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Now that WarnerMedia and Discovery have tied the knot, the pressure's on ViacomCBS and NBCUniversal

In this articleCMCSAVIACShari Redstone, chairwoman of ViacomCBS and president of National Amusements, reacts as she celebrates her company’s merger at the Nasdaq Market site in New York, December 5, 2019.Brendan McDermid | ReutersIn the words of the great Tom Lehrer, “Who’s Next?”Now that AT&T has decided to separate WarnerMedia and merge with Discovery, the rest of the media world — particularly the smaller players — face new pressure to make their countermoves.Even before this deal, it was clear that Lionsgate, MGM, Sony Pictures and AMC Networks were probably too small to compete in a streaming world where success depends on a massive store of content and global reach.But ViacomCBS and Comcast’s NBCUniversal are much bigger, and probably assumed they had some time — at least a year — to see how many subscribers signed up for their streaming offerings, Paramount+ and Peacock.”Within the next two years, it’s going to be put up or shut up for all of us,” said David Zaslav, Discovery’s CEO who will take the top job at the combined company, in December. “Can you show you’re scaling? Are you going to be a player in the U.S.? Are you going to be a player around the world?”Under pressureThat timeline is shorter now.Suddenly, both ViacomCBS and NBCUniversal seem subscale as they attempt to put together global streaming services. They aren’t trying to be niche players, such as Starz or AMC+.That means both will need more content to compete against Netflix, Amazon Prime Video, Disney and whatever the new name of WarnerMediaDiscovery will be.The obvious move would be for ViacomCBS and NBCUniversal to merge. But a combined ViacomCBS/NBCUniversal would have two U.S. broadcast networks — CBS and NBC — housed under the same corporate roof. That won’t fly with U.S. regulators. While the parent companies could theoretically spin out or sell them, the broadcast networks provide so much value to both companies — and their streaming services — that it seems unlikely.Further, Shari Redstone controls ViacomCBS and Brian Roberts controls NBCUniversal through his family’s Comcast shares. Their dual class share structure is another obstacle for both companies, as it makes it hard for outsiders to pressure the companies to make changes the executives don’t favor. But it’s not a deal stopper — Discovery had several classes of shares too, but John Malone was willing to eliminate his voting shares to get a deal done with WarnerMedia.Four optionsThat leaves Comcast and ViacomCBS with four likely options.Buy. If both companies feel their streaming services can compete around the world, they can go on global and domestic acquisition sprees. It may take several deals to get to a scaled position, as they piece together smaller U.S.-based assets and larger global media companies in Latin America and Europe.Sell. They could also sell. Shari Redstone is more open to the idea of selling ViacomCBS than her father, according to people familiar with the matter. It’s unclear if Roberts would consider selling NBCUniversal. Potential buyers could include Amazon or the newly merged WarnerMedia-Discovery. Apple and Netflix continue to hover along the periphery, but neither company has ever shown much interest in making big media acquisitions.Reduce their ambitions. The third option is to throw in the towel on being a global streaming service. Instead, NBCUniversal and ViacomCBS could license their content to other, larger streamers and wind down Paramount+ and Peacock if they fail to gain global traction.Bundle. Option four is similar but less drastic. ViacomCBS and NBCUniversal could begin bundling their streaming services together or finding new streaming partners to increase global distribution through discounted offerings. The main problem with this strategy is it limits the upside for both companies, who won’t be able to compete with larger players for top content and breadth of programming.The fifth option — inaction — is no longer a viable strategy. The pressure is on Roberts, NBCUniversal CEO Jeff Shell, Redstone and ViacomCBS CEO Bob Bakish to find exciting go-forward solutions for their companies.Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.WATCH: What the WarnerMedia-Discovery deal could mean for the streaming wars

Comcast stock closes down 5.5% on Discovery, AT&T's deal

In this articleCMCSABrian Roberts, Chairman and CEO of ComcastDavid A. Grogan | CNBCShares of Comcast closed down 5.5% Monday after AT&T announced a deal to combine its content unit WarnerMedia with Discovery to form a new media giant.The new media company, which could be worth well over $100 billion, will compete against other players that have invested heavily in streaming, including Comcast’s NBCUniversal, Netflix and Disney. Netflix stock closed down nearly 1%, while Disney shed more than 2%.Executives said the two companies already spend a combined $20 billion per year on content, including programming for their linear networks, which is comparable to Netflix’s projected estimate of $17 billion spent this year.The deal also could put pressure on Comcast’s internet business. By shedding its media assets, AT&T can focus on its core connectivity business, touting the power of 5G. AT&T Chief Executive John Stankey said in a call with reporters Monday that he plans to focus his company’s capital on fiber infrastructure to improve AT&T’s 5G network, which could compete against Comcast as a home broadband alternative.”Connectivity demand is higher than ever,” an AT&T spokesperson told CNBC earlier Monday. “Especially connectivity with symmetrical upload and download speeds. This transaction allows us to step up our investment in spectrum and fiber.”As part of the deal, AT&T said it would receive an aggregate amount of $43 billion in a combination of cash, debt and WarnerMedia’s retention of certain debt.Disclosure: Comcast is the owner of NBCUniversal, the parent company of CNBC.CNBC’s Alex Sherman contributed to this report.

Michael Burry of ‘The Big Short’ reveals a $530 million bet against Tesla

In this articleTSLAMichael Burry attends the “The Big Short” New York premiere at Ziegfeld Theater on November 23, 2015 in New York City.Jim Spellman | WireImage | Getty ImagesFamed investor Michael Burry on Monday revealed a short position against Tesla worth more than half a billion, in a regulatory filing.Burry, one of the first investors to call and profit from the subprime mortgage crisis, is long puts against 800,100 shares of Tesla or $534 million by the end of the first quarter, according to the filing with the U.S. Securities and Exchange Commission. Investors profit from puts when the underlying securities fall in prices. As of March 31, Burry owned 8,001 put contracts, with unknown value, strike price, or expiry, according to the filing.Shares of Tesla fell more than 4% on Monday, bringing its month-to-date losses to more than 20%.Burry, whose firm is Scion Asset Management, shot to fame by betting against mortgage securities before the 2008 crisis. Burry was depicted in Michael Lewis’ book “The Big Short” and the subsequent Oscar-winning movie of the same name.Tesla has had a turbulent 2021 amid slumping sales in China in April, and parts shortages that have impeded production both in the U.S. and China.Zoom In IconArrows pointing outwardsBurry previously mentioned in a tweet, which he later deleted, that Tesla’s reliance on regulatory credits to generate profits is a red flag.As more automakers produce battery electric vehicles of their own, ostensibly fewer will need to purchase environmental regulatory credits from Tesla, which they have done in order to become compliant with environmental regulations.Besides his “Big Short,” Burry made a killing from a long GameStop position recently as the Reddit favorite made Wall Street history with its massive short squeeze.In the first quarter of 2021, Tesla reported $518 million in sales of regulatory credits, which Elon Musk’s company generally receives from government programs to support renewable energy. It has sold these to other automakers, notably FCA (now Stellantis) when they needed credits to offset their own carbon footprint.In the fourth quarter of 2020, Tesla’s $270 million in net income was enabled by its sale of $401 million in regulatory credits to other automakers.Tesla historically racked up around $1.6 billion in regulatory energy credits, primarily zero emission vehicle credits, which helped Tesla report more than four consecutive quarters of profitability, qualifying Elon Musk’s automaker for addition to the S&P 500 index.Tesla is currently delayed in producing and delivering its updated versions of its high-end sedan and SUV, the Model S and X. And it is delayed in commercial production of its custom-designed “4680” battery cells for use in forthcoming vehicles, including the Cybertruck and Tesla Semi.Meanwhile, Elon Musk’s electric vehicle venture is facing regulatory scrutiny in China and the U.S. with high profile vehicle crashes leading to negative publicity and investigations by vehicle safety authorities in both nations.Many believe that CEO Elon Musk’s tweets about bitcoin and dogecoin have also contributed to the volatility in Tesla’s stock. Musk has tens of millions of followers on Twitter.Musk, a proponent of cryptocurrency generally, announced last week that Tesla was indefinitely suspending the acceptance of bitcoin as a payment for cars, saying he was concerned by the “rapidly increasing use of fossil fuels for Bitcoin mining and transactions.” Tesla revealed earlier this year that it bought $1.5 billion worth of bitcoin.Tesla shares have dropped nearly 20% in 2021 after surging a whopping 740% in 2020.Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now

David Zaslav sees 400 million streaming subscribers one day for combined Discovery-WarnerMedia

Discovery CEO David Zaslav told CNBC on Monday he thinks the new company created out of a merger with AT&T’s WarnerMedia could eventually attract 400 million global streaming video subscribers.Zaslav, a media executive with decades of experience, said the two are collectively a quarter of the way there already. He was tapped to lead the combined firm.”We own the full ecosystem,” Zaslav said on “Squawk on the Street.” “Netflix is a great company. Disney is a great company, but we have a portfolio of content that is very diverse and broadly appealing.””We think it could be [up to] 400 million homes over the long-term,” added Zaslav — who, prior to Discovery, had a long tenure at NBC where he was instrumental in launching CNBC.Asked whether such a lofty prediction was a realistic goal, Zaslav said: “There’s billions of people out there that we could reach in the market.”Here’s a rundown of the streaming landscape:Netflix has nearly 208 million global subscribers, according to its latest quarterly earnings release.Last week, Disney said Disney+ ended the fiscal second quarter with 103.6 million subscribers and doubled down on its plans to reach between 230 million and 260 million subscribers by 2024.Disney also reported that its ESPN+ had 13.8 million subscribers, while its third streaming property Hulu had 41.6 million total subscribers.Out of the more than 200 million Amazon Prime members, the company said in April that over 175 million of them watched content through Prime Video in the past year.The Discovery/WarnerMedia deal would bring together content properties including HBO, CNN, Turner Sports and the Warner Bros. studio as well as the Discovery Channel, HGTV and Food Network.WarnerMedia’s flagship digital streaming service, HBO Max, debuted in the U.S. in May 2020. Discovery’s direct-to-consumer streaming service, Discovery+, launched in January.The merger deal announced Monday represents the latest chapter in the ever-intensifying streaming wars, as media and entertainment companies battle for consumers’ dollars directly in a shift away from traditional pay TV.Disclosure: Comcast is the owner of NBCUniversal, the parent company of CNBC.

AT&T battled the DOJ to buy Time Warner, only to spin it out again three years later

In this articleTDISCAThen-WarnerMedia CEO John Stankey speaks in 2016.John Lamparski | Getty Images Entertainment | Getty ImagesJust three years ago, AT&T finally closed its $85 billion deal to buy Time Warner, ending a protracted battle with the Justice Department under then-President Donald Trump, which sought to block the deal.Now it’s spinning off its media assets from the deal to combine with Discovery to create a content giant. If the deal is approved by regulators, AT&T will receive $43 billion in cash, debt and WarnerMedia’s retention of some debt, while effectively undoing its earlier merger. The companies said they expect the deal to close in the middle of 2022.The deal marks a stark change in direction for AT&T after it spent a year fighting to buy Time Warner to create a vertically integrated empire of both content and distribution. The company that fought so hard for brands such as CNN, HBO and Warner Bros. just a few years ago is now ready to let them go.The shift highlights how fast the media landscape has changed, as people switch away from pay TV and toward streaming video services in record numbers. The competition for those subscribers is fierce, underscored by the launch of Disney’s fast-growing platform and Netflix’s continuing growth.Meanwhile, AT&T faces new competition in its core business, as T-Mobile and Sprint merged in 2020 to form a more formidable competitor alongside Verizon, and all three companies are racing to roll out faster 5G service to subscribers.AT&T CEO John Stankey alluded to the changed environment in an interview on CNBC’s “Squawk on the Street” on Monday.”Things have changed a bit since we did the transaction,” said Stankey, who led AT&T’s Entertainment Group at the time of the merger and was later named CEO of WarnerMedia before taking on his current role. “Despite the fact that we are doing this relatively quickly, shareholders have still done reasonably well with this decision.”Here’s a look back at the long road it took for AT&T to acquire Time Warner (since renamed WarnerMedia):AT&T says Time Warner is ‘a perfect match’In October 2016, AT&T announced its plans to buy Time Warner. Randall Stephenson, then the CEO of AT&T, called the pair “a perfect match” in a statement accompanying the release.AT&T touted the “complementary strengths” of the two businesses, which it said would allow it to deliver customers premium content from Time Warner to every screen through its network.”A big customer pain point is paying for content once but not being able to access it on any device, anywhere. Our goal is to solve that,” Stephenson said in a statement at the time. “We intend to give customers unmatched choice, quality, value and experiences that will define the future of media and communications.”AT&T positioned the deal as a win for customers, saying it would give them new choices and offer more relevant content and advertising because of its insights across its network.But Trump and his Justice Department didn’t see it the same way.Trump opposes the dealFormer U.S. President Donald Trump speaks at the Conservative Political Action Conference in Orlando, Florida, February 28, 2021.Octavio Jones | ReutersAs a candidate, Trump bashed the AT&T-Time Warner deal shortly after it was announced, saying his administration would not approve the deal “because it’s too much concentration of power in the hands of too few.”Once elected, Trump held to that promise. Though some pundits had speculated after the election that a Republican administration would still be positive for the deal’s prospects, Trump’s Justice Department later disproved that thinking by filing a lawsuit to block the merger in November 2017.Many Democrats and antitrust experts feared Trump’s opposition to the deal influenced the DOJ’s lawsuit. Trump made no secret of his distaste for Time Warner-owned CNN, which he often positioned as his foil when slamming what he called the “fake news.”The DOJ’s top antitrust official at the time, Makan Delrahim, has repeatedly denied that Trump held any sway over the decision to seek to block the merger. He told CNBC as recently as January that he “never” spoke with Trump or heard from White House officials about the case during the investigation or trial.A fight with the DOJWhen the DOJ sued to block the AT&T-Time Warner merger in 2017, it claimed the combination was unlawful and would ultimately harm consumers by raising prices.Stephenson said on a conference call at the time that the suit would have “nothing but a freezing effect on commerce.”The lawsuit came shortly after Delrahim had been approved by the Senate to lead the DOJ’s Antitrust Division. But a year before filing the lawsuit to block the case, Delrahim had told a Canadian news outlet that he didn’t see the combination “as a major antitrust problem.” He did acknowledge at the time there could be some concerns about a distributor owning content and its impact on other distributors.In June 2018, U.S. District Court Judge Richard Leon ruled that the deal was legal and placed no restrictions on the merger’s close. Leon wrote that the government failed to meet its burden to prove the deal would substantially lessen competition.The DOJ dropped the suit after losing on appeal in February 2019.Delrahim, for his part, told CNBC earlier this year that he still believes a different judge might have handed him a win.”Sometimes different judges could reach different conclusions on the same exact set of facts. So I’m convinced we might have had a different outcome if we had a different judge in that case,” he said. Never mindAT&T and Time Warner officially closed their merger in June 2018, prior to the DOJ’s appeal.Since then, AT&T changed the name of the media business to WarnerMedia and shuffled around staff and streaming services, including simplifying HBO’s streaming offerings.Still, HBO has lagged behind in subscriber count compared with rivals like Netflix and Disney+. HBO and HBO Max reportedly have about 64 million global subscribers, while Netflix has about 208 million and Disney+ more than 100 million in about a year and a half of service.After spending so much time fighting to acquire Time Warner, AT&T’s decision to let those assets go is an acknowledgement of the new realities of the streaming wars, which seems to reward services with sprawling content offerings like Netflix’s and Disney’s deep archive of beloved classics.”My job is to make sure this came out on balance right for the AT&T shareholder in aggregate,” Stankey told CNBC Monday, “and I think we did that here.”Subscribe to CNBC on YouTube.WATCH: Cramer says he would want to own AT&T less after Discovery deal

AT&T CEO John Stankey's biggest corporate reversal in history rejects former boss Randall Stephenson

In this articleDISCATJohn Stankey, senior executive vice president of AT&T Inc. merger integration planning, arrives to federal court in Washington, D.C., U.S., on Monday, April 30, 2018. Andrew Harrer | Bloomberg | Getty ImagesIt didn’t work. It was misguided. It never really made sense to begin with. And we’re not talking about Quibi.AT&T announced Monday it decided to spin off WarnerMedia, merging it with Discovery to form a new media and entertainment company likely worth well over $100 billion.AT&T’s decision to split out WarnerMedia comes less than three years after closing its $100 billion transaction, including debt, is an admission that putting a large content asset with a wireless phone company had few long-lasting synergies. If anything, WarnerMedia became an albatross on AT&T shares, which have underperformed Verizon and T-Mobile since the deal’s completion date on June 14, 2018.AT&T CEO John Stankey also sold a 30% stake in DirecTV and other linear pay-TV assets in February, along with operational control, to TPG. That deal also partially unwound a major AT&T acquisition from just a few years earlier. AT&T spent $67.1 billion, including debt, on DirecTV in 2015.Stankey was former AT&T CEO Randall Stephenson’s right-hand man. He had defended the DirecTV and the Time Warner acquisitions in the past.But his actions signal something that his words have not: both deals haven’t worked.Here’s what Stephenson said about why AT&T should buy Time Warner right after the deal was announced in 2016.”Why put the two companies together?” Stephenson said. “The world of distribution and content is converging, and we need to move fast, and if we want to do something truly unique, begin to curate content differently, begin to format content different for these mobile environments — this is all about mobility. Think DirecTV Now, the new product we’re bringing to market. What can you do with Time Warner content really fast and very uniquely for our customers? Can you begin to integrate social into that content? Can you give the capability to … I’m watching content, I want to clip it, I want to send it via social media to my friends. Can we iterate on that quickly, and can we give a unique experience to our customers?”Whatever he was talking about there never happened. Instead, here’s what has happened.Media companies have realized that linear pay-TV is a slowly dying business. That’s why Stankey partially unloaded DirecTV, a linear pay-TV distribution business.Media companies have attempted to counteract the loss of pay-TV subscribers with direct-to-consumer services that allow users to pay for access to content without subscribing to cable. This has turned entertainment giants into distribution platforms, themselves, a la Netflix.After running WarnerMedia for about two years, Stankey clearly concluded AT&T was at best not necessary as an owner of media assets and at worse holding the wireless company and the media business back.”My job as the CEO of AT&T is to turn out to the employee body, who all have good ideas on how to grow this business and where to take it, and make sure I facilitate those opportunities,” Stankey told reporters Monday. “Looking out over the next couple years on these great growth opportunities we have at AT&T, whether it’s fixed broadband, what we do in wireless and what we can do in growing the media business, it became clear to me that we were going to need a different capital structure to get that done. It was important that I not do something in my decision-making that caused anyone to slow down in their execution.”Stankey went on to acknowledge that instead of supercharging WarnerMedia, as Stephenson had hoped, AT&T was actually holding WarnerMedia back.”Streaming has evolved in the last couple of years,” Stankey said. “The global opportunity from a shareholder accretion perspective is far greater to seize that opportunity on a stand-alone basis than it is to continue to work on improving our domestic connectivity business.”In other words, Stankey said adding Discovery’s content and giving WarnerMedia flexibility to spend billions on content was better for AT&T than any benefits WarnerMedia provided AT&T wireless.That’s as clear of an acknowledgement as possible that Stankey concluded vertical integration wasn’t helping AT&T shareholders.Elliott’s influenceWhile Stankey said he decided in recent months that WarnerMedia needed a new capital structure to better compete against rival streaming services, prompting the deal with Discovery, he seriously started to consider extracting WarnerMedia from AT&T after activist hedge fund Elliott Management took a stake in the company in 2019 and publicly chastised management in a letter, according to people familiar with the matter.At first, Elliott believed Stankey was part of the problem, assisting Stephenson in deals that moved AT&T away from its focus on wireless. But after expediting Stephenson’s retirement and helping run a search for a new CEO, Elliott came to believe Stankey was actually the right man for the job, said three of the people, who asked not to be named because the discussions were private.Stankey told Elliott privately he was his own man — not a Stephenson clone — and would come to his own viewpoints about the value of DirecTV and WarnerMedia. After running a months-long wide search for a new CEO, Elliott decided it would take a chance on Stankey being a man of his word.Stankey began to meet with financial advisers to discuss a transaction in September, according to people familiar with the matter. Reaching a deal with Discovery has allowed the new company to have one class of stock — giving the merged entity flexibility to buy other media assets or sell to an even larger company down the road.Even Elliott was surprised with Stankey’s speed and willingness to take its advice on rationalizing the AT&T portfolio, noting he used phrases Monday such as “focuses our management team” and “simplifying AT&T’s investment thesis” that nearly replicate language from the hedge fund’s letter, the people said.Stankey also impressed Discovery shareholder John Malone on his willingness to be shareholder friendly with his decisions, another person said.”It has been a transformational year at AT&T since John Stankey took over as CEO, and today’s announcement represents another impressive step in the company’s recent evolution,” Elliott said in a statement. “AT&T has now executed on its promise to streamline operations and re-focus on its core businesses, all while improving operational execution, enhancing its financial position and advancing its corporate governance. As investors, Elliott supports AT&T in its efforts to best position the company for future success.”

AT&T announces deal to merge WarnerMedia with Discovery

In this articleTDISCAU.S. telecom giant AT&T announced Monday a deal combining its content unit WarnerMedia with Discovery, paving the way for one of Hollywood’s biggest studios to compete with rivals like media giants Netflix and Disney.Under the agreement, AT&T said it would receive an aggregate amount of $43 billion in a combination of cash, debt and WarnerMedia’s retention of certain debt. AT&T shareholders would receive stock representing 71% of the new company, while Discovery shareholders would own 29%, it added.If approved by regulators, the deal effectively reverses AT&T’s years-long plan to combine content and distribution in a vertically integrated company.The deal would create a new business, separate from AT&T, that could be valued at as much as $150 billion, including debt, according to The Financial Times.Shares of U.S. media company Discovery were 27% higher in premarket trading, while AT&T’s stock price was up more than 4%.”This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms,” AT&T CEO John Stankey said in a statement.”AT&T shareholders will retain their stake in our leading communications company that comes with an attractive dividend. Plus, they will get a stake in the new company, a global media leader that can build one of the top streaming platforms in the world.” Leadership and governanceAT&T said Discovery President and CEO David Zaslav would lead the new company. The board would consist of 13 members, seven initially appointed by AT&T including the chair, and Discovery would appoint six members, including Zaslav.”It is super exciting to combine such historic brands, world class journalism and iconic franchises under one roof and unlock so much value and opportunity,” Zaslav said, adding that AT&T and Discovery’s assets “are better and more valuable together.”The new firm’s singular mission, Zaslav said, is “to focus on telling the most amazing stories and have a ton of fun doing it.”Discovery Communications President and CEO David Zaslav and HBO Chairman and CEO Richard Plepler speak onstage during “Who Owns Your Screen?” at the Vanity Fair New Establishment Summit at Yerba Buena Center for the Arts on October 9, 2014 in San Francisco, California.Michael Kovac | Getty ImagesAT&T owns CNN, HBO and Warner Bros. after it acquired Time Warner, since renamed to WarnerMedia, for $109 billion in 2018. Discovery’s channels include Animal Planet and the Discovery Channel.HBO and HBO Max reportedly have around 64 million subscribers worldwide. Discovery said last month it had reached 15 million paying subscribers.By contrast, Netflix has around 208 million global subscribers, while Disney+ recently surpassed 100 million less than 1½ years after the streaming service launched.The announcement came after reports over the weekend that the companies were in advanced talks to complete the merger.— CNBC’s Alex Sherman contributed to this report.

Governments are deploying 'wartime-like' efforts to win the global semiconductor race

Integrated circuits on a circuit board.filonmar | E+ | Getty ImagesTiny pieces of silicon with intricate circuits on them are the lifeblood of today’s economy.These clever semiconductors make our internet-connected world go round. In addition to iPhones and PlayStations, they underpin key national infrastructure and sophisticated weaponry.But recently there haven’t been enough of them to meet demand.The reasons for the ongoing global chip shortage, which is set to last into 2022 and possibly 2023, are complex and multifaceted. However, nations are planning to pump billions of dollars into semiconductors over the coming years as part of an effort to sure up supply chains and become more self-reliant, with money going toward new chip plants, as well as research and development.South Korea became the latest country to announce a colossal investment in the industry last week. The nation’s government said Thursday that 510 trillion South Korean won ($452 billion) will be invested in chips by 2030, with the bulk of that coming from private companies in the country.Abishur Prakash, a geopolitical specialist at the Center for Innovating the Future, a Toronto-based consulting firm, told CNBC by email that it’s a “a wartime-like effort by South Korea to build future security and independence.””By building massive chip capabilities, South Korea will have the power to decide its own trajectory, instead of being forced in a specific direction,” added Prakash. “This is also about not depending on China or Taiwan. By investing hundreds of billions of dollars, South Korea is ensuring that it is not pegged to other nations for its critical technology needs.”Through the so-called “K-Semiconductor Strategy,” the South Korean government said it will support the industry by offering tax breaks, finance, and infrastructure.In a speech on May 10, South Korean President Moon Jae-in said: “Amid the global economy’s grand transformation, semiconductors are becoming a sort of key infrastructure in all industrial areas.”He added: “While solidly keeping the status of our semiconductor industry as the world’s best, we will safeguard our national interests by using the current semiconductor boom as an opportunity for a new leap forward.”But South Korea isn’t leading on all fronts. “In sheer manufacturing capacity, Taiwan is #1 and South Korea is #2, with the U.S. in third place and China gaining quickly,” Glenn O’Donnell, VP and research director at analyst firm Forrester, told CNBC.South Korea has a commanding lead in memory chips with a 65% share, largely thanks to Samsung, he said. He added that Asia as a whole dominates in manufacturing, with 79% of all the world’s chips produced on the continent in 2019.O’Donnell said it’s “difficult to say” whether the investment will help South Korea seize the global chipmaking crown in the way that it wants to. “This is a monumental investment, but the U.S., Taiwan’s TSMC, and the Chinese are also investing heavily,” he said.Deep pocketsSouth Korea’s investment is being led by two of its biggest chip firms: Samsung Electronics and SK Hynix.Samsung Electronics — the nation’s biggest chipmaker and a rival to Taiwan’s TSMC — is planning to invest 171 trillion won in non-memory chips through 2030, raising its previous investment target of 133 trillion won, which was announced in 2019.Elsewhere, SK Hynix, a semiconductor supplier of dynamic random-access memory (DRAM) chips and flash memory chips, is planning to spend 230 trillion won in the next decade. A spokesperson for SK Hynix told CNBC that the company will spend 110 trillion won on its existing production sites in Icheon and Cheongju between now and 2030. It is also investing 120 trillion won into four new factories in Yongin as part of a wider effort to double the amount of chips it produces.Prakash said the world should be shocked at the size of the South Korea’s overall war chest. “With almost half a trillion dollars, and the involvement of more than 150 companies, South Korea is moving mountains to secure its place in the future,” he said.U.S., China and EU also investingSouth Korea’s pledge comes after U.S President Joe Biden proposed a $50 billion plan for chipmaking and research, while China’s Xi Jinping has pledged to spend on high-tech industries, with a big emphasis on semiconductors. The EU said in March it wants 20% of the world’s semiconductors to be manufactured in Europe by 2030, up from just 10% in 2010. “In the ongoing battle for dominance in the technology field, all nations are jockeying for that all-important designation as the key supplier to the world,” said Forrester’s O’Donnell. “South Korea, Japan, the U.S., Taiwan, the EU, and China all covet that gold medal in the Tech Olympics podium.”O’Donnell noted that it takes about two years to build a chip manufacturing plant, or a fab. “Each fab will cost upwards of $10 billion, but all the money in the world won’t solve the chip shortage quickly nor will it guarantee that gold medal.”He added: “Geopolitical tensions also play into the dynamics. South Korea always lives under the threat from North Korea that will destabilize its tech position if things heat up too much across the DMZ. Taiwan, arguably the biggest current semiconductor supplier faces a similar threat as tensions heat up with mainland China.”Outside South Korea, all of the major chip manufacturers have announced big investments of their own.TSMC has pledged to spend $100 billion over three years to grow its production capacity, while Intel is planning to build two new factories in Arizona with $20 billion. Both companies have also been in discussions about a new European factory, according to reports.Elsewhere, Chinese chipmaker SMIC said Friday it is working rapidly to expand capacity with some plans moving ahead of schedule. Haijun Zhao, the CEO, said on an earnings call that semiconductor demand in every customer segment continues to exceed supply.SMIC posted a 22% jump in first quarter sales to $1.1 billion and raised its sales outlook for the first half of the year.

Elon Musk suggests Tesla may have dumped bitcoin holdings

In this articleTSLAElon Musk, founder of SpaceX and chief executive officer of Tesla, waves while arriving to a discussion at the Satellite 2020 Conference in Washington, D.C., on Monday, March 9, 2020.Andrew Harrer | Bloomberg | Getty ImagesTesla CEO Elon Musk implied in a Twitter exchange Sunday afternoon that the electric vehicle maker sold or may sell the rest of its bitcoin holdings, sending the price of of the cryptocurrency down.Bitcoin dipped nearly 8% to around $44,000 per coin.A Twitter user who goes by @CryptoWhale said, “Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their holdings. With the amount of hate @elonmusk is getting, I wouldn’t blame him…”Musk replied, “Indeed.”A potential sale comes just days after Musk said the company planned to hold rather than sell the bitcoin it already has and intended to use it for transactions as soon as mining transitions to more sustainable energy.Musk has been a big supporter of cryptocurrencies, helping rally the prices of digital coins, including bitcoin, several times in the past year. In an SEC filing in February, Tesla revealed that it bought $1.5 billion worth of bitcoin. The company later said it registered a net gain of $101 million from sales of bitcoin during the quarter, helping to boost its net profits to a record high in the first quarter.However, Musk seems to have reversed course in recent weeks in favor of dogecoin, the meme-inspired cryptocurrency. Tesla last week also “suspended vehicle purchases using bitcoin,” out of concern over “rapidly increasing use of fossil fuels for bitcoin mining.” The price of bitcoin dropped about 5% in the first minutes after Musk’s announcement.Musk has since been hitting back on Twitter against users who are critical of his cryptocurrency stance. Influential venture investor Fred Wilson, a founding partner of Union Square Ventures, tweeted Friday: “He’s playing games. It is hard to take anyone who does that seriously. I’ve lost enormous respect for him over the last year because of it.”Wilson added, “Deep respect for what he does with his talents. Less for what he does with his tweets.”He’s also pushing further into dogecoin. His aerospace venture, SpaceX, announced last week it would accept dogecoin as payment to launch ‘DOGE-1 mission to the Moon.’ His endorsements have helped boost the price of the coin, pushing acceptance among some traders.Crypto exchange platform Coinbase has said it would offer the digital coin in the next six-to-eight weeks. Other popular trading platforms among retail investors, Robinhood and Binance, already allow users to trade dogecoin.

AT&T in advanced talks to merge WarnerMedia with Discovery, deal expected as soon as tomorrow

Combined images of AT&T CEO John Stankey (L)and john stankey WarnerMedia CEO Jason Kilar.ReutersAT&T is in advanced talks to merge WarnerMedia with Discovery in a deal that will strengthen the combined company against rival media giants Netflix and Disney, according to people familiar with the matter.A deal could be announced as soon as tomorrow, said the people, who asked not to be named because the discussions are private. Talks aren’t final and could still fall apart, said the people.AT&T and Discovery declined CNBC’s request for comment. The likely structure of the deal will combine Discovery with all of WarnerMedia, which will become a new publicly traded company co-owned by AT&T and Discovery shareholders, the people said. The exact split between the two companies couldn’t be determined. Discovery has a $16 billion market capitalization and a $30 billion enterprise value. AT&T acquired Time Warner, since renamed to WarnerMedia, for $85 billion in equity value in 2018.Bloomberg News first reported talks between AT&T and Discovery for their content assets.