WEBVTT - US Probes DeepSeek Chips 0:00:02.520 --> 0:00:09.959 Bloomberg Audio Studios, podcasts, radio news from the heart of 0:00:10.000 --> 0:00:15.720 where innovation, money and power collide in Silicon Valley and beyond. 0:00:16.160 --> 0:00:21.480 This is Bloomberg Technology with Caroline Hyde and Ed louveloan. 0:00:35.560 --> 0:00:37.880 Lie from New York. I'm Caroline Hyde and. 0:00:37.800 --> 0:00:41.279 I'm Mike Sheppard in San Francisco. This is Bloomberg. 0:00:40.760 --> 0:00:43.800 Technology coming up the US probes where the deep seek 0:00:43.920 --> 0:00:47.600 bypassed US restrictions to buy advanced in video chips through 0:00:47.640 --> 0:00:51.640 third parties. In Singapore, Plus, Apple gives a reassuring revenue 0:00:51.640 --> 0:00:55.320 forecast for the current quarter. The results show declining iPhone 0:00:55.360 --> 0:00:58.560 and Chinese sales over the holidays, and we sit down 0:00:58.560 --> 0:01:01.800 with the CEO of HPE of thedoj swing to stop 0:01:01.840 --> 0:01:06.319 its fourteen billion dollar acquisition of Juniper Networks, but first 0:01:06.640 --> 0:01:10.240 check in on these markets, which have underperformed from a 0:01:10.280 --> 0:01:14.360 tech perspective in the last month the most. It's twenty sixteen. 0:01:14.720 --> 0:01:18.040 A brilliant line coming from Bank of America's Michael Hartnett, 0:01:18.160 --> 0:01:20.640 who potentially thinks we are now seeing the dawn of 0:01:20.680 --> 0:01:25.559 the Lagnificent seven. He coined the phrase magnificent seven. Mike, 0:01:25.800 --> 0:01:29.880 and we're starting to question the overall peak of AI spending. 0:01:30.360 --> 0:01:32.960 This is of course crucial in the context of this week. 0:01:33.120 --> 0:01:35.840 We started the week on deep seak revelations. Do you 0:01:35.920 --> 0:01:37.840 need as much compute when you've got an R one 0:01:37.880 --> 0:01:40.600 model that's brought to bear the implications that that has 0:01:40.680 --> 0:01:43.039 for the GPU sellers such as in video, And today 0:01:43.080 --> 0:01:45.280 we get that first official meeting between in Vidio, CEO 0:01:45.440 --> 0:01:48.840 just One and indeed President Donald Trump. That we understand 0:01:48.840 --> 0:01:51.200 that the meeting has been in the week's works for 0:01:51.280 --> 0:01:54.360 several weeks now. They plan to discuss AI policy, but 0:01:54.400 --> 0:01:57.200 that policy just got so much more interesting following the 0:01:57.440 --> 0:01:58.280 revelations of. 0:01:58.240 --> 0:02:03.040 Our one Caro. There is so much riding on this 0:02:03.200 --> 0:02:06.200 meeting for Jensen Wang, and you're right. We heard him 0:02:06.240 --> 0:02:09.080 say at CES that he was looking forward to a 0:02:09.120 --> 0:02:12.399 meeting with Donald Trump. But so much has happened since then, 0:02:12.520 --> 0:02:15.440 and all the other major tech leaders have had their 0:02:15.520 --> 0:02:17.920 chance in their sit downs with Donald Trump. And the 0:02:18.000 --> 0:02:21.120 question now is whether it might be a case of 0:02:21.200 --> 0:02:24.440 too little, too late for Jensen Wang as he sits 0:02:24.480 --> 0:02:27.400 down with Trump with all the pressure growing on whether 0:02:27.480 --> 0:02:30.639 the US should impose even more restrictions on AI chip 0:02:30.680 --> 0:02:31.920 sales to China, Cara. 0:02:32.200 --> 0:02:34.679 And of course for many, the question still remains as 0:02:34.680 --> 0:02:37.919 to whether or not it was done with very high 0:02:37.960 --> 0:02:40.040 powered in video chips or not. It all comes as 0:02:40.120 --> 0:02:43.400 US officials and Fat Mike approbing whether Deep Seat bought 0:02:43.440 --> 0:02:47.600 advanced video chips through third parties perhaps in Singapore. We 0:02:47.760 --> 0:02:50.760 here's what a representative Roga Krishna Mudy had to say 0:02:51.000 --> 0:02:53.359 on the Show of Balance and Power yesterday. 0:02:54.200 --> 0:02:56.840 What I'm concerned about is, for instance, with deep Sea, 0:02:57.000 --> 0:02:59.280 that they weren't able to stockpile a number of the 0:02:59.360 --> 0:03:04.200 highest ends before the export controls actually went into effect, 0:03:04.360 --> 0:03:07.880 namely the H one hundred chips, and then they bought 0:03:07.919 --> 0:03:10.960 a lot of these H eight hundred chips. And so 0:03:11.280 --> 0:03:14.040 what we want to do is both strengthen the export 0:03:14.080 --> 0:03:16.960 controls and make sure that they're not porous. 0:03:17.360 --> 0:03:21.160 A leading lawmaker there on the policy implications of China 0:03:21.200 --> 0:03:24.120 and US, and we bring in Blumeg's Jordan Robertson because 0:03:24.160 --> 0:03:27.359 there is much speculation as to whether or not Deep 0:03:27.400 --> 0:03:31.440 Seak achieved this with chips that it was allowed to purchase, 0:03:31.720 --> 0:03:35.920 or chips that perhaps it circumvented some key policies here 0:03:35.920 --> 0:03:36.800 in the United States. 0:03:38.280 --> 0:03:41.680 Yeah, thanks for having me. We reported today that US 0:03:41.680 --> 0:03:45.720 officials are investigating whether deep Seek achieved its breakthrough in 0:03:46.480 --> 0:03:50.760 AI chatbots, you know, through the acquisition of Nvidia advanced 0:03:50.760 --> 0:03:52.800 in video chips that it's not supposed to have. Now, 0:03:52.840 --> 0:03:55.160 I should point out that the timeline here, you know, 0:03:55.400 --> 0:03:59.600 it's messy, you know, because deep Seek has acknowledged using 0:04:00.320 --> 0:04:02.840 chips in its in its network. You know, that is 0:04:02.880 --> 0:04:04.960 not a secret. That is not something the company has 0:04:04.960 --> 0:04:09.120 tried to hide. The question is which chips has it used, 0:04:09.480 --> 0:04:11.520 and when did it buy those chips and where did 0:04:11.520 --> 0:04:14.960 it buy those chips from? And our reporting, our reporting 0:04:15.160 --> 0:04:18.320 is that American officials are looking at, you know, whether 0:04:18.440 --> 0:04:22.440 those acquisitions of chips included chips that were not supposed 0:04:22.480 --> 0:04:26.280 to be sold to China and that transited you know, 0:04:26.320 --> 0:04:28.160 from the US to China via Singapore. 0:04:29.760 --> 0:04:34.120 Jordan, let's get blunt here, are the export controls even working? 0:04:34.520 --> 0:04:37.200 Have they been able to stay ahead of what appears 0:04:37.200 --> 0:04:42.160 to be China's ability to leapfrog ahead or around them. 0:04:42.680 --> 0:04:44.280 Yeah, that's the big question in a lot of the 0:04:44.360 --> 0:04:46.719 China revelations we've seen over the last you know, especially 0:04:46.720 --> 0:04:48.600 twelve months, whether it's you know, the chips used in 0:04:48.680 --> 0:04:51.599 Huawei phones or in this case, you know, the chips 0:04:51.680 --> 0:04:56.200 used to you know, facilitate Deep Seeks breakthroughs. You know, 0:04:56.279 --> 0:04:58.600 I think there's certainly a story to be told about 0:04:58.640 --> 0:05:02.480 creativity and ingenu in you know, rethinking how you do 0:05:02.520 --> 0:05:05.720 these AI large language models. You know, that certainly is 0:05:05.800 --> 0:05:08.440 part of it. But at its core, you do need hardware, 0:05:08.480 --> 0:05:11.040 you do need software. You still do need the most 0:05:11.040 --> 0:05:15.200 advanced technology available, whether that's a SML hardware to make 0:05:15.279 --> 0:05:18.279 chips or in this case, you know, in videos GPUs 0:05:18.640 --> 0:05:21.240 to run these these models. And again deep Seek has 0:05:21.279 --> 0:05:24.040 not hidden the fact that it uses in Vidio chips. 0:05:24.279 --> 0:05:27.400 The question is which chips and when did it get them? 0:05:28.320 --> 0:05:31.760 Maybe a classic example here of just fast follow the 0:05:31.880 --> 0:05:36.280 idea that if you curtail, you bring about innovation. Jordan, 0:05:36.400 --> 0:05:37.920 that innovation has got a lot of people in the 0:05:38.000 --> 0:05:40.719 US excited the app being downloaded for deep Seek, But 0:05:40.839 --> 0:05:44.000 you're reporting that actually we're having to prevent it being 0:05:44.080 --> 0:05:45.839 used by government by companies. 0:05:47.240 --> 0:05:47.520 Yeah. 0:05:47.720 --> 0:05:50.000 Yeah, the Pentagon, I mean, we've had a number of 0:05:50.000 --> 0:05:51.640 stories come out in the past few days. One of 0:05:51.640 --> 0:05:55.239 them was that the Pentagon was kind of caught flat 0:05:55.240 --> 0:05:58.440 footed on this. You know a number of Department of Defense, 0:05:58.839 --> 0:06:02.120 you know, employees in official downloaded, you know, connected their 0:06:02.120 --> 0:06:05.520 work computers to the Chinese deep deep seek servers and 0:06:05.600 --> 0:06:09.680 downloaded the code the large language models. It was not blocked, 0:06:10.720 --> 0:06:13.760 and they were downloading this code for several days before 0:06:14.360 --> 0:06:17.200 the Defense Information Systems Agency, which is essentially like the 0:06:17.240 --> 0:06:22.640 IT and Cybersecurity Department for the Pentagon, began blocking those links. 0:06:23.279 --> 0:06:25.560 And what we've also reported is that now there's an 0:06:25.560 --> 0:06:30.280 effort underway throughout the military to identify where deep Seek's 0:06:30.279 --> 0:06:33.600 code has wound up on military networks and to remove it. 0:06:34.080 --> 0:06:37.000 So this was an example of, you know, the fast 0:06:37.480 --> 0:06:40.520 changing nature of technology and the fact that it's really 0:06:40.600 --> 0:06:43.120 hard to keep up with what the latest potential threats are. 0:06:44.080 --> 0:06:48.920 Bloomberg's Jordan robertson Thank You Coming up. Apple's holiday results 0:06:49.120 --> 0:06:52.600 showed declines for China and the iPhone, but the company's 0:06:52.640 --> 0:06:56.760 forecast helped to reassure investors. Will break down Apples earnings 0:06:56.800 --> 0:06:57.600 after the break. 0:07:10.080 --> 0:07:13.400 If you look at our Greater China revenue for the quarter, 0:07:13.520 --> 0:07:19.320 we were down eleven percent year over year, and over 0:07:19.560 --> 0:07:24.440 half of the decline that we experienced was driven by 0:07:24.440 --> 0:07:26.040 a change in channel inventory. 0:07:27.400 --> 0:07:30.560 Apple CEO Tim Cobb there trying to perhaps comment on 0:07:30.600 --> 0:07:33.880 the sales decline in China, which was a key miss 0:07:33.880 --> 0:07:36.720 in the numbers. Apple's biggest market well is the US, 0:07:36.800 --> 0:07:39.760 but in large part China is dominant too. It struggled 0:07:39.760 --> 0:07:42.920 to fend off competition from local brands. Let's get to 0:07:42.960 --> 0:07:45.760 Mark German, who was trying to understand really what this 0:07:45.920 --> 0:07:49.360 inventory change really meant it. How did it spawn an 0:07:49.400 --> 0:07:51.200 eleven percent decline in China sales. 0:07:52.600 --> 0:07:55.480 Yeah, so whenever Apple has a shortfall these days, of 0:07:55.480 --> 0:07:57.480 course there were days where they didn't have these shortfalls, 0:07:58.040 --> 0:08:01.120 they have some color or I guess, an excuse as 0:08:01.160 --> 0:08:03.760 to why that happened. And for China this time around, 0:08:03.800 --> 0:08:07.640 we're talking a seven billion dollar decline from a few 0:08:07.680 --> 0:08:10.480 years ago. On the holiday quarter. They're saying that they 0:08:10.480 --> 0:08:14.239 simply didn't have enough inventory. They're saying that they underprojected 0:08:14.240 --> 0:08:17.200 how many units they needed in the channel for the quarter, 0:08:17.680 --> 0:08:19.280 and by the end of the quarter, by the end 0:08:19.320 --> 0:08:22.040 of December, they simply ran out, which meant they weren't 0:08:22.120 --> 0:08:25.080 able to fulfill those orders, which led to a decrease 0:08:25.120 --> 0:08:27.520 in revenue. And he says about half of the eleven 0:08:27.560 --> 0:08:31.240 percent shortfall was due to that find It makes sense, right, 0:08:31.320 --> 0:08:34.800 but clearly that you are anticipating a shortfall to begin 0:08:34.840 --> 0:08:38.160 with if they under provided inventory. And I think the 0:08:38.320 --> 0:08:41.360 response right this morning you see the saw prices up 0:08:41.360 --> 0:08:46.080 considerably despite the significant miss in China, right and the 0:08:46.160 --> 0:08:48.520 three percent decline of iPhone revenue. I think one is 0:08:48.559 --> 0:08:52.000 the guidance, right, they're going to grow again in the 0:08:52.040 --> 0:08:54.600 March quarter, which is a far cry from where they 0:08:54.640 --> 0:08:56.439 were just a year and a half ago where there 0:08:56.480 --> 0:08:58.480 was a series of quarters in a row where they 0:08:58.480 --> 0:09:02.160 were declining. So that's positive. But I also think investors 0:09:02.480 --> 0:09:06.400 believe that because they missed those sales in China due 0:09:06.400 --> 0:09:09.640 to inventory in Q one, those sales will return in 0:09:09.720 --> 0:09:12.600 Q two. If you're an Apple customer and you want 0:09:12.640 --> 0:09:14.800 the new iPhone or ipowder watch or what have you, 0:09:15.200 --> 0:09:18.239 and the Apple store doesn't have it and it's unavailable, 0:09:18.520 --> 0:09:20.920 you're not really going to give up in most cases, right, 0:09:21.120 --> 0:09:23.440 You're going to go back when it's in sock. And 0:09:23.480 --> 0:09:26.640 so I think investors and analysts believe that is going 0:09:26.679 --> 0:09:28.560 to happen, and we are going to see that China 0:09:28.640 --> 0:09:32.000 revenue actually come in and factor in into the March quarter. 0:09:33.040 --> 0:09:35.480 Mark. How much have a grace period are investors they're 0:09:35.559 --> 0:09:38.400 willing to give Apple given some of the struggles that 0:09:38.400 --> 0:09:42.160 we've seen with Apple Intelligence and also areas like wearables too. 0:09:43.240 --> 0:09:45.920 Yeah, no, both good points. So on Apple Intelligence, I 0:09:45.920 --> 0:09:49.199 think investors are giving Apple a little bit of leeway. 0:09:49.480 --> 0:09:52.720 They've shown their ability to come into new categories slowly 0:09:52.800 --> 0:09:56.280 and improve the product over time. Obviously AI is a 0:09:56.280 --> 0:09:59.959 different beast. Obviously they have rivals both here and abroad. 0:10:00.480 --> 0:10:03.839 They are absolutely crushing them right now. But I think 0:10:03.960 --> 0:10:05.760 investors are going to give them a little bit of leeway. 0:10:05.880 --> 0:10:09.000 I would give them two more quarters, right analysts, I 0:10:09.040 --> 0:10:11.840 believe we'll give them two more quarters before they start 0:10:11.960 --> 0:10:14.640 having real concerns about this technology and its ability to 0:10:14.760 --> 0:10:17.880 drive sales and from a fundamental perspective, how it works 0:10:18.160 --> 0:10:22.120 feature wise. In terms of wearables. The new CFO, Kevin Burakt, 0:10:22.160 --> 0:10:24.680 made an interesting point on the earnings call that. 0:10:24.679 --> 0:10:26.160 There was a little bit of a tough compare. 0:10:26.360 --> 0:10:28.880 So typically over the last few years or so, you've 0:10:28.880 --> 0:10:31.160 see an Apple roll out two or three new Apple 0:10:31.200 --> 0:10:34.120 Watch models. This past fall, in September, they only released 0:10:34.120 --> 0:10:36.839 an Apple Watch Series ten. There was no new Apple 0:10:36.920 --> 0:10:40.600 Watch Ultra that's coming later in the year. This year. 0:10:40.720 --> 0:10:43.679 There'll be a new Apple Watch se later in the 0:10:43.800 --> 0:10:45.800 year this year, so you will see a little bit 0:10:45.840 --> 0:10:48.960 of that momentum return to the wearables category. But clearly 0:10:49.040 --> 0:10:52.440 the Apple vision pro not driving anything material to grow. 0:10:52.360 --> 0:10:53.240 That category, right. 0:10:53.320 --> 0:10:55.480 I mean, if you look at the big picture, Apple's 0:10:55.520 --> 0:10:59.080 first major new product category in years thirty five hundred 0:10:59.080 --> 0:11:02.040 dollars in revenue or peace at minimum, and it's not 0:11:02.200 --> 0:11:05.920 driving anything to that segment. That just tells you how 0:11:06.000 --> 0:11:07.559 few of these devices they're still selling. 0:11:08.640 --> 0:11:12.079 Bloomberg's Mark German, thanks for joining us. Let's get more 0:11:12.120 --> 0:11:16.640 with Gene Monster of deep Water Asset Management. Deep Seek 0:11:16.760 --> 0:11:19.800 really shook up the markets earlier this week and cause 0:11:20.160 --> 0:11:24.480 so many reflections upon investment in AI and development of 0:11:24.520 --> 0:11:27.760 AI in this country. What sort of pressure does that 0:11:27.880 --> 0:11:32.160 put on Apple specifically with its Apple Intelligence product. 0:11:34.120 --> 0:11:38.120 It's probably put a relief on Apple because if deep 0:11:38.280 --> 0:11:41.800 Seek does advance some of these third party models and 0:11:43.160 --> 0:11:47.840 basically creates an environment where the primary models like GPT 0:11:48.120 --> 0:11:50.880 or Gemini will have to lower their price to compete 0:11:50.920 --> 0:11:54.120 with more of these open source that benefits Apple from 0:11:54.280 --> 0:11:58.520 two perspectives. First is that as you use Apple Intelligence 0:11:58.679 --> 0:12:02.360 and it goes and taps into open ai, for example, 0:12:02.840 --> 0:12:05.599 there is a cost that comes to Apple for that 0:12:05.880 --> 0:12:08.600 those tokens. That's how it's measured. The usage is measured, 0:12:08.640 --> 0:12:11.600 and they sell tokens. As the price of those comes 0:12:11.720 --> 0:12:14.800 down driven by deep seek. That's a positive for Apple. 0:12:14.840 --> 0:12:18.960 And separately is Apple's app developers who are building these 0:12:19.080 --> 0:12:23.079 AI tools need to be aware of the costs that 0:12:23.200 --> 0:12:25.800 these apps have in terms of pulling in the token 0:12:25.920 --> 0:12:31.240 costs and lowering the token costs will should promote more 0:12:31.400 --> 0:12:33.920 AI development within the apps. And so that's why you 0:12:34.080 --> 0:12:37.920 saw Apple move up on the deep seek news. And 0:12:38.160 --> 0:12:41.120 I think that more broadly, I mean this has been 0:12:42.240 --> 0:12:44.679 I've been around tech for a while, and what I've 0:12:44.760 --> 0:12:47.600 seen this week related to deep seek is I think 0:12:47.800 --> 0:12:52.000 captured in the concept that the market is now the 0:12:52.120 --> 0:12:55.520 nastak is now flat from where it closed on Friday, 0:12:56.080 --> 0:12:59.320 and I think that essentially the commentary from Apple about 0:12:59.360 --> 0:13:02.920 how they can better fit from this. To answer your question, Mike, specifically, 0:13:03.880 --> 0:13:04.640 they focus in a. 0:13:04.679 --> 0:13:08.560 Long way on and AI security. They talk up their chips, 0:13:08.600 --> 0:13:10.920 they talk up private service. Is that going to be 0:13:10.960 --> 0:13:13.920 integral to a consumer when we're thinking about using Chinese 0:13:14.440 --> 0:13:16.439 apps When it comes to artificient intelligence. 0:13:18.120 --> 0:13:21.800 So for US consumers and Western consumers, they're probably not 0:13:21.920 --> 0:13:25.559 going to want to use a model I think. I 0:13:25.640 --> 0:13:27.800 suspect most people will not want to use a model 0:13:27.840 --> 0:13:31.679 that's based in China. And part of it is because 0:13:31.720 --> 0:13:35.360 I think this data integrity question, that's something that matters 0:13:35.480 --> 0:13:37.960 more for people who are over thirty five years old, 0:13:38.080 --> 0:13:42.360 when through our research we've seen that younger demographics tend 0:13:42.480 --> 0:13:45.120 not to care. I think the whole TikTok example is 0:13:45.120 --> 0:13:48.120 a pretty clear example. People just want the content, and 0:13:48.600 --> 0:13:51.120 I think some of the potential downfalls to using some 0:13:51.280 --> 0:13:54.319 platforms it's just not top of radar. But to answer 0:13:54.320 --> 0:13:58.360 your question, is that Apple will brand around security of 0:13:58.440 --> 0:14:02.600 course with AI and benefit I think with deep seek 0:14:02.679 --> 0:14:06.240 or some other third party open source AI within China. 0:14:06.480 --> 0:14:09.320 Is that that needs to Apple really needs to fill 0:14:09.400 --> 0:14:12.559 that AI hole in terms of Apple intelligence. Who is 0:14:12.600 --> 0:14:13.839 their partner in China. 0:14:14.520 --> 0:14:16.760 Let's just talk about Apple intelligence that we just heard 0:14:16.800 --> 0:14:19.280 from Mark German. I know you speak with him. He's 0:14:19.480 --> 0:14:22.640 been saying, look, you the analyst community and the investor 0:14:22.680 --> 0:14:25.480 community will give Apple a two quarter grace period to 0:14:25.520 --> 0:14:27.760 get this intelligence side right. Is that the sort of 0:14:27.840 --> 0:14:28.600 length of time we need. 0:14:30.640 --> 0:14:33.240 I think actually investors are going to give probably a 0:14:33.280 --> 0:14:37.640 little bit more room and probably give a pass largely 0:14:37.800 --> 0:14:40.920 on fiscal twenty twenty five. And if you look at 0:14:40.920 --> 0:14:44.160 the street numbers right now after these adjustments last night, 0:14:44.440 --> 0:14:46.440 iPhone growth is going to be around three percent. It 0:14:46.480 --> 0:14:50.040 steps up to eight percent in fiscal twenty six. And 0:14:50.200 --> 0:14:53.280 so I think that as long as that carrot is 0:14:53.320 --> 0:14:56.120 out there, and Apple did a good job of reminding 0:14:56.240 --> 0:15:00.480 investors that carrot's there because in markets that Apple Intelligence available, 0:15:00.520 --> 0:15:03.120 they said sales did better than in the other markets. 0:15:03.640 --> 0:15:05.720 As long as that carrot's out there, I think you're 0:15:05.760 --> 0:15:09.880 going to see this kind of this trend towards investors 0:15:09.920 --> 0:15:12.800 focused on what this breakout potentially could look like. And 0:15:12.800 --> 0:15:14.800 I would just say this, and Mark's done an incredible 0:15:14.920 --> 0:15:17.960 job of reporting on the features, on Apple Intelligence, the 0:15:18.040 --> 0:15:21.160 timing all these and from my perspective, I think that 0:15:22.120 --> 0:15:26.040 they still fall short of well short of what needs 0:15:26.080 --> 0:15:29.160 to happen for these products to really get people excited 0:15:29.240 --> 0:15:30.880 and tell their friends to buy it. I think they're 0:15:30.920 --> 0:15:33.760 going to get there. I'm an Apple shareholder, are Fermones, 0:15:33.800 --> 0:15:36.080 and I think they're going to get there. But I 0:15:36.160 --> 0:15:40.160 think that the product needs not only more distribution over 0:15:40.160 --> 0:15:42.680 the next few quarters, but the feature set really needs 0:15:42.720 --> 0:15:43.480 to get pumped up. 0:15:44.760 --> 0:15:48.760 Gene In China, we saw Apple report inventory issues there, 0:15:49.080 --> 0:15:51.920 but soon they're going to have some geopolitical ones, perhaps 0:15:52.280 --> 0:15:55.560 thanks to tariffs that Donald Trump is threatening against the 0:15:55.640 --> 0:15:59.400 world's second largest economy. How do you see Apple navigating 0:15:59.480 --> 0:16:01.120 that later this year if that happens. 0:16:02.280 --> 0:16:04.800 Well, just quickly on the tariff side of it was 0:16:04.840 --> 0:16:06.800 the second to last question on the call last night, 0:16:06.840 --> 0:16:09.920 and Cook just said, we're monitoring the situation, so basically 0:16:09.960 --> 0:16:14.320 sidestepped the question. I think most investors believe that there's 0:16:14.480 --> 0:16:18.120 just no risk to the tariffs given what happened seven 0:16:18.120 --> 0:16:20.840 eight years ago. They're able to navigate around that. So 0:16:21.360 --> 0:16:23.680 this probably is more of a risk to Apple stock, 0:16:23.840 --> 0:16:27.600 just given I think that most investors are complacent on 0:16:27.760 --> 0:16:29.680 what this potentially could mean. I think it's going to 0:16:29.720 --> 0:16:30.920 be fine. I think they're going to be able to 0:16:31.120 --> 0:16:33.760 navigate that. But I think there's something bigger going on 0:16:34.000 --> 0:16:36.880 in China. Potentially something bigger going on when you see 0:16:36.960 --> 0:16:40.560 Huawei their phone sales up fifteen percent of the December quarter, 0:16:40.640 --> 0:16:42.840 and Samsung and Apple, if you just for the channel 0:16:42.840 --> 0:16:46.400 inventory down three four or five six percent. It begs 0:16:46.440 --> 0:16:50.120 a question, is it about lack of AI features or 0:16:50.320 --> 0:16:53.840 is there some sort of shift that Chinese consumers, some 0:16:53.960 --> 0:16:57.720 sort of bias movity towards more homegrown products. And this 0:16:57.880 --> 0:17:00.480 goes beyond Apple and Samsung, but maybe think about like 0:17:00.520 --> 0:17:04.520 how Tesla could be impacted, and the Chinese government does 0:17:04.560 --> 0:17:08.000 an amazing job of being able to kind of steer 0:17:09.000 --> 0:17:11.720 how public sentiment is around some of these products. And 0:17:12.200 --> 0:17:13.879 that's kind of in the back of my mind about 0:17:13.960 --> 0:17:16.280 what me something else may be going on. This isn't 0:17:16.359 --> 0:17:19.520 just China economies week and a quarter in that negative 0:17:20.520 --> 0:17:21.360 in a way exactly. 0:17:22.880 --> 0:17:25.560 I mean, with thirty seconds to go, give marks out 0:17:25.600 --> 0:17:28.960 of ten for this earning season. This week with Tesla 0:17:29.040 --> 0:17:31.679 their Meta two, I. 0:17:31.720 --> 0:17:35.920 Think the fundamentals were six out of ten. It was 0:17:36.080 --> 0:17:38.920 it was okay, nothing, But I think what was most 0:17:39.000 --> 0:17:41.680 important as far as the a topic deep seek, the 0:17:41.760 --> 0:17:44.719 commentary about how they feel AI is going to proceed, 0:17:44.840 --> 0:17:45.920 and the spending around that. 0:17:46.040 --> 0:17:47.040 It was a ten out of ten. 0:17:47.680 --> 0:17:58.720 Gene Monster, a deep water asset management, more earnings, more chips. 0:17:58.760 --> 0:18:01.320 Let's look at Samsung chip maker, of course, on the 0:18:01.400 --> 0:18:05.280 downside by three tenths of percent. It's Pivotal Chip division's 0:18:05.320 --> 0:18:08.159 reported a smaller than expected profit. The company is fighting 0:18:08.520 --> 0:18:10.919 off arch rival s k Heinez so itself has been 0:18:10.960 --> 0:18:14.040 on the downside after a four day holiday in sat 0:18:14.280 --> 0:18:16.800 Over in South Korea, and some warriors post deep seek 0:18:17.080 --> 0:18:20.760 and what it means that chips. More broadly, mic Caro. 0:18:20.920 --> 0:18:24.200 Intel posted better than expected fourth quarter results as the 0:18:24.280 --> 0:18:28.119 company saw a sales beat, partly from Asia customer orders 0:18:28.160 --> 0:18:30.960 ahead of possible tariffs from the US, But the company 0:18:31.000 --> 0:18:33.639 says first quarter sales are expected to fall short of 0:18:33.760 --> 0:18:38.280 expectations on weaker demand and tougher competition. We're joined now 0:18:38.359 --> 0:18:41.240 by Wedbush analyst Matt Bryson, who's been writing that the 0:18:41.320 --> 0:18:45.960 results were quote nothing unexpected. He maintains a neutral rating 0:18:46.040 --> 0:18:48.760 on the stock with a twenty dollars price target, and 0:18:48.880 --> 0:18:53.080 he's with us now, Matt. We did hear a somewhat 0:18:53.160 --> 0:18:57.440 more realistic tone from the interim CEO about the prospects 0:18:57.520 --> 0:19:01.040 for maybe turning the company around in the short term. 0:19:01.160 --> 0:19:02.359 How did that land with you? 0:19:05.359 --> 0:19:08.399 I think it's the right way to think about things 0:19:09.680 --> 0:19:16.960 in the sense that Intel Underpat Elsinger was consistently you know, 0:19:17.080 --> 0:19:20.119 being optimistic about where where things were going to end up, 0:19:21.440 --> 0:19:24.040 and at the end of the day that that ended 0:19:24.119 --> 0:19:29.600 up disappointing investors. So you start off with a more 0:19:29.680 --> 0:19:32.520 realistic bar and the hope is you're you're able to 0:19:32.560 --> 0:19:33.360 execute from there. 0:19:34.280 --> 0:19:38.600 Realistic looks pretty painful and the shares do drop on 0:19:38.680 --> 0:19:41.040 the back of all of this. No quick fixes, but 0:19:41.160 --> 0:19:42.800 what can be done the interim when you get no 0:19:42.920 --> 0:19:43.760 news on a new CEO? 0:19:45.640 --> 0:19:48.479 Yeah, so I think the big question is what does 0:19:48.560 --> 0:19:54.520 Intel do from here? So under underpat Intel's plan was 0:19:54.880 --> 0:19:57.439 we're going to make Intel grate again. So we're going 0:19:57.520 --> 0:20:01.439 to restore our our fabs to competit ofness. That's going 0:20:01.480 --> 0:20:05.760 to bolster the entire operation. So now the real question 0:20:06.000 --> 0:20:09.240 is when you bring in a new CEO, is that 0:20:09.440 --> 0:20:13.760 still the plan of record or rather, do you do 0:20:13.880 --> 0:20:16.480 what a m D did, try to split the business up, 0:20:17.200 --> 0:20:21.520 look more like a Broadcom or Marvel, be a chip 0:20:21.560 --> 0:20:25.240 design house, spin the fab out. I think until we 0:20:25.280 --> 0:20:28.000 get an answer to that, it's going to be hard 0:20:28.040 --> 0:20:30.480 to kind of figure out what future looks like for Intel. 0:20:31.680 --> 0:20:35.399 Matt, what is your timeline? Nonetheless for Intel to be 0:20:35.520 --> 0:20:38.760 able to close the gap with rivals in critical areas 0:20:39.560 --> 0:20:42.080 like server chips for all those data centers that we're 0:20:42.160 --> 0:20:44.280 starting to see built across the country. 0:20:46.080 --> 0:20:48.960 Yeah, so there's two things to think about there. One 0:20:49.119 --> 0:20:52.040 is where are they with their fabs. They've they've told 0:20:52.119 --> 0:20:55.200 us that AT and A is going to ship second 0:20:55.240 --> 0:20:57.840 half of this year, So I think it's really important 0:20:57.960 --> 0:21:01.879 as to what those new chips look like. If the 0:21:02.200 --> 0:21:06.080 ships are competitive, that's a huge victory for Intel. Their 0:21:06.119 --> 0:21:10.840 struggles really started almost a decade ago when they missed 0:21:11.560 --> 0:21:15.280 their their their FAB upgrades. So getting that right, I 0:21:15.320 --> 0:21:17.119 think would be would be a huge positive. But the 0:21:17.200 --> 0:21:19.600 next piece is what we're seeing is a whole lot 0:21:19.640 --> 0:21:23.399 more consumption of AI chips. So whether it's Nvidia or 0:21:23.880 --> 0:21:26.440 Broadcom or Marvel building for for some of the large 0:21:26.480 --> 0:21:29.080 data centers or a m D, their growth has come 0:21:29.119 --> 0:21:32.800 from the AI side. Intel there, they still really don't 0:21:32.840 --> 0:21:35.600 have a product. Gouty disappointed. They just told us that 0:21:35.680 --> 0:21:37.560 their next product, Fealton Shores, is going to be more 0:21:37.600 --> 0:21:41.159 of a test product. So I think getting things right 0:21:41.240 --> 0:21:43.800 there it is important, But we don't have a whole 0:21:43.840 --> 0:21:47.200 lot of insight into what exactly that that roadmap is 0:21:47.200 --> 0:21:48.840 going to look like and how successful it's going to be. 0:21:49.000 --> 0:21:49.200 Matt. 0:21:49.240 --> 0:21:52.399 In thirty seconds, they're planning to spend twenty billion dollars 0:21:52.440 --> 0:21:55.400 on new plants. Will the administration be supporting this long term? 0:21:57.480 --> 0:21:57.800 That is? 0:21:58.040 --> 0:22:00.600 That is a great great question is SEMs like this 0:22:00.680 --> 0:22:05.280 administration goes from one place to another place. You never 0:22:05.520 --> 0:22:07.840 quite know where it's going to go. So hopefully for 0:22:07.920 --> 0:22:10.680 Intel sake they will. But I'm not going to guess 0:22:10.680 --> 0:22:12.119 what the Trump administration is going to do. 0:22:12.440 --> 0:22:14.520 Matt Bryson, a wed Verse, Thanks so much for your 0:22:14.560 --> 0:22:25.080 time today. Welcome back to Blue Meg Technology. I'm Caroline 0:22:25.119 --> 0:22:25.560 Hide in New. 0:22:25.560 --> 0:22:28.119 York and I'm Mike Shepard in San Francisco. 0:22:28.280 --> 0:22:30.119 As we wrap up the week, let's look at these markets, 0:22:30.359 --> 0:22:34.280