WEBVTT - Disney's Cost Cuts and China Tech 0:00:01.480 --> 0:00:05.160 From Mahard where Innovation of money and power Collie in 0:00:05.240 --> 0:00:06.760 Silicon Valley NBN. 0:00:07.080 --> 0:00:10.600 This is Bloomberg Technology with Caroline Hyde and Ed. 0:00:10.640 --> 0:00:27.520 Ludlow Amed Ludlow in San Francisco. Caroline hides off today. 0:00:27.560 --> 0:00:30.200 This is Bloomberg Technology and water show we have for you. 0:00:30.320 --> 0:00:33.720 Disney's capital spending and production costs coming in lower than 0:00:33.760 --> 0:00:37.519 projected and saving three billion dollars for the entertainment company. 0:00:37.640 --> 0:00:39.000 Will bring you all the details. 0:00:39.240 --> 0:00:44.159 Plus, President Biden imposes limits on US investments in China. Meanwhile, 0:00:44.159 --> 0:00:47.080 Ali Baba returns to growth across all the main divisions, 0:00:47.320 --> 0:00:49.400 defying China's economic turbulence. 0:00:49.440 --> 0:00:52.040 What this all means for the Chinese tech. 0:00:51.880 --> 0:00:54.680 Sector Finally, will take a deeper look at the Supreme 0:00:54.720 --> 0:00:58.600 Court ruling in the epic case siding with Apple. At 0:00:58.680 --> 0:01:01.760 least for now, the single day we're watching in the 0:01:01.800 --> 0:01:05.720 earning story is Disney, so many stories within it, raising 0:01:05.800 --> 0:01:09.920 prices for streaming basically really outperforming the loss on the 0:01:09.920 --> 0:01:13.360 streaming business much narrower than forecasts five hundred and twelve million. 0:01:13.800 --> 0:01:15.280 But this is the Eiger effect. 0:01:15.920 --> 0:01:19.200 Cost discipline and cost cutting is work. The headline spending 0:01:19.200 --> 0:01:21.680 this year will be twenty seven billion dollars for content 0:01:21.760 --> 0:01:24.840 principally instead of the thirty billion they normally spend. 0:01:25.080 --> 0:01:26.800 That is something the market reacted to. 0:01:26.800 --> 0:01:30.040 As lot, as well as some of the financial forecasts 0:01:30.080 --> 0:01:32.640 they gave going forward. Let's get to our Media and 0:01:32.760 --> 0:01:35.880 Entertainment editor Chris Powmery, who joins us from La Chris 0:01:37.160 --> 0:01:40.360 Cost Discipline. Iiger the market likes it. What were some 0:01:40.360 --> 0:01:42.319 of the other key takeaways from that Disney print. 0:01:44.120 --> 0:01:47.440 Well, the the big headliners. Yeah, they've implemented as big 0:01:47.520 --> 0:01:51.480 cost cutting effort. It's dovetailing with the writers and actors strike, 0:01:51.560 --> 0:01:54.720 so they're saving money on production there. And you know 0:01:54.760 --> 0:01:57.400 the resistant general feeling on Maaster. These companies were ill 0:01:57.440 --> 0:02:02.080 spending too much on content. The lower than expected losses 0:02:02.280 --> 0:02:05.720 on streaming half a billion dollars, if you can call that, good, 0:02:06.080 --> 0:02:09.079 and dramatic price increases for the Disney plus and Who 0:02:09.320 --> 0:02:12.399 Services twenty seven percent hike as they try to get 0:02:12.400 --> 0:02:15.360 to profitability next year in streaming as they promised. 0:02:17.040 --> 0:02:19.200 You mentioned the lost half a billion dollars five hundred 0:02:19.200 --> 0:02:21.760 and twelve million on the streaming business in the quarter 0:02:21.800 --> 0:02:23.960 a year ago it was one billion, and I think 0:02:24.000 --> 0:02:26.560 the executives have guided us to seven hundred and fifty million. 0:02:26.919 --> 0:02:30.399 We're still obsessed with subscribe account So Disney Plus subscribers 0:02:30.440 --> 0:02:33.560 overall fell seven point four percent right in the course 0:02:33.600 --> 0:02:36.600 had gone. But the main story there is Disney Plus 0:02:36.639 --> 0:02:38.720 hot Star explains to what's what happened? 0:02:39.800 --> 0:02:44.120 Well, they lost the streaming rights to India Premier Cricket League, 0:02:44.160 --> 0:02:47.200 which was a big deal, big source of subscriber growth 0:02:47.240 --> 0:02:51.359 in India and a couple other countries, and so that 0:02:51.520 --> 0:02:54.080 is really you know, you're seeing the impact of that 0:02:54.320 --> 0:02:57.000 now for a few quarters, just a dramatic decrease and 0:02:57.400 --> 0:02:58.800 subscribers locally there. 0:03:00.000 --> 0:03:02.560 Hey, Chris, what did Igo and co say about the 0:03:02.840 --> 0:03:05.480 writers and actors strike and how that's going to impact 0:03:05.840 --> 0:03:06.920 the content s late. 0:03:07.840 --> 0:03:11.919 It was mord into the three billion dollars in content reduction, 0:03:12.120 --> 0:03:14.520 so they didn't specify it how much was due to 0:03:14.840 --> 0:03:17.840 the strikes as opposed to just an overall reduction in 0:03:17.919 --> 0:03:21.679 spending that they've been implementing. But it's a significant enough 0:03:21.800 --> 0:03:26.640 number and we've seen these similar numbers from all the. 0:03:25.919 --> 0:03:28.240 Big media companies in recent weeks. 0:03:28.800 --> 0:03:31.960 Billions of dollars collectively in savings as they don't have 0:03:32.040 --> 0:03:36.040 to make new TV shows and films right now, All. 0:03:36.040 --> 0:03:38.880 Right, Bloomberg's Media entertainment editor, Chris Palmery. The other big 0:03:38.880 --> 0:03:41.720 piece of news is Disney raising streaming prices right there, 0:03:41.840 --> 0:03:44.680 it's a twenty seven percent hike for the ad free 0:03:44.760 --> 0:03:47.760 version of Disney Plus it goes from fourteen to fourteen 0:03:47.800 --> 0:03:50.880 dollars a month from eleven. Really interesting, the story of 0:03:50.920 --> 0:03:53.840 Disney keeping up with Netflix in that sense. Let's keep 0:03:53.840 --> 0:03:57.160 a conversation going ross Gerba, president and CEO and co 0:03:57.240 --> 0:04:01.200 founder of Gerber Kawasaki, an investor in Disney. That's a 0:04:01.200 --> 0:04:03.720 lot to take in, right, It's very rare you see 0:04:03.760 --> 0:04:06.320 four red headlines on the Bloomberg terminal from a single 0:04:06.360 --> 0:04:09.320 earnings report. But what was the main point for you? 0:04:09.440 --> 0:04:09.760 Russ? 0:04:11.040 --> 0:04:13.240 I think the main point is exactly what you guys 0:04:13.240 --> 0:04:15.560 have been focused on, is right sizing the amount of 0:04:15.600 --> 0:04:19.400 spending that's being done in Hollywood with the actual revenue 0:04:19.440 --> 0:04:22.600 coming in from direct to consumer sources. So you know, 0:04:22.880 --> 0:04:25.960 they started out really in a race for subscribers. I'm 0:04:26.040 --> 0:04:29.520 very similar to online gambling. Lots of acquisition costs, and 0:04:29.600 --> 0:04:33.520 now the business has matured and they have you know, well, 0:04:33.680 --> 0:04:36.920 almost two hundred million plus subscribers, you know, and when 0:04:36.920 --> 0:04:40.200 you look at the business, they're very close to profitability. 0:04:40.320 --> 0:04:42.000 So these are the changes that need to be made 0:04:42.200 --> 0:04:44.600 to make streamers profitable like Netflix. So when you look 0:04:44.600 --> 0:04:47.680 at Netflix's profitability with over three and a half billion 0:04:47.960 --> 0:04:50.960 of free cash flow and growing, you know what the 0:04:51.000 --> 0:04:55.080 potential is for Disney, even if they don't add subscribers, 0:04:55.440 --> 0:04:58.440 is to see profits actually come from these streamers in 0:04:58.480 --> 0:04:59.120 the next year. 0:05:00.080 --> 0:05:00.359 Russ. 0:05:00.360 --> 0:05:02.080 Just for the benefit of our audience, I'm looking on 0:05:02.080 --> 0:05:05.360 the Bloomberg terminal. Gerbak Kawasaki has around one hundred and 0:05:05.400 --> 0:05:08.680 fifty thousand Disney shares as of June thirtieth, So. 0:05:08.640 --> 0:05:09.720 You've got skin in the game. 0:05:10.040 --> 0:05:14.360 You're a big EIGA fan, right, has your perception of 0:05:14.480 --> 0:05:17.720 him and his job changed based on what you heard 0:05:17.839 --> 0:05:18.520 last night. 0:05:20.600 --> 0:05:22.599 Not that his job has changed. He has a very 0:05:22.680 --> 0:05:25.120 challenging job, but he's got the help that I was 0:05:25.520 --> 0:05:28.480 hoping and praying he would with Kevin Mayer and Tom SAgs. 0:05:28.480 --> 0:05:31.120 You know, I know Kevin Maher and I am always 0:05:31.160 --> 0:05:35.520 impressed by his aggressiveness, his connections, his ability to get 0:05:35.560 --> 0:05:36.919 projects done in Hollywood. 0:05:37.120 --> 0:05:39.240 And I see, you know, Iiger. 0:05:39.040 --> 0:05:42.320 Making a move on Candle Media and bringing these executives 0:05:42.320 --> 0:05:46.000 back in the fold. And the big news about ESPN 0:05:46.360 --> 0:05:48.200 getting into the gambling business. 0:05:47.839 --> 0:05:48.600 With Penn Gaming. 0:05:48.880 --> 0:05:50.920 You know, they kicked port Nooy out and they added 0:05:51.200 --> 0:05:54.080 ESPN and this is a huge win for ESPN, not 0:05:54.120 --> 0:05:57.039 only with new revenue streams, but getting out to the 0:05:57.080 --> 0:06:00.760 consumers in a meaningful way and ultimately building a standalone 0:06:00.800 --> 0:06:03.840 sports app that could rival any app out there. So 0:06:04.480 --> 0:06:07.320 there are some exciting things out there, but ultimately Eiger 0:06:07.440 --> 0:06:08.680 needs to focus on content. 0:06:08.920 --> 0:06:12.040 They need good movies. That really is the fuel of. 0:06:12.040 --> 0:06:15.240 Disney and that's really what I think Iigers really, you know, 0:06:15.400 --> 0:06:18.360 main goal is besides just cutting costs, but improving content. 0:06:19.680 --> 0:06:23.000 There's like two competing forces here where they're trying to 0:06:23.000 --> 0:06:27.400 have cost discipline but you know, and reduce content spending. 0:06:27.839 --> 0:06:30.760 But the content slate is impacted because of the strikes. 0:06:30.760 --> 0:06:32.400 People want good stuff to watch. 0:06:32.920 --> 0:06:35.160 So how does Disney get the balance right making sure 0:06:35.160 --> 0:06:38.480 they've got things that get eyeballs without overspending. 0:06:39.800 --> 0:06:42.840 Well, unfortunately, the movie business is very you know, hit 0:06:42.880 --> 0:06:45.920 and miss and somewhat random, and there's no real formula 0:06:46.000 --> 0:06:46.560 for success. 0:06:46.600 --> 0:06:48.080 As we've seen over the years. 0:06:48.080 --> 0:06:51.760 Disney's had a great run over its long term in 0:06:51.839 --> 0:06:55.480 finding tremendous talent. So what's happening now with the strike, 0:06:55.520 --> 0:06:57.560 And we're hoping that the strike ends at the end 0:06:57.560 --> 0:07:00.640 of summer, once everybody's done with their vacations realize they 0:07:00.720 --> 0:07:03.680 need to make money again. So I do think that 0:07:03.680 --> 0:07:05.839 the strike will end soon and we won't see too 0:07:05.920 --> 0:07:09.480 much of a hiccup. But there's been so much content 0:07:09.600 --> 0:07:12.480 made over the last two years. None of us have 0:07:12.680 --> 0:07:15.640 seen even close to all of it. And this is 0:07:15.640 --> 0:07:18.400 what I think the writers and the actors are miscalculating, 0:07:18.600 --> 0:07:20.760 and maybe there's a short term effect of their strike, 0:07:20.840 --> 0:07:23.520 but there's just so much content in the hopper. 0:07:23.760 --> 0:07:25.200 There's international content. 0:07:25.360 --> 0:07:29.000 They are even green lighting independent projects right now. They're 0:07:29.200 --> 0:07:31.600 over one hundred productions that were green lighted by SAG 0:07:31.640 --> 0:07:33.800 even during the strike, and some of them are for 0:07:33.840 --> 0:07:35.200 big streamers like Apple TV. 0:07:35.520 --> 0:07:39.240 So the strike is really just posturing in the industry. 0:07:39.440 --> 0:07:43.360 After having just an amazingly profitable period of time, now 0:07:43.400 --> 0:07:45.440 these companies need to make money. It's a bad time 0:07:45.720 --> 0:07:48.000 for a strike, and they're going to cut costs into 0:07:48.080 --> 0:07:51.000 what's necessary to right size their businesses. So it's a 0:07:51.240 --> 0:07:53.920 changing time and We're seeing it in technology, and we're 0:07:53.920 --> 0:07:55.760 seeing it now in entertainment. 0:07:55.440 --> 0:07:57.680 As we write size in the post pandemic era. 0:07:59.000 --> 0:08:03.000 Michael Morris, an analyst at Guggenheim who covers the company, 0:08:03.440 --> 0:08:07.680 asked for on the call, what are the chances of 0:08:07.760 --> 0:08:12.240 a big technology company buying Disney? And I said, I'm 0:08:12.240 --> 0:08:15.520 not gonna I'm not gonna comment about that, but the rumor, 0:08:15.600 --> 0:08:17.520 the idea has been there for so long. 0:08:17.960 --> 0:08:18.920 What do you think about that? 0:08:19.120 --> 0:08:23.360 US? Well, I think if Apple had, you know, the 0:08:23.560 --> 0:08:23.880 I didn't. 0:08:25.480 --> 0:08:27.040 Well, I think if they did, they would have bought 0:08:27.080 --> 0:08:28.840 Netflix in the day, they would have bought Tesla in 0:08:28.880 --> 0:08:31.400 the day. And they've had several attempts at Disney, and 0:08:31.480 --> 0:08:34.480 they certainly should take this opportunity right now, but they're 0:08:34.480 --> 0:08:37.320 not going to. So Apple isn't that company, and they're 0:08:37.360 --> 0:08:39.720 wholly focused on Vision pro. I think the one to 0:08:39.760 --> 0:08:42.400 look at is really Amazon and Google. I do think 0:08:42.400 --> 0:08:44.480 the future of entertainment is very much going to be 0:08:44.600 --> 0:08:47.800 led by tech giants, not traditional media companies. 0:08:48.040 --> 0:08:49.680 And so as we see. 0:08:49.440 --> 0:08:52.680 This transition, you know, there's a very high likelihood that 0:08:52.760 --> 0:08:56.280 somebody might bid for all or parts of Disney. That said, 0:08:56.400 --> 0:08:58.400 I think the company is fine the way it is, 0:08:58.600 --> 0:09:00.960 and they just need to you know, fix the problems 0:09:01.000 --> 0:09:04.560 they have, which are fixable, and the stock has tremendous 0:09:04.640 --> 0:09:08.840 value in my mind for long term investors, despite you know, 0:09:08.880 --> 0:09:10.640 it's poor performance over the last two years. 0:09:10.679 --> 0:09:12.160 If you look at the ten years. 0:09:11.920 --> 0:09:15.280 Before it, it's been a phenomenal performer under Eiger. So 0:09:16.000 --> 0:09:17.480 we've had a big step back, but I think it's 0:09:17.480 --> 0:09:20.280 an opportunity for investors. In my fun GK it's a 0:09:20.320 --> 0:09:22.720 top holding for us. It's in the top fifteen holdings 0:09:22.720 --> 0:09:25.280 for US. And I'm you know, a long term investor 0:09:25.280 --> 0:09:27.520 in Disney and I'm not, you know, planning on changing 0:09:27.559 --> 0:09:29.120 that really quick. 0:09:29.160 --> 0:09:31.400 On the tech perspective, Disney was talking about how they 0:09:31.440 --> 0:09:35.480 have the technology to assess password sharing and that you know, 0:09:35.640 --> 0:09:37.680 going into the next fiscal year would be more of 0:09:37.679 --> 0:09:40.880 a priority. That was a factor for Netflix and its earnings. 0:09:41.080 --> 0:09:44.360 How do you think about password sharing in the context 0:09:44.360 --> 0:09:46.680 of Disney plus Well. 0:09:46.559 --> 0:09:49.840 I was surprised how successful Netflix was in getting users 0:09:49.840 --> 0:09:53.360 to sign up in the password sharing and having little backlash, 0:09:53.400 --> 0:09:56.079 as I thought possibly they could have some pretty severe 0:09:56.120 --> 0:10:00.760 backlash and lose subscribers because of it. But in in hindsight. 0:10:01.320 --> 0:10:03.680 If the content's good, people will pay for it. And 0:10:03.679 --> 0:10:05.720 that's the bottom line, you know, sort of the debate 0:10:05.760 --> 0:10:08.440 over you know, will people pay for X and will 0:10:08.480 --> 0:10:11.680 people pay for social media platforms versus paying for entertainment 0:10:11.720 --> 0:10:15.920 platforms like Netflix or Disney Plus. And what we're seeing 0:10:15.960 --> 0:10:18.400 is people will pay and we have the technology to 0:10:18.640 --> 0:10:21.440 you know, hold people accountable. And I think that's you know, 0:10:21.520 --> 0:10:24.079 a win win for all involved. I think giving away 0:10:24.480 --> 0:10:27.000 the product, you know, at the beginning, it's served everybody, 0:10:27.000 --> 0:10:27.840 but now it doesn't. 0:10:28.800 --> 0:10:31.920 All right, ros Gerba, President, CEO and co founder of 0:10:31.960 --> 0:10:34.680 Gerber Kawasaki with the Disney reaction, thank you very much. 0:10:34.720 --> 0:10:38.400 Coming up here on Bloomberg Technology, what President Biden's executive 0:10:38.520 --> 0:10:41.840 order means for China tech and the US tech sector. 0:10:41.840 --> 0:10:44.079 We're going to talk about that and more with Joannetheny 0:10:44.160 --> 0:10:45.560 Advises Capital Management. 0:10:45.920 --> 0:10:47.840 That's coming up next. This is Bloomberg. 0:10:59.240 --> 0:11:04.360 President Joe acted in executive order yesterday placing stringent restrictions 0:11:04.679 --> 0:11:09.720 on specific US investments in China's sensitive tech sectors, for example, Chips, 0:11:10.000 --> 0:11:13.400 quantum Tech, and select AI systems. This is part of 0:11:13.400 --> 0:11:17.120 a push to restrict the company's ability to develop next 0:11:17.160 --> 0:11:21.960 generation military and surveillance technologies that could potentially threaten US 0:11:22.040 --> 0:11:22.960 national security. 0:11:23.000 --> 0:11:23.880 That is the news. 0:11:24.280 --> 0:11:27.480 Let's bring in Joan Fini, partner and portfolio manager at 0:11:27.520 --> 0:11:29.040 Advisor's Capital Management. 0:11:29.360 --> 0:11:30.840 You know you're an investor. 0:11:30.360 --> 0:11:32.640 With a global view, but we also know you as 0:11:32.640 --> 0:11:35.840 somebody with a long history with the chip sector. The 0:11:35.960 --> 0:11:39.840 chip sector a target of this Biden initiatives. What's your 0:11:39.840 --> 0:11:42.160 reaction to the executive order? 0:11:42.200 --> 0:11:44.160 First of all, you. 0:11:44.120 --> 0:11:47.679 Know, this is yet another move by the US government 0:11:47.960 --> 0:11:51.920 over the last many years, spanning administrations, to try to 0:11:52.240 --> 0:11:55.000 limit the flow of technology to China. 0:11:55.120 --> 0:11:58.040 You know, for many years we basically gave our technology 0:11:58.080 --> 0:12:01.599 away by looking the other way when China was acquiring 0:12:01.760 --> 0:12:06.160 technology through dubious means, through trade relations, through manufacturing operations 0:12:06.160 --> 0:12:09.440 in China. And now you know with the previous administration 0:12:09.520 --> 0:12:13.200 in this one, the professionals within those departments are trying 0:12:13.200 --> 0:12:14.400 to curtail that and. 0:12:14.360 --> 0:12:15.760 This is yet another way so by. 0:12:15.640 --> 0:12:19.840 Restricting venture capitalist's ability to make new investments in China 0:12:19.880 --> 0:12:22.720 and private equity ability to make new investments in China. 0:12:23.160 --> 0:12:25.480 The hope isn't so much that the deprivation of that 0:12:25.760 --> 0:12:28.440 bit of capital, that bit of money will really slow 0:12:28.720 --> 0:12:35.199 China innovation. It's more the stopping of those people providing 0:12:35.360 --> 0:12:38.080 help to those companies. So it's really the technology transfer, 0:12:38.120 --> 0:12:40.040 the knowledge transfer that they want to stop. It's not 0:12:40.360 --> 0:12:43.400 really about the money involved, because it's very little as 0:12:43.480 --> 0:12:46.280 the whole of China investment in new technology. 0:12:47.320 --> 0:12:49.599 You make a good point that's so relevant to the 0:12:49.640 --> 0:12:52.960 Bloomberg Technology or audience that this is essentially a restriction 0:12:53.080 --> 0:12:57.920 on private capital investment VC private equity. But as a 0:12:57.960 --> 0:13:01.920 public market investor, does it sound were the attractiveness of 0:13:02.000 --> 0:13:05.840 any of the Chinese ADRs that trade on US exchanges? 0:13:07.120 --> 0:13:08.760 Well, there are a lot of reasons to be concerned 0:13:08.760 --> 0:13:11.199 about specific Chinese ADRs. 0:13:12.000 --> 0:13:15.040 You know, we recognize. 0:13:14.400 --> 0:13:16.800 That the political tension between the US and China is 0:13:16.840 --> 0:13:19.720 not likely to ease anytime soon, and that does help 0:13:19.760 --> 0:13:21.960 to guide the sorts of investments we're willing to make 0:13:22.800 --> 0:13:24.480 in China in other parts of Asia. 0:13:25.160 --> 0:13:26.760 But it doesn't discourage us entirely. 0:13:26.840 --> 0:13:30.040 You know, our international group is on the ground looking 0:13:30.080 --> 0:13:31.640 for ideas there. 0:13:31.920 --> 0:13:35.480 You know, in our balance strategy, which I'm responsible for, we. 0:13:35.480 --> 0:13:39.120 Still like Taiwan semi Conductor despite the political risks that 0:13:39.160 --> 0:13:43.400 we obviously acknowledge are out there because Taiwan Semi serves 0:13:43.400 --> 0:13:46.800 the global demand for semiconductors, and they're at the forefront 0:13:46.840 --> 0:13:47.640 through at the leading. 0:13:47.559 --> 0:13:49.600 Edge of advanced manufacturing, and they. 0:13:49.480 --> 0:13:53.400 Serve so many US designers of chips and they're an 0:13:53.400 --> 0:13:55.120 integral part of that, from Nvidia. 0:13:54.760 --> 0:13:57.400 To A and D to Broadcom and others. 0:13:58.559 --> 0:14:00.160 Yeah, later in the show, we're going to act you 0:14:00.160 --> 0:14:02.600 talk a little bit about Tokyo Electron, which is a 0:14:02.679 --> 0:14:06.160 Japanese chip gear maker equipment maker, but they're getting a 0:14:06.160 --> 0:14:08.720 lot of demand from China because at the same time, 0:14:09.360 --> 0:14:11.679 China is trying to react to this, right, So think 0:14:11.720 --> 0:14:14.520 about some of the names we're interested in. In Vidia 0:14:14.880 --> 0:14:19.000 has circumvented the other US restrictions on technic knowlogy export 0:14:19.440 --> 0:14:22.160 by producing a lower power GPU. 0:14:23.160 --> 0:14:23.840 What is your. 0:14:23.720 --> 0:14:27.200 Perspective on how US technology names who want to do 0:14:27.280 --> 0:14:31.480 business in China can get around some of these executive orders. 0:14:33.080 --> 0:14:37.080 Yeah, so for a while, I think US companies like Nvidia, AMD, 0:14:37.840 --> 0:14:40.040 Cisco and others will continue to be able to sell 0:14:40.040 --> 0:14:42.800 into China. But as Invidia has done, they'll have to 0:14:42.880 --> 0:14:46.320 sell less capable chips than the leading is that they've 0:14:46.360 --> 0:14:48.160 got to sell elsewhere in the world. 0:14:48.440 --> 0:14:50.200 And as you saw not just what. 0:14:50.240 --> 0:14:53.760 Tokyo Electron said about the continued demand for equipment are 0:14:53.840 --> 0:14:56.360 into China, because you know, China is going to want 0:14:56.400 --> 0:14:58.400 to build and it's going to continue to build up 0:14:58.400 --> 0:15:03.040 its own semiconductor manufactur string capabilities, encouraged in part by 0:15:03.080 --> 0:15:05.400 all these restrictions not just from the US but from 0:15:05.480 --> 0:15:08.480 Europe as well the Netherlands. And in addition, we saw 0:15:08.560 --> 0:15:12.920 also that according to the Financial Times in videos receiving 0:15:12.960 --> 0:15:16.200 like five billion dollars worth of orders from Chinese companies 0:15:16.240 --> 0:15:19.400 now because they're afraid that the restrictions are only going 0:15:19.440 --> 0:15:24.200 to get more severe. So China remains an opportunity even 0:15:24.240 --> 0:15:26.920 if they are constrained, because they're going to want to 0:15:26.960 --> 0:15:30.960 get as high level chips and as high level equipment 0:15:31.120 --> 0:15:33.480 in the semiconductor industry as they possibly can. 0:15:33.920 --> 0:15:35.840 And it's pretty clear that China. 0:15:35.640 --> 0:15:39.120 Is going to be making its own investments in design capabilities, 0:15:39.120 --> 0:15:41.480 in manufacturing capabilities, and a lot of the people they 0:15:41.480 --> 0:15:44.960 have on staff right at Smith and at other locations 0:15:45.000 --> 0:15:47.160 in the design world as well as manufacturing have been 0:15:47.200 --> 0:15:49.480 trained in the US and have worked for US companies, 0:15:49.520 --> 0:15:51.240 so they have a lot of knowledge. 0:15:51.000 --> 0:15:51.600 To work with. 0:15:51.720 --> 0:15:55.400 Joan All told on any metric or scale you like, 0:15:55.960 --> 0:15:59.160 what is your assessment on the warmthful health of the 0:15:59.240 --> 0:16:00.480 US China relationship. 0:16:00.520 --> 0:16:01.200 Where do we stand? 0:16:02.760 --> 0:16:06.120 Oh, well, on a scale of one to ten, one 0:16:06.200 --> 0:16:10.120 being least healthy, I'd say we're around a three right now. 0:16:10.240 --> 0:16:14.480 I mean, it is not a good place because of 0:16:14.520 --> 0:16:16.280 our goals in the. 0:16:16.320 --> 0:16:22.000 US to prevent China from you know, creating military capabilities 0:16:22.000 --> 0:16:24.920 that would be a threat to US are essentially in 0:16:25.000 --> 0:16:27.920 conflict with China's goals and that level of tension. 0:16:28.680 --> 0:16:30.640 You know, I'm not a military a political. 0:16:30.320 --> 0:16:32.600 Expert, but I don't see that level of tension easy 0:16:32.680 --> 0:16:35.160 from everything I've read, that's not going to really get 0:16:35.200 --> 0:16:39.240 any better. Can we cooperate on fronts outside of those 0:16:39.280 --> 0:16:42.320 sensitive areas, Yes, obviously, and we should, you know, hope 0:16:42.320 --> 0:16:44.600 for the sake of our companies and our consumers, by 0:16:44.600 --> 0:16:46.840 the way, who benefit from getting cheaper goods out of China, 0:16:47.400 --> 0:16:51.560 that the restrictions don't spread beyond those essential areas. 0:16:51.280 --> 0:16:54.680 Where the US finds, you know, it's needed for our security, 0:16:55.560 --> 0:16:56.760 and clearly that's the case. 0:16:56.760 --> 0:16:59.120 I mean, what Nvidia continues to sell, Look at what 0:16:59.160 --> 0:17:00.800 other companies can take you to be able to sell, 0:17:00.800 --> 0:17:04.600 whether it's Tokyo Electron or Applyed Materials or KOA or 0:17:04.640 --> 0:17:05.320 LAMB Research. 0:17:05.480 --> 0:17:07.600 Right, there's still plenty of opportunity in China. 0:17:07.720 --> 0:17:10.119 It's just a bit narrower now, a bit lower margin 0:17:10.359 --> 0:17:11.560 now than it was before. 0:17:12.840 --> 0:17:15.320 The US China relationship on a three out of ten 0:17:15.960 --> 0:17:18.840 on the Juan Feeni Advisors Capital Management Scale. 0:17:18.840 --> 0:17:19.840 Thank you so much for your time. 0:17:19.840 --> 0:17:23.760 Going to catch up here on Bloomberg Technology. 0:17:29.880 --> 0:17:30.880 Time for talking tech. 0:17:31.040 --> 0:17:35.080 Chinese chip makers are speeding up investments in mature semiconductor 0:17:35.119 --> 0:17:39.040 equipment as the US and its allies Titan Export controls to. 0:17:39.040 --> 0:17:40.639 Cut Asia's tech edge. 0:17:40.680 --> 0:17:44.960 Asia's biggest semiconductor gear maker is seeing extremely strong investment 0:17:45.000 --> 0:17:47.679 in China quote and is winning new customers there. That 0:17:47.800 --> 0:17:51.240 all according to the name Tokyo Electron and its CEO. 0:17:51.320 --> 0:17:53.000 And something else we're tracking is Ali. 0:17:52.800 --> 0:17:56.600 Barber returning to growth across all its main divisions, defying 0:17:56.680 --> 0:17:59.639 China's economic turbulence. This a first step forward to a 0:17:59.640 --> 0:18:02.440 long or comeback after more than a year of malaise. 0:18:02.720 --> 0:18:06.280 China's online shopping leader reported a better than expected fourteen 0:18:06.359 --> 0:18:09.480 percent rise in revenues during a quarter when the world's 0:18:09.520 --> 0:18:13.040 number two economy struggle to gain momentum after years of 0:18:13.080 --> 0:18:16.359 COVID zero restriction shares up more than five percent in 0:18:16.480 --> 0:18:17.320 US trading today. 0:18:17.359 --> 0:18:21.000 Those are the US listed ADRs. Let's head to Space 0:18:22.440 --> 0:18:25.240 three two one release release release. 0:18:27.720 --> 0:18:31.320 That's the first set of private tourism passengers embarking on 0:18:31.680 --> 0:18:34.439 the ride of a lifetime two out of space on 0:18:34.600 --> 0:18:38.600 Virgin Galactic's second commercial spaceflight, joining us now. 0:18:38.680 --> 0:18:40.360 Bloomberg News reporter on. 0:18:40.359 --> 0:18:46.080 All Things Space, Lauren grush Hey seventh successful launch. Finally, 0:18:46.520 --> 0:18:50.400 twenty years later, Virgin Galactic gets some tourists into space. 0:18:50.440 --> 0:18:51.320 Give us the details. 0:18:52.119 --> 0:18:53.880 Yeah, I mean, if you think about it, really has 0:18:53.960 --> 0:18:54.960 been leading to this moment. 0:18:55.000 --> 0:18:57.120 I know I probably said that during their last flight, 0:18:57.480 --> 0:19:00.359 but this is the one that sent private pain space 0:19:00.440 --> 0:19:04.160 tourists to space, and that is ultimately why Virgin Galactic 0:19:04.240 --> 0:19:07.080 was founded in the first place, nearly twenty years ago. 0:19:07.200 --> 0:19:10.320 In fact, one of the passengers on today's flight, John Goodwin, 0:19:10.640 --> 0:19:13.960 has been waiting almost two decades, He's had his ticket 0:19:14.080 --> 0:19:16.000 that long, and he finally got to make good on 0:19:16.040 --> 0:19:19.040 that promise that Virgin Galactic made for him all. 0:19:18.960 --> 0:19:19.680 Those years ago. 0:19:20.040 --> 0:19:22.359 So this is why it was such a big moment. 0:19:22.400 --> 0:19:25.440 It's capping off nearly two decades of development for the company, 0:19:25.720 --> 0:19:27.879 and from here on out it's going to be monthly 0:19:27.920 --> 0:19:31.520 flights of these paying space tourists hereafter. 0:19:33.400 --> 0:19:35.959 So there's some things we have to clarify here. Originally 0:19:36.000 --> 0:19:38.600 ticket prices were two hundred and fifty thousand dollars, right, 0:19:38.680 --> 0:19:42.800 they closed them while they basically put a pause on operations. 0:19:42.840 --> 0:19:45.360 When they reopened they rose to four hundred and fifty. 0:19:45.080 --> 0:19:46.639 Thousand on board. 0:19:46.720 --> 0:19:51.560 We had three essentially customer tourist astronauts, but two of 0:19:51.600 --> 0:19:52.119 them were. 0:19:52.000 --> 0:19:53.119 Not paying customers. 0:19:53.200 --> 0:19:53.360 Right. 0:19:53.760 --> 0:19:56.120 They won these tickets in a charity draw. 0:19:57.840 --> 0:19:58.719 Yes, that's correct. 0:19:58.880 --> 0:20:01.280 Only John was really the that was one of the early. 0:20:01.119 --> 0:20:05.840 Ticket holders, and he competed at the nineteen seventy two Olympics. 0:20:06.200 --> 0:20:08.000 The big question is what happens next. What do we 0:20:08.040 --> 0:20:10.400 know about the cadence of launches now the last one 0:20:10.440 --> 0:20:11.920 was in June one today? 0:20:12.520 --> 0:20:13.360 How do they get going? 0:20:14.200 --> 0:20:17.600 So the ideal goal is to do monthly launches from. 0:20:17.400 --> 0:20:18.080