The long-term winners were definitely not the groups that extracted or refined the oil, even though they made lots of moneyâit was the countries that consumed the oil and built industrial capacity leading up to WWII, and could then use the controlled supply of oil. ⌠And as far as I can tell, no-one is restricting Chinese companies from using compute right nowâthey donât own it, but can use the same LLMs I do.
that you think ownership of compute does not substantially influence who will have or control the most powerful AI systems? I disagree; I think it will impact both AI developers and also companies relying on access to AI models. First, AI developersâexport controls put the Chinese AI industry as a whole at a compute disadvantage, which we see in the fact that they train less compute-intensive models, for a few reasons:
It is generally unappealing for major AI developers to merely rent GPUs they donât own, as a result of which they often build their own data centers (xAI, Google) or rely on partnerships for exclusive access (OpenAI, Anthropic). I think the main reasons for this are cost, (un)certainty, and greater control over the cluster set-up.
Chinese companies cannot build their own data centers with export-controlled chips without smuggling, and cannot embark on these partnerships with American hyperscalers. If they want to use cutting-edge GPUs, they must either rely on smuggling (which means higher prices and smaller quantities), or renting from foreign cloud providers.
The US likely could, if and when it wanted to, deny access of compute via the cloud to Chinese customers, at least large-scale use and at least for the large hyperscalers. So for Chinese AI developers to rely on foreign cloud compute gives the US a lot of leverage. (There are some questions around how feasible it is to circumvent KYC checks, and especially whether the US can effectively ensure these checks are done well in third countries, but I think the US could deny China most of the worldâs rentable cloud compute in this way.)
Chinese privacy law makes it harder for Chinese AI developers to use foreign cloud compute, at least for some use cases. Iâm not sure exactly how strong this effect is, but it seems non-negligible.
For deployment/âinference, you may want to have your compute located close to your users, as that reduces latency.
In the event of an actual conflict over or involving AI, you can seize compute located on territory you control. I hope that doesnât happen obviously, but itâs definitely a reason why as an AI developer youâd prefer to use compute located in your own country, than located in a rival country or one of the rivalâs allies or partners.
Thatâs AI developers. As for the AI industry more broadly, there are barriers for Chinese companies wanting to use US models like ChatGPT or Claude, which, for example, is likely one reason why Manus moved to Singapore. So the current disparity in who owns compute and where it is located means Chinese AI developers are relatively compute-poor, and since Chinese companies rely substantially on domestic Chinese models, it seems to me like the entire Chinese AI industry is impacted by these restrictions.
Also, I disagree that oil âonly mattered because it enabled economic developmentâ. In WWII especially, oil was necessary for fuel-hungry militaries to function. I think AI will also be militarily important even ignoring its effects on economic development, though maybe less so than oil.
Iâve updated substantially towards this viewâthe practical issues with renting CPUs make them far less of a fungible commodity than I was assuming, and as you pointed out, contra my understanding, there are effective restrictions on Chinese companies getting their hands on large amounts of compute.
On the oil analogy, it seems from
that you think ownership of compute does not substantially influence who will have or control the most powerful AI systems? I disagree; I think it will impact both AI developers and also companies relying on access to AI models. First, AI developersâexport controls put the Chinese AI industry as a whole at a compute disadvantage, which we see in the fact that they train less compute-intensive models, for a few reasons:
It is generally unappealing for major AI developers to merely rent GPUs they donât own, as a result of which they often build their own data centers (xAI, Google) or rely on partnerships for exclusive access (OpenAI, Anthropic). I think the main reasons for this are cost, (un)certainty, and greater control over the cluster set-up.
Chinese companies cannot build their own data centers with export-controlled chips without smuggling, and cannot embark on these partnerships with American hyperscalers. If they want to use cutting-edge GPUs, they must either rely on smuggling (which means higher prices and smaller quantities), or renting from foreign cloud providers.
The US likely could, if and when it wanted to, deny access of compute via the cloud to Chinese customers, at least large-scale use and at least for the large hyperscalers. So for Chinese AI developers to rely on foreign cloud compute gives the US a lot of leverage. (There are some questions around how feasible it is to circumvent KYC checks, and especially whether the US can effectively ensure these checks are done well in third countries, but I think the US could deny China most of the worldâs rentable cloud compute in this way.)
Chinese privacy law makes it harder for Chinese AI developers to use foreign cloud compute, at least for some use cases. Iâm not sure exactly how strong this effect is, but it seems non-negligible.
For deployment/âinference, you may want to have your compute located close to your users, as that reduces latency.
In the event of an actual conflict over or involving AI, you can seize compute located on territory you control. I hope that doesnât happen obviously, but itâs definitely a reason why as an AI developer youâd prefer to use compute located in your own country, than located in a rival country or one of the rivalâs allies or partners.
Thatâs AI developers. As for the AI industry more broadly, there are barriers for Chinese companies wanting to use US models like ChatGPT or Claude, which, for example, is likely one reason why Manus moved to Singapore. So the current disparity in who owns compute and where it is located means Chinese AI developers are relatively compute-poor, and since Chinese companies rely substantially on domestic Chinese models, it seems to me like the entire Chinese AI industry is impacted by these restrictions.
Also, I disagree that oil âonly mattered because it enabled economic developmentâ. In WWII especially, oil was necessary for fuel-hungry militaries to function. I think AI will also be militarily important even ignoring its effects on economic development, though maybe less so than oil.
Iâve updated substantially towards this viewâthe practical issues with renting CPUs make them far less of a fungible commodity than I was assuming, and as you pointed out, contra my understanding, there are effective restrictions on Chinese companies getting their hands on large amounts of compute.