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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business app. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Switch gears to technology? Why not? Mandy sing joints us here,

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Speaker 2: globalhead of tech Research for Bloomberg Intelligence. Lots of ways

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Speaker 2: to go here, man deep, Start with sk Heinex. What

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Speaker 2: did you make of their US listing on Friday? And

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Speaker 2: maybe how that in the stocks trading off today? You know,

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Speaker 2: five percent and then traded off pretty I think was

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Speaker 2: it fifteen percent in yeah Korea?

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Speaker 3: Yeah, and it costs me down about nine percent on

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Speaker 3: the day.

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Speaker 2: What do you make of all that?

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Speaker 4: I mean, I think the data day volatility will be there,

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Speaker 4: and uh, we're kind of going through a phase where

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Speaker 4: everyone is trying to figure out the next leg of

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Speaker 4: this AI infrastructure build out and how the companies would

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Speaker 4: be reporting, especially the hyperscalers. I mean, at the end

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Speaker 4: of the day, everything comes down to the CAPEX numbers

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Speaker 4: for twenty twenty seven and twenty twenty eight, and we'll

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Speaker 4: learn about that when they report earnings, the hyperscalers and

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Speaker 4: you know there is some profit taking right now. But overall,

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Speaker 4: I thought the IPO was well received in terms of

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Speaker 4: you know, the first day bump that we saw in

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Speaker 4: terms of a close and everyone, the long term investors

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Speaker 4: do think this is a multi year cycle for memory names,

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Speaker 4: and even though they are cyclical and there is a

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Speaker 4: fear around peak earnings, I think on the whole, everyone

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Speaker 4: buys into this multi year buildout for AI.

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Speaker 3: It feels increasingly like everyone's taking their cue from the

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Speaker 3: COSP from what happens in Korea and that the tail

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Speaker 3: is wiking the dog here is that the case?

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Speaker 5: Man?

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Speaker 3: Deep? I mean, when you come in the morning, do

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Speaker 3: you look at what's happening in Korea and say, okay,

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Speaker 3: now I have a better picture of what's going to

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Speaker 3: happen globally because that sets the tone every day.

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Speaker 4: No, I mean, for me, it's just another data point

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Speaker 4: where yeah, I look at the futures, I look at

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Speaker 4: how the markets have reacted, But at the end of

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Speaker 4: the day, there are some data points that weigh a

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Speaker 4: lot more from me, and the hyper scale Capex guide

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Speaker 4: is one of them. And if I know that all

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Speaker 4: these companies are raising their capex for next year, and

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Speaker 4: we're into a thirty year of a seventy percent increase

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Speaker 4: in capex, and if next year is going to be

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Speaker 4: another fifty percent, then there is not much to worry

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Speaker 4: about at least for the next twelve to eighteen months.

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Speaker 3: Okay, And it looks like some of those hyperscalers really

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Speaker 3: don't report earnings until the end of this month. Next

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Speaker 3: tomorrow we're going to get the big banks reporting. We're

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Speaker 3: also going to hear from TSMC and ASML, two big

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Speaker 3: big names globally. How do you see that kind of

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Speaker 3: filling the vacuum between now and when the hyperscalers do

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Speaker 3: report and give us a better picture of their capex

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Speaker 3: plans for twenty twenty seven and beyond.

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Speaker 4: Yeah, I mean TSMC reported their monthly number today and

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Speaker 4: you know, we are easily tracking over a forty percent

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Speaker 4: increase or a year over year, and the seasonality was

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Speaker 4: better than expected. So when you look at TSMC's results,

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Speaker 4: which hasn't really used their pricing power like the Memory

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Speaker 4: guys have, so in the case of Memory top line,

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Speaker 4: you see a lot of pricing growth. TSMC, on the

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Speaker 4: other hand, has been a lot more balanced in terms

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Speaker 4: of volume versus pricing. And it's just a question like

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Speaker 4: the durability of TSMC's growth ASML's growth. And all of

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Speaker 4: these Memory guys, whether it's ske Heinex or Micron, have

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Speaker 4: talked about raising their own capex, so that means ASML

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Speaker 4: is a beneficiary of Memory capex. And right now everyone

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Speaker 4: buys into this thesis that you have to keep investing

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Speaker 4: to keep raising their capex just to increase the supply

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Speaker 4: by fifteen twenty percent, and even that would not be sufficient.

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Speaker 4: That's what the skehih next cheerman said is we will

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Speaker 4: double our supply through twenty thirty at a kegre of

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Speaker 4: fifteen percent, but we will still be under supplied. So

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Speaker 4: the demand growth will outpace fifteen to twenty percent supply

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Speaker 4: growth that these companies are investing in.

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Speaker 2: Okay, again, the numbers is blown me away, dude, But

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Speaker 2: I'm going to take what you're seeing face value. If

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Speaker 2: I'm a Meta or Google or Amazon, what do I

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Speaker 2: want to put up a big capex forecast or not?

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Speaker 2: Where are we in that play?

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Speaker 5: There?

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Speaker 2: Does a mark I want to see these guys keep

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Speaker 2: spending or we kind of pass that.

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Speaker 4: I think the market wants to see them spending at

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Speaker 4: the same time show some revenue lift to their top lines.

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Speaker 4: So in the case of Meta and Microsoft and Google,

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Speaker 4: they want to see that cloud business get a bump,

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Speaker 4: the core ads business get a bump from AI, and

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Speaker 4: the AI contribution has to be very clear. So like

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Speaker 4: Google Cloud growth, for example, has surpassed fifty percent. Now

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Speaker 4: expectations why they were growing traditionally Cloud rose growing twenty

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Speaker 4: to twenty five percent. That additional twenty five percent plus

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Speaker 4: growth is coming from AI. So similarly, you want to

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Speaker 4: see that reflected in all the hyperscalers that are reporting

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Speaker 4: that this is the AI portion, and hence we are

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Speaker 4: raising our capex, and I think the market will cheer

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Speaker 4: for that.

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Speaker 6: Stay with us.

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Speaker 3: More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

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Speaker 1: with the Bloomberg Business app. Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 2: Right now, we want to talk about Apple. They're in

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Speaker 2: the courts fighting Open AI regarding intellectual property. It's I

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Speaker 2: don't know it's legal stuff, folks. But let's get to

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Speaker 2: an expert because I'm not really sure what's going on here.

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Speaker 2: Talent Basin joins us here tech litigation analysts for Bloomberg Intelligence.

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Speaker 2: He's based in London. Talent summarize what's going on here

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Speaker 2: with open ai and our good friends at Apple.

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Speaker 6: Yeah, sure, parl Yeah. So this is a intellectual property case,

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Speaker 6: and specifically it's on trade secrets. On trade secrets are

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Speaker 6: sort of the most cloaking dagger form of intellectual property disputes,

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Speaker 6: and sort of reading the complaint over the weekend, that's

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Speaker 6: you know, there's no exception here. So Apple is accusing

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Speaker 6: open Ai of a coordinated orchestrated attempt to gain some

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Speaker 6: of it's proprietary know how relating to making devices for

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Speaker 6: the next iteration of AI rollouts. So they started about

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Speaker 6: a year and a half ago and open ai spent

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Speaker 6: about six point five billion dollars to acquire a companied

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Speaker 6: coyled io. This had been founded by some former Apple executives.

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Speaker 6: One of those executives is now the head of software

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Speaker 6: development at open ai. And what this lawsuit lays out

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Speaker 6: is at various stages where even engineers at Apple were recruited,

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Speaker 6: were asked to bring Apple devices to open AI interviews

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Speaker 6: and to share proprietary information. So what Apple was doing

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Speaker 6: is they have sued, they want an injunction. They want

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Speaker 6: to put a stop to what they see as an

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Speaker 6: attempt to shortcut Open Eyes, attempt to shorten its way

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Speaker 6: into the devices.

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Speaker 3: Okay, so lawsuits typically take a long time to get resolved,

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Speaker 3: and of course technology and technological change happens very very quickly.

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Speaker 3: What are you thinking about in terms of timeline for

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Speaker 3: any kind of landmark not even decisions, but landmark events

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Speaker 3: in this loss to affect the technology that both sides

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Speaker 3: are working on.

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Speaker 6: Yeah, and that's an excellent point. These cases long often

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Speaker 6: do have long tails to them. However, I think what

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Speaker 6: we're expecting over the next two to three weeks is

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Speaker 6: Apple to file up, follow up with a request for

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Speaker 6: a preliminary injunction. Really, what it's going to ask the

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Speaker 6: court to do is put some guardware else around what

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Speaker 6: it says are as trade secrets, preservations of evidence. So

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Speaker 6: it's going to be probably looking for something in three Q,

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Speaker 6: if not in four Q, for an early ruling on

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Speaker 6: that preliminary injunctioning request, and we do think Apple has

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Speaker 6: a pretty strong argument here. Courts are you know, it's

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Speaker 6: so difficult to pull those trade secrets out of a

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Speaker 6: product if it goes to market. So I think, now

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Speaker 6: no products have shipped yet, I think Apple is going

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Speaker 6: to have a fairly strong chance to get that temporary

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Speaker 6: preliminary injunction probably in the next few months. After that,

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Speaker 6: we're going to have to see you know that there's

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Speaker 6: potentially going to be settlement talks as I go forward,

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Speaker 6: But I think Apple's eyes right now are on getting

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Speaker 6: some near term relief in this.

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Speaker 3: How do you think about the employees that have left

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Speaker 3: Apple and gone over to open Ai. What kind of

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Speaker 3: risks did they face?

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Speaker 6: Now, Yeah, a few of them have been named in

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Speaker 6: this lawsuit, and for those name defendants, the risks are

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Speaker 6: very high. So we've seen these litigations play out. Some

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Speaker 6: other high sticks instances are Weaimo, which is Google self

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Speaker 6: driving car division. About five years ago it sued Uber

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Speaker 6: over sort of self driving car technology. The executive there

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Speaker 6: ended up going to jail. This was somebody who left

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Speaker 6: Weimo went to Uber. So the stakes can be pretty high.

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Speaker 6: Right now, there is no criminal component to this case. However,

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Speaker 6: for trade secrets disputes, that can sort of escalate quickly,

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Speaker 6: So I think everybody is going to be a little

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Speaker 6: bit on edge. And it's also interesting because there's such

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Speaker 6: a talent warrant right now, not just between these companies,

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Speaker 6: for all companies trying to gain as much AI talent

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Speaker 6: as possible. So I think we're going to have to

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Speaker 6: see if this has sort of a dampening impact on

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Speaker 6: how much poaching we're seeing in the industry.

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Speaker 2: On Wall Street, there's something called garden leave. When you

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Speaker 2: leave one firm for another. There you can't go start

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Speaker 2: work at that new firm for at least six months,

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Speaker 2: sometimes longer, to try to preserve some of the corporate

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Speaker 2: in intellectual property from the firm you're leaving. Is there

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Speaker 2: anything like that in technology?

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Speaker 6: Technology is generally pushed back on that, just because sort of,

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Speaker 6: again as pointing out, a lot of the development and

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Speaker 6: this is so fast paced that having an executive having

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Speaker 6: a star engineer sort of sit on our sidelines for

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Speaker 6: six months can be really a disadvantage. So sort of

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Speaker 6: we've seen across the entire tech space is resistance to

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Speaker 6: that sort of garden leave type scenario. We'll see get

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Speaker 6: going forward if firms are more open to implementing that,

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Speaker 6: But so far we've seen a lot of reluctance.

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Speaker 3: What does this mean for open aiy's ability to recruit,

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Speaker 3: you know, tech folks from other firms in Silicon Valley.

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Speaker 6: Yeah, I do think it's a bit of a reputational

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Speaker 6: risk right now. I think until there's more clarity on

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Speaker 6: what's going to happen with this lawsuit. And again, this

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Speaker 6: is not the first time open ai has been sued,

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Speaker 6: so I think there's been a lot of litigation that's

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Speaker 6: attached to it. So I think it probably does over

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Speaker 6: the near term, until there's more clarity, it probably does

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Speaker 6: put a bit of a dampening impact on its ability

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Speaker 6: to go out there and recruit some of the biggest

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Speaker 6: names that it may want.

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Speaker 4: Stay with us.

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Speaker 3: More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: When you think about the charging of the EV business,

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Speaker 2: I think of it as still an industry that's in infancy,

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Speaker 2: still growing, trying to add capacity. So when I read

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Speaker 2: this kind of surprised me. There has been an increasing

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Speaker 2: number of charging network acquisitions in Europe. Again, I wasn't

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Speaker 2: expecting to see that from this industry at this stage

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Speaker 2: of its life cycle. Ryan Fisher, ev Charging team leader

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Speaker 2: for Bloomberg bn EF, joins us from London. So Ryan,

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Speaker 2: we're seeing some consolidation in Europe of the charging business.

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Speaker 2: What's going on there?

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Speaker 5: Yeah, so thanks Paul. What we've started to see is

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Speaker 5: a numerous amount of acquisitions that you've kind of got

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Speaker 5: well funded players and then you've got a load of

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Speaker 5: smaller businesses who are trying to stay aflow and they're

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Speaker 5: starting to be acquired. You've also seen some mergers. There's

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Speaker 5: a merger just happened last week between a couple of

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Speaker 5: the biggest providers MR and Evini in largely Scandinavia, where

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Speaker 5: they got some German assets. I think that are also

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Speaker 5: going to be transferred in that deal, which makes them

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Speaker 5: the biggest company. So more and more of them thinking

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Speaker 5: about scale as an opportunity. And obviously you said kind

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Speaker 5: of a surprise maybe difference between what you see in

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Speaker 5: Europe and what you sing in the US within these

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Speaker 5: markets as well.

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Speaker 2: So give us a sense of kind of where the

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Speaker 2: charging network in Europe. I don't know if you can

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Speaker 2: call it Europe writ larger or if it's country by country. Again,

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Speaker 2: I would say here in the US, I mean just

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Speaker 2: barely a blip on the screen. Talk to us about

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Speaker 2: in your world over in Europe.

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Speaker 5: Yeah, yeah, So there's hundreds of thousands of these things

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Speaker 5: been installed, and often the question is like, oh, I

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Speaker 5: can't buy an EV there's no charges. Well, actually they've

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Speaker 5: been installed at such a pace that utilization has been

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Speaker 5: a bit of a problem for some of these companies,

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Speaker 5: and then the revenues because there's just so many charges

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Speaker 5: for people to choose. So then it becomes like if

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Speaker 5: you're buying a network, like what's actually considered a good network,

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Speaker 5: and some of them have more charges at the site,

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Speaker 5: some of them had these really fast power chargers, and

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Speaker 5: that makes a big difference to like whether you want

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Speaker 5: to buy it. As well as fundamentally, do they actually

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Speaker 5: own the land, and what's the right to expand and

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Speaker 5: have you got good grid connections and all this is

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Speaker 5: coming into play when somebody's fundamentally assessing like do I

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Speaker 5: want to buy this company or not? When you think

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Speaker 5: about the US, it's just so heavily dominated by Tesla's

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Speaker 5: and I think then you've also got all of the

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Speaker 5: policy environment which has affected people's confidence to roll things out.

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Speaker 5: They've got rid of the Navy grants. Obviously, they've got

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Speaker 5: rid of the grants for the actual buying of the

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Speaker 5: vehicles as well. But we are seeing pockets of companies

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Speaker 5: raising money and rolling out and having a bit more

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Speaker 5: interest in preparation for what obviously is a growing fleet.

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Speaker 5: Like sales might be consistent, but the actual fleet of

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Speaker 5: electric vehicles is therefore still growing, and it's somewhat monopolistic.

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Speaker 5: I alluded to a point about Tesla, and I'll just

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Speaker 5: remake that one, so on market share that they own

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Speaker 5: a big portion of the market. You want to go

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Speaker 5: to a fast charger, you're probably going to turn up

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Speaker 5: a Tesla in the US. But weirdly that actually is

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Speaker 5: having some consequences for the market because a lot of

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Speaker 5: the cars are changing to new eight hundred vault platforms,

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Speaker 5: and this means that you can get super fast charging

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Speaker 5: rates that can get you like five ten minutes and

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Speaker 5: you're on the move, whereas the Tesla chargers don't have

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Speaker 5: that higher voltage availability. They've sort of announced it with

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Speaker 5: these V four kind of, but actually they've only installed

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Speaker 5: like ten sites with them. So in a weird way,

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Speaker 5: if you're buying one of these fancy evs in the US,

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Speaker 5: the kind of new platforms, the BMW's and things like that,

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Speaker 5: you can't actually turn up at the Tesla site and

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Speaker 5: get the advertised charging power that they were saying. So

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Speaker 5: Tesla has been the leader, but in some ways having

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Speaker 5: such market share and not having the latest technology, it's

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Speaker 5: a bit of a problem.

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Speaker 2: Yeah, I mean that's there's one of many here in

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Speaker 2: the US, as you were mentioning here. But how about

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Speaker 2: in Europe? Do I've heard that or I've seen that

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Speaker 2: some of the field distribution centers, to the gas stations,

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Speaker 2: the BPS, the shells of the world, how are they

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Speaker 2: adapting to evs and charging.

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Speaker 5: Yeah, they were both pretty big as they were in

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Speaker 5: everything energy transition, and I'd say they pulled back. You've

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Speaker 5: seen that across all energy transition things from many of

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Speaker 5: these oil majors. I'd say they still have activities, though

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Speaker 5: Total is doing a lot in the energy transition at large,

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Speaker 5: but also pretty pretty active, the same as BP and

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Speaker 5: and they're more focused on four courts. But they these

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Speaker 5: companies have quite a big set of offerings for people

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Speaker 5: in the fleet sector, so they want to keep that.

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Speaker 5: So you can don't fill up your company's vehicles with

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Speaker 5: petrol and diesel, what you can fill them up with

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Speaker 5: electricity as well. So they've been involved in the sector

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Speaker 5: pretty heavily, but it can be a little bit difficult.

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Speaker 5: Quite a lot of sites might be franchised across the network,

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Speaker 5: so how do you convert them? And then fundamentally there's

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Speaker 5: just quite a lot of competition. Before you could only

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Speaker 5: fill up your vehicle at a fuel station. Now you

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Speaker 5: can fill up your vehicle if you've got an electric

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Speaker 5: one at home, so that cuts the market. Then you've

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Speaker 5: got all of these like supermarkets and stuff coming in.

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Speaker 5: So in the US I think Walmart has rolled out

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Speaker 5: pretty heavily. A good example in the UK Sainsbury's, which

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Speaker 5: is a pretty big supermarket over here, and what they've

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Speaker 5: managed to do is say, okay, something like twenty five

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Speaker 5: percent of evs that turn up are now actually charging

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Speaker 5: on the sainsbury sites, and they offer pretty cheap charging

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Speaker 5: so these oil and gas majors have got a lot

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Speaker 5: of competition, and the competition, like the supermarket, is offering

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Speaker 5: quite cheap charging as well. It's a big, big threat,

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Speaker 5: I would say for some of those, even if they

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Speaker 5: are still involved.

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