2:06

the central character in invidious story

2:08

is a man named jensen while he

2:11

was born in taiwan and came to the u s with his

2:13

family at the age of nine he studied

2:15

electrical engineering and college and was

2:17

an avid gamer johnson

2:19

is a colorful ceo

2:22

within the chip industry you know

2:24

used you wears a leather

2:26

jacket when he does public

2:29

presentations he's er

2:31

he's six years old now but he's he tries

2:33

to be you know youthful and

2:35

cool and a lot of people think he is cool

2:37

quite frankly and

2:41

like how did he come up with the idea

2:43

for in video basically

2:46

of he got together

2:48

with a couple fellow and years

2:51

back in nineteen ninety three at

2:53

a denny's in san

2:55

jose where are all great thing stern exactly

2:59

and you have to remember the early nineties

3:01

the p boom was in

3:04

swing by you know it's alec

3:06

every household had a computer at that point

3:08

and these guys are interested in computer graphics

3:11

which was something that's was

3:13

a little bit futuristic at that point i mean it wasn't

3:15

sort of a major major focus for

3:18

the pc industry

3:21

and they decided look we

3:23

want to try to make computer graphics better

3:26

and over the ensuing few years

3:29

that coalesce around producing chips

3:31

and they were developed

3:34

for video gamers people

3:36

who are playing you know doom

3:38

and quake call of duty things

3:41

like that games that were you

3:43

want great graphics you want the

3:45

images to be fast moving

3:48

and smooth that's what these

3:50

these chips were originally made to do

3:54

and it at work it works

4:00

and video became a powerhouse

4:03

in that arena it attracted

4:06

you know legions of followers of

4:08

fans of people who were

4:11

just dedicated to the company and it's products

4:13

and and loved what it is producing you

4:16

might have heard of c p use

4:18

central processing units essentially

4:20

the brains of a computer but in

4:22

video made a kind of chip called

4:24

a gp you are a graphics

4:27

processing unit gamers

4:29

could plug these chips into their pcs

4:31

for a better gaming experience these

4:34

days chips like this are usually built

4:36

into our computers and

4:38

invidious gp use made

4:40

them a giant in the gaming industry

4:43

by the two thousands the company was

4:45

designing chips for x box and playstation

4:48

consoles but one

4:51

wanted more in video

4:53

under jensen quang has

4:56

tried for

4:58

years and years and years to broadens

5:01

rises and

5:03

you

5:03

know at some point it must have become clear that

5:06

to expand the rises they need to do other things

5:12

invidious chips were good at performing

5:14

all kinds of complex tasks for

5:16

all kinds of industries from robotics

5:18

to bio engineering

5:20

and then the crypto world latched

5:22

on so if you're

5:24

mining bitcoin in bitcoin

5:27

prices were as a certain level it's

5:29

like free money you know you go and buy bunch of

5:31

in video gp use that i'm up in a in

5:33

a warehouse somewhere and you you turn around

5:36

and you're you're making money as long as the

5:38

price of bitcoin is high enough then you're

5:40

good

5:41

but then around this time

5:43

last year a crypto winter

5:45

in may as well we're experiencing right

5:47

now crypto as market value has

5:49

halved since it's peak light last

5:52

year hemorrhaging and eye watering two

5:54

point two

5:55

trillion dollars all humans

5:57

are down excitement as down

6:01

the thing about the crypto market is

6:03

it's extremely or has been extremely volatile

6:06

and when the prices go

6:08

down it doesn't make sense

6:10

to mind crypto anymore

6:13

the crypto winter hit in video

6:15

really hard in the second quarter

6:18

of last year the company's shares

6:20

lost nearly half their value

6:22

and so you had a situation

6:24

when the crypto winter hit where people

6:27

to suddenly didn't want his jeep using

6:29

more knowledge in need of within one's a

6:31

people are trying to offload i'm and it really skewed

6:34

the market and it was very

6:36

much not a good thing for invidious sales

6:38

but that wasn't the company's

6:40

only challenge

6:44

last year tensions between the us

6:46

and china spilled over into the chip

6:48

industry president biden announced

6:50

the us would restrict exports to china

6:53

of the most powerful chips like

6:55

invidious these restrictions

6:58

were designed to cut off china supply

7:00

of the most advanced semiconductors

7:01

and in video

7:04

was worried because

7:05

china accounted for a quarter

7:07

of it's sales at the time

7:09

and what kind of financial costs did that have

7:12

on the company it had a big one

7:15

in video said last

7:17

year that they

7:19

were lucky i will impact of bad for her

7:21

million dollars quarterly

7:24

because of this this move so

7:26

it's it's not a drop in the bucket

7:29

so in the fall of last year in video

7:32

was in a difficult position the

7:34

company was

7:36

challenged and in many different ways

7:39

they're facing markets pressures

7:42

they were facing your threat of

7:44

export restrictions they're facing

7:46

a lotta problems

7:49

but the company's luck would change

7:51

because of a bed that one had made

7:53

years ago on a i mean

7:57

that's next i'm

8:08

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8:11

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8:45

years ago when jensen hong saw

8:48

the potential of ai he leaned

8:50

in hard he spoke about it on

8:52

cnbc in march we change

8:54

the company from the bottom all the way to the top

8:56

and sideways every chip

8:58

that we made on was focused on artificial

9:00

intelligence or we

9:02

long went on to talk about the part

9:05

in video played in helping open a i

9:07

develop it's chat bot sensation

9:09

chat gp t and

9:11

i remember delivering my very first

9:13

a i super i hand delivered a myself

9:16

i deliver it open a i judge

9:21

gb t was build with invidious

9:23

chirps i according estimate the initial

9:26

version check gb cheat required ten

9:28

thousand a video chips in these these

9:30

are not cheap shirts either you know you think about

9:33

p c cause maybe a thousand

9:35

bucks or something like that you know a

9:37

server with numerous

9:40

advance and video chips

9:42

it it could easily costs upwards of

9:44

one hundred thousand two hundred thousand dollars even

9:46

what did the success of chat

9:49

gp t mean for in video

9:52

it was basically a gold rush

9:55

now hong says everyone

9:58

wants invidious chips the demand

10:01

is literally from every corner

10:03

of the world

10:06

so if you want to do a i and

10:08

video has like of the biggest tool box in the world

10:10

do a i was so invidious

10:12

chips are really the

10:15

only options right now

10:18

having seen chat gp t success

10:21

other large tech companies have accelerated

10:23

their own ai technology and

10:26

for that they'll need lots of chips

10:28

anybody who's interested in capitalizing

10:31

on the ai boom in the generative a i

10:33

wave said speak is is like in

10:35

a desperate for these chips there's

10:38

a lot of money at stake if you can make this work

10:40

for you see how these big companies like microsoft

10:43

or google itself try to defend his own turf to some

10:45

extent these guys are

10:48

driving a lot of the investment because they have really

10:50

deep pockets

10:52

is

10:52

inferior in a place to fulfill

10:55

this demand quite frankly

10:57

not entirely the

11:02

company doesn't have it's own factor

11:04

is it doesn't actually make chips

11:06

itself it designs the

11:08

chips and that it sends a circuit

11:10

blueprints to outsource manufacturers

11:13

to actually physically make them in

11:16

video relies on other companies

11:18

to produce it's chips the largest

11:20

of them is based in taiwan and

11:22

with the man sky rocketing chip

11:24

supplies are running low their

11:27

brushing to get in as

11:29

many orders that a candidate done that daves they said

11:31

in their earnings call last week that they've secured

11:34

more supplies for the second half of the year

11:37

at the same time currently if you want to get

11:39

a large number of and video gp use

11:42

good luck because you

11:43

really kind of can't you know i mean it's

11:46

it's gonna take some time according

11:48

to people who we've talked to who been

11:50

trying to get them so last

11:52

week at the wall street journal c

11:54

o council summit elon musk

11:57

talked about how hard it is to get chips

11:59

a gym user this

12:02

point can way hotter to get the drugs the

12:05

shortage of chips is expected to bleed

12:07

into next year and invidious

12:09

rivals are trying to get into the lucrative

12:11

market

12:12

there's a litany of competitors actually

12:15

even start that you've probably never heard of

12:17

that are developing a i chips and

12:20

the gold rush that in video

12:22

is having right now is probably only

12:24

going to encourage the competition

12:26

tid to invest more to do more because it you

12:28

know it's clear now that the profits

12:31

are there if you can do it while

12:32

and video struggles to meet demand in the

12:34

u it still has to navigate

12:37

the export restrictions the prevent

12:39

it from selling it's most powerful chips

12:41

to china the

12:42

company ended up making

12:44

a version of it's

12:46

chips that fell below threshold

12:49

specified by the us government

12:51

under which they would have needed a license

12:53

to export them to china but the

12:56

chinese market has been somewhat

12:58

closed off to in video because

13:00

of this us action last year but

13:02

the ai boom could help lifted

13:05

video beyond those challenges last

13:08

week the company projected demand

13:10

for it's newest a i chips will boost

13:12

sales this quarter to eleven billion

13:15

dollars that's compared with

13:17

about seven billion last quarter

13:20

after that announcement invidious stock

13:22

price sword

13:23

it gained as much value as netflix

13:25

is worth the

13:27

largest one day increase in a company's

13:29

value ever and

13:31

this push the company past the trillion

13:33

dollar valuation and what

13:35

does this say about the role

13:38

of chips in life the global

13:40

economy and global society

13:42

and life

13:44

in the world these days chips

13:46

matter the point

13:48

is chips have become a

13:51

chip if you fill in

13:54

the political world people

13:56

have realized in washington

13:58

and beijing

13:59

in countries all over the world that

14:03

if you have the world's best chips you

14:07

have power to

14:10

think this is more a story about the

14:12

potential of the ai or the role

14:14

of chips in

14:17

the world today

14:19

to some extent obviously it's about both even

14:21

though the invidious doing so well

14:24

we fundamentally still don't know whether

14:28

a eyes gonna be a super important

14:30

facet of our daily lives yet people

14:33

are clearly investing a lot of money

14:35

in the stuff and they're buying

14:37

lots of in video had shifts but

14:42

i can't name a single company today that's

14:45

you know has lake dozens

14:46

of billions of dollars a year in revenues

14:49

from like a i some sort

14:51

ai technology but what

14:53

about chips

14:55

yeah i think that's more clear the stage

14:58

you know chips are being used as a geopolitical

15:00

tool and they're

15:02

being understood more and more and a national

15:04

security context and

15:07

that's only going to continue to get more

15:09

pronounced

15:13

it's a statement of the

15:15

basic facts

15:17

that chips and computation

15:20

are essential and and in modern life

15:22

in an early going to be more essential in the future

15:35

that's all for today thursday

15:37

june first the journal is a

15:39

coal production of gimlet and the law street

15:42

journal he like are shall follow us

15:44

on spotify or wherever you get your podcast

15:46

were out every weekday afternoon

15:50

thanks for listening cmr