Europe Goes Nuclear: Is America Leaving NATO?

Flag of NATO

During a rally last week, former President Donald Trump stated that European allies that do not contribute enough to NATO (in his eyes) would not receive support if Russia were to attack them. Regardless of where you stand on this issue, we need to consider the repercussions of the US stepping away from the NATO alliance.

Trump can smell the populist/nationalist sentiment in the air and he’s going all in. While he might be on the extreme end of it right now, there’s ever-growing momentum in America taking us down that path. We’ve enjoyed decades of a largely peaceful Europe, but what happens if the Americans leave?

I would expect the Europeans to revert to their old ways, including renewed military competition and something even scarier for us Americans, nuclear proliferation. We all know how quickly places like Germany can ramp up military production.

Trump’s statements may seem wild and disconnected at the moment, but there’s more than just an election on the line here; all it would take is one country’s knee-jerk reaction to send us back to a not-so-peaceful Europe.

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First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Nigeria, After America

FOR MORE ON THE FUTURE OF United Kingdom, SEE DISUNITED NATIONS

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Today’s entry into our ‘Post American’ series is a country with a complex political, economic and security landscape. Its a country forged from colonialism that is comprised of diverse ethnic groups coexisting under a single political entity – Nigeria.

Despite civil unrest, Nigeria has retained a semblance of stability through a rotational presidency among ethnic groups that ensures representation and prevents disintegration. On the economic side, corruption within the oil industry has led to a mismanagement of oil resources and underproduction.

With global energy dynamics shifting and geopolitical instability on the rise, there’s an emerging opportunity for the Nigerians. If Nigeria can overcome the internal struggles, their strategic positioning and military strength could help them become a significant player in the region; this could even evolve into partnerships with Western powers seeking energy stability.

While this might sound like a reversion to colonial times, I assure you the dynamics have greatly changed. The potential for a mutually beneficial relationship could help Nigeria thrive and even reshape global energy dynamics.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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TranscripT

Hey everybody. Peter Zeihan  coming to you from a very snowy Colorado. Already ten inches in and another six to go. I know what I’m doing tomorrow. Any who. This is the latest in our post-American series. And today we’re going to talk specifically about a country that a number of people have written in, and that is Nigeria. So what makes Nigeria tick?

This is a country that is a creation of the post World War two strategic order and took a few pages from the post Westphalian system of nation states. Well, in essence, what that means is it’s a little bit like the settler societies of the United States, Canada, Australia and New Zealand in that it’s a polyglot group, lots of different ethnic groups, each of which have a very clear homeland, but they’ve been lumped together into a single political authority.

Now, in a lot of places where some version like this happened because of colonialism, and you can make that argument for Nigeria as well. It has gone very, very badly with lots and lots of civil wars, and Nigeria is no exception. They had the Biafran war shortly after independence and sixties, and it was one of the most disastrous wars that we’ve seen on the African continent.

But in its aftermath, things went an unexpected direction. Instead of the victors trying to wipe out the biafrans. They were included into a transition into democracy. And while it’s not something that we would recognize in the United States as democratic, what they do is they they rotate the presidency among the various ethnic groups and the other regions. And then within each of those regions, there’s actually competition within the ruling party to decide who is going to be the candidate.

So as a rule, what I’m vastly oversimplifying a very messy situation here. As a rule, the presidents looked at the primary level, basically. And while this doesn’t necessarily generate the most creative or competent leadership, it has kept the peace and has kept Nigeria Nigeria in one piece as well, which is more than you can say for a lot of the other post-colonial countries in the Congo.

Here, Angola, both of which have been war wracked or chaotic or both. Now, the con of this strategy is if you are of an ethnic group that doesn’t hold the president at a time, you have to basically be paid to not protest or riot or launch a war. And that’s where the oil comes in. Nigeria is the continent’s largest oil producer, and most folks say that if civil unrest could be tamped down, a degree of competence could be injected into the system.

Well, then they could probably be producing five or 6 million barrels a day without too much of a challenge. And instead, it’s been pretty much less than three for the last 20, 30 years. Basically, whoever sits in the big chair directs where the oil funds go. He takes a cut of it himself. It’s obviously he and the rest is used to buy off the other minorities to limit their willingness to cause chaos, which of course encourages some of the more militant minded of those groups to deliberately cause chaos in order to get a better cash settlement.

And under the globalized order, this has not been a hugely successful system from an economic point of view, because it means that people actually have a vested interest in attacking the oil patrimony in order to get a slice of the oil patrimony. And that means that the oil patrimony has probably been about one third to one quarter as large as it actually should have been under normal circumstances.

But hey, that’s what happens with a political system like this. Now, that’s under the globalized order where no one interferes in other people’s affairs. You get the series of ethnic based militant groups, some with very creative names, and some of which are creative and tenacious and have taken speedboats 50 miles off the coast to take over oil production sites.

And in this sort of environment, the oil companies that bring in the technology that allow all of this to happen have basically lost interest after seeing their people kidnaped or shot up for purposes of budgetary debates. Most Western oil companies have bailed and the last, such as rolled out Shell, are in the process of getting out right now.

As I am recording this video in February of 2024. It’s not a great model, but the world is changing. And if we’re moving away from a world where civilian maritime shipping is sacrosanct and to one where piracy and state piracy and attacks on ships are far more likely, well then you have to reevaluate how Nigeria plugs into its relationship into the global energy system.

Because right now, much to the Saudi’s happiness in Nigeria is very self-limiting, just like Venezuela has been very self-limiting these last 20 years. And you can count on Nigeria never significantly increasing its oil output for any period of time, which makes them a non-factor. As far as the countries who try to actually manage the oil markets see things.

But if you break down global stability, oil’s just not going to be transported as far. And in places that have a little bit of a hotspot going them like say, the Persian Gulf or Saudi Arabia is you should expect significant reductions in output because there’s going to be a lot of militancy and state militancy, not to mention new imperial activity, either tried to take the oil offline or take the oil period.

And in that scenario, I would expect that the stuff that’s coming out of the Persian Gulf is probably going to fall by conservatively half and take most, if not all, of say, Iran’s crude with it. But Nigeria is not in that sort of situation. Nigeria is on the western side of the African continent. While it has plenty of territorial disputes with its neighbors, it’s not like it’s facing an outright war with anyone.

The countries that are to the northwest, the north and the east are either in the Sahara, so don’t have military to speak of, or in the Sahel, where the densest concentration of populations is in Nigeria. So when we had all of those coups in back in 2022 and 2023, there is a real concern slash hope based on your politics, that the Nigerian military might just move into some of these places and knock off the computers because the Nigerian military, something like three times as large as all of the French coup belt in the Sahel combined, they ended up not doing that.

But the point remains is that Nigeria is the undisputed superpower in the region, from the Sahel down to the tropics. There’s no one else that can hold a candle to them. And if there was a conflict, I have no doubt while it would be messy that the Nigerians could give a lot more than they could take. But ultimately, we’re talking about oil here in a place where the Persian Gulf has problems, in a place where Russia is treated like Russia, and a lot of that stuff goes offline.

Secondary oil producers in the Eastern Hemisphere need to get a fresh look, because if you remove a lot of these or weaken a lot of them, all of a sudden Nigeria shows up as the largest or second largest by most math. They don’t have a physical border where they are going to expect a war. Most of the piracy that’s in the region comes from.

So it is is funny. And I can see a new sort of environment where the Brits and the French are actively looking for partnerships in the Gulf of Guinea region where Nigeria is in order to secure crude that they can’t get from places like the North Sea or the Russians any longer. It’s not that the North Sea is going away.

So this is all going to be spoken for. And so if you’re in that growth, you’re going to have to find another source. The United States can help with some of that. But Nigeria is the only thing that’s proximate, really. You’ve got Algeria to the north, but a lot of their fields are very, very, very tapped. And they’ve been in diminishing returns for the last 20 years.

Nigeria is really the only place where you can work in Greenfield or Brownfield. So I expect we’re going to see a significant reversing of this trend of the Western super majors getting out of Nigeria, because there’s not going to be a lot of choice other or maybe tertiary energy producers in the area. You’re Angola’s you’re Gabon’s. You’re Equatorial Guinea’s.

They’re going to get a fresh look to for very similar reasons. But make no mistake, Nigeria is the security decider in this region. And if they don’t want these secondary powers, especially ones that are closer to them to play a significant role in regional oil markets, then it’s going to be really hard to make that happen. And this is not a colonial experience.

Nigeria may be decades behind, say, Britain when it comes to military firepower, but it’s not like Nigeria is UN industrialized. So you’re not going to see the sort of neo colonial relationships that a lot of people fear where the former colonies come in and take over. No, no, no, no. The population in balance is not there. The technological imbalance is not there.

Instead, it’s going to be a degree of partnership and one that, while it can be messy, is probably going to work pretty well because the French and the Brits have the technology in the markets and the Nigerians have the asset and the guns. So it’s a partnership that can actually be quite productive. The question is of the outside powers who will get there first.

And I’m telling you, it’s going to be the French and the Brits, and they’re not necessarily going to agree on where that crude has to go. So the geopolitics of this region is going to start to look a lot like it did a century in a century a half ago, but with a lot more money and with the Nigerians being a player in of them themselves.

All right. That’s it for me.

Russian Opposition Leader, Alexei Navalny, Dies in Prison

Alexei Navalny, a prominent political prisoner and Putin critic, died in a harsh Siberian prison. This prison was a former Soviet-era gulag, so no real surprise there…

The Biden administration previously said that the death of Navalny would strain international relations, but when put into the context of the Ukraine War, international relations aren’t exactly pristine. So, its unlikely we’ll see much arise from the death of Alexei Navalny.

We need to remember that Russia is not a democracy and Navalny’s political influence was limited. Sure, he opposed Putin, but he was still extremely nationalistic. Its likely that we wouldn’t have been able to differentiate between Russia’s current situation and a world where things worked out differently for Navalny.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Question Time with Peter Zeihan: Episode 1

This is the first episode of our new series called ‘Question Time with Peter Zeihan!’ Every week or so I’ll be sitting down with one of the team members from Zeihan on Geopolitics and have them dish out some rapid-fire questions from the ‘Ask Peter’ forum. I’ll be joined by my Social Media Manager, Kyle, for the first few episodes.

In our inaugural episode, we’ll be discussing the current status of the Ukraine War, the Russian oil and gas industry, and the likelihood of nuclear conflict. Spoiler alert: most of the questions I’m answering won’t be rapid-fire answers…oopsy.

If you’d like to submit a question for a future installment, click the link below.

Ask Peter Zeihan

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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The United Kingdom, After America

FOR MORE ON THE FUTURE OF United Kingdom, SEE DISUNITED NATIONS

PURCHASE DISUNITED NATIONS HERE

For those with daddy issues, today’s installment in the ‘Post American’ series might be a bit triggering. If you’re still reading, we’ll be looking at the UK’s economic and security dilemmas as the global order falls.

The UK never quite came to terms with the end of its empire. Once the Brits joined the EU, they latched onto Europe for everything they needed and skipped over the transition that all the other imperial powers went through. So, they were already outdated, but had a crutch to rely on; then Brexit hit and it left the UK stumbling and fumbling.

With the UK’s future up in the air, there’s really only two paths forward. First, they could seek out new trade deals globally, but they’ll have to find some new non-imperialistic tactics to do so. Second, they could swallow their pride and nestle up under the Americans’ wings.

The UK will likely choose to align with the US, even if it means sacrificing some autonomy. The British mindset will be to push against this whole-heartedly, but it’s the most pragmatic way forward for our friends across the pond.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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TranscripT

Hey everyone. Peter Zeihan here comes to you from Saint John’s Cathedral in Detroit, which is also a resort because modern Catholicism. Anyway, I thought it would be a great backdrop to talk about the United Kingdom in our Post America series. The United Kingdom is one of those countries that is not really going to emerge into a post-American world because they’ve got some really interesting decisions to make.

I’m pretty sure I know how it’s going to go. So backdrop, two things. First, economy, the British system never really adapted to the end of empire. They do all the big high value added stuff and they import a lot of the raw materials and some of their base manufactured goods, things that are not very good at because they’re good at the really high precision stuff.

And when the empire ended and they joined Europe, all they did was kind of switch one empire for another and relied upon the European continent for things like foodstuffs and wood products and automotive. They never made the transition that all the other former imperial powers did. And so when Brexit happened, they find themselves in a bit of a lurch.

So that was kind of the economic side of things, on the security side of things. They are an island and islands are worried about one thing, other countries developing navies that might allow an invasion. So they’ve always looked at the major powers of the Eurasian landmass with more than just suspicion, outright fear and concern, whether it’s Nazi Germany or Soviet Russia or whatever.

Napoleon. And on and on. But that doesn’t mean that they like nonmilitary superpowers. So when folks in the European Union start talking about ever closer union and maybe having a common defense identity, they get a little squeamish and they want to keep things within NATO where they’ve got veto power. So that’s the economic that’s the security you play that for to where we are right now.

And they’re in a bit of a pickle. Demographically, the European Union is on its final legs. Most of the major powers, especially Germany and Italy, are going to be aging into obsolescence within a decade. And most of the remaining countries within two. And I don’t mean to suggest that the UK has a super healthy demography, but it is like the second healthiest within the Union.

So when the Brits started talking about Brexit a decade ago, it was like, okay, I can understand the conversation. Getting a jump on what’s next, leaving the sinking ship that is the economic aspect of the European Union. That makes some sense. But here we are seven years after Brexit and the Brits are still trying to figure out what Brexit means.

We still don’t have a meaningful policy for how they should go into the new world, and they really only have two choices. Option one since they haven’t done that economic change post-imperial era is to find a new empire and go out and cut a series of deals with a series of countries that have young demographics that could provide them with raw materials and on and on and on.

The problem is they can’t do it like they did before, before the secret of the British Empire. The reason that they ruled the world for the better part of two centuries is they were in the early days of the industrial era and no one else had caught up. So they were able to use the order of magnitude, greater economic intensity of early industrialization and the three orders of magnitude of better power projection of military technologies to dominate wherever they went with a very small number of people.

Well, that’s not the world we’re in anymore. You can’t go into a place like India with 50,000 people and conquer it like you could two or three centuries ago. Well, not to mention that the Indians wouldn’t let that happen. So the idea that the Brits is a mid-sized power can be the center of a global trade node. That’s a bit of a stretch.

I don’t want to say it’s impossible because weirder things have happened in the last few years, but it’s difficult to see enough countries signing on to the idea of British preeminence when the Brits can’t force the issue. The second issue is to partner with a single power large, wealthy country that has better demographic structures and shares the United Kingdom’s overall security concerns about united Eurasia as a military power.

And the only country that scratches that itch is the United States. Now, it’s not like what the Brexiteers said, that they can just waltz into Washington and ask for a free trade deal that is better than the wake up from the EU. No, no, no, no. When it comes to trade deals, the United States is very specific and it doesn’t like to bring in systems that could compete with in any meaningful way.

And that would mean that the Brits have to accede to American demands on any number of sectors, from agriculture to finance to manufacturing. Hell, we might even make them get rid of the metric system before in a bad mood. Now, when the Johnson administration in Britain came over to talk to Donald Trump’s administration about a trade deal and they found out what the conditions would be, they walked away and then the next government came in and did the same thing.

And walked away. Or was it Theresa may anyway? There were two back to back. And so the Brits right now are in this nether world where they kind of quietly admit to themselves that in order to find a future that has some degree of economic functionality, they have to get into bed with their kids and accept all the demands and the hit to their economy will be real and the hit to their ego will be massive.

But the alternative trying to build an alternative system or maybe going back to the EU. Neither of those are long term solutions that are very functional. So really what we’re doing is going through the paces until the Brits admit the obvious. And when that happens, Britain will lose the thing that it values the most its freedom to act, its agency.

It will become a subsidiary of the Americans system, for better or for worse. And while that will be horrible for the British mindset, it is the best game in town for both an economic and a security point of view. And in time, I have no doubt that that is where the Brits will end up. So stiff upper lip.

The Biden Administration Blocks LNG Exports (Sorta)

A liquefied natural gas ship

The Greens are celebrating and the oil industry is kicking and screaming over the Biden administration’s decision to pause the review process of liquefied natural gas (LNG) exports. However, this decision’s actual impact is microscopic. This pause is very limited. It has no impact upon facilities already in operation, under construction, or even those already permitted. It only impacts facilities still at the eye-gleam stage. While the “pause” may impact some firms (very) long-term plans, there’s nothing tangible as of yet.

Natural gas has an interesting foothold in the energy space, as it is a cleaner alternative to coal and is highly compatible with green energy sources like wind and solar. This means that natural gas will likely serve as the complimentary energy source of the future, which will be a large pill for the Greens to swallow.

The Biden administration’s move is temporary, limited in impact and scope, and is just a political move to garner support leading up to the election. Think of this kind of like a politician’s wet dream – making some of your constituents happy without actually doing anything.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Putin’s Puppet Show feat. Tucker “The Propagandist” Carlson

At this point you’ve all seen or heard about Tucker Carlson’s interview with Putin (if you haven’t…you didn’t miss much). This was the first time Putin has spoken to an American “journalist” since his military invaded Ukraine in February 2022.

As we enter the third year since Russia’s invasion of Ukraine, I think this is as good a time as ever to step back and take inventory of the situation. Since the beginning, we have known that the longer the war drags on, the harder it will be for Ukraine to mount a definitive counter-offensive. One reason for this has to do with differences in command structures; Russia follows a strict top-down delegation of authority, while Ukraine delegates relatively more local authority to lower-level officers.

While this strategy has paid off for Ukraine so far, the Russian military apparatus is slowly learning to adapt. To compete, Ukraine will need to take a chapter out of the Russian military school of thought and assert a more dominant command structure, one that allows for military-wide policy implementation.

Apart from strategy, Ukraine also needs more and better weaponry from its western allies. This will only get harder as time goes on. Putin knows this, and perhaps that is why he chose this moment, as Congress struggles to pass a military aid package for Ukraine and Israel, to stir the pot. Add to the mix the fact that this is an election year…

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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The Bleeding Edge of Semiconductors: A Tale of Three Companies

The semiconductor industry is one of ever-growing importance and its leaders—Intel and TSMC—are now fighting to be the first to bring the next generation of advanced chips to market.

Since its founding in the late 60s, Intel has been on the leading-edge of semiconductor manufacturing. For decades it pushed new technologies forward, vastly influencing technology developments across myriad sectors. Intel’s reign of supremacy ended, however, when in 2016 it misjudged the readiness of a novel lithography technology—extreme ultra-violet (EUV).

When Intel hesitated, Taiwan Semiconductor Manufacturing Company (TSMC) took the EUV plunge, and it paid off. TSMC is now the leading producer of sub-7nm chips, having utilized EUV lithography technology on a mass scale since 2019. Intel, on the other hand, just reached that point last year. Intel is hungry though, and has ambitious plans for the near-future, including securing the next generation of lithography machines (high-NA EUV) before any of its competitors.

The importance of the semiconductor industry will continue to grow as technology evolves and the green transition is carried out. Adding additional layers of security, stability, and cushion to the manufacturing process will be essential as geopolitical tensions rise and the world deglobalizes.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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TranscripT

Good morning from a frigid Colorado. It’s a balmy zero degrees this morning. And today, I want to tell you a tale of three companies and the state of the semiconductor industry from a technological and production point of view. Now, if you go back to the world before 2017, the technology of the day was something called deep ultraviolet, which was basically a way of producing microchips and intel.

The American technological giant was the world leader by pretty much any measure, and they had gotten a little cocky and they’d gotten a little bit lazy. So they would design chips two or three or four models out, but would only produce the next one up because they were so far ahead of everybody else. They didn’t feel the need to jump steps.

So they would use the EUV and they would make a chip that was marginally better than the one before. And then at the end of the year, no one was had caught up. So they do it again and again and again. And they do this for like 15 years. I mean, they’re very good at what they do, but they could have pushed the technological envelope a lot more if had they chosen to.

In part, that was because of the nature of the technology. The problem with it is you have to kind of make micro adjustments and physically adjust the equipment for each type of chip. And you have to do that manually and physically. And so with every design, you had to do it all over and with every machine in a fabrication facility, you would have to do it independently.

So no new chips from different machines are going to be quite exactly alike. And it generated a relatively higher loss rate from the final semiconductors than what we have today. And so generated a little bit more waste. But again, they were the industry leader. No one was close. Well, they were always had their eye on the future, however.

And so they invested in new technologies that would take them beyond the EUV, one of which is EUV, extreme ultraviolet. And the company that developed that technology is ASML out of the Netherlands. And back in 2016, ASML thought the stuff was ready to go. So they’re providing demonstrations for Intel, showing them how this technology is better. You can not only get more nodes on a chip and get to smaller and smaller nanometers, but it’s all digital.

So you kind of type in what you want to the machine over the course of a few days to a few weeks, and then the machine doesn’t actually have to be physically manipulated in the way that DV did. Now what that would mean is you’d have a higher success rate and more efficiency. But back in 2016, Intel was like, I don’t think this technology is quite right and we’re the industry leader.

We’re going to give it a few more years. Well, ASML not very happy with that. Marketed the technology to everybody else and a company decided to take the plunge. That company is TSMC out of Taiwan. And when we get to 2017, TSMC suddenly hits the ball out of the park and proves that EUV is ready for mass application and over the next couple of years very rapidly overtakes Intel because they have a shorter turnaround time for their chips and they can make chips with smaller nanometer sections.

It isn’t until 2022 or 2023 that Intel finally makes its first extreme ultraviolet chips. So TSMC in Taiwan has been the industry leader now for several years now. We’ve had a kind of a reverse in the roles. Now ASML, the Dutch have another another new technology called high numerical aperture, whose physics I’m not even to pretend to understand.

And they have marketed again. And this time Intel is the one that’s behind. And they’re kind of desperate and kind of hungry. And TSMC is the one that’s resting on their laurels. So the first delivery of those new machines, the high end chips, went to Intel in the second week of January of this year. And Intel expects two things.

Number one, they plan to overtake TSMC using the EUV technology in 2024, hoping to get down to two nanometers. Right now, the industry lead is at about three nanometers and that’s a TSMC product. And then next year they hope to leapfrog even further, provided that these new high end machines work, which will, you know, we’ll find out pretty soon.

Anyway. That’s where we are right now. In terms of the overall geopolitics, it’s pretty straightforward. Right now, 90% of all I hand chips are made by one company, TSMC, in one city in Taiwan, it’s a high concentration. But if Intel working with ASML can pull this off, all of a sudden we will have facilities in the United States that are working on the higher end stuff with some of the first facilities that are going be going online outside of Phenix and Columbus, Ohio.

So stay tuned because the geography of these chips is about to evolve pretty significantly if high works. And if not, we’re still stuck with Taiwan, it could be worse.

North Capital Forum: Crazy Little Thing Called Geopolitics

In October of 2023, I sat down with Enrique Perret, Managing Director of the U.S.-Mexico Foundation (USMF) & President and Founder, North Capital Forum (NCF). We discussed the opportunities and challenges that lie ahead for North America.

Through a geopolitical lens, we examine North America’s strategic positioning in the evolving global landscape, with a keen eye towards energy and tech. We’ll also discuss the current economic and political situations to help inform key stakeholders and decision makers in this region.

If you’d like to learn more about the U.S. – Mexico Foundation or their North Capital Forum, I encourage you to click the link below…

MORE ON THE US-MEXICO FOUNDATION

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
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The Geopolitics of Winter: Snow’s Impact on Agriculture

Some of you out there might grovel when the first snowflakes of the season fall, but I’d be willing to bet that the geopolitical significance of that snow hasn’t crossed your mind. Today, we’ll be exploring winters impact on agriculture and global food security.

If you think of all the great agricultural zones in the world, most of them have a winter season. At face value, that might seem irrelevant, but the snow and moisture that winter brings serves as insulation for the ground and facilitates biological processes critical for agriculture.

Historically, regions with a cold winter season have been more conducive to growing crops capable of feeding large populations, such as soy, wheat, rice, and corn. However, the industrialization and development of fuels and fertilizers has enabled these crops to be grown in areas previously unsuitable for agriculture.

These advances gave way to increases in population and the cultivation of new lands, but is it sustainable? As soon as places like Brazil or China can no longer import the inputs necessary to grow enough crops to feed their populations, we’re in for a rude awakening…

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

TranscripT

Hey everybody. Peter Zeihan here coming to you from snowy Colorado, where in the last 18 hours we’ve gotten 18 inches of snow, which means that this morning is a time for clearing and shoveling, but there is more to winter than shoveling and icicles. There is also the fun and games that comes with agriculture. In fact, winter is arguably the single biggest factor for how our world got to be in the shape it is, more or less the century and less century.

The issue is that when winter hits, everything stops and you have a layer of moisture that then insulates the ground. This is two things. Number one, it preserves a little bit moisture in there and then will grow a little bit back in the spring. But more importantly, the thicker the snow, the greater the insulation. And so you actually still have biological processes going on under the surface, even if right there in the topsoil.

Basically, you’ve got organic material that is decaying or as farmers like to call it, the formation of free fertilizer. If you look at the map of the world’s agricultural zones, before roughly 1900, the pre-industrial era, you’ll notice certain patterns. The American Midwest to a degree, the American Piedmont, Northern Europe, Central Eurasia, the real plot to basin in South America and the southeastern part of Australia and South Africa.

sorry, I forgot. Northern China as well. What are these areas all have in common? It’s cold. You get some snow and so you get that recharge system. There are temperate climates where the free fertilizers kind of baked into the cake. If you go outside of those zones, pre 1900, it’s not that there’s not agriculture, but by definition it’s almost not large scale.

And most of the crops that feed most of humanity. So you’re talking rice, soy, wheat and corn. Those four crops grow best in those conditions. You move out of those zones and you’re talking different crops, things like sweet potatoes or yams. And it’s not you can’t support a population with those things. It’s that you can’t support a large population with those things.

So they’re not nearly as amenable to road crop edge. It’s more subsistence farming as a rule. Now, that, of course, changed, right, right around between 1900, 1945 for some countries and then between early 1990 and 1985 for the rest. What happened there was first the development and then the mass application of industrial level agricultural inputs, things like fuels and fertilizers, which allowed you to plant more traditional crops in zones that normally weren’t really great for it.

In addition, those lower output crops per acre. If you started putting things like fertilizer, they would do a lot better. As a rule, the industrialization of agriculture had a bigger impact on marginal lands than it did on the Prime lands. The prime land still saw their output increase by 50% to 150%. But it’s the marginal lands that saw a tripling, quadrupling or even more.

Now, something to keep in mind with all those secondary lands, if you’re talking about, say, a step where it’s just dry with agriculture, doesn’t it? Nothing really happens. If you’re talking about the tropics, yes, you have a riot of growth, but the nutrients are consumed by that growth as soon as the growth rots. So if you clear the jungle and the rainforest, the soil that’s left behind is almost nutrient non-existent.

And without those industrial level inputs, you really can’t grow crops at scale in these zones. Now, because of industrialization, of agriculture, we haven’t simply seen that the part of the world that humans cultivate expand by a factor of three. We seen the population expand by a factor of three as well. My concern is that we’re entering an era where the supply chains that allow those industrial inputs to function to exist are going to break down.

And for countries like China or Brazil who import the vast, vast, vast majority of those inputs, that means the ability to sustain post 1900 levels of population are going to be hugely hit. In the case of Brazil, they still have portions of the country that are still temperate. It’s not like they’re going to starve, but they’re no longer going to be a massive agricultural exporter to places like Brazil.

So for those of you who live in a place where you don’t have snow, yes, you get more time on the beach and you don’t have to shovel. But it also means the security of your food supply is decided by people in different climate zones with supply chains that are a continent away that you have no ability to protect or even influence.

And the world we’re going into, that’s going to be a little rough.