How the Nvidia scandal, Outlook outage show our overreliance on a few tech companies

Francis Sims joins us next. He's the Associate Dean of Information and Communications Technology at Humber Polytechnic. He joins us from Manila. Francis, thanks for joining us. Good morning. NVIDIA represents about 90% of the AI chip market. You heard my colleague Peter mention there. There's no ChatGPT. There's no cloud without them. So with all of this controversy unfolding, how vulnerable is the global AI market right now? In the short term, I think quite vulnerable. NVIDIA has really done something pretty amazing. I'd say they probably have 70 to 80 or more percent of the market share. And NVIDIA is an interesting company. It actually started in video games and was founded to build chips for the Sega system, which was a competitor to Nintendo's in the 90s and almost went bankrupt. And now it's grown to be this largest AI chip provider in the world. But There are other competitors. It's just that when this company has such a large market share, an event like this is a significant impact, and the stock market's reacted, in part because NVIDIA has also invested in the companies that's buying the chips from them. So, you know, market analysts are concerned that... You know, the cost of chips might go up. What does that mean for NVIDIA's investments as an investor in these companies? Lots of concerns. But, you know, there are other companies like AMD, Broadcom, other companies around the world that build competing chips. It's just that NVIDIA has taken such a significant part of that market. So the trillions of dollars in market losses that they've suffered, what does that mean for the AI boom? Well, that's the sort of interesting question that people are trying to figure out. I think in the short term, what we might see is a slight slowdown, which might not be a bad thing, right? It might give us some time. To, you know, think about what those guardrails are, and to put some framework around, you know, being able to safely regulate this type of environment. The companies have been moving so fast, in part because NVIDIA has been making money hand over fist, and then has been able to put that money back into those companies. And so now that NVIDIA shares have taken a hit, the other competitors can come into that, which would actually be better for the industry because it'll diversify the suppliers that are out there. It may slow things down a bit, but that might not actually be a bad thing. Right now, what we're talking about is potentially a situation where, you know, national security might have been compromised here, intelligence-wise anyway. If Jensen Huang testifies before the U.S. Congress, all of this ends up being resolved, and it turns out that he didn't knowingly leak secrets or, you know, the woman he had had an affair with wasn't a Chinese spy. This then just becomes an ethical situation, and does that really carry as much power on On NVIDIA's stock going forward as this national security concern might? I think by the time this gets worked out through whether Congress or the courts or however it happens, I think the share will have moved on, right? They've replaced Jensen Huang with the interim CEO. They're going to do some sort of executive search. Maybe he'll come back. Maybe he won't. But I think by the time that gets sorted out, there'll be many other companies that will start talking about it in an increased way. And I don't think that the The share price really cares about who the CEO is at the end of the day. It's just right now, it's something that everybody likes to talk about. I'm glad you mentioned we might see him come back because that's something that's always been in the back of my mind since this started too. But I also wanted to ask you just this situation. Does it show us perhaps some of the ethical implications of having one person have so much power over the future of tech? 100%, and I think it's kind of coincidental that we're talking about this at the same time as Microsoft just had a major outage for millions of people around the world with their Microsoft Outlook and Teams client. And I think what it demonstrates is our over-reliance. on a small group of big tech firms and in this case out of the western part of the United States and so when I think the federal government in Canada talks about the need to have a sovereign solution that we can control this is part of what we're talking about right our over-reliance on one chipset provider and our over-reliance on a technology provider Fantastic. But that most of us do our emails off of it. That, I think, is the bigger story, I think, in terms of risk is that, you know, what happens in their personal lives or a configuration update that goes awry can actually affect the lives of millions and millions of people around the world in a significant way. Francis, you and I are in simpatico today because that was the next thing I was going to ask you about was the Microsoft situation today and the implications of having, again, so much power behind one person. So I guess now that you've answered that question, my question is, what can we do to alleviate some of that, spread out the responsibility? And I know it's not an easy thing to do. Yeah, I think build some of our own, you know, back AI and technology companies that can, you know, build solutions that might might replace or give us better control over these platforms. I think, you know, as Canada partners with Europe in an increasing way, we're seeing that happening now with AI. Europe has gone and chosen other solutions so that they're not 100 percent reliant on tools like Microsoft Outlook. So ultimately it has to be diversification and we just have to make sure that. So when the system goes down, we have a backup. And in this case, for millions of people around the world with Microsoft, it's been a difficult 24 hours trying to book meetings and trying to communicate with each other. Yeah, a lot of lessons learned for sure. And I guess, unfortunately, sometimes we have to kind of learn them the hard way. Francis Sims, I want to thank you so much for your time. Francis Sims is a professor at Humber Polytechnic. Thank you, sir. Yeah, thanks for having me.