Trending Now
We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates, including GZERO Media, to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence, and our use of cookies described in our Cookie Policy.
GZERO AI
A Microsoft logo is pictured on a store in the Manhattan borough of New York City, New York.
The Biden administration, which reportedly brokered the deal earlier this year, did so to box out the Chinese government, which has sought to expand its influence with the Persian Gulf’s technology sector. In exchange, G42 has been working to assure US authorities that it can be trusted, despite ties to China.
In greenlighting the latest export, which has not yet been formally announced by the US Commerce Department, the administration will place extensive prohibitions on who can access Microsoft’s facility in the UAE, including China, its officials, and any sanctioned individuals. It’s not yet clear which company’s chips Microsoft will be exporting.
The NVIDIA logo seen at the American GPU manufacturer NVIDIA Taipei office.
The California-based chip giant is negotiating with Taiwan Semiconductor Manufacturing Company, or TSMC, the world’s top contract chipmaker, to manufacture its top-of-the-line Blackwell AI processors at TSMC’s Arizona facility. TSMC has invested billions to bring its high-tech manufacturing to the Southwest US, thanks in part to a $6.6 billion cash infusion from the Biden administration as part of the CHIPS and Science Act. Apple and AMD have reportedly already signed on to get their chips made in the Arizona plant when it starts production in the first half of 2025. That said, the chips won’t be entirely made in America: Final packaging is done back in Taiwan, which complicates and prolongs an already lengthy manufacturing process.
Halfway around the world, Nvidia CEO Jensen Huang met with the Thai and Vietnamese prime ministers last week as the company makes inroads in Southeast Asia. Nvidia also announced plans to establish Nvidia’s first research and development center in Vietnam, along with the acquisition of Vietnamese healthcare startup VinBrain for an undisclosed sum. In Thailand, the company signed a cloud deal with a company called SIAM.AI Cloud. Huang also emphasized the importance of “sovereign AI,” meaning that every country should have its own AI infrastructure and models.
In China, however, Nvidia is facing new scrutiny: The State Administration of Market Regulation is reportedly investigating whether the chipmaker violated antitrust laws when it acquired the Israeli-American company Mellanox in 2020. China previously gave conditional approval of the nearly $7 billion deal, but more than four years later, with the US restricting Nvidia from selling its most powerful chips to Chinese companies, the country is seeking new ways to gain leverage. A Nvidia spokesperson said the company is “happy to answer any questions regulators may have about our business.”
Hard Numbers: Musk’s new money, A Marvell to behold, Enter the Chatbot Arena, Meta’s millions, OpenAI’s Sora
A photo illustration with the xAI logo displayed on a smartphone with the official profile of Elon Musk in the background.
6 billion: xAI, Elon Musk’s AI company, secured $6 billion in new funding last week, bringing its total investment to $12 billion and valuation to $50 billion. The company, which makes the Grok chatbot, is also reportedly building a supercomputer facility in Memphis, Tennessee.
100 billion: The chipmaker Marvell Technology saw its market capitalization rise above $100 billion last week after positive earnings and news that it’s helping Amazon develop its own AI chips. The AI boom has helped this small California-based chipmaker become more valuable than Intel, which has struggled in recent years and recently forced out its CEO.
170: A project from UC Berkeley aims to be the Billboard Hot 100 of AI models. Chatbot Arena is a website that lets users test different AI models and rate them, creating a crowdsourced ranking in the process. Google’s Gemini-Exp-1206 model is currently atop the leaderboard followed by OpenAI’s ChatGPT-4o-latest model.
600 million: Nearly 600 million people use Meta’s AI tools every month, the company now claims. Meta boasts 3.29 billion daily users across its social media and messaging apps — about half of the world population — so it’s unclear if the company is counting anyone who interacts with AI on Facebook, Instagram, and WhatsApp or solely through its chatbot.
20: OpenAI announced on Monday that its long-awaited Sora video model is now publicly available, letting users generate clips up to 20 seconds in 1080p resolution. The company first announced the project in February but limited access to a small group of testers.
That should come as no surprise; after all, the military has been a major funder, driver, and early adopter of cutting-edge technology throughout the last century. Military spending on AI-related federal contracts has been booming since 2022, according to a Brookings Institution analysis, which found yearly spending on AI increased from $355 million in the year leading up to August 2022 to a whopping $4.6 billion a year later.
In response to this demand, AI companies of all sizes are getting in on the action. Last Wednesday, on Dec. 4, OpenAI announced a new partnership with the military technology company Anduril Industries, known for its drones and autonomous systems. OpenAI had previously banned the use of its large language models, but with this partnership, it has somewhat reversed course, deciding there are, in fact, some applications that it feels comfortable with — in this case, defensive systems that protect US soldiers from drone attacks. In response, OpenAI employees have raised ethical concerns internally, the Washington Post reported, but CEO Sam Altman has stood by the decision. “We are proud to help keep safe the people who risk their lives to keep our families and our country safe,” he wrote in a statement.
OpenAI’s decision came mere weeks after two other big announcements: On Nov. 4, Meta decided to reverse course on its own military prohibition, permitting its language models to be used by US military and national security agencies. The company said it would provide its models directly to agencies, to established defense contractors Lockheed Martin and Booz Allen, and to defense tech companies like Anduril and Palantir. Then, on Nov. 7, OpenAI’s rival Anthropic, which makes the chatbot Claude, partnered with Peter Thiel’s firm Palantir and Amazon Web Services to provide AI capabilities to US intelligence services.
Military applications of AI go far beyond developing lethal autonomous weapons systems, or killer robots, as we’ve written before in this newsletter. AI can help with command and control, intelligence analysis, and precision targeting. That said, the uses of generative AI models such as OpenAI’s GPT-4 and Anthropic’s Claude are more sprawling in nature.
“There’s a lot of both interest and pressure on the national security community to pilot and prototype generative AI capabilities,” says Emelia Probasco, a senior fellow at Georgetown University's Center for Security and Emerging Technology and a former Pentagon official. “They’re not quite sure what they’re going to do with it, but they’re pretty sure it’s going to be powerful.”
And some of the best uses of this technology might simply be the boring stuff, Probasco added, such as writing press releases and filling out personnel paperwork. “Even though [the military] does some warfighting, it also does a lot of bureaucracy.”
For contractors of all types, AI presents a business opportunity too. “Defense contracting is a potentially lucrative business for AI startups despite some very valid concerns about AI safety and ethics,” says Gadjo Sevilla, senior technology analyst at eMarketer. He added that gaining the trust of the military could also help AI companies prove their safety. “They are more likely to gain other contracts once they are perceived as defense-grade AI solutions.”
Probasco says that the US military needs the expertise of Silicon Valley to stay on the cutting edge, but she does worry about the two worlds becoming too cozy with one another.
“The worst thing would be if we end up in another techno-utopia like we had when in the early days of social media, thinking that Silicon Valley is going to 100% come in and save the day,” she said. “What we need are reasonable, smart, hardworking people who respect different perspectives.”
Throughout Joe Biden’s presidency, the Commerce Department has gradually tightened its chokehold on China’s access to semiconductors needed to access, train, and build artificial intelligence. On Dec. 2, Commerce Secretary Gina Raimondo announced what she told reporters amounted to the “strongest controls ever” meant to restrict China’s access to AI for military applications. Today, China responded with its own new restrictions, sending a strong signal to the incoming US president.
The new US controls announced Monday, the third order in as many years, apply to 24 types of semiconductor manufacturing equipment, three types of software tools, and high-bandwidth memory, or HBM, an interface often used in producing AI chips. The department also added 140 Chinese companies to its Entity List, which requires regulatory approval should a US company wish to sell to a member of the list. “By adding key semiconductor fabrication facilities, equipment manufacturers, and investment companies to the Entity List, we are directly impeding the PRC’s military modernization, WMD programs, and ability to repress human rights,” said Matthew Axelrod, assistant secretary for export enforcement at the Commerce Department.
In response, on Dec. 3, China banned shipments of certain materials using gallium, germanium, and antimony to the US, as well as super-hard materials such as diamonds. These items can be used both for military and semiconductor applications. “China firmly opposes the US overstretching the concept of national security, abuse of export control measures, and illegal unilateral sanctions and long-arm jurisdiction against Chinese companies,” said Lin Jian, a Chinese Foreign Ministry spokesperson.
Jacob Feldgoise, an analyst at Georgetown University’s Center for Security and Emerging Technology, said the new US order plugged holes in the previous year’s rules. It requires a license for many more exported tools, focuses on high-bandwidth memory “because HBM is used by nearly all of the most capable AI chips” and strengthens the US’s grasp beyond its borders. “Notably, this set of controls is newly extraterritorial: It will impose licensing requirements on certain foreign-produced tools so long as they contain US technology,” Feldgoise said.
Xiaomeng Lu, director of Eurasia Group's geo-technology practice, noted that the US excluded the Chinese semiconductor company ChangXin Memory Technologies from the Entity List to appease the Japanese government. CXMT has been buying materials from Japanese suppliers to make its memory chips. “With the Trump administration on its way, they are expected to take a more unilateral approach and will be less likely to make concessions per requests of allies,” she said.
Jeremy Mark, a nonresident senior fellow at the Atlantic Council's GeoEconomics Center, said it’s difficult to judge how significant these new rules are because of the looming change of guard in the White House. Had they come ahead of the transition to a Kamala Harris administration, “they would continue making life complicated for Chinese semiconductor companies and US companies that rely on the China market for a significant portion of their sales.” However, Mark said that Donald Trump could strengthen or weaken export controls when he takes office, so it’s “impossible to say” what the legacy of this final move will be.
For Biden, it marks the end of an era of success: While his restrictions on China could have been tighter or less porous, he leaves office with China still searching for AI breakthroughs. The US, at least under Biden’s watch, is still on top.
But China’s next-day retaliation shows that it is ready to play hardball ahead of the incoming Trump administration. Beijing understands that diplomacy alone might not do the trick, and that to succeed in getting America to the bargaining table it needs to safeguard its own crucial resources. “This is a step up in China’s reaction to US technology sanctions,” Lu said. “China is very frustrated with the lack of communication channels with the incoming administration. They are trying to send a shot across the bow to get attention from the Trump team.”
Hard Numbers: Pony time, Book deals, ByteDance sues an intern, Japan’s investment, Your death clock is ticking
A logo of the autonomous driving technology startup Pony.ai is seen on a screen during an event in Beijing, China, in 2021.
13: Pony AI, a Chinese robotaxi company debuted on the Nasdaq stock exchange, the latest Chinese tech company to enter the US public markets. The company issued an initial public offering at $13 per share on Nov. 27 about two years after China started a high-profile crackdown on its companies listing on US markets. It raised $260 million during its IPO, with Bloomberg remarking that it signaled “strong investor interest” in the company.
8,000: A venture-backed startup named Spines plans to publish 8,000 books next year, charging authors $1,200–$5,000 for the production process, including AI-assisted proofreading, design, and distribution. While Spines says it can offer opportunities to would-be writers and save them weeks of labor, traditional publishing houses have criticized the startup for trying to make money off of these writers with technology that makes many in the industry uncomfortable.
1.1 million: ByteDance, the Chinese company that owns TikTok, is suing a former intern in a Beijing court for $1.1 million, alleging that the intern deliberately sabotaged its generative AI training model by manipulating and modifying its code. The company said, however, that rumors that it lost millions of dollars and thousands of powerful graphics processors were exaggerated.
9.9 billion: The Japanese government is earmarking an extra $9.9 billion for its semiconductor and artificial intelligence ambitions. Some of that money will likely go to Rapidus, the homegrown chipmaking initiative that’s been heavily funded by the Japanese government, which aims to achieve mass production by 2027.
1,200: Want to know when you’ll die? Death Clock, an AI-powered longevity app trained on 1,200 life expectancy studies with 53 million participants, promises to tell users exactly when they’re going to perish. The app costs $40 a year and suggests lifestyle changes to users so they can delay their ticking countdown.
Intel CEO Pat Gelsinger delivers a speech at the COMPUTEX forum in Taipei, Taiwan, on June 4, 2024.
Now, time has run out for the man in charge. Pat Gelsinger, CEO of Intel, resigned after being forced out of the company on Dec. 2. Gelsinger spent nearly four years at the helm of the company, and he oversaw a 30% revenue decline between 2021 and 2023, a trend capped off by cutting 15,000 jobs. Executives David Zinsner and Michelle Johnston Holthaus will helm the company while the board of directors searches for a new CEO.
Intel is an integrated chipmaker, meaning it designs and manufactures its own chips. That’s a different model than Nvidia, a chip designer that sends its units to a contract manufacturer such as Taiwan Semiconductor Manufacturing Company to be made. But over the years it has lost ground on both the design and manufacturing fronts, and investors have grown impatient. The company’s stock has fallen nearly 50% since the beginning of 2024, even as the Biden administration has agreed to give Intel $7.86 billion to build new facilities in Arizona, New Mexico, Ohio, and Oregon.
Whoever assumes Intel’s top job will oversee a legend of American technology that has failed to meet the AI moment. That person must improve the technology and the manufacturing process to have a chance at positioning Intel at the forefront of AI. No small task — probably one of the biggest jobs in American industry.