Intel Wins Big Incentives and Huawei Risks Sanctions | Bloomberg Technology

U.S. Government Support for Semiconductor Industry

• Intel received $8.5 billion in grants and up to $11 billion in loans from the U.S. government to expand its semiconductor factories in the United States.
• The Biden administration aims to onshore or re-onshore the semiconductor industry in the U.S. to reduce security and stability risks associated with the concentration of advanced manufacturing in East Asia.
• Other companies, such as Samsung, are also expected to receive incentives to build in the United States under the CHIPS Act.

Recent Developments in the Semiconductor Industry

• Intel is making a comeback in the semiconductor industry, but it will take time to bring production back to the United States.
• The $20 billion in government funding will help Intel build new factories in Arizona and Ohio, but it is not enough to cover the entire cost of these projects.
• NVIDIA's recent announcements about its AI-focused products and services have boosted its stock price.
• Samsung's stock has also risen recently, making it the best performer in the chip sector over the past six months.
• Micron is expected to report strong earnings after the bell, as demand for memory chips increases due to the construction of new data centers.

Tech Stocks and the Market

• The "Magnificent Seven" tech stocks have been driving the market to new highs, but there is some concern that this rally may not be sustainable.
• Investors are looking for safety and stability in their investments, and they are still interested in the earnings expectations of the tech companies.
• There is also interest in other parts of the AI ecosystem, such as ASML and other Asian companies.
• The investment cycle driven by AI is supporting the large mega-cap tech space in the United States, and this tailwind is expected to continue through the end of the year.

Challenges in Bringing Semiconductor Production Back to the U.S.

• Intel's recent struggles, despite the $20 billion in government funding, highlight the challenges of bringing semiconductor production back to the United States.
• The CHIPS Act support is expected to attract more investor interest in the second half of 2024, particularly in sectors such as healthcare, data centers, and technology.

Cryptocurrency and Tech IPOs

• Cryptocurrencies have experienced significant volatility, but investors are taking a long-term perspective and seeking substantial returns in the coming years.
• Shares of Astera Labs, a semiconductor-based conductivity solutions company, are set to open significantly above its IPO price of $36, indicating strong investor demand for tech IPOs.
• Reddit's IPO is generating positive indications and is expected to price above its range of $31 to $34 per share, riding on the excitement surrounding AI-related companies.
• Reddit is allocating shares to some of its top users, allowing them to access the IPO price before the first day of trading.

Microsoft's AI Strategy and Industry Developments

• Microsoft is consolidating its consumer artificial intelligence business under one leader, potentially impacting regulations and raising questions about the company's AI strategy.
• Samsung's shares rose after their HBM3 memory chips were qualified by a major customer.
• Intel received a $20 billion incentive package under the CHIPS Act, with its high bandwidth memory chips qualifying for the incentives.
• The Biden administration is toughening auto emission mandates to boost EV sales, with an EPA cap on car and truck tailpipe emissions through 2032, pushing automakers to accelerate their transition to battery electric vehicles.
• Microsoft hired most of the staff from the AI startup Inflection to head up its consumer artificial intelligence business, competing with Google in the market.
• Inflection plans to focus more on enterprise business, while Microsoft gains access to talent and expands into the consumer AI market.
• OpenAI, a competitor to Inflection, congratulated the staff on the new role, despite Microsoft's commitment to OpenAI.

Venture Capital and AI

• IVP launched a $1.6 billion early-stage venture fund focused on AI, aiming to capitalize on the technological shift and support founders in the super growth phase.
• Strategic investors like NVIDIA are also actively involved in the AI space, competing with venture firms for promising startups.
• Brand matters in venture capital, and IVP's track record helps them win competitive deals, as seen in their investment in Perplexity.
• The trend of big companies not only investing in startups but also forming strategic partnerships is evident in the Inflection-Microsoft deal.

Disney Proxy Battle

• George Lucas, who sold his production house to Disney for stock, is supporting Disney CEO Bob Iger in his proxy battle with activist investors.
• Bob Iger is considered one of the best CEOs in America and Hollywood.
• Iger's recent deals with ESPN, college sports, and Taylor Swift demonstrate his effectiveness.
• The activist investor battle against Iger stems from accusations that Disney is not performing well.
• Despite these accusations, Ross believes Disney's streaming services, studios, and parks are doing well.
• Ross suggests that Disney needs to make some good movies and that Bob Iger and his team are the best people to do it.

ASTERA Labs IPO

• ASTERA Labs, a company that makes hardware for AI infrastructure, is set to start trading on the NASDAQ under the ticker symbol ALAB.
• ASTERA Labs' stock is indicated to open at $52.56 per share, a 46% premium on where the IPO priced.
• ASTERA Labs has turned in a profitable quarter and plans to continue driving profitability in the years to come.
• ASTERA Labs is using the proceeds from its IPO to accelerate product development and expand its team.