Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is a live from coast to coast with Caroline Hyde in New York and Eva Low in San Francisco.
This is Bloomberg Tech coming up.
President Trump picks Kevin Walsh to be the next Chair of.
The Federal Reserve. We discuss how tech markets are reacting.
Plus, Apple delivers record quarterly sales, but the looming start of rising memory prices it was worrying investors.
And SpaceX is considering a merger with Tesla or with Xai.
We'll discuss what we know so far, some.
Extraordinary reporting from you and the team, and let's dig into what the macro picture is today, because it is a macro story that dictates these moves. The next FED chair is.
He going to be hawkish?
That's the way the market currently thinks a little bit more. With seeing the NASA onered or by sixteen percent, we're up on the month, and in fact we're having the best months since October for the NASLAK one hundred and the S and P five hundred. But on the day we temper some of our risk on sentiment. We're certainly seeing Bitcoin still not feeling any love. We're now at just eighty two thousand level at the moment, ed well
by one point nine percent. We are down for four straight months, the longest losing streak for this asset class since twenty nineteen. And gold and silver today. While you've see the volatility and it is all about the macro picture, yeah.
A little underperformance in tech.
Let's get to it with Bloomberg International Economics and Policy editor Mike McKee. What is the Kevin wash school of monetary policy and economics that the world of technology needs to know about?
Well, worsh is going to be someone who upsets the apple cart, which is perhaps a little bit of his training out in Silicon Valley. He graduated from Stanford and is still a visiting lecturer there and a fellow at the Hoover Institution. He believes that inflation is the Fed's only job, and that's why he gets this hawkish rec reputation. And he also is concerned with some of what happened with Silicon Valley Bank and the way the FED regulates banks,
so look for some changes there. The big question, though, is how locent interest rates go, and the President obviously wants very low rates.
How do you get there? AI is what Kevin says.
He says that AI, along with the big heavy tech investments we've seen and the President's deregulatory agenda, will move things forward. AI will be a significant disinflationary force, increasing productivity and bolstering American competitiveness. Productivity improvements should drive significant increases in real take home wages. A one percent point increase in an annual productivity growth would double standards of
living within a single generation. So he's putting a lot of his forecast on what Silicon valleycomplish in terms of AI and the tech world.
What's interesting is what he thinks about labor and how that will be impacted. We heard Fedshair Pal, the current FED chair, just speak on Wednesday about how they see AI making significant impact on labor and indeed, more broadly the economy as well. Mike McKee, I wish I could ask more questions. We so appreciate you being here, but let's talk about how tech is currently underperforming the dollar pushing higher. Here to discuss how Trump's FED pick Kevin
Walsh could impact the tech markets. Margi Bateell All Spring Global Investment Senior portfolio manager and head of Capital Allocation Margie, How do you think the market should interpret this announcement?
Well, I think the market maybe is focusing too much on his interest rate policy and not enough of the other posit of their specs that he's indicated, for example, the better regulation of the banks. And also you can see in the past one of the things a bank that the FED did, which I don't think he'll do, be extremely activist and pro cyclical, really causing a lot of the up and downs in the economy and the
financial markets. Silicon Value is a great bank, is a great example of the FED tightening so quickly that the bank simply didn't have time to adjustice investments to get in line with those much harder short rates. So I think that a less activists FED looking at better regulation will actually be very positive for the market and for the economy.
Do you align yourself with the deflationary impact of AI in that respect? Do you agree with Kevin Washing that perspective?
I think the jury is out on how much deflation we're seeing, because really, when you look around in the real world, it really looks as if we are on a track for inflation being higher for longer. Your last segment was about the price of antique cars skyrocketing, gold and silver skyrocketing, even industrial metals, real estate, fine art, all those things look more what you would think if we were in an inflationary backdrop. So that's really what
I think we are. I think interest rates at three and a half three quarters on the funds rate is really quite quite easy when you look at the financial markets and these other tangible asset markets.
Margie, it's good to see you dead here in SF.
Later in the program, we're going to hear from an interview that I did with the PG and E CEO Patty Poppy, California's largest utility, and like mister w Wassh, she argues that all the data centers that are being built will drive down electricity prices, right and therefore inflation, just like mister wash has kind of just been the
argument outlined by Mike McKee. I don't understand that, and I don't have a degree in economics, But if someone in the markets, would you just give me your interpretation of how that would work.
I don't really follow that line of reasoning either. Clearly, we have a demand for baseload electric generation capacity, and that suggests to me that the price of electricity will gradually go up even notwithstanding the data centers. So if the data centers carve out arrangements with their provider so that it doesn't feed over into the retail market the
industrial market, I think that would be a neutral. But really I think the real price of electricity is going to go up simply because the cost of building, strengthening the grid, the cost of even building new gas fired plants is really going to be on the upswing. So it's pretty hard for me to see how the price of electricity.
Could come down.
And I don't think it's closely related to the data centers, which are a big source. You know, ten fifteen percent increase in demand over the next few years is really going to be a deflationary factor when you're dealing with real assets like a generator.
I don't know, Margie, you seem to have a pretty good command of it. In the data. I appreciate the response.
We should probably get to earnings, right, you know, in the context of Apple, which we're going to discuss with an analysis in a moment. The consideration and there is tight supply of memory chips, but just so far in aggregate from the mag seven and other companies have reported.
What is your main takeaway, please, Well.
I think that's a trend that's going to continue for a while. We think the memory chips as being commodity chips that one demand is good, they overbuild and the prices come down. And this time it's been very different because the demand for memory chips is so extremely high and there are only a handful of producers of memory chips, and even they are being very very slow cautious to
add capacity. So I think it's just going to be a feature that the price of memory chips is going to be higher than we're used to and we aren't going to see that extreme cyclic go up and down in that sector that we've seen.
Margh Patel all spring low investments back on Bloomberg Tech, Thank you very much. Talked about earnings. We've got to talk about Apple shares down a percentage point that they've been higher in after hours after the print and during the cool they kind of chopped around one point session will high and now lower. The company delivered record quarterly sales and a better than anticipated forecast, but the looming
threat of rising memory prices is worrying. Invested COEO Tim Cook saying he expects quote more of an impact of gross margins and continues to see memory prices rising significantly, particularly in this current period fiscal second quarter. Richard Kramer, a Ready Research founder and senior andast joins us now to have a buy and a three hundred and five dollars price target on this name. You know, we've said throughout my career, at least Apple is the master of
managing the bottom line. But in this environment, with tight supply and pricing of memory chips such as it is, there's a limit, it seems to what Apple can do.
What was your interpretation of that?
So I think this fixation on memory class is the wrong question for Apple because it just go back to your basic economics, you know, theory of comparative advantage. Apple has had the best supply chain in the world for years. They have two hundred billion dollars of product cogs. This quarter, gross margins went up year on year and sequentially, and they're guiding to an excellent product or gross margin and
implied product gross margin next quarter. Now, when we get later into the year, if they face significant increases in memory cost, they have one lever that they can pull, which is they can raise prices on the devices, or they can raise prices when you get the higher memory spect variant of the product and offset some of those higher supply chain prices. One other thing that I think people should pay attention to is the way that Apple has vendored on trade receivables.
They funded production equipment at.
Their suppliers so that they have that superior supply chain, and I think that puts them in a comparatively much better position than everyone else in the tech hardware space.
Let's go to the product.
iPhone sales were about four billion dollars above consensus, nine percent beyond consensus. Even the top end of the range that I saw was about eighty one billion dollars. This iPhone seventeen generation has been a success, is it not?
Yeah?
Well, I think there's two things about that you need to appreciate. One is the company is saying they are still considerably supply constrained, and the day that that supply demand balance kicks in, they can rebuild channel inventories and four weeks of channel inventory is another fifteen billion dollars of iPhone sales just.
To get back to normal distribution.
And to have warehouses from so they have a long runway to realize what it's now. Obviously, this last quarter twenty three percent growth in iPhone implied in the in the guidance, we were at fourteen percent, the street was at eight. They're thirteen to sixteen implies another twenty percent growth quarter for iPhone, and they're telling you the still supply constraint. So that to me tells you that you have again a much longer runway with this product cycle
than than otherwise. And obviously demand is off the charts, and really it's a concern for everyone else in the smartphone space just how much market share Apple is poised to take.
Richard. Demand was off the charts in China, thirty eight percent growth.
What happened, well, I mean some of that, if you look back, was a relatively easy comp and but equally, if you go back to last April or May, you know, we had to we had to, we had we had to buy on the stock, and we had to battle all the people saying, oh, Apple is going to get kicked out of China.
They're they're dead there, They'll never sell any more phones. You've got Huawei and Honor.
And jel Me and Opo Vivo, and and there was this huge negativity about their China position, largely because of geopolitical elements as well. But Apple has showed that they have a huge installed base there. When they come out with a highly attractive product portfolio, consumers flop to it. Yeah, and they're also seeing good growth in some of the other products there, max iPads, wearables, and those tend to
be to first time Apple Apple customers. Now they under index in the China market in services because there's some services that aren't available there. But you know clearly that those who were writing Apple's habituary in China was a little bit premature.
And look, Apple Intelligence isn't available there, I mean, for what it's worth, No one's really raised about it. Of course richer, but what does this actually tell us about the need for a consumer to buy general to AI products? Apple has still owned this particular season, even though Android, the Google phones, Samsung phones were far ahead in terms of the generative AI offerings.
Absolutely, And look, people are not going to rush out and say I want the new device because it has GENAI capabilities. They are going to say I'm locked into the Apple equals for the last ten years.
All of my other products are Apple, and I'm going to keep buying Apple.
The question I asked on the call, which I think is the key one, is why has Apple been a fast follower in AI? Because they knew it would take time for people to get used to the services. And right now they only have about four hundred and fifty or five hundred million of their one point three billion
install base of iPhones with AI capable devices. So the fifteen pro or later and Apple is now reaching that point where half or more of their base can be the addressable market for a new sery or AI services, and I think over time they'll monetize it by getting people to buy better devices, but also adding five bucks to the Apple one bundle for some advanced serie features.
Mis your Kramer, fascinating. Thanks for being with us today. I'm at research. Let's talk about JP Morgan. It's among the banks that have begun selling down a highly anticipated twenty billion dollar debt financing backing the acquisition of Electronic Arts, now the biggest beverage buyer on record. Remember, sources are saying Middle Eastern Asian smaller European banks are piling into a terminn a as much as three billion dollars for the video game maker.
Yeah, okay.
Coming up, SpaceX is considering a merger with Tesla or with Xai. We have the Bloomberg reporting next, this is Bloomberg Tech. SpaceX is considering a potential merger with Tesla or an alternative combination with AI firm Xai. That's all according to sources. Bloomberg's Lauren Grush who covers space Carl Porter, who's on the transportation beat, and both of you involved in the breaking this.
Story last night. Join us now.
I'm going to come to you what we know two distinct proposed ideas, scenarios, transactions. My understanding from sources is that SpaceX investors are particularly pushing this idea of a combination with Tesla.
Either way.
Highly unusual because we thought that SpaceX was on track for an IPO midyear.
What do we need to know?
Well, they still may IPO this year's You know, there seems to be a lot of ideas kicking around at the corporate table. It's certainly faster to do a combination between an existing public company than it is to do an IPO. It's cheaper. You don't have to have a bank come in and underwrite. You don't have to do a road show. But you also have real drawbacks to this. You know, you don't get to roll the pitch. You could have a sudden share sell off with people don't
like what they see. You're building a conglomerate, which historically people have not enjoyed investing in.
You.
People don't feel that they can get anough visibility on the existing businesses. So there's a real debate to be had even within the company some whether this is a good idea or not.
Lauren talk to why. For example, it might be a good idea for SpaceX and Tesla to grow closer in their interaction because they already have a relationship, a strong one.
Yes, there's plenty of cross nation that already happens between SpaceX and Tesla and you know all of Elon Musk's empire, and if you've noticed, you know, he's talked a lot lately about ways in which that cross pollination could you know, become more intense. Right, He's spoken about Starship taking optimists to the Moon and Mars and things of that nature. There's also the option of using energy storage capabilities for these data centers and space that SpaceX or that Elon's
been talking about. So there is some sense to be made in combining the companies, and as they already work so closely together.
Already, what we know is again two distinct scenarios are being discussed, and that's the new bit, right, They're being discussed because you have people like chamaf Palihapatia Bill Ackman who have hypothesized about this. Anyway, Kyle, we know that Tesla has confirmed an investment in Xai just this week two billion dollars, and that SpaceX participated in an early around in Xai as well.
Elon Inc.
And a conglomerate is a bit of a regulatory headache, is it not.
Oh, it could be a massive regulatary headache. If you're looking at two commits of this size, three companies of the size, presuming everyone keeps their valuations, you're looking at trillions of dollars. That kind of market capitalization is going to attract the scrutiny of government and regulators.
It can't not, Okay, regulatory hurdles abound and actually, just to remind viewers, and as if you all have written in the story at length, things can change. None of this is set in stone. This is still work in progress. But Lauren was also work in progress. Is everyone talking about wanting to put these data centers into space and you just mentioned why there might be some sense to TESLA and SpaceX combining, but how what what are the hurdles to even that hypothesis that view?
Right?
So, obviously a lot of this is being driven by Elon's latest grand vision of putting AI data centers into space. There's obviously a lot of pros that have been you know, talked about in terms of doing so.
There's depending on where you put them, there's.
Constant access to solar energy because of where you put them in orbit. You know, there's also a lot of space in space and a lot of you know, these data centers do take up quite a lot of real estate here on Earth, and that can also come with a regulatory burden in order to get the right permits and things to do. So there's a lot of benefits to moving to space, but there's also massive engineering challenges in order to make it work. For instance, that's solar
power we're talking about. We're going to need massive solar panels in order to run the kinds of data center sizes that Elon's been talking about, So that is going to be a challenge that they're going to.
Have to work through.
You're going to have to put radiators on these vehicles in order to cool them down.
A lot of the infrastructure around data centers here.
On Earth they need massive, you know, cooling requirements, and that doesn't change for space because you're in.
A vacuum and you have to use those radiators. So there's a lot of work to be done, and it all relies.
On Starship, which is SpaceX's next generation vehicle, and that vehicle isn't quite ready for primetime yet either.
So there's a lot to keep an.
Eye on in order for this grand vision to play out, and obviously we won't be keeping an eye on it ourselves.
Caro, just one last thing, you know, I wrote to Elon Musk, I wrote to the board. We haven't heard back from any of the parties involved. But when Lauren broke the story about SpaceX's tender being settled and the internal comms about why SpaceX was going to pursue an IPO, the CFO also said this is about dramatically ramping up capacity on those existing business lines. But our reporting was that they would need tens of billions of dollars to buy the GPUs to put into space based data center.
Team awesome, Caro, big.
Scoop with some very big numbers and hypotheses. It was brilliant to have you all on loanngrash Calport. Thank you, ed as always scoop machine. What we got coming up?
Yeah, Amazon could be making an exensive new bet on with talks underway to deep in ties with open AI. We have the Bloomberg report next, this is Bloomberg Tech.
In Video provided.
Technical support that helped deep Seek improve its breakthrough AI model. That's according to the Republican head of the House China Committee, who says in Video's technical support allowed deep Seat to achieve cutting edge performance with its R one model using in Video's H eight hundred processors, undermining the goal of US export controls that were designed to restrict access to higher end American chips.
Carol Let's talk about Amazon now because it's reportedly in talk said to invest up to fifty billion dollars in Open AI.
Now.
Person familiar with the matter says the potential deal would build on an existing relationship with Amazon already, of course applying computing power to the chatching B team. Makup more, let's bring in Bloomberg's Matt Day you cover Amazon. There's been reports back in December that they might be up for about ten billion, but this just seems to be scared at the same point as the funding need of scaling.
Yeah.
Absolutely, I mean it seems like Amazon's going to have to pay a lot to get a seat at the table. We've already got some open Ai business, but I think it's clear they'd like some more. Definitely, their commitments so far trail with their rivals like Oracle and Microsoft marketting from open Ai. Maybe this is a way to get the more business.
So, you know, Amazon was super aligned with Amfropic, and Fropic has looked elsewhere beyond Amazon. Something's happening here, Matt. Could you kind of unpick the web a little bit?
Yeah, so, if you if you rolled a clockway back to an open Ai launches hand in hand with partner Microsoft, models were kind of exclusive things, at least the cutting edge ones or some of them. For a long time in thropics, you know, first and best place was on Amazon servers. I think a lot of folks expect that to fall down, and it has broken down over time.
Models can be run from other companies. Some cases, this exclusivity that we saw early in the AI age, you know a lot of folks think that's just going to going to fall by the wayside as, you know, more people want more ways to access these models, and some of the business who were inngements change.
It's almost the inevitable commoditization. Briefly, Matt, when do you think we'll start to hear more significant data points? Is the amount that they commit?
No, I'm not sure that what we were told that this opening our funderrating is a nice to have, not any media need to have. So it could be some time yet before this stuff. I'll get signed and see you.
Bloomberg's Matt Day with the reporting on Amazon looking at investing in open ai.
Thank you now.
Coming up, rising memory prices are fueling investor concerns, particularly for Apple down seven tens, eight tens four percent even after strong sales and yeah, a significant earning speed. We're going to go back to that story halftime. This is Bloomberg Tech.
Welcome back to Bloomberg Tech this Friday, the markets digest President Trump's FED chair nomination. Kevin wash Bloomberg TV Markets correspondent Noram Melinda joins us with the breakdown. You talk tech, but you also talk well other rs assets up to you today.
Absolutely, So we really are seeing a reaction in the market today, Caroline, especially as people are really trying to digest what's going on after we are seeing that Kevin Walsh will potentially be the FED chair. Of course Trump talking about this on truth Social so we are seeing a reaction across the market. So I'm looking at the SMP five hundred down for its third straight day. We
see it's currently sliding by about point five percent. But what's also interesting is that I'm seeing consumer staples, a consumer discretionary as some of the best performing areas in the.
S and P five hundred.
But what's on the downside right now is materials and information technology. So as we're continuing to keep our eyes on this tech space, we are seeing them taking a bit of a beating today, of course for various reasons that are also outside of that. That's what I'm hearing from my sources. But of course we're really keeping our eye on to our treasury yields, Caroline, I've got my
eyes on the policy sense of two years. Of course, we're seeing this sitting around three point five percent when we look at that treasury yield there, but the ten years sitting around four point two percent. So we are seeing a bit of a reaction as we look at bond the bond market, and as we're seeing a bit of a mixed picture there. But crypto, that's really an area that I've been keeping my eye on because it
tends to be a speculative space right now. If we look at bitcoin, of course we've been seeing a bit of a breather there, but as we look at so many action that we've been seeing in this space more broadly, I mean, we see that bitcoin is trading near a two month low, especially if we continue to see the slide a lot of outflows coming out of the ETF that we see in the bitcoin space, and that's only adding to the deepening exposure that we're seeing today as
people are really trading off of that speculatives area, as we're really digesting what's going on with this new FED.
Chair Blueboks Norm Melnda with the big take on the markets post that FED news.
Start your stopwatches.
I've got to do all the other tech earnings and news that we haven't got to yet. I guess start with Verizon big gain in the wireless business subscribe account. That stock is actually on track for its best days since two thousand and eight. But they threw in a twenty five billion dollar share buy back, which is a sweetener.
The market's like so far. Interesting like it.
It met estimates easily and gave a forecast revenue for the year that again was completely in line with expectations and had been higher. Then Truist comes out with a note basically saying that full year revenue guidance is a very high bar to clear and they don't think they'll do it. And now the stock's down five percent. Let's go to the world of hardware. SanDisk has taken its rally now to one thousand, seven hundred and eighty percent.
It is up thirteen percent after earnings which absolutely smashed it.
Memory prices.
This is a key name in nand although it's kind of the runt of the litter in the memory names that are out there, it's spun out from Western Digital.
Of course.
But you know, we know the story scarcity of memory. This is a fabless name. Kaksia is there is their fab out of Japan, right, the Toshiba spin off. And how is that impacting Apple? Well, Apple is down six cent to four percent. Absolutely smashed it. iPhone smashed it Outlook smashed it. We're worried about memory prices.
Over to you one minute eight seconds. Then stop watching. That was too long.
Sorry it was lovely. Nabrilla profol can go even deeper on Apple, IDC Scenior Research director and Nibrilla.
They did slash it.
Extraordinary growth, particularly in China, but their anxiety over rules should it.
You know, it's interesting like to me that even after such an amazing quarter and such you know, fantastic beats. I mean, I have analysts like calling me, your clients like just pretty much scratching their head, right because even the street analysts like they had already baked in a great quarter in their estimates, and Apple still blew them out of the park. So despite all that, you would
think everyone would just be celebrating. But you know, of course, I mean everyone's concerned about the road ahead.
Right.
They did great now, but what's going to happen, especially with the memory crisis and crunch, and all firms and analysts estimating the market is going to go down, So everyone really wants to know is Apple prepared for the year ahead. So just an IDC data, we are forecasting in November, we have forecasted at one percent drop at twenty sixth, but now because of this memory crisis become worse, we're looking at down to five percent as a smartphone market.
So I think it's a valid question, right the anxiety that how's Apple preparing? And they also didn't address their strategy, even though now I think they're a much better position to do so with a recent partnership with Google.
So I understand I can play both sides.
I can play both sides. In terms of the soccer, iss run up three point three percent this week, so maybe there's just a little bit of profit taking as well in the MILA. But our guests at the top of the hour, Richard Kramer over at was sort of outlining that if anyone's going to win in this scenario or have an outsized advantage, it's Apple because of the control it has over its supply chain. Is that true in this day and age of AI where TSMC Sunny
isn't totally reliant on Apple for its revenue flow. It is getting so much more demand put on it from the likes of Nvidia.
I think it's it is, you know, and that's what we've been saying too. That's a fair assessment with your earlier guests.
And if you look at the.
Smartphone market right especially during this crisis and always worth it was even the pandemic, Apples I don't want to say control, but leverage over the supply chain and their scale, you know, there's they're certainly getting longer contracts and better pricing, so they're able to navigate the situation, and they're in
a better position because they're a premium player. And also, on top of you know, having larger leverage in terms of the supply chain and their scale, they're also focusing on their premium segment and therefore their phones have larger margins. So that's what we've been saying that premium players such as Apple and cmsung are more insulated from the crisis because they have larger margins and greater scale, and therefore they can hopefully get better memory and at better prices.
So it's really the low end Android segment of.
The market, the players such as you know, chow Me, Vivo, et cetera, especially transient that are going to feel that crunch the most.
So absolutely, I would agree with that assessment.
I actually misspoke a little bit earlier. I'm going to correct myself. I said that the I phone revenues came in about four billion dollars above consensus.
They didn't.
They came in almost seven billion dollars above consensus, but four billion above the absolute high essiments. And of course we don't get units anymore, right, handset units. But you know what our previous guests also said is their supply constrained, right, they left money on the table a lack of handsets. Have you been able to model the success of this iPhone seventeen and how well it sort of flew out the store and online?
Absolutely, I mean the number of units as you've seen from our most recent data, and you know we're that was still priminary, preliminary, so we're still working on updating, and we're looking at the largest, you know, record breaking year in terms of units as well for Apple and even even especially when you focus in on China, right, they have kept going back in the data to see when I could find a quarter that they did you know that this didn't, that this didn't beat or that
beat this past quarter, But I couldn't known all the way back up to twenty twenty one. And this was the largest border in terms of units and share in Greater in China as well, we're looking at about twenty one percent twenty two percent share, and that's the largest they've had as far as I've gone back in my system in twenty twenty.
So, uh, this is, you know, phenomenal.
And again I think I've heard everyone ask or talk about what has really driven this sale. Was it really something as simple as the orange color? But you know, it's going back to basic the design element. It pays a huge part in consumers deciding to upgrade. Everyone was expecting Apple intelligence to drive the super cycle, but it was really something as simple as design upgrade that you make consumers fly into stores and buy this device. So and off course, on top of that a very heavy
installed base and refreshed cycle. At twenty twenty one, we had looked at a peak growth for Apple strong jump and that's really the users you know, at the prime five year or four year.
Side and be like, if the market's going to full five percent this year, shipments will four five percent this year because of the memory issue. What is the kind of wild card that gives us a different result? Right in the PC market, IDC has this forecast that says we're worried about memory, but actually AIPC could give us a bit of an uplift. Is the same not applicable to the smartphone category quickly.
No, because you know AI has really not been driving the upcake and even in the PC factor, we're working on revising those. We're looking at almost a nine percent declient PCs from our earlier forecast because of this memory crimech So it's going to hit essentially the whole market, but the top players are more installated from the impact.
That was a bit of a headline. We should have you back soon and talk about that. Nobila po Power of IDC, thank you so much. There's been growing concerns around costs linked to AI data centers, but PG and E CEO Patty Poppy, it's not worried, she says. Data center power demand will help fund the company's infrastructure upgrades through higher sales.
Listen to this, Yes, as we grow demand on the grid. We can actually lower the unit cost for every customer, so more kilowatts share.
The use of the grid.
Every killer one you see the hyperscale or a data center owner taking the burden is.
That And that's all about pricing. Someone's going to pay for it. Somebody has to pay for it.
They have to pay for it, but their utilization of the grid actually makes it more affordable for everyone else. I do think this problem is quite simple.
People. There's a lot of talk about does.
Building out data center infrastructure raise costs for everyone? Not when you number one, price it right, and two we haven't grown load on our grid in decades. This new demand actually will fund the rebuilding of an aged infrastructure. We actually need these data centers and their new revenue.
The part that people don't talk about. They talk about the cost to build the infrastructure, They forget about the revenue that comes with that infrastructure, and that revenue then funds the rebuilding of the grid, not only for that location, but more broadly.
This deflationary argument fascinating. Pgn E CEO Patty Poppy Great interview ed now Coming Up investors. They continue to back US startups focused on reshoring, manufacturing, and we're talking to the set of metal parts maker vulcan Forms, fella's latest two hundred and twenty million dollar series C that's next. This is Bloomberg Tech.
Metal parts make of vulcan Forms has closed a two hundred and twenty million dollar funding around led by a CLIPS and seventeen eighty nine Capital. The company, which uses additive manufacturing or three D printing, is part of a growing wave of startups that we talk about a lot on this show aiming to use advances in technology to bring manufacturing back to the United States. Vulcan Form CEO Kevin Casket joins us. Now, Kevin, it's great to have
you here on Bloomberg Tech. You know, in many ways of simple story, but you know it's a big raise. You can talk about what you need the funding for, but also just explain vulcan Forms.
Is this just you being a factory?
It is? It is indeed.
Yeah, vulcan Forms is an advanced metal product manufacturing company. And what we've done over the course of our years is we've developed the highest power three D printing additive system in the world, and then we've coupled that from a supply chain perspective, and kind of minimize the distance metal atoms need to travel in order to become a finished product.
And so the most efficient way.
To make a product is to make only the product that needs to be made, and an additive manufacturing allows for that. And so we've centered our technology platform and
our manufacturing ecosystem around that technology. We've developed and innovated in that space to bring the highest powered, most productive platform to the market, and then we couple that upstream and downstream and consolidate that supply chain, innovate within those process steps, simplify where we can minimizing process steps, and then bring massive scale across large market segments.
So Ken, this is completely in line with some of the central tenets of this administration's plan across a number of domains. Right, what is your relationship like with the Trump administration with commerce?
Right?
Commerce has been a big part of driving some of this activity. Yeah.
Yeah, Our general north star is we're an American advanced manufacturing company and we're very proud of that. So we partner with anyone who has interest in advancing exactly that cause.
And so that's you know, parts of the administration.
That's private equity, that's venture capital, that's that's bankers, that's others. But anyone who's really interested in driving American manufacturing forward and making us globally competitive again. We work with and we're we're very excited about our growth.
Donald Trump Junior, as a partner at seventeen eighty nine Capital, which is now one of the key investors in this particular round, I'm interested in what this money is going to be used for. That For Kevin, you've given us the what you do? What is two million ad to the vision for you?
Yeah, So what that money is allowing us to do is finish the build out of Vulcan one where I am today, to build out Vulcan two, which is up in Newburyport, Massachusetts. So both factory locations are outside of Boston. And then we are actively building on a third factory location that we'd be starting production in July of this year. And then we're in design on a much larger campus type location that will be somewhere in the US.
We can geek out on this show. Luckily production grade metal products by bringing the atoms closer. How are you achieving this, Kevin? What is it that you've done as a breakthrough that makes this three D printing so unique and so quick to be able to provide for local domestic manufacturing.
Yeah, this is a lot leveraging a lot of the learning that I have for my semiconductor days and my time at Tesla and my time at Redwood Materials. If you think about the product delivery in terms of global supply chain, right, there's not much we can do about where metal atoms are deposit in the world, but they're in circulation all over and so what we're doing is where ifying that supply chain and minimizing the distance metal
adams need to travel. We have some customers their metal supply chain is over twenty thousand miles, It goes through nine different countries, and half of the cost of that product is just in moving metal.
It actually doesn't have any value to the product.
So what we're doing is we're consolidating where it makes sense, and then where we see opportunities to innovate and design new technologies, we're doing that, such as in our additive manufacturing.
But then that alone doesn't solve the problem. Kevin Materials, Yeah.
Well, what's the reality here on your exposure to China? Then you know, we just have sixty seconds or less, but you're onshoing and manufacturing. You can't get it to zero right when it comes to China.
That's correct, Yeah, not immediately. There are titanium deposits in the US and there are folks working on that, but there's also a lot of material and circulation and our technology will allow for refining and recycling of that and putting that back into circular supply chain.
And that's why that red word, redwood expertise really comes into play. Kevin Kuska, great to have you on, CEO of Vulcan Forms. Congratulations on the round. Now let's turn a little bit more to politics. California Governor Gavin Newsom spoke with Bloomberg about regulating AI and addressing the wealth gap that some see as being intertwined with tech.
California, as we know, is the first state to lead in terms of doing regulations for frontier models, large language models. We work through that over a two year process. It's become we think, I don't want to overstate it, but Kathy Hokeel mirrored a lot of what we did. She made it our own in New York. In some ways, it may have the tenants of becoming a national model. We take it very seriously, truth, trust, peril, promise, but
I don't see it in binary terms. I'm not an accelerists, nor am I doomer in this respect, And maybe it's because I spend too much time with all of the flavors of perspectives on this, so I can see the contours. But I also know this. We don't know what we don't know, but I do see the need for us to address the issue of anxiety in a deep and profound way. And that's why we've been leading an effort
which we hope to unveil very shortly on UBC. Not universal basic income income and the old construct, but this notion of your universal basic capital. A lot of folks talking about sovereign wealth funds more challenging than it appears to do that. I've been working to try to figure a version of that out. But universally basic capital is important predistribution strategies, not just redistribution strategies, tenants and aspects
for the California economy. Your question that we're trying to shape more on that, We hope in May and June of this year, as we lay out some tracks for resolving some of that anxiety.
That was California Governor Gavin Newsom. And you can check out the full Bloomberg Newsmakers interview on Bloomberg dot com or on YouTube. Now coming up, US law enforcement has been investigating allegations that met to staff can access WhatsApp messages.
More on that next, This is Spomberg Tech.
US law enforcement has been investigating allegations that metastaff can access WhatsApp messages. So, according to interviews and an agent's report, those claims made by former contractors run counter to the company's statements that the chat service is private and it's encrypted. Now, a Meta spokesperson called those claims quote impossible. That's bring in bluem Moost Jake Briiberg, who's been reporting this story.
So where do these impossible claims exactly come from and the data that would show people are reading them as matter?
Thank you for having me.
The claims come from people who did contract work for Meta and were employed by the big management consulting firm Accenture. Now what these people did was what Meta caused content moderation work. If there's a problem with communications over what app or messenger or another platform that gets flagged, These folks, and two of these people told these, you know, really explosive claims to law enforcement.
They claimed that.
They and META staff had unfettered access to the content of what are supposed to be or what META says are encrypted messages.
Jake, this issue, but reading that you're reporting has come up before in twenty twenty four a whistle blow. These are essentially whistleblows, right, but a whistleblower went to the SEC with very similar information. Just explain that.
Part, please, Yeah, that's exactly right.
What we know is there's this law enforcement investigation and there's also an SEC whistleblower complaint. So some people with knowledge of this or knowledge of these claims brought them to the SEC, and that's essentially telling the SEC we
see something wrong here, we think you should investigate. We know the law enforcement agent who worked for the Department of Common also obtained some of that material from the whistleblower complaint, but we don't know exactly what the relationship between those two things is.
The investigative report was dated July twenty twenty five. It's been as active as recently as January, as your reporting says. Why has META been abled us far to say, we can't see what's that message is? What is the technology behind it that makes it encrypted?
Yeah, so Meta describes it's WhatsApp chats as protected by the Signal protocol, which is a sort of encryption that is supposed to be on both ends or to ensure that communications can't be intercepted in transit. They can exist on your phone and on the phone of someone you're communicating with, but the keys to sort of open that up and to decrypt them only live on those devices. And what Meta says is we can't see anything in between because we don't have the keys.
By shape libag, this is a story on the Bloomberg Terminal and on Bloomberg dot com that you really want to read. The US has investigated claims WhatsApp chats aren't private. Terrific reporting that does it carry for this edition of Bloomberg Tech. It's been a week where we've had earnings fed news, a lot of breaking news from.
The Bloomberg team.
But we're kind of still early in this cycle when it comes to earnings.
Just think of what we got next week. We all brace for the alphabets to come. We're still, of course excited about what Amazon's going to deliver. Don't forget to.
Check out our podcast.
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Go back to Ed's reporting on SpaceX, on Tesla, on Xai. It's been an extraordinary week. Have a wonderful weekend. This is Bloomberg Tech.