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BREAKING: Nvidia to take $5.5 billion charge on H20 chip exports · Elon Musk Podcast

• 0:01
  Hey everyone, welcome back to the Elon Musk Podcast.
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  I'm thrilled to share some exciting news with you over the
• 0:08
  next two weeks. We're evolving.
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  We'll be broadening our focus to cover all the tech Titans
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  shaping our world. And with that, our show will
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  become Stage 0. You'll still get the latest
• 0:20
  insights on Elon Musk, plus so much more, so stay tuned for our
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  official relaunch at Stage 0 coming soon.
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  Now let's get into this episode. the US Department of Commerce
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  told NVIDIA that it now needs an export license, one that will be
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  required indefinitely before it can send its H2O artificial
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  intelligence chips to China. Marks a new and unexpected
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  escalation in Washington's ongoing effort to limit China's
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  access to high performance computing technology.
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  Now, the H2O chip is Nvidia's most capable AI product
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  currently permitted for sale in China under previous
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  restrictions, and that status has now changed.
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  In its regulatory filing, NVIDIA said the government justified
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  the decision based on a perceived risk that the H2O2
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  might be used inside a supercomputer operated from
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  Chinese territory. Now the news landed with a thud.
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  NVIDIA stock dropped roughly 6% in after hours trading, and the
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  company warned of a $5.5 billion charge tied to the disruption in
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  its next financial quarter, which ends April 27th.
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  Now, the stakes are very high here.
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  Nvidia's not just another tech vendor, it's the engine behind
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  everything AI right now. This chips power nearly every
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  major artificial intelligence platform, from Open a is Chat
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  TPT to Metas Llama to China's most advanced homegrown models,
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  too. Now that includes Deepseeks R1,
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  which is a reasoning focus. Large language model then
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  emerged in January and briefly rattled the USAI sector with its
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  unexpectedly strong performance. And some U.S. officials had
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  already been pushing to tighten restrictions on H2O, concerned
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  it could give Chinese firms A foothold to catch up or even
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  surpass US advancements in certain types of model training.
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  These concerns have materialized into formal policy now.
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  Now, the backdrop to this decision involves more than tech
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  specs, though. This last week, reports emerged
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  that NVIDIA CEO Jensen Wong had dinner with former President
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  Donald Trump at Mar a Lago. Now he it was suggested that
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  Wang usually use the opportunity to negotiate software
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  restrictions on the H2O chip. A part of the reported
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  discussion included NVIDIA pledging to increase its
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  investment in domestic chip production.
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  Coincidence or not, NVIDIA followed up Monday by announcing
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  it would spend hundreds of millions of dollars over the
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  next four years to manufacture a portion of its AI chips in the
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  US Now. The announcement was light on
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  details such as which chips, in what quantity, and at which
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  facilities, but was interpreted as a possible effort to placate
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  regulators or demonstrate alignment with national
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  industrial policy goals. Now, the importance of the H2O
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  chip specifically lies in its performance envelope.
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  It was designed to skirt the limits set by earlier export
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  rules while still offering enough horsepower to train large
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  scale AI models. The video's intent was clear,
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  though, to maintain a legal foothold in China's growing AI
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  market without triggering additional controls.
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  That calculation seems to have failed.
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  US regulators are now treating the H2O as too risky to leave
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  unregulated, and by requiring a license that may never be
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  granted or may come with added compliance burdens, the new rule
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  effectively blocks widespread H2O shipments to China.
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  And for NVIDIA, this development cuts off a major path for
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  monetizing one of his most strategically engineered
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  products. And for China, it means fewer
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  options for legally acquiring high performance AI hardware
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  from the West. For policy makers, it raises the
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  question of whether aggressive tech controls will yield the
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  desired results or simply accelerate the decoupling of
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  global AI ecosystems. Now, the broader context here is
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  that AI capability is increasingly being treated as a
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  matter of national power. Controlling who gets access to
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  the best chips becomes a lever of international influence.
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  The US is making a bet that slowing China's access to top
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  tier semiconductors will delay the country's ability to match
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  American advances now. Meanwhile, Nvidia's trouble
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  wasn't the only tech headline of the week.
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  In a completely separate arena, Open AI is testing something
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  with potentially massive consequences of its own a
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  prototype social media platform built around ChatGPT.
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  This is an internal project right now, still in the early
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  phases. Now it includes a social feed
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  focused on AI generated images. And sources say open AICEO.
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  Sam Altman has been quietly seeking feedback from trusted
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  outsiders. It's not clear whether this
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  product will launch as a standalone app or an added
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  feature inside ChatGPT itself. But it's clearly more than just
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  a thought experiment. Now, Altman's move into social
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  media would pit him directly against Elon Musk and Mark
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  Zuckerberg, both of whom are already leveraging their
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  platforms X and Meta to collect real time social data for
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  training large language models. Altman has already made public
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  jabs in that direction. When Musk offered to buy open AI
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  for 97.4 billion in February, Altman responded no thank you.
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  But we will buy Twitter for 9.74 billion if you want.
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  Our data is the current currency of modern AI.
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  Platforms like X and Instagram are troves of constantly
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  evolving human behavior. Owning a social app wouldn't
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  just give Open AI more training data, it would give them
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  something Musk and Zuckerberg already possess, an infinite
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  stream of fresh content shaped by real people.
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  Now. It's still unknown if Open AI
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  will green light the social app for public release, though.
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  Even internally, the project is very experimental, but it's mere
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  existence signals how the company is thinking about
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  staying competitive as the race to lead an AI enters a new
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  phase. Now let's get back to NVIDIA a
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  little bit. It challenges it's challenge.
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  Now let's get back to NVIDIA. It's challenges this week aren't
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  just business problems, the geopolitical ones.
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  Washington's new restriction signals a growing willingness to
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  weaponize technological exports. And for a company like NVIDIA,
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  caught between demand and China and policy in the US, the path
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  forward is now absolutely harder to navigate. the US just made
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  Nvidia's business in China more difficult, and Open AI is
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  thinking about launching a social media app.
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  Both moves signal how AI companies are being pulled into
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  new battles over power, access and control, and what control
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  they have over you. Hey, I need a second of your
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  time. For the past four or five years,
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