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Up next, Carlo, we have this big news today. I feel like I was preparing for the show and then suddenly crossing the vire is China targets Nvidia over a two hunt over a twenty twenty deal, and with us to explain all of that is Bloomberg Intelligence, Globalhead of Technology Research, Mandy Singh. So, Mandy Mason, what we know
so far? How serious are the alleged conditions that Invidio may have breached this Melanox acquisition and is this noise or should this be something that we should take seriously?
Well, I mean typically what we have seen in cases like this when a regulator investigates, you know, an acquisition that was done in the past, is there could be a fine. There could be a hefty fine given you know, the size of the acquisition. Although we don't know what the you know, the investigation was all about, so they are very little details on what are transpired, but my sense is this is the timing is influenced by you know,
the trade negotiations and what's going on with the US. Look, at the end of the day, China knows that Nvidia has some of its largest potential customers in China, and they would prefer those customers to get off of Nvidia dependency. I mean, that's the one thing that it's very obvious from the Chinese government. They don't want their largest customers of large anguid models to be relying on Invidia chips.
Right, It's a national security issue for them. China had approved the in Vidia purchase of Melanox, a seven billion dollar deal, on the condition that Nvidia not discriminate against China these companies.
That's that wording is very vague. How do you interpret that?
Well, so, I mean, look at you know, how many architectures have been released by Nvidia since then, and so from that standpoint, the fact that you know, in the prior administration and Vidia was barred from selling their latest chips to the customers in China is just an illustration that. Yeah, I mean, all the other customers had you know, the latest and video chips accessible that wasn't the case with
the Chinese customers. So there could be a lot of things that could be in play here in terms of the exact conduct that they found, you know, was not proper. But to my mind, it is just a negotiation lever that the Chinese government is pulling here. And look that in terms of the size of the market we know NVIDIAs said it's a fifty billion dollars addressable market for GPUs in China and it's expected to grow at a
fifty percent plus cager. So it is a pretty big opportunity for a company like Nvidia and for other chip providers here in the US. And from that standpoint, you know, they could see the stakes up pretty high for companies that want to do business in China.
The stock opened lower today, it's down by one and a half percent. How do you see this affecting investors sentiment around in Nvidia? Like, what are potential downside the risk to the stock? You alluded it. It could be just noise and the timing is curious, but still investors must be a little bit rattled at the very least.
So what Nvidia has started doing is they've started embedding that in the guide. They said, if they were allowed to sell H twenties to China in three Q it could add another two to five billion dollars for the quarter. So that's how they guide going forward because of all the uncertainty. And remember the US government maybe getting a fifteen percent cut of those Nvidia or black Belt sales in China, so that's where the administration is negotiating. They want a cut of the chip sales. So I think
everyone is involved, which is very surprising. You know, you would think it's you know, a company that is doing business, but in this case, there's a big geopolitical dimension to the entire thing that's going on here.
Yeah, so it makes it extra complicated. At the same time, or maybe separately, I'm not sure which one it is, China has opened an anti dumping investigation into some US made analog chips. So the companies affected here would be Texas Instruments, Analog Devices, Broadcom, and on Semi. What can you tell us about this?
Well, so again, I think when it comes to the analog side, the drivers are very different. Like we are supply constrained on the GPU accelerator side. On the analog side, the auto chip market has been pretty lackluster when you compare that to the overall chip complex, and so from that perspective, everyone is trying to find a lever to boost their sales given the lackluster demand. And I don't think there was any anti dumping, but that's where the
negotiation aspect comes into play. That okay TI is another company that does business in China. What have they been up to? Is there anything in the conduct that they could point to? And so do my mind, you know, it's probably a reflection of that.
Maybe very briefly, what lessons should other US and foreign semiconductor companies take from this experience in terms of risk to China regulatory backlash or conditional approval being revisited after a deal.
That doing business in China is getting harder and harder. I mean, if you're a company that relied, like look at Synopsis, the stock top thirty percent partly was because of Intel pairing back on the license consumption, but also in China. They couldn't sign long term agreements in China, and they have a pretty sizable customer base in China. So that's just another illustration of the risk with China sales.
The goalpost are constantly moving for companies operating in China, and you could argue for companies operating in the US as well.
All right, man, Deep Sink, thank you so much.
Bloomberg Intelligence, Global head of Technology Research, joining us here and again we are looking at shares of Nvidia isabel lower today because Beijing unexpectedly ruled that the company violated anti monopoly laws.
With its twenty twenty acquisition of Melanox. Stay with us. More from Bloomberg Intelligence coming up after this.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple, Cockplay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Let's move on now to the headline we got this morning that this TikTok deal has been secured, or at least a framework deal has been reached, according to Scott Besson, our Treasury Secretary. President Trump says he will now speak with Chinese President Shi Jinping on Friday to complete the deal. Let's bring Matthew Shettenhelm. He has Bloomberg Intelligence media litigation analysts from Washington, DC. Matt, where does this leave TikTok's legal status.
Well, Scarlett, it looks like we may finally be seeing some movement here. This has been an extended legal limbo, as President Trump has extended this law three times, even though it's not really clear that that's what Congress envisioned. He's been able to adopt these extensions in January, in April, and in June. And that extension set to expire on
Wednesday of this week. And as you said, it sounds like there may be at least the shape of a deal coming into place to maybe be finalized after those talks on Friday. So it looks like there probably will be another extension since since the law is set to take effect on Wednesday, and we might not be done then. But this at least seems like progress.
So it is progress indeed, and I feel like there has and one extension after the other. What outcome are we hoping to expect on Friday when President Donald Trump will speak with Chinese leaders? She didn't ping it's a share of American company or like, tell us what you're looking at.
Well, it's really hard to know exactly what you know. The law contemplates a divestiture, so that the company that runs the US operations would not be controlled by byte Dance, and so what the way you read the law, it contemplates that there would be a divestiture likely to a US entity, probably where byte Dance owns less than twenty percent of that company, and that there would be no cooperation between those two companies they would be formerly affiliated
under the law. I think the really interesting thing to watch is how much is this deal going to stick to the terms of the law. You could make a pretty strong argument that that president hasn't exactly adhered to the law so far, and he hasn't gotten any pushback. So it's not clear how much any deal will need to stick to the law or not right.
Right right now, that's an important point, and you know it could not stick to law, But it doesn't matter if everyone's okay with it, Matthew In terms of companies affected by some kind of framework deal reached, for which companies is this good news?
Well?
Sure? I mean so Apple and Google have been hosting TikTok in their app store at enormous legal risk with this law in place, in theory that they are potentially exposed to liability of five thousand dollars per TikTok user, and you do that math and it's absurd, and so no one wants to operate with that cloud hanging over your head. So in that sense, you know, some clarity
in the law here is good for those companies. I'm not sure it's so good for TikTok's competitors like Meta, that had the opportunity to have one of their top competitors in the US knocked out of the market, and it looks like that is going away. So looks like TikTok will remain a fierce competitor in the United States, and so Meta won't be able to use this law to its advantage.
We also have a story published less than thirty minutes ago. It's about Treasury Secretary Scott bess and saying that the threat of allowing TikTok to go dark in the US was what ultimately sealed a framework deal. Can you talk to us more about how this strong arm negotiations may shape future negotiations between foreign companies in the US, and at least for this one specifically, in isolation, it looks successful.
It does look like this may have worked. This is not the way that these things typically work. But here Congress really gave President Trump a lot of leverage by passing this law. I think there it was questionable whether President Trump was using that level bridge by letting TikTok continue to operate. You could make the case that he could have made a stronger or leverage if you hadn't. But it seems to be working.
Matthew, always a pleasure, Matthew Schuttenhelm, Bloomberg Intelligence media litigation analysts from Washington TC on TikTok's legal status now that there has been a framework deal.
Reached on TikTok, according to Scott Besant, stay with us. More from Bloomberg Intelligence coming up after this.
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Now, we're going to talk all about Tesla and Elon Musk buying one billion dollars worth of Tesla shares. Were joined by Craig Trudell. He's the Bloomberg Global Autos editor, joining us from London. So Ed, Craig, what can you tell us about Elon Musk purchasing one billion worth of Tesla shares? What signal do you think he's trying to send markets and shareholders with this move?
I think I think it's pretty clear. There was an all out push on Friday, with Robin Denholm, the chair of the company, speaking with at Bloomberg Television, speaking with you know, the New York Times, the Wall Street Journal, all sorts of major news organizations about the merits of this pay package that the board is proposing. There's going to be a big shareholder vote in November on handing, you know, Musk, this this potentially up to one trillion
dollars worth of stock. There's a lot of caveats all that that Musk would have to sort of, you know, pull a rabbit out of the hat again after you know, doing so after a twenty eighteen pay package where the board laid out out all these really ambitious you know, market value and performance milestones. Musk, you know, at that time it was kind of perceived as this moonshot pay package. He proceeded to knock them all out, and they're now
calling this next paypackage a mark Dot pay package. So, you know, I think there's this This is all sort of part of a piece, right of trying to get investors to sort of you know, focus on you know, far out there targets objectives from us that would make
shareholders a whole lot of money. And it comes amid you know, real signs of stress for the core here and now business for Tesla where their sales have just really struggled this year and there haven't really been signs of of sort of meaningful change in that trend even into this quarter.
Right, so this will properly motivate him. I'm so glad you brought up the twenty eighteen pay package and some of the moonshot milestones that laid out for Elon Musk. What was the most I don't want to use the word outrageous, but the most ambitious of those milestones? And did he surpass each and every one of them?
Yeah? I mean in terms of the milestones there, I mean just even the market cap figures I think, you know, when they were laid out, you know, it was it was just sort of unfathomable that you know, a car company could be you know, a trillion dollar company, and you know, give give the guy credit. He went out
there and and made it happen. You know, I think Tesla now is trying to sort of, you know, incentivize him to you know, turn Tesla into a company that has many multiples of even Navidia, the most valuable company in the world in the here and now. And yet you know, the sort of path to getting there is really uncertain because you know, you've you've heard Musk make
these pitches about robotaxis and about humanoid robots. But you know, he's starting essentially from zero from a humanoid robot perspective and from a ROBOTAXI perspective. He's got you know, a very very small number of cars on the roads in Austin, Texas that still have people you know, in the in the front row minding those cars and in certain cases actually still behind the wheel. So you know, he is a long long way from accomplishing some of these new objectives that the board has set form.
This must buying shares personally, is governance concerns or could it even actually reinforce skepticism about how closely Tesla's board is aligned with his self interest, his being Musk.
You know, I think just generally whenever a CEO or an insider of a company is buying shares. That's taken as a good thing and not necessarily you know, something to look at skins at from a corporate governance perspective. It does, however, I think it's worth sort of you know,
thinking about this billion dollar purchase and context. This is a guy who's you know, sort of you know, a billion dollars can be found in his couch cushions, right he is is the top person on the Bloomberg Billionaires Index. He was very briefly, you know, not from that spot last week by Larry Ellison. But he's worth about you know, four hundred and twenty billion dollars at the moment, and
so you know just how meaningful this is. With any other CEO, you would look at a billion dollar Stoft purchase and maybe take, you know, take real note of that. With Musk, is it that you know, huge a show of confidence? Maybe not in the context of, you know, just how much wealthy has Craig.
All of this emphasis on what Elon Musk can do and what Elon Musk can achieve by a certain period really raises a key man risk. Here is there succession plan for Elon Musk if something should happen to him. I mean, I'm looking at the company management and he's got seventeen years tenure at Tesla. The person in the next closest tenure or the next longest tenure is Shaotong Ju tom Ju at.
Two point four years. He's the senior vice president of APAK.
Yeah, it's a very good question, and it's something that's sort of considered actually in this new proxy where you know, the board sort of lays out this idea of getting you know, some some buy in from Musk in terms of how being and assisting on succession. At the same time, you're hearing Robin Denholm, the chair of the board, you know, tell Bloomberg TV last week that there aren't any other people out there like Elon who can actually lead this
company over the next decade or so. And so, you know, I think they want to kind of have it both ways, right of we must, you know, incentivize this guy because he's the only one who can do this, and yet we do realize we need to sort of assuage these concerns about succession.
Correct Trudell always a pleasure of Bloomberg Global Autos editor on Elon Musk buying a billion dollars worth of Tesla's shares.
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