WEBVTT - ASML Earnings Signal AI Demand Holding Strong 0:00:00.040 --> 0:00:13.520 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live 0:00:13.560 --> 0:00:17.360 from coast to coast with Caroline Hyde in New York 0:00:17.640 --> 0:00:19.640 and Ed Lolow in San Francisco. 0:00:22.360 --> 0:00:25.400 Miss Bloomberg Tech coming up ASML says bookings for its 0:00:25.400 --> 0:00:29.440 most sophisticated chip making machines remain resilient thanks to the 0:00:29.520 --> 0:00:30.560 AI boom. 0:00:30.680 --> 0:00:32.440 That's a whirlwind of data center. 0:00:32.200 --> 0:00:35.000 News and Microsoft cutting a fourth deal. Then Scale among 0:00:35.080 --> 0:00:38.239 others will break it all down, and Apple updates its 0:00:38.320 --> 0:00:40.519 top of the line. I've had pro when other products 0:00:40.560 --> 0:00:44.960 with its own in house chip first a SML the 0:00:45.080 --> 0:00:49.280 maker of EUV equipment, the most sophisticated chip equipment that 0:00:49.479 --> 0:00:53.160 then get sent to key partners around China but also 0:00:53.200 --> 0:00:56.480 around Asia, and they're showing strong bookings. Let's get the 0:00:56.520 --> 0:00:59.920 details of Bloomberg's equities reporter Henry Wren And what's so 0:01:00.160 --> 0:01:05.000 important is it? The EUV Extreme Ultra Violet lithography machines 0:01:05.240 --> 0:01:07.880 seem to be being still snapped up even as China 0:01:07.959 --> 0:01:09.160 has to pull away eventually. 0:01:10.560 --> 0:01:14.839 Yeah, so thanks for having me and for this quarter, 0:01:15.120 --> 0:01:18.800 which is the market focus. Is this EUV order's number 0:01:18.840 --> 0:01:21.560 and has risen to the highest level since late twenty 0:01:21.560 --> 0:01:24.720 twenty three, a huge plus for investors, and that's why 0:01:24.440 --> 0:01:27.600 we've been seeing stock trading higher now. So we know 0:01:27.680 --> 0:01:31.240 that actually mainland China investor chip makers they can't order 0:01:31.600 --> 0:01:35.959 EUV tools directly. They can access a less advanced tool 0:01:36.080 --> 0:01:39.319 called DUV. But it really is a sign that some 0:01:39.440 --> 0:01:44.120 other chip makers, including Samsung in South Korea, including TSMC 0:01:44.160 --> 0:01:48.200 in Taiwan, is stepping up, and to investors, it's an 0:01:48.280 --> 0:01:52.880 early sign that this rapid increase in AI infrastructure is 0:01:52.920 --> 0:01:57.360 actually translating to the orders that ASML has been seeing 0:01:58.000 --> 0:01:59.120 so far in this quarter. 0:02:00.040 --> 0:02:02.800 Interesting is the dominance of Asia as the demand flow 0:02:03.000 --> 0:02:05.280 us starting to pick up for ASML's equipment. 0:02:05.520 --> 0:02:08.760 But they're in the heart of the geopolitical tension right now. 0:02:08.840 --> 0:02:11.560 They must be exposed to concerns around rare earth metals, 0:02:11.680 --> 0:02:14.400 let alone an ability to have to pull away from 0:02:14.440 --> 0:02:15.359 selling into China. 0:02:16.520 --> 0:02:16.760 Yeah. 0:02:16.800 --> 0:02:19.640 Indeed, a lot of discussions on rare earth in the 0:02:19.680 --> 0:02:23.000 morning as well, and ASML said that it has stacked 0:02:23.200 --> 0:02:27.080 enough rare Earth's materials for at least several months because 0:02:27.480 --> 0:02:30.480 realize that we realize that the market has a lot 0:02:30.520 --> 0:02:35.760 of concerns regarding chip equipment makers reliance on those metals 0:02:35.800 --> 0:02:40.640 because analysts said that although in terms of rare earths 0:02:40.760 --> 0:02:43.960 the total material input for ASML, it just accounts for 0:02:43.960 --> 0:02:47.080 a very small amount, but it's still a very critical 0:02:47.280 --> 0:02:51.200 component for its most advanced EUV machines as you mentioned, 0:02:51.360 --> 0:02:54.760 but also for its partners for example, because ASML works 0:02:55.080 --> 0:02:59.640 with other partners for mirrors, for other components for uvs 0:02:59.680 --> 0:03:03.480 as well, so it's a very important ingredient into the 0:03:03.560 --> 0:03:06.280 EUV machines. But so far the company said that it 0:03:06.320 --> 0:03:08.120 hasn't seen major impact. 0:03:08.600 --> 0:03:11.640 Most valuable European stock, Henry Ren, we appreciate the breakdown 0:03:11.639 --> 0:03:13.840 on ASML. Let's stick with that very company in the 0:03:13.880 --> 0:03:16.680 Broader AI conversation. Andrew gardners with us the City Research 0:03:16.760 --> 0:03:19.800 how of European Technology Equity Research, and you have a 0:03:19.800 --> 0:03:21.560 bio rating on a SML, you have a price target 0:03:21.600 --> 0:03:23.120 of more than a thousand euros. 0:03:23.480 --> 0:03:24.320 What takes us there? 0:03:24.360 --> 0:03:28.960 Andrew, good morning, Thank you for having me. Yes, we 0:03:29.080 --> 0:03:31.800 continue to be bullish on ASML, and I would say 0:03:31.919 --> 0:03:35.040 you know this morning's results and the orders in particular 0:03:35.080 --> 0:03:37.800 that you are highlighting with Henry just now are a 0:03:37.840 --> 0:03:41.119 step in the right direction in terms of the potential 0:03:41.120 --> 0:03:44.880 appreciation of this stock. I really think we've we've been 0:03:44.920 --> 0:03:47.200 on a journey over the last year in terms of 0:03:47.360 --> 0:03:51.720 resetting a base for twenty twenty six, and they have 0:03:51.880 --> 0:03:55.880 confirmed this morning that you expectations are at a reasonable level. 0:03:56.280 --> 0:03:58.320 They don't want to yet go so far as to 0:03:58.360 --> 0:04:01.360 call out growth, but at least going to decline next year, 0:04:01.920 --> 0:04:05.040 and I think that's removed one of the key uncertainties 0:04:05.080 --> 0:04:07.720 for the stock, and that's helped to get us to 0:04:07.720 --> 0:04:10.360 where we are today, just shy of nine hundred euros. 0:04:10.840 --> 0:04:14.080 In terms of further appreciation from here, it's all about 0:04:14.120 --> 0:04:17.360 the growth beyond twenty twenty six in my view, and 0:04:17.400 --> 0:04:20.120 that really comes down to some of what you've been 0:04:20.160 --> 0:04:24.039 alluding to with the demand coming from the artificial intelligence 0:04:24.720 --> 0:04:28.960 players into the data center here. Clearly there's a lot 0:04:29.000 --> 0:04:32.960 of momentum in terms of the news flow ASML management. 0:04:33.080 --> 0:04:36.680 We're highlighting that just recently on the conference call. It's 0:04:36.760 --> 0:04:40.000 not yet fully reflected in their order flow, but it's 0:04:40.000 --> 0:04:43.080 something that we expect to come in the future quarters, 0:04:43.480 --> 0:04:45.400 and so it's really that momentum that we'll drive the 0:04:45.400 --> 0:04:46.080 stock higher. 0:04:46.160 --> 0:04:48.160 I love that you say that, Andrew, because I pulled 0:04:48.200 --> 0:04:50.080 this part from your note, which I think was really 0:04:50.080 --> 0:04:53.120 important for our viewers because in particularly say sml acknowledge 0:04:53.200 --> 0:04:57.680 basically the momentum in the chip industry and market more Braorley, 0:04:57.760 --> 0:05:00.040 but this is not yet reflected in firm orders, and 0:05:00.080 --> 0:05:02.960 there's a growing disconnect in the industry between the mirriaud 0:05:03.000 --> 0:05:06.200 of AICHIP deals being announced and the amount of spend 0:05:06.240 --> 0:05:08.000 committed to these equipment companies. 0:05:08.320 --> 0:05:09.280 When will it show up? 0:05:09.320 --> 0:05:13.200 Are you really confident that it will show up, because 0:05:13.200 --> 0:05:17.039 many are questioning the absolute financing of some of these orders. 0:05:18.480 --> 0:05:18.680 Yeah. 0:05:18.839 --> 0:05:24.120 I think it's a critical question for this space, as 0:05:24.160 --> 0:05:26.600 it has been talked about already this morning on this program. 0:05:27.279 --> 0:05:29.920 You're seeing all of these deals being announced by the 0:05:30.040 --> 0:05:36.000 likes of Nvidia, open Ai committing to certain volumes at AMD, 0:05:36.240 --> 0:05:41.400 in Nvidia, the memory companies, and yet ASML sure was 0:05:41.440 --> 0:05:44.640 a healthy order intake of five billion euros, but nothing 0:05:44.920 --> 0:05:47.480 too out of the ordinary for them. You know, certainly 0:05:47.520 --> 0:05:50.840 they've had stronger quarters in terms of order intake. So 0:05:50.960 --> 0:05:53.760 I do think given the lead times in particular, we 0:05:53.800 --> 0:05:56.560 are going to see need to see orders pick up 0:05:56.560 --> 0:05:59.159 in the coming quarters in order to support the future 0:05:59.200 --> 0:06:02.599 demand that's been talked about by the artificial intelligence sector 0:06:02.640 --> 0:06:06.800 in particular. For example, ASML, on the EUV tools that 0:06:06.800 --> 0:06:09.880 you've already highlighted, their lead times are roughly twelve months, 0:06:10.000 --> 0:06:12.760 So even if you're ordering today in the fourth quarter, 0:06:13.240 --> 0:06:14.920 you're not going to get those tools until the fourth 0:06:15.000 --> 0:06:18.520 quarter of next year, ramping production into twenty twenty seven. 0:06:19.000 --> 0:06:21.240 So the lead times are quite long, and therefore the 0:06:21.279 --> 0:06:25.720 supply chain needs to be prepared for that ramp to come. 0:06:26.160 --> 0:06:28.880 Andrew, you don't cover the stocks in particular, but if 0:06:28.920 --> 0:06:32.440 you are thinking about an announcement coming from Nvidia saying 0:06:32.480 --> 0:06:35.160 we're going to be there with thousands of chips ready 0:06:35.160 --> 0:06:37.560 by twenty twenty six to be put into which have 0:06:37.600 --> 0:06:39.680 a data center that open Air has just asked for, and. 0:06:39.720 --> 0:06:42.320 The AMD as well, do you think the backlog is. 0:06:42.279 --> 0:06:45.000 There that they've got them the inventory to be able 0:06:45.040 --> 0:06:47.640 to sustain the twenty twenty six dates that we keep 0:06:47.640 --> 0:06:48.720 getting from these companies. 0:06:50.760 --> 0:06:53.920 So in terms of thinking through the supply chain, you 0:06:54.160 --> 0:06:57.359 take ASML as a critical supplier, the only one in 0:06:57.400 --> 0:07:00.680 the world who can supply the EUV tools that necessary 0:07:00.720 --> 0:07:05.040 for many of these chips. They are close to but 0:07:05.080 --> 0:07:08.800 not quite fully booked for twenty twenty six deliveries. That 0:07:08.920 --> 0:07:11.440 will be the case by the end of twenty twenty five, 0:07:11.880 --> 0:07:14.880 given that twelve month lead time, and so really the 0:07:14.920 --> 0:07:18.160 capacity that is already planned to be installed next year, 0:07:18.720 --> 0:07:20.560 Sure there could be a little bit of upside, but 0:07:20.960 --> 0:07:24.240 we're already getting close to the limits, and really, as 0:07:24.240 --> 0:07:26.640 I described earlier, what you're playing for is the growth 0:07:26.760 --> 0:07:31.080 into twenty twenty seven. SML management this afternoon here in 0:07:31.120 --> 0:07:34.320 Europe commented on the fact that they don't have perfect 0:07:34.400 --> 0:07:37.559 visibility because those orders aren't there yet, but they are trying. 0:07:37.960 --> 0:07:41.000 They're acknowledging the growth in the industry, the demand that 0:07:41.120 --> 0:07:44.040 is coming, and they're trying to prepare themselves and indeed 0:07:44.040 --> 0:07:46.840 their suppliers to be able to make sure that they 0:07:46.840 --> 0:07:49.080 are not going to be a bottleneck into future years. 0:07:49.280 --> 0:07:52.000 What was so notable about this quarter just gone that 0:07:52.040 --> 0:07:54.480 they reported on for SML was the forty two percent 0:07:54.960 --> 0:07:57.840 exposure still to China in terms of revenue. How much 0:07:57.840 --> 0:07:59.520 smaller will that became lad eventually? 0:08:01.160 --> 0:08:03.520 Yeah, So they have called that out in terms of 0:08:03.600 --> 0:08:06.000 the expectation for twenty twenty six and saying it's going 0:08:06.040 --> 0:08:11.640 to decline significantly unquote into next year. I would say, 0:08:11.680 --> 0:08:15.120 on a year to date basis through September, they're at 0:08:15.160 --> 0:08:18.840 about thirty two percent of system sales into China. As 0:08:18.840 --> 0:08:21.120 you point out, that was higher in the third quarter 0:08:21.160 --> 0:08:24.040 at about forty two percent, So they're still generating very 0:08:24.040 --> 0:08:27.960 strong business in China at the moment. They're just saying 0:08:28.000 --> 0:08:32.480 given the extended level of spend this year, last year, 0:08:32.559 --> 0:08:35.440 indeed the year before that, they think it should normalize 0:08:35.520 --> 0:08:38.800 into the future. At the moment, though, with the restrictions 0:08:38.800 --> 0:08:41.199 in the way that they are, the Chinese companies are 0:08:41.600 --> 0:08:45.200 ordering what they can and so yeah, we'll just have 0:08:45.320 --> 0:08:48.000 to see exactly how that pans out into twenty twenty six. 0:08:48.480 --> 0:08:50.360 The lead times for the type of tools that the 0:08:50.440 --> 0:08:53.120 Chinese customers are buying are not twelve months in the 0:08:53.120 --> 0:08:56.440 way that they are for EUV They're much shorter, six months, 0:08:56.440 --> 0:08:59.840 perhaps even less in some cases. So again, things could 0:09:00.400 --> 0:09:01.960 as we look into twenty twenty six. 0:09:02.280 --> 0:09:04.640 Andrew, you cover ASML and the who's who of the 0:09:04.640 --> 0:09:06.080 European hardware sector. 0:09:06.320 --> 0:09:08.200 We appreciate you being on the show today. 0:09:08.200 --> 0:09:16.800 Andrew Gardner of City Research, Apple updated this. 0:09:16.880 --> 0:09:18.240 Top of the line iPad pro. 0:09:18.120 --> 0:09:20.320 As well as this vision pro headset and the fourteen 0:09:20.320 --> 0:09:23.680 inch MacBook Pro, rounding out a series of product refreshes, 0:09:23.720 --> 0:09:25.960 all ahead of the crucial holiday shopping season that the 0:09:26.000 --> 0:09:29.720 new products all use Apple's latest in house chip five. 0:09:30.280 --> 0:09:32.800 US Consumer Tech editor Mark German joins us for more. 0:09:33.120 --> 0:09:35.720 How impactful is it that they're going yet more and 0:09:35.800 --> 0:09:38.200 more on their own supply chain, their own hardware. 0:09:39.320 --> 0:09:42.280 Well using in house chips, of course, is you know, 0:09:42.360 --> 0:09:44.840 paramount to what Apple has been doing under Tim Cook 0:09:44.880 --> 0:09:46.760 for the last you know, a decade and a half 0:09:46.840 --> 0:09:48.959 or so. But in terms of these new products today, 0:09:49.880 --> 0:09:53.199 this is probably the most minor set of Apple product 0:09:53.200 --> 0:09:57.400 refreshes that I could remember in recent history. What they've 0:09:57.400 --> 0:10:01.559 done here is essentially taking design from prior years, the 0:10:01.600 --> 0:10:04.839 iPad pro design from last year, the MacBook Pro design 0:10:04.880 --> 0:10:07.400 they've been using since twenty twenty one. Obviously, the Vision 0:10:07.440 --> 0:10:10.880 Pro rolled out at the beginning of twenty twenty four, 0:10:10.920 --> 0:10:11.559 and they put. 0:10:11.400 --> 0:10:12.680 New processors inside. 0:10:12.720 --> 0:10:14.920 So for the Vision Pro, going from the M two 0:10:14.960 --> 0:10:17.000 to the M five, that is a size of a leap. 0:10:17.559 --> 0:10:19.160 The UI should be a bit smoother. 0:10:20.080 --> 0:10:22.880 The device is now more comfortable, but still thirty five 0:10:22.960 --> 0:10:26.360 hundred dollars. So the fundamentals of the product have not 0:10:26.520 --> 0:10:30.559 changed to any major extent the MacBook Pro. What they've 0:10:30.559 --> 0:10:33.080 done here is they've split the line in terms of 0:10:33.160 --> 0:10:35.920 rollout timing between the entry level and the high end. 0:10:36.480 --> 0:10:38.800 So the high end machines with higher end versions of 0:10:38.840 --> 0:10:41.400 the M five chip that won't come out until early 0:10:41.520 --> 0:10:44.000 next year, and then of course the iPad pro that 0:10:44.640 --> 0:10:48.040 got a gigantic upgrade with the M four version last year. 0:10:48.240 --> 0:10:50.040 So this is about just bringing up to the latest 0:10:50.080 --> 0:10:54.480 processor in terms of upgrades. Very unlikely that anyone should 0:10:54.600 --> 0:10:57.920 or will upgrade if they have the last generation versions 0:10:57.920 --> 0:11:00.120 of those products, but ahead of the holiday season and 0:11:00.520 --> 0:11:01.480 they keep everything humming. 0:11:01.840 --> 0:11:03.400 So if we want something really new, we have to 0:11:03.400 --> 0:11:05.640 think about the new home devices eventually coming on tap. 0:11:05.640 --> 0:11:07.679 There's a great story on the terminal about where these 0:11:07.720 --> 0:11:11.000 are coming from. It seems as though they're leaning less 0:11:11.040 --> 0:11:13.160 on China all at the same time as Tim Cooks 0:11:13.160 --> 0:11:15.280 trying to say he's going to invest more in the country. 0:11:16.960 --> 0:11:17.880 Yeah, both can be true. 0:11:17.920 --> 0:11:19.840 They're going to up their investment in China, but at 0:11:19.840 --> 0:11:24.199 the same time, for some newer products they're going to differentiate, 0:11:24.320 --> 0:11:29.080 they're going to diversify. They're working with BYD obviously known 0:11:29.080 --> 0:11:33.680 as a electric car maker predominantly in Asia. They also 0:11:33.800 --> 0:11:37.120 do mass manufacturing. They've been doing some final assembly for 0:11:37.200 --> 0:11:40.800 Apple for some iPads over the last year or so. 0:11:41.720 --> 0:11:44.640 They're going to do these new devices. Why is that interesting? 0:11:44.679 --> 0:11:47.960 Typically when Apple rolls out an entirely new product category, 0:11:48.080 --> 0:11:51.160 they start with China. This time around, they're starting with Vietnam, 0:11:51.360 --> 0:11:54.120 where they already, like I said, make some iPads. They 0:11:54.160 --> 0:11:56.840 make the vast majority of Apple watches and air pods 0:11:56.880 --> 0:11:58.840 for the US market, and they also make. 0:11:58.720 --> 0:12:03.040 Some home podsloomg's Mark German always with the latest, We 0:12:03.080 --> 0:12:08.239 so appreciate it. Meanwhile, in China, a fatality involving Shaomi's 0:12:08.360 --> 0:12:11.200 SU seventy and v saidan when it's renewed. Scrutiny on 0:12:11.360 --> 0:12:14.800 flush door handle designs bystanders were unable to open the 0:12:14.840 --> 0:12:17.560 doors for the vehicle to rescue a suspected drunk driver 0:12:17.679 --> 0:12:21.240 during a collision, who died when the vehicle burst into flames. Now, 0:12:21.280 --> 0:12:24.760 flush door handles they've recently come under scrutiny globally, Tesla 0:12:24.800 --> 0:12:27.480 now facing an investigation after the Bloomberg reported incidents related 0:12:27.520 --> 0:12:29.960 to the door design, and Rivian also saying they'll be 0:12:30.040 --> 0:12:33.440 redesigning their handles in an upcoming future model. For more, 0:12:33.480 --> 0:12:37.040 Bloomberg's Creatudel joins us and your team have been so 0:12:37.280 --> 0:12:39.880 on top of what has become a global concern about 0:12:39.920 --> 0:12:41.840 the design of door handles in the latest evs. 0:12:42.240 --> 0:12:44.480 Yeah, and the big concern here, I feel like in 0:12:44.840 --> 0:12:50.680 these issues of crashes and battery fires is particularly the 0:12:50.720 --> 0:12:53.760 troubles that people are having with getting into these vehicles 0:12:53.800 --> 0:12:58.079 from the outside. Yes, there are issues with mechanical releases 0:12:58.160 --> 0:13:02.000 that are different from inside the inside the vehicle and 0:13:02.400 --> 0:13:04.600 different from the typical way you get out of the vehicle. 0:13:04.640 --> 0:13:08.120 But what's really I think alarming for people and particularly 0:13:08.160 --> 0:13:11.959 for first responders, is if these door handles are built 0:13:11.960 --> 0:13:15.440 from the outside to where they just aren't operable when 0:13:15.559 --> 0:13:19.960 the low voltage battery fails or sort of you know, 0:13:20.040 --> 0:13:24.559 purposely goes out of commission to sort of prevent against 0:13:24.840 --> 0:13:28.680 these battery fires. You're just not able to get into 0:13:28.679 --> 0:13:31.800 the vehicle without bashing through a window or some other means. 0:13:31.840 --> 0:13:36.520 And so to have built a vehicle where the external 0:13:36.520 --> 0:13:40.800 door handles are inoperable without low voltage battery, that's just 0:13:40.840 --> 0:13:42.920 a problem and sort of on its face a concern 0:13:42.960 --> 0:13:43.720 for regulators. 0:13:43.880 --> 0:13:45.880 Well, why we might see a rush of buying many 0:13:45.960 --> 0:13:49.400 hammers and cutters to go inside vehicles At the moment, Craig, 0:13:49.400 --> 0:13:51.839 which the latest purchase I've just made, It might be 0:13:51.920 --> 0:13:54.400 focused on the regulatory pushback, and you're seeing China in 0:13:54.400 --> 0:13:57.600 particular looking for feedback open comment by November twenty ten, 0:13:58.360 --> 0:14:01.240 November the twenty second. But what else are we expecting 0:14:01.320 --> 0:14:02.800 Chinese regulators to do here? 0:14:03.160 --> 0:14:06.040 Yeah, I think it's interesting that you know this is 0:14:06.640 --> 0:14:10.120 this has been spurred. This rulemaking and this soliciting of 0:14:11.000 --> 0:14:13.960 views from the industry got underway because there was a 0:14:14.000 --> 0:14:18.120 similar incident back in March, also involving a Gaomi vehicle. 0:14:18.679 --> 0:14:18.800 Uh. 0:14:19.040 --> 0:14:22.160 And so we've seen the regulator in China move pretty 0:14:22.200 --> 0:14:24.520 quickly here in terms of you know, there was an 0:14:24.600 --> 0:14:27.440 incident that got a lot of attention, there's this second incident, 0:14:27.800 --> 0:14:31.400 and I think interestingly we may see some manufacturers not 0:14:31.480 --> 0:14:35.200 necessarily wait for the regulator to change the rules. I 0:14:35.240 --> 0:14:39.600 think Linda LUs a story about this latest incident out 0:14:39.640 --> 0:14:43.280 today goes into this idea that you know, some manufacturers 0:14:43.320 --> 0:14:47.080 already are changing their their door handled designs to take 0:14:47.120 --> 0:14:50.080 into account that this is a concern. And I think 0:14:50.200 --> 0:14:52.160 one of the things that we've seen in China's car 0:14:52.240 --> 0:14:55.040 market is just the level of competition is so intense 0:14:55.480 --> 0:14:58.160 that any way you can sort of sell your cars 0:14:58.200 --> 0:15:03.040 being incrementally better from different performance aspects, including safety. You're 0:15:03.080 --> 0:15:04.880 going to jump at that opportunity. 0:15:05.120 --> 0:15:06.120 Zeker jumping at it. 0:15:06.160 --> 0:15:09.320 The nine exports utility vehicle already going back to an 0:15:09.320 --> 0:15:12.200 old school kind of handle and a return to common 0:15:12.280 --> 0:15:14.360 sense is for one consultancy called it. 0:15:14.400 --> 0:15:16.560 Blooms Creatudell. Thanks so much. 0:15:17.200 --> 0:15:19.440 Now coming up, we're going to be talking all things quantum. 0:15:19.440 --> 0:15:22.440 The CEO of d Wave joins us. This is Bloomberg Tech. 0:15:46.960 --> 0:15:50.160 News out of Europe from d Wave, which develops quantum 0:15:50.160 --> 0:15:53.080 computing systems. Today the company announced an agreement with the 0:15:53.120 --> 0:15:56.720 Swiss Quantum Technology to deploy a D wave advantage to 0:15:56.840 --> 0:15:59.720 quantum computer in Europe. It's expanding access to the technology. 0:15:59.720 --> 0:16:03.440 Glue DA CEO Alan Ratz joins us now from Lake Como, 0:16:03.800 --> 0:16:06.680 which of course very close to Switzerland. In Italy where 0:16:06.720 --> 0:16:09.200 the announcement comes from. Alan, what does it mean to 0:16:09.240 --> 0:16:10.640 be deploying this right. 0:16:10.440 --> 0:16:11.080 Here right now? 0:16:12.640 --> 0:16:15.760 So we are going to be deploying an advantage to 0:16:16.120 --> 0:16:19.600 quantum computer here in the region. And it will be 0:16:19.840 --> 0:16:28.040 available to researchers, scientists, businesses in Italy to basically explore 0:16:28.240 --> 0:16:31.960 how to make the best use of quantum computers. This 0:16:32.000 --> 0:16:36.800 is a part of the Q Alliance which was announced yesterday. 0:16:37.080 --> 0:16:39.360 The WAVE is a founding member of the Q Alliance 0:16:39.560 --> 0:16:42.640 and that's all about bringing quantum to Italy and support 0:16:42.640 --> 0:16:44.640 of their Digital Transformation initiative. 0:16:45.760 --> 0:16:49.640 Let's talk about the FOY four hundred plus cubit advantage 0:16:49.640 --> 0:16:53.440 shoe system. What can it do that is more sophisticated 0:16:53.600 --> 0:16:56.320 than classical computers today. 0:16:56.040 --> 0:17:01.320 Alan So, our four four hundred cubit advantage to quantum 0:17:01.360 --> 0:17:05.000 computer is arguably the largest and most powerful quantum computer 0:17:05.119 --> 0:17:08.240 in the world. At over four thousand cubits. We have 0:17:09.040 --> 0:17:13.200 almost ten times more cubits than anybody else and with 0:17:13.240 --> 0:17:17.840 respect to the power of the processor, we recently published 0:17:17.880 --> 0:17:21.399 in Science a paper showing that we are able to 0:17:21.560 --> 0:17:26.800 compute properties of materials on our quantum computer in minutes 0:17:27.600 --> 0:17:30.800 that it would take nearly a million years to compute 0:17:30.920 --> 0:17:34.760 on the fastest supercomputers in the world. So this is 0:17:35.119 --> 0:17:40.720 literally computing properties that can't be computed classically. This is 0:17:40.720 --> 0:17:44.960 what everybody in the quantum industry has aspired to, namely, 0:17:45.359 --> 0:17:49.000 the ability to do something important and useful on a 0:17:49.080 --> 0:17:52.040 quantum computer that can't be done classically, and this advantage 0:17:52.040 --> 0:17:54.200 to quantum computer has achieved that goal. 0:17:54.480 --> 0:17:56.439 I believe you solved a physics problem on the behavior 0:17:56.440 --> 0:18:00.119 of magnetism, particularly in certain solids. What's interesting is a 0:18:00.160 --> 0:18:03.280 ton of phrase arguably, Alan, Why is it only arguably 0:18:03.359 --> 0:18:05.600 the most powerful at the moment? How is your technology 0:18:05.640 --> 0:18:09.600 differing or or still try to measure itself out versus 0:18:09.680 --> 0:18:10.600 others out there. 0:18:11.760 --> 0:18:16.240 Yeah, so when it comes to the ability to perform 0:18:16.359 --> 0:18:21.080 a computation on a useful problem that can't be solved classically, 0:18:21.920 --> 0:18:25.439 we have the only quantum computer in the world that 0:18:25.720 --> 0:18:29.480 is capable of doing that today. I use the word 0:18:29.760 --> 0:18:33.680 arguably in the context of largest when I talked about 0:18:33.720 --> 0:18:36.560 four four hundred cubits, and the reason why I did 0:18:36.560 --> 0:18:41.320 that is because DWave quantum computers today are what's called 0:18:41.440 --> 0:18:46.359 annealing quantum computers. Everybody else in the industry is pursuing 0:18:46.440 --> 0:18:49.800 a different approach called Gate model quantum computers, and while 0:18:49.800 --> 0:18:53.600 they have many fewer cubits, the nature of the cubits 0:18:53.720 --> 0:18:57.439 is a little different between annealing and gate model. So 0:18:57.520 --> 0:19:00.359 we believe that at four thousand and four one hundred 0:19:00.400 --> 0:19:05.560 and knealing cubits, we are significantly larger than anybody else 0:19:05.640 --> 0:19:08.240 because all these other gate model systems have tens to 0:19:08.280 --> 0:19:12.280 a few hundred cubits. But there is an academic debate 0:19:12.560 --> 0:19:14.400 around the difference between the cubits. 0:19:14.800 --> 0:19:18.280 What's interesting is you are making and generating real revenue. 0:19:18.440 --> 0:19:19.720 It's small, but it's there. 0:19:20.400 --> 0:19:23.159 But the market capitalization of yours and many other quantum 0:19:23.160 --> 0:19:26.680 computing companies has just gone so far up into the 0:19:26.760 --> 0:19:31.639 right Allen, is the promise and hope being shown up 0:19:31.640 --> 0:19:33.919 in reality from orders because this is Europe taking a 0:19:33.960 --> 0:19:35.560 ten million euro step forward. 0:19:35.720 --> 0:19:36.760 What about other deals? 0:19:38.040 --> 0:19:41.720 Yeah, So we announced at the end of last year 0:19:42.119 --> 0:19:44.960 that we had sold a quantum computer to the Ulick 0:19:45.240 --> 0:19:50.080 Supercomputing Center in Germany. They purchased that system to connect 0:19:50.119 --> 0:19:57.960 it to their Jupiter exoscale supercomputer to explore new AI workflows. 0:19:58.440 --> 0:20:01.439 And then earlier this year we announced that we had 0:20:01.480 --> 0:20:06.000 signed a memorandum of understanding with Yansai University and Incheon 0:20:06.119 --> 0:20:10.040 City in South Korea for the acquisition of a quantum 0:20:10.040 --> 0:20:13.960 computer there. And we have frankly a number of other 0:20:15.280 --> 0:20:21.479 countries and research centers that are interested in acquiring our 0:20:21.560 --> 0:20:24.600 quantum computers as well, and that's just with respect to 0:20:24.840 --> 0:20:28.480 purchasing of the quantum computers. Our quantum computers today are 0:20:28.520 --> 0:20:32.679 also used commercially in support of a broad array of 0:20:32.720 --> 0:20:38.480 business applications. For example, North Wales Police is using us 0:20:38.560 --> 0:20:43.680 to compute the best way to forward place police vehicles 0:20:43.720 --> 0:20:48.960 to be able to arrive at incidents in a timely fashion. 0:20:49.480 --> 0:20:52.000 These customers use us over the cloud, so we have 0:20:52.080 --> 0:20:55.400 both a cloud based business and an on premise. 0:20:55.040 --> 0:20:58.200 Business North Wales UK or Australia. 0:20:59.280 --> 0:20:59.480 UK. 0:21:00.640 --> 0:21:04.040 Fascinating, absolutely fascinating. Thank you very much for data, Alan Barats. 0:21:04.040 --> 0:21:06.960 It's learning about the European focus that you seem to 0:21:07.000 --> 0:21:09.440 be having with the business in particular US based company 0:21:09.600 --> 0:21:11.399 and the new announcement out of lake Como. 0:21:11.560 --> 0:21:19.880 We wish you well over their d Waceo. Welcome back 0:21:19.880 --> 0:21:22.600 to Blue Beg Tech. Let's tack in on these markets. 0:21:22.240 --> 0:21:26.399 Because we are trading higher once again, new AI deals, 0:21:26.560 --> 0:21:30.040 AI compute deals helping push up then as that one hundred, 0:21:30.040 --> 0:21:32.080 we're at one point two percent. Amid some of the 0:21:32.080 --> 0:21:35.000 geopolitical risks, we continue trading higher. Let's go onder the 0:21:35.000 --> 0:21:37.200 hood and look, what's really moving from a points perspective. 0:21:37.200 --> 0:21:38.960 We know about the AIRSMEL numbers, we. 0:21:38.920 --> 0:21:41.520 Know about the optimism that chip equipment is still selling strong. 0:21:41.680 --> 0:21:42.520 Well, let's have a look. 0:21:42.440 --> 0:21:44.800 At AMD and indeed in video both of them getting 0:21:44.960 --> 0:21:47.960 some more mighty price target raises over at HSPC today 0:21:48.320 --> 0:21:51.240 more than eight percent. In fact, AMD is your leader 0:21:51.320 --> 0:21:54.040 in terms of points moves on the Nasdaq one hundred. 0:21:54.119 --> 0:21:55.520 Again, this hope that yet. 0:21:55.359 --> 0:21:58.359 More AI compute needs means more desire for their chips, 0:21:58.359 --> 0:22:00.400 and they are making an indent on the likes VideA, 0:22:00.440 --> 0:22:02.760 but in VideA could go high to the tune of 0:22:02.920 --> 0:22:06.320 what an eight trillion dollar company is what HSBC is 0:22:06.320 --> 0:22:08.960 currently outlining or one hundred and eighty one as we speak, 0:22:09.000 --> 0:22:11.320 up nine ten percent on the day. Let's dig into 0:22:11.320 --> 0:22:13.720 that particular report a little bit more and just the 0:22:13.800 --> 0:22:17.439 AI further more broadly with Bloomberg executive reporter Ryan Lastelica 0:22:17.440 --> 0:22:21.840 and Ryan they are seeing significant market cap accretion. 0:22:22.280 --> 0:22:25.160 To invidea on what over at HSBC. 0:22:25.720 --> 0:22:27.399