Some Thoughts On The ‘Chip Wars’

Of all the supply chain shortages we’ve seen in the past three years, the one that concerns our national security the most has been a shortage of precious semiconductors, the chips that go into phones, cars, computers and IoT devices.

China’s semiconductor consumption accounts for more than three-quarters of the global total. However, China produces only about 15% of global semiconductor output yet spends more than $400 billion importing chips, according to an academic paper published in the journal ‘Computer.’

This has led to a ‘Chip War’ between China and the US as China is currently the largest buyer of semiconductors in the world, and with the majority of chip manufacturing countries friendly to the US, China now has to ramp up production due to sanctions under last year’s CHIPS act that tightened earlier this month. In order for the US to retain its lead, we need to step up production, not soften sanctions for short-term market gains.

To China, wasting resources means nothing if it means a big Government handout at the end of the day. And to this day, the country continues to make the claim. Even though it was debunked by investigators over seven years ago.

So we shouldn’t trust the numbers. Secondly, China’s AI - which aims for transparency, unlike Western AI - is doing great according to the Chinese government.

In reality, the staunchly pro-business, pro-personal liberty Hong Kong newspaper The South China Morning Post angles their coverage to call the CCP’s version of free and open AI for what it truly is - a paper tiger.

In the past two years, I’ve watched firsthand how Mission-Critical data centers have shrunk in size while experiencing a dramatic increase in efficiency. After all, data centers aren't measured by how many microchips they use, but by how few they use. How small and efficient the hardware is to get extremely complex software jobs done. 

Let’s put it this way: an NVIDIA chip is like waiting an hour to pay $35 for an artisanal hand-made pizza in Napoli, Italy, and then China’s response is a wide selection of tepid, glazed-over slices from the heat-lamp part of an all you can eat buffet.

Because, in reality, which Western Company is buying Chinese-made AI chips? And that’s where the US truly has the edge over China. Without the dynamic intellectual portfolios Western Companies had to surrender as the price of doing business, China is stuck with a stunted vision of how to innovate. No more copying off other students’ homework. The free ride is over.

That’s why, when it comes to AI technology as a whole (and, by extension, the chips that power it), China is sure to fall behind.