The economic world that we are living in
In the last few weeks, Trump's tariff announcement sent the stock markets to correction territory (S&P500 -8%). It's creating frictions in the global trade - globalisation.
We could argue that the acceleration of economic globalisation starting from the 80s (William I. Robinson) thanks to capital movements. While in reality starting from the 60s, the US semiconductor industry (e.g. Fairchild) already started to move the manufacturing part to Asia for its cheap labor to reduce manufacturing marginal costs.
See the chart below of the past 43 years of global economic share shift:
-The US maintained its share thanks to its dominance in the last technology waves (PC, Internet, smartphone, Cloud computing, ML, AI)
-China ~9X its share as it's becoming the world's manufacturing hub
-Japan lost its significance
-Europe still has an important share (5% of the world population, 15% economic share)
What is not shown on the chart is the interwind between the US and China. To have a vulgar simplification: the world is running on American software on hardware made in China.
Even thought some manufacturing is moving out of China, Apple still employs 700K (through its suppliers) manufacturing workers in China. As a perfect illustrative example, iPhone is designed in California and the phone is assembled in China by Foxconn.
Thinking about the Pax Americana (post-war order):
-The US is driving the world economy through its consumers (largest consumer market, "Americans just buy stuff")
-The US dollar being the reserve currency and made US debt attractive.
-The rest of the world is producing and financing US consumption.
-The US dominates software run on hardware produced in Asia
But we are in a turning point:
-The US wants to repatriate the manufacturing using tariffs.
-China is producing its own leading edge software (e.g. DeepSeek).
-The US wants to keep its technology edge and China wants to replace it.
It's not going to be easy. Asia (primarily China) has spent the last 40 years on the manufacturing learning curve and built an ecosystem.
Software and hardware are complementary products. We need cheap hardware to use software for productivity. Imagine a world where the chip price doubled, how much that would slow down the proliferation of AI(LLMs) deployment.
To close, I moved to Europe from China in 2010. It just seems unreal how much the world has changed since then. Three technology waves of technology happened in the last 15 years: smartphone, cloud, and ML.
The wave of LLM is happening thanks primarily to the symbiotic relationship between US software makers and Asian hardware makers. Something might happen because of the on-going frictions. It might be a chance to build.