Speaker 1: From Marhart where Innovation, Money and power Collie in Silicon
Speaker 1: Vallet NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 3: I'm Ed Ludlow in San Francisco. Caroline hides off today.
Speaker 3: This is Bloomberg Technology coming up on the program. Qualcom
Speaker 3: and Apple extend their semiconductor agreement for three more years
Speaker 3: in a sign Apple's in house chips are taking longer
Speaker 3: than expected. Will bring you the details and Ali Baba's
Speaker 3: former chief Daniel Jang leaving the company's cloud division just
Speaker 3: months after agreeing to lead it. We'll have more on
Speaker 3: the leadership changes and uncertainty facing the company as it
Speaker 3: navigates a complicated breakup. Plus we'll talk initial public offerings
Speaker 3: as Instacart kicks off its IPO row show and the
Speaker 3: company seeks evaluation. That's a big drop from its pandemic heyday.
Speaker 3: We'll have that and so much more throughout the hour.
Speaker 3: Let's get straight to our top story, Apple and Quawcom.
Speaker 3: This is about modems that go into the iPhone, connecting
Speaker 3: them to the high speed five G networks. You can
Speaker 3: see both shares. This is boosting Qualcomm up three point
Speaker 3: five percent. Remember Bloomberg Is reported that Apple has been
Speaker 3: working on its own in house modem. Twenty four hours
Speaker 3: from now, Apple will unveil its iPhone fifteen. The expectation
Speaker 3: was that that would be the last generation to use
Speaker 3: Qualcomm's modem. Not the case, according to the agreement which
Speaker 3: was announced this morning. For more, let's bring in Bloomberg's
Speaker 3: Ian King on all Things Chips and Mark German, who
Speaker 3: covers Apple. Ian will start with you. This was a surprise.
Speaker 3: What are the terms of the agreement as we understand.
Speaker 4: It, Yeah, I mean they didn't give the precise details.
Speaker 4: What they said was, look, it's the same as the
Speaker 4: agreement that we have in place, and in terms of timing,
Speaker 4: that's out until the twenty twenty six model and basically
Speaker 4: same again, right, same deal that they signed in twenty nineteen,
Speaker 4: except it's going three years longer than it was supposed to.
Speaker 3: Let's go to the basics. What is it that Qualcom
Speaker 3: makes for smartphones and in particular Apple.
Speaker 4: Well, it's in particular Apple is the key here. This
Speaker 4: is the modem. This is the chip that takes that
Speaker 4: cellular radio signal, turns it into data, turns it into
Speaker 4: a voice, and it's a crucial, crucial component that determines
Speaker 4: just how well your phone works.
Speaker 3: Gumman, let's bring you into the conversation. You have reported
Speaker 3: that Apple was developing its own modem in house. The
Speaker 3: story here seems to be that Apple's not as far
Speaker 3: along as they'd expected.
Speaker 5: They're certainly not as far along as they expected when
Speaker 5: they set out to build a modem in twenty eighteen.
Speaker 5: They were hoping to get that chip into phones beginning
Speaker 5: around twenty twenty two. That got delayed a bit through
Speaker 5: twenty twenty three, right, And you can see that in
Speaker 5: the supply agreement they reach it qualcommon twenty nineteen is
Speaker 5: part of that royalty lawsuit settlement. But the anticipation was
Speaker 5: to begin getting that modem in flagship iPhones by the
Speaker 5: end of this year or early next year.
Speaker 6: And my anticipation is they'll still be able.
Speaker 5: To begin rolling out that modem, probably at the beginning
Speaker 5: of twenty twenty five, not the tail end at twenty
Speaker 5: twenty five, and they wanted to give themselves a little
Speaker 5: bit of leeway agreeing through twenty twenty six.
Speaker 6: Now you have to.
Speaker 5: Look at Apple and how many devices they have. They
Speaker 5: have several skews of the iPhone, they have many skews
Speaker 5: of the iPad, they have the Apple Watch as well,
Speaker 5: and they need to get their own modem to work
Speaker 5: in all of those different devices and also have them
Speaker 5: certified to work across the world on hundreds of different
Speaker 5: carriers in hundreds of different countries, and they have to
Speaker 5: deal with the biocracy of that as well, the testing
Speaker 5: the different conditions. They have to have the chipwork on
Speaker 5: three G, four G, and five G, and that's not
Speaker 5: something they can do in one full swop. So my
Speaker 5: belief is they'll begin the transition with one or two
Speaker 5: model in twenty twenty five and gradually expand that to
Speaker 5: more models across twenty twenty six and into twenty twenty seven.
Speaker 3: Mark I and bear with me. This is what Qualcom
Speaker 3: said this morning in their statement. This agreement reinforces Qualcom's
Speaker 3: track record of sustained leadership across five D technologies and products,
Speaker 3: and as Ian outlined the deal carries through in the
Speaker 3: twenty twenty six generation of iPhone, And as Mark, you
Speaker 3: just outlined you think that this will be phased with Apple.
Speaker 3: Where does the modem sit within Apple's other activities in
Speaker 3: silicon Because actually I think what we expect in twenty
Speaker 3: four hours time is more proprietary silicon from Apple going
Speaker 3: into the latest handsets.
Speaker 5: Yeah, it's just one leg of the stool, right Apple's
Speaker 5: Harvard Technologies organization, the modem is a high priority component there.
Speaker 5: They have offices in San Diego, Cooper Tino, multiple places
Speaker 5: in Europe, including in Munich, Germany, working on this modem.
Speaker 5: They have thousands people on the effort. The person in
Speaker 5: charge of the modem is actually a former Qualcom vice
Speaker 5: president who left about half a decade ago to come
Speaker 5: to Apple to work on this project. Johnny Strugi, who
Speaker 5: is Apple Senior vice president of Harvard Technology who oversees
Speaker 5: all the custom silicon. There's a special place in his
Speaker 5: heart against Qualcomm, and so certainly this is a very
Speaker 5: important effort for Apple. They want to design Qualcom out
Speaker 5: of all of their products. They've been working on this extensively.
Speaker 5: They've run into battery life issues in terms of where
Speaker 5: it sits in the overall organization. They have their Mac chips,
Speaker 5: and then tomorrow they'll announce one new chip, the A
Speaker 5: seventeen processor that's going to be the company's first three
Speaker 5: and nanimeter chip. That's a major milestone for the company.
Speaker 5: There's also going to be a new wireless component that's
Speaker 5: less significant, but certainly the A seventeen chip will be
Speaker 5: one of the core elements of the iPhone fifteen pro
Speaker 5: and Promac's announcement on Tuesday.
Speaker 3: Shares up three and a half percent, on track for
Speaker 3: the biggest jumps since July. Earlier in the session, on
Speaker 3: track for the biggest jumps since May. And it's spare
Speaker 3: a thought for Qualcomm and what it means for them.
Speaker 3: You know, I said that this was a surprise, knowing
Speaker 3: that Apple was working on its own mode. But this
Speaker 3: is good news for Qualcomm.
Speaker 7: Yeah.
Speaker 4: I mean, you look at the analyst notes this morning
Speaker 4: and they're saying this is like seven billion dollars of
Speaker 4: good news for Qualcom had an analyst day last November
Speaker 4: where they said, look, just take out the Apple numbers
Speaker 4: going forward, take them out, act like we don't have
Speaker 4: that business anymore, and they still do, so clearly that's
Speaker 4: a part on the back for their abilities. This is
Speaker 4: a very difficult thing. As Mark just explained, It's not
Speaker 4: just a case of hey, design a nice piece of silicon.
Speaker 4: You know, there's a lot of software tuning. A lot
Speaker 4: of work, a lot of insider knowledge that goes into that,
Speaker 4: and the fact that a company with the resources of
Speaker 4: Apple cannot replicate that effort in a timeline that they
Speaker 4: had set for themselves tells you that Qualcom is doing
Speaker 4: a good job, all.
Speaker 3: Right, Bloomberg, Smart German on Apple, Ian King on Qualcom.
Speaker 3: Thank you. And speaking of those analyst notes, let's bring
Speaker 3: in Jordan Klein, managing director b Zoo's Securities. In a
Speaker 3: note out today, client wrote, the news is a best
Speaker 3: case scenario for Qualcom, as some thought maybe Apple would
Speaker 3: only do a one year supply deal and then move
Speaker 3: on to their own chips. Mark German just explain that.
Speaker 3: So how do you see it, Jordan, the transition using
Speaker 3: Qualcom's modem to using Apple's own proprietary silicon based on
Speaker 3: the deal announced today.
Speaker 2: Well, thanks for having me. I mean, I agree with
Speaker 2: your host as kind of what they said that Apple's
Speaker 2: been working on this for years. It's taking them longer.
Speaker 8: You know.
Speaker 2: We think they're going to gradually migrate over to their
Speaker 2: own custom base ban it's going to take them, you
Speaker 2: know again, probably at the earliest till twenty twenty five,
Speaker 2: you know, we think it could be their lower end
Speaker 2: SC four that could start using their own baseman, and
Speaker 2: then they would gradually shift to other models in the
Speaker 2: lineup in twenty twenty six, so you know, but it's
Speaker 2: three years some time, and in the meantime, you know,
Speaker 2: Qualcomm kind of sustains its leadership position and gets the
Speaker 2: added revenue and earnings that they would have lost starting
Speaker 2: next year.
Speaker 3: Jordan, I spent all of twenty twenty one and all
Speaker 3: of twenty twenty two talking about the five G supercycle. Unbelievably,
Speaker 3: my mind's already going to six G, and I just
Speaker 3: wondered if you could talk us through how you see
Speaker 3: Qualcom as positioned, if we're all going to move on
Speaker 3: to six G and the relationship with Apple in the future.
Speaker 2: Well, it's a great question. I mean, again, like I said,
Speaker 2: Qualcomm is viewed as the best company and mobile technology,
Speaker 2: and there's a reason for that. They've been doing it
Speaker 2: longer than anyone. But if you ask the company about
Speaker 2: six G and people have on their earnings calls, I mean,
Speaker 2: they don't even really think it's going to be an
Speaker 2: impact until the end of the decade.
Speaker 1: So you know, at the.
Speaker 2: Earliest you're talking five six years away. It's going to
Speaker 2: take a long time for that to evolve. So I
Speaker 2: think right now their focus is broadening their revenue base,
Speaker 2: moving beyond mobile. I mean, there's a reason that that
Speaker 2: Investor day a year ago they told the Wall Street
Speaker 2: community to kind of take this Apple business out of
Speaker 2: their revenues. I think that they wanted to move beyond Apple.
Speaker 2: They want to go into automotive, IoT, other areas of
Speaker 2: the market, even PC computing, where they can diversify beyond mobile.
Speaker 2: So look, it's going to be really big for them
Speaker 2: when the industry is finally ready to go to six G.
Speaker 2: But to be honest, I think we've got multiple years
Speaker 2: be it between then and now before it will really
Speaker 2: matter for the Stocker investors.
Speaker 3: I've spoken to Christiano I'm on so many times about
Speaker 3: this move towards automotive. Indeed, actually the importance of on
Speaker 3: device running of LMS. You know, it's another area for Qualcom.
Speaker 3: Can they maintaintain technology leadership the smartphone modem at the
Speaker 3: same time is trying to move and throw these other
Speaker 3: areas well.
Speaker 1: I definitely think they can.
Speaker 2: I think that they make so much profit and money
Speaker 2: from the basepan and the modem business. And really, when
Speaker 2: you think about it, I mean they're licensing businesses almost
Speaker 2: one hundred percent margins. It's it's basically a license to
Speaker 2: print money, and they take a lot of that and
Speaker 2: they use that to develop new areas of silicon new technologies.
Speaker 2: And they're out there talking, you know, a big game
Speaker 2: about how generative AI is going to move from in
Speaker 2: the cloud and these large big data centers towards the
Speaker 2: end user device, and that's where they think they'll have
Speaker 2: an edge because of their advantage in mobile processing units,
Speaker 2: where they're also a leader. So I think again, the
Speaker 2: time's going to tell if users are going to, you know,
Speaker 2: upgrade their phones to a more powerful mobile processor where
Speaker 2: they think they can get advantages doing AI on their device.
Speaker 3: Jordan, of the universe of chick names that you're covering,
Speaker 3: who do you see as best position to take advantage?
Speaker 3: I suppose if the CAPEX and R and D commitments
Speaker 3: right now that are going into how technology companies of
Speaker 3: all sizes use AI within their core businesses, well.
Speaker 2: I think first and foremost that conversation or that answer
Speaker 2: has to start within Nvidia. I mean, there's a reason
Speaker 2: it's almost doubled this year because they're just dominating the
Speaker 2: shift in terms of processing from CPUs traditional server chips
Speaker 2: towards global graphics processors which are much higher power, much
Speaker 2: more energy efficient. So I think you start within VIDIA,
Speaker 2: that again has a big advantage in a lead over
Speaker 2: their competitors. But I think as we go into twenty
Speaker 2: twenty four, companies like AMD clearly are going to be
Speaker 2: in the mix. Marvel and Broadcom are also big contributors,
Speaker 2: are contributing to this AI investment thesis, and then I
Speaker 2: wouldn't count out TELL and I would also look to
Speaker 2: these memory companies like micround because you're going to need
Speaker 2: a lot of memory to run these systems.
Speaker 3: Jordan Klein and Massoua Goods catch up and have you
Speaker 3: here on Bloomberg Technology. Thank you, Okay, So this is
Speaker 3: the market story. US majors trading in the green today
Speaker 3: the S and P five hundred near it's forty five
Speaker 3: hundred level. The story has been outperformance in the session
Speaker 3: of Technology. We get the CPI print Wednesday. In the
Speaker 3: last seven days, a new story snuck in which is
Speaker 3: concerns about China US China tensions, but also what's happening
Speaker 3: with the technology sector in China, remember then, as that
Speaker 3: one hundred is up more than forty percent year today,
Speaker 3: why probably artificial intelligence. Let's tie this all together and
Speaker 3: bring in Linda Dousol federated Herme's senior ecuity strategists. That's
Speaker 3: a tough thing to ask, Linda, but right now from
Speaker 3: a technology sector perspective, what is driving these markets?
Speaker 9: Well, I think you made the important point, which is
Speaker 9: that artificial intelligency AI craze isn't really a craze. It's
Speaker 9: a revolution. And as your previous guests discussed in depth,
Speaker 9: you know whether or not we peeked out in our
Speaker 9: use of chat GPT for the moment, lots of companies
Speaker 9: out there are building for what is going to be
Speaker 9: a great productivity and handswer So it's very exciting. It's
Speaker 9: moved the market this year to date, and of course
Speaker 9: it's had a nice little correction as well into now
Speaker 9: so steadily now we look at it again and say
Speaker 9: maybe it's time to get back in, and then we
Speaker 9: trade down semiconductors.
Speaker 3: Linda is an equity strategist. Even if you're taking a
Speaker 3: macro view, how has artificial intelligence changed the data points
Speaker 3: that you look at. You know, we'll talk about the
Speaker 3: FED and CPI in a minute, but I just wondered
Speaker 3: if you've changed your approach the commentary you look at
Speaker 3: where you look for information to try and understand what
Speaker 3: AI is doing.
Speaker 9: Well, Well, you know, I appreciate that question because just
Speaker 9: as a general equity strategist, may it behooves us all
Speaker 9: to learn about AI and how quickly it might come
Speaker 9: and change our lives. So I guess the bottom line
Speaker 9: for any general anybody who's looking at stocks is is
Speaker 9: the company that you're looking at grasping this or are
Speaker 9: they turning a blind eye.
Speaker 6: To it and expecting it to go away?
Speaker 9: Those who are investing in this even you know, looking
Speaker 9: for companies that are hiring for AI talent is one
Speaker 9: very interesting way to look for stocks out there, and
Speaker 9: the productivity enhancement that should be expected over the next
Speaker 9: ten years can come a lot quicker than many people think,
Speaker 9: and that's obviously going to show its way through earnings.
Speaker 3: Linda, is there any specific sub sector or area where
Speaker 3: you see most potential upside from investments into whether it's
Speaker 3: accelerated computing or into large language models. The underlying technology
Speaker 3: behind generative AI you.
Speaker 6: Know, that's a very interesting question.
Speaker 9: Is going to probably cross through all sectors of the economy.
Speaker 6: But when you look at really there's two areas of it.
Speaker 9: The information part of it, those jobs that are highly
Speaker 9: information oriented that can be at first helped buy AI,
Speaker 9: and then maybe see jobs displaced by AI over years
Speaker 9: going forward.
Speaker 6: So that'll be some of the.
Speaker 9: More highly paid, highly compensated areas out there. I don't know,
Speaker 9: if you're a lawyer, maybe you need to watch out
Speaker 9: here that type of a thing. And then on the
Speaker 9: lower end of the spectrum, you'll see cost cutting in
Speaker 9: terms of labor in areas that are heavily labor intensive
Speaker 9: but that are repetitive, and that goes to the robotics
Speaker 9: side of things. Your retail sales clerks, you know, are
Speaker 9: in big, big trouble. I think if I was looking
Speaker 9: to give advice to a young student, I'd say, you know,
Speaker 9: you might want to go ahead and be a nurse
Speaker 9: instead of thinking about going to work at the mall.
Speaker 6: For example.
Speaker 3: I am not a lawyer. I did go to law
Speaker 3: school blenda, but I know numbers start out here in
Speaker 3: the Bay Area. They're looking to use AI for the
Speaker 3: review of legal documents. I think we better also talk
Speaker 3: about China. You know, the story about China is that
Speaker 3: is kind of the tension between the US and China's
Speaker 3: central government. But Ai is at the heart of that.
Speaker 3: And I just wondered how you see the latest headlines
Speaker 3: from China impacting this market.
Speaker 9: Well, China in general as a place to invest is
Speaker 9: something that people are ever more afraid of for numerous reasons,
Speaker 9: and this is just one extra thing to add to that.
Speaker 6: We want to be self.
Speaker 9: Sufficient here and move lots of production here to the
Speaker 9: United States, and I think other countries around the world
Speaker 9: the same.
Speaker 6: This is going to take a lot longer than many think.
Speaker 9: Not being anew at this at all, but seems very
Speaker 9: clear that we as the United States and our leadership
Speaker 9: may want to try to tamp down those concerns. And
Speaker 9: as you know, some of the best actually have the
Speaker 9: best money being spent in capital expenditures in the manufacturing
Speaker 9: side is because of things like the chip back where
Speaker 9: money's coming from our government to help get more self
Speaker 9: sufficient here in the United States.
Speaker 6: So we can try to.
Speaker 9: Wean away from China in this way, but it will
Speaker 9: be longer. It'll take longer than many think and you know,
Speaker 9: just bringing everything back short and we'll probably take longer
Speaker 9: than many think.
Speaker 3: Linda's CPI Wednesday. Where is your head out with the
Speaker 3: FED and what that means for the tech sector.
Speaker 9: Well, we had Federated Hermes believe that you will see
Speaker 9: probably one more height this year, maybe it's November. Maybe
Speaker 9: they wait one more time, and that is something that's
Speaker 9: probably reasonably expected. You know, in the tech sector, the
Speaker 9: tech sector, that's a long duration asset and you really
Speaker 9: want to see you really don't want to see real
Speaker 9: rates going up, and they've gone up fairly quickly here
Speaker 9: as versus inflation expectations. If we're right about inflation expectations,
Speaker 9: they're coming down, then FED please stop raising rates. It
Speaker 9: just makes it more dangerous or vulnerable for these for
Speaker 9: these stocks that are long duration like tech.
Speaker 3: Linda Dousol's senior equity strategists over at Federated Hermes, Good
Speaker 3: to see you coming up here on bloombo Technology, Ali
Speaker 3: Barber's former chief Daniel Jang quits more in the details. Next,
Speaker 3: this is Bloombow Technology. Time for talking tech. First up,
Speaker 3: India's ed Tech Titan by Jew's made the surprise repayment
Speaker 3: proposal to lenders almost a year of conflict over its debts.
Speaker 3: Sources say the firm is now offering to pay back
Speaker 3: its entire one point two billion term loan in less
Speaker 3: than six months. And Intel Sat, the world's biggest geostationary
Speaker 3: satellite operator, trying to get a foothold in a technology
Speaker 3: that's gained traction in recent years, low Earth orbit satellites.
Speaker 3: The company has taken stakes between five million and twenty
Speaker 3: five million dollars in four businesses focused on low Earth
Speaker 3: orbit to off for new services. Plus, Ali Baba's former chief,
Speaker 3: Daniel Jang has decided to quit just months after agreeing
Speaker 3: to lead the company's cloud division and introducing a new
Speaker 3: layer of uncertainty to China's largest e commerce company just
Speaker 3: as it's navigating a complicated breakout. Let's bring in Bloomberg's
Speaker 3: Isabel Lee out in New York for more. What does this.
Speaker 1: Mean, Haiyan?
Speaker 10: Actually, this was really a surprise to many. It comes
Speaker 10: after two months after his appointment. We have Goldman Sachs
Speaker 10: saying it's a surprise, Bloombery intelligencying that this will likely
Speaker 10: mean that the new partners will have more of an
Speaker 10: influence in the strategic cloud decisions of Ali Baba and
Speaker 10: Bloomberg just last Monday reported that Ali Baba was in
Speaker 10: talks to raise funds from China state owned entities. So
Speaker 10: the departure really caused some people to raise some eyebrows.
Speaker 10: And this comes after an eight year storied career for Zang.
Speaker 10: But not to worry, he will still be in the
Speaker 10: Ali Baba's ecosystem. He'll be running the one billion tech
Speaker 10: fund of the firm. But still the reshuffle comes as
Speaker 10: Alibaba navigates this complicated and historic breakup into meaning Baby Baba's.
Speaker 10: We've discussed a lot in your show, but now I
Speaker 10: guess the certainty is really getting to the investors. Ali
Speaker 10: baba shares fell as much as three and a half percent.
Speaker 10: That's their biggest fall in something like three weeks.
Speaker 3: You know. Josi is like more of a known quantity
Speaker 3: to us here in the United States, at least. He's
Speaker 3: one of the co founders of Ali Barba alongside Jack Maher.
Speaker 3: But tell us about the two new guys not necessarily new,
Speaker 3: but newer names to an international audience.
Speaker 10: So Zen gave up his dual roles of CEO and
Speaker 10: chairman to Eddie Wu and to Joseph Taie, so the
Speaker 10: two are close confidence of MA. Let's go with Eddie
Speaker 10: Woo first. So Eddie Wu is lesser known, but he
Speaker 10: has been with me since the beginning, and he's a
Speaker 10: computer science major. He's credited for the development of the paper.
Speaker 10: Like Ali Pai, we have Taie. He's a well known
Speaker 10: deal maker, and he's a Yale alumnus, and he's a
Speaker 10: former lacrosse player, if that's of any significance, and he's
Speaker 10: the owner of Brooklyn Nets. And like Wo, he was
Speaker 10: with MA since the very beginning. So that probably tells
Speaker 10: you that MA probably really values loyalty. But this means
Speaker 10: that the two of them will be responsible for steering
Speaker 10: a two hundred and thirty billion dollar company around after
Speaker 10: years of struggling since twenty two and one when China
Speaker 10: really cracked down at the tech sector. So this is
Speaker 10: going to be an interesting space to watch. It's very much,
Speaker 10: it's new, it's unexpected, and it's in the middle of
Speaker 10: a huge historic reshuffle.
Speaker 3: All right, bloombergs Isabelle Lee with the lowdown on Ali Baba.
Speaker 3: Welcome back to Bloomberg Technology, Ed love Loo here in
Speaker 3: San Francisco quick check on the markets. This is the
Speaker 3: picture with the nazet one hundred up seven tens of
Speaker 3: one percent outperformance in the technology sector. We get CPI
Speaker 3: data Wednesday, and as we heard from guests in this hour,
Speaker 3: a big view to forming how we feel about the
Speaker 3: FED based on that data print. But we're coming off
Speaker 3: a one point four percent drop on a weekly basis
Speaker 3: on the NASDAC last week. There were being concerns about China.
Speaker 3: We're through the bulk of earning season. It will come
Speaker 3: around again from a points perspective. One of the big
Speaker 3: stories in the session is Tesla basically on track for
Speaker 3: its biggest jump since the end of January. Morgan Stanley
Speaker 3: out with a note raising their racing on the stock
Speaker 3: to overweight from equal weight, adding a street high price
Speaker 3: target four hundred dollars. Adam Jonas and co. Are basically saying,
Speaker 3: look at Dojo, Tesla's supercomputer and their work in semiconductors.
Speaker 3: This is going to add five hundred billion or up
Speaker 3: to five hundred billion dollars in market cap. And they
Speaker 3: basically say this is like an AWS moment for Tesla,
Speaker 3: like Amazon was able to enter new markets like cloud
Speaker 3: computing with AWS. They see that opportunity for Tesla. Remember
Speaker 3: go back to twenty fifteen, Adam Jonas first onto the
Speaker 3: scene with a seventy percent raise of his price target
Speaker 3: on Tesla because he saw the future being in robotaxis.
Speaker 3: Present day twenty twenty three not quite there, but it's
Speaker 3: an interesting call nonetheless, and it's having a pretty big
Speaker 3: impact on markets this Monday, right stories. Supercomputers are not
Speaker 3: the only type of technology with growing commercial appeal. Enter
Speaker 3: quantum computing an entirely separate kind of technology with the
Speaker 3: capability to accelerate various sectors in society. I'm really excited
Speaker 3: to say that joining us now to walk through this
Speaker 3: tech wave is d Wave CEO Alan Barrats. It's one
Speaker 3: of the first commercial quantum computing companies in the world.
Speaker 3: And Alan, I would say that's a good place to start.
Speaker 3: This misconception that quantum computing is still at the theoretical stage.
Speaker 3: It's not out there in the real world. That is
Speaker 3: a point of view that you would disagree.
Speaker 1: With absolutely, And first of all, thank you for the
Speaker 1: opportunity to be here today. I'm really excited to be
Speaker 1: able to speak with you.
Speaker 8: So you're absolutely right.
Speaker 1: Most people in the industry are saying that quantum computing
Speaker 1: is years away from commercial reality. But in DWave, we
Speaker 1: took a very different approach to quantum computing. When it
Speaker 1: has allowed us to deliver for commercial quantum computers today.
Speaker 1: In fact, we've been delivering them for almost two years now.
Speaker 1: We have over sixty commercial customers that are leveraging our
Speaker 1: quantum computer to see improved performance in a broad array
Speaker 1: of business applications.
Speaker 3: And I'm going to play Devil's advocate for a minute.
Speaker 3: You've sixty commercial customers, you've been delivering computers. I look
Speaker 3: at your revenues and they are low. If quantum computing
Speaker 3: is in the real world, why are you not booking
Speaker 3: more sales as a real commercial product.
Speaker 1: Sure, so, first of all, commercial quantum computing is still early.
Speaker 1: In other words, even we were not commercial until a
Speaker 1: little over a year ago. So we've achieved that milestone
Speaker 1: and we are now getting started building the business. We
Speaker 1: have seen our bookings accelerate quarter over quarter for five
Speaker 1: quarters now. We have seen our average deal size grow
Speaker 1: significantly from tens of thousands of dollars to well into
Speaker 1: the hundreds of thousands of dollars. And we are supporting
Speaker 1: applications as far ranging as employee scheduling, e commerce delivery,
Speaker 1: customer loyalty, rewards optimization, optimization of marketing campaigns, even improving
Speaker 1: the performance of shipping forts. So it is early days,
Speaker 1: but we're off to a great start and we're really
Speaker 1: excited about the prospects for the future.
Speaker 3: Alan the basics of quantum computers, if one can say
Speaker 3: such a thing, is that they use quantum mechanics to
Speaker 3: carry out calculations as opposed to sort of high efficiency
Speaker 3: than supercomputers. What is it about d Wave that is proprietary?
Speaker 3: What is it that's unique about your technology?
Speaker 1: Yeah, So, as I mentioned earlier, we've taken a different
Speaker 1: approach to quantum computing from everybody else in the industry,
Speaker 1: and in fact, we're the only company in the world
Speaker 1: that pursues quantum computing in the way we do with
Speaker 1: the technology that we have developed. And we've developed that
Speaker 1: technology entirely ourselves, everything from the design to the manufacturing
Speaker 1: of the quantum computers, to the software for programming the systems,
Speaker 1: all the way up through the Quantum Cloud service, which
Speaker 1: is the vehicle by which our customers access our quantum computers.
Speaker 1: We've designed, we've developed, we delivered that ourselves, and we
Speaker 1: have extensive patent coverage for all of that technology. We
Speaker 1: have over two hundred US granted patterns and over one
Speaker 1: hundred in process worldwide. That space for quantum computing is owned.
Speaker 3: By d Waves And a few weeks ago we had
Speaker 3: a company called Phasecraft from the UK on the program
Speaker 3: talking about their work in quantum algorithms and quantum computing,
Speaker 3: and one of the observations made by that founder was
Speaker 3: that China is making progress in the field of quantum computing,
Speaker 3: but that it is a cooperative initiative globally for those
Speaker 3: in the field. Could you speak to how you view
Speaker 3: China's progress in quantum computing because as you as you know,
Speaker 3: you know China right now and its access to technology
Speaker 3: is a mainstay of the news cycle.
Speaker 1: Yeah, you're absolutely right, and in fact this is a
Speaker 1: real concern. China is investing over fifteen billion dollars in
Speaker 1: quantum computing. I was in Europe last week, actually I
Speaker 1: was in the UK, Switzerland, Germany. They're all investing heavily
Speaker 1: in quantum computing. The UK over four billion in quantum Unfortunately,
Speaker 1: the US is currently investing less than four billion in
Speaker 1: quantum computing. In some sense, we're a laggard in this space,
Speaker 1: and we absolutely must get our act together because this
Speaker 1: technology is going to fundamentally transform the way businesses operate
Speaker 1: and they have a huge impact on the social and
Speaker 1: the economic environment, and the US must accelerate its investment
Speaker 1: in this area.
Speaker 3: All right, Alan barrat CEO of d Way, thank you
Speaker 3: for joining us here on Bloomberg Technology, all things quantum computing,
Speaker 3: saying that word more and more. Now coming up, tech
Speaker 3: Starle CEO Male Gave joins us to talk about the
Speaker 3: outlook for the early stage funding ecosystem. They're changing how
Speaker 3: they do their accelerator program. Want to understand why that's
Speaker 3: coming up next? This is Bloomberg Technology, all right, it
Speaker 3: is a big week ahead for IPOs in the technology sector.
Speaker 3: Let's kick it over to New York City where who
Speaker 3: else Bloomberg Shnali Bassek has all the latest sale.
Speaker 7: It certainly is a big week. We're going to zoom
Speaker 7: in on Instacart because it's setting the stage for an
Speaker 7: ib that could value it at up ten nine point
Speaker 7: three billion dollars. But here's the thing that is less
Speaker 7: than a quarter of what it was worth at the
Speaker 7: height of the pandemic. Let's bring in Bloomberg's Katie Roof
Speaker 7: to break it down, because Katie, we were looking at
Speaker 7: this Instacart ipo and it is not the only one
Speaker 7: that might be facing a down round.
Speaker 11: Sure, so, you know, Instacart was well aware that the
Speaker 11: market conditions have affected its valuation. They had lowered their
Speaker 11: own internal valuation, which is the four and nine A
Speaker 11: valuation to thirteen billion last year due to market conditions
Speaker 11: and possibly due to their own slowed growth. But you know,
Speaker 11: some people are saying that bankers may be trying to
Speaker 11: price these things conservatively in order it to ensure a
Speaker 11: pop so that it's well received in the market and
Speaker 11: therefore opens the window for additional IPOs well.
Speaker 7: Another example of this would be, for example, klavy out,
Speaker 7: which even with a valuation that's close search where it
Speaker 7: was last in private rounds, it is still lower. But
Speaker 7: they are bringing in some interesting massive names at the beginning, Blackrock, Alliance, Bernstein.
Speaker 7: What does this say about the model to taking companies public?
Speaker 6: Now?
Speaker 1: Sure?
Speaker 11: And so I think at this point most people in
Speaker 11: the tech industry are no longer in denial the market
Speaker 11: has been in a correction for over a year now,
Speaker 11: and so companies, you know, are aware, especially if they're
Speaker 11: coming to market, that it's not going to look like
Speaker 11: twenty twenty one. And so it looks like a lot
Speaker 11: of them are accepting that. But you know, we'll see.
Speaker 6: I mean with.
Speaker 11: Klavo especially, they're so close to where their last valuation
Speaker 11: was from last year that you know, they may end
Speaker 11: up being a nine billion dollar company or more if
Speaker 11: they do pop on that first day.
Speaker 7: Now, when you think about instacart, Sequoia D one are
Speaker 7: among the largest investors. Tiger Global Co Two two very
Speaker 7: well known Tiger cubs that have been investing in these
Speaker 7: ipo these hot pipo companies. How important is this instacart
Speaker 7: listening to them?
Speaker 11: Well, they're going to make a lot of money regardless,
Speaker 11: because these are firms that invested, especially Sequoia, you know,
Speaker 11: when this was a you know, a very young company,
Speaker 11: and so depending on what share price they got in
Speaker 11: it's still going to be for most of them, it's
Speaker 11: going to be you know, a lot lower than where
Speaker 11: it's trading at. You know, some of the ones that
Speaker 11: invested at thirty nine billion valuation or whatever. I mean,
Speaker 11: they're going to lose money on those shares unless there's
Speaker 11: a gigantic pop. But by overall, you know, I'd have
Speaker 11: to do the math. But if you're investing when when
Speaker 11: it's you know, a dollar share or less, you're going
Speaker 11: to make a lot of money.
Speaker 7: Bloomberg's Katie Roof all over it breaking a lot of
Speaker 7: news in this market. Thank you to you for your time.
Speaker 7: Ed back to you.
Speaker 3: Yeah, my thanks to you, Bloomberg Shnali Bassek alongside Katie
Speaker 3: Roof there as Shnali said, that's one end of the
Speaker 3: scale pre IPO with IPOs imminent, Let's go to the other.
Speaker 3: In today's VC Spotlight, tech Stars, the largest preceed investor
Speaker 3: in the world, is making some strategic changes to the
Speaker 3: way it operates its accelerator programs, starting with a move
Speaker 3: to a two term schedule. Let's get more details on
Speaker 3: that from tech Star CEO Mal Gabe, who joins us now.
Speaker 3: We had Gary Tan on the program on Friday, Summer
Speaker 3: twenty three, class of Y Combinator came to a close
Speaker 3: and he was talking about what was different this time round.
Speaker 3: Very interested to hear from you that you are also
Speaker 3: thinking a bit differently about the accelerated program. Explain what
Speaker 3: you've done.
Speaker 8: Yeah, absolutely, First, thank you for having me on your
Speaker 8: program as usual, that's the pleasure. So the big news
Speaker 8: for us is that we're moving to a two term
Speaker 8: model for our extra program starting in twenty twenty four.
Speaker 8: And what it means is that our extra programs will
Speaker 8: now start together and end together twice a year. And
Speaker 8: so the first string term which we are about to
Speaker 8: which we're about to open, we'll be running twenty two
Speaker 8: programs in sixteen cities across five countries, and we will
Speaker 8: also have a remote program, and a lot of this
Speaker 8: program will be in partnership with a corporate entity like
Speaker 8: JP Morgan or Audi and few more. So that's the
Speaker 8: big change.
Speaker 3: You and Iron stage together at startup Grind earlier in
Speaker 3: the year, and I asked you a question that elicited
Speaker 3: such a response from the audience afterwards, which is how
Speaker 3: do you find candidates? How do you go out and
Speaker 3: find the right precede stage companies.
Speaker 8: So we're lucky to be a very well known brand
Speaker 8: and a lot of entrepreneurs around the world know that
Speaker 8: they should come to us if they are interested in
Speaker 8: getting a first check and We received thousands and thousands
Speaker 8: of applications every month, and so we go through this application.
Speaker 6: What is very specific to tech.
Speaker 8: Stars is that we have local teams in the different
Speaker 8: countries that I mentioned before, and so we have the
Speaker 8: opportunity to meet in person was the entrepreneurs on the ground,
Speaker 8: whether it's New York, Seattle, San Francisco, but also Paris, London,
Speaker 8: Tel Aviv.
Speaker 3: Mail you're joining us from the Middle East. I believe
Speaker 3: you're in Saudi Arabia right now. We know all about
Speaker 3: Saudi money in growth stage companies, but you are looking
Speaker 3: at the very earliest stage of Saudi founders. What is
Speaker 3: the landscape like that.
Speaker 8: So it's still a very early, very young ecosystem. Part
Speaker 8: of the reason why we've been active in the Middle
Speaker 8: East for a little over five years running ACTU programs
Speaker 8: and making investments in the region. We now have over
Speaker 8: sixty investments in the region. Part of the reason why
Speaker 8: we're there is because we are usually building the deal
Speaker 8: flow that then the VC industry invest in. And when
Speaker 8: we came here, part of what we were asked to
Speaker 8: do was to go and find entrepreneur, find people who
Speaker 8: wanted to be entrepreneur, find women, who wanted to be
Speaker 8: entrepreneur and help them get there, help them BEBC backable.
Speaker 3: There has been a debate among venture catalysts on the
Speaker 3: pros and cons of partnering with Saudi LPs or taking
Speaker 3: money from Saudi LPs. Where does TEXT does sit on
Speaker 3: that debate.
Speaker 8: We are an a political organization. We basically we go
Speaker 8: where we believe that we can help entrepreneurs. We have
Speaker 8: deeply rooted into our culture and into our mission the
Speaker 8: idea that talent and ideas are evenly distributed around the world,
Speaker 8: but opportunities are not. And so whether it's the US, Canada,
Speaker 8: Saudi Arabia or Japan, when we see an opportunity to
Speaker 8: go and support founders on the ground, we go there.
Speaker 3: One of the things that Gary Town reflected on on
Speaker 3: Friday was the thirty five percent of the Summer twenty
Speaker 3: three class was an AI focused startup, but by the
Speaker 3: end more than fifty percent were looking into AI in
Speaker 3: some way. Is there any number you can give us
Speaker 3: about where those sitting in your accelerator program are proportionately
Speaker 3: A focused in AI?
Speaker 8: The number are fairly similar. The challenge is always to
Speaker 8: distinguish when AI is there the core business that you're
Speaker 8: investing in versus an enabler of the core business. When
Speaker 8: you look at our latest investments throughout twenty twenty three,
Speaker 8: the vast majority of companies have leveraged AI in one
Speaker 8: form or another, and about twenty percent of them twenty
Speaker 8: thirty percent of them have AI as the core of
Speaker 8: their business.
Speaker 3: My colleagues Shnali and Katie Ruth were talking about everything
Speaker 3: that's to come this week in the IPO market. I
Speaker 3: know that you're investing at the other end of the scale,
Speaker 3: but you've been through so many markets. I just wondered
Speaker 3: if you give us your perspective on how much of
Speaker 3: a starting gun this week is for tech IPOs in
Speaker 3: twenty twenty three.
Speaker 8: This is an important week if anything, because the entire
Speaker 8: techn ecosystem has been waiting for that week for a
Speaker 8: very long time. There hasn't been really any significant IPO
Speaker 8: in the last twelve months, and so everybody's watching what's
Speaker 8: going to happen. Is there going to be a successful
Speaker 8: instacart IPO which will give increased confidence to venture capitalists
Speaker 8: and to venture backed firms to go and get ready,
Speaker 8: or is it going to be very very tuned down
Speaker 8: and in that case, the companies are probably going to
Speaker 8: wait a little longer to go public, So Big week and.
Speaker 3: Find them out. You have access to just an astonishing
Speaker 3: body of data, real time data about the health of
Speaker 3: very small companies around the globe. Know how has the
Speaker 3: preceed market held up? You know, over the volatility of
Speaker 3: the last eighteen months or so, the.
Speaker 8: Early stage founding ecosystem has pulled quite substantially, with obviously
Speaker 8: the exception of artificial intelligence and climate tech. Having said that,
Speaker 8: if you look at Precede, the valuation have remained fairly stable.
Speaker 8: They continues to be a really great deal flow for
Speaker 8: Preceed investors. Lots of innovation driven not just by AI
Speaker 8: but also blockchain and nanotechnology and so all in all,
Speaker 8: compared to growth stage company that really took the biggest
Speaker 8: hits so far, the early stage Preceed type of type
Speaker 8: of companies have been fairly protected.
Speaker 3: Tech starle CoML gave investing in thousands of early stage
Speaker 3: companies across the world. Thank you for joining us. All right,
Speaker 3: today's going viral. You know what we're talking about. The
Speaker 3: US Open, Novak Djokovic and Coco goth taking home the
Speaker 3: champion titles over the weekend, but about fifteen million customers
Speaker 3: of Spectrum cable TV were not able to watch as ESPN,
Speaker 3: ABC and their sibling TV channels showed blank screens amid
Speaker 3: a dispute a business dispute with Charter Communications. However, breaking
Speaker 3: news this morning, a deal has been reached, ending the
Speaker 3: blackout for millions of PayTV customers, hours before the first
Speaker 3: broadcast of Monday Night football, making Bloomboat Technology producer Jackie
Speaker 3: Lopez a very happy Jets fan. Let's get the important details.
Speaker 3: As Disney shares on the move, Bloombo's Chris pal Mary,
Speaker 3: who leads our media coverage, joins us from LA, what
Speaker 3: do we know?
Speaker 12: Well, you can see the market reaction. Disney's up a little,
Speaker 12: Charter's up a lot. It looks like Charter regard much
Speaker 12: of would have wanted two big takeaways here, wanted to
Speaker 12: include Disney streaming services in their basic cable packages and
Speaker 12: no additional charge to customers. It looks like that's happening.
Speaker 12: So for sixty dollars the sixty dollars a month package
Speaker 12: of cable channels, you get Disney Plus with ads thrown in.
Speaker 12: Their similar deal for the people who pay more for
Speaker 12: ESPN Plus. Also, when they launch an online version of
Speaker 12: the ESPN the Papa Channel if you will, which Iger
Speaker 12: Bob Iger, CEO of Disney has said they would, that
Speaker 12: will be included in the cable bundle as well, So
Speaker 12: big win there. Other big surprise here is that a
Speaker 12: lot of these lesser channels are off the Charter system,
Speaker 12: and some of them are pretty well known. FXX a
Speaker 12: spin off of FX Disney Junior Disney XD free Form,
Speaker 12: which used to be an AM ABC Family channel. Those
Speaker 12: won't be available to Charter subscribers.
Speaker 3: So you have to share. Reaction charts are up more markedly,
Speaker 3: Disney up a percentage point. You get a knee jet
Speaker 3: reaction in the Bloomberg Jackie Lopez index because she's excited.
Speaker 3: But here's the bit in the story, I don't understand.
Speaker 3: There's a more narrow lineup on Spectrum. So it's not
Speaker 3: all good for Charter, right, No, what that means is
Speaker 3: they traded.
Speaker 12: Yes, subscribers to Charter won't get those channels anymore, but
Speaker 12: they used to have to pay for those and the
Speaker 12: game in cable TV for a long time. So let's
Speaker 12: create these spinoff channels and you get more money from
Speaker 12: the subscribers, you know, but you just don't have Disney Channel.
Speaker 1: You have Disney XD, Disney Junior.
Speaker 12: And those marginal channels are going away because of the
Speaker 12: cable bundle costs so much, and that strategy isn't working anymore.
Speaker 12: And to see all of those channels dropped by the
Speaker 12: second largest cable provider is big news. It really signals
Speaker 12: that those channels will probably see a lot more of
Speaker 12: them fading away.
Speaker 3: Yep, yep, they're still getting that GEO. That's important. Blooms Chris,
Speaker 3: Tom Mary, thank you very much. That does it for
Speaker 3: this edition of Bloomberg Technology. You can recap the show
Speaker 3: on our podcast where you get it if you get
Speaker 3: your pod costs, Apple, Spotify, iHeart, and of course on
Speaker 3: all of your Bloomberg platforms. From San Francisco. This is
Speaker 3: Bloomberg Technology.