Why Generative AI could be the next battlefield

Generative artificial intelligence, the technology on which viral chatbot ChatGPT is based, could become the new battleground in the battle for technological supremacy between the US and China, according to one analyst.

While the two countries have sought better ties since US Secretary of State Anthony Blinken met with Chinese President Xi Jinping this week, technology tensions will continue, analysts say.

While Washington wants to cut China off from key technologies such as semiconductors, China is also showing its domestic sector to increase its self-sufficiency and free itself from American technology.

“The situation is unlikely to change much on any front — from sanctions to trade pressures,” Abhishur Prakash, CEO of The Geopolitical Business, a Toronto-based consulting firm, told CNBC in an email.

AI, seen as a critical technology by the two countries, is bound to be dragged into the war between the two sides.

Meanwhile, the US has sought to boost its own domestic technology, including semiconductors, with funding such as $52 billion available through the Chips and Science Act.

Washington’s attention is now likely to turn to generative AI.

“There may be further attempts from Washington to target the development of certain types of applications in China, and artificial AI may emerge in the coming year,” said Paul Triolo, head of technology policy at the consulting firm. CNBC

“It comes at a time when the Biden administration is deciding which technologies can benefit both China’s military modernization and Chinese companies’ ability to make breakthroughs in generative AI,” he said.

Generative AI relates to apps like ChatGPT that can generate content when requested by users.

AI needs to be trained on large amounts of data to function. Generative AI is based on so-called big language models, that is, a language that is trained to understand and respond to users’ queries at a large scale.

The processing of this information requires a large amount of computing power, which is performed by certain semiconductors, such as those sold by the US company NVIDIA, which appears to be the market leader in such chips.

Part of the US’s current sanctions aim to cut China off from some of Nvidia’s key chips, which could hamper China’s AI development.

Washington is conducting a Foreign Investment Review, which sets rules for U.S. investment in foreign companies.

“The upcoming spending review executive order includes restrictions on US investment in some AI-related technologies, and this will be a major indicator of the direction of US technology control in the last two years of the Biden administration,” said Triolo.

ChatGPT, developed by US company OpenAI, has taken the world by storm and sparked an AI arms race between US tech companies and investors Microsoft and Alphabet.

China’s tech giants have taken notice.

In the past few months, Chinese tech giants from Baidu to Alibaba have launched plans and tests for their own ChatGPT rivals.

Beijing says the US sanctions are violating international trade rules and that the ban on China’s chip industry is “bullying”.

Washington says the move is in the interest of national security and is targeting certain sensitive technologies.

China did not retaliate much. However, last month Chinese regulators barred “critical data infrastructure” operators from buying chips from US company Micron, saying the company’s products failed a network security assessment.

Technology was not discussed much in public when Blinken recently met with China’s Xi, but the two sides undoubtedly discussed it.

Trello told CNBC that the United States has raised concerns about the handling of microchips and that China will impose controls on exports.

“Beijing sees that package [export controls]and the US Chips and Science Act, as a one-two punch to disconnect the Chinese semiconductor industry from the global semiconductor ecosystem,” Trillo said.

However, the two parties are somewhat at loggerheads.

Blinken spoke about areas of cooperation between the US and China, such as the climate crisis and the economy. But advanced technology is one area where the two countries remain in competition.

“But at the same time, as I said, it’s not in our interest to give China technology that could be used against us,” Blinken said on Monday.

“What China wants, the US will not provide, such as opening up the chip ecosystem to Beijing or not checking Chinese investment in US technology,” Prakash said. “The US-China War Technological dominance is about to enter the era.

Unlike previous flashpoints, like over 5G or TikTok, where both sides still believed differences could be ironed out, such ideas are now politically dead. The gap between the US and China is widening – and neither superpower wants to bridge the gap.