¶ Intro / Opening
Bloomberg Audio Studios, podcasts, radio news.
This is Bloomberg Tech coming up.
¶ Anthropic, G7, and AI Geopolitics
Anthropic gets a warning from the US Common Secretary saying it needs government permission to grant foreign nationals access to its most advanced AI models. Plus, after three days of soaring, SpaceX shares come back down to earth and drop for the first time in the company's fourth trading day, and Bloomberg reports Apple's upcoming camera equipped AirPods will launch in late twenty twenty seven as part of a flurry of
new releases. There is a lot going on in the world of technology, and that's playing out inequity markets, and as that one hundred.
Is seen a lot of churn and chop. We're up modestly, few tenths percent.
Chip stocks are rebounding, but we had a really big drop in yesterday's session.
But remember as an.
Index, as a bucket, chip stocks are up like ninety percent year today and SpaceX that's a pretty reasonable pullback down to one hundred and ninety three dollars per share, down four percent, but had added nine hundred and thirty billion dollars of market cap in the first three days of its life as a public company.
Let's get to the new stories and.
An extraordinary escalation in Washington's conflict with Anthropic. Bloomberg's obtained a copy of the letter from Cover Secretary Howard Lutnik, dated last Friday, warning that Enenthropic faces severe civil and criminal penalties if it grants foreign nationals access to its most advanced AI models. Bloomberg's editor in DC, Mike Shephard, is with us for more. So, what do we learn from the letter that's start there?
Well, one of the things we actually didn't learn ed was the rationale. What was the underlying security concer learn that drove Howard Lutneck and the US government to take such a drastic step as to order and impose export
controls on shipments and sharing of this sensitive technology. But what we did learned was this that the government is using authorities that are typically reserved for dual use technology, that is, products that could be applied for both civilian and military purposes, and the government is invoking these authorities in a way to try to prevent foreign nationals, perhaps from leaking either intentionally or unintentionally, these whares, these products,
the top two AI models from Anthropic to foreign adversaries of the US, and they are preparing to impose these export controls and have them in place until further notice, and they're warning it of criminal penalties and civil penalties if Anthropic fails to comply.
Shep just very quickly. Let's re recap the reporting of the show. Yesterday, technical staff of Anthropic went to DC met with the administration.
What do we know, Well, we haven't seen any further signs of progress in the negotiations between the two sides. We do, however, have today at the G seven Evion Dario Amidae, the Anthropic CEO, and President Donald Trump in the same room for an AI lunch hosted by French President Emmanuel Macron. Now, at the lunch, the two men did not sit anywhere near each other, and it's unclear
whether they had any interactions or cydebars. But after his bilateral meeting with Indian Prime Minister and Arundromodi, President Donald Trump was asked well, how are things going with Anthropic,
and all he could say was going fine. We may hear more from the President on this, but clearly it's something that's on the mind of G seven leaders, and Macron himself is pushing this idea of trusted partners for sensitive technologies like anthropics AI models in which these partners allied countries would be vetted by security authorities so that they too could perhaps re access to centretive tech like these two models.
Bloomboks Mike Shepard, thank you very much. I want to go deeper on that story. The G seven is underway in vy On, France this week, and beyond geopolitical and economic debates, AI is in the spotlight. The chief executives of Open Ai, Anthropic and Google all on hand, joining world leaders to discuss the global.
Future of AI.
The conversation comes as the US government indicates its willingness to use emergency powers forcing private developers into compliance over national security threats. The President of the United States also in Evyon, and we expect to hear from him today. Bloombirs Kle lines co hosts of Balance of Powers with US, such an interesting dynamic, right power players, World leaders, AI leaders recap.
Yeah, well and Mike spoke to some of this incredibly well ed. Basically, what we have here is countries who are all calling for a regulatory regime around AI. The German Chancellor Friedrich Marks talked about the need for and intensive discussion around that, also saying that all countries need to have access to this technology and admitting fridrim Mertz
did that Europe needs to play catchup. And that's really what's that issue here is we consider anthropic and these export controls being slapped on in particular, is that Europe doesn't have its own AI juggernauts such as those in the United States. This is somewhere and we heard President Trump speak to this earlier as well, that the United States is leading in and Europe wants to be able
to trust that it can access the technology. Thus the push to have Europe considered some of these trusted partners who would be able to access this technology versus adversaries like China for example, when we're considering things like Mythos and Fable five. So this is obviously an active discussion. We could hear more from President Trump about this, but it also feeds into another issue that was raised at
the G seven summit. At as we consider the technology questions that leaders are grappling with, it is also inputs into certain technologies like rare earth and permanent magnets, and we actually saw the G seven countries agreeing today to cap their imported supply from China to sixty percent of rares and permanent magnets by the year twenty thirty.
The ultimate goal, as soon.
As possible is to get those imports down to fifty percent, and they're going to by the end of this year have a separate discussion around other critical minerals, but the idea is reducing the dependence on China, which has shown a willingness to restrict exports of this market in which they are dominant, not just in terms of mining these rare earths, but also in the refining of them. This is going to be a really ambitious target for these countries to meet at is they have to work on
their own supply chains. Even officials of the G seven are admitting that may mean imposing quotas on certain industries like defense, for example. But this is actually one of the big tangible items that is emerging from the G seven summit, the sixty percent cap on rare earths from China again by twenty thirty.
The mss kaye lyones, thank you very much, and of course we expect to hear from the President about the status of an agreement with Iran other topic that has had direct impact on supply chains in tech, including semiconductors. Stick with AI and video founder and CEO Jensen Wog
¶ AI Productivity, Market Focus & Regulatory Outlook
sat down with the AP to discuss the need to build AI in a safe and responsible way. But beyond that, he says, the US needs to harness the new technology to stay ahead of the curve globally.
Listen to this, We.
Have to be very careful that artificial intelligence, this new next generation of technology revolution, that we're also enthusiastic about the adopting it and make sure that we don't get left.
Behind joining us now.
Udecha Revu, a member of the portfolio management team for the International Equity Strategy Desk at Harding Lovner. You know something that's come up actually very recently yesterday's show was what is the kind of black swan for this market where we are right now?
And it might just be regulatory risk.
Listening to what Jensen Wong had to say there, extrapolate on that a little bit. You know, we're still unresolved with China. Supply chains are impacted by the war, and what's tep of mind for you right now?
Top of mind for us is a productivity gain. So the return on equity that can be generated from AI and how much people are embracing it and what purposes are they using and what is the adoption curve and the return on that adoption curve is what's on top of our mind. And when we point out a less
regulatory risk might be less of an issue. The bigger issue is going to be people have to take time to digest what they're included, what AI they've started using in their workplaces, and then understand the returns of it before they can generate additional demand. And to us, the timing of that is where the market might get moist, might get most confused about, And to us, that's that
Blacks fundament. Short term risk might be extrapolated as long term risk, and that's where the market might overreact.
Where do you look for the evidence of productivity's impact from AI? You know, very recently and I think you're talking about in team markets, right. We had a conversation ten days ago with San Francisco Fair president Mary Daily saying I don't see any evidence of productivity in this country being impacted by AI, for better or worse.
Yeah, So from that, I think there's a number ways to look at it. The first thing we do is to talk to companies.
At the individual levels how they're adopting AI and what impact that AI is having on either their cost management or the sales that they're generating, or the activity that they're doing.
So one clear evidence that we find is people are able to do a lot more with a lot less human resources or keeping human resources versus the same. What we yet to see is that translate into profit growth for anyone either, And that's to us is what the next step is going to be and trying to understand where that profit growth is coming from. Most immediate is that some costs can come down, but that cost is being reinvested into AI, and to us, that's where that discript in a secret come from.
We started the program saying there's been some choppy trading and churn inequities in this morning session, at least remind the audience that we have a FED decision and meeting today.
The first of Kevin.
WASH's chair is that a factor for technology investors right now?
I don't think it's a factor for technology investors from a fundamental perspective. We still are focused on what's happening in the fundamental markets, and the market is reacting to a lot of the fundamental news that's coming out. So the investors, in my mind, have become more and more sensitive to profit and what impact by AI is having on profit versus revenue. Over the last two years, revenues, backlogs,
bookings was what the market's reacted to. It started to turn in the last two quarters where revenue growth is being given less of interest and more interesting into profit growth. So I don't think we're there the point where the interest rate changes itself will have a big impact on it a longer run. It will because that's it's a discount rated which you mpv the future edge.
Yes, it's been it's been a long time since I've said this out loud on Bloomberg Tech. But higher rates discount the present value of future cash flows and continue to remind ourselves at that point. Look, I won't ask you about SpaceX specifically, but there's this idea that that presages a big i PO window, but more sophisticated than that. After a long era of buybacks and other shareholder friendly policies, lots of new equity will hit the market maybe this year.
How does that go for you? Sorry?
Go ahead, So that's that creates a technical risk in terms of where if anthropic and open AI come to the market, the equity that's raised for that, and the funding that's which that, where is that going to come from, Which which sick does the market? Which part of the market. And we've seen some of the some of the reason why the semi conductors have done so well is softly it has underperformed. So what are the segments of the
markets are going to underform? So they are going to be technical factors and they'll become even more important in the market in the next six months.
Just very quickly, French President Makran saying in his own presser in Avon, it's good that the US realizes the dangers of frontier AI models. We're showing live pictures of him speaking at the G seven. This idea of government intervention and dictation on how technology can or can't be used. How is that playing out in the market mood right now?
I think it's not as important to the market at this point in time because we're still trying to understand what are the capabilities of AI, and there's so much latent demand in even the previous generational models that we're less concerned about is there going to be the next generation going to be restricted? Well, we're still having used the full capacity or the previous generations, So let's do that and understand what the teram of that is before we're worried about the next generation.
Like I said, there is a lot going on in the world of technology this morning, Harding Love and a portfolio manager who they threw a great to have you
¶ HPE's Networking Strategy for AI
back on show, Thank you very much. Coming up, we're going to hear from HPECO Antonio Neeri story about let's make networking great again in the world of AI.
That's next. This is Prittberg Tech.
As AI infrastructure scales attention shifting beyond the chips to networking. HPE is betting the demand and its Juniper acquisition will be a major growth driver. I sat down with HPE President and CEO Antonio and Ery listen to this.
We believe and has been for now three years plus, that networking is the core foundation to deliver AI across many aspects of the market, not just the enterprise, but obviously to train these models because networking is also the bottleneck to get the best productivities for all the GPUs of the point all over the world, and so Juniper
has been a key thesis of that. We understood in twenty twenty three when we start thinking about the acquisition of Juniper with Rami, which was the CEO of Juniper and now leading our combined networking business, that this is a massive opportunity and the combination of Juniper and HPE and particularly with compute storage general green Lake platform will
allows us to differentiate the market. So clearly is going to be the driving force as we go forward, because enterprises need to put that foundation in place and then the cloud experience around it. Because AI is the definition of a hybrid world load and tarry.
That's pretend for a moment that the Bloomberg Tech audience is not familiar with networking. They know all about the GPUs, they know all about the high bandwidth memory, But what is it that we're talking about materially here.
Yeah, when we think about AI and we think about the amount of accelerating computing through the GPUs we are plowing today, you have to connect all of them together in a parallel process. And that connectivity is the networking fabric, and there are three.
Aspects of that.
One is in a raq think about the cabinet you bring together seventy two or one hundred and forty four, that requires a lot of networking connectivity. That's what we call scale up. That's where Juniper is going to play a bigger role with the introduction of AMD helios in the fall, where Juniper will be the de facto networking
fabric inside that architecture. And then when you start putting cabinets together in large data centers, you need to connect these cabinets all together, and that's what we'll scale out and that's also Juniper. And then finally, as we build these amazing data centers all over the world, you have to connect them with each other, and that's what we call scale across. And that's where our Juniper routing business excel because we have one of the best platforms in
the world. So that's why networking so relevant to train models and to influence models.
That was Hpe CEO, Antnio and Ery. There is a lot going on the world of technology, so many news stories.
¶ Tech Updates & AI Safety Debates
Let's get out to New York and Bloombergs. You hire and and you hire a HI I.
Ed it's time out for talking tech. First up AI creditors are taking over software company Medalia. It's an effort led by Blackstone after owner Toma Bravo said it would not inject fresh cash into the struggling SaaS company creditors will invest one hundred and fifty million dollars into the company to curb it's debt and accelerate AI efforts. Plus SoftBank says it's becoming harder to find Latin American startups that are ready for major investments.
The company says fewer.
Firms in the region are meeting the requirements for its preferred investments of fifty million.
Dollars or more.
It's a big shift from just a few years ago when Latin American startups were attracting record amounts of venture capital and we end on Lenovo it is the latest company tapping the debt market look to raise two billion dollars through a convertible bond sale. The Beijing base, maker of PCs and AI servers, is returning to the market just two years after securing a similar size investment from
Saudi Arabia's sovereign Wealth Fund. It says the money will be used to refinance debts and buy back shares.
Ed thank you, Hira as we discussed earlier, the US is total anthropic not to give foreign nationals access to its most powerful models, but CEO Dario Amiday says the best defense against those risks is getting the technology to cyber defenders. He spoke with Billiomberg's Emily Chang for the circuit.
If this helps defenders, it also helps attackers.
Can we defend anything anymore?
What I would say is that the reason that we're giving Mythos to defenders before we give it to attackers is to patch all the bugs. I don't know, as the models get better, there may be more and more bugs to be found, but there's only so many. They're finite, right. It's like you have this surface and there's only so many holes in it.
You patch all the holes.
And then the surface becomes very hard to attack as well as the code itself is written with the powerful models, so it's it's then becomes very hard to find flaws in or break into. So I think on the other side of this, hopefully six months or a year from now, we have a much more secure Internet ecosystem than we had in the past. We're trying to get to that world and we're doing the best we can to open up Mythos to new cyber defenders. We've been talking to
the government. We're very respectful of their recommendations. They're slowing the pace at which we open it up because they're worried about counterintelligence risk. I think that's sensible. I think all serious people here understand that there's real trade offs here.
We see a lot of.
Sniping from people on Twitter and from you know, from other AI companies. You look at what they're saying and the inconsistency with.
What they're doing.
It's not they're not serious people.
They're not seriously engaging with the the serious trade offs that that that that we have here. Look, I have customers calling me up every day saying I want access to Mythos. I have countries calling me up scene I want access to Mythos. And I have the US government and my security team saying no, wait a minute, there's risk to it. You know, I'm not saying one side or the other is right. I think it's somewhere in between.
Both sides have valid points, but there's a real challenge here and we need to face it together as a society.
That was Anthropics CEO Dario ami Day, speaking with Bloomberg's Emily Chang.
You can catch that full.
Episode of the circuit later today on Bloomberg TV and
¶ Tech Giants: Market Swings & Future Visions
on Bloomberg dot com. SpaceX shares come back down to earth dropping for the first time. It's only the company's fourth trading day since that blockbuster ipo, puts the stock on track to snap three days of gains, where the shares had pushed nearly fifty percent above the IPO price and added almost to trillion dollars of market cap. Bloomberg Actacies reporter common Rhyanikey is trying to keep track of numbers that in real time keep changing. I mean, what
is the what is happening right now? Right there is scarcity. There is only four percent of this company available for trade on the float.
What's the big thing here?
Yeah, So I think we're seeing some of the keynote, you know, volatility that can be associated with new IPOs in their earliest days of trading right here today, I mean, shares are down six percent right now, We're a little bit off the lows of the day for SpaceX, but this is a pretty extreme drop. It was up about
six percent earlier in the session. Has paired all of that to decline here, we know that there's a low flow that can make swings in the stock price look extra large or bigger than maybe than they usually would, and that can also then have an impact on market caps. So yesterday we reported that SpaceX had jumped over Amazon in market value and that's a little bit up in the air today. We'll see where it ends at today's close.
There's also like the listed options right the options market came into play over the last time for hours. Is that a factor in the volatility?
It definitely can be. I mean, you know, traders are obviously now making bets on where SpaceX shares go next. You know, they're buying puts and calls. They're trying to additionally sort of game this system or see if they there's extra you know alpha here. One thing that we have heard or seen that is that options contracts are that are pretty expensive. You know, investor Michael Burry wrote in a sub stack note yesterday that he was looking at puts and they were just too expensive to buy
right now. So I think we have a lot of traders looking there. We have more options trading actually coming online in the next few weeks from other pens.
That's a that's a volatility premium, just really really quick.
And I know this is unfair.
Do we even look at price to sales ratio for SpaceX?
What's the point?
That's a great question. I mean, I think the point is just in comparing it to some of these other large companies where it now has a similar market value, right. I mean, it brought in about nineteen billion dollars in revenue last and if you compare that to Microsoft, that is, you know, it's fifteen times hire. So it's good to keep that in mind sort of as we look at the value of this company.
We hope to talk a lot more about the company a little later in the program. Bloomber's corm Ryanikey, thank you very much. Indeed, there's a lot of news from Bloomberg as well. Apple's investors are frustrated the iPhone maker has been slow to deliver on AI promises, even with its latest Serie AI features, and after a disappointing performance at its annual Worldwide Developers Conference last week, investors are becoming a little bit impatient. Bloomber's Michael Reagan leads the
team that's been writing about this. It's interesting, right, Actually, I was staring at the chart and being like, what are the shares telling me? In the days since I was in Coopertino. But that's still the same story. Everyone wants to see a little bit more from Apple.
Yeah, I think that's pretty much it. You know, as you're familiar with, it's not uncommon for there to be a lot of optimism ahead of the Developers conference from Apple and then a little bit of a letdown and there's not really a big bang product announcement. So yeah, the investors we've talked to are basically saying we're just hoping for a little bit more oomph from their AI offerings,
their Apple Intelligence offerings. So there's a little bit of disappointment that Siri will only be in beta mode in September, only available in English, not available in Europe or Asia. So a bit of a disappointment there. But I would say, you know, Apple stock is still it's up ten percent this year, It's right in line with S and P five hundred.
But I think it.
Goes back to those chip makers. You're just talking to people, are you know, turning their head over there and seeing these triple digit gains. You know, there's something like a dozen chip makers in the Nasdaq one hundred with triple digit gains this year and just saying, you know what, we wish Apple had been a little bit more ahead of the curve, a little bit more aggressive with AI.
Now that said, we do have these days in the market where everybody starts second guessing all the capex involved it, and that's when Apple sort of becomes almost your defensive tech stock play. So there is a little bit disappointment, But you know, at the end of the day, this is Apple with this fortress balance sheet, still looking at
fifteen percent revenue growth for this physical year. So you know, I don't think we can make too much out of the disappointment from the from the developers conference.
Just very quick, Mike, there was there was a part of our report on this that basically seems to indicate the market's more focused on the next hardware upgrade cycle. Just real quick, what are they talking about?
Yeah, exactly.
I mean when you're looking at the iPhone that's coming out in September, you know what is sort of baked into the assumptions about, you know, how much growth we can we can see because of people refreshing buying new iPhones. Just because they're excited about the new one. So far, the you know, the the revenue estimates are pretty much staying where they are, so it doesn't seem like they've really adding onto the estimates.
Following the conference, Michael Reagan with the Apple Stock story, Thank you very much. Meanwhile, the company holds steady with its AI ambitions, planning camera equipped AirPods, smart glasses, and new foldable iPhones as part of this major product push, which will span the next two years. Bloomberg to Apple and Consumer Tech editor Mark German is with us with the latest reporting. I just I read it a few times. AirPods with camera and the new bit I think is
the kind of timeline for launch. Go with that, Like, what was the important bit of what you reported, Mark?
So these new camera AirPods are going to launch at the end of twenty twenty seven. It's going to be a pretty blockbuster Fall of next year, that's the twentieth anniversary of the iPhone.
So they're planning a lot of stuff to go hand in hand with that.
In addition to these AirPods with cameras, And just to give you some context, these are not for facial recognition. These are not for taking pictures and video. These are for being able to see the world around you and feed that information into Siri, so you can see things sort of like what can I make with the food on this table right?
What recipes? Can you can talk for me?
Tell me more information about that object or that plant or what have you, or things for visual reminders or more specific turn by turn directions. And in addition to that, you're going to see the second generation of the foldable iPhone as well as the twentieth anniversary iPhone something I'm calling the iPhone twenty or the iPhone twenty Pro coming.
Out at the end of next year. So it's going to be pretty jam packed.
And if you look at the more near term, this year is going to be pretty extensive as well. You have several new iPads, you have several new Macs, new Apple Watches, and of course you have the first foldable iPhone as well as the iPhone eighteen Pro eighteen Promax and if you recall, Apple made that big design change with the seventeen Pro and Promax last year. Typically when Apple does a new design change, the first two years of that design are extremely successful in terms of upgraders.
Some people don't do it in year one. They like to wait for year two, and so I think the eighteen pro prom are going to be pretty hot sellers this fall as well.
Another big story that played out in markets, it played out on social media in a huge way in the last twenty four hours is Snap and Snap specs augmented reality glasses.
You know what the stock reaction was. You spoke to.
The CEO yourself, summarize everything we need to know about this, please.
I think the stock reaction is more in response to how much we're spent on this product and investors in Wall Street knowing that this is not going to be a hit out the gate. This is a conceptual product right now. This is something like when the Vision pro launched a couple of years ago. This is going to be for developers, for the biggest tech fans, for the earliest of early adopters. This is not something that's going to like the world on fire from the get go.
But this is the future of computing, I believe as well, and this is what Evan Spiegel has been saying. These are augmented reality glasses that allow you to overlay applications, your work notifications on top of the real world. Eventually, this is a product category that is going to click, but it needs to get a little bit later, and it needs to get a lot less expensive. These are about twenty two hundred dollars right now, certainly not the
priciest device in the category. The vision pro obviously being over one thousand dollars more expensive than that, but there is some work to be done. But this is another stepping stone towards that vision that Snap and several other companies have. So maybe I'm not optimistic about this first generation of the product from Snap, but in terms of the category, this is going to be the future, and Snap clearly is placing a foothold there.
The most Mark German, who leads all of our coverage of consumer technology, thank you very much.
Did you see this one?
¶ Space AI: Infrastructure, Communication & Challenges
All Birds is now smart Bird, completing its pivot from footwear to AI infrastructure after selling off its shoe business and the brand's assets. The company tapped former DCAIICEO Nadia Carlston to lead the next chapter.
Smart Bird also doubled its convertible.
Financing facility to one hundred million dollars and says it's ready already talking with potential customers as it builds out its first AI computing clusters.
Wow, okay, coming up, we're going to.
Talk about the challenges facing space based data centers, including satellite to satellite communication, the deep dive. Next, this is Bloomberg Tech. The US is the clear winner in the AI race. That's according to ASML CEO Christophe Fouque. He sat down with Bloomberg Tech Europe's Tom McKenzie earlier today on the sidelines of the Viva Tech conference in Paris. Here's what he had to say about his thoughts on the global AI race.
If we compare all we do on the entire chrisystem versus the US and China, I think today the US is a clear winners in DR looking at champion across the entire AI so my ECO system. I think the one place they were missing a bit out was manufacturing, and I think they have been extremely aggressive in bringing some key company to manufacturing in the US. They can do that because they buy chips.
ASMLCO Christophe Fouquet. Back to SpaceX. Despite today's decline, SpaceX has sowed since its IPO four days ago. A big part of investor enthusiasm stems from Elon Musk goal to put data centers in space starting in twenty twenty eight. We've heard from those bullish on the prospect, including SpaceX investor Sean Maguire, who said this about orbital compute.
Every individual component here is kind of fully fully proven by SpaceX, except.
For the compute sign but that is not It's just not that hart.
But space does present specific challenges for compute, including communication between satellites and with the ground. That's an issue Den Rocker, former head of software engineering at SpaceX, set out to address when he co founded Observable Space, and Dan joins us now and really grateful for you to come in with your expertise. Right when you read the SpaceX prospectus, it's like, okay, the big picture, get it space data center in space as early as twenty twenty eight.
One of the things we.
Focus on the show is the ability for communication RF but also laser Try and summarize the challenge for us.
Yeah, you know, like everyone's known for a long time that laser communication is the next generation of communication for space. You saw that really as Starlink was getting built with the isl links between satellites that are in orbit.
It's you know, because it's in space.
There's no like atmosphere conditions or challenges really establishing optical links. One of the big challenges you kind of have though going from space to ground and ground to space is obviously the atmosphere. But everyone kind of knows that solving those technical challenges or what's going to provide they're really like ten to one hundred times the bandwidth throughput that you're going to want and continue to like low latency that we need for kind of expanding the space.
That's what what are they doing here?
Yeah? Good, no, no, no, no, I'm sorry to interrupt you.
I guess that the easy way to help themIn with tech audience on the side is like what are the current limitations of existing generations of hardware and software in that environment in space?
Yeah, so, you know, I think from being able to deploy these ground stations for laser communications at scale on Earth to communicate is definitely one of the challenges. There's a lot of technical challenges as well around being more to correct like the kind of waveform and wayfront for laser communication, and around like adaptive optics as you're basically
receiving the light on our ground stations. These are all like very active challenges, but we've actually made as a as a is an industry, a lot of like advancements to make this feasible at this point. The data centers in space now is really going to require laser com to be the primary mechanism of communication moving forward.
So the timing works out really well.
They're still challenges ahead, but it is i'd say, like commercially viable at this point, and so that's why we're really excited about being able to get these deployed at scale over the next six to twelve months.
Observable Space the world's largest vertically integrated hardware and software company for space observation. But you are working on the laser component. That's why is laser the best technology.
There's a few different things that make it clearly the winner over RF. First, just pure speed, it's ten to one hundred times faster. The second is there's no spectrum management. You know a lot of times with the RF bans you have to work with different countries to be able to manage who owns the spectrum and how that's kind of being used and service from space. And then the other one that is really important, especially for kind of
military defense purposes is the privacy of it. It's a very point to point communication, so it's extremely hard to ease drop on and be able to collect that communication. You have to be in a very specific area where the ground station is located at in order to collect any signals. So from a military perspective, this is like a clear winner, and most future constellations for defense purposes are going to be optical first and to do forward.
The basic idea of SpaceX going public is also that it will shine a light on commercial space. You know, SpaceX likes to do a lot of stuff itself, but do you see a kind of ripple effect or even an opportunity to work with SpaceX on those technologies.
Yeah, totally, Like you know SpaceX, like we're we love SpaceX. It's really the company that's defining the future of space, so you know, partnerships with them, like we we work with them and we will continue to like would love to expand our relationship with SpaceX moving forward. I do think you're going to see over this next phase of space technology development. You know, people starting to unstack kind
¶ Hyperscale AI in Orbit: Deep Dive into Hurdles
of pull out the different stacks in the space technology spectrum. It's kind of similar to like how this happened in the early days of the Internet, when if you were going to be an Internet company, you had to do all the things. You know, you were a data center, you were like a website, you were doing networking.
You know.
As the space economy and kind of space technology matures, you're going to see these different layers being pulled out. We're that communication optical communication infrastructure layer that is now pulled out and people can just buy our products off the shelf, turn key solutions to establish optical cons from Earth to space and space.
Serve lasers in space no longer special see of space, Thank you so much. Blue Origin is rebuilding the launch site where it's New Glen rocket exploded last month, aiming to fly again later this year. New Glen is a key part of Blue Origin's plans for space exploration, but also NASA's Artemis program, but it's years behind schedule, and as Blue Origin founder Jeff Bezos said earlier today, this is not a sector where it is easy to move fast.
Traditional aerospace, I think often suffers from slow decision making speed, and it's and I know how aerospace gets there, but I mean, you know, you're building things that often have you know, hazardous operations, life safety critical missions, and so again not every decision is like that though, so you end up making every decision as if it's life safety critical.
Let's talk more about the challenges space presents, the things we send up into it. Mackenzie Listrop joins us a former director for the godd Space Flight Center, which is NASA's primary hub for building up lating scientific satellites, now principal consultant Paradise Services and just an absolute expert in space systems. So there are different degrees of orbital compute, right, different variations of a space based data center. But at the extreme SpaceX is presenting, it is at hyperscale. It
is running massive AI workloads inference. Explain the distinction between those three grades of compute and why it's hard.
Absolutely. So the first is really on orbit edge computing. So this is about taking you know, imagery data, radar, weather, maritime, climate or defense data that's collected in space and then using AI edge computing, some kind of inference, some kind of processing in the space system itself before sending it down to Earth. So this is real, this is near term. So satellite sends raw data to an orbital compute node.
The node perform filtering or aiml inference and then only the higher value or smaller data products get sent to Earth. So this is a process that the company Axiom, says that it deployed as a prototype unit on the International Space Station and has an orbital data center node as well. Now, the second is really resilient or sovereign storage and computing, so infrastructure that is physically separated from terrestrial threats so disasters,
political borders, or ground based attacks. That also has some real defense, continuity of government, and critical infrastructure use cases, but still not entirely explored. Now, the third is hyper scale AI work in orbit, and this is really the moonshot. It's potentially enormous, but it is not merely about the
launch cost or even the orbital downlink nodes. It really requires some challenges to be met in power in heat, rejection, in radiation, tolerant computing, high band with optical networking, orbital reliability, and other issues. So it's a real challenge.
So let's zero in on some of the challenges. Right.
Your job was to get systems ready to be in the environment of space. The Sci Fi nerd in methinks about the vast coldness of space. But in thermal it's a very different challenge, right.
It is, So you know, space is not cold sometimes in the way that people think. And I would say that in orbit, a data center is a heat engine first and foremost, and a compute platform second. So a terrestrial data center rejects heat through chillers, through air water or liquid cooling through evaporative systems as well. Now in orbit there is no convective air heat sinc. So heat has to be moved through the spacecraft and then radiated away.
So this means that radiator area, radiator emissivity, the attitude control of the spacecraft, can tampa degradation. These are all effects that have now become first order economic variables.
And then there is the power challenge. There's the belief that the sun is always on infinite solar panel as long as there's nothing blocking the path. But again it's not as simple about that as that when it comes to access to.
That power correct.
So you know, the pitch for orbital data centers is often that, hey, sunlight is stronger and more continuous in the right orbit. Google's Project Suncatcher argues that solar panels in the right orbit can be up to eight times more productive than on Earth. So that is true. But just because you have space energy access doesn't mean that
you have space energy infrastructure. So you're going to have to deal with some real constraints, and that means the close formation, orbital dynamics, the radiation effects, the thermal management, the ground communications. All of this depends on a reliable access to power in power generation, but also power storage distribution. Again that thermal issue of rejection and also redundancy. Now
this has to be flight qualified. It also has to be able to be reliably operated in space and maintained, and maintenance is one of these hidden costs.
Right now that we're not talking a lot.
About McKenzie, we have literally ten seconds. Do you think SpaceX can do it well.
They're a vertically integrated company that has demonstrated many technical challenges before, so I wouldn't count them out.
Mackenzie.
Listrap principal consultant, a paradoct services, former director to NASA's god and Space Flight Center, and a top expert in space based systems, and get used to that. We're going to be talking about it a lot. That does it for this edition of Bloomberg Tech. Really interesting mix of market news, political news, but the technology sector has a lot going on right now. Recap on the podcast, Apple, Spotify, iHeart, and all of the Bloomberg platforms from San Francisco.
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