Chips- "the new oil" of the global economy?

To most of us who are not professionally involved in the AI industry, Nvidia is associated with high-performance graphics cards used by gaming fans. However, Nvidia's greatest success came in the wave of AI hype, where it became the proverbial ?shovel salesman” in a gold rush.

The chips produced by Nvidia have become one of the main driving forces behind the AI revolution that has been taking place in recent years. Despite declines in the company's share price since its peak in November 2021, the company is once again on an upward trend. Many analysts expect generative language models like ChatGPT to further accelerate the demand for high-performance chips.

Many things in technology have been compared to the new ?oil”-the commodity that drives the economy.?

"The new oil" was hailed earlier as data and later as AI. It is now increasingly being said that 'chips are the new oil'. And probably rightly so. Without chips, there would be no use for data, nor would there be AI.

The chip industry produces now more transistors than the combined quantity of goods produced by all other industries- well over a quintillion.

The problem of chips relates to two important areas: geopolitics and sustainability.

In terms of geopolitics, the production of chips enters into an economic rivalry between the US and China. The Chinese company Huawei has started to produce advanced technologies and services like telecom equipment and cloud services at such attractive prices that this has been met with a US reaction.

As Chris Miller writes in his excellent book ?Chip War” (link in recommendations below): ?World War II was decided by steel and aluminum, and followed shortly thereafter by the Cold War, which was defined by atomic weapons. The rivalry between the United States and China may well be determined by computing power.”

President Biden took a decisive stance against Chinese technology expansion. America budgeted huge subsidies for the production of semiconductors, green energy and electric cars. ???????????? ???? ????????-?????? ?????????? ??????????????????????????? ?????????????????? ???? ?????????? ?????? ???????? ????????????.

Federal Communications Commission has unanimously ???????????? ?????????? ???? ???????????? ?????????????????? ?????? ?????????????? ???? ?????? ???????????? ???????????? as ?posing threat to national security”.

This robust reindustrialisation policy combined with isolation instead of globalisation is meant the US to win the technology race with China.

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?? It will mean huge costs for the country;

??It will raise prices (labor in the US is way more expensive than in China) hurting the poor the most;

?? China is the main supplier of raw materials used in electronics, including lithium which is the core material used in battery production;

????????????LATAM countries like Bolivia, Chile and Argentina would become the main lithium sources. They may form an organisation on the pattern of OPEC dictating lithium prices;

The US would need allies. For instance, the Dutch company ASML which possesses 100% of the world’s photolithography market. Without ultraviolet lithography machines, chips are impossible to produce.

History repeats itself though. In the 1970s American companies outsourced chip production to Asian countries like Taiwan, Singapore or Japan. The latter was often accused in the 1980s of unfair competition and stealing jobs from the US.

Another issue related to the chip industry is sustainability.

As Kate Crawford pictures in her book ?Atlas of AI” data mining is also factual mining of minerals that devastates the natural environment. ?We are extracting Earth’s geological history to serve a split second of contemporary technological time, building devices like the Amazon Echo and the iPhone that are often designed to last for only a few years”.

I’m not dwelling here on the environmental impact of large computing centers of cloud providers.

How much of chips do we really need?

#chips #chipshortage #microchips

Book recommendations:

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