Broadcom, Apple Expand Custom Chip Partnership

20:27Ed Ludlow:Runway is going global. The AI video company is opening new hubs in London, Tokyo, and Paris with plans to invest nearly$300 million over the next few years as it scales its business and also its AI research. Joining us now is Runway co-founder and CEO, Christabel Valenzuela. So I think there's a clear link here from where your priority markets are and where you're growing fastest and where you've opened up these hubs. Explain that. Yeah, I think it's a version of the same, to be honest. We're growing really fast, of course, in the US. That's our biggest market. But we see natural expansions happening both in Asia.

21:03So a couple months ago, we announced Japan and our office there and our presence there. I've been spending a lot of time in the region and our growth there is consistent. So we want to make sure we have more time and more people just in that region. And more recently, we opened up two European hubs. We announced London, London and Paris that we're announcing today. Both of them are on the heels of just growing the markets and are being close to our customers. Europe is our second largest market and Japan is our third. We're also making inroads in Latin America. So Brazil will start becoming also a hub and, of course, Mexico.

21:40And so for us, it's more about making sure we're close to our customers. We're close to how we're serving them and then talent. Talent these days is broadly everywhere. So we need to be also everywhere to hire the best people we can.

21:52Ed Ludlow:That$300 million commitment, how much of it really is talent, the cost of talent? A big chunk of it is talent, specifically research. As you know, researchers are expensive and talent is expensive. And so people is what makes this company really special. And a lot of it is definitely dedicated towards not only growing our research team, but our go-to-market team. In Japan, it's kind of interesting because we've grown a lot there. And traditionally, everyone will tell you that in Japan, you need to have a commercial team, a business team, just to be able to sell one contract. And that hasn't been the case for us.

22:26We actually have been able to sell into Japanese enterprises and Asia with no commercial presence whatsoever. And so really for us is the ability to double down and make sure we can sell more by having great teams and great people there. And now we're kind of putting time and effort and money into that.

22:42Ed Ludlow:The debate facing, I was going to say Hollywood, but industry at large right now, has been, you know, what will the impact of AI be on content creation? You know, for want of a blanket expression. How much has that shifted, Cristobal, to not whether they should, but how they should use the technology? Well, I think the question of, like, will AI ever be useful in creating content in Hollywood, it was really a question two years ago at the most. I think these days you could assume, and it's fairly common to assume, that every company, every media, every studio is using AI somehow. I mean, we work with all of them.

23:20So we can tell you from the inside that that's actually the case. And so companies are seeing significant impact in their business by using the technology that models themselves to make content you just couldn't do before. And we have countless cases of, I don't know, the BBC using it to create content you just couldn't do before. or studios using it to create storyboards or art directions or edits of things. And so for us, that's kind of like resolved already. You know, Hollywood and media has been all over and has finally fully adopted AI. We now need to grow really outside of that.

23:56Ed Ludlow:On the studio side, the Lionsgate relationship is really interesting, right? That you're co-developing on projects, but they took an equity stake. Correct. Why? But also, is that something you feel like you could replicate with other studios? Yeah, we're replicating it related with other studios. Again, if you're a great technology partner to a lot of studios, what you're bringing to the table is the ability for the studios to create content you couldn't do before. And LiveSgate was one of the first and the most vocal proponents of this. But really, we're working with a lot more studios and companies with similar models.

24:33Some of them don't involve equity at all. It's more about partnerships and our ability to integrate our products into the way they work. And there's so much great AP. There's so much great content out there that needs to be made somehow. And so if you can help them make it, they just want to partner with you. And that's kind of what we've done to make sure that hopefully we'll get to see more interesting stories out there.

24:55Ed Ludlow:Cristobal, just very quickly, where is Runway in its efforts to raise money, need to raise money to fund all of this? uh we've we've raised uh almost like every 10 to 12 months and so we're pretty much probably going to go into that trajectory we closed our series e uh on late last year so december of last year um so hopefully later this year we'll announce something christopher valenzuela runway ceo expanding outside of its top market the u.s to europe and asia through paris london and tokyo thank you very much indeed now coming up is a ai a path to prosperity and jobs chief investment officer Lauren Cassidy of Founders 100 ETF is going to join us to explain why she's optimistic and why in the ETF space there's a way of tracking the founder trade.

25:42Ed Ludlow:Something we talked about in private late stage markets where you make a bet on founders. You can do it in public markets too, she'd argue. This is what markets look like. Nasdaq 100 up one and a half percent, but it's the rebound in chip stocks that's our top story right now. A big part of it, Broadcom's deal with Apple, but there's other things out there. Bitcoin,$62 ,337 per token. It's halftime. I'm in New York City this week. There is a lot going on. Stay with us. This is Bloomberg Tech.

26:18Ed Ludlow:Welcome back to Bloomberg Tech. July 6th, 2026. This is what markets look like. And chips are the big story, really rebounding from a bit of a sell-off last week. There are Lots of reasons why we're going to get into them in a moment. MicroStrategy is down two tenths of a percent. It had been down a lot more. Basically, they're selling$260 million worth of Bitcoin. There's been this financing overhaul at the company because of the volatility in crypto assets. It's one of the most read stories on the Bloomberg. And it accounts somewhat for the trading in Bitcoin today. But all eyes on the SOX, the Philadelphia Semiconductor Index.

26:48Ed Ludlow:Off-session highs, but up around 4%. A big reason why, Broadcom, one of the biggest points gainers. It has extended an agreement with Apple for multiple generations of Apple products on custom silicon, ASICs. But Bloomberg's Mark Gurman, right at the top of the show, you heard it here first. It's all about an AI server chip. So we'll continue covering that as details emerge. It is all about chips today. And markets are arguing that AI is here to stay. AI infrastructure continues to expand. CapEx expected to overtake$1 trillion by 2030. And chips are expected to continue generating value through inference workloads.

27:24Ed Ludlow:Inference will be here for a long time. Chief Investment Officer Lauren Cassidy of Founders 100 ETF is with us on set. And this is part of your argument, right, that we've shifted to the inference phase. The point being, though, the inference phase is going to be here for a really long time. You still see value in the chip stocks for that reason. Yes, a tremendous amount of value. We're going to need chips for decades to come. They'll be used for training up front, but they can be used, to your point, for inference for decades. even the A100 servers that were created back into 2020 are still in use.

28:00And we think these are very long-lived assets.

28:03Ed Ludlow:Just to catch our audience up, the A100, again, an older generation of GPU or accelerator from NVIDIA. Some of the data points that you and your peers look to is the pricing on renting capacity through those older chips is like through the roof. Yes. And the latest generations of chips are really hard to get hold of. Exactly. What does that tell you? Yes, that we are still in the early innings and that we have a long road ahead of us. And it's going to over time create a tremendous amount of prosperity and jobs for our country. We're just going to go through the transition period first, but we're very positive long term.

28:38Ed Ludlow:There are lots of different themes and arguments here. So one of them is we were bound to see a sort of pullback in chip stocks eventually because of the dramatic performance over a longer time horizon. And Morgan Stanley and Mike Wilson are saying, well, actually, we think we'll see some rotation out of chip stocks and into hyperscalers because that's where the sort of AI economy is at. And then there's the idea, well, actually, there's a lot of potential upside. Memory is still tight. SK will list this Friday. Which is the dominant theme? Yes. So actually to extend that, we see a broadening from just not just the chips and the memory names and to the hyperscalers, but also to software names, to security names, observability.

29:20There's all different areas of AI. And we think that we're already seeing some broadening of participation in the tech complex. And we expect that trend to continue this year.

29:31Ed Ludlow:Okay, super interested in you, the firm, and the idea of tracking founders. Yes. On Bloomberg Tech, we have a lot of late-stage VCs that will say, even at that late-growth stage, We're backing companies where the intellectual capital is in the founder. You seem to be saying, like, actually, there's lots of different ways through the ETF market you could do the same. Exactly. So the Founders 100 ETF, ticker FFF, invests in 100 of the 200 largest companies that are founder-led that are listed on the U.S. exchanges. We really care a lot about fundamentals. So we look at strength of the balance sheet, quality of cash flows and earnings, as well as valuation and deciding each quarter the 100 founders that we want to own.

30:17Ed Ludlow:I'm also looking at SpaceX. You have a lot to say on SpaceX. Just to catch the audience up again,$161 a share, essentially. IPO'd at$135, opening trade was$150. What's that experience been like for the last few weeks? Yes. So, you know, as focusing on founders, Elon is one of the greatest founders of our generation. And we were day one buyers of SpaceX at 150 a share. We are very excited about what he's building. Our thesis is really vertical integration. So TerraFab, he's going to have his own chips and memory, not have to wait on Samsung, not face shortages or, you know, volatility in prices if he's providing them for himself.

30:59He's going to have Grok as his LLM. He'll have X as his expert network. So Twitter really provides the insights in real time that he can feed and can add to insights and intelligence. He then has Starlink for the communications globally, interterrestrially over time, and then also SpaceX to build it all in space. over time, we think that he's going to be the low-cost provider of data centers through orbit.

31:30Ed Ludlow:Orbital compute. Maybe a little bit more near term, but what's your five-year outlook for SpaceX? Yes. So we really think with no night, no clouds, and no NIMBY up in space that Elon Musk has a once-in-a-lifetime opportunity to put data centers there and really compete on price against the terrestrial players, including Amazon, Google, and Microsoft. We just have about a minute left, but you have this sort of unwavering belief that in the end, AI is going to revolutionize the US economy and the global economy. What is that founded on? We're already seeing early evidence that companies that are the heaviest investors in AI actually two years later have 10 % greater employee headcount.

32:18And that's led by entry-level workers. We've had a lot of fear in the early days that some of these initial layoffs that we see as right-sizing are going to be permanent, but we don't see that. Kevin Warsh just said a few days ago, who knew that the internet would bring a million and a half Uber jobs? We think there's all new industries that are going to be created from AI in the years ahead.

32:42Ed Ludlow:Founders 100 ETF, Chief Investment Officer Lauren Cassidy. Great to have you here in New York on Bloomberg Tech. There's more technical lines to go through. Let's get to Bloomberg's Yajira Anand, who's standing by. Yajira. Hi, Ed. Great to have you here in New York. But it's time now for Talking Tech. First up, prosecutors in Singapore have filed new charges against the key suspect in a money laundering case tied to the alleged transfer of NVIDIA chips to China. The suspect, a businessman born in China, pleaded not guilty. Prosecutors say he misled server manufacturers in order to obtain hardware.

33:14that may have included NVIDIA AI chips restricted under U.S. export controls. Plus, ByteDance and Alibaba are dialing back some AI companion features as China rolls out new regulations. The rules take effect later this month and are aimed at preventing users from becoming too emotionally attached to human-like chatbots. And a Samsung union leader who secured bonuses of up to$400 ,000 for some workers is now facing backlash. That's because employees in less profitable areas received much smaller payouts. So thousands of members have quit the union, weakening its bargaining power, while others are wearing black to work to show their discontent.

33:59Ed?

33:59Ed Ludlow:Thank you, Yuhaira. Now, coming up, countries are shelling out to develop and control the battlefield tech of the future. We're going to discuss the new$2 trillion arms race next. This is Bloomberg Tech.

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36:14Ed Ludlow:A$2 trillion race to develop new battlefield technology is underway. The spending spree echoes the Cold War buildup. But instead of nuclear stockpiles, think drones, AI and hypersonic weapons. Bloomberg's global defense editor, Jerry Doyle, wrote today's big take and joins us now. You know, the number is staggering in some sense. To others, you know, maybe that's what you'd expect. Take us inside the big take. What is the point that we're getting at at the top? Well, the point we're getting at, as much as you described in the intro, We're used to thinking of an arms race in these Cold War terms of building up enormous stockpiles of varied types and huge numbers of nuclear weapons.

36:56But we sort of moved past that to the point where there are new technologies that countries think could reshape the battlefield, could give them an insurmountable edge in whatever future combat looks like. And those are things like AI. Those are things like hypersonic weapons. Those are things like the militarization of space and drones. Some of these we've already seen in action. We've seen drones in heavy use, obviously, in Ukraine in the last four years. We saw them also surface quite a bit in the Iran war. We've seen hypersonics used in the Iran war and we even saw, and in Ukraine, and we even saw the USA that it had used AI to help plan its strike campaign against Iran.

37:40So some of these technologies are already in use, they're already surfacing, they might be in their, you know, sort of initial forms, but they're developing into things that the countries that can afford to get in the game think will be massive game changers.

37:55Ed Ludlow:There's been a lot of activity in private and in public markets, right? Lockheed even today buying ultramarine for almost three and a half billion dollars. That is out there, the legacy prime spending, buying different properties in the submarine space. What I think is interesting about your story as well is that unsurprisingly, it is the US and China that are the biggest spenders. Is there any difference in approach that they're taking to AI on the war field? Well, China has much closer links between the government and the private sphere. So there are undoubtedly a lot of investments and developments happening behind the scenes on the commercial side that immediately are able to be put into use on the government side.

38:40Whereas, of course, in the U.S., there's a lot more separation. Obviously, the military organizations like DARPA are trying to develop AI tools on their own. but there are massive companies doing this as well. And those developments don't always immediately make their way into the government's hands.

38:59Ed Ludlow:Bloomberg's Jerry Doyle with the big take. Thank you very much. Sticking with advancing defense tech in a case study, Ondas, which develops drones and secure wireless communications, has agreed to buy autonomous aircraft maker design technologies. The cash and stock deal, worth over$875 million, will turn Ondas into a full-service autonomous defense technology platform. Ondas chairman and CEO Eric Brock is with us. I think this is really interesting. The structure of the deal, the timing, the why. But essentially, what is it you've been able to acquire that you didn't have or that you couldn't have done yourself, Eric?

39:37It's a great question. And firstly, thank you for having me on the show. It is an important day for Ondas. So what we're seeing in terms of opportunity is that we're in the really the early innings of a massive adoption cycle around unmanned and autonomous systems. And this is after a long period of what I would call foundational work in terms of developing and maturing the tech stack. So the things you're seeing today in the battlefield were really started to be incubated well over a decade ago. And for Andas, the opportunity we're seeing in how this market's going to evolve is we think there's a tremendous number of really valuable and critical technology platforms being developed.

40:16However, we need to bring them to the market and scale. So that means we have to scale the supply chain, fuel support and services and sustainment, and essentially industrialize this industry. So with design, it was an amazing opportunity for us to really deepen the portfolio that we had been building previously, both through internal activities as well as acquisitions. So design for us is where across now we call persistent ISR. They bring to what is already a very powerful and existing counter drone portfolio at Ondas. But now we're having wide, wide capabilities. And we're just going to be delivering those now at scales and customers.

40:52Ed Ludlow:So that bit I'm interested in. You have drones, counter-drone systems, and the communications tech. Who is the customer? You just basically want to be a one-stop shop for the Pentagon, or it's more complex than that? Absolutely. So, clearly, the Department of War and the Combatant Commands and Armed Services branches of the United States are critical customers for us. But what we're doing in terms of business model is really creating a global operating platform so we can deliver these technologies to allied countries and militaries. So that's in the Middle East. That's in Europe and in a big way in the United States, which, of course, is the largest market for us.

41:33Ed Ludlow:Eric, how able are you to do business with U.S. allies away from the United States as a customer?

41:44yeah so it's it's become more complex you know we've come uh as we've seen uh military uh doctrine and geopolitics evolve uh there's an extreme effort or emphasis on what i call localization so uh so for example made in america policies mean the technology platforms you're developing and bringing to the u.s have to be supported with u.s supply chain have to be sold the services sustained by u.s citizens the same thing's happening europe right we've got we're making Europe great again. So what we're doing there is we're partnering with local defense and industrial companies who bring expertise in and around markets.

42:18They bring supply chain scale, and they bring the ability to support these activities in the field. I think that's the way we're going to have to grow businesses now. You can still be global, but you have to be very local. And that's the core tenet of our business model.

42:33Ed Ludlow:You structured this as$200 million in cash and then about$675 million in stock with basically a lockup for six months. Why structure it that way and how much room do you have to do more M &A to go out and get properties you think add to what you do? Sure. So I'll start with the latter first. We have substantial capacity to continue to evolve on what we call the core and strategic growth platform. And I do believe that continuing to expand the portfolio in our operating platform through acquisitions is going to be incredibly valuable for our investors and our customers and partners. So, you know, in terms of why we structured the deal the way we did, the counterparty, Highland Partners, who was the majority owner of design, of course, had liquidity needs.

43:23There's going to be taxes to be paid. So we did include cash in the deal. At the same time, they were very eager in partnering with Andas. They're super bullish on what design does. They know the ramp there and they believe in our business model. So, you know, so Highlander and the investors of design are more than happy to take on our shares because they see quite a bit of upside in both the near term and in longer term.

43:46Ed Ludlow:Eric, I want to go back to the Bloomberg big take that our defense editor, Jerry Doyle, was outlining the headline, the two trillion dollar race for the control of the future battlefield. We got into this idea that unsurprisingly, the United States and China are not just the biggest spenders. But if you look at China very closely aligned with private industry, how does that impact you at Ondas? How does that put pressure on you or give you an opportunity in this environment? Well, certainly there's the arms race is started. Right. And it's not a question of will we be able to develop these unmanned systems or not or we will be able to produce the drones.

44:25We absolutely will be able to. At the same time, there are challenges around how we're localizing the business. Of course, it's well understood that over the last 20 plus years, we have deindustrialized in the United States. That means the supply chain has moved to China. And I think what you're seeing among policymakers ranging from the White House to Congress to the Pentagon, there is a significant emphasis on rebuilding our defense industrial base. And we're going to be participating in that. And I think when you think about strategies that Ondusk is deploying and others in our industry on all sides of the table, vendors, supply chain, producers and manufacturers, we have to bring scale.

45:04Right. So we have to in terms of industrializing, we have built hundreds and hundreds of alcohol drone companies. Today, we need to put them on operating platforms so we can get the scale and unit economics that will justify bringing those investments here to the U.S. to industrialize. So I think that cycle is already well on its way. And I'm very optimistic that we're going to be able to rise the occasion. We will have exceptional unmanned autonomous systems in leadership in this sector for sure.

45:30Ed Ludlow:Eric Brock, CEO of Ondas, who agreed to buy autonomous aircraft maker design for$875.8 million. Thank you very much. Coming up, we're going to have more details on SK Hynix's U.S. market debut. We're going to talk a little bit about Broadcom and Apple. Stay with us. This is Bloomberg Tech.

45:58Ed Ludlow:Let's get back to Broadcom and Apple's partnership. Bloomberg Intelligence out with a note saying this expanded partnership means Apple will, quote, likely have to increase its capex over the next few years amid a greater push to add more AI features across its products. Joining us now is Bloomberg Intelligence Senior Anirag Rana out with the React. Take us a bit more into it. Why would they have to raise CapEx if they're going to go bigger on ASICs? Yeah, see, one of the things we realized that if you're going to do more inferencing, both on device and outside, and in the case of Apple, they're going to be using cloud services from, let's say, Google or anybody else, but they're also going to do their private cloud setup as well, which means more data centers.

46:41Now, we all know for data centers, you would need chips. Now, either you go and buy them from NVIDIA or you can build your own custom chips, which we have seen that, you know, you know that Google has its own chips. Amazon's built its own chips. And it's today's announcement. And thanks to Mark Gurman for actually reporting that, you know, that agreement could be related to the AI servers that Apple is investing. So, I mean, if they are going to be adding more of their custom chips for AI servers, you know, where is that going to go? It has to go. So, I mean, I think it all turns nicely. But at the same time, and remember, how much does Apple spec in CapEx?

47:17Nothing compared to Microsoft or Amazon and the others. So it's not going to break their free cash flow nature, but it is going to go up compared to what it has been.

47:26Ed Ludlow:Real quick, Anurag, do you think the investors will cheer that, though? You're absolutely right. You know, Apple's stock story has been completely detached from the CapEx story of the hyperscalers. People have almost been like, come on, Apple, spend a bit of money. Yeah, but again, as I said, you know, if they are at 3 % of their revenue right now, which is nothing, again, you know, 15 odd billion. If it goes to even 4 % of revenue or three and a half, 18 billion, 20 billion, it's nothing compared to how much they bring in every year. So if Siri is going to help them sell more phones down the road, adding another 5, 10, 15 billion is not going to, you know, to be honest, break the bank here.

48:03Ed Ludlow:Bloomberg Intelligence's Anurag Rana very quick with the react on this Apple Broadcom deal. Thank you very much. Well, it's not exactly Terminator 2, but Reddit is using AI to fight AI. The platform which licenses content to JackGPT and Gemini has become a target for marketers trying to plant posts that AI chatbots might repeat as genuine human opinions. Reddit says its new automated system has caught 25 ,000 of these posts and cut users' exposure to them by 20 % compared to last year. Okay, that does it for this edition of Bloomberg Tech. It's day one. I'm here in New York City all week. There is a lot going on.

48:44Ed Ludlow:I want to check really quickly on those big stories. Broadcom up off-session ties, but about 4%. Apple now 1.6 % higher. An extended multi-year agreement for multiple generations of products. We gave you those details. Microsoft off-session lows, but still down a percentage point because Xbox cutting jobs, closing studios. Now, bring your Xbox questions to an interactive live Q &A live stream tomorrow. I'm going to be speaking again with Bloomberg's video game industry reporter, Jason Schreier. We'll pick up where we left off today, and we will take your questions from the audience. Bloomberg.com, 1 p.m.

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