Mehran Gul, author of "The New Geography of Innovation," says the investigation into Nvidia's Jensen Huang could diminish his leverage with the US government over China. He speaks on "Bloomberg: The China Show."
Let's get the take from Miran Gul, author of the new Geography of Innovation. Uh this is what, you know, you've been talking about this whole global tech map is map is shifting uh and with China now the only real competitor to the US. Uh Miran, it's great to have you joining us all the way up in in Geneva here this morning. Um, I have to ask you about the our top story here today revolving this investigation into the CEO ofdia, Jensen Huang now. Uh obviously this is a setback for him, for the company. Do you see this having any sort of this damage having sort of systemic sort of implications for the company and this whole AI revolution?
Um, I think it's important to remember right now, these are allegations and it depends on whether they're proven. Um, Jensen has admitted right now to having relationships, but he hasn't admitted to any national security implications. But if they are proven, then it's hard to see how it does not have implications for the wider US-China AI race. Um, Jensen has been a very vocal supporter of the US working more closely with China. Of course, Nvidia benefits the more um it can sell chips in China. Um up until very recently, Nvidia made 25% of its revenue from China. that is no longer the case anymore. Um, um it was after Jensen had lobbied the Trump administration that they allowed H200s to be allowed back into China earlier this year. Um so I think this would strengthen the hand of China Hawks in the administration. um and um other than Jensen, I could not really see anyone else who was as vocal as as he was, um to opening up um more collaboration between the US and China. So, one is the impact that it had this has on Nvidia and its ability to lobby the US government at a time when people like Dario Amode for instance, um have been advocating um um cutting ties with with China. and I think those voices will become stronger as a consequence. Um I think beyond the US and China, this has implications for the wider ASEAN region as well. Um rumors about Singapore or Indonesia or Malaysia being a way station for Nvidia chips into China have been around for at least five years now. Um and companies like Megaspeed and other companies, I mean Megaspeed rumors have been around for over a year and the company has been denying these rumors for over a year at this point in time. So, um Megaspeed being at the middle of this is not news. Um we we've been hearing about this for a while. So, um I think data centers coming up in the Southeast Asian region were premised on the notion that Chinese companies can access Nvidia resources over the cloud and this will potentially turn off the tap to that as well.
There's Keyman risks, Miran, and then there's Jensen Huang. I mean, just he's so pivotal in this whole AI story and everything that's around him, whether it's the financing of of data centers or neo clouds, whether it's really just being part of this whole AI supply chain. If his position would be in fact compromised in some way, I mean, how significant would that be if you you think?
Um, I I think the fact that he was at the center of such a high profile targeting effort shows you just how important he is not just to global compute, but bilateral relations between the US and China. I think in the past you would not have seen um, you know, such a high profile attempt to ensnare, um, you know, a senior business leader. You would this sort of targeting would potentially have happened only for senior political leaders. Um so so I think it's very significant and I think this this ratchets up um the the nature of the technology competition between the US and China. We have not seen a targeting effort of this nature in the past 10 years even though um, you know, the two countries were in in in competition. So this takes the competition competition to a different level. Um, how does this impact Jensen's own future in the firm? I think it weakens his bargaining position vis-a-vis the US government, uh but I don't see, I don't think Jensen is going anywhere. Um I still think that he will play a very important role because I think one fundamental fact does not change. Nvidia still makes the most important chips in the world. If anything, what has happened in the past couple past couple of days only highlights um how important its hardware is to international affairs.
And what does it mean for China? I mean, you've been writing extensively in your book, the Geographies of innovation about how quickly Chinese AI hyperscalers, how these developers are scaling up, uh not just when it comes to the adoption of these AI models, but also in terms of innovation. You've been speaking to a lot of these insiders in China. How how close is this race right now between the two?
Um, I think much closer than people imagine it to be. I think um something that one of your speakers mentioned earlier that um, you know, China that that the US is very good at creating, at inventing new things whereas China is very good at diffusing it or or the US is really good at going from zero to one. China is good at going from 1 to 100. Um you know, these are mimetic frames that you probably would have heard about very frequently which I think at this point are quite obsolete. When it comes to AI, um China is right up there with the US in making frontier innovations. It's just a fact that today the most cited paper in all of our artificial intelligence, a paper called the Resnet paper was authored in Beijing, not at Stanford, not at Harvard, not at MIT. Um the Resnet paper's four co-authors all received their undergraduate, graduate and PhD degrees in China and they had never left China before writing what is essentially the most uh uh the most important paper in AI. Uh if you look at the top 100 papers, most cited papers in artificial intelligence, 41 of them have Chinese co-authors. Um so it's I think the competition is much um tighter than people often portray it to be. It is not true that China only scales. I think China invents plenty as well. Um and and and people often read too much into the fact that Nvidia is worth a five trillion dollars whereas no Chinese company is worth a trillion dollars. Um it's just that they operate in very different capital environments. That's why American companies have much more inflated valuations, but otherwise the race is actually much tighter than valuations would imply.
So how do you see it then? Do do you see the US can continue with its dominance or do you see China one day could surpass the US in terms of innovation as well? What are still those key bottlenecks you think?
I I think that's not it it's not a scenario for a hard to imagine future scenario. If you look at so many other frontier technologies like electric vehicles for instance. If you look at lithium ion batteries, if you look at solar panels, if you look at the um civilian drones. Um China already leads in these industries. If you look at um lithium ion batteries which if you were to people talk about the new oil a lot like what is the new oil? um data, other things, but if you were to look at the exact analogy, uh the new oil would have to be um the new oil would have to be lithium ion batteries. and it's just a fact that um the top 10 manufacturers of lithium ion lithium ion batteries in the world are all Asian players. and there are no western lithium ion manufacturers in the world. Um um so so I think that shows that um you know China is is innovating at the highest level and is competing um in in in a variety of industries. And I don't see what's so special about AI that it would be so different.
