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tv   Bloomberg Technology  Bloomberg  April 6, 2021 11:00pm-12:00am EDT

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so join the carrier rated #1 in customer satisfaction... ...and learn how much you can save at ♪ emily: i am emily chang in san francisco and this is "bloomberg technology." the crypto market surpasses $2 trillion for the first time. bitcoin now worth more than $1 trillion. cerium -- atherium hitting
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record highs. in the biggest crypto exchange is out with some big new numbers ahead of its much anticipated direct listing next week. plus, the votes are still being counted in alabama. the results will determine whether amazon employees unionize or not. but the verdict is in, amazon violated labor law by firing to -- two activists last year. the white house rules out vaccine passports. a new study shows modernity's covid vaccine lasts more than six months. what will new variants spreading fast, how many more boosters will we need with that? moderna's co-founder will be my guest. the markets where equities hit all-time highs before dropping sharply. let's get to katie greifeld and ed ludlow with the latest. katie: it was a bit of a mixed bag today. if we look at the big benchmarks, the s&p and the nasdaq, they both ended slightly lower, down 1/10 of 1%.
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the big action happened in the chip space after republicans said they were willing to work with democrats to address the global chip shortage. that is 1.2% off the semiconductors index. and it will outperform a bit, breaking away from the broader tech sector in notching a game. -- a gain. in general, you are setting to see things leave the tech space. volatility index it's close to its lowest level in about a year after a pretty rocky start to 2021. creeping lower, and the next chart explains why. look at the nasdaq 100's daily trading range. how much the index moves in a given day. it is getting smaller and smaller. you can see it widen and a big -- in a big way as treasury yields surged and hit the market by surprise. but that bond market has started to cool a little bit. ed, now you are seeing tech stocks calmed down as well. ed: i am climbing out the saddle with peloton. one of the best performers, up almost 6%.
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credit suisse with a price target of $164 a share. they are talking about the trifecta of wellness. peloton will continue to benefit from the new trends that came out of covid-19. more exercise, more people using technology workouts. you can see that reflected in the gains of the stocks soared on tuesday. lululemon also was of 3.5%. it is another company invested in technology for people working out. it has this idea around stickiness. i love that word, stickiness. all of the things that became hot during covid, will they be popular going forward? zoom is up almost 2% and netflix is up almost 7/10 of a percent. without any real catalyst, another big trend that we carried over from the covid era is electrification. look at general motors, out today, announcing a factory version of the chevy pickup.
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investors liked it, stocks were lower and ended up almost 1.5%. tesla is treading water. it's the main rival. it has its cyber truck, gm has the battery electric pickup. the chevy, then you have them them. look at the story year to date. it's interesting. tesla was the story of 2020. as the year has gone on -- i will go with it -- final one, applied materials. the chip sector. when we are talking about semis to fix the supply issues, supply materials, these are the companies that build the machines that build the semiconductors. during an analyst event today, whoosh, the stock dropped. they did not give us any clues about what's to come in the next two to three years. they just gave us the outlook for 2024. there is such a microscopic on -- microscope on this start. -- stock. analysts were looking for more. lots of action in the markets
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and story names. i know you are looking at crypto as well, emily. emily: indeed, i am. bloomberg's ed ludlow. thank you. katie greifeld as well. just a week before they go public, coinbase revealed big first-quarter numbers. that they expected to report $730 million to $800 million profit in the first quarter of the year. they are also saying it likely generated $1.8 million in revenue in that time. 56 million verified users. for more we are joined by bloomberg's sonali basak and i have seen so many companies go public with no losses at all -- no profits at all. these are big numbers for coinbase. sonali: investors liked profitability. we know they are afraid of the bitcoin volatility. profitability is significant and
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has more than doubled. what it turned in all of 2020, it shows how far the crypto boom can take you, and, in terms of revenue in the first three months of the year, it surpassed all of what it brought in and revenue and all of last year. a pandemic year, a lot of people stayed home trading crypto. the numbers, at first glance, are good. they did not give a forecast. emily: they did not give revenue targets. is that a problem, along with all of the skepticism and regulatory scrutiny that is surely ahead? sonali: exactly. those things are hard to ignore. the things about the regulatory scrutiny is that we knew some of it was there. the question is, how much does it ramp up into the era? it's kind of unknown. some things they will be friendly, others have noted it's an area of concern. another risk factor, and a way ink about coinbase's listing, they think about in
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terms of price cycle rather than just quarters. even they say, don't really worry about three months, think about the cycles that crypto goes through and they have been through four major cycles already. the question is, where are we in the cycle? emily: exactly. let's talk about major cycles. the crypto market surpassing $2 trillion for the first time. bitcoin is worth $1 trillion. the entire market is doubling in just two months. how fast is the cycle? sonali: you can see it plateauing a little bit in recent days and weeks, even though you have seen major news over the last week. goldman sachs, morgan stanley, paypal, visa, more news with major firms really embracing this in bigger ways. so what is the marginal value as companies start to pour into the market in a bigger way? what about the other crypto's? are some of them in bubble territory, and where do they go from here? these are all real questions. i pose that plateauing issue to mike novavax of galaxy digital and he made the point that you
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made just now, that it is still doubled this year. so, is it where it should be? well, what does that do for trading, the trading in the first three months of the year? that has fueled the revenue we are seeing. emily: we will hear more from your interview this hour. when it comes to the coinbase direct listing, what are you watching, what are you hearing from investors about how excited they are? yes, coinbase is making a lot of money, but this is an unproven market and we don't know where this is going. sonali: the other thing about it too, you and i spoke to the ceo last week. they are not the only game in town. they are going public at the high valuation, or do you invest in something else? these are real question marks right now. we will see, is it a direct listing, emily, that is the other thing exciting about this listing. the first real one on the
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nasdaq, first major technology listing on the nasdaq, a direct listing. it's just a matter of the love of the game to look at how much they were paying for the ipo. they said they were paying $35 million tied to the direct listing. that is not so bad. will it convince more people to use the model? see how next week goes. emily: well, we will be watching. bloomberg's sonali basak, thank you for the update. coming up, biden's tax plan is as big as trump's trade war. how big tex and pharmaceuticals are in the crosshairs. amazon's jeff bezos weighs in. speaking of amazon, the vice president of the company's cloud-based services will be among our guests wednesday in bloomberg tactics special -- bloomberg tech special, "chip crunch." we will examine the global surprise shortage and talk to ceos at nearly every stage of
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the production process, we will speak with the global foundry ceo and covering the chips shortage from all angles in our special, wednesday. this is bloomberg. ♪
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♪ emily: the tax plan president biden laid out will likely hit attack and to pharma particularly hard. -- hit tech and pharma particularly hard. the challenge for legislators will be to minimize loopholes that could diminish the impact, according to tax experts. i want to bring in bloomberg's laura davison who has been covering this in depth for us. what stands out to you? laura: tech and pharma have had the run of the tax code for a couple of decades. they have had all of the tax breaks advantages to them and
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they have had the flexibility because they were largely in ip intellectual property. able to take advantage of low tax rates in the caribbean, ireland, or wherever they wanted to go. basically biden is saying no matter where you are, they will do the 21% and that has cut down a lot of the creative tax planning that tech has been able to take advantage of for years. emily: very interesting development today in response to the president's plan. jeff bezos released a statement saying, we support the administration's focus on making bold investments in american infrastructure, both democrats and republicans have supported infrastructure in the past, and it is the right time to make this happen. we recognize the investment will require concessions from all sides, both on the specifics and how it gets paid for. we are supportive of a rise in corporate tax rate. we look forward to congress and the administration coming together to find the right balanced solution that maintains and enhance competitiveness. it is slightly long but i wanted
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to read it because it's unusual to hear jeff bezos come forward and put a stake in the ground. what do you make of this? laura: this could prove to be a smart strategy for jeff bezos and amazon. tax plan would probably hurt them, but on the others of the build, the whole infrastructure plan, they stand to benefit from airports, roads, bridges, charging stations around the country, having better broadband access. it helps amazon's business grow and it connects them to consumers better and consumers to the company. this could be a good thing for them and i think they recognize that. and second, by saying we are willing to make concessions and accept a tax increase, gives them a seat at the table in a way that other companies aren't. saying look, we are willing to agree with you. i'm sure there are things they don't like, but this allows them
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to go into the white house and have these conversations in a way that other companies have not warmed up to yet. emily: what does the tax plan ultimately mean for big tech companies like amazon? laura: it likely means a pretty significant tax increase. biden has called for an increase of the corporate rate to 28%, and also limits on how many tax breaks and deductions you can use. and tech companies have used r&d tax credits to whittle down their tax bills. also for stock-based deductions has been big in tact. biden is putting limits on that. what we have seen in years past , with companies being able to pay 5%, 10% taxes, they will be closer to the mid to high 20% if biden could push the plan. emily: talk to us about the likelihood of this getting through congress. as bezos said, it will face scrutiny from all sides, and it will not be as quick as the
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coronavirus relief package. do we get back to playing politics or can president biden unite two parties? laura: even with bezos saying there will be republicans and democrats, it will most certainly to be a democrats only exercise. republicans have said any tax increase of any size won't work for us. biden can push this forward with members of his party alone, but the margins are super, super tight. in the senate, they have to get all 50. even yesterday, joe manchin of west virginia has said that he wanted a 25% rate, not 28% rate. there is just a two to three seat majority that nancy pelosi will have in the house. it will be very difficult. it can be done. but the timing of when it happens, that is what is up in the air. emily: bloomberg's laura davison, thanks for covering, we will keep following your reporting. thanks so much. coming up, 2021 has already seen more spacs than all of 2020. we are looking into the spac
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craze and if the popularity is sustainable. that is next. also, taking a look at electric cars in the electric car market. gm announcing they are getting into the ev pickup game. shares rising. tesla shares are up. tesla has a huge lead on gm and electric cars in general. neo shares also rising. this is bloomberg. ♪
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♪ emily: the spac craze continues. the number of spacs an amount to raised has exceeded the numbers in 2020 just three months into the year. with almost 300 new spac ipo's, the performance of these companies has lagged over the last couple of months. the big question is, are we in a spac bubble? is this all just type?
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joining me now, the cofounder and chair and backer of spac one, which debuted last summer. in spac two, filed for a $200 million debut. great to have you on the show. you have been investing in tech for a long time, you started a bunch of companies. what do you think of the spac craze? is this a bubble or not? kevin: there are two sides to this. first of all, this is an amazing vehicle to get a company into the public market. the second side is that it has gone a little wacky. we've got an incredible amount of volume. all of a sudden, last week it came to a skidding halt. we were one of two spacs to go out last week. a lot of times, and there has been a few weeks we have had spac proceeds generated in just a few weeks. and last week, $300 million.
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emily: let's talk about the buzzwords, we are hearing companies say we are looking for the next unicorn. a lot of companies looking for the next big thing in technology. how do you separate the wheat from the chaff? kevin: the market and the investors are really good at doing that. it's not necessarily the fcc or other organizations. it's really the market and a lot of investors. they are dealing with spac, and they are really looking more closely at the spacs out in the market. so you will see this continue to separate the strong performers from the underperformers as time progresses. emily: you are spac one, you ended up acquiring a 3d printing company. why 3d printing? is that the future of technology? kevin: our broad mandate is really the innovation economy. i used to call it silicon valley, but you and i know we can't anymore because it stretches so far around the
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world in so many different industries. 3d printing which is called additive manufacturing is one of those, and it is an exciting business in the sense that you really imagine that you don't have these big supply chains and parts coming from all around the world. and imagine you can just print these things up in a factory and there will be some time before we realize that vision fully, but it is on its way there. emily: meantime, you've got spac 2 coming, and the description is similar to spac 1. what can investors expect and what are you looking for? kevin: a lot of the same. innovative companies, great teams, massive markets, competitive advantages, those are what we really stuck to and what we are looking for. in our second spac, we have zero warrants. we are really looking for a
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partner that is going to appreciate less dilution, which, every partner will by having zero warrants. emily: i'm curious, for the spac s that you think might run into some challenges, could those challenges involve litigations? it's not just about making money, but what about some of the possible negative side effects? kevin: undoubtedly there will be a lot of litigation in the future. it is just an unfortunate byproduct of partnering in these companies, going after not so high quality companies. it will be tough to see when these retail investors lose their money, that they are going to end up, of course, suing. and maybe that's the good thing. nobody is ever excited about the legal system and lawsuits, but we do need a manner of separating out the underperformers.
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emily: kevin, you were a partner at founders fund venture capitalist for a long time. i am curious how you would compare investing in venture capital to the spac game. obviously, you know, it seems like such a different animal. kevin: it's surprisingly very similar. we are always looking for the same qualities of what will be an enduring business. what is something we want to be a part of an own shares in in 10, 15, 20 years from now? how do we find the next amazon, google, microsoft and so on? it's surprisingly similar now. the big difference, which is exciting, it is you go out in the ipo's in the public markets and you help bring that company into the public markets. that's an exciting side of these spacs. emily: you cofounded eventbrite,
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you were the ceo for many years. your wife julia now runs the company. what is your outlook on events in the future? do you see a more hybrid approach longer-term, even after we are all vaccinated and we are in this kind of, new normal? do you see live events bouncing back and person just the way they were? kevin: great question. it has been a monumental comeback. one of the greatest business comebacks was julia and the team at eventbrite fighting for survival in a period of march of last year. just one year ago and the company had negative revenue, more refunds than sales. it was an incredibly bleak situation. julia right sized the company. she was able to raise funding under dire circumstances. now, it's very exciting to see the business coming back, and the business is coming back very strongly.
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we have always had an online events product and that being really took off. i'm not sure i actually know that a lot of our creators, which we call our event organizers, will still stay in a hybrid state. it's a new normal, the most of the world is dying to get out and enjoy the roaring 20's as soon as we can get through the vaccinations. emily: we will see if that roaring 20's indeed comes to pass. and what a -- what event life is really like. eventbrite cofounder and chair chamoli will be watching your spacs. coming up, amazon warehouse workers in alabama patiently waiting as their votes are being counted in a historic election that could leave them to unionize. more on what is at stake and when we will get the results. plus later, moderna's co-founder
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joins us to talk about the new positive findings in vaccine efficacy. his thoughts on vaccine passports and more. this is bloomberg. ♪
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(announcer) do planks for maximum core and total body conditioning. (woman) aerotrainer makes me want to work out. look at me. it works, 100%. (announcer) find out more at that's emily: welcome back to "bloomberg technology." i'm emily chang in san francisco. flipkart is making progress towards an ipo. ed ludlow is with us with more. reporter: walmart took a 77% controlling stake at $16 billion for flipkart back in 2018. it has raised eyebrows because the market share of the company at the time. flipkart has 300 million users. it has a huge inventory of products and it really gives walmart an e-commerce holding in
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india. so what we are hearing from sources is that a traditional ipo could happen as soon as the fourth quarter. they have looked at doing a spac but decided that that was the main route and that the valuation could be as much is 30 billion dollars. a premium of win walmart did the deal. if you flip up the boards investor reaction was pretty , positive. walmart has been lower for the early part of tuesday trading. then, looking at this in the financial gain that the companies have. it's not just about the money raised, it's about putting your name on the map. it's about the publicity. sticking with ipo's and listings we have to talk about coinbase. one of the things we are thinking about is why are we so interested. direct listing. the first ever large direct listing on the nasdaq. the last evaluation that we had for coinbase on the private market was around $90 billion. astonishing. you've got the latest details coming out the market on tuesday. this is a company that is making money. the company says in preliminary results that they see net income
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between $730 million to in the $800 million first quarter. that's for $1.8 billion in revenue. you cover all kinds of ipo's. i am talking about spacs, traditional ipo's, direct listings. how many have you had that are already profitable at that level and significantly more profitable than coinbase was this time last year? astonishing. emily: absolutely. after covering tech for 10 years, it is rare to see something like this. we will of course be watching the direct listing next week. ed ludlow, thank you. sticking with cryptocurrency, we will pull back to bitcoin volatility. they encourage other investors to dive in. the question remains is bitcoin , a massive bubble, or a digital currency of the future? bloomberg spoke with the founder and ceo of galaxy digital. >> what's the s&p of the year, up small and bitcoin is up. 100%. and this week ethereum, the , second largest crypto currency
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, had a monster move. what you are seeing is money continue to pour into the space. we just been over $2 trillion of wealth of market cap in crypto. that's a significant number. there is $130 trillion in u.s. wealth, $400 trillion in global wealth. we are now half. half of the verse and in global wealth is in crypto. i think it will be a percent by the end of the year. >> you have seen a lot of usage in digital art, but where do you see this going? what else could this be used for? >> and fts are going to be with us for the rest of our lives. art on the blockchain, collectibles on the blockchain, ip on the blockchain, it's all happening. we are in the very, very early stages. so much that there is little bubbles that will pop up and down, but don't miss the big picture. this is fundamentally going to
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change how we secure intellectual property from now, going forward. sonali: am i right to make the distinction that this isn't necessarily a bitcoin boom, this is a crypto, a blockchain boom that you are following? mike: 100%. galaxy digital was set up to participate in the whole ecosystem. we have made investments in over 100 companies in and around the space. from protocols to security companies, and to nfc companies. >> there has been a lot of talk now about how governments actually start getting involved in this. what happens if that happens? i keep hearing it's a good thing, but i'm not sure i understand how. mike: there are a bunch of different lanes in crypto.
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bitcoin has carved out this lane of digital gold. most governments don't care if people are putting their money and go, that if they do a horrific job managing their finances, more people are going to want to take their money out of that and put it somewhere else. right now bitcoin is being seen in the digital world is that place. i don't think bitcoin will be what we use to buy shoes, sunglasses or diet cokes. you will see a war in payments for stable coins. that's when banks issue digital currency, stable coins vying for that space. emily: mike novogratz, galaxy investment partner ceo. meantime, all eyes on alabama as the vote counting begins in the historic election to determine whether amazon warehouse workers in bessemer will unionize or not. spencer, why is the counting taking so long? do we have any idea which way they are leaning? spencer: as far as where they
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are leaning, not yet. they are still going through this tedious process of just determining whether individual ballots that have been submitted are eligible or not. like, contested or not, without looking at how people voted. that's still happening. the federal officials are telling us the votes should count, the public tallying of if people voted yes or no for union should begin later this week. that is the latest detail we got from them. we are not sure if that means tomorrow, thursday, or friday. emily: meantime, over the weekend, amazon apologized for its now infamous bottles tweet that came from the official amazon account in response to the representative about the controversy about worker conditions. amazon saying this was an own goal, we are unhappy about it, we owe an apology to the representative. the tweet did not receive proper scrutiny and we need to hold ourselves to a high accuracy bar at all times.
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what do you make of that? spencer: it is a rare apology, and amazon has to calibrate how it wants to engage. historically, they have not engaged that much and twitter -- in these kind of twitter spats. obviously, they are getting tired of being this piñata that keeps taking a beating from various politicians on the left for different social causes. there is this lightning rod aboutk wealth inequality and taxation, and various things, so they keep getting pummeled. they are trying to find a balance of, how much do we want to engage versus not being too quick with our engagements that we put our foot in our mouth? emily: meantime, the national labor relations have determined that amazon violated labor laws.
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in this case involving to employ activists who were fired last year who were raising alarms about warehouse conditions. what does that mean? spencer: a lot of this stuff is basically symptoms about how amazon can basically fire whoever the heck it wants, and just probably pay a penalty later. if anything happens with this, they will most likely settle and give these folks some sort of payment to settle the issue. ultimately, they could be forced to hire them back and give them backpay, and that sort of thing. this goes back to the environmental activism, and some employees who were agitating from within and calling for amazon to be more accountable environmentally. amazon dismissed them. it could have just been a strategic violation of the law. they might have known that this could probably get us into hot water, but let's just fire them anyway and quiet this down.
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emily: all right, spencer soper, keep us posted on that boat count. thanks for the update. facebook is saying it has removed 14 networks representing more than 1000 fake accounts trying to sway politics around the world including in iran and el salvador. while misleading the public about their identity. most of the networks take an -- taken off the platform were in the early stages of building their audience. it's one of the larger crackdowns by the social network in recent months. coming up, good news from moderna. a new study finds the vaccine still works nearly six months after patients get the second dose. moderna's co-founder joins us next to talk about it all. this is bloomberg. ♪
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emily: almost 160 9 million doses of the covid-19 vaccine have been administered in the united states. nearly half the states opening up vaccinations to everyone 16 and older. an president biden says he wants all adults to be eligible for the shot by april 19. all states, but oregon and hawaii, set to meet that target. those two states are set to open up vaccines to all adults may 1. this, as california plans to fully reopen the economy june 15, if the pandemic continues to abate. good news from moderna, the drugmaker has found antibodies to the covid-19 virus will persist for at least six months. shares climbing on this new data. joining us now for more, the cofounder noubar afeyan, who is also the ceo of flagship pioneering, which launched moderna. thank you for joining us. this antibody news is great. so these variants are very
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troubling. south africa, brazil, you have pfizer testing a third booster. what is your sense of how often we will need to get revaccinated once we get fully vaccinated? noubar: thank you for having me back. indeed, it is good news that we have begun to see some good evidence of antibody protection lasting at least six months. we expect that, as we get more and more data, both from the earlier study in the larger studies that we did later in 2020. lots more to come on that, but that's encouraging. and as for the variants, our immune system is trained to detect many hundreds of threats on a daily basis. and, variants are going to look like slightly different threats.
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in some places, they have shown they can evade the immune response partially. but what we have shown so far is that some of the immune system continues to attack the variants, and we will have to keep a close eye on which variants are persisting. as you know, we have also started developing, just in case we need them, additional mrna vaccines that will target some of these variants. whether it's a variant vaccine or the original variant vaccine or some combination, we want to be one or two steps ahead of the virus. we want to fight back against our immune systems. emily: moderna has been testing the vaccine on children ages six months to 12 years. my children are in that age group. what do you know so far, and when do you think the soonest is that kids in that age group will be vaccinated? noubar: these trials are done in a very prescribed way. we don't get early information.
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when we get the information it will be disclosed to the public, as we did in the main human trials that we did last year for phase i, phase ii and phase 3. this will be the same. it will go through rigorous testing. i don't want to give a sense of when that might be concluded. but suffice to say, when we first ventured into this in the coming months we gather data and shared it to the public as to whether we see differences in the efficacy safety. i should say that in the younger population we are also testing lower doses. we expect some of those will be advocates just, and we expect to get the right dose. more to come on that, but over the coming months, i think there is a reasonable expectation and i can't be more specific than that. emily: interesting. it's hard to believe that my dharna was just a start up a few years ago that you started
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-- that moderna was just a start up a few years ago that you started building in-house at flagship, your venture capital firm focused on biotechnology. you've also got another company that has been working on an oral treatment to fight covid, that has also seen some promising results. how confident are you that if you don't get vaccinated, or even if you do and get a serious case of covid, at a drug will be able to save you? noubar: i think that everything that we can do, based on biomedical research, to delay, deter, attack this virus, we need to do. and what you are seeing is this industry that has largely been out of the mainstream, let's say, conscious of the world, which is the biotech industry, is suddenly being called to provide any and all means to beat the virus. kaleido is one of our companies that show developments.
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i think that there will be many different treatments, we need to let the science dictate our decision-making. we need evidence in controlled trials. as we get that, i believe the arsenal of approaches to beat this virus, even if it does infect people, will grow, and will grow very rapidly. emily: you have been hiring a number of new people as ceo partners. you hired mike nally, who used to work at merck. chris austen from the national institute of health. how will this new talent help you on your quest to develop new technology that will essentially save lives? where does this take you? noubar: as you mentioned in your introduction, the firm that i cofounded is really a new type of company that invents and launches new companies. we have been doing this for some
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20 years. over the last few years, we have scaled up our operations so that, at any given time we have 12 to 14 companies that are all distinct platforms of their own that are attacking one or another aspect of health across all of these states, across all aspects of medicine. it also sustainability. we are active agricultural technology in nutritional health care. what you realize is when you do this systematically, it is one thing to make the early inventions and can seem of these transformative platforms, it's another thing to actually create, launch and grow a company that can maximally deliver impact, and also derive value from this company. that depends very heavily on forming a team, a team of
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pioneers, and the leadership for that team. over the years we have hired 100, 150 folks to ceo roles, let alone all the other leadership roles. what we have learned is that it takes a particular kind of individual, together, with the supporting team, to lead these projects. the are finding some of them coming from the leading pharmaceutical companies, like mike nally, who we announced joining us just last week to lead one of our exciting next-generation companies, or chris austen, leaving the nih, having led one of their big translational institutes, leading with his medical background and leadership background to take on this role of ceo partners. we have about seven such folks we brought on board in the last nine months. they are each leaving their own platforms, and we will learn a lot about how to get better and better at matching the human capital, the inventive capital, the ideas, and the financial capital to be able to create these disruptive breakthrough platform companies.
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emily: really interesting model. thanks for sharing that with us. moderna cofounder and flagship pioneering cofounder noubar afeyan. why shortages of a one dollar check sparked a crisis in the global economy. we will talk about the chip shortage impacting industries beyond technology, next. as we had to break, taking a look at chip stocks here, all sinking. this as the chip shortage continues. a lot of opinions about how long it will last, but everyone agrees it is here and it is not great. we will discuss more coming up. this is bloomberg. ♪
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emily: the biden administration is planning to address crunch
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and an increase in domestic manufacturing of chips could represent a long-term risk to industry profits. that's according to analysts. bloomberg is reporting that biden's top economic and security aides are planning to hold a summit, inviting industry leaders. joining us to talk about the global shortage impacting the $450 billion industry, daniel flax, thank you for joining us. what do you imagine biden's attention to this massive shortage, how will that impact the shortage itself, in the industry at large? daniel: i think the ministration wants to foster an environment where companies will invest, even more here in the united states and security with a longer-term supply semiconductors. any construction that starts today will take a few years before it actually deals additional chips. i think the fact that you have
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an administration in an industry that would like to add capacity, is positive. if we step back and think about the dynamics, in the near term we will remain supply concerned. i think some of that will ease late this year and into 2020 two. clearly, the semiconductor industry will become more and more important to a variety of industries beyond just technology. emily: i have heard conflicting opinions about how long the chip shortage will last. qualcomm ceo telling us we will have line of sight by the end of year. ceos of all these companies say it is going to last multiple years. how long do you expect we will be in this for? daniel: i think it will be a factor for the next four-six quarters. in different industries, for example, automobiles expect demand to recover less quickly
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than it has. so you have certain industries more impacted than others. but i think if we look out beyond the next 18 months, what's clear is we've got this build out of the digital infrastructure that will require more and more intellectual properties from the semiconductor industry, clearly more manufacturing at scale. so the longer-term secular drivers here are healthy. the dynamic and the shorter-term will depend industry by industry. but what's important is that capacity is being added, and that will ultimately help solve these constraints that will be with us for a little bit, still. emily: is the lack of capacity affecting all countries equally, or do you have concern this could give china, for example, an advantage over companies? daniel: all of these companies are global. they have operations all over
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the planet. their customers, if you take a qualcomm, all still have customers all over the planet. this is a global issue. i think what will happen over the next two to three years, we have seen governments, certainly china, the u.s., increasingly look to have more supply for both strategic reasons. certainly to help out some of their industries. longer-term, asia will remain critical. but i think the u.s. and european union will have more local supply, which is a longer-term -- it helps to balance things a little bit in the longer-term. but it will take time. emily: thank you for giving us a long-term view. daniel flax always good to have , you here on the show. big reminder, bloomberg technology will have lots more analysis of the chip shortage issue. when it might resolve tomorrow.
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we will highlight conversations with analysts, chipmakers, car manufacturers and more reports from around the world from europe to asia. do not miss it. thanks for joining us. i'm emily in san francisco. this is bloomberg. ♪
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