WEBVTT - Ian King on Nvidia Earnings (Audio)

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<v Speaker 1>All right, well, having a good what's been going on

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<v Speaker 1>with video? We've got certainly the quarterly revenue numbers that

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<v Speaker 1>just a horror show for them, missing projections by more

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<v Speaker 1>than one billion dollars. Let's get over too in King

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<v Speaker 1>Bloomberg News u S Semiconductor Reporter, and this was a

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<v Speaker 1>huge miss. Has been down to a fall in revenues

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<v Speaker 1>from gaming. Give us a sense of why this is

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<v Speaker 1>going on with this company, why nobody saw it coming?

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<v Speaker 1>I think the way to look at this race, I mean,

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<v Speaker 1>you've got it right in terms of the extent of

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<v Speaker 1>the miss was what surprised people and frightened them. There

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<v Speaker 1>was a widespread belief that anybody related to the PC industry,

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<v Speaker 1>which is video obviously is would would be in a

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<v Speaker 1>difficult situation. Afterward, Intel said, what a MD said, and

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<v Speaker 1>what various other companies. But this, this magnitude, though, is

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<v Speaker 1>definitely you know, surprised people on the downside, and you know,

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<v Speaker 1>again raise the question of well, how much of this

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<v Speaker 1>was demand for gaming PCs? How much of it was

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<v Speaker 1>you know, the crypto backlash, Remember that some of their

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<v Speaker 1>chips are used for crypto mining. Something they said they'd

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<v Speaker 1>kind of gottom rid of but apparently there's still a

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<v Speaker 1>dependency there as well. Ian. Is there any sense that

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<v Speaker 1>the behavior of the dollar had an impact here when

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<v Speaker 1>you look at their offshore sales, and not particularly because

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<v Speaker 1>you've got to remember a company like in Video is

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<v Speaker 1>you know, has operations everywhere. It's got manufacturing going on

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<v Speaker 1>in different places, so the the you know, the dollar situation,

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<v Speaker 1>and it's not like we're only making things in the US,

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<v Speaker 1>only designing in the US and then taking it overseas.

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<v Speaker 1>You know, most of their chips are manufactured in Taiwan

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<v Speaker 1>and there would be assembled, so there's a lot of

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<v Speaker 1>hedging can go on within their business model and a

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<v Speaker 1>lot of flexibility within their price that wouldn't make the dollar,

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<v Speaker 1>you know, the biggest issue here for them, Jeremy and

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<v Speaker 1>the I mean, you know, it's really not about the

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<v Speaker 1>earnings because the rear view, but it's about what they

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<v Speaker 1>also say looking ahead, and what are they talking at

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<v Speaker 1>in terms of outlook and what they're likely to see

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<v Speaker 1>in terms of demands of their products. Yeah, now that's

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<v Speaker 1>that's the key question. If you take the bright side view,

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<v Speaker 1>then in Video, Intel and all of the others have

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<v Speaker 1>basically given us the bottom the worst possible moments, and

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<v Speaker 1>that we're you know, we're now in a position to

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<v Speaker 1>reflect a reasonable and market demand. If you take it

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<v Speaker 1>the other way, people say, no, consumers just aren't going

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<v Speaker 1>to be spending their you know, their hard and money

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<v Speaker 1>on discussion items like PCs for gaming. This myth at

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<v Speaker 1>the PC industry tried to create, Oh hey, we're going

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<v Speaker 1>to have three PCs in a house from now on.

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<v Speaker 1>It's just not going to come true because guess what,

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<v Speaker 1>you know, few bills are going up because inflation is

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<v Speaker 1>sending their food bills up, and that it's going to

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<v Speaker 1>be the issue going forward. So there's a real division

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<v Speaker 1>of opinion on whether this is the bottom and idea

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<v Speaker 1>or whether this is a sign of things to come. Yeah,

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<v Speaker 1>many of the major gaming companies have already reported either

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<v Speaker 1>falling sales or outlooks that have been a little disappointing.

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<v Speaker 1>I'm thinking of Sony and Microsoft in particular. But let's

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<v Speaker 1>take a step back. I mean, to what extent um

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<v Speaker 1>is the invidio problem something that the entire semiconductor industry

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<v Speaker 1>is struggling with right now. Yeah, again, that's a good question.

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<v Speaker 1>If you know, in Vidia, Intel, and a highly indexed

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<v Speaker 1>to the PC market. If you look at other companies

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<v Speaker 1>that aren't having as big an issue, um, if you know,

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<v Speaker 1>the supplying chips and to say, the automotive industry into

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<v Speaker 1>the growing field of industrial use of semiconductors in factory

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<v Speaker 1>equipment and things like that, some of those companies have

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<v Speaker 1>been fairly mildly impacted by what we're seeing as as

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<v Speaker 1>a slowdown. And so really, you know, the way to

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<v Speaker 1>look at it is it depends who you talk to

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<v Speaker 1>and how heavily you are index to one of these

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<v Speaker 1>markets that's falling off rapidly, such as PCs or indeed smartphones.

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<v Speaker 1>Anything they had to say about actually supply chain constraints

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<v Speaker 1>and the like. Yeah, know, again, that's a very good question.

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<v Speaker 1>One of the big success stories for this company, you'll

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<v Speaker 1>remember over the last few years has been the ability

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<v Speaker 1>to get into a market, to take market share off

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<v Speaker 1>Intel and other companies and do really well there. And

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<v Speaker 1>they said, you know, they again, very good growth for

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<v Speaker 1>that division, but not as good as some people had projected.

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<v Speaker 1>And they said, look, it's just because we can't get

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<v Speaker 1>other types of chips to go into these complex motherboards

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<v Speaker 1>that go into servers with our graphics chips at the

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<v Speaker 1>center of them. So yeah, they're still lingering issues there.

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<v Speaker 1>So Ian, do we have to wonder about the potential

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<v Speaker 1>for over capacity in this industry at a time when

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<v Speaker 1>the US is kind of levering up a bit to

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<v Speaker 1>spend some fifty billion dollars to help US chip makers. Again,

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<v Speaker 1>that's a that's a fundamental question. I mean, as as

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<v Speaker 1>you know, up until now, for the fifty years at

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<v Speaker 1>the INSTI has been around, it's been just in time.

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<v Speaker 1>It's all about being about efficiency and costs because it's

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<v Speaker 1>so expensive and it's only getting more expensive. So no

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<v Speaker 1>in suspect capacity now because of the deal politics were saying, hey,

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<v Speaker 1>maybe we need plants around the world, Maybe we need redundancy,

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<v Speaker 1>maybe we need a supply chain that's more robust. If

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<v Speaker 1>we do, then we're going to have to pay for

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<v Speaker 1>it because these plants are not cheap, and they are

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<v Speaker 1>really really not cheap when you're not running them flat out.

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<v Speaker 1>Good stuff and I always a pleasure. Thank you so

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<v Speaker 1>much for being with us and helping us understand the

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<v Speaker 1>videos story. Ian King is a Bloomberg reporter covering the

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<v Speaker 1>semiconductor industry for US from our Bureau in San Francisco,