Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
Speaker 1: from the heart of Silicon Valley with ed Larbow in
Speaker 1: San Francisco.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: Microns sows after its AI fueled forecast shatters all street projections,
Speaker 3: plus Qualcom jumps after posting a strong annual sales forecast.
Speaker 3: We are joined by Qualcom CEO Cristio armon live and
Speaker 3: Apple raises prices on some hardware and extreme measure in
Speaker 3: direct response to the memory and storage crunch. And it
Speaker 3: is memory that is still at the heart of what's
Speaker 3: happening on Bloomberg Tech.
Speaker 2: A super bullish sales outlook.
Speaker 3: From Micron, which is currently on track for its biggest
Speaker 3: jump in a month, but at the open on track
Speaker 3: for its biggest jumpsince twenty eleven. We will get to
Speaker 3: the details. There are two other big stories, one directly linked.
Speaker 3: Apple is raising prices on some hardware citing the memory
Speaker 3: and storage crunch and storage prices a Qualcom, fresh off
Speaker 3: its invested day, has a lot of news and extended
Speaker 3: conversation with the CEO. It is still memory and it
Speaker 3: is Micron, and here's what you need to know. Micron
Speaker 3: didn't just beat expectations, reset them higher, forecasting as much
Speaker 3: as fifty one billion dollars in fourth quarter revenue, well
Speaker 3: abuff all Street estimates. More importantly, Management says AI driven
Speaker 3: memory shortages could last beyond twenty twenty seven, keeping memory
Speaker 3: prices higher for the foreseeable future, even as Micron boosts
Speaker 3: it's manufacturing capacity. And that helps explain our other top story,
Speaker 3: Apple raising prices on some of their hardware offerings as
Speaker 3: the cost of key components memory stays high. Bloombers Mark
Speaker 3: German has the story, and you write that this is
Speaker 3: an extreme set of measures that Apple is taking. Where
Speaker 3: are the price hikes? What is Apple saying about the
Speaker 3: reasons why? And this is all about memory at the
Speaker 3: end of the day.
Speaker 4: Yeah, these price hikes are largely unprecedented in Apple's modern history.
Speaker 4: There hasn't been a time where they've hyped the prices
Speaker 4: across several different products, across much of its product lineup.
Speaker 4: This is the iPad, this is the Mac this is
Speaker 4: the Home pod, this is the Apple TV, this is
Speaker 4: the Vision Pro. It's essentially everything outside of some accessories
Speaker 4: and of course the iPhone, the most important product. The
Speaker 4: AirPods and the Apple Watch. So this is a very
Speaker 4: big deal. I think that the price increases are pretty significant,
Speaker 4: but they're not necessarily going to be a big deterrent
Speaker 4: to customers, particularly on the Mac side. The iPad makes
Speaker 4: me a little uneasy given all the competition in the
Speaker 4: tablet market and upgrade cycles, and then the Apple TV
Speaker 4: and home pod prices are pretty significant, and given that
Speaker 4: there's so many cheaper alternatives from Amazon, Google and elsewhere,
Speaker 4: that could be a little dangerous for Apple in that market.
Speaker 3: Mark what struck me reading your report is how detailed
Speaker 3: a pool was in its explanation. Maybe you think that
Speaker 3: they weren't as detailed as perhaps they often are, But
Speaker 3: they're trying to tie this to what's happening in AI
Speaker 3: data centers, and they're trying to explain that for the
Speaker 3: longest time possible they held off on doing this.
Speaker 2: They have no choice. Now.
Speaker 4: Yeah, let's remember other companies in the consumer electronics space.
Speaker 4: Apple competitors hiked prices significantly in the prior months. Apple,
Speaker 4: you know it's a good thing. This time is fairly
Speaker 4: late to these price increases. About Apple's Apple, They're the
Speaker 4: most popular consumer electronics company. Everyone's buying these products, and
Speaker 4: so this is the biggest of all big deals when
Speaker 4: it comes to price increases, that being Apple. The most
Speaker 4: interesting thing to me in Apple's statement wasn't that they're
Speaker 4: blaming AI data centers and memory.
Speaker 2: We know that.
Speaker 4: It's that they seriously hinted that there will be more
Speaker 4: price increases to other products. They said that these are
Speaker 4: the price increases that are happening today, leaving the door open.
Speaker 4: I would say to iPhone and Apple watch price increases
Speaker 4: in September when announced the new models, Boobo's.
Speaker 3: Mark German, who leads our coverage of consumer technology, thank
Speaker 3: you very much. Yesterday, Microns stunned with quarterly estimates that
Speaker 3: absolutely shattered will streets expectations, signaling that the AI infrastructure
Speaker 3: boom remains strong again. Micron shares are on track for
Speaker 3: their best day in one month, but at the open,
Speaker 3: on track for their best day since twenty eleven. Supply
Speaker 3: is tight, it is going to stay tight. There is
Speaker 3: no line of sight to supply improving, and memory prices
Speaker 3: will remain high. That's the story. Chief market strategist Carosh
Speaker 3: Life of BEMO Wealth Management is with us for more
Speaker 3: and you have a very interesting, almost historical look at
Speaker 3: what will happen next, and that is that historically, for decades,
Speaker 3: tech had been a pretty reliable deflationary force. Mark just outlined,
Speaker 3: actually more price hikes could come on that higher end
Speaker 3: Apple hardware. What happens as a result.
Speaker 5: Well, I think Marcus are really trying to struggle with
Speaker 5: the fact that it looks like we've got an economic
Speaker 5: regime change, if you will, underway, and it starts as
Speaker 5: Mark talked about, it starts with the data centers and
Speaker 5: the build there. But it also you have to think
Speaker 5: through what life as a semiconductor company has been like
Speaker 5: because they go decades with very big pea contrough and
Speaker 5: so they want some reassurance from these companies before they
Speaker 5: start expanding capacity. They need reassurance that that demand is
Speaker 5: going to be there. They get some of the reassurance
Speaker 5: they're signing longer term contracts. There's really slowing expanding capacity,
Speaker 5: but in the process of really definitely targeting their production
Speaker 5: much the same way that or that many of the
Speaker 5: semiconductor companies did during the pandemic, and they diverted it
Speaker 5: away from auto companies and put it towards the PC
Speaker 5: manufacturers and the AI creators. If you will, So they're
Speaker 5: being very strategic in how they're doing, and the industry
Speaker 5: overall is trying to watch its margins. I think what
Speaker 5: investors have to deal with is, you know, there was
Speaker 5: this presumption early on that higher prices and more over
Speaker 5: here just came because someone was shaking a money tree
Speaker 5: over there. But it's a pretty zero sum game in
Speaker 5: terms of if you're a company, you've got you're paying
Speaker 5: in one category and giving up in another. And so
Speaker 5: Apple sending that message that they've held on for a
Speaker 5: very long time, not past pricing increases along. That's actually
Speaker 5: pretty indicative across the economy where a lot of companies
Speaker 5: have done that. They've held it as long as they can,
Speaker 5: and so it leaves us the consumer and us as
Speaker 5: investors to be very discerning about where we're going to
Speaker 5: see it pull through, where we're willing to pay up.
Speaker 5: I think Apple is betting that people are willing to
Speaker 5: pay up for those those specific products.
Speaker 3: What Micron said last night was remarkable. The number is
Speaker 3: fifty one billion dollars up to in the fiscal fourth
Speaker 3: quarter when the streets saw forty three.
Speaker 2: So there's just a.
Speaker 3: Simple element of outperformance relative to expectations, but the admission
Speaker 3: that they have no line of sights to the supply
Speaker 3: situation improving and therefore prices remaining high. How does the
Speaker 3: market model for that with everyone else in the equation,
Speaker 3: the capex deployers, the hyperscalers.
Speaker 5: I think it's it's difficult to model because basically what
Speaker 5: we're doing is as an economy, we're trying to rewire
Speaker 5: the whole economy very rapidly and make up for decades
Speaker 5: of under investment and infrastructure because we haven't invested in
Speaker 5: the energy grid. We haven't needed to because the demand
Speaker 5: wasn't up, and now we're asking demand to go up
Speaker 5: many multiples of where it has been historically, and so
Speaker 5: markets have to adjust to the fact that you'll probably
Speaker 5: have higher endemic core inflation, if you will. But you're
Speaker 5: seeing from the fixed income markets that they're actually pretty
Speaker 5: tolerant of that because of the fact that it's coming
Speaker 5: from steady demand. It's not coming from workforce demanding higher wages,
Speaker 5: but it's coming from growth we're putting in the economy,
Speaker 5: and economics one on one would tell you that in
Speaker 5: the long run, and we invest in that in the
Speaker 5: capital infrastructure, it does tee us up for an era
Speaker 5: of more productive growth. But there's this interim period that
Speaker 5: it's going to take us a while. We're probably talking
Speaker 5: later in the decade or early next decade when we
Speaker 5: finally see the big deflationary impacts of this come through.
Speaker 5: Because in the meantime, we all want access to it,
Speaker 5: we need data centers to get access to it, and
Speaker 5: there's that bottleneck in the middle that's going to need sorting.
Speaker 3: Carol, just really quick before we let you go, Micron.
Speaker 3: The funny thing about it in other memory names is
Speaker 3: that they're trading it like a pretty reasonable multiple.
Speaker 5: Well, they're super reasonable, and like I've heard this morning,
Speaker 5: like you've seen even within VIDIA two. Every time they report,
Speaker 5: people look at the stock price, you know, simplistically on
Speaker 5: the front. They look at the stock price and forget
Speaker 5: to put the stock price relative to the earnings. And
Speaker 5: the valuations have been coming down on these names actually
Speaker 5: for quite some time because the earnings are so unbelievably strong.
Speaker 3: It's a stock that literally is priced oney one hundred
Speaker 3: and ninety dollars a share. But yeah, I looked at
Speaker 3: twelve month fort EPs. Carrisflyfe for BIMO Wealth Management's great
Speaker 3: to have you back on the show, Thank you very much.
Speaker 3: Coming up, we're going to stick with Semiconductors. A conversation
Speaker 3: with Qualcom CEO Christiano Amon on data centers, deeper push
Speaker 3: into data centers, M and A. Qualcom's been busy and
Speaker 3: they gave some pretty interesting numbers for the future. That
Speaker 3: conversation's next. This is Bloomberg Tech. Okay shares of quodcorm
Speaker 3: We're up around four percent. They had opened up more
Speaker 3: than eleven percent. The company unveiled ambitious long term growth
Speaker 3: targets at its investor day in New York. Quilecom is
Speaker 3: projecting more than fifteen billion dollars in annual AI data
Speaker 3: center revenue by fiscal twenty twenty nine, and forty billion
Speaker 3: dollars in annual sales from businesses outside of smartphones, double
Speaker 3: the target that it is set two years ago. Joining
Speaker 3: us now is caulled Com CEO christianom On and Bloomberg's
Speaker 3: the clothes anchor remained Boss Stick and Christian. It's great
Speaker 3: to have you back on Bloomberg Tech. And here with
Speaker 3: remain and I if we could, can we just start
Speaker 3: on actually the near term because the five billion dollar
Speaker 3: data center number for fiscal twenty seven is really interesting
Speaker 3: to a lot of people. I think they really want
Speaker 3: to understand the composition of it right. Data center can
Speaker 3: mean a lot of things. Where is Quark I'm going
Speaker 3: to move most quickly.
Speaker 6: Yeah, very good. Happy to talk to both of you guys.
Speaker 6: Look this exciting time, especially because we kind of upgraded
Speaker 6: our non handset revenue as we've been diversifying the company
Speaker 6: from twenty two to forty and enter the data center market.
Speaker 6: And five billion in fiscal twenty seven. It's a high
Speaker 6: confidence number that we have based on customer engagements we
Speaker 6: have right now. Most of their revenue is from a
Speaker 6: custom ASA engagement that expanded since the acquisition of Alpha
Speaker 6: Wave and started to see in their revenue some of
Speaker 6: this innovative technology we came up for celebrators. It doesn't
Speaker 6: require HBM memory is our high bandwidth compute and as
Speaker 6: we keep executing on those customers, we're excited to see
Speaker 6: the revenue going to about fifteen billion in fiscal twenty nine.
Speaker 7: I am curious Christiana when it comes to those longer
Speaker 7: term targets and the bridge between the short term. So
Speaker 7: what you have put out there for twenty twenty seven.
Speaker 7: Is there any sense I know you haven't named the
Speaker 7: customers that get you over that bridge here, but is
Speaker 7: that going to fill the whole of that five billion
Speaker 7: based on the one billion that we already know is
Speaker 7: out there?
Speaker 6: Look the five billion, as I said it, I'll give
Speaker 6: you the composition. I think what I can say right now,
Speaker 6: I think, as it expects, a lot of those contracts
Speaker 6: are governed by non disclosure. We have one large hyperscalar
Speaker 6: customer in the United States, one large hyperscalar customer in China,
Speaker 6: and then we have some other engagements that we had
Speaker 6: on a data center that is all into the five
Speaker 6: billion dollars. So the five billion dollar is it's a
Speaker 6: very high confident forecast to which we have the customers,
Speaker 6: the capacity, the memory allocation and everything. As we think
Speaker 6: about the engagement we have today, and also we talk
Speaker 6: about a contract that we have with Meta also for
Speaker 6: two generations of the CPU, especially as we position ourselves
Speaker 6: for the GENTECHCPU opportunities, that those engagements are into the
Speaker 6: fifteen billion dollar number for Qualcom as an eventrate, those
Speaker 6: are great numbers, but really when you look at the scale,
Speaker 6: what's happening in the data center. You imagine, as we
Speaker 6: execute and we show our differentiation, they could be upside.
Speaker 6: But we're just you know, being focused on the engagements
Speaker 6: we have today.
Speaker 7: I do have to ask. So an investor seem pretty
Speaker 7: pleased is what they heard yesterday about your articulating this
Speaker 7: longer term data center strategy. But I'm curious. I mean,
Speaker 7: you famously exited the data center business back in twenty seventeen,
Speaker 7: twenty eighteen, and I know there were a lot of
Speaker 7: direct a lot of reasons for that that went beyond
Speaker 7: your operational control. But there was a lot of competition then.
Speaker 7: There's probably even more competition today. Why do you think
Speaker 7: you can get it right now compared to what it
Speaker 7: was eight years ago.
Speaker 6: Yeah, look the circumstances. I think when we started on
Speaker 6: the CPU, actually, I know people talk about data center
Speaker 6: as a general term, but we actually we start a
Speaker 6: long time with an ARM compatible eyes at CPU. Very early,
Speaker 6: there was a big software barrier. This is before AI,
Speaker 6: and you know at the time I did not you know,
Speaker 6: the market wasn't ready for it only until later. So
Speaker 6: it was kind of the probably the right decision for
Speaker 6: qualk at a time. This is a different conversation. It's
Speaker 6: a different data center right now, this is about AI.
Speaker 6: But it's a valid question, right so I will give
Speaker 6: you the same answer that I gave when we entered
Speaker 6: the automotive business, when we entered the industrial business, and
Speaker 6: everything that we have been doing to diversify the company.
Speaker 6: Those are fast moving markets now changing with technology. So
Speaker 6: what we really focus is not what the data center
Speaker 6: is doing today, but what the data center is going
Speaker 6: to be doing tomorrow. The data center is now moving
Speaker 6: to agentic. That's why you see CPU companies on the rise,
Speaker 6: you see demand on the rise. The data center is
Speaker 6: being disaggregated. Is not one single GPU that does everything.
Speaker 6: You have different harder and we're coming out with a
Speaker 6: comprehensive portfolio. We have. We have a CPU, we have
Speaker 6: a new memory solution that is not a memory from
Speaker 6: the memory provider, has actually been designed by Qualcom that
Speaker 6: doesn't require HBM. We have a different accelerator for the
Speaker 6: desegregated computes, and we have our semiconductor scale which is
Speaker 6: good for customisings. So that's what we're doing. And you know,
Speaker 6: if technology matters and you have fast innovations cycles, there's
Speaker 6: room for.
Speaker 3: Qualcom Bloomberg Tech Live on Bloomberg Television and Bloomberg Radio
Speaker 3: all around the world, and we're speaking to Qualcom's Cristiano
Speaker 3: Amon and a big part of Qualcomm's story is custom
Speaker 3: silicon now A six. You mentioned it a moment ago, Cristiano.
Speaker 3: Bloomberg reported on May twenty sixth that byte Dance was
Speaker 3: one of those HYPERSCALA companies, and at the time Qualcom
Speaker 3: didn't comment how is that going to work? You know,
Speaker 3: there is a distinction between an A six program and
Speaker 3: export of accelerator, which is your own name on it,
Speaker 3: within the current confines of the US export controls that
Speaker 3: are in place.
Speaker 6: Well, was still not commenting on it, but I'll tell
Speaker 6: you that like everybody else that has a significant portion
Speaker 6: of their data center revenues, also with customers in China,
Speaker 6: there is a there's a very clear set of regulations
Speaker 6: and specifications that you have to follow and you should
Speaker 6: expect to Qualcom it's complying with those and I think
Speaker 6: there's different types of products that are distant for China
Speaker 6: and those are the ones that we are shipping to
Speaker 6: our channel customers.
Speaker 2: Thank you.
Speaker 3: The data center business is multifaceted, so ASEX your own
Speaker 3: accelerators and now CPU. But the market's in a place
Speaker 3: where in video or AMD on an annual break basis
Speaker 3: bring a new generation of technology.
Speaker 8: Right.
Speaker 3: And so the question that a lot of people pose
Speaker 3: for you, Christiano is by the time the accelerators come
Speaker 3: to market and the CPUs in twenty twenty eight and
Speaker 3: customers deploy them, will they not be obsolete? Is it
Speaker 3: not too late to kind of get into those markets
Speaker 3: when you look at the peers and how they deploy.
Speaker 6: Absolutely not. Look, I get this question all the time,
Speaker 6: and I think if that was true, Qualcom will not
Speaker 6: diversify from phones and enter the automotive industry, into the industrial,
Speaker 6: into the robotics, into the broadband. And I actually believe
Speaker 6: it's exactly what I've said before. I'm going to give you.
Speaker 6: I'm going to give you a simple answer. There are
Speaker 6: four vectors of differentiation accelerator. First of all, we know
Speaker 6: that power matter. If you look at the demand that
Speaker 6: exists in the data center right now, is a demand
Speaker 6: that going like this and the energy available is like this,
Speaker 6: So that creates It's perfect for Qualcom because what we
Speaker 6: do is very power efficient. We design our technology always
Speaker 6: thinking there's going to be a battery on the other side,
Speaker 6: and we're going to have efficient and power consumption. That's
Speaker 6: one vector of differentiation. The other one is what I said,
Speaker 6: we design for the future which does not have the
Speaker 6: memory constraint that you have today. We don't have to
Speaker 6: move a lot of data between the accelerator to memory,
Speaker 6: and that reduces thermal, reduces power consumption, and re increases
Speaker 6: the memory bandwidth. And we don't have to use expensive HBM.
Speaker 6: We have the ability to do this at a much
Speaker 6: lower cost. Number three is we are coming in with
Speaker 6: very high density of transistors with our accelerator, and.
Speaker 2: We're not a small company.
Speaker 6: I think we we ship forty billion components a year.
Speaker 6: We do more than already new chips per year on
Speaker 6: leading notes, and I think we have the ability to execute.
Speaker 6: And if the data center is changing because of AGENTIC,
Speaker 6: and the data center is changing because of this aggregation,
Speaker 6: there's an entry point for Qualcom.
Speaker 7: I am curious, Krishano, particularly with Meta and Dragonfly, how
Speaker 7: confident are you that Meta will still be there in
Speaker 7: twenty twenty eight as a partner, and I asked that
Speaker 7: only not so much from the Qualcom side. But Meta
Speaker 7: has sort of moved around a little bit with some
Speaker 7: of its strategies and how it's approaching AI. Is the
Speaker 7: agreement that you have with them? Is that basically firm
Speaker 7: look two parts. Yes, we have a contract with Meta.
Speaker 7: That's why we talk about them as a customer for
Speaker 7: two generations and it's very significant for our CPU. We
Speaker 7: have a very unique CPU if you look at some
Speaker 7: of the metrics we're provided, and I think we have
Speaker 7: a track record that have a good CPU. The second
Speaker 7: part of the question, I will never bet against Meta.
Speaker 7: You know they have they have incredible first party applications,
Speaker 7: they have a lot of data, they have a lot
Speaker 7: of data from consumers.
Speaker 6: They're well positioned. We are on the early innings of AI.
Speaker 6: Anybody that believes right now that whoever the players are
Speaker 6: on an I AI, this is what is already defined.
Speaker 6: This is a this is a decade long and I
Speaker 6: think if what we learned something about the Internet is
Speaker 6: your technologe is going to move very fast and the
Speaker 6: players are going to change. I will not bet against Meta.
Speaker 3: Christiana, can I just jump in on Meta really quickly?
Speaker 3: What I find really interesting about it is the relationship
Speaker 3: was already there right snap Dragon in quest. I spent
Speaker 3: a lot of time down in Palo Alto on the
Speaker 3: Irian project kind of looking at what's under the hood.
Speaker 3: How much did that existing relationship on the consumer electronic
Speaker 3: side get the win on the data center side.
Speaker 6: It's one hundred percent. Look at the end of the day,
Speaker 6: this is not this is not one time relationship. We
Speaker 6: have built over a long period of time, a strategic
Speaker 6: relationship and what happened Also have those relationship in place
Speaker 6: and we have more products, you have trust, you'll have
Speaker 6: the capability of execution. And by the way, this is
Speaker 6: also true what happened on customising. We bought Alpha Wave.
Speaker 6: They have some engagements, but the other part of Qualcom.
Speaker 6: Qualcom has brought a relationship with some of those companies
Speaker 6: and I think that just scale and that's exactly what
Speaker 6: you're seeing.
Speaker 7: Well, can I ask you a little bit about that?
Speaker 7: You mentioned Alpha Wave. You've obviously you have Dentana, you
Speaker 7: have the Modular deal. You made a lot of acquisitions
Speaker 7: in a relatively short period of time. I guess my
Speaker 7: question is twofold a should we expect more anytime soon?
Speaker 7: And based on the acquisitions that you've done, have you
Speaker 7: actually already sort of integrated that into some sort of
Speaker 7: sellable product that's already sort of out there as.
Speaker 6: One, yeah, one hundred percent. Look if you look at
Speaker 6: our track record, right so, especially as I think about
Speaker 6: the diversification of the company. First was automotive. We bought
Speaker 6: a River and that is now the stack that you
Speaker 6: see on BMW for a highway autopilot. We bought Nuvia.
Speaker 6: You see now our CPU showing up not only in
Speaker 6: PC's and phones and automotive, but now in the data center.
Speaker 6: We bought Alpha Wave, and you see us now into
Speaker 6: the connectivity business and the custom AASAIC business, and the
Speaker 6: Module acquisition is incredibly exciting. I actually don't think the
Speaker 6: industry investors really understand what that acquisition is. I think
Speaker 6: my prediction is people are going to read the three
Speaker 6: or four or five times and eventually they're going to
Speaker 6: get it, which is an industry friendly alternative that we're
Speaker 6: going to make it available upon close to everybody. So
Speaker 6: all of those things.
Speaker 7: That Module acquisition you're Chris Latry is sticking around absolutely.
Speaker 6: That's why you can see, if anything, if anything, what
Speaker 6: you should see about this acquisition. By being an all
Speaker 6: stock deal, it means that the founders are now fully
Speaker 6: vested on the future of Qualcom. And I think there's
Speaker 6: another thing that investors did not understand. They asked me
Speaker 6: the question why did this size acquisition do in all
Speaker 6: stock is because they're all now committed to the future
Speaker 6: of Qualcom when we are connected together, so all those
Speaker 6: things as part of us doing that. And to your
Speaker 6: question is there are going to be some other acquisitions,
Speaker 6: but as we have been very disciplined as we're building
Speaker 6: industrial some of the acquisitions we did are Thewena with
Speaker 6: thirty three million. Developers would focus on industrial edging posts.
Speaker 6: Now you see us doing data center. Future acquisitions are
Speaker 6: focused on data center and robotics, which is another area
Speaker 6: of investment for Qualcom.
Speaker 2: Christiano.
Speaker 3: Smartphone and AIPC is still there for you, right and
Speaker 3: you'll be aware of the world that we woke up
Speaker 3: to this morning in memory with Apple raising crisis as
Speaker 3: well as your outlook for the PC and smartphone markets
Speaker 3: changed or shifted it all for this year next year.
Speaker 6: That's a great question. I think you have to look
Speaker 6: at those markets very short term and you need to
Speaker 6: look at this market. So what's happening in the midterm
Speaker 6: for the very short term. I think the whole world
Speaker 6: is dealing with this emory situation right now, which is
Speaker 6: not great. And I think I respect the companies kind
Speaker 6: of make choice of the different industries. But then what
Speaker 6: happened is you don't have to demand the problem and
Speaker 6: mobile NPC you have the memory availability and prices. I
Speaker 6: think what you saw the message from Apple, So we
Speaker 6: even expect when we think about, for example, the Android
Speaker 6: market in China, I think when you think about year
Speaker 6: over year, when you look at twenty seven, expect it
Speaker 6: to be flat to probably a down bias. And that
Speaker 6: has all to do not with demand but with the
Speaker 6: memory situation.
Speaker 2: But the other parts more interesting.
Speaker 6: There's a lot of clarity right now because of agents,
Speaker 6: how this market is going to change with AI very
Speaker 6: very clear, and I think we see a lot of
Speaker 6: those phones now becoming the customers of the phone as
Speaker 6: the human and the agents, and that is changing the
Speaker 6: architecture of the devices.
Speaker 3: CEO Christiano Ammon and Bloomberg's remain vostic. Fantastic conversation. Thank
Speaker 3: you both very much. Indeed, welcome back to Bloomberg Tech.
Speaker 3: I'm going to take a look at today's big number,
Speaker 3: which actually may be our smallest big number. Yes, sub
Speaker 3: one nanometer. IBM has unveiled what it calls the world's
Speaker 3: first sub one nanometer chip technology, squeezing nearly one hundred
Speaker 3: billion transistors onto a chip about the size of a fingernail.
Speaker 3: For scale or reference, a human hair is about eighty
Speaker 3: thousand to one hundred thousand animeters wide. We're talking sub
Speaker 3: one nanometer. Let's get to Micron. Micron's earnings and the
Speaker 3: memory environment are our top story right now. Micron's up
Speaker 3: twelve percent. It's on track for its biggest jump in
Speaker 3: a month. Earlier in the session have been much higher.
Speaker 3: Suppli is tight, prices will remain high. Bloomberg Intelligence writing,
Speaker 3: these earnings reflect AI related demand, but don't quite capture
Speaker 3: the structural changes to the industry. Let's get out to
Speaker 3: Bloomberg Intelligence analyst Jake Silverman the headline there or the
Speaker 3: title the memory up cycle. For a few days now,
Speaker 3: you and I have been talking about is this a
Speaker 3: massive departure from the memory market's historical norm. You seem
Speaker 3: to be writing now that it is.
Speaker 9: Yeah, it definitely is too many extent, to quite an extent,
Speaker 9: because in the past, what we've really seen is you
Speaker 9: see contracts on a monthly or quarterly basis, and so
Speaker 9: the fact that we're now seeing contracts extending out to
Speaker 9: twenty thirty in many cases, it just shows that there's
Speaker 9: a structural difference in the way that customers are thinking
Speaker 9: about procuring their memory. And a lot of this is
Speaker 9: just driven by the substantial price increases that we've seen,
Speaker 9: you know, with memory probably increasing two hundred to three
Speaker 9: hundred percent this year for dram and Land. You know,
Speaker 9: the hyperscalers want to make sure that not only do
Speaker 9: they have the supply that they need, but they want
Speaker 9: to be able to make sure that they have a
Speaker 9: good idea of the range of pricing that they can
Speaker 9: expect as they're building out these AI data centers.
Speaker 3: Jake, I'm about to have a really important conversation on software,
Speaker 3: so we should probably remind the audience, like what's happening
Speaker 3: in the background, and that is massive demand for memory
Speaker 3: chips in AI data centers, either for training or for
Speaker 3: running AI workloads.
Speaker 2: Just explain the bigger picture.
Speaker 9: Yeah, so when you're thinking about building out an AI
Speaker 9: data center, you need all of these GPUs. I think
Speaker 9: in video really clearly the dominant player on training. They
Speaker 9: have two hundred and eighty eight gigabytes of HBM per
Speaker 9: GPU in their NVL seventy two racks and whatever other
Speaker 9: rack configuration that they have. But yeah, actually, interestingly enough,
Speaker 9: you've seen Google with their TPU going up from one
Speaker 9: hundred and ninety two gigabytes to two hundred and sixteen
Speaker 9: two hundred eighty eight for different skews, Trainium clearly increasing
Speaker 9: the amount of HBM. So it's not just in video,
Speaker 9: it's the entire ecosystem just requires more HBM. And then
Speaker 9: we're not even getting into the system memory that you need.
Speaker 2: The LP DDR, the DDR that.
Speaker 9: Supports all sorts of different functions for AI demand and
Speaker 9: that extends beyond training into inferencing, and we haven't even
Speaker 9: touched on ergentic AI. And so if you start to
Speaker 9: see a proliferation or an inflection of a lot of
Speaker 9: these different AI tools, it's going to require a memory
Speaker 9: as one of the foundational background enabling technologies.
Speaker 3: Bloomberg Intelligence is Jake Silverman with the React. Thank you
Speaker 3: very much. Indeed, let's talk software. But it's annual config
Speaker 3: conference in San Francisco. Collaborative design firm FIGMA just unveiled
Speaker 3: a platform overhaul for the AI era, transforming its workspace
Speaker 3: into what it calls an intelligent canvas for full stack
Speaker 3: digital creation. It allows teams to build animations, integrate AI agents,
Speaker 3: and write native code all in one place. Delight to
Speaker 3: say that joining us is Figma co founder and CEO
Speaker 3: Dylan Field back on the show.
Speaker 2: It's good to see you. Good to see you too,
Speaker 2: Thanks for having me.
Speaker 3: The idea is that you want your audience, which is
Speaker 3: developers and also customers, just to be able to do
Speaker 3: more in one place.
Speaker 10: Designers, yeah, product designers and designers of all types as
Speaker 10: well as those they work with.
Speaker 3: What's the breakthrough here? What have you done from the
Speaker 3: technology side that's allowed for that?
Speaker 10: Absolutely, So, rather than having only vectors and images on
Speaker 10: the canvas, we've also added in all sorts of other things.
Speaker 10: For example, now you can have code layers where you're
Speaker 10: able to actually have a representation of code that's running
Speaker 10: and interactive on the canvas alongside your designer presentations. Plus
Speaker 10: we've made it so that you can generate with the
Speaker 10: Figma Agent plugins that let your team do reusable workflows,
Speaker 10: run skills, and we're very excited about the generative effects
Speaker 10: and shaders that we've added shaders let you do advanced
Speaker 10: graphics work on the canvas. And finally we unveiled Figma
Speaker 10: Motion Figmotion and I'm really excited about and our community
Speaker 10: is honestly just over the moon.
Speaker 2: Is it something you asketful? Sorry? Was is it something
Speaker 2: you asked for?
Speaker 3: By the designers, they basically say like, we want this,
Speaker 3: can you building.
Speaker 2: Since we've started? Okay, they've asked what's the impetus for it? Yeah?
Speaker 10: So I think that if you zoom out right now,
Speaker 10: we're in a place where AI is trained on indistbution
Speaker 10: data and the center of the distribution is your average.
Speaker 2: That's what's it's trained on.
Speaker 10: And when you're prompting and you're getting outputs, it's so
Speaker 10: often that you're getting this average output and people can
Speaker 10: smell that they are almost it's just like AI writing.
Speaker 10: You ever get sort of triggered and a little bit
Speaker 10: like is that AI when you're reading something.
Speaker 3: I think it's attributable too, yes, because they're not all equal,
Speaker 3: or just.
Speaker 10: If you think something's been AI written in the first place,
Speaker 10: and the same thing is true for design. I think
Speaker 10: that as people are trying to stand out with their
Speaker 10: businesses be bold, have a point of view that will
Speaker 10: be rewarded, and only humans can really raise the ceiling here.
Speaker 10: They can use AI to be more effective, but humans
Speaker 10: bring the point of view and they actually are able
Speaker 10: to use design as a differentiator to make it so
Speaker 10: that their product, their software, their business, their brand, their marketing,
Speaker 10: they're advertising stands out breaks to the noiseness increasingly wild
Speaker 10: attention economy we find ourselves in, which will only be
Speaker 10: more flooded by AIS.
Speaker 2: That's quite big picture of stuff.
Speaker 3: I mean, what I wanted to ask you is that
Speaker 3: the technology underpinning all of this. If you remember back
Speaker 3: to Open AI dead Day twenty twenty five, you and
Speaker 3: I had a conversation and your stock was going up
Speaker 3: a lot because you've got a name check on stage.
Speaker 2: You telling me that and you know by that.
Speaker 3: But in this case, let's take the coding layer for example,
Speaker 3: is it something you've built yourself or your model agnostic
Speaker 3: or coding platform agnostic.
Speaker 2: Now we get to the net results.
Speaker 10: We've always taken a modular approach on what models we
Speaker 10: can use, and so we can swap models in out
Speaker 10: whenever we like, on behalf of the user or at
Speaker 10: the user's request, and what we do is basically, you
Speaker 10: can take your design and just move it over to
Speaker 10: a code layer and it'll automatically convert it.
Speaker 2: You can then make that interactive.
Speaker 10: You can also in the future imagine a world where
Speaker 10: you're prototyping or even going to production with code Enfigma
Speaker 10: and by being part of that token flow, we're very
Speaker 10: excited about what that can mean for our users and
Speaker 10: their abilities to really impact the platform because as code
Speaker 10: is commoditizing, what we're seeing is that the value is
Speaker 10: moving up the stack to design. Designers are the ones
Speaker 10: that we think in the future will be building all
Speaker 10: the software so.
Speaker 2: It can equal revenues.
Speaker 3: As you know, a lot of your users watch the
Speaker 3: show and I always try to get their input what
Speaker 3: they'd ask you.
Speaker 2: I have one audience question and I'm just going to
Speaker 2: read it to you.
Speaker 3: Is there any plan to make Figma a platform for
Speaker 3: brand integrate using MCP? And so this person says, for instance,
Speaker 3: I may use a different application to build my.
Speaker 2: Website, etc.
Speaker 3: But my AI agent needs to access what he calls
Speaker 3: his ground truth, his own IP, his own branding, logos, artwork,
Speaker 3: et cetera.
Speaker 10: Not only that, but also we want to do even
Speaker 10: more when it comes to your digital asset production workflows.
Speaker 10: So as you're figuring out ways to create systems and
Speaker 10: workflows to do advertising, to do media generation, one of
Speaker 10: our bets is Weave and Phigma. Weave is a platform
Speaker 10: that is able to compose models and workflows so that
Speaker 10: you can still have that human touch, that craft and
Speaker 10: really shape the output of models like Clay, and through
Speaker 10: that you can get to extraordinary results. You can then
Speaker 10: run those workflows through an API and pull them into
Speaker 10: whatever system you like. But we're very excited to be
Speaker 10: that system of record, not only for the brand assets
Speaker 10: and design system, but also for these workflows as well.
Speaker 3: Big the co founder and CEO Dylan Field back on
Speaker 3: Bloomberg Tech, Thank you very much.
Speaker 2: Cue.
Speaker 3: There's a new threat to tech stocks, and it's not
Speaker 3: what you'd expect. Public anger towards AI has Wall Street
Speaker 3: strategist warning it could spurt anti AI policies, creating another
Speaker 3: challenge for markets already grappling with a shaky rally in
Speaker 3: tech stocks, marked both by both rapid growth but also
Speaker 3: sharp volatility.
Speaker 2: Boy did we learn that lesson this morning.
Speaker 3: Bloomberg's Matthew Griffin has more really interesting read. We've done
Speaker 3: a little bit more on the show in the past
Speaker 3: six to twelve months about the kind of pr crisis
Speaker 3: that AI is having with Americans. At least now this
Speaker 3: is translating to the desks of Wall Street strategists who
Speaker 3: are saying something could happen as a result, just explain
Speaker 3: the report.
Speaker 11: Well ed, thanks for having me on. And like you said,
Speaker 11: strategists are starting to tell their clients pay attention to
Speaker 11: this polling data, pay attention to what's happening at the
Speaker 11: local level, because again, Americans, they are very unhappy about
Speaker 11: the idea that AI might take their jobs. They're very
Speaker 11: unhappy at the prospect that data centers might be pushing
Speaker 11: up electricity prices. And what strategists think is there is
Speaker 11: a chance that's going at some point to translate into
Speaker 11: policy that slows the rate of the AI boom, slows
Speaker 11: profit growth for the hyperscalers, for the chip makers, you
Speaker 11: name it. It's things like a pause on data center construction.
Speaker 11: And you look at a market where the number one
Speaker 11: question is what's the return on this investment? That could
Speaker 11: be a pretty big risk eventually.
Speaker 3: So that's why I want it's going next is this
Speaker 3: hardware related, like there is a ban on building data centers,
Speaker 3: or is the concern that there is some kind of
Speaker 3: heavy regulatory intervention on the software side.
Speaker 11: Well, if you look at sort of the worst case
Speaker 11: scenario that Wall Street's talking about, there is an example
Speaker 11: of each One would be a national moratorium or pause
Speaker 11: on data center construction, and the other would be some
Speaker 11: kind of tax targeting big tech companies or targeting AI producers. Now,
Speaker 11: we have seen progressive politicians members of Congress pushing for
Speaker 11: these policies already. We aren't there yet, but we are
Speaker 11: seeing them at the local and at the state levels.
Speaker 11: There are a bunch of cities and counties that have
Speaker 11: paused data center construction. There's actually a moratorium sitting on
Speaker 11: the governor's desk here in New York awaiting her signature
Speaker 11: or her veto. And we've seen governors in Ohio and
Speaker 11: Illinois pausing tax breaks for data centers. So we're starting
Speaker 11: to see this kind of thing percolating.
Speaker 3: Biomas Matthew Griffin with a really well read story on
Speaker 3: the Bloomberg terminal and dot com. Thank you so much.
Speaker 3: Let's stay in the realm of the AI build out.
Speaker 3: According to a new report, AI revenue may have reached
Speaker 3: a tipping point. Analysis from exponential View shows global AI
Speaker 3: sales excluding China reached twenty five billion dollars in the
Speaker 3: first quarter of this year, preciation from data center and
Speaker 3: chips investments. Well, that's expected to be just twenty one
Speaker 3: billion dollars. So is the AI build out finally paying off?
Speaker 3: Azeemas are founder of Exponential View and an aufer on
Speaker 3: that report, as well as a Bloomberg contributor joins us.
Speaker 3: Now we've talked about this for so long, the machine
Speaker 3: where you know the numbers that are going in capital expenditures,
Speaker 3: it's just been very hard to find the numbers that
Speaker 3: are coming out the other side.
Speaker 2: You seem to have found them.
Speaker 8: Well, thank you for having me on your show, Ed,
Speaker 8: and I thought it was really important that we do
Speaker 8: find them. The supply side is well understood. How many picks, shovels, chips,
Speaker 8: data centers are being built and how much does that cost.
Speaker 8: Piecing together what's happening on the demand side is much harder.
Speaker 8: The biggest AI companies are privately held, they don't need
Speaker 8: to disclose, and the hyperscalers, the big three AI is
Speaker 8: only a small subsegment of a subsegment of their businesses,
Speaker 8: and so they don't really disclose, but there are enough clues.
Speaker 8: And for the last six months, my team and I
Speaker 8: have been looking at every public disclosure that we can
Speaker 8: up and down the supply chain, from the hyperscalers, from
Speaker 8: well sourced leaks, to reconstruct the AI economy and to
Speaker 8: reconstruct specifically, what is the top revenue coming in from customers,
Speaker 8: enterprises and consumers without any double counting, And that's where
Speaker 8: what we publish today, and that's the twenty five billion
Speaker 8: dollars in Q one twenty twenty six that you referred to,
Speaker 8: and I think it's really critical this lifts the fog
Speaker 8: of war.
Speaker 3: You can also look forward, right, so you're exactly right.
Speaker 3: I mentioned a moment in time and that was that
Speaker 3: period gone. But if you looked I guess on an
Speaker 3: annualized revenue run rate basis, you can say per the
Speaker 3: report that actually there is continued growth accelerating growth in
Speaker 3: those revenues too.
Speaker 2: Absolutely.
Speaker 8: I mean we view the if you annualize the current month,
Speaker 8: we're at one hundred and seventy billion dollars of annuallyzed
Speaker 8: revenues without any double counting that represents a two hundred
Speaker 8: percent growth rate on the previous point, this time twelve
Speaker 8: months ago. But the current growth rate is still at
Speaker 8: around two hundred percent. And what's really remarkable, ed is
Speaker 8: that you would expect that growth rate to start to
Speaker 8: slow down, and in fact, we were caught out by
Speaker 8: this because we had in our modeling from the start
Speaker 8: of this year predicted it would slow down, and what
Speaker 8: turned out to happen was that Anthropic went on a
Speaker 8: real tear and kept the growth rate.
Speaker 3: High, which you're showing the chart that goes back to
Speaker 3: what I said at the top, the point being quarterly
Speaker 3: revenue pace and current number is now exceeding the depreciation
Speaker 3: on the hardware side. I'm assuming it is em that
Speaker 3: you're a great student of history, just as I am.
Speaker 3: And what's so interesting is like you can go back
Speaker 3: and say, well, what happened at the advent of the smartphone,
Speaker 3: or even of cloud computing the Internet if you want,
Speaker 3: where does what's happening AI on those real revenue stack
Speaker 3: up against those prior moments in technology history.
Speaker 8: Those moments are epic. They were some of the fastest
Speaker 8: growing business waves we've seen in the United States worldwide. Ever,
Speaker 8: in history, AI real revenues is growing roughly three times
Speaker 8: faster than the Internet grew, roughly three times faster than
Speaker 8: mobile grew. So this is a really fast in demand
Speaker 8: product that enterprises across America and consumers around the world
Speaker 8: are really buying into.
Speaker 2: At the moment, a z in real quick to end.
Speaker 3: What happens next, Well, what happens next is we see
Speaker 3: more of main Street trying to get this right.
Speaker 8: We see more competition. I think people are concerned with
Speaker 8: the price of some of the proprietary models. We'll see
Speaker 8: large enterprises rotate towards open source, which provides better value
Speaker 8: for money. But I do think that as enterprises get
Speaker 8: better at doing this, as main Street understands how to
Speaker 8: use AI, they will double down there.
Speaker 3: Zeemers are founder of Exponential View of Bloomberg Contributes. It
Speaker 3: has been really great to have you on Bloomberg Tech
Speaker 3: such command of the data.
Speaker 2: I really appreciate it. Thank you very much.
Speaker 3: Now coming up on the show, Google's AI efforts have
Speaker 3: taken a hit with the departure of even more top talent.
Speaker 3: It's been a bit of a wave of late. We'll
Speaker 3: have the details next This is Bloomberg Tech.
Speaker 12: It's time now for talking tech. I'man Hira honand first Up.
Speaker 12: The AI Boom is making its way onto NBA floors.
Speaker 12: Cloud infrastructure provider Iron is taking over the Golden State
Speaker 12: Warriors Jersey patch starting next season, betting the partnership will
Speaker 12: raise its profile in the Bay areas booming AI ecosystem.
Speaker 12: The deal also makes Iron the team's official AI cloud partner. Plus,
Speaker 12: Anthropic is accusing Ali Baba of accusing nearly twenty five
Speaker 12: thousand fake accounts to illicitly access its claud ai model,
Speaker 12: and a letter to US senators and White House officials,
Speaker 12: Anthropic called it the biggest ever yet by a Chinese
Speaker 12: company to piggyback on the work of leading USAI labs.
Speaker 12: And Amazon is doubling down on India's AI boom, announcing
Speaker 12: another thirteen billion dollars to expand its cloud and AI
Speaker 12: infrastructure in the country, including in Mumbai. The announcement comes
Speaker 12: as CEO Andy Jasse visits India, where he's meeting with
Speaker 12: Prime Minister in rand Remodi. With a new investment, Amazon's
Speaker 12: total spending in India from twenty ten through twenty thirty
Speaker 12: is expected to top eighty eight billion.
Speaker 3: Dollars ed thank you, I Hira, two top AI researchers
Speaker 3: leaving Google Foranthropic. These are just the latest departures in
Speaker 3: recent days rattling Google's AI ambitions. Bloomberg's Google reported g
Speaker 3: you Love broke the story and joins us with the details,
Speaker 3: and the story was so impactful it was shared across industry.
Speaker 3: Let's start with those kind of two key figures are
Speaker 3: they and why it's being seen as such a blow
Speaker 3: to Google's AI efforts?
Speaker 2: Thank you, ed so.
Speaker 13: The two senior researchers who are moving from Google to
Speaker 13: Anthropic are Jonas Adler and Alexander Pritzel, and both were
Speaker 13: viewed as key contributors to Gemini, which is Google's flagship
Speaker 13: AI model.
Speaker 2: And also highly regarded by their peers.
Speaker 13: Absolutely, yes, yes, their peers were sad to see them go.
Speaker 13: Jonas Adler was playing a key role in AI coding
Speaker 13: and Alexander Pritzel was involved on the pre training side,
Speaker 13: which is where models are kind of trained on large
Speaker 13: quantities of data. And I think, especially following the news
Speaker 13: last week of Nome Shazir moving to Open AI and
Speaker 13: John Jumper, a Nobel laureate heading to anthropic. It has
Speaker 13: sparked concerns about who else.
Speaker 2: May be on the way out.
Speaker 3: We've been talking about that on the show for that
Speaker 3: extended period of time, right, and it's played out in
Speaker 3: the stock you know, Alphabet, the parent of Google's shares
Speaker 3: have been under pressure.
Speaker 2: What's the bigger picture?
Speaker 3: Like this is a mass wave of departures and so
Speaker 3: Gemini is in trouble or is it not as severe
Speaker 3: as that?
Speaker 13: To be clear, those two departures, you know, the are
Speaker 13: the only you know names that we've reported on beyond
Speaker 13: John jenberin Norm Shazier. We're talking about a small number
Speaker 13: of people. However, the AI talent pool in terms of
Speaker 13: the number of people who really can move the needle
Speaker 13: on these models is relatively small, and so individual moves,
Speaker 13: you know, can matter. Noodle stresses, of course that his
Speaker 13: bench of talent.
Speaker 2: Is very deep.
Speaker 3: Yes, thank you, and you know engage with us on
Speaker 3: that story. It was a very detailed report. Is there
Speaker 3: anything else in there that we haven't gotzi that you
Speaker 3: think you know, the world needs to know about.
Speaker 13: We got a little bit more color about what happened
Speaker 13: around the time of Nome Shazier's departure. Computing power is
Speaker 13: a precious resource in Goodle. They have a lot of
Speaker 13: computing power, but they also have a lot of mouths
Speaker 13: to feed with cloud clients research their popular products. And
Speaker 13: so we learned that shortly before Nom Shazir announced his departure,
Speaker 13: the computing power for one of his projects was shifted
Speaker 13: to a larger pre training team in London. It seems
Speaker 13: it was an attempt to boost collaboration, but we're still
Speaker 13: piecing each other. But compute can be very political within Goodle.
Speaker 3: Bloomberg Studio Love who broke a big story. I highly
Speaker 3: recommend you go and read it. So that does it
Speaker 3: for this edition of Bloomberg Tech. This is what markets
Speaker 3: look like. Those are the stories. And as that one
Speaker 3: hundred modestly higher micron the most severely bullish outlook for
Speaker 3: memory in a supply constrained environment and price is high,
Speaker 3: and then Apple raising prices on some hardware because of
Speaker 3: that memory situation. Also recap the qualcom CEO conversation on
Speaker 3: the pod. You know where to find it. This is
Speaker 3: Bloomberg Tech