August 11, 2025 • 33 mins
Bloomberg’s Caroline Hyde and Ed Ludlow discuss Nvidia’s and AMD’s agreement to pay 15% of their revenues from Chinese artificial intelligence chip sales to the US government. Analysts and investors react to the “unprecedented” deal. Plus, Intel CEO Lip-Bu Tan is set to meet with President Donald Trump, after the US leader called his resignation.
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Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
from coast to coast with Caroline Hyde in New York
and Vla Loow in sentrances.
Speaker 2 (00:19):
Go this is Bloomberg Tech coming up video and am
d a great p fifteen percent of their revenues from
Chinese AI chip sales to the US government.
Speaker 3 (00:32):
Plus Intel CEO Lib Boutan is set to visit the
White House today, just days after President Trump.
Speaker 2 (00:37):
Called for his resignation and lithium prices and stock spike
after c atl Holtz operations at a major mine in China.
Speaker 4 (00:46):
But we returned to.
Speaker 3 (00:47):
These public markets and ed this is an entire show
really focused on the semiconductor world. So I bring you
the chip sector in particular, and I'm looking at the
socks of course, the Phillies. The Philadelphia Semiiconductor index is
currently up almost a percentage point. We're coming off of
la highs. But really a focus on the macro picture
right now when near record hires, the stocks, bonds waiver,
(01:08):
We're looking at inflatory data, but we on the show
are looking at semiconductors. Dive into them for a moment.
Speaker 2 (01:14):
There are so many chip stories Micron is raising its
guidance for the current period because of pricing power, particularly
in dram There's a lot going on in high bandwidth
as well. Intel's up four point eight percent. Its CEO,
Lip Bhutan is off to the White House to meet
with President Trump. Will bring the reporting later in the hour.
Then the top story, Nvidia and AMD, according to a
(01:35):
Bloomberg source, have agreed to give the United States fifteen
percent of any revenues from chip sales to China, AI
chiphails to China in exchange for export licenses in what
is a very clear quid pro quote character.
Speaker 3 (01:51):
It is unprecedented. Many people say, let's get out to
Bloomberg Balance of Power host Joe Matthew, who we welcome
to the show for the perspective of the administration, I
do this, Je.
Speaker 5 (02:02):
Well, boy, it's a great question.
Speaker 6 (02:04):
It is unprecedented, remembering the golden share that the White
House scored in the Al the Pond takeover of US Steel,
this is a whole new level and it's raising a
lot of questions, beginning here in Washington, at least with
National security. Wall Street might have slightly different questions here,
but of course, remembering that these chips were going to
be off limits to the Chinese, and it's something that
(02:24):
we've talked about a lot here on the air. That
was only a couple of weeks ago. Then you saw
the turn to making them available. The licenses even after
that moment were not actually being given to Nvidia or
AMD for a couple of weeks.
Speaker 5 (02:36):
So this apparently unlocks the license.
Speaker 6 (02:38):
But my goodness, the role of the administration is now
playing in business. I think we can say openly that
the US government is now part of the semiconductor industry.
They're invested in the business. And the big question is
where's the line. If fifteen percent is enough to get
the H twenties on sale in China, is there a
number that Jensen Wang can come up with to sell
(03:01):
even more.
Speaker 2 (03:02):
I want to point out that AMD has not said
anything about this reporting. It was first the ft, then
it was US. Nvidia has said something. They've said a lot, actually,
but they haven't addressed the fifteen percent number. To your point, Joe,
what they've indicated is that so far, at least I
think in this fiscal year, they haven't shipped any H
twenties to China. So that's important for Wall Street to
(03:23):
kind of model for But boy, they're kind of indicating
that they're getting what they want in some sense because
China is such a key market. And the President seems
right now, if this reporting is accurate, to be willing
to oblige them because he's getting something in return.
Speaker 4 (03:38):
He's done a deal.
Speaker 5 (03:39):
That's right, He's done a deal.
Speaker 6 (03:40):
And this is the same president who just days ago,
of course, asked for the resignation of the Intel CEO.
As you mentioned, Lip Bhutan is at the White House
today and it had us last week asking the question
if President Trump is in fact the chairman of the
board at any major company. We've seen him do this before,
calling for boycotts of certain goods, calling for personnel change,
is calling for policy changes within companies. You've certainly seen
(04:04):
the impact that he's had when it comes to DEI,
But actually exchanging money with these companies is a whole
new prospect. And it's unclear exactly where this fifteen percent
would go.
Speaker 5 (04:13):
Will that be used to pay down the debt or
do something else?
Speaker 6 (04:16):
In terms of national security, we have a lot of
questions that remain. The President, by the way, is briefing
reporters right now at the White House talking about crime
here in the city and his effort to federalize Washington, DC.
It's a very separate and big story here, but they
will go to questions and I suspect that these will
come up today.
Speaker 2 (04:33):
We suspect so too, Bloomberg Balance of Power host Joe Matthew,
thank you very much. Let's get more in the reaction
to the Nvidia and AM deal with Riva Goujon. She's
a director at Rhodium Group, an independent research firm that
analyzes economic and political issues, including those relating to China. Reva,
you have more than two decades of experience as a
(04:54):
geopolitical strategist advising companies and what on earth's happening around
the world. Have you ever seen the United States impose
what is essentially an export tax in exchange for those
companies being able to export technology to a specific market.
Speaker 7 (05:10):
Well, an orthodox is an understatement here, right, And there's
that whole pesky detail of what about Article one, section
nine of the Constitution that says no tax or duty
shall be laid on articles exported from any state, meaning
any part of the US government, to include the executive branch.
So yeah, we're in uncharted territory here, but it does
(05:30):
fit with a highly transactional administration. But as you just
referenced earlier, what is exactly the line here if the
administration is driving toward revenue generation, not just in trade
policy with tariffs, but even in export controls right to
include high end semiconductors, what's the line on what is
(05:51):
considered too advanced right as it balances against this revenue
generation goal.
Speaker 3 (05:57):
Let's just repeat that. Now we've had for video. We
are hearing from AMD as well saying that in initial
China licenses have indeed been approved in AMD and confirming
it received the China AI chip export licenses, and something
that we quizzed Lisa Su on just last week after
her earnings, and that's what the market really wanted to
hear about REVA. But go further a little bit here
(06:19):
as to ultimately companies looking to sell into China thinking
longer term whether they'll remain to have access. The response
from China thus far has been one of concern about
what the amount of information and so called backdoors they've
been questioning, particularly with Drens and Wang.
Speaker 7 (06:35):
Well, Tramp has made himself intrinsic to the US China
chip wars. So now we need to see how far
this actually goes. Le Bhutana is going to be in
the White House. Can he pull off at Jensen? That
still remains to be seen. But Intel has a lot
of problems attached to it, and there is an American
imperative to create an American ship champion out of you know,
(06:55):
Intel's setbacks, and so I think there's a lot more
deal making to come out of that as well. But
you know, with this level of transactionalism, there's always a
degree of uncertainty of how long does this actually last.
If we are applying a sliding scale to chip sales
to China, then at what point does that start to retrench?
(07:18):
As US China AI competition is undoubtedly intensifying, we're still
in the early stages of AI division. As we start
to see more of these physical AI applications become more real,
right as we wrap our heads around that, as we
wrap our heads around the competitiveness issues around that, the
critical inputs where China still has intense leverage, will we
(07:38):
start to see a delayed reaction in the US that
freak out moment so to speak, where these kinds of
controls could fall back to a more restrictive nature.
Speaker 3 (07:48):
What a push US forward house the American president decided
to forego national security concerns for a billion dollars at
least per quarter coming home from or if our math
is right, and what fifteen percent earns them, or do
you think that they can manage to in some way
location track and understand what really ultimately gets into the
(08:10):
Chinese tech stack and how it is used.
Speaker 7 (08:14):
Well, there are a couple different issues here, right. H
twenty's are optimized for inference compute. So the assumption that
the administration is making here is that inference compute is
not the chief national security concern. Now that raises a
question again, if Huawei is able to produce comparable chips
to Nvidia or AMD, will we see US chip controls
(08:37):
ease right to allow US technology complete head to head
with Huawei? So again, where is that line drawn? But still,
you know, we're in a highly transactional phase here, and
so we need to see just to what degree is
the US going to be concerned about those end uses.
And again the economic competitiveness concerns are still in play here.
Speaker 4 (09:01):
I don't know H twenty can be used for training.
Speaker 2 (09:04):
You know it's had performance engineered out of it, but
I know talking to a lot of people inside the company,
there are lots of credit here. You said something a
minute ago, doing a Jensen or pulling a Jensen. I
find that so interesting because his principal argument, in line
with what we've just debated about age twenty, is if
you don't export American technology, China will use a domestic
(09:25):
champions technology and then they'll start exporting it to under
international markets. Forget the revenue side of this for a minute.
Is this smart by Trump to kind of have the
pr effect of allowing them to export technology to an
economic adversary and at the same time doing a deal
showing that he's got something out of it.
Speaker 7 (09:46):
It's a slippery slope. And as we're seeing the preparation
for a US China summit between Trump and She, what
is Beijing thinking at this point? Obviously it wants to
take advantage of this highly experimental, transactional phase. So what
is it going to push for. We know they're pushing
for an easing of the twenty percent ventanyl tears on
the chip controls front. They're going to want to push
(10:07):
for an easing of high bandwidth memory chip restrictions. Now
that's really tricky, right because if you start to say, okay,
because Chinese memory chip makers are becoming competitive in this domain,
that the US will allow Micron, for example, Samsung SK
to export these chips to the US. That doesn't help
(10:28):
in Vidia because Huawei is getting access to HBM chips
that are going to improve its production. Right, So you
see a selective application of that sliding scale approach. And
the US so far is also not easing semiconductor manufacturing
equipment controls, right, so the tools to actually make those chips.
If the US imperative is to throttle Chinese chip production,
(10:51):
really constrain that so that US companies like Nvidia and
AMD can flood the zone in the Chinese economy, get
the Chinese technologists addicted. So to speak to US tech,
you don't necessarily want to help hualy right in its
production either.
Speaker 4 (11:07):
How do you anticipate China is going to respond to this?
Speaker 7 (11:11):
Well, China has a ton of leverage at this point
with the critical raw material, the rare earth licenses, and
if you look at comments from US tr recently Jamison Greer,
and what you can see from those tops is that
that issue of licensing for critical inputs seems to be
a major theme of the US China bilaterals. So if
(11:33):
the US raises threats on tariffs or raises technology controls
in any significant way, China can basically say, look the
terms of Stockholm or whatever European capital they're off and
you're not getting your licenses and your production lines are
going to be paralyzed, and good luck with your manufacturing ambitions.
Right for this big Ai renaissance, for your manufacturing renaissance,
(11:55):
we hold the cards. And at least for the duration
of the Trump term. That is an uncomble troop.
Speaker 3 (12:01):
Riva Boujeon, director at Rolling In Group, fascinating to talk
to you. Thank you now coming up, Intel CEO lit
bou Town we just mentioned it. Reportedly going to be
meeting with President Trump today. That story's next, ed. What
are you looking at?
Speaker 2 (12:14):
I'm going to take another look at Micron Becauches are
pushing higher again. They've upped their guidance for the current period,
saying that just a EPs will be up to two
dollars ninety two cents. Previous end of their guidance at
the top range was two point two dollars sixty five cents.
But it's all about kind of favorable dram pricing because
margins also looking better as well. Again, this is a
company that wants in on this great build out in
(12:37):
data center in particular, but its historic business has been
so commoditized in cyclical. But investors in this moment really
liking what they're seeing. Micron up three and a half percent,
will be right back. This is Bloomberg Tech. Intel CEO
(13:02):
lit bou Tan is set to visit the White House today.
This is just days after President Trump called for his
resignation due to potential conflicts of interest.
Speaker 4 (13:10):
Blue Basie and King joins us.
Speaker 2 (13:12):
You've also kind of gone deep on like where Litboo
fits in right now with Intel strategy with the White House.
But what do we understand that he will be discussing
with President Trump when he's in DC later today.
Speaker 8 (13:23):
Yeah, I mean it's still a TVD obviously, but there's
an awful lot going on in Washington right now regarding chips.
But fundamentally, what the Trump administration wants is an affirmation
that all of these projects, all of this physical building
of semiconductor plants in the US is going to go ahead.
They don't want any sense that, oh, maybe we will
(13:44):
maybe we won't, And that has been the message that
kind of Intel have delivered recently because from Wall Streets perspective,
we don't want to build these factories until they can
actually fill them. So there's kind of a push and
pull there. Whether they're investors one one thing and frankly
the White House once another. So the topic has got
to be how do we get the two sort of
(14:07):
positions closer together. What kind of language can Intel come
up with that will keep the White House happy and
also not scare investors?
Speaker 3 (14:16):
Ultimately, ian what would scare investors a lack of access
to the chipsacked money, a pullback more broadly from fabrication
in the US, or is it more worrying that they're
going to be plowing money in before the.
Speaker 4 (14:29):
Demand is certain?
Speaker 8 (14:30):
Right, Investors really don't care where chips are made. They
care whether the companies who are making them are making
money or not. Building plants when you don't have orders
is not a good way to make money. It's a
way for your company to go out of business. So
that would be their position ultimately, though there is a
lot of realism out there and obviously, as we're discussing,
the supply chain is becoming more complicated and the geopolitical
(14:53):
imperatives are becoming stronger and stronger, So there will be
some understanding that, hey, maybe we do to build out capacity.
But Intel has a lot of capacity in the US already,
So why does it need to build these megafactories unless
it has orders. What they want from Intel more than
anything else, is hey, we've got some giant customers who
want to use our factories the moment, Intel cannot say
(15:15):
that in.
Speaker 3 (15:16):
King always across the reporting, we thank you so much
for more on Intel and look the broader chips sector.
Johann Foene's with US and Vice's Capital Management Partner Portfolio manager, Johann,
what is it that you would like to see lip
Bhutan managed to navigate today? Is it better that he
promises more investment into the US, more manufacturing and that
he has extricated himself from China or ultimately does he
(15:38):
even need to stand down in some way as CEO.
Speaker 9 (15:42):
It's truly unclear. Caroline.
Speaker 10 (15:44):
Obviously, I think he can defend himself from the concerns
that he's conflicted, and that's his main mission today. I
don't know if that means he needs to do more
to separate from his prior work and investments. I don't
know how much capacity he has to do that. I
think Ian is right that the administration wants to be
(16:04):
able to continue to push the narrative that they are
doing something to bring more chip manufacturing back to the US,
and so his announcements of less investment or delayed investment,
you know, is a concern to the administration.
Speaker 9 (16:17):
But they don't have the customers yet.
Speaker 10 (16:20):
Maybe he can say, hey, we've got these guys on
the line, we're reeling them in.
Speaker 9 (16:24):
Maybe that would be reassuring.
Speaker 10 (16:26):
But ultimately Intel needs to keep those subsidies, but not
at the cost of having to spend so much CAPEX
in the near term when they don't have customers. So
a very fine line for the CEO to walk.
Speaker 11 (16:39):
Here.
Speaker 2 (16:39):
The stock's up six percent, so the market likes something
about the idea that lit Bhutan's going to go to
DC and meet with the president. Present day, you're fund
manager looking all across tech, but you had a long
career in semiconductors. Lit Bhutan also has had a very
long career in semiconductors. A lot of this affiliation with
China or indirectly has been well known.
Speaker 4 (17:01):
Were you aware of it? Do you understand his history?
Speaker 10 (17:04):
Yeah, I mean, you know, I don't know him that well,
but I think the public information about his prior work
is pretty clear. He's obviously very highly respected. He was
brought in by the board to take Intel in a
different direction, one that is more measured, less capital spending
forward than Pat Gelsinger wanted to do. And so it's
(17:26):
it's just worrisome right that he might, you know, have
to be removed because of concerns that really.
Speaker 9 (17:34):
Aren't, you well, well founded.
Speaker 10 (17:36):
So he seems like he's a very good person to
run Intel at this when an Intel desperately needs the
help they need to take that company in a different,
more streamlined, more efficient direction while they sport out the
recipe for designing and manufacturing chips, which was a huge
stumbling block for them, and that that's why they're in
the position they are, right, why AMD has taken so
(17:57):
much care from Intel over the year in server chips
and elsewhere. So you know, this is something this is
a company we would avoid. We are avoiding at this point.
We don't think it's a good place for investor money.
There are just way too many uncertainties about the potential
of Intel to make a comeback.
Speaker 3 (18:13):
Meanwhile, the uncertainties loom large about access to China and
what you have to pay to do that from an
AMD and an Nvidia. But an uncertainty you're willing to
swallow if the underlying tailwinds are still so strong. Make
of it what you will tell us what you thought
about the AMD and n VideA deals.
Speaker 9 (18:30):
Yeah, so clearly right, the companies need act. The companies
are better off with access to China than without. Even
with the fifteen percent export tax.
Speaker 10 (18:40):
The you know, the potential revenue at risk, you know,
thirty ish billion dollars for Intel, six to ten billion
for AMD, likely to potentially grow over time, you know,
So to pay fifteen percent on that, it's going to
cut into their margins to some degree. They probably get
a fifty sixty percent gross margin on those sales.
Speaker 9 (18:58):
I think that they're to have to swallow this.
Speaker 10 (19:01):
Right, they're charging what the market will bear right now
for those chips selling into China and elsewhere.
Speaker 9 (19:07):
I don't think they'll be able to pass on.
Speaker 10 (19:09):
This tariff or this sorry, this export tax to the
Chinese customers. They're charging them as much as they can
get away with already, so you know, it's definitely going
to be a hit to margins on a what is
a you know, minority part of their businesses. But it's
better to have access than non And I think the
stocks are up because maybe this resolves the uncertainty.
Speaker 9 (19:29):
Maybe people will say, Okay, they're.
Speaker 10 (19:31):
Going to have to pay this, but hey, now we
can rely on the fact that they'll have these export licenses,
whereas before it was this sort of vague national security concern. No,
you can't sell ships to China. Now that's gone away, right,
It's clearly not a national security issue if the government
is willing to let them pay a fee to gain
that access.
Speaker 2 (19:49):
AMD put a statement out this morning saying they have
an initial export license. They didn't address the fifteen percent
revenue split. Nvidia put out a statement saying they've not
yet shipped any H twenty to China for months, but
they hope to. Can you and your desk analysts start
modeling for some real China revenues in the near term
from both those companies, Yeah, I think.
Speaker 10 (20:10):
Well, you know, from what we know, Yes, I mean
it's good that AMV has confirm they have the licenses,
so I think we can and we would definitely model
in that fifteen percent hit to revenue. And it's unclear,
by the way, where this goes legally, right, it's unconstitutional
to impose an export tax like this, but it's not
clear who would have legal standing to.
Speaker 9 (20:31):
Object to the tax.
Speaker 10 (20:33):
And clearly Nvidia and a MD aren't going to because
they don't want to unbalance the apple cart here and
risk those export licenses. But perhaps you know, one of
the business associations does. This is unclear whether this shouldn't stand.
But you know, we're seeing more and more of these
kinds of pay to play arrangements by the US government
that could increasingly, you know, put a tax on businesses
(20:57):
and should be known this is an ex post tax.
Speaker 9 (21:00):
Right.
Speaker 10 (21:00):
This has happened after the fact of the company's having
designed these ships and begun to sell.
Speaker 9 (21:05):
Do and they want to sell more.
Speaker 10 (21:06):
What what we worry about is that now companies are
going to take this potentially into account. You know, do
I want to develop the next ship or do I
want to develop the next you know, whatever medical device.
If I'm going to be subject abound fifteen percent revenue.
Speaker 2 (21:19):
Techs toun feeny of Advisors Capital Management throughout a time,
but really grateful, thank you know. Coming Up Forward announces
a quote tremendous pivot for its electric vehicle strategy and
can have those details next.
Speaker 4 (21:30):
This is Bloomberg Tech.
Speaker 3 (21:43):
Time now for Talking Tech and first up Forward. It
plans to invest five million dollars building a new line
of budget evs something at thirty thousand dollars mid price
pickup truck in twenty twenty seven a now, the move
represents a massive shift and strategy for Forward. If it's
like the F one fifty lightning plug and pickup just
failed to meet lofty sales expectations. Plus, Paramount is spending
(22:05):
seven point seven billion dollars for exclusive rights to show
the Ultimate Fighting Championship events in the United States. The
deal covers the next seven years and is designed to
boost the company streaming service, and of course comes just
days after David Elison and closed his deal for control
of Paramount and what are you looking at?
Speaker 4 (22:23):
Okay?
Speaker 2 (22:23):
Coming up We speak with Bernstein senior analyst Stacey rascon As.
Nvidia and AMD agreed to pay fifteen percent of their
China chip revenues to the US government. We're going to
get back to that story next. From London and from
New York City. This is Bloomberg Tech. Welcome back to
(22:52):
Bloomberg Tech. Let's get right back to our top story.
Nvidia and AMD have agreed to share fifteen percent of
their revenues from China AI chip sales with United States government.
Bloomberg's reporting that, citing an anonymous source and videos basically flat.
AMD's pushed higher since it confirmed it has been granted
(23:12):
an initial export license, but neither of those companies in
their statements have talked about the fifteen percent revenue payment
to the United States government at all. I'm looking car
at the sell side reaction and it's pretty mixed. Yes,
many say good to have access to the China market,
but there is a number of names on wall streets
that say this sets a bad or worrying precedent.
Speaker 4 (23:34):
And I think one of those names is joining US now.
Speaker 3 (23:36):
Stacey Raskin's joining US bens and senior analysts to talk
through the whole semiconductor spectrum. Stacey, we start with what
you say, initially, look eighty five percent looks better than
zero percent in terms of revenues, but what is the
precedent here? What is their long term access to China too?
Speaker 12 (23:51):
Yeah, so again I don't like the president that it sets.
It feels like a very slippery slope again, you know,
like eighty five percent better than zero. I think it's
better for them, well for them as frankly, as well
as for the US in general, to to be able
to sell into China, Like you don't want to hand
the Chinese market for Ai over to Huawei.
Speaker 11 (24:09):
We want to be able to compete there.
Speaker 12 (24:11):
So I think it's good this idea of like I
don't know what you want to call it, pay for
play or like export tax or whatever you want to
call it.
Speaker 11 (24:17):
I don't like it. Quid pro quo, Yeah, yeah, I
mean it's a slim Why does it stop here? Why
does it stop with China Ai? Why why not other
products other companies? I mean, Stacey, I don't I don't
like I don't like it. Now it's not up to me.
Speaker 2 (24:36):
We'll quite the reason. I jumped in, and Caroline forgive me.
But the reporting was really clear, right, citing the anonymous
source that it is a quid pro quo in the
sense that it is fifteen percent in exchange for an
export license. That's what the reporting tells us. Have you
got enough information on your desk now to model for
(24:56):
what you think and when you think? And Video and
AMD can stop booking that revenue, so.
Speaker 11 (25:01):
You'll let me.
Speaker 12 (25:02):
Let me put the fifteen percent aside for a minute.
They have to restart these supply chains. Both companies have
some some work in progress, not really any finish goods
that they can just sell. They've got some work in
progress that it was halted that they can restart. It
will take some time. It will take even more time
if they have to start actually new wafers from the
beginning of the process to run them through. That'll that'll
(25:24):
take it could be six months, even longer nine months maybe.
Speaker 11 (25:28):
So to the extent that they do ramp this up,
it will take some time. Maybe you get a little bit.
Speaker 12 (25:32):
You know, we had spoken with Nvidia about a month
ago when the news came out that the licenses were
getting I'm.
Speaker 3 (25:39):
Sorry to jump in. We'll be back with you in
a moment. But President Trump is just speaking on this
very topic.
Speaker 4 (25:44):
Just take a listen.
Speaker 9 (25:46):
I think President's a landski to join them.
Speaker 13 (25:48):
So you have to understand, there's a war that should
have never happened. There's a war that wouldn't have happened.
If I went president, would have never happened. It wasn't
It was the apple of I get along very well
with President but if you look under President Bush, they
took a lot of.
Speaker 3 (26:04):
Ter let's jump out. Sorry, Stacy, we returned to you
because he's just pivoted quickly away now back on relationships
with Russia and of course with Ukraine.
Speaker 2 (26:13):
But he was.
Speaker 3 (26:14):
Mentioning AMD and indeed the China relationship, and I go
to you on that because longer term, what will AMD's access,
what will in Video's access be to China, because China
doesn't seem thrilled thus far by what the sentiment is
coming out of the US.
Speaker 11 (26:29):
Yeah, I mean, look so in terms of these things.
Speaker 12 (26:32):
By the way, in Vidia has a roadmap with new
products that are supposedly already compliant that they don't require
a license for, so I don't know if they would
have to kick back some of that once they get
products actually below the threshold of the license enters, and
they do.
Speaker 11 (26:46):
Have a roadmap to sell in China.
Speaker 12 (26:47):
AMD has been a little less forthcoming about their future
China roadmap, So I don't know what products they have
that may go.
Speaker 11 (26:54):
Presumably they do have a roadmap and we'll hear about
it in due course.
Speaker 12 (26:58):
For the long term in China, though, I mean, you
got to remember, like these these thresholds are fairly punitive.
China actually does have local products that have better performance
than what both in Vida and A and D are
actually allowed to sell.
Speaker 11 (27:10):
There.
Speaker 12 (27:10):
The benefits that in Vidia and especially in Vidias is
around ecosystem, which is why we don't want them to
shut off, because we do not want the local developers
in China to coal us around other local alternatives like Quaale.
But you have to think, like over time, the gap
between what and Vidia and even AMD are allowed to
sell in China versus what they're allowed to sell in
(27:31):
the rest of the world is going to get bigger
and bigger and bigger. They're not going to really be
allowed to improve the performance of these products in China
to the extent that they could do it anywhere else,
and the Chinese are going to do their best to
improve the performance of their own products as much as
they can give.
Speaker 11 (27:45):
In the constraints that they're under.
Speaker 5 (27:46):
So like over time.
Speaker 11 (27:48):
Look, China, it's a big market.
Speaker 12 (27:49):
Hopefully they will get some of it, but I mean
it's going to be a competitive market, and it probably
will be impaired relative to their to what they would
be able to sell their if there were no constraints
at all.
Speaker 2 (28:00):
Stacey, Caroline and I had the opportunity to quiz Lisa
sou about this in the middle of last week. I
just wanted to play her thoughts on China right now.
Speaker 14 (28:08):
Ninety days ago, you know, we did not expect to
believe to ship, to be able to ship to China
because of some of the regulations. I think this administration,
the Department of Commerce, the government has actually been very
open to trying to find the right balance between national
security and ensuring that we have AI USAI technologies proliferated
(28:31):
across the world.
Speaker 2 (28:33):
We've talked endlessly about Jensen Wong's ability to have a
relationship with the President. But I just wondered if you've
given a valuation of how Lisa Sue's doing in DC
right now.
Speaker 11 (28:42):
I mean, like she seems to be doing all right
as well.
Speaker 12 (28:44):
Like you have to remember Jenson's the dominant player here,
like am D I mean and more power two of them.
I mean they've done very well given where they're coming from,
but I mean they'll do You know, they did five
billion of sales overall in AI last year year.
Speaker 11 (29:00):
I mean in Vidia didn't know what it was, one
hundred billion.
Speaker 12 (29:02):
Am d said that the China ban you know at
the time, costs him a billion and a half this
year in video B ten x A or even more so.
Speaker 11 (29:11):
They're relatively small.
Speaker 12 (29:12):
But I think Lisa, like in terms of building her
case in the administration and helping them try to build
that relationship with Trump, which for better for us is important,
is important.
Speaker 11 (29:22):
I think she's done a good job. At least she's
been there, she's been present, she's been visible. Right, there
are some other players in the industry that maybe have
been a little less visible.
Speaker 2 (29:32):
Stacy Reskin of Benstein, who thank you. We're actually going
to head back to DC ourselves where the President in
his press conference is talking about Vladimir Putin in relations
with Russia.
Speaker 5 (29:41):
You or even a third and was.
Speaker 3 (29:43):
President Trump speaking at the White House, of course, in
front of reporters currently talking about plan meeting with Putin
that he currently has in minds and Sky will not
be part of Friday's putin meeting. We understand, and Ziski
has gone to a lot of meetings already. He confirms
he will make then a pivot to the world of
technology and to chips. Trump says he wouldn't make a
(30:05):
deal on in Vidia's new chip. He's therefore referencing the
Blackwell chip system. Initially, you went talking about H twenties.
He said he wanted a twenty percent tariff if he
approved chip exports. But we understand he managed to negotiate
down in Vida, Jansen Wang negotiated to a fifteen percent
deal on a chip deal, confirming that fifteen percent chip
(30:25):
payment that will go from Invidia on in H twenty
to the US government. In videos H twenty, he says
is obsolete but still has a market. But he thinks
Jenson Wang is coming back to see him, he says
about the Blackwell chips. Let's go to Joe now, Joe Matthew,
who is back to break it all down with us.
There was a lot about Russia, There's a lot about geopolitics,
(30:46):
but there's a lot about China as well. Joe, just
for the technology audience, talk to us a little bit
about what you learned in the Nvidio context.
Speaker 6 (30:53):
Well he confirmed that fifteen percent, So Bloomberg as usual
was ahead of the curve.
Speaker 5 (30:58):
With this reporting.
Speaker 6 (30:59):
But to go, I want to suggest that there could
be a deal involving Blackwell, I think might be the
closest thing that we have to news here. What he
said is I wouldn't make a deal with that, referring
to Blackwell, although it's possible I would make a deal.
Speaker 5 (31:15):
He said a somewhat enhanced in a.
Speaker 6 (31:17):
Negative way, Blackwell, taking off thirty to fifty percent of it.
I think suggesting that somehow there would be a lower
powered version of Blackwell. I suspect that Jensen one would
have some things to say about that when they do
meet again. But the idea here that we could see
continued changes in Nvidia's export controls and relationship with China.
Speaker 5 (31:38):
I suspect that goes for AMD as well.
Speaker 6 (31:40):
It's quite remarkable to hear the President riffing on this
in front of reporters today.
Speaker 2 (31:44):
Okay, Bloomberg's balance a power host Joe Matthew the blow
by blow of what President Trump had to say. Caroen,
There's a lot more coming up to discuss on the show.
Speaker 3 (31:52):
Certainly is Nvidia AMD. We return in a moment for
their own Tom Giles as a Bloombag Tech.
Speaker 4 (32:06):
Let's get back to our top story.
Speaker 2 (32:07):
Bloomberg had reported in Vidia and amb both agreed to
pay fifteen percent of their revenue from Chinese AI chip
sales to the US government. In the last few minutes,
President Trump has confirmed at least some of that in
a video's case. Bloomberg, Senior executive editor for Tech, Tom
Giles is in San Francisco.
Speaker 4 (32:24):
What do we need to know?
Speaker 15 (32:25):
Yeah, well, this is very This has very little precedent.
This demonstrates just how important the Chinese market is to
these companies. They really want to be able to sell
their most advanced chips into the Chinese market. They have,
They've hit a buzzsaw from the Trump administration, which has
placed really strict.
Speaker 5 (32:46):
Limits on what they can and can't do.
Speaker 15 (32:48):
It's in the middle of negotiations with the Chinese government
over terriffs, and so this shows that the Trump administration
wants to cut deals, wants.
Speaker 5 (32:58):
A cut of the these chips.
Speaker 15 (33:01):
It's willing to turn a blind eye to the sale
of advanced artificial intelligence chips into the Chinese market. If
it can get a return, but this just this is
going to complicate trade negotiations going forward.
Speaker 3 (33:17):
We thank you Tom Giles for wrapping up the latest
as DC crosses passed in San Francisco. But that does
it for this edition of Bloomberg Tech Head.
Speaker 4 (33:25):
Yeah, the bit we didn't get to.
Speaker 2 (33:26):
We think Intel's CEO is going to meet with President
Trump later today, so overynight we look for a read
on that. So much to recap on the podcast, the
focus on Nvidia and AMD. You know where to find
the pods on Apple, Spotify, iHeart and all of your
Bloomberg platforms from London and New York City.
Speaker 4 (33:42):
This is Bloomberg Tech
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
from coast to coast with Caroline Hyde in New York
and Vla Loow in sentrances.
Speaker 2 (00:19):
Go this is Bloomberg Tech coming up video and am
d a great p fifteen percent of their revenues from
Chinese AI chip sales to the US government.
Speaker 3 (00:32):
Plus Intel CEO Lib Boutan is set to visit the
White House today, just days after President Trump.
Speaker 2 (00:37):
Called for his resignation and lithium prices and stock spike
after c atl Holtz operations at a major mine in China.
Speaker 4 (00:46):
But we returned to.
Speaker 3 (00:47):
These public markets and ed this is an entire show
really focused on the semiconductor world. So I bring you
the chip sector in particular, and I'm looking at the
socks of course, the Phillies. The Philadelphia Semiiconductor index is
currently up almost a percentage point. We're coming off of
la highs. But really a focus on the macro picture
right now when near record hires, the stocks, bonds waiver,
(01:08):
We're looking at inflatory data, but we on the show
are looking at semiconductors. Dive into them for a moment.
Speaker 2 (01:14):
There are so many chip stories Micron is raising its
guidance for the current period because of pricing power, particularly
in dram There's a lot going on in high bandwidth
as well. Intel's up four point eight percent. Its CEO,
Lip Bhutan is off to the White House to meet
with President Trump. Will bring the reporting later in the hour.
Then the top story, Nvidia and AMD, according to a
(01:35):
Bloomberg source, have agreed to give the United States fifteen
percent of any revenues from chip sales to China, AI
chiphails to China in exchange for export licenses in what
is a very clear quid pro quote character.
Speaker 3 (01:51):
It is unprecedented. Many people say, let's get out to
Bloomberg Balance of Power host Joe Matthew, who we welcome
to the show for the perspective of the administration, I
do this, Je.
Speaker 5 (02:02):
Well, boy, it's a great question.
Speaker 6 (02:04):
It is unprecedented, remembering the golden share that the White
House scored in the Al the Pond takeover of US Steel,
this is a whole new level and it's raising a
lot of questions, beginning here in Washington, at least with
National security. Wall Street might have slightly different questions here,
but of course, remembering that these chips were going to
be off limits to the Chinese, and it's something that
(02:24):
we've talked about a lot here on the air. That
was only a couple of weeks ago. Then you saw
the turn to making them available. The licenses even after
that moment were not actually being given to Nvidia or
AMD for a couple of weeks.
Speaker 5 (02:36):
So this apparently unlocks the license.
Speaker 6 (02:38):
But my goodness, the role of the administration is now
playing in business. I think we can say openly that
the US government is now part of the semiconductor industry.
They're invested in the business. And the big question is
where's the line. If fifteen percent is enough to get
the H twenties on sale in China, is there a
number that Jensen Wang can come up with to sell
(03:01):
even more.
Speaker 2 (03:02):
I want to point out that AMD has not said
anything about this reporting. It was first the ft, then
it was US. Nvidia has said something. They've said a lot, actually,
but they haven't addressed the fifteen percent number. To your point, Joe,
what they've indicated is that so far, at least I
think in this fiscal year, they haven't shipped any H
twenties to China. So that's important for Wall Street to
(03:23):
kind of model for But boy, they're kind of indicating
that they're getting what they want in some sense because
China is such a key market. And the President seems
right now, if this reporting is accurate, to be willing
to oblige them because he's getting something in return.
Speaker 4 (03:38):
He's done a deal.
Speaker 5 (03:39):
That's right, He's done a deal.
Speaker 6 (03:40):
And this is the same president who just days ago,
of course, asked for the resignation of the Intel CEO.
As you mentioned, Lip Bhutan is at the White House
today and it had us last week asking the question
if President Trump is in fact the chairman of the
board at any major company. We've seen him do this before,
calling for boycotts of certain goods, calling for personnel change,
is calling for policy changes within companies. You've certainly seen
(04:04):
the impact that he's had when it comes to DEI,
But actually exchanging money with these companies is a whole
new prospect. And it's unclear exactly where this fifteen percent
would go.
Speaker 5 (04:13):
Will that be used to pay down the debt or
do something else?
Speaker 6 (04:16):
In terms of national security, we have a lot of
questions that remain. The President, by the way, is briefing
reporters right now at the White House talking about crime
here in the city and his effort to federalize Washington, DC.
It's a very separate and big story here, but they
will go to questions and I suspect that these will
come up today.
Speaker 2 (04:33):
We suspect so too, Bloomberg Balance of Power host Joe Matthew,
thank you very much. Let's get more in the reaction
to the Nvidia and AM deal with Riva Goujon. She's
a director at Rhodium Group, an independent research firm that
analyzes economic and political issues, including those relating to China. Reva,
you have more than two decades of experience as a
(04:54):
geopolitical strategist advising companies and what on earth's happening around
the world. Have you ever seen the United States impose
what is essentially an export tax in exchange for those
companies being able to export technology to a specific market.
Speaker 7 (05:10):
Well, an orthodox is an understatement here, right, And there's
that whole pesky detail of what about Article one, section
nine of the Constitution that says no tax or duty
shall be laid on articles exported from any state, meaning
any part of the US government, to include the executive branch.
So yeah, we're in uncharted territory here, but it does
(05:30):
fit with a highly transactional administration. But as you just
referenced earlier, what is exactly the line here if the
administration is driving toward revenue generation, not just in trade
policy with tariffs, but even in export controls right to
include high end semiconductors, what's the line on what is
(05:51):
considered too advanced right as it balances against this revenue
generation goal.
Speaker 3 (05:57):
Let's just repeat that. Now we've had for video. We
are hearing from AMD as well saying that in initial
China licenses have indeed been approved in AMD and confirming
it received the China AI chip export licenses, and something
that we quizzed Lisa Su on just last week after
her earnings, and that's what the market really wanted to
hear about REVA. But go further a little bit here
(06:19):
as to ultimately companies looking to sell into China thinking
longer term whether they'll remain to have access. The response
from China thus far has been one of concern about
what the amount of information and so called backdoors they've
been questioning, particularly with Drens and Wang.
Speaker 7 (06:35):
Well, Tramp has made himself intrinsic to the US China
chip wars. So now we need to see how far
this actually goes. Le Bhutana is going to be in
the White House. Can he pull off at Jensen? That
still remains to be seen. But Intel has a lot
of problems attached to it, and there is an American
imperative to create an American ship champion out of you know,
(06:55):
Intel's setbacks, and so I think there's a lot more
deal making to come out of that as well. But
you know, with this level of transactionalism, there's always a
degree of uncertainty of how long does this actually last.
If we are applying a sliding scale to chip sales
to China, then at what point does that start to retrench?
(07:18):
As US China AI competition is undoubtedly intensifying, we're still
in the early stages of AI division. As we start
to see more of these physical AI applications become more real,
right as we wrap our heads around that, as we
wrap our heads around the competitiveness issues around that, the
critical inputs where China still has intense leverage, will we
(07:38):
start to see a delayed reaction in the US that
freak out moment so to speak, where these kinds of
controls could fall back to a more restrictive nature.
Speaker 3 (07:48):
What a push US forward house the American president decided
to forego national security concerns for a billion dollars at
least per quarter coming home from or if our math
is right, and what fifteen percent earns them, or do
you think that they can manage to in some way
location track and understand what really ultimately gets into the
(08:10):
Chinese tech stack and how it is used.
Speaker 7 (08:14):
Well, there are a couple different issues here, right. H
twenty's are optimized for inference compute. So the assumption that
the administration is making here is that inference compute is
not the chief national security concern. Now that raises a
question again, if Huawei is able to produce comparable chips
to Nvidia or AMD, will we see US chip controls
(08:37):
ease right to allow US technology complete head to head
with Huawei? So again, where is that line drawn? But still,
you know, we're in a highly transactional phase here, and
so we need to see just to what degree is
the US going to be concerned about those end uses.
And again the economic competitiveness concerns are still in play here.
Speaker 4 (09:01):
I don't know H twenty can be used for training.
Speaker 2 (09:04):
You know it's had performance engineered out of it, but
I know talking to a lot of people inside the company,
there are lots of credit here. You said something a
minute ago, doing a Jensen or pulling a Jensen. I
find that so interesting because his principal argument, in line
with what we've just debated about age twenty, is if
you don't export American technology, China will use a domestic
(09:25):
champions technology and then they'll start exporting it to under
international markets. Forget the revenue side of this for a minute.
Is this smart by Trump to kind of have the
pr effect of allowing them to export technology to an
economic adversary and at the same time doing a deal
showing that he's got something out of it.
Speaker 7 (09:46):
It's a slippery slope. And as we're seeing the preparation
for a US China summit between Trump and She, what
is Beijing thinking at this point? Obviously it wants to
take advantage of this highly experimental, transactional phase. So what
is it going to push for. We know they're pushing
for an easing of the twenty percent ventanyl tears on
the chip controls front. They're going to want to push
(10:07):
for an easing of high bandwidth memory chip restrictions. Now
that's really tricky, right because if you start to say, okay,
because Chinese memory chip makers are becoming competitive in this domain,
that the US will allow Micron, for example, Samsung SK
to export these chips to the US. That doesn't help
(10:28):
in Vidia because Huawei is getting access to HBM chips
that are going to improve its production. Right, So you
see a selective application of that sliding scale approach. And
the US so far is also not easing semiconductor manufacturing
equipment controls, right, so the tools to actually make those chips.
If the US imperative is to throttle Chinese chip production,
(10:51):
really constrain that so that US companies like Nvidia and
AMD can flood the zone in the Chinese economy, get
the Chinese technologists addicted. So to speak to US tech,
you don't necessarily want to help hualy right in its
production either.
Speaker 4 (11:07):
How do you anticipate China is going to respond to this?
Speaker 7 (11:11):
Well, China has a ton of leverage at this point
with the critical raw material, the rare earth licenses, and
if you look at comments from US tr recently Jamison Greer,
and what you can see from those tops is that
that issue of licensing for critical inputs seems to be
a major theme of the US China bilaterals. So if
(11:33):
the US raises threats on tariffs or raises technology controls
in any significant way, China can basically say, look the
terms of Stockholm or whatever European capital they're off and
you're not getting your licenses and your production lines are
going to be paralyzed, and good luck with your manufacturing ambitions.
Right for this big Ai renaissance, for your manufacturing renaissance,
(11:55):
we hold the cards. And at least for the duration
of the Trump term. That is an uncomble troop.
Speaker 3 (12:01):
Riva Boujeon, director at Rolling In Group, fascinating to talk
to you. Thank you now coming up, Intel CEO lit
bou Town we just mentioned it. Reportedly going to be
meeting with President Trump today. That story's next, ed. What
are you looking at?
Speaker 2 (12:14):
I'm going to take another look at Micron Becauches are
pushing higher again. They've upped their guidance for the current period,
saying that just a EPs will be up to two
dollars ninety two cents. Previous end of their guidance at
the top range was two point two dollars sixty five cents.
But it's all about kind of favorable dram pricing because
margins also looking better as well. Again, this is a
company that wants in on this great build out in
(12:37):
data center in particular, but its historic business has been
so commoditized in cyclical. But investors in this moment really
liking what they're seeing. Micron up three and a half percent,
will be right back. This is Bloomberg Tech. Intel CEO
(13:02):
lit bou Tan is set to visit the White House today.
This is just days after President Trump called for his
resignation due to potential conflicts of interest.
Speaker 4 (13:10):
Blue Basie and King joins us.
Speaker 2 (13:12):
You've also kind of gone deep on like where Litboo
fits in right now with Intel strategy with the White House.
But what do we understand that he will be discussing
with President Trump when he's in DC later today.
Speaker 8 (13:23):
Yeah, I mean it's still a TVD obviously, but there's
an awful lot going on in Washington right now regarding chips.
But fundamentally, what the Trump administration wants is an affirmation
that all of these projects, all of this physical building
of semiconductor plants in the US is going to go ahead.
They don't want any sense that, oh, maybe we will
(13:44):
maybe we won't, And that has been the message that
kind of Intel have delivered recently because from Wall Streets perspective,
we don't want to build these factories until they can
actually fill them. So there's kind of a push and
pull there. Whether they're investors one one thing and frankly
the White House once another. So the topic has got
to be how do we get the two sort of
(14:07):
positions closer together. What kind of language can Intel come
up with that will keep the White House happy and
also not scare investors?
Speaker 3 (14:16):
Ultimately, ian what would scare investors a lack of access
to the chipsacked money, a pullback more broadly from fabrication
in the US, or is it more worrying that they're
going to be plowing money in before the.
Speaker 4 (14:29):
Demand is certain?
Speaker 8 (14:30):
Right, Investors really don't care where chips are made. They
care whether the companies who are making them are making
money or not. Building plants when you don't have orders
is not a good way to make money. It's a
way for your company to go out of business. So
that would be their position ultimately, though there is a
lot of realism out there and obviously, as we're discussing,
the supply chain is becoming more complicated and the geopolitical
(14:53):
imperatives are becoming stronger and stronger, So there will be
some understanding that, hey, maybe we do to build out capacity.
But Intel has a lot of capacity in the US already,
So why does it need to build these megafactories unless
it has orders. What they want from Intel more than
anything else, is hey, we've got some giant customers who
want to use our factories the moment, Intel cannot say
(15:15):
that in.
Speaker 3 (15:16):
King always across the reporting, we thank you so much
for more on Intel and look the broader chips sector.
Johann Foene's with US and Vice's Capital Management Partner Portfolio manager, Johann,
what is it that you would like to see lip
Bhutan managed to navigate today? Is it better that he
promises more investment into the US, more manufacturing and that
he has extricated himself from China or ultimately does he
(15:38):
even need to stand down in some way as CEO.
Speaker 9 (15:42):
It's truly unclear. Caroline.
Speaker 10 (15:44):
Obviously, I think he can defend himself from the concerns
that he's conflicted, and that's his main mission today. I
don't know if that means he needs to do more
to separate from his prior work and investments. I don't
know how much capacity he has to do that. I
think Ian is right that the administration wants to be
(16:04):
able to continue to push the narrative that they are
doing something to bring more chip manufacturing back to the US,
and so his announcements of less investment or delayed investment,
you know, is a concern to the administration.
Speaker 9 (16:17):
But they don't have the customers yet.
Speaker 10 (16:20):
Maybe he can say, hey, we've got these guys on
the line, we're reeling them in.
Speaker 9 (16:24):
Maybe that would be reassuring.
Speaker 10 (16:26):
But ultimately Intel needs to keep those subsidies, but not
at the cost of having to spend so much CAPEX
in the near term when they don't have customers. So
a very fine line for the CEO to walk.
Speaker 11 (16:39):
Here.
Speaker 2 (16:39):
The stock's up six percent, so the market likes something
about the idea that lit Bhutan's going to go to
DC and meet with the president. Present day, you're fund
manager looking all across tech, but you had a long
career in semiconductors. Lit Bhutan also has had a very
long career in semiconductors. A lot of this affiliation with
China or indirectly has been well known.
Speaker 4 (17:01):
Were you aware of it? Do you understand his history?
Speaker 10 (17:04):
Yeah, I mean, you know, I don't know him that well,
but I think the public information about his prior work
is pretty clear. He's obviously very highly respected. He was
brought in by the board to take Intel in a
different direction, one that is more measured, less capital spending
forward than Pat Gelsinger wanted to do. And so it's
(17:26):
it's just worrisome right that he might, you know, have
to be removed because of concerns that really.
Speaker 9 (17:34):
Aren't, you well, well founded.
Speaker 10 (17:36):
So he seems like he's a very good person to
run Intel at this when an Intel desperately needs the
help they need to take that company in a different,
more streamlined, more efficient direction while they sport out the
recipe for designing and manufacturing chips, which was a huge
stumbling block for them, and that that's why they're in
the position they are, right, why AMD has taken so
(17:57):
much care from Intel over the year in server chips
and elsewhere. So you know, this is something this is
a company we would avoid. We are avoiding at this point.
We don't think it's a good place for investor money.
There are just way too many uncertainties about the potential
of Intel to make a comeback.
Speaker 3 (18:13):
Meanwhile, the uncertainties loom large about access to China and
what you have to pay to do that from an
AMD and an Nvidia. But an uncertainty you're willing to
swallow if the underlying tailwinds are still so strong. Make
of it what you will tell us what you thought
about the AMD and n VideA deals.
Speaker 9 (18:30):
Yeah, so clearly right, the companies need act. The companies
are better off with access to China than without. Even
with the fifteen percent export tax.
Speaker 10 (18:40):
The you know, the potential revenue at risk, you know,
thirty ish billion dollars for Intel, six to ten billion
for AMD, likely to potentially grow over time, you know,
So to pay fifteen percent on that, it's going to
cut into their margins to some degree. They probably get
a fifty sixty percent gross margin on those sales.
Speaker 9 (18:58):
I think that they're to have to swallow this.
Speaker 10 (19:01):
Right, they're charging what the market will bear right now
for those chips selling into China and elsewhere.
Speaker 9 (19:07):
I don't think they'll be able to pass on.
Speaker 10 (19:09):
This tariff or this sorry, this export tax to the
Chinese customers. They're charging them as much as they can
get away with already, so you know, it's definitely going
to be a hit to margins on a what is
a you know, minority part of their businesses. But it's
better to have access than non And I think the
stocks are up because maybe this resolves the uncertainty.
Speaker 9 (19:29):
Maybe people will say, Okay, they're.
Speaker 10 (19:31):
Going to have to pay this, but hey, now we
can rely on the fact that they'll have these export licenses,
whereas before it was this sort of vague national security concern. No,
you can't sell ships to China. Now that's gone away, right,
It's clearly not a national security issue if the government
is willing to let them pay a fee to gain
that access.
Speaker 2 (19:49):
AMD put a statement out this morning saying they have
an initial export license. They didn't address the fifteen percent
revenue split. Nvidia put out a statement saying they've not
yet shipped any H twenty to China for months, but
they hope to. Can you and your desk analysts start
modeling for some real China revenues in the near term
from both those companies, Yeah, I think.
Speaker 10 (20:10):
Well, you know, from what we know, Yes, I mean
it's good that AMV has confirm they have the licenses,
so I think we can and we would definitely model
in that fifteen percent hit to revenue. And it's unclear,
by the way, where this goes legally, right, it's unconstitutional
to impose an export tax like this, but it's not
clear who would have legal standing to.
Speaker 9 (20:31):
Object to the tax.
Speaker 10 (20:33):
And clearly Nvidia and a MD aren't going to because
they don't want to unbalance the apple cart here and
risk those export licenses. But perhaps you know, one of
the business associations does. This is unclear whether this shouldn't stand.
But you know, we're seeing more and more of these
kinds of pay to play arrangements by the US government
that could increasingly, you know, put a tax on businesses
(20:57):
and should be known this is an ex post tax.
Speaker 9 (21:00):
Right.
Speaker 10 (21:00):
This has happened after the fact of the company's having
designed these ships and begun to sell.
Speaker 9 (21:05):
Do and they want to sell more.
Speaker 10 (21:06):
What what we worry about is that now companies are
going to take this potentially into account. You know, do
I want to develop the next ship or do I
want to develop the next you know, whatever medical device.
If I'm going to be subject abound fifteen percent revenue.
Speaker 2 (21:19):
Techs toun feeny of Advisors Capital Management throughout a time,
but really grateful, thank you know. Coming Up Forward announces
a quote tremendous pivot for its electric vehicle strategy and
can have those details next.
Speaker 4 (21:30):
This is Bloomberg Tech.
Speaker 3 (21:43):
Time now for Talking Tech and first up Forward. It
plans to invest five million dollars building a new line
of budget evs something at thirty thousand dollars mid price
pickup truck in twenty twenty seven a now, the move
represents a massive shift and strategy for Forward. If it's
like the F one fifty lightning plug and pickup just
failed to meet lofty sales expectations. Plus, Paramount is spending
(22:05):
seven point seven billion dollars for exclusive rights to show
the Ultimate Fighting Championship events in the United States. The
deal covers the next seven years and is designed to
boost the company streaming service, and of course comes just
days after David Elison and closed his deal for control
of Paramount and what are you looking at?
Speaker 4 (22:23):
Okay?
Speaker 2 (22:23):
Coming up We speak with Bernstein senior analyst Stacey rascon As.
Nvidia and AMD agreed to pay fifteen percent of their
China chip revenues to the US government. We're going to
get back to that story next. From London and from
New York City. This is Bloomberg Tech. Welcome back to
(22:52):
Bloomberg Tech. Let's get right back to our top story.
Nvidia and AMD have agreed to share fifteen percent of
their revenues from China AI chip sales with United States government.
Bloomberg's reporting that, citing an anonymous source and videos basically flat.
AMD's pushed higher since it confirmed it has been granted
(23:12):
an initial export license, but neither of those companies in
their statements have talked about the fifteen percent revenue payment
to the United States government at all. I'm looking car
at the sell side reaction and it's pretty mixed. Yes,
many say good to have access to the China market,
but there is a number of names on wall streets
that say this sets a bad or worrying precedent.
Speaker 4 (23:34):
And I think one of those names is joining US now.
Speaker 3 (23:36):
Stacey Raskin's joining US bens and senior analysts to talk
through the whole semiconductor spectrum. Stacey, we start with what
you say, initially, look eighty five percent looks better than
zero percent in terms of revenues, but what is the
precedent here? What is their long term access to China too?
Speaker 12 (23:51):
Yeah, so again I don't like the president that it sets.
It feels like a very slippery slope again, you know,
like eighty five percent better than zero. I think it's
better for them, well for them as frankly, as well
as for the US in general, to to be able
to sell into China, Like you don't want to hand
the Chinese market for Ai over to Huawei.
Speaker 11 (24:09):
We want to be able to compete there.
Speaker 12 (24:11):
So I think it's good this idea of like I
don't know what you want to call it, pay for
play or like export tax or whatever you want to
call it.
Speaker 11 (24:17):
I don't like it. Quid pro quo, Yeah, yeah, I
mean it's a slim Why does it stop here? Why
does it stop with China Ai? Why why not other
products other companies? I mean, Stacey, I don't I don't
like I don't like it. Now it's not up to me.
Speaker 2 (24:36):
We'll quite the reason. I jumped in, and Caroline forgive me.
But the reporting was really clear, right, citing the anonymous
source that it is a quid pro quo in the
sense that it is fifteen percent in exchange for an
export license. That's what the reporting tells us. Have you
got enough information on your desk now to model for
(24:56):
what you think and when you think? And Video and
AMD can stop booking that revenue, so.
Speaker 11 (25:01):
You'll let me.
Speaker 12 (25:02):
Let me put the fifteen percent aside for a minute.
They have to restart these supply chains. Both companies have
some some work in progress, not really any finish goods
that they can just sell. They've got some work in
progress that it was halted that they can restart. It
will take some time. It will take even more time
if they have to start actually new wafers from the
beginning of the process to run them through. That'll that'll
(25:24):
take it could be six months, even longer nine months maybe.
Speaker 11 (25:28):
So to the extent that they do ramp this up,
it will take some time. Maybe you get a little bit.
Speaker 12 (25:32):
You know, we had spoken with Nvidia about a month
ago when the news came out that the licenses were
getting I'm.
Speaker 3 (25:39):
Sorry to jump in. We'll be back with you in
a moment. But President Trump is just speaking on this
very topic.
Speaker 4 (25:44):
Just take a listen.
Speaker 9 (25:46):
I think President's a landski to join them.
Speaker 13 (25:48):
So you have to understand, there's a war that should
have never happened. There's a war that wouldn't have happened.
If I went president, would have never happened. It wasn't
It was the apple of I get along very well
with President but if you look under President Bush, they
took a lot of.
Speaker 3 (26:04):
Ter let's jump out. Sorry, Stacy, we returned to you
because he's just pivoted quickly away now back on relationships
with Russia and of course with Ukraine.
Speaker 2 (26:13):
But he was.
Speaker 3 (26:14):
Mentioning AMD and indeed the China relationship, and I go
to you on that because longer term, what will AMD's access,
what will in Video's access be to China, because China
doesn't seem thrilled thus far by what the sentiment is
coming out of the US.
Speaker 11 (26:29):
Yeah, I mean, look so in terms of these things.
Speaker 12 (26:32):
By the way, in Vidia has a roadmap with new
products that are supposedly already compliant that they don't require
a license for, so I don't know if they would
have to kick back some of that once they get
products actually below the threshold of the license enters, and
they do.
Speaker 11 (26:46):
Have a roadmap to sell in China.
Speaker 12 (26:47):
AMD has been a little less forthcoming about their future
China roadmap, So I don't know what products they have
that may go.
Speaker 11 (26:54):
Presumably they do have a roadmap and we'll hear about
it in due course.
Speaker 12 (26:58):
For the long term in China, though, I mean, you
got to remember, like these these thresholds are fairly punitive.
China actually does have local products that have better performance
than what both in Vida and A and D are
actually allowed to sell.
Speaker 11 (27:10):
There.
Speaker 12 (27:10):
The benefits that in Vidia and especially in Vidias is
around ecosystem, which is why we don't want them to
shut off, because we do not want the local developers
in China to coal us around other local alternatives like Quaale.
But you have to think, like over time, the gap
between what and Vidia and even AMD are allowed to
sell in China versus what they're allowed to sell in
(27:31):
the rest of the world is going to get bigger
and bigger and bigger. They're not going to really be
allowed to improve the performance of these products in China
to the extent that they could do it anywhere else,
and the Chinese are going to do their best to
improve the performance of their own products as much as
they can give.
Speaker 11 (27:45):
In the constraints that they're under.
Speaker 5 (27:46):
So like over time.
Speaker 11 (27:48):
Look, China, it's a big market.
Speaker 12 (27:49):
Hopefully they will get some of it, but I mean
it's going to be a competitive market, and it probably
will be impaired relative to their to what they would
be able to sell their if there were no constraints
at all.
Speaker 2 (28:00):
Stacey, Caroline and I had the opportunity to quiz Lisa
sou about this in the middle of last week. I
just wanted to play her thoughts on China right now.
Speaker 14 (28:08):
Ninety days ago, you know, we did not expect to
believe to ship, to be able to ship to China
because of some of the regulations. I think this administration,
the Department of Commerce, the government has actually been very
open to trying to find the right balance between national
security and ensuring that we have AI USAI technologies proliferated
(28:31):
across the world.
Speaker 2 (28:33):
We've talked endlessly about Jensen Wong's ability to have a
relationship with the President. But I just wondered if you've
given a valuation of how Lisa Sue's doing in DC
right now.
Speaker 11 (28:42):
I mean, like she seems to be doing all right
as well.
Speaker 12 (28:44):
Like you have to remember Jenson's the dominant player here,
like am D I mean and more power two of them.
I mean they've done very well given where they're coming from,
but I mean they'll do You know, they did five
billion of sales overall in AI last year year.
Speaker 11 (29:00):
I mean in Vidia didn't know what it was, one
hundred billion.
Speaker 12 (29:02):
Am d said that the China ban you know at
the time, costs him a billion and a half this
year in video B ten x A or even more so.
Speaker 11 (29:11):
They're relatively small.
Speaker 12 (29:12):
But I think Lisa, like in terms of building her
case in the administration and helping them try to build
that relationship with Trump, which for better for us is important,
is important.
Speaker 11 (29:22):
I think she's done a good job. At least she's
been there, she's been present, she's been visible. Right, there
are some other players in the industry that maybe have
been a little less visible.
Speaker 2 (29:32):
Stacy Reskin of Benstein, who thank you. We're actually going
to head back to DC ourselves where the President in
his press conference is talking about Vladimir Putin in relations
with Russia.
Speaker 5 (29:41):
You or even a third and was.
Speaker 3 (29:43):
President Trump speaking at the White House, of course, in
front of reporters currently talking about plan meeting with Putin
that he currently has in minds and Sky will not
be part of Friday's putin meeting. We understand, and Ziski
has gone to a lot of meetings already. He confirms
he will make then a pivot to the world of
technology and to chips. Trump says he wouldn't make a
(30:05):
deal on in Vidia's new chip. He's therefore referencing the
Blackwell chip system. Initially, you went talking about H twenties.
He said he wanted a twenty percent tariff if he
approved chip exports. But we understand he managed to negotiate
down in Vida, Jansen Wang negotiated to a fifteen percent
deal on a chip deal, confirming that fifteen percent chip
(30:25):
payment that will go from Invidia on in H twenty
to the US government. In videos H twenty, he says
is obsolete but still has a market. But he thinks
Jenson Wang is coming back to see him, he says
about the Blackwell chips. Let's go to Joe now, Joe Matthew,
who is back to break it all down with us.
There was a lot about Russia, There's a lot about geopolitics,
(30:46):
but there's a lot about China as well. Joe, just
for the technology audience, talk to us a little bit
about what you learned in the Nvidio context.
Speaker 6 (30:53):
Well he confirmed that fifteen percent, So Bloomberg as usual
was ahead of the curve.
Speaker 5 (30:58):
With this reporting.
Speaker 6 (30:59):
But to go, I want to suggest that there could
be a deal involving Blackwell, I think might be the
closest thing that we have to news here. What he
said is I wouldn't make a deal with that, referring
to Blackwell, although it's possible I would make a deal.
Speaker 5 (31:15):
He said a somewhat enhanced in a.
Speaker 6 (31:17):
Negative way, Blackwell, taking off thirty to fifty percent of it.
I think suggesting that somehow there would be a lower
powered version of Blackwell. I suspect that Jensen one would
have some things to say about that when they do
meet again. But the idea here that we could see
continued changes in Nvidia's export controls and relationship with China.
Speaker 5 (31:38):
I suspect that goes for AMD as well.
Speaker 6 (31:40):
It's quite remarkable to hear the President riffing on this
in front of reporters today.
Speaker 2 (31:44):
Okay, Bloomberg's balance a power host Joe Matthew the blow
by blow of what President Trump had to say. Caroen,
There's a lot more coming up to discuss on the show.
Speaker 3 (31:52):
Certainly is Nvidia AMD. We return in a moment for
their own Tom Giles as a Bloombag Tech.
Speaker 4 (32:06):
Let's get back to our top story.
Speaker 2 (32:07):
Bloomberg had reported in Vidia and amb both agreed to
pay fifteen percent of their revenue from Chinese AI chip
sales to the US government. In the last few minutes,
President Trump has confirmed at least some of that in
a video's case. Bloomberg, Senior executive editor for Tech, Tom
Giles is in San Francisco.
Speaker 4 (32:24):
What do we need to know?
Speaker 15 (32:25):
Yeah, well, this is very This has very little precedent.
This demonstrates just how important the Chinese market is to
these companies. They really want to be able to sell
their most advanced chips into the Chinese market. They have,
They've hit a buzzsaw from the Trump administration, which has
placed really strict.
Speaker 5 (32:46):
Limits on what they can and can't do.
Speaker 15 (32:48):
It's in the middle of negotiations with the Chinese government
over terriffs, and so this shows that the Trump administration
wants to cut deals, wants.
Speaker 5 (32:58):
A cut of the these chips.
Speaker 15 (33:01):
It's willing to turn a blind eye to the sale
of advanced artificial intelligence chips into the Chinese market. If
it can get a return, but this just this is
going to complicate trade negotiations going forward.
Speaker 3 (33:17):
We thank you Tom Giles for wrapping up the latest
as DC crosses passed in San Francisco. But that does
it for this edition of Bloomberg Tech Head.
Speaker 4 (33:25):
Yeah, the bit we didn't get to.
Speaker 2 (33:26):
We think Intel's CEO is going to meet with President
Trump later today, so overynight we look for a read
on that. So much to recap on the podcast, the
focus on Nvidia and AMD. You know where to find
the pods on Apple, Spotify, iHeart and all of your
Bloomberg platforms from London and New York City.
Speaker 4 (33:42):
This is Bloomberg Tech
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