News broke November 28 that the U.S. government is considering additional curbs on the sale of semiconductor equipment and AI memory chips to China, escalating tensions between the two superpowers. It is a sign of the times. Governments have begun to view AI compute infrastructures, including advanced AI chips, as a geostrategic resource.
With good reason: in a recent podcast OpenAI CEO Sam Altman called compute “the currency of the future” and says he believes “it’ll be maybe the most precious commodity in the world.”
Countries that can “manufacture intelligence” at scale will be at the forefront of harnessing the benefits of finding solutions to key challenges, from green transition to digital biology, says a recently released report by the Tony Blair Institute For Global Change (TBI). It argues that compute is not just a source of scientific and economic progress, but the new benchmark of global power economically and geopolitically.
“Just as governments needed to enable infrastructure such as roads, railways and telecommunication networks for business to thrive, investing in shared and public compute has become equally important,” Jakob Mökander, TBI’s Director of Science & Technology Policy, said in an interview with The Innovator.
Compute is, in fact, slated to become “the foundation of next-generation economic growth and influence, shaping economic developments, as well as the future of sovereign power and international influence,” says the TBI report. It notes that compute infrastructure – and the difference in its availability from country to country – risks becoming the basis of a new digital divide.
Last year TBI published a report that measured countries’ capabilities across the entire compute ecosystem, including talent, energy, governance initiatives, available training and technical partnerships, to help governments understand their compute capacity. The 2024 report, released November 18, underscores how the gap between nations has widened in the last 12 months.
The U.S. has some well publicized major advantages: U.S. tech companies dominate large language models globally and U.S. AI chipmaker Nvidia has become the leading beneficiary, with its Graphics Processing Units (GPUs) widely used by tech giants like Microsoft, Alphabet, Amazon, Meta, and OpenAI for AI applications. In 2024 Nvidia’s market cap reached $3.314 Trillion USD, making it the world’s second most valuable company.
The latest TBI report found that in addition to these advantages the U.S. built more data-center capacity in 2023 than the rest of the world combined, excluding China. TBI’s data-center investment indicator shows that the U.S. has announced that 5,796.2 megawatts’ (MW) worth of data centers are to be built over the next three years. This is a 164.4% rise from 2023 and shows no sign of slowing.
What’s more, large U.S. tech companies, including Alphabet, Amazon, Meta, Microsoft, xAI and Oracle, are driving competition for the latest chips, such as Nvidia’s Blackwell GPU, launched in March 2024. This latest architecture is designed to offer four-times faster training and 30-times faster inference.
As today’s largest AI models can be four times more computationally intensive than in 2023, these chips – due to start shipping at the end of 2024 – will revolutionize the next generation of compute resources, says the report.
The Race For Compute Supremacy
With $210 billion having been spent globally to upgrade and maintain the existing server base in the past year, a new compute security dilemma is emerging as the two largest state players, the U.S. and China, seek to check the other’s power with export controls, investments and industrial espionage, says the TBI 2024 report. With China’s new “HPC iron curtain”and its refusal to declare new supercomputers and other investments to global indices such as the TOP500 Supercomputers list, the balance of compute power will be increasingly difficult to verify, the report says. It forecasts that this strategy “will lead to increasing uncertainty in the world order and intensify the race for compute supremacy.”
Where Does This Leave The Rest Of The World?
As the commoditization of computer resources intersects with the clash of great powers, questions of digital sovereignty and digital colonialism are being raised, notes the report. “Caught between allegiances to infrastructure providers on the one hand and access to critical components on the other, emerging digital economies find themselves in strategic dilemmas as they trade-off between a series of sub-optimal binary choices,” the report says. Countries may find themselves in a position of having to align with one of the supercomputer superpowers for assured compute access, increasing tech bipolarity in an era of geopolitical upheaval, says the report. Alternatively, countries seeking to accelerate their own progress may be able to take advantage of the rivalry and develop alternative ecosystems to meet the needs of non-aligned countries, creating a new multi-polarity in the world order. Leaders wishing to avoid either dynamic may seek to develop sovereign capabilities, but risk investing in expensive infrastructure that is still behind the pace of the global leaders. Or they may find that key levers of their ecosystem, in particular talent, has left to work in more developed ecosystems.
To avoid a new type of digital divide and a fractured computing landscape, the TBI report recommends three possible courses of action for governments: public compute, public-private partnerships and international development for access to compute.
Public Compute
One good option for countries to build strategic autonomy while leveraging compute for the public benefit is to invest in “public compute”, i.e. state-built components of the compute stack, including data centers and cloud infrastructure and supercomputers, says the report. This compute can then be provided to critical sectors and be used as a lever to encourage responsible use of AI. As others have argued, compute should be provided on the basis that companies meet certain safety requirements, or that end outputs can help to contribute towards the digital commons, the report says.
Public compute requires investing in the key enablers of a model compute ecosystem. Having an abundance of energy and a mature data-center ecosystem has made it easier for countries like Malaysia to build their own public-compute capacity, the report says. Countries with abundant energy resources and stable business environments, such as Dubai, are focusing on attracting and hosting large-scale data centers.
Alternatively, nations with advanced manufacturing skills and startups might invest in developing domestic chip production, as seen in China’s efforts to counter U.S. restrictions while countries with more limited capital, resources and skills but a strong research ecosystem can pursue a strategy of AI model development. For example, state-of-the-art models can be fine-tuned to be better aligned with national language, values and interests and allow for models to be built with specialized sector-specific objectives in mind. The Netherlands has begun building GPT-NL with this purpose in mind.
“By strategically leveraging compute for public benefit,” says the report, “nations can not only address immediate sectoral needs but also reinforce both their long-term technological sovereignty and their competitive position in the global digital landscape.”
Public-Private Partnerships
Since TBI’s 2023 report, new models of mobilizing private capital for the development of AI infrastructure have emerged. These provide opportunities to unlock multi-trillion-dollar long-term investment and the potential for technological advancement on a global scale.
For example, Aramco, the Saudi Arabian government majority controlled petroleum and natural gas company has partnered with Groq, an American AI company that builds an AI accelerator application-specific integrated circuit (ASIC) that they call the Language Processing Unit (LPU) and related hardware to accelerate the inference performance of AI workloads, to create the world’s largest AI inference center. The center, strategically located in Saudi Arabia, aims not only to support the Saudi government’s Vision 2030 to drive digital transformation and economic diversification but also has the potential to open access to cutting-edge AI capabilities for those nations that lack the resources to build and maintain their own AI platforms. Through creating a global hub for AI infrastructure, Saudi Arabia hopes to reinforce its leadership in the global digital economy and provide a blueprint for how public and private capital can come together to build the advanced AI infrastructure needed to drive the next wave of technological innovation, economic growth and inclusivity on the global stage.
Regional Compute Sharing
Nations with limited energy and domestic compute infrastructure could also seek to build and participate in regional compute models.
Estonia, despite being one of the world’s most digitally advanced nations, has limited compute resources. By leveraging The European High Performance Computing Joint Undertaking ( EuroHPC JU) and, in particular, access to its fastest supercomputer LUMI) it overcomes potential issues in accessing supercomputing resources and AI servers via the Cloud, notes the report.
Similarly, the ASEAN-HPC taskforce is providing opportunities across the region so that ASEAN countries can access shared high-performance computing (HPC) resources such as Japan’s Fugaku supercomputer.
“A regional approach provides a larger market for compute providers to sell into, so may provide a stronger rationale for investment,” says the report. Transnational investment will help to reduce the public-spending requirements on any one individual nation.
The key for countries without strong political integration will be to find practical and regulatory mechanisms to secure corridors so that shared compute access can be realized, says the report.
International Development for Access to Compute
If countries lack the right political environment to build shared compute, an alternative could involve looking to the international development landscape for support, says the report. For example, the U.S. Department of State, in collaboration with companies such as OpenAI and Nvidia, have launched the Partnership for Global Inclusivity on AI. The partnership has allowed the Department of State and Nvidia to offer compute credits to emerging market economies. The Gates Foundation AI Grand Challenges has adopted a similar approach, focusing on health care and the Gates Foundation has also stated curating a “Gavi for compute” to redistribute compute resources in Africa.
Other multi-stakeholder agencies have begun their quest to close the international compute divide. The United Nations, for example, recently recommended the development of an AI development fund.
“Many of these projects are in their infancy, so there are unique opportunities for countries to shape this agenda by understanding their own national demand and engaging with these new initiatives, the report says.
Turning Challenges Into Opportunities
The opportunities for countries to boost their compute position don’t stop there.
Countries with a significant number of servers and data centers are gaining an advantage by beginning to replace general-purpose servers with smaller numbers of specialized AI servers. Switzerland, the Netherlands and Ireland are leading the way, says the 2024 report, and TBI projects that this trend will continue.
Small countries that commit to building out infrastructure are attracting investment. In this year’s TBI report, Israel has risen from 38th to 24th on its Cloud-service availability indicator, as it expanded from a single cloud or colocation data center in 2022 to five additional data centers – an expansion of 20,000 % (from 4,000 to 804,000 square feet). Furthermore, Israel has shown the largest percentage growth in subsea cables and Internet-exchange points, adding a further eight. This rapid growth has been driven in part by Israel’s Project Nimbus, first conceived in 2019, to be the basis of the public Cloud infrastructure in Israel to facilitate the move of a significant amount of government services to the Cloud, according to the report.With AWS and Google having won the tender to implement this $1.2 billion project, the subsequent investments play a key part in Israel’s rise, according to the report. This includes investments to increase the electricity grid, including building a new substation to facilitate the supercomputer and additional data centers, as well as a commitment to invest in smart grids and renewable energy to power this growth. The accompanying investment into regional connectivity, such as the 254 km subsea cable between the Mediterranean and the Red Sea, is also creating new opportunities for Israel’s compute ecosystem, notes the report.
Energy infrastructure is also a key factor. Companies building the largest data centers will prioritize putting them in locations that can build out energy infrastructure fastest, says the report. If Europe can translate its greening economy into one that can rapidly scale infrastructure, it will strengthen its competitive advantage. Investment in renewables has been a priority across Europe to secure domestic energy supply and reduce heavy reliance on Russian energy. It was the only region to have demonstrated significant growth in the availability of clean energy over the past year, according to the report.
Physical geography is becoming a key factor in growth for other reasons. For instance, accelerated private sector investment in Finland’s compute partly rests on the country’s cooler climate, making it cheaper and more energy efficient to run data centers. Likewise, Malaysia has taken advantage of its geographical proximity to Singapore to supply the country – which has placed a three-year moratorium on data center building – with compute at scale.
Africa is making strides in building its compute power, but still has a way to go. TBI projects that Cote d’Ivoire will have the highest server growth rate of the 67 countries studied over the next 5 years, at 84.3%. Ethiopia, Rwanda and Kenya have seen the biggest year-on-year increase in software engineers across TBI’s data, at 40%, 39% and 29% respectively. And Rwanda, Nigeria, Kenya and Ghana have shown high growth in both the size of their developer community and its activity, while the region more broadly has the highest growth in GitHub developers, year-on-year, according to TBI. That said, the Continent is being held back by a variety of issues including electricity blackouts and the fact that many African countries heavily restrict data portability across borders. In addition, despite higher levels of STEM graduates, sub-Saharan Africa is not developing strong human-capital pipelines to compute roles, says the report. Despite a new wave of investment, the region has a similar number of servers to Spain; per capita, the UK has 20 times as many, notes the report. It says two changes are required for Africa to further shore up its position in compute: an increase in edge computing (where data processing takes place on a device or local server, rather than a data center) to help leapfrog infrastructure limitations, and more opportunities for the region’s skilled workforce within local compute ecosystems. “Without these changes, the local talent pool is likely to seek opportunities elsewhere – and this could stymie the growth of the region’s access to compute,” the report says.
No Silver Bullet
The fact that U.S. companies dominate large language models (LLMs), AI chips and data center capacity and the increased tensions between the U.S. and China do not necessarily have to lead to a new digital divide and a fractured compute environment, says TBI’s Mökander. To solve the world’s biggest problems from climate to healthcare – and unlock economic growth – countries need not only invest in compute capacity, but also implement technical, procedural and cultural controls to manage tensions related to system interoperability, data sharing, and cyber resilience. “Not all compute requires the same level of localization and security.” he says. “Countries need a plurality of approaches and to segment use cases and data in order for the world to build a resilient and flourishing compute ecosystem.”
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