The Six Five Pod | EP 256: Wall Street Meltdowns, Intel Vision, Tech Rumors & the AI Energy Challenge

Is this the end, or just the beginning of a new chapter? This week on The Six Five Pod, hosts Patrick Moorhead and Daniel Newman discuss the turbulent waters of a market reeling from trade war escalations and looming recession fears. But amidst the chaos, a long-term narrative emerges: the unstoppable force of AI. The handpicked topics for this week are:

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1. Microsoft Copilot Consumer Announcements: A breakdown of Microsoft's latest consumer-focused Copilot features and their potential impact on user adoption and competition with other AI assistants.

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2. Qualcomm's IoT Expansion: An overview of Qualcomm's acquisitions and strategies to build out its presence in the industrial IoT and edge computing sectors, focusing on the growing importance of edge data for AI.

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3. Intel Vision Event Recap: A discussion of Intel's Vision event, with a focus on new CEO Lip-Bu Tan's messaging and the company's strategy for competing in the AI-driven future.

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4. TSMC and Intel Partnership Rumors: A debate on the potential partnership between TSMC and Intel and an exploration of pros and cons for Intel and national security implications.

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5. Bulls and Bears: Market Volatility: An analysis of the current market downturn in the face of tariffs, factors driving investor uncertainty, and the long-term outlook for major tech companies amid this volatility.

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6. AI's Power Consumption Problem and Solutions: An off-the-record discussion about the increasing energy demands of AI and the potential solutions being explored to address this challenge.

For a deeper dive into each topic, please click on the links above. Be sure to subscribe to The Six Five Pod so you never miss an episode.

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Daniel Newman: Is this Armageddon or is this just a moment in time for the big Donald to do some negotiating? And, you know, come Monday, everything's going to be good. And don't pretend like, you know, nobody knows. Just a bunch of us pundits making stuff up on tv. Just kidding. It's informed, it’s informed.

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Daniel Newman: Episode 256, Patrick Moorhead. Welcome back to everybody. We are The Six Five. This is our new format. We're loving it. We're having a lot of fun. We hope you are too, Patrick. It's Friday morning, but if you're listening to this, it might be Monday or Tuesday already. How are you doing, buddy? It's been a heck of a week.

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Patrick Moorhead: Yeah, doing great. I mean, I was only on the road for two days. I consider that a, a major, a major win. And, you know, family is not here. And, you know, we're doing this recording a little bit earlier. I did not have time to get into my office. But I'm not actually in a hotel. Although every meeting I do, they ask me, what hotel are you in?

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Daniel Newman: Very nice hotel.

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Patrick Moorhead: It's Hotel Moorhead.

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Daniel Newman: Yeah, the decor is just next level, but you probably live in some fancy high rise with a doorman valet, because that's just the kind of guy you are. But I mean, now that liberation day has come, you may be moving into a shanty. I don't know. It's a happy liberation week. Or as our friend John Ford called it, happy liquidation week. I should have sold some stuff. More stuff than I sold, but I sold some stuff. I don't know. I'm somewhere between, you know, enthused, exasperated, completely uncertain. I think everybody coming into this week was like, oh, we're gonna get some certainty. And that was what everybody's waiting for. I don't think we got a whole lot of certainty. And we're going to talk about that later in the show when we get into bulls and bears towards the end. I mean, is there any other topic? But of course, this is the Six, Five. And we have our three big parts of our show. Sometimes four, when we have a guest, we do The Decode where we break down a number of the week's biggest news items. I'll run through what that's going to be here in just a minute. Then we do The Flip. The Flip is probably the part that you all love the most because it's the part where I win an argument against Patrick. And then the third part is Bulls and Bears. That's where we sort of hit market related topics. And occasionally we'll bring a guest onto the show. Like last week when we had former Intel CEO Pat Gelsinger and we'll have more of those on the show from time to time to come in and entertain us all. But this week it's just you and me, buddy. It's just Pat and Dan. Unfortunately, for those of you that wanted a special guest, you ain't getting one. But we feel like we're pretty special ourselves and we don't tend to have any hesitancy to let everybody know that. All right, so on the show this week, Pat, we're going to be covering off on some news that Microsoft made in its Copilot business. We're gonna talk a little bit about Qualcomm's run into IoT, making some investments, some acquisitions, and building out a new product. And then we're going to do a bit of a rundown on the time we spent this week at Intel at their Vision event, Lip-Bu Tan's big opening salvo this week. And we heard from him, but not just him, we heard from the company at large. And then we're going to jump into The Flip. We'll hold the topic back for now and I can tell you what it is. We're going to make you listen or fast forward whatever it is you do. And then of course, at the end, we're talking Bulls and Bears and frankly, we're probably going to talk mostly about is this Armageddon or is this just a moment in time for the big Donald to do some negotiating? And, you know, come Monday, everything's going to be good. And don't pretend like, you know, nobody knows. Just a bunch of us pundits making stuff up on TV. Just kidding. It's informed. It's informed. All right, Pat, so let's get into the show. We're in The Decode. All right, buddy. So I said we got these topics, we're going to break them down here in the decode. Pat, first and foremost, just as this episode is releasing, Microsoft made some consumer Copilot announcements. Run us through them.

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Patrick Moorhead: Yeah. So a little bit of backdrop. Microsoft was first out of the gate with any type of generative AI capability. Kind of alongside OpenAI, you know, they actually put a Copilot button,, which is their magic AI feature on all Windows PCs that could support it. Over time, I think most people believe that the lure or the first mover status with Microsoft in consumer areas really wore down. Right. And people are talking about perplexity. They're talking about Chat GPT or in some circles, it's kind of the AI service of the month. Right. Whether it's DeepSeek or something like Qwen. My biggest takeaway here, first of all, they just came out with a flurry of consumer features. You have memory and personalization and quite frankly, AI without memory and personalization is just a really good search engine. It has to remember what you want. And as you get into actions, which is another feature which is interesting. Microsoft didn't use the word agents, but it's actually just getting stuff done. And memory is important related to agents and actions for some very simple reasons. Right when you tell it that you want to order 16 ounces of filet, it has to remember, for instance in my case that it's grass fed and grass finished and if not, it's just going to dump some random thing into, you know, into my Instacart. But again, they didn't use the word agents. I don't know if it's agentic or it's API. In the end it really doesn't matter as long as it's consistent and it works and it's across a wide range of services. The other thing they brought out on Windows and iOS and Android was Vision. Now I played a little bit with Vision. I was in a special, special little circle. Essentially what it does is anything you're looking at on your Windows screen, you can ask questions about it. It's not agentic yet, but I think that's the next natural thing to do. And then an iOS and Android for your smartphone, it's essentially using your camera and you can ask it what it's seeing, what it's looking for. We saw OpenAI demo this, gosh, months ago. They never actually brought it out. So this could be the first instantiation of that capability. Microsoft also brought out this thing called Pages, which is essentially a scratch sheet for everything you want to do. I can't figure out how this is different from Word that has Copilot in it. You can essentially do the same thing within a Word document. But maybe they're trying to simplify this, that hey, this isn't Word, this is a thing called Pages where you put your generative AI scratch pad. Also out there were podcasts. For instance, let's say I'm on the treadmill or I'm working out. You can take it to a website and essentially it will take anything that it's looking at and turn this into a podcast. I'm hoping that you're able to personalize this for stuff that I like. You probably can. Obviously I haven't used any of these features yet. I have seen videos, I have seen the press release. So I'm just giving you an idea what it might be. Shopping, Personal Shopper. I don't know why this isn't an action, but you put in what you're looking for and it spits out where you can buy it based on exactly what you're looking for. And I think finally a deep research integrating that into. Yeah, integrating that, that into Copilot. I thought deep research was already integrated into Copilot a few weeks ago, but maybe that was on the, on the Enterprise side. So Daniel, I don't know if this is going to mean a bump for Microsoft or not in the consumer space, but it certainly is getting on a feature basis closer to parity with the perplexities and with the ChatGPTs.

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Daniel Newman: So basically Microsoft's perspective is keep you on the platform, continue to add Copilot features. You know, I'm hearing some things in there that could be interesting. Are people going to run to the store to get a Copilot PC because it can do this? I think that's going to be a big question over the next year. I still think of this searching for the killer app is a big thing. And the biggest thing, Pat, I'd love to get your take on this too is, you know, we've talked a lot and actually our next topic we're going to talk more about the Edge and we talked a lot about on device and we talked about like, you know, oh, we need to do more AI on device. I'm still a little bit at the point where I'm trying to discern between whether people give a darn about things being achievable on the device and on the edge. Now I understand why from a power standpoint.

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Patrick Moorhead: And Daniel, just to be clear, by the way, everything we're saying is correct. These features do not require a Copilot Plus.

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Daniel Newman: Okay.

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Patrick Moorhead: But to your point, turning up the contrast ratio on what a Copilot plus PC can do is going to be even more challenging now that you're beefing up the cloud version of Copilot.

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Daniel Newman: Yeah, that's kind of what I'm thinking is there needs to be a bit more of a clear demarcation of value for being able to kind of activate the MPU and really do things on the device. And as we see Sam Altman's GPUs melting and Elon Musk needing more GPU capacity, it seems opportunistic. Right. Like you want these things done fast. You want these things done on your data. You wrote an article or a, you know, and you want to turn it into a podcast. You have a product marketing sheet, you want to turn it into a quick video. You know, it seems super opportunistic to say, hey, look, don't worry about using those resources in the cloud. We can pump this out quickly, we can keep your data private and secure. But again, you know, sort of what's in the cloud, what's on the device. I still think that's going to be the discussion point here for the next, you know, several years. And you know, the more the infrastructure build out happens to be done well with low latency back end and backhaul and throughput, and people don't see any meaningful delay in terms of getting things done with Gen AI on their, on their device, the more I sort of wonder how much it allows that value to take place. So Microsoft's got to kind of thread that needle. They got to really focus on kind of threading that needle, on adding features, getting people out to buy these new Copilot Plus PCs. But in the end, you know, if I want to be more positive about it, these devices are more performant, they're more efficient anyway, and they're going to have that natural upgrade cycle. I just don't know about that super pull forward, gotta have it cycle. But these sound like some good features, Pat. I mean, look at the end of the week, if you and I could just sit in bed or work out in the gym and not have to be here because it could just take our tweets and do an awesome pod for you and I. I'd be totally down with that.

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Patrick Moorhead: Yeah, totally, totally. I don't know, man, that I wouldn't get to see you. You're always in your corporate meetings now.

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Daniel Newman: Corporate meetings are important, especially during Armageddon. We're getting more of those meetings now that the world is coming to an end. Let's see the next topic. Man, Qualcomm, they've had a kind of a busy month. It's been a little bit quieter because there's been so much focus on sort of the Generative AI war, so much focus on data center and GPUs and Qualcomm's just quietly expanding its footprint. It's making multiple acquisitions. It's jumping into this sort of Iot. Remember you and I talked about Dragon Wing in our old podcast format. That old boring one where we did six topics and rambled on for 45 minutes per topic. But we talked about what they were doing with this sort of Dragon Wing really building out their industrial IOT and edge business. And one of the things, if you're kind of looking at the journey from AI to this physical AI, one of the things that's going to be super important is going to be the vast data landscape of the real world. Meaning that, you know, the edge data that comes off of cities, that comes off of farms, that comes off of automobiles and vehicles, that comes out of stadiums and retail stores. And this is an area that Qualcomm's been really, really focused on with their business. This is what Dragon Wing has been really all about. It's been about, you know, building this fixed wireless connectivity at the edge. You know, they basically can take advantage of mobile and wireless 5G and then basically can use the technology to deliver the data at the edge that could be really utilized to drive the next, you know, next era of AI. So we, somewhere in between where we are today and having this kind of the proliferation of humanoids that are going to be just chilling with us, right, I'm going to have one over here getting my coffee, I'm going to have one clean in the kitchen. We need to get all the data in, in sort of a system that can be managed and understood. I think that's a lot of what Qualcomm is doing. And over the last few weeks, I don't know if everybody out there has seen this, but they acquired a company called EdgeImpulse. They acquired a company called MovianAI. You know, in these two, you know, one was a US based company, EdgeImpulse, very focused on sort of AI at the edge, being able to run models, reducing data center infrastructure. Again, kind of what we just talked about with Copilot Plus what can be done on the device. And of course this is a big part of Qualcomm's connected intelligent Edge strategy. They also acquired this company, Movian. I'm not super familiar with them. Like it's not a company I was tracking. They're Vietnamese, they're a research company. And by the way, we're seeing more of this. AMD has made these kinds of acquisitions. Nvidia has made these acquisitions where they're almost like talent acquisitions that are very R and D focused that can enable the companies to get to where they're trying to go. For Qualcomm, it's about AI on smartphones, AI on PCs and AI on the vehicle. We do know that they've sort of been dabbling in data centers. So I don't want to rule them out. I think it's unfair to rule them out. But we know that the kind of the narrative is about AI having to migrate its way out of the data center to the edge. It's too power hungry, there's too much latency demand and we're not going to maximize the device cycle if we don't get more AI on those devices. So that's been a lot of the focus for the company. I think in the end it's a smart play, Pat. I think the smart play here is that if we're going to move to physical AI, we need to have the edge and the sensors and the data that can be collected, that can be utilized. Those robots will not be able to walk if it doesn't know everything about the environment that it's in. So having the opportunity to collect that data, use that data for training into the future, I think it's a continuum. It's not just that stuff. It's the everyday IoT sensors, temperature, weather, all the things that we end up using Edge IoT for. But I think it's a good opportunity for Qualcomm. This business has grown. I mean it's a little confusing because of how they put everything in numbers and what goes into IoT numbers. But it's been a very fast growing business for the company. It's been one of their big diversification plans and I think it's gone pretty well.

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Patrick Moorhead: Yeah, I'm going to give a kind of a more of a macro view here. The term IoT was coined, gosh, back in, in 1999, which was essentially the ability to connect something, a physical object to the network. The industrial IoT started to get popular with General Electric who created an entire platform which by the way crashed and absolutely burned. We went through this big cycle of this AI on the edge that really didn't economically pan out. And I asked myself, well, hey, why is this different, right this time I didn't think we had enough AI capability on the edge before. We didn't have generative AI on the edge, but now we can. And if you look at this next wave, I think you talked about this a little bit. The ability to really light up the edge for real this time. I do think it is going to be one of these big growth vectors here. Qualcomm recognized this back in 2016 when it tried to acquire NXP. And if you remember in 2018, China, basically they didn't shut it down, they just ghosted them. Right. They didn't say yes and they didn't say no, which essentially meant no. So then Qualcomm went on a multi year industrial IoT tear. You listed a bunch of the acquisitions they had organic, organic investments. For instance, with their new IQ line, they added Dragon Wing February, February of this year as their industrial AI umbrella. But what they're doing is they're very quietly building a platform. And, you know, we have to, the way the industry is set up right now is essentially a bag of industrial IoT parts. Hey, here's my parts. You guys, go figure this out. Even some of the hyperscalers have exited some of these IoT platforms. And they're like, this is just too hard for us to recognize. So what Qualcomm has done, primarily into the leadership of Nicole de Gaulle, who, by the way, is the guy who took auto from what, 5 billion to, is it 50 billion now? A really, a really big number. And he seems to be the guy that they tapped to go kind of drive the new stuff. So, you know, where does this all end up? I'm not too sure yet. But this is yet another opportunity for Qualcomm to demonstrate that it has growth beyond smartphones. And, you know, this is a multi-year thing. I'm not expecting, you know, these gigantic, you know, fireworks. I think we're, you know, my expectation is we will see a string of increased acquisitions again to build out the platform, which is about the operating systems, it's about the APIs, it's about the applications, as opposed to just the bag of parts and hardware. And, you know, Daniel, I can't help but to think, if you build a platform and you have the software ecosystem, what would keep you from moving off of ARM and getting into RISC V? I know that, you know, I just, you know, I just went from a thousand feet to like 12ft on this. But, if you have a closed ecosystem, Not a closed ecosystem. If you have the ecosystem, can't you just do what kind of Nvidia does, but for a different sector?

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Daniel Newman: Oh, absolutely. I think there's a lot of rumblings that that's already happening, and I think it probably is. And given the exacerbation of their legal woes and back and forth, you know, we know that Qualcomm pushed the envelope there a little bit this last week with a bunch of different filings around the world against arm. I mean, this is going to be a. 

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Patrick Moorhead: Oh,I missed that.

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Daniel Newman: There's gonna be missiles fired. So Qualcomm's, you know, basically countersuing or, or initiating a number of different legal rebuttals against what ARM did to it. So this will be going back and forth and I think you can be sure that Qualcomm's certainly not going to put all its chips in that basket, figuratively and literally.

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Patrick Moorhead: I had some interesting comment, interesting discussions with some of the architects, CPU, architects at Qualcomm and they're literally like  I know how to make the best core regardless of the instruction set. I could do X86, I could do ARM, I can do RISC V, it just doesn't matter. And I just, that was just kind of a mind blower. But I wouldn't put it past Qualcomm to be building this edge industrial IoT capability and swivel to RISC V.

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Daniel Newman: These are the perfect, this is sort of the perfect market to do it. You know, it's a little different than a UI and experience like a phone or a, or PC where there's a little bit more sensitivity to any sort of jitters in terms of usability. So we've got a big sort of closer here to our decode section and that's going to be the big Intel Vision event Pat. I mean, there was a lot of enthusiasm, a lot of excitement. You know, there were some, some people, I think, at the edge of their seats waiting to hear the first open keynote, which we got from Lip-Bu Tan. What, what did you think? What was your take on the event?

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Patrick Moorhead: Gosh, we could camp on this thing for like an hour. But I probably, we probably shouldn't. You've got to do some broadcast interview or something. God, you've been on like 12 times this week anyways.

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Daniel Newman: Well, by the time maybe someone watches this.

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Patrick Moorhead: Yeah, so that's good. Where do I start? This whole vision was all geared around getting to know the new CEO Lip-Bu Tan better. Right. He talked about his basic philosophies, he talked about, you know, even famous authors like Thoreau that he gets behind. It was a bit light on what we normally expect, which is, you know, here's the road map on everything, a high confidence. And quite frankly, until Lip-Bu Tan gets in there and sets the strategy, their entire road map to me is up for grabs and like. Well, what do you mean? Are they going to like, short term, their roadmap, the short term products that are coming out, you know, this year, you know, won't be impacted. But, you know, if he's going to doge, some of the development in there, stuff will change, product definitions will change, dates could change, features could change. In fact, publicly, they didn't even talk about their data center upcoming data center gpu. I was pleased to see that they flexed their muscles on Gaudi 3. That seems like a very high performance solution in certain inference workloads. One of the big news pieces that did come out that I was very pleased with was the RISC production on 18A. And that essentially is a functionality, a part that meets the functional spec on power and performance and yield. That is in the reality of hey, we can improve this over the next six months to get where we need to go. And I again that I get very light on news. I left with more questions than I have answers. A lot of messages I'd heard before from Intel, right? Like we need to bring back really good engineers or we need to have the best engineers. I'd already heard from MJ that hey, we're really going to focus on product best products as number one and we can debate. Lip-Bu's best product moniker always wins. I don't think it does, but upon reflecting on that I kind of think it was more of reiterating what MJ had said before. He talked about the balance sheet. Okay. He talked about efficiency. And you know, you could just imagine if you're a large company and it used to take you a thousand people to get something done with 10 steps and I'm now going to give you 500 people to do the same thing to get more efficient. That just doesn't happen overnight. Right. It's called process re engineering for all of you big company people out there who've experienced it, and I've experienced it personally, I've been part of it. I've led these initiatives before at big companies. Stuff gets dropped, it just does. So I'm on a TBD at this point. Until I understand the, you know, until I understand the go forward strategy, it's a, it's a TBD. I have talked to the senior executives at five of Intel's largest companies and they don't even know what the plan is. They've given input into the company, but they have yet to really understand what any of the changes are. And that might be fair, right? Lip-Bu has been in two weeks. He was on the board for two years and he auditioned for the role with the board, with a plan of exactly what he was going to do. So I think he has the answers. I just don't think he is communicating that yet.

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Daniel Newman: Yeah, so you said a lot of it, right? I actually don't think there's as much to talk about. I think we could riff on it for a while, but not because there was a lot of substance. I felt like it was a kind of an empty meeting in many, many ways. I felt like we got a little bit of a sort of big opening, sort of, here's my words, here's my vision. I'm all about, you know, I'm all about AI. I'm all about engineering, I'm all about building that sort of muscle. Again, we're going to get leaner, we're going to get faster, we're going to listen to our customers. These are all the things that a good CEO gets up and says. So to his credit, I think he said all the right things. Did it really satisfy anybody? And I think, you know, that part of it is a little bit less clear to me. You know, it was good to see some humility. I like that he got a little emotional when he talked about why he took the job. You know, that there was this.

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Patrick Moorhead: Yeah, that was good.

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Daniel Newman: I don't know if it was real or not either, but yeah, like, I like to see him sort of. He almost teared up on stage and said, I just had to do this because I love this company. You know, it is.

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Patrick Moorhead: And what he said, Daniel, that really struck me is you want to go out a winner. And he had a string of wins and what he was doing and now he's taking the risk of his legacy to go off and do this and I apologize for interrupting.

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Daniel Newman: No, no, that's good. I mean, I thought that was, I thought that was a great way to sort of connect with the partners, the audience, the people that are still very invested. I mean, look, those companies you're talking to are still very invested in their partnership with Intel. But there are a lot of question marks. I mean, the company kind of put a bold plan forward of how it's going to get into the AI Data center. The company's putting some bold plans forward to do more software on devices for the future of their AI PCs. That's a. Anything but a certainty. You know, when you've got competition in software all the way from cloud to every oem, trying to do their own thing to these, these folks, they, they want to attack the data center with the custom CPUs for, you know, for the big hyperscalers. Like that market had sort of gotten away from it. So are they going to suddenly be able to come back and compete? Are they going to be able to take the market back from ARM can and of course there's there, you know, there's arguments to be made that it can be done, but it's certainly not going to be easy. You know, they've got to find their place in this world. That's what I asked Lip-Bu about when I had the chance. And you know, you asked a great question too. But I asked him, how are you going to really find your white space here? Because between us, it's like you're not just going to compete with Nvidia. You're not going to just jump in with a, with a, you know, a big GPU that's going to suddenly, you know, move everyone. What are you going to do about software? What are you going to do about figuring out who the buyer is for this product? Product Market fit 101 but what I will say is this is, I think you're going to see some big changes in leadership. I think you're going to see some big turnover in hardware and software engineering. You're already starting to see some departures, starting to take shape. I've heard about a few of them. I think there'll be some more, probably some pretty high profile ones because in the end, you know, he's going to need to realign. He's going to be very, very focused on trying to win in these couple of areas. I do like more focus, I like more efficiency. I think we're going to see some hakonomics coming into this thing. They, you know, cut from somewhat similar cloth in terms of style. And I think he's, you know, the only question, the biggest question is, you know, that kind of, I want that very, very candid feedback that he says he wants. Is he going to be able to do anything with it? Because I don't think there's a lot of feedback he doesn't know. I think it's whether or not he can actually act on it. So that's where I think it stands. 

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Daniel Newman: All right, everybody, we're going to move over to The Flip. Today we're going to be talking about TSMC and Intel. Potentially. If it wasn't the information, I would say this is probably happening. But the information says, and it's starting to get shared more broadly that TSMC is going to take a stake, they're going to share IP and Intel and TSMC are going to go together. Good thing or bad thing? Let's see who's going to take this topic. Let's start with who gets the good thing. I like that. I like that. I like being positive

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Patrick Moorhead: Yeah. And remember, this is good for Intel. Okay, that's what you've got to argue, buddy.

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Daniel Newman: All right, I'm going to argue. It's good for Intel. Remember everybody, we may or may not back this. We don't get a choice. We just got to talk about whatever side the coin comes up with. So look, Intel has been a dumpster fire as it's come to its foundry business. And sure, it's got, you know, a near production of 18A. And sure, 18A's got better back end power. And sure, 18A is going to be the next generation of Intel strategic foundry business. And it's going to be what ropes in all the big players. AWS and Microsoft are coming in. Broadcom probably coming in. Nvidia is checking it out right now. Qualcomm is going to be building their future on Intel. We hear it, we see the rumors. But look, so far all Intel has gotten is a few spare parts. They've gotten odds and ends, some network chips and specialty chips from companies like AWS and Microsoft have. They have not won a wafer deal yet. Nobody at scale is taking them super seriously. They're all still, no matter how much TSMC raises their prices, they're still willing to send them over to TSMC. And yeah, tariffs could be a good thing for Intel if they could get their new foundries built and could actually come to mass production and maybe support the amount of demand that's going to be required. But is Nvidia going to move over for 5 or 10% of their output? I mean, Intel's got a lot of work to do here. So a partnership with TSMC, of course, could totally break down all those walls. Every company we talk to, Pat, CEOs, presidents, heads of design for the Fabless companies, all pretty much have told us at different points that they love TSMC, they trust them, there's no conflicts of interest. They're not worried about any IP leaking between the foundry business and the design business, they are all in on TSMC. Doesn't matter what the cost is. Plus it's not an easy thing to do to just lift and shift from one company over to another. These processes aren't identical. There's work that has to be done there. So to go from a TSMC two or three over to 18A, it's not just flipping a switch. It's a major decision that these companies need to make. However, the confidence of TSMC coming in and saying, hey, we're sharing ip, we're building this stuff together, we're going to make this more streamlined and seamless as we move from node to node and of course for the entire world, it's a good thing because we know that TSMC bringing more of its IP here to the United States, not just with tariffs, not just with all the new trade policies, it's good for the world. So TSMC coming over and helping intel get off the snide, giving confidence to the big fabulous companies with high volumes of especially AI chips and PCs and smartphones is going to be the way. I simply don't see a situation in which intel can do this on their own. They've tried, they've failed, they're in huge debt. It's been an absolute boat anchor to the company stock and its performance. Lip-Bu is here. I actually think he was here to make this deal happen. That's what I think is going to happen, Pat. Intel, TSMC, a small investment because we can't lose control. But that small investment, that commitment of IP changes the game. It makes Intel Foundry a legitimate player. It speeds up the whole process and it's good for the world.

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Patrick Moorhead: Yeah. So Daniel, I think you're absolutely misguided. TSMC is coming in and you know, doing a 20% JV with Intel, it's bad for intel and it's bad for national security. So have you noticed that the amount of rumors and the veracity of the rumors is a direct correlation to the good news that's coming out of 18A and the potential for, for 18AP? I don't think that's a coincidence. I think people who are in the TSMC camp absolutely want to shoot the plane down just as it is about ready to take off and the Intel Foundry business is ready to take off. I don't think anybody had any visions of grandeur of doing volume wafer agreements. They do have wafer agreements with, with Amazon, they have wafer agreements with Microsoft, they have wafer agreements with the DoD related to, related to 18A. And everybody knew that that 18A was just going to be the pipe cleaner for something high volume. And Intel has to prove 18A not only with its own products, which they just started risk production on 18A products PTL. And once that goes which, which it will, you'll then see that move to the foundry customers. And 18A had a, had a year advantage and TSMC started removing features, from 2 nanometer to pull in that deficit to. It looks like about six months. You know, I wonder about IP theft. I mean, 18, 18A is so good that like, does this increase the chance of 18A IP falling into somebody else's hands? And then what if China, what if TSMC has Intel IP, China invades Taiwan. Does that mean the Chinese now have 18A IP? So this could be an absolute national security threat here. The answer is not to have a foreign company come in and buy part of Intel and the foundry. The answer is to do what the Chinese have done and a lot of other countries, which is make much bigger investments. And by the way, Taiwan bankrolled TSMC for years, okay? And they're not going through all this hand wringing of, oh, CHIPS act being a giveaway at this point. The CHIPS Act. And this is where, you know, I get sideways with the current administration. Every single chip investment that states have made has been tax positive. Meaning in Austin, in, in New York, there have been case studies written about, okay, there was some money given away and some tax abatements provided, but it ended up bringing so many people and so many companies into the area that it was tax positive, the tax base actually went up. So this notion, I think the answer here is to get our butts in gear and start writing bigger checks for the CHIPS act, not as a giveaway, but as an in, as an investment. If, if the US Government wants to, to do a, you know, an investment like they did in the auto industry when they were going, going bankrupt, I think that that would be a good thing. And Intel could, could pay off those debts, after 2030.

Daniel Newman: All right, I win. That's it. I win. I decided everybody out there, go ahead and send me a nickel. I'm going to need it after today. Speaking of needing a nickel, the market is capitulating once again, down over a thousand points as we speak right now. We are tumbling Pat. Let's go to bulls and bears. I don't think there's really anything to talk about here besides this tariff war, trade war, and maybe giving the world some perspective.

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Patrick Moorhead: Did you see that? Go that up into the right.

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Daniel Newman: Yeah, we need to put a new one in. That's down in red. I mean, geez Louise, I mean, we've wiped out 10, 20%. So let me, let me maybe start off by saying a little bit of what's happening here. You know, by the way, if you're watching this, you're probably paying attention. You know, we just announced not only a 10 flat tariff to the entire world, but these massive reciprocal tariffs based on some voodoo calculus that doesn't really make sense. We put huge tariffs on a bunch of countries that we really do no real trading with, but had a deficit to us because they need our stuff and we don't need anything from them. What did I say about Fiji? I mean, they can only send a couple cases of water and we're good to go. There is no equality there. They need stuff we make, we don't need stuff they make. But then again, I also think a lot of that stuff is just noise when you get outside. We got 10 to 20 really big trading partners across Asia, brick nations, parts of the EU and of course Iran, North America that we really have to deal with. Trump's coming out firing and the market hates it. But I do want to say that I'm really on the fence. It's impossible to sit and watch your stocks capitulate and your, your portfolio and personal wealth just dwindle and then hear, you know, comments about this is the greatest time to get rich. It just doesn't sit well with me. But at the same time, like Pat, we've been absolutely the butt of the world's trade policy. We have been, you know, charging a very, very small amount for people to access our markets and we've been charged a lot more. And this is what it was all about. It's not just tariffs, by the way, it's tariffs and, and non tariff trade barriers and vats and the way that countries incent, you know, we don't sell our cars in Japan, our cars are twice the price to sell in Europe and of course we've offshored all of our jobs and then we end up shipping stuff back and we end up paying a really heavy toll for that as well. So a lot of this is about trying to change the game here, Pat. But here's a take that's increasingly becoming, at least on my radar, is I think all this is really about a big old flex that Trump said that he's going to get the Fed to change its direction, lower interest rates. And the only way he could do that is because Powell has been so conservative, so data dependent, and the markets have been strong, unemployment's been strong, and that they will not lower the rates. We have $10 trillion in refinancing that's going to come due in the next year. We have a $2 trillion deficit and a $37 trillion debt that is going to be completely unsustainable. So you see all this stuff with Doge, you see what they're trying to do with, you know, we're bringing down, crashing oil, we're crashing equities and assets, we're crashing everything to try to force the Fed's hand. Is that everything? Is that the whole reason we're doing all this? No, I think there is a genuine belief that we can bring more revenue in from outside the country. I do think there is real demand from outside the U.S. to do business in the U.S. I do think that there is some negotiating that's going to happen here. The more I hear him say they won't negotiate, the more I think they might Pat. But my God, this is freaking painful to watch everything fall apart. What do you think?

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Patrick Moorhead: Yeah. So this is the markets section. What I want to talk about is, I want everybody to put themselves in the shoes of the senior executive team at one of these companies and how I think they're going to play the game here because that will ultimately impact how this thing rolls out. Okay. I do believe in a couple months. So first of all, I think 10% is going to be forever. Forever is in terms of a couple years. And then this is all one big negotiation. And I think first and foremost, people shouldn't, people shouldn't panic. And I'm not saying that to investors. Again, we're thinking about getting inside of the brain of how companies are going to react. You can't make multi billion dollar decisions based on something that could be gone in two months, though. But if you do put the 10% tariffs out there, you need to create a plan of how you would do more in the U.S. regardless of the cost. And then you obviously do a cost comparison to the tariff and supply chain risks. And I think what we might ultimately see is some sort of a major tax break from bringing more jobs here into the United States. Possibly. The one thing that really people aren't talking about enough intelligently, it's gotten all political, is a scenario plan that if China invades Taiwan, essentially all of Asia will be completely unstable. Japan, Korea, Taiwan, maybe this spreads to India. Probably not, but, but it could. Companies will be like they did around the pandemic. They will be instrumenting some dramatic supply chain changes. I do think with Mexico and Canada, we'll probably get back to 10% of those, and potentially other countries in Latin America. So maybe you know, if you're, you know, if you're trading out there, what are the companies out there that will actually get a lift from this supply chain reset? Interestingly enough, supply chain management companies. I mean I don't see how companies like SAP couldn't get a lift from this and the ability to again put so much effort into supply. They're small SCM companies out there. Some are publicly traded, most are not. I believe INFOR is another one. I can't imagine them not making money who are going to be building these new facilities in Latin America and in Canada once we get this figured out. I think this is a big national security play for the long term. I think the administration thinks that China is invading Taiwan as China builds up militarily like they have, they already have more naval vessels than we do. They view this risk and they are trying to get ahead of a depression causing conflict and are willing to take a short term recession so we don't have a complete catastrophic meltdown. So you know, if I'm going to play this, find the companies that are engaged in supply chain. Find the companies that are doing the shipping. Find the companies and I, I can't imagine a scenario where they're not making more money. I wish I could help with the rest, but no. Look at, look at the run up though Daniel of tech. I mean is it, is it reality? Is it fiction, right? Look at QQQ right? And what it's done. Look at the run it has had. Is it real? Is it not?

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Daniel Newman: We know these pullbacks happen every, every so often. Obviously we've had like five Armageddon type events in the last decade. I mean I've got, since I've you know, started the company with a, you know, a number of major moments between Covid we had a huge drawdown in 22 when QT started. Now we've got this drawdown related to trade wars but like we've been in this kind of permanent state of we're going to have a collapse at some point. By the way the trade, you know, go back Pelosi, Schumer, Obama have all come out and been very loud. This is not as partisan as it's being made out to be that we had an issue. I mean the problem is, it's not the whole world.

Daniel Newman: It's largely China. It was largely China where we outsourced all of our industry but it did spread throughout a lot of Southeast Asia as well. And we have not dealt with it and everyone just sort of kicked the can down the road. And I think this administration is saying, no more kicking the can, we're going to take this thing on. I don't know how it's going to play out. There's an argument that this could play out really well if we can get our interest refinanced, if we can get, you know, sort of some of these countries to negotiate back down. I mean, China just snapped 34% in retaliation back at us, which is what set the market circuit breakers off this morning. Yeah, but I mean, here's the bottom line. We don't export anything to China. I mean, really, I'm kind of joking, but we send all our stuff to be made there. So if Apple makes a phone there and leaves it there, are we going to get charged a tariff? I don't think so. I don't think that's how it works. But having said that, like, you know, it's just going to be a very interesting time. I'll give a really quick, you know, as we sort of wrap up here, you know, I talked to six big cap CEOs yesterday and a couple of small cap ones. You know, and first of all, the biggest thing they're saying is there's still too much uncertainty to act, so they're trying to really get on top of what they can control. But in the, the messaging didn't bring more certainty, it actually brought less because everyone still thinks this is a negotiation. And all the CEOs agreed with that. They do think that it's really about a handful of trading partners that we need to try to get to some level of parity with. And basically something that kind of, I believe, and I've shared with them is I'm really waiting for where the concessions are. So if Apple brings half a trillion dollars to the U.S. are we really going to make them pay these massive tariffs while they're building? I think if they're accountable and they're going to end up making the spend. But I also think this opens the door for like the sovereign wealth fund conversation. Like maybe instead of changing the tariff infrastructure, we take dollars and we reinvest them into the companies that bring dollars back here. You know, in Europe, the VAT dollars that they collect end up going back to their domestic partners. That's what a lot of people don't talk about. They collect vats from us and then they basically rebate their domestic partners in order to incent them. So a lot going on there, Pat. But overall, like I said, I agree with you. I think the supply chain is great. I think AI, CapEx and the enterprise goes. Companies that have big, strong balance sheets will double down on the next wave because they know we're going to come out of this and they know we're going to need to get stronger. So the big enterprises, the MAG seven companies that are focused on enterprise will continue to spend because AI will be deflationary. It will make us more efficient, it will help the markets grow, it will actually create more productivity. That does not change. But in a lower interest rate environment, that could accelerate even faster in the next boom.

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Patrick Moorhead: One, one thing I, I wanted to add on there, Trump got fooled by China the first round and I don't think he's going to get fooled the second time. China made a bunch of commitments when he decreased trade and they didn't pull through on any of it. Right. They agreed to buy a certain amount of U.S. goods and they didn't. And I don't think Trump is, is, you know, I think he's going to be less likely to believe in the promises that, that, that people are making. And you know, Apple as a great example, where they went in and made this big, you know, big commitment that really didn't increase what they were going to spend anyways. And, and I think the Trump administration saw through that and which is why they, they, you know, slapped a huge tariff on China that affects all those iPhones. So it's going to be different this time, Daniel.

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Daniel Newman: I think it, I think they're going to play hardball and we're seeing it and they're, they're, they're playing roulette with the market, Pat. But having said that, like I said, the 2 trillion of deficit, the 37 trillion in debt that did need to, it was going to come home to roost. It was going to come home to roost. I don't know when, I don't know how. I don't know if we could have kicked the can down, just kept printing money, kept inflation higher and that could have possibly worked. I think a lot of people think it could work. And a lot of people are saying cut the __, and let's just keep going, turn the, turn the music back on. They all believe we can just do this forever, Pat. I don't know. Hey, great show, buddy. It was a lot of fun today. Thank you for getting your ass up a little bit early to do this with me. You know, everybody out there, stay cool, stay calm, stay collected, get your powder ready. There might be an opportunity here to buy in. I think Pat even said he might be buying in. But don't listen to him because we're not giving financial advice. We are just singing songs and telling stories. But for this episode of The Six Five Podcast 256. Hit subscribe. Be part of our community. We appreciate you tuning in. Oh, by the way, let everybody know that I won the debate again. The Flip master, that's my name. Mr. Moorhead. I'm sorry you had to acquiesce. See you all later.

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