The Lex Newsletter: Is the H100 a ‘divine chip’ or a doomsday device?

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Dear reader,

Thank you. No, really, I think you’re terrific. don’t blush Many more of you are reading this newsletter than ever before. And you said things that were either flattering or helpfully critical in a recent poll.

I’m serious because I’m a human being, not a generative artificial intelligence program (yet). This also meant I took in the biggest business story of the week: Nvidia’s forecasted AI revenue doubling, with a complex mix of rationalization and emotion.

actions in nvidia rose 25 percent, or $190 billion for a total market capitalization of $940 billion. This is a far cry from the stock plunge last year that left CEO Jensen Huang with “compensation actually paid” of minus $4 million under Perplexing US Disclosure Rules.

The cause of all excitement it is the H100 chipset from the American chipmaker. This has 80 billion transistors. You need a lot of switches for AI features like “natural language processing”. This involves taking in large amounts of text and analyzing its interconnections so that a sophisticated chatbot can competently answer questions.

Tech types have doubted for years a putative “god chip” so fast and efficient that it supersedes the rest. The H100, for the moment, has achieved that functionality for AI development.

Could the H100 builds be “god chips” in a different sense? Could they create AIs indistinguishable from living humans during remote communication? If so, they would have passed the Turing test, a landmark development envisioned by the great codebreaker Alan Turing.

Post-Turing AI would have enormous potential for good and bad. The movie Bounty hunter he toyed with the idea that synthetic people would be a threat to the genuine article. He presented a kind of reverse Turing test, which identified fakes by their lack of empathy.

The modern analogy for its corporate creator is open AI. This American organization was born as a non-profit organization determined to lead the responsible development of AI. But high development costs pushed him to create a “limited profit” arm.

lex predicts that OpenAI’s need for fresh capital will prevent it from placing limits on the returns that investors can earn.

My expectation is that AI developers will increasingly prioritize the pursuit of profit over social responsibility. That will leave politicians and regulators slow to deal with the negative consequences once the genie is out of the bottle.

Unlike some naysayers, I don’t believe that computers will destroy humanity. We are perfectly capable of doing that without help.

Please let me know what you think of lexfeedback@ft.com.

Down at home on the farm (server)

Mature technology seems so rustic compared to AI that I’m tempted to put my foot in a door and chew on a straw while we discuss it.

The source of income in sight is the laptop. The end is near for this device, we believe, following in the wake of desktop computers. lenovo of China missed its earnings forecasts on Wednesday. PC shipments of all kinds are plummeting. Sales of tablets and the like are skyrocketing.

Peripherals—speakers, keyboards, and mice—are safer places for investors than old-style computer manufacturing.

We were intrigued that Cathie Wood’s flagship Ark Innovation ETF it has suffered net outflows of $19 million this year despite a 29 percent rise in stock price. Our theory it’s that investors simply don’t believe the hard-hitting predictions for Big Tech when rates are likely to rise further.

Tighter regulation is another problem for big tech. The EU fined Goal 1.2 billion euros this week for breaching data protection laws. Like many technology groups, the owner of Facebook relied on “standardized contractual clauses” between its US and European entities to comply with data protection rules. Not good enough, said the EU.

Meta has also noted a $260 million loss from the forced sale of animated image search engine Giphy. the United Kingdom Competition and Markets Authority had prevented the original acquisition.

The technological war between Europe and the US is a low-intensity undeclared conflict. The battle between China and the United States is vigorous and highly visible. Lex characterizes him as “two heavily armed knights who beat each other up with broomsticks.” The latest blow was dealt by China, which banned its big infrastructure operators from buying memory chips from Micron.

This is a drag for the US chip group, which relies on China for just under a fifth of sales. But the move also looks like self-inflicted damage for China, whose chip deficit is growing.

China’s weakness in chips contrasts with its strength in another silicon-based product, photovoltaic cells. Low labor costs, state subsidies, and a large domestic market have helped Chinese manufacturers like Longi green technology and JA solar to defeat European rivals

However, Chinese manufacturers do not make great profits. Beijing puts too much pressure on them to keep prices low in the push for decarbonization. In fact, facility growth threatens to outpace energy demand and storage capacity by a wide margin.

Lex believes that similar drivers will leave China strongly dominant in the supply of batteries for electric vehicles, a thought that would dismay American and European manufacturers.

A very lost Greenhill

On Wall Street, franchise erosion tends to come from a new business nearby rather than one halfway around the world. A couple of stories highlighted the theme this week: corporate law firm merger shearman and sterling with UK rival allen and overy; and the purchase of the investment bank green hill by mizuho financial from Japan

As a Brit, I was not familiar with Shearman, which sounds like an invention of the mad Men script meeting. A better-informed colleague of Lex’s in New York explained that the company had lost his way after the financial crisis. This diminished the role of traditional investment clients, even as private equity firms flourished.

It was a similar story in Greenhill. His stock hit an all-time high after his rivals the lehman brothers and Stearns Bear It was low. But it was out of competition by upstarts like evercore and Moelisthat he relied a little less on a few superstar bankers.

Franchise value is also a big issue after the recent banking turmoil. first citizenswho bought extinct Silicon Valley Bankis suing HSBCthat seized BLS UK unit. The US regional lender alleges the Asia-focused giant improperly attempted to hire 40 of SVB’s top bankers.

First Citizens made a $10 billion net asset windfall when it bailed out SVB. But evidently he also had a intangible gain in the employment contracts of those bankers as well.

In the same way, UBS need to hold on to swiss credit‘yes best wealth managers The sweetener that spurred UBS to buy its struggling rival: the removal of an additional $17 billion of tier-one bonds has no doubt infuriated some of them. Credit Suisse executives plan to sue regulator Finma because its bonds reflected the value of AT1s.

Switzerland’s decision to change the capital hierarchy at Credit Suisse hangs around your neck like a rotten albatross.

Things I’ve Enjoyed This Week

I was intrigued by this report from FT colleagues Kenza Bryan and Joe Daniels about debt-for-nature swaps. the United Kingdom legal and general is swapping $250mn of Ecuadorian debt for promises to protect the Galapagos.

Darwin’s theory of natural selection is canonically attributed to the knowledge gained there. His voyage on HMS Beagle also inspired him to predict the extinction of kangaroos, which he considered hopelessly uncompetitive.

One person can’t do it right all the time.

i enjoyed this too justification why the West should supply Ukraine with retired Air Marshal Edward Stringer’s F-16 fighter jets. And I was moved by the FT obituary from the amazing Tina Turner.

I have stopped reading Edward Gibbon’s books. The story of the decline and fall of the Roman Empire. I confess that I only got to p634 of an edition of 1500 pages. Here, the Romans became Christianized and became much less entertaining.

But we have a long weekend ahead of us, so maybe you can go further.

Enjoy your rest,

jonathan guthrie
Lex’s Boss