Speaker 1: From the heart where innovation, money and power Collie in
Speaker 1: Silicon Valley and beyond. This is Bloomberg Technology with Caroline
Speaker 1: Hyde and Ed loved Love.
Speaker 2: Like from San Francisco. This is Bloomberg Technology. Tighter chip controls.
Speaker 2: Bloomberg reports the US is reviewing caps on AI chip
Speaker 2: sales to the Middle East.
Speaker 3: From companies like in Nvidia.
Speaker 2: Meanwhile, Dell says it's ready to ship servers with Nvideo's
Speaker 2: Blackwell AI accelerators, a sign production of the chips back
Speaker 2: on track.
Speaker 3: We speak to a key executive, and.
Speaker 2: Days after Tesla wild crows with its Optimus AI robops,
Speaker 2: we now know they were remotely operated by humans.
Speaker 3: After all. We start with news that could have a.
Speaker 2: Major impact USAI chip manufacturers, including in Nvidia. Sources tell
Speaker 2: bloom News that the Biden administration and officials have discussed
Speaker 2: capping sales of advanced AI chips to certain countries. The
Speaker 2: sources and officials are specifically focused on Persian Gulf countries
Speaker 2: that have shown a growing interest in AI data centers.
Speaker 3: Looking at the.
Speaker 2: Markets, these are the names that are impacted in VideA,
Speaker 2: AMD Intel. It's worth noting in that reaction that a
Speaker 2: part of the declines that if you're just joining US,
Speaker 2: have accelerated in the last thirty minutes is a really
Speaker 2: ugly earning sprint from ASML, which we'll get to momentarily.
Speaker 2: Bloombergs Ian King joins US in San Francisco. Okay, So
Speaker 2: the US is looking at some of these Middle East
Speaker 2: nations because we know they're throwing a lot of money
Speaker 2: behind AI. Previously US officials were looking at China and
Speaker 2: capping export of AI chips to them. What do we
Speaker 2: know about this latest initiative about blocking access to the accelerators.
Speaker 4: Yeah, I mean this is obviously the key choke point,
Speaker 4: that the one thing that washing can do to really
Speaker 4: control what happens, who gets what capabilities. The concern is,
Speaker 4: as you said about China, but what will the Middle
Speaker 4: East do in terms of allowing access to these capabilities
Speaker 4: to China as on a remote basis? All kinds of considerations,
Speaker 4: all kinds of concerns. We've used export controls up until now.
Speaker 4: Now we're looking at perhaps a more broader blanket approach
Speaker 4: for our audience.
Speaker 2: Some of the big technology sometimes they struggle to understand
Speaker 2: what it is the US is trying to prevent an
Speaker 2: AI accelerator is a high performance chip and it goes
Speaker 2: into a data center. How is it that any government
Speaker 2: can say to a company, okay, we cannot allow you
Speaker 2: to sell your best thing to any market. That's basically
Speaker 2: what they're trying to do, right.
Speaker 3: That's exactly it.
Speaker 4: It's trying to basically place a cap on the capabilities
Speaker 4: of a country or a company and stopping them from
Speaker 4: having the ability to develop an advanced AI model, which
Speaker 4: as we know, can have all kinds of capabilities. And
Speaker 4: once it's out there in the wild, who knows what
Speaker 4: happens with it.
Speaker 2: Okay, let's get to the breaking news of the last
Speaker 2: thirty minutes. ASML, which is Europe's most valuable company but
Speaker 2: also a leading maker of chip equipment chip making equipment,
Speaker 2: has given us earnings and.
Speaker 3: A pretty ugly forecast.
Speaker 2: It has cut its gross bookings outlook for fiscal twenty
Speaker 2: five to a much more narrow range, and as we
Speaker 2: can see on the screen, it shares have reacted very negatively.
Speaker 2: What do we learn through that metric?
Speaker 4: Yeah, I mean, bookings are really the way that a
Speaker 4: company says, hey, this is roughly what our revenue is
Speaker 4: going to be at this given point. It's a lead indicator.
Speaker 4: These machines, as we know, are absolutely enormous. They take
Speaker 4: a long time to make, so it's very much a
Speaker 4: leading indicator of demand for the whole of the industry.
Speaker 2: Let's look at some of the other names they're impacted.
Speaker 2: So ASML makes the machines which manufacture the chips, it
Speaker 2: doesn't make the chips themselves. Why is it then that
Speaker 2: names like Nvidia and AMD Intel saw their own declines accelerate.
Speaker 2: What is it that we're learning about the sector as
Speaker 2: a whole.
Speaker 3: A couple of things here.
Speaker 4: One might be more ASML specific, but in general, chip
Speaker 4: equipment is as a leading indicator you buy equipment, particularly
Speaker 4: ASML's way ahead of time thinking about what you're going
Speaker 4: to be doing this time next year. But ASML's look
Speaker 4: at their customer base. Basically they have three customers. Two
Speaker 4: of those customers, some song in Intel right now, are
Speaker 4: in cutback mode. They're in trouble mode.
Speaker 2: There is a link between the first story we covered
Speaker 2: and ASML, which is the United States along with allies,
Speaker 2: has also looked at the mechanism of controls on chip
Speaker 2: making equipment, and ASML has been at the center of that.
Speaker 2: In the context of extreme ultra violet lithography. Please take
Speaker 2: it from there and just explain why these machines are
Speaker 2: so critical and why governments want to control them.
Speaker 1: Yeah.
Speaker 4: I mean, you've got a production line lots of different
Speaker 4: machines made by lots of different companies Applied Materials here, Kla,
Speaker 4: ten Core here, Tokyo Electron, but the keystone piece of
Speaker 4: equipment is ASML. If you want to make an advanced tip,
Speaker 4: you need their EUV machine and they're not allowed to
Speaker 4: explort those to China because we, at least Washington doesn't
Speaker 4: want China to have that capability.
Speaker 3: And interesting in all of.
Speaker 2: This, and I kind of mentioned it a moment ago,
Speaker 2: this is Europe's most valuable company. They are a Dutch
Speaker 2: company with a footprint here in Silicon Valley, customers here
Speaker 2: in America. Where are they doing business principally, where are
Speaker 2: their biggest customers.
Speaker 4: For everything advanced? I mean they have basically sixty percent
Speaker 4: of their revenue comes from Intel, Samsung and more importantly
Speaker 4: TSMC so all over the world wherever these factories are,
Speaker 4: but really concentrated in these companies that want to make
Speaker 4: the world's most advanced chips.
Speaker 2: Bloomberg's Ian King, who leads to making up to coverage
Speaker 2: at Bloomberg, Thank you very much.
Speaker 1: Now.
Speaker 2: Earlier today, the US Department of Justice Deputy Attorney General
Speaker 2: Hetel Doshi spoke exclusively on Bloomberg's The Opening Trade and
Speaker 2: said this about the importance of competition.
Speaker 5: I think that history has shown us that the considered
Speaker 5: judgment regulatory bodies and legislative bodies across the world has
Speaker 5: really been the competition fuels entrepreneurship and innovation.
Speaker 3: In a way unlike anything else.
Speaker 5: And that's why competition, rather than consolidation or concentration of power,
Speaker 5: is prize in both regulatory and enforcement.
Speaker 3: Schemes across the world.
Speaker 2: Okay, those are the top news items in tech today.
Speaker 2: Let's bring in Lisa Ericsson, head of Public Markets Group
Speaker 2: at US Bank four hundred and eighty billion dollars in
Speaker 2: assets under management. Let's get the investor analysis. Two pieces
Speaker 2: of semiconductor industry news. Right, Bloomberg reporting that the US
Speaker 2: is looking at export controls of aichips in the Middle East,
Speaker 2: and then ASML cutting it its gross bookings outlook, what
Speaker 2: is your assessment of where you want to treat the
Speaker 2: chip industry?
Speaker 3: Right?
Speaker 2: Now because for so long it has been the centerpiece
Speaker 2: I think for a lot of investors' attitude, at least
Speaker 2: towards the technology sector.
Speaker 6: Lisa, Well, certainly what's going on in the chip industry
Speaker 6: and in technol in general is key for the US
Speaker 6: stock market simply because it is such a large weight
Speaker 6: and an influence not only on the capitalization and its
Speaker 6: price performance, but also in terms of a large share
Speaker 6: of the earnings drivers of what's going on in the
Speaker 6: S and P five hundred. So we do view any
Speaker 6: guidance and forward outlook coming out of the third quarter
Speaker 6: earning seasons from the technology industry as a whole, including chips,
Speaker 6: as certainly one thing.
Speaker 3: To keep an eye on.
Speaker 6: We are encouraged, even though we're very early in the
Speaker 6: earning season by initial reports of continued CAPEX spend both
Speaker 6: on technology in general as well as for AI related products.
Speaker 6: But again, as these earning reports continue to come out,
Speaker 6: we'll want to monitor for further impact.
Speaker 2: You know, the reporting on the export controls for them
Speaker 2: at least you know it states quitequickly, this is the
Speaker 2: Biden administration thinking about it, and in November we have
Speaker 2: an election where the administration might change I will not
Speaker 2: ask you to comment on that reporting, but there must
Speaker 2: be an element where investors have to factor in the
Speaker 2: election as one fact or one risk in their approach
Speaker 2: to markets.
Speaker 3: How do you approach that.
Speaker 6: Lisa, Well, the election certainly is a toss up with
Speaker 6: the pulls and the prediction market so close. And to
Speaker 6: your point, whatever policy comes out of the election, whether
Speaker 6: it's in the president presidential race or in both houses
Speaker 6: of Congress, can make an impact on again how the
Speaker 6: economy is impacted by regulation and other issues. So we
Speaker 6: are monitoring that very closely. Obviously, right now there are
Speaker 6: some different views on where regulation may head, and so
Speaker 6: we just need to see what the outcome is. As
Speaker 6: we move forward into these next few weeks.
Speaker 3: I guess calendar.
Speaker 2: Fourth quarter or the month of October for earnings will
Speaker 2: be really interesting. Do you think that we'll find ourselves
Speaker 2: in the context of big tech, the mag seven in
Speaker 2: rude health or are you kind of expecting to go
Speaker 2: into this earning season braced for some signs of things
Speaker 2: tapering off, at least in the context of this US economy.
Speaker 6: Well, certainly, if you look at the expectations for third
Speaker 6: quarter earnings contared to two Q investors actually have already
Speaker 6: adjusted for the fact that the economy and also corporate
Speaker 6: profitability and revenues are snowing. So just as an example,
Speaker 6: in the second quarter, we came in on the S
Speaker 6: and P five hundred and earnings said about eleven percent,
Speaker 6: and they're only expected to be about three point nine
Speaker 6: percent in the third quarter. That being said, three point
Speaker 6: nine percent for the third quarter is still a very
Speaker 6: solid number, and we believe that is certainly very achievable,
Speaker 6: especially since the bar for that it started earlier a
Speaker 6: few months ago at higher levels and has come down
Speaker 6: to three zero point nine percent, So that bar seems
Speaker 6: pretty reasonable and investor expectations have been dampened, so we
Speaker 6: do view it as an achievable number.
Speaker 2: Lisa, what is the one thing that the technology investor
Speaker 2: must look at most closely in twenty twenty five.
Speaker 6: Well, certainly again both the ongoing health of the consumering
Speaker 6: terms of demand for products, but more importantly as well,
Speaker 6: the appetite for capex is going to be important, and
Speaker 6: so again looking for that forward guidance that's coming out
Speaker 6: of these third quarter earnings reports, and also the demand
Speaker 6: and spend and proclivity for again that technology, particularly AI
Speaker 6: demand is really going to be key as we look
Speaker 6: at what's coming out of those guidance numbers.
Speaker 2: Lisa Erickson had a public markets group at US Bank.
Speaker 2: Really great to have you on the program, Thank you
Speaker 2: very much. Let's take a quick look at shares of Apple,
Speaker 2: which touched an intra day record high in the session.
Speaker 2: Actually earlier this morning, Apple unveiled a new iPad Mini
Speaker 2: that it hopes will attract consumers to his early generatorve
Speaker 2: AI offerings. The tablet has an eight point three inch
Speaker 2: screen in Apple's a seventeen pro chip to power Apple Intelligence,
Speaker 2: which is due for release later this month. A new
Speaker 2: iPad Mini costs four hundred and ninety nine dollars for
Speaker 2: the Wi Fi.
Speaker 3: Model and six hundred and forty nine dollars.
Speaker 2: For the version that has a cellular connection. It goes
Speaker 2: on sale October twenty third. Now coming up on the program,
Speaker 2: Too Good to Be True a major reveal on the
Speaker 2: human touch that helped Tesla's Optimus robots appear to come
Speaker 2: to life. More on my reporting about that in just
Speaker 2: a little bit. Let's go back to SML. This is
Speaker 2: a big story. The shares in Europe are now down
Speaker 2: twelve point six percent, which I make the biggest drop
Speaker 2: intra day since two and two.
Speaker 3: Very simple.
Speaker 2: They only booked half the orders half the orders in
Speaker 2: the quarter the analysts were expecting. But they also lowered
Speaker 2: guidance for fiscal twenty five. They lowered the range of
Speaker 2: gross bookings, and as Ian King of Bloomberg News explained,
Speaker 2: this is a leading indicator. This is a chip equipment maker,
Speaker 2: the machines that make the chips, and it tells us
Speaker 2: looking forward that this is a sector that might be
Speaker 2: bracing for things to cool off. We will continue to
Speaker 2: track this story given the severity of that decline. ASML
Speaker 2: down twelve and a half percent. This is Bloomberg Technology. Hey,
Speaker 2: it's time for talking tech and first start Ericsson chez
Speaker 2: saw after announcing third quarter earnings beat analysts expectations. The
Speaker 2: company also announced to fifty five percent sales growth across
Speaker 2: North America. The strength thanks in part to a major
Speaker 2: partnership with AT and T.
Speaker 3: Plus.
Speaker 2: IBM is looking into misconduct allegations facing a top executive
Speaker 2: in China. A letter online accuses chairman Chen Zu Doong
Speaker 2: of accepting vouchers from external partners and violating the company's
Speaker 2: expense policies. IBM confirmed the letter is authentic. When reached
Speaker 2: by Bloomberg News, Chen declined to comment, and Warner Brothers
Speaker 2: discoveries Max is planning a major debut across New Asian markets.
Speaker 2: It comes as competitors like Disney and Amazon as scaling
Speaker 2: back investment in the region. Max recently launched in Japan
Speaker 2: through a partnership with a local streaming platform, and plans
Speaker 2: to launch in Australia in the first half of next year. Now,
Speaker 2: Bloomberg's learned that humans were remotely controlling some of Tesla's
Speaker 2: Optimist robot prototypes at its recent showcase.
Speaker 3: Musk told the crowd the humanoid.
Speaker 2: Androids would be quote the biggest product ever, but he
Speaker 2: did not disclose that they had human helpers on the night.
Speaker 2: The event was intended to generate investor buzz for upcoming products,
Speaker 2: but principally a Robotaxi. Bloomberg's Max Chafkin a Business Week
Speaker 2: and Elon Inc.
Speaker 3: Joins me now and.
Speaker 2: What we reported in the story Max yesterday, What sources
Speaker 2: told me is that this was kind of classic ELM.
Speaker 2: Three weeks before the event, he went to the team,
Speaker 2: the Optimist team and said I want optimists at the event,
Speaker 2: and they said, well, we don't have time to get
Speaker 2: the software ready. Teleoperation is our only option here. And
Speaker 2: now we know teleoperation was what was happening.
Speaker 7: Yeah, I mean it does undercut some of the impact
Speaker 7: of the event, you know, looking at the way people
Speaker 7: reacted to it. You know, the optimist robots, I would say,
Speaker 7: was sort of the biggest surprise, the thing that seemed to,
Speaker 7: you know, excite the investors and attendees the most.
Speaker 3: And as you say, ed the.
Speaker 7: Fact that they were using teleoperation, essentially remote control. It
Speaker 7: really makes it clear that although there may be some
Speaker 7: mechanical breakthroughs here, it's not clear how far Tesla's really
Speaker 7: come on AI, which, if you remember, is the whole
Speaker 7: purpose of this whole thing.
Speaker 2: You raise an important point, which was going into this
Speaker 2: because we reported intensely about it, the focus was Robotaxi,
Speaker 2: and on Friday, the morning after the event, the stockfell
Speaker 2: ten percent, in large part I think because there was
Speaker 2: a lack of detail about a future propriety ride hailing app.
Speaker 3: Would you share that assessment.
Speaker 7: Yeah, I mean, I think the problem here is that
Speaker 7: the Robotaxi story is still very much a story and
Speaker 7: nothing about the event kind of went against that. The
Speaker 7: event was held on a sound stage. I mean, you're
Speaker 7: talking about the tele operation of these Optimist robots, but
Speaker 7: you could make a similar critique about the.
Speaker 3: Cars that were unveiled right there.
Speaker 7: They're running on a closed course, you know, a handful
Speaker 7: of stops custom software. Not totally clear that the cars
Speaker 7: themselves were running exclusively on AI either. So again, you know,
Speaker 7: you have Elon Musk selling a vision of the future,
Speaker 7: but not necessarily showing a ton of progress in the present.
Speaker 2: Elon Musk is often late, but as you know across
Speaker 2: many of his companies, he often does get there in
Speaker 2: the end. And that's kind of the sentiment that's been shared.
Speaker 2: So what do we think will happen with a ROBOTAXI
Speaker 2: and an Optimus spot will end.
Speaker 3: A propriety ride hitting app go for it?
Speaker 7: I mean, as you say, Elon Musk is often.
Speaker 3: Late, and he's achieved a lot.
Speaker 7: This is one area where he has not achieved as
Speaker 7: much as he said. You know, he's been promising robotaxis
Speaker 7: essentially next year for years and we saw him do
Speaker 7: it again, you know, in twenty twenty six, twenty twenty seven.
Speaker 7: You could kind of hear in his voice during the
Speaker 7: event a lot of uncertainty about when exactly this would happen.
Speaker 7: And and the problem is that or it's both a
Speaker 7: problem and an opportunity. Musk has clearly sort of swore
Speaker 7: of the company into this direction, saying that this is
Speaker 7: essentially the future of everything. It's such a big market.
Speaker 7: So I think investors are gonna are likely to give
Speaker 7: him a lot of leeway here because of course it's
Speaker 7: a big opportunity and it's Elon Musk, as you say,
Speaker 7: but nothing is nothing should be taken for granted.
Speaker 2: Bloomberg's Max Chafkin of Elon Income Business Week, thank you
Speaker 2: very much.
Speaker 3: So coming up here on Bloomberg Technology.
Speaker 2: Dell is set to start shipping out servers with the
Speaker 2: newest Nvidia chips. We're going to speak with Arthur Lewis,
Speaker 2: president of Dell Infrastructure Solution Group.
Speaker 3: Next.
Speaker 8: This is Bloomberg Technology, all right.
Speaker 2: In Vidia's rollout of its next gen AI black World
Speaker 2: chips begins with Dell, the largest seller of service, says
Speaker 2: they're ready to begin shipping out devices with the chip
Speaker 2: next month. The sign the production of Blackwell is back
Speaker 2: on schedule We're joined now by Arthur Lewis, President of
Speaker 2: Dell Infrastructure Solutions Group, and March has been reported and
Speaker 2: made about Blackwell a delay or no delay. I guess
Speaker 2: the starting point is to ask you, Arthur, if this
Speaker 2: was a surprise to you that you were able to
Speaker 2: adjust or pivot and then ship next month unexpectedly.
Speaker 9: First, it's great to be back and thank you for
Speaker 9: having us on your show. No, not expect not unexpected
Speaker 9: at all. You know, we've been working on this very,
Speaker 9: very hard. If you think about, you know, the innovation
Speaker 9: that we've been delivering, you know, from you know the
Speaker 9: start of the ninety six eighty to you know what
Speaker 9: we announced at Dell Technologies World, from you know, Raxkill Infrastructure.
Speaker 9: You know, we talked about the fact that the Grace
Speaker 9: Blackwell product.
Speaker 10: Was you know, on the roadmap and you know, would be.
Speaker 9: Hitting for customer testing in the second half of this
Speaker 9: year with general availability coming next year. So we're just
Speaker 9: following through on the commitment that we made back at
Speaker 9: the beginning of this year.
Speaker 2: So the last three months of the year calendar aar
Speaker 2: are going to look a lot better for Dell, now,
Speaker 2: aren't they.
Speaker 10: Yeah, we have some really exciting products.
Speaker 9: You know, customers are facing density and power constraints in
Speaker 9: terms of these large you know rack infrastructure. And so
Speaker 9: we have three you know, significant product announcements that we
Speaker 9: had today at OCP. You know, number one is the
Speaker 9: XC ninety seven twelve, which is the you know Grace
Speaker 9: Blackwell seventy two NVL inc form factor. This product, air cooled,
Speaker 9: is twenty five times more efficient than the H one hundreds.
Speaker 10: But in addition to that, we're bringing density to compute.
Speaker 9: We also announced a touring based A and D system,
Speaker 9: all direct to chip liquid cool that does.
Speaker 10: Two amazing things.
Speaker 9: Number One, it solves a density problem by providing twenty
Speaker 9: seven thousand cores per rack. And secondly, it's highly performed
Speaker 9: up to sixty times faster than the previous generation.
Speaker 3: The industry, industry wide are not making margin on this.
Speaker 3: Are you going to make margin on this? And if so, how.
Speaker 10: Yeah?
Speaker 9: So I think you know, we showed that we were
Speaker 9: able to make margin in Q two, achieving eleven percent
Speaker 9: operating income for the.
Speaker 10: Overall ISCHI business.
Speaker 9: You know, our job is to remove the shroud of
Speaker 9: complexity and mystery around generative AI and deliver value to
Speaker 9: customers and we will be rewarded for that value in
Speaker 9: the Tier two CSP space as well as in the
Speaker 9: enterprise space, where we have even more opportunity to attach
Speaker 9: more of our service and storage offerings and networking offerings.
Speaker 2: It was interesting what you're talking about there on the
Speaker 2: air cooling side. Everyone keeps asking me about liquid calling.
Speaker 2: What is the Dell position on liquid calling? Because with Blackwell, right,
Speaker 2: you were sampling the technology before you shipped it, and
Speaker 2: you must have thought a little bit about a pivot
Speaker 2: to liquid calling.
Speaker 9: Perhaps we've been talking about liquid cooling since the beginning.
Speaker 9: You know, we have air cooling, liquid assisted cooling, rear
Speaker 9: door heat exchangers, heat capture cabinets, and direct to chip
Speaker 9: liquid cooling. You know, once you get into the one
Speaker 9: thousand TDP range, this is where directed chip liquid cooling
Speaker 9: is absolutely mandatory. But we have a wide variety of
Speaker 9: offerings that span the air cooling, the liquid assisted air cooling,
Speaker 9: the heat capture cabinet, the rear door heat exchangers, as
Speaker 9: well as the directed to chip liquid cooling. Not all
Speaker 9: environments are ready to support liquid cooling, but our portfolio
Speaker 9: is comprehensive and broad and supports all the requirements that
Speaker 9: customers have to deliver the most dense and energy efficient
Speaker 9: infrastructure in the market.
Speaker 2: Arthur, before we let you go, give us insight into
Speaker 2: the reality of Blackwell volumes. This is small, right or
Speaker 2: is there some actual scale here to production?
Speaker 9: Look, our volumes is you know, contemplated in the guidance
Speaker 9: that we provided at the end of Q two. If
Speaker 9: we have any date to that guidance, you know, we'll
Speaker 9: update that in Q three.
Speaker 10: But you know, we're very.
Speaker 9: Excited about the amount of innovation that's being driven in
Speaker 9: this space. If you think about you know, where we
Speaker 9: were at the beginning of the year, we were talking
Speaker 9: about Rack infrastructure with sixty two, yes, sixty four and
Speaker 9: seventy two GPUs. Now we're up to ninety six and
Speaker 9: one hundred and twenty a GPUs and we're talking about
Speaker 9: you know, scalable systems. I mean, think about this head
Speaker 9: seven hundred and sixty eight GPUs interwoven to operate as
Speaker 9: one system with integrated networking for maximum throughput.
Speaker 10: It's just amazing what we're seeing.
Speaker 2: Arthur Lewis's Dell Infrastructure Solutions Group. It's really great to
Speaker 2: have you back on the program. Thank you that does
Speaker 2: it For this edition of Bloomberg Technology, Stay tuned for
Speaker 2: special coverage ahead of an exclusive interview between former President
Speaker 2: Trump and Bloomberg Editor in chief John mickelf Wait, this
Speaker 2: is Bloomberg