NVIDIA headquarters.
Nvidia
Nvidia and the European Union have expressed displeasure with the Biden administration’s recent blanket AI export restrictions, which could actually benefit a small number of companies and countries. But the entire industry will suffer, and so will America’s technology leadership.
Nvidia is clearly upset about the new rules restricting sales to all but 18 U.S. friends, and rightly so. Nvidia says these restrictions will limit the amount of AI that the have-nots can build to help their economies and populations, giving an advantage to America’s 18 wealthy partners in permanently deploying AI. This new policy is so short-sighted that I’m embarrassed to call myself a Democrat.
No impact at all
These limitations force AI developers and AI users to move in two directions. First, Chinese AI companies that build chips and AI models will benefit tremendously in the coming years. Sure, their chips are slow and their software is immature, but at least you can get them. Also, if you live in Africa, South America, or Asia, these platforms may be your best, and perhaps only, option. Developing sovereign AI is not optional. It is a national priority for many countries.
Second, U.S. cloud server providers will win because developers from other countries will find ways to circumvent the rules and access GPUs or CSP ASICs to train and use the AI models they need.
China (and India) threat
With India and China already building talent pools, the US appears vulnerable to long-term competition in AI. According to a report released today by the US White House, “China not only produces more S&E PhDs than the US, but the gap is widening. In 2018, China produced 65 percent more S&E PhDs than the US. In 2022, China produced 99% more S&E PhDs than the United States, nearly twice as many.
AI Talent Report, January 14, 2025
us white house
The U.S. government now claims that blocking China’s access to our hardware will slow it down, and it will. But for how long? And wouldn’t they all use and improve upon conventional silicone instead? And even if we support this strategy, restricting access to other countries’ AI hardware will only harm them and the United States. Not in China. “Far from reducing the threat, Biden’s new rules will only weaken America’s global competitiveness and undermine the innovation that has kept America ahead,” said Ned Finkle, vice president of government affairs at NVIDIA. It will happen,” he said.
net effect
The bottom line is that 1) American technology companies will not be able to realize their sales potential to countries that are not among the lucky 18, and 2) the rest of the world will be left behind or worse off in the AI revolution. 2) Chinese technology companies will fill the void, both in China and the rest of the world.
Why are we helping China challenge its hard-won technological leadership in AI?Champagne corks are popping in Shanghai.
Disclosure: This article expresses the author’s opinion and should not be taken as advice to buy or invest in any of the companies mentioned. Cambrian-AI Research is fortunate to have many, if not most, of the -Five, SiMa.ai, Synopsys, Ventana Microsystems, Tenstorrent, and numerous investment customers. The Company does not have an investment position in any of the companies mentioned in this article and has no plans to begin investing in any of the companies mentioned in this article in the near future.
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