Intel Rebuffs Arm, China Tech Stocks Soar | Bloomberg Technology
>> THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. CAROLINE: LIVE FROM NEW YORK AND SAN FRANCISCO, THIS IS BLOOMBERG TECHNOLOGY. INTEL TURNS DOWN ARM'S ADVANCES. ED: CHINA STOCKS SAID FOR THEIR BEST WEEK SINCE 2022.
CAROLINE: WANTING THE U.S. AI EFFORTS TO EXPAND, EVEN WITH FOREIGN INVESTMENT. WE BRING HER PERSPECTIVE. FIRST, THE LATEST CHIPS STORY. ARM APPROACHING INTEL ABOUT
POTENTIALLY BUYING THE CHIPMAKER'S PRODUCT DIVISION ONLY TO BE TOLD THAT THE BUSINESS IS NOT FOR SALE. WAITING OUT THAT ARM DID NOT EXPRESS INTEREST IN MANUFACTURING. ARM AND INTEL DECLINED THE COMMENT. LET'S BREAK IT DOWN. THE RATIONALE HERE FOR A
COMPANY THAT DESIGNS CHIPS IS, WHAT? MANDEEP: ARM, THEY PROVIDE THE IP. THEY DON'T DESIGN OR MANUFACTURE THEIR CHIPS. INTEL HAS A LOT OF IP IN THE COMPANY.
IT IS TIED TO THE ARCHITECTURE. ARM HAS A DIFFERENT ARCHITECTURE. WHEN YOU THINK ABOUT ANY OTHER BUSINESS THAT IS ADJACENT, ARM MIGHT BE INTERESTED IN ACQUIRING SOME OF THAT INSTRUCTION SET OR SOMETHING AROUND THOSE LINES. THAT WOULD BE MY GUESS. ED: WE REITERATE ACCORDING TO THIS BLOOMBERG SOURCE, ARM'S APPROACH TO INTEL WAS REBUFFED. QUALCOMM HAS HAD SUCCESS TO ARM-BASED PROCESSORS. I NOTED YOUR COLLEAGUES HAD
INTERESTING RESEARCH OVERNIGHT THAT LET'S SAY THAT INTEL GETS EVEN DEEPER INTO DISTRESS AND START LOOKING AT OPTIONS. HOW IS ARM GOING TO FINANCE SUCH A THING? MANDEEP: LOOK AT ARM'S VALUATION, ALMOST 50% ABOVE THE INTEL MARKET CAP. WHEN YOU DO THIS, INTEL HAS A LOT MORE BUSINESSES THAT THEY COULD DIVEST, BUT IN THE CASE OF ARM, THEIR STOCK IS CURRENTLY AT CURRENTLY THE BEST PREMIUM WITHIN THE SEMI SPACE. IT COULD BE STOCK. I IMAGINE IT WILL BE A BUYOUT. SOME OF THE PORTION OF INTEL'S BUSINESS -- CLEARLY, WE ARE TALKING ABOUT A SMALLER PIE WITHIN INTEL THAT ARM IS INTERESTED IN. IN THE CASE OF QUALCOMM, THEY WERE INTERESTED, BASED ON THE RUMORS, AND THE BULK OF INTEL'S BUSINESS. IT IS A DIFFERENT TRANSACTION
IF YOU ARE LOOKING AT ARM VERSUS QUALCOMM. CAROLINE: ALL OF THIS THUS FAR HAS BEEN PEOPLE FAMILIAR WITH THE QUALCOMM, AS YOU CALL IT RUMOR WE CALL IT REPORTING. I AM INTERESTED MORE IN HOW ARM BENEFITS IN ANY SCENARIO OR NOT AS THE CASE MAY BE. WHAT IF INTEL WENT WITH QUALCOMM, FOR EXAMPLE? MANDEEP: IN THE CASE OF ARM, THEY ARE AT A RUN RATE. WHEN YOU LOOK AT NVIDIA BUILT ON ARM DESIGNS. CLEARLY, ARM HAS TO FIND A WAY TO EXPAND INTO ADJACENT CATEGORIES WITHOUT COMPETING WITH THEIR CUSTOMERS, WHICH IN THIS CASE ARE NVIDIA AND APPLE.
THAT IS WHERE I THINK THE IP BLOCKS ARE PROBABLY THE RIGHT WAY FOR THEM TO EXPAND INTO NEW CATEGORIES. I DON'T THINK THEY ARE GETTING INTO DESIGN OR CHIP MANUFACTURING. THAT WON'T BE VERY WELL RECEIVED IN THE MARKET. ED: INTEL, 70% OF REVENUE PRODUCT, ABOUT 30% MANUFACTURING. THERE IS A PLAN OUTLINED. WHAT DOES BLOOMBERG INTELLIGENCE MAKE OF THAT PLAN? MANDEEP: NOT ALL THE PIECES OF THE PLAN ARE VIABLE.
THAT IS WHERE DOING FOUNDRY MANUFACTURING FOR CHIPS THAT ARE OUTSIDE OF INTEL IS SO HARD. EVERYONE HAS THE PERCEPTION THAT INTEL WILL END UP COMPETING WITH THEIR CUSTOMERS. THAT IS WHY THE LIKES OF NVIDIA OR ANY CHIPMAKER, IT IS HARD TO CONVINCE THEM TO USE INTEL. THAT IS WHERE THE FOUNDRY BUSINESS IS WHERE THE STRUGGLES ARE. I THINK THE PC BUSINESS WILL COME BACK BECAUSE X86 STILL HAS A MOAT AND THEN THERE IS A REPAIR BUSINESS. I AM BETTING ON THE PC SIDE. WE HAVE TO CATCH UP ON THE
SERVER AND FOUNDRY SIDE. THEY REALLY NEED TO PARTNER WITH HYPER SCALARS TO IMPROVE THE MARGIN PROFILE OF THAT BUSINESS. ED: MANDEEP SINGH, THANK YOU VERY MUCH.
STICKING WITH SEMI CONDUCTORS, TOKYO ELECTRON SEEKS TO BUILD A TEAM OF CHIP ENGINEERS IN INDIA TO BETTER RIDE THE MODI'S GOVERNMENT PUSH TO MANUFACTURING. IN AN EXCLUSIVE INTERVIEW THE TOKYO ELECTRON CEO SAYS THAT THE COMPANY PLANS TO HIRE AND TRAIN LOCAL ENGINEERS AROUND 2026, WITH THE FIRST TASK TO PROVIDE TECHNICAL SERVICES. HE ALSO SPOKE ABOUT WHERE HE SEES AI DEMAND GOING IN YEARS TO COME. LISTEN TO THIS. >> I THINK THE MARKET HAS JUST CROSSED THE THRESHOLD OF THE SECOND PHASE OF AI. OUR PROJECTION IS OVERALL CHIP
DEMAND WILL DOUBLE IN THE NEXT FIVE YEARS TO $1 TRILLION IN 2030, BOOSTED BY ARTIFICIAL INTELLIGENCE AS WELL AS AUGMENTED REALITY, VIRTUAL REALITY, AND AUTONOMOUS DRIVING. CAROLINE: CHINESE EQUITIES CAPPED THEIR BIGGEST WEEKLY RALLY SINCE 2008 WITH A BURST OF TRADING THAT OVERWHELMED THE SHANGHAI STOCK EXCHANGE UNDERSCORING A SHIFT IN INVESTOR SENTIMENT. AFTER BEIJING RAMPED UP ITS ECONOMIC STIMULUS. THE SHIFT IS FELT IN CHINA
STOCKS IN THE U.S. AS WELL WHERE THEY ARE SET FOR THEIR BEST WEEK SINCE 2022. BLOOMBERG'S EMILY GRAFFEO JOINS US FOR MORE. WE ARE SEEING REAL RISK ON. IS THERE A FOMO TRADE GOING ON? EMILY: THERE IS. A LOT OF THE U.S. CHINESE STOCKS ARE STILL IN
NEGATIVE TERRITORY ON A 1, 3, AND 5-YEAR BASIS. IT IS NEGATIVE TERRITORY, BUT THIS WEEK HAS BEEN AN INCREDIBLE WEEK. YOU HAVE DAVID TEPPER SAYING THAT HE'S GOING LONGER ON CHINA STOCKS AFTER THE MONETARY AND FISCAL STIMULUS. HE SAYS THAT HE IS SNAPPING UP
SHARES OF ALIBABA. VALUATION STILL LOW EVEN AFTER DOUBLE-DIGIT GAINS IN THESE STOCKS. ONE OF THE MOST READ STORIES, HEDGE FUNDS AND CHINA THAT SHORTED INDEX FUTURES HAVE SEEN HEAVY LOSSES THIS WEEK. IF YOU LOOK AT THE CHART OF THE CSI 300 INDEX AND WHAT IT HAS DONE, LITERALLY A VERTICAL LINE UP.
THAT HAS REALLY HAMMERED THESE WANT HEDGE FUNDS THAT HAS BEEN GOING SHORT. IT HAS BEEN AN INCREDIBLE WEEK. VERTICAL LINE. ED: THAT IS CRAZY. LOOK AT THAT INDEED. BLOOMBERG TECHNOLOGY LOVES CHARTS. EMILY GRAFFEO LOVES CHARTS. WHY IS IT SO CRAZY? WHAT ARE THE FACTORS BEHIND THE VOLATILITY TO THE UPSIDE IN THIS CASE? EMILY: EARLIER THIS WEEK, WE HAD THE CHINESE GOVERNMENT COMING IN, FINALLY, AFTER REFUSING TO BRING IN STIMULUS. THEY BROUGHT IN STIMULUS NOT ONLY ON THE FISCAL SIDE BUT ON THE MONETARY SIDE. IT CONTINUED ALL WEEK.
EARLIER IN THE WEEK WE HAD SEEN THE CHINESE CENTRAL BANKS PULLBACK THE RESERVE REQUIREMENTS FOR BANKS. ON THE MONETARY AND FISCAL SIDE, IT WAS A STIMULUS THAT INVESTORS HAD BEEN NOT SEEING ALL YEAR. THAT IS WHY YOU HAD SEEN THOSE STOCK MARKET LOSSES ALL YEAR. NOW WHEN YOU LOOK AT THE CSI 300, THE MAINLAND SHARES HAVE ERASED ALL OF THE LOSSES FOR THE YEAR. IT HAS ALL-AROUND BEEN INVESTORS REACTING TO THE MACRO NEWS. NOW, IT SEEMS LIKE THERE IS A MOMENTUM TRADE AS THE QUANT HEDGE FUNDS WERE SHORT GET KICKED OUT.
THAT CHART SPEAKS FOR ITSELF ABOUT THE MOMENTUM. WE WILL HAVE TO SEE IF IT CONTINUES. THERE HAVE BEEN SOME SURPRISE RALLIES THAT DON'T ALWAYS HOLD UP AND THE MARKETS ARE OFF NEXT WEEK FOR THE HOLIDAY. CAROLINE: GREAT CONTEXT. ALSO CONTEXT, RETAIL INVESTORS ARE INTERESTING IN THE CHINESE SPACE. EMILY: THEY HAVE BEEN CRUSHED GOING BACK TO THE FLOWS.
THE TICKER FOR THE BLACKROCK CHINA ETF, WE HAVE SEEN FLOWS INTO AND OFTEN THE FLOWS FOLLOW THE PERFORMANCE. PEOPLE SEE THESE BIG RALLIES AND THEN THEY FLOW IN AND MISS THE TOP OF THE TRADE. WE HAVE SEEN THIS HAPPEN IN THIS PARTICULAR ETF OVER THE YEARS. IT IS STILL DOWN ON THE
TWO-YEAR, FIVE-YEAR BASIS.A LOT OF INVESTORS HAVE BEEN IN THE TRADE FOR A WHILE STILL FEELING LIKE THIS IS NOT GOOD ENOUGH. ED: BLOOMBERG'S EMILY GRAFFEO BRINGING US CRAZY CHARTS. THANK YOU. HAPPY FRIDAY. I WANT TO KEEP THE DISCUSSION
GOING. IT IS KIND OF A SIMPLE STORY. THE CHINESE GOVERNMENT SAYS STIMULUS. THOSE MORE DOWNTRODDEN CONSUMER-FACING CHINESE TECHNOLOGY COMPANIES REACT, PARTICULARLY THE ADRS. HOW MANY PHONE CALLS HAVE YOU HAD ACROSS YOUR DESK ABOUT CHINA AND THAT CORNER OF THE MARKET? >> THAT HAS BEEN THE MAIN STORY THIS WEEK.
IT HAS FOLLOWED ON AS WELL FROM THE FEDERAL RESERVE THE PREVIOUS WEEK. WE HAVE QUICKLY SWUNG ATTENTION OVER TO CHINA. ADRS, WE HAVE SEEN PHENOMENAL MOVES. WE HAVE SEEN SOME REALLY STRONG MOVES IN THE MARKETS. INVESTORS HAVE BEEN CAME TO PICK UP ON THOSE, ESPECIALLY GIVEN THE DOWNBEAT MOOD THEY HAD BEEN TOWARDS CHINA PRIOR TO THIS WEEK. THERE HAS BEEN THE SENSE THAT
BEIJING WAS NOT GOING TO GET ITS ACT TOGETHER TO REALLY PULL OUT THE BAZOOKA-SIZED STIMULUS THAT THE MARKET WAS LOOKING FOR. THIS WEEK, WE GOT A SENSE THAT PERHAPS THAT'S GOING TO BE HAPPENING. THAT IS WHAT WE'VE SEEN. THE QUESTION HERE IS, IS THIS A STABILIZATION MOVE OR SOMETHING THAT WE ARE GOING TO SEE? THE CHINESE AUTHORITIES SUPPORTING THIS THROUGH THE YEAR? ED: IF YOU'RE JUST JOINING US ON BLOOMBERG TECHNOLOGY, OUR TOP STORY IS A BLOOMBERG REPORT THAT ARM MADE AN APPROACH TO INTEL THAT INTEL REBUFFED. ALL ACCORDING TO A SINGLE SOURCE. WHEN YOU WOKE UP TO THAT NEWS WHAT WAS YOUR REACTION? FIONA: INTEL HAS DEFINITELY BEEN IN THE NEWS THIS WEEK. WHILE THIS IS A STOCK THAT IS REALLY IN THE DOLDRUMS, HAS BEEN STRUGGLING, IT HAS BEEN APPROACHED BY SEVERAL SUITORS. THIS IS JUST THE LATEST. IT
SEEMS A LITTLE MURKY AND UNKNOWN WHERE THIS MIGHT BE GOING. AS FAR AS WE KNOW, IT'S NOT MOVING FORWARD YET. I THINK IF WE CONSIDER WHAT HAS HAPPENED TO THE VALUATION OF INTEL, IT IS DOWN IN THE DUMPS RIGHT NOW AND IT DOESN'T LOOK LIKE THE TURNAROUND PLAN IS GOING TO DO THE JOB HE NEEDS TO. IT DOES MEAN INTEL REMAINS VULNERABLE. CAROLINE: WE ARE SHOWING A YEAR TO DATE CHART DOWN 52%.
IT IS EXTRAORDINARY THAT THE ICON, ONE OF THE ICONS OF TIP--- ICONS OF CHIP-MAKING WOULD EVER BE DISCUSSED AS A MERGER. HOW SHARP IS THAT ON YOUR INVESTOR'S MINDS THAT THE CURRENT MOVE OF AI IS SO SWIFT YOU HAVE TO BE ON TOP OF IT? FIONA: THAT IS A GOOD POINT. IF WE THINK ABOUT WHERE INTEL WAS COMPARED TO ITS PEERS, IT WAS ALWAYS THE RIDING HIGH STRONG HORSEMAN. THAT IS NO LONGER THE CASE AND IT HAS BEEN A RELATIVELY RAPID DECLINE THIS YEAR. 50% OF ITS VALUE LOST. AT THE SAME TIME, WE HAVE SEEN A HUGE RALLY IN THE VALUATIONS OF THOSE MORE AI-FOCUSED STOCKS HIGHLIGHTING THE POINT THAT THIS AI TRADE IS RAPID MOVING.
YOU HAVE TO BE ON THE BALL WITH IT. INTEL HAS LOST THE EDGE AS FAR AS THE TECH AND IS CONCERNED. IT IS LOSING THE BALL AND THAT HAS NOT HELPED THE SHARE PRICE. CAROLINE: DO YOUR CLIENTS WANT A SINGLE NAME EXPOSURE, TO BE STOCK PICKERS? OR DO THEY WANT TO BE BROADER SO THEY DON'T GET CALLED OUT IF THE WIND TURNS? FIONA: WE HAVE SEEN A LOT OF PREFERENTIAL PREFERENCE TOWARDS INDEX STOCK -- INDICES JUST FOR THAT REASON.
IN ORDER TO BE ABLE TO MITIGATE RISK. THERE IS A CONCERN OF BEING CAUGHT OUT. THERE ARE FAVORITES WHERE OUR INVESTORS ARE HAPPY TO GO INTO SINGLE STOCKS, BUT BROADLY SPEAKING THERE HAS BEEN MORE OF A FOCUS ON INDICES. THAT ALLOWS FOR WHEN WE MOVE
TOWARDS ROTATIONS. PARTICULARLY WITH WHAT IS GOING ON WITH CHINA THIS WEEK, AND WHAT WE'VE SEEN OVER CONCERNS IN THE U.S. PREVIOUSLY ABOUT MOVING TOWARDS A POTENTIAL HARD LANDING WITH A WEAKER THAN EXPECTED JOBS DATA AT THE START OF THE SUMMER, THE IDEA THAT WE MIGHT SEE ROTATION. IF YOU ARE IN AN INDEX, THAT ALLOWS YOU TO BENEFIT FROM THOSE ROTATIONS OUT OF TECH INTO EMS OR OUT OF TECH INTO MORE DEFENSIVE STOCKS IF WE FIND THAT THE DATA GOES THE WRONG WAY. CAROLINE: WELL, DATA IS GOING THE RIGHT WAY ON CPI. THANK YOU FOR JOINING US.
COMING UP, GERMANY'S LARGEST COMPANY'S MORAL IS PLUNGING AS CAROLINE: AN INTERNAL SURVEY SHOWS HOW MORALE HAS PLUNGED AT GERMANY'S MOST VALUABLE COMPANY, SAP. ONLY 38% OF EMPLOYEES HAVE FULL TRUST IN THE SOFTWARE FIRM. YOU WOULD NEVER KNOW IT AS A SHAREHOLDER. THE STOCK HAS SURGED TO A RECORD HIGH. WHAT IS GRINDING ON THE EMPLOYEES, JAKE? JAKE: PART OF WHAT SENT SHARES SOARING IS THE FACT THAT THEY HAVE A MASSIVE RESTRUCTURING PLAN GOING ON AT SAP. THAT WILL AFFECT ABOUT ONE IN 10 WORKERS.
YOU CAN IMAGINE IF YOU'RE BEING FORCED TO BE EITHER RE-TRAINED OR POTENTIALLY LAID OFF, YOU WOULD NOT BE THINKING THAT THE MANAGEMENT IS DOING A GREAT JOB. THIS IS THE LOWEST -- WE HAVE BEEN TRACKING THIS NUMBER FOR ABOUT THREE YEARS, AND THIS IS THE LOWEST INSIDE OF 2021. IT'S CLEAR THAT EMPLOYEES ARE QUITE WORRIED ABOUT THEIR FUTURE AT SAP DESPITE REALLY HIGH SHARE PRICE. ED: THE RESTRUCTURING WAS ANNOUNCED IN JANUARY. LIKE ALL SOFTWARE COMPANIES AROUND THE WORLD, IT IS A PRIVET TO AI. IT MIGHT BE A CULTURAL
DIFFERENCE -- A PIVOT TO AI. IT MIGHT BE A CULTURAL DIFFERENCE. IF THE STOCK IS DOING WHAT WE ARE SHOWING ON THE SCREEN AREN'T EMPLOYEES HAPPY BECAUSE THEY ARE GOING ALONG FOR THE RIDE? JACK: THIS IS A SURVEY OF THE RANK-AND-FILE EMPLOYEES. I THINK THAT A LOT OF THESE GUYS ARE NOT REALLY GETTING MUCH IN THE WAY OF COMPENSATION FROM THE SHARE PRICES. THAT ALSO I IMAGINE WOULD INFLUENCE HOW THEY FEEL ABOUT THE COMPANY. MAYBE THEY SEE THE SHARE PRICE
SOARING AND THINK, WHY AM I NOT GETTING A RAISE? ED: GREAT TO HAVE YOU ON FROM GERMANY. THANK YOU VERY MUCH. COMING UP, THE U.S. ENERGY SECRETARY GIVES THE OK FOR U.S. AI EXPANSION EVEN FROM FOREIGN INVESTMENTS. THAT CONVERSATION WITH HER IS COMING UP NEXT. THIS IS BLOOMBERG TECHNOLOGY.
♪ CAROLINE: ON THURSDAY, I CAUGHT UP WITH THE ENERGY SECRETARY IN WASHINGTON AT A CONFERENCE HOSTED BY THE SPECIAL COMPETITIVE STUDIES PROJECT. I ASKED ABOUT SAM ALTMAN'S EFFORTS TO RAISE A LOT OF MONEY OVERSEAS FOR COSTLY AI INFRASTRUCTURE PROJECTS IN THE UNITED STATES AND IF THERE SHOULD BE ANY CONCERNS. HERE'S WHAT SHE HAD TO SAY. >> I THINK IT'S IMPORTANT TO HAVE -- WHAT IS THE ACCESS, I GUESS, FOR THOSE FUNDING TO VERY SENSITIVE IP, RIGHT? THESE ADVANCED CHIPS ARE -- THE GP USE FOR AI CAN BE USED FOR VARIETY OF THINGS -- GPUS FOR AI CAN BE USED FOR VARIETY OF THINGS. DOES THAT MEAN THAT YOU GET ACCESS TO THE IP AS FUNDER? WE WANT DATA CENTERS BUILT IN THE U.S.. HOWEVER THEY GET FUNDED, AS
LONG AS THERE ARE BOUNDARIES, I THINK IT'S PERFECTLY FINE. CAROLINE: I FOLLOWED UP BY ASKING IF THERE IS ANY MORE REGULATION OF AI IN GENERAL NEEDED. >> IT IS ABOUT NATIONAL SECURITY BUT ALSO ABOUT COMPETITION. WE WANT TO LEAD THE WORLD IN AI. AND WE ARE AND WE WANT IT TO STAY THAT WAY. WE DON'T WANT TO CREATE
CONSTRAINTS ON THAT. HOWEVER, WE RECOGNIZE UN -CONSTRAINED AI COULD BE USED IN A VERY NEGATIVE WAY. WE WANT TO CHANNEL THAT IN THE RIGHT DIRECTION. ED: STICKING TO HARDWARE AND AI, META UNVEILED NEW MODELS OF ITS HEADSET AND CONNECT AND ITS AUGMENTED REALITY GLASSES CALLED ORION. I SAT DOWN WITH THE META CFO AND HOW THEY PLAN TO EXPAND ON IT.
>> WE HAVE THE NEXT TWO PRODUCTS IN DEVELOPMENT BASED ON THE TECHNOLOGY WE BUILT FOR ORION. WE THINK THAT THIS IS PROOF OF HOW EXCITING THE FUTURE IS GOING TO BE AS THESE TECHNOLOGIES BECOME CONSUMER READY. ED: YOU MAY OR MAY NOT GUESS THAT THAT IS PART OF THE ORIGIN STORY. MY UNDERSTANDING IS THAT THIS IS A FUTURE BEHAVIORAL CHANGE THAT HUMANS HAVE TO MAKE. RIGHT NOW I HAVE A SMART PHONE AND A LAPTOP. THAT IS THE PRICE POINT YOU WANT TO COME IN AT. OH RYAN OR ITS NEXT-GENERATION
SIBLING WILL BE PRICED AS A HIGH-END LAPTOP PC. WHAT IS THAT PRICE POINT? GIVE ME SOMETHING HERE. WILL I BE COMING BACK IN 10 YEARS AND FINALLY LOOKING AT IT IN A CONSUMER FORM? IS IT SOMETHING MORE REAL THAN THAT? >> LONG BEFORE 10 YEARS. WE ARE MORE THAN ONE YEAR AWAY LESS THAN 10 YEARS AWAY, BUT WE HAVE A VERY CLEAR LINE OF SIGHT TO A CONSUMER PRODUCT. THE PRICE IS NOT CLEAR FOR US YET. ONE THING IS UNDERSTANDING WHAT WE CAN LEARN THAT ALLOWS US TO SIMPLIFY OR WHAT WE NEED TO KEEP IN FUTURE DESIGNS. THAT WILL CONTROL WHERE THE
PRICE LANDS. WE WANT TO GET THIS INTO A PRICE POINT THAT NOT ONLY CONSUMERS USE IT BUT DEVELOPERS WANT TO BUILD FOR IT. ED: THE BREAKTHROUGH IN TECHNOLOGY IS IN MATERIAL THAT ALLOWS FOR ALL OF THIS IN THE LENSES.
HOW DOES THE SUPPLY CHAIN LOOK FOR SOMEONE WHO WANTS TO DO CONSUMER TECH? >> IT WAS THE FIRST PLACE THAT WE LOOK FOR SUPER HIGH INDEX LAST THAT IS REFRACTIVE. THAT IS IMPORTANT FOR FOR WHAT WE DO WITH THESE LENSES. IT IS A DIFFICULT MATERIAL TO PRODUCE AND WORK WITH SO WE ARE LOOKING AT DIFFERENT MATERIALS TO REPLICATE THIS FUNCTIONALITY AT A HOPEFULLY MORE COMPETITIVE PRICE POINT. ED: THAT WAS THE META CTO. WE WILL BE BACK FROM NEW YORK CITY AND SAN FRANCISCO, THIS IS BLOOMBERG TECHNOLOGY. CAROLINE: WELCOME BACK TO "BLOOMBERG TECHNOLOGY." I AM CAROLINE HYDE IN NEW YORK.
ED: I AM ED LUDLOW IN SAN FRANCISCO. CAROLINE: WE HAVE HAD A STRONG WEEK. NOT ONLY FOR THE NASDAQ BUT SOME RISK ASSETS. BITCOIN ON FIRE. UP ANOTHER 5% ON THE WEEK. WE ARE SEEING THE HIGHS FOR THE NASDAQ, THREE STRAIGHT WEEKS OF GAINS. MICROSTRATEGY'S ON THE HIGH
SIDE WITH CRYPTO. A REALLY GOOD MONTH OF SEPTEMBER. THE BIGGEST MOVE FOR THESE ADRS TRADED IN THE UNITED STATES. ALL OF THAT MONEY BEING PUMPED INTO THE CHINESE ECONOMY MEANS GOOD NEWS FOR THE CHINESE STOCKS. INTEL ON THE DOWNSIDE, DOWN .4%. BEING SNIFFED AROUND BY VARIOUS
COMPETITORS. INTEL CURRENTLY TO THE LOWER SIDE. ED: LET'S GO TO ANOTHER TOP STORY OUT OF EUROPE. A $4 BILLION INVESTMENT PACT WAS CLEARED BY THE U.K.'S MARKETS AUTHORITY WHICH HAS BEEN INCREASINGLY HAWKISH ON BIG TECH. LET'S GO TO THE TECH EDITOR IN LONDON, AMY THOMPSON.
WHAT WAS THE REASONING? AMY: IT WAS BASICALLY ANTHROPIC THIS NOT HAVE ENOUGH OF A MARKET IN THE U.K. TO HAVE JURISDICTION. WE HAVE SEEN THIS WITH A FEW CASES THAT HAVE TAKEN ON WHERE THEY LOOKED AT MICROSOFT INFLECTION, FOR EXAMPLE, AND CAME TO A SIMILAR CONCLUSION. THEY HAVE HAD A LOOK AT THESE BIG TECH/AI DEALS BUT THERE IS NOT A LOT OF REGULATION HAPPENING. CAROLINE:
THAT IS A THEME. AMAZON'S INVESTMENT IS BEING CONSIDERED BY THE FTC. HOW MUCH IS IT GIVING THE BIG TECH COMPANIES PAUSE? AMY: IT IS WHAT WE HAVE SEEN FROM REGULATORS IN THE U.K., THE U.S. AND EUROPE. THE DOMINANCE THESE BIG TECH PLATFORMS HAVE IN THE LATEST ITERATION IS WHAT THE CMA CALLED A WEB OF CONNECTIONS WITH SOME OF THESE BUZZY AI STARTUPS AND IF ALL THE CONNECTIONS WE ARE SEEING, MICROSOFT-OPENAI IS HURTING THE MARKET. I DO NOT KNOW IF WE HAVE SEEN
ANYONE LAND A BLOW ON BIG TECH. THE FTC HAS NOT GIVEN AN UPDATE SINCE JANUARY. THE U.K.'S INVESTIGATION INTO THE GOOGLE ANTHROPIC RELATIONSHIP WOULD APPEAR TO BE BASED ON THE SAME PREMISE AS THE AMAZON ONE. THE E.U. HAD TO LET THE OPENAI-MICROSOFT DEAL GO, AS WELL, BECAUSE IT DID NOT QUALIFY AS A MERGER. I DO NOT THINK THEY REALLY
LANDED A BLOW. ED: IT BEGS THE QUESTION ABOUT THE PIPELINE FOR DEALS. WHAT IS IN THE PIPELINE? AMY: WHAT IS IN THE PIPELINE FOR DEALS? I THINK IF YOU ARE A STARTUP IN EUROPE, FOR EXAMPLE, YOU ARE NOT SAD TO SEE RESULTS LIKE THIS. YOU ARE HAPPY TO SEE BIG COMPANIES COME INTO THROW THEIR WEIGHT AROUND AND GIVE YOU BILLIONS IN INVESTMENT AND GIVE YOU ACCESS TO CHIPS. IT DOES LEAVE US WITH THE SAME PROBLEM OUT IN THE U.K.
AND EUROPE THAT WE HAVE HAD FOR A WHILE. OUR TEXT SEEN IS STILL DOM -- OUR TECH SCENE IS STILL DOMINATED BY BIG U.S. PLAYERS. CAROLINE: FIVETRAN, A DATA MOVEMENT COMPANY, IS ANNOUNCING ITS UNSURPASSED $300 MILLION IN ANNUAL RECURRING REVENUE. THEY ARE STRIKING NEW DEALS AND RELATIONSHIPS. GEORGE FRASER DEALS US -- JOINS US NOW. WHAT DO YOU DO? GEORGE: VERY NICE TO BE WITH YOU.
OUR CUSTOMERS ARE BUSINESSES THAT USE TOOLS LIKE SALESFORCE, AZURE, WORKFORCE, TOOLS TO RUN THEIR BUSINESSES. FIVETRAN GATHERS THE DATA INTO ONE PLACE AND USES THAT TO HELP THEM UNDERSTAND HOW CUSTOMERS ARE USING THEIR PRODUCT, CUSTOMIZE SUPPLY CHAINS. THE CRUX OF WHAT FIVETRAN DOES IS IT GETS ALL YOUR DATA IN ONE PLACE. CAROLINE: THAT IS PRETTY HELPFUL FOR LARGE LANGUAGE MODELS.
HOW DOES IT BENEFIT OPENAI? GEORGE: THEY ARE A VERY COMPREHENSIVE USE CASE. WE CENTRALIZE DATA IN ALL ASPECTS OF OPENAI'S BUSINESS FROM A LOT OF SOURCES. THEY USE IT TO UNDERSTAND HOW PEOPLE ARE USING THEIR PRODUCTS AND GUIDE THE NEXT GENERATION OF PRODUCT DEVELOPMENT. ED: GEORGE, WHICH LEADER AT OPENAI DID YOU NEGOTIATE THE PARTNERSHIP WITH? GEORGE: WE WORK WITH A LOT OF PEOPLE AT OPENAI.
SOMETIMES IT IS HARD TO TELL WHO IS -- A JOKE THAT I AM THE CHIEF CUSTOMER SERVICE AGENT. I AM THERE EVERY WEEK. THERE IS A LOT OF PEOPLE AT OPENAI WHO WE WORK WITH. I DO NOT KNOW WHICH ONE I WOULD NAME. ED: THE REASON I ASK IS YOU EXPLAINED HOW THE CONTRACTUAL RELATIONSHIP WORKS AND HOW THE DATA WORKS BUT AS YOU HAVE SEEN THE REPORTING, THERE IS CONSIDERATION ABOUT THE TRANSFER FROM A NONPROFIT WITH A FOR-PROFIT SUBSIDIARY TO A B CROP -- B CORP. AS A COMPANY DOING BUSINESS
WITH OPENAI, WHAT DO YOU THINK? GEORGE: WE WILL CONTINUE TO HAVE A RELATIONSHIP. THEY ARE A GREAT COMPANY WITH A COMPLICATED HISTORY. THEIR PRODUCT TOOK OFF SO EXPLOSIVELY.
WE WERE REPLICATING DATA FOR THEM BACK THEN. WE SAW THEIR ACCOUNT GO TO THE MOON. IT IS EXCITING. THERE IS SOME DRAMA THAT HAS COME WITH IT.
FROM WHERE I SIT, THE PEOPLE I INTERACT WITH ARE NAVIGATING IT VERY WELL. CAROLINE: WHAT OTHER ACCOUNTS ARE GOING TO THE MOON? SIX GEORGE: SOME BIG CUSTOMERS. FOR EXAMPLE, LVMH. WE WERE JUST TALKING ABOUT WHAT
WAS GOING ON IN EUROPE. LVMH IS A BIG CUSTOMER. THEY ARE MOSTLY CENTRALIZING DATA FROM SAP IN ORDER TO DO SUPPLY CHAIN OPTIMIZATION. THAT IS ANOTHER GREAT EXAMPLE OF A BIG CUSTOMER RIGHT NOW. ED: [LAUGHTER] COVERING THAT COMPANY DURING THE SHOW TODAY. ON YOUR GROWTH, IT IS YEAR ON YEAR QUITE A JUMP. WHAT DID YOU HAVE TO DO TO GET THERE? A BIG HIRING EFFORT ON THE SALES TEAM? WHAT IS THE COST OF THE REVENUE GROWTH? GEORGE: LIKE A LOT OF TECHNOLOGY COMPANIES WE HAVE DISCOVERED AND REDISCOVERED EFFICIENT GROWTH.
FIVETRAN HAS NOT GROWN A TON IN THE LAST FEW YEARS. WE HAVE BEEN ABLE TO GROW THE REVENUE AND THE NUMBER OF CUSTOMERS AND DO MORE WITH MORE OR LESS THE SAME AMOUNT OF PEOPLE AT THE COMPANY. IT IS A LOT OF HARD WORK FOR THE TEAM, A LOT OF WORD-OF-MOUTH IN THE MARKET THAT FIVETRAN WORKS, FIVETRAN SOLVES WHAT CAN BE AN UGLY PROBLEM FOR COMPANIES, GETTING ALL THE DATA WRANGLED TOGETHER. CAROLINE: A LOT OF PEOPLE WILL UNDERSTAND THE HARD THING IS TO UNDERSTAND HOW LONG THE CUSTOMERS ARE LOCKED IN AND HOW REPEATABLE THE GROWTH IS.
WITH THIS RUN RATE, DO YOU THINK IT WILL INCREASE AT A SIMILAR LEVEL? GEORGE: THE MARKET FOR WHAT WE DO IS ENORMOUS. MOST DATA CENTRALIZATION IS DO IT YOURSELF. IT IS NOT MOSTLY OTHER COMPANIES WE COMPETE WITH IT IS INTERNAL PIPELINES PEOPLE BUILD THEMSELVES AND CONVINCING THEM THEY DO NOT HAVE TO DO THAT ANYMORE. THE TOTAL MARKET FOR CENTRALIZING DATA THE WAY WE DO
IS TENS OF BILLIONS OF DOLLARS. IN PRINCIPLE WE HAVE THE ABILITY TO GROW AT A HIGHER RATE FOR DECADES. THERE ARE CHALLENGES, THERE ARE THINGS WE NEED TO MAKE BETTER ABOUT OUR PRODUCTS AND THINGS WE NEED TO EXECUTE BETTER ON BUT WE BELIEVE THE FEELING -- THE CEILING FOR US IS VERY HIGH. ED: GEORGE FRASER, CEO OF FIVETRAN, WE APPRECIATE YOU BEING ON "BLOOMBERG TECHNOLOGY." COMING UP, OUR CONVERSATION WITH AN TECH ENTREPRENEUR AND HIS LATEST INVESTMENT IS IN THE FIELD OF SPORTS. THAT IS NEXT. THIS IS "BLOOMBERG TECHNOLOGY." ♪
WILL BE LIVE OCTOBER 9 AND OCTOBER 10 IN LOS ANGELES. THIS IS BLOOMBERG. ALEXIS OHANIAN, YOU KNOW HIM AS AN ENTREPRENEUR, TECH TITAN AND INVESTOR AND A HEAVY SUPPORTING FEMALE ATHLETES.
ONCE INVESTED IN ANGEL CITY FOOTBALL CLUB AND NOW BETTING BIG ON PROFESSIONAL TRACK AND FIELD. HERE IS HOW HIS COMPANY AIMS TO BE LUCRATIVE FOR ATHLETES. ALEXIS: 10% OF ALL THE REVENUE SPENT, BROADCAST, TICKETS, HOTDOGS, GOES INTO A POOL AND IS DIVIDED EVENLY AMONG THE 36 WOMEN WHO LINE UP TO COMPETE. THAT IS JUST THE START. HOW LONG WILL IT TAKE?
I DON'T KNOW. THIS IS THE ORIGINAL PROFESSIONAL SPORT. THIS SPORT CAN AND SHOULD BE AS BIG AS IT IS DURING THE OLYMPICS. ED: AND YET TRACK AND FIELD STARS ARE UNDERPAID.
THAT IS A COMMONLY HELD BELIEF. I THINK ABOUT A LOT OF WHAT YOU JUST TOUCHED ON. MY RELATIONSHIP WITH ANGEL CITY FC AS I HAVE A FRIEND WHO PLAYS ON THE SQUAD AND THAT IS HOW I WAS EXPOSED TO THEM.
I WAS ALSO EXPOSED THROUGH APPLE TV. I DO NOT SEE THE SAME LEVEL WITH TRACK AND FIELD ON STREAMING PLATFORMS. WHAT DOES A MEDIA DEAL FOR TRACK AND FIELD LOOK LIKE? ALEXIS: I THINK WE GOT PHASE 1 FROM OUR FRIENDS AT BOX TO BOX THAT CAPTIVATED US ON NETFLIX. TODAY, THIS IS JUST ONE EVENT HAPPENING YEARLY. WE WANTED TO BE THE BIGGEST
SPECTACLE OF THE SPORT OF ENTERTAINMENT. WE HAVE MEGAN THEE STALLION PERFORMING. WHEN WE LOOK AT STREAMING PARTNERS, WE SAID THIS IS A GLOBAL SPORT, THE FAN BASE IS EVERYWHERE, THEY WANT ACCESS SO WE HAVE TO MAKE IT ACCESSIBLE. WE WERE ABLE TO GET TO A PLACE
WHERE YOU CAN WATCH ON ESPN PLUS. YOU CAN ALSO WATCH IT ON X AND YOUTUBE. ACCESS GLOBALLY WAS SO IMPORTANT. THIS IS STILL PHASE 1. I WILL TELL YOU A DIFFERENT STORY ON MONDAY. THE NUMBER OF PEOPLE WHO TUNED IN, TWEETED, TALKED ABOUT. THOSE ARE THE NUMBERS. WHAT IF WE INVESTED REAL MONEY
OUTSIDE OF THE OLYMPICS INTO ONE OF THESE TRACK EVENTS? WILL PEOPLE SHOW UP? I THINK THEY WILL. THESE WOMEN ARE NO LESS EXCELLENT WHEN THE OLYMPICS END. I THINK THEY WILL DELIVER. CAROLINE: ALEXIS OHANIAN OF SEVEN SEVEN SIX. DIRECTV AND DISH ARE SAID TO POTENTIALLY MERGE.
THE AGREEMENT COULD BE ANNOUNCED IN THE COMING DAYS. FOR MORE, BLOOMBERG'S MICHELE DAVIS JOINS US. WHY COMBINE 11 MILLION SUBSCRIBERS ON ONE SIDE AND 8 MILLION ON THE OTHER? >> THIS IS A DEAL THAT IS A LONG TIME COMING. THEY ATTEMPTED THE MERGER IN THE PAST. IT SEEMS LIKE THE PLANETS ARE LINING -- A. THE WAY WE VIEW CONTENT HAS CHANGED COMPLETELY. CABLE, SATELLITE.
NOW STREAMING HAS TAKEN OVER. A DEAL LIKE THIS IS ABOUT SURVIVAL. ED: READING YOUR STORY IT SOUNDS LIKE IT IS CLOSE TO GETTING OVER THE LINE FROM A DEAL PERSPECTIVE. MICHELLE: IT HAS BEEN AN OFF-AND-ON SITUATION FOR MORE THAN TWO DECADES. THERE ARE A COUPLE THINGS THAT
HAD TO HAPPEN RECENTLY FOR IT TO BE THE PERFECT TIME. WE ARE HEARING THE DEAL COULD BE ANNOUNCED AS SOON AS MONDAY. SOME OF THOSE INCLUDE TPG AND AT&T.
AS PART OF THE DEAL THIS TRUCK THERE WAS A PROVISION THAT SAID AT&T COULD NOT EXIT ITS 70% STAKE UNTIL THIS PAST SUMMER. NOW THAT THAT HAS PASSED IT GIVES DIRECTV THE CORPORATE GOVERNANCE AND ABILITY TO DO SOMETHING LIKE THIS. ON THE DISH SIDE, THE BILLIONAIRE THE CONTROLS THE COMPANY HAS BEEN DEALING WITH ISSUES ON THE DEBT SIDE. HE HAS SPENT A TON OF MONEY TO BUILD UP THE WIRELESS BUSINESS. THE VIEW IS ALL OF THIS COMING TOGETHER AT THE SAME TIME COULD HELP SOLVE BOTH PROBLEMS AT ONCE. CAROLINE: TPG, AT&T, THE NAMES BEHIND SOME BIG STAKES.
DO THEY -- REMAIN COMMITTED? MICHELLE: AT THIS POINT IT SOUNDS LIKE THE STAKEHOLDERS WILL REMAIN STAKEHOLDERS. THERE MIGHT BE WAYS TO TAKE MONEY OFF THE TABLE. DIRECTV DOES GENERATE CASH FLOW FOR AT&T. SOMETHING LIKE THIS WOULD HELP THEM EXIT IF THEY WANTED TO. CAROLINE: THANK YOU FOR BREAKING IT DOWN. ED, WHAT ARE YOU LOOKING AT? ED: MORE NEWS IN TODAY'S TALKING TECH.
IRELAND HAS FINED META MORE THAN $100 MILLION. IT INADVERTENTLY STORED PASSWORDS OF SOME USERS IN ITS INTERNAL SYSTEMS WITHOUT ENCRYPTION OR PROTECTION. SET TO ACQUIRE A JAPANESE STUDIO IN THE COMING MONTHS AS IT PLANS TO EXPAND ITS PRESENCE. VIRTUOUS IS IN ACTIVE TALKS WITH MULTIPLE STUDIOS FOCUSING ON TARGETS THAT HAVE 100 OR FEWER STAFF.
TICTAC OWNER BYTEDANCE IS SET TO SIGN A $10.8 BILLION LOAN. ABOUT 20 LENDERS ARE SAID TO BE FUNDING THE DEAL AND IT WOULD MARK THE LARGEST LOAN IN ASIA ON RECORD. CAROLINE: WE WILL TALK APPLE. WHILE SHARES STILL POWER HIGHER, USERS ARE MAYBE NOT AS HIGH ON THE IPHONE 16. THAT IS NEXT. THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: APPLE SHARES ON THE MONTH CONTINUING TO OUTPERFORM AND AVOIDING VOLATILITY DESPITE GROWING CONCERN AROUND IPHONE SALES GROWTH.
A SURVEY FOUND THE IPHONE 16 DID NOT EXCITE CONSUMERS ENOUGH TO WARRANT A SMARTPHONE SUPER CYCLE AND SALES GROWTH WILL JUST BE 3% YEAR-OVER-YEAR RATHER THAN THE PREVIOUSLY EXPECTED 5%. IPHONE 16 LEAD TIMES ARE TRACKING LOWER THAN PREVIOUS YEARS. DO THESE NUMBERS CATCH YOU BY SURPRISE? >> THE SURPRISING FACTOR WAS WE THOUGHT IT WOULD AT LEAST MATCH LAST YEAR BUT IT DECLINED SLIGHTLY. YOU ASK PEOPLE, IN THE NEXT 12 MONTHS HOW MANY PEOPLE WILL UPGRADE THEIR PHONES? THAT NUMBER IT WAS AROUND 55%. LAST YEAR IT WAS 60%. WE HAVE SEEN A DECLINE IN THAT
NUMBER MEANING PEOPLE ARE KEEPING THEIR PHONE FOR A LONGER PERIOD OF TIME. WHETHER THAT IS DRIVEN BY COST OR THE PHONE BEING BETTER THAN IN PREVIOUS YEARS. ONE WOULD HAVE THOUGHT WITH AI FEATURES YOU COULD HAVE -- SEEN A BUMP IN THAT. ED: COULD YOU KINDLY EXPLAIN THE
METHODOLOGY OF THE BLOOMBERG INTELLIGENCE SURVEY FOR THE IPHONE 16 AND THE DEPTH OF THE DATA YOU OBTAINED? >> WE LOOK AT U.S. CONSUMERS AND SEE WHAT KIND OF PHONE THEY ARE LOOKING TO BUY, WHETHER THAT IS THE PROMAX PHONE OR THE PRO PHONE. THE REASONS THEY WANT TO UPGRADE, HOW MANY WANT TO SWITCH OVER. ONE THING WAS CLEAR, WHETHER IT WAS ANDROID OR APPLE USERS, BOTH SAID THEY WANT TO KEEP THE PHONE FOR A LONGER PERIOD OF TIME. APPLE INTELLIGENCE CELL LOW IN THE RANKINGS THEY WANT TO UPGRADE. WHETHER IT IS STORAGE, PROCESSING OR CAMERA, WHICH WAS IN LINE WITH WHAT WE WERE EXPECTING. ONE REASON COULD BE WE HAVE NOT
REALLY SEEN THE SOFTWARE UPGRADE IN TERMS OF ANY NEW AI FEATURES CONSUMERS ARE USING. THESE PHONES ARE CAPABLE BUT WE DO NOT HAVE THE FEATURES. THAT WILL BE LAUNCHED OVER THE NEXT 12 MONTHS. THE SENTIMENT COULD CHANGE AS WE SEE THESE FEATURES LAUNCH OVER THE NEXT YEAR OR SO.
CAROLINE: THAT IS WHERE THE TENSION LIES. INVESTORS LOOKING TOWARDS THE LONGER-TERM ADOPTION. PERHAPS NOT THIS PARTICULAR MOMENT OF FRENZY OUTSIDE THE STORES. >> I AGREE WITH YOU. WE THINK NEXT YEAR'S MODEL WILL BE A BIGGER UPGRADE. IT WILL LOOK DIFFERENT.
THE HARDWARE HAS DONE A GOOD JOB OF TELLING PEOPLE IPHONE 17 IS WHERE YOU SHOULD SEE IMPROVEMENT. HOPEFULLY BY THE TIME WE WILL SEE ALL THE AI FEATURES LAUNCHED. THOSE WILL BE COMPELLING ENOUGH FOR AI APPLE IPHONE SALES TO GO UP. ED: AN IMPORTANT PIECE OF SURVEY DATA. WORD-OF-MOUTH. THINK BACK TO META CONNECT ON THE SMALL NUMBER OF PEOPLE WHO GOT TO SEE IT. IT MIGHT NEVER SEE THE LIGHT OF DAY BUT WITH APPLE INTELLIGENCE, MAY BE SEEING IS BELIEVING. WHEN IT DOES COME OUT, MAYBE
SOMEONE SAYS THEY WANT TO TRY IT OUT AND THEY BUY A NEW IPHONE. CAROLINE: I AM QUESTIONING THE DEMOGRAPHICS. IS IT EVERYONE BASED IN SILICON VALLEY VERSUS THE REST OF THE WORLD? MEN VERSUS WOMEN? YOUNG VERSUS OLD? WHO IS PLAYING WITH THE META AI AND CHATGPT? SO MUCH TO DEBATE. THAT DOES IT FOR THIS EDITION OF "BLOOMBERG TECHNOLOGY." ED:
FROM NEW YORK AND SF, THIS IS
2024-09-29 10:43
