Nvidia to Invest $3.5 Billion in Chipmaker MediaTek

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1:29Bloomberg Audio Studios. Podcasts, radio, news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's talk about big tech, NVIDIA in particular, because it's investing$3.5 billion in media tech. This is a Taiwanese chip maker, and this agreement broadens a partnership between the two chip designers. It's part of NVIDIA's future, an effort to ensure that the future of AI is built around its hardware platform and standards.

2:10NVIDIA's CEO Jensen Huang spoke with our Ed Ludlow. Here's what he had to say on this particular deal. Well, this is not circular because obviously they do their own business and we do our own business. And MediaTek's already incredibly profitable, incredibly successful. They are the world's best SOC maker. They make more SOCs than any company in the world. It's a great pleasure for us to invest in a technology company in Taiwan. It's a great pleasure for us to invest in MediaTek. This is going to turn out, of course, the investment is grounded on a deep partnership that's going to be multiple years.

2:49That was NVIDIA CEO Jensen Huang speaking earlier with our Ed Ludlow. Let's bring in Mandeep Singh now. He is our global head of tech research here at Bloomberg Intelligence. And Mandeep, I liked how the first thing Jensen Huang said was, this is not circular. It's kind of like he has to make that point out front to everyone because there's so many concerns, maybe accusations that a lot of the investments and deals that NVIDIA makes is kind of goes round and round in this small little ecosystem. Yeah, I mean, and it has had a, you know, an impact on NVIDIA stock. They're not trading like everyone else in terms of earnings of free cash flow multiple.

3:27So everyone right now is critical of their circular financing. But look, in this case, they want to expand the ecosystem. And for a company that's generating over$200 billion in free cash flow, you know, investing$3.5 billion has changed right now in terms of just what they could afford to do. And there are benefits. They did that with Marvell first, now with MediaTek. I mean, essentially anybody who is making an accelerator chip right now, Nvidia is saying, we provide the networking technology that can help you scale up that chip into a much bigger kind of entity that can run these large inference workloads that every large hyperscaler is doing.

4:14So from that standpoint, interoperability is a good thing, whether it's Google TPUs or their own chips, and that's why they are going to all these suppliers here. So real quick, just where is the market these days? When you talk to institutional investors, where is the market in terms of its view of these circular deals? Is it like it is what it is, we got to deal with it, or it's a problem, I'm staying away? What's the market thinking these days? I mean, NVIDIA has just guided to over$650 billion in annual revenue by next calendar year. So think of the size of this market. Just one company, which still has, you know, almost 80 % share in that accelerator chip space, is guiding to$650 billion.

5:01Then you've got Google TPUs and AMD, and you combine everything, you come up with at least an$800 billion plus market that is growing 70%. That's what NVIDIA said. And it would have grown faster if they had more supply. So that's what I think everyone is focused on is at the end of the day, there could be some pull forward because of this circular financing, because Nvidia is giving them the money. But in the end, this is still a very large market with a very high growth rate. And I think everyone wants to cater to that market. OK, so as much as it might look like NVIDIA is dominating everything with this, with the deal making within its ecosystem, it's actually there's a lot of room for other companies to come in.

5:48Having said that, NVIDIA's investment with MediaTek, who does that hurt? What companies are kind of left out as a result of this? Not left out, but Google was planning to ramp up beyond Broadcom with MediaTek. And so this is kind of front running Google to say, hey, Google, we will make sure we lock every capacity that's out there, whether it's a TSMC or with MediaTek or any provider. And I think this is NVIDIA flexing its balance sheet to say we can lock in any supplier that's out there that could help Google to ramp up capacity. Stay with us. More from Bloomberg Intelligence coming up after this.

6:30looking for more investing options meet SIBO the exchange that pioneered options trading with exclusive trading products like VIX and SPX options SIBO can help you trade in any market environment there are risks associated with SIBO company products review the disclosures and disclaimers at SIBO.com slash us underscore disclaimers some people treat chat GPT like some kind of smart search engine and some use it to get work done chat GPT work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work.

7:04It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at chatGPT.com by selecting work mode, available on Plus and Pro plans. You already know how AI is changing how everyday work gets done, how much ground you can cover, and how fast a team can scale. To stay ahead, you need the tools that give you a competitive advantage, built for this new era.

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8:33You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Anthropic is going to be the big IPO that everyone's waiting for sometime in the fall. We're thinking September, we're thinking October. That's what Bailey Lipschultz has told us. He is our senior equities reporter. He covers the capital markets and he joins us now on the upcoming IPO. So we're still thinking September, October? Still thinking September, October, but if you just understand how IPOs work, for the company to price and debut in September, it needs to publicly be on file by the Tuesday after Labor Day.

9:20So that's like kind of a best case scenario. If we believe our understanding when we talk to bankers and people around this deal to be true, they still haven't finalized their revolving credit facility. That's a big step. Bringing the other banks outside of the big four that we've broken a lot of news around under the tent is a big step. And they also have to have an analyst day so the analysts can model out what they're expecting with Anthropic when, you know, you're at Goldman Sachs. If you call up your sales desk and say, hey, I want to talk to the analyst, he has to have a model to be able to share.

9:47So if you put all of those kind of pieces into formation, you look at it and say the fastest probably is Thursday or Friday. But in reality, they've been kind of dragging their heels with piecing together this revolving credit facility. But once that takes place, it should move pretty darn quickly. Is there going to be a crowding out effect for other deals, do you think? Good question. I mean, it's going to take all the oxygen and including a lot of the dollars out of the marketplace. How's the street kind of thinking about this? because presumably after Labor Day, there's a lot of companies who will want to go public.

10:18Yeah, no, and we've already seen a few that have flipped publicly. So smaller, lesser known deals, Agreco, Covault Power, obviously they're both private equity. They're both kind of playing the AI angle. But the big thing is if you're trying to schedule a meeting with a long only, or if you're trying to schedule a meeting with the Sovereign Wealth Fund, these aren't huge teams. They're not the Millennium IPO pods that are really playing all of these deals. So I've talked to some sponsors, I've talked to some bankers, and that's kind of been consternation. When you look at SpaceX, which we saw back in June, we crunched the numbers, the 14 notable deals to go public in the month before SpaceX.

10:53So kind of racing to hit that pre-SpaceX window. Weighted average loss is almost 10 % from the offer price. You're supposed to buy IPOs to make money, not lose money. So when you look at the calendar, we have seen companies flip public. We expect some to flip public this week. That should open the opportunity to beat Anthropic out the door. But you don't want to be on the road at the same time. You don't want to be calling Wellington asking for them to take time to talk to your company if Dario is trying to make a visit. Yeah, they'll be like, we'll get back to you. Exactly. Let's talk about another company, which a couple of years ago was a big, big deal for young people.

11:27Shein, kind of like fast fashion. Shein Global Holdings, the shares fell as much as 14 percent in Hong Kong gray market trading. This is before the stock makes its debut in Hong Kong, right? It'll make its debut tomorrow. And again, this is a company that sold almost$2 billion worth of shares in the IPO. Market cap's$26 billion. You mentioned just a few years ago, 2022, they raised a private round around$100 billion. So that is a huge drop off. When you talk to investors who met with the company, the critique is I'm paying a similar multiple for a Zara or an H &M that I'm paying for a company that hasn't seen growth, that has a lot of political uncertainty and a lot of headwinds.

12:07They tried there were reports that they wanted to go public in the U.S., then London. Now they're listing in Hong Kong. There's just so much uncertainty around the company. And again, it'll be interesting to see when we see that formal trading. But we've been really using over the last few weeks and months this gray market to better inform what's going to happen actually on exchange. And even if you just go one to one or even half two to one, you're still saying this is going to be something that trades down pretty sharply. So just real quick, 30 seconds. Are we expecting a flood of deals to be filed or hit the road in the next several weeks?

12:39Definitely. We expect potentially a couple this week. And then I think after Labor Day, you'll see people back in the seats. You'll see filings being put public. You'll see companies starting those formal roadshows. And we should expect a pretty darn packed September into October. Again, though, we do have a live September meeting for the Fed. So that has a bit of a concern for some of these bankers. And then obviously all eyes will shortly after pivot to the election in the midterms and what that does or doesn't mean for risk. So I'm just looking at Potsbull tickers for anthropic. ANTH is already taken by Enthera Pharmaceuticals.

13:12So what? ANTR? No, like you still have to have the like the anthropic part of it in the ticker. Do we have any idea what they're going to use as their ticker? No, that's a good question, though. All right. I'm sure you could probably bet on it on Calci. Oh, I'm sure. There's a market for that. Absolutely. There's a market for everything. Stay with us. More from Bloomberg Intelligence coming up after this.

13:58and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at chatgpt.com by selecting Work Mode, available on Plus and Pro plans. You already know how AI is changing how everyday work gets done, how much ground you can cover, and how fast a team can scale. To stay ahead, you need the tools that give you a competitive advantage built for this new era. Welcome to Agentic Revenue. Adio is the CRM for this world. It meets you where you work, compounds every customer signal into context, then acts on it across your pipeline to let you move it on match speed and scale.

14:40With agents and automations for every job in revenue, Adio orchestrates your work around the clock. Built to handle the scale of your workloads, extensible with API and MCP, and with the infrastructure to keep up with your most ambitious agents. Loved by high-growth startups like Granola, Modal, and Etched, Adio runs the work behind every win. That's Adio, the agentic CRM, the intelligent system that never sleeps. Picks up leads at 2 a.m., catches renewals before they slip. Hands you the answer before you ask. Try Adio free at adio.com slash iHeart. That's adio.com slash iHeart.

15:23Every sale comes down to a single second. The one between buy now and maybe later. PayPal is built to help your business win that moment. With a checkout experience that feels certain, reliable, and familiar. With a global two-sided network and hundreds of millions of buyers who already know us. All to keep you in control however buying happens next. New markets. New AI-powered selling services. A whole new agentic era where you decide how your business will show up and stand up. PayPal is built to help your business come out ahead. We're built for payments, built for growth, built for agentic.

16:08PayPal Open, built for all business. Visit paypalopen.com to get started. That's paypalopen.com. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. It's Monday, which means it's Merger Monday, which means a pharmaceutical company is out there buying another health care pharmaceutical slash biotech company. And today it's Eli Lilly buying Merida Biosciences,$2.88 billion in cash. Michelle Cortez joins us. She's a senior editor for Global Business for Bloomberg News.

16:54She's based down there in D.C. Michelle, talk to us about Eli Lilly and Merida Biosciences. What's going on here? Well, Lilly has been making a bet on this particular space on immunology products for the last several years. It does have a number of products here as well. But the bigger story is that Lilly is looking to actually put some of this power that it's getting from selling diabetes shots and weight loss shots that have become so ubiquitous in the United States and the rest of the world. They're trying to put that to use so that when they do eventually lose some of that protection, some of that patent protection, they'll be able to have future income streams.

17:34It's hard to look at now because they do make so much money from those. But immunology is a huge and growing area, and that's one of the areas where Lilly is really staking its claim. Michelle, I go to the BUYP buyer profile or intent profile page on the Bloomberg Terminal, and Lilly has made a number of acquisitions in recent weeks and months. Merida is just the latest for$2.9 billion. But in August, there are two purchases with some other companies, Indupro and Amplifika Holdings. In July, there was Ratio Therapeutics. Do any of these get the attention of regulators? These acquisitions aren't really getting the attentions of regulators.

18:15It's getting a lot of attention from investors. Lilly is really taking a very different approach. They're buying things at a very early stage. It's a great question, actually. I don't know if they're somehow hovering up an awful lot of early stage products in the same category so that they could be kind of cornering the market on some new technology that's just emerging. It's so early what they're doing, though. I think that it's probably unlikely and others would follow quickly along. It's interesting, all of those things that you're citing, the numbers, they've told us that they look at 10 different acquisitions every single week.

18:54And so they're pulling the trigger a lot, but they're pulling it at a very low rate, right? all of those ones you're talking about. I think the biggest deal that Lily has ever done is sub $8 billion. You know, like it is, it is comparatively to the size of the company. It's very small potatoes. They are just chucking a lot of potatoes in all honesty. It's interesting. Well, I've been in Bloomberg 17 years and I just learned another function today. The BYP function. Very cool. I like that. Michelle, What does Eli Lilly prefer to do? Do they prefer to develop stuff in their lab or just go out and buy it, like with this deal?

19:35Right. Well, I mean, it's got to be a hard decision, right? Lilly paid the price of this a long time ago with Prozac. Of course, they were dominant in that particular space. And then when they lost the patent protection on Prozac, they really had to scramble. And then the GLP-1s, they did that themselves. Like this is a huge market. Obviously, they weren't first movers. That was No Bone Nor Disc. But they developed their weight loss and obesity drugs in-house. And they have really reaped the benefits there. And they want to do that again. And the problem is that you just can't be an expert everywhere.

20:12So they're bringing in stuff early stage. They're trying to develop it in-house and then create it long-term. We'll see what happens. A lot of other companies in this particular situation, when they've had huge products that are losing patent protection, they go out and do, you know, 25 billion, 30 billion, 50 billion. I mean, not a lot because there's not a lot of companies that can pony up that kind of money. But we do see massive M &A. They're doing massive numbers in terms of deals, not massive size of the deals themselves. I'm fascinated by the fact that Eli Lilly is kind of scouring for deals on such a frequent basis.

20:50And yes, pulls the trigger on a couple of them, but doesn't necessarily take a bite out of all of them. What does that mean in terms of their willing? I mean, do they have like a goal of how many companies or investments they want to make, you know, that they feel that they need to execute on? I don't think that they have a number that they need to execute on at this point. And to be fair, they don't have an awful lot of pressure at the moment, right? The patents that they have on these GLP-1 drugs, the shots, they have those for at least another decade. So that's not going to be hit too hard.

21:27And they are innovating in that particular space. Like we see some pills and whatnot that are coming along, even more effective, more potent medicines. They will face a little bit of pressure because Novoin or Discs drugs are older and they are coming off patent. And but Lily's to this point have been a little bit more effective. So we'll see if that creates pressure. But it won't be, I think, for another, you know, five to eight years that Lily will actually start having to show how they're going to replace this medicine. You only have to look at Pfizer and the struggles that they've had post pandemic, right, when they've lost their COVID vaccines and their COVID treatments.

22:03They just do not want to do that. Stay with us. More from Bloomberg Intelligence coming up after this. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful.

22:41Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro plans. You already know how AI is changing how everyday work gets done, how much ground you can cover, and how fast a team can scale. To stay ahead, you need the tools that give you a competitive advantage, built for this new era. Welcome to Agentic Revenue. Adio is the CRM for this world. It meets you where you work, compounds every customer signal into context, then acts on it across your pipeline to let you move at unmatched speed and scale. With agents and automations for every job in revenue, Adio orchestrates your work around the clock.

23:21Built to handle the scale of your workloads, extensible with API and MCP, and with the infrastructure to keep up with your most ambitious agents. Loved by high-growth startups like Granola, Modal, and Etched, Adio runs the work behind every win. That's Adio, the agentic CRM, the intelligent system that never sleeps. Picks up leads at 2 a.m., catches renewals before they slip, hands you the answer before you ask. Try Adio free at adio.com slash iHeart. That's adio.com slash iHeart.

23:59Every sale comes down to a single second. The one between buy now and maybe later. PayPal is built to help your business win that moment. With a checkout experience that feels certain, reliable and familiar. With a global two-sided network and hundreds of millions of buyers who already know us. All to keep you in control however buying happens next. New markets. New AI-powered selling services. A whole new agentic era where you decide how your business will show up and stand up. PayPal is built to help your business come out ahead. We're built for payments, built for growth, built for agentic.

24:44PayPal Open, built for all business. Visit paypalopen.com to get started. That's paypalopen.com.

24:56You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. Merger Monday, full force here today. KKR, our friends over there, they are selling USI insurance services to Aon for$17 billion. And KKR is set to reap a$3.3 billion windfall for the deal. Pretty good for our friends over there. Matt Palazzola joins us here, senior analyst. He covers the property and casualty insurance space. Talk to us about what Aon is buying here for$17 billion.