Why Trump is letting Nvidia sell powerful AI chips to China

0:00Support for WBUR comes from Is Business Broken? a podcast from the Mehrotra Institute at Boston University that explores questions like, why is innovation in healthcare so hard? Is ESG just greenwashing? And of course, is business broken? Listen wherever you get your podcasts. WBUR Podcasts, Boston. There's been really no doubt that access to computing power is one of the fundamental drivers of AI progress. So we should think very carefully about who gets to access these advanced ships. How to stay ahead in the AI race while still making a boatload of money.

0:51It's Tuesday, December 9th, and this is Here and Now Anytime from NPR in WBWR Boston. I'm Chris Bentley. Today on the show, big business and big government in America. It's long been a complicated relationship, but as with many things, President Trump has put his own spin on the issue. We'll dig into the mega merger frenzy in media with Paramount, Warner Brothers and Netflix, which the president was asked about earlier this week. Should they be allowed to buy Warner Brothers? Well, that's the question. They have a very big market share. And when they have Warner Brothers, you know, that chair goes up a lot.

1:31So I don't know. That's going to be for some economists to tell. And also, and I'll be involved in that decision too. But first, there's another decision that Trump's definitely involved in, one that's shaping the race to develop artificial intelligence. The president now says he's going to let NVIDIA sell more advanced chips to China. The chips in question, NVIDIA's H200 line, are the company's second best. But second best is still a big deal for Chinese companies like Alibaba, ByteDance, and Tencent, because they had been banned from buying even those, and forced to rely on inferior chips produced domestically.

2:10Some Chinese companies are even training their AI models overseas to get around the ban. NVIDIA's CEO, Jensen Huang, has been lobbying the government to loosen its restrictions for years. So this is a major shift in U.S. tech policy. But it's not coming for free. President Trump said today that NVIDIA will give the American government a 25 % cut of sales, though it's not clear exactly how that will work. So we called up Chris Miller, author of the book Chip War, the fight for the world's most critical technology. Here's his conversation with Robin Young. Chris, the Biden administration feared giving the chips would buy China time to make its own chips.

2:50Mr. Huang told the president limiting access only encouraged China to make its own chips. Sounds like he made his case. Well, that's right. I think the White House has become convinced that selling these ultra advanced chips to China is in the U.S. interest. I think there's a lot of debate around this both in Silicon Valley and in Washington, D.C., where there's recognition that China today can't produce similar quality chips at anywhere near the quantity that China's AI ambitions require. And so right now, China is really struggling to produce and acquire the AI computational capacity that its data centers need.

3:31Yeah, well, some also think U.S. restrictions may have pushed China to try to create AI systems with fewer and cheaper chips. The Chinese company DeepSeq claimed it did that. Might that have been motivation for the president? Well, I think that argument's been certainly brought up in debates in Washington. But actually, if you dig into the evidence and look, for example, at the latest model that DeepSeq released just at the start of this month, What you find is that DeepSeek has been struggling to reach the cutting edge that companies like Google and OpenAI and Anthropa can. And they publicly say it's because they don't have access to the computing power they need to do comparable levels of training of their models.

4:12In other words, even DeepSeek is saying this high-end compute really matters and they don't have enough of it. Right. Well, what about concerns about national security? President Trump said on social media the U.S. will allow approved customers in China to buy these chips under conditions that allow for continued strong national security. So what does that mean? Well, we don't really know yet. The administration hasn't released details as to what these national security restrictions might entail. I think there's two types of national security concerns. Number one is that there is a pretty well-established track record of the People's Liberation Army getting access to cutting-edge U.S.

4:51chips whenever they cross the border into China and use them for military purposes. But the second broader concern is that anything that enhances the capabilities of China's overall AI ecosystem makes it more likely that the leading tech firms of the AI era come from China. And that would enhance, if it happens, China's capabilities for surveillance, for exerting leverage by centering Chinese firms in the tech ecosystem. And that's why both Republicans and Democrats have been skeptical of the argument that we should be giving cutting-edge computing chips to enable China's AI advances. Yeah. Well, the president also confirmed that the U.S.

5:31will get a cut of the sales. So he's lobbied to clear the way for the deal by Huang, a private company, and then his government will get a cut. Is that even legal? Well, I think there's been debate among legal scholars as to whether that's an export tax, which the Constitution prohibits, or whether it's a fee, which might be legal. I think from my perspective, either way, the dollars involved aren't that large relative to the implications for AI leadership. And so if you think like I do that AI is going to be a multi-trillion dollar economic opportunity over the coming decades, a couple of billion dollars in the short run is probably not worth valuing very highly in comparison to the question of long-run leadership.

6:16Well, but we still have to point out, you know, that maybe the president already got a cut because NVIDIA CEO Jensen Huang has confirmed he's one of the donors to Trump's ballroom renovation at the White House. Feels like quid pro quo to some. But you argue that at the least it's a great deal for NVIDIA, but maybe hurts other U.S. companies? I think that's right. I think the companies that sell chips like NVIDIA obviously want looser regulations when it comes to chip sales. But if that enables Chinese cloud computing companies and Chinese AI model developers, that creates more competition for other firms in Silicon Valley.

6:54And when you look at most of the U.S., big tech firms, most of the companies at the cutting edge of AI technology, they're major users of these chips. And they want an advantage vis-a-vis their Chinese rivals. And so anything that enhances the capability of Chinese firms to access cutting edge chips creates stronger competitors that U.S. firms have to try to compete against. Give us a closing thought, Chris Miller. What are you watching? I think there's been really no doubt that access to computing power is one of the fundamental drivers of AI progress. And until today, the U.S., plus its allies in Taiwan and Korea, have really unique capabilities that China today and next year and the year after won't be able to match.

7:36And so we should think very carefully about who gets to access these advanced ships. Chris Miller, author of Chip War, the fight for the world's most critical technology, will continue this conversation in the future. Chris, thank you. Thank you.

7:55Coming up next, another deal that could reshape a major industry and whose players are appealing directly to President Trump. How a hostile takeover could affect what you watch everywhere from the news to Netflix after the break.

8:19Thank you.

8:49from trusted top-rated insurance companies to find you the best fit for your health, your lifestyle, and your budget. And they work for you for free. Get the right life insurance for you and save more than 50 % at selectquote.com slash anytime. That's 50 % off at selectquote.com slash anytime. There have been some dramatic turns in the negotiations to buy Warner Brothers Discovery. Paramount has offered to buy all of Warner Bros., including the media giant's cable channels like CNN, in an all-cash deal valued at$108 billion. It is a hostile takeover bid, and it comes just days after Warner Bros.

9:31agreed to sell its streaming and studio business to Netflix, but retain control of its cable properties. NPR media correspondent David Fulkenflick is following the story, and spoke about it with Peter O'Dowd. Yeah. Help us understand how Paramount just swooped in ahead of Netflix with this offer to buy Warner Brothers. Well, they're not past the line yet. This was the very sale of Warner Brothers Discovery was occasioned by the fact that Paramount made not one, not two, but three unsolicited offers earlier this year. Warner Brothers Discoveries, David Zasloff, its chief executive, said, hey, you know, I've been intending to spin off the cable channels from the streaming assets and the Hollywood studios, the more appealing properties.

10:19But I'm just going to put it up on the auction. Paramount was spurned for this Netflix deal that was reported on Friday and in intervening days. And then Paramount came back and said, fine, we'll give you more. And we're doing it, as you said, just as you said, for the entire company. So it's not an enormous premium, but it is worth several dollars a share more than what, or a couple dollars a share worth more than what Netflix has been offering. Netflix says it still believes it has a deal and that it will hold. But the question is, will shareholders want something more or will there be more to extract from each side?

10:50The billionaire Larry Ellison and his son David bought Paramount this summer. If they do end up getting Warner Brothers, they could put a lot of pressure on Netflix, which is already the world's largest streamer. How have the stakes for the streaming industry just changed again with this new offer? So, you know, there are these two opposing visions of what looks likely to happen, assuming some third option doesn't play out, where either you have Paramount bulking up, supersizing to take on Netflix, and for that matter, Amazon, you know, a company that doesn't require entertainment to make its enormous fortunes, as the everything store and therefore able to put a lot of resources and effort into this.

11:33And Disney, which bulked up earlier by acquiring several years ago, most of the Murdoch's Fox entertainment assets in Hollywood. Or you have Netflix saying, we're going to just end the conversation now and we're going to make sure we're the only people left in the room really to lead this industry by bulking up itself. Netflix already the world's largest streamer, already America's largest streamer taking over HBO. And you know what, Netflix would say, at least publicly, is, hey, we're not just competing with these guys. We're competing with YouTube and every other form of streaming, distraction and diversion.

12:08And so it's wrong to just lump us in with Hollywood. But that's sure not the way most people looking at this or thinking about it at the moment. It's worth noting the Ellisons at Paramount have strong ties to President Trump. Some of the names tied to this deal are also President Trump's son in law, Jared Kushner, including foreign investors. Talk about where the money's coming from and why that matters. Well, so, you know, Larry Ellison, as you say, the co-founder of Oracle is a digital titan. His son, David, was able to take Skydance Media. And earlier this year, they took over Paramount with some other investors for this deal.

12:42They're saying this is fully backed by the Ellison's fortunes. You know, Larry Ellison, one of a handful of the richest people walking on this planet. And at the same time, they've taken on, as you say, a ton of outside money. Jared Kushner's investment fund, that president's son-in-law. That's a real question mark for a company that wants to take over CNN, one of five major television news networks or divisions, and that already has, would be going into business with the Ellisons. They already have CBS News in the fold. The Saudi Arabians, a sovereign investment fund, Abu Dhabi's similar fund, Qatar is a similar fund.

13:24You know, this would be a major amount of money from the Middle East, you know, with some, in this case, the Saudis, a very controversial regime and also taking money affiliated with the Chinese state. So, you know, there's, although those, all those investors say they would forego any control of the board, you know, that's a real question mark hanging over that in terms of the best interests of the nation and of major news organizations. Well, let's talk more about the news organizations. I only have a minute left here, But unlike the Netflix deal, as you said, this one would include CNN. This is a news organization that the Trump orbit has not been shy about how it doesn't like it.

14:04What are the journalistic implications here? They're vast. You've seen CBS already in a short number of months be altered in significant ways to try to appeal more to conservatives and very much appeal more to President Trump in ways that he has cheered. you know, CNN has been a constant source of friction. He attacks CNN pretty much every hour on the hour the president does. And so, you know, you would think that the Ellisons would be likely to change that as well. It has been reported widely that they have made significant promises to Trump to do so. When you think about news organizations holding administrations and power to account, this is the ultimate example of that.

14:40So I think that's a real question that looms for those who care about having independent sources of knowledge about what people do and say in their name and with their tax dollars. All right. NPR media correspondent David Folkenflik, thanks very much. You bet.

14:57We'll be right back after a short break.

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16:20The president is involved in some high-level corporate deals, as we've been hearing. But today, he's in Pennsylvania for a rally meant to communicate that he's focused on bread-and-butter economic issues. Trump campaigned on lowering the cost of living. But nearly a year into his second term, he's struggled with how to talk about it. Affordability is a hoax that was started by Democrats who caused the problem of pricing. That was last week. Yesterday, he acknowledged it is an issue. You can call it affordability or anything you want, but the Democrats caused the affordability problem, and we're the ones that are fixing it.

17:02So what do Pennsylvania voters need to hear from the president? We asked former Republican Congressman Charlie Dent of Allentown.

17:36coffee, bananas, and things like that. So he's now acknowledging that those tariffs are hurting people. But I think the best thing he could do right now is try to lower those tariffs. But he seems fixated on it. And that's one thing that's within his power that he could do. He's also pushing the Fed to lower interest rates, which many argue may have an inflationary impact. So the problem for the president is he's going to talk about lowering prices, but many of his policy actions and rhetoric are moving in the opposite direction. So I'm curious to see what he's actually going to say to lower prices other than maybe putting price controls on pharmaceutical drugs.

18:16You can hear that whole conversation and a whole lot more at hereandnow.org, including our latest interview with the president of the American Soybean Association about the news of a$12 billion bailout for farmers. That's at hereandnow.org, which, like this show, Here and Now Anytime, comes from NPR and WBUR Boston. Today's stories were produced by Hafsa Qureshi and Sam Rifelson. Today's editors were Todd Muntz, Mark Navin, Mikaela Rodriguez, and Michael Scotto. Technical direction from Caleb Green and Marcel Damiano. Our theme music is by Mike Moschetto, Max Liebman, and me, Chris Bentley. Our digital producers are Allison Hagen and Grace Griffin.

18:58and the executive producer of Here and Now is Alan Price. Thanks for listening. We'll be back with you tomorrow.