Jaak Vilo, a computer scientist at the University of Tartu and vice president of the Estonian Academy of Sciences, told ERR that artificial intelligence (AI) is becoming a critical competitive advantage both economically and militarily. This makes the race for artificial intelligence a flash point in geopolitical power struggles among major nations.
“Because of this, there is likely to be a reassessment of whether and how to limit competitors’ rapid growth in capabilities. Developing computational power as a competitive advantage in defense and the economy, while restricting it for rivals, is nothing new,” Vilo said.
In simplified terms, the computational power available for the same amount of money has doubled roughly every 18 months. “Over 15 years, that’s two to the power of 10, or about 1,000 times,” said Vilo.
The decrease in cost of computational power and the advancement of consumer-grade graphics processing units (GPUs), originally designed for video games, have been key drivers behind the rapid development of artificial intelligence in recent years. Initially, GPUs were designed to perform a high number of specific multiplication and addition operations to render detailed virtual worlds on screens.
“Two critical conditions for AI development were met simultaneously — an enormous amount of data became available online, and cheaper yet significantly faster chips entered the market, enabling the training of large neural networks. The development of GPUs began to be driven by the demands of artificial intelligence as well as the rise of cryptocurrencies and other blockchain technologies,” Vilo explained.
Currently, the situation has evolved so that the most advanced graphics chips in the world are produced by a single U.S. company — Nvidia. To stay at the forefront of the AI race, it is necessary to buy the company’s products.
Former Deputy Secretary General for Digital Development at the Ministry of Economic Affairs and Communications (MKM), Luukas Kristjan Ilves, told ERR on Thursday that these chips now account for almost 90 percent of the market share in data centers where AI development takes place.
Investors may shun “yellow tier” countries
Jaan Raik, a computer scientist at Tallinn University of Technology, said the export restrictions will bring Estonia’s entire digital and technological development to a halt.
While the quota is considerable from Estonia’s perspective and unlikely to be reached in the near future, the overall situation is deeply concerning, he believes.
The researcher thinks investors in artificial intelligence-related ventures would be hesitant to invest in a country under these restrictions.
“It is not just Estonia that will be affected, but the European Union as a whole. The Chips Act, the AI Act, and other major investments were made with the assumption that a strong technology sector would emerge in Europe, with contributions from Eastern European countries as well,” the computer scientist explained.
The export restrictions would particularly impact larger Eastern European countries, such as Poland, which has made significant investments in AI development. “For Poland, the quota could indeed become a critical issue,” Raik noted.
“Things will simply stop happening; business activities will slow down. Barriers will emerge that we cannot yet foresee. When [foreign] minister [Margus] Tsahkna said this mistake should be corrected as quickly as possible, he was right—this should be a common position for the European Union. It’s important to understand that the blow will also hit Western Europe, as the bloc’s development will weaken as a whole,” he stressed.
Jaak Vilo also believes that being placed on the “yellow list” will restrict Estonia’s technology companies’ future opportunities. This includes companies such as Bolt, Wise, the emerging defense industry, drone development, and more.
“From the perspective of Estonia’s economy, we cannot afford to be cut off from opportunities to develop activities essential for our nation, science, businesses, and defense needs,” the professor said.
While there are currently no AI data centers in Estonia, both scientists agree that under the “yellow list” conditions, none will be established. Vilo said Finland – on the “blue list” with no restrictions – has a lot of advantages when it comes to establishing such centers.
“They are not only now on the list of preferred countries, but Finland was already a favored destination for large data centers due to stable and inexpensive hydroelectric power and air cooling. Chips generate a great deal of heat during operation,” Vilo noted.
He thinks this has become a political issue from the perspectives of Estonia, NATO, and the European Union. “Who has the desire and will to perpetuate a two-speed Europe? And who has the wisdom and strength to resist it?” the scientist asked.
A deliberate attempt to weaken an ally?
Jaan Raik said it seems, whether intentional or not, that the U.S. wants to hinder Europe’s ambitions to become a leader in the fields of chips and artificial intelligence.
“In the 1980s, the U.S. similarly restrained Japan’s chip industry, and it worked. Today, Japan is no longer at the forefront in this field,” he pointed out.
If incoming President Donald Trump does not remove the restrictions, Raik believes swift action is necessary, possibly looking more towards Taiwan instead of the U.S.
“In my opinion, Lithuania’s Taiwan venture has not paid off for them so far, but perhaps it’s worth reevaluating Lithuania’s decisions in this new light,” he suggested.
Vilo emphasized the importance of avoiding the emergence of a list of less trusted countries within NATO, noting that Estonia has given no reason to be included on such a list.
“Politically, such a division should not be allowed. We are part of NATO, a unified European Union economic area, and our values must align with those of other countries within these organizations,” the professor stressed.
“Finland, London, or other regions have been destinations for individuals loyal to Russia or China, and possibly also for espionage or enterprises of questionable intent. We should not and must not be limited by countries themselves but rather by defining boundaries between perceived threats and permissible versus dubious activities,” Vilo concluded.
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