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Speaker 1: Bloomberg Audio Studios.
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Speaker 2: On this, both the NVIDIA of it all and Iran were joined by Carlyle Group partner and Vice Chairman Admiral James Chavides. He's also a Bloomberg Opinion columnist, former NATO Supreme Allied Commander, and author of the new book, The Turning Tide, a novel of love and war, which will hit shelves tomorrow. Admiral Chavides, we'll talk about your book momentarily, but can I just get your thoughts on all of this? To what degree is this not just a corporate governance issue, an NVIDIA issue, but one of national security issues? that we should take seriously?
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Speaker 3: We should take it very seriously.
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Speaker 4: Picture in World War II, if a high-ranking U.S. leader had an affair with someone with.
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Speaker 3: Whom we were in conflict.
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Speaker 4: We're not obviously in a war with China, but we're in perhaps the edges of a Cold War.
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Speaker 3: So very serious on its face.
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Speaker 4: And then add into that the incredible sensitivity of the company itself. So I don't envy the board of directors there. They're going to have to move with real alacrity, get an outside set of eyes on this and make some, I think, hard decisions.
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Speaker 1: Admiral, what does the edges of a Cold War look like? Because we know that at the center of it all, NVIDIA, and it is the company at the center of all of this U.S.
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Speaker 3: And China tech rivalry.
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Speaker 4: It's so much larger than just the tech rivalry. It includes a kind of a shadowy cyber war that's been in progress for.
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Speaker 3: Much of a decade.
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Speaker 4: Chinese claims of ownership of the South China Sea, a vast body of water. Taiwan, our controversies over that. Fentanyl, competition for strategic minerals, trade and tariff disagreements. A lot of disagreements with China. The key is, how do we avoid stumbling further into a full-blown Cold War or, God forbid, a hot war? And the short answer there is dialogue, engagement, set boundaries. And as I always say, we need to kind of bend the relationship with China on some of the topics I just mentioned. We need to avoid breaking it altogether.
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Speaker 2: Well, again, sort of on this idea of communication here, I wonder if NVIDIA, what happened here, is instructive of a problem because reporting suggests that intelligence officials did look at this, did flag this, were concerned, yet we had a commerce department that continued to allow NVIDIA to have its relationship with this woman's company that was allegedly putting its chips, taking, buying chips and moving them through a Singapore shell company to China. Does that represent some tension or an issue that you can have the intelligence community concerned, but that not really filtering to action from the Commerce Department?
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Speaker 4: That is an additional concern. And frankly, I mentioned a board of directors. They'll have an outside
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set of eyes looking at this from the perspective of the propriety of the CEO and his actions here. I think the Congress is also going to get involved. for exactly the reasons you indicate. Who was aware of this? What were they briefed upon? What did they talk about? Did we try and set some boundaries? The facts of the matter, as reported, may or may not be accurate, but this screams for a detailed, almost day-by-day look at the relationship, and then examining, as we always do in potential intelligence leak scenarios, situations, you look very specifically at what, in this case, Jason Huang could have passed to someone he may have had an affair with.
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Speaker 3: Again, we don't know a lot of the facts.
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Speaker 4: At this point, but it certainly bears a very significant investigation.
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Speaker 1: What does it tell you, Admiral, that the Commerce Department seemingly protected Jensen Huang and also maybe even supported his preferred policies? In light of all of this that we know now, does it give you reason to Danny's point to be a little bit more concerned that this is something much bigger than what we know for now?
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Speaker 4: Again, we don't have sufficient facts to be pointing fingers at any given entity or any individual. But I am quite certain this will get the highest level of scrutiny, certainly from the administration itself. We'll want to pull this apart and understand what happened, where there may have been failures. But I think I can assure you that... New Congress will want to take a hard look at this as well. And again, all that will be in addition to something we as investors ought to be looking at, which is the board.
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Speaker 3: And their role in this, their level of knowledge.
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Speaker 4: And therefore, outside look absolutely warranted as necessary.
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Speaker 2: Admiral Servetus, elsewhere, we did last week witness an election that many, including the Republican Party, J.D. Vance, among others, have blamed the war in Iran for this huge change in sentiment and this blue wave that has come through. We have the president saying that strikes are unlikely in Iran. Do you think post-election that things have changed, that this is a United States, that this is an administration that is going to be looking at de-escalation and trying to find a way out?
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Speaker 3: I think so.
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Speaker 4: And I think that's true not only in the war in the Middle East with Iran, but I think also the administration is going to double down on trying to get to a solution in the war in Ukraine. And these are two very different conflicts, obviously. But historically, when an administration suffers this kind of midterm defeat and kind of puts the handcuffs on domestically with control now passing of the House and Senate to the opposite party, there's a tendency on the part of any administration to look outside the United States into foreign policy, look for some areas where they can achieved some wins. And back to the Arabian Gulf, the Persian Gulf, I think it's quite likely that they will work very hard to get to an agreement.
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Speaker 3: What are the chances of that?
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Speaker 4: I'm cautiously optimistic, emphasis on caution, that we can get to a deal. Maybe President Trump will need to escalate and launch a few more strikes, kind of escalate in order to negotiate.
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Speaker 3: Maybe he'll need to do that.
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Speaker 4: Maybe, as he implied in the interview and the clip you showed, he'll be able to move more directly to a deal that both sides can accept.
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Speaker 3: Let's hope so.
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Speaker 1: And Admiral, your book explores leadership, loyalty, and all of those great values amid wartime. When you look at the U.S. military today, what lessons are you taking from that? Do you see that political divisions maybe are starting to undermine maybe cohesion or unity when you look at that?
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Speaker 4: The book is set in World War II, the turning tide, and it's at that moment in that extraordinary war where the tide did turn and the United States achieved its ultimate victory. And what I try to pull apart in the book is how did that happen by telling a story about the people involved in the war? And very quickly, number one, your point, it was the unity that we enjoyed. We need to work to reestablish that. Number two, high tech. The war in the Pacific was the ultimate high tech.
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Speaker 3: War as carriers. What we think of today.
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Speaker 4: As drones called kamikazes, crypto. And then third and finally, the U.S. industrial base needs a makeover. We need to be able to produce more weapons more quickly. Those are lessons of World War II that exist today.
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Speaker 2: Admiral, thank you so much for joining us. Looking forward to the new book. Admiral James Servetus with his new book out shortly.
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Speaker 1: This is Bloomberg.