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Under those retailers, I mean Dollar General, the numbers came in, blow expectations, guidance, blow expectations, stock well, blow expectations of socks down twenty eight percent today, hitting an all time low. My question, Emily and will talk to Jen Bartashes, She's a Bloomberg Intelligence. My question is is the consumer versus Dollar General specific? So Jen Bartash's Bloomberg Intelligence. Thank so
much for joining us here. I'm trying to get a sense Jen of kind of how much of this is just the lower end consumer facing economic headwinds versus Dollar General just doesn't have it together in terms of good stores, good product, good inventory management.
Help us break it down.
Yeah, good morning, Paul. So when we look in at Dollar General, we do think a lot of their current troubles are self inflicted. There's no doubt that the low income consumer is under pressure, but this is their core consumer that they know better than anybody else. And the fact that they're misreading where that consumer is and not you know, not ready to serve them in the way that they need to be served is a little bit concerning.
So we're looking for you know, they're saying that they're going to increase, you know, spending on promotions, they're going to mark down prices, try to get customers back into stores. But we'll be really watching them for the rest of the year and how they execute against those plans.
So John Tucker was talking about how Dollar General needed to improve their store experience, perhaps take up a get a mom, get a mom.
I'm just like once a week, maybe somebody clean the store.
How much of this is actually about the products that they're offering versus the in store experience. When we talk about Dollar General trying to lure customers back in.
It's a great question. And having clean, safe, well lit stores is a basic of retail. And you know, when Dollar General says they're executing on a back to basic strategy, that should be part of that strategy. We've all seen reports of just you know, boxes piled in the aisles and unable to navigate and consumers, you know, not having
a great experience in store. I think that that is improving, it's just not yet at the pace where it's consistent across their entire chain and where consumers are really responding to it.
Hey, Jen, if.
Consumer doesn't go to Dollar General, where does that consumer go?
Well, you know, it's interesting, but we're seeing big market share gains at the likes of Walmart also in the hard discount grossers like Aldi. So you know, consumers are looking for where they're going to get the best deal, and whether that's on an everyday low price it's something like a Walmart or an Aldi, or are they're doing more cherry picking of deals, you know at regular grocery stores or other types of of retail stores, buying things
specifically on promotion in order to save money. So, you know, Dollar General talked about not getting enough of the available share that's up for grabs, But part of that is is that other companies like a Walmart are really executing well right now and are capturing more of those consumers.
Let's talk about the stock because it is down twenty eight percent right now, the worst inter day drop on record. What do you make of that move? Is that really justified today?
Well? That's a very very steep drop. And I think part of the reaction is that in the second quarter, the the the kind of sentiment was that the turnaround plan was gaining traction, and all of a sudden, the bottom sort of fell out of that. And that's the response that you're seeing with the stock today. You know, is it as bad as you know, as the stock price might might be saying. It's hard to say. I mean, they still had positive same store sales, they still had
positive traffic into stores. You know, they seem to have a plan for how they're going to build on that in the second half. But it really at this point, the message is that people want to see execution by the management team.
Hey, Jen, thanks so much for joining us. Really appreciate it.
Jen Bartashes, she's a senior retail analysts for Bloomberg Intelligence. Let me tell you, folks, Jen, we asked Jen Bartashes to join us, I don't know, twelve thirteen, fourteen years ago Bloomberg Intelligence. She was already a season Bloomberg executive and she's like, I'm not a research analyst. We said, no, you're really, really smart. We'll teach you how to be a rechannel analyst, and sure enough, here we are, and she's one of the leading voices on Wall Street. We
appreciate getting a few minutes of a time. She really knows the retail space, helping us break down the dollar general stuff.
So we appreciate that.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business. You can also listen live on ammaz on Alexa from our flagship New York station just Say Alexa playing Bloomberg eleven.
Let's check in with Dan Morgan.
He's a senior portfolio manager Sonova's trust company. Joining us on zoom from Atlanta. Hey, Dan, what did you make of the Nvidia.
Earnings last night? The conference call?
All event, Well, I have kind of a little bit more of a positive bias view towards the stock and maybe the rest of the street. Does. You have to bear in mind that we added in video to our buy list back in about twenty eighteen, twenty nineteen, when they were, you know, really gaining a lot of momentum in the data center space, kind of gaining market share
against the likes of AMD and Intel. And up to that point, as you know, they were construed as a company that produced chips that were going into you know, various video games that people played, and you know, they had a big spike in their demand during COVID and then it kind of pulled back on that, and then obviously the whole thing flipped where their data center revenue became far greater than the gaming unit. And then the AI thing exploded about you know, a couple of years ago.
It's the rest is history. So you know, overall, to be honest with you, I think this is a stellar report. I think the street has just gotten a point where it becomes so spoiled with these huge, you know, colossal beats that Nvidia's put together the last four or five quarters that their expectations have just gone off the you know, off the ray. I mean, even if you look at this number they did on the third quarter, you know,
they topped the consensus essmate. Obviously there was Whisher numbers at thirty three and thirty four billion, but you know, let's face reality, it was a strong, strong number thirty two point five billion. So I think everything is still
on track with Nvidia to ship the Blackwell chip. Out next year in volume, and I would expect margins to continue to rise because the average selling prices on these Blackwells are anywhere from twenty five you know, the thirty five thousand, far greater than what they're on the hopper of the H twenties.
Talk a little bit about some of the production issues that Nvidia is having with the Blackwell chips and what did you learn from this earnings report about how quickly those can be resolved?
Emily, that's been one of the big issues, also supply constraints that they try to build out this network of suppliers to kind of ramp up for Blackwell. I think it was kind of expected that this upcoming October quarter that there would be some shipments out, but it's not going to be in volume. There's still going to be relying on the H twenty and the H two hundred like they did in this quarter really to really post huge gains. I just think it's growing pains. I really
am not concerned about it. I think they'll work through it. They've done a dynamite job back when we're having huge supply constraints in the overall chip sector. You all probably remember, you know, trying to buy a new automobile and you can get a chip to go in a new car. I mean, they worked through that and still did very well. So I think they'll get through this hurdle and they'll start doing volume probably, like I said, first half of
twenty five. So again, you know, Emily and Paul, you're asking the wrong guy, right, because I'm an eternal n Vidio bull.
Hey, Dan, farbe it from me to call you an old man, but you've been covering his tech industry for a long time.
Where are the competitors here? That's kind of my question. I would think with this we'd see the AMDs of the.
World and some others, really Intel, even Intel, Maybe why does Nvidia have seemingly.
Such a stranglehold on this part of the market.
You know, it's interesting, Paul. When I started really you know, diving into the stock and covering you very closely, sitting in on the developer conferences and all the conference calls, they would mention AI. They talk more about omniverse, and then of course the AI thing took off, and that, by the way, we're seventy percent of the AI market. They would mention that in their public release and nobody would care. But you're right, you know, everybody else has
been extremely late getting to the table. You've got AMD with their Mi three hundred chips. You've got Intel rolling out their Dotty two, Gotty three and their Falcon shores next year, but again that's in twenty five. Marvel has the pam DSP chip. You probably covered on your show about yahweh coming out with their Ascend nine ten C
chip to compete against the H twenty. But you know, Paul and Emily, where the real competition may come in is from the hyperscalers, who are their top purchasers, right about fifty percent of their revenues coming from them with their own internal chips. You know, we know that Meta, We know that Google has the TensorFlow chip that they developed with Broadcom. They have version six right now. I think there's a dual chip coming out called Athena that
they're working on also. So there's there's a lot with AMD. There's a lot of things going on internally where these hyperscalers are trying to become rest reliant on Nvidia. But quite frankly, guys, the chips are coming out with still aren't going to pop the performance they're going to get out of blackwell, but I think I'd use it for lesser capability, you know, task so to speak, and try to save some money from as I mentioned, for the average selling prices are very higher on these newer chips.
So revenue doubled in the quarter, Dan, but yet the stock is down this morning. I'm just wondering. I know you said that investors might be getting a little spoiled. What do we need, like, what does the street want to see out of Nvidia then to move this stock up higher? If revenue doubling isn't isn't enough?
Yeah, I mean again, Emily, it's perplexing for me. I Like you said, you look at the revenue year over year, it was up you know a huge amount, one hundred and twenty two percent. You had the data center group, which one hundred and fifty four percent. I've got the data center group going over one hundred billion dollars in revenue for twenty five compared to forty four billion them in twenty four. So that's more than a double just
in that unit. So again, this has become such a momentum stock, right, I mean, trades, it's sixty times price to book. The Philadelphia Stock Exchange Index trades at six times book. You know, it's a trailing seventy five times earnings. So you have this massive multiple, this huge momentum, you have this situation where you can't make any errors at anything that you're reporting, otherwise you're bringing the stock down.
So again, I just think quite frankly, and Vidia has kind of spoiled investors, you know, since that Dynamite quarter about two and a half years ago, and people just keep raising the bar and raising the bar and they're never satisfied, but they're still doing really well.
Hey, Dan, you know you raise for me what I think would be the biggest risk, which is my customers are going to develop their own chips.
Frame that risk out for me, and how do you think about that?
Yeah, I mean that is a risk. Every single hyperscale, as I mentioned, has their own chips. Probably the best chip out there is going to be coming from Alphabet and the Broadcom joint venture with their Tenser version six what they're bringing out. So you know, that's the worry. Even Apple has their own chips now. So the worry is that instead of buying all their chips from the video or eighty ninety percent of chips from the video, maybe a little bit from AMD, let's say, or Marvel.
They may start, you know, keeping thirty forty percent in house in saving money and using their own chips. So that does potentially slow demand down for nvidio chips in the data center space. However, if you're a you know, probably the man, you know, someone in charge of this or a video, you're saying, well, guess what we're We're starting to get demand from other sources, right enterprise, We've
got demand from Tesla. They talk about different governments who are now buying data center chips for their own use. So you can make a case that yeah, maybe you're going to lose a little bit from the homegrown stuff coming from the hyperscalal, but then you're going to be able to grow it out by the fact that you're going to get greater demand from these other markets that
you're not getting right now. So you know, it's great to Yeah, I mean there's a lot of moving parts, but I mean I still feel u Paul Emily, that we're at the beginning of this this ride out and you know, the key to making money and technology and all you alluded to the fact that I've been in this for a long time. I've been writing, research and following and buying tech stock since nineteen ninety. The key is to ride a wave, and if you ride away,
it always goes up and then rides out. And you know, in the early nineties you had the big you know, move towards the internet, everybody going to a mobile phone. If you caught one of those waves at the right stock, you did great. So exactly you're on an AI wave in the chip space right now with n video.
Very good, Dan Morgan, thanks so much for that. We really appreciate gating a few minutes of your time, Dan Morgan. He's a senior portfolio manager Sonova's trust company down there in Atlanta. He was early on in video, he was right on in video, and it's been a heck of a run this stock.
Just this year, up one hundred and forty two percent year.
Today, you're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Playing and broud Otto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Like yourfeos sitting in for Alex Steel on Paul Sweeney. We're live here in our Bloomberg Interactive Brokers studio. We're streaming live on that internet thing that Gene Monster keeps talking about. I think you go to YouTube dot com and search Bloomberg Podcast, and I think.
That's where you'll find us. I'm not really sure you'll know that.
One of the topics that Alex Steel and I like to talk about Emily.
Is commercial real estate.
So it's just fascinating how that industry is adapting to a post pandemic world, particularly in the office, but also just across the border commercial real estate and what it means for the banks and all that kind of stuff. Fortunately, we've got a lot of good folks to help us figure.
Out what going on.
And Abigail Doolittle, I mean, she covers all the markets for Bloombergers, but she's been really helpful in bringing some smart commercial real estate people into Bloomberg Radio, and we appreciate Abigail. She joins us here in our studio along with Scott Kelly. He's a founder and CEO of Ato's Capital real Estate. Scott's one of these guys. He's part of that Morgan Stanley real Estate mafia. They're everywhere. Anytime you see a commercial real estate person come in here
with some money in their pockets talking to investing. They did a stint at Morgan Stanley real Estate and they just the best on the street as long as I've been on the street.
Scott, thanks so much for joining us here.
I guess my question is simply, where do you guys see the best value and opportunity in commercial real estate today? Are you going to the Lipstick Building or something like it on Third Avenue that's dealing with occupants issues.
Are you looking at other places?
Well, I would I'd make two points one. People have been us included anticipating this stressed wave of real estate which has not come as quickly as folks thought. But it's also inevitable just because the refinancing rates are totally disconnected from the underwriting of a bunch of these properties. So the answer is no, We're focused on places we
can add value. And we've got a new company called waiver Tree Property Partners, which we've got development capabilities from guys that were with the Fract family for a long time. I mean, they're good developers. We think that the combination of financial expertise and development. Redevelopment is going to be the key to making money going forward.
So a question that I have, Scott, is that we've all been waiting for this crash and commercial real estate, and there were some big headlines in twenty twenty three, there were some big office buildings that were defaulted on, But since then there really hasn't been that much. It seems like properties are still not trading maybe a couple
here there, Is that true? And is there going to be a moment where all of a sudden a ton of properties are going to flood the market or is it just going to take a really long time to work this thing out?
Well, your observation is absolutely true. You know, again, people have been waiting for the tidal wave of stuff to happen. And there's a where is it there's a billion Well, there's a billion dollar loan portfolio on the market right now from a foreign bank that's just getting out of everything, and some of it's performing, a lot of it's not.
There are a couple more coming later this year. But interestingly, as we discussed previously, so much of this bad debt is held in you know, regional and community banks, and they're just extend it's extended and pretend you know they they're renegotiating the terms, they're they're putting out the maturities.
They're never going to get repaid.
Can they do that for Well, I think it's a regulatory matter. I think the regulators don't have they don't want to cause a banking crisis in an election year. So I think the thing that changes is after the election the regulators start to and again, this bank that's selling a billion dollar portfolio is because there is a European bank, and it's because the European regulators are saying, get rid of this trash. And so I think that
doesn't happen until after the election. But after the election, I think it really does.
Interesting, So twenty twenty five could be kind of painful.
Yes, we've been talking a lot about Nvidia today and this hunger for AI and demand. I'm wondering how that is impacting commercial real estate. Are you seeing opportunities in data centers?
Well, yes, I mean data centers are one of the data centers are one of the big Again, real estate, if you want to go by category, office has got issues. Retail got issues increasingly apartments due to some extent, but data centers have just been on fire, and you know, and there continues to be an almost unquenchable demand for
data center capacity. So yeah, I think, I mean, I do think the bigger opportunity with AI and real estate, which we're working on with a partner, is to really synthesize the information in a way to help you make not just good commercial judgments, but informed commercial judgments, data driven.
Scott, You've been in this business for decades, you and your team, everybody knows you, every banker knows every lender knows you. When you go out to buy a you know, a property today, you're the equity. Can you get a loan for your capital structure? Are the banks lending?
Well, that's I mean, that's that, honestly is the big issue that yes, the banks are lending, but at terms which are radically different than most of the current owners anticipated. So you know, somebody that has borrowed money at three percent, all of a sudden they get a term sheet back from the bank and it's seven or eight percent at the same loan to value ratios. So that's what inevitably is going to cause a big turnover in a repricing
of the industry. It just hasn't happened yet. And the subordinated lenders are you know, are in control of all these situations when that debt matures. It's just that, you know, rather than pull the trigger right now, the banks I think, have been encouraged to push it out for a year or two so that the problem is profound, it's identifiable. It's just going to take a while to come to fruition.
I'm so interested in what you were saying about the regional banks because when you joined US about a year ago, you were saying that you thought that there could be a crisis once we put this election past. Us has enough extend and pretend to happen that twenty twenty five might not be awful. Do I mean, do you think that there could be a regional banking crisis if the regulators wake up?
Well, I think it's going to take as we talked about, you know, I think this is going to be a slow burn. I mean, this isn't in RTC type situation where they're gonna you know, liquidate the I mean basically the government liquidated the whole savings and loan industry. So it's a huge opportunity that probably lasted twenty four months. This is not going to be that way because this debt is all over the place. It's in really you know,
bad refinancing, you know condition. But it's going to be a slow burn as opposed to everything happening at once. So I think the answer is there's going to be a lot more distress in twenty five, but the opportunity is going to last for a while.
For an investor Scott.
Here in New York City, there's so many families that are just owned so much real estate here in New York City hav been so successful over generations. Any of them stressed right now, really financially stressed.
Some that have been more active developing recently. I mean, I'm going to tell you who, but yes there are, I mean the long term owners who've owned for a long period of time. I mean, if you look at the New York market, if you own good office properties as an example, the one thing that's really happening in the office market here is that all these buildings are being heavily immendatized. You look at you know, the three star restaurants, the gyms, the places for you know, tenants
to hang out. I mean that's the way that the classic, really high quality office buildings have been able to retain their tenants, and they're really in pretty good shape. A lot of those are owned by roots, which tend to be low leverage, and a lot of these families don't have a lot of leverage. The people that are stressed are the ones that have levered up to do new developments, you know recently, particularly in the office space that just
haven't worked out. But there is going to be the winners and losers that if you have you know, class B C office buildings, those are going to be really tough, where the Class A ones continue to perform pretty well.
What just thirty seconds, what percentage of in York real estate would you characterize this Class A oh ten?
See that's my point.
I think this is going to get ugly, and that's what I keep waiting for, and we just haven't seen.
I don't know. I don't know how it's going to plan. I don't know.
But here on Bloomberg Intelligence, we're going to continue to cover this commercial real estate business because you think it's really interesting. We've got smart people like Scott Kelly, founder and CEO of Ato's Capital real Estate, is also waiver Tree Property Partners managing. Remember there, and then our good friend Abigail Do, a little market supporter for Bloomberg News. Abigail's got so many great relationships here and we appreciate her sharing them with Bloomberg Radio.
Here talking about the commercial real estate business. I don't know.
It's all about gyms and offices.
I guess. I don't know.
Back in the day, I came in at nine o'clock, We worked like ten or eleven o'clock. We got dinner and a car home, and that was That was just plenty.
Now you need a sawn it, I know.
Now I need to sign it.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple card Play and Android Outo with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa playing Bloomberg eleven thirty.
Let's switch over to Nvidia here. I mean Stock's down two point six percent.
I don't know.
I thought the numbers were darn good. I need some perspective on this name. I need some perspective on AI because to me and I think for a lot of listeners a lot of viewers, AI is still something new. It's a new technology. I'm not really sure what it is. But our next guest has been really helpful and explaining what AI is and explaining.
What the opportunities are. That is Gene Munster.
He's a managing partner co founder of Loop Adventures, one of the leading voices in my opinion on all things technology.
Hey, Gene, thanks so much for joining us.
Can you give us your take on what we heard from Nvidia last night and how we should think of in Nvidia and AI going forward.
Well, my take starts with what is a misunderstanding related to I think the narrative around this quarter and the guidance specifically, and the narrative is that the guidance is not as exciting as it was in the past. And so a few months ago when they reported their April quarter, they guided the out quarter of the July quarter up by five point two percent. So that's kind of the bogie.
That's how investors thought about this October guide last night, and they only guided October up by two and a half percent, and that diminishing return effectively on the upside is something that is dominated. I think this view that the second derivative is not working in the advantage of Nvidia, that's just not the beats are raises are not as exciting.
But that view misses a critical point. And it is very clear, even though they were not clear on the call that this Blackwell chip, this next generation chip, was delayed by three months, and if you go back and listen to their earnings call three months ago, they were very clear. They use the word ramp in October. That's when the revenue is going to ramp for Blackwell, and now they're saying that that is going to ramp in
the January quarter. So, Paul, if you take that revenue and basically bring it back into the October quarter, it's about three billion in revenue. They would have actually raised revenue by twelve percent, and I think so that's an acceleration from the five percent raise that they did three months ago. I think that is the reality is that this business continues to accelerate nicely.
Gene. I think intuitively, investors when they see a stock that's run up so much so quickly, they get nervous that we've hit you know, we've hit euphoria, we've hit peak AI. What are you telling you know, those investors who are just skeptical of just how quickly this stock has moved up higher? What are you telling them? Because you are still owning in Nvidia at deep water.
That's right, we still own this And I would tell them, I would just ask a question about just fundamentally, how do they see AI plane out over the next several years, and if you believe that this is going to be truly transformative more than for example, the smartphone or the internet, I would tell them that just continue to stay the course. This is a rocket ship. You can debate whether you have a window seat and that would be akin to your entry price to in Nvidia or an aisle seat.
But either way, this ship is going to continue to go up. Because at the end of the day, is that in order for AI to come to its full capacity of general intelligence and eventually superintelligence, we need to scale. And scale requires not only more compute capacity, but more data. If you continue to need more compute and data, then in video is going to be a beneficiary of that. And so we also have a venture investing business. We
invest in technologies. Some of them compete with what in video is doing, and we know from that side how difficult it is to close that gap, and so I think they will continue the market, will continue to need their chips to enable what I think is a very robust outlook for AI. And just to put a final thought on Emily, is that I think we're in a three to five year bowl market still early. I don't
think we're even close to a peak. I understand why people are nervous when you see the movement in video of the last couple of years, but I think it's an uncomfortable truth about this market is it's going to continue to go higher.
Hey, Gene, a reader just kind of piped up here and said, how about some of the competitors, like some of their customers might be competitors in terms of these chips frame that force.
So some of the customers make their own chips. Microsoft makes its own chips. You also have companies like Google has their tensor chip, and so Amazon's working on different chips. And so these are the hyperscalers, and these are the parts of the business that have been kind of fueling a lot of the growth and if you just look at think about in total how much of their growth has come from the hyperscalers, it's probably about sixty percent
over the last year. And so it's been really important at the end of the day, is that I continue to believe that they will the hyperscalers will start to add some of their own chips. They still don't have the performance. And this is the central point. Just because you're creating a chip doesn't mean that it has the
same performance as Nvidio GPU. And a big part of the call last night was Jensen trying to educate investors about how the hyperscalers think about the return on investment and that there is a return on investment for spending these buying these more expensive chips, and so simply football is that just because they're working on chips doesn't mean that they are comparable to in videos GPUs A.
Gene, thanks so much again for joining us.
We really appreciate getting some of your time helping us really understand what's going on out there in the world of technology and in this.
New phase of it.
Including Ai Gene Munster, he's a Mansion partner. He's a co founder of Loop Adventures. He's based in Minneapolis. He's been covering to tech industry really for decades and gives
us a good perspective on AI. And as I remember, Gen probably told us maybe a year ago, or maybe more than a year ago, kind of just how big AI is relative to things like, oh, I don't know the internet and the electricity, and he puts it in that context, and that kind of gives you a good frame of reference for perhaps how big this AI can be for everyone.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 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.
Aside from Nvidia Emily, another big tech story out there's ASML. The Netherlands plans to limit ASML Holding's ability to repair and maintain its semiconductor equipment in China, a potentially painful blow to Beijing's efforts to develop a world class chip industry. So that tech cold war seems to be pretty hot out there these days.
Let's get some latest on that. We'll do that with Sarah Jacob.
She's an Amsterdam beurea reporter for Bloomberg News, joining us from Amsterdam via Zoom Sarah.
This seems like a pretty big step.
By the Netherlands government to limit ASML's business with China.
Give us the background.
Well, essentially, the Dutch government will likely not renew certain ASML licenses to service and provide spare parts for its chip equipment when some of those licenses expired the end of this year. The move is expected to cover ASML's top of the line machine So we're talking to v machines,
which are deep ultra lithography machines. We know that ASML's most advanced ship making equipment are sold with maintenance agreements, So a decision to limit ASML's ability to repair and maintain those machines could could make at least some of those machines inoperable in China as soon as next year.
And what was the rationale behind this ban?
Well, the Biden administration has sought to limit China's advances in the semiconductor sector for some time now, and it has implemented sweeping export controls on China on the sale of advanced chip making equipment over citing national security grounds.
So we have also previously reported that the administration, the administration has raised the possibility of opposing the FDPR, which is essentially a rule that allows American officials to control the flow of foreign products built with even the tiniest amount of you know, technology originating from the US. And in this context, the US has sort of also been urging the Dutch government in many of its allies to align their China controls with the US. So that's sort of the backdrop for this move.
You know, what percentage or how big is China for ASML? Because I'm looking at the stock. The stock's actually up today. I thought it would have been down and down maybe materially.
Well.
China, yes, China is you know, accounts for about half of a SML sales, So we do expect if this were to be announced, it would impact smls sales and these new curbs would put a SML and the same constraints that US pers such as you know, applied materials
are is experiencing. But the implications of such a move also is for China, right, it's in terms of obtaining most spare paths brings and maintaining machines are critical to the smooth operation of a chip plant, and China relies on a SML's emotion DUV lithography systems to advance its
ship making technology. So for China it would be a blow to in its efforts to develop its SCHIP industry, could make it difficult for Huawei and Semiconductor Manufacturing International cop to make breakthroughs in their current capability.
Is this ban expected to then If it's not going to be good for the huaweis of the of the world, is it better then for US chip companies? Is that the idea.
Here I s it's essentially just part of this broad uh broad uh you know or planned by the Biden administration and its allies to sort of limit China's advances. So that's the real goal over here. And SML being you know, one of the largest and in you know uh so makes makes this most advanced ship making equipment that others don't have in the world, is very critical in this whole plan across with the US and the Dutch government.
What extent, Sarah is the feeling within you know, the Netherlands that this is a SML just following US policy versus maybe acting a little bit more independently.
How willingly is a SML doing this?
Well?
Uh, this is this is coming from the Dutch government. So the Dutch government under Prime Minister Mark Rutter, which was the previous prime minister, had resisted US pressure to add is just new restrictions on servicing, arguing that, you know, they needed more time to evaluate how the the the export bands had taken effect. But we say with the new administration, Dutch Prime Minister Dick Scorefolio this month said the government has good negotiations with US in Japan and
he expects the will end with good results. So we'll have to see.
Sarah Jacob, thank you so much for joining us. Really appreciate that. Sarah Jacob. She's at Amsterdam bureau reporter for Bloomberg News. How cool is it when you got news coming out of Amsterdam. We have a bureau there, and we have an expert right there that we can talk to. That is the power folks of Bloomberg News. Matt Winkler building that with Mike way way back in the day, and we can tap into that.
For Bloomberg Radios's great stuff.
Sarah Jacob Amsterdam Brewer reported there on ASML.
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