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00:00At the moment, we're seeing Chinese rivals gain on the back of this lack of in video competition right now. What do you make of it? Well, all I know is we're going to have to figure out there's a long race here and a short race here. And we have to secure not only our global leadership, but also our intellectual property. And that's really some of the underpinning of the discussions here of is there a 15%, is there not a 15%? What does this mean from an export control? So a lot more to come on this, but obviously China is amping up their part in the race trying to win the global war on who's going to dominate. I what is the IP risk. Well, the IP address. So even though we're talking about sending a modified ship over to China, in my opinion, based on my years of experience, it's like handing over the keys to your R & D lab and saying, just be in the small Q lab, not the bigger lab, and don't look around. You wouldn't hand the keys to your R & D lab to your competitor. And China is our global competitor here for this technology. So that's really what we're thinking about here, is how could they get access to these chips and perhaps reverse engineer everything from performance to how things behave? Really, you just don't know what they're going to be able to do once they have their hands on all these chips. Let's say you're back as the White House chief information officer. What are you advising President Trump as to whether Jensen should have access to the Chinese market? Well, I think this is a tough one because the private sector does have the right you know, companies do have the right to sell their goods and services all around the globe. We don't have a blockade on selling technology and other goods and services to China. So this is a very delicate balance here between a White House administration and a private sector organization. And so really what you have to do is look at the laws we already have on the books and then say what kind of safeguards is this U.S. based company going to follow based on the laws on the books? What types of inspection processes? What types of control processes? There is a playbook for doing this, even though this technology is new. And so we have to look at this playbook. The question is, is whether or not new rules and regulations are going to be codified. And I think that's the open question that NVIDIA is having to deal with. NVIDIA put in its 10-Q that it could be exposed to potential legal implications because of this 15% issue. What would it face in terms of legal issues? Well, if we end up codifying some type of a new barrier to the market in China or enforcing one of the existing regulations in a way that hasn't been enforced before, then in video would have to make the decision of am I now blockaded from actually selling to China, or do I have a lot of burdens on me that maybe don't exist for other companies who are selling technology to China? Remember, you've got big tech who's in China? Social media is in China. It's not just in video who is selling goods and services to China. And so they may decide, well, this is an undue burden placed on us. So they may decide to take on a lawsuit or they or they may find themselves answering to, for example, CFIUS. As you know, Tik Tok USA has had a lot of legal challenges and legal bills as it relates to how they operate and serious interpretations of how they operate. So I think they're just kind of looking at past cases, president precedent and then also looking at the president's remarks as a potential future precedent and deciding that there could be a risk for a long, protracted legal battle. Teresa, we heard from Jensen Huang. There's a $50 billion opportunity in this year alone in China, but push out five years. Does that exist at the rate that the Chinese government are trying to push their own companies away from the US tech stack? Yeah, it may not exist in the future. That is a tough one. All I can tell you is from the front lines of working with companies who have done business with China. It is a very tricky proposition and especially as it relates to cutting edge technologies, whether it's sort of like clean energy, whether it's computer technology. And it's very difficult and challenging to really understand what the regulatory environment is going to be and the protection for your intellectual property. You know, kind of the big elephant that we're not discussing and having all of these conversations is we have a new, more detailed report from the FBI on Salt Typhoon. And the findings from that report are stunning. We're talking 80 countries were impacted, not just the United States and the access to metadata, phone calls and other information. You know, this is one of those things. And China denies that they had any part in this. But this is one of those things where we're seeing sort of this vacuum cleaner effect of China basically vacuuming up intellectual property data, information to use it for economic espionage.

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Sharing AI Knowledge with Geopolitical Rival

Selling AI chips to China is like giving a rival access to your research and development lab, says former White House Chief Information Officer Theresa Payton. Payton, the CEO of Fortalice Solutions, discusses Nvidia’s possible sales to China with Caroline Hyde on “Bloomberg Tech.” (Source: Bloomberg)

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