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Speaker 1: Bloomberg Audio Studios, podcasts, radio News.

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Speaker 2: Let's get back to Pittsburgh where the inaugural Pennsylvania Energy

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Speaker 2: and Innovation summits underway, and we're going to speak with

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Speaker 2: AI and Crypto taking center stage of the energy and

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Speaker 2: its digital future. Joining us now delighted, say David Sachs,

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Speaker 2: White House, AI and Cryptos, our senior policy advisor to

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Speaker 2: the President. David, welcome back. It's great to have you

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Speaker 2: as always on the program. The focus is good in video,

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Speaker 2: thank you, David. The focus is in video and AMD's

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Speaker 2: ability to now sell in a limited way chips back

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Speaker 2: into the Chinese markets. Just your reaction generally to that, well, we.

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Speaker 1: Saw of a policy of not selling our say of

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Speaker 1: the art advanced onmiconductors to China, and the Age twenty

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Speaker 1: is not that it's a heavily deprecated CHEF and that's

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Speaker 1: why the Biden administration allowed the sale of the Age

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Speaker 1: twenty to China. And this is a continuation of the

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Speaker 1: part in the larger rubric of the trade negotiations that

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Speaker 1: Secretary Besson was talking to you about. So this is

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Speaker 1: a heavily deprecated chip. I think that, like Secretary Besson said,

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Speaker 1: there are some things that China wants from us, or

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Speaker 1: are the things we want from China, And this is

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Speaker 1: all part of the overall trade negotiation.

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Speaker 2: David, you advised the President on AI policy as well

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Speaker 2: as cryptopolicy. Do you have any sense of when he

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Speaker 2: met with Jensen one last week at the White House,

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Speaker 2: what case mister Wang made to the President that it

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Speaker 2: was the right thing to get the American technology stacked

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Speaker 2: back into China.

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Speaker 1: Well, Jenson has been making the case publicly for competing

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Speaker 1: in China, and I think there are a lot of

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Speaker 1: merits to the argument. If you look at developments over

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Speaker 1: the past year. Huawei has advanced very rapidly. They have

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Speaker 1: a new technology called cloud Matrix, which networks together at

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Speaker 1: three hundred and eighty four of their Wawei assend chips. Now,

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Speaker 1: the Huawei chip is not as good as the Nvidia chip.

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Speaker 1: The Nvidia chip is three times more powerful. But if

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Speaker 1: you network together enough of those chips, you can route

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Speaker 1: force your way to a similar kind of result. And

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Speaker 1: that is what Huawei has been developing is is cloud

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Speaker 1: Matrix three eighty four. And there have been reports, including

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Speaker 1: from Bloomberg, that they've started exporting that technology or they've

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Speaker 1: been seeking to export it. So Huawei is becoming much

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Speaker 1: more competitive, and if you give the whole Chinese market

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Speaker 1: to Whuahwei, it's a huge subsidy for their R and

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Speaker 1: D right, and it basically forces Chinese companies that might

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Speaker 1: be willing to use AGE twenty to use the Huawei

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Speaker 1: chip and to basically figure out basically to figure out

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Speaker 1: the bugs, work out the kinks of the cloud matrix system,

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Speaker 1: and help Wahwei scale that up. So I think there

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Speaker 1: is a compelling argument here that you just don't want

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Speaker 1: to hand Huawei the entire Chinese market when Nvidia is

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Speaker 1: capable of competing for a big slice of it with

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Speaker 1: a deprecated, less capable chip. Again, we're not selling our

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Speaker 1: latest greatest chips to China, but we can deprive Whahwei

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Speaker 1: of basically having this giant market share in China that

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Speaker 1: they can then use to scale up and compete with

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Speaker 1: us globally. So I think this policy is nuanced and

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Speaker 1: I think it makes a lot of sense.

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Speaker 2: The reporter you're referring to that Bloomberg had was that

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Speaker 2: Huawei was going out to some of the Gulf nations

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Speaker 2: and also some of the Southeast Asian nations and offering

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Speaker 2: prior generations of their chip, but also the cloud matrix

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Speaker 2: that you mentioned, the concern being that in dealing with

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Speaker 2: third countries, you know, there be some Chinese access to

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Speaker 2: other nations technology. How involved have you been, David in

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Speaker 2: these kinds of talks and in framing that the presidents

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Speaker 2: thinking that actually just having direct access to lower performance

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Speaker 2: compute is okay with China right now?

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Speaker 1: Well, look, I don't want to I'm not going to

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Speaker 1: discuss what I talked to the President about, but I

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Speaker 1: mean I can tell you what I think, which is

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Speaker 1: that the Bloomberg story discussed how Huawei was basically trying

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Speaker 1: to make available the Huawei are certain CHEF, which is

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Speaker 1: their current chip, which is basically put together an a

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Speaker 1: rack system with cloud matrix to create a viable competitor

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Speaker 1: to in Nvidia, and I think it is a viable competitor.

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Speaker 1: I think in Nvidia and AMD and other American companies

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Speaker 1: have a better product. But if we don't compete across

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Speaker 1: the world, then we will hand the market to China.

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Speaker 1: And one of the reasons that the President went to

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Speaker 1: the Gold States on that trip is to encourage business

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Speaker 1: relations between the US and the Gold State, he signed

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Speaker 1: massive investment deals, and one of the deals that we

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Speaker 1: signed was this new AI Acceleration Partnership where we want

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Speaker 1: to create a pathway for the Gold States like UAE

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Speaker 1: to buy American technology, to buy American chips, and to

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Speaker 1: create data centers on the American tech stack. And I

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Speaker 1: can tell you that I don't quite understand why this

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Speaker 1: has proven to be so controversial in Washington, But where

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Speaker 1: these nations, like the Gold States, they have two choices.

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Speaker 1: They can go with an American technology or they can

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Speaker 1: go with a Chinese technology. And if you don't let

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Speaker 1: them buy the American technolog you're pushing them into the

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Speaker 1: arms of China. And a lot of people said, well,

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Speaker 1: China won't be ready to sell for years, But now

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Speaker 1: we see that there are reports that Huawei is out

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Speaker 1: there trying to sell an export the Huawei Assen chip.

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Speaker 1: So I think it's very important that we enable our

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Speaker 1: American companies to compete in the global market, that we

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Speaker 1: don't tie their hands, that we don't hobble them, because again,

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Speaker 1: this is zero sum game. That market share will either

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Speaker 1: belong to our companies like Nvidia, or it's going to

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Speaker 1: belong to Chinese companies like Huawei. There's a very simple

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Speaker 1: test for this, just look at market share. If five

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Speaker 1: years from now we look across the world and we

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Speaker 1: see that in Nvidia or other American companies have eighty

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Speaker 1: percent market share, it means that we won the AI race.

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Speaker 1: But if we look across the world in five years

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Speaker 1: and see that Huawei has eighty percent market share, then

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Speaker 1: it means that we lost the AI race. So I

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Speaker 1: think it's very important that we do everything we can

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Speaker 1: to encourage American exports to be sure. We can name

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Speaker 1: our security standards. But this is a very easy trust

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Speaker 1: but verify situation. You know, the chips that we're talking

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Speaker 1: about are really mainframe computers. They're eight feet tall, they're

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Speaker 1: thirty six hundred pounds. It's very easy to send inspectors

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Speaker 1: into data centers and count the server racks to make

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Speaker 1: sure that they're where they're supposed to be, so the

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Speaker 1: security concerns can be addressed. I understand that there are

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Speaker 1: some security concerns, but I think they're very easily handled,

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Speaker 1: and what we need to be doing is making sure

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Speaker 1: that we win the AI race globally by making American

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Speaker 1: technology the global standard and not Letting not creating a

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Speaker 1: Huawei Bolton Road.

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Speaker 2: Live on Bloomberg Television and radio worldwide, we're in conversation

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Speaker 2: with David Sack, Senior policy advisor for AI and Crypto.

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Speaker 2: The AI and cryptos are David. I wrote my news

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Speaker 2: that earlier this week about the analogy that Jensen Wong

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Speaker 2: has been using that the American technology stack should be

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Speaker 2: akin to the US dollar as the world's reserve currency.

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Speaker 2: That's how he would like the administration to approach it.

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Speaker 2: Do you share that view and see some truth in

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Speaker 2: that analogy.

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Speaker 1: Well, here's the way I see it, and this is

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Speaker 1: really I think a Silicon Valley view, because I'm ultimately

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Speaker 1: I've been a founder and investor in Silicon Valley for

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Speaker 1: twenty five years. And what we see is that the

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Speaker 1: winning technology companies are always the ones that create the

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Speaker 1: biggest ecosystem. They have the most developers on their platform,

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Speaker 1: they have the most apps in their app store, and

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Speaker 1: so they work very, very hard to create a partner ecosystem.

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Speaker 1: And I think that the United States needs to do

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Speaker 1: something similar with the American technology stack. We want the

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Speaker 1: most other countries using our technology, because again, it's a

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Speaker 1: zero sum game and It's not just the chips, it's

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Speaker 1: the operating system that runs on those chips, it's the

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Speaker 1: AI models that then are run in these data centers.

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Speaker 1: We want all of that to be American made and

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Speaker 1: American powered, and look to be sure. There are security

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Speaker 1: concerns and we can address them. I don't think that's

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Speaker 1: that hard. But if we hobble our American companies and

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Speaker 1: don't let them participate in the global market again, we

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Speaker 1: are creating. We are playing into China's arms and playing

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Speaker 1: into their digital soul. Wrote So I think, to me,

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Speaker 1: this is a pretty easy question. I think we do

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Speaker 1: want American technology to be the global standard. It is

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Speaker 1: a little bit like the dollar. There is a network

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Speaker 1: effect there. The reason why everyone loves the dollars because

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Speaker 1: they know that everybody else will accept it as well.

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Speaker 1: So we do want to have the strongest dollar. We

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Speaker 1: want to be the reserve currency, and we do want

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Speaker 1: our technology to be the global standard.

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Speaker 2: David Bloomberg reported this morning that on July twenty third,

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Speaker 2: the President's going to speak in an event titled Winning

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Speaker 2: the AI Race, which you and the rest of the

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Speaker 2: All In Pod team will be posting. Essentially, I guess

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Speaker 2: that's going to be a moment where we'll have a

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Speaker 2: more a fuller sense of what the President and this

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Speaker 2: administration's big picture AI policy is going to be, what

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Speaker 2: the big goals are going to be.

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Speaker 1: That's right. That's the President will be giving a keynote

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Speaker 1: address at the One Day AI Conference in Washington, DC

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Speaker 1: on July twenty third. It's co hosted by all In

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Speaker 1: and Hill and Valley Form, which is also a DC

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Speaker 1: and Silicon Valley policy group, and I think we'll be

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Speaker 1: giving us first major address on the topic of artificial

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Speaker 1: intelligence building on. There are mark studies giving here in

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Speaker 1: Pennsylvania today which are also AI related and related to

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Speaker 1: energy investment, the kinds of investments we have to make

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Speaker 1: to power the next generation of AI.

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Speaker 2: David, you've been speaking there in Pittsburgh this morning. What's

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Speaker 2: the main focus on the energy side of this AI story?

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Speaker 2: Energy security is a national security priority, but just simply

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Speaker 2: whether or enough whether we will have enough energy resources

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Speaker 2: to power the goals of META and the other hyperscalers.

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Speaker 1: Well, Pennsylvania is a huge energy producing state. I think

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Speaker 1: it's our second biggest energy producing state. They have abundant

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Speaker 1: natural gas, which I think in the near term is

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Speaker 1: going to be the power source for these data centers.

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Speaker 1: I think, you know, in about five years we could

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Speaker 1: start seeing nuclear scale up, and the administration believes in

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Speaker 1: that too. We want on all of the above approach.

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Speaker 1: But Pennsylvania is very big in natural gas, and there

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Speaker 1: are major investments being announced here for more for more

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Speaker 1: basically fracking, for more grid infrastructure, for more power generation.

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Speaker 1: All those things are needed to power data centers. AI

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Speaker 1: runs on GPUs that are incredibly power intensive, and these

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Speaker 1: data centers in the future are going to need more power.

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Speaker 1: And the one area I think where America is a

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Speaker 1: little bit behind. I mean, I think we're winning the

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Speaker 1: AI race pretty much at every level of the stack,

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Speaker 1: except that the size of our power grid has not

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Speaker 1: increased very much over the past decade. If you go

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Speaker 1: over to China, they've roughly double the size of their

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Speaker 1: electric grid over the past decade, where ours is only

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Speaker 1: gone up by a couple of percent a year. So

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Speaker 1: this is an area where we need to make major

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Speaker 1: new investments, and the President is coming to Pennsylvania today

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Speaker 1: to announce many of those investments. And I think this

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Speaker 1: has been a major priority the administration, and I think

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Speaker 1: You're going to see a lot more

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Speaker 2: Of this White House, AI and cryptos are David Sacks,

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Speaker 2: thank you very much, coming back on Bloomberg Tech