00:00You know, I'm looking again. I'm going to go back to what's rallying. We're showing it on the screen.
00:04It's technology stocks that are pushing higher right now. And one of the reasons is, OK, helium comes from the
00:11Gulf.
00:12Critical in stabilization, cooling in the etching and deposition process and chip manufacturing.
00:19Energy prices have been impacted by this war in Iran.
00:22Why is it to your mind that the tech industry is seeing some relief from the idea of a ceasefire?
00:29Well, because we're not going to all out war is the short answer.
00:34And so I think everyone is taking this bit of good news that there's a two week ceasefire and running
00:40with it.
00:40But the reality is that the Pandora's box in the Persian Gulf has been opened.
00:46And by that, I mean, you know, even if we have an extended ceasefire and cessation of possibilities that lasts
00:53longer term here,
00:55we have now seen Iran demonstrate capability and political will to strike critical infrastructure across this region to include very
01:05high value targets like data centers,
01:08multi-billion data centers, including explicit threats against OpenAI's Stargate project in UAE.
01:15Not to mention the number of AWS sites that have been struck already in Bahrain and UAE.
01:22So that's just a completely different investor climate overall for this region.
01:27But coming to supply chains, though, as you said, when we talk about helium supply, bromine, just energy supply overall.
01:33Iran also has an interest in allowing transit through the strait.
01:37But that's where we come back to political conditions that will be attached to the ceasefire.
01:43Caroline and I discussed in detail the vulnerability of data center assets in the Gulf.
01:49As it relates to China, for example, there is a long term threat to Taiwan and the concentration of semiconductor
01:58manufacturing.
02:00With that taken all into account, how conscious are companies like Apple on now changing where they plan to build
02:09future products
02:10and have a footprint in the future for their manufacturing operations?
02:14Well, there are multiple drivers in play here, not just geopolitical risk, obviously, but also the evolution of U.S.
02:21trade strategy, which is still in play.
02:24As we know, there's a pending Section 232 still on semiconductors that could contain component tariffs, right,
02:31that implicate the devices that contain those semiconductors, not to mention, looking beyond tariffs, content requirements, right?
02:39So far, for example, we have regional value content requirements for automotive parts.
02:46Imagine that applied to electronics more broadly.
02:48So I think, you know, companies like Apple are looking at these issues in parallel to say, yes, there is
02:56a lot concentrated still in Taiwan,
03:00device manufacturers also in China, that geopolitical risk is only amplified.
03:07But at the same time, there are going to be a lot of disruptors coming from the U.S.
03:12to try to drive more, not just onshoring, but more regionalized trade and bring more of that manufacturing base to
03:20the Western hemisphere as well.
03:22I want to just go a little bit further with where Ed took us in terms of China,
03:26because there's a lot of really well-read stories on the Bloomberg today thinking about how maybe the U.S.
03:32has reduced its overall, well, power among allies and adversaries at the moment because of what's happened in Iran,
03:40in particular when it comes to China. And the Iran campaign has been, quote,
03:43a serious setback for Trump, is what one particular Chinese foreign ministry advisor had told us.
03:49What does that mean for U.S.-China relations? What does that mean about AI access, chip access, the relationship that
03:55we have?
03:56Yeah, absolutely.
03:57So if you contrast where we are today in the wake of this Iran miscalculation on part of the U
04:07.S.
04:07and then compare it to where we were late last year when the Busan truce was struck,
04:13back then the U.S. was caught flat-footed by Chinese export controls on critical raw materials.
04:18And so the U.S. was in a very reactive mode when it went to Busan.
04:22Those truce terms were set.
04:23And I think the whole intent going into the next summit in Beijing was to come with a more assertive
04:30position with China to say,
04:32look, we're doing things to re-industrialize the U.S., protect critical infrastructure.
04:37We're not explicitly calling out China in these measures.
04:40So you know what? You don't get a vote on these areas.
04:43And the U.S. is going to be forging ahead.
04:46Now, because of the Iran dynamic, that certainly tamps down the confidence, right,
04:52that the ability of the U.S. to assert itself in the same way.
04:56And Beijing sees that.
04:58Beijing certainly is in a more confident position going into the summit.
05:03It has very explicit demands, for example, not just to maintain tariff levels at the Busan truce level,
05:11but to reduce them, not just to restrain U.S. technology controls, but to actually roll them back.
05:17And this is where the U.S. has been doing more country agnostic measures as well,
05:22trying to say, look, China, we're not out to get you.
05:24But Beijing's message is, I see what you're doing here, and it's got to stop.
05:29And so their interest is to make everything a red line,
05:32which means that we have a number of friction points heading into the summit,
05:36not to mention where the status of the Iran issue is,
05:40is also going to consume a lot of oxygen going into that meeting.
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