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It's one thing to be a big company. It's entirely another to stay a big company. From American Public Media, this is Marketplace. In Los Angeles, I'm Kyle Rizal. It is Thursday today. This one is the 20th of June. Good as always to have you along, everybody.
If there has not been yet, there will soon be a business school case study written about NVIDIA, the AI chip design company that, depending on the day, is either the first or second most valuable company on the planet. Second today, worth a shade less than $3.25 trillion today.
And yes, sure, the case study will look at how exactly NVIDIA got to where it is, but also how it's maintaining its dominance in the AI chip market, estimated to be somewhere between a 75% and 90% market share. Marketplace's Matt Levin gets us going today.
Big breaking news here. It's not easy to compete against one of the richest companies in the world. It is hard. It's a fantastic company. It is very well run. Sid Shade is the co-founder of D-Matrix, an AI chip startup. When he tries to sell big tech companies like Meta on his AI chips, he leans into small, or at least small compared to the $3 trillion gorilla in the room.
We are a nimble, small company that will work with you. The leverage is a lot more balanced. Maybe you at Meta have more leverage than we do. So we'll be a lot more flexible. Right now, all the leverage lies with NVIDIA. They really are the only game in town for certain types of crucial AI training chips. That doesn't just mean NVIDIA can set prices. It can also make it harder for competitors to break into longstanding relationships with big tech.
Companies like Amazon and semiconductor firms like AMD have designed their own AI chips. Problem is, almost all of those chips are physically made by one company, the Taiwan Semiconductor Manufacturing Company, or TSMC for short. Todd Achilles is a public policy lecturer at UC Berkeley.
And because of Nvidia's market power, they're really in the lead position with TSMC to get what they want built. And built first.
Achilles also says the federal government's effort to bring chipmaking to the U.S. won't really help competition all that much. If this all sounds kind of monopolistic to you, the Biden administration is reportedly looking into NVIDIA antitrust issues. But Dan Ives at the investment firm Wedbush Securities doesn't expect immediate regulation.
I mean, regulatory is essentially going 40 miles an hour in a minivan the right lane. But the technology is in a Bugatti going 100 in the left lane. And there's no sign the Bugatti is slowing down anytime soon. I'm Matt Levin for Marketplace. On Wall Street today, NVIDIA shares off about 3.5% if you're keeping track. It was a split decision on the major indices. We'll have the details when we do the numbers.
All right, here's a perhaps unexpected trifecta. Inflation, climate change, and zoning laws. They come together in a report from Harvard on rental costs and why they are so high.
Some apartments have been built over the past couple of years, yes, and that has helped stabilize rents a bit. But numbers out today from the Census Bureau shows the number of permits issued in May for new buildings with five or more units was down 6% from the month before and 31% from a year ago. Marketplace's Dan Ackerman looked into why in the middle of a housing shortage, it is so hard to get new apartments up and running.
It's basic economics that when demand and prices go up, like say for rental housing, supply should go up too and bring prices back down. And yet… Rents are high. Daniel McHugh researches housing at Harvard, and he co-authored the new report, which found… There is very little relief in sight. Particularly for lower income renters who have fewer and fewer options.
McHugh says in the last decade, We saw the number of units with inflation-adjusted rents of $1,000 or less has gone down by 6 million. So we're losing the low-end rental stock. The apartments that have come online tend to serve the luxury market, says Priya Jayachandran, CEO of the National Housing Trust. No one is building B-class apartments anymore.
She says developers want higher returns because their own costs have gone up. Inflation has hit labor and materials, and interest rates have made financing new construction costlier too. It is incredibly expensive right now to borrow. And when you've got a capped income stream and a rising expense side of the equation, the math makes less and less sense.
So it's more expensive to rent, it's more expensive to build rentals, and it turns out it's more expensive to operate them too. Insurance for apartments rose nearly 28% last year. Daryl Fairweather is chief economist at Redfin. And
And all of this means if you're in the housing market, Fairweather says one thing that can help? Looser zoning rules. She says places that allow for more apartments get more of them built. I'm
I'm Daniel Ackerman for Marketplace.
But climate change and changing energy market dynamics are forcing a new approach, a nuclear approach, actually. Almost three years ago, Bill Gates and his nuclear power company, it's called TerraPower, announced that they had chosen Kemmerer for a first-of-its-kind power plant. Gates and the Department of Energy are the two big backers of that $4 billion project with the hopes that it'll pump some life back into some struggling energy economies. Wyoming Public Radio's Caitlin Tan has the story.
Mark Thatcher opens the door of his gray stucco home in Kemmer. Photos of his 21 grandkids cover the hallway. Thatcher built his American dream in this coal town. He worked as an electrician in the mine, bought a house, raised a family, and retired. And he wants that for his grandkids. If Kemmer's dried up...
It's not an opportunity. Kemmer and coal go hand in hand. So for a while, the town emptied out, mirroring coal's 16-year decline. But now, Thatcher says Kemmer is feeling more lively, partly thanks to another source of energy, nuclear. In a nearby sea of sagebrush, TerraPower is about to break ground on its nuclear power project.
Brian Muir, Kemmerer's city administrator, scans the crowd of about 300. He looks visibly relieved. After a lot of uncertainty and getting here. That's because the nearby coal plant is permanently closing by 2036, putting a question mark on the future of the Kemmerer coal mine that serves it.
Muir's hope is for those hundreds of workers to be absorbed by the future nuclear facility, which promises 250 long-term jobs and 1,600 temporary construction jobs. I think the eyes of the world are upon us to see how soon we can get this done. It is a pilot project. Some parts still need to be permitted by the federal government.
Conventional nuclear power plants are massive and require a lot of water. TerraPower has figured out a way to make them smaller, safer, more climate-friendly, and cheaper...
In theory. It's working really well inside the computer. Speaking at the podium, Bill Gates looks on brand. Blue sweater and black-rimmed glasses. He motions to the leveled dirt behind him. A little bit harder to make it work out there, but that's what we're starting on, starting today. TerraPower still needs to secure a domestic source of fuel, a highly enriched uranium. Right now, it's only made in Russia.
Gates's vision is for these plants to be the future of America's growing energy demands. And you're the pioneers that are going to make that happen. And with that, Gates grabs a shovel and plunges it into the dirt. But not everyone feels the camaraderie. Across the highway are about 10 trucks with flags that say things like Make America Great Again and Trump 2024.
Ashton Anderson breaks away to explain. Well, we just don't like the idea of liberals coming into our state. It's that simple.
And while many agree Gates' politics don't align with Wyoming, Kemmerer's downtown is bustling, even just compared to a year ago. Two bakeries, a law office, and a home goods boutique recently opened up. And many say business is good, like here at Tinsky's Fossils, a little downtown storefront where tourists can buy local fish fossils.
Cody Tinsky is using a small power tool on a fossil. So most of these fish are covered with rock, so we have to uncover it. Four years ago, she didn't know if she could keep the doors open. The town was slow, partly because of COVID. That was our first year of business, so it was very scary. Business is good now. Tinsky says she thinks it'll only get better with the nuclear project.
I think it'll bring in new people and hopefully so Kemmerer doesn't become a ghost town again. Construction on the nuclear project is expected to take six years. So for that time at least, she expects lots of foot traffic and hopefully business. In Kemmerer, Wyoming, I'm Caitlin Tan for Marketplace. Coming up. I don't think it's beyond the pill that we could be over 400,000 Japanese visitors. Why? Why?
Well, we'll tell you. But first, let's do the numbers. Dow Industrials up 299 points today, 0.8%, 39,134. The Nasdaq off 140 points, about 0.8% there, 17,721. The S&P 500 gave back 13 points, a quarter percent, 54,73.
Dan Ackerman was talking about the costs associated with building and operating apartment buildings. Well, in related stocks, Essex Property Trust lost 1.6%. Toll Brothers dropped about 1.5%. Meritage Homes dropped 7.10%. Might just be Meritage instead of Meritage. Caitlin Tan was telling us about TerraPower breaking ground on its nuclear power project out in Wyoming. So some nuclear power stocks, shall we?
Cameco Corporation down 0.3%. New Scale Power dimmed 0.3%. Bonds down. Yield down to 10. Your T-Node up 4.626%. You're listening to Marketplace.
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This is Marketplace. I'm Kai Risdahl. The summer solstice arrived at 4.51 Eastern Daylight Time this afternoon, which lets me be astronomically accurate when I say we are in the summer travel season, when, among other things, demand for gasoline grows as road-tripping families take to the highways and byways.
But even though gas prices are down from last year, yes, people still just aren't filling up their tanks like they used to. Marketplace's Elizabeth Troval is in the driver's seat for this one. The U.S. is the number one market for gasoline in the world. But energy analyst Tom Closa says demand has been slogging along. There's no question that people aren't feeling it. Especially lower and middle income people, because while gas prices may be lower...
hotel fees and eating out is so expensive that you can save 10 cents on gasoline, but it's not going to make a difference to your lifestyle. While some may be sensitive to travel costs, there's also fewer gas guzzlers on the road, Closa says, so each gallon is going further. The efficiency of the fleet is really having an impact out there. And some travelers aren't really using gasoline at all to
to get around. Amelie Carlton is with Rice University. The slowing in U.S. demand for gasoline is due to the substitution effects from choosing air travel and choosing to travel or choosing to travel on the road with EVs or more efficient vehicles. And with work-from-home flexibility, not as many people are driving into the office, all of which is good for gas prices.
The refineries ramped up production expecting increased demand over the summer. Their expectations have not been met with the demand from the American consumer. As a result, higher supply and lower demand have led to lower prices at the pump. And as for producers of gasoline, many of which are concentrated on the Gulf Coast,
Jesse Thompson with the Dallas Fed says refiners here are in a better spot to deal with a lackluster gasoline market than those in Europe or Asia.
So if demand here is weak and margins are in negative or very, very low territory abroad, then I would expect you to see those refineries abroad cut run rates first. And cutting production would make more room for refiners in the United States to ship gasoline abroad. I'm Elizabeth Troval for Marketplace.
Are you a physical book person or an e-book person? It is very much a matter of personal taste, of course, but it is also a very real business dilemma for libraries. Books books are limited by the actual number of copies, right? Makes sense.
But e-books available through apps like Libby and Overdrive are limited, too, by the number of licenses any given library system has bought. Librarians from a number of states are pushing for more lenient licensing terms and costs as well. Sarah McCusker is the president of the Connecticut Library Association. Welcome to the program. Thank you. Happy to be here. For those who are unfamiliar, how does the business end of e-books work for a public library?
So a lot of people have this misconception that we just have access to every e-book that's out there. We don't. We have to purchase copies of it, just like we purchase copies of regular print items. We have to purchase them from the publishers. We don't have any opportunity to do any comparison shopping. We're basically tied into what the publishers charge us.
So let's so speaking of charges, let's say you want, I don't know, pick your New York Times bestseller. How much is a license going to cost you? How long do you have it for? You know?
So when we buy print copies, we get substantial discounts. So we can get a print copy of your average hardcover bestseller for, you know, $15. If we get the e-book, it might be $100, $120. And we only have that for two years or 26 checkouts. Sorry, 26 checkouts? So if I'm number 27, I'm out of luck?
If you're number 27, you're out of luck. If you're waiting for that item and our license has expired, we need to purchase it again. And generally speaking, when we purchase it again, we're paying the same inflated price that we paid initially. We don't get like a renewal price or anything like that.
Publishers who have taken on this case, as you and other states present bills to try to do something about this, basically say you're depriving authors of copyright and fundamentally you're interfering with interstate commerce. What do you say? So.
Because the copies that we circulate have digital rights management on them, we don't feel that we are violating anything having to do with copyright. Basically, all that we're saying is that the authors get paid based on the number of copies that they sell. They get the same amount in their contract, regardless of whether an individual purchase it or a library purchases it. Right. I don't suppose the public libraries are a civic good argument, does any good in this case? Right.
It doesn't seem to, no. So where do you go from here? Because if you don't have any opportunity to pass legislation or if it gets overturned in court, as at least one of these laws has been, it seems library patrons are on the losing end. Correct. The demand for downloadable materials just keeps going up and up and up. But unfortunately, our ability to purchase those items does not go up.
We liken it to if your town puts in a playground, everyone loves the playground, everyone wants to use the playground. But then imagine that that playground had a two-year expiration date on it. And so at the end of two years, there might be people lined up to use that playground, but they can't use it until we pay again. And like I say, we're paying the same amount for that playground we paid the first time around. Meanwhile, people are standing there. They can see that it is available, but they can't actually access it.
There is a middleman here, right, between the libraries and the publishers. It's the e-book apps or what have you, Libby, Overdrive. I've used them both. Where do they play in this? Because they kick in a little markup of their own too, right? Right, they do. The big thing on our end is that we don't have any other alternatives. And ultimately, we aren't looking for...
kind of unfettered access to these materials. We just want to be able to negotiate with the publishers to get terms that allow us to better serve our patrons. It's a seller's market, right? I mean, they kind of got you. Yeah, absolutely. Because that's our only option. We buy them at their prices or we don't have them at all. Sarah McCusker. She's the president of the Connecticut Library Association. Ms. McCusker, thanks for your time, ma'am. I appreciate it. Yep. Thank you.
We did ask the Authors Guild for comment. They sent us a statement that said, in relevant part, authors and publishers invest massive amounts of time and resources to create books. They also work diligently to ensure that libraries have broad access to the materials they create. You can read the whole thing, if you like, at marketplace.org. The latest data from the National Travel and Tourism Office—it's part of the Department of Commerce, if you're curious—
It shows there were 66.5 million international visitors to the United States last year. That is a third, again, more people than came in 2022. But it is still just 84% of the total number that came in the last year of the before times. And cities are taking whatever opportunities they can find to lure tourists back. Here in L.A., a gift has come in the form of Shohei Ohtani, the $700 million two-way superstar for the Los Angeles Dodgers.
He was already a star in Japan before he came to the States in 2018 to play for the Angels just down the road from us.
But now, Japanese fans are coming by the thousands to see Ohtani play for his new team. From LAist, Josie Huang has more. Near Dodgers Stadium, a new 15-story mural of Shohei Ohtani covers one wall of the Miyako Hotel. Inside, employees are selling Japanese-style pastries shaped like blue Dodgers helmets and getting to practice their Japanese.
Over in the lobby, one of the guests, Megu Odachi, is checking in at the front desk with several other friends from Japan. They can't wait to see the Dodgers play the Colorado Rockies, especially Otani, or as Odachi fondly calls him, a boy obsessed with baseball. Baseball only.
Hotel manager Akira Yohara says when the Dodgers are playing at home, half of the 170-plus rooms are occupied by Japanese tourists in town to see Otani. He says they had little reason to come to his hotel in the historic neighborhood of Little Tokyo before. It's a few city blocks downtown and seen by some as... It's very dangerous here. Especially this area, they don't want to come.
Yuhara says a sister hotel he manages a half-hour drive south of L.A. in the beach city of Torrance is more popular with Japanese travelers. The South Bay is where SoCal's Japanese American Population Center shifted to from little Tokyo after World War II.
Scores of Japanese companies like Honda and All Nippon Airways have operations here, and it's where many of their employees live, eat, bank, and shop. But hotel manager Yuhara says Otani has generated interest in parts of L.A. that have not been top tourism draws for the Japanese. Even we don't have a game today, they go to the stadium and buy everything.
At the stadium, visitors can pick up Otani's No. 17 jersey, concession stand-sell chicken katsu sandwiches and fried octopus. Signs in kanji characters dot the stadium, where tours are now given in Japanese several times a week. You can refer to it as the Otani effect. Adam Burke is president and CEO of L.A.'s Tourism Board. I don't think it's beyond the pill that we could be over 400,000 Japanese visitors.
That would be up from 230,000 in 2023. That would absolutely make it one of our top four international markets. Alongside markets like China and the U.K., Osuke Ishiguro manages the L.A. office of top Japanese tour operator JTB. He says even though the yen is weak right now, visitors from Japan are paying to see not just one Dodgers game. But like three games in a row, they're coming out to see.
His agency is booking customers in and around Little Tokyo.
like at the Miyako Hotel, where just outside, Tadashi Onaka is taking photos of the Otani mural. He had planned a trip to Arizona to visit family, but took a detour to L.A. so he could go to a Dodgers game. He got to see Otani smack a single in the first inning. Now he finds himself in Little Tokyo, a place he's surprised to learn has been around for 140 years. Very small, he adds. It's compact enough.
And very different from Japan. Rather, it's its own thing that now legions of Otani fans are starting to discover. In LA, I'm Josie Huang for Marketplace.
This final note on the way out today offered really as a cautionary tale. You might have heard already today that the Bank of England has decided to keep its key interest rate right where it is, five and a quarter percent, even though inflation in the UK has indeed hit that hallowed two percent mark. I'm paraphrasing here, but the bank said it wants to make sure inflation is well and truly dead.
All of which I mentioned because when we get to 2% here, it's not like the Fed's going to cut rates right away either. And honestly, people ought to be ready for that. John Buckley, John Gordon, Noya Carr, Diana Parker, Amanda Petra, and Stephanie Seek are the Marketplace editing staff. Amir Bibawe is the managing editor. And I'm Kyle Risdell. We will see you tomorrow, everybody. This is APM.
