Latest / Bloomberg Intelligence / The Supply Chain, Batteries, And Market Outlook

Transcript

The Supply Chain, Batteries, And Market Outlook · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. Major major rebound in
• 0:23
  Speaker 1: these markets. Whenever you think that they're down for a
• 0:25
  Speaker 1: little bit here, they just come bouncing back. It's the
• 0:26
  Speaker 1: whole by the dip mentality. Let's bring it a professional
• 0:30
  Speaker 1: to get a good view of what maybe we can
• 0:32
  Speaker 1: think about for the last few trading weeks of one
• 0:35
  Speaker 1: more importantly into next year. We do that with Brett Shouty,
• 0:38
  Speaker 1: chief investment strategist at Northwestern Mutual Wealth Management Company. So, Brett,
• 0:43
  Speaker 1: when we have sell off days and you hear from
• 0:45
  Speaker 1: your clients, do you tell them to just steady the
• 0:49
  Speaker 1: at the helm and keep looking forward and this is
• 0:52
  Speaker 1: market that will continue to move higher. How do you
• 0:54
  Speaker 1: think about this market as we head into Yeah, I
• 0:58
  Speaker 1: do think the market will continue to push higher in
• 1:00
  Speaker 1: two because the economy will continue to push higher. And
• 1:03
  Speaker 1: so if you think about the underlying fundamols these economy.
• 1:05
  Speaker 1: They still remain strong. Sure, there are some bottlenecks, there
• 1:08
  Speaker 1: are some oddities that have happened because of COVID, and
• 1:10
  Speaker 1: we can take you through those, But in general, we
• 1:12
  Speaker 1: think the economy will lurch back towards whatever normal. Maybe
• 1:18
  Speaker 1: if you think about that commentary, some of the oddities
• 1:21
  Speaker 1: that have occurred will continue to go back towards where
• 1:24
  Speaker 1: they were. So we've had this enormous amount of goods
• 1:27
  Speaker 1: demand that has really changed the trend from what it
• 1:30
  Speaker 1: was pre COVID. It was more towards the services. That
• 1:33
  Speaker 1: has caused the ports to be uh, you know, clogged
• 1:36
  Speaker 1: because goods rising in container ships services don't. But we
• 1:39
  Speaker 1: think as you move in two you're going to see
• 1:42
  Speaker 1: some of those historical trends returned towards normal or what
• 1:45
  Speaker 1: it was pre COVID. I think that's going to alleviate
• 1:47
  Speaker 1: from the inflation fears. I think the labor market is
• 1:50
  Speaker 1: going to heal because the oddities of the labor market
• 1:52
  Speaker 1: were caused by pandemic unemployment insurance, which is now we're off.
• 1:56
  Speaker 1: And I think as you have those things happen, you're
• 1:58
  Speaker 1: going to have a market that moves higher because the
• 2:01
  Speaker 1: economy was higher, but with different leadership. Well so those
• 2:04
  Speaker 1: which leadership caused audities in the market. Yeah. So I
• 2:08
  Speaker 1: think if you think of the past few years and
• 2:09
  Speaker 1: some of those oddities, I mean, the stay at home
• 2:11
  Speaker 1: trade has been in vogue, I think the world becomes
• 2:14
  Speaker 1: more back into public UM. You've had people been up hopes, dreams,
• 2:18
  Speaker 1: themes and memes because real rates have been so negative,
• 2:20
  Speaker 1: liquidity has been so large. UM liquidity will start to
• 2:23
  Speaker 1: drain up that from the system in and I think
• 2:26
  Speaker 1: people are going to focus on valuation more rather than games.
• 2:30
  Speaker 1: And I think that means things like small caps which
• 2:32
  Speaker 1: are cheap have a good backdrop value stocks and perhaps
• 2:35
  Speaker 1: even international stocks do better in twenty twenty two. I
• 2:38
  Speaker 1: like that hopes, dreams, themes, and memes and it's not
• 2:42
  Speaker 1: I should pause. You could add crypto to that too,
• 2:45
  Speaker 1: for sure. For sure crypto goes into that box. So,
• 2:49
  Speaker 1: but you think we're getting back to UM a more
• 2:52
  Speaker 1: normal market. I wonder what you think about the UM
• 2:56
  Speaker 1: active versus passive discussion, because we've had some really big
• 3:01
  Speaker 1: voices way in or going to a weigh and I'll
• 3:04
  Speaker 1: give you a little tease. Peter Lynch on a Bloomberg
• 3:07
  Speaker 1: radio program tonight is saying, Um, he thinks you're losing
• 3:12
  Speaker 1: out if you're going all in on passive. He says
• 3:14
  Speaker 1: he beat the market forever and he's got a bunch
• 3:16
  Speaker 1: of guys that do it. Where do you Where do
• 3:19
  Speaker 1: you fall in this discussion? I agree with Peter, and
• 3:22
  Speaker 1: I think it's um. I've I've kind of compared this
• 3:26
  Speaker 1: time period. There there are many comparisons to other differences. Uh,
• 3:30
  Speaker 1: And the debate on active versus passive is also cyclical.
• 3:33
  Speaker 1: And so to me, people forget that sometimes active management
• 3:37
  Speaker 1: is not about just what you own, but what you
• 3:38
  Speaker 1: don't own. And so to me, there are parts of
• 3:41
  Speaker 1: the markets that are very odd. The SMPI is as
• 3:43
  Speaker 1: concentrated as aspen since and before that's the nifty uh,
• 3:48
  Speaker 1: the nifty fifties stocks to the salviaties. I think in
• 3:50
  Speaker 1: the future there's gonna be some active management opportunities, just
• 3:54
  Speaker 1: some my evaluation perspective, from a popularity perspective, I just
• 3:57
  Speaker 1: feel that as you move forward, it's going to look
• 3:59
  Speaker 1: a lout. Get did from two thousand to two thousand
• 4:01
  Speaker 1: and five six seven, which is actually a good period
• 4:03
  Speaker 1: of time for active management. Brent, you got your NBA
• 4:06
  Speaker 1: from the University of Chicago. That means you're probably one
• 4:08
  Speaker 1: of those numbers geeks. What are some of the inflation numbers? Water?
• 4:13
  Speaker 1: I know when I applied to business school, trust me,
• 4:15
  Speaker 1: I did not apply the Universe Chicago. I didn't think
• 4:18
  Speaker 1: that would be a good fit. But Brett, what are
• 4:20
  Speaker 1: some of the inflation data that you're looking at and
• 4:22
  Speaker 1: you think the FED is looking at? To me, the
• 4:25
  Speaker 1: FED looks at the five year five year forward, So
• 4:27
  Speaker 1: so what does the market believe that the inflation will
• 4:29
  Speaker 1: be five years from now? And that number has not skyrocketed. Sure,
• 4:33
  Speaker 1: it's above where it was in the last time period
• 4:36
  Speaker 1: from like fourteen to nineteen, but it's still well belower.
• 4:39
  Speaker 1: It wasn't the more normal inflationary periods that we had,
• 4:41
  Speaker 1: oh four or five or six or seven through maybe
• 4:43
  Speaker 1: other time of eleven. To me, that's one key indicator
• 4:46
  Speaker 1: I don't first much we talked about it. The market
• 4:48
  Speaker 1: doesn't believe that inflation is going to be an issue.
• 4:50
  Speaker 1: The other part of it I mentioned as a shift
• 4:52
  Speaker 1: that's spending from services to goods. If you look at
• 4:55
  Speaker 1: where inflation has been over the past few months. Keep
• 4:58
  Speaker 1: in mind, we've had inflation for a total of stuff
• 5:00
  Speaker 1: and months now, UM, so it's awful odd that we're
• 5:02
  Speaker 1: calling it permanent. Now. You have seen a fifteen point
• 5:05
  Speaker 1: four percent jump in good spending during the pandemic. Services
• 5:09
  Speaker 1: has yet to return to its pre COVID levels. If
• 5:12
  Speaker 1: I break inflation down into goods inflation versus services inflation,
• 5:16
  Speaker 1: you've had goods inflation which from two thousand and nine
• 5:19
  Speaker 1: twenty was basically zero. In other words, it didn't inflate.
• 5:23
  Speaker 1: It's up I believe it seven and a half percent
• 5:25
  Speaker 1: on the annual basis. If I take goods inflation just
• 5:28
  Speaker 1: one more number, because I do love them. If you
• 5:30
  Speaker 1: take good inflation apart, and you say durables versus non durables,
• 5:34
  Speaker 1: durables are things like furnishings, things like UH air conditioners,
• 5:39
  Speaker 1: things like cars. Durable goods inflation from to two thousand
• 5:44
  Speaker 1: and twenty deflated. It is up eight point eight percent
• 5:49
  Speaker 1: year over a year. Because we've had that shift that
• 5:51
  Speaker 1: has really stressed, um, the sports system, has really stressed
• 5:55
  Speaker 1: our infrastructure, our supply chains. I think that as that
• 5:58
  Speaker 1: alleviates in two you will see good in flesh and
• 6:01
  Speaker 1: pull back services maybe a bit more sticky, but I
• 6:04
  Speaker 1: think those numbers will start coming down and that will
• 6:05
  Speaker 1: give us that the impetus to be able to stick
• 6:07
  Speaker 1: around longer than what people imagine. All Right, Brett, thanks
• 6:09
  Speaker 1: so much for joining us. Really appreciate it, really appreciate
• 6:11
  Speaker 1: the numbers, which is what we expect from an MBA
• 6:13
  Speaker 1: from Chicago. Bret Truty, Chief investment strategist, Northwestern Mutual. All right,
• 6:22
  Speaker 1: let's talk about the housing market, the real estate housing market,
• 6:24
  Speaker 1: Rip Warring, red hot, however you want to phrase it,
• 6:27
  Speaker 1: very very hot right now, and Matt knows that firsthand.
• 6:30
  Speaker 1: He's just was in the market place. We're joined today
• 6:33
  Speaker 1: by Annabelle Fernandez, interim chief financial Officer and treasure of
• 6:36
  Speaker 1: dream Finder's Homes. It's a publicly traded company on the
• 6:39
  Speaker 1: NSA d f H one public in January of this
• 6:42
  Speaker 1: year at thirteen dollars a share of trades today eighteen
• 6:44
  Speaker 1: dollars fifteen uh. Since it's got a market cap about
• 6:47
  Speaker 1: one point seven billion dollars. So, Annabelle hot market, give
• 6:52
  Speaker 1: us your thirty thousand foot view of the residential real
• 6:55
  Speaker 1: estate market today. Sure, thanks for having me. First of
• 6:59
  Speaker 1: all Um will remain really positive about the outlook. We
• 7:04
  Speaker 1: have had strong economic growth in post pandemic and we
• 7:08
  Speaker 1: think that will continue into low inventory levels persist, especially
• 7:14
  Speaker 1: in the m s a S in which we operate
• 7:17
  Speaker 1: in the states of Florida, in Denver, Colorado, in Texas,
• 7:21
  Speaker 1: and historically low mortgage rates. Even if the FED is
• 7:24
  Speaker 1: prepared to take action and unwind their program, we still
• 7:28
  Speaker 1: believe rates are historically low and very compelling. We have
• 7:32
  Speaker 1: millennials entering the home buyaneers um and we just have
• 7:37
  Speaker 1: observed in the m s a S in which we
• 7:39
  Speaker 1: operate a positive demographic pattern with an influx of individuals
• 7:44
  Speaker 1: moving into the suburbs post pandemic, and that has also
• 7:48
  Speaker 1: benefited certain areas of the market. So we remain relatively
• 7:53
  Speaker 1: up cautious, but very optimistic. Well, how much are you building?
• 7:56
  Speaker 1: I mean, you're as you point out, you operate in Denver,
• 8:01
  Speaker 1: in Orlando, you also build houses in Jacksonville and Austin, Savannah, UM,
• 8:07
  Speaker 1: as well as the Carolinas in Virginia. How much are
• 8:11
  Speaker 1: you putting up there? Because we know there's huge demand.
• 8:14
  Speaker 1: There's definitely very strong demand. In my history in home building,
• 8:19
  Speaker 1: I've never seen this um this market where every house
• 8:23
  Speaker 1: you put in the house on the floor, you you sell. Uh.
• 8:26
  Speaker 1: Normally we are a builder that likes to have speculatory
• 8:29
  Speaker 1: inventory on the ground because people need to move into
• 8:33
  Speaker 1: a market and buy a house right away, and normally
• 8:36
  Speaker 1: we like to keep a certain level of inventory. Well,
• 8:39
  Speaker 1: we can't keep up ninety percent of inventory world building
• 8:42
  Speaker 1: is already pre sold, so it's unprecedented and more excited
• 8:47
  Speaker 1: to see what it gets to in the next year.
• 8:49
  Speaker 1: And just definitely working through our backlob to deliver the
• 8:52
  Speaker 1: homes as quickly as we can for our customers. And
• 8:55
  Speaker 1: about one of the things we've heard about kind of
• 8:57
  Speaker 1: the new home construction business is the industry is just
• 9:01
  Speaker 1: not building enough new buyer home, first time buyer homes
• 9:05
  Speaker 1: they're buying, they're they're building kind of the McMansion because
• 9:07
  Speaker 1: obviously higher price, higher margin for the builder. Where in
• 9:11
  Speaker 1: the marketplace are you uh, in terms of the types
• 9:14
  Speaker 1: of homes you build, Uh, that's a great question. We
• 9:18
  Speaker 1: are focused on the entry level and first time move
• 9:21
  Speaker 1: up market segments. We were build in the active adult
• 9:24
  Speaker 1: sector and second time move up, but of what we
• 9:28
  Speaker 1: do is entry level and first time move up so
• 9:31
  Speaker 1: those millennials and affordability is a concern. Mortgage rates are
• 9:35
  Speaker 1: a concern, of course. Told the affordability component and building
• 9:40
  Speaker 1: an efficient home that can just um serve that piece
• 9:44
  Speaker 1: of the market is our main focus. Paul is a
• 9:48
  Speaker 1: very active adult. That is exactly market Jacksonville, Paul, I'm
• 9:54
  Speaker 1: thinking about it. My question is um stealing heights. I
• 9:58
  Speaker 1: can't stand in new builds how low the ceilings are.
• 10:01
  Speaker 1: You know. That's why I always when I'm looking in
• 10:03
  Speaker 1: New York, I want to find a pre war building.
• 10:05
  Speaker 1: Can I choose my ceiling height? If I go to
• 10:07
  Speaker 1: dream Finders, you can. You can. We have the sign
• 10:11
  Speaker 1: no level homes where you can choose that, and you
• 10:13
  Speaker 1: have ten eleven food ceilings. So yes, absolutely, depending on
• 10:17
  Speaker 1: on the right neighborhood, the right product, we can accommodate
• 10:20
  Speaker 1: for that. Because Matt is about I don't know six
• 10:23
  Speaker 1: four or something like that. Anyway, I would go to Denver.
• 10:26
  Speaker 1: I like Denver. Yeah, asolutely be my choice of the
• 10:28
  Speaker 1: dream Finders areas all right. And about Fernandez, thank you
• 10:31
  Speaker 1: so much for joining us, really appreciate And about Fernandez,
• 10:34
  Speaker 1: she's interim chief financial officer and treasurer for Dream Finders
• 10:38
  Speaker 1: Home d f H is the symbol for that building
• 10:42
  Speaker 1: new homes. And again and trying to hear that focus
• 10:45
  Speaker 1: on some entry level housing. So yeah, yeah, but but
• 10:48
  Speaker 1: not in the Tri State area. Now why would you?
• 10:50
  Speaker 1: I mean, the castes is too high. So I think
• 10:52
  Speaker 1: they've got a pretty good strategy there. Pivot a little
• 10:57
  Speaker 1: bit right here. Let's talk about the electric vehicle business,
• 11:00
  Speaker 1: the renewable business, the clean energy business. All that is
• 11:05
  Speaker 1: really dependent in part on good battery performance. Tom Jensen,
• 11:09
  Speaker 1: CEO and co founder of Friar Battery is an n
• 11:13
  Speaker 1: y s e UH listed stock. F r e Y
• 11:17
  Speaker 1: is the symbol to Norway based developer of clean batteries
• 11:20
  Speaker 1: for energy storage market EVS and the marine industry, when
• 11:23
  Speaker 1: public this past winter through Spack transaction with Alosa Energy. Tom,
• 11:28
  Speaker 1: thanks so much for joining us here. Give us a
• 11:29
  Speaker 1: sense of what your company does, what is your focus,
• 11:34
  Speaker 1: what are you guys up to? So well, thank you
• 11:39
  Speaker 1: for that. And and so we are developing um world
• 11:42
  Speaker 1: leading clean battery solutions for all market verticals. So we're
• 11:48
  Speaker 1: going to build initial capacity in the Norwegian UH or
• 11:52
  Speaker 1: in Norway, leveraging Norway's surplus renewable energy which is also
• 11:57
  Speaker 1: more cost effective than than most energy sources globally, and
• 12:01
  Speaker 1: in our opinion, batteries form, as you pointed out, the
• 12:05
  Speaker 1: most important catalyst for the energy transistion. It's kind of
• 12:08
  Speaker 1: obvious to the carbonized transportation through electric vehicles, but it's
• 12:11
  Speaker 1: equally important as a catalyst for de carbonizing energy systems globally.
• 12:17
  Speaker 1: So we're going to give batteries using an American technology.
• 12:20
  Speaker 1: So we licensed in twenty four end Technologies, which we
• 12:23
  Speaker 1: believe it's next generation listing mind battery technology that offers
• 12:27
  Speaker 1: step changing performance, step changing costs, and also has potential
• 12:32
  Speaker 1: to dramatically improve further moving forward by building larger and
• 12:37
  Speaker 1: thicker essentially electrodes into the batteries. So if you look
• 12:41
  Speaker 1: at the international energy agencies predictions of staying sort of
• 12:45
  Speaker 1: roughly within the Paris Agreement and one and a half
• 12:48
  Speaker 1: degree uh sort of addition, batteries are included, so to speak,
• 12:53
  Speaker 1: in half of the investment needing to go into the
• 12:55
  Speaker 1: energy transisition. So we're very happy to be in New
• 12:57
  Speaker 1: York today participating in an event on the New Stock Exchange,
• 13:00
  Speaker 1: and I'm going back there together with His Royal Highness
• 13:03
  Speaker 1: the Crown Prince of Norway basically talk about how to
• 13:06
  Speaker 1: finance the energy transition. So for US, batteries is part
• 13:10
  Speaker 1: of the future. We think the decade we're in is
• 13:12
  Speaker 1: going to be the decade of the battery. This is
• 13:15
  Speaker 1: a solution that is here today. It's commercially available, the
• 13:19
  Speaker 1: cost points are already competitive with the alternatives, and anybody
• 13:24
  Speaker 1: that will be you know, produced, will be sold and
• 13:27
  Speaker 1: demand is going through the roof, and then you're going
• 13:30
  Speaker 1: to go down there with hawk on correct. So His
• 13:34
  Speaker 1: Royal Highness, the Crown Prince is a very good um
• 13:39
  Speaker 1: sort of custodian of Norwegian interests, so he he participates
• 13:43
  Speaker 1: in in promoting Norwegian interests abroad and Norway obviously has
• 13:48
  Speaker 1: deep interests and relations with the United States and therefore
• 13:53
  Speaker 1: sort of collaborating around the energy transition and US actually
• 13:56
  Speaker 1: taking a US technology to scale in Norway, but also
• 14:00
  Speaker 1: coming back to the US through our partnership with Coke
• 14:02
  Speaker 1: strategic platforms and developing clean battery solutions also in the
• 14:06
  Speaker 1: American market is something that we are now actively pursuing
• 14:11
  Speaker 1: together with COPE. So so we're super excited about the
• 14:13
  Speaker 1: partnership opportunity that we have developing the blueprint in Norway
• 14:18
  Speaker 1: and then replicating that rapidly here in the US to
• 14:23
  Speaker 1: sort of be a relevant participant in the energy transition.
• 14:26
  Speaker 1: It's very cool. So you get basically the the genius
• 14:30
  Speaker 1: from m I T, you bring it to Norway where
• 14:33
  Speaker 1: they have to know how to put these things together,
• 14:35
  Speaker 1: and then you build out or solid state or lithium
• 14:39
  Speaker 1: ion batteries. What what what is the actual battery technology
• 14:43
  Speaker 1: that you're focused on. So so twenty f M Technologies
• 14:48
  Speaker 1: and m I T spin off, as you pointed out,
• 14:50
  Speaker 1: a very clever sort of solution. They've developed something they
• 14:53
  Speaker 1: labeled the semi solid platform, and that's really not sort
• 14:57
  Speaker 1: of a pun on solid state batteries. It's war to
• 15:00
  Speaker 1: do with the structure of the battery themselves. So they
• 15:03
  Speaker 1: are instead of these slurry like mix that you use
• 15:07
  Speaker 1: to to create conventional batteries which you coat onto the
• 15:11
  Speaker 1: aluminium and corporate foil, twenty four M essentially creates a
• 15:15
  Speaker 1: thicker slurry, almost like a clay like structure for the
• 15:17
  Speaker 1: electrodes which are casting onto the current collectors and hence
• 15:22
  Speaker 1: the semi solid connotation. So this is a production process
• 15:26
  Speaker 1: and a battery designed that is dramatically better in terms
• 15:30
  Speaker 1: of cost performance and also can allow you to put
• 15:32
  Speaker 1: more energy carrying material into the same volumetric unit of
• 15:38
  Speaker 1: final products. As a number of sort of technical sort
• 15:40
  Speaker 1: of jargons here, But the point is ultimately, if we
• 15:44
  Speaker 1: want to have batteries move into all the vehicles and
• 15:48
  Speaker 1: all the stationary storage applications and sort of storing sunlight
• 15:52
  Speaker 1: and wind and all the rest of it, we need
• 15:54
  Speaker 1: to put more energy carrying material into smaller and smaller
• 15:57
  Speaker 1: compartments and basically drive up energy density and reduce costs.
• 16:01
  Speaker 1: And that is what provides the promise of It's a
• 16:04
  Speaker 1: dramatically simplified production process, significantly reducing capital expenditure, significantly reducing footprint,
• 16:11
  Speaker 1: lowering the energy bill, dramatically lowering number of employees required,
• 16:17
  Speaker 1: and more importantly allowing for further optimization while staying in
• 16:22
  Speaker 1: the same raw material supply chain as conventionally in mind
• 16:26
  Speaker 1: batteries had. So for us, this is next generation happening now,
• 16:31
  Speaker 1: and the only sort of focus we have is how
• 16:33
  Speaker 1: fast can we build how much capacity? And the demand
• 16:36
  Speaker 1: is as I said, it's it's skyrocketing, as everyone is
• 16:41
  Speaker 1: now jumping onto the energy transition energy transition. Absolutely. Tom Jensen,
• 16:45
  Speaker 1: thank you so much for joining us. Really appreciate it.
• 16:47
  Speaker 1: Tom Jensen, he's the CEO and co founder of Friar Battery.
• 16:51
  Speaker 1: It's an n y S listed stock. F r e
• 16:54
  Speaker 1: Y is the symbol one is. Tom was mentioning um.
• 16:57
  Speaker 1: You know, as you move towards this renewable energy UH
• 17:00
  Speaker 1: usages and applications, one of the key key drivers here
• 17:04
  Speaker 1: is the quality UH and performance of the batteries, and
• 17:08
  Speaker 1: that's where Friar Battery looks to make its mark. And Matt,
• 17:14
  Speaker 1: let's continue our discussion of battery technology because as we
• 17:18
  Speaker 1: think about the electrification of many industries, most notably the
• 17:22
  Speaker 1: auto industry, it's coming down in large part to battery technology. Permit, president,
• 17:29
  Speaker 1: CEO and co founder of Transform, UH joins us. Permit,
• 17:32
  Speaker 1: thanks so much for joining us here. You know, Matt
• 17:35
  Speaker 1: in particular is fascinated with electric vehicles and then the
• 17:39
  Speaker 1: evolution of the auto business towards e VS. Talk to
• 17:43
  Speaker 1: us about your company, Transform and kind of how you're
• 17:46
  Speaker 1: thinking about battery technology. Thanks so much, and it's a
• 17:52
  Speaker 1: pleasure to be here, so Transform t g A n
• 17:55
  Speaker 1: We are a pioneer and leading provider of galier nitride
• 18:00
  Speaker 1: semicon power devices which are now widely used in power conversion.
• 18:06
  Speaker 1: And mind you, gallium nitride has been around for LEDs
• 18:09
  Speaker 1: for lighting RF transistors for more than two decades. Now
• 18:13
  Speaker 1: it's making its way into power conversion, which will be
• 18:15
  Speaker 1: its biggest application and market YETS and particularly with high
• 18:20
  Speaker 1: growing applications like five G and electric vehicles, with the
• 18:24
  Speaker 1: demonstrated capability to completely disrupt power conversion and displace the
• 18:29
  Speaker 1: traditional silicon device technology. And and what does gallium nitride
• 18:33
  Speaker 1: do and what is power conversion and how is it
• 18:35
  Speaker 1: related to the EVS Right, So, whether you're charging your
• 18:38
  Speaker 1: phone or an EVY battery, charging or driving an electric
• 18:42
  Speaker 1: vehicle motor, or powering even your cryptomning or data center
• 18:46
  Speaker 1: power supplies. Across this gamut of application, there is electrical
• 18:51
  Speaker 1: energy conversion going on, which is inherently lossy and it
• 18:55
  Speaker 1: wastes electricity. Gallium nitride offers superior efficiency, which is low
• 19:00
  Speaker 1: energy wasted farm factor, being compact, lightweight, better than any
• 19:04
  Speaker 1: other power conversion semi co and tectra material today and
• 19:07
  Speaker 1: Transform tries to do it in the best possible manner.
• 19:10
  Speaker 1: What do you do with magneti Morelli. That's a brand
• 19:13
  Speaker 1: I've been using for twenty years on all my do
• 19:15
  Speaker 1: Cardi motorcycles. Excellent, excellent. So Morelli now Magnetio Morelli is Morelli.
• 19:22
  Speaker 1: It's an integration of two large companies. Calconic Cancer in
• 19:25
  Speaker 1: Morelli's Magnetio Morelli. So it's a Morelli is an investor
• 19:29
  Speaker 1: in Transform and a long term partner for us in
• 19:32
  Speaker 1: electric vehicles, the application of gallium nitrate product in electric vehicles,
• 19:36
  Speaker 1: and they see their vision is matched with our vision.
• 19:39
  Speaker 1: Morelli is also for our for our purpose. Morelli is
• 19:42
  Speaker 1: also a provider, one of the leading O E M
• 19:45
  Speaker 1: providers to top tier auto manufacturers. So we work with
• 19:48
  Speaker 1: them on a long term roadmap for insertion of gallium
• 19:51
  Speaker 1: nitrate into electric vehicles, inverters, chargers for electric vehicles, making
• 19:56
  Speaker 1: them more efficient, improving the range of electric vehicles using
• 20:00
  Speaker 1: the battery more efficiently and improving the charging time of
• 20:04
  Speaker 1: the batteries and in general making all the power electronics
• 20:07
  Speaker 1: compact and lightweight. Well. Your company, Transform is a public
• 20:10
  Speaker 1: company t g A N is the symbol that kind
• 20:14
  Speaker 1: of market cap about three nine million dollars a year
• 20:18
  Speaker 1: to date. So we talked to us about kind of
• 20:21
  Speaker 1: where what are the key growth drivers for your company
• 20:25
  Speaker 1: over the next couple of years. Yes, no, that's accurate,
• 20:30
  Speaker 1: Thank you. So for Transform, p g A and right
• 20:32
  Speaker 1: the gallium nitrate power itself. GAN is emerging to be
• 20:36
  Speaker 1: a very large market opportunity in the world of power conversion.
• 20:40
  Speaker 1: More than three billion dollars of gan cam as we
• 20:43
  Speaker 1: call it in the near to mid term three time
• 20:46
  Speaker 1: frame and more than a ten billion available total market
• 20:49
  Speaker 1: GANTAM by the end of the decade, with a very
• 20:51
  Speaker 1: strong cager more than double that of the general power
• 20:54
  Speaker 1: symblic conductor market, which itself is very healthy. So we
• 20:57
  Speaker 1: see gallium nitrate power growth. Our focuses on execution over
• 21:01
  Speaker 1: the next several years, just like you know in the
• 21:04
  Speaker 1: two thousand decades. Again, LED had a hypergrowth for five, ten,
• 21:09
  Speaker 1: fifteen years and all of the companies and Transform is
• 21:13
  Speaker 1: one of the pioneers with strong technology, intellectual property products
• 21:17
  Speaker 1: manufacturing will enjoy market groups for a long time. For us,
• 21:21
  Speaker 1: our goal is to build a multi hundred million dollar
• 21:23
  Speaker 1: business over the next few years and Transform and make
• 21:26
  Speaker 1: gallium nitride a standard for power conversion. I'm looking at
• 21:31
  Speaker 1: the at the SUPERGAN technology products on your website. Amazing
• 21:37
  Speaker 1: that they can work for twenty billion field hours or
• 21:40
  Speaker 1: more than that and only have it looks like I
• 21:44
  Speaker 1: guess zero point four failures per billion hours. So this
• 21:48
  Speaker 1: is an incredible technology. How hard is it to get? Right? Now?
• 21:51
  Speaker 1: We all hear so much about the semi conductor shortage,
• 21:54
  Speaker 1: We talk about it on this program a lot. How
• 21:56
  Speaker 1: difficult are you? How much difficulty are you having in
• 22:00
  Speaker 1: killing orders? You just hit about the two important points
• 22:04
  Speaker 1: for Transform. First, you recognize the reliability on quality, which
• 22:07
  Speaker 1: is paramount. So we have now been supplying gallium nitr
• 22:10
  Speaker 1: in the field and statistically we have that fit rate
• 22:13
  Speaker 1: zero point four per billion hours of operation with significant
• 22:17
  Speaker 1: amount of penetration in the field. Quality and relablity is
• 22:19
  Speaker 1: paramount for any semiconductors technology, and we have shown that
• 22:24
  Speaker 1: gallium nitride can be no different than silicon which is
• 22:27
  Speaker 1: widely used long term in quality and reliability. Now, that's
• 22:31
  Speaker 1: one of the key advantages and strength of Transform. Our
• 22:34
  Speaker 1: p plus our quality and relability. Now other one of
• 22:37
  Speaker 1: the other strength of Transform is also that we are
• 22:39
  Speaker 1: vertically integrated. I call it our asset light vertically integrated model,
• 22:43
  Speaker 1: where we make the most important part of the gallium nitride,
• 22:46
  Speaker 1: the gallium nitrate wavefors themselves. We hundred percent make it
• 22:50
  Speaker 1: our stuff and part of our strong part of our
• 22:53
  Speaker 1: manufacturing is right here in Galata, California, where we are
• 22:56
  Speaker 1: headquarters for the gallium nitride, the main gallium nitride material.
• 22:59
  Speaker 1: So we do control our own destiny in that sense
• 23:02
  Speaker 1: making the galium nitride material, which is an advantage for
• 23:05
  Speaker 1: transforming these times of troubled supply chains. We are also
• 23:09
  Speaker 1: that said, we are also in the general semi conductor industry,
• 23:12
  Speaker 1: so we do rely on standard components, packages, etcetera for
• 23:16
  Speaker 1: and supply chain, just like a standard semi conductor industry.
• 23:19
  Speaker 1: So we have to grapple with that and manage carefully
• 23:22
  Speaker 1: and plan ahead. What sorry, what's what's it look like
• 23:27
  Speaker 1: right now? I mean, I get that you have to
• 23:29
  Speaker 1: do a lot of your own work in house if
• 23:32
  Speaker 1: you have if you want to make a million parts
• 23:34
  Speaker 1: with less than one defect per million, you've got to
• 23:37
  Speaker 1: oversee that yourself. But you still count on others um
• 23:40
  Speaker 1: for components that get shipped in. So what what's the
• 23:43
  Speaker 1: lag time right now? How hard has the pandemic been
• 23:46
  Speaker 1: for you? Yeah? Absolutely, the panto I think not has
• 23:48
  Speaker 1: been easy, but thanks to our phenomenal worldwide team right
• 23:51
  Speaker 1: our manufacturing operations. Yes, there have been some delays, but
• 23:54
  Speaker 1: we were Actually we are very fortunate and blessed and
• 23:57
  Speaker 1: thanks to the hard work of our team, our manufacturing
• 24:00
  Speaker 1: operations worldwide here in California. We have operations in Japan,
• 24:03
  Speaker 1: some operations in Asia. None of them have been down
• 24:06
  Speaker 1: in the pandemic. So we make our own gallium night
• 24:09
  Speaker 1: ride lead times. We have to plan in advance. That
• 24:12
  Speaker 1: is very important for us, but our team has been
• 24:14
  Speaker 1: managed to deal with it. Hey, Permit, thank you so
• 24:17
  Speaker 1: much for joining us. Really appreciate it. Permit Permit Parik, President,
• 24:21
  Speaker 1: CEO and co found of Transform. Thanks for listening to
• 24:26
  Speaker 1: the Bloomberg Markets podcast. You can subscribe and listen to
• 24:29
  Speaker 1: interviews of Apple Podcasts or whatever podcast platform you prefer.
• 24:34
  Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller. Yet
• 24:38
  Speaker 1: Fall Sweeney I'm on Twitter at pt Sweeney. Before the podcast,
• 24:42
  Speaker 1: you can always catch us worldwide at Bloomberg Radio.