WEBVTT - Nvidia's New Chip, China Evergrande

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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<v Speaker 1>Daybreak Asia podcast. I'm Doug Krisner. You can join Brian

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<v Speaker 1>Curtis and myself for the stories, making news and moving

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<v Speaker 1>show anywhere you get your podcast and always on Bloomberg Radio,

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<v Speaker 1>the Bloomberg Terminal, and the Bloomberg Business App.

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<v Speaker 2>Nvidia has unveiled new chips aimed at extending the company's

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<v Speaker 2>dominance in artificial intelligence computing. And Vidia says its new

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<v Speaker 2>processor design, named Blackwell, is multiple times faster at handling

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<v Speaker 2>the computer models behind AI. That includes the process of

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<v Speaker 2>developing AI technology known as training and running the process AI.

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<v Speaker 2>And Vidia says it's Blackwell chips will be the basis

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<v Speaker 2>of new computers and other products being deployed by the

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<v Speaker 2>world's largest data center operators. That roster includes Amazon, Microsoft,

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<v Speaker 2>Alphabet and Oracle. Jensen Hoong and Video CEO and co

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<v Speaker 2>founders said AI is the driving force in a fundamental

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<v Speaker 2>change in the economy.

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<v Speaker 3>The industry is being transformed, not just ours because the

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<v Speaker 3>computer industry. The computer is the single most important instrument

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<v Speaker 3>of society today. Fundamental transformations and computing affects every industry.

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<v Speaker 2>Jensen Hoong there and Vidia CEO and co founder and

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<v Speaker 2>Vidia shriffes we're down about one point seven percent in

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<v Speaker 2>late trading. Joining us now for some discussion on this

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<v Speaker 2>is Nick Turner, Bloomberg, Senior editor for the Technology Team. Nick,

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<v Speaker 2>thank you for joining us. So Jensen Wong, we heard

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<v Speaker 2>him saying that the Blackwell processor is multiple times faster

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<v Speaker 2>than previous chips. That sounds impressive, of course, but with

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<v Speaker 2>a company like Nvidia, you know, there's all kinds of superlatives.

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<v Speaker 2>And we see that the stock price in after hours

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<v Speaker 2>was a little bit underwhelming. How is the response in

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<v Speaker 2>the room?

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<v Speaker 4>Well, I mean, this is their first in person event

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<v Speaker 4>for this GtC conference in four years, essentially since the

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<v Speaker 4>pandemic started, and you know, I wasn't there myself, but

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<v Speaker 4>just seeing the photos of my colleagues end and just

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<v Speaker 4>the vibe of people who are there, it just really

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<v Speaker 4>seemed like kind of a really pumped up crowd. And yeah,

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<v Speaker 4>I mean this company is now one of the biggest

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<v Speaker 4>stars in the tech world, up there with Apple and Microsoft,

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<v Speaker 4>and in some ways more exciting to people just because

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<v Speaker 4>of what it's doing. In terms of changing the way

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<v Speaker 4>computing works.

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<v Speaker 1>And the company seems so far ahead of the competition

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<v Speaker 1>when it comes to this, and I think it goes

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<v Speaker 1>back to its roots in developing the graphics processors that

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<v Speaker 1>were used for the gaming industry, where you had to

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<v Speaker 1>kind of create a chip that was able to handle

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<v Speaker 1>complex calculations so quickly but dynamically as well, because you

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<v Speaker 1>had inputs coming from two sides, from the game itself

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<v Speaker 1>and then from the gamer who was interacting with the

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<v Speaker 1>control surface. I'm wondering, though, when it comes to this

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<v Speaker 1>idea of encryption. We played a cut earlier where mister

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<v Speaker 1>Wong was talking about encryption. How do we understand what

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<v Speaker 1>Nvidia is doing as it moves toward AI to develop

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<v Speaker 1>a secure environment.

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<v Speaker 4>Well, I mean, I think, first of all, this is

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<v Speaker 4>a company really that has its hands in so many

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<v Speaker 4>areas in terms of just designing software services, the simulations.

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<v Speaker 4>Obviously the chips are kind of its biggest source of revenue,

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<v Speaker 4>but I think that it really wants to sort of

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<v Speaker 4>create an ecosystem around what it's selling, and obviously that

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<v Speaker 4>includes security and encryption. And I think that it, I mean,

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<v Speaker 4>in broader terms, a lot of these areas that it's

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<v Speaker 4>been in. It's sort of had to make sure people

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<v Speaker 4>feel like they're safe and they're you know, secure, and

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<v Speaker 4>I think that that, you know, that's part of the pitch.

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<v Speaker 2>It is interesting. It's I think we're learning here as

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<v Speaker 2>time goes on that there's not just one winner in

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<v Speaker 2>this AI space, It'll be multiple winners. So in addition

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<v Speaker 2>to in video, a lot of the people in that

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<v Speaker 2>room probably you know, working we said, Amazon, Microsoft, Alphabet

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<v Speaker 2>in Oracle are in a sense even competitors with in video.

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<v Speaker 2>And then you have a MD and Broadcommon a whole

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<v Speaker 2>slew of others, you know, in your estimation here is

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<v Speaker 2>is this rolling out in that way where a lot

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<v Speaker 2>of people win? And that's not even to mention all

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<v Speaker 2>the downstream recipients of the AI technology. Are we going

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<v Speaker 2>to see a lot of winners here?

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<v Speaker 4>What demand is so much higher than supply at the

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<v Speaker 4>moment that I think in the short term release, it

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<v Speaker 4>does seem like you're gonna have a lot of winners.

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<v Speaker 4>I mean, I think am D is going to be

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<v Speaker 4>successful with it's you know, the same sort of styles

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<v Speaker 4>chip that in video sells that's coming out this year.

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<v Speaker 4>It's already increased its forecast for how much that's going

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<v Speaker 4>to generate. Intel has its own version too, which is

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<v Speaker 4>maybe not being received quite as warmly. But then, as

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<v Speaker 4>you mentioned, the cloud companies themselves, they're designing some of

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<v Speaker 4>their own chips that are going to handle these functions,

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<v Speaker 4>so ultimately they become customers but also competitors. But part

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<v Speaker 4>of the reason for that is they really want to

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<v Speaker 4>sort of have control over the process and maybe make

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<v Speaker 4>it a little bit easier to ensure that they get

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<v Speaker 4>as much of whatever chip it is that they need.

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<v Speaker 1>Are we reaching an inflection point in the near future

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<v Speaker 1>where this investment in the technology is going to have

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<v Speaker 1>to be justified. There's going to have to be a

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<v Speaker 1>return on investment seen, so the use case, I mean,

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<v Speaker 1>I understand the technology and the amazing things that it's

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<v Speaker 1>capable of doing, but for a company to actually derive

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<v Speaker 1>a benefit from that as it's invested in this technology.

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<v Speaker 1>Are we always away from seeing that?

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<v Speaker 4>Well, it's funny to hear him speak today. He did

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<v Speaker 4>kind of He kept coming back to this theme of

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<v Speaker 4>sort of the the AI factory, that these data centers

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<v Speaker 4>are sort of AI factories, and I think he sort

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<v Speaker 4>of said he talked about how they were money makers, improfitable,

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<v Speaker 4>and I don't know if that's the case right now

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<v Speaker 4>for these companies, but I think that it's it's It

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<v Speaker 4>did seem like he was hitting the theme that these

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<v Speaker 4>things were going to be a profitable enterprise, at least

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<v Speaker 4>in the near term. But I think you're right. If

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<v Speaker 4>suddenly tomorrow AI services were held to you know, sort

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<v Speaker 4>of a make or break you have to be profitable

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<v Speaker 4>or sort of cutting you off, then that wouldn't be

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<v Speaker 4>a I don't think any many are already at that point,

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<v Speaker 4>even the big companies that are investing in this. So

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<v Speaker 4>it's the big debate I think is is this closer

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<v Speaker 4>to the dot com bubble of two thousand year two

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<v Speaker 4>thousand or is it farther back like nineteen ninety five

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<v Speaker 4>or something like that. I mean, you hear that a lot, and.

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<v Speaker 2>One is that in the stock price. And the reason

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<v Speaker 2>I asked you about are there multiple winners is so

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<v Speaker 2>that people don't necessarily feel so, you know, beholden by Nvidia,

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<v Speaker 2>that there are other places to turn. So I wanted

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<v Speaker 2>to ask you about this process. I mean, he said

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<v Speaker 2>multiple times faster, so that's difficult to actually you know,

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<v Speaker 2>deal with quantitatively, how does that compare with the last

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<v Speaker 2>chip that they rolled out? How much did they say

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<v Speaker 2>it was faster than previous iterations. So in order to

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<v Speaker 2>get a feel for you know, how far is.

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<v Speaker 4>Nvidia, I had yeah, I mean it, you know, not

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<v Speaker 4>to get into sort of the two nitty gritty of

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<v Speaker 4>the numbers, but I mean, you looked at some of

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<v Speaker 4>these charts he threw up. Then it's really a dramatic

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<v Speaker 4>gain from even the you know, the current ship that

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<v Speaker 4>obviously is so far ahead of the competition already that

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<v Speaker 4>it's you know, in this incredible demand. So I think

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<v Speaker 4>that that it is going to be you know both

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<v Speaker 4>I think, more powerful but also hopefully more power efficient,

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<v Speaker 4>which has been another issue that the AI industry in

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<v Speaker 4>general and video has hit up against. It just that

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<v Speaker 4>these things, you know, the electricity required of these things,

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<v Speaker 4>the fact that data centers are outstripping the amount of

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<v Speaker 4>energy available in their communities in some cases. I mean,

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<v Speaker 4>that's another He's got to hit a lot of points

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<v Speaker 4>to sort of make sure people are not growing concerned

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<v Speaker 4>about some of these issues.

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<v Speaker 1>So when in video is talking about the application for AI,

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<v Speaker 1>the focus seems to be the cloud. And I want

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<v Speaker 1>to see if we can kind of shoehorn in the

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<v Speaker 1>Apple story today, because it seems like what Apple is

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<v Speaker 1>trying to do is to give a lot more of

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<v Speaker 1>that computing power to the phone where the user is

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<v Speaker 1>actually interfacing with the phone and maybe not so reliant

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<v Speaker 1>on what's happening in the cloud. Is that a fair statement?

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<v Speaker 4>Yes, I mean, I think Apple in general handling things

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<v Speaker 4>on the device, it's better for security, privacy. That's a

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<v Speaker 4>huge issue in terms of the marketing Apple, and I

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<v Speaker 4>think that the problem they're finding themselves in is that

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<v Speaker 4>they're just a little bit too far behind on some

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<v Speaker 4>of the cloud based services that people have gotten excited about,

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<v Speaker 4>a chat, GPT and you know that ILK, obviously Gemini,

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<v Speaker 4>which is the one they're in talks with from Google

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<v Speaker 4>to potentially use in the iPhone. So I think they

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<v Speaker 4>find that that they've been concentrated on this on device

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<v Speaker 4>stuff for good reason perhaps, but they're they're not quite

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<v Speaker 4>cut up on the cloud based AI services.

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<v Speaker 2>All right, Nick, thanks very much for joining us. A

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<v Speaker 2>very interesting material there, Nick Turner Bloomberg, Senior editor for

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<v Speaker 2>the Tech Team. So let's see, we've got Amazon Anthropic,

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<v Speaker 2>We've got Microsoft, Open Ai and now Alphabet Apple. At

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<v Speaker 2>least those three big camps, Nvidia and a MD seemingly

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<v Speaker 2>in their two camps on the chip side, it's setting

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<v Speaker 2>up as a fascinating story. Chinese regulators say the developer

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<v Speaker 2>Evergrand falsely inflated revenue by more than seventy eight billion

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<v Speaker 2>dollars in the two years leading to its failure. Joining

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<v Speaker 2>US now is Carrie Sue Lindberg Bloomberg Private Credit and

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<v Speaker 2>Loans reporter. So we won't have any trading in Evergrand

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<v Speaker 2>stocks bend suspended since it went into liquidation. It's a

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<v Speaker 2>good I guess it's a good time today to talk

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<v Speaker 2>a little bit about the overarching story about Evergrand. In

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<v Speaker 2>terms of these finds, a hefty fine for the founder

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<v Speaker 2>and the former CEO as well as for the hung

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<v Speaker 2>Da unit in China.

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<v Speaker 5>Right, that's right, So thanks Brian. So essentially Huy who

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<v Speaker 5>was kind of the kind of the found the founder

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<v Speaker 5>of the founder and chairman of Evergrand, was fined forty

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<v Speaker 5>seven million yun as well as Hung Da was fined

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<v Speaker 5>seven four point one eight billion un which is kind

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<v Speaker 5>of quite sizable fins And so really what this means

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<v Speaker 5>is in some ways. This is the latest blow for Huay,

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<v Speaker 5>who was once among Asia's richest tycoons and saw kind

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<v Speaker 5>of the sprawling empire. So, I mean, it really strikes

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<v Speaker 5>at the heart of Evergrand, especially when they were once

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<v Speaker 5>kind of the one of the leading growth engine of

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<v Speaker 5>the world's second largest economy. And this is really just

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<v Speaker 5>you know, more details and kind of a flaming the fires.

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<v Speaker 1>In that sense, I'm wondering whether it's unique to Evergrand,

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<v Speaker 1>which is not to say that other companies were, you know,

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<v Speaker 1>engaged in similar practices and maybe not as extreme as

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<v Speaker 1>this where you inflate revenue by more than seventy eight

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<v Speaker 1>billion dollars over two years. But are there questions being

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<v Speaker 1>asked more broadly about the accounting standards that some of

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<v Speaker 1>these property developers have used in the past, or ways

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<v Speaker 1>that they are accounting for property sales.

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<v Speaker 5>Yeah, I mean, that's a good point. I mean, And

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<v Speaker 5>just to put a little bit into perspective, the numbers

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<v Speaker 5>you brought, so for twenty nineteen they inflated their Hangdah

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<v Speaker 5>inflated their tour revenue by sixty three percent, and for

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<v Speaker 5>twenty twenty, they inflated their numbers by eighty seven percent,

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<v Speaker 5>which is massive. Well, I don't think this is in

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<v Speaker 5>some ways unique to Evergrand. I think what it really

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<v Speaker 5>shows you is why the government was trying to kind

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<v Speaker 5>of overhaul the whole regulatory system quite strongly and kind

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<v Speaker 5>of tighten the lending. So if we'll remember and kind

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<v Speaker 5>of just going back a little bit onto kind of

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<v Speaker 5>the three plus year saga of this company, it was

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<v Speaker 5>really you know, it was expanding tremendously by kind of

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<v Speaker 5>taking on massive amounts of debt. But once the regulator

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<v Speaker 5>started tightening their ability to borrow money, that's when it's

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<v Speaker 5>that's when the trouble really started. And so I think

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<v Speaker 5>that's really what we're seeing, right, We're seeing, you know,

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<v Speaker 5>once you tighten those practices, if you're you're not one

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<v Speaker 5>hundred percent sound in some ways that this is what

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<v Speaker 5>could await you. And I think that's really a signal

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<v Speaker 5>to other companies.

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<v Speaker 2>Yeah, and Andhay himself is still under police control as

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<v Speaker 2>far as we know, and his subject to whatever mandatory

0:13:04.120 --> 0:13:09.040
<v Speaker 2>measures means. But it is you know, is there much

0:13:09.160 --> 0:13:13.840
<v Speaker 2>progress in terms of selling assets of Evergrand to pay

0:13:13.880 --> 0:13:17.040
<v Speaker 2>off the you know, the creditors that because that's an

0:13:17.080 --> 0:13:20.360
<v Speaker 2>ongoing story that I think investors would be quite interested in.

0:13:20.920 --> 0:13:23.400
<v Speaker 5>You're right, it is an ongoing story because you know,

0:13:23.640 --> 0:13:27.280
<v Speaker 5>just in January, right they were the group received a

0:13:27.320 --> 0:13:29.640
<v Speaker 5>liquidation order, and so I think that's still kind of

0:13:29.679 --> 0:13:33.920
<v Speaker 5>the ongoing story. I've no news on that front, but

0:13:33.960 --> 0:13:37.400
<v Speaker 5>I could say that the mansion of Hong Kong Mansion

0:13:37.480 --> 0:13:41.359
<v Speaker 5>that's tied to Howay, who was the founder of Evergrand,

0:13:41.440 --> 0:13:44.840
<v Speaker 5>has been put up for sale. It's a luxury block

0:13:44.960 --> 0:13:48.520
<v Speaker 5>that and the tender ends on April twenty second, So

0:13:48.840 --> 0:13:51.240
<v Speaker 5>I mean that's also kind of a good barometer who

0:13:51.320 --> 0:13:53.760
<v Speaker 5>wants to buy that and where does the proceeds for

0:13:53.960 --> 0:13:58.200
<v Speaker 5>that his personal asset go. I think that could provide

0:13:58.320 --> 0:14:01.880
<v Speaker 5>some a bell weather for where everything else goes as well. Well.

0:14:01.880 --> 0:14:03.640
<v Speaker 1>That was the question that I was going to ask

0:14:03.960 --> 0:14:07.160
<v Speaker 1>next about the government's ability to claw back any of

0:14:07.160 --> 0:14:12.040
<v Speaker 1>this inflated this overstatement. Are there means for the government

0:14:12.080 --> 0:14:14.520
<v Speaker 1>to be able to try to do that, to seize

0:14:14.559 --> 0:14:16.480
<v Speaker 1>assets to make up for this?

0:14:18.120 --> 0:14:20.280
<v Speaker 5>There are, But I think a large part of the

0:14:20.320 --> 0:14:24.600
<v Speaker 5>issue is that not all of Evergrend's buildings and real

0:14:24.720 --> 0:14:29.360
<v Speaker 5>estate infrastructure that they were responsible for were completed. So

0:14:30.400 --> 0:14:32.480
<v Speaker 5>I mean you could seize an acid. But what's the

0:14:32.520 --> 0:14:34.600
<v Speaker 5>point of seizing an acid that's not completed?

0:14:34.720 --> 0:14:34.920
<v Speaker 4>Right?

0:14:35.160 --> 0:14:38.040
<v Speaker 5>So I think that's also the really tricky issue that's

0:14:38.080 --> 0:14:40.520
<v Speaker 5>not facing not just evergrand i'd say, but kind of

0:14:40.560 --> 0:14:44.960
<v Speaker 5>the slew of Chinese real estate companies that are under

0:14:45.040 --> 0:14:47.240
<v Speaker 5>severe distress or have already defaulted.

0:14:48.440 --> 0:14:50.640
<v Speaker 2>So carry see. One of the stories we did was that,

0:14:50.720 --> 0:14:53.320
<v Speaker 2>you know, we did see investment pick up and industrial

0:14:53.360 --> 0:14:56.120
<v Speaker 2>production pick up, and we just mentioned a few moments

0:14:56.160 --> 0:15:00.600
<v Speaker 2>ago that it has led some analysts and vesters to

0:15:00.600 --> 0:15:02.640
<v Speaker 2>think that maybe we'll get a little bit less stimulus.

0:15:02.840 --> 0:15:05.680
<v Speaker 2>It brings us to the property sector. That's the biggest overhang.

0:15:06.680 --> 0:15:09.200
<v Speaker 2>What are we seeing in terms of sales now, transactions

0:15:09.240 --> 0:15:12.240
<v Speaker 2>and prices? Is it getting better or is it still

0:15:12.280 --> 0:15:12.880
<v Speaker 2>getting worse?

0:15:13.920 --> 0:15:17.120
<v Speaker 5>I think it's not great, to be honest, and that's

0:15:17.160 --> 0:15:19.400
<v Speaker 5>really the key barometer what a lot of people are

0:15:19.400 --> 0:15:23.360
<v Speaker 5>looking out for. We'll wait that news as well and

0:15:23.400 --> 0:15:24.720
<v Speaker 5>see where that happens.

0:15:25.080 --> 0:15:28.680
<v Speaker 1>So what recourse do you think will the government take here?

0:15:28.760 --> 0:15:32.000
<v Speaker 1>I mean, if we're talking about the property market really

0:15:32.040 --> 0:15:34.200
<v Speaker 1>being or the weakness of the property market being the

0:15:34.240 --> 0:15:38.000
<v Speaker 1>nerve center for this lack of positive centerment, this lack

0:15:38.040 --> 0:15:41.240
<v Speaker 1>of confidence in China. Is there anything the government can

0:15:41.320 --> 0:15:44.280
<v Speaker 1>can do to kind of fortify the weakness that we

0:15:44.320 --> 0:15:47.440
<v Speaker 1>have seen among these property developers or have they just

0:15:48.200 --> 0:15:50.480
<v Speaker 1>or are they allowing the markets to kind of have

0:15:50.600 --> 0:15:51.520
<v Speaker 1>their way right now?

0:15:53.280 --> 0:15:55.040
<v Speaker 5>I think that's a tough question, and I think that's

0:15:55.080 --> 0:15:59.600
<v Speaker 5>one that we continue to watch because last year the

0:15:59.600 --> 0:16:02.680
<v Speaker 5>government did put in kind of small amount inject small

0:16:02.720 --> 0:16:06.080
<v Speaker 5>amounts of liquidity into the market, right and this was

0:16:06.120 --> 0:16:09.840
<v Speaker 5>seen as marginally helping the property sector kind of show

0:16:09.960 --> 0:16:13.720
<v Speaker 5>up the very worst of it. But on the other hand,

0:16:14.240 --> 0:16:17.960
<v Speaker 5>the debt and kind of the magnitude is so great

0:16:18.160 --> 0:16:21.240
<v Speaker 5>that actually it's not enough. And the real question is

0:16:21.680 --> 0:16:24.600
<v Speaker 5>to what extent will the government continue to help the

0:16:24.640 --> 0:16:28.200
<v Speaker 5>property sector. And that's kind of the question that's kind

0:16:28.200 --> 0:16:30.640
<v Speaker 5>of been hanging over everyone for the past three years.

0:16:30.760 --> 0:16:32.840
<v Speaker 2>All Right, Kerrie, thanks very much for joining us. Kerry

0:16:32.840 --> 0:16:36.600
<v Speaker 2>Sue Lindberg, their private credit and loans reporter for Bloomberg.

0:16:37.120 --> 0:16:40.480
<v Speaker 2>We should mention that these finds huge fines that were

0:16:40.680 --> 0:16:45.520
<v Speaker 2>leveled against Huai Khayan are civil in nature. No criminal

0:16:45.600 --> 0:16:47.800
<v Speaker 2>charges have been filed against him, but as you mentioned,

0:16:47.960 --> 0:16:51.200
<v Speaker 2>he's being held under police control and seems to suggest

0:16:51.240 --> 0:16:54.760
<v Speaker 2>that there will be illegal crimes coming because when he

0:16:54.920 --> 0:16:58.200
<v Speaker 2>was put under this control, it was mandatory measures due

0:16:58.240 --> 0:17:01.880
<v Speaker 2>to quote suspicion illegal crime something to watch out for.

0:17:03.200 --> 0:17:06.119
<v Speaker 1>This has been the Bloomberg Daybreak Asia podcast, bringing you

0:17:06.200 --> 0:17:09.320
<v Speaker 1>the stories making news and moving markets in the Asia Pacific.

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