Unlike the Nvidia CEO, Xi Jinping does not prefer the American technology stack for China AI

Nvidia CEO Jensen Huang discussed China with CNBC’s Jim Cramer Wednesday night:

HUANG: First of all, the China market is, of course, very large, but it’s also the home of 50 percent of the world’s AI researchers. The platform that succeeds is the platform with the most developers. Just like iPhone is successful because of lots of developers, Windows is successful because of lots of developers, all these platforms succeed because there are a lot of developers. China is home to 50 percent of the AI researchers in the world. And so we want the world to build on American technology stack. We want every developer in the world to prefer the American technology stacks. Once that happens, the developers develop on American technology stacks, American technology stacks will run AI the best all over the world. And so this is, that’s probably the most important strategic reason to be in China, because there are so many developers there and because the world is going to adopt technology from one country or another. And we prefer it to be the American technology stack…

CRAMER: But isn’t it true that the president has helped you immeasurably, the huge business that you’re doing in the Gulf states? When you see him, he obviously is, in many ways, NVIDIA’s number one salesperson. Is it asking too much to be able to say, and not only that, Mr. President, I also want you to open China?

HUANG: Well, we’re going to keep our dialogue going with the administration. And I believe that what we’re explaining is ground truth. And we understand the technology best, and we understand how computing works. We understand how AI works, and we have been in China for 30 years. And so this is an area that we have a lot of expertise, and we’re going to continue to share that.

Huang is not wrong, but his goal is at odds with that of Xi and the CPC, even if in the near-term PRC firms and government and military institutions would be happy to buy Nvidia chips as they are still better than the domestic alternatives.

The problem for Huang and Nvidia is that Xi Jinping made it clear at the April Politburo study session that he wants China to de-Americanize the AI technology stack:

Xi Jinping emphasized that to seize the initiative and gain the advantage in the AI field, breakthroughs must be achieved in fundamental theories, methods, tools, and more. We must continuously strengthen basic research, concentrate resources to overcome challenges in core technologies such as high-end chips and foundational software, and build an independent, controllable, and collaboratively functioning AI foundational hardware and software system [集中力量攻克高端芯片、基础软件等核心技术,构建自主可控、协同运行的人工智能基础软硬件系统]. We should use AI to lead a paradigm shift in scientific research and accelerate technological innovations and breakthroughs across various fields.

“An independent, controllable, and collaboratively functioning AI foundational hardware and software system” means a de-Nvidia’d Chinese technology stack.

I wrote about this last month in April Politburo Study Session on AI is bad news for Nvidia and included a full translation of the readout of the study session.

Huang can make his case to the media and to the US government, directly and through a growing army of lobbyists and proxies, but the ground truth in China is that there is a massive effort underway to de-Nvidia the AI technology stack, pushed from the top of the system.

It is obviou$$ why Huang does not want to lose the China market, and why lock-in to the Nvidia ecosystem is so powerful and profitable. But national security in both countries and geopolitics matter more than Nvidia revenue, and the reality now is that China is probably a lost cause for the company.

The full interview: