00:00Well, Santosh Rao is head of research and partner as Manhattan Venture Partners.
00:05Santosh, we have you on the show again.
00:07So we see, you have heard our correspondent just now,
00:10the rise of Chinese tech companies has triggered this sell-off of shares in South Korea and also in America.
00:15So what does it say about China's chip makers exactly?
00:19Yeah, thanks for having me.
00:21Well, this is welcome news, but it's a good addition to the mix.
00:26But they're still a very small player.
00:28It's probably going to be like 7% global market share of the business.
00:32So they're still a small player.
00:33This is a business that requires a good lead time.
00:36It's going to take time to catch up.
00:39It feeds into China's drive to be China's nationalism and their drive to be independent of the Western influence and
00:47Western dependence.
00:49So it feeds into that bucket.
00:51But overall, in the competitive landscape, I think in the global competitive landscape, I think it's just a very small
00:56thing.
00:57It's a good welcome addition to the mix, but it's going to take a long time before they make a
01:01big impact in terms of taking away market share from others.
01:05Well, the headline is kind of the knee-jerk reaction just seemed like that in the face of tech stocks.
01:12I mean, especially the AI stocks facing the pressure of spending too much.
01:17They're not spending too much.
01:18They need to spend because it's a huge market.
01:21But the market, the investors are getting nervous that the return on investment may not be there.
01:26So I think that's where the jitters are.
01:27But ultimately, I think they will come back.
01:29We'll see what the earnings reports come out and say.
01:32Google came out and said, OK, yes, they were eating into their cash flow, which was a negative, even though
01:38their numbers were good.
01:39So things like that.
01:40So people want to know, are they really spending or overspending?
01:43And we'll know this week.
01:45Yeah, as I said, we see the knee-jerk reactions in the global markets.
01:48And just how interconnected are the U.S., South Korean and the Chinese markets, despite the growing geopolitical tensions?
01:57Yeah, they are very much interconnected.
01:59So I think that's why you see all this volatility.
02:05I mean, the rhetoric is always heated across the board.
02:08But I think in the end, they depend on each other.
02:11They feed each other.
02:12So I wouldn't make too much of it.
02:15In West China and U.S., there are some tariff restrictions on the high end of the chip technology and
02:21other stuff.
02:22But overall, there is a good collaboration and flow of knowledge, flow of goods, rather, between these three or four
02:32countries.
02:32So I think the supply chain in that sense is not disrupted.
02:36They work very well closely, except for the very high end stuff.
02:41Well, Santosh, just one last question.
02:43We see that China has invested hundreds of billions of dollars in building a semiconductor industry.
02:48And, of course, one of the priorities right now is self-sufficiency regarding semiconductors.
02:54Do you think Beijing is beginning to see the results of that long-term strategy and investment?
03:01Yeah, I think they're definitely on the right track.
03:04They're moving towards that.
03:06But the pace of change is so much.
03:08The technology change is so fast.
03:10But they're definitely doing a good job on the low to mid-end of the market.
03:16So I think that's good.
03:17And the open source aspect of this whole AI models and all that, that's also very beneficial to China.
03:23And they're doing well.
03:24So I think there are tiers of technology.
03:27So on the low to mid-tier, I think China will compete vigorously on the high end US.
03:33And the US is definitely the leader there.
03:35It'll take time for China to catch up.
03:37But they're definitely nipping at the heels.
03:39They're moving fast.
03:40And they're very good at what they do.
03:42So it's going to take some time for them to really meet there.
03:45But they're definitely on the right track.
03:47Thank you, Santosh, for your insight.
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