Daily: Trump officials defend H20 reversal
4 min read.
Highlights
Trump praises AI investments in PA. Trump visited Pennsylvania today, praising over US$90 billion of investments into AI infrastructure in the state. The administration has called winning the AI race against China a “top priority.”
More on allowing H20s. I’m not privy to the inner workings of the Trump administration, but the purported race to beat China in AI seem to be at odds with yesterday’s permission for Nvidia to start export AI chips to China again. More American AI chips is exactly what Chinese AI firms have been asking for. Commerce Sec. Howard Lutnick said that this reversal is part of a negotiation package, where China will release more rare earths exports to the United States. China’s control over rare earths is a chokepoint for several global supply chains. Perhaps there was some calculation made in D.C. that placed the importance of rare earths access over the restriction of AI chip sales.
AI czar David Sacks defended the reversal of restrictions by saying it was important to limit Huawei’s market share in China. However, Huawei’s sales are limited by the amount of chips they can produce, which Lutnick estimated to be capped at around 200,000 chips. There is huge domestic demand for chips, so I think the limiting factor is more likely to be Huawei’s capacity to supply, rather than demand being constrained by competition. Also, even if Sacks is right, Huawei has recently pushed for international sales of its chips to Middle East and Southeast Asia, so it could easily divert supply overseas, competing for Nvidia market share in those critical regions.
ASML down 29% yoy. ASML stock is down 29% over the past year, even as the AI boom fuels other companies in the value chain. Investors are concerned as orders are inconsistent and choppy and difficult to predict over the long run.
Thanks for reading.
1. Policy and Geopolitics
1.1
NYT (07/15): Trump Hails $90 Billion in A.I. Infrastructure Investments at Pennsylvania Summit
President Trump visited Pittsburgh on Tuesday to praise companies for investing more than $90 billion in data centers and other energy projects in Pennsylvania, aimed at accelerating the development of artificial intelligence.
The event was organized by Senator David McCormick, Republican of Pennsylvania, who brought together Trump administration officials and executives from technology and fossil fuel companies, including Amazon Web Services, Anthropic, Google, ExxonMobil and Westinghouse.
Trump administration officials have said that winning the artificial intelligence race with China is a top priority. Officials have also said they want to make it easier to approve new natural gas and nuclear power plants to supply the enormous quantities of electricity needed to supply data centers.
1.2
FT (07/16): Howard Lutnick says easing of Nvidia’s AI chip exports linked to China deal
Commerce secretary Howard Lutnick said the US’s reversal of restrictions on sales of chips to China followed recent trade negotiations with Beijing over rare earths.
President Donald Trump curbed exports of Nvidia’s H20 artificial intelligence chips to China in April as part of an escalation of his trade war with Beijing.
But a person familiar with the situation said the commerce department would start approving export licenses for these chips, after Nvidia on Monday said it expected to restart sales to Chinese companies.
Lutnick said on Tuesday the loosening of export controls had been part of recent trade talks between American and Chinese officials in London and Geneva as the two sides met in a bid to de-escalate trade tensions.
1.3
Bloomberg (07/16): Trump AI Czar David Sacks Defends Reversal of China Chip Curbs
White House AI adviser David Sacks defended the Trump administration’s decision to allow Nvidia Corp. and Advanced Micro Devices Inc. to resume sales of some artificial intelligence chips to China, reversing export curbs imposed by the US earlier this year.
In an interview Tuesday, Sacks said that allowing Nvidia to restart shipments of its H20 chips would position the US to compete more effectively abroad and blunt efforts by Chinese tech giant Huawei Technologies Co. to gain a bigger slice of the global market.
2. Economy, Finance, and Business
2.1
Bloomberg (07/15): AMD Says It Will Restart MI308 Sales to China After US Review
Advanced Micro Devices Inc. said that it plans to restart shipments of its MI308 chips to China after the US said it would approve the sales, following a similar decision on an Nvidia Corp. semiconductor.
2.2
Bloomberg (07/15): ASML’s Ability to Win From AI Boom Strained by Inconsistent Orders
Wall Street is showing concern as to whether ASML Holding NV can grow demand for the cutting-edge chipmaking machines it holds a monopoly over.
The Amsterdam-listed stock is down 29% over the past 12 months. Recent downgrades from Jefferies and Barclays signaled doubt that the artificial intelligence spending plans of ASML’s biggest clients can help drive sustained orders and near-term sales.
But many ASML machines still face export controls to China and there’s uncertainty over the durability of Chinese demand for the company’s other products. Elsewhere, ASML faces questions of if chipmakers will continue to prioritize the lithography tools it makes.
3. Technology
3.1
Reuters (07/15): Broadcom launches new Tomahawk Ultra networking chip in AI battle against Nvidia
Broadcom's chip unit unveiled on Tuesday a new networking processor that aims to speed artificial intelligence data crunching, which requires stringing together hundreds of chips that work together.
The new chip is the latest piece of hardware that Broadcom has brought to bear against rival AI giant Nvidia. Broadcom helps Alphabet's Google produce its AI chips, which are perceived by developers and industry experts as one of the few viable alternatives to Nvidia's powerful graphics processors (GPUs).
Dubbed the Tomahawk Ultra, Broadcom's chip acts as a traffic controller for data whizzing between dozens or hundreds of chips that sit relatively closely together inside a data center, such as inside a single server rack.
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