00:00Ed, what do we know about these deals that lump in a company, a little company like Super Micro, along with a big behemoth like NVIDIA?
00:09Yeah, I mean, the unlock is the ability for NVIDIA and AMD to sell their latest generation cutting edge processor, you know, GPU accelerator into that market, Saudi Arabia, right?
00:20The Commerce Department announced last night they would rescind the diffusion rule, which in simple terms was a technology export restriction.
00:28The reporting had been that were it due to go into effect on the 15th tomorrow, the U.S. would not have enforced it anyway.
00:34And now the question is, well, will we get a new rule and what will the parameters of that be?
00:39But you're really smart to flag Super Micro because literally what we're talking about is the building of data centers in the Gulf.
00:45If you can send the GPUs, then a name like Super Micro, which simply packages them into server racks, can then proceed with its deals to do that as well.
00:54So their deal with Data Vault is really interesting.
00:56As you know, it's $20 billion.
00:58I would point out that that business is a much lower margin business than actually NVIDIA does, you know, just by designing the chip.
01:06I think you also showed AMD.
01:07I would point out that the buoyancy of AMD is partly informed by a $6 billion additional share buyback they authorized this morning, which is on top of $4 billion they were already doing.
01:18So take that into account.
01:19But just look at the research on the sell side from BI.
01:22This is immediate sales growth that policy is unlocked for those two names in that region.
01:27You know, it's interesting.
01:28Ed, I don't know if you know the numbers to this.
01:30I realize this is very new news.
01:32But something that really struck me on the heels of these deals being cut or these talks advancing is the fact that this is being done in an energy super hub.
01:43Is there a chance here to really accelerate AI computing power through the Middle East, given that costs could actually be a lot lower?
01:50Well, in short, yes, building data centers requires several things, capital, space, time, and the correct political and regulatory environment.
02:00And most who follow the market would agree that Saudi and UAE are places that conform to those specifics.
02:06So take the deal, for example, between NVIDIA and Humane.
02:10The first phase is 18,000 GPUs.
02:13We measure the size of a data center in megawatts, literally in energy demand.
02:17That first phase is a 500-megawatt data center.
02:21Technically, that's at the hyperscale level, what we call hyperscale.
02:25But if you compare those to data centers around the United States, those range from 5,000 to 11,000 megawatts.
02:31So it's small by comparison.
02:33But Saudi and the UAE have the tools to get it done.
02:36And that's why, again, you see from Bank of America or Bloomberg Intelligence this multibillion-dollar sales opportunity each year for the chip makers
02:44because they'll move fast in moving the product to those nations and start building.
02:50Ed, there's a lot of talk about the Qataris giving President Trump an old used airplane.
02:56Oh, I heard you talking to Anne-Marie about this.
02:58Yeah, go ahead.
02:59And the security concerns there.
03:00But what about giving the Saudis, who have such a close relationship with China, these chips that are capable of beating the whopper in global thermonuclear war?
03:11I mean, isn't there security concern with sharing this kind of high-level tech?
03:16There is security concern.
03:19And the whole point of the Commerce Department and the Trump administration reviewing the diffusion rule was the concern that if they allowed those nations in the Gulf access to the technology,
03:30those nations have a close relationship with China.
03:32They could act almost like a sales channel or third-party funnel.
03:36So what we do have is corporate deals.
03:39NVIDIA has a deal.
03:40Cisco has a deal.
03:40AMD has a deal.
03:41Supermicro has a deal.
03:42We do not have bilateral agreements between the United States and Saudi and the UAE.
03:48Those are expected, nation to nation, to come in the coming days.
03:52And how they address the China question is absolutely top of mind for everyone.
03:57But, again, go back to the Bloomberg Intelligence deck on what this means for sales growth of NVIDIA and AMD in particular.
04:03It helps them offset the revenue to China.
04:05So you'd think that those companies would play ball, be more conducive.
04:09And then the next question is, if they rescinded the diffusion rule last night and it won't go into effect tomorrow, what does the new rule look like?
04:17Does it explicitly codify restrictions on third parties passing the technology to China?
04:23You're absolutely right that that is the key question from here on in.
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