Qualcomm Takes Aim at Nvidia with New Chips

24:24But you can see as they continue to add more performance to the iPad Pro and those designs continue to get thinner and lighter, something's going to give, especially when you can't put in a fan. So the solution is bringing that vapor chamber from the latest Pro iPhones to the next generation Pro iPads in 2027. Mark, real quick, take us inside Apple and how Apple works. Why is it that they try the tech first on iPhone and then later roll it to a future generation iPad? It really all depends. There have been so many features they put in the iPad first before they put in the iPhone or put in the Mac before they brought it to another product.

25:00So there's really no consistency there. I think it comes down to the performance needs for that particular product and the importance. Much more important to get the vapor chamber in the iPhone sooner. Remember, the iPhone 15 Pro came out a few years ago. It's super hot. They needed to do something to address that, and that was their solution. The iPad Pros today, they don't really overheat, but there's going to be a time where the performance gets so high that if they didn't have the vapor chamber, maybe you would have that overheating issue. So it's all dependent. Bloomberg's Mark Gurman and the latest Power On from Sunday.

25:34It's an absolute must-read. Thank you very much.

25:43Welcome back to Bloomberg Tech. Look, this is what's going on, and it's largely semiconductor-related, starting with NVIDIA, right? We are here in Washington, D.C., because they are doing their GTC DC edition conference this week. There will be news there always is when it comes to Jensen Wang and his company. The dynamic, though, is that the president of the United States is on a tour of Asia, and we don't yet know where semiconductors and NVIDIA fit within that dynamic in terms of news flow. Qualcomm's up 12%. At one point in the session, it was up 22 % and on track for its biggest jump since April of 2019.

26:19The story, they have an NPU, an AI accelerator card. It will ship next year, and it goes to Humane in Saudi Arabia first. Severe reaction to them entering the data center market. We'll also go back to a story that we covered earlier in the program. Reuters is reporting that AMD has a pact with the Department of Energy to build two supercomputers. and that is a report from Reuters that's in that moment sent the stock up 2%. It's kind of given up some of that game up 0.5%, but we started the day, as you can see on the left of the chart, in negative territory. Goodness, that's a lot. Caro. What a semiconductor roundup.

26:55But let's head over to Asia. You just mentioned it, Ed, because President Trump is in back-to-back summits ahead of the highly anticipated meeting with President Xi Jinping later this week. that Chinese and U.S. trade negotiators have actually lined up a few easy diplomatic wins ahead of that meeting. But they've left deeper conflicts unresolved. For one, Treasury Secretary Besant said that he believed China would delay its latest rare earth restrictions after the latest talks. But friction over the export controls does remain. So we go out to Bloomberg's Tyler Kendall, who joins us very late from Tokyo.

27:27Tyler, talk us through where we stand in terms of wins for a tech perspective here? Yeah, hey, Caroline. Well, as you were mentioning, the U.S. is one of their chief wins that they wanted to see this week was China delaying the implementation of its recently announced export curves related to critical and rare earth minerals. But the U.S. Treasury Secretary maintains that the U.S. is not going to loosen its export controls related to advanced semiconductors, and that could potentially mark a setback for NVIDIA's bid to rejoin the Chinese market. Now, I'm looking forward to your coverage this week of Jensen Wang being in Washington, D.C.

28:05And once he wraps up his time in the nation's capital, he's actually headed over here to Asia, where he's going to attend the APEC CEO Summit in South Korea. That's going to be President Trump's next stop after he wraps up his time here in Tokyo, because that is where he's going to meet with Chinese President Xi Jinping. So we're going to be watching this very closely as it unfolds for the rest of the week. Now, even as the U.S. maintains, It's not going to loosen its current restrictions in place. Our analysts at Bloomberg Economics say that they expect the U.S. to take off the table the threatened but not yet imposed restrictions, including those related to critical software and cloud computing.

28:40There's a lot to look out for here, but really the top line so far has been that there is this simmering in tensions that is appearing to allow for a broader conversation about a broader trade deal down the line. But at this moment, we are really just looking at these key diplomatic wins, these top line wins instead of a fuller, more comprehensive pack. Bloomberg's Tyler Kendall, who's traveling with the president currently in Tokyo. Thank you very much. So NVIDIA chips have been at the center of this trade impasse between the U.S. and China. The company losing billions of dollars in revenue with its AI chips out of the Chinese market.

29:14The same week President Trump plans to meet Xi Jinping, NVIDIA is holding one of its biggest AI conferences at a massive convention hall just a few blocks from the White House. And it's a pretty clear sign of the growing stakes in Washington for the world's most valuable company. Bloomberg senior tech editor Mike Shepard joins us to discuss. The calculus from like Jensen Huang's point of view is very simple, where once they had 80 % of a critical market, they now basically have zero. And it's something he wants to reverse through the president and this administration. He has been making great efforts to do that, as we have seen all year.

29:47And it's not just in the many appearances that he has had with Donald Trump. Remember, he was present, of course, for the unveiling of the AI action plan. He was also with the president on his trip to the Middle East earlier in the year. And he joined Donald Trump on the visit to the U.K. in August, where they unveiled more AI chip deals. But there is more to it than that. The company is also investing in its lobbying operation here in Washington. It's not just this come and go big event at the convention center just a few blocks from here. They are also hiring more lobbyists and spending more to try to make sure that their influence operation is here to stay.

30:25And that influence, Mike, more broadly, is there an inbuilt confidence that they will have the access that's necessary for China? because there's been this ongoing narrative in the Republican Party itself, torn a little bit about the hawkishness that they should have for China and the access to deep technology that should be allowed or not in the case. Well, Carol, you hit the nail on the head right there with the tension here in Washington over whether and how much to allow NVIDIA to return to the China market. And really, it centers on national security concerns. Many in both parties here in Washington, lawmakers and policymakers from the prior administration and even some in the current administration have some misgivings about allowing China to have access to the sophisticated artificial intelligence chips that NVIDIA produces.

31:15One of the big concerns is that granting that technology to Beijing opens the door somehow to the Communist Party. They're somehow employing it for military and intelligence gathering purposes. And that would be across purposes, of course, with what the national security apparatus here in Washington wants to see. China is still seen as the top geopolitical rival with the U.S. and they don't want to hand any sensitive technology in that direction, citing those national security concerns. So we will see how that comes up in the conversations here during the NVIDIA conference. We'll be looking to see what Jensen Wong says, not only during his keynote, but also in other aside moments with the media and other folks if this comes up in any way.

32:00And we'll also be interested in seeing how lawmakers who are in attendance tomorrow may actually be reacting to that, to his sales pitch of a return to China. Blue Bay, it's Mike Shepard. Thank you very much. So a meeting between U.S. and Chinese reps are drawing close attention from the defense technology sector and its investors. Many senior opportunities emerging under the Trump administration, particularly in areas like space defense, cybersecurity, advanced manufacturing sectors increasingly viewed as arenas of competition between Washington and Beijing. Joining us now is Mina Foltas. He's the founder and chief investment officer of Washington Harbor Partners.

32:37Welcome to Bloomberg Tech. I mean, that is the dynamic. There is tension economically and otherwise between the United States and China. But if you're a venture capitalist or private growth equity player, you see an opportunity. Thank you so much both for having me here today. At Washington Harbor Partners, we're running our daily ground game. We're meeting with the Department of War. We're meeting with the national security community, with the White House, with Congress to listen and to engage and to understand what are the greatest mission needs? What are the market gaps and where can we find the best founders with the best leadership, with the best technologies and capabilities to meet those needs and to fill those market gaps?

33:18You just mentioned the Department of War. Last week, I was in Los Angeles with many space technology leaders, and they very much say that space is the next warfighting domain. Their point, which I wrote about for the Tech in Depth newsletter, is that Space Force as a government agency is a real player here. Do you agree with that argument and do you see yourself doing business with Space Force? That's a great question. And space is a critical warfighting domain that we're very interested in. We're very bullish on the Space Force. We're very excited about their leadership, their talent, their focus, the resources they're dedicating to this very critical warfighting domain.

33:56we're making active investments in the space domain. So, for example, we recently invested in a company called Turion Space, which is a space domain awareness company. They identify potential threats in space, they analyze them, and they potentially help to react to those emerging threats and emerging technologies. We also have investments in companies like Stokespace, Apex Space, and Quindar to meet these mission gaps and needs in space, and we're on the lookout to be much more active in the space domain. Stokespace just had some interesting news in and of itself about its own fundraise. I'm interested, Mina, more broadly then, what is your ask when you're thinking about later this week, the meeting between Xi and Trump?

34:39How worried are you about rare earth metals? How worried are you about access at the moment when so much of this is integral to some of the startups that you back? Thank you, Caroline. So the whole world is watching. Everyone's following the headlines. And at Washington Harbor, we just have our heads down and we're running our daily ground game. Rare Earths, the U.S. supply chain, we think is a very high priority. We're investors in a company called Vulcan Elements, which we think can help create that domestic supply chain and ensure that we have access to the most important materials for both robotics and drones and other very important mission needs.

35:19Production at scale, we think, is an increasingly important pain point. We're investors in companies like Anduril Industries, which brings hardware and sensors and munitions to the mission edge. Beyond just things, we think data is incredibly valuable and powerful. We think bringing data to the edge and empowering the warfighter and the operator with AI and AI-enabled capabilities is also of incredible importance. So we're invested in a company called Raft, which brings that decision-making capability using AI to the mission edge. And finally, power and energy. Resilient, mobile, safe power and energy anywhere in the world for the warfighter, we also think is incredibly important and very critical to the supply chain.

36:07Just remind us of, like, your thesis. At this moment, we've suddenly felt like 2025 has been the year that we were all talking about defense tech. But the LPs that are in Washington Harbor Partners, the likes of the corporate pension funds, the endowments, the foundations, have they always been there backing this thesis? How much have you suddenly heard of this wall of demand coming from those who want to access this VC focus that you have? we are very fortunate to have very focused lps who have been very passionate about bringing the best technologies to not only the warfighter and but also the civil servant they see it as having been unfair that those who are making the greatest sacrifice and and taking the most courage haven't had the best technologies and have critically been eight to ten years behind the Fortune 500.

36:58Today, they're all universally excited that, you know, in an area where we haven't had the U.S. military modernized in nearly a generation, all the stars are aligning now to change things now more than ever. Congress has appropriated real dollars to acquiring capability and next generation technologies. Both sides of the aisle are in agreement today that things have to change, that there needs to be acquisition reform, and that they're trying to enable the Pentagon to acquire modern technologies and capabilities. Just very quickly, the timeline that all of the apparatus, fence apparatus this nation runs to is conflict of some form, 2027, U.S.

37:42and China. Do you model for that same timeline? You know, we model for ASAP. We model for the urgent needs and not knowing when there could be conflict. And so the critical thing here is that both military leaders, civilian leaders, entrepreneurs, investors are scaling up and they're all acting with a sense of urgency to make sure that the warfighter has what they need in the next two weeks and doesn't have to wait two years to get what they deserve and need to fight this battle. Mina Faltas of Washington Harbor Partners, it's great to have some time with you today. Come back soon. Meanwhile, coming up, when as big tech gets set to report results, AI bubble fears, they're lingering.

38:24We're going to discuss that next. Is it real? This is Bloomberg Tech.

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39:13Hey? Hello?

39:21I've never seen that much evidence in my entire career, and I don't think we'll ever see that much evidence again. I now have several terabytes of an MSS officer, no doubt, no question, of his life. And that's a unicorn. This is a story of the inner workings of the MSS and how one man's ambition and mistakes opened its vault of secrets. Listen to The Sixth Bureau from Bloomberg Podcasts starting on February 13th on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

40:03Could the AI boom be headed for a bust? Bloomberg Intelligence's Brianne Doherty says, not yet, calling AI, quote, the backbone of a modernized industrial economy. not its next speculative tale. Please say, Brianne joins us now, working with Jessica Lynn as well. Just give us the fundamental underpinnings that gives you confidence that this isn't some tech wreck rewritten. So I think what's really interesting is we actually look at the equities landscape a little bit different than everybody else. So everything we do is through a thematic lens or a thesis driven. So we actually carve up the equities landscape into AI, decentralized energy, grid tech, space.

40:41Ed, you guys were talking about this a few minutes ago. space, quantum computing. So when we think about tech or we think about energy, we're actually looking much more discreet. And right now, what we're looking at right now is that we've seen an incredible rise in correlations between AI and decentralized energy, transition metals, which, again, rare earths and other metals critical to the transition. So those correlations have been rising over the last year. What's also very interesting, though, is we're seeing that those names or those themes have much higher beta to AI than they used to. And more specifically, it means they're getting hit a little bit harder on the downdraft, right?

41:13So when you get AI pullback, you're seeing those decentralized energy grid tech transition metal names actually feel some pain on that. But when we look at how these secular trends are actually progressing, there is just such huge underlying opportunity in the bottlenecks, in the retrofits, in the fact that, let's be honest, the power grid itself was already aging. There's a lot of investment opportunities there. If you are a Bloomberg Terminal client and you're listening to the show, first of all, look up at the screen and really focus here on what Brianne's about to say. And then check out her research on the terminal.

41:47Seriously. You're doing a comparison with 2021. Why? Why look at 2021? And then you're saying this is what we think will happen in 2026. Answer those two, please. So we're looking to 2021 because that's the most recent correction, if you will, that we saw. And a lot of people refer back to 2021, where we see a lot of that, particularly US technology, really dive down into 2022. So that's a really good reference point for us. Something that we are flagging, though, it's pretty hard to make comps, right? When you go back to the dot-com era, we're not in the dot-com era. We're looking at, when we look at the 18 biggest, most powerful names in our AI theme universe, for instance, we're talking about 24 trillion of market cap.

42:26In the dot-com era, that was more like a$7 trillion type number in today's dollars. So what we're looking at is 2021 is the most recent comp where we saw a massive market correction, naturally. And where we look to 2026, though, we don't expect that to happen. We've got rate cuts coming. We've talked about that a lot in the last few weeks as well. So rate cuts are coming. They're not on the rise, which was also a big part of that time period. And then more importantly, though, we are very much flagging some tension. So while we do think that we're very much in a boom, this isn't a bust, it's not to say that it's not going to be without tension.

42:58And the biggest tension we're watching for is the fact that we've now seen tech investors, tech dollars, flock towards industrial materials, energy names. Well, guess what? Those tend to be longer build cycles. So the tension on quarter to quarter earnings, tech investors maybe aren't used to the patience that are sometime required in there. And so we do expect some volatility because of that. Brian Doherty of Bloomberg Intelligence. We just showed it, but it's must read research on the Bloomberg Terminal with Jessica Lynn. Thank you very much. Now, coming up, we're going to discuss how Warner Brothers Discovery is looking for help blocking the Ellisons.

43:33That's a dynamic. This is Bloomberg Tech.

43:50It is time now for Talking Tech. First up, ahead of a meeting between President Trump and the South Korean president, Lee Jae-myung, the South Korean leader is saying that the country should remain stuck on all the major details of a$350 billion investment pledge. Take a listen. The method of investment, the amount of investment, the timeline, and how we will share the losses and divide the dividends, all of these remain sticking points. The U.S. will, of course, try to maximize its interests, but it must not be to the extent that causes catastrophic consequences for South Korea. Trump and Lee, well, they are set to meet on the sidelines of the APEC summit.

44:29Plus, Nelson Peltz's Tryon Fund management is teaming up with tech VC General Catalyst to buy the rest of Janice Henderson. The two firms plan to use AI to drive the asset manager's next phase of growth after Tryon helped bring the CEO Ali Dabaj and Janice Henderson posted five straight quarters of positive inflows. And GameStop shares they jumped pretty seismically in the pre-market. Now a little bit off that, but they're trading after a White House X account reposted the company's statement declaring the console wars over. GameStop was reacting to Microsoft's plan to release a Halo Combat Evolved remake for rival PlayStation 5 in 2026.

45:09More on entertainment now as Warner Brothers Discovery announced a strategic review. media giants. They have been encircling the company for a potential takeover, the most aggressive of which has been Paramount Skydance led by David Ellison, offering merger prospects no less than three times already. Blue Merck's media and entertainment managing editor, Lucas Shaw, you've been writing about it over the course of the weekend. And why has David Sasloff been pushing back on Paramount Skydance? Well, several reasons. The first of which is they think they can get more money. I think there are concerns about David Ellison and Paramount's guidance as a buyer that we can get to.

45:45But David Ellison has increased his offer three times in a row. All of the chatter around potential deals has led to a huge spike in the Warner Brothers Discovery share price. And so, you know, they're trying to start something of a bidding war. Because while there are other parties who may be interested in parts of the business, so far David Ellison is the only one who's come out and said, I want the whole thing. He wants the whole thing. How are employees reacting? How is just the company surviving with what is a big question mark? Well, look, employees at Warner Brothers Discovery are unfortunately used to this type of uncertainty around deals.

46:18You know, Warner Brothers and HBO and there have been various names of the kind of the corporate entity Time Warner, Warner Media. But Time Warner got sold to AT &T many years ago. Then it got merged with Discovery. So I think a lot of them feel like they've been in one never ending integration meeting with lots of layoffs. and you know David Zaslav is a divisive figure internally at the company so some people are very excited about the prospect some people are dreading it. Talking of excitement and where excitement is at the moment in the world of entertainment talk me through BTS talk me through the sheer scale of desire to get into these pop bands from Korea.

46:52Yeah so BTS is I'd say the band most responsible for popularizing k-pop around the world certainly outside of South Korea. the best-selling artist in the world for a couple of years i think in 2020 and 2021 they've been on hiatus essentially because the various members of the military or excuse me various members of the group have been serving in the military they are coming back with a new album in march and then going to go on their biggest tour ever according to my sources about 65 dates including more than 30 in north america and there's a huge fight between the two biggest concert promoters in the world to get to be the company to promote it.

47:28Meanwhile, all the fights at home are for costumes for K-pop Demon Hunters. So clearly it's a theme. Bloomberg's Lucas Shaw. Thank you very much indeed. It's a great read. Go get to it. And his newsletters from all of his team. Meanwhile, that does it for this edition of Bloomberg Tech. Quick check on Qualcomm in particular. That was the breaking news at the top of the hour. The fact that Qualcomm has indeed decided it's going to be unveiling a competitor to NVIDIA. It wants a bit more of the AI slice of the pie. and boy, if shares moved off the back of it, we're up more than 12 % coming off of what was a 20 % move at one point.

47:58But we are risk on across the tech world as we prepare ourselves for a meeting between US and China. Don't forget to check out our podcast. You can find it on the terminal as well as online on Apple, Spotify and iHeart. We've got a thick and fast earnings week. Stick with us for it. This is Bloomberg.

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