AI infrastructure is in high demand and short supply, prompting tech giants, chipmakers, and governments worldwide to form alliances to boost output and alleviate chokepoints. This “AI industrial complex” aims to reduce overdependence on Taiwan’s dominant chip factories.
No one has enough AI infrastructure, primarily the advanced microprocessors that power generative AI systems. CEOs are hoarding Nvidia chips, while numerous companies promise to build chip factories on American soil. State-owned or -funded efforts worldwide are also working to build and commercialize AI models in various languages.
Mark Zuckerberg announced last week that Meta has amassed 340,000 Nvidia H100 GPUs, the chips that have powered the development and use of ChatGPT. OpenAI CEO Sam Altman is raising billions to set up a network of chip factories to produce advanced semiconductors, most of which are currently manufactured in Taiwan. Microsoft also flagged chip shortages as a risk to its bottom line in its 2023 year-end report.
Altman told Axios’ Ina Fried at the World Economic Forum that “none of the pieces are ready” for delivering AI infrastructure “at the scale that people want it.” Zuckerberg is not taking any chances, telling The Verge his H100 buying spree “may be larger than any other individual company[‘s]” and will continue, whether others “appreciate that” or not.
Taiwan’s role as the world’s pre-eminent supplier of high-end chips could be disrupted by an invasion, blockade, or other military interference from China. If that dispute turns hot, the AI supply chain would become collateral damage. U.S.-based AMD, Nvidia’s closest competitor in the AI chip market, has been looking to reduce its dependence on the industry-leading Taiwan Semiconductor Manufacturing Co. (TSMC), which fabricates most AMD-designed products.
Taiwan’s producers are hedging their bets too. TSMC is working on a two-plant, $40 billion project in Arizona. GlobalWafer, another Taiwan-based chipmaker, broke ground on a Texas plant in November, after CEO Doris Hsu warned that supply chains would break down within weeks if China invaded Taiwan.
$200 billion has been committed to new U.S. chip manufacturing infrastructure, across several dozen sites, per the Semiconductor Industry Association. The biggest investments come from the likes of Intel, Micron, and TSMC, and the Biden Administration has also announced funding for 25 National AI Research Institutes.
Global investments are piling up as well. The UAE has launched a new state-backed artificial-intelligence company to commercialize sectoral versions of the country’s high-performing Falcon model. National AI stockpiles are being created in India and the U.K. The Indian government is purchasing 24,500 GPUs for startups and academics to use at 17 dedicated centers, while the British government will invest over $600 million to provide advanced chip access to researchers, non-profits, and startups.
The Indian government will also fund 500 AI/deep tech startups at the product development stage, mirroring French President Emmanuel Macron’s plan to pump $600 million into creating local “AI champions.” Ministers in India, France, and the Middle East see home-grown AI models as ways to preserve and promote their languages and culture.
Despite Silicon Valley’s libertarian rhetoric and free-market preferences, government and high tech industries have long been intertwined, as illustrated by the internet itself, which started as a government research project. The phrase “military-industrial complex” was popularized by President Dwight Eisenhower, who warned in his farewell address about the excessive influence of weapons manufacturers on government policy.
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