Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
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Speaker 2: Go this is Bloomberg Tech coming up video and am
Speaker 2: d a great p fifteen percent of their revenues from
Speaker 2: Chinese AI chip sales to the US government.
Speaker 3: Plus Intel CEO Lib Boutan is set to visit the
Speaker 3: White House today, just days after President Trump.
Speaker 2: Called for his resignation and lithium prices and stock spike
Speaker 2: after c atl Holtz operations at a major mine in China.
Speaker 4: But we returned to.
Speaker 3: These public markets and ed this is an entire show
Speaker 3: really focused on the semiconductor world. So I bring you
Speaker 3: the chip sector in particular, and I'm looking at the
Speaker 3: socks of course, the Phillies. The Philadelphia Semiiconductor index is
Speaker 3: currently up almost a percentage point. We're coming off of
Speaker 3: la highs. But really a focus on the macro picture
Speaker 3: right now when near record hires, the stocks, bonds waiver,
Speaker 3: We're looking at inflatory data, but we on the show
Speaker 3: are looking at semiconductors. Dive into them for a moment.
Speaker 2: There are so many chip stories Micron is raising its
Speaker 2: guidance for the current period because of pricing power, particularly
Speaker 2: in dram There's a lot going on in high bandwidth
Speaker 2: as well. Intel's up four point eight percent. Its CEO,
Speaker 2: Lip Bhutan is off to the White House to meet
Speaker 2: with President Trump. Will bring the reporting later in the hour.
Speaker 2: Then the top story, Nvidia and AMD, according to a
Speaker 2: Bloomberg source, have agreed to give the United States fifteen
Speaker 2: percent of any revenues from chip sales to China, AI
Speaker 2: chiphails to China in exchange for export licenses in what
Speaker 2: is a very clear quid pro quote character.
Speaker 3: It is unprecedented. Many people say, let's get out to
Speaker 3: Bloomberg Balance of Power host Joe Matthew, who we welcome
Speaker 3: to the show for the perspective of the administration, I
Speaker 3: do this, Je.
Speaker 5: Well, boy, it's a great question.
Speaker 6: It is unprecedented, remembering the golden share that the White
Speaker 6: House scored in the Al the Pond takeover of US Steel,
Speaker 6: this is a whole new level and it's raising a
Speaker 6: lot of questions, beginning here in Washington, at least with
Speaker 6: National security. Wall Street might have slightly different questions here,
Speaker 6: but of course, remembering that these chips were going to
Speaker 6: be off limits to the Chinese, and it's something that
Speaker 6: we've talked about a lot here on the air. That
Speaker 6: was only a couple of weeks ago. Then you saw
Speaker 6: the turn to making them available. The licenses even after
Speaker 6: that moment were not actually being given to Nvidia or
Speaker 6: AMD for a couple of weeks.
Speaker 5: So this apparently unlocks the license.
Speaker 6: But my goodness, the role of the administration is now
Speaker 6: playing in business. I think we can say openly that
Speaker 6: the US government is now part of the semiconductor industry.
Speaker 6: They're invested in the business. And the big question is
Speaker 6: where's the line. If fifteen percent is enough to get
Speaker 6: the H twenties on sale in China, is there a
Speaker 6: number that Jensen Wang can come up with to sell
Speaker 6: even more.
Speaker 2: I want to point out that AMD has not said
Speaker 2: anything about this reporting. It was first the ft, then
Speaker 2: it was US. Nvidia has said something. They've said a lot, actually,
Speaker 2: but they haven't addressed the fifteen percent number. To your point, Joe,
Speaker 2: what they've indicated is that so far, at least I
Speaker 2: think in this fiscal year, they haven't shipped any H
Speaker 2: twenties to China. So that's important for Wall Street to
Speaker 2: kind of model for But boy, they're kind of indicating
Speaker 2: that they're getting what they want in some sense because
Speaker 2: China is such a key market. And the President seems
Speaker 2: right now, if this reporting is accurate, to be willing
Speaker 2: to oblige them because he's getting something in return.
Speaker 4: He's done a deal.
Speaker 5: That's right, He's done a deal.
Speaker 6: And this is the same president who just days ago,
Speaker 6: of course, asked for the resignation of the Intel CEO.
Speaker 6: As you mentioned, Lip Bhutan is at the White House
Speaker 6: today and it had us last week asking the question
Speaker 6: if President Trump is in fact the chairman of the
Speaker 6: board at any major company. We've seen him do this before,
Speaker 6: calling for boycotts of certain goods, calling for personnel change,
Speaker 6: is calling for policy changes within companies. You've certainly seen
Speaker 6: the impact that he's had when it comes to DEI,
Speaker 6: But actually exchanging money with these companies is a whole
Speaker 6: new prospect. And it's unclear exactly where this fifteen percent
Speaker 6: would go.
Speaker 5: Will that be used to pay down the debt or
Speaker 5: do something else?
Speaker 6: In terms of national security, we have a lot of
Speaker 6: questions that remain. The President, by the way, is briefing
Speaker 6: reporters right now at the White House talking about crime
Speaker 6: here in the city and his effort to federalize Washington, DC.
Speaker 6: It's a very separate and big story here, but they
Speaker 6: will go to questions and I suspect that these will
Speaker 6: come up today.
Speaker 2: We suspect so too, Bloomberg Balance of Power host Joe Matthew,
Speaker 2: thank you very much. Let's get more in the reaction
Speaker 2: to the Nvidia and AM deal with Riva Goujon. She's
Speaker 2: a director at Rhodium Group, an independent research firm that
Speaker 2: analyzes economic and political issues, including those relating to China. Reva,
Speaker 2: you have more than two decades of experience as a
Speaker 2: geopolitical strategist advising companies and what on earth's happening around
Speaker 2: the world. Have you ever seen the United States impose
Speaker 2: what is essentially an export tax in exchange for those
Speaker 2: companies being able to export technology to a specific market.
Speaker 7: Well, an orthodox is an understatement here, right, And there's
Speaker 7: that whole pesky detail of what about Article one, section
Speaker 7: nine of the Constitution that says no tax or duty
Speaker 7: shall be laid on articles exported from any state, meaning
Speaker 7: any part of the US government, to include the executive branch.
Speaker 7: So yeah, we're in uncharted territory here, but it does
Speaker 7: fit with a highly transactional administration. But as you just
Speaker 7: referenced earlier, what is exactly the line here if the
Speaker 7: administration is driving toward revenue generation, not just in trade
Speaker 7: policy with tariffs, but even in export controls right to
Speaker 7: include high end semiconductors, what's the line on what is
Speaker 7: considered too advanced right as it balances against this revenue
Speaker 7: generation goal.
Speaker 3: Let's just repeat that. Now we've had for video. We
Speaker 3: are hearing from AMD as well saying that in initial
Speaker 3: China licenses have indeed been approved in AMD and confirming
Speaker 3: it received the China AI chip export licenses, and something
Speaker 3: that we quizzed Lisa Su on just last week after
Speaker 3: her earnings, and that's what the market really wanted to
Speaker 3: hear about REVA. But go further a little bit here
Speaker 3: as to ultimately companies looking to sell into China thinking
Speaker 3: longer term whether they'll remain to have access. The response
Speaker 3: from China thus far has been one of concern about
Speaker 3: what the amount of information and so called backdoors they've
Speaker 3: been questioning, particularly with Drens and Wang.
Speaker 7: Well, Tramp has made himself intrinsic to the US China
Speaker 7: chip wars. So now we need to see how far
Speaker 7: this actually goes. Le Bhutana is going to be in
Speaker 7: the White House. Can he pull off at Jensen? That
Speaker 7: still remains to be seen. But Intel has a lot
Speaker 7: of problems attached to it, and there is an American
Speaker 7: imperative to create an American ship champion out of you know,
Speaker 7: Intel's setbacks, and so I think there's a lot more
Speaker 7: deal making to come out of that as well. But
Speaker 7: you know, with this level of transactionalism, there's always a
Speaker 7: degree of uncertainty of how long does this actually last.
Speaker 7: If we are applying a sliding scale to chip sales
Speaker 7: to China, then at what point does that start to retrench?
Speaker 7: As US China AI competition is undoubtedly intensifying, we're still
Speaker 7: in the early stages of AI division. As we start
Speaker 7: to see more of these physical AI applications become more real,
Speaker 7: right as we wrap our heads around that, as we
Speaker 7: wrap our heads around the competitiveness issues around that, the
Speaker 7: critical inputs where China still has intense leverage, will we
Speaker 7: start to see a delayed reaction in the US that
Speaker 7: freak out moment so to speak, where these kinds of
Speaker 7: controls could fall back to a more restrictive nature.
Speaker 3: What a push US forward house the American president decided
Speaker 3: to forego national security concerns for a billion dollars at
Speaker 3: least per quarter coming home from or if our math
Speaker 3: is right, and what fifteen percent earns them, or do
Speaker 3: you think that they can manage to in some way
Speaker 3: location track and understand what really ultimately gets into the
Speaker 3: Chinese tech stack and how it is used.
Speaker 7: Well, there are a couple different issues here, right. H
Speaker 7: twenty's are optimized for inference compute. So the assumption that
Speaker 7: the administration is making here is that inference compute is
Speaker 7: not the chief national security concern. Now that raises a
Speaker 7: question again, if Huawei is able to produce comparable chips
Speaker 7: to Nvidia or AMD, will we see US chip controls
Speaker 7: ease right to allow US technology complete head to head
Speaker 7: with Huawei? So again, where is that line drawn? But still,
Speaker 7: you know, we're in a highly transactional phase here, and
Speaker 7: so we need to see just to what degree is
Speaker 7: the US going to be concerned about those end uses.
Speaker 7: And again the economic competitiveness concerns are still in play here.
Speaker 4: I don't know H twenty can be used for training.
Speaker 2: You know it's had performance engineered out of it, but
Speaker 2: I know talking to a lot of people inside the company,
Speaker 2: there are lots of credit here. You said something a
Speaker 2: minute ago, doing a Jensen or pulling a Jensen. I
Speaker 2: find that so interesting because his principal argument, in line
Speaker 2: with what we've just debated about age twenty, is if
Speaker 2: you don't export American technology, China will use a domestic
Speaker 2: champions technology and then they'll start exporting it to under
Speaker 2: international markets. Forget the revenue side of this for a minute.
Speaker 2: Is this smart by Trump to kind of have the
Speaker 2: pr effect of allowing them to export technology to an
Speaker 2: economic adversary and at the same time doing a deal
Speaker 2: showing that he's got something out of it.
Speaker 7: It's a slippery slope. And as we're seeing the preparation
Speaker 7: for a US China summit between Trump and She, what
Speaker 7: is Beijing thinking at this point? Obviously it wants to
Speaker 7: take advantage of this highly experimental, transactional phase. So what
Speaker 7: is it going to push for. We know they're pushing
Speaker 7: for an easing of the twenty percent ventanyl tears on
Speaker 7: the chip controls front. They're going to want to push
Speaker 7: for an easing of high bandwidth memory chip restrictions. Now
Speaker 7: that's really tricky, right because if you start to say, okay,
Speaker 7: because Chinese memory chip makers are becoming competitive in this domain,
Speaker 7: that the US will allow Micron, for example, Samsung SK
Speaker 7: to export these chips to the US. That doesn't help
Speaker 7: in Vidia because Huawei is getting access to HBM chips
Speaker 7: that are going to improve its production. Right, So you
Speaker 7: see a selective application of that sliding scale approach. And
Speaker 7: the US so far is also not easing semiconductor manufacturing
Speaker 7: equipment controls, right, so the tools to actually make those chips.
Speaker 7: If the US imperative is to throttle Chinese chip production,
Speaker 7: really constrain that so that US companies like Nvidia and
Speaker 7: AMD can flood the zone in the Chinese economy, get
Speaker 7: the Chinese technologists addicted. So to speak to US tech,
Speaker 7: you don't necessarily want to help hualy right in its
Speaker 7: production either.
Speaker 4: How do you anticipate China is going to respond to this?
Speaker 7: Well, China has a ton of leverage at this point
Speaker 7: with the critical raw material, the rare earth licenses, and
Speaker 7: if you look at comments from US tr recently Jamison Greer,
Speaker 7: and what you can see from those tops is that
Speaker 7: that issue of licensing for critical inputs seems to be
Speaker 7: a major theme of the US China bilaterals. So if
Speaker 7: the US raises threats on tariffs or raises technology controls
Speaker 7: in any significant way, China can basically say, look the
Speaker 7: terms of Stockholm or whatever European capital they're off and
Speaker 7: you're not getting your licenses and your production lines are
Speaker 7: going to be paralyzed, and good luck with your manufacturing ambitions.
Speaker 7: Right for this big Ai renaissance, for your manufacturing renaissance,
Speaker 7: we hold the cards. And at least for the duration
Speaker 7: of the Trump term. That is an uncomble troop.
Speaker 3: Riva Boujeon, director at Rolling In Group, fascinating to talk
Speaker 3: to you. Thank you now coming up, Intel CEO lit
Speaker 3: bou Town we just mentioned it. Reportedly going to be
Speaker 3: meeting with President Trump today. That story's next, ed. What
Speaker 3: are you looking at?
Speaker 2: I'm going to take another look at Micron Becauches are
Speaker 2: pushing higher again. They've upped their guidance for the current period,
Speaker 2: saying that just a EPs will be up to two
Speaker 2: dollars ninety two cents. Previous end of their guidance at
Speaker 2: the top range was two point two dollars sixty five cents.
Speaker 2: But it's all about kind of favorable dram pricing because
Speaker 2: margins also looking better as well. Again, this is a
Speaker 2: company that wants in on this great build out in
Speaker 2: data center in particular, but its historic business has been
Speaker 2: so commoditized in cyclical. But investors in this moment really
Speaker 2: liking what they're seeing. Micron up three and a half percent,
Speaker 2: will be right back. This is Bloomberg Tech. Intel CEO
Speaker 2: lit bou Tan is set to visit the White House today.
Speaker 2: This is just days after President Trump called for his
Speaker 2: resignation due to potential conflicts of interest.
Speaker 4: Blue Basie and King joins us.
Speaker 2: You've also kind of gone deep on like where Litboo
Speaker 2: fits in right now with Intel strategy with the White House.
Speaker 2: But what do we understand that he will be discussing
Speaker 2: with President Trump when he's in DC later today.
Speaker 8: Yeah, I mean it's still a TVD obviously, but there's
Speaker 8: an awful lot going on in Washington right now regarding chips.
Speaker 8: But fundamentally, what the Trump administration wants is an affirmation
Speaker 8: that all of these projects, all of this physical building
Speaker 8: of semiconductor plants in the US is going to go ahead.
Speaker 8: They don't want any sense that, oh, maybe we will
Speaker 8: maybe we won't, And that has been the message that
Speaker 8: kind of Intel have delivered recently because from Wall Streets perspective,
Speaker 8: we don't want to build these factories until they can
Speaker 8: actually fill them. So there's kind of a push and
Speaker 8: pull there. Whether they're investors one one thing and frankly
Speaker 8: the White House once another. So the topic has got
Speaker 8: to be how do we get the two sort of
Speaker 8: positions closer together. What kind of language can Intel come
Speaker 8: up with that will keep the White House happy and
Speaker 8: also not scare investors?
Speaker 3: Ultimately, ian what would scare investors a lack of access
Speaker 3: to the chipsacked money, a pullback more broadly from fabrication
Speaker 3: in the US, or is it more worrying that they're
Speaker 3: going to be plowing money in before the.
Speaker 4: Demand is certain?
Speaker 8: Right, Investors really don't care where chips are made. They
Speaker 8: care whether the companies who are making them are making
Speaker 8: money or not. Building plants when you don't have orders
Speaker 8: is not a good way to make money. It's a
Speaker 8: way for your company to go out of business. So
Speaker 8: that would be their position ultimately, though there is a
Speaker 8: lot of realism out there and obviously, as we're discussing,
Speaker 8: the supply chain is becoming more complicated and the geopolitical
Speaker 8: imperatives are becoming stronger and stronger, So there will be
Speaker 8: some understanding that, hey, maybe we do to build out capacity.
Speaker 8: But Intel has a lot of capacity in the US already,
Speaker 8: So why does it need to build these megafactories unless
Speaker 8: it has orders. What they want from Intel more than
Speaker 8: anything else, is hey, we've got some giant customers who
Speaker 8: want to use our factories the moment, Intel cannot say
Speaker 8: that in.
Speaker 3: King always across the reporting, we thank you so much
Speaker 3: for more on Intel and look the broader chips sector.
Speaker 3: Johann Foene's with US and Vice's Capital Management Partner Portfolio manager, Johann,
Speaker 3: what is it that you would like to see lip
Speaker 3: Bhutan managed to navigate today? Is it better that he
Speaker 3: promises more investment into the US, more manufacturing and that
Speaker 3: he has extricated himself from China or ultimately does he
Speaker 3: even need to stand down in some way as CEO.
Speaker 9: It's truly unclear. Caroline.
Speaker 10: Obviously, I think he can defend himself from the concerns
Speaker 10: that he's conflicted, and that's his main mission today. I
Speaker 10: don't know if that means he needs to do more
Speaker 10: to separate from his prior work and investments. I don't
Speaker 10: know how much capacity he has to do that. I
Speaker 10: think Ian is right that the administration wants to be
Speaker 10: able to continue to push the narrative that they are
Speaker 10: doing something to bring more chip manufacturing back to the US,
Speaker 10: and so his announcements of less investment or delayed investment,
Speaker 10: you know, is a concern to the administration.
Speaker 9: But they don't have the customers yet.
Speaker 10: Maybe he can say, hey, we've got these guys on
Speaker 10: the line, we're reeling them in.
Speaker 9: Maybe that would be reassuring.
Speaker 10: But ultimately Intel needs to keep those subsidies, but not
Speaker 10: at the cost of having to spend so much CAPEX
Speaker 10: in the near term when they don't have customers. So
Speaker 10: a very fine line for the CEO to walk.
Speaker 11: Here.
Speaker 2: The stock's up six percent, so the market likes something
Speaker 2: about the idea that lit Bhutan's going to go to
Speaker 2: DC and meet with the president. Present day, you're fund
Speaker 2: manager looking all across tech, but you had a long
Speaker 2: career in semiconductors. Lit Bhutan also has had a very
Speaker 2: long career in semiconductors. A lot of this affiliation with
Speaker 2: China or indirectly has been well known.
Speaker 4: Were you aware of it? Do you understand his history?
Speaker 10: Yeah, I mean, you know, I don't know him that well,
Speaker 10: but I think the public information about his prior work
Speaker 10: is pretty clear. He's obviously very highly respected. He was
Speaker 10: brought in by the board to take Intel in a
Speaker 10: different direction, one that is more measured, less capital spending
Speaker 10: forward than Pat Gelsinger wanted to do. And so it's
Speaker 10: it's just worrisome right that he might, you know, have
Speaker 10: to be removed because of concerns that really.
Speaker 9: Aren't, you well, well founded.
Speaker 10: So he seems like he's a very good person to
Speaker 10: run Intel at this when an Intel desperately needs the
Speaker 10: help they need to take that company in a different,
Speaker 10: more streamlined, more efficient direction while they sport out the
Speaker 10: recipe for designing and manufacturing chips, which was a huge
Speaker 10: stumbling block for them, and that that's why they're in
Speaker 10: the position they are, right, why AMD has taken so
Speaker 10: much care from Intel over the year in server chips
Speaker 10: and elsewhere. So you know, this is something this is
Speaker 10: a company we would avoid. We are avoiding at this point.
Speaker 10: We don't think it's a good place for investor money.
Speaker 10: There are just way too many uncertainties about the potential
Speaker 10: of Intel to make a comeback.
Speaker 3: Meanwhile, the uncertainties loom large about access to China and
Speaker 3: what you have to pay to do that from an
Speaker 3: AMD and an Nvidia. But an uncertainty you're willing to
Speaker 3: swallow if the underlying tailwinds are still so strong. Make
Speaker 3: of it what you will tell us what you thought
Speaker 3: about the AMD and n VideA deals.
Speaker 9: Yeah, so clearly right, the companies need act. The companies
Speaker 9: are better off with access to China than without. Even
Speaker 9: with the fifteen percent export tax.
Speaker 10: The you know, the potential revenue at risk, you know,
Speaker 10: thirty ish billion dollars for Intel, six to ten billion
Speaker 10: for AMD, likely to potentially grow over time, you know,
Speaker 10: So to pay fifteen percent on that, it's going to
Speaker 10: cut into their margins to some degree. They probably get
Speaker 10: a fifty sixty percent gross margin on those sales.
Speaker 9: I think that they're to have to swallow this.
Speaker 10: Right, they're charging what the market will bear right now
Speaker 10: for those chips selling into China and elsewhere.
Speaker 9: I don't think they'll be able to pass on.
Speaker 10: This tariff or this sorry, this export tax to the
Speaker 10: Chinese customers. They're charging them as much as they can
Speaker 10: get away with already, so you know, it's definitely going
Speaker 10: to be a hit to margins on a what is
Speaker 10: a you know, minority part of their businesses. But it's
Speaker 10: better to have access than non And I think the
Speaker 10: stocks are up because maybe this resolves the uncertainty.
Speaker 9: Maybe people will say, Okay, they're.
Speaker 10: Going to have to pay this, but hey, now we
Speaker 10: can rely on the fact that they'll have these export licenses,
Speaker 10: whereas before it was this sort of vague national security concern. No,
Speaker 10: you can't sell ships to China. Now that's gone away, right,
Speaker 10: It's clearly not a national security issue if the government
Speaker 10: is willing to let them pay a fee to gain
Speaker 10: that access.
Speaker 2: AMD put a statement out this morning saying they have
Speaker 2: an initial export license. They didn't address the fifteen percent
Speaker 2: revenue split. Nvidia put out a statement saying they've not
Speaker 2: yet shipped any H twenty to China for months, but
Speaker 2: they hope to. Can you and your desk analysts start
Speaker 2: modeling for some real China revenues in the near term
Speaker 2: from both those companies, Yeah, I think.
Speaker 10: Well, you know, from what we know, Yes, I mean
Speaker 10: it's good that AMV has confirm they have the licenses,
Speaker 10: so I think we can and we would definitely model
Speaker 10: in that fifteen percent hit to revenue. And it's unclear,
Speaker 10: by the way, where this goes legally, right, it's unconstitutional
Speaker 10: to impose an export tax like this, but it's not
Speaker 10: clear who would have legal standing to.
Speaker 9: Object to the tax.
Speaker 10: And clearly Nvidia and a MD aren't going to because
Speaker 10: they don't want to unbalance the apple cart here and
Speaker 10: risk those export licenses. But perhaps you know, one of
Speaker 10: the business associations does. This is unclear whether this shouldn't stand.
Speaker 10: But you know, we're seeing more and more of these
Speaker 10: kinds of pay to play arrangements by the US government
Speaker 10: that could increasingly, you know, put a tax on businesses
Speaker 10: and should be known this is an ex post tax.
Speaker 9: Right.
Speaker 10: This has happened after the fact of the company's having
Speaker 10: designed these ships and begun to sell.
Speaker 9: Do and they want to sell more.
Speaker 10: What what we worry about is that now companies are
Speaker 10: going to take this potentially into account. You know, do
Speaker 10: I want to develop the next ship or do I
Speaker 10: want to develop the next you know, whatever medical device.
Speaker 10: If I'm going to be subject abound fifteen percent revenue.
Speaker 2: Techs toun feeny of Advisors Capital Management throughout a time,
Speaker 2: but really grateful, thank you know. Coming Up Forward announces
Speaker 2: a quote tremendous pivot for its electric vehicle strategy and
Speaker 2: can have those details next.
Speaker 4: This is Bloomberg Tech.
Speaker 3: Time now for Talking Tech and first up Forward. It
Speaker 3: plans to invest five million dollars building a new line
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Speaker 3: seven point seven billion dollars for exclusive rights to show
Speaker 3: the Ultimate Fighting Championship events in the United States. The
Speaker 3: deal covers the next seven years and is designed to
Speaker 3: boost the company streaming service, and of course comes just
Speaker 3: days after David Elison and closed his deal for control
Speaker 3: of Paramount and what are you looking at?
Speaker 4: Okay?
Speaker 2: Coming up We speak with Bernstein senior analyst Stacey rascon As.
Speaker 2: Nvidia and AMD agreed to pay fifteen percent of their
Speaker 2: China chip revenues to the US government. We're going to
Speaker 2: get back to that story next. From London and from
Speaker 2: New York City. This is Bloomberg Tech. Welcome back to
Speaker 2: Bloomberg Tech. Let's get right back to our top story.
Speaker 2: Nvidia and AMD have agreed to share fifteen percent of
Speaker 2: their revenues from China AI chip sales with United States government.
Speaker 2: Bloomberg's reporting that, citing an anonymous source and videos basically flat.
Speaker 2: AMD's pushed higher since it confirmed it has been granted
Speaker 2: an initial export license, but neither of those companies in
Speaker 2: their statements have talked about the fifteen percent revenue payment
Speaker 2: to the United States government at all. I'm looking car
Speaker 2: at the sell side reaction and it's pretty mixed. Yes,
Speaker 2: many say good to have access to the China market,
Speaker 2: but there is a number of names on wall streets
Speaker 2: that say this sets a bad or worrying precedent.
Speaker 4: And I think one of those names is joining US now.
Speaker 3: Stacey Raskin's joining US bens and senior analysts to talk
Speaker 3: through the whole semiconductor spectrum. Stacey, we start with what
Speaker 3: you say, initially, look eighty five percent looks better than
Speaker 3: zero percent in terms of revenues, but what is the
Speaker 3: precedent here? What is their long term access to China too?
Speaker 12: Yeah, so again I don't like the president that it sets.
Speaker 12: It feels like a very slippery slope again, you know,
Speaker 12: like eighty five percent better than zero. I think it's
Speaker 12: better for them, well for them as frankly, as well
Speaker 12: as for the US in general, to to be able
Speaker 12: to sell into China, Like you don't want to hand
Speaker 12: the Chinese market for Ai over to Huawei.
Speaker 11: We want to be able to compete there.
Speaker 12: So I think it's good this idea of like I
Speaker 12: don't know what you want to call it, pay for
Speaker 12: play or like export tax or whatever you want to
Speaker 12: call it.
Speaker 11: I don't like it. Quid pro quo, Yeah, yeah, I
Speaker 11: mean it's a slim Why does it stop here? Why
Speaker 11: does it stop with China Ai? Why why not other
Speaker 11: products other companies? I mean, Stacey, I don't I don't
Speaker 11: like I don't like it. Now it's not up to me.
Speaker 2: We'll quite the reason. I jumped in, and Caroline forgive me.
Speaker 2: But the reporting was really clear, right, citing the anonymous
Speaker 2: source that it is a quid pro quo in the
Speaker 2: sense that it is fifteen percent in exchange for an
Speaker 2: export license. That's what the reporting tells us. Have you
Speaker 2: got enough information on your desk now to model for
Speaker 2: what you think and when you think? And Video and
Speaker 2: AMD can stop booking that revenue, so.
Speaker 11: You'll let me.
Speaker 12: Let me put the fifteen percent aside for a minute.
Speaker 12: They have to restart these supply chains. Both companies have
Speaker 12: some some work in progress, not really any finish goods
Speaker 12: that they can just sell. They've got some work in
Speaker 12: progress that it was halted that they can restart. It
Speaker 12: will take some time. It will take even more time
Speaker 12: if they have to start actually new wafers from the
Speaker 12: beginning of the process to run them through. That'll that'll
Speaker 12: take it could be six months, even longer nine months maybe.
Speaker 11: So to the extent that they do ramp this up,
Speaker 11: it will take some time. Maybe you get a little bit.
Speaker 12: You know, we had spoken with Nvidia about a month
Speaker 12: ago when the news came out that the licenses were
Speaker 12: getting I'm.
Speaker 3: Sorry to jump in. We'll be back with you in
Speaker 3: a moment. But President Trump is just speaking on this
Speaker 3: very topic.
Speaker 4: Just take a listen.
Speaker 9: I think President's a landski to join them.
Speaker 13: So you have to understand, there's a war that should
Speaker 13: have never happened. There's a war that wouldn't have happened.
Speaker 13: If I went president, would have never happened. It wasn't
Speaker 13: It was the apple of I get along very well
Speaker 13: with President but if you look under President Bush, they
Speaker 13: took a lot of.
Speaker 3: Ter let's jump out. Sorry, Stacy, we returned to you
Speaker 3: because he's just pivoted quickly away now back on relationships
Speaker 3: with Russia and of course with Ukraine.
Speaker 2: But he was.
Speaker 3: Mentioning AMD and indeed the China relationship, and I go
Speaker 3: to you on that because longer term, what will AMD's access,
Speaker 3: what will in Video's access be to China, because China
Speaker 3: doesn't seem thrilled thus far by what the sentiment is
Speaker 3: coming out of the US.
Speaker 11: Yeah, I mean, look so in terms of these things.
Speaker 12: By the way, in Vidia has a roadmap with new
Speaker 12: products that are supposedly already compliant that they don't require
Speaker 12: a license for, so I don't know if they would
Speaker 12: have to kick back some of that once they get
Speaker 12: products actually below the threshold of the license enters, and
Speaker 12: they do.
Speaker 11: Have a roadmap to sell in China.
Speaker 12: AMD has been a little less forthcoming about their future
Speaker 12: China roadmap, So I don't know what products they have
Speaker 12: that may go.
Speaker 11: Presumably they do have a roadmap and we'll hear about
Speaker 11: it in due course.
Speaker 12: For the long term in China, though, I mean, you
Speaker 12: got to remember, like these these thresholds are fairly punitive.
Speaker 12: China actually does have local products that have better performance
Speaker 12: than what both in Vida and A and D are
Speaker 12: actually allowed to sell.
Speaker 11: There.
Speaker 12: The benefits that in Vidia and especially in Vidias is
Speaker 12: around ecosystem, which is why we don't want them to
Speaker 12: shut off, because we do not want the local developers
Speaker 12: in China to coal us around other local alternatives like Quaale.
Speaker 12: But you have to think, like over time, the gap
Speaker 12: between what and Vidia and even AMD are allowed to
Speaker 12: sell in China versus what they're allowed to sell in
Speaker 12: the rest of the world is going to get bigger
Speaker 12: and bigger and bigger. They're not going to really be
Speaker 12: allowed to improve the performance of these products in China
Speaker 12: to the extent that they could do it anywhere else,
Speaker 12: and the Chinese are going to do their best to
Speaker 12: improve the performance of their own products as much as
Speaker 12: they can give.
Speaker 11: In the constraints that they're under.
Speaker 5: So like over time.
Speaker 11: Look, China, it's a big market.
Speaker 12: Hopefully they will get some of it, but I mean
Speaker 12: it's going to be a competitive market, and it probably
Speaker 12: will be impaired relative to their to what they would
Speaker 12: be able to sell their if there were no constraints
Speaker 12: at all.
Speaker 2: Stacey, Caroline and I had the opportunity to quiz Lisa
Speaker 2: sou about this in the middle of last week. I
Speaker 2: just wanted to play her thoughts on China right now.
Speaker 14: Ninety days ago, you know, we did not expect to
Speaker 14: believe to ship, to be able to ship to China
Speaker 14: because of some of the regulations. I think this administration,
Speaker 14: the Department of Commerce, the government has actually been very
Speaker 14: open to trying to find the right balance between national
Speaker 14: security and ensuring that we have AI USAI technologies proliferated
Speaker 14: across the world.
Speaker 2: We've talked endlessly about Jensen Wong's ability to have a
Speaker 2: relationship with the President. But I just wondered if you've
Speaker 2: given a valuation of how Lisa Sue's doing in DC
Speaker 2: right now.
Speaker 11: I mean, like she seems to be doing all right
Speaker 11: as well.
Speaker 12: Like you have to remember Jenson's the dominant player here,
Speaker 12: like am D I mean and more power two of them.
Speaker 12: I mean they've done very well given where they're coming from,
Speaker 12: but I mean they'll do You know, they did five
Speaker 12: billion of sales overall in AI last year year.
Speaker 11: I mean in Vidia didn't know what it was, one
Speaker 11: hundred billion.
Speaker 12: Am d said that the China ban you know at
Speaker 12: the time, costs him a billion and a half this
Speaker 12: year in video B ten x A or even more so.
Speaker 11: They're relatively small.
Speaker 12: But I think Lisa, like in terms of building her
Speaker 12: case in the administration and helping them try to build
Speaker 12: that relationship with Trump, which for better for us is important,
Speaker 12: is important.
Speaker 11: I think she's done a good job. At least she's
Speaker 11: been there, she's been present, she's been visible. Right, there
Speaker 11: are some other players in the industry that maybe have
Speaker 11: been a little less visible.
Speaker 2: Stacy Reskin of Benstein, who thank you. We're actually going
Speaker 2: to head back to DC ourselves where the President in
Speaker 2: his press conference is talking about Vladimir Putin in relations
Speaker 2: with Russia.
Speaker 5: You or even a third and was.
Speaker 3: President Trump speaking at the White House, of course, in
Speaker 3: front of reporters currently talking about plan meeting with Putin
Speaker 3: that he currently has in minds and Sky will not
Speaker 3: be part of Friday's putin meeting. We understand, and Ziski
Speaker 3: has gone to a lot of meetings already. He confirms
Speaker 3: he will make then a pivot to the world of
Speaker 3: technology and to chips. Trump says he wouldn't make a
Speaker 3: deal on in Vidia's new chip. He's therefore referencing the
Speaker 3: Blackwell chip system. Initially, you went talking about H twenties.
Speaker 3: He said he wanted a twenty percent tariff if he
Speaker 3: approved chip exports. But we understand he managed to negotiate
Speaker 3: down in Vida, Jansen Wang negotiated to a fifteen percent
Speaker 3: deal on a chip deal, confirming that fifteen percent chip
Speaker 3: payment that will go from Invidia on in H twenty
Speaker 3: to the US government. In videos H twenty, he says
Speaker 3: is obsolete but still has a market. But he thinks
Speaker 3: Jenson Wang is coming back to see him, he says
Speaker 3: about the Blackwell chips. Let's go to Joe now, Joe Matthew,
Speaker 3: who is back to break it all down with us.
Speaker 3: There was a lot about Russia, There's a lot about geopolitics,
Speaker 3: but there's a lot about China as well. Joe, just
Speaker 3: for the technology audience, talk to us a little bit
Speaker 3: about what you learned in the Nvidio context.
Speaker 6: Well he confirmed that fifteen percent, So Bloomberg as usual
Speaker 6: was ahead of the curve.
Speaker 5: With this reporting.
Speaker 6: But to go, I want to suggest that there could
Speaker 6: be a deal involving Blackwell, I think might be the
Speaker 6: closest thing that we have to news here. What he
Speaker 6: said is I wouldn't make a deal with that, referring
Speaker 6: to Blackwell, although it's possible I would make a deal.
Speaker 5: He said a somewhat enhanced in a.
Speaker 6: Negative way, Blackwell, taking off thirty to fifty percent of it.
Speaker 6: I think suggesting that somehow there would be a lower
Speaker 6: powered version of Blackwell. I suspect that Jensen one would
Speaker 6: have some things to say about that when they do
Speaker 6: meet again. But the idea here that we could see
Speaker 6: continued changes in Nvidia's export controls and relationship with China.
Speaker 5: I suspect that goes for AMD as well.
Speaker 6: It's quite remarkable to hear the President riffing on this
Speaker 6: in front of reporters today.
Speaker 2: Okay, Bloomberg's balance a power host Joe Matthew the blow
Speaker 2: by blow of what President Trump had to say. Caroen,
Speaker 2: There's a lot more coming up to discuss on the show.
Speaker 3: Certainly is Nvidia AMD. We return in a moment for
Speaker 3: their own Tom Giles as a Bloombag Tech.
Speaker 4: Let's get back to our top story.
Speaker 2: Bloomberg had reported in Vidia and amb both agreed to
Speaker 2: pay fifteen percent of their revenue from Chinese AI chip
Speaker 2: sales to the US government. In the last few minutes,
Speaker 2: President Trump has confirmed at least some of that in
Speaker 2: a video's case. Bloomberg, Senior executive editor for Tech, Tom
Speaker 2: Giles is in San Francisco.
Speaker 4: What do we need to know?
Speaker 15: Yeah, well, this is very This has very little precedent.
Speaker 15: This demonstrates just how important the Chinese market is to
Speaker 15: these companies. They really want to be able to sell
Speaker 15: their most advanced chips into the Chinese market. They have,
Speaker 15: They've hit a buzzsaw from the Trump administration, which has
Speaker 15: placed really strict.
Speaker 5: Limits on what they can and can't do.
Speaker 15: It's in the middle of negotiations with the Chinese government
Speaker 15: over terriffs, and so this shows that the Trump administration
Speaker 15: wants to cut deals, wants.
Speaker 5: A cut of the these chips.
Speaker 15: It's willing to turn a blind eye to the sale
Speaker 15: of advanced artificial intelligence chips into the Chinese market. If
Speaker 15: it can get a return, but this just this is
Speaker 15: going to complicate trade negotiations going forward.
Speaker 3: We thank you Tom Giles for wrapping up the latest
Speaker 3: as DC crosses passed in San Francisco. But that does
Speaker 3: it for this edition of Bloomberg Tech Head.
Speaker 4: Yeah, the bit we didn't get to.
Speaker 2: We think Intel's CEO is going to meet with President
Speaker 2: Trump later today, so overynight we look for a read
Speaker 2: on that. So much to recap on the podcast, the
Speaker 2: focus on Nvidia and AMD. You know where to find
Speaker 2: the pods on Apple, Spotify, iHeart and all of your
Speaker 2: Bloomberg platforms from London and New York City.
Speaker 4: This is Bloomberg Tech