Latest / THE DAILY BRIEF / Sacks Sees Case for Selling China Deprecated AI Chips

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Sacks Sees Case for Selling China Deprecated AI Chips · THE DAILY BRIEF

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  Speaker 1: David, there is something that I wanted to talk to
• 0:01
  Speaker 1: you about for a long time, and we will get
• 0:03
  Speaker 1: to it. The debate around should the United States or
• 0:06
  Speaker 1: should the United States not export some form of AI
• 0:09
  Speaker 1: chip to China, And we will get to it. But
• 0:12
  Speaker 1: I'm sure you can appreciate, you know, the AMD and
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  Speaker 1: Open AI agreement is very interesting, and so as a
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  Speaker 1: place to start, could I just ask your sort of
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  Speaker 1: interpretation of what it signals when you have a US
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  Speaker 1: chipmaker like AMD, after and Nvidia and one of the
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  Speaker 1: frontier model shops like open AI working so closely together
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  Speaker 1: on infrastructure.
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  Speaker 2: Well, and I think the main thing here is this,
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  Speaker 2: there's an AI boom going on, and the market is
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  Speaker 2: highly competitive. We have a number of leading model companies.
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  Speaker 2: We have a number of leading chip companies, and they're
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  Speaker 2: all competing with each other and they're all booming. And
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  Speaker 2: what we see here is that this AI boom just
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  Speaker 2: keeps going and going and keeps striving businesses to new highs.
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  Speaker 2: And this is all a result of President Trump's pro innovation,
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  Speaker 2: pro export, pro AI policy. We saw this help drive
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  Speaker 2: US GDP to three point eight percent growth rate in
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  Speaker 2: the second quarter. So I think this this boom just
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  Speaker 2: seems like I think, keep going.
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  Speaker 3: And going, and we just heard I think it's just
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  Speaker 3: juston Weng was latest on a podcast shouting you out,
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  Speaker 3: shouting out those that are in the team at the
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  Speaker 3: White House at the moment guiding when it comes to technology, David.
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  Speaker 3: But I'm interested as to whether you, as an investor
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  Speaker 3: have great comfort in these relationships being built, financial relationships
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  Speaker 3: between chip designers and the chip users.
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  Speaker 2: Well, I think it's up to them, you know. I
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  Speaker 2: don't really take sides in these deals. We want all
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  Speaker 2: of our American air companies to be successful, and they're
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  Speaker 2: all competing with each other and cooperating with each other.
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  Speaker 2: I guess it's called coopetition, and that's a great thing
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  Speaker 2: to see. We just want, you know, putting my AI
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  Speaker 2: hat on, we just want these markets to be competitive,
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  Speaker 2: and we want American companies to be successful, and that's
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  Speaker 2: what's happening right now.
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  Speaker 3: I'm looking therefore, at the future, role out, the buildout,
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  Speaker 3: anything that gives you pause in terms of actually the
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  Speaker 3: destructure needs here at the moment.
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  Speaker 2: David, Well, anytime you're working in the world of atoms,
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  Speaker 2: it's going to be more complicated than when you're working
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  Speaker 2: in the world of bits, and so it's very important
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  Speaker 2: for us to scale up the amount of power that's
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  Speaker 2: available to AI companies. And you're seeing that thanks to
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  Speaker 2: President Trump's policies that are pro energy. The President back
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  Speaker 2: the idea of drill baby drill, going back many years.
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  Speaker 2: I think he was very far sighted in this regard.
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  Speaker 2: He understood that energy is a basis for everything. It's
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  Speaker 2: certainly the basis for this AI boom. And we're in
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  Speaker 2: the process of allowing a lot more power generation in
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  Speaker 2: the US. President Trump is allowing so called behind the
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  Speaker 2: meter power generation. In other words, these AI companies can
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  Speaker 2: stand up their own power generation. We need to squeeze
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  Speaker 2: more out of the grid, and we're enabling new oil
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  Speaker 2: and gas and nuclear so all the above. So I
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  Speaker 2: think that energy is the main thing, and President Trump
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  Speaker 2: is supporting that.
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  Speaker 1: David final question on AMD and Open AI. Did the
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  Speaker 1: parties salt the White House about moving forward with this
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  Speaker 1: arrangement and their plan to work together?
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  Speaker 2: No? No, I mean not with me, and I wouldn't
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  Speaker 2: expect them to. We just don't get involved in the
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  Speaker 2: dealmaking between private companies. Again, we're here to create a
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  Speaker 2: policy environment that is supportive for all of RII companies.
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  Speaker 1: I appreciate that. Okay, So, David, I asked you to
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  Speaker 1: come on the program because we spoke at the end
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  Speaker 1: of last week for a story that was done out
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  Speaker 1: of DC on the idea of well, what is a
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  Speaker 1: China Hawk? But also within that broad description, should the
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  Speaker 1: United States or should the United States not export deprecated
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  Speaker 1: AI chips to China. You've been very generous with your time,
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  Speaker 1: but I just invite you again for our Blobo Tech audience.
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  Speaker 1: Explain how you view yourself in this debate and what
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  Speaker 1: you think is strategically most important for this country.
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  Speaker 2: Well, first of all, I would say that I consider
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  Speaker 2: myself to be a China Hawk. I want the US
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  Speaker 2: to to win this AI race. We understand that China
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  Speaker 2: is our main competition globally in this AI race, and
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  Speaker 2: we want to do everything we can to win. And
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  Speaker 2: President Trump and his AI speech on July twenty third
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  Speaker 2: laid out some of the tempoles of that strategy. We
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  Speaker 2: need to be pro innovation, we need to be pro
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  Speaker 2: infrastructure and pro energy, and we need to be pro
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  Speaker 2: exports so that the American technology stack dominates the world.
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  Speaker 2: So this is all in the service of the United
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  Speaker 2: States winning this AI race. We understand that it's going
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  Speaker 2: to have major economic and national security gratifications, and we're
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  Speaker 2: in it to win it.
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  Speaker 1: There is a lot of focus on the direct to
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  Speaker 1: China part, But the other way that some look at
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  Speaker 1: it is there is a marketplace outside of America and
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  Speaker 1: outside of China, the Middle East being an example. What's
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  Speaker 1: your position on that and whether the United States wants
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  Speaker 1: to kind of leave the world open to China to
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  Speaker 1: sell its own technology.
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  Speaker 2: Well, there was a view in the previous administration that
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  Speaker 2: we shouldn't sell chips to many countries, including the resource
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  Speaker 2: rich Gulf States, and I think that was a major
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  Speaker 2: mistake because every time you tell a country that they
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  Speaker 2: can't buy the American tech stack, what's their action going
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  Speaker 2: to be? They're going to turn to China and adopt
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  Speaker 2: the Chinese tech stack. I have a very simple metric
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  Speaker 2: for measuring weatherwoiting the AI race, which is global market share.
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  Speaker 2: If we look around the world and say five years
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  Speaker 2: and we see that the American technology stacks has say
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  Speaker 2: eighty percent market share, that means that we won. But
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  Speaker 2: if we look around the world in five years and
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  Speaker 2: we see that the Chinese technology stack, and I'm talking
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  Speaker 2: about Huawei chips and deepsea models for example, has an
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  Speaker 2: eighty percent market share. Then obviously we lost by the way,
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  Speaker 2: that's what happened in five G. We don't want to
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  Speaker 2: repeat of that. So again, the strategy here should be
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  Speaker 2: for the US to dominate the world and have the
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  Speaker 2: greatest market share. And I think this is pretty obvious
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  Speaker 2: to everyone in Silicon Valley because we understand that the
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  Speaker 2: way to win technology races is to have the biggest ecosystem.
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  Speaker 2: If you're a technology platform, you want to have the
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  Speaker 2: most developers using your API. If you're an app store,
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  Speaker 2: you want to have the most apps in your app store.
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  Speaker 2: In a similar way, we want as many users on
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  Speaker 2: the American technology stack as possible. And I find it
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  Speaker 2: hard to understand why the previous administration would exclude these
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  Speaker 2: rich countries from participating on our tech stack. It certainly
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  Speaker 2: didn't help us in the race with China. If anything,
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  Speaker 2: President Trump's policy boxes out China from the Middle East,
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  Speaker 2: whereas the previous administration's policy forced these countries into China's arms.
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  Speaker 3: You've reworked, therefore, the diffusion ideals set by the previous
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  Speaker 3: administration but when you're allowing only less powerful chips, I mean,
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  Speaker 3: I think the President even call them obsolete versions of
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  Speaker 3: in videos chips into China. Does that mean that ship
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  Speaker 3: of innovation in China has already sailed because they need
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  Speaker 3: to have the most sophisticated they're going to have to
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  Speaker 3: build it themselves.
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  Speaker 2: Well, I think when you're talking about what we export
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  Speaker 2: to China, that's obviously going to be a very complicated question,
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  Speaker 2: and there's arguments on both sides. I think there's a
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  Speaker 2: pretty strong argument for not selling China our latest and
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  Speaker 2: greatest chips because that would be too beneficial for them. However,
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  Speaker 2: if you don't sell them anything, then, like you're saying,
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  Speaker 2: that will accelerate their desire to be independent of the
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  Speaker 2: American stack. And so I do think there is a
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  Speaker 2: compelling argument for selling them a let's call it deprecated
• 7:26
  Speaker 2: American ship or a less great American ship. And by
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  Speaker 2: the way, this is why the Biden administration approved the
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  Speaker 2: H twenty in unlimited quantities for export to China. Now,
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  Speaker 2: when President Trump came in, he said that those H
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  Speaker 2: twenty sales after he licensed and they're subject to a
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  Speaker 2: fifteen percent surcharge and Nonetheless, all the people who approved
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  Speaker 2: the Biden policy started attacking President Trump. I think this
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  Speaker 2: is just a classic case of no one had a
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  Speaker 2: problem with it until President Trump agreed to do it.
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  Speaker 1: David Jensen Woe went on Brad Gerstner's podcast, and there
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  Speaker 1: was reaction to what he said. You would point out
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  Speaker 1: you are an official of the government. Jensen is a
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  Speaker 1: private citizen and CEO. But at the root of what
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  Speaker 1: he was saying was also the idea of talent. Many
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  Speaker 1: talented computer scientists and engineers come from China. I think
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  Speaker 1: that was the point he was making. But the personnel
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  Speaker 1: part of this story, where do you stand on that?
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  Speaker 2: Well, it's true that's something like half the world's AI
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  Speaker 2: researchers are from China, and so I do think that
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  Speaker 2: we have to somehow be open to working with this
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  Speaker 2: talent or allowing this talent to use the American chip
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  Speaker 2: stack to some degree. So it's a complicated question always
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  Speaker 2: of what you allow China to do. But I think
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  Speaker 2: Jensen was making a point there about again the talent pipeline,
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  Speaker 2: and we have to be open to it to some degree. Again,
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  Speaker 2: I could serder myself to be a China hawk, but
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  Speaker 2: I wasn't triggered by what Jensen said because I watched
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  Speaker 2: the entire two hour podcast, not just the thirty second clip,
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  Speaker 2: and I understood what he was trying to say in context,
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  Speaker 2: and it is a nuanced question. And look, let me
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  Speaker 2: just say, to all these people who are criticizing Jensen,
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  Speaker 2: what have you done to help us win the AI race?
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  Speaker 2: I can't think of a more strategic asset in the
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  Speaker 2: I race than Nvidia and Jensen himself, who for thirty
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  Speaker 2: years have been working on these GPUs and Jensen is
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  Speaker 2: a source of huge American advantage in this AI race.
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  Speaker 2: So let's try them a little bit of grace here