August 19, 2025 • 41 mins
Bloomberg’s Caroline Hyde discusses potential plans by the US government to take a stake of about 10% in Intel as SoftBank buys into the chipmaker. Plus Palo Alto Networks CEO Nikesh Arora, discusses the company’s growth plans. And Apple expands iPhone production in India.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Carolline Hide in New York
and Edmavelow in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up. Intel gets two billion
dollars from soft Bank as the US government confirms discussions
to take a steak in the chip maker. Plus Palo
Alto Networks gives a strong forecast for the cybersecurity giant
our conversation with the CEO Nikesha Rura, and Apple expands
its iPhone production in India as it seeks to lessen
its reliance on China. But first I shinelight what's happening
(00:45):
with arm as well, because the news was that SoftBank
is taking well two billion dollars in inequity state. They're
going to be selling new shells. Soft Bank is going
to be having them. Remember SoftBank, of course, in many
ways controls on the chip designer. We're thinking also about
the US government, which doesn't indeed confirm that they are
eyeing a stake for the business. We're wondering just how much.
And I'm pretiused to say that we can dive into
(01:06):
this with Michael Shepherd, of course, Blomberg's executive editor on
all things to do with technology and Washington, and boy
is Washington playing a bigger and bigger role at the moment.
COMMAS Secretary Lutnik saying, yes, we're involved in talks, but
how much equity MIC.
Speaker 3 (01:22):
Well, it's a great question.
Speaker 4 (01:23):
He stopped short of saying that it would be the
ten percent stake that our colleagues scooped and reported yesterday,
and it gave a size and scope to what we
had broken earlier over last week, and that is that
the government had been weighing this investment in the company.
And the idea is to take some of the Chips
(01:44):
Act money and those are funds and subsidies CARA that
we have talked about on these airwaves so much.
Speaker 3 (01:50):
Over the past year and a half.
Speaker 4 (01:52):
But they would take that money and turn it into
equity handstock over to the government, and that would make
the federal government the largest holder in Intel, which would
be an extraordinary step, especially in the tech space, and
it would also provide something of a lifeline to this
company as the new CEO, Lip Bhutan, tries to turn
it around after inheriting from Pat Gelsinger's predecessor, a company
(02:15):
that was really at a crossroads.
Speaker 2 (02:17):
Really at a crossroads. Lip Bhutan now has to almost
try and weave a narrative that's got pretty confusing for
the government. They care about manufacturing in the United States,
they care about Ohio an awful lot, They care about innovation,
and that almost felt like something that Boutan was pulling
away from, and certainly in terms of the latest and
greatest innovation with fourteen eight processes, but they couldn't find
(02:42):
demand for it.
Speaker 4 (02:44):
Well, Caro, you hit the nail on the head right there.
There is such tension between what lip Bhutan was going
to have to do with the turnaround, with the goals
of the administration, which, as you said, is to try
to stoke warm domestic manufacturing, especially in the advanced technology
space and semiconductor space, and that factory in Ohio we've
talked so much about has now been pushed back to
(03:05):
the twenty thirties, and that's not a timeline that the
Trump administration would accept. The rub though, is that Intel
just doesn't yet have the customers to be able to
sustain the factory build out there, which is so costly
and would involve such continued investment by the company. It
needs a guaranteed revenue stream from those buyers of chips.
Speaker 3 (03:29):
To be able to make that work.
Speaker 4 (03:30):
Now, one of the questions is would the government try
to cajole some other tech companies into buying chips from
Intel to help it find that customer base as it
seeks to move forward. We heard from Treasury Secretary Treasury,
the secret Treasury Secretary Scott Vestn't this morning saying that no,
(03:51):
the federal government would not get involved in trying to
find those customers.
Speaker 3 (03:55):
But we'll wait and see.
Speaker 4 (03:57):
The President is very much interested in trying to see
Intel succeed.
Speaker 3 (04:01):
He had a very positive meeting with.
Speaker 4 (04:03):
Bhutan about ten days ago, and this was just days
after suggesting that the CEO might have to leave over
his prior ties and engagement with China.
Speaker 3 (04:13):
China.
Speaker 4 (04:13):
So we are seeing a bit of a turn of
fortune between not only the company and the government, but
really the company and CEO with the president himself.
Speaker 2 (04:23):
I mean, Link Secretary Strategies might call this monumental the
last couple of days in their view for Intel. What
I think is really interesting though, is not aside from
already the investment, they're managing to push from SoftBank, for example,
into Intel. But whether other companies that have taken Chipsack
money might see that turn into an equity investment too.
(04:44):
That seemed to be what I was reading between the
lines of our reporting. Well, Micron's taken money, but how
could that possibly work for TSMC Samsung?
Speaker 4 (04:53):
We are seeing in between the lines of those reporting
a sense among some White House officials that they would
like to perhaps take it a step further with those
other companies, perhaps including the ones that you mentioned now,
with a venture like Micron, perhaps because it's US flagged
and US based.
Speaker 3 (05:11):
Sure, maybe that could work.
Speaker 4 (05:12):
But then Taiwan and TSMC, how does Taiwan semiconductor manufacturing
company and the Taiwanese government leadership accept something like that?
And Samsung and the government in South Korea there lies
some greater sensitivities. Even as those governments have come to
embrace the need to diversify the location of their manufacturing
(05:36):
and to also curry favor with Donald Trump by investing
in the US, there may be a certain line when
it comes to the equity stakes, Carol, So we'll have
to see how that plays out.
Speaker 2 (05:46):
A Max Michael Shepherd and the Inside Track of what's
happening in Washington. We thank you. Let's turn to well
they analysis on the street now for Intel and the
read across to the sector. Gailuria's with US head of
Tech research at DA Davison. Is this a good thing
for Intel?
Speaker 5 (06:01):
It's a lightsaver. They were on an unclear path before
the government decided to renegotiate its deal. Let's not forget
the US government already had a deal with Intel. It's
we're going to give you six billion dollars and we're
going to get a colored profit shared down the line.
What this administration is doing is just renegotiating the deal.
(06:22):
It's saying that's not good enough. We want to take
an equity state. And by the way, Intel is different
because part of this deal is a big Department of
Defense component. Let's not forget. We're going to want Intel
to manufacture chips for our F thirty fives and other
important weapons systems. So the government has a different type
of relationship, for instance, than it does with TMSMC, where
(06:46):
we're just talking about making chips for data centers. So
the government renegotiated the deal, and now when it's done that,
it's not a coincidence that Libu time can go to
his friend Masa San and say, okay, this is the
time for SoftBank to invest as well and maybe line
up some armed demand for those fourteen eight chips down
(07:08):
the line.
Speaker 2 (07:09):
I'm so interested in the arm architecture side of this.
How do you see these working hand in hand going forward?
How more cemented could a relationship become?
Speaker 5 (07:20):
Well, clearly it could be part of the deal. And
more importantly for Intel, as of a week ago, they
had no customers for the fourteen A architecture and they
said they may not even proceed with it. Now they
might have one lined up. Let's not forget the Department
of Defense is a customer that's now more likely to
(07:41):
be lined up for that, And then they can go
and talk to the other companies. And even if the
government doesn't have it, doesn't go ahead and twist some arms.
Let's not forget. And Nvidia's committed half a trillion dollars
of investment in the US, so can the government now?
Can President Trump called Jensen Wang and say, hey, this
(08:02):
is part of how I want to see the investment
play out. I need for you to be a customer
of fourteen A that's not inconceivable at this point. And again,
remember this is national security, So the rules of the
games change once we say this is national security.
Speaker 2 (08:17):
Rules of the game are often blurred by frenemy lines.
Gil And what's so interesting is Massa has had a
long term relationship with the CEO of Invidia, of course,
Jensen Wang, but also in some ways wants to build
a competing architecture in some ways, what's to take on
in Vidio in terms of AI chips? Could he do
that with Intel's help.
Speaker 5 (08:41):
It's one way for him to participate in an even
more broad fashion in the growth of AI, which he's
doing now. He regrets selling in video when he did.
He's buying some of it back, but he's also making
a set of other investments in AI infrastructure. Let's not
forget Stargate is probably the flag bearer of his effort,
(09:02):
combining with open Ai and Oracle to build again at
least one hundred billion dollars worth of data center capacity.
And for that it would make sense to diversify and
not only buy Nvidia chips. Now, that's going to take
a while, and Nvidia not only has a lead but
continues to extend its lead every year, but it does
(09:23):
make sense for him and for other companies to try
to diversify away from Nvidia.
Speaker 2 (09:30):
What's interesting is how a Lutnik Ecomo sextuary had said, look,
we will be we confirm that we're looking at taking
an equity stake. Didn't say how much, but it wouldn't
be with a governance role. Now, well, broadly, how are
you starting to analyze companies that are getting closer and
closer to the US government and how much Well is
it interference or is it positive help that is being
(09:54):
led by a US government here.
Speaker 5 (09:57):
Well, the US government has an ability to to give
proferential treatment to some of these companies to change the
rules of the road, and it wants equity participation when
it does that. And again, it's not doing it broadly.
It's doing when it's a matter of national security. Let's
not forget it's already very involved with Nvidia. It's limiting
(10:18):
their chip sales to China. It's already very involved with
open Ai. This may be quiet, but it's pretty safe
to assume the Department of Defense gets briefs from open
Ai very frequently about where the models are. So the
government is involved because it's national security. In Intel's case,
it's a matter of if this is this century's nuclear arsenal,
(10:41):
we need somebody to make the shellcasings domestically. We can't
have a Taiwanese company in a Korean company make our
shellcasings for our nuclear arsenal. So in Intel's case, it's
a much deeper involvement, and I wouldn't be surprised if
there are if there is input into where the investments go,
what the governance is, even if it's not explicit.
Speaker 2 (11:06):
Something that Blomberg will seek comment on Da Davidson's Guilduria,
like so much be analysis today we are coming up.
We have from Palo Alto Network CEO Niickesha Arora is
the company sees it a stronger than expected twenty twenty six.
This is Blue Medtech Shares a Palo alter Networks rising
(11:31):
in fact best days since April. It's not apposting a
stronger than expected forecast for twenty twenty six. We caught
up with the CEO, Niickesha Rara earlier. That's what we
had to say about the growth.
Speaker 6 (11:41):
The industry has got too many fragmented players where the
customers are left to do the stitching on cybersecurity themselves,
and now the base at which attacks are happening, the
base at which the bad actor is able to get
in and excellent straight data has shrunk to twenty five minutes.
Speaker 3 (11:56):
You can't solve that problem with the humans. You have
to apply technology. You have to apply automation, you have
to apply.
Speaker 6 (12:01):
Yeah, and that's why that's where platformization comes in.
Speaker 2 (12:04):
You talk about the pervasive attacks, I mean you apply
GENI to tackle ultimately attacks coming from JENI. I think
you had phenomenal statistics in the call, eight hundred and
ninety percent increase in GENAI traffic in twenty twenty four.
Can you just talk to us about how you can
combat that, what sort of things you need in place
to be able to take on the GENI impact.
Speaker 6 (12:27):
Well, look, as we're noticing everywhere as AI is getting deployed,
the fundamental problem that every company is facing and deploying
LLLMS or AI effectively is they don't have good data.
You need good data on drug discovery, you need good
data on self driving cars to understand where every tree is,
where we plant is, So you need good data to
solve the problem. If you want to use AI and
(12:47):
What we have done at our end is we have
basically built a platform that ingests so collects all the
data from the enterprise and makes sense of it as
fast as.
Speaker 3 (12:56):
The bad actors can. Now, that can't be done in humans.
Speaker 6 (12:59):
For example, in an instance of ourselves, Leaven just one
hundred and fifty terabytes a day. That's a lot of data,
and that's just for ourselves. And imagine doing that across
four hundred customers. We're ingesting data and petabytes, analyzing it
on the fly and trying to stop an attack made stream.
That requires tons of technology, tons of AI expertise because
the consequences are disastrous. Right, the bad actors are doing that,
(13:22):
but they're trying to get it right once. We have
to get it right one hundred percent of the time.
Speaker 2 (13:26):
Okay, so you're on the expertise that you need. You've
had organically, but also some inorganic expertise coming on. When
I think about the identity focus you've now put on
with cyber arg it's a deal that of course will
be folded in in the longer term.
Speaker 3 (13:38):
I don't know. You guys like to call it in organic.
Speaker 6 (13:40):
When you hire great people, that's possibly call it in organic,
isn't it like, Well, Meta goes and hires AI researchers
and people hire people. That's innerwirement. Guess we have to
get great people from elsewhere because we don't have, you know,
the prerogative of having best people on all of the time.
Speaker 3 (13:54):
So yes, we buy great teams who are doing great works.
Speaker 2 (13:56):
It's twenty five billion, This is a twenty five billion
dollar Aquahi.
Speaker 6 (14:00):
Well, we can't get there the way we got here,
so we're going to have to make sure that we
go ahead. And it's not just acquhire. It's amazing technology.
It's a great bunch of people. And honestly, I think
the way to frame it, Caroline, is if you listen
to all the narratives I here in Bloomberg and around
in media, we're all worried about agents.
Speaker 3 (14:17):
We all believe that agents are going to take over
the world.
Speaker 6 (14:19):
We believe they're going to be more agents in companies
and they're going to be humans. Now, well, somebody's got
to make sense of these agents. Somebody's got to make
sure these agents have credentials, they're managed, they're understood, they
don't run rogue, they have guardrails. That whole world of
agentic AI needs a whole cloak or framework of identity
management around them, and cyber Arc is the world leader
in this topic. So partnering with them, making them put
(14:41):
the networks allows us to see ahead and say two
years from now, three years from now, when the world
is talking about how to manage all these things, how
does podel to get ready and be at the forefront
so our customers can solve their problems on deploying AI
while we help them a security What.
Speaker 2 (14:55):
Sales synergies do you see in that two to three years?
How do you ensure that you don't get a hit
to that margin that some award about.
Speaker 6 (15:05):
We are as the first at scale cybersecurity company. We
crossed a ten billion dollar revenue rundrate never been done
in cybersecurity. That allows us to leverage scale economics. We
run a thirty percent operating margin, We run close to
forty percent free.
Speaker 3 (15:17):
Cash flow margins.
Speaker 6 (15:18):
Were a robust, profitable company. Any company that isn't a
billion two billion dollar ur business, which a cyber Arc is,
we think we can vastly improve their operations as part
of Polo Alto because the scale economics that we bring
both on the go to market side, we have ten
times of sellers they have, and on the operating side,
and we run large scale systems for sixteen thousand employees.
Adding six thousand employees doesn't take a lot, but it
(15:41):
does improve the margins the underlying business of Tagic, So
we believe that the acquisition will be a creative over time.
The billion f FI twenty eight we can collectively achieve
a forty percent free cash flow margin, which again is
gold standard in our industry, let alone our industry and software.
Speaker 2 (15:55):
Hello Alto Networks Cee Nikesh Aurora. The AI industry's massive
funding needs are being seen as an opportunity by private
credit firms. For example, firms competed for months till Ard
Meta twenty nine million dollars for its AI data center
project in Louisiana. Now Pinco and blue Out Capital eventually
(16:18):
selected there. Bloomberg's Laura Benitez joins us. She covers asset management,
and we're reporting on this a lot, and just remind
us why private credit is really salivating at the opportunity here.
Speaker 7 (16:29):
There's a huge opportunity within AI, you know, unline private equity,
which we're seeing, you know, some kind of logjam with exits.
You know, there's big opportunity with infrastructure and digital infrastructure.
The margins can be quite high, the coupons can be
very lucrative. So yes, it's a piece of the private
everyone's trying to get in on right now.
Speaker 2 (16:49):
They get in our meta, there's opportunities to come. I
was just looking at a note put out by UBS,
So they almost worry that perhaps this is getting too much.
The froth starts to appear, the risks start to appear.
That something you're hearing, Laura, that's right.
Speaker 7 (17:02):
There are some concerns that, you know, there's too much
money chasing this opportunity now, and that it might be
overblown and demand you know, seem to be you know,
apparently soaring. But we I think kind of a bit
skeptical on that in the long term. But you're right.
Morgan Stanley have said, for instance, that there's you know,
trillions of capital expenditure needs for AI in the next
(17:23):
few years, and that could translate to hundreds of billions
of bond issuance coming into the bond market.
Speaker 8 (17:27):
So again huge numbers here.
Speaker 2 (17:29):
Three trillion in the next three years is the number
that morgus Standing was estimating. It is eyewatering. A lot
of it is US denominated. Just tell us where on
the respectrum actually this lies. Is this what would be
deemed investment grade debt? More broadly, because these companies are
i mean washed with cash and very betterable against the
many see the demand is there for these AI data centers.
(17:51):
It's a good question.
Speaker 7 (17:52):
The vast majority of what we're seeing could translate into
investment grade issuance, primarily because of the tenor so the
maturities of these debt instruments are very very low long
that allows companies and issuers to get an investment grade rating.
And also they're back to against card assets, so you've
got more collateral there.
Speaker 8 (18:07):
Should things go wrong.
Speaker 7 (18:08):
You've got more security to negotiate with.
Speaker 2 (18:13):
Banks, cut out private credit swoops in Pimco A big
winner here, Bluemos, Laura Benitez, it has been great speaking
to you, thank you. But elsewhere in AI, let's talk
about regulation. Last year, California Governor Gavin Newsom, remember he
vetoed an AI safety bill. The lawmakers actually pleased to
take another swing at the regulation. Here's State Senator Scott
Wiener speaking with us after the.
Speaker 9 (18:33):
Vetop California as the heartland of tech and.
Speaker 8 (18:38):
AI innovation, has a responsibility to lead on AI safety.
Speaker 2 (18:43):
Titus Wu. He covers California politics for Bluembag Industry Group,
and you're joining us now because there are multiple AI
in tech related bills in front of lawmakers and Sacramento.
But I thought, this is exactly what the administration doesn't want,
a patchwork effect, a state by state AI regulation future.
Speaker 10 (19:02):
I would say for thanks for having me on, but
I would say that you know, Governor news doesn't necessarily
say that he didn't want, you know, any air regulation
whatsoever here in California. If anything, you know, in recent months,
you know, given that you know, on the fairal level,
we saw them try to implement a ten year moratorium
(19:22):
on state IO laws. That you know, Newsom has tod
that he's felt that California has to lead on AI regulation.
The question is what is Newsome's preferred approach of regulating it,
because clearly, you know last year was SP ten forty seven,
that was not how he wanted to see it. And
right now, you know, lawmakers they're trying again, and they're
(19:44):
trying to suss out and read the teenies on us
to what the governor wants what kind of regulation. What's
the mill line in which the governor would say, okay,
this supports innovation but also advances some sensible regulation.
Speaker 2 (19:57):
So they're thinking about AI developers testing the tools against bias,
for example, that's in the AB ten eighteen. This isn't
just the only era of regulation that my OVERSEAI, right,
we're also thinking about how big tech, in many ways
is lobbying against what's SB fifty three. Can you took
us through that one, Titus?
Speaker 10 (20:15):
Yes? So SB fifty three is basically center and Winner's
kind of second attempt after his teen forty seven got vitailed.
It's definitely a lot less i'd say, restrictive than ten
forty seven. It focuses mostly on kind of disclosing safety
and security prodcasts for AA developers. There's s a blow
of protections the third party audits. You have to report
(20:38):
a kind of safety instance to the state ag. So
it's it's it's nothing not as intrusive as last years
ten forty seven, and it's trying to pick up on
some of the recommendations from this working group formed by
this group of experts that the governor formed after his
vetol last year.
Speaker 2 (20:55):
And very briefly worker rights against automated tools. That seems
to we canes.
Speaker 10 (21:01):
Yes, definitely. You know, labor forces in California, the really
powerful political force, uh you know this year they're they're
getting more in the weeds into trying to put in
comprehensive rules around AI in the workplace SB seven. It's
very very intense bill where you know, labor and in
tech they're fighting with each other and the capital over it. Basically,
(21:23):
that bill would, uh, that bill would give workers rights
to kind of you know, opt out, potentially refuse you know,
decisions by employers when they use AI, for instance, to
make termination decisions, disciplinary decisions, and it had a big
consequence of employers across the California.
Speaker 2 (21:41):
Titus Wio, California correspondent for Bluemag Industry Group. Great to
get your insights. Thank you, welcome back to blombag Tech.
We're all thinking about what the US government means for
Intel ownership, how much they confirm that they are indeed
looking at taking a stake, what size of steak is
still under question, how we see a change of grants,
(22:04):
money lent in the chip sat into equity, and what
soft Bank's now getting in on the game. For we're
up seven and a half percent. Let's get over to
London where Peter Elstrom is with US executive editor who
used to oversee. Of course, you're looking at the technology
news for US more broadly and big expertise in Asia.
So I go to Asia first. I ask you why
SoftBank is taking that two billion dollar steak. Why are
(22:24):
they getting Intel to sell more equity to them.
Speaker 11 (22:28):
Yeah, there's a lot going on here with Intel, but
on the software. On the soft Bank front in particular,
the founder Mosio Shechssan has had ambitions in the chip
area for a long time. He bought armholdings of course,
the chip designers that's commonplace and all sorts of smartphones,
and he has ambitions to be able to compete in
AI chips against Nvidia. In particular. They think that they
(22:51):
can use some of those designs from ARM to make
a much more efficient, energy efficient chip that could compete
with Invidious chips, particularly for running some of these AI
services like chat, GPT in particular. So the idea that
SoftBank would put two billion dollars into Intel gives them
a stake in the company that could be important, perhaps
as an investment, but also if Intel is able to
(23:14):
develop its foundry business, that is, making custom chips for
other kinds of companies. You could imagine a day when
Intel makes AI chips for soft Bank and is able
to sell those, and both companies would be able to
benefit from taking some of that demand away from Nvidia
as this AI boom really explodes.
Speaker 2 (23:31):
And when we think about the foundry business, when we
think about manufacturing, that's where the US government wants to
lean in. They want domestically made manufactured chips that ultimately
gives them control of the supply chain. But we're hearing
from Howard Lutnink that he doesn't want control over Intel
in any way. They don't want a governance role here.
Speaker 11 (23:49):
Right right, Yeah, you make a good point. The US
government has wanted to rebuild the domestic semiconductor and industry
for a number of different reasons. Partly because it's a
great business. It could mean some jobs and some profits
for them, but also they don't want to have the
strategic risk of having all the advanced semiconductor and manufacturing
in the world in East Asia and Taiwan and South
(24:11):
Korea in particular. They want to be able to bring
that into the United States, And Howard Lutnik eluded this
today when he confirmed the nice group that we had
yesterday about how the US government is looking at taking
this ten percent stake in Intel. Intel, of course, is
really the last major US chip maker standing that has
a shot at being able to make those most advanced
chips to be able to compete with the likes of
(24:32):
TSMC and Samsung in particular. So Lutnik is saying, hey,
we may use this chipsack money to convert into equity
and then take this ten percent steak within Intel. And
he's also suggesting that they may do that with some
of the other companies that are supposed to be recipients
of the chipsacked.
Speaker 2 (24:48):
Money, one of them being Micron for example. You want
to on Earth that would sink in with a TSMC
and Samsung they've also taken chipsacked money. Peter. But what's
really interesting is weather this gets you. The end of
the reason that we could pull back from fourteen A
in many ways was because it was like, I don't
want to be that person who just builds it in
hopes that they come.
Speaker 11 (25:09):
Yeah, this isn't free money, to be clear, under the
Biden administration, they allocated these Chips Act awards. Those were
supposed to be grants. This was supposed to be money
that was coming in anyway. There was no talk about
these companies giving up equity to be able to get
those billions of dollars. So the Trump administration is trying
to change the calculus here where they still will give
you the amount of money that you were supposed to
(25:30):
get from the Chips Act, but in place you're going
to have to give them some equity in the company.
So it's not free money. And maybe a little bit
accelerated from what the original vision was for the Chips Act.
Intel for example, may be able to get that ten
point nine billion dollars that they were supposed to get
a bit sooner, but still it's not you know, it's
not free money. They still have to go out there.
They have to prove that they can succeed in the
(25:52):
foundry business. And to your point, then they need to
go out and get customers. The US government can do
a lot, but it can't get Intel customers for that
boundary business.
Speaker 2 (26:00):
To Alstrom also to articulate and like me, just then
we thank you. Let's bring in Swiss COT senior analyst
ipek Oskodeshka for more. Who I ask you whether there's
changing up of the calculus is actually what global investors
want to see. How difficult is it to calculate what
the US government's going to do next?
Speaker 12 (26:19):
Well, it's very difficult, indeed, because the speed at which
things are coming some news are usual, some news are unusual.
So the speed at which things are coming to investors'
attention is just went out of control. And some of
the news do have positive implications for companies.
Speaker 2 (26:37):
But there is still the risk that the US.
Speaker 12 (26:39):
Government's goals are not going to be always aligned with
business objective objectives and the company's primary goal of maximizing
investor value.
Speaker 2 (26:50):
So the risks are building, risk of building. Does it
put you off the generator of AI tailwinds? More broadly
though that we've seen, Let's go back to previous weeks
with Nvideo and AMD becoming in the eye of the
political storm and having to pay fifteen percent if they're
going to sell it to China, for example.
Speaker 12 (27:08):
So that's very interesting because if you look at AMD
and Nvidia today, they are in a better place than
they were a month or two months ago where they
weren't able.
Speaker 3 (27:17):
To sell their hips to China.
Speaker 12 (27:19):
Today all of a sudden, they can if they pay
fifteen percent cut of their Chinese sales.
Speaker 3 (27:24):
So this looks like it is good.
Speaker 12 (27:25):
News, but in the short run is going to give
these companies more revenue. But in the long run, in
the midium to long run, we don't know how the
news and the US government interference is going to change,
whether the changes are going to be positive or negative.
So that means that the votility is higher and the
risks are building up. It doesn't mean that the companies
will not benefit from the US government support, but it
(27:47):
means that the US government will not pursue the same
goals that they do all the time. So that I
think is a risk, and that is there's something that
we become quite concious.
Speaker 2 (27:58):
Even though over the last let's call it two years,
basically seven names have made up nearly all of the
equity benchromarks gains. So how does an investor basically hedge
against that volatility? Do they stay exposed but start diversifying impact?
Speaker 12 (28:14):
Well, diversific diversification is one of the rules that we're
just like recommending obviously because diversifying away from the US
equities that have quite high valuations right now towards sectors
that do have opportunity to follow up is interesting. Then
other clients are looking to byput options for example, that
are interesting in case there is a sell off in
(28:37):
the market and we start seeing valuations come down, and
there are many things to do, but at the end
of the day, what we see is that.
Speaker 2 (28:44):
AI is growing.
Speaker 12 (28:45):
It is not the AIK that's going to be smaller,
but it is how the AIK is going to be
pieced together that's going to be important. And we think
that international companies are also going for a piece of
a piece for themselves and that is actually giving way
to opportunities in the international market. Is now that the
US technology companies are value to perfection.
Speaker 2 (29:07):
It's been interesting. You just mentioned how perhaps you use
options to be able to well hedge oneself. What many
would say is what occurred with Intel, as many were
using it as a hedge, betting against it to be
able to protect the upside that they've been getting from
in video and other areas of chips market. Was that
something you saw at play and where else had basically
investors looked to bet against to protect other winnings that
(29:30):
they'd seen in the sector.
Speaker 12 (29:32):
Well, you don't really want to go against MVDA NAMS,
you don't. You cannot really go against this machine. The
only thing that you're willing to do is to protect
any potential sell off or any potential drug down. So
in this sense, we think that it is always very
important to stay long and just diversific Diversification of the
portfolios looks like the way to go for US. We
(29:53):
do not really expect to see a sector meltdown or
very very big change in the dominance of the US.
Speaker 2 (30:01):
What we're trying to do.
Speaker 12 (30:02):
Is just to diversify a little bit in order to
tame the downside US for investors who are looking to
have some international exposure to broader AI play.
Speaker 2 (30:09):
And is that Europe? I mean I think of ASML, SAP,
but not many other AI names leap to the forefram
when it comes to publicly traded equities. Is it more
of an Asia game as well? Is it thinking elsewhere
in the asset pool, not just equity, but maybe death?
Speaker 12 (30:24):
No, you're right, I mean for Europe, we are specifically
looking into defense related technology plays and we think that
the defense spending is somehow going to boost the technology
spending in Europe as well, So we are mostly looking
into military in defense technologies within the European context.
Speaker 2 (30:42):
For China, we are looking at the AI plays.
Speaker 12 (30:44):
We are looking at the funderies and the chip makers
like SMIs for example. Same thing for South Korea.
Speaker 8 (30:50):
We are watching.
Speaker 12 (30:51):
Very closely some some what especially ska Heinex. So there
are some champions around the world that are willing to
take a piece of that cake and that are looking
in resting and that how not seen enough exposure so
far because they have remained will stay under the cloud
of the US big technology giants. And we think that
there's still opportunity there and there's still a reason to
(31:12):
think about diverse buying there.
Speaker 2 (31:13):
Ibecshta Geshkaya, We thank you so much for Swiss quid
open Ai. But it's launching a new subscription tier exclusively
in India called chatchipt Go and the plan will use
its latest GPT five model at just five dollars a
month now. The plan would allow users to generate more
(31:35):
images and interact with the chatbot more frequently compared to
the free version. The latest tier will be in addition
to its other paid plan offerings, including Chatchipt Plus, which
course costs twenty dollars a month. Now, sticking with India,
Apple is expanding iPhone production at five factories in the country. Look,
it's a move aimed at lessening the company's reliance on
(31:55):
China for US bound models. Let's bring in Marabell Lopez,
Founa and play for analyst at Lopez Research and Marravell.
What was so interesting is this brought the ire of
President Trump, who was frustrated that Apple was doing more
of its manufacturing in India, shifting from China. He wanted
it in the US. But has Tim Cook done enough
therefore in the United States to offset this.
Speaker 9 (32:18):
I think Tim Cook eventually will do enough on the
United States to upset it. But today the answer to
that is now. And it's unexpected that they move this
to India. They've been working with India since roughly twenty seventeen.
So it takes a long time to build manufacturing. So
you just don't go in, no matter who you are,
a president or not, and say you're going to build tomorrow.
Speaker 8 (32:38):
It takes time to build factors.
Speaker 2 (32:40):
Takes time. So how much do you think ultimately will
be sourced from India into the United States. Is it
only going to be iPhones in other accessories, Well.
Speaker 9 (32:51):
I think we're starting to see other plants come online
in the US. For example in Houston, when we look
at what they want to do with Apple Intelligence and
Servers for they are building that and that's coming online
in twenty twenty six. So that's an example of some
of the products that will be built here. But the
iPhone manufacturing, I expect that it will take several years
to get up and running any major significant US presence,
(33:14):
And this is part of the reason why there's roughly
six hundred billion earmarked towards creating manufacturing in the US,
and that comes in many different forms. Part of that
will be for servers, but you have to envision that
part of that will also be for iPhones.
Speaker 2 (33:29):
Let's talk about what's happening here in the United States,
because today we understand that Apple is unfolding its academy.
This is all about training here in the United States.
Who exactly is it for and what production do that
ultimately lead to here.
Speaker 9 (33:45):
So one of the things that we have happening right
now is AI is very complicated and businesses actually don't
know where to get started. So the concept behind the
Apple Academy is for small medium businesses to understand effectively
what they need to know to build next.
Speaker 8 (33:59):
Gen manufacturing, which would be highly AI driven. So that
is going to.
Speaker 9 (34:04):
Be a multi day program that small and medium businesses
sign up for. They currently have a wait list at
this point for the next wave of that. They will
be running those courses throughout the year, and then once
you've gone through the course, there's an opportunity to discuss
more detailed discussions about what kind of products and services
we need. With Apple engineers, it can help you do
(34:25):
something that's more specific to your organization.
Speaker 8 (34:27):
This is to fill a skills gap.
Speaker 9 (34:29):
You know, we have a plenty of education programs in
high school and above to try to bring in new employees,
but if you're actually a business running today, especially at
small medium business, there's very few options for you. So
this is both an opportunity to educate these small businesses
but then also put them in the pipeline to buy
Apple products and services moving forward.
Speaker 2 (34:50):
Really interesting you talk about this is the skills gap.
Prior to this, of course, President Trump has talked a
lot about the production gap and where he wants to
see that rectivid. Just take a listen to what he
said in August six.
Speaker 13 (35:00):
We're doing these things now in the United States instead
of other countries, far away countries.
Speaker 2 (35:07):
This is a.
Speaker 13 (35:08):
Significant step toward the ultimate goal of ensuring that iPhone
sold in the United States of America also are made
in America with the mass infusion of capitalists. Announcing today,
Apple will also build a two hundred and fifty thousand
square foot server manufacturing facility in Houston and avest billions
of dollars to construct data centers across the country from
(35:30):
North Carolina to Iowa to Oregon.
Speaker 2 (35:34):
Marvell, you so thoughtfully put us right on the medium
sized businesses. They really have nowhere to go when it
comes to upskilling and being able to facilitate production. What
is it that Apple brings by training? Because really the
anxiety for Tim Cook has been they haven't got the
tooling engineers in the United States that they have in
China that they have in India. Is that what is
(35:55):
going after longer term?
Speaker 9 (35:58):
So I think yeah is the short answer, but it's
actually a very broad field when you think about what
we're moving into moving forward, There's been a lot of
discussion of physical AI and robotics, and a lot of
that will be in manufacturing. It could be for iPhones,
it could be for automotive. The reason that they've picked
Detroit is not lost. It's a manufacturing culture. There are
companies there, but we are running into this gap where
(36:22):
these organizations don't have data scientists. They don't understand machine learning,
as an example, so we're starting with things that is
on the AI side, machine learning, which is a basic
way to start, and then moving that forward. So these
are short courses. The Apple engineers that are there are
actually basically doing rotations to spend some time helping the
(36:44):
small medium businesses, but they're also still doing their day job.
So there wasn't a net new investment in terms of employees,
but there is a net new investment in terms of
getting organizations to understand what is required for them to
participate in the next generation economy.
Speaker 8 (37:00):
That's stage one.
Speaker 2 (37:01):
Well alongside that stage is what companies are listening to
in terms of what's needed in terms of manufacturing here
in the US on the most sophisticated chips. I turn
our attention to what's happening with Intel at the moment.
I mean, we just heard from President Trump on all
the sixth what he wants of Apple. How do you
make of the state that they might take in Intel.
Speaker 9 (37:20):
I think we really were in this situation where the
concept of a US chip manufacturer was almost going to
go away. There was just so many discussions about what
would happen Intel, and I think the US governments thing
we're going to step in.
Speaker 8 (37:36):
We're going to take an equity stake.
Speaker 9 (37:37):
Some of that chip backed money that we had talked
about in the Biden administration that was actually going to
go away, it's actually.
Speaker 8 (37:43):
Now coming back.
Speaker 9 (37:45):
And the context of how that comes back, if you
look at it as an investment and equity stake, it
is really to try to create confidence in Intel as
a long standing player, to take away that risk. Buyers
do not want to invest in a chip company where
they think that could be risk. These are multi year
deals that we're talking about, plans that I talked to
(38:07):
you today about something I want to have come online
in three years. If I don't think you're going to
be there in three years, I'm not calling you. And
so part of this strategy is to take away some
of that risk, to give Intel a foundation where they
think they can execute on the strategy that they need
to execute on without all being at the whim of
how does the market feel about you?
Speaker 2 (38:26):
Marabell Lopez, founder and principal analyst of Lopez Research, fascinating
to catch up with you. Let's get back to Intel,
the government confirming that it is in talks with the
company to acquire a stake in the chip maker. That's,
of course, after SoftBank makes a two billion dollar investment
Blue Bang Intelligence Senior semiconductor analyst Kunja Savani joins us
(38:49):
now and Qunjin. You put out a react note along
with colleagues, really talking about how this would offer support
this potential stake, but it wouldn't close the gap with TSMC.
Just talk us through your.
Speaker 14 (39:01):
Yeah, there's like positives of this stake one near term
that it can help, but we don't think it's really
positive long term for stakeholders. In terms of the new
term positives they get the ten billion infusion, they get
as signaling that the government is behind this, behind Intel,
and so it might not fail as people have risks.
And the third important point is we think given the
(39:22):
looming risk of the semi conductor terriffs up till three
hundred percent that's coming. The government could incentivize US fabulous
semiconductors to bring business to Intel manufacturing, which could aid
the company in lieu of getting exemptions for terraffs. So
some positives near term, but long term, we don't think
this is ideal for shareholders. First, you have the delusion. Second,
(39:43):
most of this money would have come to Intel until
last week almost in the shape of grants which they
don't have to pay back. But now you have to
give up about ten percent stake for receiving the same money.
So not great outcome for share shareholders. And finally, like
we say, this does not aid anything change structurally anything
from Intel to catching up to TSMC.
Speaker 2 (40:03):
Isn't it interesting that the share price has been going
up into the right in reaction to basically money they
were getting anyway, but maybe it was more of a
profit share in the future. Tell us a little bit
though about where they really need to close the gap
from an innovation perspective. Is this really going to get
them out there with a fourteen A.
Speaker 3 (40:20):
It does not do anything.
Speaker 14 (40:21):
I mean, look, they ten billion is not going to
make or break them getting out in the fourteen eight
right so that is an execution challenge that only the
company can fix. This could depends on what the you know,
what are the things attached to this deal. This could
even slow it down because now you have government on
the decision making, seat driving some kind of decisions in
(40:44):
that direction. So this does not do anything to close
that gap when it comes to leading edge.
Speaker 2 (40:48):
I mean must be said how it lukmank Commers sexually
was saying, we're not going to take a governance role here,
but you can potentially you're saying, estimate, Maybe there's more
thoughts that the executives have to think through. So we're
p only in the here and now. What do you
want to hear from the CEO, lit butan what's next?
Speaker 14 (41:05):
Yeah, I think we want to see the same reassurance
that the focus is going to be on eighteen A
and fourteen A and how like I said, the possibilities
of those positives. Hopefully we hear that and that encourages
investors that they'll deal will be positive in the near term.
A is getting more business from US fabulous companies in
(41:26):
order to get those exemptions from the tariffs.
Speaker 2 (41:28):
We still await those tariffs. Con Josvanni Bloomberg Intelligence. We
thank you for the analysis. Meanwhile, that does it the
this edition of Blomberg Tech. Do not forget to check
out our podcast. You find it on the terminal as
well as online on Apple, Spotify, and iHeart so much
more Intel news to digest ap currently the highest since April.
It's a Bloomberg Tech
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Carolline Hide in New York
and Edmavelow in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up. Intel gets two billion
dollars from soft Bank as the US government confirms discussions
to take a steak in the chip maker. Plus Palo
Alto Networks gives a strong forecast for the cybersecurity giant
our conversation with the CEO Nikesha Rura, and Apple expands
its iPhone production in India as it seeks to lessen
its reliance on China. But first I shinelight what's happening
(00:45):
with arm as well, because the news was that SoftBank
is taking well two billion dollars in inequity state. They're
going to be selling new shells. Soft Bank is going
to be having them. Remember SoftBank, of course, in many
ways controls on the chip designer. We're thinking also about
the US government, which doesn't indeed confirm that they are
eyeing a stake for the business. We're wondering just how much.
And I'm pretiused to say that we can dive into
(01:06):
this with Michael Shepherd, of course, Blomberg's executive editor on
all things to do with technology and Washington, and boy
is Washington playing a bigger and bigger role at the moment.
COMMAS Secretary Lutnik saying, yes, we're involved in talks, but
how much equity MIC.
Speaker 3 (01:22):
Well, it's a great question.
Speaker 4 (01:23):
He stopped short of saying that it would be the
ten percent stake that our colleagues scooped and reported yesterday,
and it gave a size and scope to what we
had broken earlier over last week, and that is that
the government had been weighing this investment in the company.
And the idea is to take some of the Chips
(01:44):
Act money and those are funds and subsidies CARA that
we have talked about on these airwaves so much.
Speaker 3 (01:50):
Over the past year and a half.
Speaker 4 (01:52):
But they would take that money and turn it into
equity handstock over to the government, and that would make
the federal government the largest holder in Intel, which would
be an extraordinary step, especially in the tech space, and
it would also provide something of a lifeline to this
company as the new CEO, Lip Bhutan, tries to turn
it around after inheriting from Pat Gelsinger's predecessor, a company
(02:15):
that was really at a crossroads.
Speaker 2 (02:17):
Really at a crossroads. Lip Bhutan now has to almost
try and weave a narrative that's got pretty confusing for
the government. They care about manufacturing in the United States,
they care about Ohio an awful lot, They care about innovation,
and that almost felt like something that Boutan was pulling
away from, and certainly in terms of the latest and
greatest innovation with fourteen eight processes, but they couldn't find
(02:42):
demand for it.
Speaker 4 (02:44):
Well, Caro, you hit the nail on the head right there.
There is such tension between what lip Bhutan was going
to have to do with the turnaround, with the goals
of the administration, which, as you said, is to try
to stoke warm domestic manufacturing, especially in the advanced technology
space and semiconductor space, and that factory in Ohio we've
talked so much about has now been pushed back to
(03:05):
the twenty thirties, and that's not a timeline that the
Trump administration would accept. The rub though, is that Intel
just doesn't yet have the customers to be able to
sustain the factory build out there, which is so costly
and would involve such continued investment by the company. It
needs a guaranteed revenue stream from those buyers of chips.
Speaker 3 (03:29):
To be able to make that work.
Speaker 4 (03:30):
Now, one of the questions is would the government try
to cajole some other tech companies into buying chips from
Intel to help it find that customer base as it
seeks to move forward. We heard from Treasury Secretary Treasury,
the secret Treasury Secretary Scott Vestn't this morning saying that no,
(03:51):
the federal government would not get involved in trying to
find those customers.
Speaker 3 (03:55):
But we'll wait and see.
Speaker 4 (03:57):
The President is very much interested in trying to see
Intel succeed.
Speaker 3 (04:01):
He had a very positive meeting with.
Speaker 4 (04:03):
Bhutan about ten days ago, and this was just days
after suggesting that the CEO might have to leave over
his prior ties and engagement with China.
Speaker 3 (04:13):
China.
Speaker 4 (04:13):
So we are seeing a bit of a turn of
fortune between not only the company and the government, but
really the company and CEO with the president himself.
Speaker 2 (04:23):
I mean, Link Secretary Strategies might call this monumental the
last couple of days in their view for Intel. What
I think is really interesting though, is not aside from
already the investment, they're managing to push from SoftBank, for example,
into Intel. But whether other companies that have taken Chipsack
money might see that turn into an equity investment too.
(04:44):
That seemed to be what I was reading between the
lines of our reporting. Well, Micron's taken money, but how
could that possibly work for TSMC Samsung?
Speaker 4 (04:53):
We are seeing in between the lines of those reporting
a sense among some White House officials that they would
like to perhaps take it a step further with those
other companies, perhaps including the ones that you mentioned now,
with a venture like Micron, perhaps because it's US flagged
and US based.
Speaker 3 (05:11):
Sure, maybe that could work.
Speaker 4 (05:12):
But then Taiwan and TSMC, how does Taiwan semiconductor manufacturing
company and the Taiwanese government leadership accept something like that?
And Samsung and the government in South Korea there lies
some greater sensitivities. Even as those governments have come to
embrace the need to diversify the location of their manufacturing
(05:36):
and to also curry favor with Donald Trump by investing
in the US, there may be a certain line when
it comes to the equity stakes, Carol, So we'll have
to see how that plays out.
Speaker 2 (05:46):
A Max Michael Shepherd and the Inside Track of what's
happening in Washington. We thank you. Let's turn to well
they analysis on the street now for Intel and the
read across to the sector. Gailuria's with US head of
Tech research at DA Davison. Is this a good thing
for Intel?
Speaker 5 (06:01):
It's a lightsaver. They were on an unclear path before
the government decided to renegotiate its deal. Let's not forget
the US government already had a deal with Intel. It's
we're going to give you six billion dollars and we're
going to get a colored profit shared down the line.
What this administration is doing is just renegotiating the deal.
(06:22):
It's saying that's not good enough. We want to take
an equity state. And by the way, Intel is different
because part of this deal is a big Department of
Defense component. Let's not forget. We're going to want Intel
to manufacture chips for our F thirty fives and other
important weapons systems. So the government has a different type
of relationship, for instance, than it does with TMSMC, where
(06:46):
we're just talking about making chips for data centers. So
the government renegotiated the deal, and now when it's done that,
it's not a coincidence that Libu time can go to
his friend Masa San and say, okay, this is the
time for SoftBank to invest as well and maybe line
up some armed demand for those fourteen eight chips down
(07:08):
the line.
Speaker 2 (07:09):
I'm so interested in the arm architecture side of this.
How do you see these working hand in hand going forward?
How more cemented could a relationship become?
Speaker 5 (07:20):
Well, clearly it could be part of the deal. And
more importantly for Intel, as of a week ago, they
had no customers for the fourteen A architecture and they
said they may not even proceed with it. Now they
might have one lined up. Let's not forget the Department
of Defense is a customer that's now more likely to
(07:41):
be lined up for that, And then they can go
and talk to the other companies. And even if the
government doesn't have it, doesn't go ahead and twist some arms.
Let's not forget. And Nvidia's committed half a trillion dollars
of investment in the US, so can the government now?
Can President Trump called Jensen Wang and say, hey, this
(08:02):
is part of how I want to see the investment
play out. I need for you to be a customer
of fourteen A that's not inconceivable at this point. And again,
remember this is national security, So the rules of the
games change once we say this is national security.
Speaker 2 (08:17):
Rules of the game are often blurred by frenemy lines.
Gil And what's so interesting is Massa has had a
long term relationship with the CEO of Invidia, of course,
Jensen Wang, but also in some ways wants to build
a competing architecture in some ways, what's to take on
in Vidio in terms of AI chips? Could he do
that with Intel's help.
Speaker 5 (08:41):
It's one way for him to participate in an even
more broad fashion in the growth of AI, which he's
doing now. He regrets selling in video when he did.
He's buying some of it back, but he's also making
a set of other investments in AI infrastructure. Let's not
forget Stargate is probably the flag bearer of his effort,
(09:02):
combining with open Ai and Oracle to build again at
least one hundred billion dollars worth of data center capacity.
And for that it would make sense to diversify and
not only buy Nvidia chips. Now, that's going to take
a while, and Nvidia not only has a lead but
continues to extend its lead every year, but it does
(09:23):
make sense for him and for other companies to try
to diversify away from Nvidia.
Speaker 2 (09:30):
What's interesting is how a Lutnik Ecomo sextuary had said, look,
we will be we confirm that we're looking at taking
an equity stake. Didn't say how much, but it wouldn't
be with a governance role. Now, well, broadly, how are
you starting to analyze companies that are getting closer and
closer to the US government and how much Well is
it interference or is it positive help that is being
(09:54):
led by a US government here.
Speaker 5 (09:57):
Well, the US government has an ability to to give
proferential treatment to some of these companies to change the
rules of the road, and it wants equity participation when
it does that. And again, it's not doing it broadly.
It's doing when it's a matter of national security. Let's
not forget it's already very involved with Nvidia. It's limiting
(10:18):
their chip sales to China. It's already very involved with
open Ai. This may be quiet, but it's pretty safe
to assume the Department of Defense gets briefs from open
Ai very frequently about where the models are. So the
government is involved because it's national security. In Intel's case,
it's a matter of if this is this century's nuclear arsenal,
(10:41):
we need somebody to make the shellcasings domestically. We can't
have a Taiwanese company in a Korean company make our
shellcasings for our nuclear arsenal. So in Intel's case, it's
a much deeper involvement, and I wouldn't be surprised if
there are if there is input into where the investments go,
what the governance is, even if it's not explicit.
Speaker 2 (11:06):
Something that Blomberg will seek comment on Da Davidson's Guilduria,
like so much be analysis today we are coming up.
We have from Palo Alto Network CEO Niickesha Arora is
the company sees it a stronger than expected twenty twenty six.
This is Blue Medtech Shares a Palo alter Networks rising
(11:31):
in fact best days since April. It's not apposting a
stronger than expected forecast for twenty twenty six. We caught
up with the CEO, Niickesha Rara earlier. That's what we
had to say about the growth.
Speaker 6 (11:41):
The industry has got too many fragmented players where the
customers are left to do the stitching on cybersecurity themselves,
and now the base at which attacks are happening, the
base at which the bad actor is able to get
in and excellent straight data has shrunk to twenty five minutes.
Speaker 3 (11:56):
You can't solve that problem with the humans. You have
to apply technology. You have to apply automation, you have
to apply.
Speaker 6 (12:01):
Yeah, and that's why that's where platformization comes in.
Speaker 2 (12:04):
You talk about the pervasive attacks, I mean you apply
GENI to tackle ultimately attacks coming from JENI. I think
you had phenomenal statistics in the call, eight hundred and
ninety percent increase in GENAI traffic in twenty twenty four.
Can you just talk to us about how you can
combat that, what sort of things you need in place
to be able to take on the GENI impact.
Speaker 6 (12:27):
Well, look, as we're noticing everywhere as AI is getting deployed,
the fundamental problem that every company is facing and deploying
LLLMS or AI effectively is they don't have good data.
You need good data on drug discovery, you need good
data on self driving cars to understand where every tree is,
where we plant is, So you need good data to
solve the problem. If you want to use AI and
(12:47):
What we have done at our end is we have
basically built a platform that ingests so collects all the
data from the enterprise and makes sense of it as
fast as.
Speaker 3 (12:56):
The bad actors can. Now, that can't be done in humans.
Speaker 6 (12:59):
For example, in an instance of ourselves, Leaven just one
hundred and fifty terabytes a day. That's a lot of data,
and that's just for ourselves. And imagine doing that across
four hundred customers. We're ingesting data and petabytes, analyzing it
on the fly and trying to stop an attack made stream.
That requires tons of technology, tons of AI expertise because
the consequences are disastrous. Right, the bad actors are doing that,
(13:22):
but they're trying to get it right once. We have
to get it right one hundred percent of the time.
Speaker 2 (13:26):
Okay, so you're on the expertise that you need. You've
had organically, but also some inorganic expertise coming on. When
I think about the identity focus you've now put on
with cyber arg it's a deal that of course will
be folded in in the longer term.
Speaker 3 (13:38):
I don't know. You guys like to call it in organic.
Speaker 6 (13:40):
When you hire great people, that's possibly call it in organic,
isn't it like, Well, Meta goes and hires AI researchers
and people hire people. That's innerwirement. Guess we have to
get great people from elsewhere because we don't have, you know,
the prerogative of having best people on all of the time.
Speaker 3 (13:54):
So yes, we buy great teams who are doing great works.
Speaker 2 (13:56):
It's twenty five billion, This is a twenty five billion
dollar Aquahi.
Speaker 6 (14:00):
Well, we can't get there the way we got here,
so we're going to have to make sure that we
go ahead. And it's not just acquhire. It's amazing technology.
It's a great bunch of people. And honestly, I think
the way to frame it, Caroline, is if you listen
to all the narratives I here in Bloomberg and around
in media, we're all worried about agents.
Speaker 3 (14:17):
We all believe that agents are going to take over
the world.
Speaker 6 (14:19):
We believe they're going to be more agents in companies
and they're going to be humans. Now, well, somebody's got
to make sense of these agents. Somebody's got to make
sure these agents have credentials, they're managed, they're understood, they
don't run rogue, they have guardrails. That whole world of
agentic AI needs a whole cloak or framework of identity
management around them, and cyber Arc is the world leader
in this topic. So partnering with them, making them put
(14:41):
the networks allows us to see ahead and say two
years from now, three years from now, when the world
is talking about how to manage all these things, how
does podel to get ready and be at the forefront
so our customers can solve their problems on deploying AI
while we help them a security What.
Speaker 2 (14:55):
Sales synergies do you see in that two to three years?
How do you ensure that you don't get a hit
to that margin that some award about.
Speaker 6 (15:05):
We are as the first at scale cybersecurity company. We
crossed a ten billion dollar revenue rundrate never been done
in cybersecurity. That allows us to leverage scale economics. We
run a thirty percent operating margin, We run close to
forty percent free.
Speaker 3 (15:17):
Cash flow margins.
Speaker 6 (15:18):
Were a robust, profitable company. Any company that isn't a
billion two billion dollar ur business, which a cyber Arc is,
we think we can vastly improve their operations as part
of Polo Alto because the scale economics that we bring
both on the go to market side, we have ten
times of sellers they have, and on the operating side,
and we run large scale systems for sixteen thousand employees.
Adding six thousand employees doesn't take a lot, but it
(15:41):
does improve the margins the underlying business of Tagic, So
we believe that the acquisition will be a creative over time.
The billion f FI twenty eight we can collectively achieve
a forty percent free cash flow margin, which again is
gold standard in our industry, let alone our industry and software.
Speaker 2 (15:55):
Hello Alto Networks Cee Nikesh Aurora. The AI industry's massive
funding needs are being seen as an opportunity by private
credit firms. For example, firms competed for months till Ard
Meta twenty nine million dollars for its AI data center
project in Louisiana. Now Pinco and blue Out Capital eventually
(16:18):
selected there. Bloomberg's Laura Benitez joins us. She covers asset management,
and we're reporting on this a lot, and just remind
us why private credit is really salivating at the opportunity here.
Speaker 7 (16:29):
There's a huge opportunity within AI, you know, unline private equity,
which we're seeing, you know, some kind of logjam with exits.
You know, there's big opportunity with infrastructure and digital infrastructure.
The margins can be quite high, the coupons can be
very lucrative. So yes, it's a piece of the private
everyone's trying to get in on right now.
Speaker 2 (16:49):
They get in our meta, there's opportunities to come. I
was just looking at a note put out by UBS,
So they almost worry that perhaps this is getting too much.
The froth starts to appear, the risks start to appear.
That something you're hearing, Laura, that's right.
Speaker 7 (17:02):
There are some concerns that, you know, there's too much
money chasing this opportunity now, and that it might be
overblown and demand you know, seem to be you know,
apparently soaring. But we I think kind of a bit
skeptical on that in the long term. But you're right.
Morgan Stanley have said, for instance, that there's you know,
trillions of capital expenditure needs for AI in the next
(17:23):
few years, and that could translate to hundreds of billions
of bond issuance coming into the bond market.
Speaker 8 (17:27):
So again huge numbers here.
Speaker 2 (17:29):
Three trillion in the next three years is the number
that morgus Standing was estimating. It is eyewatering. A lot
of it is US denominated. Just tell us where on
the respectrum actually this lies. Is this what would be
deemed investment grade debt? More broadly, because these companies are
i mean washed with cash and very betterable against the
many see the demand is there for these AI data centers.
(17:51):
It's a good question.
Speaker 7 (17:52):
The vast majority of what we're seeing could translate into
investment grade issuance, primarily because of the tenor so the
maturities of these debt instruments are very very low long
that allows companies and issuers to get an investment grade rating.
And also they're back to against card assets, so you've
got more collateral there.
Speaker 8 (18:07):
Should things go wrong.
Speaker 7 (18:08):
You've got more security to negotiate with.
Speaker 2 (18:13):
Banks, cut out private credit swoops in Pimco A big
winner here, Bluemos, Laura Benitez, it has been great speaking
to you, thank you. But elsewhere in AI, let's talk
about regulation. Last year, California Governor Gavin Newsom, remember he
vetoed an AI safety bill. The lawmakers actually pleased to
take another swing at the regulation. Here's State Senator Scott
Wiener speaking with us after the.
Speaker 9 (18:33):
Vetop California as the heartland of tech and.
Speaker 8 (18:38):
AI innovation, has a responsibility to lead on AI safety.
Speaker 2 (18:43):
Titus Wu. He covers California politics for Bluembag Industry Group,
and you're joining us now because there are multiple AI
in tech related bills in front of lawmakers and Sacramento.
But I thought, this is exactly what the administration doesn't want,
a patchwork effect, a state by state AI regulation future.
Speaker 10 (19:02):
I would say for thanks for having me on, but
I would say that you know, Governor news doesn't necessarily
say that he didn't want, you know, any air regulation
whatsoever here in California. If anything, you know, in recent months,
you know, given that you know, on the fairal level,
we saw them try to implement a ten year moratorium
(19:22):
on state IO laws. That you know, Newsom has tod
that he's felt that California has to lead on AI regulation.
The question is what is Newsome's preferred approach of regulating it,
because clearly, you know last year was SP ten forty seven,
that was not how he wanted to see it. And
right now, you know, lawmakers they're trying again, and they're
(19:44):
trying to suss out and read the teenies on us
to what the governor wants what kind of regulation. What's
the mill line in which the governor would say, okay,
this supports innovation but also advances some sensible regulation.
Speaker 2 (19:57):
So they're thinking about AI developers testing the tools against bias,
for example, that's in the AB ten eighteen. This isn't
just the only era of regulation that my OVERSEAI, right,
we're also thinking about how big tech, in many ways
is lobbying against what's SB fifty three. Can you took
us through that one, Titus?
Speaker 10 (20:15):
Yes? So SB fifty three is basically center and Winner's
kind of second attempt after his teen forty seven got vitailed.
It's definitely a lot less i'd say, restrictive than ten
forty seven. It focuses mostly on kind of disclosing safety
and security prodcasts for AA developers. There's s a blow
of protections the third party audits. You have to report
(20:38):
a kind of safety instance to the state ag. So
it's it's it's nothing not as intrusive as last years
ten forty seven, and it's trying to pick up on
some of the recommendations from this working group formed by
this group of experts that the governor formed after his
vetol last year.
Speaker 2 (20:55):
And very briefly worker rights against automated tools. That seems
to we canes.
Speaker 10 (21:01):
Yes, definitely. You know, labor forces in California, the really
powerful political force, uh you know this year they're they're
getting more in the weeds into trying to put in
comprehensive rules around AI in the workplace SB seven. It's
very very intense bill where you know, labor and in
tech they're fighting with each other and the capital over it. Basically,
(21:23):
that bill would, uh, that bill would give workers rights
to kind of you know, opt out, potentially refuse you know,
decisions by employers when they use AI, for instance, to
make termination decisions, disciplinary decisions, and it had a big
consequence of employers across the California.
Speaker 2 (21:41):
Titus Wio, California correspondent for Bluemag Industry Group. Great to
get your insights. Thank you, welcome back to blombag Tech.
We're all thinking about what the US government means for
Intel ownership, how much they confirm that they are indeed
looking at taking a stake, what size of steak is
still under question, how we see a change of grants,
(22:04):
money lent in the chip sat into equity, and what
soft Bank's now getting in on the game. For we're
up seven and a half percent. Let's get over to
London where Peter Elstrom is with US executive editor who
used to oversee. Of course, you're looking at the technology
news for US more broadly and big expertise in Asia.
So I go to Asia first. I ask you why
SoftBank is taking that two billion dollar steak. Why are
(22:24):
they getting Intel to sell more equity to them.
Speaker 11 (22:28):
Yeah, there's a lot going on here with Intel, but
on the software. On the soft Bank front in particular,
the founder Mosio Shechssan has had ambitions in the chip
area for a long time. He bought armholdings of course,
the chip designers that's commonplace and all sorts of smartphones,
and he has ambitions to be able to compete in
AI chips against Nvidia. In particular. They think that they
(22:51):
can use some of those designs from ARM to make
a much more efficient, energy efficient chip that could compete
with Invidious chips, particularly for running some of these AI
services like chat, GPT in particular. So the idea that
SoftBank would put two billion dollars into Intel gives them
a stake in the company that could be important, perhaps
as an investment, but also if Intel is able to
(23:14):
develop its foundry business, that is, making custom chips for
other kinds of companies. You could imagine a day when
Intel makes AI chips for soft Bank and is able
to sell those, and both companies would be able to
benefit from taking some of that demand away from Nvidia
as this AI boom really explodes.
Speaker 2 (23:31):
And when we think about the foundry business, when we
think about manufacturing, that's where the US government wants to
lean in. They want domestically made manufactured chips that ultimately
gives them control of the supply chain. But we're hearing
from Howard Lutnink that he doesn't want control over Intel
in any way. They don't want a governance role here.
Speaker 11 (23:49):
Right right, Yeah, you make a good point. The US
government has wanted to rebuild the domestic semiconductor and industry
for a number of different reasons. Partly because it's a
great business. It could mean some jobs and some profits
for them, but also they don't want to have the
strategic risk of having all the advanced semiconductor and manufacturing
in the world in East Asia and Taiwan and South
(24:11):
Korea in particular. They want to be able to bring
that into the United States, And Howard Lutnik eluded this
today when he confirmed the nice group that we had
yesterday about how the US government is looking at taking
this ten percent stake in Intel. Intel, of course, is
really the last major US chip maker standing that has
a shot at being able to make those most advanced
chips to be able to compete with the likes of
(24:32):
TSMC and Samsung in particular. So Lutnik is saying, hey,
we may use this chipsack money to convert into equity
and then take this ten percent steak within Intel. And
he's also suggesting that they may do that with some
of the other companies that are supposed to be recipients
of the chipsacked.
Speaker 2 (24:48):
Money, one of them being Micron for example. You want
to on Earth that would sink in with a TSMC
and Samsung they've also taken chipsacked money. Peter. But what's
really interesting is weather this gets you. The end of
the reason that we could pull back from fourteen A
in many ways was because it was like, I don't
want to be that person who just builds it in
hopes that they come.
Speaker 11 (25:09):
Yeah, this isn't free money, to be clear, under the
Biden administration, they allocated these Chips Act awards. Those were
supposed to be grants. This was supposed to be money
that was coming in anyway. There was no talk about
these companies giving up equity to be able to get
those billions of dollars. So the Trump administration is trying
to change the calculus here where they still will give
you the amount of money that you were supposed to
(25:30):
get from the Chips Act, but in place you're going
to have to give them some equity in the company.
So it's not free money. And maybe a little bit
accelerated from what the original vision was for the Chips Act.
Intel for example, may be able to get that ten
point nine billion dollars that they were supposed to get
a bit sooner, but still it's not you know, it's
not free money. They still have to go out there.
They have to prove that they can succeed in the
(25:52):
foundry business. And to your point, then they need to
go out and get customers. The US government can do
a lot, but it can't get Intel customers for that
boundary business.
Speaker 2 (26:00):
To Alstrom also to articulate and like me, just then
we thank you. Let's bring in Swiss COT senior analyst
ipek Oskodeshka for more. Who I ask you whether there's
changing up of the calculus is actually what global investors
want to see. How difficult is it to calculate what
the US government's going to do next?
Speaker 12 (26:19):
Well, it's very difficult, indeed, because the speed at which
things are coming some news are usual, some news are unusual.
So the speed at which things are coming to investors'
attention is just went out of control. And some of
the news do have positive implications for companies.
Speaker 2 (26:37):
But there is still the risk that the US.
Speaker 12 (26:39):
Government's goals are not going to be always aligned with
business objective objectives and the company's primary goal of maximizing
investor value.
Speaker 2 (26:50):
So the risks are building, risk of building. Does it
put you off the generator of AI tailwinds? More broadly
though that we've seen, Let's go back to previous weeks
with Nvideo and AMD becoming in the eye of the
political storm and having to pay fifteen percent if they're
going to sell it to China, for example.
Speaker 12 (27:08):
So that's very interesting because if you look at AMD
and Nvidia today, they are in a better place than
they were a month or two months ago where they
weren't able.
Speaker 3 (27:17):
To sell their hips to China.
Speaker 12 (27:19):
Today all of a sudden, they can if they pay
fifteen percent cut of their Chinese sales.
Speaker 3 (27:24):
So this looks like it is good.
Speaker 12 (27:25):
News, but in the short run is going to give
these companies more revenue. But in the long run, in
the midium to long run, we don't know how the
news and the US government interference is going to change,
whether the changes are going to be positive or negative.
So that means that the votility is higher and the
risks are building up. It doesn't mean that the companies
will not benefit from the US government support, but it
(27:47):
means that the US government will not pursue the same
goals that they do all the time. So that I
think is a risk, and that is there's something that
we become quite concious.
Speaker 2 (27:58):
Even though over the last let's call it two years,
basically seven names have made up nearly all of the
equity benchromarks gains. So how does an investor basically hedge
against that volatility? Do they stay exposed but start diversifying impact?
Speaker 12 (28:14):
Well, diversific diversification is one of the rules that we're
just like recommending obviously because diversifying away from the US
equities that have quite high valuations right now towards sectors
that do have opportunity to follow up is interesting. Then
other clients are looking to byput options for example, that
are interesting in case there is a sell off in
(28:37):
the market and we start seeing valuations come down, and
there are many things to do, but at the end
of the day, what we see is that.
Speaker 2 (28:44):
AI is growing.
Speaker 12 (28:45):
It is not the AIK that's going to be smaller,
but it is how the AIK is going to be
pieced together that's going to be important. And we think
that international companies are also going for a piece of
a piece for themselves and that is actually giving way
to opportunities in the international market. Is now that the
US technology companies are value to perfection.
Speaker 2 (29:07):
It's been interesting. You just mentioned how perhaps you use
options to be able to well hedge oneself. What many
would say is what occurred with Intel, as many were
using it as a hedge, betting against it to be
able to protect the upside that they've been getting from
in video and other areas of chips market. Was that
something you saw at play and where else had basically
investors looked to bet against to protect other winnings that
(29:30):
they'd seen in the sector.
Speaker 12 (29:32):
Well, you don't really want to go against MVDA NAMS,
you don't. You cannot really go against this machine. The
only thing that you're willing to do is to protect
any potential sell off or any potential drug down. So
in this sense, we think that it is always very
important to stay long and just diversific Diversification of the
portfolios looks like the way to go for US. We
(29:53):
do not really expect to see a sector meltdown or
very very big change in the dominance of the US.
Speaker 2 (30:01):
What we're trying to do.
Speaker 12 (30:02):
Is just to diversify a little bit in order to
tame the downside US for investors who are looking to
have some international exposure to broader AI play.
Speaker 2 (30:09):
And is that Europe? I mean I think of ASML, SAP,
but not many other AI names leap to the forefram
when it comes to publicly traded equities. Is it more
of an Asia game as well? Is it thinking elsewhere
in the asset pool, not just equity, but maybe death?
Speaker 12 (30:24):
No, you're right, I mean for Europe, we are specifically
looking into defense related technology plays and we think that
the defense spending is somehow going to boost the technology
spending in Europe as well, So we are mostly looking
into military in defense technologies within the European context.
Speaker 2 (30:42):
For China, we are looking at the AI plays.
Speaker 12 (30:44):
We are looking at the funderies and the chip makers
like SMIs for example. Same thing for South Korea.
Speaker 8 (30:50):
We are watching.
Speaker 12 (30:51):
Very closely some some what especially ska Heinex. So there
are some champions around the world that are willing to
take a piece of that cake and that are looking
in resting and that how not seen enough exposure so
far because they have remained will stay under the cloud
of the US big technology giants. And we think that
there's still opportunity there and there's still a reason to
(31:12):
think about diverse buying there.
Speaker 2 (31:13):
Ibecshta Geshkaya, We thank you so much for Swiss quid
open Ai. But it's launching a new subscription tier exclusively
in India called chatchipt Go and the plan will use
its latest GPT five model at just five dollars a
month now. The plan would allow users to generate more
(31:35):
images and interact with the chatbot more frequently compared to
the free version. The latest tier will be in addition
to its other paid plan offerings, including Chatchipt Plus, which
course costs twenty dollars a month. Now, sticking with India,
Apple is expanding iPhone production at five factories in the country. Look,
it's a move aimed at lessening the company's reliance on
(31:55):
China for US bound models. Let's bring in Marabell Lopez,
Founa and play for analyst at Lopez Research and Marravell.
What was so interesting is this brought the ire of
President Trump, who was frustrated that Apple was doing more
of its manufacturing in India, shifting from China. He wanted
it in the US. But has Tim Cook done enough
therefore in the United States to offset this.
Speaker 9 (32:18):
I think Tim Cook eventually will do enough on the
United States to upset it. But today the answer to
that is now. And it's unexpected that they move this
to India. They've been working with India since roughly twenty seventeen.
So it takes a long time to build manufacturing. So
you just don't go in, no matter who you are,
a president or not, and say you're going to build tomorrow.
Speaker 8 (32:38):
It takes time to build factors.
Speaker 2 (32:40):
Takes time. So how much do you think ultimately will
be sourced from India into the United States. Is it
only going to be iPhones in other accessories, Well.
Speaker 9 (32:51):
I think we're starting to see other plants come online
in the US. For example in Houston, when we look
at what they want to do with Apple Intelligence and
Servers for they are building that and that's coming online
in twenty twenty six. So that's an example of some
of the products that will be built here. But the
iPhone manufacturing, I expect that it will take several years
to get up and running any major significant US presence,
(33:14):
And this is part of the reason why there's roughly
six hundred billion earmarked towards creating manufacturing in the US,
and that comes in many different forms. Part of that
will be for servers, but you have to envision that
part of that will also be for iPhones.
Speaker 2 (33:29):
Let's talk about what's happening here in the United States,
because today we understand that Apple is unfolding its academy.
This is all about training here in the United States.
Who exactly is it for and what production do that
ultimately lead to here.
Speaker 9 (33:45):
So one of the things that we have happening right
now is AI is very complicated and businesses actually don't
know where to get started. So the concept behind the
Apple Academy is for small medium businesses to understand effectively
what they need to know to build next.
Speaker 8 (33:59):
Gen manufacturing, which would be highly AI driven. So that
is going to.
Speaker 9 (34:04):
Be a multi day program that small and medium businesses
sign up for. They currently have a wait list at
this point for the next wave of that. They will
be running those courses throughout the year, and then once
you've gone through the course, there's an opportunity to discuss
more detailed discussions about what kind of products and services
we need. With Apple engineers, it can help you do
(34:25):
something that's more specific to your organization.
Speaker 8 (34:27):
This is to fill a skills gap.
Speaker 9 (34:29):
You know, we have a plenty of education programs in
high school and above to try to bring in new employees,
but if you're actually a business running today, especially at
small medium business, there's very few options for you. So
this is both an opportunity to educate these small businesses
but then also put them in the pipeline to buy
Apple products and services moving forward.
Speaker 2 (34:50):
Really interesting you talk about this is the skills gap.
Prior to this, of course, President Trump has talked a
lot about the production gap and where he wants to
see that rectivid. Just take a listen to what he
said in August six.
Speaker 13 (35:00):
We're doing these things now in the United States instead
of other countries, far away countries.
Speaker 2 (35:07):
This is a.
Speaker 13 (35:08):
Significant step toward the ultimate goal of ensuring that iPhone
sold in the United States of America also are made
in America with the mass infusion of capitalists. Announcing today,
Apple will also build a two hundred and fifty thousand
square foot server manufacturing facility in Houston and avest billions
of dollars to construct data centers across the country from
(35:30):
North Carolina to Iowa to Oregon.
Speaker 2 (35:34):
Marvell, you so thoughtfully put us right on the medium
sized businesses. They really have nowhere to go when it
comes to upskilling and being able to facilitate production. What
is it that Apple brings by training? Because really the
anxiety for Tim Cook has been they haven't got the
tooling engineers in the United States that they have in
China that they have in India. Is that what is
(35:55):
going after longer term?
Speaker 9 (35:58):
So I think yeah is the short answer, but it's
actually a very broad field when you think about what
we're moving into moving forward, There's been a lot of
discussion of physical AI and robotics, and a lot of
that will be in manufacturing. It could be for iPhones,
it could be for automotive. The reason that they've picked
Detroit is not lost. It's a manufacturing culture. There are
companies there, but we are running into this gap where
(36:22):
these organizations don't have data scientists. They don't understand machine learning,
as an example, so we're starting with things that is
on the AI side, machine learning, which is a basic
way to start, and then moving that forward. So these
are short courses. The Apple engineers that are there are
actually basically doing rotations to spend some time helping the
(36:44):
small medium businesses, but they're also still doing their day job.
So there wasn't a net new investment in terms of employees,
but there is a net new investment in terms of
getting organizations to understand what is required for them to
participate in the next generation economy.
Speaker 8 (37:00):
That's stage one.
Speaker 2 (37:01):
Well alongside that stage is what companies are listening to
in terms of what's needed in terms of manufacturing here
in the US on the most sophisticated chips. I turn
our attention to what's happening with Intel at the moment.
I mean, we just heard from President Trump on all
the sixth what he wants of Apple. How do you
make of the state that they might take in Intel.
Speaker 9 (37:20):
I think we really were in this situation where the
concept of a US chip manufacturer was almost going to
go away. There was just so many discussions about what
would happen Intel, and I think the US governments thing
we're going to step in.
Speaker 8 (37:36):
We're going to take an equity stake.
Speaker 9 (37:37):
Some of that chip backed money that we had talked
about in the Biden administration that was actually going to
go away, it's actually.
Speaker 8 (37:43):
Now coming back.
Speaker 9 (37:45):
And the context of how that comes back, if you
look at it as an investment and equity stake, it
is really to try to create confidence in Intel as
a long standing player, to take away that risk. Buyers
do not want to invest in a chip company where
they think that could be risk. These are multi year
deals that we're talking about, plans that I talked to
(38:07):
you today about something I want to have come online
in three years. If I don't think you're going to
be there in three years, I'm not calling you. And
so part of this strategy is to take away some
of that risk, to give Intel a foundation where they
think they can execute on the strategy that they need
to execute on without all being at the whim of
how does the market feel about you?
Speaker 2 (38:26):
Marabell Lopez, founder and principal analyst of Lopez Research, fascinating
to catch up with you. Let's get back to Intel,
the government confirming that it is in talks with the
company to acquire a stake in the chip maker. That's,
of course, after SoftBank makes a two billion dollar investment
Blue Bang Intelligence Senior semiconductor analyst Kunja Savani joins us
(38:49):
now and Qunjin. You put out a react note along
with colleagues, really talking about how this would offer support
this potential stake, but it wouldn't close the gap with TSMC.
Just talk us through your.
Speaker 14 (39:01):
Yeah, there's like positives of this stake one near term
that it can help, but we don't think it's really
positive long term for stakeholders. In terms of the new
term positives they get the ten billion infusion, they get
as signaling that the government is behind this, behind Intel,
and so it might not fail as people have risks.
And the third important point is we think given the
(39:22):
looming risk of the semi conductor terriffs up till three
hundred percent that's coming. The government could incentivize US fabulous
semiconductors to bring business to Intel manufacturing, which could aid
the company in lieu of getting exemptions for terraffs. So
some positives near term, but long term, we don't think
this is ideal for shareholders. First, you have the delusion. Second,
(39:43):
most of this money would have come to Intel until
last week almost in the shape of grants which they
don't have to pay back. But now you have to
give up about ten percent stake for receiving the same money.
So not great outcome for share shareholders. And finally, like
we say, this does not aid anything change structurally anything
from Intel to catching up to TSMC.
Speaker 2 (40:03):
Isn't it interesting that the share price has been going
up into the right in reaction to basically money they
were getting anyway, but maybe it was more of a
profit share in the future. Tell us a little bit
though about where they really need to close the gap
from an innovation perspective. Is this really going to get
them out there with a fourteen A.
Speaker 3 (40:20):
It does not do anything.
Speaker 14 (40:21):
I mean, look, they ten billion is not going to
make or break them getting out in the fourteen eight
right so that is an execution challenge that only the
company can fix. This could depends on what the you know,
what are the things attached to this deal. This could
even slow it down because now you have government on
the decision making, seat driving some kind of decisions in
(40:44):
that direction. So this does not do anything to close
that gap when it comes to leading edge.
Speaker 2 (40:48):
I mean must be said how it lukmank Commers sexually
was saying, we're not going to take a governance role here,
but you can potentially you're saying, estimate, Maybe there's more
thoughts that the executives have to think through. So we're
p only in the here and now. What do you
want to hear from the CEO, lit butan what's next?
Speaker 14 (41:05):
Yeah, I think we want to see the same reassurance
that the focus is going to be on eighteen A
and fourteen A and how like I said, the possibilities
of those positives. Hopefully we hear that and that encourages
investors that they'll deal will be positive in the near term.
A is getting more business from US fabulous companies in
(41:26):
order to get those exemptions from the tariffs.
Speaker 2 (41:28):
We still await those tariffs. Con Josvanni Bloomberg Intelligence. We
thank you for the analysis. Meanwhile, that does it the
this edition of Blomberg Tech. Do not forget to check
out our podcast. You find it on the terminal as
well as online on Apple, Spotify, and iHeart so much
more Intel news to digest ap currently the highest since April.
It's a Bloomberg Tech
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