Speaker 1: From Mahard where Innovation, Money and Power Collie in Silicon
Speaker 1: Vallet NBN. This is Bloomberg Technology with Caroline Hyde and
Speaker 1: Ed Ludlow.
Speaker 2: Live from New York and San Francisco. This is Bloomberg
Speaker 2: Technology coming up. TSMC's US plant yields surpassed that of
Speaker 2: similar factories in Taiwan.
Speaker 3: What that means for the US chip ambitions.
Speaker 4: And the Biden administration's planning a concrete strategy on the
Speaker 4: US military's use of AI in warfare.
Speaker 2: And Alphabet's autonomous driving unit. Weimo raises five point six
Speaker 2: billion dollars in its largest ever funding round. But first
Speaker 2: we check back on the public markets and new record
Speaker 2: high for the NASTAK. The Broader Technology indexes up one
Speaker 2: point three percent on the day. Consumer sentiment looks strong
Speaker 2: on the day, inject some risk on across the board,
Speaker 2: but most notably, we're still seeing the key magnificent seven
Speaker 2: players managing to drive up to a new record high end.
Speaker 3: What are you watching on the micro.
Speaker 4: Well, I want to get to that breaking news from
Speaker 4: this morning about WEIMO raising five point six billion dollars
Speaker 4: its largest ever round. It was a Series C and
Speaker 4: remember WAIMO is the autonomous driving unit of Alphabet, the
Speaker 4: parent of Google. Alphabet's leading the round, And actually I'm
Speaker 4: not drawing a direct causal link, but the stock did
Speaker 4: push higher after the open when that news hit. Later
Speaker 4: in the show will bring you the full details of
Speaker 4: the RAM because some really interesting names in the world
Speaker 4: of finance participating in it, and a lot of attention
Speaker 4: on autonomous driving right now. Elsewhere, our top story is TSMC.
Speaker 4: The basics of what Bloomberg's reporting is that its first
Speaker 4: US chip plant in Arizona has achieved yields that surpassed
Speaker 4: that of equivalent plants in its domestic home of Taiwan.
Speaker 4: An important political story and important industry story. These are
Speaker 4: the ADRs or US listed shares up almost three percent.
Speaker 5: Har more details, Yeah, let's.
Speaker 2: Get to it because, as you mentioned, just the nuance
Speaker 2: there of the yields in the first plant in Arizona
Speaker 2: that are surpassing similar.
Speaker 3: Factories back home.
Speaker 2: It's a significant breakthrough many feel for a US expansion
Speaker 2: project initially played by delays by worker strife in King
Speaker 2: joins US for some of the backstory on this because
Speaker 2: it was hard to get to this position that they're
Speaker 2: currently in.
Speaker 6: Yeah, there was several reports there was labor issues. Can
Speaker 6: they really do this outside of their home base? Is
Speaker 6: this big bet that the US government is making on
Speaker 6: a foreign company to bring them to the US where
Speaker 6: they really haven't done very much in the past. Is
Speaker 6: that all going to work out? And what TSMC and
Speaker 6: our sour Thing is indicating is, well, yes, it is
Speaker 6: working out.
Speaker 4: I think it's worth explaining to the Bluemote Technology audience
Speaker 4: what yield is and why it's important. I've had to
Speaker 4: go at it and we'll bring the definition up on
Speaker 4: the screen. But it's basically the volume or number of
Speaker 4: usable chips in a batch, and that's super important when
Speaker 4: you think about profit and efficiency.
Speaker 6: Yeah, I mean the key phrase here is production yields.
Speaker 6: That means basically, if you don't have production yields, you
Speaker 6: shouldn't be in production. You are losing money on what
Speaker 6: you're doing. How many of these things do you have
Speaker 6: to throw away? Proper production backs because you have to
Speaker 6: throw away a lot in the early stages. What they're
Speaker 6: saying here is, hey, we've got through those early stages,
Speaker 6: perhaps quicker than had been expected, and we're in a.
Speaker 2: Good position, in a good position, What then, is the
Speaker 2: ramifications for the US focus on bringing production to the
Speaker 2: United States. Are we going to see yet more TSMC production?
Speaker 2: Are we going to see yet more money coming from
Speaker 2: the federal government.
Speaker 6: I mean, there's no doubt that, given the landscape, that
Speaker 6: that is what the US government would want from TSMC.
Speaker 6: We've got Intel, as we know, having problems. We've got
Speaker 6: Samsung as we know, having some issues with its foundary business.
Speaker 6: So if we want this production in this country, TSMC
Speaker 6: has to be the leading vehicle for that.
Speaker 4: I wouldn't read too much into it. I would say
Speaker 4: that the timing and manner by which we came to
Speaker 4: this information is interesting.
Speaker 5: Could you help me explain why.
Speaker 6: The US needs a win?
Speaker 7: Right?
Speaker 6: The Biden administration needs a win.
Speaker 4: Right.
Speaker 6: There's a lot of negative newsflow around what's going on
Speaker 6: with this initiative. At the same time, if you're TSMC,
Speaker 6: you've been criticized for what you've done here, for not
Speaker 6: going as big as possible, for coming in with an
Speaker 6: older production technique. So perhaps you want to remind the
Speaker 6: world that actually, no, we are in the lead.
Speaker 8: We can do this. We know what we're doing.
Speaker 5: On shoring is one part.
Speaker 4: The other part is the export control which we can
Speaker 4: talk about a little bit more bloombergsy and King thank
Speaker 4: you very much. I want to bring an Annya Manuel
Speaker 4: for more on this exact point. Executive director of the
Speaker 4: Aspen Strategy Group and former diplomat. Let's just start with
Speaker 4: the basics of this whole situation. TSMC the sort of
Speaker 4: crown jaw of Taiwan technology industry having success early in
Speaker 4: the US and the support of the US to do
Speaker 4: it in the context of China. That's a difficult one.
Speaker 9: That's right.
Speaker 10: This is really very good news, and it means that
Speaker 10: the Biden policy of both having some tough export controls
Speaker 10: on certain very small critical technologies, but also these subsidies.
Speaker 10: I think TSMC got six billion in subsidies, five billion loans.
Speaker 10: Other companies are getting similar That project of pushing our
Speaker 10: semiconductor industry forward is actually working.
Speaker 2: We come to you because of your rich experience when
Speaker 2: it comes to foreign policy, the work that you do
Speaker 2: with the Aspens Strategy Group, the work that you've done
Speaker 2: with the US government thus far. What do you grade
Speaker 2: this focus of the United States on shoring of chip
Speaker 2: supply from an A to a D.
Speaker 3: Are they surpassing.
Speaker 10: Expectations it's a good question I would give it about
Speaker 10: So the important thing is to keep our eye on
Speaker 10: the long term ball. There are certain key technologies where
Speaker 10: the US and our friends and allies should stay in
Speaker 10: the lead. We should be more advanced than the Chinese,
Speaker 10: who are becoming more and more competitors in that space.
Speaker 10: We do that in two ways, by slowing them down
Speaker 10: that's the export controls, and by speeding ourselves up. My
Speaker 10: personal view is that we've done pretty close to what
Speaker 10: we can do to slow the Chinese down.
Speaker 9: They're great entrepreneurs themselves.
Speaker 10: We have some very tough export controls on the most
Speaker 10: advanced chips and also on the tools that makes the chips.
Speaker 9: Making those controls even tougher.
Speaker 10: Nilatterly on the US side won't slow China down. It
Speaker 10: just means our companies won't have the revenue that they
Speaker 10: need to fund the research and development to keep ourselves
Speaker 10: in the lead.
Speaker 2: Let's just set the context of this week as well,
Speaker 2: because there will some cups, shall we say, to the
Speaker 2: US focus on containing semiconductor expertise, limiting it from going
Speaker 2: into Chinese hands. In particular, we hear that TSMC has
Speaker 2: had to admit that somehow it's chips are working its
Speaker 2: way into Huawei's products, even though Huawei has been cut
Speaker 2: off in theory since twenty twenty. News today that al
Speaker 2: Chip Technology said it has no director and direct business
Speaker 2: dealings with Huawei. Of course, many trying to work out
Speaker 2: how and which client of TSMC's allowed the chips to
Speaker 2: get into the hand of Huawei. But how effective can
Speaker 2: these limitations really be on you?
Speaker 10: That's a perfect question, and this example shows exactly how
Speaker 10: difficult it is. You know, there are lots of well
Speaker 10: meaning people in the US government in European governments trying
Speaker 10: to get this right and trying to make the controls
Speaker 10: narrowly focused and effective, very very hard to do.
Speaker 9: I think they're doing quite a good job.
Speaker 10: I worry, however, that, for example, you see some folks
Speaker 10: in the might go into a Trump administration very tough
Speaker 10: on China, China hawks, saying well, we're just going to
Speaker 10: control more, We're going to put more companies on the
Speaker 10: entity list. And as you're seeing with this TSMC example,
Speaker 10: even when people are well meaning, it's just very very.
Speaker 9: Difficult to do things with controls alone. You've got to run.
Speaker 5: Faster, which is more powerful.
Speaker 4: Then we've covered the export controls part of this story
Speaker 4: deeply on this program, but they almost work in parallel.
Speaker 5: You sort of can't have one way out the other.
Speaker 4: If your end goal is to make your own nation
Speaker 4: more competitive than any given field or domain.
Speaker 9: That's absolutely right.
Speaker 10: I'm firmly on the side of running faster is better.
Speaker 10: We have an amazing innovation engine. I live out here
Speaker 10: in California. You all report on it all the time.
Speaker 10: We're doing great, so we need to make sure that
Speaker 10: engine keeps running and keeps running fast. One of the
Speaker 10: things that's underappreciated. Everyone always talks about the CHIPSAC the
Speaker 10: subsidies to semiconductor fabs. What they don't talk about so
Speaker 10: much is that there was supposed to be one hundred
Speaker 10: and seventy billion dollars for going into basic science R.
Speaker 9: And D funding.
Speaker 10: This is really important. This creates all of the technologies
Speaker 10: of the future, you know, okay, Serie, GPS, and so
Speaker 10: those are the things we should be doubling down on.
Speaker 5: ANYA.
Speaker 4: At the same time, China is taking its own action.
Speaker 4: How closely do you follow and assess their response to
Speaker 4: the TSMC situation.
Speaker 10: China is great. They're doing a lot of innovating. Their
Speaker 10: companies are excellent. If you look at, for example, what
Speaker 10: they're doing on artificial intelligence, they're large language models.
Speaker 9: The biggest models.
Speaker 10: In AI are depending who you ask, three six, nine
Speaker 10: months behind because of our chip's controls. But on certain
Speaker 10: other parts of artificial intelligence, computer visions, surveillance, drones, they're
Speaker 10: really first rate.
Speaker 9: So the Chinese are going to keep running fast.
Speaker 10: And I would just say one thing this, this policy
Speaker 10: needs to be nuanced. It's not like we are competing
Speaker 10: with China on absolutely every technology.
Speaker 9: There's certain areas where we.
Speaker 10: Should still collaborate on healthcare, tech, on other things. It's
Speaker 10: just those things that touch national security that are really
Speaker 10: sensitive that can be dual use, where we need to be.
Speaker 3: More careful push us forward.
Speaker 2: Then, no matter what the administration ofter November fifth, sixth,
Speaker 2: will there forever be this idea of tension and ultimately
Speaker 2: opposing nations between China and US when it comes to AI.
Speaker 2: Do you see any grounds for a more dubbsh approach?
Speaker 9: Yeah?
Speaker 10: I do think we are entering a phase where the
Speaker 10: Chinese government, led by Si Jinping specifically, has said they
Speaker 10: want to advance in certain technologies AI semiconductors, five G,
Speaker 10: six G, certain others. They've set this out in the plan,
Speaker 10: and they want to have a very dominant military, and
Speaker 10: those two things are quite worrying. Understandably so to the US,
Speaker 10: Europe are friends and allies, and so I do think
Speaker 10: no matter who wins our election, this part of the
Speaker 10: technology race, and I don't call it a war, I
Speaker 10: call it a tech race, is going to continue. This
Speaker 10: is a big, long term push that's going to continue.
Speaker 10: That doesn't mean, however, that the US and China can't
Speaker 10: do business.
Speaker 9: Together and lots of other areas.
Speaker 10: When I see companies in the consumer sector and agriculture
Speaker 10: and other places still doing a lot of work with China,
Speaker 10: it doesn't mean that there has to be a completely
Speaker 10: coupling nuance.
Speaker 3: We love it.
Speaker 2: Anna Manuel, thank you, executive director of the Aspen Strategy Group.
Speaker 3: Coming up, how the UK Prime.
Speaker 2: Minister is looking to win over skeptics with they plan
Speaker 2: to lead on.
Speaker 3: Your guest at artificial intelligence.
Speaker 2: That's next, there's a bring back technology.
Speaker 4: After some early confusion around the UK Labor Party's commitment
Speaker 4: to AI, Prime Minister Kiss starm is now positioning himself
Speaker 4: as a champion for AI. His party's inaugural investment summit
Speaker 4: last week. He even appeared alongside former Google CEO Eric
Speaker 4: Schmidt and called AI an opportunity rather than something to
Speaker 4: be scared of. Let's bring in Bloomberg's Matt Bergen, who's
Speaker 4: out in London for us, and let's ask the simple question,
Speaker 4: what is the UK's AI plan.
Speaker 5: Well, we don't know it yet.
Speaker 11: Wear our story today we talked to Secretary Cumpeter Kyle,
Speaker 11: who's the Secretary for Science and Technology runs the department here.
Speaker 11: He said, they're coming out with two false strategy and
Speaker 11: one is this opportunities plan where they're going to be
Speaker 11: using AI both for they talk about for improvements in
Speaker 11: the public sector and for the private sector, and we've
Speaker 11: seen a little bit of that in the public sector
Speaker 11: so far. The second part is the prom a legislation
Speaker 11: around AI, and what he told us very explicitly is
Speaker 11: we are not going to go as far as the
Speaker 11: EU have. They basically said the EU has gone it's
Speaker 11: kind of overreached on AI, overregulated in a way. This
Speaker 11: is an opportunity, one of the silver silver linings for Brexit,
Speaker 11: if you will. For a Labor Party, which which stood
Speaker 11: against that obviously, and they've given kind of two rough
Speaker 11: commitments that AI bill. One is that the AI labs
Speaker 11: are going to have to make their voluntary commitments they
Speaker 11: made last year, made those into law, and he's going
Speaker 11: to have a new agency to kind of monitor and
Speaker 11: enforce the safety and criteria for these frontier rols like
Speaker 11: open AI and Google.
Speaker 2: Piece of Carl though the UK Science of Technology Secretory
Speaker 2: rather upended everyone though earlier by having to it seems
Speaker 2: nix a couple of very important investment areas in to
Speaker 2: ultimately compute and I'm interested as to how he's tried
Speaker 2: to navigate that a little bit more and educate us
Speaker 2: why he did it.
Speaker 11: Yeah, that's correct. I was kind of shocking to a
Speaker 11: lot of investors here. And so that was a project
Speaker 11: in Scotland, one of the countries very few kind of
Speaker 11: these supercomputing projects. His explanation from that, and the Labor
Speaker 11: Party's explanation is that the prior government promised this money
Speaker 11: without allocating the funds. They are in a big fiscal
Speaker 11: hole that they're trying to fill, among other things, discussing
Speaker 11: the possibility of capital gains tax and some measures that
Speaker 11: the tech community is very afraid of and doesn't want
Speaker 11: to happen. I think they certain people we've talked to
Speaker 11: around the Labor government who advised them admit that that
Speaker 11: was sort of clumsy handling of that, But he told
Speaker 11: us that they're reevaluating the computing budget for the country.
Speaker 2: Mob you cover bench capital in the UK and Europe.
Speaker 2: What is the VC community to say right now? What
Speaker 2: is the amount of money going into AI and AI
Speaker 2: innovation compared to the US and globally.
Speaker 11: Yeah, I mean it's it's small, and there's a concern
Speaker 11: that the UK will is is losing its footing to France,
Speaker 11: which has invested quite a bit and the government has
Speaker 11: been like working the prop up the industry. There's a
Speaker 11: concern that the efforts not just of say pension funds
Speaker 11: moving into VC, but but government research project. I think
Speaker 11: the other side of that is, you know that they're
Speaker 11: defenders of the government that are saying they're much more realistic.
Speaker 8: We had Rishi.
Speaker 11: Sunak, the Prime Minister, talking about the UK being a
Speaker 11: scigned superpower, having Elon Musk on stage. Some of those
Speaker 11: things that maybe weren't realistic for the UK to be.
Speaker 4: Caroline and I have some experience in reporting on the
Speaker 4: UK government and in the context of things like AI,
Speaker 4: they often add in many buzzwords and political words like efficiency,
Speaker 4: some of which we've mentioned in this conversation. But are
Speaker 4: they actually acting with the private sector, not just the vcs,
Speaker 4: but you cover the startups too, right, They need kind
Speaker 4: of some relationship there to move forward.
Speaker 11: Yeah, I think you know, the term we heard a
Speaker 11: lot was it's a wait and see. I think right
Speaker 11: now they're they're certainly having conversations with the startup industry.
Speaker 11: They are the choice few sort of AI startups that
Speaker 11: are promising that are involved in conversations. But I don't
Speaker 11: think we've seen a lot of evidence of them either
Speaker 11: being drawn in as government contracts or partners. But that's
Speaker 11: something that at least in LIB service they're talking about
Speaker 11: a lot.
Speaker 3: We want to thank you, Mart Bergen.
Speaker 4: It's time for talking tech and first start. Four astronauts
Speaker 4: have made touchdown back on Earth. SpaceX's Crew eight capsule
Speaker 4: landed earlier this morning after undocking from the International Space
Speaker 4: Station on Wednesday. The crew arrived at the ISS on
Speaker 4: March fifth, but could not return due to delays and
Speaker 4: issues with Boeing Starliner two Boeing Starliner test pilots are
Speaker 4: still stuck in space for the return set for February plus.
Speaker 5: Elon Musk is said to have.
Speaker 4: Had secret conversations with Russian President Vladimir Putin. That's according
Speaker 4: to The Street Journal, who say the two have been
Speaker 4: chatting regularly since twenty twenty two on a wide ranging
Speaker 4: number of topics, including business and geopolitical issues. And Tesla
Speaker 4: is drawing up an eclectic menu as it prepares to
Speaker 4: open a fifties diner been charging station in the heart
Speaker 4: of La where.
Speaker 5: Ev drivers will be able to grab a bite.
Speaker 4: Or catch a movie or topping off their battery assign
Speaker 4: the industry's moving away from the utesarian utilitarian.
Speaker 5: Gas station model. It's something I thought i'd never read.
Speaker 3: Character I say it, that's quite cool.
Speaker 2: Meanwhile, let's talk about the Biden administration saying that the
Speaker 2: US must accelerate its adoption of AI for military and
Speaker 2: intelligence use. In a new national security memorandum, the White
Speaker 2: House outlined efforts to maintain an edge of arrivals and
Speaker 2: increase safety. Courtney rosen imanly by government joins US now,
Speaker 2: and you've really been focusing in on why the US
Speaker 2: government is suddenly ramping up this narrative.
Speaker 3: What's behind it? Corney.
Speaker 12: Well, the primary partomle of this is that US adversaries
Speaker 12: are already deploying AI in their militaries and their intelligence uses.
Speaker 12: And that's what President Biden's National security advisor said yesterday.
Speaker 9: He said that.
Speaker 12: These things are advancing without American values, and so the
Speaker 12: US has to keep up in order to keep up
Speaker 12: with the adversaries.
Speaker 5: Courney.
Speaker 4: I want to get into kind of the specifics of
Speaker 4: what a strategy might look like, but I think to
Speaker 4: be fair to our audience on Bloomberg Technology around the world,
Speaker 4: we're all kind of conscious that we have a US
Speaker 4: presidential election in less than two weeks. Therefore, the existing
Speaker 4: administration has a time limit on what it can or
Speaker 4: can't do while in office. Just kind of take that
Speaker 4: and explain that bit to us.
Speaker 5: Please.
Speaker 12: This memo that President Biden's team published yesterday lays out
Speaker 12: a whole bunch of to do lists for military officials,
Speaker 12: intelligence officials. The President's not going to be in power
Speaker 12: long enough to see a lot of that through, so
Speaker 12: we need to be thinking about what the next president
Speaker 12: would do on these issues now. The Republican platform says
Speaker 12: that President Trump would repeal a lot of the Biden
Speaker 12: administration's consumer policies on AI. It doesn't really have a
Speaker 12: take on military and intelligence uses. So that's one particular
Speaker 12: vision forward. And then you've got Vice President Kamala Harris,
Speaker 12: who has really been the face of AI for this
Speaker 12: administration on the international stage and had a hand in
Speaker 12: developing a lot of these policies. So two very different visions.
Speaker 12: But regardless, it's not going to be President Biden who's
Speaker 12: executing on these things.
Speaker 4: Accorney, on this program, we talked to companies all the time,
Speaker 4: like Palenteer and Anderill, private sector, publicly traded companies or
Speaker 4: startups that tell us they're working more and more with
Speaker 4: the government. What about from the government's side, is this
Speaker 4: strategy they plan based on working with the private sector.
Speaker 3: Yes.
Speaker 12: Jake Sullivan, who's President Biden's National security advisor, yesterday made
Speaker 12: a speech about this Artificial intelligence and national security strategy,
Speaker 12: and he devoted a lot time to talking about how
Speaker 12: AI innovation is largely happening in the private sector and
Speaker 12: not in government. There was a lot of talk about
Speaker 12: how the US government's going to have to work with
Speaker 12: tech companies to make that happen in a way that
Speaker 12: maybe they hadn't in different eras of technology.
Speaker 5: Now.
Speaker 12: I was sitting in a room here in Washington a
Speaker 12: couple months ago during NATO when Oracle Saffricats said something
Speaker 12: very similar that the tech is existing in the companies,
Speaker 12: the government is behind, and the two have to get
Speaker 12: along to make this work.
Speaker 2: What's interesting is the ethics around it and any limitations
Speaker 2: coming from the United Nations. There is this tension around
Speaker 2: autonomous weapons and AI, and ultimately they're used in the battlefield.
Speaker 2: How is that something that perhaps Jake Sullivan is speaking
Speaker 2: to or trying to navigate.
Speaker 12: They put together what they call or what I would
Speaker 12: call a risk based approach. Right, the riskiest uses of
Speaker 12: AI in military and intelligence settings, for example, use it
Speaker 12: to make decisions about weapons targeting, like what you were
Speaker 12: talking about, that should require the most safeguards and the
Speaker 12: most thinking about ethics. Tasks that are smaller don't necessarily
Speaker 12: need those kind of guardrails, according to the Biden administration.
Speaker 12: So they're really thinking about this as tiers of risks,
Speaker 12: which matches up what they've done with consumer AI as well.
Speaker 2: And is it going to be the companies that we've
Speaker 2: just referenced the ones that are already leading away. Are
Speaker 2: they looking to spark even smaller companies to be integrated
Speaker 2: within government.
Speaker 12: Right now? The strategy. President Biden directed his procurement teams
Speaker 12: at the Department of Defense to work on expanding the database.
Speaker 12: I'll call them a vendors for this technology, and so
Speaker 12: they're definitely trying to yes, of course work with the
Speaker 12: big guys like what you've talked about, but also to
Speaker 12: engage with the startup community and to make sure that
Speaker 12: they have access to this opportunity to help the US
Speaker 12: government and help the military right just as much as
Speaker 12: the bigger players would.
Speaker 4: Be their government reports at Courtney Rosen. Great to have you,
Speaker 4: Thank you very much.
Speaker 3: Welcome back to Bluemot Technology. I'm Caroline Hyde.
Speaker 5: In New York and I med Loveo in San Francisco.
Speaker 3: Quick check on these markets.
Speaker 2: We're just tentatively near that record high that we saw
Speaker 2: on an injury day basis. If we managed to hold
Speaker 2: on to some of these gains, maybe we will crack
Speaker 2: that new record for the NASDAC. We're currently up eight
Speaker 2: ten percent over the course of the week. Look another
Speaker 2: volatile one. We're still trying to digest what meet the
Speaker 2: Federal Reserve is really going to do in terms of rates,
Speaker 2: what that means for some of the main big winners
Speaker 2: in technology. But what drags the naws back to a
Speaker 2: new record high today in the same names that have
Speaker 2: led the twenty four percent rally over the course of
Speaker 2: the year. Of course, it's going to be the likes
Speaker 2: of Nvidia on top. It's also going to be Tesla
Speaker 2: finally seemingly breaking back into some of the Magnificent seven
Speaker 2: on the week at least, but you've had number of
Speaker 2: the key names outperforming. We're up nine tenths of percent
Speaker 2: on the week, and a lot more of that on
Speaker 2: the day, ed, but we've got a lot more when
Speaker 2: we're digging into individual names, we want to shine, like
Speaker 2: what's happening with Apple because we're down on the week,
Speaker 2: but we've been up on the day.
Speaker 3: But notably your drawing attention.
Speaker 2: To one key analyst report, we want to get into
Speaker 2: what Key Bank is saying and why they think some
Speaker 2: of Apple's well. Analysts views on Apple are just too
Speaker 2: optimistic investors embedding too much on Apple's growth.
Speaker 3: But there's a lot going on for Apple right now.
Speaker 4: Yeah, particularly with a lens on China, and also next week,
Speaker 4: Apple plans a series of events which are expected to
Speaker 4: include the rollout of new Mac models with the new
Speaker 4: M four chip. Those chips are designed to support AI capabilities,
Speaker 4: including Apple's own platform, Apple Intelligence here with more Bloomberg's
Speaker 4: tech editor Dana Wolman, and always interesting how they communicate
Speaker 4: this interesting that Apple has earnings Thursday and then a
Speaker 4: series of events running up to it. But Mark German,
Speaker 4: our chief Correspundence, do a lot of reporting about these
Speaker 4: macs and the processes going into them.
Speaker 13: Yes, absolutely, it looks like Apple is looking to create
Speaker 13: a Meganews cycle for itself next week around its Mac
Speaker 13: lineup ahead of the key holiday shopping season, and it
Speaker 13: does seem that the M four chip is coming to
Speaker 13: a series of Mac products that would include the iMac,
Speaker 13: the MacBook Pro, and the Macmini, the Macmini being often
Speaker 13: a forgotten child in Apple's lineup, but Mark has reported
Speaker 13: that the Macmini specifically is due for a pretty drastic
Speaker 13: design refresh coming up, one that would see the device
Speaker 13: getting much much smaller than it already is.
Speaker 2: Let's set this into the context of what's needed from
Speaker 2: Apple later in the next week, because at the moment,
Speaker 2: there is anticipation that Apple is going to be fueled
Speaker 2: by artificial intelligence into weaving itself into all of its
Speaker 2: products and it's going to manage to outperform. The stock
Speaker 2: has already done pretty well, and Key Bank Capital markets
Speaker 2: on it, and it's just saying we're baking in too much
Speaker 2: right now.
Speaker 13: Yes, with their point is that, and this really I
Speaker 13: don't think is disparagement of Apple. Really, their point is
Speaker 13: just that the underlying expectation is not realistic. That it's
Speaker 13: assuming that Apple will grow across all of its product
Speaker 13: lines at once, across all regions, and statistically that is
Speaker 13: not impossible.
Speaker 3: Exactly.
Speaker 13: It has happened before, and we're talking about an event
Speaker 13: that happens once every few years, if not once a
Speaker 13: decade roughly.
Speaker 4: I want to go back to what Cara alluded to earlier,
Speaker 4: which is one cell side firm, KEYBMP, has basically cut
Speaker 4: Apple to sell. But what they're talking about is something
Speaker 4: really interesting happening in China. In China, you have iPhone
Speaker 4: sixteen cells. The data is confusing, frankly about whether it's
Speaker 4: doing well or not. But Apple intelligence isn't available in China.
Speaker 4: And yet the evidence tells us the consumer might be
Speaker 4: buying the handset because they believe in the future at will.
Speaker 4: What do we know about what on earth is going on?
Speaker 13: I would agree with you the sales data so far
Speaker 13: has been inconsistent at best. Initially, it seemed that Apple
Speaker 13: really had to cut prices or retailers had to cut
Speaker 13: prices in China to boost sales this spring. And yet,
Speaker 13: as you said, the early numbers for the iPhone sixteen
Speaker 13: in China have been encouraging. And that's despite the fact
Speaker 13: that sales of other otherwise luxury goods in China have
Speaker 13: been soft around in the same period. So those are
Speaker 13: good early indicators. I don't think the results next week
Speaker 13: should shed much light on iPhone sixteen sales specifically.
Speaker 3: It's just too soon to know.
Speaker 13: But I do think there will be a lot of
Speaker 13: scrutiny on China sales specifically next week when the company's
Speaker 13: earnings come out.
Speaker 2: We're expecting a five percent increase in revenue, up some
Speaker 2: five percent to ninety four billion dollars for Apple. On
Speaker 2: Halloween is when the numbers come out. Thirty first and
Speaker 2: a woman, We thank you so much. Now here with
Speaker 2: more Thomas Martin, senior portfolio manager at Globalt Investments. Let's
Speaker 2: just talk a little bit about Apple and as it
Speaker 2: sits in the context of the Magnificent seven, just as
Speaker 2: we look towards next week and we start to get
Speaker 2: this bumper crop of earnings.
Speaker 8: If you being optimistic, well we are feeling optimistic.
Speaker 7: I mean, these are companies that are growing their earnings
Speaker 7: and their revenues, and they have had a little bit
Speaker 7: of a you know, I guess not slow down, but
Speaker 7: they haven't been as strong as they were in the
Speaker 7: first half of the year, and the fundamentals underlying them
Speaker 7: in terms of driving their revenues and their earnings, are
Speaker 7: still pretty strong. So we're hopeful that we can get
Speaker 7: some good reports out of them.
Speaker 4: So that is very interesting, Thomas, I will if you
Speaker 4: allow me to do a bit of scene setting. I
Speaker 4: think we agree that the mag seven were the big
Speaker 4: driver of the S and P five hundred in the
Speaker 4: first half of this year, but that's kind of changed
Speaker 4: since July, right when that index, if you call it
Speaker 4: an index, peaked, and if you take the basket of
Speaker 4: the mag seven or the five that will report next,
Speaker 4: I think the earnings grope expectations about nineteen percent sub
Speaker 4: twenty percent, way beyond the S and P five hundred.
Speaker 4: But it's also the slowest rate of EPs growth.
Speaker 5: For like six quarters.
Speaker 4: So how optimistic are you give us a sort of
Speaker 4: relative frame of reference.
Speaker 7: Well, I think that's a good point, and I think
Speaker 7: that applies also to the market in general, is that
Speaker 7: we did have a big run up to a new
Speaker 7: high and we're back.
Speaker 8: Above that high again.
Speaker 7: I mean, we're off at a little bit now from
Speaker 7: the all time high, but here we are. And the
Speaker 7: seasonality of the market has really been brought forward in
Speaker 7: every case, and so we were supposed to maybe have
Speaker 7: some weakness here in September and October.
Speaker 8: October's almost over, and we really haven't seen that.
Speaker 7: And we're supposed to have a rally into the end
Speaker 7: of the year from that weekend point, and we may
Speaker 7: not get that. It may have been kind of pulled through.
Speaker 7: And so the one reason to not be as optimistic
Speaker 7: is regardless of what the results are, is that the
Speaker 7: market says, you know, we just we need to take
Speaker 7: a little breather here for these companies that are up
Speaker 7: so strongly, I mean, twenty seven percent on the Russell
Speaker 7: one thousand growth and the.
Speaker 8: MGK you know, the large cap mega growth Thomas.
Speaker 4: Which corners of the very large world of technology do
Speaker 4: you like the most?
Speaker 7: Well, we still do like the semiconductor companies that are
Speaker 7: part of the AI movement. And so even though in
Speaker 7: Nvidia is back up to its old high the outlook
Speaker 7: for what they have and the demand for their product
Speaker 7: uh and just the underlying driver of the need for
Speaker 7: this large language models, et cetera, and the AI is
Speaker 7: still in the earn early innings of it. So those
Speaker 7: are companies that, even though you know, along with the
Speaker 7: other companies in the index, are at highs, still have
Speaker 7: the fundamentals to support it. And we also like those
Speaker 7: industrials that would fit that method too.
Speaker 2: What's interesting within Video is we have to wait all
Speaker 2: the way to the twenty first November for their numbers,
Speaker 2: but we're going to get a lot of signals coming
Speaker 2: from the so called hyperscalers, whereas Alphabet, Amazon the spending.
Speaker 3: Coming from Meta.
Speaker 2: How much is still going to be ultimately plowed in
Speaker 2: to in Video's chips. Do you think that this quarter
Speaker 2: will still show that level of commitment and investment that
Speaker 2: we've been used to in the previous quarters.
Speaker 7: Well, it will be critical and everybody's going to be
Speaker 7: watching those CAPEX numbers very carefully. I do think that
Speaker 7: it will still be there. It's too early for them
Speaker 7: to back off. And the reason that they would back
Speaker 7: off on their capital spending is if there is a
Speaker 7: slowdown in their revenues and their business and their costs
Speaker 7: other costs go up, they would need to cut back
Speaker 7: in order to keep the EPs growth going. But I
Speaker 7: don't think that were at that point yet, or maybe
Speaker 7: even in the next couple of quarters.
Speaker 8: That could be a risk though for later on. In
Speaker 8: twenty twenty.
Speaker 4: Five, Thomas Martin, Senior portfolio manager at Global Investments, Happy Friday,
Speaker 4: thank you for.
Speaker 5: Joining us on the show. A piece of news.
Speaker 4: Cryptocurrency exchange Kraken is set to name a new co CEO.
Speaker 4: Argent Seti, who's the co founder of the venture firm
Speaker 4: Tribe Capital, is set to lead Kraken alongside current CEO
Speaker 4: Dave Ripley. Kracken's been expanding into new product areas and
Speaker 4: considering a final funding round before a potential IPO offering
Speaker 4: all of back Carrow, according to a Bloomberg source.
Speaker 2: One to watch Meanwhile, let's stick with crypto for a moment,
Speaker 2: because the companies are making a massive investment in the
Speaker 2: upcoming election. Of course, all in an effort to ensure
Speaker 2: politicians take the industry more seriously. Bloomgs Tim Stenowick has
Speaker 2: more on the growing impact it's having on races across
Speaker 2: the country.
Speaker 1: Cryptos involved in the US election cycle like never before.
Speaker 1: Campaign donations have poured in supporting politicians more friendly toward
Speaker 1: the industry and opposing skeptics. Crypto backers have directed more
Speaker 1: money to support their industry than any other interest group.
Speaker 1: Leading the way is the super Pac Fairshake, which backs
Speaker 1: Republicans and Democrats as long as they back crypto and
Speaker 1: attacks members of both parties who don't. It's raised more
Speaker 1: than one hundred and sixty million dollars at the company level.
Speaker 1: Coinbase leads the way, followed by Ripple and then in
Speaker 1: recent Horowitz. When added up, crypto donors have given more
Speaker 1: than one hundred and ninety million dollars at the federal level.
Speaker 1: Coinbases predicting political financing will translate to regulatory results, I
Speaker 1: think there's.
Speaker 8: No question about it.
Speaker 13: We are going to see a pro crypto Congressromerge regardless
Speaker 13: of the particular outcome in individual races, and of course
Speaker 13: the outcome in the presidential race.
Speaker 1: In the presidential race, former President Donald Trump said back
Speaker 1: in twenty twenty one that bitcoin quote seemed like a scam.
Speaker 1: Now he's become crypto's most high profile proponent.
Speaker 14: This afternoon, I'm laying out my plan to ensure that
Speaker 14: the United States will be the crypto capital of the
Speaker 14: planet and the bitcoin superpower of the world.
Speaker 15: Today, I take the oath of office. Joe Biden.
Speaker 14: Kamala Harris's anti crypto crusade will be over.
Speaker 5: In fun day.
Speaker 2: One, I will fire Gary Gensler and appoint a new
Speaker 2: SEC chair.
Speaker 1: On the Democratic side, Vice President Kamala Harris strikes a
Speaker 1: potentially softer stance on SEC chair Gary Gensler. Her campaign's
Speaker 1: crypto plan, though, is considered more vague. In a policy statement,
Speaker 1: which is part of the Opportunity Agenda for Black Men,
Speaker 1: it reads quote, make sure owners of and investors in
Speaker 1: digital assets benefit from a regulatory framework so that black
Speaker 1: men and others who participate in this market are protected.
Speaker 1: It does show that both candidates recognize the importance of
Speaker 1: crypto as for crypto insiders, they believe the industry will
Speaker 1: outlast the election.
Speaker 15: These elections are going to swing back and forth for
Speaker 15: a while, and so Crypto shouldn't be partisans.
Speaker 16: It doesn't really matter too much who's president Crypto broadly
Speaker 16: and bitcoint specifically. It is an unstoppable force, and an
Speaker 16: unstoppable force meeting an immovable object, you know there's going
Speaker 16: to be firework.
Speaker 1: No matter how you slice it. Crypto certainly has a
Speaker 1: bigger voice in the election cycle than ever before.
Speaker 5: Okay, coming up.
Speaker 4: Activate Consulting is out with its twenty twenty five tech
Speaker 4: and media outlet report. The company's CEO, Michael Wolfe, is
Speaker 4: joining us next stay with us will be right back.
Speaker 4: This has been back technology.
Speaker 2: Time.
Speaker 3: Now for our VC roundup.
Speaker 2: First up, Waimo has raised five six billion dollars for
Speaker 2: investors for its largest ever funding round. The investment round
Speaker 2: was led by Alphabet, but it included other big names,
Speaker 2: as you can see at recent Horowitz Fidelity tro Price
Speaker 2: for example. Plus China's Rewrite has raised over four hundred
Speaker 2: and forty million dollars from its twice delayed IPO. According
Speaker 2: to a filing, the self driving automotive company priced at
Speaker 2: the bottom of what was a range of fifteen and
Speaker 2: a half dollars to eighteen and a half range, but
Speaker 2: it was upsized and had a concurrent private placement and
Speaker 2: Agility Robotics is raising one hundred and fifty million dollars
Speaker 2: from investors.
Speaker 3: That's called called it in two sources.
Speaker 2: The deal is being led by investment firm DCVC and
Speaker 2: would value the maker of the humanoid robots that you
Speaker 2: see at about a billion dollars. Company declined to comment
Speaker 2: on the deal or its valuation.
Speaker 5: Ed so much going on in that world.
Speaker 4: Another one we're looking at over the next four years,
Speaker 4: the tech, Internet and media sectors are expected to add
Speaker 4: more than one point one trillion dollar of global growth.
Speaker 4: That's according to Activate Consultings twenty twenty five Technology and
Speaker 4: Media Outlook. Do I say that the company's Michael Wolf
Speaker 4: is with us now and you know, reading the rapport,
Speaker 4: it's not just the density of it or the global
Speaker 4: nature of it, but actually the near term jump that
Speaker 4: you see. It's the twenty twenty five outlook, But by
Speaker 4: the time you get to twenty twenty eight, these are
Speaker 4: big numbers.
Speaker 5: What are the sort of top line conclusions You've drawn
Speaker 5: a couple of things.
Speaker 15: First of all, we're talking about roughly four hundred billion
Speaker 15: dollars in incremental revenue to consumer the consumer technology media businesses,
Speaker 15: and another seven hundred billion additional revenue dollars for B
Speaker 15: to B. What you see is B to B is
Speaker 15: going to grow much faster, three percentage points faster than
Speaker 15: the consumer side of the business. And as we look
Speaker 15: at this, we're very optimistic because there's still going to
Speaker 15: be a lot more money coming into these businesses.
Speaker 2: Can you spell out a little bit, Michael, of the
Speaker 2: underlying data you use to get to these numbers.
Speaker 3: How have you factored in this level of.
Speaker 15: Both Well, we spend an entire year doing a tremendous
Speaker 15: amount of both consumer and B to B research. We
Speaker 15: take apart all of the plans for the major companies,
Speaker 15: we look and see the underlying things that are driving growth,
Speaker 15: and as a result, our forecasts reflect really a mosaic
Speaker 15: of everything that we see going on and where we
Speaker 15: believe that's going to translate into revenue growth.
Speaker 4: The reason that Caroline's question is so good and so
Speaker 4: important is that within the reports you attribute some quite
Speaker 4: a lot of what's going to happen to generative AI
Speaker 4: and on this program, whether it's an investor or a
Speaker 4: company executive, or us as journalists, I still think we're
Speaker 4: finding it really hard to see the money coming out
Speaker 4: the other side of all of the investment into the
Speaker 4: infrastructure behind AI. Take us there, Michael, generative AI leading
Speaker 4: to sales growth.
Speaker 15: We're we're not looking at it that way. We're not
Speaker 15: looking at there's there are specific forecasts for the use
Speaker 15: of generative AI, but most of what we focused on
Speaker 15: the consumer time consumer side is increases in consumer time
Speaker 15: with technology and media, and in the case of enterprise,
Speaker 15: it is it is not money that those companies are
Speaker 15: going to get from generative AI. It's actually the amount
Speaker 15: of money that they're going to get from both pricing
Speaker 15: for initial additional penetration uh in of their consumer apple,
Speaker 15: of their B to B applications. So we're not we're
Speaker 15: not specifically forecasting some number for what generative AI is
Speaker 15: going to be.
Speaker 8: We can grow, We get that.
Speaker 2: Do you think though, that there is hype around how
Speaker 2: much return on AI there will be? What's interesting I
Speaker 2: was speaking with the IBM CEO earlier this week and
Speaker 2: his key point was, at the moment, it's still really
Speaker 2: cost Yes, Eventually we're going to get there, and CEOs
Speaker 2: want to be bringing in general to AI to their companies,
Speaker 2: but it's not easy enough for enterprise right now, and
Speaker 2: it's really too expensive.
Speaker 3: Is that something that you're feeling and hearing.
Speaker 15: Yeah, and I think we're really this is an amazing
Speaker 15: hype cycle and there's going to be a lot of
Speaker 15: specific applications. It's unlikely that any of those applications, though,
Speaker 15: are really going to provide huge amounts of additional revenue
Speaker 15: to these companies. In many cases, it's going to be
Speaker 15: increased functionality, it's going to be better tools. But we're
Speaker 15: not stepping back and saying, let's predict what's happening in
Speaker 15: the market based on GENERAI.
Speaker 3: We keep looking at this from.
Speaker 15: The perspective of what's going to happen in terms of
Speaker 15: specific sales of what's existing out there, rather than bedding
Speaker 15: what could be coming.
Speaker 5: We're shot on time.
Speaker 4: But one other Nasson area you're looking at is a
Speaker 4: I was fortunate to spend some time with Oryan Meta's concept.
Speaker 5: Tell us about your forecast there? I find it fascinating.
Speaker 15: Well, we're forecasting fifty four million headset shipments by twenty
Speaker 15: twenty eight and it sounds doesn't it's really underwhelming. It's ravi.
Speaker 15: It's equivalent to four percent of smartphone sales. We believe
Speaker 15: that they're going to be a great deal more because
Speaker 15: we aren't counting on much more sophisticated headsets. The other
Speaker 15: thing is it is a place where the AI is
Speaker 15: already here, and so the AI is ahead of the
Speaker 15: device versus the other way around.
Speaker 2: It really is a fascinating read. We thank you for
Speaker 2: bringing it. What is a year long set of number
Speaker 2: crunching and data forecasting and activate consulting.
Speaker 3: We appreciate it. CEO Michael Wolfe.
Speaker 2: Let's go back to today's big story in the world
Speaker 2: of chips, SMC's chip yields in the United States. What
Speaker 2: it means for American chip manufacturing at LADS. Let's bring
Speaker 2: in Bloomberg Intelligence senior analyst man Need Singh the read
Speaker 2: on the fact that TSMC is getting some superior yields
Speaker 2: even to where.
Speaker 3: They produce back at home.
Speaker 2: What does this mean for the general demand cycle that
Speaker 2: they're seeing.
Speaker 14: I mean, look, in terms of the overall capacity, twenty
Speaker 14: thousand wayfirst is not that big of a deal. But
Speaker 14: when you look at the fact that they are doing
Speaker 14: it at five nanometer, which is about you know, thirty
Speaker 14: five percent of TSMC's overall revenue. And TSMC the fact
Speaker 14: that they have the pricing power is because of the
Speaker 14: leading notes. So this is one of the most popular
Speaker 14: leading notes and you know, higher yields than TSMC's own fabs.
Speaker 14: It's a pretty big deal. I mean, I can imagine,
Speaker 14: you know, all the hyperscalers like Nvidia, Apple, Microsoft, going
Speaker 14: to TSMC because they want their latest end product to
Speaker 14: have a chip made on shore in the US. And
Speaker 14: so I would expect the twenty thousand wayfirs will be
Speaker 14: sold out on D one if you know, the market
Speaker 14: is to be believed that, Yeah, they are ahead.
Speaker 4: Real quick. Mandy, Oh, actually, I think we've got to
Speaker 4: leave it. But I'm glad you came on and gave
Speaker 4: us the b I take. I think the market might
Speaker 4: price it in a little bit. We can argue about
Speaker 4: that next week. All right, have a good weekend, Carrot.
Speaker 3: Short, sweet to the point. But that does it for
Speaker 3: this edition.
Speaker 2: Bloomberg Technology an important one when you're thinking of chip
Speaker 2: manufacturing here in the US.
Speaker 4: It's been a huge week in the world of technology.
Speaker 4: The Bloomberg Technology podcast is your friend. Recap there Wherever
Speaker 4: you are in the world, have a fantastic weekend. Big
Speaker 4: shout out to the team in New York City and
Speaker 4: all the crew here in San Francisco. Reminded on Monday,
Speaker 4: another big week starts. This is Bloomberg Technology