US Discusses Curbing AI Chips | Bloomberg Technology Full Show 10/15/2024

US considers capping AI chip sales to Middle East

• The US is reviewing caps on chip sales to the Middle East from companies like India, with a focus on Persian Gulf countries that have shown a growing interest in AI datacenters (1m9s).
• The Biden administration and officials have discussed capping sales of advanced A.I. chips to certain countries, with the goal of controlling the capabilities of countries or companies and stopping them from developing advanced AI models (2m51s).
• The US is looking at the Middle East nations because they are throwing a lot of money behind AI, and there are concerns about what they might do in terms of allowing access to these capabilities to China on a remote basis (2m5s).
• The US has used export controls up until now, but is now looking at a more broader blanket approach to control the sale of high-performance chips, such as accelerators, to certain countries (2m16s).
• The move is aimed at preventing countries or companies from developing advanced AI models, which can have various capabilities and potentially be used in unintended ways once they are out in the wild (2m55s).

Dell ready to ship servers with Nvidia Blackwell AI accelerators

• Dell is ready to ship servers with Nvidia's Blackwell AI accelerators, as production of the chips is back on track (37s).

ASML's disappointing earnings report impacts chip sector

• ASML, a leading maker of chip equipment, has given a disappointing earnings report and cut its gross bookings outlook for fiscal 25, leading to a negative reaction in its shares (3m20s).
• The decline in ASML's shares has also impacted other companies in the sector, including AMD and Intel, as chip equipment is a leading indicator of demand for the whole industry (4m6s).
• ASML, a Dutch company and Europe's most valuable company, has three main customers: Samsung, Intel, and TSMC, with 60% of its revenue coming from these companies, particularly for advanced chip production (4m14s).
• The United States, along with its allies, has considered implementing controls on chip-making equipment, with ASML being at the center of this discussion due to its extreme ultraviolet lithography technology (4m23s).
• ASML's EUV machines are crucial for producing advanced chips, and the company is not allowed to export these machines to China due to restrictions imposed by Washington (4m58s).

US emphasizes competition in driving innovation

• The US Department of Justice Deputy Attorney General emphasized the importance of competition in driving entrepreneurship and innovation, highlighting that regulatory and enforcement schemes across the world prioritize competition over consolidation or concentration of power (5m54s).

Market outlook and investor considerations

• The US is considering export controls on AI chips in the Middle East, which may impact the semiconductor industry, and ASML has cut its gross bookings outlook, affecting investor sentiment (6m33s).
• The chip industry is a significant component of the US stock market, with a large weight and influence on capitalization, price performance, and earnings drivers, making any guidance or forward outlook from the technology industry crucial for investors (7m1s).
• Despite being early in the earnings season, initial reports indicate continued CapEx spend on technology and AI-related products, but investors will need to monitor further impact as earnings reports continue to come out (7m32s).
• The upcoming US election in November may introduce an element of risk for investors, who will need to factor in the potential change in administration when approaching the markets (8m3s).
• The upcoming US election is closely monitored as its outcome may impact the economy through regulation and other issues, with different views on where regulation may head (8m18s).
• The third-quarter earnings season is expected to be interesting, with investors already adjusting for a slowdown in the economy and corporate profitability, and the S&P 500 earnings expected to be around 3.9% (9m23s).
• Despite the slowdown, 3.9% is considered a solid and achievable number, especially since investor expectations have been dampened (9m48s).
• The technology investor must closely monitor the ongoing health of the consumer and the appetite for capital expenditures (CapEx) in 2025, with forward guidance from third-quarter earnings reports being key (10m25s).

Apple unveils new iPad mini

• Apple unveiled a new iPad mini with an 8.3-inch screen and a 17 pro chip, priced at $499 for the Wi-Fi model and $649 for the cellular version, set to go on sale on October 23rd (11m10s).

ASML shares drop on lowered guidance

• ASML shares dropped 12.6% due to the company booking only half the expected orders in the quarter and lowering guidance for fiscal 2025, indicating a potential cool-off in the chip equipment sector (11m52s).

Ericsson shares soar on strong earnings

• Ericsson shares soared after announcing third-quarter earnings that beat analysts' expectations, with a 55% sales growth in North America thanks to a major partnership with AT&T (12m59s).

IBM investigates misconduct allegations in China

• IBM is investigating misconduct allegations against its top executive in China, who is accused of accepting vouchers from external partners and violating the company's expense policies (13m16s).

Warner Bros. Discovery expands Max in Asia

• Warner Brothers Discovery's Max is planning to debut in new Asian markets, while competitors like Disney and Amazon are scaling back their investments in the region (13m37s).

Tesla's Optimus Robot showcase and stock impact

• Tesla's Optimus Robot prototypes were remotely controlled by humans during a recent showcase, despite Elon Musk's claims that the robots would be a major product (13m56s).
• The event was intended to generate investor buzz for upcoming products, including a robotaxi, but the use of teleoperation undercut the impact of the showcase (14m13s).
• The focus of the event was on the robotaxi, but there was a lack of detail about a future proprietary ride-hailing app, which contributed to a 10% drop in Tesla's stock price (15m28s).
• Elon Musk is known for selling a vision of the future, but the event did not show significant progress in the present, with the cars and robots being demonstrated in a controlled environment (16m15s).
• Despite being late to deliver on his promises, Elon Musk has achieved significant success in the past, and investors may give him leeway on the robotaxi project due to its potential as a big market opportunity (17m16s).

Dell to ship servers with Nvidia Blackwell chips next month

• Dell is set to start shipping out servers with Nvidia's newest video chips, specifically the Blackwell chips, next month, indicating that production of Blackwell is back on schedule (18m2s).
• Arthur Lewis, president of Dell Infrastructure Solutions Group, stated that the ability to ship Blackwell chips next month was not unexpected, as they had been working hard on the innovation and had previously announced that the product would be heading for customer testing in the second half of the year (18m44s).
• Lewis mentioned that Dell had made a commitment to deliver the Blackwell product, and they are following through on that commitment (19m9s).
• The last three months of the calendar year are expected to look better for Dell, with exciting products such as the Z 9712, which is a Grace Blackwell 72 and Inc form factor that is 25 times more efficient than the 100 (19m18s).
• Dell also announced a Turin-based A&E system with direct-to-chip liquid cooling, which solves density problems and is up to 60 times faster than the previous generation (19m52s).
• Lewis stated that Dell will make margin on the new products by delivering value to customers and removing the complexity and mystery around generative AI (20m22s).
• Dell's position on liquid cooling is that they offer a wide variety of cooling solutions, including air cooling, liquid-assisted cooling, and direct-to-chip liquid cooling, which is mandatory for high-power applications (21m7s).
• Dell's portfolio supports various customer requirements for delivering dense and energy-efficient infrastructure, including liquid cooling, although not all environments are ready for it (21m36s).
• The company's volumes are contemplated in the guidance provided at the end of Q2, with any updates to be announced in Q3 (21m59s).
• Dell is excited about the innovation in the space, with significant advancements in rack infrastructure, including an increase from 62-72 GPUs to 96 and 128 GPUs (22m18s).
• The company is also working on scalable systems, including a system with 768 GPUs interwoven to operate as one, featuring integrated networking for maximum throughput (22m30s).
• Arthur Lewis, from Dell Infrastructure Solutions Group, discussed these developments and expressed his enthusiasm for the progress being made (22m38s).