 |
THE REVERSE AI TSUNAMI BEGINS By Berit Anderson ______ Why Read: AI is here to stay, but corporate leaders, forced to grapple with its geopolitical, economic, and logistical realities, are moving on from the hype. Only media, investors, and the model builders themselves are still holding the line. - bba ______ For years, Nvidia has quietly tried to skirt US export controls - a move that has brought with it both the annoyance of US regulators and a thriving black market in Hong Kong and Beijing for its AI chips, which, of course, made their way there. This week, Nvidia CEO Jensen Huang - who, for some reason, thought himself immune to the same Chinese dynamics of IP theft that have plagued Apple, Dell, Boeing, Tesla, and so many others - was faced with the possibility of a difficult reality. On Wednesday, it was reported that the Cyberspace Administration of China had banned the country's biggest tech companies from buying Nvidia's RTX PRO 6000D, which the company had made specifically for the Chinese market. Per the Financial Times: "The ban goes beyond earlier guidance from regulators that focused on the H20, Nvidia's other China-only chip widely used for AI. It comes after Chinese regulators concluded that domestic chips had attained performance comparable to those of Nvidia's models used in China." [Emphasis ours.] This move is, of course, intended as a bargaining chip - perhaps a sign that China doesn't yet have, but wants, Nvidia's more powerful AI chips. And hopes to secure its access in Xi's current negotiations with Donald Trump. Have the Chinese actually created something comparable already? Unlikely. This latest threat is probably just that: a threat. It is also (hopefully) a wake-up call for Jensen. The Chinese market under Xi is a fickle mistress. As soon as Chinese firms can replicate or replace Nvidia's chips, they will. And they won't hesitate to cut off Nvidia in the same way they have other firms, flooding the rest of the world with cheaper-than-Nvidia knockoffs. On Thursday, with access to Chinese markets hanging in the balance, Nvidia announced a $5B investment in Intel, the stock of which surged 32% upon the announcement. With China moving in an increasingly kinetic military direction, as Mark Anderson wrote about in last week's Global Report ("CRINK's All-Fronts War: Now Global and Kinetic"), the future of Taiwanese chip production for US companies is not at all a sure thing. Rumors in the intel community put 2027 as the most likely timing for an invasion of Taiwan. If it happens. China always prefers to use soft power and economic manipulation when they are an option. The move mirrors Meta's sudden about-face on open-source models in its new AI team. This after the Chinese firm DeepSeek reportedly used Llama as the basis to leapfrog US models to slash energy use and vastly increase efficiencies. |
