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Samsung to Make Tesla AI Chips in Multiyear Texas Deal · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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  Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
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  Speaker 1: Listen on demand wherever you get your podcasts, or watch
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  Speaker 1: us live on YouTube.
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  Speaker 2: Let's cross over to tech to Tesla. Samsung Electronics will
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  Speaker 2: produce AI semiconductors for Tesla in a new sixteen point
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  Speaker 2: five billion dollar pack that marks a wind for its
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  Speaker 2: underperforming foundry division. What does this mean for our friends
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  Speaker 2: at Tesla? Craig Trudell joins us Bloomberg Global Autos Editor Here,
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  Speaker 2: Craig talk to us.
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  Speaker 3: Are what Tesla's.
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  Speaker 2: Trying to do here with this big deal with Samsung?
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  Speaker 4: Yeah, so this this is a deal for a next
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  Speaker 4: generation AI chip for Tesla. So Samsung is an existing
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  Speaker 4: supplier of these uh, you know, high powered semiconductors that
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  Speaker 4: are used for it's driving systems that it markets as
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  Speaker 4: full self driving and autopilot. Uh And and contrary to
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  Speaker 4: those names that you know, you cannot buy a Tesla
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  Speaker 4: today and have it drive itself for you. You still
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  Speaker 4: need to pay attention and keep your hands on the
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  Speaker 4: wheel and eyes on the road. But uh, it is
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  Speaker 4: the case that those systems are are becoming more more
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  Speaker 4: capable and that Tesla is trying to kind of press
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  Speaker 4: the issue with them to the point where uh, you know,
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  Speaker 4: they're they're taking people out of out of the driver's
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  Speaker 4: seat and and having uh you know, supervisors in the
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  Speaker 4: in the passenger seat of cars in Austin, Texas, and
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  Speaker 4: and trying to to take that elsewhere as well. Uh.
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  Speaker 4: This this will be interestingly. Musk announced overnight that they
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  Speaker 4: will be going to a T S M C chip
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  Speaker 4: for for the next generation of of semis that they
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  Speaker 4: use and then go to Samsung, relying on on supply
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  Speaker 4: from from this plant in Texas that that Samsung is
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  Speaker 4: boys to to open, uh in the near future.
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  Speaker 5: And what near future? How how long does it take
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  Speaker 5: to build a fab plant?
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  Speaker 3: The cool kids say fab right.
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  Speaker 4: Yeah, that's right. Yeah, I mean, I think you know
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  Speaker 4: the the this is a project on Samsung's part that's
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  Speaker 4: been in the worst for some time, right and and
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  Speaker 4: so uh they they you know, were sort of moved
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  Speaker 4: actually by the Chips Act under the Biden administration, and
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  Speaker 4: Trump uh was was critical of of the Chips Act.
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  Speaker 4: You know, on the on the campaign trail. And yet
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  Speaker 4: we've seen uh sort of a continuation and somewhat of
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  Speaker 4: an embrace of it, uh, you know, as we we've
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  Speaker 4: seen a change in the White House. Uh in terms
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  Speaker 4: of the exact timing of when exactly this new AI
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  Speaker 4: chip uh you know, will will be coming out of
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  Speaker 4: that Texas factory. It's it's not yet clear from from
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  Speaker 4: Musk's posting on an X, and the companies have not
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  Speaker 4: said much because you know, they of course agreed to
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  Speaker 4: you know, some some privacy here that Musk proceeded to
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  Speaker 4: to sort of loosen up on, you know, at least
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  Speaker 4: over social media.
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  Speaker 2: Craig, do we know at this stage to what extent
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  Speaker 2: Elon Musk is engaged in the day to day the
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  Speaker 2: strategic of Tesla analogy stepped back from his doze responsibilities.
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  Speaker 4: I mean, I think you can you can glean so
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  Speaker 4: much from his his you know, activity on X as
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  Speaker 4: to what he's paying attention to. And it absolutely is
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  Speaker 4: the case that we're seeing him him posting more about
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  Speaker 4: things like this deal with Samsung, and I do think
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  Speaker 4: that that's helpful sort of for for sentiment around Tesla.
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  Speaker 4: And yet I would say too that you know, if
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  Speaker 4: if there was a sort of you know, scorecard, sort
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  Speaker 4: of an informal scorecard that you'd be keeping track of
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  Speaker 4: where he's sort of devoting most of his time and
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  Speaker 4: attention to. I would say it's as much or more
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  Speaker 4: on XAI and just ai in general than it is
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  Speaker 4: on Tesla specifically. You know, you heard from him a
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  Speaker 4: few months ago that he would really be turning his
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  Speaker 4: attention back to Tesla, uh, you know, as he was
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  Speaker 4: making his way out of the White House. But I think,
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  Speaker 4: you know, the amount of attention and emphasis he's put
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  Speaker 4: on trying to catch up to the likes of open
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  Speaker 4: AI and Google in our artificial intelligence and l MS
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  Speaker 4: is you know, definitely exceeds, you know, the amount of
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  Speaker 4: of you know, noise we're hearing from him about the
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  Speaker 4: day to day interworkings of of Tesla.
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  Speaker 2: All right, excellent, Craig, thanks so much for joining us.
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  Speaker 2: Appreciate your reporting there. Craig Tudell, Global autos editor for
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  Speaker 2: Bloomberg News, joining us from our London h Q. Samsung
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  Speaker 2: to make Tesla chips in multi year Texas deals.
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  Speaker 3: And Elon is going to actually walk walk the floor.
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  Speaker 2: He used to sleep at the in the Tesla plans
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  Speaker 2: back in the day.
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  Speaker 1: You're listening to the Bloomberg and Halogen's podcast. Catch us
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  Speaker 2: Stop a beer, John, I mean, oh, Audrey got a
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  Speaker 2: perfect day for it, Audrick Heine can.
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  Speaker 3: You put it from yes?
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  Speaker 2: Especially with the heat today, Heinegen beer sales fall as
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  Speaker 2: price dispute took longer to fit. What's going on with
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  Speaker 2: our friends at Heinegill.
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  Speaker 6: Let's go to the.
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  Speaker 2: Go to a guy there. Duncan Fox, senior consumer staples
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  Speaker 2: analysts for Bloomberg Intelligence, is based over there in our
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  Speaker 2: London office, Queen Victoria Street, right in the center of
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  Speaker 2: the city of London. Dont you talk to us about Heinegen?
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  Speaker 2: What's going on there?
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  Speaker 6: Well, essentially European retailers decided not delayed pushing the prices
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  Speaker 6: up after I suppose last year wasn't particularly big on
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  Speaker 6: pricing and the that's three percent of the local Heinegen brown,
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  Speaker 6: but the previous two years when inflation was raging, you know,
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  Speaker 6: they did get fourteen and ten percent respectively in in
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  Speaker 6: twenty two and twenty three. Costs of goods are not
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  Speaker 6: really going up, so I think the retailer is just
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  Speaker 6: pushed back and it took them longer to push out
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  Speaker 6: to get a small price through in Europe and that's
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  Speaker 6: just hit them. So it's about fifty percent of the
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  Speaker 6: overall business.
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  Speaker 5: Is what is a Heineken class in the pub?
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  Speaker 6: Well, if you're in London, a heck of a lot.
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  Speaker 6: It's probably st eight pounds plus I can be about ten,
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  Speaker 6: which they are either the Dorset you'd be lucky to get,
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  Speaker 6: you know, sort of around five to six pound. But nevertheless,
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  Speaker 6: you know, when you're pushing the price up the premium
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  Speaker 6: Heinegen brand, which is probably twenty percent more expensive than
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  Speaker 6: any other sort of mainstream beer that they've got on
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  Speaker 6: their portfolio, you can see why the volumes struggled in
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  Speaker 6: the short.
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  Speaker 7: Term given cost of living crisis.
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  Speaker 6: So it's something they will resolve and hope they have
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  Speaker 6: revolved in fact on the pricing, so one would hope
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  Speaker 6: it would get better as we go to half with
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  Speaker 6: That's a one that we've found in Europe.
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  Speaker 2: So we had I guess the announcement of a trade
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  Speaker 2: deal between the US and the EU. I don't think
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  Speaker 2: what's it mean for the spirit's business, the beer business,
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  Speaker 2: the wine business.
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  Speaker 6: Asking for a friend, I hope you've already stocked up
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  Speaker 6: that fifteen percent is probably is probably a good outcome
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  Speaker 6: given some of the rumors that were going around from
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  Speaker 6: April on was that he could have gone up to
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  Speaker 6: two hundred percent. But obviously the cost of beer coming
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  Speaker 6: in for someone like Harneck, and they basically ship in
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  Speaker 6: from either Holland or Mexico. Some of the Mexican beer
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  Speaker 6: may well be tariff free on the US NCA agreement,
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  Speaker 6: but then you've got the out sort of the cans,
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  Speaker 6: So lord knows how much that will push the price up.
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  Speaker 6: But yeah, they'll just have to push prices up on
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  Speaker 6: beer and spirits. Spirits at fifteen percent, probably say it's
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  Speaker 6: not huge, but it'll mean pushing price is up three
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  Speaker 6: four percent something of that order on top of what
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  Speaker 6: they would normally try and get. So it's it's not
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  Speaker 6: going to be easy to do, but it's not as
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  Speaker 6: disastrous as thirty percent or something like that, which Renby
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  Speaker 6: said last week would take profit slaand for thirty five
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  Speaker 6: million euros, so a little bit better than expected or feared,
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  Speaker 6: but it's still not going to be great and.
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  Speaker 7: US wine there really isn't anybody that.
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  Speaker 6: Exports wine that's quoted, so it's a bit difficult to
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  Speaker 6: say all the impact is. But it will certainly make
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  Speaker 6: it more expensive compared to your good, US great varieties
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  Speaker 6: at car on the market. So I would have thought
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  Speaker 6: you'll see people switch to US lines.
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  Speaker 5: I find that's kind of disturbing. This part of the
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  Speaker 5: story where you quote the CEO of Heineken beer markets
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  Speaker 5: have declined that it pays Heineken has rarely seen any
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  Speaker 5: time before. Is this the end of humanity as we
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  Speaker 5: know it?
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  Speaker 6: Well, if it carries only I think there was. There's
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  Speaker 6: stories that, you know, the gen Z's have given up
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  Speaker 6: and drink. I think that's that's wildly wrong. But there's
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  Speaker 6: certainly people are abstaining during the week a little bit.
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  Speaker 6: But the real problem is that people are drinking more
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  Speaker 6: at home rather than going to the pub, and that's
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  Speaker 6: sort of change. That's the big change from COVID. So
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  Speaker 6: you've got to make sure you get your pricing at
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  Speaker 6: retailers right. Goes back to your original question because people
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  Speaker 6: that know it's sort of more like eighty percent drinking
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  Speaker 6: at home in the US, it's anywhere between sort of
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  Speaker 6: fifty and twenty percent, depends on where you're on the world,
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  Speaker 6: but a lot more people drinking home and going to
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  Speaker 6: POGs and clubs. So the mix is poor really or
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  Speaker 6: has been, and it needs the good summer would help
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  Speaker 6: and in these people to have a bit more money
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  Speaker 6: in their pocket as well, so maybe feeling a little
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  Speaker 6: bit more confident that they can go out and spend
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  Speaker 6: with their friends rather than buying it cheap from and
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  Speaker 6: entertaining at home.
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  Speaker 2: Doncan are you one of this is a national phenomenon
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  Speaker 2: because it's a phenomenon on the Jersey Shore, which is
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  Speaker 2: people are drinking like these iced tea vodka things, the
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  Speaker 2: white Claws, all this stuff that's not beer.
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  Speaker 6: Are you seeing that?
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  Speaker 2: Is that a trend around the world.
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  Speaker 3: He hasn't been at my beach, by the way.
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  Speaker 7: Unfortunately, it seems to be that is a trend.
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  Speaker 6: You get a lot of ready to drinking being pushed
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  Speaker 6: and they big for sort of twelve eighteen months, and
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  Speaker 6: it does tend to go against the beer volume more
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  Speaker 6: than anything else. Spirit companies are doing it with no
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  Speaker 6: spirits now, and they're also pushing you in bigen and
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  Speaker 6: tyic already to drink gin and time and stuff like that.
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  Speaker 6: So there's just a lot more choice to the consumer
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  Speaker 6: than there was, you know, when I was a kid,
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  Speaker 6: So it just takes a little bit of a shine off.
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  Speaker 6: You can try new things, and I'd say people are
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  Speaker 6: spending more. I'm spending a similar amount on artcult just
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  Speaker 6: buying less of it in terms of volume. So it's
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  Speaker 6: all about getting the value right. Premium brands are doing
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  Speaker 6: well in Premium brand did very well in these results,
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  Speaker 6: but it's only twenty four percent of their overall volume,
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  Speaker 6: so you know, four point five percent on twenty four
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  Speaker 6: percent doesn't sort of help.
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  Speaker 5: Any chance Heinniken is going to build a brewery of
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  Speaker 5: factory in the United States. I mean, I don't know
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  Speaker 5: if it would be the same.
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  Speaker 7: I would say it's unlikely.
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  Speaker 6: It's that's a big commitment, and you've got to make
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  Speaker 6: sure that the volume growth will be there because otherwise
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  Speaker 6: you're you're spending quite a lot of cap over the
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  Speaker 6: next two years. If you had a site ready today,
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  Speaker 6: and then you've got to make sure that you have
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  Speaker 6: enough falling through. But for that, for that to make
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  Speaker 6: money for you and be better than shipping it in.
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  Speaker 6: Even with the tariffs. At this moment, it doesn't seem
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  Speaker 6: that they're likely to build a brewery in the US.
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  Speaker 6: But if tarists are higher, suspective would be a challenge.
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  Speaker 6: But I mean, they're building a big one in Mexico
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  Speaker 6: and I suspect a ship.
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  Speaker 3: Yeah.
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  Speaker 2: Man, all right, Donki, thanks so much for joining us.
• 12:08
  Speaker 2: Duncan Fox senior Consumer Staples analys fro Bloomberg Intelligencies over
• 12:12
  Speaker 2: there in London, and they shut down the Bud brewery
• 12:15
  Speaker 2: in Newark right by Newark Airport.
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  Speaker 3: Did they?
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  Speaker 2: I think so? I think that I don't know as
• 12:21
  Speaker 2: a bush brewery right across the I didn't never hear
• 12:23
  Speaker 2: about that. Yeah, I think that's a thing here, Yeah,
• 12:26
  Speaker 2: Field Chip exactly.
• 12:28
  Speaker 3: To do some investigative reporting. Exactly.
• 12:32
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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• 12:45
  Speaker 2: All Right, we got John Tucker, Paul Swing you live here,
• 12:47
  Speaker 2: in our Bloomberg Interactive Brokers studio, and we are also
• 12:51
  Speaker 2: doing that internet thing. We're on YouTube's ahead over to
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  Speaker 2: YouTube dot com and search a Bloomberg Live radio and
• 12:57
  Speaker 2: that's where you'll find us Terras Europe. I guess we
• 13:01
  Speaker 2: got a deal in John, so.
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  Speaker 5: We have a deal, but I'm still begging for some
• 13:06
  Speaker 5: more details, especially when it comes to pharmaceuticals and autos.
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  Speaker 2: True, and with all these deals I'm expecting, don't you
• 13:13
  Speaker 2: have to negotiate these for like a year or two
• 13:15
  Speaker 2: and there's like ten thousand pages agreement or it's this
• 13:18
  Speaker 2: just like a one page term sheet we kind of
• 13:20
  Speaker 2: put across the table and somebody.
• 13:21
  Speaker 3: Initial is it. We're good to go.
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  Speaker 7: I don't know.
• 13:24
  Speaker 5: Somebody's got answers.
• 13:26
  Speaker 3: Let's go to Brendan Marry. You might Brenda Marry.
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  Speaker 2: He's a Bloomberg God. Big take story today entitled Trump
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  Speaker 2: tariffs are already stunting world growth, but the markets are
• 13:36
  Speaker 2: shrugging here, So let's get to it. Hey, Brendan again,
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  Speaker 2: another big trade deal announcement today with the European Union.
• 13:44
  Speaker 2: They're coming fast and furious.
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  Speaker 7: You know. I guess if you're looking at the.
• 13:47
  Speaker 2: Economic data, I'm not sure we've seen any slowdown in
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  Speaker 2: the economy. I'm not sure i've seen any pickup inflation,
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  Speaker 2: which were two of the concerns for a lot of
• 13:55
  Speaker 2: people out there.
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  Speaker 3: What is your reporting show?
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  Speaker 8: Yeah, our reporting shows that when you look at what
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  Speaker 8: companies are saying their capital investment plans are and what
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  Speaker 8: they're saying about how they're going to try to absorb
• 14:08
  Speaker 8: these costs, whether those are in margins or passing those
• 14:12
  Speaker 8: costs on the consumers, that these tariffs are starting to
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  Speaker 8: take a bite. They're not happening all of a sudden.
• 14:19
  Speaker 8: It's this kind of slow grind on the economy that
• 14:22
  Speaker 8: we're seeing, and you can see it in some of
• 14:25
  Speaker 8: the in some of the of the surveys that the
• 14:29
  Speaker 8: government or private surveys that are that are are reported.
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  Speaker 8: So the lesson here is that you don't just flip
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  Speaker 8: a switch and get inflation overnight. It's a slow, slow
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  Speaker 8: moving process. And the deals that are coming in from
• 14:46
  Speaker 8: President Trump, the markets are celebrating because they're not the
• 14:50
  Speaker 8: worst case scenario, but it still makes goods. The EU deal,
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  Speaker 8: let's say, makes European exports to the US fifteen percent
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  Speaker 8: more expensive, So that's just the bottom line. And that's
• 15:04
  Speaker 8: that's an economic head win in any economist book.
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  Speaker 5: Hey, Brendan, when we hear Secretary Lutnik speak, for instance,
• 15:13
  Speaker 5: he'll be saying something like, China is going to pay
• 15:16
  Speaker 5: so and so is going to pay settle this for
• 15:20
  Speaker 5: us for people don't follow us too closely. They're not paying.
• 15:24
  Speaker 5: It's the consumer. It's a tax, is it not.
• 15:28
  Speaker 3: The American importers pay tariffs.
• 15:31
  Speaker 8: They pay these taxes to the Customs to Bureau. And
• 15:36
  Speaker 8: so now those importers could go to the exporter in
• 15:41
  Speaker 8: China or the European Union or wherever and say, hey,
• 15:44
  Speaker 8: this is costing me an extra fifteen percent, can you
• 15:48
  Speaker 8: lower your price? That happens in some cases most of
• 15:52
  Speaker 8: the time the profits of that company take a hit.
• 15:56
  Speaker 8: They or they pass it on and or they pass
• 15:59
  Speaker 8: it on to consumers. But the bottom line is they've
• 16:01
  Speaker 8: got less to invest in, they've got less money to
• 16:04
  Speaker 8: hire people. So this is this is what our reporting
• 16:08
  Speaker 8: shows today in the Bloomberg big take is that we
• 16:11
  Speaker 8: are starting to see that slow grind on the economy
• 16:15
  Speaker 8: that tariffs have, that that economists would warn you about,
• 16:19
  Speaker 8: that are happening now that the Trump administration would argue, look,
• 16:23
  Speaker 8: this is going to incentivize companies to produce more in
• 16:26
  Speaker 8: the United States, and some of that may actually happen,
• 16:29
  Speaker 8: so we shouldn't discount that completely.
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  Speaker 3: But the tariffs hurt well.
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  Speaker 8: More a lot more companies and consumers than they do help.
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  Speaker 8: Look at the steel Look at steel tariffs. We've seen
• 16:43
  Speaker 8: an increase in domestic steel prices. There are a lot
• 16:46
  Speaker 8: more companies and employees of those companies that use steel
• 16:52
  Speaker 8: then make steel, and they are paying that they are
• 16:55
  Speaker 8: paying the price for it.
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  Speaker 2: So where will we see it, you know, Craig, I
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  Speaker 2: mean are we seeing Will we see it in GDP numbers?
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  Speaker 2: Will we see it in headline inflation numbers? And if
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  Speaker 2: we do see it when, when do you think we
• 17:09
  Speaker 2: will see it in the hard numbers?
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  Speaker 8: Is?
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  Speaker 2: I know economists like to talk.
• 17:13
  Speaker 8: About so the investment figures. We're going to watch this
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  Speaker 8: week's GDP number very carefully. This is the second quarter. We're,
• 17:21
  Speaker 8: like the headline numbers, likely to see a bounce back.
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  Speaker 8: Remember it was a negative first quarter. The second quarter
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  Speaker 8: should be something in the two and a half percent range.
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  Speaker 8: But if you look at the the the part of
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  Speaker 8: that those numbers that will tell you, will give you
• 17:40
  Speaker 8: a clean look at how companies are investing. That number
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  Speaker 8: is supposed to be flat, So there was a lot
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  Speaker 8: of distortion with tariffs over the over the second quarter,
• 17:50
  Speaker 8: so some of that will still be some noise, but
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  Speaker 8: noise or not, that's those are companies that are not
• 17:57
  Speaker 8: investing for the future in things like that will help
• 18:00
  Speaker 8: their productivity and their growth.
• 18:03
  Speaker 5: How long does this take to wind its way through
• 18:06
  Speaker 5: before consumers. I mean, you've already mentioned steel, for instance,
• 18:11
  Speaker 5: but of the other parts of the inflation to show
• 18:15
  Speaker 5: up in the economy.
• 18:17
  Speaker 8: It could take a couple of quarters. You know that
• 18:20
  Speaker 8: the Trump administration is rolling these deals out fairly gradually,
• 18:27
  Speaker 8: or you know they're coming quite quick quickly towards the
• 18:30
  Speaker 8: August first deadline, but they're going from ten percent to
• 18:34
  Speaker 8: fifteen percent in a lot of cases, and so you know,
• 18:37
  Speaker 8: we're just going to see those costs for the American
• 18:40
  Speaker 8: importer go up even higher. And what's really crushing to
• 18:44
  Speaker 8: a lot of these businesses is the small the small
• 18:48
  Speaker 8: one get The small businesses get hurt the most. The
• 18:51
  Speaker 8: large retailers of the world they have, you know, more
• 18:55
  Speaker 8: the wherewithal to withstand some of this, but it's really
• 18:59
  Speaker 8: the Small Business and National Retail Federation has chronicles a
• 19:03
  Speaker 8: lot of small businesses that are getting hit.
• 19:05
  Speaker 2: All right, Brendon, thanks so much.
• 19:06
  Speaker 3: We appreciate it.
• 19:06
  Speaker 2: Brandon Mary, Global Trade Editor, Bloomberg News.
• 19:09
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