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Twenty twenty four. Man, it was a benchmark year for the semiconductor industry, companies including Nvidia and Broadcom reaching new highs. Not everyone that was sharing in the good fortune. Intel, as we know, a story we talked throughout the year, falling sharply in twenty twenty four as the company contended with losses and grim forecasts and really trying to figure its way forward for more. We are joined by someone who knows the semi space like no other, Bloomberg Semiconductor
and networking reporter Ian King, joining us on this money Monday. Ian, good to have you here with Fannie and me. I do want to start with Intel. I do wonder if twenty twenty five is going to be the year where it figures itself out. I don't know, how are you thinking about it as we get ready to kick off a new year.
Yeah?
No, I mean, it's a huge question right now. It doesn't even have a CEO. Remember, we still don't even know who is going to lead this company forward. The last thing we heard from its two co CEOs, who the interim appointees, was that is a company going to be broken up? We don't know that'll be for something that whoever takes the CEO role will decide. So that's even the existence of this company as it currently is, as it always has been. Even that's a question at this point.
What's its expertise in now? Ian, sorry I expertise? What would it be bought for?
Well, historically it had one of the strongest design teams in microprocesses, still owns a huge percentage of the PC market in terms of market share, still owns a big percentage of the server market in terms of market share, and it used to have the best factories in the world. All of those bright and shiny things are a little bit duller these days, unfortunately, but there's still in many respects and intrinsic value in that capacity in those engineering.
Hey, one thing I do think about Ian is what kind of leader does Intel need going forward? You know, we've talked a lot about it. You know, the insider versus the outsider, And I do wonder what is the kind of leader that this company needs to compete in this and video world, if you will, or Nvidia dominated world at least at this moment.
No, I mean, that's the question. And I think once the board decide who that is, that the type of choice they make will be a really important indicator as to what they see as the future of this company. If they look to sort of replace Pat Gelsinger, the outgo and CEO, with somebody similar, somebody who knows the company, somebody who's committed to keeping it together, then that's a
sign that they're still believers. If they looked perhaps bringing an outsider, somebody who's perhaps towards the end of their career, who kind of knows the industry in general, has all the contacts, maybe that's because they see it as a breakup situation at this point.
And then, of course, and you have the other side of the coin. Let's take Broadcom for example. We waited all year long and then suddenly Broadcom had this resurgence and twenty five percent.
Move in one day alone.
What's behind that sort of you know, revitalization of Broadcom.
Yeah.
I mean, you've got Hoctan, the CEO there, who's made this kind of company out of sort of the leftover parts of other companies. He sort of identified what he sees as these kind of staid but strong franchises, and that's been the atmosphere surrounding this company. But then all of a sudden, it's like, bang, we're exploding with growth because Broadcom does the design work for companies like Google
who want to make their own semiconductors. And what he's saying is, Hey, I've got a pessimistic view of chips overall, but guess what this sector is amazing.
Is Broadcom ian potentially the company we talk more about in twenty twenty five Over in Vidia.
Difficult to say if you look at the raw numbers. No broadcoms projecting massive growth an available market as much as I think ninety billion by twenty twenty seven for its you know, AI related chip designs in videos already there right. In Vidia this year is going to have, you know, a data center division that's going to be somewhere in the one hundred hundred and twenty billion dollars. And that's just one division. So clearly in video is already there. Clearly we all have a long way to
go to get even close to them. But the one that appears to be closest at this point would be Broadcome.
So Nvidia is one of the stocks that is hirer today.
Ian and today are always seeing right across the screen and spartially, I would imagine because of this acquisition.
And Israeli software.
Company tell us a little bit about one AI and what it will do for Invidea.
Yeah, I mean this is a software acquisition. This software from this is rarely startup. Helps owners of data centers to get the best out of their infrastructure, to sort of coordinate it, to make sure the utilization is up, to make sure the software is being balanced in the right way. This kind of intermediary role, which is very important when you're spending you know, tens of thousands of
dollars per chip. So that's very useful for Invidea. And there was some you know, concerns that in Vidia, because of its market influence, because of its size, just wouldn't be able to get anything past regulators. That's obviously not the case. It's obviously been able to close this deal and it's shown, you know, that Invidia perhaps still has room to do deals and to be able to sort of make moves and influence the industry externally.
Hey, Ian, one quick last question forty five seconds here. I am curious you. We've talked so much about the semiconductor cycles right where there's lots of demand, then there's the build up, and then there's over supply. Will the AI semi cycle be the same thing or is it something different this time?
Every time?
I mean, I Scarlett likes to point out how long I've been covering this industry. I've been listening to CEOs telling me this time is different for most of those twenty five years, and that's never been the case. So why would that change now?
Fair enough?
I will definitely whatever you say, I'm going to follow it. Ian, Thank you so much, Tappy Holidays, Happy New Year, Ian King of course, Bloomberg Semiconductor and Networking reporter. All right, folks, we just chatted, of course about semis with e on. Twenty twenty four was once again a year about artificial intelligence in.
A big way.
Check out one measure on that. If you look at the two point six billion dollar global X funds, global X artificial intelligence and Technology ETF. It's up about twenty six percent year to date, and that's after a fifty five percent gain in twenty twenty three. So the question at this point is can it outperformed for a third year in a row. Let's get some thoughts on that. We welcome Xeno Mercer senior research analyst a Vetefi Zino.
Good to have you here with Vonnie and me. Strong year in twenty twenty four, strong year in twenty twenty three, much stronger in twenty twenty three. What's your investment outlook for AI related investing come twenty twenty five. Do you have any clarity on that?
I think it's clear at this point to most people and viewers or the show that AI is coming down the pipeline and every facet of society. It's not just chat and interfaces. It's advanced you know, autonomous vehicles, it's logistics, it's you know, human you know, we're advancing to the next kind of phase of human tech interaction. It's not just going to be locked in the screens. It's going to be real time with us. You know, we had
the iPhone atwe Haven seven. Maybe wireless your buds and then chat GPT and now you know, from a consumer, enterprise, government, industrial standpoint, we're starting to see kind of the aifurcation of everything. And to be clear, there's still a lot of challenges and roadblocks ahead for deployment and implementation. There's new safeguards, there's new challenges that occur when you start
to automate more. You know, human society isn't perfect. We operate off communication and assumptions and ledgers and things of our own, you know, AI and then robots, for example, also depend on real time and accumulated knowledge to make decisions, both from an individual basis as well as you know.
A societal basis.
And so what we expect to see is continued implementation of AI and robotics that you know, we expect to start to continue to eat the world to kind of paraphrase Mark Indreas and and and that's definitely something that we don't expect to slow down at all, especially when you consider some of the policies and global dynamics that are happening right now.
Sure, but what kind of return on investment will it provide? And specifically for investors and companies that are making those investments, is there a case for waiting to see what it can actually do. In terms of the bottom.
Line, well, I mean if you look at you know, just to look at how Wall Street's looking at it, classic the projected top and bottom lines for AI and robotics companies are both projected to continue to accelerate next year. Now and video might start to you know, grow into its accelerated growth that's been going on since you know, October twenty twenty two or you know, November since when it bottomed out. But you know, these end markets are
expected to grow rapidly. I mean we're talking about, you know, majority of GDP starting to be AI and robotics driven. That's a huge you know, you're talking talking about the tam of the world that you can reverse engineer task
and processes and everything else. So you if you break down the stack of what AI or robotics are, let's talk about you know, cerebral digital automation and all the connectivity and data stores that happens on that side, and the physical inputs, right we're physics found and then physical automation, which is even less automated. There's a lot of sub sectors within those that are that are that are parts
of that sensors. For example, as we start to have robots that can connect and do more rather than just stat and non dynamic, We're going to have dynamic robots with more skills, higher adoption rates because they can do more. The payback periods are going to be better both for you know, manufacturers. Right now, there's a lot of push to move away from China. So we've got Vietnam, India, and even the US. A lot of people are saying like, hey, why don't we build more here? We've got very low
robotics penetration rates here. You know, we're tenth in the world the United States. There's a lot of room to grow. And if we actually want to be able to match parity of cost and make this efficient for everybody, we have to we have to do more there.
So z you know, walk us through.
Then how does my life maybe change as a result of what you're saying? How does Bonni's life? How does everybody who's listening and watching their life change? Maybe in twenty twenty five as a result of what you're saying. This collaboration between AI and robotics, well.
Some of it will be less obvious and behind the scenes right, like how food and deliveries get to you right when you We're used to pressing a button and magically things appear, so kind of continue, like, let's go a step further, right, navigating around your home for but we have remotes and automatic doors and dispensers and things like that.
But what's the next level of that? Right?
You know, Meta, for example, is working on interfaces that combine your real time vision.
And you know, potentially a risk a wrisk worn sensor that allows you to navigate your environment.
Now, this could be huge for elderly and pair you know, disabled other people as well as everyone else. On the other side, you know, personal AI assistance. I think we'll start to take off a little bit more in a more impactful way in twenty twenty five. We've seen GEM and I do this. You know, it starts connect with your calendar, your goal is your budget.
You know it's not exactly there yet, but kind.
Of a more simple way is you know, just even you know Open Eye's latest and others, you know, ability to look at a scene and ask questions it's asked.
You know, it's kind of there's a lag period.
We'll start to see that inference time disappear, maybe we'll even see that full AI capability on that specific device, whether it's a glasses or a camera on your phone, and that allows you to basically have kind of like a personal AI assistant, life coach or you know, trainer or just kind of this omni all knowing thing that can help you solve whatever problem you have.
Are there companies then that have been overlooked so far in this bull run, Companies you know that are doing some of the things you just laid out.
Well, there's certainly a lot of companies that are putting their hat in the ring. There's public and private companies. To be clear, You've got humanoid robots that are coming. That's one form factor of many. To be clear, you might not even have humanoids be the phone factor in your home. It might be on a base or the stand in a telescopic arm and things.
To do chores for you.
So we probably will have an iPhone like moment or chat GBT moment in the next year or two to say, twenty twenty five might be a bit bullish, but it's coming. You're seeing lots of companies working on it, I think at this point because things are moving so fast. It's almost better to have a basket of companies that are out.
You know, that have exposure.
And you know, if you have AI and autonomous vehicles to take off, you need cloud connectivity, right because they're not just operating as a loan device their network, so they depend on inputs and sensors and so a.
Lot of these components like actuation, computer vision.
You know, I would almost look at it as sub leaders of these sub sectors that make a lot of sense to get access to how we're seeing the majority of the GDP transforming into a more automated world.
Heze and know, I do wonder do we make the leap of AI having its own agency?
Right?
We talk a lot about autonomous agents and basically AI not needing human intervention to respond react, just got about thirty seconds. Do we have that?
Do we see?
Do we hear more about that in twenty twenty five because it feels like that's the next big step.
Yeah, AI agents and mixture of experts. We're going to see a lot of advances here. Clearly, you know, AI can start to solve problems on its own. We saw three from open AI come out. We're seeing open source AI come out with new models, and ultimately AI agents will will certainly start to be utilized more in twenty twenty five.
That there's no question about it.
It's it's going to start, you know again, open source or even just directed AI will start to eat the world, and AI agents is certainly a big part, but a slice of that pie.
Well, you know, we will no doubt be talking to you again then in twenty twenty five and looking forward to a happy new year to.
You that I'm not looking forward to the agent or the personal AI assistant that says, do you really need.
Those new shoes? I'm not so worried about how much they get. They kind of invade your life.
I totally agree.
Although I bought the new iPhone, the one that's supposed to have AI capabilities, I don't know.
I do not notice any difference.
Alasino Mercer, they're a senior research analyst at Vertify joining us.
You're listening to the Bloomberg Business Week podcast. Can't Just Live weekday afternoons from two to five pm Eastern Listen on Apple car Play and then brought auto with a Bloomberg Business act or Warn't Just Live on YouTube?
Let's turn out to Lauren zeidel Baker, who is an economist at it R Economics, and Lauren will start with, you know, the most recent data out today, Dallas FED manufacturing activity coming.
In strong three point four.
We were anticipating a decline for December and pending home sales month over month of two point two percent, year of year of five point six percent less strong, but nevertheless getting up there.
What concerns do you have?
Let's start there with the US economy for twenty twenty five.
Sure, we see actually good news ahead for the economy, so my concerns are really limited to these black Swan type events. So something like tariff policy, as Matt mentioned, really could constrain It could cause them upward pricing for a US consumer that's already been very squeezed by inflation. Could cause some additional hindrances for businesses here. But overall, the foundational pieces are in place for a very resilient economy,
so I don't see any underlying cracks now. Later into twenty twenty five, that's when we at ITR Economics do see inflation starting to build again. Some of those inflationary pressures already in place, So something that has been squeezing both consumers and businesses, could even cause the FED to stop decreasing rates potentially even start raising them again by the end of next year, but those impacts would probably be felt more strongly by twenty two, twenty six, or seven.
So all signs really pointing to good news ahead in the year to come.
All right, I want to go back to how you started black swan events, whether it's tariffs, because if anything we've learned over the last decade or so or two decades, is that black swan events actually do happen, and I've had a couple in my lifetime, whether it's the Great Financial Crisis or whether it's the global pandemic. So when you say that, what in particular is it what kind of trade war we see? What is it in particular that you are so most worried about.
The big ones for me are all geopolitical. So if we see wars right, increasing tensions or conflicts globally, that is a big one that we just couldn't really predict. I'm an economist, not a geopolitical analyst. But other than that, we do see the trade war, especially if we get reciprocal tariffs on some broad based US tariffs that could hinder some global trade activities. Now globally we are sort of seeing the pendulum swing away from globalization back towards nationalism.
There are certainly some benefits, especially to US manufacturers, a lot of foreign direct and flowing into the United States.
But this is just tipping the scale.
So there will be winners and there will be losers of this tariff policy of changes right to the trade policy. It's more a matter of which side of the table you're sitting on. Certainly some opportunities for some, but it does also cause that disruption which could have those unintended consequences economy wide and.
Can make things more expensive. Correct, I mean this is what I worry about. The inflationary pressures.
Yeah, I want to be clear, we see fundamental reasons for inflation coming back next year on top of the tariff's tariffs would really just to boost that level of price rise. But at the end of the day, tariffs do tend to be inflationary. We have really good case studies historically from either the twenty eighteen round of tariffs. Even domestic producers do tend to increase their own prices when they get that room from their foreign competition being priced up.
So I would expect.
This is building on what we already see as again fundamentally resurgent inflation.
So we see quite the rebound and yields treasuries just really having the most phenomenally.
Awkward and strange year.
Lauren Neil DNA is saying today the rise and yields is about the term premium going up, and that's because of deficit concerns. He sort of puts away the idea that it's anything to do with economic growth.
What do you think.
I think there's a real case for the market just putting its hand on the scale in this case. So we've seen even things like government, you know, kind of funding treasury levels, mortgage rate with certainly we think would be driven by something like the Federal funds rate, but seem much more closely correlated, especially this cycle, with those treasury yields and just not reacting in quite the same way to the Fed funds rate as they have historically.
So there is.
Certainly a lot of money at play right The kind of differential between global central bank policy is coming into effect here. But overall, the US is still a very good place to do business. Anytime we get that additional risk premium. Right, we are the gold standards. So I see why yields have reacted in the way. Will deficit concerns. I'm watching those in the i'll call it medium term.
I'm looking toward twenty thirty to be where we really have to do something about this debt level, something about this deficit. That's when I see the problem coming to an abrupt end. But in the very near term, the US is still the gold standard. So this, technically, yes, is what we consider, right, the risk free premium.
When you think about Lauren doing something about the deficit, Okay, we have been here before, but it does feel like it's something different, and the pressure is certainly building. And if it means cutting the deficit, that means either cutting programs or cutting spending somewhere. And I do wonder about and worry about the economic impact. So how do you see this potentially playing out and the impact on the US economy that might result?
No good answer to that question. There are a lot of different things we could do, from cutting programs, raising taxes, to monetizing the debt to defaulting on the debt. Right, throw our hands in the air and just say we're done with it. None of those would be pain free for the US economy. Some would be clearly more painful
than others. But at this point, with our debt burden being so high, with our deficit really growing year after year after year, contributing to more and more debt with higher interest rates, today just the mere interest payments on our national debt are a huge and growing problem, again contributing to that higher and higher deficit spending year after year. It seems like we're far enough down this road that there just isn't any easy answer anymore.
It never is easy. Lauren, Thank you so much. Lauren is economist at ITR Economics.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on applecar Play and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
President Biden said he'll order a state funeral in the capital for Jimmy Carter, calling the former Democratic president who died Sunday an extraordinary leader, statesman and humanitarian shooting us now to talk about this and Jimmy Carter's place in the presidential history, if you will, and really his legacy after he was out of the White House. Is Barbara Perry, University of Virginia's Miller Center Presidential Oral History Program CoA chair.
So nice to have you here with Vonnie and myself.
Barbara.
My understanding is that Jimmy Carter was the first president that you voted for. Take us back to then and tell us how you are thinking about the former president today.
Oh well, first of all, thank you for having me.
And I do think of it very personally because I saw Jimmy Carter when.
He was certainly Jimmy who. In nineteen seventy.
Three, he was here for a Democratic conference of governors from the Democratic Party and I was a high schooler and I was selected as a page to help with that meeting, and people didn't pay too much of attention to him than in terms of a presidential candidate. But by nineteen seventy five he came back to Louisville for.
An issues convention for the Democrats, and.
By that time eight other people had joined him to run for the nomination of the Democratic Party. In nineteen seventy six, and since I knew that was going to be the first election I voted in, I was really looking for a candidate, and I thought all the other people, these eight other people who were big names in the country and around the world, and they had been in Washington for years.
But I was really impressed with Jimmy Carter. I kept an open mind. He spoke about.
Foreign affairs, which wouldn't have been an area of expertise for him, but he had traveled all over the world and he obviously had a very good mind. So I thought, well, this is somebody who could maybe be in the mixed and sure enough he won the Iowa caucuses and then went on to win the nomination and just improbably went on to win the presidency in nineteen seventy six, and I decided to go to his inaugural.
So it was freezing cold. That was so cold.
The Potomac River froze over. But I had a warm feeling because he did something very and he got out of the limousine and he and Rosalind walked hand in hand from the Capitol all the way to the White House with their family behind them. And that was the first time a president had done that. It really did make them seem like they were of the people.
It's pretty impossible to do counterfactuals. But what if he had had a second term.
Oh, you know, it's a fascinating question, isn't it.
I love counterfactuals.
I think that the country wouldn't necessarily have been better. Often by that, I mean that the economy was not good when he left office. That was one of the main reasons he lost to Ronald Reagan and Jimmy Carter. While we think of him, I think now in terms of his positive contributions as a post president, there was a side to him, maybe that came from his Christian background, that was sort of a dark side and a light side. And his dark side tended to be a little bit
lecturing and hectoring of the American people. And that was not Ronald Reagan. What we needed in nineteen eighty was a positive view, and that's what Ronald Reagan brought to the United States. And so I don't know if we would necessarily have been better off as a country, but we certainly were better off as a country to have Jimmy Carter in a post presidency.
Yeah.
And having said that, and this is something we talked about with our David Weston. I mean, you think about him bringing awareness to energy conservation, the solar panels on the roof of the White House, creating the Department of Education. There's a lot of things that he did that I think we credit maybe to the Reagan administration that he actually started to put initially into work.
Yes, well, it turned out that his lecture to the American people, the so called misnamed Malay Speech, Busy never used the term malaise, but it was a crisis that he was calling Americans to face. But instead of doing it in a more positive way that an FDR or Reagan might have done again, it was a bit too negative for the American taste, and particularly since right after that he got rid of most of his cabinets, so
it made people feel like things were a bit unstable. So, yes, he did the things you just mentioned, and he also upgraded our defenses during the Cold War that obviously Ronald Reagan could could work on that, and in the end, thanks goodness, under George Bush the First and.
The Cold War.
So I do think that there were many positives from the Carter administration, but there were just some unlucky events that he either mishandled or wasn't able to handle, and that brought Ronald Reagan to power.
Barbara, we're out of time, But is there a lineage?
Do you see any politicians out there that are carrying on a Jimmy Carter type legacy?
I do, and it's Joe Biden.
And as he said yesterday, decency, decency, decency, That's what he took from Jimmy Carter, and that is Joe Biden. Where that will go come this January twentieth is hard to say.
That's for sure, all right, Barbara, thank you so much for giving us your time today.
And he was the first president she voted for as well.
Carol, I love that story and just taking us back there. But is the point of him and his moral compass is certainly something that in this division that we are seeing and money in politics and so many things that seem to get in the way. It's just something to really think about in this current environment.
Liked on exactly.
That was Barbara Perry, University of Virginia's Military Center Presidential Oral History.
Program co chair.
Thank you for helping us honor the life of President Jimmy Carter.
This is Bloomberg.
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