AI Policy Remains an Open Question at CES

Key Concepts

• Pax Silica: A coalition of seven technologically advanced countries (including Japan, South Korea, UAE, Israel, Singapore) aimed at securing supply chains, leading innovation, and gaining market share in critical technologies, particularly semiconductors.
• AI Race: The strategic competition between the US and China for dominance in Artificial Intelligence and related compute capabilities.
• Supply Chain Security: Efforts to diversify and secure the supply chains for critical technologies, reducing reliance on single countries (specifically China).
• Compute Capacity: The total processing power available for AI and other advanced technologies, considered a key driver of 21st-century economic growth.
• Technological Diffusion vs. Innovation: The trade-off between broadly distributing technology (diffusion) and maintaining a technological edge (innovation).
• Economic Security Coalition: A broader effort to build resilience and diversification in global supply chains through strategic partnerships.

The US Strategy to Win the “AI Race” and Secure Semiconductor Supply Chains

The discussion centers on the US government’s strategy, spearheaded by the State Department, to secure its position in the global technology landscape, particularly concerning semiconductors and Artificial Intelligence (AI). The core concern is the potential disruption of access to Taiwan’s semiconductor capacity, potentially as early as 2026, due to escalating tensions with China and President Xi’s reiterated goal of reunification. This scenario is framed as a critical national security risk.

The Importance of Silicon and Compute

The speaker emphasizes a fundamental shift in the global economy: “Today, it's clear that if the 20th century ran on steel, the 21st century is increasingly running on silicon and compute.” This is supported by the statistic that “a third of our GDP growth [in the US] [is] coming from A.I.” with growth accelerating as productivity increases. This highlights the centrality of semiconductors and computing power to economic prosperity.

The “Winning the AI Race” Policy & Pax Silica

In July, President Trump declared the US intent to “win the AI race,” establishing it as official US policy to “do whatever it takes.” This broad goal has been operationalized through the Pax Silica initiative. The strategy is broken down into three key pillars:

1. Leading Innovation: Maintaining a technological advantage through research and development.
2. Gaining Market Share: Expanding the reach of American technology globally.
3. Securing Supply Chains: Diversifying and strengthening the supply chains for critical technologies.

Pax Silica, launched with seven technologically advanced nations (Japan, South Korea – home to Samsung, SK Hynix, Mitsubishi – and others), is the primary vehicle for achieving these goals. The initiative is currently transitioning into its implementation phase, targeted for 2026.

Balancing Innovation and Diffusion: Export Strategy

A key tension identified is the balance between technological innovation and diffusion. Exporting technology expands market share but can potentially compromise the US’s technological edge. The strategy involves a dual-track approach: exporting to strategic partners (like Gulf states – UAE, Saudi Arabia) to prevent a vacuum that China would fill (“nature abhors a vacuum”), while simultaneously protecting the most sensitive technologies. The speaker notes Nvidia previously held 95% of the market share but lost it, highlighting the risks of inaction. The goal is to ensure American models “stay ahead” through these bilateral deals.

Addressing Concerns about China’s Access to US Technology

The discussion addresses concerns about potential approvals for Chinese companies, like Alibaba, to access Nvidia’s chips. The speaker frames this within the context of market share, arguing that the US must actively compete to prevent China from dominating the global technology landscape. The launch of Pax Silica is presented as a “sensible approach” to exporting technologies while safeguarding sensitive ones.

The Risks of Supply Chain Concentration

A central argument is that concentrating the global supply chain in a single country (China) is inherently risky and creates a “brittle” and “ultimately a liability to the global economy.” Pax Silica is positioned as a solution to diversify these supply chains through collaboration with the world’s most advanced technology companies and countries.

CBS Las Vegas & Future Roadmap (2026)

The current focus, as evidenced by the gathering at CBS Las Vegas, is on:

• Policy Coordination: Aligning policies among Pax Silica members.
• Membership Expansion: Bringing more countries into the coalition.
• Infrastructure Projects: Investing in the “arteries” (logistics), “muscle” (fabs and refineries), and “fuel” (capital and energy) of supply chains. The event allows for “stress tests” of these ideas with industry builders.

Geopolitical Context & “Peace Through Power”

The speaker characterizes the current geopolitical landscape as requiring a firm stance, stating that “the world needs to know that the Trump administration says what it means and means what it says.” The events in Venezuela and the Arctic are cited as examples of potential threats. Pax Silica is presented as a pragmatic approach to pursuing “peace through power” by forging strategic investment deals with key technological partners. The coalition’s diversity – including countries like Singapore, Israel, and UAE – is highlighted as a strength, representing a departure from traditional groupings like the G20 and G7.

Quote: “Today, it's clear that if the 20th century ran on steel, the 21st century is increasingly running on silicon and compute.” – Speaker, emphasizing the shift in economic drivers.

Quote: “nature abhors a vacuum. We have got to fill the vacuum while we can.” – Speaker, justifying the export strategy to prevent China from filling market gaps.

Conclusion

The US is actively pursuing a multi-faceted strategy, centered around Pax Silica, to secure its leadership in the AI and semiconductor industries. This strategy involves balancing innovation with market share, diversifying supply chains, and forging strategic partnerships with key technological allies. The urgency stems from concerns about potential disruptions to Taiwan’s semiconductor capacity and the broader geopolitical competition with China. The success of this strategy will depend on effective policy coordination, continued investment in infrastructure, and a commitment to maintaining a technological edge.