Shares in high tech stocks took a severe hit this week when China announced that the state-owned company, Shanghai Yuliangsheng, was about to begin mass producing machinery to manufacture advanced microchips used for Artificial Intelligence (AI).
This news was enough to cause a rout amongst global stock markets yesterday morning following a similar meltdown on Wall Street on Monday.
These machines are vital in the production of the advanced semiconductors used in AI chips.
They use high-powered lasers to imprint designs onto silicon wafers, far too small to be seen by the naked eye, used to make the chips.
Until now, the technology required for what is called ultraviolet lithography has been closely guarded by a small handful of Western companies, with the Dutch company ASMI operating a virtual monopoly on the machines required to print the most advanced chips.
For the US, the absolute imperative was to restrict the development of AI technology in China and to this end bans were imposed by Trump and his predecessor Joe Biden on the export of these machines.
The announcement that China had produced its own machines capable of producing advanced computer chips was a body blow to the US, whose economy and stock markets rely almost entirely on keeping hold of a monopoly over advanced AI.
The effects on the stock markets were instantaneous, with shares in ASMI, Europekk’s most valuable company, plunging by over 8% on Monday with other chipmakers in South Korea and Japan experiencing similar falls.
In America, Nvidia, the world’s largest producer of chips and the biggest listed company in world, saw $250 billion (£188 billion) wiped off its valuation on Monday.
This was the second blow to the US monopolisation of the AI industry in the past few days.
Two Chinese companies, Moonshot and Alibaba, released AI models that ranked with the most advanced American systems, competing directly with the giant US tech companies like Google.
Last year, stock markets suffered a crash when a tiny Chinese artificial intelligence company, DeepSeek, produced a powerful AI model at a fraction of the cost of similar American models.
Then, $1 trillion was wiped off the value of America’s leading tech companies.
DeepSeek was able to make this breakthrough – despite the ban imposed by the first Trump presidency (and later increased by Joe Biden and ramped up by Trump the second time around) on the sale of advanced chips to China in order to ensure US domination of AI.
Now, with this latest development, the stranglehold that is vital not just to the multi-billionaire owners of America’s tech companies but the entire US economy, has been broken.
The Chinese models are all ‘open sourced’ and can be downloaded for free by users to be run on their own equipment and modified as needed.
This represents a massive threat to US domination over advanced technology and the Wall Street stock exchange that owes its sky high valuations on the bloated share prices of the seven major US tech companies.
Open AI’s head of Strategic Futures, and former advisor to Trump, Dean Ball, expressed this fear clearly when he wrote that free AI would lead to ‘full AI communism’ denouncing it as a ‘dystopian hellscape’ where AI would no longer function as a source of massive profits for the capitalist class but become a ‘public good’ for the people of the world.
The dream of the ruling class of an AI revolution securing capitalism and ensuring vast profits has been shattered as they now ponder a ‘dystopian future’.
However, the ruling class will never peacefully relinquish its right to exploit and plunder the world and the working class for profit, but will wage war against its enemies in China and Russia along with its main enemy at home – the working class – to make them pay for the capitalist crisis.
The working class has the power to resolve this crisis by forcing its trade union leaders to call general strikes to bring down their capitalist governments, bringing in workers governments and socialism.
This is the only way forward today.
