WEBVTT - Elon Musk Sues Apple, US Takes Intel Stake 0:00:02.560 --> 0:00:12.960 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live 0:00:13.000 --> 0:00:16.799 from coast to coast with Caroline Hyde in New York 0:00:17.079 --> 0:00:19.080 and ever though in San Francisco. 0:00:21.160 --> 0:00:22.799 This is Bloomberg Tech coming up. 0:00:22.840 --> 0:00:25.720 The US takes nearly ten percent stake in Intel, and 0:00:25.800 --> 0:00:28.960 President Trump's celebrating that he got it for zero. What 0:00:29.080 --> 0:00:31.640 this means for future deals? Plus, the President of South 0:00:31.720 --> 0:00:34.160 Korea heads to the White House with tech leaders from 0:00:34.200 --> 0:00:38.080 Samsung and s k Heinez details on that meeting and 0:00:38.159 --> 0:00:39.400 gaming gets patriotic. 0:00:39.440 --> 0:00:41.000 Why the Esports World Cup. 0:00:40.840 --> 0:00:44.920 Foundation has announced a new bi annual tournament for nations. 0:00:45.280 --> 0:00:47.240 But first, let's check in on these markets. Let's just 0:00:47.320 --> 0:00:49.360 check in on Intel, because that is the stock that's 0:00:49.360 --> 0:00:50.720 on the move. They want to keep an eye out. 0:00:50.800 --> 0:00:53.840 General Benchmark's flat, but Intel up more than two percent. 0:00:53.880 --> 0:00:55.680 We were in the red just for a moment. 0:00:56.000 --> 0:00:58.120 But now we get the real devil in the details 0:00:58.120 --> 0:01:01.000 of what that almost ten percent stake looks like from 0:01:01.040 --> 0:01:03.800 the government and the president seeming to feel that he's 0:01:03.800 --> 0:01:06.480 got it for zero. Let's get into the details. Because 0:01:06.520 --> 0:01:08.680 I'm peace to say Miuch Shepherd is with us, of course, 0:01:08.720 --> 0:01:11.600 who really helps lead our coverage of the intersection of 0:01:11.680 --> 0:01:14.720 technology in Washington and Mike. It is interesting that, of 0:01:14.720 --> 0:01:17.880 course the money comes from that that was already promised 0:01:17.920 --> 0:01:20.320 to Intel. Remind us of the detail of the deal. 0:01:21.680 --> 0:01:24.680 Well, so in the broad strokes, it's a nearly ten 0:01:24.720 --> 0:01:28.280 percent stake totally more than four hundred million shares going 0:01:28.319 --> 0:01:30.960 to the US government in this CARA is an exchange 0:01:31.000 --> 0:01:33.640 for what has not yet been spent out of the 0:01:33.720 --> 0:01:36.520 grant money that was to go to Intel through the 0:01:36.640 --> 0:01:39.360 Chips and Science Act. Remember this is the law that 0:01:39.520 --> 0:01:43.600 was passed under President Joe Biden designed to spur domestic 0:01:43.680 --> 0:01:48.280 chip manufacturing, helping makers like Intel, but others including TSMC 0:01:48.680 --> 0:01:53.200 and Samsung as well get fabs and plants up and 0:01:53.320 --> 0:01:56.720 running here in the US. Now, Donald Trump is talking 0:01:56.760 --> 0:02:01.120 about this as really the US government getting something for nothing, 0:02:01.200 --> 0:02:03.880 although if you think about it, that's almost eight point 0:02:04.000 --> 0:02:08.760 nine billion in unspent Chips Act money, and so there 0:02:08.919 --> 0:02:11.640 is a little bit of something in there. Many are 0:02:11.680 --> 0:02:16.560 looking upon this CARA is really an unprecedented intervention in 0:02:16.760 --> 0:02:19.760 a company, especially when you think about how sacro san 0:02:20.160 --> 0:02:23.119 these principles of the free market have been not only 0:02:23.160 --> 0:02:26.600 for Republicans but for Democrats too. And how it has 0:02:26.680 --> 0:02:30.760 been looked on with really some skepticism Simpson. Last week 0:02:30.800 --> 0:02:35.559 we interviewed former Vice President Mike Pence and former Obama 0:02:36.320 --> 0:02:41.640 former Biden rather economic director Lael Brainerd on successive days 0:02:41.639 --> 0:02:45.160 and each express their own misgivings and skepticism about the 0:02:45.200 --> 0:02:48.840 president of the US government intervening in a company without 0:02:48.880 --> 0:02:50.600 a crisis actually unfolding. 0:02:51.400 --> 0:02:55.160 Many though, would frame it from the administration's side that 0:02:55.280 --> 0:02:58.560 this is a focus on national security, that this is 0:02:58.560 --> 0:03:01.200 a crisis for Intel to be able to be and 0:03:01.280 --> 0:03:04.560 turn it around as a national winner of manufacturing. 0:03:04.919 --> 0:03:06.600 But will government intervention do that? 0:03:06.760 --> 0:03:10.520 Mike, Well, that's a great question, Caro, And really that 0:03:10.639 --> 0:03:12.400 is how they framed it. They didn't quite use the 0:03:12.480 --> 0:03:16.000 crisis word, but they did stress the urgency on the 0:03:16.120 --> 0:03:20.519 national security side of having a US flag company leading 0:03:20.560 --> 0:03:23.760 the way when it comes to chip production. And curiously, 0:03:23.840 --> 0:03:26.480 in the announcement, one thing was missing, and that was 0:03:26.720 --> 0:03:29.320 mentioned of the new plant in Ohio that you and 0:03:29.360 --> 0:03:31.480 I have talked about a lot, and this is the 0:03:31.520 --> 0:03:34.600 one that has been planned by Intel as part of 0:03:34.600 --> 0:03:37.320 its revival, the one that was started under the former 0:03:37.400 --> 0:03:41.240 chief executive officer, Pac Gelsinger and It was really destined 0:03:41.280 --> 0:03:43.880 to be a flagship of that effort, but it has 0:03:43.920 --> 0:03:47.120 since been delayed and this is a massive undertaking. It 0:03:47.120 --> 0:03:49.760 has been pushed back into the next decade, and they 0:03:49.840 --> 0:03:54.400 really need this underway to put Intel really back into 0:03:54.440 --> 0:03:57.080 the running when it comes to making those kinds of 0:03:57.120 --> 0:03:58.000 advanced chips. 0:03:58.160 --> 0:03:59.440 Their biggest challenge. 0:03:59.200 --> 0:04:02.080 Right now, Caro is finding the customers to be able 0:04:02.120 --> 0:04:06.080 to sustain such a massive investment in that Ohio plan, 0:04:06.320 --> 0:04:08.560 and right now they don't quite have enough. And the 0:04:08.680 --> 0:04:12.440 interesting wrinkle in this is that Donald Trump, by taking 0:04:12.960 --> 0:04:15.360 leading the US government into taking the stake in a way, 0:04:15.480 --> 0:04:19.520 positions himself as CEO of everything. And this is a 0:04:19.600 --> 0:04:23.640 role he has liked to play. He has relished pushing 0:04:23.680 --> 0:04:26.680 companies into expanding their investments in the US. 0:04:26.720 --> 0:04:28.039 We've seen it on the tech front, and. 0:04:28.000 --> 0:04:30.840 We start just a few weeks ago with Apple and 0:04:31.279 --> 0:04:35.039 expanding their investments in the US. So will he take 0:04:35.120 --> 0:04:37.360 some sort of a more active role in trying to 0:04:37.440 --> 0:04:41.599 drum up customers to help Intel. And it's CEO Lip 0:04:41.640 --> 0:04:44.359 Bhutan who Trump has met in recent weeks at the 0:04:44.360 --> 0:04:47.240 White House and really was the one who Trump was 0:04:47.279 --> 0:04:50.279 able to persuade to have this exchange of a stake 0:04:50.440 --> 0:04:52.640 in exchange for chips act money. 0:04:52.480 --> 0:04:55.640 Mike Shephard bringing us through what is an unprecedented piece 0:04:55.680 --> 0:04:56.040 of news. 0:04:56.040 --> 0:04:57.320 We thank you now. 0:04:57.520 --> 0:05:01.680 In video potentially could be a future buyer of Intel's 0:05:01.720 --> 0:05:04.359 made chips. But all eyes are on Video more importantly 0:05:04.400 --> 0:05:07.359 for its earnings coming out Wednesday, when the investors seeing 0:05:07.440 --> 0:05:09.599 it is a key test of boarder AI impact on 0:05:09.680 --> 0:05:13.120 demand for more briber Gequity's reporter common Ranicky is here 0:05:13.120 --> 0:05:15.880 with us. It is the bell weather in many ways, 0:05:16.200 --> 0:05:19.000 but analysts in particular have got excited about what the 0:05:19.040 --> 0:05:21.120 revenue could look like coming for this fiscal quarter. 0:05:21.600 --> 0:05:22.600 Yeah, that's really true. 0:05:22.640 --> 0:05:24.880 I mean it's something that we see actually kind of 0:05:24.960 --> 0:05:28.280 cyclically around earnings that analysts boost sort of their price 0:05:28.360 --> 0:05:31.240 targets for companies ahead of the results. We sort of 0:05:31.279 --> 0:05:33.120 rally up to them and everything kind of resets, And 0:05:33.200 --> 0:05:36.000 in the last week we had at least nine analysts 0:05:36.040 --> 0:05:39.200 increase their price targets for Nvidia. So they see upside 0:05:39.200 --> 0:05:41.520 at least over the next twelve months. They're excited going 0:05:41.560 --> 0:05:44.200 into this report, and you're right, I mean, revenue growth 0:05:44.360 --> 0:05:46.880 is the thing that everybody is always watching within Vidia. 0:05:46.920 --> 0:05:48.480 They put up incredible numbers. 0:05:48.480 --> 0:05:53.160 I think this quarter, analysts are expecting revenue to jump 0:05:53.240 --> 0:05:56.760 forty eight percent from last year forty six billion dollars. 0:05:56.800 --> 0:05:59.080 That is just, you know, it's not something that we 0:05:59.120 --> 0:06:00.600 see every day. 0:06:00.480 --> 0:06:02.760 Certainly for a four trillion dollar company exact, and you're 0:06:02.760 --> 0:06:05.120 expecting more than fifty percent growth in earnings per share. 0:06:05.720 --> 0:06:09.480 Many though, would question China as the area of concern. Look, 0:06:09.480 --> 0:06:12.840 we're just talking about President Trump having unprecedented impact on businesses, 0:06:12.880 --> 0:06:16.640 and that deal to sell eight twenties is unprecedented, and 0:06:16.680 --> 0:06:17.520 we're warned about. 0:06:17.279 --> 0:06:20.080 Demand totally, and I think that's something that analysts are 0:06:20.120 --> 0:06:22.160 and investors are really going to be listening to on 0:06:22.240 --> 0:06:27.000 the call what Jensen says about China demand, what total 0:06:27.040 --> 0:06:29.560 market they're forecasting that they're. 0:06:29.360 --> 0:06:30.640 Going to be able to see. 0:06:30.760 --> 0:06:34.400 I think people hadn't they hadn't factored in China revenue 0:06:34.480 --> 0:06:36.800 maybe in the next few quarters. Right, we know that 0:06:37.160 --> 0:06:38.560 things are sort of up in the air there, But 0:06:38.880 --> 0:06:42.000 going through fiscal twenty twenty seven twenty twenty eight for Nvidia, 0:06:42.240 --> 0:06:44.679 that's something that everybody hoped was going to come back online. 0:06:44.720 --> 0:06:45.760 And so even though it's not a. 0:06:45.760 --> 0:06:47.720 Huge part of their overall revenue. I think it's about 0:06:47.760 --> 0:06:50.840 fifteen percent, maybe a little bit less. It's going to matter. 0:06:51.040 --> 0:06:53.560 You know that it's a big market, and I mean 0:06:53.560 --> 0:06:56.480 if it goes to zero, you know, that's a considerable. 0:06:56.000 --> 0:06:58.280 Hit, and it's going to matter as we question AI 0:06:58.400 --> 0:07:00.000 valuations more broadly across the space. 0:07:00.320 --> 0:07:02.240 It's great to have come and ran unicate. We thank you. 0:07:02.279 --> 0:07:03.600 It's a very well read piece. 0:07:03.600 --> 0:07:06.760 Today, let's get broader, investor take bringing Erin Brown, managing 0:07:06.760 --> 0:07:09.400 director and portfolio manager at Pimco, and just bring us 0:07:09.440 --> 0:07:12.760 the context of last week prior of course to Jackson 0:07:12.800 --> 0:07:15.600 Hole and euphoria, or on Friday, we were worried about 0:07:15.720 --> 0:07:17.920 overall frothy valuations in the area of AI. 0:07:18.040 --> 0:07:19.560 Is in video going to be a key test on that? 0:07:20.680 --> 0:07:21.280 I think it is. 0:07:21.320 --> 0:07:23.400 I mean, I think that really is keeping the market 0:07:23.480 --> 0:07:25.960 right now with respect to the AI trade on pause, 0:07:26.120 --> 0:07:29.080 waiting for more news from the video to see what 0:07:29.160 --> 0:07:32.480 earning bears and really to see if they've been able 0:07:32.520 --> 0:07:37.200 to continue to grow into what are really lofty growth numbers. 0:07:37.280 --> 0:07:40.920 You certainly seen AI come under pressure as the market's 0:07:40.960 --> 0:07:44.640 been rallying to new highs but broadening out outside of AI, 0:07:44.840 --> 0:07:47.200 and so Navidia, I think is front and center for this, 0:07:47.840 --> 0:07:49.920 at least for the market this week with respect to 0:07:49.920 --> 0:07:50.880 the AI trade. 0:07:51.600 --> 0:07:55.640 Have you questioned anything fundamentally though that changed in the 0:07:55.720 --> 0:07:59.120 last week when we suddenly were awash with concerns about 0:07:59.480 --> 0:08:02.880 MIT writings or whether Sam Altman's soula bubble or not. 0:08:04.200 --> 0:08:04.400 Yeah. 0:08:04.400 --> 0:08:08.640 I think the MIT research note really lay bare the 0:08:08.680 --> 0:08:13.960 fact that right now implementation and adoption is really critical 0:08:14.000 --> 0:08:18.080 in terms of enterprise integration, being able to appropriately adopt 0:08:18.120 --> 0:08:24.400 these models into the enterprise environment. And so with the 0:08:24.520 --> 0:08:27.239 I think the MIT paper was a little bit misunderstood 0:08:27.320 --> 0:08:30.680 in that yes, they're saying that only five percent are productive, 0:08:30.680 --> 0:08:34.920 but where they see the real hindrance is not with 0:08:35.000 --> 0:08:39.000 the models themselves, but rather with enterprises being able to 0:08:39.200 --> 0:08:45.240 implement effectively those models into their software environments. And so 0:08:45.480 --> 0:08:47.800 what I think is really key for the next leg 0:08:47.920 --> 0:08:51.040 for AI adoption and growth is going to be the 0:08:51.080 --> 0:08:55.040 software companies and the implementers that are able to take 0:08:55.080 --> 0:09:00.640 these effective CHAT, GBT or other models and enter and 0:09:00.760 --> 0:09:05.439 integrate them into the business environment. And so software companies 0:09:05.480 --> 0:09:07.880 that can do that effectively are really going to be 0:09:07.920 --> 0:09:09.720 the winners I think in the next leg of this 0:09:09.800 --> 0:09:11.120 AI trade. 0:09:10.960 --> 0:09:13.520 We got worried about into it or workday earnings. At 0:09:13.520 --> 0:09:15.280 the end of last week, we've been worried about some 0:09:15.320 --> 0:09:17.599 of the European players. SAP has been under pressure and 0:09:17.679 --> 0:09:19.560 others as we worried about software. 0:09:19.240 --> 0:09:20.400 Sort being eaten by AI. 0:09:20.960 --> 0:09:23.960 But then on the flip side, a Palenteer, ultimately a 0:09:24.000 --> 0:09:27.160 software company, has been the best performing company of the year. 0:09:27.400 --> 0:09:29.520 Even with some of the recent selloff. 0:09:29.920 --> 0:09:32.719 Do you generally think that software is getting beaten up 0:09:32.760 --> 0:09:34.680 too much or do you think companies are able to 0:09:34.679 --> 0:09:35.760 embrace and pivot with AI. 0:09:36.880 --> 0:09:39.160 I think right now we're really seeing the winners and 0:09:39.200 --> 0:09:43.520 the losers, and the bifurcation of the winners and losers 0:09:43.559 --> 0:09:48.240 in the software environment. Companies that are like Palenteer, that 0:09:48.280 --> 0:09:52.319 have been really effectively able to deploy AI, use it 0:09:52.400 --> 0:09:56.040 and then deliver it effectively to their customers are the 0:09:56.080 --> 0:09:58.360 winners right now in this environment, and I think are 0:09:58.400 --> 0:10:01.000 going to persist to be the win I think the 0:10:01.040 --> 0:10:04.040 companies that are being left behind and the laggards right 0:10:04.080 --> 0:10:07.400 now are the companies where Palenteer is sort of eating 0:10:07.400 --> 0:10:11.760 their lunch and taking you know, business from them, and 0:10:11.840 --> 0:10:13.960 so you know there's going to be winners and losers 0:10:14.000 --> 0:10:18.440 in any environment when you see these disruptions occur. But 0:10:18.600 --> 0:10:22.079 right now we're really seeing sort of the fight of it. 0:10:22.400 --> 0:10:25.959 But I think broadly speaking, as a as an industry group, 0:10:26.040 --> 0:10:31.040 software should be the ones that are implementing AI into 0:10:31.480 --> 0:10:36.240 enterprise environments and being able to grow into what I 0:10:36.240 --> 0:10:38.760 think is a greater demand environment going forward. 0:10:39.000 --> 0:10:41.079 We're moved on from just the picks and. 0:10:41.040 --> 0:10:44.400 Shovels of AI and now really looking to the deployment 0:10:44.440 --> 0:10:48.400 stage and the monetization stage, and that's where software should 0:10:48.440 --> 0:10:49.080 really shine. 0:10:49.200 --> 0:10:51.120 And video is the picks and shovels. It's the key 0:10:51.160 --> 0:10:54.000 tests this week in terms of earnings. What are you 0:10:54.080 --> 0:10:57.360 hearing in terms of well, the depreciation of the assets 0:10:57.360 --> 0:10:59.400 that ultimately in video is selling to all of these 0:10:59.480 --> 0:11:02.440 hyper scale it's whether demand goes, but how long are. 0:11:02.320 --> 0:11:04.000 They sticking around? Have you managed to sort of model 0:11:04.040 --> 0:11:04.840 that out? 0:11:05.800 --> 0:11:09.920 No, I mean not explicitly in terms of modeling it out, 0:11:09.960 --> 0:11:12.560 but I think right now we're still in very early 0:11:12.600 --> 0:11:15.120 stages of this, and so I think there still is 0:11:15.280 --> 0:11:18.640 quite a long runway for the video chips. But you 0:11:18.720 --> 0:11:21.760 are seeing that, you know, with we're seeing you know, 0:11:21.840 --> 0:11:24.600 good scale adoption. But we're also seeing a lot of 0:11:24.600 --> 0:11:27.400 innovation and that should really just keep demand, you know, 0:11:27.520 --> 0:11:30.880 pretty robust for the picks and shovels as we continue 0:11:30.920 --> 0:11:35.720 to innovate, you know those, you know, the the entry 0:11:35.760 --> 0:11:37.720 trips into the AI space. 0:11:38.679 --> 0:11:42.120 Amon Brown, really great context, digging deep in tech. We 0:11:42.160 --> 0:11:44.680 so appreciate it for any manager over at PIMCO. 0:11:44.840 --> 0:11:45.200 Thank you. 0:11:45.840 --> 0:11:48.080 Meanwhile, we've had some breaking news and it all surrounds 0:11:48.080 --> 0:11:50.560 big players in AI and it's in fact Enal Muskus 0:11:50.640 --> 0:11:55.480 suing Apple and open Ai over an alleged arrangement on 0:11:55.559 --> 0:11:58.400 its iPhone. Of course, open Ai has been in some 0:11:58.440 --> 0:12:00.800 ways integrated within Apple offerings. 0:12:01.040 --> 0:12:02.439 Elon Musk taking issue with that. 0:12:02.480 --> 0:12:06.040 He took his fight to X last week, concerned about 0:12:06.080 --> 0:12:09.480 the rankings on Apple App Store of certain generator of 0:12:09.520 --> 0:12:12.880 AI products and feeling that X doesn't get enough love there. 0:12:13.280 --> 0:12:14.920 We'll dig deep on that story. We're still out four 0:12:14.960 --> 0:12:17.600 tenser percent on Apple. Coming up, though, we're going to 0:12:17.600 --> 0:12:18.880 be talking more trade, joined. 0:12:18.640 --> 0:12:21.200 By Gano Globals Eliza Tobin and what. 0:12:21.120 --> 0:12:23.360 To expect from a meeting between Donald Trump and President 0:12:23.360 --> 0:12:25.560 of South Korea and it's tech giants. 0:12:26.000 --> 0:12:27.400 This is Bloomberg Tech. 0:12:37.640 --> 0:12:40.760 South Korean President nij Mung is said to read with 0:12:40.920 --> 0:12:43.640 President Trump at the White House today. In focus will 0:12:43.679 --> 0:12:46.280 be South Korea's three hundred and fifty billion dollar pledge 0:12:46.360 --> 0:12:48.640 for projects in the United States, announced a month ago, 0:12:48.960 --> 0:12:52.959 but pretty few details on what actually is known. Meanwhile, 0:12:53.000 --> 0:12:56.480 several Korean firms already have existing US investment plans. Samsung 0:12:56.559 --> 0:12:59.120 planning for a multi billion dollar semiconductive plant in Texas, 0:12:59.200 --> 0:13:01.240 or hi nd I when it's twenty one billion dollar 0:13:01.240 --> 0:13:04.120 pledge to expand future industries and ev charging production, or 0:13:04.160 --> 0:13:07.560 even TSMC when this one hundred billion dollar investment in 0:13:07.640 --> 0:13:11.000 US chip manufacturing operations present LYE will be joined by 0:13:11.000 --> 0:13:13.040 the leaders of some of those companies in today's meeting. 0:13:13.320 --> 0:13:15.960 That's bringing in e Lisotobin, imagined, director of Ghano Global, 0:13:16.000 --> 0:13:19.160 who can help break down ultimately what these sorts of 0:13:19.160 --> 0:13:22.320 negotiations look like and what perhaps if you're an equity 0:13:22.360 --> 0:13:26.080 holder in a Samsung or in a TSMC, what future 0:13:26.120 --> 0:13:26.920 deals could look like. 0:13:29.360 --> 0:13:30.959 Caroline is great to be on with you. 0:13:32.160 --> 0:13:33.960 Yeah, Li said, to talk us through as to what 0:13:34.000 --> 0:13:39.120 we anticipate. Will there be semiconductor tariffs coming this direction 0:13:39.200 --> 0:13:41.200 for certain of these companies, Will they get a carve 0:13:41.240 --> 0:13:44.040 out because they're investing so much. Will we hear anything 0:13:44.040 --> 0:13:46.920 about equity stakes being taken by leaders like the President 0:13:46.960 --> 0:13:49.040 of the United States and the US government in sentences 0:13:49.080 --> 0:13:50.160 semi conductor companies. 0:13:51.800 --> 0:13:54.280 Yeah, Caroline, you've really put your finger on it. This 0:13:54.320 --> 0:13:56.840 is what everyone is wondering. This is what we're all 0:13:56.880 --> 0:13:59.680 waiting to see. What is going to be this shape 0:14:00.080 --> 0:14:04.599 the semiconductor terriffs. These Section two thirty two tariff investigations 0:14:04.600 --> 0:14:07.600 that Commerce has been doing for months, and they keep 0:14:07.720 --> 0:14:11.079 kicking the can down the road. What's really complicating things 0:14:11.480 --> 0:14:14.240 is that these are now being kind of merged and 0:14:14.400 --> 0:14:17.920 mixed up with the ongoing trade negotiations that the United 0:14:17.960 --> 0:14:21.440 States is having with South Korea, Japan, the EU and 0:14:21.480 --> 0:14:25.040 all these other partners. And so these countries are racing 0:14:25.120 --> 0:14:28.360 to get exemptions or some kind of guarantee. 0:14:28.040 --> 0:14:30.720 Of a lower rate of tariffs. 0:14:30.800 --> 0:14:34.120 But nothing really is certain until you see that deal, 0:14:34.520 --> 0:14:37.840 that handshake in the Oval Office between Donald Trump and 0:14:37.920 --> 0:14:39.680 his South Korean counterpart. 0:14:40.680 --> 0:14:42.760 So really, looking forward. 0:14:42.520 --> 0:14:45.600 What I'm waiting to see with all the dust settling 0:14:46.000 --> 0:14:49.200 with semiconductor tariffs is how is it all going to 0:14:49.320 --> 0:14:52.160 net out? Are we going to see a distinction between 0:14:52.560 --> 0:14:56.360 China on the one side, and US trusted allies and 0:14:56.400 --> 0:15:00.640 partners on the other hand, which are trusted appliers and 0:15:00.960 --> 0:15:04.640 key parts of the semiconductor supply chain players like Samsung 0:15:04.680 --> 0:15:05.720 and s k Heinex. 0:15:06.520 --> 0:15:06.880 I'm just. 0:15:08.400 --> 0:15:10.840 I like the idea that you're calling them trusted partners 0:15:10.840 --> 0:15:14.040 and allies. And then we get the latest post from 0:15:14.120 --> 0:15:19.440 President Trump sent to seemingly the president of South Korea 0:15:19.480 --> 0:15:20.200 ahead of the meeting. 0:15:20.480 --> 0:15:22.680 What is going on in South Korea? Question mark? 0:15:22.760 --> 0:15:25.320 Seems like a purge or a revolution. We can't have 0:15:25.440 --> 0:15:29.720 that and do business there. How, leaders of countries meant 0:15:29.720 --> 0:15:32.800 to navigate what they thought as allyship when they're about 0:15:32.840 --> 0:15:35.440 to go into a meeting and receive sort of slightly 0:15:35.840 --> 0:15:37.400 confusing statements such as this. 0:15:38.960 --> 0:15:41.880 Yeah, this is not really a great sign for the 0:15:41.960 --> 0:15:46.120 upcoming talks that we're about to see. For a long time, 0:15:46.160 --> 0:15:49.360 you know, even dating back to his first term, President 0:15:49.400 --> 0:15:52.600 Trump was putting pressure on allies like the Koreans and 0:15:52.640 --> 0:15:55.800 the Japanese in particular on at least two fronts, so 0:15:55.840 --> 0:15:59.120 both trade and defense spending. He would always want to 0:15:59.160 --> 0:16:02.400 know how much are these allies paying for their own defense? 0:16:02.880 --> 0:16:05.560 As well? As what is the trade balance. 0:16:05.920 --> 0:16:08.720 So I think this is an unfortunate signal that Korea 0:16:08.800 --> 0:16:12.200 is going to be under pressure on both fronts. And again, 0:16:12.320 --> 0:16:15.120 I think when we see the dust settle of both 0:16:15.280 --> 0:16:20.040 the administration's trade negotiations as well as the semiconductor tariffs, 0:16:20.240 --> 0:16:23.520 are we going to see a distinction between China, which 0:16:23.520 --> 0:16:26.080 I think there's a bipart is in consensus that they're 0:16:26.120 --> 0:16:30.800 a threat and an adversary versus these other countries that 0:16:30.840 --> 0:16:33.920 are part of the semiconductor ecosystem that we depend on 0:16:34.800 --> 0:16:37.240 from Europe to Asia. So is there going to be 0:16:37.240 --> 0:16:39.480 a distinction or is there going to be a generally 0:16:39.680 --> 0:16:42.600 lower teror freight on the allies and partners than there 0:16:42.680 --> 0:16:45.560 is for China. I don't think anyone knows for sure, 0:16:45.960 --> 0:16:48.720 and we won't know until the Commerce Department comes out 0:16:48.880 --> 0:16:50.520 with the results of the investigation. 0:16:50.760 --> 0:16:52.400 And as I put it into the context of what 0:16:52.520 --> 0:16:55.880 did just happen officially on Friday, we've known and thought 0:16:55.920 --> 0:16:58.320 it was coming for a while. The ten percent equity 0:16:58.360 --> 0:17:03.000 stake can Intel by basically taking money already promise them 0:17:03.040 --> 0:17:06.600 by the Chips and Science Ackedlaza. This ultimately is meant 0:17:06.640 --> 0:17:09.440 to make the US less dependent on a TSMC and 0:17:09.600 --> 0:17:11.760 on a Samsung, but still in the interim we want 0:17:11.800 --> 0:17:13.160 them to build manufacturing here. 0:17:15.040 --> 0:17:19.000 Yeah, the Intel deal is really interesting, So I like 0:17:19.080 --> 0:17:22.280 to kind of zoom out and think about why does 0:17:22.320 --> 0:17:26.480 the US government care about the fate of Intel either Anyway, 0:17:27.480 --> 0:17:30.960 you know, this isn't just a normal business deal. We 0:17:31.080 --> 0:17:33.640 have to remember that the government is not a business 0:17:33.680 --> 0:17:37.040 and so we should be evaluating what's going on here 0:17:37.320 --> 0:17:39.640 not just as a business deal, but it's really more 0:17:39.760 --> 0:17:43.200 like an insurance policy. What the US government has been doing, 0:17:43.280 --> 0:17:47.400 even since the Biden administration to try to rescue Intel. 0:17:47.920 --> 0:17:51.560 So your audience will be well aware of the United 0:17:51.600 --> 0:17:56.119 States is almost entirely dependent on Taiwan on TSMC for 0:17:56.320 --> 0:18:00.320 the supply of advanced semiconductors, and that's a real problem. 0:18:00.359 --> 0:18:01.520 If we ever lost. 0:18:01.320 --> 0:18:05.919 Access to the chips, it would be economic catastrophe. So 0:18:06.840 --> 0:18:09.880 the US government sort of stepping into intervene. I think 0:18:09.920 --> 0:18:12.840 it is rational to see this as dealing with an 0:18:12.840 --> 0:18:18.199 economic emergency, so extraordinary intervention by the government is in 0:18:18.240 --> 0:18:22.679 fact required. The question I'm thinking of is, you know, 0:18:22.840 --> 0:18:26.240 is this the right kind of government intervention? And what 0:18:26.480 --> 0:18:30.280 you know in the history of industrial strategy. You know, 0:18:30.320 --> 0:18:33.760 an equity deal might not be the right play. What 0:18:34.480 --> 0:18:37.400 these firms that are kind of in strategic sectors that 0:18:37.640 --> 0:18:41.399 we can't allow to fail often need is a long term, 0:18:41.520 --> 0:18:45.080 reliable source of demand, and that's where the US government 0:18:45.200 --> 0:18:50.159 can can sometimes step in more effectively. I will just 0:18:50.240 --> 0:18:55.520 remind the audience why Intel is special. Under the CHIPSAC program, 0:18:55.560 --> 0:18:58.840 they became the steward of something called the Secure Enclave 0:18:58.920 --> 0:19:01.879 program that was set up to have kind of a 0:19:01.960 --> 0:19:05.359 minimum viable number of chips being produced here in the 0:19:05.440 --> 0:19:09.960 United States for needs like defense and national security. So 0:19:10.400 --> 0:19:12.440 it's not realistic to think we're going to rea shure 0:19:12.440 --> 0:19:15.639 the entire semiconductor supply chain, but having this goal of 0:19:15.720 --> 0:19:18.000 kind of an insurance policy to make sure we can 0:19:18.040 --> 0:19:22.040 produce at least some chips in the event of a 0:19:22.119 --> 0:19:23.840 contingency is really important. 0:19:24.280 --> 0:19:28.200 Great context Isotobin, Thank you so much, Managing director he 0:19:28.359 --> 0:19:33.480 Ghano Global el muss doing Apple and open Ai over 0:19:33.520 --> 0:19:37.040 an alleged arrangement on its iPhones, using the two companies 0:19:37.040 --> 0:19:39.920 of unfairly favoring open Ai on its smartphones and thwarting 0:19:39.960 --> 0:19:45.000 competition such as Musk's Clock. Blomberg Consumer Tech managing editor 0:19:45.119 --> 0:19:47.120 is with us Mark German, who knows the thing we'll 0:19:47.160 --> 0:19:50.399 do about Apple. I mean a threatened this earlier this 0:19:50.560 --> 0:19:52.840 month on x and now has gone through with that threat. 0:19:52.920 --> 0:19:55.399 Ultimately, couldn't do anything to the relationship. 0:19:54.880 --> 0:19:58.520 That open ai does have with Apple and vice versa. 0:19:58.640 --> 0:20:01.080 I don't see so, I mean, if they consider this 0:20:01.119 --> 0:20:04.760 an antitrust violation, that being the cord or the government 0:20:04.840 --> 0:20:06.880 or what have you. What Apple would have to do 0:20:07.320 --> 0:20:10.159 is open up what they call extensions within series. So 0:20:10.280 --> 0:20:13.439 right now, the open ai relationship is what's called an 0:20:13.520 --> 0:20:18.000 extension in Siri. If it doesn't understand one of your commands, 0:20:18.080 --> 0:20:19.760 or it doesn't have the knowledge to answer one of 0:20:19.760 --> 0:20:24.439 your commands, it uses open aist GPT as a fallback option. Now, 0:20:24.440 --> 0:20:27.920 when Apple introduced this functionality, it's said that they would 0:20:27.920 --> 0:20:31.920 have other available AI services, right and so they said 0:20:31.960 --> 0:20:34.760 that Gemini would be there. Gemini never actually came to 0:20:34.800 --> 0:20:37.320 fruition there. There's a lot more behind the scenes with 0:20:37.400 --> 0:20:41.040 the Search Engine lawsuit, working with Gemini on other facets 0:20:41.080 --> 0:20:43.360 that have gotten the way of that. But it's possible 0:20:43.359 --> 0:20:46.160 if they open this up to third parties. Allow XAI, 0:20:47.000 --> 0:20:51.000 allowed Brock, allow Claud allow different AI services in there, 0:20:51.119 --> 0:20:54.440 and that would certainly solve the issue. And Elon is right, 0:20:54.480 --> 0:20:57.000 they do give pretty hot promotion to some of the 0:20:57.040 --> 0:20:59.720 other AI companies in the app Store. They haven't done 0:20:59.720 --> 0:21:01.479