WEBVTT - Nvidia Earnings, China Net Selling Ban 0:00:00.120 --> 0:00:10.440 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:10.520 --> 0:00:13.720 Daybreak Asia podcast. I'm Doug Krisner. You can join Brian 0:00:13.800 --> 0:00:16.640 Curtis and myself for the stories, making news and moving 0:00:16.680 --> 0:00:19.560 markets in the APAC region. You can subscribe to the 0:00:19.600 --> 0:00:23.080 show anywhere you get your podcast and always on Bloomberg Radio, 0:00:23.320 --> 0:00:26.080 the Bloomberg Terminal and the Bloomberg Business app. 0:00:27.280 --> 0:00:29.800 Joining us on the line now were in our studios 0:00:29.880 --> 0:00:32.760 rather its flat savof Bloomberg Tech Editor to take a 0:00:32.800 --> 0:00:35.239 closer look at video. We want to talk about the 0:00:35.320 --> 0:00:38.120 China angle, Vlad, But I wanted to mention as well 0:00:38.159 --> 0:00:40.720 that you know, the stock did trade up in after hours, 0:00:40.720 --> 0:00:43.640 and if you look at the analyst coverage, you've got 0:00:43.680 --> 0:00:49.200 sixty buys, five holds, and one sell. You wonder about 0:00:49.200 --> 0:00:52.240 the one sell, But anyway, is that likely to continue 0:00:52.280 --> 0:00:54.200 given all you saw from the earnings today? 0:00:54.800 --> 0:00:57.160 Maybe that once said we was just somebody who's profit taken. 0:00:57.200 --> 0:00:59.080 They bought NVIDI in two thousand and eight and now 0:00:59.120 --> 0:01:01.560 they're just catching it in What can I tell you 0:01:01.600 --> 0:01:05.479 about this company? When you look at its profits, they 0:01:05.520 --> 0:01:09.639 are just stratospheric relative to the previous year. We're talking 0:01:09.720 --> 0:01:12.800 twenty two billion. It's a record quarterly profit that they 0:01:12.880 --> 0:01:16.840 just reported. Expectations for Nvidia have been sky high, and 0:01:16.880 --> 0:01:20.200 it keeps outperforming, and this is a full year of 0:01:20.280 --> 0:01:24.680 quarterly results being better than already elevated expectations. A good 0:01:24.720 --> 0:01:28.479 way to contextualize this is Nvidia's history is a graphics 0:01:28.520 --> 0:01:32.680 card maker, graphics cards, GPU gaming. That was two point 0:01:32.800 --> 0:01:34.959 nine billion out of that twenty two billion. So the 0:01:35.000 --> 0:01:39.959 company is churning out huge revenues and sales and outperforming 0:01:40.000 --> 0:01:41.160 even sky high expectations. 0:01:41.200 --> 0:01:43.319 Yeah, but the power of those chips, that's why they're 0:01:43.400 --> 0:01:48.040 so great for you know, crunching AI data. They're lightning 0:01:48.120 --> 0:01:51.800 fast and robust as well. But the one thing that 0:01:51.840 --> 0:01:53.880 I think Brian was kind of alluding to when the 0:01:53.920 --> 0:01:57.360 company says that China data center revenue was down significantly, 0:01:57.400 --> 0:02:01.080 and you can obviously look to the US export controls 0:02:01.120 --> 0:02:03.520 as a big reason for that, But in my mind, 0:02:03.600 --> 0:02:07.080 I'm thinking, if I'm in the artificial intelligence business in 0:02:07.200 --> 0:02:10.240 China and I don't have access to the most advanced 0:02:10.320 --> 0:02:13.960 chips from in Video, I'm at a big disadvantage. Right, 0:02:14.919 --> 0:02:15.919 That's absolutely right. 0:02:16.000 --> 0:02:18.720 What is going to require is a fair amount of 0:02:18.720 --> 0:02:22.520 creativity because the way that things are structured today when 0:02:22.520 --> 0:02:25.079 you think about chat, GPT kick starting this entire thing, 0:02:25.720 --> 0:02:28.480 the whole technology is based on transformers and those are 0:02:28.480 --> 0:02:31.760 designed to run on Nvidia's Kuda architecture. So, without getting 0:02:31.760 --> 0:02:34.320 too geek into it, there is no other in video 0:02:34.360 --> 0:02:37.080 and video designed the whole thing. Everybody just jumped aboard 0:02:37.120 --> 0:02:39.280 and found it to be the most efficient way. So 0:02:39.440 --> 0:02:41.440 the way to go about it today and in the 0:02:41.480 --> 0:02:45.240 future is to come up with more power efficient AI models, 0:02:45.440 --> 0:02:48.959 to come up with lighter workloads, and then figure out 0:02:49.000 --> 0:02:52.280 ways to achieve what companies like open eie are doing 0:02:52.360 --> 0:02:54.440 with a whole bunch of Nvidia GPUs today. 0:02:55.240 --> 0:02:57.040 Well, we know you like to geek out a little bit, 0:02:57.480 --> 0:02:59.840 and Vidia has been sending some samples of new chips 0:02:59.840 --> 0:03:03.200 to China that are compliant with the US restriction, So 0:03:03.240 --> 0:03:04.239 will that be enough. 0:03:04.560 --> 0:03:07.040 Right, Well, it's been a fascinating back and forth between 0:03:07.240 --> 0:03:10.320 Nvidia and the US government. The US government imposed sanctions 0:03:10.360 --> 0:03:14.400 to get Nvidia's most advanced chips to make them inaccessible 0:03:14.400 --> 0:03:17.560 to China, and then Nvidia effectively chopped them down to 0:03:17.600 --> 0:03:19.880 spec so they could get into China. Then the US 0:03:19.919 --> 0:03:22.200 government said you can't do that. The head back and 0:03:22.200 --> 0:03:25.080 forth the head conversation, and Vidia did say after reserning 0:03:25.120 --> 0:03:27.960 is that it's confident that the things that it's sampling, 0:03:28.000 --> 0:03:30.720 the chips that is samplingto China today are in compliance 0:03:30.760 --> 0:03:31.600 with those regulations. 0:03:31.600 --> 0:03:34.720 Now, yeah, Brian was talking about a story that where 0:03:34.800 --> 0:03:38.160 the Commerce Department here in the US was suspending permission 0:03:38.280 --> 0:03:42.040 for some US suppliers to sell products to the most 0:03:42.080 --> 0:03:47.440 advanced semiconductor plant in China that's run by SMIC. Can 0:03:47.480 --> 0:03:51.640 you imagine a world in the next two years, let's say, 0:03:51.680 --> 0:03:54.880 where China has caught up to Nvidia, or is it 0:03:55.040 --> 0:03:58.720 so far behind now we're a company like Nvidia, or 0:03:58.760 --> 0:04:01.360 to a lesser extent, let's say AMD or even Intel 0:04:01.760 --> 0:04:04.080 is playing. Is China that far behind? 0:04:05.040 --> 0:04:07.720 Well, let's say, you'll be shocking. I can't say it's 0:04:07.720 --> 0:04:10.560 never going to happen, because I might have said that 0:04:10.640 --> 0:04:14.160 about Nvidia doing ten times its earnings in the space 0:04:14.200 --> 0:04:17.760 of a year. Right, So things can move really quickly. 0:04:18.120 --> 0:04:20.840 They can be breakthroughs. We sorder with the Huawei chip 0:04:21.760 --> 0:04:25.719 out of China last year. That being said, the amount 0:04:25.760 --> 0:04:28.320 of investment and time that goes into building this and 0:04:28.440 --> 0:04:31.400 video started this entire thing more than a decade ago. 0:04:31.480 --> 0:04:34.440 When you think about TSMC, which is the worst leading 0:04:34.560 --> 0:04:37.279 chip maker, they're investing thirty billion dollars a year just 0:04:37.320 --> 0:04:39.520 in capex. So for China to do it, it's not 0:04:39.600 --> 0:04:42.600 just a matter of money and resources, it really is 0:04:42.680 --> 0:04:43.320 time as well. 0:04:43.680 --> 0:04:45.800 It's not only in China that's far behind, but even 0:04:45.920 --> 0:04:49.440 AMD it's rolled out this accelerated them I three hundred. 0:04:50.440 --> 0:04:52.480 It expects revenue to be three and a half billion 0:04:52.520 --> 0:04:57.000 dollars this year three point five billion, and video is 0:04:57.040 --> 0:04:59.960 doing eighty billion plus. So it shows you the gap. 0:05:00.560 --> 0:05:02.279 Can AMD narrow that gap? 0:05:03.040 --> 0:05:07.080 I believe that's much more reviable proposition. And if you 0:05:07.440 --> 0:05:09.840 talk to AMD, they're saying that they're already doing it. 0:05:09.880 --> 0:05:12.039 The thing is again, it takes time. It takes time 0:05:12.040 --> 0:05:15.120 to ramp up. It takes time to have the companies, 0:05:15.120 --> 0:05:19.039 the customers who adopt your technology. That's three billion dollars 0:05:19.160 --> 0:05:21.480 just from AI for AMD, just to be clear, they 0:05:21.520 --> 0:05:24.159 do you have all the other business with graphics and 0:05:24.240 --> 0:05:28.880 processes as well. Look, AMD is growing and I said 0:05:28.880 --> 0:05:33.360 this to your colleagues in Europe yesterday. There is a 0:05:33.400 --> 0:05:36.440 world in which AMD can fulfill all of its ambitious 0:05:36.440 --> 0:05:40.120 targets and grow its AI sales and for Nvidia to 0:05:40.160 --> 0:05:42.880 still struggle to provide as many GPUs as the market 0:05:42.880 --> 0:05:43.520 demands from it. 0:05:43.800 --> 0:05:45.039 Yeah, demand is that strong. 0:05:45.360 --> 0:05:48.440 Where does Armholdings come in all of this? I mean, 0:05:48.600 --> 0:05:51.800 obviously the British chip designer, the tone by softbanker. Are 0:05:51.880 --> 0:05:55.120 they involved at the periphery of kind of advancing the 0:05:55.640 --> 0:05:57.360 next generation of AI chips? 0:05:58.320 --> 0:06:01.000 Right? It depends. I mean if you ask the company, 0:06:01.000 --> 0:06:02.640 they're not at the periphery. They are at the heart 0:06:02.680 --> 0:06:05.240 of it. They're the future of AI. Because what in 0:06:05.360 --> 0:06:08.560 video is really great at is AI training. So talking 0:06:08.560 --> 0:06:11.400 to its competitors like Intel, like Armed, they're saying the 0:06:11.440 --> 0:06:14.000 next stage in AI is inference. It's the AI that 0:06:14.040 --> 0:06:17.440 happens on devices, and every smartphone today is basically running 0:06:17.600 --> 0:06:20.880 ARM technology or the Apple chips for even its desktop 0:06:20.880 --> 0:06:25.080 computers or ARMED technology. So when you think one, two, 0:06:25.120 --> 0:06:27.480 three years down the line, it may indeed be ARMED 0:06:27.480 --> 0:06:28.520 who's leading the way. 0:06:28.839 --> 0:06:32.039 You mentioned that demand was still so strong that even 0:06:32.080 --> 0:06:34.240 AMD could produce and produce and produce, and it wouldn't 0:06:34.240 --> 0:06:36.640 really close the gap that much. Jensen Wong did say 0:06:36.680 --> 0:06:39.480 today that supply and demand was coming more into balance. 0:06:40.040 --> 0:06:42.719 If that's true, does that mean the prices may come 0:06:42.760 --> 0:06:44.720 down for those in video chips. 0:06:45.120 --> 0:06:47.839 Well, that's the fascinating thing I was thinking, and video 0:06:47.839 --> 0:06:50.799 could effectively name its price. Over the past year, everyone 0:06:50.960 --> 0:06:52.640 was in such a rush, in a hurry to get 0:06:52.640 --> 0:06:55.920 the chips in place, because, as I say, it's AI training. 0:06:55.960 --> 0:06:59.360 It's the very initial stages before you actually produce an 0:06:59.360 --> 0:07:01.880 AI model. The can stop monetizing as a business right, 0:07:01.920 --> 0:07:04.280 so everyone wants to have that as early as possible. 0:07:04.520 --> 0:07:06.960 That's why the competition has been there. I think Nvidia 0:07:07.040 --> 0:07:10.560 can probably sustain its pricing just because the demand was 0:07:10.720 --> 0:07:13.520 so much higher E could have detated price previously. This 0:07:13.600 --> 0:07:15.400 welcome competition coming down the line, though. 0:07:15.760 --> 0:07:18.440 Glad, thanks very much for joining us. Flat Savov there 0:07:18.760 --> 0:07:21.560 Bloomberg Tech editor, and you spare time for fun. He 0:07:21.680 --> 0:07:27.520 reads very dense technical manuals, you know, just to be entertained. Glad, 0:07:27.840 --> 0:07:39.040 thanks again and we'll have you back soon. China is 0:07:39.080 --> 0:07:42.880 said to have banned institutional investors from reducing their equity 0:07:42.920 --> 0:07:46.720 holdings at the opening close each day. And joining us 0:07:46.720 --> 0:07:50.040 for some analysis on this is Jill Desis, Bloomberg's China 0:07:50.080 --> 0:07:54.080 ecogov editor. So they can sell, but they can't sell 0:07:54.120 --> 0:07:56.360 more than they buy, Jill. So it's a kind of 0:07:56.720 --> 0:07:59.640 you can't reduce your position or you can't do net selling. 0:08:00.120 --> 0:08:03.040 I'm curious what institutional investors are saying about this. I mean, 0:08:03.080 --> 0:08:06.720 this is kind of astonishing. Are we hearing much from 0:08:07.000 --> 0:08:08.760 this is the Bloomberg story, of course, Are we hearing 0:08:08.840 --> 0:08:09.760 much from investors? 0:08:09.840 --> 0:08:10.040 Yes? 0:08:10.120 --> 0:08:12.520 Well, Brian, I think at the point here, it's really 0:08:12.600 --> 0:08:16.560 this is about the government trying to alleviate some of 0:08:16.600 --> 0:08:19.240 the selling pressure. I think the backstory that you have 0:08:19.320 --> 0:08:22.640 to keep in mind here is that, you know, we've 0:08:22.680 --> 0:08:26.480 seen some increased pressure in recent days, particularly from the government, 0:08:26.520 --> 0:08:29.600 to sort of clamp down on quantitative trading. What happened 0:08:29.720 --> 0:08:31.960 was on Monday, there is a major hedge fund in 0:08:32.040 --> 0:08:35.120 China that's sold something like three hundred the equivalent of 0:08:35.160 --> 0:08:37.520 like three hundred and fifty million dollars worth of shares 0:08:37.559 --> 0:08:41.400 within a minute of the open on Monday. And so 0:08:41.440 --> 0:08:45.040 it's really here about, you know, curbing some of this volatility. 0:08:45.200 --> 0:08:48.160 So I think from an investor perspective, obviously confidence is 0:08:48.160 --> 0:08:50.360 a much bigger issue in China right now. But I 0:08:50.360 --> 0:08:52.520 think at least from the government's perspective. This is really 0:08:52.559 --> 0:08:56.000 about trying to clamp down on volatility within the market. 0:08:56.320 --> 0:08:59.560 So the CSRC, we know, has a new chairman now, 0:09:00.040 --> 0:09:03.160 wou Ching, and I'm wondering whether he's the architect of this, 0:09:03.360 --> 0:09:06.200 and basically he was. I'm going to use the term 0:09:06.320 --> 0:09:09.160 hired to do something like this as a way of 0:09:09.200 --> 0:09:11.680 bringing stability to the equity market. I mean, the stakes 0:09:11.679 --> 0:09:12.800 are pretty high, aren't. 0:09:12.559 --> 0:09:16.120 They they are? And look, i mean we're not sure 0:09:16.760 --> 0:09:20.160 entirely what his role particularly in this move was, but yes, 0:09:20.240 --> 0:09:22.640 I mean this does come just a couple of weeks 0:09:22.679 --> 0:09:25.760 after he was appointed to this position. And wu Ching 0:09:25.880 --> 0:09:28.839 also has a you know, quite a starried history of 0:09:30.200 --> 0:09:33.240 clamping down on behavior within in the market like this. 0:09:33.320 --> 0:09:35.360 In his a previous job, he was really known as 0:09:35.400 --> 0:09:39.800 the broker butcher within China. So I mean he's kind 0:09:39.800 --> 0:09:42.400 of here to you know, sort of slam down the 0:09:42.440 --> 0:09:45.080 hammer and rain things in. I mean, remember, this is 0:09:45.080 --> 0:09:48.439 a market that has experienced a tremendous amount of volatility, 0:09:48.480 --> 0:09:51.600 particularly over the last eighteen months. We've seen a massive 0:09:51.679 --> 0:09:53.880 multi trillion dollar sell off in China. A lot of 0:09:53.880 --> 0:09:57.199 these issues are really really sort of deep and painful 0:09:57.240 --> 0:09:59.679 within the market here, and so I think that if 0:09:59.720 --> 0:10:02.320 you're Xi Jinping looking at the guys that you have 0:10:02.360 --> 0:10:04.199 in place to sort of regulate the markets here, you 0:10:04.240 --> 0:10:06.480 want to make sure that you're trying to prevent any 0:10:06.520 --> 0:10:08.600 further volatility as much as you possibly can. 0:10:09.600 --> 0:10:11.480 One thing that we point out in our story is 0:10:11.520 --> 0:10:15.040 it's unclear how widely this is being implemented, and perhaps 0:10:15.040 --> 0:10:16.840 it doesn't need to be implemented once you put this 0:10:16.920 --> 0:10:20.400 statement out. Institutional investors don't want to fall foul of 0:10:20.400 --> 0:10:23.800 the regulator, and so they will make sure that they 0:10:23.840 --> 0:10:27.000 are not net sellers. Is that what we're seeing or hearing? 0:10:27.360 --> 0:10:29.200 Yeah, I mean I think that at this point a 0:10:29.200 --> 0:10:31.080 lot of what the government is trying to do here 0:10:31.280 --> 0:10:33.560 is you know, they're sending a message, right, and I 0:10:33.559 --> 0:10:36.719 think that that's really a key thing here. You're right 0:10:36.800 --> 0:10:40.040 that it's not entirely clear how widely this band is 0:10:40.080 --> 0:10:42.679 being applied. I mean, you know, obviously, I think you know, 0:10:42.679 --> 0:10:46.319 it's really sort of keying in on major institutional investors. 0:10:46.320 --> 0:10:48.880 You do have to remember though, as well, that you know, 0:10:49.000 --> 0:10:51.920 Chinese markets have a massive number of mom and pop 0:10:51.920 --> 0:10:54.760 investors as well, and so those retail investors likely aren't 0:10:54.760 --> 0:10:58.079 really affected by this thing, and they are really responsible 0:10:58.120 --> 0:11:00.760 for quite a big part of this market here. But yes, 0:11:00.800 --> 0:11:03.400 I think at this point regulators certainly want to send 0:11:03.400 --> 0:11:05.319 a message saying, you know, we're clamping down and this 0:11:05.400 --> 0:11:07.520 type of behavior. We want to clamp down on volatility. 0:11:07.559 --> 0:11:11.120 We've seen other you know, restrictions in recent weeks and months, 0:11:11.160 --> 0:11:13.240 curbing short selling, that kind of thing. So I think 0:11:13.280 --> 0:11:16.800 it's really again about alleviating the selling pressure within the market. 0:11:16.920 --> 0:11:18.960 And we don't have an indication as to whether this 0:11:19.160 --> 0:11:21.520 policy is going to be lasting or whether it's just 0:11:21.640 --> 0:11:25.280 kind of a temporary adjustment to let the market kind 0:11:25.280 --> 0:11:26.319 of settled in, do we. 0:11:27.440 --> 0:11:29.600 Yeah, we don't really know that. I mean, I think 0:11:29.640 --> 0:11:32.480 that again at this point, you know, I wouldn't be 0:11:32.520 --> 0:11:36.120 surprised if we see additional measures announced or you know, 0:11:36.240 --> 0:11:38.400 sort of implemented in the next few weeks or so. 0:11:39.360 --> 0:11:41.840 It's it's we're you know, this is a this is 0:11:41.840 --> 0:11:44.400 a government that's really trying to stem this really incredible 0:11:44.440 --> 0:11:47.600 market route right now. And so whether these are temporary curbs, 0:11:47.640 --> 0:11:49.600 whether these are long lasting curbs, I mean, a lot 0:11:49.600 --> 0:11:51.560 of this is really just about stemming the bleeding at 0:11:51.559 --> 0:11:51.920 the moment. 0:11:52.000 --> 0:11:54.480 A couple of other quick areas, perhaps you can comment 0:11:54.559 --> 0:11:58.920 on both. One that the csr rc is IS is 0:11:58.960 --> 0:12:02.120 putting together this task for us with the exchanges themselves 0:12:02.600 --> 0:12:05.200 to monitor short selling, so that looks like some of 0:12:05.240 --> 0:12:07.320 that will dry up. And this other one, which is 0:12:07.360 --> 0:12:10.640 pretty interesting too, that China is drafting a law to 0:12:10.760 --> 0:12:13.640 promote the development of the private sector economy. 0:12:14.240 --> 0:12:16.520 Yes, well, I think that, you know, on that first 0:12:16.520 --> 0:12:18.959 point in terms of creating that task force, again, I 0:12:19.000 --> 0:12:21.840 think speaks to just the bevy of different measures that 0:12:21.880 --> 0:12:23.800 the government is rolling out to try to you know, 0:12:23.840 --> 0:12:26.360 again curb volatility within the market. And then yes, when 0:12:26.360 --> 0:12:29.120 it comes to the private sector, I mean, look, you know, 0:12:29.200 --> 0:12:31.640 the private sector does not have a ton of confidence 0:12:31.720 --> 0:12:34.840 in China's government economy right now. They obviously have very 0:12:34.960 --> 0:12:40.120 very long standing concerns about treatment preferential treatment for state 0:12:40.160 --> 0:12:43.720 owned you know, enterprises versus private firms. That's been a 0:12:43.760 --> 0:12:46.920 major theme, particularly over the last couple of years within China. 0:12:47.040 --> 0:12:49.240 So I think that anything that the government can do 0:12:49.320 --> 0:12:52.120 to try to instill some level of confidence in these 0:12:52.160 --> 0:12:54.360 private firms telling them, look, we do have your back 0:12:54.400 --> 0:12:56.079 and we do want to help you grow and develop, 0:12:56.240 --> 0:12:59.280 is you know, going to you know, you know, maybe 0:12:59.280 --> 0:13:02.000 go some way to restoring some of that sentiment there. 0:13:02.360 --> 0:13:04.720 So there's a People Congress a meeting at the early 0:13:04.800 --> 0:13:07.200 part of March. Do I have that right? And is 0:13:07.240 --> 0:13:09.520 that going to be an opportune time for more policy 0:13:09.600 --> 0:13:10.280 be rolled out. 0:13:11.080 --> 0:13:11.280 Yes. 0:13:11.400 --> 0:13:14.959 So that's really that meeting of those top legislators in China. 0:13:14.960 --> 0:13:16.920 It's the most important political meeting that they have of 0:13:16.920 --> 0:13:19.160 the year. That's going to kick off at the beginning 0:13:19.200 --> 0:13:21.880 of March, and that's really an opportunity that all of 0:13:21.880 --> 0:13:26.120 these major you know, these top leaders lawmakers have to 0:13:26.200 --> 0:13:28.880 kind of gather and set this policy agenda for the year. 0:13:28.920 --> 0:13:30.600 I mean, a lot of these things that they're likely 0:13:30.640 --> 0:13:33.840 discussing at this upcoming meeting in March, they've probably already 0:13:33.880 --> 0:13:36.080 been working on for quite some time. But I think 0:13:36.160 --> 0:13:38.800 just formalizing, you know, any sort of arrangements that they 0:13:38.840 --> 0:13:42.160 have for the trajectory for the rest of twenty twenty four, 0:13:42.200 --> 0:13:44.800 they're likely going to announce their economic growth target for 0:13:44.840 --> 0:13:48.160 the year. That's really I think an important agenda setting 0:13:48.160 --> 0:13:49.959 meeting on that calendar as we get into the rest 0:13:49.960 --> 0:13:50.400 of this year. 0:13:50.640 --> 0:13:52.680 All right, Jill, thanks for joining us. Jill de Sez 0:13:52.840 --> 0:13:54.840 Bloomberg's China Eco guv Anger. 0:14:02.200 --> 0:14:04.640 All right, let's pick up on that theme of Donald 0:14:04.679 --> 0:14:08.200 Trump possibly being elected to the US presidency. We are 0:14:08.280 --> 0:14:12.400 joined now by Bloomberg opinion columnist Karishma of Aswane, who 0:14:12.480 --> 0:14:15.520 joins us from our studios in Singapore. Karishma, it's always 0:14:15.520 --> 0:14:19.000 a pleasure. And you've been writing about what a Trump 0:14:19.360 --> 0:14:23.200 election to the presidency might mean for Taiwan. Break that 0:14:23.280 --> 0:14:23.800 down for me. 0:14:24.480 --> 0:14:27.800 Yeah, So, you know, to be fair, when Trump was 0:14:27.960 --> 0:14:32.160 in power, arguably there had been no better president American 0:14:32.200 --> 0:14:36.280 president for Taiwan until, of course Biden came along. Because 0:14:36.480 --> 0:14:40.400 since we've had President Biden in the White House, there 0:14:40.400 --> 0:14:42.320 have been a number of things that he's done in 0:14:42.320 --> 0:14:46.320 comparison to the former President Trump that has helped to 0:14:46.360 --> 0:14:49.360 boost support for Taiwan internationally. But just looking at some 0:14:49.440 --> 0:14:52.440 of the rhetoric that's come out of Donald Trump in 0:14:52.760 --> 0:14:56.560 this campaign, and I want to point to an interview 0:14:56.600 --> 0:14:59.280 that he's done recently with Fox News where he suggested 0:15:00.320 --> 0:15:03.600 that perhaps Taiwan would not be the most urgent priority 0:15:04.040 --> 0:15:06.520 for his White House if indeed he does make it 0:15:06.560 --> 0:15:09.120 into the White House in November. That has raised a 0:15:09.160 --> 0:15:11.920 lot of concern in this part of the world, obviously 0:15:11.960 --> 0:15:15.400 in Taipei, but even further afield with the American partners 0:15:16.040 --> 0:15:20.320 like Japan, the Philippines, and Australia. And it's a real 0:15:20.400 --> 0:15:24.160 issue of American credibility out here because how the US 0:15:24.800 --> 0:15:28.160 manages the Taiwan issue with China is being seen as 0:15:28.200 --> 0:15:30.640 a test of American leadership across the region. 0:15:31.960 --> 0:15:35.280 Yeah, as you say, Joe Biden has taken one extra step, 0:15:35.320 --> 0:15:39.120 even talking about the possibility of coming physically to the 0:15:39.160 --> 0:15:42.920 defense of Taiwan in the event of an attack. And 0:15:42.960 --> 0:15:45.760 President Trump seems like, as you say, that, he's taken 0:15:45.840 --> 0:15:49.000 back a step a little bit, and perhaps that's consistent 0:15:49.080 --> 0:15:53.720 with his basic America First policy. So the question then arises, 0:15:53.920 --> 0:15:56.920 if China was emboldened by this, whether it would be 0:15:57.520 --> 0:16:00.680 a kind of literal move or just a figurative one. 0:16:01.640 --> 0:16:04.520 I think it's important to look at the signaling out 0:16:04.560 --> 0:16:07.520 of Beijing, and just in the last week or so, 0:16:07.640 --> 0:16:11.040 we have seen that there has been appetite from China 0:16:11.080 --> 0:16:17.440 to escalate tensions relatively speaking. The recent incident of two 0:16:17.560 --> 0:16:21.720 Chinese fishermen that unfortunately died tragically in Taiwanese waters off 0:16:21.760 --> 0:16:26.640 the island of Jinmn, Taiwanese controlled has prompted the Chinese 0:16:26.680 --> 0:16:29.880 to say that they are going to increase their patrols 0:16:29.880 --> 0:16:32.800 in this area. A Chinese coast guard in fact bordered 0:16:32.800 --> 0:16:35.880 a Taiwanese tourist vessel a couple of days ago. That 0:16:36.040 --> 0:16:40.360 really scared people in Taiwan. And I think it is 0:16:40.440 --> 0:16:43.640 important ahead of the May twentieth inauguration of the new 0:16:43.760 --> 0:16:47.560 president Leichinda, who is of course from the Democratic Progressive Party, 0:16:47.840 --> 0:16:51.320 the politician that possibly China hates the most. Right now, 0:16:52.000 --> 0:16:54.800 I think we will continue to see an escalation of 0:16:54.880 --> 0:16:58.960 what is called gray zone activities by Beijing and culminating 0:16:59.520 --> 0:17:02.960 in whatever the Chinese want to signal ahead of that 0:17:03.000 --> 0:17:05.480 inauguration speech. On me the twentieth, that's pivotal. 0:17:05.880 --> 0:17:06.080 You know. 0:17:06.200 --> 0:17:09.440 You cite a report from Bloomberg Economics suggesting there could 0:17:09.480 --> 0:17:12.040 be a twenty five percent probability of a major crisis 0:17:12.040 --> 0:17:14.280 in the Taiwan straight in the next five years ten 0:17:14.320 --> 0:17:17.480 percent risk of some form of conflict. I'm wondering though, 0:17:17.800 --> 0:17:21.560 whether that analysis was assuming a Biden presidency or a 0:17:21.600 --> 0:17:25.360 Trump presidency, and how the calculation might shift. We can 0:17:25.520 --> 0:17:27.439 put that aside for the moment. The other thing, we 0:17:27.520 --> 0:17:30.479 need to address the economic consequences, right, I think that 0:17:30.560 --> 0:17:33.320 cannot be ignored. We were talking about the results from 0:17:33.480 --> 0:17:37.639 Nvidia a short while ago. This company relies on Taiwan's 0:17:37.640 --> 0:17:42.120 semiconductor to produce all of its chips, and I think 0:17:42.160 --> 0:17:44.359 that's the big elephant in the room, is it not? 0:17:45.200 --> 0:17:45.440 Yeah? 0:17:45.480 --> 0:17:49.280 Absolutely, I think you know, the pivotal role, the key 0:17:49.400 --> 0:17:52.160 role that Taiwan plays in the global supply chain, particularly 0:17:52.200 --> 0:17:54.159 when it comes to these high value chips. I mean 0:17:54.160 --> 0:17:57.800 they're in everything, right, like from your television set to 0:17:58.480 --> 0:18:04.000 extremely sophistic technological equipment. And the numbers are staggering. According 0:18:04.000 --> 0:18:07.960 to Bloomberg Economics, this analysis was released in January this year. 0:18:08.000 --> 0:18:10.840 They put the global price tag of an invasion at 0:18:10.880 --> 0:18:15.120 around ten trillion dollars and that's equal to about ten 0:18:15.160 --> 0:18:20.399 percent of global GDP. And importantly, this exceeds the blow 0:18:20.440 --> 0:18:23.080 from the war in Ukraine, the pandemic, and the two 0:18:23.080 --> 0:18:25.919 thousand and eight financial crisis. And I was listening to 0:18:26.440 --> 0:18:31.280 a podcast where Matt Pottenscher, the former deputy of the 0:18:31.480 --> 0:18:34.679 NSC during Trump's administration, was speaking, and he said that 0:18:34.880 --> 0:18:37.640 if there was to be an invasion, I'm paraphrasing him 0:18:37.960 --> 0:18:41.320 of China into Taiwan. It would make what looks it 0:18:41.320 --> 0:18:43.520 would make what is happening in the Middle East right 0:18:43.560 --> 0:18:46.040 now and in Ukraine look like Child's Place. Sure he's 0:18:46.080 --> 0:18:48.000 overblowing that a little, but I think it speaks to 0:18:48.040 --> 0:18:49.240 the point that we're making here. 0:18:50.080 --> 0:18:52.800 Yeah, that's why I asked about the difference between a 0:18:53.359 --> 0:18:56.359 sort of literal attack or perhaps just a figurative one. 0:18:56.440 --> 0:19:00.879 Doug mentioned economic, but you also have you economic and 0:19:00.920 --> 0:19:04.200 yours have cultural warfare in the sense I mean there's 0:19:04.200 --> 0:19:06.280 a lot of pressure that China could put on Taiwan 0:19:07.240 --> 0:19:09.919 that might go unattended by a presidency of Trump. 0:19:10.600 --> 0:19:12.960 Yeah, and it's already happening. It's such a good point. 0:19:13.040 --> 0:19:15.760 It's the digital misinformation. It's the fact that you know, 0:19:15.800 --> 0:19:17.480 when I was out on the island of gin Men 0:19:17.560 --> 0:19:20.159 just a few well just in January. Rather when you 0:19:20.200 --> 0:19:23.560 speak to people there, they can see China across the 0:19:23.640 --> 0:19:26.440 ocean and it's not that far away. And you know, 0:19:26.640 --> 0:19:28.879 I think there's two things happening. One, there is a 0:19:28.920 --> 0:19:31.840 real desire for stability. I mean, who doesn't want that, right, 0:19:32.200 --> 0:19:34.639 And the people of Taiwan are just like you, and 0:19:34.680 --> 0:19:37.359 I they certainly don't want war, but then there's the 0:19:37.400 --> 0:19:40.199 other aspect where it feels like their own sense of 0:19:40.320 --> 0:19:44.000 sovereignty and decision making is being threatened on a daily basis. 0:19:44.040 --> 0:19:47.840 They have a clear sense of their identity, particularly amongst 0:19:47.920 --> 0:19:50.719 young people there that is growing and that's what Beijing 0:19:50.800 --> 0:19:51.600 doesn't want to see. 0:19:51.840 --> 0:19:53.840 Yeah, in the time that we have left, I can 0:19:53.880 --> 0:19:56.399 only give you about fifteen seconds to deal with the 0:19:56.440 --> 0:20:00.440 issue of the US expanding its coalition with that include 0:20:00.480 --> 0:20:02.160 countries in the APAC region. 0:20:02.200 --> 0:20:06.440 Do you think one hundred percent Japan, South Korea, Australia 0:20:06.480 --> 0:20:08.360 and the Philippines all key, allies? 0:20:08.400 --> 0:20:10.639 All right, Korshma will leave it. There always a delight 0:20:10.680 --> 0:20:15.040 to Karishma Vaswani. Bloomberg opinion columnists joining us from Singapore 0:20:15.080 --> 0:20:18.480 to talk about the possibility of what a Donald Trump 0:20:18.640 --> 0:20:21.920 reelection might mean for the future of Taiwan. 0:20:22.520 --> 0:20:25.960 This is the Bloomberg Daybreak Asia podcast, bringing you the 0:20:26.040 --> 0:20:29.480 stories making news and moving markets in the Asia Pacific. 0:20:29.760 --> 0:20:32.880 Visit the Bloomberg Podcast channel on YouTube to get more 0:20:32.920 --> 0:20:36.720 episodes of this and other shows from Bloomberg. Subscribe to 0:20:36.760 --> 0:20:40.600 the podcast on Apple, Spotify, or anywhere else you listen 0:20:40.840 --> 0:20:44.040 and always on Bloomberg Radio, the Bloomberg Terminal and the 0:20:44.080 --> 0:20:45.320 Bloomberg Business App.