The chip war at the heart of artificial intelligence

Behind the ChatGPT phenomenon, hide tens of thousands of expensive and sophisticated electronic chips, which have become a major issue for technology giants engaged in the race for artificial intelligence (AI), from Silicon Valley to Taiwan.

Since the generative AI interface won over millions of people with its ability to create all kinds of text on simple request in common language, the OpenAI start-up, responsible for the language model, and its main investor Microsoft have taken the head.

“But the only ones making money is Nvidia,” said Alan Priestley, analyst at Gartner. Microsoft has integrated generative AI into many online services, but “they haven’t figured out how to make additional revenue out of it yet.”

The production of the overwhelming majority of semiconductors used to drive artificial intelligence models in the world depends on two companies, Californian Nvidia, for the design, and Taiwanese TSMC, for the manufacturing.

Nvidia is known for its graphics processors (the “GPUs”), which notably allow you to play high-resolution video games or make videoconferences.

But these chips capable of processing large amounts of data have more recently enabled the emergence of the latest generation of AI, the object of all greed in tech and a national security issue in the eyes of certain governments.

– “Sense of urgency” –

“AI is at an inflection point. The capabilities and versatility of generative AI are driving a sense of urgency to develop and deploy an AI strategy in enterprises,” noted Jensen Huang, CEO of Nvidia. in February, at an analyst conference.

“There is a huge appetite” for these chips, confirms independent analyst Jack Gold. “Nvidia says it can provide them, but I don’t know if that’s true.”

Even if the offer follows, not all organizations have the means. “Machines powerful enough to train generative AI models can cost hundreds of thousands of dollars,” says the expert. Not to mention the energy consumption.

Intel, the number one American semiconductor company, which designs and manufactures the components, has fallen behind.

“They have long rested on their laurels,” said Jack Gold, independent analyst, for AFP. “They are trying to produce chips that can compete with Nvidia, but this is a new area for them, they haven’t made GPUs for at least ten years.”

The Californian group still produces chips dedicated to AI, less sophisticated but essential in a lot of computer equipment, especially for the cloud.

“We are working to democratize AI,” Intel CEO Pat Gelsinger told analysts on Thursday. According to him, some AI capabilities will migrate from servers to computers, where Intel “has assets to play”.

Tech giants are also working on their own components. According to the specialized site The Information, Microsoft has been developing a chip called Athena since 2019, which is supposed to allow it to save money. Contacted, the group did not confirm.

“Competition is increasingly intense in this ecosystem”, sums up Jack Gold.

– “God forbid” –

Last September, Joe Biden assured that the manufacture of these increasingly sophisticated chips was a question of “national security”, in particular in the face of Chinese ambitions.

He had come to inaugurate the construction of a semiconductor factory in Ohio (east) and praise a law adopted on his initiative, which released 52 billion dollars in subsidies to revive the production of semiconductors.

Europe has allocated funds of a similar amount to encourage the industry as well. Intel has invested heavily in production and research, on both continents.

It is for Western countries to create jobs but also, and above all, to guarantee the sources of supply of these electronic components present in smartphones, cars, refrigerators, advanced weapons…

“God forbid, but if China ever attacked Taiwan, and TSMC stopped producing, the global supply of chips would be cut by something like 80%,” remarks Jack Gold.

But diversification will take time. “It takes 3-4 years to build a new specialized factory,” insists the analyst.

Anxious to preserve its lead in the latest generation chips, synonymous with advances in AI, the United States has also taken measures to restrict China’s access to technologies essential to the manufacture of semiconductors.

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