Speaker 1: From Mahard.
Speaker 2: We're Innovation, Money and Power colle in Silicon Valley, NBN.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
Speaker 3: I'm Caroline Heide and Bloomberg's world headquarters in New York,
Speaker 3: and I'm Ed Ludlow in San Francisco.
Speaker 4: This is Bloomberg Technology.
Speaker 5: Coming up.
Speaker 3: We'll take the pulse of the market and get a
Speaker 3: read on appetite of those Magnificent seven as one name
Speaker 3: struggles to keep up with the pack and.
Speaker 6: Snap joining the courus of technology companies announcing job cuts
Speaker 6: with plans to slash ten percent of its global workforce.
Speaker 4: Details ahead us.
Speaker 3: We'll get a check in on the state of the
Speaker 3: semiconductor industry as global chip sales that protected to hit
Speaker 3: a record this year.
Speaker 5: The CEOs of on Semian Element.
Speaker 3: Solutions join the program. But first let's check in on
Speaker 3: these markets. And it's a day of mac affecting some
Speaker 3: of the individual names. At the moment the market takes
Speaker 3: a turner is once again we're running too hot. The
Speaker 3: ICM number really coming in strong, Services going well and
Speaker 3: indeed the cost of services employment as well.
Speaker 5: What does this all mean.
Speaker 3: In terms of overall inflatory pressure. We know that, of course,
Speaker 3: joining CBS over the weekend was one FED chair Pale
Speaker 3: and he was talking back against any sort of rake
Speaker 3: cups coming as soon as March. Add in that job
Speaker 3: to the overall strong economic data and we turn on
Speaker 3: the nasdag off by eight ten percent. Interesting volatile play
Speaker 3: going over in China. Remember as the SMP hit a
Speaker 3: record on Friday, we actually saw a five year low
Speaker 3: for Chinese stocks, and all of this as we see
Speaker 3: once again China trying to curtail any selling coming and
Speaker 3: indeed betting against the market over there and trying to
Speaker 3: push back against that volatility. We're off about bout ten
Speaker 3: percent in terms of the overall Chinese names traded here
Speaker 3: in the US tenure yield it crushes ever higher up
Speaker 3: fifteen basis points. This as we of course get that
Speaker 3: strong economic data and the read across to the FED.
Speaker 3: Move on and have a look at what's having in
Speaker 3: the world of crypto though for a moment.
Speaker 5: Ed because look, as we see a strong.
Speaker 3: Dollar, so bitcwingo's a little bit lower, off by four
Speaker 3: tenths of a percent, but still training about forty two
Speaker 3: to thousand dollars. What have you got on the individual names.
Speaker 6: Well, one name where there is still some buoyancy is
Speaker 6: in video. Even when the market turned post im Video
Speaker 6: is still up almost three percent and is extending those
Speaker 6: record highs that it hit Goldman boosting this price target
Speaker 6: on the stock to eight hundred dollars a share, And
Speaker 6: they're basically saying, we look at what's to come in
Speaker 6: the year, and we still think that there's going to
Speaker 6: be spending by the hyperscalers and in the cloud context.
Speaker 6: So that name continues to charge higher fresh record highs,
Speaker 6: and it's just become this jugglele. We're going to dig
Speaker 6: a bit deeper later in the show car of course,
Speaker 6: about the outlook overall for this industry in twenty twenty four,
Speaker 6: but AI still calls that story a moving to the
Speaker 6: downside or.
Speaker 4: In a different direction. Is snap, this is interesting.
Speaker 6: The company is going to trim ten percent of its
Speaker 6: global workforce. Later in the program, we'll speak to Bloomberg
Speaker 6: Intelligence is mandep sing and kind of get engauge in
Speaker 6: what's going on. When the headline's first cross, there was
Speaker 6: kind of a spike on the shares in pre market,
Speaker 6: but we are firmly lower now down three point nine percent.
Speaker 3: Yeah, and that's notable, isn't it considering the read across
Speaker 3: some Meta and just their phenomenal move we saw in
Speaker 3: that company's shares after its earnings on Friday.
Speaker 5: And let's just talk more broadly about.
Speaker 3: What's happening with big tech with those magnificent seven names
Speaker 3: and ultimately the read across some bond yields two tech
Speaker 3: stocks bluemogs Isabel.
Speaker 5: Lee is here with actually a great story talking.
Speaker 3: I love the headline Elon just lost his cage fight
Speaker 3: with Zuckerberg. This was all about how ultimately Tesla's market
Speaker 3: cap has really diverged from that of say a Meta,
Speaker 3: which has just been on the upper and not particularly
Speaker 3: post its numbers. Friday, Tech managed to outperform despite bon
Speaker 3: yields going high and not the same today.
Speaker 7: It's not the same today, and then usualness must highlight it. Indeed, Friday,
Speaker 7: because bond yields surge thanks to a strong bond jobs report,
Speaker 7: what happened through tex sharees They areso surge And usually
Speaker 7: this doesn't really go hand in hand because history would
Speaker 7: tell us that higher long term yields aren't really the
Speaker 7: particularly harmful to companies that are longer duration, which are
Speaker 7: tech shares because they've most of their values they put
Speaker 7: into the future. So usually when bond yield, search textures
Speaker 7: are down basically, but we didn't see that on Friday
Speaker 7: and in the past weeks. And this is why Bank
Speaker 7: of America's Michael Hartnett is saying that this is reminiscent
Speaker 7: to the dot com bubble, that he's seen the rush
Speaker 7: into tech stocks, the irrational exuberance, and one can't really
Speaker 7: make sense of it, like why is it like this?
Speaker 7: On one hand, maybe because AI is just a contained
Speaker 7: situation on its own, and maybe those tech stocks aren't
Speaker 7: moving in conjunction with markets. But for the most part,
Speaker 7: a lot of unusual things are happening.
Speaker 4: You know.
Speaker 6: The comparison that the article puts in front of us
Speaker 6: is whether Tesla should be magnificent or if it's less
Speaker 6: than magnificent. The number I look at is EPs growth, right,
Speaker 6: because if you look at the six x Tesla, we
Speaker 6: saw really big year on your EPs growth in Meta's case,
Speaker 6: like more than two hundred percent. Tesla was the exception
Speaker 6: to that rule. It's sort as EPs dropped forty percent
Speaker 6: year on year. Both were having interests comps with an
Speaker 6: interesting period twelve months ago. What is the case for
Speaker 6: Tesla being not magnificent? To your mind as well.
Speaker 7: There is a lot of case being Tesla not being magnificent,
Speaker 7: But there is also a lot of cases about how
Speaker 7: this whole sector should be even seen or group Magnificent
Speaker 7: seven Super seven Elite seven, because if you look at it,
Speaker 7: the magnificent Magnificent seven companies carry a thirty three percent
Speaker 7: premium to the index when it comes to forward PE earnings,
Speaker 7: But then should they even be looked at as Magnificent
Speaker 7: seven as a whole? We know that last year this
Speaker 7: Super seven Elite seven powered the NASSAC index fifty four
Speaker 7: percent higher, and those gained some of them really trickled
Speaker 7: into the new year. But last week we saw a
Speaker 7: divergence when we have Meta and Amazon reported they really
Speaker 7: had historic days. Meta saw one hundred and ninety billion
Speaker 7: in one day, which is the most that we've seen
Speaker 7: in the history of US doocs. But we have some
Speaker 7: like Microsoft and Apple. Yes they beat mind you, but
Speaker 7: then we saw Shar's fault because people were just really
Speaker 7: more optimistic. People had more lofty ambitions for those AI shares.
Speaker 7: So maybe people are now being more discerning. If you
Speaker 7: look at Magnificent seven as a whole, they are big.
Speaker 7: Here's around them Tied Bittory. It was in the article
Speaker 7: the Magnificent Seven as a whole are worth more than
Speaker 7: the copined combined GDP of New York, Tokyo, La, London, Paris, Soul, Chicago,
Speaker 7: San Francisco, Osaka and Shanghai.
Speaker 5: So they're really huge.
Speaker 7: But then maybe we should stop seeing or looking at
Speaker 7: them as one whole group.
Speaker 6: Now ed, it's an interesting if you start thinking about
Speaker 6: the words concentration and risk Bloombers Isabel Lee just fantastic
Speaker 6: data analysis.
Speaker 4: Thank you.
Speaker 6: Let's keep the conversation going about the technology sector with
Speaker 6: Lisa Ericson, head of Public Markets Group a US Bank
Speaker 6: Wealth Management, and I think we also better address what's
Speaker 6: happening in the moment. So when ism numbers hit the
Speaker 6: market turned, we're now significantly lower on then as that
Speaker 6: one hundred and about one percent. But if you drill
Speaker 6: into the data, basically the concern is the price is
Speaker 6: paid on materials and the idea that the FED still
Speaker 6: has some way to go to fight inflation. Put that
Speaker 6: into context for us of the technology sector, well, certainly.
Speaker 8: We've had a couple of strong prints with the non
Speaker 8: farm payrolls report on Friday and then again to your point,
Speaker 8: a better than expected ism number this morning. And really,
Speaker 8: I think what's going on with the market with respect
Speaker 8: to how that impacts overall equity pricing and technology in particular,
Speaker 8: is that investors are simply concerned again that these positive
Speaker 8: rate cut expectations that they've had on the FED really
Speaker 8: may need to be ratcheted down. We certainly saw that Friday,
Speaker 8: we saw it again this morning, and investors are just
Speaker 8: simply concerned that if rates don't come down as quickly
Speaker 8: as they think they could again that could impact per
Speaker 8: Isabel's point, really, these technology sector valuations because most of
Speaker 8: their growth is further out in the future, and to
Speaker 8: the extent that rates provide more competition, that just makes
Speaker 8: it tougher.
Speaker 3: Lisa was managed to ultimately send these companies higher. Has
Speaker 3: been the distinguishing factor of artificial intelligence being able to
Speaker 3: be that silver lining amid the cloud that is the macroeconomy,
Speaker 3: higher rates, concerns about jobs. Can AI still manage to
Speaker 3: lift these boats despite the valuations already being toppy.
Speaker 8: We certainly see that long term case for AI. Obviously,
Speaker 8: we're very early in the cycle, and we are seeing,
Speaker 8: for example, even in the near term that continuing to
Speaker 8: bolster some of these earnings reports, whether it's on data
Speaker 8: center spending or whether it's on a continued investment into
Speaker 8: cloud services. However, to your point, that doesn't necessarily mean
Speaker 8: that the road is going to be smooth going into
Speaker 8: the full year, and that is because we have had
Speaker 8: quite a bit of run up on that AI and
Speaker 8: so I think some of that uneven response that you've
Speaker 8: seen to the earnings reports here with the fourth quarter
Speaker 8: reports is reflective of the fact that some of that
Speaker 8: optimism has already been priced into the ship.
Speaker 3: The context also being that these companies are winning the
Speaker 3: rewards of investors, particularly if we take like a matter
Speaker 3: because of the cost discipline at the same time as
Speaker 3: they've been talking up their AI bets. And when you
Speaker 3: look at Snap today at more job cuts to come,
Speaker 3: how much do you think the overall microeconomy can continue
Speaker 3: to see strong jobs where we do see companies taking
Speaker 3: this sort of disciplinary action.
Speaker 8: Well, certainly we have seen a very strong jobs market,
Speaker 8: and there were a number of prints last week that
Speaker 8: really reinforced that message. Whether it was from the Non
Speaker 8: farm Payrolls Report or the JOLTS or the Employment Cost Index.
Speaker 8: As far as its ability to sustain, one really interesting
Speaker 8: fact is that many of those job gains are and
Speaker 8: openings continue to remain in companies with less than a
Speaker 8: thousand employees, so those mid and smaller sized companies. And
Speaker 8: again we saw that reinforced in the jolt's data last week.
Speaker 8: And so with that, even though we may be seeing
Speaker 8: some layoff notices from those large your companies, the ability
Speaker 8: of the smaller end of the companies to continue to
Speaker 8: post job gains as they continue to make up for
Speaker 8: less hiring than they would have liked you in the
Speaker 8: last couple of years, is still possibility.
Speaker 6: Before we called that group magnificent, we would basically say
Speaker 6: they have strong balance sheets in trenched market positions, and
Speaker 6: if there's going to be a recession, that's a great
Speaker 6: place to be because they'll be fine. But now the
Speaker 6: conversations change from hard landing, soft landing, to no landing,
Speaker 6: and I just wonder how you think about those names
Speaker 6: and some of the facts, as Caroline was talking about
Speaker 6: in the context of whether we actually just don't have
Speaker 6: any pullback in the economy at all.
Speaker 8: Well, we're really looking at more of a balance view
Speaker 8: right now on the US stock market and the economy.
Speaker 8: And the reason why is that while again the economic
Speaker 8: data and the jobs market to your point, has been
Speaker 8: better than most people have expected, we still have a
Speaker 8: number oftionary forces in place balancing some of those positive factors,
Speaker 8: and so we have had really the most rapid rate
Speaker 8: increases in quite some time, and to your point earlier,
Speaker 8: really the inflation fight is not quite done, just as
Speaker 8: we saw for example with some of the ism numbers
Speaker 8: this morning. And so with that, with that more balanced
Speaker 8: view of rewards and risk, we really continue to watch
Speaker 8: where that landing will go, whether it's no soft or
Speaker 8: heart And in the meantime, we're really just cautioning our
Speaker 8: investors to stay at whatever their strategic blitz would be
Speaker 8: in the equity asset class, again reflective of a more
Speaker 8: balanced reward risk ratio.
Speaker 5: Lisa, so great to catch up with you.
Speaker 3: Thank you for bringing your tech focus to the broader
Speaker 3: macro markets at the moment. Lisa Erikson head a public
Speaker 3: markets group over the US Bank Wealth Management.
Speaker 6: The Semiconductor Industry Association is forecasting the global ship industry
Speaker 6: will see sales jump to a record level this year,
Speaker 6: fueled by a greater need for the electrical components from
Speaker 6: a broad range of businesses. Joining me to break down
Speaker 6: the data, Bloombergsy and King here in SF. What took
Speaker 6: me by surprised about this report is I get the
Speaker 6: overall twenty twenty four is going to be good, because
Speaker 6: twenty twenty three was very bad. But it's not just
Speaker 6: one single thing they're not saying. It's AI and everything.
Speaker 6: They're saying across a lot of end markets things are
Speaker 6: looking pretty good.
Speaker 2: Well, you've got to remember that this is a projection
Speaker 2: via the Industry Association.
Speaker 1: Right.
Speaker 2: Their basic thesis is chips are everywhere, and that is
Speaker 2: broadly true, more things need semiconductors. But we're also, as
Speaker 2: we'll find out in a minute when you speak to
Speaker 2: the CEO on SEMI, there are countervailing forces here. There
Speaker 2: are the secular argument more chips, more chips per vehicle,
Speaker 2: more chips per industrial system against what's going on last year,
Speaker 2: and there's still with us to an next day, which
Speaker 2: is we still have inventory overhanging in certain areas.
Speaker 5: I was just looking at that chart fascinating.
Speaker 3: I in that Europe was basically the only area that
Speaker 3: posted growth last year. We sit here as originally three
Speaker 3: Europeans and it's kind of amazing that in their economic
Speaker 3: environment they saw gains where globally speaking, we meant to
Speaker 3: see the rebound. Is it all about China getting slightly better?
Speaker 2: I mean it is in theory. Everywhere you've got you've
Speaker 2: had markets that were really quite poor, which is like
Speaker 2: such as the PC and the smartphone. Now those markets
Speaker 2: have got through that inventory and in theory that you know,
Speaker 2: with a bit of consumer demand and a bit of
Speaker 2: end market demand, they're going to be very strong. Really speaking,
Speaker 2: though we're looking at AI, we're looking at the data center.
Speaker 2: The big concerns still in people's minds is what's going
Speaker 2: on with industrial and what's going on with automotive. And
Speaker 2: again you're going to be speaking to a CEO be
Speaker 2: able to tell you a little bit more about.
Speaker 9: That in a minute.
Speaker 3: That's do just that inking brilliant to catch up with you.
Speaker 3: Thank you for bringing us the industry report. We appreciate it.
Speaker 3: It's now deep into basically the highest performing.
Speaker 5: Chip stock of the day.
Speaker 3: It's more than eight percent the best performer on the
Speaker 3: socks at the moment on Semi joining us for reporting
Speaker 3: fourth quarter results that well seem to post forward an
Speaker 3: idea that in this quarter gone it was doing better
Speaker 3: than expected and indeed maybe though some of the forward
Speaker 3: looking guidance not being as bad as had been expected.
Speaker 5: Really to welcome Hassan al Kuri on.
Speaker 3: Semi CEO and has and when we're digging into some
Speaker 3: of the overall focus of your business, just where are
Speaker 3: you seeing particularly some of the optimism coming from the investor.
Speaker 5: Why are you managing to.
Speaker 3: Think that despite evs, for example, being an area we're
Speaker 3: worried about stagnation, you're still able to outperform in that area.
Speaker 10: Yeah, good morning, thanks again for having me.
Speaker 1: So.
Speaker 10: Yeah, we reported a quarter. I think the reaction you
Speaker 10: see in the stock, I think it's it's all based
Speaker 10: on where the expectation has been and really what a
Speaker 10: lot of our peers have already reported. What differentiates on
Speaker 10: Semi for the last I would say four to six quarters,
Speaker 10: we have being taken action to match and become more
Speaker 10: in line with what we see from an end demand,
Speaker 10: both an industrial and automotive. If you recall and the
Speaker 10: third quarter earnings I started talking about bottomotive softness, inventory
Speaker 10: digestion that extended. Therefore, it was not a surprise to
Speaker 10: what we announced today. It was more of an expectation
Speaker 10: and really better than expected. But nevertheless, it was a
Speaker 10: softness that we as a company have been very disciplined
Speaker 10: in addressing to get us to weather through it much
Speaker 10: better than a lot of our peers has.
Speaker 6: One criticism from Truest Securities this morning was that there
Speaker 6: wasn't anything said about the outlook what happens next in
Speaker 6: those end markets. So you just said we rebalanced to
Speaker 6: make sure our output match demand on industrial and automotive,
Speaker 6: But going forward, what are you hearing from those end
Speaker 6: market leaders and CEOs about what they think demand for
Speaker 6: their industry will be in twenty four.
Speaker 10: I think for us, the way we're managing twenty twenty four,
Speaker 10: we're not managing for a recovery, which if you take
Speaker 10: where we are today as a base, twenty twenty four
Speaker 10: is going to be basically down in all end markets
Speaker 10: versus twenty twenty three, which was a good year and
Speaker 10: a lot of the markets. So industrial, automotive and then
Speaker 10: the other end markets will remain soft. If the demand
Speaker 10: picks up in the second half, that's great. That's all
Speaker 10: tailwinds for us from fabriutilization that impacts margin, profitability, and revenue.
Speaker 4: We'd rather be in.
Speaker 10: This spot rather than prepare for a recovery that doesn't happen.
Speaker 10: Now you have a correction mid year. We're taking again
Speaker 10: a much more discipline approach which worked very well with
Speaker 10: us for US in Q four, coming into Q one.
Speaker 6: We use the case study of silicon carbide in the
Speaker 6: EV context, and Caroline quite rightly points out that we
Speaker 6: think there will be growth in twenty twenty four, it
Speaker 6: will just be slow growth. The growth is decelerating in
Speaker 6: global EV demand.
Speaker 4: Does your business reflect that?
Speaker 10: Yeah, I spoke about it earlier today, where the industry
Speaker 10: still projects a high number for EV growth in the
Speaker 10: thirty to forty what I believe based on customer engagement
Speaker 10: are really based on some of the leading OEMs in
Speaker 10: the automotive industry what they projected for their EV growth
Speaker 10: in twenty twenty four. We look at it more and
Speaker 10: twenty to thirty growth, So for me, I more trust
Speaker 10: what we see and that's what we're managing to still
Speaker 10: very heavy growth because what we also projected in light
Speaker 10: of that market growth is we will grow a silicon
Speaker 10: car by two x the market. So at this point
Speaker 10: in time in twenty twenty four, we're peck to and demand.
Speaker 10: Products are out, qualifications are there, We're designed in all
Speaker 10: the platforms that we need to be designed into right now.
Speaker 10: It is an end demand signal. We will still take share,
Speaker 10: we will still grow ahead of market at two x.
Speaker 10: The question is what will the market do through twenty
Speaker 10: twenty four.
Speaker 3: And as you said in your call, electrification remains a
Speaker 3: content expansion opportunity for you as you two X, So
Speaker 3: who are the customers.
Speaker 5: That manage to outperform?
Speaker 3: Why have you managed to get the customers that are
Speaker 3: ramping production?
Speaker 5: Where in the world are they ramping production?
Speaker 10: Bottom line, I've always been consistent, you only win when
Speaker 10: you have the best technology. We've been providing the best
Speaker 10: technology at a high power packaging. So both device silicon
Speaker 10: carbide and the package we put in it the best
Speaker 10: technology out there as far as performance. That's why we've
Speaker 10: been winning. So we've been broadening our customer exposure to
Speaker 10: kind of reduce that lumpiness from too many focused customers.
Speaker 10: We have recognized revenue from over six hundred customers in
Speaker 10: twenty twenty three. That will keep extending into twenty twenty
Speaker 10: four as more of the European OI start ramping for US.
Speaker 10: So again a very broad base of gossmer very diversified
Speaker 10: regionally from China to North America, and like I said,
Speaker 10: in Europe, that gives us a very good base to
Speaker 10: clearly grow from as we manage through the short term
Speaker 10: lumpness of ev.
Speaker 6: Adoption hasan al Kuri on semi ceo best performing stock
Speaker 6: on the socks today. Very quickly, I want to check
Speaker 6: in on shares of coinbase down around nine percent their
Speaker 6: session loads down more than ten percent, on track for
Speaker 6: the biggest decline since June of last year.
Speaker 4: But I got to be honest with you, Caroline.
Speaker 6: We've got no idea what's going on, or no idea
Speaker 6: why there are no headlines on the terminal relating to
Speaker 6: the name. We're going to continue to dig in it
Speaker 6: and get the crypto team on that. But a big
Speaker 6: move to the downside coinbased off nine percent. This is
Speaker 6: Bloomberg technology.
Speaker 11: All right.
Speaker 4: Time for talking tech.
Speaker 6: First up, Samsung executive chairman Jy Lee has been acquitted
Speaker 6: of stock manipulation charges, removing the threat of jail time.
Speaker 6: That's loomed over one of Korea's most prominent business people
Speaker 6: for years and lifting a weight off of the company
Speaker 6: as it struggles with a global downturn and some more
Speaker 6: competition from Apple in the smartphone space, and shares in
Speaker 6: ATOS fell as much as thirty percent to a record
Speaker 6: low after the French it company dropped plans to sell
Speaker 6: seven hundred and seventy seven million inequity rights. ATOS said
Speaker 6: it's seeking a mediator to help renegotiate of financing with lenders.
Speaker 6: Plus Yandex has striked a five point two billion dollar
Speaker 6: deal to sell its Russian business. It's the highest value
Speaker 6: deal yet to exit Russia following the invasion of Ukraine.
Speaker 6: Negotiations took more than a year, and it allows the
Speaker 6: Netherlands registered company to develop projects abroad after dive investing
Speaker 6: Russian units that generated most of its revenue.
Speaker 5: Cara some companies to be watching.
Speaker 3: Meanwhile, we've got to keep an eye on what's coming
Speaker 3: up with Snap. Look, they're cunning ten percent of their
Speaker 3: global workforce that as we know, the tech setter continues
Speaker 3: to see layoffs more broadly, but will also be anticipating
Speaker 3: the numbers coming from this particular business. They report, of course,
Speaker 3: and we're anticipating actually some recover and revenue. But what
Speaker 3: is the cost of having to let go of so
Speaker 3: many staff? Will dig into that in a moment. Shares
Speaker 3: had spiked a little bit on the news of this
Speaker 3: cost discipline, but now we're back sinking more than four
Speaker 3: percentage points on this particular social media name.
Speaker 5: We'll dig into snap in a moment. This is a
Speaker 5: BLUEBG technology. It's going viral.
Speaker 3: Taylor Swift making history this weekend by winning her fourth
Speaker 3: album of the year. If that wasn't enough, the superstar
Speaker 3: announced a new album on its way April nineteenth, to
Speaker 3: the excitement Swift these worldwide. But also there are a
Speaker 3: fair few elephants in the room that night, one of
Speaker 3: them from a tech perspective. Trevor Noah did address Universal
Speaker 3: Music Group, of course, pulling its music catalog from TikTok,
Speaker 3: which includes like the very own Taylor Swift drait not
Speaker 3: to mention, but many others and ed, I mean, this
Speaker 3: was a night of celebrating women. This was a night
Speaker 3: where we saw history being made.
Speaker 5: And what is the new?
Speaker 3: I mean, I'm pretty sure you're more of a Swiftian
Speaker 3: than I am. At the Tortured Poets Department.
Speaker 4: You're excited.
Speaker 6: Yeah, I mean it's astonishing because Swift goes in tied
Speaker 6: to that event with Snartchrip or Simon Stevie Wonder and
Speaker 6: then exceeds that record. And we're doing this and going
Speaker 6: viral because it's all everyone's talking about on social media, right,
Speaker 6: But you can't celebrate on TikTok, which is simply put,
Speaker 6: you cannot use Taylor Swift songs on TikTok.
Speaker 3: Yeah, and that continues to be an ongoing issue of
Speaker 3: basically the monetization of such incredible moves made by artists
Speaker 3: like this. But when we're consuming that, and maybe from
Speaker 3: TikTok's the point of view helping market it, how much
Speaker 3: does the money flow to the artists, to the labels.
Speaker 5: That's a key question.
Speaker 6: When I was reading Lucas's news letter Lucas Shaw's USTA
Speaker 6: about this, you realize they've been negotiating on this for years,
Speaker 6: so it's not a new thing. But there's been a
Speaker 6: flashpoint because the volume of eyeballs is not translating into
Speaker 6: dollars in the artist's pocket.
Speaker 4: That's the tension.
Speaker 3: Interestingly, of course, Taylor swift'shone collaborator saying, maybe UMG should
Speaker 3: have given a heads up to some of the artists
Speaker 3: before they did this. But anyway, we talk more broadly
Speaker 3: about the world of social media and indeed well how
Speaker 3: law makers are addressing in it right now, because across
Speaker 3: the aisle we're actually seeing work being made for legislation
Speaker 3: that would place safeguards in particularly across artificial intelligence. And
Speaker 3: now this is about Taylor Swift too, because it of
Speaker 3: course involves deep fake videos individuals such as Taylor Swift,
Speaker 3: and there of course pornographic deep fake images that were
Speaker 3: circulating on social media. Late last month, social network analysis
Speaker 3: come need Graphica determined that the images of where they
Speaker 3: originated from, it's actually an online challenge to break safety
Speaker 3: measures designed to block people from generating loud images with
Speaker 3: artificial intelligence. Margie Murphy has more so just go into
Speaker 3: the detail of basically what's happening on certain parts of
Speaker 3: the Internet where almost these weird challenges are erupting that
Speaker 3: don't just affect Taylor Swift.
Speaker 5: Right exactly.
Speaker 12: For a long time now, before the images of Taylor
Speaker 12: Swift emerged on x that caused huge outrage and caused
Speaker 12: X to block Taylor Swift's searches. For a while, these
Speaker 12: deep fake pornographic images of several women, celebrities, politicians were
Speaker 12: already appearing on a four Chan forum and on a
Speaker 12: thread where a community was engaging in daily competitions to
Speaker 12: try and break the kind of text image generation models
Speaker 12: that we're all really familiar with, like Microsoft's image designer
Speaker 12: open a Eyes Dari, and they have for weeks now
Speaker 12: been trying to teach each other how to use certain
Speaker 12: words to get around the safeguards that have been put
Speaker 12: in place to create these pornographic images that these companies
Speaker 12: who create the models say aren't allowed.
Speaker 6: The technology stories is the use of text image creators,
Speaker 6: and the policy point was the banning of some keywords
Speaker 6: and then using others to get around it. Then there's
Speaker 6: the political side of this story, which is basically this
Speaker 6: has been a really big story and now lawmakers and
Speaker 6: Capitol Hill are thinking about what they need to do
Speaker 6: about it.
Speaker 12: Right, So, Taylor Swift was not the first person to
Speaker 12: be deep fake, she won't be the last, but because
Speaker 12: of her celebrity late last month, we just people were
Speaker 12: talking about it so much more. We had the White
Speaker 12: House condemning it. We had this reanogization of a bill
Speaker 12: that had been brought in, a bipartisan bill because at
Speaker 12: the moment there is no federal law that bans deep
Speaker 12: fake pornography, and we've got kind of scattered approach across states.
Speaker 12: So although this has been happening for a really, really
Speaker 12: long time, we're finally seeing the kind of politicians, lawmakers,
Speaker 12: everyone's taking action, and brightly.
Speaker 6: So are Bloomberg's Margie Murphy, who, by the way, has
Speaker 6: done a very big body of reporting on this issue.
Speaker 6: I highly recommend you read it on Bloomberg dot Com.
Speaker 6: Another story, Mesa's independent oversight board agreed with the company's
Speaker 6: recent decision to leave up a misleading video of US
Speaker 6: President Joe Biden, but called its policies on AI generated
Speaker 6: content incoherent and too narrow. The board is now urging
Speaker 6: Meta to update its policies ahead of the twenty twenty
Speaker 6: four US general election. Will continue to follow, of course,
Speaker 6: that story throughout the year.
Speaker 3: Karen, Yeah, and let's just stick on the world of
Speaker 3: social media, because we've got to shine light on what's
Speaker 3: happening with snap The perment of Snapchat cunning is workforce
Speaker 3: by around ten percent worldwide, joining us of course around
Speaker 3: the entire focus of a slader technology companies that have
Speaker 3: announce layoff of the layoff is money, saying of Bloomberg Intelligence,
Speaker 3: and really this is once again a company perhaps trying
Speaker 3: to front run a slowing ad market narrative that's going
Speaker 3: to come from the earnings with cost discipline, we're doing
Speaker 3: something about it.
Speaker 11: Yeah, I mean, look, Meta has set up a good
Speaker 11: blueprint in terms of what companies need to do, especially
Speaker 11: in the social media land, and it's worked for them.
Speaker 11: I mean, the proof is in the numbers they delivered
Speaker 11: last week, and every company that went big in terms
Speaker 11: of layoffs in twenty twenty three actually benefited with better
Speaker 11: execution and top line growth. In the case of Meta,
Speaker 11: I would be curious to see how ad pricing tends
Speaker 11: recover for a snap, because what we saw with Meta
Speaker 11: was there was a clear inflection in terms of digital
Speaker 11: ad pricing coming back that actually helped their top line.
Speaker 11: And I would be surprised if it's exclusive to Meta,
Speaker 11: because we know from the past that all these digital
Speaker 11: ad vendors benefit when you know it's there's a cyclical uptrend.
Speaker 11: And so that is to me the key number for
Speaker 11: pinterest in Meta is they should also see that lift
Speaker 11: in at pricing when the report earnings.
Speaker 3: What's interesting about Snap, though, is that they've kind of
Speaker 3: been flailing to find some sort of diversification. They were
Speaker 3: looking into augmented reality, helping other companies embrace that, and
Speaker 3: then realize that wasn't the way they should be spending
Speaker 3: their money.
Speaker 5: How are you.
Speaker 3: Seeing their narrative build as to what this company stands for,
Speaker 3: where the growth is going to come from.
Speaker 11: I mean, they probably are narrowing their focus, so the
Speaker 11: layoffs have to come from somewhere. And the last round
Speaker 11: of layoffs was really focused on augmented reality because they
Speaker 11: wanted to narrow down the focus to the profitable part
Speaker 11: of the business, which is the social media ads. Look
Speaker 11: with Meta, we saw reels engagement continues to grow twenty
Speaker 11: five percent growth in reels. Snap has an equivalent of reels,
Speaker 11: it's called Spotlight. They don't make any money off of that,
Speaker 11: and that's where you want to see monetization. Why is
Speaker 11: Meta monetizing video? And they've caught up to TikTok and
Speaker 11: not Snap, And I think that's where it's still this
Speaker 11: story is still missing why can't Snap monetize videos as
Speaker 11: effectively as Mata.
Speaker 6: This sets us up nicely because Snap reports earnings after
Speaker 6: the bell tomorrow, and I think my takeaway from the
Speaker 6: Meta earnings was I understand how you work in AI
Speaker 6: is relating to your core business. You point out Snap
Speaker 6: has Spotlight, but it also has Snapchat plus my AI,
Speaker 6: and I don't really understand how that's helping them yet.
Speaker 11: Yeah, I mean, look, when a company of this size,
Speaker 11: Meta is like one point two trillion, compare that to
Speaker 11: Snap twenty seven billion, So it's only fifty times in
Speaker 11: a market size compared to Snapchat. So I would much
Speaker 11: rather better on a smaller company at this point of
Speaker 11: time to drive up its engagement, and it should have
Speaker 11: a long runway compared to Meta, which we know is
Speaker 11: executing flawlessly. It's got that AI scale and you know
Speaker 11: it's on Lama Ma model. But still for a smaller
Speaker 11: company with four hundred million daily active users, they should
Speaker 11: be able to figure out how to use AI to
Speaker 11: drive their engagement, how to improve their AD infrastructure. And
Speaker 11: that's where I do think Snap things are fixable. It's
Speaker 11: just we haven't seen that monetization aspect yet. From their
Speaker 11: ancillary products.
Speaker 6: At the end of last year, Mende you and the
Speaker 6: team also wrote about snaps kind of e commerce potential.
Speaker 6: I think that was because it had done some partnerships
Speaker 6: with Amazon, for example. Do you believe that's an opportunity
Speaker 6: for Snaps still?
Speaker 11: I think so. And look, Meta has also done a
Speaker 11: partnership with Amazon. So Snap's partnership as an exclusive pinterest
Speaker 11: has done the same. For all these social media companies.
Speaker 11: The holy grail is in app e commerce. They haven't
Speaker 11: figured it out because the logistics part is very hard
Speaker 11: when it comes to social media pivoting to e commerce,
Speaker 11: and we have seen that with the Chinese companies. But
Speaker 11: in the end, you know, Amazon partnership does make sense
Speaker 11: because Amazon clearly has the fulfillment capacity and it does
Speaker 11: need the channel for you know, the social media companies
Speaker 11: to transfer over the customers that are engaging with them
Speaker 11: almost sixty to seventy minutes a day. So it does
Speaker 11: make sense. But it would be interesting to see how
Speaker 11: it affects snaps gross margin.
Speaker 3: Well, we wait for those numbers to be coming out,
Speaker 3: of course, and really dictating how the stock continues to perform.
Speaker 3: Man Deep Seeing and bloom Bag Intelligence brilliant to get
Speaker 3: the deep dive ahead of snap zone earnings. Meanwhile, coming up,
Speaker 3: we'll be turning back to the state of the semiconductor industry.
Speaker 3: We're going to be speaking with the Element Solutions CEO
Speaker 3: Ben click chick.
Speaker 9: This is Bloomberg Technology.
Speaker 8: We established ourselves, as you know, a key AI contender.
Speaker 10: India, Japan and France, Canada, now Southeast Asia, Singapore speak
Speaker 10: up about the importance of investing in sovereign AI capabilities.
Speaker 13: The early signs of gen AI youth cases are actually exciting.
Speaker 3: We're going to show just how capable and how much
Speaker 3: AI is now part of, you know, really the entire
Speaker 3: AMD story.
Speaker 10: For the very first time. Because of generative AI, computers
Speaker 10: are going to be computer technology is going to impact
Speaker 10: literally every single industry in every single country.
Speaker 13: That could create an interesting opportunity for upgrade cycle and
Speaker 13: phone well.
Speaker 3: An array of CEOs after, of course, earnings from the
Speaker 3: chip makers and they will have a lot to say
Speaker 3: about artificial intelligence of course in this cultum beyond. But
Speaker 3: let's check in on the markets right here, right now
Speaker 3: when it comes to semiconductors, because we're managing despite the
Speaker 3: macro picture, of.
Speaker 5: Which is one of too strong a growth from.
Speaker 3: A US economy, so therefore pushing back on some of
Speaker 3: these tech stocks. The socks does remain higher, up by
Speaker 3: three time percent. Largely we got in video to thank
Speaker 3: We thank Coldman Sachs for that particular rerating on this
Speaker 3: particular price target for in video they see yet further growth.
Speaker 5: Interestingly, AMD is on.
Speaker 3: The downside, even though they too had an upgrade coming
Speaker 3: from Philip Securities in fact about AI tailwinds. But it's
Speaker 3: under pressure more broadly as the rest of the market
Speaker 3: feels a little bit of weakness amid this stronger macro data.
Speaker 3: But ed it is notable that on semi managers to
Speaker 3: be riding high on it's earnings. We've got a deep
Speaker 3: dive continuing on chips.
Speaker 4: Yeah, someone that knows the space well.
Speaker 6: Ben Glickish is the CEO of Element Solutions, which produces
Speaker 6: chemicals in almost every EV smartphone computer and develops next
Speaker 6: gen chemicals that enable tech advancements.
Speaker 4: And what all of those things have in common.
Speaker 6: You know, we focus so much on this show on
Speaker 6: the GPU, CPU analog level, but we're talking about circuit boards,
Speaker 6: integrated circuits and what they all have in common. Ben
Speaker 6: is they're all rethinking their supply chain, and we're heading
Speaker 6: towards this kind of decoupling from China. You know, we've
Speaker 6: done a lot of reporting here at Bloomberg about Apple,
Speaker 6: for example, wanting to shift some of its supply chain
Speaker 6: based from China to India. Is that is somebody involved
Speaker 6: in that supply chain, as simple as that.
Speaker 14: So we like to say chips don't float, and so
Speaker 14: Element Solutions products are used in semiconductor manufacturing, in assembling,
Speaker 14: putting chips onto circuit boards, and in making high performance
Speaker 14: printed circuit boards.
Speaker 4: And the printed circuit board market.
Speaker 14: Is primarily an Asian market, but we're seeing a shift
Speaker 14: towards something called China plus one, and so supply chains
Speaker 14: are moving outside of China two places like India, Vietnam, Thailand, Malaysia,
Speaker 14: and we're even starting to see some green field investment
Speaker 14: in printed circuit board capacity here in North America, Mexico
Speaker 14: in the US.
Speaker 3: Then, when it comes to your role and Element Solutions,
Speaker 3: how much are you part of the soul for these companies?
Speaker 14: So our technologies are used in every high performance electronics
Speaker 14: device in the market. So we're an enabling provider of
Speaker 14: chemical technology for all of these markets, and for us,
Speaker 14: our manufacturing processes are pretty simple. Our people are global,
Speaker 14: and so we're welcoming these supply chains as they move
Speaker 14: to new places. Our footprints are ready there, and it's
Speaker 14: an opportunity for us to support our customers as they
Speaker 14: diversify their supply chains when they move out of China
Speaker 14: or into new markets.
Speaker 3: And what therefore, for you is any sort of block
Speaker 3: on your own ability to keep up with the demand.
Speaker 3: All we hear about is just like the absolute scale
Speaker 3: the price point than the need.
Speaker 5: Has there anything that's been slowing you down?
Speaker 3: Or is it just ability to roll out in lockstep
Speaker 3: with the demand.
Speaker 8: Yeah.
Speaker 14: So we're fortunate because we've been in these markets for
Speaker 14: decades and our customers and our customers customers the OEMs
Speaker 14: rely on us to come up with new solutions to
Speaker 14: enable their next generation products. And so for us, staying
Speaker 14: on top of innovation, technology, roadmap exchanges with customers enables
Speaker 14: us to.
Speaker 4: Meet those emerging needs.
Speaker 14: And then we make investments in new material science technologies
Speaker 14: as the legacy capabilities don't meet the needs of next generationships.
Speaker 14: For AI, we're investing to support that. Outside of our
Speaker 14: four walls and bringing very interesting capabilities to market.
Speaker 6: Ben When we think about some of the end markets
Speaker 6: that we listed at the top of the segment that
Speaker 6: you're in EV smartphone, there are mixed forecasts of what
Speaker 6: twenty twenty four looks like. You heard from Christiano Mamman
Speaker 6: a moment ago right quile Con saying flat to low
Speaker 6: single digits growth.
Speaker 4: In the smartphone market.
Speaker 6: We've covered a lot broadly, a slow down in EV
Speaker 6: growth globally. Is that reflecting what your customers are engaging
Speaker 6: with you on.
Speaker 14: Yeah, So we call the bottom in our electronics business
Speaker 14: in the second quarter of twenty twenty three. Twenty twenty
Speaker 14: three was a tough year in electronics from a demand perspective,
Speaker 14: but also because there's a lot of inventory in the
Speaker 14: channel that had to clear. We've seen a recovery in
Speaker 14: the back half of twenty twenty three and we see
Speaker 14: growth in twenty twenty four. Smartphone units should grow in
Speaker 14: twenty twenty four and will be lapping a period of
Speaker 14: inventory clearing, so we should have nice growth from that
Speaker 14: part of the business. And our business isn't just driven
Speaker 14: by units, it's driven by content per units. So each
Speaker 14: next generation technology of smartphone has more value of our
Speaker 14: technology because it's enabling higher performance applications. Similar in the
Speaker 14: EV market, where we've got game changing technology and power electronics,
Speaker 14: and that market's been very strong for us. We're seeing
Speaker 14: customers adapt our technology to deliver better performance vehicles.
Speaker 4: So even if the EV.
Speaker 14: Market is flatish, we're going to see real growth for
Speaker 14: our capabilities in electric vehicles because of the technology trend shift.
Speaker 4: Ben I want to go back to the supply chain.
Speaker 6: Is India ready to be a great to contribute to
Speaker 6: supply chains and SUMA electronics, the semiconductor industry and AI.
Speaker 14: So there's definitely a significant investment in infrastructure that's required
Speaker 14: in India and we're actually seeing that huge investment from
Speaker 14: many OEMs and partners and supply chains to support it.
Speaker 14: In fact, we've been asked by one of the largest
Speaker 14: smartphone OEMs in the world to help train the Indian
Speaker 14: supply chain to meet their needs.
Speaker 4: So it's a great who's that.
Speaker 14: We don't speak about our specific customers and supply chains
Speaker 14: broadly or in public, but a very large smartphone manufacturer
Speaker 14: is asking us to help train the supply chain to
Speaker 14: bring them up from a capability perspective to enable their production.
Speaker 5: Well, we want to thank you for being here in town.
Speaker 5: Ringing the bell five years.
Speaker 3: I think was the celebration of today of Element Solutions,
Speaker 3: Ben Laclich, We thank you for your time.
Speaker 6: For video game fans, the name Blizzard Entertainment was once
Speaker 6: anonymous with perfection. The maker of StarCraft, Overwatch and World
Speaker 6: of Warcraft forever changed the video game landscape. But then
Speaker 6: its corporate parent, Activision started cracking down on Blizzard's proud autonomy.
Speaker 6: It's all chronicled in a new book, Play Nice, the Rise, Full,
Speaker 6: and Future of Blizzard Entertainment, and it's offered by Bloomberg
Speaker 6: News's Jason Schreyer, who joins us now. Jason's congratulations. I
Speaker 6: mean some of those titles, Diablo four in particular, in
Speaker 6: more recent history, the fastest selling title. And then there's
Speaker 6: the company story of everything that happened in the last
Speaker 6: twelve months.
Speaker 4: How'd you write a book about it?
Speaker 1: Yeah? Man, I've been frantically rerating the ending over the
Speaker 1: last couple of weeks. Yeah, it's quite a story. It's
Speaker 1: a thirty three year history that I'm chronical in this book,
Speaker 1: starting with two UCLA students who set out to start
Speaker 1: a video game company and wound up building an empire
Speaker 1: that became thousands of people, billions of dollars, and many,
Speaker 1: many millions of fans.
Speaker 3: Jason, You've written a couple of best selling books, so
Speaker 3: I'm interested as to what sort of reception you tend
Speaker 3: to get to these books. Who are the audience that
Speaker 3: really gravitate towards these sort of journeys, these stories. Is
Speaker 3: it ever an introduction to those that don't know that
Speaker 3: much about the gaming industry.
Speaker 1: Yeah, it's funny. My first two books were kind of
Speaker 1: where there were anthologies including a bunch of stories, so
Speaker 1: a lot of people could kind of glom onto them
Speaker 1: and find an interesting story, a company that they had
Speaker 1: heard of, or a game that they played. But I
Speaker 1: also tried to make them appeal to the mainstream. And
Speaker 1: with this one, I've tried even harder to make it
Speaker 1: something that my mom would read.
Speaker 4: And my mom hasn't read.
Speaker 1: My first two books, but hopefully she'll read this one. Yes,
Speaker 1: I think there are a lot of gamers out there
Speaker 1: who will want to read this book, who will find
Speaker 1: it interesting, who will get a lot out of the
Speaker 1: behind the scenes details and the creative struggles and the
Speaker 1: development stories and the games and just knowing the story
Speaker 1: behind World of Warcraft and Overwatch and Hearthstone. But I
Speaker 1: also think that it'll be really interesting to anyone who
Speaker 1: is interested in kind of behind the scenes corporate stories,
Speaker 1: stories like the social network, stories like Bad Blood, stories
Speaker 1: that are about companies that grow and their cultures and
Speaker 1: how they evolve and the kind of the trials and
Speaker 1: tribulations along the way.
Speaker 4: And the story keeps going behind the scenes.
Speaker 6: Because the latest is YOU'RENNA fairies who ran the call
Speaker 6: of duty business is now taking the helmet blizzard.
Speaker 4: I think I'm right insane. Did you keep up with that?
Speaker 1: Yes, my editor is waiting for me to send over
Speaker 1: a revised version of the ending. Yeah, I'm spending in
Speaker 1: the next couple of weeks kind of revising the ending,
Speaker 1: changing a few things. And yes, unfortunately there was a
Speaker 1: mass layoff and a game cancelation just a couple of
Speaker 1: weeks ago, kind of a tragic way for the new
Speaker 1: era of the company under Microsoft to begin. Microsoft, of
Speaker 1: course purchase them for sixty nine billion dollars in a
Speaker 1: deal that closed in October, and one of Microsoft's first
Speaker 1: moves was to slash a bunch of jobs, So yes,
Speaker 1: I will be incorporating that into the manuscript. But at
Speaker 1: a certain point, yes, this book has to end, and
Speaker 1: it'll probably it'll include up up through just about the
Speaker 1: present day sequel.
Speaker 3: Jason Shah, thank you so much spending some time with us,
Speaker 3: and congratulations on the never ending book.
Speaker 9: It's going to be a great read.
Speaker 5: Meanwhile, that does it for the sedition of Blue Bag Technology.
Speaker 6: Check out the pod. That's where you can find it.
Speaker 6: This is blamebag Technology.