SK Hynix US Listing Demand Soars

19:22And obviously, you know, certain other players have had some setbacks over the, you know, sort of past year. I do think by 2029, between Rocket Lab now being a$70 billion company and investors really wanting them to deliver on Neutron, you know, Bezos clearly taking Blue Origin very seriously. And while they've had their setbacks with New Glenn, I do believe that Rocket will get back online. And they have shown reusability, right? They are the only people on the planet other than SpaceX that have shown their ability to go land a stage one and go reuse it and stoke space as well and there's a handful of others

19:51Ed Ludlow:behind them we just have 30 seconds i want to talk re-entry the u.s looking at offshore sites outside the u.s how it goes with that relationship to get re-entry approvals real quick

20:04yeah you know for now we're landing all of our capsules out in australia you know starfall they just landed off the you know sort of coast of the united states in an ocean at the end of the day in order to make this railroad back to space super consistent, we're going to have to find an area in the United States that the FAA basically designates as the re-entry railroad landing area. We're working with our regulators and partners here in the United States to find a path back. For now, we're still planning on landing in Australia. Turns out the West Australian desert, super empty, great for re-entering vehicles, but it's obviously not the ideal long-term path.

20:36U.S. companies should launch in the U.S.

20:38Ed Ludlow:and land in the U.S. Delian Asparohoff, partner at Founders Fund, chair at Varda. Thank you so much. back on Bloomberg Tech. Now coming up, Mark Zuckerberg unveils Meta's next AI model and we have the details. This is Bloomberg Tech. With the highest number of young STEM graduates per capita in the EU, Ireland has the people and skills your company needs to succeed here. IDA Ireland, the National Investment Development Agency, can help you find and nurture the people you need to internationalise and thrive. Our talent is just one of the extraordinary benefits Ireland has to offer. Learn more at IDAireland.com.

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23:00Ed Ludlow:meta unveiling its latest ai model moving closer to delivering a personalized ai assistant to the masses ceo mark zuckerberg telling bloomberg muse spark 1.1 includes a new paid tier for developers i want to get out to bloomberg's kurt wagner who did the interview with mark zuckerberg and this is all about how aggressively meta is pricing access you discussed that with mr zuckerberg at length what did he say yeah he was uh critical of pricing from other ai labs saying that they were basically taking too much margin and that his goal is to make this as affordable as possible because he wants to reach any people as possible.

23:41I think this is sort of a classic meta thing. They try to get their products into as many hands as they can and then sort of worry about making money after the adoption is there. I also think there's an element here of trying to lower the price of tokens industry-wide. I do know if Meta comes out with a very low competitive pricing option. Maybe some of those other companies are going to have to lower their prices as well. Meta is also a consumer of those tokens from other companies, right? So this could lower their pricing as a customer in some ways. But yes, essentially, he's very much trying to undercut the competition here with this API pricing.

24:16Ed Ludlow:So then there's also like the question is about is 1.1 any good? You know, prior models from Meta have just underperformed on a benchmark basis against the big guys in Fropic, OpenAI. What did Zuckerberg say about what 1.1 can actually do and how it stacks up against, I don't know, Google's Gemini, for example? Yeah, he acknowledged that they're still not quite in the same tier as Anthropic, probably open AI on most things. But he was very proud of the fact that for the first time, Meta's models benchmarked higher than Google Gemini. And he went out of his way to kind of point out, hey, we tested better than all of Google's models.

24:56And this is a milestone for us. So for a company that a year ago essentially scrapped their AI plan and started everything from scratch, I think he feels like the progress is there. Obviously, they still have a long ways to go to catch, you know, sort of the frontier, which is something that we talked a little bit about in our interview. But I think he, you know, was trying to hammer home this idea that in one year they made some leaps and bounds. And, you know, Google is certainly in his sights right now.

25:20Ed Ludlow:It's so interesting. You know, this morning, Meta was down pretty significantly. There was a Reuters report about them pulling forward their own in-house silicon plans. And then the story from your interview published, now the stock's flat. It's pushing just into positive territory as people have had time to understand what Meta's trying to say here about its models. Reflect on that. Well, I think the narrative around Meta for six months, even a year, has been they're spending very, very aggressively on AI. They're trying to build all these data centers by this compute. But where's the payoff?

25:55You know, where does this ultimately come back to recoup that investment? And I think today is a step towards showing that, you know, they have this API for the first time. Developers are going to be paying meta to access their LLMs. And I think, you know, that is a step in a direction that investors, I'm sure, are happy with. When you couple that with this idea that charging consumer subscription for their AI chat bot, when they're talking about a cloud business, we had that report last weekend, as you know, that they're looking into cloud enterprise stuff. I think the combination of all that things shows that they're serious about a business around AI.

26:32Ed Ludlow:Bluebird's Kurt Wagner, thank you very much. Coming up, SpaceX shares are hovering around their trading debut price, but analysts super bullish as more coverage gets initiated. We have one of those analysts.

26:48Ed Ludlow:Welcome back to Bloomberg Tech. Chip companies, semiconductors are the story, particularly in financial markets. Look at the Nasdaq 100. We're up 1.4 percent. The outperformance on the Philadelphia Semiconductor Index, in part because we are literally imminently going to get SK Hynix's U.S. listing. And those ADRs will be the biggest U.S. first time share sale by a foreign entity. A lot of coverage of that still to come in the program. Then there's Micron. Micron significantly gaining as it expands its U.S. investment commitments to spend$250 billion. That's up from$200 billion. Also investing$3 billion into its supply chain.

27:29Ed Ludlow:Thinking about for every memory chip, it always starts with that silicon wafer. That's boosting the market too. Chip stocks are rebounding right now, but it's been a rough ride. Investors remain wary of how much of the trillions being spent on CapEx is going to bear fruit. Meanwhile, software stocks are kind of coming back to life after fending off fears that AI will erode those companies' growth. Bloomberg's Ryan Vlaselica has been writing about exactly that and joins us with more. You know, again, one session a market does not make, but zooming out a little bit, that's kind of the summary of your report this morning.

28:03Yeah, we've seen a real sort of push-pull between software and chips throughout the year to the point that the correlation between the two subsectors actually turned negative last month. That is the first time ever that we've seen that. And it all really comes down to AI with these two subsectors on different sides of the technology. Basically, if AI continues to proliferate and it continues to improve, that is seen as good for chip makers in terms of their demand, in terms of their growth. And it's seen as bad for software to the extent that AI disrupts the sector. So we've really seen a huge divergence between the two this year.

28:40Now, there has been some back and forth recently. Like you said, software seems like it was doing a little bit better. Chips seemed like they were coming back a little bit. Today, of course, scrambles that some, but really the trend has been very intact in terms of the divergence between these two groups.

28:55Ed Ludlow:Yeah, that chart shows it, right? Still massive outperformance on a longer period for semiconductors. There's a story on the Bloomberg today, Starbucks taps AI to cut reliance on Microsoft and IBM software. In the moment, software is taking a hit on this report. Explain it to us. Yeah, well, I think this really sort of exemplifies what people view as the bare case scenario, which is that customers, instead of using, you know, legacy software providers for all these different kinds of functions, will instead be creating their own sort of services through these AI tools. the ability to sort of vibe code, you know, your own kind of program to track inventory or handle sales or deal with customers, all these different kind of functions that have really made software such a powerful outperforming sector over the previous decade or so.

29:41The whole, you know, software is eating the world kind of argument that is really being thrown by AI. And the idea that some of these legacy software companies, they're going to really see their growth eroded, their pricing power eroded, their margins pressured because of offerings from these AI native companies. So the fact that Starbucks is doing this and kind of able to do it well enough that it may not need Microsoft or IBM, I think that really just speaks to the underlying fear that people have had throughout this year.

30:09Ed Ludlow:Bloomberg's Ryan for Celica. Thank you very much indeed. Take a look at SpaceX and where we're trading on Elon Musk's space company right now. Kind of interesting on the stock because we are very close to that debut trade. $150.20 is where we're at right now. The opening trade of the biggest IPO in history was$150 flat. The underwrite to quiet period is now over. So Wall Street is weighing in on SpaceX. William Blair's Louis de Palma initiated coverage with a bullish outlook, raising his expectations for the company after news that rival Blue Origin is seeking outside funding. The story we did earlier, Louis joins us now.

30:48Ed Ludlow:It's dynamic, right? Capital is flowing into the space economy. Just start with the basics of your thesis on SpaceX, right? How much in your target, your price target for this stock you assign to the space launch business with the bigger, longer-term AI story behind it? Fantastic. Thanks for having me on. In terms of the specific question, we used the general formula Starlink Starship equals Starbucks. You were just talking about Starbucks on the previous segment. Previously, we assigned a$300 billion valuation to SpaceX's launch business, which was only a fraction of the total roughly$2.2 trillion total company valuation.

31:41I think the company went public at around$1.8 or$1.9 trillion. But Starlink and the data center business right now are what's producing the Starbucks here. And that Starlink has, quite honestly, taken over the entire telecom industry. We have, for the past decade, covered satellite communications providers such as Viasat, Iridium, GoGo, and AST Space Mobile. And Starlink has won a ton of customers across the in-flight connectivity sector, residential, and for data centers, it was widely reported that SpaceX won the leases with Anthropic and Google. So they're firing on all cylinders, or nearly all cylinders, I should say.

32:40Ed Ludlow:Louis, I'm sure you did, and many did, study the prospectus very closely. And all of those future business lines, be it Orbital Data Center, and things even more further afield on that, are predicated on SpaceX getting Starship A to work, human payload rated, and B reusable. My question to you and all of the sell side going forward is every time there is a Starship test launch, how closely is that going to impact the stock and be tracked for its success?

33:15Yeah, so they've done 12 Starship launches. I think they're going to do the 13th. And every time they launch Starship, they learn something and there's iterative improvement. So the goal here is for rapid reusability and full reusability over the next several years. So this isn't something that's expected in the next few months. And given how SpaceX is a full decade ahead of the competition here, we don't think the stock price is going to be that sensitive for each trial. We think there will be learnings from each trial and progress will be made in terms of developing the AI satellites, which are expected to debut in, I believe, the second half of 2028.

34:13So I don't think there's going to be very high sensitivity. I think there will be more sensitivity if Google or Anthropic were to suggest that they wanted to terminate their data center leases with SpaceX given the huge dollar volumes.

34:36Ed Ludlow:Well, it was Musk in the first instance that was suggesting those were short term and sort of disputed the longer term nature of them anyway. You also write about Blue Origin in the private markets. What did that signal to you? And how do you see the gap between SpaceX and Blue right now? Yeah, so, I mean, quite honestly, in terms of New Glenn, it has launched three times, and the prior mission with AST Space Mobile didn't work out very well, whereas SpaceX has launched its Falcon 9 rocket over 650 times. So, you know, the scorecard 650 to three and SpaceX is already on on Starship, which is, you know, a generation ahead of of New Glenn.

35:25So I think there is, you know, an appetite for a competitor to Starship and Falcon 9 and Blue Origin as well as Rocket Lab. They represent, you know, the most competent and capable and innovative competitors. But the fact remains, you know, SpaceX has a 90 percent plus market share there a decade ahead. And so, you know, the launch business for SpaceX should be valued at more than triple, you know, the rest of the market combined.

35:57Ed Ludlow:Louis, we're running short of time here, but how do you model for Elon Musk key man risk? Yeah, it's a double edged sword. You would say Elon Musk is also the key man, like virtue here, in that Elon Musk is the greatest innovator of this century. And we think Elon Musk is highly aligned to the company. So we don't consider it a major risk here. He sleeps on the floor at Starbase. He puts his heart and soul into these business endeavors. So we think he's fully aligned and he's going to be on board. And SpaceX has a very deep bench with Gwynne Shotwell and Milo Custo, Brett Johnson as the CFO, who's awesome.

36:53So they have a very deep bench and we got to meet everybody at Starbase and in Hawthorne.

37:00Ed Ludlow:Right. Louis De Palma, William Blair, initiating coverage, SpaceX. Thank you very much indeed. SpaceX has shown the might of American space technology and financial muscle with its record-breaking IPO. Here's Joseph Asbacher, Director General of the European Space Agency, on exactly that. We see now, of course, with the IPO of SpaceX that the support of NASA and the Space Force really leads to world-dominating space companies. And this is something, of course, where volume is just as important as excellence. And catch more of that interview on the next episode of Bloomberg Tech Europe as Tom McKenzie looks at where Europe is lagging in the space race and how it can secure some space autonomy.

37:43Ed Ludlow:That's tomorrow, 8.30 a.m. London time. Now, coming up, as midterms loom, some Republican candidates have joined their progressive counterparts in pushing anti-data center campaigns, dividing the GOP on its AI stance. More on that next. This is Bloomberg Tech. Support for the show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English.

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40:03Ed Ludlow:Little in Washington is bipartisan these days, but both the Trump administration and Vermont Senator Bernie Sanders see AI as a way to finance a new sovereign wealth fund. Bloomberg's tech editor in DC, Mike Shepard, is with us. We've been talking a little bit more regularly about the idea of a U.S. sovereign wealth fund. previously, Shep, in connection with whether the U.S. should or should not take stakes in AI companies. But there's this deeply reported Business Week piece out. There is agreement here. There really does seem to be some common ground on the idea in general terms. But both politically and in terms of practicalities, Ed, there are a lot of hurdles.

40:44You know, this is an idea that actually predates Donald Trump taking office. When he was a candidate in September 2024 in a speech at the New York Economic Club. He called for creating a sovereign wealth fund that would be seeded with actual the revenue from the tariffs he was talking about at the time. But that has evolved. Some of the thinking now is now aligning with proposals that have been on the table from Sam Altman and others in the AI industry for the government to take stakes in their businesses, to have some skin in the game, to feel some responsibility at the government level for the process and the progress in terms of developing this cutting-edge technology, but then also find a way to redistribute those returns.

41:24But the common ground really ends there. President Donald Trump has panned this idea from Bernie Sanders, which would call for kicking up to 50 % stakes in these companies and then handing back a 5 % dividend to the public on an annual basis. The president has said, I had the idea first, and he just doesn't think it would work.

41:45Ed Ludlow:Right. The president's also said, well, everyone else has a sovereign wealth fund, so the United States should have one as well. And when I look at that chart and I reflect on like some of my prior beats, Tesla, for example, or some of the deals that are happening in the AI space, Norway at the top. But some of the Gulf sovereign funds are very active in that AI sector. What do we know? Right. Well, certainly, when you think about a sovereign wealth fund, you really look at it in terms of, you know, the nations that you just mentioned, Norway, Saudi Arabia, Qatar. These all have and Singapore, of course, have all really, you know, kind of laid the table for how a sovereign wealth fund should be run, fed by natural resource income, especially if you think about energy rich states like Norway and Saudi Arabia.

42:32and then using that money to support projects and diversifying the economies, as we have seen in both those countries. The difference here, though, Ed, is that, you know, the U.S. really is running just off the charts deficit numbers every year and a debt load overall that really raised a lot of questions about the practicality of a sovereign wealth fund. And then there are also just the logistics. Who would run it? How would it be seated? We've talked about AI. We've talked about tariffs, possibly. And so far, the president, who did sign an executive order in February 2025 to try to set this whole thing in motion, we really have not seen much progress toward this since then.

43:12And so the conversation is happening there. But the two sides, Republicans and Democrats, are really far apart. But in the meantime, we have seen the government through various agencies, including the Pentagon, the Treasury Department and the Development Finance Corporation, have been investing in companies. Of course, we've talked so much about the Intel investment, but they have also acquired stakes in a number of rare earth refiners and other companies in that space. So we may not have sovereign wealth fund with capital letters, but we sure have the makings and shape of one at a smaller scale.

43:44Ed Ludlow:Bloomberg's Michael Shepard. Thank you very much. The GOP is divided over data centers. As the midterm elections loom, some Republican candidates have joined their progressive counterparts by running anti-data center campaigns, despite President Trump's big tech alliance. Not everyone's on board. Bloomberg's Emily Birnbaum joins us with the details. It's so interesting that we've tracked this early, I feel like early in the cycle, but it is an issue. And now the campaigns are responding, it seems, to the sentiment of the American public. Yes, exactly. So poll after poll shows that Americans do not want data centers built in their backyards.

44:22They're skeptical of the enterprise. They don't like it at a local level. They don't like the sound. They don't like what it does to their utility bills. And they also don't like what it means symbolically. So I spoke to a lot of experts for this article who said, you know, data centers have become sort of a symbol of an unfettered elite that rigs the system in their favor, runs roughshod over local regulations, you know, things of that nature. And so candidates are picking up on that grassroots fervor on both sides of the aisle.

44:55Ed Ludlow:Within reading your report, and again, so detailed, there is different approaches. The hardline approach, some Republicans taking a middle ground approach. What would be the distinction between a hardline and a middle ground approach on data center? So hardline would be no data centers in our state. I'll protect you from data centers. And then there's sort of a middle ground approach taken by Florida gubernatorial candidate Byron Donald. He's very aligned with President Trump. And his whole tact is, I will make sure that they pay for their own energy. They're not going to drive up your electricity bills.

45:32They're not going to make your life worse. So accepting data centers as a reality, even inviting them, but saying, you know, you'll be protected from the excesses of them. And, you know, it's very interesting in the Donald's case. He got a lot of flack earlier in the cycle for coming out in favor of data centers. So he's sort of tempering his tone a little bit. And I think a lot of candidates are having to do that right now.

45:55Ed Ludlow:Bloomberg's Emily Birnbaum, thank you very much. Now, coming up, we're going to have more on SK Hynix ahead of its U.S. listing. It's of U.S. ADRs. We're going to discuss that next. This is Bloomberg Tech.

46:14Ed Ludlow:One big story making waves in the gaming world, Microsoft's Xbox is doubling down on one of its biggest franchises, Fallout. As part of a broader restructuring, Obsidian Entertainment is cancelling several projects, laying off about a quarter of its workforce and shifting its focus to a new Fallout game. It will be the franchise's first new title since 2018's Fallout 76, which has reached more than 23 million players. The move comes as Xbox CEO Asha Sharma refocuses the business on its biggest blockbuster franchises following sweeping job cuts across the gaming division. Microsoft shares are under pressure, but remember that story earlier, Starbucks tapping AI is hitting some of the software names.

46:55Ed Ludlow:Let's get back to SK Hynix and their blockbuster US listing and ADRs. Mandeep Singh of Bloomberg Intelligence is with us. And look, BI is taking different tracks in its research of SK. I just wanted you to come on the show and kind of set us up for how you see SK having ADRs and its place in the memory market. I mean, overall, I see it as a big positive that you've got a big player which American investors didn't have access to in a market that has got really strong fundamentals, at least for the foreseeable future. And so from that perspective, I think the timing seems to be perfect. The drivers of the memory market, and we just had a webinar yesterday where we were talking about how longer contact lens for all these models has been a big driver of KVCash and HBM demand.

47:48And that seems to be something that will stay for a while. I mean, if you're talking about using more frontier models and, you know, all these models need longer context and cash, then I don't see how that changes until you've got a new player that can add more supply, which we know is not going to happen anytime soon.

48:08Ed Ludlow:You've also been focused on the sovereign AI story of Korea. You and I have exchanged messages about that. Korea seems massively committed to its domestic industry. Just quickly, why does that interest you? Because, you know, if they have the backing of the government and there was talk about$880 billion over multiple years. That's very similar to how TSMC built its fabs and its moat over time. And having the backing of the sovereign is huge in terms of both setting up factories in Korea and also abroad. And I think that's where doing it at the leading edge, which is what these companies have been doing.

48:46Remember, they manage their own fabs. That's been a huge moat, which is why we don't hear about new entrants getting into the memory market.

48:54Ed Ludlow:And as a reminder, Bloomberg reporting$149 per ADR. So they're going to raise about$26 to$28 billion capacity, but also reputation. Bloomberg Intelligence Analyst, Mandeep Singh, thank you very much. And a lot more to come. That does it for this edition of Bloomberg Tech. But don't forget, in 24 hours' time, we'll be speaking with SK Groups Chair Che in a critically important conversation. And we've set up that listing. Recap the whole show on the podcast. You can find it on the Bloomberg Terminal as well as online on Apple, Spotify, and iHeart. It is the chip stocks that are driving not just the news cycle, but this market today as well.

49:35Ed Ludlow:From New York City, this is Bloomberg Tech.

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