China will steal chips, until a nuke drops on their head 💣
21st November 2023
Welcome to AI Collision 💥,
In today’s collision between AI and our world,
If you can’t beat ‘em, steal from ‘em.
The most terrifying plane ever made
Make sure to register for the AI Advantage Workshop
If that’s enough to get the AI-powered nuclear button pressing, read on…
AI Collision 💥 ban AI-chips? What ban?
Just over a week ago, almost half of Australia was without internet services.
That’s somewhere in the ballpark of 14 million people, all “dark” from online activity.
No cat videos for anyone!
The outage was due to one of the biggest Aussie telecommunications companies, Optus, suffering some kind of technical “problem”. Optus is a wholly owned subsidiary of Singtel (SIN:Z74) a huge telecommunications company based out of Singapore.
As of yet, there’s no definitive answer for what caused the outage. No doubt, over time we’ll know more, but Optus has form for this sort of thing.
It’s also in the midst of a class action lawsuit from 2022 regarding a data breach that affected around ten million Australians.
It’s regarded as the worst data breach in Australian history.
That 2022 breach was the result of a cyberattack which according to ABC, the Australia spy agencies,
“[point] the finger at China as the major backer of serious hacking of Australian companies and critical infrastructure.”
Now, if Optus has form in stuffing up everything from online access to protecting customer data, then China has form when it comes to cyberattacks, particularly when it comes to nicking stuff that they want really badly…
In 2013, it was reported that Chinese cyber-attackers infiltrated Australian spy agencies to steal the blueprints for,
“a new multi-million-dollar Australian spy headquarters.”
The suggestion was that China was targeting Australian organisations and government agencies as it was taking aim at any and all allies of the US.
So it comes as no surprise that recently there were further accusations that China has heavily relied on stolen data from US government agencies to build its J-20 strike fighter.
It does look remarkably like the Lockheed Martin (NYSE:LMT) F-22 strike fighter… but you can see that for yourself.
When the Wall Street Journal reported in 2009 that terabytes of data from the F-22 development were stolen… well, we all knew where it would end up, didn’t we?
And China has been reported to have stolen the blueprints to everything from US-built fighter jets, helicopters and missiles to sensitive data on submarine warfare.
But more recently, there’s been another target of Chinese cyberattacks. And it’s possibly the most important technology (and potential weapon) that both the Chinese and the US are developing…
It also has come to light that two Chinese hackers have infiltrated and stolen important data and designs for semiconductors from NXP Semiconductors (NASDAQ:NXPI).
Cybersecurity detection agencies are noticing a distinct increase in attacks by Chinese attackers targeting semiconductor companies. The NXP attack news comes hot on the heels of another report that Chinese attackers had lured a Middle Eastern telephone company, an Asian government and the US legislature into clicking malicious links they shouldn’t have.
Apparently the attackers posed as the Taiwan Semiconductor Manufacturing Company (NYSE:TSM) to get them to click links, which then gave the attackers access to their systems.
It’s not too hard to see why China is taking aim at the semiconductor industry.
With the US deciding to use semiconductor exports as leverage in its ongoing trade-spat with China, we think that China will simply take what it needs instead of asking nicely.
In October, the US decided to place more restrictions on certain AI-based semiconductors like Nvidia’s A800 and H800, which no doubt annoyed the Chinese, and sent its notorious cyber army into overdrive.
Where all of this heads is that any restrictions on Chinese semiconductors won’t have the intended impact. They’ll take the designs and the blueprints anyway.
What this does bring to light, though, is that if China’s just going to try and take it as it pleases, perhaps in order to protect domestic AI technology, we should be casting our eye not to AI pure-plays, not even to semiconductor companies – but perhaps it’s cyber security companies that hold the real key to the future of AI technology.
AI Gone Wild 🤪
Keeping in the mood of China, the US and what appears to be a slowly but surely acceleration of tensions…
Have you ever heard of the term “mutually assured destruction”?
It’s a form of military deterrence on the premise that if a nuclear superpower were to launch a nuclear attack on a target, the target would launch an equally and perhaps an even more aggressive nuclear attack in retaliation.
Thereby, both nuclear superpowers would wipe each other off the face of the planet.
Hence, you don’t fire because you know what’s coming back in your face if you do.
This has been the primary reason that we’ve never seen another nuclear attack since World War II.
But what if the technology was available to ensure that your enemies could never launch a nuclear attack to begin with… or in retaliation to yours?
Let’s play a hypothetical situation out…
The US launches a nuclear attack on another country. Let’s call this other country, China.
Now mutually assured destruction says the US would never fire to start with because it knows China will just launch one back – game over for all.
Unless…
The US can launch an attack and then deploy a weapon so fast, so powerful and so accurate that if China were to retaliate, this “weapon” could simply take out the Chinese threats before they even left Chinese airspace.
Whoa, that sounds nuts, but it would be a game changer for warfare… for nuclear warfare.
But that might be the direction that warfare is taking if AI has anything to do with it.
Sometime in the next six or seven years, the US will enter the Northrop Grumman B-21 “Raider” Stealth Bomber.
This is the next-generation stealth bomber that, according to reports, is “full of AI”.
Even Northrop says,
“The B-21 Raider will be capable of penetrating the toughest defenses to deliver precision strikes anywhere in the world. The B-21 is the future of deterrence.”
It’s expected that the Raider will come into service just as China builds up its own nuclear arsenal. Now we have no idea just how much AI will be in the Raider.
But it’s fair to assume…a lot.
As we linked to the other week, the US military is going deep into AI and there’s no doubt that’s going to be a big driver of its weapons technology into the future.
But with the Raider well under development, and close to full service, perhaps the AI strategy has been there all along. And perhaps it’s the key to the US maintaining nuclear dominance and the upper hand against China, whether it’s stealing plans for it or not.
Boomers & Busters 💰
AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).
Boom 📈
Symbiotic (NASDAQ:SYM) up 38%
iRobot (NASDAQ:IRBT) up 36%
Cyngn (NASDAQ:CYN) up 25%
Bust 📉
Appen Ltd (ASX:APX) down 28%
Amesite (NASDAQ:AMST) down 11%
DotDigital (LSE:DOTD) down 5%
From the hive mind 🧠
AI-powered autonomous vehicles seem cool. What about the ones strapped with massive machine guns and still all controlled by AI?
There’s talk that a hyper-powered, more intelligent AI called Q* is what got Sam Altman fired. But… what is Q?
It feels like the lines of warfare have been drawn, and there’s a group of US-allied nations that are all willing to take the knee as the US presses on with its own ideas about what AI should be.
My AI Advantage Workshop goes live later today – if you haven’t yet registered for it, you still can here.
Artificial Polltelligence 🗳️ : The Results Show
Last week, we asked how much capital you’d consider risking to invest in AI-stocks.
Simple question? Not so much. Deciding how much capital to risk on any kind of breakthrough technology is no easy task.
But loads of people took the time to vote, and here’s the results…
Interestingly most people thought that risking somewhere between £1,000 and £5,000 pounds on AI stocks was within their “risk wheelhouse”.
Here’s the outcome to see…
I actually think that’s a good result. It shows that you’re prepared to carefully consider the risks of these stocks, but also that you’re not opposed to risk altogether!
Balancing risk and capital is hard, but do it right and you open yourself up to huge opportunities in the market with big breakthrough ideas like AI.
Stay tuned for a new poll on Thursday and thanks for voting!
Weirdest AI image of the day
While on the topic of Microsoft…
Children’s games as horror movies – r/Weirddalle
ChatGPT quote of the day
"Intelligence is the ability to adapt to change, and true artificial intelligence is knowing how to learn from it." – ChatGPT
Thanks for reading, see you on Thursday (and don’t forget to leave your comments below)
Sam Volkering
Editor-in-Chief
AI Collision
