30
JAN
2025
Just last week, the chairmen of several tech companies had announced huge investments in artificial intelligence (AI) in the presence of US President Donald Trump. According to this, as part of the new Stargate project, 100 billion US dollars will be spent in a first step to build huge data centers and use them to advance the expansion and use of AI. The operational leadership is the responsibility of OpenAI, the company best known for its application ChatGPT. The US company Oracle has the technical leadership in the construction of data centers; the provision of the necessary funds, in turn, is to be organized by the Japanese tech financier SoftBank. 1] The tech investor MGX from the United Arab Emirates, founded only in 2024, is also involved as a funder.[ 2] Stargate wants to mobilize another 400 billion US dollars within four years beyond the 100 billion US dollars. The most important "technology partner" is the US company Nvidia, the world's leading producer of AI semiconductors. The project has been in progress for more than a year. It is now benefiting from Trump's first decrees, which have lifted all kinds of restrictions on the AI industry and for energy generation. AI devours huge amounts of energy.
In Germany and the EU, Stargate's presentation confirmed the view that the field of AI was almost hopelessly behind the USA. If a good 60 billion US dollars were invested privately in the industry in 2023, it was not even ten billion US dollars in the EU and Great Britain combined, it was reported.[ 3] Of the 35 billion US dollars invested in AI start-ups worldwide in the first half of 2024 alone, only six percent was accounted for by Europe. It is true that the EU Commission had drawn up ambitious plans in 2018 that provided for public and private AI investments of up to 20 billion euros per year. At the end of 2018, it was said in Berlin that they wanted to become a world-leading AI location; there was talk of an "Airbus 2.0 for AI". 4] Today, media groups such as Springer or Bertelsmann and German medium-sized companies are using "tailor-made AI systems" from US companies, while the German automotive sector "relys on the US AI chip groups Nvidia and AMD", industry experts now explain. Neither in Berlin nor in Brussels is a "clear strategy" to catch up, explains Daniel Abbou, the managing director of the AI Federal Association. This applies equally to politics and business.
However, a breakthrough in the development of AI, which the Chinese company DeepSeek has succeeded in, now has far-reaching consequences. DeepSeek has developed an AI model whose quality is unanimously assessed by experts as being as good as OpenAI's products. However, the production costs, which the company estimates at 5.5 million euros, were many times lower than the production costs of OpenAI's AI. In addition, DeepSeek not only got by with a far smaller number of semiconductors; the company also did not have access to state-of-the-art chips from the US company Nvidia, which were previously considered indispensable. 5] If the first findings about DeepSeek's AI model are confirmed, the United States has missed a central goal that it is pursuing with its economic war against the People's Republic: Then they would not have succeeded in beating China out of the AI field with unprecedented chip sanctions. "Deepseek shows that the sanctions are absolutely not effective," tech entrepreneur Robert Wu from Shanghai is quoted as saying: "This drives people here to innovate again." 6]
Moreover, even serious problems for the US AI industry could not be ruled out. The current investments in the three-digit billions are being made in the firm conviction that the funds will be able to re-install sooner or later - through the sale of their own AI products. If DeepSeek can provide comparable things at a much lower cost, the business model no longer works - especially as DeepSeek is based on open source; "other developers", observers state, "can so easily build on the work of the Chinese". 7] Accordingly, the prices of major US tech stocks collapsed dramatically at the beginning of the week; the Nvidia stock even lost almost a sixth of its value, while the US index Nasdaq, which is characterized by tech stocks, fell by about three percent. The further development is unclear.
Profound foreign policy consequences affecting the Arab Gulf States are possible. The United Arab Emirates and Saudi Arabia in particular rely on participation in the AI boom - and have either initiated their own AI projects, usually in cooperation with US companies, or invested in US AI projects. At the beginning of January, for example, the Emiratic billionaire Hussain Sajwani, a personal friend of the Trump clan from Dubai, announced that he would invest 20 billion US dollars or more in new US data centers.[ 8] Saudi Arabia launched the $100 billion Alat fund in February 2024, which is to invest in AI projects, among other things. In April 2024, Microsoft announced that it would invest $1.5 billion in the Emiratic AI company G42, which then had to commit to removing Huawei components from its systems. The chairman of the Saudi fund Alat has confirmed that he is also ready to stop all cooperation with Chinese companies in exchange for corresponding US investments. If the success of DeepSeek is confirmed, the Arab investors would have invested billions in far too expensive US projects and could now, it is said, fundamentally rethink this and their avoidance of Chinese AI.[ 9]
After the breakthrough of DeepSeek, on the other hand, European AI companies, including German companies such as Aleph Alpha (Heidelberg) and French companies such as Mistral (Paris), are hoping for new opportunities. If it was said in analyses, which were probably completed before the new DeepSeek AI model became known, that "Europe" had to mobilize huge sums like the USA or give up ("go big or go home") [10], observers now note that if companies from Europe followed the Chinese model, they could achieve attractive success even without immense, hardly financeable data centers. The Chinese are showing, it says, that apparently even without access to gigantic AI data centers, competitive AI models are possible. 11] "Deepseek shows," says the president of the Federal Association of German Industry (BDI), Peter Leibinger, "how incredibly mobile and surpriseful the topic of AI will still be."[ 12]
[1] Felix Holtermann, Philipp Alvares de Souza Soares: OpenAI, Softbank and Oracle forge "colossal" AI alliance. handelsblatt.com 22.01.2025.
[2] Adam Lucente: What to know about MGX, UAE's latest AI investment firm. al-monitor.com 12.03.2024.
[3] Stephan Finsterbusch, Hendrik Kafsack, Julia Löhr, Maximilian Sachse, Winand von Petersdorff: ChatGPT, where is Europe? Frankfurter Allgemeine Zeitung 23.01.2025.
[4] S. to "Airbus 2.0 for AI".
[5] AI from China trumps US competition. Frankfurter Allgemeine Zeitung 28.01.2025.
[6], [7] Gustav Theile, Stephan Finsterbusch, Max Sachse: China's AI coup shakes the tech world. Frankfurter Allgemeine Zeitung 28.01.2025.
[8], [9] Samuel Wendel: China's DeepSeek triumph sparks billion-dollar AI dilemmas for Gulf investors. al-monitor.com 28.01.2025.
[10] Andrea Renda, Pierre-Alexandre Balland: Stargate and the fight for AI supremacy – this is Europe's wake-up call. ceps.eu 27.01.2025.
[11] Gustav Theile, Stephan Finsterbusch, Max Sachse: China's AI coup shakes the tech world. Frankfurter Allgemeine Zeitung 28.01.2025.
[12] Rivals pay respect to China's AI surprise. Frankfurter Allgemeine Zeitung 29.01.2025.