Tech Giants Are Going Nuclear & $420B Wipeout Scares Chip Industry

0:00This episode is brought to you by State Farm. Checking off the boxes on your to do list is a great feeling. And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you. Whether you prefer talking in person, on the phone, or using the award-winning app, it's nice knowing you have help finding coverage that best fits your needs. Like a good neighbor, State Farm is there.

0:27Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, is big tech single-handedly saving the nuclear industry? Um, yeah. Then thanks to the FTC, your gym subscription is about to get a lot easier to cancel. It's Thursday, October 17th. Let's ride.

0:49Boom. Don't mean to scare you early this morning, but it is spooky season and Americans can't get enough of haunted hayrides and downright ghoulish experiences. According to the National Retail Federation, 18 % of U.S. adults visited a haunted attraction last year, about 46.5 million people. Haunted houses in general are a$500 million industry. Toby, what makes a good haunted house? First of all, my heart rate is still going from that boo at the beginning of the show. I will tell you what makes a good haunted house, and that is bringing a date with you. This was huge in Florida where I grew up, going to Halloween Horror Nights at Universal, or hallow scream at Busch Gardens.

1:31Gets the heart rates elevated. Everyone's adrenaline is pumping. But just try to control the octaves of your screaming because one ill-time jump scare leading to a voice crack-infused shriek can really kill the move. But yeah, this was big in the dating scene amongst high schoolers. I'm just wondering how you follow that up. What's the second date after a haunted house? I mean, some people just go multiple times over the weekend. They just run it back again and again. But yeah, it is tough to come down from the adrenaline-infused date. I think that's why people like haunted houses, though, because you don't get that adrenaline.

2:07You don't get your blood pumping in the modern day very much. So going to a haunted house, very controlled environment can be very cathartic for some people. And that's why it is such a gigantic business. And we got to find one in New York City to go to. Now, a word from our sponsor, Wendy's. Neil, what are you smiling at over there? Oh, just doing a little daydreaming. about about breakfast specifically wendy's breakfast burrito we got a show to record and you're thinking about breakfast burritos obi fresh cracked eggs seasoned potatoes gooey cheese sausage or bacon all wrapped in a warm tortilla you try to get that image out of your head oh and now i'm imagining the smell too simply divine should we just skip the rest of the show and head over to wendy's now don't tip me with a good time if you're looking for a delicious breakfast on the go head to your nearest wendy's to try the wendy's breakfast burrito Hey, business owners.

2:58We know you know the importance of maximizing every dollar. With the Delta SkyMiles Reserve Business American Express card, you can make your expenses work just as hard as you. From afternoon coffee runs to stocking office supplies and even team dinners, you can earn miles on all your business expenses. Plus, you can earn 125 ,000 bonus miles for a limited time through October 29th. The Delta SkyMiles Reserve Business card. If you travel, you know. Minimum spending requirements and terms apply. Offer ends October 29th, 2025. Staring down a shortage in electricity to fuel their power-hungry AI data centers, big tech is taking the nuclear option literally.

3:35This week, Google and Amazon both announced landmark projects to source power from nuclear plants, providing a lifeline to an industry that many considered too radioactive to remain viable. On Monday, Google said it would sign a contract to purchase nuclear energy from startup Keros power, the first time a tech company has ever commissioned a new nuclear power plant. Then yesterday, Amazon one-upped its tech rival by announcing three different projects, including a$500 million investment in reactor developer X Energy. For big tech, nuclear power kills two birds with one stone, if you'll excuse the cliche.

4:13The first problem, soon there's not going to be enough electricity in America's grid to power their data centers that underpin the AI boom. Without data centers, there's no chat GPT. And without enormous amounts of electricity, there's no data centers. The second problem, tech companies have ambitious goals to cut their carbon emissions. But with all the power that AI requires, those targets are at risk. Enter nuclear power. Nuclear is a reliable power source to pair with data centers. And it doesn't emit planet warming greenhouse gases. Big tech and nuclear like Lana Del Rey and the Alligator Tour Guide.

4:46It's a marriage no one saw coming. That is a deep cut reference right there. But you are right. One of the big winners here, too, in this big tech embrace of nuclear power are these smaller modular reactors. The United States wants to achieve these really big climate goals by certain dates, 2035. And if they want to get there, these small modular reactors are going to be a big reason why that happens. They have a number of advantages over those traditional hulking bigger reactors that you typically think of when you associate with nuclear power. One, just reduced construction costs. They are smaller, so it doesn't take as much money or as much time to spin them up.

5:23Two, they're more flexible, so they are suitable for maybe smaller grids in remoter areas, which, again, is where some of these new power plants are starting to pop up. And then three, it's just a smaller upfront investment. You don't have to plow as much cash into them. A lot of these reactors and a lot of these deals that we just spoke about are currently under development. Like these aren't going to come online and start producing power for the grid until a few years down the line. So one thing that you need is these big upfront investments, which is why nuclear is so happy that big tech is embracing it because they are willing to pay a premium.

6:00They are willing to put that upfront investment in and make sure that those next generation smaller reactors are being deployed. and so eventually you can bring the cost down in total. So this is just a huge win for these tinier reactors because big tech is willing to basically foot the bill in order to create these, like do the R &D necessary to bring these online. Yeah, I think that's a critical point. Even you said they're small modular reactors, but they're still super expensive and they're like, how can we, who is our first customer here? Who is going to foot the bill? And all of a sudden big tech is coming along out of nowhere because of this AI revolution that just happened.

6:36a few years ago and says, wow, we are looking at power grids that are going to be strained. The amount of power that data centers specifically are going to require is about to double in the next few years. Oh, hey, look at nuclear power. That is very good for data centers because unlike they are investing and big tech is investing in solar and wind energy, but data centers, unlike other industrial processes, they run 24-7. You don't close down a data center like you would maybe a factory. So the fact that nuclear is there, which runs 24 seven, it provides a stable base layer of power is a very attractive to them.

7:14And we didn't even mention maybe one of the biggest projects, which happened a few weeks ago, is that Microsoft, through a deal with Constellation Energy, is bringing back one of the reactors at Three Mile Island, home to the biggest partial meltdown in U.S. history. So you have Microsoft, Amazon, and Google all inking these huge nuclear deals just because of AI. And when do you hear big tech and climate goals come, you know, align? And that's what we're seeing right now, just because of AI. It's kind of a twilight zone. And then finally, Amazon, I just want to touch on who signed the deal yesterday, might be one of the most power hungry of all the big tech companies, because not only does it have AI ambitions, it also has Amazon Web Services, which has long been this product that relies on very large data centers that are very power hungry to just power.

8:05So Amazon is looking down the road and saying like, all right, if we want to scale up our AI ambitions, we also, people are going to rely more heavily on Amazon web services. We are going to need nuclear as well. So Microsoft, Google, Amazon, they are very power hungry. Nuclear seems to be the solution for them. And that's why they're willing to plow so much money up front into these new age reactors. Experimental because they have not, none of these small modular reactors have ever come online. The first one for Google might happen in 2030 due to regulatory approval and things like that. So we're still years out.

8:38This is a long-term solution. The semiconductor chip industry toppled to some serious losses to start out this week after one of its foundational companies showed some out-of-character weakness in its Q4 earnings report. ASML, often dubbed the most important company you've never heard of is a Dutch manufacturer that sells the immensely complicated ultraviolet lithography machines that chip makers use to fabricate delicate pieces of silicone. But despite the precision machines it sells, this week ASML had a mess of an earnings call. Not only did it forecast much weaker demand in 2025 than analysts were expecting, but it also mistakenly dropped its earnings report a day earlier than scheduled thanks to a technical error.

9:21It slip up prompted a meltdown for chip stocks around the globe with an index of the largest US and Asian stocks losing about$420 billion in market value. This was a bit of a shock to the system because if demand for the machines who make the chips to train AI models is falling, that means AI demand might be softening as well. Is this more of an ASML issue, Neil, alone, or is it indicative of a broader slowdown? It looks like just an ASML issue. They reported that they only got half the orders investors had expected. But in the in the recent hours, actually, we got heartening news that this was not necessarily indicative of a global downturn in the chip industry, which is what the biggest fears were.

10:07TSMC, which is the biggest chip maker in the world out of Taiwan just a few hours ago, reported very good earnings and it raised its forecast for the year ahead. It said sales were going to climb 30 percent in U.S. dollar terms compared to previous projections of a mid 20 percent rise. And TSMC is, along with ASML and Intel and NVIDIA, one of the most important players in the chip industry. So the fact that it came out this morning and said not all good here, that is definitely heartening to market. So we should say, I don't want to say anything because it's still 6 a.m., but we should see chip stocks rise thanks to TSMC.

10:45But really, this wasn't necessarily about AI demand because ASML said AI demand is fine. The problem is, you know, we forget when we talk about AI all the time that semiconductors go into a lot of other products like automobiles, PCs and smartphones. And that's where it said there was not as much demand and chip makers had built a huge inventory glut that they just didn't need to order any more machines. And then one of the issues as well is that it looks like business in China is going to get a little tougher. Last month, the US rolled out these really punitive restrictions on sending critical technologies to China.

11:19The Dutch government also announced similar sort of restrictions over exports of ASMLs machines to the country. So that China market for them is probably about to dry up even more so than it already has specifically on like one. They only sell one type of machine to China, but even that looks like it's about to be cracked down upon. So that's another reason for maybe the more muted forecast. But yeah, Neil, you want to kind of nerd out on ASML a little bit because these machines are extremely expensive, extremely complicated to make. Why are they such an important part of the semiconductor supply chain?

11:53Well, basically, the ASML owns a monopoly on the most complicated or advanced machines that allow you to make semiconductors. They're called extreme ultraviolet lithography machines. They cost up to$200 million per machine. So that means ASML basically only has five customers. Intel, Samsung, TSMC, these are the only chip makers that can possibly afford to buy a$200 million machine. They basically use tiny beams of light to imprint minuscule circuits onto silicon wafers using the tiniest light wavelengths you can even imagine. I mean, the transistors that they print onto these silicon wafers are 10 ,000 times smaller than a human hair.

12:38So imagine how complex and precise this machine is. But it's also big. So a lot of ASML's customers are in Asia, in Taiwan. So the way you have to transport these machines, because they're so massive, you disassemble them and then you put them onto 20 trucks and three loaded Boeing 747s to ship to customers. So the whole process of saying, OK, I want to order a machine from you is not as much. You know, you can't just put it in FedEx. This is insanely complicated stuff. And that's why they cost 200 million dollars, but absolutely underpins our entire semiconductor economy. It's like the world's most complicated Lego project right there.

13:13You have to disassemble and then reassemble with just the entire weight of the world economy on your shoulders. The gym membership that is harder to get out of than benching 225, the cable company's customer service rep that suddenly turns into will hunting when you call and try to cancel your subscription. These are the headaches that everyday Americans might no longer have to deal with after the FTC issued a crackdown on the arduous process of canceling a subscription. According to new rules dubbed click to cancel, outlined yesterday, gyms, retailers, and any businesses with a sign-up option have to make canceling subscriptions as easy as signing up.

13:51In other words, if you sign up for something with one click online, you have to be able to unsign up in the same amount of steps. The crackdown from the FTC comes after Lena Khan said the agency receives around 70 complaints a day relating to frustrations around canceling subscriptions, a number that has skyrocketed in recent years. I would imagine a lot of you listening to this have been sent on a wild subscription canceling goose chase at some point when an unexpected charge pops up. But now that goose chase will ideally be a lot shorter. Yeah, I mean, this is just one of those things in life that just super annoying that you kind of have to deal with on a daily basis, but it just kind of permeates the base level of your being.

14:33And Lena Khan, the FTC chair, has just taken it upon herself to say, This is under the purview of my agency to crack down on companies that are making consumers' life worse. So this is one of those instances that she has cracked down on and says, businesses, you have to stop. You have to make canceling businesses as easy as it is to sign up. And this is not the only action that the FTC has taken in this realm. Remember last year, they sued Amazon for allegedly duping millions of people into Amazon Prime subscriptions. and then making it really hard to cancel. They also sued Adobe over deceiving subscriptions.

15:12But people seem to narrow in on gyms and Planet Fitness in particular for their very hard-to-cancel practices. Yeah, I mean, you hear some of these stories. One person signed up for a Planet Fitness, decided, never mind, it's a little too far away. Then you realize you have to go in person to the gym in order to cancel. And one article I read interviewed a woman that said she just let the membership run on autopay for months before you finally find a window to go and actually physically drive to a location to cancel. That is just a ridiculous amount of steps that you have to do. You can sign up online, but suddenly when you come time to cancel, you have to go in person to it.

15:50Everyone has a horror story relating to the gym membership that they just keep running. There has been some pushback for this though. U.S. Chamber of Commerce big business lobbying group said the FTC's proposal is in effect micromanaging business practices. They're saying they overstepped their legal authority to pass these requirements that are just adding additional burdens to companies. But Lena Khan said, hey, if your business is dependent on trapping people or tricking people into paying for your subscription, that's not even a good business model to begin with. So it's fine to apply these rules to these shady practices.

16:28And I don't think a lot of consumers are going to push back against these rules. I think, yeah, if I had to say this was this is one of the more very popular that the FTC has done. And it is the last big enforcement action before the election. And like we talked about earlier this week, Lena Kahn's future at the head of the FTC is certainly in doubt. Even if Kamala Harris wins, we know that her billionaire backers are pushing her to oust Lena Kahn as the head of the FTC because they say she's been too aggressive. Now, we should say the only way to unsubscribe from Morning Brew Daily is to travel to Nuke Greenland, solve the riddle the troll has for you there, and then break four minutes in the mile.

17:05That is it, though. Easy as pie. Up next, put down your coffee mug. I don't want you choking because we've got Neil's numbers coming up next. I'm Christian McCaffrey, pro running back, and Abercrombie is an official fashion partner of the NFL. I'm not kidding when I say NFL by Abercrombie broke the Internet last year. And I think this season's lineup is even cooler. And so does my wife, who keeps stealing all my hoodies. Stay fit for the season and Abercrombie's newest arrivals. Shop NFL by Abercrombie in the app, online, and in store.

17:48When did making plans get this complicated? It's time to streamline with WhatsApp, The secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will make you feel smarter than someone speaking in a British accent. My first number is for anyone looking to buy an electric vehicle.

18:28Check out the used car lot. You could be getting a great deal. That's because used EV prices have plummeted 25 % from the start of 2023. Now, according to Edmonds, the average selling price of a three-year-old EV is$28 ,400, less than that of a gas engine vehicle of the same age. This is a total 180 from a few years ago. During the supply chain bottlenecks of the pandemic, some used EV models were selling for as much or more than new ones due to car shortages, according to the Wall Street Journal. But as those logistical kinks smoothed over and demand for EVs fell, so has the price of a used battery-powered car.

19:08Another major reason for the discounts, prices for new EVs have fallen dramatically, driving used car prices lower. Tesla was the ringleader of this price war when last year it slashed prices by up to one third on some new models, forcing other automakers to do the same. Toby, the used EV market has gotten crushed, which is causing rapid depreciation for people who own those cars too. Yeah, I mean, a lot of it is Tesla's fault because they did drive a lot of those price decreases. Also Hertz, remember the rental car company went all in on buying all these Teslas and then completely rolled that back and dumped a lot of their Tesla feet onto the used car market.

19:46So that further depressed prices. I don't want to say it's all Tesla's fault, but there are a couple of signs that do point to it being Tesla's fault. Another big trend that you can see in these electric car prices falling is that leasing has become way more popular. At the start of the year, 16 % of electric vehicle sales at dealerships were leases. That has jumped to 80 % now, according to Edmonds. And a big reason why that is happening is that some of these brands are applying that$7 ,500 EV tax credit to purchases directly at a lease deal. So you've seen the average monthly payment for an electric car lease fall from$950 at the start of the year to$582 by about mid-summer.

20:29So a lot of people are just going to the lot saying, wait a second, I can get this for essentially half the lease price that I could at the beginning of the year. Of course, I'm going to start leasing these electric vehicles. it did it could have longer term implications though because if you are alleviating that uh industry or that inventory buildup right now that could lead to this huge flood of lightly used evs hitting the market a few months down the line when all those lease agreements come up so we could be having this exact same conversation a few more months down the line a few more years down the line as these lease agreements come up so the price of electric vehicles might continue to fall as like these factors kind of come together to create a lot of this downward price pressure.

21:11Yeah, and then a final bonus, Neil's number, let's just say that, about the car market. Because of these depreciating car values, there are astonishing number of underwater loans, which means that people owe more on their auto loans than the vehicle is worth. That has risen to nearly one in four consumers in the United States, which has pushed the national average for negative balances to a record high of more than$6 ,400. You're going to have to trust me with this next number. Americans' trust in media has fallen to a record low. According to a new Gallup survey, just 31 % of Americans say they have a great deal or fair amount of trust in the mass media, the lowest level since this survey began in the 1970s.

21:53In fact, the news media is the least trusted group among 10 U.S. institutions Gallup asked about, ranking lower than Congress, the Supreme Court, and the legislative branch. While trust in the media is at a record low, there are some interesting differences between groups. When you zero in on political party, Democrats trust the media far more than Republicans, with 54 percent of Dems saying they have a great deal or fair amount of trust in the media compared to just 12 percent of Republicans. But there's a big split between young and old as well, with younger people not buying what news outlets are selling.

22:27even among Democrats aged 18 to 29, just 31 % trust the media compared to 74 % of Dems 65 and older. Toby, there was a time when if Walter Cronkite said something, it was a stone cold fact. Now there is a major crisis of confidence. Now you gotta listen to Neil's numbers for stone cold facts. Yeah, you see stats like this, you have to go one step further. It's not only that trust is falling, it's just a lot of people are seeking their information elsewhere as well, specifically younger people. They are more likely to get their news online from social media, from potentially podcasts. So that is potentially why they just no longer turn to the media or put trust in media.

23:06You do see across the board, though, falling trust in institutions, American institutions, which is a little alarming. What I immediately thought of is the Nobel Prize winners in economics wrote this book called Why Nations Fail, and a big portion of it is why institutions are so important to creating prosperous communities, prosperous countries. So when you see across the board declines in trust of these institutions, it makes you a little scared or it makes you think that there's some maybe cracks forming, troubling signs for American democracy. But who knows? It is still a survey. Maybe people will rebound in certain years, but a little bit alarming to see these statistics.

23:44And my final number is good news for anyone fed up with shrinkflation, aka everyone listening, because PepsiCo said that some of its bags of chips will come with more chips for the same price. Yesterday, the country's largest maker of salty snacks said that some Tostitos and Ruffles bonus bags will contain 20 % more chips for the same price as standard bags. Plus, it's adding two additional small chip bags to its traditional 18-bag variety pack. Call it moreflation, the opposite of shrinkflation. With shrinkflation, companies like Pepsi have been accused of giving you less food for the same price.

24:22According to the Watchdog website Consumer World, in 2021, Tostitos' hint of guacamole version shrank by, I don't know why that made me laugh, shrank by one ounce and its hint of lime bag fell by two ounces. Consumers got really tired of this and as a consequence have bought fewer snacks from Pepsi, which owns major brands like Lay's Doritos, Tostitos, and Ruffles. And in response to this sales slowdown, Pepsi is stuffing bags with more chips to make consumers feel like they're getting a better value. Toby, is this going to work? Honestly, I'm just trying to wrap my head around. We have inflation.

24:56We have disinflation. We have shrinkflation. We got skimflation. Now we got moreflation. It's very, very hard to keep track. I mean, they're not doing this out of the goodness of their hearts. They are making these changes because consumers have been buying fewer snacks, so they want to prolong the shift. People have been going to private label brands, Walmart, Costco, instead of going to those name brands like Tostitos. So they are trying to, it's like essentially a marketing stunt a little bit. But also consumers have been beaten down recently. They have been seeing less volume in their hint of guacamole, their hint of lime chips.