1 00:00:00,240 --> 00:00:07,680 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:10,680 --> 00:00:14,000 Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the 3 00:00:14,000 --> 00:00:16,640 Speaker 2: top stories in the coming week from our Daybreak anchors 4 00:00:16,760 --> 00:00:19,400 Speaker 2: all around the world. Straight Ahead on the program, we'll 5 00:00:19,400 --> 00:00:22,600 Speaker 2: look ahead to earnings from some of tech's magnificent seven. 6 00:00:22,760 --> 00:00:24,680 Speaker 2: I'm Nathan Hager in Washington. 7 00:00:24,760 --> 00:00:27,880 Speaker 3: I'm Caroline Hedkit in London, where we're asking whether UK 8 00:00:27,920 --> 00:00:31,840 Speaker 3: five Minister Kastarma can throw frosty relations with China. 9 00:00:32,000 --> 00:00:35,159 Speaker 4: I'm Doug Chrisner looking at what Apple earnings will indicate 10 00:00:35,159 --> 00:00:35,879 Speaker 4: about Asia. 11 00:00:38,159 --> 00:00:42,200 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 12 00:00:42,240 --> 00:00:45,920 Speaker 1: eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, 13 00:00:46,440 --> 00:00:51,559 Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syrias, 14 00:00:51,720 --> 00:00:55,240 Speaker 1: XM one twenty one, and around the world on Bloomberg Radio, 15 00:00:55,280 --> 00:00:57,520 Speaker 1: dot Com and the Bloomberg Business app. 16 00:01:02,600 --> 00:01:05,399 Speaker 2: Good day to you. I'm Nathan Hager. We begin today's 17 00:01:05,440 --> 00:01:08,920 Speaker 2: program with the Federal Reserve. Jay Powell and company begin 18 00:01:09,000 --> 00:01:13,040 Speaker 2: their first monetary policy meeting of twenty twenty six on Tuesday, 19 00:01:13,360 --> 00:01:16,160 Speaker 2: with the first rate decision of the year to come Wednesday. 20 00:01:16,280 --> 00:01:19,000 Speaker 2: So what should we expect as we map out policy 21 00:01:19,360 --> 00:01:21,160 Speaker 2: for the rest of the year. Let's bring in Michael 22 00:01:21,200 --> 00:01:24,200 Speaker 2: McKee for more on this, our international economics and policy 23 00:01:24,200 --> 00:01:27,920 Speaker 2: correspondent for Bloomberg Radio and Television. Mike, I guess, as 24 00:01:27,920 --> 00:01:30,200 Speaker 2: far as the January decision goes, would probably be a 25 00:01:30,200 --> 00:01:33,880 Speaker 2: big shock if we got another rate cut this week, right, 26 00:01:33,959 --> 00:01:35,480 Speaker 2: So what should we be looking for. 27 00:01:36,000 --> 00:01:38,440 Speaker 5: I think this is gonna be another one where the 28 00:01:38,440 --> 00:01:40,840 Speaker 5: FED is sort of going to be anxious to make 29 00:01:40,840 --> 00:01:43,720 Speaker 5: as little news as possible, which I don't think they're 30 00:01:43,760 --> 00:01:46,720 Speaker 5: going to be able to avoid, but there is no 31 00:01:47,760 --> 00:01:51,480 Speaker 5: rate cut in train, so they're unlikely to do that. 32 00:01:51,480 --> 00:01:53,960 Speaker 5: That would be a shock. There's been no news that 33 00:01:54,040 --> 00:01:58,120 Speaker 5: would justify that at this point, and all the speakers 34 00:01:58,160 --> 00:02:00,800 Speaker 5: going into the blackout period, we're saying, you know, we 35 00:02:00,840 --> 00:02:03,320 Speaker 5: don't think we need to kind anything. So I think 36 00:02:03,360 --> 00:02:05,800 Speaker 5: you'll get a unanimous decision no to sense this time 37 00:02:06,600 --> 00:02:10,320 Speaker 5: for a hold, and then the question always, as always, 38 00:02:10,360 --> 00:02:13,000 Speaker 5: moves on to what do they do at the next meeting, 39 00:02:13,000 --> 00:02:16,919 Speaker 5: which is in March. I think they're going to avoid 40 00:02:17,880 --> 00:02:23,639 Speaker 5: making any kind of specific forecast because they don't know 41 00:02:24,320 --> 00:02:26,280 Speaker 5: what the data are going to show. We're still coming 42 00:02:26,320 --> 00:02:30,440 Speaker 5: out of this as the government shutdown, data shortage, so 43 00:02:30,960 --> 00:02:33,080 Speaker 5: they won't have a lot of information. 44 00:02:33,600 --> 00:02:36,480 Speaker 2: Well, let's talk about the information that they have gotten 45 00:02:36,560 --> 00:02:39,840 Speaker 2: thus far. I mean, we have seen some more labor 46 00:02:39,880 --> 00:02:42,880 Speaker 2: market reports, we've gotten non farm payrolls, you've gotten the 47 00:02:42,880 --> 00:02:46,079 Speaker 2: Fed's preferred gage of inflation as well. What does that 48 00:02:46,160 --> 00:02:49,480 Speaker 2: tell you about what the economy looks like going into 49 00:02:49,480 --> 00:02:50,320 Speaker 2: twenty twenty six. 50 00:02:50,639 --> 00:02:52,560 Speaker 5: Well, if you're looking at it in terms of the 51 00:02:52,560 --> 00:02:56,600 Speaker 5: Fed's dual mandate, you do have inflation. The PCEE numbers 52 00:02:56,639 --> 00:03:03,600 Speaker 5: came out last week at looking at two point eight percent, 53 00:03:03,800 --> 00:03:07,200 Speaker 5: which is up from the month prior. But now these 54 00:03:07,200 --> 00:03:11,120 Speaker 5: are November numbers. The December numbers won't come out yet 55 00:03:11,520 --> 00:03:14,480 Speaker 5: for a couple of weeks, and in the December numbers, 56 00:03:15,040 --> 00:03:18,280 Speaker 5: the expectation is inflation will rise again to three percent. 57 00:03:19,160 --> 00:03:20,839 Speaker 5: And then when you look at the jobs numbers, it's 58 00:03:21,160 --> 00:03:25,040 Speaker 5: the unemployment rate went down last month and Java's claims 59 00:03:25,200 --> 00:03:29,519 Speaker 5: have stayed extremely low. So at worst, maybe you say 60 00:03:29,560 --> 00:03:33,800 Speaker 5: for the moment, the labor market has stabilized, and so 61 00:03:34,040 --> 00:03:38,160 Speaker 5: there's not really an economic argument for cutting rates. There's 62 00:03:38,200 --> 00:03:43,240 Speaker 5: also a feeling that given the tax cut bill, we're 63 00:03:43,240 --> 00:03:47,480 Speaker 5: going into tax season now, people will get higher refunds 64 00:03:47,520 --> 00:03:50,560 Speaker 5: than they have in prior years and that will feed 65 00:03:50,600 --> 00:03:53,400 Speaker 5: some spending into the economy and keep it a little 66 00:03:53,400 --> 00:03:57,720 Speaker 5: bit stronger. So there's no real need to cut rates 67 00:03:57,760 --> 00:03:58,520 Speaker 5: at the moment now. 68 00:03:58,680 --> 00:04:01,240 Speaker 2: It's interesting because at the of last year, there was 69 00:04:01,280 --> 00:04:04,600 Speaker 2: so much focus on the idea of cracks in the 70 00:04:04,680 --> 00:04:07,240 Speaker 2: labor market. Now, as you say, we are seeing this 71 00:04:07,320 --> 00:04:10,600 Speaker 2: sort of sign of stabilization. While it seems like this 72 00:04:10,800 --> 00:04:13,840 Speaker 2: last mile of getting inflation back down to the Fed's 73 00:04:13,880 --> 00:04:18,360 Speaker 2: two percent target just seems to look like an uphill climb. 74 00:04:18,520 --> 00:04:22,760 Speaker 2: Could we be seeing the Fed's focus shift now from 75 00:04:22,920 --> 00:04:25,360 Speaker 2: the job market to inflation once again. 76 00:04:25,880 --> 00:04:28,839 Speaker 5: I think they will move back they were emphasizing the 77 00:04:28,880 --> 00:04:30,760 Speaker 5: labor market. I think they'll move back to the middle 78 00:04:31,200 --> 00:04:33,720 Speaker 5: at this point and waiting for more data. Next week 79 00:04:33,760 --> 00:04:37,239 Speaker 5: we won't have the December PCE numbers, so they'll still 80 00:04:37,279 --> 00:04:42,560 Speaker 5: be looking to guess at what the numbers are going 81 00:04:42,640 --> 00:04:47,000 Speaker 5: to be, and even if it's going up to three percent, 82 00:04:47,080 --> 00:04:49,599 Speaker 5: that's going to concern them. So I think they try 83 00:04:49,640 --> 00:04:52,480 Speaker 5: to keep their options open with that and not emphasize 84 00:04:52,480 --> 00:04:54,839 Speaker 5: the labor market just as much. But the problem with 85 00:04:55,480 --> 00:04:58,760 Speaker 5: both sides of the man data and the data are 86 00:04:58,520 --> 00:05:02,320 Speaker 5: the uncertainty that the Trump administration has caused has not 87 00:05:02,400 --> 00:05:05,960 Speaker 5: gone away. We just went through a week of We're 88 00:05:05,960 --> 00:05:08,640 Speaker 5: going to put big tariffs on Europe. Oh, no, we're not, 89 00:05:09,839 --> 00:05:14,560 Speaker 5: And so companies don't know what to do. They're kind 90 00:05:14,560 --> 00:05:16,960 Speaker 5: of hunkered down at the moment. They don't want to 91 00:05:16,960 --> 00:05:18,680 Speaker 5: fire a lot of people if the economy is going 92 00:05:18,720 --> 00:05:21,000 Speaker 5: to pick up. But if the economy is going to 93 00:05:21,040 --> 00:05:24,040 Speaker 5: slow down or we're going to have inflation issues, then 94 00:05:24,080 --> 00:05:26,680 Speaker 5: they're going to try to control costs and you might 95 00:05:26,720 --> 00:05:30,120 Speaker 5: see some layoffs. So at this point we're kind of 96 00:05:30,120 --> 00:05:31,880 Speaker 5: in this no man's land that we've been in for 97 00:05:31,920 --> 00:05:32,360 Speaker 5: a year. 98 00:05:33,120 --> 00:05:35,680 Speaker 2: You talked about the Fed maybe not wanting to make 99 00:05:35,800 --> 00:05:39,239 Speaker 2: much news at this meeting. Of course, this is coming 100 00:05:39,279 --> 00:05:43,000 Speaker 2: at a time where the Central Bank is facing continued 101 00:05:43,080 --> 00:05:46,080 Speaker 2: pressures outside the committee room. This is going to be 102 00:05:46,320 --> 00:05:50,040 Speaker 2: Chair Powell's first policy meeting since he announced that he's 103 00:05:50,120 --> 00:05:53,960 Speaker 2: under a Justice Department investigation. How much could that weigh 104 00:05:54,000 --> 00:05:55,200 Speaker 2: on this decision? Will it? 105 00:05:56,240 --> 00:05:58,240 Speaker 5: I don't think it weighs on the decision at all, 106 00:05:58,920 --> 00:06:04,960 Speaker 5: because the of Powell is sort of vengeance by the 107 00:06:05,000 --> 00:06:08,000 Speaker 5: President and the rest of the members of the Open 108 00:06:08,000 --> 00:06:11,760 Speaker 5: Market Committee aren't going to think it means anything, and 109 00:06:11,800 --> 00:06:14,920 Speaker 5: they will ignore it. But what will be interesting is, 110 00:06:15,200 --> 00:06:17,560 Speaker 5: since the FED is not expected to do anything exciting 111 00:06:17,640 --> 00:06:20,760 Speaker 5: or surprise anybody with monetary policy, is the first question 112 00:06:20,920 --> 00:06:23,240 Speaker 5: going to be about the decision or is it going 113 00:06:23,279 --> 00:06:27,200 Speaker 5: to be about the president's efforts to atara and feather 114 00:06:27,320 --> 00:06:30,440 Speaker 5: the FED chair. There probably will be a lot of 115 00:06:30,480 --> 00:06:35,280 Speaker 5: focus on that, and my guess is that Powell will 116 00:06:35,320 --> 00:06:40,359 Speaker 5: try to shut that down, maybe say I've already spoken 117 00:06:40,440 --> 00:06:45,000 Speaker 5: my piece on this, maybe something about the importance of 118 00:06:45,040 --> 00:06:47,760 Speaker 5: FED independence, But I don't think he wants to spend 119 00:06:47,800 --> 00:06:52,440 Speaker 5: the entire news conference in a shouting match with the President. 120 00:06:52,839 --> 00:06:54,559 Speaker 2: We know you're going to be there for that news 121 00:06:54,600 --> 00:06:58,080 Speaker 2: conference and for the decision as well, with the January 122 00:06:58,080 --> 00:07:02,440 Speaker 2: policy decision of the Federal resis coming up later on Wednesday. 123 00:07:02,440 --> 00:07:05,280 Speaker 2: Thank you for this, Mike. As always, it's Michael McKee, 124 00:07:05,279 --> 00:07:09,600 Speaker 2: international economics and policy correspondent from Bloomberg Radio and Television. 125 00:07:09,920 --> 00:07:12,600 Speaker 2: We move next to a slew of corporate earnings. The 126 00:07:12,640 --> 00:07:15,080 Speaker 2: focus this week turns to some of the biggest names 127 00:07:15,120 --> 00:07:17,880 Speaker 2: in tech. We're going to hear from Tesla, Microsoft, meta 128 00:07:17,920 --> 00:07:22,040 Speaker 2: platforms all on Wednesday. We'll also hear from Apple after 129 00:07:22,080 --> 00:07:25,080 Speaker 2: the closed Thursday, let's bring in Bloomberg Tech co anchor 130 00:07:25,240 --> 00:07:28,040 Speaker 2: Ed Ludlow to get a set for the Magnificent seven 131 00:07:28,240 --> 00:07:30,840 Speaker 2: earnings kickoff. Great to have you here. 132 00:07:31,000 --> 00:07:31,080 Speaker 6: Ed. 133 00:07:31,360 --> 00:07:33,840 Speaker 2: Let's start with Tesla because we heard from the CEO 134 00:07:34,120 --> 00:07:36,440 Speaker 2: Elon Musk at the World Economic Forum this past week. 135 00:07:36,480 --> 00:07:39,440 Speaker 2: He was talking about the optimist robots. Is that where 136 00:07:39,440 --> 00:07:41,280 Speaker 2: the focus is going to be for investors when it 137 00:07:41,320 --> 00:07:42,760 Speaker 2: comes to the earnings. 138 00:07:43,080 --> 00:07:45,040 Speaker 6: Yeah, when it comes to earnings, like you have to 139 00:07:45,120 --> 00:07:47,160 Speaker 6: kind of unpick all of the noise that comes from 140 00:07:47,160 --> 00:07:49,360 Speaker 6: Elon Musk in the interim. So what happened at the 141 00:07:49,440 --> 00:07:52,360 Speaker 6: end of twenty twenty five is Tesla had its second 142 00:07:52,400 --> 00:07:56,320 Speaker 6: consecutive sales decline on an annual basis. Basically, they're not 143 00:07:56,320 --> 00:07:59,000 Speaker 6: selling as many evs and there's lots of evidence that 144 00:07:59,440 --> 00:08:02,960 Speaker 6: musks medical activities last year impacted that we had the 145 00:08:03,080 --> 00:08:06,040 Speaker 6: end of federal credits in the United States and other 146 00:08:06,120 --> 00:08:09,480 Speaker 6: factors you know about the economy and competition. So when 147 00:08:09,480 --> 00:08:11,840 Speaker 6: it comes to earnings, you kind of look for, well, 148 00:08:12,160 --> 00:08:14,880 Speaker 6: was that story true. What is Tesla's explanation for it? 149 00:08:14,920 --> 00:08:17,840 Speaker 6: Because it's the first chance that they really talk about it. 150 00:08:18,160 --> 00:08:20,360 Speaker 6: Then there's all the big picture stuff, and you know, 151 00:08:20,400 --> 00:08:23,280 Speaker 6: we say on Bloomberg Tech all the time, Must's greatest 152 00:08:23,320 --> 00:08:26,320 Speaker 6: skill is keeping all the investors looking to the horizon 153 00:08:26,600 --> 00:08:30,400 Speaker 6: on those future projects, which are robotaxi and humanoid robots. 154 00:08:30,640 --> 00:08:33,000 Speaker 2: So when it comes to the core business, though, what's 155 00:08:33,120 --> 00:08:36,679 Speaker 2: the show me story for Elon Musk and for Tesla 156 00:08:36,840 --> 00:08:40,000 Speaker 2: when it comes to EV demand the fact that we 157 00:08:40,080 --> 00:08:43,640 Speaker 2: don't have those incentives and we're seeing that draw down 158 00:08:43,800 --> 00:08:46,360 Speaker 2: in demand across the EV sector. What's that going to 159 00:08:46,440 --> 00:08:48,160 Speaker 2: mean for Tesla when it comes to the earnings. 160 00:08:48,480 --> 00:08:51,079 Speaker 6: Yeah, again, it's a cutting through the noise kind of thing, 161 00:08:51,160 --> 00:08:53,960 Speaker 6: especially when we're reporting the news on it. But what 162 00:08:54,160 --> 00:08:58,400 Speaker 6: Tesla has done more recently inconsistently is in their earnings 163 00:08:58,440 --> 00:09:01,720 Speaker 6: deck a growth target. They will either say or they 164 00:09:01,760 --> 00:09:05,720 Speaker 6: won't say, we expect fifty percent compound annual growth rates. 165 00:09:05,960 --> 00:09:09,080 Speaker 6: And that's the only indication that we get to tell 166 00:09:09,160 --> 00:09:11,600 Speaker 6: us that they have firm data and firm belief that 167 00:09:11,640 --> 00:09:14,920 Speaker 6: they will or won't grow. Historically, that's been the story 168 00:09:14,960 --> 00:09:17,920 Speaker 6: for many years. Grew at fifty percent a year, and 169 00:09:17,960 --> 00:09:20,199 Speaker 6: then it stopped and as I just said two straight 170 00:09:20,280 --> 00:09:24,439 Speaker 6: years of declining growth, declining sales growth, so you look 171 00:09:24,480 --> 00:09:27,679 Speaker 6: into the deck. But again, you know, it depends on 172 00:09:27,720 --> 00:09:30,760 Speaker 6: the questions the analysts asked. It depends on what tests does. 173 00:09:30,800 --> 00:09:33,280 Speaker 6: A bit differently, the retail investors get to ask questions 174 00:09:33,320 --> 00:09:35,880 Speaker 6: that they submit through an online portal, and lots of 175 00:09:35,880 --> 00:09:38,560 Speaker 6: those often don't even worry about the day to day 176 00:09:38,600 --> 00:09:41,480 Speaker 6: business of selling evs. They just care about those shiny things. 177 00:09:41,679 --> 00:09:44,680 Speaker 2: Yeah, speaking of shiny things, let's move on to some 178 00:09:44,720 --> 00:09:48,160 Speaker 2: of the other companies reporting earnings this week, including Meta Platforms. 179 00:09:48,200 --> 00:09:52,040 Speaker 2: Of course, they've gone all in on AI spending right now. 180 00:09:52,760 --> 00:09:55,840 Speaker 2: Is there such a thing as too much AI capex 181 00:09:55,880 --> 00:09:58,120 Speaker 2: When it comes to Meta. 182 00:09:57,440 --> 00:10:01,640 Speaker 6: Quite the opposite. The expectation is that capital expenditures across 183 00:10:01,760 --> 00:10:04,920 Speaker 6: Meta and then the hyperscalers. So Meta, as you know, 184 00:10:05,160 --> 00:10:07,800 Speaker 6: is a social media company that's also very interested in 185 00:10:07,880 --> 00:10:11,800 Speaker 6: artificial intelligence, but it does not operate in the business 186 00:10:11,880 --> 00:10:16,000 Speaker 6: of renting computer capacity to others. Those are cloud providers 187 00:10:16,320 --> 00:10:19,680 Speaker 6: in other words, Amazon, Microsoft, Google, and to a lesser extent, Oracle. 188 00:10:20,120 --> 00:10:23,760 Speaker 6: But metas spending on its own data centers is so 189 00:10:23,840 --> 00:10:27,000 Speaker 6: significant that we put it in that bucket, and the 190 00:10:27,040 --> 00:10:30,440 Speaker 6: story's not changed from last quarter or last year. We 191 00:10:30,520 --> 00:10:34,400 Speaker 6: track capital expenditures across all those names, and the market 192 00:10:34,440 --> 00:10:38,040 Speaker 6: wants to see confidence of spending. The basic logic is 193 00:10:38,320 --> 00:10:41,200 Speaker 6: if capital expenditures are in the range that investors forecast, 194 00:10:41,240 --> 00:10:43,880 Speaker 6: they're higher than they were last year, then that shows 195 00:10:43,880 --> 00:10:46,800 Speaker 6: a commitment to spending, because the companies believe on the 196 00:10:46,840 --> 00:10:50,040 Speaker 6: other side of building more data centers comes revenue growth, 197 00:10:50,040 --> 00:10:52,520 Speaker 6: comes profit from all their work, particularly in AI. 198 00:10:52,920 --> 00:10:55,280 Speaker 2: And we're going to hear from one of those hyperscalers. 199 00:10:55,360 --> 00:10:58,920 Speaker 2: You just mentioned Microsoft. Of course there as your cloud business. 200 00:10:58,960 --> 00:11:02,319 Speaker 2: It seems like that's been going gangbusters for several quarters now. 201 00:11:02,320 --> 00:11:04,640 Speaker 2: So what's the expectation when it comes to Microsoft. 202 00:11:05,200 --> 00:11:08,360 Speaker 6: Yeah, Microsoft can be a pretty straightforward story. Again, we 203 00:11:08,360 --> 00:11:10,880 Speaker 6: look at its capital expenditures because as one of the 204 00:11:10,880 --> 00:11:13,760 Speaker 6: biggest data center operators and owners, you want to see 205 00:11:13,760 --> 00:11:16,880 Speaker 6: their commitment to doing it. But then in terms of segments, 206 00:11:16,920 --> 00:11:21,280 Speaker 6: it's just about the top line growth of that as 207 00:11:21,320 --> 00:11:24,120 Speaker 6: your cloud computing business, and you know it's in the 208 00:11:24,160 --> 00:11:28,000 Speaker 6: thirties and plus or minus a few percent against street consensus, 209 00:11:28,040 --> 00:11:33,280 Speaker 6: makes a really big impression on how AI. The investment 210 00:11:33,320 --> 00:11:35,319 Speaker 6: starts with the chips that go in data centers, you 211 00:11:35,360 --> 00:11:37,000 Speaker 6: have to spend a lot of money on that. But 212 00:11:37,040 --> 00:11:39,600 Speaker 6: when you start to show sales growth in cloud, it's 213 00:11:39,679 --> 00:11:41,400 Speaker 6: evidence that that payoff is happening. 214 00:11:41,720 --> 00:11:44,120 Speaker 2: So when we start to look at these earnings, Z, 215 00:11:44,600 --> 00:11:47,000 Speaker 2: what are you expecting when it comes to this ongoing 216 00:11:47,000 --> 00:11:50,960 Speaker 2: debate about AI valuations and you know circular spending in 217 00:11:51,000 --> 00:11:52,000 Speaker 2: the space as well. 218 00:11:52,840 --> 00:11:55,439 Speaker 6: Yeah, but the issue then takes us back to growth. 219 00:11:55,559 --> 00:11:59,719 Speaker 6: The valuations are being justified by that growth narrative. And 220 00:12:00,120 --> 00:12:02,080 Speaker 6: you know, if you read on the Bloomberg terminal, the 221 00:12:02,120 --> 00:12:05,680 Speaker 6: team on equities in particular point out that actually that 222 00:12:05,880 --> 00:12:08,000 Speaker 6: growth if we take the MAGS seven as a bucket, 223 00:12:08,080 --> 00:12:10,120 Speaker 6: or we take the higher growth tech stock s and 224 00:12:10,120 --> 00:12:13,400 Speaker 6: P five hundred, it isn't expected to be where it 225 00:12:13,520 --> 00:12:16,160 Speaker 6: was in more recent quarters. So that gives you the 226 00:12:16,160 --> 00:12:19,040 Speaker 6: potential for upside, of course, but it also means that 227 00:12:19,880 --> 00:12:22,080 Speaker 6: they're going to have to tell a pretty good story 228 00:12:22,240 --> 00:12:25,960 Speaker 6: to convince investors that where valuations are currently, these are 229 00:12:26,000 --> 00:12:27,679 Speaker 6: stocks worth putting money into. 230 00:12:27,920 --> 00:12:30,280 Speaker 2: You're going to see that story play out later on 231 00:12:30,320 --> 00:12:32,160 Speaker 2: this week. Thank you for this and again great have 232 00:12:32,280 --> 00:12:35,280 Speaker 2: you on with us. That's Bloomberg Tech co anchor Ed 233 00:12:35,360 --> 00:12:38,600 Speaker 2: Ludlow and coming up on Bloomberg Daybreak weekend, we'll look 234 00:12:38,600 --> 00:12:41,839 Speaker 2: at whether the UK's Prime Minister Keir Starmer can thought 235 00:12:42,000 --> 00:12:46,920 Speaker 2: frosty relations with China. I'm Nathan Hager and this is Bloomberg. 236 00:12:58,000 --> 00:13:01,000 Speaker 2: This is Bloomberg Daybreak Weekende will book ahead at the 237 00:13:01,000 --> 00:13:03,760 Speaker 2: top stories for investors in the coming week, and Nathan 238 00:13:03,760 --> 00:13:06,439 Speaker 2: Hager in Washington up later in the program will look 239 00:13:06,440 --> 00:13:09,120 Speaker 2: ahead to how earnings from Apple may have been affected 240 00:13:09,160 --> 00:13:12,880 Speaker 2: by business in Asia. But first in the coming days, 241 00:13:13,040 --> 00:13:16,439 Speaker 2: UK Prime Minister Keir Starmer will become his nation's first 242 00:13:16,520 --> 00:13:19,320 Speaker 2: leader to travel to China in more than seven years. 243 00:13:19,640 --> 00:13:24,559 Speaker 2: Starmer seeking to improve diplomatic ties as several geopolitical points 244 00:13:24,600 --> 00:13:27,680 Speaker 2: of tension remained between the two countries. So how will 245 00:13:27,720 --> 00:13:31,520 Speaker 2: Starmer's planned visits to Shanghai and Beijing play out? For 246 00:13:31,640 --> 00:13:33,960 Speaker 2: more Let's go to London and bring in Bloomberg Daybreak 247 00:13:33,960 --> 00:13:36,320 Speaker 2: Europe anker Caroline Hepger Nathan. 248 00:13:36,360 --> 00:13:39,240 Speaker 3: The last British premier to visit China was Treisa May 249 00:13:39,360 --> 00:13:42,640 Speaker 3: back in twenty eighteen. Since then, relations between the two 250 00:13:42,679 --> 00:13:47,199 Speaker 3: countries have worsened. After the crackdown on pro democracy protests 251 00:13:47,200 --> 00:13:51,400 Speaker 3: in Hong Kong, a spate of espionage and cyber attack allegations, 252 00:13:51,760 --> 00:13:55,960 Speaker 3: and Beijing's support for Russia's war in Ukraine. Despite the 253 00:13:56,000 --> 00:13:59,800 Speaker 3: frosty state of affairs, Starmer is seeking something of a thaw. 254 00:14:00,240 --> 00:14:03,920 Speaker 3: His optimistic approach is one he defended during a recent 255 00:14:04,000 --> 00:14:06,400 Speaker 3: speech in which he called for the UK to take 256 00:14:06,480 --> 00:14:10,920 Speaker 3: a pro business approach to China, whilst recognizing that it 257 00:14:11,040 --> 00:14:13,280 Speaker 3: poses a threat to national security. 258 00:14:14,840 --> 00:14:20,280 Speaker 7: I am clear that no transformation today carries greater consequence 259 00:14:21,640 --> 00:14:26,320 Speaker 7: than the rise of China. It is a nation of 260 00:14:26,960 --> 00:14:34,200 Speaker 7: immense scale, ambition and ingenuity, a defining force in technology, 261 00:14:34,440 --> 00:14:40,680 Speaker 7: in trade and global governance. So our response will not 262 00:14:40,720 --> 00:14:46,480 Speaker 7: be driven by fear nor softened by illusion. It will 263 00:14:46,480 --> 00:14:52,840 Speaker 7: be grounded in strength, clarity and sober realism, in line 264 00:14:52,880 --> 00:14:57,560 Speaker 7: with our wider international approach, and guided by our conviction. 265 00:14:58,480 --> 00:15:01,640 Speaker 3: That was the UK Prime Minister Kirs Starmer speaking there. 266 00:15:02,000 --> 00:15:05,360 Speaker 3: So can the British government draw a line under what 267 00:15:05,440 --> 00:15:09,480 Speaker 3: has been a turbulent period for UK China relations or 268 00:15:09,800 --> 00:15:14,600 Speaker 3: could you o political tensions and US influence maybe change things? 269 00:15:14,880 --> 00:15:18,080 Speaker 3: To think about this, I'm joined by Bloomberg's UK political correspondent, 270 00:15:18,120 --> 00:15:21,880 Speaker 3: Ellen Milligan and our chief Asia correspondent was in Matheson. 271 00:15:22,000 --> 00:15:24,440 Speaker 3: Welcome to both of you, and then can I start 272 00:15:24,480 --> 00:15:28,320 Speaker 3: with you. There was a time when under the previous government, 273 00:15:28,360 --> 00:15:31,720 Speaker 3: the Conservatives, we were talking about the Golden Age in 274 00:15:31,880 --> 00:15:34,880 Speaker 3: UK China relations. I remember that, but it does seem 275 00:15:34,920 --> 00:15:36,680 Speaker 3: like a long time ago, doesn't it. 276 00:15:36,920 --> 00:15:40,200 Speaker 8: Yes, So do you remember when David Cameron and Gguping 277 00:15:40,360 --> 00:15:44,800 Speaker 8: went to that kind of village pub and pulled pints chips. 278 00:15:45,080 --> 00:15:47,760 Speaker 8: I mean, we just really haven't seen that in the 279 00:15:47,840 --> 00:15:50,560 Speaker 8: last ten years, and you were saying that, I mean 280 00:15:50,880 --> 00:15:54,160 Speaker 8: really kind of that short lived Golden age. You know, 281 00:15:54,800 --> 00:15:59,600 Speaker 8: billions promised in Chinese investment, much closer ties break down 282 00:15:59,640 --> 00:16:05,280 Speaker 8: and sad over initially over that crackdown on activists in 283 00:16:05,320 --> 00:16:10,760 Speaker 8: Hong Kong, a former British colony, but also over espionage 284 00:16:10,840 --> 00:16:14,040 Speaker 8: and cyber attack allegations, and then more recently in the 285 00:16:14,120 --> 00:16:18,320 Speaker 8: last few years China support for Russia. So what Kiss 286 00:16:18,320 --> 00:16:22,320 Speaker 8: Starmer's administration has long complained of is that under the 287 00:16:22,400 --> 00:16:25,560 Speaker 8: Tories there was this kind of back and forth between 288 00:16:25,760 --> 00:16:28,640 Speaker 8: the Golden era and then a complete almost freeze of 289 00:16:28,680 --> 00:16:32,520 Speaker 8: ties under particularly Boris Johnson, and that they wanted to 290 00:16:32,560 --> 00:16:36,840 Speaker 8: get back to a more cooperative approach, but where they 291 00:16:36,880 --> 00:16:40,440 Speaker 8: would still challenge China where they needed to in. 292 00:16:40,480 --> 00:16:44,000 Speaker 3: Terms of Kiirs Stalma's recent foreign policy ideas. Then the 293 00:16:44,040 --> 00:16:47,320 Speaker 3: effort to try to set the record straight on Labour's 294 00:16:47,440 --> 00:16:52,120 Speaker 3: China strategy. What is their view, because there does seem 295 00:16:52,160 --> 00:16:55,760 Speaker 3: to be still a push pull, a strong push pull 296 00:16:55,840 --> 00:16:59,520 Speaker 3: in the UK about what attitude to adopt to Beijing. 297 00:17:00,080 --> 00:17:00,240 Speaker 9: Yeah. 298 00:17:00,280 --> 00:17:03,440 Speaker 8: I mean kir Starmer came in promising clarity over their 299 00:17:03,520 --> 00:17:06,000 Speaker 8: China policy and I think we've had anything but that. 300 00:17:06,880 --> 00:17:09,560 Speaker 8: I mean when he entered office in twenty twenty four, 301 00:17:09,600 --> 00:17:13,280 Speaker 8: there was quite a quick succession in terms of high 302 00:17:13,320 --> 00:17:16,920 Speaker 8: profile visits to China. David Lammi, who was the Foreign 303 00:17:16,920 --> 00:17:20,159 Speaker 8: Secretary at the time now Deputy Prime Minister, the Chancellor 304 00:17:20,240 --> 00:17:23,359 Speaker 8: Rachel Reeves both went over there and that pretty much 305 00:17:23,560 --> 00:17:27,200 Speaker 8: stopped when Donald Trump and re entered the White House 306 00:17:27,840 --> 00:17:34,400 Speaker 8: in January last year. I think Kirstarmer's foreign policy priorities 307 00:17:34,440 --> 00:17:37,520 Speaker 8: were very much about establishing of relationships with the US, 308 00:17:38,520 --> 00:17:43,920 Speaker 8: avoiding of the most harsh trade tariffs Ukraine, and also 309 00:17:44,040 --> 00:17:47,080 Speaker 8: the reset that he has been pursuing with the European Union. 310 00:17:47,640 --> 00:17:52,000 Speaker 8: And Donald Trump is of of famous China hawk and 311 00:17:52,119 --> 00:17:56,000 Speaker 8: so no visits really happened, and if they did happen, 312 00:17:56,000 --> 00:17:58,160 Speaker 8: they were very much under the radar and Britain didn't 313 00:17:58,160 --> 00:18:02,000 Speaker 8: shout about them. And I think what has happened in 314 00:18:02,040 --> 00:18:05,240 Speaker 8: the last few months, Macron did a hyper file visit 315 00:18:05,320 --> 00:18:09,399 Speaker 8: to Bishi, Mattz, the German Chancellor, has one planned, and 316 00:18:09,440 --> 00:18:12,680 Speaker 8: crucially Trump had his own bilateral meeting with Uguping and 317 00:18:13,000 --> 00:18:16,080 Speaker 8: has also planned a state visit, and I think Starmer 318 00:18:16,200 --> 00:18:18,560 Speaker 8: felt as though that paved the way for him to 319 00:18:18,600 --> 00:18:21,000 Speaker 8: be able to kind of soften relations with China. 320 00:18:21,080 --> 00:18:26,280 Speaker 3: Now to Okay Rozu in Asia, how does China see 321 00:18:26,359 --> 00:18:29,639 Speaker 3: its relationship with the UK? Maybe sort of historically and 322 00:18:29,720 --> 00:18:31,000 Speaker 3: also now, Well. 323 00:18:30,920 --> 00:18:33,080 Speaker 9: It depends how far back you want to go, because 324 00:18:33,119 --> 00:18:37,320 Speaker 9: there is a lot of history there. In more recent history, 325 00:18:37,320 --> 00:18:40,240 Speaker 9: it's probably been more down than up obviously from that 326 00:18:40,400 --> 00:18:42,639 Speaker 9: moment of the beer and the beer and the pub 327 00:18:43,800 --> 00:18:46,639 Speaker 9: after that, but it's never been easy in the past 328 00:18:46,680 --> 00:18:49,320 Speaker 9: in a ways, just to find this relationship from the 329 00:18:49,440 --> 00:18:53,400 Speaker 9: China side. You know, they now see themselves, no doubt 330 00:18:53,480 --> 00:18:57,240 Speaker 9: as the senior partner, shifting from one hundred years ago, 331 00:18:57,320 --> 00:19:03,320 Speaker 9: the aftermath of the Opium Wars, which very wounding to China, 332 00:19:03,400 --> 00:19:06,040 Speaker 9: you know, they manage an arrangement to get the return 333 00:19:06,800 --> 00:19:10,600 Speaker 9: of Hong Kong. But China probably sees the UK still 334 00:19:10,640 --> 00:19:13,480 Speaker 9: having a sense of a proprietary air, you know, weighing 335 00:19:13,560 --> 00:19:16,760 Speaker 9: in particularly on Hong Kong issues, protests there, the rule 336 00:19:16,800 --> 00:19:20,439 Speaker 9: of law. We've seen Kiss Starmer criticize the conviction of 337 00:19:20,480 --> 00:19:23,480 Speaker 9: the former Hong Kong media mogul jimmy Li. So a 338 00:19:23,560 --> 00:19:25,879 Speaker 9: sense in China's eyes that the UK is still willing 339 00:19:25,920 --> 00:19:29,440 Speaker 9: to interfere in its business in a different way perhaps 340 00:19:29,520 --> 00:19:33,560 Speaker 9: than during the Opium Wars, but it's still there. And 341 00:19:33,880 --> 00:19:35,880 Speaker 9: for China, what they want to do is put this 342 00:19:36,080 --> 00:19:39,960 Speaker 9: relationship to focus really on business and investment and trade 343 00:19:39,960 --> 00:19:43,640 Speaker 9: because that's where China wants to benefit. And for them, 344 00:19:43,680 --> 00:19:47,360 Speaker 9: the UK is a useful market as they also want 345 00:19:47,400 --> 00:19:50,600 Speaker 9: to diversify in trade. So for them now they probably 346 00:19:50,600 --> 00:19:54,440 Speaker 9: see this relationship as very transactional, but probably themselves is 347 00:19:54,480 --> 00:19:56,960 Speaker 9: a bit more of the senior partner. Yeah. 348 00:19:57,200 --> 00:20:00,760 Speaker 3: Is the UK seen as a strategic who by China 349 00:20:00,880 --> 00:20:03,439 Speaker 3: or is it simply as a kind of trading partner? 350 00:20:03,480 --> 00:20:07,200 Speaker 9: Do you think was my dut of China sees many, 351 00:20:07,400 --> 00:20:11,400 Speaker 9: if any Western nations as strategic allies. It might see 352 00:20:11,400 --> 00:20:15,000 Speaker 9: them as useful, but not as allies, perhaps since of 353 00:20:15,000 --> 00:20:17,840 Speaker 9: dividing and conquering in the West a bit so splitting 354 00:20:17,880 --> 00:20:21,960 Speaker 9: Europe and the UK off somewhat from the US, maximizing 355 00:20:22,000 --> 00:20:25,399 Speaker 9: the tensions that the US has right now with Europe 356 00:20:25,440 --> 00:20:29,200 Speaker 9: and the UK on different matters. So probably as a 357 00:20:29,600 --> 00:20:34,359 Speaker 9: useful partner, not strategic ally, a transactional partner. Definitely a 358 00:20:34,400 --> 00:20:38,320 Speaker 9: trading partner as long as the totality of that relationship 359 00:20:38,359 --> 00:20:41,600 Speaker 9: is still to China's advantage. So net net, are its 360 00:20:41,600 --> 00:20:44,080 Speaker 9: companies better off? Is it selling the sorts of things 361 00:20:44,080 --> 00:20:46,359 Speaker 9: it wants to? Does it have a foothold in the 362 00:20:46,400 --> 00:20:49,960 Speaker 9: industry as it wants? But that's probably how China would 363 00:20:50,000 --> 00:20:52,760 Speaker 9: see it as less a strategic ally because it're not 364 00:20:52,800 --> 00:20:55,720 Speaker 9: partnering on security matters. On defense, I mean, the UK 365 00:20:55,840 --> 00:20:59,080 Speaker 9: has actually been quite critical of China for its tacit 366 00:20:59,119 --> 00:21:02,960 Speaker 9: support of Russia for example in Ukraine was economic support 367 00:21:03,040 --> 00:21:06,520 Speaker 9: for Russia. But certainly China would see them as a 368 00:21:06,640 --> 00:21:07,840 Speaker 9: useful partner. Potentially. 369 00:21:08,920 --> 00:21:13,280 Speaker 3: We have seen the likes of Rachel Reeves and David 370 00:21:13,359 --> 00:21:17,960 Speaker 3: Lammy visiting China. Have they managed to make any progress? 371 00:21:18,280 --> 00:21:21,840 Speaker 8: There was no substantial outcome from either of those visits. 372 00:21:22,000 --> 00:21:25,439 Speaker 8: I think those initial visits were more about no one's 373 00:21:25,480 --> 00:21:28,760 Speaker 8: been in years, so let's go and make sure that 374 00:21:28,800 --> 00:21:32,840 Speaker 8: we get diplomacy back on track. More progress has been 375 00:21:32,840 --> 00:21:35,840 Speaker 8: made recently. Peter Karl, the Tech Secretary when he's now 376 00:21:35,880 --> 00:21:41,080 Speaker 8: Business Secretary, went out late last year and they've resumed 377 00:21:41,080 --> 00:21:44,679 Speaker 8: this economic trade dialogue which had not taken place I 378 00:21:44,680 --> 00:21:48,440 Speaker 8: think since before Boris Johnson. But you know, it means 379 00:21:48,440 --> 00:21:51,320 Speaker 8: that Kisdom has almost put more pressure on himself with 380 00:21:51,400 --> 00:21:53,880 Speaker 8: this state visit coming up. I mean the way he 381 00:21:54,119 --> 00:21:57,400 Speaker 8: describes China as this is like the most consequential global 382 00:21:57,440 --> 00:22:02,960 Speaker 8: shift to the UK of them, and so the stakes 383 00:22:03,000 --> 00:22:04,080 Speaker 8: are really high for him. 384 00:22:05,119 --> 00:22:10,040 Speaker 3: Roz does China want the UK to pick between the 385 00:22:10,160 --> 00:22:13,320 Speaker 3: US and China? What is their perspective? I mean America 386 00:22:13,400 --> 00:22:15,200 Speaker 3: has a view or mat doesn't. 387 00:22:14,880 --> 00:22:18,120 Speaker 9: It They do, And for China they probably realize it's 388 00:22:18,119 --> 00:22:21,359 Speaker 9: not realistic to try and say the UK has to 389 00:22:21,440 --> 00:22:23,960 Speaker 9: pick a side there, but they can take advantage because 390 00:22:24,000 --> 00:22:26,800 Speaker 9: that's what they like to do, is to spot an 391 00:22:26,840 --> 00:22:31,439 Speaker 9: opportunity and to maximize ruptures and tensions. You know, and 392 00:22:31,480 --> 00:22:34,520 Speaker 9: that sense just said the US led global order is 393 00:22:34,640 --> 00:22:38,879 Speaker 9: changing into something more fractured into spheres of influence Trump 394 00:22:38,880 --> 00:22:42,159 Speaker 9: in the Americas, China in Asia and so on, and 395 00:22:42,240 --> 00:22:45,639 Speaker 9: exploiting that when it comes to trade, because it's clear 396 00:22:46,720 --> 00:22:48,719 Speaker 9: Europe and the UK are acknowledging they need to do 397 00:22:48,800 --> 00:22:52,360 Speaker 9: business with China. As Ellen was saying, there's a lot 398 00:22:52,400 --> 00:22:55,399 Speaker 9: at stake for STARMA in this visit, you know, to 399 00:22:55,560 --> 00:22:58,760 Speaker 9: manage the relationship and to walk those lines. And they'll 400 00:22:58,800 --> 00:23:02,199 Speaker 9: be aware of that too him coming in, and they 401 00:23:02,320 --> 00:23:05,520 Speaker 9: understand the UK will always have a relationship of sorts 402 00:23:05,560 --> 00:23:07,760 Speaker 9: with the US. There is a lot of cooperation that 403 00:23:07,800 --> 00:23:11,240 Speaker 9: still goes on between them, including on the defense side, 404 00:23:11,560 --> 00:23:14,120 Speaker 9: despite what Donald Trump may say about that. 405 00:23:14,440 --> 00:23:16,679 Speaker 3: Ellen just lastly, how important do you think the recent 406 00:23:16,720 --> 00:23:23,800 Speaker 3: approval of a new Chinese embassy in London is It 407 00:23:23,920 --> 00:23:26,240 Speaker 3: was an enormously contentious decision. 408 00:23:27,000 --> 00:23:30,600 Speaker 8: Well, we've spoken about how the US approach China and 409 00:23:30,680 --> 00:23:34,080 Speaker 8: Donald Trump coming back has complicated this research. There've been 410 00:23:34,200 --> 00:23:37,280 Speaker 8: two other major obstacles in the past year for STARMA. 411 00:23:37,920 --> 00:23:44,160 Speaker 8: One is this embassy approval. The government decided to call 412 00:23:44,520 --> 00:23:49,920 Speaker 8: that embassy decision in from the local authorities almost a 413 00:23:50,000 --> 00:23:53,439 Speaker 8: year ago now and have constantly delayed a decision on this, 414 00:23:53,600 --> 00:23:57,480 Speaker 8: they've sought more information on what exactly China intends to do, 415 00:23:58,040 --> 00:24:03,040 Speaker 8: how close this embassy would be to sensitive communication cables, 416 00:24:03,640 --> 00:24:08,360 Speaker 8: and the timing is no coincidence that this decision has 417 00:24:08,440 --> 00:24:12,639 Speaker 8: been made just the week before this state visit, and 418 00:24:13,520 --> 00:24:17,000 Speaker 8: it really kind of paves the way for Starma to say, look, 419 00:24:17,040 --> 00:24:19,680 Speaker 8: we've been able to make this big decision that you've 420 00:24:19,720 --> 00:24:23,600 Speaker 8: wanted for a long long time. And also it's important 421 00:24:23,640 --> 00:24:28,520 Speaker 8: because Britain has its own crumbling embassy in Beijing that 422 00:24:28,600 --> 00:24:33,720 Speaker 8: it has had planning application to rebuild out for a while, 423 00:24:33,840 --> 00:24:36,600 Speaker 8: so that's really important. And the second thing I would 424 00:24:36,600 --> 00:24:38,600 Speaker 8: just say, because it would be a miss not to, 425 00:24:38,800 --> 00:24:43,960 Speaker 8: is this criminal case against two Brits accused of spying 426 00:24:43,960 --> 00:24:48,000 Speaker 8: for China that collapsed towards the end of last year, 427 00:24:48,080 --> 00:24:50,760 Speaker 8: and that has been a big obstacle too. And we've 428 00:24:50,800 --> 00:24:53,840 Speaker 8: spoken about there's a lot of China hawks across political 429 00:24:53,880 --> 00:24:57,160 Speaker 8: parties in UK's Parliament and those are really the two 430 00:24:57,240 --> 00:25:01,000 Speaker 8: big things that they continually point to for for examples 431 00:25:01,040 --> 00:25:03,119 Speaker 8: for Starma to be much more cautious with China. 432 00:25:04,000 --> 00:25:06,840 Speaker 3: Okay, Ellen, thank you so much for being with me. 433 00:25:06,880 --> 00:25:11,760 Speaker 3: That Isenbag's UK political correspondent Ellen Milligan, and my thanks 434 00:25:11,760 --> 00:25:14,919 Speaker 3: also to our chief Asia correspondent ros In Matheson for 435 00:25:15,080 --> 00:25:20,520 Speaker 3: discussing this visit by Kirs Starmer to China, and we 436 00:25:20,600 --> 00:25:23,680 Speaker 3: will of course have full coverage of the Prime Minister's 437 00:25:23,680 --> 00:25:26,359 Speaker 3: trip to China, including reaction on the ground and the 438 00:25:26,440 --> 00:25:30,000 Speaker 3: key takeaways from the talks. I'm Carolin Hetgar here in London. 439 00:25:30,080 --> 00:25:33,040 Speaker 3: You can catch us every weekday morning for Bloomberg Daybreak 440 00:25:33,040 --> 00:25:35,160 Speaker 3: you at beginning at six am in London. That's one 441 00:25:35,200 --> 00:25:36,240 Speaker 3: am on Wall Street. 442 00:25:36,440 --> 00:25:40,119 Speaker 2: Nathan, Thanks Caroline, and coming up on Bloomberg Daybreak weekend, 443 00:25:40,119 --> 00:25:42,560 Speaker 2: we look ahead to earnings from tech giant Apple and 444 00:25:42,600 --> 00:25:45,240 Speaker 2: how they may have been impacted by business in Asia. 445 00:25:45,680 --> 00:26:00,000 Speaker 2: I'm Nathan Hager, and this is Bloomberg. This is Bloomberg 446 00:26:00,119 --> 00:26:02,800 Speaker 2: Daybreak week and our global look ahead at the top 447 00:26:02,840 --> 00:26:05,600 Speaker 2: stories for investors in the coming week. I'm Nathan Hager 448 00:26:05,680 --> 00:26:09,000 Speaker 2: in Washington. We get Apple's latest earnings this week, and 449 00:26:09,119 --> 00:26:12,480 Speaker 2: the company's business in Asia will be a key focal point. 450 00:26:12,720 --> 00:26:15,160 Speaker 2: Let's get more on this from Bloomberg's Doug Krisner, host 451 00:26:15,240 --> 00:26:17,040 Speaker 2: of the Daybreak Asia podcast. 452 00:26:17,560 --> 00:26:19,840 Speaker 4: Nathan, there will be a couple of issues to consider 453 00:26:19,880 --> 00:26:23,480 Speaker 4: from this quarterly report, First sales of Apple devices in 454 00:26:23,520 --> 00:26:27,160 Speaker 4: Greater China, a market where the competitive landscape is shifting. 455 00:26:27,880 --> 00:26:31,440 Speaker 4: And second, what those sales figures mean for Apple's partners 456 00:26:31,480 --> 00:26:34,600 Speaker 4: and parts suppliers in the Asia Pacific. Joining me now 457 00:26:34,640 --> 00:26:37,440 Speaker 4: for a closer look is Bloomberg's Vlad svov Lad is 458 00:26:37,520 --> 00:26:40,840 Speaker 4: Tech editor for Asia, and he joins from our studios 459 00:26:40,880 --> 00:26:43,679 Speaker 4: in Hong Kong, thank you for being here. What do 460 00:26:43,720 --> 00:26:47,119 Speaker 4: we know about how well Apple products have been selling 461 00:26:47,200 --> 00:26:49,480 Speaker 4: in Greater China, especially the iPhone? 462 00:26:49,920 --> 00:26:53,359 Speaker 10: Well, absolutely, that is the company's iconic product. And Tim 463 00:26:53,400 --> 00:26:55,760 Speaker 10: Cook did give us a little bit of foreshadowing at 464 00:26:55,760 --> 00:26:59,359 Speaker 10: the last earnings saying that he looks forward to growth 465 00:26:59,359 --> 00:27:02,560 Speaker 10: in China. And we got a hold of numbers from 466 00:27:02,560 --> 00:27:06,639 Speaker 10: Counterpoint Research that showed that the iPhone overperform the broader 467 00:27:06,640 --> 00:27:10,400 Speaker 10: smartphone market significantly. That was up roughly about twenty eight 468 00:27:10,440 --> 00:27:13,359 Speaker 10: percent year and year in the holiday quarter, whereas the 469 00:27:13,400 --> 00:27:17,200 Speaker 10: overall China smartphone market actually dipped a couple of percentage points. 470 00:27:17,520 --> 00:27:20,959 Speaker 10: So really it signifies how big the iPhone seventy upgrades 471 00:27:21,000 --> 00:27:24,560 Speaker 10: have been, how they're resonated with consumers. The analysts also 472 00:27:24,600 --> 00:27:28,119 Speaker 10: pointed out that you had that covid era refreshed cycle, 473 00:27:28,200 --> 00:27:30,320 Speaker 10: so all the people who got a smartphone at that 474 00:27:30,440 --> 00:27:33,159 Speaker 10: time were due to get a new one, and presumably 475 00:27:33,160 --> 00:27:35,560 Speaker 10: all the iPhone owners just kept going with the iPhone. 476 00:27:35,640 --> 00:27:37,600 Speaker 4: So you and I have spoken in the past about 477 00:27:37,600 --> 00:27:41,600 Speaker 4: the intense competition from Chinese handset makers like Quabwei and 478 00:27:41,680 --> 00:27:44,800 Speaker 4: shao Me. Did that not show up in the last quarter. 479 00:27:45,680 --> 00:27:48,520 Speaker 10: Well, those two particular brands were down double digit in 480 00:27:48,520 --> 00:27:51,960 Speaker 10: percentage terms year and year for that quarter. It is 481 00:27:52,000 --> 00:27:54,520 Speaker 10: significant to say that for the entire year in terms 482 00:27:54,560 --> 00:27:57,800 Speaker 10: of shipments, while it was the biggest in China, it's 483 00:27:57,880 --> 00:28:02,000 Speaker 10: just the particular quarter because of product cycles. Apples is 484 00:28:02,080 --> 00:28:04,480 Speaker 10: very regular, it is like clockwork, but the likes of 485 00:28:04,520 --> 00:28:06,840 Speaker 10: Huawei Shami, they tend to jump around, so you have 486 00:28:06,920 --> 00:28:10,359 Speaker 10: some quarterly unevenness, so to speak. And one of the 487 00:28:10,400 --> 00:28:14,280 Speaker 10: interesting things with the Chinese manufacturers themselves is that they 488 00:28:14,359 --> 00:28:17,720 Speaker 10: keep handing over the crowd. So one year Apple will 489 00:28:17,760 --> 00:28:20,480 Speaker 10: be ahead, one year it will be Vivo, Shami, Huawei, 490 00:28:20,480 --> 00:28:23,879 Speaker 10: et cetera. So there's never really a clear cut leader 491 00:28:24,000 --> 00:28:27,320 Speaker 10: or winner amongst them. Whereas Apple there is just one Apple, 492 00:28:27,359 --> 00:28:29,880 Speaker 10: there is just one iPhone, and that's the recurring theme 493 00:28:29,920 --> 00:28:32,440 Speaker 10: with the company. It has that ecosystem that nobody else had. 494 00:28:32,800 --> 00:28:36,760 Speaker 4: Now Apple has established a well oiled supply chain right 495 00:28:36,800 --> 00:28:41,720 Speaker 4: across the APAC region, although recently some capacity constraints seem 496 00:28:41,840 --> 00:28:45,240 Speaker 4: to have become a factor. How well has Apple supply 497 00:28:45,440 --> 00:28:48,040 Speaker 4: chain held up in the face of this demand. 498 00:28:48,400 --> 00:28:51,200 Speaker 10: Well, the supply chain, I can kind of guess what 499 00:28:51,240 --> 00:28:54,440 Speaker 10: you're getting into, which is that memory chip crunch, which 500 00:28:54,440 --> 00:28:57,720 Speaker 10: has been the southern and overwhelming theme that we've seen 501 00:28:57,840 --> 00:29:00,400 Speaker 10: across the entire supply chain. It is brought on by 502 00:29:00,560 --> 00:29:03,600 Speaker 10: the AI demand. The likes of Nvidia and AMD are 503 00:29:03,640 --> 00:29:05,880 Speaker 10: the ones who are buying up the capacity at Samsung, 504 00:29:05,960 --> 00:29:08,720 Speaker 10: s k Heinix, and Micron. So all the memory that 505 00:29:08,840 --> 00:29:12,080 Speaker 10: used to be the most commodified, the most boring component 506 00:29:12,560 --> 00:29:15,960 Speaker 10: is now surging in costs, So that's hitting laptop manufacturers, 507 00:29:16,040 --> 00:29:19,800 Speaker 10: smartphone manufacturers, et cetera. Again, Apple is fairly unique in 508 00:29:19,840 --> 00:29:23,720 Speaker 10: this because Counterpoints and other analysts have said the premium 509 00:29:23,920 --> 00:29:26,320 Speaker 10: tier of the smartphone market is not being affected, is 510 00:29:26,360 --> 00:29:28,840 Speaker 10: the entry level is the mid range. We've seen some 511 00:29:28,880 --> 00:29:32,080 Speaker 10: indications that some of the smaller manufacturers actually canceling products 512 00:29:32,120 --> 00:29:34,280 Speaker 10: because they cannot get a hold of memory at a 513 00:29:34,320 --> 00:29:36,040 Speaker 10: price that makes the product viable. 514 00:29:36,480 --> 00:29:40,480 Speaker 4: Now we know that Apple outsources chip production to Taiwan Semiconductor. 515 00:29:40,480 --> 00:29:45,040 Speaker 4: This relationship goes back years. TSMC has been the exclusive 516 00:29:45,120 --> 00:29:49,600 Speaker 4: partner for producing processors for things like the iPhone, the iPad, 517 00:29:49,680 --> 00:29:53,280 Speaker 4: and even Max and for a long time, Apple was 518 00:29:53,320 --> 00:29:57,920 Speaker 4: TSMC's most important client. But these days that distinction seems 519 00:29:57,960 --> 00:30:01,080 Speaker 4: to belong to Nvidia. Given the explosive demand that we 520 00:30:01,120 --> 00:30:05,560 Speaker 4: have seen for high end chips now, TSMC has responded 521 00:30:05,600 --> 00:30:09,400 Speaker 4: recently by raising the lower end of its CAPEX spending target. 522 00:30:10,240 --> 00:30:14,120 Speaker 4: So when you consider expanding capacity, let's bring into the 523 00:30:14,160 --> 00:30:18,240 Speaker 4: conversation Apple's other critical partnership in Asia, and that is 524 00:30:18,360 --> 00:30:23,120 Speaker 4: fox Con, the largest contract manufacturer for Apple. So Vlad, 525 00:30:23,160 --> 00:30:26,920 Speaker 4: I'm wondering whether fox Con, like TSMC, is being forced 526 00:30:26,960 --> 00:30:29,440 Speaker 4: to increase its CAPEX to meet demand. 527 00:30:30,160 --> 00:30:33,720 Speaker 10: Well, Foxcone is an interesting one and clearly it doesn't 528 00:30:33,760 --> 00:30:36,480 Speaker 10: have that much in the way of capacity issues when 529 00:30:36,520 --> 00:30:40,520 Speaker 10: it comes to consumer electronics light the iPhone. But increasingly 530 00:30:40,560 --> 00:30:46,320 Speaker 10: FOXCNE is moving into being a data center hardware manufacturer. 531 00:30:46,360 --> 00:30:49,520 Speaker 10: So effectively, when TSMC builds in video chips, somebody needs 532 00:30:49,560 --> 00:30:51,880 Speaker 10: to put them in racks, build them into like fridge 533 00:30:51,920 --> 00:30:54,760 Speaker 10: sized units that then go into data centres. Foxcone is 534 00:30:54,760 --> 00:30:57,800 Speaker 10: doing a whole bunch of that. The company hasn't recently 535 00:30:57,800 --> 00:31:00,600 Speaker 10: spoken about amping up its own spending, but it does 536 00:31:00,640 --> 00:31:03,000 Speaker 10: stand to reason. Fox con does want to be has 537 00:31:03,040 --> 00:31:05,080 Speaker 10: a very close relationship with video, just as it does 538 00:31:05,120 --> 00:31:07,280 Speaker 10: with Apple. It does want to be the leader in 539 00:31:07,320 --> 00:31:10,440 Speaker 10: this space. So to your point, it may well be 540 00:31:10,480 --> 00:31:12,960 Speaker 10: the case that fox Conne and some of its competitors, 541 00:31:13,000 --> 00:31:15,560 Speaker 10: many of them being Taiwanese companies as well, are going 542 00:31:15,600 --> 00:31:18,640 Speaker 10: to ramp up as well because the demand. We saw 543 00:31:18,680 --> 00:31:21,200 Speaker 10: this at c Yes Jensen, CEO from a Video and 544 00:31:21,280 --> 00:31:24,320 Speaker 10: Other adjective said, the demand for AI hardware is still 545 00:31:24,360 --> 00:31:25,160 Speaker 10: outstripping supply. 546 00:31:25,400 --> 00:31:27,400 Speaker 4: When I think of memory chip makers, I think of 547 00:31:27,440 --> 00:31:30,320 Speaker 4: South Korea. I think of Samsung and sk Heinex. But 548 00:31:30,360 --> 00:31:33,520 Speaker 4: I also want to consider what's happening in China. We 549 00:31:33,640 --> 00:31:39,719 Speaker 4: have Semiconductor Manufacturing International Corp. Known as SMIC or SMICK. 550 00:31:40,160 --> 00:31:43,800 Speaker 4: This company also produces memory chips. So if the supply 551 00:31:43,880 --> 00:31:47,680 Speaker 4: of memory is being constrained, I'm wondering whether Chinese firms 552 00:31:47,800 --> 00:31:48,920 Speaker 4: like Smick are benefiting. 553 00:31:49,440 --> 00:31:52,000 Speaker 10: Yeah, the opportunity right now is in fact for the 554 00:31:52,080 --> 00:31:56,760 Speaker 10: Chinese manufacturers of memory chips. You have YMTC and some 555 00:31:56,840 --> 00:32:00,640 Speaker 10: other players within China. They have the opportunity because they 556 00:32:00,800 --> 00:32:03,680 Speaker 10: don't have the cutting edge the HBM technology that Heinigs 557 00:32:03,680 --> 00:32:07,280 Speaker 10: and Samsung are dedicating all their attention to. So for 558 00:32:07,360 --> 00:32:10,520 Speaker 10: them they can fill in the gap because Heinnicks has 559 00:32:10,520 --> 00:32:13,720 Speaker 10: already said twenty twenty six memory capacity is already booked 560 00:32:13,720 --> 00:32:17,240 Speaker 10: out and sold. And you're seeing these things emerging when 561 00:32:17,240 --> 00:32:18,880 Speaker 10: you look at the consumer prices if you want to 562 00:32:18,880 --> 00:32:22,760 Speaker 10: build your own PC, prices have more than doubled for ramsticks. 563 00:32:23,120 --> 00:32:26,880 Speaker 10: So Smick itself also a lot like TSMC that it 564 00:32:26,920 --> 00:32:30,400 Speaker 10: has its hands busy with orders from Huawei, which wants 565 00:32:30,440 --> 00:32:33,360 Speaker 10: to build AI accelerators to compete with in video, and 566 00:32:33,440 --> 00:32:35,480 Speaker 10: a number of players such as more Threads, which is 567 00:32:35,520 --> 00:32:38,000 Speaker 10: another Chinese chip designer that wants to compete with in video. 568 00:32:38,240 --> 00:32:41,120 Speaker 10: So Smick not necessarily busy with memory, but the likes 569 00:32:41,120 --> 00:32:43,840 Speaker 10: of YMTC are going to have more of an opportunity 570 00:32:43,920 --> 00:32:44,800 Speaker 10: in the broader market. 571 00:32:44,920 --> 00:32:47,280 Speaker 4: So how well have the Chinese chip makers been doing 572 00:32:47,320 --> 00:32:51,240 Speaker 4: in terms of improving the quality of their semiconductors, whether 573 00:32:51,240 --> 00:32:54,080 Speaker 4: we're talking about memory or even processors. 574 00:32:55,040 --> 00:32:58,320 Speaker 10: I would say that probably they're much closer to closing 575 00:32:58,360 --> 00:33:02,160 Speaker 10: the gap on the memory front because, again, to do 576 00:33:02,480 --> 00:33:05,520 Speaker 10: consumer electronics memory, some of these things are stabilized. Some 577 00:33:05,560 --> 00:33:08,920 Speaker 10: of that technology is mature and hasn't jumped by leaves 578 00:33:08,920 --> 00:33:10,640 Speaker 10: and bounds in the same way that it has done 579 00:33:10,680 --> 00:33:14,680 Speaker 10: with logic processes, especially AI processes. So SNICK again is 580 00:33:14,680 --> 00:33:17,440 Speaker 10: a very good example because it is effectively stuck at 581 00:33:17,480 --> 00:33:21,680 Speaker 10: seven nanometer technology, while TSMC and Samsung are this year 582 00:33:21,720 --> 00:33:25,200 Speaker 10: moving to two nanometers, which is several generations ahead, and 583 00:33:25,280 --> 00:33:28,080 Speaker 10: the difference that that makes is kind of consistent. It 584 00:33:28,120 --> 00:33:31,080 Speaker 10: means more transistors in less pace, it means more performance 585 00:33:31,320 --> 00:33:34,240 Speaker 10: for less energy consumed. And again, when we're talking AI 586 00:33:34,240 --> 00:33:37,000 Speaker 10: and data centers, energy consumed is a big factor. 587 00:33:37,040 --> 00:33:40,520 Speaker 4: What about the adoption of artificial intelligence in China, especially 588 00:33:40,560 --> 00:33:42,080 Speaker 4: on mobile devices. 589 00:33:41,920 --> 00:33:44,920 Speaker 10: Apple intelligence doesn't even exist in China at the moment. 590 00:33:45,200 --> 00:33:48,120 Speaker 10: Apple Intelligence outside of China has also been a disaster 591 00:33:48,200 --> 00:33:51,480 Speaker 10: by Apple standards. It has gone nowhere. It is not 592 00:33:51,520 --> 00:33:55,640 Speaker 10: a selling point whatsoever. But for Apple's constellation, the fact 593 00:33:55,720 --> 00:33:58,800 Speaker 10: is that AI on devices is not selling point for anyone. 594 00:33:59,360 --> 00:34:02,280 Speaker 10: Samsung has the most integration, uses Google Gemini for a 595 00:34:02,280 --> 00:34:05,520 Speaker 10: whole bunch of stuff, it uses Samsung's own technology. Nobody's 596 00:34:05,520 --> 00:34:09,719 Speaker 10: buying Samsung device because if its AI. Likewise, for Shaomi, Huawei, 597 00:34:09,920 --> 00:34:11,799 Speaker 10: Honor is one of these companies that has its own 598 00:34:11,800 --> 00:34:14,160 Speaker 10: built in AI agent that will do things for you 599 00:34:14,200 --> 00:34:17,440 Speaker 10: on the device. These are interesting technologies. There are things 600 00:34:17,480 --> 00:34:20,080 Speaker 10: that make a nice tech demo, but no consumer is 601 00:34:20,120 --> 00:34:22,280 Speaker 10: actively going out and saying I will buy this brand 602 00:34:22,280 --> 00:34:24,480 Speaker 10: over the other because I think it's AI agent is 603 00:34:24,480 --> 00:34:25,080 Speaker 10: more valuable. 604 00:34:25,160 --> 00:34:27,320 Speaker 4: When we have spoken in the past about the iPhone, 605 00:34:27,360 --> 00:34:30,719 Speaker 4: the camera obviously becomes a focal point pun intended here, 606 00:34:30,760 --> 00:34:34,280 Speaker 4: But when it comes to the iPhone seventeen, I'm wondering 607 00:34:34,280 --> 00:34:38,000 Speaker 4: whether that's been a big selling point. The camera has 608 00:34:38,040 --> 00:34:39,720 Speaker 4: been a selling point for Greater China. 609 00:34:40,120 --> 00:34:42,399 Speaker 10: I'm sure it is mean people in China always care 610 00:34:42,440 --> 00:34:46,000 Speaker 10: about specs. With them, more is always more. I would 611 00:34:46,000 --> 00:34:49,040 Speaker 10: say that in particularly the iPhone seventeen, the base model, 612 00:34:49,080 --> 00:34:53,200 Speaker 10: no other affixes after the seventeen has been a massive upgrade. 613 00:34:53,239 --> 00:34:55,960 Speaker 10: One of the things Apple did is they added more memory. Again, 614 00:34:56,040 --> 00:34:58,680 Speaker 10: memory the big thing right now without raising the price. 615 00:34:58,880 --> 00:35:02,040 Speaker 10: So just looking iPhone sixteen to iPhone seventeen at that 616 00:35:02,080 --> 00:35:05,640 Speaker 10: price level, there was a bigly, big uprating specification. So 617 00:35:05,840 --> 00:35:09,319 Speaker 10: I feel like things like battery life camera improvements always come. 618 00:35:09,400 --> 00:35:12,040 Speaker 10: There hasn't been like a blow your socks off kind 619 00:35:12,080 --> 00:35:15,920 Speaker 10: of camera improvement from the iPhone, but the overallspec improvement, 620 00:35:16,000 --> 00:35:18,239 Speaker 10: all those quality of life improvements are the things that 621 00:35:18,280 --> 00:35:20,759 Speaker 10: people look for, and clearly the iPhone seventeen here's a 622 00:35:20,760 --> 00:35:21,239 Speaker 10: sweet pot. 623 00:35:21,400 --> 00:35:23,840 Speaker 4: You and I have spoken in the past about Apple 624 00:35:23,920 --> 00:35:28,600 Speaker 4: diversifying some of its manufacturing outside of China, especially to India. 625 00:35:29,400 --> 00:35:32,440 Speaker 4: Among the lessons from the pandemic was the vulnerability of 626 00:35:32,480 --> 00:35:36,680 Speaker 4: being overly reliant on just one jurisdiction. So I'm curious 627 00:35:36,680 --> 00:35:39,480 Speaker 4: to get your take, Vlad on where Apple is right 628 00:35:39,520 --> 00:35:42,759 Speaker 4: now in trying to reduce its reliance on China as 629 00:35:42,800 --> 00:35:44,000 Speaker 4: a manufacturing center. 630 00:35:45,760 --> 00:35:49,359 Speaker 10: That is still the case increasingly what we're seeing, and 631 00:35:49,480 --> 00:35:52,480 Speaker 10: the move to India in fact has been accelerating. But 632 00:35:52,520 --> 00:35:55,799 Speaker 10: that's been quiet for several months now, and to my 633 00:35:55,960 --> 00:35:58,480 Speaker 10: sense is that Apple will speak on it and figures 634 00:35:58,520 --> 00:36:01,960 Speaker 10: will emerge when more pressure from say the Trump administration 635 00:36:02,040 --> 00:36:04,200 Speaker 10: to do more in the way of the coupling. Over 636 00:36:04,200 --> 00:36:06,600 Speaker 10: the long run, you can kind of see that made 637 00:36:06,600 --> 00:36:09,000 Speaker 10: in China will be for the China market, which Let's 638 00:36:09,000 --> 00:36:11,480 Speaker 10: not forget, is the world's biggest smartphone market, so Apple 639 00:36:11,520 --> 00:36:14,080 Speaker 10: will never get rid of that part of its business 640 00:36:14,360 --> 00:36:16,719 Speaker 10: so long as that's within its control, and that will 641 00:36:16,760 --> 00:36:20,279 Speaker 10: always be very, very significant. India is again the big 642 00:36:20,360 --> 00:36:23,640 Speaker 10: hub for doing manufacturing outside of China. Worth bearing in 643 00:36:23,680 --> 00:36:26,160 Speaker 10: mind that India is also one of the biggest growth 644 00:36:26,200 --> 00:36:28,480 Speaker 10: markets for smartphones, one of the biggest growth markets for 645 00:36:28,520 --> 00:36:30,600 Speaker 10: the premium range. So Apple is putting a lot of 646 00:36:30,600 --> 00:36:32,799 Speaker 10: focus on that. I would say that the company is 647 00:36:32,840 --> 00:36:36,600 Speaker 10: trying to have everything effectively, like make sure it's big 648 00:36:36,600 --> 00:36:39,160 Speaker 10: in India, make sure it's still big in China. Nothing 649 00:36:39,200 --> 00:36:41,200 Speaker 10: will ever go neglected by Apple so long as there's 650 00:36:41,239 --> 00:36:42,200 Speaker 10: big potential there. 651 00:36:42,320 --> 00:36:45,279 Speaker 4: And Vietnam, which as we know, has been another manufacturing 652 00:36:45,320 --> 00:36:47,840 Speaker 4: location for a few Apple products. 653 00:36:48,200 --> 00:36:48,640 Speaker 5: That's right. 654 00:36:48,680 --> 00:36:52,200 Speaker 10: The Vietnam is a place where things like iPads and 655 00:36:52,280 --> 00:36:56,200 Speaker 10: let's say air pods production can happen. It is a 656 00:36:56,200 --> 00:37:00,000 Speaker 10: place that others. Fox has facilities there and other manufacturers 657 00:37:00,160 --> 00:37:04,400 Speaker 10: are also doing work. Again, that tends to be the 658 00:37:04,920 --> 00:37:08,240 Speaker 10: move of manufacturing out of China toward India and Vietnam 659 00:37:08,320 --> 00:37:10,960 Speaker 10: tends to be more of a high priority. When you 660 00:37:11,000 --> 00:37:13,640 Speaker 10: hear more noise from the US administration, to say less 661 00:37:13,640 --> 00:37:17,200 Speaker 10: of manufacturing leaf China. It tends to come and go 662 00:37:17,400 --> 00:37:19,520 Speaker 10: with pressure from the White House. 663 00:37:19,520 --> 00:37:20,080 Speaker 1: Effectively. 664 00:37:20,200 --> 00:37:22,279 Speaker 4: One of the questions for me at this point as 665 00:37:22,320 --> 00:37:25,480 Speaker 4: it relates to the shortage in memory components is whether 666 00:37:26,200 --> 00:37:29,560 Speaker 4: Apple's margins will come under pressure and whether or not 667 00:37:29,719 --> 00:37:32,920 Speaker 4: the company will be confronted with having the increase prices. 668 00:37:33,080 --> 00:37:36,440 Speaker 4: It seems like the scarcity of memory is going to 669 00:37:36,480 --> 00:37:40,360 Speaker 4: produce higher prices, and presumably those increases are going to 670 00:37:40,360 --> 00:37:42,400 Speaker 4: be passed on ultimately to the consumer. 671 00:37:43,719 --> 00:37:47,960 Speaker 10: Absolutely, the rising consumer electronics prices is already on the way, 672 00:37:48,080 --> 00:37:51,759 Speaker 10: especially with laptops. I would again say you will see 673 00:37:51,880 --> 00:37:54,399 Speaker 10: on the lower end of things, entry level devices will 674 00:37:54,440 --> 00:37:58,120 Speaker 10: become much pricier. Mid range two. I suspect that Apple 675 00:37:58,200 --> 00:37:59,959 Speaker 10: is one of the companies that will do with something 676 00:38:00,320 --> 00:38:04,440 Speaker 10: to not let that price premium pass on to the consumer. 677 00:38:04,440 --> 00:38:08,520 Speaker 10: Apple tends to be very steady with its pricing, so 678 00:38:08,640 --> 00:38:10,759 Speaker 10: the premium end of the market will not be so 679 00:38:10,840 --> 00:38:13,759 Speaker 10: much affected. But again it's worth recounting Micro and one 680 00:38:13,800 --> 00:38:18,320 Speaker 10: of the Micro and executive sodas. This memory crunch is unprecedented, 681 00:38:18,360 --> 00:38:21,520 Speaker 10: and we're talking something stretching deep into twenty twenty seven 682 00:38:21,600 --> 00:38:22,000 Speaker 10: for sure. 683 00:38:22,239 --> 00:38:24,040 Speaker 4: Glad we'll leave it there. Thank you so very much. 684 00:38:24,160 --> 00:38:28,200 Speaker 4: Flat Savov, Bloomberg Tech Editor for Asia, joining from Hong Kong. 685 00:38:28,280 --> 00:38:31,239 Speaker 4: By the way, Apple will be reporting those earnings on 686 00:38:31,400 --> 00:38:34,680 Speaker 4: Thursday after the US close. I'm Doug Prisner. You can 687 00:38:34,719 --> 00:38:38,280 Speaker 4: catch us weekdays for the Daybreak Asia podcast. It's available 688 00:38:38,320 --> 00:38:40,879 Speaker 4: wherever you get your podcast Nathan. 689 00:38:40,920 --> 00:38:42,920 Speaker 2: Thanks Doug, and that does it for this edition of 690 00:38:42,960 --> 00:38:46,080 Speaker 2: Bloomberg day Break Weekend. Join us again Monday morning at 691 00:38:46,080 --> 00:38:48,880 Speaker 2: five am Wall Street Time for the latest on markets 692 00:38:48,880 --> 00:38:51,399 Speaker 2: overseas and the news you need to start your day. 693 00:38:51,760 --> 00:38:54,560 Speaker 2: I'm Nathan Hager. Stay with us. Top stories and global 694 00:38:54,600 --> 00:38:58,240 Speaker 2: business headlines are coming up right now