Trump Threatens Licenses of TV Stations That Criticize Him

Summary

Bloomberg Businessweek: "Trump Threatens Licenses of TV Stations That Criticize Him"

Date: September 18, 2025
Hosts: Carol Massar & Tim Stenovec
Featured Guests:

• Katie Fallow (Knight First Amendment Institute, Columbia University)
• Brendan Carr (FCC Chair, earlier interview excerpt)
• Ed Ludlow (Bloomberg Technology Correspondent)
• Chris Miller (Author, Professor at Tufts University)
• Aaron Kennan (CEO, Clear Harbor Asset Management)

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Episode Overview

This episode centers on the escalating battle over free speech and government intervention in the United States, which erupted after President Trump threatened the broadcast licenses of TV networks critical of him—an unprecedented move with profound First Amendment implications. The debate is anchored in the fallout from ABC's suspension of late-night host Jimmy Kimmel following controversial remarks about Republican activist Charlie Kirk. The show also covers consequential updates on the semiconductor industry, the US-China tech rivalry, and market reactions post-Fed decision.

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Main Discussion Threads & Key Insights

1. Trump, Jimmy Kimmel, and Threats to Press Freedom

[01:58–16:16]

The Kimmel Controversy and Trump’s Reaction

• Background: Jimmy Kimmel was taken off-air indefinitely over his remarks about Charlie Kirk. President Trump criticized both Kimmel and the networks, suggesting the latter should lose broadcast licenses if they are too critical of him.
• Trump Quote: "He was fired for lack of talent." (Donald Trump, 02:16)
• President’s Warning: "He said that US Broadcast networks should face scrutiny over their licenses if they're too critical of him." (Host, 02:34)

Government Pressure and Legal Implications

• Brendan Carr (FCC Chair) on Kimmel:

  "Jimmy Kimmel is no Johnny Carson... It was appearing to directly mislead the American public about a significant fact of probably one of the most significant political events we’ve had in a long time." (Brendan Carr, 03:18)

• Katie Fallow (Knight First Amendment Institute):
  • Describes these developments as an “absolutely” real threat to free speech.
  • Emphasizes government’s use of “regulatory oversight, denial of mergers and things like that to essentially coerce private companies into censoring speech that the administration doesn’t like.” (Katie Fallow, 04:16)
  • Notes a troubling trend of companies “folding and caving before actually litigating or vindicating their rights.” (05:01)

Rights of Media Companies vs. Government Coercion

• Complexity in Free Speech:
  • The First Amendment "only applies to actions by the government," but the real danger comes when the government uses “threats of regulatory investigations” to force private companies' hands. (Fallow, 07:47, 09:30)
• Notable Moment: FCC chair directly called out Disney/ABC to take action, a move laden with regulatory overtones.
• Fallow’s Warning: “The government is using threats to coerce private speech, and that is unconstitutional.” (09:30)

Possible Legal Recourse

• Can Kimmel Sue?
  • Recent Supreme Court precedent (involving the NRA) suggests “Jimmy Kimmel could bring a lawsuit against the government saying Brendan Carr and the Trump administration sought to exert pressure... and then the result was that ABC canceled or suspended the show.” (Fallow, 11:26)
  • Suit would be “against the government, not ABC.” (12:37)

Chilling Effect on the Press

• Pattern of Lawsuits and Settlements:
  • The administration has targeted other media through defamation lawsuits and regulatory actions (e.g., $15 billion suit against NYT, ABC settlement, and CBS “60 Minutes” probe).
  • Fallow: “The message that it sends to journalists and to media companies is if you criticize the President or his administration, you do so at great risk. And that should be frightening to all of us.” (13:49)
  • “If we accept that...then if there’s a Democratic president...that person could use the same kinds of threats and coercion against Fox News or right-wing media entities and we would all be the poorer...” (14:12)

Broader Implications for American Free Speech

• "Frontal Assault" on the First Amendment:
  • “I’ve never seen such a frontal assault on basic First Amendment principles...things that we all benefit from.” (Fallow, 15:12)
• Public Stake:
  • “It’s not just about media...it’s about everybody in terms of what they say.” (14:48)
• Legal Trajectory:
  • “Does this...go all the way up to the Supreme Court at some point?”

    "I think it will at some point." (Fallow, 16:13)

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2. Semiconductor Industry, US-China Rivalry, and Tech Policy

[18:20–33:32]

Nvidia–Intel Deal and US Tech Strategy

• Nvidia investing $5B in Intel—a “historic collaboration” per Jensen Huang (Nvidia CEO), not brokered by the Trump administration, but reflective of heightened cooperation in US chipmaking.
• Host’s Cynicism: "It looks really good for Nvidia to make this investment in a company partially owned by the U.S. taxpayer, partially owned by the U.S. government..." (20:53)
• Ed Ludlow on the Deal:
  • “If I jump in my car right now ... I'll see Nvidia’s headquarters. If I look the other way, I'll see AMD’s headquarters. In the context of technology history, we've not seen something like this since...Microsoft bailed out Apple...” (21:36)

National Security, Manufacturing, and China

• Chris Miller (Author, ‘Chip War’):
  • “Nvidia is a leader in AI chips. Intel has been trying to catch up when it comes to AI...On chip design side, there’s differing areas of expertise that both of these companies can bring together.” (24:42)
  • US government and foreign entities (e.g., SoftBank) investing in Intel to ensure America remains a dominant semiconductor player.
  • US government sees Intel's manufacturing arm as critical for “national security,” providing a domestic alternative to Taiwan-based TSMC. (27:34)
  • “Most of the world's advanced processor chips are produced by one company in one country, Taiwan.” (27:34)
  • Emphasizes the importance of Intel securing large-scale manufacturing customers to compete with TSMC. (28:45)

China, Taiwan, and Global Chip Supply

• Geopolitical Tensions:
  • “All of the biggest, most valuable companies, United States require silicon that today can in some cases only be sourced from Taiwan.” (30:32)
  • US efforts to diversify are “making progress but there’s a long way to go. ... The entire Taiwanese ecosystem is just so central.” (31:21)
• TSMC’s US Expansion:
  • Arizona plant helps but “the ecosystem in Arizona is still less developed than it is in Taiwan”; thus, risk remains. (31:52)

Roots of US-China Tensions in Chips

• Was Trump right to escalate with China?
  • “Actually China’s desire to become self-sufficient” was the catalyst for this ‘chip war,’ not US policies per se. (33:09, Miller)

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3. Markets: Fed, Valuation, and American Consumers

[35:37–43:26]

US and Global Markets Post-Fed Decision

• Aaron Kennan (Clear Harbor):
  • US markets at record highs, but European and emerging markets have outperformed recently.
  • “Valuations are not cheap ... but elevated valuations do not always ... augur bear markets.” (36:29)
  • Expects the Fed to continue cutting rates, given “a prerogative to ensure that we have a healthy employment market.” (37:37)
  • The AI growth story is still in “early innings” and US tariff policy will mean “more reshoring, more investment in the United States going forward.” (39:01)

Inequality and the US Consumer

• Deteriorating Credit Scores:
  • America is experiencing the “fastest rate that credit scores have fallen since 2009.” Lower-income Americans are struggling most.
• K-Shaped Economy:
  • “We have a widening maldistribution of wealth ... but the rising wealth boat has lifted almost all tides.” (42:41)
  • “Consumption at the unit level is happening at the upper quartile... Lower half have credit card debt, auto loans... but that's all liability, that's not asset.” (41:02)
  • Increasing bifurcation is a “problem ... that ultimately is going to be playing out like in our economy, in our markets.” (42:41)
  • Still, “base level of quality of life has improved dramatically for the lower quartile of Americans relative to 50, 75, 100 years ago.” (42:41)

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Notable Quotes & Timestamps

• Trump on Kimmel:

  “He was fired for lack of talent.” (Donald Trump, 02:16)

• FCC Chair on Kimmel Incident:

  “Jimmy Kimmel is no Johnny Carson... It was appearing to directly mislead the American public...” (Brendan Carr, 03:18)

• Katie Fallow on Government Overreach:

  “The government is using threats to coerce private speech, and that is unconstitutional.” (09:30)
  “I’ve never seen such a frontal assault on basic First Amendment principles...” (15:12)

• Chris Miller on TSMC and Tech Ecosystem:

  “All of the biggest, most valuable companies, United States require silicon that today can in some cases only be sourced from Taiwan.” (30:32)

• Aaron Kennan on Inequality:

  “We have a widening maldistribution of wealth... the base level of quality of life has improved dramatically... but the maldistribution ... has widened.” (42:41)

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Segment Timestamps

• 01:58–02:34: Introduction of the Kimmel controversy and Trump's response
• 03:18–13:49: Katie Fallow and FCC Chair discuss government threats to media, First Amendment challenges
• 14:48–16:16: Broader implications for US free speech and likely Supreme Court trajectory
• 18:20–23:43: Semiconductor sector, Nvidia–Intel deal, and role of US policy
• 24:16–33:32: Chris Miller analysis on chip wars, US-China rivalry, national security, and Taiwan/TSMC
• 35:37–43:26: Aaron Kennan on market highs, Fed cuts, inequality, and the real state of the American consumer

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Tone & Language

The conversation was urgent and analytical, maintaining both the professional rigor of Bloomberg and the lived, immediate concerns of the free press and tech sectors. There was frankness on the threats posed to American civil liberties, the gravity of US-China tech competition, and clear-eyed analysis on economic divides.

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Summary Conclusion

This episode highlighted a historic inflection point: direct government efforts to suppress media criticism, raising alarms from free speech advocates and offering a real-time test of the First Amendment. Beyond media, it connected the dots to broader US strategic interests—from protecting technological leadership to confronting internal economic fault lines. With legal challenges likely ahead, and the global tech rivalry intensifying, the episode made clear that the most consequential economic and political stories are, ultimately, about the power to speak, innovate, and dissent.

Transcript

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[Host/Anchor]

Now on to one of the most read stories on the Bloomberg Terminal Jimmy Kimmel is off air indefinitely amid a backlash to remarks the late night host made about the killing of Republican activist Charlie Kirk. President Trump weighing in on this. He had this to say about the late night host earlier from the uk.

[Donald Trump]

Well, Jimmy Kimmel was fired because he had bad ratings more than anything else and he said a horrible thing about a great gentleman known as Charlie Kirk. And Jimmy Kimmel is not a talented person. He had very bad ratings and they should have fired him a long time ago. So you know, you can call that free speech or not. He was fired for lack of talent.

[Host/Anchor]

So that was the President earlier today. Later, Carol on his way back. He's still on his way back from the uk. He made comments on Air Force One that got a lot of attention. He said that US Broadcast networks should face scrutiny over their licenses if they're too critical of him. The president also backed ABC's decision to remove Jimmy Kimmel amid pressure from network affiliates who had said they were pulling the show over Kimmel's comments about conservative activist Charlie Cook. The president's comments represent a break with the nation's long standing traditions of freedom of speech and the press that are enshrined in the US Constitution. FCC chair Brendan Carr was on CNBC this morning. He weighed in on ABC's decision.

[Aaron Kennan]

Jimmy Kimmel is no Johnny Carson. And the issue that arose here where lots and lots of people were upset was not a joke. It was not, you know, making fun or pillaring me or the administration or the president. It was appearing to directly mislead the American public about a significant fact of probably one of the most significant political events we've had in a long time. It's really the most significant political assassination we've seen in a long time.

[Interviewer (likely Tim or Carol)]

All right. That again, of course, was FCC chair Brendan Carr earlier on cnbc. Hey, we wanted to turn more kind of dig into this and kind of get a feel of what's, what's really here at threat and what's at issue. Katie Fallow is deputy litigation director of the Night First Amendment Institute at Columbia University, where she focuses on threats to free speech at a free press in the digital age. She joins us right here in New York City. Katie, is free speech under threat? Is the First Amendment under threat?

[Katie Fallow]

Absolutely. I think since the beginning of this second Trump administration, the president and his advisors have taken a number of steps to use sort of every lever of power at their disposal to control the speech of private individuals, private companies and private institutions. And I think the Brendan Carr's statements on Wednesday is just the latest example of this administration using threats of regulatory oversight, denial of mergers and things like that to essentially coerce private companies into censoring speech that the administration doesn't like.

[Host/Anchor]

So what is the recourse here? You have a long history of working in this field. You were one of the litigators, the lead litigator on that landmark case back in the first Trump administration where the president blocked people on his social media account, the real Donald Trump Twitter account. So you have a lot of experience with this. What is the recourse here?

[Katie Fallow]

Well, the recourse typically and certainly over many decades of our history is to sue in the courts under the First Amendment and to challenge government action that violates the First Amendment. And that is important both for the speaker, speakers that are affected by government censorship, but also important for everybody else for the courts to confirm that the First Amendment protects all kinds of speech, including speech that many people or even most people find very offensive. And it also protects speech on broadcast stations, on cable news, on social media, et cetera. And so what the main step to get relief here, other than public opinion and political change, obviously, is to get courts to rule that this is unconstitutional. And it plainly is. The problem is that at least we've seen in the Trump administration a number of private institutions and companies, even if they have a very strong First Amendment claim, essentially folding and caving before actually litigating or vindicating their rights.

[Interviewer (likely Tim or Carol)]

So wait, so then when you look at this, and let's roll on top of this, I mean, you know, Walt Disney taking Jimmy Kimmel live off the air indefinitely, it was said amid a backlash to remarks that he made about the killing of Republican activist Charlie Kirk. So amid a backlash. And then the move was really brought about by NextStar Media Group, which owns dozens of ABC TV affiliates, saying it would pull the show from its stations over remarks that were, quote, offensive and insensitive. So when we think about free speech, does Jimmy Kimmel have the right to say what he was doing, that it was within the parameters of what free speech is? Does NextStar Media, if there's a backlash of people who also have free speech right to say we didn't like this, have the ability to say that? Does NextStar Media have the right to say, we run a business and we want to change what we carry? Or maybe not like, help me understand free speech in all its wonderment, if you will, but in also maybe how it's a little tough to kind of figure out what it exactly is?

[Katie Fallow]

Yeah, I mean, it's absolutely complex. I mean, the First Amendment only applies to actions by the government, meaning the government cannot censor speech, but private companies, private institutions, private individuals can suppress speech or, you know, decide that they don't want to speak in certain ways. If they don't want to, that's absolutely fine. But I also think it's important to see the context here, which is that, yes, this, affiliates or these local broadcast stations said they weren't going to carry the Jimmy Kimmel show. But they also said that after the chairman of the Federal Communications Commission made a statement that said, called on Disney and ABC to take action against Kimmel or else the FCC was going to look into whether these broadcast licensees were broadcasting in the public interest. So that's a direct threat of government censorship. So while, you know, ABC could make its own decision, but I think there is a real concern here and direct evidence that the government is using the threat of regulatory investigations and possibly, you know, by the way, these local broadcasters are seeking approval by the FCC of a potential merger. And so, you know, I think you can connect the dots and see that the FCC chairman's statements played a significant role here. If, even if we don't know for sure, it certainly raises the troubling specter that the government is using threats to coerce private speech, and that is unconstitutional.

[Interviewer (likely Tim or Carol)]

So what about, like a news organization or an entity like Disney, abc, who also has a fiduciary responsibility. I know that this may not be your area, but a fiduciary responsibility to shareholders that if there are deals that don't happen and things don't happen, it changes their financial picture. And I guess I'm just trying to understand that. Do they have a right to. To say, well, this isn't in the best interests of the company? And so even if it's kind of, you know, dampens somebody's free speech or removes it, do they have a right? Yeah, that's a.

[Katie Fallow]

They may have a right, but is it. No, they might have a right, but is that the long term, best way to go? Is that in the long term, best interest of the company? I mean, if you're gonna have companies constantly bowing to pressures from the government, censorship pressures, including, I mean, you just saw the president or you played the clip of the president saying on Air Force One, I think you should revoke the licenses. Anytime a broadcaster carries a show that criticizes me is essentially what he's saying. Long term, I think that is not in the best interest of broadcasters that want to air programs that the entire country watches. And presumably these broadcasters, and certainly Disney and ABC see, have many viewers that are upset about Jimmy Kimmel being suspended based on, you know, pushback from the. The Trump administration.

[Host/Anchor]

So how do you view this as going through the courts? Like, does Jimmy Kimmel have a case here? Does. Does somebody have a case here that they could bring to the court that could ultimately go to the Supreme Court and be a test for the First Amendment of the Constitution?

[Katie Fallow]

I think it could be just last year in a case involving the National Rifle Association. So certainly not. An entity on the left brought a lawsuit against a New York regulator saying that the regulator had brought pressure onto insurance companies not to cover the nra. And the NRA brought a lawsuit, and the Supreme Court said if that regulator uses its authority to pressure other banks or insurers not to do business with the nra, that violates the first based on viewpoint, that violates the First Amendment. So under that case, I think Jimmy Kimmel could bring a lawsuit against the government saying Brendan Carr and the Trump administration sought to exert pressure and through threats of coercion, and then the result was that ABC canceled or suspended the show. There are some complexities in terms of the remedy that he could seek, but I think at the very least, you know, you could ask for a declaration and an injunction saying the government can't do this. So it wouldn't be a lawsuit against abc, it would be a lawsuit against the government.

[Interviewer (likely Tim or Carol)]

That's what I'm thinking. Right.

[Host/Anchor]

Yeah, that's.

[Interviewer (likely Tim or Carol)]

It would be his own lawsuit, though, without the backing of his network.

[Host/Anchor]

I'm just wondering.

[Chris Miller]

I mean.

[Host/Anchor]

I mean.

[Katie Fallow]

Yeah, exactly. Well, yeah, okay, we could get into. Yeah, I mean, that is sort of what I was thinking and that I think he would have a good claim. But of course it's complex. There are questions about remedy. And I think, you know, overhanging this as of whether it would eventually reach the Supreme Court is all the sort of other financial considerations that are motivating the various actors that are involved in this issue.

[Host/Anchor]

I'm curious about the non legal implications of this. And just in your view, as somebody who focuses on the freedom of the press, what the implications are of an administration that seems to target negative news about him, News that's critical. For example, the president this week sued the New York Times for $15 billion, claiming it has an agenda against him. Last year, Disney paid $15 million to settle a defamation lawsuit that was brought on by President Donald Trump over comments made by host George Stephanopoulos. What is the effect of that? Not, not the legal ramifications. Not the legal ramifications, but the effect of that. Justin, in your view on a free press.

[Katie Fallow]

I think it's deeply scary. And adding to the examples you gave, also the FCC's actions against CBS and the ultimate settlement over 60 minutes airing, you know, a particular edited version of its interview with Kamala Harris. So I think the message that it sends to journalists and to media companies is if you criticize the President or his administration, you do so at great risk. And that should be frightening to all of us and including should be frightening to people on the left because if we accept that that's how these things should proceed, then if there's a Democratic president in power, that person could use the same kinds of threats and coercion against Fox News or right wing media entities and we would all be the poorer for it from a free speech perspective.

[Interviewer (likely Tim or Carol)]

Last question. All right, so everybody in media is listening and paying attention, but what about American citizens more broadly? I mean, free speech is just something we take for granted. Right. And gold standard, if you will. I think around the world, like what could be, you know, should we be worried that it's not just about media, it's just, it's about everybody in terms of what they say?

[Katie Fallow]

Absolutely. I do think we are the gold standard and for good reason. Or we have been. But, you know, I've been practicing First Amendment law for a long time and I've never seen such a, like frontal assault on basic First Amendment principles, things that I thought were well established and things that we all benefit from. And so right now it's being waged against members of the media. But we also see the Trump administration essentially taking all these steps to decide for the American people what their colleges can teach, what their media, what their comedians, their favorite comedians can say. And I think that that can be used just increasingly to crack down on free speech. And we should all be very concerned about that.

[Interviewer (likely Tim or Carol)]

Katie, yes or no, does this potentially the issue of free speech, First Amendment, go all the way up to the Supreme Court at some point, yes or no?

[Katie Fallow]

I think it will at some point.

[Interviewer (likely Tim or Carol)]

Okay. Katie, thank you so much. Super, super appreciative. Katie Fallow, deputy litigation director at the Knight First Amendment Institute at Columbia University.

[Host/Anchor]

Stay with us. More from Bloomberg businessweek Daily. Coming up after this.

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[Interviewer (likely Tim or Carol)]

It's exactly where we start that agreement or deal for Nvidia to invest 5 billion in Intel. Nvidia CEO Jensen Huang called it a historic collaboration that together they will lay the foundation for the next era of computing. President Trump also weighing in from the UK where he and the UK Prime Minister Keir Starmer unveiled a new technology partnership to deepen ties on AI and digital assets.

[Donald Trump]

So we're taking the next logical step with a historic agreement on science and technology partnerships. And this will create new government, academic and private sector cooperation in areas such as AI, which is taking over the world.

[Katie Fallow]

It's.

[Donald Trump]

I mean, I'm looking at you guys. You're taking over the world. Jensen, I don't know what you're doing here. I hope you're right. All I can say is we both hope you're right. But it's pretty amazing.

[Host/Anchor]

That was President Trump earlier from the UK with more on the global backdrop. When it comes to the industry that has a role in with making so much of our world tick, we are talking semiconductors, of course. I want to bring In Bloomberg, Bloomberg TV BTech Co host Ed Ludlow joining us from San Francisco. Ed, just off the phone with Jensen Huang and Lip Bhutan, CEO of Intel and of course Jensen, the CEO of Nvidia. Ed, what did they tell you? What did you find?

[Ed Ludlow]

Yeah, I mean, the main takeaway is that the president and the administration were not involved in the brokering of this partnership and deal. It predates more recent events with both companies in the Trump administration. The way that they both explained it.

[Interviewer (likely Tim or Carol)]

Is that really do you believe?

[Ed Ludlow]

Yeah, well, well, I'm so. I'm so glad that you did that. So let's get into it. You know, that was what they said.

[Interviewer (likely Tim or Carol)]

Okay.

[Ed Ludlow]

And what I find interesting is that they, they claim that 12 months ago or more, engineering teams started meeting and working together. Now, that would not only predate the sort of more recent relationship between Jensen Huang and the president and Lip Bhutan's relationship with the president, but I also point out that Lip Bhutan was not CEO of Intel. 12 months ago he was on the board. So this is a kind of legacy thing, if that to be believed. Now to your point, the equity stake and the investment of $5 billion of Nvidia into Intel, how do we interpret that? The way that Jensen Huang answered it is why wouldn't we invest invest if we believe in the success of the products that we're working on together? Because they'll realize an excellent return. But nobody in this briefing that I participated in asked Jensen if the investment itself was catalyzed or proposed by the administration.

[Host/Anchor]

Yeah, I mean, just the cynic in me would say this looks really good for Nvidia to make this investment in a company that is partially owned by the U.S. taxpayer, partially owned by the U.S. government, and show his support, show in video support for this company. I want to think about this in the broader context. I mean, Pat Gelsinger, Ed was the CEO at the time. And I think it was notable back in January of this year. I think it was when in video had that big decline as a result of the deep seq news. Pat Gelsinger essentially coming out and saying that he was going to buy some of the Nvidia, Nvidia stock on LinkedIn. He said that that was a really big deal because these two companies were seen as rivals even then. Are they still seen as rivals right now?

[Ed Ludlow]

Guys, if you. If I jump in my car right now and I go 25 miles down the 101 and I park up at intel and climb onto the roof and I look back across the freeway, I'll see Nvidia's headquarters. And funnily enough, if I look the other way, I'll see AMD's headquarters. In the context of technology history, we've not seen something like this since way back when Microsoft kind of bailed out Apple, which, like is. Is a moment in history long forgotten. The way they explain it and, you know, you tell me if you want to get into the nitty gritty of it, is that it's a simple technology story. You know, the, the architecture that Intel CPUs are based on still dominate the datacenter market. So all the CPUs are going to data centers. You know, intel has a good hold in that market and in video sees an opportunity to leverage that to their advantage.

[Interviewer (likely Tim or Carol)]

I'm trying to understand. So Nvidia invests 5 billion. The US took a roughly 10% stake in intel in August, and that investment so far paying off pretty nicely. Japan SoftBank Group committed to investing a lot in US chipmaking. They made a surprise $2 billion investment last month in Intel. It's a rather notable group of investors. How should one read that? What is intel becoming? Is this a step toward Nvidia buying Intel? What's. Is there a grand takeaway here?

[Ed Ludlow]

The way to interpret it is that intel still needs cash. So Lip Bhutan was very honest that he's still focusing on shoring up Intel's balance sheet. You know the difference between Microsoft investing in Apple way, way, way back when is that Apple was facing bankruptcy. Intel's not, but its profit has been eroded or obliterated. And gelsing his kind of thing was to try and get back on a product roadmap. Lippu Tant is like I'm going to cut back, I'm going to cut down to profit, get the balance sheet strong. But on paper, intel also represents everything that this administration wants. A US Company with heavy footprint in the United States on paper can do more manufacturing. The problem is this in video agreement has nothing to do with manufacturing really.

[Interviewer (likely Tim or Carol)]

Well, our next guest was giving us hints and cues several years ago about the chip wars and some so we're going to talk a bit more about it with Chris Miller. But you set us up so well as you always do. Ed Ludlow, Bloomberg TV BTech Co host, joining us there from San Francisco. All right, so let's get to Chris Miller. He wrote Chip War the Fight for World's Most Critical Technology. It was written in 2022. That book made us all sit up and take notice of the importance of semiconductors to the world, to the most developed nations when it comes to economic growth, national security and so much more.

[Host/Anchor]

Chris is professor of International History at the Fletcher School at Tufts University. He does consulting, but he has not consulted for intel or for Nvidia. He joins us from Palo Alto, California. Chris, the book laying it out for us three years ago, America's Edge is slipping, undermined by competitors in Taiwan, Korea, Europe and above all China. Should we be shocked by a partnership such as this? Strange bedfellows in a previous life? No.

[Chris Miller]

Well, I think from the perspective of ten years ago, this would have been a, a pretty surprising pair up. But today there's a real logic for it. Nvidia is a leader in AI chips. Intel has been trying to catch up when it comes to AI, but also Intel's got a lot of unique know how when it comes to building processor chips, which AI servers still require. So certainly on the chip design side, there's differing areas of expertise that both of these companies can Bring together.

[Interviewer (likely Tim or Carol)]

All right, but just all of it together. The US taking that 10%, approximately 10% stake in intel over the summer. You've got SoftBank, their $2 billion investment now in video. What is this, I mean, is this what you thought would happen, need to happen to ensure us remain a dominant player in the semi space?

[Chris Miller]

Well, I think we're going to need to wait and see what implication this announcement has, if any, for Intel's manufacturing business. I think there's no doubt that intel is going to be an important chip designer in the future. Perhaps smaller than it used to be, but they've got a unique position in the market on the chip design side. But from a national perspective, what really matters is Intel's manufacturing arm. And that's where intel has really struggled the last couple of years to stay at the cutting edge technologically and also to win customers away from tsmc, the Taiwanese market rival. And today, Nvidia produces almost all of its most advanced chips with tsmc. There's been a big push from Washington to get companies like Nvidia to diversify their supply and to try to help into intel become a more successful manufacturer of chips for other companies. The announcement today doesn't really say anything about that, but I think a lot of people will ask whether this is a stepping stone for other US Companies and Video or some of its peers to bring more of their manufacturing business to Intel's manufacturing arm.

[Interviewer (likely Tim or Carol)]

So chip war it is on or where are we? Is it the beginning of the chip war? And I'm just curious, are you starting to think about, I don't know, another book and where it goes from here? Give us, give us your thought here.

[Chris Miller]

Well, I think we're in the thick of the chip war right now. Next to this news about Nvidia and Intel, there's a big debate going on in Beijing and in Washington about which companies should be allowed to buy which type of the AI accelerators that Nvidia specializes in designing that are almost exclusively today produced in Taiwan. And so you've got these competitive commercial dynamics intersecting with high geopolitics. And today you can't really separate the chip industry from the decisions of President Trump or from Chairman Xi.

[Host/Anchor]

Well, that's, that's a really good point. And kind of brings me to my question about intel specifically and the US Taking this unprecedented stake in this chip maker earlier this year. What did you think of that, Chris?

[Chris Miller]

Well, I think the US has been pretty clear in its desire, going all the way back to the first Trump administration through the Biden administration, as well as both houses of Congress, both parties, that it sees Intel's success in manufacturing as important for US national security. You know, right now most of the world's advanced processor chips are produced by one company in one country, Taiwan. And the US wants a more diversified base of manufacturing these ultra critical chips that are key both for smartphones and computers, but especially for AI. And intel is one of the three companies in the world alongside Samsung and TSMC that can produce these cutting edge chips. And it's the only US company, the only company with a major US footprint, at least right now. And so that's why the US Government has been trying to find ways to help intel out. So what would it go ahead?

[Host/Anchor]

Well, what would it take for, for intel to be able to compete with tsmc? I mean, it got money from the US Government, it got money, it's getting money from intel here. As Carol always says, the devil's in the details. And you said we need to see exactly where this money goes. But, but what do we need to see to say, okay, this company, this US company is now competing with tsmc.

[Chris Miller]

So there's no doubt that intel needs money and it's raised some money from Softbank and the US government. But the key thing that it needs is customers for its advanced manufacturing processes. You'd only prove whether or not they work if you've got at least medium sized, but ideally large scale customers that are going to let you produce thousands, tens of thousands, eventually millions of chips on your manufacturing process. You can't scale up without customers. And right now Intel's got a couple of smaller customers for its manufacturing business, but it's thus far failed to win a very large scale customer. And Nvidia is one example of a company, there are others that could provide a really large contract that would let intel test out its cutting edge manufacturing. And right now I think the entire ecosystem is waiting to see will it win some big customers that lets it complete that scale out and testing of its cutting edge manufacturing.

[Interviewer (likely Tim or Carol)]

All right, so we're talking with Chris Miller, professor of International History at the Fletcher School at Tufts University, author of Chip War the Fight for the World's Most Critical Technology. Hey Chris, one thing I want to ask you and I want to go back to China. There was a story I was reading this morning by our Javier Blass, an opinion please piece. And it was asking why is China stockpiling so much surplus plus oil? And one of there were like five or six different reasons. And one of it was does China fear An interruption in supply beyond US And European sanctions. Oil traders who traffic in intrigue utter only one word, Taiwan. Do you believe that. That there is a strong possibility that there will be a conflict involving Taiwan? And what does that mean for tsmc, who is so crucial in terms of the global chip supply chain? What could that potentially mean for the United States? The global economy? I mean, can you play that out and what the likelihood is?

[Chris Miller]

Well, there's no doubt it's a possibility. Nobody knows for certain what the likelihood is. But I think the magnitude of impact is so large that even if you think it's only 5 or 10% likely, you've got to take steps to prepare. All of the biggest, most valuable companies, United States require silicon that today can in some cases only be sourced from Taiwan. That's true for Nvidia, true for Apple, true for Google, true for Microsoft, true for Meta. The entire US tech ecosystem relies on Taiwan's expertise. And that's why there's been this push for the last couple of years to find ways to diversify the US from being so centrally exposed to China's decisions about war and peace in the Taiwan Straits.

[Interviewer (likely Tim or Carol)]

And the reality is that the US is still very, very exposed. Correct. Because of how much TSMC still produces.

[Chris Miller]

That's right. I think the US has made a bit of progress, but there's still a long way to go. And it's a long way to go because TSMC is an extraordinarily capable company. And the entire Taiwanese ecosystem is just so central to producing the semiconductor hardware that our tech firms and AI firms depend on.

[Host/Anchor]

What do you think of the politics of this and the fact that TSMC is, you know, has this facility in Arizona and is working to increase its presence here in the United States? Does it put that at risk?

[Chris Miller]

No, I don't think so. I think TSMC has got a strong signal from its customers that they want US space production. It's got this uncertainty created by the tariffs that incentivizes more investment in the United States. And it's got a signal from the US government, again across multiple administrations, both parties, that they're going to keep pushing for a bigger US footprint. But I think the challenge that TSMC faces is twofold. First, all of its key R and D remains in Taiwan and will be in Taiwan as far as we can see in the future. So Arizona is helpful in diversifying today's manufacturing, but it doesn't really get you diversification of the next generation. The second thing is that the ecosystem in Arizona is still less developed than it is in Taiwan. And so sourcing the gases and the materials and all the spare parts and specialized equipment you need for a cutting edge chip plant, it's still harder and more expensive in Arizona than in Taiwan. And that's going to be the case for some time until we keep building out the scale of Arizona. And all of that means that Taiwan is going to stay very, very important for our techie ecosystem for many years to come.

[Interviewer (likely Tim or Carol)]

Chris, really quickly, 30 seconds here. I mean, was President Trump right in his increasing tensions China? It started in his first term and ramped up in the second. Was he right? Especially when you think about semiconductors and just quickly if you could.

[Chris Miller]

Well, I think the key driver of tensions in this sector is actually China's desire to become self sufficient. We were in a pretty stable equilibrium in 2015 before the Made in China 2025 plan was released. That happened before any of the US policies to support its own chip industry. And that was really the catalyst for introducing geopolitical tension as a central facet in the chip industry.

[Interviewer (likely Tim or Carol)]

All right, so glad we could get some time with you. So relevant as always, Chris Miller, author of Chip War and professor of International History at the Fletcher School at Tufts University.

[Host/Anchor]

Stay with us. More from Bloomberg businessweek Daily Coming up.

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[Interviewer (likely Tim or Carol)]

We're looking at a day where we could potentially see records across four major averages. We're talking about S&P 500, Dow NASDAQ 100 and Russell 2000. If this happens, it would be the first time since 2021, but we'll see whether or not we get there. In the meantime, curious to see what our next guest has to say about the market environment. He is Aaron Kennan, co founder and chief executive officer of Clear harbor asset management, about 2 billion in assets under management, joining us once again from Stanford, Connecticut. A lot as always, Aaron, coming at us. We're more than 24 hours from that last Fed decision. I don't know, what do you think is the constructive conversation right have about the equity markets in particular valuations and what seems to be kind of continued moves to the upside?

[Aaron Kennan]

Yeah, we've had quite a run, Carol. You know, as you mentioned, the S and P is up historic bubbles today and yet we look across the pond and emerging markets are up 28% versus the S&P is 14 and Europe's up 18 versus the S&P 14. So it hasn't just been a US story. I think that's an important narrative for at least our clients to understand. And certainly valuations are not cheap. We're trading at top quartile levels in most equity indices other than the small cap area, which is relatively cheap here. And yet we also know that elevated valuations do not always or never really augur bear markets. Usually there's some economic shock that ensues. And so so we're mindful of the valuations, but it's not sort of putting up the cautionary flag too significantly for us here. So we remain reasonably constructive here, particularly now that the Fed, the Fed is starting to cut rates and we think they'll continue to cut rates even though there were quite cautious.

[Host/Anchor]

Okay, so let's talk about that. Why are you convinced that they'll continue to cut rates?

[Aaron Kennan]

Well, if you look at the Fed, they always want to be a little more optimistic, Tim, as it pertains to the economic outlook and this transcends this. Fed Chair Yellen Bernanke Greenspan have all done it. They don't want to sound gloom and doomy, but I would argue that there's still some normalization to occur as it relates to just the Fed funds rate and its relationship to inflation. I also think too that we have a Fed that's going to be leaning more towards supporting employment than pulling down the last 50 basis points or 75 basis points of inflation. I think there's a sense that there's more of a prerogative to do that to ensure that we have a healthy employment market. Then of course, you look at the Fed funds futures, which is what the market thinks, and the market's calling for 5 to 6 rate cuts between now and year end. Maybe it will not be that aggressive. And we heard of course Chairman Powell yesterday say, well, we're on a meeting to meeting basis. So we have, we don't have any insight. We're just going to look at the data.

[Interviewer (likely Tim or Carol)]

Yeah, right. I mean, just that dot plot and of course that's never set in stone. It can change and it will change, but it's just a reminder that there are a lot of different views being discussed there at the central bank. So what do you do with new money in this market environment, Aaron?

[Aaron Kennan]

Well, I think we want to start with the foundational framework of, you know, what's the objective of the client? What is their risk tolerance, whether it's an individual, family or an institution, how much liquidity do they need? And then we look at the, you know, where we're allocating capital around the world, where there are opportunities to maybe stick our necks out a bit. We still believe in the US Equity story for the long run. We still think the AI growth story is a, is a, is in the earlier innings that we've got. We're going to go from picks and shovels to a broader opportunity set within software, within AI. And we think, of course, the tariff picture in the US is probably going to mean more reshoring, more investment in the United States going forward. But we also think there's opportunity in places like Europe and emerging markets. In fact, I think what's interesting right now is you have a country like China that is historically selling to the developed world, the United States and Europe up. We've put up tariffs and they can't flood our markets any longer with a good portion of their goods. And so they're looking at places where they can do that. And I think they're going to be selling more and more of their goods to emerging markets. It could push up emerging market currencies and actually boost capital markets further in those regions. So we're thinking about asset class level allocation as well as even within the equity asset class sector level and then geographic level. So there's a lot to talk about there.

[Host/Anchor]

There, there is. But I'm curious about your view on the US consumer. We got news yesterday that the average FICO score slipped to 17, 715 in April from 717 a year earlier. It's the second consecutive year over year drop. It's essentially the fastest rate that credit scores have fallen since 2009. We're also seeing some inflation in some places as a result of tariffs or other other things as well, like beef prices, beef prices moving higher, which certainly affects consumers. How is the consumer doing in your view?

[Aaron Kennan]

I think it's a tale of two stories, Tim. I think you just alluded to half the country which doesn't own financial assets unfortunately haven't been able to sort of hedge this rising inflationary price price that we've seen over the last five years or so. And you have retail sales recently that indicated relatively robust numbers. But then when you look beneath the hood to your question, where is the retail sales growth really happening at the unit level? It's happening at the upper quartile, upper decile of the economic stratum in the United States, the lower half, they have credit card debt, they have auto loans, if they're lucky, they have a mortgage. But that's all liability, that's not asset. And so we have this sort of bifurcation and the consumption pattern in the US I think it's one reason why the Fed's leaning towards the dovish side, why they cut rates and they'll continue to cut them.

[Interviewer (likely Tim or Carol)]

So my sister had shared something with me a little while ago and forgive me, I'm trying to find out who the individual. But it was essentially, I think it was a European CEO or something who basically said I don't want to be a rich man in a poor country. And I just think this kind of resonates with me. And we've talked about this, this K shaped recovery and economy. So people who are in the market and have a good job and doing well and own a house, so many who don't and you kind of laid it out for us. I mean, isn't that a problem? Isn't that a problem? Today continues to be a problem and I don't know, something that ultimately is going to be playing out like in our economy, in our markets and forgive me, it's a serious question, Aaron, I'm giving you about 40 seconds.

[Aaron Kennan]

Yeah, well, we have a widening maldistribution of wealth, but if you look at where we were 50 years ago, where we were 100 years ago, and even where we were 30 years ago, you know, it's sometimes easy to think that, you know, we have it worse today among large cohorts than we did 50 years ago. But the rising wealth boat has lifted almost all tides. It's just that the, the maldistribution of existing wealth has widened. And so I think that the base level of sort of quality of life has improved dramatically for the lower quartile of Americans relative to 50, 75, 100 years ago. And I think, you know, it's good to keep that in mind.

[Interviewer (likely Tim or Carol)]

Always good also to get some time with you. Erin Ken and co Founder CEO of Clear Harbor Asset Management this is the.

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