...it occurs to me that it's worrying in very different directions if FRED changes what or how they report. If they stop reporting or data collection is halted for political reasons, I'd expect that we either pick an arbiter to make the call, or agree to call the bet off.

I would have been happy to get better odds, obviously! 

I've updated substantially towards this view - the practical issues with renting CPUs make them far less of a fungible commodity than I was assuming, and as you pointed out, contra my understanding, there are effective restrictions on Chinese companies getting their hands on large amounts of compute.

Thanks for this response - I am not an expert on chip production, and your response on fabrication is clearly better informed than mine.

However, "Policy changes in 2025 could start affecting Chinese AI models in 2027 (for chips) and around 2030 (for SME) already."

I now agree with this - and I was told in other comments that I didn't sufficiently distinguish between these two, so thanks for clarifying that. But 2030 for starting to help get more chips is long timelines, and the people you cite with 2029-2030 timelines expect it to be playing out already then, so starting to get more chips then seems irrelevant in those worlds.

Edit to add: First, I really liked your post yesterday, which responded to some of this.

I think the technical barriers to developing EUV photolithography from scratch are far higher than anything needed to extract, refine, or transport oil.

I think the technical barriers are higher today, but not so high that intense Chinese investment can't dent it over the course of a decade.  SMEE is investing in laser-induced discharge plasma tech, with rumored trial production as soon as the end of this year. SMIC  is using DUV more efficiently for (lower-yield, but still effective) chip production. There's also work on Nanoimprint lithography, immersion lithography, packaging, etc. And that won't affect market shares, until it does.

There's no oil equivalent to TSMC's ~90% leading-edge logic chip, NVIDIA's ~90% data center GPU, or ASML's 100% EUVL machine market shares.

I think Standard Oil in the late 1800s, and the seven sisters in the 1950s, both did something roughly similar - but this isn't actually key to the argument. (And as you pointed out in your piece, oil could be controlled - but that was because the seven sisters predated WWII, and were all on the Allied side. The same isn't true if China has started competing already - and they are trying to do so.)

But the key point I wanted to make is that oil only mattered because it enabled economic development. The long-term winners were definitely not the groups that extracted or refined the oil, even though they made lots of money - it was the countries that consumed the oil and built industrial capacity leading up to WWII, and could then use the controlled supply of oil.

And as far as I can tell, no-one is restricting Chinese companies from using compute right now - they don't own it, but can use the same LLMs I do. (But I guess it matter smuch more if we're primarily concerned with internal deployment?)

I would guess that the chip supply chain used by NVIDIA has more investment than the Chinese counterpart. 

Sure, today, if you count all of the West versus China alone. But my point is that this will change over a decade or more - the Chinese government is happy to subsidize things if they look like they will work, and will be under increasing pressure to do so if there is a continuing embargo. If timelines are long, they have lots of reason to invest, and they have much longer investment timelines than western companies can typically manage. (Though the internal management of NVIDIA and similar have shown that they can plan for longer timelines then most investors will care about, as I'll note next.)

I was under the impression the AI chip design process is more like 1.5-2 years, and a fab is built in 2-3 years in Taiwan or 4 years for the Arizona fab.

TSMC Arizona was announced in May 2020, which makes it 5 years to first chip production. I think this is the most relevant timeline; Taiwan can keep building new fabs, and it keeps things locked in to the status quo, and China can't start building fabs using UV lithography tech they are still developing, so the lock-in is until closer to the end of the decade. (The second fab is planned to come online in 2028, and it will be longer for others - and the first fab is using their older 4nm process, while they have been using the 3nm process since 2022 in Taiwan, which will only start in the US in 2028 earliest, and they have started using the 2nm process this year, which will be in the 2028 second fab, or perhaps only in the planned-for-2030 third Arizona fab.)

And the "chip design process" is 2 years or so only after the specifications and design are basically finished - but my understanding is that those depend on having a roadmap that is far longer. For example, the public roadmaps for tech development from NVIDIA extend to the Feynman architecture planned for late 2028, based on using fabs that are coming online today, integrating Vera chips they are already making. (And which I'll guess won't be made in the 2nm plants they will have online in the US then.) That means they are confident enough in the roadmap to be pretty far along with high-level design already, but they still need 3+ years to get it into production. My understanding (which could be entirely wrong) was that the internal roadmap extends out a few more generations, and they have been investing in planning and tech development to enable their later chips even longer.

To be clear, I think that this bet is pretty close to fair according to my views about the likely future of the US economy - I don't have a large edge in my estimate, and I'm making the bet mostly to have my (fairly and unusually pessimistic) views clearly on the record, for myself and for others.

It's partly shorter timelines, which we're seeing start to play out, and partly underlying pessimism on US economic policy under Trump, and the increasing odds of a recession. 

The Us economy has been stalled, and the only reason this isn't obvious in the stock market is the AI companies - so my weak general model is that either the AI companies continue to do better, which at least weakly implies job displacement, or they don't, and there's a market crash and need for stimulus and inflation. In that situation, or even with a continued status quo maybe AI matters/maybe it doesn't, then absent a pretty strong recovery elsewhere - which seems unlikely given the ongoing uncertainty under Trump - implies that we could have a pretty major setback in the broader economy.

First, I was convinced, separately, that chip production location matters more than I presumed here because chips are not commodities in an important way I neglected - the security of a chip isn't really verifiable post-hoc, and worse, the differential insecurity of chips to US versus Chinese backdoors means that companies based in different locations will have different preferences for which risks to tolerate. (On the other hand, I think you're wrong in saying that "the chip supply chain has unique characteristics [compared to oil,] with extreme manufacturing concentration, decades-long development cycles, and tacit knowledge that make it different" - because the same is true for crude oil extraction! What matters is who refines it, and who buys it, and what it's used for.)

Second, I agree that the dichotomy of short versus long timelines unfairly simplifies the question - I had intended to indicate that this was a spectrum in the diagram, but on rereading, didn't actually say this. So I'll clarify a few points. First, as others have noted, the relevant timeline is from now to takeoff, not from now to actual endgame. Second, if we're talking about takeoff after 2035, the investments in China are going to swamp western production. (This is the command economy advantage - though I could imagine it's vulnerable to the typical failure modes where they overinvest in the wrong thing, and can't change course quickly.)

On the other hand, for the highest acceleration short timelines, for fabrication, we're past the point of any decisive decisions on chip production, and arguably past the point of doing anything on the hardware usage to decide what occurs - the only route to control the tech is short term policy, where only the relative leads of the specific frontier companies matters, and controlling the chips is about maintaining a very short term lead that doesn't depend on technical expertise, just on hardware. (I'm skeptical of this - not because it's implausible, but because the cost of these fights is high. That is, I think it's more likely that in these worlds the critical risk mitigation is global cooperation to stop loss of control - which means that the fights being created over hardware are on net damaging!)

For moderately short, 2-6 year timelines, the timelines for chip fabs are long enough that we're mostly locked in  not just to overall western dominance via chips produced in Taiwan, but because fabrication plans built today are coming online closer to 2029, and the rush to build Chinese fabrication plants is already baked in. And that's just the fabs - for the top chips, the actual chip design usually takes as long or longer than building the plant. So we're going to see shifts towards the end of the window either way. 

And in those moderate timeline worlds, I'll strongly grant your point that location, in terms of which companies have the technical lead for producing AGI, matters at lot. I just don't see it as impacted that much by chip embargoes, which will be circumvented either by smuggling, or by leasing the chips via proxies, etc. And as with the above scenario, I think that hobbling Chinese acquisition of chips turns this into a zero-sum game along the wrong dimension - because the actual force dictating which AI companies have access to the most compute is the capital markets, and expectations for profit. But this brings in a point I didn't discuss at all here, and wasn't thinking about, where AI companies have commodified their own offerings. Capital market expectations seem not to be accounting for this - or are properly pricing both the upside of a single-company AI singleton, and the downside of commodified offerings meaning there's no profit at all. 

Either way, I'm unsure that western countries should see much marginal benefit in the coming years from controlling chip location. "Hobbling" Chinese AI efforts is still easier to do via current market dynamics where western companies have better market options, and will pay more for the chips - if that's even a benefit, which seems very unclear given the commodification of models and the benefit accruing to the users of AI models.

So my conclusion is that this is very much unclear, and I'd love to see a lot more explicit reasoning about the models for impact, and how the policy angles relate to the timelines and the underlying risks - which are very much missing in the public discussions I've seen.

As a meta-comment, it's really important that a huge proportion of the disagreement in the comments here is about what "engage deeply" means.

If that means it is a crux that must be decided upon, the claim is clearly true that we must engage with them - because they are certainly cruxes.
It if means people must individually spend time on doing so, it is clearly false, because people can rationally choose not to engage and use some heuristic, or defer to experts which is rational^[1].

1. ^{^}

   In worlds where computation and consideration are not free. Using certain technical assumptions for what rational means in game theory, we could claim it's irrational because rationality typically assumes zero cost of computation. But this is mostly a stupid nitpick.

Deference to authority is itself a philosophical contention which has been discussed and debated (in that case, in comparison to voting as a method.)