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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Welcome to the Daybreak Asia podcast. I'm Charlie Peala. Doug

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Speaker 2: Krisner has the day off. President Trump has granted in

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Speaker 2: Vidia permission to ship it's H two hundred artificial intelligence

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Speaker 2: ship to China in exchange for a twenty five percent

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Speaker 2: cut of the sales. The decision marks a major lobbying

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Speaker 2: win for Nvidia and could let it regain business lost

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Speaker 2: in the China market and with more. Here's Bloomberg's Annabelle Droolers.

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Speaker 3: It's significant for nvideo itself, and I think, yeah, you're

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Speaker 3: pointing to maybe not even the million dollar question. It's

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Speaker 3: probably the multi billion dollar question is what kind of

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Speaker 3: demand are we going to see on that H two

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Speaker 3: hundred side. We don't know that yet, But what we

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Speaker 3: do know is that the H two hundred is a

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Speaker 3: much more advanced ship than the twenty that was initially

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Speaker 3: modified for the mainland market. So the H two hundred

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Speaker 3: and is one that has already been sold around the world.

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Speaker 3: But of course we're moving to Blackwell, moving to Reuben architecture,

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Speaker 3: so China still will be a couple of iterations behind.

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Speaker 3: But yes, this is a big announcement that's just come

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Speaker 3: through in the last couple of hours. But President Schrump

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Speaker 3: giving Nvidia permission to ship these h two hundred chips

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Speaker 3: to China. It's something we've been discussing for weeks. We

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Speaker 3: saw Jensen Huang just back in Washington even last week,

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Speaker 3: continuing his lobbying efforts. So on this front, it certainly

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Speaker 3: is a win for the business. As you said, we've

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Speaker 3: got this true social post here you can see President

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Speaker 3: Trump saying that he had warned or informed President she

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Speaker 3: of this, Xi responding positively. This is something, of course

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Speaker 3: a lot of Chinese companies are going to want to

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Speaker 3: see as well. They're still sort of hamstrung by these

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Speaker 3: access to more advanced chips. The question is whether China

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Speaker 3: will allow them to purchase. But at the same time,

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Speaker 3: in terms of the breakdown of the deals, so the

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Speaker 3: Commerce Department says it's still finalizing the details on this

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Speaker 3: sort of accord, but we do know that twenty five

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Speaker 3: percent of each sale is also going to be going

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Speaker 3: toward the US as well, So it's an exchange here

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Speaker 3: for a twenty five percent surcharge. So it's this potential

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Speaker 3: maybe to billions of dollars in the mainline market. But

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Speaker 3: of course you think about the latest earnings and China

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Speaker 3: was completely written out of the picture as well.

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Speaker 2: Bloomberg's Annabelle Jewelers in video shares climbed and after ours

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Speaker 2: trading after the news broke, And that's where we begin

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Speaker 2: the conversation with Fabian Yip market analyst ig and she

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Speaker 2: spoke to Bloomberg's April Hong and Sherry on.

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Speaker 1: Fabian and how does the AI narrative play into the

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Speaker 1: markets in twenty twenty six. We do have Nvidia's headline,

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Speaker 1: for example today about those h two hundred chip exports

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Speaker 1: to China.

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Speaker 4: Yeah, that's right. So it's a good news for Nvidia

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Speaker 4: for sure that they got the approval to export these chips.

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Speaker 4: The big up question is whether China is going to

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Speaker 4: take it, because we did see earlier this year where

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Speaker 4: the Chinese government has encouraging local tech tech companies to

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Speaker 4: be adopting their local chips instead of Nvidia's chip. So

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Speaker 4: if this narrative doesn't change, I guess it's quite hard

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Speaker 4: for Nvidia to realize that profit. The good news though,

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Speaker 4: is in the recent earnings discussions from Nvidia, we did

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Speaker 4: see that Jensen Huang said their projection on revenue growth

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Speaker 4: as well as earnings growth has not been including the

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Speaker 4: growth in China yet, So anything that could be shipped

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Speaker 4: to China is actually an upside for the company.

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Speaker 5: To one extent, Are you expecting that to benefit the

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Speaker 5: Asia suppliers?

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Speaker 4: I think the Asia suppliers will definitely play a very

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Speaker 4: important role in the overall AI chain. Obviously, Japan, Korea,

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Speaker 4: Taiwan have actually been dominating the upper stream of the

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Speaker 4: AI supply chain. So the ongoing improvement in margins as

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Speaker 4: well as the growth in AI demand will continue to

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Speaker 4: drive a pretty prosperous outlook for these companies. The bigger

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Speaker 4: question here perhaps is whether valuations of these respective companies

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Speaker 4: are justified.

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Speaker 5: When you look at Chinese tech and the idea that

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Speaker 5: maybe they don't need these h two hundreds given how

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Speaker 5: their domestic options look to be making a lot of progress.

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Speaker 5: How do you position how do you advocate as an

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Speaker 5: investor when it comes to Chinese tech.

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Speaker 4: I think the Chinese tech companies are at a slightly

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Speaker 4: different stage. I would be saying if you look at

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Speaker 4: the AI chatbots that are happening in China, for instance,

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Speaker 4: obviously we know that they're making a lot of progress,

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Speaker 4: but at the same time, the monetization model looks quite

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Speaker 4: different from the US tech companies. I think the Chinese

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Speaker 4: companies are trying to gain market share as they are

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Speaker 4: doing similar moves in other sectors such as food delivery.

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Speaker 4: The margins that are happening in the front end of

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Speaker 4: the expansion cycle looks very different from what we're seeing

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Speaker 4: in the US. But I think it's going to be

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Speaker 4: leaders take all type of market where we expect to

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Speaker 4: see the leaders in tech continue to grow in their

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Speaker 4: AI capabilities. Kapex spand obviously is another concern that we're

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Speaker 4: watching very closely, as margins have already been compressed. If

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Speaker 4: capex increases significantly, it could put further pressure on the

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Speaker 4: balance sheet of these Chinese tech companies.

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Speaker 1: Fabian, what about the Chinese economy itself. I mean, we

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Speaker 1: saw from the Polyburo readout that they want to priority

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Speaker 1: ties boosting domestic demand, but Goldman Sachs calling this somewhat disappointing.

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Speaker 4: M I think it's not surprising to see that they

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Speaker 4: have a shift towards domestic demand. If you look at

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Speaker 4: the trade data yes yesterday, it's actually a bittersweet moment,

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Speaker 4: I would call it because if you look at the exports,

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Speaker 4: the growth is actually pretty strong. It recovered quite nicely

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Speaker 4: right after the deal with US has been struck. However,

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Speaker 4: import growth rate is still slow, reflecting low domestic demand.

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Speaker 4: The other problem we're having here is it seems like

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Speaker 4: the dependence on export growth is still pretty strong, and

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Speaker 4: domestic demand, which is largely driven by consumer sentiments and

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Speaker 4: that has been impacted by China's property sector crisis, it's

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Speaker 4: still pretty low. So a shift towards a consumer sector,

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Speaker 4: domestic consumer uh, domestic consumer sentiments, it's a pretty clear

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Speaker 4: direction that the Chinese government is adopting. How well can

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Speaker 4: they execute that weather by continuing the consumer stimulus program,

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Speaker 4: by handing out cash where people can replace their old

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Speaker 4: home appliances, etc. Can still continue to propel the momentum

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Speaker 4: is a question that we have. I think it needs

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Speaker 4: to be a more structural change in the entire economy,

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Speaker 4: and we need to see an improvement in the property

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Speaker 4: sector for the entire sentiment to improve.

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Speaker 2: Baby and YEP market analysts that ig speaking to Bloomberg's

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Speaker 2: Sherry On and April Hong coming up, we go to

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Speaker 2: Australia next, where they are set to ban social media

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Speaker 2: access for children under age sixteen. We'll hear from Terry Flue,

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Speaker 2: professor of Digital Communication and Culture at the University of Sydney.

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Speaker 2: Welcome back to the Daybreak Asia podcast. Charlie Palett. Doug

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Speaker 2: Prisner has the day off. We go to Australia where

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Speaker 2: Prime Minister Anthony Albanisi is reminding social media companies that

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Speaker 2: they will be held responsible when a ban on children

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Speaker 2: having accounts takes effect on Wednesday. Under the crackdown, which

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Speaker 2: is the first of its kind among the world's democracies,

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Speaker 2: platforms including TikTok and Instagram will be required by law

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Speaker 2: to block children under age sixteen from holding accounts. And

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Speaker 2: that's where we begin our conversation with Terry flu professor

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Speaker 2: of Digital Communication and Culture at the University of Sydney.

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Speaker 2: He spoke to Bloomberg's Sherryon and April Hon.

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Speaker 5: So we are going to unpack I guess the fore

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Speaker 5: and against arguments for such a social media ban, but

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Speaker 5: talk to us first. How we got here after what

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Speaker 5: three decades of mostly an unregulated internet.

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Speaker 6: I think that the pressure for policies long days lines

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Speaker 6: has been building for about a decade. There's a lot

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Speaker 6: of dissatisfaction with industry self regulation and also a growing

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Speaker 6: sense that a lot of the promises of social media

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Speaker 6: have had significant downsides. So in Australia, the conversation essentially

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Speaker 6: begins about eighteen months ago and there were various proposals

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Speaker 6: around how to address issues around young people and adverse

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Speaker 6: mental health consequences, and a social media ban was agreed

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Speaker 6: upon by government, opposition and the state premiers as the

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Speaker 6: best way in which to proceed along these lines. In

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Speaker 6: legislation was passed twelve months ago, so we've now had

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Speaker 6: quite a long lead time to put in place the

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Speaker 6: implementation of the band, which will be commencing tomorrow.

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Speaker 5: What about the potential, I guess initial challenge for social

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Speaker 5: media companies and enforcement, because that seems to be something

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Speaker 5: like a lingering concern for them.

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Speaker 6: Most but not all, social media companies are named in

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Speaker 6: the band have chosen to cooperate, most notably Meta Snapchat,

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Speaker 6: TikTok YouTube reluctantly. There's an argument there about whether the

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Speaker 6: YouTube actually is social media, but they have chosen to

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Speaker 6: comply with the legislation. It's important to note that the

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Speaker 6: legislation gives the officer, the E Safety Commissioner, the capacity

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Speaker 6: to designate platforms as coming under the legislation. It's also

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Speaker 6: important to note that the onus is not on parents

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Speaker 6: to implement this band, but upon platforms to make the

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Speaker 6: best measures to ensure that those who hold accounts on

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Speaker 6: their platforms are age sixteen or older.

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Speaker 1: Oh, Terry wen all that kids, especially teenagers, really get

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Speaker 1: around rules right, that you always find a way. What

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Speaker 1: are the risks that we're pushing under sixteen users to

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Speaker 1: potentially more harmful parts in the online space.

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Speaker 6: That's a possibility, although I would note that the E

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Speaker 6: Safety Commissioner has the capacity to designate new platforms to

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Speaker 6: come under the legislation. So there's been quite a debate

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Speaker 6: about gaming platforms for instance, and perhaps say odd arrangement

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Speaker 6: where some platforms are subject to the bands, such as

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Speaker 6: Twitch and Kick but not roblocks, perhaps because roblocks have

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Speaker 6: themselves implemented age verification scheme. I think over time, the

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Speaker 6: principal question about whether the legislation works will be seen

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Speaker 6: around the rate of growth in the number of young

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Speaker 6: people using social media platforms if that begins to decline,

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Speaker 6: and it could because while there are a lot of

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Speaker 6: online options. Network effects mean that people tend to go

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Speaker 6: onto the platforms that they know other people are on.

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Speaker 6: If there's a decline in the number of young people's

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Speaker 6: peers who are on particular platforms, then they may be

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Speaker 6: moving off those platforms as well, and I think that

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Speaker 6: would be taken to be a measure of success for

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Speaker 6: the legislation.

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Speaker 1: And when it comes to the legislation, has the potential

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Speaker 1: or positive impact perhaps on marginalized youth and how social

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Speaker 1: media can play into that been taken into account.

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Speaker 6: There are certainly debates about that, just as there are

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Speaker 6: debates about whether a ban is to blunt an instrument

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Speaker 6: through which to address some of these issues. I think

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Speaker 6: there is a strong case for saying that if there's

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Speaker 6: reduction in online social resources, then there should be a

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Speaker 6: commitment to other resources for young people. I should say

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Speaker 6: it's not actually a ban on using the internet, that

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Speaker 6: would be ridiculous, but it is a ban on accounts

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Speaker 6: on particular platforms because the view has been taken that

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Speaker 6: holders of accounts can be subject to algorithmic manipulation.

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Speaker 1: And also one made sixteen the right age for these restrictions.

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Speaker 6: Well, I think that's a debate. I mean, one challenge

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Speaker 6: is that, of course, in the US, the threshold age

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Speaker 6: tends to be thirteen, and I would say that given

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Speaker 6: that many of these platforms have had a rule for

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Speaker 6: a long time that only those age thirteen or older

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Speaker 6: can hold accounts on them, had those laws actually been

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Speaker 6: implemented at the time they were created, or had those

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Speaker 6: rules been implemented by the platforms, we may not be

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Speaker 6: having this conversation, but the fact is for twenty years

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Speaker 6: or more, they for the most part haven't. So we

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Speaker 6: do find ourselves with an arrangement around under sixteen. But

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Speaker 6: there is certainly a debate around developmental stages of childhood

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Speaker 6: in that regard about whether those aged fourteen fifteen have

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Speaker 6: a greater degree of maturity than those age twelve or thirteen.

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Speaker 6: But I would say at least in Australia, there's been

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Speaker 6: less conversation about the age at which it's been set,

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Speaker 6: but around the principle itself.

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Speaker 5: As you alluded to earlier, there's a debate still about

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Speaker 5: the extent in which this maybe constitutes a bit overreach

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Speaker 5: on the part of authorities. And there are other countries,

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Speaker 5: developed economies included, that are looking at Australia as a

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Speaker 5: sort of example of what they can bring on to

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Speaker 5: their regulatory environment. How do you think they will be

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Speaker 5: watching all this as unfolds.

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Speaker 6: Well, I think that the principal question will be in

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Speaker 6: the first instance, where we see mass civil disobedience against

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Speaker 6: the legislation. I don't think that will happen, but there's

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Speaker 6: certainly a lot of talk around young people using various

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Speaker 6: measures to circumvent the rules, such as VPNs, such as

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Speaker 6: fake id's and so on. Actually, the laws themselves are

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Speaker 6: very difficult to implement without some level of parental support,

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Speaker 6: so I think the measures are in part about empowering

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Speaker 6: parents who've felt very disempowered in their dealings with young

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Speaker 6: people's use of social media, and I think that has

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Speaker 6: attracted attention internationally. Whether the age is going to be

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Speaker 6: the age at which other countries land on will remain

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Speaker 6: to be seen in some countries such as Malaysia and

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Speaker 6: New Zealand, that is the talk. In others such as

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Speaker 6: Denmark and France, they're perhaps looking at a lower age,

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Speaker 6: such as fourteen, But the general principle that a largely

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Speaker 6: unregulated internet where children basically have access to the same

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Speaker 6: content as adults. A sort of thirty year experiment that

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Speaker 6: we've had in this has been deemed to have a

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Speaker 6: significant number of downsides and the number of people making

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Speaker 6: the case that nothing should be done in this area

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Speaker 6: I think has been diminishing over time.

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Speaker 2: Terry flu Professor of Digital Communication and Culture at the

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Speaker 2: University of Sydney, speaking to Bloomberg. Sherryon and April Hall.

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Speaker 2: Thanks for listening to today's episode of the Bloomberg Daybreak

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Speaker 2: Asia Edition podcast. Each weekday, we look at the story

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Speaker 2: shaping markets, finance, and geopolitics in the Asia Pacific. You

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Speaker 2: can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel,

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Speaker 2: or anywhere else you listen. Join us again tomorrow for

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Speaker 2: insight on the market moves from Hong Kong to Singapore

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Speaker 2: and Australia. I'm Doug Prisoner and this is Bloomberg.