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Speaker 2: This is Bloomberg Tech.
Speaker 3: Coming up, the Trump administration is eyeing CHIPSAC funds for
Speaker 3: a steak in Intel.
Speaker 4: Plus applied materials plunges due to growing trade concerns between
Speaker 4: the US and China.
Speaker 3: And an in depth interview with Open AI chairman and
Speaker 3: Sierra CEO Brett Taylor that's later in the hour.
Speaker 2: We go straight to.
Speaker 3: The top story, Bloomberg reporting the White House is considering
Speaker 3: tapping US CHIPSAC funds in an effort to take a
Speaker 3: steak in American chip maker Intel. That's according to sources.
Speaker 3: For more, Bloomberg's Joe Doe joins us Joe, what's the
Speaker 3: new information?
Speaker 2: Reporting today?
Speaker 5: Right?
Speaker 6: A follow on from yesterday's scoop from Bloomberg that it
Speaker 6: looks like the funding that the White House is looking
Speaker 6: at using would come from chips Act money. Of course,
Speaker 6: everybody might remember that from the law pass during the
Speaker 6: Biden administration. We've understood that some of that money has
Speaker 6: laid dormant and could be potentially used for this potential
Speaker 6: equity stake that the administration was looking at and Intel.
Speaker 4: Fascinating because we understood there was almost eight billion dollars
Speaker 4: coming Intel's way pre agreed, maybe even eleven billion dollars
Speaker 4: and loans. We don't know the intricacies of how much
Speaker 4: money and what equity state that would be equivalent to.
Speaker 4: But Joe remind us why the US government is doing this,
Speaker 4: We're even eyeing it.
Speaker 6: The way to look at so much of this Intel
Speaker 6: is one. Of course, this hasn't happened, but we do
Speaker 6: have one that has happened, which was the MP Materials,
Speaker 6: rare earth company that very few people have heard of,
Speaker 6: but just got a four hundred million dollar preferred EQ
Speaker 6: stake investment from the Defense Department. It is all built
Speaker 6: around this idea of national security. What does the Trump administration,
Speaker 6: the White House view as central to national security efforts,
Speaker 6: in particular related to its race against China. You have
Speaker 6: a rare earth company, potentially a chips company. Earlier this week,
Speaker 6: had we had the announcement that in Nvidia and AMD
Speaker 6: would be giving fifteen percent of their revenues generated out
Speaker 6: of China to the federal government, this is all built
Speaker 6: around this kind of new idea that Trump.
Speaker 2: Is trying to make work. Joe some basics.
Speaker 3: Intel has not commented directly on our reporting. They've issued
Speaker 3: this statement. We're going to put it on the screen
Speaker 3: now and generally right this is the point that what
Speaker 3: the administration is trying to do is achieve onshoring of
Speaker 3: manufacturing of chips in this country. Intel kind of wants
Speaker 3: to do the same thing. There is more reporting that
Speaker 3: you did that a lot of this literally relates to
Speaker 3: the meeting this week between Bhutan and the President.
Speaker 6: What have sources teld us We understand that this is
Speaker 6: the idea. This idea did come up in that meeting.
Speaker 6: I think the point that we draw from this, and
Speaker 6: I was just saying this earlier, is we have an
Speaker 6: administration a president I'm not an administration, a president directly
Speaker 6: who's willing to just have a bilateral talk or negotiation
Speaker 6: with any CEO he can bring into the White House
Speaker 6: that he finds, you know, central to some of the
Speaker 6: most important themes.
Speaker 2: In his second term.
Speaker 6: So obviously, as the Intel chief come in and as
Speaker 6: you've pointed out ed, you know, we don't have a
Speaker 6: full confirm here that this is happening. These things remain fluid.
Speaker 6: We've seen this in so many different issues with the
Speaker 6: White House. A lot of it is just hey, what
Speaker 6: about this? What about that? But in particular related to this,
Speaker 6: the Intel chief does show up to the White House
Speaker 6: and has this conversation with the President, and this apparently
Speaker 6: is where this idea whispurred.
Speaker 4: Bloomberg's Jodo fascinating reporting. Scoops keep coming. We thank you. Look,
Speaker 4: let's dive into the Intel side of the equation. Why
Speaker 4: they do it? Jordan Klein, Zooho Securities Managing director joins
Speaker 4: us now who put I don't knowe this morning discussing
Speaker 4: the implications of a possible government stake and Jordan, you're
Speaker 4: questioning it, asking how does the US government help Intel
Speaker 4: fixes leading edge node when it's not a money issue?
Speaker 7: They have no customers and.
Speaker 4: There is a good reason for that. Jordan, extrapolate on that.
Speaker 8: Yeah, I mean, Intel, in my opinion, has two main issues.
Speaker 8: One is on the technology side, where their leading edge
Speaker 8: foundry business has struggled to execute at these more advanced
Speaker 8: nodes and they've lost you know, a lot of potential
Speaker 8: business and share to TSM, who's executed flawlessly. And the
Speaker 8: second big issue is, you know, and this is kind
Speaker 8: of the chicken in the egg, is that they don't
Speaker 8: have any external non Intel customers to move you know,
Speaker 8: volume and bi business into these fabs on this new
Speaker 8: leading edge. So you kind of need the former, meaning
Speaker 8: you need to be a leader improved to customers you
Speaker 8: can execute at these advanced nodes for these you know,
Speaker 8: AI and leading edge chips.
Speaker 9: And then secondly then you need to win the business.
Speaker 8: And until they get both of those, I think they're
Speaker 8: going to continue to struggle.
Speaker 4: And the Bhutan really said that articulated it in the
Speaker 4: earnings saying we are not going to have this, build
Speaker 4: it and they will come. Mentality, they've got to say.
Speaker 7: That they're coming before we build it.
Speaker 4: In the fourteen a leading cutting edge nodes for example Jordan,
Speaker 4: is government control or at a smaller equity stake going
Speaker 4: to secure that demand.
Speaker 8: Well, on the surface, it's not because the customers are
Speaker 8: going to ultimately decide is Intel a company I can
Speaker 8: depend and count on for my most advanced you know
Speaker 8: products that I have to get to the market. Why
Speaker 8: would I leave TSM who's proven to me year after
Speaker 8: year that they can execute on the plan. I think
Speaker 8: the goal here is that Trump puts some money in
Speaker 8: or gets the government to invest, and then uses that
Speaker 8: to get Intel to accelerate the process of building out
Speaker 8: these new fabs in Ohio, and then he can go
Speaker 8: to these customers like Broadcom, Qualcom, Apple and Nvidia and say, oh,
Speaker 8: now they have the capability and you need to move
Speaker 8: more of your orders and production to a domestic, leading
Speaker 8: edge company like Intel.
Speaker 3: Jordan, I really want the desk analysts take and experience.
Speaker 3: We broke the story yesterday about the stake, We broke
Speaker 3: the story this morning about using chips Act funds. What
Speaker 3: was the byside saying to you about how they interpreted
Speaker 3: that news.
Speaker 8: Yeah, that's kind of the key question, and I think
Speaker 8: it's it's I haven't heard a ton of questions as
Speaker 8: to Okay, what next does this mean I go out
Speaker 8: and buy Intel. Ultimately, if you look at semiconductors that
Speaker 8: have led much of the market this year, I think
Speaker 8: Intel has been the laggered due to their weak fundamentals
Speaker 8: and a lot of people who need shorts to offset longs,
Speaker 8: like in video, Broadcon TSM.
Speaker 9: Have used Intel as that short.
Speaker 8: Now today the news about a stake and what this
Speaker 8: could mean I think gets people nervous. You know, maybe
Speaker 8: Intel's going to go on a run. I should cover
Speaker 8: my short But outside of that, I do not hear
Speaker 8: you know, big mutual funds, the traditional guys who would
Speaker 8: come in take a big steak and think this company
Speaker 8: is going to turn it around, you know, acting on
Speaker 8: this and these headlines. One because it's premature, but two,
Speaker 8: I think they're coming to the same conclusion that I
Speaker 8: just talked about, is that how does government money or
Speaker 8: an equity stake, you know, really bring them the customers
Speaker 8: or fixed their internal technology problems?
Speaker 9: And that's unknown.
Speaker 3: Jensen Wogen Nvidia have demonstrated the proximity to the President
Speaker 3: has allowed them to move fast as I'm thinking King
Speaker 3: Prince be actually about exports to the Gulf, a good
Speaker 3: relationship between the President and lit Bhutan.
Speaker 2: Is there an unlock for Intel in that, Well, you know.
Speaker 8: I don't know what the I think ultimately, here's what
Speaker 8: I would Here's the way I see it is that
Speaker 8: I don't think Trump likes the fact that the you know, largest,
Speaker 8: you know, oldest and most established kind of US foundry
Speaker 8: logic company and Intel is on its heels struggling, losing
Speaker 8: share to these foreign players in Asia like TSM.
Speaker 9: I think it's a bad look.
Speaker 8: Obviously, he wants the US, you know, to be great
Speaker 8: again and that you know, we so much depends on semiconductors.
Speaker 8: So I think the fact that they're firing people, reducing costs,
Speaker 8: struggling is just a bad look under his watch. And
Speaker 8: all this Chipsacked money was allocated and they got the
Speaker 8: most of it.
Speaker 9: So I think basically he's saying.
Speaker 8: I want some return for this, and you know, I
Speaker 8: want to try to help this, you know, semiconductor business
Speaker 8: domestically improve, and that's got to start with you somehow.
Speaker 9: So I think he's just putting pressure.
Speaker 8: On them, and I don't know what other alternative Intel has,
Speaker 8: they can't really push back, and ultimately they'll probably take
Speaker 8: what money the government wants to invest and try to
Speaker 8: strengthen the relationship going forward.
Speaker 4: Jordan, what's so interesting is then we heard on Air
Speaker 4: Force one, and we're going to discuss it more in
Speaker 4: the show later.
Speaker 7: A potential threat of.
Speaker 4: Two hundred to three hundred percent tariffs on semiconductors coming
Speaker 4: into the US.
Speaker 7: But there are huge.
Speaker 4: Carve outs that we understand being written here that if
Speaker 4: you're investing a lot in America, you don't face that.
Speaker 4: So that seems that TSMC and Samsung that are building
Speaker 4: in America aren't affected. Is he going to allow these
Speaker 4: big Asian chip giants to continue to build in America
Speaker 4: and get these sorts of carve outs.
Speaker 9: I don't know what other alternative they really have.
Speaker 8: I mean, the US is in the government, and the
Speaker 8: administration's kind of in a tough spot here. They need
Speaker 8: to project, like, you know, a strategy of trying to
Speaker 8: get you know, more domestic US semiconductor capacity. But if
Speaker 8: you get too tough and put too high of a tariff,
Speaker 8: that that really puts the US consumer and our strategic technology,
Speaker 8: whether it's defense or AI, at a major disadvantage. And
Speaker 8: the reason that is is because the US doesn't have
Speaker 8: an alternative. It's not like, you know, we can just
Speaker 8: shift to all this domestic capacity. It's going to take
Speaker 8: a lot of time and money to basically get that.
Speaker 8: And right now that's basically TSM and a lot of
Speaker 8: Samsung and some of Intel. So I think that's why
Speaker 8: they get the carve outs is to buy time and
Speaker 8: then ultimately that time runs out, and then Trump's going
Speaker 8: to say, well, if we have the capacity here and
Speaker 8: Intel is, you know, on a better footing and track,
Speaker 8: then we want you to push that those orders in
Speaker 8: that money towards Intel and away from Ta Simon Samsung,
Speaker 8: and that's where he could start to then use the
Speaker 8: tariffs to basically push that business towards Intel.
Speaker 4: Really thoughtful and a great note. Jordan Klein of Mizuho,
Speaker 4: Thanks for bringing you expertise.
Speaker 7: Shares of Applied Materials tumbling.
Speaker 4: Worst day since March twenty twenty after the company presented
Speaker 4: a disappointing sales forecast for the fiscal fourth quarter said
Speaker 4: it's seeing less demand from China more. Let's bring in
Speaker 4: Bloomberg's Brodie Ford. What's so interesting is Land Research came
Speaker 4: out a week or so ago and look pretty buoyant
Speaker 4: about future growth and revenue. Very different for this chip
Speaker 4: equipment company.
Speaker 10: You are pointing out the debate that is waging and
Speaker 10: all the sales side reports in my inbox right now, right,
Speaker 10: I mean on the call last night, the narrative from
Speaker 10: the company was that China demand is worst and some
Speaker 10: of our largest customer mergers that are holding off due
Speaker 10: to kind of just general economic uncertainty, tariffs and all that.
Speaker 11: But there's also a head here.
Speaker 10: As you said, some of the peers have done relatively well.
Speaker 10: So is applied losing share here? Or is this truly
Speaker 10: just a macroeconomic it's hitting everybody the same way kind
Speaker 10: of issue.
Speaker 3: They try to explain away those two categories of customer.
Speaker 3: Right in China, loads of chip makers have gone through
Speaker 3: a refresh of their equipment, but the larger customers they're
Speaker 3: talking about is largely TSMC and Samsung.
Speaker 2: And this is a tariff's issue. What is it?
Speaker 12: Right?
Speaker 10: I think tariffs is the big word we heard, but
Speaker 10: I think also, I mean, we have an administration right
Speaker 10: now that's negotiating trade deals. I mean, we saw the
Speaker 10: Intel news this morning. There's just a lot of economic
Speaker 10: uncertainty right now, right, I mean, some of the data
Speaker 10: coming out people are questioning. And so the narrative we
Speaker 10: heard on the call, and I heard in a conversation
Speaker 10: with the CEO is that companies are holding off purchases.
Speaker 10: They're not sure exactly what the economic picture of it
Speaker 10: is like in six months, and so why do you
Speaker 10: want to make a multi billion dollar commitment right now?
Speaker 10: How much to hit the brakes for a little while.
Speaker 4: And Brodie, we put this in the deeper context as
Speaker 4: you just hinted at with Intel. This is at a
Speaker 4: time where we want more manufacturing the United States, according
Speaker 4: to the administration, and Apply Materials.
Speaker 7: Is part of that.
Speaker 4: They've got what eighty percent of the revenue.
Speaker 7: Coming from abroad.
Speaker 4: But is that going to shift more to America?
Speaker 10: That is the song they're singing, right, I mean they
Speaker 10: say that we are involved with you know, Apple's initiatives
Speaker 10: and Samsungs. The actual dollars committed at this point to
Speaker 10: me don't look incredible, right. I mean, a lot of
Speaker 10: companies are talking about multi billions invested in the US,
Speaker 10: and Apply to talking about hundreds of millions, and so
Speaker 10: I don't think the expectation is that revenue shift to
Speaker 10: the US in a meaningful way right now. But it's
Speaker 10: an interesting part of the narrative. I mean, how much
Speaker 10: can the administration push the industry to, you know, reshore
Speaker 10: more of this demanding capacity?
Speaker 3: Then, thanks Brady Ford, thank you very much. Meanwhile, President
Speaker 3: Trump is en route to Alaska for a high stakes
Speaker 3: meeting with Russian President Vladimir Putin.
Speaker 2: During the flight on air Force one.
Speaker 3: He addressed the state of tariffs on chip makers, saying
Speaker 3: it could rise to as much as three hundred percent.
Speaker 2: Listen to this.
Speaker 12: They're all coming in because they want to beat the
Speaker 12: tariffs because if they open here, they don't have to
Speaker 12: pay tariffs. If they don't open here, they have to
Speaker 12: make in some cases two hundred percent, three hundred percent.
Speaker 12: I haven't even said some of the tariffs yet till
Speaker 12: sent Semiconductors will be setting sometime next week week.
Speaker 3: Care for for more on the tariff implications on chips
Speaker 3: and the broader technology sector. Martin Norton Empower Chief Investment Strategists. Actually,
Speaker 3: of all the reporting out there, this is the President
Speaker 3: speaking on the record saying up to three hundred percent
Speaker 3: tariffs on chips coming into America. I haven't even said
Speaker 3: the tariffs yet. This is the point policy keeps changing.
Speaker 3: As a strategist, how do you interpret it?
Speaker 13: Well, I mean, I think there's a few things that
Speaker 13: we have to look at.
Speaker 14: First.
Speaker 13: We have to look at the breadth of the tariffs
Speaker 13: that we've seen and the way the market has reacted
Speaker 13: as tariffs have become part of the daily conversation. At first,
Speaker 13: you know, April second, this was something that the market
Speaker 13: felt was a disaster.
Speaker 14: But as we've.
Speaker 13: Rolled forward, we've seen little effect on corporate earnings, we've seen.
Speaker 14: Little effect on economic data.
Speaker 13: And I think there's this kind of benign neglect of
Speaker 13: tariffs as a concern for the market, which I think
Speaker 13: embolden's President Trump to continue to push forward bigger and
Speaker 13: bigger numbers when we're looking at triple digits. Of course,
Speaker 13: when we're talking about tariffs, that's a pretty astonishing thing.
Speaker 13: I really like how your last guest with Jordan really
Speaker 13: kind of talked about the very long term emphasis here.
Speaker 13: Building manufacturing here in the US is a long term thing.
Speaker 13: Forcing companies or encouraging companies to buy US as a
Speaker 13: long term thing, and I think these tariffs are part
Speaker 13: of that game.
Speaker 3: So if the endgame is bring Chit manufacturing back to America,
Speaker 3: you agree with Jordan that it will work or you disagree.
Speaker 13: Well, I think there has to be a long term
Speaker 13: commitment on the part of the administration and the folks
Speaker 13: in Washington to keep those tariffs in place. I think
Speaker 13: that's in question whether that's something that we're going to
Speaker 13: see over the period of several years, because that's what
Speaker 13: it would take several years to bring manufacturing back to
Speaker 13: the United States or to the United States in the
Speaker 13: first place.
Speaker 14: So I think there's still.
Speaker 13: An open question as to how effective it will be
Speaker 13: and how long term that commitment will be, and how.
Speaker 4: Long until you see it rewarding companies like an Applied Materials,
Speaker 4: which right here right now is having its worst days.
Speaker 4: It's March twenty twenty and rated all of its games
Speaker 4: for the year Marta. How do you decide who are
Speaker 4: the winners longer term in this environment?
Speaker 13: I think the winners is one of the bigger questions
Speaker 13: that we're looking at, especially when you start to look
Speaker 13: at it in the context of artificial intelligence. When we're
Speaker 13: taking a look at corporate earnings long term, of course
Speaker 13: we're concerned about the that deglobalization will have on those
Speaker 13: corporate earnings. And yet when we look at the estimates
Speaker 13: that artificial intelligence can add to corporate earnings to profit margins,
Speaker 13: it more than offsets it. The question is who those
Speaker 13: winners are, And what we've seen in past periods of
Speaker 13: innovation is that the early winners are not necessarily the
Speaker 13: long term the enduring winners. And there's also questions as
Speaker 13: to how different industries respond. You know, first folks thought
Speaker 13: with software is the next leg of this story, but
Speaker 13: that doesn't necessarily need to be the case. If some
Speaker 13: of these big tech companies can capture some of the
Speaker 13: developments there, it's not necessarily going.
Speaker 14: To be the small cap companies that win.
Speaker 13: So when I'm looking at this and I'm thinking about
Speaker 13: how do you play this, I think it's more of
Speaker 13: a broad based question than it is trying to find
Speaker 13: and pick those narrow winners.
Speaker 4: So you take tech thinking to other industry groups, that's right, Yes,
Speaker 4: absolutely so.
Speaker 13: For example, if you're taking a look at where can
Speaker 13: you apply AI? Where can you apply some of these narratives.
Speaker 13: The areas that we've heard talked about regularly is healthcare
Speaker 13: and applying artificial intelligence to research and development. That's a
Speaker 13: long term play, and of course there's tons of headwinds
Speaker 13: against healthcare, pharma and the like, and when we think
Speaker 13: about those headwinds, those are opening up pretty attractive valuations
Speaker 13: while there's also this positive long term narrative that's there.
Speaker 13: So I do think that we can look at some
Speaker 13: of these other areas, particularly those that are a bit cheaper.
Speaker 13: There's not many of them. There's a few as areas
Speaker 13: of long term beneficiaries of AI.
Speaker 2: Marta.
Speaker 3: It's funny for me, but it's been a week where
Speaker 3: economic data has impacted technology markets, right, PPI and I
Speaker 3: grew up in the Bloomberg school of why do we
Speaker 3: care about the FED? Because higher rates discount the present
Speaker 3: value of future cash flows. And I just wondered if
Speaker 3: you'd react to that statement, please well listen.
Speaker 14: I mean, I do think when we think.
Speaker 13: About economic data and we think about technology, there are
Speaker 13: these secular growth themes that can really push back against
Speaker 13: any headwind that economic data poses for technology, And of
Speaker 13: course there are other areas of the market that are
Speaker 13: more sensitive.
Speaker 14: When I think about the economic.
Speaker 13: Data that we're seeing come through, all that comes out
Speaker 13: is this idea of mixed signals, and people can kind
Speaker 13: of project whatever view they want on the market and
Speaker 13: find or on the economy and find evidence to support
Speaker 13: that view. I think at this point what matters more
Speaker 13: are the secular themes rather than some of these economic
Speaker 13: data points that are trickling in.
Speaker 4: Briefly matter It's also been a week of record hizing
Speaker 4: crypto IPOs.
Speaker 7: How many questions you get on that?
Speaker 14: Well, it does come up more and more.
Speaker 13: I think one of the things that people are looking
Speaker 13: at when they see the record highs in crypto, or
Speaker 13: when they're looking at IPOs, or in fact the kind
Speaker 13: of resurgence of the mean theme is what does this
Speaker 13: mean in terms of the speculative froth in the market.
Speaker 13: I don't think we're at all time peaks there, but
Speaker 13: there is this measure of complacency that's been baked in,
Speaker 13: this kind of sense that nothing can go wrong, and
Speaker 13: of course that's reflected in valuations. So I do think
Speaker 13: when we're looking at those kind of signals, it's important
Speaker 13: to remember that things are a bit priced for perfection
Speaker 13: and we could see some volatility in the nearest term.
Speaker 4: Martin Norton, we so appreciate having you on today of Empower.
Speaker 7: Have great weekend.
Speaker 4: It's time now for talking tech and first up, Masuyoshi's
Speaker 4: son has added eleven billion to his fortune in just
Speaker 4: the first two weeks of August. That is, his AI
Speaker 4: bets over at SoftBank sent shares to record highs.
Speaker 7: Look Sum's net worth naws dance more.
Speaker 4: Than thirty three billion dollars, making him the second richest
Speaker 4: man in Japan, according to the Bloomberg Billionaires Index plus
Speaker 4: Bill Ackman's Pershing Square Capital. Well, it's revealed that it
Speaker 4: a mastered in nearly one point three billion dollar steak
Speaker 4: in Amazon. The firm initially disclosed it had built a
Speaker 4: stake during an analyst school in May. That's after the
Speaker 4: stock tumbled more than thirty percent over AI and tariff concerns.
Speaker 4: Look regulatory filing on Thursday show that Pershing had accumulated
Speaker 4: more than five point eight.
Speaker 7: Million Amazon shares.
Speaker 4: And Jackie Bezos, mother of Jeff Bezos, has died at
Speaker 4: the age of seventy eight. According to the Bezos Family
Speaker 4: Foundation website, she passed away at a home in Miami
Speaker 4: after a long battle with louis body dementia. Jackie Bezos
Speaker 4: was an advocate for early childhood education.
Speaker 7: Alongside her husband.
Speaker 4: She was in fact the first to invest in Amazon
Speaker 4: in nineteen ninety five.
Speaker 9: ED.
Speaker 2: Welcome back to Bloomberg Tech. I want to go back
Speaker 2: to Intel.
Speaker 3: The reporting is that the US government's thinking about using
Speaker 3: chipsec funds to take a stake in Intel. Caroline, believe
Speaker 3: it or not. On the course of the week, this
Speaker 3: stocks up almost twenty five percent. If it continues to
Speaker 3: chop around and climb just a percentage point higher. It
Speaker 3: will have its best five day gain, its best weekly
Speaker 3: gain on record ever, just seven days after the President
Speaker 3: said that its CEO should resign after ties with China.
Speaker 3: Later in the program, we're going to do so much
Speaker 3: more on Intel. But when you go into the data
Speaker 3: in the Bloomberg terminal, you can always surprise your because
Speaker 3: in Agrica over the course of the week, what an
Speaker 3: astonishing stat that is.
Speaker 4: It is quite the stat six straight days against for Intel.
Speaker 4: What a winning performance twenty five percent that you can
Speaker 4: see it in.
Speaker 7: All its glory.
Speaker 4: Let's get into the world of generative AI now, though,
Speaker 4: because we are joined by Brett Taylor ed whose extensive
Speaker 4: Silicon Valley resume, who's Google metas Salesforce open Ai. His
Speaker 4: startups Erra AI helps companies build agentic customer service tools.
Speaker 4: You work with the likes of ram with clear among others. Brett,
Speaker 4: and boy, is it competitive out there at the moment.
Speaker 4: How are you seeing your customer facing GENDERAI products being taken.
Speaker 7: Up right now?
Speaker 5: Yeah, I've never quite been in a market like this,
Speaker 5: and as you said, I've been in the Silicon Valley
Speaker 5: for a long time. I've started three companies, one in
Speaker 5: sort of the early days of the internet, you know,
Speaker 5: one call it about you know, a decade ago, and
Speaker 5: we have never seen this kind of customer interest. I've
Speaker 5: never seen this kind of of revenue growth and customer momentum.
Speaker 5: But as you said, a lot of competition too, you know.
Speaker 5: I think if you look at what is the impact
Speaker 5: of AI and society, there's probably two areas being impacted
Speaker 5: most right now, software engineering and customer service. We're in
Speaker 5: that latter category. We have the privilege to be the
Speaker 5: leader survey it. As you said, traditional companies like ADT,
Speaker 5: Home Security and direct TV, and the fastest growing companies
Speaker 5: in Silicon Valley like Ramp. And it is such a
Speaker 5: privilege and so much fun to be in the middle
Speaker 5: of this right now.
Speaker 4: I'm not sure the competitors, particularly the older god of
Speaker 4: SaaS some that you helped work with, like Salesforce, love
Speaker 4: the enthusiasm way that you're shaking things up in terms
Speaker 4: of pricing though, I mean outcome based pricing models.
Speaker 7: How are you seeing that really.
Speaker 4: Change the cadence of which others.
Speaker 7: Can sell and how they're selling.
Speaker 5: It's such a great question if you look at the
Speaker 5: history of software. These technical shifts have also given rise
Speaker 5: to changes in business models, so kind of famously, you know,
Speaker 5: when Mark and Parker started Salesforce, the world went from
Speaker 5: buying a petrol license to software, to software as a
Speaker 5: service and subscribing to it. Now, our view is at Sierra,
Speaker 5: these agents aren't just helping you be more productive, but
Speaker 5: actually solving problems for you. And the best business model
Speaker 5: is to actually pay for a job well done. So
Speaker 5: at Sierra, we only charge our customers when it solves
Speaker 5: the problem autonomously for that customer.
Speaker 11: We call it outcomes based pricing.
Speaker 5: And we think it's going to really disrupt the software
Speaker 5: industry because if you think about it as a business,
Speaker 5: what a great alignment of values with your partners. You
Speaker 5: only pay us when we actually save you money and
Speaker 5: solve the customer's problem delightfully. And I think it really
Speaker 5: aligns the software industry with all of our partners, and
Speaker 5: I think it's a really positive trend for the industry
Speaker 5: as a whole.
Speaker 3: Right, you founded Sierra with Clay in twenty twenty three, Right,
Speaker 3: and I think back to when you came on the
Speaker 3: show in February twenty twenty four, it had grown so
Speaker 3: quickly the company update us on what Sierra looks like today.
Speaker 5: Well, we have customers across a wide range of industries,
Speaker 5: from some of the largest health insurance companies to banks
Speaker 5: to some of the fastest growing companies in Silicon Valley,
Speaker 5: like Ramp, which is we're also a proud customer of
Speaker 5: They power all of our corporate credit cards. What's remarkable
Speaker 5: is just the size of customers that have aligned with us.
Speaker 5: So over twenty percent of our customers have over ten
Speaker 5: billion in revenue, over half have over a billion in revenue.
Speaker 5: These aren't just early adopters, right, These are some of
Speaker 5: the most traditional financial services firms, healthcare firms that are
Speaker 5: really saying, Hey, I don't want my customers to.
Speaker 11: Have to wait on hold or press two for service.
Speaker 5: Can we have a multi lingual, delightful AI agent just
Speaker 5: pick up the phone and solve problems automatically. And what's
Speaker 5: remarkable is just how well it works. You know, you
Speaker 5: brought up RAMP at the beginning of the call. Their
Speaker 5: AI agent is actually solving ninety percent of customer cases
Speaker 5: completely autonomously. And you know that's obviously great for Ramp
Speaker 5: as a business, but for me as a customer of Ramp.
Speaker 5: It means I don't have to wait on hold ninety
Speaker 5: percent of the time. It's completely transforming the industry and
Speaker 5: it is so fun to be able to help brands
Speaker 5: really in every industry transform their customer experience.
Speaker 3: Brett, I'd still like to learn more about Sierra. So
Speaker 3: you talked about you haven't seen growth like this in
Speaker 3: your career. Would you share with us an arr figure,
Speaker 3: what Sierra's financials look like, number of team members, how
Speaker 3: aggressively you're hiring.
Speaker 5: I won't share a rr numbers, sorry, but maybe when
Speaker 5: we do, I'll come back on this show and you
Speaker 5: can hear it first. But I'll tell you we have
Speaker 5: hundreds of employees. We've opened offices in New York, Atlanta, London.
Speaker 5: We're planning our expansion into Asia. We're the leader in
Speaker 5: this space. We'll do hundreds of millions of phone calls
Speaker 5: on our platform this year, hundreds of millions of digital chats.
Speaker 5: We're the highest volume company in this space, and really
Speaker 5: that scale benefits all of our customers. It means we
Speaker 5: support more languages, it means that we've dealt with some
Speaker 5: of the most complex regulatory landscapes from hip A compliance
Speaker 5: to the compliance regimes that apply to the financial industry.
Speaker 5: We're really trying to be the best and safest bet
Speaker 5: for every company in the world who wants to transform
Speaker 5: their customer experience who they are.
Speaker 4: And to do that, you're scaling, and I'm sure there's
Speaker 4: a little bit of a fierce fight out there for
Speaker 4: talent and that costs money before get into the talent
Speaker 4: wars a little bit, Brett, what about having to raise
Speaker 4: more money because you did back in twenty twenty four.
Speaker 7: Do you need any more? We've got a good runway.
Speaker 5: We have a good runway. But it's a great question,
Speaker 5: just because I do think that we really want to
Speaker 5: grow as quickly as possible. There's this great I attribute
Speaker 5: to Albert Einstein. As quickly as possible, but no more quickly.
Speaker 5: And you know right now our businesses work in I've
Speaker 5: never seen product market that quite like this. And we're
Speaker 5: always asking ourselves the question as a management team, how
Speaker 5: fast can we grow? Because if you look around the world,
Speaker 5: the application of technology is not limited to one industry,
Speaker 5: is not limited to one country. How can we best
Speaker 5: serve not just multinationals based here, but in Europe and
Speaker 5: Asia as well? And so if raising more money will
Speaker 5: enable us to achieve that end, we're absolutely open to it. Thankfully,
Speaker 5: we have a really healthy business model and it's not
Speaker 5: something we need to do, but absolutely something we're allays
Speaker 5: open to considering because.
Speaker 4: In many ways, Look, you raised one hundred and seventy
Speaker 4: five million last year led by Green Oaks Capital.
Speaker 7: I'm thinking like two hundred million.
Speaker 4: Dollars is now what Meta is willing to pay to
Speaker 4: get one person. In terms of talent, Brett, Yeah, we
Speaker 4: all chose the wrong profector here. You didn't, but Brett,
Speaker 4: I mean, I'm no coder, but Brett, tell us a
Speaker 4: little bit about trying to get that sort off the
Speaker 4: talent do you need it?
Speaker 7: And how face is it?
Speaker 5: Well, first, you know, I do think there's a slight
Speaker 5: difference between the really small handful of researchers building these
Speaker 5: foundation models at the research labs and you know, Sierra,
Speaker 5: we're an apply to I company, So you can think
Speaker 5: of us not necessarily as the folks doing the R
Speaker 5: and D to build these frontier models like Open Eye
Speaker 5: GPT five, but really taking all of those models and
Speaker 5: fine tuning them and applying them to a solution in
Speaker 5: the marketplace, so you can really think of the market.
Speaker 5: I think of it really in three areas. The companies
Speaker 5: building these frontier models, open the eyes models are obviously
Speaker 5: the leading and frontier models in the space. You have
Speaker 5: companies building tools, So what are the tools you need
Speaker 5: if you're applying AI in your business. These are companies
Speaker 5: that can do data labeling and data transformation and data storage.
Speaker 5: And then you have companies like Ours and Cursor and
Speaker 5: Harvey that are taking all of that great technology and
Speaker 5: making a push button solution so you can just solve
Speaker 5: a problem without a lot of implementation time. We just
Speaker 5: went live with an international retailer in fifteen markets in
Speaker 5: six weeks and are solving eighty five percent of their
Speaker 5: customer service cases automatically. That's what really an apply DA
Speaker 5: company does is makes it easy to consume, easy to deploy.
Speaker 5: So thankfully we're not competing in the market for some
Speaker 5: of those I think widely publicized researchers. But as you said,
Speaker 5: it's a competitive market, a competitive market for talent, as
Speaker 5: it always is in the Valley.
Speaker 3: You know, Brett, Over the years, I got told a
Speaker 3: lot of stories about you in meetings, like in the
Speaker 3: Salesforce context. And you know, basically people say you're pretty
Speaker 3: frighteningly effective when you talk to customers, but you're also
Speaker 3: you know, you're a busy guy. You have a very
Speaker 3: unusual jewel roll right as chairman of open Ai and
Speaker 3: chairman of its board. That's an unusual gig. How do
Speaker 3: you split the time?
Speaker 5: You know, I love to work, is the short answer.
Speaker 5: So I work from the moment I get up to
Speaker 5: the moment I go to sleep, and I love every
Speaker 5: minute of it. And you know, some weeks I'll spend
Speaker 5: more time at some two weeks last. It's really what
Speaker 5: the organization demands. And you know, it is a lot
Speaker 5: of work, but it is such a privilege just because well,
Speaker 5: I'm very excited about what Siro is doing. To be
Speaker 5: able to spend time with I think the greatest research
Speaker 5: lab in the world developing, I think the most important
Speaker 5: consumer product in the world in chat GPT is such
Speaker 5: a privilege and it makes me a better leader. I
Speaker 5: understand AI with more depth than ones. And then similarly,
Speaker 5: hopefully my experience having scaled a lot of companies in
Speaker 5: the past is helping Open Eye, is it? I think
Speaker 5: it's scaling and faster than really any company in history,
Speaker 5: and so it's so fun. I wouldn't have it any
Speaker 5: other way. Sleep is for the week, right.
Speaker 3: The big question our audience has for you in the
Speaker 3: open AYE context is how much you're working on this
Speaker 3: relationship with Microsoft and how much you personally have focused
Speaker 3: on the restructuring or the move to a new or
Speaker 3: different corporate structure.
Speaker 5: Well, Microsoft is open Ey's most important partner and has
Speaker 5: been for years, so it's a very important relationship. The
Speaker 5: board's role is really specific. Open Eyes a not for profit.
Speaker 5: Our fiduciary duties on the board are really related exclusively
Speaker 5: to our mission, which is to ensure that our official
Speaker 5: general intelligent intelligence benefits humanity. And so we're always thinking
Speaker 5: how do we set up the organization over the long
Speaker 5: term to ensure that we can achieve that goal. And
Speaker 5: you know, one of the things that we've talked a
Speaker 5: lot about is, you know, since the company was founded
Speaker 5: as a small research lab, the level of capital expenditure
Speaker 5: required for the infrastructure for AI, I think exceeds anyone's
Speaker 5: expectations that they had a year ago, let alone ten
Speaker 5: years ago, and so really thinking about how do we
Speaker 5: ensure that we remain a mission driven not for profit,
Speaker 5: but also set up our organization so we can raise
Speaker 5: the capital we need to achieve that mission. So that's
Speaker 5: what I think the media is appropriately called the restructuring.
Speaker 5: It is something that we're working on. Nothing to announce
Speaker 5: it this time, but I think it's one of the
Speaker 5: most important things we work on as a board, because
Speaker 5: your job as a board is to set the company
Speaker 5: up for the future, and that's really how we think
Speaker 5: about it.
Speaker 7: Do you think you'll get it done by the end
Speaker 7: of this year, Brett?
Speaker 5: I can't really comment on timelines, and you know, we're
Speaker 5: really just trying to work with all the stakeholders who
Speaker 5: have an interest in it and most importantly focused on
Speaker 5: the mission. But no update on the time frame.
Speaker 3: Redeye a CEO of Sierra and chairman of the board
Speaker 3: for Open AI. Thank you very much for your time.
Speaker 3: This is Bloomberg Tech and you're looking at a live
Speaker 3: shot of the principal room. Check out the Bloomberg Tech podcast.
Speaker 3: You can find it on the terminal so its online
Speaker 3: on Apple, Spotify and on iHeart. This is Bloomberg. Okay,
Speaker 3: all eyes are meta real quick. In the session, it's
Speaker 3: made attempts to hit all time highs and at one
Speaker 3: point go beyond two trillion dollars of market cap for
Speaker 3: the first time. Where will we close We don't know,
Speaker 3: but it's exciting and it's one to watch. And we're
Speaker 3: also thinking a lot about Meta's AI app, which is
Speaker 3: facing mounting pressure with users complaining of an underpersonalized and
Speaker 3: inconsistent experience. The tech giant emitting this is quote just
Speaker 3: the first and many steps, as the company will continue
Speaker 3: to make updates over time. Joining us now is Bloomberg's
Speaker 3: Natalie Lung. This is the post launch digest, tell us.
Speaker 2: What we need to know.
Speaker 15: Yeah, we have tested it for a few weeks and
Speaker 15: asking it basic inquiries, asking it for personalized recommendations, and
Speaker 15: overall we found the experience rather inconsistent and it felt
Speaker 15: a little bit half baked. For example, I asked it
Speaker 15: to give me recommendations and what to do over the
Speaker 15: weekend here in New York City. For some reason, it
Speaker 15: knew min zip code. I might have provided it to
Speaker 15: an advertiser one time, but it wasn't able to personalize
Speaker 15: it to that area. And the unique thing about it,
Speaker 15: apart from Rivals, is that it has a discover feed
Speaker 15: where you can see how others are prompting and interacting
Speaker 15: with the chatbot, and they're like endless images.
Speaker 5: There, you can see.
Speaker 4: Endless images that perhaps aren't that relevant to you, and
Speaker 4: sometimes the more edgy types of chatbots you might not
Speaker 4: want to interface with, Natalie, what's so weird as well?
Speaker 4: Is I interact with METAAI actually more within the WhatsApp
Speaker 4: offering and maybe within the Instagram offering? Why is that
Speaker 4: not taking my data that I'm feeding it and bringing
Speaker 4: it over to Meta right now?
Speaker 15: All of those experiences are not connected, as you rightly
Speaker 15: pointed out. It is on WhatsApp, it is on Messenger,
Speaker 15: it is on Instagram, but they're not connected, which makes
Speaker 15: it a little bit foreshot of some of the personalization
Speaker 15: ambitions that Zuckerberg has.
Speaker 7: Almost Natalie Lang a real deep dive. Go read the analysis.
Speaker 4: Getting back to our top story, the White House is
Speaker 4: set to consider using chips At funding to take a
Speaker 4: stake in Intel, scording to sources from more Bloombergs. Ryan
Speaker 4: Gould is here who helped break this story. It's been
Speaker 4: very busy twenty four hours. Do we have any idea
Speaker 4: how much equity they could take for this?
Speaker 2: Not yet, Caroline.
Speaker 16: We're still trying to find out exactly how much the
Speaker 16: government is talking. I mean, just on the base of it.
Speaker 16: If you think about the problems that are facing Intel
Speaker 16: right now, you're probably looking to solve something as big
Speaker 16: as Ohio to onshore manufacturing in the US. You're talking
Speaker 16: tens of billions of dollars that the company needs. Now,
Speaker 16: I'm not going to suggest that they got it is
Speaker 16: going to go out and put that money in. We
Speaker 16: don't know, and the government has not obviously commented on
Speaker 16: this reporting yet, but I would say that you know
Speaker 16: that the challenges facing Intel are vast, and I think
Speaker 16: most investors and alis know that. I think, just at
Speaker 16: the top of this, though, it's worth taking a step
Speaker 16: back and thinking about what a difference a week makes.
Speaker 16: If you think about Donald Trump calling for the resignation
Speaker 16: of Liputen, the CEO, last Thursday, last Friday, I mean
Speaker 16: a week later, we're now on the cusp of maybe
Speaker 16: a potentially game changing deal, at least in the short
Speaker 16: term for one of America's most beleagued companies.
Speaker 3: Bloombos Ryan Gould part of the reporting team, or an
Speaker 3: astonishing week for Intel.
Speaker 2: Thank you.
Speaker 3: Let's get more on Intel and Washington's chip goals and
Speaker 3: how this all fits in Ben hur in Creative Strategy CEO, Ben,
Speaker 3: for loads of people, this isn't actually an issue of
Speaker 3: money for Intel, It's an issue of technology and it's
Speaker 3: an issue of no customers. How did you react to
Speaker 3: Bloomberg's reporting in the last twenty four hours.
Speaker 17: Yeah, I mean, I think we've been looking at this
Speaker 17: from some sort of a leading in this direction for
Speaker 17: some time. I mean, obviously, when you know, Trump came
Speaker 17: up and said what he said about lip butan we
Speaker 17: felt that this was in light of wanting to do
Speaker 17: or at least have a broader conversation that had not
Speaker 17: had happened prior. If he's noted like Intel was not
Speaker 17: involved in a lot of the you know, sort of
Speaker 17: public displays of America first, even though everybody knows they're
Speaker 17: America first. And obviously his comments right on earnings about
Speaker 17: you know, they may not go forward to fourteen A
Speaker 17: without help, I think was very telling. And I think
Speaker 17: all of that led to this moment, which is, you know,
Speaker 17: from a national security standpoint, and really anybody in insecurity
Speaker 17: and knowing what's going on in chips in the US
Speaker 17: should believe we want a US company to make leading
Speaker 17: edge chips here in the United States, and that's Intel.
Speaker 17: So we want to see some resolution, right as one
Speaker 17: hundred percent clear. Like you said, they need customers and
Speaker 17: we need to figure out how to get some form
Speaker 17: of capital so they can keep going.
Speaker 3: Over the course of five days, Intel's up twenty seven percent.
Speaker 3: If it closes at those levels, it will be the
Speaker 3: biggest weekly gain on record on a closing basis, which, yeah,
Speaker 3: is Boo Tan the man for this Ben Yeah.
Speaker 17: I mean I think his approach is fairly pragmatic. Right,
Speaker 17: It's not just about build and invests. Build the right technology,
Speaker 17: but do so in a capital way that makes sense.
Speaker 17: I think that's really what the board wants, that's what
Speaker 17: investors wants.
Speaker 5: You know.
Speaker 17: And I think really the strategy is, again, how much
Speaker 17: money do they actually need. I do think the tens
Speaker 17: of billions of dollars is right in terms of to
Speaker 17: get to fourteen A on top of what Intel will
Speaker 17: bring in customers. But the bottom line is right, they
Speaker 17: can't do this on their own, that's what they're saying.
Speaker 17: Whether it's customers or whether it's the government. You know,
Speaker 17: there needs to be an infusion of capital that's not
Speaker 17: just Intel, to make sure that foundry is secured for
Speaker 17: the long haul.
Speaker 4: Ben there is this chicken nag situation because le Bhutan is saying,
Speaker 4: I'm not going to build it and wait for them
Speaker 4: to come. They've got to tell me that the demand
Speaker 4: is there. Does in some way taking equity by the
Speaker 4: US government incentivize others to get behind the government and
Speaker 4: say will buy them. We'll them if indeed you do
Speaker 4: innovate and get that fourteen A out there.
Speaker 17: I mean, I think it's got to be more than
Speaker 17: just the government stake. I mean, I think what everybody's
Speaker 17: been speculating is would that come along with some form
Speaker 17: of a of a tariff or something that you know,
Speaker 17: strongly incentivized companies like you know, Nvidia, Apple, A, md Qualcom,
Speaker 17: et cetera to not you know, use TSMC, but then
Speaker 17: use some capacity of Intel, not one hundred percent, but
Speaker 17: some of it.
Speaker 11: So I think it would necessitate that.
Speaker 17: You know, again, I think we want Intel to win
Speaker 17: on the merit of technology, which we think is very
Speaker 17: good on paper, but they just need to get some
Speaker 17: customer wins. And I think once that happens, the confidence,
Speaker 17: you know, continues but again they're at a they're at
Speaker 17: a need for capital, and so how that arises is
Speaker 17: sort of the root of this situation.
Speaker 4: Ben, that's interesting that you say the tariff tactic because
Speaker 4: we've heard on air Force one from President Trump today.
Speaker 7: Then maybe it goes fast two hundred.
Speaker 4: Three hundred percent tariffs on semiconductors. But then there's all
Speaker 4: these carv oalves, particularly for companies investing in the US,
Speaker 4: like TSMC likes, I'm sung Intel's biggest competitives.
Speaker 17: Yeah, And I think the difference though, is that Intel
Speaker 17: is more at the leading edge, So TSMC is not
Speaker 17: going to bring in. The Taiwanese government has been very
Speaker 17: clear they're not going to allow them to bring the
Speaker 17: leading edge. So call it two naanimeter, one nanometer and beyond.
Speaker 17: Samsung's equally struggling to hit that number even though they're trying.
Speaker 17: Intel's really the best bet. And more importantly, Intel is
Speaker 17: an American company, And so that's why I say, like,
Speaker 17: if this is some investment of peep private equity plus government,
Speaker 17: it makes sense that they want to protect that investment,
Speaker 17: so they will do what they need in terms of
Speaker 17: terrorists or some other form of regulations that just encourage
Speaker 17: customers to use Intel. But again, I still think it's
Speaker 17: better if Intel just wins on technological merit, which we
Speaker 17: think they have.
Speaker 11: But we need a bridge, we need a gap, and.
Speaker 17: That's kind of where everybodys struggling to figure out where
Speaker 17: that comes from.
Speaker 3: Ben Intel will not comment on Bloomberg's reporting. The White
Speaker 3: House hasn't said anything to confirm the reporting. But the
Speaker 3: chart says, you assigned to this deal happening.
Speaker 11: Oh, it's a tough it's a good question.
Speaker 17: I mean, I think it really comes down to do
Speaker 17: would they believe that they could structure this in the
Speaker 17: way in a way that's fair, whether that's divesting of
Speaker 17: shares right or paying that back like some of the
Speaker 17: ways where you've seen them when they have to do,
Speaker 17: you know, investments in companies, so.
Speaker 11: It's not just a constant holding.
Speaker 17: I think when anytime the government gets involved, it's very
Speaker 17: very tricky. But again, right, they need customers. I'd like,
Speaker 17: I know, this is an non answer, I'd say fifty
Speaker 17: to fifty.
Speaker 7: It's okay, but you know, a phone a friend. Fifty
Speaker 7: to fifty phone a friend.
Speaker 4: Benar creative strategies fantastic to get your opinion.
Speaker 7: Thank you very much.
Speaker 4: Indeed, that does it for this edition of Bloomboat Tech.
Speaker 4: An extraordinary week around semiconductor Z.
Speaker 3: Yeah, like the rest of the session, keep an eye
Speaker 3: on Intel if it closes that level best week on record.
Speaker 3: Recap everything we discussed in the podcast. You know where
Speaker 3: to find it on the Bloomberg terminal as well as
Speaker 3: online on Apple fight In. iHeart from New York City
Speaker 3: and London. I'm taking a little.
Speaker 2: Break for a while, but we'll be back. This is
Speaker 2: Koomberg Tech.