Export control

That makes sense.

So because of those December export controls, Chinese tech firms cannot acquire this critical memory through official standard channels anymore.

So they can't just call up the supplier.

Exactly.

Absolutely.

It's a massive leverage play.

And as the U.S. and China build higher and higher walls around their respective AI ecosystems, you know, using export controls on one side and alleged data extraction on the other, it creates this massive fracture in the global tech landscape.

Which leaves the rest of the world trying to figure out how to operate in the crossfire.

And so they are naturally determined never to fall behind or even to become overly reliant on other countries for key technologies ever again, no matter what it takes.

And they understand American semiconductor export controls and our general rhetoric around winning the AI race as reflecting our desire to keep them down or potentially even worse.

That said, while technological leadership and self-sufficiency are non-negotiable parts of the Chinese strategy, it's my view that the United States and the West more broadly should see this as a motivating challenge but not necessarily as a threat.

After all, Chinese rhetoric suggests not only that they share many of our concerns regarding AI safety and control but also that they would prefer a collaborative international approach to global AI governance and would rather avoid an AI arms race.

We too must make sure that we don't fall behind the technological frontier, which means that we can't simply exclude Chinese technology, but rather we will need to actively seek to develop state capacity with American characteristics and also to learn from China in the areas that they now lead.

In AI specifically, I emphasize above all the importance of maintaining a shared AI paradigm and how dangerous it would be for us to allow our relative tech stacks to diverge to the point where neither side can be confident about the other's capabilities.

This, I think, is how today's AI competition could turn into a cold or even a hot war, and this is a big part of the reason that I remain skeptical of export controls, even though I do recognize that they will help America keep its lead in AI for a bit longer than we otherwise would.

Altogether, unless you are very confident in short AI timelines and willing to bet on your own particular flavor of recursive self-improvement going well such that nothing else much matters, I believe the overall picture suggests that the United States should seek a deal whereby we trade chips and perhaps even some chip-making know-how for Chinese expertise in solar energy, batteries, robotics, and much more, effectively recoupling our economies without creating vulnerabilities or dependencies that either side finds unacceptable.

Of course, the Isle of Man through the United Kingdom, where most actual real space companies go do their work because of the good regulation.

ITAR, Missile Technology Control Regime, Export Control, all the way through to the data sovereignty compliance, right? You've got to be in the right country.

You've got to get the right insurance.

Insurance is the biggest thing as well.

One last toolkit conversation or part of the discussion before we move on to other topics.

You have said in the past, you've described in the past a moment when you realized that one of the chip companies you were negotiating with had a matter pending with the Bureau of Industry and Security at the Commerce Department, which presumably was something to do with export controls.

And you said that linking the two would have made getting what you wanted on the CHIPS Act easier, but that the lawyers thought that was a bad idea and generally dissuaded you from that.

I have thought in the past on a kind of similar track that you can envision places where...

Export controls could be part of industrial policy in the sense of if we have some technology that we've invented here, but we don't want it manufactured in China, for example, OLED screen technology, you know, which is now mostly manufactured in China, we could have... restricted the export of the technology to China and kept the manufacturing somewhere else.

I'm not saying that would have been a good idea.

I'm saying that conceptually, you can think about how export controls would be a piece of the national, the industrial policy toolkit.

Curious how you saw that.

We will decide the fate of our country, not some out-of-control, radical-left AI company run by people who have no idea what the real world is all about, Trump said in a February 27 post on Truth Social.

US lifts export controls on Anthropic's mythos fable Anthropic said on June 30 that it received notice that the U.S. Commerce Department has lifted export controls on Claude Fable 5 and Mythos 5, its most advanced artificial intelligence models, weeks after access to them was suspended due to security concerns.

Commerce Secretary Howard Lutnick said in a letter to Anthropic that he has determined that appropriate safeguards are in place to permit certain trusted partners to access the Clawed Mythos 5 model.

Since the issuance of my June 12 letter, Anthropic has worked with the U.S. government to address risks associated with the covered models.

So you mentioned chips.

So U.S. export controls, they restrict China's access to most advanced chips, which are NVIDIA's GPUs, which are manufactured in Taiwan, as you mentioned, and those machines come from Netherlands.

And There are reports that some of these Chinese AI companies have actually worked around those rules to gain access to NVIDIA's top chips.

And some of the US AI leaders, not Jensen, not Satya Nadella, but CEOs of OpenAI and Anthropic, they have been raising security concerns about Chinese models.

And we also know that a Tencent executive, Tencent being a leading tech company, a leading cloud computing provider in China, has said that access to foreign manufacturing of Chinese AI chips is increasing and has increased in recent times.

So I take that to say that very likely Chinese companies are still able to manufacture their AI chips abroad, very likely in a way that violates export controls.

We don't know if that's at TSMC.

We don't know if that's at Samsung.

And that's one of the things that the foundry rule was designed to prevent.

That's a critical export control, and we still have yet to hear confirmation from BIS that they are adequately enforcing this rule at all.

Recall a few weeks ago, we were talking with Chris Maguire of the Council on Foreign Relations in an episode called "The Biggest Ever Loophole in Export Controls."

[laughs]