Undeclared Wars. Chips With Everything. AI Lobbying. East/West Factory Flaws. Running a Marathon Drunk – Plus More! #207
Grüezi! I’m Adrian – welcome!
1️⃣ The US Wake Up Call on China
China is gaining hearts and minds.
US Secretary of State Antony Blinken visits China this week.
Elizabeth Economy and Evan Medeiros are leading voices on US-China relations. Both have wake up calls for the United States over its position at the top of the global pecking order.
The US, says Economy:
“Is increasingly viewed as operating outside the very institutions and norms it helped create...”
Washington, she argues, has underestimated China’s global appeal, especially to countries in the global south – a point Medeiros backs up:
Chinese narratives about history and contemporary geopolitics resonate in the developing world, and Beijing is only getting better at promoting them.
The US is the incumbent global power and when people look at the world – for good or ill – they tend to blame whoever is at the top of the pile.
America needs a new narrative if it wants new friends in old places it has neglected.
⏭ Here are the some of the things on Secretary Blinken’s China agenda.
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2️⃣ Dire Straits – Admirals Ring Asia Alarm Bells
To prevent conflict the US needs to be better prepared.
🚨 China wants the ability to mount a successful invasion across the Taiwan Strait by 2027, according to Admiral John Aquilino, US Indo-Pacific commander. 🚨
That’s the headline.
If you want a more detailed insider’s account of Pentagon thinking turn to another admiral, Mike Studeman. He just retired from a career at the heart of US naval intelligence, analysing China’s military.
Studeman writes this week: “Xi is militarizing Chinese society and steeling his country for a potential high-intensity war.”
What should the US do? Studeman suggests:
Build alliances to maintain the current status quo.
Field more military. Make the potential cost of conflict too high.
Be prepared. Strength is the best way to deter China – it respects powerful opponents.
Engage diplomatically, but cautiously. View “stabilization” measures as potential attempts to buy time, i.e. a permanent “Cold War” posture.
Monitor Chinese finance. Shifts in US Treasury bond holdings and forex reserves may be aimed at shielding it from potential sanctions.
You can write this all off as Pentagon fear-mongering aimed at military budget grabbing. And doubtless there are many better things to spend tax dollars on.
But – given where we are – the military advice the White House is getting is all heading in one direction: war is coming, diplomacy and engagement will not prevent it, only military spending and strength.
⏭ Joint US-Philippines military exercises start this week...
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3️⃣ Coming Wave, Present Conflict
#AI is already a US-China battlefield.
I just put down #AI exec Mustafa Suleyman’s book The Coming Wave.
TL;DR? A polemic with no piñata. Good read but punches are pulled.
Except one:
“On October 7, 2022 ... America declared war on China ... This didn’t involve missiles shooting over the Taiwan Strait... It came instead from an unlikely source: the Commerce Department.”
I was genuinely shocked to see such a blunt description of the Biden administration’s export controls on #AI computer chips to China and others.
It’s rare to hear a tech exec express such a strong view so coldly or clearly.
At the time of the announcement the only business voice the FT could find was anonymous:
“They are not just targeting military applications, they are trying to block the development of China’s technology power by any means.”
Regular readers will recall that this is the theme of 3 Body Problem – except its aliens not Americans, and they’re trying to stifle the earth’s – not China’s – scientific progress.
⏭ ‘The Coming Wave’ argues for “containment” – of #AI, not China.
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4️⃣ Ghosts of Tech Wars Past
Before China and semiconductors, there was Japan
Rising Asian power threatens US tech supremacy? ✅
Restrictions to sensitive tech transfers? ✅
Back in the 1980s, US chipmakers saw Japan as a major threat to their semiconductor superhero status.
The result? 1986’s US-Japan Semiconductor Trade Agreement, cutting Japanese exports and promising the US a 20% market share in Japan.
It did slow Japan’s tech advance, but the US semiconductor industry bounced back by shifting from memory chips to microprocessors.
TL;DR? Innovation and adaptation mattered more than the trade war.
Current US-China tech rivalry is different, but the lessons of the 1980s are still worth heeding.
Trade restrictions raise costs, strain alliances, increase tech espionage, stoke nationalist resentment and encourage substitution and retaliation.
Investing in R&D, talent, and infrastructure does more to build long-term competitiveness than putting up tech barriers.
As the US pursues its current tech showdown with China, another debate is brewing within #AI industry.
Big tech companies and open-source advocates are clashing over the future of AI regulation, with far-reaching implications for innovation, security, and the balance of power between established players and newcomers. Read on...
⏭ Calls to toughen the US semiconductor sanctions regime are getting louder.
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5️⃣ The AI Lobby Trying to Kill Open-Source
It’s King Kong vs. Godzilla on K Street.
Coming Wave’s Mustafa Suleyman now works for Microsoft. He also thinks #AI needs to be put back in the hands of well-regulated, responsible big tech:
“The most sophisticated Al systems or synthesizers or quantum computers should be produced only by responsible certified developers.”
Laura Edelson is a computer scientist who used to work for the US government, monitoring anti-competitive behaviour.
She’s worried that this proposal kill open-source Large Language Models (LLMs), like Meta’s Llama. (Edelson is not on Meta’s payroll, she’s been critical of them.)
She has three points on the “K Street” Meta vs. Google, King Kong vs. Godzilla clash:
History: Open-source LLMs have not been held back by open-source, in fact it was the norm until OpenAI made GPT-3.5 closed-source.
Business model: Foundational LLM is not the product. Companies make money helping people put LLMs to work and by building around it.
Security and speed: Open-source software wins in terms of innovation and security. When everyone can access code, innovation happens faster, and while good and bad actors can find bugs quicker, the net result is more secure software because there are more defenders than attackers.
⏭ “AI doomsayers funded by billionaires ramp up lobbying.”
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6️⃣ How Hard Can It Be To Build a Chip Factory?
America’s finding out with ‘East meets West’ culture clash.
American Factory – trailer above – was a great tale of East/West corporate culture clash in auto-parts manufacturing.
Taipei’s world-leading chipmaker TSMC looks to be remaking it for high tech.
The geopolitical clash described above has driven the US to pressure TSMC to move chip jobs from Taipei to Phoenix.
TSMC’s legendary founder Morris Chang has called it “a very expensive exercise in futility.” But it’s being built.
Some nuggets:
“The company runs on engineers with ‘slave mentalities’....
“Managers excluded Americans from higher-level meetings conducted in Mandarin...
“Staff were banned from using personal devices inside the factory. Instead, they were given company phones, dubbed ‘T phones,’ that couldn’t be connected to most messaging apps or social media.
“TSMC veterans described their American counterparts as lacking the kind of dedication and obedience they believe to be the foundation of their company’s world-leading success.”
And what did transplanted TSMC employees make of their new home?
One engineer’s wife summed up the US:
“Great mountains, great rivers, and great boredom.”
May we live in boring times.
⏭ TSMC says US and German made chips will cost customers more.
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7️⃣ The Weekend? Can You Run A Marathon Drinking?
Watch as wine TikTok-er Tom Gilbey samples a wine a mile.
Personally I don’t recommend it.
⏭ You can watch more of Gilbey’s pontification on vinification here.
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If you enjoy this newsletter – please recommend it!
Best,
Adrian
