tv Bloomberg Technology Bloomberg February 22, 2022 11:00pm-12:00am EST
this. how the global ship -- chip shortage is affecting micron. president biden is ramping up sanctions. we will begin the latest from washington. we will get to all of that in a moment but first we have to have a look at the look at the markets. >> ukraine and russia is top of mind. in correction territory now. this is the longest losing streak and a month. this was against russia and
russian individuals. bitcoin, you see it right on the screen now as we go into the wednesday session. nickel, look at the bloomberg terminal. look at this chart. the white line going toward that $25,000 per ton. you can see the blue line coming down. russia is one of the biggest exporters of nickel. let's look at the big picture of what investors said about this whole situation. bank of america with a note on tuesday saying that tech stocks are in purgatory. we have rising rates, guidance.
the s&p 500 only has 0.1% sales exposure. this is one of the biggest end, area. yes the situation is worrying but investors are really focusing on the etsy market at least. >> let's get to the geopolitical story of the day. but it said that moscow had flagrantly violated international law. we have more of the privy voice that understands put in, russia and indeed the white house. tell us about the reaction to
what may be the toughest sanctions yet. >> these are not the toughest of sanctions. they can dig in and push in on russia. this is what the president called crotch one. -- not tranche -- tranche one. this would be the secondary debt market. on the diplomacy front, i want to bring in some new information. we had anthony blinken speaking alongside the canadian counterpart. he has said that now that we see the invasion, russia has made clear for cell reduction of diplomacy, it does not make sense to go forward with that meeting at this time. lincoln says they want to --
blinken wants to leave a path open to diplomacy but only when russia is serious about it. >> where is the path to be opened? what is the next up that we have to await? >> one thing scheduled was a caveat. that was the state department saying that we will all attend this meeting only if there is no further invasion of ukraine. the united states says this will infringe upon the territorial integrity and sovereignty of ukraine. i think at this moment, given the fact that the u.s. is saying this meeting is canceled, the ball is in the kremlin court. >> it is. we wait and we watch about the
market implications about energy prices and gas prices. next up, more on my exclusive interview with the micron ceo. we talked about the state of global ship making industry and how the exposure to russia and ukraine is impacting some of the supply chain already. of course, being sustained by the semiconductor industry. this is bloomberg. ♪ >> the semiconductor supply chain is highly intertwined and sometimes there can be secondary suppliers. suppliers to the suppliers. ♪
industry. it induced a radical increase in demand. you have supply chain's scaling back a bit. now we are in a position of a meaningful shortage. >> this race lead to skyrocketing. the gap hit records, in response, chipmakers are now competing to play catch up and in the process, spending bucks to increase capacity. this was part of a $150 spending plan. including many in the u.s.. they have a budget as much as 40. with hundreds of billions of dollars at stake in the coming years, the global race to expand production, some executives say despite all this money and
effort, it still may not be equaling demand. >> our industry, including global offenders will be chasing capacity to meet not only demand in front of us today but growing demand. >> as copies go all in and move ships to the center of the table. >> i got to extend that conversation on all things chips. that was right here at the company's headquarters in boise, idaho and we talk about everything from chip crisis to supply chain issues to innovation and the 49,000 patents that they have here. i asked if there was a light in particular for the supply chain headaches at the end of the tunnel. there is what he had to say. -- here is what he had to say.
>> part of the work that we were doing -- working on the suppliers and their suppliers. of course, covid presented an unprecedented level of challenges. our teams were extremely agile and adaptive in terms of responding to those challenges and i am very proud of our global supply chain officials and how they tackled those. they'd managed the mix. while we see that, we are
continue to see improvements in certain categories. the mean of improvement is behind what we were hoping for. however, we are continuing to work with our suppliers, with our partners. some of these supply chain shortages, these are common to the industry. this there is a lot of focus on the entire ecosystem on the part of the industry for these situations. >> so many of the fans needed to meet demand.
do you think these incidents might continue to occur? >> you are seeing the world's leading r&d facility. also, here in the u.s. as well. with the example that you gave of other suppliers of memory that have recently been hit and certain production challenges, what is important to realize is -- semiconducting -- semiconductor production is highly reliable. we produce several million per
year. also, tremendous attention to detail to monitor many parameters. there are parameters being controlled, constantly monitored at all times. >> and that you are a man that has been speaking to the administration. they see the supply chain issues. is that enough to make you filled us again in the u.s. even more?
in the long term, it is particularly important. just as covid has shown. we need to have a diversified supply chain. we have announced a plan for for that hundred $50 billion -- more than $150 billion in investment. this will be important to have the necessary support from government to work on the other 45% that exists. also, micron has been investing here. we are investing at record
evolving venture-capital space that is developing in boise away from silicon valley and away from new york. the co-founder is also the managing partner in early-stage venture capital funds with an office right here in boise. talk to us about what attracted you. why bring the capital to this ecosystem? >> our first fund was in seattle. one of the things that we noticed is investing in big major tech buddies was starting to become cost prohibitive. we started in boise and idaho and nevertheless, we really found that the strength of the region was already here. there was something of an
underground railroad of people migrating from silicon valley to idaho. microsoft helped create the tech ecosystem in seattle and austin and so on and so forth and we have micron right here in idaho. that was one of the important characteristics for us to come. and then with governor little's leadership, they have a really stable business environment. >> talk to us about geo fund 23 investments. what sort of companies are being built here that her head and shoulders above the rest? >> our focus is in getting company's from commercialization
getting funded through series a and series b. if you can do that, you have a really good chance for success. the same companies you are seeing in other established tech ecosystems can be developed right here from the cybersecurity companies. they just raise -- raise this out of new york. this is all-white to the fintech companies. kind of the same broad swaths that you will find it bigger tech ecosystems. they are reaching out or wanting to move here to start the companies. it is really exciting. there is a lot of academia right here in boise. >> it is a combination of both.
we could not have protected the pandemic but that helped. i like to say that idaho used to be a flyover state. think it is now a flight to stay. we had entrepreneurs that have moved here and are thriving here. it is a great combination of finding a portable place to be able to grow your business. crisis suddenly faces like austin and boise are becoming more expensive. does that become a hindrance or is it ok? >> i think the delta change from salt lake, it all changed. it is as hot here as anywhere in the country. but your day-to-day living, it
takes that to start a business and grow a business. it is very advantageous to be here. it is not just your company and idaho. it is providing a great place for employees to have a nice worklife balance. review idaho as being geographically and between the pacific northwest, silicon valley and the rest of the west. it is 1.5 hours to san francisco and an hour to seattle. it is not just the overall cost arbitrage. >> what do you think about more venture-capital coming? >> we are hoping so.
we invest in by practitioner or for practitioner entrepreneurs. we think that is happening. when you see all of these companies coming here and writing sizable checks in the region, that helps get the supply going. not only for the entrepreneurs but for other venture capitalists. we think that is coming. >> we thank you, co-founder of the managing partner. meanwhile, coming up, i will be joined by the vp of micron's dram crisis -- price integration. we have a list of the patents being built on average coming out of micron.
>> this is bloomberg technology. i am caroline hyde. in boise, idaho. let's get back to the markets. we will have a check on the day chipped news in particular. >> if you look across the philadelphia semiconductor index, there is only one name on tuesday that was in the green and that was advanced micro devices. the fed is slowly better than the broader market. still down nonetheless.
bernstein turning bullish on the stock to the first time in a decade, bringing outperformed rating from a market born rating. they basically said we got it wrong. we were late to the game and there was another milestone close. and he closed with a market value of 188.3 billion dollars. why is that significant? it gives it a market cap greater than intel. this has been the story. they have really outperformed intel over the past 12 months because it has also outperformed in the industry, stealing market share in that highly competitive space. analysts say this is one to watch. there is this bigger picture we stoke about -- spoke about earlier. companies sever from this idea of stretch valuations.
bernstein saying that if you look at how the philadelphia semiconductor industry has performed your today or even the nasdaq 100, you can see the s&p 500, the philadelphia semiconductor index has really underperformed. there was incredible outperformance, such a big run-up. >> a great breakdown. let's keep on the subject of the chip space. we want to talk about the focus on memory chips. i am joined by the vice president. great to have some time with you. where micron has finished to dominate and survive and become one of the few has been in the memory space. what is it now that you are doing to differentiate yourself? everyone says it is multiplying space but it is not.
>> we basically develop our memory technologies to be industry leaders and we do that to provide a wide >> ability for product portfolios and we continue to shrink so that we can reduce the cost and increase the density of our memories. >> i was just inside your r&d. it is normal. i went around to keep it clean. the machinery that is needed, just talking about the 600 different chemicals, the gases needed to produce this tiny little piece, talk to us about the interest in continuing to shrink semiconductors. >> absolutely. it has got to be so complex. it is over thousands of steps and we basically used all of the elements on the periodic table and my team takes it from paper
studies to defining the structural dimensions, the physical dimensions and electrical requirements to meet the customer requirements for market demand. you think about building billions of lego chips and trying to build the empire state building out of that and we do this day in and day out and it is virtually defect free. incredibly innovation that is required to innovate from the process developing standpoint, both of the advanced tools possible to meet all the demand out there. >> talk to us about that demand. where is it coming from? i hear a lot about data centers and autos. everyone is saying this is the same as before. there will be a boom and a bus but fundamentally, the market
has changed to stop that happening? >> if you think about our daily lives, without memory i think life would come to a screeching halt. memory is in everything we use. some of the trends show that besides the data centers and enterprise storage applications, the advanced automotive applications require ai, machine learning and we basically have to have enough faster memory, density to store all of that data and applying new technologies like 5g and iot to leverage the data and put more value to it. we will always need more edge computing. if you really want to hit it home, we basically -- with the video calls, work from home, all of the information entertainment that we need, gaming, even
telemedicine, you can never have enough the -- have enough memory. >> we talked about the intricacies earlier but what about the talent pipeline? we see you are beating up the infrastructure on the ground to talk about the united states wanting to build more locally. what about the talent to go windows? is that being built up enough in the united states? >> the challenge needs more help from all the way back to all the stem programs from elementary all the way to high school, higher education. companies also need to not only provide the funding but also sponsors and provide mentorship programs for these programs that also help underprivileged people. >> i know that is something
you're very passionate about. there was a huge company based in the united states. talk to us about your journey. >> yes. my journey is a story of survival, resilience and living the american dream. my father after the vietnam war was imprisoned by the communist government for 10 years so we had to his get from vietnam. before we made it to the u.s. and in terms of resilience, we started from scratch, we held multiple jobs, six paper routes, i don't know how many jobs during high school and college but we managed to survive and
turn setbacks into comebacks. electrical engineering was my ticket out of poverty. it started as a practical decision but along the way i learned to hone my craft and really find my groove. especially when i started at micron. i am in the zone when it comes to semiconductors. i am very grateful to be where i am today. for the people that have helped me throughout my experience. >> are really powerful story. but the rest of your colleagues -- what are they look like? i know that coming from india, you coming from outside the u.s., how are you making sure the talent pool is so rich, diverse and does not look like what a lot of people envision silicon valley to look like? >> talent attracts talent. we have a talented team here. this is the global team but we have a lot of global technology development here in boise.
in order to attract talent, we need to also offer opportunities for growth and leadership and our innovative powers. as you saw what our patent wall, 48,500 patents to date, we foster an environment with innovation where people really thrive in terms of their career development. >> thank you so much. what a story. coming up, sitting down with boise's mayor to talk about all of this, chipmaking, more on that next, this is bloomberg. ♪
>> i am here in boise, idaho at the micron headquarters. that's look at the crypto markets now for our crypto report. >> let's look at where crypto has gone over the last day or so. we did start to get a little bit of lift in crypto prices over one day after five straight days of declines. but if you look at that price, that still has not reached $38,000 and it is still on the decline right now. down over the last two ways -- over the last two days. even with the most recent bid, you're not seeing much of arise. if you look at the drawdown we
have seen in bitcoin, you are seeing that not only have you had a 10 day decline here over the past 10 days of bitcoin trading, you have had a significant drawdown from last year over the highs of bitcoin. we have gone from almost 70,000 two 44% drawdown. look at just what that means. the drawdown is not the worst we have seen in the last year but it is among the worst we have seen from those highs we were talking about just a moment ago. let's see if this means if we are finding a floor in -- finding a floor or if there will be ways to go. >> we love it. thank you so much on the crypto update. let's get you back up-to-date with boise. right here in idaho, my colleague managed to have a good
chat with the mayor about how the chip industry is affecting the city's job markets. >> what we have done here in boise throughout the last two decades is create a community that welcomes everyone and supports the technology sector that makes the jobs available. i moved here right out of college. this was the technology space that recruited -- ever since my husband and i moved here. the technology sector has grown here as well. >> give us a sense for all of us that are not all that familiar with boise. what is the attraction for companies like that? why are they choosing their versus other major coastal hubs? >> we have a community that really welcomes everyone and micron in particular has helped lead the way when it comes to creating an inclusive community.
we have a beautiful clean river, open space. also, important, growing economic opportunities as the tech space continues to grow. whether it be small companies that started in the last 10 years or companies that have grown right alongside the city like micron in the last 20 years. >> you have been speaking to clearwater on all that has been growing here. i just blew into the boise airport. it is fantastic infrastructure but is it enough? when you start to see normal people coming, when they are raising home and looking stressed around hospitals and the like? what happens when the standard of living that people are used to gets attacked? >> we make sure that our water remains clean and we can grow and create the infrastructure that we need. housing is really important.
this as every community around the country is grappling with this. we are focused on making sure that we have great education, a good workforce, partnerships with business and industry and then creating the economic opportunities of the future to support the residents that are here. >> talk to us about the balance sheet, the fundamentals of rising property taxes and sales taxes can certainly help but also, being one of the lower tax states, how are you thinking about financing this and balancing a budget? >> we in idaho and boise pride ourselves with great financial management. our budget can only grow a certain amount every year and we prioritize investment to keep the levels that are residents
have come to expect. we also work with private industries to do what is needed to address affordability, support workforce development, make sure our kids are educated well. all while doing what idaho residents do well, budget selling. >> coming up, we will discuss the chip shortage a little more. it is not going away anytime soon. that is next. this is bloomberg. ♪
conversation we have been having for about four hours about supply chain issues, chip conch -- chip crunch. i want to welcome a friend of the show also joined by ian king good covers all things chips for us. they'll educate me as to what is necessary to look through what is right now a supply chain headache that does not look to be changing anytime soon. talk to us about why 2022 would be the time that prices would fall off, that we would start to see rightsizing of supply and demand what it does not seem to be happening yet. >> it does depend on who you speak to and which sector you're talking about. in the second half of 2022, things begin to get better but then we hear a lot of talk about people saying perhaps we don't get back to balancing certain products until 2023. a lot of that has to do with who you are and what you're asking for. i think a lot of people will point to the automotive being
the biggest victims. they relate and they had to join the end of the queue to get what they needed. >> your take as an investor about the boom bust cycle. right now we are hearing this call not only from the administration looking to see government putting 50 billion to work to incentivize companies to build supply in the united states but already people looking at what is going to come on tap by 2023. are we going to see supply? are we going to go back into the boom bust cycle of previous? >> great question. clearly we are still at a point where demand is outstripping supply. that is because it took a long time to build these back. the middle of this year, we will have more spac's come online.
it looks like the real influx of supply will ramp up. whether or not these two will bust think is pretty unlikely at this point. you look at how any cars are being produced in the pandemic. we are still well below that number. then you take that and you spread it around the rest of the economy. households and the amount of chips there. factory automation, robotics, there is such a big increase in content. i think it will take what a long time for supply to catch up to demand. i don't anticipate a bust anytime soon. the subsidy from the u.s. government could come to gate matters. that means the industry will be bigger than they would be if left to their own devices. that means overcapacity but it will take a number of years before we get there. >> this is the overcapacity that
many now and understand and companies desperately try to fine-tune and avoid but also, with the government incentives in talked of, will we see a shift toward more supply being grown in the united states? will we see less risk to supply chains going forward then we have in the past? >> that is the argument being made by executives who essentially want government to help subsidize their expansion plans. it makes sense that you would ring that bell and get the attention of politicians and get them behind that but when you look at the amount of money being deployed and whether that would ultimately have the timed -- the kind of impact that politicians are hoping for, it remains to be seen. we can just compare the numbers, 52 billion from the u.s. over five years verse 40 billion being budgeted this year, they
give you and is able of how little national governments are deploying in terms of capital and it really tells you they probably don't understand a lot of the commitments needed. >> to that point, the investment decision you have to make, it is do you want to be investing in companies that are taking on short-term incentives? >> it is exactly right. the subsidies to the companies building spac's means that they will have a little bit of a buffer. even more is how much the industry has changed over the last decade or so. the chips are used in a much wider variety of location. it tends to be less cyclical. that helps to move out some of
the cyclical problems we had in the past. even beyond that, just to think about that rise, i don't think your subsidies will at all that much. on the margin, yes, there will probably be plenty of spac's in the u.s.. but it was the auto sector that chose to cancel their orders because they thought demand for cars would go away at the beginning of the pandemic. you could not get back in line fast enough. and the big shock of how all this changed during covid, that increased the demand for everything with chips. though shock can happen to matter what the government does. this will at least limit our exposure to the political risk. correct if covid has taught us anything and geopolitics continues to, it is
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