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Joining us on the line now were in our studios rather its flat savof Bloomberg Tech Editor to take a closer look at video. We want to talk about the China angle, Vlad, But I wanted to mention as well that you know, the stock did trade up in after hours, and if you look at the analyst coverage, you've got sixty buys, five holds, and one sell. You wonder about the one sell, But anyway, is that likely to continue given all you saw from the earnings today?
Maybe that once said we was just somebody who's profit taken. They bought NVIDI in two thousand and eight and now they're just catching it in What can I tell you about this company? When you look at its profits, they are just stratospheric relative to the previous year. We're talking twenty two billion. It's a record quarterly profit that they just reported. Expectations for Nvidia have been sky high, and it keeps outperforming, and this is a full year of
quarterly results being better than already elevated expectations. A good way to contextualize this is Nvidia's history is a graphics card maker, graphics cards, GPU gaming. That was two point nine billion out of that twenty two billion. So the company is churning out huge revenues and sales and outperforming even sky high expectations.
Yeah, but the power of those chips, that's why they're so great for you know, crunching AI data. They're lightning fast and robust as well. But the one thing that I think Brian was kind of alluding to when the company says that China data center revenue was down significantly, and you can obviously look to the US export controls as a big reason for that, But in my mind, I'm thinking, if I'm in the artificial intelligence business in China and I don't have access to the most advanced
chips from in Video, I'm at a big disadvantage. Right, That's absolutely right.
What is going to require is a fair amount of creativity because the way that things are structured today when you think about chat, GPT kick starting this entire thing, the whole technology is based on transformers and those are designed to run on Nvidia's Kuda architecture. So, without getting too geek into it, there is no other in video and video designed the whole thing. Everybody just jumped aboard
and found it to be the most efficient way. So the way to go about it today and in the future is to come up with more power efficient AI models, to come up with lighter workloads, and then figure out ways to achieve what companies like open eie are doing with a whole bunch of Nvidia GPUs today.
Well, we know you like to geek out a little bit, and Vidia has been sending some samples of new chips to China that are compliant with the US restriction, So will that be enough.
Right, Well, it's been a fascinating back and forth between Nvidia and the US government. The US government imposed sanctions to get Nvidia's most advanced chips to make them inaccessible to China, and then Nvidia effectively chopped them down to spec so they could get into China. Then the US
government said you can't do that. The head back and forth the head conversation, and Vidia did say after reserning is that it's confident that the things that it's sampling, the chips that is samplingto China today are in compliance with those regulations.
Now, yeah, Brian was talking about a story that where the Commerce Department here in the US was suspending permission for some US suppliers to sell products to the most advanced semiconductor plant in China that's run by SMIC. Can you imagine a world in the next two years, let's say, where China has caught up to Nvidia, or is it so far behind now we're a company like Nvidia, or to a lesser extent, let's say AMD or even Intel is playing. Is China that far behind?
Well, let's say, you'll be shocking. I can't say it's never going to happen, because I might have said that about Nvidia doing ten times its earnings in the space of a year. Right, So things can move really quickly. They can be breakthroughs. We sorder with the Huawei chip out of China last year. That being said, the amount of investment and time that goes into building this and video started this entire thing more than a decade ago.
When you think about TSMC, which is the worst leading chip maker, they're investing thirty billion dollars a year just in capex. So for China to do it, it's not just a matter of money and resources, it really is time as well.
It's not only in China that's far behind, but even AMD it's rolled out this accelerated them I three hundred. It expects revenue to be three and a half billion dollars this year three point five billion, and video is doing eighty billion plus. So it shows you the gap. Can AMD narrow that gap?
I believe that's much more reviable proposition. And if you talk to AMD, they're saying that they're already doing it. The thing is again, it takes time. It takes time to ramp up. It takes time to have the companies, the customers who adopt your technology. That's three billion dollars just from AI for AMD, just to be clear, they do you have all the other business with graphics and processes as well. Look, AMD is growing and I said
this to your colleagues in Europe yesterday. There is a world in which AMD can fulfill all of its ambitious targets and grow its AI sales and for Nvidia to still struggle to provide as many GPUs as the market demands from it.
Yeah, demand is that strong.
Where does Armholdings come in all of this? I mean, obviously the British chip designer, the tone by softbanker. Are they involved at the periphery of kind of advancing the next generation of AI chips?
Right? It depends. I mean if you ask the company, they're not at the periphery. They are at the heart of it. They're the future of AI. Because what in video is really great at is AI training. So talking to its competitors like Intel, like Armed, they're saying the next stage in AI is inference. It's the AI that happens on devices, and every smartphone today is basically running ARM technology or the Apple chips for even its desktop
computers or ARMED technology. So when you think one, two, three years down the line, it may indeed be ARMED who's leading the way.
You mentioned that demand was still so strong that even AMD could produce and produce and produce, and it wouldn't really close the gap that much. Jensen Wong did say today that supply and demand was coming more into balance. If that's true, does that mean the prices may come down for those in video chips.
Well, that's the fascinating thing I was thinking, and video could effectively name its price. Over the past year, everyone was in such a rush, in a hurry to get the chips in place, because, as I say, it's AI training. It's the very initial stages before you actually produce an AI model. The can stop monetizing as a business right, so everyone wants to have that as early as possible.
That's why the competition has been there. I think Nvidia can probably sustain its pricing just because the demand was so much higher E could have detated price previously. This welcome competition coming down the line, though.
Glad, thanks very much for joining us. Flat Savov there Bloomberg Tech editor, and you spare time for fun. He reads very dense technical manuals, you know, just to be entertained. Glad, thanks again and we'll have you back soon. China is said to have banned institutional investors from reducing their equity holdings at the opening close each day. And joining us for some analysis on this is Jill Desis, Bloomberg's China ecogov editor. So they can sell, but they can't sell
more than they buy, Jill. So it's a kind of you can't reduce your position or you can't do net selling. I'm curious what institutional investors are saying about this. I mean, this is kind of astonishing. Are we hearing much from this is the Bloomberg story, of course, Are we hearing much from investors?
Yes?
Well, Brian, I think at the point here, it's really this is about the government trying to alleviate some of the selling pressure. I think the backstory that you have to keep in mind here is that, you know, we've seen some increased pressure in recent days, particularly from the government,
to sort of clamp down on quantitative trading. What happened was on Monday, there is a major hedge fund in China that's sold something like three hundred the equivalent of like three hundred and fifty million dollars worth of shares within a minute of the open on Monday. And so it's really here about, you know, curbing some of this volatility. So I think from an investor perspective, obviously confidence is a much bigger issue in China right now. But I
think at least from the government's perspective. This is really about trying to clamp down on volatility within the market.
So the CSRC, we know, has a new chairman now, wou Ching, and I'm wondering whether he's the architect of this, and basically he was. I'm going to use the term hired to do something like this as a way of bringing stability to the equity market. I mean, the stakes are pretty high, aren't.
They they are? And look, i mean we're not sure entirely what his role particularly in this move was, but yes, I mean this does come just a couple of weeks after he was appointed to this position. And wu Ching also has a you know, quite a starried history of clamping down on behavior within in the market like this. In his a previous job, he was really known as the broker butcher within China. So I mean he's kind of here to you know, sort of slam down the
hammer and rain things in. I mean, remember, this is a market that has experienced a tremendous amount of volatility, particularly over the last eighteen months. We've seen a massive
multi trillion dollar sell off in China. A lot of these issues are really really sort of deep and painful within the market here, and so I think that if you're Xi Jinping looking at the guys that you have in place to sort of regulate the markets here, you want to make sure that you're trying to prevent any further volatility as much as you possibly can.
One thing that we point out in our story is it's unclear how widely this is being implemented, and perhaps it doesn't need to be implemented once you put this statement out. Institutional investors don't want to fall foul of the regulator, and so they will make sure that they are not net sellers. Is that what we're seeing or hearing?
Yeah, I mean I think that at this point a lot of what the government is trying to do here is you know, they're sending a message, right, and I think that that's really a key thing here. You're right that it's not entirely clear how widely this band is being applied. I mean, you know, obviously, I think you know, it's really sort of keying in on major institutional investors.
You do have to remember though, as well, that you know, Chinese markets have a massive number of mom and pop investors as well, and so those retail investors likely aren't really affected by this thing, and they are really responsible for quite a big part of this market here. But yes, I think at this point regulators certainly want to send a message saying, you know, we're clamping down and this type of behavior. We want to clamp down on volatility.
We've seen other you know, restrictions in recent weeks and months, curbing short selling, that kind of thing. So I think it's really again about alleviating the selling pressure within the market.
And we don't have an indication as to whether this policy is going to be lasting or whether it's just kind of a temporary adjustment to let the market kind of settled in, do we.
Yeah, we don't really know that. I mean, I think that again at this point, you know, I wouldn't be surprised if we see additional measures announced or you know, sort of implemented in the next few weeks or so. It's it's we're you know, this is a this is a government that's really trying to stem this really incredible
market route right now. And so whether these are temporary curbs, whether these are long lasting curbs, I mean, a lot of this is really just about stemming the bleeding at the moment.
A couple of other quick areas, perhaps you can comment on both. One that the csr rc is IS is putting together this task for us with the exchanges themselves to monitor short selling, so that looks like some of that will dry up. And this other one, which is pretty interesting too, that China is drafting a law to promote the development of the private sector economy.
Yes, well, I think that, you know, on that first point in terms of creating that task force, again, I think speaks to just the bevy of different measures that the government is rolling out to try to you know, again curb volatility within the market. And then yes, when it comes to the private sector, I mean, look, you know, the private sector does not have a ton of confidence
in China's government economy right now. They obviously have very very long standing concerns about treatment preferential treatment for state owned you know, enterprises versus private firms. That's been a major theme, particularly over the last couple of years within China.
So I think that anything that the government can do to try to instill some level of confidence in these private firms telling them, look, we do have your back and we do want to help you grow and develop, is you know, going to you know, you know, maybe go some way to restoring some of that sentiment there.
So there's a People Congress a meeting at the early part of March. Do I have that right? And is that going to be an opportune time for more policy be rolled out.
Yes.
So that's really that meeting of those top legislators in China. It's the most important political meeting that they have of the year. That's going to kick off at the beginning of March, and that's really an opportunity that all of these major you know, these top leaders lawmakers have to kind of gather and set this policy agenda for the year. I mean, a lot of these things that they're likely discussing at this upcoming meeting in March, they've probably already
been working on for quite some time. But I think just formalizing, you know, any sort of arrangements that they have for the trajectory for the rest of twenty twenty four, they're likely going to announce their economic growth target for the year. That's really I think an important agenda setting meeting on that calendar as we get into the rest of this year.
All right, Jill, thanks for joining us. Jill de Sez Bloomberg's China Eco guv Anger.
All right, let's pick up on that theme of Donald Trump possibly being elected to the US presidency. We are joined now by Bloomberg opinion columnist Karishma of Aswane, who joins us from our studios in Singapore. Karishma, it's always a pleasure. And you've been writing about what a Trump election to the presidency might mean for Taiwan. Break that down for me.
Yeah, So, you know, to be fair, when Trump was in power, arguably there had been no better president American president for Taiwan until, of course Biden came along. Because since we've had President Biden in the White House, there have been a number of things that he's done in comparison to the former President Trump that has helped to
boost support for Taiwan internationally. But just looking at some of the rhetoric that's come out of Donald Trump in this campaign, and I want to point to an interview that he's done recently with Fox News where he suggested that perhaps Taiwan would not be the most urgent priority for his White House if indeed he does make it into the White House in November. That has raised a lot of concern in this part of the world, obviously in Taipei, but even further afield with the American partners
like Japan, the Philippines, and Australia. And it's a real issue of American credibility out here because how the US manages the Taiwan issue with China is being seen as a test of American leadership across the region.
Yeah, as you say, Joe Biden has taken one extra step, even talking about the possibility of coming physically to the defense of Taiwan in the event of an attack. And President Trump seems like, as you say, that, he's taken back a step a little bit, and perhaps that's consistent with his basic America First policy. So the question then arises, if China was emboldened by this, whether it would be a kind of literal move or just a figurative one.
I think it's important to look at the signaling out of Beijing, and just in the last week or so, we have seen that there has been appetite from China to escalate tensions relatively speaking. The recent incident of two Chinese fishermen that unfortunately died tragically in Taiwanese waters off the island of Jinmn, Taiwanese controlled has prompted the Chinese to say that they are going to increase their patrols in this area. A Chinese coast guard in fact bordered
a Taiwanese tourist vessel a couple of days ago. That really scared people in Taiwan. And I think it is important ahead of the May twentieth inauguration of the new president Leichinda, who is of course from the Democratic Progressive Party, the politician that possibly China hates the most. Right now, I think we will continue to see an escalation of what is called gray zone activities by Beijing and culminating in whatever the Chinese want to signal ahead of that
inauguration speech. On me the twentieth, that's pivotal.
You know.
You cite a report from Bloomberg Economics suggesting there could be a twenty five percent probability of a major crisis in the Taiwan straight in the next five years ten percent risk of some form of conflict. I'm wondering though, whether that analysis was assuming a Biden presidency or a Trump presidency, and how the calculation might shift. We can put that aside for the moment. The other thing, we need to address the economic consequences, right, I think that
cannot be ignored. We were talking about the results from Nvidia a short while ago. This company relies on Taiwan's semiconductor to produce all of its chips, and I think that's the big elephant in the room, is it not?
Yeah?
Absolutely, I think you know, the pivotal role, the key role that Taiwan plays in the global supply chain, particularly when it comes to these high value chips. I mean they're in everything, right, like from your television set to extremely sophistic technological equipment. And the numbers are staggering. According to Bloomberg Economics, this analysis was released in January this year. They put the global price tag of an invasion at around ten trillion dollars and that's equal to about ten
percent of global GDP. And importantly, this exceeds the blow from the war in Ukraine, the pandemic, and the two thousand and eight financial crisis. And I was listening to a podcast where Matt Pottenscher, the former deputy of the NSC during Trump's administration, was speaking, and he said that if there was to be an invasion, I'm paraphrasing him of China into Taiwan. It would make what looks it would make what is happening in the Middle East right
now and in Ukraine look like Child's Place. Sure he's overblowing that a little, but I think it speaks to the point that we're making here.
Yeah, that's why I asked about the difference between a sort of literal attack or perhaps just a figurative one. Doug mentioned economic, but you also have you economic and yours have cultural warfare in the sense I mean there's a lot of pressure that China could put on Taiwan that might go unattended by a presidency of Trump.
Yeah, and it's already happening. It's such a good point. It's the digital misinformation. It's the fact that you know, when I was out on the island of gin Men just a few well just in January. Rather when you speak to people there, they can see China across the ocean and it's not that far away. And you know, I think there's two things happening. One, there is a
real desire for stability. I mean, who doesn't want that, right, And the people of Taiwan are just like you, and I they certainly don't want war, but then there's the other aspect where it feels like their own sense of sovereignty and decision making is being threatened on a daily basis. They have a clear sense of their identity, particularly amongst young people there that is growing and that's what Beijing doesn't want to see.
Yeah, in the time that we have left, I can only give you about fifteen seconds to deal with the issue of the US expanding its coalition with that include countries in the APAC region.
Do you think one hundred percent Japan, South Korea, Australia and the Philippines all key, allies?
All right, Korshma will leave it. There always a delight to Karishma Vaswani. Bloomberg opinion columnists joining us from Singapore to talk about the possibility of what a Donald Trump reelection might mean for the future of Taiwan.
This is the Bloomberg Daybreak Asia podcast, bringing you the stories making news and moving markets in the Asia Pacific. Visit the Bloomberg Podcast channel on YouTube to get more episodes of this and other shows from Bloomberg. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen and always on Bloomberg Radio, the Bloomberg Terminal and the Bloomberg Business App.