WEBVTT - Tech Stocks Post Election and Chip Demand 0:00:01.440 --> 0:00:05.120 From Mahard where Innovation of Money and Power Collie in 0:00:05.200 --> 0:00:10.160 Silicon Valley NBN. This is Bloomberg Technology with Caroline Hyde 0:00:10.160 --> 0:00:11.080 and Ed Ludlow. 0:00:25.239 --> 0:00:27.680 Now from New York and San Francisco. This is Bloomberg 0:00:27.720 --> 0:00:31.280 Technology coming up. Tech stocks lead the markets to new highs. 0:00:31.520 --> 0:00:34.479 We discussed the drivers from the elections to earnings and 0:00:34.520 --> 0:00:36.040 the FED, and. 0:00:36.000 --> 0:00:39.040 We talked chip demand as ARM and Qualcom give mixed 0:00:39.040 --> 0:00:40.879 signals about the smartphone market. 0:00:41.000 --> 0:00:43.599 We speak to ARMS CEO Rene Has and. 0:00:43.560 --> 0:00:45.960 The c suite take on the election. We speak with 0:00:46.040 --> 0:00:49.000 Andreil's at Palmer Lucky. I'm going to focus on defense tech, 0:00:49.080 --> 0:00:51.440 but first let's just get back to these publicly traded 0:00:51.479 --> 0:00:53.920 markets that are at new record highs. I shine a 0:00:53.960 --> 0:00:56.480 light on the Nastak one hundred. It finally reaches that 0:00:56.560 --> 0:00:59.840 new record yesterday, eclipsing the number it got to back 0:00:59.880 --> 0:01:00.320 in July. 0:01:00.360 --> 0:01:01.600 We're at one point three percent. 0:01:01.920 --> 0:01:06.319 The likely magnificent sevens drive this benchmark to yet further 0:01:06.360 --> 0:01:07.320 heights ahead of the FED. 0:01:07.400 --> 0:01:08.039 What are you watching? 0:01:08.120 --> 0:01:09.560 End earnings? 0:01:09.560 --> 0:01:12.640 But November fifth an astonishing day to report numbers. Right, 0:01:12.760 --> 0:01:15.479 Lift is up twenty seven percent off session highs where 0:01:15.480 --> 0:01:18.440 it was up thirty percent strong outlook, they're kind of 0:01:18.480 --> 0:01:22.000 finding their niche and growth despite big brother Uber also 0:01:22.160 --> 0:01:24.800 doing well. Then there's the chip names qual Common, ARM. 0:01:25.200 --> 0:01:27.920 They've traded very choppy in the session. Qual Comm was 0:01:28.000 --> 0:01:30.160 up a lot, now it's up eight tens percent. Arm 0:01:30.319 --> 0:01:32.600 was down, it's now up five and a half percent. 0:01:33.319 --> 0:01:37.959 Basically consumers in key markets like China buying higher price 0:01:38.040 --> 0:01:39.600 handsets and both benefiting from that. 0:01:39.680 --> 0:01:41.560 But we can get into it later in the program 0:01:41.600 --> 0:01:42.160 we can. 0:01:42.000 --> 0:01:43.880 And of course China are a key focus for the 0:01:43.920 --> 0:01:47.199 macro perspective going forward. After the results of the election 0:01:47.319 --> 0:01:49.920 came through. Let's get an overview of these markets of roombgs, 0:01:50.040 --> 0:01:53.400 Jess meant and just we see big tech leading all 0:01:53.400 --> 0:01:55.880 the benchmarks to new highs as well as small caps. 0:01:55.880 --> 0:01:57.760 But what keeps your eye, Well. 0:01:57.600 --> 0:01:59.400 The big thing is because you'll just touched on when 0:01:59.400 --> 0:02:01.840 it comes to Earth. So the biggest player, obviously we'll 0:02:01.840 --> 0:02:04.440 have Invidia coming up on November twentieth, but when you 0:02:04.480 --> 0:02:06.880 look more specifically at when it comes to some of 0:02:06.920 --> 0:02:09.520 its biggest customers, we've already had those earnings when it 0:02:09.560 --> 0:02:12.960 comes to Meta, Microsoft, alphabet as Wolls, Amazon, So when 0:02:12.960 --> 0:02:15.200 it comes to as far as what in totality when 0:02:15.200 --> 0:02:18.519 it comes to what they're plowing into data center binesses 0:02:18.600 --> 0:02:20.840 as well as other fixed assets. I mean, it's around 0:02:20.919 --> 0:02:24.120 fifty nine billion with those forward companies just in the 0:02:24.160 --> 0:02:26.400 third quarter alone, So usually that you can kind of 0:02:26.400 --> 0:02:29.239 glean into what that means for in video moving forward. 0:02:29.280 --> 0:02:30.200 But obviously on the. 0:02:30.160 --> 0:02:32.480 Back of these election results, there's a lot of questions 0:02:32.520 --> 0:02:34.960 as far as what this could potentially mean for Biden's 0:02:35.000 --> 0:02:37.440 chip back, especially when you think about companies that derive 0:02:37.639 --> 0:02:40.880 different manufacturing from overseas like Apple as wolves when it 0:02:40.919 --> 0:02:44.200 comes to say China and Biden trying to prohibit them 0:02:44.280 --> 0:02:46.480 trying to use Western technology and trying to curb that. 0:02:46.560 --> 0:02:50.880 Right now, Caroline, the headline of the band story today 0:02:50.919 --> 0:02:53.359 is in video is clear winner in a lackluster big 0:02:53.360 --> 0:02:54.200 tech earning season. 0:02:54.760 --> 0:02:58.600 Is anyone watching the show? It's been great, Caroline, I've 0:02:58.600 --> 0:02:59.400 had a lot of fun. 0:03:00.120 --> 0:03:01.960 The main point is that whatever happens in this next 0:03:02.000 --> 0:03:04.520 administration jests, it doesn't kick in for a while. Is 0:03:04.560 --> 0:03:06.800 there like a theme of the now of the next 0:03:06.800 --> 0:03:09.240 three months, final three months of the year that markets 0:03:09.240 --> 0:03:10.160 are looking to well. 0:03:10.240 --> 0:03:12.920 Usually the playbook in an election year is typically once 0:03:13.000 --> 0:03:14.160 you have the election results. 0:03:14.160 --> 0:03:15.160 There tends to be a year. 0:03:15.120 --> 0:03:17.520 End rally, but we had quite a bit of a 0:03:17.560 --> 0:03:19.600 real not even just when you're thinking about what's happened 0:03:19.720 --> 0:03:21.840 tech and growth stocks, but the first three quarters of 0:03:21.840 --> 0:03:23.520 this year was the best start to a year for 0:03:23.520 --> 0:03:25.920 the S and P five hundred since nineteen ninety seven, 0:03:25.919 --> 0:03:27.639 but the Magnetum seven didn't really. 0:03:27.680 --> 0:03:29.400 Contribute to that in the third quarter. 0:03:29.440 --> 0:03:31.440 Obviously we've seen a bounce back from that, but even 0:03:31.440 --> 0:03:34.760 when we heard from Microsoft and Meta's results in recent 0:03:34.800 --> 0:03:36.520 weeks on the back of that, we didn't. 0:03:36.240 --> 0:03:37.440 Really see those stocks pop. 0:03:37.560 --> 0:03:39.600 But obviously sort of an all tied kind of lifting 0:03:39.640 --> 0:03:41.680 bulks here over the last couple of days following those 0:03:41.680 --> 0:03:44.040 election results. But moving forward, it's whether or not we 0:03:44.160 --> 0:03:46.760 see that playbook and especially the positioning play out in 0:03:46.800 --> 0:03:48.600 the final months of the year like we normally would 0:03:48.600 --> 0:03:49.160 through history. 0:03:50.120 --> 0:03:52.280 Boo bos Jess meant and helping us make sense of 0:03:52.360 --> 0:03:55.680 tech in markets, Thank you very much. So what does 0:03:55.760 --> 0:03:58.680 Trump two point zero presidency look like for the tech sector? 0:03:59.000 --> 0:04:02.720 Dan ives have web shrites. We expect a strong AI 0:04:02.880 --> 0:04:05.600 focus out of the gates from Trump for US big 0:04:05.640 --> 0:04:09.480 tech players can't out of the FTC and Musk's big 0:04:09.480 --> 0:04:12.720 bet on Trump being a home run for Tesla. 0:04:14.040 --> 0:04:14.960 Danaves joins us. 0:04:14.960 --> 0:04:18.560 Now, Dan, regular viewers of this show and network will 0:04:18.600 --> 0:04:20.200 know that much of what I just read out is 0:04:20.200 --> 0:04:23.120 not a surprise this that you have this thesis. 0:04:23.120 --> 0:04:24.880 But let's start on the AI part. 0:04:25.080 --> 0:04:28.440 What gives you such conviction that Trump will focus on 0:04:28.520 --> 0:04:29.520 AI out of the game. 0:04:30.240 --> 0:04:31.640 I mean, I think that that's going to be a 0:04:31.720 --> 0:04:34.680 huge focus within the government. I mean, government's been way 0:04:34.760 --> 0:04:37.160 behind when it comes to AI. That's going to be 0:04:37.279 --> 0:04:41.400 huge initiatives. I think through D O D, through the agency. 0:04:41.560 --> 0:04:45.159 Is that's gonna be borged for Microsoft, borge for Amazon, 0:04:45.240 --> 0:04:46.839 borge for good good Google. 0:04:47.000 --> 0:04:48.200 Names like par and Teer. 0:04:48.720 --> 0:04:51.000 I think that's other names that are going to benefit 0:04:51.080 --> 0:04:55.680 here in what is a gordon aede for AI and Palenteer. 0:04:55.760 --> 0:04:58.039 There's the link with government. I want to ask you 0:04:58.040 --> 0:05:00.320 about Elon Musk, and if you'll allow me, let me 0:05:00.360 --> 0:05:02.479 just put it this way. Because the market tried to 0:05:02.480 --> 0:05:06.279 make sense of the Tesla move, It's believed that Trump 0:05:06.279 --> 0:05:10.039 will repeal some or all of what's legislated for on 0:05:10.080 --> 0:05:15.240 the EV consumer incentive side, manufacturing support for the companies themselves, 0:05:15.640 --> 0:05:20.400 there's the association tailwind between Musk and Trump. Why is 0:05:20.440 --> 0:05:23.039 it that Tesla survives and stands out to your mind, 0:05:23.279 --> 0:05:26.279 but gm Ford rivian names like that won't do as well. 0:05:26.440 --> 0:05:28.560 Sure, I think it's a great point where it's good 0:05:28.680 --> 0:05:33.800 two parts. One by removing the credits seventy five hundred, 0:05:34.400 --> 0:05:36.359 that's going to give much more even playing field. I 0:05:36.400 --> 0:05:38.440 mean task as a scale and scope, They're going to 0:05:38.520 --> 0:05:42.599 be hugely advantaged there versus the Detroit Star Wars. So 0:05:42.640 --> 0:05:46.400 that's bullege there in terms of giving them that availability. 0:05:46.440 --> 0:05:48.839 And I think option you know, to the automate, they 0:05:48.839 --> 0:05:51.279 can still cut prices more. But the big thing, the 0:05:51.400 --> 0:05:54.200 reason that this stock, I believe it's a trillion dollars 0:05:54.680 --> 0:05:58.480 of value unlocked when it comes to the AIPS because 0:05:58.680 --> 0:06:01.120 when you look at Trump, this is going to give 0:06:01.160 --> 0:06:04.880 the highway the autobond for autonomous I think he is 0:06:04.920 --> 0:06:08.760 going to fast track autonomous FSD. That is very bullish 0:06:08.839 --> 0:06:12.360 for Tesla. And it comes down to from Musk one 0:06:12.360 --> 0:06:16.760 of the best strategic bets he ever made was ultimately 0:06:16.800 --> 0:06:18.440 this bet on Trump. 0:06:19.120 --> 0:06:20.320 It's the technology ready. 0:06:21.520 --> 0:06:22.040 I think the. 0:06:22.000 --> 0:06:25.320 Technology is not maybe not necessarily ready today in its 0:06:25.360 --> 0:06:28.360 current form, but it's going to a point that this 0:06:28.480 --> 0:06:31.200 is ultimately going to be. When I look at autonomous 0:06:31.200 --> 0:06:35.680 and FSD, it's a trillion dollar incremental valuation. You could 0:06:35.680 --> 0:06:39.599 cyber cabs, you could ultimately see twenty twenty six, twenty 0:06:39.720 --> 0:06:41.960 seven initiatives, get fast tracked. 0:06:42.320 --> 0:06:42.839 Tesla. 0:06:43.400 --> 0:06:47.400 Musk is the big winner in this called Trump sweepstakes, 0:06:47.640 --> 0:06:50.160 along with big tech because the other view is that 0:06:50.320 --> 0:06:53.279 Khan is likely going to be out the FTC and 0:06:53.279 --> 0:06:56.080 that's bullish for deal making across big tech. 0:06:56.960 --> 0:06:59.000 Okay, there's a lot to be butish about, but one 0:06:59.040 --> 0:07:02.599 area of concern has been well, yes, AI will be fueled, 0:07:02.600 --> 0:07:04.440 but what about the infrastructure for AI? A lot of 0:07:04.440 --> 0:07:07.880 that comes with growing chip sector here in the United States, 0:07:07.880 --> 0:07:10.960 and that's dependent on well, in many ways, the Chips Act. 0:07:11.240 --> 0:07:12.720 Maybe that gets blown out in the water. 0:07:12.920 --> 0:07:15.280 Yes, I think when it comes to Chips or Inflationial 0:07:15.280 --> 0:07:17.800 Reduction Act, clearly there's gonna be a lot of revisions there. 0:07:18.000 --> 0:07:20.559 I think probably the biggest loser negative would be names 0:07:20.560 --> 0:07:23.760 like Intel. You're just adding to that pain. But from 0:07:23.800 --> 0:07:25.480 a chip perspective. 0:07:25.000 --> 0:07:27.040 You think Intel will be a loser that well, for. 0:07:27.200 --> 0:07:29.920 I think Intel has been a loser. This is just 0:07:30.000 --> 0:07:33.360 putting really adding gasoline to the fire in terms of 0:07:34.080 --> 0:07:36.720 IRA was really going to be a huge opportunity for Intel. 0:07:37.000 --> 0:07:39.800 I think Intel now is on the wrong side that trend. 0:07:39.840 --> 0:07:41.720 I think what you're going to see with IRA and 0:07:41.720 --> 0:07:45.000 inflacial Reduction act much more focus on chips in the US, 0:07:45.040 --> 0:07:47.760 but really much more focus on the AI build out. 0:07:48.120 --> 0:07:49.720 And I think when it comes to some of the 0:07:49.760 --> 0:07:52.120 tariffs that we talked about with China, I think there 0:07:52.160 --> 0:07:53.400 will be carve outs. 0:07:53.760 --> 0:07:54.800 That's why I don't. 0:07:54.560 --> 0:07:57.600 Think that Nvidia is going to be so negatively impacted. 0:07:57.880 --> 0:07:59.680 I don't think a lot of these other names in 0:07:59.720 --> 0:08:03.160 terms of the tafts, I think Tesla Apple. That's also 0:08:03.200 --> 0:08:05.680 why it's so important that Musk is going to be 0:08:05.760 --> 0:08:07.480 a whisper in the White House. 0:08:07.520 --> 0:08:09.560 I'm going to let you put your ifvback on because 0:08:09.560 --> 0:08:11.600 I know Ed wants to jump in here, but I'm 0:08:11.600 --> 0:08:14.680 interested in basically, you think Trump isn't going to live 0:08:14.760 --> 0:08:16.040 up to a lot of the things he promised on 0:08:16.040 --> 0:08:16.560 the campaign. 0:08:16.640 --> 0:08:18.440 I think bar's going to be a lot worse than 0:08:18.480 --> 0:08:21.120 the bite. When it comes to some of the tariffs, 0:08:21.360 --> 0:08:24.040 you have some that'll be much more nastier. But when 0:08:24.080 --> 0:08:26.320 it comes to some of the exports that we see. 0:08:26.480 --> 0:08:28.880 I think it's you're gonna see carve outs here. I 0:08:28.920 --> 0:08:30.680 don't think it's gonna be as negative for tech and 0:08:30.760 --> 0:08:33.840 supply chain. That's why right now this is a Goldielox 0:08:33.920 --> 0:08:38.479 scenario for tech, but it's a champagne moment for Tesla investors. 0:08:39.559 --> 0:08:43.840 Dan, you can hear me? Well, can hearn? 0:08:44.000 --> 0:08:44.120 You? 0:08:44.120 --> 0:08:45.040 Give you a second? O? Good? 0:08:45.040 --> 0:08:48.200 All right, here's the question, be honest with me. Can 0:08:48.240 --> 0:08:50.439 Elon Musk have an. 0:08:49.960 --> 0:08:52.080 Informal all formal. 0:08:51.800 --> 0:08:55.040 Role in the administration and be the CEO of Tesla, 0:08:55.360 --> 0:08:59.240 SpaceX associated with Neuralink boring company, et cetera. 0:09:00.360 --> 0:09:03.320 Yes, I think he won't clearly have a formal role 0:09:03.360 --> 0:09:06.800 from a cabinet perspective. Why not kidding, because then it 0:09:06.920 --> 0:09:10.080 complicates in terms of his ownership and I think some 0:09:10.120 --> 0:09:11.920 of the structure in terms of what we see with 0:09:12.200 --> 0:09:14.719 Tesso with space X. But I believe he'll be an 0:09:14.800 --> 0:09:18.760 unofficial whisper. I think he'll have a significant influence within 0:09:18.800 --> 0:09:19.560 the White House. 0:09:20.200 --> 0:09:21.959 And that's why this is going to be. 0:09:21.960 --> 0:09:26.000 Known as probably the best strategic bet that Musk ever 0:09:26.120 --> 0:09:29.480 made in terms of betting on Trump. And I think 0:09:29.559 --> 0:09:32.720 you know this is something that is just starting to 0:09:32.760 --> 0:09:38.000 play out in terms of this Trump Musk sort of alliance. 0:09:38.320 --> 0:09:41.440 That i'ves and Webbush. I appreciate you coming on today. 0:09:41.800 --> 0:09:44.520 Meanwhile, coming up, we speak with m CEO Rene has 0:09:44.760 --> 0:09:46.440 hosts the chip designers earnings. 0:09:46.520 --> 0:09:47.000 That's next. 0:09:47.000 --> 0:09:58.520 This is bely Me Technology. 0:10:07.040 --> 0:10:08.800 Let's just dive into the markets a little bit more 0:10:08.840 --> 0:10:10.360 and check out chipmakers in particular. 0:10:10.520 --> 0:10:13.880 I'll bring you the socks. Of course. The Semiconductor index currently. 0:10:13.600 --> 0:10:15.640 Out one point six percent, having a lovely couple of days, 0:10:15.679 --> 0:10:18.240 were up more than almost four point seventy five, call 0:10:18.280 --> 0:10:20.440 it five percent over the last couple of training days. 0:10:20.440 --> 0:10:22.840 Most in the green qualcom just holding on to its gains. 0:10:23.040 --> 0:10:25.199 It has come down from what had been in excess 0:10:25.240 --> 0:10:27.600 of four five percent higher earlier. We're up seven tens 0:10:27.600 --> 0:10:30.480 of percent. They're giving a bullish sales forecast, expecting revenue 0:10:30.520 --> 0:10:32.280 of ten and a half to eleven point three billion 0:10:32.320 --> 0:10:35.440 dollars in the current quarter. They beat analyst expectations and 0:10:35.440 --> 0:10:37.880 their profit came in better than expected as well. Moving 0:10:37.880 --> 0:10:39.960 on to ARM, which has come from what was in 0:10:40.000 --> 0:10:42.959 the red pre market training to a higher three and 0:10:43.000 --> 0:10:45.679 a half percent. Now this is they too really managed 0:10:45.720 --> 0:10:47.640 to beat out the gate when it comes to the 0:10:47.679 --> 0:10:50.720 both the top and bottom line. The company's revenue forecast 0:10:50.840 --> 0:10:52.280 was a bit of a concern nine hundred and twenty 0:10:52.320 --> 0:10:55.040 million to nine hundred and seventy million, which perhaps just fell. 0:10:54.880 --> 0:10:56.400 Short of some expectations. 0:10:56.600 --> 0:10:58.800 But they really are maintaining their annual forecasts of three 0:10:58.800 --> 0:11:01.000 point eight to four point one billion dollars in sales. 0:11:01.440 --> 0:11:03.319 So let's get into it all a little bit more. 0:11:03.320 --> 0:11:05.960 At Yeah, I think the shares are so interesting for 0:11:06.000 --> 0:11:08.120 maybe it's a company reporting November fifth, and it took 0:11:08.120 --> 0:11:10.199 time for the market to wake up and read the 0:11:10.280 --> 0:11:11.000 numbers a little bit. 0:11:11.000 --> 0:11:14.280 Who knows. The chip maker did give what was seen. 0:11:14.120 --> 0:11:17.640 As a sluggish sales outlook and at first disappointed investors. 0:11:17.640 --> 0:11:20.440 What has changed, Rene Huss is the CEO of ARM 0:11:20.480 --> 0:11:23.000 and joins us. Now it's really interesting, right and the 0:11:23.000 --> 0:11:27.520 function of what ARM does on licensing royalties, because sometimes 0:11:27.559 --> 0:11:28.960 it's not about unit growth. 0:11:29.000 --> 0:11:30.199 I look at like revenue. 0:11:30.200 --> 0:11:33.760 For example, maybe some evidence renee that the Chinese consumer 0:11:33.840 --> 0:11:35.920 in particular is buying higher end handsets. 0:11:36.200 --> 0:11:37.600 How does that help you benefit? 0:11:39.400 --> 0:11:42.240 Well, good morning Eda and Caroline, and we are very 0:11:42.240 --> 0:11:45.040 happy about the quarter. We just reported the high end 0:11:45.040 --> 0:11:48.680 of the guidance, and our royalties were at a record number. 0:11:48.760 --> 0:11:51.400 And to your question, you know, one of the things 0:11:51.400 --> 0:11:53.480 that we have seen a huge benefit from with our 0:11:53.520 --> 0:11:56.920 technology going forward has been our Version nine, which commands 0:11:56.960 --> 0:11:59.080 a much higher royalty rate than we have in the past. 0:11:59.160 --> 0:12:02.280 And what that allows to do is not exactly track 0:12:02.360 --> 0:12:05.040 the market from a unit standpoint. One of the proof 0:12:05.040 --> 0:12:08.199 points of that unit sales for smartphones we're up four 0:12:08.240 --> 0:12:11.680 percent in the last quarter. Our royalties we're up forty percent. 0:12:12.200 --> 0:12:14.240 So you can get a sense that you're seeing a 0:12:14.320 --> 0:12:17.400 very big difference that's really driven by two factors. One 0:12:17.440 --> 0:12:19.480 is Version nine, as I said, which commands a high 0:12:19.520 --> 0:12:23.280 royalty rate. And second, we're just seeing more arm technology 0:12:23.800 --> 0:12:27.480 inside these smartphones, particularly the premium segment, which also commands 0:12:27.480 --> 0:12:29.719 a high royalty rene. 0:12:29.800 --> 0:12:31.439 A lot of investors and people that I speak to 0:12:31.480 --> 0:12:33.760 in the world of technology think you're great. You're a 0:12:33.800 --> 0:12:37.000 great CEO, and you've been embarked on this sort of 0:12:37.080 --> 0:12:40.640 journey for profit and margin. But is there a ceiling 0:12:40.679 --> 0:12:43.319 to that, Like, at some point, how do you keep 0:12:43.440 --> 0:12:46.120 driving those letters? Are you sort of very pricing dependent 0:12:46.200 --> 0:12:46.920 at this point? 0:12:48.520 --> 0:12:49.240 I don't think so. 0:12:49.480 --> 0:12:52.760 You know, the market that we're addressing is very, very large, 0:12:53.360 --> 0:12:55.320 and one of the things that has made it even 0:12:55.400 --> 0:12:58.080 larger has been all things AI. And if you think 0:12:58.120 --> 0:13:00.880 about what ARM does, we do compute, we do the CPU. 0:13:01.160 --> 0:13:04.040 Every digital device has one. And the fact that you're 0:13:04.120 --> 0:13:07.320 running all these AI workloads on devices that are already 0:13:07.360 --> 0:13:09.760 running different applications that they had to in the past, 0:13:10.200 --> 0:13:12.599 that drives a need for more and more compute capacity, 0:13:12.640 --> 0:13:15.680 which ends up ending up with ARM. So as a result, 0:13:15.720 --> 0:13:18.839 we were very, very fortunate to have some tailwinds from 0:13:18.840 --> 0:13:21.800 a technology standpoint driving our growth. So as far as 0:13:21.800 --> 0:13:23.800 the ceiling, I don't think about it quite that way, 0:13:24.320 --> 0:13:26.520 but I do think where we are is a market 0:13:26.559 --> 0:13:29.559 where we just can't get enough compute capacity for all 0:13:29.559 --> 0:13:31.200 these workloads that are going to be running on every 0:13:31.200 --> 0:13:33.920 device in your home or your business. 0:13:34.559 --> 0:13:37.640 Meanwhile, though, perhaps some of the tension around compute and 0:13:37.760 --> 0:13:40.600 AI has been whether China is going to quote unquote 0:13:40.600 --> 0:13:43.040 beat out the United States, and that suddenly comes into 0:13:43.559 --> 0:13:46.760 a closer focus, particularly with the results of the US election. 0:13:47.040 --> 0:13:49.280 Does any of that concern you, particularly around the trade 0:13:49.280 --> 0:13:52.920 and embroilment and whether that courtails the industry and going forward. 0:13:54.120 --> 0:13:57.080 Yeah, a little hard to say, Caroline, relative to what 0:13:57.480 --> 0:14:00.560 could happen from perspective of tariffs, etc. I think the 0:14:00.600 --> 0:14:04.560 one thing that I'm happy about post the election on 0:14:04.600 --> 0:14:07.080 Tuesday is that here we are on Thursday morning and 0:14:07.120 --> 0:14:10.559 we have a result. We're not debating about what might 0:14:10.600 --> 0:14:13.040 happen or could happen or should happen. We at least 0:14:13.080 --> 0:14:15.760 have a result behind us, which is good for business, 0:14:15.800 --> 0:14:18.520 it's good for the country. Now going forward, we'll just 0:14:18.559 --> 0:14:22.080 have to see what goes forward. In terms of the 0:14:22.120 --> 0:14:24.800 things you mentioned, the China business for US has been 0:14:25.040 --> 0:14:28.560 very resilient and very strong, both in data center and 0:14:28.600 --> 0:14:31.480 phones that we've talked about, but also in the automobile sector. 0:14:31.560 --> 0:14:33.840 So regarding your question, we'll just have to wait and see. 0:14:34.680 --> 0:14:35.200 Talk to us a. 0:14:35.200 --> 0:14:38.400 Little bit about the phone part, and in particular whether 0:14:38.520 --> 0:14:41.560 or not just us replacing less often but with much 0:14:41.600 --> 0:14:44.400 more expensive phones is going to be able to what 0:14:44.800 --> 0:14:47.440 makes your numbers resilient going forward? Will that continue to 0:14:47.560 --> 0:14:50.080 upset the fact that we're just buying fewer on them. 0:14:50.800 --> 0:14:53.560 I do, and the reason for that is when you 0:14:53.600 --> 0:14:56.600 start thinking about all of these AI agents that will 0:14:56.680 --> 0:14:59.920 increasingly be running on your smartphone, that is going to 0:15:00.160 --> 0:15:04.440 drive demand for more and more capability on these premium phones. 0:15:04.800 --> 0:15:07.560 And that's great for ARM because if you think about 0:15:07.640 --> 0:15:10.040 a next generation smartphone still has to run games, it 0:15:10.040 --> 0:15:11.880 still has to run apps, it still has to connect 0:15:11.880 --> 0:15:14.040 to the internet. But now you want to run a 0:15:14.120 --> 0:15:16.360 large language model or a small language model, and you 0:15:16.400 --> 0:15:19.360 need to interface with a cloud and do security. That 0:15:19.520 --> 0:15:22.120 all requires a lot of compute, much more than in 0:15:22.160 --> 0:15:25.600 the past, which is great for ARM because you can't 0:15:25.600 --> 0:15:27.240 do it without using our technology. 0:15:28.640 --> 0:15:33.280 Renee Bloomberg reported that ARM was interested in buying some 0:15:33.760 --> 0:15:34.880 or all of Intel. 0:15:35.200 --> 0:15:39.200 What's the latest for that, please? Yeah, I read that. 0:15:39.320 --> 0:15:42.120 I'm not sure exactly where it came from, but I 0:15:42.160 --> 0:15:43.880 can't really comment on those kind of rumors. 0:15:45.560 --> 0:15:50.480 Small recent is a licensed dispute with Qualcom, a longtime 0:15:50.680 --> 0:15:54.160 partner and customer of yours. Wouldn't it just makes sense 0:15:54.200 --> 0:15:56.200 for you guys to work it out and settle and 0:15:56.240 --> 0:15:58.600 get something done so you can both just move forward. 0:16:00.680 --> 0:16:00.880 Yeah. 0:16:00.880 --> 0:16:02.880 So it's an ongoing litigation, as you know, and in 0:16:03.000 --> 0:16:04.360 just the baseline things, it's. 0:16:04.280 --> 0:16:05.800 A pretty straightforward case. 0:16:06.720 --> 0:16:10.560 Consent is required anytime one company buys another company that 0:16:10.600 --> 0:16:14.440 has ARMED technology. Consent was not granted in this case, 0:16:14.800 --> 0:16:17.480 and just by way of history, every contract we have 0:16:17.560 --> 0:16:20.280 has this clause, and in thirty five years, I think 0:16:20.280 --> 0:16:23.160 we've done one hundred and thirty assignments and one hundred 0:16:23.160 --> 0:16:26.760 and thirty times consent has been granted. This time it wasn't. 0:16:27.360 --> 0:16:29.840 We sent a notification to QUALKM that they were in 0:16:29.840 --> 0:16:33.040 breach of the license. We're very confident in our case. 0:16:33.400 --> 0:16:37.480 But more importantly, this is about fairness. It's about equity 0:16:37.480 --> 0:16:40.640 the ecosystem. We have lots of partners who've license our 0:16:40.680 --> 0:16:43.440 technology over the last decades. We need to be fair 0:16:43.440 --> 0:16:46.360 and equitable, and we just now have a situation, an 0:16:46.440 --> 0:16:51.400 unprecedented one where consent was not granted, and as a result, 0:16:51.800 --> 0:16:53.480 we took the action we felt we needed to take. 0:16:54.120 --> 0:16:57.240 How is it doing business therefore with what is a 0:16:57.320 --> 0:16:59.840 key customer but increasingly becoming more of a front of me. 0:17:01.920 --> 0:17:04.640 Well, you know, in terms of the litigations, I said, 0:17:04.640 --> 0:17:06.480 there's not much more I can add on to it. 0:17:07.080 --> 0:17:11.440 From a financial standpoint, we've made assumptions all along when 0:17:11.440 --> 0:17:14.480 we've given guidance and forecast to investors that we will 0:17:14.480 --> 0:17:18.280 not prevail in this case. So we've taken a fairly 0:17:18.800 --> 0:17:22.440 bearish position on the financial outlook, and that's really about 0:17:22.720 --> 0:17:23.800 about all I can say on it. 0:17:24.720 --> 0:17:27.840 RENEE at the end, market level and product level. What 0:17:28.000 --> 0:17:30.760 is the next phase farm, what's the next story that 0:17:30.800 --> 0:17:32.399 you think will carry the company forward? 0:17:34.480 --> 0:17:37.720 Thanks for asking that question. You know, compute subsystems and 0:17:37.760 --> 0:17:41.000 these are all about taking the pieces of IP, stitching 0:17:41.000 --> 0:17:44.200 them together together, providing them as a full end solution 0:17:44.800 --> 0:17:48.119 which greatly saves engineering time, time to market, time to 0:17:48.160 --> 0:17:52.240 profit for our partners. That is the direction of the company. 0:17:52.359 --> 0:17:55.840 We've seen amazing traction. We've had lots of design wins 0:17:55.880 --> 0:17:59.119 in the data center space. Media Tech just announced their 0:17:59.119 --> 0:18:02.720 first chip set recently using ARM computer subsystems for mobile. 0:18:03.280 --> 0:18:05.960 I see that to be pervasive going forward, and it's 0:18:05.960 --> 0:18:08.800 going to allow us to not only get great benefits 0:18:08.800 --> 0:18:12.240 to the customers' markets, but those drive much higher royalties 0:18:12.280 --> 0:18:14.199 than anything we've ever done in the past, which will 0:18:14.280 --> 0:18:15.160 drive growth for us. 0:18:16.320 --> 0:18:19.239 Just paint the picture of where ARM will be in 0:18:19.280 --> 0:18:24.080 the ecosystem five ten years from now. You're still majority 0:18:24.119 --> 0:18:26.679 held by soft Bank in terms of your outstanding shares. 0:18:26.960 --> 0:18:29.520 Massa has some big vision one hundred billion dollars to 0:18:29.520 --> 0:18:33.720 put in in terms of creating an AI behemoth. 0:18:33.200 --> 0:18:34.760 That complements what you do. 0:18:35.200 --> 0:18:37.159 But then there's also the element of whether you just 0:18:37.160 --> 0:18:39.160 stick to the designing part of the business. 0:18:39.320 --> 0:18:41.720 Where do you take this business? Renee as a CEO. 0:18:43.080 --> 0:18:45.280 We have a lot of optionality, Caroline in terms of 0:18:45.320 --> 0:18:46.600 the things that we do, and these are obviously the 0:18:46.640 --> 0:18:50.159 things we talk about all the time internally. Which direction 0:18:50.240 --> 0:18:52.800 do we go, how horizontal do we go, how vertical 0:18:52.840 --> 0:18:55.800 do we go. I'm not able, unfortunately to talk about 0:18:56.000 --> 0:18:58.840 unannounced products this morning with you, although I would love to, 0:18:58.880 --> 0:19:03.080