Tech Brew Ride Home - Thu. 04/03 – How Tariffs Might Impact Tech

Episode Date: April 3, 2025

Well we gotta talk about this tariff thing because the early indications are this could impact almost every nook and cranny of the tech industry. Could we get an announcement about TikTok within days? I think I figured out why CoreWeave’s stock popped back up. And how Nintendo plans to fight the scalpers. Links: Trump’s New Tariffs Test Apple’s Global Supply Chain (NYTimes) Trump to Outline TikTok Deal Proposal, With ByteDance Retaining Stake (The Information) Google in Advanced Talks to Rent Nvidia AI Servers From CoreWeave (The Information) AI Video Startup Runway Valued at $3 Billion in Funding Round (Bloomberg) Amazon targets April 9 launch of first Kuiper internet satellites (Reuters) Nintendo’s Switch 2 preorder process has strict requirements to thwart scalpers (The Verge) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Thursday, April 3rd, 2025. I'm Brian McCullough today. Well, we got to talk about this tariff thing because the early indications are this could impact almost every nook and cranny of the tech industry. Could we get an announcement about TikTok within days? I think I figured out why CoreWeave's stock popped back up and how Nintendo plans to fight the scalpers. Here's what you miss today in the world of tech. You all know I try to keep politics out of this show as much as possible. But the obvious exception is when politics affects the tech industry in a meaningful way. So take as read that I don't have a personal opinion on whether these tariffs are good or bad policy, but I can tell you at the time of this

writing, Apple stock opened down nearly 8 percent, Amazon opened down 6 percent, meta down 6 and a half percent, alphabet down 3.3 percent, Microsoft down 2.2 percent, Nvidia down 5 percent. Now, obviously, by the time you hear these words, all these stocks could have come roaring back, but let me just read some headlines for you. The U.S. announced a 34% reciprocal tariff hike on China, taking effect from April 9th. Economists say the average U.S. tariff on Chinese products is now at least 65%. Tons of gadgets get imported from China, right? So lots of companies have been trying to diversify away from China for that reason. But President Trump announced a 46% tariff on goods from Vietnam and 26% on goods from India. So that alone could account for the Apple weaknesses.

That was where they had been going to try to diversify away from China. The White House said de minimis tariff exemptions for up to $800 packages from China and Hong Kong will end on May 2nd. So once again, whither Temu and Sheehan. And if you think crypto is immune from this, well, according to Bloomberg, even though many of the largest Bitcoin miners are based in the U.S., the supply chain for mining equipment is rooted in Asia. And one more thing you have to keep in mind, as it stands right now, this only affects imports of things U.S. tech companies might want to sell, but countries around the world could announce tit-for-tat tariffs of their own,

the very definition of a trade war, thereby making Silicon Valley tech more expensive to sell overseas, and perhaps dampening sales. So, quoting CNBC, We will supercharge our domestic industrial base, we will pry open foreign markets and break down foreign trade barriers, Trump said during his speech, ultimately more production at home will mean stronger competition and lower prices for consumers. Apple is going to spend $500 billion. They never spent money like that here, Trump said. They're going to build their plants here. The NASDAQ just wrapped up its worst quarter since 2022,

dropping 10% in the first three months of the year, though the tech heavy index rose in each of the first two days of the second quarter, end quote. Though at the time of this writing, the NASDAQ is down 4.4.4.5.5. point four percent at 16,800. It was above the 20,000 point mark as recently as mid-February. Bitcoin is down 5 percent at time of this writing. Ether, down 7 percent. Solana down 13 percent. Quoting the New York Times. The proposed tariffs threatened to compound the pressure on Apple's business. The company is already dealing with 20 percent tariffs on products imported from China, where Apple makes about 90 percent of the iPhones it sells around the world. Mr. Trump said that the rate would go to 34 percent under his new tariff plan. The cost of reciprocal tariffs, as Mr. Trump calls them, could put Apple's

business in a jam. The iPhones, iPads, and Apple watches that the company sells deliver three-quarters of its nearly $400 billion in annual revenue, with Mr. Trump saying he won't allow products to be exempted from tariffs. Apple will have to either pay those fees, which will reduce its profit or indirectly pass those added costs onto customers by raising prices. Apple will take these new tariff numbers and put them in models they have built and know within hours how big of a problem they have, said Anna Katrina Shedletzky, the founder of Instrumental, a Bay Area company that uses artificial intelligence to improve manufacturing performance. She previously worked at Apple. The tariffs on iPhones and other devices imported from China will increase Apple's annual cost

by $8.5 billion without any relief from the Trump administration, according to Morgan Stanley. That would reduce the company's profit next year by $0.52 per share or about $7.5.5.7. $8.5 billion. That would be a roughly 7% hit on next year's profits. In 2017, as Mr. Trump started in office, Apple began setting up assembly lines for iPhones in India. It took five years for it to train workers and build the infrastructure to make its newest iPhones in the country. It is in the process of increasing production there, with hopes the country's factories manufacture about 25% of the 200 million iPhones that it sells annually. The company also began shifting production of AirPods, iPads, and MacBooks to Vietnam. The country became a destination

for Apple and others after COVID-19 shut down factories in China in 2020, and Vietnam's factories accounted for more than 10% of the top 200 suppliers that the company had in 2023. Vietnam was an appealing location because of its proximity to China. India was alluring because Apple wanted to boost sales of iPhones in that country, which is the world's second largest smartphone market. While Apple is the most prominent tech company to feel the sting of tariffs, most other tech companies will see an impact directly or indirectly. Google and Microsoft, for example, are not as heavily dependent on international suppliers, but they do have notable consumer electronics businesses. And the tariffs could increase the cost of building the massive new data

centers that companies are planning on to build new artificial intelligence technology, end quote. And quoting Bloomberg. Tariffs at the proposed level would shrink Chinese exports to the U.S. by some 80 percent, according to Bloomberg economics. China is now facing a one to two percentage point loss to growth as a result of the hikes, according to economists at BNP Paribati. society general oversee Chinese banking and ING bank. Many said Beijing would ramp up stimulus to offset the impact. President Xi Jinping has just under a week before tariffs take effect to calibrate Beijing's response, with prospects for negotiating a deal in that window looking slim. Talks so far have stalled at lower levels with the world's most powerful men not speaking since the Republican leader returned to the White House.

That's the longest a U.S. president has gone without talking to his Chinese counterpart post-inaguration in 20 years. Beijing has responded to Trump's previous tariffs with targeted measures designed to avoid hurting its own economy, which is battling a property crash and facing its longest spell of deflation since the Mao Zedong era. Retaliation has included restricting exports of critical minerals, putting tariffs on U.S. agricultural goods, often produced in Trump voter heartlands, and investigating U.S. firms, including Google, which has little business in China. Today's action could harden views in Beijing and lead to serious escalation far beyond tariffs using the tools Beijing has sharpened over the past four years, said Martin Chorzempa, senior fellow at the Peterson Institute for International Economics in Washington, end quote.

The information has a source who says that President Trump plans to announce TikTok America, a company that will be around 50% owned by U.S. investors and 19.9% owned by ByteDance, the new entity would license the TikTok algorithm from BytDance. quote, that structure would put bite dance's ownership just under the 20% threshold required in the U.S. law passed last year, requiring TikTok to sever ties with its parent company or face a ban. With the new structure, Trump could deem a qualified divestiture has happened under the law, which was passed by Congress last year and upheld by the Supreme Court. The planned announcement comes ahead of a Saturday deadline, which Trump set to delay enforcement of the divest or ban law. The Trump administration is expected to spell out a time frame of roughly 90 to 100. 120 days from Wednesday to finalize a deal, the person said. The proposed new company name is not

finalized and could change, the person said. It's unclear which new investors will participate in the deal. In recent days, media outlets have reported that Andreessen Horowitz and private equity firm Blackstone have mold taking a stake. Amazon also submitted a last-minute bid to acquire TikTok U.S. operations, according to a person familiar with the bid, though parties involved in the TikTok sale talks do not appear to be taking Amazon's bid seriously. New York Times earlier on Wednesday reported Amazon's interests. It's unclear whether the Trump administration has approval for the proposed structure from the Chinese government, end quote. AI video startup runway has raised $308 million, led by General Atlantic. Sources say, at a $3 billion

plus valuation and plans to use the money to hire more filmmakers, screenwriters, and others. Quoting Bloomberg, the New York-based company kicked off the frenzy around AI video generators in early 2023 with the release of a model that could produce slightly chop. looking three-second clips based on written prompts such as drone footage of a desert landscape. Two years later, the competition has increased significantly with tech companies including OpenAI and PICA rolling out similar services. Earlier this week, Runway unveiled a new AI model called Gen 4 that aims to let users create videos with consistent characters, objects, and backgrounds, a milestone that may mark a leap ahead of some of its rivals. As the company's software improves,

co-founder Chris Valenzuela said it's becoming increasingly possible to use it to speed up the filmmaking process. Films, in my opinion, should work in shorter timelines, Valenzuela said, adding that the goal is to enable creatives to move at a pace closer to the show Saturday Night Live. If you have a good story, you can probably go from Monday to Saturday and make it like SNL does, end quote. I think I might have solved that mystery of why Corweave's stock had been rebounding so much from that lackluster IPO day. In short, they might be close to solving that, but they only have one big customer concern investors were voicing. The information also has a source that is telling them that Google is in advanced talks to rent Nvidia Blackwell chips from CoreWeave, highlighting how Nvidia customers

are struggling with AI chip availability. Quote, the potential deal shows how major Nvidia customers like Google are struggling to get enough chips to meet rising demand from their own customers. It also shows how CoreWeave's special relationship with NVIDIA and its ability to move quickly in setting up AI-focused data centers is attracting business from large cloud providers and major AI developers like OpenAI and meta-platforms. OpenAI, for instance, says it also can't get enough Nvidia chips as usage of its chat GPT service accelerates, hurting its ability to run new features like the chatbot's image generation tools. In the past two weeks, Google executives have also

asked other CoreWeave competitors for access to spare GPUs, assign the that the firm is capacity constrained, according to two other people involved in those conversations. Though Google is one of the largest buyers of Nvidia chips, much larger than CoreWeave, Google has struggled to set up enough of its own data centers to power the newest ones, which have proven especially tricky to use. The situation echoes what happened in 2023 when sudden demand for Nvidia chips after the launch of ChatGBTT triggered a worldwide shortage. Corweave and other upstart AI-focused cloud providers, however, were able to buy sizable

amounts of chips from Nvidia and grow rapidly. Nvidia saw these firms as friendlier customers compared to cloud providers like Amazon, Google, and Microsoft, which have been developing their own AI chips to reduce reliance on Nvidia chips. Google itself has placed more than $10 billion of orders for Blackwell chips and began making those chips available to select customers in February. Leasing chips from CoreWeave would expand Google's capacity to rent out the chips to cloud customers that develop AI, which include Anthropic, Apple, Character AI, and GitLab.

Google and Corweave are also in preliminary discussions for a separate deal in which Google would lease space in Corweaves data centers to house the Google TPUs, suggesting that Google is facing a crunch in data center space for its own chips. It isn't clear whether Google has such arrangements with other data center providers, end quote. Amazon is planning to launch the first 27 satellites for its Project Kuiper Internet network on April 9th after launching two prototype satellites in October 2023, Quoting Reuters. In a statement, Amazon said it will launch the Kuiper Atlas One mission on April night at noon eastern daylight time from the Cape Canaveral Space Force Station in Florida. The mission will kick off Amazon's full-scale deployment of Kuiper, a mesh-like network designed to top 3,000 satellites in low-Earth orbit that will provide high-speed internet globally and rival SpaceX's Starlink. Amazon announced project, Coiper, in 2019, with plans to invest $10 billion into the network's development after hiring a team of engineers who had been leading

Musk's Starlink before he fired them the prior year, end quote. And quoting the verge. The KA01 mission satellites, short for Kuiper Atlas I, will launch on an Atlas 5 rocket from United Launch Alliance. Amazon's other project Kuiper launch partners include Arian space, blue origin, and yes, SpaceX. As a global service offering, Amazon space internet service will eventually be available from virtually any location on the planet. Users will need terminal antennas to tap into the satellite constellation. In 2023, Amazon said that its smallest dish, a 7-inch square design, weighing just one pound, would offer speeds up to 100mbPS, making it a Starlink Mini

alternative. Amazon will further compete with SpaceX by offering larger dishes for residential and enterprise use, offering speeds of up to 1 GbPS. Amazon expects to produce the terminals for less than $400 each, which may or may not be subsidized to attract users. Notably, the satellites flying on K-A-O-1 are coated in a dielectric mirror film unique to Kuiper that scatters reflected sunlight. That should help make them less visible to ground-based astronomers, according to Amazon. Although Amazon already launched a pair of Project Kuiper prototype satellites, its upcoming mission will include a number of firsts that introduce risk. We've done extensive testing on the ground to prepare for this mission, but there are some

things you can only learn in flight, and this will be the first time we've flown our final satellite design, and the first time we've deployed so many satellites at once, said Rajiv Badial, vice president of Project Kuiper. No matter how the mission unfolds, this is just the start of our journey, and we have all the pieces in place to learn and adapt as we prepare to launch again and again over the coming years, end quote. Finally today, one more quick additional word on that Nintendo Switch 2 announce. You know how with gaming hardware launches it can take months or even years before or you can get your hands on one, sometimes because the hardware can't be made quickly enough, but also often because scalpers get them first and then try to sell them at a big markup.

Well, it seems Amazon has a solution, quoting the verge. If you want to pre-order a switch directly from Nintendo, you'll need to make sure you have at least 50 hours of gameplay on the original switch as of April 2, 2025. Nintendo revealed the anti-scalper mechanism on its pre-order registration page where it says it will prioritize registrants who meet the gameplay requirements and have purchased at least a 12-month switch online membership. For Nintendo to track your gameplay hours, you'll need to have opted in to share gameplay data with Nintendo. You can check if you opted in by logging into your Nintendo account and checking your privacy settings.

Nintendo says it will send out its first round of pre-order invites on May 8, 2025, with additional batches of invitation emails sent periodically until purchasing on My Nintendo Store. is open to everyone. When you receive an email, you'll have 72 hours to pre-order the switch to pre-orders at participating retailers will open to everyone on April 9th in North America or on April 8th in Europe, end quote. Nothing more for you today. Talk to you tomorrow.