• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Economy AI gold rush pits China vs US as possible microchip shortage looms: experts
Economy

AI gold rush pits China vs US as possible microchip shortage looms: experts

by December 8, 2023
by December 8, 2023 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

The world could face another chip shortage as companies and nations seek to lead the way with artificial intelligence (AI) development, having seemingly made few changes after the impacts of the 2021 supply chain crisis, experts said. 

‘The answer is different for different segments of the semiconductor industry and the chip economy,’ Gregory C. Allen, the director of the Wadhwani Center for AI and Advanced Technologies for the Center for Strategic and International Studies, told Fox News Digital. 

‘Companies that make these chips are building out additional capacity to a different extent and in different market niches,’ he said, adding that while the world is ‘headed to an oversupply of certain types of chips,’ there is ‘already a shortage’ of more advanced chips, reflected in the ‘extraordinary cost of each of these chips.’ 

China enacted a series of extreme lockdown measures, known as ‘zero-COVID,’ to combat the coronavirus pandemic, which required cities to shut down and test every resident after officials detected just a few positive cases. 

The impact of this shortage proved severe. Everything from cell phones to cars to Javelin and Stinger missiles halted production and distribution. The U.S. Department of Commerce estimated the shortage accounted for a loss of a full percentage point off the GDP for the year. 

‘[It is] a really big deal when companies can’t get enough of the types of chips that they need,’ Allen said. He highlighted the difference, though, between the chips needed to train AI models and the kinds of chips in cars that allow for simple operations and navigation.

The demand for semiconductor chips and microprocessors skyrocketed following public engagement with ChatGPT and mainstream attention on AI models and platforms. Chip manufacturer Nvidia’s revenue rose 206% over the prior year in its latest quarter thanks to the surge in AI interest and demands. 

The United Kingdom, for example, pledged to spend hundreds of millions of pounds on purchasing chips to allow researchers and developers to pursue breakthroughs and remain at the cutting edge of the industry as nations jockey for a leading role in AI. 

Matt McInnis, senior fellow for the Institute for the Study of War’s China program, told Fox News Digital that a renewed chip shortage is ‘a legitimate concern’ since it remains ‘difficult for the industry to estimate how much the demand is going to be as we grow.’ 

Despite the risk of a shortage, McInnis noted that it is not yet clear if such a shortage may be ‘imminent.’ 

Allen warned about a more considerable issue arising from China’s efforts to try and control the chip supply, which currently rests on Taiwan, which controls a near total monopoly on the production of the most advanced semiconductor and processor chips needed for AI research and development.

‘In the case of China, they have been faced with U.S. regulations that prohibit the sale of the most advanced types of AI chips to China, and what China has done in response to that is – with the most advanced chip that they are able to purchase – companies like Tencent purchased a two-year stockpile of the most advanced GPU chips for their AI applications,’ Allen said. 

These efforts help constrict the supply of the most advanced chips, thereby raising the price and putting competitors into a difficult choice – potentially driving them out of business altogether. 

‘They basically paid above market price on these chips to jump the line in allocating the capacity: What chips have been made, who gets to buy them post an extraordinary jump in price,’ Allen explained. 

That may lead to a tug-of-war, with China dumping cheaper, legacy – or simpler – chips onto the market, while the U.S. may continue to limit access to the more advanced chips as well, leading to companies stockpiling chips even more than they have already done. 

‘AI is the hottest category in global venture capital markets and technology investments,’ Allen said. ‘So many different companies are being created to pursue AI technology and so many major technology giants are remaking themselves around AI technology – especially after the more recent breakthroughs in generative AI and foundation models.’ 

Nathan Picarsic, a senior fellow focused on China and Technology for the Foundation for the Defense of Democracies, argued that the limiting factor may not be demand but the capacity to produce chips to meet demand, since many countries have not yet diversified their supply chains enough to meaningfully have reduced reliance on China. 

‘It’s not always at the same exact nodes, but you can start all the way at the upstream and the export restrictions that China imposed on gallium and germanium, for example, a few months back, which speaks to the degree to which China’s positioning in the supply chain can cause problems starting at the upstream down through everything from the chips that are going to make your car work to the ones that are going to make data servers operate the way that cutting edge applications they need,’ Picarsic explained. 

‘I don’t think we’re necessarily better prepared because the market is segmented, so we’ve maybe closed one hole in the dike but left another open, if you will,’ he added. ‘I think that the exposure we have to China remains there.’  

This post appeared first on FOX NEWS
You Might Also Like
  • Time’s running out for these GOP presidential candidates scrambling to qualify for the 2nd nomination debate
  • Protectionism in Biden’s Inflation Reduction Act Harms Consumers and Domestic Industries
  • NC Republicans ask high court to reconsider redistricting, voter ID decisions
  • ‘We need to win’ AI race against Beijing, House China Committee member warns
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Rising car crash deaths could force companies to rethink stunt driving in commercials
next post
1960s Analogue Sees Inversion in 2023

You may also like

Republicans torch Biden paying Iran $6 billion for American hostages:...

August 11, 2023

Hunter’s text about Biden making him fork over half his...

August 10, 2023

AI security infrastructure needed after ‘malicious’ foreign actors use OpenAI...

February 17, 2024

Biden appeases Iran because he’s desperate to beat Trump

April 16, 2024

Marjorie Taylor Greene moves to censure Rashida Tlaib over ‘sympathizing...

October 27, 2023

House Intel Chair Turner warns of ‘serious national security threat,’...

February 15, 2024

Trump campaign fires back at GOP opponent trying to bait...

July 17, 2023

The Long Read: 2024 is an election about 10/7, not...

January 14, 2024

Jill Biden’s office attempts to walk back Iowa WH invite...

April 5, 2023

Biden calls Speaker Johnson ‘dead on arrival’ in odd response...

July 30, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout, pulls outlook

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025
    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against strict U.S. chip controls

      May 7, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,630 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,339 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,320 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,302 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,186 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout,...

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Some conservatives have surprising ‘Barbie’ take...

    August 7, 2023

    Progressives Love Suppressing Votes–But Not the...

    December 21, 2022

    New York man sentenced 3 months...

    August 26, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here