WIRED Roundup: Chip Manufacturers Bonanza

0:00Hey, this is Zoe. Before we start, I want to share some exciting news with you. We're doing a live show in San Francisco on September 9th in partnership with KQED. Uncanny Valley co-hosts Lauren Good and Michael Calore will sit down with our editor-in-chief Katie Drummond and a special guest for a conversation that you won't want to miss. You can use the link in the show notes to grab your ticket and invite a friend. We can't wait to see you there. Welcome to Wired's Uncanny Valley. I'm Zoe Schiffer, Wired's Director of Business and Industry. Today on the show, we're bringing you five stories that you need to know about this week, including the controversial deals that Trump appears to be trying to strike with a number of chip manufacturers.

0:40I'm joined today by Wired's Senior Business Editor, Luis Matsakis. Luis, welcome to Uncanny Valley. Hi, Zoe.

0:55This week, we're going back to Doge. We thought we'd left it behind, but it continues to pop up. Wired found out that Doge set up a shadow account on X for a small government agency, as in a second account that they just decided to create on their own. And this happened at the Small Business Administration, or SBA. You'll be shocked to hear that the shadow account was named Doge underscore SBA.

1:19Louise Matsakis:So they weren't really trying to hide the fact that they made this account? No, I think they were being pretty upfront, but in somewhat classic Doge fashion, they didn't clear it with the existing social media teams. Our colleague, Vittoria Elliott, reported that, according to documents shared exclusively with Wired, it was a member of the Doge staff that started and ran the new X account. And they did so without clearing it with anyone first. And in at least one instance, this shadow account from SBA appears to have accepted a complaint from a potential whistleblower over direct message. So how did the staff at the SBA respond?

1:57I think they were honestly quite surprised. It was a social media manager who emailed his colleagues at the agency with a link to the account and said, how did I not see this before? But the repercussions here obviously go beyond opening up a separate line of communications to annoy your colleagues. this shadow account explicitly asked for tips on, quote, fraud, waste, and abuse that might affect small businesses. So there are, like, established ways to do this already within SBA, and now there's an unauthorized channel that risks kind of the integrity of the entire process.

2:31Louise Matsakis:That is just, like, really wild. Okay, so I have to read this line that a government auditor who spoke to Victoria gave her. Imagine you have a crazy uncle and he says, I'm going to be the cop, send me your tips. That's essentially what's going on here. I think that this is just another example of how rogue Doge went. They were supposed to be doing auditing and looking for fraud and waste. But in reality, they basically were just taking over these agencies and kind of doing whatever they want, including setting up social media accounts. Yeah, it also feels like they were doing the kind of classic tech thing where you like see something happening and then without doing a ton of research on what is happening and why, you're like, I could do that better.

3:07I'm just going to do it myself. And then you set up something and you kind of reinvent the wheel. Moving on to OpenAI. OpenAI, one of the leading AI firms in the world, is on track to be what looks like the most valuable private company in the world. More valuable than Palantir or SpaceX or even TikTok's parent company, ByteDance. One investor talked to our colleague, Kylie Robeson, and said that the math is fairly straightforward. If ChatGPT hits 2 billion users and monetizes at$5 per user per month, that's$120 billion in annual revenue, which could support, this investor says, a$1.5 trillion company, which makes these really high investments worthwhile.

3:50Louise Matsakis:So I get the basic math of that formula, but it seems really unlikely to me that OpenAI is actually going to be able to monetize 2 billion users. We've never really seen that in history, right? Google, Facebook, yeah, they have user bases that are about that big. But for the most part, they earn revenue from advertising. So is it really likely that OpenAI is going to get all these people to pay$5 a month for a subscription? I was at a dinner last week with OpenAI CEO Sam Altman, and he talked a little bit about this. There was a question at the dinner about basically like, would you do ads in Chat Sheep AT?

4:28And his answer was pretty classic, Sam. He said, I'm not clear that that's exactly the best way to monetize. But he didn't come out and say, like, absolutely, no, we would never do that. And so I think they're leaving themselves open to a couple different monetization strategies here.

4:44Louise Matsakis:Yeah, I think that advertising has to remain on the table, given the fact that, first of all, OpenAI has perhaps one of the craziest burn rates in history. They're just going through billions and billions of dollars every year. And also they've trained, you know, a large swath of their user base to expect to be able to use this chatbot for free already, right? Like that is, I think, really the risk here is that I don't know how you suddenly turn around and say, just kidding, you need to start paying$5 a month so that we can monetize our user base without having to turn to advertising. Because what's going to happen in that case is that they're going to just start using one of the plethora of other either open source or totally free models.

5:25Exactly. Sam also said something really interesting at the dinner, which I've been thinking about. It was basically floated at the dinner that OpenAI has some of the most robust user data profiles on its users of any company because they have so much information. They have all the information that someone might have Googled for previously, like stuff they're looking for or advice, but then they also often have a lot of very personal information about people. You can imagine that this information would be very attractive to potential advertisers. And as the company is eyeing more agentic work, things like, oh, you ask an AI agent to go on hotels.com and book you a hotel, there is a certain amount of information you would imagine needs to be shared between OpenAI and that other company.

6:13And I think a lot of users aren't even aware that that could be a remote possibility.

6:18Louise Matsakis:Oh, yeah, that's absolutely terrifying. I really do not like the idea of, you know, suddenly you open ChatGBT and it's like, have you considered Ambien? Because you were asking for like ways to sleep. Exactly. I was looking through their terms of service to kind of try and determine what they could actually share. And it's still pretty opaque what's going on or what could happen in the future. Our next story is bi-coastal. we're going to New York City where Silicon Valley tech executives have been panicking about the prospect of the elected Democratic nominee Zoran Mamdani becoming the mayor of New York City.

6:56None of them, it's worth saying, actually live in New York City full time, but that hasn't stopped them from going off on X.

7:07Louise Matsakis:Yeah, I think there is just a lot of panic about what Mamdani represents, which I think is sort of this democratic upswell, this sort of backlash to the Trump administration. And I think also particularly in New York City, it's just a place where the politics have been toxic for so long. But because Mamdani is young, you know, because he's Muslim, because he's identified as a democratic socialist, I think he's just the perfect foil for all of these guys in Silicon Valley to be triggered because they're sort of projecting a lot onto him. It's kind of like a Rorschach test. Totally. I mean, White House AI and CryptoZar David Sachs has been among the voices warning that Momdami could pose a real threat to the entire country.

7:52He posted on X, quote, wake up Silicon Valley. You basically have two choices now. Get on board with MAGA or prepare to be on Momdami's dinner menu. And he's not the only one who's posted like this. The Gemini co-founders, Tyler and Cameron Winklevoss, Palantir co-founder Joe Lonsdale, Coinbase CEO Brian Armstrong, they've all been posting about this potential election. You and I both have a brain disease where we listen to the All In podcast obsessively. So I'm sure you have heard them talk about this. But I mean, I'm not surprised in some ways, like aside from what you're talking about with New York politics in particular, these men and so far most of them are men like their entire platform at this point is weighing in on issues that are like pretty far outside the zone of what they do professionally a lot of the

8:45Louise Matsakis:time yeah i mean i think they're kind of professional posters to some degree no offense to the venture capitalists listening to this but i i don't think that being a vc is necessarily a full-time job. So how dare you? A lot of investors, you'll have a lot of great time on their hands, but I also think it strikes me that why do they have a guilty conscience here? Like, why do you think that this candidate who is talking about making sure their government works, making housing more affordable, trying to work with businesses, trying to cut red tape and trying to create a more equitable society, you have to sort of wonder why does that trigger you?

9:22Louise Matsakis:If you're a crypto mogul, if you're a VC, that is kind of the question I want to ask is like, why is this so threatening to you? When from the rhetoric I've heard, I've listened to Mondani interviewed on a number of podcasts. I've heard his stump speeches. He doesn't really talk about wanting to squash the tech industry, which brings us back to Caroline's reporting. Right, exactly. So this is the interesting thing. It's that Caroline talked to a number of people who went to about a 200-person private event that was held in July with Mamdami and a bunch of tech leaders. And the people who were there basically said that they felt like he had thoughtful answers to their questions.

10:02He was charismatic. The gist of the article is essentially that while the leading voices in tech are very, very anti this person, actually the people who live in New York City and are in the tech industry, they have a more nuanced take. One more story, which is about ant smuggling. A topic you would think would be very foreign, but actually to me specifically has enormous personal relevance.

10:29Louise Matsakis:Okay, yes. So my colleague, Kate Nibs, who is just a wonderful writer, wrote about how these cuts at the U.S. Department of Agriculture have led to ant smugglers feeling very emboldened. Basically, they feel like no one's paying attention. So they're smuggling all of these ants between state lines. They're trading them on Discord servers. They're buying these ants on eBay. But as you just said, Zoe, I need to know, why do you know so much about ants? As soon as I heard we were doing this, I was like, I might be conflicted out of this story. Like my husband is a former biology teacher and he has ants.

11:06Yes, I call them his pet ants, but I don't know what they are, what you classify them as.

11:11Louise Matsakis:Have the ants ever gotten ants? Do you know personally what it's like to have an ant problem? I actually do. But no, it's it's I talk about this constantly because where we live, ants get really bad in the summer and they drive me completely insane. And Andrew's always like, it's just not a big deal. No, you can't kill them. I'm like, oh, my God. That's amazing. Yeah, I think you're right. It's not a huge problem in the grand scheme of things, but I think it's just a sign of how under the Trump administration, a lot of these parts of the government that many of us, myself included, have long taken for granted.

11:44Louise Matsakis:And like my sort of fear is that there's going to be a major infestation or, you know, maybe the power is going to go out in a neighborhood or something and the USDA and other government agencies are not going to know what's going on, right? It's going to take longer to solve the problem. Yeah. Well, shout out to the people on ant Reddit who corrected our misidentified ant photo in this story because the ant community was on it when we called a weaver ant a fire ant. And damn, did we get a lot of emails about that. Yes. And for the record, even the Getty photographer who took the photo was apparently mistaken.

12:20Louise Matsakis:So these ant experts are really good. Coming up after the break, we dive into the recent NVIDIA deal with the Trump administration that has raised all kinds of legal and ethical questions. Stay with us.

12:42Louise Matsakis:150 years ago, they were hunting us down to kill us, and now they're hunting down immigrants to deport them. This is First America, the true story of how the United States came to be and how we got to this present moment. Listen to First America wherever you get your podcasts.

13:11Welcome back to Uncanny Valley. I'm Zoe Shipper. Here with me today is our senior business editor, Luis Mitsakis, and our main story is about the deals that President Trump appears to be trying to strike with a number of chip manufacturers. This week, reports came out that suggested Trump is trying to take an equity stake in companies like Intel that took grant money from the federal government as part of the Chips Act in 2022. This follows a pretty wild story we reported on last week about the deal NVIDIA struck with the Trump administration. Trump said he would allow the company to continue selling its H20 chips to China in exchange for a 15 % share of the company's revenues.

13:47The president reportedly changed his mind about allowing NVIDIA to sell these chips to China after meeting with CEO Jensen Huang, who has argued that allowing Chinese companies to buy H20s doesn't pose a risk to national security. Louise, you've covered tech deals between the U.S. and China for years and years, so I'm curious about your impressions of the deal to start. Did it surprise you?

14:11Louise Matsakis:Definitely. These deals are just totally unprecedented. I've never seen anything like them before. I keep coming back to the fact that when Trump returned to the White House, one of the first things that Commerce Secretary Howard Ludnig talked about is the idea of creating a sovereign wealth fund. So basically having like an investment fund for the U.S. government, which is something that we've seen a number of Gulf states do. Actually, the only one we have in the U.S. is actually in Alaska. And that's because of the oil money there and because they have a really small population. But Zoe, to be totally frank, we're broke.

14:45Louise Matsakis:We can't have a sovereign wealth fund like that. We can't be making these sorts of investments. But I think that it seems to be this fantasy that Lutnick and Trump have. So you're seeing them make these business and investment deals rather than what they're supposed to be doing, which is regulation. They're sort of taking this part of the government inside the Commerce Department that was designed for national security, and they're using it seemingly to try and generate revenue for the U.S. government. Let's take a few steps back, because just to lay the groundwork for what's happening now, there was previously a ban.

15:22The U.S. government had banned the sale of some chips to China. Can you just explain what that was and what the rationale for that ban was? Yeah.

15:33Louise Matsakis:So when Trump first came into office, he had a lot of China hawks in his administration who were really worried about sort of the rising technological power of China. And so they started cracking down on Chinese companies like Huawei. And then when Biden came to office, his team specifically zeroed in on chips. And so the concern there was that by having access to advanced chips from companies like NVIDIA, that would eventually allow China to build, you know, really technologically advanced artificial intelligence. And so the concern in the Biden administration was that they really wanted to ensure that America was able to develop things like CHI-GPT first and that China didn't reach what they conceived of as super intelligence before the United States got there.

16:19Louise Matsakis:So they started sort of systematically limiting what kinds of chips China could buy from American companies. But it really felt like there were two ideologies on opposite sides of the table. One is the idea that you keep China dependent on U.S. chips and this will dissuade them from developing their own technology to compete. and the other side of that is no we need to cut them off entirely because we need to stay ahead and it feels like the first one has for the moment won out right I think that's right I think that regardless of which ideology was more convincing to you I think that officials in both the Trump administration and the Biden administration agreed that you kind of had to have a mix of both and And they were trying to strike this really delicate balance, which is don't totally cut them off tomorrow where that would devastate companies like NVIDIA and AMD.

17:20Louise Matsakis:These are really important American companies that have a large impact on the economy, on the stock market. So you don't want to cut one of their arms off and totally cut off their ability to sell into the Chinese market. But at the same time, can you maybe ensure that they don't get the best products from those companies? And that's why you saw the development of chips like the H20, which NVIDIA actually specifically designed to just come under the thresholds that the Biden administration set. Yeah, and Trump has insinuated that these are old and kind of useless chips. But you and I have talked about how they're actually quite good at some of the things that are really important for modern AI development.

18:03It's not like they're totally archaic.

18:05Louise Matsakis:the future of technology is incredibly difficult to predict. So while these H20 chips are not that great for training, so for building those huge models like GDT5, the H20s are not a great use case. But for doing inference, which is the ability to ping the model and get an answer in real time, they're much better, actually. They're pretty advanced. And we didn't know at the time when these export controls were originally designed, how important inference would actually be. Yeah. I mean, I will definitely stop talking about the SAM dinner after this. But one other thing he mentioned at the dinner was that of all the money that OpenAI plans to invest in its CapEx expenditures for data centers and whatnot, all of that.

18:54And I think he said it was going to be trillions of dollars, but certainly like hundreds of millions over the next few years. That's all for inference. That is the big frontier right now. Training is its own thing and it's obviously quite expensive, but the bulk of the resources are going to inference at this point. Totally.

19:10Louise Matsakis:And that makes perfect sense, right? It's like you build this incredible model and then you have to let people use it, right? And you have to develop the reasoning ability and sort of the ability to interact with that model. It makes perfect sense to me, but it's not something I think you could have designed into a regulation three, four years ago. I don't think anybody has the magic eight ball where they can see that. So I just think it's a really difficult but also fascinating area. Louise, thank you so much for coming on Uncanny Valley. Thanks so much for having me, Zoe. There's a reason millions of people start their day with Morning Brew Daily.

19:47Louise Matsakis:Each morning, we break down the biggest news in business from the latest tech headlines to why nobody can afford a house right now. all in a format that fits seamlessly into your day. You'll leave each episode of Morning Brew Daily smarter and ready to take on the world around you. I'm Toby Howell. And I'm Neil Freiman. And we're ready to show you that business news doesn't have to be boring. So join us on Morning Brew Daily, available wherever you get your podcasts.

20:17That's our show for today. We'll link to all the stories we spoke about in the show notes. Make sure to check out Thursday's episode of Uncanny Valley, which is about how vibe coding is changing the tech industry. Adriana Tapia and Mark Leda produced this episode. Amar Lal at Macrosound mixed this episode. Kate Osborne is our executive producer. Kondi Nass, head of Global Audio, is Chris Bannon. And Katie Drummond is Wired's Global Editorial Director.

20:49Louise Matsakis:On Masters of Scale, iconic leaders reveal how they've beaten the odds. Asking really strong questions is a superpower. You want to show up with something radically different and how they've grown companies to incredible heights. The greatest rewards always come from the greatest risks. That's hit the gas. Airbnb, Zillow, Microsoft, Liquid Death, and more. Hear from the founders who've changed the game. It's anything but business as usual. Find Masters of Scale on Apple Podcasts, Spotify, YouTube, or wherever else you get podcasts.