announcer: from the heart of where innovation, money, and power collide -- in silicon valley and beyond, this is bloomberg technology with emily chang. caroline: i'm caroline hyde in for emily chang and this is bloomberg technology. we are live in boise, idaho at the micron headquarters. we had a sit down with the micron ceo where we talk about

all things chips and supply chain and so much more. plus a look at how the global chip shortages not only impacting micron but the real world impact it continues to have and when it might ease. and president biden is an thing up russian sanctions. we will bring you the latest from washington. we will get to all of that in a moment, but first, we've got to get a look at the markets because once again, risk aversion amid geopolitical tensions -- ed ludlow with the latest. >> look at the s&p 500, down 10% from a january 3 peak, in correction territory now. the nasdaq at its lowest level since june, the fourth straight day of losses, the longest losing streak in a month. what was interesting is a choppy session after president biden added to the voices globally and added sanctions taken by the

european union against russia and russian individuals. we paired some of the losses. the u.s. 10 year yield a little higher and bitcoin -- you see red on the screen as we tick over into wednesday session, snapping three days of losses after the long holiday weekend. one of the big movers on the day is nickel. look at this chart -- the white line heading toward that $25,000 per ton, you can see the blue line coming down -- russia is one of the biggest exporters of nickel. the concerns are it could add to already stressed supplies. and -- a component in ev batteries -- a really big move there you see on tuesday. let's talk big picture about what investors feel about this whole picture. bank of america out with a note tuesday saying tech stocks are

in purgatory. we have rising rates but ultimately, the s&p 500 only has zero point 1% exposure to russia directly. we should be more worried about tech stocks. higher rates happening and covid induced pain, some of the pandemic-era stocks becoming unloved. investors focused on the outlook for higher rates. caroline: still all about the fed. ed ludlow. first and foremost, let's get to the geopolitical story of the day -- president biden announcing the united states was ordering heavy financial sanctions against russian banks and oligarchs, declaring moscow had flagrantly violated international law by invading ukraine. andrea horton joins us now. the woman who understands putin,

russia and the white house. tell us about the reaction to what are perhaps not the toughest sanctions yet. >> that's correct. these aren't the toughest sanctions, but they can dig in and push against russia. this is what the president called tranche one, echoing the words from the u.k. prime minister, boris johnson. a number of individuals close to the kremlin as well as sovereign debt. the primary debt market -- this would be the secondary debt market. on the diplomacy front, i want to bring some new information. we heard the secretary of state speaking alongside his ukrainian counterpart. that meeting he planned to attend at the end of next week with his russian counterpart has been canceled. he says now that we see the invasion is beginning and russia has made clear it does not make sense to go forward with the

meeting at this time. blinken says he wants to remain with a path open to diplomacy but only of russia is serious about it. caroline: where is the path to be opened? what is the next step? do we have to wait for words from putin or one of his team? annmarie: it's a great question. prior to this meeting being scheduled and it was being scheduled with a caveat, what the state department saying we would only attend this meeting if there is no further invading of ukraine. obviously, over the weekend, what we have from russia is president putin recognizing separate states -- the separatist states. this infringes on the sovereignty of ukraine, so at this moment, given the fact the u.s. saying this meeting is canceled, the ball is in the kremlin's court. caroline: indeed it is and we

wait and watch. energy prices, metal prices, gas prices, you name it. we are going to have more of the corporate angle because coming up, more of my exclusive interview with the micron ceo. we sat here in the r&d headquarters of micron and talked about the state of global chipmaking and how exposure to russia and ukraine is impacting some supply chain bottlenecks already. this is bloomberg. ♪ >> i will tell you the semiconductor supply chain is highly intertwined and sometimes there can be secondary suppliers , suppliers of the suppliers and these are the things that it is important that it be shored up for everybody in the ecosystem.

caroline: carmakers/productions, play stations became impossible to find and these phenomenon all had a similar problem -- a cascading shortage of semi conductors. what caused the shortfall? the stay-at-home shift triggered by the pandemic rearranged supply and demand. when certain businesses shut down, suppliers started to direct chips to phone and computer makers. then when the economy started to reopen, industries like automakers that had cut back rushed to re-up. the supply chain could not meet the surgeon demand. >> covid caused everyone to step back a little bit and induced a

radical increase in demand. so you have supply chains scaling back come a demand scaling up radically and now we are in a position that there is a meaningful shortage. caroline: this led to skyrocketing lead time with the time between ordering a chip and delivery sitting records. chipmakers are now competing to play catch-up and now competing to spend big bucks to increase capacity. >> a competitive world and we are going to be competitive in the process. caroline: micron is set to spend as much as $12 billion, part of a broader $150 billion spending round. it unveiled a plan to invest as much as $28 billion, including plants in the u.s., one in asia. with hundreds of billions of dollars at stake in the coming years, the global race to expand production -- despite the money

and effort, it may not be enough. >> i think for the better part of the next four or five years, our industry will be chasing the ability to put capacity online to meet not only demand in front of us today but the growing demand. caroline: as companies go all in and move their chips to the center of the table, global investors are placing bets on who will prevail in the coming decade. and i got to extend that conversation on all things supply chain with the ceo of micron right here at the company's headquarters in boise, idaho. we talked about everything from the ship prices to supply chain issues, innovation and the 49,000 patents they have here. i asked if -- i asked about the light of the supply chain tunnel. sanjay: what has been

demonstrated is the work we were doing pre-covid in terms of building the supply chain, analytics, working on our suppliers and making sure we have all of that served us well. covid presented an unprecedented level of challenges and our team is agile and adaptive in terms of responding to those challenges and i'm very proud. we continue to work with our suppliers. what i would say is we certainly expected supply chain shortages would continue to improve during the course of the year that we procure from other suppliers. while we see failure of those

components, we continue to see improvement and in certain categories of those components, the improvement is behind what we were hoping for. however, we are continuing to work with our suppliers, with our partners to have them increase supply to meet demand. some of these are a phenomenon common to the industry. i believe it will continue to improve through the years. we have challenges in other areas and a lot of focus in the entire ecosystem for this situation. caroline: so many have been running at full pelt and need the production. they've been hit by contamination by a u.s.

manufacturer. do you think these might continue to occur? that prices may fall for chips? will they actually rise? sanjay: micron has a great example of leading semi conductor technology. what you are seeing here is a leading r&d facility and from here, the economies that go into production, in taiwan and singapore and here in the u.s. as well. what is important is the example that you gave of others that have been hit, what is important to realize is semiconductor production, as you saw on the tour today, it is highly complex. let me give an example. we produced several million for

our semi conductors and our engineers are working around the clock. in a productively paranoid and absolutely tremendous attention to detail to monitor many parameters. let me give an example. we have about 230 million parameters being controlled, constantly monitored. this is what is needed to absolutely make sure the production continues uninterrupted. caroline: what about your work with the government? i know you've been speaking to the administration and they see the supply chain issues and want to bring it closer to home and make sure manufacturing is back in the united states and are offering $50 billion. is that enough to make you build

once again in the u.s.? i know you are building in virginia and expanding here. sanjay: micron is investing in terms of building the future of memory, the leading edge technologies are being developed right here in this r&d facility. micron is leading the technology, we are ahead in production, so we are very proud of the work we produce here and is taking to production and other sites. i'm highly appreciative of the work president biden's administration is doing and that of course, having bipartisan support in congress for securing the long-term leadership in semiconductor research as well as bolstering manufacturing given the u.s. and the 50 billion you talk about is a good start. of course we have to get across

the finish line but in the longer-term, more will have to be supported. it is important, as covid has shown, that we need to have the supply chain and manufacturing footprint in the u.s.. we have announced a plan for more than $150 billion in investment. caroline: how much here? sanjay: in leading edge r&d and around the globe and what will be important is to have the necessary support from government to overcome 45% cost difference that exists. micron has been investing in leading edge r&d. this facility you are seeing here and that to most advanced rooms to drive innovation forward, quickly adding up to a billion dollars still.

we are investing at record levels in capex in fiscal year 22 around our global site. caroline: the micron ceo there. later, i will be joined live by the vp of micron integration. coming up, we will stay in boise and talk about these -- talk about the tech startup scene here. that's next. this is bloomberg. ♪

caroline: i'm caroline hyde in boise, idaho at the micron headquarters. we want to talk a little more about the tech scene, the evolving venture space building

in places like this away from silicon valley and away from new york and finding cheaper homes. i want to bring in mike selph, one of the cofounders and managing partner at an early stage venture capital firm with an office right here in boise. talk to us about what attracted you -- why bring the capital to this ecosystem? mike: thank you for having us on and welcome to idaho. our first firm was seattle. we are geographically agnostic and invest across the country. one of the big things we noticed is it can become cost prohibitive so we started exploring some of the non-west cities. we started exploring boise and never left. we found the strength of the region was the intellectual capital that was already here

and there almost an underground railroad source of folks commuting from silicon valley to idaho. the combination of that and if you do any sort of analysis on what creative tech has been in the past, the hp's of the world created silicon valley, microsoft created the tech ecosystem in seattle, dell and austin and so forth. we have micron here in idaho, so that was one of the important characteristics for us to come. lastly, with governor little's leadership, we have a great and stable business environment to come build companies. when you are in venture, you need to think 20 years out. caroline: talk about q funds -- 23 investments. but sort of companies are being built here that stand head and shoulders above the rest? mike: our focus is getting

companies from commercialization to series a and series b investment. so if you can do that, you have a good chance for success. so the same companies you are seeing another large established tech ecosystems can be built here in idaho from cybersecurity companies. all the way to fintech companies -- kind of the same broad swath you will find, entrepreneurs want to start those companies or are willing to move here to start their companies, so it is an exciting time for idaho. caroline: is the tech talent coming here or being bred here? there is a lot of academia in boise. mike: it is a combination of both.

we came here in 2018 and we were impressed with the folks that were already here. we could not have predicted the pandemic but that has helped. i like to say idaho used to be a flyover state. i think it is now a flight to state. we have entrepreneurs that have moved here and are thriving here and it's a great combination of finding intellectual capital and debt affordable place to be able to grow your business. caroline: talk to us about the affordability. as we have seen with covid, places like austin and boise are becoming more expensive. is that a hindrance or for now is it ok? mike: it has caught up in the last 24 months. the change from salt lake, san francisco, seattle, two boise -- real estate has been as hot here as anywhere in the country. but on a relative standpoint, your day to day living and what

it takes to start and grow a business is still very advantageous to be here. it's not just cost arbitrage and why you should start your company in idaho, you are providing a great place for employees to have a nice work-life balance and we view idaho as being an intersection geographically between the pacific northwest, silicon valley and the rest of the mountain west. it's a 30 minute flight to salt lake, an hour and a half to silicon valley, and hour to seattle. we see the growth accelerating. it's not just overall cost arbitrage. caroline: what do you think about more vc coming? you have the startups. his venture-capital going to be here? mike: we are hoping so. we've said if we are the only ones here 10 years from now we haven't done our job.

we invest in by practitioner for practitioner entrepreneurs, so we need more to build the ecosystem here and luckily, we think that's happening. when you see andreessen horowitz and inside partners coming here writing sizable checks, that's helping to get the flywheel going. not only for the entrepreneurs but other vc's. we are hoping we have more competition here soon. we think that's coming. caroline: thank you, mike self. really great to have some time with you. meanwhile, coming up, i will be joined by the vp of micron's g ram integration. we will talk about the technological innovation happening right here, right now. on average, three per day coming

out of micron. we will talk about 30 years in the business and inspiring the next generation of female innovators. plus while the mayor of boise, my conversation with her on job creation in the city. this is bloomberg. ♪

caroline: this is bloomberg. i'm caroline hyde in boise, idaho at the headquarters of micron technologies. let's get a check on today's chip news. ed ludlow is standing by. ed: if you look at the philadelphia semiconductor index, there's only one name in the green and that was advanced micro devices. the index fared slightly better than the broader market, down

.8% but still down nonetheless. why? bernstein turning bullish on the stock, bringing in outperform rating from a market perform rating and a price target of 150 dollars. they basically said we were late to the game and another milestone closed -- a md closed a market value of 100 88 p $3 billion. why is that significant smirk because it gives it a market cap greater than intel. this has been the story -- outperforming intel over the last of months because it also outperformed in the industry, stealing market share in that highly competitive server and chip space. it's a stock analysts favor and say it is been to watch and bernstein finally coming around. there was a bigger picture with tech stocks -- semiconductors like some of their software cousins suffer from this idea of

stretch valuations but bernstein is saying a md is relatively free. relative to the nasdaq 500 -- the philadelphia semiconductor index has really underperformed. but it had such incredible outperformance in plato anyone. but a md, one of the winners on tuesday. caroline: we want to keep on the subject of the chip space and we want to talk about focus on memory chips. because i'm here at micron and i'm joined by the vice president of the vram division. where micron has managed to thrive and become an oligopoly now is within the memory space. what are you doing to differentiate yourself? everyone says --

thy: we develop our technology to the industry leaders in vram and flash memory. we do that to provide pride flexibility for our portfolio and continue to shrink so we can reduce the cost and increase the density of our memory chips. caroline: i've just been inside of some of your r&d fab. i not in my bunny suit and the machinery that is needed -- 600 different gases that are needed to rid -- to produce this tiny piece. talk about the intricacies of all -- involved in continuing to shrink, shrink, shrink semiconductors. thy: it has gotten to be so complex that it's thousands of steps and we use almost all the elements on the periodic table.

my team takes it to defining structural physical dimensions and electrical requirements to meet customer requirements for market demand. if you think about building billions of lego chips and trying to build an empire state building out of that, and we do this day in, day out, virtually defect-free. it is incredible the innovation required from the process development standpoint and the most advanced tools possible to meet all the demand that's out there. caroline: talk to us about that demand. i hear a lot about autos but there's always a cynical analyst going it will be a boom and then it will be a bust. but fundamentally, has the demand church changed?

thy: if you think about our daily lives, without memory, life would come to a screeching halt. memory is in everything we use and the trends show besides the data centers and enterprise storage applications, the advanced automotive applications require ai, requires machine learning, we have two have faster memory, more density to store that data and apply new technologies like iot to leverage the data and put more value to it. we will always need more edge computing, cloud computing and if you really want to hit it home, with the video call and all the infotainment we need memory for, gaming, telemedicine

, you can never have enough memory. caroline: we had a long discussion about supply chain issues. what about the talent pipeline? we talk about the united states morning to ensure they are building more locally, but what about the talent to go in those fabs should mark -- in those fabs? thy: the talent needs more help all the way from elementary to high school and higher education. we being corporate citizens, also need to not only provide funding but sponsor and provide mentorship programs for these programs that help underprivileged people. caroline: i know that is

something you are passionate about. you did not have the most obvious route to becoming a senior executive. tell us about your journey. thy: my journey is a story of survival, resilience, and living the american dream. my father, after the vietnam war ended, my father was imprisoned by the communist government for 10 years. so we had to escape from vietnam. we tried three times and finally survived pirates and storms to make it to thailand. before we made it to the u.s.. in terms of resilience, we started from scratch, held at local jobs, i had six paper routes. i had jobs in high school and college. we managed to survive and turn

setbacks into comebacks and electrical engineering was my ticket out of poverty. it started as a practical decision but, along the way, i learned to hone my craft and find my groove, especially when i started at micron. i'm in the zone when it comes to semi conductors. i lead a talented team and i'm very grateful to be where i am today and for the people who have helped me. caroline: a very powerful story. what does your team look like? i know sanjay himself, coming from india and you coming from outside the u.s. come how do you make sure the talent pool here is so rich and diverse and doesn't look like what a lot of people envision silicon valley to look like? thy: talent attracts talent. we have a global team here but we also have a lot of technology

talent here. in order to attract talent, we need to offer opportunities for growth and leadership. as you probably saw with our patent wall, over 48,500 patents today to. we foster an environment of innovation where people really thrive in terms of career development. caroline: great speaking with you. what a story. coming up, i sit down with the mayor of boise to talk about all of this -- talent, chipmaking, bringing jobs to the city. more on that, next. this is bloomberg. ♪

caroline: i'm caroline hyde, here in boise idaho, at the micron headquarters. let's look at crypto markets for our crypto report. >> let's take a look at where crypto prices have gone over the last day or so because we did get a little lift and crypto prices over one day after five straight days of declines. but if you look at the price, it has not breached $38,000 and is still on the decline, down over the last two days. not seeing much of arise. if you take a look at the

drawdown we have seen in bitcoin, you are seeing that not only have we had a 10 day decline, you had a significant drawdown over the highs of bitcoin, gone from almost 70,000, $67,000 to a 44% drawdown. the drawdown is not the worst we've seen in the last year, but it is among the worst we've seen from those highs we were talking about just a moment ago. let's see if this means we are posting a floor or if there will be a way to go as risk starts to wean off the markets. caroline: thank you so much on the crypto update.

right here in idaho, my colleagues commit taylor riggs, romaine bostick and i managed to have a good chat with the mayor about how the chip industry is affecting the city's job market. mayor mclean: as has been mentioned, the last 20 years, just as micron has grown and the technology sector has grown as well. romaine: give us a sense for those not familiar with boise, what is the attraction for companies like that? what's the attraction for employees to come there? why are they choosing their versus other hubs? mayor mclean: we have a community that welcomes everyone. micron helps lead the way when it comes to creating an inclusive and diverse community. we have a great landscape with a

beautiful, clear river and open space for folks to enjoy. importantly, growing economic opportunity as the tech space continues to grow, whether it be small companies that started in the last 10 years or companies that have grown alongside the city like micron has done in the last 10 years. caroline: i just flew into boise airport and it's great. is it enough when you see more and more people coming here ed the stress on hospitals and the like -- what are you doing to make sure the standard of living here remains intact. mayor mclean: just this last fall, we passed a massive water bond to make sure our water remains clean and we can grow free of the infrastructure we need. the clean water and water renewal project, just as every

community is grappling with the price of housing, we will remain focused on a workforce and partnership with business and industry helping us and creating economic opportunity in the future. and of course, welcome more that are coming. taylor: talk about the fundamentals of a city -- rising property taxes and sales taxes can help but you are known for being one of the lower tax states. how are you thinking about financing this and balancing a budget? mayor mclean: we in idaho, particularly in boise, find ourselves with great financial management. the budget can only grow a certain amount every year and we prioritize investments that keep the quality of life and level of service our citizens have come

to expect. we have to work with private industries and the state to do what's needed to address affordability, to support workforce development and make sure our kids are educated well in prep for stem jobs in the future all wild doing what idahoans do well which is budgeting and family. caroline: the mayor of boise there. coming up, we will be discussing the chip shortage which isn't going away anytime soon, at least not according to my next guest. that's next. this is bloomberg. ♪

caroline: i'm caroline hyde in boise, the headquarters of

micron. i want to continue our ongoing conversation about supply chain issues and the chip crunch. i want to welcome a partner and friend of the show. we are also joined by ian king who covers all things chips, educate me on what is a supply chain headache that doesn't appear to be changing anytime soon. talk to us about why some thought 2022 would be the time prices would fall off and we would see may a rightsizing of supply and demand but it doesn't seem to be happening yet. ian: it really does depend who you speak to and which sector you are talking about. a lot of the industry in the second half of 2022, things begin to get better but then we hear talk about people saying perhaps we get back into balance and certain products until 2023. a lot of that has to do with who you are and what you are asking for and i think a lot of people would point to the automotive

industry being the biggest victims because they are late to realize they had a problem and had to do the key to get what they needed. caroline: your take as an investor about the boom-bust cycle. we are hearing calls not only from the administration looking to see government putting billions to work to build supply here in the united states, but already people looking at what's going to come on tap by to pay 23. are we going to see a sudden spot of supply or go back into the boom-bust cycle? >> good question and hello, ian, nice to see you again. demand is far outstripping supply. this -- the middle of this year, we will have more bets come off and we will start to see supply

as it is needed but the real influx of supply isn't going to be until 2020 three. at this point, i think bust is unlikely. if you look at how many cars being produced in the pandemic, we are well below that number. then take that and spread it around the rest of the economy, whether in households, the amount of chips there, factory automation, the use of robotics, there such a big increase that it's going to take quite a lot of time for supply to catch up to demand. i don't anticipate a bust anytime soon. the subsidy from the u.s. government probably matters. does that mean the industry is going to be bigger if left to their own devices? that does mean overcapacity at some point. but it's going to take a number of years before we get to that.

caroline: from your perspective, with the government incentive, will use the a shift toward more supply being grown in the united states? will we see less risk to the supply chain going forward as we have had in the past? ian: that is the argument being made by executives who want to subsidize their expansion plans. that you would ring that bell and get the attention politicians get behind that, but when you look at the amount of money being deployed and whether that will have the kind of impact the politicians are hoping for remains to be seen. just compare the number -- compare the numbers. 52 billion in the u.s. versus 40 billion being budgeted by tsmc

alone this year. that gives an example how little the national governments are deploying in terms of capital and tells you they don't really understand the long-term requirements and commitments needed. caroline: to that point, the investment decision you make is do you want to be investing in companies taking on short-term incentives that make less economic sense than producing out of asia? joanne: ian is exactly right. moreover, the subsidies to the companies to build these means we will have a bit of a buffer. more importantly is how the industry has changed over the last decade or so. the chips are used in a much wider variety of locations and so it tends to be less cyclical.

that helps with some of the cyclical problems we've run into and beyond that, just think about i don't think the u.s. subsidy is going to add that much. on the margin, yes but that's not going to aluminate the risk of shortages. it was the -- eliminate the risk of shortages. the auto industry canceled their orders and they couldn't get back in line fast enough. the big shock of how behavior changed that really increased the demand for chips, those shocks can happen no matter what the government does. but having a bit more exposure, potentially to sovereign bonds. caroline: if covid has taught us anything and geopolitics

continues to come it is diversification you want in terms of the supply chain. thank you so much. that does it for this edition of bloomberg technology. tomorrow, we will be talking to jonathan johnson, ceo of overstock. at ♪♪ --

>> a very good morning, i'm heidi stressant in the end we are counting down to the major market open. >> i'm shery ahn in new york. they say a ukraine invasion is underway. traders are weighing the escalating tension in eastern europe. and a big interview