Interesting post! Thank you guys for putting it together.
One comment on AI in America. I suspect that American tech companies are also dreaming of a monopoly on AI systems that will, in the future, control the world, including, money & banking, investment, politics, law, the military, even society en mass. It is the America corporate thinking that wants monopoly profits that has led to this AI model in America. I recall IBM wanted to do the same with desktop computers back in the 1980's. Control is the intention.
China wants AI to be widespread and commonplace, on everyone's phone or laptop as a tool, like a calculator to make things easier to do. Most importantly, so every workshop,factory, transport company, school kid, and university student has access to an intelligent 'advisor' to turn to for technical help, to run the calcs, to offer advice, to plot the marketing. Productivity is the intention.
Thank you for this essay. One remark: I think the electric stack is only possible with a modern, robust and intelligent electricity grid. China does not only invest in all underlying technologies but also in the grid itself, driving innovations like DC high voltage transmission lines.
Investments are needed in two different directions: 1. The basic infrastructure (transformers, transmission lines, substations, batteries, and of course generation) and 2. Adding "intelligence" to the grid, in order to use the basic infrastructure more efficiently and to make it more resilient. Some examples: adding synthetic inertia to solar inverters or making them black-start capable / better controlling how decentralised batteries feed energy in the grid...
Incentives could be a big driver of innovation there (e.g., flexible rates).
Wow. This is so well researched; admittedly I have to still sit and parse through this carefully, but genuinely looking forward to this. Especially excited with the US-China comparison.
America's energy grid is the bottleneck for data centers and AI, suppressing clean energy is not a great idea. The Trump Administration is certainly doing China a lot of favors when it comes to the AI arms race of the 2030s.
Not sure I see that quite the same way. Yes, wind is taking a big hit under this administration, but is that really such a big deal? “No longer subsidizing” is not quite the same as suppression though, say in the case of solar and EVs. And stopping the suppression of nuclear seems like a good thing to me.
I think we need to see as many forms of energy contributing to net energy wealth as possible, preferably the cleaner the better. Given China’s energy policies, which seem less concerned with cleanliness, is kicking wind to the curb really such a big deal, if we are going full throttle elsewhere?
There have been recent executive orders to not allow wind or solar permits on federal lands.
Besides this, a large impediment was the regulatory uncertainty around subsidies as it takes the market 1-2 years to digest these changes and re-price.
I feel that the latter is fine, but the former seems a bit political.
I suspect you are correct, that the former is indeed political. Though no fan of Trump, I am not unhappy more of these fugly things won’t be built on federal lands.
The level of detail, not to mention the research that was obviously required, is itself commendable. But the entire premise is fascinating. I continued reading even when it began to feel like I was drowning in the details. Because they matter. I wish I had the attention span to even attempt such a project. But it’s also frightening. You should somehow produce a condensed version and send it directly to…well, I wish I knew. I’m not sure anyone in the current administration could properly digest it. Or would even understand why that matters. That’s the frightening part. Because if someone doesn’t start to get it, this and other important things about what is currently going wrong in this country, we’re all sunk. We’re already sinking and none of us has the proper life preservers for this situation.
Fantastic piece. 👏👏👏 I’ve phrased the conclusion this way: A country does not rise to the level of its innovation. It falls to the level of its industrial commons.
Best piece on Substack. I was at Northvolt - Swedish battery company (leading Software and AI), and Apple before that. Now I am building a company to build the “Linux for manufacturing” to run complex factories. Reading this piece gives me so much more confidence (not that I was lacking any), you gotta be irrational to start a company, let alone do one for manufacturing software. Packy - you are an amazing publisher! Thank you both (Sam and Packy)!! Hit me up if you’re in the Nordics, we will show you what we are building.
Having read this remarkable piece of work, I have now embedded its premise as a core component in a prompt (for Gemini) that is helping me maintain and develop a portfolio strategy:
C. Core Strategic Conflict: "Intelligence vs. Action" (The Electric Stack Thesis)
We believe the primary economic and geopolitical battle of the next two decades will be between "Intelligence" (AI, software, design) and "Action" (physical manufacturing, energy, supply chains).
We assess that while the U.S. currently leads in "Intelligence," this layer is at high risk of being commoditized. Our default assumption is that a country's strength will ultimately "fall to the level of its industrial commons."
We identify a fierce global competition to dominate the "Action" layer, specifically the "Electric Stack" and its enabling infrastructure.
The Electric Stack Defined: Batteries, Magnets/Motors, Power Electronics, Embedded Compute.
The Enabling Infrastructure: A modern, robust, and intelligent Electricity Grid.
The Competitive Landscape: While China has established a formidable lead in manufacturing scale and supply chain integration within the stack, we recognize that the U.S. retains significant, world-class innovation potential (e.g., next-gen batteries, advanced motor design). The outcome of this competition is not pre-determined.
The Strategic Implication: Our portfolio must hedge against the risk of U.S. over-concentration on "Intelligence." A key strategic goal is to increase our exposure to the "Action" layer, particularly to the raw material and industrial companies that will benefit from the strategic imperative to rebuild Western supply chains, often catalyzed by government incentives and defense spending.
D. Acknowledged Boundary Conditions:
We recognize that the "Electric Stack" thesis is not a theory of everything. Key sectors of the global economy (e.g., heavy transport, agriculture, plastics) are resistant to electrification. Our strategy must still account for the geopolitics of traditional strategic resources like oil and natural gas.
I should add that this article, in a slightly more tactical way, supports the key premise of the electric stack https://substack.com/home/post/p-171945788 and was part of the concept formation used in this prompt (above is just a section of it)
Every single time I read "Not Boring" I learn more than any other substack or email or even sometimes research papers... well done... again
Interesting post! Thank you guys for putting it together.
One comment on AI in America. I suspect that American tech companies are also dreaming of a monopoly on AI systems that will, in the future, control the world, including, money & banking, investment, politics, law, the military, even society en mass. It is the America corporate thinking that wants monopoly profits that has led to this AI model in America. I recall IBM wanted to do the same with desktop computers back in the 1980's. Control is the intention.
China wants AI to be widespread and commonplace, on everyone's phone or laptop as a tool, like a calculator to make things easier to do. Most importantly, so every workshop,factory, transport company, school kid, and university student has access to an intelligent 'advisor' to turn to for technical help, to run the calcs, to offer advice, to plot the marketing. Productivity is the intention.
My money is on the Chinese version.
I was feeling pretty good this morning. About something. I forget what. And then I read this.
This is literally me almost every day now.
😀
Thank you for this essay. One remark: I think the electric stack is only possible with a modern, robust and intelligent electricity grid. China does not only invest in all underlying technologies but also in the grid itself, driving innovations like DC high voltage transmission lines.
Investments are needed in two different directions: 1. The basic infrastructure (transformers, transmission lines, substations, batteries, and of course generation) and 2. Adding "intelligence" to the grid, in order to use the basic infrastructure more efficiently and to make it more resilient. Some examples: adding synthetic inertia to solar inverters or making them black-start capable / better controlling how decentralised batteries feed energy in the grid...
Incentives could be a big driver of innovation there (e.g., flexible rates).
Wow, that was amazing. You tied it all together very well! Thank you for your time and effort!!
Thank you for reading it!
Epic dive.
This is fantastic. Thank you for the effort and insight!
Wow. This is so well researched; admittedly I have to still sit and parse through this carefully, but genuinely looking forward to this. Especially excited with the US-China comparison.
America's energy grid is the bottleneck for data centers and AI, suppressing clean energy is not a great idea. The Trump Administration is certainly doing China a lot of favors when it comes to the AI arms race of the 2030s.
Not sure I see that quite the same way. Yes, wind is taking a big hit under this administration, but is that really such a big deal? “No longer subsidizing” is not quite the same as suppression though, say in the case of solar and EVs. And stopping the suppression of nuclear seems like a good thing to me.
I think we need to see as many forms of energy contributing to net energy wealth as possible, preferably the cleaner the better. Given China’s energy policies, which seem less concerned with cleanliness, is kicking wind to the curb really such a big deal, if we are going full throttle elsewhere?
There have been recent executive orders to not allow wind or solar permits on federal lands.
Besides this, a large impediment was the regulatory uncertainty around subsidies as it takes the market 1-2 years to digest these changes and re-price.
I feel that the latter is fine, but the former seems a bit political.
I suspect you are correct, that the former is indeed political. Though no fan of Trump, I am not unhappy more of these fugly things won’t be built on federal lands.
It's criminal this wasn't broken up into multiple posts or parts.
The level of detail, not to mention the research that was obviously required, is itself commendable. But the entire premise is fascinating. I continued reading even when it began to feel like I was drowning in the details. Because they matter. I wish I had the attention span to even attempt such a project. But it’s also frightening. You should somehow produce a condensed version and send it directly to…well, I wish I knew. I’m not sure anyone in the current administration could properly digest it. Or would even understand why that matters. That’s the frightening part. Because if someone doesn’t start to get it, this and other important things about what is currently going wrong in this country, we’re all sunk. We’re already sinking and none of us has the proper life preservers for this situation.
I really appreciate you reading it, Barbara! Good idea on trying to condense it and spread it further.
Every day is a learning experience. Today was a great day!
Fantastic piece. 👏👏👏 I’ve phrased the conclusion this way: A country does not rise to the level of its innovation. It falls to the level of its industrial commons.
Holy smokes. This is was a doozy. Thank you for intro'ing me to the world of Sam... he's got a new subscriber.
Best piece on Substack. I was at Northvolt - Swedish battery company (leading Software and AI), and Apple before that. Now I am building a company to build the “Linux for manufacturing” to run complex factories. Reading this piece gives me so much more confidence (not that I was lacking any), you gotta be irrational to start a company, let alone do one for manufacturing software. Packy - you are an amazing publisher! Thank you both (Sam and Packy)!! Hit me up if you’re in the Nordics, we will show you what we are building.
Having read this remarkable piece of work, I have now embedded its premise as a core component in a prompt (for Gemini) that is helping me maintain and develop a portfolio strategy:
C. Core Strategic Conflict: "Intelligence vs. Action" (The Electric Stack Thesis)
We believe the primary economic and geopolitical battle of the next two decades will be between "Intelligence" (AI, software, design) and "Action" (physical manufacturing, energy, supply chains).
We assess that while the U.S. currently leads in "Intelligence," this layer is at high risk of being commoditized. Our default assumption is that a country's strength will ultimately "fall to the level of its industrial commons."
We identify a fierce global competition to dominate the "Action" layer, specifically the "Electric Stack" and its enabling infrastructure.
The Electric Stack Defined: Batteries, Magnets/Motors, Power Electronics, Embedded Compute.
The Enabling Infrastructure: A modern, robust, and intelligent Electricity Grid.
The Competitive Landscape: While China has established a formidable lead in manufacturing scale and supply chain integration within the stack, we recognize that the U.S. retains significant, world-class innovation potential (e.g., next-gen batteries, advanced motor design). The outcome of this competition is not pre-determined.
The Strategic Implication: Our portfolio must hedge against the risk of U.S. over-concentration on "Intelligence." A key strategic goal is to increase our exposure to the "Action" layer, particularly to the raw material and industrial companies that will benefit from the strategic imperative to rebuild Western supply chains, often catalyzed by government incentives and defense spending.
D. Acknowledged Boundary Conditions:
We recognize that the "Electric Stack" thesis is not a theory of everything. Key sectors of the global economy (e.g., heavy transport, agriculture, plastics) are resistant to electrification. Our strategy must still account for the geopolitics of traditional strategic resources like oil and natural gas.
I should add that this article, in a slightly more tactical way, supports the key premise of the electric stack https://substack.com/home/post/p-171945788 and was part of the concept formation used in this prompt (above is just a section of it)