Intel Spending Billions to Revive Manufacturing

dot Com. You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio, or watch us on YouTube search Bloomberg Global News Carol Masterlowa, Tim Stanovik in our Interactive Broker Studio. So we talked about some of the headlines today from Anglo Merkel making an about face when it comes to shutting down her economy.

You've got cases, virus cases passing a hundred and twenty four million, tim death succeeding two point seventy three more than four hundred sixty million those shots have been given worldwide.

Let's get into it with Elizabeth Stewart, Professor of American Health at the Johns Hopkins Bloomberg School of public Health joining us on the phone from Washington, d C. The Johns Hopkins Bloomberg School of Public Health is supported by Michael R. Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies.

Professor Stewart, Thanks so much for joining us. What is concerning you right now, because there's this interesting dichotomy playing out here in the U S which is millions of vaccines a day are being given in the US, but at the same time we are not seeing that necessarily reflected in great news when it comes to cases in many parts of the country. Yeah, thanks so much for having me to talk about this, And I think you're exactly right. There's sort of some feelings of cautious optimism

with pretty good vaccine rates in the US. You know, would be good to speed them up, but we're doing pretty well with with the vaccinations. But at the same time, we really can't let down our guard, and you know, we're sort of people talk about we're kind of at a race with the variants that are emerging um, and so we really need to kind of get those vaccinations out and in some people's arms, and also at the

same time not let down our guard too much. We need to kind of give a little bit more time, more physical distancing, continued mask wearing, uh, so that we can really sort of look ahead a few months and really hope that we're in a much better place then, you know, Professor Stewart, We have some upcoming coverage in the Bloomberg Business Week magazine that's all about the potential for a COVID passport in order to allow traveling happening.

But one of the concerns is that we don't really know how long the vaccine ultimately keeps you immune from potentially getting the virus again or getting a variant. And I do wonder, what is it that you are watching closely to make sure that we get enough population vaccinated by what date ahead of any possible variant or another wave. Yeah, I think it's a it's a great question, and we

are certainly monitoring that. I want to say that there is some sort of growing evidence or sort of emerging as evidence I should say that the vaccines actually give longer lasting and better immunity than infections, and so I want to sort of point out that it does. There's hope that the vaccinations will actually kind of help us even more than people sort of being naturally infected. Um, but we do really need to you know, there are

these variants emerging in different places. It's unclear whether there might be booster shots needed for vaccines, you know, sort of like we have flu shots every year. UM. So the scientists are working really hard on that, and I'm hopeful and really quite hopeful that they will sort of

you know, maybe we'll need those booster shots. But you know, it does seem like the vaccines are really still working very well, and I think, well, no much better kind of where the country will be in a couple of months, hopefully most adults will have access to the vaccine you know, sort of early summer, uh, and that I think that will really will really start to see some good results

after that. What do we need to do when it comes to addressing other issues related to pandemic and lockdown, namely mental health and the way that we've seen this pandemic in lockdowns affect young people, especially those kids who missed out on a year of in person school. Here in New York City high schools just went back to in person learning on Monday, for example. What do we

need do? Yeah, thanks so much for raising this I think it's a topic that hasn't been getting a lot of attention, But we need to remember that the mental health implications might linger a long time even after this sort of infectious disease pandemic results. As you noted, we're finding in a lot of studies that sort of eighteen to thirty year olds and even those under the eighteen

are experiencing really high levels of distress. You know. Recent Pew Research Center study just in the past month found that approximately a third of young adults were experiencing high levels of mental distress UM and that was the highest rate among age groups. It's a group where they were sort of just starting to get you know, emerging into adulthood, and they're kind of late teens and early twenties are

looking very different than they sort of were expecting. So I think we're gonna need really attention to screening for them, screening for all of us really also connections to services. There are effective mental health services available UM, and we need to make sure as those kids can sort of recover from this time in their lives. We're gonna talk about this a little bit more mental health, uh, and

what companies are doing. We've got the CEO of Accenter North America, and he specifically they've been reaching out to their employees creating programs because they realize this is something that's had a tremendous impact on their workforce. I do wonder too, if this is raised overall our awareness that mental well being is as important, uh, Professor Stewart as our physical well being, and kind of taken away maybe some of the stigma of talking about it. And just

got about fifty seconds. Yes, I certainly hope so. Um. I think this new attention is great. It's wonderful to hear about companies that are focusing on this, and yes, screening programs, mental health well being programs, it's what we're gonna need in a lot of settings, workplaces, schools, all around. So it's great to see this this attention. Alright, we're gonna leave it on that note. I'm really glad to

get some time with Elizabeth Stewart. She is Professor of American Health at John's Hopkins Bloomberg School of Public Health, joining us on the phone from Washington, d C. Him we see the battle. It is finally on, or at least it kind of feels that way when it comes to dominance in the EV market, which begs the question is the era of Elon coming to an end? And there's an established car company that has beginning a lot of attention in terms of its investment into evs. Yeah,

we're talking about folks, Waggett. This is the subject of a story the upcoming issue of Bloomberg business Week magazine Bloomberg News Europe Auto's team leader Craig Trudel wrote it, and he joins us on the phone from our London bureau along with Bloomberg business Week editor Joe Weber on the access line in Brooklyn, and Joel, I gotta say the first line of craig story, he doesn't date a synth pop star publicly puff on blunts, so profess to

want to die on Mars. But Herbert GeSe is starting to look and sound an awful lot like Elon Musk. I love that. Yeah, Craig did a great job of the story, And you know, I just want to totally be clear that you know, for for more than a decade now, I think Tesla has just dominated what a bunch of naysayers said would never be a viable space, and by by being such a leader, in the space. It has absolutely transformed the future of the auto industry um and the question now is like, are there is

there going to be meaningful competition? And the head start that Tesla has had like leads us to to now and Volkswagen is going to basically be of, you know,

a viable competitor in the very near future. They will have almost instant scale from from what we're able to kind of look at with their numbers, and we're gonna basically see a version of the world that starts to look a little bit more like streaming, where Netflix also had a huge lead, but it wasn't like other incumbents could enter the space and also have a decent business model. So so, Craig, how do you how do you see this all all setting out? How realistic of a shot

does Volkswagen really have here to take on Tesla's market power? Yeah, I think it's really interesting that the comparison we made to streaming absolutely makes sense. And I think, you know, the company that we raise in this story that you know is a great example of what v W might be like is Disney, where you know, they have uh, you know, all the hits, Uh, they have an ability to you know, bring out some new ones you think about, you know, Disney Plus and what a hit the Mandalorian

has been. Uh, you know, Volkswagen is a company that has a lot of flaws and uh, they still have a lot to overcome in that regard. But erber dece really is dead set on on you know, really taking on Musk and he's not uh, you know, sort of dismissive of of Ellen. I think that's one of the most interesting things about him. He really, I think takes Ellen seriously, has thought highly of him and and has

said so. He's been very public about the idea that they are sort of a yardstick for VW, which is really something considering this is a company that sells, you know, in normal years, more than ten million cars worldwide. Yeah, that's a lot of cars. Hey, Craig, I want to home in on something that I really focused on in your story, and it reminded me of what Volkswagen has gone through over the last year. Skeptics you write could be forgiven for raising their eyebrows at the idea of

going electric. And I'm paraphrasing you here, coming as it was from the same car maker that spent years gaslighting the world about quote clean diesel. Where is where is Volkswagen in getting over that scandal because it is you know, a tough message I think for the company given its

recent history. Yeah, it's it's still something that is playing out in the course and it's still haunting them, you know, things, things that that they're going to have to deal with in terms of more settlements, uh and uh, you know, dealing with even questions about you know, disclosure. A lot of those sorts of issues continue to linger. I think, you know, largely the world has you know, kind of

uh more or less moved on. I'm sure there are consumers who you know, did buy into the quote unquote clean diesel uh, you know messaging who really felt betrayed and would will never buy a VW again. But I think we have been surprised to see that, you know, especially in America, where you know, VW has never been

uh you know, really big in the US. But we have seen, you know, this is a company that while they're still small there, you know, they really have come all the way back in terms of the hits that they took in the immediate aftermath of that scandal. Uh. You know, they remain a sort of bit player, but they're back to where they were or were back to

where they were before COVID hit. And you know, I think the thing that there's mentioning their uh Tian and Craig, Uh, we can turn it back to you on this again, is is the fact that as to to make good on basically epic deception, they had to agree to Electrify America and that has been a huge infrastructure under a king UM. Craig talked to us about what they've attempted to be building UM quietly during during the past couple

of years. Yeah, they they it was a massive settlement that they agreed to with the US and California and Electrify America is this affiliate that you know, is part of two billion. Uh was was a portion of that settlement that needed to go to setting up charging infrastructure and uh sort of you know, building up sort of educating consumers in the US about electric vehicles. And Electrify

America is now the largest fast charging network in the US. UH. This is a company that was you know, set up by Volkswagen, funded by Volkswagen, but as sort of a condition of the settlement, it also needs to sort of benefit everybody. It can't just favor Volkswagen or be you know, closed to VW. So this is a network that actually is being used by Ford Mustang mach Ee drivers. Uh. And it'll it'll be a network that will really come in handy for you know, really the broader efforts of

the industry to go electric electric and take elon Muscan. Hey, Craig, really quickly, twenty five seconds. I've seen a picture of both Deecee and Musk together. I think it was something like the Golden Steering Wheel Awards in Berlin in twenty nine. Could these two ultimately work together? And you've gotta be quick for me twenty seconds. I could see them absolutely wanting to put their their heads together for a project.

H You know, there was a bit of flirtation even that that we learned about back in eighteen during the Go Go Private fiasco. So these two could be friends, yeah, and then they might actually become SITH pop stars. Who knows. It's an incredible story. Craig Trudal, Europe Autos team leader of Bloomberg News along with Joel Webber, editor of Bloomberg Business Week. So it must read on this Wednesday's about

Intel CEO Pat Gelsinger. He's charting a comeback for the company really to get back to its past hip making glory and deal with those current chip shortages. Here's what he told Bloomberg a short while ago. COVID caused everybody a step back a bit from capacity and build out in the supply chain of the industry, and it induced a radical increase in demand. So you have supply chains, uh,

scaling back a bit and demands scaling up radically. Wow, and now we're in a position that there's a meaningful shortage, and you know it's going to be a couple of years until that's fully resolved supply demand and balance or is there a lot more going on? That? Of course, was Intel CEO Pat Gilsinger catching up with our Emily Chang earlier on Bloomberg Television. Let's get into the story two of our top chip watchers, Ian King. He is

u S Semiconductor and Networking reporter at Bloomberg News. He's on the phone from our Bloomberg nine sixty. Actually he's in our Bloomberg nine sixties studio in San Francisco along with an entree of us on he's Bloomberg Intelligence senior semi conductor and hardware analyst. He is on the phone in New Jersey and I want to start with you. Listen, you and I have talked about this before. I've talked about it with a non but let's do the big picture.

Remind everybody of the big backdrop when it comes to the U S. Semi conductor industry, because it it's been struggling. It's been struggling in terms of its production, as in the ability to physically make chips. That's a skill set that's been fading. An Intel was the sort of last basting of that, and Intel has had its own problems, so that's definitely a fade away if you if you like.

But frankly, the industry couldn't be stronger in general. You have other companies and and you know who are actually designing and outsourcing their manufacturing, who are going from strength to strength, and the US is still by far the biggest you know, beneficiary of of this sort of growth in sales of semi conductors via companies like Callcom by a companies like Broadcom. What does that supply chain look like, though, I where does it span? It spans the whole globe.

Something that could be designed by an American company in its design bureau in Europe, then gets manufactured in Taiwan, then gets shipped to Malaysia to get packaged, then get shipped to a Chinese factory where it gets put into an end device, then get ships out of China for sale in the US or Europe or anywhere in the world.

And non come on in on this and kind of layer on top of it globally what's going on because we keep talking about uh, kind of a tech war, tech cold war that's going on, or we'll be going on and you see a lot more, especially the Chinese and others looking to develop their own ship industries. UM layer on that aspect of this too. Yeah, so listen, I think he informed it really well. There's two vectors

of issues, right. One is the chip manufacturing constraints that we're seeing UM as a result of the spike in demand and the shortage and supply. And the second is the technological complexity associated with the production and where Intel has been struggling. Now we're Taiwan semiconductor has not been structed. It has been producing advanced semiconductors rather efficiently UM so much so that it is cornered the market on advanced transistor based semiconductors that Qualcom and MD and UM and

Apple use. So the question is Intel stepping into this BOYD saying hey, we can not only regain our past glory UM and manufacture these advanced logic chips UM and compete with the likes of t SMC, but also that we can do it here at home, providing a sort of a geographical counterbalance to t SMC, because right now all of the advanced logic chipmaking is with t SMC, primarily which is based out of Taiwan, and secondarily with

this Samsung, which is based out a career. So the US is trying to provide a geopolitical counterbalance to that East Asian basket. If you may know, how does how does how does intell do this in the US at scale for a price and cost that actually works? Yeah, So over the past couple of years, I'm afraid to say it hasn't UM, and that's where it has struggled,

and UM others have taken the mantle of leadership away. Now, at the end of the day, it comes back to a focus on manufacturing that there again, two factors here is making the chips smaller and smaller, or using transitions that are smaller and smaller so you can have more density packed chips, thereby making it more powerful. Doing it

at scale reduces the cost per transistor. The other aspect of it is that Intel historically has been architecturally monolithic one chip um controlled by one die, and the industry has moved away from that. It tries to put together a bental box of different kinds of chips and made on different transistors and different technologies, and effectively it matches a workload, so intels more intercot Geltingers straining to do

multiple things at the same time. Shrink the transistor is more effectively that they haven't been able to do in the past, change its architecture and build it at scale to computer with t smc um I'll tail battle. But on a relative basis, we are cautiously optimistic on Intel's chances before uh compared to when Geltinger came aboard. So we think they've got a good shot. And he's he's kind of a new guy in town. UH. And I mean, is he a game changer for this company? Well, he's

the new old guy. Yeah, exactly. His tagline was, you know, the new Intel is the old Intelli can remember. Yeah, he joined this company in the nineties seventies as a teenager, right. He left in two thousand and nine to go and run vm ware. But he was you know, he is absolutely staped in the company's traditions, and he's also a technologist, you know, to he was a chip designer, part of the fundamental core of of what Intel is as a

chip company. He actually physically made himself. So you know, back to what An answered, it's that's where the optimism comes from. It's like, at least you have somebody in control who seems to understand the problem, because that was the concern with his predecessor, who's a financial guy. So people believe that at least Pat has a handle on the problem. And you saw the stop jump up yesterday on optimism that hey, he gets it, maybe he can

fix it. But I think again to what An answaid and a lot of other analysts and investors have said, it's not going to happen tomorrow. It's going to be a slow process and there's no guarantee of success here. Intel's birthright doesn't exist anymore. Yea. And meanwhile, you've got Apple doing chips right, and other company is doing chips, so I feel like it's another And I know all chips are not the same, but nonetheless it does feel like the industry is definitely changing. Um, guys, thank you

so much. In king US semiconductor networking reporter at Bloomberg News with us from San Francisco and with an answering of US and senior MA conductor and hardware analyst at Bloomberg Intelligence on the phone in New Jersey. I'm road Marco, a journal now. But you let me drive. No, no, no, he's going to drug home. Please, I'll do the riding gravel. Lets me. I want to drive, Just drive by the question trying. This is the drive to the globe. Tim

me thanks well, drying us on Bloomberg Radio. All right, just about ten minutes left in today's trading session. It is time for the drive to the closing with us. As Dave Masa, he's managing director at Direction, which has a roughly twenty billion dollars in assets under management, and that includes its Moonshot Innovator DTF that has about three four million in assets under manage. It Dave joins us on the phone in New York City. Dave, nice to have you here with Tim and myself. How are you.

I'm doing well, Thanks for having me back. So talk to me about flows. Where are you guys, what kind of money is coming in new investment money that folks are looking to put to work, What do the fun

flows look like, and where is the money going? So we're really seeing a contrast and fun flows across are both our leverage and inverse EPs, which are primarily for traders to folks for a managing their portfolios on a short term basis, and then also in our thematic EPs like the Moonshot Innovator's fun But what's happening is it's a bifurcation from the highest growth areas, which of course we're Darling's last year in to some extent this year

to think of semiconductors, thinks of technology, think of other disruptors like cloud computing. But then on the other hand, the most beaten down areas like oil and gas, regional banks. Almost nothing in between is seeing flows. So all further lineup is a bit quiet. But it's either those on the most extreme level with the largest growth opportunities and some of the richest valuations, and also those that either not necessarily benefit from reopening but just simply have been

so out of favor. What's the what's the trend when it comes to E t F the E t F that you're seeing right now, Dave. I mean, we talked about ARC all the time, and and it certainly it's getting it's getting a lot of interest. Um, But but why are e t F s having a moment during the pandemic. Well, as we know, uh, the interest in investing in trading has came back markedly as folks were spending more time at health. But what I find most

interesting is ets as an invest in vehicle. Has I've actually become a favored tool because they offered diversified exposure to areas in the market. So certainly we spend a lot of time thinking about the meme stocks and the

next thing that's getting attention on Reddit. But unless you're really, uh, you know, looking to make a big bet and some marys, maybe better off using an e t S because I can get diversified exposure to the SMP five hundred, or I could get a basket of thematic stocks like we have with you know, with our Moonshot ets that are

focused on disruption. So in one vehicle, an investor can build a fully diversified portfolio or and both have things that are more setting and forget it for the long term, but complement that with opportunities that they may see over shorter time periods or just that they're interested in without taking on so much single stock risk. So in terms of setup forget it, remind me is it based on an index or is it? Is there active management where

names can change. So when I say that, you know, I talked about some of the larger and more well known in ets in the market tracking SMP five hundred and must emerging markets for that. The more recent interest has been in thematic EPs, and those are either actively managed, you know, by a team of portfolio managers like we saw with traditional aps, or done in a rules based

systematic fashion. So actually what we do, which is different than active management in the moon shot ets is we actually scan corporate file things just using something which sounds complicated, but really it's just teaching a computer to learn what historically has been associated with innovation UH and go out and seek those terms. So meaning innovative terms for biotechnology versus for industrials. Then we say, do these terms on average? Do companies use these terms on average more so than

their peers? And then actually are they spending money behind it? So it's a bit of a talk to talk and walk the walk type strategy. So by spending money behind it, are they actually spending on research and development, Because it doesn't make any sense just to build a basket of securities that maybe just simply using innovative terms in their

corporate filings. But when you pair that with the fact that they're actually spending on R and D relative to their sales, you end up with companies that are actually have a corporate culture focused on disruption innovation and are actually putting money behind it. So taking a deeper dive into in the moonshots et f on the Bloomberg, I see that the biotechnology is is really overweight more than eighteen percent. Software comes in next at it. Why are

you so overweight biotech? So one of the reasons we're so overweight biotech today, you know, and of course I think the pandemic has put this at the forefront of investors minds, is that there's so much exciting disruption happening there, whether we're thinking about areas in genetic engineering or going back to you know what happened with UM you know,

to two of the most successful vaccines for COVID. You know that's using a brand new technology m n r A. It's it's really a way to think about it is it is a is a technology. It's not the traditional way that we have fought have created flu shots. And it doesn't mean the efficacy of those vaccines are not as strong. It's just this was brand new. And when that's the case for fighting uh, the the the the virus which is so paramount today, you can now commercialize

that in a in a multitude of different ways. But there's also you know, other other biotech in the portfolio, so immunity bio for example. You know, they're creating customized cancer and disease treatments based off of your own DNA. So the treatment and sells you might receive today are going to be different than what I might receive. UM. These are these are technologies which were not available even

a couple of years ago. How much, just really quickly twenty five seconds, Kathy would I mean she has just like thrown off, kicked off the roof when it comes to innovation, how has that helped kind of even your play here that people are just want to have some money and exposure to it just very quickly. So I think it's great. It's people are focused on it. Our play, it's focused more on small and mid cap stocks, so

great complimentary what they may be doing. All right, Dave Masa, thank you so much over a direction, joining us on the phone in New York. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube. Search to Bloomberg Global News