Speaker 1: Let's get to our guest, Kirk Young, chairman and CEO
Speaker 1: at Kirkland Capital. Kirt, great to have you on the program.
Speaker 1: Some interesting little tidbits in your notes. I would put
Speaker 1: one of the comments into this adage of a little
Speaker 1: bit of knowledge can be a dangerous thing, where you
Speaker 1: say that national leaders in the U S And China
Speaker 1: really didn't know anything about high tech, certainly quantum computing
Speaker 1: and AI and and the semiconductors that went into it,
Speaker 1: and now that they know a little bit about it,
Speaker 1: they're all ginned up over national security. Explain your thoughts
Speaker 1: to us, sure, uh, I would say that for the
Speaker 1: last several years, many people, especially national leaders, believe technology
Speaker 1: are things like Internet or Google or Amazon or Facebook.
Speaker 1: Let me now know that to keep everything was semi conductors.
Speaker 1: So about two years ago when US had the trade
Speaker 1: war was China, when they found out that Huawei and
Speaker 1: Cite presents a threat to US, they started to focus
Speaker 1: on technology. They kind of found out semi conductor was
Speaker 1: the chock point, almost by accident, because they realized that
Speaker 1: US have control and influenced a lot of semiconductor manufacturing
Speaker 1: process from software to semi canal equipment, to chemicals. That's
Speaker 1: why it's seeing that US have all the leverage for
Speaker 1: last year or two putting all the restrictions on China. Unfortunately,
Speaker 1: the manufacturing process quite complicated that there's not much China
Speaker 1: can do to resolve the choke points. They have probably
Speaker 1: over a hundred chock points. So I would say that
Speaker 1: to your point that maybe a little knowledge is dangerous,
Speaker 1: but US definitely found a way to limit China's um
Speaker 1: um investment or trying to progress on semi conductors, especially
Speaker 1: now semi conductor is becoming more national security issues rather
Speaker 1: than business issues. We talk about semic a doutors can
Speaker 1: make things like a like super computers, like missiles, airplanes
Speaker 1: for example. So that's why US is even putting more
Speaker 1: pressure to limit the highest civic co doctors to China.
Speaker 1: So cook, if there's not much that China can do,
Speaker 1: does that mean that the US kind of wins this
Speaker 1: chip warring? And then how investable is China? Take sure?
Speaker 1: I would say that for the next fact to ten years,
Speaker 1: there's not much China can do. Obviously, China now realize
Speaker 1: its shortcomings, so trying to trying very hard to catch up.
Speaker 1: There are a lot of you know, smart people, PhD, etcetera.
Speaker 1: In China, so gifvely in five to ten years there
Speaker 1: might be a possibility for them to catch up, but
Speaker 1: in the near term it's almost impossible. So for investment opportunity,
Speaker 1: one theory ahead is called one world two systems, which
Speaker 1: means you're going to see one standard for China, one
Speaker 1: standard for non China. So for trying to specific investment opportunities,
Speaker 1: you have to look at domestic opportunities copy like bi do,
Speaker 1: like Ali Baba, et cetera, only focused on china domestic market. Unfortunately,
Speaker 1: it will be difficult for them to go outside China. Well.
Speaker 1: A good example of how US officials were caught off
Speaker 1: guard as well, uh is the the Huawei and um
Speaker 1: you know, basically had a big lead in five G
Speaker 1: right that that that um, what they were doing with
Speaker 1: five G was more advanced than what the US was doing.
Speaker 1: That's correct. I would say for many years, China's been
Speaker 1: making cheap products to seal into US, like you know,
Speaker 1: toys and phones because those were not related to national security,
Speaker 1: So is it US did not pay too much attention.
Speaker 1: I would say Huawei also Zte are the first time
Speaker 1: US realized that the communications could be national security issues
Speaker 1: because all the conversation or the secret goes into telecommunications. Huawei,
Speaker 1: because we're so cost competitive, seeing start in many phone companies,
Speaker 1: especially as you mentioned, they were leading leader in five G.
Speaker 1: That's why US became really worry and cautious on China attack.
Speaker 1: So that's why they were able to find semi choke point.
Speaker 1: As you know that after US put a restriction on Huawei,
Speaker 1: Whabi is a phone business pretty much gone, is facing
Speaker 1: business almost putty much gone because everything without semi conductors.
Speaker 1: So US was able to find the choke point to
Speaker 1: limit China's technology investment. What's the outlook for some of
Speaker 1: these phone suppliers. I mean, we saw Apple saying it's
Speaker 1: going to make fewer of the new iPhones, and that's
Speaker 1: due to the lockdowns in China. But you've also got
Speaker 1: to argue whether or not people want to continue to
Speaker 1: upgrade amidst all the concerns about to slow down. Do
Speaker 1: you need a new iPhone if you're potentially going to
Speaker 1: lose your job or have a decrease in living conditions
Speaker 1: due to higher costs. Yeah, that's actually a very good point.
Speaker 1: My concerns more demand than supply demand. As you mentioned
Speaker 1: that right now, because higher interest rate people have less
Speaker 1: discretional spending, they have to spend money on like more gage,
Speaker 1: like rent, you know, higher gasoline, higher food cost. So
Speaker 1: the last thing they want to buy is a new phone,
Speaker 1: especially in the last two years during the COVID shutdown
Speaker 1: when people work at home, many people bought new phones
Speaker 1: and new PCs computer in the last two years. So
Speaker 1: right now there's really no reason to buy new consumer
Speaker 1: electronic So I think the man you hit the nail
Speaker 1: on the head. That is the biggest concern fund supply perspective.
Speaker 1: The zero China COVID policy UH is actually a big
Speaker 1: issue for China. Company like fast Com, even Quantact that
Speaker 1: make iMac. I'm sure you heard that. Even disney Land
Speaker 1: shut down the Shan High operation, Macail, Casino and g
Speaker 1: also shut down for a day. So zero COVID policy
Speaker 1: is making things very difficult in China. But if you
Speaker 1: look at Apple, Apple's UH press announcement like cutting about
Speaker 1: three million phones out of ninety MILLIONI so the show
Speaker 1: fall is probably around five percent, maybe ten percent. I
Speaker 1: don't think it's it's high. Thirty percent is some other
Speaker 1: media reported but still show for is my smaller concert
Speaker 1: My biggest concerts actually demand I do not expect and
Speaker 1: to be strong this year even next. Let's talk a
Speaker 1: little bit about areas that you look at that offer
Speaker 1: a lot of opportunity for investors. Let me give you,
Speaker 1: uh would you rather kind of question in terms of
Speaker 1: opportunity to you like autonomous driving more or the metaverse.
Speaker 1: I was say a ton about driving for sure, because
Speaker 1: EV is something you can see electrly. Vehicle is something
Speaker 1: we are using today. Just look at Tesla. So from
Speaker 1: the electric vehicle perspective, the important functions like battery, like
Speaker 1: charging stations. Of course a ton of driving there will
Speaker 1: be the key going forward. Metaverse is a next concept,
Speaker 1: but I think we might be years away from really
Speaker 1: looking for applications if a revenue for metaverse, so I
Speaker 1: think something might happen, but as years away. But EV
Speaker 1: you can see today we're using today, so to be
Speaker 1: autonomous driving that is actually the biggest opportunity in the
Speaker 1: next three to five years, especially given that we have
Speaker 1: seen the slowdown for PCs for phones, et cetera. Industry,
Speaker 1: vehicle and related industry. UH companies should be the investment
Speaker 1: opportunity to focus on. So yeah, who, Yeah, we want
Speaker 1: to know names. Okay, if you like autonomous driving, who
Speaker 1: makes the money? Sure? Uh? The company in Japan, uh
Speaker 1: give example called Tier four. It makes the software to
Speaker 1: control cars. Also, we have company that makes sensors, sensors
Speaker 1: like a company in Taiwan. Um it's called Ability. For example,
Speaker 1: they make like the sensors in the car. If you
Speaker 1: look your cars today, they are about night to ten
Speaker 1: cameras around the car that sense. So okay, Kirk, you
Speaker 1: teached us very nicely. They're certain to get an invite back.
Speaker 1: We want to hear more. Kirk, thanks very much for
Speaker 1: joining us. Kirk Young, Chairman and CEO at Kirkland Capital