Nvidia’s Biggest Challenge Remains Backward Looking Media, Politicians

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Nvidia CEO Jensen Huang Speaks At The Bipartisan Policy Center

Short of Chinese producers of “rare earths” literally hoarding them, there’s no keeping them out of the United States. Production begets imports, and with the U.S. economy by far the world’s most productive, global production will find its way here.

The biggest country economies need never worry about lacking the resources necessary to continue growing. In the “closed economy” that is the world economy, production always and everywhere finds production.

This is worth remembering as media accounts, including one in the New York Times from this week, criticize Nvidia for “final delivery of advanced tech” to China. The Times portrayed the movement of advanced technology between San Jose, CA-based Nvidia to China in cloak-and-dagger fashion, but the reality is that it’s basic economics. The U.S. has the world’s largest economy, China the world’s second largest, so it’s no surprise that market goods are going to reach each country from the other without regard to the wishes of an always backwards looking political class.

History is clear here. Think back to the 19^th century. It was then that England was routinely at war with one or many European nations, nations that “embargoed” England as payback for the warring. Of course, “embargoed” is placed in quotes simply because efforts expended to keep market goods out of England failed. Production trumps political decrees, which means war in no way kept British shelves bereft of products produced in Europe. That England had the world’s largest economy – by far – ensured the inflow.

The Times article on Nvidia referenced technology inflows into China that were “sought by nearly every branch of the Chinese military,” and the perhaps natural reaction from media and political types is of the gasping variety. More realistically, Nvidia is the world’s most valuable corporation not because its advanced technology isn’t coveted, but precisely because it is.

Which means the proper economic and business lesson to take from Chinese military interest in Nvidia technology isn’t that an American company is supplying Chinese military interests, but that demand for Nvidia’s technology is global. Implied in its frequently #1 in the world valuation is that short of Nvidia literally hoarding its technology, the technology will find its way around the world not because Nvidia is acting in nefarious ways, but exactly because demand for Nvidia’s genius is yet again global.

Taking global interest in Nvidia’s products further, the latter doesn’t just happen without a market reaction. As you read this there are American (Cerebras, AMD, Intel?) and Chinese companies (Huawei, Cambricon, Moore Threads, and many more) eager to compete for Nvidia’s market share. Translated, vain political attempts to place a wall around U.S. genius wouldn’t be necessary even if they worked.

Success begets success, which means there will eventually be a lot of American and Chinese companies competing for Nvidia’s China market share. This is worth remembering as U.S. Senator Jim Banks (R-IN) tells the Times that “Giving” China “access to America’s best A.I. chips will only quicken their efforts.” Banks is looking backwards, as are his media enablers.

Think Claude Mythos, and all the excitement/worry about it. This AI was created without top-of-the-line, “frontier” chips, and it explains why Banks’s fears are overdone. By the time politicians and media members discover a world-leading technology that must be kept from enemies real and imagined, technological advance itself has moved on.

Nvidia’s Jensen Huang knows this better than anybody. Paraphrasing him, 30 days in technology is an eternity. Get it? Politicians and media members do not. Readers, however, should know that what worries both cohorts is old news by the times either or both discover it.

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