AI boom's big winners are all in four states
Why it matters: Generative AI may produce "winner-takes-most" economic outcomes, per the authors of the Brookings report, unless the government moves to foster a more broadly distributed AI sector.
Details: Nearly half of the generative AI job postings in the past year were in San Francisco, San Jose, New York, Los Angeles, Boston and Seattle. That extends previous trends in AI jobs and R&D.
By the numbers: The 43 U.S. members of the Forbes AI 50 list — a showcase of the promising AI companies — come from just four states.
- The winning states are California (35), New York (4), Texas (2) and Massachusetts (1), with one company operating fully remotely.
- None of the top 50 AI startups are in a Rust Belt state, the Midwest or the South.
- San Francisco alone is home to 20 of the best-funded AI companies — more than the rest of America combined.
- 18 out of 55 members from an alternative list, the IVP Enterprise 55, are San Francisco-based.
Be smart: U.S. high-tech industries have become increasingly concentrated in coastal cities in recent decades.
- While more than 100 metro areas have the potential to be AI centers, just 14 metro areas account for more than half of AI R&D investment.
- Ensuring workers with AI skills are spread across the country is critical to making the CHIPS and Science Act work, Zoë Baird, senior counselor at the U.S. Department of Commerce, told the Aspen Security Forum, because “innovation takes place where manufacturing happens.”
- Hours after Baird's comments, TSMC, the world’s biggest semiconductor manufacturer, announced it would delay the planned opening of its Arizona plant because of shortages of skilled labor.
What they’re saying: Report authors Mark Muro, Julian Jacobs and Sifan Liu suggest that a "widely distributed" expansion of public sector AI research and access to computing to spread AI benefits away from "superstar cities."
- Non-defense federal AI research spending flatlined at $1.7 billion in 2022.
Yes, but: It's early days in generative AI deployment, and wider deployment and adoption across the economy are likely to spread at least some of the economic benefit.
- A National Artificial Intelligence Research Institutes program is now operating in 19 cities, helping to build up AI talent pools.
- Beyond AI, there is a more widely distributed manufacturing boom underway in the U.S. South and West.
Flashback: The 1960s "space race" was a classic example of "place-based industrial policy," with federal investment transforming cities such as Huntsville, Alabama.