US Eases Path for Nvidia to Sell H200s to China

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1:11Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech. Coming up, the U.S. Commerce Department moves closer to allowing NVIDIA to sell its H200 AI chips to China. Plus, robotics startup Skilled AI just closed a$1.4 billion funding round, tripling its valuation in seven months. We'll discuss with the CEO, Deepak Pathak. And Netflix is working to revise its bid for Warner Brothers Discovery, shifting to an all-cash offer. As you see, though, those names in the red and in general, the market on the downside. We've still got geopolitical anxiety.

1:52We've still got earnings coming thick and fast. And we've still got a last-up 100 off by 1.5%. Not so in the world of commodities. A search for safety, a bid as the dollar falls. We see 2.8 % higher on the Bitcoin rally. So maybe a bit of catch up with digital gold where we see spot gold and a new record high. Up 7.10%. Copper, all important commodity to our world of AI and data centers, Ed. We're at a new record high on an intraday basis. We're up 5.10 % just coming off of that high on the day. But Ed, it's notable and shift of this year. Right, rules and requirements are changing in the world of AI chips.

2:30The US Commerce Department out with clarification, which impacts NVIDIA and its H200 that it wants to ship to China, but also impacts AMD as well. AMD has been trading all over the place this morning, at one point notably higher in the session, but NVIDIA markedly down, now trading at its lowest level in around a month. What are these new rules and what do they mean and why is this significant? Bloomberg Senior Tech Editor Mike Shepard joins us out of DC. lay out the new rules and requirements for us. But what we're saying in the Bloomberg story is this marks a significant moment for the companies in their efforts to sell them to China.

3:02Why? Well, this is a small but critical bureaucratic step that paves the way for NVIDIA and AMD to be able to sell H200 and comparable AI chips to China. What it does is it now says that the US government will review requests for export licenses on a case-by-case basis and move away from the past policy of a presumption of denial of any such request. And that had in the past been really an effective export ban. Now, these companies can't be there expecting a rubber stamp for their requests. The U.S. government is laying out some pretty specific requirements. One, that the companies must show that the exports to China will not create a supply shortage here.

3:46This is addressing in a way some of the concerns that lawmakers here in Washington have been raising with attempts to pass their own version of export controls. Two, they must show that any manufacturing done for China must not displace any production capacity intended for U.S. customers here. And three, the companies must implement strict know-your-customer procedures to ensure that these chips and the related technology don't get out to unauthorized users. It's interesting, Mike, that we are seeing NVIDIA down on the day and AMD. do we get any sense of how many they might be able to ship? Because it's not without its intricacies, as you say, 50 % of the overall made in the U.S.

4:26Well, it is the question of the moment surrounding this rule, just how this cap that it lays out would function. The rule says that the exports to China can go no more than 50 % of total product here in the U.S. But does that mean H200s produced from this day going forward? If that's the case, it would not be a very big set, and it would mean a far smaller number of exports to China. And that would certainly not go anywhere near meeting the huge demand that Jensen Wang has said that he is getting from Chinese customers. And we have reported that Alibaba and ByteDance are interested in buying as many as 200 ,000 chips each.

5:11Now, if we are talking about all the H200s produced over all time, that would be a much bigger universe, and that would be a much happier outcome for NVIDIA, AMD, and their investors. So we will have to see exactly how that is interpreted, if that gets spelled out. Another big question, Carol, is how quickly the government can move to actually process these export requests. because we have been hearing over the past year and longer that they are simply running into capacity problems in the bureaucracy of commerce and being able to turn these around. Bottlenecks throughout the world of AI. Mike Shepard, thanks so much.

5:51Let's stick with what this means for NVIDIA and more broadly for semiconductors. Beth Kindig's with us, IO Fund lead tech analyst. So is this a$50 billion annual revenue opportunity? Is China that for NVIDIA? Hi, Caroline. And Jensen Wong has stated it's a$50 billion per year annual opportunity. When we left off, it was about$5 billion a quarter. That's$25 billion. So somewhere between$25 billion and$50 billion, which really means that as we look into analyst estimates, they are probably too low. And that has been something from the very beginning that we have found alpha in, is that analysts are really struggling to wrap their head around the opportunity of NVIDIA.

6:31And now here comes back the H200s. And where my firm is very focused is calendar year 2027. If you look at these estimates, they are too low as it is, let alone if China revenue resumes. What's really interesting, though, is China's response to all of this. You say it's too low how much might be the revenue for NVIDIA in China. But at the same time, we understand that deep seats driving new models, with seeing them use what they have in a different method that maybe Alibaba and Baidu don't need those 200 ,000 that they've already put efforts and offers in for. What do you make of the way in which China is going to pivot to domestic chips?

7:11I would argue that right now, the number I had was about 2 million H200s, and there's only about 700 ,000 available, which means that, once again, NVIDIA is oversubscribed. I have been asked before, who is the next NVIDIA? Is it something like Huawei? You know, is it Google's TPUs? And the answer is the next NVIDIA is NVIDIA. They are extremely hard to disrupt. And that goes for China or even United States competitors. Beth, taking into account the news story that Mike Shepard just brought us, Jensen Wong told us at CES that the$500 billion forecast for five fiscal quarters, it includes this one for Blackwell-Rubin, could get bigger because they could factor in some H200 sales in 26.

7:57I know 27 to a year, but have you modeled for that little update that Jensen Wong gave? Yes. So right now, the analyst estimates did actually catch up. They're about$320 billion this calendar year. Let's just go with 2026. I want to really emphasize that it's next calendar year that we're going to start to see analyst estimates too low. That is where the alpha is at right now. And it only takes one or two quarters for us to really see NVIDIA's price movement from all of the momentum we're seeing, not only from Blackwell Ultra, but then we've got Vera Rubin, second half of this year. Now we have the H200s coming back.

8:40Where that falls specifically in what quarter matters less to me. And what matters more is that those analyst estimates are far too low. Beth, the big story in global markets this morning is a blistering rally in metals, particularly copper. Copper, as S &P Global wrote January 8th, foundational to the expanding electricity supply that will power the data center build out. and it's now a big growth area in that market. How worried are you about that, copper in the supply chain, and how it relates to the power needs of the data centers that NVIDIA's chips go into? These are excellent questions, Ed.

9:19Across-the-board, resources, when it comes to this data center expansion, are extremely stretched, especially anything that supports the electrical grid, such as copper. What I would really emphasize is those alternative sources of energy is a great way to position going into 2026. One thing, too, my firm has dug up is that in order for us to get to Vera Rubin and then Rubin Ultra, power has to precede that. We have to really get this power to these data centers before those systems can really ship in volume and be installed. Things like Nat gas, even solid oxide fuel cells, those that do not need great dependency on the electrical grid is a wonderful way to position.

10:03And copper surging today is a reminder of that. What's interesting is we've hit NVIDIA. We're talking about the supply chain they're in. We're also getting the idea that CPUs is where it's at as well. And you just think about the moves that we've seen yesterday, today in Intel. I mean, where do you think the gluts or the bottlenecks are really going to be hitting hard? I mean, analysts, key banks saying Intel and AMD are basically sold out for 2026 on the CPU server side. Exactly. And what's even more interesting is that AMD was up more last year than NVIDIA. And they are such a strong CPU player as well as Intel.

10:38There are many bottlenecks, Caroline. Networking is another one that comes to mind. Of course, energy we just spoke about. Just keep in mind that it's not just GPUs, but there's almost an equal amount of money being spent on all of the components, all of the networking, all of the power. And we are no longer compute constrained. We're no longer GPU constrained. It really is becoming a power problem and a networking problem that needs to be solved, especially as we move into the inference market, which is only going to require more memory, more bandwidth, less latency, and more and more energy.

11:14Beth, do AMD and Intel just accept that it's the CPU market where they can do battle and just let the accelerator market go to NVIDIA and other specialists? No, I do not believe that will be the outcome. I think AMD is a strong contender, a strong number two, especially in the second half of this year. They've really been preparing to bring the rack scale architecture to market, which is called Helios. And Ed, what was, I've covered AMD very thoroughly and we could get into the specs all day long. But OpenAI giving them that six gigawatt deal is a massive nod. I mean, that is a big nod that AMD is a contender from the leading R &D firm.

11:57Helios AMD's first rack scale solution, but theirs in the world's first two nanometer chip inside, which they talked up in our interview last week. Beth Kindig of IO Fund, great to have you back on Bloomberg Tech. Thank you very much. Now coming up, anger grows over sexually explicit, non-consensual AI generated images on X. We have the latest. This is Bloomberg Tech.

12:29The Supreme Court still hasn't ruled on challenges to President Trump's tariffs, leaving the world to wait until at least next week to learn the fate of his signature economic policy. No-Mex surveillance co-host Anne-Marie Horton joins us right here for more. So we delay once again, and that timing could be awkward. It could be awkward. So the Supreme Court punts it once again. They do not come out with a decision on whether or not the majority of actually a lot of this tariff revenue we're bringing in into the United States, more than 70%, is tethered to the president using IEPA, very flexible, a blunt tool that he has used since he came back into office.

13:04And why it could be so awkward is because the president will be in Davos next week, and he's going to be meeting with global leaders, the world elite. Last year, he joined on remote, really lambasted the global elite. And at this point, potentially, we could get the decision next Tuesday or Wednesday, because that's when the justices will be meeting again. That's when potentially we can get the decision. And he could potentially be facing a Supreme Court saying you cannot use that legal authority while he's talking to all these countries that he already did trade deals with. Bloomberg's Ann Marie Horden, thank you very much.

13:39Another top story. The U.S. Senate unanimously passed a bill allowing victims of sexually explicit AI images to sue the creators of that content. The move is in response to growing public anger after Bloomberg reported that Elon Musk's X has become a top site for generating pictures of people who have been non-consensually undressed by AI. Musk posted on X that he wasn't aware of any naked, underage images generated by Grok. That's XAI's generative AI tool. Let's bring in Bloomberg's Emily Birnbaum, who covers corporate lobbying government. The Defiance Act confers on American citizens a civil right to sue.

14:20Take that information and give the rest of the details, because that's the bit that's new here. Yes, that's exactly what it does. It essentially empowers victims of this non-consensual deep fake technology, people who have been non-consensually undressed by this AI tool, and it allows them to sue the people responsible for posting that. And it's a companion to a bill that was signed into law last year by President Trump that creates criminal penalties for distributing that kind of content. But it didn't go through the House last time, the Defiance Act, whereas Takedown did. And why would this time be any different?

15:03Is the pushback becoming enough? Because thus far, all we've really seen is the Department of Defense put Grok AI within its military system instead of pushing back on this being something that Grok or X needs to clamp down in some way. that's true there definitely is more of an appetite in congress to pass this legislation there have been six new co-sponsors that have come on board since the beginning of the year i think that the issue of non-consensual ai generated images has become so vivid to lawmakers many of them like alexandria ocasio-cortez are themselves the victims of this so i think the The appetite has really broadened this year.

15:49Emily, where does the company X and the platform X fit into this in a citizen's right to sue and those that distribute the content? So this, the Defiance Act, which passed the Senate this week, that probably would not impact Grok. That impacts the people who are responsible for distributing the images. But there is a lot of conversation right now about whether the Take It Down Act would empower attorneys general to sue Grok, XAI, Elon Musk over some level of responsibility for thousands of these images proliferating every hour. So far, no attorneys general have taken that up, but it's definitely under serious consideration.

16:35Certainly something that maybe Malaysia has been putting forward about whether or not it's XAI's responsibility in some way. Bloomberg's Emily Birnbaum, fantastic reporting. Thank you very much indeed. Now coming up, Airbnb has a new chief technology officer. We'll hear about his plans for the short-term rental company. That's next. This is Bloomberg Tech.

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18:06I'm extremely excited, like Brian said, to bring craft to the art of deploying AI first features and products. So I hope to be able to surprise the world with really beautiful features that they're going to love using every day. That was Airbnb's new CTO, Armand Aldale, weighing in on the short-term rental platform's AI efforts. Let's get more with our own Latterly-Lung, who spoke with Aldale and Airbnb CEO Brian Chesky. I think an interesting way to start is what is Airbnb trying to solve for here by bringing in a new CTO? What is it they want to change about the platform? So after a few years of sort of working on the plumbing of Airbnb's app, like revamping the app, they are ready to take it forward, adding AI across the app, including customer service, which they did last year.

18:52And now they're going to do more with search as well, like letting people discover listings and also cross market some of the new services like tours and experiences going forward. And I think you sort of put that exact question to Branceschi himself. Let's just take a listen to how he responded as to why they're pivoting and focusing all in on AI at this moment. Take a listen. We are the beginning of this incredibly exciting technological transformation with AI. It's going to be a journey. And I couldn't be more excited about Ahmed because he's one of the leading AI experts in the world. but he also brings a sense of craft to Airbnb, something we're really known for.

19:26And I think what you're going to see in Airbnb is not only AI search, but a very personalized AI experience where I think we're going to bring great design sensibility into the experience of Airbnb. Let's talk a little bit about how they're talking of the narrative of change, because they've said farewell to the previous CTO, who's there for about seven years, and brought in this expert from Meta. So who do they say farewell to and why is this meta executive the best place? So Ari Barlow, the previous CTO, came in during a time when Airbnb was going through hyper growth. That was more than seven years ago.

20:03And now Airbnb is sort of, as Chesky said, going through a technological revolution of LLMs and chat agents. And now Airbnb sort of wants to use sort of the unique data they have on their platform to differentiate itself from other, you know, chatbots to provide better recommendations to customers on their platform. Airbnb, the company whose stock rose about 3 % last year, it's down a couple of percent so far this year. And Chesky was one of those people that was the early vocal behind founder mode. What's the health of Airbnb right now? Is this them saying we've got to do something to reaccelerate?

20:40Yeah, Brian was not satisfied with some of the below 10 % growth rate we've seen last year. And so he's been very active in wanting to pilot more businesses for this year. They're piloting boutique hotels in several cities. And they're trying to add grocery delivery for people to pre-stock their kitchens before they check in. And so they're trying to get their growth rate back up as sort of the core rental service matures. Natalie, you've also got a story about how the chief information officer has departed after the CTO shakeup. Is there more executive leadership changes to come? Yes, so they're still looking for the new CIO.

21:19We can expect that to come in the months and the year ahead. Thanks, Natalie Leung. Thank you very much indeed. Let's turn our attention to entertainment now. Netflix is working to revise its bid for Warner Brothers Discovery, potentially shifting to an all-cash offer according to sources. Now, the move is aimed at speeding up a deal that, look, has faced pushback from Washington and competition from rival bitter Paramount Skydance. For more, let's get to Bloomberg's Lucas Shaw, who covers media and entertainment. Hit this story hard. And Lucas, I mean, the all-cash narrative, why is that important?

21:53Why would that be the winning formula for Netflix? Because investors like cash now versus, you know, stock and Netflix that they could sell later, right? One of the knocks against the Netflix deal, as perpetuated at least by Paramount's guidance, the rival bidder, has been that Paramount's deal is all cash and that Netflix deal contains between$4 and$5 a share of stock. Now, Netflix stock is pretty valuable, something that you think people would want to have. But most people would rather just take the cash now and get paid. And so that, I think, Netflix hopes will accelerate on many fronts. It'll assuage any shareholder concerns about their bid and also eliminate any potential complexities as they continue to negotiate and pursue it.

22:38Lucas, when we were reporting this out, the Netflix response and the tit for tat, Paramount suing earlier this week and nominated our heads to the board. Do you get the sense that Netflix think this will work, that they now are back in sort of the lead in a tight race for the assets? Yes. Well, I think if you were to talk to the people at Netflix, they've never felt they were out of the lead, right? They are obviously facing a stiff challenge from Paramount, but they're the ones who have an approved deal. And they have yet to see kind of some – they have yet to see shareholders say en masse, we don't want the Netflix deal.

23:16They have yet to see the federal government say we're going to block this deal. There are certainly some kind of blinking yellow lights, but I don't think they've seen anything yet that makes them too concerned. They seem still pretty confident that they'll get this done. And in a week, January 21st, that's when the tender offer for certainly the Paramount Skydance side of the equation runs outright. I mean, do we get any signal for investors that they're at all interested in that side? You know, investors have been split. But some of the big investment funds, they don't say anything, but we have spoken with a number of the major shareholders.

23:50And I'd say their reactions range from we prefer Netflix to we prefer Paramount. And then a lot of people in the middle are basically saying, you know, tie right now goes to the winner, which is Netflix. But we hope slash expect that Paramount will increase its offer, which doesn't seem to be the Paramount move. Just very quickly remind us of the state of play, the difference between the two bids. Well, Netflix's bid is for just the studio and streaming service, so Warner Brothers and HBO. Paramount's bid is for the whole company, so that includes all the cable networks like CNN, TNT, TBS, and the like.

24:25Bloomberg's Lucas Shaw, who leads the team at Screen Time that has led the way on reporting this story. Thank you so much. Now, coming up on Bloomberg Tech, robotics startup, skilled AI, just closed a$1.4 billion funding round, a big valuation, tripling from a year. But this is next. This is Bloomberg Tech.