WEBVTT - China Bans Micron Chips and Meta's Fine 0:00:01.400 --> 0:00:05.080 From the heart where innovation, money and power Collie in 0:00:05.200 --> 0:00:09.719 Silicon Vallet and beyond. This is Bloomberg Technology with Caroline 0:00:09.800 --> 0:00:24.160 Hyde and Ed Ludlow. 0:00:25.480 --> 0:00:28.000 I'm Scarlett who in for Caroline Hide at Bloomberg World 0:00:28.000 --> 0:00:29.920 headquarters in New York, and. 0:00:29.880 --> 0:00:32.240 I'm Alex Burnka in for Ed Ludlow in San Francisco. 0:00:32.400 --> 0:00:34.560 This is Bloomberg Technology. 0:00:34.159 --> 0:00:37.279 Coming up an escalation in the US China tensions as 0:00:37.360 --> 0:00:40.440 China bans microns chips on cybersecurity risks. 0:00:40.440 --> 0:00:43.080 Will bring you all the details, plus a. 0:00:43.000 --> 0:00:45.559 Record find for Meta, the social media giant ordered to 0:00:45.560 --> 0:00:48.200 pay one point three billion dollars to the EU after 0:00:48.240 --> 0:00:51.680 regulators said it failed to protect personal information. We'll break 0:00:51.680 --> 0:00:54.560 that decision down and forward. 0:00:54.320 --> 0:00:57.280 Stepping up its electric vehicle output after reaching a series 0:00:57.280 --> 0:01:00.000 of deals to buy lithium from projects in Canada to 0:01:00.560 --> 0:01:02.800 We're going to be hearing from the CEO later this hour, 0:01:04.120 --> 0:01:05.679 but first we want to give you a check on 0:01:05.760 --> 0:01:08.600 markets and where things stand at midday here in New York. 0:01:08.680 --> 0:01:09.800 It's very much weight and. 0:01:09.760 --> 0:01:12.080 See game when it comes to the broader equity market, 0:01:12.120 --> 0:01:14.960 both on the debt selling negotiations and what the Federal 0:01:15.000 --> 0:01:17.640 Reserve decides to do with interest rates. Negotiating teams, by 0:01:17.680 --> 0:01:21.040 the way, are back on at the table today in Washington, 0:01:21.120 --> 0:01:24.119 d C. However, we do see the Nazak one hundred 0:01:24.200 --> 0:01:27.520 leading the way. Tech stocks continue to be the outperformers here, 0:01:27.720 --> 0:01:29.640 even as chip makers are under pressure. We'll get to 0:01:29.680 --> 0:01:31.520 that a little bit later on the Nazak one hundred, 0:01:31.560 --> 0:01:35.360 by the way, at a thirteen month high, and excel UF, 0:01:35.360 --> 0:01:37.720 which is the ETF that tracks financial stocks, up by 0:01:37.720 --> 0:01:39.919 a third of one percent, thanks very much. In focus 0:01:39.959 --> 0:01:43.039 today with JP morgan Chase holding its investor day and 0:01:43.120 --> 0:01:47.480 also helping to boost sentiment is pack West. The Beverly 0:01:47.560 --> 0:01:50.840 Hills based lender is not a holding in this ETF, 0:01:50.960 --> 0:01:53.680 but it is taking steps to boost its liquidity by 0:01:53.720 --> 0:01:56.280 selling two point six billion dollars of real estate loans 0:01:56.360 --> 0:01:59.080 at a discount and the two year yield ticking up 0:01:59.080 --> 0:02:01.440 to four point three to three percent. There's no ECO 0:02:01.520 --> 0:02:04.760 data today, so expect a lot of movement based on 0:02:04.840 --> 0:02:09.760 incremental movement, hopefully progress in those debt sealing discussions. Let's 0:02:09.760 --> 0:02:11.640 switch it up here and take a look at commodities. 0:02:11.880 --> 0:02:14.400 Crude oil has now flipped to the upside, up by 0:02:14.400 --> 0:02:16.760 four tenths of one percent, even as copper is down 0:02:16.800 --> 0:02:19.360 by one point three percent. Still a lot of concerns 0:02:19.400 --> 0:02:22.520 over what's going on in China. That post COVID rebound 0:02:22.600 --> 0:02:24.560 has not been as strong as many people had hoped, 0:02:24.600 --> 0:02:27.320 and the lack of fresh stimulus measures in China is 0:02:27.360 --> 0:02:29.560 certainly holding back some of the medals. 0:02:29.800 --> 0:02:30.880 And I wanted to point. 0:02:30.680 --> 0:02:33.040 Out the Hanksaying Index closing up by more than one 0:02:33.400 --> 0:02:36.440 percent after Joe Biden, the President said that he expects 0:02:36.560 --> 0:02:39.680 US China relations to improve very shortly. 0:02:39.720 --> 0:02:40.960 Details on that coming up. 0:02:41.000 --> 0:02:44.880 And finally, Greek stocks getting a big, big day here. 0:02:44.960 --> 0:02:48.040 They made a new ten year high after national elections. 0:02:48.080 --> 0:02:50.880 It looks like the incumbent Prime Minister is in position 0:02:50.960 --> 0:02:53.600 to get another four year term, which is certainly a 0:02:53.600 --> 0:02:56.799 good thing for all his investment friendly policies. That investors 0:02:56.800 --> 0:02:59.079 are keeping a very close eye on alex What about you? 0:02:59.120 --> 0:03:01.840 What are you watching? I'm watching the top tech. 0:03:01.600 --> 0:03:05.360 Mover today, Scarlett first with Meta Investors are really taking 0:03:05.400 --> 0:03:08.640 that one point three billion dollar fine in Stride coming 0:03:08.639 --> 0:03:11.320 over from the EU. Perhaps that's because the company has 0:03:11.360 --> 0:03:14.160 actually in the past threatened to leave if there's not 0:03:14.440 --> 0:03:17.799 a resolution on the EU's kind of push for them 0:03:17.800 --> 0:03:20.840 not to send userdata over overseas to the US. I'm 0:03:20.880 --> 0:03:23.640 also looking at Albermarle. Now, this is a company that 0:03:23.800 --> 0:03:27.440 just inked a lithium partnership with Ford. Ford has a 0:03:27.480 --> 0:03:31.280 fifty billion dollar electric vehicle plan and for Albemarle to 0:03:31.280 --> 0:03:33.680 be in the mix. Investors are liking a little bit 0:03:33.720 --> 0:03:36.920 of that now. In terms of what's going on in 0:03:36.960 --> 0:03:39.360 the cybersecurity space, there is. 0:03:39.440 --> 0:03:42.240 Kind of our top name of the day, Micron. 0:03:42.640 --> 0:03:48.200 China's cybersecurity regulator said it found relatively serious cybersecurity risks 0:03:48.400 --> 0:03:51.280 when it comes to the company's chips. Whether this is 0:03:51.560 --> 0:03:54.200 political banter or there are actual risks. We're going to 0:03:54.240 --> 0:03:56.560 break all that down in the show, but for now, 0:03:56.640 --> 0:03:59.320 investors drove the stock down around five percent. It's pairents 0:03:59.280 --> 0:04:02.360 some of those laws, but we'll get into the details here, 0:04:02.400 --> 0:04:05.480 Suit Scarlett, all right, and let's stay on that right now, 0:04:05.520 --> 0:04:08.200 because we're going to go now to San Francisco and 0:04:08.240 --> 0:04:11.680 bring in Ian King, who's covered semiconductors in Asia and 0:04:11.720 --> 0:04:14.080 now on the West Coast. So Ian, with his decades 0:04:14.080 --> 0:04:16.160 of experience, is certainly the best person to speak on this. 0:04:16.560 --> 0:04:20.000 Ian, as Alex was setting up for us. It's curious 0:04:20.160 --> 0:04:23.440 this ban on Micron products. What kind of history does 0:04:23.480 --> 0:04:27.080 Micron have with China specifically? Is there a notable significant 0:04:27.120 --> 0:04:27.960 history between the two. 0:04:29.000 --> 0:04:31.279 Yeah, I mean there are a number of incidents. The 0:04:31.279 --> 0:04:34.760 big thing to point out is that Micron, unlike it's 0:04:34.800 --> 0:04:39.000 South Korean competitors Sam Song and s Khaynix, doesn't have 0:04:39.120 --> 0:04:43.440 a production plant in China. Those guys do, which obviously 0:04:43.480 --> 0:04:46.479 makes them a little bit closer to Beijing's heart in 0:04:46.560 --> 0:04:49.880 terms of what that country wants to do with domesticating 0:04:49.920 --> 0:04:52.640 its own chip industry. And the other sort of negative 0:04:53.080 --> 0:04:55.760 thing that's happened for Micron in the past is Micron 0:04:55.839 --> 0:05:00.360 went caught with a Taiwanese company arguing that that company 0:05:00.360 --> 0:05:04.680 with stealing its IP to give to China. So there's 0:05:04.720 --> 0:05:07.279 there's some real kind of tension there in the past. 0:05:07.680 --> 0:05:10.240 Now Ian Micron obviously caught in the middle of this 0:05:10.240 --> 0:05:11.080 political banter. 0:05:11.440 --> 0:05:13.480 If your Qualcom, if you're Broadcom. 0:05:13.080 --> 0:05:15.719 If you're Intel, should you be worried that your next 0:05:15.760 --> 0:05:19.279 And if not, why is Micron the target of Beijing's 0:05:19.320 --> 0:05:20.039 ire at the moment? 0:05:20.160 --> 0:05:23.480 I mean, the way to think about this is China 0:05:23.560 --> 0:05:28.120 needs Qualcomm, China needs Intel. China needs Broadcom, it doesn't 0:05:28.200 --> 0:05:31.400 need Micron. The chips that Micron makes, the DRAM and 0:05:31.480 --> 0:05:34.840 the non flash memory chips are basically exactly the same 0:05:34.880 --> 0:05:37.240 as the ones that Samsung makes, as the ones at 0:05:37.320 --> 0:05:39.960 sk Henex makes, So literally you can drop them into 0:05:40.040 --> 0:05:42.280 a piece of electronics, pull one out, put one in. 0:05:42.560 --> 0:05:45.520 You can't do that with other products from those companies 0:05:45.560 --> 0:05:47.680 you mentioned. So that's what's going on here. 0:05:47.960 --> 0:05:50.880 That's incredible context here because Micron's memory chips are kind 0:05:50.880 --> 0:05:55.039 of commoditized. They're pretty standard components as opposed to say, 0:05:55.040 --> 0:05:58.000 in videos graphics chips. How much of this is trying 0:05:58.040 --> 0:06:00.640 to buying time or giving its own domestic industry some 0:06:00.720 --> 0:06:02.040 time to bloom. 0:06:03.520 --> 0:06:07.960 I mean, if that's the plan, we're talking a decade 0:06:08.120 --> 0:06:12.560 two decades before they'll have equivalent capabilities. What this is 0:06:12.600 --> 0:06:15.800 being seen as more of Scarlett is really Beijing has 0:06:16.000 --> 0:06:17.760 just really had to take it on the chin. We've 0:06:17.760 --> 0:06:20.880 seen all of these actions by the US government against 0:06:21.040 --> 0:06:24.719 Chinese technology companies, and really Beijing has had nothing to 0:06:24.760 --> 0:06:27.479 fight back with apart from Micron. It can take a 0:06:27.520 --> 0:06:28.080 swing at them. 0:06:28.480 --> 0:06:31.560 Ian King, our in house semiconductor expert, Thank you. I 0:06:31.600 --> 0:06:34.440 want to now bring in the Washington angle on this. 0:06:34.520 --> 0:06:38.120 We have Bloomberg's Haley Lines. Kayley, as we see this 0:06:38.240 --> 0:06:42.120 kind of back and forth between Beijing and DC, what 0:06:42.200 --> 0:06:44.200 do you think is next here or does dec have 0:06:44.240 --> 0:06:45.080 a response to this. 0:06:45.080 --> 0:06:46.200 Micron move from China. 0:06:47.480 --> 0:06:50.640 Yeah, well, we've already heard from the Commerce Department on this, 0:06:50.760 --> 0:06:54.680 saying that Beijing's conclusion here that micro imposes a cybersecurity 0:06:55.120 --> 0:06:57.839 national security threat has no basis in fact, and that 0:06:57.960 --> 0:07:00.919 this action, along with some other recent action that Beijing 0:07:00.960 --> 0:07:04.159 has taken, is inconsistent with China's assertions that it's opening 0:07:04.240 --> 0:07:08.920 up its markets and is committed to a transparent regulatory framework. 0:07:09.160 --> 0:07:11.640 So that's the US response. Of course, China, for its 0:07:11.680 --> 0:07:15.080 part in releasing this conclusion from this review, says it 0:07:15.120 --> 0:07:17.680 wasn't political, that it is about national security, but it 0:07:17.720 --> 0:07:20.440 does kind of have this sense of escalating a fight 0:07:20.520 --> 0:07:23.040 between the world's two largest economies when it comes to 0:07:23.080 --> 0:07:25.000 this technology. Because we have to keep in mind the 0:07:25.120 --> 0:07:27.680 US has already taken plenty of action on its own. 0:07:27.720 --> 0:07:30.760 It's blacklisted certain Chinese technology firms, and of course late 0:07:30.840 --> 0:07:35.280 last year also introduced a pretty sweeping restriction on selling 0:07:35.480 --> 0:07:38.520 advanced semiconductor manufacturing equipement to China. 0:07:39.000 --> 0:07:41.840 You know, it's ironic that this is happening right as 0:07:42.000 --> 0:07:44.880 President Joe Biden is in Asia attending the G seven 0:07:44.920 --> 0:07:47.640 summit and making comments about how he sees he has 0:07:47.760 --> 0:07:51.200 China relations actually improving very shortly. Give us some context 0:07:51.280 --> 0:07:53.360 for when he made those comments and what he might 0:07:53.400 --> 0:07:54.040 be referring to. 0:07:55.280 --> 0:07:57.160 Well, that was him speaking before he left the G 0:07:57.240 --> 0:07:59.720 seven seven in Japan, your right, Scarlett or Ambrey Horden, 0:07:59.800 --> 0:08:03.400 was asking him about China. Also the question around sanctions 0:08:03.400 --> 0:08:06.760 to facilitate a meeting between Defense Secretary Lloyd Austin and 0:08:06.800 --> 0:08:09.840 his counterpart, which that we understand is under review by 0:08:09.880 --> 0:08:13.320 the administration, still something potentially in the works. But he 0:08:13.400 --> 0:08:16.680 did say referring to the Chinese spy balloon incident that 0:08:16.720 --> 0:08:20.200 captured all of our attention earlier this year, calling it silly, 0:08:20.280 --> 0:08:23.600 saying that he does expect relations between the US and 0:08:23.720 --> 0:08:27.680 China too thaw in the near term. It poses a 0:08:27.800 --> 0:08:31.320 very interesting contrast between the tone of the President's remarks 0:08:31.520 --> 0:08:35.000 over the weekend versus then just hours later later China 0:08:35.080 --> 0:08:37.360 making this move against a US company. 0:08:38.080 --> 0:08:40.920 Now, Kaylee, this isn't the only big conversation happening in DC. 0:08:41.520 --> 0:08:43.720 It is start of the week. Where are we next 0:08:43.720 --> 0:08:46.280 on the debt ceiling debate? What do we expect today 0:08:46.320 --> 0:08:47.280 on this Monday. 0:08:48.200 --> 0:08:50.160 Well, at five point thirty pm, there is going to 0:08:50.200 --> 0:08:53.559 be a meeting between President Biden and House Speaker Kevin McCarthy. 0:08:53.640 --> 0:08:56.040 So that's really what we're all looking forward to. 0:08:56.200 --> 0:08:56.360 Now. 0:08:56.360 --> 0:08:58.839 Those two did speak on the phone yesterday when the 0:08:58.920 --> 0:09:00.880 President Biden was on Air one on his. 0:09:00.920 --> 0:09:02.520 Way back to the US. 0:09:02.559 --> 0:09:04.640 It seemed that their tone coming out of that phone 0:09:04.640 --> 0:09:07.640 call was one of more optimism. But really this is 0:09:07.640 --> 0:09:10.640 going to be about real progress being made. 0:09:10.679 --> 0:09:11.439 We understand that. 0:09:11.400 --> 0:09:13.640 The two sides are still really far far apart in 0:09:13.679 --> 0:09:16.840 the negotiations, as their different parties have been working over 0:09:16.880 --> 0:09:19.480 the weekend, working again at the Capitol this morning on 0:09:19.559 --> 0:09:22.520 this But the issue of spending cuts, spending caps, stricter 0:09:22.640 --> 0:09:26.760 work requirements for entitlements, permitting reform, all still on the table, 0:09:26.800 --> 0:09:30.480 all still needing to be ironed out into an ultimate compromise. 0:09:30.600 --> 0:09:33.520 Because even once we get a deal between Speaker McCarthy 0:09:33.559 --> 0:09:35.520 and President Biden, it still needs to work. It's the 0:09:35.520 --> 0:09:38.040 way through both chambers of Congress to make it back 0:09:38.080 --> 0:09:40.240 to the President's desk for him to sign off on it. 0:09:40.480 --> 0:09:42.800 And we're just ten days out now from June first, 0:09:42.920 --> 0:09:46.000 which Treasury Secretary Jenneyellen reiterated over the weekend could be 0:09:46.280 --> 0:09:47.600 the earliest possible X State. 0:09:47.840 --> 0:09:50.240 Yeah, Cluck is sticking. Kelly, Thank you so much. Kelly 0:09:50.280 --> 0:09:52.160 Lines joining us from Washington. 0:10:00.600 --> 0:10:02.240 It's time now for talking tech. 0:10:02.360 --> 0:10:05.199 First up, Uber, the ride sharing company, is placing its 0:10:05.200 --> 0:10:08.520 head of diversity on leave after complaints of insensitivity. 0:10:08.760 --> 0:10:10.559 CEO Dara Kashrashahi asked. 0:10:10.400 --> 0:10:12.880 Bo Young Lee to take a leave of absence after 0:10:12.920 --> 0:10:16.640 workers complained that an employee event she moderated called Don't 0:10:16.640 --> 0:10:20.520 Call Me Karen was insensitive to people of color. And 0:10:20.800 --> 0:10:24.160 turmoil in the cyber insurance market. Global insurers are racing 0:10:24.200 --> 0:10:27.280 to figure out how to avoid covering government sponsored cyber 0:10:27.320 --> 0:10:31.840 attacks and catastrophic hacks. Ransomware attacks increased by eighty seven 0:10:31.920 --> 0:10:34.200 percent in twenty twenty two from the year prior, with 0:10:34.320 --> 0:10:37.720 global cyber premiums expected to exceed twenty three billion dollars 0:10:37.760 --> 0:10:38.840 by twenty twenty five. 0:10:39.440 --> 0:10:39.880 Plus. 0:10:39.920 --> 0:10:44.240 Instagram ran into some technical difficulties on Sunday night. Tens 0:10:44.240 --> 0:10:46.880 of thousands of users reported that they could not access 0:10:46.920 --> 0:10:49.840 the app and what was the second widespread disruption in 0:10:49.960 --> 0:10:52.720 just over two months. Down detectors now reporting that the 0:10:52.760 --> 0:10:55.120 problem lasted for about an hour and the app is 0:10:55.280 --> 0:10:56.280 back up and running. 0:10:56.320 --> 0:10:58.559 Now, Scarlett, all right, well we're going. 0:10:58.559 --> 0:11:02.319 To stick with Instagram because his parent company Meta now 0:11:02.400 --> 0:11:05.360 faces a record one point three billion dollar fine in 0:11:05.440 --> 0:11:07.560 the EU. So we want to bring in Alex Webb 0:11:07.600 --> 0:11:10.000 of Bloomberg Quick Take, who covers all things tech, to 0:11:10.040 --> 0:11:11.400 give us some more context here. 0:11:11.679 --> 0:11:12.320 Alex, this is. 0:11:12.320 --> 0:11:14.760 Something that was not a total surprise, but the amount 0:11:14.840 --> 0:11:15.800 is certainly a surprise. 0:11:17.360 --> 0:11:20.800 Yes, it is a record fine for Facebook. The question 0:11:20.880 --> 0:11:23.920 is whether ultimately they will end up paying it. There 0:11:24.320 --> 0:11:27.840 sort pertains to the so called US EU privacy Shield. 0:11:27.920 --> 0:11:31.679 This was the agreement that previously let companies transfer data 0:11:31.679 --> 0:11:35.319 from Europe to the US without any major questions asked. 0:11:35.520 --> 0:11:37.559 Then all of a sudden there were concerns that actually 0:11:37.679 --> 0:11:40.680 US intelligence agencies might have access to this data, so 0:11:40.720 --> 0:11:44.800 they scrapped the privacy shield. Facebook has, according to this decision, 0:11:44.800 --> 0:11:47.760 at any rate, failed to prevent data from being shipped 0:11:47.800 --> 0:11:51.120 over to the US. There is, however, a new privacy shield. 0:11:51.160 --> 0:11:53.520 Talks about it are in the offering that could be 0:11:53.559 --> 0:11:56.200 agreed upon by the end of the Northern Hemisphere summer. 0:11:57.040 --> 0:11:59.559 Now alex The investors, though, are not necessarily seeing this 0:11:59.600 --> 0:12:01.839 as about thing. Perhaps that's because the company in the 0:12:01.880 --> 0:12:03.840 past has threatened to actually pull out of the EU. 0:12:04.320 --> 0:12:07.640 How are you taking this stock reaction that the shares 0:12:07.679 --> 0:12:09.800 are up about two percent on the news even though 0:12:09.800 --> 0:12:12.840 this is a record fine for Meta. 0:12:13.080 --> 0:12:15.120 Well, Often in these sort of cases, when a fine 0:12:15.440 --> 0:12:18.720 is sold out, stocks do tend to pop because investors 0:12:18.760 --> 0:12:21.960 have clarity. They know how much this is likely to 0:12:22.000 --> 0:12:24.439 cost the company if it does end up costing them 0:12:24.480 --> 0:12:28.880 anything at all. That clarity therefore results in a stock 0:12:28.920 --> 0:12:32.920 price gain. Often then, don't forget you know, Facebook has 0:12:33.280 --> 0:12:36.160 met as oodles of money, has very healthy free cash flow, 0:12:36.200 --> 0:12:39.520 even before the savings program that they've been putting into place. 0:12:39.520 --> 0:12:43.720 They've reported twenty eight billion of revenue in the first quarter. 0:12:43.760 --> 0:12:46.760 So one point three billion, you know, while clearly painful, 0:12:47.160 --> 0:12:48.800 is not going to bankrupt the company. 0:12:48.960 --> 0:12:49.280 Yeah. 0:12:49.320 --> 0:12:51.839 Absolutely, And we've seen how those tech companies with their 0:12:51.840 --> 0:12:54.960 free cash flow have been regarded as safe havens for 0:12:55.080 --> 0:12:58.199 investors in this turbulent time in the markets. One thing 0:12:58.240 --> 0:13:00.520 that I did notice in the reporting is that metal 0:13:00.640 --> 0:13:03.480 was given time to suspend any future transfer of data. 0:13:03.520 --> 0:13:05.440 Does that mean that there is a way out for 0:13:05.480 --> 0:13:08.400 the company where perhaps a fine could be whittled down. 0:13:10.679 --> 0:13:12.719 No, it means that if they don't do it by 0:13:12.760 --> 0:13:15.280 that date, then there could be there's the risk of 0:13:15.280 --> 0:13:18.400 further punishment. The real act. One of the really interesting 0:13:18.440 --> 0:13:20.960 piece of reporting on this About a year ago, Motherboard 0:13:21.280 --> 0:13:23.560 managed to get hold of an internal document from Facebook 0:13:23.640 --> 0:13:26.120 which likened data to a pot of ink that is 0:13:26.160 --> 0:13:28.240 thrown into a swimming pool. That the ink is in 0:13:28.280 --> 0:13:30.360 the pool, Now, how do you gather that ink back up? 0:13:30.559 --> 0:13:34.880 The internal Facebook document heavily implied that that was essentially impossible. 0:13:34.880 --> 0:13:36.880 That's the real challenge they face right now. Perhaps over 0:13:36.880 --> 0:13:40.040 the course of the past year since this reporting was published, 0:13:40.120 --> 0:13:42.120 they have found a way of putting the ink back 0:13:42.160 --> 0:13:44.760 in the pot, but it is a real challenge and 0:13:44.800 --> 0:13:46.280 will be interested to see how or if they do it. 0:13:47.120 --> 0:13:50.480 Alex, this is meta cotton and crosshairs. This beats out 0:13:50.520 --> 0:13:53.760 the record fine that was previously applied to Amazon. Are 0:13:53.760 --> 0:13:56.720 there other companies in the EU that should be looking 0:13:56.760 --> 0:13:59.079 at this as kind of a warning sign? Who should 0:13:59.080 --> 0:14:01.480 be actually looking at where their ink is spread throughout 0:14:01.480 --> 0:14:02.400 their organizations. 0:14:03.840 --> 0:14:08.120 I think that the EU has been very slow on GDPR, 0:14:08.480 --> 0:14:12.560 on the general Data Protection regulation, and they are that 0:14:12.640 --> 0:14:17.160 clearly picking the big most egregious victims first. It's still 0:14:17.160 --> 0:14:19.440 five years, so first, it's a very long timeline. It 0:14:19.520 --> 0:14:21.720 is a warning shot to other people to say, you know, 0:14:21.920 --> 0:14:23.880 sort your stuff out. I'm sure there are plenty of 0:14:23.880 --> 0:14:26.800 other companies who have done this. Facebook also sits on 0:14:26.800 --> 0:14:29.720 one of the biggest pools of consumer data in the world, 0:14:29.800 --> 0:14:32.200 so it's unsurprising therefore that they are gone for first. 0:14:32.200 --> 0:14:33.840 I wouldn't like to name names on who else might 0:14:33.880 --> 0:14:35.880 be in the firing line, but I'm sure there is 0:14:35.920 --> 0:14:38.080 a very long list of people who could be vulnerable 0:14:38.120 --> 0:14:39.440 to this well. 0:14:39.480 --> 0:14:42.120 Bloomberg's Alex Webb thanks for joining and some clarity on 0:14:42.160 --> 0:14:54.200 that situation. Rory Harvey, executive vice president of General Motors, 0:14:54.240 --> 0:14:57.200 spoke exclusively to Bloomberg's Matt Miller about its new line 0:14:57.200 --> 0:15:00.440 of evs, including an electric Chevrolet Varado. 0:15:00.600 --> 0:15:01.160 Take a listen. 0:15:03.240 --> 0:15:05.880 We have our Altium platform, and the Altium platform actually 0:15:05.880 --> 0:15:08.800 gives us the ability to be able to configure battery 0:15:08.840 --> 0:15:11.320 packs in many different formats in terms of the amount 0:15:11.360 --> 0:15:13.800 of modules that are in there, so dependent upon the 0:15:13.840 --> 0:15:16.960 capabilities of the vehicle, dependent upon the prices of the vehicle, 0:15:17.040 --> 0:15:20.360 dependent upon what functionality we want from the vehicle, then 0:15:20.400 --> 0:15:23.480 we can figure those atium battery packs in a way 0:15:23.520 --> 0:15:26.120 that fits the customer needs. So there's a huge decree 0:15:26.200 --> 0:15:29.320 of commonality within autium. But it also provides us with 0:15:29.520 --> 0:15:30.680 ultimate flexibility. 0:15:31.120 --> 0:15:34.240 Is altm able to scale from you know, a thirty 0:15:34.280 --> 0:15:36.520 thousand dollars vehicle all the way up to one hundred 0:15:36.520 --> 0:15:38.160 and fifty thousand dollars vehicle. 0:15:38.800 --> 0:15:41.360 It certainly is. That's one of the great things about 0:15:41.360 --> 0:15:42.280 otium as a product. 0:15:43.040 --> 0:15:47.200 That's that's very impressive. Now, having said that, more people 0:15:47.280 --> 0:15:49.880 who are ordering your vehicles are paying closer to the 0:15:49.920 --> 0:15:53.280 upper end. I saw that of the Silverado HD orders, 0:15:53.320 --> 0:15:57.160 which is a work truck. Let's be fair, right, eighty 0:15:57.200 --> 0:16:01.640 four percent or for AT four and Denali trims. In 0:16:01.680 --> 0:16:04.360 fact more than fifty percent or for Denali and Denali 0:16:04.480 --> 0:16:05.080 Ultimate trims. 0:16:05.120 --> 0:16:07.240 So they're paying top dollar for these trucks. 0:16:08.360 --> 0:16:10.840 Yeah, no, I mean, and I think that's again it's 0:16:10.880 --> 0:16:14.000 just credibility in terms of the desirability of the product portfolio. 0:16:14.040 --> 0:16:16.440 If you looked at the general Motors product portfolio today, 0:16:17.040 --> 0:16:19.800 I think it's outstanding. And if you looked at it 0:16:19.840 --> 0:16:22.600 in terms of what customers are looking at to buy 0:16:22.680 --> 0:16:25.200 to meet their needs. As an example, they're paying a premium. 0:16:25.240 --> 0:16:28.200 So again it just shows the desirability of our vehicles 0:16:28.680 --> 0:16:30.680 and the fact that we've got vehicles that are attractive 0:16:30.680 --> 0:16:31.400 to our customers. 0:16:31.480 --> 0:16:35.320 You have a small electric vehicle in the bolt that 0:16:35.440 --> 0:16:39.040 addresses that issue. How are your EV sales as a 0:16:39.040 --> 0:16:41.600 percentage of the total what do you expect for example, 0:16:41.720 --> 0:16:44.040 Rory in twenty twenty three and twenty twenty four. 0:16:45.160 --> 0:16:47.840 Yeah, that one's really interesting because, as you know, Matt, 0:16:47.880 --> 0:16:50.800 the adoption rates continue to change. If you looked at 0:16:51.000 --> 0:16:53.080 the data for April, I think it was the highest 0:16:53.080 --> 0:16:55.880 penetration of evs in the industry as an example. So 0:16:56.080 --> 0:17:00.680 we adjust our production capabilities in line with could demand. 0:17:01.000 --> 0:17:03.600 So I guess I'm not going to give a definitive number, 0:17:03.640 --> 0:17:06.360 but suffice to say that you know it's increasing all 0:17:06.400 --> 0:17:08.639 of the time. And if you looked at the second 0:17:08.680 --> 0:17:11.080 half of the year, certainly if you take the Cadillac 0:17:11.160 --> 0:17:13.400 Lyric as an example, we know that we started off 0:17:13.440 --> 0:17:18.040 deliberately so with relatively low volumes and we're building significantly 0:17:18.080 --> 0:17:20.240 in half two, so it's going to take an ever 0:17:20.320 --> 0:17:22.159 greater proportion of general motor sales. 0:17:22.280 --> 0:17:24.400 Rory, let me finally ask you about the chip situation. 0:17:24.920 --> 0:17:27.080 Are you all cut up in terms of the supply chain? 0:17:27.119 --> 0:17:29.040 Can you get all the chips that you need to 0:17:29.480 --> 0:17:32.040 produce in the size that you want to. 0:17:33.880 --> 0:17:35.880 I would say work in progress. I would say it's 0:17:35.920 --> 0:17:39.680 significantly better than where it was historically. I would say 0:17:39.720 --> 0:17:42.240 that we are not in a position that we could 0:17:42.240 --> 0:17:44.800 declare that it's all totally behind us, but I would 0:17:44.840 --> 0:17:46.960 say that it's much more stable, and I would say 0:17:46.960 --> 0:17:49.159 that it's going to continue to improve going forward. So 0:17:49.280 --> 0:17:51.880 a much better position overall. 0:17:52.080 --> 0:17:54.639 And you can watch Ry Harvey's full interview with Bloomberg 0:17:54.760 --> 0:17:57.160 on the Terminal. Now, Matt Miller has been pretty busy 0:17:57.400 --> 0:17:59.880 because he also sat down with Ford CEO Jim Farley 0:18:00.200 --> 0:18:03.320 about that company ramping up its EV production, which includes 0:18:03.320 --> 0:18:06.560 striking a number of deals to buy lithium for batteries. 0:18:06.720 --> 0:18:09.800 Matt joins us now from Ford's production plant in Michigan. Matt, 0:18:09.800 --> 0:18:11.160 I thought you were going to wear a hard hat. 0:18:11.480 --> 0:18:13.359 I didn't realize you're outside in front of cars. But 0:18:13.400 --> 0:18:15.879 of course you are tell us a little bit about 0:18:15.960 --> 0:18:19.320 the Ford Lithium partnership that it made public today. How 0:18:19.320 --> 0:18:22.439 critical is this partnership to meeting Ford's edy goals. 0:18:24.480 --> 0:18:27.520 Yeah, it's very important because you know, last year Ford 0:18:27.640 --> 0:18:29.959 sold at least in the US, I think about sixty 0:18:29.960 --> 0:18:34.159 one sixty two thousand electric vehicles in total. In twenty 0:18:34.200 --> 0:18:37.320 twenty six, they want to sell two millions, so they've 0:18:37.320 --> 0:18:40.640 got to ramp up substantially, and the most difficult part 0:18:40.640 --> 0:18:44.480 of that, according to Jim Farley, is scaling up battery production. 0:18:44.680 --> 0:18:46.879 In order to build those batteries, they need a lot 0:18:46.960 --> 0:18:51.160 of chemicals and minerals like lithium, they need nickel, they 0:18:51.160 --> 0:18:55.480 need cobalt, and getting those things isn't particularly easy, especially 0:18:55.480 --> 0:18:59.960 since eighty percent of that refining process currently sits in China. 0:19:00.119 --> 0:19:03.399 So Ford has made a number of deals three on 0:19:03.600 --> 0:19:07.439 lithium with the biggest lithium producers in the world to 0:19:07.520 --> 0:19:11.600 get that refining done in North America and in South America, 0:19:11.640 --> 0:19:16.359 so in Canada and Mexico and in Chile. That's really 0:19:16.520 --> 0:19:20.560 key to keeping costs down, and that's really the biggest 0:19:20.560 --> 0:19:22.480 part of the vehicle. So they're going to be building 0:19:22.520 --> 0:19:27.520 their next generation electric vehicles in Tennessee as well as 0:19:27.920 --> 0:19:30.040 around the rest of North American plants that they already 0:19:30.080 --> 0:19:34.440 have production in. But getting these chemicals, getting these minerals 0:19:34.640 --> 0:19:35.800 is really important. 0:19:36.800 --> 0:19:38.560 And Matt, that sounds expensive. 0:19:38.680 --> 0:19:41.359 Are those costs being passed along to consumers? 0:19:41.400 --> 0:19:45.119 What's the pricing strategy look like for Ford's evs as 0:19:45.119 --> 0:19:46.400 they roll them out? 0:19:47.760 --> 0:19:52.360 Yeah, so it is very expensive. And right now they 0:19:52.400 --> 0:19:56.440 have a negative one hundred percent margin and change right 0:19:56.480 --> 0:20:00.640