Intel's Chips Grant, California Vs. Tesla | Bloomberg Technology

Intel's Chip Grant and Market Updates

• Intel has secured an $8 billion grant from the US government for its chip factory expansion in the US, with the funds to be used in Arizona, Oregon, and New Mexico, but not in Ohio as its construction is not far enough along (2m1s).
• The grant is part of a program to boost US chip production, and Intel will receive the money between now and 2030, by which time it expects to spend $90 billion on capex projects (2m41s).
• The first $1 billion of the grant will be given to Intel this year, as it has already made progress on projects in Arizona, New Mexico, and Oregon (2m58s).
• Intel's award was initially announced in March for $5 billion, but the company has been going through due diligence and disagreements with the government over information disclosure and terms (3m28s).
• The grant is less than previously estimated, and Intel's CEO Pat Gelsinger has expressed frustration about the difficulty of getting money from the US government (3m20s).
• Intel is also receiving $3 billion to make chips for the Pentagon, which was supposed to be mostly funded by the Pentagon, but some of the money came from the funds already set aside for Intel (4m4s).

Market Performance and Electric Vehicle Incentives

• Meanwhile, California is proposing state incentives for electric vehicle buyers, which could exclude Tesla's models (47s).
• Zoom's stock is down 7.9% after the company's earnings did not meet expectations, despite solid numbers, and Analog Devices' stock is down 1% after rallying due to strength in auto sales and chips (1m29s).
• The S&P 500 is on track for another set of records, and the Nasdaq is up for four straight days, with big tech managing to lead the market higher (1m12s).

CHIPS Act and Potential Policy Changes

• The CHIPS Act and Intel's Chips Grant are discussed, with the possibility that the program may be changed or removed under the new administration, as President-elect Trump has expressed disfavor towards it (5m57s).
• The CHIPS Act aimed to create jobs, but Intel laid off 50% of its workforce, raising questions about the program's effectiveness (6m0s).
• NVIDIA, which did not receive any money from the CHIPS Act, is doing well in supplying the chips industry, and its success may be affected by the new administration's policies (6m10s).
• The new administration's merger guidelines are expected to be more lenient, which could lead to an increase in M&A activity, particularly in the tech sector (5m16s).
• The CHIPS Act's goal of on-shoring chip production may be impacted by the fact that NVIDIA relies on TSMC and other chipmakers to produce its chips, which could be affected by tariffs (6m42s).
• President-elect Trump's stance on tariffs may encourage TSMC to accelerate production in the United States, which could impact NVIDIA's business (7m14s).
• NVIDIA's high gross margins and demand for its products may allow it to pass on any potential tariffs to its customers (7m38s).

Semiconductor Industry Competition and Stock Valuations

• The semiconductor industry is expected to see increased competition, particularly from Amazon, AMD, and Intel, which could impact NVIDIA's market position (8m18s).
• Despite potential competition, NVIDIA is expected to have another strong quarter, with revenues up 70% (9m4s).
• The stock prices of NVIDIA and Tesla are discussed, with NVIDIA trading at 56 times future earnings and Tesla trading at 141 times future earnings, leading some investors to take profits (9m18s).
• The stocks of the "Magnificent Seven" are currently trading at about 35 times forward earnings, making them vulnerable to disappointment, and it is suggested that investors diversify beyond technology shares to minimize potential risks (9m43s).
• Made Cap, in particular, is seen as an excellent beneficiary of a potential corporate tax rate cut and a better growth outlook in the United States, trading at 13-14 times earnings (10m10s).
• Earnings are expected to decelerate in the "Magnificent Seven" as the market heads into 2025, while accelerating in the rest of the market, making diversification a potentially attractive strategy (10m33s).

Xiaomi's Chip and Trump's Tariff Threats

• China's Xiaomi is readying a chip, with mass production expected to begin in 2025, according to sources (11m4s).
• President-elect Donald Trump has threatened additional tariffs on top trading partners of the United States, including Canada, Mexico, and China, in an effort to extract policy concessions (12m1s).
• Trump's tariff threats are aimed at achieving policy goals, such as stemming the flow of fentanyl into the US, and are not purely economically motivated (12m48s).
• The market is taking Trump's tariff threats in stride, but there are many unanswered questions about the potential impact, including whether there will be carveouts for certain industries (13m9s).
• The proposed tariffs could have a major ripple effect on the economy and supply chains, affecting autos and the tech trade with China, and potentially prompting retaliation from trading partners (13m55s).
• The auto sector is the most important export from Canada and Mexico to the US, aside from fuel, and any trade disruptions would be extremely harmful to the US, Canada, and Mexico, as well as US plants waiting for parts (14m47s).
• The auto sector is fully integrated between the US, Canada, and Mexico, with certain vehicles crossing the border seven or more times before being sent to an auto dealer, making disruptions extremely likely (15m10s).
• Disruptions to the auto sector would lead to increased costs for consumers and would undoubtedly cause disruptions to US production (15m43s).
• The US has become less dependent on China since the first trade war, but many electronics devices, such as laptops and cell phones, were not taxed under the first trade war tariffs (16m9s).
• A proposed 60% tariff on China, with an additional 10% tariff, would be extremely disruptive to US companies that have not had time to move their supply chains out of China (16m51s).
• Companies like Apple have been trying to reduce their dependence on China by moving to countries like India and other Southeast Asian nations (17m3s).
• CEOs may be anticipating carveouts or expecting the tariffs to be rolled back, as they understand the economic constraints and potential impact on inflation (18m9s).
• The first round of tariffs on China was effective in reducing trade flows by about 30%, but also led to retaliation from China and diversion of trade to third countries (18m46s).
• Retaliation from China and other partners is expected if new tariffs are imposed, which would have a significant effect on trade flows (18m59s).

Australian Social Media Bill and California EV Incentives

• The Australian government is pushing to pass a bill that would make social media giants responsible for policing a ban on their platforms, with threats of fines of up to $32.5 million, which could serve as a blueprint for other countries to adopt similar measures (20m19s).
• The bill's passage could be a concern for tech companies, as it may limit their ability to attract young users, which is crucial for their growth and future success (20m49s).
• Meta has expressed concerns about the bill, stating that it would be hard to enforce and would require collecting biometric data from all Australians, framing the issue as a matter of free speech and identity (21m40s).
• The company has also pointed out the technical challenges of implementing the ban, but it's possible that they could roll out teen accounts with stricter settings and verification requirements, similar to what they have done in other contexts (22m5s).
• California Governor Gavin Newsom has proposed a state incentive for electric vehicle buyers, which would exclude Tesla's models due to a market share limitation perspective, aiming to encourage more carmakers to enter the EV market (23m53s).
• The move could escalate tensions between Newsom and Tesla, and is seen as an attempt to front-run any changes from the new administration, particularly if the federal support for EVs is taken away (24m16s).
• The proposal is also linked to the potential removal of the $7,500 credit for EV buyers, which could impact the demand for electric vehicles in the state (24m24s).

Cryptocurrency Market and California EV Credit Limits

• The cryptocurrency market has added about $1 trillion since the election of Donald Trump, but has cooled down slightly after a pullback from close to $100,000, with people locking in profits and questioning some of the geopolitical risks (23m18s).
• California Governor Gavin Newsom has proposed a plan to limit electric vehicle tax credits to manufacturers with a market share below a certain threshold, effectively excluding Tesla, in an effort to spur competition among smaller electric vehicle manufacturers in the state (24m47s).
• The proposal aims to support smaller manufacturers that are currently losing money when selling electric vehicles, while Tesla is making a profit from each car sale (25m22s).
• Elon Musk has responded to the proposal, calling it "insane" and citing Tesla's status as the only car manufacturer producing cars in California, despite having moved its headquarters to Texas (25m52s).
• The proposal may be seen as punishment for Tesla's success and profitability, and could raise tensions between Elon Musk and Gavin Newsom (25m31s).
• The $7,500 rebate could make a significant difference for consumers, especially those buying more affordable electric vehicles or leasing, and could encourage shoppers to consider other brands besides Tesla (27m45s).
• California has been an early adopter of electric vehicles, with an EV market share of over 20%, but there is still a larger challenge to penetrate the mass market, which may benefit from incentives (28m22s).
• The proposal could spur competition in the electric vehicle market, as consumers may consider other brands that are eligible for the rebate, potentially putting Tesla at a disadvantage (26m58s).
• California's electric vehicle (EV) incentive program may be replicated in other states if federal support is implemented, as it sets a precedent for other states to follow California's lead (29m7s).
• The program aims to encourage the mass-market adoption of EVs, which is crucial for California to meet its goal of zero emissions by 2035 (29m25s).
• The program's effectiveness in spurring mass-market adoption is questioned, as it excludes cheaper Chinese EVs, which could make US competitors less competitive (29m38s).
• Automakers are focusing on the low-end market, trying to deliver good value with a $40,000 price tag, as people are feeling less wealthy and affordability is a big issue for car buyers (30m0s).

Dev Agents Funding and Klarna IPO

• A group of former Google and Stripe executives are raising $56 million for a new company, Dev Agents, which aims to develop an operating system for AI agents (30m58s).
• The company's goal is to build a platform that connects AI agents, allowing them to talk to each other and enabling developers to build on one platform, similar to how Android operates (31m30s).
• Index is leading the funding round, and the investors have confidence in the founders due to their experience in building the Android platform and their past work at Google and Stripe (32m10s).
• Klarna, a key fintech company, is reportedly close to breaking even in the first nine months of the year, and its IPO is seen as important for the market opening (33m8s).
• The IPO market has been quiet in recent months, with the last major tech IPO being Reddit, and Klarna's IPO is expected to be a significant event (33m32s).
• The market is waiting for the election and interest rate changes, with Klarna being a test case for the market due to its volatile valuation history (33m46s).
• Klarna's valuation has fluctuated significantly, from $46 billion to $7 billion, but the company made a smart decision to adjust its valuation and has since built its way back up (34m23s).
• Klarna's IPO is expected to price in the range of $15-20 billion, and the company is coming out at a great time, with its main competitor's stock up 500% in the last couple of years (34m37s).
• The secondary market has been active, with many companies having a decent amount of capital and not needing to exit, and some companies like Stripe buying back their own stock from previous employees (34m55s).
• Going public is a marketing event that provides liquidity and sets a price point for a company's stock, making it easier to hire, do M&A, and provide liquidity to employees and investors (35m26s).
• Klarna calls itself the AI-powered global payments network, and going public will help increase its visibility and recognition (35m22s).
• There may be more M&A activity in the fintech space, with regulatory processes becoming more friendly, and companies like Bread and others being potential targets (35m56s).
• To prepare for a new era of M&A, companies should focus on having enough cash, as it is essential for survival, and consider raising debt rounds or loans to bridge the gap until the environment improves (36m38s).
• The secondary market has become more liquid, with platforms like Forge and Hive providing more up-to-date pricing, but it is still episodic, and access can be limited to those with the right connections (37m39s).
• Information rights are limited for investors before a company goes public, and they do not get all the financials, making it difficult to make informed investment decisions (38m19s).
• Once a company is public, it is a level playing field for everybody, and investors get the information they need to invest with full knowledge (38m37s).

EON Cloud Backup Funding and Bloomberg Technology

• EON is a cloud backup startup that was founded in January by a group of web services alumni and has closed a new funding round, evaluating the company at $1.4 billion (39m28s).
• EON's CEO, Ofir, states that the company is making cloud backup useful, as it is currently cumbersome and not working properly, with companies spending hundreds of billions of dollars annually on cloud backup (40m21s).
• Ofir mentions that he and his partner have been working on fixing the cloud backup problem for the last 11 years, and they aim to make it easier to manage and access data when needed (41m32s).
• EON wants to make sure it can manage all the data for an entire organization, help classify what is important to backup, and make it easy to access the data when needed, such as for compliance purposes (42m18s).
• The current cloud backup technology does not work, and companies are missing compliance audits due to the difficulty in accessing their data, which can take days or weeks (42m50s).
• Ofir is discussing the fourth round of funding for a project, stating that the funds are needed to address significant problems customers are experiencing, with the goal of providing a comprehensive solution at an enterprise level to solve the issues for companies of all sizes (43m7s).
• The current situation is described as a "mess," and the funding will be used to build a comprehensive solution to address the enormous pain points felt by customers (43m29s).
• The funding will likely be used to bring on more engineers, marketing, sales, and other personnel to support the project's growth and development (43m47s).
• The discussion is part of "Bloomberg Technology," and viewers are encouraged to check out the podcast, available on various platforms, including the Terminal, Apple, Spotify, and iHeart (43m53s).