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# The Geopolitics of Semiconductors and AI

## The Rise of AI and the Demand for Computing Power

- Advances in artificial intelligence (AI) have been driven by the ability to train larger and larger AI systems on more and more data.

- This trend, known as the "scaling laws" in AI, has led to a consistent and rapid increase in the amount of data used to train the most advanced AI systems over the past 70 years.

- The training of these large AI systems, such as ChatGPT, requires vast amounts of computing power, which is enabled by the most advanced semiconductor chips.

## The Global Distribution of Computing Power

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- The United States and China are the two clear leaders in terms of server installation base, giving them access to the extraordinary volumes of computing power needed to train state-of-the-art AI systems.

- This concentration of computing power in the hands of these two countries has significant economic and geopolitical implications, as access to cutting-edge computing resources is seen as critical for technological and economic advancement.

## The Semiconductor Supply Chain and Its Complexities

- The manufacturing of advanced semiconductors is an extraordinarily complex process, involving a global supply chain of specialized companies and materials.

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- No single country or company is self-sufficient in semiconductors, as the supply chain relies on the exchange of intellectual property, materials, and manufacturing equipment across borders.

- This global interdependence in the semiconductor supply chain has made it a key battleground in the intensifying geopolitical competition between the United States and China.

## The Geopolitical Competition over Semiconductors and AI

- Both the United States and China have recognized the strategic importance of semiconductors and AI, as they are seen as critical for future economic and military power.

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- The United States has sought to restrict China's access to the most advanced semiconductor manufacturing equipment and chips, while China has been pursuing a strategy of self-sufficiency in semiconductors to reduce its reliance on foreign suppliers.

- This geopolitical competition has led to the politicization of the semiconductor supply chain, as governments seek to ensure that their respective technology ecosystems have access to the critical components needed to develop and deploy advanced AI systems.

## The Implications for the Future

- The geopolitical competition over semiconductors and AI is likely to continue, as both the United States and China view these technologies as essential for their economic and national security interests.

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- This competition will have far-reaching consequences, not only for the technology industry but also for the global economy and international relations, as governments seek to shape the development and deployment of these transformative technologies.

- Understanding the dynamics of the semiconductor supply chain and its role in the AI revolution is crucial for making sense of the world around us and the forces shaping its future.