Daybreak Weekend: US Jobs, UK Parliament Challenges, Taiwan SEMICON

Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Daybreak Weekend, 0:00:12.840 --> 0:00:14.760 our global look at the top stories in the coming 0:00:14.800 --> 0:00:17.520 week from our Daybreak anchors all around the world. Straight 0:00:17.560 --> 0:00:19.600 ahead on the program, and look ahead to the August 0:00:19.720 --> 0:00:22.520 Jobs Report in the US what it could mean to 0:00:22.680 --> 0:00:26.000 Fed policy moving forward. I'm Tom Busby in New York. 0:00:26.320 --> 0:00:29.520 I'm Stephen Carolyn London, where we're discussing the challenges facing 0:00:29.560 --> 0:00:32.960 the UK's government as Parliament returns from at summer break. 0:00:33.400 --> 0:00:37.880 I'm deg Christner previewing a major semiconductor conference in Taiwan. 0:00:43.960 --> 0:00:47.960 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:48.000 --> 0:00:51.800 Eleve Them three own New York, Bloomberg ninety nine to one, Washington, DC, 0:00:52.120 --> 0:00:56.200 Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco, 0:00:56.400 --> 0:01:00.680 DAB Digital Radio, London, Sirius XM one nineteen and around 0:01:00.680 --> 0:01:03.320 the world on Bloomberg Radio dot com and via the 0:01:03.360 --> 0:01:04.560 Bloomberg Business App. 0:01:08.720 --> 0:01:09.280 Good day to you. 0:01:09.360 --> 0:01:12.000 I'm Tom Busby. We begin today's program with the August 0:01:12.200 --> 0:01:15.760 Jobs Report out this Friday, and what it could mean 0:01:15.920 --> 0:01:18.559 for the Federal Reserve at its September meeting for more. 0:01:18.720 --> 0:01:24.720 We're joined by Michael McKee, Bloomberg International Economics and Policy correspondent, Well, Michael, 0:01:24.800 --> 0:01:28.560 inflation steadily cooling, the US labor market carrying a lot 0:01:28.640 --> 0:01:31.679 more weight with the FOMC for its next meeting now 0:01:31.800 --> 0:01:33.880 less than two weeks away. What do you expect to 0:01:33.920 --> 0:01:37.280 see in this August jobs report and what will all 0:01:37.280 --> 0:01:39.160 of it mean to the FED? 0:01:39.560 --> 0:01:43.800 Well, it's important to the Fed. At his Jackson Hole comments, 0:01:44.080 --> 0:01:48.080 jaypoul FED chairman said that the risks have tilted now 0:01:48.440 --> 0:01:52.320 towards a weakening labor market away from strengthening inflation, and 0:01:52.400 --> 0:01:58.160 inflation as we saw on Friday's PCE index still very contained, 0:01:58.800 --> 0:02:02.400 still continuing to slowly moved down towards their two percent target. 0:02:02.640 --> 0:02:04.480 So they're keeping an eye on the labor market in 0:02:04.560 --> 0:02:08.560 part because it's the one thing that they don't have 0:02:08.639 --> 0:02:13.080 a lot of data ahead of time until this coming week. 0:02:13.400 --> 0:02:16.200 Because we will get the ADP numbers, will get the 0:02:16.320 --> 0:02:22.400 ISM manufacturing and services hiring numbers, we get the latest 0:02:22.520 --> 0:02:27.120 jobless claims numbers and jolts. All of those things in 0:02:27.200 --> 0:02:32.360 one week are all the precursors to Friday's labor market report. 0:02:33.000 --> 0:02:37.160 Right now, what we're tentatively expecting is as sort of 0:02:37.160 --> 0:02:40.840 a return of job growth. That last month was one 0:02:40.919 --> 0:02:43.960 hundred and fourteen thousand. The feeling is we'll go back 0:02:44.040 --> 0:02:46.720 up to somewhere between one hundred and fifty and two 0:02:46.800 --> 0:02:49.680 hundred thousand. It's not going to be as strong as 0:02:49.720 --> 0:02:51.480 it was, but it's still going to be a fairly 0:02:51.520 --> 0:02:54.080 strong number. The most interesting thing is going to be 0:02:54.200 --> 0:02:57.280 the unemployment rate, because a lot of economists think that's 0:02:57.320 --> 0:02:59.880 going to go down to four point two percent. The 0:03:00.200 --> 0:03:04.200 four point three percent we saw in July was sort 0:03:04.240 --> 0:03:09.320 of a one off, accidental increase and that will change 0:03:09.520 --> 0:03:12.040 and if that's the case, that'll make the FED feel better. 0:03:12.800 --> 0:03:15.600 I mean, we have been seeing evidence a bit of 0:03:15.639 --> 0:03:18.560 a slow down despite what we think will be you know, 0:03:19.120 --> 0:03:22.600 four point two percent unemployment rate, the weekly jobless claims 0:03:22.639 --> 0:03:27.240 fluctuating kind of up and down, but still actually historically 0:03:27.360 --> 0:03:29.280 very strong, though right very low. 0:03:29.639 --> 0:03:32.440 They've been so low for so long, with the exception 0:03:32.520 --> 0:03:35.360 of the weirdness of the pandemic, that it's hard to 0:03:35.400 --> 0:03:38.440 get an exact idea of where it is. 0:03:38.480 --> 0:03:39.440 You have to be worried. 0:03:39.720 --> 0:03:42.200 It used to be in the three hundred to four 0:03:42.560 --> 0:03:44.960 thousand range. Now we're in the two hundred, the low 0:03:45.000 --> 0:03:48.000 two hundreds that have been other than that one brief 0:03:48.000 --> 0:03:50.560 period for so long that even when they go up, 0:03:50.640 --> 0:03:53.360 people get a little nervous, But it doesn't appear that 0:03:53.440 --> 0:03:56.800 it's because anybody's being laid off. In July, we saw 0:03:56.840 --> 0:04:01.120 an increase because factories were retooling, and we normally see 0:04:01.680 --> 0:04:05.600 people go on unemployment during those periods. We had the 0:04:05.680 --> 0:04:08.520 hurricane in Texas, that sort of thing, and that's behind 0:04:08.560 --> 0:04:12.520 us now and we're seeing still very low jobles claims numbers, 0:04:13.040 --> 0:04:16.120 and they don't seem to be indicating any problem. 0:04:16.400 --> 0:04:18.719 Now, let's go back to you talked about the PCEE 0:04:18.839 --> 0:04:21.800 that came out this past week. Not only did we 0:04:21.800 --> 0:04:24.680 see inflation continue to edge lower two point five percent 0:04:24.800 --> 0:04:29.039 was the headline, but also wages and salaries as expected, 0:04:29.400 --> 0:04:32.160 but spending still better than expected. 0:04:32.880 --> 0:04:36.080 Spending still better than expected, up half a percent, feeds 0:04:36.120 --> 0:04:39.360 the narrative of the soft landing. It was up from 0:04:39.440 --> 0:04:44.599 three tenths the prior month in June. The issue is, though, 0:04:44.640 --> 0:04:47.680 that the savings rate went down to two point nine percent, 0:04:47.720 --> 0:04:49.640 first time in the two is except for one month 0:04:49.680 --> 0:04:54.360 in twenty twenty two. Since the mid two thousands, two 0:04:54.360 --> 0:04:56.800 thousand and six to two thousand and eight, and it 0:04:56.839 --> 0:04:59.760 isn't clear how people are going to continue to a 0:05:00.120 --> 0:05:05.320 for that kind of spending unless wages and salaries continue 0:05:05.400 --> 0:05:08.760 to grow at a healthy pace. They grew okay, three 0:05:08.800 --> 0:05:13.920 tenths of percent during the month of July, but at 0:05:14.000 --> 0:05:18.000 some point you have to wonder when people's spending gets exhausted. 0:05:18.440 --> 0:05:21.000 The Fed wants to see inflation moving in the right direction. 0:05:21.480 --> 0:05:24.400 They're seeing the labor market where they want to see. 0:05:24.400 --> 0:05:27.559 At mid September we have this FED meeting. It looks 0:05:27.600 --> 0:05:30.200 like a sure thing that a cut is happening. The 0:05:30.240 --> 0:05:32.080 big question, how big a cut? 0:05:32.400 --> 0:05:35.760 Yeah, J Powell all but promised a cut in September, 0:05:35.839 --> 0:05:38.960 So that's likely to happen unless we have some sort 0:05:39.000 --> 0:05:43.640 of data accident between now and then. The Fed would 0:05:43.680 --> 0:05:46.679 prefer to do twenty five basis points. That's their history, 0:05:47.040 --> 0:05:50.839 That's what they consider sort of a normal move. There 0:05:50.960 --> 0:05:53.479 is a fear that if they did fifty it would 0:05:53.480 --> 0:05:55.960 suggest there's something wrong with the economy they have to 0:05:56.360 --> 0:05:59.400 rescue it, and that then the markets would start pricing 0:05:59.440 --> 0:06:02.920 in more fifty basis point cuts. Now, if we do 0:06:03.000 --> 0:06:07.320 have a data accident that suggests the economy is significantly weaker, 0:06:08.320 --> 0:06:13.120 like some bad number from the employment report, then the 0:06:13.200 --> 0:06:16.640 Fed could go fifty. They've left their options open, but 0:06:16.720 --> 0:06:20.279 at this point there doesn't seem to be much support 0:06:20.400 --> 0:06:22.000 for doing that as a base case. 0:06:22.240 --> 0:06:24.159 And there are still two meetings left. 0:06:24.160 --> 0:06:28.080 This year, and the markets had been pricing one hundred 0:06:28.120 --> 0:06:30.320 basis points move one percentage point by the end of 0:06:30.320 --> 0:06:33.040 the year. That's starting to go out of the numbers 0:06:33.120 --> 0:06:36.359 as the numbers continue to come in good and so 0:06:36.520 --> 0:06:40.039 people are basically thinking. People on Wall Street are basically 0:06:40.040 --> 0:06:43.240 thinking now twenty five at each of those three meetings, 0:06:43.640 --> 0:06:46.719 and then it will continue into next year. I don't 0:06:46.760 --> 0:06:49.039 know that it really matters that we say by the 0:06:49.120 --> 0:06:51.599 end of the year, because they're going to continue cutting 0:06:52.240 --> 0:06:55.960 as long as they think that they are restrictive. They 0:06:56.000 --> 0:06:58.640 don't know where neutral is going to be, and they say, 0:06:58.800 --> 0:07:00.719 we're going to just feel our way along. Do we 0:07:00.760 --> 0:07:01.159 get there. 0:07:02.240 --> 0:07:03.839 I want to talk to you about something. The Bureau 0:07:03.839 --> 0:07:06.680 of Labor Statistics reported this is about two weeks ago, 0:07:06.920 --> 0:07:09.600 that in the year leading up to this March eight 0:07:09.760 --> 0:07:14.960 hundred and eighteen thousand fewer jobs than initially reported. How 0:07:15.000 --> 0:07:18.360 can that happen? Is it the gig economy? Who are 0:07:18.400 --> 0:07:21.120 these people that they mistakenly counted? 0:07:21.520 --> 0:07:25.720 Well, a number of factors come into play. One is 0:07:25.760 --> 0:07:30.000 that there has been a big surgeon immigration, and so 0:07:30.480 --> 0:07:34.160 there may be people who are being counted in on 0:07:34.200 --> 0:07:37.320 the payrolls numbers that are not counted in this revision, 0:07:37.360 --> 0:07:41.840 which looks at unemployment insurance, and if you're an undocumented alien, 0:07:41.920 --> 0:07:47.000 you're not eligible for unemployment insurance, so companies wouldn't pay. 0:07:47.560 --> 0:07:51.480 That's one potential explanation. And another is we've seen response 0:07:51.560 --> 0:07:54.520 rates go down from companies since the pandemic, so they 0:07:54.560 --> 0:07:58.600 may not be capturing all of those who are at work. 0:07:58.640 --> 0:08:01.320 And then there could be just the fact that errors 0:08:01.360 --> 0:08:05.320 are made by a companies sending in their data. The 0:08:05.400 --> 0:08:07.760 thing about these revisions is, first of all, as you mentioned, 0:08:07.760 --> 0:08:10.720 they only go through March of this year. It's the 0:08:10.840 --> 0:08:14.760 year prior to that, and then they get revised again 0:08:15.280 --> 0:08:19.680 before the data are actually changed, which happens in January. 0:08:20.080 --> 0:08:21.840 And we have seen in the past when there have 0:08:21.960 --> 0:08:26.080 been big revisions they sometimes revise much of it away, 0:08:26.440 --> 0:08:30.000 and just this past week, Goldn Sachs said they thought 0:08:30.000 --> 0:08:33.200 the eight hundred and eighteen thousand would be revised down 0:08:33.240 --> 0:08:36.840 to three hundred thousand. I don't know how accurate they 0:08:36.880 --> 0:08:39.360 are on that, but it just shows you the range. 0:08:39.720 --> 0:08:41.880 So the Fed is looking past that and they're not 0:08:42.120 --> 0:08:45.200 concerned at this point that we have a terribly weak 0:08:45.360 --> 0:08:46.120 job economy. 0:08:46.200 --> 0:08:49.160 Okay, so a little far back in the rearview mirror. 0:08:49.320 --> 0:08:52.239 Yes it was March. Okay, the August non farm payrolls 0:08:52.559 --> 0:08:55.040 out at eight thirty am Wall Street Time on Friday, 0:08:55.040 --> 0:08:58.679 and our thanks to Michael McKee, Bloomberg International Economics and 0:08:58.720 --> 0:09:01.960 Policy correspondent. Well, we move now to take a closer 0:09:01.960 --> 0:09:06.160 look at the IT hardware space. Strong earnings results last 0:09:06.200 --> 0:09:08.600 week from Dell thanks to sales of its AI servers, 0:09:08.920 --> 0:09:12.040 also blow out demand last quarter for Nvidia's AI chips. 0:09:12.040 --> 0:09:15.960 This week, though, we hear from Eulett Packard Enterprise HPE. 0:09:16.480 --> 0:09:20.360 So how will AI server demand impact HPE's results. For more, 0:09:20.480 --> 0:09:25.439 we're joined by Wujin Ho, Bloomberg Intelligence Senior technology analyst. Well, 0:09:25.440 --> 0:09:27.640 wujin let's start with what you expect to see in 0:09:27.880 --> 0:09:29.720 HPE's earnings this week. 0:09:30.240 --> 0:09:31.920 The way I'm looking at it right now, I do 0:09:32.040 --> 0:09:36.239 think with your lead AI servers is probably going to outperform. 0:09:36.480 --> 0:09:39.000 We've seen that with Dell all performing as well as 0:09:39.000 --> 0:09:41.280 a super Micro I performing on the AI server side, 0:09:41.320 --> 0:09:44.800 and I do think that AI servers are going to 0:09:45.080 --> 0:09:46.600 lift results in the quarter well. 0:09:46.760 --> 0:09:50.200 HPE a leading provider of server storage, networking, consulting more 0:09:50.280 --> 0:09:55.560 for business customers. Are businesses still spending big to upgrade 0:09:55.600 --> 0:09:57.240 and update their AI technology? 0:09:58.000 --> 0:10:02.959 Yep, so they're not there yet. HPE does have exposure 0:10:03.080 --> 0:10:07.920 to larger enterprises. From a relative basis, hpe s AI 0:10:07.960 --> 0:10:11.640 server exposure is much smaller. I think they're gonna do 0:10:11.840 --> 0:10:15.480 roughly about one point two billion dollars in AI server 0:10:15.640 --> 0:10:19.120 sales in the fiscal third quarter. Contrast that with Dell 0:10:19.320 --> 0:10:23.120 was just reported last week they did about three point 0:10:23.160 --> 0:10:25.960 one billion in sales in AI servers and super Micro 0:10:26.000 --> 0:10:29.360 did about five point two billion in sales. So, you know, 0:10:29.400 --> 0:10:32.920 smaller exposure, but they do have a good footprint. 0:10:33.559 --> 0:10:36.400 It's also got a partnership, right HPE with Nvidia to 0:10:36.400 --> 0:10:38.959 build a private cloud business. How is that going? 0:10:39.280 --> 0:10:41.760 Yeah, Look it's still in the early days. It is 0:10:41.840 --> 0:10:44.880 part of HPE's broader strategy on driving a lot more 0:10:44.920 --> 0:10:48.080 private cloud and video is trying to look for a 0:10:48.120 --> 0:10:51.880 better footprint into the enterprise, and this would be a 0:10:51.880 --> 0:10:56.120 good marriage between HPE and exposing them to and video, 0:10:56.200 --> 0:10:59.240 exposing them to their insall base as well as HPE 0:10:59.280 --> 0:11:03.600 having access to in videos GPUs. 0:11:03.360 --> 0:11:06.240 And I think that's that's good. Almost a decade after 0:11:06.360 --> 0:11:10.199 it's split with HP HPE, where where is it heading now? 0:11:10.360 --> 0:11:13.520 Is it more toward those AI servers, is it more 0:11:13.640 --> 0:11:17.040 towards just AI or or you know, are there legacy 0:11:17.080 --> 0:11:18.800 businesses that are going to be around for a while 0:11:18.840 --> 0:11:19.720 with Hpe. 0:11:20.200 --> 0:11:23.199 Yeah, So if you look at HPE, it's much more 0:11:23.280 --> 0:11:25.840 than just the AI servers. They are one of the 0:11:25.920 --> 0:11:31.080 leading server as well as storage vendors out there. One 0:11:31.080 --> 0:11:33.360 of the things that I am looking for is a 0:11:33.440 --> 0:11:37.880 general broader IT spending recovery for their server and storage businesses. 0:11:38.280 --> 0:11:40.240 What I do think is that we are going to 0:11:40.280 --> 0:11:45.720 start seeing more signs of recovery in both of those businesses. Look, 0:11:45.720 --> 0:11:48.160 it's it's been in the malaise for the last several quarters, 0:11:48.559 --> 0:11:52.760 and I do think that you know, with IT spending stabilizing, 0:11:53.000 --> 0:11:55.080 it's poise for growth for the next couple of quarters. 0:11:56.120 --> 0:11:59.320 Now you see some growth there. How about on the 0:11:59.320 --> 0:12:03.000 consumer side, you know, we've seen the business side, the consumer. 0:12:03.080 --> 0:12:05.320 We know that last week we heard from best Buy 0:12:05.559 --> 0:12:09.400 they're expecting more sales of PCs, laptops, that type of thing, 0:12:09.440 --> 0:12:11.360 along with you know, of course they sell a lot 0:12:11.360 --> 0:12:13.880 of home appliances, but are you seeing evidence of that? 0:12:13.960 --> 0:12:15.840 Are you seeing more consumer demand? 0:12:16.200 --> 0:12:19.640 Yeah, and that aligns with more of their sister company, HP, 0:12:19.920 --> 0:12:23.000 which they split from several years ago, as well as 0:12:23.559 --> 0:12:26.840 we can glean into those results as well, we are seeing, 0:12:27.120 --> 0:12:31.240 you know, the uptake in consumer PCs for both HP 0:12:31.520 --> 0:12:33.400 as well as Dell has not been as strong as 0:12:33.440 --> 0:12:35.840 one had hoped. I do think it may be a 0:12:35.840 --> 0:12:39.360 sluggers second half on the consumer PC side. And also 0:12:39.520 --> 0:12:41.880 if we think about it from a global perspective, we 0:12:41.920 --> 0:12:45.640 are waiting for a broader global recovery. PC demand I 0:12:45.640 --> 0:12:47.040 think is going to be muted, but there are some 0:12:47.080 --> 0:12:50.840 catalysts coming in twenty five, such as AIPCS that could potentially. 0:12:50.400 --> 0:12:53.880 Help all right. HPE earnings out this Wednesday are thanks 0:12:53.880 --> 0:12:58.600 to Wujin Hoo, Bloomberg Intelligence Senior technology analyst, and coming 0:12:58.679 --> 0:13:01.240 up on Bloomberg Day Break weekend, we'll discuss the challenges 0:13:01.280 --> 0:13:05.280 facing the UK's government as Parliament returns from its summer Break. 0:13:05.520 --> 0:13:19.760 I'm Tom Busby, and this is Bloomberg. This is Bloomberg 0:13:19.800 --> 0:13:21.840 day Break weekend, our global look ahead at the top 0:13:21.880 --> 0:13:24.760 stories for investors in the coming week. I'm Tom Busby 0:13:24.800 --> 0:13:28.080 in New York. Up later in our program, Taiwan Semicon 0:13:28.120 --> 0:13:30.600 Summit kicks off this week and we'll discuss what this 0:13:30.760 --> 0:13:34.400 means for chip development in that country. But first, the 0:13:34.520 --> 0:13:37.440 UK's Parliament reconvenes this week, and for new Prime Minister 0:13:37.559 --> 0:13:41.840 Keir Starmer, after an eventful summer holiday filled with international 0:13:41.880 --> 0:13:45.679 engagements and settling into life on Downing Street, challenges a 0:13:45.760 --> 0:13:48.840 wait in Westminster for more, Let's go to London and 0:13:48.880 --> 0:13:51.679 bring in Bloomberg Daybreak. You're a banker, Stephen. 0:13:51.400 --> 0:13:54.839 Carroll, Tom Keir Starmer and his new government have been 0:13:54.880 --> 0:13:58.319 busy this summer, from diplomatic trips abroad to announcing and 0:13:58.480 --> 0:14:02.839 deenacting new policies. The UK's first labor government in fourteen 0:14:02.960 --> 0:14:06.600 years seems eager to make its mark. Whilst Parliament has 0:14:06.640 --> 0:14:09.640 been on summer recess and the Conservative opposition largely fixated 0:14:09.679 --> 0:14:12.720 on their own leadership election, Starmer and his cabinet have 0:14:12.800 --> 0:14:16.040 been able to set the narrative. So far. It's been 0:14:16.080 --> 0:14:20.280 one of considerable caution. The Chancellor Rachel Reeves emphasized the 0:14:20.320 --> 0:14:24.160 scale of the spending black hole she says her predecessors caused, 0:14:24.360 --> 0:14:26.840 while the Prime Minister made a speech warning of painful 0:14:26.920 --> 0:14:30.640 decisions ahead. The supposedly gloomy outlook is something we've been 0:14:30.640 --> 0:14:34.600 discussing with Philip Collins, former chief speechwriter to Tony Blair. 0:14:34.840 --> 0:14:38.040 He says it's wise of Starmer to set expectations low. 0:14:38.800 --> 0:14:42.480 Well, I thought it was a conventional speech in a 0:14:42.520 --> 0:14:45.240 way to do at this time, in the early days 0:14:45.240 --> 0:14:47.720 of a government, because it's one things you want to 0:14:47.760 --> 0:14:51.400 do is to win time by blaming your predecessors. And 0:14:51.480 --> 0:14:55.160 everybody does a version of this speech. Now it's particularly 0:14:55.240 --> 0:14:59.800 dramatic because of the riots, and also because the real 0:15:00.440 --> 0:15:03.160 I would have with this speech is that what Starmer 0:15:03.200 --> 0:15:06.120 says might be true. It may be that things are 0:15:06.160 --> 0:15:09.120 going to get considerably worse. I mean, you'd probably say 0:15:09.160 --> 0:15:11.520 that even if you didn't think they were, because you 0:15:11.600 --> 0:15:14.600 lower expectations. But I fear that this may be true. 0:15:14.920 --> 0:15:17.280 And I'm not sure that we didn't already know this 0:15:17.440 --> 0:15:19.920 was going to come. I think most people thought that 0:15:20.160 --> 0:15:22.800 whoever had won the general election, there was going to 0:15:22.840 --> 0:15:26.480 be some difficult decisions to follow, difficult decisions on tax 0:15:26.520 --> 0:15:30.240 and spending. And so I think in signaling that, although 0:15:30.520 --> 0:15:33.800 you're right rhetorically there are contradictions all over the place 0:15:33.840 --> 0:15:36.520 with the campaign which had just gone before and with 0:15:36.600 --> 0:15:39.440 some of the early words, but taken in isolation, I 0:15:39.440 --> 0:15:41.800 don't think that message that things are going to be 0:15:41.840 --> 0:15:44.920 bad and there's going to be something difficult to encounter 0:15:45.040 --> 0:15:47.240 now will come as a great surprise. 0:15:47.840 --> 0:15:50.440 When you say sort of, it won't necessarily come as 0:15:50.480 --> 0:15:53.400 a surprise. What do you glean from what Starmer said 0:15:53.400 --> 0:15:56.120 that might realistically have changed from what we can expect 0:15:56.120 --> 0:15:57.640 from Labor in sort of the coming months. 0:15:58.040 --> 0:16:01.520 Oh, I don't really think anything has particularly changed. I 0:16:01.520 --> 0:16:06.640 think they always knew that when they look in serious 0:16:06.680 --> 0:16:10.200 detail at the public finances there were holes there and 0:16:10.240 --> 0:16:13.320 they'd have to take difficult decisions on tax. So I 0:16:13.320 --> 0:16:16.840 don't think in one in that sense anything has particularly changed. 0:16:17.840 --> 0:16:20.880 I mean, the riots, of course, are a major event 0:16:21.320 --> 0:16:25.560 which have changed the response and have changed the context. 0:16:25.800 --> 0:16:28.440 But as far as the budget is concerned, I think 0:16:28.440 --> 0:16:31.480 we are where we are. I mean, and Rachel Reeves 0:16:31.480 --> 0:16:35.040 gave that really rather dramatic, and I think a little 0:16:35.080 --> 0:16:38.640 bit exaggerated statement to Parliament about the nature of the 0:16:38.680 --> 0:16:43.880 public finances and the sort of the fallacies of the 0:16:43.880 --> 0:16:47.520 information she'd been receiving. So there's been there is a 0:16:47.560 --> 0:16:50.080 concerted attempt to say, look, this is a really bad 0:16:50.200 --> 0:16:52.520 state of affairs. We're going to have to do difficult things. 0:16:52.720 --> 0:16:55.600 It will get worse before it gets better. So again 0:16:55.640 --> 0:16:58.160 I'm not saying that's a change. I think that's just, 0:16:58.240 --> 0:17:01.760 in fact, the start realization of what was always there. 0:17:02.440 --> 0:17:04.680 Well, then to take sort of that idea that maybe 0:17:04.680 --> 0:17:07.920 the economic reality hasn't changed, but maybe the political context 0:17:07.960 --> 0:17:11.760 has shifted in some ways. This speech then becomes a 0:17:11.880 --> 0:17:16.600 challenge of political rhetoric of starma. Can he convince the 0:17:16.600 --> 0:17:20.520 public and the media that his vision is going to 0:17:20.640 --> 0:17:22.200 make the country a better place than the long winter? 0:17:22.600 --> 0:17:25.719 Tie us up in his telling of what the government 0:17:25.760 --> 0:17:27.480 and the country should be like, do you think he 0:17:27.560 --> 0:17:27.920 did it? 0:17:28.440 --> 0:17:30.959 Well, That's exactly the question, I think, because there are 0:17:31.000 --> 0:17:34.359 two parts to the slogan, aren't there things will get worse, 0:17:34.680 --> 0:17:37.960 but then the second half is before they get better. Now, 0:17:37.960 --> 0:17:40.879 it's that second bit that is in fact the really 0:17:40.880 --> 0:17:43.520 interesting part of it, because I don't think many people 0:17:43.560 --> 0:17:46.480 would doubt that things are going to get worse. People 0:17:46.520 --> 0:17:48.920 as a rule think things will get worse anyway. Politically, 0:17:49.480 --> 0:17:52.719 it's the second part, but before they get better, and 0:17:52.760 --> 0:17:55.600 there is the promissory note that things will in due 0:17:55.600 --> 0:18:00.000 course get better, and there's a lot resting on that. 0:18:00.040 --> 0:18:03.800 That's the thing which here in the end, the political 0:18:03.880 --> 0:18:07.000 judgment will be on that second part of the slogan. 0:18:07.520 --> 0:18:11.440 Does the Labor Party have the resources both material and 0:18:11.680 --> 0:18:15.160 intellectual to change things around? On that? I don't think 0:18:15.160 --> 0:18:18.040 we know a lot, because the manifesto on which the 0:18:18.080 --> 0:18:22.080 Labor Party has just run was deliberately thin in policy terms, 0:18:22.520 --> 0:18:24.879 and I don't think we've seen a great deal since 0:18:25.240 --> 0:18:28.400 to tell us exactly what will be done to turn 0:18:28.440 --> 0:18:32.080 things around. So I do think that's exactly politically the 0:18:32.200 --> 0:18:35.240 question on which the government will be judged. 0:18:35.440 --> 0:18:39.600 Is exaggeration of risk. Here is this reinforced message which 0:18:39.640 --> 0:18:42.000 is coming now almost it feels like a drum beat 0:18:42.040 --> 0:18:44.879 since the election of Oh, things are really terrible financially 0:18:44.920 --> 0:18:46.879 and we won't be able to do anything, and we 0:18:47.000 --> 0:18:50.320 you know, everything's going to be very difficult, isn't There 0:18:50.440 --> 0:18:52.640 is too that people will just tune out and then 0:18:52.640 --> 0:18:54.480 by the time the good times rolled around, that people 0:18:54.520 --> 0:18:55.480 won't be ready for that either. 0:18:56.359 --> 0:18:59.399 There is a risk always of exaggeration, but I would 0:18:59.400 --> 0:19:01.800 once upon a time I thought that risk was severe. 0:19:02.200 --> 0:19:05.879 But then I watched George Osborne convince enough people that 0:19:06.080 --> 0:19:09.199 the global financial crash have been the result of a 0:19:09.240 --> 0:19:13.040 slight labor overspend, and I thought, oh, dear, well, clearly 0:19:13.119 --> 0:19:16.800 this works, so the risk is perhaps not all that great. 0:19:17.359 --> 0:19:19.960 That was former chief speech writer to Tony Blair, Philip Collins, 0:19:20.080 --> 0:19:22.520 speaking to James Wilcock and me on the Bloomberg UK 0:19:22.600 --> 0:19:26.760 Politics podcast. So as MP's prepared to head back to Westminster, 0:19:27.000 --> 0:19:30.080 what sort of questions might wait Keir Starmer at the 0:19:30.119 --> 0:19:33.440 dispatch box. That's something I've been discussing with Bloomberg's UK 0:19:33.480 --> 0:19:35.080 Political editor Alex Wickham. 0:19:35.640 --> 0:19:38.600 The main thing coming down the track is the budget 0:19:38.640 --> 0:19:41.240 end of October, so we've sort of got a two 0:19:41.280 --> 0:19:45.560 months run into that where Rachel Reeves, the Chancellor, has 0:19:45.640 --> 0:19:49.040 her first big opportunity to lay out her tax and 0:19:49.080 --> 0:19:51.399 spend plans, and it's a huge budget. You've had some 0:19:51.440 --> 0:19:53.680 pretty big budgets over the last few years, but this 0:19:53.880 --> 0:19:57.320 is this is the biggest of any of the recent ones. 0:19:57.359 --> 0:19:59.880 We will get to see whether tax rises are coming 0:20:00.119 --> 0:20:06.000 for the wealthy probably but potentially for everybody, and that 0:20:06.080 --> 0:20:08.439 will be a huge moment for the Labor government and 0:20:08.520 --> 0:20:12.359 whether they can manage these really different difficult balancing acts 0:20:12.359 --> 0:20:16.200 that they've got between keeping the public's finances on a 0:20:16.280 --> 0:20:19.480 sound footing. Labor are constantly telling us that they've inherited 0:20:19.560 --> 0:20:23.399 a really bad picture on the public finances, need to 0:20:23.440 --> 0:20:26.040 not choke off economic growth and wealth creation, which they 0:20:26.040 --> 0:20:29.080 say is their number one priority in governments, and being 0:20:29.119 --> 0:20:31.480 able to find a way to do both of those 0:20:31.520 --> 0:20:34.080 things is a big challenge and certainly the main thing 0:20:34.119 --> 0:20:36.000 that we'll all be looking out for when Parliament comes 0:20:36.000 --> 0:20:36.679 back next week. 0:20:37.000 --> 0:20:40.840 How much have we been warned, I suppose about the 0:20:41.240 --> 0:20:43.280 bad news that is to come, because in the past 0:20:43.359 --> 0:20:45.919 few days we heard from the Prime Minister telling us 0:20:45.920 --> 0:20:49.400 that there were painful decisions ahead, pointing us towards as 0:20:49.440 --> 0:20:51.920 you have the budget at the end of October. Is 0:20:52.200 --> 0:20:54.320 them setting a tone for what's going to be a 0:20:54.359 --> 0:20:57.760 fairly rough ride when it comes to the difficult decisions 0:20:57.760 --> 0:20:58.800 that have to be made. 0:20:59.040 --> 0:21:02.080 It is they are are being pretty upfront about the 0:21:02.119 --> 0:21:05.880 fact that they're going to be making some very unpopular decisions. 0:21:05.920 --> 0:21:09.359 You know, Labor said during the election campaign that they 0:21:09.359 --> 0:21:11.880 didn't want to put up taxes, that they had no plans. 0:21:11.920 --> 0:21:14.520 So as we kept hearing to put up taxes beyond 0:21:14.880 --> 0:21:17.040 a small select view that they that they announced in 0:21:17.080 --> 0:21:20.240 their manifesto, and it turns out that they are going 0:21:20.280 --> 0:21:22.679 to put up more taxes than they were they were saying. 0:21:22.720 --> 0:21:25.479 And their argument is that are, well, we've looked at 0:21:25.480 --> 0:21:29.200 the books and things are worse than we thought. Well, yes, maybe, 0:21:29.240 --> 0:21:32.720 but I think many would have suspected that this was 0:21:32.800 --> 0:21:36.600 coming regardless of what they'd found. And you know, on 0:21:36.640 --> 0:21:39.919 the flip side, Rachel Reeves has her own party to 0:21:40.280 --> 0:21:43.800 manage as well. In this budget, there will be labor 0:21:43.880 --> 0:21:48.040 MPs and indeed cabinet ministers who want more public spending 0:21:48.160 --> 0:21:51.719 for their either their departments, whether it's you know, justice 0:21:51.840 --> 0:21:56.639 or health or whatever, education or whatever, but also you know, 0:21:56.760 --> 0:22:01.720 on things like welfare. Crucially, there's the two child benefit cap, 0:22:02.240 --> 0:22:05.439 which Labor MPs really want to be lifted at some 0:22:05.560 --> 0:22:08.320 point in this parliament. Doesn't look like there is any 0:22:08.320 --> 0:22:10.639 money for it at the moment, but Reeves will come 0:22:10.680 --> 0:22:13.480 under huge pressure to have something positive to say as well, 0:22:13.520 --> 0:22:15.240 amongst all the doom and gloom, what. 0:22:15.160 --> 0:22:17.119 Are the other key policies that you're going to be 0:22:17.119 --> 0:22:20.359 watching out for coming through the parliamentary process as MPs 0:22:20.400 --> 0:22:21.280 get back to business. 0:22:21.600 --> 0:22:26.160 Oh, we're still awaiting details on some of Kearsarmer's plans 0:22:26.200 --> 0:22:29.199 on things like immigration, where he said he's going to 0:22:29.240 --> 0:22:33.680 set up a new border force to deal with a 0:22:33.760 --> 0:22:36.520 regular migration across the English Channel. That's a major test 0:22:36.560 --> 0:22:40.240 for his premiership as he comes under pressure from right 0:22:40.280 --> 0:22:43.320 wing parties and he certainly will do towards the end 0:22:43.359 --> 0:22:46.280 of the parliament. Whether he can get on top of 0:22:46.280 --> 0:22:51.119 that is a major is a major unknown Picting the NHS, 0:22:51.160 --> 0:22:57.280 which has been ridden with strikes over the last you know, 0:22:57.320 --> 0:23:01.159 a few years and long wait lists. That is a 0:23:01.240 --> 0:23:04.840 key priority for labor voters but all voters, and he 0:23:04.920 --> 0:23:07.359 needs to be able to show progress there. So there's 0:23:07.640 --> 0:23:10.200 a really a lot of unknowns about what policy Kiss 0:23:10.240 --> 0:23:11.880 Armer is going to come up with over the next 0:23:12.080 --> 0:23:14.800 few months, and the budget will be the first time 0:23:14.840 --> 0:23:15.760 that we get to see them. 0:23:16.160 --> 0:23:18.520 Well, keeping you and us busy in the meantime, Alex. 0:23:18.640 --> 0:23:20.760 The other thing to think about, I suppose is that 0:23:20.880 --> 0:23:25.240 Kiss Armer was elected with this fairly hefty parliamentary majority 0:23:25.320 --> 0:23:27.359 as well. Are there going to be questions over a 0:23:27.400 --> 0:23:30.359 Labor Party unity as the party gears into sort of 0:23:30.400 --> 0:23:33.680 the main business of governing them and some unpopular choices. 0:23:34.119 --> 0:23:36.480 I think so. You know, even over the last few 0:23:36.560 --> 0:23:41.560 weeks we've seen early creaks of unity on things like 0:23:41.680 --> 0:23:46.280 winter fuel payments, which Rachel we have said at the 0:23:46.320 --> 0:23:48.119 beginning of the summer or the middle of the summer 0:23:48.280 --> 0:23:51.240 that she was going to remove this winter fuel allowance 0:23:51.280 --> 0:23:55.879 for pensioners. Now that has proven highly controversial within the 0:23:55.960 --> 0:23:58.760 Labor Party. Funnily enough, if you're a Labor MP and 0:23:58.800 --> 0:24:01.720 you've got lots of pensioners in it constituency, and pensioners 0:24:01.760 --> 0:24:03.960 tend to be the people who vote, you know, turn 0:24:04.000 --> 0:24:07.000 out to vote. They're not very happy about it. And 0:24:07.080 --> 0:24:11.720 there are many pensioners who are not well off who 0:24:11.880 --> 0:24:16.760 will struggle to keep hold of this allowance, and that 0:24:16.920 --> 0:24:20.520 is going to be an unpopular policy. Rachel Reads is 0:24:20.560 --> 0:24:24.280 sticking by it, you know, she insists no u turns, 0:24:24.359 --> 0:24:26.720 no backing down. These are the unpopular decisions that she 0:24:26.760 --> 0:24:28.959 has to make because of the fiscal inheritance that's been 0:24:29.000 --> 0:24:32.320 handed to her, Well, yes, but we'll see whether that 0:24:32.400 --> 0:24:34.960 stands the test of time. We're already hearing that she's 0:24:35.040 --> 0:24:37.280 now having to come up with new ways to sort 0:24:37.320 --> 0:24:41.600 of finesse this policy and take soften some of the 0:24:41.680 --> 0:24:44.520 rough edges on it to keep labor MPs happy. And 0:24:44.520 --> 0:24:47.000 that's a sign that even with a big majority, Keir 0:24:47.040 --> 0:24:50.000 Starmor is still coming under pressure from his own MPs 0:24:50.040 --> 0:24:53.120 and from within his own cabinet. And for a poor 0:24:53.200 --> 0:24:57.159 politician who prizes unity and professionalism and all of that 0:24:57.240 --> 0:24:59.680 above all else, that will be an interesting test. 0:25:00.040 --> 0:25:02.880 And Alex just a thought too on the leadership race 0:25:02.920 --> 0:25:05.679 for the Tories as well. Of course, now in opposition, 0:25:05.920 --> 0:25:08.600 what will you be watching out for in those party dynamics. 0:25:08.880 --> 0:25:12.040 Well, it's a long way to go and a link 0:25:12.359 --> 0:25:15.160 quite an open race, to be honest. You've got Kenny 0:25:15.200 --> 0:25:19.240 Badenock probably still just about the front runner, but Robert 0:25:19.320 --> 0:25:23.280 Jenmis made an interesting sort of the last few weeks, 0:25:23.400 --> 0:25:27.399 getting out and about and sort of perhaps outperforming expectations 0:25:27.480 --> 0:25:30.280 and rising up the ranks in the polls. So it'll 0:25:30.320 --> 0:25:33.080 be interesting to see whether the front runner, Kermy Baid 0:25:33.160 --> 0:25:36.199 or not can continue that momentum. She hasn't done a 0:25:36.200 --> 0:25:38.720 great deal of campaigning over the summer. That sort of 0:25:38.760 --> 0:25:41.040 starts now as we head back to school, as it were. 0:25:41.880 --> 0:25:44.560 And then whether the likes of James Cleverly Tom tugan 0:25:44.640 --> 0:25:48.600 Hat can make enough of a splash to get attention 0:25:48.760 --> 0:25:52.119 on themselves is the other difficult thing in the media 0:25:52.160 --> 0:25:55.800 ahead of Tory Party Conference where things start to get serious. 0:25:56.080 --> 0:25:59.879 Thanks to Bloomberg's UK Political editor Alex Wickham, I'm Stephen 0:26:00.000 --> 0:26:02.560 Maarlyn London. You can catch us every weekday morning here 0:26:02.560 --> 0:26:05.520 for Bloomberg Daybreak Europe, beginning at six am in London 0:26:05.600 --> 0:26:07.200 on one am on Wall Streets. 0:26:07.240 --> 0:26:10.120 Tom, Thank you, Steven. And coming up on Bloomberg day 0:26:10.119 --> 0:26:13.520 Break weekend to look ahead to Taiwan's semi Con summit. 0:26:13.920 --> 0:26:28.200 I'm Tom Busby and this is Bloomberg. This is Bloomberg 0:26:28.240 --> 0:26:30.440 day Break Weekend, our global look ahead at the top 0:26:30.480 --> 0:26:33.359 stories for investors in the coming week. I'm Tom Busby 0:26:33.400 --> 0:26:36.720 in New York. Semi Coon Taiwan kicking off this week, 0:26:36.800 --> 0:26:39.560 and that's where high level discussions on the latest chip 0:26:39.600 --> 0:26:43.600 industry trends and solutions take place. Let's get to Bloomberg 0:26:43.680 --> 0:26:46.360 day Break Asia co host Doug Krisner for more onut 0:26:46.359 --> 0:26:47.440 a preview Tom. 0:26:47.480 --> 0:26:51.840 The enthusiasm around artificial intelligence has made the chip industry 0:26:52.080 --> 0:26:56.120 the hottest area in information technology now. To be fair, 0:26:56.320 --> 0:27:00.320 not all chip makers are benefiting equally. Clearly, the domned 0:27:00.400 --> 0:27:04.399 force is in Vidia. Its graphic processing units have become 0:27:04.440 --> 0:27:08.960 the backbone of AI computing. But in building AI infrastructure, 0:27:09.040 --> 0:27:13.280 those GPUs must be paired with high bandwidth memory chips, 0:27:13.840 --> 0:27:18.399 and the lion shares of those hbms are produced in Asia. 0:27:18.560 --> 0:27:21.959 Earlier I spoke with Mario Morales, Group vice President of 0:27:22.119 --> 0:27:27.000 Enabling Technologies and Semiconductors at IDC. The question is whether 0:27:27.280 --> 0:27:30.440 HBM chip makers will be able to keep up with demand. 0:27:31.200 --> 0:27:34.840 We're not seeing the weakness. In fact, since probably September 0:27:34.840 --> 0:27:39.119 of last year, the memory companies began to change their 0:27:39.200 --> 0:27:43.000 operations in order to get back to profitability. But demand returned, 0:27:43.040 --> 0:27:46.480 especially from the data center, and today we're expecting that 0:27:46.600 --> 0:27:50.560 both DRAM and NAND will grow significantly from a revenue basis, 0:27:50.680 --> 0:27:53.400 close to seventy three percent in terms of revenue growth, 0:27:53.480 --> 0:27:56.280 so very phenomenal growth. A lot of that led not 0:27:56.400 --> 0:27:59.920 just by high bandwidth memory but also DDR five that's 0:28:00.080 --> 0:28:04.320 being used in the flagship smartphones and the upcoming aipcs 0:28:04.359 --> 0:28:07.360 that we'll see later during the holiday season. I think 0:28:07.400 --> 0:28:11.040 in general, the demand for memory will still remain robust 0:28:11.080 --> 0:28:13.600 this year and likely into twenty twenty five. 0:28:13.720 --> 0:28:18.240 That is Mario Morales from IDC. So let's circle back 0:28:18.359 --> 0:28:20.800 to what we heard in the last week from Nvidia 0:28:20.880 --> 0:28:23.880 and the company saying it is now working through production 0:28:24.080 --> 0:28:29.240 snags with its highly anticipated new Blackwell GPU chip. I 0:28:29.280 --> 0:28:33.240 spoke about this with Dan Newman, CEO of the Futurum Group, 0:28:33.680 --> 0:28:36.480 and really wanted to get at how this may impact 0:28:36.560 --> 0:28:39.080 those high bandwidth memory chip makers. 0:28:39.600 --> 0:28:42.480 I think this continues to be the reason why, whether 0:28:42.800 --> 0:28:45.040 Blackwell is a little bit delayed or not, they're going 0:28:45.080 --> 0:28:48.239 to produce as much of the hopper as possible. The 0:28:48.440 --> 0:28:52.760 overall situation as it pertains to memory is they're also 0:28:52.840 --> 0:28:55.520 constrained there. So you heard me talk about three and animeter. 0:28:55.280 --> 0:28:59.800 Constrained, COOSTS constrained, and of course HBM constrained. 0:29:00.160 --> 0:29:03.680 So right now you are literally seeing these five or 0:29:03.720 --> 0:29:08.680 so major hyperscalers plus global hyperscalers and Tier two's taking 0:29:08.760 --> 0:29:11.200 up the vast majority of the demand for all of 0:29:11.240 --> 0:29:15.320 these major parts of the supply, and you know, Jensen 0:29:15.320 --> 0:29:16.120 talked about it being. 0:29:16.000 --> 0:29:19.120 Around forty five percent coming from the three or four 0:29:19.200 --> 0:29:22.040 biggest but they are taking most of the demand and 0:29:22.160 --> 0:29:25.320 until we can expand capacity. So it's on Micron, which 0:29:25.360 --> 0:29:28.360 is investing, It's on sk and Samsung, all of which 0:29:28.360 --> 0:29:31.520 are investing. But it can't happen fast enough. This does 0:29:31.600 --> 0:29:32.000 take time. 0:29:32.120 --> 0:29:35.360 He is Dan Newman from the Futuum Group. I think 0:29:35.360 --> 0:29:37.800 it's fair to say that high bandwidth memory chips will 0:29:37.840 --> 0:29:41.280 likely dominate the conversation in the coming week at the 0:29:41.400 --> 0:29:45.560 semecon Taiwan twenty twenty four. To preview the event, I'm 0:29:45.640 --> 0:29:49.280 joined by Bloomberg's Jane Lee. She covers the chip industry, 0:29:49.320 --> 0:29:52.720 and she joins us now from our studios in Taiepai. Jane, 0:29:52.760 --> 0:29:55.520 thanks for making time. Is it fair to say? Was 0:29:55.560 --> 0:29:58.360 I write in saying that high bandwidth memory chips are 0:29:58.360 --> 0:30:00.640 going to dominate the conversation semicon? 0:30:00.880 --> 0:30:06.440 That's absolutely right. In fact, this semikon Taiwan is different 0:30:06.480 --> 0:30:11.560 from previous years. Taiwan and South Korea are two sort 0:30:11.600 --> 0:30:15.760 of rivals when it comes to chip making. Samsung is 0:30:15.800 --> 0:30:19.760 a rival of TSMC when it comes to logic chips 0:30:19.800 --> 0:30:24.160 and so oftentimes in the past, the Samsung or s 0:30:24.240 --> 0:30:26.720 k Heinex might have sent over, you know, a mid 0:30:26.800 --> 0:30:30.200 level manager and they weren't in the keynote. They were 0:30:30.240 --> 0:30:35.360 barely even noticeable. This time, the sk Heinex president Kim 0:30:35.440 --> 0:30:40.240 Jusn and Samsung Electronics head of Memory I Jianbe are 0:30:40.280 --> 0:30:45.200 both giving keynote speeches and are quite high profilely set 0:30:45.280 --> 0:30:48.840 during the conference. So it's kind of a rare thing. 0:30:48.960 --> 0:30:51.560 And the reason for that is, as you point out 0:30:51.720 --> 0:30:56.360 the high bandwidth memory chips. Before, when Samsung and TSMC 0:30:56.480 --> 0:31:00.560 were just rivals over over logic chips, they were, but 0:31:00.720 --> 0:31:03.160 now they're going to have to start to work together 0:31:03.560 --> 0:31:07.440 as Samsung tries to get into the HBM business in 0:31:07.480 --> 0:31:10.520 a much bigger way. It's kind of behind sk Heinix, 0:31:10.760 --> 0:31:14.280 but it definitely is aiming for in Nvidia's business, and 0:31:14.360 --> 0:31:17.200 when it does that, it will have to ship those 0:31:17.520 --> 0:31:22.240 HBM chips or the wafers thereon over to TSMC or 0:31:22.280 --> 0:31:27.640 TSMC's partner that packages those together. So this time Taiwan 0:31:27.680 --> 0:31:31.960 and South Korea are both prominently featured at Semiicon Taiwan, 0:31:32.040 --> 0:31:35.040 so that'll be quite interesting. The other thing that will 0:31:35.320 --> 0:31:40.680 be highly watched is packaging because the HBM and the 0:31:40.920 --> 0:31:45.480 GPU that in Nvidia provides will have to be packaged together. 0:31:46.080 --> 0:31:51.240 This new advanced packaging, which is called COOS chip on 0:31:51.400 --> 0:31:55.480 wafer on substrate, it's basically the newest technology to pull 0:31:55.520 --> 0:31:58.959 these chips together to make them work like one. So 0:31:59.000 --> 0:32:02.960 a lot of those technologies will be highlighted. And this 0:32:03.120 --> 0:32:08.280 technology of advanced packaging is also in short supply. TSMC 0:32:08.400 --> 0:32:11.160 has said that they will double the capacity by the 0:32:11.280 --> 0:32:13.560 end of the year and next year double that again. 0:32:14.200 --> 0:32:17.480 So a lot of people will be very interested to 0:32:17.600 --> 0:32:21.080 see how that's going and what kind of other future 0:32:21.160 --> 0:32:25.280 technologies there are to bring all these different chips together. 0:32:25.560 --> 0:32:28.280 Because Moore's law is kind of dead. 0:32:29.600 --> 0:32:31.880 It's interesting if you look at the history of TSMC, 0:32:32.040 --> 0:32:34.840 there was obviously a lot of government support on the 0:32:34.880 --> 0:32:38.640 part of Taiwan. Here in the States, we're dealing with 0:32:38.680 --> 0:32:40.960 the Chips and Science Act as a way of trying 0:32:41.000 --> 0:32:44.160 to provide some support for the industry and keep it 0:32:44.240 --> 0:32:47.880 growing domestically in the United States. I'm curious about the 0:32:47.960 --> 0:32:51.240 role that governments are playing right now, whether it's Taiwan 0:32:51.720 --> 0:32:53.920 or South Korea. Are they heavily involved? 0:32:54.080 --> 0:32:57.200 South Korea and Taiwan are both heavily involved. There's always 0:32:57.240 --> 0:33:01.400 tax incentives and large programs, the billions that are rolled 0:33:01.400 --> 0:33:06.600 out to support the domestic chip industry. That's not going 0:33:06.640 --> 0:33:10.280 to change part of the problem though. And what's interesting 0:33:10.840 --> 0:33:14.000 for me when I watch the US government roll out 0:33:14.040 --> 0:33:18.680 the Chips Act and bring TSMC and Samsung to build 0:33:18.680 --> 0:33:21.680 more fabs in the US. I mean, they're saying that 0:33:21.680 --> 0:33:25.160 they're going to do this to resolve a supply chain issue. 0:33:25.280 --> 0:33:28.479 It's for national security. But the fact that is not 0:33:28.920 --> 0:33:32.360 often talked about is that these wafers, once they're printed 0:33:32.760 --> 0:33:35.560 in those US fabs, they still have to get on 0:33:35.640 --> 0:33:38.680 a plane or a ship to come back to Asia 0:33:38.800 --> 0:33:43.560 for this next process of advanced packaging. So in fact, 0:33:43.800 --> 0:33:46.880 we don't talk about it a lot, but the Chips 0:33:46.880 --> 0:33:52.120 Act is not solving completely the supply chain issue that 0:33:52.160 --> 0:33:55.760 we all think it should, and so that'll be something 0:33:55.800 --> 0:33:59.880 that we should all watch going forward. And once TSMC 0:34:00.000 --> 0:34:02.920 these fabs are up and running, I think that issue 0:34:02.960 --> 0:34:05.320 could be pointed out a lot more well. 0:34:05.400 --> 0:34:09.719 In so far as TSMC's production in Taiwan, obviously this 0:34:09.800 --> 0:34:12.600 is a foundry, they are the manufacturer, and there may 0:34:12.640 --> 0:34:15.640 be a little bit of concern, particularly when you hear 0:34:15.680 --> 0:34:18.480 what in Nvidia had to say about whether or not 0:34:18.840 --> 0:34:22.640 TSMC is going to be able to keep up with demand. Again, 0:34:23.040 --> 0:34:25.840 here is Mario Morales at IDC. 0:34:26.239 --> 0:34:29.200 That's continued to be the theme right for over a 0:34:29.280 --> 0:34:31.600 year now. I think last year we saw correction in 0:34:31.600 --> 0:34:34.799 a semic ntor space, but when you look at TSMC, 0:34:34.880 --> 0:34:38.080 they tend to buck the trend. They're a very strong 0:34:38.160 --> 0:34:40.600 player in the founder space. The leader they control over 0:34:40.719 --> 0:34:44.040 sixty percent of the market. Where they're investing heavily now 0:34:44.120 --> 0:34:47.080 is in advanced packaging. So when you hear about COOS, 0:34:47.880 --> 0:34:50.280 all of that means is that that's where they're seeing 0:34:50.600 --> 0:34:52.879 the big investments that they need to make in order 0:34:52.920 --> 0:34:56.239 to serve companies like Nvidia and Broadcom and AMD and 0:34:56.360 --> 0:34:59.760 others that are now beginning to use more advanced packaging 0:35:00.239 --> 0:35:01.719 to continue to drive integration. 0:35:01.960 --> 0:35:06.839 He is Mario Morales of IDC talking about expanding capacity 0:35:07.000 --> 0:35:10.680 at TSMC. Let's get back to the issue. At hands 0:35:10.680 --> 0:35:15.000 Semicon Taiwan, twenty twenty four, Bloomberg's Jane Lee is with 0:35:15.080 --> 0:35:17.520 us from our studios in Taipei. Do you think there's 0:35:17.560 --> 0:35:20.200 going to be any news made out of this conference. 0:35:20.400 --> 0:35:23.919 The conference generally doesn't really create news. It's not been 0:35:24.040 --> 0:35:29.200 an area where executives come to unveil big news. They 0:35:29.280 --> 0:35:32.040 kind of do that on their own home turf for 0:35:32.160 --> 0:35:36.400 in their big conferences. But the one thing that people 0:35:36.520 --> 0:35:41.680 are talking about ahead of the conference is whether or 0:35:41.719 --> 0:35:45.360 not Jensen Wang, the CEO for Nvidia, is going to 0:35:45.400 --> 0:35:51.240 show up or not. Korean media earlier this year speculated 0:35:51.640 --> 0:35:59.360 Jensen Wang and TSMC's possibly CEO and s k Heinez 0:35:59.480 --> 0:36:04.319 is Press would have a fireside chat, but that's not 0:36:04.480 --> 0:36:08.279 really shown up on the agenda, and in Nvidia is 0:36:08.320 --> 0:36:12.240 declining to confirm whether or not Jensen will be coming, 0:36:12.520 --> 0:36:15.520 and so the chatter is is he coming or not? 0:36:15.680 --> 0:36:20.160 And some teams are also deciding how many people they 0:36:20.239 --> 0:36:22.680 send depending on whether he is here or not. Is 0:36:22.719 --> 0:36:25.520 one of those things like almost like a high school 0:36:25.560 --> 0:36:28.640 party where if this person comes, I'll come, but if 0:36:28.640 --> 0:36:30.440 he's not going to be there, I'm not coming either. 0:36:31.160 --> 0:36:34.520 So it's quite amusing. And the reason for that is 0:36:34.560 --> 0:36:38.520 because Jensen made such a splash during Computex, which is 0:36:38.560 --> 0:36:43.160 the other big Taiwan conference that was held in early June, 0:36:43.440 --> 0:36:47.040 and for that everybody else showed up because he was here. 0:36:47.719 --> 0:36:52.120 AMD CEO Lisa Sue came, pack Elsinger, CEO of Intel 0:36:52.200 --> 0:36:57.080 came and they were all going around and signing servers 0:36:57.280 --> 0:37:02.239 and hardware for their suppliers and customers. So it was 0:37:02.400 --> 0:37:06.600 quite the feast. So people are trying to see if 0:37:06.840 --> 0:37:10.800 Semikon Taiwan will be another one of those events. Semi 0:37:10.880 --> 0:37:15.240 Coon is generally more of a technology conference where future 0:37:15.280 --> 0:37:19.759 technology is discussed, so you know, we'll have to wait 0:37:19.800 --> 0:37:24.520 and see, but everyone's getting excited for him possibly showing 0:37:24.600 --> 0:37:25.000 up again. 0:37:25.520 --> 0:37:27.400 Jane, Before I let you go, I have to ask 0:37:27.600 --> 0:37:30.120 one of the things that the Biden administration is obviously 0:37:30.160 --> 0:37:32.840 imposed on China is a restriction on some of the 0:37:33.000 --> 0:37:37.080 high and the most advanced semiconductors, many of which are 0:37:37.120 --> 0:37:39.640 made by Nvidia. That's part of that story, obviously, and 0:37:39.680 --> 0:37:45.280 I'm wondering how the suppliers in Asia are feeling about 0:37:45.840 --> 0:37:48.640 those restrictions and how it's impacting their businesses. 0:37:49.600 --> 0:37:55.320 That's really interesting because these export control on Nvidia AI 0:37:55.440 --> 0:38:01.000 chips into China has really changed already the flow of trade. 0:38:01.320 --> 0:38:05.480 Because China can't get these chips, they cannot build AI 0:38:05.600 --> 0:38:08.439 servers that they might have built or that they used 0:38:08.440 --> 0:38:11.800 to build, and a lot of that business is coming 0:38:11.840 --> 0:38:15.200 to Taiwan. And so that's pretty visible when you just 0:38:15.360 --> 0:38:21.719 look at the trade number exports of ai server related 0:38:22.000 --> 0:38:26.319 parts from China versus Taiwan. And so it's having a 0:38:26.360 --> 0:38:30.799 real impact and Asian companies are having to pivot and 0:38:30.880 --> 0:38:32.360 change their business accordingly. 0:38:32.520 --> 0:38:34.560 Jane, thank you so much. We'll have to check back. 0:38:34.680 --> 0:38:37.520 I know you're going to Semicon Taiwan twenty twenty four 0:38:37.600 --> 0:38:40.440 to cover it for Bloomberg. I'll be interested in reading 0:38:40.480 --> 0:38:42.120 your reporting and maybe we can have you on the 0:38:42.200 --> 0:38:46.240 radio to talk about it further. Bloomberg's Jane Lee joining 0:38:46.239 --> 0:38:49.560 from our studios in Taipei. I'm Doug Krisner. You can 0:38:49.640 --> 0:38:53.160 join Brian Curtis and myself weekdays here for Bloomberg Daybreak 0:38:53.200 --> 0:38:57.040 Asia beginning at eight am in Hong Kong eight pm 0:38:57.040 --> 0:38:58.560 on Wall Street. Tom. 0:38:58.840 --> 0:39:00.799 Thank you, Doug, and that does it for this edition 0:39:00.840 --> 0:39:03.520 of Bloomberg day Break Weekend. Join us again Monday morning 0:39:03.560 --> 0:39:05.480 at five am Wall Street time for the latest on 0:39:05.640 --> 0:39:08.839 markets overseas and the news you need to start your day. 0:39:09.280 --> 0:39:11.720 I'm Tom Busby. If you're listening to us in Boston, 0:39:11.800 --> 0:39:15.200 our new home. Starting September third, will be ninety two 0:39:15.360 --> 0:39:18.840 nine FM. That's the day after Labor Day. Bloomberg Radio 0:39:19.200 --> 0:39:22.719 moving to ninety two nine FM in Boston. Stay with US. 0:39:22.880 --> 0:39:25.919 Top stories and global business headlines are coming up right 0:39:25.960 --> 0:39:26.960 now