WEBVTT - OpenAI Drops Exclusivity Deal with Microsoft 0:00:02.560 --> 0:00:13.680 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 0:00:13.720 --> 0:00:17.480 from coast to coast with Caroline Hyde in New York 0:00:17.800 --> 0:00:19.800 and Va Low in San Francisco. 0:00:22.800 --> 0:00:24.560 This is Bloomberg Tech coming up. 0:00:24.720 --> 0:00:29.080 Microsoft and open Ai have agreed to drop exclusivity rights 0:00:29.240 --> 0:00:32.360 on AI models, opening the doors for rivals to make 0:00:32.440 --> 0:00:35.960 new deals. Plus China blocks metas two billion dollar deal 0:00:36.159 --> 0:00:39.320 for AI startup Manners and a surprise move that unwinds 0:00:39.400 --> 0:00:42.920 a controversial deal. And Elon Musk and Sam Altman head 0:00:42.920 --> 0:00:46.120 to court with the Tesla CEO alleging that the open 0:00:46.159 --> 0:00:49.960 Ai founder abandoned its founding mission. Let's get to our 0:00:49.960 --> 0:00:52.320 top story of the day, and this is an interesting one. 0:00:52.360 --> 0:00:56.160 Microsoft shares are now basically flat, but when youws hit 0:00:56.640 --> 0:01:00.720 that they had ended their exclusivity packs with open Ai 0:01:01.160 --> 0:01:03.800 to stop was down four percent in pre market. Amazon 0:01:03.840 --> 0:01:07.119 shares shot off on the logic it would benefit all 0:01:07.160 --> 0:01:10.080 of that has been undone. It is a complicated story. 0:01:10.200 --> 0:01:12.880 Bloombergs Brody Ford joins us on set in San Francisco. 0:01:13.319 --> 0:01:15.800 The bits that are new are there are changes in 0:01:15.840 --> 0:01:18.200 the structure of the agreement between Microsoft and open Ai. 0:01:18.319 --> 0:01:19.040 Let's start there. 0:01:19.200 --> 0:01:21.240 What do we need to know what can open Ai 0:01:21.400 --> 0:01:23.559 now do that it couldn't do twenty four hours ago. 0:01:23.760 --> 0:01:26.080 So the big headline of what has changed is that 0:01:26.120 --> 0:01:29.080 the OAI models for a long time were exclusive on 0:01:29.160 --> 0:01:32.880 Microsoft Azure, and that was really kind of the last 0:01:32.920 --> 0:01:36.399 bit of exclusivity in this storied partnership that helped us 0:01:36.440 --> 0:01:39.360 share in the AI era that now is kind of 0:01:39.440 --> 0:01:42.720 going away. And so this is meaningful for open ai 0:01:42.880 --> 0:01:46.080 because they're in a world where compute is constrained. They 0:01:46.120 --> 0:01:47.800 need as much as they can get, and they want 0:01:47.840 --> 0:01:50.400 to be able to distribute their products onto all the 0:01:50.440 --> 0:01:51.440 major platforms. 0:01:52.240 --> 0:01:56.120 Microsoft still gets access to the models through twenty thirty two, 0:01:56.200 --> 0:01:58.880 it's just open Ai can sell them and make them 0:01:58.880 --> 0:02:01.600 available in other places. So you and I were talking 0:02:01.600 --> 0:02:04.760 before the show, who benefits or Amazon in the first 0:02:04.760 --> 0:02:07.040 instance where it shares jump in pre market. Now I 0:02:07.040 --> 0:02:10.600 think they're lower again. But that's the idea. This is 0:02:10.639 --> 0:02:12.480 hot on the heels of a deal between open Ai 0:02:12.560 --> 0:02:15.560 and AWS, which I think was in January, maybe February. 0:02:15.840 --> 0:02:18.959 Yeah, in recent months, you know, OAI and AWS have 0:02:19.040 --> 0:02:22.560 been working together to distribute on that platform, which is 0:02:22.600 --> 0:02:27.320 still the leading cloud infrastructure platform. Microsoft reportedly was not 0:02:27.520 --> 0:02:28.839 super happy about that. 0:02:28.919 --> 0:02:29.480 We have to. 0:02:29.480 --> 0:02:33.639 Imagine the changes today are downstream of those discussions, or 0:02:33.639 --> 0:02:37.400 at least discussions like that. And what Microsoft gets in 0:02:37.400 --> 0:02:39.640 a return here is that they're no longer paying a 0:02:39.680 --> 0:02:40.320 revenue share. 0:02:40.400 --> 0:02:40.640 Yeah. 0:02:40.639 --> 0:02:42.960 Effectively they're saying, look, you can go and hang out 0:02:43.000 --> 0:02:44.880 with other people, but I'm not going to pay you 0:02:44.960 --> 0:02:45.280 to do it. 0:02:45.400 --> 0:02:49.240 So this is really interesting and again complicated. Basically, Microsoft 0:02:49.560 --> 0:02:53.000 was paying open ai a revenue share from revenues where 0:02:53.080 --> 0:02:57.280 it used open ais technology in some form, right. But 0:02:57.919 --> 0:03:00.720 the bit that's hard to understand is open ai is 0:03:00.800 --> 0:03:04.080 still a customer of Microsoft. They basically pay them for 0:03:04.160 --> 0:03:07.760 various reasons. Open ai pays Microsoft, and at the same time, 0:03:08.120 --> 0:03:10.360 Microsoft is the biggest investor in open ai. 0:03:11.520 --> 0:03:12.400 Explain me it's. 0:03:12.480 --> 0:03:15.120 Right, because it all stems from that original partnership with 0:03:15.160 --> 0:03:18.160 Microsoft and OI were for a long time folks saw 0:03:18.280 --> 0:03:22.000 as OI was almost a part of Microsoft. Right, So 0:03:22.160 --> 0:03:25.880 Microsoft gets access to these OI models everybody else has 0:03:25.919 --> 0:03:28.240 to pay for, but they just get to access them 0:03:28.240 --> 0:03:30.680 for free at least for the next couple of years. 0:03:31.240 --> 0:03:34.920 Bloemos Brodie Ford again two red headlines from the report. 0:03:35.040 --> 0:03:37.360 Markets have behaved very strange, and we'll get more on 0:03:37.400 --> 0:03:40.520 that later in the program. That's turned to matter. China 0:03:40.920 --> 0:03:44.040 has blocked the social media giant's two billion dollar acquisition 0:03:44.400 --> 0:03:48.440 of AI startup Mannus. The country's National Development and Reform 0:03:48.480 --> 0:03:52.280 Commission ordered the cancelation of the deal, stating it was 0:03:52.560 --> 0:03:56.680 prohibiting the foreign investment in accordance with laws and regulations. 0:03:57.080 --> 0:04:01.240 Without further elaborating here with more, Bloombergs Executive editor for 0:04:01.320 --> 0:04:05.720 Asia Tech Peter Elstrom, again another complicated story. Let's start 0:04:05.760 --> 0:04:07.560 with the what we need to know. This is a 0:04:07.720 --> 0:04:11.280 body in China unwinding at what we thought was a 0:04:11.320 --> 0:04:11.840 done deal. 0:04:13.720 --> 0:04:16.520 Yeah, this was a surprise, as you alluded to earlier. 0:04:16.640 --> 0:04:19.839 The NDRC jumped in today. It was only a one 0:04:19.920 --> 0:04:23.480 sentence announcement that they made. They didn't name Meta. They 0:04:23.560 --> 0:04:26.200 just said that this foreign deal with Manus had to 0:04:26.240 --> 0:04:27.960 be undone. 0:04:28.080 --> 0:04:28.720 So what the. 0:04:28.800 --> 0:04:31.600 DRC is doing here is they're trying to reverse a 0:04:31.640 --> 0:04:36.640 deal that was announced in December. The reason is that 0:04:37.000 --> 0:04:40.840 Manus's founders originally started the company when they were in 0:04:40.920 --> 0:04:43.720 mainland China. They decided to move to Singapore in the 0:04:43.760 --> 0:04:46.560 middle of last year. They declared themselves a Singapore company. 0:04:46.560 --> 0:04:49.000 They did set up shop there legally, and so when 0:04:49.040 --> 0:04:51.520 they cut the deal with Meta, Meta and Manus agreed 0:04:51.520 --> 0:04:54.680 to the deal and they did not get explicit regulatory 0:04:54.760 --> 0:04:58.279 approval from Beijing. But there were people inside of China 0:04:58.320 --> 0:05:02.320 who were saying that this was essentially losing critical AI 0:05:02.480 --> 0:05:07.679 technology to our biggest geopolitical rival in the United States, 0:05:07.720 --> 0:05:11.120 in Meta in particular, So they wanted some sort of 0:05:11.560 --> 0:05:14.560 pressure put to this, and we wrote a story last 0:05:14.560 --> 0:05:17.720 week about how regulars now are pressing other AI companies 0:05:18.040 --> 0:05:21.400 not to take money from US investors in particular. Now 0:05:21.440 --> 0:05:23.960 it's not clear whether China is going to be able 0:05:24.000 --> 0:05:26.880 to force Meta to undo this deal. These two companies 0:05:26.880 --> 0:05:31.839 have been operating together quite closely already. Metayee Manus employees 0:05:31.880 --> 0:05:35.320 have gone into the Meta offices. The executives are cooperating. 0:05:35.560 --> 0:05:38.600 All the investors in Manus have already gotten paid, They 0:05:38.600 --> 0:05:40.400 have their checks at this point, so it's not clear 0:05:40.440 --> 0:05:41.280 how they can underwin this. 0:05:41.960 --> 0:05:44.600 There's a technicality that Manis would say it was headquartered 0:05:44.680 --> 0:05:48.880 in Singapore, but it shows that China has reach if 0:05:49.080 --> 0:05:53.320 there's an origin within country. The political dimension is that 0:05:53.400 --> 0:05:56.960 President Trump in just a few weeks time will visit 0:05:57.080 --> 0:06:01.720 Jijing Pay and speak was Jijing Pay relationship as a 0:06:01.760 --> 0:06:04.479 negotiation has had chips semikindizers at the heart of it. 0:06:04.880 --> 0:06:08.440 What about software? What about AI and what we expect 0:06:09.120 --> 0:06:10.960 to be a negotiation there. 0:06:12.360 --> 0:06:16.600 Yeah, as you allude to, the technology transfer between the 0:06:16.640 --> 0:06:19.880 two countries has been a very significant deal. China would 0:06:19.960 --> 0:06:23.080 like more access to Nvidia chips in particular that are 0:06:23.160 --> 0:06:25.720 used to train some of these more advanced models. At 0:06:25.760 --> 0:06:28.080 the same time, Beijing has decided that they do need 0:06:28.120 --> 0:06:31.440 to develop their own semiconductor industry. It's not clear how 0:06:31.480 --> 0:06:34.240 big of a strategic priority this deal is going to 0:06:34.240 --> 0:06:36.880 be for the Trump administration. We've reached out to them 0:06:36.920 --> 0:06:39.039 for comment on this. They haven't weighed in so far. 0:06:39.279 --> 0:06:41.320 It's not clear that that's that big of a deal. 0:06:41.480 --> 0:06:43.839 Meta of course, is kind of playing catch up against 0:06:44.600 --> 0:06:49.040 Alphabit and Microsoft, as you were alluding to earlier Open Ai, 0:06:49.400 --> 0:06:51.359 so it's not one of the leading players in AI 0:06:51.480 --> 0:06:53.800 right now. But this deal was designed to get them 0:06:53.839 --> 0:06:56.640 back into the race. So we'll see whether Washington picks 0:06:56.720 --> 0:06:58.640 up the ball here and decides to make this a 0:06:58.680 --> 0:07:01.640 priority in those negotiations. Would be a bit of a surprise. 0:07:03.000 --> 0:07:05.479 Metas said in its own statement that they did the 0:07:05.520 --> 0:07:08.280 deal in compliance for applicable laws and that they expect 0:07:08.320 --> 0:07:09.400 a resolution. 0:07:09.040 --> 0:07:10.080 But didn't say any more than that. 0:07:10.120 --> 0:07:13.360 Bloomberg's Peter Elstrom, who leads our coverage of Asia tech, 0:07:13.400 --> 0:07:15.920 thank you very much saying with AI models and another 0:07:16.000 --> 0:07:19.800 story out of China, China's deep Seek is aggressively rolling 0:07:19.840 --> 0:07:23.320 out low cost plans for its newly released flagship model, 0:07:23.360 --> 0:07:27.000 intensifying competition in the country's AI sector. The company's offering 0:07:27.040 --> 0:07:30.880 developers a seventy five percent discount on its deep Seat 0:07:30.960 --> 0:07:33.520 V four pro model and as cut fees for input 0:07:33.560 --> 0:07:38.040 cachet hits to one tenth of previous pricing. The moves 0:07:38.080 --> 0:07:42.000 expected to heighten competitive pressures across the industry and could 0:07:42.000 --> 0:07:45.800 reignize a price driven race to the bottom. Here is 0:07:45.840 --> 0:07:48.720 another story that broke this morning. Shares of Qualcomm are 0:07:48.800 --> 0:07:54.080 now down one percent. They had jumped fourteen percent in 0:07:54.160 --> 0:07:57.280 the pre market. The company initially surged eight percent of 0:07:57.360 --> 0:08:00.680 the open after a closely watched industry analyst suggested the 0:08:00.760 --> 0:08:03.160 chip maker was working with Open. 0:08:02.880 --> 0:08:04.720 AI on a smartphone. 0:08:05.080 --> 0:08:09.120 Here with the details, Bloomberg's equities reporter Rhyan VLASLCA this 0:08:09.240 --> 0:08:13.400 was about an analyst who posted a report on x 0:08:13.800 --> 0:08:16.840 and the market reacted, what are the details? 0:08:17.600 --> 0:08:19.040 Hey, good morning, thanks for having me. 0:08:19.160 --> 0:08:23.560 So this is a very closely followed and highly respected analyst, 0:08:23.600 --> 0:08:27.440 and it really excited investors because Qualcomm right now is 0:08:27.480 --> 0:08:31.960 going through pretty uncertain times. It has been pretty strongly 0:08:32.040 --> 0:08:35.160 pressured this year the shares in large part because of 0:08:35.200 --> 0:08:38.680 the rise in memory prices, prices from memory related chips, 0:08:38.679 --> 0:08:43.600 which is having a negative impact on consumer electronics, especially 0:08:43.640 --> 0:08:47.720 its handset chips. So it's facing that kind of weaker backdrop. 0:08:47.920 --> 0:08:49.880 And at the same time, this has been a longer 0:08:50.000 --> 0:08:52.840 term story, but Apple is developing more of its own 0:08:52.880 --> 0:08:56.400 modem chips in house, developing more of its own internal hardware. 0:08:56.640 --> 0:08:59.320 That has been a major problem for Qualcomm, which used 0:08:59.360 --> 0:09:02.240 to count Apple as a major, major customer. So the 0:09:02.280 --> 0:09:04.960 prospect that they would get a new big customer in 0:09:05.000 --> 0:09:07.840 the form of open AI, a new market, a new 0:09:07.880 --> 0:09:11.120 smartphone market, is obviously very exciting for investors. But I 0:09:11.160 --> 0:09:13.640 guess it's maybe a little bit too far out there. 0:09:13.679 --> 0:09:15.760 It's too hard to price what this would really mean 0:09:15.800 --> 0:09:17.920 as far as revenue or anything else like that goes. 0:09:17.920 --> 0:09:20.360 So we did see the stop the stock pulled back 0:09:20.440 --> 0:09:22.480 after a pretty pronounced initial game. 0:09:23.480 --> 0:09:25.600 We're sharing that right now, qual comes down eight tens 0:09:25.640 --> 0:09:27.600 of a percent. The analyst we're talking about is Ming 0:09:27.720 --> 0:09:31.920 chi Quo of TF International Securities, And you know, the 0:09:31.960 --> 0:09:34.800 basics of it are. We know open Ai is planning 0:09:34.880 --> 0:09:37.680 some kind of device. We don't know much more than that. 0:09:37.800 --> 0:09:41.200 We know from January they were trying to establish us 0:09:41.280 --> 0:09:45.559 supply chain. Qualcom is the biggest maker of smartphone processes. 0:09:46.360 --> 0:09:48.560 What else is there to discuss, Ryan, I mean, that's 0:09:48.600 --> 0:09:50.600 the extent of our knowledge at this point. 0:09:50.840 --> 0:09:51.480 Right exactly. 0:09:51.520 --> 0:09:53.680 And the report did say that mass production will begin 0:09:53.720 --> 0:09:56.360 in twenty twenty eight, so again two years out. How 0:09:56.360 --> 0:09:58.040 do you begin to price something like that or factor 0:09:58.040 --> 0:10:00.440 it into a share price very hard to do, especially 0:10:00.480 --> 0:10:03.280 with so few details out there. We did reach out 0:10:03.320 --> 0:10:05.840 to all the companies involved, so far we haven't heard back, 0:10:05.920 --> 0:10:08.120 so a lot of the stuff remains sort of speculative. 0:10:08.160 --> 0:10:10.160 But like I said, right now, people are very focused 0:10:10.160 --> 0:10:12.400 on the memory situation and how Qualcom is going to 0:10:12.480 --> 0:10:16.199 navigate that. It does report as results I believe wednesday afternoon, 0:10:16.240 --> 0:10:18.960 so that's going to be a very closely watched report 0:10:19.040 --> 0:10:21.319 this week. You know, less in focus and some of 0:10:21.360 --> 0:10:24.240 the other megacaps, but certainly a notable one to come out, 0:10:24.280 --> 0:10:26.600 and I think maybe people are hoping that we'll get 0:10:26.600 --> 0:10:28.319 a little bit more clarity on the situation. 0:10:28.400 --> 0:10:33.000 Then Lumo's rhym Vesavaca, thank you very much. Now coming out, 0:10:33.000 --> 0:10:35.520 we're going to speak with Tim Alcuriy, UBS analysts and 0:10:35.559 --> 0:10:39.240 global cohead of AI. You just had the trio top stories. Well, 0:10:39.280 --> 0:10:40.800 this is a guy who can react to all three 0:10:40.840 --> 0:10:41.160 of them. 0:10:41.200 --> 0:10:42.920 That's next. This is Bloomberg Tech. 0:10:55.800 --> 0:10:59.800 Okay, three big technology stories driving markets. The first, Microsoft 0:10:59.880 --> 0:11:02.920 is down seven tens for percent. It has ended and 0:11:03.000 --> 0:11:07.480 broken its exclusivity packs with open Ai, Meta has had 0:11:07.520 --> 0:11:11.280 its deal with manas Ai and agentic ai platform blocked 0:11:11.480 --> 0:11:14.160 by regulators in China. That stock is up six tents 0:11:14.280 --> 0:11:16.360 one percent. And then the one that I don't think 0:11:16.400 --> 0:11:18.960 any of us really saw coming. Qualcom is now down 0:11:19.440 --> 0:11:22.360 about a percentage point eight tens of percent in the 0:11:22.400 --> 0:11:25.920 pre market. It was up fourteen percent in the open 0:11:26.160 --> 0:11:29.120 It was up eight percent all on an analyst report 0:11:29.679 --> 0:11:32.720 that it is working with open ai as the silicon 0:11:32.760 --> 0:11:35.680 provider on a future device, and that is all we know. 0:11:36.360 --> 0:11:40.160 Tim Hercury Ubs semi and Semi. Caab Anlyst, also UBS's 0:11:40.200 --> 0:11:43.480 global co head of AI is with us and I'm 0:11:43.559 --> 0:11:46.480 extremely grateful to have you on a daylight today, Tim. 0:11:46.520 --> 0:11:49.160 The basics of what we know is that there are 0:11:49.160 --> 0:11:53.000 talks right between open Ai Qualcom Media Tech was also 0:11:53.120 --> 0:11:58.680 named Qualcom is the biggest maker of smartphone processors. And 0:11:58.720 --> 0:12:02.120 the stock went sick and then quickly fell away. Your 0:12:02.160 --> 0:12:05.679 interpretation of the headlines, Yeah, look. 0:12:05.520 --> 0:12:09.520 I mean we haven't commented on this deal in particular, 0:12:09.559 --> 0:12:11.880 but you know what I would say is that, you know, 0:12:11.960 --> 0:12:14.880 Quacom has had a server, you know, effort now for 0:12:14.960 --> 0:12:18.320 a while, and it makes sense that they're going to 0:12:18.320 --> 0:12:22.319 be a player in an agetic world and and and 0:12:22.400 --> 0:12:25.640 you know certainly, you know, certainly they have a big effort, 0:12:25.679 --> 0:12:27.840 and and you know, the thing I would say about 0:12:27.840 --> 0:12:30.120 open Ai would be open ai tends to do a 0:12:30.120 --> 0:12:32.520 lot of deals with a lot of different companies, and 0:12:32.640 --> 0:12:34.959 so I typically put a little bit of a discount 0:12:35.000 --> 0:12:37.000 factor on, you know, any deal they could signed with 0:12:37.200 --> 0:12:40.880 open Ai, because they're doing deals with you know, virtually everybody. 0:12:42.320 --> 0:12:42.520 Tim. 0:12:42.559 --> 0:12:45.400 When I think about my use of an AI tool, 0:12:45.559 --> 0:12:47.520 I spend a lot of time at my desk Obviously 0:12:47.640 --> 0:12:51.760 I access that any given tool through a browser on desktop, 0:12:51.800 --> 0:12:54.640 but most of the time it's on this thing, right, 0:12:54.960 --> 0:12:58.280 the smartphone is the form factor by which I engage 0:12:58.280 --> 0:13:02.000 with AI in my daily life. In your research, is 0:13:02.040 --> 0:13:05.800 that the direction of travel that you see? 0:13:06.080 --> 0:13:08.640 Yeah, I mean we do. We think that you know, 0:13:09.080 --> 0:13:11.680 engagement with AI is going to be across of multitude 0:13:11.679 --> 0:13:15.160 of different platforms and a multitude of different devices, including 0:13:16.000 --> 0:13:19.360 you know, smartphones obviously, so you know, Qualcom. 0:13:18.960 --> 0:13:19.960 Is going to have a play here. 0:13:20.280 --> 0:13:23.960 Quacomm is has a you know, a very very strong 0:13:24.080 --> 0:13:26.760 edge franchise, and they will. 0:13:26.640 --> 0:13:27.120 Be a player. 0:13:27.160 --> 0:13:30.080 I think the issue with Qualcom, of course, is that 0:13:30.200 --> 0:13:35.720 seventy percent of the operating profit today comes from phones, 0:13:35.880 --> 0:13:38.880 and and you had mentioned in the you Know show 0:13:39.040 --> 0:13:42.880 previously the the you know situation with Apple, and we've 0:13:42.920 --> 0:13:46.480 talked about that where once Apple doesn't need their motive anymore, 0:13:46.720 --> 0:13:49.319 I don't think Apple is going to pay them a 0:13:49.360 --> 0:13:52.040 license either, and so there's there's more angles to this 0:13:52.320 --> 0:13:53.880 Apple story. So I think you're going to have to 0:13:53.880 --> 0:13:56.880 get through this period before we can then look ahead 0:13:56.880 --> 0:13:59.880 to Qualcomm being a player in a gentic world. 0:14:00.920 --> 0:14:03.280 I just want to update our audience on Bloomberg Tech 0:14:03.360 --> 0:14:07.800 that Intel went to the market for the investment investment 0:14:07.840 --> 0:14:10.800 grade bond market this morning. They want some help financing 0:14:11.360 --> 0:14:13.480 what they're building out in Ireland. But it was an 0:14:13.520 --> 0:14:18.200 astonishing news week for Intel last week as well. Where 0:14:18.200 --> 0:14:21.520 do you see Intel in its evolution in its turnaround? 0:14:21.720 --> 0:14:22.560 Under Litboutan. 0:14:24.400 --> 0:14:26.560 Yeah, you know, we've been talking for some time now 0:14:26.600 --> 0:14:30.400 about being more optimistic about their foundry business and about 0:14:30.400 --> 0:14:34.520 how they're turning around manufacturing. And I think that there's 0:14:34.560 --> 0:14:37.440 a lot of different customers that are potentially very interested 0:14:37.480 --> 0:14:42.160 in doing a deal with Intel on the foundry side, 0:14:42.240 --> 0:14:44.080 and I think you're going to hear more about that 0:14:44.120 --> 0:14:47.520 this fall. You know, we've talked about many, many different customers. 0:14:47.560 --> 0:14:50.160 So I think they are turning things around from a 0:14:50.240 --> 0:14:53.360 manufacturing point of view. They have a lot of you know, 0:14:53.520 --> 0:14:57.320 very good packaging IP to offer to these customers. I 0:14:57.360 --> 0:14:59.920 think the issue is their product roadmap. That that's kind 0:14:59.920 --> 0:15:02.400 of where I've been really stuck for now. I think 0:15:02.440 --> 0:15:06.240 because of the gentic the server CPU market's growing so 0:15:06.400 --> 0:15:10.840 much that that's what people are getting excited about from 0:15:10.840 --> 0:15:14.640 a stock point of view. So I would just you know, 0:15:14.720 --> 0:15:17.120 my caution really is on the product side, I think 0:15:17.160 --> 0:15:19.960 that they're turning things around. I think in foundry, the 0:15:20.080 --> 0:15:22.280 you know, turnaround will come a little faster than it 0:15:22.320 --> 0:15:23.960 comes on the product business. 0:15:25.440 --> 0:15:29.480 Tim we ended Friday show with the Philadelphia Semiconductor Index 0:15:29.600 --> 0:15:33.680 or socks up for an eighteenth straight day eighteen sessions, 0:15:33.720 --> 0:15:38.040 its longest winning streak on record. We're giving some of 0:15:38.080 --> 0:15:41.360 that back this morning. A nineteenth day would have been interesting, 0:15:41.400 --> 0:15:44.160 I'm sure, but Intel was a big part of that story. 0:15:44.200 --> 0:15:48.440 What else was driving investor sentiment around semiconductors that put 0:15:48.480 --> 0:15:51.200 us on that historic streak. Yeah. 0:15:51.240 --> 0:15:56.119 Look, I think there's been a resurgence in the realization 0:15:56.240 --> 0:16:01.040 that the analog sector, for one, is not I was 0:16:01.040 --> 0:16:04.040 pretty bullish on that sector into earnings, uh you know 0:16:04.240 --> 0:16:06.760 t I came out and gave you know, pretty good guidance. 0:16:07.320 --> 0:16:10.880 I think that customers are seeing the you know, capacity 0:16:10.880 --> 0:16:13.960 constraints get closer and closer to them, you know, customers 0:16:13.960 --> 0:16:17.560 in the industrial world, and so I think that customers 0:16:17.560 --> 0:16:19.440 pretty much across the board are beginning to think that 0:16:19.480 --> 0:16:20.720 they are going to have to start to build some 0:16:20.760 --> 0:16:23.840 inventories to protect against all of this. And that was 0:16:23.880 --> 0:16:25.680 one of the things that fueled this you know, rally 0:16:25.760 --> 0:16:27.720 last week was when you know, t I came out 0:16:28.160 --> 0:16:31.000 and basically guided you know, gave pretty good guidance and 0:16:31.360 --> 0:16:33.920 pretty good commentary, and I think you're going to hear 0:16:34.040 --> 0:16:36.320 more of that, So that was a big driver. I 0:16:36.320 --> 0:16:38.880 think also, you know, I've been builtished on semiicap equipment. 0:16:39.160 --> 0:16:40.520 I think you know you're going to hear more of 0:16:40.520 --> 0:16:43.480 that this week from you KLA and from some others, uh, 0:16:43.520 --> 0:16:46.320 you know, upping guidance there. There's just just so much 0:16:46.480 --> 0:16:49.280 capacity that has to get built out over the next 0:16:49.360 --> 0:16:52.400 three years. So you know, I think it's a myriad 0:16:52.400 --> 0:16:54.240 of things driving the sector right now. 0:16:54.840 --> 0:16:57.000 We we didn't even have time to talk about terrified 0:16:57.080 --> 0:16:58.800 and whether you're and the team are modeling that in 0:16:58.880 --> 0:17:00.600 as well, but we will now next time. Tim i 0:17:00.680 --> 0:17:02.920 Caurier of UBS, really great to have you on the program. 0:17:03.000 --> 0:17:04.040 Thank you. Now. 0:17:04.080 --> 0:17:06.560 Coming up, it's a huge week for tech earnings and 0:17:06.560 --> 0:17:09.800 two of the biggest names are slashing jobs. AI spending 0:17:09.920 --> 0:17:14.120 is surging, headcount is shrinking. What's really going on we'll 0:17:14.119 --> 0:17:28.800 discuss that next. This is Bloomberg Tech and Wednesday, two 0:17:28.840 --> 0:17:31.720 of the biggest names in tech step up to report earnings. 0:17:31.760 --> 0:17:34.560 Meta and Microsoft, and they do it under a cloud 0:17:34.600 --> 0:17:38.520 of contradiction. Just days ago, both companies signal cuts that 0:17:38.560 --> 0:17:41.840 could touch as many as twenty three thousand rolls, combined 0:17:42.200 --> 0:17:45.040 meta planning to slash about ten percent of its workforce. 0:17:45.160 --> 0:17:49.240 Microsoft offering buyouts on a scale it's never attempted before. 0:17:49.280 --> 0:17:51.000 At the same time, both are. 0:17:50.880 --> 0:17:54.719 Spending at record levels, pouring billions into AI data centers 0:17:54.760 --> 0:17:58.200 and chasing the next wave of growth. Here discussed attention 0:17:58.600 --> 0:18:02.800 Sarah Franklin ladders see the platform just sees massive flow 0:18:02.840 --> 0:18:05.880 of data right It's an HR platform and analytics platform 0:18:05.920 --> 0:18:10.399 that sees the world through numbers. And that's why I 0:18:10.440 --> 0:18:13.320 love having you on the program. I just outlined the 0:18:13.359 --> 0:18:15.840 story two of the biggest companies in this country, in 0:18:15.880 --> 0:18:20.240 the world cutting levels that we've not seen, but spending 0:18:20.280 --> 0:18:22.560 a lot. Is that the trade off that companies are 0:18:22.560 --> 0:18:23.480 managing right now. 0:18:23.880 --> 0:18:26.360 We're seeing this across the board. It's a trend in 0:18:26.400 --> 0:18:29.560 tech ed and it is really important right now that 0:18:29.600 --> 0:18:33.359 we look at people and their performance and not just 0:18:33.760 --> 0:18:36.560 what they're doing with tokens or what they're doing with AI. 0:18:37.240 --> 0:18:39.720 It's very interesting right now how you see leaders that 0:18:39.800 --> 0:18:43.520 are investing in severance and not necessarily the skills. It's 0:18:43.520 --> 0:18:46.480 a transformation in tech and we need to have leaders 0:18:46.560 --> 0:18:49.040 with the courage to take people from here to there. 0:18:49.400 --> 0:18:53.560 You know, job cuts and roles being eliminated is not pleasant, right, 0:18:53.640 --> 0:18:56.320 you know, And if anyone from Meta or Microsoft is watching, 0:18:56.359 --> 0:18:59.120 you know, reach out tell us what your experience has been. 0:19:00.080 --> 0:19:02.840 You said on performance is so interesting. So what the 0:19:02.880 --> 0:19:06.520 managers are measuring this in revenue per employee or output 0:19:06.560 --> 0:19:08.760 per employee to make that decision. 0:19:09.240 --> 0:19:11.439 You see a lot you see revenue per employee. You 0:19:11.640 --> 0:19:13.920 also see token maxing as a trend. 0:19:13.880 --> 0:19:14.880 Right they stay in age? 0:19:14.960 --> 0:19:18.520 Yeah, yes, right, but ask yourselves like, would you look 0:19:18.560 --> 0:19:20.400 at the person at your company that sends the most 0:19:20.400 --> 0:19:23.399 email as the most productive. It's a new thing that 0:19:23.440 --> 0:19:26.560 we can use to measure. It's not necessarily the correlation 0:19:26.800 --> 0:19:29.360 to performance. And what we need to do is help 0:19:29.440 --> 0:19:33.080 people get from where we are today to where we're 0:19:33.119 --> 0:19:34.200 going to with AI. 0:19:34.640 --> 0:19:36.119 You know a lot of people would look at the 0:19:36.200 --> 0:19:38.680 overall size of a Microsoft or a Meta and say, 0:19:39.440 --> 0:19:43.240 you know, well, ten thousand roles or eight thousand roles 0:19:43.960 --> 0:19:46.359 is or isn't a lot to anyone's point of view, 0:19:47.040 --> 0:19:51.240 from the payroll perspective. Does cutting that level really free 0:19:51.320 --> 0:19:55.040 up capital? Does it take the pressure off the finance teams? 0:19:55.640 --> 0:19:58.520 It doesn't really relieve the pressure. And it also deeply 0:19:58.560 --> 0:20:02.240 impacts culture. Whether it's one person or a thousand people 0:20:02.280 --> 0:20:05.440 or ten thousand, it is a human and people care 0:20:05.600 --> 0:20:07.200 about what happens to other humans. 0:20:07.359 --> 0:20:08.840 So there's a real. 0:20:08.720 --> 0:20:11.440 Cost on the spreadsheet. There's also a real cultural cost 0:20:11.480 --> 0:20:13.359 to what it means to lay off people. 0:20:13.800 --> 0:20:17.240 I always try and look deeper, what's the underlying story. 0:20:17.240 --> 0:20:19.320 I remember when you and I were talking kind of 0:20:19.359 --> 0:20:22.440 more immediately after the pandemic, the idea was to undo 0:20:22.880 --> 0:20:26.680 pandemic era exuberance and hiring. Now it's you know, it's 0:20:26.680 --> 0:20:30.080 about the AI era, right and freeing up for capex. 0:20:30.359 --> 0:20:31.959 But what those two things have in common is when 0:20:32.000 --> 0:20:34.960 you see waves of layoffs to that level that really 0:20:35.000 --> 0:20:37.320 experienced people in there, sometimes they go and found companies 0:20:37.320 --> 0:20:37.840 of their own. 0:20:38.280 --> 0:20:38.480 Yeah. 0:20:38.600 --> 0:20:41.879 No, it's what we're seeing right now is a big 0:20:41.920 --> 0:20:44.960 transformation in tech, and it's not just for the companies. 0:20:45.000 --> 0:20:48.119 It's also for the people with the careers. They've spent years, 0:20:48.280 --> 0:20:52.879 decades even working on refining their craft and what it 0:20:52.960 --> 0:20:55.119 means to be told to change overnight. It's like me 0:20:55.200 --> 0:20:58.359 telling you be in Europe in an hour unless you 0:20:58.359 --> 0:21:01.880