'Bloomberg Technology' Full Show (01/06/2023)

'Bloomberg Technology' Full Show (01/06/2023)

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I'm Caroline Hyde Bloomberg Quicktake is a Neil, and I made Ludlow at sea at the Consumer Electronics Show in Las Vegas. This is a special edition of Bloomberg Technology coming up this hour. Tesla concerns they worsen as the auto maker drops prices in China. Again, investors call it a train wreck, is it? Plus, competition against Tesla ramps up as Mercedes Benz reveals plans to install thousands of Eevee ultrafast charging stations globally. And Samsung posted a historic drop in

profit as chip sales, they plummet. We discussed the demand outlook with semiconductor giant Qualcomm. Its CEO, Christiana Amon, joins us. But first and foremost, we'll get to those markets.

And today was a day of macro, not micro. Today was a day of jobs, data of non-farm payrolls showing that basically got a Goldilocks scenario when it comes to the Federal Reserve's eying of the jobs market. The S&P surged more than 2 percent. The Nasdaq having its best day in a month. And this is largely because we saw wage inflation, the pressures that just fall back somewhat.

So still resilience in the job market. One of 32000 jobs added, even though we keep talking about those headlines and technology of job losses that this is not featuring at a federal macro level. And therefore, we see a resilient job market, but a cooling in inflationary pressures, two year yields, absolutely dull, but money pours in to the bond market as we think the Federal Reserve can take its foot off the gas when it comes to rate hikes that Su Keenan again. Let's get into some of the micro moves, because amid this joy in the market, we see some of the big tech moves move higher. Apple with the biggest mover in terms of points we're seeing up while four point six points, up almost 4 percent.

But that really helped the benchmarks move to the upside. It's once again worth more than two trillion dollars. First Solar getting a bid. This is in light of Wells Fargo saying

it's one of their best ideas. 2023, the solar company surging 1 percent. Point eight percent when the best performers on the S&P and Biogen. I want to shine a light on from biotech for you today because the FDA giving it sped up approval of, of course, the Alzheimer's drug. The Biogen is in partnership trying to tackle at the moment. So we're seeing up 2.8 percent. But really, overall, we want to dial it back to what's happening and see what's happening on the floor, what's happening in terms of, well, the car story, really, that is on everyone's lips. It really does feel like a car show

rather than electronic show. Yeah. It's day two here in Las Vegas. And even ISE is still top of mind, not just the announcements, but actually everyone is paying attention to Tesla erasing a drop as much as 8 percent Friday. This is all about competition heating up in China. Such an important market shares down after the company slashed prices for its cause in China for the second time in three months. And then you look at its rival, DAX, half way back.

B, why raising prices and posting record sales? I'm so pleased, Caroline, that Bloomberg is Kevin Tynan is alongside me here in Las Vegas, of course. Bloomberg intelligence senior analyst for autos. You have a very clear view on this. This is a demand problem for Tesla, isn't it? Sure. Look, and globally, regionally, the auto industry is cyclical. And these ivy makers, including Tesla,

which is the oldest of all of them, just haven't been through this kind of demand or here or in China here. Money was easy and cheap for years. So we went through this period where valuation goes through the roof because it's easy to afford vehicles. And this is the first time that these companies are really gonna be challenged, I should say, to quote, Tesla closed up almost 3 percent. It was down almost 8 percent at one point. The market's kind of making up its mind

that over the course of weeks, the downward pressure on the stock was about demand. It seems there's a competition angle. You know, you look at what Mercedes announced here, you know, focus globally, but also United States in China. There are so many more players or investors kind of now waking up to the idea that Tesla is not the only game in town. I think so. And I think on top of that, I think the

idea of the adoption slowing is becoming a reality as well. In terms of mining materials, who controls the materials increased in prices of the materials? And then the real environmental impact of the technology, providing the energy generation to power a fleet of electric vehicles like these are all things that through the period that is ending now, really weren't talked about or considered as deeply as they are going to be now. Well said. And it's interesting that one of the co-founders of Tesla went off to try and think about how you can recycle batteries, how to make that more of an environmentally friendly means and driving. Kevin. I'm interested that at the same time as worrying about Tesla in China while they're dialing back prices for Tesla, big just seems to be cleaning up because this is a company that's backed by the likes of Warren Buffett. How big is the pie getting of Eevee and how much is market share being eroded by other players in the space now? Yeah, look, and ideally each of the regions, if you look at North America, you look at Europe and you look at China.

The governments are essentially the wild card in terms of whether penalizing automakers for not doing more TV or subsidizing the losses. And here in North America and us specifically, we don't we're doing neither right where we're incentivizing the consumers. Federal tax credits. So you have a different demand profile and supply profile in each region based on how the government gets involved. And in China, you know, their push for adoption is much greater than it is even in Europe and certainly more than it is here.

So you're just going to get this kind of demand profile that we don't know over here and that is being driven by penalties in Europe. All right. Bloomberg Intelligence is Kevin Tynan. So get to hang out and pick your brain here in Las Vegas. Thank you. In a few minutes time, we're going to

discuss the future of electric vehicles with Mercedes board member and CTO Marcus Schaefer. Yes, so much more to discuss. And in fact, and as we dial back demand for autos, in fact, as we dial back demand for anything that involves a chip at the moment, semiconductors have been under some significant pressure. Just look at the quarterly profit coming from Samsung Electronics was its initial profit forecast. And in fact, it said it fell the most in more than a decade. Of course, it's a little bit of a sign in the global economic slowdown and it's hurting electronics demand even more than many had actually expected sometimes. Operating profit plunging. Sixty nine percent. Remember, this is the bellwether of

South Korea is its largest company. And Samsung has kind of been grappling with weak demand for memory, cheap chips, smartphones, starting back displays, of course, less in demand. It's all about what had been the pandemic ramp up ad and then this sudden dial back. We see it whether it's the purchasing of these goods. And of course, in many ways, that's why we see a reflection of people cutting jobs at these sorts of companies to. The dynamic here is fascinating.

Yes, that's just a complete drop in demand for D Ram, right? Those memory chips. Also, think about Apple, how difficult it was for Apple in the final month of 2022. The worries around demand for Apple handsets and how there was such a revision for the full year. No.

Well, remember, ironically, Apple is so important to Samsung's business as well from that memory perspective. So we're going to continue that conversation here in Las Vegas later this hour. We will discuss the chip outlook with Qualcomm's CEO Cristiano Amon Carey, which is, you know, I can't wait because they are so key to that smartphone market as well. And he's actually managed to weather supply chain so well with the business and has remained pretty bullish throughout all of it. We'll see how he's talking about overall

demand in a moment. Meanwhile, coming up, so much more to be talking about. We've got more on cars. As I kept saying, this is kind of an auto show as well as electronic show. Gonna piece the conversation. Michael Schaffer, Mercedes Benz Group is the car maker launches efforts to expand their own electric vehicle strategy. But first, we've also got to talk about Ed.

Wearable tech continues to be a top trend. I know you're seeing it. Yes, it is only getting bigger, according to Aura CEO Tom Hale. Just listen what he told us a little bit earlier in terms of the holiday season. We actually went into the Black Friday, Cyber Monday with a price increase and we saw incredible unit volumes at incredible unit economics as a result. So we're actually bucking the trend.

I think that's part of a larger trend post Covid. People are much more aware of their health, of their wellness, how they're feeling. We've got a mental health crisis amongst teens. We've got people really start to think about longevity. And sleep is the foundation of all these things. And as a product, we've been sparing right into health. We want to we want to extend from sleep

into heart health. The American Heart Association just declared eight key factors in health. Sleep is one of them. And if you're getting bad sleep, you're going to know you're going at higher risk for cardiovascular issues, mental cognitive health, Alzheimer, Parkinson's. People are just much more aware of it now. And that's really the tail when it's driving it.

Yes, there might be short term economic concerns, but what values your health? Priceless. I think 20 22 was one of the best years in the car industry. Right. From the car makers perspective, I think supply is still limited and demand is still exceeding supplies.

I don't see 2023 as a challenging year from the automotive perspective. As the CEO of Mobilized here at CBS Las Vegas. Sustainability has been a big focus, not just for tech, but also companies as well. Yes, yes. Yes. Luxury car maker Mercedes Benz

announcing plans to build a global network of ultrafast charges for even the first stations this year in North America, later expanding to Europe and then China. And I'm delighted to say, Caroline, they're here with more on the IVA outlook for Mercedes Benz is their chief technology officer, Marcus Schaefer. This is a real announcement. This is a real move by Mercedes to drive evey adoption, to drive electrification.

Talk us through the timeline for rollout of this charging infrastructure. Well, this message is branded global charging infrastructure is complementing a roaming network which is currently existing and consisting of 1 million points. So it's a great addition to this network. The timeline to establish our own network globally in North America, Europe is starting 23 and completion actually is planned by twenty 27. My question is, why are you doing this?

I know you have electric vehicle offerings in key markets. Do you think that this will be a driver of sales for those legacy Mercedes buyers who want to go electric? I guess a concerned about charging. Why are you doing this? Well, if you are a driver and you know all about the experience and all the shortcomings range excited. But we want to provide to customers to mislead as customers a real premium yield that range anxiety is still an issue. Absolutely. Absolutely.

I mean, despite we offer probably the best ranges in class, just look at the equals more than 400 miles of range. That's phenomenal. But still looking at the market, I think still the range excited. So to address this, we need a premium charging experience and that's exactly what we're targeting. Let's look at some of your electric vehicles and let's look at ultimately demand for them as range anxiety. But there's also economic factors at play at the moment.

Markets, you are perhaps ahead of what we're seeing on today with Tesla, Tesla cutting its overall supply to China. You had to do that back in November. What does the man look like for you globally and in specific? What is it like in China? Well, if I look at the global markets, there's a high increase and the option of Mercedes Benz vehicles. So the piece we're introducing and the growth rate we are having is more than 100 percent. Looking at the first nine months of 20, 22, so customers accepting our vehicles. So the introduction is just in full swing. So we're in the market with eight electric vehicles, which is probably the most comprehensive portfolio of use used in the market. And the first cars entering the Chinese

market in an interesting segment, the Top End segment, though, we just were in the core segment, starting in the core segment. Now we're entering into the Top End segment, which is not existing at the moment. The segment over 1 million R and B, which is a one hundred fifty thousand US dollars. That's an interesting segment. And now the first offering is therefore mostly dispense the U.S. Electric Gas plus.

Interesting. So the ultra luxury sort of price point is still there, Marcus. But what about the middle? And what about pricing pressure that. Well, it's a it's a market that's not a solid market yet. So there are always new players coming into the market. The ISE market is very well established over a long time. But the market is very fragile at the

moment. New players coming into. So it's about content, customer acceptance and pricing. And so the market is just getting in the balance at the moment. Were you surprised that you had to cut prices in China in November of last year? Was that something that caught you off guard to say? It is a little bit. Well, as I said, it's a new it's a new bracket that's coming together.

So there are new players entering this. So we were in this bracket, 11 million. Our NBA started there and we did reposition the place. But still after repositioning, we are in the top notch bracket still. Talk to us about adoption overall. Marcus, we actually went to our own

audience. We asked them in a poll on Twitter. At what point are they going to be getting into the TV space if they're not already? And actually, in large part, 15 percent said they already owned one. But the majority, 40 percent said that they'll be buying one in three years plus. So they still need hearts and minds while they still need perhaps infrastructure or building out. But what also about do you need to meet?

From a supply side right now? Have you got the right talent? Have you got the right software technicians at the moment? Are you managing to avoid any supply side problems coming down the pike? Well, I think there are now lots of challenges starting from raw material through battery assembly plants attacking all these elements in a really a 360 degree approach. So we're taking care about quality and so we're changing our sourcing activities, really taking care of raw materials, talking to mining companies, having offtake agreements, establishing our own or joint venture sell factories or battery assembly plants and converting all production and global assembly plants worldwide. So we are in the midst of completing basically this is really a 360 degree approach here. And the one missing point was the charging infrastructure. So now you have it all starting from raw materials up to a charging really in the comprehensive 360 degree.

That was a big commitment on charging software. I want to talk to you about Formula 1 car. Not today. Another time in Formula One that taught me about software. It's competitive on the hiring side. You look at some of your peers. VW had some challenges with software. Do you feel happy with where you are with talent, with the timelines for development, for the platforms that are in work? Talk to me about software. Well, we are absolutely happy.

So we just completed hiring of 3000 additional software engineers. And actually, the company is very attractive until we had really no issue. Attractive talent, the best talent on the software side. So right now, we establishing our own operating system ambiguous, we call it. It's a chip to cloud software, actually. And it's on track. So we're going to market in twenty five, actually.

And even then the next class coming out this year, you will have the first glimpse of how this operating system will look like. So there's great software talent onboard. And as we were able to show here at CBS or we have the first idea of where this software will deliver in terms of performance. I've got to ask you about autonomy level 3.

You've received the permit for Nevada, right, in saying California maybe this year. Do you think that that will happen? Oh, are actually really, really hopeful that that's going to happen soon. Absolutely. So the DMV of Nevada approved all

application. That's a great step. Moving from level two to level three. We call it the moon landings for the first time. Really?

That responsibility is taken over by the vehicle itself, not by the driver anymore. And this no hands and no ISE on the road anymore. But still, of course, safety is a key element for us as Mercedes-Benz. She has been so great to see these

bands, chief technology officer say, well, enjoy the rest of CBS. Interesting. We'll be speaking much more with Qualcomm about autonomous driving and the technology behind it.

Hey, Ed. Yeah. We will do that now. We'll have that conversation later in the show. Coming up, in the near term, U.S. and Bahamian officials reaching a bankruptcy deal in RTX crypto assets.

More on what both sides propose to end the liquidation battle between the two states. This is playing by. So movement, when it comes to RTX, Bahamian and U.S.

officials overseeing the bankruptcy of the crypto empire have actually struck a deal. They're going to work together. They're going to end most of their legal disputes. Now, this comes at a time while the ripple effects of RTX are going far and wide. We've got to focus in on Silver Gate, the key lender to many crypto firms. It, too, continues to plummet. Let's talk about the shares lied about the implications of reimbursing Qiang following the RTX implosion and the contagion effect.

Silver Gate. Such an important player when it comes to the crypto ecosystem and basically saw a run on the bank, but for quite different reasons. And we usually expect for a run on the bank. Yes.

So Silver Gate is really one of the most important bank in the crypto space because it provides banking services, deposit services to companies in the crypto industry, which is historically kind of cut off from the rest of the banking system. And so Robert Gates really made a name for themselves as being this very essential provider of banking services to crypto players. And it benefited over the years when the crypto market was in a bull run. But now, as we know, one of their biggest client was FTSE, which is in trouble at the other. Depositors who are mostly concentrated in the crypto industry are also pulling out assets and deposits from the bank. And he's we've sort of run off a bank for surrogate, which is very different from the other run of banks that we've seen historically during the Great Depression, for example.

What's extraordinary is that it survived it. It survived an 80 billion draw down, a 70 percent basically pulled down on deposits. What it isn't surviving so much is investors confidence. In particular, Kathy Wood, well known for buying the debt, has not bought the debt on silver gate. In fact, they sold out almost entire entirety of their stake.

What's investor sentiment like Romney's name? Do investors still have great doubts about the future of the company? I think Silver, again, is a really unique name in the market in the sense that it is really doubling down on crypto. There are other banks that are friendly with crypto, for example, signature bank. There are starting to scale back their exposure to the crypto in the. But for a surrogate, they talk about how

they're still deeply committed to serving the crypto clients. And that, of course, introduced group uncertainty for its future because there's all the regulatory overhang and there's also the the the market conditions as not looking good for crypto. And therefore, analysts are worried that the run of the bank will still continue for a silver gate. Hey, Yuki, I read your story yesterday about the worst case scenario. Are we at a worst case scenario with all this crypto concern? Sadly, I think there's still a significant concerns in the industry for some of the remaining big players. This week, for example, Genesis were solved further lay off for the company.

And then we're still looking for more updates from both Genesis and the parent company PCG. And they're both just big, important players in the crypto industry that historically play the important role. Building up to industry for others. So there's more to see for sure. Besides the companies that are already in the bankruptcy court, you Yang has been continuing to follow the fallout. We thank you so much for it from Bloomberg News. Meanwhile, of course, many of sort of rift that you may be getting out of crypto and you're going into the new big talked about space, which is A.I. artificial intelligence.

And there's some latest news on that, because we're all talk about Chachi Beatty and some of the generative A.I.. But New York City public schools have taken, well, aim at this. They're banning students from accessing chapter CBT on its networks, on its devices, saying, look, the chat CBT, which, of course, an open A.I. program for generating text and some speculate could be used to cheat on essays or other assignments. And the public school system is therefore saying, look, they're worried about safety, about accuracy, and actually more about wealth creation, creativity, about intelligence and the way in which children, youth build it.

And this, of course, was something immediately that people thought about when they started playing with this particular program. Is that boy, whereas content editing gonna go, where's copywriting gonna go? Where is the ability to be able to mark the student's essays? I just find it astonishing how quickly we went from brand new exciting tech to plagiarism and how many column inches already written. Anyway, coming up, U.S. manufacturing in 23 was hit. All things Siemens, all things tax, next. This is Bloomberg.

Welcome back to Bloomberg Technology Caroline Hyde in New York with Ed Ludlow, who is out in a very busy Las Vegas. Yeah, there's a lot going on, right? You get caught up in the moment here. You can't ignore what's going on globally.

There are macro economic concerns, but a report from Bloomberg Intelligence says U.S. machinery 2023 sales and earnings may prove more resilient than previously thought. We've had all kinds of announcements here, and so I'm delighted, Carrie. We're joined by Siemens U.S. CEO Barbara Hampton.

Barbara, let's start with farming. I didn't expect you, of all people to come to Las Vegas and talk about vertical farming. Please explain. Well, who knew that actually the

agriculture sector is adopting digital in a big way. And today, Siemens and 80 acres announced our partnership. We've made what is it? What is the partnership? Eighty Acres is a vertical farming outfit to entrepreneurs in the food industry, decided there's gotta be a better way to get healthy food to people and eliminate the long logistics supply chains that actually result in less nutrition. What they've discovered is that with vertical farming, they can produce 300 times the produce from a single plot of land that would be possible outdoors and and they're using Siemens technology to make that happen. I want to ask you about that technology. Know when people hear the name Siemens, they think all kinds of things, electronics, industrial equipment, healthcare, equipment.

Which part of your business is it that is making this happen? You know what? This is in all of the above. And we've actually been engaged in so many ways. It was our Siemens financial services that first identified the company and made the investment. Then it was our digital industries team bringing the software and hardware to help 80 acres control there their growing process. Then we discovered that they needed the help of our smart infrastructure team because the building envelope actually there they have sustainability goals. So here is a farm that uses ninety seven percent water, less water than than regular farming.

And so it's a sustainable solution using all of Siemens. Now, I say it's all of the above because think about health care. Do you know food is medicine? And this is a team that is now figuring out how to engineer crops so they can deliver the nutrients we need to actually combat disease. What was interesting, in the end of your

press release, you then push it forward to the future. You talk about the R and D. I mean, talk about Siemens technology, about A.I. machine learning, how that's going to optimize plants in the future. In this macro environment, how much is

Siemens still willing to be committing capital to R and D to the future when we're so worried about the here and now? Oh, no. Siemens has a long history of investment in R and D because we know we can't sacrifice the future. And so what we're doing with 80 acres is. Yes, partnering them on the research and development. The big issue that we're trying to work on now is how to scale. It's one thing to be able to put up a single farm and they have done so in seven cities around the United States.

It's another thing to then make that IP available to others who might want to establish their own farms and then bring that technology into the hands of others who can make use of it. Talk to us about that. Well, ultimately, we we are at a world, not just the nation hit with inflation. We're worried about access to food, particularly when you think of European issues, particularly a war between Russia and Ukraine, the impact that's had on agriculture more broadly. How will you as a as an executive, as a leader of an enormous business, thinking about the macro headwinds, about inflationary environment, about the labour market, you fitting positive or a little bit more worried? Well, of course, we have to be.

These are grave times that we have to be very realistic about the situation we're dealing with. But we also have to understand that these moments of disruption give us the best opportunity to shape the future. So what we're doing at Siemens, we are a company with technology that transforms the everyday. We're in the backbone of economies

around the world. So what we're doing is working with our customers to make sure that we're helping them meet the needs of their local customers in order to help people get through this and actually thrive. I believe that where we're going to get through this disruption is some new modes, some new business models, some new ways of delivering products and services. I'll say at the edge where we've been

able to bring technology out to the rest of the world, really mechanical question, indeed. All layoffs on reality for a company like not at Siemens. Right now, the situation we're in is that our backlog is huge. I don't know if you've seen the numbers,

but in 2022 we had an absolutely stellar year. And so at the moment, we're working hard to meet our customer's existing requirements. In fact, I have opened I have job openings across the U.S. and so I'm hoping that people will come to our website and let us know if they're interested. And I do think, though, that overall it's an interesting point you make asking straight on about jobs, and I'm instead, Barbara, more broadly about your clients. You said you're really your focus is to

help clients with their own supply chain, keeping things local. Are you sitting a client saw in expansion mode or contraction mode? Well, here in the US, Siemens is making expansion plans. You would have seen last year we made the commitment to build even charges, a million heavy charges over the next four years. And we have new operations going up in Texas, for instance. In addition to what we already had in South Carolina and in California.

But in addition to that, we're looking forward to expanding other portions of our operations because quite frankly, with the investment being made in the American economy right now, we see investors going back here. On that note, I ask you about software. You know, you made this kind of software push in the U.S.. I want to know about this excessively accelerate. I want to know about integration with

brightly. Can you just give us a quick update? Absolutely. Yeah. Brightly. How fun a North Carolina business that's

been brought into our smart infrastructure business. And so they now have access to the full portfolio of customers that Siemens has across the country and around the world. So that integration is going well. We're continuing with additional software investments. We are absolutely working closely with the U.S. government because, of course, these deals get a lot of scrutiny these days.

But I'm happy to say the U.S. government has been saying Siemens as a good responsible owner for these businesses. All right. Well, perhaps more deals to be announced. Carry Siemens U.S.

CEO Barbara Hampton. Thank you very much. Now, finally, some good news for the airline industry. Delta is now offering free Wi-Fi for all passengers. Earlier, I spoke with Delta CEO Ed Bastian about the news. This is about giving our customers something that they've been asking for and wondering about for years. Why don't they have it? And we also know that there's no place in the world to pay for Wi-Fi except on an airplane and that we needed to fix that.

You and I were hearing 2020 and a lot of this is coming full circle. It seems like as part of your big tech plan, you are going out to make further investments. But talk us through those investments in cabin tech that you're going to improve. And is there a dollar value that you can

put around all of this? Well, we've invested a bit over a billion dollars the last few years just to bring the free Wi-Fi to our customers with Vice that that we're launching that because it's not just the satellites that you pay for, but it's also the equipment, the routers, the downtime on planes. So it's been a pretty significant technology investment in its own right. Secondly, we're going to be bringing more than just Wi-Fi. We're going to be. We also introduced Delta Sync, which is going to be a broader entertainment, experiential channel, channel that when you're onboard Delta, we have exclusive partnerships with T-Mobile and American Express and Paramount plus to bring quality experience that you can only get on Delta aircraft and not on the ground. The other thing that we did over the last several years, which again we talked about three years ago, would CBS was the airport and ground experience. We have opened the new L.A. facility, the new LaGuardia facility,

the new Salt Lake City facility, the new Seattle facility ahead of schedule on all those projects because we put the pedal down during Covid. Once we realized that we were going to be stable and make it through, we accelerated the push to get this worked on. And so we're actually a couple steps ahead of where I even thought three years ago would be. Interestingly, it's kind of a tough one, isn't it? And I don't know if I want to have great Wi-Fi on a flight because I kind of enjoy the whole non contactable element to all of it. But then when you do need to work the

frustration around paying a whole lot of money and it will flow, not really working that efficiently. It's good to see that it's someone's trying to get ahead of the curve. It feels as though I was going to have to follow suit. Yeah, it's interesting. It is the first move and he promised the speeds will be faster than even in the room. He gave the presentation in here at CAC,

at CBS at Bastions, a tech savvy guy. And I asked him, do you need to hire more tech talent here right now? I think we've got this. Yeah, they recently did that 60 million funding round for job as well. So really trying to double down on the investment in tech.

Meanwhile, we'll get double down more on the old technology information coming from Qualcomm. We're gonna talk. Well, satellites and chips and that conversation to follow CEO, how he navigates what is perhaps some concerns about and demand this happening. So earlier we talked about how Samsung post data historic 69 percent drop in profit as chip demand drops worldwide. How competitors like Qualcomm to avoid the same fate. Well, luckily, CEO Chris Yvonne Man is here with me in Las Vegas. I actually want to kind of start in the news of the day, which kind of answers that question.

A deal with Iridium to bring satellite based messaging technology finally into the real world. I don't mean to cause offence, but we've been waiting for this kind of thing for a long time. Yeah, well, we're very sad about it, but we're good to see you.

Happy to be here. We're very excited about this announcement. We're freedom. But I think I need to probably step back and tell what he means. We work with them for over two years to really design this technology that could leverage their satellite network in a regular phone.

It's the regular phone form factor, not a specialty satellite device, but that whenever you are in the globe, you have the ability to be connected and send a message to anybody you want. And I think it's about redefining connectivity for Qualcomm's Snapdragon to say we were going to be connected. Period. Well, let me ask that.

Is that. It stops at the phone or do you see a business case where you can use satellite connectivity in other forms of devices, electronics? Great question. So the way we're thinking about this, and I think we're at the beginning of a new era when satellite communication is going to be at a default. So the way you think about communications, every phone and every other device have seller have Wi-Fi. You know, you get at said come in.

We're talking about some very interesting use cases. For example, we're taking this technology as well to laptops. So a laptop, even if it needs to send a message to the I.T. department or vice versa to unlock cars. Think about your have a car and there's

an airbag deployment. It's an important message. You need to get out. There is an airbag deployment or how you put pins on a map, how you can look at a car, how you can find a car.

So and I think it's just the beginning of a number of applications. I think this sort of sums up your tenure in so many ways because John ISE is 20 21. You come on and you've told investors again and again, we are more than just smartphones.

We are more than just laptops. We are about automotive. We are about getting into new types of devices. Is that the answer? How is that currently going to weather what is basically a worry around end demand for things like smartphones? Look, we are very proud of the company diversification strategy and we've said it correctly. We're going to see Qualcomm Technology and Alta. You see Qualcomm technology is the brother IO t wouldn't want to think about CBS.

This has been an outward show for us. We have five major announcements. I'll start with something which is people didn't expect at Qualcomm. We unveil a concept car and people will say what? Qualcomm, a concept car? And we'd basically showing what's possible with this technology. When you think about the core connect connected to the cloud, the snapdragon of crop it in a dress and autonomy. We also announce that we have a partnership with Salesforce.

Right. Cause car companies now with all of those beautiful screens and all this connectivity to the cloud are going to be talking to their customers all the time, not only when you go to the dealership. So all of a sudden you need to do CRM in the car. We announced that we're in a second generation autonomous chip. We announced that we now have ability to

bring a DAX to entry level course. So we're very proud of all the progress the company is doing in auto. And yet Christiano and demand for cars is under pressure. We see that with Tesla's concerns surrounding that business at the moment. We've got concerns around and demand for so many products. Give us your macro perspective, your

bird's eye view. When will we start to see a pickup in demand? When are you seeing a weathering of this current economic storm? OK. And that's that's a very interesting topic of conversation because this is an industry in transformation. So I think there's two aspects.

One aspect is, you know, the macro definitely impact demand also has been more resilient than other consumer sectors like handsets. And the reason is because there was already pent up demand for outdoor fall coming from the supply shortage. But, you know, like everything is impacted for the macro. But the other aspect is it is actually more interesting, which is investors are looking at car companies and asking two questions. Are you electrical? Are you able to electrify? And are you digital? And the digital is a necessity. Car companies are investing in digital very heavily because that's the future of the industry that's going to define winners and losers. And we see the opportunity for semi's in

each car to increase faster than growth of the number of cars. I'm going to ask you something about a school of thought that's building the smartphone. Boom and bust cycle is dead. We are only driven now by the need to upgrade as in the boom cycles.

Dad, I'm sorry. Do you agree that it's just upgrades that drive adoption, drive purchasing? OK. So smartphones is today the world's largest consumer electronic products.

Right. And actually, you can think about computing, mobile computing now happen on a smartphone. Now, everybody in the world, few exceptions have a smartphone. So it's a very mature market. So we just only grows organically.

So as the market doesn't grow. So has been now in all regions basically being driven by upgrades. So while the units are, we're still have not recover from pre pandemic levels and the total size of the market. But we see an interesting phenomena. People when they buy their next smartphone, it is really an upgrade market.

Now they want a better phone. We saw, for example, with the pandemic collaboration and productivity came the phones, people doing team calls and random calls. They want a better camera. They want a better display. I think that trend will continue. And we just launched 5G, 5G still being deployed. 5G advances coming. It's going to be the next big upgrade of 5G. And I think that's going to drive

volumes you see on it. Another trend amid the pandemic, of course, more to the negative rather than different way in which we use our smartphones with supply chain. That was actually one that you navigated very expertly. If I might say so.

But just talk to us about supply chain headaches for you, for Qualcomm, for the industry there in the rearview mirror now. I s s he relates to this supply chain constrain. We are a little bit in the rear view mirror. I think that has been largely resolved, like I can say today, that we have no shortage on any technology. Other companies still have some shortage

there. They're gonna be doing better as we go 2023. You're going to see some residual shortage on alto, maybe all the way to the end of the year, but mostly behind us so that I think that part is solved. The other exciting part is there's no broader recognition that semiconductors are important. I think important for the digital economy.

I think with the supply chain shortage, if there's one positive thing is deep, it was understood the importance of semiconductor companies and there is this desire now to build capacity in different locations. You see of the United States chips, the Science Act. You see the European chips. And those are actually building capacity

in a geographically diversified way. That's in the we're in the beginning of that phase. And that's very good for the industry and for the long term. You have been a regular retainer, USCIS, even when others have known you were here last year in person. Can you just give us a sense about what it's been like this week? Have you met with many other CEOs, other executives, business meetings, or was this simply about the products announcements? Very busy. I know. I'd say CSR is back to its full force. Thank you.

Gary SHAPIRO did a great job. I think I see most of the companies are back here. He has been very busy back to back meetings, I think, with other CEOs, with partners. I think it's exciting day. And of course, CSR has become a very important outdoor show. So automotive companies are here in full force as well. Now, I'm going to hold you to account of

Sunday. You've been talking about the pipeline for automotive for a long time. Will we start see real revenue growth from that? What's made in business? Yes. Look, we're very proud of the automotive

business is a pipeline now in excess of 30 billion dollars. And we did say in our Auto Investor Day back in September. By 2026, that pipeline is going to convert into about 4 billion dollars of revenue at 26. And it's going to be accretive to more to margins in QCT. We're going to get to over 9 billion dollars at the end of the decade. I remember you coming on business after that auto investor day. Keep coming on with us, Qualcomm's CEO,

Oxiana I'm on. We now forward to having another conversation and enjoy the rest of CSR. Meanwhile, so much to dissect from what? Well well, Ed's been mainly seeing over that high functioning bird feeders here. All the latest wacky gadgets bring back.

Back and forth, new new years sort of easing in ad straight to it in Las Vegas at CBS and it felt busy, but amidst all the CEO interviews and things you were getting done there, I mean, what was the weirdest stuff you saw? Because there's always something highly ridiculous. That's hard. That is hard. You know, what's funny is just the people you see walking around wearing kind of weird headsets and you're not quite sure what it is you're looking at. You know, there's also the kind of concept, two things a robot dentists are extraordinary. Producer Marguerite Gallery, they went and got her teeth done by a robot today. You see all the VR headsets, but for me,

it's just the footfall. You know, there's hundreds of thousands of exhibitors here and then hundreds of Fortune 500 companies. And you heard it from Christiane. I no, I'm on. It seems like CBS is back. Back and I'm realistic, pragmatic, like

we were just talking about 2026 deadlines and about revenue becoming reality. How much does it feel like it's affecting us in the here and now? You heard it right, sexy realism. That's what Bloomberg News called it. It's about being pragmatic and profitable. All of those sort of distant futuristic concepts are less so now. It's more about products that can come to market in two, three years. That's particularly true of the

automakers. And we heard it from Mercedes, right. This commitment to finish the Eevee charging network globally by 2024, I think he said, didn't he? Yeah. I also asked your question on our Twitter spaces a little bit earlier.

But like, how diverse does it feel regionally, geographically, kind of people, women, men, diversity in and of itself? Yes, certainly we have many more women executives on the program leading big tech companies this year. It's diverse on the floor, but also international. Right. There's so many big names from Asia here that you think about the names missing.

Apple is not here. And I always find that fascinating, given the focus right now on that business. Yeah. All eyes an apple is actually one of the

best performers in terms of points for the S&P today. So all eyes on next week's stock performance. That does it for this very special edition of Bloomberg Technology from New York, from Las Vegas. Safe trip home and have a great weekend. This is about.

2023-01-08 04:34

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