Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive from coast to coast with Caroline Hide in New York and ever though in San Francisco.
This is Bloomberg Tech coming up in video.
Becomes the first company in history to have reached a four trillion dollar market cap, plus a new record for a private giant two SpaceX is, and discussions to sell shares that would value the company at four hundred billion dollars. And Apple thinks it's too big to tariff now. That's according to White House Trade counselor Petere Navarro. This is wider trade questions remain, But first we check in on these markets, which, as she managed to shrug off a
lot of that trade anxiety. On the day in the NASTAC up to ten percent. We were trading in excess of five ten percent higher, led by key names such as in video. Let's just dig into what's happenings. We await big bond auctions in the United States. We try to digest what's happening in terms of trade. I am seeing a four trillion dollar market capitalization for the first time in history. We touch it, we pull back down a little bit, but in video is very close to
it as we stand out. And this despite the world's biggest market cap erosion back in February after the deep Seak anxiety, they pull back and they're up twenty percent so far in twenty twenty five.
Move on, though, and have.
A look what's happening with Apple, because from a points perspective, it is the big drag lower on the major benchmarks today Apple Office, you'll see by more than a percentage point. This is we hear from Peter Navarro, of course, who whispers closely in trumps hera around trade that he thinks that Apple sees itself as too big to tariff, but they are moving.
Fast to change this.
Nevertheless, the anxiety remains around Apple and the exposure to certain trade tariffs still to be decided and announce Bloomberg's balance of power. Host Kayleie Lyons has more. We heard from Peter Navarro, who is on another network earlier today. But bring us up to speed, which is where we stand in terms of the new deadline of August first.
Well, President Trump suggests that deadline actually isn't new, Caroline. He said yesterday that it's always been August first, though we thought today July ninth initially was the trade deadline that at least countries were facing in order to make trade deals with the United States. Obviously that has been punted back a few weeks. The President, in addition to tariffs on countries, is still teasing further sectoral tariffs that could affect companies like Apple when it comes to things
like semiconductors, for example. And then there's copper, which he surprisingly announced yesterday. Not necessarily, the tariffs itself were surprising because a Section two thirty two investigation had been opened into copper, but the timing and the scale of the
tariff were what caught us a bit aback. Fifty percent in the Commerce Secretary Howard Lutnix says, that could be effective at the end of July or also on August first, and you think about a commodity like copper, what that could do to supply and demand dynamics, Knowing right now the US doesn't have adequate supply to meet the growing demand for copper because of the role it plays in things like, for example, powering artificial intelligence, or rather the
data centers that do that work in the facilities that generate the power for those data centers, the actual infrastructure to get that power to data centers, the construction of data centers that require it for things like cooling systems or their circuit boards. All of that requires copper, and copper could either be harder to come by or potentially more expensive when these tariffs go into effect.
So that obviously is.
One area of the market that has been roiled by tariff news in recent days, and we're waiting potentially for more tariff news. Caroline. The President posted on true Social overnight that this morning he would be announcing seven countries in regard to trade.
Assumably we assume what would.
Be letters like we saw earlier this week when fourteen countries had tariff rates essentially set for them that will take effect on August first. No news yet on this front, but he did say seven will come this morning, with additional letters to come later this afternoon, so we'll be on watch for those essentially all day here in Washington.
The weaving of politics and technology expertly done, Thank you, Kayley Lines. Now, let's just admit that talk of tariffs are probably going to be consuming much of.
The conversation over the annual Allen and co retreat in Sun Valley.
But so two, there's a competition in AI when companies like Meta actively recruiting top talent from across the industry, including from Open Ai.
Now.
Despite that, talent war CEO Sam Altman says he remains confident in this team.
I think we have an incredible I mean, obviously an incredibly talented team, and I think they really love what they're doing.
Obviously some people have got a different places.
There's a lot of excitement I guess we could say in the industry, but.
No, I think we still find joining us now is our very own ed Ludlow in Sunny Sun Valley, Idaho. So thus far, no awkward meeting between Altman and zuck has been witnessed, right.
No, people I've spoken to haven't witnessed one, and we haven't actually seen Zuckerberg arrive yet. But that was what Sam Altman said because he was asked. You know, his expectation is that he will see Mark's Uckerberg and that he's looking forward to it.
You know.
He kind of elaborated on what he discussed on the podcast with his brother a few weeks back, which is he feels the strategy on talent is to be mission oriented, to have the great research lab and a great company. It was kind of a reference to that quote that he had about being mission driven missionaries not mercenaries. But again we're waiting for it to happen. I do know that it's a big point of focus this year here at Anal.
And coch Well.
A big talent question has just arisen as well, a movement of Linday Acarino out of x she's posting on the social media platform saying she's stepping down as the CEO.
ED what do you make of it?
Yeah, I mean in the post she's talking about the turnaround job that she's done without sort of giving any specific metrics that lowered down. There's a reference to Xai, right, and it's really important to remember that post March, when x and Xai essentially merged under Xai Holdings, that the structure of that company changed.
There's a lot of.
Emphasis on how how x the social platform provides a mote for Xai, the developer of large language models and generative AI tools. But Elon Musk, this is the latest person in his orbit to step down or leave. You'll remember reporting about Omi Dafshar leaving Tesla, other senior executives in other places. So very interesting to see what happens big picture with x and where it fits in alongside XAI rather than just being an ad base social platform.
And let's talk about orbits and Elon Musk a bit more, because you have a great scoop out on SpaceX working with colleagues talking about how it's going to be perhaps a record setting valuation of a private company.
So SpaceX does tend to do a secondary or tender every six months, and they use this mechanism where it's concurrent with a very small primary in other words, they sell very small number of new shares to set the price and the valuation. And what we're hearing from sources is that that valuation is now above four hundred billion dollars and it's astonishing, right, like it's a milestone, most
valuable private startup. But you know it's also in the backdrop of Elon Musk and the President of the United States. SpaceX relies heavily on contracts from the US government defense apparatus, but it also dominates commercial payload to orbit, and that valuation continues to climb with a really heavy emphasis on starlink.
A big part of it as well, of course, is about employee liquidity and talent, because there are people that worked at SpaceX for a really long time and stock is a big part of comp Loads of people watching this show will know that. But it continues to go up, and that's super interesting.
It is still validation in Elon Inc. It feels at this moment. But what everyone's going to be talking about where you sit is also a bit of M and A and a healthy amount potentially going on in the media landscape.
Talk to us about Ane, Yeah.
I mean, this is the history of all and Cohen, Sun Valley, right, TMT and M and A. And the news that we've had in the last twenty four hours is that A and E, which is the joint venture between Disney and Hurst, is available for sale. That's kind of like the cable channels, including History Channel, shout out History channels to.
Those that watch it.
Bob Iger walked past and we asked him, can we talk a little bit about A and E? And he said, I'm not going to be talking about that right now, but it is some property up for grabs. And then you have Warner Brothers Discovery that's on a path to split between a pure place streaming business and a pure place studio business. And we did catch up with David Zaslov who said, like, look, we're on track. There are
no approvals needed. We aren't ready to talk about the debt side of this, but all of that indicates that in this space some stuff might happen, and I think that's what people are going to be talking about a lot in in amongst all of the seminars and coffee stops in the next few days, a.
History lesson on the History Channel and the history of Allen co Ed Lulow out in Idaho.
Love catching ups soon.
Meanwhile, let's dive into all of this with Scott Lanner from Horizon Investments, who, of course is taking a temperature gauge of the markets right now. And Scott, we're looking at maybe a little bit of em and a coming to bear. We're seeing phenomenal valuations on the public market with a new four trillion dollar company if we can retain it back for Nvidia and that four hundred billion dollar private valuation for SpaceX.
Can we sustain these sorts of valuations?
Scott, Hey, Caroline, you know, like long as a short yes, I think we can. And the reason why we probably can is because these companies are growing into the valuations that the market is placing upon them. This is not like, you know, kind of not not like the nineties where where those companies really sort of got ahead of themselves there weren't making enough money to justify the valuations ultimately.
But these you know, this, this you know, this generation's Internet, this generations tech companies you know have have ros in the thirties and and you know that is a very sustainable kind of valuation metric that we can that we can use to say, yeah, this is this is pretty sustainable right now like these this is this is we're not multatory anywhere close to it.
I mean, return on equity looking still healthy and.
Not too eye watering, Scott.
Will that be vindicated in the earning season that we're about to get. Will Microsoft for some of these particular the hyperscalers be able to co to the spending that drives in video yet further higher?
Yeah, that is obviously the trillion dollar question, Joe. Do we get continued growth and continued upward pressure on those ro and kind of kind of metrics you get the ro expansion by by having additional profitability, additional market, additional margin expansion, and just and just overall is just better
accution on the business side. And and if these companies can continue to do that, then there's there's no reason why we can't be substantially higher in a year from now in many of these companies than we are right now. Our expectation is that that's going to continue. There's no reason why it really shouldn't. At this point. We are still early stages of the AI revolution, and that is our expectation currently.
I mean, I guess the extraordinary matter of all of this is, of course we saw the biggest sell off ever in a market capitalization of Nvideo just in February because of the worry of deep Seed. But we also have the tariff anxiety that just doesn't seem to impede its valuation. Is that something that could knock off valuations or do you think we're getting numbed to tariffs?
We're definitely getting numb.
I mean, look that the market is not trading like it used to in April on based on the tariff headlines. You see, there's just sort of a diminished return towards towards the shock the mark is able to absorb with these because now we sort of get we think we
understand what what the playbook looks like. Playbook looks like, you know, you know, talk tough and then eventually find some way to get a deal as acceptable to everybody, and that if that that continues to pace, then that there's no reason why, you know, why the market can't
sort of sustain these types of levels. But you know that that you know that getting getting comfortable with the way that that the terroifts are going to end up going and figuring out the market frankly is starting to figure out that there's not really an alternative still to to to Nvidian and some of those ships. Despite this, there's does wite some of the deep seat stuff and that's why we've recaptured, you know, these all time highs and valuations.
It does seem to be a story of AI winners and then the laggards, and we're talking tough. Has really got hard today is on Apple once again, Peter Navarro calling it out, saying they think they're too big to tariff. Are we just going to see more money pile into the infrastructure, air or what point are we going to start to see companies winning out with the application of AI, which thus far Apple doesn't seem to.
Be on top of.
Yeah, we think that's probably a twenty twenty, like late
twenty twenty by early twenty sixth story. You know, as we move from the you know, the makers of the stuff to the users of the stuff and that and that's probably gonna be the most important and that's being called to make as we as we come into next year, is like figuring out which companies and which sectors are actually able to use the AI technology which is amazing to increase profit margins, to increase productivity and and that you know, that's we're spending quite a lot of time
on that on that here at Horizon, and it's it's something that we're actually pretty excited about. But you know, the the focus on the intense focus we've had on the infrastructure side try not can go away. It's you know, it's not it can be diminished, but it's kind of broughten out towards towards more more towards those users and in some of the ultimate winners in the space, which which are always the users of the technology rather than the makers of the technology.
I mean, I know you say it's still early days, but can you give us an inkling of where you're getting most excited about.
Is it a healthcare space, is it elsewhere?
Healthcare is definitely one of the top of the mind in terms of the people that can use this to just really speed up the drug development is like an obvious application for some of these things. I Mean, the exciting thing, Caroline, I think is we don't really know what that's what's around the corner. I'm not smart to figure out like what the next shoe drop is and like which which companies and sectors are you're really going to take, especially the agenic AI and into the ends
of the next level. And so you know, we are spending a fair amount time kind of figure that stuff out right now, but I don't know what I don't know.
And that's actually one of.
Some of the most exciting parts about this is you know, really have to stay front footed and do and do the research and just listen to what you're what you're seeing.
And Scott, therefore, do you take money out of prior winners to allocate to the future ones or are you taking out of just lagging industry groups that you just don't want to be allocated to.
At the moment.
I think it's more it's more, you know, you probably do take some out of the infrastructure plas you you take some out of the prior winners. You know, some have the videos of the world. And but but like as I said earlier, Carolyn, it's more of a broadening play. So you know, I think you actually increase the overall allocation towards AI in your portfolio. But and you're taking out some of you know, some of like in the
the envitees of the world. You're also taking out of like industrials, you're taking out of you know, like utilities, and you're gonna take it out of some of the more borings like staples types of things. You know, you probably just want to allocate out of those types of sectors and just overall increase your breadth you AI in your portfolio.
Scott Lander of Rising Investments, Chief investment Officer, thanks for pushing us forward.
We appreciate it. Coming out, Samsung unveils a slew of new foldable phones. Were on that.
Next, this is Reuberg Tech. It's time now for talking tech and first up. Waimo's first self driving taxis have arrived in New York City, but Ford Autonomous Operations remain pending regulatory approval.
Now.
In the meantime, the company is collecting data across the city the safety drivers behind the wheel as it awaits to begin self driving tests.
Plus, a California.
Lawmaker makes another push to regulate AI in the state. Senator Scott Wiener has introduced a bill that will require companies developing certain AI models to publicly release safety and security protocols. The bill is expected to go before a California Assembly committee later this month. And Samsung unveiled it is the latest smartphones and wearable devices and its annual Unpacked event is announced three new foldable devices, each thinner
lighter than previous iterations. The company also revealed a new line of upgrade A smart watches.
They use Google's Gemina AI.
Now for more on Samsung and plenty elsewhere in consumer tech, mallu Meg's Mark gum And joins us, you haven't had your hands on.
These things, they look pretty good. What do you make of the announcements from Unpacked?
I think these are hugely significant announcements.
What Samsung is trying to do Year is take buldabule's mainstream.
So two main levers they've pulled here.
One they've widened the display so they've made it less narrow. This is an older Samsung foldable right here, and you can see.
How narrow it is.
And if you're used to working on an iPhone or a regular Samsung phone, the narrow form factor makes it quite difficult to you. So they've expanded it so now in the closed state. The new foldable fold this is the two thousand dollars model, feels like a normal candy bar phone that you can then open up to have even more screen real estate. The other thing they've done
is they've released a sub thousand dollars foldable. This is a new version of the Flip that's their vertical phone, and that rice point makes it a lot more compelling and is taking it.
Out of the early adopter price range.
And it's interesting because foldables have been popular amongst the early adopter crowd, some of the tech year crowd, more of the productivity focused crowd, but now Samsung is trying to take it mainstream. And really those were the two levers they needed to pull in order to accomplish that,
So we'll see what happens. Next year, Apple will announce their foldable, which certainly is going to bring a much bigger spotlight to the category, not only for its own product that they're unveiling, but for everyone else who already has foldables on the market.
And mark just spotlight app a little bit more for us because you brought us that news yesterday that a changing of the guards COO is now departing. Perhaps not unexpectedly, it's a blockbuster move.
As one former Apple executive told me, the band is dissolving. Right at some point in the next few years, it's going to be Tim Cook left standing with a whole new executive team around him. These are serious organizational changes happening at Apple. There are more to come, obviously. Jeff Williams was the long time number two at Apple to Cook, but really primary decision maker when it came to product development,
which products Apple should launch, what it shouldn't launch. Really deep in the weeds on expansion for manufacturing into new areas, obviously dealing with tariffs, obviously dealing with their AI struggles.
There's really no sugarcoating it.
This is one of the most significant departures in Apple's history.
Hey ed watches how What's interesting though, is Sabi Khan, who takes the reins, has been there for three decades and has been managing supply chain. But who do we to now mark the new guard that might even one day replace him?
Cook himself well.
On Selby Kahan.
He has been there three decades, is only a few years younger than Jeff Williams. So you're going to see another COO transition in a few years from now. Right, You're going to see a lot of movement on the Apple executive team over the next few years. You've seen a lot over the past few years. We've been talking about this several times. I think we've had conversations about this.
I've written several articles on this. Terms of the next CEO, look no further than John turnas the senior VP of Hardware Engineering at Apple.
We keep all eyes on him. Mark German always ahead of the curve. We appreciate it.
A Rivian back startup that's developing small e these is getting valued at a billion dollars in new investment from Green Oak's capital, and the company called Also Inc. Was spun out of Rivian earlier this year also well, it hasn't revealed specifics, but said it's tech platform will be applicable to e Bike's microcrs and neighborhood evs. Meanwhile, French AI start up Mistral is in talks to raise as much as one billion dollars in equity from several investors,
including Abidabi Fund, mgx Sort, according to sources. For more, we go out to Blue Meg's Mark Bergen, who helped break this story and just focusing on Mistrale here. They've already raised about a billion before in equity, but they're also looking to the debt markets as well.
That's right.
I mean it's a move that we've seen Elon do with Xai. I mean, these are incredibly compute, computational intensive businesses, especially if you're trying to build language models and the kind of keep up with the frontier of Open Ai
and Google. Miestrel has I think tapped the brakes a little bit on that being a direct competitor to open Ai, but they still want to be in this sort of generative AI model game that's very expensive, both as we've talked about a lot on the show, for hiring engineers, and then it's very expensive for these these big data
center projects that they announced earlier this year. So that's why we believe they're actually I'm not raising this equity round, but also seeming the race probably almost half as much in debt.
Wow, and go back to those data center announcements because Abidabi's involved in that too, just tell us about how much this is political in many ways.
I think.
So this is partially We've seen a bilateral agreement coming out a few months back to the UAE in France talking about building the biggest data centers in Europe.
MGX was part of that.
There was a commitment of somewhere between thirty to fifty billion euros in funding for data centers across France. MGX has basically taken a portfolio strategy.
If they go through with this deal.
We've also reported that they're in talks to invest with Inthropic, They've invested in open Ai, they invested in XAI. They are getting behind sort of every major player in this AI race. I believe they're probably gonna do something similar with infrastructure. We do see something similar on the energy and on the chip side as well.
It's interesting because we've had perhaps some pieces so surprisingly within the contracts that assign when you're giving money. As of course you can't be sharing information when you're invested in so many of these startups. But if you're looking at mistrial versus XAI or open AI, where are those niche Because they're not more broad anymore.
Right, they're not more broad and they're not necessarily as commercially successful or building the sort of cutting edge models. I mean, their niche has been and their selling point is sort of we are an open source alternative. We are the sort of sovereign AI where the will come in and kind of build you these AI services that can live in a private cloud.
They're targeting governments.
They've started working on defense in France and Europe in a time when sovereign AI is certainly like a marketing term thrown around a lot, but it is something that's become much more politically critical where countries and companies in Europe are looking to rely on local tech as much as they can.
Is Mestra like the pin up for Europe right now?
I mean, right now they are they're certainly the highest.
This would make them the most valuable. I think they're probably the most valuable.
We don't an evaluation for Wave, which is a self driving company based here in the UK. I think there's been a little bit of wavering enthusiasm for Miestro. I don't think people have been asn't impressed with their models, but there's certainly a lot of energy and certainly a lot of investor money tied up with their success.
M Meg's mart Bergen coming to us from London. We appreciate it.
Welcome back to lu Meg Tech.
Let's take a look at these markets that are very close to record highs. We have the NASAK one hundred currently powering up full tens of percent. We're shaking off some of that trade anxiety and we're seeing.
Some of the key leaders of the pack drivers.
From a points perspective, yes, Apple is lower, particularly worrying about TARIS to them as again today, but let's look at what is really on the points perspective driving us higher.
In video.
We have at one point hit four trillion dollars in market capitalization, never been seen before.
We're up more than two percent, is a record high for the AI.
Darling Amazon also helping contribute from more points perspective. Microsoft two that's got an upgrade, but Amazon doing well at one point three percent.
NASA's Prime Day is in full swing.
We are stretching now over four days this year, up from two in twenty twenty four. That it remains to be seen whether that will entice shoppers and sellers alike. This, of course in the context of rising tariffs and rising prices.
Let's get more on the inside track. Jamal Ghani's with US vice president of Amazon Prime.
And you're really already seeing Jamil Adobe Analytics saying that US retailers drove close to eight billion in online spending on July eighth, up almost ten percent, and single biggest e commerce day so far this year is sent have been good.
Therefore, Yeah, we just started the event yesterday, so it's very early, but we're really pleased by the engagement that we're getting from our customers and our members. Not only is the event twice as long, so four days, as you mentioned, but we're also offering more than double the number of deals that are fifty percent off or more. That's striving engagement across the millions of deals we have in thirty five categories. So we're really pleased. But it's very early, of course.
Why make it four days, and how is that affecting the pace of spending do you.
Think, Well, we listen to our members and they told us they needed more time to shop the millions of.
Deals that we offer across our entire store. This gives them that.
We're also offering new AI tools to get a more personalized, more targeted experience that allows our members to shop both the needs that.
Are on their list but also the wants. And you see that in the data already.
The top categories that our members are engaging with are health and personal care, apparel, beauty, home, kitchen, and really it's stretching the entire entirety of the store and members need time to shop it, and so we've given them double that time needs and wants.
That's an interesting way of putting it.
We've seen a lot of spend galvanizing groceries, for example, in some of the competitors. Is that an error you're feeling you're having to make more inroads in when you show that you can discount in this particular.
Time, you know, grocery and everyday essentials, which is the broader definition we use internally to describe those things that a busy household needs to keep running and you know, deal with all the things that come their way, and we're investing heavily. That's the fastest growing part of our store. And you know, some of the items that are really resonating with our members during prime day already are like down Platinum powerwash, Disphray, something that my household, your household
likely has it under the cupboards. It's also Crest three D white strips, Amazon Basic Triple A batteries. It's these essentials that you need for modern life, but it's also the other end of the spectrum. Beauty is a really exciting part of our store. Medcube has a number of fantastic products on sale. One of the top products so far is their zero core pads.
So you can see just even in.
The data of what members are scooping up in terms of savings. It's stretching from you know, the things you need to do in order to keep life moving all the way to what you would consider more wants as well, things you might have had on your list for a while.
Apparently white Teeth needed to keep life moving. Jimil talk to us about Jenai though, because you just mentioned how that's helping it become more personalized. How's Rufus the shopping assistant doing. How more broadly is alexaplus doing Because I think as Adobe again saying that we're going to see more than three thousand percent increase in the use of Jenai in this particular spending screen.
Yeah, Caroline, you're absolutely right.
We've been investing for years, from the very beginning of Amazon, at the beginning of Amazon Prime, which is celebrating its twentieth anniversary this year, in all forms of AI.
This year, we're bringing Rufus.
As you said, is Rufus is smarter about Prime day. Rufus is smarter about your interests and can respond to natural language queries and bring back those deals that match those interests.
We also have a product called.
Interest where you can go in and with a simple set of statements, you can say, I'd like to remodel my live room in mid century modern. Please show me deals that are less than one hundred dollars, and it will proactively make that into the recommendations you see.
Throughout the store.
We also have shopping guides for those items that are a bit more considered. You know, I'm in the I'm in the shopping mode for a laptop, for my eldest daughter, who's eight, I don't buy a laptop that often, and these AI power shopping guides have been invaluable. And then lastly,
Alexa plus is rolling out. Millions of members have access now and they're using it to check, you know, the timing for Prime Day, but also to get recommendations on deals and to be alerted when something that they've looked at previously is now on sale.
Okay, so you're in the market to how you're eight year old. But what's interesting is Amazon seems to be in the market to learn more young adults. Right That is such a push right now? Why is that the area you want to make in roads?
Well, we recognize that, you know, Prime exists to deliver three things convenience, savings, and entertainment behind one simple membership, and we hold ourselves to the bar of delivering disproportionate value. Everybody today and likely always wants to make a dollar stretch, and for younger customers that's more true than maybe for
most and so we're reinventing our young adult program. Prime for young adults is fifty percent off, but now on top of that, we also are offering an evergreen five percent discount that for Prime Day is ten percent, so our members cannot only avail the great deals across the entire store that we've been talking about, but also add to it ten percent in categories that they really care about, like beauty, apparel, electronics, and so we're really proud of
that program that offering to that key customer segment.
See how much they love the lebron adds to Jimmy ol Ghani. Great to has some time with you Amazon Prime Worldwide. Meanwhile, coming up, we'll dive into how China is building data centers throughout the country's deserts and a bit of fuel Beijing's AI ambitions. As blommeg Tech, China
is betting big on AI. We know this, but in a new Bloomberg investigation, we have found Chinese companies driven to build data centers in some of the most remote regions of the country to fuel Beijing's AI ambitions and looking to buy one hundred and fifteen thousand in video chips to power them. Lumo's Jackie Devolos joins us now for more so. On the edge of the Gobi Desert in modest county called yu Wu, I think has massive AI ambitions what draws them there In particular, why that spot because.
This is in the Shinjiang region and a lot of US know about that region because of the controversy around labor issues, religious persecution. But it's also one of the most energy rich places in China. It's rich in solar, it's rich in wind, and it also has abundant coal energy, which is needed to power this massive AI infrastructure undertaking Caroline.
It is one of the largest that we've seen come out of China, and in many ways it's almost, you know, garnering the same kind of clout as the US is Stargate.
This is a huge undertaking.
Thirty six data centers are planned and seventy percent are expected to be housed within a single compound, seventy percent of that capacity. It is massive when you think about just how much AI compute power China needs to kind of.
Get up to speed to the US.
But of course, the big question coming out of this story is how will they obtain these Nvidia chips one hundred and fifteen thousand to really get that power off the ground.
That's so poignant because we know that China has energy, but it doesn't have the scale needed to create their own semiconductors sophisticated as ones as far as we on done now in Nvidio did weigh in and have been saying that ultimately this isn't what they believe is currently occurring. They say, trying to cobble together a data center from smuggled previous generation products makes no business or engineering sense. So where's this one hundred and fifteen thousand Nvidia chips coming from?
Jackie Well?
Reporters that put together this story really combed through tender documents, investment approvals, and other reporting that really didn't explain this, not in those documents. And perhaps it's for a reason because these are banned chips. China is not supposed to have access to them. Since October of twenty twenty two, these chips have been banned, so it's not clear exactly
how this would occur. But of course one avenue is through smuggling, and even US officials have said that such a smuggling out operation would be too complex, so it is ambitious, but it's not clear just what measures they would need to take. Obviously, the United States has been taking a closer look at other countries where such smuggling
could help China, Thailand and Malaysia being two countries. But this is a major focus for the Trump administration, which has really started to ramp up those efforts to curtail China's ability to get access.
To these steps Caroline sort of a replacement to the AI diffusion rule, Bloomberg's Jackie Devolo's fantastic roundhup.
Thank you.
Now, let's keep discussing how the US can compete with China's growing AI efforts.
But please to Welcome to the show.
Jason Oxman, President and CEO of the Information Technology Industry Council, alongside New America's senior fellow Sam Sachs. And Sam, I start with you, because you've been assessing analyzing Chinese tech policy for decades. In the moment, what do you make of their belief system that they could access in video chips like this?
Would they?
I mean, I know you're about to go out to China for a KEYAI conference, then.
Headed to Shanghai for the World AI Conference at.
The end of the month.
And the reality is both China and the United States are focused on getting the infrastructure necessary to win the so called AI race, and whether it's actually a race is a separate question, but data, energy, computation, and human capital are all critical inputs to this, and massive investment in infrastructure is top of mind for leaders in both countries as they seek to do it.
Now.
The question of chips is also colliding with the tariff battle. Expert controls and the question of whether the Trump administration will loosen its grip on China's access to the advanced technology advanced semiconductors is going to be a key question as these negotiations take place.
Let's therefore, talk about what the executives are wanting at this moment. And Jason, you represent the most innovative companies in the United States, So how do they think about this so called competition with China? Are they thinking that they need to raise and where are our bottlenecks?
More broadly here, it's very real.
And if we go all the way back to the very second day of the Trump administration, you saw a big announcement Project Stargate, as Jackie mentioned, companies like open Ai and Oracle and soft Bank and Vidia investing five hundred billion dollars.
In AI capability.
Here in the United States, it's definitely a race and the primary competitor in that race is China. China has aspirations to compete globally on AI, we need to win the.
Race here in the United States.
So what the technology industry is really looking for is an environment that's conducive to investment in the US. You saw it with Project Stargate. You've seen a lot of other announcements. Apple announcing five hundred billion dollars as an investment in the US, IBM announcing one hundred and fifty billion dollars.
The list goes on.
It's up over two trillion dollars at this point. But there's certainty that's necessary. We got a little bit of that last week with the big beautiful bill passing and restoring the tax incentives for investment in manufacturing, accelerating the incentives for investing, particularly in manufacturing.
And technology in the United States.
The next thing we need is some trade certainty and a move away from tariffs's a trade strategy and into trade agreements so we can expand that investment in the United States as well.
Well.
Sam Way in here on the trade negotiations with China in particular, and whether there will be any wiggle room to be seeing what China ultimately wants is access to certain semiconductors. Will that be a bargaining chip that could be loosened in some way.
So a year ago I was in Beijing and I heard from interlocutors, we will not come to the table. And this was before the tariff battle. This was just regular tensions. We will not really come to the table to work things out with US unless export controls are lifted.
And a year ago that was an impossibility. But when the two sides met in London last month to try to get things back on track, we had the Secretary of Commerce, Howard Lutnik included in the negotiations alongside Treasury Secretary in USTR, which meant export controls are now on the table. The question is how far will they go. In April we saw in Video's H twenty chips put on the export control list. Those were designed to be compliant with China's market, But we don't know will they
lift that, Will the Trump administration lift that? Are they going to go even further and unwind some of the buyer administration controls on advanced semiconductors equipment. We saw loosening on electronic design software just in the last week.
Or so so there's a lot of room to work.
With and the question is what specific tools will be acceptable to the Hawks in the Trump administration when China is eager to get sort of at this issue that has been front and center for them for a long time.
I know this is a hard one for you, Jason, but to single out a few of your members AMD and VIDEO.
They want access still to China.
Do you think that's ever going to be something that they're managing to convince that they can do that safely.
There is a way to balance national security interests that Sam made reference to with the economic interests of American companies. Ninety five percent of the people that live on the planet do not live in the United States, and if we deny American companies access to global markets, we're denying
them the opportunity to really expand economically and succeed. There is a way, and the Trump administration has been moving in this direction to make sure that the Chinese Communist Party doesn't get access to the most sensitive technology for its military purposes. The Biden administration tried this with the AI diffusion rule that you mentioned. They did it in
a very poor way. They restricted access to our allies around their world getting access to American AI technology and semiconductive technology.
That rule has been scrapped. We're moving forward and ensuring.
That we make a legitimate national security approach, not harbor that economic interests as well. In other words, we can't in the name of national security, deny American companies access to the rest of the world.
We can balance it correctly.
We can make sure that the markets are open and accessible, but make sure that the national security interests are protected as well.
Sam Many would say that some of the moves on limiting copper, for example, into the United States is about national security in the longer term to make it more self sufficient, but that takes decades. Just tell us about some of the certainty that's necessary. I think of rare earth elements, rare earth metals so dependent on China. That's a big bargaining chip of China versus the US. But thus father hasn't been this sort of support coming necessary from the administration to allow us.
To mine it more in the United States. That certainty isn't there.
The thing about rare earth that everyone will say is they're not that rare, but they're really dirty, and it will take a long time and do we actually want.
Those industries here.
But certainly I think there's been an emphasis on reducing bottlenecks because these are choke points that can be weaponized against the United States, and Beijing realized that they'd stumbled upon an incredibly important choke point. Looking at where the negotiations stand right now on Earth specifically, you know, when the two sides came back to the table they said we have a deal. I noticed two things from the
Chinese side, specifically on rare earths. One, they agreed that they were going to loosen their controls and speed up approvals, but they're only going to be granting licenses for six months at a time, which means Beijing wants to keep this in their back pocket as leverage. And the second is we've heard that US companies in the process of applying for those approvals have been subject to very invasive
questions from the Chinese government for sensitive business information. So we're not out of the woodwork yet, and I think it's yet to be seen what the Chinese government is willing to give on rare earths.
Very briefly, Jason, the other key bottle necks talent, have we.
Got a hair.
Yeah, So China is racing to deploy that AI talent. The Trump administration just last week announced a new AI education initiative that ITI and a number of our member companies signed onto to develop the homegrown talent that we need. We also need to attract the best and the brightest
from around the world. Most technology companies that we're familiar with were started by first or second generation immigrants, and we need that next generation of AI talent to happen here, to start their companies here, to stay here.
So we need to attract them as students.
And we also need to educate the workforce to make sure that we have the best AI talent here in the United States doing that invention, doing that creating and job descriptions that we want to see out there.
What a great conversation Jason Oxman from the Information Technology Industry Council right here in New York, along with Sam Sachs from New America. It's been wonderful having you both.
Thank you.
META it is investing three and a half billion dollars in eslor Luxotka, purchasing a minority state in the company as it boots his aiglasses ambitions. So all according to sources, some more blue mos Kurt Wagner joins us you help break this story. Basically, they are the maker of ray bands and Oakley's the power the Meta AI story.
That's right.
This is a company that Meta has been partnering with on the product side for several years now. You mentioned the ray ban, Meta glasses, the Oakley glasses that they just announced last month, So this is a company has had a long relationship with and actually this investment has been expected, but now it's final.
And what I think it does is just it ties these two companies.
Together in a more formal way, but it also signals how much Meta continues to believe in this idea.
Of AI glasses as the future.
Right.
I mean this is not a small investment. This is a sign that they are not only building these things, but that they're kind of putting their money where their mouth is here and this is the future for them.
Yeah, they want to profit from the upside as well as they deepen that tie cut. Just pivoting to another AI story, and one is XAI and just looking at x I mean, how do you react to Linda Yacarino saying she no longer going to be CEO.
Yeah, well I was surprised, not because we haven't been talking about this for a while, right, I think everyone's sort of been wondering how long she would last since she took the job two years ago. But I was just at can Lyons in the south of France a few weeks ago, and she was there. She was representing X, she was on stage, she was in meetings with partners and advertisers, and so I kind of thought that she would be around a little a little longer because of that.
But look, this is a job that I've said from the beginning, is incredibly hard, especially when Elon Musk is the owner of this company, because he does not do things that make selling advertising on X an easy proposition, right, So her whole job is to make X seems safe, brand friendly, And when you have you know, Musk out there doing the thing that he tends to do, it.
Is a it is a tough, a tough gig. And so I'm not.
Surprised that, you know, two years in, she's decided.
To move on and thirty seconds.
It's also hard when Grock the chatbod is doing the things it's been doing, anti semitic commentary was what was reported yesterday, but they've got a big update tonight.
They do.
There's a live stream tonight about Grock four. You mentioned that the timing of yesterday when Grok was viewing this really vitriolic stuff of anti Semitism things like that that a lot of people took issue with, and so it'll be interesting to see how they address that if they address that tonight on the live stream. But it works back been that late tonight Pacific time.
Forever busy, bloombos Kote Wagner. Thanks for bringing us the story. Now that does it for this edition of Bloomberg Tech. Do not forget to check.
Out our podcast finding on the terminal as well as online on Apple, Spotify, and iHeart this is Bloomberg Tech.