The AI China Report #11 🇨🇳
Your executive summary on the geopolitics of AI - Issue #11
Welcome back to The AI China Report. This week we’re covering the bombshell report on Abu Dhabi’s leading AI company and its ties to China, as well as JPMorgan’s AI plans, and global AI policy updates.
QUOTE OF THE WEEK
“We cannot let China get these chips. Period. We’re going to deny them our most cutting-edge technology.”
- US Commerce Secretary Gina Raimondo at the Reagan National Defense Forum on Saturday
ONE BIG STORY: ABU DHABI IS PLAYING BOTH SIDES WITH AI
Abu Dhabi-based G42 is the leading AI company out of the Middle East. The company is closely tied to the government with Tahnoun bin Zayed Al Nahyanthe, National Security Advisor of the UAE, as the company’s chairman and controlling shareholder.
Recently, US officials have raised concerns that G42 is being used as a channel for China to get a hold of US technology and intelligence, and potentially even the genetic data of millions of Americans. The New York Times broke the bombshell story on White House concerns that the company may be feeding information to China and considers its ties to Chinese companies, most notably tech giant Huawei, which is at the core of G42 technology infrastructure, as a national security concern. Biden officials have put pressure on G42 leadership to cut ties with Chinese companies, which the firm has rejected. This summer the Biden administration held internal discussions about potentially sanctioning the firm.
The US has been investigating G42 CEO Peng Xiao, an American who renounced his citizenship to become a UAE citizen. The CIA issued a classified report on Xiao, which Xiao himself has said he’s seen but “hasn’t finished reading”. This isn’t the first time Xiao has popped up on the radar of American intelligence agencies. In 2019, social media app ToTok, was identified as a spy tool for the Emirati government by US intelligence after it was found to be tracking the location and conversations of users. That data was being stored by UAE firm Pax AI, which Xiao controlled.
Following The Times report, which Xiao said he also hasn’t read, he responded to data security concerns at Fortune Global Forum in Abu Dhabi saying, “We make sure there is no leakage of sensitive information from our data center link in the U.S. If the U.S. counterparts ever share any data with us, we are accountable for ensuring that data is kept safe and sound here.”
But G42 has been playing both sides, working with both American and Chinese companies. In 2021, US private equity firm Silver Lake announced an $800m investment in G42. Since then, the company has inked deals across US industries - announcing strategic partnership with US pharmaceutical giant AstraZeneca, Microsoft, Dell and OpenAI. It’s also working with Silicon Valley chipmaker Cerebras, investing $100m to create the “world’s largest supercomputer”.
In addition to its relationship with Huawei, G42 purchased $100m of shares in ByteDance, TikTok’s parent company. Presight AI, a G42 subsidiary that sells surveillance technology to police forces worldwide, has come under the microscope of US officials who are concerned that the software looks nearly identical to surveillance tech that is popular with Chinese police. If Presight AI is selling white-labeled Chinese tech, it could give China unprecedented visibility to sensitive government data across the world.
In light of the complex web of international concerns surrounding G42 and its CEO, it’s evident that the company's actions and affiliations have triggered significant national security discussions. The ties between G42, Chinese entities, and the potential implications for US technology and intelligence have raised alarms. Despite the company's assurances of data security, questions linger about its dual engagements with American and Chinese firms. As this situation continues to unfold, the scrutiny on G42's activities underscores the importance of vigilance and transparency in the global technology landscape, as nations grapple with the challenges posed by the broader landscape of AI collaboration and data protection on the international stage.
NEWS ROUNDUP
JPMorgan Chase is collaborating with American regulators to develop its first AI projects, aiming to establish proper controls as it seeks to outpace competitors in launching AI offerings, according to Lori Beer, the company's CIO. The bank is testing AI applications that generate earnings summaries for monitored companies and is working on a help desk offering precise customer problem-solving steps, with CEO Jamie Dimon expressing enthusiasm for integrating AI into all aspects of the bank's operations. (PYMNTS)
US chipmakers still need China, but not just for revenue. Nvidia CEO Jensen Huang said US chipmakers, including Nvidia, are still at least a decade away from “supply chain independence” from China. While Chinese manufacturers are key in allowing US firms to create the most powerful AI chips in the world, China is barred from getting access to the chips as a result of US sanctions. (CNBC)
The United States, Britain, and over a dozen other countries have unveiled the first international agreement on ensuring the safety of artificial intelligence, emphasizing the importance of creating AI systems that are "secure by design." The non-binding agreement highlights the need to monitor AI systems for abuse, protect data from tampering, and prioritize security during the design phase, drawing participation from 18 countries including Germany, Italy, Australia, and Singapore. (Reuters)
Chinese smartphone maker Realme announced that it has shipped over 200 million phones since its inception just over five years ago, becoming the fifth fastest smartphone manufacturer to reach this milestone, with most of its sales occurring outside of China. (Reuters)
OpenAI signed a letter of intent to purchase $51m worth of AI chips from startup Rain AI. The “neuromorphic process unit” chips are designed to “replicate features of the human brain”. Sam Altman has personally invested over $1m in the the company. (Wired)
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