a16z Podcast - H20s to China + 15% with Chris Miller and Lennart Heim

Episode Date: August 14, 2025

We’re sharing an episode from ChinaTalk that dives into one of the biggest recent reversals in U.S. tech policy.The U.S. banned Nvidia’s H20 AI chips to China in April. Now, just months later, they’re being sold—with a 15% export fee. What happened? Why the reversal? And what does it mean for the future of AI competition between the U.S. and China?Chris Miller—author of Chip War—and Lennart Heim from RAND join ChinaTalk host Jordan Schneider to unpack the policy flip-flop, why China is publicly downplaying interest in the H20, and why high-bandwidth memory and semiconductor manufacturing tools may be even more important than the Nvidia chips themselves.Resources:Listen to more from ChinaTalk: https://link.chtbl.com/chinatalkCheck out the Horizon Fellowship to work in DC on emerging tech policy issues like AI chip export controls: https://horizonpublicservice.org/applications-open-for-2026-horizon-fellowship-cohort/Outro Music: It's a Shame, The Spinners, 1970

Emergency Podcast, we're bringing back Leonard Haim of Rand and Chris Miller. You guys know who Chris Miller is to talk the new H-20 drama. We went from banning it in April to now selling it with a 15% export fee. All right, Leonard, why don't you start our narratives? What is the H-20? Why should you care about it? And what were the first few months of the Trump administration doing when it came to this chip? The H20 is this chip, which in Vida designed as a response to export controls in 2023, right?

It's a typical game. You draw some lines, and then new chips get created right below the lines. And the H20 is such an example, but it did a neat trick. It maxed out the specifications which are not controlled, memory bandwidth. So putting on the best high bandwidth memory world currently has on this chip and created an export control compliant chip, which I think was introduced at beginning of 2004, so a couple of months after the update. And it was sold over 2024, lots of interest in this chip.

And when then the term administration started in January, they, well, we can say the Biden administration didn't get to it. I think it was definitely a way out of this problem. Many of their officials came out and many of them even favored, but they just never got to banning to it because, again, many stakeholders and many different opinions and also just kind of running out of time. But Trump then banned this chip, as we saw reported in April 2025.

Not via the normal means how you do it, not via passing regulation, via using a cool tool called is informed letters, because they're pretty fast. And you can just send a letter to the companies which produce these chips and tell them like, hey, you can't sell these chips anymore because we expect there's an export control violation going on and we actually think this chip is too good.

So that's where we started. So the chip was banned, for my personal point of view, a big success. I think this chip should not be sold. We need to reduce our thresholds. This is just simply too good of a chip. And well, then this was the latest status. and I think in the last few months, last few weeks,

we saw some flip-flopping back and forth and every day revealed some more information. And I don't know, while we talk, probably more things will come out over time. All right, so this was President Trump on Monday. Let's give two questions. One about China, one about Russia, if I could. On China, your administration agreed to send the most advanced

or advanced Nvidia and AMD chips. No, obsolete. No. And then 15% of profits. I mean, the 20s. No, no, this is an old chip. that China already has, and I deal with Jensen, who is a great guy, and Navidia. The chip that we're talking about, the H20, it's an old chip. China already has it in a different form, different name, but they have it,

or they have a combination of two will make up for it and even then some. Now, Jensen also has, Jensen's a very brilliant guy, and Jensen. Jensen also has a new chip, the Blackwell. Do you know what the Blackwell is? The Blackwell is super duper advanced. I wouldn't make a deal with that, although it's possible I'd make a deal a somewhat enhanced in a negative way,

black well. In other words, take 30% to 50% off of it. But that's the latest or the greatest in the world. Nobody has it. They won't have it for five years. But the H20 is obsolete. obsolete. You know, it's one of those things, but it still has a market. So I said, listen, I want 20% if I'm going to prove this for you for the country, for our country, for the U.S.

I don't want it myself. You know, every time I say like 747, I want, I want, yeah, for the Air Force. So I just want it. So when I say I want 20, I want for the country, I only care about the country, I don't care about myself. And he said, would you make it 15? So we negotiate a little deal. So he's selling a essentially old chip that Huawei has a similar chip, a chip that does the same thing. And I said, good, if I'm going to give it to you because they have a, you know, they have a stopper,

what we call a stopper, not allowed to do it. It's really known as a restrictive covenant. And I said, if I'm going to do that, I want you to pay us as a country something because I'm giving you a release. them only from the age 20 now on the black well I think he's coming to see me again about that but that will be a unenhanced version of the big one like I don't know if you know we will sometimes sell fighter jets to a country and will give

them 20% less than we have do you know what I mean it's just yeah it's crazy to see you like this discussion also to the level of sophistication you right knowing age 20s, knowing the Blackwells by name, knowing what Huawei. It's clearly a big topic now where this whole exponent of things in the spotlight. So I think it's a good moment to kind of take a step back and look at the arguments in favor and against selling China AI chips. So against selling, you have broadly the argument that selling AI chips helps upgrade the Chinese AI ecosystem that's going to compete with America's broadly. and that there are specific applications of the chips that we would be selling to China,

which we would be very uncomfortable with, like military ones or intelligence ones or sort of broad human rights violations that you wouldn't want, sort of America and technology to be helping to further. And then the arguments in favor of selling, we have this idea that actually selling Nvidia chips would retard domestic chip development, make it harder for SMIC and Huawei and whoever else wants to try to build a domestic AI chip to find a marketplace, and this idea that selling chips into China would maintain American, you know, Chinese dependency on the U.S. stack.

So it keeps Chinese developers using QDA, building infrastructure around U.S. technology, and, you know, some sort of like broad, soft power agenda setting advantages to be determined that China using Nvidia hardware will give to the U.S. going forward. So maybe we should run through those. Maybe we should run through those systematically, I guess. You know, let's start with the biggest one, which is you shouldn't sell these chips to China

because upgrading the Chinese AI ecosystem is like a strategic threat to the U.S. And I think that's a, I think maybe we'll throw this one to Chris. I mean, this is a, this is like a grand strategic question almost of like how much of China's rise is okay and how much of it isn't because, you know, the military intelligence, human rights applications are almost secondary to like just how scary you see a richer, more flourishing, more powerful China to be, right? Yeah. And I would even segment out the sort of richer and more flourishing side and just talk about technological capabilities.

They're obviously interlinked, but I don't think U.S. strategy has been to try to make China poorer or less flourishing in general. I think the question is just who's going to lead in AI? The trend over the last five years and really the last 50 years has been that if you want advanced AI, you need lots of advanced computing, and there's a small number of companies who produce the chips in question. And so if you think that advanced technology has mattered in the past in T.O. Street's competition, which I think is pretty hard to argue with, it's probably going to matter in the future. And therefore, who wins an AI is a little bit reductive to ask, but I think it also matters. And just like we would be less happy if we were all using Huawei phones and relying on Alibaba Cloud because I think there'd be pretty significant political ramifications that were downstream of that. So, too, if we find ourselves a future where either the U.S. or third countries are relying on Chinese AI providers, whether for

models or for applications or for AI cloud, that implies less political influence for the U.S., a weaker U.S. and a stronger China. And that's the stakes. And I think to some degree, both sides of this argument agree on that basic framing. The question is, how best do you get there? you know, one argument is that you restrict compute access and thereby hobble the growth of Chinese AI firms. A second argument is that you try to, you know, as Secretary Lutnik has said, get China addicted to the AI stack. And the question to ask is, you know, how addicted are they willing to become and how addicted could you actually make them? And can you leverage that addiction in the future or not? And I think these are where the empirical questions are really focused.

And I think kind of one more on the in favor of selling argument. idea that keeping China dependent on, you know, TSM fab chips actually lowers the risk of a Taiwan war, which I have some questions about. But this is something that Ben Thompson has been pushing, which I think has also percolated into the, uh, into the administration and Congress, like my mom threw me that one the other day. Um, anyways, I mean, what do you think? What do you make out of it, Jordan? I'm like, I'm like, for me, it's like, it doesn't seem to be the main calculus behind it. Like, I, I buy on the margin. I think maybe on the margin a little bit.

I think there's two levels to the question. First, at the political calculus to go to war or not to go to war, it seems very, this is like this would be an extremely kind of weighty decision where, you know, the fates of nations would be at stake to do a serious blockade or to, you know, do some strike or some, or some actual, you know, D-Day style invasion. And, you know, whether or not the chips are there, China's sort of like, you know, gaining relatively or losing relatively in AI hardware just strikes me as like the 12th thing that you would be thinking about if you were a Chinese premier. I mean, domestic political developments in Beijing, political developments in Taipei, just how willing the U.S. is seeming to fight for a time.

Taiwan, how excited Japan is to let the U.S. fight from its territory, all of those strike me as much more germane decisions. And there's a bit of sort of like technological myopia of tech analysts thinking that like, oh, the chips are the one thing that's like this silicon shield stopping it. It's like, no, like we're, I'm sorry. I really, as as cool and important and you know, over a 50-year period, potentially like world-shaking as, you know, advanced semiconductors and artificial intelligence may be, you know, if you are a head of state, this is, and making the biggest decision of your life, I don't think it's really going to come down to like, oh, well, Huawei tells me they can only make 750,000 chips in 2028, so then it's not going to work out.

But I do think sort of one level down from that, there is this very open question, which we debated on Sunday's edition of Second Breakfast, about to what extent the chips and the technology that they're going to be enabling ends up sort of reshaping the military balance of power. And I think that is still very much an open question that smart people can disagree on on whether or not, you know, whatever. you can do with, you know, putting chips in your autonomous drones so they can, like, target without being, uh, uh, interfered with or what have you. You can imagine a lot of, a lot of different crazy futures where, where AI really matters. And by the way, like, it could actually work in the other direction, um, uh, of lowering the risk of Taiwan war if America has a big lead when it comes to, uh, semiconductors, because then, uh, a Chinese, uh, leader in Beijing would look at,

the military balance of power, a balance of power, and the advantage that the U.S. and Taiwanese forces get from being more, you know, AI-ified that they see, oh, you know, there's no chance of us winning. Why even try to play this game in the first place? I think the other key facet here is that if you look at sales advanced chips from Taiwan and its ecosystem to China, most of them are not AI chips. It's mostly smartphone chips and PC processors and AI chips are a portion, but a small portion. I think it also gets back to the, question. I know you've raised in a lot of shows, Jordan, which is how AGI-pilled is Xi Jinping? And the answer is, you know, it doesn't seem that AGI pilled. Best evidence for which is that, you know, SMIC and its 7-9-meter production is still producing a whole lot of smartphone chips, which you would not do if you thought we were in a race for AGI which will define the future. So both of those facets, again, point against the Silicon Shield as it relates to AI chips being absolutely central here. And also, just to clarify, they're not allowed to produce

AI chips at TSM. They can produce everything else there. Huawei not because they're an entity list, you know, they did some bad stuff, but almost every other Chinese company can just go to TSM and produce chips there, right? So there's like significant flow of chips from Taiwan, as or as we're speaking right now, to China, right? Just not a, ideally not AI chips. You know, we had some hiccups in the past where it was also AI chips, right? So I think a key question, Leonard, is how obsolete is the age 20 relative to A, what Blackwells can do, but probably more importantly, be what Wallway can do. You want to walk us through the numbers?

What I would just say, I don't think describe the H-20 as an obsolete chip is fair, right? Chips have many specifications, right, and let me try to break it down. Two simple ones we should care about. The computational power, how many flops it has, how many operations per second that can crunch. But then also memory bandwidth. This means basically you need to read and write memory and the memory capacity and the bandwidth, how fast you can read and write this memory is key. And one of the key inventions we've seen of the last few years,

which actually AMD did first, the so-called high bandwidth memory, which is a pretty complex technology. We've got three companies in the world doing it right now, SK-Hinix, Samsung, and Micron, building this HBM. And the H-20 is really bad on the flops. 7x worse than H-100, even more worse, 14x worse, than the upcoming chips in the B-100s and more, right?

So it's definitely no competitive chip here. but on the memory bandwidth side which is again key for deploying chips it's pretty good it's even better than h100 because the h100 uses five units of hbm whereas this one has six units of hbm so it gets a mind like bugling four terabytes per second of high bandwidth memory and no chinese chip

has such good high bandwidth memory and more importantly even if they have right now like 910c which has some hbm i think it sits at 3.2 terabytes per second they're not allowed to buy it anymore it's banned since December, 24, right? So right now, China would be struggling to, first of all, getting their hands on this HBM,

and they're trying to produce it domestically, but this will take a bit, and even if they're produced it domestically, it would initially be worse. So I don't think the H20 is an obsolete chip. It's a pretty competitive chip. I think it's definitely fair to say it's a worse chip than many others.

That's fair to say. But again, if you look at this other dimension, this dimension of deployment, it's pretty good. It's really, really good. But I think that is one of the key actions of debate. some people say the goal is to stop China from training high end and therefore you focus on the flops if your goal is to constrain inference you focus more on memory bandwidth walk walk us through the way these

different chips are used yeah i think that's a fair debate too we should be having here right like we should think about with xpoken holds what do we want them to achieve and i think right now it's fair to say the h20 is not an amazing chip for training AI systems there are some things which numbers don't always capture right like you still build on top of the invidia software stack if your company which used in video before, there's like a little bit of a pain to switch. There's a bunch of problems with Huawei chips which you don't really see in the specifications, right? The overheat, you need more of them.

The software stack isn't great yet. You can't even get enough, right? All of these things just mean that H20 is not a great training chip, but beyond the numbers, it's still you're stuck on a software ecosystem. So on the training goal, I think that's still being achieved here. Where the debate begins is, what do we think about deployment? And what at least I've learned over time here is if you want to be really precise, right,

if your goal is to only stop them from training, but everything else is below it or you only stop them from training big systems, it's really hard to be precise on all of this. And then AI is ever changing. And I think the most biggest thing we've seen over the last year is like this rise of test time compute of AI models thinking, right?

How do they think? Will they produce tokens? And that's what the H20 is like really amazing at, right? So one could say the usability and the importance of the H20 only went up. ever since because we've got models which do more thinking, generating more tokens, and also generating tokens to then train the next generation of AI systems, right? And I think these are the arguments which people wouldn't say, like, well, actually,

this is a pretty good chip, right, for producing these new things, which are, like, more important than AI development life cycle. So the other argument that the president made is that Huawei already makes these chips, which is true to an extent, but walk us through the numbers there as you see them. I know that there's questions both about the quality of Huawei's chips as well the numbers they can be produced. I know Secretary Lutnik said they can produce 200,000 a year. And I suppose that's right. How does that compare with what we're going to see with age 20s? The key dimensions here are just quality and quantity. And I think many always talk about the

quality argument here. I personally think the quantity argument is way more important. You already mentioned the number from, I think Lutnik said and Kessler also testified at 200,000 Acent chips being produced in 2025. How does this compare to the U.S.? I think we're churning out around 10 million chips this year. So significantly more. This means if we're selling, and I think there have been projections about Nvidia selling a million H20s, we sell them five times more what they can produce. Right. And I think this is where the debate starts. The quantity argument is like really key here. If you would only sell them a couple of thousands or like 200,000 or something, that's a vastly different debate than selling them a million or potentially even more. And just the sign that

China wants to buy them speaks to like their problems with producing domestic chips. right so on the quantity side china is simply not there yet they're getting better and they're producing more chips the minute we speak that's the case but there many difficulties long as even to produce more chips have the enough high bandwidth memory how good is their smuggling operation to get this memory how good is their packaging yield all of these things just add up that you eventually just really can't produce competitive chips then at the end they get chips out of it if you compare the a in 19C to Nvidia's best chip right now which is being sold to B200, it's way worse, right? It's way worse on the high band with memory part, and it's also way worse on the computation

performance, and it's also worse than H20, which we're selling, at least on the memory part, which we're seeing here. And the point is, if we're selling the H20, I think what many missed, there's a chip. At least, there were rumors around it, and I think they were pretty good rumors. There's a chip called the H20E. What does it do? It doesn't use HBM3. It uses HBM 3E.

So I previously said it has 4 terabytes per second. If you use HBM 3E, you can probably go up to 5 terabytes per second or even more, right? And which indications do we have that this ship is not getting sold, right? The flops are still being kept, but the memory just continues going higher and higher. And I think that's another thing to be tracking here, and as long as we don't have updated regulations for it, we just don't know where the line is going to be drawn here in terms of quality of memory bandwidth, but also most importantly in terms of quantity. So if I could ask for one thing, please reduce the quantity.

I think that's the key thing we should pay attention to you. I think, you know, one of NVIDIA's lines that Jensen has been saying a lot is like they used to have 95% market share before the restrictions and now it's down to 50%. First off, they've never actually given numbers for that. But second, my guess is that they were the only people making, you know, accelerators that people wanted. So even if it did go down to 50%, it's not like it was the same pie. Like the pie went down such that that 5% that it used to be now turns into 50% of the whole pie. So the idea that sort of Huawei, like that number does not tell you that Huawei necessarily has the capacity in order to fill it up. And as Leonard said, like the Jensen cares about this because lots of Chinese companies are willing to spend his projection is what, like $15 billion a year in sales.

And to think that, like, I mean, you know, Huawei and Baidu and Tencent, they are not dumb. Like, they are going to spend billions and billions of dollars of CAPEX. By the way, this CAPEX number, you know, seems small if you're talking about Google and meta, but it's actually pretty large relative to the sort of total CAPEX that you're seeing from the Chinese hyperscalors. So, like, they're doing this because they think it is useful and important and relevant to their sort of, you know, AI ambitions going forward. not to, like, do Jensen a favor or anything. Could we talk about what we know in terms of who in China will be the large-scale buyers of these ships?

Jordan, you mentioned, Tencent, Alibaba. There's AI firms like Deep Seek. There's bite dance, a huge player in China's A ecosystem. I don't know whether or if you have a sense of numbers of any of those are public or at least talk about kind of who are the buyers of these ships inside of China. I don't think we have public reporting of exactly. There's definitely been some reporting that the big hyperscalers, the big cloud companies, right? Tencent, Bytens, and others are definitely interested in this.

I'm not sure I'm interested in Bightens is because they're building tons of clusters in Malaysia, which, by the way, can buy whatever chips they want to buy there and just continue building. So I think just the normal hypers go there, they will continue buying these kinds of chips, but they're all hatched, right? They all also get Acent chips. They're not stupid, right? you just see with the policy flip-flopping, they don't know when they're going to get cut off, right? So they're all just hatching with like Huawei's and chips while they're getting

better. There's something we would just subsidize their transition while we do this, right? And that's, that's like the thing which I'm worried about here. It's just, it's just a case that Huawei will get better. They will produce better chips. I think the ships will be significantly worse and significantly less quality in the US, but they will get better. And that's the thing we all need to acknowledge. And there was a policy at some point which was made, which just tell Huawei, they will need to produce their own ships, right? And that's just a path we're going down here. And I think there's like no going back here. The question is like, what do we do in the meanwhile, right? And how big will the gap potentially be? And I'm a firm believer that this

will be quite a massive gap, which will have big impact on the AI competition. And I think that is one of the key lines of debate, but also empirical questions that's hard to really research or get hard data on, which is the decisions of the private tech firms in China, the Alibaba's, the 10 cents and others, because to the extent that you're right, that there's a meaningful

quality difference between Nvidia and Huawei GPUs, for example, they got a strong incentive to build as much as possible on on Nvidia. So you can see an argument that says, well, they're going to buy a Sends, but sort of put them in the closet or not going to take them seriously because they want to build

their products. But you're saying, no, that's probably not the case because even those firms, which don't have a strong incentive on their own to help out Huawei do in the context of potential future export controls and loss of access to Nvidia chips. And so the argument that that controls sort of align the incentives of Tencent and Alibaba with Huawei, the Chinese state, you think those incentives are already at this point fully aligned? Yeah, I think so. I think more. More importantly here, we should just always, I mean, let's walk through the arguments for it. There are arguments in favor of selling age 20.

I think that's a sane debate to be had here, right? On the other side, I think it's sometimes lacking some technical details here. I think the market share argument is a fair argument, right? Just like you want to maintain for Nvidia bigger market chain and reduce demand for Huawei. I just don't think that's the case, right? It's an existential priority for China to produce the semiconductor industry. And importantly, it's not like the semiconductor industry only gets better because of AI chips. the majority of chips the world produces are not AI chips

who's producing at the advanced node at most advanced node at SMIC but also at TSMC it's Apple right usually we produce mobile phones first there so they're pushing it forward anyways for the newest Huawei smartphone that produce probably soon something like a 6 nanometer node which will then be leveraged to produce better AI chips right so even if you reduce the market demand right now semiconductor industry will get better

and these will lead to better AI chips eventually right if they then just like transition to to this and then also what is the tech stack argument here right sure we keep them hooked on kuda right and it's a pain to go from kuda to venture to minesport to the Huawei ecosystem and i think we can model this as like a one-time transition costs many very can companies have done this google switch to tpus at some point right um andthropic right is using the trainium chips on a ws i think they they pay a significant amount of costs here to switching and like running these different hardware stakes but eventually they're doing it right and And they will also eventually do it with Huawei.

And it's not like if you use Kuder, your systems are not more aligned, you know. Like if you would sell them AI systems who don't spit out CCP propaganda, I'm in favor of that. That's like spreading American values, liberal values, right? That seems fine. But if you would be just selling them chips, there are no values, no constraints, which come with selling chips. You can just do whatever you want on it.

And I think that's again where it's missing this tech set component. And we kind of got it right in the UAE, sell them to cloud. let Microsoft build here versus here we just sell the underlying component that can build whatever they want on top of it. And I think that's just missing in the debate. You've made it 30 minutes into a podcast about age 20s. Do you want to do this full time? Do I have the opportunity for you? The Horizon Fellowship provides a direct path into the world of emerging tech policy, a fully funded placement at a federal agency, congressional office, or think tank in D.C. for up to two years. For its 2026 cohort, Horizon is actively seeking candidates with expertise on China's

technology ecosystem. It's policy landscape and broader strategic goals. Prior technical or policy experience is not required. Join a community of over 80 fellows working on some of today's most pressing issues that I can personally vouch for having met a good chunk of them are some of the smartest minds working on these topics in DC. The application deadline is August 28th. Check the show notes for a link to learn more and apply. I think this is a key aspect of the export control debate, which is fascinating a lot of people don't get, which is that if you restrict sales of tools, then you hurt the tool makers, but you help the users of those tools. And so in the chip industry, if you sell fewer lithography tools, it's bad news for

ASML, but it's actually probably good in the long run for DSMC and other companies that face less Chinese competition. Similarly, if you sell GPUs to China, it's bad news for GPU sellers, or so it's good for GPU sellers, but bad news for USAI firms who face stronger competition. And so one of the kind of strategic questions is, which level do you try to cut off? And the U.S. has, I guess, decided until recently cut off at multiple levels and is now shifting, well, I guess we'll see where we are next week. But this week, it seems like it's shifted towards a policy of sell the GPUs, but keep the controls on the chipmaking tools. Which makes sense, right?

Like, if we would, like, reverse selling them extreme ultraviolet photography machines on my SML would be way more than a rampage than selling them AI chips, right? And I would also complain more if we start selling them Blackwells over H20s, right? So I think that's a fair debate we should be having here. People can fall on different types of positions here. And again, we can disagree on some arguments here. And then you have these different types of controls which are stacked with each other. And the AI chips are the first ones to fall. And I think that makes sense.

Yeah. So one of the arguments is that if you make China addicted to AI chips, you gain long-term leverage. And I think like the mental model that people think of here as well, if you get them using UV lithography tools, they don't have their own ecosystem, and it takes a decade to try to replicate your own tools. So maybe this is going for Leonard. Does the same dynamic hold here or is, or if not why? What are the differences? Yeah, I guess there are many different facets being addicted to something, right?

I mean, in the ideal case, it just means all Chinese firms are like really reluctant to adopt Chinese chips, right? And therefore, they have less revenue, smic is wondering, nobody wants to buy their chips. and instead all the Chinese and just buy US chips. I already talked upon how just like Smick and Semic and Semic and Semiconductor gets anyways

independent of AI, right? But it's a fair thing to say like the less people use like Huawei's AI software ecosystem the versus it is. I think that's a fair argument to be made.

I just think they know they want to produce it anyways. They just know we need our own AI chips at some point. They're not full steam on this. I think they could go strong if they wanted to. Maybe they're full steam on it

but they just don't do better for many reasons. So like them using the US tech right now, I think, like, maybe delays it, to somebody even subsidize it. Let's just think about, I don't know, Volkswagen, you know, my German heritage, a lot of the sarcast of China. How's this going right now? Did this stop B-YD?

Not really, right? And I expect, like, the share of folks being sold to China, right? And the future will be low. The argument to be made to you, they made a ton of money in the meantime. And I think that's a fair argument to be made. The reason why I just feel nervous about AI chips is, will you supplement, you'd, like, increase the total compute, deployment, training capacity in the time. If, again, let's just say AGI is a singular point,

AI is just not going to matter a nice five years, then all we discuss here doesn't matter that much, right? Because the good thing about AI chips is they get exponentially better. We're not going to talk about age 20s in five, six years from now because we have exponentially better chips already here, right? So I think that's an argument we can just say like, don't worry, man, we just sell them, we make some money, they get a little bit better AI,

but AI is not going to be decisive in the next four to five years, but then later, ideally then later we stop it, right? And we don't sell them. We have like better chips that are like exponentially better. Again, it goes back where do we draw the threshold and when and how does AI matter, which is a diffuse question, right? And I have a pretty uncertain view here. I'm just like, man, AI could be a really big deal in the next three to four years.

It seems likely it's going to be a big deal, bigger or less big, right, depending on how it goes, from just like transformative economic growth, be like determined the future of the military up to just going to fizzle out. Right. And I think we should address this uncertainty here. I just work on national security risk and I'm trying to minimize downside risks, right? And I don't see the benefits here in the long run that why we should sell them. So fair argument. I think there's some good arguments here. But of all, I think it doesn't cut it at least for me. When you look at some companies, like it's a really big deal having Chinese market access. Like Nvidia, excuse me, like Intel, like 35% of their revenue is selling CPUs into China. This was a big deal. This was a big deal. deal for the tool manufacturers, like, you know, in some years it was 30, 40% over the past few years. Um, invidia is a $4 trillion company. Like, they will be just fine.

Um, and still be able to deliver you that exponential curve of, uh, you know, rapidly improving AI chips even without, um, uh, you know, the extra $10 billion of sales. Um, I mean, I guess, you know, there's like the maximalist version of this question of like, okay, like, you are 100% sure that AI. is not matter, does not matter and is not a sort of like strategic technology, then yeah, sell it, you know, go crazy, do whatever you want

with it. But it is a, it's like a, it's a tricky line of thought where like a, you know, we're writing an AI action plan where we want to make AI dominance. We think this is going to usher in a new golden age. But we're willing to like take some of this downside

risk that we're, making it easier on a China which we've identified as a like major strategic threat in order to um i don't know what i mean we're still yeah well well it's like it's like okay so if we if we if we do think this is a big chip like there is a broader context of the relationship that you can try to trade things in right and say you know we wanted them to scuttle some Marines or, um, you know, uh, stop, uh, messing with the Philippines or, uh, I don't know. There's just, there, there are lots of other asks you can make from a sort of like balance

of power, regional dynamics perspective that you could have put on this. And it's kind of wild that it didn't even seem to be in the context of the, um, of the debate, of the sort of discussion between the U.S. China trade deal, but was just like a decision that Trump made independently because Jensen got to him and we wanted to have like good vibes in the relationship. And the 15% tax we're putting on it, I mean, is it just going to like pay off the national debt? I mean, what if it went to like buy drones for Taiwan or to sort of shore up, you know, go into funding BIS so they could do a better job of tracking down all the chips that are getting

leaked out into China, you know, there are some sort of lines of this where if you really are going to follow the like, okay, like, we're all right with the premise that like China is a strategic threat and we got to kind of watch and hopefully shape just how much they're going to gain on the U.S. from a sort of relative technological competition perspective. Like, there are other moves you can do to make it more to sort of like use this card more in your favor than just like letting the other side pocket it i think i think john that's an excellent point right and we would just have like more insight here because what we've seen so far is the h20 got sold again then post hoc somebody said it was part of the trade talks others denied it then the chinese

came out denying it was part of the trade talks right and eventually What I don't like about it, Xbox Controls were always a national security thing, right? When the diffusion framework came out, and there were certain countries like Poland, Switzerland, in this tier two, many were complaining, like you're dividing a European trade union. But it's a national security thing. It's not a trade deal we're doing here. This is at least where Xbox Controls originally came from, right? And now we're mixing them with this trade things, and now we get 50% of the revenue share,

and amazing, let's pay off the debt, let's do other great things. I don't think national security is for sale here, right? if we would get like other national security concessions here in return, that'd be amazing, right? It would just be nice to hear more and communicate about this. There's definitely things where people like me and others are willing to walk back, hell yeah, let's sell in age 20 because we got a beautiful deal out of it. I just don't think 15% of the sales makes the cut here.

Just money, money doesn't help you. They get the computing power, you make money. You might even make more money because there is Nvidia making money and maybe Microsoft or your favorite hyperscaler in between, right? while you still have more control and more leverage, right? So I still generally think I think many just missed the point

you don't need chips like in your basement to run them. You just access them remotely. And so they could literally dial in. They could dial in our beautiful new UAE 5 gigabod cluster or dial in the US and like existing cloud providers.

And then in the future, in case they go rogue or you really want to make sure it doesn't go to certain military linked entities if they have way more leverage, right? And I think like if we do the concessions, we talked about the different things you want to walk back.

Before you sell, sell chips, just tell them you can use the cloud, which is, by the way, perfectly legal as we're speaking right now. So if they really want to the computing power, use our cloud. It's still legal. You can go for it. We still make money. So I think political economy dynamic here, which Leonard, I think you're referencing, which is getting back to if you sell the tools, you enable the chipmaker, if you enable chip makers, that type of competitor dynamic. And what we've seen is GPU sellers, and Vida, I think, most prominent be very vocal on this issue.

We haven't seen hyperscalers be vocal at all, even though I think one should conclude this implies more competition for them. And then we've seen mixed responses from AI model companies. I think Anthropic has been pretty vocal opposed. I haven't seen OpenAI. And so it strikes me that companies that have a lot of stake have been taking very different strategies, some being vocal, some not.

I don't know what exactly explains that. more observation. I got an explanation. Go for it. You know which GPUs they're all using in videos? And if you speak out against them, Jensen is going to get you. Right? So if you look at Amphropic, who's like slowly migrating to like more Google TPUs and Amazon

Traneum, you can see the deals. They can speak out against it where everybody else is like reliant on Jensen. And I can at least confirm from many conversations with many people in his companies. The only competitor here is AMD. Right. think it's only going to be the market share for me video is only going to go downhill from here right the total market will go up a i is a big deal but amd is getting better google GPU is getting better microsoft chips getting better we have more and more startups getting better right we just have way

way more AI chip competition i think like invidia so like slightly nervous on all of these issues and i think i would love to live in a world when they had a smaller market share and see what the hypers in the eye companies would say and i think many of them would actually come out and open i at least came out in favor of export controls historically when they talked about energy dominance and more. And I think right now they're all just all quiet because somebody else might then knock on the door. It's fascinating in the context of I've gotten lots of questions of what does industry think? And of course, you know, what you're saying is, well, which part of industry are you looking at? Which segment, which specific companies? Yeah, fascinating political economy there.

Jordan back to you. Why don't you do the, why don't you do the HBM political economy? This has apparently been reported that the Chinese government is asking for, high bandwidth memory as part of a concession number two maybe like what would that what does that tell you Leonard that ask if I'd be be running China I would ask for high bandwidth memory of asking for H20s personally right because I've got my sovereign drive anyways I want to be better and better AI chips and if I look at my current AI chip industry I would like to want EUV but maybe this is too much to ask for right because we did this early on Trump did it back in the days but what is the thing

we've only recently done is banning high band with memory units, right? So we got our chip and next to the chip we put like the memory and these memory units being produced by Samsung

and SK Hynix and Micron they're not allowed to go to China anymore, right? And we've seen reporting that at least the Chinese, again, the Chinese put forward could we trade HBM is that like something we can do here?

I hope the US government will draw like a clear red line here. We talked about how you would walk back things. There are arguments in favor of setting their chips. We talked about them. What we do here is not selling them our chips. What we do here is enabling them building better chips.

The best way how the 910C or the 910D, whatever the next chip is they produce will get better is by having higher bandwidth memory. And right now, China does not have the capacity to use even HBM3. There is reporting about first trial production of HBM3. In contrast, invidion and others are starting to equip HBM 4 and using HBM 3E right now. So again, don't get wrong, China will get better, they will eventually produce high bandwidth memory. There's lots more to be done. We could stop them from producing better memory. But in the meantime, while they're like scaling up this production and

trying to get better at least, we should probably not sell them our high bandwidth memory to make the AI chips more competitive because we might regret this in many years when we then competing across emerging markets and Huawei has a better chip which can better compete with our chip. And the interesting dynamic of the memory space is that the two of the

three producers are not US but Korean. Indeed. Indeed. That's also why we see probably tons of smuggling here because it's pretty close by and there's like certain tricks to get more HPM. So don't get me wrong, I think China smuggling HPM right now, which is for sand in the gears. But again, I'm in favor of throwing sand in the gears. And ideally, we get better enforcement. So, yeah, they get less HPM eventually. Should we switch to the political economy of this in China? So July 15th, we get the news that the Trump administration is letting Nvidia start to sell

H20s. A week later, MSS publishes a notice to the public saying to beware of digital spying via Ford and produced chips. Ten days later, the CAC, the Cyberspace Administration of China, summons inviative representatives over risks of being able to control eight Chinese remotely and accuses them of having a kill switch in them. Then we have a private leading cybersecurity research firm in China. Tiancine, they publish a report, which goes viral. talking about all the ways that there could be backdoors and 10 days after that. So just three days ago, August 9th, we have state television doing a whole big report talking about how there might be backdoors already in these age 20s.

And they cite former China Talk guest Tim Fist, CNAS report, on this topic, which he came on to talk about on China Talk a few years ago. So you're welcome. I don't know. Chris, what's your, what's your read on this, like, kind of interesting brusback pitch we've gotten from the central organs about age 20s in China? So I think there are three potential explanations, not mutually exclusive. One is that the Chinese security services are paranoid and the discussion in Washington of the CHIP Security Act, which would mandate geolocation, very very important. verification, which has been happening simultaneously to the H20 debate, has intensified those concerns. That's explanation one. Explanations two is that it's part of an effort to discourage

the private Chinese tech firms from using H20s, and that there are people around Huawei or in the government who are afraid that H20s will actually take into the market share, and so this is a way to say buy more Huawei chips as well. And then I think the third explanation is that this is actually pressure on U.S. firms like NVIDIA. to say, actually, we need you to do more or else we're not going to let you back in the market. We've seen this in other segments of the tax sector where China will ramp up pressure on a private U.S. firm with the aim of having that firm then try to use its resources to shift the debate in Washington. You could maybe envision the HBM debate being part of what China is looking for,

the broader trade negotiations that are underway. But it certainly wouldn't be a very attractive. end point for NVIDIA, if they got approval from the U.S. side, then didn't get approval from the Chinese side to sell. So perhaps China thinks it has some leverage there. How exactly to kind of attribute these three causes? I'm not exactly sure what the shares I would put on each of them. But they both seem, or all three of them, seem potentially relevant. Do we talk about also put out guidance a while ago on energy efficiency? This was actually shortly in April or May when the H20 was a lot. No, sorry, even before.

So when the H20 was to resolve before it got banned initially, they put out guidance that the H20 is famously pretty energy inefficient if you look at flops, right, because of the export control bandwidths. And basically, I don't know exactly what this guidance means, but basically discourages companies from using it. I guess nobody's been following it because now they're buying it in the, well, up in the single millions, this chip. But I think it feeds into the same narrative here, right?

Just like you try to push certain companies or you create artificial demand for like some Huawei chips and like slowly tell them like, hey guys, at some point we want to do our own AI chips, right? And I think, as Chris was saying, I think all of these stories are simultaneously true, right? I think it all just makes sense, and there's like no big downside for them to do these kinds of things,

only benefits. But actually, there was a same media source. I don't know if someone you were referencing Jordan, but one of its criticisms of the age 20 was that it was environmentally unfriendly. Yeah, no, they cite this exact NDRC line that Leonard talked about how. The goal is five taraflops or half a tarifflop per.

watt and the H20 can only give you 0.37. So it's pretty bad. Pretty environmental and friendly for training, but pretty damn environmentally friendly for deployment of AI chips. Way better than any Huawei chip. I can tell you that. I mean, I think like here's a moment where some mirroring might be in order. We've just had an hour-long conversation about how messy and convoluted and sort of like how many conflicting priorities we have in American policy towards artificial intelligence. And like the same thing is happening in all these different ministries in China. And, you know, this is big news. This is like a change in the landscape. And people want to, you know, people want to have their say and make

their stamp on it. So you don't necessarily need to sort of like attribute some like 4D chess of like, oh, now's the time to squeeze them. But like, I'm sure the people in the MSS read Tim's thing and are like, oh, this would be really stupid if we bought all these chips. only for them to turn into, you know, bricks or, like, spy on us or, like, have bombs in them that are going to blow up, like, beepers in Lebanon or something. I'm sure folks in KAC feel the same way. And then, you know, the same debate that we've been having for the past hour of, oh, is it sort of, like, net positive or net negative for domestic self-sufficiency,

like, to have a sort of competitor to Huawei, potentially take a big chunk of the market domestically is something that's that's being played out in China. So I agree with you that like at a broad level, now is the right time to ask for more stuff from Nvidia that now that they've gotten the green light and there is this kind of, you know, 10, 15 billion dollars of demand and these chips sitting on a lot somewhere in Taiwan that they're really excited to ship out to say, hey, you know, you know, you better step it up or cut the price or um you know do do an extra screen to make sure there aren't any kill switches on it or whatever you know the way this is playing out on twitter is oh trying to

saying they don't want them that means we should definitely sell them um i don't think it is necessarily dispositive just reading that chinese state media or state organs or saying something means it is true i mean there is it's not that hard to play the what's not even give this credit for four d's chess this is just two d chess of saying Oh, no, we're worried about the chips. We don't even want them chips. That changes the political economy of the debate in Washington, where it makes selling these chips potentially easier to go down.

So that's also something to watch out for as we see the Chinese government saying, ah, no, we didn't really want these all that much. This isn't actually a big concession. We're kind of worried about the second order effects of this. But the fact is people, like, the demand is not going anywhere. Like, it's not like Alibaba's not going to buy these chips because of these sort of warnings, I think, is the main. And I think Alibaba would be pretty sad if they suddenly only need to rely on other inferior chips where they can't produce enough of them, right? Like, ideally, again, if I would run the Chinese government, I would, like, put out so many regulations that I can sell all of the Huawei chips I can produce and then fill the rest with, like, some nice embedded chips here.

But I think also it's interesting. I think there's just some misunderstanding of what the chip security act is supposed to do. location verification. The idea is not to check it for chips. Well, the idea is to check if a chip is in China and then we have a problem, right? So the idea is like we put this tracker on a chip in Malaysia, Singapore, wherever you think they'll be smuggled and then check they don't end up in China. Right. So this was never supposed to be going on chips which go to China because ideally we don't have any chips going to China, at least not the advanced ones, right? So this is an interesting confusion, right? Like this whole debate of these

hardware and mechanism location verification was it big in the UAE and Saudi Arabia and Singapore were in Malaysia for all of these smuggling hotspots, which people were worried about. And again, I think some people have been pushing. And I think if you think about, if we know stop selling chips, I'm arguing we should sell them cloud. That's one line before. People got to say, we can sell them chips, but put something on the chip, right? But like, just knowing a chip is now in China and we know it's in this location and

this city of it, how does this help us again here? Right? Again, like, and then everybody can dial in remotely, even if it sits at 10cent, who says that the PLA is not using it, right? You can just dial in remotely. So I don't know what's going on there. If there's some misinterpretation of documents, just some vibes, it's a confusing status.

Jordan, you previously made a point about Intel, which I think is an interesting one. We were like saying like Intel made a lot of money in China, right? And Intel is still allowed to sell their CPUs. And Intel's CPU share in China is only going down, right? And I think we will see the same with Nvidia and AI chips, basically. Even if you're allowed to sell, your share will potentially go down.

Why is this a case? There is similar guidance, for example, for all government computers, to go to homegrown domestic-produced chips. We can't trust Intel anymore on this, right? We will see the same on AI chips. So, yes, Intel made a lot of money in China, but the share is going down over time, and they're pushing on the self-reliance, basically, to produce their own AI chips. And they also named security concerns here, right? That's why the government is coming first.

I don't know the exact numbers of Intel sales right now in China and how much money they're making there, but I'm pretty confident it's been going down and the government is not buying any more Intel chips because they just put out this guidance here. So we've seen this playbook playing out before, right? The only difference is now we have this confusion which ships are allowed to be sold, which ones are not to be sold,

and how good are that actually, right? But the story is nothing new. Could we talk about what we know in terms of the big buyers of AI ships in China and their relationship with the state? So you've got the private, you know, quote-in-private tech firms, Baba and Tencent,

you've got the AI labs, you know, Deep Seek most prominently, I don't know what Leonard Jordan, which you have a view here, but one of the key questions seems to be how, what is the relationship with the state today and how is it changing? And to what extent should we see them as, you know, arm of the state is certainly not accurate. Totally independent is certainly not accurate. There's a spectrum. And so to what extent are these political priorities shaping their procurement decisions? Look, there was reporting, which was clearly sourced by the intelligence community over the past few years, that after the MSS hack of the SF86, so that's the form you submit to the U.S. government when you want a security clearance, which talks about, which basically like you try to, you know, it's your like confession of sorts to the Catholic Church where you talk about all your divorces and all your debt and everything, you know, that a foreign intelligence community might want to know about you,

that that data was actually, that the MSS tapped Alibaba and Bightance engineers to sort of like put into a more useful format. So, like we've just seen over the past few weeks reporting from Business Insider about a public tender from some corner of the PLA that wanted H. eight h20 is to like do whatever they wanted to do with it i used to be more sanguine on this type of thing um but i think there's again this is like the most this is the due to use technology to like beat out other dual use technology so it just seems to me to be like a little preposterous that like insofar as this is a strategic resource that the chinese government would not be able to leverage um you know data centers that are living in china

that the U.S. did not have any sort of kill switches or on-chip governance on in order to do whatever they want to do with it, whether that's, you know, build a surveillance system or help with weapons manufacturing. And to be clear, like, you know, the Pentagon has now signed, like, I think it's like a $200 million contract with Open AI, and that this is just the beginning, right? So, like, clearly this stuff is useful that we're willing to pay a lot of money to, like, get it into the Pentagon in one form or another. So if what we're sort of convinced with, if what you find what Lennar says is convincing is that you're selling a lot of age 20s, like materially raises the amount of sort of like usable functional compute that can be put into. anything in China, it would be really surprising for me if you didn't have the Chinese government want to take out these new toys for it. If you didn't have the sort of Chinese like military police complex want to take these new tools out for a spin. So I think there's kind of two, two points you would analyze. So one is if AI tools exist, will the military use them?

And I think that obviously the answer is yes there. But on the, on the prick, if you're a data center procurement official or executive at Alibaba cloud, to what extent is your decision making there shaped by what you read in state media versus what your boss tells you to build an effective cloud, in which case maybe age 20s are your best option versus the sense. How do we think about the, because those are the people who are going to decide how many a sense to buy, right? Unless they're getting a dictate, maybe they are from the top. I guess, like, the sort of counter example I'm thinking to myself is, you know, there was a time when parts, and maybe still, I don't know, parts of the U.S. military were using Chinese drones, not because there was a policy to Chinese drones because they didn't have any U.S. drones. And so is, is there a scenario in which, like, your procurement executive at Alibaba is, is just going to try to ignore the sense because they were told to build a good data center.

Yeah, I think, I think at some level, yes, I mean, these are, these are companies that report quite. quarterly earnings that pay their employees based on how well the company performs, right? And, you know, people get stock options. So I think by and large, the incentives of the people who are buying these chips is to, you know, drive the most revenue for the money you're spending on your KAPX. But, you know, it only goes so far. And I do think that there is this sort of broader strategic realization, which you don't even, which you don't need Beijing to tell you, right? Is that this is like a, this is this, you know, this door could be closed at any time.

And even ignore Beijing. It's close to it already. Yeah, so, you know. Yeah. I mean, I think, I think maybe now is an interesting moment to sort of talk about the sorts of things that could change the dynamic we're on now. on chips and sort of on the broader U.S.-China relationship. I mean, we have Congress as a variable. There have been a number of senators and Congress people who've been like,

wait, what are we doing selling these ships to China? I thought we banned and said we're, you know, our golden ticket to the 21st century. And then I think just because Trump is doing this at such a personal level, like we've seen him turn on Putin right and I mean we've seen him gone from gone from like all Putin to like we're going to ask some questions about this guy and we'll see what the hell happens in in Alaska but I do think that there is like Jensen saying the wrong thing taking too much of a victory lap or you know she doing something really obnoxious I mean there's there are a lot of sort of like personal interpersonal dynamics that could change. what the what the Trump administration ends up doing which is like

probably the more relevant variable than like whether or not Leonard can convince you that Huawei can only make X amount of chips. It's an interesting moment of time because we just have all of the trade negotiations, right?

So everything is like volatile and it's just like certain things are just on the table and they'd be willing to discuss them, right? And we see the Chinese bringing forward at least the country reporting the idea of HBM, right? And it will just be interesting to see what the government is going to say

and it's going to draw a red line. We had statements before the trade negotiations in London that H20 is above the red line, right? So they wouldn't negotiate it. And again, we can all try to put together the story, what happened to you or whatnot, if it's part of it. We won't know for sure, right? But there will be more discussions about these kinds of things.

The Chinese can bring it up. But I'm also more interested in the semiconductor manufacturing equipment companies. If Nvidia got this beautiful deal, know what we're doing right they're all trying to give the president elsewhere ring um and it just seems like it's a handful of people who are making these these decisions and i just hope they're like well informed of which things are more important right um if if i see any news about eov machines being sold to china i'm probably going to get a heart attack and i just really don't want this to happen i mean i think just from a personal transaction perspective like there isn't someone in the

semi-cap equipment ecosystem that trump's going to give of the time of day, like he felt like he had to with Jensen because, you know, this is like America's most important CEO. I don't think any of those folks have this sort of like panache and skill to make it work. And even, you know, Ben Thompson, who I gave some, I gave a hard time for earlier in this podcast understands very clearly that there's a lot of downside risk in selling more tools to China than we already have. I would go even so far, it wouldn't be good for Jensen if Huawei is not good at producing AI chips, right?

So it wouldn't be it in their interest to say like, hey, yeah, yeah, let's make sure we sell them all chips. Really, let's make sure to hit them on every single dimension we can to make sure Huawei is just less competitive, right? I would love to see that. This would be at least a good part of the story here. I think going back to Congress, I think Congress will be interesting to watch on this issue. because you the trending Congress has been Congress has vocally pushed for tougher controls both in the first administration and under Biden, not universally, but I think that's been the predominant push. And so now I think we'll have anything to watch Senator Cotton, for example, and what he does or does not say publicly on this issue. Chris, do you want to sort of tie the, you know, tease out the Russia comparison a little bit?

I mean, Congress, like, really not happy. they ended up putting some sanctions on the table. What have the dynamics been there over the past six months? Well, I guess the last six months in Russia have seen Congress officially not play much role at all. They put sanctions legislation on the table and then pulled it back, actually, if Trump requested it. But I think I would say there's been a number of Republican senators

who have been influential in shaping Trump's thinking. Lindsay Graham, for example, seems to play a role in shaping Trump's thinking on Putin over the last six months and the way that Putin is stringing along. Now we're going to Alaska later this week and so maybe all that will prove irrelevant if Trump changes his mind. But

it does seem like you could argue that that even though Congress has done nothing on Russia, in fact it has helped change thinking in the White House. I wonder if the same will be true here but this seems like a place where Trump's going to make more of his own decisions, especially as far as it intersects with the China trade

negotiations, which it seems like it may well. Yeah. And it's It's kind of a less salient thing than a land war. There's no domestic constituency. Yeah. Yeah. Just weirdos with tech national security podcasts. Other stuff we should get to?

Leonard, do you have anything to say about the, because before this week it was reported that Nvidia was coming out with a downgraded version of some new downgraded chip post-age 20. But I guess that's not irrelevant. the B-40 or B-30, I think that's now irrelevant because of the age 20. It's unclear, right? If people, we flip-flop the decision on the H-20, but notably there is still a license requirement, right?

So, in Vida, they got a license granted. So if they wanted to go all the way back, they could have removed the license requirement, right? So from October, 2003, to April 2025, there was no license requirement. Then they introduced the license requirement, which is still intact. The only thing which happened, as of speaking, last Friday, is they granted the licenses, according to reporting, right? So if they still want to set a chip which is not subject to Xbox controls, they would produce a new chip called B30B40. It needs to be low the computational power threshold, so the same as the H20, and also have lower memory bandwidth. And according to the reporting, I think FT leaked what is in the ESMformed letter.

It needs to be less than 1.4 terabyte per second memory bandwidth. Again, the H20 is at 4 terabyte per second, right? So the B40 would then probably not use HBM anymore. It would probably be used to like an inferior memory technology, but significantly cheaper because why use HBM if you can't have their many memory bandwidth anyways, so-called GDR technology, which we usually use for a graphic GPUs. And again, if people talk about this is only the fourth best chip, I don't think the H20 is the fourth best chip.

I think the B-30, B-40, that's a more fair description of a, fourth best chip and I would still not call an obsolete chip but it's definitely a worse chip it's only like you know um with a chip where like again the US government at least decided here's where we draw the new lines this chip is fine to be exported before license so it could still be coming I have not heard they stopping the production yet I guess Nvidia's making a calculus right now on how much demand there is but it's clear the K-stage 20 is better the question is will all the licenses be granted going forward right and Trump has said or he said at the press conference a couple days ago that he'll consider a downgraded Blackwell.

Are there ways we should think about what that might look like if in fact a material materializes, of course, with huge questions over whether or not that's actually real? One thing which stood out, he said like 30 or 15 to 50 percent less performance. And I think what many people are just missing on AI chips and computing, chips get exponentially better if your chip is 15% less that's nothing that's still the same generation right so if you really want to sell worse chips you need to go back a few generations and then the chip needs to be like seven times worse not only 50% or 15% right so there's an argument to be made that you want to sell worse chips but it's not a little bit of a down wait we really need to take the exponentially into

account right if we trim down a blackwell chip for example a b 200 by 15 to 50% still like twice a three times as good as the Huawei chip, right? And again, we can produce millions of them, but Huawei struggles, according to reporting, producing $200,000 this year. So again, that's just a key thing to get right here. And, yeah, people keep in mind, the exponentials here, right? Like, chips get exponentially better.

A 50 into a 50% trim is nothing in the grand scheme of things. And I would at least, yeah, make my voice heard to say, this is probably not a good idea of what should be doing here. The government do lines before, and the lines are way lower and i think that's where it should be all right well it's been a long road since october of 2022 thanks for sticking with us everyone chris leonert always a pleasure yeah never a dull moment on the china ai semiconductor export control i'm sure we'll speak again let's see This information is for educational purposes only and is not a recommendation to buy, hold, or sell any investment or financial product.

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