Nvidia is in constant 'cat-and-mouse game' with US regulators

00:00 Speaker A

When video like most chip makers has struggled with geopolitical concerns, tariff policies and global marketplace risk, our next guest is a geopolitical strategist who works with businesses and governments to help mitigate risk. Reva Gujan is the director at Rhodium Group. It's a research and advisory firm focusing on global challenges and data analysis. Reva, it is great to see with always. So let me get your take Reva on on this Nvidia report and specifically Reva, what do you make of of what they're telling us about business in China?

00:47 Reva Gujan

Uh, well, they are certainly lamenting declining business in China due to the H20 ban. As we know, Jensen referred to that as a deeply painful hit, um, affecting some 15 billion in potential sales of the China market. So obviously they're not thrilled about that. Um, but it was a long time coming, right? And Nvidia is also trying to use a lot of momentum in the moment from Trump's overhaul of the Biden era AI diffusion rule, which opens up third markets, uh, for Nvidia to to deploy its GPUs while still closing off China. Um, but they're trying to use that momentum to also push for a broader easing of chip controls on China directly. There are just a lot of reasons why I don't think that latter part is going to happen.

02:08 Speaker A

Well, and Reva, Nvidia continues to try to sort of get around these export controls. There's been reporting that it's developing another chip to ship into China, although it did say in a filing today that it might be unable to uh, provide and create that product that would be a competitive one in China. Do you think it does succeed in sort of getting around the the rules as it has been?

02:57 Reva Gujan

It's tough. I mean, there is a cat and mouse game between BIS regulators at Commerce on the one hand and Nvidia on the other. Of course, Nvidia is going to be the prime target under scrutiny for the design of any potential controls. And so, you know, with this, the the kind of variant of the Blackwell chip for the China market, um, from what we can tell, right, they have designed it to strip down the memory bandwidth by more than half compared to the original H20. Um, they designed this without any advanced coOS advanced packaging technology. Um, so it's a stripped down, uh, chip and it is going to come at a discount, but you, this is where you also have Huawei, um, with a competitive edge, um, offering discounted chips, um, that are also are going to be at higher performance.

04:33 Speaker A

Reva, you know, President Trump right now does seem to be a fan of Jensen Wong. You saw them in the Middle East together. That's a nice place for Jensen to be. I'm wondering how you think Jensen Wong maybe could try and and capitalize on that relationship, capitalize on that friendship, Reva.

05:15 Reva Gujan

Well, it's, uh, it's a mixed bag, right? There are a number of tech influencers surrounding the president, um, and he's hearing from from all of them, but there are also lines being drawn. And I think the message here, um, for a company like Nvidia and others is focus on the X China market for your growth, right? Don't bank on on that market for your future that, you know, AI infrastructure build outs have to happen all around the world. Um, Jensen has taken this message globally of this idea of AI sovereignty and he wants Nvidia to be at the epicenter of those build outs. Uh, from a policy perspective, the White House agrees and says, you know, this is the time to lock in those AI infrastructure dependencies so that it's US-made and design chips and US hyperscalers that are are leading these build outs globally, but not in China, right? And so, so that's the catch here. So whenever you're looking at any one of these tech influencers, there's always going to be, um, some give and take on on how far that influence actually goes.