Daybreak Weekend: US CPI, London Tech, China Eco Data

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This is Bloomberg Daybreak Weekend, our global look at the
top stories in the coming week from our Daybreak anchors
all around the world. Straight Ahead on the program, we
looked at some key inflation data in the US and
how they could affect FED policy. I'm Nathan Hager in Washington.
I'm Carolyn Hepke Harid London, where we're getting ready for
the buzz of London Tech Week.
I'm Doug Chrisner looking at how higher energy prices will
impact Chinese inflation.
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
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Good day to you. I'm Nathan Hager. We begin today's
program with some key economic data in the US, with
a big focus on inflation. The May Consumer Price index
comes out Wednesday, followed by the index for producers the
following day, and for more on what to expect We're
joined by Edward Harrison, senior strategist at Bloomberg News and
author of the Everything Risk newsletter. Always great to speak
with you, Ed, And I think it's no secret that
just about everything is more expensive these days. So what
are you expecting to stand out when it comes to
the data this week.
Hey, Nathan, I'm expecting to see the numbers be relatively
elevated across the board PPI more than CPI. And what
we're looking for is we're looking for anything that's demonstray
below three percent on any of the figures that we see,
because the lowest expected number is two point nine percent
for core CPI. If we can get something in the
order of year and year increases more two point six
two point seven, that would be a very positive signal
for the Federal Reserve, which is meeting later in the month.
Why are you expecting producer prices to be higher this
time around, Well.
Just because of expectations. In terms of the Bloomberg average expectations,
the average economist expectations for final demand is six point
four percent for the month of May, and we also
have five point four percent expected if you take out
food and energy and those numbers are higher than you know,
a four point two percent number that's expected for CPI.
What are you expecting that it's going to be driving
all this? Of course, you know, you drive by a
gas station these days and prices are still much higher
than many of us would like to be spending. Is
that really what's continuing to drive the inflation picture right now?
No?
And you know, so that's why I think that the
number that I'm looking for in particular is the core
number for a CPI, that number which is at currently
it's at two point eight percent, it's expected to go
up to two point nine percent. That's the number that says,
here's what the economy looks like if you take out
these vital food and energy items over the last year,
here's the rise that we've seen. And if that number
is decent, you know, moving more towards the FEDS two
percent target, it changes the whole picture. Because last week
on Friday, what we saw is we saw a job's
number that was very large. If you look at the
last three months of job gains, it's the best that
we've seen since the beginning of twenty twenty four. And
so the market priced in a rate hike is soon
as the end of this year. On the back of that,
anything that we can see in terms of inflation that
is more towards two percent would therefore dial back those
expectations and cause yields to go down.
Yeah.
Coming off the back of those jobs numbers, we actually
spoke with White House National Economic Council Director Kevin Hasseid.
He was saying that the FED should be able to
look past an oil driven supply shock. Can it?
No, it can't, because those numbers are the best that
we've seen for the jobs in almost a three years
or two and a half years, i should say. And
the reality is is that with what we're seeing in
the Gulf, in addition to core numbers that are that
have reaccelerated. If you looked at PC, which is the
Fed's preferred gauge, we have bottomed fourteen months ago in
April twenty twenty five two point six percent. The most
recent reading was three point three percent, So we've seen
an acceleration in the core. This is taking out food
and energy. So there's no way that the FED can
look over that because we're looking at a trend that's
been going on for more than a year. And we've
seen an acceleration in the rate of inflation.
So what do you see potentially snapping that trend? Is
there anything that the FED can do at this point?
No, the Fed can just sit and wait. And the
reality again is that the Gulf only adds more problems there.
The interesting bit is is that, you know, when this
war began in the Middle East, people were expecting it
to have a very negative impact on consumer spending. But
it hasn't had a negative impact. It hasn't had a
negative impact on a job formation. So you know, the
steady state of the United States economy is very high,
and that means that the ability of the FED to
try to counteract the inflationary impulses is much greater, which
means that we should expect the FED to hike before
we expect them to lower rates.
All right, appreciate this d as always. That's Bloomberg News
Senior strategist Edward Harrison definitely check out adds the Everything
Risk newsletter. You can find it at Bloomberg dot com,
slash newsletters or by typing ni every Risk Go on
the Bloomberg terminal. Let's take a look now at some
stocks making news in the week Ahead. I'm Nathan Hager,
joined by Bloomberg Cross Asset reporter of Adana Hirich. But Dana,
we've got more tech earnings to look forward to this week,
including Oracle after the close. Of course, this has been
a company that's been a pretty big beneficiary of the
AI buildout. So should we be looking for a blowout
from Oracle?
First?
I want to say that every week we're looking forward
to some sort of tech earnings, right, so.
It seems like it.
Yeah, every week there's something of interest happening. So for Oracle,
that's ticker oh RCL on Wednesday, June tenth. The company
was once best known for its namesake database software, but
it's really found some success in providing the type of
chips filled data centers and other equipment that's necessary for
training and deploying AI models. And the reason I mentioned
that is just so that we get a sense of
what kind of read through it's giving us on a
specific sector of the economy. Shares of Oracle are up
some eighteen percent roughly eighteen percent year to date. Its
last quarterly report was very strong in terms of what
analysts had been expecting and what the company ended up
delivering Its last report was in March, and shares actually
soared after it posted results. It said that it's closely
watched infrastructure business had jumped eighty four percent to four
point nine billion dollars. The company also at the time
said that revenue reach ninety billion in the fiscal year
beginning in June. Also at the time, it handily beat
analyst projections on a number of other measures. So the
takeaway was that we were sort of seeing we were
getting this through line on AI spending. It gave investors
a really good look at how demand for AI centers
was going. There had been in the past some concern
that maybe that a specific corner of the market was
maybe slowing down, but then Oracle gave us those results.
Looking ahead, of course, we don't exactly know what the
company is going to be telling us, but we do
have some analyst projections, and we do have a report
from Bloomberg Intelligence where the analysts there say oracles physical
four qre results will likely reflect another quarter of robust
AI infrastructure demand.
Also this week, after the close on Thursday, we're going
to hear from Adobe. Now, you got to think this
company's got a lot to show for with all the
fears around SaaS apocalypse or whatever we're calling it now.
Yeah, exactly. And I love when a company can tell
us a specific story, you know, one of especially with
like Bellweather companies that can tell us something that's happening
within a certain sector of the economy or the market,
like we were just saying with Oracle. So for Adobe
ticker ADB, reporting on June eleventh, after the market close,
shares are not doing so great this year. They're down
some twenty five percent so far this year. When we
think of Adobe, we think of its software, it's creative tools,
it's digital marketing offerings, and also of course PDFs, which
I can never figure out how to edit or save
or print seriously, But a lot of Adobe's revenue is
generated via those subscriptions. Analysts will be paying attention to that.
But Adobe actually has a very interesting theme and the
story going on right now, which is that there are
talks about who it's next CEO will be. Bloomberg just
reported that the company is eyeing to internal leaders for
its quest for a new chief executive officer, and Adobe
has hired a well known search firm to look at
some external candidates who could be suited to running the
company in our ai era. And so there are two
contenders of two of its main business units who are
sort of like the leading in house candidates, and then
you know whoever else that they're looking at from the outside.
So analysts really are thinking about, you know what, will
we get some clarity around the CEO transition. It's sure
to be a key focus on the earnings call yea.
So maybe more than just numbers in this sorting.
St exactly exactly. It might even supersede some of the
financial metrics themselves, which is really interesting.
Yeah, it certainly is not just tech. Later on this
week as well, we're going to hear from Lenar reporting
their earnings. It's been pretty tough for the homebuilders in
this rate and price environment.
Fildana exactly another great example of a company that's giving
us a look at, in this case the housing market.
The home building market ticker LN shares are also lower
so far this year. The company is reporting after the
close on Thursday, June eleventh. This is one of the
largest US homebuilders by revenue, and again another great read
on home builder sentiments. So just in terms of some
of the data that we've seen for new home sales.
For instance, in April they had fallen month over month
some six percent to around six hundred and twenty two thousand.
US homebuilder sentiment had rebound London in May, but in
general it sort of remains pretty low, given affordability concerns
weighing on a lot of consumers and also weighing on
the spring selling season, and so it's important to keep
those things in mind in terms of what the housing
market looks like and whether or not people think we're
going to potentially continue to see a lackluster housing market persists,
you know, in future quarters.
Yeah, so we're going to learn more about the AI
build out and the housing build out this week. Thank you, Vildona.
That's Vildona Hirich, Cross asset reporter for Bloomberg News, and
coming up on Bloomberg day Break weekend, we'll discuss what
to expect from London's tech week. I'm Nathan Hager, and
this is Bloomberg. This is Bloomberg day Break Weekend, our
global look ahead at the top stories for invests in
the coming week. I'm Nathan Hager in Washington. Up later
in the program, we'll look to some key inflation data
in China. But first London Tech Week starts Monday. Executives
from AI labs like Anthropic Perplexity and Open Ai are
headed to Britain, which, after the US and China, sees
the highest AI investment globally. Let's get more from Bloomberg
day Break Europe banker Caroline Hepger in.
London, Nathan Summer conference season has arrived in London. CEOs,
politicians and innovators are rubbing shoulders the likes of south
By Southwest Founders Forum and London Tech Week, but the
regular gatherings mask a moment of deep uncertainty about the future.
Artificial intelligence promises to reshape the business world, but for
UBS's chief economists to ar captain, the new technology isn't
yet even close to delivering on its promises.
I think there are certainly a lot of corpors benefiting
from this spending boom and top twenty percent spending, but
there's also I think a very large part of the
population and businesses that is not benefiting from that, and
so I think we're in this sort of still relatively
fragile equilibrium.
Okay, you mentioned productivity gains. Where are you seeing them
in Europe from AI.
Oh I'm not seeing here anyway yet, so I think
it's way too early, right, So there's a we're in
the Capex phase what I call the figuring it out phase, right,
So we are diffusing AI into organizations, and the implementation
model is to go to people like me, give them
some AI programs and go figure it out. Right, that's
not a good implementation model. And if you look at
the implementation rate, so we do an enterprise adoption survey,
it's still very very low, less than twenty percent of
all the firms claim to be implementing at skill. So
it just cannot be the case that anything is happening
yet because no one's changed hiring behavior and no one's
really figured it out yet. Now, the reason it shows
up in the US in productivity data is because if
you create a lot of output with capex, you don't
hire anybody. It looks like per employee you're generating more output.
But that's not AI productivity the way I think about it, right,
that's just a shift from producing with libra to producing
with capital. In Europe, of course, you don't even have that.
AAR captain there speaking to me and James Wilcock on
Bloomberg Radio for Britain. Add to that, a somewhat more
frosty relationship with the US may be growing wariness of
Silicon Valley and a ship of state which seems to
lack a rudder. So does Britain's pitch to be an
AI leader increasingly look a little thin. Bloomberg TV anchor
Tom McKenzie joins me, Now you get the lucky job
of going down to London Tech Week to take the
temperature rub shoulders with all of these big CEOs, what
are you trying to find out?
Look? I think this is an incredible moment obviously for
the world of technology when we think about what's happening
in the US with the upcoming listings and IPOs of
SpaceX and likely of course Anthropic and Open AII as well.
So that intense focus on the innovation and the buildout
of these companies. And so the key question really is
where does the UK play in all of this? And
this is a really key annual gathering that pulls together
the great and the good ministers as well senior government
figures with leading CEOs across the UK tech ecosystem. So
my key questions and what I'm really trying to find
out is where does the UK play in the AI story?
Do we have some advantages that other nations don't, What
kind of companies do we building, what kind of support
is the government giving to those companies? And can this
be sustainable? Is this something that's going to have a
broader macroeconomic impact as well? That will really be the
key focus as I talked to CEOs executives and government
ministers as well next week.
Yeah, it comes after the UK government launched this five
hundred million pounds for AI in the UK that was
in April. It doesn't sound like very much money, does
it when you think about the billions in the AI space.
But it is intent, isn't it. What do you think
about the UK and whether we can really claim to
be a tech leader? How much does it show about
impetus to be in that leadership role in the UK?
I think there's a couple of metrics that you could
point to that show that there is a really healthy
momentum right now in the UK and the UK really
can claim to be playing a role. Not sure if
it's leading, but certainly a role, a significant role in
terms of the build out of AI and innovation. You
do have that fund from the UK government, the UK
Sovereign Wealth Fund, which yes, you say, in comparison the
numbers we see in the US is is minimal. But
what they would tell you James Wise is the chair
formerly and also at Balderton which is eventually capital firm.
What James would say is that look, not only do
we invest, but we also open the doors to government
for you. That credential that you get, that stamp of
UK government approval actually is meaningful. In fact, I was
speaking to Isomorphic Labs, a drug discovery company that sits
under alphabet is a unit there, and speaking to their
president he said it is meaningful. They've also had investment
from the UK Sovereign Fund, so that is an important
part we have. You know, three of the top ten
universities in the world are in the UK, Cambridge, Oxford
and Imperial. We have that talent, that deep research talent.
We do have the cap of the City of London,
and we do have access of course in those connections
to Europe as well, so on all those fronts there
is some supportive kind of muscle tissue there. What you're
also seeing in terms of fun flows. I'll just give
you a few statistics then that's come out of a
recent technician report. The UK tech sector has a combined
market value now of about one point six trillion US dollars,
and AI's total UK tech market value is in fact
more than doubled in the last five years. You have
companies like eleven Labs, like Synthesia, like Wave AI raising
billions of dollars, and.
So in terms of adoption and the next steps, how
far are we seeing the latest advances in AI filtering
through into how startups are doing business, but also into
how other businesses are adopting this technology and turning it
into productivity gains.
And I think that is a question that remains partly answered.
And you go around the UK's tech ecosystem and you
speak to people working in those organizations, they are leaning in.
They're using these platforms, They're using these AI solutions. No
doubt you and I are using forms of AI probably
on a daily basis as well. We maybe as individuals
be able to point to productivity gains. The harder question
to answer is at the corporate level, to your point,
at the enterprise level, are we yet seeing that filtering
through to earnings to the bottom line. I think the
jury is still out on that, but it is relatively
early days in terms of adoption, and smaller companies and
smaller enterprises may be adopting more quickly. Bigger enterprises, particularly
those that are regulator heavy regulator for example in the
financial services space, may take a little longer.
Though.
There are examples of banks that are leaning in too
AI adoption, and we've seen evidence of that in terms
of their commitments and their spending. So I think we
still need to see that evidence come through. And that
is a really key point because that comes down to
the return on investment. Are we getting our bank for
our bus As companies spend increasingly large amounts on AI solutions,
on so called tokens, is that paying off?
Yeah?
Absolutely. As sort of thinking about adoption also skills, What
sort of skills do people need to be able to
use AI? That's one of the issues that's been brought
up a lot, hasn't it in the UK? And you're right,
how much does it cost a company actually to have
AI tools that all of their workers can use those
sort of token costs. Look, there's another sort of slightly
darker issue, which is sort of the uncertainty around the
labor government. And I mean I was speaking to the
AI Minister only a few weeks ago about that software
well funded. I know you speak to a lot of
players and policy makers. The future of the current Prime
Minister is very uncertain. Andy Burnham, who seems at the
moment like the front runner maybe to replace him, sounds
a bit tough on regulation in the AI industry, in
the tech industry. Is that going to seep into issue
use if there's a kind of tougher view around technology
in Britain.
I think that is an important question. Clearly, it's a
question that we're putting to company executives around political uncertainty
in the UK and what that means for their investment
plans and their hiring plans. So I think that's a
valid question for those working and operating in the tech
ecosystem as well. I think it's fair to say that
the AI Minister kenesian Arian is pretty well received within
the tech ecosystem. I hear pretty solid responses off record
and on record to what that government minister is doing
Kanishka alongside the AI Sovereign Fund, and that is something
that clearly AI leaders and entrepreneurs in the UK. They
want to see that kind of commitment continuing, and there
has been some evidence that the UK is and the
UK government is trying to be on the front foot
in terms of aligning the regulation with innovation with adoption.
You've got one example of coming up at the end
of this year, which is Weimo is very likely to
be testing and actually rolling out its cars for the public.
They're testing now rolling out its cars for the public
by the end of this year. I speaking to them.
That's still currently the plan, and that is because the
UK has put in place a regulatory framework that allows
them to do that for the first time out of
the United States. So that is one example. It's not
to say that there aren't others who say we need
to have checks and balances around this technology. Yeah, so
I think it's an important question. Will that stability or
question marks about the future government post some kind of
headwind is something that I will be addressing and bringing
up with founders and CEOs next week.
Yeah. It's going to be fascinating, isn't it watching Weimo
for the first time outside a US city, you know,
trying to kind of weave their way through the ancient
streets of London's going to be a big test of
the company. It's going to be really interesting to see
how people in the UK react to that. In terms
of the other major tension, you have to also bring
up the worries maybe around dependency, around sovereignty. These are
lots of countries thinking about this, how dependent to be
on Silicon Valley on big US companies palente I can
point to as the most recent worry MPs of flag
that as a worry Palent's involvement, for example, with the NHS,
the National Health Service. How important are those tensions?
Well, I think those tensions are real and I think
one response to that, and we've heard this from some
would be well, it's fine, we can rip out and
replace Palenteer with what So we need to have an alternative. Palenteer,
the argument goes, is the best at what they do,
and if we want to be able to align all
the data across the NHS and make things like booking
appointments and collecting all of that evidence that can help
in terms of outcomes and have better healthc outcomes, then
we need this kind of technology. Of course, it is
a controversial company and hence the scrutiny that is it
is facing. As yet, we do not have a company
that can do what Palentteer does. Maybe in the future
we will, But I think the broader question about sovereignty
is real. Do we need more data centers? Do we
need more infrastructure? How much of that needs to be
on a supply chain that the UK has greater control
over all We speaking to the likes of Brookfield's head
of AI infrastructure about that point, we are a long
way from getting the kind of investment commitments around data
centers and infrastructure that the US is getting. Can we
rely on the hyperscalers? Can we and are we relaxed
about running our systems on ammazaws or on Azure or
on other parts of the Google Cloud system, or do
we need to have our own sovereign capabilities. The European
Union is coming up with their response to that, and
we're seeing that working through the system right now, so
that is also a valid question. And then if we
think about infrastructure, we have to think about energy. Our
energy costs are about three times that of the United States,
about two times out of China. Do we have the
Greek capacity? Are we building the energy that we need
to support this kind of infrastructure. What is the solution
on that front. Tony Blair has his views around the
North Sea oil story. Others will have opposing views, so
that is also part of the question that the UK
is going to have to wrestle with. And certainly entrepreneurs
and executives they want to see cheaper, cleaner, more accessible
energy and that is a really key part of how
we position going forward.
Yeah, it's going to be a very interesting week and
we look forward to all of your coverage from London
Tech Week. That is Bloomberg TV anchor Tom McKenzie. Thank you.
I'm Caroline hepget here in London. You can catch us
every weekday morning for Bloomberg Daybreak here at beginning at
six am in London. That's one am on Wall Street.
Nathan, Thanks Caroline. Then coming up by Bloomberg Daybreak Weekend,
we'll look ahead to inflation data from the world's second
largest economy. I'm Nathan Hagger and this is Bloomberg. This
is Bloomberg Daybreak Weekend, our global look ahead at the
top stories for investors in the coming week. I'm Nathan
Haiger in Washington. One of those stories is going to
be inflation in China. We get the main readings on
price pressures this week. For a preview, let's get to
Doug Krisner, host of the Bloomberg Daybreak Asia podcast.
Thanks Nathan. For years, authorities in China have been battling
a problem with deflation, and the price declines were showing
up at both the wholesale and retail levels. But the
energy shock as a result of the conflict in the
Middle East has changed the narrative somewhat. The latest reading
on PPI is likely to show factory gate prices rose
in the month of May. Even so, consumer prices are
still struggling to break out of their deflationary trap. For
a closer look, let's bring in Bloomberg's Alan Wong. Allen
is team leader for the China Economy and Government team.
He joins us from our studios in Hong Kong. Thank
you for being here. I want to begin with looking
at the PPI story and wondering if the expected pickup
that we're going to see, perhaps in factory gate prices
is due to forces beyond higher energy. Is it spilling
out beyond the energy complex?
We are seeing limiteds spill over in terms of price hikes,
which means that even if the producer prices are going up,
this is not quite the China inflation story just yet.
But just back through the producer prize a little bit,
we're seeing forecasts for a three point nine percent jump
year over year, and that would be the biggest search
we've seen since July twenty twenty two. So it is
still very much about the global energy crisis. It's still
very much about the shockwaves from the conflict in the
Middle East affecting China's factory flows. And if we look
at the breakdown in price data from the previous month's release,
the month of April, we've seen the cost of things
like crude extraction, petroleum, natural gas, they all shot up,
but then for out of categories we see mild effect
in terms of rising prices, and so so far it's
been pretty much contained.
So let's look at the consumer level now. And my
memory is that this is really a story about weak demand.
Has that changed or is that still very much the
same case.
The numbers actually tell the story here pretty well. I
mentioned that PBI is going to jump three point nine
percent for CPI for the month of May, it's going
to be a one point three percent increase, So that's
just slightly higher than the April figure which was one
point two percent. So this means that we actually, you know,
on one hand, you're seeing some healthy inflation compared to
the previous deflation story after the COVID. One point two
isn't that much globally speaking, But then it's a much
higher pace compared to the near zero level in the
two years after COVID. But then another way to look
at this is the gap between the rise in PBI
and CPI. If the gap is large, it just means
that factories and companies they are stomaching this higher input
costs and without passing that on to customers. It means
that to preserve their market shared they rather eat that
cost themselves. And for those companies, obviously it would be
terrible for them because they are suffering thinner profit margins.
But then even if consumers are happy that the price
tax are only modestly got bigger, their wages might suffer
too because the companies can't afford to raise prices and
they might have to, you know, they face pressure in
terms of how much they can pay their workers. So
all of these feeds back into the weak consumption story
in China, where consumers just don't feel secure enough about
the economic outlook to spend.
So I'm going to imagine alan that part of the
weak domestic demand story still traces back to the weakness
in the housing market. Is that still the case.
That's still very much the case, But you know, there
are signs that in some part it's of the Chinese economy,
housing is seeing some bottom. It's very controversial because you know,
you don't want to be the one to call the
bottom in the housing market, but we're seeing more voices
from among economists who I'm considering that like a slower
pace of decline in home prices. By some measures, we're
seeing that new home prices have actually risen months over month.
But when they will continue is another question because we
have seen something like that over the last couple of years,
but there have been false down so nobody is sticking
their neck out to call bottom just yet. And in
terms of the weak consumption story, housing is still a
big factor. But then the uncertainty in terms of geopolitical
outlook is also weighing on consumers' mind for sure, and
the fact that higher oil prices, and higher PPI may
limit how much the PBOC can do in terms of easing.
Will also mean that policymakers have less room to stimulate
domestic demand using direct measures. And one important the development
we've seen in terms of the macro economy, it's just
how people are paying down their debts more than they borrow.
So that's just another way to gauge just how weak
the sentiment is.
To what extent is the trade story a part of
the narrative when it comes to inflation, And I'm thinking
of the tariff story where the US is involved.
So yes, the US, it's trying to rebuild his tariff wall.
So even after they, you know, US President An Trump
met with she and kind of cooled down the tensions
that the two countries previously faced, and they agreed on
strategic stability framework that China came up with. So broadly speaking,
that relationship is looking steady and better than previously. But
then Trump did try to attempt to raise tariffs on
China and among a countries again, and China is not
happy with it, for sure, but it doesn't seem like
it would threaten the Dayton between the two countries and
the truth is that China's export to the US have
fallen by a lot already since the Trump returned to office,
So any marginal increase in the tariff ray on Chinese
exports are not going to hurt that part of export
that much. But then one potential surprise is coming from
the EU, which has been floating measures to curb China's
imports and and otherwise address China's over capacity issue. So
China has protested that in threatened countermeasures. We're seeing a
new trade war on horizon. That's to be determined, but
if trade frictions rise between those two economies, that could
be a source of headwinds for China's economy.
That's a great point. Alan, thank you so very much
for helping us look ahead to the Chinese inflation data
in the week ahead. Bloomberg's Alan Wong Allen is team
leader for the China Economy and Government team. Joining from
our studios in Hong Kong, we go to Taiwan next,
where Computechs took place in the last week. This is
Asia's largest tech showcase, and the event brought together CEOs
from the world's leading tech companies to discuss the outlook
for things like AI robotics and semiconductors, and that's where
we had the chance to speak with Albert Liu. Albert
is founder and CEO of AI chip firm Neuron. He
spoke with Bloomberg Steven Engel.
It's interesting. I'll just read you designed and manufactured chips
and hardware and software for EDGAI. So that's more local
solutions rather than uploading to the cloud. And there's all
kinds of and downloading from the cloud, so there's all
kinds of applications for that. But you are promoting NPUs
neural processing units. How does that compare? What is put
it into context for US NPUs versus cp USE and GPUs.
Yeah, I think the technology trend migration from CPU to
GPU to MP for AI computation. Computation power is a
really bit like a VHS to DVD to MB three.
So nb threo is quite tiny, right one tango so
they can revert BUND to DVD a bunch of vhs.
So you can sing in this way today using the
GPU or CPU to power GBD label AI is power hungry.
Some company even comes seeking to build a nuclear help
print to support that AI chain, which is kind of
ridiculous and nonsustainable right. Also the privacy and also operation
speed quich ai if down to the earth or enable
the device and the close to diva industry which you
will remote efficient and also low costs.
So how does this promote your technology? How does it
promote an edge AI? How does it promote you know
what we're seeing in China and around the world as well,
and that is the open claw movement and agentic AI
essentially and the creation of agents. And even in China
you're having one person companies. So you need that privacy local,
you need solutions local, low latency.
I think I would say not only local, also privacy,
but also controllable control. I mean, uh mp, you can
make it become possible is you can sing this way,
you can put the GVD label AI into a small
bux uh. Then the recent open clowd criticize is because
first they probably will spend the token fee like unexpected
right one night, you might spend like few hundred dollars.
And second they probably will leak your combinational information. There's
a couple of issues happen, like they even leak your
conversation with your your your your lofer and or even
your secret key or of your bank account to everywhere.
So the open claus is really open. Yeah, yeah, yeah,
open your privacy data everywhere. So if you can bring
the UH cloud label AI down to the earth, which
is what they're wrong, provide we are only selling the MPU,
but we also sell a system like a media doing
the H one hundred h two hundred there and then
we put the open crowd in the small box and
all the token is free and and also your privacy
data got control in local.
So where are we in the evolution? Right then you
talked about this is the age of inference now as
they still build out. Of course, UH the infrastructure for
the big data centers and training is happening from the
large language models. But how does your technology really fuel
the age and the era of inference?
I will say AI train first step definitely is the training,
right Clowd training, So the Clowd training definitely, GVU has
the greatest advantage because they're cool that Ecosys is so strong.
But once everyone's training or AI up to a certain
level become saturated or become more mature, then the second
one will be the cloud inference. Then the third one
will be like make them out of smaller and applied
to everywhere, which would be AHI. So I think cloud
AI or training AI. The GPU or the hardware is
super expensive and also power consumption is heavy and also
command doese emission is huge. Then once you move to
the inference, using these heavy hardware is kind of luxury.
So inference AI definitely is the right. Now the reason
AI s over n media acquire the lp U, right,
it's also facing the challenge of the inference that GPU
is two sevensy. Then move to the third one, which
will be HI. So I will say MP has a
great adventure in inference and HI. Because we are the
hardware dedications design for AI purpose.
How are you specifically and where are you impacted by
key components? The shortage and key components and memory is
the most acute for a lot of the big data centers.
But what's the most important and most acute shortage of
components for you?
You can see like what I said, MP street dongo
there taking on us Joe Mahy different as a TVD
and also VHS right the same thing MPU oxnicture is
much smaller and much low costs versus the GPU or
CPU GPU is any human history for Morning Street tak
and that was original designed for gaming or graphic for purse, right,
so they need they require HPN HIPing wish memory. Yeah so,
but MPU always is TV off.
That is Albert lu, founder and CEO of the AI
chip firm Neuron, speaking with Bloomberg Stephen Engel on the
sidelines of computext. I'm Doug Prisoner. You can catch us
weekdays for the Daybreak Asia podcast. It's available wherever you
get your podcast.
Nathan, Thanks Doug, And that does it for this edition
of Bloomberg Daybreak Weekend. Join us again Monday morning at
five am Wall Street Time for the latest on markets,
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I'm Nathan Hager. Stay with us. Top stories and global
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