US Holds AI Lead Over China Due to Hardware

Silicon Valley tech companies, particularly those involved in AI, are as aggressive as Chinese firms in collecting and utilizing personal data, according to Peter Zeihan. Meta and other social media platforms actively mine user data with little regard for privacy.

The US tech industry faces minimal obstacles in gathering information essential for training advanced AI models, mirroring the data practices often attributed solely to Chinese companies.

China's historical advantage, stemming from its large population available for manual data entry, has become obsolete. This is because AI has advanced to a point where it can now self-process data efficiently.

China faces strict export restrictions that prevent it from importing the high-end hardware necessary for advanced semiconductor manufacturing. Specifically, China lacks access to extreme ultraviolet (EUV) lithography machines, which are supplied by the Dutch company ASML.

Without EUV technology, China cannot reliably produce chips below 7 nanometers. Export controls imposed by the US, Taiwan, Japan, and Ireland cap China's domestic chip manufacturing capabilities at a 4-5 nanometer technology level, while global standards for high-end AI chips currently operate at 2-4 nanometers.

Modern AI performance hinges on the number of computations a chip can perform and the power efficiency per computation. Newer chips are engineered with integrated coolant topography to effectively manage significant thermal output.

A hyper-scaled data center, consuming 1 gigawatt of power, requires approximately 500,000 GPUs, which are critical components for processing large language models at their core.