Nvidia's Middle East Sales Raise Questions

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00:00There's a pressure on Congress in particular to allow Jensen Huang and NVIDIA to have greater

00:05access to some of these so-called adversaries. What are you hearing?

00:09Well, what we're hearing is that the White House would like Congress to hold off on

00:13legislation that would force NVIDIA to put American customers first ahead of adversarial

00:20nations like China. And of course, NVIDIA is proscribed from selling to China right now by

00:25U.S. export controls and even by Beijing rejecting those H20 chips that we've talked about that have

00:32won American authorization to be sold inside China. NVIDIA has been looking for permission to do more,

00:40and that includes selling a deprecated version of its market-leading Blackwell chip to China.

00:46Jensen Huang sees being able to compete in China as key to being able to compete around the world.

00:51But this measure is seen as really putting the handcuffs on NVIDIA and on AMD as well. And

00:58both companies have moved against this. The bill is called the GAIN Act. It would be attached

01:03to a piece of legislation that's must-pass. It governs defense policy, and it has bipartisan

01:10support. But now the White House is weighing in and seeking to get it pulled from the legislation.

01:15And it's unclear what would emerge in its place, because right now, Carol, there really is no

01:20uniform code governing export controls, especially as applied to China. And that's because if we go

01:28back all the way to the beginning of the year, and it seems so long ago, the Biden administration had

01:33tried to impose this AI diffusion rule, this framework that would prevent tech from leaking

01:40from allies like Saudi Arabia, like the UAE, to China. And we don't really have anything here yet

01:48in place in Washington. So you see the China Hawks on Capitol Hill, and even inside the administration,

01:53grasping for an alternative. And this bill, which the White House is now trying to head off,

01:58is at least an attempt at that.

02:01Shep, last night was a little bit an issue of timing and chronology. So during the call,

02:06the analyst call, the Commerce Department put out a statement confirming that NVIDIA is now allowed

02:12to export black well to the Gulf states. Is that just kind of rubber stamping something we knew was

02:17coming?

02:19We have widely expected this approval to come through, but it does take some time to work its

02:24way through the guts of the bureaucracy. But there is also a hurdle to overcome. And that is the concerns,

02:31as we just discussed, that the technology does risk leaking to adversarial nations, especially China.

02:39And that is because both the Saudis and the Emiratis have had longstanding business ties with China.

02:45And China's Huawei technologies has a footprint in each of those two nations. And the concern is that

02:52the proximity of Huawei to American technology in a data center creates a risk of some sort of leakage,

03:00either through software or something else. And that is something that the U.S. government was really

03:04trying to seek assurances on. We don't have details on what was required of the Emiratis and include

03:11also of the companies. And you did your best in asking Jensen for specifics on that. But he really

03:18dug in on the whole broader question of diversion. And that is something that the company has been

03:24sensitive about. They have insisted that their Know Your Customer programs have done enough to prevent

03:30diversion. And yet that hasn't assuaged all the concerns of China hawks here in Washington that

03:36advanced American technology could eventually leak back to China and somehow support its military and

03:42intelligence bureaucracies.