tsmc reported third-quarter numbers. it is a beat. we discussed.berg. ♪ manus: this is bloomberg daybreak europe. we have the numbers from tsmc and it is a beat. demand for chips stayed robust. we know that in spite of a worsening supply chain. let's get to our senior editor on tech. we have the numbers. what has driven the growth? >> yes, it looks strong across the board. tsmc has the largest contract maker of chips is really still enjoying from the boom and demand and everything from cars to smartphones to gaming consoles to personal computers. consumers are just snapping up gadgets and devices and tsmc is enjoying the growth and benefiting as a result. dani: if that is the positive, what is the negative? it has not all been rosy for the chip industry. >> there are certainly a lot of risks or a lot of things to look out for. margins has been one cause of concern and that is a result of capacity constraints in the chip supply system. right now, it seems like tsmc's margins for the latest quarter were stronger-than-expected, so that is a good sign.

if you look at the numbers that have come out, earlier tsmc said they were controlling output by 30%.he chips are going somewhere. what's going on with the shortage? i think a lot of it is in those little stock files in various places just in case. taylor: the industry is cyclical when it comes to pricing. what are you noticing about the pricing power? how does it shift? >> right now, chipmakers have all announced price increases for next year around 20%. i should point out especially in cases like the automotive sector, the chips that they use tend to be on older technologies. the chipmakers are very careful about increasing capacity there because the last thing they want to have his excess capacity and a commodity sector. what has exacerbated the shortage is shortage of investment coming up to the pandemic. capacity was tight. now, they have the pricing power. if they increase the output, you have to wonder that sometimes -- at some point someone has to use all these chips. there is also a risk of excess capacity and softness down the road when the shortage gets alleviated. that has

let's zero in on tsmc out with earnings. a quick look at valuations.ave come down in terms of price, which has taken or pulled back some of these multiples from 30 times earnings at the start of the year. no trading at 21, 22, 23. two standard deviations above where you are historically on the stock. is it time to get in given the chip crunch? rishaad: i cannot answer that but certainly we can get over to a senior investment analyst. joining us now. thanks for joining us. to david's question. >> i think the key focus on the earnings today, it will be on -- more focus on the capital expenditure outlook. i think we are seeing the massive investment requirements for other countries and also the chip shortage. every country has wanted to have a secure supply chain. everyone adding the capex. tsmc is one of those companies that are going to internationally, globally one to expand the capacity. different from the strategy in the past. the company we talk about, the three-year investment will be 100 billion. u.s. dollars. i think the consensus has been stated

also, you have tsmc shifting its business.akness ahead in terms of demand for chip used in mobile phones and computers. in the case of smartphones they have a lot of business. automakers are an issue. if you look at the biggest customers, you see where that comes together. apple, quarter of the revenue. a lot of the rest going to other chipmakers because tsmc is a foundry. they are making tips for other companies as opposed to coming up -- chips for other companies as opposed to coming up with their own. alix: we are seeing a ripple. european tech stocks at a two-week high. what is the readthrough for the u.s. chipmakers? dave: more of the same as far as that goes. what you are seeing in europe is what you are seeing in the u.s. invidia, one of the biggest customers higher. intel and amd up as well. gains across other chipmakers. the chip equipment makers also higher. bear in mind, tsmc committed itself to spending $100 million the next three years on capital projects, including putting up a new plant in japan. what's good for

we saw some very strong earnings for tsmc, very strong demand as well.constraints are seen as temporary, but how do you to find temporary? guest: thanks for having me on. to define temporary, i would say we are in probably the worst of the constraints now, and actually it should be coming off in the next few quarters. we are in peak season for consumer tech demand. that will ease. the other piece is vaccination rates in southeast asia has helped production come up. you see signs of improvement. not out of the woods. we are still facing issues with china power supply and we still have an issue with capacity. it is difficult to get the materials to get all the chips, so there is still limitation. but i expect in terms of temporary that we should be seeing the worst and it should start to improve over the next two quarters. paul: one to two quarters is potentially optimistic because this is a sector that has had years of underinvestment. it takes a very long time to get a new chip plant up and running. how enduring will this shortage be? guest: i think ther

mark: we have had tsmc results this morning. what is the story?ve not missed an enormous amount, it is broadly in line with what was expected. demand is incredibly high, they are struggling to keep up. there were reports around apple and iphone production yesterday. i do not expect moves in chip stocks, tsmc is one of the most important companies in the global supply chain. they expect tightness in supply to remain throughout 2022. anna: let's go to the global appetite industry. >> an upbeat report today, heavy investment in building up the data business. when the pandemic hit, it drove arise in e-commerce. they benefited enormously from that, now paying dividends. we are expecting a good reaction . anna: thank you very much. quietly in the background we keep returning to oil prices, up again 0.9% on print threatening to go above $84 a barrel. this is a forever theme. mark: this is massive and under the radar. there is so much to focus on. the oil is one of the big problems, the energy crisis, and it is the driver of inflation. later today we will

tsmc is now bringing the world's most advanced chip making back to the u.s.ation plant or fab the middle of arizona desert. >> it's going to be when it's introduced to production in 2024, the most advanced technology manufacturer in the united states. >> reporter: building a fab today takes at least two years and $10 billion. it's become nearly impossible for even the biggest chip companies intel and broadcom-amd to do it all and keep up with the most advanced tech >> that full piece in-depth more than 15 minutes is on cnbc.com and dee, tsmc is the pace setter you've got intel, trying to ramp up this foundry strategy under pat gellsinger hear from him on "techcheck." you have to chase down tmsc to do it. they have great technology that lot of people are using. >> and lot of experience and sam sunk the major players are asian players and we talked about this a lot, guys. as a national security issue we want more american companies to be manufacturing chips as jon said, carl, intel is trying to do that. but they don't have the kind of experience these days that

we will see what tsmc has to say about the overall situation later this afternoon.ers, and what does the supply chain look like when it comes to the biggest sectors that will take a hit? reporter: in asia, we are seeing competitors grapple with chip shortages, and other electronics makers. some of the executives here have been saying those who secure critical components can booze themselves. -- boost themselves. it's a wide variety of companies that have taken a hit in asia as well. haidi: let's take a look at some other stocks we are watching. sophie: looking to chinese stocks links to eldercare, asian culture mothers -- beijing calls for measures to boost fiscal support. keep an eye on chinese property, after latest data showed liquidity walls -- woes crumpton moody's to downgrade the real estate firm which now has a negative rating outlook. switching out the board, and singapore keeping an eye on banks with jeffries reiterating [indiscernible] [indiscernible] plus a taper without attention. a constructive backdrop according to the broker. the central bank sees mo

the chip—maker is the world's third largest by revenue, trailing behind taiwan's tsmc, and with samsungp in quarterly profits. but analysts had expected that because of a global chip shortage that has dented productions for global car—makers. ford's third quarter results were still nearly double of what analysts had estimated. samsung, the world's biggest chip and smartphone maker, saw operating profits for the july to september quarterjump nearly by 30% — the highest in three years. let's go to our asia business hub in singapore, where suranjana tewari is following the story. what is behind the numbers? samsung is seen as an industry bellwether because it supplies to big tech firms like apple and sony, so with this 28% jump in operating profits between july and september, it seems quite good, and it is also its highest quarterly profit in three years, $10.5 billion. an increase of $1 billion since last year. they are best known for smartphones, last year. they are best known forsmartphones, but last year. they are best known for smartphones, but these results are driven by memory chips

. >> they have gradually been -- manufactured by tsmc in taiwan.mpact on intel is going to be built into the stock already at this stage. intel is not really the big money spender anymore. it is not good news for them. mark: what about netflix earnings? can we expect more positive results? that very addictive show, squid game. >> analysts are looking for 3.7 million additional subscribers in the first part of the year, a slowing in the pace of new subscribers. we are seeing the drip of new show lineups hit the platform, that is driving new subscriptions. whether they can drive the pace of what is expected, and of course how we look ahead into the fourth quarter of the year is going to be accelerating even more. those are the headline numbers people are going to be looking for. >> successful shows setting the expectations bar higher. netflix internally, we have this scoop that the korean megahit was valued at $900 million. what do those numbers mean? how did they arrive at that? >> that is the sort of analysis, you think of the lifetime value of a c

these are processors based on the arm architecture designed by apple and manufactured by tsmc.e've seen in terms of supply chain is they've been doing a fairly good job cranking out processors for apple products. the problem comes down to receiving other components that are not vertically integrated. we are seeing shipment delays on the new macbook pro deep into december and if you combine that with the shipment delays we are seeing across the apple portfolio, they have a real problem on their hands going into the holiday season. shery: what did you think of their upgrade to the audio line? >> the home pot update was basically nothing. i'm not sure why they did that. the new apple music plan is screen list. it's using apple music without an app. i'm not sure i would pay five dollars a month for a service that requires you to use siri to operate. at this is targeting a new feature amazon rolled out about a year ago which allows you to pay a lower price for amazon music used through your echo speakers. in terms of the new airpods, my question is where is the new airpods pro? thes

tsmc says it will not part with sensitive client data. korea has released a statement expressing concern with the scope of the u.s. request. a pboc governor says that china will continue steps to curb monopolistic behavior among tech companies and strengthen consumer data protection. the central bank will also tighten regulation of the payment sector. he asks all financial services companies to be licensed. this mirrors actions taken recently against alibaba. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: it's time for morning calls ahead of the asian trading day. >> we are seeing preliminary earnings for the third quarter. citibank expects a solid report card. over at citigroup, the chip unit is set for a robust recovery going into year-end. paul: tesla is hosting its annual shareholder meeting as we speak and its new factory in austin, texas. let's get to our auto reporter for the latest. austin is going to be the new home

we have software companies in the united states, that exported this software to tsmc in taiwan, who madeated and got the chips from tsmc that created and helped build these hypersonics. this is why, we have called for more rigid export control laws and action, so that the united states for god's sake is not sharing the very technology that the chinese military are using to build most advanced weapons systemss. >> john: what i was getting at, though, is this part of a military umbrella that would make impossible any u.s. response to a chinese invasion of taiwan? >> michael: right. if you're in taiwan right now, in particular after afghanistan, the ccp is very embolden, so is russia, putin with the ukraine. taiwan is very much in their bull's eye, part of long-term strategy to take taiwan back as part of empirial china. i would be nervous if i were taiwan. they are testing this president. if we show no deterrence rest assured communist china will take it over, free democracy in the nation, in the world and they created a lot of semiconductor chips and we can't allow that to happen. to turn

the tsmc results feeding into the sm -- the asml story.sector continuing to bounce back. financial services looking good. the underperformance comes from the utilities and the staples. defensive areas of the market nonperforming that strongly. individual names continue to be a big focus. adidas up strongly, announcing another big buyback. adidas bouncing on the back of that. asml makes the kids chipmakers used to make chips. you saw what happened earlier on. that feeds back into asml. leonardo is an interesting story. it is based out of italy. it looks like there is reporting suggesting that faulty titanium fasteners which are used to put together the boeing 787, which is a composite body tube in terms of the aircraft manufacturing process and the reporting suggests the fault has been traced back to leonardo. leonardo's stock dropped like a stone on the back of this as that new started to come out. it has accelerated over the last hour. the stop is now down 7%. the 787 got a series of ongoing problems related to that aircraft. this latest

are competing against companies that have positionally executed, whether it is nvidia, whether it is tsmc, whether it's amd. they are trying to hit a moving target yes, if you have a long enough time horizon in 2025, 2026, when intel is targeted being ahead of manufacturing, if they execute, certain things could work out. my concern is simply what happens in 2022, 2023, and there is not a certainty that they get to the that point. >> it's a matter of getting investors excited about the story again. what they keep hearing about is how extraly si sue is doing. how great jensen wong is doing and how great nvidia is doing and all the stories that seemingly have a better narrative around them. as you said, over one year, your target, your outlook, people are going to be disappointed over five years, why not take a bet on what you say is cheap stock? >> i think it simply comes down to uncertainty so if you wait a year, are you going to be -- have any -- you will have more insight, and you will have avoided the pain of what happens in 2022 if they are targeting being ahead in 2004, you will have

the chip that is the dominant chip in the intel amd war is made by tsmc.oing back to my point earlier, china views taiwan as part of china. there is no way they will be technologically impotent compared to america over the next 20 years. they will get there one way or another. erik: what do you say to americans who are angry that engagement with china, until now, has been on china's terms and partly, if not largely a result of that dynamic, the united states has lost some of its technological superiority. what do they understand about china? ken: there is a farmer troubling part of this story. let's go back to the theory of the case. china is going to evolve towards capitalism. the united states erases that transfer -- embraces that wholeheartedly because our theory was that as they became capitalistic, they would embrace democracy. and we were clearly willing to leave a value on the table for chinese for that journey, because they have the most populist country in the world be part of the western ethos of is incredibly strategically important. and it is a

they're not at where tsmc, samsung and intel are trying to get. they're certainly dealing with their own issues over there. but we think that semi conductor manufacturing within the chinese industry or economy is still a long-term goal that they would like to build out. as they decouple really from western suppliers. they've seen what could happen you know, through zte and they know they have to manufacturer and build out, they're just not at the cutting edge like western companies. >> is there danger here, particularly with semiequipment stocks at some point some of these companies might be buying equipment more than they need because it's so hard to get a hold of and then in the next 18 months or so there's some digestion that has to happen >> i don't think right now that they're buying more than what they need. i think that there's such a demand to install capacity, as well as the build plans that we're hearing from the primary foundries that they want to place them more in the united states where we haven't had that build out. so, we think rea

amd is and really getting that supply from tsmc that is so important for them still, though, the match sets a bit of an issue. gaining even more share, if not for some of the constraints on other components that are keeping customers from putting machines together. but still the trends very much in their favor i'm looking forward to seeing what she got and what amd's got next year. a lot of announcements around graphics due to come out then. i expect that we'll hear from nvidia and intel and the competitive chip market the likes i have never seen. >> that was really an incredible interview because i know you guys were asking about competition in the space and alluding to intel, but just felt like lisa sue doesn't really even see intel as competition. i know she was probably, you know, talking up a big game and just talking about the high performing chips that their competitors or rivals don't have and that issue of, that deal is supposed to be happening and where is it. it was always supposed to be by year end does that give them another leg up on intel, john? >> perhaps but got to rem

specifically as you're expanding capacity the founder of tsmc is skeptical of washington's plans to increaseapacity, $52 billion to increase that domestic capacity is too little what do you think? >> the 52 billion is not the beginning and the end. it's the beginning really you think about that 52 billion, you know, about 30% partial in funding so that 52 billion will enable about $150 billion of capital expen expenditure and look i'm absolutely confident once we start to use this partnership model to create capacity, the economic return for governments that they will see in employment and philosophy of money through the economy, they'll want to do phase 2, phase 3 of that so we shouldn't argue or debate over is 52 billion enough or not. let's make that the first installment. make it successful and more will come >> speaking of the government aspect, tom, i wonder when you look at asia pacific, north america, europe who is doing the best job at drawing in that investment and welcoming the capacity additions that we so badly need >> well, look, i already spoke singaporean government already h

we will also watch tsmc amid the ongoing supply chain disruptions.d also note the economic data, we have some big things to throw into the pot with regard to inflation debate. numbers coming from the united states and china. let's look at this chart. this is key here. it shows u.s. consumer prices and china as producer prices and how closely they are intertwined. it was claimed that china exported deflation, and that is what it was difficult for other companies to raise prices. that is why we had the situation in the west where we couldn't get inflation up to 2% in many parts of the world. the thing is, we have ppi possibly coming in over 10% this week, that data on wednesday. we also have the policy-run blast of korea, it may refrain from a back-to-back rate hike. and australian jobs. and that is a look at your week ahead data wise, at least. more on the way, including "bloomberg daybreak: europe middle east." baaam. internet that doesn't miss a beat. that's cute, but my internet streams to my ride. adorable, but does yours block malware? nope. -it

tsmc says it will not part with sensitive client data.s it has released a statement saying it is concerned over the scope of the u.s. request. the u.s. central intelligence agency is creating a dedicated china mission center. it is aimed at tackling what cia director bill burns calls the most important geopolitical threat of the 21st century, and adversarial chinese government. mission centers are standalone entities that utilize resources from across the agency. the cia says work will continue on other threats including russia and iran. former president donald trump wants top aides to defy subpoenas relating to the capital insurrection that took place last january. the four personnel are requested to submit records and testified to a congressional committee. if they refuse, it would set up a potential legal battle with house committee. a letter seen by bloomberg, a trump lawyer says the information is protected by executive privilege. to vietnam, the country is facing a worker exit is from its factory heartland. more than 2 million peopl

>> well, 25% customer to tsmc. so that's why i think the stock was up today and broadcom.is known in terms of the iphone 13. i don't see it as a super cycle. i think we know about services don't know about the auto and exposure there that's years away. i feel like everybody owns this stock so i'm underweight and 100 basis points and still 5% total in my portfolio because it is such a big weighting i'm there and not as enthused. much more enthusiastic about broadcom. >> tiffany, round it off for us with the broad markets do you feel like the bottom is for the rest of the year or don't have the confidence on that yet >> yeah. that i definitely can't call but seeing increased volatility going forward and much of the reasons we saw earlier definitely supply chain issues and labor costs. work changed i don't think it's a matter of getting back to work people have exited the labor force and account for that and not baked in yet definitely growth in china just talking about semis 9 2% of chips are made in china and slowdowns in production so i think that's going to weigh into thi

the enthusiasm spilled over into asia where taiwan was also buoyed by tsmc results.t's talk about the earnings so far. good to speak to you this friday, hannah. let's start with the earnings narrative and what you are seeing. how do you take on what we have heard from the banking sector? is the banking sector you want to be based on valuations, the earnings sector so far? or are you not convinced? >> good morning. we actually don't invest in the banking sector, but we are looking to companies with strong balance sheets. what we have taken away from the earnings of the banks, which is really interesting, is the read cross into sectors that maybe more interesting. we are looking at mastercard. if you look at j.p. morgan finance, you see volumes are up above 2019 levels. that is really exciting. we are looking for the reader cross into the payment sector where we have seen a pullback in the likes of visa and mastercard. mark: i can't believe you don't own banks, i thought everyone owned banks. one of the most consensus trades out there. why don't you? what are you worri