Chapter 1: What is the main topic discussed in this episode?
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You certainly ask interesting questions.
Bloomberg Audio Studios. Podcasts. Radio. News. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco.
This is Bloomberg Tech. Coming up, President Trump allows Nvidia to ship its H200 AI chip to China in exchange for a 25% surcharge. Plus, we'll drill more into the Warner Brothers Discovery saga and antitrust concerns rising from the proposed bids. And Microsoft is committing $17.5 billion over four years to help build India's cloud and AI infrastructure.
We dig into the markets first and foremost, though. And Ed, not much of a movement. We're up tenth of a percent on the Nasdaq 100. The jolts data, basically jobs opening, coming in better than had been anticipated, but scratched beneath the hood and maybe less optimism there than the market had hoped for.
More broadly, we're in wait-and-see mode for the Fed tomorrow, but we're not in wait-and-see mode when it comes to some significant moves for OneStop. Yep, Nvidia. This is how Nvidia is traded over a 24-hour period and two sessions. We're down marginally, basically flat in Tuesday's session.
When news broke from the president that Nvidia would be authorized to ship H200 to China under certain circumstances with a 25% surcharge, the stock spiked. But then when reports hit that China would move With its own restrictions on how and why and which companies could have access to that technology, the gains fizzled and the same can be applied to both AMD and Intel.
Let's stick with the Nvidia story as you look at that two-day chart of the stock and the big jump that led to a big fade. Let's bring in Bloomberg's Ian King, who leads our coverage of semiconductors. That's the news broadly. What else do we need to know about the calculus of America's decision to allow H200 in particular to go to China in certain circumstances and whether or not China wants it?
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Chapter 2: What decision did President Trump make regarding Nvidia's H200 chips?
So the chips that it can make itself are constrained by the actual amount that it can make, but also the quality that it can make based upon the manufacturing capabilities of plants inside China.
Ian, quickly, just when I reference age 20, the 15% never went to the government because that was never signed off legally. Do we know whether the age 200, yes, got a true social, but will it be signed off legally by the US at least?
Yeah, I mean, as we put in our story yesterday, we had some reporting on that and an exclusive for us. This is going to be a different arrangement because these ships are made in Taiwan. What's going to happen apparently is that they're going to be imported into the U.S., which would make them subject to an import tariff. So that's how we basically the U.S.
government gets paid and then they become re-exported to China.
The nuance, always clear.
Thank you, Ian King. Now, let's discuss the broader impact now on the tech markets. We bring in Ipek Oskar Deshkaya, which is analyst at SwissQuote. Ipek, what do you make of this potential for NVIDIA, at least, and whether or not China will indeed import? The market reaction from your perspective.
Well, this is a win for Nvidia, but it has to be taken with a pinch of salt because we already hear that there are tensions among US politicians regarding what this means for the national security for US. It is a very sensitive segment of business.
China is unsure to let its own companies buy these chips for the same national security issues and also because they are backing the domestic chip production. So for Nvidia, which assumes that its China sales are now zero, every chip that's going to be sold to China is a bonus. It is a tailwind.
But for long-term forecasts, we still remain very much cautious regarding what this means and how stable the sale is going to be. Ipek, the base case assumption from NVIDIA is right now in the fiscal year and maybe next fiscal year, zero revenues from China. But clearly this news has led everyone to recalculate. Would you assume some upside from Chinese AI data center chip revenue next year?
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Chapter 3: What are the implications of Nvidia's chip sales to China?
And Google, for example, with its TPUs doesn't really have it. Ipek Oskar Deskaya, Swiss quote senior market analyst. Thank you very much. Coming up, we'll come back on the talk of Hollywood, Warner Brothers' discovery, and the antitrust concerns the proposed bids are definitely raising. That's next. This is Bloomberg Tech.
Let's get to what everyone has been talking about in entertainment, the rival bids for Warner Brothers Discovery. After Paramount came out with its own hostile takeover offer yesterday, Netflix co-CEO Ted Serrano says he's not too worried. He spoke at the UBS Global Media and Communications Conference in New York yesterday. Just take a listen.
Today's move was entirely expected. We have a deal done and we are incredibly happy with the deal. We think it's great for our shareholders. We think it's great for consumers. We think it's a great way to create and protect jobs in the entertainment industry. We're super confident we're going to get it across the line and finish. So we're excited.
Let's bring in Bloomberg's Lucas Shaw, author of the Screen Time newsletter. Should he be as confident, Lucas?
First of all, I love those old photos that you have of Ted back from, I guess, the release of Lillehammer.
Of course, he's going to project confidence. He agreed to a deal, and what Paramount is proposing at the moment is not different from what it proposed when it lost this auction last week. They're sticking with their $30 a share, and their insistence is that the board just didn't take the time to really consider it, and that if more shareholders hear their point of view, that they will be swayed.
I think if Paramount stays on that current course, Ted has reason to be pretty confident because he already won with that. The risk for Ted and for Netflix would be if Paramount comes back and offers even more money because then the board and the shareholders would likely think about opening it back up.
Lucas, you have spoken at length and in some detail in the last year and two years with both Ted Sarandos and with David Ellison. The reporting overnight was really focused on the coalition that David Ellison has pulled together for the financing. And part of that includes people that have proximity to the administration, Jared Kushner and his private equity firm being the easiest example here.
Just reflect on what you know of both CEOs in the competition between them, but also David Ellison's ability here to manage that relationship with the White House, if there is one.
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Chapter 4: How does the H200 chip compare to previous Nvidia models?
U.S. antitrust law is supposed to be based in the consumer welfare standard, which means what regulators should really be looking at is will this merger or acquisition harm consumers in some way? Will it negatively impact prices? Will it negatively impact the ability to have products? to have a certain quality or certain other elements that really should be based on sound economic factors.
This shouldn't be about a subjective idea of how many players should be in the streaming market. It should really be focused on this question of are consumers going to be harmed? Are consumers going to be worse off if they have this combined company as opposed to two separate companies?
The Cato Institute is so interesting because it's a libertarian think tank and it's really thinking about individual liberty, about limited government, free markets. You come at it from that angle. But Jennifer, give us your global perspective here a bit, because this doesn't just get sign off from the United States. We go worldwide.
We're just seeing what the EU is doing again today, for example, with alphabet and competition within AI. Are they going to hit roadblocks there as well?
I mean, that's certainly going to be a question depending on the nature of any particular transaction. And we've seen this happen in other cases when it comes to questions around large US tech companies and their potential acquisitions. For example, we certainly saw a large debate around the Microsoft Activision acquisition in Europe as well. And ultimately, that was able to go through.
We've also seen European regulators trying to put up various structural roadblocks that would allow some of America's leading tech companies to to continue to innovate, to continue to go into new markets. So I think it's certainly a worthy question of not only how might such transactions play out when it comes to U.S.
regulators, but if this is something that's a global international debate, are there other regulators where there might be other conversations that get had along the way?
It's interesting, Jennifer, that Netflix has tried to front run a lot of these concerns by putting out the statement that consumers will win from their perspective because already they're signed up to Netflix and HBO and more broadly they'll probably get more bang for the buck.
But they're also having to talk about how they're going to benefit content creation or indeed the industry of Hollywood writ large. Should they have to do that? Will the narrative be based on that in any way as to how this might help jobs and creativity?
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Chapter 5: What are the potential market impacts of Nvidia's chip sales?
We have the bid from Netflix, cash and stock, $27.75 a share. We have the bid now from Paramount Skydance, $30 per share. And we are looking deeply into the financing of both. There is the Wall Street take, which we'll get into, but there's also the Hollywood take. What is this moving for the industry going forward? Later in the program, Caro, we'll get to that. What other news?
Yeah, it's time now for Talking Tech, Ed. And first up, we're talking Microsoft committing $17.5 billion to help build India's cloud and AI infrastructure. The spend coming over four years will focus on scale, skills and sovereignty, according to Microsoft. It's aligning with Prime Minister Narendra Modi's AI goals for his country.
Then there's the EU, which is investigating whether Google is abusing its market power in its AI rollout. Regulators are probing whether Google is favoring its own model and how AI overviews and AI mode use and compensate publishers for content. Google argues the probe, quote, risks stifling innovation. And then sticking with Google, remember these?
Google Glass may have been ahead of its time, but now developing two new smart glass designs as it battles meta in the AI device race we understand. One with displays, the other audio only. First pair is expected next year. Ed. Let's go back to that Nvidia story.
President Trump has announced a major policy shift on Nvidia, allowing the company to sell its H200 AI chips to China in exchange for a 25% surcharge. And as Bloomberg's Ian King explained, because the chips are manufactured in Taiwan, they enter the United States. That's the point of surcharge and tariff. But there's more about the market opportunity.
Bloomberg Intelligence's Mandeep Singh joins us. I was really interested in BI's reaction to this because... Prior to yesterday, this was about opportunity lost in China, a market that Jensen Huang has said is $50 billion of addressable market opportunity. You've done some math on where you think at BI there is some revenue to now be had in China. What is that number?
Yeah, look, I mean, it's hard to pinpoint exactly what portion of that 50 billion NVIDIA can capture through H200s, but there is no doubt that, you know, the frontier LLM companies, you know, from DeepSeek to, you know, the Alibaba, Quen, and Kimi, all these models have been trained and they have kept up in terms of functionality with the frontier models here, whether it's Gemini or OpenAI.
And so from that perspective, you have to ask yourself, how have these companies trained their models, and is it all based on their in-house or Huawei chips? And the answer, it's hard to discern sitting here, but
To my mind, they would welcome any opportunity to get a big NVIDIA cluster because at the end of the day, when it comes to training, NVIDIA is proven to be the one chip company that is the most useful for building the big training clusters. Yes, we have the TPU news and all that, but everyone universally wants to train their models on NVIDIA.
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