WEBVTT - Chips Tariff Probe, Nvidia's Fast Pass 0:00:00.840 --> 0:00:05.080 From the heart of where innovation, money and power collide 0:00:05.400 --> 0:00:10.680 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.840 --> 0:00:13.320 Caroline Hyde and Ed Ludlow. 0:00:27.400 --> 0:00:30.800 Live from San Francisco. This is Bloomberg Technology coming up 0:00:30.920 --> 0:00:35.959 more tariffs. President Trump initiates trade probes into semiconductors and 0:00:36.000 --> 0:00:41.400 pharmaceutical imports. Plus Trump pledges expedited permits for Nvidia and 0:00:41.479 --> 0:00:46.120 other companies investing in the US. And Estranis has big 0:00:46.200 --> 0:00:49.960 satellite plans for Taiwan. How the nation could have full 0:00:50.000 --> 0:00:53.760 bandwidth as early as next year. Let's get straight to markets. 0:00:53.800 --> 0:00:56.920 Our focus today is the chip industry, with the administration 0:00:57.480 --> 0:01:00.680 pressing forward with a plan to impose the civic tarifs 0:01:00.680 --> 0:01:03.560 on semis. Actually, in the last thirty minutes or so, 0:01:03.680 --> 0:01:07.240 equity markets have pulled back, but there is some outperformance 0:01:07.240 --> 0:01:10.479 in the Philadelphia Semiconductor Index. The logic that I'm hearing 0:01:10.520 --> 0:01:13.559 from people is certainty, we kind of now know more 0:01:13.600 --> 0:01:17.120 about what's happening in terms of the specific movers. Nvidia 0:01:17.360 --> 0:01:20.240 continues to be in the headlines right They pledge to 0:01:20.319 --> 0:01:23.399 produce five hundred billion dollars worth of AI infrastructure in 0:01:23.440 --> 0:01:26.600 the United States within the next four years, but there 0:01:26.600 --> 0:01:30.319 are questions about capital expenditures, generally on the hyperscalers. Amazon 0:01:30.360 --> 0:01:32.880 is one of the big movers to the downside, particularly 0:01:32.880 --> 0:01:36.000 on the Nasdaq one hundred as a point drag. HPE 0:01:36.240 --> 0:01:40.920 Enterprise reporting from Bloomberg citing sources that Elliott's taken a 0:01:40.959 --> 0:01:43.440 one point five billion dollar state. Later in the program, 0:01:43.560 --> 0:01:46.000 we'll get full details of that. It's an important story 0:01:46.000 --> 0:01:48.240 this morning. Let's get back to our top story. The 0:01:48.280 --> 0:01:53.160 Trump administration has initiated trade probes into semiconductor imports. It's 0:01:53.240 --> 0:01:57.240 a precursor to broader levies on chips. Bluebog. Tyler Kendall 0:01:57.280 --> 0:02:00.840 has the details from the White House. Good morning, Tyler, Yeah, 0:02:00.880 --> 0:02:01.480 Good morning, ed. 0:02:01.520 --> 0:02:03.840 While the White House has formally announced its Section two 0:02:03.880 --> 0:02:06.880 thirty two investigation, which is widely seen as a precursor 0:02:07.120 --> 0:02:09.680 for the administration to implement tariffs on the basis of 0:02:09.800 --> 0:02:13.160 national security concerns, and we learned that the investigation actually 0:02:13.160 --> 0:02:16.120 started back on April first. That means that the Commerce Secretary, 0:02:16.120 --> 0:02:18.840 Howard Lutnik now has two hundred and seventy days from then, 0:02:18.960 --> 0:02:21.880 so roughly nine months, to release his finding report, which 0:02:21.919 --> 0:02:25.200 would then spur the tariffs into place. But we know 0:02:25.240 --> 0:02:26.840 that this White House is really looking at more of 0:02:26.880 --> 0:02:29.760 an expedited timeline here. Howard Lutnik himself has said that 0:02:29.760 --> 0:02:32.640 we could see these tariffs ultimately implemented in the next 0:02:32.720 --> 0:02:34.800 one to two months. We have to keep in mind 0:02:34.960 --> 0:02:37.720 this investigation really is wide ranging. It includes chips, but 0:02:37.720 --> 0:02:39.640 it also includes the equipment used to make the chips 0:02:39.639 --> 0:02:43.120 as well as those downstream consumer electronics that contain them. 0:02:43.160 --> 0:02:45.560 The Commerce Department says that they are looking at legacy 0:02:45.639 --> 0:02:47.720 chips as well as cutting edge chips that are used 0:02:47.720 --> 0:02:50.320 in artificial intelligence applications. 0:02:50.360 --> 0:02:51.519 Now, this White House really. 0:02:51.520 --> 0:02:53.919 Has taken more of a stick versus cart approach when 0:02:53.919 --> 0:02:56.600 it comes to chip makers. President Trump long criticizing the 0:02:56.639 --> 0:02:59.799 Chips and Science Act with its subsidies and funding, instead 0:02:59.800 --> 0:03:03.400 safeing that his tariff plan will spur production in the US, 0:03:03.440 --> 0:03:05.960 and actually, yesterday from the Oval Office, president Trump saying 0:03:06.000 --> 0:03:08.840 that a recent Invidia manufacturing announcement was a result of 0:03:08.840 --> 0:03:11.040 his tariffs, but ed, as you well know and have 0:03:11.160 --> 0:03:14.280 mentioned and reported on, President Trump implied that in video 0:03:14.360 --> 0:03:17.359 was investing five hundred billion dollars in the US, when 0:03:17.480 --> 0:03:20.079 rather the announcement was that they are pledging to produce 0:03:20.160 --> 0:03:24.200 five hundred billion dollars worth of goods in the US the. 0:03:24.280 --> 0:03:26.519 Books Tyler Kenda at the White House, thank you very much. 0:03:26.560 --> 0:03:30.000 The President also pledged to make it easier for Nvidia 0:03:30.080 --> 0:03:32.840 and other companies that are committed to the United States. 0:03:32.919 --> 0:03:36.000 By Brady Ford in New York has the details of that. 0:03:36.240 --> 0:03:38.120 But also I think we need to recap some of 0:03:38.160 --> 0:03:41.080 the numbers from the Nvidia announcement yesterday. Good morning, Brady, 0:03:41.240 --> 0:03:44.320 Good morning. Five hundred billion of goods. That is the 0:03:44.360 --> 0:03:46.440 amount that in video said that is the kind of 0:03:46.600 --> 0:03:50.040 upper limit of what it's targeting as it invests more 0:03:50.080 --> 0:03:51.360 in building in the US. 0:03:51.520 --> 0:03:54.200 It said that it's going to be making chips out 0:03:54.240 --> 0:03:58.720 of Phoenix with TSMC, making servers out of Texas with 0:03:58.880 --> 0:04:02.320 Fox Con. And I mean this is in line with 0:04:02.400 --> 0:04:05.360 the announcements we've been hearing from companies like Apple or 0:04:05.360 --> 0:04:09.160 open Ai or Eli Lilly that as tariffs are hitting, 0:04:09.240 --> 0:04:12.640 as Trump is putting on pressure, companies feel this urge, 0:04:12.800 --> 0:04:15.480 this kind of need to show that, look, we have 0:04:15.560 --> 0:04:18.600 an ability to produce in America, and I imagine it 0:04:18.600 --> 0:04:21.080 helps them a lot. With the administration as well. We 0:04:21.160 --> 0:04:24.200 saw that in Trump's tweet today that look, if you 0:04:24.640 --> 0:04:26.880 are being part of what he calls the you know, 0:04:27.000 --> 0:04:30.400 Golden age of America and investing here, we're going to 0:04:30.480 --> 0:04:31.680 try to help you out. He said that we're going 0:04:31.720 --> 0:04:32.840 to expedite permits. 0:04:33.680 --> 0:04:35.000 Those are done at the local level. 0:04:35.200 --> 0:04:38.039 But of course, if someone at the top of the 0:04:38.040 --> 0:04:40.400 food chain is telling you, as a local government official, 0:04:40.480 --> 0:04:42.719 that hey, let's let's get these on the road. You know, 0:04:42.800 --> 0:04:45.159 I write a lot about data centers, and yes, waiting 0:04:45.200 --> 0:04:51.080 for utilities, waiting for permits, these things can slow down projects. 0:04:51.960 --> 0:04:53.680 Brady Ford's going to be that later in the hour 0:04:53.760 --> 0:04:57.320 with that Hpe Elliott News as well, Brady Ford, Bloomberg News, 0:04:57.360 --> 0:04:59.880 thank you. What does the tariff news this morning mean 0:05:00.040 --> 0:05:03.520 free technology investors? And what's the outlook in particular for 0:05:03.640 --> 0:05:08.280 AI CAPEX JP Morgan Asset Management Global market strategist Stephanie 0:05:08.279 --> 0:05:11.160 Aliaga joins us now, and I think we start there right, 0:05:11.279 --> 0:05:15.000 which is the news and certainty. I look at the 0:05:15.040 --> 0:05:20.680 Philadelphia Semiconductor Index, it's slightly higher versus other benchmarks this morning. 0:05:21.279 --> 0:05:24.159 Section two three to two is an interesting strategy, but 0:05:24.279 --> 0:05:27.240 maybe the market knows more now than it did, say 0:05:27.279 --> 0:05:28.200 forty eight hours ago. 0:05:29.279 --> 0:05:30.839 Thank you, Ed. It's been remarkable. 0:05:30.920 --> 0:05:32.680 You know, at the beginning of this year, we saw 0:05:32.720 --> 0:05:35.680 a real rerating of a lot of those leading tech 0:05:35.680 --> 0:05:39.120 companies and a lot of scrutiny around the AI CAPEC cycle. 0:05:39.440 --> 0:05:41.760 A lot of that was due to concerns around deep 0:05:41.839 --> 0:05:44.960 seek and also the fact that those leading tech companies 0:05:45.000 --> 0:05:48.640 were over owned and overloved perhaps. But now in the 0:05:48.760 --> 0:05:51.599 last couple weeks, what we've seen is market shift to 0:05:51.720 --> 0:05:55.160 really begin to appreciate how these companies are the poster 0:05:55.279 --> 0:05:59.880 children of globalization and they are highly exposed to the 0:06:00.320 --> 0:06:02.839 trade war that is going on right now, all of 0:06:02.880 --> 0:06:06.400 these different tariff headlines, and you can see these companies 0:06:06.440 --> 0:06:11.000 are quite actively trying to figure out ways to show 0:06:11.040 --> 0:06:13.680 that they can reshore some production or expedite some of 0:06:13.720 --> 0:06:16.400 that processes. But at the end of the day, not 0:06:16.560 --> 0:06:21.760 only are the mag seven let's take, highly globally exposed 0:06:21.920 --> 0:06:26.440 in their suppliers and their revenue, but they're also cyclically exposed. 0:06:26.560 --> 0:06:29.120 And you mentioned the capex cycle and what the outlook 0:06:29.200 --> 0:06:33.000 is there. A lot of those assumptions will to become 0:06:33.120 --> 0:06:38.120 under a greater scrutiny if we have a slower moving economy. 0:06:38.400 --> 0:06:43.440 Does the outlook for AI CAPEX hold, get cut or 0:06:43.480 --> 0:06:45.120 grow based on what's happening. 0:06:46.200 --> 0:06:49.719 First, we need to consider just how significant the rates 0:06:49.720 --> 0:06:52.160 of growth that we saw in capex were over the 0:06:52.279 --> 0:06:56.640 last two years. The hyperscalers grew more than fifty percent 0:06:56.880 --> 0:07:00.480 in their cap BAX expenditures from twenty twenty reader twenty 0:07:00.520 --> 0:07:04.360 twenty four. Is that rate of growth sustainable, particularly in 0:07:04.360 --> 0:07:07.160 an environment where we're looking at a likely cooler economy, 0:07:07.520 --> 0:07:10.120 a lot of uncertainty. So I think some of that 0:07:10.160 --> 0:07:12.240 frauth comes down longer term. 0:07:12.400 --> 0:07:13.520 There's still a lot. 0:07:13.320 --> 0:07:16.120 Of CAPEX that needs to be spent on AI, but 0:07:16.520 --> 0:07:19.760 in this environment of uncertainty, management teams are going to 0:07:19.760 --> 0:07:24.800 be really focused on defending margins and ways that they 0:07:24.840 --> 0:07:28.080 can indeed the bottom line. 0:07:28.120 --> 0:07:31.400 Okay, defending Martin. There's some calculus that the cell side 0:07:31.440 --> 0:07:33.600 is doing that the CEOs of all of these companies 0:07:33.600 --> 0:07:35.800 are doing. Which is and bear with me on it. 0:07:36.640 --> 0:07:39.800 If you on shore you're manufacturing or the assembling of 0:07:39.800 --> 0:07:43.920 your electronics component to America, it's probably more expensive. The 0:07:43.920 --> 0:07:47.160 cost of doing business is greater by let's say twenty 0:07:47.200 --> 0:07:50.640 five percent. But you face a choice because if your 0:07:50.640 --> 0:07:52.880 components come for a market where there is a levee 0:07:52.920 --> 0:07:56.080 of tariff or tariff of twenty five percent net, you've 0:07:56.120 --> 0:07:58.640 got a decision to make right, what's the most cost 0:07:58.680 --> 0:08:00.760 effective and do you pass it on to the customer? 0:08:01.200 --> 0:08:03.640 How is that impacting your view of markets right now? 0:08:03.760 --> 0:08:07.600 Absolutely, tariffs do nothing to stimulate demand, and immediately what 0:08:07.640 --> 0:08:10.360 they're going to do is increase costs. And it's not 0:08:10.400 --> 0:08:12.240 as easy to just pass those costs along to your 0:08:12.240 --> 0:08:16.000 consumers because then that will tighten or shrink the amount 0:08:16.000 --> 0:08:18.040 of demand that you're facing that you're getting from those 0:08:18.040 --> 0:08:18.960 consumers as well. 0:08:19.120 --> 0:08:20.600 So I think that's the overall risk here. 0:08:20.640 --> 0:08:24.040 You know, supply chains they can adjust, they have been 0:08:24.240 --> 0:08:27.280 over the last many years, but it takes time, it 0:08:27.400 --> 0:08:29.320 costs a lot of money. And there was a reason 0:08:29.360 --> 0:08:32.000 why they were so global in nature to begin with. 0:08:32.400 --> 0:08:35.240 They were optimized that way, and it's a big reason 0:08:35.280 --> 0:08:38.000 why these tech companies have been able to defend and 0:08:38.080 --> 0:08:41.360 grow their profit margins on a secular basis over the 0:08:41.440 --> 0:08:42.280 last many years. 0:08:43.240 --> 0:08:46.920 There's a little discussion in the media about how financial 0:08:46.920 --> 0:08:50.320 institutions like the one you work for put more emphasis 0:08:50.360 --> 0:08:55.520 on geopolitical analysis than fundamental analysis. Perhaps historically that balance 0:08:55.800 --> 0:08:59.080 has been different. We had a headline from the European 0:08:59.160 --> 0:09:02.520 Union about full minutes ago that cause markets to pull back, 0:09:02.520 --> 0:09:04.839 which is the EU doesn't think there's going to be 0:09:04.880 --> 0:09:07.720 any movement on tariffs and talk so not going very well. 0:09:08.040 --> 0:09:09.679 Could you just explain to our audience, like, when you 0:09:09.720 --> 0:09:13.200 think about the technology sector from an equity markets perspective, 0:09:13.640 --> 0:09:16.400 how you factor in the politics of this, how one 0:09:16.480 --> 0:09:18.720 jurisdiction behaves with regards to another. 0:09:19.600 --> 0:09:23.440 Absolutely, there's a lot of uncertainty and headline volatility right 0:09:23.480 --> 0:09:26.240 now in the midst of all of these negotiations. I 0:09:26.240 --> 0:09:29.000 think on the medium to longer term, the reality is 0:09:29.679 --> 0:09:32.800 the chip industry, for instance, but also a lot of 0:09:32.800 --> 0:09:38.400 these other highly sophisticated tech services are very globally integrated 0:09:38.920 --> 0:09:43.160 and it is very difficult to immediately decouple. Now we're 0:09:43.400 --> 0:09:45.840 likely going to see greater efforts around that as we 0:09:45.920 --> 0:09:48.240 have been over the last few years, so that remains 0:09:48.280 --> 0:09:51.280 a risk. But I do think it's notable of all 0:09:51.360 --> 0:09:54.600 of the sectors that are at risk or exposed to 0:09:54.640 --> 0:09:56.880 these tariffs, and there are many of them, that the 0:09:56.920 --> 0:09:59.960 tech sector was the first one that was really granted. 0:10:00.320 --> 0:10:04.599 These kind of sweeping are broad based exemptions at least temporarily, 0:10:04.920 --> 0:10:07.400 and I think there is an understanding that this is 0:10:07.520 --> 0:10:11.959 very mission critical for the US and maintaining its tech leadership. 0:10:12.320 --> 0:10:14.000 And maybe at the end of all of. 0:10:13.960 --> 0:10:17.320 This, perhaps you know the too big to be faced 0:10:17.520 --> 0:10:20.360 with massive tariffs from the administration's policies. 0:10:21.640 --> 0:10:24.880 Stephanie ilg JPB Organ Asset Management. Terrific to have you 0:10:24.920 --> 0:10:27.360 on the program. Thank you very much. Now, coming up 0:10:27.600 --> 0:10:30.280 navigating the tech tariff uncertainty, We're going to go back 0:10:30.440 --> 0:10:34.120 and have more on the offs and ons of tariffs, 0:10:34.120 --> 0:10:36.200 so we step back from the brink. Do we know 0:10:36.320 --> 0:10:51.720 more that conversation? Next this is Bloomberg Technology. Back to 0:10:51.760 --> 0:10:54.800 our top story tariffs coming for the chip sector. With 0:10:54.880 --> 0:10:59.600 new tariffs reshaping global trade, technology faces rising costs and 0:10:59.679 --> 0:11:03.720 fresh uncertainty. To help us understand the broader policy implications, 0:11:04.000 --> 0:11:08.000 Joining us now, Karen Cornblue Milkin Institute, Senior Advisor for 0:11:08.000 --> 0:11:12.200 Emerging Technology, a former Principal Deputy White House Chief Technology Officer, 0:11:12.240 --> 0:11:17.280 also Ambassador to the OECD under Barack Obama. Let's start 0:11:17.320 --> 0:11:21.920 with the certainty or uncertainty piece today as it stands 0:11:21.960 --> 0:11:24.439 with the Section two thirty two probe launched into the 0:11:24.440 --> 0:11:29.560 semiconductor industry. Do we understand what this administration's tariff policy is? 0:11:31.600 --> 0:11:33.320 That is the question of the hour. 0:11:33.400 --> 0:11:36.079 I mean, I think it's quite remarkable and we should 0:11:36.080 --> 0:11:41.400 start there that this sector, which is arguably the critical 0:11:41.440 --> 0:11:45.120 sector for our economy for national security, we seem to 0:11:45.160 --> 0:11:50.040 be making policy on the fly. So what happened on Friday, 0:11:50.280 --> 0:11:55.120 Customs put out a list and it became clear that electronics, 0:11:55.200 --> 0:11:58.040 not just semiconductors, were going to be exempt from. 0:11:57.880 --> 0:11:59.840 The reciprocal tariffs. 0:12:00.840 --> 0:12:05.920 Then over the weekend, the Commerce Secretary Lutnik said, well, 0:12:05.920 --> 0:12:09.199 that's only going to be this reprieve is only temporary. 0:12:09.679 --> 0:12:14.520 Then Stephen Miller, the President's deputy chief of staff, said 0:12:15.360 --> 0:12:20.760 that they'd be subject to this national security review, and 0:12:20.800 --> 0:12:23.880 the President reiterated that, saying that the tariffs were going 0:12:23.920 --> 0:12:28.640 to be twenty five percent plus. So making policy for 0:12:28.720 --> 0:12:34.960 this incredible sector over the weekend. And what's so incredible 0:12:35.000 --> 0:12:37.680 is that this is the sector that is you know, 0:12:37.760 --> 0:12:41.360 especially the mag seven right, they're ten percent of GDP, 0:12:42.080 --> 0:12:44.600 They're a huge proportion of the S and P. 0:12:45.360 --> 0:12:47.520 And here we are making. 0:12:46.960 --> 0:12:50.640 Policies like this. Let me ask you, this is about communication. 0:12:50.880 --> 0:12:53.440 You know you've held Office in the White House in 0:12:53.520 --> 0:12:56.320 the field of technology. You've been in an ambassador to 0:12:56.360 --> 0:13:03.199 the OECD. An understand global trade, the communication from this administration, 0:13:04.000 --> 0:13:08.559 How is it received, interpreted, understood and acted on by 0:13:08.640 --> 0:13:13.080 other jurisdictions like the European Union or China for example. 0:13:15.400 --> 0:13:19.560 I mean, you know this to make policy and change 0:13:19.559 --> 0:13:23.160 it like this is so difficult for other countries to 0:13:23.480 --> 0:13:26.360 adjust to, you know, they I mean, we just saw 0:13:26.360 --> 0:13:27.760 this with Europe today. 0:13:28.600 --> 0:13:29.960 But I think they've been prepared. 0:13:30.200 --> 0:13:32.280 That's what's interesting here is that I think you see 0:13:33.120 --> 0:13:35.880 not only some companies like Apple seems to have been 0:13:36.360 --> 0:13:39.400 planning for a long time for this kind of disrupt 0:13:39.520 --> 0:13:44.200 not this level of disruption, but some disruption. China seems 0:13:44.200 --> 0:13:48.439 to be prepared and not being caught flat footed. But still, 0:13:48.880 --> 0:13:53.760 as you know, the global supply chains are involved, so 0:13:53.920 --> 0:13:57.320 much investment, involves so much time, and this kind of 0:13:57.360 --> 0:14:01.040 disruption is incredibly difficult for them. But then as you're 0:14:01.080 --> 0:14:04.840 asking about the countries, governments are not that familiar with 0:14:04.880 --> 0:14:08.880 the inner workings of these sectors, and so they're learning 0:14:09.000 --> 0:14:12.960 on the fly as well what's important, not what's not important, 0:14:13.120 --> 0:14:15.440 and what the implications of all this are and for 0:14:15.480 --> 0:14:17.800 them to do that kind of homework and then respond 0:14:17.920 --> 0:14:20.280 is incredibly difficult. 0:14:20.800 --> 0:14:24.600 What is the end goal of using tariffs as a 0:14:24.640 --> 0:14:26.280 tool policy for this administration? 0:14:26.360 --> 0:14:31.720 Karen Well, at the risk of sandwashing, which is a 0:14:31.840 --> 0:14:34.600 term that's been used here to and when people try 0:14:34.640 --> 0:14:38.920 to interpret some of the Trump administration's policies, it seems 0:14:39.120 --> 0:14:43.760 like the tariffs are gradually falling into three main buckets. 0:14:43.960 --> 0:14:46.680 One is about raising revenue the ten percent across the 0:14:46.680 --> 0:14:50.040 board tariffs, which could raise two hundred billion dollars or more. 0:14:51.040 --> 0:14:54.280 A second one, which is where we see the semiconductors, 0:14:54.320 --> 0:14:59.080 the semiconductor machinery and the electronics, as well as steel, autos, 0:15:00.040 --> 0:15:05.160 aluminum falling, maybe timber, is national security. And then there's 0:15:05.160 --> 0:15:09.200 a third one, which is the overall competitiveness and job creation, 0:15:09.240 --> 0:15:12.160 where we see these reciprocal tariffs that look like they're 0:15:12.200 --> 0:15:14.440 for negotiating down tariffs overseas. 0:15:14.520 --> 0:15:17.520 Should I ask you about that third bucket, because the 0:15:17.520 --> 0:15:19.560 big headline of the last twenty four hours is this 0:15:19.640 --> 0:15:24.280 commitment from Nvidia to build five hundred billion dollars worth 0:15:24.320 --> 0:15:27.560 of AI infrastructure. We're talking goods and sales, not a 0:15:27.560 --> 0:15:32.040 CAPEX commitment in America and the criticism of the past administration, 0:15:32.640 --> 0:15:35.800 which you participated in and served in, was that the 0:15:35.880 --> 0:15:39.520 Chips Act on paper was one thing, but unlocking the 0:15:39.560 --> 0:15:42.360 funding from it and actually getting people moving to onshore 0:15:42.720 --> 0:15:46.680 didn't really happen. Is Trump now achieving that with a different. 0:15:46.400 --> 0:15:51.240 Tool, Well, I mean it remains to be seen. You know, 0:15:51.240 --> 0:15:53.040 there are a bunch of there were announcements made under 0:15:53.040 --> 0:15:55.960 Trump one. There were announcements of a huge amount of investment, 0:15:55.960 --> 0:15:58.320 and there was actually quite a lot of investment that 0:15:58.440 --> 0:16:01.840 was made under Biden as well. So far these are 0:16:02.080 --> 0:16:05.920 these are announcements, the Apple announcement, the Nvidia announcement, the 0:16:05.920 --> 0:16:11.840 TSMC announcement. TSMC in the past has made announcements of investments, 0:16:11.840 --> 0:16:14.280 but then they haven't been able to find the. 0:16:14.160 --> 0:16:15.400 Workers that they need. 0:16:15.680 --> 0:16:18.040 And what you're going to see now for all of 0:16:18.080 --> 0:16:21.080 these companies, they may make announcements, but when it comes 0:16:21.120 --> 0:16:23.280 down to it, their prices are going to go up. 0:16:23.520 --> 0:16:25.840 There's going to be a delay in there being able 0:16:25.880 --> 0:16:29.520 to get the equipment, and then there's a worker shortage. 0:16:29.520 --> 0:16:31.760 So if we want to see any of this come, 0:16:32.360 --> 0:16:34.760 I think we're going to have to We're going to 0:16:34.800 --> 0:16:37.760 have to lock down the certainty we can't be driving 0:16:37.800 --> 0:16:41.320 prices up and there needs to be serious workforce training. 0:16:43.920 --> 0:16:47.480 Current to end. Are we stepping back from the brink here? 0:16:48.600 --> 0:16:51.400 Or is this just a pause while the administration kind 0:16:51.400 --> 0:16:53.600 of works out the most effective method. 0:16:55.040 --> 0:16:58.520 So the two thirty two, the section two thirty two investigation, 0:16:58.600 --> 0:17:01.520 this is the national security invest stigation that's going to 0:17:01.600 --> 0:17:06.239 happen for the electronics that they put a deadline on 0:17:06.400 --> 0:17:09.560 comments for a month from now, and they're going to 0:17:09.600 --> 0:17:13.800 move really quickly. I think the President has really stuck 0:17:13.800 --> 0:17:16.439 his neck out. He personally has said that the tariffs 0:17:16.480 --> 0:17:18.639 are going to be twenty five percent plus, So I 0:17:18.680 --> 0:17:21.119 think we can expect to see those And when you 0:17:21.160 --> 0:17:24.760 think about that plus perhaps the fentanyl terror or certainly 0:17:24.800 --> 0:17:28.360 this fentanyl tariffs of twenty percent from China, I think 0:17:28.359 --> 0:17:30.600 you're going to still see very high tariffs. 0:17:31.359 --> 0:17:33.479 I think you're going to see uncertainty. I think you're 0:17:33.480 --> 0:17:34.840 going to see raising costs. 0:17:35.720 --> 0:17:38.960 So I hope you know, as they're making policy on 0:17:39.000 --> 0:17:41.760 the fly, they're going to realize how critical this sector 0:17:41.960 --> 0:17:44.720 is and they're going to address a bunch of those 0:17:44.840 --> 0:17:48.720 vulnerabilities in this policy where they can't reach the results 0:17:48.760 --> 0:17:49.560 they want to reach. 0:17:50.359 --> 0:17:54.399 Karen Cornblue, former US Ambassador to the OECD. Grateful to 0:17:54.440 --> 0:18:05.440 have you on the program. Thank you. Metas Mark Zuckerberg 0:18:05.520 --> 0:18:08.760 took to the witness stand yesterday and an historic antitrust 0:18:08.800 --> 0:18:12.600 trial in which the FTC alleges Meta's purchase of Instagram 0:18:12.680 --> 0:18:16.960 and WhatsApp destroyed competition. Joining us now as Schweter Cojuria 0:18:17.000 --> 0:18:20.359 of Wolf Research, who currently has an outperform rating on 0:18:20.480 --> 0:18:24.560 Meta with a six hundred and forty dollars target price. 0:18:24.680 --> 0:18:27.040 I'm looking at the stock. We're basically flat. In the session, 0:18:27.880 --> 0:18:31.520 we'll get to the details of this trial, but simply 0:18:32.000 --> 0:18:35.360 is there or is there not antitrust risk in this name? 0:18:36.080 --> 0:18:37.280 I think there is. Yes. 0:18:37.320 --> 0:18:40.760 It would be difficult to say no, given that there 0:18:40.800 --> 0:18:42.919 is an ongoing case, which I think that will be 0:18:43.000 --> 0:18:48.200 stretched for several weeks now. And the bigger question also 0:18:48.359 --> 0:18:51.720 is if there is a likelihood of a settlement. If 0:18:51.920 --> 0:18:57.240 the probability of settlement increases, then maybe the overhand is gone. 0:18:57.359 --> 0:18:59.560 But otherwise, yes, I think there's a real risk. 0:19:00.040 --> 0:19:02.600 Let me ask you this, This isn't data, but when 0:19:02.640 --> 0:19:05.560 Mark Zuckerberg appears on day one of the trial, what 0:19:05.640 --> 0:19:06.480 does that tell you. 0:19:07.160 --> 0:19:10.959 That it is very very important for the company and 0:19:11.119 --> 0:19:14.560 for him personally, and the fact that he has spoken 0:19:14.600 --> 0:19:18.560 with President Trump multiple times since his inauguration it tells 0:19:18.640 --> 0:19:21.280 us a little bit about how important this is for him. 0:19:21.680 --> 0:19:25.399 The argument the FTC makes was largely based on email 0:19:26.200 --> 0:19:30.639 documentary evidence that showed Zuckerberg having concerns prior to the 0:19:30.680 --> 0:19:33.280 acquisition of Instagram that they would be a threat to 0:19:33.280 --> 0:19:38.359 Facebook in the domain of photo images. That's very interesting argument. 0:19:38.440 --> 0:19:39.479 Is it a strong one? 0:19:39.640 --> 0:19:40.280 I don't think so. 0:19:40.400 --> 0:19:42.480 I think FTC has a weak case on hand for 0:19:42.520 --> 0:19:46.040 a variety of reasons. First of all, they are saying 0:19:46.080 --> 0:19:48.920 that Meta is a monopoly. This is a backward looking 0:19:49.000 --> 0:19:53.760 case from twenty twenty, and Instagram was not that big 0:19:53.800 --> 0:19:56.040 of a platform with one million users at the time. 0:19:56.200 --> 0:19:59.440 Success was not guaranteed, and they didn't even make revenue. Second, 0:19:59.480 --> 0:20:01.800 they approved this case over a decade ago already, and 0:20:01.840 --> 0:20:05.199 they're revisiting the same case. And the third thing is 0:20:05.200 --> 0:20:08.439 that they're only looking at Snapchat and me. They are 0:20:08.480 --> 0:20:14.800 not inc the FP is and the competition has evolved meaningfully. 0:20:15.080 --> 0:20:18.359 So the counter argument that Meta is giving is that 0:20:18.840 --> 0:20:22.840 they focus on TikTok and YouTube. Now, if you forget 0:20:23.040 --> 0:20:25.320 the context of a trial. If you were analyzing this 0:20:25.400 --> 0:20:29.800 stock in this marketplace, how do you assess the competition 0:20:30.119 --> 0:20:32.080 from TikTok and YouTube that comes Metas way. 0:20:32.240 --> 0:20:36.200 Absolutely, TikTok and YouTube are competitive, and it's more than 0:20:36.240 --> 0:20:40.439 TikTok and YouTube. It's TikTok, YouTube, Snapchat, Reddit, anywhere that 0:20:40.480 --> 0:20:45.000 a user is spending their time. And what I think 0:20:45.080 --> 0:20:48.120 is missed in this case is that the Metas platform 0:20:48.160 --> 0:20:51.480 has evolved from connecting friends and family to how people 0:20:51.600 --> 0:20:55.960 actually spend time for broader entertainment and over fifty percent 0:20:55.960 --> 0:20:58.639 of time spend of users today is video, which is 0:20:58.640 --> 0:21:01.359 competing with all these their platforms sweter. 0:21:01.480 --> 0:21:04.679 Many people were confused Metas an AI. 0:21:04.520 --> 0:21:06.159 Company, isn't it It is? 0:21:06.480 --> 0:21:08.720 So why is that not taken into account in this case? 0:21:08.920 --> 0:21:13.840 Absolutely, It's just that the monetization of the platform today 0:21:14.119 --> 0:21:18.560 is predominantly ad based monetization and that's their bread and 0:21:18.600 --> 0:21:19.879 butter that they're competing on. 0:21:19.960 --> 0:21:22.159 So we just have thirty seconds. But with earning season 0:21:22.200 --> 0:21:24.080 around the corner, what do you expect methods to tell 0:21:24.160 --> 0:21:25.160 us that. 0:21:25.160 --> 0:21:28.240 They are cautious around the macro that they are reiterating 0:21:28.280 --> 0:21:31.800 their gapex for full year, and they'll probably give a 0:21:31.840 --> 0:21:35.000 conservative guy for the second quarter without much visibility into 0:21:35.040 --> 0:21:36.200 what's coming in the back half. 0:21:36.600 --> 0:21:39.439 Oh thanks to Schweeder Cajuria of Wolf Research joining us 0:21:39.480 --> 0:21:51.200 here in the San Francisco studio. Welcome back to Bloomberg Technology. 0:21:51.200 --> 0:21:54.400 Amed Ludlow in San Francisco. This is what financial markets 0:21:54.400 --> 0:21:56.800 look right now. Earlier in the session, the story was 0:21:57.119 --> 0:22:01.359 outperformance from semiconductors, the socks for the healthier semiconductor index. 0:22:01.560 --> 0:22:04.560 It's still there, but it's much more muted. One of 0:22:04.640 --> 0:22:07.760 the big factors of the last hour was a headline 0:22:07.760 --> 0:22:12.080 from the European Union explaining that the EU expects tariffs 0:22:12.080 --> 0:22:16.040 to remain in place, but the talks between the EU 0:22:16.080 --> 0:22:19.080 and the United States have made very little progress. Then 0:22:19.119 --> 0:22:22.480 we think about the individual movers. Still in the headlines. 0:22:23.080 --> 0:22:27.159 Is Nvidia, for example, because of that commitment to build 0:22:27.200 --> 0:22:30.919 more AI infrastructure one hundred percent in America. Amazon is 0:22:31.119 --> 0:22:34.560 big moving to the downside. In the broad context of things, 0:22:34.560 --> 0:22:38.760 we have questions about capex around AI. Google also lower 0:22:39.160 --> 0:22:41.919 as well. I want to get to the big picture 0:22:41.920 --> 0:22:44.240 here on tech stocks and what's driving this morning session. 0:22:44.280 --> 0:22:47.199 Let's bring in Rhyme Vasellca of Bloomberg News. So what 0:22:47.240 --> 0:22:48.520 do you see out there? I think you know the 0:22:48.560 --> 0:22:51.000 mag seven's a bit bifurcated at the moment. But what 0:22:51.080 --> 0:22:52.680 are the main drivers of this market? 0:22:53.600 --> 0:22:57.320