Nvidia in Crisis: What Next? | Bloomberg Tech: Europe

0:00 ♪ TOM: JUST A FEW WEEKS AGO JENSEN HUANG WAS RIDING HIGH MEETING ROYALTY. >> ALL RIGHT. COME ON UP. LADIES AND GENTLEMEN, I'M INVESTING IN YOU. I'M INVESTING IN YOU. I'M INVESTING IN YOU. I GIVE YOU MONEY. I GIVE YOU MONEY. TOM: RELISHING HIS ROLE THEN AS THE AI BOOM'S UNOFFICIAL BANKER WRITING CHECKS AND KEEPING THE MONEY FLOWING. LAST MONTH, HE SWEPT THROUGH ASK ACROSS EUROPE COURTING POLITICAL AND BUSINESS LEADERS.

0:31 AND WHERE JENSEN WENT SO TOO WENT THE FANS. PHONES RAISED HOPING FOR A SELFIE WITH THE BIGGEST STAR OF THE AI AGE. AND THEN IN JUST A MATTER OF DAYS, THE APPLAUSE AND ADULATION STOPPED. AFTER DECADES SPENT BUILDING NVIDIA INTO THE WORLD'S DOMINANT AI CHIP MAKER, MUSIC IS OUT. RESIGNING AS CEO. AFTER REPORTS OF EXTRAMARITAL AFFAIRS INCLUDING ONE WITH A SUSPECTED CHINESE SPY. IN THIS SPECIAL EDITION OF BLOOMBERG TECH: EUROPE WE WILL HEAR FROM OUR OUR GUESTS THE SHOCK WAVES OF JENSEN HUANG WILL BE FELT ACROSS EUROPE AND ITS TECH ECOSYSTEM. I'M JOINED BY SENIOR BLOOMBERG ANALYST AT BLOOMBERG INTELLIGENCE MATTHEW BLOXHAM.

1:13 GET US UP TO SPEED ON WHAT'S HAPPENED THE LAST FEW DAYS AND WHAT THE IMPLICATIONS ARE FOR THE BROADER AI ECOSYSTEM WITH THAT LENS ON EUROPE GIVEN THE FINANCING POWER OF NVIDIA. >> YEAH. THAT'S RIGHT. OBVIOUSLY JENSEN HUANG RESIGNING ON THE BACK OF A BOARD INVESTIGATION INTO HIS ALLEGED AFFAIRS OR CONFIRMED I GUESS FROM HIS SIDE AFFAIRS. AND REPLACED ON AN INTERIM BASIS WITH THE CFO AND A LOT OF FOCUS NOW SHIFTS TWO PATHS.

1:43 ONE, WHAT'S GOING 0 HAPPEN WITH JENSEN. AND A LOT OF PEOPLE OUT THERE THAT ARE VERY BIG FANS OF HIS AND ARE KEEN TO BACK HIM ON WHATEVER HE DOES NEXT. I WOULD IMAGINE THERE'S GOING TO BE A PERIOD OF QUIET BEFORE ANY OF THAT CAN HAPPEN. THAT'S PROBABLY A NONCOMPETE CLAUSE. AND THE BIG QUESTION ABOUT WHAT HAPPENS TO MISSED NOW. WHO IS IS GOING TO LEAD THIS COMPANY FORWARD? ARE THERE GOING TO BE MORE INVESTIGATIONS, PARTICULARLY FROM THE U.S. ADMINISTRATION, INTO THE IMPACT OF ESPIONAGE. AND OBVIOUSLY LOTS OF INVESTIGATIONS GOING ON FOR SOME TIME ABOUT HOW SHIPMENTS OF NVIDIA CHIPS HAVE FOUND THEIR WAY INTO CHINA AND WHETHER NVIDIA HAD DONE ENOUGH TO DUE DILIGENCE ON ITS CUSTOMERS TO KIND OF STOP THAT. SO I THINK THERE'S STILL A LOT OF UNCERTAINTY AND RISK ABOUT NVIDIA.

2:26 AND, YOU KNOW, WHETHER THE COMPANY CAN CONTINUE TO BE THE KIND OF CORE. AI TRADE IT HAS BEEN FOR THE LAST FEW YEARS. TOM: HOW WOULD YOU CHARACTERIZE THE ROLE NVIDIA HAS PLAYED WHEN IT COMES TO FINANCING THIS ECOSYSTEM? >> ABSOLUTELY CENTRAL. IT'S BEEN THE FLYWHEEL IF YOU LIKE IN PROVIDING THE TECHNOLOGY AND ALSO PROVIDING THE FINANCE AND ALSO STIMULATING OTHERS IN THE SYSTEM TO ACTUALLY LOOK AT CREATIVE WAYS TO KIND OF FINANCE THE GROWTH. AND I WOULD SAY WITHOUT NVIDIA AND WITHOUT JENSEN HUANG, PROBABLY THE PACE OF EXPANSION OF AI WOULD HAVE BEEN SLOWER. I THINK HE'S KIND OF REALLY LOOKED TO KIND OF PUSH THIS AS QUICKLY AS POSSIBLE TO KIND OF REALLY GET THE MOMENTUM, YOU KNOW, TRULY EMBEDDED IN THE GLOBAL ECONOMY. TOM: MATT BLOCKS HANDLE, THANK YOU VERY MUCH INDEED. BLOOMBERG INTELLIGENCE SENIOR ANALYST. AND LET'S GET MORE INSIGHTS ON THIS AND BRING IN RICHARD WINDSOR FOUNDER AND -- OF -- THANK YOU FOR YOUR TIME. LET'S START WITH NVIDIA SPECIFICALLY. AND THEN WE CAN BROADEN THE LENS. GIVE US YOUR CURRENT TAKE AS TO THE DAMAGE THAT'S BEEN INFLICTED ON THIS COMPANY AND WHAT THE FUTURE STEPS ARE UNDER COLETTE KRESS IN THAT -- AT LEAST INTERIM CEO ROLE. >> OK.

3:41 I THINK IT'S ACTUALLY VERY SIMPLE. THE DAMAGE THAT'S BEEN DONE TO MISSED AS A COMPANY AS OF TODAY IS ENTIRELY REPUTATIONAL. THE PRODUCTS ARE NOT DAMAGED. THERE ISN'T A PRODUCT WITH DAMAGE. AND NO CONTRACTS HAVE BEEN LOST. ESTIMATES ARE NOT BEING CUT. SO FROM THAT PERSPECTIVE, IT IS ENTIRELY REPUTATIONAL. NOW, THE BIG QUESTION IS, WHAT HAPPENS GOING FORWARD? NOW, THE CRITICAL RISK AS I SEE IT IS NOT CUDA WHICH MANY PEOPLE HAVE HIGHLIGHTED BUT ACTUALLY THE CADENCE AND THE SPEED WITH WHICH NVIDIA RELEASES AND DEVELOPS NEW PRODUCTS.

4:14 AND THAT THAT IS THE MAIN REASON NOW WHY IT IS SO COMPETITIVE. AND THE REASON WHY THEY'VE BEEN ABLE TO DO IT FASTER THAN ANYONE ELSE IS BECAUSE OF THE STRUCTURE THAT JENSEN BUILT. SO WHOEVER COMES IN HAS GOT TO BE ABLE TO MAINTAIN THAT PRODUCT CADENCE BECAUSE WITHOUT THAT PRODUCT CADENCE, MARKET SHARE WILL FALL. GROSS MARGINS WILL FALL. AND THE VALUATION HERE WOULD NOT LOOK NEARLY AS CHEAP AS IT DOES TODAY. TOM: THAT'S REALLY INTERESTING.

4:38 SO PRODUCT CADENCE IS REALLY IMPORTANT. THE ROLE THAT JENSEN HAD IN ACCELERATING THAT AND KEEPING THAT UP TO PACE. WHERE DOES THAT LEAVE YOUR TAKE, RICHARD, IN TERMS OF POTENTIAL SUCCESSES? DO YOU HAVE A FAVORITE AT THIS POINT? >> I DO, ACTUALLY. I THINK SHE WILL BE VERY, VERY DIFFICULT TO GET A HOLD OF. BUT FRANKLY, IF THEY MANAGE TO ACQUIRE THE SERVICES OF LISA SU FROM AMD, I THINK THAT BOTH -- I WOULD BE VERY HAPPY AND I THINK THE SHARE PRICE WOULD ACTUALLY RE-RATE FAIRLY QUICKLY. BECAUSE IF THERE'S ONE PERSON THAT HAS FANTASTIC EXPERIENCE AT TURNING AROUND A HORRIBLE SITUATION INTO A GLITTERING SUCCESS, IT'S LISA SU.

5:17 TOM: FASCINATING. LISA SU. AND WE'VE SEEN AMD OUTPERFORMING NVIDIA IN TERMS OF GAINS THAT HAVE COME THROUGH THIS WEEK. SO WE'LL WATCH TO SEE IF SHE IS ON THE RADAR AND TO WHAT EXTENT THEY COULD ACTUALLY MAKE THAT HAPPEN. I JUST WANT TO BRING SOME SOUND IN NOW FROM JENSEN HIMSELF. HE WAS SPEAKING ON OCTOBER 14, JENSEN HUANG, TO BLOOMBERG'S EMILY CHANG IN AN INTERVIEW FILMED IN LONDON FOR HER SHOW "THE CIRCUIT." TAKE A LISTEN TO WHAT HE HAD TO SAY ABOUT HOW HE VIEWED HIS RESPONSIBILITIES AS THE NVIDIA CHIEF.

5:45 >> I THINK YOU HAVE TO HOLD YOURSELF RESPONSIBLE. YOU HAVE -- YOU HAVE AGENCY. YOU'RE THE CEO OF THE COMPANY FOR GOD'S SAKES AND YOU HAVE TO HAVE HIGH STANDARDS AND EXPECTATIONS. I'M RESPONSIBLE FOR AN ENTIRE INDUSTRY. AND SO I THINK THE PRESSURE OF BEING THE CEO IS HIGH. AND IT'S SUPPOSED TO BE HIGH. IT SHOULDN'T BE -- IT SHOULD NOT BE AN EASY JOB. IT SHOULDN'T BE A JOB THAT YOU TAKE FOR GRANTED. TOM: A JOB YOU SHOULDN'T TAKE FOR GRANTED.

6:13 RICHARD, DID WE THINK ABOUT THE PRESSURE ON WHO THE NEXT CEO WILL BE TAKING OVER NVIDIA? HOW DO YOU THINK THE NEW EXECUTIVE TEAM, HOW DO YOU THINK A REMOLDING OF THIS COMPANY, THAT WE'RE STILL VERY MUCH IN THE EARLY INNINGS OF, OF COURSE, WILL IMPACT ITS ABILITY AND ITS DESIRE TO BACK ITS PARTNERS AND INVEST ACROSS THE ECOSYSTEM? >> I THINK THAT'S GOING TO REMAIN UNCHANGED TO BE HONEST WITH YOU. IF YOU -- ONE OF THE THINGS THAT MISSED HAS RIGHT NOW, ACTUALLY, IS TIME. BECAUSE IF YOU LOOK AT THE 2027 CALENDAR YEAR, THOSE SALES ARE ALREADY MADE.

6:46 THOSE CONTRACTS ARE SIGNED. AND SO CONSEQUENTLY, NVIDIA IS PROBABLY GOING TO GENERATE NEXT YEAR SENIOR SOMEWHERE IN THE REGION OF $400 BILLION OF CASH FLOW FROM OPERATIONS. SO FROM THAT PERSPECTIVE, IT HAS TIME. PLUS IT STILL -- IT STILL HAS ITS CFO AND SHE'S A VERY GOOD CFO. I'M NOT SURE SHE WOULD BE A GREAT CEO BUT IN TERMS OF KEEPING THE ECOSYSTEM FINANCED AND THE CURRENT SITUATION IN TERMS OF KEEPING THE ECOSYSTEM SHE HAS BEEN DOING THAT ALREADY AND WILL CONTINUE TO DO THAT.

7:19 TOM: THERE IS A THESIS OUT THERE THAT COMPETITORS THE LIKES OF AMD AND BROADCOM AND APPLE, ALPHABET I SHOULD SAY, AND THEIR TPU CHIPS, THAT THOSE COMPETITORS TO NVIDIA CAN NOW STEAL A MARCH ON ITS MARKET SHARE. WOULD YOU PUSH BACK AGAINST THAT THESIS? >> I WOULD POTENTIALLY -- I WOULD SAY POTENTIALLY THEY CAN. AND THAT GOES STRAIGHT BACK TO WHAT I SAID IN ANSWER TO YOUR FIRST QUESTION. WHICH IS IF NVIDIA LOSES ITS PRODUCT CADENCE, THE SHARKS ARE CIRCLING AND THEY ARE READY TO TAKE A BITE OUT OF THE COMPANY IF IT SLIPS.

7:53 HOWEVER, IF IT DOESN'T SLIP, THEN THE COMPETITIVE SITUATION I THINK REMAINS UNCHANGED. AND, YOU KNOW, FULL DISCLOSURE, I'M LONG THE STOCK SINCE MONDAY. AND I THINK THAT'S NOT GOING TO HAPPEN. I THINK THE COMPANY IS GOING TO RECOVER. AND HENCE I THINK THERE'S A LOT OF UPSIDE IN IT. TOM: LET'S END ON THE GEOPOLITICAL STORY THEN. AND THE EXPOSURE TO CHINA AND THE ACCUSATION, THE REPORTING SUGGESTING THAT THIS IS A COMPANY AND THIS IS A COMMERCE DEPARTMENT, THE U.S., THAT AT THE VERY LEAST HAS TURNED A BLIND EYE TO SOME LOOPHOLES.

8:19 ACCORDING TO SOME OF THE REPORTING IN TERMS OF GETTING CHIPS INTO THE CHINESE MARKET, HOW MUCH OF A HEADWIND COULD THAT BE? IS THE -- IS A COMPLETE LACK OF ACCESS TO THE CHINESE MARKET? IF THAT'S WHAT RESULTS FROM THIS? IS THAT A HEADWIND FOR HAD COMPANY? >> I DON'T THINK SO. AND THE REASON I DON'T THINK SO IS BECAUSE, YOU KNOW, NVIDIA SAYS THAT SALES ALREADY ARE ZERO. SO THERE'S ONLY UPSIDE FROM THERE FROM MY PERSPECTIVE.

8:45 NOW, THERE ARE STORIES ABOUT CHIPS BEING SOLD INTO CHINA AND THE FACT THAT CHINESE COMPANIES LIKE DEEPSEEK HAVE ACCESS TO GPU'S. THEY DO. BUT THE THING IS THOSE GPU'S ARE NOT IN CHINA CHINA. THEY'RE IN THE NEIGHBORING COUNTRIES WHERE THE -- WHERE THEIR ACCESS TO IS NOT ILLICIT BUT A LOOPHOLE AROUND THE EXPORT REGULATIONS. MY PERSONAL OPINION IS I THINK THAT'S WHAT MEGASPEED WAS DOING MOST OF THE TIME WAS GETTING CHIPS FOR THOSE -- FOR THOSE COMPANIES.

9:12 NOT NECESSARILY SMUGGLING INTO CHINA. AND THERE HAVE BEEN LOTS OF ARTICLES ABOUT HOW MANY CHIPS WERE SHIPPED, SMUGGLED INTO CHINA OVER THE LAST FEW YEARS. AND THE GRAND SCHEME OF THINGS IT WAS A ROUNDING ERROR. TOM: RICHARD WINDSOR, FOUNDER AND OWNER OF RADIO FREE MOBILE. APPRECIATE YOUR INSIGHT. YOU CAN WATCH THE FULL EPISODE OF THE CIRCUIT, THE RISE AND RECKONING OF JENSEN HUANG, VERY MUCH DESERVING OF YOUR TIME. OUT NOW ON YOUTUBE, BLOOMBERG.COM, AND THE TERMINAL. NOW, LESS THAN A MONTH AGO JENSEN HUANG ANNOUNCED BILLIONS OF DOLLARS IN DEALS IN NEW EUROPEAN AI INVESTMENTS. NOW HE'S GONE.

9:47 WE'RE GOING TO LOOK AT WHAT THIS MIGHT MEAN FOR THE REGION'S STARTUP LANDSCAPE. COMING UP, WE'LL TALK TO THE DIRECTOR OF TECH INCUBATOR STATION F. AND ALSO DELVE INTO SOFTWARE THAT COULD REDUCE RELIANCE ON NVIDIA'S GPU'S ALLOWING EASIER SWITCHING BETWEEN CHIPS. WE'LL DISCUSS THAT WITH THE CO-FOUNDER OF COLOSUM.

11:06 THIS IS BLOOMBERG. >> AS I CAN BE FIRED, THE NEXT CEO HAS TO BE HIRED. AND SO -- AND, YOU KNOW, I LIKE IT THAT WAY. I LIKE THAT -- I LIKE THAT WE CAN'T BE OVERLY COMPLACENT ABOUT OUR POSITION INSIDE THE COMPANY. AND THAT WE CAN'T TAKE IT FOR GRANTED. AND YOU'RE ALWAYS VULNERABLE. YOU'RE ALWAYS EARNING IT. YOU'RE ALWAYS STRIVING TO BE BETTER. THAT'S A CONDITION THAT'S GOOD. TOM: JENSEN HUANG OF SPEAKING TO BLOOMBERG'S EMILY CHANG FOR THE CIRCUIT RECORDED LAST MONTH WHEN HE WAS STILL NVIDIA'S CEO. LET'S TAKE A CLOSER LOOK AT JENSEN HUANG'S DEPARTURE FROM NVIDIA AND WHAT IT MEANS FOR THE TECH INDUSTRY IN EUROPE. ROXANNE VARZA, DIRECTOR AT TECH INCUBATOR STATION F JOINS ME NOW FROM PARIS.

11:49 SOMEONE WHO'S VERY WELL PLACED TO TALK ABOUT THIS AND SOMEONE WHO IS VERY CLOSE TO THE ECOSYSTEM NOT JUST IN FRANCE BUT ACROSS EUROPEAN SPACE. THANK YOU FOR TAKING THE TIME. YOUR REACTION LAST FEW DAYS THE DOWNFALL OF JENSEN HUANG. ROXANNE: WELL, I HAVE TO SAY PERSONALLY, OBVIOUSLY, SURPRISED. I DON'T THINK ANYBODY SAW THIS COMING. AT THE SAME TIME, IT'S -- IT'S MOVING SO QUICKLY. IT'S CHANGING SO FAST. AND THERE'S SO MUCH SPECULATION THAT I THINK IT'S REALLY -- IT'S KIND OF HARD TO SEE WHERE THINGS ARE GOING TO GO FROM HERE.

12:24 TOM: YEAH. ABSOLUTELY. AND THERE'S A LOT OF UNANSWERED QUESTIONS STILL THAT NEED TO BE ANSWERED. I'M JUST THINKING IN TERMS OF -- HE HAD THIS EUROPEAN TOUR AND PARIS WAS PART OF THAT TOUR, PARIS, STOCKHOLM, LONDON, BERLIN. AGAIN, FRESH ANNOUNCEMENTS FROM JENSEN WHEN HE WAS ON THE GROUND IN PARIS BACKING FRENCH STARTUPS. WHAT -- WHAT IS THE MOOD? HAVE YOU SPOKEN TO FOUNDERS WHO HAVE INVESTMENT FROM -- WHAT HAVE YOU HEARD FROM THEM AND ANY SENSE OF CONCERN? WHAT IS THE MOOD ON THAT POINT?

12:53 ROXANNE: YES. I'VE SPOKEN TO A LOT OF FOUNDERS. IT'S VERY MIXED REACTIONS. BUT I WOULD SAY OVERALL, THERE'S STILL JUST SUCH A GREAT LEVEL OF RESPECT FOR JENSEN. WHAT HE'S BUILT REGARDLESS OF WHAT'S HAPPENED. AND I THINK EVERYBODY KNOWS CEO'S AREN'T PERFECT. AND ALSO I THINK THAT THERE IS NOT TOO MUCH FEAR GIVEN THAT THIS COMES AT JUST AFTER ALL THE INVESTMENT ANNOUNCEMENTS SO THERE IS -- NONE OF THAT HAS BEEN PUT INTO JEOPARDY. SO FOR THE MOMENT, ACTUALLY, THE ECOSYSTEM SEEMS RELATIVELY REASSURED.

13:25 AND I THINK THAT THERE'S ALSO A LOT OF DISCUSSION ABOUT THE LEARNING FOR THEM AS FOUNDERS. OBVIOUSLY, NVIDIA WAS VERY TIED TO JENSEN PERSONALLY AND THAT'S A RISK FOR ANY COMPANY. AND SO NOW THERE'S A LOT OF DISCUSSION AROUND HOW TO AVOID THAT AS THEY THEMSELVES BUILD THEIR COMPANIES. BUT I WOULD SAY ACTUALLY GIVEN EVERYTHING THAT'S HAPPENED AND HOW QUICKLY IT'S HAPPENED, THE MOOD IS ACTUALLY QUITE POSITIVE. AND I THINK IT IS REALLY REPUTATIONAL. I DON'T THINK REALLY WHAT NVIDIA HAS BUILT IS REALLY PUT AT RISK FOR THE MOMENT. TOM: THAT'S REALLY INTERESTING.

13:59 IN TERMS OF THE REPUTATIONAL ASPECT OF IT. AND THE LEARNING THAT SOME OF THESE FOUNDERS ARE TAKING FROM HOW TO CONDUCT YOURSELF AND HOW TO BUILD AN ORGANIZATION AROUND A CEO AND A FOUNDER. SO TO BE CLEAR, ROXANNE, YOU'RE NOT HEARING CONCERN THAT SOME OF THESE INVESTMENT PLEDGES ARE GOING TO BE PULLED BACK? YOU'RE NOT HEARING CONCERN THAT THE KIND OF FINANCIAL SUPPORT INVESTMENT, THE EQUITY, FROM NVIDIA IS GOING TO BE REDUCED? ROXANNE: NO. THERE WERE FOUR ANNOUNCEMENTS THAT WERE -- FOUR COMPANIES THAT NVIDIA ANNOUNCED INVESTMENTS IN IN FRANCE.

14:31 TWO OF THEM WERE STATION F STARTUPS AND ONE WAS A PARTNER. TWO -- TO OUR KNOWLEDGE, NONE OF THAT IS BEING PULLED OFF THE TABLE. SO I THINK HONESTLY THAT THE ECOSYSTEM HERE FOR THE MOMENT SEEMS QUITE REASSURED. AND IN ANY CONFLICT FOUNDERS ARE ALWAYS LOOKING FOR WHERE IS THE OPPORTUNITY? WHERE IS THE OPPORTUNITY FOR EUROPE? AND SO THAT'S -- THAT'S ALSO PART OF THE DISCUSSION AT THE MOMENT. TOM: IS THERE -- ON THE OPPORTUNITY PIECE, IS THERE AN OPPORTUNITY ON THE SOVEREIGNTY SPACE?

14:57 IS THERE AN OPPORTUNITY IN BUILDING OUT ALTERNATIVES TO THE NVIDIA CHIP SUPPLY? IS THAT -- IS THERE MATERIAL EVIDENCE OF THAT STARTING TO HAPPEN IN EUROPE? HOW DOES THIS CHANGE THE SOVEREIGNTY CONVERSATION IF AT ALL THE RELIANCE, THE DEPENDENCY, NOT JUST ON THE CHIPS BUT ON THE ENTIRE NVIDIA -- THE ENTIRE NVIDIA STACK? ROXANNE: I MEAN, THESE ARE CONVERSATIONS THAT WE'VE BEEN HAVING, I WOULD LIKE TO SAVE AND FOR YEARS, IT'S NOT SOMETHING THAT'S JUST COME UP BECAUSE OF JENSEN'S DEPARTURE. IT'S SOMETHING THAT EUROPE HAS TO STRENGTHEN AND THINK ABOUT. FOR THE MOMENT, GIVEN HIS DEPARTURE, IS SO RECENT, I DON'T THINK THIS HAS GIVEN RISE TO ANY NEW PROJECTS JUST YET. BUT I THINK WE'LL HAVE TO LOOK AT HOW THINGS PLAY OUT AND IT'S VERY LIKELY THAT SOME PEOPLE, SOME FOUNDERS, SOME ENTREPRENEURS WILL JUMP ON THAT OPPORTUNITY. TOM: ROXANNE, REALLY APPRECIATE YOUR INSIGHTS AND JUMPING ON. ROXANNE VARZA, DIRECTOR AT TECH INCUBATOR STATION F THERE WITH HER FINGER-TERMLY ON THE PULSE OF THE ECOSYSTEM. NVIDIA'S DOMINANCE IN AI HAS GIVEN IT EXTRAORDINARY POWER. THE INDUSTRY HEAVILY DEPENDENT ON ONE COMPANY. CALLOSUM WANTS TO LOOSEN NVIDIA'S GROUP WITH SOFTWARE THAT DIRECTS AI ACROSS A RANGE OF CHIPS AND MODELS, RATHER THAN LOCKING THEM INTO A SINGLE PROVIDER. CO-FOUNDER DANYAL AKARCA IS HERE. THIS IS A MOMENTOUS MOMENT FOR YOUR ECOSYSTEM. HOW ARE YOU DIGEST, THE NEWS FROM NVIDIA AS YOU TRY TO BUILD A PRODUCT AND AN ALTERNATIVE THAT ALLOWS AT LEAST THOSE DEPENDENT ON CHIPS TO HAVE ALTERNATIVE -- TO HAVE ALTERNATE SYSTEMS AND RELY ON NOT JUST ONE CHIP BUT OTHER CHIPS? DANYAL: QUITE EXTRAORDINARY NEWS THE LAST FEW DAYS. OF COURSE.

16:36 AND I THINK EVERYONE IS DIGESTING WHAT THE IMPLICATIONS OF THIS. I THINK IT IS IMPORTANT TO TAKE A STEP BACK AND THINK ABOUT THE FUNDAMENTAL MARKET DYNAMICS OVER THE LONGER TIME PERIOD. IT HELPS US UNDERSTAND WHAT'S REALLY HAPPENING ON THE MACRO SCALE. WHAT WE'RE REALIZING IS THAT THERE HAS BEEN A HUGE ADOPTION OF AI TECHNOLOGIES OF COURSE. MANY PEOPLE ARE UNDERSTANDING THE DIFFERENT TYPES OF WORK FLOWS AND USE CASES FOR AI IN NEW WAYS. AND AS A RESULT, AND THERE'S A HUGE DEMAND FOR CHIPS IN GENERAL.

17:02 OF COURSE, AND NVIDIA HAVING BUILT AMAZING CHIPS AND BEEN DOING SO FOR A VERY LONG TIME. AND WHAT PEOPLE ARE NOT REALIZE -- WHAT WE ARE REALIZING AT CALLOSUM IS THAT ACTUALLY, BECAUSE THERE ARE SO MANY DIFFERENT TASKS AND MANY MODELS IN THE ECOSYSTEM THERE IS ACTUALLY AN INCREASE IN THE NUMBER OF ALTERNATIVE CHIPS THEY'RE ENTERING THE MARKET AS WELL. THE REASON FOR THIS IS BECAUSE THOSE CHIPS ARE GOOD FOR DIFFERENT THINGS. SOME OF THEM ARE VERY ENERGY EFFICIENT AND SOME OF THEM ARE VERY, VERY FAST. AND AS A RESULT, THE ABILITY TO BE ABLE TO MAP THE DIFFERENT TASKS IN THE AI SYSTEMS FOR THESE DIFFERENT ALTERNATIVE CHIPS ARE INCREDIBLY EXCITING.

17:34 A LOT OF SHORT-TERM DYNAMICS THAT ARE HAPPENING IN THE MARKET VOLATILITY, THIS IS QUITE NORMAL OF COURSE AND VERY UNIQUE NEWS THAT'S HAPPENED. AND A MACRO PICTURE HERE WHICH IS THERE ARE KIND OF A WIDE RANGE OF REALLY AMAZING CHIPS THAT ARE ENTERING THE MARKET IN WHICH THE MARKET I SAY THE PIE IS GROWING FOR COMPUTE IN GENERAL BUT THAT PIE MAY BE SHARED INCREASINGLY OVER TIME IS VERY EXCITING. TOM: VERY SIMPLISTICALLY YOU OFFER THE ABILITY TO HOP SEAMLESSLY ACROSS DIFFERENT CHIP ARCHITECTURES AND DIFFERENT CHIP SETS FOR USERS AND THOSE WHO WANT ACCESS TO COMPUTE.

18:03 DO YOU THINK LONGER TERM, RIGHT NOW NVIDIA HAS A 90% MARKET SHARE OF AI ACCELERATORS AND LONGER TERM THE MARKET SHARE SHRINKS. IS THAT YOUR VIEW? ROXANNE: THAT'S CORRECT. THE LAST PERIOD OF TIME IN THE AI AND THE MOST RECENT CHAPTER OF AI AND WE HAD AN NVIDIA DOMINANCE BECAUSE NVIDIA HAS BEEN BUILDING AMAZING CHIPS. IT'S BEEN THE PREDOMINANT ONE IN OUR SUPPLY CHAINS AND AVAILABLE TO US BUT NOW A GROWTH OF REALLY AMAZING CHIP COMPANIES, FOR EXAMPLE, WITHIN EUROPE, WE JUST HAD THE OTHER DAY FRACTAL RAISING $720 MILLION IN THEIR SERIES C.

18:36 WE HAVE COMPANIES LIKE OLEX IN LONDON BUILDING AMAZING PHOTONIC CHIPS RAISING HUNDREDS OF MILLIONS OF DOLLARS. WHAT PEOPLE ARE REALIZING IS THERE ARE SPECIALIZED CHIPS THAT ARE VERY GOOD FOR PARTICULARLY TASKS. AND WHAT DOES THIS MEAN? IT MEANS NATURALLY OVER TIME THE MARKET CAN BE INCREASINGLY SHARED AND THAT PIE AS SAY CAN BE SHARED ACROSS THOSE CHIPS. AND IT CALLS REALLY FOR A TYPE OF COMPANY LIKE CALLOSUM WHICH AS YOU DESCRIBE ENABLES THE SOFTWARE SYSTEMS THAT ALLOWS US TO BREAK DOWN AI SYSTEMS INTO THEIR PARTS AND RUN THE BEST TASKS ON THE BEST CHIPS.

19:07 AND I THINK THIS IS REALLY, REALLY GOOD FOR EVERYONE. IT MEANS THAT PEOPLE CAN HAVE CHEAPER SYSTEMS. THEY HAVE MUCH MORE PERFORMANCE SYSTEMS. IT'S GREAT FOR THE PLANET BECAUSE MORE ENERGY EFFICIENT. BUT ULTIMATELY YOU'RE RIGHT. THE MARKET DYNAMICS WE SEE THAT THIS WILL SHIFT TO MUCH MORE SHARED PICTURE IN THE CHIP SPACE. TOM: GOING TO BE MORE CHIPS ON THE MARKET WHETHER OPENAI'S JALAPENO OR WHAT'S COMING OUT FROM OLEX AND FRACTAL APE AND THE DEMAND FOR CHIPS CONTINUES.

19:33 WHAT DO YOU SAY TO THOSE WHO HAVE I NVIDIA HAS THIS LOCK IN WITH JALAPENO, NOT ABLE TO COMPETE BECAUSE THE LOKEN THAT CUDA HAS? >> THE CUDA MOAT, THE SOFTWARE THAT ALLOWED AN ECOSYSTEM TO BEGIN, I GUESS, THE KIND OF DAWN OF THIS MODERN AI ERA IT REALLY HELPED DEVELOPERS BE ABLE TO ADOPT NVIDIA VERY QUICKLY. WE'VE ACTUALLY SEEN AN ACCELERATION OF MANY OF THE SOFTWARE LIFE CYCLES HAVE REALLY ACCELERATED NOW. MUCH QUICKER THAN EVER BEFORE TO ACCELERATE HOW YOU BUILD YOUR SOFTWARE AND SO CHIP COMPANIES ARE OBVIOUSLY REALIZING THIS. THEY'RE REALIZING THEY CAN ACTUALLY BUILD THEIR SOFTWARE VERY QUICKLY.

20:11 AND ENABLES THEIR CHIPS TO BE ADOPTED IN THE MARKET. AND ALSO YOU HAVE COMPANIES, A COMPANY LIKE CALLOSUM, FOR EXAMPLE, WHICH IS ALSO ACCELERATING THAT ADOPTION. WE WORK WITH MANY OF NIECE NEW CHIP COMPANIES BUILDING GREAT TECHNOLOGY TO ACCELERATE HOW THEIR CHIPS CAN BE PLUGGED INTO OUR SYSTEMS, FOR EXAMPLE, WHICH ALSO GETS THEM TO MARKET. AND SO ALL OF THESE SPEAK ULTIMATELY TO THE FACT THAT THOSE -- CUDA MOATS AND OTHER MOATS THAT EXIST. BUT THAT ONE SEEMS TO BE DECLINING QUITE A LOT.

20:37 TOM: OK. THE FUTURE IS MORE CHIPS. AND THE ABILITY TO HEDGE BUT THE HERE AND NOW IS NVIDIA CONTINUES TO HAVE THAT DOMINANCE. WHAT DO YOU HEAR IN -- IN YOUR CONVERSATION AND BACKED BY THE SOVEREIGN AI WEALTH FUND, WHAT DO YOU HEAR IN YOUR CONVERSATIONS ABOUT SOVEREIGN CAPABILITIES AND HOW DEPENDENT WE ARE? I WAS SPEAKING TO THE UK AI MINISTER AND REALLY FOCUSED ON THE CHIP SPACE AND SEMICONDUCTOR SPACE IS THIS ANOTHER MOMENT THAT CATALYZES A VIEW TO KIND OF DIVERSIFY?

21:05 DANYAL: I WOULD SAY IT'S HARD TO SAY THIS EXACT MOMENT. BECAUSE OBVIOUSLY QUITE -- WE'RE LEARNING QUITE A LOT. BUT WHAT WE ARE REALIZING, IS THIS REALLY KIND OF TWO THINGS. WE'RE MOVING IN MANY WAYS TO A MORE MULTIPOLAR WORLD. EVERY COMPANY AND COUNTRY ARE THINKING ABOUT HOW THEY HAVE LEVERAGE ON THEIR OWN FUTURES. HOW CAN THEY DICTATE THE TECHNOLOGIES OF THEIR OWN FUTURES AND AT THE SAME TIME, REALLY THE FUTURE IS YET TO BE BUILT.

21:30 THERE ARE MANY -- AMAZING NEW TECHNOLOGIES I THINK THAT FOUNDERS AND COMPANIES ARE EXCITED TO BE BUILDING. AND SO REALLY, WHAT DOES THAT MEAN? IT MEANS THAT EVERYONE SHOULD REALLY BE CONCERNED ABOUT WHAT ARE THE MOST AMBITIOUS AND IMPORTANT TECHNOLOGY YOU CAN BUILD TODAY AND I SEE -- I GUESS ONE OF THE SIGNALS OF THIS IS COUNTRIES ARE ACCELERATING THIS. AND SO IN THE UK AS YOU DESCRIBE CALLOSUM HAS BEEN BACKED BY THE UK SOVEREIGN AI FUND.

21:50 AND FOR THIS, ONE OF THE REASONS FOR THIS IS BECAUSE OF THE LEVERAGE THAT WE -- THAT TECHNOLOGY IS -- CAN AFFORD OR -- BEING ABLE TO INTEROPERATE BETWEEN DIFFERENT CHIP TECHNOLOGIES. AND SO I THINK THIS IS REALLY A SIGNAL THAT COUNTRIES ARE ACCELERATING THEIR SOVEREIGN EFFORTS AND I WOULD LIKE TO STRESS THAT REALLY THAT IS BORN FROM BUILDING THE VERY, VERY BEST TECHNOLOGIES THAT YOU LEVERAGE ON YOUR OWN FUTURE. TOM: CAN I BRIEFLY ASK YOU BEFORE WE END. HAVE YOU PERSONALLY AS A FOUNDER TAKEN ANY LESSONS FROM THE JENSEN HUANG SAGA IN TERMS OF LEADERSHIP? DANYAL: YEAH, I HAVE.

22:22 EFFECTIVELY JENSEN, IF YOU -- BEFORE THIS MOMENT JENSEN HAS DONE AN UNBELIEVABLE JOB LAST 30 YEARS IN BUILDING NVIDIA FROM A FOUNDER TO NOW. I THINK THE WAY THAT IT'S VERY HARD TO SAY EXACTLY ABOUT WHAT HAS BEEN HAPPENING HERE IS A VERY UNIQUE EXAMPLE AND NEW CASE. THE WAY THAT I -- THAT THE LESSONS THAT I GUESS THAT I TAKE FROM THIS IS OBVIOUSLY THAT WHEN -- WHEN ONE IS KIND OF THE FOREFRONT OF YOUR POWER TO EFFECTIVELY, YOU KNOW, MAKE SURE THAT YOU STICK TO YOUR CORE VALUES AND MAKE SURE YOU'RE CONSISTENT.

22:52 TOM: CORE VALUES AND MAKE SURE YOU'RE CONSISTENT AND YOU THINK THE UK IS WELL PLACED IN TERMS OF BUILDING OUT ALTERNATIVE CHIPS? >> ABSOLUTELY. ABSOLUTELY. SO WE'VE -- AS I DESCRIBED ALREADY, THE UK HAS A VERY INTERESTING POSITION IN THE WORLD IN BEING ABLE TO INTERACT GLOBALLY WITH ALL OF OUR PARTNERS. AN EXCITING TIME WITH ALL OF OUR NEW CHIP TECHNOLOGIES HAPPENING AND A HUGE AMOUNT OF INVESTMENT IN THE UK AND SUPER EXCITED TO BE BUILDING HERE.

23:13 TOM: THANK YOU VERY MUCH FOR JOINING US. DANYAL AKARCA, CO-FOUNDER OF CALLOSUM. THAT IS IT FOR THIS SPECIAL EDITION OF BLOOMBERG TECH EUROPE. NEXT MONTH, WE WILL BE LOOKING AT THE RISE OF HYBRID NAVIES AND EXPLORING HOW TECHNOLOGY IS RESHAPING NAVAL POWER. AND SECURITY AT SEA. THAT EPISODE ON DECEMBER 11 HERE ON BLOOMBERG TV. SO TUNE IN FOR THAT. "THE PULSE" IS UP NEXT.