Tech billionaires aren't the only ones fighting for control of AI. The same goes for America and China.
These two world superpowers are competing on everything from the intellectual know-how to design AI hardware and software to the raw materials that power artificial intelligence systems. Both companies are using government subsidies to fuel new advances.
According to Frank Long of Goldman Sachs' (GS) applied innovation division, the United States currently holds a clear lead in the development of generative AI systems such as large-scale language models (LLMs). These models examine existing data and use it as the basis for chatbots such as Open AI's ChatGPT.
Another advantage for the United States is that it can impose export restrictions on high-performance semiconductors designed by companies like Nvidia (NVDA), which are in high demand across the AI world. So for now, the development of the most sophisticated LLMs is out of China's reach, Long said.
However, China is countering with its own strategies. It has reportedly set aside a new $27 billion chip fund to support its major projects while restricting exports of semiconductor-making metals gallium and germanium to the United States.
Intense competition for AI talent between the two countries continued last week with the US Department of Justice's indictment charging a Chinese former Google (GOOG, GOOGL) AI software developer with stealing 500 files of confidential code provided by the technology. The situation became even more heated after the incident was made public. Giant uses supercomputing data centers to train LLMs.
The government claimed that after the defendants stole the intellectual property, they simultaneously began working for a rival company in China.
FBI Director Christopher Wray said in a statement that the charges are “the latest example of the extent to which affiliates of companies based in the People's Republic of China are willing to steal American innovation.”
'Horse racing'
The battle for global AI supremacy was a hot topic at the annual technology conference Web Summit in Doha, Qatar, earlier this month. The event attracted investors and technology executives from around the world.
AI leaders in the public and private sectors acknowledged that the United States and China currently have the upper hand. These countries are currently ranked 1st and 2nd in Tortoise Media's Global AI Index, which evaluates nations based on their investment, innovation, and implementation in AI.
But the leaders also said at the summit that it is too early to know which countries will make the most of this technology to maximize economic and social benefits over time. For example, Singapore has risen rapidly in recent years and currently ranks third on the Tortoise Index.
“I don't think horse racing is that simple, this person or that person, this country or that country,” Long said. “It's going to be a full stack to compete” in terms of energy, computing power, data and models needed for AI systems.
In a recent white paper, Goldman's Long and his team found that certain geopolitical “swing states” such as the United Kingdom, the United Arab Emirates (UAE), Israel, Japan, the Netherlands, and South Korea are in the most advantageous positions. He said that he suspected that there was a problem. Leverage technology to form AI alliances.
Asian countries other than China already have some advantages. Taiwan is home to the most advanced semiconductor manufacturer, Taiwan Semiconductor Manufacturing Company (TSM), which produces 90% of the world's most advanced semiconductors and 68% of the world's semiconductors.
Japan and South Korea also have major semiconductor manufacturing and design companies that are securing more government funding to drive advances in AI.
Japan allocated $13 billion for the technology in its 2023 budget, up from $8.6 billion in 2022, while South Korea pledged $470 billion over the next 23 years to build the world's largest semiconductor manufacturing hub.
Other potential AI hubs could emerge in Europe and the Middle East. Home to ASML (ASML), the Netherlands is the world's only manufacturer of the ultraviolet lithography equipment needed to manufacture cutting-edge semiconductors.
The UAE has a $10 billion fund to invest in cutting-edge technology, and Israel has also attracted billions of dollars in private AI investment.
According to Alaa Abdulal, head of digital foresight at the Riyadh-based multilateral foundation Digital Cooperation Organization (DCO), global power will shift from countries that produce AI technology to those that exclusively consume it. The group's mission is to recommend government policies that promote access to technology.
“The government cannot do it by itself,” Abdulal said. “We need to take a collaborative approach where the private sector, public sector and civil society sit at the same table and all sit together to devise the right set of frameworks for AI.”
“It’s getting closer.”
Most countries have now adopted at least a national strategy to develop and protect against the potential risks of AI. Others have paved the way for regulation, but none have been able to counter market forces.
The EU is expected to introduce new legal restrictions on AI in March. Earlier this year, the bloc's member states agreed to the AI Act, the world's first comprehensive law regulating technology.
AI-specific federal legislation does not yet exist in the US or UK, and it is unclear whether that will ever happen.
In October, President Biden issued an executive order encouraging safe AI development that includes privacy protection. More than a dozen US states have adopted multiple AI-related laws.
The UK also rolled out a National AI Strategy in 2022, contributing approximately $4 billion in chip development subsidies. The country also attracts her third-highest amount of private investment in AI, after the United States and China.
Jihad Tayara, CEO of Evoteq, a Dubai-based company that promotes public-private collaboration to integrate AI into public infrastructure, believes state subsidies and export bans are permanent as countries compete. He said that it may not have much influence.
“We're getting very close to that,” Tayara said of the digital divide, noting that most countries have access to high-speed 5G data capabilities.
And human capital is important, along with access to open source models.
“Open source models are now emerging that are as capable as the most cutting-edge models for many use cases,” Long said.
Countries that prepare their workforces to develop and implement AI models will gain a significant advantage, Abdulal said.
“This opportunity can only be realized if we have the right people in place.”
Alexis Keenan is a legal reporter at Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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