Ben Thompson on Big Tech, China, and the AI Boom Running Out of Money

**Patrick O'Shaughnessy** (0:00)
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**SPEAKER_2** (1:52)
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**Patrick O'Shaughnessy** (2:19)
So Ben, if you can believe it, how long it's been since we last did this. The world was very different, no AI at the time. We talked about aggregation theory mostly. I thought a fun place to begin since the world has changed so much is to hear what you think it would mean for the US to win the AI race.

**Ben Thompson** (2:35)
I think it would be very problematic for the US to win. Let's say we take the most sort of fantastical scenario where if you control AI, you basically, your military is better than anyone else. Somehow it fixes our manufacturing, all these things that I don't think AI is necessarily going to do because they sort of deal with the real world. But in this world, what is the game theory optimal response of China?
To blow up TSMC.
Game theory can get very convoluted and complex. To me, this one actually isn't that complicated. There is a fundamental disconnect that I have with a lot of the rhetoric coming out of Silicon Valley. Coming out, I think, of one of the labs in particular. Where if we get to a place where we have a meaningful superiority in terms of a military and national security perspective, I think that's very dangerous for the world.

**Patrick O'Shaughnessy** (3:25)
But in that state, how much does it extend beyond TSMC being blown up? Because in that state, I would assume we figured out how to build fabs here in the US to some degree and are less reliant on that one choke point.

**Ben Thompson** (3:38)
I think there's a little bit of magical thinking, which I just invoked in terms of manufacturing and whether it be fabs, whether that be actuators, all these precursors. I think the degree to which we are dependent on China is underappreciated and is not something that is going to be fixed outside of a conflict. Just because fixing so many of these things is going to be dramatically dumb. If your competitor is sourcing from China and you're going to start sourcing or getting things from the US, you're going to be at such a disadvantage, relatively speaking, that you're just not going to do it. So you do it when you have literally no choice. And that works for very big headline items. You can browbeat Apple to move some of their iPhone manufacturing to India, for example. But even that is a good example because Apple is not truly moving out of China. They're diversifying to an extent, but it would just cost so much. It's like paying an insurance policy that if you don't have to pay it and it's astronomically expensive, you're just not going to pay it.