Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is a
Speaker 1: lie from coast to coast with Caroline Hyde and New
Speaker 1: York and Vla Low in San Francisco.
Speaker 2: This is Bloomberg Tech coming up. TSMC, the world's biggest
Speaker 2: contract chip maker, gets a big boost from AI demand.
Speaker 2: Plus Uber teams up with EV maker Lucid and self
Speaker 2: driving tech start up Neuro to launch a robotaxi fleet.
Speaker 2: We'll speak with the CEO of Neuro and what to
Speaker 2: expect from Netflix earning today. Will it be a blockbuster
Speaker 2: or a bus Let's get to that curious three way
Speaker 2: deal that is between Uber, Lucid and Neuro. Basically how
Speaker 2: it works is Lucid's going to provide the cars, Neuro
Speaker 2: the self driving tech, and Uber's gonna pay for everything.
Speaker 2: We're gonna get a lot more detail on that later
Speaker 2: in the show. But look at shares of Lucid up
Speaker 2: thirty six percent. This is a big move upwards and
Speaker 2: we need to find out why. The big story in
Speaker 2: global technology is TISMC, the world's largest and most important
Speaker 2: contracts manufacturer. These are the US listed shares. ADR is
Speaker 2: up two point eight percent, basically upgraded the growth forecast
Speaker 2: on the top line to thirty percent, saying that there
Speaker 2: is hot AI demand right now, but interestingly some headwinds
Speaker 2: from currency which we can dig into. Luckily, bloombergsy and
Speaker 2: King is here for more who leads our coverage of
Speaker 2: the semiconductor industry. So actually quite a simple story that
Speaker 2: in the numbers in the period gone and what they
Speaker 2: said about what's to come. AI demand is everything now.
Speaker 3: I mean only time you're saying thirty percent of year
Speaker 3: saying we're having a good year. But it's important to
Speaker 3: point out that the start didn't do much locally and
Speaker 3: why was that well because guess what some analysts were
Speaker 3: expecting even more so fantastic obviously a great derivative for here,
Speaker 3: but maybe not as fantastic as some had expected.
Speaker 2: Tiersmc's business is really interesting because basically two thirds of
Speaker 2: it is high performance compute, the chips that go into
Speaker 2: data centers. Historically it was smartphones. So even though the
Speaker 2: proportions have changed, I see both of those divisions growing.
Speaker 3: Yeah, both of them did well. As you said, high
Speaker 3: performance computing, which is basically in videos, chips, amb's chips,
Speaker 3: anything that any of the hyperscalers design themselves. That's sixty
Speaker 3: percent of its business that's growing well. And that's really
Speaker 3: what the focus is right now. That's what everybody wants
Speaker 3: to see, is this story that is defining technology still
Speaker 3: continuing And the answer was absolutely yes.
Speaker 2: So TISMT is like the crown jaw of Taiwan. It's
Speaker 2: their most important entity and company. They have a big
Speaker 2: footprint there. But what was really interesting to hear about
Speaker 2: was the headwind from currency. As I understand it, they
Speaker 2: book all their revenue and US dollars, but their operating
Speaker 2: costs are in Taiwanese dollars. What did they say about
Speaker 2: that and how it's going to impact them?
Speaker 3: Yeah, I mean this is obviously a complex story because
Speaker 3: they're in a distributed supply chain. Though you've got the
Speaker 3: currency headwims, You've got concern about what's going to happen
Speaker 3: to that supply chain. Are they moving, are they raising
Speaker 3: their expenses as they build factories here in the US,
Speaker 3: what's going to happen with tariff? So all of these
Speaker 3: kind of economic uncertainties and currency was one of them
Speaker 3: factored into I think this kind of conservative or what
Speaker 3: was considered conservative forecast with conservative in their context, which
Speaker 3: is pretty amazing still.
Speaker 2: Okay, Blimbozi and King, who again leads our coverage of
Speaker 2: the semiconductor industry. Let's get more of a broader market's
Speaker 2: perspective and go out to j Jacobs Blackrock, US head
Speaker 2: of equity. Ets you and I've talked about infrastructure so much,
Speaker 2: but I almost consider names like TSMC and ASML as
Speaker 2: being kind of soft data sets rather than kind of
Speaker 2: hard data sets. ASML gave us one signal and then
Speaker 2: TSMC gave us another. As somebody that looks at their
Speaker 2: exposure to this AI supply chain, what did you make
Speaker 2: of it?
Speaker 4: Well, I think you really have to go up to
Speaker 4: kind of the higher order of capital expenditures, which is
Speaker 4: impacting so many different semiconductor stocks. If you look at
Speaker 4: the top four builders of infrastructure this year and combine
Speaker 4: them with energy and utilities companies, all of that capex
Speaker 4: equals the rest of the S and P five hundred combined.
Speaker 4: So you're just seeing so much investment from semi conductors
Speaker 4: to energy and power sources across this AI megaporce that
Speaker 4: it's really providing a ton of ballast to these stocks
Speaker 4: as we enter into earning season.
Speaker 2: I think we'd agree that AI is having a profound
Speaker 2: impact on markets. That's probably an understatement at this point.
Speaker 2: But when you consider the ETFs you're managing, where do
Speaker 2: you see the enthusiasm or where do you see movement
Speaker 2: of investors wanting to be exposed to what's happening.
Speaker 4: Well, you know, if we look more broadly at what's
Speaker 4: happening in the markets, this here, themes are really displacing
Speaker 4: sectors as having the most explanatory power of what's happening
Speaker 4: around us. You know, artificial intelligence and baskets of stocks
Speaker 4: related to that explained a lot of what happened in February.
Speaker 4: If you look at geopolitical fragmentation and companies in the
Speaker 4: infrastructure and defense space, that explains a lot of what's
Speaker 4: been happening since April. So themes themselves have a ton
Speaker 4: of explanatory power in the markets. To your question, you know,
Speaker 4: where are we seeing some of the most excitement and
Speaker 4: artificial intelligence? We continue to be looking at the build
Speaker 4: out of digital infrastructure. You know, we know that we
Speaker 4: are still in the build phase of AI. This is
Speaker 4: where you're seeing hundreds of billions of dollars of capital
Speaker 4: expenditure to build the best models, to make them smarter,
Speaker 4: to make them more scalable. That's where we are today,
Speaker 4: and that's where a lot of our active portfolio managers
Speaker 4: like Tony Kim, who manages BAI for US, has positioned
Speaker 4: a lot of his portfolio.
Speaker 2: BAI is super interesting. We just showed it on the screen.
Speaker 2: But the Tica BAI, there's this two point two billion
Speaker 2: dollars of interest, you can quantify it. What are the
Speaker 2: main facts behind that meeting?
Speaker 4: Jay Well, I think a lot of investors are looking
Speaker 4: at artificial intelligence but realize they don't really have great
Speaker 4: exposure to it. In fact, you know, we looked at
Speaker 4: over ten thousand portfolios by financial advisors in the United
Speaker 4: States and about ninety five percent of whatever AI exposure
Speaker 4: they have in their portfolio is coming just from the
Speaker 4: MAG seven. So maybe it's because they own index funds
Speaker 4: that are just broad market in nature and getting that
Speaker 4: MAG seven exposure. Maybe they're looking at tech sector and
Speaker 4: getting MAG seven through that, but so little of their
Speaker 4: exposure is to the broader AI value chain across digital infrastructure, power, infrastructure, applications,
Speaker 4: data owners that we see a lot of investors are
Speaker 4: more intentionally allocating to AI, selling down tech sector exposure
Speaker 4: to allocate to a fund like BAI, or even selling
Speaker 4: down core exposure in large in US large caps to
Speaker 4: get exposure to a fund like BAI.
Speaker 2: I find this sub theme of onshoring into America and
Speaker 2: basically reindustrialization really interesting. Is there a sort of specific
Speaker 2: basket of names which you would not necessarily feel are
Speaker 2: the technology sector. I'm thinking a little bit like real
Speaker 2: estate and all of those names that are involved in
Speaker 2: the construction of a data set into.
Speaker 4: Yeah, there's a few areas to look at. I mean, one,
Speaker 4: we just broadly really like US infrastructure names. You know,
Speaker 4: we've seen some good flows into IFRA, which is a
Speaker 4: US infrastructurey TF because if you want to build semiconductors
Speaker 4: in the United States, or you want to build you know,
Speaker 4: kind of high end technologies like electric vehicles, you need roads,
Speaker 4: you need highways, you need airports, you need ports, you
Speaker 4: need electricity on the grid, you need waterways. It really
Speaker 4: takes a wide range of infrastructure to set up these
Speaker 4: very expensive and complicated manufacturing supply chains within the United States.
Speaker 4: So we see that physical infrastructure and digital infrastructure being
Speaker 4: a really common denominator here. But if you really want
Speaker 4: to kind of double click into one area. If you
Speaker 4: look at semiconductor equipment manufacturers, you know, this is kind
Speaker 4: of a highest upstream way to play. More semiconductors being
Speaker 4: built in the United States, the semi's equipment manufacturers should
Speaker 4: do quite well. And that's an area we have exposure
Speaker 4: to in our manufacturing ETF made.
Speaker 2: Let's bring it back to the use of the day,
Speaker 2: which is TSMC, and one of the themes that came
Speaker 2: up was currency headwinds. And it was interesting because, in
Speaker 2: simple terms, TSMC is a Taiwanese company that books revenue
Speaker 2: in US dollars, but it operates in Taiwanese dollars. I
Speaker 2: give that to you Jay, to kind of illustrate that
Speaker 2: this is a name that if you're an American investor,
Speaker 2: even though it's Taiwanese, you can still get exposure to.
Speaker 2: But it's a company that's increasingly looking to the US
Speaker 2: for its own investments and to build out more of
Speaker 2: its own capacity here onshore or domestically. Yeah, that's right.
Speaker 4: I mean what we've seen is, you know a lot
Speaker 4: of latility in the dollar, and the weakening of the
Speaker 4: dollar generally has you know, boosted international stocks. You know,
Speaker 4: in fact, just if you look at a lot of
Speaker 4: what our investors are doing today, it's allocating to international
Speaker 4: ETFs to benefit from the changing position of the dollar.
Speaker 4: So I think we're going to see this more and
Speaker 4: more of this earning season. Currency is going to be
Speaker 4: an important factor as companies trying to explain how their
Speaker 4: earnings have done. And there's you know, there's just a
Speaker 4: new element to back out of with dollar weekening.
Speaker 2: Jay, we're a few weeks now into the second half
Speaker 2: of the year. What do you expecting and watching foremost
Speaker 2: closely in the balance of twenty twenty five.
Speaker 4: Well, we just published our thematic media or update on
Speaker 4: ishers dot com and we're really looking at kind of
Speaker 4: the evolution of two areas, artificial intelligence and geopolitical fragmentation.
Speaker 4: You know, in AI, what we're looking for is continued
Speaker 4: breakthroughs in the intelligence of AI. You know, right now
Speaker 4: we would say AI models are kind of college level
Speaker 4: of intelligence. I think we're on the precipice of master's
Speaker 4: degree level of intelligence of AI, and that should really
Speaker 4: boost even more adoption on the geopolitical fragmentation front. You know,
Speaker 4: we talked about infrastructure a bit, defense spending is still
Speaker 4: very much in focus. But also even if you just
Speaker 4: look at things like people buying gold, a lot of
Speaker 4: diversification into monetary alternatives. It should be a pretty big
Speaker 4: trend we see through the end of the year as well.
Speaker 2: J Jacobs a black Rold. Great to have you back
Speaker 2: on the show. Really appreciate it. Now, coming up, Congress
Speaker 2: edges closer to the landmark crypto legislation. We're going to
Speaker 2: speak with Kristen Smiths, Solana Policy Institute President about everything
Speaker 2: that's going on in crypto week sous to take a
Speaker 2: quick look at. Shares of Lucid now up forty percent,
Speaker 2: almost forty one percent, a deal with Uber and euro
Speaker 2: over the next six years for a fleet of robotaxis
Speaker 2: on the platform. Also a one to ten reverse stock split.
Speaker 2: A reverse stock split non diluted reduces the number shares
Speaker 2: outstanding proportionately raises the price lots to ask about that,
Speaker 2: and actually later in the day on Bloomberg TV, I
Speaker 2: heard that the Lucid CEO is going to swing by
Speaker 2: stay with us. This is Bloomberg Tech Washington's weighing landmark
Speaker 2: crypto legislation during what's been dubbed crypto week, digital assets
Speaker 2: have been surging thanks in part to those regulatory prospects,
Speaker 2: with ether ETF seeing a record breaking seven hundred and
Speaker 2: twenty six million in daily I want to get out
Speaker 2: to Kristen Smith, Solana Policy Institute President, and this is
Speaker 2: the bit that I'm trying to understand. It is Crypto Week,
Speaker 2: and there seems to be a lot of excitement, and
Speaker 2: that excitement alone is driving inflows into various places and
Speaker 2: trading activity across the world of crypto. Is that a
Speaker 2: good ration now, Kristen.
Speaker 5: Well, first of all, Happy Crypto Week. It's great to
Speaker 5: see you.
Speaker 2: Yeah.
Speaker 5: I think there's a lot of excitement within the crypto industry,
Speaker 5: within the policy making industry, but within the broader financial
Speaker 5: services industry around what's happening in Washington here today. Later
Speaker 5: this afternoon, the House of Representatives is going to vote
Speaker 5: on three bills, the Genius Act, which regular stable coins,
Speaker 5: the Clarity Act, which is the House's version of market
Speaker 5: structure legislation, and the third bill on Central bank digital currencies.
Speaker 5: So this is a really historic week, and one of
Speaker 5: those bills, the Genius Act, is going to go on
Speaker 5: this way to the White House for the President's signature.
Speaker 5: This is going to be the first time the US
Speaker 5: government has put a new federal regulatory framework in place,
Speaker 5: and so I think this is showing the entire market
Speaker 5: that this is a technology that's here to stay and
Speaker 5: it's got the full backing of the US government.
Speaker 2: Something very interesting happened this week. It was crypto weeek,
Speaker 2: but it was also Earning's week for the banks, And
Speaker 2: I'm looking down at the list. You had the CEOs
Speaker 2: of JP Morgan, Bank of America, and City Group all
Speaker 2: basically a acknowledge the digital dollar, but then note that
Speaker 2: it's a threat to how banking is currently done in
Speaker 2: the context of this legislation that's going through. What do
Speaker 2: you make of that those heavyweights of waters finance saying
Speaker 2: we got to think about this.
Speaker 5: Yeah, well, I've also seen a lot of those heavyweights
Speaker 5: talk about getting into this stable coin industry themselves, and
Speaker 5: so I think what we have here is there's going
Speaker 5: to be an upgrade of our technology. Crypto rails, open
Speaker 5: public blockchains like Solana, for example, are very good for
Speaker 5: recording transactions and moving payments around the world in a
Speaker 5: timely manner, and so I think what we're going to
Speaker 5: see in the years A head is a real upgrade
Speaker 5: to our system, one that will lower costs but will
Speaker 5: also bring new opportunities. I think what's really great about
Speaker 5: this legislation is that it will spur innovation across many
Speaker 5: different sectors, and that innovation is really where the US
Speaker 5: economy sees its growth come from. And so this is
Speaker 5: a real opportunity I think for crypto, for traditional finance,
Speaker 5: and for the businesses and consumers here in the United States.
Speaker 2: Christin, you've been involved in different roles in advocating the
Speaker 2: industry's position to government and to regulators. What does this
Speaker 2: moment represent if those different pieces of legislation get done
Speaker 2: and dusted, how significant is that for what you've been
Speaker 2: trying to work on in recent years. Yeah.
Speaker 5: Well, I've been in the crypto advocacy space for almost
Speaker 5: seven years now, and so for me, this this week
Speaker 5: is the highlight of my career. I have a red
Speaker 5: dress I bought to hopefully word of the White House
Speaker 5: film signing ceremony, and I think it's a really big moment.
Speaker 5: But really this is I think the true opportunity for
Speaker 5: the American people. I think for a long time, our
Speaker 5: financial services system has been you know, sort of stuck
Speaker 5: on old technology and this is the first step forward.
Speaker 5: And so I'm, you know, very excited that we've had
Speaker 5: such strong leadership with Senator Haggerty, Senator jillibrand also Congressman
Speaker 5: Thompson and Chairman Hill in the House, and then President
Speaker 5: Trump and David Saxson Bohines for really really digging in
Speaker 5: and making this a priority. I think it's something that
Speaker 5: we're going to see payoff for all of the American
Speaker 5: people in due time.
Speaker 2: There was discussion that I had with David Sachs in
Speaker 2: the last couple of weeks or a few weeks about
Speaker 2: the bipartisan nature or not of the legislation. So if
Speaker 2: we take the Genius Act and stable Coin, for example,
Speaker 2: there were things that the Democrats wanted in there that
Speaker 2: ended up not being From the salon a Policy institute's perspective,
Speaker 2: did you get what you felt was needed in the
Speaker 2: content of that bill. Yes.
Speaker 5: At Lana Policy Institute, we're very happy with the way
Speaker 5: that the Genius Bill ended up, And people who know me,
Speaker 5: I'm very skeptical of early drafts. But that's why we
Speaker 5: have advocates in Washington who can go with work with
Speaker 5: Congress fine tune the legislation and make sure that it
Speaker 5: has the customer protections that the policy makers want, but
Speaker 5: also is done in a way that allows those who
Speaker 5: are building around the technology to have the certainty that
Speaker 5: they need in order to build and innovate. And so
Speaker 5: I think they've nailed it here with the Genius Act.
Speaker 5: I think it's it's really good language, and I think
Speaker 5: it's one of the reasons why the House is going
Speaker 5: to you know, sort of pass it without changes and
Speaker 5: send it on to the President's desk. You know, there
Speaker 5: is another issue, the market structure issue, that that debate
Speaker 5: is continuing to happen, and so you know, if there's
Speaker 5: any cleanup that needs to happen, you know, I think
Speaker 5: we'll get another bite at the apple.
Speaker 2: Kristen Smith, Slana Policy Institute President. Great to have you
Speaker 2: back on the show. Thank you very much. Now, coming up,
Speaker 2: Uber teams up with ev maker Lucid and self driving
Speaker 2: tech startup Neuro to launch a robotaxi fleet. We're going
Speaker 2: to speak to the CEO of Neuro. That's coming up next.
Speaker 2: This is Bloomberg Tech. Okay, let's take a look at
Speaker 2: shares of the ev maker Lucid. Take a look at this.
Speaker 2: The stock in the session is currently up significantly forty
Speaker 2: six percent. It went wild in the pre market for
Speaker 2: various reasons. The first one that hit the wire a
Speaker 2: reverse one to ten stock split. Basically, it is non
Speaker 2: dilute tree. It reduces a number of shares outstanding. It
Speaker 2: proportionately raises the share price for holders of note. Later
Speaker 2: in the day. We can get into mechanics of that,
Speaker 2: because what's really boosting it is the three way robotaxi
Speaker 2: deal that this company's done. Lucid with Uber is launching
Speaker 2: a partnership along with self driving text dot up Neuro.
Speaker 2: It's a new robotaxi which will be available on Uber's
Speaker 2: ride hailing service. The details are important, fortunately, Dave Ferguson,
Speaker 2: the co founder and president of Neuro's with us, give
Speaker 2: me a second. With this, Lucid provides the gravity SUVs.
Speaker 2: You guys provide a part of the technology stack. Uber
Speaker 2: basically pays for everything. They've invested three hundred million dollars
Speaker 2: into Lucid, several hundred million dollars into you. What happens next?
Speaker 6: Yes, so, Ed, First, thanks for having me. Great to
Speaker 6: see you, Great to be here, I think you've got it.
Speaker 6: So Lucid is integrating Neuro's driver hardware components, so the
Speaker 6: sense and compute into their vehicles on the production line.
Speaker 6: Those vehicles are then ship to Uber. Uber owns and
Speaker 6: operates them, and neuro drivers software provides the driving capability
Speaker 6: for those vehicles on the Uber network.
Speaker 2: What does Uber get out of its investment in you?
Speaker 2: In fact, let's just be honest about it. Lucids is
Speaker 2: clear three hundred million. How much is Uber putting into you?
Speaker 2: And what are they getting in return in terms of
Speaker 2: IP or guaranteed access to something.
Speaker 6: I think Uber is investing in Neuro in a standard
Speaker 6: equity stake, and so I think that they're very, very
Speaker 6: excited about this partnership and this program, and they want
Speaker 6: to make sure that all of the parties are very
Speaker 6: invested in the success of that program. And so they
Speaker 6: want to make sure that they also have some ownership
Speaker 6: and frankly some upside in Neuro. Given how deeply we're
Speaker 6: going to be partnering to build this and the scale
Speaker 6: that we're going to be embarking on together, how.
Speaker 2: Much are they investing? Well, we carefully worded it as
Speaker 2: why not just give us a number.
Speaker 6: Yeah, well, I think some of that is within our
Speaker 6: control and some of that is outside of our control.
Speaker 2: We were not mind so much giving you the number.
Speaker 6: I think there there's more sensitivity in other courts.
Speaker 2: Well, we'll phone and ask. You have a very close
Speaker 2: relationship with Nvidia, you know, essentially building on top of
Speaker 2: what Nvidia offers and and just explain it because it
Speaker 2: seems like a bit of our unlocked for you guys.
Speaker 2: And this deal kind of involves in video to a
Speaker 2: certain extent as well.
Speaker 7: Yeah.
Speaker 6: Absolutely, So part of what we believe differentiates Neuro is
Speaker 6: that we have a dramatically lower cost hardware set of
Speaker 6: sensors and compute that powers all of the vehicles that
Speaker 6: we create as self driving vehicles. And so Nvidia plays
Speaker 6: a very large part of that because they provide for
Speaker 6: us the SOOC that powers all of the compute. So
Speaker 6: all of the compute on this robotaxi platform is going
Speaker 6: to be based on video chips SC That's right, and
Speaker 6: for us, for Neuro, that has dramatically simplified our overall
Speaker 6: compute because before we had that system, we had to
Speaker 6: have FPGAs that dealt with the sensor data. We had
Speaker 6: to have CPUs, we had to have GPUs, we had
Speaker 6: to have safety computers. We've been able to effectively collapse
Speaker 6: all of that into the thor SoC So it's a
Speaker 6: simplification and the complexity as well as a significant reduction
Speaker 6: in costs.
Speaker 2: You've been, I understand a testing a Lucid vehicle but
Speaker 2: on a closed circuit to make sure the tech stack works.
Speaker 2: What's the evolution of that? Like the plan as I
Speaker 2: understand it is, Gravity goes into production late twenty twenty
Speaker 2: six and twenty thousand thousand of them are due to
Speaker 2: Uber over six period year period. How do you get
Speaker 2: to public roads?
Speaker 6: Yeah, so we as a company, Neuro has been doing
Speaker 6: fully driverless operation on public roads for over five years now,
Speaker 6: so we have a lot of experience with what it
Speaker 6: takes to validate our tech and to get it out
Speaker 6: onto those roads safely. With the Lucid platform, it's obviously
Speaker 6: a new vehicle platform for us to work with. We
Speaker 6: got the first one going our first prototype in something
Speaker 6: like seven weeks, which is unheard of for us and
Speaker 6: we think the industry, so we'd be moving very very quickly.
Speaker 2: So Lucid's providing the sensor suite.
Speaker 6: The sensor suite is neuro driver hardware, so it's a
Speaker 6: sensor suite that neuro has designed, although all of it
Speaker 6: is automotive grade, set the shelf off the shelf sensing,
Speaker 6: So Neuro has basically provided a design template for that,
Speaker 6: and Loocid is going to integrate that for the prototype
Speaker 6: vehicles where we're doing small scale integration. For the twenty
Speaker 6: thousands fleet, it's going to be integrated directly into the
Speaker 6: production line.
Speaker 2: You were focused on delivery, not moving humans. Have you
Speaker 2: just done with that now?
Speaker 6: So about two years ago we shifted our go to market.
Speaker 6: We used to be building a fully vertically integrated delivery
Speaker 6: as a service business with our own custom vehicles. Two
Speaker 6: things changed about two years ago. The first is that
Speaker 6: the cost of capital dramatically increased, and while we still
Speaker 6: today like that business model, it requires a huge amount
Speaker 6: of capital, so it no longer made sense for us
Speaker 6: to take on all of that. The second thing that
Speaker 6: changed was the tech that we had built was so
Speaker 6: heavily based on AI that we had learned how to
Speaker 6: drive like an experts human driver, so we could expand
Speaker 6: it beyond goods to also passenger transportation. So we made
Speaker 6: the call about two years ago to stop doing goods
Speaker 6: and to license the tick across a range of applications.
Speaker 2: Dave's just very quick ten seconds. Do you really believe
Speaker 2: that Lucid can manufacture all these to the deadline you've outlined?
Speaker 8: Oh?
Speaker 2: Absolutely yes. All right, day focused a neuroc founder and president.
Speaker 2: Thank you very much for being here with us in
Speaker 2: San Francisco. In about an hour a conversation with Lucid's
Speaker 2: interim CEO, Mark Winterhoff. That's a twelve thirty pm New
Speaker 2: York time, nine thirty am here in the Bay Area. Okay,
Speaker 2: coming up, Details of an agreement between Facebook and US
Speaker 2: privacy regulators emerge in the Delaware court yesterday. We're gonna
Speaker 2: have an update on a recently announced settlement between Meta
Speaker 2: shareholders and the company's board of directors. That's next. This
Speaker 2: is Bloomberg Tech. Welcome back to Bloomberg Tech. In the
Speaker 2: context of earnings, I think Netflix is kind of what
Speaker 2: we're all waiting for after the bell. We're not going
Speaker 2: to get a subscriber or subscribe a growth number anymore.
Speaker 2: So what are you going to look at? Most are
Speaker 2: saying the content slate. What is Netflix going to bring
Speaker 2: to us in the second half of this year. Shout
Speaker 2: out to those of you that are going through squid game.
Speaker 2: At the moment, the stocks are eight tens to one percent,
Speaker 2: but we're basically treading water. And then there's the outlook.
Speaker 2: Netflix has said for a really long time, will Street
Speaker 2: treat us as you would any other company on our
Speaker 2: top and bottom line? And so we'll look at margins,
Speaker 2: we'll look at operating income. But what might they do
Speaker 2: in pricing, raising prices in various markets to give them
Speaker 2: a bit of a boost. Really looking forward to that one.
Speaker 2: I will swear away from the domain of markets. We're
Speaker 2: focused on some litigation investors in Meta say they've reached
Speaker 2: a settlement with current and former directors at the company
Speaker 2: to end a multi billion dollar case that just started
Speaker 2: yesterday in Delaware. I want to bring in Bloomberg's Riley Griffin,
Speaker 2: who you'll remember twenty four hours ago, was here with
Speaker 2: us on the show. What's happened in the interim and
Speaker 2: what is this agreement that we've learned about.
Speaker 9: It's amazing.
Speaker 10: So yesterday you and I were discussing how it's very
Speaker 10: rare for these kinds of cases that seek to hold
Speaker 10: board directors, CEOs, executives personally financially accountable for the crises
Speaker 10: at their company. Now we have reached a settlement just
Speaker 10: one day into the eight day case.
Speaker 9: We do not yet know the.
Speaker 10: Financial terms of this deal, but this means that out
Speaker 10: of court we now know that Mark Zuckerberg and other
Speaker 10: board directors aren't going to be testifying later this week,
Speaker 10: There isn't going to be more evidence presented, and some
Speaker 10: some is being paid out to shareholders for this case,
Speaker 10: which was about the data breach Cambridge Analytica that has
Speaker 10: had that long shadow over years and years for Meta.
Speaker 2: So as we made absolutely clear just now but also yesterday,
Speaker 2: this wasn't a case between the company and the shareholders.
Speaker 2: It was specific e negatives and the board of directors.
Speaker 2: Does that mean that's it? Now? That it's done, As.
Speaker 8: Far as I understand it, it is done.
Speaker 10: We are not going to see Mark Zuckerberg testify. We
Speaker 10: are not going to see Peter Tiel testify. I think
Speaker 10: that is a notable part of this story. We were
Speaker 10: going to hear from the board members themselves. Just yesterday,
Speaker 10: actually we heard from Jeff Science. This was a former
Speaker 10: Facebook board member who also went on to be President
Speaker 10: Joe Biden's chief of staff, and what came out of
Speaker 10: that testimony was interesting. We heard from Science that ultimately
Speaker 10: the board had considered negotiating with the FTC, proposing through
Speaker 10: its lawyers that it would reach a multi billion dollar
Speaker 10: settlement over at Cambridge Analytica, but only if Mark Zuckerberg
Speaker 10: wasn't held personally responsible. So that is one glimpse into
Speaker 10: the kind of evidence that can come out in a
Speaker 10: trial like this, and one day in they've shut it down.
Speaker 10: We are not going to hear from other board members
Speaker 10: or the CEO.
Speaker 2: Bludo's Riley Griffin on the metabat. Great reporting, Thank you
Speaker 2: very much. Let's get to some deals news. Princeton Digital
Speaker 2: Group is getting one point three billion dollars from alternative
Speaker 2: investment firms Stone Peak, the funds that we used to
Speaker 2: accelerate PDG's data center operations, which are across Asia. The
Speaker 2: business already has over one point one gigawatts across six
Speaker 2: countries in the region. Delighted to say we're joined by
Speaker 2: PDG's chairman, CEO and co founder Rangu Salgam, who's joining
Speaker 2: us late at night out in Singapore, and welcome to
Speaker 2: the program. Let's just start with the basic mechanics. There
Speaker 2: is an interesting equity investment going on here. Why did
Speaker 2: you go down this route with the investor rather than
Speaker 2: just kind of a straight equity kind of deal.
Speaker 9: Good morning, Ed, Thanks for having me. It's a pleasure
Speaker 9: to be on a show.
Speaker 7: You know.
Speaker 8: PDG has grown at a phenomenal radar of the last
Speaker 8: six years, as you mentioned, and we have three of
Speaker 8: the world's largest investors Warburck, Binkers Ontario, Teacher's Mension Plan
Speaker 8: and more La. And we are a juncture where we
Speaker 8: thought it's a great time to have an alternative investor,
Speaker 8: an infrastructure investor like Stone Pig coming. That gives us
Speaker 8: tremendous level optionality how we can grow from here. For example,
Speaker 8: Warburg still is interested to grow with the company. They
Speaker 8: see a tremendous growth ahead and they having been in
Speaker 8: the business for seven.
Speaker 9: Years, they have key to continue for some more time.
Speaker 8: So that with that in mind, an opportunity grow also
Speaker 8: consolidate our position in the market by mergers and acquisitions
Speaker 8: and other means. Gives us an opportunity to really scale
Speaker 8: up like and be a market leader in this part
Speaker 8: of the world. And Stone Peak really brought a tremendous
Speaker 8: solution that fitted for what we are looking for. And
Speaker 8: that position says well to capture the air growth that
Speaker 8: just started off in Asia.
Speaker 2: We've got to talk about that air growth. But really quickly,
Speaker 2: were there other investors knocking down your door other than
Speaker 2: Stone Peak?
Speaker 8: Yes, I think we had a lot of interest in
Speaker 8: the market of different folks than large private reforms as
Speaker 8: well as out in funds and so on, and as
Speaker 8: well as the insiders who are very keen and s
Speaker 8: don't Peak turned out of the best solution for what
Speaker 8: we're looking for.
Speaker 2: So the big question is what happens next? Right, RANGU,
Speaker 2: you operate in six nations across Asia. What's the next market?
Speaker 2: And when you think about the next market you enter,
Speaker 2: how much is it part of the equation how quickly
Speaker 2: you can build and start operations at any one facility.
Speaker 9: Yeah, that's a very important aspect of what the market
Speaker 9: is looking for.
Speaker 8: If you look at what our customers look for, our
Speaker 8: customers are large hyperscalers. These are some of the largest
Speaker 8: tech companies from the West Coast. As you know, you
Speaker 8: know there are two things that matter for these customers
Speaker 8: when they are expanding in a market like Asia, they
Speaker 8: want to look for partners who have an execution track record,
Speaker 8: our track record that is UNPI impeccable in the market. Second,
Speaker 8: they look for operators who have deep capital partners and
Speaker 8: PDG brings both to this markets. With that in mind,
Speaker 8: our strategy is not to expand in new markets. Get
Speaker 8: into new markets like Australia and South Korea.
Speaker 9: That's on a plan.
Speaker 8: And second, deepen in the markets that we're already in
Speaker 8: like Japan, like India, which are huge markets in the making,
Speaker 8: and our strategies to go in and deepen in those
Speaker 8: markets as well.
Speaker 9: As enter new markets.
Speaker 8: That gives us to be a great partner, a trusted
Speaker 8: partner for the US cyberskillers who are expanding in these
Speaker 8: markets at a rate like we have never seen before.
Speaker 2: Rangu I think back to Meta's last earnings call and
Speaker 2: the explanation that one of the reasons they raised the
Speaker 2: capital expenditures get guidance and range wasn't just the commitment,
Speaker 2: but it was the higher cost of doing business, the
Speaker 2: higher cost in the supply chain for data center. Do
Speaker 2: you see higher costs in your supply chain right now?
Speaker 9: Are not yet ed?
Speaker 8: We haven't seen the implications of any market dynamics that
Speaker 8: are impacting our supply chain. We have a pretty much
Speaker 8: good lock in over for the next couple of years
Speaker 8: on a complete supply chain. And also the good news
Speaker 8: is for US a large part of our supplier manufacturing
Speaker 8: happens in Asia, and that gives is an edge in
Speaker 8: terms of the cost.
Speaker 9: Being lower being part of the side of the world.
Speaker 8: So overall we are not seeing cost pressures yet at
Speaker 8: the same time, we are seeing a tremendous level.
Speaker 9: Of supply opportunities. When it comes to power. For example,
Speaker 9: they are parts of Asia where there's significant excess power
Speaker 9: and good quality power.
Speaker 8: That gives U an opportunity to build these large scale
Speaker 8: AI data centers which are closer to this good supply
Speaker 8: of power at very reasonable cost, and that really positions
Speaker 8: operators like WEDG in Asia very well in.
Speaker 9: The eyes of the large US hyperskillers.
Speaker 2: Rang you, I know you just raised a significant chunk
Speaker 2: of change that I got to ask about IPO and
Speaker 2: when you're thinking about a listing.
Speaker 9: I think we are well positioned to do a couple
Speaker 9: of things.
Speaker 8: Either do an IPO in the near term, there's a
Speaker 8: trade cell opportunity, but the bigger exciting thing it is
Speaker 8: to really consolidate a position in the market. We believe
Speaker 8: the market tells us we are one of the two
Speaker 8: or three top players in him pact, and then we grow.
Speaker 8: At this page, we have an opportunity really consolid in
Speaker 8: the market by making acquicisions and be a much bigger
Speaker 8: scale in the next three to four years, and that
Speaker 8: gives an opportunity for us to go public.
Speaker 2: Rangusal Game Chairman, CEO and co founder of Princeton Digital
Speaker 2: Group in the data center space. Great to have you
Speaker 2: on the show. Now, coming up, Roadblocks CEO David Mazuki
Speaker 2: joins us talk about the company's new age verification tech.
Speaker 2: Will it work, How will it work? All the questions
Speaker 2: to come. This is Bloomberg Tech gaming platform Roadblocks is
Speaker 2: introducing a new feature for verifying users ages. Take a
Speaker 2: selfie and the AI will estimate the user's age. If
Speaker 2: the tech determines they're over thirteen, then the user will
Speaker 2: have access to the new Trusted Connects feature where they
Speaker 2: can chat freely with other Roadblocks users. Delighted to say
Speaker 2: that joining us now is Roadblocks's CEO David Bzooki. Dave,
Speaker 2: good morning, Thank you for being back on Bloomberg Tech.
Speaker 2: I find d tech so interesting here. Could we just
Speaker 2: go over the basics of how it works and why
Speaker 2: this is the right technology for this issue.
Speaker 9: Yeah, thank you.
Speaker 7: Know we've been innovating on safety and civility for almost
Speaker 7: twenty years, and what we're rolling out today is our
Speaker 7: vision for age based communication. Age based communication, especially for
Speaker 7: teens thirteen through seventeen, which is a vulnerable time, involves
Speaker 7: a couple things. First, trusted connections, so identifying friends and
Speaker 7: people that you know and trust, and second, using age
Speaker 7: estimation to enable trusted connections to.
Speaker 9: Actually allow those teens to speak a little.
Speaker 7: More freely on our platform, even though we do scan
Speaker 7: the text for critical harms. And this is super important
Speaker 7: because business notwithstanding, engagement notwithstanding, we're trying to keep people
Speaker 7: on our platform so they don't jump to other platforms
Speaker 7: where they may share images or where they may communicate
Speaker 7: without text monitoring.
Speaker 2: Dave, the skeptic here will say, well, well, how good
Speaker 2: is the AI. How can the video and an AI
Speaker 2: analysis of it analysis of it guarantee a correct result
Speaker 2: that the person using it is indeed age thirteen or older.
Speaker 9: I want to highlight a couple of things.
Speaker 7: We've been innovating on AI for four years plus and
Speaker 7: we're running over two hundred AI systems. We've open sourced
Speaker 7: our voice moderation system because it's so good, and we've
Speaker 7: really advanced the state of the art and text moderation
Speaker 7: systems as well. This is age estimation. The AI is
Speaker 7: really good. It's not perfect, of course, but we're leaning
Speaker 7: conservative in that case, and I'll highlight we're using this
Speaker 7: in a conservative way to enable freer communication that is
Speaker 7: still monitored. So we've really thought a lot about it,
Speaker 7: and we think this is the future of how teens
Speaker 7: will communicate.
Speaker 2: In testing, what is the proportion bin of sort of
Speaker 2: false positives and accurate results? And is there an element
Speaker 2: of sort of human moderation in the first instance.
Speaker 7: Yeah, well I want to highlight there for historically there's
Speaker 7: always been an element of moderation on roadblocks and all techs,
Speaker 7: all voice, all images has always gone through moderation, including
Speaker 7: AI and human moderation.
Speaker 9: So we have such a firm foundation for safety.
Speaker 7: We're using age estimation to in a way slightly free
Speaker 7: up the communication. If you and I were fourteen on
Speaker 7: roadblocks and you called me a butt head.
Speaker 9: I wouldn't see it. We'd see a bunch of hashtags.
Speaker 7: But it's the kind of a lot of teams like
Speaker 7: to chat about. And when it's with people you know
Speaker 7: and trust, we're open to letting them communicate more freely
Speaker 7: in that way.
Speaker 2: Dave is probably really helpful to put this in the
Speaker 2: context of a case study example, and Grow a Garden
Speaker 2: is probably the best right. So if you just bear
Speaker 2: with me, and then we bring it back to product safety,
Speaker 2: there are all of these teenagers wanting to be on
Speaker 2: Grow a Garden and then share with their peers, right
Speaker 2: their friends, their community of a similar age. How does
Speaker 2: this new technology fit into the daily running of that
Speaker 2: game and how players and users interact with one another.
Speaker 9: Yeah, thanks for highlighting Grow a Garden.
Speaker 7: Just as last summer, Dressed to Impress was going crazy
Speaker 7: on roadblocks. Right now Grow a Garden, who sit over
Speaker 7: twenty million people playing it at the same time, which
Speaker 7: is actually a record, we believe for any game in
Speaker 7: the history of gaming. People really want to hang out
Speaker 7: with their friends and communicate. And up until now, if
Speaker 7: you and I were fifteen and we were trying to communicate,
Speaker 7: once again, we might see some hashes and some blocking
Speaker 7: when we're.
Speaker 9: Trying to compete in the game.
Speaker 7: With the release of this, if we are trusted connections
Speaker 7: and we can validate we're people we know and we trust,
Speaker 7: and then we take a selfie to estimate our age,
Speaker 7: we're going to be able to communicate more freely and
Speaker 7: have possibly more fun and Grow a Garden and be
Speaker 7: less likely to go to some other platform where maybe
Speaker 7: we start sharing selfies or things that we don't allow
Speaker 7: on roadblocks.
Speaker 2: Right, Dave, is Grow a Garden the biggest game you've
Speaker 2: had ever?
Speaker 7: Well, I think it's been very public. A couple of
Speaker 7: weekends ago, we hit over thirty million people on roadblocks
Speaker 7: playing at the same time, and for a moment in time,
Speaker 7: Grow a Garden hit over twenty million people playing at
Speaker 7: the same time. It's not just the biggest we've ever
Speaker 7: had on roadblocks. That is, we believe the largest concurrent
Speaker 7: player of any game in history.
Speaker 2: And just very quickly, Dave, would you just define largest
Speaker 2: concurrent played?
Speaker 7: We believe from the Guinness Book of World Records that
Speaker 7: twenty million is the largest concurrent players of any game
Speaker 7: in real time in history.
Speaker 2: Okay, understood what many people don't appreciate about Roadblocks is
Speaker 2: the scale of your own infrastructure. I think that you
Speaker 2: run yourself. You have a lot of footprint on prem
Speaker 2: with all the activity. Are your servers and CPUs just
Speaker 2: melting on Friday and Saturday nights or how are you
Speaker 2: handling all of the traffic right now?
Speaker 7: Well, we do like it when our servers melt, as
Speaker 7: long as we stay live and we stay up. And
Speaker 7: what we have done over the last couple of years
Speaker 7: is abstracted all of this infrastructure we have, and you're
Speaker 7: absolutely correct. We believe we get better performance, better reliability,
Speaker 7: and better cost building out all of our own data
Speaker 7: centers around the world. We have started working with partners though,
Speaker 7: and you know those partners as you're Amazon AWSGCP at
Speaker 7: peak times to burst into their cloud as well, and
Speaker 7: so we can run all of our own infro, but
Speaker 7: for Saturday morning for two hours, we're actually relying on
Speaker 7: some of these partners to hit those peaks.
Speaker 9: Dave.
Speaker 2: Roadblocks has been subject to a lot of scrutiny over
Speaker 2: child safety, the feature that you're announcing today, but also
Speaker 2: the sort of technological capability for you as the leader
Speaker 2: of this company. Where does it rank and what you
Speaker 2: think will sort of address those historic issues but also
Speaker 2: just allow you to move forward in growing because you
Speaker 2: have an ambition right to capture ten percent of the market,
Speaker 2: and I'm just trying to understand how this piece of
Speaker 2: tech allows you to tap into a demographic that will
Speaker 2: get you there.
Speaker 7: We've been focusing on safety civility as top priority for
Speaker 7: almost twenty years. We believe this is the future of
Speaker 7: communication on social platforms, especiallys, and we believe the future
Speaker 7: will be for teens in that vulnerable time, trusted connections,
Speaker 7: plus some form of age estimation or verification or maybe
Speaker 7: someday help from the phone vendors and other things, but
Speaker 7: ultimately for private chat. We believe this is the future.
Speaker 7: So we're we haven't been waiting for the law. We
Speaker 7: haven't been waiting for legislation. We think this thirteen through
Speaker 7: seventeen segment is just as important. It's thirteen and under
Speaker 7: and eighteen and nine.
Speaker 2: We didn't even get to advertising on the platform. All
Speaker 2: of the millionaires that are being minted through the platform.
Speaker 2: Dave Bazooki, you have to come back, CEO of Roadblocks,
Speaker 2: Thank you very much. Now coming up, Netflix readies to
Speaker 2: release its results. What to expect from the streaming giant
Speaker 2: that's coming up next. This is Bloomberg Tech. Netflix drops
Speaker 2: earnings after the bell and no subscriber numbers won't be
Speaker 2: in the script anymore. The hot scenes to watch out
Speaker 2: for Netflix's operating margin forecast currently twenty nine percent. Will
Speaker 2: advertisers keep tuning in? Is the ad tear ramps up
Speaker 2: and can management tees out new growth from live sports
Speaker 2: and big name content deals? And with that key stat
Speaker 2: subscriber growth left on the cutting room floor, engagement could
Speaker 2: steal the spotlight, especially with a killer second half lineup
Speaker 2: Squid Game, Stranger Things, Wednesday, Knives Out, Taylor v. Serrano
Speaker 2: three and even NFL and key track of price hikes?
Speaker 2: Will they be padding the bottom line all year long?
Speaker 2: Stay tuned because we've got more with Bloombo's Ryan Selica,
Speaker 2: because this earnings episode might just be binge worthy puns aside, Ryan,
Speaker 2: what's Wall Street's in?
Speaker 9: Hey?
Speaker 2: And thanks for having me on?
Speaker 11: So everyone is pretty optimistic about Netflix's position right now.
Speaker 11: They continue to benefit from a lot of very strong
Speaker 11: secular trends, not just the shift towards streaming, but also
Speaker 11: their ability to continue growing ad revenue on their platform,
Speaker 11: their continued embrace of live events like sports as a
Speaker 11: way to further juice the sort of ad part of
Speaker 11: the business.
Speaker 2: The only question is is all this expected?
Speaker 11: Is all this price into the stock and our expectations
Speaker 11: too high? Given the stock has been one of the
Speaker 11: real standout performers of the year.
Speaker 2: Right year to date, the stock up forty one percent
Speaker 2: so far in twenty twenty five. Netflix has been saying
Speaker 2: for quite a long time, we want you to judge
Speaker 2: us by normal financial metrics that all other industries and
Speaker 2: companies are judged by. I said, we won't get that
Speaker 2: subscribe account or subscribe a growth. So from a top
Speaker 2: or bottom line perspective, what is it that we look
Speaker 2: to in Netflix?
Speaker 11: I think anything they say about their outlook from here,
Speaker 11: what they're going to be spending on content, their continued
Speaker 11: ability to sort of improve efficiency and kind of improve
Speaker 11: their cash flow, their earnings, all that is going to
Speaker 11: be taking the place of subscriber numbers, especially since at
Speaker 11: least here in the States pretty well saturated, are pretty
Speaker 11: well positioned across the globe, so I think that might
Speaker 11: be of less interest to people right now. But certainly
Speaker 11: you mentioned all the content they have coming out. People
Speaker 11: are very interested to see are some of the games
Speaker 11: that we've been seeing already this year. Is that likely
Speaker 11: to continue or are they do for some kind of
Speaker 11: consolidation here. On a separate note, I'd also be very
Speaker 11: interested on anything they say about competition from sort of
Speaker 11: newer entrants, things like YouTube and TikTok, or those areas
Speaker 11: where Netflix maybe faces some competition, as like new places
Speaker 11: that people are going to view content.
Speaker 2: I pay for the non ad tear. I've just completed
Speaker 2: Squid Game season three, I'm watching The Sandman. That's a
Speaker 2: bit of a miss with me. But if I were
Speaker 2: to pay for a tier where ads were involved, what
Speaker 2: are we learning about advertising a Netflix's platform, Because this
Speaker 2: is an industry wide thing right now.
Speaker 11: Yeah, we are seeing more companies start to explore these
Speaker 11: kinds of options. Obviously, Netflix has a huge subscriber based
Speaker 11: here in the States.
Speaker 2: You know, hundreds of millions of people use it.
Speaker 11: I think they even sort of automatically putting some people
Speaker 11: on the ad tier because if people are watching it enough,
Speaker 11: you're actually making more money with the ad revenue from
Speaker 11: those viewers than you would beginning if they were paying
Speaker 11: up for the higher tier that doesn't include advertising.
Speaker 2: Bloomberg's Ryan Plaseelca with the Netflix preview, thank you very much.
Speaker 2: So that does it for this edition of Bloomberg Tech.
Speaker 2: Stick with us. At twelve thirty PM New York time,
Speaker 2: nine point thirty here in San Francisco, we have an
Speaker 2: exclusive interview with the Lucid interim CEO Mark Winterhoff. With
Speaker 2: that stock up more than forty percent, don't forget check
Speaker 2: out the podcast. You know where to find it on
Speaker 2: the Bloomberg Terminal and Bloomberg platforms, as well as online
Speaker 2: on Spotify, iHeart and on Apple. From San Francisco, this
Speaker 2: is Bloomberg Tech