WEBVTT - Google Shares Surge on Cloud Growth, BYD Beats Tesla on Revenue 0:00:02.640 --> 0:00:11.920 Bloomberg Audio Studios, podcasts, radio news. 0:00:09.680 --> 0:00:14.000 From Mahart where Innovation, money and power Collie in Silicon 0:00:14.120 --> 0:00:14.960 Valley NBN. 0:00:15.320 --> 0:00:18.600 This is Bloomberg Technology with Caroline Hyde and. 0:00:18.760 --> 0:00:19.840 Ed Ludlow. 0:00:33.720 --> 0:00:35.919 Live from New York and San Francisco. This is Bloomberg 0:00:35.920 --> 0:00:36.959 Technology Coming up. 0:00:37.000 --> 0:00:38.880 Google's AI bet is paying. 0:00:38.600 --> 0:00:41.720 Off shares surging on the company's cloud growth. 0:00:42.159 --> 0:00:45.880 Plus byd beats Tesla on quarterly revenue for the first 0:00:45.920 --> 0:00:49.240 time in the battle between the two ev giants. 0:00:48.920 --> 0:00:52.920 And super Micro, shares plunge after Ey resigns as the 0:00:53.000 --> 0:00:55.360 auditor to the troubled server maker. 0:00:55.640 --> 0:00:59.760 But first, Ed, Yeah, straight to that top story. Super 0:00:59.800 --> 0:01:03.120 Micro is a server maker. It takes those high performance 0:01:03.160 --> 0:01:06.560 GPUs from names like n Video and AMD packages them 0:01:06.640 --> 0:01:10.680 up for data centers. Ey, its auditor, has resigned citing 0:01:10.760 --> 0:01:16.479 concerns about the company's ethics, its integrity, and specifically management 0:01:16.520 --> 0:01:18.920 in the audit committee. The stock is down more than 0:01:18.959 --> 0:01:21.240 thirty percent. That puts it on track for its biggest 0:01:21.280 --> 0:01:25.360 drop since October twenty eighteen. This is complex and there 0:01:25.400 --> 0:01:28.399 is a backstory and a series events that went on 0:01:28.480 --> 0:01:31.800 with super Micro. Let's bring in bloombergs brody Ford to discuss. 0:01:32.200 --> 0:01:35.319 Ey told us about this brody in a regulatory filing. 0:01:35.360 --> 0:01:36.840 First off, what did they say. 0:01:38.160 --> 0:01:40.880 Yes, these are some words that you never want to 0:01:40.880 --> 0:01:43.759 hear from your auditor. Right, we only got a snippet 0:01:43.760 --> 0:01:46.920 of the resignation Letterer, but effectively, Ey said that they 0:01:46.959 --> 0:01:51.000 received some information that made them feel that they could 0:01:51.040 --> 0:01:54.200 not continue with this. And in addition, they felt that 0:01:54.240 --> 0:01:57.600 there was information they weren't getting right. So there was 0:01:57.680 --> 0:02:00.760 something that made them feel that they were not right, 0:02:00.840 --> 0:02:02.800 and that they said they weren't willing to put their 0:02:02.880 --> 0:02:06.840 name behind reports that came out from this management committee. 0:02:07.440 --> 0:02:10.000 Obviously investors have to read a bit of tea leaves here, 0:02:10.000 --> 0:02:12.600 but they're not exactly mincing words. It doesn't look great 0:02:12.680 --> 0:02:16.000 for a company that's financials are on pause. We are 0:02:16.040 --> 0:02:19.120 waiting to see them. Yeah, and they say that they 0:02:19.160 --> 0:02:23.640 are not going to restate, but clearly the shares today 0:02:23.680 --> 0:02:25.880 there's anxiety that they will right. 0:02:25.760 --> 0:02:29.920 Berdy to the point of tea leaves. This tea has 0:02:29.919 --> 0:02:31.320 been being made for a long time. 0:02:31.560 --> 0:02:34.720 They've had the Hindenburg research, We've had many people calling 0:02:34.720 --> 0:02:35.920 out concerns in this way. 0:02:37.280 --> 0:02:39.200 Yeah, and I mean even going back to twenty twenty, 0:02:39.240 --> 0:02:42.560 super Micro paid to settle claims from the SEC about 0:02:42.560 --> 0:02:45.680 accounting issues, right, and so there has been these kind 0:02:45.720 --> 0:02:48.600 of murmurs for a little while that super Micro had 0:02:48.600 --> 0:02:52.080 some accounting issues that were going on. As you said that, 0:02:52.080 --> 0:02:55.480 there was a large Hindenburg report. About a month later, 0:02:55.560 --> 0:02:57.440 the company said that, hey, we're going to you know, 0:02:57.840 --> 0:03:01.960 delay our annual filing, a very rare step of a 0:03:02.040 --> 0:03:04.280 company of this scale. It's something you do not see 0:03:04.400 --> 0:03:07.919 very often. When you do, often there are no issues 0:03:07.960 --> 0:03:10.239 at the end. Not to say that there are. We're 0:03:10.560 --> 0:03:13.119 we're still waiting to see you. But yes, this has 0:03:13.160 --> 0:03:15.320 been kind of bubbling for a while, and this is 0:03:15.360 --> 0:03:18.360 certainly a moment where the pot seems to be tipping'. 0:03:18.919 --> 0:03:20.679 Okay, I just want to do this. It's important for 0:03:20.720 --> 0:03:24.400 our audience. Super Micro settled in accounting probe in twenty 0:03:24.440 --> 0:03:27.120 twenty with the SEC. But in April this year, a 0:03:27.120 --> 0:03:32.640 former employee accused them through litigation of exaggerating or misstating revenue. 0:03:33.000 --> 0:03:35.160 Then you had the Hindenburg report in August, and then 0:03:35.280 --> 0:03:38.760 last month the stock sank because of reports that the 0:03:38.800 --> 0:03:43.080 DOJ's investigating. That's the background, but we care about super 0:03:43.120 --> 0:03:49.279 Micro because of its role in AI infrastructure. Explain that part, Brady. 0:03:49.840 --> 0:03:52.800 Yes, very expert history there. I appreciate you giving that 0:03:52.840 --> 0:03:56.280 in simple English. But yeah, we care about super Micro 0:03:56.400 --> 0:03:58.800 because all of a sudden, everybody needs to run these 0:03:58.840 --> 0:04:02.840 advanced work flows for AI and it requires much more 0:04:02.880 --> 0:04:06.320 powerful servers. And there's really three companies that are selling 0:04:06.360 --> 0:04:09.560 these right now. Right it's HPE, Dell and super Micro, 0:04:09.680 --> 0:04:13.120 and so super Micro this year has seen an incredible 0:04:13.240 --> 0:04:18.039 ramp at revenue. There are debates over the margins some 0:04:18.160 --> 0:04:21.000 of that revenue, because you know, it requires these super 0:04:21.000 --> 0:04:25.040 expensive chips. But the server makers, which were somewhat of 0:04:25.080 --> 0:04:28.760 a sleepier segment of the tech industry maybe two years ago, 0:04:28.880 --> 0:04:31.880 have really come into the center of the zeitgeist, which 0:04:31.920 --> 0:04:37.239 makes this whole disruption kind of all the more. You know, cinematic. 0:04:38.200 --> 0:04:40.640 Cinema is what potentially we'll get on November the fifth, 0:04:41.000 --> 0:04:43.320 not because it's election day only, but because that is 0:04:43.320 --> 0:04:45.719 when we will see the earnings being restated. We understood 0:04:45.720 --> 0:04:48.359 by the company, as you mentioned before, Brody, super Micro 0:04:48.480 --> 0:04:51.359 does not expect the issues to lead to revisions in 0:04:51.440 --> 0:04:53.120 previously issued financials. 0:04:53.480 --> 0:04:54.919 We want to thank you, Brodie Ford. 0:04:54.960 --> 0:04:58.160 Now we've got a lot to digest today Alphabet up 0:04:58.200 --> 0:05:00.280 five percent. We were higher than this earlier, but we 0:05:00.320 --> 0:05:04.200 surge on the back of of course AI paying off Alvabit. Look, 0:05:04.240 --> 0:05:06.360 they might not be buying all their chips from AMD 0:05:06.480 --> 0:05:07.400 at the moment it would. 0:05:07.160 --> 0:05:08.600 Seem, but they are investing. 0:05:08.640 --> 0:05:11.640 They're raising their capital expenditure, but it's paying off dividends. 0:05:11.640 --> 0:05:14.480 People are really buying into the cloud, offering a thirty 0:05:14.600 --> 0:05:17.240 five percent growth in cloud. Let's just see what the 0:05:17.240 --> 0:05:20.760 CEO Snapitchi was particularly pleased about in terms of adoption 0:05:20.800 --> 0:05:21.520 of AI offerings. 0:05:21.560 --> 0:05:22.039 Take a listen. 0:05:22.839 --> 0:05:25.720 I'm very pleased with our growth. This business is real 0:05:25.800 --> 0:05:30.680 momentum and the overall opportunity is increasing as customers embrace 0:05:30.800 --> 0:05:34.640 jen Ai. We generated Q three revenues of eleven point 0:05:34.680 --> 0:05:38.320 four billion dollars, up thirty five percent over last year, 0:05:38.480 --> 0:05:40.960 with operating margins of seventeen percent. 0:05:42.200 --> 0:05:44.520 Let's get an invest to take now, like im Asinos 0:05:44.560 --> 0:05:47.640 with our CEO of we family offices AI paying office 0:05:47.640 --> 0:05:50.159 some not others. Let's just hear about Alphabet's perspective. 0:05:50.920 --> 0:05:54.360 I definitely think one of the interesting things is everybody 0:05:54.480 --> 0:05:57.640 was worried about how much money they were spending on AI, 0:05:57.800 --> 0:06:01.800 and now they're using AI, and I heard their CFO 0:06:01.960 --> 0:06:05.200 speak yesterday talking about how they're going to be using 0:06:05.240 --> 0:06:09.080 AI to actually become more productive and reduce expenses. So 0:06:09.160 --> 0:06:13.919 I think they're already starting to become more productive using AI. 0:06:13.680 --> 0:06:18.120 Itself, using AI managing to build up in terms of 0:06:18.160 --> 0:06:18.960 the cloud offering. 0:06:19.000 --> 0:06:20.480 We're also seeing not. 0:06:20.800 --> 0:06:24.440 Much competition eating in to their search offering. Are they 0:06:24.480 --> 0:06:26.920 going to manage to keep that mote there well? 0:06:26.920 --> 0:06:30.120 And I think with the search of offering, and as 0:06:30.120 --> 0:06:34.080 sun Dar was talking about that yesterday, people are asking 0:06:34.160 --> 0:06:37.680 customers are asking more questions, They're asking more important questions, 0:06:37.720 --> 0:06:41.599 more complex questions, and AI is delivering, and so I 0:06:41.640 --> 0:06:43.560 think the opportunity is tremendous. 0:06:44.760 --> 0:06:47.679 Well, final question on Alphabet, but sort of looking ahead 0:06:47.680 --> 0:06:51.000 as well to Microsoft and later Amazon, the calculus is 0:06:51.000 --> 0:06:54.279 the same, right, you look at capital expenditures going forward 0:06:54.520 --> 0:06:58.000 and then decide if it's showing up in revenue growth 0:06:58.040 --> 0:07:01.359 and bottom line growth in terms of do you see 0:07:01.400 --> 0:07:02.159 that with Google? 0:07:02.880 --> 0:07:05.000 Yes, I do see that with Google, and I see 0:07:05.000 --> 0:07:07.080 her with the other two as well. I think I 0:07:07.080 --> 0:07:12.560 think we sort of underestimate just the incredible impact of 0:07:12.640 --> 0:07:16.160 AI in terms of productivity and efficiency in these companies 0:07:16.240 --> 0:07:17.960 as well as in revenue. 0:07:17.480 --> 0:07:21.080 World, AMD is going to do about twelve billion dollars 0:07:21.120 --> 0:07:23.680 of data center sales this year. In video is going 0:07:23.720 --> 0:07:25.840 to do one hundred and ten billion dollars. What do 0:07:25.840 --> 0:07:26.560 you make of AMD? 0:07:27.800 --> 0:07:34.119 I think they've got a catchup extrapolate opportunities there. 0:07:35.080 --> 0:07:37.200 Okay, let's talk about the opportunities that are there. 0:07:37.240 --> 0:07:39.320 Because is it that the market just wants too much 0:07:39.360 --> 0:07:42.120 too quickly? From Lisa suit because she has been pointing 0:07:42.560 --> 0:07:45.720 that twenty twenty five is where they're making inroads. She 0:07:45.800 --> 0:07:49.320 anticipates that they're making big moves. Analysts call out the 0:07:49.360 --> 0:07:52.200 Middle East in particular, going well, they talk about Meta 0:07:52.280 --> 0:07:55.360 being a key well buyer of AMD. 0:07:55.520 --> 0:07:57.800 They think at least is that. 0:07:57.760 --> 0:07:59.480 Likely to be where they need to make the inroads. 0:08:00.400 --> 0:08:03.200 I think how you manage the narrative is very important. 0:08:03.280 --> 0:08:05.640 And I think that the street tends to get ahead, 0:08:06.120 --> 0:08:10.840 whether it's about interest, whether it's about interest rates or 0:08:10.880 --> 0:08:12.920 revenue or whatever. And I think that's a little bit 0:08:12.960 --> 0:08:18.040 of the story here. She's been signaling what actually has happened, 0:08:18.200 --> 0:08:19.400 but the market wanted more. 0:08:20.800 --> 0:08:24.000 It's a really interesting time to be a technology journalist. 0:08:24.080 --> 0:08:27.240 And I imagine an investor in the technology sector. I 0:08:27.360 --> 0:08:30.400 note that Google said the election was a tailwind for 0:08:30.440 --> 0:08:33.600 their search business and other parts. Try and tie that 0:08:33.640 --> 0:08:35.840 all together for us. If you're an investor this week 0:08:35.880 --> 0:08:39.079 looking at the sector, where's your attention focused. 0:08:39.679 --> 0:08:42.800 I'm not focused on the election at all. I'm focused 0:08:42.840 --> 0:08:47.040 on the long term tailwinds for the technology sector and 0:08:47.080 --> 0:08:50.040 for risk assets in general. All we get is good news. 0:08:50.040 --> 0:08:53.079 We have sunny skies out there. Look at the GDP 0:08:53.240 --> 0:08:56.560 report this morning, up two point eight percent. Look at 0:08:56.600 --> 0:09:01.000 the employment report this morning. Interest rates are going to 0:09:01.040 --> 0:09:03.280 come down, maybe not as fast as the market wanted, 0:09:03.400 --> 0:09:08.160 but they're going to come down. The housing market, housing 0:09:08.200 --> 0:09:13.320 sales are actually up. Everything that we have in the economy, 0:09:13.400 --> 0:09:17.360 all the drivers of the economy are pointing green, and 0:09:17.400 --> 0:09:20.120 so I think it's not about the election. Actually, the 0:09:20.160 --> 0:09:22.920 only thing that I think can mess up this sunny 0:09:22.920 --> 0:09:27.040 outlook is mistakes that politicians might make, because when we 0:09:27.080 --> 0:09:31.079 look at the fundamentals of economic growth, they're all there. 0:09:31.240 --> 0:09:34.560 The US economy is in a fantastic space. And from 0:09:34.600 --> 0:09:37.880 an investor perspective, no matter whether you're going to invest 0:09:37.920 --> 0:09:41.000 in fixed income, in real estate, in the equity market, 0:09:41.800 --> 0:09:44.120 it's all green light ahead. 0:09:44.800 --> 0:09:48.880 All these valuations within Nvidia trading at forty. 0:09:48.600 --> 0:09:50.679 Nine times future earnings. 0:09:51.000 --> 0:09:55.560 The right level for these green skies at green the 0:09:55.600 --> 0:09:58.120 outlook of being a positive one, Well. 0:09:57.960 --> 0:10:00.559 It depends how long your timeline is. I mean, if 0:10:00.760 --> 0:10:05.160 I wouldn't be without Emdia in my portfolio, I wouldn't 0:10:05.200 --> 0:10:08.120 be without any of these hyperscalers in my portfolio, because 0:10:08.160 --> 0:10:11.199 that's that's the future, and you buy them and you 0:10:11.280 --> 0:10:12.719 hold them. 0:10:13.080 --> 0:10:15.240 Oh, if we had more time, I would ask you, 0:10:15.280 --> 0:10:17.000 how on earth you know what's going to happen in 0:10:17.040 --> 0:10:19.520 the world in twenty twenty seven, twenty twenty eight, But 0:10:19.600 --> 0:10:22.640 we don't, so we'll save it for next time. Melga Messino, 0:10:22.720 --> 0:10:25.439 CEO of we Family of this, thank you, Okay. Other 0:10:25.440 --> 0:10:28.920 earnings that we're watching Reddit in particular, it's fiscal fourth 0:10:29.000 --> 0:10:31.880 quarter outlook. Yes, that is a stock that's up forty 0:10:31.920 --> 0:10:34.600 one percent in the session. Yes, it was a stock 0:10:34.640 --> 0:10:37.440 that post ipo in March was already up one hundred 0:10:37.440 --> 0:10:41.280 and forty percent. And basically they're making money in different ways. 0:10:41.320 --> 0:10:43.959 The ad business is strong, but also there's the data 0:10:44.000 --> 0:10:48.200 licensing and AI part. It's a pretty astonishing jump and 0:10:48.360 --> 0:10:50.760 a lot of optimism that Reddit will continue to grow, 0:10:50.800 --> 0:10:53.720 even though Carro points out something interesting the user base 0:10:53.760 --> 0:10:56.160 if you compare it to like a snap very small, 0:10:56.360 --> 0:10:58.360 They're just gould at squeezeing dollars out of them. 0:10:58.520 --> 0:11:00.679 I'm with a market cap of now excess a twenty 0:11:00.679 --> 0:11:01.800 one billion extraordinary. 0:11:01.880 --> 0:11:01.960 Ed. 0:11:02.000 --> 0:11:06.559 Meanwhile, coming up another earning story BYD it's now beating 0:11:06.640 --> 0:11:09.240 Tesla on quarterly revenue for the first time. We'll have 0:11:09.280 --> 0:11:27.600 all the details. As of Blueberg technology, the European Union 0:11:27.679 --> 0:11:30.319 has imposed those higher tariffs of up to forty five 0:11:30.320 --> 0:11:33.560 percent on electric vehicles from China, so ratcheting up trade 0:11:33.559 --> 0:11:36.800 tensions between the world's leading export powers. The regulation was 0:11:36.840 --> 0:11:39.760 published in the EU's official journal last night, going into 0:11:39.760 --> 0:11:42.599 force today after months of negotiations. 0:11:42.760 --> 0:11:46.360 ED Yeah, let's stick with EV's Chinese clean energy vehicle 0:11:46.440 --> 0:11:51.360 Giant BYD posted quarterly sales that eclipse Tesla's for the 0:11:51.400 --> 0:11:54.360 first time, but the race to dominate the EV market 0:11:54.440 --> 0:11:57.560 is very much still on Blueberg's. Danny Lee is still 0:11:57.559 --> 0:12:00.600 awake for us in Hong Kong, and I posted on 0:12:00.640 --> 0:12:03.880 social media about this this metric. Many would point out 0:12:03.920 --> 0:12:06.319 this is not apples to apples right, because you need 0:12:06.360 --> 0:12:09.439 to explain to us Danny that within those BYD sales 0:12:09.440 --> 0:12:13.240 include plug in hybrids and the scales are completely different. 0:12:13.280 --> 0:12:15.160 What do we learn in the court just gone. 0:12:16.360 --> 0:12:19.000 I mean we learn in the quarter how BID is 0:12:19.120 --> 0:12:21.600 continue to dominate the China market where it gets most 0:12:21.600 --> 0:12:24.880 of its sales. But when you look at how BYD 0:12:25.160 --> 0:12:28.760 and Tesla are both building out the electric vehicles, BID 0:12:28.840 --> 0:12:31.400 obviously has its hybrids and so it has a greater 0:12:31.480 --> 0:12:34.280 advantage in particularly at the time when demander is skewed 0:12:34.640 --> 0:12:37.800 when it comes to electric vehicles and hybrids and the 0:12:37.800 --> 0:12:41.040 infrastructure is not necessarily always there around the world. But clearly, 0:12:41.080 --> 0:12:43.920 when you look at how BID is doing on a 0:12:43.960 --> 0:12:48.760 per employee basis, Tesla earns six times more per employee. 0:12:48.920 --> 0:12:53.400 So as much as the figure shows a new landmark 0:12:53.480 --> 0:12:56.240 for BID, clearly there are still other metrics to show 0:12:56.720 --> 0:12:59.800 just how efficient Tesla is. And you know, whether you 0:12:59.840 --> 0:13:02.680 get those who support must those who are big fans 0:13:02.679 --> 0:13:06.160 of Tesla who point out otherwise, clearly it's still a. 0:13:06.040 --> 0:13:07.439 Good run for BYD. 0:13:07.720 --> 0:13:10.840 We had that run last year of them eclipsing pure 0:13:11.000 --> 0:13:14.160 D sales, but this time on revenue. 0:13:14.040 --> 0:13:17.360 Talk about that vertical integration though, that we do see 0:13:17.400 --> 0:13:19.880 with BID in its supply chain, can it ring out 0:13:19.880 --> 0:13:22.640 more efficiencies, can it start to produce more per capita. 0:13:24.440 --> 0:13:26.640 It's already got the efficiencies there, and what it is 0:13:26.679 --> 0:13:31.120 doing now, particularly where it's nine hundred thousand employees, is scale, scale, 0:13:31.160 --> 0:13:33.199 and what it's doing is to try and build as 0:13:33.200 --> 0:13:35.679 many cars as possible, not just in China but now 0:13:35.760 --> 0:13:38.000 around the world with all the factories it's committed to. 0:13:38.120 --> 0:13:41.160 So you know, it's got the efficiency there and now 0:13:41.160 --> 0:13:42.880 it can use it to its advantage. And that is 0:13:42.920 --> 0:13:47.000 what is scaring the European and US automakers who are 0:13:47.040 --> 0:13:49.520 really struggling with the EV transition. But when you look 0:13:49.559 --> 0:13:53.040 at Tesla and BYD combined the might of them, they 0:13:53.040 --> 0:13:57.640 can show that profitable path to get into that EV transition, 0:13:57.720 --> 0:14:00.760 which the others out there, the legs you'll becerus, are struggling, 0:14:00.760 --> 0:14:03.360 which is why you see Tesla and BODS at one 0:14:03.400 --> 0:14:06.520 and three. In terms of valuations, it is hard to 0:14:06.559 --> 0:14:07.000 compare them. 0:14:07.040 --> 0:14:09.240 I look at gross margin for example, where like BYD 0:14:09.360 --> 0:14:11.400 in the Quarrid was near to twenty two percent and 0:14:11.440 --> 0:14:14.320 Tesla just under twenty percent. But again it's not apples 0:14:14.320 --> 0:14:16.760 to apples. Many point out well, Tesla's an AI and 0:14:16.840 --> 0:14:21.640 robotics company and it's investing there. How is BYD different, 0:14:21.840 --> 0:14:23.920 you know, what are its product lines? Where is it 0:14:24.000 --> 0:14:25.280 moving toward? 0:14:26.640 --> 0:14:30.160 BUID has very much focused itself on the product, the 0:14:30.240 --> 0:14:33.600 car itself, and so it doesn't necessarily have those wildly 0:14:33.640 --> 0:14:36.640 big evaluations that Tesla has with that you know, full 0:14:36.680 --> 0:14:40.320 self driving that it's been pushing constantly. So BID is 0:14:40.360 --> 0:14:42.600 starting to think about how it's looking to be more 0:14:43.000 --> 0:14:46.200 more savvy with its digital skills because on the roads 0:14:46.240 --> 0:14:49.640 in China it does have this level of automation which 0:14:49.760 --> 0:14:53.520 could match Tesla frankly, and so with its scale in China, 0:14:53.560 --> 0:14:57.040 it's all its learnings perhaps that can be extrapolated into 0:14:57.040 --> 0:14:59.040 something more meaningful in a long run. 0:15:00.120 --> 0:15:03.160 More than eight hundred billion dollar valuation for Tesla just 0:15:03.160 --> 0:15:06.400 over one hundred billion BYD. Dannie Lee stays late for US, 0:15:06.440 --> 0:15:08.800 We thank you now. Despite more than six years of 0:15:09.000 --> 0:15:14.120 US tariffs, expert controls, financial sanctions, China is making steady 0:15:14.200 --> 0:15:17.800 progress in position itself to dominate the industries of the future, 0:15:17.960 --> 0:15:19.200 like the one we were just discussing. 0:15:19.440 --> 0:15:20.720 There's some new research by. 0:15:20.600 --> 0:15:24.040 Blue Meg Economics and Blueberg Intelligence diving into thirteen key technologies, 0:15:24.160 --> 0:15:27.000 and it shows that China achieved a global leadership position 0:15:27.080 --> 0:15:30.000 in five of them, catching up fast in seven others. 0:15:30.560 --> 0:15:32.280 We're pleased to welcome to the show that the author 0:15:32.320 --> 0:15:36.120 of this piece, Jered Dipipio from Bloomberg Economics, who takes 0:15:36.160 --> 0:15:39.360 part in the report in Gerard, just outline the five 0:15:39.440 --> 0:15:41.600 where they're dominant and the areas that they're growing. 0:15:44.000 --> 0:15:47.360 Right, So we looked with our Bloomberg Intelligence and Economics 0:15:47.440 --> 0:15:51.000 colleagues at thirteen key technologies that are part of China's 0:15:51.000 --> 0:15:54.360 Made in China twenty five initiative from about ten years ago. 0:15:54.960 --> 0:15:57.800 The five areas where China is clearly leading as of 0:15:57.840 --> 0:16:01.920 this year would be drones, high speed rail evs, as 0:16:01.920 --> 0:16:04.320 you were just discussing, solar panels, and graphing. So some 0:16:04.360 --> 0:16:08.360 advanced materials where there are competitive would be things like semiconductors, AI, 0:16:08.480 --> 0:16:11.720 machine tools, LERG carriers they have like a big ship 0:16:11.760 --> 0:16:17.040 target and drugs like pharmaceuticals. Where they're really behind is 0:16:17.080 --> 0:16:20.280 commercial aircraft, interesting toads. 0:16:20.320 --> 0:16:23.000 You just read out the sort of dream smallus board 0:16:23.000 --> 0:16:27.320 of Bloomberg technology stuff. I think one thing we reflect 0:16:27.360 --> 0:16:30.440 on in the show is that some of those key areas, right, semiconductors, 0:16:30.440 --> 0:16:34.960 even drones. In EV it's very policy focused. In other words, 0:16:35.240 --> 0:16:39.080 the government in China change their minds, but they're often 0:16:39.120 --> 0:16:43.600 willing to support those industries through finance or policy to 0:16:43.720 --> 0:16:44.760 make them successful. 0:16:46.560 --> 0:16:49.160 Indeed, I mean industrial policy is a big part of it. 0:16:49.400 --> 0:16:52.560 China's new energy vehicle targets and plans go back to 0:16:52.560 --> 0:16:54.560 around two thousand and nine, so they predate Man in 0:16:54.640 --> 0:16:58.000 China twenty five. How they do this it's hard to quantify, 0:16:58.080 --> 0:17:02.160 but there are a lot of subsidies for buyers for firms. 0:17:02.160 --> 0:17:06.760 There's state backed credit, state backed investment funds, government procurement, etc. 0:17:07.359 --> 0:17:09.359 But I think BYD is a good example. So the 0:17:09.400 --> 0:17:13.560 EV sector clearly benefited from Chinese industrial policy, but the 0:17:13.600 --> 0:17:16.680 industrial policy also didn't pick winners, so to speak. BYD 0:17:16.840 --> 0:17:18.600 was the one that rose to the top, in part 0:17:18.600 --> 0:17:21.280 because consumers were ultimately the ones sociding. And now it 0:17:21.359 --> 0:17:22.879 is a globally competitive firm. 0:17:23.680 --> 0:17:26.000 Let's just talk about what this means for the US 0:17:26.040 --> 0:17:29.920 as well, because the US has been trying to prevent 0:17:30.200 --> 0:17:34.000 great strides in certain areas of technology. AI chips comes 0:17:34.200 --> 0:17:37.520 first to mind by limiting trade from the US, but 0:17:37.560 --> 0:17:39.359 also from its allies. 0:17:39.880 --> 0:17:41.800 What does this do if China gets there? 0:17:41.840 --> 0:17:47.359 Anyway, The US measures I media tariffs are kind of 0:17:47.359 --> 0:17:49.679 more macro in terms of hitting many things. The expert 0:17:49.680 --> 0:17:52.359 controls are very much focused on van semic conductors and 0:17:52.400 --> 0:17:56.679 things related to artificial intelligence. The US concern, as articulated 0:17:56.680 --> 0:18:00.679 by Jake Sullivan recently, is basically that they're afraid that 0:18:00.760 --> 0:18:03.520 China having advanced leading these things while having military application, 0:18:03.600 --> 0:18:06.479 particularly for things like artificial intelligence. But there's also an 0:18:06.480 --> 0:18:08.800 economic side, because these are the industries of the future, 0:18:09.040 --> 0:18:12.080 and from a competitiveness perspective, especially if you think China 0:18:12.160 --> 0:18:14.880 is benefiting from its own industrial policy. The US thinks, 0:18:14.920 --> 0:18:17.040 you know, in a sense, it's quote unfair and that 0:18:17.040 --> 0:18:19.240 they don't want to be left behind. 0:18:20.000 --> 0:18:23.400 Job, let's do semiconductors as one final case study, please, 0:18:23.440 --> 0:18:26.320 partly because it's also been in the news cycle. Right, Yes, 0:18:26.600 --> 0:18:30.600 US export controls, but China's responded and tried to champion 0:18:30.680 --> 0:18:34.320 specific names. What did your research find in that space? 0:18:36.520 --> 0:18:39.960 So, I mean China's main fab is Smick, right, and 0:18:40.080 --> 0:18:44.320 Smick is sort of their TSMC equivalent. It receives heavy subsidies. 0:18:44.480 --> 0:18:46.320 But then there are other firms like Quawei, which is 0:18:46.400 --> 0:18:49.160 ultimately buying the chips that they're making that are also 0:18:49.320 --> 0:18:52.480 being state supported. So in general, I think the US 0:18:52.520 --> 0:18:55.480 export controls have probably done less damage in many in 0:18:55.480 --> 0:18:58.320 the US government would have hoped two years ago. China 0:18:58.359 --> 0:19:00.639 is still making strides, but it's also clear that or 0:19:00.680 --> 0:19:04.000 at least maybe debatable, how good THEO strides are. And 0:19:04.200 --> 0:19:07.200 even recently Bloomberg was reporting that maybe Huawei was getting 0:19:07.240 --> 0:19:10.000 chips from TSMC through a carve out right, So there's 0:19:10.000 --> 0:19:12.520 still leakage in the export controls and this is something 0:19:12.560 --> 0:19:14.720 that the Biden administration in its final days is looking 0:19:14.720 --> 0:19:15.240 to address. 0:19:17.160 --> 0:19:21.560 Gerard DiPippo from Bloomberg Economics, just incredible, Thank you so much, 0:19:21.640 --> 0:19:22.880 really appreciate it. 0:19:30.320 --> 0:19:33.840 Time now for talking tech. First up, in Or Musk's startup, Xai, 0:19:34.320 --> 0:19:36.880 seeking new funding at a roughly forty billion dollar valuation, 0:19:36.920 --> 0:19:39.560 according to a person familiar with the matter, and the 0:19:39.560 --> 0:19:42.960 company's valuation was twenty four billion, including the six billion 0:19:43.000 --> 0:19:45.280 dollar raised during its last funding round back in May. 0:19:45.600 --> 0:19:48.240 This week, Musk said that his aim was to double 0:19:48.359 --> 0:19:51.600 Xai's access to compute, of course, the resource that fuels 0:19:51.640 --> 0:19:55.399 official intelligence, plus open Ai is working with broad content 0:19:55.440 --> 0:19:58.919 developing custom AI chip focused on running AI models. After training, 0:19:59.160 --> 0:20:01.640 the chips will run I software that responds to user 0:20:01.680 --> 0:20:04.840 requests and is expected to be in some high demand. 0:20:05.080 --> 0:20:08.400 You are Apple again this hour, veiling an updated MacBook 0:20:08.400 --> 0:20:10.920 Pro lineup with new M four chips, looking to entice 0:20:10.920 --> 0:20:14.600 shoppers with Speedia processing and of course AI capabilities. Is 0:20:14.640 --> 0:20:17.199 part of a flurry of Mac upgrades this week. The 0:20:17.200 --> 0:20:20.840 company also released Apple Intelligence, it's new AI platform. 0:20:20.880 --> 0:20:23.320 Earlier in the week ed what are you watching? 0:20:23.760 --> 0:20:27.760 Super Micro the server maker again reminder it's down significantly, 0:20:27.800 --> 0:20:32.560 biggest drop since twenty eighteen. Ey It's auditor resigned. It's 0:20:32.600 --> 0:20:35.520 concerned about ethics and integrity of the management team and 0:20:35.560 --> 0:20:41.800 the audit committee. This is Bloomberg Technology. 0:20:47.480 --> 0:20:49.880 Welcome back to Bloomberg Technology. I'm karenine Hyde. 0:20:49.640 --> 0:20:52.120 In New York and I'm ed Lovelo in San Francisco. 0:20:52.240 --> 0:20:54.840 Let's get back to the technology earning story. Social media 0:20:54.920 --> 0:20:57.879 kind of a focus snaps up the most in six months. 0:20:58.000 --> 0:21:00.400 User growth looks good. Sales in the cour have gone 0:21:00.400 --> 0:21:03.280 above expectations, and it's like they've done a lot of 0:21:03.280 --> 0:21:05.840 work on advertising to make them more relevant. They're getting 0:21:05.880 --> 0:21:09.440 rewarded for that. Also Reddit biggest jump since IPO day 0:21:09.480 --> 0:21:12.760 March twenty first, a strong outlook for the holiday quarter 0:21:13.119 --> 0:21:15.320 again ad business, but of course they had the data 0:21:15.359 --> 0:21:17.840 licensing side with AI as well. We're going to talk 0:21:17.840 --> 0:21:19.719 about that in just a moment. And then Meta up 0:21:19.760 --> 0:21:21.800 eight ten to one percent. I think this is going 0:21:21.840 --> 0:21:25.240 to be a megaprint. You know, Meta, the social media company, Meta, 0:21:25.240 --> 0:21:28.080 the AI company, Meta, the biggest runner of data centers 0:21:28.080 --> 0:21:30.639 that no one talks about that kind of stuff, Garrett. 0:21:30.800 --> 0:21:32.040 Someone talks about all of it. 0:21:32.119 --> 0:21:35.840 We're pleased to have flue megazation accounts across a florry 0:21:36.280 --> 0:21:39.399 of social media moves. Let's just start with snap because 0:21:39.440 --> 0:21:43.440 they are managing to show that they can still get 0:21:43.720 --> 0:21:46.240 growth outside of the US. It seems to mainly be 0:21:46.440 --> 0:21:47.760 and also people subscribing. 0:21:49.119 --> 0:21:51.440