Speaker 1: From the heart of where Innovation of Money and Power
Speaker 1: Collie in Silicon Valley, NBN.
Speaker 2: This is Bloomberg.
Speaker 1: Technology with Caroline Hyde and Ed Ludlove.
Speaker 3: Live from New York. This is Bloomberg Technology coming up.
Speaker 4: Intel shares rise a CEO Pat Gelsinger leaves the company
Speaker 4: after a failed turnaround effort plus Tesla and byd ramp
Speaker 4: up discounts and incentives in China in a final push
Speaker 4: to meet annual sales targets and tenstorrant NAB's a two
Speaker 4: point six billion dollar valuation off the backing from Jeff Bezos.
Speaker 4: And in Nvidia, we sit down with the CEO and
Speaker 4: chip design legend Jim Keller later this hour. But first
Speaker 4: check on these markets, a check in on Intel. We
Speaker 4: dive straight there. We are more than three percent on
Speaker 4: the back of the news that Intel CEOPA Gelsinger is
Speaker 4: leaving the company and is indeed going to be two
Speaker 4: interim CEOs that take the helm for the time being,
Speaker 4: CFO David Sinsner Michelle Johnston Helpo's going to be serving
Speaker 4: as the interim leaders as the board searchers for a replacement.
Speaker 4: This after, of course, his departure is potentially signaling more
Speaker 4: strategic shifts at the business.
Speaker 3: The investor base collaps.
Speaker 4: It slightly, but we get into the details with Man
Speaker 4: Deep Singer, BlueBag Intelligence.
Speaker 3: Look, many would say they're surprised.
Speaker 4: Many would say, Look, the August numbers that came from
Speaker 4: Intel just showed that this turnaround, this restruction was going
Speaker 4: to be so painful, and the boarders lost confidence.
Speaker 5: Yeah, and look, I think it probably suggests that the
Speaker 5: numbers for four Q don't look very good either. So clearly,
Speaker 5: you know, the gross margin going down, and the foundry
Speaker 5: business was a big contributor to that because even though
Speaker 5: you know, Intel has about eighteen billion dollars of foundry revenue,
Speaker 5: it's negative gross margins. And when you think about that
Speaker 5: eighteen billion dollar number, how much of that business comes
Speaker 5: from the outside, Like they don't have any big customers
Speaker 5: like TSMC does. You know, when it comes to the
Speaker 5: foundry business, it's mostly internal when you think about that
Speaker 5: eighteen billion dollar number. So that's where you know, the
Speaker 5: question marks were raised around Intel's capex of around twenty
Speaker 5: five billion, which is the major reason why they are,
Speaker 5: you know, burning fifteen billion dollars a year, and I
Speaker 5: think pat had about four years to decide on the
Speaker 5: fate of the foundry business. He actually wanted to acquire
Speaker 5: power Semis that didn't happen because of regulatory hurdles. So
Speaker 5: you have to ask yourself was focusing on foundry business
Speaker 5: the right strategy and the answer probably is not, given
Speaker 5: it hasn't turned around in the last four years.
Speaker 4: And yet the US government is handing them a lot
Speaker 4: of money to build chicks to be the future of
Speaker 4: on shoring.
Speaker 3: How resilient does that look?
Speaker 4: How resilient does well trying to do both manufacturing and
Speaker 4: design look for the business.
Speaker 6: Yes, so you're absolutely right the government wants them to
Speaker 6: succeed on the manufacturing side. The problem is the optics here.
Speaker 6: Why would an Amazon or a Microsoft, or an Nvidia
Speaker 6: for that matter, go to Intel foundry when they know
Speaker 6: Intel is a competitor on the design side. And that's
Speaker 6: where you know, divesting that foundry business will actually make it,
Speaker 6: you know, more palatable for competitors like Amazon and Nvidia
Speaker 6: to use some portion of Intel's foundry, similar to what
Speaker 6: MD did with Global Foundaries. I mean, Global Foundry has
Speaker 6: a lot of business outside of MD now because it's
Speaker 6: an independent entity. So that's where the gross market profile
Speaker 6: will still be a lot lower for the foundry business,
Speaker 6: but at least the core Intel business, which is how
Speaker 6: investors look at some of the parts of Intel and
Speaker 6: they say, the core client PC business is still where
Speaker 6: they dominate. I mean, look the server side, they are
Speaker 6: leading share to Nvidia, but more than fifty percent of
Speaker 6: the revenue still comes from core PCs. And even though
Speaker 6: it's a saturated market, the AIVA will help spur refreshed
Speaker 6: cycle at some point. We don't know it's going to
Speaker 6: be first half or second half, but it will come.
Speaker 3: And it will come under new leadership.
Speaker 4: Mande Singh, We thank you so much on all things
Speaker 4: Intel will have plenty more of that in a moment.
Speaker 4: But let's just talk a little bit more about the
Speaker 4: US focus on chips, because the Biden administration unveiled new
Speaker 4: restrictions on China's access to vital components for chips and
Speaker 4: artificial intelligence, and the Department of Commerce slapping additional curbs
Speaker 4: on the sale of high bandwidth memory and chip making gear.
Speaker 4: It's impacting twenty seven types of chip design and fabrication tools.
Speaker 4: It's also blacklisted one hundred and forty more Chinese entities
Speaker 4: than it accused of acting on Beijing's behalf. Blomberg's and
Speaker 4: mackenzie Hawkins had a busy Thanksgiving period reporting all this out.
Speaker 4: McKenzie and just go first and foremost as to whether
Speaker 4: this actually looked perhaps slightly better to the market than
Speaker 4: some had anticipated.
Speaker 7: So this is what's become kind of the third annual
Speaker 7: update to these sweeping outport controls of the Biden administration
Speaker 7: has levied on companies trying to sell chips and chip
Speaker 7: making gear to China. But the latest controls, which were
Speaker 7: unveiled this morning, came in slightly softer than some proposals
Speaker 7: that officials had floated earlier this year. They didn't sanction
Speaker 7: a handful of key Chinese companies with ties to Huawei
Speaker 7: that they had discussed sanctioning, and they also exempted important allies,
Speaker 7: notably Japan and the Netherlands, which are home to of
Speaker 7: the most important ship tool making companies, from rules that
Speaker 7: restrict additional types of chip making gear from being sent
Speaker 7: to China.
Speaker 4: All of this context is the US trying to limit
Speaker 4: capabilities over in China, trying to home grow a supply
Speaker 4: chain here in the United States, which does involve Intel
Speaker 4: just going back to that story of the day, mackenzie,
Speaker 4: how much do you think the US government is going
Speaker 4: to be upended by change of leadership? How much has
Speaker 4: Intel benefited from the CHIPSACK for example.
Speaker 7: So Intel actually last week solidified a deal for seven
Speaker 7: point eight billion dollars in funding from the CHIPSAC, which
Speaker 7: is this broader fifty two billion dollar program to bring
Speaker 7: chip manufacturing back to the United States. The company i
Speaker 7: said it's committed to its US expansion plans, which include
Speaker 7: more than one hundred billion dollars in investment, ninety billion
Speaker 7: of which will come by the end of the decade,
Speaker 7: and plans to execute on factories in Arizona, Ohio, Oregon,
Speaker 7: and New Mexico. Galsinger's departure shouldn't change the company's plans
Speaker 7: as we see it now, but of course a new
Speaker 7: CEO will have to decide whether to pursue options that
Speaker 7: Galsinger had left off the table, and the US government
Speaker 7: we're watching that closely.
Speaker 4: They will be McKenzie Hawkins, thanks for breaking it all down. Meanwhile,
Speaker 4: we want to get the whole circumference of the chip
Speaker 4: sector for you now with Pierre Faragu from New Street Research.
Speaker 4: Your first take on the announcement of Pat Gelsinger retiring.
Speaker 3: Were you surprised?
Speaker 8: I was very surprised by the abrupt news, like retiring today.
Speaker 8: It is no transition period, so difficult, a difficult situation.
Speaker 8: We knew the board was stands since the summer urum
Speaker 8: early and the CEO of Cadence resigned from the board
Speaker 8: of over the summer, and it was like reflecting like
Speaker 8: difficult conversations. And so it probably looks like, you know,
Speaker 8: Pat loss the continents of the board or didn't get
Speaker 8: the support of the boat for his strategy anymore. And
Speaker 8: basically probably and uh decided to leave abruptly. So so
Speaker 8: that was a surprise now that you know, we are
Speaker 8: four years into the turnaround. Bad direction was let's double
Speaker 8: down and Intel's capabilities in manufacturing. Let's make Intel like
Speaker 8: a leading manufacturer. Let's go large, Uh, you know, go
Speaker 8: big and you know, leverage at a maximum. The political
Speaker 8: support will have to do that. So that was the plan.
Speaker 8: And the plan failed basically because TSMC's model cannot be
Speaker 8: competed against. I think it's that's so we've had from
Speaker 8: the beginning, so Intel being able to preserve manufacturing capabilities yes,
Speaker 8: Intel being like a scalable like like a large scale
Speaker 8: competitor to TSMC is probably not possible for like scale
Speaker 8: and experience reasons, and that's why things failed.
Speaker 4: In August on that very bleak announcement of numbers that
Speaker 4: we had and ish disastrous sell off in the shares.
Speaker 3: Was this restructuring.
Speaker 4: It involved a lot of job losses, but it did
Speaker 4: involve also the sort of peeling away of the foundry
Speaker 4: business to be able to be managed sort of separately
Speaker 4: but alongside Intel. Does that stay or do we start
Speaker 4: to see actual purchasing coming from well with the reports
Speaker 4: previously of Qualcom being interested even the chip designer.
Speaker 8: ARM So the situation is going to be very very
Speaker 8: fluid for quite some time for sure. As you mentioned
Speaker 8: last summer, you know, the word was say to be
Speaker 8: fighting of you know, activist activist Shoulder is getting prepared
Speaker 8: to fight of activity smooth. The stitution is of course
Speaker 8: very complex. On one hand, Intel has manufacturing capabilities. Intel
Speaker 8: has manufacturing capabilities onshore and owned buy like a US
Speaker 8: control company. So it's a very very unique asset, extremely
Speaker 8: valuable in today's cheer political context, and I think Intel
Speaker 8: needs to continue to be able to to build on that.
Speaker 8: So of course there is a tempting, tempting route, which
Speaker 8: is to say, okay, maybe Quale common Intel could merge
Speaker 8: or Qualcome to biot Intel or try and trigger the
Speaker 8: consolidation of that type. I don't see that as good
Speaker 8: as a good opportunity. It's difficult to generate synergies between
Speaker 8: Quale governing Intel. The chips qual Come do are very
Speaker 8: different from the Intel ships. Manufacturing is a complex business,
Speaker 8: so I'm not super you know, that's an area that
Speaker 8: scares me more than anything else.
Speaker 7: You know, bad many.
Speaker 8: Decisions typically can arrive in a situation like that. What's
Speaker 8: more interesting, I think is to be like, okay, how
Speaker 8: can we make sure we create a sustainable US owned
Speaker 8: on us SO manufacturing capability. And if you do that,
Speaker 8: you have quody to admit that you're not going to
Speaker 8: compete with TSMC. You need to partner with TSMC, right,
Speaker 8: you need to find other very large partners that are
Speaker 8: going to super oft to And of course the one
Speaker 8: that comes to mind that has that those maybe to
Speaker 8: the US is in video. So you know, like Engagent
Speaker 8: partnering around manufacturing with TSMC as a partner and Vidia
Speaker 8: as a partner would be a much more interesting route
Speaker 8: to pursue from here.
Speaker 4: There is ongoing breaking news around this story and Bloomberg
Speaker 4: leading the charge with how Pat Gilsinger was inteed forced
Speaker 4: out after the board grew frustrated. The biggest frustration Pier
Speaker 4: was that they missed the AI evolution jumping on and
Speaker 4: being able to ensure that what they produced, which.
Speaker 3: Is GOWI, was able to compete.
Speaker 4: I mean, they're likely to miss that five hundred million
Speaker 4: dollar target for this year when very is busily making
Speaker 4: about one hundred billion a year.
Speaker 8: Yeah, I think it's the frustration came from the lack
Speaker 8: of prudence of the initial plan going to be too large,
Speaker 8: assuming you know, demand would follow as long as you
Speaker 8: can pull together like quality, quality, supply. And yes, the
Speaker 8: underlying causes that uh Intel ended up not being in
Speaker 8: the growing part of the market, and namely it was
Speaker 8: last summer was particularly abrupt, like you see, like the
Speaker 8: complete failure of the Intel AI chips and the fact
Speaker 8: that they would not be at all in the market.
Speaker 8: Him is actually carving out a fairly sustainable niche positioning
Speaker 8: in that market. So that was part of it, But
Speaker 8: I think part probably stuck too much to his initial
Speaker 8: plan with like a very ambitious, very large scale plan
Speaker 8: and should have a year or eighteen months ago thought
Speaker 8: about like you know, changing tag to smaller and more
Speaker 8: colarborative with other players in the market.
Speaker 4: Because yeah, Peah, I mean much of this predated the
Speaker 4: pack coming back in twenty twenty one. That course was
Speaker 4: already kind of paved, and he didn't reorientate quickly enough.
Speaker 4: Where now in terms of leadership and in terms of
Speaker 4: Intel's place in the ecosystem very quickly, please.
Speaker 8: So I think INTE could be specialized in manufacturing in
Speaker 8: the US under US control and ownership and collaborate with
Speaker 8: the rest of the industry instead of instead of competing,
Speaker 8: I think in like smaller scale, remaining like keeping a
Speaker 8: position at the leading edge and leveraging the products of
Speaker 8: Intel like the PC ships and the servitude that are
Speaker 8: still very good and in very high demand.
Speaker 4: Right, Yeah, thank you so much for lending your expertise today,
Speaker 4: Pierre for Ago on New Street research and all things
Speaker 4: intell and chips. Meanwhile, sticking with the error of AI,
Speaker 4: shares of super Micro absolutely soaring today. The company says
Speaker 4: that an external review of its business found no evidence
Speaker 4: of wrongdoing and the company will appoint a new CFO.
Speaker 4: This follows, of course, that tumultuous year for super Micro,
Speaker 4: which is also facing USDOJ probe following a report from
Speaker 4: short seller Hindenburg Research. This, of course, is a company
Speaker 4: that uses in video chips within its servers that it
Speaker 4: sells on two key clients for up thirteen fourteen percent
Speaker 4: over the last two training days. Meanwhile, coming up, we're
Speaker 4: going to break down the Black Friday sales data and
Speaker 4: trends for Cyber Monday. Mick max Richel topograph stick with us.
Speaker 4: There's a bluebog technology. Of course, Today is Cyber Monday,
Speaker 4: and Adobe expects consumers will spend a record thirteen point
Speaker 4: two billion dollars, up six percent year on year. Online
Speaker 4: spending is expected to peak, especially between eight and ten
Speaker 4: pm later tonight, with fifteen point seven million dollars spent
Speaker 4: every single minute.
Speaker 3: That's Eastern time.
Speaker 4: Of course, let's look at all of that Anergy, what
Speaker 4: happened on Black Friday and the weekend?
Speaker 3: Rachel tipographs with US founder and c here mcmack.
Speaker 4: It's an e commerce marketing platform for multi channel brands.
Speaker 4: It feels like a big year I'm certainly getting hit
Speaker 4: with a lot of marketing. Is it feeling that way
Speaker 4: for you?
Speaker 3: Rachel?
Speaker 4: It is.
Speaker 9: You know, despite what's happening in the economy, consumers are
Speaker 9: showing up to really save I want to say spend,
Speaker 9: but it's really about savings right now.
Speaker 3: Okay, that's interesting.
Speaker 4: So it's more about the deal making and how are
Speaker 4: companies managing to access those consumers right now? What innovative
Speaker 4: ways are they using to market across various platforms. Oh,
Speaker 4: do we have some technological issues?
Speaker 3: Rachel?
Speaker 9: Absolutely? You know, when we look at what happened from
Speaker 9: stinks hello, can you hear me?
Speaker 4: Apologies, there's a big delay, Rachel, Do carry on?
Speaker 9: Hello. When you look at what happened between things thank
Speaker 9: Giving and Sunday, the majority of traffic came from social,
Speaker 9: Meta being number one, TikTok being number two, and YouTube
Speaker 9: being number three. If we were looking at results from Gear,
Speaker 9: YouTube wouldn't have made the top three. What's really clear
Speaker 9: right now is brands are recognizing that social is the
Speaker 9: third shelf and wherever short video and creators are, that's
Speaker 9: where brands are investing their dollars in their time to
Speaker 9: gain mind share to then drive traffic to their Black
Speaker 9: Friday deals.
Speaker 4: How Rachel all the companies that are doing well, the
Speaker 4: likes of Walmot we sold release stealing a lot of
Speaker 4: the marketshed and the targets, how are they tracking it?
Speaker 4: How are they making sure that they've got the measurements
Speaker 4: that proves that the investment's making sense to them?
Speaker 9: Absolutely. I mean, if you look at Amazon's earnings or
Speaker 9: Walmart's earnings, it's very clear that these reach tailors are
Speaker 9: now becoming data businesses. They're making eighty to ninety percent
Speaker 9: margins on selling data as a service, and we all
Speaker 9: know they're not making those margins on selling physical goods.
Speaker 9: So when it comes to measurement, major brands are first
Speaker 9: relying on retailer's first party data, but then they have
Speaker 9: to marry that to third party sources because we can't
Speaker 9: all be grading our own homework. So they're turning to
Speaker 9: companies like Mickmac, Adobe Circana, which was the merger of
Speaker 9: Iri NPD to really validate what's happening between Mickmac's data
Speaker 9: and Adobe's data. We're pretty much seeing the same thing.
Speaker 9: In Mickmac. We've seen a one percent one percent increase
Speaker 9: in conversion rates during the Black Friday weekend this year
Speaker 9: compared to last year. If you extrapolate that to what
Speaker 9: Adobe seeing Adobe sawn increase in a billion dollars in revenue,
Speaker 9: that one percent increase in conversision rate marries that one
Speaker 9: billion dollar increase in revenue. So by marrying moremultiple sources
Speaker 9: of truth, we can all start to see the picture
Speaker 9: that consumers showed up. They were really choosy with their
Speaker 9: dollars and they turned to places like Walmart because that's
Speaker 9: where the value is and that's also where breadth of
Speaker 9: merchandise is this holiday season.
Speaker 3: One stop shop is what people are liking.
Speaker 4: Rachel topograph for me, Thank you so much for the expertise,
Speaker 4: CEO of Mick Mac.
Speaker 3: Time now for talking tech. First up, five Canadian news
Speaker 3: media publishers.
Speaker 4: They've sued open ai for breaching copyright, alleging the company
Speaker 4: scraps content to train its AI products. According to an
Speaker 4: open ai spokesperson, is models are trained unquote publicly available data.
Speaker 3: Grounded in fair use.
Speaker 4: Plus Elil Musk has asked a federal court to block
Speaker 4: open ai from pursuing an illegal quote conversion to a
Speaker 4: for profit business. In his latest court filing, Musk repeated
Speaker 4: earlier claims that open Ai broke its promise to him
Speaker 4: and abandoned its founding purpose as a charity, and it
Speaker 4: accepted backing for Microsoft back in twenty nineteen. And In
Speaker 4: Video CEO Jenson Wang is set to meet the Thai
Speaker 4: Prime Minister on Tuesday. The two were expected to discuss
Speaker 4: investment plans and cooperation within the Thai government. The meeting
Speaker 4: comes after and Video announced a buildout of AI data
Speaker 4: centers and manufacturing in Thailand back in October. Now, sticking
Speaker 4: with all things Asia, and let's just talk about China
Speaker 4: and ev makers, in particular Tesla BUYD. We're getting data
Speaker 4: that they've unleashed even more discounts and incentives in China.
Speaker 4: This is a final push to meet annual sales targets.
Speaker 4: Let's break down with Bloomberg's David Welch and look what
Speaker 4: are we getting on offer here in China.
Speaker 2: I think they've been fighting for market share all year long,
Speaker 2: and now everyone's trying to hit their sales goals as
Speaker 2: we get into the last month. So reminds me when
Speaker 2: I looked at some of these deals as Toyota's December,
Speaker 2: to remember that they have every year in the US,
Speaker 2: but this is electric vehicles in China, so zero percent
Speaker 2: plus rebates on some Tesla models. They'd already announced some
Speaker 2: discounts last week, and I think model why BYD has
Speaker 2: been doing this for a while, basically launching a price
Speaker 2: war to put pressure on their competitors gain market share.
Speaker 2: Byd is one of the few EV makers in China.
Speaker 2: The Chinese makes that is that even makes money, so
Speaker 2: it's going to put a lot of pressure on its
Speaker 2: domestic rivals. And then look, Tesla's trying to hang in
Speaker 2: there in a tough market for foreign auto makers, so
Speaker 2: they want to keep the market share up and they
Speaker 2: want to keep the cars moving too, So very good
Speaker 2: deals if you're looking for an EV in China right now,
Speaker 2: and you're seeing some of that in the US as well.
Speaker 4: In the US, maybe some very reasonably priced zero percent
Speaker 4: loans that are going on if you want to be
Speaker 4: making purchases in evs.
Speaker 3: There are new entrants as well within China.
Speaker 4: Shoomi, for example, has made real inroads into the EV market.
Speaker 4: Tesla is dependent on China in many ways, and many
Speaker 4: wonder whether they're going to make their fourth quarter targets
Speaker 4: in terms of sales.
Speaker 3: How difficult is it to navigate China?
Speaker 2: Very tough right now, especially if you're a foreign automaker
Speaker 2: foreign to the Chinese market. The Europeans have had a
Speaker 2: tough time there, so as General Motors, Tesla is trying
Speaker 2: to really stay in the game and they're having to discount.
Speaker 2: One of the reasons you're seeing other car companies like
Speaker 2: General Motors and Volkswagen struggle is they're not as willing
Speaker 2: to discount and sell cars at a loss as the
Speaker 2: domestic producers are. And BYD is driving a lot of
Speaker 2: this because they're huge, they're profitable, they're trying to grow
Speaker 2: all over the world. They've got lower costs, so they're
Speaker 2: able to do it in a lot of ways. And
Speaker 2: you know, there's a bit of a Darwinian game playing
Speaker 2: out in China where the top domestic producers who can
Speaker 2: afford a discount are going to go for market share,
Speaker 2: go for overall size and scale and push some of
Speaker 2: the others, whether they be American and German companies or
Speaker 2: even Tesla itself or some of their own Chinese domestic competitors,
Speaker 2: push them out of business or into downsizing, so they
Speaker 2: just dominate the market. One day. They're already pretty big
Speaker 2: and they just want to be the player in the country.
Speaker 4: Evan Wilch with a pretty brutal help look on evs
Speaker 4: over in China.
Speaker 3: Thank you so much.
Speaker 4: Meanwhile, let's talk about one key carmaker. Stellantis has left
Speaker 4: without clear leadership after a surprise departure from its CEO,
Speaker 4: Carlos Tever's, which was supported earlier by BlueBag News. This
Speaker 4: comes at a time when Stalantis is under pressure to
Speaker 4: halt a sales slide in the US. It's also struggled
Speaker 4: with the European market, where demand for EBS is waning.
Speaker 4: Just as we're just talking about Chinese manufacturers to span
Speaker 4: in the region. Remember they are key when it comes
Speaker 4: to the likes of Fiat and Jeep. Welcome back to
Speaker 4: Blue Meg Technology and Caroline Hide in New York. Let's
Speaker 4: get a quick check on these markets, and let's focus
Speaker 4: in on what's happening when it comes to chips. The
Speaker 4: key story of the day a five percent rise in Intel,
Speaker 4: as the CEO, Pat Gelsinger, hired back in twenty twenty
Speaker 4: one to turn around this iconic chip maker will leave
Speaker 4: the job as that turnaround has thus far failed and
Speaker 4: he's lost the confidence of the board. According to Bloomberg reporting,
Speaker 4: in Vidia is up five ten percent. Look under his tenure.
Speaker 4: It's twenty twenty one at Intel. Intel shares dropped sixty percent,
Speaker 4: in Videa's shares rows eight hundred percent. We shine a
Speaker 4: light on what's happening with the chip sector more broadly.
Speaker 4: We're up two and a half percent on the socks,
Speaker 4: and let's just shift gears a little bit talk chips
Speaker 4: more broadly and how there's some new entrance into the
Speaker 4: AI part of the equation. Jeff Bezos, for example, and
Speaker 4: Samsung are betting big on AI chip startup ten Storrant
Speaker 4: announcing a seven hundred million dollar investment, which puts the
Speaker 4: company now on a two point six billion dollar valuation.
Speaker 4: Joining us to discuss is the CEO of the company,
Speaker 4: Jim Keller, who is himself a legend and chip making world.
Speaker 4: Of course, your resume includes know who's who of AMD, Apple,
Speaker 4: Tesla and indeed Intel. Jim, the money that you're raising,
Speaker 4: what is it that you're hoping to do? You're wanting
Speaker 4: to make a more cheaper operation and option out there
Speaker 4: for AI accelerator chips.
Speaker 1: Yeah, that's right. We're building out the team, we're building
Speaker 1: out our products. We're starting the ship our products, and
Speaker 1: our real mission right now is to bring on developers
Speaker 1: and early customers.
Speaker 4: Let's talk about the customers and what you offer that
Speaker 4: isn't in the market at the moment.
Speaker 3: Jim, what's your selling point?
Speaker 1: Well, we have a couple of things we license our
Speaker 1: IP and we're building a business on that for both
Speaker 1: risk ICPU and AI. We're selling low cost development systems
Speaker 1: like I'm really interested in hitting a much lower cost point.
Speaker 1: And then we open source to our whole AI compiler
Speaker 1: stack and people like the transparency they can see exactly
Speaker 1: what the technology is doing. They actually it's turned into
Speaker 1: a great recruiting vehicle for our software engineers.
Speaker 3: Interesting.
Speaker 4: So let's just go first to the price point, just
Speaker 4: a cheap offering. A lot of that's done by having
Speaker 4: less pricing components. For example, in videos, chips are incredibly expensive.
Speaker 4: We know people pay it because of what they offer
Speaker 4: the full stack in many ways, but they struggle from
Speaker 4: a choke perspective on how bandwidth memory chips in particular, you.
Speaker 3: Don't need them, Why do you need them? Why don't
Speaker 3: you want them?
Speaker 1: Well, it's partly about choices. So there's two choices. One is,
Speaker 1: if you pick a really expensive memory technology, you'll never
Speaker 1: get the price down right, and so you need to
Speaker 1: then make technology decisions to lower your costs. So we
Speaker 1: have a tensor process or architecture, we keep the data
Speaker 1: on chip. More, we have a software stack that's very
Speaker 1: good at partitioning AI workloads across multiple chips, and then
Speaker 1: they can send information and compute packets to each other
Speaker 1: without having to go through memory, and that lowers the
Speaker 1: memory vandwith required and also lets it scale more naturally
Speaker 1: across many chips.
Speaker 3: So I'm a new investor. You brought me on board.
Speaker 3: I'm interested Bezos Samsung.
Speaker 4: But you're saying, look, I'm going to do this with
Speaker 4: more open architecture with cheaper offerings. How much of the
Speaker 4: market shed do you have to get? What sort of
Speaker 4: price point are we looking at for your chip offering?
Speaker 1: Yeah, so this is really wild. The market is so
Speaker 1: big to percent we have to get is actually pretty
Speaker 1: small to be a real value proposition. You know, next
Speaker 1: year we'll die and go to heaven if we make
Speaker 1: two hundred million dollars. We have already booked one hundred
Speaker 1: and fifty million in revenue. I'm really interested in finding
Speaker 1: small players, early players. People want to own their technology.
Speaker 1: People are excited about our software and hardware architecture, and
Speaker 1: you know, I want to grow organically from there. I
Speaker 1: think some people will focus on the big guys first,
Speaker 1: That's not how new technology introductions go. You focus on
Speaker 1: smaller players, people who need a differentiation. And that's what
Speaker 1: we're really that's our mission.
Speaker 4: So what therefore is the mission building in in terms
Speaker 4: of long term value of generative AI of AI applications?
Speaker 4: Do you think that we are in some sort of
Speaker 4: hype cycle? Do you think that actually this market is
Speaker 4: as big as manufacturing in.
Speaker 1: Well, first of all, we are definitely in the hype cycle.
Speaker 1: There's going to be multiple and people say, well, Jim,
Speaker 1: you'll understand it's going to go down next year, and
Speaker 1: then it's going to go up, and it's going down
Speaker 1: low past filter all that stuff. Right, What's really going
Speaker 1: to happen is AI is going to dominate computing over
Speaker 1: the next ten years and we're just starting and the
Speaker 1: hardware is going to change a lot, the software is
Speaker 1: going to change a lot. Like one day you read
Speaker 1: in the papers, LMS can do anything, and the next
Speaker 1: day you read they've hit a limit. Ignore all that stuff.
Speaker 1: We're just starting this. There's going to be massive transformations.
Speaker 1: So what I really wanted tense Torrent to have is
Speaker 1: great computer designers, general purpose CPUs, AI processors, chip design,
Speaker 1: system design, software design. And then the open source stuff
Speaker 1: is really interesting because that engages a community. People are
Speaker 1: really passionate about that to contribute back.
Speaker 4: This is why you're thinking about your own talent team.
Speaker 4: You've managed talent, as we said, sort of across the board.
Speaker 4: You began like you're integraled to the chip design process
Speaker 4: in the US. When you think back to DC and
Speaker 4: then the work that you then did at AMD moving
Speaker 4: to Apple, you were Intel, and I just have to
Speaker 4: go there. On this day that Pat Gelsinger hands in
Speaker 4: his well, hands his hat on off, he's going to
Speaker 4: re resigning. Many would say it's because they didn't get
Speaker 4: into AI quickly enough.
Speaker 3: That was prior to him. What do you make of
Speaker 3: the transition?
Speaker 1: Well, it's hard to say. So I like Pat personally.
Speaker 1: I've met him a number of times. He's a smart guy.
Speaker 1: He really cares. I think the market focuses too much
Speaker 1: on stuff like execution and AI transition the way you
Speaker 1: make money. Get customers to build great products. Like Steve
Speaker 1: Jobs is the best at this focus on the product,
Speaker 1: make the best product you possibly can. And I think
Speaker 1: they need somebody way more hands on, really focus on product,
Speaker 1: and they need to stop talking about AI execution all
Speaker 1: the nonsense. Right when they make the best product, the
Speaker 1: best fab, the best chip, the best GP accelerator, they'll
Speaker 1: do fine.
Speaker 4: Jim, when you're thinking about all of the errors, you
Speaker 4: want to own. How much does US and China factor
Speaker 4: into your growth story?
Speaker 1: So, first of all, we are building open source software
Speaker 1: risk five based technology. We think that's an open platform.
Speaker 1: There's a lot of people interested in that. At the
Speaker 1: same time, you know, there are you know, restrictions by
Speaker 1: the US government and trade rules. We have really good
Speaker 1: lawyers and trade compliance people. We work very closely with
Speaker 1: those those guys. We want to do the right thing
Speaker 1: both for the business and for you know, being compliant
Speaker 1: to what's going on. And it's a changing world and
Speaker 1: we're very involved in that. Short run. Our business possibilities
Speaker 1: are really big, and you know, if China plays in that,
Speaker 1: that'll be interesting. If it doesn't, for you know, various reasons.
Speaker 4: That's fine, got a big valuation. Come back when you're
Speaker 4: executing on the latest round. Thank you, Jim Keller of
Speaker 4: ten Stone, All right, great to have you. Meanwhile, Europe's
Speaker 4: most valuable start up, Housing has moved from software to hardware.
Speaker 4: Company that provided AI software for drones and jet fighters
Speaker 4: and now making weapons of its own, debuting a new
Speaker 4: attack drone. Blum Begs mart Bergen joins US for more
Speaker 4: five billion.
Speaker 3: Euro values start up.
Speaker 4: And this is all about drones potentially to be used
Speaker 4: in terrain for example Russia issue.
Speaker 10: Correct, I mean, so there's a couple of things. They
Speaker 10: have their AI software. Their main feature here is that
Speaker 10: they say they have built software that allows these drones
Speaker 10: to avoid GPS jamming. So a major problem in the
Speaker 10: war in Ukraine has been Russia's electronic warfare that has
Speaker 10: blocked GPS and effectively rendered these drones kind of useless, right,
Speaker 10: And they say that we've built these autonomous drones they
Speaker 10: can get over this GPS issue. Now they're going to
Speaker 10: be shipping these new units. They're said, they're talking to
Speaker 10: Ukraine and their NATO allys. And the way the company
Speaker 10: describes it is they sort of see this as this
Speaker 10: border deterrent, not just in Ukraine but across all the
Speaker 10: eastern flank of countries in Europe that border Russia.
Speaker 4: Let's just talk a little bit about the startup itself,
Speaker 4: pretty cagy around details of the technol energy in sales.
Speaker 4: They didn't want to give a demonstration, but who is
Speaker 4: backing them and who is buying from them?
Speaker 10: So they've had some pretty prominent backers that the most
Speaker 10: early one was Daniel Eck who invested the Spotify founder
Speaker 10: invested through his fund. They received some pretty big investments
Speaker 10: from general catalysts, the US fund that's become much more
Speaker 10: active in Europe, so getting a mixture, i say, of
Speaker 10: European and American investors. They have had a deal with
Speaker 10: SOB to work on the euro Jet fighter, and they've
Speaker 10: also done some deals with Airbus and some drug manufacturers.
Speaker 10: What we haven't really seen is actually, is to our
Speaker 10: point in the story, a clear demonstration of the products.
Speaker 10: You know, a lot of this has been sort of
Speaker 10: bespoke AI deals and kind of working on command and
Speaker 10: control software and making these weapons sort of more intelligent
Speaker 10: and more autonomous. This is the first time we're going
Speaker 10: to actually see something that they produced potentially go into
Speaker 10: the battlefield. They have not shared anything about revenue or profits,
Speaker 10: but as we know, they've raised nearly a billion dollars
Speaker 10: to date.
Speaker 4: We'll see how the HX two performs when we get
Speaker 4: that sort of detail in information.
Speaker 3: Mark Bergen, it's a brilliant story. Thank you.
Speaker 4: Coming up, look at how the fade of TikTok in
Speaker 4: the US can impact future investments in Chinese tech. Michail
Speaker 4: Green of lead Edge Capital that he's joining us. Next,
Speaker 4: this is Blue Meg Technology. Let's get a check in
Speaker 4: on these crypto markets for you and the moment, because
Speaker 4: maybe we've been tempering some of the phenomenal rally that
Speaker 4: we've seen in bitcoin. We're not nearly one hundred thousand dollars,
Speaker 4: Mark quite ninety six thousand where it trade were off
Speaker 4: by one point percent. The whole of crypto seems to
Speaker 4: be partying Miami this week, but I'm looking at Mara Holding,
Speaker 4: so we're down by five point five percent. New kid
Speaker 4: on the block announcing how much it's buying in terms
Speaker 4: of bitcoin onto its balance sheet. This, of course is
Speaker 4: a bitcoin mining company, and micro Strategy has been doing this.
Speaker 3: For several years now.
Speaker 4: We know Michael Saylor has been plowing yet more money
Speaker 4: into bitcoin in the last week, announcing that this morning
Speaker 4: as well. Let's do it all with Isabelle Lee. I mean,
Speaker 4: Michael Saylor showed us how it's done. What they own
Speaker 4: more than thirty maybe even forty billion dollars worth of
Speaker 4: bitcoin on a balance sheet.
Speaker 3: Now Mara is joining.
Speaker 11: It's thirty eight billion, and they're now announcing their fourth
Speaker 11: straight week of buying. It's just really astonishing. We have
Speaker 11: the likes of Kassie Wood really kind of rejoicing. Sounds bad,
Speaker 11: but they're rejoicing the Trump administration because they know that
Speaker 11: this will mean good news for the coin. And as
Speaker 11: you can see, it really bols soed ever since Trump won.
Speaker 11: You can see the chart, it really was just a
Speaker 11: spike higer. And yes we're struggling to hit the one
Speaker 11: hundred thousand mark, but we're inching ever closer there. It's
Speaker 11: around ninety six ninety seven, So that's really a positive news.
Speaker 11: And we have Trump saying on his first day he
Speaker 11: will fire SEC chair Gary Gensler. No need for that
Speaker 11: since Gensler said he will step down. But we have
Speaker 11: Paul Atkins, who served as Republican SEC Commissioner being considered,
Speaker 11: according to reports by Bloomberg.
Speaker 3: So it's really lots of tailwinds.
Speaker 11: For the space. And now we have the establishment takeover
Speaker 11: of fifth as well.
Speaker 4: Yeah, I mean so interesting how at one point Tesla
Speaker 4: was doing the same thing. Companies did have bitcoin on
Speaker 4: the balance sheet, but really it was only Microstructurgy that
Speaker 4: stayed committed. Now we have Mara doing the same thing.
Speaker 4: What's interesting is we did hear from Kathie Wood saying
Speaker 4: praising a new regime under the administration. She's pretty long
Speaker 4: digital asset classes. But where else does she see positivity?
Speaker 11: He sees a lot of positivity, not only in crypto,
Speaker 11: but also in fintech companies and m and a all
Speaker 11: of that. Really all of the things that were clamped
Speaker 11: down under this administration. Remember a lot of the CFTC
Speaker 11: also banned a lot of acquisitions in the tech space.
Speaker 11: So she just sees more loose regulations, softer regulations on
Speaker 11: the space. And when it comes to bitcoin, it's not
Speaker 11: just Marathon Mara Holdings or even micro Strategy acquiring bitcoin
Speaker 11: for the US government potentially being a whale. There's a
Speaker 11: bill that if it's passed, will require a fed to
Speaker 11: sell some of their goal and buy bitcoin. So that's
Speaker 11: good news for the space, but of course it will
Speaker 11: create risks like price volatility in the run up to
Speaker 11: that gold price might think bitcoin might rise, and of
Speaker 11: course whoever holds what will kind of suffer or celebrate.
Speaker 11: But there's really a lot of things happening in this space.
Speaker 11: But it's interesting because now a lot of companies on
Speaker 11: more bitcoin than others.
Speaker 4: It's a bali or thanks crypto, We appreciate it. Look,
Speaker 4: crypto regulation is looming over law makers in Washington, but
Speaker 4: it's not the only tech policy facing uncertainty. Of course,
Speaker 4: the future of TikTok in the United States is also
Speaker 4: up in the air, as well as impacts of President
Speaker 4: elect Trump's threats to impost weeping tarifs, most significantly on
Speaker 4: Chinese goods. Mitchell Green's with us founder and managing partner
Speaker 4: and need Edge Capital, key investor in byte Dance. You've
Speaker 4: been building up that investment in the secondary market, Mitchell,
Speaker 4: and I just want to understand how much of a
Speaker 4: weight you think US China is on it.
Speaker 12: Thanks Carolin for having me, and how much weight do
Speaker 12: I think it is?
Speaker 13: So for us?
Speaker 12: We actually in our base case, assume that we have
Speaker 12: assumed that the US business would have actually not account
Speaker 12: for anything, and we thought it would be banned. What
Speaker 12: you see Trump saying is looks like it may head
Speaker 12: another way. You know, what people say and do in
Speaker 12: Washington on both sides are two very different things. Who knows,
Speaker 12: you know, I think I can't imagine the first thing
Speaker 12: Donald Trump wants to do though, is being TikTok, especially
Speaker 12: when a lot of his big supporters like inn Elon Mosk,
Speaker 12: who I think is you know, probably an ads with
Speaker 12: Mark Zuckerberg, who would be the one to benefit off
Speaker 12: of a you know, being a TikTok band, or like
Speaker 12: a Joe Rogan who's a huge supporter on TikTok, Right,
Speaker 12: I love, I think it's pretty positive for TikTok to
Speaker 12: have Trump in office.
Speaker 4: Meanwhile, Mark Zuckerberg, we understand, has been dining with Trump
Speaker 4: over in mar A Lago last week, so maybe real
Speaker 4: music changes there. But I'm I'm interested more broadly on
Speaker 4: just spell out TikTok and how integral it is too
Speaker 4: broad a bite dance investment choices of yours.
Speaker 12: Yes, so the Chinese business, you know, the you know,
Speaker 12: it's been it's been rumored and reported in the press
Speaker 12: that you know, the North American version of TikTok is
Speaker 12: a single digit percentage of the business. It is not
Speaker 12: a very It is not a giant part of the business.
Speaker 12: I think it is a part of the business where
Speaker 12: a lot of investors or potential investors in it see
Speaker 12: a huge amount of opportunity. You know, I believe that
Speaker 12: TikTok is the biggest existential threat to a business like
Speaker 12: Facebook or you know, Instagram inside Facebook or Snapchat. I mean,
Speaker 12: just go ask millennials in America what they use or
Speaker 12: if you know your own kids, or just look at
Speaker 12: their usage patterns and look at the data around like
Speaker 12: daily active users and how much time has spent on
Speaker 12: all these different apps. And TikTok is a real player.
Speaker 12: But I can assure you Mark Zuckerberg would love to
Speaker 12: have a band. It would be great for his business.
Speaker 4: But Mitchell, your expertise is so great on the show
Speaker 4: because you led or co led some significant investments like
Speaker 4: buy Dance, but also like Ali Barba, you're someone who
Speaker 4: understands the consumer of China where technology is going there.
Speaker 3: How much harder has your life become.
Speaker 4: To access these sorts of deals on secondary market, for example,
Speaker 4: to be long China investments.
Speaker 12: It's not very popular at the moment. We'll put it
Speaker 12: that way, although some of the greatest investors I know say,
Speaker 12: if you do you know, if ninety nine percent of
Speaker 12: investors are doing, If you want to know where public
Speaker 12: markets are doing, ask the ten smartest hedge fund investors.
Speaker 12: And when all of them tell you one, when nine
Speaker 12: of them tell you one thing and one tells you
Speaker 12: the other, you know, do what the one does and
Speaker 12: you'll probably make a lot of money. It is sure
Speaker 12: now of consensus trade at the moment. Buy in China.
Speaker 3: But it is cheap.
Speaker 12: I mean, we can buy byte Dance, and we've been
Speaker 12: buying byte Dance, you know, sub five times earnings for
Speaker 12: a business you know, growing you know, much faster than Facebook.
Speaker 12: So we think it's really cheap and that the risk
Speaker 12: adjusted reward is quite attractive. And in our base case
Speaker 12: model we model the business is zero. Look, we might
Speaker 12: get we might get lucky. The Trump may not ban it, yeah,
Speaker 12: you may. You know, the Chinese economy made start to
Speaker 12: recover some and on any start of the imagination looking
Speaker 12: at public Chinese comps today in the internet space. If
Speaker 12: you look at Tencent or Ali Baba or Sea Trip,
Speaker 12: these things trade that you know, substantially hire multiples in
Speaker 12: five times earning. So not only are we potentially going
Speaker 12: to get earnings growth, we're also going to get multiple
Speaker 12: expansion and MOONI exit. But I can't tell you when
Speaker 12: the company is going public, and I don't think nor
Speaker 12: can anybody else, but tailwinds. Whereas the US political environment
Speaker 12: six months ago. Look, look it was going to be
Speaker 12: a huge headwind. It might become a tailwind, but you know,
Speaker 12: time will tell.
Speaker 4: Mitchell Green found a managing partner of lead Edge Capital.
Speaker 4: You like people on with contrarian ideas. This gets today's
Speaker 4: screen Time letter bloom Meggs Lucashaw writing over the weekend
Speaker 4: about how he's uncovered financial details about Lebron James's media
Speaker 4: company that reveal quite a bit about the current state
Speaker 4: of Hollywood. Because joins us, Now, you were pulled off
Speaker 4: the bench from sitting and consuming content and hanging out
Speaker 4: with family to write the newsletter, because what twenty eight
Speaker 4: million being lost? This is a company that's valued well
Speaker 4: in the heyday, very high.
Speaker 13: Yeah, well, they benefited from the streaming boom that happened, right,
Speaker 13: You add all these companies that were making shows for
Speaker 13: Netflix and Amazon and Disney and others, and those in
Speaker 13: particular affiliated with famous people. Reese Witherspoon's company, Lebron James's
Speaker 13: company raised money at valuations that really, in retrospect, made
Speaker 13: no sense. I mean, Lebron's company got a valuation of
Speaker 13: more than seven hundred million dollars when its revenue was
Speaker 13: high seventy millions, and it lost millions of dollars. And
Speaker 13: you know, they ended up having to pay for it
Speaker 13: in the end because the market crashed a little bit,
Speaker 13: and people are looking at these companies differently.
Speaker 4: They're managing to well get lemon out of Lemons with
Speaker 4: a merger with full Well seventy three.
Speaker 3: Is that going to be Lemonade? What does that deal
Speaker 3: look like?
Speaker 13: Well, look, the deal does give them more scale, and
Speaker 13: I think that will benefit them at a time where
Speaker 13: these companies that they're competing with are giant cutting back.
Speaker 13: It also gives them some complimentary expertises. You know, the
Speaker 13: Lebron's company is very good at unscripted. Full Well is
Speaker 13: also good at unscripted, but does more live events. Lebrons
Speaker 13: has a big branding company. I do think it's probably
Speaker 13: squishing together to challenge businesses to try to solve a problem.
Speaker 13: Sometimes that works, sometimes it doesn't.
Speaker 4: I mean, you talk a lot about Maverick Carter, who's
Speaker 4: kind of the guy who's running the business on the
Speaker 4: daily basis, and he smart things around, not building it
Speaker 4: within Lebron James, but sort of all around Lebron.
Speaker 3: It's sort of like he's been the expert in the building.
Speaker 4: Meanwhile, everyone's trying to work out where content does work.
Speaker 3: Clearly it's working in the theaters right now.
Speaker 4: I mean Wicked and Gladiator or Moana too, seems to
Speaker 4: be one everyone's excited about.
Speaker 13: Yeah, huge weekend at the box office, I mean Moan
Speaker 13: or two, setting records the big animated or biggest Thanksgiving
Speaker 13: opening ever, one of the biggest animated openings ever, I believe,
Speaker 13: the biggest opening of the year, most close to four
Speaker 13: hundred million dollars worldwide. Is just insane. And then the
Speaker 13: you know, the good news for movie theaters. The good
Speaker 13: news for Hollywood is that you had two other movies
Speaker 13: out in Wicked and the sequel to Gladiator that people
Speaker 13: were very excited about. I mean, the stat that blew
Speaker 13: my mind was that seventy five percent of showtimes this
Speaker 13: past weekend were for those three movies.
Speaker 3: Wow, and as kind of everyone's catered for in this scenario.
Speaker 4: Kids are catered for male women no matter what you're.
Speaker 13: Across demographics and reaction, You've got singing, You've yeah, you've
Speaker 13: got a little bit of everything for everyone.
Speaker 4: But the money being made, I mean Gladiator and Wicked,
Speaker 4: I can't imagine prediction cheap to make.
Speaker 3: They have to make some money.
Speaker 13: Yeah, Gladiator very expensive. I think they have owned two
Speaker 13: hundred and fifty million dollars to produce. Some people say
Speaker 13: it's more that's the one that will be the hardest
Speaker 13: to make money on because it's probably going to top out,
Speaker 13: you know, five hundred maybe six hundred million worldwide. Wicked,
Speaker 13: I think maybe one p fifty one seventy five. It
Speaker 13: will make enough to make money, and then Mwan is
Speaker 13: going to make a fortune for.
Speaker 3: Disney As and all the merch. I'm already going to
Speaker 3: hit with that. Bloomberg's Lucas Shaw, we love it. Thank you.
Speaker 3: That does it for this edition of Bloomberg Technology. Do
Speaker 3: not forget to check out our podcast.
Speaker 4: Find it on the terminal, as well as online on Apple, Spotify,
Speaker 4: and iHeart this is a Bloomberg