AI CHIPSAI Chip Race: Fears Grow of Huge Bubble

By Nik Martin

Published 4 March 2024

A global contest is underway to build powerful chips for the next generation of artificial intelligence. OpenAI CEO Sam Altman is calling for a $7 trillion investment.

Sam Altman caused more than a stir in early February when he called for a $5 to 7 trillion (€4.65 to 6.5 trillion) global investment to produce more powerful chips for the next generation of artificial intelligence (AI) platforms. Many industry analysts were left open-mouthed at the figure cited by the OpenAI chief executive, which is equivalent to almost a quarter of the US federal budget. 

Altman wants to solve some of the major issues faced by the AI sector, which includes a major shortage of chips and semiconductors needed to power large language models like his firm’s ChatGPT, the Wall Street Journal reported earlier this month.

The US entrepreneur has warned that vastly more powerful computing will be needed to help AI eventually overtake human intelligence. Altman recently held discussions with potential investors in the United Arab Emirates, the business daily said.

Unprecedented Investment Demands
“Asking for $7 trillion is just indecent,” Pedro Domingos, professor emeritus of computer science and engineering at the University of Washington, told DW. “It is an order of magnitude more than the entire chip industry has spent in its history.”

Domingos said Altman would likely settle for around $700 billion in backing, which is still a far cry from the value of the entire AI chip sector. Canadian-Indian analytics firm Precedence Research recently calculated the industry could be worth some $135 billion by 2030.

Others think that Altman’s projection might not be so far out if the ambition is for AI to eventually become smarter than humans in every way.

Right now, ChatGPT4 is only text,” Dylan Patel, chief analyst at SemiAnalysis, told DW. “But what if you add images, video, audio and motorized tactile feedback? And what if we assume that AI does outpace humans on all fronts? That is going to cost hundreds of billions or even trillions of dollars.”

In the latest sign of the speed that AI is progressing, OpenAI last week unveiled a platform called Sora, for creating high-quality short videos from a simple line of text.

AI Chip Race Heats Up
Before Altman’s projection was made public, the world’s major governments — the United States, China, Japan and several European countries — were already trying to secure or maintain a share of the chip industry for themselves.

Over the past 18 months, Washington has also levied sanctions on Beijing to stop Chinese firms from gaining access to US-designed chips. But rather than hobble Beijing’s ability to develop advanced AI computing power, Domingos said the sanctions were “counterproductive.”