From the heart of where innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Live from San Francisco. This is Bloomberg Technology coming up more tariffs. President Trump initiates trade probes into semiconductors and pharmaceutical imports. Plus Trump pledges expedited permits for Nvidia and other companies investing in the US. And Estranis has big satellite plans for Taiwan. How the nation could have full bandwidth as early as next year. Let's get straight to markets.
Our focus today is the chip industry, with the administration pressing forward with a plan to impose the civic tarifs on semis. Actually, in the last thirty minutes or so, equity markets have pulled back, but there is some outperformance in the Philadelphia Semiconductor Index. The logic that I'm hearing from people is certainty, we kind of now know more
about what's happening in terms of the specific movers. Nvidia continues to be in the headlines right They pledge to produce five hundred billion dollars worth of AI infrastructure in the United States within the next four years, but there are questions about capital expenditures, generally on the hyperscalers. Amazon is one of the big movers to the downside, particularly on the Nasdaq one hundred as a point drag. HPE Enterprise reporting from Bloomberg citing sources that Elliott's taken a
one point five billion dollar state. Later in the program, we'll get full details of that. It's an important story this morning. Let's get back to our top story. The Trump administration has initiated trade probes into semiconductor imports. It's a precursor to broader levies on chips. Bluebog. Tyler Kendall has the details from the White House. Good morning, Tyler, Yeah, Good morning, ed.
While the White House has formally announced its Section two thirty two investigation, which is widely seen as a precursor for the administration to implement tariffs on the basis of national security concerns, and we learned that the investigation actually started back on April first. That means that the Commerce Secretary, Howard Lutnik now has two hundred and seventy days from then, so roughly nine months, to release his finding report, which
would then spur the tariffs into place. But we know that this White House is really looking at more of an expedited timeline here. Howard Lutnik himself has said that we could see these tariffs ultimately implemented in the next one to two months. We have to keep in mind this investigation really is wide ranging. It includes chips, but it also includes the equipment used to make the chips as well as those downstream consumer electronics that contain them.
The Commerce Department says that they are looking at legacy chips as well as cutting edge chips that are used in artificial intelligence applications.
Now, this White House really.
Has taken more of a stick versus cart approach when
it comes to chip makers. President Trump long criticizing the Chips and Science Act with its subsidies and funding, instead safeing that his tariff plan will spur production in the US, and actually, yesterday from the Oval Office, president Trump saying that a recent Invidia manufacturing announcement was a result of his tariffs, but ed, as you well know and have mentioned and reported on, President Trump implied that in video was investing five hundred billion dollars in the US, when
rather the announcement was that they are pledging to produce five hundred billion dollars worth of goods in the US the.
Books Tyler Kenda at the White House, thank you very much. The President also pledged to make it easier for Nvidia and other companies that are committed to the United States. By Brady Ford in New York has the details of that. But also I think we need to recap some of the numbers from the Nvidia announcement yesterday. Good morning, Brady,
Good morning. Five hundred billion of goods. That is the amount that in video said that is the kind of upper limit of what it's targeting as it invests more in building in the US.
It said that it's going to be making chips out of Phoenix with TSMC, making servers out of Texas with Fox Con. And I mean this is in line with the announcements we've been hearing from companies like Apple or open Ai or Eli Lilly that as tariffs are hitting, as Trump is putting on pressure, companies feel this urge, this kind of need to show that, look, we have an ability to produce in America, and I imagine it
helps them a lot. With the administration as well. We saw that in Trump's tweet today that look, if you are being part of what he calls the you know, Golden age of America and investing here, we're going to try to help you out. He said that we're going to expedite permits.
Those are done at the local level.
But of course, if someone at the top of the food chain is telling you, as a local government official, that hey, let's let's get these on the road. You know, I write a lot about data centers, and yes, waiting for utilities, waiting for permits, these things can slow down projects.
Brady Ford's going to be that later in the hour with that Hpe Elliott News as well, Brady Ford, Bloomberg News, thank you. What does the tariff news this morning mean free technology investors? And what's the outlook in particular for AI CAPEX JP Morgan Asset Management Global market strategist Stephanie Aliaga joins us now, and I think we start there right, which is the news and certainty. I look at the Philadelphia Semiconductor Index, it's slightly higher versus other benchmarks this morning.
Section two three to two is an interesting strategy, but maybe the market knows more now than it did, say forty eight hours ago.
Thank you, Ed. It's been remarkable.
You know, at the beginning of this year, we saw a real rerating of a lot of those leading tech companies and a lot of scrutiny around the AI CAPEC cycle. A lot of that was due to concerns around deep seek and also the fact that those leading tech companies
were over owned and overloved perhaps. But now in the last couple weeks, what we've seen is market shift to really begin to appreciate how these companies are the poster children of globalization and they are highly exposed to the trade war that is going on right now, all of these different tariff headlines, and you can see these companies are quite actively trying to figure out ways to show that they can reshore some production or expedite some of
that processes. But at the end of the day, not only are the mag seven let's take, highly globally exposed in their suppliers and their revenue, but they're also cyclically exposed. And you mentioned the capex cycle and what the outlook is there. A lot of those assumptions will to become under a greater scrutiny if we have a slower moving economy.
Does the outlook for AI CAPEX hold, get cut or grow based on what's happening.
First, we need to consider just how significant the rates of growth that we saw in capex were over the last two years. The hyperscalers grew more than fifty percent in their cap BAX expenditures from twenty twenty reader twenty twenty four. Is that rate of growth sustainable, particularly in an environment where we're looking at a likely cooler economy, a lot of uncertainty. So I think some of that frauth comes down longer term.
There's still a lot.
Of CAPEX that needs to be spent on AI, but in this environment of uncertainty, management teams are going to be really focused on defending margins and ways that they can indeed the bottom line.
Okay, defending Martin. There's some calculus that the cell side is doing that the CEOs of all of these companies are doing. Which is and bear with me on it. If you on shore you're manufacturing or the assembling of your electronics component to America, it's probably more expensive. The cost of doing business is greater by let's say twenty
five percent. But you face a choice because if your components come for a market where there is a levee of tariff or tariff of twenty five percent net, you've got a decision to make right, what's the most cost effective and do you pass it on to the customer? How is that impacting your view of markets right now?
Absolutely, tariffs do nothing to stimulate demand, and immediately what they're going to do is increase costs. And it's not as easy to just pass those costs along to your consumers because then that will tighten or shrink the amount of demand that you're facing that you're getting from those consumers as well.
So I think that's the overall risk here.
You know, supply chains they can adjust, they have been over the last many years, but it takes time, it costs a lot of money. And there was a reason why they were so global in nature to begin with. They were optimized that way, and it's a big reason why these tech companies have been able to defend and grow their profit margins on a secular basis over the last many years.
There's a little discussion in the media about how financial institutions like the one you work for put more emphasis on geopolitical analysis than fundamental analysis. Perhaps historically that balance has been different. We had a headline from the European Union about full minutes ago that cause markets to pull back, which is the EU doesn't think there's going to be any movement on tariffs and talk so not going very well.
Could you just explain to our audience, like, when you think about the technology sector from an equity markets perspective, how you factor in the politics of this, how one jurisdiction behaves with regards to another.
Absolutely, there's a lot of uncertainty and headline volatility right now in the midst of all of these negotiations. I think on the medium to longer term, the reality is the chip industry, for instance, but also a lot of these other highly sophisticated tech services are very globally integrated and it is very difficult to immediately decouple. Now we're likely going to see greater efforts around that as we have been over the last few years, so that remains
a risk. But I do think it's notable of all of the sectors that are at risk or exposed to these tariffs, and there are many of them, that the tech sector was the first one that was really granted. These kind of sweeping are broad based exemptions at least temporarily, and I think there is an understanding that this is very mission critical for the US and maintaining its tech leadership.
And maybe at the end of all of.
This, perhaps you know the too big to be faced with massive tariffs from the administration's policies.
Stephanie ilg JPB Organ Asset Management. Terrific to have you on the program. Thank you very much. Now, coming up navigating the tech tariff uncertainty, We're going to go back and have more on the offs and ons of tariffs, so we step back from the brink. Do we know more that conversation? Next this is Bloomberg Technology. Back to our top story tariffs coming for the chip sector. With new tariffs reshaping global trade, technology faces rising costs and
fresh uncertainty. To help us understand the broader policy implications, Joining us now, Karen Cornblue Milkin Institute, Senior Advisor for Emerging Technology, a former Principal Deputy White House Chief Technology Officer, also Ambassador to the OECD under Barack Obama. Let's start with the certainty or uncertainty piece today as it stands with the Section two thirty two probe launched into the semiconductor industry. Do we understand what this administration's tariff policy is?
That is the question of the hour.
I mean, I think it's quite remarkable and we should start there that this sector, which is arguably the critical sector for our economy for national security, we seem to be making policy on the fly. So what happened on Friday, Customs put out a list and it became clear that electronics, not just semiconductors, were going to be exempt from.
The reciprocal tariffs.
Then over the weekend, the Commerce Secretary Lutnik said, well, that's only going to be this reprieve is only temporary. Then Stephen Miller, the President's deputy chief of staff, said that they'd be subject to this national security review, and the President reiterated that, saying that the tariffs were going to be twenty five percent plus. So making policy for
this incredible sector over the weekend. And what's so incredible is that this is the sector that is you know, especially the mag seven right, they're ten percent of GDP, They're a huge proportion of the S and P.
And here we are making.
Policies like this. Let me ask you, this is about communication. You know you've held Office in the White House in the field of technology. You've been in an ambassador to the OECD. An understand global trade, the communication from this administration, How is it received, interpreted, understood and acted on by other jurisdictions like the European Union or China for example.
I mean, you know this to make policy and change it like this is so difficult for other countries to adjust to, you know, they I mean, we just saw this with Europe today.
But I think they've been prepared.
That's what's interesting here is that I think you see not only some companies like Apple seems to have been planning for a long time for this kind of disrupt not this level of disruption, but some disruption. China seems to be prepared and not being caught flat footed. But still, as you know, the global supply chains are involved, so much investment, involves so much time, and this kind of
disruption is incredibly difficult for them. But then as you're asking about the countries, governments are not that familiar with the inner workings of these sectors, and so they're learning on the fly as well what's important, not what's not important, and what the implications of all this are and for them to do that kind of homework and then respond is incredibly difficult.
What is the end goal of using tariffs as a tool policy for this administration?
Karen Well, at the risk of sandwashing, which is a term that's been used here to and when people try to interpret some of the Trump administration's policies, it seems like the tariffs are gradually falling into three main buckets. One is about raising revenue the ten percent across the board tariffs, which could raise two hundred billion dollars or more. A second one, which is where we see the semiconductors, the semiconductor machinery and the electronics, as well as steel, autos,
aluminum falling, maybe timber, is national security. And then there's a third one, which is the overall competitiveness and job creation, where we see these reciprocal tariffs that look like they're for negotiating down tariffs overseas.
Should I ask you about that third bucket, because the big headline of the last twenty four hours is this commitment from Nvidia to build five hundred billion dollars worth of AI infrastructure. We're talking goods and sales, not a CAPEX commitment in America and the criticism of the past administration, which you participated in and served in, was that the Chips Act on paper was one thing, but unlocking the funding from it and actually getting people moving to onshore
didn't really happen. Is Trump now achieving that with a different.
Tool, Well, I mean it remains to be seen. You know, there are a bunch of there were announcements made under Trump one. There were announcements of a huge amount of investment, and there was actually quite a lot of investment that was made under Biden as well. So far these are these are announcements, the Apple announcement, the Nvidia announcement, the TSMC announcement. TSMC in the past has made announcements of investments, but then they haven't been able to find the.
Workers that they need.
And what you're going to see now for all of these companies, they may make announcements, but when it comes down to it, their prices are going to go up. There's going to be a delay in there being able to get the equipment, and then there's a worker shortage. So if we want to see any of this come, I think we're going to have to We're going to have to lock down the certainty we can't be driving prices up and there needs to be serious workforce training.
Current to end. Are we stepping back from the brink here? Or is this just a pause while the administration kind of works out the most effective method.
So the two thirty two, the section two thirty two investigation, this is the national security invest stigation that's going to happen for the electronics that they put a deadline on comments for a month from now, and they're going to move really quickly. I think the President has really stuck
his neck out. He personally has said that the tariffs are going to be twenty five percent plus, So I think we can expect to see those And when you think about that plus perhaps the fentanyl terror or certainly this fentanyl tariffs of twenty percent from China, I think you're going to still see very high tariffs.
I think you're going to see uncertainty. I think you're going to see raising costs.
So I hope you know, as they're making policy on the fly, they're going to realize how critical this sector is and they're going to address a bunch of those vulnerabilities in this policy where they can't reach the results they want to reach.
Karen Cornblue, former US Ambassador to the OECD. Grateful to have you on the program. Thank you. Metas Mark Zuckerberg took to the witness stand yesterday and an historic antitrust trial in which the FTC alleges Meta's purchase of Instagram and WhatsApp destroyed competition. Joining us now as Schweter Cojuria of Wolf Research, who currently has an outperform rating on Meta with a six hundred and forty dollars target price.
I'm looking at the stock. We're basically flat. In the session, we'll get to the details of this trial, but simply is there or is there not antitrust risk in this name?
I think there is. Yes.
It would be difficult to say no, given that there is an ongoing case, which I think that will be stretched for several weeks now. And the bigger question also is if there is a likelihood of a settlement. If the probability of settlement increases, then maybe the overhand is gone. But otherwise, yes, I think there's a real risk.
Let me ask you this, This isn't data, but when Mark Zuckerberg appears on day one of the trial, what does that tell you.
That it is very very important for the company and for him personally, and the fact that he has spoken with President Trump multiple times since his inauguration it tells us a little bit about how important this is for him.
The argument the FTC makes was largely based on email documentary evidence that showed Zuckerberg having concerns prior to the acquisition of Instagram that they would be a threat to Facebook in the domain of photo images. That's very interesting argument. Is it a strong one?
I don't think so.
I think FTC has a weak case on hand for a variety of reasons. First of all, they are saying that Meta is a monopoly. This is a backward looking case from twenty twenty, and Instagram was not that big of a platform with one million users at the time. Success was not guaranteed, and they didn't even make revenue. Second, they approved this case over a decade ago already, and they're revisiting the same case. And the third thing is
that they're only looking at Snapchat and me. They are not inc the FP is and the competition has evolved meaningfully.
So the counter argument that Meta is giving is that they focus on TikTok and YouTube. Now, if you forget the context of a trial. If you were analyzing this stock in this marketplace, how do you assess the competition from TikTok and YouTube that comes Metas way.
Absolutely, TikTok and YouTube are competitive, and it's more than TikTok and YouTube. It's TikTok, YouTube, Snapchat, Reddit, anywhere that a user is spending their time. And what I think is missed in this case is that the Metas platform has evolved from connecting friends and family to how people actually spend time for broader entertainment and over fifty percent of time spend of users today is video, which is competing with all these their platforms sweter.
Many people were confused Metas an AI.
Company, isn't it It is?
So why is that not taken into account in this case?
Absolutely, It's just that the monetization of the platform today is predominantly ad based monetization and that's their bread and butter that they're competing on.
So we just have thirty seconds. But with earning season around the corner, what do you expect methods to tell us that.
They are cautious around the macro that they are reiterating their gapex for full year, and they'll probably give a conservative guy for the second quarter without much visibility into what's coming in the back half.
Oh thanks to Schweeder Cajuria of Wolf Research joining us here in the San Francisco studio. Welcome back to Bloomberg Technology. Amed Ludlow in San Francisco. This is what financial markets look right now. Earlier in the session, the story was outperformance from semiconductors, the socks for the healthier semiconductor index.
It's still there, but it's much more muted. One of the big factors of the last hour was a headline from the European Union explaining that the EU expects tariffs to remain in place, but the talks between the EU and the United States have made very little progress. Then we think about the individual movers. Still in the headlines. Is Nvidia, for example, because of that commitment to build more AI infrastructure one hundred percent in America. Amazon is
big moving to the downside. In the broad context of things, we have questions about capex around AI. Google also lower as well. I want to get to the big picture here on tech stocks and what's driving this morning session. Let's bring in Rhyme Vasellca of Bloomberg News. So what do you see out there? I think you know the mag seven's a bit bifurcated at the moment. But what are the main drivers of this market?
Well, again, as always, the focuses almost entirely on trade policy on tier obviously mentioned the headline out of the European Union. There is still so much uncertainty, so much back and forth. People are really having a hard time gaming out with the ultimate teri freights are going to be, what everything is going to look like, how companies are going to react. There's still so much uncertainty in that strive and volatility in both directions that we're seeing the same today.
One of the big outperformers is Netflix up more than five percent. There was a report in the journal I think about some of their financial targets long term, some of them eyewatering on market cap, target on what they want to do with the top line. What's the story there?
Yeah, so, like you said, Wall Street Journal reported there are twenty thirty targets expecting the double revenue, triple operating income, have a lot more subscribers, and reach one trillion in market cab joining that very elite club. This is a stock that's been performing pretty well this year. They had very strong results in January. They report again on Thursday afternoon ahead of the holiday. There's a lot of optimism because this is not really eight stock that is at
risk from tariffs. It's also a start that has seen as pretty resilient in the face of an economic contraction or a recession. If you're going to cut back onto your spending, I think your Netflix subscription is going to be one of the last things you've cut because you know, the argument goes that you get a lot of being for your buck.
As far as the breath of their library versus the monthly b blombo's Ryan Blastellika with his finger on the pulse of tech stocks this morning, Thank you very much. Okay, time to diversify. That's the words of recent reflections from Gerber Kawasaki quote. One of the key themes of this year has been the value of diversification. While US stocks have recently pulled back, many of the diversified strategies we've implemented are proving providing balance. And that's all in the
context of course of trade, tariffs and technology. For more, let's bring in Ross Gerber Gerber Kawazaki's CEO, and I find that point interesting because you are someone that I've enjoyed having on the program with a very sort of high conviction thesis on specific technol loogy names. In this environment, What does diversifying mean for you? Good morning US.
Well, for US, it's you know, firstly, just you know, I'm traditionally just a US based investor, and we get our international exposure through like big cap tech and other consumer companies that are global, like Apple. So we've always done substantially better for our clients investing in US companies
than foreign companies. But for the first time in like at least five no, it's maybe eight ten years, I'm investing in Europe and in Asia, and I think there's a lot of opportunities globally, and if you actually look at the global markets.
They're all pretty much up except.
For for the United States. So this has been a good way to diversify assets if you want to own stocks. But in general, stocks as an asset I think have a much higher risk level for the return that you can earn than it's had in the last five years, and so investors need to look at diversifying in other areas like gold and bitcoin from the sense of having alternative assets. Real estate and reads look interesting to me here as well as you know, private investments.
Let's talk about Europe and the equity market if we can, because I think like ASML is a really interesting example, right. It is this sort of darling of Europe, but it is right at the center of what is happening with tariffs and the adjustment of global supply chains. I also ask the team to show SAP because like, right, there isn't much big, big tech out there in Europe, and I kind of have a right to say that, having spent most of my life and career in Europe.
And you have Semens too, So we looked at SAP and Semens recently, which are excellent companies. And you know, the way we're playing it right now, because I'm not really an expert in European securities like US securities, is really just through the indexes, which I think give you exposure because SAP and Semens Novo, which is really cheap as well, are are, you know, all big components of the European indexes. So that's one way to play it.
I own ASML in my fun GK and for clients, and we just trimmed it a little bit because I kind of feel like they're just in this crossroads of the trade board because they make the most important machines for chips. But it's also like we don't want this person to get it. We don't want that person to get it. So, you know, ASML has some challenges that are political, but their product is crucial to the development of advanced chips. You know.
Bitcoin, You mentioned the moment ago. Is there a kind of Goerba Kawasaki thesis and strategy around bitcoin? Uss?
Well, I've been investing in bitcoin for over a decade, so for me, bitcoin is a long term, highly volatile asset that's related to risk, and so when risk on bitcoin goes up, when risk off bitcoin goes down. But we look at it very similar to gold. But gold acts opposite of bitcoin, you know, with inflation, and it's a risk off asset.
Do you like them?
Kind of here in my fund, I own, you know, a much higher percentage of gold now than bitcoin because I think gold is a better that today than bitcoin. But I think having alternative assets like this in your portfolio makes a lot of sense, and we have it in my ETF GK, and we're the only ETF that actually owns gold and Bigcoin Ross.
I'm going to ask you about Tesla, but first I just observed that historically, when you've come on the program, we've talked about Tesla, because you have been a vocal Tesla shareholder, and when I posted on social media you were coming on. There are many that point out, well, why are you getting him on? He is too emotional. I'm quoting others just hear me out, he's too emotional about Tesla. He is anti Elon. There are those that sort of think you're too combative with this sort of
retail Tesla shareholder and audience. That's the context, but actually there are some specific questions in that, which is how focused are you on Elon's involvement at DOGE and the assumption that you probably want him to stop doing that and focus back on Tesla.
Well, there's a couple of things to unpack there. First of all, I understand why retail investors at Tesla are frustrated with me for voicing my views as a retail Tesla investor and a cyber truck driver. I find it horrible the fact that people are worried about having their vehicles vandalized, including me, because of Elon. You know, so I don't know why I'm getting attacked when I'm the one I'm actually really getting attacked because of Elon's behavior.
So I think you'd have to be a blind person not to see that Elon's behavior is, you know, highly political and highly damaging to the brand, and all the numbers are showing that. So I'm a shareholder, and if you go back to twenty twenty one, that was the high of Tesla around four hundred dollars until that brief rally during the election, So nobody's made any money in Tesla for a long time. Tesla stock is down forty
percent this year. The performance is I think directly related to the CEO A not working at the company and be his outside activities. I guess you could call it. I don't like Elon's personal the way he does things.
That's true, and I don't align with him morally, but that is irrelevant of my investment in Tesla, which I have a substantial amount of money, and for my clients that deserve correct representation by their CEO and the board of director's responsibility to running the company as every other company.
In America is run.
We all know that this is a reality, and I'm just the one willing to say it. So people can attack me all they want, But what I really care about is what's best for Tesla and Tesla's shareholders. And if these people don't get it, they don't get it, what am I going to do?
Another question is, well, what happens if Tesla outperforms one user? And X gave the example of what if it ten? X is I think a more modest model, but you'll mindedness to add to the position and continue to see the long term story around AI and energy.
I still own Tesla, like you know, we own a lot of Tesla at my firm, a lot less in my fund because I think the short term and the medium to look pretty bad for Tesla right now. But we still even own it in my fund, and I can't really even justify owning it. But for clients, we own Tesla because I do think something fixes itself at some point, and they have the best products. I was just in the new model. Why it's a great upgrade,
it's way better than the old model. Why and why they're not advertising to consumers that they have a new product is mind blowing to me. So I've had enough of the bs that Elon knows what he's doing at Tesla. It's clear that he just doesn't care. And his next move is Xai. And by the way, I'm invested in that too, so you know I own Xai stock. And the truth of the matter is Elon's going back to Xai. So if you have any confusion that he's come back to Tesla, he's not. That's not what his passion or
focus is. And there's a great article from I think the information that came out today about basically just doesn't care and I believe that. So I'm sorry. I'm going to stand up for Tesla because I care about climate. I just survived a horrible fire that was created by climate and I can tell you firsthand after seeing it fighting it myself, that if you're not concerned about what climate change is going to do to you, you're just being foolish here. And Tesla's one of the most important
companies to solving climate. So I want to see Tesla succeed. And that is the whole purpose of why I say these things and get criticized.
I don't mean to cut you off. Were just short on sus and I want to get to Netflix, and I want to get to that.
I am emotional about it because I love Tesla.
Noted you've been a holder of Disney. We talked about it a lot. But that Netflix news on their twenty thirty targets. How do you see both names?
You know, it's funny because I fight about Disney all the time with my coworkers because I still think Disney is wildly undervalell you and after the Netflix announcement, you know, we own Netflix as a top holding in my fund and at my firm, and we've owned it for a long time and it's been a great investment. And the team there is incredible and their goals are I think great and accurate, and it's a great stock to own.
But then you look at Disney.
Trading at this like discount with Hulu really doing well. You know, Hulu has great content. ESPN is about to become a free agent from the cable companies this year where it can be a standalone service. They have these sports services coming out. They've done very well I think with movies, not as good as i'd wish, but much better than before and then theme parks, and I think there's this global uncertainty with travel, which is why we've
lowered our position a little bit. And I'm not sure how this shakes out with China because Disney and China have a very close relationship. So there are some headwinds with Disney that Netflix doesn't have because they don't have physical, you know, locations. But with Disney and the cruise ships, I see this as a cash cow. So I'm really bullish on Disney. I think the evaluation, okay, is way chip, way cheap. But I'm also very bullish on netflite.
Ross Gerba of Gerber Kawasaki, thank you very much. Now coming up on the show, as Taiwan braces for digital threats, one US space startup has a bold plan that starts in orbit. A Strata CEO John Gedmark joins us next. This is Bloomberg Technology. Taiwan is teaming up with US startup as Strantis to launch a satellite that could keep
its Internet online no matter what. For example, a satellite link would likely be crucial for Taiwan to maintain its communications if a possible Chinese attack were to disrupt its networks. Joining US now is John Gedmark, a Straanti CEO here in the San Francisco studio. Let's start with the basics of the technology. What is a micro geo satellite, what does it do and how is it going to get up there?
Yeah?
Absolutely so.
This is the first time that Taiwan has had a satellite dedicated just to them for broadband connectivity. And we're able to do that because we're in this special orbit called geostationary orbit.
So this is a very high.
Orbit, much higher than lower orbit satellite networks you might have heard about. And this special orbit allows us to park a single satellite over a country or multiple satellites and provide NonStop service with just that one.
Asset and the launch provider.
We'll be launching this satellite along with a number of other of our satellites, on a SpaceX rocket later this year.
One of the questions I got from the audience was about the orbit, and a question was about the vulnerability. So you kind of went through the benefits of that jacing from this orbit, but what are the risks involved in that level?
Well, I'm not going to go into details on techniques to counter the kinds of things I think you're talking.
I think that is at the reason of that question.
Yes, what I would say is that resiliency comes from strengthen numbers. So this satellite is actually just the beginning. We're gonna be launching many satellites. But this is why we're spooling up production out of our factory here in San Francisco to launch many dozens of these satellites in the years to come. And then you can relocate those satellites, you can move them around, you can bring more to
bear on a particular issue, regardless of what happens. I think the other thing i'd add is space is actually a much better visime to be in than on the ground or under the seat. If you think about how difficult it is to replace, say an undersea cable that might get cut, space is a very different, very different question. Actually much easier for us to bring in one or more additional satellites if needed.
This seems like a really big commercial development for you. The contract value with Taiwan is worth an excess of one hundred million dollars.
How do you execute on a Yeah, so this is a contract with Chungwa Telecom, the largest tolco and Taiwan. They have about a thirty billion dollar market cap. This is a total value over the service life of the satellite. So you know, what we're finding is that a certain type of customer they really want this dedicated satellite and
really it's a dedicated network. So they get the security, they get this enterprise grade connectivity, and they get insight and transparency into exactly what's happening in their network.
And this is.
Something that we found customers really are looking for now in sort of this age of heightened geopolitical tensions, will and they're willing to pay a premium.
Well, that's why we sided the conversation, right, like the communication satellite that what happens if Taiwan is subject to aggression from China in the possible that, right, Is a Stratus a communication satellite company or is it a defense technology company?
Well, certainly, I would say we're a little bit of both. We are definitely a communications service provider, and we now have a number of contracts actually with the US military as they have become interested in our technology as well. So it is a true dual use technology and that's I think to the benefit of both our commercial customers and to the US military. We get to benefit from that shared investment and shared infrastructure.
I think there is a lot of interest in America's commercial space industry. Could you just explain the basics of your supply chain and your footprint where all of your center activity is here.
Yeah, We're an American company with the vast, vast majority of our supply chain in the United States. We have very little international footprint on that actually, and none out of China if I suspect that's where you're going with that. So, yeah, this is something we've been thinking about for many years now.
John Denmark has straying a CEO on the big deal with one of Taiwan's leading telecommunications companies, Thank you. We're about to find out how tariffs and doubts about AI demand are hitting the chip industry. TSMC, the world's biggest contract manufacturer of chips, and ASML, the leading chip making equipment maker, both report earnings in the next thirty six hours. Both have borne the brunt of the broader market selloff that's focused on trade wars and AI. Wall Street expects
sales and income to rise sharply at both companies. However, it's the outlooking guidance you want to focus on as investors assess how hard trade tensions and macroeconomic concerns put off key customers. The main metric to watch. Analysts see TSMC actually withdrawing its guidance and ASML missing estimates on quarterly bookings. A right, let's take a look at shares of HPE. The stock popped after use the Elliott Investment Management built a position worth more than one point five
billion dollars into the company, that's according to sources. But the best ready forward is back with more. So this is an activist play. What does Elliott want from and with Hpe?
What does any activists want? They want more money? Right? I mean appears that Elliott notices that HPE has had a pretty rough year. You know, it's share prices down quite a bit, it's underperformed peers like a Dell or a super micro, and it appears that they see it's a good time to invest in agitate for changes. Now we haven't heard from Elliott, we haven't heard from HPE.
But generally the playbook here is to find a company that has some pretty good kind of bones to it, but is you know, apparently being misrun or it's not you know, really living up to its potential is generally how activists see it. Often that means things as drastic as let's get a new CEO or switch up the ball, let's do some layoffs, things of that nature.
That this tariff's in the equation right, Like I think HPU said last month that profit this year will be below what people hope. But I'm like one of those few people that's ripped apart a server. I know that HPE is deeply involved in the AI infrastructure build out. Why do they not get that credit from Elliott?
Well, they could be I mean, part of the calculation could be that, you know, the market's really beat up this name, but they actually have a pretty good position with their networking and with their servers. I think a big question for investors right now with all the hardware names is how much will they be impacted by teriffs? And it's not totally clear. HPE has a lot of
manufacturing in Mexico. I don't believe they have quite the level of Asia exposure, so that could be a benefit, But these terriffs keep changing every day, so it's hard to say.
So.
To Brodie's point, the stock is down like more than thirty percent year today again of four percent is kind of not really registering in the context of reccessions. Bluembogs Brady Ford, big shift on the show today. Thank you very much. That does it for this edition of Bloomberg Technology. Don't forget check out the podcast. You can find it on the terminal as well as online on Apple, Spotify, and iHeart Wow. A lot going on in the world
of technology. Thanks to everyone watching. This is Bloomberg Technology.