WEBVTT - Woo Jin Ho ON Chips (Audio)

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<v Speaker 1>Well, shares of semiconductor companies foul, with the industry selling

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<v Speaker 1>off globally. This is after fresh US curbs on China's

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<v Speaker 1>access to American technology, joining US now to discuss religion.

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<v Speaker 1>Who Bloomberg's Intelligence senior technology analysts. So we've got tighter

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<v Speaker 1>restrictions now on the export of some chips which are

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<v Speaker 1>used for artificial intelligence and super computing. So what are

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<v Speaker 1>the details of these new measures from the US and

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<v Speaker 1>what do they aim to do? Sure, so, thanks for

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<v Speaker 1>for having me on. So so the couple of things

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<v Speaker 1>right there. There was a ban on the shipment of

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<v Speaker 1>AI chips and high performance computing ship and we're talking

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<v Speaker 1>about the ultra high end chips that uh that are

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<v Speaker 1>supplied by Video, A m D and and Intel. Um

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<v Speaker 1>they will uh their US is trying to block the

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<v Speaker 1>sale of those And we kind of got hint of

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<v Speaker 1>that about about a month ago when in Video and

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<v Speaker 1>A m D both provided a k warnings about that.

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<v Speaker 1>And we don't see a big impact on sales yet,

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<v Speaker 1>but it's yet to be seen how the US will

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<v Speaker 1>implement that. The second big thing that I think investors

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<v Speaker 1>need to be concerned about is more along the lines

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<v Speaker 1>of not being able to sell equipment to manufacture high

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<v Speaker 1>end chips to to Chinese entities. And that's UM more

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<v Speaker 1>along the lines of trying to slow down the development

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<v Speaker 1>of these chips UH domestically in China. UM again, UH

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<v Speaker 1>you know there there was a soft barring of this

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<v Speaker 1>equipment sold uh to China. As it is there. There

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<v Speaker 1>isn't any sail to that right now. But this somewhat

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<v Speaker 1>lays the groundwork of officially not selling that equipment to

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<v Speaker 1>to the Chinese. We can get into the risk of retaliation. Certainly,

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<v Speaker 1>that was something that Bernstein pointed out today with the

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<v Speaker 1>move on the part of the Biden ad ministration to

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<v Speaker 1>prevent China from getting kind of this cutting edge technology.

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<v Speaker 1>But are any of these chips manufactured in Taiwan? Well,

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<v Speaker 1>if we think about from from the smaller geometries tens

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<v Speaker 1>and smaller, about eighty of those chips are are made

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<v Speaker 1>in Taiwan, right and uh as we get even to

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<v Speaker 1>the advanced cutting edge technologies, UM, Taiwan holds that now

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<v Speaker 1>the Chips Act that the US past UM just recently, UH,

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<v Speaker 1>that that's supposed to diversify the supply. So the US

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<v Speaker 1>lessons dependency of Taiwan. But even even that isn't going

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<v Speaker 1>to make a great impact, at least in their term.

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<v Speaker 1>There's some geopolitical implications here that we need to be

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<v Speaker 1>cognizant of as well, in terms of China want to

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<v Speaker 1>reunify with Taiwan. Um and and you know, I I

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<v Speaker 1>I think um one of these uh, some of the

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<v Speaker 1>measures of the U S implement that is trying to

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<v Speaker 1>uh try to halt any type of Chinese China Taiwanese reunification.

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<v Speaker 1>And now keep in mind, I think it is a

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<v Speaker 1>big risk if there is a reunification, because I don't

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<v Speaker 1>think that's Taiwanes want to be reunified. And and uh

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<v Speaker 1>if if there is a halt in a chip production,

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<v Speaker 1>um uh, it hurts everybody also, including the Chinese. So

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<v Speaker 1>I think it's more of a turn than anything else. Yeah,

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<v Speaker 1>and God forbid, we're dealing with a situation where there

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<v Speaker 1>is an invasion on the part of the mainland forces

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<v Speaker 1>on Taiwan. We were talking yesterday about a report that

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<v Speaker 1>the Biden administration has a contingency planning for a potential

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<v Speaker 1>assault that would include evacuating some of the highly skilled

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<v Speaker 1>chip engineers from from Taiwan. But when you look at

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<v Speaker 1>companies that manufacture the technology G that is used in

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<v Speaker 1>in manufacturing these computer chips. I'm thinking of advanced micro

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<v Speaker 1>devices just one name. How is a decision like this

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<v Speaker 1>going to impact those companies? Well, advanced micro devices relies

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<v Speaker 1>on t SMC to manufacturers chips for them. Uh So

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<v Speaker 1>if anything, if if t SMC comes down, it will

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<v Speaker 1>be a crippling effect to the chip industry in its entirety. Now,

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<v Speaker 1>if we're talking about companies who supply the equipment to

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<v Speaker 1>manufacture the chips itself, someone like an s mL or

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<v Speaker 1>or someone like an SML um uh you know, then

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<v Speaker 1>we are going to see some negative impact um for

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<v Speaker 1>for those companies as well because of the man will

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<v Speaker 1>potentially dry up if there is a China Taiwanese invasion.

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<v Speaker 1>So let's talk about the potential impact on Chinese manufacturers

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<v Speaker 1>that require these chips. So what are the implications for

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<v Speaker 1>them and what's the likelihood of retain revalviation from China? Sure? So,

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<v Speaker 1>so from from the negative impact is that some of

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<v Speaker 1>the advanced chip manufacturing it will be slowed. We know

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<v Speaker 1>that the Semi Charastry Manufacturing Corps NICK has been trying

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<v Speaker 1>to attain some of that equipment for quite some time now,

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<v Speaker 1>and they've been advancing to sixteen nanometer technologies and then

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<v Speaker 1>now they can't manufacture these chips. Similar for the domestic

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<v Speaker 1>Chinese domestic memory manufacturing as well. UH, they've been trying

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<v Speaker 1>to grow their China manufacturing, but with some of these

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<v Speaker 1>restrictures in place the memory market, the memory development will

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<v Speaker 1>also slow as well. Now now, Paul, in terms of retaliation, UM,

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<v Speaker 1>I know that the US has been really really focused

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<v Speaker 1>on the advanced ship making UM capabilities. The issue is

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<v Speaker 1>is that a couple of things China manufactures about the

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<v Speaker 1>electron on good globally. We have a report out there

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<v Speaker 1>that we think they could potentially diversify away from China

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<v Speaker 1>to about the only reliant. But now if the Chinese

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<v Speaker 1>wants that can actually shut down the manufacturing UH domestically

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<v Speaker 1>to supply whether it's your iPhone or your PC. UM,

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<v Speaker 1>think about this. A hundred percent of the made in

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<v Speaker 1>China and a hundred percent of pecs made in China.

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<v Speaker 1>That's amazing down Yeah, well, Juno, thank you so much

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<v Speaker 1>for being with us. See he is a Bloomberg Technology

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<v Speaker 1>senior tech analysts joining us here on daybreak. Asia