Digital Economy Weekly - November 17, 2024

Story of the Week

Frontier Markets

Frontier Markets are countries that are not among the world's least developed, but which still have significant investment risks. Large investors and financial institutions offer slightly different definitions of the term, and frequently update their lists of which countries fall under the definition. The term is often used for smaller nations that nevertheless offer high potential rewards for high risk.?

Frontier Markets provide the most intriguing list of countries within the IDCA Digital Readiness Index. IDCA Research covers 28 Frontier-Market countries – the IDCA defines the term as those nations with a per-person annual income of between US$2,000 and $5,000.? Below that level lie the world's Least-Developed Countries (LDCs); above it lie Emerging Markets, Edge Nations, and Developed Countries.?

By defining the term simply, IDCA Research includes several very large nations, including India, the world's largest by population, with more than 1.4 billion people. Other Frontier Markets with more than 100 million people in the Digital Readiness Index include Bangladesh, the Philippines, and Egypt.

Frontier Markets provide the sternest tests of whether ongoing initiatives to create of Digital Economies will ultimately be a success.?

The reasoning here is: We can assume all developed nations will have well-defined Digital Economies soon enough, and nations ambling their way to developed status will, too. On the other hand, LDCs will likely make minimal progress in at least the short term, even as the potential within many of them remains very high. But the Frontier Markets – not developed, but also not the least developed – will provide the truest tests of the world's investors' and governments' ability to make real progress in nations that will benefit the relative most from better transportation and communications, better supply chains, better eGovernment services, and other benefits from a more Digital Economy.

In addition to the countries cited above, the most promising Frontier Markets in the IDCA Digital Readiness Index include the small island-nation of Mauritius, Vietnam, Sri Lanka, Kenya, Jordan, Morocco, Ghana, Tunisia, and C?te d'Ivoire.?

Links of the Week

Increased 2024 CO2 Emissions Reported at COP29

The world's nations are on track to put 37.4 billion metric tons of CO2 into the atmosphere this year, up 0.8 percent from 2023, according to Global Carbon Project, presenting at the COP29 summit in Baku. Meanwhile, several United Nations reports say the globe must cut emissions by 42 per cent by 2030 to to be in with a chance of limiting warming to the internationally agreed-upon threshold of 1.5deg C. Read here.

Gloomy Climate Forecasts Coming from COP29 in Baku

Attendance is down 20 percent at COP29 in Baku, Azerbaijan compared with COP28 a year ago in Dubai, UAE, while CO2 and GHG emissions will be up slightly this year over last. UN Secretary General Antonio Guterres is referring to this past year as a “masterclass in climate destruction,” while Azerbaijani President reportedly said oil, gas, and other natural resources are “a gift of god.”

The UK and EU made pledges to their fidelity to climate-change abatement, while the US discussed a fee for methane producers. More developments have also been reported. Read here.

Softbank and Nvidia CEOs Team Up for AI-Driven Network, etc.

Softbank Founder and CEO Masayoshi Son (aka Son-san) has always thought big, often speaking in terms of 1,000-year plans and trillion-dollar investments. Now he's joining forces with Nvidia Founder and CEO Jensen Huang to create an mobile data network for 5G and AI-driven traffic. The two of them have a couple of supercomputers in the mix, too, with Nvidia's new Blackwell chips put to use throughout the new initiatives.?Read here.

Meta's Stock is Fine, But...

An article by Bloomberg reporter and columnist Kurt Wagner points out several disquieting things going on with Facebook parent Meta at the moment. The report expresses concern over the company and CEO Mark Zuckerberg's relationship with the incoming administration, better prospects for Tik Tok, the ongoing FTC suit, and new competition for Threads, among other items. All of these developments are balanced against the company's great stock performance this year and its steadiness so far after the recent election. Read here.

SMR Initiative Envisioned to Produce 750MW of New Electricity

The startup Oklo says it has letters of intent to build and deploy as much as 750MW of new electrical power from small modular reactor (SMR) nuclear plant designs. The company's plans are said to be based on the use of nuclear waste and experimental breeder reactor technology. It envisions a total company buildout of 2.1GW – equal to the capacity of many traditional two-reactor nuclear plants operating around the world today. Read here.

Anthropic CEO Sees $100B AI Data Centers in 2027

A five-hour podcast featuring Anthropic CEO Dario Amodei included a prediction that AI development data centers will each become $10B projects by 2026, and as much as $100B projects in 2027. At current construction rates, $10 billion will buy about 800MW of new capacity, and $100B bout 8GW. The world's largest data centers today run at 100MW, or so, although Dario is referring to clusters of facilities within individual initiatives. The world today still has less than 50GW of data center capacity. Read here.

Commerce Dept. Awards TSMC $6.6 Billion in Waning Days of Biden Administration Following the logic that the incoming US administration may try to undo everything that's been done in the current administration, the U.S. Commerce Department has announced it's completed a $6.6 billion government subsidy for TSMC's U.S. unit for semiconductor production in Phoenix, Arizona. This is a binding contracts.

TSMC plans to produce highly advance 2nm chips in Arizona, with operation planned to begin in 2028.?Read here.

Heard in the Industry

"It's the same vision that we can smell, right? It's like a wolf smelling (another) wolf," Softbank CEO Masayoshi Son, speaking of his conversations with Nvidia CEO Jensen Huang, as reported by Reuters. Read here.

Heard in the Aisle

“Racks will have liquid-cooled GB200 GPUs, each of which features one Grace CPU and one B200 AI GPU for up to 90 teraflops of FP64 compute. An NVL72 GB200 machine with a 72 B200 graphics processor will require around 120kW of power.”? – according to Nvidia, regarding its latest chip and supercomputer plans.

Country Snapshot: India

India's overall economy has been growing at 6 to 8 percent annually for some time, and is now the world's fifth-largest, with a prospect of catching number four Germany in just a few more years. Because India's population of 1.4 billion people is the world's largest, even its phenomenal growth of the past several years has budged its per-person (ie, per capita nominal) income up to about $2,600. This moors the country in the bottom 25% of personal income.?

India thus remains a Frontier Market in the IDCA Digital Readiness Index, even as it has emerged as a global economic power. Its bond rating sits on the lowest rung of investment-grade risk, second among Frontier Markets after the Philippines. Its bond rating is actually higher than most nations in the next highest economic tier, Emerging Nations, but lower than Mexico, Malaysia, and Thailand among members of this group.

So, India remains a Frontier Market within the Digital Readiness Index, if an unconventional one. There are highly ambitious plans to add 10's of gigawatts of data center footprint throughout the nation over the next several years, as its now-three-term President Narendra Modi pushes his agenda to make India a fully-developed nation by 2047.

Numbers start to lose their meaning when contemplating India. For example:

• The nation has the world's second-largest roadway system (after the United States), but road traffic remains an enormous impediment to economic performance and progress.
• More than 50 million people use metro trains each day, but that's less than 4 percent of the country's population.
• The country's airports serve 84 million people annually, about 20 percent that of China and 13 percent that of the United States.
• India's electricity grid is the world's third-largest, yet delivers only 20 percent of the per-person power of the developed-world standard, and lags China by 80 percent and the US by 65 percent overall.?

So India remains the world's largest and most daunting Frontier Market. There's still plenty of time for pioneers to venture there and work with local investors, businesses, and (to some degree) agencies to keep it moving upwards through the world's economic leaders.

Inside IDCA

Digital Infrastructure & Application Ecosystems, Wed, Dec 18, 11am-noon eastern time The days of data centers sitting somewhere processing bits and bytes mindlessly are rapidly disappearing. Data center designers, builders, and operators must increasingly think about the Application Ecosystem that data centers serve. Operators must consider the Application Architecture, Availability, Security, Integrity, Efficiency, Reliability and Performance, Capacity and Maintainability, I/O Processing, and Business-Specific Metrics.

Registration is free: https://events.zoom.us/e/view/QhszwC9uSdKztOmnwYx8eA