Nvidia's Pact with the German Government: Rails Bought, What Runs on Them Is Open
Last week I wrote here that Germany hasn't been left behind and is merely leaving its substance lying idle. And that this one week brings everything needed to change that: a date, a budget, participants. Now the week is over. Time to take stock.
What actually happened
Monday evening, Kraftwerk Berlin, red carpet. Merz opens the federal government's first investment summit, Huang sits next to him and talks about robots and autonomous cars as if he were a member of the cabinet. A Joint Declaration of Intent was signed, officially an initiative to develop cutting-edge AI models for Physical AI. Around a dozen German companies are involved, Siemens, Audi, Black Forest Labs. The federal government is reportedly putting in a three-digit million sum, Nvidia engineers and chips. Nobody named concrete figures. Huang mentioned in passing that Nvidia invested almost one billion dollars in Germany last year, and Merz called on German companies to open up their industrial data for AI.
Then Wednesday, Tempodrom. The queue at Askanischer Platz stretched all the way around the entire football pitch; the Tagesspiegel quoted someone who compared it to a Taylor Swift concert. Many didn't get in at all and watched the keynote on their phones, a few meters from the stage. Huang backed up the show with numbers: almost ten billion dollars invested in Europe last year, 14 startup investments on the tour through France, the UK, Sweden and Germany, more than 12,000 partnerships on the continent. Plus the DSX Pod, a complete data center in a container, prefabricated and validated, so that an AI factory is up and running in weeks instead of six months. First systems in early 2027. In parallel, Google and Nvidia announced clusters with up to 960,000 GPUs.
Twenty minutes in, in the middle of the Vera Rubin presentation, Greenpeace activists stood up and wanted to know what Nvidia is doing about its chips in Russian drones. Huang told security to take it easy, everyone was allowed to say something, he would talk to them later. Then he carried on. At the end, the little robot ducks came on stage and were supposed to take a nap; one just kept walking and then toppled over. Two of them pulled off the somersault. After that, an AI-generated Eurovision video with singing robots.
I watched it on the stream and loved the ducks most of all, precisely because they fell over. This is what Physical AI looks like right now: impressive, expensive, and when you say "take a nap," something topples over.
The sentence of the week
The most interesting sentence of the week appeared in an assessment of the Nvidia pact by the Science Media Center: buying chips gets you capacity, and sovereignty doesn't come with it.
Heise put it more sharply and wrote of sovereignty by Nvidia's grace: Nvidia uses Europe's call for independence to entrench itself as an indispensable supplier, thereby deepening the dependency further. In the same week, Bitkom measured that 96 percent of German companies source digital products from abroad and that a loss of these imports would end their business after 16 months on average.
That is all correct. And it is still the wrong yardstick for this week.
Europe does not have sovereignty in high-performance chips this decade. Anyone who attaches that as a condition to every cooperation builds nothing at all. The researchers at the Science Media Center say so themselves: anyone who, in pursuit of chip independence, cuts themselves off from the available cutting-edge technology today will also lose out in developing their own systems. The dependency of German companies on the US currently arises mainly from their use of US models. Chip purchasing, by comparison, is the smaller issue.
And that's where it gets interesting. Because that is exactly what Huang said on stage on Monday: data is a national resource that you keep in the country and turn into your own intelligence instead of exporting it. That same evening, Merz called on companies to open up their industrial data. The US corporation and the Chancellor are talking about the same lever. And the lever lies with neither of them.
Who owns the models?
The question this week left open is: who owns the models trained on the purchased chips?
If a supplier from the Allgäu contributes its twenty years of machine data to a Physical AI initiative, and the result is a model that Siemens licenses and Nvidia hosts, then Germany has bought capacity and given away its substance. If the same model belongs to the supplier, or to a consortium of twenty suppliers, then the pact has done exactly what it says on the label. Both are possible under Monday's declaration of intent. Nothing has been decided.
The 1,700 Mittelstand world market leaders I cited last week as an argument against being left behind are now the ones being addressed, well ahead of Nvidia and the Chancellery. The data has been sitting on factory floors for decades, never trained on, because there was no reason to. Now there is a reason, a container that is up and running in weeks, and a federal government that co-funds it. What's missing is the decision about who ultimately holds the key to the model. And no summit makes that decision; every company makes it for itself.
A salesman, yes. So what?
Under my post from last week, several people commented that Huang is just a salesman, that his statements serve the share price, supposed hope. All true. Nvidia won't have become one bit more European this week, and the keynote was a two-hour product catalog with ducks.
Except: a salesman who delivers rails doesn't decide what runs on them. That was true of Megaupload and it's true of GPUs too. Infrastructure has to pay for itself, and besides the corporation itself, any research that would otherwise have no computing time benefits from that as well. That a US corporation takes the stage in Berlin and recites to us the recipe for our own sovereignty is a little absurd. It is still the best news of the week. The ingredients are here. Nobody has taken them away from us. We've just never mixed them together.
I remain a fan of the company. As a ten-year-old I couldn't afford their cards; today they deliver data centers in containers to Berlin. What we do with them is not their job.