Apple’s Ternus Era Starts the iPhone Duo

0:00Hi, I'm Barry Rittultz inviting you to join me for the Masters in Business podcast. Every week we bring you conversations with the people who shake markets, investing, and business. I speak with CEOs, Nobel laureates, market innovators, and legendary investors. Whether you own stockspons, real estate commodities, even crypto, these are discussions you absolutely need to hear. Subscribe to the Masters in Business podcast on Apple Spotify or anywhere you listen. Bloomberg Audio Studios Podcasts Radio News Bloomberg Tech is live from the heart of Silicon Valley with Ed Loveleau in San Francisco. This is Bloomberg Tech coming up. It's what everyone's talking about. Apple's first foldable smartphone, the iPhone Duo, will break everything down from yesterday's

1:00product launch. Plus the AI chip race is moving to inference. D-Mate Trick CEO Sid Sheff joins us on its new partnership with Nvidia and the battle to make AI cheaper and faster. An Elon Musk's boring code reaches a $23 billion valuation after its latest funding round. Let's get straight to our top story. Apple's Showstopper iPhone Duo brings an entirely new design while preserving everything you love and expect from iPhone. It gives you the largest display ever on an iPhone while still fitting easily in your pocket. It reflects extraordinarily complex engineering, yet feels effortless to use. And it makes new experiences possible. That was Apple CEO John Turner's making his first official keynote in the top seat, turning heads with the new foldable iPhone Duo. Shares really accelerating gains 90 minutes into the session up to a half percent now. What's interesting is they were basically flat, bang in line with the average of an iPhone launch day market performance that we've seen going back at least a decade.

2:03Well everyone's woken up and said this is a big deal. This is Garson. Who better to discuss it with? The Mark German who leads our Apple coverage and basically broke most of the details prior to yesterday's event anyway. Start with the basics iPhone Duo. We've a spot on the price. That's probably the big news headline right just under $2,000. But the specs as well. Your first impressions and the most notable points of the technology. My first impression is that this device makes every foldable phone from Samsung, from Google, from Huawei. Anyone else before it? Look like a toy. Look like a prototype. Look like a beta test basically. Because the fit and finish we're seeing here is new to the foldable industry. The way that they are putting, they call it ceramic inserts into the cellular antenna cutouts. So when you go and try to bend the phone and break it, people who do that, it's not going to bend in half. The way they put a special cover glass over the flexible display to hide the crease as much as possible and make it so your fingernails don't put cuts in the screen.

3:06The fact that they're using titanium around the edges to make the phone more durable. The fact that it's water and dust resistant. They've hit every check box here for it to feel like a normal iPhone, but to also be foldable. This really has very few compromises other than the lack of the telephoto camera on the back and battery life to some extent. It was amazing to get hands on with it yesterday and everyone's sort of first reaction is to say there's no crease, there's no margin, there's no seam in the middle, not one that the naked I can see. I do want to talk about the pricing mark. You said this would be $2,000. It was in the end $1,999. To what extent has Apple eaten some cost in the environment they're operating in? But also, if you look at the higher tiers of storage, clearly there are some handsets out there beyond $3,000 too. So they're eating costs for sure because the memory shortage really is having an impact

4:08on so many companies including Apple, Deling products, paying more for memory, needing to charge customers more. But they've offset it in two key ways. One is on the storage tiers. So you can get the 256 gigabytes for that $2,000 price point. You can get 512 for the $2,200 price point. But if you want to go to the higher tiers, you're talking $2,600 for a terabyte and then $3,200 for two terabytes. So they're charging massive premiums on that storage. And their thinking is that most people probably aren't going to get the base level version. This is an early adopter product for all intents and purposes. And that group of people is going to go for higher storage tiers so they are going to get their margin on that. The other thing they've done is they've really jacked up pricing on the international customers. So in the US, right, the $2,000 price point globally is going to be the one everyone's talking about. But you go internationally, the prices in Canada, the price in Australia, the price in Asia, really sky-high. And if you do some of the conversions, the prices in those other countries, it's not a

5:10one-to-one conversion for what the US price is. So for instance, there's an in Australia. There's an $800 Australian premium on top of the converted rate. So that's how they're making up for that shortfall. Mark, to me, John Turner's tried to do two things with his first formal keynote CEO. Talk about the smartphone being the device for the AI era. But also, he put a lot of emphasis on your iPhone or whichever OS you're using knows you. It has your data, it has your contacts. What did you make of that messaging and Mr. Turner's first full iPhone day event? Yeah, I mean, for the first time, Apple came out in showcase a real AI strategy. Whether it's an AI strategy that I agree with, that you agree with anyone agrees with, it doesn't matter. At least they have a strategy now. And it's interesting they haven't really showcased a coherent strategy until now. He calls it the intelligent personal hub, the phone being the center of everything for artificial intelligence.

6:12It harkens back to their previous intelligent hubs. That all started with the Mac. Steve Jobs introduced the Mac as sort of the center of everything. And you have all those peripherals around it, the iPod, you name it. Then came iCloud. iCloud is the center of everything. And the Mac, the iPad, the phone. Those are all peripherals around the cloud. Now the center of everything is sort of the intelligent hub and the iPhone with everything built around that. Whether it's your iPad, your Mac, your AirPods, your Apple Watch, and all the AI wearables are going to have in the future. It's all built around AI in the phone. So it's a pretty interesting strategy. I do think it's going to work to some extent, but obviously it's still early innings for their AI. And there's more to come and there's more to do. The Goldibos Mark German who leads our coverage of Apple, but also reported so deeply on iPhone Duo, including what its name would be prior to its announcement yesterday. Let's stick with Apple, but also we're going to talk more about technology markets. New beans, chief investment officer, Sarah Malink joins us now.

7:13Actually, the Apple move today is really interesting, up to 1.5%. If you go back and look at the average performance on the day itself of an iPhone event and next day, it doesn't often get the momentum we're seeing right now. I think you probably want to talk to what Mark was just talking about in terms of Apple having an AI strategy. That's been a bearing on the stock, Sarah. Your thoughts, please. Well, definitely, there's a lot of consumer interest and excitement over the new foldable phone, but there's two issues that investors are thinking about around Apple and this new phone. So first of all, would the phone the $2,000 price point or $19.99 may lead to a more modest, addressable market from the start and will grow from there? But secondarily, is this question around AI? The new CEO has a hardware background and Apple's very strong on hardware. But what investors want to know is can Apple become more competitive in AI? They have somewhat lagged their peers in terms of their push into AI. So really, that is the key question for investors and Apple going forward. Is this AI strategy going to turn into something that has monetization for the company?

8:15Of course, this is a wait and see. So happy to see the stock up based on the excitement over a new phone, and the AI question is the medium term question for whether the stock outperforms or not. There is lots happening in financial markets right now. You look at oil, $105 a barrel, yields a higher technology stock to lower chip stocks are underperforming and there are lots of pieces of economic data and macro events that are driving this market for you this morning. What's going on? What's happening? It is all about higher rates and higher rates are tougher for long duration technology stocks. And really, even though we had a very strong second quarter earning season driven by the tech sector, it's higher oil price prices, potentially higher rates at the FOMC meeting next week, rate hike out of the ECB. All of that is causing this turmoil for the markets. The biggest data point we're going to see before the FOMC meets next week is CPI, which comes out tomorrow. If that number comes out hot and by that I mean above 0.3% on the plus side month over month,

9:18I think you're going to lock in a hike for next week. If it comes in soft, under 0.2% month over month, that might cause the Fed to pause. But either way, we're seeing long-term treasure yields at up over 5% oil prices over 105. That is very concerning for the markets and there is no end inside at this point for the geopolitical issues in the war in the Middle East. So I think this turmoil for the markets is going to continue because it's hard to see the path for yields to start to decline from year, especially with the Fed either pausing or hiking rates next week. For me, Sarah, I'm going to go back to Apple actually because if you think about what the market at least on the excite is doing this morning, Apple is massively outperforming from a points perspective at the index level. With that indicates to you that investors are genuinely cheering what was outlined by the company yesterday. The positive here for Apple and out of the Goldman Sachs technology conference that's happening this week is we are hearing positive data points on monetization of artificial intelligence, which is what everybody has been waiting for.

10:19Today what you're seeing is for Apple is great. It's fundamental outperforming the macro issue. So overall for the markets, the macro overhang of higher oil prices and the potential spark of inflation because of that is definitely a cloud over the markets. But Apple's new product launch is exciting. It's a new style of phone. It isn't a higher price point. But then New South of Point phone can start a new product cycle for Apple. And that's what people are excited about. But as I mentioned, there is a key question for Apple, which is how are they going to gain more traction in AI with their phones? And it's great to see a strategy. And now we'd like to see the traction and the monetization from that. We are kind of late in a technology earnings cycle where we... They keep coming. Oracle and Adobe is after the bell to, you know, one software name, one infrastructure name with a software element. You know, how much of importance do investors continue to assign the data points coming out of earnings in terms of where we are in the cycle right now? Well, ever technology data point counts because technology earnings are what are leading

11:20overall earnings growth, especially for the S&P 500 and in the US. So Oracle and Adobe will be important. They'll be... We may get some commentary around you, hyper scalers and CapEx and whether we're seeing any monetization from AI investments. All that's going to be important. But I think the issue is with an FOMC meeting next week and CPI data coming out tomorrow, people are more focused right now on what do these higher oil prices mean for inflation? What does it mean for the US economy? As an example, we did get various wrong payrolls last week. But if we were... If inflation stays high and we become worried that oil prices will cause the economy to slow, then we could start talking about stagnation. I think all of that for now is going to be a bigger issue for the markets than a couple of more incremental technology earnings data points. We covered an iPhone day. We covered technology earnings. We covered macros. We covered higher rates. We covered oil. We covered inflation and then the Fed meeting next week. That's pretty good going. New V&G investments officer Sarah Malik back on Blue Vogue Tech. Thank you very much. A coming up, D Matrix is plugging into Nvidia's AI ecosystem.

12:24CEO Sid Sheff joins us on the new partnership. And while the next big battle in AI chips is in France, this is Blue Vogue Tech. Game Insight on the innovators, disruptors and tech-driven trends shaping today's complex economy. I'm Carol Masser. And I'm Tim Stenevek. Wrap up your work day with the Bloomberg Business Week Daily Podcast. We bring you deeper dives into the story shaping your world from the evolution of AI to the shifting priorities of global business. Plus Silicon Valley power players and the latest tech trends. Catch up on the conversations you missed during the day. Subscribe to the Bloomberg Business Week Daily Podcast on Apple's Spotify or anywhere you listen.

13:32Yeah, the numbers are pretty staggering. I think we're familiar with the trend, but the numbers are quite staggering here. So first of all, TSMC reported a 53% rise in revenue for August. Taiwan does this thing where they have companies report every month. So we get a sense of how the quarter is going for them. That's above the expectations that analysts have for the company to boost revenues about 47% for the quarter. We had an interview with the COO, the Clif Ho and he talked to us a bit about the constraints that they've got on supply right now. They say that typically in a typical year, they'd be building four or five fabs someplace. Right now, they're trying to build 20 fabs. They're so far behind on demand here that they just can't keep up. So they're trying to build fabs as quickly as they can. Of course, fabs take years to build. They're very complicated. They're very expensive. TSMC is the best in the world at building them, but they're having a hard time getting them built in as quick of a manner as they would like right now. And partly it's what you were talking about before. Apple certainly wants more advanced chips, especially in video in the AI ecosystem,

14:34wants to be able to get more capacity online as soon as they possibly can get it. That's on the manufacturing side. On the Fabless chipmaker side, MediaTek, a company we've been covering very closely on the show recently, out with very strong numbers. A lot of momentum for their chips. Yeah, I mean, you alluded to this earlier that we've had MediaTek CEO on the show talking about this new joint venture that they've got with Nvidia in particular. MediaTek is also growing very quickly. They reported strong revenue growth of 44%. They historically have done very well on the smartphone market. Now they're moving into these adjacent markets, especially in AI services. They've struck this deal within video where they want to be able to incorporate their technology in with Nvidia's technology. They want to also move into being able to make chips that will work in laptops and computers and bring more AI capabilities there too. So the company is growing quite strong at this point. They also are trying to keep up with demand. The Rebexpeta-Eustrem, who leads our coverage of Asian technology companies, thank you very much indeed.

15:35Nvidia is confronting a world of more custom chips from more players and growth in specialized inference systems. Its response has been, embrace it. There's no question Nvidia's footprint is the largest. There's no question we're growing share in close models and open models. We're growing share across the entire AI opportunity. And so we're not intimidated by this. We're in fact welcoming it and opening our platform so that they could connect XPUs into it. So that was Nvidia CEO Jensamong speaking to me after the deal with MediaTek on XPUs last month. Today, startup Dematrix is the latest to partner with Nvidia to plug its specializing inference XPUs into Nvidia's platforms targeting ultra low latency AI workloads where its tech works alongside Nvidia GPUs using NVLink Fusion. Dematrix CEO Sid Shashin joins us now. Very interesting. Why is it a benefit to you to be able to plug into a largely

16:38Nvidia based architecture? Yes, first of all, Ed, I'm a fan of the show, so thanks for having me on it. Now this is a landmark announcement for Dematrix obviously. And the biggest reason we embarked on this partnership with Nvidia and we've been working on this for six plus months with them is exactly what Jensam said in his comments earlier. This is probably most certainly the largest deployed infrastructure base for AI in the world. It is in every cloud. And Nvidia hardware is in every cloud, every country, pretty much every data center in the world. At Dematrix, we have a very unique memory centric inference computing technology. We have been working on this for seven plus years, really targeted for ultra low latency inference. And ultra low latency inference computing just took off in a massive way in the last 12 months. Post GPT codex and cloud code and with the arrival of agentic coding, everyone is looking for how they can quickly get access to low latency compute

17:43so that they can really interact with these agentic coding tools. And that's where Dematrix comes in. And this partnership will really allow us to take our products to market very rapidly with the Nvidia partnership. Said in MediaTex case, Nvidia made a very significant investment through the purchase of convertible nodes. Under your arrangement with Nvidia, are they making an equity or any other kind of investment into Dematrix to help you get moving? At this point, I couldn't comment on the investment piece specifically. But look, this is a partnership that is very strategic to Nvidia. They are putting a lot of resources, engineering resources. There is obviously a lot of work. The two teams have been doing for six plus months. And our first goal is to really make sure that the Raptor XPU that is going to be integrated into the Nvidia ecosystem is going to be ready to come to market in about 12 months.

18:45So the biggest opportunity here is really about getting that product in customer's hands because we've got a lot of customer pull for that specific product in the Nvidia ecosystem. Right. So on your newest chip or your newest platform, I should say, is there any data point you can give me on how the partnership with Nvidia tangibly allows you to move faster? In other words, will this deploy into the real world quicker than it otherwise would had you not struck a deal with Nvidia for NVLink fusion? Yeah, 100% look, the Raptor XPU, which is the specific XPU that's in partnership with Nvidia and will be launched as part of this partnership. It's going to be the world's first 3D stacked DRAM XPU. Just let me touch upon why that is so important. It is important because memory is really the biggest bottleneck for AI right now. And we all know that. And what we have done is instead of using HVM, we don't use any HVM at D-MATrix. So what we have done is we have taken DRAM and found a way

19:49to package it directly with the compute. And it is 3D stacked exactly like you just saw in the picture there. And that allows for the architecture to punch through the memory wall, which is really the biggest bottleneck in AI today in terms of addressing latency, addressing energy efficiency, addressing cost. And we have found a recipe, we have cracked the code on how to do it. And we'll be the first to bring that solution to market. So there is tremendous customer pull for that product right now because no other company is going to be within a two-year window of getting access to that technology. And this Nvidia partnership will truly allow us to take that to market the fastest because there is already a deployed base of all that infrastructure in all the data centers. And we don't want to reinvent that part of the wheel. We'd much rather just ride on the Nvidia ecosystem and get the product to our customers as soon as possible. So we're short of time here. Who are those new customers? If I look at your cap table, there's lots of sovereign well funds on there who have lots of national AI projects. We'll have 30 seconds. Yes, yes. It's a combination. And we

20:53will be announcing these customers. Stay tuned. It is a combination of hyperscalers, frontier labs, sovereigns, inference clouds, high frequency traders. Stay tuned. We're going to be announcing these customers in pretty short order. Sit down for D matrix. Thank you so much for your time. There's another important story. As Nvidia expands its ties with specialized AI chip makers, one of those deals is drawing scrutiny. The justice department is investigating Nvidia's 20 billion dollar tie-up with AI inference startup GROC. And whether it was structured to avoid an antitrust review according to sources. GROC remained independent, but its CEO and CEO moved to Nvidia as a part of the deal. US lawmakers have called the arrangement a takeover that stifled competition. Nvidia representatives and a DOJ spokesperson declined to comment a representative for GROC did not respond to request for comment. It's time now for Talking Tech. I'm Yihair Anand. First up, OpenAI is ending its deal for government agencies to use its models for one dollar per year.

21:56That's according to the General Services Administration. Starting October 1st, agencies will have to pay based on how much they use them with a 50% discount off standard pricing. Plus Anthropic is giving the EU cybersecurity agency access to its most powerful missiles AI model after months of back and forth over who should be allowed to use it. Of course, Anthropic has tightly restricted access because it says the model is so powerful it can uncover cybersecurity flaws on its own. And DeepSeek unveiled its latest AI model that charges as little as a fraction of a cent per million tokens, putting even more pressure on rivals to bring down prices. DeepSeek even claims the new model outperforms moonshots Kimi K3 head. Thank you Yihair. Welcome back to Bloomberg Tech. Let's get back to Apple and the iPhone duo. Bloomberg Intelligence

22:56senior analyst Anna McRarner writing today that quote, we anticipate a much better consumer reception than recent models. Anna Rag joins us now. I knew this was a big deal because while I was at Apple Park running around the Steve Joseph's, I got an email from you. And I thought, okay, Anna Rag has something important to say here. You're really bullish on how many of these you think that the Apple will ship in the first year? Yeah, I think the, you know, the rumor was that they had asked suppliers to do about 10 million units or so. But, you know, I think for the first time in years, I've seen a product that has designed far better than the earlier generation of products. The UI was completely mind blowing in terms of the how the software was infused. And the, I mean, I could see so many new use cases in terms of consumers having things side by side. So again, you have to remember, the ultra side of the Apple consumer is fairly expensive. And the rich, I would say. So if you are selling about let's say 240, 250 million units in a year, you know, 40 million is not that big of a deal in terms of like,

23:58that's not even, you know, 6% of the total units you're going to sell in a year. And there are massive amount of affluent consumers who would do that. In fact, in our own circle, I asked a bunch of people and I got an over-developing response that they actually maybe thinking of upgrading for the first time in years. The price point, Anarag, what was notable about the psychology of coming just under $2,000 at the entry level? See, I think 2000 is exactly what Mark Oman had reported, so we were looking into that. But what I was surprised about is when you look at the upgrade plan, it was priced at about 57, 99 a month for 24 months, which means the residual value after two years is also still over 600 bucks. So that number was a bit surprising to me because I would have thought that would be a little higher. I think that's a very attractive price point for people who want to finance it. I mean, $58 a month is not that much if you are thinking about it from that point of you. That's interesting because I imagine just first generation, they'll iterate on top of this.

25:06Also, Anarag, if you would, your assessment of John Ternis is CEO, the Apple iPhone Day keynote for the first time in that role. What did you make of all of it? I think what other things that really caught my attention was that the center of discussion was around the product quality, design and the integration of the whole ecosystem. He talked about it a lot and I think that's where going back to the roots of Steve Jobs, the focus on that. And again, we have Mark has said that he has been working on this project for a very long period of time. I'm really curious to see if he's able to spend some more money, I would say a little more capex into new product developments, even if it's a dud, it's okay. But more experimentation would be really nice. And I have a feeling that we're going to see that trump him. Anarag, Rana, a Bloomberg intelligence with the react. Thank you so much. I want to get more reaction from the sales side. Wumsy Moe and who leads research covering IT hardware and tech supply chain at Bank of America, reiterating a buy rating on the stock

26:08following the launch of iPhone duo and saying that the iPhone duo quote, impresses Wumsy Moe and the Bank of America joins us now. What about it specifically impresses you? Yeah, good morning, Ed. Thanks for having me. Look, I think that this is where Apple excels. It's in bringing the hardware and the software and the services, all of those and tightly integrating it. I was at Apple Park yesterday. I had an opportunity to feel the device. The quality of it really feels excellent. You can play with it, open it, close it, and the way that the software morphs around that, the way that the apps rearrange themselves around that, that's the magic that Apple brings. And it was truly an excellent product. It was definitely a home run from a new keynote from a new CEO standpoint. I think one of the things that's also very impressive is that obviously Apple has worked on this for a long time, but we're seeing the same ethos of product design.

27:09The importance of this, hold stack. You heard of a lot of new chips that are being designed into this product specifically for this product. I think all of these are things that are very quarter the Apple ecosystem and we're seeing a radiation of that again. Wumsy, how many models or do you have a model for the number of units you think Apple can do on duo in the December quarter in its first 12 month period? Yeah, so Ed, you know, actually when we were in Asia back in March, we picked up that the foldable was somewhere between 10 to 20 million units, is what Apple was asking for production. And so as we look through, you know, what can happen in the first year, it's going to depend a little bit on whether or not some of these installment plans are taking advantage of. There's also the handoff feature, which I think is very interesting in coming at a time when, you know, people are also facing like, you know, pressure from a spending perspective. And so I would say somewhere between that 10 to 20 million units, for the year is pretty realistic in year one. I think about 17 million units for the year or so

28:12is where we shake out. Now, as you look into the following year, I think that 10 really starts to expand. You can also bring pricing down a little bit on some of the models and have a broader skew and broader price spectrum around this product as well. But I think to start off, this is going to be a very, very well-covered and designed product. Let's talk a little bit more about the handoff. It's something we discuss less with Bloomberg's Mark Gurman, but the idea is that that could drive it an upgrade cycle in and of itself, because you make it easy for a consumer to go from a this shape phone, candy bar shape to the foldable. Do you really see that as the catalyst? Yes. Yeah, I wouldn't say that's the only catalyst. I think the feature functionality, it's a very good stand-alone device by itself. I just think that for pro users, right, the ability to have handoff, for instance, if I'm carrying two separate phones, one for my work, one for my personal use, and then I'm able to hand off any of those at any given point and time for productivity reasons, that can be really appealing.

29:15So I think it does sort of substitute almost as a productivity enhancer, which I would say is more of me not using an iPad mini, almost instead of using it. Yes. And instead, use the Duo is the way that I would think about it. It's complementary, more so to the iPad from a productivity standpoint, rather than an incremental yet another device that you're going to have to carry. I'd love to get into the specifics of the A20 Pro chip. You mentioned the chip innovation. Two nanometer process, six core CPU, seven core GPU, 40% faster graphics, but basically much better in the AI context. Was that a real move forward from Apple, you think? Yeah, look, I mean, I think it's very clear that right at the beginning, John Ternis' opening statements and in the keynote, it was very obvious that AI is going to be very, very central to the strategy. For a written extensively about the fact that Apple is going to be a winner at AI at the edge. And we think that this whole notion around privacy being able to do a lot of things

30:19on device is where Apple's going to excel. And for that, you're going to need more memory, you're going to need faster processors, you're seeing innovation over there with the A20, as you just mentioned, Ed. And I think that the key here is to be able to do more by loading sparse models, by being able to take advantage of the architecture, which is so tightly integrated with the hardware design overall. And I think that this is where Apple, again, excelled, and we're going to see a lot more innovation in AI across all sorts of devices from Apple. And this is just the start of that. I think AI is going to be very dominant because this is a modernization vehicle, not just for devices, but also for first-party services, and eventually for third-party services. And we think that, for this, is much, much larger than what people expect. So we're very excited about what's yet to come from an AI standpoint from Apple. Wumsy, I heard many Apple executives say, and indeed post, this is a new chapter for Apple. What do you think changes from this point on under John Ternis? Yeah, I think the most notable change here is what was announced as a departure from Netcash

31:24Neutral. And what that really means from an Apple standpoint, in our opinion, is that we're giving John Ternis the ability to go and invest as he would like, right? So we've taken away some of the barriers around maintaining Netcash Neutral, which means you opened up the aperture for more M&A, you opened up the aperture for spending more catbacks. And we've done some analysis around this and think that if Apple were to spend $100 billion cumulatively through 2030, so $20 billion a year, you can get a sizable amount of infrastructure set in place for a lot of things from an AI workload perspective to be done on device and Apple private cloud compute. And so you don't really have to go off to other cloud providers to really be able to do all the AI to take all the AI workloads and be able to satisfy those requests that are coming to them and instead be able to do it either locally on device or do it on private cloud compute.

32:26So we think this is a big deal and we think that this is where John Ternis will be able to differentiate on what we can do on device and on Apple private cloud compute in the age of AI. Ramsay Moan, a Bank of America from Apple Park. Next day on the show, appreciate it a lot. Thank you to other companies that we're watching today or a cornered Toby. By the way, both have earnings due out after the closing bell. One more of an infrastructure hyperscaler story, the other is software, both of them an AI story, both down pretty significantly ahead of those prints. Coming up on the show, Positron CEO. Let me take Agra while it joins us to discuss the chip startups latest funding round at a five billion dollar valuation in the private markets. Now, if you're a Bloomberg terminal user, check out Live Go. Bloomberg PowerPlay is live in New York, some of the leading voices from the business of sport. Join us to discuss the multi trillion dollar global industry. Now, this is Bloomberg. Silas, a reporter here at Bloomberg News, we broke a deal that you're involved in, which was the Yankees deal with Apollo. And then, of course, at the NL.

33:31Hi, I'm Carol Maser with a helpful tip to keep you plugged in throughout the market day. Subscribe to the Stock Movers report from Bloomberg. These are short audio episodes, five minutes or less, delivered right to your podcast feed. Stock Movers fills you in on the day's winners and losers on Wall Street and tells you about the news and data that's driving those gains and losses. Why spend all day watching ticker scroll across your screen? Subscribe to Stock Movers today, an Apple, Spotify or anywhere else you listen. Okay, a cross-private markets investors continue to show an appetite for backing startups aiming to take on Envideas lead, but focused on inference, the latest example, Positron. There's raised $875 million at a $5 billion valuation to bring its inference focus to look into market, Positron CEO, Matech Agrawas with us. Okay, let's just do the round. That was a big round. Yeah. Split into two tranches, but also the participants, super interesting. There must be a

34:33need for capital. What is it? Yeah, no, thanks, said, for having me and like, look, the need for capital is growth. I mean, we've seen the last, the little is the last three days of news. You know, Navier Stokes, Muse, Astra. Look at the amount of compute increases that's going. So the scale is very important and supply chain obviously is a big kind of constraint. So anyone that can scale out in the current supply chain regime and can use capital to do that, that's kind of where the need comes from and that's kind of what this is really driving is, is scale out of our next generation Silicon and Systems. So let's talk about that next generation of system. Where is Positron out with it? And just explain the basics of what you offer. Yeah, yeah, like, look, we're really focused on inference, Silicon and Systems and we deployed at a RAC scale. We have our first product out, first generation call out, less already out, 50 RACs at Oracle getting deployed. And then second generation, the Silicon is called Asmoth, the systems are called Titan and that scales out of the RAC scale setup. Basically, what we are really, really focused on is memory first architecture. So we drive mass amounts of memory capacity and very high realized memory bandwidth

35:37to really get fast inference, but at really good TCA. Like that's kind of the, look, making inference cheaper so that you can have more access to compute, making all this kind of applications, in a code generation, research all those faster is very, very critical, right? So we are taping out end of this year with our next generation Silicon asmoth and then Titan will be in production sometimes second half of next year. I'm taping out at the end of this year, take us from that throughout the process. How does that work out? Yeah, so taping out and then you get your first Silicon back in about, you know, anywhere between eight to 12 weeks from, and we're taping out with TSMC and 3P. They're close partners for us and then, and 3P is the node. And then you get your first Silicon back. And the validation? Yeah, as with most, as expected with most kind of companies nowadays for Silicon companies, you want your first Silicon to be successful as it should work. We expect that otherwise it gets expensive. Yes, yes. And we like look, we spend on emulation and other kind of techniques to make sure that there are as less bugs as possible as we move forward. But

36:39yeah, validation, bring up, you get your first and production systems, you know, to put your Silicon into your systems. And then you're really testing out, you know, kind of all the cutting-in models of whatever the model will be in June and then seeing how that works. You're always about the existing generation 50 racks of Oracle. Yeah, it is Oracle the customer. How does your go-to-market work? Yeah, so for our first generation, the way we have done generally for go-to-market is kind of typical Silicon semiconductor company. So it's a CapEx cell to Oracle. So Oracle buys it as a CapEx purchase on their balance sheet and they pay us as a PIO. So it's a very, very standard purchase. Obviously, as we grow, you know, there is like more emotions around how do you sell, you know, you know, obviously, NeoClouds and HyperSkursch, the Lada $1 per GPU or dollar per systems per hour. And then there's even further optimization into, $1 per million tokens and then all of those things, right? So as a company, we have to evolve with through partnerships and working with all these players. But the first generation is very simple. Do you have some customers lined up for these next generations? Even though given the stages

37:42there are, and what kinds of companies are those? Oh, name them, it's up to you. Won't name them yet, but by suspected. Yeah, yeah, but really, you have to think about the very, very typical kind of space, you know, the kind of AI labs or model labs companies, NeoClouds that are out there, HyperSkullers, that, you know, and one already Oracle, our customer, you know, you obviously have a little bit of look into the sovereign play as well, because that they are deploying and building out a lot of their own inference data center capacities. And then really anyone that has to do token as a service or inference as a service. So either they can be their net consumers of themselves, of tokens or video generations or someone who's packaging them and selling them into the market, right? So that's kind of your broad ecosystem of the customer base for us, we're really focused on, look, it is a go-big or go-home market kind of thing in the sense that you have to focus on this very large application companies to really get a large footing in the market. Let's finish by talking about Jemmins Paradox and also in video. So on Jemmins Paradox, the idea that a resource gets

38:43more efficient, the economics improve and then demand goes up. Is that what you see? And then earlier you would have heard Dmatrix on the show, you know, partnering with Nvidia on NVLink so that their custom platform slots into existing GPU-based architecture. Both of those things are true at the same time. Yeah, so under Jemmins Paradox, I mean, like look, I think it's, you know, what, Nvidia, sorry, OpenAI recently said that when they slashed the prices by half, they saw that utilization go up by 10x. Today deep-seek, we 4.1, amazing, amazing launch, I think, very cheap, sole level performance based on early results. I haven't looked into the architecture yet, but like look, again, really great for use cases and utilization. I think that will go up. It's a good story for us as well, especially around memory. They're using LPDDR5X, we are also doing that. So so that's kind of really interesting. On Nvidia's kind of working, like look, Nvidia is absolutely like the main player in the market, right? Whether it's training, absolutely main one, and then even in inference, they are the majority kind of there. So for all of us, including positron AI, we

39:44really focus on how can we work with them, right? You know, we have to be in the same data centers, in fact, even same racks as them to work with them, right? So we also plan on connecting. We do in NVLink fusion agreement. We will definitely, you know, try. Yeah, we'll definitely like talk to them and try it, but like without even like just wanted to make clear also on technical side of things, you can directly connect with NVDGPUs even today through standard, you know, Ethernet and Infinivan connections, right? So so this is not like this doesn't stop you from doing it, but obviously you want to get closer and then like look, you mentioned the people on our on our board, right? You know Gavin is on our board. He's very, very clear. Yeah, and Baker is a ladies. Correct, Gavin Baker has a crazy, he's very clear about, you know, like look, we have to, you know, this is a heterogeneous computer market. This is how it's going to grow. Post-Trump CEO, Mitesh Agrowile. Thank you. Really appreciate it. Some breaking news crossing the Bloomberg Saudi Arabia's well-fund is considering combining electronic arts with savvy games sources say a deal that would bring blockbuster titles like Madden NFL and Pokemon Go under one roof. The sources point out no final decisions have been made and a deal is unlikely to happen until savvy completes its six billion

40:48dollar acquisition of Chinese mobile gaming business, Muntan. Coinbase is betting stable coins who could become the next big growth engine. CEO Brian Armstrong says the roughly 300 billion dollar market could grow tenfold by 2030 as more businesses use digital dollars for payments and moving money across borders. He says improving regulation in the US could accelerate that adoption with a key piece of crypto legislation facing a Senate vote next week. He's split with Bloomberg's Hezzlin.harmon. Well, regulatory clarity has been getting a lot better, you know, from a US lens last year, the Genius Act was passed into law for stablecoins and we saw 150 large companies adopt stablecoins in the wake of that. And now the Clarity Act, which is the second piece which deals with crypto market structure, it's right on the finish line. We actually have a big vote next week in the Senate to see if that legislation is ready to become law. We've been meeting with both sides of the aisle for many years on this. There's hundreds of pages of compromises. The banks are many banks have come out and endorsed it law enforcement groups, the crypto companies, and it's good

41:50for America, good for the consumers. Today's big number, $23 billion. That's how much Elon Musk boring companies valued out after raising $3 billion in its latest funding round from the UAE and affiliated investment entities. That's after slow progress over the last decade in realising Musk's vision for a series of ultrafast underground hyperlutes. Bloomberg's Karl Porter joins us with the details. Let's go into the round. Quite a big raise, interesting valuation. Yeah, on both counts. It's quadruple what they got valued out in their last fund raising round. And it comes along with a new anchor investor and incredibly ambitious plan. You've done a big take on boring in this year. Where are they at? The idea was, by the way, boring code balls tunnels and those tunnels get used to things. But are there actually any of them out there in the world? There is an active unit you can go on in Las Vegas. They started in 2019. The eventual plan is for a, I believe, 60 mile network with a series of interconnected tunnels.

42:53They currently have 10 tunnels operational. I believe it's about 11 miles and the original completion date of 2027 for a complete network certainly seems very unlikely. They're also boring down in Nashville. They agreed that last year. The original plan was that at 10 mile music city loop would be completed by 2027. I'm being taught by sources that is a little bit unrealistic. And then they've struck in memorandums of the standing with the MRR of Dubai. And they also offered a few free projects in two US cities, one in Louisiana and the other in Texas. Very quickly. Do we have any sense of how involved Elon Musk is in the company? He defers on boring a lot more than he does in his other companies. He has a very well established team in place there. He's talked about it a lot less recently compared to a lot of his other endeavors. He was certainly very, very involved with the style when he was living in Los Angeles and was straight with the traffic. Boomboast, car reporter, on the big round, the boring code

43:56just did. Thank you very much indeed. That does it for this edition of Bloomberg Tech. A lot going on in markets. There's a lot of news in the world of technology as well. Recap it on the podcast, which you can find on the Bloomberg terminal as well as online on Apple, Spotify and IHAR. It's Thursday, one more day to go in the week. Thanks for being with us. This is Bloomberg Tech. Hi, I'm David Weston. Join me every week for the Wall Street Week podcast to hear stories of capitalism from around the world, from geopolitical tensions and central bank decisions to artificial intelligence, energy and infrastructure. We sit down with the CEOs, economists, policymakers and thought leaders whose decisions are shaping markets everywhere we find them. Subscribe to the Wall Street Week podcast on Apple, Spotify or anywhere you listen.