Speaker 1: All right, well, having a good what's been going on
Speaker 1: with video? We've got certainly the quarterly revenue numbers that
Speaker 1: just a horror show for them, missing projections by more
Speaker 1: than one billion dollars. Let's get over too in King
Speaker 1: Bloomberg News u S Semiconductor Reporter, and this was a
Speaker 1: huge miss. Has been down to a fall in revenues
Speaker 1: from gaming. Give us a sense of why this is
Speaker 1: going on with this company, why nobody saw it coming?
Speaker 1: I think the way to look at this race, I mean,
Speaker 1: you've got it right in terms of the extent of
Speaker 1: the miss was what surprised people and frightened them. There
Speaker 1: was a widespread belief that anybody related to the PC industry,
Speaker 1: which is video obviously is would would be in a
Speaker 1: difficult situation. Afterward, Intel said, what a MD said, and
Speaker 1: what various other companies. But this, this magnitude, though, is
Speaker 1: definitely you know, surprised people on the downside, and you know,
Speaker 1: again raise the question of well, how much of this
Speaker 1: was demand for gaming PCs? How much of it was
Speaker 1: you know, the crypto backlash, Remember that some of their
Speaker 1: chips are used for crypto mining. Something they said they'd
Speaker 1: kind of gottom rid of but apparently there's still a
Speaker 1: dependency there as well. Ian. Is there any sense that
Speaker 1: the behavior of the dollar had an impact here when
Speaker 1: you look at their offshore sales, and not particularly because
Speaker 1: you've got to remember a company like in Video is
Speaker 1: you know, has operations everywhere. It's got manufacturing going on
Speaker 1: in different places, so the the you know, the dollar situation,
Speaker 1: and it's not like we're only making things in the US,
Speaker 1: only designing in the US and then taking it overseas.
Speaker 1: You know, most of their chips are manufactured in Taiwan
Speaker 1: and there would be assembled, so there's a lot of
Speaker 1: hedging can go on within their business model and a
Speaker 1: lot of flexibility within their price that wouldn't make the dollar,
Speaker 1: you know, the biggest issue here for them, Jeremy and
Speaker 1: the I mean, you know, it's really not about the
Speaker 1: earnings because the rear view, but it's about what they
Speaker 1: also say looking ahead, and what are they talking at
Speaker 1: in terms of outlook and what they're likely to see
Speaker 1: in terms of demands of their products. Yeah, now that's
Speaker 1: that's the key question. If you take the bright side view,
Speaker 1: then in Video, Intel and all of the others have
Speaker 1: basically given us the bottom the worst possible moments, and
Speaker 1: that we're you know, we're now in a position to
Speaker 1: reflect a reasonable and market demand. If you take it
Speaker 1: the other way, people say, no, consumers just aren't going
Speaker 1: to be spending their you know, their hard and money
Speaker 1: on discussion items like PCs for gaming. This myth at
Speaker 1: the PC industry tried to create, Oh hey, we're going
Speaker 1: to have three PCs in a house from now on.
Speaker 1: It's just not going to come true because guess what,
Speaker 1: you know, few bills are going up because inflation is
Speaker 1: sending their food bills up, and that it's going to
Speaker 1: be the issue going forward. So there's a real division
Speaker 1: of opinion on whether this is the bottom and idea
Speaker 1: or whether this is a sign of things to come. Yeah,
Speaker 1: many of the major gaming companies have already reported either
Speaker 1: falling sales or outlooks that have been a little disappointing.
Speaker 1: I'm thinking of Sony and Microsoft in particular. But let's
Speaker 1: take a step back. I mean, to what extent um
Speaker 1: is the invidio problem something that the entire semiconductor industry
Speaker 1: is struggling with right now. Yeah, again, that's a good question.
Speaker 1: If you know, in Vidia, Intel, and a highly indexed
Speaker 1: to the PC market. If you look at other companies
Speaker 1: that aren't having as big an issue, um, if you know,
Speaker 1: the supplying chips and to say, the automotive industry into
Speaker 1: the growing field of industrial use of semiconductors in factory
Speaker 1: equipment and things like that, some of those companies have
Speaker 1: been fairly mildly impacted by what we're seeing as as
Speaker 1: a slowdown. And so really, you know, the way to
Speaker 1: look at it is it depends who you talk to
Speaker 1: and how heavily you are index to one of these
Speaker 1: markets that's falling off rapidly, such as PCs or indeed smartphones.
Speaker 1: Anything they had to say about actually supply chain constraints
Speaker 1: and the like. Yeah, know, again, that's a very good question.
Speaker 1: One of the big success stories for this company, you'll
Speaker 1: remember over the last few years has been the ability
Speaker 1: to get into a market, to take market share off
Speaker 1: Intel and other companies and do really well there. And
Speaker 1: they said, you know, they again, very good growth for
Speaker 1: that division, but not as good as some people had projected.
Speaker 1: And they said, look, it's just because we can't get
Speaker 1: other types of chips to go into these complex motherboards
Speaker 1: that go into servers with our graphics chips at the
Speaker 1: center of them. So yeah, they're still lingering issues there.
Speaker 1: So Ian, do we have to wonder about the potential
Speaker 1: for over capacity in this industry at a time when
Speaker 1: the US is kind of levering up a bit to
Speaker 1: spend some fifty billion dollars to help US chip makers. Again,
Speaker 1: that's a that's a fundamental question. I mean, as as
Speaker 1: you know, up until now, for the fifty years at
Speaker 1: the INSTI has been around, it's been just in time.
Speaker 1: It's all about being about efficiency and costs because it's
Speaker 1: so expensive and it's only getting more expensive. So no
Speaker 1: in suspect capacity now because of the deal politics were saying, hey,
Speaker 1: maybe we need plants around the world, Maybe we need redundancy,
Speaker 1: maybe we need a supply chain that's more robust. If
Speaker 1: we do, then we're going to have to pay for
Speaker 1: it because these plants are not cheap, and they are
Speaker 1: really really not cheap when you're not running them flat out.
Speaker 1: Good stuff and I always a pleasure. Thank you so
Speaker 1: much for being with us and helping us understand the
Speaker 1: videos story. Ian King is a Bloomberg reporter covering the
Speaker 1: semiconductor industry for US from our Bureau in San Francisco,