Hey everyone, welcome back to the Elon Musk Podcast. I'm thrilled to share some exciting news with you over the next two weeks. We're evolving. We'll be broadening our focus to cover all the tech Titans shaping our world. And with that, our show will become Stage 0. You'll still get the latest insights on Elon Musk, plus so much more, so stay tuned for our official relaunch at Stage 0 coming soon.
Now let's get into this episode. the US Department of Commerce told NVIDIA that it now needs an export license, one that will be required indefinitely before it can send its H2O artificial intelligence chips to China. Marks a new and unexpected escalation in Washington's ongoing effort to limit China's access to high performance computing technology.
Now, the H2O chip is Nvidia's most capable AI product currently permitted for sale in China under previous restrictions, and that status has now changed. In its regulatory filing, NVIDIA said the government justified the decision based on a perceived risk that the H2O2 might be used inside a supercomputer operated from Chinese territory. Now the news landed with a thud.
NVIDIA stock dropped roughly 6% in after hours trading, and the company warned of a $5.5 billion charge tied to the disruption in its next financial quarter, which ends April 27th. Now, the stakes are very high here. Nvidia's not just another tech vendor, it's the engine behind everything AI right now. This chips power nearly every major artificial intelligence platform, from Open a is Chat TPT to Metas Llama to China's most advanced homegrown models, too. Now that includes Deepseeks R1,
which is a reasoning focus. Large language model then emerged in January and briefly rattled the USAI sector with its unexpectedly strong performance. And some U.S. officials had already been pushing to tighten restrictions on H2O, concerned it could give Chinese firms A foothold to catch up or even surpass US advancements in certain types of model training. These concerns have materialized into formal policy now. Now, the backdrop to this decision involves more than tech
specs, though. This last week, reports emerged that NVIDIA CEO Jensen Wong had dinner with former President Donald Trump at Mar a Lago. Now he it was suggested that Wang usually use the opportunity to negotiate software restrictions on the H2O chip. A part of the reported discussion included NVIDIA pledging to increase its investment in domestic chip production.
Coincidence or not, NVIDIA followed up Monday by announcing it would spend hundreds of millions of dollars over the next four years to manufacture a portion of its AI chips in the US Now. The announcement was light on details such as which chips, in what quantity, and at which facilities, but was interpreted as a possible effort to placate regulators or demonstrate alignment with national
industrial policy goals. Now, the importance of the H2O chip specifically lies in its performance envelope. It was designed to skirt the limits set by earlier export rules while still offering enough horsepower to train large scale AI models. The video's intent was clear, though, to maintain a legal foothold in China's growing AI market without triggering additional controls. That calculation seems to have failed.
US regulators are now treating the H2O as too risky to leave unregulated, and by requiring a license that may never be granted or may come with added compliance burdens, the new rule effectively blocks widespread H2O shipments to China. And for NVIDIA, this development cuts off a major path for monetizing one of his most strategically engineered
products. And for China, it means fewer options for legally acquiring high performance AI hardware from the West. For policy makers, it raises the question of whether aggressive tech controls will yield the desired results or simply accelerate the decoupling of global AI ecosystems. Now, the broader context here is that AI capability is increasingly being treated as a matter of national power. Controlling who gets access to the best chips becomes a lever of international influence.
The US is making a bet that slowing China's access to top tier semiconductors will delay the country's ability to match American advances now. Meanwhile, Nvidia's trouble wasn't the only tech headline of the week. In a completely separate arena, Open AI is testing something with potentially massive consequences of its own a prototype social media platform built around ChatGPT. This is an internal project right now, still in the early phases. Now it includes a social feed
focused on AI generated images. And sources say open AICEO. Sam Altman has been quietly seeking feedback from trusted outsiders. It's not clear whether this product will launch as a standalone app or an added feature inside ChatGPT itself. But it's clearly more than just
a thought experiment. Now, Altman's move into social media would pit him directly against Elon Musk and Mark Zuckerberg, both of whom are already leveraging their platforms X and Meta to collect real time social data for training large language models. Altman has already made public jabs in that direction. When Musk offered to buy open AI for 97.4 billion in February, Altman responded no thank you. But we will buy Twitter for 9.74 billion if you want.
Our data is the current currency of modern AI. Platforms like X and Instagram are troves of constantly evolving human behavior. Owning a social app wouldn't just give Open AI more training data, it would give them something Musk and Zuckerberg already possess, an infinite stream of fresh content shaped by real people. Now. It's still unknown if Open AI will green light the social app for public release, though.
Even internally, the project is very experimental, but it's mere existence signals how the company is thinking about staying competitive as the race to lead an AI enters a new phase. Now let's get back to NVIDIA a little bit. It challenges it's challenge. Now let's get back to NVIDIA. It's challenges this week aren't just business problems, the geopolitical ones. Washington's new restriction signals a growing willingness to
weaponize technological exports. And for a company like NVIDIA, caught between demand and China and policy in the US, the path forward is now absolutely harder to navigate. the US just made Nvidia's business in China more difficult, and Open AI is thinking about launching a social media app. Both moves signal how AI companies are being pulled into new battles over power, access and control, and what control they have over you. Hey, I need a second of your
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