1
00:00:02,480 --> 00:00:10,480
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg

2
00:00:10,520 --> 00:00:13,720
Speaker 1: Daybreak Asia podcast. I'm Doug Krisner. You can join Brian

3
00:00:13,800 --> 00:00:16,640
Speaker 1: Curtis and myself for the stories, making news and moving

4
00:00:16,680 --> 00:00:19,560
Speaker 1: markets in the APAC region. You can subscribe to the

5
00:00:19,600 --> 00:00:23,080
Speaker 1: show anywhere you get your podcast and always on Bloomberg Radio,

6
00:00:23,320 --> 00:00:26,080
Speaker 1: the Bloomberg Terminal, and the Bloomberg Business app.

7
00:00:27,280 --> 00:00:31,880
Speaker 2: Tesla receiving in principal approval from government officials in China

8
00:00:31,920 --> 00:00:35,880
Speaker 2: to deploy its driver assistance system there, and a mapping

9
00:00:35,880 --> 00:00:39,199
Speaker 2: and navigation deal was announced with byd and also that

10
00:00:39,320 --> 00:00:42,880
Speaker 2: Tesla has met some requirements on data security and privacy issues.

11
00:00:43,159 --> 00:00:45,040
Speaker 2: Joining us now to look at this is Sarah Jung,

12
00:00:45,080 --> 00:00:48,800
Speaker 2: who is Bloomberg China Technology Reporter. But it's a little

13
00:00:48,800 --> 00:00:51,599
Speaker 2: bit sketchy here on the details. What do we know

14
00:00:51,800 --> 00:00:53,560
Speaker 2: and what are we waiting to learn more about?

15
00:00:54,280 --> 00:00:56,320
Speaker 3: Well, so what we know for sure is that Elon

16
00:00:56,440 --> 00:00:58,560
Speaker 3: Musk had a very fruitful trip to China. It was

17
00:00:58,600 --> 00:01:00,800
Speaker 3: sort of a surprise visit. We had expected he was

18
00:01:00,840 --> 00:01:03,560
Speaker 3: going to go this unannounced trip where he met with

19
00:01:03,680 --> 00:01:07,039
Speaker 3: Chinese Premier Lechang, who he's actually had a historical relationship

20
00:01:07,080 --> 00:01:11,160
Speaker 3: with and he came away with two main cleared hurdles

21
00:01:11,200 --> 00:01:13,800
Speaker 3: for FSD, which is full self driving, so to be

22
00:01:13,840 --> 00:01:17,400
Speaker 3: able to launch this driver assistant software in China, One,

23
00:01:17,480 --> 00:01:19,959
Speaker 3: like you said, is this big mapping a navigation deal

24
00:01:19,959 --> 00:01:24,040
Speaker 3: with Baidu, and the other is clearing this data security approval.

25
00:01:24,080 --> 00:01:27,959
Speaker 3: They're actually the first foreign automaker to do that, and

26
00:01:28,000 --> 00:01:31,520
Speaker 3: so that just really erases some of the previous questions

27
00:01:31,560 --> 00:01:35,600
Speaker 3: about data security and Tesla. There were some reports before

28
00:01:35,600 --> 00:01:38,400
Speaker 3: about how Tesla cars weren't allowed into government compounds things

29
00:01:38,440 --> 00:01:40,720
Speaker 3: like that. These two things show that the government is

30
00:01:40,760 --> 00:01:44,679
Speaker 3: saying we endorse Tesla and now they can move toward

31
00:01:44,880 --> 00:01:47,120
Speaker 3: launching this FSD program.

32
00:01:47,360 --> 00:01:50,240
Speaker 1: So I think the term here is in principle approval

33
00:01:50,440 --> 00:01:53,160
Speaker 1: and there may be some other conditions obviously that we're

34
00:01:53,160 --> 00:01:55,200
Speaker 1: not aware of. One of the things that I think

35
00:01:55,240 --> 00:01:58,600
Speaker 1: of when it comes to driver assistance technology is the

36
00:01:58,640 --> 00:02:00,880
Speaker 1: combination not only of the use of light OAR, but

37
00:02:01,000 --> 00:02:03,680
Speaker 1: cameras as well. And I think this was something that

38
00:02:03,720 --> 00:02:07,160
Speaker 1: Beijing was very concerned about that in the process of

39
00:02:07,400 --> 00:02:11,400
Speaker 1: using these vehicles on the road autonomous kind of self driving,

40
00:02:11,440 --> 00:02:15,040
Speaker 1: full self driving, that the cameras are capturing data and

41
00:02:15,840 --> 00:02:20,680
Speaker 1: the government needed assurances that that data wouldn't be used inappropriately.

42
00:02:20,720 --> 00:02:24,360
Speaker 1: I mean, do we were probably not at that point completely,

43
00:02:24,400 --> 00:02:26,480
Speaker 1: although I don't know would you Carr to weigh in

44
00:02:26,560 --> 00:02:26,760
Speaker 1: on that.

45
00:02:27,520 --> 00:02:29,680
Speaker 3: Yeah, that's exactly right. I mean, I think that's why

46
00:02:29,760 --> 00:02:33,240
Speaker 3: this clearing of the data security data privacy hurdle was

47
00:02:33,240 --> 00:02:35,880
Speaker 3: so important. Of course, we don't know the exact details

48
00:02:35,880 --> 00:02:38,120
Speaker 3: of what this will mean and what it's deal with

49
00:02:38,200 --> 00:02:40,640
Speaker 3: by do WAL look like, how it would actually you know,

50
00:02:40,720 --> 00:02:43,160
Speaker 3: roll out FSD, But what we do know is that

51
00:02:43,400 --> 00:02:46,000
Speaker 3: the government is saying you have cleared the most important

52
00:02:46,360 --> 00:02:49,400
Speaker 3: industry standards here for data data, as we know, a

53
00:02:49,480 --> 00:02:52,280
Speaker 3: huge issue. Actually, just a few months back, Tesla had

54
00:02:52,280 --> 00:02:55,760
Speaker 3: to take to their official Wayble account to say, you know,

55
00:02:55,800 --> 00:02:58,760
Speaker 3: we localize all of our user data in China as

56
00:02:58,840 --> 00:03:01,640
Speaker 3: part of Chinese privacy laws that were ruled out in

57
00:03:01,639 --> 00:03:04,880
Speaker 3: twenty twenty one. So they've always been actually quite ahead

58
00:03:04,880 --> 00:03:07,240
Speaker 3: of the curve compared to other foreign companies when it

59
00:03:07,320 --> 00:03:10,239
Speaker 3: comes to securing their data and saying they will localize

60
00:03:10,320 --> 00:03:12,399
Speaker 3: all of that in China to address some of those

61
00:03:12,400 --> 00:03:13,880
Speaker 3: concerns that you mentioned.

62
00:03:13,720 --> 00:03:16,200
Speaker 2: On some of the non business angles, Sarah, is there

63
00:03:16,200 --> 00:03:20,840
Speaker 2: a political element to this. In particular, the China wants

64
00:03:20,880 --> 00:03:23,880
Speaker 2: to show the US that it can make some concessions.

65
00:03:25,080 --> 00:03:27,799
Speaker 2: Is it expecting concessions, say, than on TikTok?

66
00:03:28,240 --> 00:03:30,200
Speaker 3: Definitely. So a lot of people have noted that it

67
00:03:30,240 --> 00:03:33,720
Speaker 3: comes at a very interesting time. Obviously, the US Congress

68
00:03:33,760 --> 00:03:36,119
Speaker 3: just passed their TikTok bill. Biden signed that into law.

69
00:03:36,320 --> 00:03:40,160
Speaker 3: So while the US is moving towards restricting a Chinese

70
00:03:40,240 --> 00:03:43,800
Speaker 3: origin app there over data security concerns, China it seems

71
00:03:43,880 --> 00:03:46,520
Speaker 3: like is making some concessions, are at least showing a

72
00:03:46,520 --> 00:03:50,440
Speaker 3: little bit of flexibility for a US carmaker. But so

73
00:03:50,760 --> 00:03:52,680
Speaker 3: that's why a lot of people are interpreting this as

74
00:03:52,720 --> 00:03:56,920
Speaker 3: like Beijing signaling we are pro business. They've been doing

75
00:03:56,920 --> 00:03:59,040
Speaker 3: that over the past few months, trying to say we're

76
00:03:59,120 --> 00:04:01,800
Speaker 3: open to foreign investment and to form businesses, and this

77
00:04:01,840 --> 00:04:04,000
Speaker 3: is part of it. Whether or not that would actually

78
00:04:04,120 --> 00:04:06,760
Speaker 3: move the needle in terms of, you know, the data

79
00:04:06,760 --> 00:04:09,520
Speaker 3: security tensions between the two countries, that's a different story.

80
00:04:09,560 --> 00:04:13,800
Speaker 1: Even with this approval or in principle approval, it's not

81
00:04:13,960 --> 00:04:17,360
Speaker 1: clear that Tesla's going to have an easier time selling

82
00:04:17,360 --> 00:04:19,760
Speaker 1: into the China market. I mean, there is some very

83
00:04:19,880 --> 00:04:22,600
Speaker 1: very tough competition when it comes to evs.

84
00:04:23,279 --> 00:04:25,799
Speaker 3: Definitely, we've actually been seeing them sort of lose market

85
00:04:25,800 --> 00:04:28,560
Speaker 3: share to some of the big Chinese EV stars bid

86
00:04:28,720 --> 00:04:32,440
Speaker 3: for example. And even if they do actually pass the

87
00:04:32,480 --> 00:04:35,280
Speaker 3: final approvals to be able to deploy the system, it's

88
00:04:35,279 --> 00:04:38,720
Speaker 3: still different from what Chinese homegrown automakers can offer. They

89
00:04:38,720 --> 00:04:43,000
Speaker 3: can offer advanced driver assistant systems, whereas Tesla's system would

90
00:04:43,000 --> 00:04:46,359
Speaker 3: still be not fully autonomous. It's just a driver assistant software.

91
00:04:46,720 --> 00:04:48,560
Speaker 2: All right, Sarah, thanks so much for taking out the

92
00:04:48,600 --> 00:04:51,599
Speaker 2: time to be with us here live. Sarah Young, Bloomberg

93
00:04:51,680 --> 00:05:01,520
Speaker 2: China Technology Reporder is now on the program for some

94
00:05:01,640 --> 00:05:06,960
Speaker 2: discussion of markets. Is Hebchen market analyst over at IG

95
00:05:07,600 --> 00:05:10,440
Speaker 2: with this live here on the program. Well, let's talk

96
00:05:10,480 --> 00:05:14,600
Speaker 2: first about the macro. I think Hebi because last week

97
00:05:14,640 --> 00:05:17,640
Speaker 2: we had investors getting pretty ginned up on earnings and

98
00:05:17,640 --> 00:05:20,279
Speaker 2: that sort of trump the macro. But it feels like

99
00:05:20,320 --> 00:05:23,080
Speaker 2: this week we might be swinging back to a little

100
00:05:23,120 --> 00:05:26,920
Speaker 2: bit of angst over higher for longer rates. Of course,

101
00:05:26,960 --> 00:05:30,200
Speaker 2: all of this gets discounted in markets, But what do

102
00:05:30,240 --> 00:05:32,799
Speaker 2: you think is the primary input at the moment.

103
00:05:34,720 --> 00:05:38,240
Speaker 4: Well, yes, you're right, I think this week the FOMC meeting,

104
00:05:38,440 --> 00:05:41,279
Speaker 4: what the Fed would say was definitely a crucial point

105
00:05:41,400 --> 00:05:44,560
Speaker 4: to watch, And in the past couple of weeks the

106
00:05:44,600 --> 00:05:48,880
Speaker 4: market has changed the expectation quite substantially from the previous meeting,

107
00:05:48,960 --> 00:05:53,320
Speaker 4: So this is probably the time that would likely to

108
00:05:53,400 --> 00:05:57,039
Speaker 4: consolidate whether the expectation is moving into the right direction

109
00:05:57,200 --> 00:05:59,720
Speaker 4: or whether there's a room for the fat to move.

110
00:06:00,120 --> 00:06:02,479
Speaker 1: I think it's about that, Tibbie. Don't you think that

111
00:06:02,560 --> 00:06:04,839
Speaker 1: Powell is going to make a kind of a hawkish

112
00:06:04,880 --> 00:06:06,960
Speaker 1: pivot here? He has no choice given some of the

113
00:06:06,960 --> 00:06:08,560
Speaker 1: readings that we have seen on inflation.

114
00:06:09,960 --> 00:06:13,120
Speaker 4: I think a hokish pouset is for me, it's almost

115
00:06:13,440 --> 00:06:16,039
Speaker 4: certain that something that he will say. But I think

116
00:06:16,040 --> 00:06:18,240
Speaker 4: one of the key watch points for me is definitely,

117
00:06:18,279 --> 00:06:21,080
Speaker 4: as you say, what's his view on the inflation? If

118
00:06:21,080 --> 00:06:23,480
Speaker 4: you will remember in the past meetings, I remember one

119
00:06:23,600 --> 00:06:26,400
Speaker 4: word that impressed me is that he's saying the inflation

120
00:06:26,520 --> 00:06:28,920
Speaker 4: in the genuine em fact is it was just a bump.

121
00:06:29,440 --> 00:06:31,160
Speaker 4: So I think I would be quite keen to know

122
00:06:31,240 --> 00:06:34,400
Speaker 4: that how he going to describe this time for what's

123
00:06:34,440 --> 00:06:38,440
Speaker 4: happening in the March, the data from March, Whether or

124
00:06:38,560 --> 00:06:40,360
Speaker 4: not that he is seeing that this is just a

125
00:06:40,400 --> 00:06:43,400
Speaker 4: bump or is part of an uphill. I think that's

126
00:06:43,440 --> 00:06:46,320
Speaker 4: one of the critical watching point there. But of course,

127
00:06:46,440 --> 00:06:49,159
Speaker 4: what the implication from his view on inflation is whether

128
00:06:49,240 --> 00:06:52,880
Speaker 4: or not that that he would revise down the chance

129
00:06:53,000 --> 00:06:55,880
Speaker 4: for a rake cut. Now market is expecting one cut,

130
00:06:56,520 --> 00:07:00,840
Speaker 4: but not yet to thinking about even potentially a great rise.

131
00:07:00,880 --> 00:07:04,520
Speaker 4: So I think that's a uncertainty that everyone will be

132
00:07:04,600 --> 00:07:05,680
Speaker 4: just keeping the eyes on.

133
00:07:07,360 --> 00:07:10,520
Speaker 2: Yeah, it's an interesting time here because as mentioned, you know,

134
00:07:10,560 --> 00:07:13,080
Speaker 2: you've got a lot of things to consider. You're getting

135
00:07:13,120 --> 00:07:16,880
Speaker 2: some interesting announcements from on the earning side, which we mentioned,

136
00:07:16,920 --> 00:07:19,440
Speaker 2: and of course it does seem like the FED has

137
00:07:19,480 --> 00:07:21,560
Speaker 2: to turn a little bit more hawkish here and some

138
00:07:21,640 --> 00:07:25,120
Speaker 2: will welcome that and you know, some may not. I

139
00:07:25,200 --> 00:07:27,600
Speaker 2: suppose it depends on what sort of company you're in.

140
00:07:27,920 --> 00:07:30,679
Speaker 2: One of the interesting things, too, is with the earnings,

141
00:07:30,680 --> 00:07:35,880
Speaker 2: we're starting to see third derivative gainers now in artificial intelligence,

142
00:07:36,480 --> 00:07:38,920
Speaker 2: the chip makers came first, and then you've got the

143
00:07:39,040 --> 00:07:41,960
Speaker 2: use case consumer and enterprise companies, and we saw that

144
00:07:42,040 --> 00:07:45,440
Speaker 2: last week with Google and Microsoft, and now utilities and

145
00:07:45,800 --> 00:07:50,960
Speaker 2: HVAC firms are gaining on power generation and data center

146
00:07:51,160 --> 00:07:56,920
Speaker 2: cooling for this whole AI run. Is that something that

147
00:07:56,960 --> 00:07:59,080
Speaker 2: you have to kind of factor into your thinking now

148
00:07:59,080 --> 00:08:01,720
Speaker 2: about how this is and it's spreading pretty quickly.

149
00:08:03,200 --> 00:08:05,920
Speaker 4: Yes, absolutely, I think that what you just describe is

150
00:08:05,960 --> 00:08:10,480
Speaker 4: a sort of bldening rallied across the AI sectors. Yes,

151
00:08:10,520 --> 00:08:13,760
Speaker 4: this is such a huge story, not only the application

152
00:08:13,920 --> 00:08:16,720
Speaker 4: that everyone else for me, the ways like Microsoft Open

153
00:08:16,760 --> 00:08:20,280
Speaker 4: AI that will benefit, but down to another part of

154
00:08:20,320 --> 00:08:23,239
Speaker 4: the value chain, for example, the chip industry. For example,

155
00:08:23,280 --> 00:08:26,920
Speaker 4: you're talking about the electricity because the AI tends to

156
00:08:27,040 --> 00:08:31,280
Speaker 4: use much more energies compared to the previous version of

157
00:08:31,480 --> 00:08:33,960
Speaker 4: the Internet system, so they are the one that will

158
00:08:33,960 --> 00:08:37,440
Speaker 4: also benefit as well. And yeah, talking about the endings

159
00:08:37,559 --> 00:08:39,760
Speaker 4: this week we have the Amazon and Apple. I think

160
00:08:39,760 --> 00:08:41,920
Speaker 4: the old eyes will also be focused on what sort

161
00:08:41,920 --> 00:08:44,600
Speaker 4: of AI story they're going to tell the market. We

162
00:08:44,760 --> 00:08:47,840
Speaker 4: just purely from the comparison from last week's Mata and Microsoft,

163
00:08:47,880 --> 00:08:51,840
Speaker 4: and you can definitely not how important an AI story

164
00:08:51,920 --> 00:08:54,040
Speaker 4: means to the market now, So I think you are

165
00:08:54,080 --> 00:08:57,960
Speaker 4: right then. The market is putting quite the enthusiasm about

166
00:08:58,040 --> 00:09:02,080
Speaker 4: AI is definitely still quite hot there and it's a

167
00:09:02,160 --> 00:09:04,640
Speaker 4: challenge for the companies how they're going to tell the

168
00:09:04,720 --> 00:09:07,840
Speaker 4: story to the market and impress the market and its shareholders.

169
00:09:07,920 --> 00:09:11,040
Speaker 1: Yeah, we're hearing from Samsung today. Earning surged a lot

170
00:09:11,040 --> 00:09:15,040
Speaker 1: of the semiconductor business is benefiting from AI, so much

171
00:09:15,160 --> 00:09:18,520
Speaker 1: so that the business was able to return to profitability

172
00:09:18,559 --> 00:09:20,840
Speaker 1: for the first time since twenty twenty two. Do you

173
00:09:20,880 --> 00:09:23,440
Speaker 1: think there is still buying opportunity in a name like

174
00:09:23,520 --> 00:09:27,480
Speaker 1: Samsung or is Has the market kind of gone into

175
00:09:27,520 --> 00:09:29,839
Speaker 1: so much enthusiasm where some of the chip makers are

176
00:09:29,840 --> 00:09:33,880
Speaker 1: concerned that you'd be a little worried about levels of valuation.

177
00:09:35,400 --> 00:09:39,000
Speaker 4: Well, I absolutely thinking that the semiconductor chip industry still

178
00:09:39,000 --> 00:09:42,920
Speaker 4: have a huge potential for the AI because unlikely n

179
00:09:43,080 --> 00:09:46,480
Speaker 4: application for that, they are the one that for this stage,

180
00:09:46,559 --> 00:09:48,640
Speaker 4: they are the one that we're pretty much one hundred

181
00:09:48,640 --> 00:09:52,360
Speaker 4: percent sure they will benefit because that any AI applications

182
00:09:52,640 --> 00:09:55,480
Speaker 4: class services that we need chips. Some song is a

183
00:09:55,480 --> 00:09:58,080
Speaker 4: bit of a different story because we heard about terms

184
00:09:58,080 --> 00:10:01,880
Speaker 4: about Korean Discounsole, the Korean player they do have at

185
00:10:01,920 --> 00:10:04,120
Speaker 4: different games, but we do also see quite a lot

186
00:10:04,120 --> 00:10:07,440
Speaker 4: of catalysts is happening in the Korean market as well.

187
00:10:07,480 --> 00:10:10,559
Speaker 4: So I think if you just point to the Samsung specifically,

188
00:10:10,600 --> 00:10:12,960
Speaker 4: I think they do have quite a good potential after

189
00:10:13,000 --> 00:10:16,880
Speaker 4: the attending profitabilities, and the technology advance will be another

190
00:10:16,920 --> 00:10:21,240
Speaker 4: one that will definitely check more eyeballs from the global landscape.

191
00:10:21,480 --> 00:10:23,600
Speaker 2: Yeah, one of the things that interested me most with

192
00:10:23,720 --> 00:10:30,640
Speaker 2: Samsung was obviously, you know, return to profitability in the

193
00:10:30,679 --> 00:10:35,960
Speaker 2: semiconductors is great, but also that the smartphone business was

194
00:10:36,080 --> 00:10:40,840
Speaker 2: pretty buoyant. The majority of the first quarter operating profit

195
00:10:40,880 --> 00:10:46,040
Speaker 2: actually came from the smartphone business unit, around about two

196
00:10:46,080 --> 00:10:49,920
Speaker 2: thirds or so of operating profit. And there seems to

197
00:10:49,920 --> 00:10:52,080
Speaker 2: be some signs that there's a little bit of a

198
00:10:52,080 --> 00:10:54,760
Speaker 2: pick up there in that space. Do you buy it

199
00:10:54,920 --> 00:10:56,560
Speaker 2: or do you think that it's still troubled. You know

200
00:10:56,600 --> 00:10:58,920
Speaker 2: when you look at PCs and smartphones.

201
00:11:00,080 --> 00:11:03,280
Speaker 4: Well, I think yeah, you point to the smartphone, Yes,

202
00:11:03,320 --> 00:11:05,600
Speaker 4: if you're looking for for example, the Apple share, the

203
00:11:05,720 --> 00:11:09,880
Speaker 4: sales in China has dropping quite substantially, meaning that the

204
00:11:10,240 --> 00:11:13,560
Speaker 4: as you the demand for the smartphone is getting software

205
00:11:13,559 --> 00:11:17,680
Speaker 4: getting to hit a bottleneck. That potentially because the external environment,

206
00:11:17,679 --> 00:11:21,040
Speaker 4: the inflation, people feel the squeeze from the searching life

207
00:11:21,080 --> 00:11:24,760
Speaker 4: expenses which prolong their use for smartphone reduced demand. I

208
00:11:24,800 --> 00:11:27,040
Speaker 4: think that could be a temporary or the short term

209
00:11:27,559 --> 00:11:31,199
Speaker 4: uh catalyst or short term the headwind for the smartphone.

210
00:11:31,200 --> 00:11:34,480
Speaker 4: But I think the long term wise that when this chant,

211
00:11:34,720 --> 00:11:37,319
Speaker 4: when these tie changes, I believe that the demand will

212
00:11:37,360 --> 00:11:39,760
Speaker 4: be coming back. But now, of course, in the short term,

213
00:11:39,800 --> 00:11:42,160
Speaker 4: I think the what next one or two years. Definitely

214
00:11:42,160 --> 00:11:44,600
Speaker 4: we were seeing the demand for the smartphone for this

215
00:11:45,760 --> 00:11:51,080
Speaker 4: they they sorry, the electronic devices will definitely hit a

216
00:11:51,559 --> 00:11:53,920
Speaker 4: quite a slow ross face.

217
00:11:53,960 --> 00:11:56,360
Speaker 1: Heibi, I want to get your sense of the EV

218
00:11:56,520 --> 00:11:58,760
Speaker 1: market before we let you go. Over the weekend, the

219
00:11:58,800 --> 00:12:02,679
Speaker 1: Elon Musk made us price visit to China, and while

220
00:12:02,679 --> 00:12:06,439
Speaker 1: he was there, he received an imprincipal approval from Beijing

221
00:12:06,520 --> 00:12:10,400
Speaker 1: to deploy the driver assistance system that Tesla has in

222
00:12:10,440 --> 00:12:14,160
Speaker 1: the China market. When you look at the EV space broadly,

223
00:12:14,200 --> 00:12:15,360
Speaker 1: how are you feeling about it?

224
00:12:16,880 --> 00:12:18,960
Speaker 4: Well, yes, I think that's there's a big news as

225
00:12:19,080 --> 00:12:20,800
Speaker 4: you put it at the beginning of the program. It's

226
00:12:20,840 --> 00:12:23,600
Speaker 4: a big gain for the for the Tesla, and I

227
00:12:23,640 --> 00:12:27,160
Speaker 4: think this even is sort of the center of the

228
00:12:27,360 --> 00:12:29,679
Speaker 4: tension in between the US and China, And for me,

229
00:12:29,800 --> 00:12:32,480
Speaker 4: I think it's a flashing sign for me that China

230
00:12:32,520 --> 00:12:34,840
Speaker 4: is trying to change the game to play with the

231
00:12:34,960 --> 00:12:38,800
Speaker 4: US restriction There of course, also they claim about goog capacity,

232
00:12:39,440 --> 00:12:42,679
Speaker 4: and it can den tell that they're China trying to

233
00:12:42,760 --> 00:12:45,800
Speaker 4: restore its reputation as the most important market of the

234
00:12:45,840 --> 00:12:48,959
Speaker 4: world by welcoming Tesla more into their market. But on

235
00:12:49,080 --> 00:12:52,080
Speaker 4: the other hand, we know that the competition the future

236
00:12:52,080 --> 00:12:54,360
Speaker 4: of a Tesla won't be easy because there's so many

237
00:12:54,360 --> 00:12:57,600
Speaker 4: players from China and with sach much cheaper prices there,

238
00:12:57,679 --> 00:13:00,560
Speaker 4: so it's a beigin for Tesla. But the game is

239
00:13:00,600 --> 00:13:02,080
Speaker 4: now getting into a different level.

240
00:13:02,679 --> 00:13:04,840
Speaker 2: All right. He'd be so much to talk about today.

241
00:13:04,880 --> 00:13:06,880
Speaker 2: We didn't even get much of a chance to get

242
00:13:06,920 --> 00:13:09,959
Speaker 2: to the end that's ahead, but he be thank you

243
00:13:10,040 --> 00:13:13,880
Speaker 2: for joining us. Cb Chan there market analyst over at ig.

244
00:13:21,440 --> 00:13:25,520
Speaker 1: We've got earnings from Samsung today, net income much above forecast.

245
00:13:25,840 --> 00:13:28,280
Speaker 1: The figure is six point six y two trillion one.

246
00:13:28,320 --> 00:13:31,120
Speaker 1: That was nearly a trillion one ahead of estimates. Let's

247
00:13:31,120 --> 00:13:33,520
Speaker 1: take a closer look at what's happening with Samsung with

248
00:13:33,840 --> 00:13:38,120
Speaker 1: Robert Lee, Bloomberg Intelligence senior analyst who joins us from

249
00:13:38,120 --> 00:13:41,400
Speaker 1: Hong Kong. What jumps off the page here, Robert, so

250
00:13:41,520 --> 00:13:44,920
Speaker 1: to speak, is the Semiconductor Index returning to profitability for

251
00:13:44,960 --> 00:13:48,200
Speaker 1: the first time since twenty twenty. Is this really is

252
00:13:48,200 --> 00:13:49,480
Speaker 1: the AI story, is it not?

253
00:13:51,360 --> 00:13:54,040
Speaker 5: There's an element of AI in it, and within the

254
00:13:54,120 --> 00:13:57,520
Speaker 5: semi conductive businesses there are three elements. The two largest

255
00:13:57,679 --> 00:14:02,560
Speaker 5: are the nan flash business flashes, the temporary storage using smartphones,

256
00:14:03,080 --> 00:14:06,720
Speaker 5: and for those who are old enough, the digital cameras

257
00:14:06,760 --> 00:14:10,760
Speaker 5: if you remember, those with a little flash memory inserts.

258
00:14:11,040 --> 00:14:13,840
Speaker 5: So that's a major driver, and it's a notoriously volatile

259
00:14:13,840 --> 00:14:19,840
Speaker 5: industry which is driven by very volatile pricing swinging from

260
00:14:20,200 --> 00:14:24,160
Speaker 5: heis and lows depending on the outlook demand and supply outlook.

261
00:14:24,400 --> 00:14:27,280
Speaker 5: That's one element, the other being DRAM which is driven

262
00:14:27,320 --> 00:14:31,040
Speaker 5: by the mainstream PC industry. But on top of that,

263
00:14:31,160 --> 00:14:34,080
Speaker 5: as you've mentioned, you've got this new element of AI growth,

264
00:14:34,160 --> 00:14:38,760
Speaker 5: so incrementally that is coming in and driving some incremental demand.

265
00:14:38,960 --> 00:14:41,280
Speaker 5: So what you're seeing at the moment is a pickup

266
00:14:41,280 --> 00:14:45,120
Speaker 5: in PC demand with restocking, a pickup in smartphone demand

267
00:14:45,120 --> 00:14:48,800
Speaker 5: with restocking, and this additional element of AI demand coming

268
00:14:48,840 --> 00:14:51,680
Speaker 5: in on the top. Hence robert U Business Interprofit.

269
00:14:52,360 --> 00:14:55,600
Speaker 2: You told us last week in our interview, and Glad

270
00:14:55,640 --> 00:14:58,520
Speaker 2: Salvov mentioned it as well that Heinez had taken a

271
00:14:58,640 --> 00:15:03,920
Speaker 2: lead over Samsung in HBM chips and the importance obviously

272
00:15:03,960 --> 00:15:07,240
Speaker 2: of those types of chips for AI is well known.

273
00:15:08,280 --> 00:15:11,479
Speaker 2: Anything in this report that suggests that Samsung is regaining

274
00:15:11,600 --> 00:15:16,120
Speaker 2: that that lost number one status or is it still Heinex.

275
00:15:17,000 --> 00:15:18,680
Speaker 5: I think at the moment it is still Heinex. And

276
00:15:18,720 --> 00:15:21,360
Speaker 5: as you said, they're reported recently anyway, so the strong

277
00:15:21,360 --> 00:15:24,800
Speaker 5: momentum on the high bandwidth memory or HBM business. But

278
00:15:24,920 --> 00:15:27,880
Speaker 5: Samson is the world's leading nan flash and d RAM company.

279
00:15:28,160 --> 00:15:30,960
Speaker 5: It's a company with huge resources and I would say

280
00:15:31,600 --> 00:15:35,080
Speaker 5: I very pointed an aggressive approach in general to everything.

281
00:15:35,240 --> 00:15:38,840
Speaker 5: So Samson is absolutely doing it all it can to

282
00:15:38,920 --> 00:15:42,880
Speaker 5: narrati gap with Heinex. So there's some an initial evidence

283
00:15:42,920 --> 00:15:44,840
Speaker 5: to support that. But still heinez I has the lead

284
00:15:44,880 --> 00:15:47,000
Speaker 5: at this point and that will probably remain the case

285
00:15:47,320 --> 00:15:48,840
Speaker 5: through the rest of this year, I think.

286
00:15:48,960 --> 00:15:52,440
Speaker 1: So what does Samsung do to close that gap? Is

287
00:15:52,440 --> 00:15:55,080
Speaker 1: it about capex spending, Is it about R and D?

288
00:15:55,360 --> 00:15:57,920
Speaker 1: Is it about making sure they're at the tip of

289
00:15:57,960 --> 00:15:59,840
Speaker 1: the spear, so to speak when it comes to these

290
00:16:00,040 --> 00:16:01,920
Speaker 1: most advanced memory chips.

291
00:16:02,600 --> 00:16:05,200
Speaker 5: Yeah, I think this time Henix was head of the

292
00:16:05,280 --> 00:16:07,120
Speaker 5: curve in terms of putting in the R and D

293
00:16:07,240 --> 00:16:10,560
Speaker 5: dollars early in foreseeing the opportunity in the same way

294
00:16:10,560 --> 00:16:13,280
Speaker 5: that Nvidia was, you know, well ahead of any of

295
00:16:13,320 --> 00:16:16,320
Speaker 5: the other mainstream TIP companies. So that's the main reason

296
00:16:16,360 --> 00:16:18,640
Speaker 5: why Henix has got the lead at the moment, Samson's

297
00:16:18,640 --> 00:16:20,800
Speaker 5: playing catch up. They need to invest more heavily in

298
00:16:20,920 --> 00:16:23,920
Speaker 5: R and D and I think over time they will

299
00:16:24,000 --> 00:16:26,080
Speaker 5: narrow the gap. So you're more likely to see a

300
00:16:26,160 --> 00:16:28,960
Speaker 5: two horse race and possibly even a three horse race.

301
00:16:29,440 --> 00:16:34,880
Speaker 5: As Micron, you know, the remaining domestic US DRAMs supplier,

302
00:16:35,080 --> 00:16:36,680
Speaker 5: you know, is also trying to get a piece of

303
00:16:36,720 --> 00:16:37,320
Speaker 5: the action there.

304
00:16:38,640 --> 00:16:41,040
Speaker 2: Now. One of the other interesting areas was that the

305
00:16:41,080 --> 00:16:44,480
Speaker 2: first quarter operating profit that the majority of that actually

306
00:16:44,480 --> 00:16:47,840
Speaker 2: came in the in the unit that produces the smartphones.

307
00:16:48,760 --> 00:16:52,040
Speaker 2: That seems kind of interesting. Does that in itself suggest

308
00:16:52,800 --> 00:16:55,320
Speaker 2: that the smartphone business is coming back or is it

309
00:16:55,360 --> 00:16:55,800
Speaker 2: too early?

310
00:16:57,240 --> 00:16:57,440
Speaker 4: Yeah?

311
00:16:57,520 --> 00:17:01,320
Speaker 5: Well, so, the major laptop and smartphone companies have all

312
00:17:01,400 --> 00:17:05,760
Speaker 5: launched AI enabled devices where you can run simplified large

313
00:17:05,800 --> 00:17:09,119
Speaker 5: language models actually on the device. They were all launched

314
00:17:09,160 --> 00:17:11,200
Speaker 5: at the tail end of last year early this year

315
00:17:11,600 --> 00:17:14,760
Speaker 5: and are expected to drive demand through this year. So

316
00:17:14,800 --> 00:17:17,880
Speaker 5: Samson's obviously benefiting from that. Both on the memory side,

317
00:17:17,880 --> 00:17:21,320
Speaker 5: as we've discussed, and also within their smartphone business. At

318
00:17:21,320 --> 00:17:23,040
Speaker 5: the end of the day, I think the key risk here,

319
00:17:23,119 --> 00:17:25,320
Speaker 5: just to inject a little bit caution, is to sell through.

320
00:17:25,960 --> 00:17:28,520
Speaker 5: This is all dependent on consumers going out and buying

321
00:17:28,520 --> 00:17:32,560
Speaker 5: these new devices, and that is typically loaded on the

322
00:17:32,600 --> 00:17:34,760
Speaker 5: second half of the year, So we'll still have to

323
00:17:34,800 --> 00:17:36,720
Speaker 5: wait and see on that front, but it's all looking

324
00:17:36,760 --> 00:17:38,600
Speaker 5: good for them at the moment. You've got three major

325
00:17:38,680 --> 00:17:42,520
Speaker 5: drivers within Samson's business cyclical drivers coming back on track.

326
00:17:42,960 --> 00:17:45,560
Speaker 1: So it wouldn't surprise you if on the revenue side

327
00:17:45,640 --> 00:17:47,840
Speaker 1: there was a lot more volatility, let's say in the

328
00:17:48,600 --> 00:17:50,280
Speaker 1: third and fourth quarters of this year.

329
00:17:51,240 --> 00:17:54,199
Speaker 5: Absolutely. I had the pleasure of covering Samson as a

330
00:17:54,240 --> 00:17:57,240
Speaker 5: self side analyst several years ago. I think the core

331
00:17:57,280 --> 00:18:00,760
Speaker 5: of Samson's business is relatively stable, the white business, the

332
00:18:00,840 --> 00:18:04,800
Speaker 5: TV business, the smartphone business to some extent, but then

333
00:18:04,800 --> 00:18:09,479
Speaker 5: you've got this overlay of very volatile profits. You know,

334
00:18:09,960 --> 00:18:12,200
Speaker 5: volatile business is on the memory side, as I said,

335
00:18:12,280 --> 00:18:15,160
Speaker 5: DRAM and nan Flash, which when things are going great,

336
00:18:15,240 --> 00:18:20,000
Speaker 5: there's huge operational gearing and this company's in inverted commas

337
00:18:20,040 --> 00:18:22,840
Speaker 5: printing money. Equally, when we're in a city called low

338
00:18:22,920 --> 00:18:26,080
Speaker 5: for those businesses, they can really depress profit in the business.

339
00:18:26,400 --> 00:18:28,639
Speaker 5: So what we're seeing at the moment is demand coming

340
00:18:28,680 --> 00:18:30,960
Speaker 5: back on this memory side and driving profit for the

341
00:18:31,000 --> 00:18:31,720
Speaker 5: group overall.

342
00:18:32,600 --> 00:18:35,720
Speaker 2: Well, that's good news, I guess to some investors. A

343
00:18:35,800 --> 00:18:38,480
Speaker 2: quick question on Tesla because the other big story that

344
00:18:38,520 --> 00:18:42,040
Speaker 2: we're covering this morning, so we're talking about in principle approval.

345
00:18:42,359 --> 00:18:45,399
Speaker 2: I assume that that means that Tesla faces kind of

346
00:18:45,480 --> 00:18:50,879
Speaker 2: conditional status on this self driving system in China. So

347
00:18:51,000 --> 00:18:52,639
Speaker 2: is this kind of a gesture by China or is

348
00:18:52,640 --> 00:18:54,640
Speaker 2: it real very good.

349
00:18:54,520 --> 00:18:59,320
Speaker 5: Question, that's how you're asking the questions, not me. Well,

350
00:18:59,400 --> 00:19:01,520
Speaker 5: I think like every country you've got, you know, every

351
00:19:01,520 --> 00:19:05,080
Speaker 5: country looks after its own, doesn't it. And China's you know,

352
00:19:05,200 --> 00:19:09,000
Speaker 5: rapidly narrative gap on the EV space, and you know

353
00:19:09,040 --> 00:19:11,960
Speaker 5: you've got the likes of BYD and Lee Auto as examples,

354
00:19:12,280 --> 00:19:15,080
Speaker 5: who are you know, dominating the China market and also

355
00:19:15,680 --> 00:19:20,040
Speaker 5: very aggressive overseas. So opening up to Tesla is definitely

356
00:19:20,119 --> 00:19:24,200
Speaker 5: a positive for sentiment is incrementally positive for Tesla. The

357
00:19:24,320 --> 00:19:27,359
Speaker 5: question is, you know, what real success will they they

358
00:19:27,440 --> 00:19:27,840
Speaker 5: have there?

359
00:19:28,440 --> 00:19:31,280
Speaker 1: Robert Lee from Bloomberg Intelligence joining from Hong Kong.

360
00:19:33,440 --> 00:19:36,879
Speaker 2: This is the Bloomberg Daybreak Asia podcast, bringing you the

361
00:19:36,960 --> 00:19:40,400
Speaker 2: stories making news and moving markets in the Asia Pacific.

362
00:19:40,640 --> 00:19:43,800
Speaker 2: Visit the Bloomberg Podcast channel on YouTube to get more

363
00:19:43,840 --> 00:19:47,679
Speaker 2: episodes of this and other shows from Bloomberg. Subscribe to

364
00:19:47,720 --> 00:19:51,480
Speaker 2: the podcast on Apple, Spotify, or anywhere else you listen

365
00:19:51,760 --> 00:19:54,960
Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the

366
00:19:55,000 --> 00:19:56,280
Speaker 2: Bloomberg Business app.