Era of Tech wars
Date: Jan 15, 2025
It's a pity we are already into another cold war, rapidly intensifying the conflict between China and the USA. Who knew that the poverty-stricken country, razed by intense famine, would one day challenge US hegemony? Henry Kissinger certainly didn't. A rapidly rising and assertive China has taken the world by surprise with the launch of its large language model named DeepSeek. Any Chinese innovation has been met with labels like "reverse-engineering," "cheap Western copy," etc. But DeepSeek's technological breakthrough, at a fraction of the cost of American firms, is truly groundbreaking. It has sent shockwaves throughout the world.
The crisis periods of history have often led to leaps and bounds in innovation. When the Soviet Union launched a satellite named Sputnik into space orbit for the first time, it unleashed a US innovation powerhouse. It's undoubtedly the Sputnik moment for AI, where China has established parity in AI, if not the lead. The chip restrictions in 2022 failed to hinder Chinese companies from developing advanced LLMs but forced them to innovate, ensuring economy and efficiency. With substantially low training and inference costs, DeepSeek has opened Pandora's box with its novel approach in the field of AI.
China’s Technological Edge
The country leading in emerging technologies like Quantum, Blockchain, and AI will have a strategic edge. The geo-economic benefits of breakthroughs in such tech are well understood. A recent study by ASPI (ASPI Report) has shown that China has gone from leading in 3/64 technologies from 2003-2007 to now leading in 57 of 64 technologies in 2019–2023. It has achieved technological parity with the US, if not displaced it.
Quantum Supremacy: The World on Hourglass
The concept of "Save now, decrypt/use later" in quantum decryption poses a direct threat to national security. The recent advancement in quantum chips has created a real possibility of scaling qubits (Majorana 1) as well as preserving their stability (Willow). Such a Y2Q era is not far away. India's quantum mission is timely to establish quantum key distribution and quantum satellite communication to counteract such a future.
DRILL BABY DRILL!
US President Trump's establishment of a crypto reserve aims to preserve American supremacy in blockchain technology and Bitcoin mining. Apart from the stated objective of creating the reserve using forfeited cryptocurrencies taken from money laundering and drug smugglers, it provides additional benefits to the US economy. Enhanced revaluation of cryptocurrencies due to limited supply (e.g., 21 Mn BTC) allows quick gains to the US treasury. Second, it will allow the US to devalue the dollar in a broader attempt at re-industrialization and boost exports. Third, it will stimulate the energy demand, with the US already being the largest crude oil producer (EIA Report).
The energy-hungry AI industry has already led to the spinning up of nuclear plants by US tech majors like Google and Microsoft. The demand for crypto mining will allow for energy supremacy of the USA.
GPU IS THE NEW URANIUM
In a world where naked power politics is dominating, and the intensifying tech competition will further enhance gaps between the haves and have-nots. In the bygone nuclear era, the nth nation problem showed how the limiting factor for nuclear proliferation was not access to nuclear tech but access to enriched Uranium. In a world where strategic leadership will be determined by AI, GPUs will undertake the central role.
The recent restrictions on the export of NVIDIA state-of-the-art chips like H100 are a stark reminder of supply chain disruption. H100 is built on TSMC's special 4nm technology nodes. India has around ~20% of the world's design engineers. It should allow further investments in Tata's fabrication plant, which currently aims to produce 28nm chips with plans to reach 14nm in the near future.
The semiconductor geopolitics is already strenuous, with sole suppliers like Dutch ASML controlling advanced UV lithography machines. The unsettled Europe, with threats of leaving NATO by American oligarchs like Elon Musk, provides India with an opportunity to integrate mutual semiconductor supply chains and improve resilience. The Taiwan issue is at the heart of Semiconductor geopolitics. With TSMC's Arizona plant capable of producing 4nm tech nodes and plans for 2-3 nm, it will dilute the American security umbrella and strategic ambiguity over Taiwan. Politicians like Vivek Ramaswamy have already hinted towards such a future. For now, Taiwan still enjoys a shared monopoly for 3nm chips with South Korea, allowing it leverage over US foreign policy. China is closing the gap with Huawei and Xiaomi tinkering with experimental 3nm nodes.
India’s Role in Emerging Tech
India needs to invest in Quantum tech and AI tech in mission mode as their strategic potential outpaces every other tech. India should ideally withhold itself from regulating these technologies and let the private sector take the lead in self-regulation. Instead, the government can present a vision that can be emulated by startups and private companies. The Hon'ble PM's commitment to human-centric AI with companies working towards it can serve India well.