Transcripts For BLOOMBERG Bloomberg 20240703 : vimarsana.com

BLOOMBERG Bloomberg July 3, 2024

Visionaries driving change in Silicon Valley and beyond. Caroline we will be speaking with the seals of arm and more as part of our special. Ed we will push ahead to our keynote speakers later today that include evan spiegel and more. Artificial intelligence is probably the overriding theme of the event. It is ai everything, even in some cases if you are not an ai company. Caroline if you are not the ai company, you will think about how you can adapt to it and bring out the productivity. How do we live up to the hype . The valuations are extraordinary. They have been heavy in the public markets. We have seen real use cases. Ed these events are always very interesting and very engaging. Everyone is very positive. In the background there is a talent wall and people are running out of cash. We have to ask difficult questions. Caroline and geopolitics. How are you navigating the issue of china as well. So much talk about. Here in the now we are talking about one key infrastructure plane when it comes to artificial intelligence. We will be talking about the chip design firm arm which has bounced off of lows in terms of share price. Down by 1. 3 , coming out after the bill with its earnings. Even though they absolutely smashed it in terms of the Fourth Quarter and their full first quarter. Lets dig into some of that caution with rene haas, the arm ceo. Wonderful to have time with you. There seems to be a worry about your forecast. Are you being cautious . Rene thanks for having me. We just came off a record year in terms of revenue. We were up 20 . We have been over 20 from disclosure 23 and 22 fiscal year 23 and 22. We signal to the markets yesterday that in 25, 26, 27, we can see the growth continuing. We have incredible visibility to our business and we are very confident about this growth going forward. Ed we are just seeing your shares go into positive territory. Up 0. 6 . The underlying story is the build in ai infrastructure. We are talking about Data Center Power by gpus. Your numbers were good. Tell me about the underlying demand, the longterm and the Addressable Market that you think is either intact or is not. Rene i think this ai buildout as you describe or expanding capacity to run these Foundation Models to do more training, we are at the very beginning. When you start to think about the capabilities that this could unleash whether it is around healthcare, armor research, productivity gains, call centers, we are in very early days. That all starts with having to do this level of training and entrance in the cloud. It will also find itself into every single edge device whether it is a to see, your smartphone whether it is a pc, your smartphone or your car. We have incredible visibility to where this is all going which is where we are confident in the which is why we are confident in the growth rates. Power and efficiency is key. It is what arm is good at. We are seeing the most complex applications moving to arm. The most sophisticated trading ship on the planet, grace blackwell, that is based on arm. Caroline so you are managing to think that you will be the server play as well as the pc play and the cell phone play. I want to focus on the cell phone play. How are we looking from the smartphone perspective . Is the market looking strong . We have many mixed messages coming from china for example. Rene overall what we have seen in the Smartphone Market has been a good growth rate in terms of royalties. Our version nine which is now being used in many of the premium mobile phones, that drives a higher royalty rate for arm. There are some complex cpus that go into that that is better for arm. One of the things we are seeing with not just the smartphones is that as the ai models are moving so fast, the hardware cannot keep up with the software. The Software Innovation is happening so quickly that by the time the hardware is ready to run those models, everyone wishes they had more performance and more efficiency. What does that mean for arm . It is driving growth in the licensing activity. People are looking to do more and more, design chips faster and faster. That is good for us going forward. You will see more innovation happening not only with smartphones but across all edge devices. Caroline what is interesting is it is hard to keep up with the pace of geopolitical change as well. The latest news coming from huawei where it will not have access to qualcomm intel chips. You are affected by u. S. Policies. Has this impacted your business, limitation of huaweis access to chip design and technology . Rene that issue that you are referring to was when huawei was placed on the entity list in 2019 or 2020, companies had to apply for a license to exempt them to ship to huawei. A lot of companies asked for those licensees. They got those licenses. Now they are being revoked. We dont follow that category. We did not apply for any licenses at the time. We complied with the export controls as they relate out. It is a nonevent for us in terms of what you are seeing with qualcomm and intel. Ed we are speaking live to the arm ceo rene haas. We are on the ground here at bloomberg tech in San Francisco. Last week christy was on the show telling caroline and i this was the last year. You gave a slightly different answer. Maybe it is not the year of the ai pc. You dont want to see just one supplier. You said you would like to see two or three. What is your beef with qualcomm . Rene one large ecosystem has already moved on in a very big way. Apple is 100 based on arm. All of the apple silicon is based on arm. You see amazingly good products relative to what they have delivered. Fantastic battery life. Performance, no fans. The windows market is different. It is highly fragmented. Lots of different players. The ecosystem matters. The channel matters. Price points matter. Gaming machines versus lowend devices that are cloud enabled. What is all that mean . It generally has meant that vendor choice multiple options to provide a full scope is what matters. What im hearing is over the next couple of years the windows ecosystem will be able to afford that. Over the next two or three years i believe windows on arm will be real. You will see multiple players, multiple price points, multiple units. You will see many in the market share start today the kind of performance. I think you will find its way to the windows ecosystem. Ed i want to talk about geography. We are here in San Francisco. There is a lot about americas r d focus on ai related chips. Are you seeing this equivalent activity in europe . Any of your customers outside of those markets . Rene im in San Francisco today too so i will see you a little bit later. In general i think the geopolitics are something that all tech ceos are having to figure out and work with. Ai models, Foundation Models, sovereign clouds, thinking about what level of training takes place in a country versus outside the country, where the weights sit. These are all the kinds of things politicians have never had to think about in the past. We are involved in a lot of those conversations whether that is in the united states, europe and really just trying to understand it. The lawmakers in these jurisdictions are trying to figure it all out. As i mentioned before, as the models are moving so fast, it is difficult for everyone to keep up. We are exceptional to all of those discussions. Caroline what has been keeping up is your valuation. Boy. Do you think there is too much exuberance around ai valuations out there . Are you going to make the most of it by listing in the u. K. Too . Rene i dont think about the valuations as much as i think about the ai opportunity which i frankly believe is under called in terms of what it will mean relative to society and what it can do for our planet. I think we are in very early days in terms of the capabilities of what this can unleash for our society. Incredibly excited to be a part of that. But i dont think we are part of a high cycle at all. There is a lot of innovation taking place. The innovation that is taking place and the inventions we are seeing, it is just breathtaking. I dont personally view it as a height cycle is all hype cycle at all. Rene you will be ed you will be with us later today. Your stock is pretty high. Coming up on the program, we will be joined by the ceo of hugging face clement delangue. This is Bloomberg Technology. Ed welcome back to the special edition of Bloomberg Technology. We are live at the bloomberg tech event. Artificial intelligence is the overarching theme. We have a pretty good guest to talk about that. The ceo of hugging face. You made this prediction which we will hold due to account on by the end of this calendar year and were not even halfway, opensource models would be equivalent to the best close sourced models. Give us a status check on that prediction. Clement opensource now is better than closed source for most use cases. We specialize in models on Companies Like data sets. I have my rayban glasses here. We are seeing so many use cases being powered by opensource models and most of the Big Tech Companies are now publishing open models. Just last month we have seen apple using open models and hugging face we have seen nvidia, microsoft. All of them are publishing open models. Ed there might be some people in attendance who dont agree with him. Caroline microsoft published one quickly in some of the reporting because they had not stress tested. They had not whittled out some of the toxicity checks in particular. How are you feeling about the way in which largely was models are growing and the way in which governance is developing around it . Clement the most important question is concentration of power. For such an Important Technology you do not want a world where just a few companies are controlling it. Caroline that is the world we live in. Clement i dont think so. What we are seeing with opensource you can actually distribute power more and you want to reduce the gap between the most powerful companies and the rest of the world. Nunnally other companies but policymakers, not only other companies but policymakers. We are reducing the gap between the most powerful companies and the rest of the world and that is what creates a sustainable balanced future. Ed it is a conversation we are going to have all day long. You point out that opensource allows more groups to go to work on it. The problem is as we are learning the tens of billions of dollars it takes to train models with tens or hundreds of parameters and then you go lower down and now what we are hearing is that folks who are doing this are running out of cash. Are you seeing that as well . Clement you can use that which has been very costly and use a small amount. There are only one million models trained by companies and a lot of these companies are very small and do not have big budgets. Today every Single Company has to build their own ai otherwise they run the risk of being left behind. That is what we are seeing. One interesting point is that we will need to find ai Companies Better business models. That is what you hinted at. Something that we focus on at hugging face, we are looking to be close to profitable. We are starting to see that there are some ways to generate revenue and not turn insane amounts of compute for ai startups today. Caroline on that profitability, how many paying customers do you have . You have one little model one million models. Clement more than 10,000 paying customers. More than 4 million ai builders using our platform. I think we found the right balance between monetizing especially with Big Companies that are using the platform in private. Ed enterprise companies. Clement exactly. In order to fund all of the Free Community opensource work that we are doing and that will always stay open source and free. Caroline i want to go back to what i was saying about people running out of cash. You put out a recent interesting call on x. I am here if you need me. If they are good people building interesting businesses but running out of money, we can be a home for you. Are you making acquisitions . Clement we made some acquisitions. We will have announcements in the next few weeks. Caroline dont tease us. Clement in general in ai, you will see more m a. I think a lot of companies took very risky bets. A lot of them are running out of money. At the same time you have other Companies Like hugging face and others who are successful enough to be homes. Some of the m a will be weird. We see that happening a little bit with big tech. Ed married to necessity rather than choice. One thing that is good about summits like these, by the way, we can go around the room and ask you are shopping for. You get all of these people in one place. You use the time you have been in San Francisco because you are up in seattle. Clement miami. Ed miami. Apologies. You have been interviewing candidates. Is that just a function of the best candidates being here in this city . How wide are you casting your net . Clement i think San Francisco still the heart of technology and ai. So much talent. So many interesting companies. So many interesting Big Technology companies being here that it is import for us to have a foot on the ground here. We have a team already here but we are also hiring community leads for hugging face here. Caroline applications being taken . Clement yes. This really massive fight and struggle for ai talent right now with inflation everywhere. What we are seeing is that when you have a mission that is interesting to candidates like with opensource, then you can attract good talent. Thats one of the reasons why we are seeing big tech doing more print source. If you look at meta caroline is meta your favorite . Clement as long as companies contribute to the field with opensource and open research, it benefits everyone. If you look at ai five years ago , most of it was opensource and open science. It changed a little bit when some companies started to make money. I think it would be positive for the world to get back to an ai domain that is more open and transparent and inclusive. Ed you told us you would announce news when you are ready. Caroline for weeks. We are holding you to it. Thanks for having you. We will let you get back to your breakfast, the ceo of hugging face. A great conversation. Coming up, another great conversation. We have so much live for you here in San Francisco. People are having their coffee. We will get you all of the exuberance in a moment. This is bloomberg. Sandals jamaica sale is now on with rates from 199 per person per night. Visit sandals. Com or call 1800sandals caroline welcome back to the special edition of Bloomberg Technology. Live in the heart of San Francisco, all the great and good of industry movers and shakers. Academics, the companies, the ceos and notably the investors. This is an interesting one for the investor base. We have potentially a new language model . Ed what we learned last night is that x ai, the ai Company Started by elon musk which has been built up pretty quickly, is closing this mega funding round. The thing we have learned over the last year or more, the numbers involved are not that eye watering. Caroline is the money he racing an awful lot . Ed i think it has been reported up to 6 billion. I took a phone call this morning saying look past the cash and start asking whether x ai has access to gpus. It is good gossip for the bloomberg tech event. Caroline it is. Ultimately, who are the investors . What we have seen in 2023 and 2024 has been corporative ec. You have Sequoia Capital which has been incredibly active. The amount of money necessary means nvidia has to be a player or google. Ed the head of the musk Family Office has been talking a lot about what has been going on. Coming up, another conversation around artificial intelligence. Someone who is actually pretty straightforward and direct about what is going on in industry. Caroline she was building this business back in 2020. Ed what is interesting is may has a little bit of cash in the bank. That might help. We will be right back. This is Bloomberg Technology. Her uncles unhappy. Im sensing an underlying issue. 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Visit feedingamerica. Org actnow caroline welcome back to a special edition of Bloomberg Technology. An event is upon our hands that has to do with artificial intelligence. To continue that conversation right here right now at the bloomberg tech settlement bloomberg tech summit is may habib who has been doing generative ai. You have an enormous chunk of change. How does it feel with everyone trying to surge in on the opportunity . How are you standing out and making sure that you keep the clients you already have . May it is really exciting to see all of the investment. We have been working on this for 10 years previously in a Machine Translation startup. To see all of th

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