Recent US export control decisions imperil national security and threaten not only US artificial intelligence "dominance" but potentially many other emerging technologies critical to military programs.
Ho hum! What does AI matter when the US lacks the capability to make the high-end chips? They come from Taiwan, made on Dutch machines. And what good does AI do the US when China today is outbuilding the US in ships by a factor of over 100 (!)? How many US warplanes could take off if all the Chinese-made components were removed?
Yes, the US may have a temporary advantage in AI software. But look at China's production of STEM graduates versus the US's -- and note that a large share of "US" STEM graduates are in fact Chinese citizens. Today's US advantage in AI is a rapidly diminishing asset, regardless of what the US does to try to sustain it.
The US's problems are all internal, mostly caused by our government -- de-industrialization, inadequate educational system, excessive counter-productive regulations, Byzantine tax laws, too many lawyers throwing sand in the gears. Until we get all those problems sorted out (which would in the best case take at least a quarter of a century), we would be smart to try to be on friendly terms with China, our critical supplier.
The Dutch machines using extreme ultraviolet lithography incorporate US technology for critical parts and so are subject to US export controls. Part of this comes from ASML's acquisition of US startup BRION.
You are missing the point. When push comes to shove, ASML has the physical capacity to make those lithographic machines -- the US does not have that physical capacity.
If you have spent some time around Dutch people, you would know that lots of them absolutely detest America and Americans. Why? Who knows? Maybe it goes back to renaming New Amsterdam as New York? But it would be easy to see in a future conflict that the Netherlands would line up with China, and simply ignore the US claim to Intellectual Property. Since the US unwisely no longer has the physical capacity to make those machines, the US would simply be out of luck. Yeah! During a future major conflict, let's see how far we get suing the Netherlands in an international court!
Note that during one of the Gulf Wars, the Swiss company which made essential parts for US smart bombs stopped supplying. Anything which has happened can happen again!
You are still missing the point. You are exactly right that the ability to sue over Intellectual Property goes away once parties pick sides in an actual conflict. The US might order ASML to stop selling chip-making machines to China "because of IP" -- and instead ASML may stop selling to the US. Whatcha goin' to do about it? Bomb the Netherlands? That would still not give the US the capacity to make those machines.
In a future major conflict, the US will be unable to repair ships (not enough shipyards), unable to keep warplanes flying (need parts from China or Switzerland), unable to manufacture key parts (no rare earths), etc.
The only thing that will count in that future major conflict will be the ability to supply oneself from one's own industrial base. And the US Political Class has spent the last several decades giving that industrial base away.
“instead ASML may stop selling to the US. Whatcha goin' to do “
Full land, air, naval blockade using US forces in Europe.
Watcha gonna do? Wait for the Chinese army to arrive?
Russia is a military and economic laughingstock. China is facing population decline, dictator restraint on successful capitalism and lower growth. No country with a choice prefers either of those two to the US.
Please get serious! If the US tried to embargo Europe, the Euros would suddenly remember that Russia was their best friend and would also beg their then-allies China to stop all shipments to Walmart. Empty store shelves -- US crumbles.
The not-so-hidden threat in the de-industrialization of the US is that, if faced with a real challenge from a peer (Russia, China), the US would quickly run out of ammunition and equipment. Then the only choices would be surrender or go nuclear.
Very early in the year the Editor of FP spoke of a private conversation he had with a senior Biden official around Christmas time last year. The conversation was about why the official thought that the Democrats had lost the election. At one stage the Editor asked first if the Trump One proscriptions on technology to China, which the Biden Administration had kept and strengthened, were actually working - to which the official replied that the evidence showed that the embargos had failed and China were overcoming their technological deficiencies with native innovations. As to why the Biden Administration had kept the Trump One embargos even as they had not worked, was down to local politics where the Biden Administration were trying to leach back some MAGA voters by being 'tough on China'. So anecdotally, the US embargoes on technology appear to be failing.
What is not spoken about in the article is Jensen Wong's argument to Trump - and which apparently has had some impact on Trump. Wong argues that Nvidia chips (of a certain type at least) should be sold to China. Not only does Nvidia make a killing in the largest chip market in the world, but that China has no need to develop local solutions independent of the US, and where China builds a dependency on the US for it's chips. The US is then in a position to dictate standards and use its chips as leverage in the future. But it is a catch-22 situation.
On one hand China might develop an addiction to Nvidia chips, stop local initiatives and fulfil Wong's vision. But Wong's reasoning may fail where the Chinese use Nvidia chips in the interim to power future innovations, while at the same time advance their local technologies in parallel.
The other reason, as I see it, as to why Trump is now doing this is that to resolve the Tarriff War between China and the US. If the Tarriff War had continued then US store shelves would be empty and to the flow of rare earth magnets to critical industries would be blocked (including a dependency on Chinese rare earths to the embargoed technologies referred to in the article). Politically, Trump, who unwisely started this war from a position of weakness, could not afford this to happen. Trump had very few cards to play against China and failure to end the war would have led to massive political blow-back. Thus Trump was caught in a bind between Chinese demands to gain access to these technologies and the cut-off of critical products that the US needed. This weakness forced upon Trump was the product of self inflicted wounds over many US administrations (on both sides and including Trump One) and within many US industries seeking quick profits over long term thinking over the last 30 years. I would argue that Trump was forced into it and had no choice.
I can see your argument but I think that the US should then be making a very heavy investment in rare earths along with its Asian allies, but it is not. I think then it was not so much rare earths as Trump's need for a big trade deal with China. As for the Wong argument about Chinese dependence on US supply, it is just crap. China is investing billions in its chip industry to develop AI chips, nor will it change direction just because it can solve short term needs with Nvidia chips. Same goes for AI itself. The Chinese are not as stupid as the US is about security of supply.
As for the Wong argument - I was being polite - it is in your words 'crap', however he pitched it to Trump at the White House and on the evidential basis that the last person who speaks to Trump generally sways Trump's mind, it possibly might have had an impact. I note that Trump's change in policy came after Wong spoke with him.
I agree that the US should be investing heavily in rare earths and its processing, but this will take many years and perhaps decades to reach self-sufficiency. The issue is the problem in the here and now when the US is not self-sufficient.
As for the trade deal with China, nothing has been concluded yet, and nothing in writing. Trump needed stuff to bring the Chinese to the table before the repercussions of the trade war he started with China came to 'bite him in the bum'. He may paint this as a successful negotiation but all that Trump has brought at present is a trade truce with negotiations to happen in the future.
Being in Oz and somewhat adjacent to the mining sector, its not the extraction that's the problem (rare earths are not that rare) but the processing. Heavy RE (which got the goodies needed for high temp magnets) come in ore which is slightly radioactive. So the equipment to process, refine and separate the oxides to the desired chemical elements is very input intensive .... we're talking tons of acids, acres of plants and tough environmental effluent recycling. So from bare ground to survey to operating plant you're looking at 20 years (assuming no financing hiccups).
its not $$$ which is the bottleneck but permitting and logistics (remote sites).
Well U.S. "National Security" -- an increasingly obtuse and meaningless term -- has been replaced by national "stupidity." The American political system is so corrupt (torn by powerful competing internal political interests and endless external warring) that it's impossible to even identify, much less address important challenges that we face as a "nation" among other nations in an increasingly changing world order . . . we could, for example, shut down both the Ukraine proxy war and Israel's genocide of Palestinians immediately but we're not using our power to do this.
When it comes to technical challenges from China the U.S. is completely outpaced, both on the AI development capabilities side and even more by the hi-tech industrial/production and control of supply chain infrastructure in China. Jason Huang persuaded "the Donald" to allow continuing sales of NVIDIA chips to Chinese AI developers arguing that "hooking" them on this American owned technology would drive their AI and guarantee ongoing market share (riiiiight).
If we know only one thing about the Chinese, they use what's available and improve on it endlessly. Even now, they don't need NVIDIA, but they'll use it while they can. Huawei already has developed a chip communication capability to develop competitive LLM (AI) products like "Deepseek1" and others that -- nearly as good costly U.S. LLMs -- are open source and cost next to nothing compared to expensive U.S. AI models. Most of the rest of the world's countries today are using "free" Chinese LLM to do AI.
Add to this, the need to quickly build AI computer data centers in the race to implement AI requires huge amounts of electricity -- power the aging U.S. grid doesn't have and will take years to develop, leaving U.S,. companies in a backwater or having to operate in China. China, on the other hand, has an amazing abundance of electricity. Guess who will win the AI race . . . see Kevin Walmsley's INSIDE CHINA BUSINESS blog for the latest on AI: https://www.youtube.com/watch?v=X6pUDf7u9r0
I agree that Trump’s decision to lift export controls on sensitive technologies contradicts the administration’s stated objective to “win” the AI race. Of course, export controls cannot stop China from obtaining said technologies—the BIS is a relatively small outfit. Furthermore, its budget is peanuts and foreign entities are highly adept at circumventing export controls, especially when financially incentivized. President Carter opened the flow of technologies to China, albeit in a limited way. Future presidents allowed more to be exported to China as relations improved. Regarding multilateral export control regimes, what are your thoughts on CoCom’s role in China’s earlier efforts to gain access to sensitive technologies? Thank you very much.
COCOM was disbanded in 1994, so it has no role whatever today. As you may or may not know, I headed DoD's export control effort in the 1980s and founded the Defense Technology Security Administration (DTSA) and served as its first director. We were very effective in stopping exports to the USSR over the time from I ran DTSA. The administration has the resources to do the job, but is faking it, and has been for years. Add to this the fact that most US tech has migrated to Asia. NVIDIA's chips are made in Taiwan by Taiwan Semi (TSMC). The US has lots of leverage but does not use it. Politicians in Washington take big money from Big Tech. And so on.
US has to balance export controls of chips vs control of high-end chip manufacturing. The more expensive it is for the Chinese to get hold of chips on edge, the higher their incentive to get the high-end chip manufacturing working. Just saying...
so you are saying its money and lots of it. Personally I dont think the chips matter as much as people say they do. Look at Elon and team jumping into the fray in months using what kind of chips? People dont talk about that. He even ganged together every generator he could find and put them in tents and ran them in a a cold environment at night. The point is GPU's and the way to use them and break down stuff into groups is changing the way it all works. Bigger may not be better.
Ho hum! What does AI matter when the US lacks the capability to make the high-end chips? They come from Taiwan, made on Dutch machines. And what good does AI do the US when China today is outbuilding the US in ships by a factor of over 100 (!)? How many US warplanes could take off if all the Chinese-made components were removed?
Yes, the US may have a temporary advantage in AI software. But look at China's production of STEM graduates versus the US's -- and note that a large share of "US" STEM graduates are in fact Chinese citizens. Today's US advantage in AI is a rapidly diminishing asset, regardless of what the US does to try to sustain it.
The US's problems are all internal, mostly caused by our government -- de-industrialization, inadequate educational system, excessive counter-productive regulations, Byzantine tax laws, too many lawyers throwing sand in the gears. Until we get all those problems sorted out (which would in the best case take at least a quarter of a century), we would be smart to try to be on friendly terms with China, our critical supplier.
Chips "come from Taiwan, made on Dutch machines"
The Dutch machines using extreme ultraviolet lithography incorporate US technology for critical parts and so are subject to US export controls. Part of this comes from ASML's acquisition of US startup BRION.
https://www.asml.com/en/company/about-asml/history
You are missing the point. When push comes to shove, ASML has the physical capacity to make those lithographic machines -- the US does not have that physical capacity.
If you have spent some time around Dutch people, you would know that lots of them absolutely detest America and Americans. Why? Who knows? Maybe it goes back to renaming New Amsterdam as New York? But it would be easy to see in a future conflict that the Netherlands would line up with China, and simply ignore the US claim to Intellectual Property. Since the US unwisely no longer has the physical capacity to make those machines, the US would simply be out of luck. Yeah! During a future major conflict, let's see how far we get suing the Netherlands in an international court!
Note that during one of the Gulf Wars, the Swiss company which made essential parts for US smart bombs stopped supplying. Anything which has happened can happen again!
Dream on ...
In a future major conflict, the United States of America won't be suing
You are still missing the point. You are exactly right that the ability to sue over Intellectual Property goes away once parties pick sides in an actual conflict. The US might order ASML to stop selling chip-making machines to China "because of IP" -- and instead ASML may stop selling to the US. Whatcha goin' to do about it? Bomb the Netherlands? That would still not give the US the capacity to make those machines.
In a future major conflict, the US will be unable to repair ships (not enough shipyards), unable to keep warplanes flying (need parts from China or Switzerland), unable to manufacture key parts (no rare earths), etc.
The only thing that will count in that future major conflict will be the ability to supply oneself from one's own industrial base. And the US Political Class has spent the last several decades giving that industrial base away.
“instead ASML may stop selling to the US. Whatcha goin' to do “
Full land, air, naval blockade using US forces in Europe.
Watcha gonna do? Wait for the Chinese army to arrive?
Russia is a military and economic laughingstock. China is facing population decline, dictator restraint on successful capitalism and lower growth. No country with a choice prefers either of those two to the US.
Please get serious! If the US tried to embargo Europe, the Euros would suddenly remember that Russia was their best friend and would also beg their then-allies China to stop all shipments to Walmart. Empty store shelves -- US crumbles.
The not-so-hidden threat in the de-industrialization of the US is that, if faced with a real challenge from a peer (Russia, China), the US would quickly run out of ammunition and equipment. Then the only choices would be surrender or go nuclear.
Very early in the year the Editor of FP spoke of a private conversation he had with a senior Biden official around Christmas time last year. The conversation was about why the official thought that the Democrats had lost the election. At one stage the Editor asked first if the Trump One proscriptions on technology to China, which the Biden Administration had kept and strengthened, were actually working - to which the official replied that the evidence showed that the embargos had failed and China were overcoming their technological deficiencies with native innovations. As to why the Biden Administration had kept the Trump One embargos even as they had not worked, was down to local politics where the Biden Administration were trying to leach back some MAGA voters by being 'tough on China'. So anecdotally, the US embargoes on technology appear to be failing.
What is not spoken about in the article is Jensen Wong's argument to Trump - and which apparently has had some impact on Trump. Wong argues that Nvidia chips (of a certain type at least) should be sold to China. Not only does Nvidia make a killing in the largest chip market in the world, but that China has no need to develop local solutions independent of the US, and where China builds a dependency on the US for it's chips. The US is then in a position to dictate standards and use its chips as leverage in the future. But it is a catch-22 situation.
On one hand China might develop an addiction to Nvidia chips, stop local initiatives and fulfil Wong's vision. But Wong's reasoning may fail where the Chinese use Nvidia chips in the interim to power future innovations, while at the same time advance their local technologies in parallel.
The other reason, as I see it, as to why Trump is now doing this is that to resolve the Tarriff War between China and the US. If the Tarriff War had continued then US store shelves would be empty and to the flow of rare earth magnets to critical industries would be blocked (including a dependency on Chinese rare earths to the embargoed technologies referred to in the article). Politically, Trump, who unwisely started this war from a position of weakness, could not afford this to happen. Trump had very few cards to play against China and failure to end the war would have led to massive political blow-back. Thus Trump was caught in a bind between Chinese demands to gain access to these technologies and the cut-off of critical products that the US needed. This weakness forced upon Trump was the product of self inflicted wounds over many US administrations (on both sides and including Trump One) and within many US industries seeking quick profits over long term thinking over the last 30 years. I would argue that Trump was forced into it and had no choice.
I can see your argument but I think that the US should then be making a very heavy investment in rare earths along with its Asian allies, but it is not. I think then it was not so much rare earths as Trump's need for a big trade deal with China. As for the Wong argument about Chinese dependence on US supply, it is just crap. China is investing billions in its chip industry to develop AI chips, nor will it change direction just because it can solve short term needs with Nvidia chips. Same goes for AI itself. The Chinese are not as stupid as the US is about security of supply.
As for the Wong argument - I was being polite - it is in your words 'crap', however he pitched it to Trump at the White House and on the evidential basis that the last person who speaks to Trump generally sways Trump's mind, it possibly might have had an impact. I note that Trump's change in policy came after Wong spoke with him.
I agree that the US should be investing heavily in rare earths and its processing, but this will take many years and perhaps decades to reach self-sufficiency. The issue is the problem in the here and now when the US is not self-sufficient.
As for the trade deal with China, nothing has been concluded yet, and nothing in writing. Trump needed stuff to bring the Chinese to the table before the repercussions of the trade war he started with China came to 'bite him in the bum'. He may paint this as a successful negotiation but all that Trump has brought at present is a trade truce with negotiations to happen in the future.
As the Chinese, who have no 'r' might say, you got Huang's name and his argument wong.
Being in Oz and somewhat adjacent to the mining sector, its not the extraction that's the problem (rare earths are not that rare) but the processing. Heavy RE (which got the goodies needed for high temp magnets) come in ore which is slightly radioactive. So the equipment to process, refine and separate the oxides to the desired chemical elements is very input intensive .... we're talking tons of acids, acres of plants and tough environmental effluent recycling. So from bare ground to survey to operating plant you're looking at 20 years (assuming no financing hiccups).
its not $$$ which is the bottleneck but permitting and logistics (remote sites).
Well U.S. "National Security" -- an increasingly obtuse and meaningless term -- has been replaced by national "stupidity." The American political system is so corrupt (torn by powerful competing internal political interests and endless external warring) that it's impossible to even identify, much less address important challenges that we face as a "nation" among other nations in an increasingly changing world order . . . we could, for example, shut down both the Ukraine proxy war and Israel's genocide of Palestinians immediately but we're not using our power to do this.
When it comes to technical challenges from China the U.S. is completely outpaced, both on the AI development capabilities side and even more by the hi-tech industrial/production and control of supply chain infrastructure in China. Jason Huang persuaded "the Donald" to allow continuing sales of NVIDIA chips to Chinese AI developers arguing that "hooking" them on this American owned technology would drive their AI and guarantee ongoing market share (riiiiight).
If we know only one thing about the Chinese, they use what's available and improve on it endlessly. Even now, they don't need NVIDIA, but they'll use it while they can. Huawei already has developed a chip communication capability to develop competitive LLM (AI) products like "Deepseek1" and others that -- nearly as good costly U.S. LLMs -- are open source and cost next to nothing compared to expensive U.S. AI models. Most of the rest of the world's countries today are using "free" Chinese LLM to do AI.
Add to this, the need to quickly build AI computer data centers in the race to implement AI requires huge amounts of electricity -- power the aging U.S. grid doesn't have and will take years to develop, leaving U.S,. companies in a backwater or having to operate in China. China, on the other hand, has an amazing abundance of electricity. Guess who will win the AI race . . . see Kevin Walmsley's INSIDE CHINA BUSINESS blog for the latest on AI: https://www.youtube.com/watch?v=X6pUDf7u9r0
Thanks for your great work Stephen!
We've shared the link on our daily report.
A Skeptic War Reports
https://askeptic.substack.com/
I'm not convinced it is important to "win," the AI race. Once ASI is achieved, it is not likely Azimov's 3 Laws will be in effect.
I agree that Trump’s decision to lift export controls on sensitive technologies contradicts the administration’s stated objective to “win” the AI race. Of course, export controls cannot stop China from obtaining said technologies—the BIS is a relatively small outfit. Furthermore, its budget is peanuts and foreign entities are highly adept at circumventing export controls, especially when financially incentivized. President Carter opened the flow of technologies to China, albeit in a limited way. Future presidents allowed more to be exported to China as relations improved. Regarding multilateral export control regimes, what are your thoughts on CoCom’s role in China’s earlier efforts to gain access to sensitive technologies? Thank you very much.
COCOM was disbanded in 1994, so it has no role whatever today. As you may or may not know, I headed DoD's export control effort in the 1980s and founded the Defense Technology Security Administration (DTSA) and served as its first director. We were very effective in stopping exports to the USSR over the time from I ran DTSA. The administration has the resources to do the job, but is faking it, and has been for years. Add to this the fact that most US tech has migrated to Asia. NVIDIA's chips are made in Taiwan by Taiwan Semi (TSMC). The US has lots of leverage but does not use it. Politicians in Washington take big money from Big Tech. And so on.
US has to balance export controls of chips vs control of high-end chip manufacturing. The more expensive it is for the Chinese to get hold of chips on edge, the higher their incentive to get the high-end chip manufacturing working. Just saying...
so you are saying its money and lots of it. Personally I dont think the chips matter as much as people say they do. Look at Elon and team jumping into the fray in months using what kind of chips? People dont talk about that. He even ganged together every generator he could find and put them in tents and ran them in a a cold environment at night. The point is GPU's and the way to use them and break down stuff into groups is changing the way it all works. Bigger may not be better.