White House Adviseors Discuss How the US Will Export AI

25:09Now let's just shift to IBM shares briefly because they are down pretty significantly, Dave, off their lows. But I actually spoke with Arvind Krishna yesterday, the CEO of IBM. He had been pretty upbeat about his revenues, thinking it was of high quality, felt good about the product. He also felt good about federal spending, which had been a key question mark. They think that this is an opportunity that they want to modernize and leverage technology within the federal government. There are opportunities, and they want to compete for that business. It is time now for Talking Tech. And first up, more fallout from Microsoft's SharePoint floor.

25:40Now, hackers have compromised several entities in South Africa, including the national treasury. That's according to cybersecurity firm iSecurity. South Africa's national treasury has said it's seeking help from Microsoft after identifying malware on its network. Plus, Amazon's Prime Day plan, in fact, fires. The company's extended Prime Day sales were meant to give more time for customers to browse. Instead, shoppers compared prices. Many went to Walmart. The sales at the retail are growing 24%. And Elon Musk's Neuralink is expected to implant chips into 20 ,000 people by the year 2031, generating at least$1 billion in annual revenue.

26:16That's all according to documents reviewed by Bloomberg. Neuralink has raised$1.3 billion from investors and is now valued at$9 billion, according to PitchBook.

26:29Welcome back to Bloomberg Tech. Let's get a quick check on these markets because they're at new record highs. The Nasdaq 100 up 0.3%. Yes, there are key moves to the downside, Tesla being one of them, Ed. But on the upside, we see NVIDIA once again crushing it to a new record high, more than$4 trillion in market cap. We are up across the benchmarks today. Hope about that European trade deal, too, fueling some risk on sentiment. Move, though, to a company that has no risk on sentiment. In fact, it's falling the most in a year, down 16%. STMicro, Franco-Italian chipmaker. Now, I'm looking at the ADRs traded here in the US, but it was down similarly in Europe.

27:02This is after their numbers showed a surprise operating loss instead of a profit. They have restructuring costs, but also big exposure to the automotive sector, like Tesla, one of the key clients. And they're seeing some slowdown. Margins also not looking good for the third quarter. We've heard that from NXP and, of course, Texas Instruments too, Ed. AI developers and chip makers are rallying behind President Trump's AI action plan. Yesterday, I caught up with AMD CEO Lisa Su, who said the efforts to bring semiconductor production to the U.S. were strategically important, but come at a higher cost.

27:35Listen to this. I think the AI Action Plan absolutely helps this notion of bringing up the resources that are necessary, whether it's regulatory or power or just ensuring that there's a view that this is a priority. And if it's a priority for the administration, it'll be a priority for the industry. And it kind of coalesces all of the aspects that are necessary. So it's still hard work. I don't want to say that we can do this quickly. It's still multi-years. But you will move some chips from Arizona this year, I think you said. Absolutely. We're going to start manufacturing this year and we're going to add to it as we go forward.

28:11One of the things you addressed on stage was the idea of the relative price comparison for a semiconductor made here in the United States versus abroad. There is a marginal degree of greater expense. I think you said it was less than 20 percent, more than 5 percent, somewhere high double digits. But if you are building the broader high performance compute system in the United States, does it matter? I mean, how do you approach the sort of economics of it? I think the economics of it are we have to consider the, you know, just resiliency in the supply chain. I think we learned that, frankly, Ed, from the pandemic.

28:45You know, the idea that you think about your supply chains not just by the lowest cost, but also about reliability, about resiliency and all those things. I think that's how we're thinking about U.S. manufacturing. And, yes, it will be a little bit more expensive. Frankly, some of the work that has been done to encourage semiconductor investment has been helpful. But when you really average it across everything else that you need to build this computing infrastructure, I think it's a very good investment for us to make to assure that we have American manufacturing and resiliency. The AI action plan will be followed by action, one imagines.

29:25Executive orders from the president and other pieces of specific policy. what is left to do to your mind? What is it actually that needs to be enacted either from a supply chain point of view or your ability to sell your technologies around the world? Well, what I really like about the AI action plan is I actually believe it's quite actionable. So there are lots of things in there where when we look at it, it's a perfect blueprint for public-private partnership. And we're going to be active with the administration to try to help shape some of those conversations about what should be exported, what an open ecosystem looks like, how do we ensure that AI for science is front of mind.

30:06We're very active with the Department of Energy and the entire national lab infrastructure, which can really help accelerate AI in the country. So, yeah, we're ready to go. That was AMD CEO Lisa Su speaking to me at the AI Summit in D.C. yesterday. Let's talk more about the impact of this new U.S. AI policy framework, the AI action plan. Irene Suleiman, head of AI research and policy for Hugging Face, was in the room yesterday and now in the room with us here in the DC studio. And, you know, I haven't got it with me now, but when I printed out the 23-page document, I turned page one, and in the indexing, open source and open weight was so high up, which was a surprise to many people.

30:49For Hugging Face, that clearly is a good result. Absolutely. It's not just for Hugging Face, It's for the community at large. It's time that the U.S. gets back to its roots of open source and what that means for the future of innovation. Why is open source, I mean, so important to the future of innovation in this so-called race of U.S. versus China? So much of what has started this AI boom today is really the foundation of open science, the original papers that created the kinds of transformers that we're seeing today. And there's something in that report for everybody. So we're really looking forward to the next generation of manufacturing and to the many areas of science where we're seeing more development through open source and open science.

31:39It's not just language models. There's many communities that rely on sharing and with community work. What Lisa Sue was talking about there was an involvement informing policy from her perspective. How involved has Hugging Face been with this administration? And, you know, we had Mr. Kratzios on the show earlier. Shuram Christian will be on just after you. Are these conversations you were involved in as this document was written up? We were lucky to engage deeply with this administration. I will say that we are a little tech, and we've also appreciated the attention that this administration has given to little tech with our 200-plus team.

32:17One of the interviews I did yesterday was with SBA director Kelly Loeffler. who said the same thing, that her interpretation is obviously her domain, is that this is written with a view to how it impacts Main Street, companies of all sizes as they kind of get to grips with using AI. Why is that important? Well, so much of AI, I think it's easy to overlook those hobbyists. Part of what our platform wants to encourage is the kind of person who's just been toying with AI in their rooms, who really wants to skill up. We talked a little bit yesterday and today about training and deployment. we want everybody to be able to ensure that they can contribute to AI because everybody is affected by it.

32:56That's what's so important, perhaps more about the AI evaluation ecosystem as well. I know that's something that you prioritize a lot at Hugging Face and you think about ultimately the societal implications. There was talk about how they support the labor market. I'm interested in the note on bias or potential bias or what ultimately they see as bias within some of the large language models and how that's adopted by federal government in the U.S. Irene, how have you interpreted that? Yes, so the AI ecosystem is really a thriving area for research, for development. I'm sorry, I'm unable to hear some of that question, if you could repeat that, Caroline.

33:34Can you hear me now? Ed, you jump in. I'll jump in. It's a technology show where sometimes the technology fails us a little. You heard Lisa Sue talk about science, the application of AI. She meant in, I think, infrastructure, but in energy, for example. One of the panelists I believe you listened to was Jake Lusrarian from Gecko. Heavy emphasis on how AI can help the energy industry boost its output. You were also interested in the science application. You came away reading the document and the president's speech feeling what about that domain? A huge part of AI, of course, is going to be energy.

34:16The energy was high yesterday, and as the plan says, it's only going to get higher. We're seeing at Hugging Face people really using actually smaller models to enhance their work stream. So some of the most downloaded models are energy efficient. As we scale up our infrastructure, people need to rely on what is easy to deploy. There is a heavy emphasis on exporting the American technology stack or simply exporting American AI. That's the bit of the open source debate that I really want to understand from you. Because at the same time, this administration frames this as competition. America wants to lead with its commercial leadership of AI against China in particular, as much as it wants to foster an open source ecosystem.

34:58Are both achievable? One of the biggest takeaways that we have from this action plan is this U.S. tech stack. So there's not just this race for the frontier, this race for AGI. There's really this race for the global ecosystem. A huge part of open source and open weights is what people are able to locally deploy. And this is the emphasis on the American tech stack. We need the U.S. to develop more of those open weight and lightweight models. Irene, finally, you were in the room and some people were taken back a little bit about who was in the room. the mix of policymakers, leaders in your industry, what was it that was most discussed in between the panels?

35:39You know, what is it that you exchanged views on with your peers? It was a mix. It was a it was a huge variety of people in that room, which is who needs to be part of this AI conversation. Some of the conversations we were having is about the next areas that we're excited about. We're looking forward to the next generation of manufacturing towards robotics, towards what we can be doing to make sure that AI is being deployed in every sector in a meaningful way. Irene Suleiman, head of AI research and policy at Hugging Face. Joy to have you on. Now, coming up, President Trump unveils his AI roadmap, as we've been talking about throughout.

36:14Sharam Krishnan is going to be joining us. White House Senior Policy Advisor for AI. He joins us to discuss next. This is Bloomberg Tech. The people who seem to get more done than everyone else. They're not working longer hours or running on more caffeine. They've just stopped wasting time on the stuff that doesn't move work forward. Switching apps, re-explaining context, hunting for files. Those aren't small inefficiencies. They're hours wasted every week. Superhuman Go gives you those hours back. From the makers of Grammarly, Go is an AI assistant that sits inside every tab and tool you already use.

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39:054certain.

39:11I think the AI action plan is actually extremely well done. President Trump knows that small business is big business. It amounts to shock therapy for American competitiveness and the AI industry. I think the key component is it's very much all about energy. The fear right now before this action plan was that we weren't doing enough. And so what's exciting is that the action plan is addressing this head on with permitting as well as a call to arms. I think the third pillar around making sure that we are expediting the export of our American AI stack, that is really core to our mission at Armada.

39:47Well, what I really like about the AI action plan is I actually believe it's quite actionable. That's just what a few of the AI leaders had to say yesterday in Washington about President Trump's AI action plan. Here with more and the administration's AI rollout is one of the people that helped formulate, write that policy in that document. Sheree Ram Krishnan, White House Senior Policy Advisor for AI, together here in person in Washington, D.C. There was a point towards the end of that, that sequence of comments about exporting the American technology stack, exporting chips in particular. Your colleagues in the cabinet, Mr.

40:26Lutnick, for example, talked about this at length on stage. Are we going to get a set of rules? And how will we decide the volume and specificity of the types of chips that we can sell, particularly into China? Thank you, Ed, for having me here. I think, you know, we're going to work on that. I think if you look at the executive order that President Trump signed, which is about America setting the standard, what you're going to see is we're going to work closely with our friends in commerce, especially in BIS. and what we're going to figure out is what those policies are going to be. But the meta point here is, President Trump said, was very clear, we need America to set the standard for how AI is being used globally, from chips to models to every part of the stack.

41:14And what we have seen over the last six months, be it with Huawei on the chip side, or be it with models like DeepSeq, we have competition. And yesterday's plan sets a very clear note that we need to be making sure that our standards exist worldwide. I read all 23 pages as many times as I could. 28, I think. 23 on the version I have, but we can agree to disagree. There's a heavy emphasis on deregulation and permitting. That we get for the on-shoring component. For exporting American AI, what is it tangibly? What action will be taken to open that up, be it on the software end or the hardware end of the stack?

41:52Yes, so President Trump signed three executive orders yesterday, and one of them deals exactly with this. And what we're going to do is we're going to work with industry to come up with a gold standard for what the American stack should be. And there's going to be a process in how we figure this out. And then we're going to try and make sure that when we work with our partners and our allied countries, that they are using our stack instead of the competitions. Shuram, many would look at the$4.2 trillion market capitalization of NVIDIA and wonder, does it need any more help in exporting its tech stack right now?

42:30How much more support does an AMD or an NVIDIA need, do you think? Well, the way we look at it is we want America to win. We want American GPUs and American models to be used. And NVIDIA and AMD happen to be great American companies along with many, many others. And so our job is to create the playing field where Jensen or I saw Dr. Lisa Su earlier can go sell their products worldwide. Let's talk about that team because there were some absences, let's say it. We would think that Intel would be a company about to report on its earnings that would be integral to manufacturing here in the U.S. TSMC from abroad coming in and putting money to work here in the United States as well.

43:16What do we interpret by those who weren't in the room? I'm not sure I would read too much into that. I think if you look at yesterday's event, it was amazingly well attended. We had industry leaders from across the stack, from the semiconductor space to energy to AI models to AI applications. And as you said, we really want American semiconductor industry to win. And you saw yesterday's event being extremely well represented when it came to that. You have advised the president and collectively as a group looked at policy, but there was a moment that we have to address yesterday where the president, after making various people stand up, said that he had looked at breaking up NVIDIA, but then came to understand how crucial they were to the American technology stack, and that his aides had basically said to him, Jensen's great.

44:07Can I ask you, did you ever discuss with the president the idea of breaking up NVIDIA and why that was included in his speech? No, I wasn't in that meeting with the president, but I think what the president was referring to is that NVIDIA has just done a phenomenal job in building products and applications and GPUs that the world is using and that they are so ahead of the curve. So if you listen to the second part of what the president said, he talked about how it's going to take several years for people to catch up with them. And I think that's kind of one of the pieces that's put America in this pole position when it comes to the GPUs that everybody in the world wants to get access to.

44:45We appreciate the clarity, Sri Ram. Open source, very prominent, very high up in the AI action plan. Why? That's something you're particularly focused on as well. Yes, and this is an issue near and dear to my heart. And this is something which I think the Biden administration got totally wrong, where they tried to basically scare people about open source. We believe that open source is the integral part of innovation, of how academic research is done, how you get little tech to innovate quickly and be on a level playing field. And we think America should win. And, you know, the first day when I took this job, we had DeepSeek come out and really, you know, send a signal that America wasn't actually leading in open source at the time.

45:29And we believe that needs to be rectified. And that's why in the action plan, we send a very strong signal that open source or open rates, America is going to have a leadership position. Another thing near and dear to your heart is pro wrestling, Shram. And it feels like we're in a wrestling match between China and the US. And I'm really interested as to how you navigate the rules of that wrestling match. For example, China gives us rare earth metal access. In return, we give them some H20s. But how does NVIDIA navigate if China stops and chokes that? Will they have to be limited in age 20? How do they get certainty in this environment?

46:03Well, first of all, if you're talking pro-wrestling, let's be clear. We are the face, we are the baby face who's going to ultimately go over for all of you pro-wrestling fans. But look, the way we think about it is we want the American tech stack to win. One of the metrics I talk about is every token that is inferenced worldwide, we want it to be on an American GPU or using an American model. how many of our quadrillion tokens there are. And when it comes to the H20, I think the way we think about it is we would much rather have NVIDIA or AMD be the GPU of choice rather using Huawei or somebody else's.

46:43And that's how we see it. NVIDIA is a baby face. That's a fan favorite. I love it. Sharam Krishnan, it's been great having time with you. Thank you. White House Senior Policy Advisor for AI.

46:58Back to earnings now. And looking after the closing bell today, it's Intel's turn, reporting second quarter earnings and giving its new leadership a chance to update investors on the company's supposed turnaround efforts. For more, Bloomberg's Ian King joins us now. I just want to reflect for a moment on the numbers we're expecting. I know we've got a chart to show it all. These are woeful, like one cent for earnings per share. You were singling out the revenue number. Yeah, that revenue number below 12 billion, if that's what they come in at, is going to be probably the second or arguably the worst total that they've had in more than a decade.

47:33You know, they're clearly at the bottom or bouncing along the bottom at the moment. And really, you know, it's difficult to describe how far things have declined in terms of where this company used to be. And where the anxiety dials up is actually this is reflecting some pull-in, supposedly, even. Ahead of tariff implications, people actually rush to do orders. So what does Liputan need to signal here? Yeah, no, you're absolutely right. Even if they have a good quarter, the lingering concern will be, well, it's not going to continue because of what's going on in the market right now. But, yeah, I mean, it's all about the diagnosis and the prescription, really.

48:15what is this company going to do going forward to change this momentum, to solve all of the issues that we know it's have. And that's what investors really want to hear from him. How much more can he cut? Because that has been the initial prescription, hasn't it? Just de-layer, get management speaking more clearly to those underneath to be able to be more efficient. But you couldn't even pull that string so far. Yeah, no, that's a very good point, Caroline. that yes, great, cutting costs helps and we need a cultural shift within the company to be more lean, to be more adaptive and flexible in this difficult situation we're in.

48:55All of that message resonated, but the fundamental problem there is that you can't cut your way to growth, right? You can only grow by having better products and more customers, and we don't know how they're going to do that yet, and that's what people really want to hear. And we've got a minute left, Ian, but just thinking of what the AI action plan means for them. They were absent in the room yesterday. Are we anticipating any sort of federal help for them to build a manufacturer in the US? Yeah, I mean, what they've said is the plan we had isn't going to work. We can't catch NVIDIA with our current products, so we're going to have to come up with a different plan as to how we can cash in on this massive opportunity, obviously, that NVIDIA is grasping with both hands.

49:39and the answer was, we'll think about it and we'll come back to you. So about time, we want to really hear what they're going to do. Ian King, you'll be across those earnings later after the bell. Thank you so much. Now that does it for this edition of Bloomberg Tech. Do not forget to check out our podcast. Find it on the terminal as well as online on Apple, Spotify and iHeart. This is Bloomberg Tech. Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else.

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