WEBVTT - How China Regulates Big Tech, Top Chip Players

0:00:02.400 --> 0:00:08.480
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. You're listening to Bloomberg

0:00:08.520 --> 0:00:13.240
<v Speaker 1>BusinessWeek with Carol Messer and Tim Steneveek on Bloomberg Radio. Hey.

0:00:13.280 --> 0:00:15.200
<v Speaker 2>For a few years before the pandemic, it looked, at

0:00:15.320 --> 0:00:17.760
<v Speaker 2>least to a lot of people, that Chinese tech companies

0:00:17.920 --> 0:00:19.480
<v Speaker 2>were pretty much unstoppable.

0:00:19.520 --> 0:00:21.479
<v Speaker 3>You remember this, Carol, right, I certainly do.

0:00:21.640 --> 0:00:21.880
<v Speaker 1>Okay.

0:00:21.880 --> 0:00:25.040
<v Speaker 2>So back in twenty seventeen, for example, ten Cent shot

0:00:25.120 --> 0:00:27.600
<v Speaker 2>past what was then Facebook to become the fifth largest

0:00:27.640 --> 0:00:30.680
<v Speaker 2>publicly health company. In twenty twenty, China was the was

0:00:30.760 --> 0:00:33.800
<v Speaker 2>second to the US in terms of the number of unicorns,

0:00:33.840 --> 0:00:37.280
<v Speaker 2>those private companies worth a billion dollars. Of the world's

0:00:37.280 --> 0:00:39.800
<v Speaker 2>top ten unicorns in twenty twenty, six of them came

0:00:39.800 --> 0:00:43.760
<v Speaker 2>from China. Four Chinese companies top the chart. All of

0:00:43.760 --> 0:00:45.960
<v Speaker 2>this that I just read coming from the introduction to

0:00:46.120 --> 0:00:49.280
<v Speaker 2>the new book High Wire, How China Regulates Big Tech

0:00:49.320 --> 0:00:52.239
<v Speaker 2>and governs its Economy. The book by Angela Zong, a

0:00:52.280 --> 0:00:54.720
<v Speaker 2>professor of law at the University of Hong Kong. Professor

0:00:54.800 --> 0:00:58.040
<v Speaker 2>Zong joins us now from Washington, DC. Professor, good to

0:00:58.040 --> 0:01:00.000
<v Speaker 2>have you with us this afternoon. How are you.

0:01:00.800 --> 0:01:03.639
<v Speaker 4>I'm doing great? Hi, Carol and Tim Hi Hi.

0:01:03.760 --> 0:01:05.800
<v Speaker 2>This is a great topic because we talk about it

0:01:05.840 --> 0:01:08.400
<v Speaker 2>a lot, and just about investing in China and whether

0:01:08.480 --> 0:01:10.679
<v Speaker 2>or not it is indeed investable right now. But I

0:01:10.680 --> 0:01:12.039
<v Speaker 2>want to back up a little bit. How did we

0:01:12.120 --> 0:01:15.600
<v Speaker 2>get to the point where Chinese tech companies, both public

0:01:15.640 --> 0:01:18.679
<v Speaker 2>and private, seemed unstoppable and then suddenly in the midst

0:01:18.680 --> 0:01:20.720
<v Speaker 2>of the pandemic there was this crackdown.

0:01:20.720 --> 0:01:26.600
<v Speaker 5>What happened, well, I see the watershed moment was end

0:01:26.600 --> 0:01:32.760
<v Speaker 5>Group's IPO suspensioned and a couple of weeks before a

0:01:32.760 --> 0:01:35.760
<v Speaker 5>few days a couple of weeks before the suspension, Jackma

0:01:35.880 --> 0:01:40.319
<v Speaker 5>made this highly controversial speech in the financial summit in Shanghai,

0:01:40.400 --> 0:01:43.760
<v Speaker 5>as you may recall, and that really spoke to financial

0:01:44.120 --> 0:01:49.680
<v Speaker 5>regulators who eventually, you know, wage of regulatory war against

0:01:49.800 --> 0:01:52.840
<v Speaker 5>end and which caused the collapse of its IPO and

0:01:53.000 --> 0:01:59.120
<v Speaker 5>also marked the beginning of an unprecedented crackdown that swept

0:01:59.240 --> 0:02:04.800
<v Speaker 5>like that'spreadlight wildfire, affecting every sector of China's internet industry.

0:02:04.880 --> 0:02:09.840
<v Speaker 2>Can you talk about competing forces for motivations here, because

0:02:10.840 --> 0:02:13.120
<v Speaker 2>it would seem to be in the best interest of

0:02:14.480 --> 0:02:18.160
<v Speaker 2>leadership of a country to have a thriving economic to

0:02:18.160 --> 0:02:20.519
<v Speaker 2>have a thriving tech sector and to have a thriving economy.

0:02:20.560 --> 0:02:24.640
<v Speaker 5>Here what happened, well, of course, right for a really

0:02:24.639 --> 0:02:29.520
<v Speaker 5>long time, that was the main policy agenda of the

0:02:29.600 --> 0:02:34.919
<v Speaker 5>Chinese Communist Party, and they introduced this Internet Plus initiative

0:02:35.000 --> 0:02:40.520
<v Speaker 5>and have been very supportive of the development of the

0:02:40.560 --> 0:02:41.919
<v Speaker 5>consumer tech businesses.

0:02:42.000 --> 0:02:43.639
<v Speaker 4>And back then we have this.

0:02:45.040 --> 0:02:52.400
<v Speaker 5>You know, very vibrant entrepreneurial environment. But what happened is

0:02:52.440 --> 0:02:57.080
<v Speaker 5>that starting in twenty twenty, when AND was preparing for IPO,

0:02:57.720 --> 0:03:03.400
<v Speaker 5>I mean, this firm trying to identify itself not as

0:03:03.520 --> 0:03:05.680
<v Speaker 5>a think type business but rather as a tech farm.

0:03:06.160 --> 0:03:06.919
<v Speaker 4>So it even.

0:03:06.760 --> 0:03:10.320
<v Speaker 5>Changed its name from and Financial to end Group to

0:03:10.360 --> 0:03:14.440
<v Speaker 5>avoid being identified as a financial institution, so that it

0:03:14.480 --> 0:03:17.640
<v Speaker 5>can gain a much higher valuation and in fact four

0:03:17.680 --> 0:03:21.600
<v Speaker 5>times as much valuation as we have got it would

0:03:21.639 --> 0:03:25.560
<v Speaker 5>have gotten as a financial institution, and that really worries

0:03:25.639 --> 0:03:30.080
<v Speaker 5>China's financial regulator, particularly the People Spank of China PBOC,

0:03:31.120 --> 0:03:36.120
<v Speaker 5>and particularly AND got the really really high valuation. In

0:03:36.160 --> 0:03:39.920
<v Speaker 5>the end it was three hundred and twenty billion US dollars,

0:03:40.880 --> 0:03:45.119
<v Speaker 5>and that's even higher than JP Morgan, the then largest

0:03:45.320 --> 0:03:46.560
<v Speaker 5>bank at that time.

0:03:46.920 --> 0:03:49.640
<v Speaker 4>I mean, so that really worried the regulator.

0:03:49.920 --> 0:03:53.560
<v Speaker 3>You know, Professor Zone. One thing I wonder is how

0:03:53.720 --> 0:03:55.560
<v Speaker 3>you know your book is about how trying to regulate

0:03:55.600 --> 0:03:59.040
<v Speaker 3>big technology, and I do wonder in a time where

0:03:59.240 --> 0:04:02.640
<v Speaker 3>I look at US China relations are very strange, especially

0:04:02.640 --> 0:04:07.160
<v Speaker 3>when it comes to it feels like technology and company

0:04:07.320 --> 0:04:10.920
<v Speaker 3>know how between uh, the two nations. Having said that,

0:04:10.960 --> 0:04:14.360
<v Speaker 3>what you are seeing in terms of the regulatory environment

0:04:14.560 --> 0:04:18.520
<v Speaker 3>for China or what China has for its big tech companies,

0:04:19.040 --> 0:04:21.720
<v Speaker 3>will the ultimately hold them back and stemy them? And

0:04:21.760 --> 0:04:24.560
<v Speaker 3>maybe the I don't know, does the US not have

0:04:24.640 --> 0:04:27.640
<v Speaker 3>to be so concerned about where China is going, especially

0:04:27.680 --> 0:04:28.760
<v Speaker 3>when it comes to high tech?

0:04:30.680 --> 0:04:31.360
<v Speaker 4>You're you're right.

0:04:31.600 --> 0:04:33.800
<v Speaker 5>I mean, in the aftermath of the crackdown, we see

0:04:33.839 --> 0:04:37.760
<v Speaker 5>that you know this, the tech sector has suffered a lot,

0:04:37.960 --> 0:04:40.720
<v Speaker 5>I mean the loss over a trillion dollars of market

0:04:40.760 --> 0:04:45.000
<v Speaker 5>cap during the crackdown, and a lot of these tech

0:04:45.040 --> 0:04:51.159
<v Speaker 5>firms are laying off, a conducting massive layoff, and they

0:04:51.240 --> 0:04:54.039
<v Speaker 5>would not be as competitive as they would have been,

0:04:54.480 --> 0:04:58.640
<v Speaker 5>would it not be a massive crackdown? However, I mean,

0:04:58.760 --> 0:05:01.960
<v Speaker 5>I still think that this companies obviously competitive as you

0:05:02.000 --> 0:05:04.800
<v Speaker 5>can see by them, is able to fullster you know,

0:05:05.120 --> 0:05:08.040
<v Speaker 5>a really successful company like TikTok, right, I mean in

0:05:08.080 --> 0:05:11.520
<v Speaker 5>the first place. So I still think that these are

0:05:11.960 --> 0:05:16.120
<v Speaker 5>you know, serious rivals to US consumer tech businesses. But

0:05:16.120 --> 0:05:19.920
<v Speaker 5>you are definitely right that what the government.

0:05:19.880 --> 0:05:23.839
<v Speaker 4>Did had on the mind its power.

0:05:24.000 --> 0:05:25.760
<v Speaker 3>Well, it's interesting to you on a day where we

0:05:25.800 --> 0:05:28.040
<v Speaker 3>talk to our Mark German about how was it one

0:05:28.080 --> 0:05:31.680
<v Speaker 3>in seven iPhones through the lower end iPhones are now

0:05:31.680 --> 0:05:35.320
<v Speaker 3>being made in India and how Apple is diversifying you know,

0:05:35.360 --> 0:05:38.040
<v Speaker 3>where it's making items. And I understand that China wants

0:05:38.080 --> 0:05:41.240
<v Speaker 3>to be playing certainly from a technology bent on a

0:05:41.320 --> 0:05:43.440
<v Speaker 3>higher level, if you will, right, They don't want to

0:05:43.480 --> 0:05:46.000
<v Speaker 3>be the manufacturer to the world. But as they start

0:05:46.080 --> 0:05:50.400
<v Speaker 3>to see some of those coveted global technology companies maybe

0:05:50.440 --> 0:05:53.520
<v Speaker 3>look to diversify, does that have China concern? Should they

0:05:53.560 --> 0:05:56.880
<v Speaker 3>be concerned and is it a result of all the policy?

0:05:57.320 --> 0:06:02.280
<v Speaker 5>Well, I think that diversification has less to do with

0:06:02.400 --> 0:06:05.680
<v Speaker 5>the domestic regulatory policy, but more to do the deteriorated

0:06:05.880 --> 0:06:07.760
<v Speaker 5>geo political environment.

0:06:09.200 --> 0:06:11.840
<v Speaker 4>And so. But at the same time, you know.

0:06:12.040 --> 0:06:12.120
<v Speaker 6>The.

0:06:13.800 --> 0:06:17.960
<v Speaker 5>The very intense regulatory crackdown wasn't helping Chinese tech firms

0:06:18.000 --> 0:06:23.279
<v Speaker 5>and hurt their competitiveness. But you know, US firm do

0:06:23.440 --> 0:06:27.200
<v Speaker 5>what they need to do to diversify the portfolio, and

0:06:27.360 --> 0:06:31.000
<v Speaker 5>especially if not just US large tech businesses, but also

0:06:31.600 --> 0:06:34.719
<v Speaker 5>UH US investors who used to be the major UH

0:06:34.760 --> 0:06:37.920
<v Speaker 5>investors in the Chinese consumer tech businesses, and now they

0:06:37.920 --> 0:06:42.200
<v Speaker 5>are retreating from the Chinese tach sectors, partly also because

0:06:42.279 --> 0:06:45.360
<v Speaker 5>they really don't like the regulatory regime.

0:06:45.920 --> 0:06:48.000
<v Speaker 4>They think that too arbitrary.

0:06:48.080 --> 0:06:50.560
<v Speaker 2>Yeah, okay, So I want to give you mentioned by

0:06:50.680 --> 0:06:52.800
<v Speaker 2>Dan's TikTok. I do want to get your prediction for

0:06:52.880 --> 0:06:55.479
<v Speaker 2>what's going to happen here in the US when it

0:06:55.520 --> 0:06:57.719
<v Speaker 2>comes to the fate of TikTok. It's certainly not the

0:06:57.760 --> 0:07:00.640
<v Speaker 2>focus of your book, but it's it's definitely something that

0:07:00.680 --> 0:07:02.880
<v Speaker 2>I'm interested in your opinion on. I mean, what do

0:07:02.880 --> 0:07:03.640
<v Speaker 2>you think happens here?

0:07:05.279 --> 0:07:06.160
<v Speaker 4>Well, I mean I think it.

0:07:06.279 --> 0:07:09.560
<v Speaker 5>Look, it's still relevant to the TikTok story because in

0:07:09.680 --> 0:07:12.640
<v Speaker 5>TikTok is owned by Dance, a Chinese company, despite the

0:07:12.640 --> 0:07:15.120
<v Speaker 5>fact that TikTok says we are not a Chinese company,

0:07:15.320 --> 0:07:17.400
<v Speaker 5>but it has this Chinese link, right, I mean, so

0:07:17.520 --> 0:07:22.480
<v Speaker 5>how China regulates by Dance will have implications for TikTok's businesses.

0:07:22.600 --> 0:07:26.160
<v Speaker 5>Just like when the US introduced this bill says, you know, TikTok,

0:07:26.160 --> 0:07:29.400
<v Speaker 5>you can either divest yourself or you know, disappear from

0:07:29.440 --> 0:07:33.520
<v Speaker 5>the US market, and the China says, well, we we

0:07:33.600 --> 0:07:36.280
<v Speaker 5>may not want you to sell set to buy dance.

0:07:36.320 --> 0:07:37.280
<v Speaker 4>We may not want you to.

0:07:37.280 --> 0:07:43.440
<v Speaker 5>Sell your your critical technology to uh you know, US

0:07:43.560 --> 0:07:44.200
<v Speaker 5>US buyers.

0:07:44.280 --> 0:07:44.400
<v Speaker 6>Right.

0:07:44.440 --> 0:07:47.160
<v Speaker 5>I mean that was back in twenty twenty when the

0:07:47.320 --> 0:07:53.560
<v Speaker 5>dermonstrations wanted uh TikTok to divest uh it's it's itself

0:07:53.720 --> 0:07:55.160
<v Speaker 5>to oracle.

0:07:56.200 --> 0:07:58.320
<v Speaker 4>Or sell it to other businesses.

0:07:58.400 --> 0:07:58.520
<v Speaker 6>Right.

0:07:58.520 --> 0:08:02.840
<v Speaker 5>I mean, China introduces export restrictions that will potentially block

0:08:03.200 --> 0:08:06.400
<v Speaker 5>such cells. Now that being said, I don't think the

0:08:06.480 --> 0:08:11.800
<v Speaker 5>Chinese government is hurting TikTok's position here. The fact that

0:08:12.640 --> 0:08:16.640
<v Speaker 5>you know, Chinese government has this law and will be

0:08:16.720 --> 0:08:19.400
<v Speaker 5>very likely to say, you know, we are blocking the cells,

0:08:19.720 --> 0:08:24.480
<v Speaker 5>that will strengthen TikTok's argument that this is effectively a bent. Right.

0:08:24.520 --> 0:08:27.360
<v Speaker 4>I mean, so when this case, even if.

0:08:29.280 --> 0:08:32.559
<v Speaker 5>The Senate eventually approved this law, I mean, even if

0:08:32.559 --> 0:08:35.040
<v Speaker 5>this become law, this could be a challenged in court,

0:08:35.120 --> 0:08:38.280
<v Speaker 5>and court is highly unlikely. I mean, I think court

0:08:38.360 --> 0:08:42.120
<v Speaker 5>is very unlikely to rule in favorable law that work

0:08:42.160 --> 0:08:44.960
<v Speaker 5>effectively as a band, because that valet is the freedom

0:08:44.960 --> 0:08:48.160
<v Speaker 5>of speech of too many affecting too many A citizens.

0:08:48.440 --> 0:08:51.640
<v Speaker 5>So actually I think the Chinese, the Chinese actually helps

0:08:51.640 --> 0:08:54.599
<v Speaker 5>TikTok's position if you look at it from this perspective.

0:08:55.000 --> 0:08:56.440
<v Speaker 3>One thing I want to do. We just have about

0:08:56.480 --> 0:09:00.199
<v Speaker 3>forty five seconds left here, Just quickly, Professor Zong and

0:09:00.240 --> 0:09:02.560
<v Speaker 3>G's all about common prosperity. And that's how you justify

0:09:02.640 --> 0:09:04.960
<v Speaker 3>some of the regulatory crackdown if you will and oversight

0:09:05.320 --> 0:09:09.160
<v Speaker 3>a big technology. Will it lead to a more prosperous

0:09:09.280 --> 0:09:14.400
<v Speaker 3>or widespread prosperous economy for China or not necessarily? And

0:09:14.440 --> 0:09:16.320
<v Speaker 3>again sorry, just about thirty seconds here.

0:09:18.120 --> 0:09:21.920
<v Speaker 5>Well, the Commons Prosperity initiative was well intention However, I

0:09:21.960 --> 0:09:24.760
<v Speaker 5>mean the way it had been implemented had led to

0:09:24.920 --> 0:09:28.680
<v Speaker 5>unintended consequences. I mean, the tech crackdown is one excellent example.

0:09:29.000 --> 0:09:33.319
<v Speaker 5>It was supposed to empower all the platform participants like users, bias,

0:09:33.400 --> 0:09:34.440
<v Speaker 5>merchants to better.

0:09:34.280 --> 0:09:38.440
<v Speaker 4>Negotiate with the platform. However, it did really achieve this goal.

0:09:38.520 --> 0:09:39.840
<v Speaker 4>It hasn't really changed.

0:09:39.640 --> 0:09:42.679
<v Speaker 5>The competitive dynamics or enhanced consumer welfare.

0:09:43.800 --> 0:09:47.199
<v Speaker 2>Really really interesting. Yeah, hey, maca think check out the book.

0:09:47.240 --> 0:09:49.839
<v Speaker 2>It's called High Wire, How China regulates Big Tech and

0:09:49.880 --> 0:09:53.160
<v Speaker 2>governs its economy. Angela Zong, a professor of law at

0:09:53.200 --> 0:09:58.120
<v Speaker 2>the University of Hong Kong, joining us just now. Professor Zong,

0:09:58.160 --> 0:09:59.800
<v Speaker 2>thank you so much, really appreciate it.

0:10:00.760 --> 0:10:05.200
<v Speaker 1>This is Bloomberg Business Week inside from the reporters and

0:10:05.320 --> 0:10:08.920
<v Speaker 1>editors who bring you America's most trusted business magazine, plus

0:10:09.000 --> 0:10:12.920
<v Speaker 1>global business, finance and tech news as it happens. Bloomberg

0:10:12.960 --> 0:10:18.080
<v Speaker 1>Business Week with Carol Meser and Tim Stenebek on Bloomberg Radio.

0:10:19.000 --> 0:10:21.120
<v Speaker 2>It is Bloomberg a business Week. I don't know if

0:10:21.120 --> 0:10:24.120
<v Speaker 2>you saw this, Carol, but it seems like everybody's coming

0:10:24.120 --> 0:10:27.000
<v Speaker 2>out with new chips these days. I agree, so Meta

0:10:27.040 --> 0:10:28.160
<v Speaker 2>platforms today, it's.

0:10:28.040 --> 0:10:30.800
<v Speaker 3>Like there's an AI race or new AI racism or something.

0:10:31.040 --> 0:10:33.440
<v Speaker 2>So Meta announced this new homegrown chip. What it's going

0:10:33.480 --> 0:10:36.440
<v Speaker 2>to do is to help power its AI services. The

0:10:36.520 --> 0:10:39.000
<v Speaker 2>idea here is that it aims to decrease its reliance

0:10:39.000 --> 0:10:42.200
<v Speaker 2>on semis from Nvidia and other outside companies. And you

0:10:42.240 --> 0:10:45.520
<v Speaker 2>know what, it comes just a day after Intel essentially

0:10:45.559 --> 0:10:47.120
<v Speaker 2>did the same thing. They rolled out a new version

0:10:47.160 --> 0:10:50.280
<v Speaker 2>of their AI chip also aiming to challenge in Vidia

0:10:50.360 --> 0:10:53.320
<v Speaker 2>in one of the fastest growing parts of the semiconductor industry.

0:10:53.320 --> 0:10:55.000
<v Speaker 3>All right, needless to say, AI and the chips that

0:10:55.040 --> 0:10:57.480
<v Speaker 3>power AI, they are so hot right now?

0:10:57.520 --> 0:11:00.200
<v Speaker 2>Is that a Zulender reference? I think I think she

0:11:00.200 --> 0:11:03.679
<v Speaker 2>just did a Zelander reference. Maybe maybe chips so hot

0:11:03.760 --> 0:11:04.079
<v Speaker 2>right now?

0:11:04.120 --> 0:11:04.400
<v Speaker 5>All right?

0:11:04.440 --> 0:11:06.240
<v Speaker 3>One of our go tos on chips is Dan Morgan.

0:11:06.280 --> 0:11:09.400
<v Speaker 3>He's senior portfolio manager at Sonova's trust company, joining us

0:11:09.480 --> 0:11:13.240
<v Speaker 3>right now from Atlanta. You actually write about the top

0:11:13.240 --> 0:11:15.640
<v Speaker 3>players in the red hot AI chip market. It does

0:11:15.720 --> 0:11:19.080
<v Speaker 3>feel like there's a lot going on, Dan Morgan, What

0:11:19.240 --> 0:11:22.080
<v Speaker 3>are you paying attention to, whether it's Meadow, whether it's Intel,

0:11:22.160 --> 0:11:23.240
<v Speaker 3>or what Nvideo is up to.

0:11:24.960 --> 0:11:26.880
<v Speaker 6>What's interesting, Carol, because you know, we kind of started

0:11:26.920 --> 0:11:30.480
<v Speaker 6>off this conversation with who are the top traditional chip

0:11:30.520 --> 0:11:34.160
<v Speaker 6>makers who are coming out with AI, you know, AI

0:11:34.280 --> 0:11:37.560
<v Speaker 6>products to compete against Nvidio. So we had conversations about

0:11:37.640 --> 0:11:41.800
<v Speaker 6>let's say, AMD or Broadcom or Marvel and to a

0:11:41.840 --> 0:11:45.520
<v Speaker 6>certain extack Qualcom on the handset. And now that everything's

0:11:45.600 --> 0:11:48.000
<v Speaker 6>kind of turned around, Tim and Carroll, where we have

0:11:48.120 --> 0:11:52.439
<v Speaker 6>the end user buyer of the chip is actually producing

0:11:52.440 --> 0:11:55.520
<v Speaker 6>their own chips, like you mentioned the recent announcements that

0:11:55.600 --> 0:11:57.480
<v Speaker 6>came out over the last couple of days. I mean,

0:11:57.520 --> 0:12:00.360
<v Speaker 6>you've got but we alpha bed, we're actually on chip.

0:12:00.440 --> 0:12:02.440
<v Speaker 2>I'm sorry, go ah, I just want to Is it

0:12:02.520 --> 0:12:04.840
<v Speaker 2>that easy that Meta can just create a chip that

0:12:04.880 --> 0:12:06.280
<v Speaker 2>competes within VIDIA.

0:12:08.040 --> 0:12:11.200
<v Speaker 6>Well, it's kind of interesting. Meta's chip, the nt I

0:12:11.280 --> 0:12:14.920
<v Speaker 6>A is what it's abbreviated as, which is Meta Training

0:12:15.040 --> 0:12:18.920
<v Speaker 6>Inference Accelerator Version one, which is kind of a long name.

0:12:19.000 --> 0:12:22.120
<v Speaker 6>But to say, Tim, that that chip could go head

0:12:22.120 --> 0:12:25.080
<v Speaker 6>to head against let's say, a Blackwell one hundred, which

0:12:25.120 --> 0:12:26.959
<v Speaker 6>is the new in video chip that came out a

0:12:27.000 --> 0:12:28.760
<v Speaker 6>couple of weeks ago, I'm sure you guys covered that

0:12:29.920 --> 0:12:33.280
<v Speaker 6>probably not be an accurate statement. But for the purpose

0:12:33.480 --> 0:12:36.840
<v Speaker 6>of Meta in regards to what they're trying to do obviously,

0:12:36.840 --> 0:12:39.920
<v Speaker 6>which is trying to post advertising when you're doing your

0:12:39.960 --> 0:12:43.120
<v Speaker 6>social media searches and so forth in the right places

0:12:43.160 --> 0:12:46.560
<v Speaker 6>to increase ROI, it might work very well for them.

0:12:46.679 --> 0:12:50.000
<v Speaker 6>So it is interesting, though, Tim, that we're getting all

0:12:50.040 --> 0:12:52.000
<v Speaker 6>these companies that are the end users who are now

0:12:52.080 --> 0:12:53.680
<v Speaker 6>producing their own proprietary chips.

0:12:53.880 --> 0:13:01.600
<v Speaker 3>So is that a no, Well, well, here's the deal, right,

0:13:01.760 --> 0:13:03.640
<v Speaker 3>not all tips are the same. We know that we've

0:13:03.640 --> 0:13:06.480
<v Speaker 3>talked to you, We talked to our Ian king. You know,

0:13:06.559 --> 0:13:10.600
<v Speaker 3>I'm assuming that different companies are putting out things to

0:13:10.640 --> 0:13:13.439
<v Speaker 3>make accelerator chips to make the you know, to make

0:13:13.440 --> 0:13:17.599
<v Speaker 3>the AI applications happen more efficiently, use less energy, and

0:13:17.640 --> 0:13:19.800
<v Speaker 3>so on and so forth. So how are you looking

0:13:19.840 --> 0:13:22.800
<v Speaker 3>at the AI chip space? Like, what's important? What does

0:13:22.920 --> 0:13:25.280
<v Speaker 3>our audience kind of need to know here as all

0:13:25.320 --> 0:13:27.400
<v Speaker 3>this news continues to come at them.

0:13:28.280 --> 0:13:30.200
<v Speaker 6>We bring up a good point, Carol, and that is

0:13:30.200 --> 0:13:32.320
<v Speaker 6>that up to this point, most of the action has

0:13:32.360 --> 0:13:35.840
<v Speaker 6>been a data center, right, And Tim and Carroll we

0:13:35.880 --> 0:13:38.320
<v Speaker 6>have covered in Nvidia for many many years and talked

0:13:38.360 --> 0:13:42.880
<v Speaker 6>about their you know, trajectory through that space. And now

0:13:42.960 --> 0:13:45.440
<v Speaker 6>you have other companies who are trying to focus on

0:13:45.480 --> 0:13:49.360
<v Speaker 6>the data center, right, Amd, Intel trying to come out

0:13:49.360 --> 0:13:51.440
<v Speaker 6>with chips to go against Nvidia. And then you have

0:13:51.640 --> 0:13:54.880
<v Speaker 6>the top players in that space, which would be Amazon

0:13:55.280 --> 0:13:58.560
<v Speaker 6>with AWS. They just came out with a couple of

0:13:58.559 --> 0:14:02.520
<v Speaker 6>new chips, so the graviton for the Tredium two. Then

0:14:02.559 --> 0:14:05.680
<v Speaker 6>we also have believe it or not, Microsoft, which is

0:14:05.720 --> 0:14:08.920
<v Speaker 6>the head of operating systems, has come out with their

0:14:08.960 --> 0:14:13.680
<v Speaker 6>own chips also in that space for ASER. So it's interesting, Carol,

0:14:13.720 --> 0:14:17.160
<v Speaker 6>because you have the proprietary companies developing chips specific to

0:14:17.679 --> 0:14:21.440
<v Speaker 6>for example, Amazon for AWS, and you have let's say

0:14:21.480 --> 0:14:24.520
<v Speaker 6>Microsoft with ASER, but they are still focused in the

0:14:24.600 --> 0:14:27.400
<v Speaker 6>data center and that still seems to be the hot

0:14:27.400 --> 0:14:30.120
<v Speaker 6>spot in terms of profits and so forth, and where

0:14:30.280 --> 0:14:32.520
<v Speaker 6>a lot of the action is right now, not to

0:14:32.600 --> 0:14:36.560
<v Speaker 6>take away from, for example, what Meta or maybe Alphabet

0:14:36.640 --> 0:14:39.840
<v Speaker 6>is doing, but so far the hot spot for investors

0:14:39.840 --> 0:14:41.320
<v Speaker 6>has been definitely in the data center.

0:14:41.440 --> 0:14:43.120
<v Speaker 2>Hey, Dan, what would you say to someone I want

0:14:43.160 --> 0:14:45.400
<v Speaker 2>to switch gears a little bit and talk about investment

0:14:45.400 --> 0:14:48.360
<v Speaker 2>opportunities Because you watch the space really closely. What would

0:14:48.360 --> 0:14:50.760
<v Speaker 2>you say to somebody who said, you know what I

0:14:50.840 --> 0:14:53.560
<v Speaker 2>missed out on in videos two hundred and forty percent

0:14:53.640 --> 0:14:55.680
<v Speaker 2>run up last year. I missed out on some of

0:14:55.720 --> 0:15:00.160
<v Speaker 2>the seventy five percent increase this year meta platforms two

0:15:00.240 --> 0:15:03.160
<v Speaker 2>hundred percent increase last year, or meta platforms you know,

0:15:03.200 --> 0:15:05.840
<v Speaker 2>close to fifty percent increase so far this year. And

0:15:05.880 --> 0:15:08.240
<v Speaker 2>they're thinking to themselves, wait a second, I feel like

0:15:08.280 --> 0:15:11.080
<v Speaker 2>a lot of the gains to be had with AI

0:15:11.760 --> 0:15:15.760
<v Speaker 2>have already been had. What would you say to that, you.

0:15:15.720 --> 0:15:18.560
<v Speaker 6>Know, I would say, Tim, we're still in the beginning stages.

0:15:18.640 --> 0:15:20.600
<v Speaker 6>I mean, you could add Broadcom to that list of

0:15:20.720 --> 0:15:23.800
<v Speaker 6>huge winners right in terms of investment over the last year.

0:15:24.880 --> 0:15:27.160
<v Speaker 6>But you know, I think that it's you know, some

0:15:27.200 --> 0:15:29.240
<v Speaker 6>people have said it's over hyped, it's kind of like

0:15:29.280 --> 0:15:31.360
<v Speaker 6>what happened back in the summer of two thousand and

0:15:31.720 --> 0:15:34.360
<v Speaker 6>I would totally disagree, just because these companies are all

0:15:34.480 --> 0:15:37.520
<v Speaker 6>very profitable, they have very solid products. I still think

0:15:37.560 --> 0:15:40.360
<v Speaker 6>there's a huge amount of upward potential, you know, in

0:15:40.400 --> 0:15:42.400
<v Speaker 6>a lot of these names that we're talking about today.

0:15:42.440 --> 0:15:47.680
<v Speaker 6>I mean, the projected growth rate for artificial intelligent chips

0:15:47.760 --> 0:15:50.960
<v Speaker 6>is about twenty five percent going out, so definitely one

0:15:50.960 --> 0:15:53.640
<v Speaker 6>of the fastest growing groups. And I still think we're

0:15:53.680 --> 0:15:55.520
<v Speaker 6>in the beginning stages, Tim and Carroll, And I know

0:15:55.600 --> 0:15:58.960
<v Speaker 6>that sounds a little crazy after these huge run ups,

0:15:58.960 --> 0:16:01.600
<v Speaker 6>but this is where the action is right now in tech,

0:16:01.600 --> 0:16:03.120
<v Speaker 6>and I still believe it to continue to go.

0:16:03.280 --> 0:16:05.520
<v Speaker 3>Can I ask you, I mean, there are chips in everything, right,

0:16:05.520 --> 0:16:06.920
<v Speaker 3>how many times do have we said this? If we

0:16:06.960 --> 0:16:08.440
<v Speaker 3>all had a buck for every time we said that,

0:16:08.480 --> 0:16:10.520
<v Speaker 3>we would all be living on our private islands.

0:16:10.560 --> 0:16:14.280
<v Speaker 2>You could almost afford some and video chips or stock

0:16:14.400 --> 0:16:15.520
<v Speaker 2>right exactly now.

0:16:15.520 --> 0:16:17.640
<v Speaker 3>But having said that, there are chips in everything, so

0:16:18.000 --> 0:16:21.000
<v Speaker 3>not all chips are like, you know, how much of

0:16:21.040 --> 0:16:25.240
<v Speaker 3>our world currently today is an AI related chip of

0:16:25.280 --> 0:16:28.080
<v Speaker 3>some sort? How many? How much will be?

0:16:30.240 --> 0:16:32.120
<v Speaker 6>Well, it's interesting, Carol, because you know, we've talked before

0:16:32.120 --> 0:16:35.240
<v Speaker 6>about Micron technology being more of a commodity based chip

0:16:35.240 --> 0:16:38.000
<v Speaker 6>maker with d RAM and nand and then we swing

0:16:38.120 --> 0:16:41.120
<v Speaker 6>the pendulum over to AI right as being right like

0:16:41.280 --> 0:16:43.960
<v Speaker 6>in video as being like, wow, they charged twenty to

0:16:44.000 --> 0:16:47.400
<v Speaker 6>thirty thousand dollars a chip. We're even a high level

0:16:47.640 --> 0:16:52.040
<v Speaker 6>Micron high bandwidth memory chip would probably be one thousand

0:16:52.040 --> 0:16:54.720
<v Speaker 6>to fifteen hundred dollars, just give you difference in the pricing.

0:16:54.840 --> 0:16:57.440
<v Speaker 6>So you know, I wouldn't say at this point, Carol,

0:16:57.520 --> 0:17:00.680
<v Speaker 6>that everything has an AI chip in it. It's mostly

0:17:00.800 --> 0:17:03.200
<v Speaker 6>like we mentioned the data center, but it is moving

0:17:03.200 --> 0:17:07.520
<v Speaker 6>to other applications. But again it's just it's a sector

0:17:07.560 --> 0:17:10.520
<v Speaker 6>that is still in its infinity stages in terms of

0:17:11.200 --> 0:17:13.399
<v Speaker 6>like you just mentioned, is it going to end up

0:17:13.400 --> 0:17:15.640
<v Speaker 6>that we have an AI chip in our washing machines

0:17:15.960 --> 0:17:18.280
<v Speaker 6>that we do our laundry and I wouldn't be surprised

0:17:18.280 --> 0:17:19.520
<v Speaker 6>that we don't, and we're getting there.

0:17:19.600 --> 0:17:21.920
<v Speaker 2>I can't even connect from the washing machine to the internet.

0:17:22.000 --> 0:17:24.240
<v Speaker 3>But no, but that's your point. No, is there a

0:17:24.280 --> 0:17:26.560
<v Speaker 3>way that it's right? Like, I don't know, do you

0:17:26.880 --> 0:17:29.960
<v Speaker 3>anticipate someone who understands this industry that there will be

0:17:30.000 --> 0:17:34.080
<v Speaker 3>an AI chip in everything? Is that where we're going?

0:17:35.119 --> 0:17:37.200
<v Speaker 6>Yeah, I don't know if you could say, but pretty close,

0:17:37.280 --> 0:17:40.080
<v Speaker 6>especially in terms of the you know, you look at

0:17:40.080 --> 0:17:43.439
<v Speaker 6>the driverless vehicles, that's a huge AI option, you know,

0:17:43.520 --> 0:17:46.040
<v Speaker 6>opening for them. You look at mobile phones. I mean,

0:17:46.080 --> 0:17:48.359
<v Speaker 6>Apple hasn't done that much in that space.

0:17:48.440 --> 0:17:48.639
<v Speaker 5>We have.

0:17:48.720 --> 0:17:52.800
<v Speaker 6>Qualcomm has a chip that they have introduced in terms

0:17:52.840 --> 0:17:55.760
<v Speaker 6>of the AI one hundred. But that's a huge open

0:17:55.760 --> 0:17:59.040
<v Speaker 6>frontier right getting away from the data center, getting away

0:17:59.040 --> 0:18:02.560
<v Speaker 6>from cloud. So there are a lot of opportunities in

0:18:02.600 --> 0:18:04.840
<v Speaker 6>other spaces and maybe a wright, Carol, we'll get to

0:18:04.840 --> 0:18:06.840
<v Speaker 6>the point where everything has an AI chip in it.

0:18:07.040 --> 0:18:09.199
<v Speaker 6>We're not there yet, and that's what creates the growth.

0:18:09.359 --> 0:18:11.399
<v Speaker 2>I wasn't actually joking about not being able to connect

0:18:11.440 --> 0:18:12.680
<v Speaker 2>my washing machine into the internet.

0:18:12.720 --> 0:18:13.800
<v Speaker 4>We have Do you think that's crazy?

0:18:13.800 --> 0:18:15.199
<v Speaker 3>I have a tooth brush that I can do like

0:18:15.240 --> 0:18:15.920
<v Speaker 3>connect to an app.

0:18:15.920 --> 0:18:16.440
<v Speaker 4>I'm like, I don't.

0:18:16.480 --> 0:18:17.520
<v Speaker 3>I just need to brush my team.

0:18:17.560 --> 0:18:20.119
<v Speaker 2>No, we our washing machine is supposed to connect to

0:18:20.119 --> 0:18:21.280
<v Speaker 2>the internet. It just won't work.

0:18:21.400 --> 0:18:22.560
<v Speaker 3>But why do you want that?

0:18:22.560 --> 0:18:24.800
<v Speaker 2>You know, I was trying to down down the app

0:18:24.800 --> 0:18:26.080
<v Speaker 2>it won't connect.

0:18:26.840 --> 0:18:30.239
<v Speaker 3>Instead of the household when laundry kind of the use?

0:18:30.280 --> 0:18:32.679
<v Speaker 2>I have no idea. Hey, Dan, before we let you go,

0:18:33.720 --> 0:18:36.600
<v Speaker 2>give give me some, give us some give give our

0:18:36.800 --> 0:18:39.119
<v Speaker 2>investing audience some some picks for the remainder of the

0:18:39.160 --> 0:18:40.399
<v Speaker 2>years of stocks you like.

0:18:40.480 --> 0:18:42.080
<v Speaker 3>Do you have a favorite name in this space?

0:18:43.520 --> 0:18:45.960
<v Speaker 6>Well, I mean Tech it's hard not to like, you know,

0:18:46.000 --> 0:18:48.000
<v Speaker 6>and Nvidio. I mean these are names that are currently

0:18:48.040 --> 0:18:52.000
<v Speaker 6>on our by list. Broadcom is another AI play. Qualcomm

0:18:52.119 --> 0:18:54.879
<v Speaker 6>is interesting uh just as I mentioned before, as a

0:18:54.920 --> 0:18:58.520
<v Speaker 6>play on on the actual uh cdm A based phones

0:18:58.680 --> 0:19:02.040
<v Speaker 6>of course Android based Apple. So those would be some

0:19:02.160 --> 0:19:05.320
<v Speaker 6>kind of some names in the space you know that

0:19:05.400 --> 0:19:07.359
<v Speaker 6>are currently on our buy list that if you know,

0:19:07.640 --> 0:19:11.119
<v Speaker 6>the client's risk tolerance and objectives are in line, that

0:19:11.160 --> 0:19:14.359
<v Speaker 6>would be something that we look at in terms of AI.

0:19:14.600 --> 0:19:17.560
<v Speaker 6>So those again are names that aren't uncommon. I'm sure

0:19:17.600 --> 0:19:19.560
<v Speaker 6>a lot of people have already looked at those, but

0:19:20.520 --> 0:19:22.520
<v Speaker 6>you know, there's not that many ways to play it

0:19:22.640 --> 0:19:25.000
<v Speaker 6>right now, and those are probably the top place.

0:19:25.240 --> 0:19:28.560
<v Speaker 3>Hey twenty seconds, are you buying Microsoft Alphabet or Meta

0:19:28.600 --> 0:19:29.439
<v Speaker 3>because of its chips?

0:19:29.480 --> 0:19:30.000
<v Speaker 4>Real quickly?

0:19:31.960 --> 0:19:35.240
<v Speaker 6>You know, Microsoft looks really good coming into this upcoming

0:19:35.280 --> 0:19:38.200
<v Speaker 6>report in about two weeks Carol and SODA's Meta in

0:19:38.280 --> 0:19:41.080
<v Speaker 6>terms of ability to blow numbers. So even beyond the

0:19:41.480 --> 0:19:44.280
<v Speaker 6>jen Ai focused which we'll hear about on the conference call,

0:19:44.640 --> 0:19:46.600
<v Speaker 6>I think there's other things that are working really strong

0:19:46.600 --> 0:19:47.040
<v Speaker 6>for those.

0:19:46.880 --> 0:19:50.080
<v Speaker 3>Companies now, Dan Morgan, great report. Great to chat with you,

0:19:50.119 --> 0:19:51.639
<v Speaker 3>Dan Morgan of Sonovas.

0:19:51.720 --> 0:19:52.040
<v Speaker 4>Thanks