WEBVTT - President Trump Announces Apple and Intel Chip Collaboration 0:00:05.519 --> 0:00:09.080 Bloomberg Tech is live from the heart of Silicon Valley 0:00:09.600 --> 0:00:11.920 with Ed Lulow in San Francisco. 0:00:14.520 --> 0:00:16.040 This is Bloomberg Tech coming up. 0:00:16.079 --> 0:00:20.480 President Trump posts about a chip agreement between Apple and Intel, 0:00:20.560 --> 0:00:22.960 sending Intel Soaring will have the details. 0:00:23.079 --> 0:00:23.920 Plus we speak with. 0:00:23.840 --> 0:00:26.639 The CEO of Anderil after the company wins a production 0:00:26.800 --> 0:00:30.760 contract for autonomous fighters with the US Air Force and 0:00:30.880 --> 0:00:34.120 SpaceX shares full for a second straight day after a 0:00:34.200 --> 0:00:37.640 forty nine percent jump, still in high orbit as the 0:00:37.680 --> 0:00:43.680 company concludes its first full week of trading. Thursday, June eighteenth, 0:00:43.760 --> 0:00:47.360 Bloomberg Tech Intel is at a record high after the 0:00:47.360 --> 0:00:51.680 President of the United States posted a very long truth 0:00:51.760 --> 0:00:57.160 social which included a reference to an agreement between Intel 0:00:57.240 --> 0:01:03.520 and Apple for chip design and chip manufacturing. Simple story. 0:01:03.640 --> 0:01:06.520 There is some background to it that Bloomberg News has 0:01:06.560 --> 0:01:11.200 reported in the past. It also talked about Nvidia, terror 0:01:11.200 --> 0:01:13.240 fab and a lot more. But it's Intel where we 0:01:13.319 --> 0:01:16.000 focus and Bloomberg's and King is with us along with 0:01:16.000 --> 0:01:19.480 Bloomberg Intelligence Senior analyst man Deep Singh, and we're going 0:01:19.520 --> 0:01:24.400 to start with ian an agreement. What do we know? 0:01:24.959 --> 0:01:26.000 What do we do not know? 0:01:26.400 --> 0:01:31.320 Well, we've previously reported that Apple was exploring using Intel 0:01:31.440 --> 0:01:34.360 as a second source for manufacturing some of its chips. 0:01:35.160 --> 0:01:37.399 What the president is saying, and you know, we have 0:01:37.480 --> 0:01:41.440 to be careful because not everything he says immediately comes true. 0:01:42.480 --> 0:01:45.800 That this has actually reached a firmer stage. And if 0:01:45.840 --> 0:01:48.240 that's the case, and that's clearly a boost for Intel's 0:01:48.280 --> 0:01:50.800 efforts to become a manufacturer for other companies. 0:01:50.920 --> 0:01:54.840 Ian really quickly, you reported with Mark and Ryan in 0:01:54.920 --> 0:01:58.600 May that Apple was looking at its options. Explain the 0:01:58.600 --> 0:01:59.840 basics of that report. 0:02:00.040 --> 0:02:00.880 That's right right now. 0:02:00.920 --> 0:02:05.840 There are Apple is completely dependent upon TSMC right for manufacturing, 0:02:06.200 --> 0:02:09.720 so obviously that's a choke point, something that they wish wish, 0:02:09.840 --> 0:02:11.440 you know, they would like to have a solution to 0:02:11.520 --> 0:02:14.160 have options. So you would look at Samsung and you 0:02:14.200 --> 0:02:19.320 would look at Intel as potential backups or potential supplemental manufacturers. 0:02:19.440 --> 0:02:21.360 And that's what we understand is going on. Apple has 0:02:21.360 --> 0:02:23.080 always been smart about the supply chain. 0:02:23.240 --> 0:02:25.760 That's the reporting in the details, let's get the analysis. 0:02:25.800 --> 0:02:29.320 Mandy's singing, who leads our technology research team a Bloomberg 0:02:29.360 --> 0:02:32.919 Intelligence What are you making of this? Right? Ean outlined 0:02:32.960 --> 0:02:35.400 that actually in May there was a sense that Apple 0:02:35.480 --> 0:02:37.680 was looking at options but you have the President of 0:02:37.720 --> 0:02:41.480 the United States saying there's an agreement. How much can 0:02:41.520 --> 0:02:43.960 you model for that the president's statement. 0:02:45.240 --> 0:02:48.399 Look, I mean, there's no doubt that Intel is now 0:02:48.560 --> 0:02:53.399 well positioned to be a double digit revenue growth company 0:02:53.600 --> 0:02:57.280 given what we have seen so far with the CPU 0:02:57.400 --> 0:03:01.680 demand that has taken off with Agent and now you know, 0:03:01.760 --> 0:03:04.600 the fab side of things would get a real kicker 0:03:04.840 --> 0:03:09.120 for if Apple was to use it for manufacturing. And 0:03:09.680 --> 0:03:13.520 you know, when you have one design WRIN, it follows 0:03:13.560 --> 0:03:18.320 with you know, multiple companies that want to use your manufacturing, 0:03:18.520 --> 0:03:22.359 and that's where it could be very exciting if actually 0:03:22.440 --> 0:03:24.720 Apple ends up ramping up in volume. 0:03:24.760 --> 0:03:29.079 Here I note that Apple shares are a percentage point. 0:03:29.160 --> 0:03:29.880 Tim Kok this. 0:03:29.880 --> 0:03:34.480 Year, the outgoing CEO soon to be executive chairman of Apple, 0:03:34.520 --> 0:03:36.400 game in interview to Wall Street Journal where he said 0:03:36.400 --> 0:03:38.200 they're going to have to raise prices because of the 0:03:38.200 --> 0:03:42.200 commodity environment. But what do you interpret here, mandeep on 0:03:42.200 --> 0:03:45.600 the Apple side of this story with Intel their ability 0:03:45.680 --> 0:03:48.320 to kind of reindustrialize here in America. 0:03:48.680 --> 0:03:52.160 On the chip side, well, look right now, when I 0:03:52.200 --> 0:03:56.920 look at TSMC's capacity and video has already prepaid. You 0:03:56.960 --> 0:04:00.760 know what one hundred and twenty billion dollars for TSMC capacity. 0:04:01.000 --> 0:04:04.520 So even an Apple which used to get proferential treatment 0:04:04.600 --> 0:04:08.480 at TSMC, right now, I think they're feeling that Nvidio 0:04:08.640 --> 0:04:12.800 probably has a bigger lock in in terms of PSMC 0:04:12.920 --> 0:04:17.479 manufacturing capacity. And from an Apple standpoint, I think diversification 0:04:17.800 --> 0:04:21.240 and really appeasing the president here makes a ton of sense. 0:04:22.120 --> 0:04:27.360 So from that perspective, I think psmc's monopoly is a 0:04:27.400 --> 0:04:30.320 problem for a lot of you know, they're big customers, 0:04:30.360 --> 0:04:33.480 including Apple, and it makes sense that they're looking to 0:04:33.520 --> 0:04:34.479 diversify here. 0:04:35.520 --> 0:04:39.040 In finally, to you, there's kind of two parts that 0:04:39.080 --> 0:04:43.360 Intel's foundry story. There's the process, the technology process, and 0:04:43.400 --> 0:04:46.760 then the sort of solidity of whether they have any customers. 0:04:47.080 --> 0:04:49.279 Where are they at with both of those things. 0:04:49.080 --> 0:04:51.559 Right What they've said is that their process is getting 0:04:51.600 --> 0:04:55.080 better and better, getting closer to the industry standard, which 0:04:55.080 --> 0:04:58.679 would be TSMC yield being very important. They're the amount 0:04:58.720 --> 0:05:01.560 of good chips you make for the run. In terms 0:05:01.600 --> 0:05:03.599 of customers, they've said, look, we're not going to talk 0:05:03.640 --> 0:05:06.280 about it. We're hopeful we've got a couple of big 0:05:06.480 --> 0:05:08.840 irons in the fire that might come to fruition in 0:05:08.880 --> 0:05:11.360 the second half of this year. But we're not going to. 0:05:11.279 --> 0:05:12.800 Talk about it. We're going to leave it up to them. 0:05:12.920 --> 0:05:14.400 We're not going to get ahead of ourselves and. 0:05:14.400 --> 0:05:14.719 So on that. 0:05:14.760 --> 0:05:17.080 Now, I point out that neither Intel nor Apple have 0:05:17.279 --> 0:05:19.960 commented so far on the president's post Bloomberg Zy and 0:05:20.040 --> 0:05:22.560 King and Mandeep seing of a Bloomberg intelligence Thank you 0:05:22.600 --> 0:05:25.320 both very much. Let's brought in the conversation beyond chips. 0:05:25.320 --> 0:05:28.800 Then that's that one hundred pushing higher two percent in 0:05:28.839 --> 0:05:32.080 the session. We're kind of trading near those records of 0:05:32.160 --> 0:05:32.839 recent weeks. 0:05:32.839 --> 0:05:34.719 I would say there's a lot going on in the market. 0:05:35.040 --> 0:05:37.440 Semiconductors are a big part of the market right now, 0:05:37.600 --> 0:05:39.960 but the Intel story is a catalyst and driver of that. 0:05:40.240 --> 0:05:43.080 There is the SpaceX part of this market, and then 0:05:43.120 --> 0:05:45.599 there is the role of the retail investors. The AI 0:05:45.760 --> 0:05:50.680 trade has been expanding. Investors are looking across software infrastructure, 0:05:50.960 --> 0:05:54.120 the next generation of tech leaders for the market's next 0:05:54.120 --> 0:05:54.679 growth engine. 0:05:54.680 --> 0:05:57.359 Could those be IPOs? So much to discuss. 0:05:57.360 --> 0:06:01.159 Ankor Crawford portfolio manager ourgas with us. You know, I 0:06:01.200 --> 0:06:04.160 always say this one one session of market does not 0:06:04.320 --> 0:06:08.040 make really interesting though. How we're ending this short training 0:06:08.080 --> 0:06:11.720 week in the US, with so many factors for you 0:06:11.839 --> 0:06:14.560 right now, what is the main driver of psychology for 0:06:14.600 --> 0:06:15.680 the technology sector? 0:06:16.320 --> 0:06:19.599 Gosh, you know, I think that what I find is 0:06:19.640 --> 0:06:23.440 people are finally understanding how significant this AI trade is 0:06:23.480 --> 0:06:25.400 going to be, and that's what's getting reflected in some 0:06:25.440 --> 0:06:26.560 of the moves that you're seeing. 0:06:26.400 --> 0:06:27.839 In the market. 0:06:28.960 --> 0:06:32.240 You know, the impact of the shortages of the supply 0:06:32.360 --> 0:06:35.360 chain are also becoming very obvious, whether you see what's 0:06:35.360 --> 0:06:38.960 happening in memory or the optical supply chain, and so, 0:06:40.400 --> 0:06:43.680 you know, I feel like the market is fully understanding 0:06:44.040 --> 0:06:49.719 the kind of supply chain implications and the demand implications. 0:06:49.760 --> 0:06:53.720 You're going to have a CEO on later who recently 0:06:53.760 --> 0:06:57.359 commented that token pricing for him went up to x 0:06:57.920 --> 0:07:01.560 in over the last we'd got to x in in 0:07:01.600 --> 0:07:04.640 the next six months. Well, that is an indication of 0:07:04.720 --> 0:07:10.760 supply demand balance. And you know, clearly we are significantly 0:07:10.880 --> 0:07:14.320 we need significantly more tokens and we have significantly more 0:07:14.320 --> 0:07:16.120 demand for the intelligence then we have supply. 0:07:17.440 --> 0:07:20.640 It's so interesting where like the kind of raw data 0:07:20.680 --> 0:07:23.239 sets or and thotal data sets that the markets tracking 0:07:23.240 --> 0:07:25.920 are so different now to what they were. I don't 0:07:25.920 --> 0:07:28.120 know you tell me, like as recently as last year 0:07:28.160 --> 0:07:29.800 or two years ago, and I. 0:07:29.680 --> 0:07:30.960 Want to talk about SpaceX. 0:07:31.040 --> 0:07:33.960 You know, how big a factor has that IPO been 0:07:34.040 --> 0:07:36.560 for you and your team and how have you sort 0:07:36.560 --> 0:07:37.720 of responded to it. 0:07:38.480 --> 0:07:41.280 Well, it's not necessarily a factor, but it's clearly an 0:07:41.280 --> 0:07:46.160 incredibly significant company that has a very open ended story 0:07:46.960 --> 0:07:51.480 alongside with it. We've never really seen a business like 0:07:51.560 --> 0:07:55.240 SpaceX before in our careers, would I would argue there, 0:07:56.080 --> 0:08:00.400 you know, humanity hasn't seen a business like SpaceX. So 0:08:01.160 --> 0:08:04.200 you know, we have found a significant place in our 0:08:04.240 --> 0:08:08.640 port on our portfolios for SpaceX, in part because we 0:08:08.800 --> 0:08:12.240 do see incredible appreciation as we look out three and 0:08:12.360 --> 0:08:15.400 five years now. The day to day trading on it 0:08:15.480 --> 0:08:17.600 is you know, who knows. There's a lot of things 0:08:17.600 --> 0:08:20.200 that affect that day to day trading, but we are 0:08:20.320 --> 0:08:22.160 very bullish on its prospects. 0:08:23.120 --> 0:08:25.760 The retail investors tied a big role head we spites 0:08:25.840 --> 0:08:26.400 cheld SWEBC. 0:08:27.000 --> 0:08:28.040 Let's get his take. 0:08:28.880 --> 0:08:31.120 As a breakthrough event, I think for the retail investor 0:08:31.120 --> 0:08:34.280 who is allocated roughly twenty percent of the deal, which 0:08:34.320 --> 0:08:37.400 is triple a typical IPO. So it's great to see 0:08:37.440 --> 0:08:40.760 retail having a meaningful seat at the table. It created 0:08:40.760 --> 0:08:44.960 a tremendous engagement with our clients and broadly with retail clients. 0:08:45.400 --> 0:08:48.360 Demand was off the charts, and that demand continues. We've 0:08:48.400 --> 0:08:51.520 seen in the three days following the IPO nearly seven 0:08:51.559 --> 0:08:54.479 billion dollars of additional orders come from our clients. 0:08:55.600 --> 0:08:57.040 Child schwebc West. 0:08:57.679 --> 0:08:59.960 Is it the retail traded driving trading right now? 0:09:01.400 --> 0:09:03.520 I'm not really sure what's driving it. I think that 0:09:03.559 --> 0:09:06.200 there's a lot of different aspects that. 0:09:06.320 --> 0:09:09.120 Appreciate the honesty. I don't think anyone knows anger was 0:09:09.200 --> 0:09:09.640 driving it. 0:09:10.440 --> 0:09:13.920 Oh, we shouldn't make it up then, and so I 0:09:13.960 --> 0:09:16.520 don't know. All I can say is that sometimes the 0:09:16.559 --> 0:09:19.720 market kind of thinks about the next day or the 0:09:19.760 --> 0:09:22.880 next week, and for something like SpaceX, I think what 0:09:22.920 --> 0:09:24.760 you have to do is look at the long arc 0:09:24.840 --> 0:09:28.000 of time to understand what they are doing and the 0:09:28.040 --> 0:09:32.400 significant mote that they have created with you know, Starship, 0:09:32.440 --> 0:09:35.160 and the reusability of Starship when that comes to fruition, 0:09:35.760 --> 0:09:39.760 and the different business models that will get unleashed. And 0:09:40.200 --> 0:09:44.000 it is incredibly exciting to see this company now be 0:09:44.080 --> 0:09:49.840 accessible to not only retail but also institutional investors like us, 0:09:50.920 --> 0:09:51.840 and how. 0:09:51.679 --> 0:09:53.280 Do you assess the role the on the rights has 0:09:53.320 --> 0:09:56.160 played in it in getting the story of the perspectives 0:09:56.200 --> 0:09:59.920 across to the valuation and economics of this company. 0:10:00.360 --> 0:10:03.520 I think they did a fantastic job. I don't think 0:10:03.559 --> 0:10:07.679 it could have gone any better. And you look at 0:10:07.760 --> 0:10:10.640 just how you know they made the management available. There 0:10:10.640 --> 0:10:17.040 were several different you know, kind of knowledge knowledge of 0:10:17.720 --> 0:10:20.720 zooms and that that investors could could get on and 0:10:20.760 --> 0:10:24.560 to understand the story more completely. That they priced it 0:10:24.600 --> 0:10:28.199 correctly so that you know they were leaving some economics 0:10:28.200 --> 0:10:31.000 on the table for what its true value will be. 0:10:31.520 --> 0:10:33.960 So I actually think they did the most beautiful job 0:10:35.679 --> 0:10:39.400 on this IPO, and it was a tricky one because 0:10:39.559 --> 0:10:43.640 of the valuation kind of the perception. There was a 0:10:43.840 --> 0:10:48.360 very divided, I think opinion on SpaceX. There's some that 0:10:48.480 --> 0:10:51.880 love it, some that hate it. Retail was a bit skittish, 0:10:52.040 --> 0:10:55.080 it felt like to me, at least through the conversations 0:10:55.080 --> 0:10:57.720 that I had. But so I think they actually, Donder 0:10:57.720 --> 0:11:00.560 writers did a beautiful job on this. I hope they 0:11:00.640 --> 0:11:04.760 repeat it with the upcoming IPOs of opening Anthropic. 0:11:05.480 --> 0:11:07.319 Really appreciate it and we're going to have that conversation 0:11:07.320 --> 0:11:09.600 about anthropic and open AI Later in the program, Anka 0:11:09.640 --> 0:11:12.400 Crawford of ALGIA back on Bloomberg Tech, Thank you very much. 0:11:12.720 --> 0:11:16.320 Big news crossing the Bloomberg terminal. Amazon is in talks 0:11:16.360 --> 0:11:19.320 to sell its custom made AI chips for use in 0:11:19.440 --> 0:11:24.040 other companies data centers, trying to cut into invidious dominance. 0:11:24.080 --> 0:11:26.920 This is based on an interview in Paris with Amazon's 0:11:26.960 --> 0:11:30.120 AI chief, who said the company has begun discussions with 0:11:30.160 --> 0:11:33.760 potential customers but declined to name them. We're talking about 0:11:33.800 --> 0:11:37.240 Peter DeSantis here. He said he views AI infrastructure as 0:11:37.320 --> 0:11:40.520 rapidly evolving. In the stock hitting session highs on that 0:11:40.559 --> 0:11:41.800 Bloomberg report. 0:11:42.200 --> 0:11:42.679 Coming up. 0:11:43.440 --> 0:11:46.880 Andreil just won a production contract for autonomous fighters with 0:11:46.960 --> 0:11:50.040 the US Air Force as the Pentagon pushes for a 0:11:50.080 --> 0:11:53.480 fleet of up to one thousand autonomous combat jets. We're 0:11:53.480 --> 0:11:55.600 going to be speaking with Andreil's CEO, Brian Ship. 0:11:55.920 --> 0:11:57.920 That's next. This is Boomberg Tech. 0:12:06.840 --> 0:12:10.520 Andreil is having a major week. The defense tech startup 0:12:10.640 --> 0:12:13.680 just on a production contract for autonomous fighters with US 0:12:13.760 --> 0:12:16.319 Air Force, secured a key role in the race to 0:12:16.360 --> 0:12:21.160 provide software for those aircraft and is moving towards scale manufacturing. 0:12:21.880 --> 0:12:24.040 Is the Pentagon pushes for a fleet of up to 0:12:24.080 --> 0:12:27.400 one thousand autonomous combat jets. All of that comes as 0:12:27.440 --> 0:12:31.400 defense stocks and military technology remain in focus amid the 0:12:31.400 --> 0:12:34.400 fallout from the US around conflict and what is a 0:12:34.480 --> 0:12:39.840 fragile new diplomatic agreement joining US now live on Bloomberg 0:12:39.880 --> 0:12:43.240 Tech and Real CEO Brian Schimp. You know, I think 0:12:43.720 --> 0:12:46.160 Andreil's in this place, and it's in its evolution of 0:12:46.240 --> 0:12:49.920 life cycle where you're trying to manage winning new contracts 0:12:50.559 --> 0:12:53.880 and put out new technology and ramp what's already out there. 0:12:54.000 --> 0:12:56.480 Just talk about those that trio of news you put 0:12:56.480 --> 0:12:58.199 out and how you pulled it off. 0:13:00.080 --> 0:13:03.840 So you know, we were extremely excited to be awarded 0:13:03.840 --> 0:13:07.280 this production contract for the Air Force Loyal wing Man 0:13:07.320 --> 0:13:07.880 fighter jet. 0:13:08.480 --> 0:13:09.520 And you know this. 0:13:09.559 --> 0:13:12.319 Is really about taking it from prototype technology which we've 0:13:12.320 --> 0:13:16.280 been validating, we've been flying multiple times a day into 0:13:16.360 --> 0:13:18.959 now an operational capability. So this is both the hardware 0:13:19.000 --> 0:13:21.960 side where we've already started to produce these out of 0:13:22.000 --> 0:13:26.200 our facility in Ohio, our Arsenal one facility, and we 0:13:26.280 --> 0:13:30.840 are now confirmed to move this into a production aircraft, right, 0:13:30.920 --> 0:13:32.920 so really start to ramp this next year. So it's 0:13:32.920 --> 0:13:36.880 super exciting, but that challenge is real, right, and we 0:13:36.920 --> 0:13:40.320 know the defense industry has had struggles ramping production to 0:13:40.360 --> 0:13:42.720 the demand we're seeing around the world. But this is 0:13:42.760 --> 0:13:46.360 something we've systematically invested in and everything we're showing is 0:13:46.360 --> 0:13:48.880 that we're hitting every ramp that we've promised to hit. 0:13:50.160 --> 0:13:54.560 There's like the established systems fury and there is the 0:13:54.600 --> 0:13:59.520 next phase of product and contract. How difficult a decision 0:13:59.559 --> 0:14:01.880 is it to a US sign resource to know where 0:14:01.920 --> 0:14:04.840 to put teams and capital right now? 0:14:06.520 --> 0:14:09.240 You know, we're we're seeing demand through the roof across 0:14:09.280 --> 0:14:12.480 the board, right, and this is everything from weapons programs, 0:14:12.559 --> 0:14:17.040 aircraft programs, you name it. We're seeing just a massively 0:14:17.080 --> 0:14:20.960 increased demand across the board. But we've been able to 0:14:21.000 --> 0:14:25.000 scale incredibly well. Right, We've doubled headcount every year. You know, 0:14:25.040 --> 0:14:28.720 we are continuing to be able to resource these successfully, right, 0:14:28.920 --> 0:14:31.600 and I think we're just an incredibly attractive place to work. 0:14:31.920 --> 0:14:33.840 So for us, the challenge isn't really you know, where 0:14:33.840 --> 0:14:36.520 do we put resources, it's just you know, running through 0:14:36.520 --> 0:14:38.520 it as fast as we can, which we've demonstrated the 0:14:38.520 --> 0:14:40.840 ability to do year over year for you know, the 0:14:40.840 --> 0:14:44.040 past near decade now, so that part we're not as 0:14:44.040 --> 0:14:46.560 concerned with. But you know, I think a huge credit 0:14:46.600 --> 0:14:48.680 to the Air Force on this. You know, they have 0:14:48.920 --> 0:14:51.480 decided to move out and I think the fastest fighter 0:14:51.520 --> 0:14:54.000 jet programs in the nineteen fifties, like this is just 0:14:54.000 --> 0:14:57.360 an immensely fast pace and I think it shows that 0:14:57.360 --> 0:14:59.640 the government can move when it wants to and then 0:14:59.800 --> 0:15:03.280 is can respond to that pace. And it's just an 0:15:03.360 --> 0:15:06.840 incredibly exciting time to be able to deliver these capabilities. 0:15:08.320 --> 0:15:10.720 How to winsle this translate to the to the revenue 0:15:10.760 --> 0:15:13.480 run rate? You know that that big announcements, big deals, 0:15:13.840 --> 0:15:17.640 but for the financials of this company, it's immediate or 0:15:17.680 --> 0:15:19.280 it's a distant opportunity. 0:15:20.440 --> 0:15:23.640 These types of programs give you know, just this amazing 0:15:23.720 --> 0:15:26.880 base of growth for the next you know, five years, right, 0:15:26.920 --> 0:15:30.040 And so this is about how do we lock in 0:15:30.240 --> 0:15:32.920 that growth and success we've seen to date into something 0:15:32.920 --> 0:15:36.240 that's going to be producing and delivering for the next decade. 0:15:36.720 --> 0:15:38.960 And that's something. 0:15:38.680 --> 0:15:40.440 That I think really you know, when we look at 0:15:40.440 --> 0:15:43.240 the financials for the out years, when we stack in 0:15:43.520 --> 0:15:46.240 all the types of big programs that we're working on now, 0:15:46.720 --> 0:15:50.840 it more or less gives US an extremely solid base 0:15:51.000 --> 0:15:53.040 that we're going to continue to grow on and compound 0:15:53.080 --> 0:15:56.440 on in the future. You know, Brian, I appreciate this 0:15:56.520 --> 0:16:00.600 is about autonomous fighters. Every time you come on the program, 0:16:01.000 --> 0:16:02.960 I get a flood of request to ask you about 0:16:02.960 --> 0:16:05.320 subterranean and actually I get. 0:16:05.160 --> 0:16:07.440 The sense that you don't. It's not even that exciting 0:16:07.480 --> 0:16:10.600 to you, guys. So what are the next domains, the 0:16:10.640 --> 0:16:13.840 next big bets that you probably can't talk as much about, 0:16:14.000 --> 0:16:15.760 but everyone wants me to ask you about. 0:16:16.840 --> 0:16:18.960 Yeah, we're doing, you know, an immense amount of work 0:16:19.000 --> 0:16:22.400 in space. You know, there's a huge number of areas 0:16:22.440 --> 0:16:26.080 where you know, this is becoming the next generation warfighting domain. 0:16:26.240 --> 0:16:28.160 I think the Space Force is talking a lot more 0:16:28.160 --> 0:16:31.880 about the adversarial activities that Russia and China are doing regularly. 0:16:32.360 --> 0:16:35.600 You know, they are constantly maneuvering around space, threatening the 0:16:35.720 --> 0:16:38.240 US's and Allied satellites. And I think there was an 0:16:38.240 --> 0:16:42.240 open source report of Russia maneuvering against the satellite that's 0:16:42.280 --> 0:16:46.280 a commercial SATELLITEES used to provide intelligence to the Ukrainians. 0:16:46.680 --> 0:16:48.760 So this is an area that's you know, an active 0:16:48.760 --> 0:16:51.480 growth area that is incredibly important for the US to 0:16:51.480 --> 0:16:55.400 have leadership in and deter the adversarial activities that you know, 0:16:55.440 --> 0:16:58.960 our adversaries are doing every day. The other area we're 0:16:59.000 --> 0:17:01.560 just seeing an immense amount of growth in is on 0:17:01.600 --> 0:17:02.520 the weapon side. 0:17:02.680 --> 0:17:04.960 You know, you can read all the reports. 0:17:05.520 --> 0:17:07.960 Everyone is well aware now of what's been sort of 0:17:07.960 --> 0:17:10.080 a poorly kept secret for a long time, which is 0:17:10.520 --> 0:17:13.280 the US has amazing weapons, right like that, that's been 0:17:13.320 --> 0:17:16.600 obviously true. But the inability to produce these at scale 0:17:16.600 --> 0:17:19.480 to supply our allies, the huge delays that exist in 0:17:19.560 --> 0:17:22.560 delivering these is a major strategic issue for the US 0:17:22.560 --> 0:17:25.600 and our allies. And so that is translated, you know, 0:17:25.640 --> 0:17:28.440 out of the conflict in Iran into you know, an 0:17:28.440 --> 0:17:31.600 immense amount of demand to bring build up next generation 0:17:32.760 --> 0:17:35.000 weapons capabilities that can be produced at scale. 0:17:35.800 --> 0:17:38.119 So looking at the Irong conflict, but you know, what 0:17:38.200 --> 0:17:41.080 is the lesson that you think is learned here for 0:17:41.119 --> 0:17:46.399 the Pentagon on these types of technologies and war preparedness. 0:17:47.520 --> 0:17:49.480 Yeah, so I think, you know, there's a lot of 0:17:49.520 --> 0:17:52.000 different lessons you can take away, but one of the 0:17:52.000 --> 0:17:54.439 biggest ones was really you know, when you look at 0:17:54.440 --> 0:17:57.119 the number of strikes, the number of ammunitions consumed in 0:17:57.160 --> 0:18:00.000 the first thirty days of the conflict, it was something 0:18:00.240 --> 0:18:03.560 around ten times the amount we consumed in the entirety 0:18:03.600 --> 0:18:06.159 of the Gulf War. Right, and we're shooting, you know, 0:18:06.200 --> 0:18:10.439 nearly a decade of tomahawk production in a week. Like 0:18:10.480 --> 0:18:14.560 these are really serious quantities of munitions consumed in these 0:18:14.560 --> 0:18:17.080 modern conflicts, and it parallels what you know has been 0:18:17.119 --> 0:18:19.080 seen in every conflict that's played out in the last 0:18:19.119 --> 0:18:21.800 several years. You know, particularly as you look at Ukraine, 0:18:21.840 --> 0:18:24.040 where the amount of munitions consumed is staggering. 0:18:24.840 --> 0:18:27.000 So I think this question of how do. 0:18:26.960 --> 0:18:31.439 You actually get the inventory the stockpiles and have the 0:18:31.440 --> 0:18:35.240 producibility that you need, that becomes one of the critical questions. 0:18:35.320 --> 0:18:38.040 And you know, the US again its amazing weapons, but 0:18:38.480 --> 0:18:41.840 for the vast majority of scenarios you can you can 0:18:41.880 --> 0:18:44.320 deal with things that are sort of lower price and 0:18:44.400 --> 0:18:47.119 more fit for purpose and the types of you know, 0:18:47.320 --> 0:18:50.000 uses you're realistically going to have and what you need 0:18:50.040 --> 0:18:53.240 to convey to your adversaries you have the resiliency to do. 0:18:53.800 --> 0:18:56.160 And so that that is probably the biggest shift I've 0:18:56.200 --> 0:18:59.560 seen out of this conflict, which is really looking at 0:18:59.600 --> 0:19:04.199 and excite tolerating how to get to more producible capabilities quickly. 0:19:04.680 --> 0:19:07.520 And you know we've got you know, maybe a half 0:19:07.600 --> 0:19:10.960 dozen or more different programs that have initiated out of. 0:19:10.920 --> 0:19:15.840 That, Brian, we just have thirty seconds. You've said Arsenal 0:19:15.840 --> 0:19:19.240 two could be built outside of the United States. Big 0:19:19.280 --> 0:19:23.240 market for you is Australia. Taiwan is a big factor 0:19:23.359 --> 0:19:27.880 in Anderal's guiding mission. Are those realistic locations. 0:19:28.560 --> 0:19:30.600 Yeah, I mean we we have. 0:19:31.760 --> 0:19:34.280 I think the reality in the world is that our 0:19:34.600 --> 0:19:36.920 allies are going to look to have more control over 0:19:36.920 --> 0:19:39.160 the production and supply of weapons. I think that's correct, 0:19:39.200 --> 0:19:42.720 and I think production capacity for the Allied nations is 0:19:42.760 --> 0:19:45.200 a contribution in and of itself, and so I think 0:19:45.200 --> 0:19:48.400 for the administration they want the Allies to be prepared 0:19:48.440 --> 0:19:51.119 to contribute. So the idea that they are also producing 0:19:51.200 --> 0:19:56.040 and contributing to the Allied stockpiles is hugely advantageous. I 0:19:56.080 --> 0:19:58.760 think that's been a very consistent message from the administrations. 0:19:58.840 --> 0:20:01.119 We've seen immense support for that. You know where we 0:20:01.119 --> 0:20:03.479 put it exactly. You know, we have a factory up 0:20:03.480 --> 0:20:06.720 and running in Sydney, Australia making ghost Shark, and then 0:20:06.760 --> 0:20:09.800 we're constantly evaluating the right way to help any given 0:20:09.840 --> 0:20:11.879 country on what they need, how they want us to 0:20:11.880 --> 0:20:15.240 work with their local partners in industry, and so it's 0:20:15.280 --> 0:20:19.560 a very nuanced process. But the reality is we think 0:20:19.600 --> 0:20:23.040 of allied production as a critical dimension of providing that 0:20:23.080 --> 0:20:24.040 deterrence that we're here to. 0:20:24.000 --> 0:20:28.040 Do andreal CEO Brian Shim Microsoft is cashing in on China. 0:20:28.320 --> 0:20:31.640 Unlike its competitors, the AI cloud maker is selling it's 0:20:31.640 --> 0:20:35.800 Azure cloud models to Chinese tech companies including TikTok Parent 0:20:36.160 --> 0:20:38.880 bike Dance, which is on track to spend a billion 0:20:39.280 --> 0:20:41.560 as Microsoft's top client blue most Matt Day has more. 0:20:41.720 --> 0:20:43.760 So there's the idea that this is a typical right 0:20:43.840 --> 0:20:45.480 doing business in China full stop. 0:20:45.720 --> 0:20:47.720 But in the AI domain, what. 0:20:47.720 --> 0:20:49.800 Are the models that the Microsoft is able to sell 0:20:49.800 --> 0:20:50.680 into that market? 0:20:51.720 --> 0:20:54.560 So Microsoft, because of its long standing partnership with Opening I, 0:20:54.760 --> 0:20:57.760 has some unique ability to sell products in the term 0:20:57.760 --> 0:20:59.320 of the terms under which it sells products. 0:20:59.400 --> 0:21:00.320 We understand that there's been. 0:21:00.280 --> 0:21:03.080 Some friction between Microsoft and Open Eye over Microsoft sales 0:21:03.080 --> 0:21:04.840 in China, but they can they can list some of 0:21:04.840 --> 0:21:05.639 their biggest models. 0:21:06.600 --> 0:21:09.000 Is this big business for Microsoft, Matt Like we said, 0:21:09.000 --> 0:21:11.840 a billion dollars potentially, But where does that stack up 0:21:11.880 --> 0:21:13.879 against the rest of its revenues. 0:21:14.960 --> 0:21:17.320 A big number, but not hugely significant to Microsoft at 0:21:17.320 --> 0:21:19.359 a global scale. You know, they said China accounts for 0:21:19.480 --> 0:21:21.160 something like a percent and a half of their revenue, 0:21:21.400 --> 0:21:23.480 so not super significant. But you know the company is 0:21:23.520 --> 0:21:26.320