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Semiconductors and GPUs are the New Oil
Graphics Processor Units (GPUs) are the “New Oil.” GPUs are the semiconductor chips that power gaming systems and artificial intelligence (AI).
To explain, oil is a valuable commodity that drives trade and commerce. During the 20th century oil, was the commodity that drove the world economy. For example, petrodollars, crude oil export revenues denominated in US dollars, were the basis of US economic power in the 1970s and 1980s.
Global crude oil exports generated $3.2 trillion in petrodollars at a price of $100 per barrel, Investopedia estimates.* Petrodollars are the basis of many nations’ wealth, including Saudi Arabia and Norway. For example, the petrodollar is the basis of Norway’s $1.4 trillion sovereign wealth fund.
GPUs are the New Oil
Today advanced semiconductors, such as GPUs, could replace oil as the world’s most important commodity. For example, the Saudi Arabian government bought 3,000 NVIDIA H100 GPUs at $40,000 apiece, Business Insider India reports. Hence, I estimate the Saudi government spent $120 million for 3,000 GPUs.
They built the NVIDIA H100 Tensor Core GPU to support large language models. Large language models are the build blocks of Generative AI solutions such as ChatGPT. NVIDIA claims the H100 is “AI-ready infrastructure.” For example, NVIDA claims the H100 can support AI chatbots such as ChatGPT, recommendation engines, deep learning and vision AI.
Notably, NVIDIA claims the H100 can make AI training four times faster. They also claim the H100 can make deep learning 30 times faster. Hence, AI could learn 30 times faster with H100. Theoretically, the H100 could make AI faster, smarter, and more powerful, which is why so many people want them.
Importantly, the Saudis got the money for those GPUs by selling oil. Hence, some Saudis think advanced chips are now more valuable than oil.
How the US Government Made Semiconductors the New Oil
News articles do not say why the Saudi government bought the GPUs. I suspect the…
