Ceasefire in Gaza, Chips in America 10/13/25

0:00Bring in show music, please. This is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, a ceasefire in the Middle East. As Israel and Hamas exchange hostages and Palestinian prisoners, President Trump declares a new age in the region. This is the historic dawn of a new Middle East. President Biden's lead negotiator between Israel and Hezbollah, Amos Hochstein, is also looking forward. I think the real question is, what do you do from here? And I don't want to take away. Today is a tremendously great moment. Then former Intel CEO Pat Gelsinger. Are we in an AI bubble? Of course.

0:45AI and the chips race against China. Today, I think the number is 49 reactors under construction in China and zero in the U.S. These are dreadful numbers. Plus, the other stories that got us squawking today, like JP Morgan's strategy to bolster America, a trade dispute with China over rare earth minerals, and Warner Brothers' discovery, rejecting a takeover bid. I might be able to get it. Now you're part of Versant, so there. It's Monday, October 13th, 2025, and Squawk Pod begins right now. Stand Becky by in three, two, one, cue it please. Good morning, everyone. Welcome to Squawk Box right here on CNBC.

1:31We're live from the NASDAQ market site in Times Square. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. Before we get to the rest of it, we do have some breaking news right now on J.P. Morgan and Leslie Pickers got that news for us this morning. Leslie. Hey, and good morning, Andrew. J.P. Morgan announcing a$1.5 trillion national security and economic resiliency initiative, a 10-year plan involving financing medium and large companies and making direct investments off its balance sheet. The initiative, according to a press release, will focus on four key areas, including supply chain and advanced manufacturing, defense and aerospace, energy independence, and strategic technologies.

2:10Chairman and CEO Jamie Dimon saying in the release, quote, it has become painfully clear that the United States has allowed itself to become too reliant on unreliable sources of critical minerals, products, and manufacturing, all of which are essential for our national security. J.P. Morgan had already planned to finance about $1 trillion over the next decade in these areas, but today's announcement increases that target by 50%. The firm will also make direct equity and venture capital investments of as much as$10 billion. J.P. Morgan will hire more bankers, investment professionals, and other experts and create an external advisory council to help guide its long-term strategy.

2:51The initiative will include research on private companies and supply chain management issues related to rare earths, AI, and technology. And the firm also plans to advocate for policies to bolster this initiative, including R &D, permitting, procurement, and regulations. Diamond saying in the release, quote, Hopefully once again, as America has in the past, we will come together to address these immense challenges we need to act now. We'll hear more from Diamond about the initiative at 1030 a.m. this morning and hopefully how it plays a role amid rising geopolitical tensions with China, guys. So just go back in time for us a little bit.

3:28I don't remember ever hearing an announcement of this kind of magnitude from a bank, let alone J.P. Morgan, about sort of where they were going to be prioritizing either investments or financing in this kind of way. I mean, there were times when they looked at cities like Detroit, for example, and said, we want to help finance Detroit or other things. This seems very different. Yeah, that was my take, too, when I first read the release, was this was a very different thing here. Now, they have already had this strategy of a trillion dollars worth of financing areas that were key to national security.

4:01And Diamond has spoken for years in his annual letter about the need to kind of safeguard national security. and he was worried about cyber and he was worried about rising tensions with China. He wrote that or he had that interview with the FT where he talked about how important it was for the U.S. to come to the table with China to have a conversation and ensure that talks were happening. This was, you know, maybe four or five months ago. But in terms of kind of coming out with this big initiative that's all encompassing and hiring bankers and investment professionals and covering it for research, no, this does feel very different.

4:38And so in terms of how this is going to play out, I mean, some people are going to look at this announcement and think it's a little bit like when, you know, you hear Apple say that they're going to invest a certain amount of money in the United States. Or OpenAI will say that they're going to, you know, and they're these sort of grand, these grand announcements that then the president often cites and other things. How is this different? I mean, I think, you know, in terms of financing, you know, these certain industries, I think this is something that they probably see as just good for business anyway.

5:12If you think about just safeguarding and putting money into and financing energy infrastructure, I mean, that's something that's growing. That's the whole AI exposure. That's an area that's growing. So that's something JP Morgan wants to be a part of because it is good for their bottom line as well. So I think they see concentric circles here in terms of overlap for what they believe is important or what Diamond and his team believes is important versus what's also good for the company as well. And then finally, Leslie, in terms of looking at what JP Morgan is doing in this space relative to other banks, other private credit firms, how do they compare?

5:50So it's also interesting timing on that front too, Andrew, because we are seeing this shift from private credit back to the syndicated loan market for some big deals. I mean, it's a newer trend that we're seeing. But if you recall over the last few years, the pendulum had been swinging the other direction toward private credit. And lately that has shifted a little bit. So whether this is the beginning of that or not remains to be seen. But as it pertains to things like data center financing and energy infrastructure and some of these other types of deals, you know, banks are kind of back in terms of being competitive here, especially as regulations appear to be diminishing for them.

6:30And as rates decrease, they can provide, in many cases, a much more competitive rate to the borrower than, say, some of their private peers. Fair enough. Leslie, thank you for bringing us that news. And we look forward to seeing what Jamie says later today. President Trump also softening his tone on China after Friday's threat of new 100 percent tariffs on that country starting November 1st. Eunice Yun is tracking all the latest developments in this story, and she joins us now with more, including the reaction in China. Eunice, good to see you. Thanks, Becky. Well, after getting a strong response from the U.S., the Chinese are defending their approach to expand their export curbs.

7:12The foreign ministry today said the U.S. has continuously introduced a series of restrictions and sanctions against China, which have severely harmed China's interests. China firmly opposes this. So in other words, from Beijing's perspective, the Chinese are merely responding to what the U.S. already does. The Chinese are also threatening to retaliate against President Trump's 100 percent tariff threat. The foreign the Commerce Ministry over the weekend had pledged to take what they described as corresponding measures. At the same time, the Chinese appear to be trying to head off some of the negative response that they've been receiving from the U.S.

7:55for these expanded rare earths curbs, saying that the curbs do not equate a ban. There is speculation among China watchers as to what really has been motivating the Chinese decision to expand the rare earth curbs at this time, at a time when there are ongoing negotiations between the U.S. and China and an expected meeting between President Trump and President Xi at APEC at the end of this month. It could also, one line of thinking anyway, is that the Chinese potentially see this as a way to extract more concessions out of the U.S., so ramping up the pressure ahead of that expected meeting. There's also a line of thinking that this could be a way for re-escalating because the negotiations aren't going very well.

8:41Guys? Eunice, I guess the big question comes down to how the response was received and then the backing off that President Trump kind of did on Air Force One saying, we think we'll get things worked out. Has there been any state response to that? Not on that particular post. But based on the response that we're seeing of the Chinese, it seems as though the Chinese do not intend to back down or change their stance on their Earth's curbs. I think this potentially could mean that they believe that this is a good way to add leverage in these discussions to be able to get more concessions. And from the Chinese perspective, it would be seen that the ball is now in President Trump's court.

9:28So if he doesn't respond, that could mean that we wouldn't necessarily see any more escalation. Of course, if he does respond, then we would see an escalation, at least from the Chinese have been pledging that. I mean, it really depends on who's in a better position for whether the moves made on each side. And, you know, obviously China doing OK, but this is going to be this is going to take us a large bite out of manufacturing. In fact, people are calling it de facto an embargo of China. Who's going to do business with China? So we'll see how long they can do this. And, you know, we were talking on Friday.

10:06This was the rare metal move was someone called it the economic equivalent of nuclear war. So when they were pointing at someone who shorted the market and made some money on Friday, anybody that couldn't. I mean, not everyone knew it was going to be down 800 points. But you knew Trump, given that, you know, 0.1 percent of the value is going to be looked at by China. You knew that there was going to be a move later in the session from Trump. And the way he's been with China in the past, it wasn't surprising at all. He said, OK, we're going back to 100 percent. Market sells off. But I'm just wondering who's in a better position.

10:43We've got a labor market slowdown over here and other government shutdown. We've got our own problems that I would venture that in China things are even worse with with, you know thousands tens of thousands of manufacturers That are going to be hit with this. Yeah, right, right I mean, it's obviously a very big concern for the manufacturing sector People are generally not feeling very good about the economy more broadly But when you look at say the export numbers from today There were two things that people were taking away One was that they beat expectations, that the factories were actually doing generally OK.

11:19But the other thing that I think was more important is that only 10 percent now of direct shipments come from the United States. So we're already seeing that the Chinese have been trying to move away from relying on the U.S. And then the Chinese government, at least the negotiators, are quite good at figuring out what the pressure points are for President Trump specifically. So, we're seeing that with the rare earths, something that he was concerned about, and then also the soybeans, because soybean imports are now at a record high here, and none of them are coming from the United States. So you could see how the Chinese are kind of steering the negotiations away from what maybe President Trump had prioritized in the past, which is fentanyl, as well as the trade deficit, possibly.

12:05And now we're talking about rare earths and soybeans. and these matters that are not so important for China and, of course, important for President Trump politically back home. Yeah, Eunice, I guess what are the things that the Chinese would like to ask for in these negotiations? Because we used to look at rare earth minerals as the counter to what the U.S. was doing with its export controls when it came to technology and chips. But China moved last week to say, forget it. We want to make sure we're not getting any of those chips either. we don't want those anymore. So what what are they looking for in terms of leverage and what are they asking for?

12:44Well, I mean, what we have seen is that the Chinese ideally would like to get those tariffs off. Ideally would like to have the export controls on some of the technology on the very high tech stuff, you know, off so that they could be able to get their hands on that. The messaging, of course, has been conflicted. We have seen that the Chinese are trying to not have the Chinese companies rely too heavily on the U.S. But, yeah, they do want to be able to get those higher end advanced technology items. Eunice, thank you. Eunice Young. Well, the world turns in the world of media. And here's a new one for you, but maybe not new, because I think we've been talking about the possibility of this for quite some time.

13:29Warner Brothers Discovery rejecting what it sees as an undervalued takeover bid from Paramount Skydance. That's according to a Bloomberg report. A couple of other reports trying to confirm some of that news. A report saying that Paramount's offer was about$20 per share. Now, Warner Brothers, per Warner Brothers share, that is. Reports also say Paramount CEO David Ellison could potentially increase his bid, appeal directly to Warner Brothers shareholders, or seek additional financial backing. We had heard a couple of reports even last week that there was conversations with some private equity firms and other things.

14:00You're looking right now at Warner Brothers stock at$17.65. So you could see why a$20 bid might not do the trick. Gone up a little. Gone up a little bit on the back. But it's gone up a little bit, more than a little bit on the back of just the possibility that Warner Brothers might be coming. Is it like seven? That's what I mean. Yeah, I think it was like seven or eight at one point. What comes next? Do they go hostile? Do they raise their bid? like what are the options on the table i think the options on the table is just go away just to go big yeah to go big interestingly rich greenfield who we have on the broadcast all the time put out a report saying if you're david ellison don't do this that actually that the better path wait till they split was no his argument was just invest in your own content invest in the technology you don't need everybody else's libraries did you see comcast shares on friday i did But 29 and change.

14:57Everyone says they're waiting in the, Brian Roberts, waiting in the wings to do this. And that that's who's going to finally, that in fact, he, I don't know if it's true. I think this is, you know, the guy at Fox that we used to work with all the time. Gasparino. Oh. Yeah. That Comcast is most likely and that it would kill Brian if he let, you know, Ellison come in. Right. But the question has always been a different one, which is actually, does Washington allow something like that? I believe. Right. I understand with the way. I mean, the president, we call it a commie cast. So I understand as well as anyone that whether you can get that.

15:35I might be able to get it through. Now you're part of a person. So there. I think I could talk to the president. I don't know if he might say, you know, sorry, Joe, take a hike. I don't know how deep seated some of the. I think they're pretty deep-seated. So it shows the problem. Cheese will be next. Next on Squawk Pod, we're diving into the chip and AI economy with former Intel CEO Pat Gelsinger. Intel's turnaround plan, competing with China, and setting up America for success in the tech ecosystem. Today, we're not chip limited. We're not capital limited. We're power limited. And against that, we have under-invested in the energy resources of the nation.

16:21We'll be right back.

16:28Welcome back to Squawk Pod. You're watching Squawk Box on CNBC. I'm Andrew Ross Sorkin, along with Joe Kernan and Becky Quick. We got so much going on this morning. Let's get into the world of AI and the chips economy now with a special guest who is on the set with us this morning. Pat Gelsinger, former Intel CEO, he's now general partner at Venture Capital from Playground Global, and if there's one person who knows what's going on around this whole space and around what happened at Intel, what's going on with Intel now, it is you. I'm just so curious where you land on what's transpired here, specifically before we even get into just everything else, this idea that the U.S.

17:07government is now a major shareholder in Intel. Yeah, thanks, Andrew, Becky, Joe. Just great to be on the show and see you all again. And, you know, is the stake that the U.S. government has taken in Intel, is it good or bad? Right. And to me, the only metric that matters is, does it cause the building and filling of Intel fabs? And if it causes more fabs to be built, more fabs to be filled in the U.S., then it's good. If that doesn't occur, then it's not. Right. You know, it's a question of, you know, policy at that point. And obviously the market responded a little bit positively to it when it was announced.

17:42We've seen some other equity come into Intel. But none of those have yet included a commitment to fill the Intel fabs. And obviously, this is a good week for Intel. With 18A coming across the line, I put a lot of sweat equity. Deeply appreciative of the team making that happen. But the metric is build and fill fabs. I want to go back in time, if you will. So Gina Raimondo comes to you and says, we're thinking about doing this Chips Act thing. You wanted a piece of the action. and at the time it was a grant. It was just a, we're going to hand you the money under the sort of guise that this would be good for national security and resilience in the country and that that would be the benefit to the country, to the nation, not necessarily that there was also an economic component that would come straight back to taxpayers in the sort of direct way.

18:32If she had said to you, hey, Pat, we'd like to give you some money, but you're going to have to give us a little bit of equity for this. you would have said what? Well, you know, first, you know, that's not how it played out, right? Right. Remember, the CHIPS Act began under Trump I. So it was a long process, you know, bipartisan act being passed as a grant program. And obviously, Intel was a beneficiary. I was super disappointed, you know, that the GINA and Department of Commerce took so long to get the money deployed, so long to get it across the line to help Intel at that point. But if the trade was, hey, we wanted to invest and we were going to drive the industry to build and fill fabs, I would say the same thing.

19:17That's a good deal if it drives the industry to build and fill fabs. We have to reshore supply chains for leading edge R &D and technology. But Howard Lutnick has basically said this was a lousy deal for the American taxpayer and that basically the money that was already given has effectively been squandered and that if we're going to keep giving this kind of money away, that we should have a piece of the action. Well, I think this administration has clearly said, hey, when they see things that aren't OK, they're ready to blow them up and reconceive them. And I think that's what you saw. Do you believe that they're not OK then?

19:51I believe this was under your leadership. You know, had they, you know, I was very happy that we got the chips, the bipartisan chips across the line. I was very disappointed by how the Department of Commerce under Gina executed it. and the length that it took to get that money to the place, two and a half years, critical years, nothing happened. So I was quite disappointed. And for them to come in and say, that was broken, we're going to fix it in a very different way. Hey, we need to build and fill FAPS. Hey, Pat, if you looked at Intel shares for the last year, they're up by 54%. But if you look over five years, they're still down more than 33%.

20:31What happened besides the Biden administration taking too long NVIDIA has taken over the world. NVIDIA is even now investing. Think of AMD because that was your perennial rival was AMD. I never thought it would be. Over that period of time. Just explain the bigger, broader picture. Yeah, clearly, you know, two things happen. One is, you know, it's a long, heavy, and expensive. And I said it was five plus years to rebuild, you know, the technology base for Intel. We haven't even gotten there yet. 18A last week, an important milestone to that end. And then the shift of the industry to AI. And those were the two big factors that led to this being the case.

21:13Did Intel miss it? Like, when did Intel take its eye off the ball in terms of looking towards AI? How do you kind of go back and just break down what happened? It was a long journey, right? Intel made a set of bad decisions over 15 years. You know, this was the rebuilding of Intel. Lost technical leadership, wasn't led by technologists, you know, for many years. And rebuilding, you know, core technology, manufacturing supply chains, process technology. And yeah, we were late on AI as well. But this was way long decisions that were made, you know, that put it in a difficult position. And, you know, to the leadership of Intel today, great milestone last week.

21:52And I wish nothing but the best. This is similarly important for the nation. We need leading R &D. We need leading manufacturer at scale in the U.S. for our supply chains. So now that we're in this position, do you look at what's happening? Sort of the other large question out there is, are we in some kind of AI boom, but also some would think about it in the context of a bubble? There's a lot of leverage in the system. There's a lot of cash. But then there's a whole bunch of other folks who are trying to build these data centers. And whether there's the energy component side of it or whether you think about the real estate component.

22:29I mean, there's just a whole lot of things happening at one time. Yeah. And, you know, are we in an AI bubble? Of course. Right. You know, we were of course, of course we are. I mean, you know, we're hyped. We're accelerating. We're putting enormous leverage into the system. You know, that said, I don't see it ending for several years. You know, I do think we have, you know, an industry shift to AI, as Jensen has talked about, and I agree with this, you know, that businesses are yet to really start materially benefiting from it. You know, we're displacing all of the Internet and the service provider industries as we think about it today.

23:04We have a long way to go. What's the sign that would be too much for you? Well, you know, and what's the risk of it being too much, which I want to come back to as well. You know, to me, there's a set of technologies on the horizon, some of which we're driving, like our snow cap, you know, where we're promising to be 100x better in power performance, you know, meaning a gigawatt data center. I can do it in 10 megawatts and deliver the same AI performance and not just snow cap, but a whole range of disruptive technologies. And I think they start materializing the latter part of the decade. So, you know, I do think in that sense, nothing is changing this path for several years.

23:44You know, that said, it will change. You know, these are radical improvements in AI efficiency that occurred this year. However, you know, today we're not chip limited. We're not capital limited. We're power limited. And against that, we have underinvested in the energy resources of the nation for a decade and a half, maybe two decades. So if the bubble induces us to build energy capacity, that is a really good thing because energy capacity equals economic capacity. The big question, though, is there enough cash on the other side? So OpenAI makes these big commitments for all of these build outs.

24:19And the question is, are they ultimately going to have the cash to pay for it? Right. I mean, that that is, you know, whether it's Anthropic or OpenAI or you name the company, is there going to be a moment? And it's not to say that Meta doesn't have the money or Google doesn't have the money or, you know, any of these companies don't have the or Amazon doesn't have the money. But right now, shareholders seem to be applauding every time they spend more rather than less. But there could always be a turn in the market. And the question is, could that happen? And what would what would the implication?

24:48Yeah, I think fundamentally, we're a couple of years away from it. I do think there, you know, we're in this bubble enthusiasm. But when you say a couple of years away, a couple of years away from people saying there isn't enough cash on the other side. I guess that's the fundamental question. Do the economics make sense? Well, I think there's unquestioned energy in the economics now that will be materialized. At what point do those economic underpinnings change? And I say one of them will be the technology underpinnings. When all of a sudden I can accomplish the same with one tenth or one one hundredth the energy or capital requirements.

25:21That will be dislocated. You know, also at some point, you know, we're over leveraged. Right. And we're not seeing the materialization of the revenue impacts on these companies as well. But right now we're clearly seeing good economic returns, at least at the hardware level of the A.I. companies. So that'll be a second factor. You know, a third factor is, you know, how far can you go in the leverage and, you know, change in the game? Well, I think we have a couple of years. What do you think of the AMD OpenAI deal? What do you think of the NVIDIA OpenAI deal? Well, you know, clearly the round tripping, right, of economics has, you know, been spoken about.