Dr. Gray Manicom of the Policy Innovation Lab was recently invited to comment on the CapeTalk radio show Good Morning Cape Town with Lester Kiewit on the relationship between companies Stargate and DeepSeek and the related geopolitical tensions between the USA and China (podcast available here). In this interview, Dr Manicom touched on these two companies, the AI technology they are building, the geopolitical stir they caused, and how they may affect South Africa.
The Stargate Project is an American tech company founded by four global tech giants who agreed to invest USD 500 billion over the next four years into this venture. For South African readers, our annual GDP is just under USD 400 billion, and for Western Cape readers, the Western Cape’s GDP is about USD 35 billion. That means, each day for the next 4 years, this one company will receive about 3 times what Western Cape province will make that day. The company’s main goal is to build AI infrastructure for OpenAI with the aims of creating American jobs, re-industrialising the USA, furthering America’s military dominance, and generating economic benefits for the entire world.
A few days after Stargate was announced, the Chinese company DeepSeek surprised many with the launch of their newest Large Language Models (LLMs). Their LLMs are superior, in many ways, to OpenAI’s models; while they match or outperform OpenAI’s models in different metrics like the ability to solve challenging mathematics problems, and quickly became the top-rated app in the US, the real breakthrough of DeepSeek’s models is that they were reportedly trained at a fraction of the cost of OpenAI’s models.
This resulted in the biggest loss by an American company in a single day as Nvidia, a company that makes computing units, took major hits. This is because Nvidia’s value is undermined by companies that buy compute, like DeepSeek, being able to do more with less. Valid concerns that DeepSeek may be used by the Chinese Communist Party to collect data from foreign citizens and spread propaganda have resulted in widespread bans similar to those put on TikTok. On the other hand, by making some of their models open, DeepSeek may increase data security by enabling users to run the model on their own machines and thus maintain control of their data.
DeepSeek’s model releases are challenging the dominance of US-based companies. The implications are significant. For some, DeepSeek’s success emphasises Stargate’s importance in ensuring American AI dominance, while for others it has undermined Stargate’s huge price tag. Both data and compute are physical, so the countries that have the physical infrastructure to house data and compute cheaply and securely will be at an advantage among the digital economies of the 21st century. The development of this infrastructure in South Africa, and the skills to use it, is something that we, at the Lab, encourage in our briefing note on fast-tracking digital transformation in South Africa. We are leading conversations with experts on digital public infrastructure to create a practical approach for its design, implementation and governance. In South Africa, our infrastructure requirements involve more basic issues such as electricity supply, data access and the affordability of compute and data resources, which are foundations that allow us to take advantage of new technological breakthroughs.
Evidence suggests that adopting AI too hastily may lead to negative outcomes including systemic risks like job losses and the digital divide, technological risks like hallucinations and bias, and the risks of malicious actors taking advantage of AI technology. With both China and America taking a national security approach to the development of AI technology, this could mean less of a focus on developing AI as an instrument for public well-being. Google recently retracted its commitment not to use AI for surveillance or military technology, which seems to be a trend amongst large tech companies involved in AI. The Stargate Project announced that it would help “provide a strategic capability to protect the national security of America and its allies”, suggesting that those who benefit from its advancements will be a select few. The Policy Innovation Lab will continue to advocate for the rapid yet responsible transformation of South African policymaking with this remarkable technology.