00:00Let's talk now to Santosh Rao, who's Head of Research and Partner at Manhattan Venture Partners.
00:04Good to see you again, Santosh. Thanks for coming back on the program.
00:06Good to see you.
00:07So, just how important is the Chinese market to NVIDIA?
00:12The Chinese market is very important, very critical for NVIDIA.
00:18It's a growing market. It's a huge market.
00:20I think what this agreement shows is that China needs access to advanced chips, advanced technology.
00:28Even though they have some lower-level chips, but they need access to this.
00:33So, they're ready to give up that to get access to that.
00:37So, it's very important for NVIDIA's sales in the future.
00:41But NVIDIA is really, if you look at it, the real impact is going to be on a long-term basis.
00:45The developers that will build on top of this, the CUDA and all that, software stack, I think that's important.
00:52In the future, you're going to have the governance issues, standards issues.
00:58So, they want to be the, the U.S. wants to be in the midst of global standards and governance of AI.
01:04And China is right now leading that pack in the emerging markets and other areas.
01:10So, India, U.S. doesn't want to give up the lead.
01:13So, I think that's important.
01:14So, China, it's very important for NVIDIA, for U.S., and very important for China as well in terms of access to this.
01:21So, net-net, both gain with this.
01:24So, as you suggested there, this easing of export restrictions, good news for more than just NVIDIA, good news for other companies as well.
01:31What's the market reaction been?
01:34Market reaction is pretty much priced in already.
01:37I mean, it ran up quite a bit last few days.
01:39So, at this point, I think it's just going to be wait and see to see where it's going.
01:45The near term has been priced in.
01:47But you know how things are so erratic with this administration.
01:51You're on again, off again.
01:52So, I think the market will wait and see.
01:55But at this point, they like what they see.
01:58It's going to go on.
01:59So, I think it's not a negative.
02:02It's a net positive.
02:03But you're going to see some near-term volatility just because of the uncertainty in Washington and the erratic nature of the sanctions and no sanctions and all that.
02:11So, markets are going to wait and see.
02:12They're not going to put all the chips on the table.
02:14But, yes, they're heaving a sigh of relief because this is a big product.
02:19And NVIDIA will have a stake in the biggest market outside of the U.S.
02:23So, I think they want to be there.
02:26Well, let's talk about Washington and relations with Beijing.
02:28What does this easing of restrictions perhaps say about their broader trade relationship?
02:34Yeah, I think, yes, I think things are improving.
02:37Both sides have seen the reality of sanctioning each other.
02:42U.S. needs sanctions, needs access to rare earth.
02:47China needs access to technology, advanced technology, advanced chips.
02:50So, both have all the capabilities, but they need the raw material and the technologies to do whatever they want to do, which is a lot.
02:58They want to lead the world.
02:59So, yes, it's going to improve stuff, I think, at this point.
03:04Yes, there is some opposition still from some senators and congressmen.
03:08They want NVIDIA to access the U.S. and the Chinese market, but limit it or limit China's access to the military and sensitive installations and all that stuff, sensitive technology.
03:20So, there is some limitation.
03:22I think that's what probably is holding the market at this point.
03:27The outright enthusiasm, that's what it's holding off on because some senators are still kind of complaining that we might be giving up too much.
03:36But at this point, I think where we are, with the edge 20, I think it's okay.
03:41The market will accept it.
03:43President Trump has accepted it.
03:44So, I think that's the most important thing.
03:46And so, it will improve relationships, I'm sure.
03:49And it's going to be very mutual in terms of working with each other on very critical aspects of technology.
