Speaker 1: From Marhard where Innovation of Money and Power Collie in
Speaker 1: Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde
Speaker 1: and Ed Ludlove.
Speaker 2: I'm Caroline Heide of Bloomberg's world headquarters in New York,
Speaker 2: and I'm Ed Ludlow in San Francisco.
Speaker 3: This is Bloomberg Technology coming up.
Speaker 2: Oh, Apple wiping out as much as two hundred billion
Speaker 2: dollars in market value. That's as China broadens its iPhone. Man,
Speaker 2: we'll discuss the outlook for the company and what it
Speaker 2: means for US China relations.
Speaker 4: And we'll dive deep into the world of artificial intelligence
Speaker 4: with the CEO of Imbu, which just raised two hundred
Speaker 4: million dollars, and we speak to the former CEO of
Speaker 4: r go Ais he embarks on a new mission with
Speaker 4: more than a billion dollars in backing expected to come
Speaker 4: from SoftBank.
Speaker 2: Meanwhile, Instacart preparing to said it's IPO price range as
Speaker 2: soon as Monday, as the startup is gearing for its
Speaker 2: road show. We'll bring you all that and so much more.
Speaker 2: But Ed, the market is being dictated front and center
Speaker 2: by what is happening with Apple right now.
Speaker 4: Yeah, and that's exactly how we frame it. The news
Speaker 4: Chinese authorities, according to Bloomberg sources, are thinking about expanding
Speaker 4: a ban on the iPhone in state enterprises and in
Speaker 4: government agencies.
Speaker 3: The market reaction is clear, with.
Speaker 4: Off session lows in Thursday session down around three percent,
Speaker 4: but just following the open we were down five percent.
Speaker 4: That was putting us on track for our biggest single
Speaker 4: day drop since September of last year, so in a year,
Speaker 4: and on a two day basis, we were headed for
Speaker 4: our biggest two day drop since May of twenty twenty two.
Speaker 4: That tells you the severity of the action, and we
Speaker 4: will look at some of the suppliers later in the
Speaker 4: program who are also moving to the downside. You talked
Speaker 4: about at the top of the show that two hundred
Speaker 4: billion dollars in market cap shed because of what's been
Speaker 4: reported over the last twenty four hours. That was on
Speaker 4: a two day basis. Where we're at now two point
Speaker 4: seven to seven billion or eighty billion dollars approximately in
Speaker 4: marketcap eighty to ninety billion shed this morning alone. And
Speaker 4: you think about Apple as the biggest constituent of both
Speaker 4: the S and B five hundred, then as that one
Speaker 4: hundred Carr, You're absolutely right. It's being felt much more
Speaker 4: broadly in financial markets this Thursday. Let's get the details
Speaker 4: and what's happening with China's reported Apple ban with Bloomberg's
Speaker 4: Mark gum and chief correspondent for Apple, Mark tell us
Speaker 4: what we know at this state.
Speaker 3: Yeah, Ed, thank you for having me.
Speaker 5: What we're reporting is that government owned companies, government agencies,
Speaker 5: those types of government affiliated organizations, in addition to the
Speaker 5: government itself is either banning or plans to ban the
Speaker 5: use of iPhones and other foreign built devices or foreign
Speaker 5: devices from foreign run companies to China within the region. Now, Tip,
Speaker 5: this is clearly having a major impact.
Speaker 3: On the market.
Speaker 5: Like you said, a couple hundred billion dollars of marketcap
Speaker 5: getting wiped away because of this news. And one thing
Speaker 5: I want to clarify is I think investor can Burns
Speaker 5: is not so much on lost unit sales from a
Speaker 5: potential ban like this from these agencies, but it's what
Speaker 5: it means for Chinese nationalism and if people in China
Speaker 5: are going to decide to no longer buy iPhones in
Speaker 5: some quantity because of this, So it's not the government
Speaker 5: employees that investors are concerned about but if this is
Speaker 5: going to create some sort of domino effect for the
Speaker 5: iPhone's penetration within China.
Speaker 2: And Mark of course, Ed shouts out that the suppliers
Speaker 2: are under pressure, market valuations being lost with Qualcom Skyworks,
Speaker 2: we think of Micron technology as well.
Speaker 6: What about the supply side, What about the.
Speaker 2: Amount of manufacturing that's done in China by Apple?
Speaker 5: Yeah, I mean if you think about the larger Apple
Speaker 5: ecosystem in supply chain, right, when Apple is impacted by
Speaker 5: something like this, it's not only landing at Apple's doorstep,
Speaker 5: it's all the suppliers that contribute to the company's products,
Speaker 5: right Qualcom you mentioned there's other technology makers Micron and
Speaker 5: such that you mentioned that could be fearful of further
Speaker 5: bands impacting them down the road for products that their
Speaker 5: components are in. Certainly this is a concerning but we
Speaker 5: have to see exactly how widespread this becomes. If you
Speaker 5: look on social media China Mobile, there was a rumor
Speaker 5: yesterday going around that China Mobile would not be procuring
Speaker 5: iPhone fifteen units as part of this band. Given China
Speaker 5: Mobile is a state run carrier. It's a major carrier
Speaker 5: with nearly a billion customers there.
Speaker 3: So that was quite scary.
Speaker 5: But the carrier has come out through state media and
Speaker 5: denied the idea that they're not going to be working
Speaker 5: with Apple, so that is a positive there. But we
Speaker 5: really have to see how widespread this becomes and how
Speaker 5: this is going to impact the minds of consumers. Obviously,
Speaker 5: this band comes at the same time that Huawei and
Speaker 5: other Chinese phonemakers are upping their game in China too,
Speaker 5: so clearly, just days ahead of Apple's big iPhone fifteen launch,
Speaker 5: there is some concern going on in China. But we
Speaker 5: still need to see how broad this goes.
Speaker 6: Well said regarding Huawei.
Speaker 2: Will dig into that in a moment, but for now,
Speaker 2: we really sang Mark governman, of course our chief really
Speaker 2: correspondent on all things Apple, and let's get the investigate.
Speaker 2: Let's get a conversation with Alet Young now chief investment
Speaker 2: strategists at a quantitive research firm, Map Signals, and Alec
Speaker 2: did you agree with Mark there that really this is
Speaker 2: the concern of not just state run businesses, but the
Speaker 2: fact that this is Chinese nationalism, This is a consumer
Speaker 2: no wanting, no longer wanting to purchase Apple products.
Speaker 7: Well, thank you for having me.
Speaker 8: Certainly a very noisy situation around Apple right now. There's
Speaker 8: no question that part of the negative inferences that are
Speaker 8: swirling around right now is this idea that Apple gets
Speaker 8: caught up in a nationalist rivalry between the US and China.
Speaker 8: If iPhones, for example, were to become stigmatized throughout Chinese
Speaker 8: society over the next few months to the point that
Speaker 8: it depressed demand, those types of narratives inevitably are popping
Speaker 8: into investors' minds right now.
Speaker 7: But I think it's.
Speaker 8: Worth noting that so far the ban in the government agencies,
Speaker 8: we're looking at about a half a million units according
Speaker 8: to a lot of the Wall Street research that I'm reading,
Speaker 8: and that's out of a total run rate over the
Speaker 8: next twelve months of about forty five million iPhones in China.
Speaker 8: So the current band impacts a little over one percent
Speaker 8: of the units. Obviously, if it spreads to state owned
Speaker 8: enterprises and it winds up having a bigger societal impact
Speaker 8: in China on iPhone usage, it would be much worse,
Speaker 8: much bigger, But at this.
Speaker 7: Point it's fairly contained.
Speaker 8: It's also worth noting that Apple has been gaining market
Speaker 8: share in China over the last few years, about three
Speaker 8: hundred basis points in the last twelve months.
Speaker 1: Now.
Speaker 7: It is true that Huawei.
Speaker 8: Is launching more competitive bones, so you know, it'll be
Speaker 8: interesting to see how that dynamic evolves. But the current
Speaker 8: context is that Apple's doing very well in China.
Speaker 2: Its valuation is done very well as well. Do you
Speaker 2: think that basically this is a bit of a perfect storm.
Speaker 2: Therefore we're seeing the sort of market cap erosion because
Speaker 2: of how well tech companies have outperformed. Because we're at
Speaker 2: a twenty nine times future earnings, Yeah, I.
Speaker 8: Think the streets at about six fifty for next year,
Speaker 8: so we're actually at twenty seven and change on the
Speaker 8: forward multiple right now.
Speaker 7: But there's no question that.
Speaker 8: When the stock peaked at one ninety eight a few
Speaker 8: weeks ago, it was around thirty times. It was priced
Speaker 8: to perfection. So this type of news is not going
Speaker 8: to be greeted favorably. In addition, we've got macro issues
Speaker 8: with rising rates that can also pressure equity valuation.
Speaker 7: So I think this is a healthy pullback.
Speaker 8: But in terms of the bigger question, does this change
Speaker 8: the bulkcase for Apple of the long term, I definitely
Speaker 8: think the jury's still out. You know, there's probably some
Speaker 8: legitimate signal in today's news, but there's also a tremendous
Speaker 8: amount of noise, yes and overreacting to knee jerk noisy
Speaker 8: media driven things around this.
Speaker 7: Stock and many others.
Speaker 8: Frankly, has it historically been a great way to make
Speaker 8: money on Wall Street?
Speaker 2: And was interesting is that Apple has a big event
Speaker 2: coming up pretty soon. But Apple has also been pretty
Speaker 2: dedicated to China in terms of what.
Speaker 4: They've said, at least, this is the big question for
Speaker 4: me alec. Right last quarter they said that there was
Speaker 4: a swing in China to eight percent revenue growth in
Speaker 4: Greater China from a three percent decline the prior quarter.
Speaker 4: But it's what they called switchers, consumers in China that
Speaker 4: were buying an iPhone for the first time or switching
Speaker 4: from a domestic or other international brand. I acknowledge what
Speaker 4: you just said, but look at the market reaction and
Speaker 4: explain to us whether this is knee jerk or it's
Speaker 4: the market recalibrating what they heard from Apple in that
Speaker 4: earning school.
Speaker 7: I think it's a little bit of both.
Speaker 8: Obviously, it's knee jerk because investors have to react to
Speaker 8: the news as it breaks.
Speaker 7: We can't control when we get the news, but.
Speaker 8: Definitely a recalibration of potential, you know, revenue headwinds, earnings
Speaker 8: headwinds is definitely in the calculus here. But you know, ultimately,
Speaker 8: you know, American investors were not used to gauging, you know,
Speaker 8: government intervention of this magnitude. It's normally about the free
Speaker 8: market deciding who's got the best product. I think on
Speaker 8: that basis, it's clear Chinese people love iPhones, but obviously
Speaker 8: when we have you know, the.
Speaker 7: Government's hand at play so heavily.
Speaker 8: It's difficult for Americans to read because frankly, it's not
Speaker 8: something that we're used to in our home market or
Speaker 8: really in most major markets around the world.
Speaker 7: So we'll have to see how it plays out. But
Speaker 7: unless you know, the government.
Speaker 8: Takes a very heavy hand, you know, I don't think
Speaker 8: this is going to really be looked back upon as
Speaker 8: a major negative, game changing inflection point for the company.
Speaker 4: You know, at the question of the day here, I'm
Speaker 4: going back television has been is tech in trouble? You know,
Speaker 4: in the year of Ai, the year of the FED
Speaker 4: and valuations? Is geopolitics in China now kind of an
Speaker 4: equal weighted risk factor.
Speaker 8: Yeah, I mean it's definitely I don't know about equal weighted.
Speaker 8: We've got a lot of other macro issues we're contending with,
Speaker 8: but certainly geopolitical risk with China is at the top
Speaker 8: of the geopolitical risk table, and certainly you know the
Speaker 8: situation with Taiwan and now just this general competitive tension
Speaker 8: that we seem to have going on with the Chinese.
Speaker 8: The Trade Secretary's recent visit Jui Romando didn't really go
Speaker 8: over that well. So it's definitely something that investors are
Speaker 8: going to have to monitor, especially in light.
Speaker 7: Of the.
Speaker 8: Recent regulations around semiconductors and you know US banning their
Speaker 8: access to certain high end semis. They're trying to do
Speaker 8: the same to us in other areas. We've got Nvidia involved,
Speaker 8: So it's definitely something that investors are going to have
Speaker 8: to watch.
Speaker 4: Alec Young, chief investment strategist at MAP Signals, thank you.
Speaker 4: A perfect segue, because the other top story is s
Speaker 4: k Heinex has opened an investigation into the use of
Speaker 4: its chips in the latest phone from Huawei after a
Speaker 4: tear down commissioned by Bloomberg of the latest device revealed
Speaker 4: that s ke Heinez's memory and flash storage was inside,
Speaker 4: though the Korean maker confirmed to Bloomberg it has not
Speaker 4: worked with Huawei and it has been adhering Caroline to
Speaker 4: US sanctions. This is an incredible story and.
Speaker 2: This is where politics and of course supply chain really
Speaker 2: intertwine and timing. We were just mentioning Gina Romando, of
Speaker 2: course was over there in China Commerce Secretary. At that
Speaker 2: exact moment, Huawei very quietly unleashes this new product, the
Speaker 2: Mate sixty. We all wonder where the chippers come from.
Speaker 2: Is s mic Smick as has known, or have they
Speaker 2: been bypassing some of these very stringent what do they
Speaker 2: call it, sort of a high walls the ability of
Speaker 2: the US seemingly been trying to cut them off from
Speaker 2: the supply chain that they still manage to access.
Speaker 4: This is how it came about. Huawei put out the
Speaker 4: Mate sixty pro. Bloomberg News got their hands on one,
Speaker 4: took it to Tech Insights, they did a tear down.
Speaker 4: One of the main processors was made in China by Smick.
Speaker 4: And now they've uncovered two memory chips nand in a
Speaker 4: high end or next gen d ram that are covered
Speaker 4: by sanctioned sa Gainitz has responded straight away saying, look,
Speaker 4: we didn't know about this, We did not work with Huawei.
Speaker 2: And meanwhile, it's been this sort of moment to celebrate
Speaker 2: for the Chinese at least this idea that they're able
Speaker 2: to produce these incredibly powerful chips in their own country,
Speaker 2: supply them, and therefore make an incredibly powerful new phone
Speaker 2: that some analysts are saying, could this be the Apple
Speaker 2: killer in China? And the question is is how much
Speaker 2: they have managed to really build and operate and become
Speaker 2: self sustaining when it comes to their own semiconductors in China.
Speaker 2: We continue to dig into that key geopolitical story. We
Speaker 2: continue to think about the knock on a Fox effects
Speaker 2: for the entire border market ed because this is a
Speaker 2: key concern China US what it means for Apple. Of course,
Speaker 2: when you've got the big bell, whether that is Apple
Speaker 2: under pressure, you're going to have the whole nastac.
Speaker 6: On the downside.
Speaker 2: But just think who was thinking was it was actually
Speaker 2: in the green earlier trade. It's now off by more
Speaker 2: than two percent. We're seeing some other key players, and
Speaker 2: we've mentioned the suppliers to Apple being under pressure, The
Speaker 2: Coal com for example two year yield. Though interesting that
Speaker 2: we're seeing the bond market just get a little bit
Speaker 2: of bid on the front end. Now we've seen, of
Speaker 2: course many wondering about where.
Speaker 6: We see the federal reserve go.
Speaker 2: The job bless hims today once again strength in the
Speaker 2: US jobs market. But for now, maybe we get a
Speaker 2: little bit of buying moment after the sell off that
Speaker 2: we've seen in the bond market of late. Euro under
Speaker 2: pressure because we've got very weak European data over all,
Speaker 2: the really peeking out the tiniest bit of growth in
Speaker 2: the second quarter. What does that mean for the ECB
Speaker 2: The euro is down versus the US dollar, so much
Speaker 2: more to come on the macro and the micro. This
Speaker 2: is win bog technology.
Speaker 3: Time for talking tech.
Speaker 4: First up, California Governor Gain having use and signed and
Speaker 4: executive order on AI regulation that it instructs state agencies
Speaker 4: to examine how artificial intelligence might threaten the security and
Speaker 4: privacy of California residents, while also authorizing state employees to
Speaker 4: experiment with AI tools and try integrating them into the
Speaker 4: state's operations.
Speaker 3: Use some tol Bloomberg News.
Speaker 4: There's a Pandora's box being opened here and we just
Speaker 4: want it done in a safe way. Plus billionaire Patrick
Speaker 4: Drahi's debt laid in telecommunications empire Altice is weighing the
Speaker 4: sale of its French data centers in a deal valued
Speaker 4: at one point one billion dollars, as well as the
Speaker 4: sale of part of the capital of Altis France, and
Speaker 4: options for Portugal Telecom and its ad tech company Teeds.
Speaker 4: All of this in an effort to shore up confidence
Speaker 4: in his network of businesses, which have been battered by
Speaker 4: a Portuguese corruption probe targeting key figures linked to our teas.
Speaker 4: And Finally, a fintech owner in London is facing allegations
Speaker 4: that he helped notorious drug traffickers attempt to launder hundreds
Speaker 4: of millions of euros through a crypto exchange platform. The
Speaker 4: thirty eight year old Italian is alleged to have converted
Speaker 4: piles of cash into crypto accounts for a criminal gang.
Speaker 4: The case puts the British financial technology scene under fresh
Speaker 4: scrutiny amid fears that its weak controls are enabling the
Speaker 4: movement of illicit funds around the world.
Speaker 2: Caroline really global set of stories there and and look
Speaker 2: now we're going to return a bit more to home
Speaker 2: and for the IPO market, we are gearing up online
Speaker 2: grocery delivery startup and indeed on more broadly e commerce tools.
Speaker 2: Instacart it's preparing to set a price range for its
Speaker 2: IPO and start its investor roadshow as early as the
Speaker 2: coming Monday. Boy, have we got this back to school
Speaker 2: feeling right now? And I'm pleased to welcome to the
Speaker 2: showroomg Ryan Gould, who really can set the scene of
Speaker 2: what story they're going to be trying to tell investors
Speaker 2: on this roadshow come Monday.
Speaker 3: Yeah, thanks, Caroline.
Speaker 9: I think you know, there's certainly some energy as we
Speaker 9: head into this back to school period. Dare I say
Speaker 9: probably a little bit of cautious optimism. You know, there's
Speaker 9: a set of new IPOs that sort of been talked
Speaker 9: about for you know, months, if not years in instacar case.
Speaker 9: You know, as we said, instacart is about to said
Speaker 9: it's price range as early as Monday, kick off a
Speaker 9: road show, and then they could look to price it
Speaker 9: as soon as the nineteenth, so almost a week later
Speaker 9: trading on the twentieth. I think, you know, this is
Speaker 9: a point that you know, we're starting to see people
Speaker 9: sort of jostling for position. Armor is already out there.
Speaker 9: It's the biggest ipea of the year. They've got their
Speaker 9: price range, could be pricing soon. But you know, there's
Speaker 9: certainly some energy, I would say, and I think probably
Speaker 9: there are quite a few investors who are starting to
Speaker 9: feel a little more constructive about how we think about
Speaker 9: hypos in the US.
Speaker 2: Mangled great to have them on very early to the game.
Speaker 2: In terms of Bloomberg, I think we've just welcomed into
Speaker 2: the company and already right here I'm going to beg technology.
Speaker 6: Time now for work shifting.
Speaker 2: It's where look we look at the changing landscape of
Speaker 2: the labor market amid advances in technology and today. But
Speaker 2: job Stata initial jobbers claims in particular showing resilience in
Speaker 2: this workforce lowest levels for job as claims amid a
Speaker 2: resilient labor market for the US, But there are issues
Speaker 2: historic labor force games we've actually seen in particular for women,
Speaker 2: while could be eroded, could be stalled as a panemic
Speaker 2: era lifeline.
Speaker 6: To daycare providers expires, with more than.
Speaker 2: Seventy thousand childcare programs estimated to be in danger of closing.
Speaker 2: Joining US now to discuss look whether technology can.
Speaker 6: Off set this setback.
Speaker 2: Alan of Ekowitz is a general partner at Spring Bank,
Speaker 2: which invests in early stage companies building look infrastructure to
Speaker 2: enable working women and families to succeed and ultimately, can
Speaker 2: technology be any sort of solution in this scenario. It
Speaker 2: seems like a terrible scenario at that.
Speaker 10: Yeah, so it's not a great scenario. It's pretty bad timing.
Speaker 10: We're here at the start of the school year. Against
Speaker 10: most expectations, the percentage of moms of young children in
Speaker 10: the workforce is actually higher than ever having recovered post pandemic,
Speaker 10: which has huge consequences for women's lifetime earnings and career trajectories.
Speaker 10: But as you just meant it, mention, we're about to
Speaker 10: lose twenty four billion dollars in stimulus, which might put
Speaker 10: three hundred children's childcare slots it.
Speaker 7: At risk, and of course put it risk the.
Speaker 10: Ability for all of these women to continue to participate
Speaker 10: in the workforce. And to be really clear, of course,
Speaker 10: this isn't just a mom issue. It's an economy issue.
Speaker 6: It's an inviolent issue.
Speaker 2: And you say, rightly, so it's an impact on GDP,
Speaker 2: on earnings. What about though anyways that in companies you
Speaker 2: invest in can be some sort of support amid perhaps
Speaker 2: slowing money funds coming towards these childcad.
Speaker 10: Yeah, so you know, of course, innovation can't replace infrastructure
Speaker 10: and public policy, it can augment. So technology and startup
Speaker 10: solutions can't print money. But there's a lot that we
Speaker 10: can do to make it easier for families to find access,
Speaker 10: VET and pay for childcare, and of course for care
Speaker 10: businesses themselves, which are often pretty small mom and pop operations,
Speaker 10: to run more efficiently and effectively. So maybe I'll give
Speaker 10: one example from our portfolio, and also happy to talk
Speaker 10: more broadly about areas where we think technology can make
Speaker 10: a really big impact. But we're investors in a wonderful
Speaker 10: company called Wealthy, which combines digital tools, AI and world
Speaker 10: class human expertise to basically serve as a care coordinator
Speaker 10: for the employees of some of the US's largest employers
Speaker 10: like best Buy, Cisco, Hilton, and basically they match families
Speaker 10: with care professionals, automate workflows, automate workfloads to get tasks
Speaker 10: done faster while they're looking for a home healthcare aid,
Speaker 10: pure aging mother, or backup childcare for your kids so
Speaker 10: you don't have to miss work. So that's just one
Speaker 10: example in our own portfolio. But you know, we think
Speaker 10: beyond backup care and childcare specifically, there's a lot of
Speaker 10: opportunities for technology to improve the overall care economy, ranging
Speaker 10: from you know, first it can make hopefully care jobs better.
Speaker 2: Yeah, dare I say artificial intelligence in that sentence?
Speaker 10: Listen if we're if we don't talk about AI, are
Speaker 10: we even doing a technology show right now? Surely you
Speaker 10: know we know that, for instance, healthcare worker burnout is
Speaker 10: an enormous problem in the industry across the care co
Speaker 10: I mean, there's one point eight million vacancy US right now,
Speaker 10: and for instance, things like automation or AI supported charting
Speaker 10: and documentation could cut that work dramatically, giving people time
Speaker 10: back in their schedules, hopefully improving some of the burnout crisis.
Speaker 10: So that's you know, that's just sort of one one area.
Speaker 10: You know, I think there's also a lot of room
Speaker 10: to use innovation and technology actually even make care more affordable.
Speaker 10: One of the things we hear from providers is that
Speaker 10: even with government subsites in place, it can take beats
Speaker 10: or months or those childcare payments from the government to
Speaker 10: be sent to providers. And these are often low margin
Speaker 10: businesses that are kind of operating months to months because
Speaker 10: of the operational complexity and collecting that data. And there's
Speaker 10: a lot of room for sort of modernized financial rails
Speaker 10: and technology to move that flow.
Speaker 4: Alana, the fear is that the tap of stimulus money
Speaker 4: just just closes abruptly right later in the year. But
Speaker 4: the problem of the last twelve months has been actually
Speaker 4: getting money to people. And I wondered how closely you're
Speaker 4: tracking sort of the fintech solution that brings government infrastructure
Speaker 4: into the twenty first century.
Speaker 10: Yeah, So, you know, I think there's a lot we
Speaker 10: can do to improve the rails on how money flows
Speaker 10: between careers and receivers, also insurance companies, employers, and the government.
Speaker 10: We've actually been seen a decent amount of startup activity
Speaker 10: in this space, even outside of care whether it's trying
Speaker 10: to make it easier to access government benefits like food
Speaker 10: stamps through companies like Propel, companies like Promise Pay that
Speaker 10: make it easier for folks to make payments to the
Speaker 10: government and interact with government services.
Speaker 1: And I think there's a lot of room you know.
Speaker 10: Look, we're all used to being able to do basically
Speaker 10: anything from our phone, right to do our job, find
Speaker 10: out hotel, do everything else. And I think that there's
Speaker 10: a real push to sort of modernizing the government experiences
Speaker 10: into our daily lives.
Speaker 2: Alana Bakowitz from that collective, we thank you for joining
Speaker 2: us on what is a pretty dramatic childcare cliff.
Speaker 6: This is really much.
Speaker 4: Welcome back to blue though technology. Ed Lovelow here in
Speaker 4: San Francisco and Caroline heard in New.
Speaker 2: York and Ed, let's get to what is a geopolitical picture,
Speaker 2: a macro picture that just questions time and time again,
Speaker 2: canon as that can technology stocks outperform, managed to continue
Speaker 2: to gain when we're seeing rates on the higher side,
Speaker 2: when you're seeing you for a little, contensions build between
Speaker 2: the US and China, and ultimately when we start to
Speaker 2: question valuations.
Speaker 6: Today is another day of.
Speaker 2: Losses on the n as that big tech really feeling
Speaker 2: the brunt of some sentiment souring and also economic data
Speaker 2: slowing in Europe, also slowing in China. I shine a
Speaker 2: light on what's happening to the yarn that trades offshore.
Speaker 6: It's actually at a sixteen year low. The US STORER
Speaker 6: has been outperforming because.
Speaker 2: This economy seems to still be managing to weather the
Speaker 2: storms that are being felt elsewhere. I'm looking a what's
Speaker 2: happening in a two year yields actually getting a bed
Speaker 2: after we've sold off.
Speaker 6: It's back below five percent.
Speaker 2: But nevertheless, this focus on the federal reserve and what
Speaker 2: it does to curtail inflation and very resilient jobs market,
Speaker 2: which we've got in the jobs jobless claims data a
Speaker 2: little bit earlier today. Yet more evidence of that going
Speaker 2: to some of the individual names. Because we know the
Speaker 2: story of the day is basically a tech one.
Speaker 6: It is that of Apple.
Speaker 2: It is of course the concern that China will be
Speaker 2: pushing back on allowing its own employees, government employees from
Speaker 2: buying Apple iPhones. And what does that mean in terms
Speaker 2: of a consumer pushback? Apple under pressure off by more
Speaker 2: than three percent. We've seen, of course, watching ondred billion
Speaker 2: dollars in terms of market value falling over the last
Speaker 2: couple of days. Was seeing Qualcom suppliers really.
Speaker 6: Feeling the pain. Actually we go to SPLC.
Speaker 2: It's a supply chain that you can see on the
Speaker 2: Bloomberg Qualcom kind of getting twenty two percent of its
Speaker 2: revenue from Apple, a key supplier, and we're looking at
Speaker 2: T Mobile though I wanted to give a little bit
Speaker 2: of row of green today T Mobile actually giving money back.
Speaker 2: We learned that yesterday dividends they're going to be buying
Speaker 2: back shares, and of course that's always music to an
Speaker 2: investor base. Is here also some bi reports saying that
Speaker 2: look the Apple iPhone fifteen, that's going to help the
Speaker 2: likes of T Mobile.
Speaker 4: H Yeah, I'm not doing much to put green on
Speaker 4: the screen today. Let's get back to that top story
Speaker 4: in the world of technology, China planning to expand a
Speaker 4: bag on the use of iPhones for government backed agencies
Speaker 4: and state companies that according to Bloomberg's sources, this all
Speaker 4: happening in Apple's biggest individual, foreign market and global production based.
Speaker 4: Apple as well as the relevant Chinese agencies, did not
Speaker 4: respond to requests for comment on the Bloomberg story.
Speaker 3: Joining us now Bloomberg.
Speaker 4: Kdie lines out of DC and quickly this is becoming
Speaker 4: a tit for Tat twenty four hours ago, the journal
Speaker 4: report on some government agencies Bloomberg reporting more it follows
Speaker 4: the Gina Ramondo trip to China.
Speaker 11: It does the Commerce Secretary made a trip to Beijing,
Speaker 11: of course, just last weekend, she following Secretary Jennet Yellen,
Speaker 11: the Secretary of State Anthony Blincoln.
Speaker 6: The climate on Boijeon.
Speaker 11: Kerry as well, all an effort to shore up the
Speaker 11: relationship between the largest economy in the world and the
Speaker 11: second largest economy in the world. In Ramondo specifically trying
Speaker 11: to ease the path of US businesses doing China. She
Speaker 11: talked a lot while in China about the uncertainty of
Speaker 11: operating in that market, given headlines like what we they
Speaker 11: are seeing take place with Apple, the idea that a
Speaker 11: ban on iPhone would expand from sensitive departments too, as
Speaker 11: you say, a government backed agencies state on enterprises. It's
Speaker 11: not clear based on our reporting, how many companies or
Speaker 11: agencies could eventually adopt these restrictions, but obviously a massive
Speaker 11: risk to a company like Apple who is so dependent
Speaker 11: on China. A from a supply chain perspective, a lot
Speaker 11: of iPhones in the first place are made in China
Speaker 11: in factories they're employing Chinese people. But also from a
Speaker 11: revenue perspective, this is a market that made up about
Speaker 11: a fit of their revenue in the latest quarter.
Speaker 2: You put that context so perfectly, Katie. But also the
Speaker 2: context is that this is a building concern not only
Speaker 2: from competition. We think of Huawei and its latest phone,
Speaker 2: reveal what that does for Chinese sales for Apple, but
Speaker 2: also what that means for the relationship when we're thinking
Speaker 2: of Huawei and its access to chips that the US
Speaker 2: is trying to prevent them getting. Can you just give
Speaker 2: us any update to what stake Sullivan and the like
Speaker 2: of implementing on that.
Speaker 11: Yeah, this is a very prevalent topic of conversation here
Speaker 11: in Washington now, because, of course, it was just last
Speaker 11: week that Huawei announced its smartphone that it had really
Speaker 11: said was a triumph against US sanctions because it was
Speaker 11: made using Chinese made chips from SMIC. So in theory,
Speaker 11: what China is saying is that they were able to
Speaker 11: get around sanctions, do this in spite of sanctions. What
Speaker 11: we're hearing from authorities here in the US on Capitol Hill,
Speaker 11: for example, though, is that this we have actually been
Speaker 11: done in violation of sanctions. Congressman Michael McCall, who of
Speaker 11: course is a Republican he chairs the House Foreign Affairs Committee,
Speaker 11: was speaking overnight saying that smi C may require an
Speaker 11: investigation because he thinks it's obvious the company violated sanctions
Speaker 11: by supplying components to Huawei, and of course this is
Speaker 11: a company that's on the entity list here in the
Speaker 11: US for national security concerns, and that's been echoed by
Speaker 11: others as well. Mike Gallagher, who chairs the China Select
Speaker 11: Committee in the House, also was saying that the US
Speaker 11: may need to look at a ban or an ending
Speaker 11: of all experts to both experts, rather to both Huawei
Speaker 11: and SMI C. It is this idea of national security
Speaker 11: risk on the part of the U s US being
Speaker 11: paramount and more restrictions potentially being looked at as a
Speaker 11: result of that, so as Ed was saying at the
Speaker 11: very beginning, it is this kind of tit for tat idea.
Speaker 11: The US moves to restrict one thing, China moves to
Speaker 11: restrict another, and it seems like this is just the
Speaker 11: pattern that we are in at this point.
Speaker 4: Cara and Kaylee to appoint that Kaye made a minute ago.
Speaker 4: City Groups put a note out since we've gone on
Speaker 4: air basically saying what Kaylee did that we don't know
Speaker 4: how many companies or government agencies or people in them
Speaker 4: using iPhones, But it's probably the case that they were
Speaker 4: already transitioning away from iPhone anyway, so it might have
Speaker 4: limited impact. I guess that that note, Kaylee speaks to
Speaker 4: the point that relations between the US and China, in
Speaker 4: spite of Ramondo's visit, are still not good, right.
Speaker 3: We're not in a good place right now.
Speaker 11: No, absolutely not. And this is the tricky dance. On
Speaker 11: the one hand, you are trying geopolitically to make sure
Speaker 11: that the relationship is more stable or at least the
Speaker 11: two sides are talking. On the other hand, to protect
Speaker 11: national security interests or economic interests or otherwise. You also
Speaker 11: are seeing very targeted action that works in theory against
Speaker 11: China's interests, things like the executive order on outbound investment
Speaker 11: into certain areas of technology like quantum computing, artificial intelligence, semiconductors.
Speaker 11: It makes it very difficult for countries to interact with China,
Speaker 11: to engage with China, but also clearly for companies themselves
Speaker 11: to figure out how exactly to navigate this market. And
Speaker 11: to the point of the City Group note you were
Speaker 11: just talking about their ed this is the idea that
Speaker 11: it may not just be necessarily about iPhone sales, but
Speaker 11: more broadly about the environment and the uncertainty around.
Speaker 2: It and no wonder Therefore, in videos down you're seeing
Speaker 2: the likes of Tesla down other companies with big exposure
Speaker 2: to China, and I just think of the rm IPO
Speaker 2: that's coming as well. Kaeline's brilliant to break it down
Speaker 2: from a Washington perspectively. Thank you, let's just shift gears.
Speaker 2: But it's probably also home that Washington hasn't Zion because
Speaker 2: Crypto is where we're going next. But it's an update
Speaker 2: on the FTX case. Former executive Ryan Salem is planning
Speaker 2: to plead Gill to criminal charges over the collapse of FTX.
Speaker 2: According to sources, now Sellon was a co chief executive
Speaker 2: of FTX is Bahamas subsidiary before the exchange basically imploded
Speaker 2: last November. Le's for again, someone who's been all across
Speaker 2: it the Mootionnali Basse for more and perhaps given the
Speaker 2: other key executives before, this isn't too much of a surprise.
Speaker 12: One thing that is potentially different here is whether or
Speaker 12: not he will cooperate. That has not been ascertained yet.
Speaker 12: According to this scoop by our own EVA, Benny Morrison,
Speaker 12: who has really been reporting on Ryan Salem's role in
Speaker 12: this for many months now. Remember when the initial issue
Speaker 12: had come to the fore in the Bahamas, it was
Speaker 12: Ryan Salem himself who had really brought the case to
Speaker 12: Bhaman officials very specifically that customer funds may have been
Speaker 12: coll mingled.
Speaker 6: And so to come.
Speaker 12: Back around in this fashion is quite interesting because even
Speaker 12: though he may plead guilty to certain charges criminal charges,
Speaker 12: it's not clear what his level.
Speaker 6: Of cooperation will be.
Speaker 4: Well, the timing is interesting and Beau because Sam Bankman
Speaker 4: freed himself, I think, is scheduled to stand trial one
Speaker 4: month from now. You know, does that contribute to that
Speaker 4: court case?
Speaker 6: It certainly could.
Speaker 12: And remember the other folks at Alameda and FTX who
Speaker 12: have already come forward, they are cooperating, and so we
Speaker 12: know that whether or not he does testify, it definitely
Speaker 12: adds another element to this trial. Remember, I just kind
Speaker 12: of want to talk about their relationship for a moment here,
Speaker 12: because I had a lot of my own reporting around it.
Speaker 12: I had interviewed actually both men right before the collapse
Speaker 12: of FTX. I spoke to Ryan Salem just a week
Speaker 12: or so before. The interesting thing about both Ryan and
Speaker 12: Sam Bankman Fried here is they were not always in
Speaker 12: the same place. Ryan was back and forth between the
Speaker 12: DC suburbs and Bahamas. When I spoke to the people
Speaker 12: around them, I was always told that they kind of
Speaker 12: kept separately. You had Ryan Salem really donating to the
Speaker 12: tune of twenty four million dollars to Republican candidates, when
Speaker 12: Sam Bangman Free was donating to tens of millions to
Speaker 12: Democratic candidates. They seem to have some pivotal differences. So
Speaker 12: Ryan Salem's role in all of this is certainly interesting
Speaker 12: leading up to this trial, though still very early to
Speaker 12: tell exactly what that.
Speaker 2: Would be interesting those political donations, you remind us for
Speaker 2: us withdrawer, they withdrew the campaign finance law issues being
Speaker 2: alleged these particular men Ryn.
Speaker 3: Part of this.
Speaker 12: Issue here also was how the money was used to
Speaker 12: the point you're making, and the campaign dance violations was
Speaker 12: a definite worry here until those violations were withdrawn. But
Speaker 12: remember that they still are a big question mark about
Speaker 12: the role of cryptocurrencies in Washington and why these senators
Speaker 12: had taken the money in.
Speaker 6: The first place.
Speaker 12: What was ultimate motive I'm going back to our initial
Speaker 12: reporting because remember it was not a little bit of money.
Speaker 12: Both of these men were donating almost more than anybody
Speaker 12: else in the most recent cycle. And I'm just going
Speaker 12: back and looking to remember here, Ryan Salem, there were
Speaker 12: some pro crypto, very clearly pro crypto candidates that he
Speaker 12: was giving to make no bones about it. Remember when
Speaker 12: Sam was giving, he mostly said that this was a
Speaker 12: matter of pandemic preparedness and altruism, effective altruism, but not
Speaker 12: a matter as Ryan had said more explicitly about crypto.
Speaker 12: Ryan had also had donated to you very plainly here.
Speaker 6: A lot of.
Speaker 12: Candidates were ties to Donald Trump. They had different rationales
Speaker 12: for why they gave, and so it's kind of hard
Speaker 12: to tell at this point what the motive was.
Speaker 4: Bloomboag Snali B's sick such deep reporting on what has
Speaker 4: been an endless saga. When you'll be back for more,
Speaker 4: Thank you very much. Okay, I'm next coming up on
Speaker 4: Bloomberg Technology.
Speaker 3: Keep on Trucking.
Speaker 4: The founders of the former self driving unit of Ford
Speaker 4: and Volkswagen are back and they're launching a new autonomous
Speaker 4: trucking startup. The co founder and CEO Brian Seleski joins
Speaker 4: us next in an exclusive interview.
Speaker 3: This is Bloomberg Technology.
Speaker 4: The founders of r Go AI, the autonomous vehicle company
Speaker 4: that was shut down last year, are back and they're
Speaker 4: at it again with a new self driving business, this
Speaker 4: time focused on autonomous trucking rather than consumer cars. It's
Speaker 4: called Stack AV, and it's backed by none other than SoftBank.
Speaker 4: One Pittsburgh official told Bloomberg he expects SoftBank's commitment to
Speaker 4: Stack to be more than one billion US dollars. Let's
Speaker 4: bring in Stack AV co founder and CEO Brian Celeski
Speaker 4: for more on his new venture.
Speaker 3: In an exclusive conversation.
Speaker 4: Brian, just start by explaining what you're doing with Stack AV,
Speaker 4: what the technology is, and what the end goal is.
Speaker 1: Yeah, it's great to be here.
Speaker 13: Well, as you said, we're announcing the formation of our
Speaker 13: new self driving startup called stack We're building fully autonomous
Speaker 13: class eight trucks and we're looking to solve really some
Speaker 13: of the biggest issues that the trucking industry faces, whether
Speaker 13: it be driver shortages, retention, issues, over the road, safety,
Speaker 13: and just the inefficiencies that we saw in the supply.
Speaker 1: Chain during the pandemic.
Speaker 13: We really think self driving trucks has a huge opportunity
Speaker 13: here to solve some of those issues.
Speaker 4: Yeah, Brian, you're coming out of stealth, and whether it's
Speaker 4: with more than a billion dollars or not, you've kind
Speaker 4: of moved very quickly to grow. Where will you need
Speaker 4: to spend Like, talk to me about the talent costs,
Speaker 4: the compute costs.
Speaker 3: In your project.
Speaker 13: Well, our priority is to build a great company that
Speaker 13: can really scale and move fast and realize those benefits.
Speaker 13: You know, there's the number of people like it's required
Speaker 13: to build this technology is enormous. The capital needs are
Speaker 13: obviously large, but our priority is to build that fantastic
Speaker 13: team and to really get the technology deployed as quickly
Speaker 13: as we can and get test vehicles up and running.
Speaker 13: We are a new company, but we have been moving
Speaker 13: quickly and just excited about the team that we built.
Speaker 4: Yeah, Brian, you've always looked more holistically at autonomous technology.
Speaker 4: This is a very specific technology and use case. It's
Speaker 4: very similar to what Aurora is doing, and so I
Speaker 4: just wondered why you sense this was the best way
Speaker 4: of commercializing.
Speaker 13: Well, you know, we think that the business model is
Speaker 13: really interesting. The cost of goods have really to ship
Speaker 13: goods has really increased substantially. We know a lot of
Speaker 13: small businesses are feeling the pain times to deliver our
Speaker 13: increasing across the industry, especially in larger markets. So we
Speaker 13: just think that autonomous trucking has the ability to address
Speaker 13: a lot of those inefficiencies. And it just it isn't
Speaker 13: just in the autonomous part of it, the self driving
Speaker 13: aspect of it. It's also in the scheduling and the
Speaker 13: overall logistics, the way the system works. There's just a
Speaker 13: lot of opportunity for improvement. And we think not just
Speaker 13: taking the benefits of AI, but also the benefits of
Speaker 13: generative AI, and a lot of the latest advancements that
Speaker 13: we've seen over the last year we think can really
Speaker 13: be applied to the entire logistics equation.
Speaker 6: So, Brian, does that speed up things?
Speaker 2: Because ultimately the Ford VW backing became impatient.
Speaker 6: I think it was.
Speaker 2: Quoted that one Ford executive said it was easier to
Speaker 2: put a man on the moon than it was to
Speaker 2: get autonomous driving really up and running. Did you just
Speaker 2: need a different mindset of length of time to commit
Speaker 2: capital here?
Speaker 1: Well, I think this requires patient, long term capital. It requires.
Speaker 13: And it certainly requires a big vision in order to
Speaker 13: make this happen. But at the end of the day,
Speaker 13: we want to improve people's lives. We want to we
Speaker 13: want to improve the overall cost structure in that entire
Speaker 13: supply chain. Then the only way we're going to do
Speaker 13: that is by making big changes to how it works right,
Speaker 13: and that means anytime you're working on sort of a
Speaker 13: world scale problem, that means that you have to really
Speaker 13: you have to really work in the details, and you
Speaker 13: have to take a big vision and try to make
Speaker 13: it a reality. That takes capital, it takes time, and
Speaker 13: I think what you're seeing in the field in general
Speaker 13: is that you know, different companies are sort of playing
Speaker 13: to their strengths and how they feel they can be
Speaker 13: most successful and adapt their business. What's unique and exciting
Speaker 13: about this is that soft Bank has a large commitment
Speaker 13: to AI in general. They believe in the power that
Speaker 13: AI has in transforming our everyday lives and making it better.
Speaker 1: And that's where stackav comes out of.
Speaker 13: Is doing that, doing that and applying it to applying
Speaker 13: it to try it.
Speaker 4: Yes, Brian SoftBank said, they're not just backing you with capital,
Speaker 4: but also with AI competence as well. Could you just
Speaker 4: explain that, is that your point of differentiation here your
Speaker 4: access to software and talent.
Speaker 13: Well, we have access to the entire SoftBank group, the
Speaker 13: entire team. They've been wonderful and giving us such a
Speaker 13: huge lift and getting the company started. They see a
Speaker 13: lot in terms of business models and what works and
Speaker 13: what doesn't. We've seen a lot our team in terms
Speaker 13: of what works and doesn't and to be able to
Speaker 13: see around the corners with the.
Speaker 1: How to build the technology.
Speaker 13: And so at the end of the day, putting those
Speaker 13: two brains, if you will, together, we think we have
Speaker 13: a really differentiated story and in a very compelling team
Speaker 13: that can win here.
Speaker 6: And well that's happening.
Speaker 2: Stack av co founder and CEO Ran Celeski brilliant to
Speaker 2: have you.
Speaker 6: We thank you.
Speaker 4: AI startup in View, the company formerly known as Generally Intelligent.
Speaker 4: It has just raised two hundred million dollars Series B
Speaker 4: an evaluation of over one billion dollars. Joining us now
Speaker 4: on set is kenjun Q, CEO of MBU. You also
Speaker 4: secure ten than h one hundreds and that's become like
Speaker 4: the badge of honor for people building a foundation model.
Speaker 4: So what was more important the cash or the compute.
Speaker 14: Both honestly, so cash is much easier to come by
Speaker 14: than compute, and we managed to get our compute quite
Speaker 14: early because we saw this coming and so we're very
Speaker 14: excited to have both.
Speaker 3: Was that the structure of the deal?
Speaker 4: I have to ask the videos one of your back
Speaker 4: is a Nvidia's book back to many Did they just
Speaker 4: participate in the round or was their payment in chips?
Speaker 3: If you see what I.
Speaker 4: Mean, No, it's all cash, well cash and is a
Speaker 4: quick follow on what are you building? I mean, we
Speaker 4: know a few companies building one hundred billion parameter to
Speaker 4: foundation models, that's right.
Speaker 14: So we're really focused on AI agents, which are systems
Speaker 14: that can take action in the world and help us
Speaker 14: as people accomplish much larger goals. So today's AI systems
Speaker 14: they generate an output, but they're not going to go
Speaker 14: off and do a bunch of research if you're writing
Speaker 14: an essay and come back and restructure the argument and
Speaker 14: think through and reason through what's happened. And so we
Speaker 14: build systems optimized for reasoning so that we can end
Speaker 14: up with AI that can actually help us do you
Speaker 14: know what we say? What we want and not just
Speaker 14: what we say.
Speaker 2: What's amazing, Candrin is two hundred million for a bold
Speaker 2: focus on AI agents that people actually haven't been able.
Speaker 6: To play with or see your touch. Maybe one of
Speaker 6: your key backers has.
Speaker 2: But I'm interested as to how far down the road
Speaker 2: you are in terms of development from real perspective.
Speaker 14: Yeah, it's a great question. I think it's always hard
Speaker 14: to tell. We are quite excited over the next couple
Speaker 14: of years to hopefully have things that people can use.
Speaker 14: It might be sooner, it might be later.
Speaker 6: I think, you know, just.
Speaker 14: Like how Apple for Apple iPhone was under development for
Speaker 14: ten years before it came out, It's not going to
Speaker 14: be ten years. But there is a right time for
Speaker 14: technology to be taken to market, and there is a
Speaker 14: such thing as bringing it to market too early. So
Speaker 14: we really believe in serious use, seriously using these systems
Speaker 14: ourselves internally every single day and having some beta users
Speaker 14: that are using them every day. And that's what teaches us, Okay,
Speaker 14: this is good enough, this is not good enough. We
Speaker 14: need to improve the reasoning models in these ways.
Speaker 2: It's really interesting the previous founders that was just talking
Speaker 2: about the need for patient capital and looking at your
Speaker 2: cap table, it kind of looks similar.
Speaker 6: I mean, it's not a normal.
Speaker 2: Cap table in terms of VC money because in fact
Speaker 2: it's the Astera Institute and actually kind of a not
Speaker 2: for profit.
Speaker 6: You've got in video, you got cruise.
Speaker 2: Are they behind you in the idea that this is
Speaker 2: going to take some time?
Speaker 14: They are, and that's actually what we were looking for
Speaker 14: in this round. I think something that's important to remember
Speaker 14: is that open Ai didn't ship chat GBT until five
Speaker 14: six years after they were founded, and it's whenever we're
Speaker 14: building a really deep technology technological breakthrough like this that
Speaker 14: run time is necessary.
Speaker 4: Kenja, can you tell me a little bit about your
Speaker 4: business and company. Are you highly concentrated in San Francisco?
Speaker 4: Are all of your talented engineers here and if so,
Speaker 4: why San Francisco.
Speaker 14: Yeah, that's a great question. We are primarily based in
Speaker 14: San Francisco in person in the office every day, and
Speaker 14: we do have some remote team members, remote engineers. We
Speaker 14: structure it as a kind of hub and spoke model
Speaker 14: where the collaborative hub is optimized for collaboration in San
Speaker 14: Francisco and remote team members are optimized for autonomy because
Speaker 14: that's often what we want remotely. San Francisco is just
Speaker 14: a great technology hub. You know. We host lots of
Speaker 14: events this Thursday Nights in AI series and meet a
Speaker 14: lot of people here, have a lot of potential customers here,
Speaker 14: so it's a good place to be.
Speaker 6: A decade in the making.
Speaker 2: You are building what the archive then that group house
Speaker 2: of like minded thinkers and builders and still focused on
Speaker 2: the SF beat. Really overall, we thank you in bu Ceo,
Speaker 2: Candre and Q joining us.
Speaker 6: What amazing show. But that does it for this edition
Speaker 6: of Bloomberg Technology yet.
Speaker 3: Yeah, don't forget.
Speaker 4: You can recap on our podcast wherever you get yours, Apple, Spotify, iHeart,
Speaker 4: and on Bloomberg from here in SF and New York.
Speaker 3: This is Bloomberg Technology