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Speaker 2: Joining us on the line now were in our studios
Speaker 2: rather its flat savof Bloomberg Tech Editor to take a
Speaker 2: closer look at video. We want to talk about the
Speaker 2: China angle, Vlad, But I wanted to mention as well
Speaker 2: that you know, the stock did trade up in after hours,
Speaker 2: and if you look at the analyst coverage, you've got
Speaker 2: sixty buys, five holds, and one sell. You wonder about
Speaker 2: the one sell, But anyway, is that likely to continue
Speaker 2: given all you saw from the earnings today?
Speaker 3: Maybe that once said we was just somebody who's profit taken.
Speaker 3: They bought NVIDI in two thousand and eight and now
Speaker 3: they're just catching it in What can I tell you
Speaker 3: about this company? When you look at its profits, they
Speaker 3: are just stratospheric relative to the previous year. We're talking
Speaker 3: twenty two billion. It's a record quarterly profit that they
Speaker 3: just reported. Expectations for Nvidia have been sky high, and
Speaker 3: it keeps outperforming, and this is a full year of
Speaker 3: quarterly results being better than already elevated expectations. A good
Speaker 3: way to contextualize this is Nvidia's history is a graphics
Speaker 3: card maker, graphics cards, GPU gaming. That was two point
Speaker 3: nine billion out of that twenty two billion. So the
Speaker 3: company is churning out huge revenues and sales and outperforming
Speaker 3: even sky high expectations.
Speaker 1: Yeah, but the power of those chips, that's why they're
Speaker 1: so great for you know, crunching AI data. They're lightning
Speaker 1: fast and robust as well. But the one thing that
Speaker 1: I think Brian was kind of alluding to when the
Speaker 1: company says that China data center revenue was down significantly,
Speaker 1: and you can obviously look to the US export controls
Speaker 1: as a big reason for that, But in my mind,
Speaker 1: I'm thinking, if I'm in the artificial intelligence business in
Speaker 1: China and I don't have access to the most advanced
Speaker 1: chips from in Video, I'm at a big disadvantage. Right,
Speaker 1: That's absolutely right.
Speaker 3: What is going to require is a fair amount of
Speaker 3: creativity because the way that things are structured today when
Speaker 3: you think about chat, GPT kick starting this entire thing,
Speaker 3: the whole technology is based on transformers and those are
Speaker 3: designed to run on Nvidia's Kuda architecture. So, without getting
Speaker 3: too geek into it, there is no other in video
Speaker 3: and video designed the whole thing. Everybody just jumped aboard
Speaker 3: and found it to be the most efficient way. So
Speaker 3: the way to go about it today and in the
Speaker 3: future is to come up with more power efficient AI models,
Speaker 3: to come up with lighter workloads, and then figure out
Speaker 3: ways to achieve what companies like open eie are doing
Speaker 3: with a whole bunch of Nvidia GPUs today.
Speaker 2: Well, we know you like to geek out a little bit,
Speaker 2: and Vidia has been sending some samples of new chips
Speaker 2: to China that are compliant with the US restriction, So
Speaker 2: will that be enough.
Speaker 3: Right, Well, it's been a fascinating back and forth between
Speaker 3: Nvidia and the US government. The US government imposed sanctions
Speaker 3: to get Nvidia's most advanced chips to make them inaccessible
Speaker 3: to China, and then Nvidia effectively chopped them down to
Speaker 3: spec so they could get into China. Then the US
Speaker 3: government said you can't do that. The head back and
Speaker 3: forth the head conversation, and Vidia did say after reserning
Speaker 3: is that it's confident that the things that it's sampling,
Speaker 3: the chips that is samplingto China today are in compliance
Speaker 3: with those regulations.
Speaker 1: Now, yeah, Brian was talking about a story that where
Speaker 1: the Commerce Department here in the US was suspending permission
Speaker 1: for some US suppliers to sell products to the most
Speaker 1: advanced semiconductor plant in China that's run by SMIC. Can
Speaker 1: you imagine a world in the next two years, let's say,
Speaker 1: where China has caught up to Nvidia, or is it
Speaker 1: so far behind now we're a company like Nvidia, or
Speaker 1: to a lesser extent, let's say AMD or even Intel
Speaker 1: is playing. Is China that far behind?
Speaker 3: Well, let's say, you'll be shocking. I can't say it's
Speaker 3: never going to happen, because I might have said that
Speaker 3: about Nvidia doing ten times its earnings in the space
Speaker 3: of a year. Right, So things can move really quickly.
Speaker 3: They can be breakthroughs. We sorder with the Huawei chip
Speaker 3: out of China last year. That being said, the amount
Speaker 3: of investment and time that goes into building this and
Speaker 3: video started this entire thing more than a decade ago.
Speaker 3: When you think about TSMC, which is the worst leading
Speaker 3: chip maker, they're investing thirty billion dollars a year just
Speaker 3: in capex. So for China to do it, it's not
Speaker 3: just a matter of money and resources, it really is
Speaker 3: time as well.
Speaker 2: It's not only in China that's far behind, but even
Speaker 2: AMD it's rolled out this accelerated them I three hundred.
Speaker 2: It expects revenue to be three and a half billion
Speaker 2: dollars this year three point five billion, and video is
Speaker 2: doing eighty billion plus. So it shows you the gap.
Speaker 2: Can AMD narrow that gap?
Speaker 3: I believe that's much more reviable proposition. And if you
Speaker 3: talk to AMD, they're saying that they're already doing it.
Speaker 3: The thing is again, it takes time. It takes time
Speaker 3: to ramp up. It takes time to have the companies,
Speaker 3: the customers who adopt your technology. That's three billion dollars
Speaker 3: just from AI for AMD, just to be clear, they
Speaker 3: do you have all the other business with graphics and
Speaker 3: processes as well. Look, AMD is growing and I said
Speaker 3: this to your colleagues in Europe yesterday. There is a
Speaker 3: world in which AMD can fulfill all of its ambitious
Speaker 3: targets and grow its AI sales and for Nvidia to
Speaker 3: still struggle to provide as many GPUs as the market
Speaker 3: demands from it.
Speaker 2: Yeah, demand is that strong.
Speaker 1: Where does Armholdings come in all of this? I mean,
Speaker 1: obviously the British chip designer, the tone by softbanker. Are
Speaker 1: they involved at the periphery of kind of advancing the
Speaker 1: next generation of AI chips?
Speaker 3: Right? It depends. I mean if you ask the company,
Speaker 3: they're not at the periphery. They are at the heart
Speaker 3: of it. They're the future of AI. Because what in
Speaker 3: video is really great at is AI training. So talking
Speaker 3: to its competitors like Intel, like Armed, they're saying the
Speaker 3: next stage in AI is inference. It's the AI that
Speaker 3: happens on devices, and every smartphone today is basically running
Speaker 3: ARM technology or the Apple chips for even its desktop
Speaker 3: computers or ARMED technology. So when you think one, two,
Speaker 3: three years down the line, it may indeed be ARMED
Speaker 3: who's leading the way.
Speaker 2: You mentioned that demand was still so strong that even
Speaker 2: AMD could produce and produce and produce, and it wouldn't
Speaker 2: really close the gap that much. Jensen Wong did say
Speaker 2: today that supply and demand was coming more into balance.
Speaker 2: If that's true, does that mean the prices may come
Speaker 2: down for those in video chips.
Speaker 3: Well, that's the fascinating thing I was thinking, and video
Speaker 3: could effectively name its price. Over the past year, everyone
Speaker 3: was in such a rush, in a hurry to get
Speaker 3: the chips in place, because, as I say, it's AI training.
Speaker 3: It's the very initial stages before you actually produce an
Speaker 3: AI model. The can stop monetizing as a business right,
Speaker 3: so everyone wants to have that as early as possible.
Speaker 3: That's why the competition has been there. I think Nvidia
Speaker 3: can probably sustain its pricing just because the demand was
Speaker 3: so much higher E could have detated price previously. This
Speaker 3: welcome competition coming down the line, though.
Speaker 2: Glad, thanks very much for joining us. Flat Savov there
Speaker 2: Bloomberg Tech editor, and you spare time for fun. He
Speaker 2: reads very dense technical manuals, you know, just to be entertained. Glad,
Speaker 2: thanks again and we'll have you back soon. China is
Speaker 2: said to have banned institutional investors from reducing their equity
Speaker 2: holdings at the opening close each day. And joining us
Speaker 2: for some analysis on this is Jill Desis, Bloomberg's China
Speaker 2: ecogov editor. So they can sell, but they can't sell
Speaker 2: more than they buy, Jill. So it's a kind of
Speaker 2: you can't reduce your position or you can't do net selling.
Speaker 2: I'm curious what institutional investors are saying about this. I mean,
Speaker 2: this is kind of astonishing. Are we hearing much from
Speaker 2: this is the Bloomberg story, of course, Are we hearing
Speaker 2: much from investors?
Speaker 1: Yes?
Speaker 4: Well, Brian, I think at the point here, it's really
Speaker 4: this is about the government trying to alleviate some of
Speaker 4: the selling pressure. I think the backstory that you have
Speaker 4: to keep in mind here is that, you know, we've
Speaker 4: seen some increased pressure in recent days, particularly from the government,
Speaker 4: to sort of clamp down on quantitative trading. What happened
Speaker 4: was on Monday, there is a major hedge fund in
Speaker 4: China that's sold something like three hundred the equivalent of
Speaker 4: like three hundred and fifty million dollars worth of shares
Speaker 4: within a minute of the open on Monday. And so
Speaker 4: it's really here about, you know, curbing some of this volatility.
Speaker 4: So I think from an investor perspective, obviously confidence is
Speaker 4: a much bigger issue in China right now. But I
Speaker 4: think at least from the government's perspective. This is really
Speaker 4: about trying to clamp down on volatility within the market.
Speaker 1: So the CSRC, we know, has a new chairman now,
Speaker 1: wou Ching, and I'm wondering whether he's the architect of this,
Speaker 1: and basically he was. I'm going to use the term
Speaker 1: hired to do something like this as a way of
Speaker 1: bringing stability to the equity market. I mean, the stakes
Speaker 1: are pretty high, aren't.
Speaker 4: They they are? And look, i mean we're not sure
Speaker 4: entirely what his role particularly in this move was, but yes,
Speaker 4: I mean this does come just a couple of weeks
Speaker 4: after he was appointed to this position. And wu Ching
Speaker 4: also has a you know, quite a starried history of
Speaker 4: clamping down on behavior within in the market like this.
Speaker 4: In his a previous job, he was really known as
Speaker 4: the broker butcher within China. So I mean he's kind
Speaker 4: of here to you know, sort of slam down the
Speaker 4: hammer and rain things in. I mean, remember, this is
Speaker 4: a market that has experienced a tremendous amount of volatility,
Speaker 4: particularly over the last eighteen months. We've seen a massive
Speaker 4: multi trillion dollar sell off in China. A lot of
Speaker 4: these issues are really really sort of deep and painful
Speaker 4: within the market here, and so I think that if
Speaker 4: you're Xi Jinping looking at the guys that you have
Speaker 4: in place to sort of regulate the markets here, you
Speaker 4: want to make sure that you're trying to prevent any
Speaker 4: further volatility as much as you possibly can.
Speaker 2: One thing that we point out in our story is
Speaker 2: it's unclear how widely this is being implemented, and perhaps
Speaker 2: it doesn't need to be implemented once you put this
Speaker 2: statement out. Institutional investors don't want to fall foul of
Speaker 2: the regulator, and so they will make sure that they
Speaker 2: are not net sellers. Is that what we're seeing or hearing?
Speaker 4: Yeah, I mean I think that at this point a
Speaker 4: lot of what the government is trying to do here
Speaker 4: is you know, they're sending a message, right, and I
Speaker 4: think that that's really a key thing here. You're right
Speaker 4: that it's not entirely clear how widely this band is
Speaker 4: being applied. I mean, you know, obviously, I think you know,
Speaker 4: it's really sort of keying in on major institutional investors.
Speaker 4: You do have to remember though, as well, that you know,
Speaker 4: Chinese markets have a massive number of mom and pop
Speaker 4: investors as well, and so those retail investors likely aren't
Speaker 4: really affected by this thing, and they are really responsible
Speaker 4: for quite a big part of this market here. But yes,
Speaker 4: I think at this point regulators certainly want to send
Speaker 4: a message saying, you know, we're clamping down and this
Speaker 4: type of behavior. We want to clamp down on volatility.
Speaker 4: We've seen other you know, restrictions in recent weeks and months,
Speaker 4: curbing short selling, that kind of thing. So I think
Speaker 4: it's really again about alleviating the selling pressure within the market.
Speaker 1: And we don't have an indication as to whether this
Speaker 1: policy is going to be lasting or whether it's just
Speaker 1: kind of a temporary adjustment to let the market kind
Speaker 1: of settled in, do we.
Speaker 4: Yeah, we don't really know that. I mean, I think
Speaker 4: that again at this point, you know, I wouldn't be
Speaker 4: surprised if we see additional measures announced or you know,
Speaker 4: sort of implemented in the next few weeks or so.
Speaker 4: It's it's we're you know, this is a this is
Speaker 4: a government that's really trying to stem this really incredible
Speaker 4: market route right now. And so whether these are temporary curbs,
Speaker 4: whether these are long lasting curbs, I mean, a lot
Speaker 4: of this is really just about stemming the bleeding at
Speaker 4: the moment.
Speaker 2: A couple of other quick areas, perhaps you can comment
Speaker 2: on both. One that the csr rc is IS is
Speaker 2: putting together this task for us with the exchanges themselves
Speaker 2: to monitor short selling, so that looks like some of
Speaker 2: that will dry up. And this other one, which is
Speaker 2: pretty interesting too, that China is drafting a law to
Speaker 2: promote the development of the private sector economy.
Speaker 4: Yes, well, I think that, you know, on that first
Speaker 4: point in terms of creating that task force, again, I
Speaker 4: think speaks to just the bevy of different measures that
Speaker 4: the government is rolling out to try to you know,
Speaker 4: again curb volatility within the market. And then yes, when
Speaker 4: it comes to the private sector, I mean, look, you know,
Speaker 4: the private sector does not have a ton of confidence
Speaker 4: in China's government economy right now. They obviously have very
Speaker 4: very long standing concerns about treatment preferential treatment for state
Speaker 4: owned you know, enterprises versus private firms. That's been a
Speaker 4: major theme, particularly over the last couple of years within China.
Speaker 4: So I think that anything that the government can do
Speaker 4: to try to instill some level of confidence in these
Speaker 4: private firms telling them, look, we do have your back
Speaker 4: and we do want to help you grow and develop,
Speaker 4: is you know, going to you know, you know, maybe
Speaker 4: go some way to restoring some of that sentiment there.
Speaker 1: So there's a People Congress a meeting at the early
Speaker 1: part of March. Do I have that right? And is
Speaker 1: that going to be an opportune time for more policy
Speaker 1: be rolled out.
Speaker 3: Yes.
Speaker 4: So that's really that meeting of those top legislators in China.
Speaker 4: It's the most important political meeting that they have of
Speaker 4: the year. That's going to kick off at the beginning
Speaker 4: of March, and that's really an opportunity that all of
Speaker 4: these major you know, these top leaders lawmakers have to
Speaker 4: kind of gather and set this policy agenda for the year.
Speaker 4: I mean, a lot of these things that they're likely
Speaker 4: discussing at this upcoming meeting in March, they've probably already
Speaker 4: been working on for quite some time. But I think
Speaker 4: just formalizing, you know, any sort of arrangements that they
Speaker 4: have for the trajectory for the rest of twenty twenty four,
Speaker 4: they're likely going to announce their economic growth target for
Speaker 4: the year. That's really I think an important agenda setting
Speaker 4: meeting on that calendar as we get into the rest
Speaker 4: of this year.
Speaker 2: All right, Jill, thanks for joining us. Jill de Sez
Speaker 2: Bloomberg's China Eco guv Anger.
Speaker 1: All right, let's pick up on that theme of Donald
Speaker 1: Trump possibly being elected to the US presidency. We are
Speaker 1: joined now by Bloomberg opinion columnist Karishma of Aswane, who
Speaker 1: joins us from our studios in Singapore. Karishma, it's always
Speaker 1: a pleasure. And you've been writing about what a Trump
Speaker 1: election to the presidency might mean for Taiwan. Break that
Speaker 1: down for me.
Speaker 5: Yeah, So, you know, to be fair, when Trump was
Speaker 5: in power, arguably there had been no better president American
Speaker 5: president for Taiwan until, of course Biden came along. Because
Speaker 5: since we've had President Biden in the White House, there
Speaker 5: have been a number of things that he's done in
Speaker 5: comparison to the former President Trump that has helped to
Speaker 5: boost support for Taiwan internationally. But just looking at some
Speaker 5: of the rhetoric that's come out of Donald Trump in
Speaker 5: this campaign, and I want to point to an interview
Speaker 5: that he's done recently with Fox News where he suggested
Speaker 5: that perhaps Taiwan would not be the most urgent priority
Speaker 5: for his White House if indeed he does make it
Speaker 5: into the White House in November. That has raised a
Speaker 5: lot of concern in this part of the world, obviously
Speaker 5: in Taipei, but even further afield with the American partners
Speaker 5: like Japan, the Philippines, and Australia. And it's a real
Speaker 5: issue of American credibility out here because how the US
Speaker 5: manages the Taiwan issue with China is being seen as
Speaker 5: a test of American leadership across the region.
Speaker 2: Yeah, as you say, Joe Biden has taken one extra step,
Speaker 2: even talking about the possibility of coming physically to the
Speaker 2: defense of Taiwan in the event of an attack. And
Speaker 2: President Trump seems like, as you say, that, he's taken
Speaker 2: back a step a little bit, and perhaps that's consistent
Speaker 2: with his basic America First policy. So the question then arises,
Speaker 2: if China was emboldened by this, whether it would be
Speaker 2: a kind of literal move or just a figurative one.
Speaker 5: I think it's important to look at the signaling out
Speaker 5: of Beijing, and just in the last week or so,
Speaker 5: we have seen that there has been appetite from China
Speaker 5: to escalate tensions relatively speaking. The recent incident of two
Speaker 5: Chinese fishermen that unfortunately died tragically in Taiwanese waters off
Speaker 5: the island of Jinmn, Taiwanese controlled has prompted the Chinese
Speaker 5: to say that they are going to increase their patrols
Speaker 5: in this area. A Chinese coast guard in fact bordered
Speaker 5: a Taiwanese tourist vessel a couple of days ago. That
Speaker 5: really scared people in Taiwan. And I think it is
Speaker 5: important ahead of the May twentieth inauguration of the new
Speaker 5: president Leichinda, who is of course from the Democratic Progressive Party,
Speaker 5: the politician that possibly China hates the most. Right now,
Speaker 5: I think we will continue to see an escalation of
Speaker 5: what is called gray zone activities by Beijing and culminating
Speaker 5: in whatever the Chinese want to signal ahead of that
Speaker 5: inauguration speech. On me the twentieth, that's pivotal.
Speaker 3: You know.
Speaker 1: You cite a report from Bloomberg Economics suggesting there could
Speaker 1: be a twenty five percent probability of a major crisis
Speaker 1: in the Taiwan straight in the next five years ten
Speaker 1: percent risk of some form of conflict. I'm wondering though,
Speaker 1: whether that analysis was assuming a Biden presidency or a
Speaker 1: Trump presidency, and how the calculation might shift. We can
Speaker 1: put that aside for the moment. The other thing, we
Speaker 1: need to address the economic consequences, right, I think that
Speaker 1: cannot be ignored. We were talking about the results from
Speaker 1: Nvidia a short while ago. This company relies on Taiwan's
Speaker 1: semiconductor to produce all of its chips, and I think
Speaker 1: that's the big elephant in the room, is it not?
Speaker 4: Yeah?
Speaker 5: Absolutely, I think you know, the pivotal role, the key
Speaker 5: role that Taiwan plays in the global supply chain, particularly
Speaker 5: when it comes to these high value chips. I mean
Speaker 5: they're in everything, right, like from your television set to
Speaker 5: extremely sophistic technological equipment. And the numbers are staggering. According
Speaker 5: to Bloomberg Economics, this analysis was released in January this year.
Speaker 5: They put the global price tag of an invasion at
Speaker 5: around ten trillion dollars and that's equal to about ten
Speaker 5: percent of global GDP. And importantly, this exceeds the blow
Speaker 5: from the war in Ukraine, the pandemic, and the two
Speaker 5: thousand and eight financial crisis. And I was listening to
Speaker 5: a podcast where Matt Pottenscher, the former deputy of the
Speaker 5: NSC during Trump's administration, was speaking, and he said that
Speaker 5: if there was to be an invasion, I'm paraphrasing him
Speaker 5: of China into Taiwan. It would make what looks it
Speaker 5: would make what is happening in the Middle East right
Speaker 5: now and in Ukraine look like Child's Place. Sure he's
Speaker 5: overblowing that a little, but I think it speaks to
Speaker 5: the point that we're making here.
Speaker 2: Yeah, that's why I asked about the difference between a
Speaker 2: sort of literal attack or perhaps just a figurative one.
Speaker 2: Doug mentioned economic, but you also have you economic and
Speaker 2: yours have cultural warfare in the sense I mean there's
Speaker 2: a lot of pressure that China could put on Taiwan
Speaker 2: that might go unattended by a presidency of Trump.
Speaker 5: Yeah, and it's already happening. It's such a good point.
Speaker 5: It's the digital misinformation. It's the fact that you know,
Speaker 5: when I was out on the island of gin Men
Speaker 5: just a few well just in January. Rather when you
Speaker 5: speak to people there, they can see China across the
Speaker 5: ocean and it's not that far away. And you know,
Speaker 5: I think there's two things happening. One, there is a
Speaker 5: real desire for stability. I mean, who doesn't want that, right,
Speaker 5: And the people of Taiwan are just like you, and
Speaker 5: I they certainly don't want war, but then there's the
Speaker 5: other aspect where it feels like their own sense of
Speaker 5: sovereignty and decision making is being threatened on a daily basis.
Speaker 5: They have a clear sense of their identity, particularly amongst
Speaker 5: young people there that is growing and that's what Beijing
Speaker 5: doesn't want to see.
Speaker 1: Yeah, in the time that we have left, I can
Speaker 1: only give you about fifteen seconds to deal with the
Speaker 1: issue of the US expanding its coalition with that include
Speaker 1: countries in the APAC region.
Speaker 5: Do you think one hundred percent Japan, South Korea, Australia
Speaker 5: and the Philippines all key, allies?
Speaker 1: All right, Korshma will leave it. There always a delight
Speaker 1: to Karishma Vaswani. Bloomberg opinion columnists joining us from Singapore
Speaker 1: to talk about the possibility of what a Donald Trump
Speaker 1: reelection might mean for the future of Taiwan.
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