Chip Stocks on Track for Best Quarter Ever

22:45And that swing is really what brings SpaceX into profitability. But the revenue at that group is going to grow and be largely responsible for getting this company to$160 billion of revenue, potentially, we think, in 2030. And so that's core to, I think, the thesis around SpaceX right now.

23:06Ed Ludlow:Bloomberg Intelligence Analyst George Ferguson with the BI thesis on SpaceX. Thank you very much to stick with SpaceX. And if you've ever felt left out, spare a thought for Mirai Asset Securities. The South Korean firm was the only one of 23 underwriters to receive no stock in SpaceX's mega IPO, no allocation at all. And Bloomberg reporting it was all one big, and for the Korean asset manager, embarrassing mix up. Bloomberg's Bailey Lipschelz is with us. Try and explain it. There's basically a process that happens in the weeks before an IPO. And there has been a miscommunication in that process.

23:45Yeah, we go back to May, Ed. All these banks were compiling orders or at least indications of interest. So when you're talking about tapping retail, promoting this across your retail channel, saying basically let us know if you're interested in buying SpaceX and how much you would want to buy. Or I did that. And they said, well, we have more than a billion dollars of demand from these indication of interest. They submit that to Goldman Sachs, Morgan Stanley, the big banks running the initial public offering. And according to Bloomberg reporting, they thought that's all they had to do, except when you get closer to the launch and closer to the pricing dates in June, you need to actually show up with an order book.

24:25So according to our reporting, the bank never submitted actual orders on behalf of its clients. So more than a billion dollars that was indicating interest, according to Mirai, never actually was passed along formally to Goldman Sachs and Morgan Stanley. Therefore, they get zero. It certainly was an interesting update and something a lot of people were questioning when we saw the initial distributions.

24:48Ed Ludlow:Bailey, real quick, there are serious repercussions for Mirai. What do we know about the fallout from this? Yeah, the regulators in South Korea are looking through what this ultimately could mean, not only for the bank, but kind of for the entire distribution. It's something that I think we will see a formal kind of ruling, a formal investigation conducted. It remains to be seen when that will come out. But that's certainly top of mind, again, for the entire organization and really for everyone who's a retail trader in South Korea. Bloomberg's Bailey Lipschultz with what is the most read story across Bloomberg today and no surprise.

25:24Ed Ludlow:Link to SpaceX. We're looking at shares of AT &T, T-Mobile and Verizon. In all three cases, down significantly and for a second day. Bloomberg had reported June 26th that SpaceX and Charter Communications had held high-level talks about partnering on a consumer mobile phone offering. And while not drawing too close a direct or causal link, like everything I'm reading on the Bloomberg terminal is that the downward pressure on these carriers is the idea that SpaceX comes in. if those reports from Bloomberg about SpaceX working with Chata are accurate and disrupts that space. SpaceX, particularly in the context of Starlink, already has relationships with a couple of those.

26:11Ed Ludlow:So we'll continue to track that, but it's interesting to see the level declines. It's halftime in the show. Coming up, Gavin Uberti of Etch joins us. His startup coming out of stealth, taking on chip giants, low latency approach to AI inference, Serious money being raised out of the gate, busy for two years, and till this point, haven't said very much about what they're up to. This is Bloomberg Tech.

26:48Ed Ludlow:Welcome back to Bloomberg Tech. Semiconductors. An outperformance of semiconductors is the story, particularly in public markets. Right now, the NASDAQ 100 is up more than a percentage point. The Philadelphia Semiconductor Index is up 3%, but we've seen some big swings in recent sessions, even with the overall rally of this week. The bigger picture point is we're in the last trading day of June and headed for the second quarter. And the Philadelphia Semiconductor Index, or SOX, is on track for its best quarter ever. It gained 86 % in the last three months. It is up almost 100 % year-to-date, although we still have a half of the calendar year to go.

27:24Ed Ludlow:who knows what happens next. In a little while, we're going to have a conversation about how private markets are viewing innovation in silicon and also great inference demand and what that's doing for chips. We have a lot of other tech headlines to get through. Let's get out to New York where Bloomberg's Yahaira Andan is standing by. Yahaira, hi. Hi, Ed. It's time now for Talking Tech. First up, Tencent is going on the offensive after a$300 billion wipeout. The Chinese tech giants is ramping up share buybacks to support a stock that's lost a third of its value since October. The move comes as investors demand proof that Tencent's massive AI pivots can generate real-world revenue.

28:07Plus, the global AI boom is fueling a massive fundraising wave in Hong Kong, with companies looking to raise more than$6 billion through new listings. Leading the charge is Apple supplier Luxshare, the world's largest maker of AirPods. The company is aiming to raise up to$3.1 billion in what would be Hong Kong's biggest IPO of the year. And while Hong Kong's IPO market is booming, it's been a much tougher year for Chinese tech. The sector is on track for its worst underperformance against global markets since 2001, with the MSCI China Index down 15 % this year. Analysts say weakened consumer spending and a lack of homegrown AI hardware leaders have left China trailing the global AI rally.

28:55Ed.

28:55Ed Ludlow:All right, let's get to private markets. Startup Etched is emerging from stealth with an eye toward taking on chip heavyweights like NVIDIA as the industry shifts from training AI models to running them. Inference, the company's raised$800 million in funding out of the gate, including backing from the likes of Jane Street and TSMC-linked firm Venture Tech Alliance. Etched CEO Gavin Iberti joins us now. Now, you have introduced a rack scale system, very interesting split memory design, very focused on inference. We'll get into all the money you raised and what you've been doing quietly for two years.

29:36Ed Ludlow:But could we start on the system? What is Etched? What is it pitching? Well, Etched is building rack scale inference systems. We're really excited today to go and unveil both our funding and two of our core technologies that make the tech work. what we call a low-voltage inference and cluster-scale memory. When you think about inference, you think about pre-fill and decode. Yes. That is reading in all the input data and producing out those decode tokens. We're just showing an image of the system on the screen, the rack-scale inference system. What is it we're looking at? Break it down for us. So right here, you see one of our racks.

30:11This thing comes pre-assembled with 32 of our chips in it for our first-gen product. And what you have is our cluster scale memory tech linking those chips. And this technology allows for very low latency communication between chips. And that then allows one chip to read and use the HBM and SRAM memory of other chips in its system.

30:31Ed Ludlow:You have a very interesting story. You've clearly been busy for a couple of years, but you've raised a significant amount of money from a very interesting list of backers. Just reflect on that for a minute. I mean, how have you been able to convince a Jane Street of the effectiveness of the technology? And why raise capital at that level? Well, I think if you look at our backers, they are extremely technical. To go ahead and take a bet like this on somebody like myself and my co-founders, you need to go ahead and be very first principles driven, understand the tech very, very deeply, and see why the market is going to be so big and why this technology is fundamentally better.

31:10and our backers like James Reed and PetroTek Alliance have big chip teams and they get it.

31:16Ed Ludlow:We had reported, I think, that that money was raised at around a$5 billion valuation. But what's astonishing is, you know, with respect, the brief history of the company, right? How long, when did you come up with the idea? What was that first couple of years of trying to get set up like? Well, it took a lot of work to get to this point. We're at a spot today where we have the RackScale Inference Systems running and we have this tech proven out. And while it's not a low valuation, the fact that we have the tech to back it up I think makes it make sense. I'm really interested by the specifics of the system.

31:51Ed Ludlow:On the program of late, just by way of example, the pitch of Cerebris is its insulation from what's happening in high bandwidth memory because it doesn't rely on high bandwidth memory. SRAM is what they have configured. How does that work for Etch and its system? Well, for us, we're able to go ahead and get more out of the same volume of HPM. And one of the ways we do it is a tech we call low-voltage inference. We want to be able to use the same HPM and the same SRAM to run way, way more tokens for more users. But the bottom line here typically is power. If you look at a GPU, it thermally throttles.

32:30You cannot fit more compute onto that same chip. So what we do is we lower the voltage a lot. We run out under half the voltage of typical NVIDIA GPUs. And as a result, we're able to get very large power savings. And that in turn means you can have more users on the same chip and get more mileage out of your same HBM bandwidth.

32:50Ed Ludlow:If you think about the economic benefits for the customer and the user, then you would pitch this as being superior on essentially a dollar per token basis. Absolutely. We think about this as economies of scale. You can go have more infrastructure. that allows you to go ahead and get a much lower cost per user. And as the models get bigger, that cluster scale memory tech is going to give more and more of an advantage. The world we're in is that, you know, for some time we've been talking about better performing systems coming for NVIDIA architecture, right? NVIDIA still has a technical monopoly in the market.

33:28Ed Ludlow:What does the pathway look like for you to scale? And is there anything you can say about sort of real world workloads that are being run on your systems, real world revenues that you're already able to point to as evidence that this will be out there in a meaningful way? Well, we are running some benchmarks and we are seeing best in the world performance. What gets me really excited... Outside of the lab environment, though? We've had some customers test the system. What gets me really excited on this is production. That to make a big difference, you have to build a lot of these products. And we have a world-class platform in production.

34:02And that explains the capital that you raised? It's a key part of it. The team is such a massive part of our story. Around half of our platform team is from NVIDIA. We're lucky to have some of the best, including our VP, who ran NVIDIA's DGX and HGX team.

34:17Ed Ludlow:Gavin and Bertie introducing Etch to us, CEO of Etch, raising a lot of money after two very quiet years building a low-voltage inference system. Come back. Thank you very much indeed. Now, coming up on the show, the U.S. has long been a top destination for talented immigrants, but increasingly restrictive immigration policies are changing the corporate landscape. We have a few stories next. This is Bloomberg Tech.

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37:30Ed Ludlow:Today, the Supreme Court rejected President Trump's planned restrictions on birthright citizenship, invalidating a central plank of his immigration agenda. The court saying the executive order couldn't be squared with the Constitution's 14th Amendment, which guarantees citizenship to virtually everyone born on U.S. soil. Bloomberg's Washington correspondent, Tyler Kendall, is standing by outside of the Supreme Court. What do we need to know? Well, just to underscore the point that you made about how this really does reject a central pillar of President Trump's immigration agenda. I was in this very spot back in April when President Trump became the first sitting U.S.

38:11president in modern history to ever attend oral arguments in person. That is how critical the administration viewed this policy to its broader agenda. But ultimately, the decision isn't surprising, right? We got these signals from the justices during oral arguments that this was how this case was going to go. In fact, President Trump himself had indicated that he didn't think that the justices were going to go his way. But as you mentioned, it really does come down to that executive order that President Trump signed on his very first day in office, which sought to restrict automatic birthright citizenship to those with at least one parent who is a U.S.

38:45citizen or green card holder, which meant that newborn children of parents that are on temporary visas would not be able to be eligible. But the justices ultimately looked at those five keywords of the citizenship clause under the 14th Amendment, which says that if you are born in the United States and, quote, subject to the jurisdiction thereof, then you are a U.S. citizen. These justices sided with that longstanding legal precedent. And, Ed, as you well know, it could have very broad ranging impacts for the nearly 255 ,000 children of undocumented immigrants that are born in this country each year.

39:20Ed Ludlow:We're very excited, Kendall. Thank you very much. The U.S. has long been a top destination for talented immigrants. In fact, two-thirds of its tech workers in Silicon Valley are foreign-born. While the U.S. has spent decades relying on top-tier talent from nations like India and China, increasingly restrictive immigration policies are changing the calculus. Bloomberg Originals did a deep dive. This story is all about the American dream. It used to be that coming to the U.S. was this beacon of opportunity for skilled immigrants who wanted to pursue their fortune. And in turn, the U.S. received all the innovation that comes with having top talent.

40:00But now, with all the administration chaos and the visa back and forth, that calculus is changing. The trend we're seeing is that immigrant workers who feel like they've done everything right to stay in this country are now wondering if the country wants them at all. this could affect the competitive advantage that America's held for decades. Each year, the government issues 400 ,000 F1 visas for foreign students who want to come to an American university. At the same time, they offer 85 ,000 H1B visas for international talent that want to come and work at American companies. The H1B visa has been seen as the most viable way to secure a green card and eventually have a life in the US.

40:39Two-thirds of tech workers in Silicon are foreign-born. Even though the U.S. is now a powerhouse of the AI-fueled economy, it's relied for years and years and years on a lot of skilled immigrants coming from countries like India and China. Making matters more complicated for skilled immigrants, the Trump administration is flip-flopping on immigration policy. All the 50 skilled immigrants that we spoke to, that was a sticking point for them. That was a moment where the path that they had charted would not be possible anymore.

41:14Ed Ludlow:You can read and watch the full report on Bloomberg.com. More on immigration. So after the Supreme Court officially struck down President Trump's signature restrictions on birthright citizenship this morning, with implications for the future U.S. tech workforce, which relies heavily on immigrant talent, as was just outlined, new data by Handshake shows the share of entry-level jobs offering visa sponsorship has plummeted. to just 2.3 % this year. Joining us now to break down what is at stake and what is happening, Heber Anva partner with Ericsson Immigration Group. Welcome back to Bloomberg Tech.

41:53Ed Ludlow:I want to start with the Supreme Court decision, if I may. As many would point out, those in the technology industry from all around the world come to the United States in part for their careers, right, to seek a job in the technology sector, but also with the hope that, you know, if they have a family here, it offers a future to their family. I would just ask, you know, based on your client base, your experience working as an attorney in the field, what you make of the decision by the Supreme Court this morning. So I think that this is going to be good news for the tech industry, the healthcare industry, financial services.

42:31These are all industries that rely very heavily on workers from countries that are heavily represented in the H-1B and the L-1 pipelines in particular. So I think that first and foremost, this is a win for stability. The last 18 months have involved a tremendous amount of change. And I think that, you know, had the decision gone a different way, then the immediate question that would have occurred to a lot of business leaders is, if the court was willing to go that far, what other reinterpretations would have been possible? And so, you know, with the uncertainty itself being arguably economically damaging, I think that, again, this is a win for stability and continuity.

43:10Ed Ludlow:I want to go back to that data, the handshake data that the share of entry level jobs offering visa sponsorship has plummeted to just 2.3 percent. You can see based on that chart, the visual alone that, you know, in 2023, we're above 10 percent. What does that data tell you about the impact of policy? I mean, I think that we're seeing basically an acceleration of the talent drain, right? We're already seeing brain drain. Foreign job seeker interest in the United States is at a six-year low. There are estimates that there has been a 17 % drop in enrollment on the part of international students.

43:52The economic consequences of that foreign student enrollment drop is by some measures quantified to be over$1 billion. And so I think what this is demonstrating is, again, the fact that interest is starting to be directed elsewhere, but that you cannot divorce the overlap between the immigration policies as well as their downstream economic effects. And a lot of these trends are starting to have economic impact on U.S. workers and the U.S. labor force as well.

44:22Ed Ludlow:If you could give any case study or just sort of illustrative example of if you're working for a technology company or you are representing somebody that's trying to secure a job in the tech sector in this country, like what is the real world experience of those two entities in securing a visa in this current environment? I mean, there is a tremendous amount of scrutiny. There's a tremendous amount of vetting. The evidentiary burden is becoming increasingly more strict. And then when it comes to individuals who are from certain countries, the wait time before an individual can convert to a legal permanent resident of the United States is years and years, if not decades.

45:06And so, you know, this is not as simple as saying that foreign workers are taking jobs from U.S. workers. Foreign workers actually have to jump through a lot of hoops to be able to achieve their immigration goals. And had this decision gone the other way, I think that there would have been a segment of that high skilled foreign talent demographic that would have seriously, you know, rethought the decision to choose, you know, the United States as their permanent home.

45:35Ed Ludlow:What are the technology companies doing? Are they spending more to secure that talent? Are they lobbying hard to have policy change? I think companies just want to be able to hire who they want to hire. And when it comes down to finding the right talent, they're interested in onboarding that individual as quickly as possible, regardless of where that individual is from. The industries in which a lot of tech companies operate are becoming increasingly competitive. It always feels like it's a race to innovate all the time. And so companies just want to be able to hire without any sort of, you know, burden or hindrance so that they can remain competitive.

46:13And so when they hone in on a qualified candidate, they want to be able to do whatever it takes to be able to bring them on. The more barriers that are presented in a company, a U.S. company's ability to do that, the further advantage it creates for companies outside of the United States. And so, you know, what I've observed is that companies, while the overall demand for, you know, foreign talent has decreased slightly because companies seem to be hiring less in general, once they decide that there's a particular candidate that fits their need, they're really willing to do whatever it takes to be able to bring them on because the stakes are so high.

46:52Ed Ludlow:he the amber of ericsson immigration group on what's happening with the technology workforce with immigration policy and this morning supreme court decision thank you very much indeed now coming up media conglomerate comcast has plans to split up nbc universal and sky from the rest of its business the spinoff is meant to allow for more strategic flexibility we'll get more details next this is bloomberg tech

47:28Ed Ludlow:media giant comcast's plans to split up nbc universal and sky its european media unit into standalone companies the strategic move is intended to set the company up with more deals down the line and it comes after comcast lost out on the bidding war for warner brothers months prior bloomers kelsey griffith has been all over it i kind of have two big questions which is why, you know, why split up the company in that way? But also it kind of feels like the era of the big conglomerate is kind of over. That's right. I think we've seen Comcast sort of following this playbook that has come before them.

48:07We saw AT &T try the big media conglomerate strategy and they ended up selling off WarnerMedia a couple of years ago. So Comcast, it's their time now. They have decided that the market would prefer pure play media, pure play broadband companies, and that's the strategy that they're going to go forward with. I think one of the reasons that this might be strategic for them in the short term is that they don't want to see a bad broadband quarter weighing on an otherwise good quarter for, say, the box office or their theme parks. So that's potentially part of the thinking there.

48:43Ed Ludlow:I'm very interested in what happens to Brian Roberts, the chairman and co-CEO of Comcast, somebody that I've tried to interview several times. I would love to speak to him. So if you're watching, Mr. Roberts, if this plan proceeds. Yeah. So I got to speak with the executive team yesterday and they were telling me that Brian Roberts has no plans to retire anytime soon. He is going to take a step back from being co-chairman or sorry, co-CEO of Comcast. We don't know yet what he is going to do in terms of his chairmanship role. Will he stick around as chairman of both of the split companies, of just one of them?

49:26We're not sure yet, but he does say he plans to be involved on some level, much in the same way that he has been in the past.

49:35Ed Ludlow:Kelsey, shifting to another story really quickly, a lot of the carriers are under pressure. You reported on the 26th, SpaceX is talking with Charter, and that seems to account for some of that pressure. Yes, this has been a really interesting thing to watch. About a year ago, we saw SpaceX buy a lot of spectrum from EchoStar, and at the time, they were saying they really just wanted to do this to boost their direct-to-sell offerings. Since then, SpaceX has obviously gone through a massive IPO, and it has started edging closer to potentially setting up plans for a standalone mobile carrier. And I think that's what's interesting about this report.

50:14This is some of the first concrete evidence we've seen that this is potentially on the table.

50:19Ed Ludlow:Bloomberg's Kelsey Griffiths. Thank you very much indeed. That does it for this edition of Bloomberg Tech. Really packed show. Lots to recap on the podcast. You know where to find it on the Bloomberg Terminal, as well as online on Apple, Spotify, and iHeart. From San Francisco, this is Bloomberg Tech.

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