Washington Is Taking Control of AI

Nathaniel Whittemore (0:00)

The fallout of the Jensen Affair continues, and its blast radius is certainly not limited to Nvidia or even AI. It's clear that as the lame duck session of Congress begins, this is being seen as a key inflection point to make some key shifts in geopolitical priorities.

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Welcome back to the Jensen Daily Brief.

We are continuing to examine the seismic reverberations in the wake of Jensen Huang's resignation from Nvidia. Although as we'll discuss today, calling it a resignation, I think doesn't quite do justice to exactly what has happened. Hold aside all of the more speculative theories about whether there was some coordinated campaign behind this and the timing of it, and all that stuff that was part of the show yesterday, even without describing any strong intent or devious machinations in that way, this still feels like the opening salvo of a very new period in Washington, where the Democrats are starting to assert their power, both in terms of their foreign policy, as well as in terms of their desire to bring powerful private market actors to heel, and where the China hawks are increasingly ascendant. It looks, in other words, in some ways, like Washington fired Jensen, which does not mean that he will no longer have any dealings with Washington. Following Huang's resignation on Thursday morning, Chairman John Moulinard released a statement on behalf of the House Select Committee on China. It stated, Jensen Huang's firing from the company he founded is an unfortunate end that could have been avoided. It is in our national interest for Nvidia and our other AI champions to succeed, but American companies should never jeopardize our nation's security by giving Chinese companies access to their most advanced chips. Nvidia must now change its corporate practices and appoint leadership that makes national security its top priority. In Congress, we must act quickly to pass bipartisan export control legislation. Now, on the one hand, I don't think that we should be overly obsessed with close textual analysis of a comment coming right on the heels of a big event. But the idea that a private company's top priority is national security, as opposed to, for example, their fiduciary responsibility to their shareholders, gives you a bit of a feel and flavor for the struggle around power rebalancing that I think has opened up. The events of this week have certainly given China hawks a huge amount of ammunition to push through reform. The New York Times broke the story as lawmakers were returning to Washington following the midterm break. And while chip controls were already on the agenda for the lame duck session, expected to be attached to the must pass National Defense Authorization Act, the scandal around Jensen and Nvidia has vaulted these issues to the top of the agenda. One congressional aide told Politico earlier in the week that Democrats will now push for even tougher restrictions and feel they have the momentum to get it done. That aide said, Republicans who have been nervous about crossing the White House on this day know the next version gets written by Democrats if they don't deal now.

Indeed, following Huang's resignation, the sentiment in Washington has become even more hawkish towards Chinese chip bans.

House Speaker Mike Johnson said on Thursday, I think there's a developing consensus in Congress that this is an important position to take, especially given in light of recent developments. I think it might change a few minds. Senate Majority Leader John Thune said that passing chip controls was becoming a high probability.

House Foreign Affairs Chair Brian Mast, who is sponsoring one of the three chip control bills, said that the events of the past week have quote 100% boosted the chances of all three being passed. He also flagged that the White House is playing ball, commenting, stuff that we're pushing through, we're getting direct assistance from the White House. I'm not going to elaborate too much on it.