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We're Innovation, Money and Power colle in Silicon Valley, NBN.
This is Bloomberg Technology with Caroline Hyde and Ed Ludlove.
I'm Caroline Heide and Bloomberg's world headquarters in New York, and I'm Ed Ludlow in San Francisco.
This is Bloomberg Technology.
Coming up.
We'll take the pulse of the market and get a read on appetite of those Magnificent seven as one name struggles to keep up with the pack and.
Snap joining the courus of technology companies announcing job cuts with plans to slash ten percent of its global workforce.
Details ahead us.
We'll get a check in on the state of the semiconductor industry as global chip sales that protected to hit a record this year.
The CEOs of on Semian Element.
Solutions join the program. But first let's check in on these markets. And it's a day of mac affecting some of the individual names. At the moment the market takes a turner is once again we're running too hot. The ICM number really coming in strong, Services going well and indeed the cost of services employment as well.
What does this all mean.
In terms of overall inflatory pressure. We know that, of course, joining CBS over the weekend was one FED chair Pale and he was talking back against any sort of rake cups coming as soon as March. Add in that job to the overall strong economic data and we turn on the nasdag off by eight ten percent. Interesting volatile play
going over in China. Remember as the SMP hit a record on Friday, we actually saw a five year low for Chinese stocks, and all of this as we see once again China trying to curtail any selling coming and indeed betting against the market over there and trying to push back against that volatility. We're off about bout ten percent in terms of the overall Chinese names traded here in the US tenure yield it crushes ever higher up
fifteen basis points. This as we of course get that strong economic data and the read across to the FED. Move on and have a look at what's having in the world of crypto though for a moment.
Ed because look, as we see a strong.
Dollar, so bitcwingo's a little bit lower, off by four tenths of a percent, but still training about forty two to thousand dollars. What have you got on the individual names.
Well, one name where there is still some buoyancy is in video. Even when the market turned post im Video is still up almost three percent and is extending those record highs that it hit Goldman boosting this price target on the stock to eight hundred dollars a share, And they're basically saying, we look at what's to come in the year, and we still think that there's going to be spending by the hyperscalers and in the cloud context. So that name continues to charge higher fresh record highs,
and it's just become this jugglele. We're going to dig a bit deeper later in the show car of course, about the outlook overall for this industry in twenty twenty four, but AI still calls that story a moving to the downside or.
In a different direction. Is snap, this is interesting.
The company is going to trim ten percent of its global workforce. Later in the program, we'll speak to Bloomberg Intelligence is mandep sing and kind of get engauge in what's going on. When the headline's first cross, there was kind of a spike on the shares in pre market, but we are firmly lower now down three point nine percent.
Yeah, and that's notable, isn't it considering the read across some Meta and just their phenomenal move we saw in that company's shares after its earnings on Friday.
And let's just talk more broadly about.
What's happening with big tech with those magnificent seven names and ultimately the read across some bond yields two tech stocks bluemogs Isabel.
Lee is here with actually a great story talking.
I love the headline Elon just lost his cage fight with Zuckerberg. This was all about how ultimately Tesla's market cap has really diverged from that of say a Meta, which has just been on the upper and not particularly post its numbers. Friday, Tech managed to outperform despite bon yields going high and not the same today.
It's not the same today, and then usualness must highlight it. Indeed, Friday, because bond yields surge thanks to a strong bond jobs report, what happened through tex sharees They areso surge And usually this doesn't really go hand in hand because history would tell us that higher long term yields aren't really the particularly harmful to companies that are longer duration, which are tech shares because they've most of their values they put
into the future. So usually when bond yield, search textures are down basically, but we didn't see that on Friday and in the past weeks. And this is why Bank of America's Michael Hartnett is saying that this is reminiscent to the dot com bubble, that he's seen the rush into tech stocks, the irrational exuberance, and one can't really make sense of it, like why is it like this? On one hand, maybe because AI is just a contained situation on its own, and maybe those tech stocks aren't
moving in conjunction with markets. But for the most part, a lot of unusual things are happening.
You know.
The comparison that the article puts in front of us is whether Tesla should be magnificent or if it's less than magnificent. The number I look at is EPs growth, right, because if you look at the six x Tesla, we saw really big year on your EPs growth in Meta's case, like more than two hundred percent. Tesla was the exception to that rule. It's sort as EPs dropped forty percent year on year. Both were having interests comps with an interesting period twelve months ago. What is the case for
Tesla being not magnificent? To your mind as well.
There is a lot of case being Tesla not being magnificent, But there is also a lot of cases about how this whole sector should be even seen or group Magnificent seven Super seven Elite seven, because if you look at it, the magnificent Magnificent seven companies carry a thirty three percent premium to the index when it comes to forward PE earnings, But then should they even be looked at as Magnificent
seven as a whole? We know that last year this Super seven Elite seven powered the NASSAC index fifty four percent higher, and those gained some of them really trickled into the new year. But last week we saw a divergence when we have Meta and Amazon reported they really had historic days. Meta saw one hundred and ninety billion in one day, which is the most that we've seen in the history of US doocs. But we have some
like Microsoft and Apple. Yes they beat mind you, but then we saw Shar's fault because people were just really more optimistic. People had more lofty ambitions for those AI shares. So maybe people are now being more discerning. If you look at Magnificent seven as a whole, they are big.
Here's around them Tied Bittory. It was in the article the Magnificent Seven as a whole are worth more than the copined combined GDP of New York, Tokyo, La, London, Paris, Soul, Chicago, San Francisco, Osaka and Shanghai.
So they're really huge.
But then maybe we should stop seeing or looking at them as one whole group.
Now ed, it's an interesting if you start thinking about the words concentration and risk Bloombers Isabel Lee just fantastic data analysis.
Thank you.
Let's keep the conversation going about the technology sector with Lisa Ericson, head of Public Markets Group a US Bank Wealth Management, and I think we also better address what's happening in the moment. So when ism numbers hit the market turned, we're now significantly lower on then as that one hundred and about one percent. But if you drill into the data, basically the concern is the price is paid on materials and the idea that the FED still
has some way to go to fight inflation. Put that into context for us of the technology sector, well, certainly.
We've had a couple of strong prints with the non farm payrolls report on Friday and then again to your point, a better than expected ism number this morning. And really, I think what's going on with the market with respect to how that impacts overall equity pricing and technology in particular, is that investors are simply concerned again that these positive rate cut expectations that they've had on the FED really
may need to be ratcheted down. We certainly saw that Friday, we saw it again this morning, and investors are just simply concerned that if rates don't come down as quickly as they think they could again that could impact per Isabel's point, really, these technology sector valuations because most of their growth is further out in the future, and to the extent that rates provide more competition, that just makes it tougher.
Lisa was managed to ultimately send these companies higher. Has been the distinguishing factor of artificial intelligence being able to be that silver lining amid the cloud that is the macroeconomy, higher rates, concerns about jobs. Can AI still manage to lift these boats despite the valuations already being toppy.
We certainly see that long term case for AI. Obviously, we're very early in the cycle, and we are seeing, for example, even in the near term that continuing to bolster some of these earnings reports, whether it's on data center spending or whether it's on a continued investment into
cloud services. However, to your point, that doesn't necessarily mean that the road is going to be smooth going into the full year, and that is because we have had quite a bit of run up on that AI and so I think some of that uneven response that you've seen to the earnings reports here with the fourth quarter reports is reflective of the fact that some of that optimism has already been priced into the ship.
The context also being that these companies are winning the rewards of investors, particularly if we take like a matter because of the cost discipline at the same time as they've been talking up their AI bets. And when you look at Snap today at more job cuts to come, how much do you think the overall microeconomy can continue to see strong jobs where we do see companies taking this sort of disciplinary action.
Well, certainly we have seen a very strong jobs market, and there were a number of prints last week that really reinforced that message. Whether it was from the Non farm Payrolls Report or the JOLTS or the Employment Cost Index. As far as its ability to sustain, one really interesting fact is that many of those job gains are and openings continue to remain in companies with less than a
thousand employees, so those mid and smaller sized companies. And again we saw that reinforced in the jolt's data last week. And so with that, even though we may be seeing some layoff notices from those large your companies, the ability of the smaller end of the companies to continue to post job gains as they continue to make up for less hiring than they would have liked you in the last couple of years, is still possibility.
Before we called that group magnificent, we would basically say they have strong balance sheets in trenched market positions, and if there's going to be a recession, that's a great place to be because they'll be fine. But now the conversations change from hard landing, soft landing, to no landing, and I just wonder how you think about those names and some of the facts, as Caroline was talking about in the context of whether we actually just don't have any pullback in the economy at all.
Well, we're really looking at more of a balance view right now on the US stock market and the economy.
And the reason why is that while again the economic data and the jobs market to your point, has been better than most people have expected, we still have a number oftionary forces in place balancing some of those positive factors, and so we have had really the most rapid rate increases in quite some time, and to your point earlier, really the inflation fight is not quite done, just as we saw for example with some of the ism numbers
this morning. And so with that, with that more balanced view of rewards and risk, we really continue to watch where that landing will go, whether it's no soft or heart And in the meantime, we're really just cautioning our investors to stay at whatever their strategic blitz would be in the equity asset class, again reflective of a more balanced reward risk ratio.
Lisa, so great to catch up with you.
Thank you for bringing your tech focus to the broader macro markets at the moment. Lisa Erikson head a public markets group over the US Bank Wealth Management.
The Semiconductor Industry Association is forecasting the global ship industry will see sales jump to a record level this year, fueled by a greater need for the electrical components from a broad range of businesses. Joining me to break down the data, Bloombergsy and King here in SF. What took me by surprised about this report is I get the overall twenty twenty four is going to be good, because twenty twenty three was very bad. But it's not just
one single thing they're not saying. It's AI and everything. They're saying across a lot of end markets things are looking pretty good.
Well, you've got to remember that this is a projection via the Industry Association.
Right.
Their basic thesis is chips are everywhere, and that is broadly true, more things need semiconductors. But we're also, as we'll find out in a minute when you speak to the CEO on SEMI, there are countervailing forces here. There are the secular argument more chips, more chips per vehicle, more chips per industrial system against what's going on last year, and there's still with us to an next day, which is we still have inventory overhanging in certain areas.
I was just looking at that chart fascinating.
I in that Europe was basically the only area that posted growth last year. We sit here as originally three Europeans and it's kind of amazing that in their economic environment they saw gains where globally speaking, we meant to see the rebound. Is it all about China getting slightly better?
I mean it is in theory. Everywhere you've got you've had markets that were really quite poor, which is like such as the PC and the smartphone. Now those markets have got through that inventory and in theory that you know, with a bit of consumer demand and a bit of end market demand, they're going to be very strong. Really speaking, though we're looking at AI, we're looking at the data center. The big concerns still in people's minds is what's going
on with industrial and what's going on with automotive. And again you're going to be speaking to a CEO be able to tell you a little bit more about.
That in a minute.
That's do just that inking brilliant to catch up with you. Thank you for bringing us the industry report. We appreciate it. It's now deep into basically the highest performing.
Chip stock of the day.
It's more than eight percent the best performer on the socks at the moment on Semi joining us for reporting fourth quarter results that well seem to post forward an idea that in this quarter gone it was doing better than expected and indeed maybe though some of the forward looking guidance not being as bad as had been expected.
Really to welcome Hassan al Kuri on.
Semi CEO and has and when we're digging into some of the overall focus of your business, just where are you seeing particularly some of the optimism coming from the investor.
Why are you managing to.
Think that despite evs, for example, being an area we're worried about stagnation, you're still able to outperform in that area.
Yeah, good morning, thanks again for having me.
So.
Yeah, we reported a quarter. I think the reaction you see in the stock, I think it's it's all based on where the expectation has been and really what a lot of our peers have already reported. What differentiates on Semi for the last I would say four to six quarters, we have being taken action to match and become more in line with what we see from an end demand, both an industrial and automotive. If you recall and the third quarter earnings I started talking about bottomotive softness, inventory
digestion that extended. Therefore, it was not a surprise to what we announced today. It was more of an expectation and really better than expected. But nevertheless, it was a softness that we as a company have been very disciplined in addressing to get us to weather through it much better than a lot of our peers has.
One criticism from Truest Securities this morning was that there wasn't anything said about the outlook what happens next in those end markets. So you just said we rebalanced to make sure our output match demand on industrial and automotive, But going forward, what are you hearing from those end market leaders and CEOs about what they think demand for their industry will be in twenty four.
I think for us, the way we're managing twenty twenty four, we're not managing for a recovery, which if you take where we are today as a base, twenty twenty four is going to be basically down in all end markets versus twenty twenty three, which was a good year and a lot of the markets. So industrial, automotive and then the other end markets will remain soft. If the demand
picks up in the second half, that's great. That's all tailwinds for us from fabriutilization that impacts margin, profitability, and revenue.
We'd rather be in.
This spot rather than prepare for a recovery that doesn't happen. Now you have a correction mid year. We're taking again a much more discipline approach which worked very well with us for US in Q four, coming into Q one.
We use the case study of silicon carbide in the EV context, and Caroline quite rightly points out that we think there will be growth in twenty twenty four, it will just be slow growth. The growth is decelerating in global EV demand.
Does your business reflect that?
Yeah, I spoke about it earlier today, where the industry still projects a high number for EV growth in the thirty to forty what I believe based on customer engagement are really based on some of the leading OEMs in the automotive industry what they projected for their EV growth
in twenty twenty four. We look at it more and twenty to thirty growth, So for me, I more trust what we see and that's what we're managing to still very heavy growth because what we also projected in light of that market growth is we will grow a silicon car by two x the market. So at this point in time in twenty twenty four, we're peck to and demand. Products are out, qualifications are there, We're designed in all the platforms that we need to be designed into right now.
It is an end demand signal. We will still take share, we will still grow ahead of market at two x. The question is what will the market do through twenty twenty four.
And as you said in your call, electrification remains a content expansion opportunity for you as you two X, So who are the customers.
That manage to outperform?
Why have you managed to get the customers that are ramping production?
Where in the world are they ramping production?
Bottom line, I've always been consistent, you only win when you have the best technology. We've been providing the best technology at a high power packaging. So both device silicon carbide and the package we put in it the best technology out there as far as performance. That's why we've been winning. So we've been broadening our customer exposure to kind of reduce that lumpiness from too many focused customers. We have recognized revenue from over six hundred customers in
twenty twenty three. That will keep extending into twenty twenty four as more of the European OI start ramping for US. So again a very broad base of gossmer very diversified regionally from China to North America, and like I said, in Europe, that gives us a very good base to clearly grow from as we manage through the short term lumpness of ev.
Adoption hasan al Kuri on semi ceo best performing stock on the socks today. Very quickly, I want to check in on shares of coinbase down around nine percent their session loads down more than ten percent, on track for the biggest decline since June of last year.
But I got to be honest with you, Caroline.
We've got no idea what's going on, or no idea why there are no headlines on the terminal relating to the name. We're going to continue to dig in it and get the crypto team on that. But a big move to the downside coinbased off nine percent. This is Bloomberg technology.
All right.
Time for talking tech.
First up, Samsung executive chairman Jy Lee has been acquitted of stock manipulation charges, removing the threat of jail time. That's loomed over one of Korea's most prominent business people for years and lifting a weight off of the company as it struggles with a global downturn and some more competition from Apple in the smartphone space, and shares in ATOS fell as much as thirty percent to a record low after the French it company dropped plans to sell
seven hundred and seventy seven million inequity rights. ATOS said it's seeking a mediator to help renegotiate of financing with lenders. Plus Yandex has striked a five point two billion dollar deal to sell its Russian business. It's the highest value deal yet to exit Russia following the invasion of Ukraine. Negotiations took more than a year, and it allows the Netherlands registered company to develop projects abroad after dive investing Russian units that generated most of its revenue.
Cara some companies to be watching.
Meanwhile, we've got to keep an eye on what's coming up with Snap. Look, they're cunning ten percent of their global workforce that as we know, the tech setter continues to see layoffs more broadly, but will also be anticipating the numbers coming from this particular business. They report, of course, and we're anticipating actually some recover and revenue. But what is the cost of having to let go of so
many staff? Will dig into that in a moment. Shares had spiked a little bit on the news of this cost discipline, but now we're back sinking more than four percentage points on this particular social media name.
We'll dig into snap in a moment. This is a BLUEBG technology. It's going viral.
Taylor Swift making history this weekend by winning her fourth album of the year. If that wasn't enough, the superstar announced a new album on its way April nineteenth, to the excitement Swift these worldwide. But also there are a fair few elephants in the room that night, one of
them from a tech perspective. Trevor Noah did address Universal Music Group, of course, pulling its music catalog from TikTok, which includes like the very own Taylor Swift drait not to mention, but many others and ed, I mean, this was a night of celebrating women. This was a night where we saw history being made.
And what is the new?
I mean, I'm pretty sure you're more of a Swiftian than I am. At the Tortured Poets Department.
You're excited.
Yeah, I mean it's astonishing because Swift goes in tied to that event with Snartchrip or Simon Stevie Wonder and then exceeds that record. And we're doing this and going viral because it's all everyone's talking about on social media, right, But you can't celebrate on TikTok, which is simply put, you cannot use Taylor Swift songs on TikTok.
Yeah, and that continues to be an ongoing issue of basically the monetization of such incredible moves made by artists like this. But when we're consuming that, and maybe from TikTok's the point of view helping market it, how much does the money flow to the artists, to the labels.
That's a key question.
When I was reading Lucas's news letter Lucas Shaw's USTA about this, you realize they've been negotiating on this for years, so it's not a new thing. But there's been a flashpoint because the volume of eyeballs is not translating into dollars in the artist's pocket.
That's the tension.
Interestingly, of course, Taylor swift'shone collaborator saying, maybe UMG should have given a heads up to some of the artists before they did this. But anyway, we talk more broadly about the world of social media and indeed well how law makers are addressing in it right now, because across the aisle we're actually seeing work being made for legislation
that would place safeguards in particularly across artificial intelligence. And now this is about Taylor Swift too, because it of course involves deep fake videos individuals such as Taylor Swift, and there of course pornographic deep fake images that were
circulating on social media. Late last month, social network analysis come need Graphica determined that the images of where they originated from, it's actually an online challenge to break safety measures designed to block people from generating loud images with artificial intelligence. Margie Murphy has more so just go into the detail of basically what's happening on certain parts of the Internet where almost these weird challenges are erupting that don't just affect Taylor Swift.
Right exactly.
For a long time now, before the images of Taylor Swift emerged on x that caused huge outrage and caused
X to block Taylor Swift's searches. For a while, these deep fake pornographic images of several women, celebrities, politicians were already appearing on a four Chan forum and on a thread where a community was engaging in daily competitions to try and break the kind of text image generation models that we're all really familiar with, like Microsoft's image designer open a Eyes Dari, and they have for weeks now been trying to teach each other how to use certain
words to get around the safeguards that have been put in place to create these pornographic images that these companies who create the models say aren't allowed.
The technology stories is the use of text image creators, and the policy point was the banning of some keywords and then using others to get around it. Then there's the political side of this story, which is basically this has been a really big story and now lawmakers and Capitol Hill are thinking about what they need to do about it.
Right, So, Taylor Swift was not the first person to be deep fake, she won't be the last, but because of her celebrity late last month, we just people were talking about it so much more. We had the White House condemning it. We had this reanogization of a bill that had been brought in, a bipartisan bill because at the moment there is no federal law that bans deep fake pornography, and we've got kind of scattered approach across states.
So although this has been happening for a really, really long time, we're finally seeing the kind of politicians, lawmakers, everyone's taking action, and brightly.
So are Bloomberg's Margie Murphy, who, by the way, has done a very big body of reporting on this issue. I highly recommend you read it on Bloomberg dot Com. Another story, Mesa's independent oversight board agreed with the company's recent decision to leave up a misleading video of US President Joe Biden, but called its policies on AI generated content incoherent and too narrow. The board is now urging Meta to update its policies ahead of the twenty twenty
four US general election. Will continue to follow, of course, that story throughout the year.
Karen, Yeah, and let's just stick on the world of social media, because we've got to shine light on what's happening with snap The perment of Snapchat cunning is workforce by around ten percent worldwide, joining us of course around the entire focus of a slader technology companies that have announce layoff of the layoff is money, saying of Bloomberg Intelligence, and really this is once again a company perhaps trying to front run a slowing ad market narrative that's going
to come from the earnings with cost discipline, we're doing something about it.
Yeah, I mean, look, Meta has set up a good blueprint in terms of what companies need to do, especially in the social media land, and it's worked for them. I mean, the proof is in the numbers they delivered last week, and every company that went big in terms of layoffs in twenty twenty three actually benefited with better
execution and top line growth. In the case of Meta, I would be curious to see how ad pricing tends recover for a snap, because what we saw with Meta was there was a clear inflection in terms of digital ad pricing coming back that actually helped their top line. And I would be surprised if it's exclusive to Meta, because we know from the past that all these digital ad vendors benefit when you know it's there's a cyclical uptrend.
And so that is to me the key number for pinterest in Meta is they should also see that lift in at pricing when the report earnings.
What's interesting about Snap, though, is that they've kind of been flailing to find some sort of diversification. They were looking into augmented reality, helping other companies embrace that, and then realize that wasn't the way they should be spending their money.
How are you.
Seeing their narrative build as to what this company stands for, where the growth is going to come from.
I mean, they probably are narrowing their focus, so the layoffs have to come from somewhere. And the last round of layoffs was really focused on augmented reality because they wanted to narrow down the focus to the profitable part of the business, which is the social media ads. Look with Meta, we saw reels engagement continues to grow twenty five percent growth in reels. Snap has an equivalent of reels, it's called Spotlight. They don't make any money off of that,
and that's where you want to see monetization. Why is Meta monetizing video? And they've caught up to TikTok and not Snap, And I think that's where it's still this story is still missing why can't Snap monetize videos as effectively as Mata.
This sets us up nicely because Snap reports earnings after the bell tomorrow, and I think my takeaway from the Meta earnings was I understand how you work in AI is relating to your core business. You point out Snap has Spotlight, but it also has Snapchat plus my AI, and I don't really understand how that's helping them yet.
Yeah, I mean, look, when a company of this size, Meta is like one point two trillion, compare that to Snap twenty seven billion, So it's only fifty times in a market size compared to Snapchat. So I would much rather better on a smaller company at this point of time to drive up its engagement, and it should have a long runway compared to Meta, which we know is executing flawlessly. It's got that AI scale and you know
it's on Lama Ma model. But still for a smaller company with four hundred million daily active users, they should be able to figure out how to use AI to drive their engagement, how to improve their AD infrastructure. And that's where I do think Snap things are fixable. It's just we haven't seen that monetization aspect yet. From their ancillary products.
At the end of last year, Mende you and the team also wrote about snaps kind of e commerce potential. I think that was because it had done some partnerships with Amazon, for example. Do you believe that's an opportunity for Snaps still?
I think so. And look, Meta has also done a partnership with Amazon. So Snap's partnership as an exclusive pinterest has done the same. For all these social media companies. The holy grail is in app e commerce. They haven't figured it out because the logistics part is very hard when it comes to social media pivoting to e commerce,
and we have seen that with the Chinese companies. But in the end, you know, Amazon partnership does make sense because Amazon clearly has the fulfillment capacity and it does need the channel for you know, the social media companies to transfer over the customers that are engaging with them almost sixty to seventy minutes a day. So it does make sense. But it would be interesting to see how it affects snaps gross margin.
Well, we wait for those numbers to be coming out, of course, and really dictating how the stock continues to perform. Man Deep Seeing and bloom Bag Intelligence brilliant to get the deep dive ahead of snap zone earnings. Meanwhile, coming up, we'll be turning back to the state of the semiconductor industry. We're going to be speaking with the Element Solutions CEO Ben click chick.
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The early signs of gen AI youth cases are actually exciting.
We're going to show just how capable and how much AI is now part of, you know, really the entire AMD story.
For the very first time. Because of generative AI, computers are going to be computer technology is going to impact literally every single industry in every single country.
That could create an interesting opportunity for upgrade cycle and phone well.
An array of CEOs after, of course, earnings from the chip makers and they will have a lot to say about artificial intelligence of course in this cultum beyond. But let's check in on the markets right here, right now when it comes to semiconductors, because we're managing despite the macro picture, of.
Which is one of too strong a growth from.
A US economy, so therefore pushing back on some of these tech stocks. The socks does remain higher, up by three time percent. Largely we got in video to thank We thank Coldman Sachs for that particular rerating on this particular price target for in video they see yet further growth.
Interestingly, AMD is on.
The downside, even though they too had an upgrade coming from Philip Securities in fact about AI tailwinds. But it's under pressure more broadly as the rest of the market feels a little bit of weakness amid this stronger macro data. But ed it is notable that on semi managers to be riding high on it's earnings. We've got a deep dive continuing on chips.
Yeah, someone that knows the space well.
Ben Glickish is the CEO of Element Solutions, which produces chemicals in almost every EV smartphone computer and develops next gen chemicals that enable tech advancements.
And what all of those things have in common.
You know, we focus so much on this show on the GPU, CPU analog level, but we're talking about circuit boards, integrated circuits and what they all have in common. Ben is they're all rethinking their supply chain, and we're heading towards this kind of decoupling from China. You know, we've done a lot of reporting here at Bloomberg about Apple, for example, wanting to shift some of its supply chain based from China to India. Is that is somebody involved in that supply chain, as simple as that.
So we like to say chips don't float, and so Element Solutions products are used in semiconductor manufacturing, in assembling, putting chips onto circuit boards, and in making high performance printed circuit boards.
And the printed circuit board market.
Is primarily an Asian market, but we're seeing a shift towards something called China plus one, and so supply chains are moving outside of China two places like India, Vietnam, Thailand, Malaysia, and we're even starting to see some green field investment in printed circuit board capacity here in North America, Mexico in the US.
Then, when it comes to your role and Element Solutions, how much are you part of the soul for these companies?
So our technologies are used in every high performance electronics device in the market. So we're an enabling provider of chemical technology for all of these markets, and for us, our manufacturing processes are pretty simple. Our people are global, and so we're welcoming these supply chains as they move to new places. Our footprints are ready there, and it's an opportunity for us to support our customers as they diversify their supply chains when they move out of China or into new markets.
And what therefore, for you is any sort of block on your own ability to keep up with the demand. All we hear about is just like the absolute scale the price point than the need.
Has there anything that's been slowing you down?
Or is it just ability to roll out in lockstep with the demand.
Yeah.
So we're fortunate because we've been in these markets for decades and our customers and our customers customers the OEMs rely on us to come up with new solutions to enable their next generation products. And so for us, staying on top of innovation, technology, roadmap exchanges with customers enables us to.
Meet those emerging needs.
And then we make investments in new material science technologies as the legacy capabilities don't meet the needs of next generationships. For AI, we're investing to support that. Outside of our four walls and bringing very interesting capabilities to market.
Ben When we think about some of the end markets that we listed at the top of the segment that you're in EV smartphone, there are mixed forecasts of what twenty twenty four looks like. You heard from Christiano Mamman a moment ago right quile Con saying flat to low single digits growth.
In the smartphone market.
We've covered a lot broadly, a slow down in EV growth globally. Is that reflecting what your customers are engaging with you on.
Yeah, So we call the bottom in our electronics business in the second quarter of twenty twenty three. Twenty twenty three was a tough year in electronics from a demand perspective, but also because there's a lot of inventory in the channel that had to clear. We've seen a recovery in the back half of twenty twenty three and we see
growth in twenty twenty four. Smartphone units should grow in twenty twenty four and will be lapping a period of inventory clearing, so we should have nice growth from that part of the business. And our business isn't just driven by units, it's driven by content per units. So each next generation technology of smartphone has more value of our technology because it's enabling higher performance applications. Similar in the EV market, where we've got game changing technology and power electronics,
and that market's been very strong for us. We're seeing customers adapt our technology to deliver better performance vehicles.
So even if the EV.
Market is flatish, we're going to see real growth for our capabilities in electric vehicles because of the technology trend shift.
Ben I want to go back to the supply chain.
Is India ready to be a great to contribute to supply chains and SUMA electronics, the semiconductor industry and AI.
So there's definitely a significant investment in infrastructure that's required in India and we're actually seeing that huge investment from many OEMs and partners and supply chains to support it. In fact, we've been asked by one of the largest smartphone OEMs in the world to help train the Indian supply chain to meet their needs.
So it's a great who's that.
We don't speak about our specific customers and supply chains broadly or in public, but a very large smartphone manufacturer is asking us to help train the supply chain to bring them up from a capability perspective to enable their production.
Well, we want to thank you for being here in town. Ringing the bell five years.
I think was the celebration of today of Element Solutions, Ben Laclich, We thank you for your time.
For video game fans, the name Blizzard Entertainment was once anonymous with perfection. The maker of StarCraft, Overwatch and World of Warcraft forever changed the video game landscape. But then its corporate parent, Activision started cracking down on Blizzard's proud autonomy. It's all chronicled in a new book, Play Nice, the Rise, Full, and Future of Blizzard Entertainment, and it's offered by Bloomberg
News's Jason Schreyer, who joins us now. Jason's congratulations. I mean some of those titles, Diablo four in particular, in more recent history, the fastest selling title. And then there's the company story of everything that happened in the last twelve months.
How'd you write a book about it?
Yeah? Man, I've been frantically rerating the ending over the last couple of weeks. Yeah, it's quite a story. It's a thirty three year history that I'm chronical in this book, starting with two UCLA students who set out to start a video game company and wound up building an empire that became thousands of people, billions of dollars, and many, many millions of fans.
Jason, You've written a couple of best selling books, so I'm interested as to what sort of reception you tend to get to these books. Who are the audience that really gravitate towards these sort of journeys, these stories. Is it ever an introduction to those that don't know that much about the gaming industry.
Yeah, it's funny. My first two books were kind of where there were anthologies including a bunch of stories, so a lot of people could kind of glom onto them and find an interesting story, a company that they had heard of, or a game that they played. But I also tried to make them appeal to the mainstream. And with this one, I've tried even harder to make it something that my mom would read.
And my mom hasn't read.
My first two books, but hopefully she'll read this one. Yes, I think there are a lot of gamers out there who will want to read this book, who will find it interesting, who will get a lot out of the behind the scenes details and the creative struggles and the development stories and the games and just knowing the story
behind World of Warcraft and Overwatch and Hearthstone. But I also think that it'll be really interesting to anyone who is interested in kind of behind the scenes corporate stories, stories like the social network, stories like Bad Blood, stories that are about companies that grow and their cultures and how they evolve and the kind of the trials and tribulations along the way.
And the story keeps going behind the scenes.
Because the latest is YOU'RENNA fairies who ran the call of duty business is now taking the helmet blizzard.
I think I'm right insane. Did you keep up with that?
Yes, my editor is waiting for me to send over a revised version of the ending. Yeah, I'm spending in the next couple of weeks kind of revising the ending, changing a few things. And yes, unfortunately there was a mass layoff and a game cancelation just a couple of weeks ago, kind of a tragic way for the new
era of the company under Microsoft to begin. Microsoft, of course purchase them for sixty nine billion dollars in a deal that closed in October, and one of Microsoft's first moves was to slash a bunch of jobs, So yes, I will be incorporating that into the manuscript. But at a certain point, yes, this book has to end, and it'll probably it'll include up up through just about the present day sequel.
Jason Shah, thank you so much spending some time with us, and congratulations on the never ending book.
It's going to be a great read.
Meanwhile, that does it for the sedition of Blue Bag Technology.
Check out the pod. That's where you can find it. This is blamebag Technology.