🧠 America Must Win the AI Arms Race

Subscribe | Contact | Meet The Team

Welcome back AI prodigies!

In today’s Sunday Special:

• 🤷‍♂️Why Care?

• 🦸‍♀️The Silent Heroes of AI

• 🛢The New Oil

• 🤖Man > Machine

• 🎯Bottom Line

Read Time: 8 minutes

🎓Key Terms

• Generative AI: creates content, such as text, images, videos, and music, using algorithms to mimic human creativity and generate new materials based on existing content.

• Military-Civil Fusion: an aggressive national strategy of the Chinese Communist Party (CCP) to enable China to develop the most technologically advanced military in the world.

• Cloud Computing: on-demand internet access to computing resources (e.g., servers or storage) and services for flexibility, scalability, and cost-efficiency.

• Large-Language Models (LLMs): a deep-learning model that understands and generates text. Deep learning finds patterns in data, like Google Photos, and organizes your photos into albums.

🤷‍♂️WHY CARE?

Although generative AI (GenAI) promises to deliver $4.4 trillion annually to the global economy, Gross Domestic Product (GDP) gains are merely a metric worshiped in the halls of power. For us, GenAI tools make life easier and more fun, often for free. They give coders and writers superpowers, entertain us with seamless video and image generation, and give us recipe ideas for what’s left in our fridges. They also seed scientific breakthroughs that would otherwise take decades. One model predicts the next two weeks of weather 10,000+ times faster and more accurately than current forecasting methods. Another model identified an antibiotic to combat one of the world’s most dangerous antibiotic-resistant bacteria that afflicts hospital patients.

GenAI has hardly emerged in a vacuum. As governments invest in technology competitiveness and pursue “de-risking” strategies to increase resilience, GenAI has moved to the forefront of U.S.-China competition. Chinese leadership understands the economic significance of AI and has a history of leveraging its scope and scale—and employing ruthless tactics—to achieve dominance in critical sectors. Plus, their strategy of Military-Civil Fusion ensures that breakthroughs in the private sector advance the CCP’s goals, often at the expense of Muslim minorities, user privacy, and dozens of developing countries.

At the moment, the U.S. enjoys significant advantages. American technology giants have released the most advanced consumer-facing frontier models (e.g., OpenAI's ChatGPT), and our venture capital firms have invested over $14 billion in U.S. AI companies in the last twelve months. In addition, through the CHIPS and Science Act, Congress has enhanced U.S. semiconductor manufacturing capacity and attracted more than $200 billion in private investments. Plus, the most dominant fabricator of AI chips, Taiwan Semiconductor Manufacturing Corporation (TSMC), has invested $40 billion in manufacturing facilities on U.S. soil. To turn this competitive advantage into a sustainable one, the U.S. will have to invest more precisely in the building blocks of AI: semiconductors, data, and people.

🦸‍♀️THE SILENT HEROES OF AI

Advanced AI chips are the silent heroes of AI applications, as building and maintaining AI models is extraordinarily computationally extensive. Since 2012, the number of computing resources needed to train AI models has increased by a staggering 55 million. U.S. advantages in GenAI begin here. Nvidia, the world’s leading designer of AI chips, is based at home, as are its largest competitors.

Meanwhile, U.S. firms dominate cloud computing, making up nearly 80% of the global market. Most AI applications can’t function without affordable, reliable cloud computing services. Cloud computing is when end-users (e.g., consumers using ChatGPT) or intermediaries (e.g., OpenAI developers who built ChatGPT) rent, as opposed to owning, the underlying hardware or software that runs the application (e.g., ChatGPT). For example, OpenAI pays Microsoft for their data centers and servers instead of owning and maintaining expensive hardware. Similarly, iPhone users back up their data in iCloud, storing it on Apple servers instead of flash drives at home.

Export controls on AI chips and semiconductor manufacturing equipment and cloud computing dominance provide Washington with a powerful lever to slow Beijing’s ambitions to secure compute dominance. Despite existing computing advantages, America’s private sector seeks to maximize profit, a goal often at odds with building a sustainable competitive advantage against China. To streamline academia and industry initiatives and incentivize moonshot projects, the Biden Administration has done the following:

• National Artificial Intelligence Research Resource (NAIRR): Policymakers in Washington will guarantee that academic researchers have ample access to cloud-based computing resources. NAIRR bridges the critical gap between academia and the private sector, enabling academic research to find commercial applications in the fast-moving AI industry.

• Incentivizing Investments in Emerging Computing Paradigms: In addition to launching the National Semiconductor Technology Center (NSTC)—already funded under the CHIPS and Science Act and scheduled to launch later this year—with appropriate national ambition, the NSTC Investment Fund will serve as a “help desk” for innovators as they attempt to navigate the public-private ecosystem.

🛢THE NEW OIL

Data is the oil of the 21st century. Data, the input for algorithms that dictate what we watch, where we go, and who we date, is also the food that all AI models consume. Fortunately, the U.S. has long enjoyed significant advantages, owing to the global presence of U.S. technology firms and large volumes of English text on the Internet to train LLMs. The U.S. also has more data centers than any other country and dominates the big data analytics market.

China, however, is making gains with a comprehensive strategy that restricts access to its extensive domestic data resources and leverages its technology firm’s growing global footprint to access global data resources. The CCP has also made significant strides in developing and exporting the next generation of data infrastructure and advanced network technology. Meanwhile, disagreement over U.S. and European Union (EU) approaches to data regulation threatens to dampen innovation and limit opportunities.

To maintain its competitive advantage in data access, the United States must resolve uncertainty around regulatory issues like data privacy and ownership, make valuable government data more accessible, and create public-private partnerships to aggregate siloed datasets.

• Pass Comprehensive Data Privacy Legislation: As diverse industries seek to harness AI, the data governance model will be instrumental in establishing checks and balances that ensure data and technology are used ethically, safely, and aligned with our nation’s values. Legislation is required to unify the patchwork of state laws and enable trust in the U.S. data ecosystem to set conditions for new digital trade agreements.

• Develop a National Strategy for Digital Infrastructure: Congress has appropriated over $100 billion for digital infrastructure since 2018, but the U.S. lacks a coordinated approach to strengthen America’s digital backbone. In particular, the U.S. must position itself to win the competition for 5G and 6G by prioritizing industrial and enterprise use cases. Wireless networks will be especially crucial as GenAI-powered applications increase data flows.

🤖MAN > MACHINE

Talent is perhaps America’s most important asset for AI competitiveness. While the U.S. remains an attractive destination for technical experts, increasing numbers of highly skilled immigrants are choosing to take their talents elsewhere due to the administrative burdens of our immigration system. In addition, providing high-quality Science, Technology, Education, and Math (STEM) education and pathways for reskilling and training is vital to realizing the productivity benefits of general-purpose technologies and creating opportunities for the American workforce. Many experts argue that Congress should initiate the following:

• Increase the H-1B Visa Cap: Talented immigrants have played a key role in America’s innovation ecosystem. 65% of America’s top AI companies have immigrant founders or co-founders. A comprehensive strategy from the Departments of Labor and Homeland Security is required to improve the H-1B system and, in collaboration with Congress, increase the annual cap from 65,000 to 195,000.

• Form a National Commission on Automation and the Future of Work: GenAI could deliver dramatic productivity benefits. But at this early stage, it remains unclear how Gen AI will affect labor markets and the nature of work in the long run. The federal government should form a bipartisan commission to review the current state of automation in the U.S., analyze its impact on our workforce and economic competitiveness, and propose policy changes that address human-machine teaming, upskilling, and reskilling.

🎯BOTTOM LINE

The emergence of generative AI on a commercial scale marks a fundamental economic turning point. Those that lead in the adoption and development of GenAI will reap the long-term benefits of increased productivity and economic growth—both of which translate to additional resources for national priorities, from defense spending to healthcare and social welfare programs. GenAI also marks an opportunity to embed democratic values of privacy and safety in AI applications used globally. Without a coherent national effort, however, enduring U.S. leadership cannot be assured.

📒FINAL NOTE

If you found this useful, follow us on Twitter or provide honest feedback below. It helps us improve our content.

How was today’s newsletter?

• ⭐️⭐️⭐️⭐️⭐️Nailed it!

• ⭐️⭐️⭐️Average

• ⭐️Epic fail.

❤️AI Pulse Review of The Week

🎁NOTION TEMPLATES

🚨Subscribe to our newsletter for free and receive these powerful Notion templates:

• ⚙️150 ChatGPT prompts for Copywriting

• ⚙️325 ChatGPT prompts for Email Marketing

• 📆Simple Project Management Board

• ⏱Time Tracker