Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Welcome to the Daybreak Asia podcast. I'm Doug Prisner. It
Speaker 2: was a mixed day for the US equity market in
Speaker 2: front of the Independence Day holiday. On one hand, we
Speaker 2: had the Dow jumping by more than one percent to
Speaker 2: a record high fifty two nine hundred. However, the semiconductor
Speaker 2: stocks were in retreat. We had the Philadelphia Semiconductor Index
Speaker 2: down for a second straight session, falling on Thursday by
Speaker 2: more than five percent. For a look at some of
Speaker 2: the price section we are seeing in the APAC region,
Speaker 2: I'm joined by Bloomberg Charlotte Young. Charlotte is Asia Equities
Speaker 2: reporter and she joins from our studios in Hong Kong.
Speaker 2: Thank you for being here. Talk to me a little
Speaker 2: bit about what you're seeing on fold today, particularly given
Speaker 2: the weakness in the chip stocks.
Speaker 3: Yeah, so this this morning was seeing a really choppy
Speaker 3: session on Korea and Japan stocks. They open slightly higher,
Speaker 3: but then quickly raised all that gangs. So for careers
Speaker 3: cost being decks, they actually win over two percent at
Speaker 3: one point, but then quickly rebounded again. So I think
Speaker 3: this kind of shows you a little I think there
Speaker 3: is a sense of nervousness with treated that everybody is
Speaker 3: now digesting those headlines, especially the one earlier this week
Speaker 3: about around matter planning a cloud business. You saw a
Speaker 3: computing power that's really causing a lot of concerns over
Speaker 3: this AI over capacity built up. But then there's also
Speaker 3: people are still digesting this, so there is a little
Speaker 3: bit I think lack of conviction right now. But on
Speaker 3: the other hand, it was really interesting that you're seeing
Speaker 3: retail investors again instead of stepping up to buy the
Speaker 3: dips both yesterday and today, while offer investors having selling.
Speaker 2: So next week we have the preliminary earnings from Samsung,
Speaker 2: and today a very interesting press report in the Information
Speaker 2: I don't know whether you saw this, Anthropic is in
Speaker 2: talks with Samsung to be a man facturer partner for
Speaker 2: a custom AI chip. Now, in the last week, we
Speaker 2: had this announcement in South Korea that Samsung and sk
Speaker 2: Heinix we're going to be spending more than five hundred
Speaker 2: billion US to build up more capacity for these high
Speaker 2: bandwidth memory chips, which as you know well, are in
Speaker 2: high demand given this AI buildout. Talk to me a
Speaker 2: little bit about what we're expecting from Samsung next week,
Speaker 2: so there's.
Speaker 3: A lot of attention on Samsund's pulmonary second quarter results
Speaker 3: next week. It doesn't provide any segment breakdown of business guidance.
Speaker 3: With that said, I think all the tension will be
Speaker 3: focused on second quarter operating profit, so Boombay Intelligence expecting
Speaker 3: it to be slightly exceed on consensus given the strong
Speaker 3: memory chip burnings despite the have that special bonus payments.
Speaker 2: We also have sk Heinix in the news. So I
Speaker 2: mentioned kind of the capex announcement earlier in the week,
Speaker 2: and I also want to point out that the South
Speaker 2: Korean government is very much involved in this initiative. But
Speaker 2: in the coming week, we're going to have ADRs trading
Speaker 2: for sk Heinex for the US market. Is that right?
Speaker 3: Yes, So, esk Heinex ADR listing is expected to happen
Speaker 3: next Friday. The company is looking to raise twenty nine
Speaker 3: billion dollars. This is a really big deal for eskhex
Speaker 3: in that and now that now offers with the ADR listing,
Speaker 3: it now offers global investors easy access to buy the shares.
Speaker 3: So before the ADRs, a lot of the investors, for example,
Speaker 3: if they're based in Hong Kong and they don't have
Speaker 3: direct trading idea with the career stock exchange, they have
Speaker 3: to go through the banks, the trading decks to use
Speaker 3: equity swapsually that's the main way people do it. But
Speaker 3: now with ADRs, people can just easily access it. There
Speaker 3: is some expectation that this will help boost eskahex valuations.
Speaker 3: While there is also a key issue that is unresolved
Speaker 3: at the stage, which is people the funngability issue, whether
Speaker 3: that ADRs can be easily transferred into the local shies
Speaker 3: and vice versa. So the fundability issues something people are
Speaker 3: still trying to figure out. But with that said, the
Speaker 3: ADR listing is the one key thing to watch for
Speaker 3: how much I think I s Kahanis valuations can go.
Speaker 2: Let's talk a little bit about what you're seeing right
Speaker 2: now with the smaller suppliers that kind of are a
Speaker 2: part of the supply chain for semiconductor stocks, those suppliers
Speaker 2: that are Chinese based. Talk to me a little bit
Speaker 2: about what you're seeing in the price section there and
Speaker 2: some of the story that's connected with that.
Speaker 3: Yeah, So earlier this year, I would say one of
Speaker 3: the biggest bry spot in the Chinese aial market is
Speaker 3: those hardware names, and usually it's vary in those niche
Speaker 3: corners that nobody has paid attention before, you know, whether
Speaker 3: that is about like optical makers or like making MLCC
Speaker 3: these names that investors usually before wouldn't look at. But
Speaker 3: because the now they offer the most eract exposure to
Speaker 3: the broader chips psycho story and then they are they're
Speaker 3: really seeing real earnings upgrade. So there's been a lot
Speaker 3: of excitement also flows going into there. Uh just this
Speaker 3: week they've also been seeing some of the sell off,
Speaker 3: just as the global uh textile off. Investors are kind
Speaker 3: of partterning a little bit there. But with that set,
Speaker 3: I think so far, if you other strategies about China,
Speaker 3: the key thing they're still stressing about is this AI
Speaker 3: AI semiconductor psycho and how the hardware names still have
Speaker 3: a lot of optimists on that. And also with CXMT,
Speaker 3: which is China's I think memory chip maker Crown DREWNE
Speaker 3: is about is expected to list soon. We don't have
Speaker 3: the fixed day yet, there are some chatters that they
Speaker 3: could becoming, you know, later this month. China's memory chip
Speaker 3: maker Crown CXMT is expected to list soon in on
Speaker 3: the onshore market or we don't have the fixed day yet,
Speaker 3: but some chatters are talking about it to be later
Speaker 3: this month. That's definitely the key, key thing everybody's watching.
Speaker 3: And also how they could read a cross for the
Speaker 3: career memory chip makers as well. So the Chinese name,
Speaker 3: even though their technology is not as advanced as as
Speaker 3: Kinex or Samsung. But the now right now is that
Speaker 3: if they get a lot of if they were able
Speaker 3: to raise a lot of money from the equity market,
Speaker 3: they can instead put it back into the R and
Speaker 3: D and all those big capital expenditure and that could
Speaker 3: help them catch up as a career makers.
Speaker 2: Okay, Charlotte, thank you so very much. We'll leave it there,
Speaker 2: Bloomberg Charlotte Young. She joins from Hong Kong. She covers
Speaker 2: the Asia Equity Markets Force. Joining us here on the
Speaker 2: Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast.
Speaker 2: I'm deg Krisner. Samsung will be reporting preliminary earnings next
Speaker 2: week on Thursday. The tech news outlet the Information Report
Speaker 2: it Anthropic is talking with Samsung about being a manufacturing
Speaker 2: partner for a custom AI chip, and that's where we
Speaker 2: begin our conversation with Bob O'Donnell Bob as president and
Speaker 2: chief analyst at TECHnalysis Research. He spoke with Bloomberg TV
Speaker 2: host sharing how.
Speaker 1: Does this meaningfully change the market if this more custom
Speaker 1: chips come to play, are they a meaningful threat to
Speaker 1: Nvidia and the likes of chip makers or are we
Speaker 1: just going to see more specialized chips.
Speaker 4: I think we're just going to see more specialized chips,
Speaker 4: to be honest with you, Sherry. I mean, look, there
Speaker 4: is such demand for different types of architectures. And one
Speaker 4: of the interesting things that we're seeing that's driving this
Speaker 4: movement towards specialization is the fact that we're seeing companies
Speaker 4: trying to figure out how can they reduce the cost
Speaker 4: and increase the efficiency of how they generate tokens for
Speaker 4: all the queries that we're doing in all the agents
Speaker 4: that people are running, and so what they've realized is
Speaker 4: they can break it up into different chunks or disaggregate.
Speaker 4: That's what everybody calls it these days, is disaggregation. And
Speaker 4: what they're figuring out is different aspects of those workloads
Speaker 4: require different types of computing. So you're going to see
Speaker 4: companies say, aha, I'm going to work on prefill or
Speaker 4: I'm going to do the decode portion. I'm going to
Speaker 4: do this part of the inference workload. There's still the
Speaker 4: training workloads as well. So all of what is to say,
Speaker 4: a lot of different ways to look at this problem,
Speaker 4: but a lot of different ways for companies to come
Speaker 4: up with creative and differentiated ways to solve this because
Speaker 4: at the end of the day, look, people want to
Speaker 4: be able to generate more AI tokens to fulfill like
Speaker 4: I said, all these inquiries to let all the agents
Speaker 4: do the work they want to do, and they want
Speaker 4: to do it cost efficiently, so they can actually start making.
Speaker 1: Certain when they partner with these facts are making ready
Speaker 1: to be clear A yeah, to be fair, right, I
Speaker 1: mean they are helping in the manufacturing process. I mean,
Speaker 1: Samson could partner up with Anthropic. But when it comes
Speaker 1: to choosing those partners, does it make a difference who
Speaker 1: they are and what sort of facilities they have like
Speaker 1: Samson for example, full Stock memory founder, advanced packaging.
Speaker 5: Yeah, I mean all of those things matter.
Speaker 4: I mean, look, we all know there's only a couple
Speaker 4: of places they can go, Right, You're gonna go to TSMC,
Speaker 4: You're gonna go to.
Speaker 5: Samsung, and maybe you'll go to Intel.
Speaker 4: But really, I mean, there's not a whole lot of
Speaker 4: choices when we're talking, you know, the most advanced silicon.
Speaker 4: So look, it's a great win if Samsung gets this.
Speaker 4: We've seen some other companies showing interest in getting access
Speaker 4: to Samsung. Part of it is because TSMC is completely
Speaker 4: sold out, right, I mean, so look, you've got to
Speaker 4: go where there's availability.
Speaker 5: To manufacture these chips.
Speaker 4: So that's all part of the game as well, is
Speaker 4: just figuring out where that capacity is available.
Speaker 1: But then again, you can make your own, right, You
Speaker 1: have the likes of these hyperscalers now coming up with
Speaker 1: custom chips. So is this eventually a threat down the
Speaker 1: line when it comes to a few years from now.
Speaker 4: Well no, but I mean again, all of those guys,
Speaker 4: all the hyperscalers, again, they're doing the same thing that
Speaker 4: anthropics trying to do that met has talked about doing.
Speaker 4: Everybody is again looking at how can I do my
Speaker 4: own custom silicon to allow me to do these different
Speaker 4: types of workloads more efficiently, and everybody has different ideas
Speaker 4: on the way to approach it. But again, when it
Speaker 4: comes to the actual manufacturing, they don't have a lot
Speaker 4: of choice.
Speaker 1: Okay, so you mentioned Meta, we are also hearing that
Speaker 1: they want to sell AI computing capacity, the same thing
Speaker 1: that Softbak seems to be doing or Xai. Why is
Speaker 1: this important for them and does that give you sort
Speaker 1: of a picture of the capacity and the need to
Speaker 1: start monetizing at this point?
Speaker 4: Yeah, I mean what's interesting with the Meta news is
Speaker 4: it shows the fact that AI compute supply and demand
Speaker 4: are completely out of whack. Some people have more than
Speaker 4: they need and a lot of people have less than
Speaker 4: they need, and so it's all about kind of trying
Speaker 4: to balance that out. Meta made a bunch of early
Speaker 4: bets to get as much capacity as they could, and
Speaker 4: it turns out that they're not using all of that capacity.
Speaker 4: So they think, all right, we can be kind of
Speaker 4: like a neocloud, just like Xai did last week, and
Speaker 4: say we're going to sell some of that excess capacity.
Speaker 4: And there are plenty of people willing to do it,
Speaker 4: and in point of fact, it's proving to be.
Speaker 5: A very profitable business model.
Speaker 4: Now there are questions longer term, like is this something
Speaker 4: they're just doing to kind of spice up the stock
Speaker 4: for a year or two That could be the case,
Speaker 4: but Meta does have a lot of capacity also being built,
Speaker 4: so they're looking ahead and saying, Okay, we think we're
Speaker 4: going to need this, and we know we're going to
Speaker 4: have this much capacity, So it looks like we've got
Speaker 4: a little bit left and the market seems to react
Speaker 4: very favorably to selling this stuff. We can make really
Speaker 4: great margins with it, so why.
Speaker 1: Not I mean great for the big guys. What happens
Speaker 1: to the smaller guys? Right, we're talking about core wave
Speaker 1: anebias as well. I mean, are we going to see
Speaker 1: this stack in divergence of winners and losers?
Speaker 4: Well, it's a great question, but I look, I still
Speaker 4: see think overall, I said, the supply and demand rod
Speaker 4: of wack. But overall, if you look at the picture,
Speaker 4: based on all the data that I can see, demand
Speaker 4: is still significantly higher than supply. So it's just a
Speaker 4: question of how people are.
Speaker 5: Moving these things around.
Speaker 4: I think certainly in the near term there's still plenty
Speaker 4: of opportunity for the core weaves and the other neoclouds
Speaker 4: that are out there, because again people are looking for capacity. Also,
Speaker 4: remember there are hundreds thousands of different companies looking for
Speaker 4: compute resources it may be that you see the core
Speaker 4: weaves and the other neoclouds focus on say smaller vendors
Speaker 4: or more specialized types of applications, and the metas only
Speaker 4: sell to one or two people a couple of the
Speaker 4: big guys right some of their coopetitions. So I think
Speaker 4: you're going to see a lot of diversity in who
Speaker 4: sells to whom, and that still gives plenty of opportunity
Speaker 4: because again, fundamentally, there's still plenty of room for people
Speaker 4: to grow, which is why, by the way, I didn't
Speaker 4: get to it, but Nvidia, I think still has plenty
Speaker 4: of room to grow even with all this competition because
Speaker 4: of the overall demand just raises all boats.
Speaker 1: Well, then before we let you go, I mean, how
Speaker 1: bad is the memory shortage? Right now, we're hearing that
Speaker 1: Apple is considered in Chinese suppliers that are on a
Speaker 1: black list from the Pentagon.
Speaker 5: Yeah.
Speaker 4: Well, the Apple thing is interesting because what Apple said is, look,
Speaker 4: we want to use the Chinese memory suppliers for all
Speaker 4: the products we ship into China, which you know makes
Speaker 4: logical sense. I mean, Apple needs a ton of memory,
Speaker 4: and if they can use all the existing memory they
Speaker 4: have for the US and Europe and other markets, and
Speaker 4: then get access to Chinese memory for the China market,
Speaker 4: that tremendously relieves you know, the challenges that they're facing.
Speaker 4: I mean, we already saw the big price increases. I
Speaker 4: don't think those things are going to go away. I
Speaker 4: think that's basically where the world is going to be.
Speaker 4: And my expectation is when the new iPhones come out,
Speaker 4: they may not raise the current iPhone price. When the
Speaker 4: new ones come out, they're going to be at a
Speaker 4: higher price point because of how bad the memory crunch
Speaker 4: is for everybody, including Apple.
Speaker 2: That was Bob o'donald, President and chief analyst at Tech
Speaker 2: Analysis Research, speaking with Bloomberg TV host Sherry on bringing
Speaker 2: you their conversation here on the Daybreak Asia Podcast. Thanks
Speaker 2: for listening to today's episode of the Bloomberg Daybreak Asia
Speaker 2: Edition podcast. Each weekday, we look at the story shaping markets, finance,
Speaker 2: and geopolitics in the Asia Pacific. You can find us
Speaker 2: on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere
Speaker 2: else you listen. Join us again tomorrow for insight on
Speaker 2: the market moves from Hong Kong to Singapore and Australia.
Speaker 2: I'm Doug Chrisner, and this is Bloomberg.