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19 quotes from 1 episode on Odd Lots, each with a timestamped link to the source.
Mackenzie Hawkins reported that Chinese AI firms legally rent advanced Nvidia compute in Southeast Asia to avoid direct trade restrictions. An analysis of trade manifests revealed roughly 50,000 advanced chips missing from declared regional facilities.
One smuggler pled guilty after labeling restricted Nvidia hardware as adapter modules.
“There was one case where, and this is a case where one person has actually pled guilty already, where they declared restricted Nvidia hardware to be, quote unquote, 'adapter modules.'”
Restricting remote chip access would hit revenue for Nvidia and hyperscalers like Oracle.
“This is sort of nightmare scenario for Nvidia if remote access were to be restricted. It's also a nightmare scenario for some hyperscalers like Oracle, that counts Chinese offtakers as a significant portion of its business.”
Mackenzie Hawkins said Johor, Malaysia acts as the compute backbone for Chinese AI labs. Megaspeed buys Nvidia chips in Southeast Asia to supply compute to Alibaba legally through cloud rentals.
“In some ways the backbone of Chinese compute is like Johor, Malaysia.”
“Megaspeed is the single largest Southeast Asian buyer of Nvidia chips. It's a major supplier of AI compute to Alibaba, which is one of the most important tech companies and frontier AI leaders in China.”
“In the vast majority of cases, this is legal…”
Trade manifests showed 50,000 Nvidia chips unaccounted for across Malaysia and Indonesia. Mackenzie Hawkins said Nvidia claimed the processors were in newly found warehouses after questions arose about chip delivery locations.
“We compared that number to Malaysian and Indonesian trade records that we had gotten and found that there were about 50,000 chips unaccounted for, which is like not a small amount of compute…”
“And after we asked about that, they went back to Malaysia, and they said, 'Oh, we found these warehouses that contain what's missing.'”
“…the stated location of where the chips are going to wind up was not the intended location.”
Nvidia general counsel Tim Teter contacted export officials about an executive detention, prompting a unique rule that restricted agent inquiries. Mackenzie Hawkins said the Department of Justice took over the case from commerce officials.
“Nvidia's general counsel, a guy called Tim Teter, called the head of the Bureau of Industry and Security, like the export controls enforcement, and the agency that writes and enforces export controls at the Commerce Department, in late summer last year to inquire about whether BIS was involved in the detention of Alice.”
From Nvidia's Export Probe Escalated After In-House Counsel Called BIS
“And agents or people working on export enforcement, you know, were restricted from like requesting information directly from Nvidia without getting Kessler's approval beforehand or routing it through him. That's a policy that's unique to Nvidia.”
From Nvidia's Export Probe Escalated After In-House Counsel Called BIS
“The Department of Justice had been working alongside BIS for a bit on this case, ended up asking BIS to stop its efforts. So now that case is with DOJ.”
From Nvidia's Export Probe Escalated After In-House Counsel Called BIS
Mackenzie Hawkins said Huawei production remains capped in the low hundreds of thousands, with executives projecting delays until 2030. American companies formed a consortium to counter Huawei bids in Egypt.
“Huawei's overall production capacity of that hardware is in the low hundreds of thousands.”
“Huawei's senior executives themselves say it'll take until 2030…”
“…when they learned of this bid that Huawei had made in Egypt, they like gathered this consortium of American companies and they were like counter bid.”
“The US government has a handful of export control officers overseas, including in Southeast Asia…”
“A consistent theme across, you know, what's now like half a dozen cases being prosecuted…”
“They sort of view Huawei, their primary competitor in China, as this sort of existential threat to US dominance.”
“The enforcement unit of the part of the Commerce Department that handles chip export control, so the people who are like, 'Oh, you've violated, like you smuggled, we're going to go after you,' that unit started mapping where in the world remote access happens, which is very interesting, because remote access is not illegal.”
“He later emailed BIS staff who are working on the case, and asked to meet with one of them. And they forwarded those emails to Jeffrey Kessler, because Tim Teter invoked Kessler's name.”
From Nvidia's Export Probe Escalated After In-House Counsel Called BIS
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