Intel's Results Fail to Convince Investors of Turnaround | Bloomberg Tech 7/25/2025

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Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Lelo in San Francisco. [Music] This is Bloomberg Tech. Coming up, Intel shares tumble after the CEO sparks concerns that he's more focused on cost cutting than innovation. >> Plus, Tesla set to roll out its robo taxi service in San Francisco this weekend, according to reports. But how robo is it with a person in the driver's seat? >> And the FCC approves Paramount's merger with Sky Dance after a few concessions to appease the Trump administration. But first, Ed, we check in on these markets after a week that has been a relatively turbulent one in the face of the micro that is the earnings story and the macro that is Japan trade deal and what we see in terms of the Federal Reserve whether it cuts or whether it doesn't and that relationship between Fed share pal and Trump as he visits of course the new building site of the Federal Reserve. We're actually up 8/10en of a percent over the last five trading days because big tech has managed to win out in the face of the AI action plan, some semiconductor outperformance. Move on to some of the individual names though because some earnings on the semiconductor front have not been pleasant. But I also want to look what's happening in the world of crypto for you before you get to the micro ed. I'm down 3% on Bitcoin. That's more about the Fed story. That's more about the fact that maybe the Federal Reserve won't be cutting in the near term with pressure off of Fed chair pal's role it seems as Trump and him meet over the course of the last day or so. We're down 3%. What have you got? >> Yeah, Intel. Intel is probably our top tech story and it's probably our top earnings story. The stock's down more than 9% on track for its biggest drop since the first week of April. The print was fine and we'll get into that in just a moment, but all it took was just a few words from Lit Bhutan on the earnings call. basically a focus on cost cutting, not on the product, not on innovation. The result is after hours, pre-market, and now in the session tumble. Caroline, bring us the details. >> Yeah, let's get all the results from Ian King. I have to say this almost felt like an emission of defeat. The fact that they're pulling back on their manufacturing, but they're also pulling back on almost innovating. in >> yeah I mean this is the way that analysts have interpreted what he said which is that this future production technology this you know this key to them being more competitive maybe we won't do it maybe we won't do it if we don't get commitments from outside customers and that is not being taken well at all by analysts who have been listening to the company telling them hey this technology this 14A this is the key to our future this gets us back in the game and now maybe we're not going to do it so there's a lot of a lot of like what's going on here sort of reaction to this. >> Ian, the headline that's driving the stock lower is that the CEO is struggling to convince Wall Street that the turnaround is intact. You had some time on the phone with the CFO Dave Zinsner and part of what you guys discussed was where they will pull back probably in Europe and where they'll continue to invest. What can you tell us? Yeah, I mean they under Pat Gellzinger had all of you know laid out a map of basically covering the world of all of these new projects that they were going to do that you know that they were going to make themselves this manufacturing powerhouse again Germany Poland packaging facilities here there all of those are going right and even the Keystone project of Ohio which we already know has been delayed is going to be delayed even further so we're seeing a kind of retreat on that building and and and what they said was look we're not we're not going to build ahead of demand we're going to wait until we get demand and you know the analysts were like good well done that's sensible but then when we talk about future technology then that's when things get tricky and that's when people get concerned >> concerned that they were not going to build 14A until they get the commitments in but what I'm really interested in is how this fits in the context of security of supply chain here in the United States how can the federal government that wants an AI action plan and manufacturing here in the US just let Intel delay Ohio back to at least 2030. >> Yeah. I mean, probably more important than Ohio would be 14a, which because if they don't go to 14A, this new techn production technology, then they're effectively saying, "That's it. We're done. We're frozen in time." So, US indigenous semiconductor leading edge capability grinds to a halt and doesn't advance. So clearly that would be a massive concern to the government were that scenario to unfold and and that's something which is obviously people are going to focus on very heavily. Bloomberg's Ian King who leads our semiconductor coverage. Thank you very much. It's actually been a really busy week of tech earnings across the world of tech, software, hardware, chips, and some of the hyperscalers as well. Let's get out to Brent Till, Jeffrey's analyst. Uh, and and it's been a week that's really interesting. I just got back from Washington DC, right Brent, for the AI action plan. I listened to the president. I appreciate that Intel is not actually on your coverage list, but it was interesting that Intel wasn't in the room there in DC. Uh, Alphabet wasn't either. they had their earnings print. Would you say there's kind of one core lesson right now about what's happening in infrastructure in America and what the biggest result of this week has been from the administration? >> Yeah, I think the key takeaway is that the AI investment boom is still happening at a rapid rate. There's no slowdown. Google uh raised their entire capex from 75 to 85 billion on their cloud business, not their ad business. So that's uh selling uh Google cloud to enterprises and I think it tells you that we're still in the infrastructure buildout. We continue to see you know the dirt the energy the the power lines uh the core servers that's really been the focus and the AI trade has not come to applications. It has not gone to Salesforce or Adobe uh to many of those names. They're not monetizing this yet. We think that happens and that has to happen for AI to work in our in our view uh that we have to go up through the infrastructure layer to the application layer. And so I think that's the next chapter. But I'd say uh so far uh alive and kicking uh in doing very well in AI infrastructure. There's been no signs of slowdown. You heard Mark Zuckerberg talk about uh spending hundreds of billions of dollars in capex uh just a couple weeks ago. uh Google just raised their capex by 10 bill and then we've got Microsoft Amazon on on deck and we think that ultimately in our checks the demand for hyperscaler infrastructure is accelerating and we're seeing the the territories starting to shake off. >> Brent the the AI action plan largely focuses on deregulation and expedited permitting. Of all of the companies that you cover where that's relevant, how will it help them? Well, I think it should help the entire industry if we have lower bars and lower regulation. Uh, we're going to see hopefully a lot more consolidation. I think the one thing we're seeing is there's a lot of companies that say they're AI first. Uh, we saw this movie in the internet boom in the '90s. We saw this in the cloud boom. There's going to be massive consolidation. So, you're seeing already the beginning of a of an M&A wave. So, I think it'll help M&A. It should help the buildout. it should help protect the US in terms of what we're doing as a country in in AI. Um so I think you know the president has us right and certainly um uh you look at uh our allies and in building this it's it's a collection of of different technology companies and I think what we're we thought would happen at the beginning of AI is that we consolidate power to to a few and what we're finding is it's consolidating power to many and so there's just not enough capacity. Everyone's capacity constrained. Google said their capacity constrained. Microsoft said they were going to be constrained, but but what's happening now is that uh you're seeing demand get spread all over and that's actually good for the ecosystem and good for many vendors. Uh over time again I think you're going to see a tremendous amount of cleanup and M&A and that that needs to happen because there's probably going to be too many companies chasing this uh long term but short term I think you know there's no no question we're an AI boom and uh it's really exciting and and I think it's real. I don't think this is this is fake like we've seen in other tech trends. >> It's interesting. Service Now, Bill McDerman yesterday saying this is an existential issue for many in CRM who aren't on the AI bandwagon. I'm thinking about to IBM and they look like they're selling well in terms of consulting into AI. The software bit was a little bit woolly and people pulled back from what had been a ramp up in the stock. Brent, just before we push forward to what's next week, what did you make of some of the weaker plays and how much they get beaten up this week? >> Yeah. Yeah, I mean I IBM didn't have uh a phenomenal quarter. They introduced uh you know a new infrastructure um cycle and that kind of paused demand. They also integration Hashi which is a a deal they did and so the software business decelerated at the point you know it wasn't it wasn't terrible but the stock had run up and is almost sitting at the same multiple that Microsoft was at. And I think you know IBM is a single digit grower, Microsoft is a double digit grower. So I I think the stock got mismarked. We don't have a buy on IBM. >> Uh we like what they're doing. We like Arvin's software ccentric uh strategy. So we're we're fundamental fans, but stock just had a big move and it kind of didn't didn't make sense maybe where it was at based on the results. >> Yeah. >> Um so I don't I wouldn't look at IBM's results and say, you know, that they're a proxy. Uh actually the CEO upgraded the overall economy from cautiously optimistic to optimistic. And I said, well, what's next? Is there a ludic ludicrous speed or is there another speed above optimistic? But, you know, Arvin, you know, has a pretty good lens in what he sees. And I think that was probably the most interesting thing, which is to us that that's a good tellt tell what's about to happen next week. >> Yeah. I mean, Alvin told me he's really looking at M&A at the moment. And also that he's more optimistic about consulting for 2026 than he is about 2025. Push forward then for next week and the optimism around what this means for Microsoft spend, what this means for Amazon spend, and how much their cloud units are growing. Yeah. So, Microsoft uh we they're on acceleration path. They've said they're capacity constraint. They're accelerating the guide to an acceleration. We're now, you know, looking at at mid30% Azure infrastructure build. Uh for Amazon, last quarter they put up 20% backlog and that was up from 14. So, their backlog's growing which is a sign of what was going to happen with revenue. So, we continue to see uh right now a continued uh acceleration across the board. And again, I I would highlight we haven't even seen AI hit these numbers in in in in a big way. I mean, for all these big companies, it's less than 5% of its total revenue. >> Sorry, sorry to interrupt. We just had 30 seconds left, but I wanted to ask that is capex still the data point to watch, or you want to see topline growth as a result of capex in the prior year? >> Booking bookings is number one, revenue growth, and then uh capex in that order. >> Brent Hill of Jeff, great to have you back on Bloomberg Tech. We really appreciate your time. Thank you very much. Now, coming up, Tesla's reportedly set to expand its robo taxi roll out this weekend to the city of San Francisco. H we'll find more on that next. This is Bloomberg Tech. [Music] [Music] Time now for talking tech and first up, Lyft. And it has plans to deploy autonomous shuttles in the United States in late 2026 as it tries to catch up to Uber's driverless rides. Now, Lyft will partner with Austria based manufacturer Bentella Group to test its whole electric shuttles in cities and airports. Plus, Alphabet CEO Sunda Pitchi is now worth over $1 billion according to the Bloomberg billionaires index. Now, the CEO holds just 0.02% 02% economic stake in the company, but Alphabet has added more than a trillion dollars in market value since 2023. And SpaceX's Starlink satellite internet service network, well, it's been restored after an hours long outage. The Elon Musk led unit said in a post on X that the issues had been resolved, but didn't say how widespread the issue was or how many subscribers were affected. Ed. >> Okay, let's get to elsewhere in Elon Inc. Tesla is reportedly set to plan a roll out or expansion of its robo taxi service to San Francisco beginning this weekend. That's according to a report from Business Insider. I want to bring in Bloomberg's Max Chaffkin, one of the Elon Inc. team. And I find this interesting. The specifics are that it's planned for maybe today, Friday. Uh on the earnings call earlier in the week, which you participated in, Ashok Kellwami, who's the robo taxi chief said that they were doing this anyway, but there are some bits that we don't know. what was in the business insider report uh and what do you make of it? >> So the business insider report is based on a memo, an internal memo, uh you know within Tesla promising a uh a sort of robo taxi service, albeit one with a driver in the driver's seat. So So I I don't I'm not sure if you can really call it a robo taxi if there is a uh if it's a driverless car that does have a driver, but but you know that what they're saying is that they're testing this. The other thing I'll say is California has a pretty robust permitting system for driverless cars. In fact, you know, this has been around since like 2018. I believe the first company that had this permit was Zuks. Uh but Whimo, Cruz, lots and lots of companies for years have been have been operating these services with permits. As anyone who lives in the Bay Area knows, Tesla does not have any of these permits yet. What what they have is something called a TCP permit. This is basically a permit to operate a charter service with human drivers. So, so effectively like a black car service, a chauffeur service, whatever. Uh, and so, so my guess is that is how they're they're going to justify this, which is to say, you know, it's not really an autonomous car as far as the law is concerned. Of course, Tesla has blurred the lines between like what constitutes an autonomous uh car for for years and years. We were just seeing the Tesla VP of AI software what he said about the roll out of robo taxi more broadly on the earnings call and I'm really interested ultimately here Max as to how you get to this vision that by I think it's second half of the year half of Americans are meant to be able to access a robo taxi but at the moment there are about a handful in Austin and maybe a few with a driver at the well at least a person at the driver's seat starting to do San Francisco >> I mean look Tesla doesn't really have a robo taxi service today like what it as is, you know, 11 or so cars in Austin that have a safety observer. And and of course, we know that there, as I said before, there are other companies that are operating actual robo taxi service. Whimo has something like 1,500 vehicles in five cities uh with without drivers. I I I think if you it just all depends on how you define it. My guess is what they're going to say is they have these testing vehicles. They have relatively wide ranges. May maybe you do some some math and and it and and and in theoretically you can justify have it saying that half the population is covered but but I think by by any normal person's definition um that that that just isn't going to be true just because technically we are not that close to that being possible. >> The other big story out today is about Optimus in March. This is how Elon Musk outlined the plan for Optimus in 2025. Listen to this Max. This year we we hopefully will be able to make about um 5,000 Optimus robots. Uh we're technically uh we're aiming for enough parts to make 10,000 maybe 12,000. Um but since it's a totally new product with totally new, you know, like everything is totally new. Um I I'll say like we're succeeding if we get to half of the 10, you know, half the 10,000 now. But but even 5,000 robots, that that's that's the size of a Roman legion. FI, which is like a little scary thought, like a whole legion of robots. I'd be like, whoa. Okay. Um, but I think we I think we'll literally build a legion, at least one legion of robots uh this year. >> There's a report from the information out today that disputes what Elon Musk outlined that they are actually nowhere near to 5,000. What do we know, Max? Yeah, th this information report um it's pretty uh it pours some cold water on the statements that that Musk has made. Um it talks about, you know, real difficulty manufacturing parts of these robots, particularly the hands. I mean, one thing in that clip that's worth noting, Elon Musk is right when he says this is new and this is hard. And so so you know in a weird way you know where whereas with robo taxis there are lots of other companies that have been doing what Tesla is doing for for quite some time with Optimus if they were actually able to make this work or really get close to making it work. That would be amazing. That would be really impressive. But but from this information story, you know, it seems like they're just not progressing where they are must talked about what was it a legion I think where what the information said is they have something like 50 Optimus Optimi uh you know kind of walking around and and picking stuff up and putting it down in the factory. Not not doesn't sound like doing actual work yet. I don't know how many 50 is but definitely less than a legion. Um my you know Musk is somebody who is totally focused and and and his his sort of expertise is getting investors to look at the future to not to look at the near here and now but to look ahead. And so I think if you look at the timing of this robo taxi launch one possible reason would be you have this information uh report coming out that that makes this other futuristic thing look like it's it's much further out. So hey let's let's let's speed up the robo taxis. Let's get investors excited about something. I don't know what 50 is. Two soccer squads bring Chaffkin. Thanks so much. >> Brigade. >> Meanwhile, a brigade. Meanwhile, coming up, less about optimi and more about the US and China. Both pushing ahead to lead the global AI rise. We're going to speak with Theresa Carson of the General Catalyst Institute on a conversation on how governments can support cutting edge tech. This is Bloomberg Tech. Chinese tech leaders, government officials, investors, well, they're headed to Shanghai this weekend for the World AI conference. It comes as Beijing looks to propel its AI ambitions forward in the face of the new AI action plan from Washington meant to cement US dominance in the space. For more, we're joined by Theresa Carson, founding president of the General Catalyst Institute. And you've been applauding this AI action plan. Is there enough there for startups as well as big tech? It's it's definitely got an amazing basis for it. Um it was it was broad and it was reaching and I've never seen an administration act this quickly. And I think one of the biggest issues here is that we need to be ahead of China in all aspects. And the only way that this is going to occur if it if we have a public private partnership where you have both government ensuring that they're cutting all the regulatory tape and you have uh private sector both developing and providing capital into these markets. >> Teresa, I've I've been trying to write down everything that I learned from being in the room and speaking to all those officials and CEOs. And the thing I keep writing down is no software people on stage. There were none of the frontier or model making names. Everything was about energy chips and deregulation. Do you have a view on that? >> Yes. It really stood out. I was in that room with you and it was the one thing we were all talking about, but I actually thought it was very energizing because we backed over 800 startups at General Catalyst in all different areas from energy to finance to defense to healthcare. And a lot of these companies now are way outside of they're not just doing software. A lot of them are doing rebuilding, wire harnessing, new capabilities that we're seeing that are really required. So for me, it was actually very energizing from a software, you know, I've been doing software for 25 years. So seeing more hardware uh capabilities and and look, what do you need for true AI? You need energy, right? You need chips, you need land, you need all these capabilities. We've got to rebuild American manufacturing in order to have AI dominance. So, I believe that they did focus on the right things uh from that event on Wednesday. >> I mean, your expertise and experience is so important here because you've led led large businesses. I think of Splunk. I also think of the startups like Flexport, but you've been in house in Microsoft and AWS. And I'm really interested as to whether or not some of the startups that you help now back and invest in are going to be able to get a direct line into federal government. Are they going to be able to sell more easily in this environment? >> Um we actually just took we've had two what we call flyins at the General Kellas Institute. March we took six of our top healthc care AI companies in to both meet uh government agencies, the White House and Congress. Two weeks ago, we took seven defense and industrial startups in to meet DoD, the White House, and congressional leaders, and it was fantastic. It was a it they were amazing. They are very commercial, very business-like. They are cutting the red tape. We do need them to do more especially ensuring that not just traditional uh partners and vendors have access but that startups but I can see that they're working to make this connection and they also Yes. >> just really quick. So we only have 20 seconds. Your assessment of the president and his handle on AI just real quick. >> Well, you know, we were very excited to see him take this stance. I think he made it very clear this is top of mind for him. He also made it clear by having all of his cabinet members on stage and talking about this and he was very direct with everybody on Wednesday what needs to occur and he gave federal mandates for his agencies to get going. So we are we are very excited about it. >> Said Mr. Zelden of the EPA the most important guy in the room Theresa Carlson founding president of General Catalyst Institute. Thank you very much. Now coming up meta stop selling political ads in the EU. We're going to have more on that story next. Stay with us. We will be right back. This is Bloomberg Tech. [Music] Welcome back to Bloomberg Tech. It's been a good week in financial markets, particularly for technology investors. The NASDAQ 100 up a percentage point, but I think Karen noted earlier in the show and has all week that the NASDAQ 100 is kind of my go-to index because it's such a high concentration of tech. continuing to push record highs. Some single names also continuing to push record highs. Think about what's happened this week. Nvidia in particular ending the week pushing a fresh record high, but front and center in the president's speech and the AI action plan out of DC Wednesday. AMD also having a good session and a strong week. Then we push ahead, right? You know, Alphabet was the earning story this week where we AI fueled growth kind of story. Well, Meta is also interesting. Like there's been a lot of ad hoc talk from Mark Zuckerberg about what they're going to do in infrastructure with the super intelligence group, but actually I get excited about earnings as you know Cara and I think that there's really exciting imprint around the corner. >> Yeah, we wonder what happens in terms of capital expenditure but more on meta elsewhere right now because it's set to stop selling political and issue focused ads in the EU ed. Now, the social media giant is citing new regulations that create quote an untenable level of complexity and legal uncertainty. Meta is set to disband the business beginning in early October. For more, Bloomberg's Kurt Wagner joins us. But now, it just seems again and again the EU regulation is just in friction and combat with big tech here in the United States. >> This is just the latest, Caroline. It's been a pretty steady stream of combative, you know, back and forth between Meta and regulators in the EU. Obviously, the latest, as you mentioned, has to do with targeting of political ads. Meta uh there is new regulation. I believe it's coming uh online in October that makes it very difficult to target without getting very uh direct data source from the the user themselves with permission to target them with political ads. and Meta has obviously decided that juice is not worth the squeeze here in that regard and so they're going to just get rid of that business entirely. >> Well, I'd like to ask a little bit more about that. There's more than 450 million people in the European Union. So on paper it's a big market, but I think that Meta and specifically the CFO Susan Lee have talked about how generally political advertising isn't that material a contributor to to revenue anyway. >> Yeah, you're absolutely right. At the beginning of last year, so at the beginning of 2024 as we were heading into the US election cycle, Susan Lee, the CFO of Meta, was asked on an earnings call about, you know, the the political ad business. She basically said it's not material. Uh I believe in 2020, it wasn't even in the top 10 uh categories in terms of advertising spend on on uh Meta's various platforms. So, you can see why they're willing to walk away here uh from that business because it does not, you know, it is not a a material revenue growth driver for them. Anyways, >> what it all sets us up for, Kurt, is also seeing how Alphabet, I think Google had already pulled away in terms of their focus on political ads. But when we're thinking in the context of the AI action plan in the US and what that means for EU regulation and trying to lead the charge, it really feels as though the US is just walking away from the EU in many ways like they have done with their generative AI offerings in the EU as well when it comes to meta. >> That's right. I think we're seeing, you know, two very different paths between regulators in the US, regulators in the EU. As you mentioned, Caroline, at the beginning of this conversation, constantly in uh combative mode with EU regulators, meta is not so much uh here in the US. Obviously, they are still dealing with antitrust related stuff and the FTC and all of that, but generally a much more friendly uh regulatory environment in in the US. A lot of self-regulation from these tech companies. Europe is not really taking that same stance and it feels like it's getting wider and more dramatically different you know by the month here. >> Bluebird Curt Wagner on the latest out of Europe for Meta. Thank you very much. The stay on meta the biggest tech companies are clashing with the social media giant over ultimately who's responsible for age checks meant to protect children online. Meta's arguing that app stores from the likes of Apple and Google should be the ones to verify a user's age. Bloomberg's Emily Bernbomb joins us now. This is um something Caroline and I were talking about before the show has has kind of been a thing for a while, but clearly there is a a point of difference on approach and even philosophy between what Meta believes and what other big tech company believes. Could you just explain the differences of opinion? >> Yes, absolutely. So over the last year or so, we've seen this rise of child safety bills, but in order to take care of children online to give them a different experience, you need to verify that they are minors. Um, so basically that's the hurdle that all of these state legislators are grappling with. And until uh very recently, the idea was social media platforms themselves would be responsible for verifying children's ages. Now Meta has taken that debate into its own hands and it says actually the app stores are better positioned to do this kind of age verification. Um and so there's a there's an analogy there's sort of uh sparring over. So, Meta says that Apple and Google are analogous to the liquor store essentially that um that they should be responsible for checking IDs. And then Apple and Google say the analogy is a little off and actually, you know, maybe Meta is uh maybe Meta is just the mall and it, you know, >> Apple's the mall. Yeah, I love this analogy. that Apple is the mall and then Meta is the liquor store and it just depends at what point you're IDing people basically. But Meta would respond saying, "Look, on average, young people have about 40 apps and it's exhausting for parents and and for children alike to permanently be getting signed off on each and every app. It's easier on an app store basis, but obviously Alphabet and Apple would dispute that." I'm just interested, Emily, as to what this means for states. Who is winning out in this argument? because there is a lot of regulatory change going on from a state level. >> I think right now um when you look at the broader landscape, there are more laws that would hold META accountable for these kinds of age checks, but Meta has successfully convinced three different states since the beginning of this year to pass their vision of legislation putting the onus on app stores. So, I think the debate is really shifting right now. Um so many of these laws are tied up in court. Um there is also a pending uh there there's something pending at the Supreme Court asking the Supreme Court to weigh in on the constit the constitutionality of age verification at all. Um so they're almost neck andneck right now and I think Meta has successfully um created a big pivot in the conversation. >> We'll see how that conversation continues. Emily Bernbound, it's a great story. I urge people to go read it. Meanwhile, let's talk hardware because as Bloomberg Tech Asia took a deep dive into South Korea's biggest conglomerate and it's also the world's largest electronics empire and it's Samsung. In an exclusive interview with Samsung President and mobile division chief Wujun Choy, well, he weighed in on the context of US tariffs and talked about how Samsung thinks about competition in the smartphone market. >> You know, rather than focusing on uh competition, I think we are have been focusing on our consumers. uh what are the experience that we can uh bring to the consumers and how complete they are. So we've been focusing on those and uh I think um healthy competition with uh other uh companies uh I think uh will bring more innovations and then bring more benefits to consumers. So we are welcoming uh um kind of others to join this category which we created back in 2019. When we see the pressure on Samsung semiconductors and we see the success in mobile, does that change your thinking about how heavy your shoulders are at this point? >> No, I mean our pressure has been there for all the time. I mean nothing has changed and uh I think there is a you know um I think one of the Samsung is one of the companies who has every aspects of this supply chain not only from I mean not only from the components to all the way to the devices and also application and services. So we believe there will be a big synergy we can we can have across all these uh different business units and that we'll continue to kind of uh utilize this uh this uh complete ecosystem that we have. >> Let's talk a little bit about the tariff concerns around the world because President Trump says that potentially there could be a 25% tariff on Samsung phones not produced in the United States. How are you preparing for that? Ah very good question and tough one. Um so Samsung uh has long uh established multiple manufacturing uh facilities in key regions uh around the world. Uh that kind of gives us a flexibility in dealing with or responding to any changes in other countries kind of trade policies not just US. So we have established that kind of a flexible system. >> That was Samsung president and mobile division chief Juan Jun Choi along with Bloomberg's Sheran. And you can catch the full episode of Bloomberg Tech Asia online at bloomberg.com. Okay, coming up, Steve Jang from Kindred Ventures joins us to talk about M&A and Meta's recent deal for Kindred's portfolio company, Play AI. That's next. This is Bloomberg Tech. [Music] The US FCC approved Paramount's merger with Sky Dance after the Trump administration extracted concessions on the company's political coverage and diversity practices. For more on what those concessions were, Bloomber's Chris Palary, our entertainment editor, joins us. So, yep, it's happened. It's over the line. Uh, what did the parties have to do to get us there, Chris? >> Well, goodbye to all those diversity, equity, inclusion programs. Paramount, like a lot of companies, was was trying to get more uh people of color, more diverse people on screen behind the scenes. Uh, all of that uh effort is gone. Uh, another big change is in the newsroom at CBS. There's going to be a ombbudsman who's uh going to handle claims of media bias. Uh this is the company that just this month settled a $16 million lawsuit with President Trump over alleged uh bias at 60 Minutes. So u this will be a person sort of in the newsroom poking around for a couple years to come at least. >> I mean the fallout continues about the late show with Steven Colbear. There's a lot that has been swallowed, bitter pills or not. Chris, remind us of the prize, why they're doing this, and what the future looks like. >> Yeah. So, end of an era for the Redstone family, which is controlled this media empire is assembled by some of Redstone over decades. So, we're talking about MTV, Nickelodeon, uh the CBS network, Paramount Pictures Film Studio, uh all wonderful brands, but in trouble. And so there's a reason the Redstones uh gave up. Essentially, uh David Ellison, who's injecting a lot of his father's money and his own media assets in here, has work to do from day one. Uh the traditional cable channels are shrinking in double digits and the broadcast network. Uh and as people switch to streaming, but their streaming business, Paramount Plus, is still losing money. and their movie studio, as glorious as it is, uh, is barely profitable and and really and also ran compared to the biggies, Warner Brothers, Disney, and Universal. So, he's going to have to deal with all of this >> and buy some cloud from his father, Larry Ellison, it seems. Chris Palary, it's great to have some time with you. Thanks for spelling it out. Look, let's get more for you on the M&A space, but from the venture capital perspective. Now, Steve Jang is the managing partner and founder of Kind Aden Ventures, which has been backing early stage AI startups since, well, 2019, long before Chatbt. Steve, your investments also include Uber, Coinbase, but the AI space, we think of Plexity. We also think of Play AI, and let's just talk about that because it's recently been purchased by Meta, which is on the hunt for deals. It's on the hunt to lead in super intelligence. We could get more of that, Steve. >> Sure. Yeah, good question, and thanks for having me on. Um, you know, I think what's happening right now is, you know, in Meta's case is that they're looking to uh uh completely overhaul their uh their AI research team and also their research engineering team. And so, you know, I think with data centers on the rise in terms of investment, uh you see, uh some major hyperscalers, Amazon, uh uh uh Azure and GCP, Google's cloud. Uh you also see Oracle uh who was just mentioned prior on the show and then Meta and Meta is an interesting case. Meta is uh has one of the largest data center uh networks has uh is one of the largest buyers of GPUs and is expected to be the largest buyer of GPUs moving forward over the next uh 18 months. Uh they are trying to also build uh the largest AI frontier lab uh and they're competing with OpenAI on that front. And what I think you're going to see not only from them but from every other private uh AI frontier lab like OpenAI and Anthropic is it's a talent war. And >> um the play AI purchase uh means several things. So number one uh teams that have both uh a research scientist aspect to it as well as a research engineering and product engineering uh capability uh they're going to be really sought after in this market and we're seeing a lot of that already among our portfolio and outside our portfolio and so you're going to see uh continuous acquisition hunts. Uh the uh the second thing that's really interesting about this acquisition of play AI is that um it's really u uh it's really the the the the leading signal in what's happening in the space multimodal LLMs. The inclusion of video and audio and images in and how LLM work like chat GPT uh and even applications like perplexity is super important. it's going to be uh ever increasingly more important especially with generative media models uh with video generative video generative images uh becoming more and more important. So that wave of generative media um is going to be in our estimation going to be as large and as important in society and economy as LLMs. And so uh with these two trends happening uh with voice AI in particular and play AI's um uh case uh this is going to be a harbinger of a lot of things that are going to come down the line over the next two years in terms of multimodal as well as generative media and AI >> and I think a foul in your portfolio companies. It's all about the ability to be making generative media. Now, before we get into the backlash as to whether this creates slop and what that ultimately means also for a business case for Meta going forward, Steve, I just want to go to another portfolio company that's been in the eye for M&A and that's Perplexity. Like, would you ever see Perplexity being bought up by one of these big cloud players or even buy an Apple? >> Yeah. And I think, you know, whenever there's a a company that creates a a sort of singular space and name for themselves um in an important area in technology, there's always M&A interest. um you know we've seen some uh rumors about that in the news so I'm not describing anything new that you don't know about there but um what you are seeing right now at this moment is a switchover and the switchover is there are legacy companies with with platforms and distribution and great products but uh the AI uh wave itself has has sort of left them flatfooted and I think a company like perplexity you know it started from AI answers right competing with the legacy and traditional search and bringing an AI search into the into the um the the consumer's eye. And now what you're seeing with their new comment browser is saying how do we create a browser that not only brings in uh knowledge and answers but also lets you take actions. So an agentic browser that allows you to create Spotify playlists that allows you to deeply research your Robin Hood portfolio as you're surfing it on the web. And really if you think about it um browsers and websites, those are old school terms. All of your SAS apps, all of your applications are coming from uh through a web browser. And so uh Perplexity is is really an interesting agentic browser. Uh Val Y >> let me jump in there because because that's what I found so interesting about your LinkedIn post when the Play deal was announced. >> Perplexity evolved and it grew organically, right? And >> in the history that you outlined in the LinkedIn post about PlayAI, you guys did the seed round a year ago. They grew so quickly, but ultimately they just got engulfed. They took their their core tech and became part of something else. And as a as as somebody that backs founders and kind of instructs them on what to do, that kind of seems like the future in this domain. >> Yeah, I I think the I think what you're seeing is the multimodality is really important here. What you're seeing is that, you know, if you um have voice AI, what you want is you want that to be part of a Lego block system with uh an LLM, a language model. And that's really the the ultimate expression or the ultimate product there. And so that's what was happening with Play AI. you know, play AI was was hosted uh on FAL and FAL was providing uh the generative media inference for their speech models and you know converging that speech model technology with a speechtoech model in their case uh was something that was really exciting for for u meta and meta you know meta's push is to create very personal AI Mark Zuckerberg has talked about that publicly and u if you think about what they're building play AI I represented um a really interesting aspect of saying how do we create multimmodal LLMs? How do we create voice AI and this personal AI vision that Meta has? And so it's a really unique purchase because most of the other things that most of the other acquisitions that Mark has uh uh uh executed have been hires right these 100 million plus hires. But Play AI is the one company acquisition where he purchased not only a great team of researchers and engineers but also of models. And so I think it's a really big push into multimodal LLM for Meta. >> Regrettably, Steve Jang, we we got to go. There's never enough time. Uh >> fly back from Hawaii, come to San Francisco, sit in the studio, and we'll have at it. Managing partner and founder of Kindred Ventures, Steve Jang. Thank you very much. Coming up, startups are spending really big on defense manufacturing in the US. But are they getting too far ahead of the demand? We have a deep dive next. This is Bloomberg Tech. Silicon Valley investors are betting big on the reindustrialization of the US defense base and the startups they're backing are spending billions to bring that vision to life. Bloom's Lette Chapman has the reporting. There are a series of EOS. You have the big beautiful bill now act and build baby build, but it's the defense sector and startups in that domain that are responding. There are a number of different responses and to to your point this is part of a much larger push to re-industrialize uh many of the areas that the US offshored for for decades. So there's this big push now by private capital to back the defense startups um in expanding their manufacturing capa capacity. Now, a lot of these have been around for about a decade, but they're just getting to the point now where they're >> Who are the leaders? Who are the some of the big names? >> And uh is building uh two a uh one they're investing over uh $1 billion into a new manufacturing facility in Ohio called Arsenal 1. We've got Seronic that's looking to invest 2.7 billion total into a series of different um yeah >> uh projects called Port Alpha, which is going to be a modernized softwaredefined shipyard to build massive autonomous ships. >> Lette, the question is the demand there. We'll see if it works out. Lzette Chapman, great analysis. Go read her story. Meanwhile, though, that does it for this edition of Bloomberg Tech. >> Yeah, don't forget to check out the podcast. You know where to find it. From San Francisco and New York City, this is Bloomberg Tech. [Music]