Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is a
Speaker 1: live from Coast to Coast with Caroline Hyde in New
Speaker 1: York and vlave Low in sentences go.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: Broadcom suffers a stock slide after its sales outlook or
Speaker 3: lack of failed to meet investors lofty expectations.
Speaker 4: Plus, China I is the largest ever state MATCHIP incentives,
Speaker 4: with as much as seventy billion dollars of state money
Speaker 4: incident for the pivotal sector.
Speaker 3: And our conversation with White House ais are David Sachs
Speaker 3: on President Trump's executive order aimed at limiting state level
Speaker 3: regulation of AI.
Speaker 4: First, and we check on these markets that are dictated
Speaker 4: by tech, dictated by them, and we say that where
Speaker 4: we're off by eight tenths one point eight percent, let's
Speaker 4: look at it and the Nastak one hundred, we are
Speaker 4: under pressure. We consider not just the macro perspective, and
Speaker 4: vonn yields move what's happening underneath the surface. I'm looking
Speaker 4: at the Golden Dragon Index. Look, this is showing what
Speaker 4: Chinese names trade in the US in terms that eight
Speaker 4: hors are up to.
Speaker 5: What a dichotomy. We've got going what a juxtaposition, China higher, we'll.
Speaker 4: Get to that news later, US lower, and in large
Speaker 4: part it's by one key stock.
Speaker 3: You're looking at some breaking news Bloomberg reporting citing sources
Speaker 3: that Oracle has pushed back some of the completion dates
Speaker 3: of data centers that's developing with and for open AI.
Speaker 3: That pushback is to twenty twenty eight from an earlier
Speaker 3: plan of twenty twenty seven. The market reacted. Look at
Speaker 3: the right hand side of the squiggly line. It's paired
Speaker 3: some of that decline, but at one point session low
Speaker 3: well beyond six percent.
Speaker 2: I think car relating the show.
Speaker 3: We're going to get an opportunity to talk to Brody Ford.
Speaker 3: You broke that story. Get more of the details. Right now,
Speaker 3: the top story is Broadcom. It is on track for
Speaker 3: its biggest decline since January of this year, a seventy
Speaker 3: three billion dollar backlog AI specific, but what the street
Speaker 3: wanted was a very different number. During a conference call,
Speaker 3: CEO Hoc Tan held off giving an annual AI revenue forecast,
Speaker 3: saying it was quote a moving target.
Speaker 2: Listen to this.
Speaker 6: It's hard for me to pinpoint what twenty six is
Speaker 6: going to look like precisely. So I'd rather not give
Speaker 6: you guys any guys, and that's why we don't give
Speaker 6: you guys, but we do give it for two one.
Speaker 3: Carle Ackerman, Managing director of semi Conductors and Networking Hardware
Speaker 3: at BNP Pariber joins us for more is new price
Speaker 3: target four hundred and seventy five dollars, among the highest
Speaker 3: now for analysts covering the stock. So that's the point.
Speaker 3: You have different sets of data. They gave us a
Speaker 3: figure which was a seventy three billion dollar backlog this morning.
Speaker 3: Quite clearly the market would like to see a revenue
Speaker 3: number that's forward looking.
Speaker 2: Yep, yeah, that's true.
Speaker 7: So so you're right, I think the I think what's
Speaker 7: interesting here the reason why brad Armer is down is
Speaker 7: not about out the It's not about how revenue has
Speaker 7: perhaps missed expectations. First and forem with some of the
Speaker 7: company actually beaten raised guidance AI sales or above expectations.
Speaker 7: The outlook for next quarter of eight point two billion
Speaker 7: farc City consensus of six point eight billion of AI sales,
Speaker 7: which doubled on ear of your basis. When queried, the
Speaker 7: company indicated that how Co indicated that revenue could perhaps
Speaker 7: accelerate into fiscal twenty six versus that one hundred percent
Speaker 7: accelerated growth number. We have over fifty billion of AI
Speaker 7: sales in fiscal twenty five. I think the reason why
Speaker 7: the stock is down ed, however, is in part because
Speaker 7: there are some investors a bit worried about the margin
Speaker 7: structure of the Entropic deal. So of that seventy three
Speaker 7: billion in AI sales, twenty one billion will go to
Speaker 7: an Entropic as part of a TPU system sale, and
Speaker 7: that TPU system sale is going to be lower margin
Speaker 7: than what brought Com generates content.
Speaker 3: How much of the content of a server do you
Speaker 3: own beyond just the chair?
Speaker 2: But you like this name right?
Speaker 3: Like you've just rate the price target to full seventy
Speaker 3: five from three to eighty five, that right map, Well,
Speaker 3: what is it you like about?
Speaker 2: Brokem sure?
Speaker 7: I mean Broadcom I think is in a llegue of
Speaker 7: its own, akin to in video. Really where Nvidia and
Speaker 7: Broadcom dominate two of the three main buckets of AI
Speaker 7: infrastructure spending. Those include compute, memory, and networking. They of
Speaker 7: course control two of them, networking and compute more than
Speaker 7: anyone else, And I think, what's what is happening here?
Speaker 7: What the what the investment community I think is overlooking
Speaker 7: today on this on the selloff is the fact that
Speaker 7: Broadcom is moving toward a full solution stack akin to
Speaker 7: what in Video is doing on I'm providing AI compute
Speaker 7: and AI networking as we move to scale up domain
Speaker 7: where you're going to need optical for both the for
Speaker 7: the both the networking A six and the and the compute.
Speaker 7: And they offer that entire IP stack in house. And
Speaker 7: that is what I think people are over miss missing today.
Speaker 5: You're calling it short sighted, Karl.
Speaker 4: I know you don't cover in Video as a name,
Speaker 4: but does broadcom success come at the expense of others
Speaker 4: in the market?
Speaker 7: Thanks Carolyn, It's a good question, you know, I think
Speaker 7: I think it's in a vacuum. You know, we try
Speaker 7: and pigeonhole broad conferences in Vidia or broad conferences AMD
Speaker 7: or GPUs versus customer accelerators. I think what we found
Speaker 7: out is that it is not a it is not
Speaker 7: a winner take Hall, It is not a singular approach.
Speaker 7: What you're seeing is that hyper scales are adopting custom
Speaker 7: compute as well as GPUs for frontier model training, and
Speaker 7: that will continue to progress as we move toward inferencing,
Speaker 7: So it's not so clear sighted there. I think what's
Speaker 7: important here is that Broadcom offers the full solution stack
Speaker 7: across networking and compute, and similar to Nvidia, those are
Speaker 7: about the only two companies in all of tech, including Semis,
Speaker 7: that offer that capability.
Speaker 4: Of course, hocktans very much aligned in terms of his
Speaker 4: own pay package with hitting certain revenue numbers for AI
Speaker 4: in particular. But from your perspective, is there a supply
Speaker 4: side headache going on.
Speaker 5: At the moment.
Speaker 4: We're hearing reports that Dell, for example, is having to
Speaker 4: jack up pricing because of the pricing that it's feeding
Speaker 4: on memory were Broadly, we're seeing the breaking news that
Speaker 4: Oracle's having to delay some of its data centers. There
Speaker 4: is a tussle for the infrastructure that's necessary right now,
Speaker 4: and is that just not going to happen in the
Speaker 4: overnight way that the market is anticipating.
Speaker 7: Great question, Carolyn, I think what's interesting to hear is
Speaker 7: I would like to tie in this idea that are
Speaker 7: we in a bubble of AI infrastructure?
Speaker 2: I think that's no. The answer is definitive. No, I think.
Speaker 7: Gigawatt capacity and announcements take time to ramp that ramp
Speaker 7: in that qualification and filling up that fab is now
Speaker 7: extending the visibility across the entire supply chain, whether it's
Speaker 7: hard drives, whether it's memory, whether it's networking, whether it's compute,
Speaker 7: and that is giving companies like Broadcom, companies like Nvidia,
Speaker 7: companies like everyone across the supply chain.
Speaker 2: Very long visibility.
Speaker 7: And right now things are very tight, and so some
Speaker 7: of the areas that are the most tight in our
Speaker 7: AI ecosystem coverage include lasers for optical transceiver components. There
Speaker 7: are ways to ameliorate those that tightness among the supply chain,
Speaker 7: and Hawk and Broadcom announced how they have the sufficient
Speaker 7: capacity for their chips to meet the demand that they
Speaker 7: see in fiscal twenty six and in fiscal twenty seven.
Speaker 5: Who doesn't love talking lasers.
Speaker 4: Kyle Ackerman of BNP paraba, it's been great getting your take.
Speaker 4: As we do see stocks fallswe the NASDAK more broadly
Speaker 4: now under pressure is some two percent pop. The discussion
Speaker 4: that's happening between the US and China, because look, chip
Speaker 4: markets are in the eye of the storm. They're China
Speaker 4: planning to pour up to seventy billion dollars of state
Speaker 4: money into the sector, dem pivotal to its technological conflict
Speaker 4: with the United States. Bloomberg's Maggie Eastland joins US now,
Speaker 4: and seventy billion dollars would be an extraordinary amount of
Speaker 4: government support that we've ever seen worldwide.
Speaker 5: Right, Yes, this is a huge number.
Speaker 8: This would be you know, China's biggest semiconductor specific packaging.
Speaker 8: And according to Bloomberg reporting, that number could be anywhere
Speaker 8: between as you said, seventy billion, and it could go
Speaker 8: down to twenty eight billion, So it depends.
Speaker 5: Here we'll see how large it is.
Speaker 8: That compares to the US effort at industrial policy for semiconductors,
Speaker 8: which is fifty two billion dollars.
Speaker 5: So this is a.
Speaker 8: Similar scale to what the US has undertaken in recent years.
Speaker 3: Maggie, there are some questions to which we just don't
Speaker 3: have answers, and that largely relates to what China specifically
Speaker 3: will do with the funds and where they'll go. But
Speaker 3: within that Bloomberg reporting, where do we think China is
Speaker 3: going to prioritize using the funding to you know, which
Speaker 3: champions is it going to elevate.
Speaker 8: Yes, So of course China is always really looking to
Speaker 8: support it's AI chip makers that compete with in Vidia,
Speaker 8: so that includes companies like Huawei and Camber kN But
Speaker 8: there are other chip companies including SMIC or Smith which
Speaker 8: does the manufacturing, so that would be the corollary to TSMC.
Speaker 8: So there's a range of companies that could see this investment.
Speaker 8: But China will face headwinds because it still has restrictions
Speaker 8: on many of the equipment technologies and the foundries that
Speaker 8: can't access TSMC.
Speaker 5: For those advanced node chips.
Speaker 4: You have many worrying about just what yields are like
Speaker 4: from an SMIC from a SMICK when they're actually producing
Speaker 4: these homegrown, domestically made chips. But I'm looking at video
Speaker 4: under pressure again today, Maggie. Well, broadly, are we getting
Speaker 4: any sense whether this is meaning that China will say
Speaker 4: no thank you to the H two hundreds in the
Speaker 4: same way that they did the H twenties.
Speaker 8: As you know, China has certainly never been shy about
Speaker 8: saying no to US technology when they have their own
Speaker 8: local champions. But what I will say is we don't
Speaker 8: know the exact number of AGE two hundreds China will
Speaker 8: accept if any What we do know is they're clearly
Speaker 8: not backing down on their commitment to their own chip
Speaker 8: supply chain, and they're not going to readily give way
Speaker 8: to this US strategy of selling advanced DAIDE chips in
Speaker 8: order to undermine their local competitors. So we'll have to
Speaker 8: wait and see what happens on h two hundreds.
Speaker 3: Bloomberg's Maggie Eastland, who's been across China's chip efforts all
Speaker 3: week long, thank you very much. Coming up, we're going
Speaker 3: to get more on that breaking news report from Bloomberg
Speaker 3: about Oracle delaying open AI specific data center project by
Speaker 3: one year back to twenty twenty eight. It had an
Speaker 3: impact on the markets, and as that one hundred is
Speaker 3: now two percent actually Caroen as of Thursday night, the
Speaker 3: state of play was the NAS that one hundred was
Speaker 3: flat for the week, so we are now down two
Speaker 3: percent on the NAS that one hundred or weekly basis.
Speaker 3: Of course, the reaction to Broadcom and some other AI
Speaker 3: angst is part of what's weighing on this market, and
Speaker 3: we're going to go a lot more on that very
Speaker 3: very soon.
Speaker 2: Stay with us.
Speaker 3: This is Bloomberg Tech okay shares Oracle down almost five percent.
Speaker 3: They'd hit session loads of six point five percent decline
Speaker 3: after Bloomberg's Brodi Ford broke the story that the firm
Speaker 3: will be delaying data centers for open AI to twenty
Speaker 3: twenty eight instead of a previously planned twenty twenty seven.
Speaker 3: The reason labor and material shortages. Bluemo's Brody Ford runs
Speaker 3: to set and joins us. Now important reporting for you
Speaker 3: because this is what a part of Oracle's debate is. Okay, great,
Speaker 3: you have a great backlog of business, but we are
Speaker 3: very closely monitoring the ability to execute on it and
Speaker 3: then book revenue on it. And open AI is a
Speaker 3: big chunk of the exposure fill the banks for us.
Speaker 3: More reporting, What are the details have you got?
Speaker 9: These are unprecedented scale data centers, right, I mean, giggle
Speaker 9: watse scale data centers unprecedented, and Oracles trying to do
Speaker 9: effectively five and them at once. And so what we
Speaker 9: have today is that the initial completion dates, the initial
Speaker 9: full delivery dates have been pushed backed in some cases
Speaker 9: from twenty seven to twenty eight. And you know, I
Speaker 9: think if you've spoken with data center folks over the
Speaker 9: last couple of months. It's not a huge shocker because
Speaker 9: I mean, these are such crazy projects, right, and the
Speaker 9: idea of getting them done in two years was always
Speaker 9: going to be ambitious. So now getting them done by
Speaker 9: twenty eight it's still a tight timeline. It's still, frankly
Speaker 9: an impressive turnaround, but it's maybe just not as quick
Speaker 9: as the company had initially hoped.
Speaker 4: We're looking at Abelaine, Texas right now, where on the
Speaker 4: conference call doing earnings we had the co CEO one
Speaker 4: of them saying that they had more than ninety six
Speaker 4: thousand in video chips delivered, giving you the sense of scale.
Speaker 4: But is it a hindrance to what the revenue is
Speaker 4: ultimately for Oracle here or is it just investors having
Speaker 4: to be like, oh, it's still jammed tomorrow, not today.
Speaker 9: Right, I mean, Oracle, I'm sure will say that as
Speaker 9: you put they deliver these sites in chunks, right, And
Speaker 9: so Abilene is already being turned on this massive data center.
Speaker 2: In West Texas.
Speaker 9: Once you get the servers running open, AI uses them,
Speaker 9: that's revenue recognition, yeah, right, And so really what we're
Speaker 9: thinking about is the further out sites beyond Abilene.
Speaker 10: Right.
Speaker 9: We keep seeing these Stargate announcements for Michigan and New Mexico. Right,
Speaker 9: these sites which are still being kind of put together,
Speaker 9: and Oracle and other vendors too are finding that, Wow,
Speaker 9: there's a lot of stuff out there that's backlogged.
Speaker 5: NAMA for one of them.
Speaker 9: There's only so many electricians, right, I mean, you want
Speaker 9: to build in rural Texas, it's a smaller pool of
Speaker 9: people you have access to.
Speaker 5: It's a fascinating story. It's going to run and run.
Speaker 4: Blomberg's Brodie Ford with a real market moving bit of
Speaker 4: reporting that. Let's talk more about the market implications. We've
Speaker 4: got Margie Battel with us. You put any manager and
Speaker 4: headed capital allocation of all Spring Global investments to have
Speaker 4: six hundred twenty nine billion dollars an assets and advisement,
Speaker 4: and Margie, you worried these drip drip bits of information
Speaker 4: that maybe the revenue streams.
Speaker 5: Aren't able to be booked tomorrow.
Speaker 4: It has to be waited out a little bit more
Speaker 4: in terms of the returns on AI investment.
Speaker 11: No, I think the long term trends are still in place.
Speaker 11: I actually thought that Broadcom's numbers were quite good and
Speaker 11: people were just I think very nervous at the end
Speaker 11: of the year, particularly with some bad news we've seen,
Speaker 11: such as from Oracle, and I think it's really more
Speaker 11: just end of your jitters rather than anything fundamental. I
Speaker 11: think when you look out into twenty twenty six, you
Speaker 11: still have to like the tech sector, especially the semi
Speaker 11: the memory those companies. I think you still have to
Speaker 11: stick with them, that there are to continue to be
Speaker 11: high growers, and these little hiccups we have here and
Speaker 11: there don't change the fundamental trend of very very strong
Speaker 11: growth in a year, which would be very much lot
Speaker 11: of growth next year. So we still like the whole sector.
Speaker 4: So Maggie, on a day where BRAUN comes up by
Speaker 4: eleven percent when the nasdak's off by two percent, is
Speaker 4: that hacup a buying opportunity?
Speaker 11: Well, I think it is actually because if you look
Speaker 11: at the leading stocks that have stuck to their plan,
Speaker 11: that have great growth, great profit margins, great innovation, and
Speaker 11: they're down ten to fifteen, even twenty percent from their
Speaker 11: peaks of a few months ago. So I think that
Speaker 11: looks like a pretty attractive time to add to these names.
Speaker 11: Because there's end of your uncertainty, a lot of short
Speaker 11: term traders who preserve their games cash out, And I
Speaker 11: think that's what you're seeing, is this pressure on the
Speaker 11: sector rather than the change in the fundamentals the cash flow.
Speaker 5: The big companies are so.
Speaker 11: Large, this isn't going to be derailed anytime soon. So
Speaker 11: I think next year looks pretty good.
Speaker 2: Sailing too, Margie, It's good to see you.
Speaker 3: It sounds like at your end you don't personally have
Speaker 3: many jitters. One of the best read stories on the
Speaker 3: Bloomberg Ternal today is about the debt and the lens
Speaker 3: that is behind the build out in that infrastructure, where
Speaker 3: the debt does debt as a factor in consideration sit
Speaker 3: for you when you are tracking all sorts of different
Speaker 3: hard and soft data sets to work out what's going
Speaker 3: on here.
Speaker 11: Well, I look at the debt as really a company's
Speaker 11: choice of how they want to allocate capital. Do they
Speaker 11: want to borrow, do they want to increase the dividend,
Speaker 11: do they want to do share buybacks? And particularly the
Speaker 11: large successful companies really have no need to borrow. Even
Speaker 11: paying for the CAPPAC, they still have plenty of excess
Speaker 11: cash flow that they have to decide how to utilize.
Speaker 11: Whereas I think Oracle has really taken on a lot
Speaker 11: of debt compared to their cash flow, But the rest
Speaker 11: I think all look pretty good.
Speaker 2: It's a vital.
Speaker 11: Sector and that's why the returns are higher, because you
Speaker 11: have to be prepared for these little down drafts in
Speaker 11: order to get the upside.
Speaker 3: Maggie Brodie's report and Oracle was very specific that Oracles
Speaker 3: delaying those projects by a year because of labor and
Speaker 3: material shortages elsewhere in the US economy. We have all
Speaker 3: the chips we need, clearly, are we good at the
Speaker 3: other stuff? And is the other stuff where it needs
Speaker 3: to be to support this build out?
Speaker 11: Yes, I think it is. I think when you have
Speaker 11: this explosion in demand of these very complex centers, I
Speaker 11: think you should expect there will be short term problems
Speaker 11: of supply and so forth. But really that's a good
Speaker 11: problem to have rather than lack of demand or pricing pressure.
Speaker 11: And we're really seeing very strong pricing for the summaris
Speaker 11: that are going into the data centers, so we think
Speaker 11: it's just nothing to worry about, and the fundamentals are
Speaker 11: still very strong.
Speaker 4: Briefly though, there's reports today from other outlets saying that
Speaker 4: Dell's going to have to Jack of its prices because
Speaker 4: of pricing and strength and memory. Are there areas of
Speaker 4: this AI trade that are overvalued that you shouldn't be
Speaker 4: piling into From a margin perspective.
Speaker 11: Well, I think when you look at check it's like
Speaker 11: any other sector. Is the best companies usually trade rather richly.
Speaker 11: The cheap companies usually have problems. They don't have the
Speaker 11: leading edge, they don't have the innovation. And when you
Speaker 11: look at chech it's just and you can see even
Speaker 11: here with the data centers and concern about what approach
Speaker 11: that companies are using Broadcom or nvideo whatever in the
Speaker 11: new products. It's really about innovation and who are the
Speaker 11: leading innovators, and so the companies that don't have that
Speaker 11: innovation are just going to fall behind. So I think
Speaker 11: this year up till say the summer, everything moved up
Speaker 11: and now we're seeing a separation between the companies that
Speaker 11: have leading edge and the companies that are really falling
Speaker 11: behind and aren't going to catch up. So I think
Speaker 11: it'll be much more stock selection next year than we've
Speaker 11: had for the first part of this year.
Speaker 3: With a message that in tech there's nothing to worry about.
Speaker 3: Margie Patel from all Spring Global Investments. Great to have
Speaker 3: you back on the show.
Speaker 2: Thank you very much.
Speaker 3: Now coming up, we're going to bring you Bloomberg's exclusive
Speaker 3: conversation with Uber's CEO and the company's international ambitions, particular
Speaker 3: focus on Asia.
Speaker 2: Next this is Bloomberg Tech.
Speaker 5: Ouba si Jari Koswa.
Speaker 4: Shahi says the company expects to offer robotaxi services in
Speaker 4: more than ten markets by the end of next year.
Speaker 5: He spoke with Bloomberg Tech Asia's Annabel.
Speaker 4: Druders about why he's optimistic, in particular about growth potentially in.
Speaker 12: Asia, the APAC market and in particular the North Asia
Speaker 12: markets as well. They are huge growth markets for us,
Speaker 12: and if you look, for example, in the ride share business,
Speaker 12: over thirty percent of our global first trips coming into
Speaker 12: the category come from the Apac region. The area is
Speaker 12: growing very quickly, including taxi as well, which is actually
Speaker 12: one of our newest products on the platform. So for
Speaker 12: me coming here, seeing the teams, meeting with local business
Speaker 12: people and regulators and talking about how we can be
Speaker 12: part of the future growth of the region is really
Speaker 12: what my agenda is.
Speaker 13: Early this year, you also put out a statement on
Speaker 13: the robot taxi push as well, and so the Middle
Speaker 13: East and Asia were the markets for twenty twenty five
Speaker 13: to launch, and we've seen of course that initial deployment
Speaker 13: in the Middle East already. What's happening on the Asia side, well, lots.
Speaker 12: Of discussions on the Asia side. I think what's really
Speaker 12: important is to set up a regulatory framework to go forward.
Speaker 12: For example, Hong Kong has various trials and pilots going on,
Speaker 12: and in many other markets we're talking to regulators about
Speaker 12: how we can be a part of shaping right share
Speaker 12: and autonomous right shair going forward. The technology is absolutely
Speaker 12: getting there. These are the robot driver. It doesn't get tired,
Speaker 12: doesn't get distracted, and we very much look forward to
Speaker 12: working with various authorities to introduce right shair into the
Speaker 12: markets we're now live in for markets now as we
Speaker 12: speak in the US and in the Middle East to
Speaker 12: be in ten plus markets by next year, and we
Speaker 12: want those markets to be in the Asia Pacific region
Speaker 12: as well.
Speaker 13: Where then in Asia do you think is the most
Speaker 13: likely place.
Speaker 12: We'll see I think that certainly Japan has great potential,
Speaker 12: you know, with.
Speaker 5: They behind on their regulation.
Speaker 12: They are behind in their regulation, but I think that
Speaker 12: they also understand that with an aging population. There's a
Speaker 12: real need for transportation, not just in the large cities,
Speaker 12: but in.
Speaker 2: The rural areas.
Speaker 12: And for example, I experienced that personally going to Kaga
Speaker 12: City and where we have communal ride share and kind
Speaker 12: of took a ride share trip and understood what the
Speaker 12: needs are there. So we're talking with various countries regulatory authorities.
Speaker 12: I think Japan is going to be part of it.
Speaker 12: I certainly hope that Hong Kong is going to be
Speaker 12: a part of it. Australia, where we were just talking about,
Speaker 12: is a huge market for us. So we're having those
Speaker 12: dialogues and I think that the picture will shape up
Speaker 12: over the next two years because the technology is definitely
Speaker 12: getting there.
Speaker 3: Uber CEO Dara Kostrashahi there along with our animl drawers
Speaker 3: and aw sticking with Uber. The company, along with door Dash,
Speaker 3: is suing New York City to block requirements that the
Speaker 3: delivery tipping option be available at the time of checkout
Speaker 3: and set to at least ten percent. The two companies
Speaker 3: argue this would worsen sticker shock for inflation weary consumers.
Speaker 2: New tipping laws.
Speaker 3: Are set to become effective January twenty sixth carrot.
Speaker 5: I want to watch it.
Speaker 4: Meanwhile, coming up, you're reporting to watch how Rivian is
Speaker 4: replacing invideos tech in future vehicles with its own chips.
Speaker 4: From New York, From San Francisco, this is Bloomberg Tech.
Speaker 2: Welcome back to Bloomberg Tech.
Speaker 3: Rivian take a look at its shares up currently sixteen
Speaker 3: percent at one point in the session, up more than
Speaker 3: nineteen percent, trading at its highest level since January of
Speaker 3: twenty twenty four, so its highest level in two years.
Speaker 3: Yesterday it fell quite a lot after it told investors
Speaker 3: and the world its plans for autonomous driving. Rivian's plan
Speaker 3: for autonomous driving is based on two big technology bets,
Speaker 3: and we went to see them. Rivian's developed its own
Speaker 3: artificial intelligence chip for its future cars that gamble might
Speaker 3: pave the way to fully autonomous driving. A lot of
Speaker 3: the tech world imagines a future where we don't own
Speaker 3: cars at all. We're talking about fleets of robotaxis that
Speaker 3: are summoned through an app, maybe no steering wheel or
Speaker 3: driver controls at all. But Rivian's in the camp that
Speaker 3: does see people owning their own cars in the future
Speaker 3: and being willing to pay top dollar for a software
Speaker 3: platform that allows the car to drive itself. If this
Speaker 3: idea seems familiar, Tesla has been selling a version of
Speaker 3: it for years.
Speaker 2: Full self driving supervised is not.
Speaker 3: Technically full autonomy if you read the fine print, but
Speaker 3: it can get you from point A to point B
Speaker 3: without needing to put.
Speaker 2: Your hands on the steering wheel.
Speaker 3: Rivian's path to autonomy is rooted in two big bets.
Speaker 3: The first a custom AI chip developed in house, which
Speaker 3: marks a big break from Nvidia.
Speaker 14: This is a wrap one chip, it's a multitip module.
Speaker 14: In the middle is a Rivian design custom silicon surrounded
Speaker 14: by memory on two sides. The decision to build an
Speaker 14: in house was based on a very rigorous analysis of
Speaker 14: the benefits we could come and those benefits are velocity
Speaker 14: or ability to get to market, break quickly with it,
Speaker 14: performance and cost.
Speaker 3: The second a major change in how Rivian vehicles see
Speaker 3: the world. The next generation Rivian R two will have
Speaker 3: indented lidar sensors in it.
Speaker 14: It's not just about the computer, it's also about the
Speaker 14: sensors and it's about how they all come together.
Speaker 15: This is really in mark one what the Gen three
Speaker 15: architecture does with compute levels that are dramatically expanded, such
Speaker 15: as to put some numbers to this at the platform level,
Speaker 15: sixteen hundred sparse tops where you can process five billion
Speaker 15: pixels per second, beautifully integreated lightar that raises the ceiling
Speaker 15: to allow us to take your eyes off the road.
Speaker 2: This will cause some debate.
Speaker 3: Tesla vehicles only use cameras as sensors for their systems,
Speaker 3: and what Elon Musk company has always argued is that
Speaker 3: other sensors like lidar or radar are too expensive to scale.
Speaker 3: Until now, Rivian didn't really have an autonomous system. It
Speaker 3: had advanced driver assistance tools powered by cameras and radar,
Speaker 3: and Rivian used Nvidia chips as the brain in the
Speaker 3: vehicle to interpret the world around it. Rivian says it's
Speaker 3: new AI model will keep improving those older cars too,
Speaker 3: eventually adding capabilities like hands off point to point driving.
Speaker 3: Rivian doing its own chip and ditching in Nvidia is
Speaker 3: a surprise.
Speaker 15: On the Rivian processor side. This represents a significant cost
Speaker 15: savings to us. There is a lot of margin, of
Speaker 15: course in the in the semiconductor space, and working directly
Speaker 15: with PSMC, we have a great relationship with them.
Speaker 3: The new hardware is the unlock. It should allow Rivian
Speaker 3: to go from that driver assistance software in its existing
Speaker 3: lineup to true autonomy in the next gen R two.
Speaker 15: And the next big step is personal level for it.
Speaker 15: And what I mean is the vehicle can operate empty,
Speaker 15: it can operate without anyone in the driver's seat. It
Speaker 15: can pick your kids up from school, it can drop
Speaker 15: you at the airport. It's a complete shift in how
Speaker 15: we think about the vehicle experience.
Speaker 3: Looking back, this was the company that pulled off the
Speaker 3: sixth largest IPO in US history, and it was first
Speaker 3: to market with full size battery electric pickups and sau
Speaker 3: beating out Tesla, Forward and General Motors. But today Rivian
Speaker 3: struggling with the basics. Production of its evs hasn't really scaled.
Speaker 3: Rivian Soul plant in Illinois is capable of building two
Speaker 3: hundred and fifty thousand units a year, but in twenty
Speaker 3: twenty five it probably won't hit fifty thousand. The truest
Speaker 3: representation of that struggle, the stock is at a fraction
Speaker 3: of its peak.
Speaker 2: Right now.
Speaker 3: In the world of tech, you have to have something
Speaker 3: to say about AI, and Rivian is diving deep into
Speaker 3: autonomy to appease its investors, an ai chiplidar and a
Speaker 3: large driving model right now. It's a promise from Rivian
Speaker 3: that their next generation vehicles will have genuine autonomous capabilities.
Speaker 4: Extraordin and reporting deep dive and Rivian, as you said,
Speaker 4: ed doing very well on the day, unlike the rest
Speaker 4: of the markets. Just check in what's happening to the Nasdak.
Speaker 4: We're down on the week, We were down on the
Speaker 4: day and as at one hundred, off by more than
Speaker 4: two percent andach points tech in the line of fire
Speaker 4: today even dragging Chinese names now into the red. They
Speaker 4: started the trade and our show in the green as
Speaker 4: we understood that the Chinese government was going to be
Speaker 4: going all in on funding its own domestic chips apply
Speaker 4: up to seventy billion dollars worth of government incentives, is
Speaker 4: the reporting coming out of Bloomberg News at the moment.
Speaker 4: But even China starts to dip at the moment. We
Speaker 4: see Broadcom in the video in the red, Pallanteer, Amazon, Micron,
Speaker 4: some key names currently on the downside as we have
Speaker 4: that AI bubble anxiety all over again.
Speaker 3: Right coming up, actually, Caro, we're going to talk about
Speaker 3: the United Kingdom. We're going to be joined by British
Speaker 3: Business Bank CEO Lewis Taylor for his take on the
Speaker 3: UK's tech sector. He's in town in San Francisco and
Speaker 3: Silicon Valley to think about how technology might work across
Speaker 3: the Atlantic.
Speaker 2: That's next, This is Sploomberg Tech.
Speaker 3: The UK economy is at risk of its first coarsely
Speaker 3: contraction since labor returned to power after growth, disappointed again
Speaker 3: by shrinking ahead of Chancellor of the Exchequer Rachel Reeves's
Speaker 3: tax raising budget. Can the UK tech sector come to
Speaker 3: the rescue? Louis Taylor, CEO of the British Business Bank,
Speaker 3: joins us now and it's great to have you in
Speaker 3: town in San Francisco.
Speaker 16: Really great to be here, ed, thank you very much.
Speaker 3: Indeed, you have an annual budget essentially to invest in
Speaker 3: and lend to and support the technology industry in the
Speaker 3: United Kingdom.
Speaker 2: Why are you in San Francisco?
Speaker 11: Then?
Speaker 2: What brings you in San Francisco?
Speaker 16: Well, look, we're here pitching to us VC's a really
Speaker 16: great new growth opportunity for them, which is based on
Speaker 16: three things. Firstly, as you say, the quality of the
Speaker 16: UK tech industry for the top ten universities globally producing
Speaker 16: great research with some really excellent entrepreneurs and the ability
Speaker 16: to scale businesses as well. So that's where they come in. Secondly,
Speaker 16: a new pool of capital coming on stream domestically in
Speaker 16: the UK from pension funds hopefully. And then thirdly the
Speaker 16: opportunity to partner with the bank, which is the biggest
Speaker 16: LP in UK venture and growth equity connected and knowing
Speaker 16: the landscape pretty well.
Speaker 5: Luis the landscape we know so well? Is fintech?
Speaker 4: I think of Revolute, I think a Monso the standouts.
Speaker 4: But where else is really thriving? Where else should VC
Speaker 4: come in as port in the UK?
Speaker 16: Well, look, I think you're absolutely right. Fintech is very strong.
Speaker 16: And just today Go Cardless did a deal with Molly
Speaker 16: and that a unicorn that we invested in twelve years ago.
Speaker 16: So you need a bit of patience on this. So
Speaker 16: fintech's very strong. AI in different places is very strong.
Speaker 16: Not so much on the hardware side, not so much
Speaker 16: on the larger language models, but more broadly, if I
Speaker 16: think about companies like Synthesia or eleven Labs, all of
Speaker 16: those companies coming out of the UK, So I think
Speaker 16: those tech areas are great, but also the application of
Speaker 16: AI into life sciences is incredibly strong as well, and
Speaker 16: the UK has an incredibly strong life sciences industry. So
Speaker 16: I think we see AI as being a theme across
Speaker 16: the sectors of the industrial strategy the government announced and
Speaker 16: the UK being strong in those.
Speaker 3: To be fair, many of those companies you name, you know,
Speaker 3: they come on this program regularly, you know, and they
Speaker 3: are making advancements in their respective fields.
Speaker 2: We want to go back to what you.
Speaker 3: Said, the big pot of pool of money coming online
Speaker 3: a little bit more. Please, Yeah, how big? How certain
Speaker 3: is it? And that's important right because the lesson of
Speaker 3: AI in this country at least is the capital requirements
Speaker 3: are much bigger.
Speaker 2: Much bigger.
Speaker 16: So the UK we incubate companies incredibly well, we scale
Speaker 16: them less well, and we haven't had the scale up
Speaker 16: capital we need. It's not that we don't have the money,
Speaker 16: because we have the second largest funded pension scheme in
Speaker 16: the world at around four trillion pounds, but we have
Speaker 16: an allocation issue with that pension money, which is changing
Speaker 16: the government encouraging pension funds to invest more in the
Speaker 16: domestic economy and in the growth economy. I think what
Speaker 16: we're looking for is some of the expertise here in
Speaker 16: the VC industry in the US about scaling those companies.
Speaker 16: As I say, we incubate well, but it's that scaling
Speaker 16: stage and the expertise needed there where. Of course you
Speaker 16: need capital, but you need other things as well, network's
Speaker 16: capabilities and many other things. Mentoring of leadership teams.
Speaker 4: Luis what is the state of brain drain when you
Speaker 4: actually do get a really successful company. Now, eleven labs
Speaker 4: are staying there since these years as well, but many
Speaker 4: up and even come to Silicon Valley or to the US.
Speaker 5: Is that something that's still happening.
Speaker 16: Well, look, I think it does happen to an extent.
Speaker 16: I think we really want to try and address that
Speaker 16: and try and stop it and actually capture some more
Speaker 16: of the value in the UK economy. As I say
Speaker 16: this is the companies have largely come over here because
Speaker 16: is where the capital is. If you've got a new
Speaker 16: capital stream with some expertise based on it in the UK,
Speaker 16: we're going to hope to retain those companies in the
Speaker 16: UK longer. And actually the innovation ecosystem I think is
Speaker 16: quite self perpetuating success breed success. We've got a lot
Speaker 16: of the right things in place, but it's just this
Speaker 16: top end that we need to to really make sure
Speaker 16: that we realize more potential and keep the flywheel going.
Speaker 3: So your strategy here, and one of the reasons you're
Speaker 3: in town, is to go to the American VCS, the
Speaker 3: Value v season say.
Speaker 2: Give us your capital, come to the UK. We have
Speaker 2: something to offer.
Speaker 3: But that strategy then carries risks with what you're just
Speaker 3: talking with Carolina about.
Speaker 2: Right.
Speaker 16: Yeah, we're not quite saying that, we're saying, bring us
Speaker 16: your expertise, will help you raise capital locally.
Speaker 2: This is a growth opportunity for capital locally. That's a key,
Speaker 2: absolute distinction.
Speaker 16: Absolutely, and the connections that we have with all the
Speaker 16: gps LPs but also the pension funds. I mean, we
Speaker 16: actually are raising our own fund at the moment for
Speaker 16: a co invest fund in the UK from UK pension
Speaker 16: funds and we'll do the first close end of January
Speaker 16: early February. And this is a thing, it's.
Speaker 2: A real thing.
Speaker 4: It's a real thing, and we'll let you go out
Speaker 4: and have real conversations with those vcs and the Value
Speaker 4: the Louis Taylor, thanks for stopping by. CEO the British
Speaker 4: Business Bank. Coming up, White House AI and Cryptos are
Speaker 4: David Sachs joins us to talk about the President trump
Speaker 4: executive Order on a regulation.
Speaker 5: This is ring back Tap.
Speaker 3: Welcome to our global radio and TV audiences. President Trump
Speaker 3: signed an executive order aimed at limiting state level regulation
Speaker 3: of AI. The move is supported by tech leaders who
Speaker 3: have argued local rules could stifle innovation. We're joined by
Speaker 3: David Sachs, the White House AI and Crypto ZA or
Speaker 3: Senior Advisor, David. I think it's a really good place
Speaker 3: to start in your work with the President in consulting
Speaker 3: and advising on the formulation of this executive order.
Speaker 2: What was the.
Speaker 3: Problem that you were trying to solve for and what
Speaker 3: is it that you said to the President about why
Speaker 3: this EO was the right approach to focus on state
Speaker 3: level laws?
Speaker 10: Well, thanks for having The problem that we see is
Speaker 10: that you've got one thousand different bills going through state
Speaker 10: legislatures right now to regulate AI, and over one hundred
Speaker 10: measures already passed. Some of these bills are contradictory, and
Speaker 10: you've got fifty different states running in fifty different directions.
Speaker 2: That type of compliance.
Speaker 10: Regime is going to be very hard for small companies
Speaker 10: and startups, especially innovators to comply with. And so what
Speaker 10: we need is a single federal or national framework for
Speaker 10: AI regulation. And that's what the President has supported, and
Speaker 10: by the way, he supported this for a long time.
Speaker 10: If you go back to his July speech on AI,
Speaker 10: he called for a single national framework then. And what
Speaker 10: we've done with THISEO now is to make clear that
Speaker 10: that is the administration's policy and to task members of the
Speaker 10: administration to work with Congress to try and enact that
Speaker 10: framework through legislation, because ultimately this needs to be a law,
Speaker 10: and in the meantime create tools that the administration can
Speaker 10: use to push back on examples of the most onerous
Speaker 10: and excessive state regulations.
Speaker 3: David, there is of course some pushback you know, on
Speaker 3: the executive order from the states themselves, from other Republicans
Speaker 3: you know, as you know, like I studied the July
Speaker 3: speech and strategy closely, a big part of it, you know,
Speaker 3: was infrastructure related and about deregulation. The concern about this
Speaker 3: latest executive order is that while it addresses your concerns
Speaker 3: about many different pieces of state regulation, it does not
Speaker 3: provide for a single federal framework.
Speaker 10: Well, at the end of the day, that single federal
Speaker 10: framework has be enacted through law, and we need Congress
Speaker 10: to do that. And so the President has asked Congress
Speaker 10: to do that, and these tasked members the administration to
Speaker 10: work with Congress to produce that framework. In the meantime.
Speaker 10: What we've done here is articulated set of principles. We
Speaker 10: said what values are important to us. We said that
Speaker 10: we want to protect child safety, that's important. We want
Speaker 10: to respect copyright, we want to preserve the ability of
Speaker 10: local community is to choose what infrastructures and their communities.
Speaker 10: We're not seeking to preempt the states in any of
Speaker 10: those areas. So this is an important set of principles
Speaker 10: that we have put forth. And at the same time,
Speaker 10: the EO provides for a number of tools that can
Speaker 10: be used to push back on excessive state regulation. And
Speaker 10: let me just illustrate why I think this is so necessary.
Speaker 10: What we're really talking about here is regulation of AI
Speaker 10: models and algorithms. Well, think about how an AI model
Speaker 10: is developed. You can have developers in one state of
Speaker 10: multiple states writing the code. It can then be trained
Speaker 10: in a data center in another state. You then can
Speaker 10: have inference happen in another state, and the entire service
Speaker 10: is provided over the Internet using national telecommunications infrastructure. So
Speaker 10: you're dealing there with at least four different states, and
Speaker 10: all of them can lay claim to regulating those AI models,
Speaker 10: and those regulations can be in contradiction with each other.
Speaker 10: Even Democrat governors have admitted this as a problem. Just
Speaker 10: the other day, Kathy Hockle, the governor of New York It,
Speaker 10: basically said that she might prefer to enact California's SB
Speaker 10: fifty three, which is a regulation that they just passed
Speaker 10: in California, rather than the bill that her own assembly
Speaker 10: gave her the raise act, because she sees that, wait,
Speaker 10: do we really want to create this patchwork in different regulations.
Speaker 10: So even Democrat governors are realizing this is a problem,
Speaker 10: and if they all run in different directions, then we're
Speaker 10: going to end up with a patchwork or a misshmash
Speaker 10: of regulations that are impossible for companies to comply with.
Speaker 10: What the President is calling for here is just common sense.
Speaker 10: We want to get to a single national framework of
Speaker 10: compliance as opposed to fifty states running in different directions.
Speaker 4: Meanwhile, Kathy Hokle actually is getting a bit of criticism
Speaker 4: perhaps for narrowing and what some are saying is bowing.
Speaker 5: Down to business. David, I'm really interested in.
Speaker 4: How you oppose that view, because there is anxiety in
Speaker 4: the population AI versus jobs, AI versus energy bills. How
Speaker 4: are you giving them the sense that we haven't seen
Speaker 4: federal government and India now state government's just handing over
Speaker 4: the reins to big tech billionaires as people call them.
Speaker 6: Right.
Speaker 10: No, I understand there's a lot of fear out there
Speaker 10: about AI and job loss specifically, and a lot of
Speaker 10: those fears have been drummed up. Let me just say
Speaker 10: on the job loss question, because I think this is
Speaker 10: really important that Yale just released a study and it
Speaker 10: showed that in the thirty three months after the launch
Speaker 10: of chat GPT, there was no discernible disruption to the
Speaker 10: US job market none. They said, no discernible disruption. And
Speaker 10: in fact, if you look right now, more jobs are
Speaker 10: being created than being lost. So this whole idea of
Speaker 10: job losses just isn't true. There was an article on
Speaker 10: the Wall Street Journal just last week talking about the
Speaker 10: construction boom that's happening that's benefiting construction workers like electricians
Speaker 10: like plumbers like workers who pour concrete or hang drywall.
Speaker 10: Their wages are up thirty percent because this infrastructure boom
Speaker 10: that's happening right now, and there's actually a job shortage
Speaker 10: in many of those trades, meaning we need more workers
Speaker 10: going into those trades. So what we're seeing right now
Speaker 10: is an overall AI boom that's benefiting the economy. You know,
Speaker 10: the the GDP growth rate was tracking about four percent,
Speaker 10: and half of that up to half of it's been
Speaker 10: attributed to AI. So I just think that this narrative
Speaker 10: about job loss has been blown out of proportion. Certainly
Speaker 10: there could be job displacement in the future, but we
Speaker 10: haven't seen any of that so far. It's been quite
Speaker 10: the opposite. It has been job gains.
Speaker 3: David Final one on the EO, If I may, you
Speaker 3: know what this EO allows for. Is it the sort
Speaker 3: of hope that it will lead to the DOJ sewing
Speaker 3: states like New York and California. And if that's the case,
Speaker 3: you know, the President and the administration's confidence that you'd
Speaker 3: win them.
Speaker 10: Well, that is one of the tools that is in
Speaker 10: the EO is that the DOJ has been tasked to
Speaker 10: form a litigation task force that would have the ability
Speaker 10: to push back on excessively burn some state laws, laws
Speaker 10: that may be unconstitutional, violate the First Amendment, things like that.
Speaker 10: By the way, the DOJ already had that power, So
Speaker 10: this is a novel power. But what's being done here
Speaker 10: in the CEO is we're marshaling all the resources of
Speaker 10: the federal government behind the strategy of the President to
Speaker 10: create a national framework. Now, in terms of what laws
Speaker 10: we go after, that's a decision that has been made.
Speaker 10: We haven't decided whether California and New York should be
Speaker 10: targets in that way. The one that I think is
Speaker 10: probably the most excessive is this Colorado law that seeks
Speaker 10: to prohibit algorithmic discrimination. What that basically says is that
Speaker 10: if an AI model has a disparate impact on a
Speaker 10: protected group, then that model is violating the law. Model developers,
Speaker 10: by the way, I have no idea how to comply
Speaker 10: with this because they're not aware of all the downstream
Speaker 10: uses of their model. I mean, if a business decides
Speaker 10: to use an AI model in a hiring decision, for example,
Speaker 10: that business is already on the hook for discrimination. So
Speaker 10: how would the model developer know that it was being
Speaker 10: used in that way. But what Colorado was trying to
Speaker 10: do there is get their ideology inserted into the model.
Speaker 10: That's very concerning to us. We think there's a First
Speaker 10: Amendment issue there, but look, we haven't made any decisions
Speaker 10: in terms of how that litigation task for US to
Speaker 10: be used.
Speaker 4: David Briefly, all of this is set in the context
Speaker 4: of US versus China and a deemed to run forward
Speaker 4: on AI development. Meanwhile, it's been a busy week and
Speaker 4: H two hundreds might indeed be able to get to China.
Speaker 4: How many do you think you'll do in volumes and
Speaker 4: what do you think the appetite is of China to
Speaker 4: buy in videos more sophisticated chips.
Speaker 10: Well, it's interesting. I just saw an article that said
Speaker 10: that China was rejecting the H two hundreds, So apparently
Speaker 10: they don't want them, and I think the reason for
Speaker 10: that is they want semiconductor independence the same way that
Speaker 10: the United States wanted to be energy independent. They want
Speaker 10: to be semiconductor independent, So they're rejecting our chips, and
Speaker 10: that's part of the calculation that goes into the decision
Speaker 10: of what we authorized to be sold to China. The
Speaker 10: US policy has always been that we don't allow the
Speaker 10: leading edged chips, and we're not. This is this H
Speaker 10: two hundred chip. It was state of the art a
Speaker 10: couple of years ago, but now it's been superseded by
Speaker 10: the new or Blackwell architecture and the Ruben architecture that's
Speaker 10: coming out next year. So this is now a lagging chip,
Speaker 10: not a leading chip. But what you see is not
Speaker 10: taking them because they want to prop up and subsidize Hahwei.
Speaker 10: They want to create a national champion, and that was
Speaker 10: part of our calculation of selling not the best but
Speaker 10: lagging chips to China's. You can take market share away
Speaker 10: from Huawei, but I think the Chinese government's figured that
Speaker 10: out and that's why they're not allowing them.
Speaker 4: David Sachs, we always wish we had more time White House,
Speaker 4: AI and cryptos Are. We thank you for joining us
Speaker 4: today on the executive order and indeed on in videos
Speaker 4: H two hundreds. That does it for this edition of
Speaker 4: Bloomberg Tech. The market is in sell off motored as
Speaker 4: we wrap up this week. We're down by more than
Speaker 4: two percent on the NASDAC more broadly and indeed for
Speaker 4: the week, but really all eyes on well Broadcom.
Speaker 5: And its numbers.
Speaker 3: Yeah, Broadcom in the earnings context investors, what is more
Speaker 3: But Bloomberg reporting on Oracle is what moved the needle,
Speaker 3: believe it or not. This is my last show of
Speaker 3: twenty twenty five. An astonishing year and a lot of
Speaker 3: the themes in today's show what we've been talking about
Speaker 3: all year long. Recap on the podcast. You can find
Speaker 3: it on the terminal and online. You know where to Caro.
Speaker 3: I'll see you in twenty twenty six.
Speaker 5: Have a great break. Mmmmmm