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AI Factories
In a world where artificial intelligence (AI) is fast becoming the backbone of national security and economic dominance, the race to build advanced AI factories will shape the future leaders of both nations and corporations. Daron Acemoglu and James A. Robinson, who recently won the Nobel Prize for their work in “Why Nations Fail”, argued that the success or failure of nations hinges on their institutions. But in today’s AI era, this disparity could grow even larger, with both countries and dominant corporations gaining unprecedented power if they control AI infrastructure. The ability to harness AI could create a new global divide—not just between nations, but between powerful corporations and those left behind.
Some might argue that nations and companies without their own AI factories could simply become customers of more advanced countries or tech giants. However, this path comes with significant risks. Relying on foreign AI systems—whether from other nations or dominant corporations—leaves countries and companies vulnerable, undermining their sovereignty, autonomy, and strategic positioning. The dependence on external AI infrastructure can expose governments to geopolitical leverage and corporations to competitive disadvantages. Moreover, it locks them out of the economic rewards tied to AI innovation, intellectual property, and job creation. The result is not only technological dependency but a widening economic and strategic gap between the AI “haves” and “have-nots.” In this series, we’ll explore why both nation-states and corporations must urgently build their own advanced datacenters to secure their futures, and what’s truly at stake—not just in terms of national security but also long-term economic survival in an AI-dominated world.
The Future of AI Factories: A New Era in National Security
In the near future, artificial intelligence (AI) will no longer be just a tool—it will become critical infrastructure, as essential as power grids or telecommunications. As we advance into an era defined by immense computational demands, the concept of the “AI factory” or “advanced datacenter” is emerging as the next frontier. These centralized hubs of AI development and deployment will serve as the backbone for nations seeking to lead in the global race for technological superiority. Given its importance, and thematic relevance to our investment thesis, we are going to spend some considerable time over the next few weeks breaking down this topic, covering everything from cost to develop, maintain, and opportunities in the sector. Each of these will reemphasize why nation-states and corporations build and operate their own AI factories and advanced datacenters, and how this trend will shape the geopolitical and security landscape in the coming decades.
Today, we stand at the threshold of an AI-driven future, where the real power lies not only in the algorithms themselves but in the massive computational infrastructure that supports them. Nations like the United States, China, and the European Union are investing heavily in advanced datacenters, how these efforts influence their geopolitical standing, and what’s at stake if others fail to keep up.
Why Nations Are Leading the Build-Out of Advanced Datacenters
Historically, private industries have driven large technological shifts. Silicon Valley tech giants and hyperscalers like Amazon, Microsoft, Oracle, and Google have built the world’s most advanced cloud infrastructures, which power much of the AI used globally today. However, as AI becomes more central to national security, economic competitiveness, and global influence, governments are recognizing the strategic importance of building and controlling their own advanced datacenters.
Countries like the United States and China are already leading this charge. In the U.S., public and private sectors are aligning through initiatives like the CHIPS and Science Act, which aims to strengthen domestic semiconductor production, a critical component of AI infrastructure. China, on the other hand, has launched its AI development plan that aims to be the world leader in AI by 2030. The country is constructing vast AI-centric datacenters to fuel its ambition, particularly in regions like Shenzhen and Beijing, which are becoming global AI hubs.
These countries understand that owning and operating advanced datacenters means controlling the infrastructure required to train and deploy cutting-edge AI models—technology that will shape the global balance of power. For instance, in China, advanced datacenters are not just seen as a technological asset but also as a means of asserting dominance in Asia, influencing neighboring countries economically and politically.
Europe is also recognizing the need for investment, albeit playing catch-up. Countries like Germany and France have begun investing in large-scale AI infrastructure, seeing it as vital not just for economic growth but also for protecting the continent’s technological sovereignty. While the European Union lags behind the U.S. and China in terms of sheer scale, initiatives like Gaia-X—a European effort to create a federated, sovereign cloud infrastructure—are steps toward ensuring they are not entirely dependent on foreign AI infrastructures.
What’s at Stake if Nations Fall Behind
The implications of falling behind in the race to build advanced datacenters go far beyond technological lag. For nation-states, the cost of falling behind could be catastrophic, not just in terms of economic competitiveness but in matters of national security and global influence. Nations that fail to build these AI factories risk becoming overly reliant on foreign powers, rendering them vulnerable to technological choke points.
Take, for instance, the U.S.-China trade war and the growing tension over semiconductor technology. Countries that rely on foreign-made chips or external AI infrastructure can be crippled by supply chain disruptions, export bans, or cyberattacks. In a world where AI-driven technologies will dominate sectors like defense, finance, and healthcare, control over advanced datacenters becomes akin to having control over a nation’s energy supply or its military capabilities.
Falling behind also risks economic stagnation. The next wave of AI innovations will drive productivity gains and economic growth for those with the infrastructure to harness them. Countries without robust AI factories will struggle to compete globally, missing out on the opportunities AI will create across sectors from manufacturing to medicine. This loss isn’t limited to GDP—it extends to job creation, technological leadership, and the ability to shape global policy on the use of AI.
Moreover, countries that lag in AI development may find themselves at the mercy of global powers that dominate the space. In the worst-case scenario, a nation without advanced datacenters could lose its ability to protect its own cyber infrastructure, conduct advanced research, or safeguard its citizens from AI-driven misinformation and surveillance technologies deployed by more advanced adversaries.
The National Security Imperative
AI development is no longer just about commercial interests—it is increasingly tied to national security. Autonomous drones, AI-driven surveillance systems, and cyber defense mechanisms are technologies that will change the way conflicts are waged and deterred. The countries that dominate AI will be the ones dictating the terms of global security, much like nuclear arms did in the 20th century.
For this reason, nations must secure their own advanced datacenters to maintain sovereignty over one of the most critical resources of the 21st century: computational power. AI models are essentially software programs trained on massive datasets, and the best models will require an incredible amount of compute power. Whoever controls the infrastructure that powers these models will control the future of warfare, espionage, and even global economic systems.
The implications of this are profound. Governments must not only build advanced datacenters but also ensure their cybersecurity, optimize their energy consumption, and protect them from geopolitical disruptions. Losing control over this infrastructure could mean losing control over national security itself.
In this introduction, we’ve outlined why advanced datacenters and AI factories are critical to national security and economic competitiveness. The nations that lead the development of this infrastructure—like the U.S., China, and the EU—will hold the keys to future global influence. But the stakes are high: falling behind could mean not just a loss of economic growth, but the erosion of sovereignty and security.
In Part Two, we’ll dive into the technical architecture of modern advanced datacenters. We will discuss the specialized requirements for building AI-centric datacenters, from the latest developments in inference chips and GPUs to high-speed networking and data storage solutions. We’ll also explore how advanced datacenters are optimized for training and deploying increasingly large and sophisticated AI models.
In Part Three, we will tackle the energy implications of AI factories. AI models are power-hungry, and the scale at which these factories will need to operate poses significant challenges in terms of energy consumption and environmental impact. We’ll discuss emerging technologies and strategies for optimizing energy use, including innovations in cooling systems, renewable energy integration, and the potential role of nuclear power.
The race to build advanced datacenters is not just a technological contest—it’s a geopolitical one. The future of national security, economic prosperity, and global power hinges on the ability of nations to build, operate, and secure these vital infrastructures. Stay tuned as we explore this evolving landscape and what it means for the future of AI and global security.