May 23, 2025 • 22 mins
Bloomberg’s Caroline Hyde discusses President Trump's threat to place a 25% tariff on Apple if it doesn't move iPhone production to the U.S. Plus, Andrew Ng, co-founder of Coursera and AI investor, discusses the skills shortage in advanced manufacturing that makes building iPhones and other tech in the US difficult. And the IPO market begins to heat up, spurring hope for tech startups and their investors.
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Speaker 1 (00:00):
From the heart of where innovation, money and power collide
in Silicon Valley and beyond. This is Bloomberg Technology with
Caroline Hyde and Ed.
Speaker 2 (00:12):
Ludlow live from New York.
Speaker 3 (00:28):
This is Blomberg Technology, and we get straight to our
top story. President Trump taking aim and Apple yet again,
threatening a twenty five percent tariff on the iPhone maker
if they don't produce the devices in the United States
for US consumers. Shares as you see, down yet another
two point seven percent. We're dropping below that three trillion
dollar market capitalization, and we're bringing the analysis Blombergs. Mike
(00:50):
Shepherd joins us we have seen Tim Cook in the
line of fire from Donald Trump for at least the week.
Speaker 4 (00:56):
Now, how does he respond, Mike, This is.
Speaker 5 (01:00):
A tough one for him, Caro, because the President's dander
really is up here. Last week he singled him out
during an appearance with reporters while he was traveling to
the Middle East, and he noted Cook's absence during a
forum with other CEOs in Riab where he called out
Tim Cook. Tim Cook, do I see? And he said,
(01:21):
I don't think Tim is here, And then later he
pointed to Apple's intention to move some of its China
based iPhone production for the US to India to avert
what would be higher costs related to tariffs on goods
coming from China. Trump wants to see something different, though.
He wants that production not to go to India but
to the US. He would like to see domestic production
(01:43):
move here. And whatever Tim Cook has been promising the President,
with whom in the past he's had a good relationship,
clearly wasn't enough. And remember Tim Cook did meet with
Trump at mar A Lago after the election, and he
attended the inauguration too. He had a visible spot along
with other tech leaders in the capital rot Tuanda on
that day, January twentieth.
Speaker 4 (02:03):
And we're not seeing for Tim.
Speaker 5 (02:06):
Cook the results that he might have hoped for in
this relationship with the President.
Speaker 3 (02:10):
The signals have been their Mike, as you mentioned, the
little problem with Tim Cook that Trump spoke of last
week being that of shifting manufacturing from China to India,
and then the ft with a report showing that that
India manufacturing focus had been being doubled down on in
the last week. More broadly, to speak to the relationship
therefore that we see of Tim Cook with the US
(02:32):
and investing him because already he had promised five hundred
billion dollars.
Speaker 5 (02:37):
He had promised five hundred billion dollars and it was
not insignificant, and he had talked about moving some iPhone
related chip production here and other efforts here, including training
and other works, but it wasn't enough. Trump is really
about the symbolism. He wants the iconic products, including the iPhone,
(02:58):
but others as well made here in the US. But
one of the problems is, of course, the workforce. We
don't have the workforce, and then the cost. Do we
have the workforce that is prepared to do the kind
of high tech, high skill assembly of these phones that
you see on mass in China and in India and
in Vietnam. We really don't. And Tim Cook has made
(03:20):
this point over and over again, as have other chief
executives when they talk about the challenge of bringing production
here to the US. So is a difficult moment for
Tim Cook and trying to figure out this relationship with
the US.
Speaker 6 (03:34):
The cost.
Speaker 5 (03:35):
There are estimates all over the place about how much
more an iPhone would cost if it were produced here,
from beginning to end. One analyst out this morning saying
as high as thirty five hundred dollars per unit. That
may be high, but it gives you an idea of
just how much more of a cost there may be
for moving production here, which Caro, it's important to note,
(03:56):
would take years to reroute all those supply lines, find
that land, et cetera.
Speaker 4 (04:02):
Well, said Mike Sheppard.
Speaker 3 (04:03):
We appreciate it, of course, that being Dan ives a
Webburshoe called about a thirty five hundred price tag, and
indeed he called it a fairy tale. And it's calling
this an absurd directive coming from the president. Let's get
more analysis with Gil Luria Da Davison managing director joining us.
Now you have a buy rating on Apple, a two
hundred and fifty dollars price target. Does any of that
change if they indeed have to bring production hitting the
(04:26):
United States?
Speaker 6 (04:27):
It does not. This is really just a matter of timeframes. Yes,
if we needed to make an iPhone right now in
the US, it would be very expensive. But can we
do this in five years? If Apple was to commit
to bringing production on iPhones to the US in five
years and invested its considerable resources into doing that, it
(04:50):
wouldn't be that much more expensive. And that's what the
President is looking for. And I'm surprised that Apple is
at a point where they're negotiat eating this badly that
the President has to go out publicly and threaten them.
You've seen other technology CEOs do a much better job
of giving the President what he wants and moving forward
(05:13):
and making those commitments. And I'm surprised that Apple is
continuing to be humbled. Let's not forget this has been
a humbling week for Apple. Yes, at Google Io, we've
seen that that Google is way ahead on AI on Android.
Then there was the embarrassing announcement from Open Ai and
Johnny Ive. Apple needs to do a better job of
(05:35):
negotiating because if it does commit to a long term path,
it could make iPhones in the US at a competitive price.
It doesn't have to do it today.
Speaker 3 (05:45):
How Gil, at the moment, we're hearing that we don't
have the skill set in the United States. We don't
have the ecosystem of supply chain here. It has taken
decades to build it up in China, It's taken years
to build up in India. What do they have to
go about sorting here in the United States?
Speaker 4 (06:00):
Three to five year timeframe.
Speaker 6 (06:02):
Yeah, that's exactly right. It is a skills issue. But
if you give them five years, we can hire internationally,
we can develop the skill Here. Apple is sitting on
fifty billion dollars of cash and it produces one hundred
billion dollars of cash every year. That is, that is
enough to accomplish great things. And if the great thing
(06:23):
Apple needs to accomplish right now is to develop that
skill set domestically, then it should be focusing its own
resources on that.
Speaker 4 (06:32):
Again, Gil jumping in there.
Speaker 3 (06:34):
The opportunity cost of diverting that cash away from R
and D. Boy, they have to catch up in terms
of Generator AI and integrating it there, but instead having
to focus on production here in the United States? Is
that not an opportunity cost? That does indeed drag down
the price target it needs for the stock.
Speaker 6 (06:53):
It is a headwind and that's the head whend they're
dealing with this year. That's why the stock is down
so much, is that they've been caught in this cross
us fire and they didn't need to again. All they
needed to do is make some early commitments, start down
a path, and then this path either it leads them
to a successful outcome or they have a fallback of saying, okay,
(07:14):
let's just absorb the twenty five percent tariff from India.
That's why when people say it'll cost thirty five hundred
dollars to make an iPhone in the US, that's not
a real thing. The only possibility year is that they're
going to say, okay, even in a five year time frame,
it's going to cost us so much to make an
iPhone that will absorb the twenty five percent tariff from
India and absorb it through higher prices, slightly lower margin,
(07:39):
and push it down to vendors. So this is really
just a matter of them doing a better job negotiating
moving forward. But yes, absolutely this is a drag on
the stock. It has been this year, and until they
find a path forward and get out of the headlines,
it'll continue away on the stock.
Speaker 3 (07:57):
So, Gil, if you're saying it's not a real thing,
estimate what an iPhone made in America would cost. Are
you anticipating that they do stomach a twenty five percent
tariff coming on just continue into import or are you
anticipating that they do go about a three to five
year investment plan in the US When look the term
of President Trump is in five years.
Speaker 6 (08:20):
I think they need to proceed on both pasts again
this year. They can't make iPhones in the US now
this year, not in the next three years, so they
are going to have to try to negotiate that tariff
down or absorb it in the short term, which is
what they're doing, and then proceed on both paths, because
to your point, this administration isn't going to be in
power forever and they're going to have to find out
(08:43):
over time how what it is going to cost. I
think that we're also minimiz I think that I've heard
some comments minimizing the changes to manufacturing in the US.
Manufacturing is going to change dramatically over the next few
years in the US for a variety of reasons, because
labor has become more expensive in China and Taiwan, because
robotics are getting that much better. So in a five
(09:05):
year timeframe they may be able to accomplish these goals.
They have to pursue that now they don't have a choice.
But at the same time they need to use that
as leverage to go back to the administrator and say, hey,
give us five years to do this. Let's take off
that twenty five percent on India because we are making
a firm commitment to the five year timeframe and that'll
(09:27):
buy them the time to find a good resolution that
is possible, and mister Cook is a skillful enough negotiator
that he needs to be able to accomplish that.
Speaker 3 (09:37):
But how frustrating do you think it is for investors,
for yourself or indeed Tim Cook, to just think about
the inefficiencies that have to be built into the business
model now. Even if they do bring over a component
building here in the US, it's not going to be
an easy task and they're likely to have to still
assemble in China and India for the time being.
Speaker 6 (09:55):
Well, it's a reality. I think sometimes other countries and
some CEOs are a little bit in denial over the
fact that President Trump got seventy seven million votes and
believes he has a mandate to make these very profound
changes to the global order, including changing the way the
global supply chain works. This is not going to change
(10:17):
in the next three years. This is something that all
these companies and by the way, these countries have to
acknowledge and move forward with, and we as analysts and
investors have to adapt to it. We can't go back
in time and change the outcome of the US elections.
This is the administration, this is its policy, and we
have to adapt as investors, which means that Apple is
(10:40):
going to have a choppy year for sure, and other
companies that try to negotiate badly are going to have
choppy years. That's why we favor companies that have handled
this better. Microsoft, Amazon I've handled this a lot better.
Their business is more resilient to this, and they should
be better able to get through the rest of this
(11:03):
year and the rest of this administration.
Speaker 3 (11:05):
All lies on the political navigation of Tim Coke.
Speaker 4 (11:08):
Next, Gil Luria.
Speaker 3 (11:10):
Great to have you Da Davidson coming up, renowned computer
scientist in Ai developed and row and he's going to
be joining us to talk about his new VC fund.
But also this talent, the skill issue that we're just
talking about with Gil Luria, can that be brought here
to the United States.
Speaker 4 (11:23):
Let's just take a quick.
Speaker 3 (11:24):
Check on the market's ahead of that though, because the
Nazak is under pressure as we dial up tariff anxiety.
Speaker 4 (11:29):
Nazak off by more than percent.
Speaker 3 (11:30):
We see this semiconductor index also off by two percent,
and video gets sold for Apple in the line of fire.
This is bluebog technology. The big news today it is
(11:54):
Apple shares trading low as investors react to President Trump's
threat of a twenty five percent tariff on the company
if it doesn't bring more iPhone production to the United States.
But doing that requires skills many American workers currently do
not have. We're pleased to welcome to the show Andrew
and his world renowned computer scientist, thought leader and also
the co founder of online education company called Serah, and
(12:16):
is also announcing his second fund targeting AI startups. Andrew,
it is wonderful to have your voice on the show.
And before we get into really the AI talent that
you've been building, I just want to get your take
on the labor skills that are currently needed in the
US for this manufacturing pivot. If we were to bring
iPhone manufacturing to the United States, could we do it
in a near ative time frame?
Speaker 7 (12:38):
It will take years to develop the talent based needed
to bring a lot of advanced manufacturing back to the
United States. I think there's a certain largely to making
sure that advanced manufacturing is under the control of the
US and our allies, and that's important, not just US
but also I trusted Ollies. Several years ago, I actually
visited Wisconsin where the first Trump administration and fox Con
(12:59):
might be put fed into Wiscon Valley, which is an
attempt to move semiconductor, sorry, move display manufacturing panel display
manufacturing to the United States in Wisconsin, and frankly it
was a great effort, but it really struggled to gain
traction because it's very difficult to find the talent in
Wisconsin or the US more broadly, with the advanced manufacturing skills,
(13:20):
manufacturing today is often a high skill requiring knowing about robotics,
knowing about software. It's not just people assembling little things
with their hands anymore. And we've got a lot of
work to do to grow that talent in the US.
Speaker 3 (13:31):
Where could we bring in from and where have you
seen that skill set among allies that can be broad
in because in many ways it's feeling as though we're
not bringing in.
Speaker 4 (13:39):
Talent from abroad at this moment either.
Speaker 7 (13:42):
I think that in the case of manufacturing talent, curly
China has a lot of it. I think Taiwan interestingly
also has a lot of manufacturing talent. So I feel
like and obviously also Japan. I think some parts of
career as well, especial when it comes to semiconductors. But
so many of our allies do have skilled manufacturing talent.
But how to work with them to import some of
(14:04):
those skills to the US is I think something still
to be figured out. And then on the other sid
of the spectrum they alluded to, I think one of
the best things that US could do to ensure American
competitiveness in AI and other advanced technology fields is to
frankly support our universities and support high skill immigration.
Speaker 3 (14:22):
How have you been considering the cuts to science funding
in particular? Is that impacting your sector? The sector you
want to invest more in with your second fund.
Speaker 7 (14:33):
So AFUNS Adventure Studio. We work with many entrepreneurs to
build companies and I feel like over the last many decades,
America led the world in science and technology, and this
is an eraror when we have strong institutions like the
National Science Foundation and the NAH the funded open research.
One thing that I think not many people fully understand
is when say, the National Science Foundation funds and researcher
(14:55):
the writer research paper there's published a free anyone in
the Internet can can read it. Yes, it holds their adversaries. Yes,
it helps the whole world. But the country it helps
the most is America because when an American researcher on American
assault publishes a paper, that diffusion of knowledge is fastest
within America. And yes, other countries, including our adversaries, can
benefit from it too, but that openness of research helps
(15:17):
the country that does it the most. And so I
think America's ability to attract amazing international I always once
an international student myself on an F one visa, and
I came to the US study and it ended up
saying and hopefully making some positive contributions to this country.
I think welcoming school immigration would be a they would
be an important piece of insurance American competitiveness.
Speaker 3 (15:39):
Well, let's talk about your positive contribution when it comes
to raising one hundred and ninety million dollars second fund
to invest in ai talent and startups and sort of
co found them in many ways. What sector is you
looking at and are they US built companies alone?
Speaker 7 (15:54):
We are building the majority of countries we built are
in the US, but we are also working with businesses
in Japan and Taiwan. Career and so on, Afan's Adventure studio.
So what I decided was unlikely traditional VC. You know,
I don't want to be competing for or chasing deal flow,
so we exclusively work of entrepreneurs to co found companies.
(16:15):
What that means is my team is alongside the entrepreneurial
We're writing code and customers debating what features to build.
And because my team is fortunate to be close to
the AI technology, a less of local across many different
industry sectors, recruit great AI talent and apply our technical
expertise to all sorts of different sectors where AI can
(16:36):
be applied.
Speaker 3 (16:37):
Well come back as that portfolio continues to grow.
Speaker 4 (16:40):
Andrew has been a joy speaking with you.
Speaker 3 (16:41):
Congratulations on the new fund and thank you for sharing
your expertise and drawing. Of course, managing general partner at
the AI Fund, It's also founder of Deep Learning AI and.
Speaker 4 (16:50):
Of course co founder of Coursera.
Speaker 3 (16:52):
Sticking with artificial intelligence and forropic well, it's rolling out
two new versions of its claud AI software, including a
longer laid.
Speaker 4 (16:58):
Update to the high end model.
Speaker 3 (17:00):
This is as a startup really advised to stay ahead
of a crowded market. Mike Kreiger joined ed a little
earlier Andthropic's chief product officer, Our really.
Speaker 8 (17:10):
You know constraint for the slaunch was we wanted to
be available to you know, as many people as want
it on the launch day itself as well, and so
it'll be generally available. It'll be in claud dot ai
for our more end users. It'll also be available in
the API for usage on day one, and then as
people scale up their usage, you know, there's often you know,
capacity and rate limit conversations that we need to have
just because the models aren't really in demand. But in
(17:31):
terms of being generally available.
Speaker 3 (17:32):
It's day one coming up tech IPOs and we're back.
We'll discuss a Bream and ch equity Zen. This is
reuly Meg technology. Now as the broader market sells off
(17:58):
shares of Mountain of Hinge Health, both trading higher after
making their public debuts just yesterday. Their success is giving
hope to other tech startups that have been waiting to
go public in some cases for many years.
Speaker 4 (18:10):
Let's talk about it all.
Speaker 3 (18:11):
Briann lynches with US head of market Insights at equity
Zen and one of the largest pre IPO platforms for
private shares. It's in the secondary market and brand. Look,
are we seeing the creaking open? Is it companies that
have to come to the market or are we going
to start to see companies that just want to come
in this environment?
Speaker 9 (18:28):
Thanks for having me now. If you had asked me
a few weeks ago if we would be seeing positive
IPO activity right now, I would have said no. But
these few companies that have bit the bullet and decided
to go out Eutro last week, Hinge Health, and mount
In yesterday are performing well in are outperforming the market.
So I think, you know, we're not in a market
(18:49):
environment where we'll see the floodgates open up. But for
companies that need to go public for liquidity or other reasons,
or feel like they have a really compelling story, they
might just be brave and decide to despite you know,
the volatility there is.
Speaker 3 (19:04):
What are the story necessities. It's interesting that core we've
now really outperforming. We're at priced despite the initial volatility.
So we've got an AI focus, you've got release services
and consumer focus businesses. Thus far, does it have to
be there or could we even go into broader hardware
and deep tech?
Speaker 9 (19:21):
I think we can go broader into a hardware detech.
There's other names that are on our radars. Rebra Swan
who has filed and you know, has been on the
IPO pipeline for some time now. But what's interesting is
the companies we've seen recently. You have a fintech, you
have a health tech, you have an ad tech company,
so very different companies, but there are some similarities. These
(19:41):
are older companies that are over a decade plus years old,
so there's a lot of investors and early employees who've
been reading a very long time for liquidity. Surprisingly, when
you look at the two from yesterday, these are unprofitable
companies as well, so it's a little bit surprising to
see how well they've then received given that they're not
yet profitable. They're almost there, but it seems like maybe
(20:03):
that's not a requirement now for public market investors when
you're achieving thirty five plus percent growth rates and hundreds
of millions of dollars in revenue. So I think there's
a similar story well we're seeing across some of these sectors.
And another thing to notice, these have been down round IPOs,
you know, the to yesterday both raising in their IPO
(20:24):
at valuations below their last round of private funding, and
especially for a lot of these companies that last raise
in twenty twenty one, twenty twenty two, I think that's
going to be a reality in the market. So just
some commonalities and things that we may expect to see
as others enter the market.
Speaker 3 (20:39):
Bran, Let's talk though about some of the pressures that
can be taken off by the secondary market, because liquidity
for employees that have been there a long time, liquidity
for the venture that's back them for a long time,
and it's actually getting far easier in the secondary market
right absolutely.
Speaker 9 (20:53):
And what we've seen is the VC ecosystem as a
whole is at this really interesting inflection point where it
used to be raise capital from LPs, deploy that into
early stage startups, have exits around the ten year time
horizon return capital, rinse, repeat, rinse repeat. That crucial exit
at the ten year timeline piece is not happening, and
that's really driving more secondary activity. Precursor Ventures gave a
(21:17):
stat a few weeks ago that they expect seventy five
to eighty percent of distributions to LPs to be from
secondaries over the next five years, and that's a huge
number and it really speaks to the liquidity crunch that
we're seeing in the venture market, and secondaries are certainly
becoming a larger avenue.
Speaker 3 (21:35):
To address that briefly, though, we've seen an interesting tech
focus from vcs where they convert to be able to
buy more of the secondary market, maybe even some of
the public market too.
Speaker 1 (21:47):
Yeah.
Speaker 9 (21:47):
Absolutely, so, we've seen this trend of more vcs registering
as Ria's light Speed is the most recent example of
a VC firm that's done that, and that really allows
them more flexibility to invest more than twenty percent of
their portfolio into both public companies and secondaries. And while
we've talked a lot about, you know, the secondary need
(22:07):
on the cell side, there's also a secondary need on
the buy side where these AI companies they have just
so much capital available to them, it's hard for most
investors to get access to a funding round or get
the allocation that they're looking for in you know, the
latest AI startup, So they're also coming to the secondary
market to either build or establish investments.
Speaker 3 (22:30):
Brian Lynch, great to catch up with you, thank you,
head of Market inside It at Quityzen. Meanwhile, we check
bick back on the big story of the day, Apple
shares lower well, we see a twenty five percent tariff
that they don't move more US manufacturing for the iPhone.
Speaker 4 (22:44):
This is Bloomberg Technology
From the heart of where innovation, money and power collide
in Silicon Valley and beyond. This is Bloomberg Technology with
Caroline Hyde and Ed.
Speaker 2 (00:12):
Ludlow live from New York.
Speaker 3 (00:28):
This is Blomberg Technology, and we get straight to our
top story. President Trump taking aim and Apple yet again,
threatening a twenty five percent tariff on the iPhone maker
if they don't produce the devices in the United States
for US consumers. Shares as you see, down yet another
two point seven percent. We're dropping below that three trillion
dollar market capitalization, and we're bringing the analysis Blombergs. Mike
(00:50):
Shepherd joins us we have seen Tim Cook in the
line of fire from Donald Trump for at least the week.
Speaker 4 (00:56):
Now, how does he respond, Mike, This is.
Speaker 5 (01:00):
A tough one for him, Caro, because the President's dander
really is up here. Last week he singled him out
during an appearance with reporters while he was traveling to
the Middle East, and he noted Cook's absence during a
forum with other CEOs in Riab where he called out
Tim Cook. Tim Cook, do I see? And he said,
(01:21):
I don't think Tim is here, And then later he
pointed to Apple's intention to move some of its China
based iPhone production for the US to India to avert
what would be higher costs related to tariffs on goods
coming from China. Trump wants to see something different, though.
He wants that production not to go to India but
to the US. He would like to see domestic production
(01:43):
move here. And whatever Tim Cook has been promising the President,
with whom in the past he's had a good relationship,
clearly wasn't enough. And remember Tim Cook did meet with
Trump at mar A Lago after the election, and he
attended the inauguration too. He had a visible spot along
with other tech leaders in the capital rot Tuanda on
that day, January twentieth.
Speaker 4 (02:03):
And we're not seeing for Tim.
Speaker 5 (02:06):
Cook the results that he might have hoped for in
this relationship with the President.
Speaker 3 (02:10):
The signals have been their Mike, as you mentioned, the
little problem with Tim Cook that Trump spoke of last
week being that of shifting manufacturing from China to India,
and then the ft with a report showing that that
India manufacturing focus had been being doubled down on in
the last week. More broadly, to speak to the relationship
therefore that we see of Tim Cook with the US
(02:32):
and investing him because already he had promised five hundred
billion dollars.
Speaker 5 (02:37):
He had promised five hundred billion dollars and it was
not insignificant, and he had talked about moving some iPhone
related chip production here and other efforts here, including training
and other works, but it wasn't enough. Trump is really
about the symbolism. He wants the iconic products, including the iPhone,
(02:58):
but others as well made here in the US. But
one of the problems is, of course, the workforce. We
don't have the workforce, and then the cost. Do we
have the workforce that is prepared to do the kind
of high tech, high skill assembly of these phones that
you see on mass in China and in India and
in Vietnam. We really don't. And Tim Cook has made
(03:20):
this point over and over again, as have other chief
executives when they talk about the challenge of bringing production
here to the US. So is a difficult moment for
Tim Cook and trying to figure out this relationship with
the US.
Speaker 6 (03:34):
The cost.
Speaker 5 (03:35):
There are estimates all over the place about how much
more an iPhone would cost if it were produced here,
from beginning to end. One analyst out this morning saying
as high as thirty five hundred dollars per unit. That
may be high, but it gives you an idea of
just how much more of a cost there may be
for moving production here, which Caro, it's important to note,
(03:56):
would take years to reroute all those supply lines, find
that land, et cetera.
Speaker 4 (04:02):
Well, said Mike Sheppard.
Speaker 3 (04:03):
We appreciate it, of course, that being Dan ives a
Webburshoe called about a thirty five hundred price tag, and
indeed he called it a fairy tale. And it's calling
this an absurd directive coming from the president. Let's get
more analysis with Gil Luria Da Davison managing director joining us.
Now you have a buy rating on Apple, a two
hundred and fifty dollars price target. Does any of that
change if they indeed have to bring production hitting the
(04:26):
United States?
Speaker 6 (04:27):
It does not. This is really just a matter of timeframes. Yes,
if we needed to make an iPhone right now in
the US, it would be very expensive. But can we
do this in five years? If Apple was to commit
to bringing production on iPhones to the US in five
years and invested its considerable resources into doing that, it
(04:50):
wouldn't be that much more expensive. And that's what the
President is looking for. And I'm surprised that Apple is
at a point where they're negotiat eating this badly that
the President has to go out publicly and threaten them.
You've seen other technology CEOs do a much better job
of giving the President what he wants and moving forward
(05:13):
and making those commitments. And I'm surprised that Apple is
continuing to be humbled. Let's not forget this has been
a humbling week for Apple. Yes, at Google Io, we've
seen that that Google is way ahead on AI on Android.
Then there was the embarrassing announcement from Open Ai and
Johnny Ive. Apple needs to do a better job of
(05:35):
negotiating because if it does commit to a long term path,
it could make iPhones in the US at a competitive price.
It doesn't have to do it today.
Speaker 3 (05:45):
How Gil, at the moment, we're hearing that we don't
have the skill set in the United States. We don't
have the ecosystem of supply chain here. It has taken
decades to build it up in China, It's taken years
to build up in India. What do they have to
go about sorting here in the United States?
Speaker 4 (06:00):
Three to five year timeframe.
Speaker 6 (06:02):
Yeah, that's exactly right. It is a skills issue. But
if you give them five years, we can hire internationally,
we can develop the skill Here. Apple is sitting on
fifty billion dollars of cash and it produces one hundred
billion dollars of cash every year. That is, that is
enough to accomplish great things. And if the great thing
(06:23):
Apple needs to accomplish right now is to develop that
skill set domestically, then it should be focusing its own
resources on that.
Speaker 4 (06:32):
Again, Gil jumping in there.
Speaker 3 (06:34):
The opportunity cost of diverting that cash away from R
and D. Boy, they have to catch up in terms
of Generator AI and integrating it there, but instead having
to focus on production here in the United States? Is
that not an opportunity cost? That does indeed drag down
the price target it needs for the stock.
Speaker 6 (06:53):
It is a headwind and that's the head whend they're
dealing with this year. That's why the stock is down
so much, is that they've been caught in this cross
us fire and they didn't need to again. All they
needed to do is make some early commitments, start down
a path, and then this path either it leads them
to a successful outcome or they have a fallback of saying, okay,
(07:14):
let's just absorb the twenty five percent tariff from India.
That's why when people say it'll cost thirty five hundred
dollars to make an iPhone in the US, that's not
a real thing. The only possibility year is that they're
going to say, okay, even in a five year time frame,
it's going to cost us so much to make an
iPhone that will absorb the twenty five percent tariff from
India and absorb it through higher prices, slightly lower margin,
(07:39):
and push it down to vendors. So this is really
just a matter of them doing a better job negotiating
moving forward. But yes, absolutely this is a drag on
the stock. It has been this year, and until they
find a path forward and get out of the headlines,
it'll continue away on the stock.
Speaker 3 (07:57):
So, Gil, if you're saying it's not a real thing,
estimate what an iPhone made in America would cost. Are
you anticipating that they do stomach a twenty five percent
tariff coming on just continue into import or are you
anticipating that they do go about a three to five
year investment plan in the US When look the term
of President Trump is in five years.
Speaker 6 (08:20):
I think they need to proceed on both pasts again
this year. They can't make iPhones in the US now
this year, not in the next three years, so they
are going to have to try to negotiate that tariff
down or absorb it in the short term, which is
what they're doing, and then proceed on both paths, because
to your point, this administration isn't going to be in
power forever and they're going to have to find out
(08:43):
over time how what it is going to cost. I
think that we're also minimiz I think that I've heard
some comments minimizing the changes to manufacturing in the US.
Manufacturing is going to change dramatically over the next few
years in the US for a variety of reasons, because
labor has become more expensive in China and Taiwan, because
robotics are getting that much better. So in a five
(09:05):
year timeframe they may be able to accomplish these goals.
They have to pursue that now they don't have a choice.
But at the same time they need to use that
as leverage to go back to the administrator and say, hey,
give us five years to do this. Let's take off
that twenty five percent on India because we are making
a firm commitment to the five year timeframe and that'll
(09:27):
buy them the time to find a good resolution that
is possible, and mister Cook is a skillful enough negotiator
that he needs to be able to accomplish that.
Speaker 3 (09:37):
But how frustrating do you think it is for investors,
for yourself or indeed Tim Cook, to just think about
the inefficiencies that have to be built into the business
model now. Even if they do bring over a component
building here in the US, it's not going to be
an easy task and they're likely to have to still
assemble in China and India for the time being.
Speaker 6 (09:55):
Well, it's a reality. I think sometimes other countries and
some CEOs are a little bit in denial over the
fact that President Trump got seventy seven million votes and
believes he has a mandate to make these very profound
changes to the global order, including changing the way the
global supply chain works. This is not going to change
(10:17):
in the next three years. This is something that all
these companies and by the way, these countries have to
acknowledge and move forward with, and we as analysts and
investors have to adapt to it. We can't go back
in time and change the outcome of the US elections.
This is the administration, this is its policy, and we
have to adapt as investors, which means that Apple is
(10:40):
going to have a choppy year for sure, and other
companies that try to negotiate badly are going to have
choppy years. That's why we favor companies that have handled
this better. Microsoft, Amazon I've handled this a lot better.
Their business is more resilient to this, and they should
be better able to get through the rest of this
(11:03):
year and the rest of this administration.
Speaker 3 (11:05):
All lies on the political navigation of Tim Coke.
Speaker 4 (11:08):
Next, Gil Luria.
Speaker 3 (11:10):
Great to have you Da Davidson coming up, renowned computer
scientist in Ai developed and row and he's going to
be joining us to talk about his new VC fund.
But also this talent, the skill issue that we're just
talking about with Gil Luria, can that be brought here
to the United States.
Speaker 4 (11:23):
Let's just take a quick.
Speaker 3 (11:24):
Check on the market's ahead of that though, because the
Nazak is under pressure as we dial up tariff anxiety.
Speaker 4 (11:29):
Nazak off by more than percent.
Speaker 3 (11:30):
We see this semiconductor index also off by two percent,
and video gets sold for Apple in the line of fire.
This is bluebog technology. The big news today it is
(11:54):
Apple shares trading low as investors react to President Trump's
threat of a twenty five percent tariff on the company
if it doesn't bring more iPhone production to the United States.
But doing that requires skills many American workers currently do
not have. We're pleased to welcome to the show Andrew
and his world renowned computer scientist, thought leader and also
the co founder of online education company called Serah, and
(12:16):
is also announcing his second fund targeting AI startups. Andrew,
it is wonderful to have your voice on the show.
And before we get into really the AI talent that
you've been building, I just want to get your take
on the labor skills that are currently needed in the
US for this manufacturing pivot. If we were to bring
iPhone manufacturing to the United States, could we do it
in a near ative time frame?
Speaker 7 (12:38):
It will take years to develop the talent based needed
to bring a lot of advanced manufacturing back to the
United States. I think there's a certain largely to making
sure that advanced manufacturing is under the control of the
US and our allies, and that's important, not just US
but also I trusted Ollies. Several years ago, I actually
visited Wisconsin where the first Trump administration and fox Con
(12:59):
might be put fed into Wiscon Valley, which is an
attempt to move semiconductor, sorry, move display manufacturing panel display
manufacturing to the United States in Wisconsin, and frankly it
was a great effort, but it really struggled to gain
traction because it's very difficult to find the talent in
Wisconsin or the US more broadly, with the advanced manufacturing skills,
(13:20):
manufacturing today is often a high skill requiring knowing about robotics,
knowing about software. It's not just people assembling little things
with their hands anymore. And we've got a lot of
work to do to grow that talent in the US.
Speaker 3 (13:31):
Where could we bring in from and where have you
seen that skill set among allies that can be broad
in because in many ways it's feeling as though we're
not bringing in.
Speaker 4 (13:39):
Talent from abroad at this moment either.
Speaker 7 (13:42):
I think that in the case of manufacturing talent, curly
China has a lot of it. I think Taiwan interestingly
also has a lot of manufacturing talent. So I feel
like and obviously also Japan. I think some parts of
career as well, especial when it comes to semiconductors. But
so many of our allies do have skilled manufacturing talent.
But how to work with them to import some of
(14:04):
those skills to the US is I think something still
to be figured out. And then on the other sid
of the spectrum they alluded to, I think one of
the best things that US could do to ensure American
competitiveness in AI and other advanced technology fields is to
frankly support our universities and support high skill immigration.
Speaker 3 (14:22):
How have you been considering the cuts to science funding
in particular? Is that impacting your sector? The sector you
want to invest more in with your second fund.
Speaker 7 (14:33):
So AFUNS Adventure Studio. We work with many entrepreneurs to
build companies and I feel like over the last many decades,
America led the world in science and technology, and this
is an eraror when we have strong institutions like the
National Science Foundation and the NAH the funded open research.
One thing that I think not many people fully understand
is when say, the National Science Foundation funds and researcher
(14:55):
the writer research paper there's published a free anyone in
the Internet can can read it. Yes, it holds their adversaries. Yes,
it helps the whole world. But the country it helps
the most is America because when an American researcher on American
assault publishes a paper, that diffusion of knowledge is fastest
within America. And yes, other countries, including our adversaries, can
benefit from it too, but that openness of research helps
(15:17):
the country that does it the most. And so I
think America's ability to attract amazing international I always once
an international student myself on an F one visa, and
I came to the US study and it ended up
saying and hopefully making some positive contributions to this country.
I think welcoming school immigration would be a they would
be an important piece of insurance American competitiveness.
Speaker 3 (15:39):
Well, let's talk about your positive contribution when it comes
to raising one hundred and ninety million dollars second fund
to invest in ai talent and startups and sort of
co found them in many ways. What sector is you
looking at and are they US built companies alone?
Speaker 7 (15:54):
We are building the majority of countries we built are
in the US, but we are also working with businesses
in Japan and Taiwan. Career and so on, Afan's Adventure studio.
So what I decided was unlikely traditional VC. You know,
I don't want to be competing for or chasing deal flow,
so we exclusively work of entrepreneurs to co found companies.
(16:15):
What that means is my team is alongside the entrepreneurial
We're writing code and customers debating what features to build.
And because my team is fortunate to be close to
the AI technology, a less of local across many different
industry sectors, recruit great AI talent and apply our technical
expertise to all sorts of different sectors where AI can
(16:36):
be applied.
Speaker 3 (16:37):
Well come back as that portfolio continues to grow.
Speaker 4 (16:40):
Andrew has been a joy speaking with you.
Speaker 3 (16:41):
Congratulations on the new fund and thank you for sharing
your expertise and drawing. Of course, managing general partner at
the AI Fund, It's also founder of Deep Learning AI and.
Speaker 4 (16:50):
Of course co founder of Coursera.
Speaker 3 (16:52):
Sticking with artificial intelligence and forropic well, it's rolling out
two new versions of its claud AI software, including a
longer laid.
Speaker 4 (16:58):
Update to the high end model.
Speaker 3 (17:00):
This is as a startup really advised to stay ahead
of a crowded market. Mike Kreiger joined ed a little
earlier Andthropic's chief product officer, Our really.
Speaker 8 (17:10):
You know constraint for the slaunch was we wanted to
be available to you know, as many people as want
it on the launch day itself as well, and so
it'll be generally available. It'll be in claud dot ai
for our more end users. It'll also be available in
the API for usage on day one, and then as
people scale up their usage, you know, there's often you know,
capacity and rate limit conversations that we need to have
just because the models aren't really in demand. But in
(17:31):
terms of being generally available.
Speaker 3 (17:32):
It's day one coming up tech IPOs and we're back.
We'll discuss a Bream and ch equity Zen. This is
reuly Meg technology. Now as the broader market sells off
(17:58):
shares of Mountain of Hinge Health, both trading higher after
making their public debuts just yesterday. Their success is giving
hope to other tech startups that have been waiting to
go public in some cases for many years.
Speaker 4 (18:10):
Let's talk about it all.
Speaker 3 (18:11):
Briann lynches with US head of market Insights at equity
Zen and one of the largest pre IPO platforms for
private shares. It's in the secondary market and brand. Look,
are we seeing the creaking open? Is it companies that
have to come to the market or are we going
to start to see companies that just want to come
in this environment?
Speaker 9 (18:28):
Thanks for having me now. If you had asked me
a few weeks ago if we would be seeing positive
IPO activity right now, I would have said no. But
these few companies that have bit the bullet and decided
to go out Eutro last week, Hinge Health, and mount
In yesterday are performing well in are outperforming the market.
So I think, you know, we're not in a market
(18:49):
environment where we'll see the floodgates open up. But for
companies that need to go public for liquidity or other reasons,
or feel like they have a really compelling story, they
might just be brave and decide to despite you know,
the volatility there is.
Speaker 3 (19:04):
What are the story necessities. It's interesting that core we've
now really outperforming. We're at priced despite the initial volatility.
So we've got an AI focus, you've got release services
and consumer focus businesses. Thus far, does it have to
be there or could we even go into broader hardware
and deep tech?
Speaker 9 (19:21):
I think we can go broader into a hardware detech.
There's other names that are on our radars. Rebra Swan
who has filed and you know, has been on the
IPO pipeline for some time now. But what's interesting is
the companies we've seen recently. You have a fintech, you
have a health tech, you have an ad tech company,
so very different companies, but there are some similarities. These
(19:41):
are older companies that are over a decade plus years old,
so there's a lot of investors and early employees who've
been reading a very long time for liquidity. Surprisingly, when
you look at the two from yesterday, these are unprofitable
companies as well, so it's a little bit surprising to
see how well they've then received given that they're not
yet profitable. They're almost there, but it seems like maybe
(20:03):
that's not a requirement now for public market investors when
you're achieving thirty five plus percent growth rates and hundreds
of millions of dollars in revenue. So I think there's
a similar story well we're seeing across some of these sectors.
And another thing to notice, these have been down round IPOs,
you know, the to yesterday both raising in their IPO
(20:24):
at valuations below their last round of private funding, and
especially for a lot of these companies that last raise
in twenty twenty one, twenty twenty two, I think that's
going to be a reality in the market. So just
some commonalities and things that we may expect to see
as others enter the market.
Speaker 3 (20:39):
Bran, Let's talk though about some of the pressures that
can be taken off by the secondary market, because liquidity
for employees that have been there a long time, liquidity
for the venture that's back them for a long time,
and it's actually getting far easier in the secondary market
right absolutely.
Speaker 9 (20:53):
And what we've seen is the VC ecosystem as a
whole is at this really interesting inflection point where it
used to be raise capital from LPs, deploy that into
early stage startups, have exits around the ten year time
horizon return capital, rinse, repeat, rinse repeat. That crucial exit
at the ten year timeline piece is not happening, and
that's really driving more secondary activity. Precursor Ventures gave a
(21:17):
stat a few weeks ago that they expect seventy five
to eighty percent of distributions to LPs to be from
secondaries over the next five years, and that's a huge
number and it really speaks to the liquidity crunch that
we're seeing in the venture market, and secondaries are certainly
becoming a larger avenue.
Speaker 3 (21:35):
To address that briefly, though, we've seen an interesting tech
focus from vcs where they convert to be able to
buy more of the secondary market, maybe even some of
the public market too.
Speaker 1 (21:47):
Yeah.
Speaker 9 (21:47):
Absolutely, so, we've seen this trend of more vcs registering
as Ria's light Speed is the most recent example of
a VC firm that's done that, and that really allows
them more flexibility to invest more than twenty percent of
their portfolio into both public companies and secondaries. And while
we've talked a lot about, you know, the secondary need
(22:07):
on the cell side, there's also a secondary need on
the buy side where these AI companies they have just
so much capital available to them, it's hard for most
investors to get access to a funding round or get
the allocation that they're looking for in you know, the
latest AI startup, So they're also coming to the secondary
market to either build or establish investments.
Speaker 3 (22:30):
Brian Lynch, great to catch up with you, thank you,
head of Market inside It at Quityzen. Meanwhile, we check
bick back on the big story of the day, Apple
shares lower well, we see a twenty five percent tariff
that they don't move more US manufacturing for the iPhone.
Speaker 4 (22:44):
This is Bloomberg Technology
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