WEBVTT - Changing Consumer Sentiment and TikTok's Chinese Influence 0:00:02.200 --> 0:00:05.520 From the heart of where innovation, money and power. CALLI 0:00:06.360 --> 0:00:10.840 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.920 --> 0:00:27.720 Emily Chay. This is Broomberg Technology. I'm Caroline Hyde in 0:00:27.720 --> 0:00:29.920 New York in Family Chin. Coming up in the next hour. 0:00:30.040 --> 0:00:32.720 It's no longer full steam ahead for Silicon Valley. Consumer 0:00:32.760 --> 0:00:35.879 sentiment is changing quickly, tech sector trying to keep up. 0:00:35.880 --> 0:00:38.600 We'll look at how Amazon and Apple really managed to 0:00:38.880 --> 0:00:42.279 win over these obstacles. Plus, the Chinese government tried to 0:00:42.320 --> 0:00:45.080 create a stealth TikTok account to promote propaganda in the 0:00:45.159 --> 0:00:48.000 US because to look at how Chinese state influence could 0:00:48.040 --> 0:00:52.000 be reaching younger generations. And the FTC is singling caution 0:00:52.040 --> 0:00:55.400 to big tech Mergers chair Lena Khan ruled her staff 0:00:55.800 --> 0:00:58.440 to sue Meta over its acquisition of a VR company, 0:00:58.600 --> 0:01:01.040 which wasn't necessarily an ex pens of deal to begin with. 0:01:01.280 --> 0:01:04.960 We'll discuss the aggressive tone this case is setting. We'll 0:01:04.959 --> 0:01:06.600 get to all of that in about a moment, but 0:01:06.680 --> 0:01:10.360 first let's look at Amazon proving its e commerce power 0:01:10.400 --> 0:01:13.520 and card computing businesses also helping turn out revenue that 0:01:14.200 --> 0:01:17.480 even consumers the worry they're about inflation couldn't offset it 0:01:17.520 --> 0:01:20.400 gave revenue forecast for as much as growth in the 0:01:20.480 --> 0:01:24.120 current period. Really relieved investors, and we saw it in 0:01:24.160 --> 0:01:27.040 the share price reaction. Two thousand and nine best months 0:01:27.040 --> 0:01:31.360 since two thousand and nine. Spencer Soperan covering it, particularly 0:01:31.400 --> 0:01:36.000 the consumer angle, and from the perspective, what's amazing is 0:01:36.560 --> 0:01:39.080 before the earnings, we were really worried about what Walmart 0:01:39.120 --> 0:01:41.839 was suggesting, what Best Buy was suggesting, and then roomth 0:01:42.000 --> 0:01:46.000 just Amazon shows its power and pros. Yeah, there were 0:01:46.920 --> 0:01:50.200 and relief. The word you just used earlier is exactly right. 0:01:50.240 --> 0:01:53.480 There was these kind of expectations you know, kicked in 0:01:53.880 --> 0:01:57.240 and then uh, you know, the results kind of blew 0:01:57.240 --> 0:02:00.880 those concerns away. So investors were very relieved both Amazon 0:02:00.960 --> 0:02:04.320 can resume growth like you say up to in the 0:02:04.400 --> 0:02:07.080 in the current quarter, and also people that aren't spending. 0:02:07.120 --> 0:02:10.240 They shed about a hundred thousand workers and and started 0:02:10.240 --> 0:02:13.760 getting that spending in control, whereas previous quarter they had 0:02:13.760 --> 0:02:17.400 a lot of uh, concerns about over building and having 0:02:17.440 --> 0:02:20.680 too many people, so investors were worried how long that 0:02:20.720 --> 0:02:23.280 was gonna last and drag on. This quarter showed they're 0:02:23.360 --> 0:02:25.760 kind of you know, starting to unwind that and starting 0:02:25.800 --> 0:02:29.440 to see see some uh some more positive signs and 0:02:29.520 --> 0:02:31.640 with a positive size. Of course, the fuecast was what 0:02:31.760 --> 0:02:35.360 relieved any more details you sat there on the cool yesterday, 0:02:35.639 --> 0:02:39.280 Annie Jasse or his team spell out how they managed 0:02:39.360 --> 0:02:43.080 the next quarter. Yeah. One one big thing, especially on 0:02:43.120 --> 0:02:46.160 the spending, was you know, investors are always worried about 0:02:46.160 --> 0:02:48.160 how much how quickly is Amazon going to spend whatever 0:02:48.200 --> 0:02:51.639 comes in, and because of that over build on their 0:02:51.639 --> 0:02:54.560 delivery network, They're not They're gonna cool off on you know, 0:02:54.600 --> 0:02:58.200 warehouses and delivery station and those sorts of things, but 0:02:58.240 --> 0:02:59.720 they are going to spend more and it's going to 0:02:59.840 --> 0:03:03.240 be more targeted on data centers and fueling its cloud 0:03:03.240 --> 0:03:05.840 computing business. So they really gave a signal that they're 0:03:05.840 --> 0:03:07.919 going to double down on the cloud computing and they're 0:03:07.919 --> 0:03:10.960 expecting that to remain strong even as they kind of 0:03:10.960 --> 0:03:13.760 cool off investing on the On the e commerce side 0:03:14.200 --> 0:03:18.720 and what so good or in this particular environment about 0:03:18.720 --> 0:03:21.799 Amazon visa v say the Walmarts, the best buys that 0:03:21.880 --> 0:03:24.639 have such inventory loads that they now need to basically 0:03:24.639 --> 0:03:26.799 cut the price off, is Amazon does have a very 0:03:26.840 --> 0:03:28.960 different sort of business model behind it. How has that 0:03:29.000 --> 0:03:32.760 helped to weather. Yeah, that's a great point. And uh 0:03:32.800 --> 0:03:37.280 and something that really shown in this in this earnings report, 0:03:37.560 --> 0:03:42.400 Amazon has this marketplace model where of the products sold 0:03:42.680 --> 0:03:45.600 in the second quarter, that's the highest set number has 0:03:45.640 --> 0:03:49.440 ever been before come from these independent third party merchants. 0:03:49.640 --> 0:03:52.040 And the main thing that means is when stores like 0:03:52.400 --> 0:03:56.160 Walmart Target have this inventory risk and have to take 0:03:56.240 --> 0:03:59.920 deep discounts on products they've already purchased before they reach 0:04:00.000 --> 0:04:03.440 tell them. Amazon doesn't have that inventory risk. If a 0:04:03.520 --> 0:04:06.000 merchant has to, you know, take the price down on 0:04:06.120 --> 0:04:08.200 something to sell it, even if that merchant takes a loss, 0:04:08.560 --> 0:04:11.920 Amazon is not exposed. Amazon still gets a permission, Amazon 0:04:12.000 --> 0:04:14.920 still gets paid to pack and deliver that product. So 0:04:15.000 --> 0:04:18.800 a lot of this, uh, this marketplace model kind of 0:04:18.800 --> 0:04:20.760 shields it from this inventory risk that some of the 0:04:20.800 --> 0:04:24.320 other retailers are basing. We really want to thank you 0:04:24.360 --> 0:04:26.440 as always for bringing us the expertise when it comes 0:04:26.440 --> 0:04:30.279 to Amazon. Spencers Sofa thumbs up, Happy weekend. Meanwhile, let's 0:04:30.279 --> 0:04:33.320 talk about the recent changes the navigation that these companies 0:04:33.320 --> 0:04:36.880 having to do around consumer behavior, around sentiment. Because Jason 0:04:36.880 --> 0:04:39.400 Bilson needs with us principle at full run adventures, of course, 0:04:39.440 --> 0:04:42.080 a lot of your portfolio very much around the consumer. 0:04:42.160 --> 0:04:44.680 You of course in one of us a company that's 0:04:44.720 --> 0:04:48.760 all about consumer engagement and sentiment, and I'm interested, Jason. 0:04:49.640 --> 0:04:51.599 There was a particular note coming from Wells Fargo the 0:04:51.600 --> 0:04:53.920 court Everyone's I know it caught yours too, saying basically, 0:04:53.920 --> 0:04:55.799 if we're in a recession alone, was told the consumer, 0:04:56.160 --> 0:04:58.440 do you think that the consumer is resilient in this 0:04:58.520 --> 0:05:00.760 current environment? Thanks for having me, It's a pleasure to 0:05:00.760 --> 0:05:05.240 be on the program. Absolutely, We a foreignner, you know, 0:05:05.360 --> 0:05:08.919 really believe in the resiliency of people. We hope people 0:05:08.920 --> 0:05:11.240 at the center of everything we do, and we're optimistic 0:05:11.360 --> 0:05:15.640 about the future. We saw consumers be incredibly resalment, resilient 0:05:15.680 --> 0:05:18.800 and adaptable during the pandemic, and we believe that that 0:05:18.839 --> 0:05:21.120 will that will hold up, you know, through this economic 0:05:21.160 --> 0:05:23.320 backdrop and in the long run as we think about 0:05:23.320 --> 0:05:27.920 the next decade ahead. Why you see consumers um spend 0:05:28.000 --> 0:05:31.400 levels are high, you know, the sentiment, on the other hand, 0:05:31.680 --> 0:05:34.840 is low. They're really taking in what's happening right now, 0:05:34.880 --> 0:05:38.440 and they're adapting and they're taking precautionary steps. So we're 0:05:38.480 --> 0:05:43.960 hearing about you know, of consumers are, excuse me, are 0:05:43.960 --> 0:05:50.640 creating a budget. Of consumers are creating a a a 0:05:51.240 --> 0:05:55.560 savings account for an emergency fund. They're beginning to make changes, 0:05:55.920 --> 0:05:59.880 certainly for lower income consumers. We saw this with Walmart 0:06:00.000 --> 0:06:03.800 coming out this week and lowering their profit target when 0:06:03.880 --> 0:06:09.080 consumers are shifting dollars from from discretionary categories like apparel 0:06:09.520 --> 0:06:15.560 to categories that are more necessities like food. So consumers adapt. 0:06:15.839 --> 0:06:19.880 That's their resiliency, right. They may face tough times economically, 0:06:20.000 --> 0:06:22.960 personally or at a macro level, but they adapt, and 0:06:23.320 --> 0:06:25.719 that where we see the resiliency coming in just and 0:06:25.800 --> 0:06:28.640 also many of talked like there are different types of 0:06:28.640 --> 0:06:31.160 consumers out there. There are the consumers that at the 0:06:31.200 --> 0:06:35.159 moment are facing, you know, a balancing act. They cannot win. 0:06:35.400 --> 0:06:38.839 Groceries costs more, gas costs more, they are going to 0:06:38.880 --> 0:06:41.560 have to contail their purchases. But then there's a more 0:06:41.640 --> 0:06:46.240 luxury and purchaser who is able, despite perhaps their four 0:06:46.279 --> 0:06:48.440 oh one k falling off a cliff and despite some 0:06:48.480 --> 0:06:51.760 of their stock prices having been damaged, are still willing 0:06:51.800 --> 0:06:54.560 with the pent up demand to be traveling. And therefore 0:06:54.640 --> 0:06:57.440 your portfolio company away comes into my mind's eye, all 0:06:57.640 --> 0:06:59.800 still willing to be buying an Apple iPhone or an 0:06:59.800 --> 0:07:02.520 a ring, which perhaps costs a little bit more. Are 0:07:02.520 --> 0:07:06.880 you thinking that this consumer is bifurcated. Absolutely, I think 0:07:06.880 --> 0:07:09.560 that that's true right now. I mean, I hope we'd 0:07:09.560 --> 0:07:12.680 certainly have our eye towards opportunities that are that have 0:07:12.880 --> 0:07:17.280 the lower income consumer in mind and increasing access increasing 0:07:17.320 --> 0:07:19.560 costs for them. But I do think that we are 0:07:19.680 --> 0:07:22.320 experienced that. I mean, the reality is that this is 0:07:22.360 --> 0:07:26.200 a complex and dynamic time for consumers. As we mentioned before, 0:07:26.280 --> 0:07:29.400 spend is remaining high, sentiment is low. You know, on 0:07:29.480 --> 0:07:31.240 the one hand, consumers want to get out there and 0:07:31.280 --> 0:07:33.360 live their lives coming out of the pandemic. They want 0:07:33.360 --> 0:07:36.400 to eat out, they want to travel. Uh. You know, 0:07:36.480 --> 0:07:38.400 on the other hand, they have inflation steering them in 0:07:38.400 --> 0:07:40.960 the face and their dollars aren't going as far as 0:07:40.960 --> 0:07:45.120 they used to. Yeah, I've heard much view that actually 0:07:45.920 --> 0:07:48.480 this summer, they'll do it. This summer that like, I 0:07:48.520 --> 0:07:51.040 am just caution to the wind. I'm getting on that flight. 0:07:51.120 --> 0:07:53.960 It costs me a lot. But people are already buying. 0:07:54.400 --> 0:07:57.000 For example, Walmart said, look, we think that the shopping 0:07:57.040 --> 0:08:00.440 period for the September returned to school is actually be good. 0:08:00.640 --> 0:08:03.600 But my warriors, I'm the parent. I'm looking at Amazon 0:08:03.600 --> 0:08:05.800 Prime Day and buying my kids their lunch boxes because 0:08:05.840 --> 0:08:08.120 I don't want them to get more expensive. Are people 0:08:08.280 --> 0:08:11.400 buying stalking up now and then perhaps into the winter 0:08:11.480 --> 0:08:13.760 and in the fall, that's when we start to pull back. 0:08:13.920 --> 0:08:16.680 I think that there's a possibility of that. You know, 0:08:16.720 --> 0:08:19.520 at this moment, we're seeing a shift and spend from 0:08:19.520 --> 0:08:23.440 from durable goods, uh, these one time replacement purchases that 0:08:23.520 --> 0:08:26.880 people made during the pandemic, and they're not putting dollars 0:08:26.920 --> 0:08:29.960 towards that anymore. They're thinking about things like back to school, 0:08:30.000 --> 0:08:32.000 like travel, some of the services that they didn't get 0:08:32.080 --> 0:08:34.720 to spend on in the last couple of years, you know, 0:08:35.000 --> 0:08:37.200 with that in mind very much so though, I do 0:08:37.320 --> 0:08:42.520 believe and see that that consumers, consumers are taking precautionary 0:08:42.559 --> 0:08:45.640 steps and they will start to fall back. For the middle, 0:08:45.880 --> 0:08:49.120 middle income and upper income, we haven't seen that effect yet. 0:08:49.160 --> 0:08:51.680 For the lower income, we have seen that, and to 0:08:51.760 --> 0:08:53.480 your point, you know, in the back half of this year, 0:08:53.559 --> 0:08:55.760 that's something that we have our eye on for sure, 0:08:56.280 --> 0:08:58.480 and we're looking at your portfolio at the moment, and 0:08:58.600 --> 0:09:00.320 chime is one that comes to mind. And course you 0:09:00.360 --> 0:09:03.360 were talking about how the consumers wanting to say you 0:09:03.440 --> 0:09:05.960 seeing a change in the way in which they're wanting 0:09:06.040 --> 0:09:10.679 to have savings for emergency rainy day funds. What about 0:09:10.760 --> 0:09:14.040 just a desire to be in the market, a retail investor, 0:09:14.080 --> 0:09:16.600 one that wants to be seeing and building wealth. How 0:09:16.600 --> 0:09:18.920 are you thinking about that from a fintech perspective as well. 0:09:20.120 --> 0:09:22.040 There was a lot of energy around that, of course 0:09:22.080 --> 0:09:23.840 over the last couple of years. You know, I think 0:09:23.880 --> 0:09:27.080 the reality has set in. There's plenty of individuals that 0:09:27.120 --> 0:09:30.840 got burned that we're tracing, you know, chasing Uh you 0:09:30.880 --> 0:09:33.640 know what, what what I see as as a free 0:09:33.720 --> 0:09:35.560 lunch and that just isn't a free lunch, And so 0:09:35.600 --> 0:09:39.240 the realities are setting it. I'm hopeful that that consumers 0:09:39.240 --> 0:09:42.160 will want to continue to participate as retail investors. I 0:09:42.160 --> 0:09:46.200 think that that is important increasing access to new categories 0:09:46.240 --> 0:09:49.960 of investments. This is this is critical for for broad 0:09:50.080 --> 0:09:54.720 wealth creation. You know that being said, uh, chasing the trends, 0:09:55.520 --> 0:09:58.560 people are feeling the pain of that right now, and 0:09:58.600 --> 0:10:00.880 I think that will probably color in shape how they 0:10:00.920 --> 0:10:05.240 invest going forward. Jason, it is always fascinating to have 0:10:05.280 --> 0:10:07.640 someone who is so early in one success story like 0:10:07.679 --> 0:10:10.640 Bonomous and then gone on to bm VC and thinking 0:10:10.679 --> 0:10:12.880 about these sorts of consumer facing companies. We thank you 0:10:12.920 --> 0:10:25.520 for runadventurous principle of Jason Bolstein. There really great thoughtful answers. Now, 0:10:25.559 --> 0:10:26.880 of course, this week we have the big news of 0:10:26.880 --> 0:10:28.960 the House and the Senate have passed the Chips Act. 0:10:29.040 --> 0:10:32.000 The bill goes to President Biden's desk next to get 0:10:32.040 --> 0:10:36.000 signed into law. Now, meanwhile, US itself as tightening restrictions 0:10:36.040 --> 0:10:38.920 on China's access to chip making gear according to two 0:10:38.920 --> 0:10:42.520 major equipment suppliers, which further under schools basically Washington's accelerating 0:10:42.520 --> 0:10:46.200 efforts to we'll win out versus Beijing's economic ambitions. Let's 0:10:46.200 --> 0:10:49.360 bring in Bloomberg's executive editor for Asia Technology, who happens 0:10:49.360 --> 0:10:51.920 to be in the US, Peter Alstrom. Thank you so 0:10:52.000 --> 0:10:54.720 much for being with us. And we have seen already 0:10:55.080 --> 0:10:59.239 there were reports that America was leaning on European equipment 0:10:59.280 --> 0:11:02.160 makers to stop setting over to Beijing into China and 0:11:02.200 --> 0:11:05.079 now leaning on US manufacturers. Talk to us about the 0:11:05.120 --> 0:11:08.360 latest news. We know, uh, that's right, Yeah, we had 0:11:08.440 --> 0:11:12.320 two CEOs of chip equipment makers who came out this 0:11:12.360 --> 0:11:15.600 week and talked about new restrictions, tighter restrictions on their 0:11:15.640 --> 0:11:18.560 ability to export gear into China. And this is part 0:11:18.559 --> 0:11:22.079 of, of of course, the ongoing tensions between the U S 0:11:22.120 --> 0:11:26.520 and China. The Biden administration has been following on these 0:11:26.559 --> 0:11:29.319 plans to try to restrict China's ability to get the 0:11:29.520 --> 0:11:31.600 equipment that they need to be able to make the 0:11:31.600 --> 0:11:34.440 most advanced chips. So what these two CEOs have talked 0:11:34.440 --> 0:11:36.720 about is that now they're widening the scope of that. 0:11:36.800 --> 0:11:39.800 In the past, the hurdle was sort of ten nanometers, 0:11:39.880 --> 0:11:42.120 which is really the most advanced chips, and now they're 0:11:42.160 --> 0:11:45.480 expanding it to fourteen nimes um. And so the chip 0:11:45.520 --> 0:11:48.839 makers are now pulling back and they're disclosing to their 0:11:48.840 --> 0:11:51.680 investors that they have these tighter restrictions. And this is 0:11:51.720 --> 0:11:54.600 part of this broader clash that the U S and 0:11:54.679 --> 0:11:57.520 China are going through right now, where the US is 0:11:57.559 --> 0:11:59.800 trying to hold back China as it tries to build 0:12:00.040 --> 0:12:03.000 it's chip making expertise in particular, but more broadly the 0:12:03.040 --> 0:12:08.559 ability to build its technology sector. China's response from your perspective, 0:12:08.600 --> 0:12:12.280 Peter Well, they've pushed back. They think that the US 0:12:12.880 --> 0:12:16.840 is unfairly trying to stop their rise in the technology area, 0:12:17.080 --> 0:12:19.760 that they want to be able to build these capabilities 0:12:19.800 --> 0:12:23.000 within the country. They're investing billions of billions of dollars 0:12:23.120 --> 0:12:26.600 into companies, into venture capital funds to be able to 0:12:27.440 --> 0:12:30.640 um invest in semiconductors in particular because that's sort of 0:12:30.640 --> 0:12:33.240 the foundation of the tech industry, but also areas like 0:12:33.960 --> 0:12:40.120 artificial intelligence and robotics, autonomous driving, etcetera. Also, of course, 0:12:40.360 --> 0:12:43.160 the animosity, shall we call it that between China and 0:12:43.240 --> 0:12:45.640 US on the tech level is also spread into the 0:12:45.679 --> 0:12:48.440 world of social media, and time and time again we've heard, 0:12:48.480 --> 0:12:51.160 perhaps the likes of Meta say, you know, the reason 0:12:51.200 --> 0:12:53.160 we need to keep on building and scaling is because 0:12:53.280 --> 0:12:56.600 otherwise China will come in, and they mean TikTok. TikTok's 0:12:56.600 --> 0:12:59.920 already got a real foothold in the US, and then 0:13:00.080 --> 0:13:02.640 might be reasons for concern. Can you elaborate a little 0:13:02.679 --> 0:13:07.000 bit on what might be a so called propaganda uh 0:13:07.400 --> 0:13:12.200 developments in that space. Yeah. TikTok, of course, is one 0:13:12.240 --> 0:13:14.840 of the apps that was developed by this Chinese company, 0:13:14.880 --> 0:13:16.439 Bite Dance. They have a whole bunch of them, but 0:13:16.520 --> 0:13:19.080 TikTok is the one that's really taken off in the 0:13:19.160 --> 0:13:22.200 U S. It's very popular with teenagers in particular, and 0:13:22.320 --> 0:13:26.640 it's um first came under scrutiny under the Trump administration, 0:13:26.640 --> 0:13:28.720 which planed on banning the app for a while, and 0:13:28.760 --> 0:13:31.280 they were going to force the company Bye Dance to 0:13:31.320 --> 0:13:34.719 sell off ownership of TikTok. It's become very popular in 0:13:34.760 --> 0:13:38.360 their concerns about national security. So the latest story that 0:13:38.400 --> 0:13:42.760 you're referring to is that we found information that the 0:13:42.840 --> 0:13:45.640 Chinese government had gone to TikTok and had tried to 0:13:45.679 --> 0:13:47.960 set up a channel where they could put on their 0:13:48.000 --> 0:13:49.880 point of view, their kind of nationalist a point of 0:13:49.960 --> 0:13:53.679 view and advocate for the Chinese point of view in 0:13:53.720 --> 0:13:56.360 the world without disclosing where it was actually coming from. 0:13:56.640 --> 0:13:58.800 TikTok in this case pushed back and said that they 0:13:58.800 --> 0:14:01.680 would not comply with those regulations. They don't want to 0:14:01.720 --> 0:14:04.400 be viewed as a propaganda arm of the Chinese government, 0:14:04.800 --> 0:14:06.920 they saidainly don't, particularly when they do want to keep 0:14:06.920 --> 0:14:09.640 on expanding in the Western world. And to that point, Peter, 0:14:09.760 --> 0:14:11.960 there has been some interesting reporting from putting back just 0:14:12.000 --> 0:14:14.600 about their foothold in gen Z and and the way 0:14:14.600 --> 0:14:18.320 in which gen Z use TikTok. Right, well, TikTok is 0:14:18.400 --> 0:14:21.120 just exploding in popularity, and it has been for quite 0:14:21.160 --> 0:14:23.640 a few years. What's really changing now are a couple 0:14:23.680 --> 0:14:26.480 of things. One, TikTok is beginning to cash in on 0:14:26.560 --> 0:14:29.840 that popularity. They figured out how to use advertising to 0:14:29.920 --> 0:14:32.560 be able to bring in revenues, and we've talked about 0:14:32.560 --> 0:14:34.680 how their revenues are surging. They're likely to go to 0:14:34.760 --> 0:14:37.520 about twelve billion dollars this year. As part of that, 0:14:37.760 --> 0:14:41.280 they're moving beyond their their old kind of platform. They 0:14:41.320 --> 0:14:43.800 used to be viewed as mostly entertainment. They were short 0:14:43.880 --> 0:14:46.360 videos that people would watch. If you had to search 0:14:46.400 --> 0:14:49.440 for something, you would typically typically go to Google, of course, 0:14:49.760 --> 0:14:52.760 But now what you're seeing is that TikTok is actually 0:14:52.760 --> 0:14:54.880 being used to find things in the way that you 0:14:55.000 --> 0:14:58.239 used to look on search, especially with the younger consumers, 0:14:58.600 --> 0:15:03.000 and getting that news as well. Executive editor for Asia 0:15:03.040 --> 0:15:06.400 Technology Peter Elstrom keeping it on linear TV for US 0:15:06.440 --> 0:15:09.320 for the time being, but meanwhile coming up shares Intel 0:15:09.360 --> 0:15:12.240 plunge today and the CEO told Bloomberg that it's stark 0:15:12.320 --> 0:15:15.520 deserves to be down. Why now mere corporal moment. Will 0:15:15.560 --> 0:15:37.880 share more in that interview. This is Bloomberg. Chip maker 0:15:38.120 --> 0:15:41.800 Intel has well slashed his sales and profit forecasts for 0:15:41.840 --> 0:15:43.680 the rest of the year. We heard that after the 0:15:43.680 --> 0:15:46.560 bell yesterday, and of course CEO pat Girl Singer consider 0:15:46.640 --> 0:15:49.479 an Intel needs more time to make its products competitive. 0:15:49.840 --> 0:15:51.840 At the same time, while he, as should investors looked 0:15:51.840 --> 0:15:54.800 at the current quarter will be the low point. Here's 0:15:54.800 --> 0:15:57.600 some of his conversation with our colleagues and Edwards and 0:15:57.640 --> 0:16:01.520 alex Steel. We expect two and twenty three to be challenging, 0:16:02.000 --> 0:16:06.640 and we had great winds yesterday that we announced with Amazon, 0:16:06.800 --> 0:16:11.440 you know, long term multigeneration partnership with Meta and uh 0:16:11.560 --> 0:16:13.280 you know, these are areas where we're going to go 0:16:13.320 --> 0:16:17.440 fight every customer, every socket, every workload. But we expect 0:16:17.480 --> 0:16:20.280 that two and twenty three are challenging years until we 0:16:20.280 --> 0:16:23.640 get the products that are just unquestionably the best in 0:16:23.680 --> 0:16:26.600 the industry. Macrowhead winds are they something that you are 0:16:26.680 --> 0:16:30.360 factory into your expectations for the business, the extent to 0:16:30.400 --> 0:16:32.320 which you want to invest in the business. You know, 0:16:32.360 --> 0:16:36.320 the enterprise market continues to be strong, it's really focused 0:16:36.320 --> 0:16:38.760 the weakness and the consumer market has been where we've 0:16:38.760 --> 0:16:41.920 seen it quite acutely in this period of time. But 0:16:42.240 --> 0:16:44.760 like semiconductors, you know, it's a cyclic industry and it 0:16:44.800 --> 0:16:48.160 always has been, and we're going to embrace this and 0:16:48.240 --> 0:16:51.520 make the company stronger, better, and you know, some austerity 0:16:51.720 --> 0:16:55.240 helps to drive my transformation agenda more rapidly into the 0:16:55.280 --> 0:16:57.840 company as well, and thus we feel like this is 0:16:57.880 --> 0:17:00.840 the bottom. That's what we clearly communicated in the earnings call, 0:17:01.160 --> 0:17:03.760 and you know, we're off to the races to do 0:17:03.880 --> 0:17:07.280 better for ourselves and for our shareholders into the future. 0:17:07.480 --> 0:17:10.040 You guys also talked about UM, your new guidance for 0:17:10.080 --> 0:17:13.679 full year gross margins coming in around A lot of 0:17:13.720 --> 0:17:17.000 analysts were really skeptical of that number UM after the 0:17:17.040 --> 0:17:19.720 call that it's just too hopeful considering all the pricing 0:17:19.720 --> 0:17:24.000 pressures that everyone's under on chips and increase process nodes costs, 0:17:24.080 --> 0:17:27.240 et cetera. Um, what's the probability you're gonna have to 0:17:27.240 --> 0:17:31.840 revise that lower? Well, we clearly set out a framework 0:17:31.920 --> 0:17:34.679 of our financials that we are confident in that we 0:17:34.800 --> 0:17:38.240 can meet and beat, so our confidence is high. We 0:17:38.320 --> 0:17:42.040 also had some one time things in the quarter, like 0:17:42.400 --> 0:17:46.199 inventory research that will naturally reverse. You know, some of 0:17:46.240 --> 0:17:49.720 this was the dramatic swings that we saw in the quarter. 0:17:49.920 --> 0:17:52.359 You know, we weren't able to adjust our fixed costs 0:17:52.359 --> 0:17:54.399 that quickly, so we'll have more time to do that 0:17:54.520 --> 0:17:56.960 in the second half of the year. And with new 0:17:57.000 --> 0:17:59.719 products ramping, you know, they're very negative and as they 0:17:59.720 --> 0:18:02.760 start to ramp, you know, we get better margin structure. 0:18:02.800 --> 0:18:05.640 So overall, we're confident in the guide that we gave 0:18:05.720 --> 0:18:07.879 for the year, and we have a natural strength of 0:18:07.880 --> 0:18:10.760 shipping more products in this in the second half of 0:18:10.760 --> 0:18:14.280 the year. Normal yearly cyclicality. Intel stock is down thirty 0:18:14.960 --> 0:18:17.439 this year. It's down ten percent today. The market is 0:18:17.480 --> 0:18:21.040 just not buying what you're selling. What is everyone getting 0:18:21.080 --> 0:18:23.919 so wrong? Then I think we deserve to be down today. 0:18:24.200 --> 0:18:26.879 And with the earnings that we report, the guidance that 0:18:26.920 --> 0:18:28.880 we gave, you know, it's a bit of a reset 0:18:29.280 --> 0:18:33.520 and uh, I think we've disappointed ourselves and our shareholders 0:18:33.800 --> 0:18:36.600 in that respect. At the same time, we've laid out 0:18:36.640 --> 0:18:39.639 a multi year path to the future and we're confident 0:18:39.720 --> 0:18:43.399 that that will be realized and we're getting more and 0:18:43.480 --> 0:18:46.920 more proof points along the way, such as our technology 0:18:46.960 --> 0:18:49.800 and process. You know that area is one that everybody 0:18:49.800 --> 0:18:52.640 has set is most critical. And Intel seven, Intel four 0:18:52.840 --> 0:18:56.719 got very positive reviews, were ahead of schedule, and Intel 0:18:56.800 --> 0:19:01.600 three and eighteen A. And if I have leadership, process 0:19:01.680 --> 0:19:04.840 and capacity, you know Intel is going to do fine 0:19:04.920 --> 0:19:07.879 for the future. We had neither. We're getting back both 0:19:07.920 --> 0:19:11.120 of those as we go forward. So we're working on it. 0:19:11.280 --> 0:19:13.760 But clearly, this is a journey. It is a journey. 0:19:13.800 --> 0:19:16.400 What difference will the Chips Act make to your journey? 0:19:16.480 --> 0:19:19.119 You know, the Chips Act is a seminal act for 0:19:19.359 --> 0:19:23.960 this may be the most significant industrial policy legislation that's 0:19:23.960 --> 0:19:26.960 been put in place since World War Two in the US. 0:19:27.000 --> 0:19:29.639 This is huge. Clearly, we said, you know, we are 0:19:29.640 --> 0:19:32.439 expecting and to be a beneficiary of that both in 0:19:32.480 --> 0:19:36.720 the near term right with the manufacturing offsets, and we 0:19:36.760 --> 0:19:39.720 have an aggressive capital build for that. You know, the 0:19:39.760 --> 0:19:43.600 tax benefits will be helpful, but long term, the research 0:19:43.720 --> 0:19:47.240 portions of the bill are huge for long term leadership 0:19:47.480 --> 0:19:49.920 as well. This is good for the industry, it's good 0:19:49.960 --> 0:19:53.199 for the United States, and Intel will be a beneficiary there. 0:19:53.359 --> 0:19:55.159 And I'm proud to have played a part in getting 0:19:55.160 --> 0:19:59.080 it across the line. In tels, the pat gaussing on 0:19:59.119 --> 0:20:01.960 Blue Bay Team. Meanwhile, coming up, it is a date 0:20:02.440 --> 0:20:05.600 a judge decides when Musk Twitter trial when it's going 0:20:05.640 --> 0:20:18.480 to begin. Boy still until October. So Twitter's lawsuit against 0:20:18.520 --> 0:20:21.640 billionaire Elon Musk over they canceled four billion dollar buy 0:20:21.680 --> 0:20:24.119 out of the social media platform set for a five 0:20:24.200 --> 0:20:27.720 day trial starting October seventeenth in Delaware. Twitch As lawyers 0:20:27.760 --> 0:20:30.280 say they'll need only four days to prove Muskar is 0:20:30.520 --> 0:20:34.240 misusing questions about spam and robot accounts as an excuse 0:20:34.359 --> 0:20:37.760 to walk away from the deal. Musk's arguing Twitter's handover 0:20:37.800 --> 0:20:40.480 of the so called bots material hasn't been robust and 0:20:40.520 --> 0:20:43.679 the company's mishandling of that data provides a legitimate basis 0:20:43.680 --> 0:20:47.280 for backing out. Kurt Wagner joins us, now, too well, 0:20:47.440 --> 0:20:49.680 explain why we have to wait all the way until October. 0:20:49.760 --> 0:20:51.840 But meanwhile we get the drip feed of news and 0:20:51.840 --> 0:20:55.720 we understand Musk has indeed filed counterclaims in the lawsuit 0:20:55.840 --> 0:20:57.560 over the buy out, but we're not gonna be able 0:20:57.560 --> 0:21:01.440 to read them. Yeah, exactly. I believe they're not public 0:21:01.520 --> 0:21:04.240 right now, so we can speculate as to what they 0:21:04.320 --> 0:21:06.879 might say. And my guess is he's gonna say, hey, listen, 0:21:06.880 --> 0:21:09.240 the thing is a real issue, and you know, see 0:21:09.240 --> 0:21:11.280 you in October. We can talk about it. But as 0:21:11.320 --> 0:21:13.200 you mentioned, you know, this trial, we knew it was 0:21:13.200 --> 0:21:15.280 going to be in October. The two sides were kind 0:21:15.280 --> 0:21:17.280 of arguing a little bit over when it was going 0:21:17.320 --> 0:21:19.040 to be. Twitter had wanted it to actually be a 0:21:19.080 --> 0:21:21.480 week earlier than what it scheduled, which is right now 0:21:21.480 --> 0:21:25.080 for Monday, October se um. So clearly they were able to, 0:21:25.160 --> 0:21:27.040 you know, find a date that works for everybody, and 0:21:27.480 --> 0:21:31.919 I guess we'll see you there five days, four days, 0:21:32.119 --> 0:21:34.440 all of it. I mean, Delaware, a court in Delaware 0:21:34.600 --> 0:21:37.560 is known for speed, right, But is this particularly fast 0:21:37.640 --> 0:21:40.320 or give it a context here? Yeah, it does. It 0:21:40.359 --> 0:21:42.400 feels a little fast to me. But at the same time, 0:21:42.440 --> 0:21:45.479 I mean, so much this this, you know, feels like 0:21:45.760 --> 0:21:47.800 a sort of simple case in the sense that both 0:21:47.800 --> 0:21:51.520 sides have already signed this merger agreement, right, we know, 0:21:52.280 --> 0:21:54.720 um the issues at hand, right, it's this, it's this 0:21:54.840 --> 0:21:58.600 body issue, and so um to me, it's like everything 0:21:58.720 --> 0:22:01.280 is already kind of laid out. And so as you 0:22:01.320 --> 0:22:02.919