Tech Newsround – Nvidia & Amazon

Nvidia – Becoming futile.

• Nvidia is meeting with China to pave the way for its new chip, but the reality is that any new chip that meets the new restrictions is likely to be so compromised that the Chinese may as well use their own.
• The net result is that while Nvidia may end up losing the entire Chinese market to local versions, the restrictions will ensure that these variants are uncompetitive overseas.
• Hence, there will be greater revenues and profits for Nvidia outside of China, although in the short term, losing the Chinese market will put a dent in financial performance.
• Jensen Huang is expected to be in China next week, where he will be working on relationships with the Chinese state as well as explaining how he can deliver a great chip and comply with the regulations at the same time.
• The new chip will be a stripped-down version of its market-leading Blackwell processor, but given that even the H20 has too much performance to meet the regulations, I am not convinced that it is worth the effort.
• Jensen’s frustration is understandable as he has by far the leading product in a market that could be worth $50bn in China alone, and he is missing out on it due to regulations that he argues have failed.
• I disagree with this view because, for once, Jensen is not thinking long-term enough.
• The chip restrictions will ensure that all of the Chinese competitors, current and future, will be unable to compete with Western technology when it comes to cost and efficiency, meaning that the days of cheap Chinese technology are over.
• This means that Nvidia will win more business in non-affiliated countries that might have otherwise chosen Chinese technology.
• Consequently, I think that whatever Nvidia loses in China, it will more than get back elsewhere, meaning that it should consider the Chinese market as a lost cause.

Amazon – The Backstop.

• Amazon is thinking of pumping more money into Anthropic, further pointing to the inevitability that when money runs short, Anthropic will become part of Amazon.
• Amazon has already pumped $8bn into Anthropic, meaning that when all of its instruments have converted into equity, it will be a substantial shareholder.
• I suspect that it also has provisions that ensure that when times are not so good and Anthropic runs out of money, it will be able to acquire the company.
• This makes complete sense because, despite its protestations, Amazon is one of the weakest players in artificial intelligence.
• The evidence is everywhere, from its execrable Alexa product to advertisements on its websites for products that I have already purchased, meaning that it needs Anthropic just as much as Anthropic needs Amazon’s bank balance.
• Hence, I suspect that Anthropic will become the AI department of Amazon, which would fix most of Amazon’s shortcomings in AI.
• This latest financing simply reinforces this view, as Anthropic will become more beholden to Amazon and less of an independent company than ever.
• Anthropic can protest its independence as much as it likes, but reality tells another story.