WEBVTT - ASML Boosts Outlook as AI Chip Demand Soars 0:00:02.520 --> 0:00:04.210 Bloomberg Audio Studios. 0:00:04.690 --> 0:00:05.370 Podcasts. 0:00:05.690 --> 0:00:06.210 Radio. 0:00:06.650 --> 0:00:07.070 News. 0:00:11.050 --> 0:00:16.980 Bloomberg Tech is live from the heart of Silicon Valley 0:00:17.500 --> 0:00:19.779 with Ed Ludlow in San Francisco. 0:00:22.390 --> 0:00:25.700 This is Bloomberg Tech. Coming up, ASML raises its sales 0:00:25.730 --> 0:00:29.280 forecast for 2026 and aims to increase production of its 0:00:29.320 --> 0:00:33.000 chip-making machines to keep up with soaring AI spending. Plus, 0:00:33.020 --> 0:00:35.620 we hear from NVIDIA CEO Jensen Wang, fresh on the 0:00:35.659 --> 0:00:39.620 heels of announcing plans to invest $ 2 billion in European deals. 0:00:39.950 --> 0:00:42.850 And we take you inside of the making of Grand 0:00:42.909 --> 0:00:46.110 Theft Auto 6, expected to be the biggest video game 0:00:46.150 --> 0:00:50.530 blockbuster of all time. Okay, welcome to Wednesday. I'm taking 0:00:50.550 --> 0:00:54.440 a look at shares of ASML. Up 2.6% at one 0:00:54.480 --> 0:00:57.800 point in the session, up 3.6% in Europe and Amsterdam, 0:00:57.840 --> 0:01:01.440 and one point fell 1%. The producer of lithography machines, 0:01:01.520 --> 0:01:05.170 chip making tools to manufacture cutting edge chips, raised its 0:01:05.209 --> 0:01:08.630 sales outlook, but said it's struggling to meet demand. Joining 0:01:08.650 --> 0:01:12.089 us for the Deets, Bloomberg's Sarah Jacob, who is in Amsterdam. 0:01:12.110 --> 0:01:14.970 For ASML, this is all about capacity, right? They had 0:01:15.030 --> 0:01:17.550 plans to boost capacity. They're saying that they're still in 0:01:17.569 --> 0:01:20.450 this place where demand is running ahead of their ability 0:01:20.500 --> 0:01:21.899 to supply. Give us the basics. 0:01:22.319 --> 0:01:22.619 Hi. 0:01:22.720 --> 0:01:23.640 Yes, that's right. 0:01:23.980 --> 0:01:26.940 So ASML, again, basically just, you know, like you said, 0:01:27.000 --> 0:01:30.440 raising the low end of its annual sales forecast for 0:01:30.440 --> 0:01:35.240 2026 because it seems soaring artificial intelligence-linked demand. The CEO 0:01:35.260 --> 0:01:38.440 today saying that he's getting, you know, customers who are 0:01:38.550 --> 0:01:41.890 asking for more tools every day, and it's become the 0:01:41.910 --> 0:01:45.170 key focus of life of ASML to get that capacity going. 0:01:45.630 --> 0:01:49.400 Just as a reminder, in July, ASML said that it 0:01:49.440 --> 0:01:52.820 expected about 65 units in terms of capacity for 2026, 0:01:52.800 --> 0:01:53.720 a 30% increase on that for 2027, and it was 0:01:53.740 --> 0:02:01.850 investigating a further 30% increase for 2028. Today, it says 0:02:01.890 --> 0:02:05.890 that those plans and those current supply patterns would not 0:02:05.950 --> 0:02:09.540 be enough to fulfill demand from what it's hearing from customers. 0:02:09.580 --> 0:02:15.360 So now they're investigating going beyond 30% in 2028. So 0:02:15.419 --> 0:02:18.450 that's going to be interesting because it's hearing more from 0:02:18.510 --> 0:02:22.550 its customers in terms of the short-term and the medium-term requirements. 0:02:23.880 --> 0:02:27.169 Away from the financials, China is the story, right? There 0:02:27.230 --> 0:02:31.310 is a piece of proposed legislation to deepen restrictions, export 0:02:31.330 --> 0:02:35.730 restrictions on DUV, emerging machines to China. This came up 0:02:35.790 --> 0:02:38.940 in the call. What did ASML have to say about China, Sarah? 0:02:41.000 --> 0:02:41.280 Yes. 0:02:41.440 --> 0:02:44.680 So China, again, the third largest market for ASML in 0:02:44.700 --> 0:02:48.639 the third quarter after South Korea and Taiwan, still a 0:02:48.680 --> 0:02:52.690 significant contributor. And then we spoke to Roger Dessen, who 0:02:52.770 --> 0:02:55.990 is the CFO of ASML, in a call with journalists today. 0:02:56.010 --> 0:02:58.850 And he basically said, according to him, they believe that 0:02:58.870 --> 0:03:02.290 the Match Act is unbalanced. And he said that, you know, 0:03:02.510 --> 0:03:07.980 by introducing such restrictions, essentially, you could slow it going 0:03:08.060 --> 0:03:10.280 to China, but it would sort of increase, but not 0:03:10.380 --> 0:03:13.519 stop what China can do in developing technology and might actually, 0:03:13.940 --> 0:03:17.560 you know, sort of help homegrown technology in that regard. 0:03:18.180 --> 0:03:21.800 And by preventing, you know, ASML's ability to service its 0:03:21.880 --> 0:03:24.620 own tools in China, there could potentially be, you know, 0:03:24.700 --> 0:03:26.780 intellectual property leakage or theft. 0:03:28.320 --> 0:03:30.770 Bloomberg's Sarah Jacobs out in Amsterdam. A very long day 0:03:30.810 --> 0:03:34.630 for you. ASML, Europe's most valuable company, reporting its earnings. 0:03:34.910 --> 0:03:37.870 Let's hear from ASML CEO Christophe Fouguet, who said in 0:03:37.930 --> 0:03:40.680 a video released with the company's results that customers are 0:03:40.780 --> 0:03:43.980 asking every day for more tools to meet their own needs. 0:03:45.380 --> 0:03:48.840 Today, they expect that their supply will not meet the 0:03:48.880 --> 0:03:52.820 demand at least until 2028. So this is a very, 0:03:52.860 --> 0:03:55.940 very strong demand on their side. So a lot of 0:03:56.020 --> 0:03:59.040 our discussion with our customer now are shifting, in fact, 0:03:59.320 --> 0:04:01.520 beyond 2027. A lot of order intake for 2028, but 0:04:01.540 --> 0:04:03.100 also some strong interest to already place order for 2029 0:04:03.100 --> 0:04:05.740 and sometime even 2030. 0:04:11.580 --> 0:04:14.740 So ASML already talking to its customers about 2029. Let's 0:04:14.780 --> 0:04:17.640 discuss what that means for ASML, the AI boom with 0:04:17.700 --> 0:04:22.990 Antonella Frangelo and Listerne and Taser Sanpaolo. Again, it's about capacity, right? 0:04:23.010 --> 0:04:25.250 And I think what the market's really struggling with here 0:04:25.330 --> 0:04:28.270 is like your customers are asking for more. You're trying 0:04:28.290 --> 0:04:32.430 to address the capacity issue. Where can they find more capacity? 0:04:35.770 --> 0:04:39.950 Hi, thank you for this opportunity. This is a key 0:04:39.990 --> 0:04:46.990 point for them because it's an opportunity to increase their 0:04:47.029 --> 0:04:49.729 capacity to match the strong orders demand. 0:04:49.790 --> 0:04:50.610 What can they do? 0:04:51.270 --> 0:04:55.310 They can optimize their. 0:04:56.630 --> 0:04:57.290 Production. 0:04:57.610 --> 0:05:03.909 They can release product upgrades. They can they are already 0:05:04.450 --> 0:05:11.400 receiving strong demand for productivity. 0:05:10.820 --> 0:05:15.500 For product upgrades, which. 0:05:15.420 --> 0:05:22.990 Is the reason why in the third quarter the installed 0:05:23.029 --> 0:05:30.969 base management where I then expected. they are really pushing 0:05:31.190 --> 0:05:35.500 their effort to increase the capacity which remains for them 0:05:35.720 --> 0:05:39.920 and for the whole value chain, the key constraint to 0:05:39.960 --> 0:05:42.180 match demand, which remains very strong. 0:05:43.529 --> 0:05:49.430 Antonella, how unusual is it for ASML or anyone in 0:05:49.529 --> 0:05:52.520 the chip making equipment space to already be talking to 0:05:52.580 --> 0:05:53.599 customers about. 0:05:53.400 --> 0:05:53.920 2029, 2030? 0:05:53.920 --> 0:05:57.400 They haven't taken orders, right? They're pretty clear on that. 0:05:57.640 --> 0:06:01.520 But they are talking to customers about 2029 and 2030. Yeah, this. 0:06:03.339 --> 0:06:07.659 Is, you know, something which is becoming quite, you know, 0:06:08.260 --> 0:06:16.770 common to hear from testing equipment players. We heard from 0:06:16.800 --> 0:06:23.540 many of them speaking about full capacity already reached in 0:06:23.560 --> 0:06:27.740 terms of orders for 2027 and still very stretched for 2028. 0:06:33.720 --> 0:06:38.700 You have to consider that we are across an unprecedented 0:06:38.740 --> 0:06:46.989 tech revolution with AI deployment. It's a multi-year upcycle, so 0:06:47.910 --> 0:06:53.180 it's something that we have to look at a multi-year 0:06:53.279 --> 0:06:58.279 time horizon and for it's correct to look at 2029, 2030, 0:06:58.279 --> 0:07:07.470 and even beyond in that case, considering the potential technological 0:07:07.510 --> 0:07:12.530 upgrades they are implementing and the new initiatives they launched 0:07:12.730 --> 0:07:15.780 with TSMC and Samsung. 0:07:17.420 --> 0:07:21.140 And so let's talk about ASML's customers, right? We know 0:07:21.180 --> 0:07:28.550 who they are. High concentration, TSMC, Samsung, and Intel. Of 0:07:28.610 --> 0:07:31.710 those three, do we have a sense of who needs 0:07:32.210 --> 0:07:36.870 these lithography machines most? Who's pushing ASML hardest? 0:07:39.040 --> 0:07:43.080 They don't provide this information, but we can deduct that 0:07:43.140 --> 0:07:48.350 the memory makers are now running ahead of all the others. 0:07:48.530 --> 0:07:53.790 They confirmed that during today's call. But also advanced logic 0:07:54.210 --> 0:08:00.960 are needed for the advanced chips. So at the end, 0:08:01.220 --> 0:08:07.810 it's something that is related to all the main advanced 0:08:07.910 --> 0:08:09.170 chip manufacturers. 0:08:10.500 --> 0:08:14.660 ASML is Europe's most valuable company, publicly traded company. It's 0:08:14.720 --> 0:08:18.420 a stock that's up 67% year to date. But what 0:08:18.440 --> 0:08:21.300 I found interesting in kind of the bigger picture story 0:08:22.040 --> 0:08:26.550 of what's happening in the chip equipment makers, the semiconductor 0:08:26.570 --> 0:08:30.190 industry overall is ASML hit a record in June. And 0:08:30.290 --> 0:08:33.330 it is essentially traded sideways since it's made attempts to 0:08:33.350 --> 0:08:36.510 get to those levels, but not hit fresh records since 0:08:36.550 --> 0:08:39.630 that June 30th record. Where's your head at with the 0:08:39.650 --> 0:08:43.750 valuation of this company right now and the forward trajectory 0:08:43.790 --> 0:08:44.530 of its growth? 0:08:45.890 --> 0:08:50.670 Yeah, the decline in the share price from the May 0:08:50.730 --> 0:08:58.840 peak is something that also regarded the other most of 0:08:59.059 --> 0:09:06.670 semiconductor players. But considering the strong earnings upgrades we have 0:09:06.730 --> 0:09:11.650 implemented since then, now valuation looks very appealing in my view. 0:09:12.420 --> 0:09:17.040 The stock is trading at multiples, which are in line 0:09:17.240 --> 0:09:22.900 with the last five-year average, which in our view doesn't 0:09:23.179 --> 0:09:28.860 take into consideration properly the fact that we are now 0:09:29.020 --> 0:09:32.940 in an up cycle. So, the stock should trade above 0:09:33.280 --> 0:09:39.450 the historical average. Moreover, the stock has almost closed the 0:09:39.500 --> 0:09:45.189 historical premium to the US peers, which we also consider 0:09:45.370 --> 0:09:48.230 as not, you. 0:09:48.150 --> 0:09:49.210 Know, adequate. 0:09:49.250 --> 0:09:54.579 So, for all these reasons, we believe that stock correction, 0:09:54.720 --> 0:09:59.420 and on the other hand, the strong earnings upgrades. and 0:09:59.640 --> 0:10:04.380 the potential further upside ahead could prompt a re-rating of 0:10:04.400 --> 0:10:05.400 the share price. 0:10:06.200 --> 0:10:09.600 And so let's talk about China. You heard Sarah's reporting 0:10:09.800 --> 0:10:13.720 on ASML's position on the Match Act and the burden 0:10:13.760 --> 0:10:17.540 that they feel it unduly places on them. China was 23% 0:10:17.540 --> 0:10:19.620 of 3Q system sales, and by the end of the year, 0:10:19.640 --> 0:10:24.260 it will be 20%. What outlook do you have for 0:10:24.370 --> 0:10:25.800 ASML's business in China? 0:10:28.050 --> 0:10:32.450 The company was very detailed today, and they said that 0:10:32.730 --> 0:10:37.150 China should account for around 20% of sales this year. 0:10:37.210 --> 0:10:40.929 They had been more cautious in previous quarters, but this 0:10:41.000 --> 0:10:46.160 quarter China performed a bit better than, for example, the 0:10:46.200 --> 0:10:50.459 second quarter. The key point on China is not short-term, 0:10:50.580 --> 0:10:55.400 but is on the, as you said, the match act. 0:10:56.220 --> 0:10:59.120 And in my view, this is the main reason why 0:10:59.600 --> 0:11:06.370 the stock is currently not expressing its full potential, because 0:11:06.809 --> 0:11:14.620 investors are fearing that this implementation of this new regulatory 0:11:16.480 --> 0:11:22.780 constraint could have an impact, a double-digit impact on ASML. 0:11:22.840 --> 0:11:29.209 And Maybe we'll have more clarity on that after the 0:11:29.270 --> 0:11:34.790 midterm elections. So this could be one of the reasons 0:11:34.850 --> 0:11:40.400 why the stock is still a bit kept for. 0:11:40.300 --> 0:11:40.940 The time being. 0:11:41.740 --> 0:11:44.060 Antonella Frangila from Intesa San Paolo. It's great to have 0:11:44.080 --> 0:11:46.260 you with us here on Bloomberg Tech. Thank you very much. Now, 0:11:46.300 --> 0:11:48.050 coming up, we're going to hear from NVIDIA CEO Jensen 0:11:48.070 --> 0:11:51.390 Wang as he announces plans to invest an additional $ 2 0:11:51.090 --> 0:11:54.589 billion in European deals during a tour of the region. 0:11:54.610 --> 0:11:57.220 A little bit of gen sanity going on in the continent. 0:11:57.500 --> 0:12:11.240 That's next. This is Bloomberg Tech. Let's take a look 0:12:11.260 --> 0:12:14.960 at today's relatively big number, $ 21 billion. That's how much 0:12:15.000 --> 0:12:18.520 Japan could put behind two new global foundries chip plants 0:12:18.900 --> 0:12:22.160 in upstate New York. The agreement taps Japan's $ 550 billion 0:12:22.179 --> 0:12:26.040 investment pledge to the US, boosting American production of chips 0:12:26.140 --> 0:12:30.170 used in everything from cars to communications gear. And Washington 0:12:30.450 --> 0:12:32.270 is getting a piece of the action. The US government 0:12:32.290 --> 0:12:36.209 will take a roughly 4% stake in global foundries. deepening 0:12:36.250 --> 0:12:39.230 its direct investment into American chip making. Shares of Global 0:12:39.270 --> 0:12:41.670 Foundries up 4%. There was a much bigger spike in 0:12:41.690 --> 0:12:44.069 the pre-market. They kind of fell away pretty quickly. There's 0:12:44.090 --> 0:12:47.360 a lot to understand here. Bloomberg's Ian King, thankfully, is 0:12:47.400 --> 0:12:51.939 with us. In answering, explain Global Foundries' place in the 0:12:52.140 --> 0:12:55.920 sort of chip making world. But, you know, this is 0:12:56.059 --> 0:12:59.620 them establishing more of a domestic footprint, right? But with 0:12:59.640 --> 0:13:00.199 Japanese money. 0:13:00.440 --> 0:13:00.640 Yeah. 0:13:00.920 --> 0:13:05.309 Global Foundries is basically a foundry. It's a TSMC type company. 0:13:06.110 --> 0:13:10.990 although it concentrates on less advanced chip manufacturing, but like TSMT, 0:13:11.030 --> 0:13:14.469 tries to supply as many people as it can. 0:13:14.470 --> 0:13:17.630 $ 21 billion, actually, it's not that big a number when 0:13:17.650 --> 0:13:19.670 you think about what it takes to stand up a 0:13:19.710 --> 0:13:23.010 fab and get it online and ramp. There was a 0:13:23.070 --> 0:13:27.429 separate kind of parallel headline about money that Global Foundries 0:13:27.470 --> 0:13:30.390 had received through the CHIPS Act, CHIPS Act from the 0:13:30.429 --> 0:13:33.510 Biden administration, that essentially, as I understand it now, freer 0:13:33.570 --> 0:13:35.590 to spend it on different things. 0:13:36.170 --> 0:13:37.410 That's right. I mean, there's a couple of things. 0:13:37.410 --> 0:13:41.939 $ 21 billion, if you're TSMC or Samsung or Intel, isn't 0:13:41.980 --> 0:13:44.220 enough to even buy you one plant. But in the 0:13:44.340 --> 0:13:48.130 kind of chip that Global Foundry specialize in, it is. 0:13:48.429 --> 0:13:50.430 It's a good chunk of money and it's an order 0:13:50.470 --> 0:13:52.890 of magnitude change for them in terms. 0:13:52.690 --> 0:13:55.490 Of what they can deploy. And yes, because They've got 0:13:55.530 --> 0:13:55.910 this money. 0:13:55.950 --> 0:13:58.580 They can now use the Chips Act money for other 0:13:58.630 --> 0:14:00.540 specialist projects that they're working on. 0:14:00.940 --> 0:14:04.459 This is two projects in upstate New York since this 0:14:04.500 --> 0:14:08.880 kind of focus on re-onshoring American chip making capacity. Are 0:14:08.920 --> 0:14:11.650 these just announcements from Global Foundries or in the kind 0:14:11.690 --> 0:14:14.210 of last few years, have they ramped up what they're 0:14:14.230 --> 0:14:15.790 doing here domestically? 0:14:16.090 --> 0:14:18.570 I mean, they're kind of an unusual company. 0:14:18.650 --> 0:14:22.400 Remember, they started off life as the plants of AMD, 0:14:22.980 --> 0:14:25.479 bought by the government of Abu Dhabi. Then they bought 0:14:25.500 --> 0:14:29.080 Charter Semiconductor in Singapore. So then they built this plant 0:14:29.280 --> 0:14:31.320 in upstate New York, and now they're adding to that. 0:14:31.360 --> 0:14:34.200 So, you know, the name's above the door. 0:14:34.240 --> 0:14:37.260 It is Global Foundries, but they are very much riding 0:14:37.280 --> 0:14:40.130 this wave of public money being used to bring back 0:14:40.210 --> 0:14:41.130 this to the U.S. 0:14:41.410 --> 0:14:44.050 The final element of this story is bringing back to 0:14:44.070 --> 0:14:47.150 the U.S. with the U.S. taking a stake in global foundries. 0:14:47.670 --> 0:14:49.610 Explain that landscape a bit, because it's not just global 0:14:49.630 --> 0:14:52.270 foundries where the U.S. government has made an investment. 0:14:52.490 --> 0:14:54.930 Yeah, I mean, the obvious other one is Intel, where 0:14:55.090 --> 0:14:59.670 basically the Trump administration helped Intel out, gave Intel more 0:14:59.720 --> 0:15:01.420 freedom and said, in return, the. 0:15:01.400 --> 0:15:03.080 Taxpayer gets a slice of the action. 0:15:03.100 --> 0:15:06.040 And as we've seen, the president has talked up the 0:15:06.080 --> 0:15:09.400 returns that they've already sort of realized from that investment. 0:15:09.540 --> 0:15:11.980 And we're seeing an attempt to repeat that, albeit at 0:15:12.020 --> 0:15:12.920 a smaller scale here. 0:15:13.200 --> 0:15:15.240 Okay, Bloomberg's Ian King, thank you very much for being 0:15:15.280 --> 0:15:18.290 with us on set. NVIDIA CEO Jensen Wang says the 0:15:18.330 --> 0:15:22.450 company's planning to announce $ 2 billion in European investments over 0:15:22.470 --> 0:15:25.230 the next week. At a press gaggle in Paris yesterday, 0:15:25.250 --> 0:15:28.050 Wang reiterated that this will add to the $ 8 billion 0:15:28.070 --> 0:15:30.950 in investments the chip makers already put into the continent 0:15:30.970 --> 0:15:34.620 in the last year. This is the beginning, the beginning 0:15:34.760 --> 0:15:36.060 of AI Europe. 0:15:36.100 --> 0:15:40.300 In the last year alone, we have invested $ 8 billion 0:15:40.990 --> 0:15:44.490 in European startups. And in the next week, I'm going 0:15:44.510 --> 0:15:48.170 to announce another two more billion dollars. And so we've 0:15:48.190 --> 0:15:52.010 invested tremendously in just about every single layer of the 0:15:52.110 --> 0:15:54.250 AI infrastructure here in Europe. 0:15:54.430 --> 0:15:55.660 And so the next layer. 0:15:55.510 --> 0:15:58.680 Above that is investments. These are going to be the 0:15:58.780 --> 0:16:00.760 superstar companies of the next generation. 0:16:00.920 --> 0:16:03.320 What about the speculative bubble on AI? 0:16:03.820 --> 0:16:04.800 Are you frightened about it? 0:16:05.020 --> 0:16:09.650 Today, demand is far greater than supply. And the reason 0:16:09.670 --> 0:16:11.170 for that is because we're in the beginning of this 0:16:11.230 --> 0:16:13.810 new industrial build-out. And so we need to build AI 0:16:13.870 --> 0:16:17.550 infrastructure around the world. And so demand is much, much 0:16:17.580 --> 0:16:20.540 greater than supply. Someday, of course, the two will come 0:16:20.560 --> 0:16:24.760 into balance. Now, whether it's five years from now or seven, 0:16:24.820 --> 0:16:27.340 ten years from now, which is kind of the duration 0:16:27.380 --> 0:16:29.900 of a new technology build-out, except this one requires a 0:16:29.960 --> 0:16:34.000 lot of factories and requires energy and construction. So there 0:16:34.040 --> 0:16:38.990 are many natural limiters. that keeps the industry from building 0:16:39.030 --> 0:16:43.600 too fast. But eventually, it surely will happen that demand 0:16:43.640 --> 0:16:46.360 and supply will come into balance. But you're not going 0:16:46.380 --> 0:16:47.570 to see that in the next several years. 0:16:49.460 --> 0:16:52.990 That was NVIDIA CEO Jensen Wang. Applied Materials gave a 0:16:53.000 --> 0:16:56.790 bullish outlook on spending of wafer fab equipment, but said 0:16:56.830 --> 0:16:59.850 a number of factors make it harder to provide a 0:16:59.910 --> 0:17:03.800 detailed outlook. Overall, yesterday's investor briefing was kind of light 0:17:03.860 --> 0:17:07.119 on specifics. Applied Materials CEO Gary Dickinson spoke with us 0:17:07.160 --> 0:17:09.139 yesterday after the event and gave a little bit more. 0:17:10.220 --> 0:17:13.920 We didn't give a specific forecast because it's changing so quickly. 0:17:14.100 --> 0:17:17.560 The workloads are changing quickly. All of these technologies, models 0:17:17.619 --> 0:17:23.870 are changing quickly. So picking a precise point is really challenging. However, 0:17:23.940 --> 0:17:28.469 for us, we are investing to prepare to double our 0:17:28.570 --> 0:17:30.070 output over the next two years. 0:17:32.160 --> 0:17:34.610 So initially investors were less than impressed. The stock had 0:17:34.670 --> 0:17:37.609 their worst decline in about a month after that original 0:17:37.650 --> 0:17:40.830 kind of less detailed forecast. And the shares continued to slide, 0:17:40.930 --> 0:17:43.830 actually down 2.4% in the session right now, but on 0:17:43.850 --> 0:17:46.649 track for their seventh straight day of declines, which for 0:17:46.670 --> 0:17:49.310 Applied Materials is the longest losing streak going back to 0:17:49.369 --> 0:17:52.770 January of 2024. If ASML does the patterns on the wafer, 0:17:53.600 --> 0:17:57.600 then Applied Materials fills and builds the material, the actual 0:17:57.619 --> 0:18:01.300 physical material onto that chip. Let's get out to New York. 0:18:01.320 --> 0:18:03.139 There's so much more going on around the world. Bloomberg's 0:18:03.160 --> 0:18:05.060 Yahira Anand has that news. 0:18:05.080 --> 0:18:05.600 Hi, Yahira. 0:18:05.980 --> 0:18:06.420 Hi, Ed. 0:18:06.480 --> 0:18:08.879 It's time now for Talking Tech. First up, Bank of 0:18:08.940 --> 0:18:11.820 America is no longer part of the potential roster of 0:18:11.900 --> 0:18:16.460 banks working on Moonshot AI's IPO. That's according to people familiar. 0:18:16.540 --> 0:18:19.840 The move comes as the China AI darling faces increased 0:18:19.900 --> 0:18:23.100 scrutiny here in the U.S. Goldman Sachs is now the 0:18:23.400 --> 0:18:27.850 only U.S. bank expected to have a role in the deal. Plus, 0:18:27.900 --> 0:18:31.430 Mark Zuckerberg says Meta had to commit to spending hundreds 0:18:31.550 --> 0:18:34.970 of billions of dollars last year on AI infrastructure before 0:18:35.010 --> 0:18:38.710 the company had any idea as to whether they would succeed. 0:18:38.730 --> 0:18:41.710 It's a revealing disclosure for a company that has struggled 0:18:41.770 --> 0:18:46.360 to persuade investors to accept Meta. its ballooning expenses for 0:18:46.440 --> 0:18:50.940 its AI ambitions. And the Brooklyn District Attorney's Office has 0:18:51.000 --> 0:18:56.440 disrupted a multinational cryptocurrency scam network centered in Eastern Europe. 0:18:56.510 --> 0:19:00.150 This caps a years-long effort to stop a fraud operation 0:19:00.190 --> 0:19:04.010 that has stolen tens of millions of dollars from Americans. 0:19:04.330 --> 0:19:04.429 Ed. 0:19:05.450 --> 0:19:10.550 Thank you very much, Yoharan. A security breach from inside OpenAI. 0:19:10.630 --> 0:19:14.030 One of the company's own employees has been arrested. accused 0:19:14.070 --> 0:19:17.659 of planting a recording device inside an executive conference room 0:19:17.700 --> 0:19:21.240 at its San Francisco offices. OpenAI says there's no sign 0:19:21.280 --> 0:19:24.460 that sensitive data was compromised. Bloomberg's Rachel Metz has been 0:19:24.500 --> 0:19:26.580 reporting and has the details. And let's just start with 0:19:26.600 --> 0:19:30.340 the details, Rachel. Everything we know to this point about 0:19:30.359 --> 0:19:30.850 the incident. 0:19:31.290 --> 0:19:31.590 Sure. 0:19:31.720 --> 0:19:35.050 So an OpenAI staffer, as you say, was arrested for 0:19:35.710 --> 0:19:39.830 allegedly planting a hidden recording device. It was found in 0:19:39.869 --> 0:19:42.910 the back of a TV in an executive conference room 0:19:42.970 --> 0:19:45.210 in one of OpenAI's San Francisco offices. 0:19:46.190 --> 0:19:49.710 The company reported it to the FBI. The FBI responded. 0:19:50.030 --> 0:19:54.619 Has taken over in a criminal complaint that was unsealed yesterday. 0:19:55.080 --> 0:19:56.620 They made clear why. 0:19:56.440 --> 0:20:01.800 They were arresting this now former employee, including that there 0:20:01.820 --> 0:20:03.540 was a whole timeline in there of all the different 0:20:03.560 --> 0:20:07.020 times that He had allegedly been near this conference room. 0:20:07.040 --> 0:20:08.620 There was a picture that you're showing on the screen 0:20:08.640 --> 0:20:11.520 right now of him peering behind the TV. This device 0:20:11.600 --> 0:20:15.600 is really inexpensive. It was a $ 14 device and it 0:20:15.619 --> 0:20:19.440 was disguised in toilet paper. I'm not sure why it 0:20:19.480 --> 0:20:22.689 was disguised in toilet paper, but it was. So it's 0:20:22.710 --> 0:20:24.909 going to be really interesting to see what happens further. 0:20:25.070 --> 0:20:28.290 And there is a hearing in the case in federal 0:20:28.350 --> 0:20:30.330 court in San Francisco on Monday. So we'll get some 0:20:30.350 --> 0:20:30.889 more info then. 0:20:32.270 --> 0:20:35.760 What OpenAI was saying is that they use their own 0:20:35.880 --> 0:20:40.900 AI models to make an assessment themselves of this device. 0:20:40.920 --> 0:20:44.540 And we were showing images as provided by the authorities 0:20:44.580 --> 0:20:46.659 of that device. Could you try and explain that a 0:20:46.680 --> 0:20:47.060 little bit? 0:20:47.880 --> 0:20:50.930 I don't know too much more about that, but I 0:20:50.950 --> 0:20:54.520 am going to assume that they used one of their 0:20:54.540 --> 0:20:57.399 AI models, took a picture of it, and asked for 0:20:57.440 --> 0:20:59.460 more information about the device. I will say that the 0:20:59.480 --> 0:21:03.379 device says Seed with three E's, Seed Streams. on it, 0:21:03.390 --> 0:21:09.290 which is a company that makes a variety or sells 0:21:09.330 --> 0:21:14.300 a variety of devices, including this device. So I saw 0:21:14.340 --> 0:21:17.100 the number of the device in the filing, and once 0:21:17.140 --> 0:21:19.560 you take that number, it's pretty easy to look it up. 0:21:19.619 --> 0:21:22.560 It looked to be available for sale, and this is 0:21:22.660 --> 0:21:27.170 a small computing device that builds a microphone and has 0:21:27.210 --> 0:21:28.850 a camera and stuff on it, so you could use 0:21:28.890 --> 0:21:29.650 it for surveillance. 0:21:30.530 --> 0:21:32.550 This is a story that I'm sure we will keep 0:21:32.590 --> 0:21:35.590 tracking as we get more developments. Bluebergs, Rachel Metz, thank 0:21:35.630 --> 0:21:38.330 you very much indeed. Another OpenAI battle is playing out 0:21:38.350 --> 0:21:41.650 in court today. This one with Apple. The iPhone maker 0:21:41.950 --> 0:21:45.630 has accused OpenAI of using former Apple employees to get 0:21:45.670 --> 0:21:48.760 its hand on trade secrets as it pushes into consumer hardware. 0:21:49.160 --> 0:21:52.280 Apple wants a judge to block OpenAI from using any 0:21:52.320 --> 0:21:55.840 allegedly stolen information. OpenAI denies the claims and and wants 0:21:55.859 --> 0:21:59.160 the case thrown out. More on OpenAI coming up after 0:21:59.200 --> 0:22:02.520 the break. We'll also have an interview with CFO Sarah 0:22:02.540 --> 0:22:05.639 Fryer from the International AI Summit over in Dublin. Up 0:22:05.760 --> 0:22:09.810 next on Bloomberg Tech, Modal CEO Eric Bernhardsen joins us 0:22:09.830 --> 0:22:13.030 to discuss the AI cloud company's latest fundraise. There's a 0:22:13.070 --> 0:22:14.930 lot going on. It's halftime here in the city of 0:22:15.050 --> 0:22:31.560 San Francisco. This is Bloomberg Tech. Bloomberg Tech Okay, welcome 0:22:31.580 --> 0:22:33.240 back to Bloomberg Tech. I'm going to try and squeeze 0:22:33.260 --> 0:22:37.800 this story in. Yep, bending spoons up 41%. Italian, let's 0:22:37.820 --> 0:22:41.900 call it a tech conglomerate. Berkshire Hathaway investing more money, 0:22:41.900 --> 0:22:47.960 $ 333 million, building what represents a 4% stake in bending spoons. 0:22:48.840 --> 0:22:51.000 And clearly that's a jolt in the arm of the stock. 0:22:51.060 --> 0:22:53.160 It's one way, like hit this morning, redhead, the stock 0:22:53.180 --> 0:22:55.780 goes bananas, and I thought we should get it in. 0:22:56.060 --> 0:22:58.940 But there is a lot happening in private markets as well. 0:22:59.420 --> 0:23:03.169 AI cloud startup Modal has closed a $ 750 million Series 0:23:03.210 --> 0:23:07.850 D fundraise, bringing its post-money valuation to $ 15. 75 billion. So 0:23:07.890 --> 0:23:10.930 Modal says it's seen tremendous growth over the past year, 0:23:11.390 --> 0:23:15.010 pointing to examples like the more than 3 billion sandboxes 0:23:15.410 --> 0:23:19.060 it has run for customers. Delighted to say that Modal's CEO, 0:23:19.500 --> 0:23:23.020 Eric Van Hudson, is with us. Let's talk the round. 0:23:23.040 --> 0:23:26.570 It had been in the press a little bit earlier 0:23:26.590 --> 0:23:30.600 and clearly a lot of momentum. The basics of why 0:23:30.630 --> 0:23:35.430 you needed to raise capital and what you'll do with it. Yeah, 0:23:35.520 --> 0:23:36.380 and thanks for having me. 0:23:36.700 --> 0:23:39.020 We see so much demand coming from so many different 0:23:39.080 --> 0:23:43.240 types of companies. There's really some incredible AI applications getting built, 0:23:43.359 --> 0:23:46.400 and I really think we've entered a new era of software. 0:23:46.420 --> 0:23:49.580 There's so many new capabilities that this new software enables 0:23:49.640 --> 0:23:51.740 us to do, and we provide a lot of those 0:23:51.800 --> 0:23:53.760 building blocks, and you really kind of need a new 0:23:53.800 --> 0:23:56.400 set of building blocks for all these phases, whether that's 0:23:56.630 --> 0:23:59.590 in this phase, we're talking about inference and training and 0:23:59.650 --> 0:24:02.129 sandboxes and a lot of these building blocks are to 0:24:02.170 --> 0:24:04.710 power this new set of AI applications. And that's where 0:24:05.050 --> 0:24:07.070 there's just so much demand. And we're raising money right 0:24:07.090 --> 0:24:10.880 now to invest in really growing faster, launching new products, 0:24:10.980 --> 0:24:12.320 and getting a lot of capacity. 0:24:13.840 --> 0:24:18.160 The three billion sandboxes. Could you just explain the basics 0:24:18.200 --> 0:24:19.470 of what we're talking about there? 0:24:20.840 --> 0:24:24.300 Yeah, so sandboxes is something we started building actually three 0:24:24.340 --> 0:24:26.679 years ago. We started seeing a lot of companies explore 0:24:26.760 --> 0:24:28.680