WEBVTT - Intel Jumps on Recovery, Big Tech Earnings Preview 0:00:01.600 --> 0:00:04.600 From Mahart of We're Innovation, Money and Power. 0:00:04.480 --> 0:00:06.880 Collie in Silicon Vallet NBN. 0:00:07.200 --> 0:00:10.680 This is Bloomberg Technology with Caroline Hyde. 0:00:10.360 --> 0:00:11.680 And Ed Ludlow. 0:00:25.200 --> 0:00:27.760 Im Ed Ludlow here in San Francisco. Caroline Hyde is 0:00:27.760 --> 0:00:31.000 off today. This is BlueBag Technology. Let's get after it. 0:00:31.000 --> 0:00:34.080 Coming up, Intel surging as it's longer way to come 0:00:34.120 --> 0:00:36.559 back is underway. We're going to break down the company's 0:00:36.560 --> 0:00:40.159 earnings with the CEO, Pat Gelsinger. Plus we're gonna have 0:00:40.159 --> 0:00:42.680 an exclusive interview with the CEO of by Now Pay 0:00:42.760 --> 0:00:47.199 Later company affirm his outlook on fintech and the payment space. 0:00:47.600 --> 0:00:49.360 And we'll push ahead to what's going to be another 0:00:49.400 --> 0:00:52.800 crazy week in tech earnings with Amazon, Apple, and Qualcom 0:00:52.840 --> 0:00:55.880 all reporting next week. We're going to stick with tech 0:00:55.920 --> 0:00:59.320 out this way out West earnings next week include Apple, Amazon, 0:00:59.720 --> 0:01:02.800 and it's been an interesting dynamic where the market is 0:01:02.840 --> 0:01:04.760 so hyped up about AI, but if you look at 0:01:04.760 --> 0:01:07.160 the trading, I think we're kind of focused on some 0:01:07.200 --> 0:01:08.839 of the core businesses of these names. 0:01:08.880 --> 0:01:10.400 Will that be the story next week? 0:01:10.680 --> 0:01:15.040 Let's ask Jonathan Curtis, director of portfolio management for Franklin Equity, 0:01:15.120 --> 0:01:19.240 overseeing nine point five billion dollars in assets under management. 0:01:19.240 --> 0:01:20.400 What do you make of that, Jonathan? 0:01:20.720 --> 0:01:24.399 Investors love AI, but this week it seems like they 0:01:24.440 --> 0:01:27.240 traded on the fundamentals the core business. 0:01:27.800 --> 0:01:30.480 Yeah, well so, certainly there's a lot of excitement and 0:01:30.520 --> 0:01:34.600 appropriately so around AI, but we are in the stage 0:01:34.600 --> 0:01:38.480 of this opportunity that we like to call the experimentation phase. 0:01:38.840 --> 0:01:41.759 Companies are learning about how to use generative AI. They've 0:01:41.760 --> 0:01:48.600 been reorientary, reorienting their product roadmaps to take advantage of AI. 0:01:49.040 --> 0:01:51.400 They're starting to figure out what their customers are going 0:01:51.480 --> 0:01:53.640 to be willing to pay for some of these capabilities. 0:01:53.960 --> 0:01:57.280 But we're not really in the scale at stage. 0:01:57.320 --> 0:01:59.559 We think that's going to come here in the next 0:01:59.600 --> 0:02:02.559 two day, three, maybe four quarters. And the biggest, most 0:02:02.560 --> 0:02:05.600 important thing to be watching there is what platforms like 0:02:05.720 --> 0:02:10.000 Microsoft or Adobe or other companies that have many hundreds 0:02:10.040 --> 0:02:12.800 of millions of users can do when they start putting 0:02:12.840 --> 0:02:16.359 these AI capabilities in their products where hundreds of millions 0:02:16.400 --> 0:02:19.680 of knowledge workers and media creators operate every single day. 0:02:19.840 --> 0:02:21.760 We're quite excited about what that means. 0:02:21.560 --> 0:02:25.160 And how that will put pressure on the underlying infrastructure 0:02:25.200 --> 0:02:28.160 and semi conductor layer and keep the growth going for 0:02:28.240 --> 0:02:29.320 a lot of these companies. 0:02:30.120 --> 0:02:33.520 So we do this every quarter now, track the number 0:02:33.520 --> 0:02:36.680 of times AI as a phrase, a word is. 0:02:36.680 --> 0:02:37.960 Mentioned on an earnings call. 0:02:38.639 --> 0:02:42.160 Do you go through the transcript and say, okay AI 0:02:42.240 --> 0:02:43.560 number one, AI number two. 0:02:43.800 --> 0:02:48.200 I mean, seriously, how much we did do that? 0:02:48.320 --> 0:02:52.160 Yeah, so this past earning cycle, not this current one, 0:02:52.200 --> 0:02:54.639 because we're not completely through it. We did go through 0:02:54.720 --> 0:02:58.359 and count how many references there were to artificial intelligence, 0:02:58.400 --> 0:03:02.320 and then we compared it to references to things like 0:03:02.400 --> 0:03:05.120 mobile back around the launch of the iPhone, because we 0:03:05.160 --> 0:03:08.280 wanted to get a sense for how quickly this was 0:03:08.400 --> 0:03:13.200 dispersing through the economy relative to other big cycles that 0:03:13.240 --> 0:03:14.320 we've seen in the past. 0:03:14.680 --> 0:03:19.680 And why why, Jonathan, they're just words? What do they 0:03:19.720 --> 0:03:20.000 tell you? 0:03:20.760 --> 0:03:21.680 They're not just words? 0:03:21.720 --> 0:03:26.320 Their intentionality And what's important about that intentionality is it 0:03:26.360 --> 0:03:30.640 tells you how much the other sectors outside of the 0:03:31.160 --> 0:03:34.800 outside of tech are gearing up and getting curious about 0:03:34.800 --> 0:03:37.840 this opportunity and ultimately what the big spending is going 0:03:37.920 --> 0:03:40.640 to come. And what's fascinating about the analysis we did 0:03:40.720 --> 0:03:43.600 ninety days ago was that we saw much more dispersion 0:03:44.160 --> 0:03:47.200 for artificial intelligence than we did for mobile back at 0:03:47.200 --> 0:03:50.440 the start of the iPhone cycle, the iPhone opportunity, so 0:03:50.480 --> 0:03:52.960 that gives us a little bit of confidence that this 0:03:53.000 --> 0:03:56.000 could be even bigger than other big cycles we've seen 0:03:56.040 --> 0:03:56.720 in the past. 0:03:56.640 --> 0:03:57.160 Like mobile. 0:03:58.120 --> 0:04:00.320 Jonathan, I want to talk about the semiconductor name. We're 0:04:00.320 --> 0:04:03.240 going to be speaking to Pat Gelsinger in about five 0:04:03.280 --> 0:04:06.480 minutes time, the CEO of Intel. You do not hold Intel, 0:04:06.760 --> 0:04:11.240 but I believe you do hold Nvidia an AMD. Explain 0:04:11.440 --> 0:04:14.120 that thesis to me and why they are the winners 0:04:14.160 --> 0:04:15.160 in AI. 0:04:15.320 --> 0:04:18.440 Yeah, so, certainly Intel's an amazing company. There are funds 0:04:18.440 --> 0:04:22.320 within Franklin that own Intel. They are in the midst 0:04:22.400 --> 0:04:27.400 of a challenging transformation, and they're a little too PC 0:04:27.640 --> 0:04:32.119 centric for our growth needs, and they're in a heavy 0:04:32.160 --> 0:04:35.280 investment stage right now. So we're watching Intel closely. We 0:04:35.400 --> 0:04:38.880 like Nvidia because they're highly aligned with the AI opportunity 0:04:38.880 --> 0:04:42.520 and an incredible mode there. We like AMD because they 0:04:42.560 --> 0:04:45.159 are a share gainer in the server space at the 0:04:45.240 --> 0:04:49.320 expense of Intel. We also like TSMC, which is one 0:04:49.320 --> 0:04:52.880 of Intel's emerging competitors in the fabrication of chips and 0:04:52.960 --> 0:04:58.120 a MD and TSMC and Nvidia and TSMC together are 0:04:58.680 --> 0:05:02.120 really helping set the next stage of growth in the 0:05:02.160 --> 0:05:06.159 semiconductor space, and Intel is just playing catchup quite frankly and. 0:05:06.200 --> 0:05:11.240 As a little two PC centric for our interests PC centric. 0:05:11.279 --> 0:05:13.560 The other area we want to talk about is cloud, 0:05:13.600 --> 0:05:17.120 and we started this conversation Jonathan by pointing out that 0:05:17.240 --> 0:05:18.839 a lot of the trading this week was done on 0:05:18.880 --> 0:05:24.280 core legacy businesses. Abigail mentioned Microsoft, where investors looked at 0:05:24.279 --> 0:05:26.320 the performance of the cloud business from a top line 0:05:26.360 --> 0:05:28.520 growth perspective and weren't as happy. 0:05:29.360 --> 0:05:30.320 What do you see there? 0:05:31.320 --> 0:05:33.880 Well, encouragingly, we are starting to see some of that 0:05:34.000 --> 0:05:37.679 deceleration that we've been seeing in cloud in this post 0:05:37.720 --> 0:05:40.360 COVID era starting to calm down a bit, and in 0:05:40.400 --> 0:05:44.279 fact the deceleration that Microsoft witnessed and into cloud business 0:05:44.640 --> 0:05:47.719 slowed a bit, and encouragingly, we're starting to see the 0:05:47.800 --> 0:05:52.360 real positive impacts from the AI experimentation phase that we're 0:05:52.360 --> 0:05:57.080 in right now, impacting the cloud operators like Microsoft, like Google. 0:05:57.200 --> 0:05:59.680 So we think that we are getting through the optimization 0:06:00.120 --> 0:06:03.920 is post COVID. We are getting into easier comps there 0:06:04.200 --> 0:06:06.839 and now we're starting to see AI become a material 0:06:06.920 --> 0:06:09.760 contributor to these cloud businesses. So we think in our 0:06:09.760 --> 0:06:14.680 broader digital transformation thesis, AI is still misunderstood by investors. 0:06:14.680 --> 0:06:17.719 They don't understand how profound the impacts of this is 0:06:17.760 --> 0:06:20.280 going to be. And then the cloud opportunity is going 0:06:20.279 --> 0:06:23.960 to be a big participant along with AI. But also 0:06:24.040 --> 0:06:28.200 as digital transformation continues, and we're starting to see that stabilization. 0:06:28.279 --> 0:06:30.880 So we're quite encouraged by both what we're seeing in 0:06:30.920 --> 0:06:32.120 AI and in cloud. 0:06:32.960 --> 0:06:37.520 All right, Jonathan Curtis, Franklin Equity Group Director, Report further Strategy. 0:06:37.640 --> 0:06:40.719 Just such a wide ranging conversation, and as we discuss, 0:06:41.080 --> 0:06:43.479 the next big conversation is going to be about the 0:06:43.560 --> 0:06:46.120 chip sector. Thank you very much. Coming up, stay tuned 0:06:46.520 --> 0:06:49.080 because we will sit down with the CEO of Intel, 0:06:49.160 --> 0:06:50.120 Pat Gelsinger. 0:06:50.440 --> 0:06:52.279 The market really. 0:06:52.080 --> 0:06:55.000 Liked what it had to hear about the quarter just 0:06:55.080 --> 0:06:58.600 gone and the outlook for the current quarter, but there 0:06:58.640 --> 0:07:02.479 are long term questions here about Intel returning to a 0:07:02.520 --> 0:07:05.479 position of leadership when it comes to the cutting edge 0:07:05.839 --> 0:07:10.560 of chip manufacturing, chip making technology, and also what is 0:07:10.560 --> 0:07:12.720 the future of this company in the field of AI. 0:07:12.800 --> 0:07:16.160 Pat Gelsinger, Intel CEO coming up next here here in 0:07:16.200 --> 0:07:31.400 San Francisco. This is Bloomberg Technology. I want to welcome 0:07:31.400 --> 0:07:36.600 our global Bloomberg TV and radio audiences. Intel shares are jumping, 0:07:36.720 --> 0:07:40.040 with investors buying into signs that the chip maker's long 0:07:40.040 --> 0:07:44.680 awaited comeback is underway. Intel's forecasting sales in the current 0:07:44.760 --> 0:07:49.400 quarter of thirteen point nine billion dollars, ahead of expectations. 0:07:49.400 --> 0:07:50.840 The company also notched. 0:07:50.760 --> 0:07:53.960 A surprise profit of thirteen censor sharing in the corner 0:07:54.160 --> 0:07:57.840 just gone as a slump in demand for personal computers 0:07:58.280 --> 0:08:01.320 appears to be come into an it's not all good news. 0:08:01.360 --> 0:08:04.840 Serve demand isn't recovering as quickly. The company is still 0:08:05.040 --> 0:08:07.680 a little bit far from its heyday where margins where 0:08:07.680 --> 0:08:11.120 it's sixty percent sales were nearer to twenty billion dollars. 0:08:11.280 --> 0:08:16.679 Even so, joining us now Intel's CEO Pat Gelsinger, You know, Pat, 0:08:16.720 --> 0:08:22.240 this is the second consecutive quarter where investors have cheered 0:08:23.520 --> 0:08:26.440 the earnings results shares her up and I think before 0:08:26.480 --> 0:08:29.520 twenty twenty three, ten out of the eleven earnings prints 0:08:29.520 --> 0:08:32.680 that you had shares fell. Is this job done for 0:08:32.760 --> 0:08:34.320 you in the turnaround at Intel? 0:08:35.840 --> 0:08:39.400 Well, we have a long way to go yet, but boy, 0:08:39.520 --> 0:08:42.920 having two good beaten Ray quarters in a row, you know, 0:08:43.120 --> 0:08:46.040 was a super positive and really I think in the 0:08:46.160 --> 0:08:50.040 KP of that turning point for the company. 0:08:50.320 --> 0:08:52.040 But we still have a lot of work to do yet. 0:08:52.080 --> 0:08:54.319 You know, as we said, our client business as now 0:08:55.000 --> 0:08:57.760 healthy footing. You know, we've returned markers shared to where 0:08:57.760 --> 0:09:01.839 it traditionally was a strong roadmap. You know, the markets recovering, 0:09:01.960 --> 0:09:04.720 inventory levels are good, you know, Data Center, we still 0:09:04.720 --> 0:09:06.800 have work to do, but boy, you know, two quarters 0:09:06.800 --> 0:09:08.440 in a row where we did a bit better than 0:09:08.440 --> 0:09:11.000 we expected, you know, but we still have challenges and 0:09:11.080 --> 0:09:14.280 AI you know, and many of our really good products 0:09:14.400 --> 0:09:15.400 are only. 0:09:15.080 --> 0:09:17.680 Coming to market over the next year. You know. 0:09:17.760 --> 0:09:20.160 Networking is still a lot of inventory to work through, 0:09:20.400 --> 0:09:23.400 and our foundry business is still just a seedling, just 0:09:23.480 --> 0:09:26.199 starting to show some green shoots. So I'll say, boy, 0:09:26.320 --> 0:09:29.000 far from finish, but it is nice bouncing off the 0:09:29.000 --> 0:09:29.720 bottom of a bit. 0:09:29.679 --> 0:09:31.440 And feeling that momentum in the market. 0:09:31.440 --> 0:09:35.200 Response, Pat, why do you have the confidence to kind 0:09:35.200 --> 0:09:39.040 of cool the end of the PC slump and also 0:09:39.080 --> 0:09:41.720 at the same time state that the server recovery is 0:09:41.760 --> 0:09:43.040 delayed to the end of the year. 0:09:44.720 --> 0:09:45.280 Yeah, and the. 0:09:45.240 --> 0:09:49.120 PC side inventory levels are now healthy, right, you know, 0:09:49.280 --> 0:09:52.760 everything that we've seen and a lot of the issues 0:09:52.760 --> 0:09:54.840 that we worked through Q four, Q one and Q 0:09:54.960 --> 0:09:59.000 two were over inventory levels by the OEMs and the channel, 0:09:59.320 --> 0:10:02.800 and now everything is healthy. Our roadmap is very good. 0:10:03.040 --> 0:10:06.280 We've gained share multiple times in a row. I think 0:10:06.320 --> 0:10:08.959 we're now at five out of six quarters where we've 0:10:09.160 --> 0:10:11.240 gained market share. So I just say in the PC 0:10:11.480 --> 0:10:15.840 business healthy, Our position is good, and we're looking forward 0:10:15.920 --> 0:10:18.800 to the AI PC and with our launch of our 0:10:18.800 --> 0:10:22.440 next generation product, meteor Lake later this year. You know, 0:10:22.480 --> 0:10:26.400 we believe that ushers in the AI PC generation and 0:10:26.440 --> 0:10:29.520 I've compared that to like Centrino and Wi Fi, you 0:10:29.559 --> 0:10:32.800 know two decades ago, a major new use case for 0:10:32.920 --> 0:10:35.760 why the PC is the best platform. So we're quite 0:10:35.800 --> 0:10:38.679 excited about that. On the data center side, you know, 0:10:38.720 --> 0:10:41.840 we still saw that, you know, the inventory levels still persist. 0:10:42.240 --> 0:10:45.000 You know, China was weaker than expected. Their recovery is 0:10:45.040 --> 0:10:48.280 going slower. And you know, cyclically we see the shift 0:10:48.320 --> 0:10:52.120 toward AI you know, these big training machines. Every cloud 0:10:52.160 --> 0:10:54.480 vendor is shifting their dollars to more. 0:10:54.320 --> 0:10:55.040 Focus on that. 0:10:55.120 --> 0:10:58.240 So those three things are leading to a bit longer 0:10:58.320 --> 0:10:59.400 recovery cycle. 0:10:59.640 --> 0:11:00.600 On the data center. 0:11:00.679 --> 0:11:02.760 Well, like I said, we performed a bit better than 0:11:02.760 --> 0:11:05.240 we thought on the data center in Q one AM 0:11:05.360 --> 0:11:08.360 Q two. So we're feeling like our momentum and execution 0:11:08.559 --> 0:11:11.200 is rebuilding despite some of those headwinds that are still 0:11:11.240 --> 0:11:12.640 persist in that area. 0:11:13.160 --> 0:11:16.000 For our global TV and radio audience. Here at Bloomberg, 0:11:16.000 --> 0:11:19.960 we're speaking to Pat Elsing at the Intel CEO. Pat, 0:11:20.000 --> 0:11:23.720 you're forecasting gross margin of forty three percent in the 0:11:23.920 --> 0:11:27.520 current period, but it's a long way from that sixty 0:11:27.520 --> 0:11:30.040 percent gross margin level. You know, Wall Street used to 0:11:30.040 --> 0:11:33.480 look at Intel and say sixty percent. You know, they 0:11:33.720 --> 0:11:35.920 cheer you as a leader in that space. Can you 0:11:36.000 --> 0:11:39.720 just explain to our global audience the timeline and path 0:11:39.840 --> 0:11:42.520 to getting back to profit at that level. 0:11:44.080 --> 0:11:46.319 Yeah, and we're working our way back to margins and 0:11:46.360 --> 0:11:49.280 obviously a nice bet in Q two on margins, and 0:11:49.320 --> 0:11:51.840 we forecast Q three a bit better and Q four 0:11:51.920 --> 0:11:54.120 a bit better, you know. And part of it is 0:11:54.320 --> 0:11:59.080 the cyclicality of the semiconductor industry is brutal on margins. 0:11:59.120 --> 0:12:03.720 And when we had an oversupply situation inventory, you know, 0:12:03.760 --> 0:12:07.760 that just depresses margins because you know, the factories cost 0:12:07.840 --> 0:12:10.839 the same whether they're full or whether they're empty, So 0:12:10.920 --> 0:12:14.160 you end up with these charges that you burden the 0:12:14.200 --> 0:12:18.600 price points and depressed margins. We also realize that our 0:12:18.600 --> 0:12:22.760 own product execution has weakened our product position which doesn't 0:12:22.800 --> 0:12:25.679 have asps as strong as well, so that's another factor. 0:12:26.120 --> 0:12:28.640 And the last factor here is, you know, the plan 0:12:28.760 --> 0:12:32.439 that my CFO Dave and I have laid out is 0:12:32.480 --> 0:12:36.560 an expensive plan. We are making aggressive investments to build 0:12:36.640 --> 0:12:40.080 the capacity to get back to leadership and thus we're 0:12:40.160 --> 0:12:43.200 moving through nodes very rapidly. We sat five nodes in 0:12:43.280 --> 0:12:45.640 four years, so that causes us to have a lot 0:12:45.640 --> 0:12:50.559 of undepreciated capacity that we're working through quite aggressively. Also 0:12:50.679 --> 0:12:54.120 building up a bit more capacity for our foundry initiatives. 0:12:54.360 --> 0:12:58.640 So all of those factors depressed margins to historically low 0:12:58.720 --> 0:13:00.720 levels in the first part of the year and we're 0:13:00.720 --> 0:13:04.280 just seeing ourselves now working to build back to margin levels. 0:13:04.400 --> 0:13:07.280 But we're still very confident that as we build our 0:13:07.280 --> 0:13:11.520 foundry business get back to leadership and process and products. 0:13:11.600 --> 0:13:14.000 You know that those kind of margins, that's exactly what 0:13:14.320 --> 0:13:16.600 Dave and I aspire to to the future, and we 0:13:16.679 --> 0:13:19.560 feel like you two was a good marker. You know that, yes, 0:13:19.600 --> 0:13:21.440 we're building momentum to get back there. 0:13:22.400 --> 0:13:25.679 Thank you for joining us here on Bloomberg Television and 0:13:25.800 --> 0:13:31.000 radio worldwide. We're joined by Pat Gelsinger, Intel CEO. You 0:13:31.200 --> 0:13:34.760 described the foundry business as a seedling, but every time 0:13:34.840 --> 0:13:37.960 you and I have spoken, you've hinted that there is 0:13:38.000 --> 0:13:43.640 a big customer waiting in the wings to give life 0:13:43.679 --> 0:13:44.480 to that business. 0:13:44.640 --> 0:13:47.000 What can you tell us about that, Pat. 0:13:47.760 --> 0:13:50.600 Yeah, and we're having good momentum, and as I said 0:13:50.640 --> 0:13:54.240 on the Ernie's call yesterday, we have two big customers 0:13:54.240 --> 0:13:56.600 in particular that we made very good progress over the 0:13:56.640 --> 0:14:00.920 last quarter for our foundry business. We did have one, 0:14:01.000 --> 0:14:04.280 i'll say confirmatory, not as big a customer, but the 0:14:04.400 --> 0:14:07.840 Ericsson announcement their commitment to eighteen A and our next 0:14:07.880 --> 0:14:11.480 generation work with them that we announced this quarter. So 0:14:11.520 --> 0:14:14.640 I'll say overall, we're seeing good momentum and a really 0:14:14.679 --> 0:14:18.079 strong pipeline of customers, and we hope to make meaningful 0:14:18.080 --> 0:14:21.880 announcements later this year on that. We also pointed out 0:14:21.880 --> 0:14:24.440 on our earnings call that now we're seeing a lot 0:14:24.440 --> 0:14:26.640 of interest in our packaging technologies. 0:14:26.680 --> 0:14:28.520 So it isn't just wayfer. 0:14:28.240 --> 0:14:31.400 Manufacturing, it's also package assembly and tests. 0:14:31.400 --> 0:14:33.560 And Intel has long. 0:14:33.320 --> 0:14:37.400 Term been a leader in packaging technologies, and because of 0:14:37.480 --> 0:14:42.040 key areas like high performance computing and AI, there's tremendous 0:14:42.080 --> 0:14:45.640 interest in these advanced packaging technologies, and we're finding a 0:14:45.640 --> 0:14:49.120 lot of customer interest in that incremental area of the 0:14:49.160 --> 0:14:50.400 foundry business as well. 0:14:50.480 --> 0:14:51.600 So overall, you. 0:14:51.520 --> 0:14:53.280 Know, and the numbers were good for us in Q 0:14:53.360 --> 0:14:57.400 two for Foundry, great pipeline of activities, great progress on 0:14:57.480 --> 0:15:00.800 a couple of these most major opportunities. I'm feeling good 0:15:00.840 --> 0:15:03.920 like we're starting to really see that momentum build in 0:15:03.960 --> 0:15:07.600 this new business area for Intel or Intel Foundery services. 0:15:08.520 --> 0:15:12.360 If we think about what a potential customer might be, 0:15:12.480 --> 0:15:15.200 you know, at the scale of Apple, Google or Video, 0:15:15.560 --> 0:15:17.960 what is it that they want from you? What is 0:15:18.000 --> 0:15:19.800 it do you think that you can provide them? 0:15:21.240 --> 0:15:22.880 Yeah? You know, when I view it, you know, we 0:15:22.960 --> 0:15:24.840 have to go through four stages. You know. 0:15:24.920 --> 0:15:28.080 One is are my transistors good? You know, can they 0:15:28.080 --> 0:15:32.440 build good products using Intel? Second is do I have 0:15:32.560 --> 0:15:36.800 the design tools? You know, the cadences and synopsis, c 0:15:36.960 --> 0:15:40.120 das and the IP libraries. Have we gotten all of 0:15:40.160 --> 0:15:42.880 those basics done so that they can design on us? 0:15:43.240 --> 0:15:43.440 You know? 0:15:43.480 --> 0:15:46.320 Then Third, you know, do we have good terms and conditions? 0:15:46.360 --> 0:15:48.840 Are they better off coming to me versus you know, 0:15:49.000 --> 0:15:52.880 TSMC or Samsung as an alternative, And then finally, are 0:15:52.880 --> 0:15:56.760 we customer oriented? Can they really have the support because 0:15:56.800 --> 0:15:59.720 my factory becomes their factory, you know, So we have 0:15:59.760 --> 0:16:02.600 to work through all four of those stages before they're 0:16:02.680 --> 0:16:05.520 ready to commit major businesses to us. 0:16:05.680 --> 0:16:06.760 And that's why it takes a while. 0:16:06.840 --> 0:16:09.800 You know, they got to do designs and tests and pilots, 0:16:09.840 --> 0:16:12.560 and you know, work through the financials, and you know, 0:16:12.600 --> 0:16:15.400 this isn't a mature business area for us. But I'll 0:16:15.440 --> 0:16:18.200 just say we're making great progress, and in particular, you know, 0:16:18.280 --> 0:16:21.160 the two most significant opportunities. It was a really good 0:16:21.240 --> 0:16:24.160 quarter and I'm feeling very optimistic that yes, we'll bring 0:16:24.200 --> 0:16:27.200 them across the line and start to really accomplish what 0:16:27.280 --> 0:16:31.080 we've laid out, you know, with our reshoring and building 0:16:31.120 --> 0:16:32.480 the Western founder. 0:16:32.560 --> 0:16:34.560 And we also had great success. 0:16:34.160 --> 0:16:37.840 With both the EU and the US chipsack this last quarter, 0:16:37.880 --> 0:16:40.960 which are affirming the strong support you know, of the 0:16:41.000 --> 0:16:43.240 Western governments on this strategy. 0:16:43.440 --> 0:16:45.800 It's the right strategy at the right time. We're making 0:16:45.840 --> 0:16:46.520 good progress. 0:16:47.000 --> 0:16:49.080 A big part of your smart capital approach, we have 0:16:49.120 --> 0:16:51.960 to talk about AI. You see, a world in which 0:16:52.040 --> 0:16:55.400 the PC plays a role for localized running of l 0:16:55.520 --> 0:16:58.080 l ms. But what are the use cases that you 0:16:58.160 --> 0:17:04.000 see PAT, The applications PC with AI specific chips is relevant. 0:17:05.119 --> 0:17:08.639 Yeah, you know, to some degree. They're numerous ed. You know, 0:17:08.760 --> 0:17:11.119 let's just give one example. You know, in the future, 0:17:11.160 --> 0:17:13.359 my word processor, you know, I'm going to hit a 0:17:13.359 --> 0:17:15.960 button and say, give me a legal brief that describes this, 0:17:16.240 --> 0:17:18.760 and it's going to get locally generated. You know, my 0:17:19.200 --> 0:17:22.399 video conferencing, my zine, my teams or zooms. I'm going 0:17:22.480 --> 0:17:24.639 to say, you know, give me, you know, real time 0:17:24.800 --> 0:17:29.359 translation across multiple languages, you know, for this meeting, and 0:17:29.440 --> 0:17:31.800 I'm going to have that in real time on my PC. 0:17:32.359 --> 0:17:34.479 You know, my games, you know, for my you know, 0:17:34.520 --> 0:17:37.600 all of that is going to become synthetically generated worlds 0:17:37.720 --> 0:17:41.520 locally on my PC in real time. So we see 0:17:41.520 --> 0:17:45.000 it across creator, across productivity, you know. And as I've said, 0:17:45.040 --> 0:17:47.399 this is sort of like a Wi Fi moment, you know, 0:17:47.520 --> 0:17:50.159 for the PC of the future, and that begins with 0:17:50.200 --> 0:17:53.560 our meteor like launch in the second half of this year. 0:17:54.720 --> 0:17:58.440 PAT quickly a one billion dollar pipeline for AI products 0:17:58.440 --> 0:18:01.320 through twenty twenty four. Just me a sense of the 0:18:01.359 --> 0:18:03.359 pace at which that pipeline is growing. 0:18:03.600 --> 0:18:09.320 Now, Yeah, we had a super exciting quarter. As I said, 0:18:09.320 --> 0:18:12.199 we six sect that pipeline in Q two, so we 0:18:12.240 --> 0:18:14.800 saw a huge uptick on that, you know, and I've 0:18:14.840 --> 0:18:18.879 deployed a lot more sales resources, software resources, you know, 0:18:18.960 --> 0:18:22.399 to jump on those opportunities worldwide. You know, when we 0:18:22.480 --> 0:18:25.640 have our Gouty two chip that is now in volume. 0:18:25.880 --> 0:18:28.119 You know, we've just seen the first wafers on the 0:18:28.160 --> 0:18:30.960 next generation Gouty three, which will be our twenty twenty 0:18:31.000 --> 0:18:33.600 four product, and then we have our twenty five and 0:18:33.640 --> 0:18:35.200 twenty six products underway. 0:18:35.280 --> 0:18:37.600 So you know, we're seeing a lot of momentum there. 0:18:37.800 --> 0:18:40.480 And the world is looking for a great alternative, an 0:18:40.560 --> 0:18:45.080 open alternative, a more cost effective alternative, and Intel is 0:18:45.119 --> 0:18:48.719 a trusted supplier. We think this is a great area 0:18:48.760 --> 0:18:50.679 for us to put a lot of energy into and 0:18:50.680 --> 0:18:52.880 we're seeing the response from the marketplace now. 0:18:54.080 --> 0:18:57.480 Intel CEO Pat Gelsinger, we appreciate your time here on 0:18:57.520 --> 0:18:58.720 Bloomberg TV and radio. 0:18:58.880 --> 0:19:00.360 Thank you, thank you so much. 0:19:00.400 --> 0:19:01.400 Always a pleasure. 0:19:09.480 --> 0:19:10.440 Time for talking tech. 0:19:10.560 --> 0:19:13.800 First up, KLA reported strong earnings for the current period. 0:19:13.800 --> 0:19:17.280 It signals that the chip industry may be nearing a recovery. 0:19:17.359 --> 0:19:20.680 Shares increase around four point five percent in this session, 0:19:20.840 --> 0:19:23.440 but it's unclear how long this upspring will last. Of course, 0:19:23.440 --> 0:19:26.200 it's a sign that chip makers are ready to spend 0:19:26.200 --> 0:19:29.280 on new equipment. Plus, a burning ship near the Netherlands 0:19:29.280 --> 0:19:32.680 has almost five hundred electric cars on board. The cause 0:19:32.720 --> 0:19:34.959 of the blaze still unknown, but the Coast Guard has 0:19:34.960 --> 0:19:37.720 denied reports that the fire broke out in the section 0:19:37.800 --> 0:19:40.240 of the carrier where the electric cars were stored. And finally, 0:19:40.359 --> 0:19:43.560 China has asked its largest tech companies to provide case 0:19:43.560 --> 0:19:47.960 studies of their most successful startup investments. The askers the 0:19:48.040 --> 0:19:51.440 sign authorities are ready to grant them broaderly, way after 0:19:51.480 --> 0:19:54.080 a crackdown that brought them to a virtual halt two 0:19:54.200 --> 0:19:56.439 years ago. All right, coming up, threads, The Twitter like 0:19:56.480 --> 0:19:59.359 app might help bring the center of Internet culture back 0:19:59.400 --> 0:20:00.080 to meta. 0:20:00.200 --> 0:20:02.480 Look at the new app and its potential impact. 0:20:02.720 --> 0:20:17.720 This is Bloomberg Technology. Welcome back to Bloomberg Technology ed 0:20:17.760 --> 0:20:20.840 lovelow here in San Francisco. This week we mentioned the 0:20:20.880 --> 0:20:23.479 idea of everything apps not only for x the company 0:20:23.480 --> 0:20:26.080 formerly known as Twitter, but that conversation now going to 0:20:26.119 --> 0:20:28.960 TikTok as well. Just twenty four hours ago, we spoke 0:20:29.000 --> 0:20:32.600 to metacfo Susanly about the concept of everything apps and 0:20:32.640 --> 0:20:35.800 if Meta would consider itself heading in that direction. 0:20:35.840 --> 0:20:36.760 Here's what she had to say. 0:20:37.440 --> 0:20:40.280 We're really invested in the opportunities that we have ahead 0:20:40.280 --> 0:20:43.760 of us across our family of apps right now, including Threads, 0:20:43.760 --> 0:20:47.000 which is the newest standalone app in our portfolio. And 0:20:47.040 --> 0:20:48.760 then there's just a lot that we can do to 0:20:48.800 --> 0:20:52.080 make the experiences across our family of apps richer and 0:20:52.119 --> 0:20:55.000 more engaging with the investments that we've made already in 0:20:55.080 --> 0:20:59.399 AI and especially recommending content that you don't already follow, 0:20:59.440 --> 0:21:02.879 and we know that that's brought richer content experiences to people, 0:21:03.119 --> 0:21:08.320 is growing engagement across the apps, and we'll release you know, 0:21:08.320 --> 0:21:11.280 we'll be releasing features over the course of the next years. 0:21:11.280 --> 0:21:13.320 But we're really excited about what we think that this 0:21:13.440 --> 0:21:16.000 is going to bring to bear for the consumer experience 0:21:16.080 --> 0:21:19.119 and of course also eventually for businesses to connect with 0:21:19.200 --> 0:21:21.360 consumers across the family of apps too. 0:21:23.000 --> 0:21:24.159 The Everything app. 0:21:24.359 --> 0:21:26.879 Let's break it down with Bloomberg's Alex Brinka, who covers 0:21:26.880 --> 0:21:30.080 the social platforms for US, and Rachel Tippograph, CEO and 0:21:30.080 --> 0:21:33.199