A NVIDIA AI Chip sales Whitelist, a bruising BIS hearing, and New York's data center freeze

NVIDIA has quietly cut more than half its authorized Asian customers, building a new whitelist to keep advanced AI chips from reaching China through third countries. Gregory C. Allen and co-host Adam Goodwin dig into what that reversal says about years of NVIDIA denials, the firm's Washington overhaul under new external-affairs chief Bruce Andrews, and a striking claim from inside China that every chip it can make — "even those lower grade chips that no one wanted before" — is now sold out.

Then: BIS Under Secretary Jeffrey Kessler's testimony before the House Foreign Affairs Committee, where a bipartisan lineup — Chairman Brian Mast, Bill Huizenga, ranking member Gregory Meeks, Keith Self, and Young Kim — dogpiled Commerce over stalled rulemaking, policy-by-private-letter, and the unenforced foundry due-diligence rule that lets Chinese front companies make chips at TSMC and Samsung. Finally, Governor Kathy Hochul's first-in-the-nation moratorium on data center construction, and why it may be less a crackdown than a political needle-thread over a build-out New York is already losing to Texas and Virginia.

(00:10) Cold open — remembering Senator Lindsey Graham
 (04:55) NVIDIA's customer whitelist and the China chip-smuggling problem
 (13:50) Jeffrey Kessler's bipartisan roasting at the BIS oversight hearing
 (28:40) New York's data center moratorium and the politics of the AI build-out
 (36:45) Coming up next week

Transcript

SPEAKER_01 0:10

Welcome back to the AI Power Podcast. I'm here once again with Adam Goodwin. We've got a great episode today covering a really important update from NVIDIA about their approach to export controls enforcement, as well as the congressional hearing featuring BIS Under Secretary of Commerce Jeffrey Kessler and big news out of New York related to a data center construction moratorium. But before we get to the news of the week, we did want to pour one out for Senator Lindsey Graham, who rather tragically and suddenly died recently. And Adam, I know you've had multiple encounters with Senator Graham over the years, including some pretty charming ones. So I wanted to give you an opportunity to talk about him and your experiences with him.

SPEAKER_00 0:55

Yeah, thanks, Greg. I know there are a lot of people out there that are putting out their version of who Senator Graham was, what he meant, positive, negative. And that's not really that's not really what I want to do here. I certainly had dealt with Senator Graham quite a good bit in my role and worked for a member of the Senate Appropriations Committee, but he also just lived in the neighborhood on Capitol Hill. So a number of years ago, my wife and I had a little place on E Street any given Friday night. We'd go and pick up Thai food from this uh Thai place, which is right next to the Cap South Metro station. And on more than one occasion, I'd walk in on Friday night. This Thai place was just deserted, except for pickup service, right? It's a it's one of those places in DC that exists off of lunch by itself, right? There are zero people that are eating dinner. And I'd come in, walk to the bar, pick up my order, and if you look to the left, Senator Graham would be sitting in the corner because he was staying over the weekend, and he'd have his flip phone because he only used a flip phone, and he'd be eating a plate of Thai food. And normally when I saw him, he was wearing a 90s era tracksuit and doing it with zero shame.

SPEAKER_01 1:58

Are you serious? A 90s tracksuit? So if you you know for the Adidas, uh Adidas era tracksuit.

SPEAKER_00 2:05

Yeah, for those of our listeners that are, you know, remember far enough back for the MC Hammer era, all right, like it that that brand and vintage of tracksuit, wearing it with zero shame and zero self-awareness that it would be anything other than perfectly appropriate and always seem to be having a good time there.

SPEAKER_01 2:21

I remember you talking about from the Blue Origin Day was getting your hair cut routinely next to uh Senator Graham.

SPEAKER_00 2:27

Yeah, one of the vestiges of old DC, there's actually a Senate hair care. There's a barber shop in the basement of the Russell Senate office building. It's called Senate Hair Care, and there's an old school barber setup down there, right? And so, you know, you could go and schedule time and get your hair cut really quickly, which was helpful because it was like an efficiency built into your day, right?

SPEAKER_01 2:48

You can pop downstairs for 20 minutes and get yourself cleaned up because everything's like and like the average male senator gets a haircut minimum every two weeks, sometimes once a week, sometimes twice a week, right? They gotta always look the same.

SPEAKER_00 3:00

Yeah, and it's a it's a comfort thing for them. And all their pictures are up on the wall, like their headshot from being a senator is up on the wall all the way around this barber shop at the top. And the because of the way it's set up, it's owned by the senator.

SPEAKER_01 3:13

Uh government provided hair care as government-provided hair care.

SPEAKER_00 3:17

Uh, back in the day, these guys were actually like furs employees, right? So they get federal retirement, the whole deal. Because it was a Senate facility. If the senators were in a rush, they'd come downstairs and they could actually bump you out of the seat, right? That was their prerogative.

SPEAKER_01 3:30

You're like halfway through a haircut and the guy just points at the senator and you're out. He's in.

SPEAKER_00 3:35

Yeah, it happened to me more than once where you just go and sit on the side with shaving cream still all over your face and the smock on and the whole deal, and you just sit for 20 minutes, and obviously they had priority and needed to be taken care of. But uh I mean, certainly Senator Graham and uh Senator Harry Reid and a number of others spent a lot of time there, and you could learn quite a bit as a young staff for just sitting and kind of listening to these conversations. Uh, and they kept up on every single employee of the Senate hair care studio, right? All the barbers, kind of everybody working down there, up to and including getting involved when things weren't going well. I remember there being an argument with somebody over their retirement package or how it was being treated, and that was going on while senators were there, and they took a direct role in making sure that things were straightened out. These are all people. Elected officials are people, and I tend to have these kind of very idiosyncratic stories because I've spent so much time in the building there. But those are the things that I'll remember about Senator Graham. Those are the things I'll carry on.

SPEAKER_01 4:32

Uh, and I'll remember that he was a uh China hawk, and I'm grateful for that. Uh no personal interactions with it whatsoever. But thanks. Thanks very much for sharing that story. So uh, should we get to the meat of the the podcast?

SPEAKER_00 4:44

We should get to the meat of the podcast, Greg. Uh, we're gonna start the conversation with the AI chip export control. And on this point, there's a very interesting article in the Financial Times on July 14th. So I will read the opener there. Uh NVIDIA has more than halved the number of Asian customers authorized to buy its AI chips after creating a new whitelist of companies that have passed tougher compliance checks aimed at preventing the products from reaching China. The $5.1 trillion chipmaker has over the past few months intensified due diligence in Singapore, Malaysia, and Japan, according to the three people with knowledge of the matter. The renewed vetting excludes more than half of NVIDIA's previous customers, although companies that failed the initial review could make changes and reapply. The move reflects a broader US effort to close loopholes and export controls that have allowed advanced AI chips to reach China through third countries despite years of research. End quote. So this is something you've been calling for for a while now. What do you think of this news?

SPEAKER_01 5:49

Gosh, so much. First, I think I'm happy it's happened. I think there has been a ton of reporting about the extent of chip smuggling into China going through NVIDIA customers, right? Nobody has ever said that NVIDIA is smuggling chips to China. It is always a multiple hop transaction where NVIDIA sells to somebody who either then sells to somebody who sells to China or then themselves sells to China. So the problem is NVIDIA's customers per se, not NVIDIA. But that does imply that part of the problem lies with NVIDIA because it's their job to vet these customers. It's their job to ensure that their customers are authorized to use these chips and that the use that they have for these chips is a legal one, which very obviously means you can't sell them to China. So I'm glad NVIDIA is doing this. Good on them for doing this. The other flip side of this equation is it calls into question everything NVIDIA has been saying in the past. NVIDIA had called chip smuggling into China tall tales. Nvidia told me personally when I was interacting with their government affairs team that their compliance process was very solid and that large-scale smuggling was basically impossible. Now they've said, okay, our previous process was not rigorous enough. Here's the new process. Half of our customers don't meet the new criteria. Yes, exactly. That tells you what, like it, if if this is what it takes to be good, what have you been doing for the past four years? The other thing that I think this connects to is that NVIDIA is overhauling their approach to government relations in Washington, D.C. So I think I think this is true. I think the number of full-time government affairs personnel who were not doing like sales to the government, like sales to the DoD or sales to the Department of Energy, the number of government affairs personnel who like go talk to Congress, who go talk to the White House, in 2022, the number of government affairs personnel that NVIDIA had in DC, I think was zero. So they really did not interact with the Washington, DC machine the way some other larger tech companies at the time, like a Google or a Microsoft, for a while, NVIDIA didn't really want to change. They made some hires locally, but the person in charge of government affairs was just their head of all external affairs, meaning that person had a portfolio much larger than just government relations and was not a government affairs professional and didn't have a ton of exposure to that universe. But just recently, this June, NVIDIA brought on Bruce Andrews as its new chief external affairs officer, and he's a bona fide DC veteran. Previously served as general counsel of the US Senate Commerce Committee, previously served as deputy secretary of the Department of Commerce. So this guy actually knows how the DC machine works. He was also previously the head of government affairs at Intel, but he's also a staunch opponent of the export controls. So he's aligned with NVIDIA ideologically, but he brings a little bit more know-how of what is the right way to interact with the system. NVIDIA has had some success in terms of Jensen Huang's one-on-one relationships with President Trump, for example, but less success in the traditional Washington game. And my guess is that this overhaul is going to lead to a more sophisticated Washington, DC operation in the not too distant future. So I hope that that includes actually engaging with the national security community more deeply, understanding what the nature of the opposition to China's rise in AI is. I hope there's fewer statements that NVIDIA champions, both publicly and privately, that turn out to be obviously wrong in terms of the impossibility of chip smuggling, uh, for example. So again, mostly I think this is good news, but it's one of those things where even though you're doing the right thing, it doesn't necessarily reflect well on you because of how long it took you to do the right thing.

SPEAKER_00 10:15

Yeah, it's an answer that just begs far, far more questions.

SPEAKER_01 10:19

I think that's a good that's a good way to put it. So there was one other thing in that in that Financial Times article, which I do encourage folks to read. They had a quote from a Chinese technology executive on background, and this individual is saying, quote, and this is in terms of you know China's AI chips, quote, all domestic suppliers are sold out. Even those lower grade chips that no one wanted before are sold out so long as they can be put into work somehow, end quote. And that's really, really interesting because we have this sense that there are two ways that China can get access to computing resources for its AI build-out. One is to get foreign chips from NVIDIA via smuggling, via however. And the other is to build more domestic chips. And the challenge is that number one, they can't make enough of those chips. And then number two, the chips that they can make are often lousy and not all that useful. So, this executive, if he or she is indeed accurately describing the state of the Chinese AI ecosystem, is that number one, they still can't make anywhere near enough of their own chips, which explains, right, why you're seeing reports that the Chinese government is getting ready to allow imports of H-200s, which they had previously blocked, and indeed Under Secretary Kessler recently confirmed uh that some of those licenses had been approved, some of those shipments had taken place, and it's because the local Chinese chipmaking ecosystem is just not strong enough. Everything they can make, however, is getting sold, even crummy chips, which I think is quite interesting. That actually, I would say, is a is a change from uh my best understanding of what was going on about uh six or seven months ago, where you know Huawei chips were so lousy folks didn't even want to use them. This is basically saying we we even want the lousy chips because that's how deep the shortage is right now.

SPEAKER_00 12:27

Yeah, yeah. And I mean, per what you've said uh historically, uh as far as logic chips are concerned, you can make progress even with you know substantially inferior chips, right? You can stack.

SPEAKER_01 12:39

That's true in multiple ways. And um, in the case of AI in particular, Google has said that their TPUs, which is their in-house competitor to NVIDIA GPUs, they said that they have a hundred percent utilization, not just of the latest and greatest TPUs, but like of many generations back older TPUs, uh, just because the demand for computing is so overwhelming right now. So uh the old TPUs were were well designed, but obviously don't take advantage of what we know now. This is sort of saying that like even the not especially well-designed Chinese chips are also seeing rampant demand.

SPEAKER_00 13:18

So brought up Secretary Kessler and want to make sure that we we have a conversation about him because his testimony before the House Foreign Affairs Committee this week, Under Secretary of Commerce Jeffrey Kessler, who leads uh BIS, the Bureau of Industry and Security, it was not exactly the most friendly testimony that you can imagine. Uh, Bill Bishop of the Sinatism newsletter described it on his Sharp China podcast as he was fairly roasted for not doing anything and being kind of incompetent. There's just a lot of frustration, end quote. That doesn't sound like Secretary Kessler had a great day, and there are these hearings every once in a while before any chamber of Congress or any committee where people just get dogpiled, and that kind of sounds like what happened here. But give us a little bit of a deeper dive into what Under Secretary Kessler experienced here.

SPEAKER_01 14:05

Oh, the Under Secretary is obviously a member of the Trump administration. He's going into a committee that is chaired by a Republican, Brian Mast. But that chair, while he is a loyal supporter of Donald Trump, is also one of the most notable China hawks in the entire United States Congress, Congressman Brian Mast of Florida. And Mast's opening remarks start out with what sounds like some nice words for Jeffrey Kessler, like maybe he's gonna have a good day. Here's what he started with, BIS is the tip of the spear in this tech war. The BIS undersecretary is not just a sheriff enforcing pre-existing rules, he is the lead general in the AI arms race. You know, you can imagine Jeffrey Kessler being like, yeah, I took a cool job, I'm a cool person. Um, but the reality is he got dogpiled on by Republicans and Democrats in this hearing. It was a it was a bipartisan smackdown, frankly. And here's what I think was one of the more telling moments of the entire exchange, which comes from I'm gonna pronounce this wrong, maybe you can correct me. Representative Hui Zinga, who's a Republican of Michigan, and he said, quote, um, quote, BIS is supposed to close loopholes, not create new ones. Then later he went on to say, this is multiple conversations that we've had, that is just a freaking circle that you talk in, and I'm sorry, but this is unacceptable, end quote. Like that's that's for coming from your own party, talking about how you just talk in circles and the actions that you're taking are unacceptable. The thing is, though, that was uh among the kinder things that he was going to hear that day. And this is an extremely long quote for which I apologize, but every single line of it is very meaty. So from the Democratic ranking member, Gregory Meeks, he said, quote, the office has not unveiled a single new rule during the second Trump administration. The policy paralysis and negligence at BIS got so bad that Chairman Mast was compelled to organize a 24-bill export controls markup in April. That raises an obvious question. Why should Congress drastically increase the budget for an agency that has failed to fully use the authorities it already has? I hope you will be able to answer that question today. But it's not just the policy that concerns me. Under Secretary Lutnick's watch, BIS has become less effective and less transparent, which have been unacceptable delays in license reviews, which are harming our economy and technology leadership. Engagement with industry is at an all-time low, making compliance and cooperation difficult. Just last month, BIS had to issue guidance reminding companies that it was still enforcing its own rules because many companies were no longer sure. Major policy actions are increasingly being implemented through private letters to individual companies rather than transparent rules that apply equally to everyone. Legitimate questions about consistency, accountability, and whether export controls are being applied fairly. And we have seen years of expertise and know-how pushed out or leave voluntarily because of mismanagement and declining morale within the agency. The bottom line is simple. BIS is not meeting its missions as I can see it under Secretary Lutnick's leadership. BIS has dropped the ball on rulemaking and entity list designations while focusing entirely on enforcement. And enforcement is indispensable, let's be clear about that. But it is far less effective when the underlying rules are outdated and ineffective. The president's budget request largely doubles down on that imbalance by emphasizing enforcement while doing little to address the underlying policy deficiencies. I mean, wow. Yeah.

SPEAKER_00 18:17

And God have mercy on your soul.

SPEAKER_01 18:21

That's about right. So, like every single line in there is a pretty extraordinary indictment. Now, I think one thing that's especially telling is Meeks is saying something that Chairman Mast is not saying, right? Chairman Mast is in general being kind to Kessler. But what Meeks is doing is he's basically saying, even when Chairman Mast is being nice to you in his words, his actions reveal that he has no confidence in you. The bills that he is drafting, the MATCH Act, uh, there's two other bills that are out there right now that would basically take a lot of the decision-making authority out of Kessler's hands, out of Trump's hands, because Congress doesn't trust them to write rules the right way. And so it's basically saying, no, these have to be the rules, these have to be the way you enforce it. And I think, frankly, Meeks has it right. If Chairman Mast thought that the administration was doing it the right way, he wouldn't feel the need to jump in and legislate specific actions.

SPEAKER_00 19:23

Yeah, I 100% agree. The hearings would be significantly less oversight and they would be much more press release. Featuring things the administration was doing, uh, highlighting very good things the administration's doing. The hearing was under the guise of the FY27 budget, so it's the FY27 BIS budget hearing from an authorizing committee, as the uh House Foreign Affairs Committee is an authorizing committee. Uh, this was an oversight hearing. This is the committee really trying to exercise some level of diligence on what they're very concerned about within BIS. So absolutely.

SPEAKER_01 19:54

Yeah, I think you put it well. And there's another way that I think this is just bizarre. It's a reverse of the problem we had in the Biden administration. So the Biden administration, I was like screaming at them to increase the budget of BIS because they put in place all these new policies that were going to be very difficult to enforce, right? What do you think has happened to the budget of Russian smugglers since the invasion of Ukraine? What do you think has happened to the budget of Chinese smugglers since this export control architecture came into being? Kessler is absolutely right that BIS needs a big budget increase. But whereas the Trump administration has been willing to ask for that and agitate for that budget increase, now they're basically saying you should praise us because of how big of fines we're handing out. You should praise us because we're taking enforcement actions seriously. But like the some of the big actions that they're proud of, like the fine that was applied to uh applied materials, that's from a case that was years old that originated in the Biden administration, right? So, yes, okay, great, you like cleared that from your books. But if you want to have an impact on geopolitics, you've got to clear these cases way faster than multiple years. And you've got to do enforcement in a way that actually shapes the future behavior of these companies. And there, I think there's no bigger failure mode than what's going on with the foundry rule right now. So the foundry rule was put in place by the Biden administration, and that one specifically relates to Chinese companies' ability to manufacture chips, AI chips in particular, at places like TSMC of Taiwan or Samsung of Korea. And while BIS has clarified, you know, the rules on you can't sell AI chips to Chinese subsidiaries outside of China, they have not issued that accompanying clarification about enforcement of the founder rule. And this was something that came up. So here I'm gonna actually read from Chris Maguire's tweet. Chris Maguire, who was on this podcast not that long ago, and a friend of mine, he said, quote, great question by Representative Young Kim to Under Secretary Kessler at today's HVAC hearing. Is BIS enforcing the element of the foundry due diligence rule that requires TSMC Samsung to obtain a license before making AI chips for unapproved companies located outside of Country Group D? And here's Chris's note BIS is not enforcing this license requirement, which creates a loophole that allows China to use front companies to make AI chips at TSMC Samsung. The hypothesis that the Tencent executive explicitly confirmed. And now here Chris continues. Undersecretary Kessler responded by saying if a foundry provides advanced AI chips to a Chinese front company, it would be a violation of U.S. controls. Obviously, this is true. But Kessler did not say that BIS is enforcing the license requirement for unapproved companies because it isn't. The whole purpose of this license is to catch violations before they occur so we can actually stop chips from going to Chinese companies. Baffling that BIS is not enforcing this provision. And this is what I mean when I say like there's a difference between being quote unquote, you know, tough on enforcement, having big penalties, and actually shaping the behavior of companies in a way that redounds to US strategic interests. Where like you have to be pre-approved to receive their chips. You know, you have to go through some kind of vetting process to receive their chips. The foundry due diligence rule was about moving companies like TSMC Samsung to a whitelist-based model so that we could know that they weren't going to be making chips on behalf of Chinese shell companies who are pretending to not be Chinese even though they are. Of course, it is illegal if you find out that it's a Chinese shell company to make chips for them. But it's not enough for that to be illegal. You have to have a mechanism that makes it extremely unlikely that that's ever going to happen. And that's the reason for going to the whitelist approach. Only such and such companies who've run through some kind of certification gauntlet can buy the chips, as opposed to a blacklist model, right? We will add companies as we discover their nefarious behavior to some kind of list. And I think that the fact that Kessler didn't want to say we want to do this is extremely concerning. Like, what is the argument that says that Huawei should be allowed to make chips at TSMC or Samsung and thus compete with NVIDIA vastly more effectively than they would otherwise be? Like, find me who anywhere in America's economy or national security benefits from a strategic interest perspective. It's baffling that they wouldn't want to enforce this. And I can only speculate as to what's going on here. And I think it's because the Trump administration is frankly scared to derail what's going on in the larger US-China relationship. They're scared of retaliation from China. And wow, for an administration that campaigned on getting tough on China, for an administration that says we're so powerful, we're so willing to use all the tools at our disposal, it's kind of cowardly.

SPEAKER_00 25:36

On a very tactical level, with his response during that hearing, hearing questions are only allowed five minutes, right? This is kind of inside baseball, but most of our listeners are going to know this from DC. Uh, five minutes total for the member of Congress to ask the question and for the witness to respond back with the answer. So when you have an under-secretary sit there and essentially answer the question by reading the question back to the person who had asked it very slowly and taking deep breaths, they clearly don't want to be involved in that conversation whatsoever, even though the answers that we're talking about are somewhat intuitive, right? So that is a tactical way of evading as much as humanly possible, right?

SPEAKER_01 26:15

Yeah. Well put. Um okay. So there's there's one other quote that I want to read, which is from Representative Keith Self, again, a Republican, this time from Texas. And this was really interesting. He said, quote, the AI action plan, I think you've got the requirement for the policy, the negotiated policies in place, they just haven't been enacted. And so here he's highlighting specifically that the Trump administration's AI action plan talked a big game on the competition with China being as important as the Cold War space race, as how they were going to use export controls as a really powerful tool of ensuring that kind of competition. And here you have a Republican saying basically none of that has come true. He goes on to say, quote, it is enforcement heavy. I could go through your charts, but I won't. But the information that we were given is that there is no new export controls on equipment. The license to buy H-200s, but not Blackwells, is there. There are no new entity list editions for almost a year now. There are no new location verification controls put in place. So my question is: do we really need to look at enforcement or do we need to look at the policies we have in place? And I understand you have a dearth of employees, but if you'll just take the overall view there of why shouldn't we not be looking at some of these policies that seem to be lacking as opposed to only looking at the enforcement inputs, I want to talk about outputs. And then he goes on to say that he's going to submit a question in writing about what metrics BIS should be assessed on, what kind of success criteria there are. Again, I'm in favor of increasing the inputs available to BIS in terms of staffing, in terms of funding, in terms of technological enablers. I've been screaming about that for four years now. But here again, you have Republicans basically saying even if we gave you these resources, it sounds like you don't even want to use the ones you have because your overall approach to policy on this topic is these are my words, not his, but kind of cowardly.

SPEAKER_00 28:22

Yeah, this was not an appropriations committee hearing where you'd be talking specifically about money and budgets, although that was discussed here. But the the concept that would come up very quickly in one of those hearings is we're gonna wind up throwing good money after bad. Right? If you don't have the policy and architecture, you need to actually pursue this right. Why are we giving you more money? Period.

SPEAKER_01 28:40

Yeah. Well put.

SPEAKER_00 28:41

All right, Greg, changing gears here. Uh, there's a big news item out of New York this week. From the July 14th, Washington Post. New York became the first state in the nation to impose a moratorium on construction of data centers Tuesday, a striking setback for artificial intelligence companies that politicians once courted for investment, but have now triggered public fears about energy prices and water use. Governor Kathy Hokul signed an executive order pausing environmental permits for large data centers for up to a year, saying the delay would give state officials time to craft rules to protect the electrical grid, the environment, and communities where developers want to build. As data center development threatens to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers, it is my responsibility to take the lead, Hokeel said in a statement. New York will lead the way in creating the strongest standards in the nation for data centers development, ensuring that when companies succeed because of New York, New Yorkers succeed too. Craig, what are we thinking here?

SPEAKER_01 29:43

So I think this is the governor threading a difficult needle politically. One really important piece of context is that a month ago, the New York legislature had already passed a bill calling for a moratorium on data center construction. Uh, Governor Hochel has not signed it. I'm sure big tech companies hate this executive order. I've heard from some of them that in fact they do. But it is not clear that this executive order is specifically worse than what might have happened if the legislature had forced the governor's hand. This is this is actually something that we've seen in the past. New York wanted to have a pretty strict AI regulation policy about the models and legal liability and all that sort of stuff. And the governor vetoed it and negotiated a much tamer version of the bill that ultimately became what New York had. So it could be that this is a replica of that story, where it looks like the governor is doing something big and bold and harsh against the tech companies, but actually what she's doing is preventing the legislature from doing something worse. The second big beat that I think is important here is that New York has already been missing the boat on the AI data center boom, to it a certain extent. I mean, according to data from uh Atiero, which tracks this sort of thing, as of March 2026, New York is among the worst states in America in terms of the proportional gap between how many data centers have been announced compared to how many are actually under construction. There have been 70 projects announced, only three are under construction, right? Compare that to Texas and Virginia. Texas has 140 under construction right now, with 610 additional ones announced. Virginia has 138 under construction right now, with another 499 announced. New York has three under construction. And so I think the reality is that local jurisdictions in New York have already been blocking all of these data center projects, which I would say is bad news for the people of New York. When you think about the data center build-out boom and the associated economic development, a lot of that takes place in the construction phase of these data centers. You create a lot of jobs very quickly. And those jobs are now taking place outside of New York. The shortage for certain categories of blue-collar work are so extreme that they will literally fly electricians from around the country into Texas to work on these data center construction and pay their travel and pay their housing and pay for everything. So it's totally possible. In fact, I would say it's effectively guaranteed, that there's a lot of people who could be working those construction jobs, who could be welders, who could be electricians, who could be something higher up on the salary curve. And they're literally being flown out of New York into Texas and into Virginia, places where it's much, much easier to build these kind of data centers. So that's the second thing is that New York is already making it very, very difficult. So this executive order, I'm not sure it actually changes the status quo in terms of what is actually happening on the ground of New York, but it might give the governor an opportunity a year from now to say, hey, everybody, please stop blocking all the data center construction. I've had this review. Now I can say, yay, verily, it's okay and it's going to be good for New Yorkers, and it's not going to raise your electricity bills as long as the data center construction project undergoes such and such checklist, right?

SPEAKER_00 33:31

And also give her time to work with the building trades unions to help engage public sentiment in a way per what you're describing, because there are a lot of blue-collar people, and theoretically, blue-collar union employed people doing this work. Give them a whole bunch of time to engage the public and elected representatives at the state and local level to help understand the implications of these projects more than they currently do.

SPEAKER_01 33:53

And I think it's just shocking to me how unpopular data center construction is and is becoming even more unpopular around the country. There's polling that shows people would be happier if a nuclear power plant was built in their backyard compared to a new data center being built in their backyard, which you know, the nuclear power industry, not historically someone that Americans have been eager to have as a neighbor, as safe as nuclear power actually is empirically. And I think a lot of it has to come with noise, construction inconvenience, and then finally, and by far most importantly, electricity bills. People think that a big part of the reason why electricity bills are going up in the United States, and they are going up, is because of the data center boom. And so some of what the governor is talking about is hey, how are we gonna ensure bills aren't gonna go up? Here's kind of the problem, though. The bills needed to go up in America anyway, just because America's electrical infrastructure is really old. It was built with a 50-year lifetime, a lot of the big grid stuff. It's been 60 years. Somebody has to pay for the old stuff to get taken down and new stuff to get constructed. The AI infrastructure boom happens to coincide with a big infrastructure refit that needed to happen in America anyway. And I think this is the governor looking at the politics on the left, looking at people like Bernie Sanders calling for nationwide moratoriums on data center construction. And she sees an opportunity to seemingly demonstrate leadership on an issue that imposes relatively few costs, at least compared to what local communities are already imposing as a prevention of these uh construction projects. And that's the that's the political needle that she's trying to thread. What I would much rather see is a way uh that embraces the build-out, but also tries to address local concerns. And I think it just it's kind of sad that New Yorkers think that the problem they face is that there's too many New Yorkers. And empirically, people are leaving the state and they're moving to other states, including Texas. So this is probably a political win for the governor, but an economic own goal for the state of New York.

SPEAKER_00 36:30

Yeah, and there are many paths to be able to deal with this, and I think you highlighting that this is really a one-year cooling off period until there is some type of other path forward potentially is uh is worth watching over time.

SPEAKER_01 36:46

Okay, well, that does it for this week's episode of the AI Power Podcast. There was another bit of big news that happened, which was around a proposal from Google Deepmind CEO, Dennis Hasabas, about a proposal for an international US-led AI safety regulation system and oversight system. I think we're gonna have a special guest on the podcast. I hope to be able to announce that soon, um, who's in a very, very good position to talk about that. So we'll we'll save that one for next week, but we'll also uh be back with Adam talking about the the news of the week. Thanks.