The chip race heats up as the White House eases rules on China

This BBC Podcast is supported by ads outside the UK. Available now on the documentary from the BBC World Service, we investigate the scavenging of pre-atomic steel from the seabed. Shipwrecks. Some silent war graves are vanishing. Making money is overruling all ethics. I'm Anna Pagiski, a material scientist. I'll be diving into the murky world of ship scavenging. Listen now by searching for BBC, the documentary, wherever you get your BBC podcasts. The chip brace heats up as the White House eases rules on China. President Trump is very clear he wants America to win. You're taking over the world, Jensen. I don't know what you're doing here. And, um, President, she wants China to win. Welcome to World Business Report from the BBC World Service. I'm Sam Fennick. President Donald Trump has opened the door for China to buy Nvidia's most advanced semi-conductors a U-turn on President Biden's policy and a move that could reshape the global AI race. We'll also be looking at what's behind sweeping raids across Argentine football with tax officials searching the federation and several top clubs. So, first today, the US has taken a major step in its tech policy towards China. Approving some exports of Nvidia's H200 chips. These are some of the most advanced AI processors in the world. These chips promise huge leaps in computing power and up until now, Washington had blocked their sale to China on national security grounds. But as the boss of Nvidia Jensen Huang told the BBC in September, it's a very competitive race. President Trump is very clear he wants America to win. And, um, President, she wants China to win. And it's possible for both of them too. And the reason for that is because it's not a zero-sum game. Well, to explain what these chips are, how powerful they are, and why they've been off limits to China until now is Chris McGuire. He's a tech expert at the Council on Foreign Relations. And he's also held roles in the White House and the State Department during Joe Biden's administration. And we'll talk about the politics in a moment, Chris. But first of all, just explain what are these H200 chips? Why are they so important? Sure. So, these are the chips that are used to develop and run advanced AI models. The H200 is the best AI chip of the previous generation. So, it's not the most advanced chip, but it is basically the second most advanced chip. It is substantially more powerful than anything that has ever been approved for export to China before. It's six times better than the best chip, the US chip that's there. It is nine times better than export-controlled thresholds. And China doesn't anticipate making a chip as good at this for two years at the earliest. So, it is a substantially better chip than what they have available. And the best chip that China have got so far is the Huawei's chip. And that's what a generation or so behind this particular chip. Is that right? That's about right. Yeah, so it's the Ascend 910C, which is, it's about 60% worse on performance metrics generally is kind of where it plays out. But one important thing to note is that the best US chip compared to the best Huawei chip right now is about, it's about a 5x difference. But actually, Huawei's chips are stalling out for the most part because their production capacity is not getting more advanced. And at the same time, Nvidia's chips are getting much, much more advanced. So, in two years, based on the road maps of Nvidia and Huawei, Nvidia's best chip is going to be 20 times better than the best Huawei chip. So, I think what this indicates is that the competition from Huawei is while they're a formidable company and very, very, very serious and good, it is not as substantial in this place as I think some people are making it out to be because they don't have the production capacity to make chips that are nearly as advanced as a bit. And what could China do with these chips that they can't easily do now? So, fundamentally, this will significantly increase China's ability to train, particularly advanced models. So, you need to aggregate very large numbers of these chips to basically make super computers that have very large amounts of computing power that you all use them all simultaneously to make a frontier model. So, right now, the leading Chinese AI firms are doing a deep-seek or doing very good job, but they are behind the United States, probably by a matter of several months. With access to substantially more computing power and substantially better chips, they will be able to close that gap. The question is how much and how fast, but deep-seek and others have repeatedly said their number one constraint is computing power, and right now this is going to be a huge boon for them. Okay, so the Biden administration spent years blocking China's access to Nvidia's most powerful AI chips. You, as we say, you're a tech giant, you're currently at the Council on Foreign Relations, but you did have senior roles in the White House under Joe Biden's administration. Why did Joe Biden block access to these chips? So, computing power in hardware is really the single advantage that the United States has over China in AI. If you look at the rest of the inputs into AI, talent, data, electricity, the applications, the algorithms, it's all kind of a wash or maybe even in some China is better, but the area where the United States has really big advantages is hardware and you really need very large numbers of these chips. With the Biden administration realized, and this was building off of export controls that started in the first Trump administration focused on advanced semiconductors in their tooling, was that export controls on AI chips that restricted China's access to very large amounts of computing power was the only means we have, but a very viable means to slow down China's AI capability. So the Biden administration's policy was to maintain as large of a lead as possible over China in AI, and I think the Trump administration by shifting to selling these chips is basically saying we don't need as large of a lead as possible, we are okay having a relative advantage over China in AI, and that seems risky. Now, the boss of Nvidia, Jensen Huang has told Donald Trump, so we believe that these chips will only, that if you don't sell their chips to China, that will only boost domestic producers, and thus create competition for Nvidia. And he's got a point, hasn't he? He wants to remain, and the U.S wants to remain that the biggest seller of these chips so sell them. I think that China is going to do everything they can to produce advanced semiconductors domestically. They've made that very clear. Whether or not Nvidia is in the market or not, China is going to to kind of turbo charge their advanced production capacity, and they're also going to make sure that every chip that gets made domestically is sold. They will protect their market for their own Huawei chips and make sure that they are moving as fast as possible and using them. And also, I, given the United States has clearly demonstrated that it is trying to cut the Chinese off from these chips, I don't think China is ever going to be except being reliant on a foreign power on these chips. So it's moving as fast as possible. I don't think there's any, there's putting any toothpaste back in the tube on that front. And as we said before, their main constraint is really how their production, quality, and capacity, which does far lag the United States and its allies and partners. Chris McGuire, thank you very much for joining us from the Council on Foreign Relations and also held senior roles in the White House and the State Department during Joe Biden's administration. Thank you for joining us today on the program. Now we're going to head to Australia now because on Wednesday, it became the first country in the world to implement a social media ban for under 16s. The BBC's Ed Butler has been looking into what it could mean for entrepreneurs and concrete content creators. So how is business responding to the new measures? Lucas Lane is a remarkable 16 year old entrepreneur. He's the founder of Glossy Boys and nail varnish company specifically for teenage boys. Tina and Mark Harris meanwhile are children's musicians whose La La YouTube channel with 1.4 million subscribers offers educational content. I heard from Mark first of all that he told me the ban will have a big effect on his company's channel. We're a little bit confused about it to be perfectly honest. Our business is primarily in YouTube and digital music distribution. Very much the world we play in in that digital space is not considered by anyone to be social media and for the Australian government to be explicitly rolling up YouTube inside the social media, you know, major restrictions just doesn't make sense to us. And you see it as an educational platform primarily here. Education and entertainment. Our eldest daughter was 13 when she started her first YouTube channel and she was interested in making videos and filming. It was a playground. It was a play. Yeah. And so she learned how to film and... You've editing software. I've published and promote. And she's now about to start working on her second major Hollywood film in Sydney. And that entire learning platform, her learning how to do that was all done in the YouTube ecosystem. Let me bring in Lucas Lane now. You are providing a community to an underrepresented subgroup, which is boys who perhaps against the male stereotype like to wear varnish. They like to wear makeup. They like to wear other things. That I guess is what the social media age has done for a lot of people, isn't it? It's found a niche for people who aren't necessarily part of the traditional mainstream. Yeah, social media let me find who I was and let me... Well, let me have a voice with social media. It let me express myself and it let me connect to other people and let me create a business that was inclusive. That was for everyone that the people who didn't have... They just wanted to be heard. They wanted to be spoken through. I was able to create something with that because of social media. That was Ed Butler reported. You can hear more of that report on business daily. Search for business daily wherever you get your podcast, your BBC podcast. So while restrictions clearly have an impact on those that provide content for teens, they were almost also hit the bottom line of social media companies, especially if other jurisdictions follow suit, which is looking increasingly likely. Let's talk to Ticara Small now. She's a tech journalist she's based in Toronto. Do we get a sense Ticara of how much it could cost social media companies to ensure that they comply with these restrictions? It's very interesting because some of the numbers and the reports that we're hearing about this range from anything from 50 million to almost, you know, a billion dollars. It's very challenging to know for sure until we see, you know, a couple months in. But what we are certain of is that there will be an impact on advertising, monetization, not just in Australia, but also from groups and businesses that actually advertise to that demographic in Australia as well. The knock on consequences are definitely far reaching. And do we know how big a source of revenue advertising is to under 16s in Australia, but also around the world? So around the world is a really interesting concept. So in many countries, they have actually integrated sometimes limitation on how much data they can gather from that specific age range. But we do know that advertisers are still using other means. They're still using not targeted advertising in general, but they're using a lot of content creators. And this is where I think the gray area steps in when you have sponsored content, which isn't necessarily targeted advertisement, but people who I think a lot of young people resonate with. It will definitely be interesting, especially in Canada, where we've seen meta leave the space altogether when it came to government restrictions. How else Australia moves forward? I mean, it's going to be costly, isn't it? We've talked about the cost of implementing the restrictions, the lack of the advertising revenue, but also the potential fines if you're caught with a under 16 on one of your platforms. Yes, I do want to emphasize that this legislation does include reasonable steps. And that does add some murkiness to the discussion. You know, what does, you know, reasonable steps include? And how can we have, you know, social media platforms ranging from reddit to tiktok held response balls were still ironing those things out? I think that will leave a gray area that, you know, teenagers who are quite technologically advanced will manipulate to their means to carousel tech journalist there in Toronto. Thank you for joining us today on the program. This is world business report from the BBC world service with me Sam Fennick. Now Argentine football has been hit by a wave of simultaneous police raids on Tuesday with officers searching the headquarters of the National Football Association and several major clubs. Now, authorities are investigating possible money laundering and tax evasion. Let's talk to Marcella Mora. She is an Argentinian football journalist. She joins us now and can tell us exactly what's happened today, which clubs and which organisations have been raided. Hello there. Yes. It's quite a sort of alarming sounding headline, 17 clubs, 35 operations all simultaneously, but I think it's kind of part and parcel of an ongoing sort of backstory to Argentinian football and a long-standing dispute between several of the clubs, the president of the Football Association, Mr Tiki Tapia, and the government in Argentina and a major sort of non-negligible lobby who want to privatise football clubs and sort of convert the way football is managed there. But it's not getting too dull about it. It sounds like these are quite serious allegations of money laundering and potential fraud, but you say it goes something a little bit deeper between an argument between the Football Association and clubs and politicians who are wanting to attract private funding. I think there is a political backdrop that can't be ignored. The money laundering investigation was detonated a couple of months ago. It's looking into the sort of the doings of a specific firm called Saurfi Nancez, which is a big sponsor of small football clubs, acts as a loaner for many clubs, but also sponsors the Argentinian national team, or has them at times, and it's a sort of the slogan, the CEO of sort of finance dislike to say, we are football's wallet in Argentina. So it makes sense if you're looking into a company that you suspect or has been accused or there are allegations of money laundering or irregularities in their finances to raid all the the paperwork of those that do business with them. But I think the political backdrop is super interesting because that's what's kind of slightly it's perceived at least that it's that's what's motivating this. And as someone was saying today on on national television, it all kicked off because of a sort of fraudulent title or a cup that was awarded to a specific club and then the protest of a football fans and players and other clubs who thought no, we don't we don't like this. And what could be the consequences just briefly if Argentine football if there is found to be wrong doing? Well, I think there is wrongdoing in football clubs and football worldwide and you know how big or small the scandal becomes depends very much on the on the level of irregularities but it wouldn't be sort of a stop press if you know a football finances our daughter is hardly news these days. But I think what is interesting is the timing because well the World Cup draw has just happened. We're all got our sights on this major sort of entertainment circus and so I think it's it's very odd timing and something to keep an eye on to see if if the head of Argentinian FA is going to crumble through a financial scandal with months to go to the World Cup. So I would watch this space. Okay, we will do that. Thank you very much Marcella Morage on list there, especially in Argentinian football. Now, Canada is making a major push to lure top global researchers backed by 1.2 billion US dollars in new funding to fast track immigration reforms. The University of Toronto says it's searching globally to hire the next godfather of AI and it's already recruited big names from Yale, MIT, Stanford and elsewhere and has created a hundred new postdoctoral positions to attract new talent. Now, this comes as US universities face budget cuts, political pressure and uncertainty under the Trump administration, conditions that some academics say are pushing them to move north. Well, earlier I spoke to Professor Melanie Woodin, she's president of the University of Toronto. Well, look, we're always interested in hiring the top minds of our time wherever they are in the world, whether they're Canadians that have been studying abroad or academics from other institutions anywhere in the world. We want to bring them here to the University of Toronto to support our mission and excellence in teaching and research, to have them come to Toronto to make the next research discoveries and to inspire our students. And we've got a moment in time right now we feel with some global mobility of academics. So we're seizing that moment in time and trying to recruit them here. And what does the current climate between your relationship as in Canada's relationship in the United States have on high profile scholars, perhaps from Yale or MIT or Stanford? Yeah, well, I don't think it's so much about our relationship between our countries now versus some of the decisions that have undertaken within the United States that are causing some academics to consider opportunities elsewhere. That's what we're leveraging. It also might be scholars in other parts of the world that had been considering studying or are conducting their research in the United States and are now looking at other opportunities. And so that's what we're trying to achieve versus anything about the relationship itself between the countries. Did you ever think you'd be in a position where you'd be actually attracting academics from Yale or MIT or Stanford? We actually hire about 120 faculty members in Ebony Givineer. We're a very large university. We have more than 100,000 students across three campuses. And certainly some of those outstanding academics do come from Ivy Leagues in any given time. But have this moment in time to attract so many sort of these cluster hires, these constellation of stars in one fell swoop is quite an opportunity that I hadn't seen coming, but I'm thrilled to leverage it. It is quite a unique opportunity. Yeah, yeah, it really is. And we're also creating, I would say, a bit of a flywheel defect. So you referenced some of the hires that we've made recently, you know, a year ago we hired three faculty members, historians from Yale to our month's School of Global Affairs and Public Policy. We just announced new leaders coming from Stanford and MIT in fields ranging from astrophysics to innovation and management. And while we're increasingly seeing with some of the publicity we've had around that is other top academic stars, noticing that some of their peers are coming here and wanting to learn more about the opportunity for them in Canada and specifically at the University of Toronto. And so we're really here to leverage their interest. What would you say, though, to critics who worry that Canada just won't be able to sustain these academics for a long period of time and that they, you know, once the situation changes, perhaps in the United States, they might just go back. Well, look, we've had a long history of sustaining outstanding academic academics in Canada. In fact, many of your listeners will know that Jeffrey Hinton, who's the godfather of artificial intelligence, made all of his seminal discoveries here. He joined us in the 1980s and he continued to stay and conduct his research here. And he still has an office here and spends much of his time as to many of the colleagues that he recruited here. So we actually have a longstanding history of recruiting and retaining outstanding faculty. And in fact, the investments that the federal government is making that came out today and and the own investments, their own investments, the university is making are very much around not just attracting these scholars, but providing them with the support they need to power their new knowledge and discoveries, including things like significant investment in research infrastructure. If you didn't have that federal money, would this strategy not really be viable? Not at the level that it is. So we've done some of this level of recruiting in the last year or so, but the financial injection that the federal government has made will absolutely transform our ability to recruit many more top academics. And I also think importantly, it's a signal that Canada is sending around the world that we highly value higher education, research, and discovery. And so it's a call out to academics to consider a coming to a country that does highly value that and to make their discoveries here. That was Professor Melanie Woodin and she is the president of the University of Toronto, where we're going to head north now and back to the US because if you're looking for a job in the US, you might be feeling a little bit more optimistic. Vacancies rose to a five-month high in October, but it is a tale of two stories, even more openings. Hirings have actually fallen suggesting that confidence in the labour market is a little bit shaky. Nicole Bouchot is a labour economist at Zip Recruiter Economic Research. That's the research unit for the job matching platform she joins us now. So we've got a little bit of a split picture, haven't we? Jobs data showing that there are more vacancies, but fewer people being hired. What do you think it tells us about the health of the economy? So the last couple of months, we've seen the Federal Reserve instituting policies to cut interest rates in an effort to spur more business activity. The Federal Reserve is really looking to balance unemployment rates and inflation and unemployment started to pick up earlier this year in order to combat that. We've seen interest rates being cut and the goal of that is to spur business activity. My take from the October jobs data that was delivered this morning tells us that this is beginning to unravel, right? We're starting to see job openings increasing. While those have yet to translate to hires, I think that's just because we're in this really kind of slow portion of the market right now. While businesses are still kind of reacting to a lot of the geopolitical and macroeconomic concerns that are swirling overhead. Nicole, what do we know about the jobs that are opening, the where there are vacancies and what jobs are hiring but more slowly? So where I suppose is there a mismatch between those that are looking for work and those that are learning the jobs that are available? There's absolutely going to be somewhat of a mismatch in this market. One of the biggest industries that we're seeing hiring right now is healthcare that is seeing really strong demand over 2025 and will continue into 2026. But other industries that are going to struggle to find a match between the current workforce are going to be construction agriculture where we're seeing some changes in the dynamics of the demographic shift with the reduction and immigrations coming in to the United States. Also on the other end of that spectrum, higher skills, tech roles are going to be challenging to fill as well as we see immigration changing. So that's interesting because it's kind of like both ends of the job spectrum. It's a kind of higher and higher paid jobs, but also kind of lower paid jobs as well. Yeah, and that really shows the challenges with the underlying dynamics of labor supply in the United States. The workforce is aging and we're seeing more disengagement from younger generations who are just not working at the same level that they had in the past. And so we're not really replacing the domestic workforce at the pace that we need to in order to match the need for growth in the future. So that's going to leave a lot of these openings in these cracks. This time tomorrow we'll be talking about the fed and what they're going to do with interest rates. We are coming to the end of the program. We've got about 10 seconds. Do you think that this job's data will change what might happen with tomorrow's fed decision on rates? It's highly expected that rates will continue to be cut in December as we see weaker hires and quitting. Fantastic. Thank you so much Nicole Bruchoff from the Labor economist at the ZIP Recruiter Economic Research Group. Thank you very much for listening today. From all the team here, thank you very much. Bye-bye and we'll talk to you tomorrow. Available now on the documentary from the BBC World Service, we investigate the scavenging of pre-atomic steel from the seabed. Shipwrecks. Some silent wargraves are vanishing. Making money is overruling all ethics. I'm Anna Pajaiski, a material scientist. I'll be diving into the murky world of ships scavenging. Listen now by searching for BBC The Documentary, wherever you get your BBC podcasts.