Intel's CEO Retires, Retailers Ready for Cyber Monday | Bloomberg Technology
ANNOUNCER: THIS IS "BLOOMBERG TECHNOLOGY" WITH CAROLINE HYDE AND ED LUDLOW. ♪ CAROLINE: LIVE FROM NEW YORK, THIS IS "BLOOMBERG TECHNOLOGY." INTEL SHARES RISE AS THE CEO LEAVES THE COMPANY AFTER A FAILED TURN AROUND EFFORT. TESLA AND BYD RAMP UP
INCENTIVES IN CHINA IN A FINAL PUSH TO MEET SALES TARGETS. TENSTORRENT WITH A $2.6 BILLION VALUATION. FIRST, CHECK ON THE MARKETS, CHECK ON INTEL, UP MORE THAN 3% ON THE BACK OF THE NEWS THE CEO IS LEAVING THE COMPANY AND IIT IS GOING TO BE TWO INTERIM CEO'S THAT TAKE THE HELM AS THE BOARD SEARCHES FOR A REPLACEMENT AS THE DEPARTURE IS POTENTIALLY SIGNALING MORE STRATEGIC SHIFTS.
WE GET INTO THE DETAILS WITH MANDEEP SINGH. MANY WOULD SAY THEY ARE SURPRISED. MANY WOULD SAY THE AUGUST NUMBERS SHOWED THE RESTRUCTURING WOULD BE PAINFUL AND THE BOARD LOST CONFIDENCE.
>> I THINK IT PROBABLY SUGGESTS THE MEMBERS FOR Q4 DO NOT LOOK GOOD EITHER. THE FOUNDRY BUSINESS WITH A BIG CONTRIBUTOR. EVEN THOUGH INTEL HAS ABOUT $18 BILLION OF FOUNDRY REVENUE, IT IS NEGATIVE GROSS MARGINS. WHEN YOU THINK ABOUT THE $18 BILLION NUMBER, HOW MUCH OF THAT BUSINESS COMES FROM THE OUTSIDE? THEY DO NOT HAVE ANY BIG CUSTOMERS LIKE TSMC DOES WHEN IT COMES TO THE FOUNDRY BUSINESS.
IT IS MOSTLY INTERNAL WHEN YOU THINK ABOUT THE $18 BILLION. THAT IS WHERE THE QUESTIONS WERE RAISED AROUND INTEL'S CAPEX AROUND $25 BILLION, WHICH IS THE MAIN REASON THEY ARE BURNING $15 BILLION A YEAR. I THINK PAT HAD ABOUT FOUR YEARS TO DECIDE THE FATE OF THE FOUNDRY BUSINESS. YOU HAVE TO ASK YOURSELF, WAS FOCUSING ON THE FOUNDRY BUSINESS THE RIGHT STRATEGY? THE ANSWER IS PROBABLY NOT GIVEN IT HAS NOT TURNED AROUND IN THE LAST FOUR YEARS.
CAROLINE: AND YET THE U.S. GOVERNMENT IS HANDING THEM A LOT OF MONEY TO BUILD SHIPS AND BE THE FUTURE OF ONSHORING. HOW RESILIENT DOES THAT LOOK? >> YOU ARE ABSOLUTELY RIGHT. THE GOVERNMENT WANTS THEM TO SUCCEED ON THE MANUFACTURING SIDE. THE PROBLEM IS THE OPTICS. WHY WOULD AMAZON OR NVIDIA NOT GO TO INTEL FOUNDRY WHEN THEY KNOW THAT IS A COMPETITOR? INVESTING THE FOUNDRY BUSINESS WILL MAKE IT MORE PALPABLE FOR COMPETITORS LIKE AMAZON AND NVIDIA TO USE SOME PORTION OF THEIR FOUNDRY. GLOBAL FOUNDRY HAS A LOT OF BUSINESS OUTSIDE BECAUSE IT IS AN INDEPENDENT ENTITY. THAT IS WHERE THE GROSS MARGIN
PROFILE WILL BE A LOT LOWER FOR THE FOUNDRY BUSINESS BUT AT LEAST THE CORE INTEL BUSINESS, WHICH IS HOW INVESTORS LOOK AT THE SUM OF THE PARTS, THE CORE CLIENT P.C. BUSINESS IS STILL DOMINANT. THE SERVER-SIDE IS BLEEDING SHARES TO NVIDIA. MORE THAN 50% OF THE REVENUE
STILL COMES FROM CORE PC'S. EVEN THOUGH IT IS A SATURATED MARKET, AI WILL HELP FOR A REFRESHED CYCLE AT SOME POINT. CAROLINE: IT WILL COME UNDER NEW LEADERSHIP. WE WILL HAVE PLENTY MORE IN A
MOMENT. LET'S TALK MORE ABOUT THE U.S. FOCUS ON CHIPS. THE BIDEN ADMINISTRATION UNVEILED NEW CURBS ON THE SALE IMPACTING 27 DIFFERENT TYPES OF CHIP DESIGN AND FABRICATION TOOLS AND HAS BLACKLISTED MORE CHINESE ENTITIES. MACKENZIE HAWKINS HAD A BUSY THANKSGIVING REPORTING THIS OUT.
DID THIS LOOK SLIGHTLY BETTER TO THE MARKET THAN SOME ANTICIPATED? >> THIS HAS BECOME THE THIRD ANNUAL UPDATE TO THE SWEEPING EXPORT CONTROLS THE BIDEN ADMINISTRATION HAS LEVIE ON COMPANIES TRYING TO SELL CHIPMAKING GEAR TO CHINA. IT CAME IN SLIGHTLY SOFTER THAN SOME PROPOSALS FLOATED EARLIER THIS YEAR. THEY DID NOT SANCTION A HANDFUL OF CHINESE COMPANIES THEY DISCUSSED SANCTIONING AND EXEMPTED IMPORTANT ALLIES, JAPAN AND THE NETHERLANDS, FROM THE RULES THAT RESTRICT ADDITIONAL TYPES OF CHIPMAKING GEAR BEING SENT TO CHINA. CAROLINE : THEY ARE TRYING TO HOME GROW CHIPMAKING IN THE UNITED STATES. HOW MUCH DO YOU THINK THE U.S.
GOVERNMENT WILL BE UPENDED BY A CHANGE OF READERSHIP? >> INTEL LAST WEEK'S SOLIDIFIED A DEAL FOR 7.8 BELIEVE DOLLARS IN FUNDING FROM THE CHIPS ACT, THE BROADER $52 BILLION PROGRAM, TO BRING CHIP MANUFACTURING BACK TO THE UNITED STATES. THE COMPANY SAID IT IS COMMITTED TO ITS U.S. EXPANSION PLANS. IT HAS PLANS TO EXECUTE ON FACTORIES IN . HIS DEPARTURE SHOULD NOT CHANGE THE PLANS BUT A NEW CEO WILL HAVE TO DECIDE WHETHER TO PURSUE THE OPTIONS HE LEFT OFF THE TABLE. THE U.S. GOVERNMENT WILL BE WATCHING
CLOSELY. CAROLINE: THANKS FOR BREAKING IT DOWN. WE WANT TO GET THE CIRCUMFERENCE OF THE CHIP SECTOR NOW. YOUR FIRST TAKE ON THE ANNOUNCEMENT OF PAT GELSINGER RETIRING, WERE YOU SURPRISED? >> I WAS VERY SURPRISED BY THE ABRUPT NEWS. A DIFFICULT SITUATION.
WHEN ANOTHER CEO RESIGNED OVER THE SUMMER IT WAS REFLECTING DIFFICULT CONVERSATIONS. IT LOOKS LIKE PAT LOST CONFIDENCE AND DECIDED TO LEAVE ABRUPTLY. THAT WAS A SURPRISE. NOW THAT WE ARE FOUR YEARS INTO THE TURN AROUND, PAT'S DIRECTION MADE INTEL LESS OF A LEADING MANUFACTURER.
WITH MAXIMUM POLITICAL SUPPORT, THEY PLANNED TO GO BIG. THE PLAN FAILED BECAUSE TSMC'S MODEL CANNOT BE COMPETED AGAINST I THINK. INTEL BEING ABLE TO PRESERVE MANUFACTURING CAPABILITIES, YES, INTEL BEING SCALABLE LIKE TSMC IS PROBABLY NOT POSSIBLE.
THAT IS WHERE THINGS FAILED. CAROLINE: IN AUGUST, ON THAT VERY BLEAK ANNOUNCEMENT OF NUMBERS WE HAD AND A DISASTROUS SELLOFF IN THE SHARES, THE RESTRUCTURING INVOLVED A LOT OF JOB LOSSES. IT DID INVOLVE THE PEELING AWAY OF THE FOUNDRY BUSINESS TO BE ABLE TO MO BE MANAGED SEPARATELY BUT ALONGSIDE INTEL. DO WE SEE PURCHASING COMING FROM QUALCOMM IN THE CHIP DESIGNER ARM? >> THE SITUATION IS GOING TO BE VERY FLUID FOR QUITE SOME TIME FOR SURE. LAST SUMMER, THE BOARD WAS SAID TO BE FIGHTING OFF ACTIVIST SHAREHOLDERS , GETTING PREPARED TO FIGHT OFF ACTIVIST MOVES.
THE SITUATION IS COMPLEX. INTEL HAS MANUFACTURING CAPABILITIES ON SHORE AND OWNS THE U.S. COMPANY, UNIQUE ASSET, VERY VALUABLE IN TODAY'S GEOPOLITICAL CONTEXT. I THINK THEY NEED TO CONTINUE THAT. IT MAY BE TEMPTING TO SAY QUALCOMM AND INTEL COULD MERGE.
I DO NOT SEE THAT IS A GOOD OPPORTUNITY TO GENERATE SYNERGIES. THE CHIPS ARE VERY DIFFERENT. MANUFACTURING IS A COMPLEX BUSINESS. THAT SCENARIO SCARES ME MORE THAN ANYTHING. BAD DECISIONS CAN TYPICALLY ARISE IN A SITUATION LIKE THAT. THE BEST THING IS TO BE LIKE, HOW DO WE MAKE SURE WE CREATE A SUSTAINABLE U.S.-OWNED ON U.S. SOIL MANUFACTURING CAPABILITY?
IF YOU DO THAT, YOU HAVE TO ADMIT YOU CANNOT COMPETE WITH TSMC. YOU NEED TO PARTNER WITH TSMC. YOU NEED TO FIND OTHER LARGE PARTNERS THAT WILL SUPPORT YOU. THE ONE THAT COMES TO MIND IS NVIDIA. LIKE AN INTELLIGENT PARTNERING AROUND MANUFACTURING WITH TSMC AND NVIDIA AS A PARTNER WOULD BE A MUCH MORE INTERESTING ROUTE TO PURSUE FROM HERE. CAROLINE:
THERE IS ONGOING BREAKING NEWS AROUND THIS STORY. BLOOMBERG LEADING THE CHARGE WITH HOW PAT GELSINGER WAS FORCED OUT AFTER THE BOARD GROUP FRUSTRATED. THE BIGGEST FRUSTRATION WAS THAT THEY MISSED THE AI EVOLUTION, JUMPING ON AND BEING ABLE TO ENSURE WHAT THEY PRODUCED WAS ABLE TO COMPETE. THEY ARE LIKELY TO MISS THE
$500 MILLION TARGET FOR THIS YEAR WHEN NVIDIA'S IS MAKING ABOUT $100 MILLION A YEAR. >> I THINK THE FRUSTRATION CAME FROM THE LACK OF PRUDENCE OF THE INITIAL PLAN. GOING TO BIG, TOO LARGE, ASSUMING DEMAND WOULD FOLLOW. IT ENDED UP NOT BEING A GROWING PART OF THE MARKET. LAST SUMMER WAS PARTICULARLY ABRUPT WITH THE COMPLETE FAILURE OF INTEL'S AI CHIPS AND WOULD NOT AT ALL BE ON THE MARKET WITH A SUSTAINABLE NICHE POSITIONING IN THE MARKET. THAT WAS PART OF IT.
I THINK PAT STUCK TOO MUCH TO HIS INITIAL PLAN WHICH WAS AN AMBITIOUS, LARGE-SCALE PLAN, AND HE SHOULD HAVE 18 MONTHS AGO TALKED ABOUT CHANGING TACK TO SMALLER CAPABILITIES WITH OTHER PLAYERS IN THE MARKET. CAROLINE: MUCH OF THIS PREDATED PAT COMING BACK IN 2021. THAT COURSE WAS ALREADY PAVED AND HE DID NOT REORIENT EIGHT QUICKLY ENOUGH. WHERE ARE THEY IN THE ECOSYSTEM? >> INTEL COULD SPECIALIZE IN MANUFACTURING IN THE U.S. WITH U.S. CONTROL AND OWNERSHIP INSTEAD OF COMPETING , KEEPING A POSITION AT THE LEADING EDGE AND LIBERATING THE PRODUCTS. CAROLINE: THANK YOU SO MUCH FOR YOUR
EXPERTISE TODAY. STICKING WITH THE AREA OF AI, SHARES OF SUPER MICRO ARE SOARING. THEY FOUND NO EVIDENCE OF WRONGDOING IN THE COMPANY WILL APPOINT A NEW CEO. THIS IS A COMPANY THAT USES NVIDIA CHIPS WITHIN THE SERVICE ITSELF TO KEY CLIENTS, UP 14% OVER THE LAST TWO TRADING DAYS.
WE WILL BREAK DOWN THE BLACK FRIDAY SALES DATA AND THE TRENDS FOR CYBER MONDAY WITH RACHEL TIPOGRAPH. STICK WITH US. CAROLINE: TODAY IS CYBER MONDAY. ADOBE EXPECTS CONSUMERS WILL SPEND A RECORD $13.2 BILLION, UP 6% YEAR ON YEAR. ONLINE SPENDING IS EXPECTED TO PEAK BETWEEN 8:00 AND 10:00 LATER TONIGHT WITH $15.7 MILLION SPENT EVERY MINUTE.
THAT IS EASTERN TIME OF COURSE. LET'S LOOK AT WHAT HAPPENED WITH BLACK FRIDAY ON THE WEEKEND. IT FEELS LIKE A BIG YEAR. I'M GETTING HIT WITH A LOT OF MARKETING. IS IT FEELING THAT WAY FOR YOU?
>> IT IS. DESPITE WHAT IS HAPPENING IN THE ECONOMY, CONSUMERS ARE SHOWING UP TO SAVE. I WANT TO SAY SPEND BUT IT IS REALLY ABOUT SAVINGS NOW. CAROLINE: INTERESTING. IT IS MORE ABOUT DEALMAKING. HOW ARE THE COMPANIES ACCESSING THEM ACROSS VARIOUS PLATFORMS? DO WE HAVE SOME TECHNOLOGICAL ISSUES? RACHEL: ABSOLUTELY. WHEN WE LOOK AT WHAT HAPPENED FROM THANKS -- HELLO? CAN YOU HEAR ME? CAROLINE: APOLOGIES. THERE IS A BIG DELAY.
DO CARRY ON. RACHEL: HELLO? WHEN YOU LOOK AT WHAT HAPPENED BETWEEN THANKSGIVING AND SUNDAY, THE MAJORITY OF TRAFFIC CAME FROM SOCIAL. META BEING NUMBER ONE, TIKTOK BEING NUMBER TWO, AND YOUTUBE BEING NUMBER THREE. IF WE ARE LOOKING AT RESULTS FROM THIS YEAR, YOUTUBE WOULD NOT HAVE MADE THE TOP THREE. WHAT IS CLEAR RIGHT NOW IS BRANDS ARE RECOGNIZING SOCIAL IS THE THIRD SHAFT. WHEREVER CRATERS ARE, THAT IS
WHERE BRANDS ARE INVESTING DOLLARS AND TIMES TO GAIN MIND SHARE TO DRIVE TRAFFIC TO BLACK FRIDAY DEALS. CAROLINE: HOW ARE THE COMPANIES DOING WELL LIKE WALMART AND TARGET, HOW ARE THEY TRACKING IT AND MAKING SURE THEY HAVE THE MEASUREMENTS THAT PROVE THE INVESTMENT IS MAKING SENSE FOR THEM? RACHEL: ABSOLUTELY. IF YOU LOOK AT AMAZON'S EARNINGS OR WALMART EARNINGS, IT IS VERY CLEAR THESE RETAILERS ARE BECOMING DATA BUSINESSES. THEY ARE MAKING 80% TO 90% MARGIN SELLING DATA AS A SERVICE. WE KNOW THEY ARE NOT MAKING THAT MARGIN ON PHYSICAL GOODS.
WHEN IT COMES TO MEASUREMENT, MAJOR BRANDS ARE FIRST RELYING ON RETAILERS'FIRST PARTY DATA BUT THEY HAVE TO MARRY THAT WITH THIRD PARTY SOURCES BECAUSE WE CANNOT BE GRADING OUR OWN HOMEWORK. THEY ARE TURNING TO OTHERS TO VALIDATE WHAT IS HAPPENING. BETWEEN MIKMAK AND ADOBE DATA, WE ARE SEEING THE SAME THING.
IN MIKMAK, WE HAVE SEEN A 1% INCREASE IN CONVERSION RATES DURING THE BLACK FRIDAY WEEKEND THIS YEAR COMPARED TO LAST YEAR. IF YOU EXTRAPOLATE THAT TO WHAT ADOBE IS SEEING, ADOBE SAW AN INCREASE OF $1 BILLION IN REVENUE. THAT 1% INCREASE IN CONVERSION RATE MERITS THE $1 BILLION INCREASE IN REVENUE. BY MARRYING MULTIPLE SOURCES, WE CAN SEE THE PICTURE THAT CONSUMERS SHOWED UP, WERE CHOOSY WITH THEIR DOLLARS, AND TURNED TO PLACES LIKE WALMART BECAUSE THAT IS WHERE THE VALUE IS AND WHERE THE BREADTH OF MERCHANDISE IS THIS SEASON. CAROLINE: COMING UP, THE END OF YOUR RUSH FOR EV MAKERS TURNING TO CHINA TO MEET THEIR ANNUAL SALES TARGETS. THAT IS NEXT. THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: TIME FOR TALKING TECH. FIVE CANADIAN PUBLISHERS HAVE
SUED OPENAI FOR BREACHING COPYRIGHT ALLEGING THE COMPANY SCRAPES CONTENT TO TRAIN PRODUCTS. ACCORDING TO THE OPENAI SPOKESPERSON, IT IS TRAINED ON PUBLICLY AVAILABLE DATA GROUNDED IN FAIR USE. IN HIS LATEST COURT FILING, ELON MUSK REPEATED EARLIER CLAIMS OPENAI BROKE ITS PROMISE TO HIM AND ABANDONED ITS FOUNDING PURPOSE AS A CHARITY WHEN IT ACCEPTED BACKING FROM MICROSOFT IN 2019. CEO IS SET TO MEET THE THAI PRIME MINISTER ON TUESDAY. THE MEETING COMES AFTER NVIDIA ANNOUNCED A BUILDOUT OF MANUFACTURING IN THAILAND IN OCTOBER. STICKING WITH ALL THINGS ASIA, LET'S TALK ABOUT CHINA AND EV MAKERS.
TESLA, BYD, WE ARE GETTING DATA THEY HAVE UNLEASHED MORE DISCOUNTS AND INCENTIVES IN CHINA IN A FINAL PUSH TO MEET ANNUAL SALES TARGETS. LET'S BREAK IT DOWN WITH DAVID WELCH. WHAT ARE WE GETTING ON OFFER IN CHINA? DAVID: THEY HAVE BEEN FIGHTING FOR MARKET SHARE ALL YEAR AND NOW EVERYONE IS TRYING TO HIT THEIR SALES GOALS IN THE LAST MONTH. IT REMINDS ME OF TOYOTA'S DECEMBER TO REMEMBER EVERY YEAR IN THE U.S., BUT THIS IS
ELECTRIC VEHICLES IN CHINA. THEY ALREADY ANNOUNCED DISCOUNTS LAST WEEK ON THE MODEL Y. BYD HAVE BEEN DOING THIS FOR A WHILE, LAUNCHING A PRICE WAR TO PUT PRESSURE ON COMPETITORS, GAIN MARKET SHARE. BYD IS ONE OF THE FEW EV MAKERS IN CHINA THAT EVEN MAKES MONEY SO IT PUTS PRESSURE ON DOMESTIC RIVALS.
TESLA IS TRYING TO HANG IN THERE IN A TOUGH MARKET FOR MODEL MAKERS. THEY WANT TO KEEP THE SHARE UP AND KEEP THE CARS MOVING. A VERY GOOD DEAL IF YOU ARE LOOKING FOR AN EV IN CHINA AND YOU'RE SEEING SOME INDIE U.S. AS WELL. CAROLINE: SOME 0% LOANS. THERE ARE NEW ENTRANCES. TESLA IS DEPENDENT ON CHINA IN MANY WAYS AND MANY WONDER IF THEY WILL MEET THEIR FOURTH-QUARTER TARGETS IN TERMS OF SALES. HOW DIFFICULT IS IT TO NAVIGATE
CHINA? >> DAVID: VERY DIFFICULT. THE EUROPEANS HAVE HAD A TOUGH TIME, SO HAS GENERAL MOTORS. TESLA IS TRYING TO STAY IN THE GAME. THEY ARE HAVING TO DISCOUNT. ONE OF THE REASONS YOU ARE SEEING OTHER CAR COMPANIES STRUGGLE IS THEY ARE NOT AS WILLING TO DISCOUNT AND SELL AT A LOSS AS DOMESTIC PRODUCERS ARE. BYD IS DRIVING A LOT OF THIS BECAUSE THEY ARE HUGE, THEY ARE PROFITABLE, TRYING TO GROW ALL OVER THE WORLD. THEY HAVE LOWER COSTS SO THEY ARE ABLE TO DO IT IN A LOT OF WAYS. THERE IS A BIT OF ART DARWINIAN
GAME PLANNING IN CHINA WHERE THE TOP PRODUCERS WILL GO FOR MARKET SHARE PUSH OTHERS OUT OF BUSINESS OR INTO DOWNSIZING SO THEY DOMINATE THE MARKET ONE DAY. CAROLINE: DAVID WELCH WITH A BRUTAL OUTLOOK ON EV'S IN CHINA. THANK YOU. STELLANTIS IS LEFT WITHOUT CLEAR LEADERSHIP AFTER A SURPRISE DEPARTURE FROM THE CEO WHICH WAS REPORTED EARLIER. THIS COMES AT A TIME WHEN STELLANTIS IS UNDER PRESSURE TO HALT THE SALES SLIDE IN THE U.S.. IT HAS ALSO SUFFERED WITH THE EUROPEAN MARKET WHERE THE DEMAND FOR EV'S IS WANING. CHINESE MANUFACTURING IS EXPANDING IN THE REGION. COMING UP, ONE STARTED HOPES TO
BREAK NVIDIA'S DOMINANCE WITH HEAVYWEIGHT BACKERS INCLUDING JEFF BEZOS AND SAMSUNG. WE SPEAK WITH JIM KELLER NEXT. A QUICK CHECK ON INTEL. IT IS THE KEY NEWS OF THE DAY THAT WE HAVE SEEN PAT GELSINGER STEP ASIDE AND ANNOUNCED HIS RESIGNATION ON THE BACK OF A FRUSTRATED BOARD WHO COULD NOT GET BEHIND HIS TURN AROUND OF THE ICONIC CHIPMAKER.
WE ARE UP 7% AS WE HAVE TWO NEW INTERIM CEO'S NAMED FOR THE TIME BEING. THIS IS "BLOOMBERG TECHNOLOGY." ♪ CAROLINE: WELCOME BACK TO "BLOOMBERG TECHNOLOGY." LET'S GET A QUICK CHECK ON THE MARKETS. LET'S FOCUS IN ON WHAT IS HAPPENING WITH CHIPS. 5% RISE IN INTEL AS THE CEO, HIRED BACK IN 2021 TO TURN AROUND THE ICONIC CHIPMAKER, WILL LEAVE THE JOB AS THEY TURN AROUND HAS FAILED AND HE HAS LOST THE CONFIDENCE OF THE BOARD ACCORDING TO BLOOMBERG REPORTING. NVIDIA IS UP 10%.
UNTIL SHARES DROPPED 60%. -- INTEL SHARES DROPPED 60%. NVIDIA SHARES WENT UP. LET'S TALK CHIPS MORE BROADLY AND HOW THERE ARE SOME NEW ENTRANTS.
JEFF BEZOS AND SAMSUNG ARE BETTING BIG ON TENSTORRENT. JOINING US TO DISCUSS IS THE CEO OF THE COMPANY, JIM KELLER, WHO IS HIMSELF A LEGEND IN THE CHIPMAKING WORLD. THE MONEY YOU ARE RAISING, WHAT IS IT YOU ARE HOPING TO DO? YOU ARE WANTING TO MAKE A CHEAPER OPERATION AN OPTION FOR AI ACCELERATOR CHIPS? >> THAT IS RIGHT. WE ARE BUILDING UP A TEAM.
WE ARE BUILDING OUT OUR PRODUCTS. WE ARE STARTING TO SHIP PRODUCTS. OUR MISSION IS TO BRING ON DEVELOPERS AND EARLY CUSTOMERS.
CAROLINE: LET'S TALK ABOUT THE CUSTOMERS AND WHAT YOU OFFER THAT IS NOT IN THE MARKET. WHAT IS YOUR SELLING POINT? JIM: WE HAVE A COUPLE OF THINGS. WE LICENSE OUR I.D. AND WE ARE BUILDING A BUSINESS ON THAT. WE ARE SELLING LOW-COST SYSTEMS. I'M INTERESTED IN HITTING A LOWER COST POINT. PEOPLE LIKE THE TRANSPARENCY. THEY CAN SEE EXACTLY WHAT THE TECHNOLOGY IS DOING.
IT HAS TURNED INTO A GREAT RECRUITING VEHICLE. FOR SOFTWARE. CAROLINE: LET'S GO TO THE PRICE POINT. A CHEAPER OFFERING. A LOT OF THAT IS BEING DONE BY HAVING LESS PRICEY COMPONENTS. NVIDIA CHIPS ARE INCREDIBLY EXPENSIVE. PEOPLE PAY IT BECAUSE OF WHAT
THEY OFFER, THE FULL STACK. BUT THEY STRUGGLE WITH HIGH-VALUE MEMORY CHIPS. YOU DO NOT NEED THEM. WHY NOT? >> IT PARTLY ABOUT CHOICES. THERE ARE TWO CHOICES. IF YOU PICK AN EXPENSIVE MEMORY TECHNOLOGY, YOU WILL NEVER GET THE PRICE DOWN. YOU NEED TO THEN MAKE TECHNOLOGY DECISIONS TO LOWER YOUR COSTS.
IN OUR ARCHITECTURE, WE KEEP THE DATA ON SHIP MORE. WE HAVE A SOFTWARE STACK GOOD AT PARTITIONING. THEY CAN SEND INFORMATION TO EACH OTHER WITHOUT HAVING TO GO THROUGH MEMORY. THAT LOWERS WHAT IS REQUIRED AND LET'S US SCALE OR NATURALLY. CAROLINE: I AM A NEW INVESTOR, YOU BROUGHT ME ON BOARD, I'M INTERESTED, JEFF BEZOS, SAMSUNG, YOU SAY I WILL DO THIS WAS CHEAPER OFFERINGS -- WITH CHEAPER OFFERINGS. WHAT SORT OF PRICE POINT ARE WE LOOKING AT? JIM: THE MARKET IS SO BIG, THE PRESENT WE HAVE TO GET IS PRETTY SMALL TO BE A REAL VALUE PROPOSITION.
NEXT YEAR, WE WILL DIE AND GO TO HEAVEN IF WE MAKE $200 MILLION. WE HAVE ALREADY BOOKED $50 MILLION IN REVENUE. I'M INTERESTED IN FINDING SMALL, EARLY PLAYERS, PEOPLE WHO WANT TO OWN THEIR TECHNOLOGY. PEOPLE ARE EXCITED ABOUT OUR
SOFTWARE AND HARDWARE ARCHITECTURE. WANT TO GROW ORGANICALLY FROM THERE. SOME PEOPLE HAVE FOCUSED ON THE BIG GUYS FIRST. THAT IS NOT HOW NEW TECHNOLOGY INTRODUCTIONS GO. YOU FOCUS ON SMALLER PLAYERS,
PEOPLE WHO NEED DIFFERENTIATION. THAT IS OUR MISSION. CAROLINE: WHAT IS THE MISSION BUILDING IN, IN TERMS OF LONG-TERM VALUE OF GENERATIVE AI APPLICATIONS? DO WE THINK WE ARE IN SOME SORT OF HYPER CYCLE? DO YOU THINK THE MARKET IS AS BIG AS MANY ARE THINKING? JIM: THERE WILL BE MULTIPLES. PEOPLE SAY IT WILL GO DOWN NEXT YEAR. IT WILL GO UP AND DOWN. LOW COSTS FILTER ALL OF THAT STUFF. AI IS GOING TO DOMINATE COMPUTING OVER THE NEXT 10 YEARS. WE ARE JUST STARTING. THE HARDWARE IS GOING TO CHANGE A LOT.
THE SOFTWARE IS GOING TO CHANGE A LOT. ONE DAY, YOU READ IN THE PAPER LOM'S CAN DO ANYTHING AND THE NEXT DAY THEY HAVE HIT THE LIMIT. IGNORE ALL OF THAT. WE ARE JUST STARTING. THERE WILL BE MASSIVE TRANSPORTATION -- TRANSFORMATIONS.
I WANT GREAT DESIGNERS, AI PROCESSORS, CHIP DESIGN, SYSTEM DESIGN, SOFTWARE DESIGN. THE OPEN-SOURCE STUFF IS INTERESTING BECAUSE THAT ENGAGES A COMMUNITY OF PEOPLE PASSIONATE ABOUT THAT TO CONTRIBUTE BACK. CAROLINE: THIS IS WHERE YOU ARE THINKING ABOUT YOUR OWN TALENT TEAM. YOU HAVE MANAGED TALENT ACROSS THE BOARD. YOU ARE INTEGRAL TO THE CHIP DESIGN PROCESS IN THE U.S.
WITH THE WORK YOU HAVE DONE AT AMD, APPLE. YOU WERE AT INTEL. I HAVE TO GO THERE ON THE DAY PAT GELSINGER IS RESIGNING. MANY WOULD SAY IT IS BECAUSE THEY DID NOT GET INTO AI QUICKLY ENOUGH. THAT WAS PRIOR TO HIM. WHAT DO YOU MAKE OF THE TRANSITION? JIM: IT IS HARD TO SAY. I LIKE PAT PERSONALLY. I HAVE MET HIM A NUMBER OF TIMES. HE IS A SMART GUY. HE REALLY CARES.
I THINK THE MARKET FOCUSES TOO MUCH ON STUFF LIKE EXECUTION AND AI TRANSITION. THE WAY YOU MAKE MONEY AND GET CUSTOMERS IS TO BUILD GREAT PRODUCTS. STEVE JOBS WAS THE BEST AT THIS. FOCUS ON THE PRODUCT. MAKE THE BEST PRODUCT YOU CAN. THEY NEED SOMEBODY MORE
HANDS-ON TO REALLY FOCUS ON PRODUCT. THEY NEED TO STOP TALKING ABOUT AI EXECUTION, ALL THE NONSENSE. WHEN THEY MAKE THE BEST PRODUCT, THE BEST CHIP, THEY WILL DO FINE. CAROLINE: WHEN YOU ARE THINKING ABOUT ALL OF THE AREAS YOU WANT TO OWN, HOW MUCH DOES U.S. AND CHINA FACTOR INTO YOUR GROWTH STORY? JIM: FIRST OF ALL, WE ARE BUILDING OPEN SOURCE SOFTWARE TECHNOLOGY.
WE THINK THAT IS AN OPEN PLATFORM. THERE IS A LOT OF PEOPLE INTERESTED IN THAT. AT THE SAME TIME, THERE ARE RESTRICTIONS BY THE U.S. GOVERNMENT AND TRADE RULES. WE HAVE GOOD LAWYERS AND GREAT COMPLIANCE PEOPLE. WE WORK CLOSELY WITH THOSE GUYS.
WE WANT TO DO THE RIGHT THING FOR THE BUSINESS AND FOR BEING COMPLIANT. IT IS A CHANGING WORLD. WE ARE VERY INVOLVED IN THAT. SHORT RUN, OUR BUSINESS POSSIBILITIES ARE REALLY BIG. IF CHINA PLAYS IN THAT, IT WILL
BE INTERESTING. IF IT IS NOT FOR VARIOUS REASONS, THAT IS FINE. CAROLINE: BIG VALUATION. COME BACK WHEN YOU ARE LATEST ROUND, JIM KELLER. THE COMPANY THAT PROVIDED AI SOFTWARE FOR DRONES AND JET FIGHTERS ARE NOW MAKING WEAPONS OF ITS OWN, DEBUTING A NEW ATTACK DRONE. $5 BILLION EURO VALUE START.
THIS IS ABOUT DRONES TO BE USED IN THE RUSSIA ISSUE? >> CORRECT. A COUPLE OF THINGS. THEY HAVE AI SOFTWARE. THEY SAY THEY HAVE BUILT SOFTWARE THAT ALLOWS THE DRONES TO AVOID GPS JAMMING. A MAJOR PROBLEM IN THE WAR IN UKRAINE IS ELECTRONIC WARFARE THAT HAS RENDERED THESE DRONES USELESS. THEY SAY WE HAVE BUILT THESE AUTONOMOUS DRONES THAT CAN GET OVER THE GPS ISSUE. THEY WILL BE SHIPPING NEW UNITS. THE WAY THE COMPANY DESCRIBES IT IS THEY SEE THIS AS A BORDER DETERRENT NOT JUST IN UKRAINE BUT ACROSS THE EASTERN FLANK OF COUNTRIES IN EUROPE THAT BORDER RUSSIA. CAROLINE: LET'S TALK ABOUT THE START-UP
ITSELF. CAGEY AROUND THE DETAILS OF TECHNOLOGY AND SALES. THEY DID NOT WANT TO GIVE A DEMONSTRATION. WHO IS BACKING THEM AND BUYING FROM THEM? >> THEY HAVE HAD SOME PROMINENT BACKERS.
THE ERDOGAN WAS DANIEL ECK, THE SPOTIFY FOUNDER. GETTING A MIXTURE OF EUROPEAN AND AMERICAN INVESTORS. THEY HAVE A DEAL WITH SAAB TO WORK ON THE EURO JET FIGHTER AND THEY HAVE MADE DEALS WITH AIRBUS AND DRONE MANUFACTURERS. WE HAVE NOT SEEN A CLEAR DEMONSTRATION OF THE PRODUCTS. A LOT OF IT HAS BEEN BESPOKE A IDEALS AND WORKING ON COMMAND AND CONTROL SOFTWARE AND MAKING WEAPONS MORE INTELLIGENT AND MORE AUTONOMOUS. THIS IS THE FIRST TIME WE WILL SEE SOMETHING THEY PRODUCED GO INTO THE BATTLEFIELD.
THEY HAVE NOT SHARED ANYTHING ABOUT REVENUE OR PROFITS. WE KNOW THEY HAVE RAISED NEARLY $1 BILLION TO DATE. CAROLINE: WE WILL SEE HOW IT PERFORMS WHEN WE GET THAT INFORMATION. BRILLIANT STORY, THANK YOU. COMING UP, TIKTOK WITH MITCHELL GREEN. THIS IS "BLOOMBERG TECHNOLOGY."
♪ WITH EMILY CHANG TONIGHT AT 10:00 EASTERN. THIS IS BLOOMBERG. ♪ CAROLINE: LET'S GET A CHECK ON THE CRYPTO MARKETS AT THE MOMENT.
WE HAVE BEEN TEMPERING SOME OF THE PHENOMENAL RALLY IN BITCOIN. WE ARE NOT NEARLY $100,000 MARK QUITE. OFF BY 1.7%. THE NEW KID ON THE BLOCK ANNOUNCING HOW MUCH IT IS BUYING IN TERMS OF BITCOIN UNTO ITS BALANCE SHEET. THIS IS A BITCOIN MINING COMPANY.
MICROSTRATEGY HAS BEEN DOING THIS FOR SEVERAL YEARS. THEY ANNOUNCED PUTTING MORE MONEY INTO BITCOIN THIS MORNING. MICHAEL SAYLOR SHOWED US HOW IT IS DONE. >> IT IS $38 BILLION AND THEY ARE ANNOUNCING THE FOURTH STRAIGHT WEEK OF BUYING. IT IS ASTONISHING.
WE HAVE THE LIKES OF CATHIE WOOD REJOICING BECAUSE THEY KNOW THIS WILL MEAN GOOD NEWS FOR THE COIN. EVER SINCE TRUMP WON, YOU CAN SEE THE CHART. WE ARE STRUGGLING TO HIT $100,000 BUT WE ARE INCHING EVER CLOSER. AROUND $97,000 IS A POSITIVE NEWS. GARY GENSLER SAID HE WOULD STEP
DOWN. WE HAVE PAUL ATKINS BEING CONSIDERED ACCORDING TO REPORTS BY BLOOMBERG. LOTS OF TAILWINDS FOR THE SPACE. NOW, WE HAVE THE ESTABLISHMENT TAKE OVER BITCOIN AS WELL -- TAKE OVER OF BITCOIN AS WELL. CAROLINE: AT ONE POINT, TESLA WAS DOING THE SAME THING.
WHAT IS INTERESTING IS WE DID HEAR FROM CATHIE WOOD PRAISING A NEW REGIME UNDER THE ADMINISTRATION. SHE IS LONG DIGITAL ASSET CLASSES. BUT WHERE ELSE DOES SHE SEE POSITIVITY? >> IN CRYPTO AND FINTECH, M&A, ALL OF THE THINGS CLAMPED DOWN ON DURING THIS ADMINISTRATION. CFTC BAND A LOT OF ACQUISITIONS IN THE TECH SPACE COULD SHE SEES SOFTER REGULATIONS ON THE SPACE. THE U.S. GOVERNMENT IS POTENTIALLY BEING
A WHIALE. THERE IS A BILL THAT COULD REQUIRE THEM TO BUY BITCOIN. IT COULD CREATE RISKS LIKE VOLATILITY. GOLD MIGHT SINK AND BITCOIN MIGHT RISE. THERE ARE A LOT OF THINGS HAPPENING IN THE SPACE. INTERESTING BECAUSE NOW A LOT
OF COMPANIES OWN MORE BITCOIN THAN OTHERS. CAROLINE: CRYPTO REGULATION IS LOOMING OVER LAWMAKERS IN WASHINGTON. THE FUTURE OF TIKTOK IS ALSO UP IN THE AIR ALONG WITH PRESIDENT-ELECT TRUMP'S THREATS TO IMPOSE TARIFFS ON CHINESE GOODS. A KEY INVESTOR IN BYTEDANCE, YOU HAVE BEEN BUILDING THAT UP IN THE SECONDARY MARKET. WANT TO UNDERSTAND HOW MUCH -- I WANT TO UNDERSTAND HOW MUCH WEIGHT YOU THINK IT IS ON IT. >> FOR US, IN OUR BASE CASE WE ASSUMED THE U.S.
BUSINESS WOULD NOT ACCOUNT FOR ANYTHING AND WE THOUGHT IT WOULD BE BANNED. WHAT YOU SEE TRUMP SAYING IS IT MAY GO THE OTHER WAY. WHAT PEOPLE SAY AND DO IN WASHINGTON ON BOTH SIDES ARE VERY DIFFERENT THINGS SOMETIMES. I CANNOT IMAGINE THE FIRST THING DONALD TRUMP WANTS TO DO IS BAN TIKTOK, ESPECIALLY WHEN A LOT OF HIS BIG SUPPORTERS LIKE ELON MUSK WHERE MARK ZUCKERBERG WOULD BENEFIT FROM THE BAN, I THINK IT IS POSITIVE FOR TIKTOK TO HAVE TRUMP IN OFFICE. CAROLINE: WE UNDERSTAND MARK ZUCKERBERG HAS BEEN DINING WITH TRUMP AT MAR-A-LAGO LAST WEEK.
MAYBE THE MOOD MUSIC CHANGES. I'M INTERESTED MORE BROADLY ON HOW INTEGRAL TIKTOK IS TO INVESTMENT CHOICES OF YOURS. >> IT HAS BEEN RUMORED AND REPORTED IN THE PRESS THAT THE NORTH AMERICAN VERSION OF TIKTOK IS A SINGLE-DIGIT PERCENTAGE OF BUSINESS, NOT A GIANT PART OF THE BUSINESS. I THINK IT IS A PART OF THE BUSINESS WHERE A LOT OF INVESTORS OR POTENTIAL INVESTORS SEE A HUGE AMOUNT OF OPPORTUNITY.
I BELIEVE TIKTOK IS THE BIGGEST EXISTENTIAL THREAT TO A BUSINESS LIKE FACEBOOK OR INSTAGRAM OR SNAPCHAT. JUST GO ASK MILLENNIALS IN AMERICA WHAT THEY USE, OR YOUR OWN KIDS, JUST LOOK AT THE USAGE PATTERNS AND THE DATA AROUND DAILY ACTIVE USERS AND HOW MUCH TIME IS SPENT ON THE DIFFERENT APPS. TIKTOK IS A REAL PLAYER. I CAN ASSURE YOU MARK ZUCKERBERG WOULD LOVE TO HAVE IT BANNED. IT WOULD BE GREAT FOR HIS BUSINESS. CAROLINE: YOUR EXPERTISE IS GREAT. YOU ARE SOMEONE WHO UNDERSTANDS THE CONSUMER OF CHINA, WHERE TECHNOLOGY IS GOING THERE, HOW MUCH HARDER HAS YOUR LIFE BECOME TO ACCESS THESE DEALS ON THE SECONDARY MARKET, TO BE LONG CHINA INVESTMENTS? MITCHELL: IT IS NOT VERY POPULAR AT THE MOMENT, PUT IT THAT WAY. SOME OF THE GREATEST INVESTORS I KNOW SAY IS 99% OF INVESTORS -- ASK THE 10 SMARTEST HEDGE FUND INVESTORS AND WIND NINE TELL YOU ONE THING AND ONE TELLS YOU ANOTHER, DO WHAT THE ONE TELLS YOU.
IT IS NOT A CONSENSUS TRADE BUYING CHINA BUT IT IS CHEAP. WE HAVE BEEN BUYING BYTEDANCE AT SUB FIVE TIMES EARNINGS FOR A BUSINESS GROWING FASTER THAN FACEBOOK. WE THINK IT IS REALLY CHEAP AND THE RISK-ADJUSTED REWARD IS ATTRACTIVE. IN OUR BASE CASE MODEL, WE MODELED THE BUSINESS AT ZERO. WE MIGHT GET LUCKY. TRUMP MAY NOT BAN IT. THE CHINESE ECONOMY MAY START TO RECOVER SOME. BY ANY STRETCH OF THE
IMAGINATION, LOOKING AT CHINESE COMPS TODAY, THESE THINGS TRADE AT SUBSTANTIALLY HIGHER MULTIPLES THAN FIVE TIMES EARNINGS. WE WILL NOT ONLY GET EARNINGS GROWTH BUT ALSO GET MULTIPLE EXPANSION. I CANNOT TELL YOU WHEN THE COMPANIES GOING PUBLIC. TAILWINDS. THE U.S.
POLITICAL MARKET SIX MONTHS AGO -- ENVIRONMENT SIX MONTHS LOOK LIKE A HEADWIND, IT MIGHT BECOME A TAILWIND. TIME WILL TELL. CAROLINE: MITCHELL GREEN WITH CONTRARIAN IDEAS, THANKS FOR JOINING. COMING UP, A DEEP DIVE INTO LEBRON JAMES' MEDIA COMPANY WHICH LOST $28 MILLION IN 2023. THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: LET'S GET TO TODAY'S SCREEN TIME. HE WAS WRITING OVER THE WEEKEND ABOUT HOW HE HAS UNCOVERED FINANCIAL DETAILS ABOUT LEBRON JAMES' MEDIA COMPANY THAT REVEALED QUITE A BIT ABOUT THE CURRENT STATE OF HOLLYWOOD. YOU WERE PULLED OFF THE BENCH
FROM CONSUMING CONTENT AND HANGING OUT WITH FAMILY TO WRITE THE NEWSLETTER. $28 MILLION BEING LOST? THIS IS A COMPANY VALUED IN THE HEYDAY VERY HIGH. >> THEY BENEFITED FROM THE STREAMING MOVEMENT. YOU HAD ALL THESE COMPANIES MAKING SHOWS FOR NETFLIX, AMAZON, DISNEY, AND OTHERS, AND THOSE AFFILIATED WITH FAMOUS PEOPLE RAISED MONEY AT VALUATIONS THAT IN RETROSPECT MADE NO SENSE. THE BRONZE COMPANY GOT A VALUATION OF MORE THAN $700 MILLION WHEN THE REVENUE WITH HIGH $70 MILLION AND LOST MILLIONS OF DOLLARS. THEY ENDED UP HAVING TO PAY FOR IT IN THE END BECAUSE THE MARKET CRASHED A LITTLE BIT. PEOPLE ARE LOOKING AT THESE
COMPANIES DIFFERENTLY. CAROLINE: THEY ARE MANAGING TO GET LEMONADE OUT OF LEMONS WITH THE MERGER. WILL THAT BE ELIMINATE? WHAT DOES THE DEAL -- WILL THAT BE LEMONADE? LUCAS: IT DOES GIVE THEM MORE SCALE. IT BENEFITS THEM WHEN OTHER COMPANIES ARE CUTTING BACK.
IT GIVES THEM COMPLEMENTARY EXPERTISE S. THE BRONZE COMPANY IS GOOD AT UNSCRIPTED -- LEBRON'S COMPANY IS GOOD AT UNSCRIPTED. SOMETIMES IT WORKS, SOMETIMES IT DOES NOT. CAROLINE: MAVERICK CARTER RUNS THE DAILY BUSINESS. NOT BUILDING IT WAS IN LEBRON JAMES BUT AROUND LEBRON, HE HAS BEEN THE EXPERT IN THE BUILDING.
EVERYONE IS TRYING TO WORK OUT WHERE CONTENT DOES WORK. CLEARLY, IT IS WORKING IN THE THEATERS. "WICKED," "GLADIATOR 2," AND "MOANA 2." LUCAS: I BELIEVE THE BIGGEST OPENING OF THE YEAR. THE GOOD NEWS FOR MOVIE THEATERS, THE GOOD NEWS FOR HOLLYWOOD IS YOU HAD TWO OTHER MOVES OUT IN "WICKED" AND A SEQUEL TO "GLADIATOR" THAT PEOPLE WERE EXCITED ABOUT. 70% OF SHOWTIMES THIS PAST WEEKEND WERE FOR THOSE THREE MOVIES.
ALL ACROSS DEMOGRAPHICS, YOU HAVE ACTION, SINGING, A LITTLE BIT OF EVERYTHING FOR EVERYONE. CAROLINE: THE MONEY BEING MADE. GLADIATOR AND WICKED WERE NOT CHEAP TO MAKE. THEY HAVE TO MAKE MONEY. LUCAS: GLADIATOR VERY EXPENSIVE. I THINK $250 MILLION TO PRODUCE, SOME SAY MORE. THAT WILL BE THE HARDEST TO MAKE MONEY ON BECAUSE IT MAY TOPPED OUT WORLDWIDE. WICKED WILL MAKE ENOUGH TO MAKE MONEY. MOANA WILL MAKE A FORTUNE FOR
DISNEY. CAROLINE: ALL THE MERCH AS WELL. THAT DOES IT FOR THIS EDITION OF "BLOOMBERG TECHNOLOGY." DO NOT FORGET TO CHECK OUT OUR PODCAST ON THE TERMINAL, APPLE, SPOTIFY, AND IHEART.
2024-12-08 18:19
