Speaker 1: Also media, Hello and welcome to Better Offline.
Speaker 2: I'm your host ed ZiT Tron. And of course you
Speaker 2: can go into the notes for the episode. You can
Speaker 2: take a look at links from a newsletter. You can
Speaker 2: go and buy some merch as always, but much more importantly,
Speaker 2: today I'm joined by the esteem Steve Burke of Gamers Nexus. Steve,
Speaker 2: thank you for joining.
Speaker 3: Us, Thanks for having me.
Speaker 2: So you did an incredible video on the black market
Speaker 2: smuggling of in videos AI GPUs into China, and then
Speaker 2: there has been a thing that's happened where the video
Speaker 2: has been pulled down due to a DMCA complaint from Bloomberg.
Speaker 2: What is happening?
Speaker 3: Yeah, it's so the video, it's really cool video where
Speaker 3: we went all over China finding these GPUs. As part
Speaker 3: of that, we included a recap of all the news
Speaker 3: of export controls or the US controls GPUs that are
Speaker 3: above a certain performance threshold and the allowance to export
Speaker 3: those to China by American companies, and so that was
Speaker 3: the story we wanted to look into. Okay, but they're
Speaker 3: still getting to China and so how is that? And
Speaker 3: as part of that recap, go through all the news
Speaker 3: we've got clips of you know, various politicians. There was
Speaker 3: a clip of Obama in there, and there was a
Speaker 3: clip of Trump in there, a couple of them talking
Speaker 3: about AI or GPU export control bands. Of course AI,
Speaker 3: I know ed is one of your favorite topics. Yes, yes,
Speaker 3: me as well. And yeah, so we received a copyright
Speaker 3: strike from small, small publication called the Bloomberg. Yeah. So
Speaker 3: that strike took the video offline and now we are
Speaker 3: currently challenging it. And so the strike was for specifically,
Speaker 3: I believe it was minutes twenty two until minute twenty
Speaker 3: three point fifteen in the video.
Speaker 2: Of Donald Trump speaking the President of America. Correct, Yes,
Speaker 2: that is ludicrous. And you went to New York specifically
Speaker 2: to have it out with them, did they Where do
Speaker 2: we stand as we speak, because this is going out
Speaker 2: in about a week from now. It's August twenty eighth,
Speaker 2: so who knows what twenty sixth even, I don't know
Speaker 2: what happened next.
Speaker 3: Yeah, if it goes out in about a week, then
Speaker 3: that'll be pretty close to when we should have an
Speaker 3: update from YouTube.
Speaker 2: Because the video is off right now.
Speaker 3: Correct, the video's gone. And it's very interesting how copyright
Speaker 3: strikes work because if basically the way it works is
Speaker 3: a company files a strike. They decide if there's infringement
Speaker 3: of some kind, and they file it. YouTube then basically,
Speaker 3: especially for comedy, Bloomberg size will automatically approve it. It's then
Speaker 3: up to the creator to dispute that the videos offline.
Speaker 3: During this entire process, any money from the video is
Speaker 3: held at least in escrow, and so then you can
Speaker 3: dispute it if you want. At that stage, YouTube then
Speaker 3: decides if it's going to accept your dispute. It accepted.
Speaker 3: Ours is written by a lawyer, so that makes sense,
Speaker 3: and then they step back and they're like, Okay, we're
Speaker 3: not involved anymore. It's between you guys. And so the
Speaker 3: party that filed the claimant, so Bloomberg here, has ten
Speaker 3: business days to file proof of lawsuits. So they if
Speaker 3: they submit to YouTube proof that they are suing us,
Speaker 3: which thus far as we record this, they have not,
Speaker 3: then at that stage YouTube would keep the video offline
Speaker 3: and they kind of let the two parties resolve that
Speaker 3: amongst themselves. If they don't submit any proof of a
Speaker 3: lawsuit or they don't file a lawsuit and then show
Speaker 3: YouTube that they've done so, again, they haven't at this point.
Speaker 3: Then basically in ten business days the video goes back up.
Speaker 3: We get fucked over for the ten days in between,
Speaker 3: and then the money, in theory should be released back
Speaker 3: to us, the ad revenue that was made from it,
Speaker 3: if it follows that course. But the biggest damage that's
Speaker 3: done is from the loss of momentum in those you know,
Speaker 3: total time period maybe thirteen days or so. But why would.
Speaker 2: Bloomberg do this? Are they really that attached to videos
Speaker 2: of Donald Trump? Or is it something else?
Speaker 3: I mean, I yeah, we talked about this in our
Speaker 3: video where we flew out to try and speak with them.
Speaker 3: I have a number of theories. We don't know their
Speaker 3: motive precisely, but you know, there's a few strange things
Speaker 3: going on where first of all, I've noticed that they
Speaker 3: have not claimed any or struck any that I'm aware
Speaker 3: of the re uploads of the video. So that's interesting
Speaker 3: because there's hundreds of them. It was just hours that
Speaker 3: want top initially. Secondly, we have used that clip before
Speaker 3: and that hasn't been stricken and so specifically in this
Speaker 3: black market video. And yeah, the theories we came up
Speaker 3: with were there's some competing content from Bloomberg where they
Speaker 3: attempted to do what we did. It was really a
Speaker 3: failed attempt. They tried to find smuggled ai GPUs in
Speaker 3: China as far as they kind of presented it in
Speaker 3: data centers, they were unable to do so they couldn't
Speaker 3: get any access. They filmed sand in the desert. They
Speaker 3: go home. There's also that's all they go. Yeah, they
Speaker 3: drive around at a desert, they point the camera at
Speaker 3: some buildings that are being constructed. They say, you know,
Speaker 3: there's ai GPUs in them their hills, and then that's
Speaker 3: about it.
Speaker 2: It's kind of funny that you you appear to on
Speaker 2: your own and with your with your team obviously able
Speaker 2: to get this access to these large legacy media people don't,
Speaker 2: which it's meant to be the other way around based
Speaker 2: on what everyone says.
Speaker 4: So what is it the makes your approach.
Speaker 2: Different to bloombugs, Like why did you get stuff that
Speaker 2: they didn't?
Speaker 3: I think rather than just the desert, right, Yeah, Well,
Speaker 3: to be fair, we did not film the desert, so
Speaker 3: they did have an exclusive there. But I think it
Speaker 3: comes down to the approach where we looked at it
Speaker 3: like this is an interesting concept, this idea of black
Speaker 3: market GPUs, But from my point of view, we approached
Speaker 3: it as well, let's just see what are the people
Speaker 3: involved in this chain think and do they think it's
Speaker 3: a black market or do they just think it's a market.
Speaker 3: And a lot of the people we worked with were just,
Speaker 3: I think, amused at the concept of being involved in
Speaker 3: the media process and wanted to see how it works.
Speaker 3: And so I honestly, I think a lot of that access,
Speaker 3: especially to the people who are just sort of like
Speaker 3: normal people. They're not these big, you know, executives at
Speaker 3: some huge corporation. They're they're middleman and they're people transacting
Speaker 3: GPUs on the ground. I think for them, if you
Speaker 3: go into it without this free supposition of some kind
Speaker 3: of particular i don't know, leaning or ethics of whether
Speaker 3: what they're doing is or isn't okay or whatever, or.
Speaker 2: Even expecting what you'll find exactly.
Speaker 3: Yeah, I think if you go in with an open
Speaker 3: mind of like we're just gonna hang out with this
Speaker 3: guy for a day and just observe his job, people
Speaker 3: are you know, they're pretty happy to share that.
Speaker 2: So, yeah, how did you actually start those? So you
Speaker 2: you came up with the idea that you wanted to
Speaker 2: see how elicit GPUs making it into China. Did you
Speaker 2: have contacts in China or Hong Kong and so on
Speaker 2: that you talk to in advance and they kind of say, oh,
Speaker 2: if you come here, we can show you this. What
Speaker 2: was the process?
Speaker 3: Yeah, the process was really cool. We're still kind of
Speaker 3: learning how to iterate on this, but each time we're
Speaker 3: The big thing we learned this time for this investigation
Speaker 3: was really just trying to that first contact matters a lot,
Speaker 3: and being able to work with that first person we
Speaker 3: find to then find their contacts and kind of follow
Speaker 3: the chain down the line. And so the first guy
Speaker 3: we found is a professor at the Chinese University of
Speaker 3: Hong Kong. He buys and uses these high end GPUs
Speaker 3: in servers for educational purposes and research purposes. And as
Speaker 3: soon as we made contact with him, we were able
Speaker 3: to work with someone who first of all speaks you know,
Speaker 3: native level excellent English, so that certainly helped. And then
Speaker 3: secondly who has a lot of local knowledge and contacts.
Speaker 3: And I think a lot of it is just kind
Speaker 3: of knowing which, in our case, which link in the
Speaker 3: chain you need next to make the story makes sense.
Speaker 3: So in his case, he's a user of these GPUs.
Speaker 3: So next we need is some kind of supplier, you know,
Speaker 3: and then we need their supplier.
Speaker 2: Yeah, so what it's all quite complex. I did watch
Speaker 2: the video and it was it was what three three
Speaker 2: hours or so or more even really wonderful. And so
Speaker 2: what exactly are the GPUs that are restricted? Was it
Speaker 2: just aigpus? Was it like consumer level ones as well?
Speaker 2: What is exactly being handed around?
Speaker 3: It's both. So on the high end side, there's some
Speaker 3: smuggling and presence of these data center class GPUs, so
Speaker 3: that'd be things like EH one hundreds, Hopper one hundreds,
Speaker 3: A one hundreds. We actually physically saw several of those
Speaker 3: and things like that. On the consumer side, there aren't
Speaker 3: as many restricted consumer GPUs, but there are a few.
Speaker 3: So the RTX fifty ninety is one of them that
Speaker 3: has thirty two gigabytes of video memories. That's very valuable
Speaker 3: for these use cases. The ARTAX forty ninety actually is
Speaker 3: another one, and that one's kind of amusing because it's
Speaker 3: so GPU right, yes, consumer GPU, yeah, and last gen
Speaker 3: consumer GPU at that, but it's easily modified to carry
Speaker 3: double the video memory as the actual official end video
Speaker 3: spec and the skew so they can increase it from
Speaker 3: twenty four to forty eight gigabytes of memory, which is
Speaker 3: extremely valuable for these training and LLM type tasks where
Speaker 3: it may be a last gen So it's technically a
Speaker 3: little bit slower, but if you can fit it in memory,
Speaker 3: you can still run it, versus if you can't fit
Speaker 3: it in memory of the model you made, not be
Speaker 3: able to run it at all. And so those are
Speaker 3: the consumer cards the forty ninety. That was interesting because
Speaker 3: one of the guys we spoke to who is effectively
Speaker 3: a buyer and seller of these band GPUs, he was
Speaker 3: asking me on camera. He was seeking confirmation of well,
Speaker 3: but are you sure the fifty nineties banned? Yeah? And
Speaker 3: I said, yeah, I'm sure. Here it is on the list.
Speaker 3: And he was so confused because he said, but they're
Speaker 3: just all over the market next door. We walk over
Speaker 3: there and there's dozens of them.
Speaker 2: So it's so strange as well, because it doesn't seem
Speaker 2: like you basically walked off the plane and had a
Speaker 2: price sheet from just a guy, Like it wasn't clear
Speaker 2: how you got the price sheet exactly. Perhaps you can't say,
Speaker 2: but it was just Yeah, these things a band other
Speaker 2: than the fact we have just like guys who sell
Speaker 2: them literally everywhere. Yeah, getting in.
Speaker 3: So there's a couple of ways. The one of the
Speaker 3: ones that we showed in the video is really interesting.
Speaker 3: To the very end of the process. We actually this
Speaker 3: is one of the reasons we delayed initial publication. We
Speaker 3: were able to, with help of a viewer, locate someone
Speaker 3: you could actually classify as a smuggler in the US.
Speaker 3: So someone from China in the US.
Speaker 5: And.
Speaker 3: He buys GPUs from people in the US. He drives
Speaker 3: around all over and buys most through forty nineties, which
Speaker 3: are in a high demand in China, and then he'll
Speaker 3: strip those downs that could be removing the cooler. I
Speaker 3: don't think this particular guy disolders them. I've heard stories
Speaker 3: of some people desoldering GPUs and mailing them that would
Speaker 3: reduce your shipping costs a lot, increase your margin. But
Speaker 3: he buys the forty nineties ships the boards back his
Speaker 3: profits about three hundred dollars US per board before taxes.
Speaker 3: It wasn't a one hundred percent clear if he does or
Speaker 3: doesn't pay taxes. And then at that point, once they
Speaker 3: are either shipped into Hong Kong or Macau directly if
Speaker 3: they feel gutsy enough, or indirectly through a third country,
Speaker 3: a middle country where there is no export control, you know,
Speaker 3: then they arrive and they get redistributed from there. There's
Speaker 3: sometimes hand carried as well, like by students, international students
Speaker 3: who just fly back with a fifty ninety. They bought
Speaker 3: it best Buy or something, and they can double their
Speaker 3: money roughly if they're lucky.
Speaker 2: That's so, it's wacky that there is such a big
Speaker 2: black market, but I guess the export bends just created it,
Speaker 2: as did this whole AI, this crazed AI moment. Did
Speaker 2: in fact, while you were over over in Hong Kong,
Speaker 2: did you actually go to China or can't remember? It
Speaker 2: was just in home? So did you? This is an
Speaker 2: anecdotal thing. How was the pressure of AI there? How
Speaker 2: big was the conversation the advertisement? Did you see it
Speaker 2: on the same level? It's fine if you didn't, I'm
Speaker 2: just curious.
Speaker 3: I saw it more in Taiwan, which we went to
Speaker 3: as well. So yeah, after the China trip, we went
Speaker 3: over to Taiwan, and I don't think it made it
Speaker 3: into the cut, but we shot a short clip of
Speaker 3: just a bus, like a public bus with a gigantic
Speaker 3: AI the laptop advertisement on it. So I would say
Speaker 3: it's kind of at least there, it's similar to what
Speaker 3: you see here where it's you know, if you're anywhere
Speaker 3: in the vicinity of a best Buy or a city
Speaker 3: that has technology dealers, then you're gonna see AI ads
Speaker 3: In China, Yeah, I saw it in the tech markets
Speaker 3: for sure, some banners, but it just it. I don't know.
Speaker 3: That's I only understand Chinese if I'm actively trying to
Speaker 3: understand it, you know. So it's I think a lot
Speaker 3: like it's filtered out for me, right, Yeah, I was good.
Speaker 2: Yeah, I assume you speak some You seem to speak
Speaker 2: some Chinese. I can't speak anything but English, so I
Speaker 2: could not correct your Chinese, doll.
Speaker 3: You do speak more proper English than I do, though,
Speaker 3: so I'll.
Speaker 2: Get Yeah, yeah, I speak all kinds of it. These days.
Speaker 2: It's not going well. People criticize my accent all the time.
Speaker 2: So as far as how the government sets these limits,
Speaker 2: one thing he did really eloquently towards the beginning of
Speaker 2: the video as well, was he kind of went through
Speaker 2: how arbitrary the limits seemed to be and how in
Speaker 2: Video seems very capable of adapting around them to the
Speaker 2: point they almost doesn't make sense.
Speaker 3: Yeah, yeah, they they've modified the regulations a few times.
Speaker 3: And it's it's so this particular part I don't really
Speaker 3: blame and video for for this, which is just trying
Speaker 3: to you know, the government sets some regulations and a
Speaker 3: company says, okay, we'll comply with these, and then they
Speaker 3: comply with them, and then the government kind of says
Speaker 3: no weight not like that.
Speaker 2: Yeah, that's very standard for pretty much or regulation. It
Speaker 2: maybe it's good or bad what have you, but it's not.
Speaker 2: It happens all the time with companies.
Speaker 3: Yes, And in this case, one of the things that
Speaker 3: as the I guess AI world developed and the applications,
Speaker 3: one of the things that changed was this understanding that
Speaker 3: memory capacity is basically the most important aspect of it.
Speaker 3: And the initial versions of the formula didn't consider memory
Speaker 3: in any scenario. What I remember, it was based on
Speaker 3: the marketed flops of performance on the spec sheet multiplied
Speaker 3: against the bit length of the operation or something like that,
Speaker 3: and they later added memory bandwidth. Memory capacity though is
Speaker 3: still as far as I'm aware right now, is still
Speaker 3: not considered in the formula.
Speaker 2: Yeah, it just it feels just arbitrary. But I imagine
Speaker 2: also it's quite difficult to find a way to do this,
Speaker 2: especially when the people setting the regulation might not have
Speaker 2: the best handle on computers.
Speaker 3: Yeah, I think I think the best way to do
Speaker 3: this would probably be if they wanted to and I'm
Speaker 3: not I don't have a particular one way or the other,
Speaker 3: but if they wanted to control it, I think the
Speaker 3: best way is probably some kind of benchmark or set
Speaker 3: of benchmarks, just like you would do for a review,
Speaker 3: where you know, you say, okay, if it exceeds some
Speaker 3: performance threshold in this real world use case or multiple
Speaker 3: of them in aggregate, then it's control, it's export controlled.
Speaker 3: But instead they just kind of calculate based on the
Speaker 3: spec sheet and the companies that make these things. Obviously,
Speaker 3: you know, full appropriate credit to Nvidia. The company is
Speaker 3: extremely confident with making GPUs. They know what they're doing,
Speaker 3: and they're going to know a lot more about how
Speaker 3: to tweak those dials to comply then a government agency
Speaker 3: will so.
Speaker 2: So on the subject of Nvidia knowing things, do you
Speaker 2: think that do they seem aware of any of this,
Speaker 2: like any of any of this smuggling happening. Do they
Speaker 2: seem to Did you get any comment out of them?
Speaker 3: We asked a lot of the people in the chain
Speaker 3: what their perception was of Nvidia's awareness, and so the
Speaker 3: professor at the Chinese University of Hong Kong, he had
Speaker 3: a great answer when I asked him, do you think
Speaker 3: Nvidia knows? And he kind of he paused for a second,
Speaker 3: and then he said, how could they not? You know,
Speaker 3: like these things are very expensive. You've got thirty plus
Speaker 3: thousand dollars GPUs and it just seems like they would
Speaker 3: all be tracked. So what was the term?
Speaker 2: There was a specific terms like kind of like basically
Speaker 2: equivalent of ignoring him.
Speaker 3: Yeah, so the Chinese has done eg and b egn,
Speaker 3: which means open one eye, close one eye, or turn
Speaker 3: a blind eye? Is the idiot?
Speaker 2: Yeah, And that's awesome.
Speaker 3: It's just very cool. Yeah, it's super I mean the
Speaker 3: coolest part about that was multiple people said that exact
Speaker 3: idiom and it's it's just it's such a specific choice
Speaker 3: of words. It'd be the same as if you asked
Speaker 3: like three people a question, you know, they all said, oh,
Speaker 3: they turn a blind eye. At some point you're like, Okay,
Speaker 3: this seems to be a really consistent belief here, But yeah,
Speaker 3: I think from a video standpoint, it's whether or not
Speaker 3: they want to actually control what gets in. It's hard
Speaker 3: to say. Certainly, from a pure financial standpoint. The more
Speaker 3: gps they sell, the more money they make that they
Speaker 3: probably don't really care who they sell them to as
Speaker 3: long as they sell them to someone and then where
Speaker 3: they end up after that. I mean, maybe to the
Speaker 3: extent that video doesn't want to piss off the United
Speaker 3: States government. They you know, they try to comply as
Speaker 3: much as they reasonably can. But how much do they
Speaker 3: actually try to control ingress into a country that's export controlled.
Speaker 3: It's hard to say, But certainly I think they are
Speaker 3: aware of this happening, and I just I have a
Speaker 3: really hard time believing that they are unaware their gps
Speaker 3: are making it into China when they shouldn't be.
Speaker 2: And I imagine it must be quite hard to stop.
Speaker 2: Like I hate to have any sympathy for in video,
Speaker 2: but it does. It does feel like something that would
Speaker 2: be kind of a moving target. Because one thing that
Speaker 2: was consistent across the whole video was the ingenuity of
Speaker 2: the people involved. It does make you see like American
Speaker 2: entrepreneurs sometimes and they're like, oh, yeah, it's tough to
Speaker 2: you know that the hours are very tough, and you know,
Speaker 2: I was covering all not and all of these guys
Speaker 2: were just like, yeah, I've got a thing in the
Speaker 2: back of my car full of wires. Yeah I've got
Speaker 2: I have a whole rig.
Speaker 3: Yeah it's crazy, and that is I mean again, you know,
Speaker 3: from that particular side of things, I don't suspect. I mean, look,
Speaker 3: it's a government regulation, and if the government wants to
Speaker 3: regulate it, it's kind of up to them. Obviously the
Speaker 3: companies need to comply with it, but I wouldn't expect
Speaker 3: a company, even Nvidia, to send in any kind of enforcement.
Speaker 3: Maybe what they would do is if they wanted to
Speaker 3: enforce it, you know, they might identify, Okay, this purchaser,
Speaker 3: there's evidence of this purchaser exporting to China anyway, and
Speaker 3: so we're just gonna stop selling to them or something.
Speaker 3: But that's kind of I think the most you might
Speaker 3: expect of them. But yeah, as far as the ingenuity,
Speaker 3: it was pretty crazy. Like the guy in the US
Speaker 3: who buys the cards, he he just got a Prius
Speaker 3: with a massive like battery bank in the back, like
Speaker 3: a ups with a lithium ion battery in it. He's
Speaker 3: got a test bench hooked up to it, an ATX
Speaker 3: test bench. Pops the trunk open. He's got a spare
Speaker 3: license plate in the trunk for some reason. I don't
Speaker 3: know why. Uh, that's not to ask. Yeah, I don't
Speaker 3: need to know. And uh yeah. And if you want
Speaker 3: to sell him your card, you're just some American new
Speaker 3: found him on Facebook Marketplace. He at the time we
Speaker 3: were talking with him, he was paying two thousand dollars flat.
Speaker 3: He makes three hundred when he sells it, and you
Speaker 3: bring them the card, meet him wherever he tests it,
Speaker 3: and in the back of the you know, in the
Speaker 3: trunk of the car, he just runs a benchmark, make
Speaker 3: sure it's good, and then buys it and ships it
Speaker 3: back or carries it back, depending on how secure he feels.
Speaker 3: And then also to your point of ingenuity, the shops
Speaker 3: that are capable of modifying cards, where they're just they're
Speaker 3: repair shops, and they just happen to be really good
Speaker 3: at board level BGA or ballgrid array device repair or
Speaker 3: or swapping, so they can pull memory modules. They can
Speaker 3: add memory modules, swap the GPU between PCBs, and they're
Speaker 3: able to keep Silicon in service where you know, they're
Speaker 3: just repair shops, so it's kind of like from their perspective, look,
Speaker 3: they're not doing anything illegal in China, they're just keeping
Speaker 3: boards in service. But for people who need these high
Speaker 3: capacity GPUs for AI tasks and they having to be
Speaker 3: export controlled, a shop like this would be capable of
Speaker 3: taking a card that has died, you know, through through
Speaker 3: use or just needs to be upfit to be better,
Speaker 3: and they can do that for pretty cheap and basically
Speaker 3: in a couple hours.
Speaker 2: And it's not illegal to sell them in China once
Speaker 2: they are there, right, They've like that is not a
Speaker 2: like China is not prosecuting people for any of this.
Speaker 3: Correct that it is not illegal to own or sell
Speaker 3: these GPUs or buy them in China. It's legal if
Speaker 3: you are an American company, if you're Nvidia or your
Speaker 3: best buyer or a partner or whatever. It would be
Speaker 3: illegal to sell the export controlled cards to a company
Speaker 3: or an entity or person in China. But once it's there, yeah,
Speaker 3: there's no real control over it. The only the only
Speaker 3: place that we found that China steps in is if
Speaker 3: there's some kind of undeclared ingress through port. So like,
Speaker 3: for example, there were CPUs and GPUs at various points
Speaker 3: in the last several years that were smuggled in with
Speaker 3: creates of live lobsters or prosthetic baby bombs.
Speaker 4: But was that real?
Speaker 2: Was the lobes the thing real?
Speaker 3: The lobster things real? Despite what Nvidia said.
Speaker 4: Hell yeah, I love the So what actually describe the full.
Speaker 2: Loves the situation? I think everyone wants will want to
Speaker 2: hear it over lobs.
Speaker 3: Yes, So the loster situation as it were is basically
Speaker 3: there was a Hong Kong uh port, so customs intercepted
Speaker 3: a white van I think it was. There's like a
Speaker 3: customs post they post photos of the things that they
Speaker 3: are able to snipe being brought in improperly. So Hong
Speaker 3: Kong's a free trade port, but there's still certain declarations
Speaker 3: you have to make and sometimes people won't make those.
Speaker 3: And so there was a van bringing in crates of
Speaker 3: undeclared live lobsters driving on I think it was the
Speaker 3: Macau or the jew Hai Bridge or something. But anyway,
Speaker 3: they got intercepted and alongside the live lobsters were GPUs
Speaker 3: and they were older, so I think they were quadros,
Speaker 3: but they're brought it all being brought in improperly. And yeah,
Speaker 3: so customs post the thing. They're like, we found this,
Speaker 3: you know, and I think that's just kind of like
Speaker 3: the here's us doing our job and maybe scared people
Speaker 3: off or whatever. And then later AI startup Anthropic released
Speaker 3: a statement talking about how there needed to be more
Speaker 3: strictly enforced export control in the US, and they mentioned
Speaker 3: smuggling of GPUs with lobsters, and Vidia responded and I
Speaker 3: don't have their statement in front of me right now,
Speaker 3: but it was something along the lines of it would
Speaker 3: be better if American you know, AI companies would focus
Speaker 3: on innovation rather than the part I do remember was
Speaker 3: tell tall tales of prosthetic baby bump smuggling or GPU's
Speaker 3: sensitive electronics being smuggled with live lobsters. Turns out that
Speaker 3: is not a tall tale. That is a thing that happened.
Speaker 2: So, yes, this is the thing people say. Jensen Wong
Speaker 2: is cool. If you're cool, you say, yeah, well, our
Speaker 2: chips like, we don't like this happening. This is bad,
Speaker 2: but doing everything we can't stop it. But yeah, they're
Speaker 2: doing James bondshit to get our GPUs, Like, come on,
Speaker 2: you could just say that, like they do seem a
Speaker 2: little sensitive, and we're we're recording this the day before
Speaker 2: their earnings, and I got no idea what's going to happen,
Speaker 2: No one does. Everyone's a bit everyone's a bit worried
Speaker 2: about it. So it's I think it. The China market
Speaker 2: is going to get extremely interesting because they've got the
Speaker 2: H twenty band. But now the H twenty band has
Speaker 2: been lifted, and now we're in this weird spot where
Speaker 2: I don't know if you've heard anything about this yourself,
Speaker 2: where there are suggestions that the Chinese government is actively
Speaker 2: saying not to buy in video GPUs. If you heard
Speaker 2: anything about that.
Speaker 3: Yes, So the Chinese government, I believe it's called the
Speaker 3: Cyberspace be a security agency or something like that, but
Speaker 3: one of their government agencies put out a statement following
Speaker 3: separate statement from a state owned or at least state
Speaker 3: you know, controlled in some capacity media report where the
Speaker 3: statement said or at least floated the possibility that Nvidia's
Speaker 3: H twenties may have some form of spyware in them.
Speaker 3: And so the suggestions we're tracking or government back doors,
Speaker 3: and so that was kind of the accusation, and Vidia
Speaker 3: of course posted a statement saying absolutely not, this is
Speaker 3: not a thing, and you know, just to be fair here,
Speaker 3: there's not currently, as far as we're aware of, any
Speaker 3: firm evidence of this. But I'm also sure that governments
Speaker 3: know things about you know, about products from other nations
Speaker 3: that we would never know anyway, So who knows. But
Speaker 3: that's where it stood. Nvidia said, we don't have these.
Speaker 3: China's agency said to companies in China that they should
Speaker 3: be wary of using H twenties and advised against purchasing
Speaker 3: them for fear of some kind of backdoor or spyware.
Speaker 2: So how realistic would it be for Actually, did you
Speaker 2: hear any scuttle about around this of switching to Huawei
Speaker 2: chips or something?
Speaker 3: We did ask? Yeah, I think we might have only
Speaker 3: kept one of those questions in the actual video, but
Speaker 3: I did ask a lot of people Huawei from the users' perspectives,
Speaker 3: the people we spoke to, they none of the people
Speaker 3: we spoke to are using Huawei components right now, so
Speaker 3: they're getting more powerful from what I understand, I think
Speaker 3: there's a few hurdles. One of them is. It's kind
Speaker 3: of the same reason where the companies aren't even really
Speaker 3: using AMD and they've been doing this for a while,
Speaker 3: whereas Huawei is pretty new. And a lot of that
Speaker 3: comes down to Kuda, where Nvidia is the proprietor of Kuda,
Speaker 3: which is a library they can use to accelerate tasks
Speaker 3: in which a lot of software is written to use,
Speaker 3: I mean even just rendering a video.
Speaker 2: It's the coding language to get accelerate computing, right, correct, Yeah,
Speaker 2: specifically on Nvidia GPUs.
Speaker 3: Though, yes, it specifically works on Nvidia and nothing else,
Speaker 3: and so AMD would have to use i don't know,
Speaker 3: open cl or something else, depending on like for video encoding,
Speaker 3: you maybe use open CL. But that's the biggest limitation
Speaker 3: where a lot of the sort of so called AI
Speaker 3: tasks are reliant on Kuda to operate at any reasonable speed.
Speaker 3: And so until there's a big push to move away
Speaker 3: from that, it's Nvidia GPUs all the way down, you know. So,
Speaker 3: and maybe the push is export control. Maybe the groups
Speaker 3: in China that need a higher volume of GPUs than
Speaker 3: they're able to easily get of actually say okay, let's
Speaker 3: just let's put all of our resources on trying to
Speaker 3: use open Seattle or use something out of or PyTorch
Speaker 3: or whatever, so that may be the direction that goes.
Speaker 2: Yeah, it just feel it does actually feel like Couder
Speaker 2: is the thing that needs to be broken here for
Speaker 2: better or for worse. I'm just saying that there's a
Speaker 2: lots of talk about oh, making more powerful chips here
Speaker 2: and there with AMD or Huawei, but it feels like
Speaker 2: couder really is the thing that they actually need to change.
Speaker 2: And I guess the probably explaining to the markets what
Speaker 2: Couder is is difficult enough, but it feels that that
Speaker 2: if they could move past Kuda, that would be the
Speaker 2: actual thing that we're doing.
Speaker 3: Yeah, it's kind of like the X eighty six situation
Speaker 3: where getting off of X eighty six.
Speaker 2: Just for the listeners, what do you what do you
Speaker 2: mean by that?
Speaker 3: Yeah, So your average computer is very likely an X
Speaker 3: eighty six computer, which is a specific micro architecture that
Speaker 3: has to do with how software runs and interacts with
Speaker 3: the hardware and the other so around the system. And
Speaker 3: so it's kind of like a prerequisite for you might
Speaker 3: have an application that requires Windows to be compatible, and
Speaker 3: this is another one of those types of foundational prerequisites. Okay,
Speaker 3: X eighty six as opposed to for example, ARM and
Speaker 3: ARM laptops made kind of a splash a while ago
Speaker 3: because they were trying to basically assert that, hey, look
Speaker 3: we can run stuff that typically would only run on
Speaker 3: an old X eighty six micro architecture and now we
Speaker 3: can run it on ARM. And so it's that is
Speaker 3: something where Intel an AMD, although mostly Intel have a
Speaker 3: vested interest in keeping everything on x eighty six, and
Speaker 3: likewise on Vidia has an interest in keeping things on Cuda.
Speaker 3: From an end user standpoint, there are benefits to this
Speaker 3: where Kuda, for me, for rendering a video, it just
Speaker 3: works better than something else, right, right, And so it's
Speaker 3: kind of it is a chain or the egg problem
Speaker 3: where it's it's kind of like, well, okay, you know,
Speaker 3: on one hand, you don't want a company to develop
Speaker 3: the monopoly only because there's some kind of anti competitive
Speaker 3: practice that's keeping them in place. On the other hand,
Speaker 3: you don't want to punish a company either for inventing
Speaker 3: something that's just better. And that The problem we run
Speaker 3: into with software is the developers need to choose what
Speaker 3: to support, and a lot of times they choose n
Speaker 3: video and maybe not something else, because if you have
Speaker 3: limited resources, you're going to go with what ninety percent
Speaker 3: of the market has. It's kind of a self fulfilling,
Speaker 3: you know, it to feedback loop basically. So to expand
Speaker 3: it to something like Huawei, they would have to break
Speaker 3: that kuda. I don't know if you want to call
Speaker 3: it a moat or something like that, but or a
Speaker 3: walled garden I guess either one of those or a
Speaker 3: walled garden with a moat around it. But they would
Speaker 3: have to break that down to really become more viable
Speaker 3: and increase the performance.
Speaker 2: So before we go, did you catch any black Well
Speaker 2: out there or any signs that black Well would even
Speaker 2: make it out there?
Speaker 3: Yeah, So in addition to the fifteen nineties which are Blackwell,
Speaker 3: as far as like the high end server stuff, we
Speaker 3: did work with. So there's two companies we worked with here.
Speaker 3: One of them we physically visited in Taiwan, and there's
Speaker 3: another one we were talking to in Stapore. And what
Speaker 3: we learned is that there is some intermediary basically passed
Speaker 3: throughs that can happen through for example, a Taiwanese testing
Speaker 3: agency where a Chinese company might ask them to purchase
Speaker 3: Blackwell servers or high end Hopper servers and bring them
Speaker 3: into Taiwan under their company performed testing or pre testing
Speaker 3: on them, assembly, whatever, packaging, whether it's a facade or not,
Speaker 3: basically the stated purposes, make sure it all works, and
Speaker 3: then once it does, forward that shipment to their customer,
Speaker 3: the Taiwanese company's customer in China, and so that would
Speaker 3: allow them to potentially get into China. And so in
Speaker 3: that situation, yeah, we were showing a room filled with
Speaker 3: for example GB or Grace Blackwell servers that were being
Speaker 3: tested and prepped.
Speaker 2: Yeah, well I'm gonna I think we should wrap it there, Steve. So,
Speaker 2: the status of the video right now as we record
Speaker 2: this is it's offline. But by the time this goes live,
Speaker 2: you know, in I think September the third, it will
Speaker 2: go up. Hopefully it's back on. Where can people support.
Speaker 3: You gamers and access just the YouTube channel is the
Speaker 3: best place to go. And yeah, hopefully it's back up
Speaker 3: within It should be within a couple of days of
Speaker 3: you posting this, unless Bloomberg submits a files a lawsuit,
Speaker 3: in which case they'll hear about you. Everyone will hear
Speaker 3: about it.
Speaker 2: Oh and no hear about it from me as well.
Speaker 2: This is utter bullshit what Bloomberg is doing. It's ridiculous.
Speaker 2: But you have been listening to Better Offline. I'm at
Speaker 2: Zetron Steve. Thank you so much for joining us, and
Speaker 2: yeah we can do something in a couple months as well,
Speaker 2: but always push to having you ma'am.
Speaker 3: Thank you right, thanks so much.
Speaker 1: Thank you for listening to Better Offline.
Speaker 2: The editor and composer of the Better Offline theme song
Speaker 2: is Matasowski. You can check out more of his music
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