The hardware that runs the latest AI systems faces rising uncertainty as models grow larger and more computationally intensive.

What’s new: The U.S. Commerce Department sounded an alarm over bottlenecks in the availability of semiconductor chips, the integrated circuits at the heart of virtually all digital devices. The supply of advanced microprocessors that drive cutting-edge AI is vulnerable, The New York Times reported.

How it works: Geopolitical tensions, rising costs, and supply-chain disruptions threaten the supply of AI chips.

  • Geopolitical tensions. Amid friction over trade, security, and dominance in high-tech, the U.S. has hobbled China’s ability to manufacture chips. In recent years, the U.S. has restricted trade with companies that make crucial chip-fabrication tools. A new round of U.S. sanctions targets China’s effort to build its own manufacturing equipment. Meanwhile, China is asserting its sovereignty over Taiwan, home of Taiwan Semiconductor Manufacturing Company (TSMC), which manufactures AI chips for Amazon, Google, and Nvidia as well as chip-design startups like Cerebras and Graphcore.
  • Rising costs. Expanding the capacity to make such chips is extraordinarily expensive. A plant under construction by U.S. chip leader Intel may cost as much as $100 billion. Last year, TSMC raised its prices for advanced chips by 10 percent, the largest such price hike in a decade.
  • Supply-chain disruptions. A recent government report found that, while the Covid-19 pandemic drove up demand for semiconductors, a panoply of disasters — including blackouts, fires, shutdowns, and storms — curtailed supply. U.S. lawmakers are pushing legislation that would fund U.S.-based manufacturing plants such as Intel’s and other measures intended to boost the national semiconductor industry, such as easing immigration rules.

Why it matters: So far, the post-pandemic semiconductor shortage mostly has affected chips that rely on older manufacturing methods, such as those used in automobiles, medical devices, radio-frequency identification, and optical sensors. As AI grows ever more hungry for processing power, a sustained shortage of advanced chips could be a significant barrier to progress in the field and beyond.

We’re thinking: International cooperation generally fosters prosperity. In AI, it's essential to progress.


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