December 12, 2025 • 44 mins
Bloomberg’s Ed Ludlow and Caroline Hyde break down Broadcom's plunge after the company's sales outlook failed to meet investors' lofty expectations. Plus, China eyes the largest ever state-backed incentives for its pivotal chip sector, and White House AI Czar David Sacks joins to weigh in on President Trump's executive order aimed at limiting state-level regulation of AI.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is a
live from Coast to Coast with Caroline Hyde in New
York and vlave Low in sentences go.
Speaker 2 (00:22):
This is Bloomberg Tech coming up.
Speaker 3 (00:24):
Broadcom suffers a stock slide after its sales outlook or
lack of failed to meet investors lofty expectations.
Speaker 4 (00:30):
Plus, China I is the largest ever state MATCHIP incentives,
with as much as seventy billion dollars of state money
incident for the pivotal sector.
Speaker 3 (00:39):
And our conversation with White House ais are David Sachs
on President Trump's executive order aimed at limiting state level
regulation of AI.
Speaker 4 (00:48):
First, and we check on these markets that are dictated
by tech, dictated by them, and we say that where
we're off by eight tenths one point eight percent, let's
look at it and the Nastak one hundred, we are
under pressure. We consider not just the macro perspective, and
vonn yields move what's happening underneath the surface. I'm looking
at the Golden Dragon Index. Look, this is showing what
Chinese names trade in the US in terms that eight
(01:10):
hors are up to.
Speaker 5 (01:11):
What a dichotomy. We've got going what a juxtaposition, China higher, we'll.
Speaker 4 (01:15):
Get to that news later, US lower, and in large
part it's by one key stock.
Speaker 3 (01:19):
You're looking at some breaking news Bloomberg reporting citing sources
that Oracle has pushed back some of the completion dates
of data centers that's developing with and for open AI.
That pushback is to twenty twenty eight from an earlier
plan of twenty twenty seven. The market reacted. Look at
the right hand side of the squiggly line. It's paired
(01:41):
some of that decline, but at one point session low
well beyond six percent.
Speaker 2 (01:45):
I think car relating the show.
Speaker 3 (01:46):
We're going to get an opportunity to talk to Brody Ford.
You broke that story. Get more of the details. Right now,
the top story is Broadcom. It is on track for
its biggest decline since January of this year, a seventy
three billion dollar backlog AI specific, but what the street
wanted was a very different number. During a conference call,
CEO Hoc Tan held off giving an annual AI revenue forecast,
(02:11):
saying it was quote a moving target.
Speaker 2 (02:13):
Listen to this.
Speaker 6 (02:15):
It's hard for me to pinpoint what twenty six is
going to look like precisely. So I'd rather not give
you guys any guys, and that's why we don't give
you guys, but we do give it for two one.
Speaker 3 (02:29):
Carle Ackerman, Managing director of semi Conductors and Networking Hardware
at BNP Pariber joins us for more is new price
target four hundred and seventy five dollars, among the highest
now for analysts covering the stock. So that's the point.
You have different sets of data. They gave us a
figure which was a seventy three billion dollar backlog this morning.
Quite clearly the market would like to see a revenue
(02:51):
number that's forward looking.
Speaker 2 (02:52):
Yep, yeah, that's true.
Speaker 7 (02:54):
So so you're right, I think the I think what's
interesting here the reason why brad Armer is down is
not about out the It's not about how revenue has
perhaps missed expectations. First and forem with some of the
company actually beaten raised guidance AI sales or above expectations.
The outlook for next quarter of eight point two billion
farc City consensus of six point eight billion of AI sales,
(03:15):
which doubled on ear of your basis. When queried, the
company indicated that how Co indicated that revenue could perhaps
accelerate into fiscal twenty six versus that one hundred percent
accelerated growth number. We have over fifty billion of AI
sales in fiscal twenty five. I think the reason why
the stock is down ed, however, is in part because
(03:35):
there are some investors a bit worried about the margin
structure of the Entropic deal. So of that seventy three
billion in AI sales, twenty one billion will go to
an Entropic as part of a TPU system sale, and
that TPU system sale is going to be lower margin
than what brought Com generates content.
Speaker 3 (03:54):
How much of the content of a server do you
own beyond just the chair?
Speaker 2 (03:57):
But you like this name right?
Speaker 3 (03:59):
Like you've just rate the price target to full seventy
five from three to eighty five, that right map, Well,
what is it you like about?
Speaker 2 (04:06):
Brokem sure?
Speaker 7 (04:07):
I mean Broadcom I think is in a llegue of
its own, akin to in video. Really where Nvidia and
Broadcom dominate two of the three main buckets of AI
infrastructure spending. Those include compute, memory, and networking. They of
course control two of them, networking and compute more than
anyone else, And I think, what's what is happening here?
(04:28):
What the what the investment community I think is overlooking
today on this on the selloff is the fact that
Broadcom is moving toward a full solution stack akin to
what in Video is doing on I'm providing AI compute
and AI networking as we move to scale up domain
where you're going to need optical for both the for
(04:51):
the both the networking A six and the and the compute.
And they offer that entire IP stack in house. And
that is what I think people are over miss missing today.
Speaker 5 (05:01):
You're calling it short sighted, Karl.
Speaker 4 (05:03):
I know you don't cover in Video as a name,
but does broadcom success come at the expense of others
in the market?
Speaker 7 (05:12):
Thanks Carolyn, It's a good question, you know, I think
I think it's in a vacuum. You know, we try
and pigeonhole broad conferences in Vidia or broad conferences AMD
or GPUs versus customer accelerators. I think what we found
out is that it is not a it is not
a winner take Hall, It is not a singular approach.
(05:32):
What you're seeing is that hyper scales are adopting custom
compute as well as GPUs for frontier model training, and
that will continue to progress as we move toward inferencing,
So it's not so clear sighted there. I think what's
important here is that Broadcom offers the full solution stack
(05:54):
across networking and compute, and similar to Nvidia, those are
about the only two companies in all of tech, including Semis,
that offer that capability.
Speaker 4 (06:06):
Of course, hocktans very much aligned in terms of his
own pay package with hitting certain revenue numbers for AI
in particular. But from your perspective, is there a supply
side headache going on.
Speaker 5 (06:19):
At the moment.
Speaker 4 (06:19):
We're hearing reports that Dell, for example, is having to
jack up pricing because of the pricing that it's feeding
on memory were Broadly, we're seeing the breaking news that
Oracle's having to delay some of its data centers. There
is a tussle for the infrastructure that's necessary right now,
and is that just not going to happen in the
overnight way that the market is anticipating.
Speaker 7 (06:39):
Great question, Carolyn, I think what's interesting to hear is
I would like to tie in this idea that are
we in a bubble of AI infrastructure?
Speaker 2 (06:47):
I think that's no. The answer is definitive. No, I think.
Speaker 7 (06:53):
Gigawatt capacity and announcements take time to ramp that ramp
in that qualification and filling up that fab is now
extending the visibility across the entire supply chain, whether it's
hard drives, whether it's memory, whether it's networking, whether it's compute,
and that is giving companies like Broadcom, companies like Nvidia,
(07:16):
companies like everyone across the supply chain.
Speaker 2 (07:18):
Very long visibility.
Speaker 7 (07:20):
And right now things are very tight, and so some
of the areas that are the most tight in our
AI ecosystem coverage include lasers for optical transceiver components. There
are ways to ameliorate those that tightness among the supply chain,
and Hawk and Broadcom announced how they have the sufficient
(07:42):
capacity for their chips to meet the demand that they
see in fiscal twenty six and in fiscal twenty seven.
Speaker 5 (07:49):
Who doesn't love talking lasers.
Speaker 4 (07:51):
Kyle Ackerman of BNP paraba, it's been great getting your take.
As we do see stocks fallswe the NASDAK more broadly
now under pressure is some two percent pop. The discussion
that's happening between the US and China, because look, chip
markets are in the eye of the storm. They're China
planning to pour up to seventy billion dollars of state
money into the sector, dem pivotal to its technological conflict
(08:12):
with the United States. Bloomberg's Maggie Eastland joins US now,
and seventy billion dollars would be an extraordinary amount of
government support that we've ever seen worldwide.
Speaker 5 (08:21):
Right, Yes, this is a huge number.
Speaker 8 (08:25):
This would be you know, China's biggest semiconductor specific packaging.
And according to Bloomberg reporting, that number could be anywhere
between as you said, seventy billion, and it could go
down to twenty eight billion, So it depends.
Speaker 5 (08:37):
Here we'll see how large it is.
Speaker 8 (08:38):
That compares to the US effort at industrial policy for semiconductors,
which is fifty two billion dollars.
Speaker 5 (08:44):
So this is a.
Speaker 8 (08:45):
Similar scale to what the US has undertaken in recent years.
Speaker 3 (08:49):
Maggie, there are some questions to which we just don't
have answers, and that largely relates to what China specifically
will do with the funds and where they'll go. But
within that Bloomberg reporting, where do we think China is
going to prioritize using the funding to you know, which
champions is it going to elevate.
Speaker 8 (09:08):
Yes, So of course China is always really looking to
support it's AI chip makers that compete with in Vidia,
so that includes companies like Huawei and Camber kN But
there are other chip companies including SMIC or Smith which
does the manufacturing, so that would be the corollary to TSMC.
So there's a range of companies that could see this investment.
(09:30):
But China will face headwinds because it still has restrictions
on many of the equipment technologies and the foundries that
can't access TSMC.
Speaker 5 (09:38):
For those advanced node chips.
Speaker 4 (09:39):
You have many worrying about just what yields are like
from an SMIC from a SMICK when they're actually producing
these homegrown, domestically made chips. But I'm looking at video
under pressure again today, Maggie. Well, broadly, are we getting
any sense whether this is meaning that China will say
no thank you to the H two hundreds in the
same way that they did the H twenties.
Speaker 8 (10:00):
As you know, China has certainly never been shy about
saying no to US technology when they have their own
local champions. But what I will say is we don't
know the exact number of AGE two hundreds China will
accept if any What we do know is they're clearly
not backing down on their commitment to their own chip
supply chain, and they're not going to readily give way
to this US strategy of selling advanced DAIDE chips in
(10:23):
order to undermine their local competitors. So we'll have to
wait and see what happens on h two hundreds.
Speaker 3 (10:29):
Bloomberg's Maggie Eastland, who's been across China's chip efforts all
week long, thank you very much. Coming up, we're going
to get more on that breaking news report from Bloomberg
about Oracle delaying open AI specific data center project by
one year back to twenty twenty eight. It had an
impact on the markets, and as that one hundred is
now two percent actually Caroen as of Thursday night, the
(10:50):
state of play was the NAS that one hundred was
flat for the week, so we are now down two
percent on the NAS that one hundred or weekly basis.
Of course, the reaction to Broadcom and some other AI
angst is part of what's weighing on this market, and
we're going to go a lot more on that very
very soon.
Speaker 2 (11:06):
Stay with us.
Speaker 3 (11:07):
This is Bloomberg Tech okay shares Oracle down almost five percent.
They'd hit session loads of six point five percent decline
after Bloomberg's Brodi Ford broke the story that the firm
(11:30):
will be delaying data centers for open AI to twenty
twenty eight instead of a previously planned twenty twenty seven.
The reason labor and material shortages. Bluemo's Brody Ford runs
to set and joins us. Now important reporting for you
because this is what a part of Oracle's debate is. Okay, great,
you have a great backlog of business, but we are
(11:52):
very closely monitoring the ability to execute on it and
then book revenue on it. And open AI is a
big chunk of the exposure fill the banks for us.
More reporting, What are the details have you got?
Speaker 9 (12:03):
These are unprecedented scale data centers, right, I mean, giggle
watse scale data centers unprecedented, and Oracles trying to do
effectively five and them at once. And so what we
have today is that the initial completion dates, the initial
full delivery dates have been pushed backed in some cases
from twenty seven to twenty eight. And you know, I
think if you've spoken with data center folks over the
(12:25):
last couple of months. It's not a huge shocker because
I mean, these are such crazy projects, right, and the
idea of getting them done in two years was always
going to be ambitious. So now getting them done by
twenty eight it's still a tight timeline. It's still, frankly
an impressive turnaround, but it's maybe just not as quick
as the company had initially hoped.
Speaker 4 (12:45):
We're looking at Abelaine, Texas right now, where on the
conference call doing earnings we had the co CEO one
of them saying that they had more than ninety six
thousand in video chips delivered, giving you the sense of scale.
But is it a hindrance to what the revenue is
ultimately for Oracle here or is it just investors having
to be like, oh, it's still jammed tomorrow, not today.
Speaker 9 (13:08):
Right, I mean, Oracle, I'm sure will say that as
you put they deliver these sites in chunks, right, And
so Abilene is already being turned on this massive data center.
Speaker 2 (13:18):
In West Texas.
Speaker 9 (13:19):
Once you get the servers running open, AI uses them,
that's revenue recognition, yeah, right, And so really what we're
thinking about is the further out sites beyond Abilene.
Speaker 10 (13:27):
Right.
Speaker 9 (13:28):
We keep seeing these Stargate announcements for Michigan and New Mexico. Right,
these sites which are still being kind of put together,
and Oracle and other vendors too are finding that, Wow,
there's a lot of stuff out there that's backlogged.
Speaker 5 (13:41):
NAMA for one of them.
Speaker 9 (13:42):
There's only so many electricians, right, I mean, you want
to build in rural Texas, it's a smaller pool of
people you have access to.
Speaker 5 (13:50):
It's a fascinating story. It's going to run and run.
Speaker 4 (13:52):
Blomberg's Brodie Ford with a real market moving bit of
reporting that. Let's talk more about the market implications. We've
got Margie Battel with us. You put any manager and
headed capital allocation of all Spring Global investments to have
six hundred twenty nine billion dollars an assets and advisement,
and Margie, you worried these drip drip bits of information
that maybe the revenue streams.
Speaker 5 (14:13):
Aren't able to be booked tomorrow.
Speaker 4 (14:15):
It has to be waited out a little bit more
in terms of the returns on AI investment.
Speaker 11 (14:21):
No, I think the long term trends are still in place.
I actually thought that Broadcom's numbers were quite good and
people were just I think very nervous at the end
of the year, particularly with some bad news we've seen,
such as from Oracle, and I think it's really more
just end of your jitters rather than anything fundamental. I
think when you look out into twenty twenty six, you
(14:41):
still have to like the tech sector, especially the semi
the memory those companies. I think you still have to
stick with them, that there are to continue to be
high growers, and these little hiccups we have here and
there don't change the fundamental trend of very very strong
growth in a year, which would be very much lot
of growth next year. So we still like the whole sector.
Speaker 4 (15:03):
So Maggie, on a day where BRAUN comes up by
eleven percent when the nasdak's off by two percent, is
that hacup a buying opportunity?
Speaker 11 (15:11):
Well, I think it is actually because if you look
at the leading stocks that have stuck to their plan,
that have great growth, great profit margins, great innovation, and
they're down ten to fifteen, even twenty percent from their
peaks of a few months ago. So I think that
looks like a pretty attractive time to add to these names.
Because there's end of your uncertainty, a lot of short
term traders who preserve their games cash out, And I
(15:35):
think that's what you're seeing, is this pressure on the
sector rather than the change in the fundamentals the cash flow.
Speaker 5 (15:41):
The big companies are so.
Speaker 11 (15:42):
Large, this isn't going to be derailed anytime soon. So
I think next year looks pretty good.
Speaker 2 (15:47):
Sailing too, Margie, It's good to see you.
Speaker 3 (15:50):
It sounds like at your end you don't personally have
many jitters. One of the best read stories on the
Bloomberg Ternal today is about the debt and the lens
that is behind the build out in that infrastructure, where
the debt does debt as a factor in consideration sit
for you when you are tracking all sorts of different
(16:12):
hard and soft data sets to work out what's going
on here.
Speaker 11 (16:17):
Well, I look at the debt as really a company's
choice of how they want to allocate capital. Do they
want to borrow, do they want to increase the dividend,
do they want to do share buybacks? And particularly the
large successful companies really have no need to borrow. Even
paying for the CAPPAC, they still have plenty of excess
cash flow that they have to decide how to utilize.
(16:39):
Whereas I think Oracle has really taken on a lot
of debt compared to their cash flow, But the rest
I think all look pretty good.
Speaker 2 (16:47):
It's a vital.
Speaker 11 (16:48):
Sector and that's why the returns are higher, because you
have to be prepared for these little down drafts in
order to get the upside.
Speaker 3 (16:56):
Maggie Brodie's report and Oracle was very specific that Oracles
delaying those projects by a year because of labor and
material shortages elsewhere in the US economy. We have all
the chips we need, clearly, are we good at the
other stuff? And is the other stuff where it needs
to be to support this build out?
Speaker 11 (17:17):
Yes, I think it is. I think when you have
this explosion in demand of these very complex centers, I
think you should expect there will be short term problems
of supply and so forth. But really that's a good
problem to have rather than lack of demand or pricing pressure.
And we're really seeing very strong pricing for the summaris
that are going into the data centers, so we think
(17:39):
it's just nothing to worry about, and the fundamentals are
still very strong.
Speaker 4 (17:43):
Briefly though, there's reports today from other outlets saying that
Dell's going to have to Jack of its prices because
of pricing and strength and memory. Are there areas of
this AI trade that are overvalued that you shouldn't be
piling into From a margin perspective.
Speaker 11 (17:58):
Well, I think when you look at check it's like
any other sector. Is the best companies usually trade rather richly.
The cheap companies usually have problems. They don't have the
leading edge, they don't have the innovation. And when you
look at chech it's just and you can see even
here with the data centers and concern about what approach
that companies are using Broadcom or nvideo whatever in the
(18:19):
new products. It's really about innovation and who are the
leading innovators, and so the companies that don't have that
innovation are just going to fall behind. So I think
this year up till say the summer, everything moved up
and now we're seeing a separation between the companies that
have leading edge and the companies that are really falling
behind and aren't going to catch up. So I think
it'll be much more stock selection next year than we've
(18:41):
had for the first part of this year.
Speaker 3 (18:43):
With a message that in tech there's nothing to worry about.
Margie Patel from all Spring Global Investments. Great to have
you back on the show.
Speaker 2 (18:50):
Thank you very much.
Speaker 3 (18:51):
Now coming up, we're going to bring you Bloomberg's exclusive
conversation with Uber's CEO and the company's international ambitions, particular
focus on Asia.
Speaker 2 (19:00):
Next this is Bloomberg Tech.
Speaker 5 (19:08):
Ouba si Jari Koswa.
Speaker 4 (19:09):
Shahi says the company expects to offer robotaxi services in
more than ten markets by the end of next year.
Speaker 5 (19:15):
He spoke with Bloomberg Tech Asia's Annabel.
Speaker 4 (19:17):
Druders about why he's optimistic, in particular about growth potentially in.
Speaker 12 (19:20):
Asia, the APAC market and in particular the North Asia
markets as well. They are huge growth markets for us,
and if you look, for example, in the ride share business,
over thirty percent of our global first trips coming into
the category come from the Apac region. The area is
(19:42):
growing very quickly, including taxi as well, which is actually
one of our newest products on the platform. So for
me coming here, seeing the teams, meeting with local business
people and regulators and talking about how we can be
part of the future growth of the region is really
what my agenda is.
Speaker 13 (20:01):
Early this year, you also put out a statement on
the robot taxi push as well, and so the Middle
East and Asia were the markets for twenty twenty five
to launch, and we've seen of course that initial deployment
in the Middle East already. What's happening on the Asia side, well, lots.
Speaker 12 (20:18):
Of discussions on the Asia side. I think what's really
important is to set up a regulatory framework to go forward.
For example, Hong Kong has various trials and pilots going on,
and in many other markets we're talking to regulators about
how we can be a part of shaping right share
and autonomous right shair going forward. The technology is absolutely
(20:40):
getting there. These are the robot driver. It doesn't get tired,
doesn't get distracted, and we very much look forward to
working with various authorities to introduce right shair into the
markets we're now live in for markets now as we
speak in the US and in the Middle East to
(21:00):
be in ten plus markets by next year, and we
want those markets to be in the Asia Pacific region
as well.
Speaker 13 (21:08):
Where then in Asia do you think is the most
likely place.
Speaker 12 (21:11):
We'll see I think that certainly Japan has great potential,
you know, with.
Speaker 5 (21:18):
They behind on their regulation.
Speaker 12 (21:20):
They are behind in their regulation, but I think that
they also understand that with an aging population. There's a
real need for transportation, not just in the large cities,
but in.
Speaker 2 (21:31):
The rural areas.
Speaker 12 (21:32):
And for example, I experienced that personally going to Kaga
City and where we have communal ride share and kind
of took a ride share trip and understood what the
needs are there. So we're talking with various countries regulatory authorities.
I think Japan is going to be part of it.
I certainly hope that Hong Kong is going to be
a part of it. Australia, where we were just talking about,
(21:52):
is a huge market for us. So we're having those
dialogues and I think that the picture will shape up
over the next two years because the technology is definitely
getting there.
Speaker 3 (22:03):
Uber CEO Dara Kostrashahi there along with our animl drawers
and aw sticking with Uber. The company, along with door Dash,
is suing New York City to block requirements that the
delivery tipping option be available at the time of checkout
and set to at least ten percent. The two companies
argue this would worsen sticker shock for inflation weary consumers.
Speaker 2 (22:24):
New tipping laws.
Speaker 3 (22:25):
Are set to become effective January twenty sixth carrot.
Speaker 5 (22:27):
I want to watch it.
Speaker 4 (22:28):
Meanwhile, coming up, you're reporting to watch how Rivian is
replacing invideos tech in future vehicles with its own chips.
From New York, From San Francisco, this is Bloomberg Tech.
Speaker 2 (23:00):
Welcome back to Bloomberg Tech.
Speaker 3 (23:02):
Rivian take a look at its shares up currently sixteen
percent at one point in the session, up more than
nineteen percent, trading at its highest level since January of
twenty twenty four, so its highest level in two years.
Yesterday it fell quite a lot after it told investors
and the world its plans for autonomous driving. Rivian's plan
(23:24):
for autonomous driving is based on two big technology bets,
and we went to see them. Rivian's developed its own
artificial intelligence chip for its future cars that gamble might
pave the way to fully autonomous driving. A lot of
(23:45):
the tech world imagines a future where we don't own
cars at all. We're talking about fleets of robotaxis that
are summoned through an app, maybe no steering wheel or
driver controls at all. But Rivian's in the camp that
does see people owning their own cars in the future
and being willing to pay top dollar for a software
platform that allows the car to drive itself. If this
idea seems familiar, Tesla has been selling a version of
(24:10):
it for years.
Speaker 2 (24:11):
Full self driving supervised is not.
Speaker 3 (24:13):
Technically full autonomy if you read the fine print, but
it can get you from point A to point B
without needing to put.
Speaker 2 (24:20):
Your hands on the steering wheel.
Speaker 3 (24:25):
Rivian's path to autonomy is rooted in two big bets.
The first a custom AI chip developed in house, which
marks a big break from Nvidia.
Speaker 14 (24:35):
This is a wrap one chip, it's a multitip module.
In the middle is a Rivian design custom silicon surrounded
by memory on two sides. The decision to build an
in house was based on a very rigorous analysis of
the benefits we could come and those benefits are velocity
or ability to get to market, break quickly with it,
performance and cost.
Speaker 3 (24:55):
The second a major change in how Rivian vehicles see
the world. The next generation Rivian R two will have
indented lidar sensors in it.
Speaker 14 (25:05):
It's not just about the computer, it's also about the
sensors and it's about how they all come together.
Speaker 15 (25:12):
This is really in mark one what the Gen three
architecture does with compute levels that are dramatically expanded, such
as to put some numbers to this at the platform level,
sixteen hundred sparse tops where you can process five billion
pixels per second, beautifully integreated lightar that raises the ceiling
to allow us to take your eyes off the road.
Speaker 2 (25:32):
This will cause some debate.
Speaker 3 (25:35):
Tesla vehicles only use cameras as sensors for their systems,
and what Elon Musk company has always argued is that
other sensors like lidar or radar are too expensive to scale.
Until now, Rivian didn't really have an autonomous system. It
had advanced driver assistance tools powered by cameras and radar,
and Rivian used Nvidia chips as the brain in the
(25:57):
vehicle to interpret the world around it. Rivian says it's
new AI model will keep improving those older cars too,
eventually adding capabilities like hands off point to point driving.
Rivian doing its own chip and ditching in Nvidia is
a surprise.
Speaker 15 (26:12):
On the Rivian processor side. This represents a significant cost
savings to us. There is a lot of margin, of
course in the in the semiconductor space, and working directly
with PSMC, we have a great relationship with them.
Speaker 3 (26:25):
The new hardware is the unlock. It should allow Rivian
to go from that driver assistance software in its existing
lineup to true autonomy in the next gen R two.
Speaker 15 (26:35):
And the next big step is personal level for it.
And what I mean is the vehicle can operate empty,
it can operate without anyone in the driver's seat. It
can pick your kids up from school, it can drop
you at the airport. It's a complete shift in how
we think about the vehicle experience.
Speaker 3 (26:51):
Looking back, this was the company that pulled off the
sixth largest IPO in US history, and it was first
to market with full size battery electric pickups and sau
beating out Tesla, Forward and General Motors. But today Rivian
struggling with the basics. Production of its evs hasn't really scaled.
Rivian Soul plant in Illinois is capable of building two
(27:13):
hundred and fifty thousand units a year, but in twenty
twenty five it probably won't hit fifty thousand. The truest
representation of that struggle, the stock is at a fraction
of its peak.
Speaker 2 (27:26):
Right now.
Speaker 3 (27:27):
In the world of tech, you have to have something
to say about AI, and Rivian is diving deep into
autonomy to appease its investors, an ai chiplidar and a
large driving model right now. It's a promise from Rivian
that their next generation vehicles will have genuine autonomous capabilities.
Speaker 4 (27:48):
Extraordin and reporting deep dive and Rivian, as you said,
ed doing very well on the day, unlike the rest
of the markets. Just check in what's happening to the Nasdak.
We're down on the week, We were down on the
day and as at one hundred, off by more than
two percent andach points tech in the line of fire
today even dragging Chinese names now into the red. They
started the trade and our show in the green as
we understood that the Chinese government was going to be
(28:09):
going all in on funding its own domestic chips apply
up to seventy billion dollars worth of government incentives, is
the reporting coming out of Bloomberg News at the moment.
But even China starts to dip at the moment. We
see Broadcom in the video in the red, Pallanteer, Amazon, Micron,
some key names currently on the downside as we have
that AI bubble anxiety all over again.
Speaker 3 (28:32):
Right coming up, actually, Caro, we're going to talk about
the United Kingdom. We're going to be joined by British
Business Bank CEO Lewis Taylor for his take on the
UK's tech sector. He's in town in San Francisco and
Silicon Valley to think about how technology might work across
the Atlantic.
Speaker 2 (28:48):
That's next, This is Sploomberg Tech.
Speaker 3 (28:59):
The UK economy is at risk of its first coarsely
contraction since labor returned to power after growth, disappointed again
by shrinking ahead of Chancellor of the Exchequer Rachel Reeves's
tax raising budget. Can the UK tech sector come to
the rescue? Louis Taylor, CEO of the British Business Bank,
joins us now and it's great to have you in
(29:20):
town in San Francisco.
Speaker 16 (29:23):
Really great to be here, ed, thank you very much.
Speaker 3 (29:24):
Indeed, you have an annual budget essentially to invest in
and lend to and support the technology industry in the
United Kingdom.
Speaker 2 (29:37):
Why are you in San Francisco?
Speaker 11 (29:38):
Then?
Speaker 2 (29:38):
What brings you in San Francisco?
Speaker 16 (29:40):
Well, look, we're here pitching to us VC's a really
great new growth opportunity for them, which is based on
three things. Firstly, as you say, the quality of the
UK tech industry for the top ten universities globally producing
great research with some really excellent entrepreneurs and the ability
to scale businesses as well. So that's where they come in. Secondly,
(30:02):
a new pool of capital coming on stream domestically in
the UK from pension funds hopefully. And then thirdly the
opportunity to partner with the bank, which is the biggest
LP in UK venture and growth equity connected and knowing
the landscape pretty well.
Speaker 5 (30:14):
Luis the landscape we know so well? Is fintech?
Speaker 4 (30:17):
I think of Revolute, I think a Monso the standouts.
But where else is really thriving? Where else should VC
come in as port in the UK?
Speaker 16 (30:25):
Well, look, I think you're absolutely right. Fintech is very strong.
And just today Go Cardless did a deal with Molly
and that a unicorn that we invested in twelve years ago.
So you need a bit of patience on this. So
fintech's very strong. AI in different places is very strong.
Not so much on the hardware side, not so much
on the larger language models, but more broadly, if I
(30:46):
think about companies like Synthesia or eleven Labs, all of
those companies coming out of the UK, So I think
those tech areas are great, but also the application of
AI into life sciences is incredibly strong as well, and
the UK has an incredibly strong life sciences industry. So
I think we see AI as being a theme across
(31:07):
the sectors of the industrial strategy the government announced and
the UK being strong in those.
Speaker 3 (31:12):
To be fair, many of those companies you name, you know,
they come on this program regularly, you know, and they
are making advancements in their respective fields.
Speaker 2 (31:20):
We want to go back to what you.
Speaker 3 (31:20):
Said, the big pot of pool of money coming online
a little bit more. Please, Yeah, how big? How certain
is it? And that's important right because the lesson of
AI in this country at least is the capital requirements
are much bigger.
Speaker 2 (31:37):
Much bigger.
Speaker 16 (31:38):
So the UK we incubate companies incredibly well, we scale
them less well, and we haven't had the scale up
capital we need. It's not that we don't have the money,
because we have the second largest funded pension scheme in
the world at around four trillion pounds, but we have
an allocation issue with that pension money, which is changing
the government encouraging pension funds to invest more in the
domestic economy and in the growth economy. I think what
(32:00):
we're looking for is some of the expertise here in
the VC industry in the US about scaling those companies.
As I say, we incubate well, but it's that scaling
stage and the expertise needed there where. Of course you
need capital, but you need other things as well, network's
capabilities and many other things. Mentoring of leadership teams.
Speaker 4 (32:18):
Luis what is the state of brain drain when you
actually do get a really successful company. Now, eleven labs
are staying there since these years as well, but many
up and even come to Silicon Valley or to the US.
Speaker 5 (32:30):
Is that something that's still happening.
Speaker 16 (32:32):
Well, look, I think it does happen to an extent.
I think we really want to try and address that
and try and stop it and actually capture some more
of the value in the UK economy. As I say
this is the companies have largely come over here because
is where the capital is. If you've got a new
capital stream with some expertise based on it in the UK,
we're going to hope to retain those companies in the
UK longer. And actually the innovation ecosystem I think is
(32:53):
quite self perpetuating success breed success. We've got a lot
of the right things in place, but it's just this
top end that we need to to really make sure
that we realize more potential and keep the flywheel going.
Speaker 3 (33:04):
So your strategy here, and one of the reasons you're
in town, is to go to the American VCS, the
Value v season say.
Speaker 2 (33:10):
Give us your capital, come to the UK. We have
something to offer.
Speaker 3 (33:14):
But that strategy then carries risks with what you're just
talking with Carolina about.
Speaker 2 (33:17):
Right.
Speaker 16 (33:18):
Yeah, we're not quite saying that, we're saying, bring us
your expertise, will help you raise capital locally.
Speaker 2 (33:22):
This is a growth opportunity for capital locally. That's a key,
absolute distinction.
Speaker 16 (33:26):
Absolutely, and the connections that we have with all the
gps LPs but also the pension funds. I mean, we
actually are raising our own fund at the moment for
a co invest fund in the UK from UK pension
funds and we'll do the first close end of January
early February. And this is a thing, it's.
Speaker 2 (33:43):
A real thing.
Speaker 4 (33:44):
It's a real thing, and we'll let you go out
and have real conversations with those vcs and the Value
the Louis Taylor, thanks for stopping by. CEO the British
Business Bank. Coming up, White House AI and Cryptos are
David Sachs joins us to talk about the President trump
executive Order on a regulation.
Speaker 5 (34:01):
This is ring back Tap.
Speaker 3 (34:15):
Welcome to our global radio and TV audiences. President Trump
signed an executive order aimed at limiting state level regulation
of AI. The move is supported by tech leaders who
have argued local rules could stifle innovation. We're joined by
David Sachs, the White House AI and Crypto ZA or
Senior Advisor, David. I think it's a really good place
(34:37):
to start in your work with the President in consulting
and advising on the formulation of this executive order.
Speaker 2 (34:45):
What was the.
Speaker 3 (34:46):
Problem that you were trying to solve for and what
is it that you said to the President about why
this EO was the right approach to focus on state
level laws?
Speaker 10 (34:58):
Well, thanks for having The problem that we see is
that you've got one thousand different bills going through state
legislatures right now to regulate AI, and over one hundred
measures already passed. Some of these bills are contradictory, and
you've got fifty different states running in fifty different directions.
Speaker 2 (35:14):
That type of compliance.
Speaker 10 (35:15):
Regime is going to be very hard for small companies
and startups, especially innovators to comply with. And so what
we need is a single federal or national framework for
AI regulation. And that's what the President has supported, and
by the way, he supported this for a long time.
If you go back to his July speech on AI,
he called for a single national framework then. And what
(35:37):
we've done with THISEO now is to make clear that
that is the administration's policy and to task members of the
administration to work with Congress to try and enact that
framework through legislation, because ultimately this needs to be a law,
and in the meantime create tools that the administration can
use to push back on examples of the most onerous
and excessive state regulations.
Speaker 3 (36:00):
David, there is of course some pushback you know, on
the executive order from the states themselves, from other Republicans
you know, as you know, like I studied the July
speech and strategy closely, a big part of it, you know,
was infrastructure related and about deregulation. The concern about this
(36:20):
latest executive order is that while it addresses your concerns
about many different pieces of state regulation, it does not
provide for a single federal framework.
Speaker 10 (36:32):
Well, at the end of the day, that single federal
framework has be enacted through law, and we need Congress
to do that. And so the President has asked Congress
to do that, and these tasked members the administration to
work with Congress to produce that framework. In the meantime.
What we've done here is articulated set of principles. We
said what values are important to us. We said that
we want to protect child safety, that's important. We want
(36:56):
to respect copyright, we want to preserve the ability of
local community is to choose what infrastructures and their communities.
We're not seeking to preempt the states in any of
those areas. So this is an important set of principles
that we have put forth. And at the same time,
the EO provides for a number of tools that can
(37:16):
be used to push back on excessive state regulation. And
let me just illustrate why I think this is so necessary.
What we're really talking about here is regulation of AI
models and algorithms. Well, think about how an AI model
is developed. You can have developers in one state of
multiple states writing the code. It can then be trained
(37:37):
in a data center in another state. You then can
have inference happen in another state, and the entire service
is provided over the Internet using national telecommunications infrastructure. So
you're dealing there with at least four different states, and
all of them can lay claim to regulating those AI models,
and those regulations can be in contradiction with each other.
(37:57):
Even Democrat governors have admitted this as a problem. Just
the other day, Kathy Hockle, the governor of New York It,
basically said that she might prefer to enact California's SB
fifty three, which is a regulation that they just passed
in California, rather than the bill that her own assembly
gave her the raise act, because she sees that, wait,
do we really want to create this patchwork in different regulations.
(38:18):
So even Democrat governors are realizing this is a problem,
and if they all run in different directions, then we're
going to end up with a patchwork or a misshmash
of regulations that are impossible for companies to comply with.
What the President is calling for here is just common sense.
We want to get to a single national framework of
compliance as opposed to fifty states running in different directions.
Speaker 4 (38:39):
Meanwhile, Kathy Hokle actually is getting a bit of criticism
perhaps for narrowing and what some are saying is bowing.
Speaker 5 (38:45):
Down to business. David, I'm really interested in.
Speaker 4 (38:48):
How you oppose that view, because there is anxiety in
the population AI versus jobs, AI versus energy bills. How
are you giving them the sense that we haven't seen
federal government and India now state government's just handing over
the reins to big tech billionaires as people call them.
Speaker 6 (39:05):
Right.
Speaker 10 (39:05):
No, I understand there's a lot of fear out there
about AI and job loss specifically, and a lot of
those fears have been drummed up. Let me just say
on the job loss question, because I think this is
really important that Yale just released a study and it
showed that in the thirty three months after the launch
of chat GPT, there was no discernible disruption to the
US job market none. They said, no discernible disruption. And
(39:27):
in fact, if you look right now, more jobs are
being created than being lost. So this whole idea of
job losses just isn't true. There was an article on
the Wall Street Journal just last week talking about the
construction boom that's happening that's benefiting construction workers like electricians
like plumbers like workers who pour concrete or hang drywall.
Their wages are up thirty percent because this infrastructure boom
(39:48):
that's happening right now, and there's actually a job shortage
in many of those trades, meaning we need more workers
going into those trades. So what we're seeing right now
is an overall AI boom that's benefiting the economy. You know,
the the GDP growth rate was tracking about four percent,
and half of that up to half of it's been
attributed to AI. So I just think that this narrative
(40:10):
about job loss has been blown out of proportion. Certainly
there could be job displacement in the future, but we
haven't seen any of that so far. It's been quite
the opposite. It has been job gains.
Speaker 3 (40:21):
David Final one on the EO, If I may, you
know what this EO allows for. Is it the sort
of hope that it will lead to the DOJ sewing
states like New York and California. And if that's the case,
you know, the President and the administration's confidence that you'd
win them.
Speaker 10 (40:40):
Well, that is one of the tools that is in
the EO is that the DOJ has been tasked to
form a litigation task force that would have the ability
to push back on excessively burn some state laws, laws
that may be unconstitutional, violate the First Amendment, things like that.
By the way, the DOJ already had that power, So
this is a novel power. But what's being done here
(41:02):
in the CEO is we're marshaling all the resources of
the federal government behind the strategy of the President to
create a national framework. Now, in terms of what laws
we go after, that's a decision that has been made.
We haven't decided whether California and New York should be
targets in that way. The one that I think is
probably the most excessive is this Colorado law that seeks
(41:23):
to prohibit algorithmic discrimination. What that basically says is that
if an AI model has a disparate impact on a
protected group, then that model is violating the law. Model developers,
by the way, I have no idea how to comply
with this because they're not aware of all the downstream
uses of their model. I mean, if a business decides
to use an AI model in a hiring decision, for example,
(41:43):
that business is already on the hook for discrimination. So
how would the model developer know that it was being
used in that way. But what Colorado was trying to
do there is get their ideology inserted into the model.
That's very concerning to us. We think there's a First
Amendment issue there, but look, we haven't made any decisions
in terms of how that litigation task for US to
be used.
Speaker 4 (42:01):
David Briefly, all of this is set in the context
of US versus China and a deemed to run forward
on AI development. Meanwhile, it's been a busy week and
H two hundreds might indeed be able to get to China.
How many do you think you'll do in volumes and
what do you think the appetite is of China to
buy in videos more sophisticated chips.
Speaker 10 (42:20):
Well, it's interesting. I just saw an article that said
that China was rejecting the H two hundreds, So apparently
they don't want them, and I think the reason for
that is they want semiconductor independence the same way that
the United States wanted to be energy independent. They want
to be semiconductor independent, So they're rejecting our chips, and
that's part of the calculation that goes into the decision
of what we authorized to be sold to China. The
(42:42):
US policy has always been that we don't allow the
leading edged chips, and we're not. This is this H
two hundred chip. It was state of the art a
couple of years ago, but now it's been superseded by
the new or Blackwell architecture and the Ruben architecture that's
coming out next year. So this is now a lagging chip,
not a leading chip. But what you see is not
taking them because they want to prop up and subsidize Hahwei.
(43:04):
They want to create a national champion, and that was
part of our calculation of selling not the best but
lagging chips to China's. You can take market share away
from Huawei, but I think the Chinese government's figured that
out and that's why they're not allowing them.
Speaker 4 (43:17):
David Sachs, we always wish we had more time White House,
AI and cryptos Are. We thank you for joining us
today on the executive order and indeed on in videos
H two hundreds. That does it for this edition of
Bloomberg Tech. The market is in sell off motored as
we wrap up this week. We're down by more than
two percent on the NASDAC more broadly and indeed for
the week, but really all eyes on well Broadcom.
Speaker 5 (43:36):
And its numbers.
Speaker 3 (43:37):
Yeah, Broadcom in the earnings context investors, what is more
But Bloomberg reporting on Oracle is what moved the needle,
believe it or not. This is my last show of
twenty twenty five. An astonishing year and a lot of
the themes in today's show what we've been talking about
all year long. Recap on the podcast. You can find
it on the terminal and online. You know where to Caro.
(43:58):
I'll see you in twenty twenty six.
Speaker 5 (44:00):
Have a great break. Mmmmmm
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is a
live from Coast to Coast with Caroline Hyde in New
York and vlave Low in sentences go.
Speaker 2 (00:22):
This is Bloomberg Tech coming up.
Speaker 3 (00:24):
Broadcom suffers a stock slide after its sales outlook or
lack of failed to meet investors lofty expectations.
Speaker 4 (00:30):
Plus, China I is the largest ever state MATCHIP incentives,
with as much as seventy billion dollars of state money
incident for the pivotal sector.
Speaker 3 (00:39):
And our conversation with White House ais are David Sachs
on President Trump's executive order aimed at limiting state level
regulation of AI.
Speaker 4 (00:48):
First, and we check on these markets that are dictated
by tech, dictated by them, and we say that where
we're off by eight tenths one point eight percent, let's
look at it and the Nastak one hundred, we are
under pressure. We consider not just the macro perspective, and
vonn yields move what's happening underneath the surface. I'm looking
at the Golden Dragon Index. Look, this is showing what
Chinese names trade in the US in terms that eight
(01:10):
hors are up to.
Speaker 5 (01:11):
What a dichotomy. We've got going what a juxtaposition, China higher, we'll.
Speaker 4 (01:15):
Get to that news later, US lower, and in large
part it's by one key stock.
Speaker 3 (01:19):
You're looking at some breaking news Bloomberg reporting citing sources
that Oracle has pushed back some of the completion dates
of data centers that's developing with and for open AI.
That pushback is to twenty twenty eight from an earlier
plan of twenty twenty seven. The market reacted. Look at
the right hand side of the squiggly line. It's paired
(01:41):
some of that decline, but at one point session low
well beyond six percent.
Speaker 2 (01:45):
I think car relating the show.
Speaker 3 (01:46):
We're going to get an opportunity to talk to Brody Ford.
You broke that story. Get more of the details. Right now,
the top story is Broadcom. It is on track for
its biggest decline since January of this year, a seventy
three billion dollar backlog AI specific, but what the street
wanted was a very different number. During a conference call,
CEO Hoc Tan held off giving an annual AI revenue forecast,
(02:11):
saying it was quote a moving target.
Speaker 2 (02:13):
Listen to this.
Speaker 6 (02:15):
It's hard for me to pinpoint what twenty six is
going to look like precisely. So I'd rather not give
you guys any guys, and that's why we don't give
you guys, but we do give it for two one.
Speaker 3 (02:29):
Carle Ackerman, Managing director of semi Conductors and Networking Hardware
at BNP Pariber joins us for more is new price
target four hundred and seventy five dollars, among the highest
now for analysts covering the stock. So that's the point.
You have different sets of data. They gave us a
figure which was a seventy three billion dollar backlog this morning.
Quite clearly the market would like to see a revenue
(02:51):
number that's forward looking.
Speaker 2 (02:52):
Yep, yeah, that's true.
Speaker 7 (02:54):
So so you're right, I think the I think what's
interesting here the reason why brad Armer is down is
not about out the It's not about how revenue has
perhaps missed expectations. First and forem with some of the
company actually beaten raised guidance AI sales or above expectations.
The outlook for next quarter of eight point two billion
farc City consensus of six point eight billion of AI sales,
(03:15):
which doubled on ear of your basis. When queried, the
company indicated that how Co indicated that revenue could perhaps
accelerate into fiscal twenty six versus that one hundred percent
accelerated growth number. We have over fifty billion of AI
sales in fiscal twenty five. I think the reason why
the stock is down ed, however, is in part because
(03:35):
there are some investors a bit worried about the margin
structure of the Entropic deal. So of that seventy three
billion in AI sales, twenty one billion will go to
an Entropic as part of a TPU system sale, and
that TPU system sale is going to be lower margin
than what brought Com generates content.
Speaker 3 (03:54):
How much of the content of a server do you
own beyond just the chair?
Speaker 2 (03:57):
But you like this name right?
Speaker 3 (03:59):
Like you've just rate the price target to full seventy
five from three to eighty five, that right map, Well,
what is it you like about?
Speaker 2 (04:06):
Brokem sure?
Speaker 7 (04:07):
I mean Broadcom I think is in a llegue of
its own, akin to in video. Really where Nvidia and
Broadcom dominate two of the three main buckets of AI
infrastructure spending. Those include compute, memory, and networking. They of
course control two of them, networking and compute more than
anyone else, And I think, what's what is happening here?
(04:28):
What the what the investment community I think is overlooking
today on this on the selloff is the fact that
Broadcom is moving toward a full solution stack akin to
what in Video is doing on I'm providing AI compute
and AI networking as we move to scale up domain
where you're going to need optical for both the for
(04:51):
the both the networking A six and the and the compute.
And they offer that entire IP stack in house. And
that is what I think people are over miss missing today.
Speaker 5 (05:01):
You're calling it short sighted, Karl.
Speaker 4 (05:03):
I know you don't cover in Video as a name,
but does broadcom success come at the expense of others
in the market?
Speaker 7 (05:12):
Thanks Carolyn, It's a good question, you know, I think
I think it's in a vacuum. You know, we try
and pigeonhole broad conferences in Vidia or broad conferences AMD
or GPUs versus customer accelerators. I think what we found
out is that it is not a it is not
a winner take Hall, It is not a singular approach.
(05:32):
What you're seeing is that hyper scales are adopting custom
compute as well as GPUs for frontier model training, and
that will continue to progress as we move toward inferencing,
So it's not so clear sighted there. I think what's
important here is that Broadcom offers the full solution stack
(05:54):
across networking and compute, and similar to Nvidia, those are
about the only two companies in all of tech, including Semis,
that offer that capability.
Speaker 4 (06:06):
Of course, hocktans very much aligned in terms of his
own pay package with hitting certain revenue numbers for AI
in particular. But from your perspective, is there a supply
side headache going on.
Speaker 5 (06:19):
At the moment.
Speaker 4 (06:19):
We're hearing reports that Dell, for example, is having to
jack up pricing because of the pricing that it's feeding
on memory were Broadly, we're seeing the breaking news that
Oracle's having to delay some of its data centers. There
is a tussle for the infrastructure that's necessary right now,
and is that just not going to happen in the
overnight way that the market is anticipating.
Speaker 7 (06:39):
Great question, Carolyn, I think what's interesting to hear is
I would like to tie in this idea that are
we in a bubble of AI infrastructure?
Speaker 2 (06:47):
I think that's no. The answer is definitive. No, I think.
Speaker 7 (06:53):
Gigawatt capacity and announcements take time to ramp that ramp
in that qualification and filling up that fab is now
extending the visibility across the entire supply chain, whether it's
hard drives, whether it's memory, whether it's networking, whether it's compute,
and that is giving companies like Broadcom, companies like Nvidia,
(07:16):
companies like everyone across the supply chain.
Speaker 2 (07:18):
Very long visibility.
Speaker 7 (07:20):
And right now things are very tight, and so some
of the areas that are the most tight in our
AI ecosystem coverage include lasers for optical transceiver components. There
are ways to ameliorate those that tightness among the supply chain,
and Hawk and Broadcom announced how they have the sufficient
(07:42):
capacity for their chips to meet the demand that they
see in fiscal twenty six and in fiscal twenty seven.
Speaker 5 (07:49):
Who doesn't love talking lasers.
Speaker 4 (07:51):
Kyle Ackerman of BNP paraba, it's been great getting your take.
As we do see stocks fallswe the NASDAK more broadly
now under pressure is some two percent pop. The discussion
that's happening between the US and China, because look, chip
markets are in the eye of the storm. They're China
planning to pour up to seventy billion dollars of state
money into the sector, dem pivotal to its technological conflict
(08:12):
with the United States. Bloomberg's Maggie Eastland joins US now,
and seventy billion dollars would be an extraordinary amount of
government support that we've ever seen worldwide.
Speaker 5 (08:21):
Right, Yes, this is a huge number.
Speaker 8 (08:25):
This would be you know, China's biggest semiconductor specific packaging.
And according to Bloomberg reporting, that number could be anywhere
between as you said, seventy billion, and it could go
down to twenty eight billion, So it depends.
Speaker 5 (08:37):
Here we'll see how large it is.
Speaker 8 (08:38):
That compares to the US effort at industrial policy for semiconductors,
which is fifty two billion dollars.
Speaker 5 (08:44):
So this is a.
Speaker 8 (08:45):
Similar scale to what the US has undertaken in recent years.
Speaker 3 (08:49):
Maggie, there are some questions to which we just don't
have answers, and that largely relates to what China specifically
will do with the funds and where they'll go. But
within that Bloomberg reporting, where do we think China is
going to prioritize using the funding to you know, which
champions is it going to elevate.
Speaker 8 (09:08):
Yes, So of course China is always really looking to
support it's AI chip makers that compete with in Vidia,
so that includes companies like Huawei and Camber kN But
there are other chip companies including SMIC or Smith which
does the manufacturing, so that would be the corollary to TSMC.
So there's a range of companies that could see this investment.
(09:30):
But China will face headwinds because it still has restrictions
on many of the equipment technologies and the foundries that
can't access TSMC.
Speaker 5 (09:38):
For those advanced node chips.
Speaker 4 (09:39):
You have many worrying about just what yields are like
from an SMIC from a SMICK when they're actually producing
these homegrown, domestically made chips. But I'm looking at video
under pressure again today, Maggie. Well, broadly, are we getting
any sense whether this is meaning that China will say
no thank you to the H two hundreds in the
same way that they did the H twenties.
Speaker 8 (10:00):
As you know, China has certainly never been shy about
saying no to US technology when they have their own
local champions. But what I will say is we don't
know the exact number of AGE two hundreds China will
accept if any What we do know is they're clearly
not backing down on their commitment to their own chip
supply chain, and they're not going to readily give way
to this US strategy of selling advanced DAIDE chips in
(10:23):
order to undermine their local competitors. So we'll have to
wait and see what happens on h two hundreds.
Speaker 3 (10:29):
Bloomberg's Maggie Eastland, who's been across China's chip efforts all
week long, thank you very much. Coming up, we're going
to get more on that breaking news report from Bloomberg
about Oracle delaying open AI specific data center project by
one year back to twenty twenty eight. It had an
impact on the markets, and as that one hundred is
now two percent actually Caroen as of Thursday night, the
(10:50):
state of play was the NAS that one hundred was
flat for the week, so we are now down two
percent on the NAS that one hundred or weekly basis.
Of course, the reaction to Broadcom and some other AI
angst is part of what's weighing on this market, and
we're going to go a lot more on that very
very soon.
Speaker 2 (11:06):
Stay with us.
Speaker 3 (11:07):
This is Bloomberg Tech okay shares Oracle down almost five percent.
They'd hit session loads of six point five percent decline
after Bloomberg's Brodi Ford broke the story that the firm
(11:30):
will be delaying data centers for open AI to twenty
twenty eight instead of a previously planned twenty twenty seven.
The reason labor and material shortages. Bluemo's Brody Ford runs
to set and joins us. Now important reporting for you
because this is what a part of Oracle's debate is. Okay, great,
you have a great backlog of business, but we are
(11:52):
very closely monitoring the ability to execute on it and
then book revenue on it. And open AI is a
big chunk of the exposure fill the banks for us.
More reporting, What are the details have you got?
Speaker 9 (12:03):
These are unprecedented scale data centers, right, I mean, giggle
watse scale data centers unprecedented, and Oracles trying to do
effectively five and them at once. And so what we
have today is that the initial completion dates, the initial
full delivery dates have been pushed backed in some cases
from twenty seven to twenty eight. And you know, I
think if you've spoken with data center folks over the
(12:25):
last couple of months. It's not a huge shocker because
I mean, these are such crazy projects, right, and the
idea of getting them done in two years was always
going to be ambitious. So now getting them done by
twenty eight it's still a tight timeline. It's still, frankly
an impressive turnaround, but it's maybe just not as quick
as the company had initially hoped.
Speaker 4 (12:45):
We're looking at Abelaine, Texas right now, where on the
conference call doing earnings we had the co CEO one
of them saying that they had more than ninety six
thousand in video chips delivered, giving you the sense of scale.
But is it a hindrance to what the revenue is
ultimately for Oracle here or is it just investors having
to be like, oh, it's still jammed tomorrow, not today.
Speaker 9 (13:08):
Right, I mean, Oracle, I'm sure will say that as
you put they deliver these sites in chunks, right, And
so Abilene is already being turned on this massive data center.
Speaker 2 (13:18):
In West Texas.
Speaker 9 (13:19):
Once you get the servers running open, AI uses them,
that's revenue recognition, yeah, right, And so really what we're
thinking about is the further out sites beyond Abilene.
Speaker 10 (13:27):
Right.
Speaker 9 (13:28):
We keep seeing these Stargate announcements for Michigan and New Mexico. Right,
these sites which are still being kind of put together,
and Oracle and other vendors too are finding that, Wow,
there's a lot of stuff out there that's backlogged.
Speaker 5 (13:41):
NAMA for one of them.
Speaker 9 (13:42):
There's only so many electricians, right, I mean, you want
to build in rural Texas, it's a smaller pool of
people you have access to.
Speaker 5 (13:50):
It's a fascinating story. It's going to run and run.
Speaker 4 (13:52):
Blomberg's Brodie Ford with a real market moving bit of
reporting that. Let's talk more about the market implications. We've
got Margie Battel with us. You put any manager and
headed capital allocation of all Spring Global investments to have
six hundred twenty nine billion dollars an assets and advisement,
and Margie, you worried these drip drip bits of information
that maybe the revenue streams.
Speaker 5 (14:13):
Aren't able to be booked tomorrow.
Speaker 4 (14:15):
It has to be waited out a little bit more
in terms of the returns on AI investment.
Speaker 11 (14:21):
No, I think the long term trends are still in place.
I actually thought that Broadcom's numbers were quite good and
people were just I think very nervous at the end
of the year, particularly with some bad news we've seen,
such as from Oracle, and I think it's really more
just end of your jitters rather than anything fundamental. I
think when you look out into twenty twenty six, you
(14:41):
still have to like the tech sector, especially the semi
the memory those companies. I think you still have to
stick with them, that there are to continue to be
high growers, and these little hiccups we have here and
there don't change the fundamental trend of very very strong
growth in a year, which would be very much lot
of growth next year. So we still like the whole sector.
Speaker 4 (15:03):
So Maggie, on a day where BRAUN comes up by
eleven percent when the nasdak's off by two percent, is
that hacup a buying opportunity?
Speaker 11 (15:11):
Well, I think it is actually because if you look
at the leading stocks that have stuck to their plan,
that have great growth, great profit margins, great innovation, and
they're down ten to fifteen, even twenty percent from their
peaks of a few months ago. So I think that
looks like a pretty attractive time to add to these names.
Because there's end of your uncertainty, a lot of short
term traders who preserve their games cash out, And I
(15:35):
think that's what you're seeing, is this pressure on the
sector rather than the change in the fundamentals the cash flow.
Speaker 5 (15:41):
The big companies are so.
Speaker 11 (15:42):
Large, this isn't going to be derailed anytime soon. So
I think next year looks pretty good.
Speaker 2 (15:47):
Sailing too, Margie, It's good to see you.
Speaker 3 (15:50):
It sounds like at your end you don't personally have
many jitters. One of the best read stories on the
Bloomberg Ternal today is about the debt and the lens
that is behind the build out in that infrastructure, where
the debt does debt as a factor in consideration sit
for you when you are tracking all sorts of different
(16:12):
hard and soft data sets to work out what's going
on here.
Speaker 11 (16:17):
Well, I look at the debt as really a company's
choice of how they want to allocate capital. Do they
want to borrow, do they want to increase the dividend,
do they want to do share buybacks? And particularly the
large successful companies really have no need to borrow. Even
paying for the CAPPAC, they still have plenty of excess
cash flow that they have to decide how to utilize.
(16:39):
Whereas I think Oracle has really taken on a lot
of debt compared to their cash flow, But the rest
I think all look pretty good.
Speaker 2 (16:47):
It's a vital.
Speaker 11 (16:48):
Sector and that's why the returns are higher, because you
have to be prepared for these little down drafts in
order to get the upside.
Speaker 3 (16:56):
Maggie Brodie's report and Oracle was very specific that Oracles
delaying those projects by a year because of labor and
material shortages elsewhere in the US economy. We have all
the chips we need, clearly, are we good at the
other stuff? And is the other stuff where it needs
to be to support this build out?
Speaker 11 (17:17):
Yes, I think it is. I think when you have
this explosion in demand of these very complex centers, I
think you should expect there will be short term problems
of supply and so forth. But really that's a good
problem to have rather than lack of demand or pricing pressure.
And we're really seeing very strong pricing for the summaris
that are going into the data centers, so we think
(17:39):
it's just nothing to worry about, and the fundamentals are
still very strong.
Speaker 4 (17:43):
Briefly though, there's reports today from other outlets saying that
Dell's going to have to Jack of its prices because
of pricing and strength and memory. Are there areas of
this AI trade that are overvalued that you shouldn't be
piling into From a margin perspective.
Speaker 11 (17:58):
Well, I think when you look at check it's like
any other sector. Is the best companies usually trade rather richly.
The cheap companies usually have problems. They don't have the
leading edge, they don't have the innovation. And when you
look at chech it's just and you can see even
here with the data centers and concern about what approach
that companies are using Broadcom or nvideo whatever in the
(18:19):
new products. It's really about innovation and who are the
leading innovators, and so the companies that don't have that
innovation are just going to fall behind. So I think
this year up till say the summer, everything moved up
and now we're seeing a separation between the companies that
have leading edge and the companies that are really falling
behind and aren't going to catch up. So I think
it'll be much more stock selection next year than we've
(18:41):
had for the first part of this year.
Speaker 3 (18:43):
With a message that in tech there's nothing to worry about.
Margie Patel from all Spring Global Investments. Great to have
you back on the show.
Speaker 2 (18:50):
Thank you very much.
Speaker 3 (18:51):
Now coming up, we're going to bring you Bloomberg's exclusive
conversation with Uber's CEO and the company's international ambitions, particular
focus on Asia.
Speaker 2 (19:00):
Next this is Bloomberg Tech.
Speaker 5 (19:08):
Ouba si Jari Koswa.
Speaker 4 (19:09):
Shahi says the company expects to offer robotaxi services in
more than ten markets by the end of next year.
Speaker 5 (19:15):
He spoke with Bloomberg Tech Asia's Annabel.
Speaker 4 (19:17):
Druders about why he's optimistic, in particular about growth potentially in.
Speaker 12 (19:20):
Asia, the APAC market and in particular the North Asia
markets as well. They are huge growth markets for us,
and if you look, for example, in the ride share business,
over thirty percent of our global first trips coming into
the category come from the Apac region. The area is
(19:42):
growing very quickly, including taxi as well, which is actually
one of our newest products on the platform. So for
me coming here, seeing the teams, meeting with local business
people and regulators and talking about how we can be
part of the future growth of the region is really
what my agenda is.
Speaker 13 (20:01):
Early this year, you also put out a statement on
the robot taxi push as well, and so the Middle
East and Asia were the markets for twenty twenty five
to launch, and we've seen of course that initial deployment
in the Middle East already. What's happening on the Asia side, well, lots.
Speaker 12 (20:18):
Of discussions on the Asia side. I think what's really
important is to set up a regulatory framework to go forward.
For example, Hong Kong has various trials and pilots going on,
and in many other markets we're talking to regulators about
how we can be a part of shaping right share
and autonomous right shair going forward. The technology is absolutely
(20:40):
getting there. These are the robot driver. It doesn't get tired,
doesn't get distracted, and we very much look forward to
working with various authorities to introduce right shair into the
markets we're now live in for markets now as we
speak in the US and in the Middle East to
(21:00):
be in ten plus markets by next year, and we
want those markets to be in the Asia Pacific region
as well.
Speaker 13 (21:08):
Where then in Asia do you think is the most
likely place.
Speaker 12 (21:11):
We'll see I think that certainly Japan has great potential,
you know, with.
Speaker 5 (21:18):
They behind on their regulation.
Speaker 12 (21:20):
They are behind in their regulation, but I think that
they also understand that with an aging population. There's a
real need for transportation, not just in the large cities,
but in.
Speaker 2 (21:31):
The rural areas.
Speaker 12 (21:32):
And for example, I experienced that personally going to Kaga
City and where we have communal ride share and kind
of took a ride share trip and understood what the
needs are there. So we're talking with various countries regulatory authorities.
I think Japan is going to be part of it.
I certainly hope that Hong Kong is going to be
a part of it. Australia, where we were just talking about,
(21:52):
is a huge market for us. So we're having those
dialogues and I think that the picture will shape up
over the next two years because the technology is definitely
getting there.
Speaker 3 (22:03):
Uber CEO Dara Kostrashahi there along with our animl drawers
and aw sticking with Uber. The company, along with door Dash,
is suing New York City to block requirements that the
delivery tipping option be available at the time of checkout
and set to at least ten percent. The two companies
argue this would worsen sticker shock for inflation weary consumers.
Speaker 2 (22:24):
New tipping laws.
Speaker 3 (22:25):
Are set to become effective January twenty sixth carrot.
Speaker 5 (22:27):
I want to watch it.
Speaker 4 (22:28):
Meanwhile, coming up, you're reporting to watch how Rivian is
replacing invideos tech in future vehicles with its own chips.
From New York, From San Francisco, this is Bloomberg Tech.
Speaker 2 (23:00):
Welcome back to Bloomberg Tech.
Speaker 3 (23:02):
Rivian take a look at its shares up currently sixteen
percent at one point in the session, up more than
nineteen percent, trading at its highest level since January of
twenty twenty four, so its highest level in two years.
Yesterday it fell quite a lot after it told investors
and the world its plans for autonomous driving. Rivian's plan
(23:24):
for autonomous driving is based on two big technology bets,
and we went to see them. Rivian's developed its own
artificial intelligence chip for its future cars that gamble might
pave the way to fully autonomous driving. A lot of
(23:45):
the tech world imagines a future where we don't own
cars at all. We're talking about fleets of robotaxis that
are summoned through an app, maybe no steering wheel or
driver controls at all. But Rivian's in the camp that
does see people owning their own cars in the future
and being willing to pay top dollar for a software
platform that allows the car to drive itself. If this
idea seems familiar, Tesla has been selling a version of
(24:10):
it for years.
Speaker 2 (24:11):
Full self driving supervised is not.
Speaker 3 (24:13):
Technically full autonomy if you read the fine print, but
it can get you from point A to point B
without needing to put.
Speaker 2 (24:20):
Your hands on the steering wheel.
Speaker 3 (24:25):
Rivian's path to autonomy is rooted in two big bets.
The first a custom AI chip developed in house, which
marks a big break from Nvidia.
Speaker 14 (24:35):
This is a wrap one chip, it's a multitip module.
In the middle is a Rivian design custom silicon surrounded
by memory on two sides. The decision to build an
in house was based on a very rigorous analysis of
the benefits we could come and those benefits are velocity
or ability to get to market, break quickly with it,
performance and cost.
Speaker 3 (24:55):
The second a major change in how Rivian vehicles see
the world. The next generation Rivian R two will have
indented lidar sensors in it.
Speaker 14 (25:05):
It's not just about the computer, it's also about the
sensors and it's about how they all come together.
Speaker 15 (25:12):
This is really in mark one what the Gen three
architecture does with compute levels that are dramatically expanded, such
as to put some numbers to this at the platform level,
sixteen hundred sparse tops where you can process five billion
pixels per second, beautifully integreated lightar that raises the ceiling
to allow us to take your eyes off the road.
Speaker 2 (25:32):
This will cause some debate.
Speaker 3 (25:35):
Tesla vehicles only use cameras as sensors for their systems,
and what Elon Musk company has always argued is that
other sensors like lidar or radar are too expensive to scale.
Until now, Rivian didn't really have an autonomous system. It
had advanced driver assistance tools powered by cameras and radar,
and Rivian used Nvidia chips as the brain in the
(25:57):
vehicle to interpret the world around it. Rivian says it's
new AI model will keep improving those older cars too,
eventually adding capabilities like hands off point to point driving.
Rivian doing its own chip and ditching in Nvidia is
a surprise.
Speaker 15 (26:12):
On the Rivian processor side. This represents a significant cost
savings to us. There is a lot of margin, of
course in the in the semiconductor space, and working directly
with PSMC, we have a great relationship with them.
Speaker 3 (26:25):
The new hardware is the unlock. It should allow Rivian
to go from that driver assistance software in its existing
lineup to true autonomy in the next gen R two.
Speaker 15 (26:35):
And the next big step is personal level for it.
And what I mean is the vehicle can operate empty,
it can operate without anyone in the driver's seat. It
can pick your kids up from school, it can drop
you at the airport. It's a complete shift in how
we think about the vehicle experience.
Speaker 3 (26:51):
Looking back, this was the company that pulled off the
sixth largest IPO in US history, and it was first
to market with full size battery electric pickups and sau
beating out Tesla, Forward and General Motors. But today Rivian
struggling with the basics. Production of its evs hasn't really scaled.
Rivian Soul plant in Illinois is capable of building two
(27:13):
hundred and fifty thousand units a year, but in twenty
twenty five it probably won't hit fifty thousand. The truest
representation of that struggle, the stock is at a fraction
of its peak.
Speaker 2 (27:26):
Right now.
Speaker 3 (27:27):
In the world of tech, you have to have something
to say about AI, and Rivian is diving deep into
autonomy to appease its investors, an ai chiplidar and a
large driving model right now. It's a promise from Rivian
that their next generation vehicles will have genuine autonomous capabilities.
Speaker 4 (27:48):
Extraordin and reporting deep dive and Rivian, as you said,
ed doing very well on the day, unlike the rest
of the markets. Just check in what's happening to the Nasdak.
We're down on the week, We were down on the
day and as at one hundred, off by more than
two percent andach points tech in the line of fire
today even dragging Chinese names now into the red. They
started the trade and our show in the green as
we understood that the Chinese government was going to be
(28:09):
going all in on funding its own domestic chips apply
up to seventy billion dollars worth of government incentives, is
the reporting coming out of Bloomberg News at the moment.
But even China starts to dip at the moment. We
see Broadcom in the video in the red, Pallanteer, Amazon, Micron,
some key names currently on the downside as we have
that AI bubble anxiety all over again.
Speaker 3 (28:32):
Right coming up, actually, Caro, we're going to talk about
the United Kingdom. We're going to be joined by British
Business Bank CEO Lewis Taylor for his take on the
UK's tech sector. He's in town in San Francisco and
Silicon Valley to think about how technology might work across
the Atlantic.
Speaker 2 (28:48):
That's next, This is Sploomberg Tech.
Speaker 3 (28:59):
The UK economy is at risk of its first coarsely
contraction since labor returned to power after growth, disappointed again
by shrinking ahead of Chancellor of the Exchequer Rachel Reeves's
tax raising budget. Can the UK tech sector come to
the rescue? Louis Taylor, CEO of the British Business Bank,
joins us now and it's great to have you in
(29:20):
town in San Francisco.
Speaker 16 (29:23):
Really great to be here, ed, thank you very much.
Speaker 3 (29:24):
Indeed, you have an annual budget essentially to invest in
and lend to and support the technology industry in the
United Kingdom.
Speaker 2 (29:37):
Why are you in San Francisco?
Speaker 11 (29:38):
Then?
Speaker 2 (29:38):
What brings you in San Francisco?
Speaker 16 (29:40):
Well, look, we're here pitching to us VC's a really
great new growth opportunity for them, which is based on
three things. Firstly, as you say, the quality of the
UK tech industry for the top ten universities globally producing
great research with some really excellent entrepreneurs and the ability
to scale businesses as well. So that's where they come in. Secondly,
(30:02):
a new pool of capital coming on stream domestically in
the UK from pension funds hopefully. And then thirdly the
opportunity to partner with the bank, which is the biggest
LP in UK venture and growth equity connected and knowing
the landscape pretty well.
Speaker 5 (30:14):
Luis the landscape we know so well? Is fintech?
Speaker 4 (30:17):
I think of Revolute, I think a Monso the standouts.
But where else is really thriving? Where else should VC
come in as port in the UK?
Speaker 16 (30:25):
Well, look, I think you're absolutely right. Fintech is very strong.
And just today Go Cardless did a deal with Molly
and that a unicorn that we invested in twelve years ago.
So you need a bit of patience on this. So
fintech's very strong. AI in different places is very strong.
Not so much on the hardware side, not so much
on the larger language models, but more broadly, if I
(30:46):
think about companies like Synthesia or eleven Labs, all of
those companies coming out of the UK, So I think
those tech areas are great, but also the application of
AI into life sciences is incredibly strong as well, and
the UK has an incredibly strong life sciences industry. So
I think we see AI as being a theme across
(31:07):
the sectors of the industrial strategy the government announced and
the UK being strong in those.
Speaker 3 (31:12):
To be fair, many of those companies you name, you know,
they come on this program regularly, you know, and they
are making advancements in their respective fields.
Speaker 2 (31:20):
We want to go back to what you.
Speaker 3 (31:20):
Said, the big pot of pool of money coming online
a little bit more. Please, Yeah, how big? How certain
is it? And that's important right because the lesson of
AI in this country at least is the capital requirements
are much bigger.
Speaker 2 (31:37):
Much bigger.
Speaker 16 (31:38):
So the UK we incubate companies incredibly well, we scale
them less well, and we haven't had the scale up
capital we need. It's not that we don't have the money,
because we have the second largest funded pension scheme in
the world at around four trillion pounds, but we have
an allocation issue with that pension money, which is changing
the government encouraging pension funds to invest more in the
domestic economy and in the growth economy. I think what
(32:00):
we're looking for is some of the expertise here in
the VC industry in the US about scaling those companies.
As I say, we incubate well, but it's that scaling
stage and the expertise needed there where. Of course you
need capital, but you need other things as well, network's
capabilities and many other things. Mentoring of leadership teams.
Speaker 4 (32:18):
Luis what is the state of brain drain when you
actually do get a really successful company. Now, eleven labs
are staying there since these years as well, but many
up and even come to Silicon Valley or to the US.
Speaker 5 (32:30):
Is that something that's still happening.
Speaker 16 (32:32):
Well, look, I think it does happen to an extent.
I think we really want to try and address that
and try and stop it and actually capture some more
of the value in the UK economy. As I say
this is the companies have largely come over here because
is where the capital is. If you've got a new
capital stream with some expertise based on it in the UK,
we're going to hope to retain those companies in the
UK longer. And actually the innovation ecosystem I think is
(32:53):
quite self perpetuating success breed success. We've got a lot
of the right things in place, but it's just this
top end that we need to to really make sure
that we realize more potential and keep the flywheel going.
Speaker 3 (33:04):
So your strategy here, and one of the reasons you're
in town, is to go to the American VCS, the
Value v season say.
Speaker 2 (33:10):
Give us your capital, come to the UK. We have
something to offer.
Speaker 3 (33:14):
But that strategy then carries risks with what you're just
talking with Carolina about.
Speaker 2 (33:17):
Right.
Speaker 16 (33:18):
Yeah, we're not quite saying that, we're saying, bring us
your expertise, will help you raise capital locally.
Speaker 2 (33:22):
This is a growth opportunity for capital locally. That's a key,
absolute distinction.
Speaker 16 (33:26):
Absolutely, and the connections that we have with all the
gps LPs but also the pension funds. I mean, we
actually are raising our own fund at the moment for
a co invest fund in the UK from UK pension
funds and we'll do the first close end of January
early February. And this is a thing, it's.
Speaker 2 (33:43):
A real thing.
Speaker 4 (33:44):
It's a real thing, and we'll let you go out
and have real conversations with those vcs and the Value
the Louis Taylor, thanks for stopping by. CEO the British
Business Bank. Coming up, White House AI and Cryptos are
David Sachs joins us to talk about the President trump
executive Order on a regulation.
Speaker 5 (34:01):
This is ring back Tap.
Speaker 3 (34:15):
Welcome to our global radio and TV audiences. President Trump
signed an executive order aimed at limiting state level regulation
of AI. The move is supported by tech leaders who
have argued local rules could stifle innovation. We're joined by
David Sachs, the White House AI and Crypto ZA or
Senior Advisor, David. I think it's a really good place
(34:37):
to start in your work with the President in consulting
and advising on the formulation of this executive order.
Speaker 2 (34:45):
What was the.
Speaker 3 (34:46):
Problem that you were trying to solve for and what
is it that you said to the President about why
this EO was the right approach to focus on state
level laws?
Speaker 10 (34:58):
Well, thanks for having The problem that we see is
that you've got one thousand different bills going through state
legislatures right now to regulate AI, and over one hundred
measures already passed. Some of these bills are contradictory, and
you've got fifty different states running in fifty different directions.
Speaker 2 (35:14):
That type of compliance.
Speaker 10 (35:15):
Regime is going to be very hard for small companies
and startups, especially innovators to comply with. And so what
we need is a single federal or national framework for
AI regulation. And that's what the President has supported, and
by the way, he supported this for a long time.
If you go back to his July speech on AI,
he called for a single national framework then. And what
(35:37):
we've done with THISEO now is to make clear that
that is the administration's policy and to task members of the
administration to work with Congress to try and enact that
framework through legislation, because ultimately this needs to be a law,
and in the meantime create tools that the administration can
use to push back on examples of the most onerous
and excessive state regulations.
Speaker 3 (36:00):
David, there is of course some pushback you know, on
the executive order from the states themselves, from other Republicans
you know, as you know, like I studied the July
speech and strategy closely, a big part of it, you know,
was infrastructure related and about deregulation. The concern about this
(36:20):
latest executive order is that while it addresses your concerns
about many different pieces of state regulation, it does not
provide for a single federal framework.
Speaker 10 (36:32):
Well, at the end of the day, that single federal
framework has be enacted through law, and we need Congress
to do that. And so the President has asked Congress
to do that, and these tasked members the administration to
work with Congress to produce that framework. In the meantime.
What we've done here is articulated set of principles. We
said what values are important to us. We said that
we want to protect child safety, that's important. We want
(36:56):
to respect copyright, we want to preserve the ability of
local community is to choose what infrastructures and their communities.
We're not seeking to preempt the states in any of
those areas. So this is an important set of principles
that we have put forth. And at the same time,
the EO provides for a number of tools that can
(37:16):
be used to push back on excessive state regulation. And
let me just illustrate why I think this is so necessary.
What we're really talking about here is regulation of AI
models and algorithms. Well, think about how an AI model
is developed. You can have developers in one state of
multiple states writing the code. It can then be trained
(37:37):
in a data center in another state. You then can
have inference happen in another state, and the entire service
is provided over the Internet using national telecommunications infrastructure. So
you're dealing there with at least four different states, and
all of them can lay claim to regulating those AI models,
and those regulations can be in contradiction with each other.
(37:57):
Even Democrat governors have admitted this as a problem. Just
the other day, Kathy Hockle, the governor of New York It,
basically said that she might prefer to enact California's SB
fifty three, which is a regulation that they just passed
in California, rather than the bill that her own assembly
gave her the raise act, because she sees that, wait,
do we really want to create this patchwork in different regulations.
(38:18):
So even Democrat governors are realizing this is a problem,
and if they all run in different directions, then we're
going to end up with a patchwork or a misshmash
of regulations that are impossible for companies to comply with.
What the President is calling for here is just common sense.
We want to get to a single national framework of
compliance as opposed to fifty states running in different directions.
Speaker 4 (38:39):
Meanwhile, Kathy Hokle actually is getting a bit of criticism
perhaps for narrowing and what some are saying is bowing.
Speaker 5 (38:45):
Down to business. David, I'm really interested in.
Speaker 4 (38:48):
How you oppose that view, because there is anxiety in
the population AI versus jobs, AI versus energy bills. How
are you giving them the sense that we haven't seen
federal government and India now state government's just handing over
the reins to big tech billionaires as people call them.
Speaker 6 (39:05):
Right.
Speaker 10 (39:05):
No, I understand there's a lot of fear out there
about AI and job loss specifically, and a lot of
those fears have been drummed up. Let me just say
on the job loss question, because I think this is
really important that Yale just released a study and it
showed that in the thirty three months after the launch
of chat GPT, there was no discernible disruption to the
US job market none. They said, no discernible disruption. And
(39:27):
in fact, if you look right now, more jobs are
being created than being lost. So this whole idea of
job losses just isn't true. There was an article on
the Wall Street Journal just last week talking about the
construction boom that's happening that's benefiting construction workers like electricians
like plumbers like workers who pour concrete or hang drywall.
Their wages are up thirty percent because this infrastructure boom
(39:48):
that's happening right now, and there's actually a job shortage
in many of those trades, meaning we need more workers
going into those trades. So what we're seeing right now
is an overall AI boom that's benefiting the economy. You know,
the the GDP growth rate was tracking about four percent,
and half of that up to half of it's been
attributed to AI. So I just think that this narrative
(40:10):
about job loss has been blown out of proportion. Certainly
there could be job displacement in the future, but we
haven't seen any of that so far. It's been quite
the opposite. It has been job gains.
Speaker 3 (40:21):
David Final one on the EO, If I may, you
know what this EO allows for. Is it the sort
of hope that it will lead to the DOJ sewing
states like New York and California. And if that's the case,
you know, the President and the administration's confidence that you'd
win them.
Speaker 10 (40:40):
Well, that is one of the tools that is in
the EO is that the DOJ has been tasked to
form a litigation task force that would have the ability
to push back on excessively burn some state laws, laws
that may be unconstitutional, violate the First Amendment, things like that.
By the way, the DOJ already had that power, So
this is a novel power. But what's being done here
(41:02):
in the CEO is we're marshaling all the resources of
the federal government behind the strategy of the President to
create a national framework. Now, in terms of what laws
we go after, that's a decision that has been made.
We haven't decided whether California and New York should be
targets in that way. The one that I think is
probably the most excessive is this Colorado law that seeks
(41:23):
to prohibit algorithmic discrimination. What that basically says is that
if an AI model has a disparate impact on a
protected group, then that model is violating the law. Model developers,
by the way, I have no idea how to comply
with this because they're not aware of all the downstream
uses of their model. I mean, if a business decides
to use an AI model in a hiring decision, for example,
(41:43):
that business is already on the hook for discrimination. So
how would the model developer know that it was being
used in that way. But what Colorado was trying to
do there is get their ideology inserted into the model.
That's very concerning to us. We think there's a First
Amendment issue there, but look, we haven't made any decisions
in terms of how that litigation task for US to
be used.
Speaker 4 (42:01):
David Briefly, all of this is set in the context
of US versus China and a deemed to run forward
on AI development. Meanwhile, it's been a busy week and
H two hundreds might indeed be able to get to China.
How many do you think you'll do in volumes and
what do you think the appetite is of China to
buy in videos more sophisticated chips.
Speaker 10 (42:20):
Well, it's interesting. I just saw an article that said
that China was rejecting the H two hundreds, So apparently
they don't want them, and I think the reason for
that is they want semiconductor independence the same way that
the United States wanted to be energy independent. They want
to be semiconductor independent, So they're rejecting our chips, and
that's part of the calculation that goes into the decision
of what we authorized to be sold to China. The
(42:42):
US policy has always been that we don't allow the
leading edged chips, and we're not. This is this H
two hundred chip. It was state of the art a
couple of years ago, but now it's been superseded by
the new or Blackwell architecture and the Ruben architecture that's
coming out next year. So this is now a lagging chip,
not a leading chip. But what you see is not
taking them because they want to prop up and subsidize Hahwei.
(43:04):
They want to create a national champion, and that was
part of our calculation of selling not the best but
lagging chips to China's. You can take market share away
from Huawei, but I think the Chinese government's figured that
out and that's why they're not allowing them.
Speaker 4 (43:17):
David Sachs, we always wish we had more time White House,
AI and cryptos Are. We thank you for joining us
today on the executive order and indeed on in videos
H two hundreds. That does it for this edition of
Bloomberg Tech. The market is in sell off motored as
we wrap up this week. We're down by more than
two percent on the NASDAC more broadly and indeed for
the week, but really all eyes on well Broadcom.
Speaker 5 (43:36):
And its numbers.
Speaker 3 (43:37):
Yeah, Broadcom in the earnings context investors, what is more
But Bloomberg reporting on Oracle is what moved the needle,
believe it or not. This is my last show of
twenty twenty five. An astonishing year and a lot of
the themes in today's show what we've been talking about
all year long. Recap on the podcast. You can find
it on the terminal and online. You know where to Caro.
(43:58):
I'll see you in twenty twenty six.
Speaker 5 (44:00):
Have a great break. Mmmmmm
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