WEBVTT - Apple's Second Downgrade, Mobileye Prompts Chip Stock Rout 0:00:01.120 --> 0:00:06.400 From Marhart where Innovation, Money and power Collie in Silicon Valley, NBN. 0:00:06.720 --> 0:00:10.760 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:24.640 --> 0:00:26.960 I'm Caroline Heide of Bloemug's world headquarters in New. 0:00:26.920 --> 0:00:29.680 York, and I'm Ed Ludlow in San Francisco. This is 0:00:29.720 --> 0:00:31.320 Bloomberg Technology coming up. 0:00:31.360 --> 0:00:34.680 Apple hit with its second downgrade in a week as 0:00:34.680 --> 0:00:37.839 analysts cautional slowing iPhone demand more analysis ahead. 0:00:38.600 --> 0:00:42.040 A Mobili plunges is its four year revenue forecast, full 0:00:42.159 --> 0:00:45.400 short of all street estimates, Full coverage on the autonomous 0:00:45.479 --> 0:00:47.080 driving company's guidance. 0:00:46.720 --> 0:00:50.480 Ahead, plus new data painting a bleak picture for Silicon Valley. 0:00:50.720 --> 0:00:51.760 Will break down the state of. 0:00:51.800 --> 0:00:54.560 Venture capital as startup saw their worst year for funding. 0:00:54.840 --> 0:00:57.600 This is twenty nineteen, the first let's check in on 0:00:57.680 --> 0:01:00.000 these markets. And while the good news is bad new 0:01:00.160 --> 0:01:02.880 the resilient job market means maybe we can't anticipate a 0:01:02.920 --> 0:01:05.120 FED cut as much as the market had been already 0:01:05.160 --> 0:01:08.280 pricing in. We're just down only slightly on the NASDAC, 0:01:08.319 --> 0:01:10.640 but it is five straight days, longest losing streak since 0:01:10.640 --> 0:01:11.959 October of twenty twenty two. 0:01:12.280 --> 0:01:13.679 I'm looking at the ten year yield just. 0:01:13.680 --> 0:01:16.880 Backing up again, up seven basis points. Notably, we are 0:01:16.880 --> 0:01:19.559 seeing a lot of supply coming into the system. Corporate 0:01:19.600 --> 0:01:22.080 bond sales means supply issues ahead, and that means, of course, 0:01:22.280 --> 0:01:24.240 some of that pricing does just fade a little bit. 0:01:24.280 --> 0:01:26.119 New York crued off by one point nine. 0:01:26.040 --> 0:01:29.119 Percent, having seen tensions, of course, red sea concerns, middle 0:01:29.160 --> 0:01:33.000 least geopolitical concerns. We're actually more worried about a global 0:01:33.040 --> 0:01:35.399 slowdown at the moment, so supply seems to win out 0:01:35.400 --> 0:01:37.000 there a little bit at the moment as well. Move on, 0:01:37.319 --> 0:01:41.000 have a look at what's happening in terms of bitcoin. 0:01:40.680 --> 0:01:42.520 Because we're actually getting a little. 0:01:42.240 --> 0:01:44.200 Bit more resilience on the day after what had been 0:01:44.240 --> 0:01:45.800 some big volatility yesterday. 0:01:45.959 --> 0:01:46.680 In the price point. 0:01:46.680 --> 0:01:49.040 We're at forty nine hundred and sixty, so back up, 0:01:49.040 --> 0:01:51.280 but not quite at that forty five thousand dollars level 0:01:51.400 --> 0:01:53.160 ed that we had seen in the run up to 0:01:53.240 --> 0:01:56.000 what everyone anticipates will be the sign off of these 0:01:56.040 --> 0:01:57.960 spot bitcoin ETF What if you got it. 0:01:58.720 --> 0:02:01.040 Well, one big move to the downside, and that is 0:02:01.120 --> 0:02:03.720 mobili We're down around twenty five percent in the session. 0:02:03.720 --> 0:02:05.880 If we close at that drop. It will be the 0:02:05.920 --> 0:02:09.640 biggest drop on record. The story is actually really clear. Mobilized, 0:02:09.680 --> 0:02:13.760 maker of advanced chip or chip systems that power advanced 0:02:13.840 --> 0:02:17.520 driver assistance in cars, think about lane change or cruise control, 0:02:17.919 --> 0:02:21.120 and their customers have big inventories of these chips, so 0:02:21.120 --> 0:02:24.720 they've stopped buying. Mobil has given us an outlook for 0:02:24.760 --> 0:02:26.880 sales in twenty twenty four, which is about one point 0:02:26.919 --> 0:02:29.600 eight nine billion at the midpoint. The street looking for 0:02:29.680 --> 0:02:32.880 two point five eight billion, significantly higher than that. So 0:02:33.000 --> 0:02:35.840 something has gone wrong here in the cycle for chips 0:02:35.960 --> 0:02:40.079 as it relates to the automotive sector and advanced driver assistants. 0:02:40.080 --> 0:02:41.960 We're going to go really deep on this story later 0:02:42.000 --> 0:02:44.440 in the program. As you mentioned, all eyes on Apple, 0:02:44.480 --> 0:02:47.280 this is critically important. We're down for a four straight session, 0:02:47.560 --> 0:02:50.680 one hundred and seventy billion dollars of market cap shed 0:02:50.880 --> 0:02:54.200 during that four day period and a second downgrade. Piper 0:02:54.280 --> 0:02:57.880 Sander's a neutral, and there appear to be basically three things. 0:02:58.040 --> 0:03:00.320 They're looking at inventories going into the first half of 0:03:00.360 --> 0:03:03.640 this year, they're worried, they're looking at growth of unit 0:03:03.760 --> 0:03:05.880 sales going into this first half of the year, and 0:03:05.880 --> 0:03:08.160 they're worried, and then they're looking at China and the 0:03:08.200 --> 0:03:10.400 macro picture. I want to bring in Bloomberg Intelligence and 0:03:10.520 --> 0:03:13.840 list sanaag Rana for his take. Those were the three 0:03:13.919 --> 0:03:16.120 kind of key points of Private Sandler. There's some read 0:03:16.200 --> 0:03:19.839 through from Berkleys who had similar concerns when they downgraded 0:03:19.880 --> 0:03:22.920 earlier this week. Do you share those concerns? 0:03:23.639 --> 0:03:26.000 Yeah, this is the same exact thing we talked about 0:03:26.080 --> 0:03:28.600 when they last time reported that the big issue is 0:03:28.680 --> 0:03:31.400 China and China remains a wild guard for them. You know, 0:03:31.480 --> 0:03:34.760 in my view, there isn't any new information from these downgrades. 0:03:35.040 --> 0:03:37.440 We already knew China was going to be bad. In fact, 0:03:37.560 --> 0:03:39.640 we have been hearing about it for almost you know, 0:03:39.680 --> 0:03:42.680 two and a half months right now, and when they reported, 0:03:42.800 --> 0:03:45.520 they really missed that China number by a big amount. So, 0:03:45.960 --> 0:03:48.760 I mean, I completely agree that sales this year is 0:03:48.800 --> 0:03:50.680 going to be tepid at the best. 0:03:51.040 --> 0:03:54.080 But you know, it's not new news. On jan first. 0:03:54.200 --> 0:03:55.120 We have known this for a. 0:03:55.040 --> 0:03:58.720 While, and so why the caution now, Anna rag Is 0:03:58.760 --> 0:04:03.200 it more evaluation questioning a fundamental well a more macro perspective. 0:04:03.240 --> 0:04:06.200 We're now seeing perhaps the anticipation rates not being cut 0:04:06.240 --> 0:04:09.840 and we're just questioning valuations across all key tech companies 0:04:10.160 --> 0:04:12.040 or is there something bespoke to Apple in the here 0:04:12.080 --> 0:04:12.400 and now? 0:04:13.320 --> 0:04:15.480 No, I think you're right about valuations and the big 0:04:15.520 --> 0:04:18.159 tech names. Last year, they were really the safe heavens 0:04:18.200 --> 0:04:20.480 for people to go in when they didn't know what 0:04:20.560 --> 0:04:22.920 was happening in the economy, what was not happening, what 0:04:23.000 --> 0:04:25.080 was going to happen with eight cuts, I think it 0:04:25.160 --> 0:04:27.039 seems at this point we're not going to have a 0:04:27.080 --> 0:04:30.320 hard landing. And if the economy stays okay and rate 0:04:30.720 --> 0:04:34.000 increases are not going to happen, then you know, people 0:04:34.040 --> 0:04:36.200 do tend to go out of safe havens into more 0:04:36.279 --> 0:04:38.680 riskier stocks and a rag. 0:04:38.720 --> 0:04:41.520 Apple was the only big tech firm or one of 0:04:41.560 --> 0:04:44.760 the cy called Magnificent seven that had four straight quarters 0:04:44.760 --> 0:04:48.200 of sort of decelerating revenue growth. It has the fewest 0:04:48.200 --> 0:04:51.840 by ratings of any of those megacaps, as per the 0:04:51.960 --> 0:04:55.200 chart were showing. Now, what is it unique to Apple 0:04:55.560 --> 0:04:58.119 that it was not able to thrive in twenty twenty 0:04:58.120 --> 0:04:59.960 three and that there is such a change of set 0:05:00.080 --> 0:05:03.640 entiment now for twenty twenty four different to those other 0:05:03.720 --> 0:05:04.679 Magnificent seven. 0:05:05.800 --> 0:05:08.120 Yeah, I mean the thing that the most important part 0:05:08.160 --> 0:05:12.239 is it's an enterprise It's not an enterprise technology company. 0:05:12.279 --> 0:05:14.680 It's a consumer technology company. You know, when you look 0:05:14.720 --> 0:05:18.680 at somebody like an AWS or a Microsoft or in video, 0:05:18.920 --> 0:05:21.960 they're all going you know, they should benefit in the 0:05:21.960 --> 0:05:24.120 long run or even in the short term because of 0:05:24.160 --> 0:05:26.120 a lot of the AI investments that are going in 0:05:26.480 --> 0:05:28.919 or for that matter, a rebound in corporate tite spending. 0:05:29.279 --> 0:05:31.200 Apple doesn't work on that end. I mean, that's a 0:05:31.200 --> 0:05:34.320 consumer technology company and it's completely different from a you know, 0:05:34.440 --> 0:05:35.440 enterprise technology. 0:05:36.200 --> 0:05:38.080 We want to thank you and our ground a Bloomberg 0:05:38.120 --> 0:05:42.960 Intelligence really just dovetailing all of what feels very fresh 0:05:43.000 --> 0:05:46.359 and concerning for Apple. But in the long term, nothing 0:05:46.400 --> 0:05:48.640 has changed in January first, as you put it, well, 0:05:48.760 --> 0:05:51.640 let's get that broader macro perspective and some of the 0:05:51.720 --> 0:05:54.800 headwinds that are facing Apple and more broadly the markets. 0:05:54.800 --> 0:05:58.240 So Christina Hooper, chief Global Market Stretch is over at Invesco. 0:05:57.880 --> 0:05:59.479 And Christina, it's always a great talk with you. 0:05:59.480 --> 0:06:01.760 In fact, it's luckily enough to speak to you before 0:06:01.800 --> 0:06:04.279 the turn of the new year, and at that point 0:06:04.560 --> 0:06:06.839 you were liking emerging markets, but you had some key 0:06:06.880 --> 0:06:09.400 thoughts in China, and I am interested as to whether 0:06:09.480 --> 0:06:13.120 you think these headwinds is worry about. For example, Apple's 0:06:13.120 --> 0:06:16.560 resilience in China is something that you also rewarried about. 0:06:17.560 --> 0:06:20.040 Well, I think when we look at China, there are 0:06:20.120 --> 0:06:24.120 certainly some question marks. We just don't know what policy, 0:06:24.320 --> 0:06:27.279 what stimulus measures will come out this year. 0:06:27.360 --> 0:06:28.520 That could be supportive. 0:06:29.200 --> 0:06:33.560 We know that the Chinese economy needs to be stabilized, 0:06:33.600 --> 0:06:36.680 we need to see more growth coming from it, and 0:06:36.760 --> 0:06:38.839 I think we will get that. It's a question mark 0:06:38.839 --> 0:06:41.560 about timing and just how effective the policies are going 0:06:41.640 --> 0:06:44.520 to be coming out of the gate in twenty twenty four. 0:06:44.839 --> 0:06:47.800 And so of course it makes sense that those companies 0:06:47.880 --> 0:06:53.200 that count China as an important part of their revenue, says, 0:06:53.279 --> 0:06:56.760 an important part of their customer base are worried. But 0:06:56.800 --> 0:07:00.440 I think it's a very short term kind of concern. Obviously, 0:07:00.480 --> 0:07:04.000 it's going to impact earnings, but I don't think it's 0:07:04.040 --> 0:07:07.320 a long term problem. It's just a matter of getting 0:07:07.400 --> 0:07:12.360 the stimulus the policies right, improving confidence for consumers and 0:07:12.400 --> 0:07:15.600 businesses in China because there's a lot of potential there 0:07:15.600 --> 0:07:16.360 for that economy. 0:07:16.440 --> 0:07:19.160 And what about the geopolitics that dovetails into all of 0:07:19.160 --> 0:07:22.080 that because on the one side, Apple's worrying about the 0:07:22.120 --> 0:07:25.640 resilience of a consumer, but also a pushback against well, 0:07:25.680 --> 0:07:30.800 it's ownership of Apple by government related entities, people working 0:07:30.880 --> 0:07:32.840 within government institutions. 0:07:33.400 --> 0:07:37.760 Geopolitics, is that a risk for you? More broadly, well. 0:07:37.640 --> 0:07:40.880 Geopolitics can be a fly in the ointment, but it 0:07:41.000 --> 0:07:43.720 tends to be something that is very short term in nature, 0:07:44.600 --> 0:07:48.720 so there typically are workarounds. Smart companies can figure out 0:07:48.760 --> 0:07:56.600 workarounds to policy changes, to changes in you know, particular 0:07:57.280 --> 0:08:02.520 you know, areas of treatment for company working and selling abroad. 0:08:03.200 --> 0:08:05.960 The key though, is that it's a. 0:08:06.080 --> 0:08:09.520 Short term problem and you know, typically a workaround will 0:08:09.560 --> 0:08:11.600 be found, So I don't think it's it's a problem 0:08:11.640 --> 0:08:14.320 for the long term, but of course it can create headwinds, 0:08:14.320 --> 0:08:16.680 and investors are looking in the short term right They're 0:08:16.720 --> 0:08:19.120 reacting and concerned about what earnings are going to look 0:08:19.160 --> 0:08:22.200 like in the next quarter, the next two quarters, And 0:08:22.600 --> 0:08:25.720 of course we have seen a nice run up in tech, 0:08:25.880 --> 0:08:28.320 so it makes sense that we're seeing a bit of 0:08:28.320 --> 0:08:30.800 a pullback, especially with rates having gone higher. 0:08:31.600 --> 0:08:35.200 Christina, Caroline and I have been reflecting on a sense 0:08:35.200 --> 0:08:38.360 of deja VU this week because the conversations we're having 0:08:38.640 --> 0:08:41.640 into the new year are basically the same as we 0:08:41.679 --> 0:08:44.800 had throughout twenty twenty three. And that's so true of 0:08:44.840 --> 0:08:47.720 the FED. You know, I feel like we started twenty 0:08:47.720 --> 0:08:50.760 twenty three asking where will the FED go? We're starting 0:08:50.800 --> 0:08:53.360 twenty twenty four with confusion about the FED. And we 0:08:53.400 --> 0:08:56.880 always remind ourselves in this program, higher rates discount the 0:08:56.880 --> 0:08:59.719 present value of future cash flows in the context of 0:08:59.720 --> 0:09:02.880 the tech technology sector. Is that the case in your 0:09:02.880 --> 0:09:04.840 analysis and your outlook for this year? 0:09:06.360 --> 0:09:06.440 Ed? 0:09:06.520 --> 0:09:11.880 Absolutely, monetary policy has driven markets in general, but the 0:09:11.960 --> 0:09:16.959 reality is that tech has been particularly affected by monetary policy. 0:09:17.280 --> 0:09:20.760 It's a long duration asset class and so it's very 0:09:20.800 --> 0:09:24.360 sensitive to rates, so when they go up, it can 0:09:24.440 --> 0:09:27.160 be a problem, and that's what we're seeing. But I 0:09:27.200 --> 0:09:29.160 think we have to look at the root cause of 0:09:29.200 --> 0:09:33.720 why rates have gone up. Markets have gotten very easily 0:09:33.840 --> 0:09:37.240 persuaded by a little FED talk and a little fear 0:09:38.040 --> 0:09:40.079 and are now convinced that we're going to get a 0:09:40.160 --> 0:09:42.240 very different FED than they thought we were going to 0:09:42.280 --> 0:09:44.400 get just a few weeks ago. And I just don't 0:09:44.440 --> 0:09:47.000 buy it. I think what we are going to see 0:09:47.320 --> 0:09:50.000 is a FED that cuts rates between one hundred and 0:09:50.040 --> 0:09:53.280 one hundred and fifty basis points this year, not because 0:09:53.320 --> 0:09:56.960 the economy deteriorates a lot, but because policy is restrictive 0:09:57.960 --> 0:10:01.360 in the face of significant disen inflation. We're going to 0:10:01.360 --> 0:10:03.800 see progress on disinflation, and so the FED is going 0:10:03.840 --> 0:10:06.920 to be forced to cut rates, and I don't think 0:10:07.040 --> 0:10:11.120 that the movement higher for long rates is going to continue. 0:10:12.120 --> 0:10:15.600 We use the word technology is a blanket term and 0:10:15.720 --> 0:10:18.800 learn that not all technology companies are the same. And 0:10:18.840 --> 0:10:21.680 Ana rag Ran a our Bloomberg Intelligence and it's just 0:10:21.720 --> 0:10:23.520 made the point on Apple, right, it is not an 0:10:23.679 --> 0:10:27.800 enterprise company. It's a direct consumer to all intents and purposes. 0:10:28.400 --> 0:10:31.960 How are you distinguishing within the broad umbrella of technology 0:10:32.000 --> 0:10:34.880 this year, those you think will thrive and those you 0:10:34.880 --> 0:10:35.880 think will fall behind. 0:10:37.520 --> 0:10:40.800 Well, that's a great question, and I would say that 0:10:41.000 --> 0:10:44.720 it's not so much whether a company is a consumer 0:10:44.800 --> 0:10:51.760 based company, but more about what exactly the businesses that 0:10:51.800 --> 0:10:54.000 they're in, right, and they are going to be areas 0:10:54.040 --> 0:10:58.880 where we're likely to see significant growth even if economic 0:10:58.960 --> 0:11:02.760 headwinds are worse than we think. For example, cybersecurity, that's 0:11:02.800 --> 0:11:05.680 an area that companies are likely going to spend on 0:11:05.800 --> 0:11:09.319 no matter what, because it typically ranks among the top 0:11:09.400 --> 0:11:13.520 fears among CEOs every year, and I think it becomes 0:11:13.760 --> 0:11:17.439 a real concern in terms of branding issue. It can 0:11:17.480 --> 0:11:20.480 get very high profile. So I just want to draw 0:11:20.520 --> 0:11:24.920 that distinction. It's not about the consumer. It can be 0:11:25.000 --> 0:11:28.480 more about the regions that companies are selling in that 0:11:28.520 --> 0:11:31.560 tech companies are selling in, whether it's to businesses or consumers. 0:11:32.320 --> 0:11:35.640 But I do have to say that in general, when 0:11:35.679 --> 0:11:39.480 we look at tech, valuations are higher and there is 0:11:39.800 --> 0:11:41.600 far more sensitivity to rates. 0:11:41.840 --> 0:11:44.439 Christina Hooper of Investigo, great to have you on the program, 0:11:44.480 --> 0:11:54.400 Thank you so much. Okay, this is one of the 0:11:54.400 --> 0:11:58.079 big movies in the technology sector. Israel's most valuable company 0:11:58.080 --> 0:12:02.040 by market cap, but US listed Mobili down almost twenty 0:12:02.080 --> 0:12:03.600 five percent if it closes at that. 0:12:03.640 --> 0:12:05.400 Level, biggest drop on record. 0:12:05.920 --> 0:12:09.800 It's also impacting other names in the semi space, some 0:12:09.840 --> 0:12:13.160 of its peers, particularly those that supply chips to the 0:12:13.160 --> 0:12:16.800 automotive sector. Intel is interesting because remember that mobile I 0:12:16.920 --> 0:12:19.880 was spun out of Intel, but Intel return retains an 0:12:19.880 --> 0:12:20.839 eighty eight per cent steak. 0:12:21.080 --> 0:12:22.720 This is the story. Let's bring up the numbers. 0:12:22.760 --> 0:12:25.480 It came out with prelim financials and Mobilized telling us 0:12:25.640 --> 0:12:28.720 that in four year twenty four revenue will be between 0:12:28.720 --> 0:12:32.319 one point eight six billion and one point nine to 0:12:32.360 --> 0:12:35.440 six billion at the midpoint one point eight nine billion, 0:12:35.480 --> 0:12:38.120 but the street was looking for two point five six billion. 0:12:38.400 --> 0:12:40.400 The story is that this is a company that makes 0:12:40.480 --> 0:12:44.520 chips or systems that power advanced driver assistance tools. Right 0:12:44.520 --> 0:12:47.599 think about when you're in your car, the lane keeping technology, 0:12:47.760 --> 0:12:53.560 the camera technology, the cruise technology. But a lot of 0:12:53.559 --> 0:12:56.920 the customers that order those types of chips were panicked 0:12:56.960 --> 0:12:58.760 in twenty twenty when we had a supply crunch. So 0:12:58.800 --> 0:13:01.480 what did they do. They built up inventories. Now they've 0:13:01.480 --> 0:13:04.600 stopped ordering and they're working through those inventories. That means 0:13:04.600 --> 0:13:07.040 that in the first quarter of this year, Mobil's telling 0:13:07.120 --> 0:13:10.040 us sales will be down fifty percent carrow year on year. 0:13:11.120 --> 0:13:13.599 Great setup, great deep dive that we now need to 0:13:13.640 --> 0:13:15.160 do a little bit more as to why this then 0:13:15.640 --> 0:13:17.880 call the market so off guard. Blue Mugazine King is 0:13:17.920 --> 0:13:20.880 here to help it break all down the chip news 0:13:20.920 --> 0:13:22.760 that we've got of the day, and just starting on 0:13:22.800 --> 0:13:25.080 mobili and starting on just how hard it is to 0:13:25.160 --> 0:13:27.960 read the end demand for these sorts of chips for 0:13:28.040 --> 0:13:29.120 inventory levels. 0:13:29.120 --> 0:13:33.440 More broadly, why had we not got more direction from 0:13:33.480 --> 0:13:34.320 MOBILEI why. 0:13:34.280 --> 0:13:36.880 Were we not able to sort of see this coming 0:13:36.920 --> 0:13:37.880 a little bit clearer. 0:13:38.920 --> 0:13:40.880 I think the way to look at this is Mobile 0:13:40.920 --> 0:13:43.760 Eye is essentially at the top of the stack. Its 0:13:44.080 --> 0:13:48.040 chips go into the most expensive cars. The cars are 0:13:48.080 --> 0:13:52.720 the most functions and are probably amongst the most expensive components. 0:13:52.720 --> 0:13:56.960 They're going to cars, So from my perspective, you want 0:13:56.960 --> 0:13:59.400 to have them on hand so you can sell those cars. 0:13:59.440 --> 0:14:01.600 But all of us sudden if you think, oh, I 0:14:01.640 --> 0:14:03.560 can't sell those models, I have to cut some of 0:14:03.600 --> 0:14:06.080 those models, and you know the market is going more 0:14:06.120 --> 0:14:09.000 towards say, mid range, then you're going to crash your 0:14:09.120 --> 0:14:12.560 ordering of somebody like Mobile Eye to obviously save on 0:14:12.880 --> 0:14:15.600 the build up of inventory and the costs that are 0:14:15.600 --> 0:14:16.200 involved in that. 0:14:16.320 --> 0:14:18.360 So that's probably what's going on here. 0:14:18.320 --> 0:14:20.520 And we know all about the automakers, particularly in the 0:14:20.560 --> 0:14:23.240 EV context, telling us we're really scaling back in twenty 0:14:23.280 --> 0:14:25.280 twenty four. The way that I always look at it is 0:14:25.280 --> 0:14:28.360 that Mobilie also sells to what we call tier ones, 0:14:28.400 --> 0:14:31.320 but basically companies that make those off the shelf components 0:14:31.880 --> 0:14:34.000 and those are the ones that built up the inventores. 0:14:34.320 --> 0:14:38.000 What's also interesting is the reaction in equity markets. All 0:14:38.120 --> 0:14:41.560 kinds of chip names, particularly those that sell to the 0:14:41.640 --> 0:14:42.880 car companies, are down. 0:14:43.320 --> 0:14:44.600 What's the read across there? 0:14:44.720 --> 0:14:46.400 Yeah, I mean, if you've been looking, if you've been 0:14:46.400 --> 0:14:49.240 listening to the conference calls for like the last couple 0:14:49.320 --> 0:14:53.720 of quarters, people like TI, people like NXP have been asked, Hey, 0:14:54.600 --> 0:14:56.600 the auto markets looking a bit shaky, how can you 0:14:56.640 --> 0:14:58.520 be so bullish about this? How come your orders are 0:14:58.560 --> 0:15:00.640 so strong? And what they've been saying is, oh, more 0:15:00.680 --> 0:15:02.760 chips per car. Don't worry about it, you know, we're 0:15:02.800 --> 0:15:05.280 not too worried about the you know, the total number 0:15:05.320 --> 0:15:08.280 of cars getting sold. Now we're seeing that perhaps they 0:15:08.320 --> 0:15:10.320 have to worry about the total number of cars being 0:15:10.400 --> 0:15:13.120 built and being sold. And that's really what's happening here, and. 0:15:13.080 --> 0:15:15.880 It's interesting Qualcom getting caught up in that. We're seeing 0:15:15.920 --> 0:15:18.200 setting pressure on the day is of course put some 0:15:18.240 --> 0:15:20.680 focus on the auto industry as it diversifies out of 0:15:20.760 --> 0:15:23.480 just mobile, but it also has an announcement today on 0:15:23.480 --> 0:15:26.080 how it's really trying to be owning the VRAR space 0:15:26.120 --> 0:15:26.520 as well. 0:15:26.640 --> 0:15:27.560 What's the latest on that? 0:15:27.640 --> 0:15:27.800 I in. 0:15:28.040 --> 0:15:28.240 Yeah. 0:15:28.280 --> 0:15:30.800 I mean, this is, you know, a repeat of a 0:15:30.840 --> 0:15:34.040 story we've seen several times when Apple get involved in 0:15:34.080 --> 0:15:36.200 a category that sort of others have been dabbling in, 0:15:36.560 --> 0:15:39.120 Suddenly it becomes serious. And as we know, Apple's got 0:15:39.280 --> 0:15:42.120 a major product coming to market in this area. So 0:15:42.160 --> 0:15:44.640 Whatqualcom's trying to do here is to say, look, let's 0:15:44.640 --> 0:15:47.320 not repeat the history that we saw with the smartphone 0:15:47.880 --> 0:15:51.840 with this smart watch. Let's make sure that our Android 0:15:51.880 --> 0:15:55.400 based offerings, our Windows based offerings have a chip that 0:15:55.560 --> 0:15:59.440 really really gives the capabilities that will allow the competitors 0:15:59.440 --> 0:16:02.600 of Apple to have things out there that can fight 0:16:02.680 --> 0:16:05.640 back and stop Apple just coming waltzing in and owning 0:16:05.640 --> 0:16:06.160 the sector. 0:16:06.920 --> 0:16:10.480 Apple has its own proprietary chip inside the Vision pro 0:16:11.240 --> 0:16:13.840 and as carry points out for Qualcom, this is one 0:16:13.840 --> 0:16:16.280 of the number of areas moving away from the smartphone. 0:16:16.880 --> 0:16:19.880 Tell me about the XR two plus chip, you know, 0:16:20.000 --> 0:16:22.480 do we believe it's at the cutting edge in this 0:16:22.680 --> 0:16:23.200 use case? 0:16:23.400 --> 0:16:25.840 I mean, the explanation that we had in the story 0:16:25.920 --> 0:16:29.320 is up to twelve, maybe even more than twelve cameras, 0:16:29.880 --> 0:16:36.320 four K projection of visuals in each I sounds pretty aggressive, 0:16:36.400 --> 0:16:40.600 sounds pretty exciting, But I think, as Qualcom said themselves, 0:16:40.680 --> 0:16:44.840 everything is in the implementation. We absolutely have to see 0:16:44.880 --> 0:16:46.440 what its customers will do with it. 0:16:46.920 --> 0:16:48.000 Bloomberg's e inking. 0:16:48.040 --> 0:16:49.880 We call him mister Chip and it's a great way 0:16:49.880 --> 0:16:52.960 to kick off the new year character I Meanwhile. 0:16:52.560 --> 0:16:56.120 Coming up, we're going to talk Tencent because buying back 0:16:56.160 --> 0:16:58.480 a record number of shares last month, it seemed to 0:16:58.480 --> 0:17:00.400 make the most of what was an industry I'd. 0:17:00.240 --> 0:17:01.120 Sell off in the name. 0:17:01.480 --> 0:17:04.479 More on what triggered, of course, the move gaming moves 0:17:04.480 --> 0:17:06.880 by China more broadly, and what's the next for investors? 0:17:06.920 --> 0:17:08.040 This is remote technology. 0:17:25.000 --> 0:17:28.040 Okay, time for talking tech, and first up, Microsoft is 0:17:28.040 --> 0:17:31.800 adding a new key which will activate its AI copilot 0:17:31.800 --> 0:17:35.480 function to its Windows keyboard. Microsoft says the shortcut will 0:17:35.520 --> 0:17:38.879 help users create images, write emails, and summarize text with 0:17:38.960 --> 0:17:41.600 the help of AI. It's the first addition to the 0:17:41.640 --> 0:17:45.879 PC keyboard since the Windows Start key was introduced in 0:17:46.000 --> 0:17:49.400 nineteen ninety four, and in an effort to boost domestic 0:17:49.440 --> 0:17:52.880 output of legacy semiconductors, the US Commis Department will give 0:17:52.960 --> 0:17:56.320 Microschip Technology one hundred and sixty two million dollars. It's 0:17:56.320 --> 0:17:59.240 second the second such commitment from the twenty twenty two 0:17:59.320 --> 0:18:02.080 Chips Act, which set aside billions of dollars to bring 0:18:02.160 --> 0:18:05.040 chip making back to the United States. While legacy chips 0:18:05.040 --> 0:18:08.560 are less advanced, they're important and essential for everyday use. 0:18:08.640 --> 0:18:09.000 Plus. 0:18:09.320 --> 0:18:12.160 In the latest show of supports for US sanctioned companies, 0:18:12.280 --> 0:18:16.320 China's number two leader made an appearance at a YMTC factory, 0:18:16.600 --> 0:18:19.400 a chip maker that competes with the likes of Micron 0:18:19.680 --> 0:18:22.680 and Samsung. The trip comes as China attempts to revive 0:18:22.920 --> 0:18:26.879 its struggling economy and bolster Chinese investments in the technology sector. 0:18:27.080 --> 0:18:30.080 Caroline and also perhaps steady some nerves about the direction 0:18:30.160 --> 0:18:33.600 of travel for policy making more broadly versus tech in China, 0:18:33.640 --> 0:18:36.080 and we want to delve into that particular area because 0:18:36.320 --> 0:18:36.800 we want. 0:18:36.640 --> 0:18:37.760 To focus on ten cent. 0:18:38.400 --> 0:18:41.480 Share repurchases by the company have hit a record one 0:18:41.520 --> 0:18:43.920 point three billion dollars. That was in December, and of 0:18:44.000 --> 0:18:46.159 course that was kind of making the most of share 0:18:46.600 --> 0:18:49.399 weakness after China supprise the gaming industry with some new 0:18:49.440 --> 0:18:52.840 regulations whom most Henry Wren is in London with more and. 0:18:52.760 --> 0:18:55.359 So is it typical for a company to make the. 0:18:55.280 --> 0:18:57.920 Most of buying back when shares have been sold off. 0:18:59.040 --> 0:19:03.000 Yes, definitely typical move for companies, but for Tencent, it 0:19:03.040 --> 0:19:07.040 has really been ramping up its efforts for share repurchase. 0:19:07.520 --> 0:19:12.399 So Bloomberg compiled data showed that recently, on every single 0:19:12.440 --> 0:19:16.560 trading day, Tencent has been buying back about total worth 0:19:16.640 --> 0:19:19.960 of one billion Hong Kong dollars of its shares on 0:19:20.040 --> 0:19:23.520 Hong Kong trading market. To put that into perspective, before 0:19:23.560 --> 0:19:27.200 the Chinese gaming regulators issued a set of surprise rules 0:19:27.400 --> 0:19:30.960 aiming at curbing players playing time as well as spending 0:19:31.000 --> 0:19:34.960 on video games, Tencent was buying back at a pace 0:19:35.000 --> 0:19:38.480 of about four hundred million Hong Kong dollars per single day, 0:19:38.760 --> 0:19:41.800 So that's an increase of more than one hundred percent. 0:19:41.920 --> 0:19:44.560 So that really shows that Tencent is ramping up its 0:19:44.560 --> 0:19:48.320 efforts to restore the market confidence given the recent drops 0:19:48.320 --> 0:19:51.760 in gaming stocks as well as intents in itself recently. 0:19:52.320 --> 0:19:56.120 Exactly that it is the mechanism or the reaction from 0:19:56.160 --> 0:19:59.440 Tencent to what's happened, which is the new rules or 0:19:59.480 --> 0:20:03.680 gaming which strictions. As a wonderful line in the Bloomberg story, still, 0:20:03.720 --> 0:20:07.280 for many investors who remain traumatized by a spate of 0:20:07.320 --> 0:20:10.719 abrupt rules just remind us where we stand with the 0:20:10.760 --> 0:20:12.920 regulations that came in just before the new year. 0:20:14.280 --> 0:20:16.080 Yeah, so exactly. 0:20:16.280 --> 0:20:18.760 So many investors that we talked to have been mentioning 0:20:18.800 --> 0:20:23.359 about all those memories being involved in the twenty twenty 0:20:23.359 --> 0:20:27.359 one twenty twenty two regulatory crackdown campaigns where the Chinese 0:20:27.400 --> 0:20:31.560 government's target fintech giants such as and Financial the gaming 0:20:31.880 --> 0:20:35.760 giants including Tensent and many others, and in the latest 0:20:35.800 --> 0:20:39.600