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Speaker 2: From Marhart where Innovation, money and power Collie in Silicon Valley.
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Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed.
Speaker 4: Ludlow live from San Francisco. This is Bloomberg Technology. Coming
Speaker 4: up on the show, the latest on ARM and Qualcom
Speaker 4: after a key tech license deal is canceled, and why
Speaker 4: some analysts predict a tough road ahead for Tesla ahead
Speaker 4: of its earnings report. Plus, We're live at B twenty
Speaker 4: and South Paulo with a conversation with Google Brazil's president,
Speaker 4: Fabio Coello.
Speaker 5: Let's get to our top story.
Speaker 4: Shares of chip maker Qualcom and chip design firm ARM
Speaker 4: are both lower morning, Bloomberg reporting that ARM canceled a
Speaker 4: license issued to its longtime partner Qualcom, potentially leaving the
Speaker 4: leader in Android smartphone processes without key intellectual property to
Speaker 4: design chips. The showdown could hit the finances of both
Speaker 4: companies and comes ahead of a breach of contract trial
Speaker 4: in December. That dispute centers around an acquisition Qualcom made
Speaker 4: of another chip firm that was already licensing ARMED designs,
Speaker 4: and those blueprints then passing on to Qualcomm. Bloomberg Intelligence
Speaker 4: senior chip analyst Counjan Sabanni has published his React research
Speaker 4: with colleagues in response to that licensed cancelation and joins
Speaker 4: us on set in San Francisco. Let's start with your
Speaker 4: reaction the news with significant overnight investors do not like it.
Speaker 4: Clearly the timing is a surprise. What do you make
Speaker 4: of it?
Speaker 6: I mean the timing of the notice for the December
Speaker 6: sixteen trial, which is almost two months of This doesn't
Speaker 6: seem like a coincidence to us. This seems as a
Speaker 6: pressure tactic for arm on Qualcom. But bring this to
Speaker 6: a settlement before even the trial begins.
Speaker 4: This is a technology story, and historically Quialdcom is used
Speaker 4: armed designs for its chips until this week when it
Speaker 4: announced its latest generation processes which relate to that acquisition.
Speaker 5: It's a company called Nuvia.
Speaker 4: I spoke to the Qualcom CEO, Carsiano Amon yesterday prior
Speaker 4: to this news coming out.
Speaker 5: You're aware of that.
Speaker 4: Let's just very quickly listen to what he said about
Speaker 4: the company's technology strategy.
Speaker 2: So we went from fault took course to the BC's
Speaker 2: and now industrial and that has been part of a
Speaker 2: strategy we did all organically. With some of the small acquisitions,
Speaker 2: we feel we have a very competitive roadmap and we're
Speaker 2: thinking about the new what is the new innovation that
Speaker 2: is coming through those markets.
Speaker 4: The acquisition he's referencing there was Nuvia. Just explain the
Speaker 4: basics of that deal and now why the timing of
Speaker 4: this piece of news is so significant.
Speaker 6: So Nuvia designs were based on ARM architecture and they
Speaker 6: had a license with ARM. When Qualcom acquired Nuvia. ARM
Speaker 6: issue what that the license was on a much lower
Speaker 6: rate than what it had with Qualcomm. Now, Qualcom did
Speaker 6: reiterate and build on top of the Nubia architecture, which
Speaker 6: they are now calling sort of their own designs. So
Speaker 6: the issue here is that the license agreement based on
Speaker 6: which the Orion chips were built on, we're at a
Speaker 6: much lower rate and ARM is demanding a higher rate
Speaker 6: comparable to what Qualcom is paying on its ARM based designs.
Speaker 4: This is a complicated story, and it's complicated for vanists
Speaker 4: like you covering. This is what Calcom had to say
Speaker 4: in response to the Bloomberg reporting and its fighting talk.
Speaker 4: As you'd imagine, this is more of the same from
Speaker 4: our more unfounded threats designed to strong arm a long
Speaker 4: time partner, interfere with our performance leading CPUs and increase
Speaker 4: royalty rates regardless of the broad right under our architectural license.
Speaker 5: They go on to say other things.
Speaker 4: I think the main point is we are headed to
Speaker 4: trial in December on the royalty rates piece.
Speaker 5: How do you see this playing out?
Speaker 4: Armed does not want to lose money with Qualcom going
Speaker 4: with different designs, right. Qualcomm is the most important smartphone
Speaker 4: processor maker when it comes to Android platform.
Speaker 5: There's quite a lot at stake here.
Speaker 6: Definitely for ARMED Qualcom it's number one customers with about
Speaker 6: three hundred and twenty million in revenues.
Speaker 5: Last year, so it does.
Speaker 6: Not definitely want the number one customer to go away.
Speaker 6: But we don't think that a litigation where blocking Qualcom's
Speaker 6: ability to ship chips based on the ARM arguement is
Speaker 6: more likely because it does not just impact Qualcom, but
Speaker 6: it impacts the entire industry. I mean imagine a scenario
Speaker 6: where phonemakers cannot get qual Comb chips in which they
Speaker 6: are getting ready for the next generation of AI smartphones.
Speaker 4: I should add the ARM decline to comment on the
Speaker 4: reporting that was Congensubani of Bloomberg Intelligence the analysis, and
Speaker 4: later in the show we'll go deeper on that Bloomberg
Speaker 4: reporting on the story. Let's talk a bit about markets
Speaker 4: and then the invested attitude.
Speaker 5: Toward the chip sector.
Speaker 4: Hillary Frisch, senior Research analysts for Software Services and Enterprise
Speaker 4: Tech at clear Bridge, joins us. And it's so interesting
Speaker 4: because there's a lot of noise and single name specific noise,
Speaker 4: but actually those headwinds are offset by massive tailwinds for
Speaker 4: the chip sector, largely related to the enterprise investment in
Speaker 4: AI infrastructure.
Speaker 7: Hillary, Yes, they absolutely are. I agree with you one
Speaker 7: hundred percent.
Speaker 5: Where are you focusing? Go ahead, please continue.
Speaker 7: Yeah, we're seeing growing demand indications for demand for cloud migrations,
Speaker 7: demand for AI, more AI projects going into production. There's
Speaker 7: a lot of debate around that, but all there's more
Speaker 7: activity now than there was six months ago. There's more
Speaker 7: likely to go into production in the first half of
Speaker 7: the year than second half of this year, So so
Speaker 7: those RULs are really starting to move.
Speaker 4: Where I would like to talk about qual Con with you,
Speaker 4: is this debate about how we as consumers will use AI.
Speaker 4: To Qualcomm's mind, it is on device, of course, it
Speaker 4: is that's their entire business, right, But they see a
Speaker 4: world where within five years all of us having an
Speaker 4: AI smartphone. When you look at the markets and you
Speaker 4: look at the names across the technology sector, is that
Speaker 4: a part of your thesis and your investment approach, that
Speaker 4: idea that we're on device sooner rather than later.
Speaker 7: I think the requirements for efficiency in processing, Jenny, I
Speaker 7: will require that processing occur everywhere, including on the device.
Speaker 7: There's clearly going to be a tremendous amount of centralized
Speaker 7: processing out the hyperscalers themselves at ancillary clouds with larger
Speaker 7: and smaller models, and there's going to be a diversity
Speaker 7: within the ecosystem. But absolutely the device is part of
Speaker 7: the thesis.
Speaker 4: There are interesting parts of the enterprise software space as well,
Speaker 4: where everyone is sticking the letters A and I in
Speaker 4: front of existing products.
Speaker 5: Are you finding it.
Speaker 4: Possible to discern what is tangibly good, new, impressive, and
Speaker 4: what is just marketing?
Speaker 7: It's such a good question, ed. There is a tremendous
Speaker 7: amount of marketing speak, fud hopes, dreams, and promises. But
Speaker 7: at the end of the day, what is interesting about
Speaker 7: this cycle versus prior cycles, first and foremost is just
Speaker 7: how quickly, incumbents have moved to embrace Jenai, to incorporate
Speaker 7: it into their product lines. Some key incumbents like Microsoft
Speaker 7: and Salesforce, have pivoted their entire organizations around Jenai. They've
Speaker 7: re architected their R and D efforts around it, seemingly overnight,
Speaker 7: let's call it within a year or a little less
Speaker 7: and even longer for Microsoft. But at the end of
Speaker 7: the day, there's a trumanous amount of activity the incumbents. Actually,
Speaker 7: there's a lot of debate over who will win, who
Speaker 7: will lose. There's a lot of investor focus on the
Speaker 7: potential disintermediation of incumbents, but they bring a lot to
Speaker 7: bear this time around, not just the data, not just
Speaker 7: the workflows, not just the customer trust, not just that
Speaker 7: whole end of it. But Jenny I, at the end
Speaker 7: of the day, isn't just about a building a bot
Speaker 7: or a NAP or an interface. It's about the complexity
Speaker 7: of the back end and that entire orchestration, the provisioning,
Speaker 7: the identities and all the things that go along with it,
Speaker 7: which is very hard to do. So that's the key
Speaker 7: of part of what I'm looking for. Who can handle
Speaker 7: the entirety of the complexity of what looks very simple
Speaker 7: on the front end of say an agent and how
Speaker 7: they will succeed in that. And we're gauging that process
Speaker 7: as we grow as we go. But so for all,
Speaker 7: the early indications are fairly.
Speaker 5: Promising and how they handle it.
Speaker 4: Let's end the conversation by asking what happens next across
Speaker 4: the field of software enterprising the hardware names you cover,
Speaker 4: how primed are we for more M and A and
Speaker 4: more consolidation.
Speaker 5: It looks as.
Speaker 7: Though we're primed for more M and A and consolidation
Speaker 7: going forward. That would have been the natural inclination to
Speaker 7: start with. We've had a sluggish spending environment, most certainly
Speaker 7: for a variety of reasons. I think the elections have been.
Speaker 8: Part of that.
Speaker 7: There are a lot of factors that are part of that,
Speaker 7: as including a wholesale focus on Jenny I by corporations.
Speaker 7: But going forward, there's better spending indications. We're going to
Speaker 7: see both administrative potential. New candidates look likely to permit
Speaker 7: more in the way of M and A. There's going
Speaker 7: to be more imperative to do that. You're seeing more
Speaker 7: private equity activity and you're seeing the low end of
Speaker 7: valuations called the ibms, the SEPs, the oracles come up
Speaker 7: providing a floor. So I think all of that and
Speaker 7: hopefully declining interest rates will precipitate a more active M
Speaker 7: and a environment going forward.
Speaker 4: Hillary Frish, Senior Research analysts for Software Services and Enterprise
Speaker 4: Technology at Clearbridge, Thank you very much. Apple CEO Tim
Speaker 4: Cook makes a visit to Beijing, meeting with China's TECHSAR
Speaker 4: with a promise to keep investing in the country. Bloomberg's
Speaker 4: chief correspondent for Apple and Consumer Electronics, Mark German with us. Now,
Speaker 4: and you and I have talked so much about the
Speaker 4: supply chain in China, and China is an end market,
Speaker 4: but it is notable that he goes in person and
Speaker 4: has this very public meeting.
Speaker 9: What do we know, Mark, Yeah, So around this time
Speaker 9: every year, UP executives make a track down to Asia.
Speaker 9: Greg Joswiak right now they're head of marketing is in
Speaker 9: Southeast Asia. Tim Cook and Jeff Williams Cooking, the CEO
Speaker 9: of Loans being the COO, are now in mainland China,
Speaker 9: and Cook typically goes to China two to four per year,
Speaker 9: other than during the pandemic years he was there quite often.
Speaker 9: There's a lot at stakes for Apple and China, right,
Speaker 9: they need to meet with their big providers and partners there.
Speaker 9: China Mobile, you had a meeting with them, they pledged
Speaker 9: continued cooperation. Cook pledge continued cooperation with the IT Minister
Speaker 9: of China. Of course, he's not going to go there,
Speaker 9: meet with the IT minister and say we're no longer
Speaker 9: going to cooperate in our second or third biggest market, right,
Speaker 9: So that's kind of obvious.
Speaker 5: So this is just how things go.
Speaker 9: When you are a multinational company as big as Apple,
Speaker 9: you have to meet with your partners and government regulators
Speaker 9: in the countries that you work with and work in,
Speaker 9: and these meetings are a big part of that. Obviously,
Speaker 9: Apple's unique as a US based tech company to have
Speaker 9: such freedoms in China. They have around forty retail stores there.
Speaker 9: For the most part, almost all of their services operate there.
Speaker 9: There are some nuances regarding cloud storage for iCloud. Obviously
Speaker 9: Apple Intelligence is not available there yet. So these are
Speaker 9: things they're going to continue to work on and keeping
Speaker 9: in and meeting with that government is important. Not to
Speaker 9: mention the necessary meetings that Cook and Williams Obviously Williams
Speaker 9: runs a supply chain needs to have with fox Conn
Speaker 9: other supply chain partners locally.
Speaker 4: Mark Apple shares down around a percentage point in the session.
Speaker 4: There's reports out there this morning that Apple's scaling back
Speaker 4: production of the Vision Pro.
Speaker 5: What do we know about that and what do you
Speaker 5: make of it?
Speaker 9: I think it's a bit of a misnomer, right. It's
Speaker 9: not that they're scaling back production of the Vision Pro
Speaker 9: because they're planning on canceling it or getting rid of it.
Speaker 9: Before Apple releases new versions of products, they need to
Speaker 9: scale back production of the current product, and the goal
Speaker 9: is to have enough units to fulfill demand and fill
Speaker 9: the channels until the new one's already And there is
Speaker 9: a new version of the Vision Pro coming out in
Speaker 9: early twenty twenty six. I'm told that's a second generation
Speaker 9: version with a faster processor and focus on artificial intelligence.
Speaker 9: At the end of twenty twenty five, they're going to
Speaker 9: unveil a cheaper model of the Vision Pro, reduce the specifics,
Speaker 9: try to get the price pointing down by about fifteen
Speaker 9: hundred to eighteen hundred dollars, and so you need to
Speaker 9: scale back production ahead of time, so you don't have
Speaker 9: over inventor and those new models come out now, the
Speaker 9: new once And the interesting part here is that Apple
Speaker 9: believes it's going to take a year for them to
Speaker 9: run out of existing supply of the Vision Pro, which
Speaker 9: makes sense given that the pace of this thing is
Speaker 9: selling at But I've seen no indication of any abandonment
Speaker 9: of the vision Pro line. In fact, what I'm seeing
Speaker 9: is increased hiring for the Vision Pro. I'm seeing increased investment,
Speaker 9: and I'm seeing increased optimism about the future of the
Speaker 9: product now that they're sort of getting a new roadmap
Speaker 9: together of different types of devices within that family.
Speaker 4: Bloomberg's Mark Gunman and all things Apple, thank you very much,
Speaker 4: and I think we're tracking. Is Tesla set to report
Speaker 4: earnings after the closing bell today?
Speaker 5: What do we expect.
Speaker 4: Let's go out to Bloomberg's Creature now in London, who
Speaker 4: leads our global autized coverage And.
Speaker 5: This is an important print and an important call. Where
Speaker 5: do you want to start?
Speaker 4: There is a long list of things that invest in
Speaker 4: Tesla fans and tests the writin is will want to
Speaker 4: know about.
Speaker 10: Yeah, I think deliveries wise going in we know that
Speaker 10: they were up a little bit for the quarter. I
Speaker 10: think the question is going to be sort of how
Speaker 10: how they pulled that off right, and to what extent
Speaker 10: were they able to keep pricing firm. I think the
Speaker 10: expectation generally is that it is that earnings may actually
Speaker 10: dip a bit in terms of, you know, because of
Speaker 10: the fact that this is a company that is still highly,
Speaker 10: highly reliant on the Model three and Model Why and
Speaker 10: those products are a bit tired and in need of
Speaker 10: some upgrades, and we didn't really see the Model Why
Speaker 10: excuse me, the Model three refresh.
Speaker 5: Really sort of moved the needle. You know.
Speaker 10: I would be interested in, of course, whether Musk has
Speaker 10: anything to say about a Model Why refresh. He sort
Speaker 10: of ruled out that anything is coming before the end
Speaker 10: of this year, but that I think is something everybody's
Speaker 10: expecting being a part of these you know, more affordable
Speaker 10: models that company has teased coming in the first half
Speaker 10: of twenty twenty five.
Speaker 4: The timing of the earnings reform call is so interesting
Speaker 4: because it comes so quickly after we robot the robotaxi event,
Speaker 4: and it feels like they left a lot out there,
Speaker 4: or a lot that they didn't put out there right
Speaker 4: investers wanted to know about a proprietary ride heading app.
Speaker 4: Do you think Musk is going to talk about that
Speaker 4: on the call, Craig.
Speaker 10: I would be surprised, just because it feels to me like,
Speaker 10: you know, even some of the timelines that Musk put
Speaker 10: out there at the event were a good ways off,
Speaker 10: and we know that, you know, as he himself acknowledges,
Speaker 10: he tends to be overly optimistic about these timelines, and
Speaker 10: so that still feels like a business that, you know,
Speaker 10: we're not going to see anytime soon, and so it
Speaker 10: would maybe be premature to get into on the call.
Speaker 10: I think another sort of you know topic that I
Speaker 10: would be surprised if it didn't come up with some
Speaker 10: discussion of Musk's involvement in politics and yes, you know,
Speaker 10: the company to its credit, you know, solicit retail investor questions.
Speaker 10: I would be shocked if we didn't have, you know,
Speaker 10: something come up along those lines. We've heard Musk address
Speaker 10: this in the past.
Speaker 4: For now, Tesla is still in the business of selling
Speaker 4: electric vehicles to consumers. What does the environment and other
Speaker 4: reports and earnings tell us about how that's going around
Speaker 4: the world.
Speaker 10: I think so many manufacturers are really pivoting to you know, hybrids,
Speaker 10: right and plug in hybrids, range extended electric vehicles. I
Speaker 10: think Tesla you know, sort of went out of its
Speaker 10: way a couple quarters ago to say to highlight that
Speaker 10: fact and say it was their belief that this is
Speaker 10: the wrong strategy. I think you have to sort of,
Speaker 10: you know, look at at what has happened at some
Speaker 10: of Tesla's biggest competitors and question whether they were really
Speaker 10: correct because we've seen much more robust demand for hybrids,
Speaker 10: whether they plug in or not. You know, Toyota, for instance,
Speaker 10: is just really kind of lighting the world on fire
Speaker 10: with its hybrid business. And so you know, Tesla, I
Speaker 10: think is struggling with some of these broader trends that
Speaker 10: the industry is seeing have slowed down for a battery
Speaker 10: electric vehicle demand.
Speaker 5: Bloomber's cry true down in London, Thank you so much.
Speaker 4: Now coming up on the show, Asana just released its
Speaker 4: latest AI workflow tools page. Costello, Company's head of AI
Speaker 4: joins us. Next, this is Bloomberg Technology Enterprise work Management
Speaker 4: platform as Sana just wrapped its work Innovation Summit where
Speaker 4: announced new AI features that will do things like project
Speaker 4: coordination and workforce orchestration teams also be able to embed
Speaker 4: the new features without using code. Here with Morris Page Costello.
Speaker 4: She's the head of AI at Asana, and there's such
Speaker 4: pressure right now to ship new products, almost like on
Speaker 4: a weekly cadence. It was a big week for you.
Speaker 4: They start with the without code bit. Why is that significant?
Speaker 11: This is important because leaders and team leads know that
Speaker 11: the most important work is across teams and they need
Speaker 11: to be empowered to set up AI to work in
Speaker 11: their existing workflows, across their existing work tools. No one
Speaker 11: wants more places to work. No one wants to remember
Speaker 11: when to engage with AI or not. And this enables
Speaker 11: people to actually set up AI directly where they're already working.
Speaker 4: What you just said, you know whether to engage or not,
Speaker 4: how to engage. Do you have any sort of early
Speaker 4: case studies or examples of how customers are actually using
Speaker 4: it and whether or not they're benefiting in a sort
Speaker 4: of easy to understand way.
Speaker 5: Yeah.
Speaker 11: One of the customers and the beta that is now
Speaker 11: available today was a career channel Outdoor, and they're a
Speaker 11: multinational advertiser. They use these AI workflows to effectively empower
Speaker 11: their creative productions and so when sales would send requests
Speaker 11: to creative teams, picture twenty five hundred requests a month,
Speaker 11: these requests were with before and after saved sixty percent
Speaker 11: of manual time and fifteen hours per request. And that's
Speaker 11: just one part of these smartworkflows.
Speaker 4: In any company, particularly in an enterprise software company, right,
Speaker 4: there is a role that an AI agent can play.
Speaker 4: If you work at any tech company, you often have
Speaker 4: like in house software where there would be a very
Speaker 4: clear and useful use case for an AI agent. But
Speaker 4: I think loads of people that watch the show they
Speaker 4: don't really know what an AI agent is.
Speaker 5: Could you define it for us?
Speaker 11: Yes, an AI agent is effectively using generative AI or
Speaker 11: LM models to make a choice, effectively tool use and
Speaker 11: reasoning about what the proper next steps are. Now importantly,
Speaker 11: enterprise organizations care about accuracy, reliability, and ultimately auditability, and
Speaker 11: that's where this solution is very unique because it sits
Speaker 11: on top of the existing scaffolding of work structure in ASANA,
Speaker 11: which is all about transparency around who's doing what, by
Speaker 11: when and why, which you care about when AI is
Speaker 11: doing work as well.
Speaker 4: Mark Benioff, who is the CEO of Salesforce, which is
Speaker 4: a very large enterprise or SaaS company has been talking
Speaker 4: a lot about what an AI agent is or is not,
Speaker 4: particularly in his critique of Microsoft's co Pilot, but there
Speaker 4: is clearly a tension on it. Why is it important
Speaker 4: that people start to understand and think about whether they
Speaker 4: use or need an AI agent at all?
Speaker 11: I think the biggest unlock is what it is able
Speaker 11: to where it is able to have creativity. And what's
Speaker 11: important is that organizations decide the length of leash they're
Speaker 11: willing to give AI. What's important here is delegating slices
Speaker 11: of work to AI and having a perspective about what
Speaker 11: you want it to do you don't want it to do. Ultimately,
Speaker 11: people are accountable for work, the decisions, the results, and
Speaker 11: when you deploy an AI agent, you want to know
Speaker 11: what it did and why, and honestly, you want the
Speaker 11: ability to undo.
Speaker 4: It page We just have thirty seconds. Why is a
Speaker 4: Sauna good at AI agents?
Speaker 11: Asana has a unique advantage with the structure of its
Speaker 11: data and it works across apps with the tools that
Speaker 11: teams use today. What's unique about the AI agents that
Speaker 11: Asana deploys for our customers is one they're highly customizable
Speaker 11: to their right in the context of apps, and three,
Speaker 11: they are exactly tailored to your team so that no
Speaker 11: one needs to make a choice about what to use
Speaker 11: and when. It just engages proactively on your behalf to
Speaker 11: reduce busy work and actually help execute some of the
Speaker 11: work right in context.
Speaker 4: Page Costello, head of AI at Asana, thanks for being here.
Speaker 4: Back on Bloomberg Technology. Welcome back to Bloomberg Technology. Ed
Speaker 4: Ludlow here in San Francisco. The technology story in financial
Speaker 4: markets is tech dragging us down at the index level.
Speaker 4: Look at the nas that one hundred, for example, kind
Speaker 4: of down a percentage point or more than a percentage point.
Speaker 4: It is some of the chip names that are most
Speaker 4: pronouncing their declines, but others are also lower ahead of earnings,
Speaker 4: for example Tesla that's after the bell. The socks down
Speaker 4: eight ten to one percent. You know what our top
Speaker 4: story is today, Let's get right to it. Qualcom, the
Speaker 4: chip maker, and ARM, the chip design firm, are both
Speaker 4: markedly lower. Bloomberg is reporting that ARM has canceled a
Speaker 4: license issue to Quaalcom for key intellectual poppits property for
Speaker 4: smartphone processor designs. It's an x escalation of an existing
Speaker 4: dispute which is headed for a trial in December, bucking
Speaker 4: the trend in that space load just really quickly is TSMC.
Speaker 4: Overnight we got used that TSMC has cut loose a
Speaker 4: client it found out was funneling chits to Huawei, which
Speaker 4: of course is a Chinese company subject to sanctions. Let's
Speaker 4: get back to that Qualcomm and ARM story and bring
Speaker 4: in Bloomberg Senior executive editor Tom Giles, who's out in
Speaker 4: London this week. Tom, this is so complex, the qualcomma
Speaker 4: ARMS story. The timing is astonishing. Frankly, Rene Huss was
Speaker 4: in the building with you this week. Christiano, a mom
Speaker 4: was on the show with me less than twenty four
Speaker 4: hours ago. As far as you can just explain the
Speaker 4: basics of what we've reported overnight, I think that's a
Speaker 4: good place to start.
Speaker 12: Well, there is a dispute between these two companies. Qualcom
Speaker 12: one of the biggest chip makers, particularly when it comes
Speaker 12: to mobile phones. ARM is this company, this UK based
Speaker 12: company that owns the basically the designs for these chips.
Speaker 12: If you don't if you can't use the design, you
Speaker 12: can't make the chips. If you don't have basically if
Speaker 12: ARM decides to pull that design away from it the
Speaker 12: license to use the design. Qualcomm is going to be
Speaker 12: inhibited from making a big swath of the chips that
Speaker 12: it needs to make those mobile phones. This is a
Speaker 12: legal dispute between the two over an acquisition Qualcom made.
Speaker 12: It's not getting resolved. It's going to trial, and this
Speaker 12: ratchets up the pressure. This doesn't mean that they're going
Speaker 12: to absolutely pull those licenses. They have sixty days to
Speaker 12: resolve it. But on the eve of this trial, this
Speaker 12: is an instance of ARM really ratcheting up the pressure
Speaker 12: and saying, you know, you need to take these allegations
Speaker 12: of intellectual property infringement seriously.
Speaker 4: Some of the analysts use words like leverage, and we'll
Speaker 4: speak to one of those analysts in just a moment.
Speaker 5: You lead the team.
Speaker 4: I mean, this broke last night after a few days
Speaker 4: where both names are in the news. You know what
Speaker 4: else can you kind of tell me about our reporting
Speaker 4: and just the kind of timeline now running up to
Speaker 4: that trial in December?
Speaker 12: Yeah, I mean this comes at a time when there
Speaker 12: is tremendous interest in the chip sector. As you know,
Speaker 12: it's against a backdrop of escalating US China tension, concerns
Speaker 12: about who is where these chips are ending up, concerns
Speaker 12: about making sure that the US has control over the
Speaker 12: full supply chain. At the same time, you have these
Speaker 12: chip stocks rallying going through the roof because of the
Speaker 12: expectations for demand for artificial intelligence. You mentioned in the
Speaker 12: introduction that TSMC is bucking the trend. They are a
Speaker 12: company that is really benefiting from the AI boom. All
Speaker 12: of these things are coming at This is the backdrop
Speaker 12: for Qualcomm in particular. Remember that they are the main
Speaker 12: maker of mobile chips. Apple's a big customer, and there's
Speaker 12: questions about a demand for the iPhone sixteen, how robust
Speaker 12: is that demand and will that hurt Qualcom? There are
Speaker 12: definite questions about whether the iPhone sixteen is a game
Speaker 12: changer of a phone. All of these things happening in
Speaker 12: the background, add to that tension between ARM and Qualcom,
Speaker 12: one of its biggest customers, and it's a recipe for
Speaker 12: a bit of turmoil in the chip market right now.
Speaker 12: And don't forget this isn't something that's just gonna hurt Qualcom.
Speaker 12: This could hurt ARM as well, because if you're not
Speaker 12: going to sell the licenses to these chips. That hurts
Speaker 12: them too. It's a risk, it's a big risk that
Speaker 12: they're taking. And my sense is, I mean, they're not
Speaker 12: saying it this way, but my sense is that this
Speaker 12: is really aimed at putting extra pressure on Qualcom on
Speaker 12: the eve of this trial, to maybe work out some
Speaker 12: kind of a settlement, maybe work out some kind of
Speaker 12: agreement that works to ARMS advantage.
Speaker 4: Right, and to point out, as we just showed ARM
Speaker 4: shares it's more significantly lower than qualcoms are. Bloomberg some
Speaker 4: jars in London. Thank you very much. I want to
Speaker 4: go to stay see Rascom his senior analyst at Bernstein
Speaker 4: Research covering US semiconductors and semi conductor capital equipment. And
Speaker 4: in your note, which was in reaction to that Bloomberg report,
Speaker 4: I think you make the same argument that Tom just outlined.
Speaker 4: This was an action taken by ARM to your mind,
Speaker 4: to force some kind of pre trial settlement. Please take
Speaker 4: that from with it, Stacy.
Speaker 13: Yeah, it feels that way. So it's a sixty day
Speaker 13: supposedly timeline, assuming they pulled they did this yesterday, the
Speaker 13: sixty day limit would be December twenty first, the trial
Speaker 13: right now, is scheduled for December sixteent through December twentieth,
Speaker 13: so it's kind of right.
Speaker 8: On top of that.
Speaker 13: Yeah, to me, this feels like an attempt to drive
Speaker 13: a settlement frum Qualcomm on the eve of the trial.
Speaker 13: It feels like the ramping up the negotiations are pretty
Speaker 13: hard there, So.
Speaker 5: Yes, Stacey.
Speaker 4: On Monday night, Qualcom unveiled Snapdragon eight Elite, which is
Speaker 4: based on the new Via at position right, based on
Speaker 4: Nuvia designs less than twenty four hours ago. Christiano Romon
Speaker 4: came on the show with me to discuss it. Last night,
Speaker 4: bloomboag broke this story about Armed canceling the license as
Speaker 4: part of this dispute. Coincidence or what do you make
Speaker 4: of the chronology?
Speaker 13: Probably not right? They look like good parts, right, So,
Speaker 13: I mean, like the general thrust of this discus as
Speaker 13: I understand again, I will call it. I'm not a lawyer,
Speaker 13: and like I won't be on the jury either. But
Speaker 13: Qualcom bought this company, Nuvia. Nuvia was an armed server start,
Speaker 13: but what it really was it was a bunch of
Speaker 13: ex Apple guys. It was the Apple M one design
Speaker 13: team that designed Apple's first custom chip. Qualcom bought them
Speaker 13: to get that expertise in there going to be delivering
Speaker 13: products across our portfolio using that expertise. Qualcom's current products
Speaker 13: are made on something called the technology license. From that's
Speaker 13: likely off the shelf ARM stuff. Moving to an architectural license,
Speaker 13: where Qualcum does the custom gips, the worlds rates tend
Speaker 13: to be lower. Rates were actually higher. So what ARM
Speaker 13: I think really wants is for Qualcomm to apply Nuvia's
Speaker 13: higher rates like through the portfolio, because otherwise the rates
Speaker 13: would come down. And when qualcommb you know, and to
Speaker 13: enable that, ARM decided not to approve the license transfer
Speaker 13: of Nuvia to Qualcomm. Qualcum's response, and I'll be honest,
Speaker 13: I have a certain degree of sympathy for it.
Speaker 2: Not a lawyer.
Speaker 13: Their response is effectively like, what are you talking about?
Speaker 13: We have our own architectural license. It covers the exact
Speaker 13: same ip in technology Take a hike, right, And that
Speaker 13: seems to be where this is. I think ARM is
Speaker 13: potentially worried that rates could go lower if Qualcomb makes
Speaker 13: a transition from technology license to architectural license. You know,
Speaker 13: I think if yes, Qualcom would agree to what ARM
Speaker 13: is wanting, then the rates would go higher and hopefully
Speaker 13: they'll settle out somewhere in the middle. Like I don't know,
Speaker 13: I can't imagine that it's good for either of them
Speaker 13: to actually take this in front of a jury. Jury
Speaker 13: trivels are are a bit of a craft shoot under
Speaker 13: the best of circumstances.
Speaker 4: So guys, allow me to take you some just to
Speaker 4: point out that Armed did not comment on the Bloomberg report,
Speaker 4: but Quilcom did.
Speaker 5: Quilcom did.
Speaker 4: So let's just show what Qualcom had to say, or
Speaker 4: at least some of it. And you know, it's kind
Speaker 4: of fighting talk, right, it's them saying that. You know,
Speaker 4: it's it's trying to strong arm a long time partner.
Speaker 4: And this is the bit I want to talk to
Speaker 4: you about interfere with our performance leading CPUs and then
Speaker 4: we can get to the royalty rates bite. Quilcom is
Speaker 4: not the same company today that it was when I
Speaker 4: moved to California six years ago. It's tried to diversify
Speaker 4: its business and the Nuvia acquisition and it's sort of
Speaker 4: change of what the technology offers of the smartphones core
Speaker 4: to that. Could you just speak about how you view
Speaker 4: Quilcom and it's placed in this smartphone market for Android.
Speaker 5: Yeah, I know you.
Speaker 13: So they're pretty dominant. They own they own the whole
Speaker 13: flagship space, particularly the flagships in smartphones where the asps
Speaker 13: are higher. They've also been, you know, the whole space
Speaker 13: has been making this push toward AI smartphones. And we
Speaker 13: can argue, do people want to AI smartphones does a
Speaker 13: driving upgrade cycle, But increasingly when people go out to
Speaker 13: buy smartphones, they're gonna buy AI smartphones because that's what's
Speaker 13: going to be for sale. And the content I think
Speaker 13: is materially hiring some of those ones versus phones without
Speaker 13: the the AI functionality and so, and that's a big
Speaker 13: area where like some of the Nuvia architectural expertise is
Speaker 13: coming in in terms of performance and everything else. We
Speaker 13: saw some of the benchmarks from some of the new
Speaker 13: stuff that they announced earlier this week, and why are
Speaker 13: you like the parts look really good?
Speaker 11: Right?
Speaker 13: That's kind of what and whether they're not just isolating
Speaker 13: Nubia though too smartphones. Clearly they've already launched PC chips
Speaker 13: AI and they're gonna be rolling down across the rest
Speaker 13: of their increasingly diversified portfolio auto and IoT and like
Speaker 13: everything else.
Speaker 4: Yeah, and I just point out, as we let you go, Stacey,
Speaker 4: that ARM shares are actually lower than Qualcom shares in
Speaker 4: this whole situation this morning. A great heavy back on
Speaker 4: Bloomberg's technology. Stacey Rasco On, senior analysts at Bernstein Research,
Speaker 4: Thank you very much. All Right, coming back up on
Speaker 4: the show, Wave CEO and co founder Alex Kendall, We're
Speaker 4: going to talk about a UK company making moves in
Speaker 4: autonomous driving that's coming up next.
Speaker 5: Stay with us.
Speaker 4: This is Bluebow Technology, Okay, automotive AI maker Wave is
Speaker 4: making its way to Silicon Valley, the London based startups,
Speaker 4: expanding it's road testing and opening a new office in Sunnyvale, California.
Speaker 4: Alex Kendall's the Wave co founder and CEO and joins
Speaker 4: us now from the UK. And what's so interesting about
Speaker 4: Wave is no focus on the hardware, no focus on
Speaker 4: the cars, just the foundation model, the robotic brain that
Speaker 4: helps a car learn how to drive itself. Let's start
Speaker 4: by asking why you felt you needed to bring your
Speaker 4: testing to California, to the streets of San Francisco.
Speaker 14: Hey, Well, we're excited to bring a fresh approach to
Speaker 14: the US market. I think in general, being able to
Speaker 14: operate an AI and about to test it in such
Speaker 14: a diverse market as the US is going to be
Speaker 14: awesome for US. We really want to push the boundaries
Speaker 14: of generalization. The neat thing about this approach is that
Speaker 14: it can allow all ranges of automation from driver assistance
Speaker 14: up to full autonomy, with different types of vehicles and
Speaker 14: different driving environments, with different cultures. And you know, look,
Speaker 14: we're now training from data from over fifteen countries. But
Speaker 14: to be able to actually have a testing fleet on
Speaker 14: the ground and show that AI can generalize and drive
Speaker 14: in a new environment like the US in California, this
Speaker 14: is a really exciting moment for our business.
Speaker 5: I'll set out the pathway from here.
Speaker 4: You're going to start with basically level two plas kind
Speaker 4: of ADAS functionality, so you don't need a DMV permit.
Speaker 4: But what are the next stages, how will you expand
Speaker 4: the testing and what's your ultimate goal for the California market?
Speaker 14: Yeah, fun mentally waves building an embodied AI. This is
Speaker 14: an AI that brings brings it out of the out
Speaker 14: of the Internet and into the physical world to be
Speaker 14: able to drive and operate vehicles. And this is an
Speaker 14: AI that can understand the physical world can drive with
Speaker 14: different types of sensors. And what's really exciting for us
Speaker 14: is that while we want to deployed in a range
Speaker 14: of range of automotive products, the latest vehicles that have
Speaker 14: been produced by the industry have GPUs surround cameras and
Speaker 14: radar sensors and actually the perfect deployment environment to reap
Speaker 14: the benefits of this AI. So the bresh model we
Speaker 14: want to bring is a software model. We can see
Speaker 14: this AI deployed in vehicles, deployed as driver resistance and
Speaker 14: use that experience and exposure to improve the quality of
Speaker 14: system over time and ultimately bring us to this autonomous
Speaker 14: future we all dream of.
Speaker 4: You've raised more than a billion dollars from the lights
Speaker 4: of soft Bank and Verdia. Uber recently topped up the round.
Speaker 4: How quickly through that and where's the money going?
Speaker 14: Yeah, Look, we've been a fairly disciplined company for the
Speaker 14: last seven years. Seven years ago, we had the thesis
Speaker 14: of going all in on an end to end AI
Speaker 14: approach for autonomous driving, and it's something that we've been
Speaker 14: building out and pioneering some really interesting approaches that allow
Speaker 14: us to be more data efficient, to learn from simulation
Speaker 14: and generative AI. And so while we're seeing a lot
Speaker 14: of expansion and growth in the amount of data we're
Speaker 14: training on, we want to continue to make a lean
Speaker 14: and cost effective solution possible to come to market. And
Speaker 14: of course, the partners that we've got in the US
Speaker 14: that also make this really interesting for us to be
Speaker 14: able to operate in the same market closer to our
Speaker 14: partners like Uber, Nvidia, and Microsoft that have been really
Speaker 14: key past this journey to power our compute and the
Speaker 14: fleet learning of these systems is going to be so critical.
Speaker 4: Wave CEO Alex Candal, It's great to have you here
Speaker 4: on Bloombo Technology. Keep us posted on your progress. Happening
Speaker 4: today in Sa Paulo, Brazil, the B twenty Business Forum,
Speaker 4: Bloomberg's Jamana Bassetchi is.
Speaker 5: There live with a very special guest, Jamana.
Speaker 8: Thank you.
Speaker 5: Ed Yeah.
Speaker 3: Joining me right now is the Google Brazil president, Pablo Coelo.
Speaker 8: Great to have you.
Speaker 5: With us, Thank you, Jama.
Speaker 3: Let me just start off by talking about the Brazil
Speaker 3: landscape as a whole. Brazil is probably the most advanced
Speaker 3: digital economy in all of Latin America.
Speaker 8: What circumstances have allowed for that to happen.
Speaker 5: Well.
Speaker 1: First, it's a large market. We have two hundred and
Speaker 1: plus million people. Second, it's a country has suffered through
Speaker 1: inflation until the nineties, which drove a lot of the automation,
Speaker 1: and then the technology was employed to make sure that
Speaker 1: people would make the most out of their money, be
Speaker 1: that the financial sector or users. And third, because Brazilians
Speaker 1: are extremely entrepreneurs and they like technology, and we have
Speaker 1: a case with Google, Jamana. Google has been around for
Speaker 1: nineteen years and our platforms have a very good relationship
Speaker 1: with resiliences.
Speaker 3: What role do you see specifically for Google in terms
Speaker 3: of driving the digital transformation right now in the country.
Speaker 1: There are so many rules. One is two empowered citizens.
Speaker 1: We have our platforms here are top five in the
Speaker 1: world for most of them. Brazilians have a love affair
Speaker 1: with technology and with Google platforms YouTube for example. Success. Also,
Speaker 1: it's important that we're able to empower business to be
Speaker 1: able to become more efficient. Efficiency in an economy like
Speaker 1: the Brazilian one, which is an emerging market is also
Speaker 1: pretty important. And we have now Brazilians very eager to
Speaker 1: adopt AI as the next wave of technology, and they're
Speaker 1: very optimist about the use of AI.
Speaker 8: Yeah, well, let me.
Speaker 3: Ask you about that, because on one hand, AI can
Speaker 3: increase efficiencies, increase productivity, but on the other hands there
Speaker 3: are also concerns about privacy, about data protection.
Speaker 8: So how do you see the path forward for AI?
Speaker 1: Well, I think it starts with the right principles. We
Speaker 1: need to be bold and at the same time responsible
Speaker 1: about the use of AI. Google has adhere to the
Speaker 1: ethical principles of AI utilization, which is important. And the
Speaker 1: third very important is to have a dialogue around society
Speaker 1: to make sure that regulations are in place, but in
Speaker 1: a way that they are discussed with the society. We
Speaker 1: have the brazil Marco CIV which the Internet built is
Speaker 1: a net framework bill. It's now celebrating ten years of existence,
Speaker 1: and that was a very good example of how to
Speaker 1: conduct a process to create regulations. We involve the society,
Speaker 1: we involve businesses as developers, politicians, and we get to
Speaker 1: the best model in such emergent technology.
Speaker 3: Well, there was a high profile case recently in Brazil
Speaker 3: of a hit for tat that went on between elon
Speaker 3: mus X platform and the Brazilian regulator over concerns about
Speaker 3: dissemination of fake news and of hate speech. Specifically, what
Speaker 3: is Google doing to combat the proliferation of all of
Speaker 3: that hate speech, of this information, of fake news.
Speaker 8: What guardrails do you have in place?
Speaker 1: The most important, thank is one we have to respect
Speaker 1: the law. So we work, we fight, and we remove
Speaker 1: anything that is related to hate crime, racism, violence, all
Speaker 1: types of crimes that we need to adhere to the law.
Speaker 1: That's a basic. Then we have platform rules, and then
Speaker 1: we invest in good content, quality content. We have partnerships
Speaker 1: in Brazil with more than one hundred and seventy five publishers.
Speaker 1: Because good content needs to go up to be able
Speaker 1: to show that we educate the consumers, help consumers to
Speaker 1: get the best out of our platforms. Bad content needs
Speaker 1: to either be the prioritized or in cases where we
Speaker 1: see reason and justice sees reason, remove that.
Speaker 8: Let me just ask you at the group level.
Speaker 3: The Department of Justice in the US has launched an
Speaker 3: investigation into Alphabet's practices. There are concerns that one of
Speaker 3: the ramifications could be an eventual up with the company
Speaker 3: due to practices that are put in place.
Speaker 8: What is your level of concern about that actually happening?
Speaker 1: You know, Jamana, I'm not in a position to discuss
Speaker 1: the global rules. I'm responsible for Brazil, but I think
Speaker 1: Google has declared quite well. It has put in blog
Speaker 1: posts all the information about this.
Speaker 3: Let me just ask you then, in Brazil specifically, do
Speaker 3: you think the regulator is getting the balance rights between
Speaker 3: innovation and safeguarding consumers.
Speaker 1: We have been very pleased with our relationship with regulators.
Speaker 13: We have being.
Speaker 1: Involved in dialogues every time we have the chance to discuss.
Speaker 1: We work together with the Supreme Court, with the Electoral Court,
Speaker 1: with the Senate, with the lower House to make sure
Speaker 1: that we all understand and come to a common denominator.
Speaker 1: This is important because this is new and we need
Speaker 1: to make sure that in a way we get the
Speaker 1: responsible approach. But we do not castrate the ecosystem of
Speaker 1: innovation and development, which is so important in Brazil. That
Speaker 1: we finished that by saying we have. However, Google has
Speaker 1: helped with a campus that we have in Staballa. For
Speaker 1: the left eighty years, we have accelerated four hundred and
Speaker 1: fifty companies here. So it means that there is a
Speaker 1: very entrepreneurial up in Brazil and we want to make
Speaker 1: sure it stays that way.
Speaker 3: Great, that's a good place to leave at Pablo the
Speaker 3: Google president over here in Brazil.
Speaker 8: Ed, I'll toss it back to you.
Speaker 4: Bloomberg Jermanamber said she in salth Paolo with Fabio Coelo,
Speaker 4: the president of Google Brazil.
Speaker 5: Thanks to you both.
Speaker 4: Okay, check out live go to get more from B
Speaker 4: twenty coming up, Ambassador Catherine Tie in conversation with Bloomberg's
Speaker 4: Stephanie Flanders. That's one that you do not want to
Speaker 4: miss coming out of B twenty. Wow, jampacks show. That
Speaker 4: does it for this edition of Bloomberg Technology. You know
Speaker 4: where to recap the show on the podcast, of course,
Speaker 4: you know where to find it on the terminal, on
Speaker 4: the Bloomberg platforms, but also online at Apple, Spotify and
Speaker 4: iHeart from San Francisco and thanks to the team in
Speaker 4: New York.
Speaker 5: This is Bloomberg Technology.