WEBVTT - Intel Wins Big Incentives and Huawei Risks Sanctions 0:00:01.600 --> 0:00:05.280 From the Heart where Innovation, money and power Collie in 0:00:05.400 --> 0:00:06.880 Silicon Vallet NBN. 0:00:07.200 --> 0:00:11.280 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:24.360 --> 0:00:27.200 I'm Caroline Heider Bloomberg's Worlday quarters in New York, and 0:00:27.240 --> 0:00:28.800 I'm Ed Ludlow in San Francisco. 0:00:28.880 --> 0:00:30.440 In this is Bloomberg Technology. 0:00:30.600 --> 0:00:34.080 Coming up, we'll talk all things chips as Intel wins 0:00:34.120 --> 0:00:37.040 nearly twenty million dollars of incentives from the US government. 0:00:37.360 --> 0:00:42.000 Plus the Biden administration weighs sanctions on Huawei's secretive chip 0:00:42.280 --> 0:00:45.760 network as the US seeks to curtail China's tech ambitions. 0:00:45.960 --> 0:00:49.159 And look, we've got to talk IPOs Reddit tomorrow. The 0:00:49.200 --> 0:00:51.840 company and shareholders guiding that they could price the offering 0:00:52.120 --> 0:00:55.400 at the top of its marketed ranger, above Astera Labs. 0:00:55.480 --> 0:00:58.280 The CEO joins US later as we expect to pop 0:00:58.360 --> 0:00:59.040 in those shares. 0:00:59.240 --> 0:01:01.480 Exclusive report at from Bloombog. 0:01:01.520 --> 0:01:04.480 The US is considering blacklisting a number of Chinese semiconductor 0:01:04.520 --> 0:01:08.000 firms linked to Huawei. That's after the telecom giant, of course, 0:01:08.040 --> 0:01:10.000 made that significant technological breakthrough. 0:01:10.040 --> 0:01:11.520 It seemed like last year. 0:01:11.880 --> 0:01:13.959 According to sources, We've got to get into it with 0:01:14.000 --> 0:01:17.800 Bloomberg's executive editor for US Government, Michael Shephard. 0:01:17.920 --> 0:01:19.640 Michael, it's great to have you on the show. And 0:01:19.959 --> 0:01:20.840 perhaps we've. 0:01:20.640 --> 0:01:23.839 Seen the reading of the tea leies anticipating yet further 0:01:23.920 --> 0:01:25.319 action on Chinese names. 0:01:25.600 --> 0:01:28.280 Well, I think you're right. What we're seeing is an 0:01:28.319 --> 0:01:33.520 extension of the Biden administration's push to keep China's chip 0:01:33.560 --> 0:01:40.360 making and technological pursuit in check. We have already seen 0:01:40.400 --> 0:01:44.120 them negotiating with the Netherlands, with Japan, with South Korea, 0:01:44.160 --> 0:01:47.280 and other countries to try to prevent China from acquiring 0:01:47.319 --> 0:01:50.240 the gear needed to make those advanced chips like the 0:01:50.240 --> 0:01:53.600 one that we saw Huawei deploy in that phone last summer. 0:01:53.840 --> 0:01:56.040 What was interesting is that the US was caught by 0:01:56.120 --> 0:01:59.920 surprise back then with that particular model of phone, which 0:02:00.000 --> 0:02:03.960 had a seven nanometer chip that was a semiconductor that 0:02:04.000 --> 0:02:06.760 the US had previously thought was out of China's reach. 0:02:07.240 --> 0:02:10.880 And Huawei, remember, has also been in the US cross 0:02:10.919 --> 0:02:13.400 heres for quite some time, for nearly a decade. 0:02:14.680 --> 0:02:15.000 Michael. 0:02:15.000 --> 0:02:18.680 We're just showing the list of Chinese domestic chip names 0:02:19.000 --> 0:02:22.840 that the US, according to our sources, is considering sanctioning. 0:02:22.919 --> 0:02:27.440 Swayshore pst CXMT, the d ram maker. What they all 0:02:27.480 --> 0:02:30.840 have in common, based on my understanding of the reporting, 0:02:31.280 --> 0:02:35.000 is existing ties to Huawei, either they're an affiliate of 0:02:35.040 --> 0:02:39.520 Huawei or Huawei has basically been using those companies to 0:02:39.639 --> 0:02:42.720 try and get access to chip making equipment to which 0:02:42.800 --> 0:02:46.280 Huawei is banned or sanctioned from accessing. 0:02:47.840 --> 0:02:50.960 Well, you're right, Huawei has been on the so called 0:02:51.160 --> 0:02:55.080 entity list, this blacklist since twenty nineteen, and that prohibits 0:02:55.200 --> 0:02:59.519 any US company from selling technology to Huawei unless it 0:02:59.560 --> 0:03:02.960 could spell permission from the Commerce Department. And the concern 0:03:03.080 --> 0:03:05.000 is that while we may have been able to develop 0:03:05.080 --> 0:03:08.200 this advanced chip that I just mentioned by using some 0:03:08.240 --> 0:03:11.600 of these companies as proxies to help get some of 0:03:11.639 --> 0:03:15.160 the technology it needed to make that leap. And so 0:03:15.240 --> 0:03:17.200 now what the US is trying to do, and Commerce 0:03:17.240 --> 0:03:20.160 Secretorary Gina Raymondo has been very clear about trying to 0:03:20.560 --> 0:03:25.360 plug any gaps in access that Huawei may have to 0:03:25.480 --> 0:03:29.760 advance technology. And likewise, the Commerce Department has also been pushing, 0:03:29.800 --> 0:03:34.359 as I mentioned, efforts to try to restrict China's access 0:03:34.440 --> 0:03:39.320 to chip making equipment in other areas as well. 0:03:39.400 --> 0:03:41.320 Okay, and it's important to note that the White House 0:03:41.400 --> 0:03:44.960 National Security Council, the Commerce Department did not comment on 0:03:45.040 --> 0:03:48.520 our story. Representatives all those Chinese domestic names that we 0:03:48.520 --> 0:03:51.120 show didn't respond to comment, but the Ministry of Foreign 0:03:51.120 --> 0:03:55.160 Affairs in China reiterated to us that it resolutely opposes 0:03:55.280 --> 0:04:00.240 US actions that disrupt market order and harm Chinese Enterprises's 0:04:00.240 --> 0:04:03.360 Michael Sheppard out of DC on an incredibly important Bloomberg 0:04:03.520 --> 0:04:04.360 piece of reporting. 0:04:04.400 --> 0:04:06.480 Thank you the other chip News. Let's get back to it. 0:04:06.720 --> 0:04:09.680 US will award Intel eight point five billion dollars in 0:04:09.720 --> 0:04:12.840 grants and as much as eleven billion dollars in loans 0:04:12.880 --> 0:04:16.920 to help the company fund and expansion of its semiconductive factories. 0:04:16.960 --> 0:04:20.719 That's the largest award from a program designed to reinvigorate 0:04:21.000 --> 0:04:23.800 the domestic chip industry. Here with me and San Francisco, 0:04:23.800 --> 0:04:26.680 Bloomberzie and King, we've gone the phone last night with 0:04:26.760 --> 0:04:29.960 Pat Gelsinger. It's a big chunk of money. He told 0:04:30.040 --> 0:04:32.039 us he would have liked more, but he's pretty happy 0:04:32.080 --> 0:04:35.599 with it. The main point is to onshore or re 0:04:35.920 --> 0:04:39.039 onshore the semiconductor industry in this country. 0:04:39.160 --> 0:04:41.760 Yeah, I mean there are two things that play here. Obviously, 0:04:41.880 --> 0:04:44.920 the concentration of advanced manufacturing who's currently in East Asia, 0:04:45.040 --> 0:04:48.760 predominantly Taiwan, but also South Korea. That, as we saw 0:04:48.839 --> 0:04:52.960 during the pandemic and this ongoing dispute with China, is 0:04:53.080 --> 0:04:57.039 a security risk, it's a stability risk. The Biden administration 0:04:57.160 --> 0:05:01.479 wants contingencies, it wants manufacturing in this country. It's backing 0:05:01.560 --> 0:05:04.240 Intel as the best chance of getting that. For Intel, 0:05:05.040 --> 0:05:07.360 they're on the comeback trail. They need money, all right, 0:05:07.600 --> 0:05:09.120 and this is a big chunk of that. 0:05:10.360 --> 0:05:12.880 Let's also think about some of the other names that 0:05:12.920 --> 0:05:14.920 are likely to be incentivized to build here in the 0:05:15.040 --> 0:05:17.599 United States, because it's notable. The US name gets the 0:05:17.600 --> 0:05:20.440 big chunk of change and the announcement, but others are 0:05:20.440 --> 0:05:22.599 going to be receiving it from the likes of Samsung 0:05:22.640 --> 0:05:23.200 for example. 0:05:24.240 --> 0:05:27.320 Yeah, I mean, you can't just back Intel. Intel, you know, 0:05:27.400 --> 0:05:29.600 let's be honest, has kind of fallen behind over the 0:05:29.680 --> 0:05:33.200 last five years. They say they're making a good shake 0:05:33.520 --> 0:05:35.560 of a comeback and that they're close to being back 0:05:35.560 --> 0:05:37.800 where they should be. But if you're looking at it 0:05:37.839 --> 0:05:40.480 from a purely objective point of view, then you have 0:05:40.520 --> 0:05:43.400 to back the winners as well, and that would be Samsung, 0:05:43.440 --> 0:05:46.720 and that would be Taiwan semi conductor Manufacturing, and both 0:05:46.720 --> 0:05:50.400 of those companies are building new facilities in the US. 0:05:50.920 --> 0:05:54.040 I think Pat Gelsinger was honest with us last night 0:05:54.160 --> 0:05:58.120 that the semiconductory industry in this country over a thirty 0:05:58.200 --> 0:06:01.599 year period, went elsewhere. Therefore, it's not going to happen 0:06:01.640 --> 0:06:05.159 overnight bringing it back. But walk our audience through the 0:06:05.160 --> 0:06:07.880 footprint of what they're trying to do. Arizona and Ohio 0:06:07.960 --> 0:06:10.480 are the focus. They also have plans for New Mexico. 0:06:10.880 --> 0:06:13.479 The twenty billion actually goes quite a long way towards 0:06:13.480 --> 0:06:14.440 getting things built. 0:06:15.160 --> 0:06:17.120 It doesn't, It doesn't. I mean, you've got to bear 0:06:17.120 --> 0:06:20.880 in mind one of these plants, twenty billion is just 0:06:20.920 --> 0:06:21.880 about going to cover. 0:06:21.760 --> 0:06:23.760 Its soutariety of that one fab. 0:06:23.760 --> 0:06:26.720 Right, So, I mean, and it's not actually building the factory, 0:06:26.720 --> 0:06:28.560 it's the equipment. It's what the money you give to 0:06:28.560 --> 0:06:31.159 apply materials and everything like that. So it's a massive 0:06:31.200 --> 0:06:34.080 amount of public money. But as you said, as you 0:06:34.160 --> 0:06:36.560 reminded us, he said, it's not as much as I want. 0:06:36.640 --> 0:06:36.760 Right. 0:06:36.800 --> 0:06:41.359 This helps this balances the economics. This makes investing in 0:06:41.400 --> 0:06:44.000 a US facility sort of equivalent to doing it in 0:06:44.040 --> 0:06:46.960 Taiwan or doing it in South Korea. But this is 0:06:47.000 --> 0:06:49.760 not a free pass. This is not a ten year 0:06:49.920 --> 0:06:52.240 kind of extension of Intel's life to do what they 0:06:52.240 --> 0:06:56.200 want for free for free. It's considerable help, but we're 0:06:56.200 --> 0:06:58.239 going to need more money if we want to create 0:06:58.279 --> 0:07:00.000 that basis. 0:07:00.040 --> 0:07:04.240 While the real gem of the chip ecosystem in the 0:07:04.320 --> 0:07:07.440 US and video has still been going out there discussing 0:07:07.520 --> 0:07:10.920 its future plans. It's vision for an AI focused reality 0:07:11.600 --> 0:07:13.400 in what are we learning more from in video? And 0:07:13.400 --> 0:07:15.200 also who they're bathing in their own glory? 0:07:16.440 --> 0:07:20.320 Are they anybody that Jensen Wang mentioned during his massive keynote, 0:07:20.480 --> 0:07:23.920 they start got a bump, and you know, my colleagues 0:07:23.960 --> 0:07:25.640 on the market team wrote a good story about that, 0:07:25.720 --> 0:07:27.840 So have a look at that one. And that's exactly 0:07:27.840 --> 0:07:30.680 what's going on here. They are absolutely central to what's 0:07:30.720 --> 0:07:33.000 going on. The big message was, hey, here's a great 0:07:33.040 --> 0:07:34.680 new tip. Of course it's twice as good as the 0:07:34.680 --> 0:07:37.880 previous one, but don't worry too much about that. There's servers, 0:07:38.000 --> 0:07:41.280 there's networking, there's you name it, and we're going to 0:07:41.320 --> 0:07:44.720 bring this technology to everybody. It's not just going to 0:07:44.720 --> 0:07:46.840 be for Amazon. It's not just going to be for Microsoft. 0:07:47.000 --> 0:07:49.280 We're going to put it out there for corporations yunday. 0:07:49.360 --> 0:07:52.880 Shipbuilding is going to be using AI to make better ships. 0:07:52.920 --> 0:07:53.920 It's everything. 0:07:54.000 --> 0:07:56.040 That was the big message that they kind of rammed 0:07:56.040 --> 0:07:57.800 down our throats over the last couple of days. 0:07:58.200 --> 0:08:00.200 It's Sam sang up the most of six months to 0:08:00.640 --> 0:08:04.360 getting Jensen Lang's blessing a little bit earlier, inking across 0:08:04.360 --> 0:08:06.120 it all in the world of chips, We've got more 0:08:06.120 --> 0:08:07.680 to come. We thank you so much. I mean, while 0:08:07.680 --> 0:08:10.440 coming up, Look, let's just check in on the implication 0:08:10.520 --> 0:08:12.400 of the chip market on the rest of the markets. 0:08:12.480 --> 0:08:15.120 Remember Magnificent seven still driving us to New hus yesterday. 0:08:15.360 --> 0:08:16.400 Where is it going in the future? 0:08:16.400 --> 0:08:19.920 Principal Asset Management chief Global strategist Semashal joins us ed, 0:08:20.000 --> 0:08:20.680 what are you looking at? 0:08:21.400 --> 0:08:23.440 Well, I'm looking at shares of Micron because we're at 0:08:23.440 --> 0:08:26.240 the tail end of earning season. But Micron memory chip maker, 0:08:26.320 --> 0:08:31.640 incredibly important, DRAM highly commoditized, and we've seen recovery in 0:08:31.720 --> 0:08:35.160 d RAM prices and the streets. Expectation is that that 0:08:35.240 --> 0:08:37.840 will result in some feel good for Micron. Where do 0:08:37.960 --> 0:08:41.280 the memory chip makers sit in this AI story? We 0:08:41.360 --> 0:08:42.920 still kind of want to learn that if they're building 0:08:42.920 --> 0:08:45.680 all these data centers, surely they need the memory to 0:08:45.720 --> 0:08:48.640 go in there alongside the GPUs and CPUs. Micro run 0:08:48.720 --> 0:08:50.880 up nine ten to percent, and it's a big earnings 0:08:50.920 --> 0:09:13.600 print after the bell. This is Bloomberg technology. 0:09:08.920 --> 0:09:10.960 Go ahead of the FED decision today, This so called 0:09:11.000 --> 0:09:13.760 Magnificent Seven, a few of them taking a breather, having 0:09:13.880 --> 0:09:17.000 powered benchmarks to new records yesterday. I made all this 0:09:17.120 --> 0:09:19.640 AI hype and indeed the reality being served to us 0:09:19.679 --> 0:09:22.760 from in video for example, the Laters unveilings. They've made 0:09:23.120 --> 0:09:26.560 some of these Magnificent seven names the most crowded trade 0:09:26.640 --> 0:09:27.800 according to Bank of America. 0:09:27.920 --> 0:09:30.439 So is this rarely going to be sustained? Let's get 0:09:30.520 --> 0:09:30.800 into it. 0:09:30.800 --> 0:09:33.800 Principal Asset Management chief Global strategist Seemacha is here with 0:09:33.880 --> 0:09:36.520 us and to talk us through the macro and the 0:09:36.559 --> 0:09:39.600 micro and just tell us how much you think, with 0:09:39.720 --> 0:09:41.959 the macro policy as it is, with the fared as 0:09:41.960 --> 0:09:45.520 it is, whether or not the Magnificent Seven can continue 0:09:45.520 --> 0:09:46.760 to just own this rally. 0:09:46.880 --> 0:09:49.200 Yeah, well, thanks for having me on. It's an interesting 0:09:49.240 --> 0:09:52.199 question right now because coming to this year, there was 0:09:52.679 --> 0:09:54.720 a perspective that actually there was going to be a 0:09:54.720 --> 0:09:57.160 ship away from the MAG seven into other parts of 0:09:57.160 --> 0:09:59.760 the market. But actually what we've seen is because there 0:09:59.760 --> 0:10:02.720 has been in so much macro volatility, so much debates 0:10:02.720 --> 0:10:04.600 still going on about what the FED is going to do, 0:10:05.280 --> 0:10:08.960 that you're still seeing that uncertainty. Mean that investors are 0:10:09.000 --> 0:10:11.240 looking for where they have safety, where they know what 0:10:11.280 --> 0:10:15.079 they can expect, and so that means that actually people's 0:10:15.200 --> 0:10:18.719 interest in MAG seven has been maintained. And of course 0:10:18.720 --> 0:10:21.479 there's always going to be questions about the froppiness evaluations. 0:10:21.800 --> 0:10:24.240 But actually the clients that we're speaking to, they're telling 0:10:24.280 --> 0:10:26.359 us that they really do have belief in the expectations, 0:10:26.400 --> 0:10:29.160 the earnings expectations, so they're not too concerned about the 0:10:29.160 --> 0:10:30.920 froth but they would like to find other parts of 0:10:30.920 --> 0:10:32.920 the market to also increase exposure to. 0:10:33.400 --> 0:10:35.200 And let's talk about other parts of the market. 0:10:35.240 --> 0:10:39.360 Is it therefore a broader part of the AI ecosystem 0:10:39.400 --> 0:10:42.199 we look at other names? Are the global names in particular, 0:10:42.280 --> 0:10:44.960 I think of ASML's done really well over there in Europe, 0:10:44.960 --> 0:10:47.160 We've done some other Asian names doing incredibly well. 0:10:47.200 --> 0:10:48.920 Or is it just getting into other industry groups. 0:10:49.960 --> 0:10:52.120 So there's a bit of both. I mean typically looking 0:10:52.120 --> 0:10:54.720 across TU Asia for the parts of that tech space 0:10:54.760 --> 0:10:57.680 which can do well, but it is also about looking 0:10:57.720 --> 0:10:59.800 at just other parts of the market, other sectors and 0:11:00.080 --> 0:11:02.920 the regions which haven't performed as well, particularly in twenty 0:11:02.960 --> 0:11:06.839 twenty three. So that has been some interest in small 0:11:06.840 --> 0:11:10.599 cap space, but really quite hesitant, but hopefully looking to 0:11:10.640 --> 0:11:12.280 see that once they know what the FED is going 0:11:12.360 --> 0:11:14.120 to do, that they can start dipping their toes more 0:11:14.600 --> 0:11:17.520 deeply into that area. And then other parts of the 0:11:17.520 --> 0:11:20.440 market which you really are not tech focused, places like 0:11:20.480 --> 0:11:23.560 Latin America, where evaluations are really interesting when the macro 0:11:24.160 --> 0:11:26.959 stories are quite compelling as well. So it is a 0:11:27.000 --> 0:11:29.480 bit of variation, but certainly what we're seeing throughout all 0:11:29.520 --> 0:11:31.680 of this is even as interested outside of the US 0:11:31.760 --> 0:11:34.920 tech space is growing, that still doesn't mean that then 0:11:35.040 --> 0:11:36.680 taking it away from US tech either. 0:11:37.880 --> 0:11:41.040 I've been thinking a lot sooner about what's supporting the 0:11:41.160 --> 0:11:44.080 sort of large or megacap tech space in the United 0:11:44.160 --> 0:11:47.560 States right. Earnings are really strong, and even if you 0:11:47.679 --> 0:11:50.280 debate the timing of rate cuts, I think most people 0:11:50.320 --> 0:11:52.880 still think some rate cuts are coming this year. But 0:11:52.960 --> 0:11:55.560 the thing supporting all of it is like this investment 0:11:55.600 --> 0:11:59.800 cycle driven by AI. How much carry does that give 0:11:59.840 --> 0:12:01.800 us through the end of the year. If you call 0:12:01.840 --> 0:12:04.520 it a tailwind, for how long does the tail wind flow? 0:12:06.640 --> 0:12:09.680 It's interesting because actually I would say that that narrative 0:12:10.440 --> 0:12:12.040 for a lot of people is not just the interest 0:12:12.080 --> 0:12:13.800 for the rest of the year, and it really takes 0:12:13.880 --> 0:12:17.480 up a very significant part of the strategic gap allocation, 0:12:17.559 --> 0:12:20.600 not necessarily the tactical ass allocation. The valuations mean that 0:12:20.600 --> 0:12:22.520 from a tactical side, this probably isn't going to be 0:12:22.559 --> 0:12:24.679 the time that you want to be adding your exposure. 0:12:25.240 --> 0:12:28.240 But most people are looking at this megacap space and saying, okay, 0:12:28.240 --> 0:12:29.760 this is something which is going to deliver for the 0:12:29.760 --> 0:12:32.600 next three, five to ten years from beyond because of 0:12:32.640 --> 0:12:36.040 the AI. So actually, I think that tailwind probably maintains 0:12:36.080 --> 0:12:38.320 and carries the space through to the end of the year. 0:12:38.320 --> 0:12:40.520 And obviously, look, the macrospace is going to be important, 0:12:40.800 --> 0:12:43.719 but as you said right now, the narrative is more 0:12:43.720 --> 0:12:45.840 about when is the bed going to cup? Not necessarily 0:12:46.160 --> 0:12:49.000 is the bed gonna cup? So certainly that does help 0:12:49.040 --> 0:12:49.840 the situation too. 0:12:50.600 --> 0:12:52.320 I want to go back to the example of Intel, 0:12:52.320 --> 0:12:54.080 because we were talking about it earlier in the show. 0:12:54.160 --> 0:12:56.320 You know, if you just as a comparison, put Intel 0:12:56.440 --> 0:12:58.880 side by side with the MAG seven, I think it's 0:12:58.920 --> 0:13:02.000 down sixteen seventeen percent so far this year, just got 0:13:02.000 --> 0:13:04.760 twenty billion dollars of awards from the US government, and 0:13:04.800 --> 0:13:08.240 it's another example of something supporting that sector, at least 0:13:08.400 --> 0:13:11.560 the CHIPSAC support. Do you expect investors to kind of 0:13:11.559 --> 0:13:15.079 pay that more credence in the back half of twenty 0:13:15.120 --> 0:13:15.600 twenty four. 0:13:16.880 --> 0:13:19.040 So we are, and I think that is actually a 0:13:19.120 --> 0:13:22.480 really important story is we're trying to see, you know, 0:13:22.520 --> 0:13:25.199 we know how the MAG seven is done, but it's 0:13:25.200 --> 0:13:27.040 now about thinking about whate of the second round effects, 0:13:27.120 --> 0:13:29.480 which are the other parts of the universe which are 0:13:29.480 --> 0:13:31.760 really going to benefit And as you said, Intel is 0:13:31.800 --> 0:13:34.320 one perfect example, but also if you just look outsidely 0:13:34.360 --> 0:13:38.679 in the tech sector, looking to maybe towards agribusiness, healthcare, 0:13:39.400 --> 0:13:41.960 data centers, these are all areas that will benefit as 0:13:41.960 --> 0:13:44.840 a second round from technology. And that's actually where we're 0:13:44.880 --> 0:13:49.040 getting particular client interest of where can they benefit maybe 0:13:49.040 --> 0:13:51.880 where the valuations haven't really moved up as much, but 0:13:51.920 --> 0:13:55.320 they do know that those segments of the market are 0:13:55.400 --> 0:13:58.880 really standing to have some serious gains over the coming 0:13:58.960 --> 0:14:01.800 years from all of the technology moves we've already seen. 0:14:02.880 --> 0:14:05.920 See, man, you are a global strategist, and you are 0:14:05.960 --> 0:14:08.280 a cross asset strategist. I would like to do credit, 0:14:08.280 --> 0:14:11.200 but instead I go to crypto and more broadly, is 0:14:11.200 --> 0:14:13.199 that something you're getting some clients more questions as to 0:14:13.280 --> 0:14:14.559 whether that rallies run out a little? 0:14:16.600 --> 0:14:16.960 Of course. 0:14:17.040 --> 0:14:18.600 I mean when you see the moves that we've had 0:14:18.600 --> 0:14:20.480 in the crypto in flu that you're going to get 0:14:20.520 --> 0:14:23.520 a lot of questions. And you know the questions are, 0:14:23.520 --> 0:14:26.120 of course, is can it continue? But also what we're 0:14:26.120 --> 0:14:28.080 seeing is that investors are looking and saying, well, look, 0:14:28.120 --> 0:14:31.040 this has been legitimized now and there is a real runway. 0:14:31.320 --> 0:14:33.920 They accept that there's a ton of volatility associated with this, 0:14:34.000 --> 0:14:36.280 they have to have a fairly strong stomach, but again 0:14:36.680 --> 0:14:39.560 they're looking at this is a long term and a 0:14:39.600 --> 0:14:41.680 long term perspective, not something that you can maybe trade 0:14:41.760 --> 0:14:44.920 in and out of. So certainly investors are trying to 0:14:44.920 --> 0:14:47.720 find like, where are we going to get the significant 0:14:47.720 --> 0:14:50.080 returns that maybe we've enjoyed in previous years but are 0:14:50.080 --> 0:14:52.320 looking a little bit more like a little less likely 0:14:52.360 --> 0:14:54.560 over the coming years. And that is certainly where crypto 0:14:54.640 --> 0:14:55.360 is coming in more. 0:14:55.200 --> 0:14:55.720 And more. 0:14:57.400 --> 0:15:00.440 Principal asset management chief global strategies seem as are great. 0:15:00.480 --> 0:15:05.880 To catch up with you here on invo technology. Steri 0:15:06.000 --> 0:15:10.320 Labs indicated to open at fifty two dollars fifty six 0:15:10.400 --> 0:15:15.160 cents a share. That's pretty significantly above its IPO price 0:15:15.200 --> 0:15:18.920 of thirty six dollars a share. Shares indicated to open 0:15:18.920 --> 0:15:22.440 at fifty three dollars as of around fifteen minutes past 0:15:22.480 --> 0:15:26.640 eleven Eastern time fifteen minutes past eight am Pacific time. 0:15:26.800 --> 0:15:29.480 It's a forty six percent premium on where they priced. 0:15:29.520 --> 0:15:32.240 Let's get straight to Bloomberg Deal's reporter, Katie Ruth. 0:15:32.760 --> 0:15:36.080 Your reaction, Well, this is the excitement that IPO market 0:15:36.160 --> 0:15:39.640 is needed. There've only been three venture backed IPOs since 0:15:39.640 --> 0:15:45.160 twenty twenty one. Is Sarah Labs popping significantly, which you 0:15:45.240 --> 0:15:49.320 know this is after already pricing above their revised range. 0:15:49.320 --> 0:15:52.040 They kept revising it higher because there was so much 0:15:52.120 --> 0:15:56.280 demand from institutional investors and so the fact that Sarah 0:15:56.400 --> 0:15:59.600 Lab's roadshow went really well shows it proves that there 0:15:59.680 --> 0:16:02.280 is an US through demand for the right companies for 0:16:02.320 --> 0:16:03.480 tech IPOs right now. 0:16:03.960 --> 0:16:06.960 And the reason that it's so well liked is well. 0:16:06.960 --> 0:16:11.960 It developed semiconductor based connectivity solutions. Basically, this is about AI, Katie, 0:16:11.960 --> 0:16:13.760 And do you think therefore we are needing to have 0:16:13.800 --> 0:16:16.840 this element of AI to get investors really excited at 0:16:16.840 --> 0:16:17.200 the moment. 0:16:18.080 --> 0:16:20.320 Yes, that's what it seems like. This is definitely an 0:16:20.400 --> 0:16:24.480 AI related company. They're in chips and you know that's 0:16:24.520 --> 0:16:27.560 been something that's drawn more excite and back to tech again. 0:16:27.600 --> 0:16:30.640 Obviously twenty twenty two was rough, and then twenty twenty 0:16:30.640 --> 0:16:33.000 three people started to get more excited about AI. And 0:16:33.320 --> 0:16:36.520 now in twenty twenty four we're seeing this make it 0:16:36.520 --> 0:16:39.440 to Wall Street in IPOs and there's a lot of 0:16:39.480 --> 0:16:40.200 excitement there. 0:16:40.400 --> 0:16:43.280 Let's get to the other technology IPO due in the 0:16:43.320 --> 0:16:46.800 next twenty four hours. Reddit sources are telling us that 0:16:46.880 --> 0:16:48.480 we're looking at the top end of the range. The 0:16:48.600 --> 0:16:50.920 range was thirty one to thirty four dollars a share, 0:16:51.400 --> 0:16:53.920 which on a diluted basis values. 0:16:53.560 --> 0:16:55.800 Reddit six point four billion. What do we know? 0:16:56.400 --> 0:16:59.120 So, you know, technically hasn't priced yet, but we're already 0:16:59.160 --> 0:17:02.640 hearing positive indications about where it will price. You know, 0:17:02.680 --> 0:17:06.360 they're writing off of the excitement from Astra, which helps, 0:17:06.480 --> 0:17:11.320 you know, excited investors for tech generally, and you know, 0:17:11.359 --> 0:17:13.320 they saw how the market was trading today and they're 0:17:13.320 --> 0:17:16.119 thinking already that this could go well. Technically, it doesn't 0:17:16.119 --> 0:17:20.040 get priced until after the bell, but you know already 0:17:20.080 --> 0:17:21.439 it's looking positive for Reddit. 0:17:21.840 --> 0:17:22.080 Yeah. 0:17:22.119 --> 0:17:24.679 I mean it's going to be music to some of 0:17:24.720 --> 0:17:27.199 the banks. Is when we're at record highs and in 0:17:27.200 --> 0:17:29.480 the days before the IPO being led by Monges Standing, Goldman, 0:17:29.520 --> 0:17:32.960 sax Shaping, Morgan, Bank of America, Katie. This is a 0:17:33.119 --> 0:17:35.760 name that people have anticipated coming to the market for 0:17:35.840 --> 0:17:39.280 so long. How is some of the allocation going to 0:17:39.560 --> 0:17:42.120 the regets themselves? Because they want to ensure that their 0:17:42.119 --> 0:17:44.679 community is supportive of them going public. 0:17:45.520 --> 0:17:48.080 That's right. They're allocating shares to some of their top 0:17:48.119 --> 0:17:50.679 Breddit users. And you know the way this works is 0:17:51.040 --> 0:17:54.080 normally it's a wall street that gets access at the 0:17:54.119 --> 0:17:58.560 IPO price. Normally, an average retail investor can only buy 0:17:59.000 --> 0:18:01.280 after it begins trade on the first day, and they 0:18:01.320 --> 0:18:04.280 don't have access to that much of that pop that 0:18:04.359 --> 0:18:06.720 we see, and so this is a way to kind 0:18:06.720 --> 0:18:09.480 of gift that to some of their top users. We 0:18:09.600 --> 0:18:12.960 have seen this with a couple of other consumer facing 0:18:13.000 --> 0:18:16.080 IPOs now but this is part of that trend. 0:18:16.640 --> 0:18:19.919 I think what's interesting about Reddit is relatively complicated history. 0:18:20.040 --> 0:18:22.879 Founded two thousand and five, had a y combinator as well, 0:18:23.400 --> 0:18:26.840 then bought by Conde Nas very quickly spun out twenty eleven, 0:18:27.320 --> 0:18:29.159 and as carry pointed out, we've been waiting. 0:18:28.920 --> 0:18:29.560 A long time. 0:18:30.240 --> 0:18:32.520 There is also how this IPA is going to work. 0:18:32.600 --> 0:18:35.479 So some of the sheds to insiders and staff, some 0:18:35.520 --> 0:18:38.800 of them to redditors themselves. How does that impact the mechanics? 0:18:39.280 --> 0:18:39.560 Sure? 0:18:39.680 --> 0:18:41.800 So, you know, what we saw on this is that 0:18:41.920 --> 0:18:44.880 we had smaller than usual stakes for some of the 0:18:45.080 --> 0:18:48.440 institutional shareholders like venture capitalists, and that's part of that, 0:18:48.800 --> 0:18:52.119 you know, because they were spun out of Advanced the 0:18:52.160 --> 0:18:57.000 Conde Nas parent, the founders had really small stakes, you know, 0:18:57.240 --> 0:19:00.440 less than five percent for them, and that's not something 0:19:00.440 --> 0:19:03.439 we typically see at the time of an IPL. But 0:19:03.960 --> 0:19:06.560 you know, this is a company that's going public after 0:19:06.720 --> 0:19:10.000 being around for nineteen years. That's really really long for 0:19:10.080 --> 0:19:12.760 a startup to IPL. But again, this is technically the 0:19:12.880 --> 0:19:15.639 second exit for Reddit because they were sold in the 0:19:15.680 --> 0:19:18.240 early days and then now spun out. 0:19:19.160 --> 0:19:23.360 Question is profitability from these companies as of when it's 0:19:23.400 --> 0:19:26.359 hit Katie Woof, We thank you so much for breaking 0:19:26.400 --> 0:19:28.119 it down. It feels like a bit of an IPO 0:19:28.240 --> 0:19:38.440 Mini Frenzy. Welcome back to Bloomberg Technology and carolinehid in New. 0:19:38.440 --> 0:19:40.960 York and I'm Med Lodlo in San Francisco. The Buying 0:19:40.960 --> 0:19:44.760 Administration is toughening auto emission mandates in order to boost 0:19:44.760 --> 0:19:47.920 EV sales. In the near term, there's actually some easing 0:19:48.119 --> 0:19:51.400 in tail pipe requirements, but in the long term it's 0:19:51.480 --> 0:19:53.840 going to be an EPA cat for car and truck 0:19:54.119 --> 0:19:58.760 tailpipe emissions through the model years twenty thirty two. The 0:19:58.880 --> 0:20:02.200 idea is that it will push the automakers, particularly the 0:20:02.280 --> 0:20:05.920 legacy auto makers, to move more quickly in boosting their 0:20:06.000 --> 0:20:08.679 sales of battery electric vehicles. You look at some of 0:20:08.680 --> 0:20:10.800