Chips fueled by AI will reshape global security

‘Its potential to redefine geopolitics could exceed our ability to both predict and plan for the changes’

A global race to build powerful computer chips that are essential for the next generation of artificial intelligence tools could have a major impact on global politics and security.

The United States is leading the race in the design of these chips, also known as semiconductors. But most of the manufacturing is carried out in Taiwan.

The debate has been fueled by Sam Altman, the CEO of ChatGPT’s developer OpenAI. He has called for up to US$7 trillion to be invested in producing more powerful chips for the next generation of AI platforms.

That would be more than the chip industry has spent in total since it began.

Whatever the facts about those numbers, overall projections for the AI market are mindblowing. The analytics company GlobalData forecasts that the market will be worth $909 billion by 2030.

Unsurprisingly, over the past two years, the US, China, Japan, and several European countries have increased their budget allocations and put in place measures to secure or maintain a share of the chip industry for themselves.

Artificial intelligence

China is catching up fast and is subsidizing chips, including next-generation ones for AI, by hundreds of billions during the next decade to build a manufacturing supply chain.

Subsidies seem to be the preferred strategy for Germany too, while the British government has announced its plans to invest $127 million to support regulators and universities in addressing challenges around artificial intelligence.

The economic historian Chris Miller, the author of Chip War, has talked about how powerful semiconductors have become a “strategic commodity” on the geopolitical stage.

Despite the efforts by several countries to invest in the future of chips, there is currently a shortage of those needed for AI systems. Miller explained that 90% of the semiconductors used to train, or improve, artificial intelligence systems are produced by just one company.

That, of course, is the Taiwan Semiconductor Manufacturing Company or TSMC. Taiwan’s dominance in the chip manufacturing industry is notable because the island is also the focus of tensions between China and the US.

A glimpse inside a TSMC Fab producing advanced semiconductors. Photo: TSMC

For the most part, Taiwan has been independent since the middle of the 20th century.

But Beijing believes it should be reunited with the rest of China and US legislation requires Washington to help defend the island if it is invaded. What would happen to the chip industry under such a scenario is unclear, but it is a focus for global concern.

The disruption of supply chains in chip manufacturing has the potential to bring entire industries to a halt. Access to the raw materials, such as rare earth metals, used in semiconductors has also proven to be an important bottleneck.

For example, China controls 60% of the production of gallium metal and 80% of the global production of germanium. These are both critical raw products used in chip manufacturing.

And there are other, lesser-known bottlenecks.

A process called extreme ultraviolet or EUV lithography is vital for the ability to continue making semiconductors smaller and smaller – and therefore more powerful. A single company in the Netherlands, ASML, is the only manufacturer of EUV systems for chip production.

Supply chains

Yet factories, or fabrications as they are known, are increasingly being built outside Asia again in a move to reduce over-reliance on supply chains. Plants in the US are being subsidized to the tune of $43 billion and in Europe, $53 billion.

For example, Taiwan’s TSMC plans to build a multibillion-dollar facility in Arizona. But when it opens, it will not be producing the most advanced chips. They will still be produced in Taiwan.

Moving chip production could reduce the risk to global supplies in the event of major disruptions.

But this process could take years to have a meaningful impact. It is perhaps not surprising that, for the first time, this year’s Munich Security Conference created a chapter devoted to technology as a global security issue, with discussions revolving around the role of chips.

Of course, the demand for semiconductors to fuel AI’s growth is not the only way that artificial intelligence will make an impact on geopolitics and global security.

A Chinese chip production line in Jiangsu. Photo: Courtesy China Daily

The growth of disinformation and misinformation online has transformed politics by inflating prejudices on both sides of debates.

We have seen it during the Brexit campaign, the US presidential elections, and, more recently, during the conflict in Gaza.

AI could be the ultimate amplifier of disinformation. Take, for example, deepfakes – AI-manipulated videos, audio or images of public figures. These could easily fool people into thinking a major political candidate had said something they didn’t.

As a sign of this technology’s growing importance, 20 of the world’s largest tech companies launched something called the “Tech Accord” at the Munich Security Conference In it, they pledged to cooperate to create tools to spot, label, and debunk deepfakes.

But should such important issues be left to tech companies to police?

National leaders

Mechanisms such as the European Union’s Digital Service Act, the UK’s Online Safety Bill as well as frameworks to regulate AI itself should help. But it remains to be seen what impact they can have on the issue.

The challenges raised by the chip industry and the growing demand driven by AI’s growth are just one way that artificial intelligence is driving change on the global stage. But it remains a vitally important one.

National leaders and authorities must not underestimate the influence of AI. Its potential to redefine geopolitics and global security could exceed our ability to predict and plan for the changes.

Kirk Chang is a Professor of Management and Technology at the University of East London. Alina Vaduva is the Director of the Business Advice Centre for Post Graduate Students and is the Ambassador of the Centre for Innovation, Management and Enterprise at the University of East London.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of China Factor.