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US-China Tensions Escalate Over Chips

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Bloomberg 07:48 · 1965 Views

On the heels of Micron's earnings today, Bloomberg's Tyler Kendall takes a closer look at how Washington is preparing for tensions with Beijing over semiconductors and artificial intelligence dominance. She speaks on Bloomberg's "Balance of Power."

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Transcript

  • 00:00 Micron today gave a weak sales forecast for this quarter.
  • 00:02 They cited lackluster demand from makers of phones and PCs, the two consumer oriented markets that use their products the most.
  • 00:10 The company added that they quote anticipate a return to growth
  • 00:13 in the second-half
  • 00:15 of our fiscal year.
  • 00:17 Now, analysts say they see that fueled by the future of artificial intelligence.
  • 00:23 The memory market at the moment is extremely polarized.
  • 00:26 On one hand of the market, you have
  • 00:29 AI infrastructure that is consuming as much memory as it can.
  • 00:32 That part of the market is doing incredibly well.
  • 00:38 Micron did confirm they are seeing strong orders for components used in AI.
  • 00:42 The company received more than $6 billion in funding under the CHIPS and Science Act.
  • 00:47 That money was awarded just last week with the goal of creating domestic manufacturing jobs.
  • 00:52 the US has an ongoing goal of shoring up domestic AI and chip production like this to compete with China.
  • 00:58 Even this week's stopgap measure from Congress that's meant to keep the government open includes a provision that would further restrict U.S.
  • 01:05 investment and some Chinese tech sectors lawmakers say could threaten national security.
  • 01:10 One of those sectors is what's known as foundational trips, older models of semiconductors that are in many everyday items that we use.
  • 01:17 Bloomberg News is reporting the Biden administration is set to launch a trade investigation into this industry in the coming days.
  • 01:24 It could result in new tariffs
  • 01:26 under the next administration.
  • 01:28 Kelly, you spoke with Joe Lavonia, the former chief economist under the first Trump administration who broadly defended any of Trump's tariff threats.
  • 01:37 I see president elect's president-elect Trump's policies as expanding the supply side of the economy.
  • 01:42 It's, it's potential, you know, productivity, basic, its ability to produce the things that we want.
  • 01:47 This is a negotiation.
  • 01:48 Tariffs will be a very powerful, important tool that will be used.
  • 01:52 I just think it's, it's incorrect to look at them as being inflationary
  • 01:59 and it does go both ways.
  • 02:00 Last week, a regulator in China launched an antitrust probe
  • 02:03 into US chip maker NVIDIA.
  • 02:05 Kaylee, these are just the latest escalations that we're seeing in this ongoing competition for chips and artificial intelligence.
  • 02:12 And Tyler, just quickly as we consider
  • 02:14 tariffs on China in particular, this is something tariffs that is that came up in the Feds press conference today with Chairman Powell,
  • 02:20 right, Of course.
  • 02:20 So
  • 02:21 I was actually there at the Federal Reserve earlier today when that FOMC decision, it came down and Powell was asked about potential inflationary impacts from the tariffs that some economists are predicting.
  • 02:32 And he said it's too soon to know since we don't know the exact specifics of Trump's economic policies that are coming through, but that the committee is starting to think through some potential scenarios.
  • 02:41 He did say, though, a line that we hear often, that they are not going to rush through this and they're going to be cautious.