:42.320 --> 0:06:45.400 to instacart. So they all kind of have their own reasons. 0:06:45.440 --> 0:06:47.360 But the big thing when you talk to investors and 0:06:47.400 --> 0:06:50.839 bankers either profitability, path to profitability or some form of 0:06:50.920 --> 0:06:53.040 unit economics and that's been the big thing, and that's 0:06:53.080 --> 0:06:55.280 why we can see some of the more interesting names 0:06:55.320 --> 0:06:58.720 I think potentially going public in the next few weeks 0:06:58.720 --> 0:07:01.680 and months, those names that have been in the pipeline, 0:07:01.720 --> 0:07:04.400 but also some that just have good, strong, fundamental businesses. 0:07:04.480 --> 0:07:07.080 I would think there'd be a lot of private equity 0:07:07.120 --> 0:07:09.800 sponsored deals that would like to come. 0:07:09.840 --> 0:07:12.239 So we haven't seen a lot that was Homer Sports 0:07:12.320 --> 0:07:15.640 was essentially private equity, not necessarily bright Spring is just 0:07:15.720 --> 0:07:18.280 KKR back that was a disaster of a deal and 0:07:18.320 --> 0:07:21.560 traded terribly. That was at least when I talked to 0:07:21.600 --> 0:07:23.480 some investors and strategists, was kind of. 0:07:23.480 --> 0:07:25.040 They just needed to get it out the door. 0:07:25.320 --> 0:07:28.000 But to your point, when you're a private equity company, 0:07:28.480 --> 0:07:31.640 a private equity firm, you're kind of looking to recycle 0:07:31.680 --> 0:07:33.880 and get that fund of flows. We've had the IPO 0:07:33.960 --> 0:07:36.200 market really frozen for a few years at this point, 0:07:36.400 --> 0:07:38.520 so it's really a question of will they kind of 0:07:38.560 --> 0:07:41.880 cave on valuation and meet investors where they are Because 0:07:41.880 --> 0:07:45.560 a lot of those assets are big, they aren't necessarily growing, 0:07:45.800 --> 0:07:47.880 and you need to get someone to at least buy 0:07:47.880 --> 0:07:48.360 the IPO. 0:07:48.880 --> 0:07:50.320 Will they do you think they will? 0:07:50.960 --> 0:07:51.360 I don't know. 0:07:51.480 --> 0:07:53.160 I think again, it goes back to the whole case 0:07:53.160 --> 0:07:54.360 by case argument. 0:07:54.080 --> 0:07:55.360 That company a company. 0:07:56.160 --> 0:07:57.880 The big thing is when you look at your comps. 0:07:57.880 --> 0:08:01.720 So if you're again an Asteri Labs, Semiconductors AI perfect, 0:08:01.920 --> 0:08:05.600 If you're Reddit, a little bit tougher again because Snapchat Pinterest, 0:08:05.640 --> 0:08:08.640 but you're pitching that AI kind of part of the 0:08:08.680 --> 0:08:11.800 business and also trying to get more tied to meta platforms. 0:08:12.200 --> 0:08:15.440 All right, Bailey, great stuff, really really great stuff. I'm 0:08:15.480 --> 0:08:17.280 amazed that you can be that excited about so many 0:08:17.280 --> 0:08:20.880 different companies going ipo and Billy Lipschaltz, a Bloomberg News 0:08:20.920 --> 0:08:22.840 IPO reporter, joining us there. 0:08:24.280 --> 0:08:28.160 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:08:28.240 --> 0:08:31.800 weekdays at ten am Eastern on applecar Play and Android 0:08:31.800 --> 0:08:34.559 Auto with the Bloomberg Business app. You can also listen 0:08:34.679 --> 0:08:37.800 live on Amazon Alexa from our flagship New York station 0:08:38.160 --> 0:08:42.000 just say Alexa playing Bloomberg eleven thirty. 0:08:42.080 --> 0:08:44.000 The other news item out there, in addition to the 0:08:44.120 --> 0:08:45.800 FED one of the key ones. It's just kind of 0:08:45.800 --> 0:08:48.160 in the chip business. Got a couple data points for 0:08:48.240 --> 0:08:50.599 you here. Today, Intel wins almost twenty billion dollars in 0:08:50.720 --> 0:08:54.480 chips incentives for US plants. That's good for Intel in 0:08:54.520 --> 0:08:56.880 the US chip business. On the flip side, the US 0:08:56.960 --> 0:09:01.400 ways sanctioning Huawei's secretive Chinese chip network. Let's get the 0:09:01.440 --> 0:09:03.880 latest on kind of what's happening there. We're joined by 0:09:03.920 --> 0:09:08.240 Mackenzie Hawkins. She is a Bloomberg News US industrial reporter. Mackenzie, 0:09:08.240 --> 0:09:09.920 thanks so much for joining us here. Let's start with 0:09:10.000 --> 0:09:14.120 Intel here here. I guess this is part of on shoring. 0:09:14.520 --> 0:09:16.360 You know, a lot of stuff on the US soil, 0:09:16.480 --> 0:09:21.080 particularly on the chip side, talks about this Intel story, right. 0:09:21.240 --> 0:09:25.160 So today we saw the first preliminary term sheet for 0:09:25.400 --> 0:09:28.160 an advanced chip maker to come out of this broader 0:09:28.280 --> 0:09:31.600 US effort to bring semi conductor manufacturing back to American soil. 0:09:32.080 --> 0:09:35.360 So Biden signed the chips back into law in August 0:09:35.400 --> 0:09:38.800 twenty twenty two. Companies have been waiting for you know, 0:09:38.880 --> 0:09:41.240 well over a year to see those funds start flowing 0:09:41.240 --> 0:09:43.240 out the door. They haven't actually flowed out the door yet. 0:09:43.240 --> 0:09:46.400 Intel's award today is just a preliminary agreement, and it 0:09:46.440 --> 0:09:48.600 will be likely until the end of this year that 0:09:48.640 --> 0:09:51.240 they start to actually see money doled out in tranches. 0:09:51.320 --> 0:09:54.000 But this is a huge investment in you know, the 0:09:54.080 --> 0:09:57.520 real leading American chip maker, and I mean these chips 0:09:57.600 --> 0:10:00.840 will power you know, the AI friends. There are the 0:10:00.840 --> 0:10:03.720 types of tips that go into nuclear missiles and hypersonics, 0:10:03.760 --> 0:10:05.920 and this is a really significant investment for the company 0:10:06.120 --> 0:10:10.120 and for the states for they're building, including Arizona, Ohio, Oregon, 0:10:10.200 --> 0:10:10.840 and New Mexico. 0:10:11.200 --> 0:10:15.080 So Mackenzie pair of this. So okay, I love covering energy. 0:10:15.280 --> 0:10:17.280 So I'm really into the IRA And like what you've 0:10:17.280 --> 0:10:20.200 seen a lot in the IRA is everyone got super excited, 0:10:20.640 --> 0:10:24.160 but then actually sort of putting shovels in the ground 0:10:24.480 --> 0:10:26.800 was a lot more difficult. So there's like, yeah, yeah, 0:10:26.800 --> 0:10:28.640 we're gonna get the money, It's gonna happen, but it's 0:10:28.679 --> 0:10:31.720 not happening quite yet. How do we think this plays 0:10:31.720 --> 0:10:34.199 out from the chips act? Like when does Intel put 0:10:34.200 --> 0:10:37.080 a shovel in the ground. What other companies are trying 0:10:37.080 --> 0:10:38.680 to put their shovels in the ground and get the 0:10:38.720 --> 0:10:40.800 funding and will it actually you know, happen. 0:10:42.320 --> 0:10:46.120 So Intel's already building these facilities. They've had a twenty 0:10:46.160 --> 0:10:49.079 billion dollar Arizona expansion underway for some time. They're building 0:10:49.160 --> 0:10:53.320 multiple fabrication facilities, there. They're making some progress in Ohio, 0:10:53.360 --> 0:10:55.960 although there's been reporting that that's slightly delayed. We expect 0:10:56.000 --> 0:10:59.960 that construction to finish in twenty twenty six. Intel's rival 0:11:00.440 --> 0:11:03.640 Taiwan Semi Conductor Manufacturing Company and Samsung out of South 0:11:03.720 --> 0:11:06.800 Korea are also building plants in the US. Both of 0:11:06.840 --> 0:11:09.880 their sites have seen some delays that the companies and 0:11:09.920 --> 0:11:13.040 the Biden administration insist are in line with typical projections, 0:11:13.640 --> 0:11:16.440 but time will tell on this one. It will be 0:11:16.559 --> 0:11:19.240 years before these facilities are stood up. The Commerce Department 0:11:19.240 --> 0:11:21.200 has set a goal that the US will produce twenty 0:11:21.200 --> 0:11:23.360 percent of the world's advanced logic shows by the end 0:11:23.360 --> 0:11:26.920 of the decade. Currently we're at about zero, so that's 0:11:26.920 --> 0:11:28.600 a lot of progress to catch up on. Most of 0:11:28.600 --> 0:11:32.199 that productions happening in East Asia. The companies announced their 0:11:32.200 --> 0:11:35.040 projects before they got the funding from the federal government, 0:11:35.080 --> 0:11:37.360 but it is certainly their expectation that they will receive 0:11:37.400 --> 0:11:39.720 that funding, and they would like it to happen, probably 0:11:39.720 --> 0:11:40.839 a little bit faster than it did. 0:11:40.920 --> 0:11:43.920 Hey McKinnie, how secure is this funding over time? Thinking 0:11:43.920 --> 0:11:47.480 about we may have a new administration in twenty twenty five, 0:11:47.920 --> 0:11:50.520 how secure is this funding particularly you know in the 0:11:50.559 --> 0:11:51.479 out years. 0:11:53.000 --> 0:11:57.280 It's a great question. So today's announcement is a preliminary agreement. 0:11:57.960 --> 0:12:01.000 Then there's a due diligence stage, and then a final 0:12:01.080 --> 0:12:04.280 term sheet between Intel and the Commerce Department that will 0:12:04.360 --> 0:12:07.320 likely come closer to the time of the presidential election. 0:12:07.640 --> 0:12:10.679 And the Commerce Department is setting all types of benchmarks 0:12:10.679 --> 0:12:12.840 that Intel must need for the money to be doled 0:12:12.880 --> 0:12:14.760 out over time. So it's not that they get the 0:12:14.800 --> 0:12:17.120 final agreement and then they get eight and a half 0:12:17.120 --> 0:12:19.920 billion dollars in grants and eleven billion dollars worth of 0:12:19.920 --> 0:12:24.079 love loan guarantees. They have to meet benchmarks related to production, 0:12:24.200 --> 0:12:27.000 related to workforce development, and there are all types of 0:12:27.040 --> 0:12:31.280 requirements that Biden's Commerce Department might set that a potential 0:12:31.400 --> 0:12:34.600 from Commerce Department might not be as interested in. You've 0:12:34.600 --> 0:12:37.439 seen saying like child care facilities, which Intel and other 0:12:37.480 --> 0:12:41.760 companies have committed to community development agreements, all those types 0:12:41.760 --> 0:12:45.640 of things. It's entirely possible that that could shift over time. 0:12:45.920 --> 0:12:48.280 But the reality is, once they've got the equipment in 0:12:48.320 --> 0:12:51.320 the building, these are machines that cost hundreds of millions 0:12:51.320 --> 0:12:55.720 of dollars, they're committed to these facilities but Intel's CEO 0:12:55.800 --> 0:12:58.240 Podcassingers said just yesterday, we might need to shift back 0:12:58.240 --> 0:13:00.959 to two point zero companies buying for a lot more 0:13:01.000 --> 0:13:04.000 money than they currently have. The advance chipmakers together asked 0:13:04.040 --> 0:13:06.360 for more than double what the Commerce Department has available. 0:13:06.679 --> 0:13:08.319 So this is really something to watch over the next 0:13:08.360 --> 0:13:09.440 couple of years and decades. 0:13:10.040 --> 0:13:12.160 I mean, is President Trump really going to go to 0:13:12.200 --> 0:13:14.920 Ohio and Arizona and Oregon in New Mexico and be like, 0:13:14.960 --> 0:13:18.120 just kidding, I'm gonna take this development back. I mean, 0:13:18.160 --> 0:13:21.280 I think that's going to be a tricky proposition since 0:13:21.280 --> 0:13:21.680 hearing it. 0:13:21.760 --> 0:13:22.840 Is so much money. 0:13:23.520 --> 0:13:26.640 So I just came back mackenzie from energy conference basically, 0:13:26.679 --> 0:13:29.040 and I was just telling Paul that all the talk 0:13:29.120 --> 0:13:32.280 there was that tech companies are finally getting wise to 0:13:32.320 --> 0:13:34.360 the fact that they're going to build all this stuff 0:13:34.840 --> 0:13:37.520 they need power, and that power isn't as easy to 0:13:37.600 --> 0:13:40.280 come by as they might have thought. Do you hear 0:13:40.320 --> 0:13:42.600 that at all on your industrial side, Like, hey, this 0:13:42.720 --> 0:13:44.800 is great, build all these data centers Intel, but like, 0:13:44.880 --> 0:13:46.640 who's going to how are you going to get that power? 0:13:46.640 --> 0:13:47.640 What do you plug it in? 0:13:49.720 --> 0:13:52.559 Absolutely, the infrastructure is a top concern for these companies. 0:13:52.600 --> 0:13:55.040 You know, a big part of their ability to apply 0:13:55.120 --> 0:13:57.840 for chap X funding is to demonstrate commercial viability and 0:13:57.840 --> 0:14:00.760 that they have buy in from state and localists to 0:14:00.960 --> 0:14:04.600 marshal the resources necessary to stand up factories that cost 0:14:04.640 --> 0:14:07.839 tens of billions of dollars to build, sometimes require entire 0:14:07.960 --> 0:14:13.239 new water pipelines or energy resources. You know, take Arizona, 0:14:13.320 --> 0:14:16.080 which has not just this massive Intel expansion but also 0:14:16.240 --> 0:14:20.920 a huge factory to factories under construction from PSMC. Arizona 0:14:20.960 --> 0:14:24.080 does one hundred year water planning. This is a desert 0:14:24.440 --> 0:14:27.640 and so they've had to very carefully plan their water 0:14:27.720 --> 0:14:31.240 development ensure residents that their water supply is not going 0:14:31.280 --> 0:14:34.040 to be impacted, and I mean down to the land 0:14:34.120 --> 0:14:37.880 parcels in Arizona, they've planned these industrial park. You see 0:14:37.880 --> 0:14:41.040 similar things happening in Indiana, which is expected to get 0:14:41.080 --> 0:14:44.280 a roughly fifteen billion dollar investment from Skhinex, which is 0:14:44.320 --> 0:14:47.000 one of the main advanced packaging companies out of South Korea. 0:14:47.320 --> 0:14:50.640 That announcement hasn't been formally announced yet on Boo Bloomberg 0:14:50.680 --> 0:14:52.880 has reported on it. So I mean, this is a 0:14:52.880 --> 0:14:56.000 massive infrastructural effort which, as you note, is coming alongside 0:14:56.280 --> 0:14:58.960 a lot of other investments in other sectors coming from 0:14:59.000 --> 0:15:03.840 the Inflation Reduction Act, things like UV's batteries, hydrogen, wind, solar, 0:15:04.400 --> 0:15:07.000 and sort of more traditional heart infrastructure from the Byparts 0:15:07.000 --> 0:15:07.800 and Infrastructure Law. 0:15:08.320 --> 0:15:12.520 All Right, more news mackenzie on the chip front, which 0:15:12.520 --> 0:15:15.040 you're reporting as well. Well, you're all over this stuff. 0:15:15.240 --> 0:15:20.400 The US ways sanctioning Huawei's secretive Chinese chip network. This 0:15:20.560 --> 0:15:24.160 sounds like another round of what may be a technological 0:15:24.160 --> 0:15:26.360 cold war between China and the West. What's the latest 0:15:26.400 --> 0:15:27.080 year with Whuahwei? 0:15:28.520 --> 0:15:32.040 Certainly so this is I would say the strongest potential 0:15:32.200 --> 0:15:35.000 US reactions so far. So a pretty significant breakthrough that 0:15:35.080 --> 0:15:39.080 Huawei had last August. So Huawei has been the target 0:15:39.240 --> 0:15:44.440 of US efforts to curtail China's text development for years now. 0:15:44.560 --> 0:15:48.440 Is originally sanctioned in twenty nineteen the Biden administration that 0:15:48.480 --> 0:15:51.000 was under Trump. The Biden administration followed up with sweeping 0:15:51.000 --> 0:15:54.520 export controls on the ability of US companies and foreign 0:15:54.560 --> 0:15:57.480 companies that use US technology to ship advance shifts and 0:15:57.520 --> 0:16:00.320 ship making equipment to China, and the goal was to 0:16:00.440 --> 0:16:04.600 cap Huawei and other Chinese companies chip development. At what 0:16:04.680 --> 0:16:07.880 we consider an older generation or mature node. And then 0:16:08.000 --> 0:16:11.720 while the Commerce Secretary Junior Raimondo was visiting China in August, 0:16:12.040 --> 0:16:14.880 Huawei unveiled a smartphone that was powered by an advanced 0:16:14.880 --> 0:16:17.840 seven nanimeter chips produced by their chip making partner, Smick, 0:16:17.960 --> 0:16:20.720 also a Chinese company, and a lot of people who've 0:16:20.760 --> 0:16:22.480 been watching the industry for a while saying this isn't 0:16:22.480 --> 0:16:25.800 actually hugely surprising. Of course, China's doubling down on efforts 0:16:25.840 --> 0:16:28.240 to build a full domestic semi conductor supply chain. They 0:16:28.320 --> 0:16:31.440 figured out how to retool some older generation machines from 0:16:31.680 --> 0:16:34.960 the main Dutch equipment maker to produce these chips. But 0:16:35.480 --> 0:16:37.560 a lot of folks in Washington were caught a little 0:16:37.560 --> 0:16:41.880 bit by surprise and has been working on a response. 0:16:42.000 --> 0:16:44.360 And so this is what the response could look like. 0:16:44.440 --> 0:16:49.040 There's a network that Bloomberg reported on last year. The 0:16:49.040 --> 0:16:52.600 Semi Conductor Industry Association of Washington based trade group identified 0:16:52.640 --> 0:16:56.360 several companies that could potentially produce chips for Huawei in 0:16:56.400 --> 0:16:59.560 the future. And so this list affirms that BIDEN is 0:16:59.600 --> 0:17:03.480 considered sanctioning, meaning that any shipments to those companies would 0:17:03.520 --> 0:17:06.840 require a formal license from the Commerce department includes four 0:17:06.880 --> 0:17:09.800 companies that might make chips for Huawei and two companies 0:17:09.800 --> 0:17:12.960 that they're worried. These are not actual shipmakers themselves, but 0:17:13.000 --> 0:17:16.280 they could import advanced equipment and then send that to 0:17:16.320 --> 0:17:20.360 Huaweis or to Huawei's other infomating partners to continue producing 0:17:20.359 --> 0:17:21.320 these chips. 0:17:21.600 --> 0:17:23.440 Really great stuff. You were coming out all the time 0:17:23.480 --> 0:17:25.880 at Kensie Hawkins. Thank you so much, Bloomberg News US 0:17:25.920 --> 0:17:29.639 Industrial Reporter. It's just the whole decoupling thing. Yeah, exactly, 0:17:29.680 --> 0:17:31.600 really hard. It's take out a lot of time. 0:17:33.040 --> 0:17:36.880 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:17:37.000 --> 0:17:40.080 weekdays at ten am Eastern on Appo, Cardplay and Android 0:17:40.080 --> 0:17:43.200 Auto with the Bloomberg Business app. Listen on demand wherever 0:17:43.240 --> 0:17:47.080 you get your podcasts, or watch us live on YouTube. 0:17:47.960 --> 0:17:49.760 Speaking of Boeing, I'm looking at the stock here. It's 0:17:49.800 --> 0:17:52.280 up about one point eight percent, as Abigail suggested, so 0:17:52.560 --> 0:17:54.959 still down twenty nine percent year to date and off 0:17:55.000 --> 0:17:57.080 about ten percent over tilling twelve months. There really some 0:17:57.080 --> 0:17:59.640 concerns there from investors. So let's check in with George 0:17:59.640 --> 0:18:04.320 Fergus and he's an aerospace and airlines analyst for Bloomberg Intelligence. 0:18:05.000 --> 0:18:08.480 He joins us a via a zoom from Princeton. God 0:18:08.520 --> 0:18:10.280 for Biddy gets on the train and comes to New York. 0:18:10.320 --> 0:18:11.840 But anyway, he's the best on the street, so we 0:18:11.880 --> 0:18:15.080 appreciate getting a few minutes at his time. George, you know, 0:18:15.880 --> 0:18:18.159 I love Boeing. It's just a great American company. I 0:18:18.160 --> 0:18:21.920 love aerospace. But boy, these guys have just seems like 0:18:22.000 --> 0:18:23.239 every day something's happening here. 0:18:23.280 --> 0:18:23.359 Now. 0:18:23.359 --> 0:18:25.119 I guess it's partly you know, the press is just 0:18:25.160 --> 0:18:28.040 picking up on any little thing. But what's going on 0:18:28.040 --> 0:18:29.200 there with Boeing? Really, do you think? 0:18:30.600 --> 0:18:30.719 Well? 0:18:30.760 --> 0:18:33.200 I mean, I think we heard it from Brian West 0:18:33.200 --> 0:18:35.000