Under Secretary of State Jacob Helberg on the U.S. AI agenda, securing U.S. supply chain

Key Concepts

• AI Race: The United States’ strategic effort to lead globally in Artificial Intelligence development and implementation.
• Pax Silica: A State Department initiative focused on securing the silicon to compute supply chain through international collaboration.
• De-risking Supply Chains: Reducing reliance on single-source suppliers, particularly those posing geopolitical risks.
• America-Centric Strategy: Focusing on leveraging US strengths and core competencies in economic and technological competition.
• Geographic Concentration Risk: The vulnerability created by a high degree of reliance on a single geographic location for critical resources or manufacturing.

Securing the AI Supply Chain: A US Government Strategy

This discussion, featuring Undersecretary of State for Economic Affairs Jacob Helberg at CES in Las Vegas, centers on the US government’s strategy to secure its position in the global AI race and mitigate risks within the silicon supply chain. The core argument presented is that proactive government intervention, while traditionally limited, is now necessary to ensure long-term economic security and technological leadership.

The Importance of Compute and Silicon

Helberg emphasizes a fundamental shift in the global economy: “If the 20th century ran on steel, the 21st century is increasingly running on compute and silicon.” He cites data indicating that “over a third of our GDP growth already comes from the AI boom,” and anticipates further economic acceleration driven by AI-induced productivity gains. This underscores the critical importance of securing the resources and infrastructure underpinning AI development. President Trump has officially declared a policy of “winning the AI race” and committing “whatever it takes” to achieve this goal, as outlined in a speech co-hosted by White House Advisor Azar and David Sachs in July.

The Three-Pronged Approach to AI Leadership

The State Department’s strategy for achieving AI leadership is structured around three key pillars:

1. Innovation Leadership: Maintaining and expanding America’s position as a global hub for technological innovation.
2. Market Share Dominance: Actively pursuing and securing a dominant share of the global AI market.
3. Supply Chain Security: Protecting and diversifying the supply chain for critical components, particularly silicon.

Pax Silica: An Economic Security Coalition

To address the supply chain security pillar, the State Department launched “Pax Silica,” described as “an economic security coalition built for the AI era.” This initiative aims to unite countries with shared interests in securing the entire silicon to compute supply chain. Initial members include Japan, South Korea, Singapore, Israel, Australia, and the UK, with further additions anticipated in the coming weeks. The impetus for Pax Silica stems from concerns about over-reliance on single sources, specifically China’s dominance in key areas.

China’s Dominance and the Need for De-risking

Helberg highlights China’s significant control over critical elements of the supply chain, stating that China controls “90% of refined rare earth minerals, 85% of smartphone manufacturing, and almost half of legacy chip production.” He argues that this “level of geographic concentration…is just not sustainable,” regardless of geopolitical considerations. The core principle of Pax Silica is to “de-risk our supply chain for the benefit of the world,” ensuring a stable foundation for innovation. This involves creating “strategic investment pipelines” to identify projects and infrastructure, providing the private sector with a “roadmap” for identifying reliable vendors and suppliers. The rare earth metals example, where China could potentially disrupt supply, served as a “clarion call” to address these vulnerabilities.

Government-Private Sector Collaboration

The discussion addresses concerns about government intervention in the traditionally free market. Helberg argues that the current administration, comprised of many individuals with private sector experience (citing Secretary Besson and Secretary Lutnick), is uniquely positioned to partner effectively with the private sector. The goal is to develop “solutions that make sense commercially and economically for the long term,” achieved through constant communication with industry executives to understand their “pain points” and price pressures. The President’s AI Action Plan is presented as a “superb roadmap” for facilitating this collaboration.

An America-Centric Competitive Strategy

Helberg frames the relationship with China not as one of “frenemies,” but as a serious economic competitor. He advocates for an “America-centric strategy” focused on leveraging US strengths and core competencies rather than attempting to replicate China’s approach. He argues that “when you’re too focused on what your competitors are doing, you try to compete tit for tat…and ultimately that tends to not play to your strengths.” Instead, the US should “lean into our strengths by thinking about from a first principle standpoint, what is the best America centric strategy available.” Partnerships with countries like Singapore, South Korea, and Japan are crucial, as they each contribute “very unique capabilities” to this strategy.

The “Great Awakening” on China

Helberg notes a growing awareness within the US regarding China’s competitive and security challenges, describing it as a “somewhat of a great awakening.” He emphasizes the importance of recognizing China as a significant economic competitor and addressing potential security risks.

Conclusion

The conversation underscores a significant shift in US government policy towards a more proactive role in securing the AI supply chain. The launch of Pax Silica, coupled with a focus on government-private sector collaboration and an “America-centric” competitive strategy, represents a concerted effort to mitigate risks, foster innovation, and maintain US leadership in the rapidly evolving global technology landscape. The key takeaway is that securing the foundations of the AI revolution – silicon and compute – is now considered a matter of national economic security.