Taiwan Eyes China AI Chip Sales Curbs; OpenAI Files for IPO

24:09This is something Apple's spoken about. They were sort of mudslinging with the EU earlier today about whether Siri AI is going to get to the EU users slower and whether it's Apple's fault or the EU's fault. Yeah, I mean, you've seen other features be held back due to the negotiations between Apple and the EU, iPhone mirroring being one of them. There were a few other features on the operating systems last year, Apple intelligence being one of them. that eventually expanded to the European Union. So I'm confident this will eventually work out. But yeah, you're seeing a public war of words play out between Apple and the EU right now.

24:44And we have to just see who's going to fold first. These are two big entities, two big personalities. And Apple, rightfully so, does not like the way the EU is inserting themselves into product development and the way features need to be introduced and implemented. And quite frankly, as a consumer, I'm not in the EU, but I do feel bad for my friends in the EU and my developer friends in the EU who are not able to roll out the newest features to their customers. And if they are a customer, not being able to use the newest feature because these rules are in place. So I don't actually think what the EU is doing is a positive at all.

25:19Fold first. Do you get any hint of a foldable phone quickly? Yeah, the foldable phone is coming in September. We've been talking about this for a while. And iOS 27 is chock full of hints to this. So really looking forward to this launch. big deal for Apple. And I think this is going to be a really soft product. This is one that I've been looking forward to for a while. And the one that you brought us news on for a very long time. Always first, Bloomberg's Mark Gurman. We so appreciate it. Thank you. Now, meanwhile, Apple is also expanding its child safety tools. As the governments around the world increasingly clamp down on youth social media usage.

25:52Now, features unveiled yesterday at WWDC will hand parents much tighter control this fall, allowing them to better control on devices when kids use the apps, what content they can access, and with whom they can communicate. Now coming up, we'll come back on OpenAI's S1 Filing, discuss the AI IPO landscape with Sung Young-yoon of Principal Venture Partners. This is Bloomberg Tech.

26:31Welcome back to Bloomberg Tech. We are seeing a rollover in stocks. We started trading higher on the day, and that optimism has since faded, and faded hard for the tech names in particular. If you look under the hood of the S &P 500, it's far healthier and more stocks are in the green. NASDAQ 100, though, we're off by more than 2%. It's Apple, Micron, NVIDIA, AMD, some of the chip hardware names that really tug from a points perspective. And this is companies, well, banks, Bank of America, for example, saying there are too many red flags right now. Take profits. Maybe people are doing that. Maybe they're getting some dry powder ahead of some massive IPOs.

27:04Let's take a look at today's big number,$3.6 trillion. That's the total market cap of the three big upcoming IPOs, if indeed they do come. OpenAI getting itself optionality. Anthropic, too, they filed confidentially with the SEC. But SpaceX, that's on deck for this week. This as these AI companies are racing. They're raising tens of billions of dollars to buy chips, data centers, build more advanced AI systems. But look, historically, mega cap IPOs, they have a rocky start in the first few months of trade. Look, stocks often slump in the first year. Could these upcoming listings be big enough that it just doesn't really apply here?

27:41The rules are off. Let's discuss the Bloomberg Equity reporter, Carmen Reinecke, who's trying to, with an unprecedented IPO at the end of this week, trying to see if there's any historical precedent here. You go back to some truest found data. 30 mega tech IPOs compared to SpaceX. How have they performed in the last 15 years? So the majority of them, after one year of trading, have been down. They've slumped a little bit in that first year of trading. But overall, the entire group has a maximum drawdown, or sorry, an average drawdown of 55 % in that first year of trading, which is really incredible if you think about it.

28:19That's a huge amount of money, one, rushing into these stocks and then coming out as investors sort of assess all the information that they're getting as lockups expire and more shares come online. So this, it could be different. It's such a huge IPO. And we know there's so much hype that retail investors are being focused on in SpaceX coming to the public market and that people are excited. They really want to buy into this. So we could see something different happen here. I mean, maybe there's the silver lining if you end up feeling that you haven't got the access that you wanted and you're forced to wait, maybe there's a better entry point.

28:54Look, we're looking particularly at a story of the CoreWeave founders. They've understandably sold$2.3 billion in stock since the IPO. Is that the sort of supply side weight that you get on these new public companies? It definitely is. And CoreWeave was really a poster child for extreme volatility in the year after its IPO. It kind of just hit that threshold in March. And it was up 400 % at one point. And then it had a drawdown of 65 % from that point. And we saw Magnetar offload half of its position and these insiders sell. I mean, the stock is still up more than 150 % from its IPO price, but you do see these kinds of pressures.

29:31They've also had some earnings reports that investors balked at. So all of these catalysts really add up to choppiness in that first year as the market kind of assesses where the valuation is going to be going forward. And I think that's something that people are looking at with SpaceX as well. If you look at price to sales, it's not profitable yet. It's a really high valuation. That's something people have been looking at in the AI and the tech and the space space overarchingly. So investors might want to wait for a better entry point. Then, like timelines are everything. You shine a light on Tesla, for example, and Facebook, which of course is now known as Meta.

30:09Meta had like a really torrid first year, down 30%. And now it's up 1 ,400 % since the IPO. And if you look back to Tesla, what up, 25 ,000 % since its listing? Exactly. So that's kind of the catch 22 here. You know, do you want to try to buy in on the first day where you could see a huge pop, right? And then maybe you're buying at a more expensive price. Or do you want to wait and see what happens? Overarchingly, it seems like if you're a longer term investor, the data show that these IPOs do really well, right? These stocks have gone up astronomically. So it's just all about finding that right entry point, finding that right time, that time horizon, when to get in.

30:49And how much business models evolve and how much we have to understand about these business models as they go public. Bloomberg's Carmen Reinecke. It's a fantastic story. Go read it. Let's discuss this and more now with Songyi Yun, founder, managing partner of Principal Ventures Partners. It's a Silicon Valley-based early-stage venture firm focused on AI-native companies. But why you're so interesting, Songyi, is also because you serve on the Advisory Council for the Institute for Human centered AI at Stanford University. You've been an operator at big gaming companies and tech. Sunghee, the business models were about to get our heads wrapped around in the public market.

31:22Should we be as excited about them as we are with SpaceX, with Anthropic, with OpenAI? Yeah, I think this is a really tremendous moment. If you think about the total market cap that we're talking about, it constitutes about 10 % of the NASDAQ. And we already talked about how concentrated NASDAQ market is with those like big top 10 companies taking about 40 more than 40 % of the total market cap. Adding this to on top of it make the magnetic even much more concentrated and expose the risk of the volatility and kind of secular risk of the technology in the market. How much is there an anxiety that not only they're going to be an outsized waiting in well, just passive funds more broadly, but they're also all related to one another in some way.

32:12The fact that Anthropik's buying compute off SpaceX, the fact that we're starting to see this circular deal-making come ever more present into the public market. That's right. I mean, that's one of the reasons why people kind of point out that there is some kind of the bubble element in kind of today's AI marketplace. And in addition to that, I think it's another thing to think about is that technology is kind of at its nascent stage. A lot of the technology, I mean, this AI is a real technology, and it was in the phase of tech demonstration that we have seen tremendous potential. But by no means that in terms of engineering, they need to go into it for optimizing and bring it down to the right price point and et cetera.

32:56There's a lot of work to be done. So in terms of the kind of technology and infrastructure and how it's formed, it's not near. It's kind of the end state and there's a lot of the improvement to be done. And I think that the improvement could be current big giants or it could come from the other stars that are working on solving the specific problems. So there is a lot of innovation to be ahead. And I think that's an interesting moment because another thing to think about is that this kind of access to the capital and building this capital moat around this company has become part of the feature of their service and their business.

33:39And I think there's a lot of kind of the circular deals that you mentioned. And it's kind of creating this moat against new entrants. And I think that that's kind of one of the reasons why that there is a rush into this IPO and access to large sum of capital. I mean, you're previously a member of South Korea's Presidential Advisory Council on Science and Technology. I mean, this AI exuberance and hype hasn't just been U.S. alone. We've seen extraordinary growth of South Korean stocks, SK Hynix and the like. Is this a global moment of reckoning? Do you think that there is a so-called bubble and it needs to come down?

34:14I mean, I think AI is an interesting technology because as soon as we say artificial intelligence, that name itself really kind of sparkles imagination of a lot of people. And people tend to anthropomorphize what AI can do. And I think that also fuels into this kind of hype-y behavior and over-expectation and extrapolating what this technology can do. because, I mean, I think that because of the global dominance of the U.S. tech market, tech companies over the past decades, I think the growth of this giant AI company is affecting the supply chain outside of the U.S. and like semiconductor companies, infrastructure companies, not just in the U.S., but elsewhere.

35:03And I think that's also feeding into the other markets' excitement. I mean, you see innovation at the public level, sitting on the board of HP at the private level when you're investing for principal ventures partners? Where is exciting? Where do you think is undervalued right now if you're going to be putting capital to work privately? I mean, there's a lot of innovation to be made. I think it's if you think about airline industry, right? I mean, I think there are only a small number of companies that can make an engine. But if you think about where all the business happening is taking place, there are companies that are making airplanes, they're making kind of, they're operating airlines, and there are a lot of businesses, hospitality around it.

35:43So I think we have found this kind of tremendous engine technology that has a potential to build whole new businesses and open up the whole new possibilities. But there are a lot of businesses and applications to be built on top of that. And where the more value is going to be created, where the value is going to be captured and held, I think it's yet to be determined. Fascinating. Song Ye Yun of Principal Ventures Partners, thank you for walking us through your thinking. We hope to welcome you back soon. Meanwhile, Elon Musk has unveiled a more detailed look at an initial version of an AI data center satellite SpaceX plans to build.

36:22That's as part of a roughly one million satellite network that will do complex computing for AI in Earth orbit, in space. So during a 30-minute video shared on X, Musk really laid out other plans for the future of this company, including the continued development of its Starship rocket and joint TeraFab facility with Tesla that aims to manufacture computer chips in the United States. Coming up, well, we've got more on AI, and this time it's all about robotics. The company Standard Bots is just raising$200 million in a new round of funding. Its CEO, Evan Beard, is going to be joining us next. But let's get back to markets because there's been a huge, like a thousand-point swing on the NASDAQ 100 right now.

37:00I'm looking at it's going from peak of 29 ,800 down to now 28 ,800 in the course of about half an hour or so is trading. We're seeing money being pulled out of chips of hardware in particular, of Apple. We're seeing the S &P 500 now down by a percentage point. The semiconductor index off by almost 4%. It is a volatile session and a volatile few trading days. This is Bloomberg Tech.

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39:15Eligibility and qualification requirements must to be met. Additional restrictions may apply. Please speak with a business banker for more information. JPMorgan Chase Bank, NA, member FDIC. If your best finance people are doing expense reports, chasing receipts, or spending time on month-end close, it's time to get Brex AF, a gentic finance that eliminates that work before it starts. Learn more at brex.com slash AF. New York-based startup StandardBots has raised$200 million in a new round of funding to scale its AI-powered robots. Now, as the company tracks to secure 10%, actually, of all robots deployed in the United States, its CEO is actively advising Congress on banning Chinese competitors over national security risks.

40:01We can talk it all now with StandardBots co-founder, CEO, Evan Beard. Congratulations on the raise. Let's start there. Series C,$1 billion valuation. What do you need the$200 million for? Thanks so much. Thanks for having me back. So we're using this funding to quadruple our manufacturing footprint. We've got a huge backlog of demand. We're growing very quickly and to also invest in more R &D. So it's going to be in Long Island, I understand. How much sort of square footage, what sort of talent and R &D hardware do you need? Yeah, so we have an engineering office in New York City, and our manufacturing space is 70 ,000 square feet.

40:33It's about an hour outside New York City, but we think it's the best city on Earth, the best place to build robotics business. And StandardBots now, we believe, is America's largest AI-native industrial robot manufacturer. And we're just getting started. By stealth, almost. How many do you already have deployed? How many are out there in the wild? What makes you such a significant force in robotics already? Yeah, well, I can say we have basically in every state, we have small and medium businesses using our robot. And we have iconic companies in aerospace, automotive, oil and gas, data centers.

41:03So really, we're working with the full gambit of folks that use robots. My favorite customer makes parts for the Long Island Railroad. And the reason I like that... Shouldn't pick favorite children. Yeah. They were our first customer, still a customer, after a few years. And it's really emblematic of everyone who uses our robot, which is they're making the things that make America, whether it's the infrastructure or the products that we use. So the railroad, are they kind of playing at using robots and understanding how they're going to work with them in the future? or are they really giving an awful lot of hard-duty work to these humanoids?

41:37Are they able, or arms that you make, are they able to hire less, for example? Yeah, it's a good question, and investors ask that. But 85 % of our robots are doing production work. So these are not pilots. These are not just testing things out. They're actually doing a job. And we think of robots as the power tool of the 21st century. So they really enable a worker to do much more work before. They improve the efficiency of our country and our workforce. And Caroline, the problem that we see and what we said to Congress was the United States right now is not competitive in manufacturing. If you look at the United States against China and other countries, it can be 5 to 10x cheaper to make your parts in those countries.

42:12And so we think robots are this foundational technology that we as a country need to be more competitive, to be able to compete, and to ultimately bring back jobs and bring back our manufacturing base. Foundational technology. Now, you need the models to be able to drive these robots. I'm interested as to what you've done. I mean, many would say, NVIDIA in particular, saying that we're not quite there yet with physical AI. We're going to have this chat GPT moment. But how are you seeing these models evolving or indeed your robots able to change and diversify? Yeah, it's a great question. And it's a reason why the U.S.

42:43can take a lead in robotics right now. And the answer there is we're focused on training robots through demonstrations. So you show them what to do. We have a handheld device for that. And you can just perform the task. And you don't have to be an expert. And what it allows us to do is take an average assembly worker, a manufacturing worker, and they can now program a robot and train an AI model. And this allows the robots to handle variability that they couldn't before. It allows them to do jobs that you just couldn't automate before because today's robots, most people don't know, they really just replay motions.

43:10You program them millimeter by millimeter and they can play through and paint and weld that way, but they're so limiting. And so this is a fundamental change in what's possible and what you can automate with your robots. And so Evan, many would say, well, you're getting people to train their replacements. How are those that are working at the railroad feeling about helping train these robots? What do you see as the future of manufacturing workforce? It's a fair question. It's one we think about a lot. And my favorite anecdote in this regard is really from Milton Freeman. And he visited a job site in the 70s.

43:40And he asked, why aren't they using earth moving equipment? It was in a developing country and they were digging with shovels. And they said, well, this is the jobs project. So if we gave them shovels, if we gave them earth moving equipment, it would create way fewer jobs. And he said, well, why don't you just give them spoons? And the point that Milton was making was you earn the right to create high-paying jobs by creating something of economic value. And I think the United States in this next transition wants to be on the right side of that. And we want to use the tools, which in the physical world, it's robots.

44:07And we really view them as this power tool, like a drill for workers to be more efficient and be able to do more. And we want to be on the right side of that. Right side of that with$200 million to keep on expanding here in the state of New York. We appreciate your time. Thank you very much indeed. Standard Bots co-founder and CEO. Evan Beard there. Now, the Mizuho Technology Conference is underway here in New York as well, bringing together top tech executives, industry leaders, speaking earlier with Bloomberg's Romain Bostic, Synopsys CEO, Sassoon Ghazi, really weighing in on the tightening restrictions targeting China.

44:38Take a listen. We're assuming China will remain the way it is currently, meaning our China business specific to IP was one of our fastest growing regions that had significant headwinds due to all the restrictions. I don't believe these restrictions are going to change. If they change, fantastic. If not, we have plenty of opportunities outside of China to capture the growth. Coming up also in New York, well, the city's controller slams Elon Musk's near total control of SpaceX ahead of the IPO. But excluding the company won't be easy for the city's pension fund or others. We'll have the details.

45:15And look, let's get back to these public markets that SpaceX is about to enter. They're down. They're down pretty hard. The Nasdaq 100 rolling over 1.9%. We were higher at the start of trade. S &P 500 off by a percentage point. We've got Apple. You've got the likes of big tech. Tesla's in the red at the moment. We've got Mike Crum pulling down in a points perspective. And that's why we mean see the semiconductor index also under pressure. This is Bloomberg Tech.

45:47New York City controller Mark Levine says Elon Musk's unprecedented control will have over SpaceX serves as a new level of disregard for regular shareholders' rights. In an interview, Naveen said he, quote, understands that we're in an era of founders wanting more control, that what Musk is planning with SpaceX is way beyond what we've seen. This is, of course, in reference to the stipulation that buying into SpaceX requires accepting a governance structure, giving Musk roughly 80 % of voting rights. New Vegas Olivia Raimondi is one of the key reporters that have just gone global with this story.

46:21And let's start with New York, New York State as well. There are a load of people managing pension fund money who are worried about this level of control. Yes, Caroline, absolutely. I think that the controller's main concern is about having shareholders' voices be heard when they invest in a public company. and to have leadership and executives in those companies be held accountable to the concerns that their shareholders have around different issues related to the governance structure of a company. I think what Levine wanted to explain to me is that he wants shareholders to still be empowered with their ability to vote in a one vote, one share type of structure.

47:02So is he saying, I'm going to boycott it? Is he saying, I can vote with my feet or my money and make an impact? or does he have to kind of go along with what is the biggest IPO ever? That's a great question. And based on my conversation that I had with him last week, I do not think the goal right now is to divest from the company or to exclude any type of exposure. He explained to me that with the pension system's own governance structure, that would be difficult. They have done sector-based exclusions before for the oil and gas industry. But to eliminate one company, he said for their own governance structure would be unprecedented.

47:37What he wants to do is he wants to engage with Elon Musk. He reached out to Musk in a letter co-signed by CalPERS and the New York State pension funds. They want Musk to engage with them and to work with them so that they can make changes from within rather than just saying we're not going to invest. Thus far, no response. This is a global issue, though, and in some pension funds in Europe, they actually are saying, I don't want anything to do with this. We've had pension funds and investors in Denmark and the UK say that they are going to sit out from the IPO, that they will be willing to adjust their funds so that they are not exposed to SpaceX.

48:16One UK-focused investor specifically said that they called the governance structure catastrophic and that it would not be prudent to have their investors exposed to it. Fascinating. Well, we can go a lot into that story about some of the reticence and the reasons why Olivia Rondick. I mean, go read her story. It's a real deep dive into the governance of this business. Meanwhile, we're looking at live pictures of NASA, which is just about to introduce its next Artemis crew. Two months after sending astronauts on a record-setting lunar flyby, NASA says Artemis 3 launched four astronauts from the Kennedy Space Center in Florida aboard the Orion spacecraft on the Space Launch System rocket.

48:55the mission. It's going to last two weeks. Now, that does it, though, for this edition of Bloomberg Tech. As we await that news from Artemis III, we see that the market's really taking a turn. Look, we're plunging to new lows of the day. Now it's like 100 off by 2.2%, let's call it. A thousand point swing. This is, as you see, really big tech names take the brunt of the hit. We've got money coming out in particular of Apple, of Micron, of Tesla. In fact, the S &P 500 is off by a percent, let's call it, but actually underneath the hood is doing rather better from a cross-industry perspective. It really is tech in the line of fire as many feel that perhaps we've run too far, too fast.

49:34There's a lot of volatility in the market and a lot of red flags. The Bank of America has been saying to clients, too many red flags. Take profits while you can. The semiconductor index off by 4.4 % after we clawed back some of Friday sessions losses just yesterday. Look, you can recap all of this. Don't forget to check out the podcast. Go find it on the terminal as well as online on Apple, Spotify, and iHeart. From New York, this is Bloomberg Tech. If your best finance people are doing expense reports, chasing receipts, or spending time on month-end close, it's time to get Brex AF, a gentic finance that eliminates that work before it starts.

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