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As we have alluded to numerous times when talking about the next "AI" trade, data centers will be the "factories of the future" when it comes to the age of AI.

That's the contention of Chris Miller, the author of Chip War, who penned a recent opinion column for the Financial Times noting that 'chip wars' could very soon become 'cloud wars'.

He points out that the strategic use of high-powered computing dates back to the Cold War when the US allowed the USSR limited access to supercomputers for weather forecasting, not nuclear simulations.

AI systems today, like supercomputers, have dual civilian and military applications, making control over AI data centers politically and economically significant.

He tells FT readers that many countries are investing heavily in AI data centers. Saudi Arabia, the UAE, Kazakhstan, and Malaysia are expanding their AI infrastructure, attracting investments from US and Chinese companies. US cloud companies, eyeing lucrative contracts, argue they must compete in these markets to prevent China from dominating.

American diplomats are also focused on data centers to block Chinese tech influence, according to his FT piece. 

As an example, Chris points out that Microsoft’s new data center in Kenya, announced during President Biden’s meeting with President Ruto, will be developed with G42, a UAE-owned company with ties to Chinese firms like Huawei. This partnership raises security concerns in Washington, prompting calls for strict compliance measures.

He concludes:

Chips, clouds and data centres are intrinsically interlinked, so long as high-end, export-controlled chips give cloud computing companies the ability to deploy AI efficiently. The tech competition that started with silicon is now intruding into a new layer of the computing stack.

Recall, for those that missed it, in April of this year we introduced our subscribers to what we thought would be the "Next AI Trade", which - if it had be summarized in one word - was basically this: the "electrification" of the current AI trade, which includes everything from massive tech giants needed gigawatts of power to operate their operations, to Matrix-like battalions of data centers spread across the country and likewise needing a staggering amount of electricity.

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