After Oil, Silicon is the New Chip

Original Author: Andy Kessler, WSJ

Original Compilation: Peggy, BlockBeats

Editor’s Note: In traditional geopolitics, oil has long been considered the core resource of war and power. However, as the importance of artificial intelligence and semiconductor technology continues to rise, new strategic variables are emerging. This article presents a clear judgment: in the competition of the 21st century, ‘silicon’ is replacing oil as the key resource affecting national power and the nature of warfare.

The article begins with recent international conflicts and the energy landscape, outlining the energy and military supply chains between Venezuela, Iran, and Russia, and analyzing how oil prices, drone warfare, and the global sanctions system intertwine in real-world conflicts. As the narrative progresses, the author shifts perspective from traditional energy to technological competition, discussing the strategic significance of advanced chips, semiconductor manufacturing, and AI computing power in today’s geopolitics.

In the author’s view, when AI can simulate war outcomes on a large scale, future conflicts may develop a new deterrence logic: potential adversaries, foreseeing defeat, choose to avoid war. Thus, ‘silicon-driven AI advantage’ is not only reshaping the resource landscape but may also alter the fundamental rules of war and peace in the 21st century.

The following is the original text:

War and politics have never been easy games. The current game is more like a multi-layered, nested “three-dimensional chess match.”

The Energy Game: Oil Still Determines the First Layer of War Logic

The regimes in Venezuela and Iran have successively suffered “decapitation-style” strikes. This is no coincidence; both countries have long been important sources of oil for China and have also indirectly supplied energy to countries like Cuba and North Korea through China. More subtly, if oil prices rise to $100 per barrel, it actually helps Russia pay for its war in Ukraine.

But at the same time, Iran is a key supplier of drones to Russia (Note: In the Russia-Ukraine war, Russia extensively uses Iranian-made Shahed series suicide drones. Due to their low cost and large numbers, these drones are often used for sustained harassment, depleting air defense missiles, and attacking infrastructure like energy facilities.) In this complex game, this is equivalent to a “check.”

From a geopolitical perspective, an ideal path to victory might involve two key steps.

First, the U.S. supports the establishment of more pro-Western regimes in Venezuela and Iran, significantly increasing oil production to add a portion of supply to the global market not subject to sanctions.

Second, the U.S. gains de facto control over the Strait of Hormuz after the war, a critical chokepoint through which about 20% of the world’s oil must pass.

If these two points are achieved, could oil prices potentially fall back to $40 per barrel? It’s not impossible. If that happens, Russia’s war machine would be severely weakened. That’s another “check” on the board.

I was reminded of a historical parallel during a recent visit to Pearl Harbor: Before WWII, Japan relied on the U.S. for about 80% of its oil. In July 1941, the U.S. froze Japanese assets, effectively an oil embargo, and history quickly slid into war. Will history rhyme again?

Silicon as the New Oil: The Scramble for Strategic Resources in the AI Era

However, perhaps what’s more important is no longer oil. A phrase I’ve been saying for years might be becoming reality: Silicon is replacing oil as the new strategic resource.

Washington should regulate the most advanced AI chips under a strict military technology control system, just like uranium. Because in a sense, AI itself is a weapon.

Unlike oil, silicon is essentially just sand. What is truly scarce is not the raw material, but the manufacturing processes and the talent ecosystem.

Equally deterring are the rapidly spreading images: Nicolas Maduro blindfolded and handcuffed, footage circulating on TikTok of Ali Khamenei’s residence being destroyed, and images of sunken Iranian naval vessels.

Currently, the U.S. and Israel almost completely control Iranian airspace. Iran, like Venezuela, uses Russian-made S-300 air defense systems. If I were a buyer, I’d probably consider asking for a refund.

AI Warfare: Technology is Changing the Nature of Conflict

In this series of operations, artificial intelligence is playing an increasingly important role.

AI is likely being used to analyze the movement patterns of personnel and weapons to lock onto key targets—this is also a crucial technological foundation enabling the U.S. to capture Maduro and carry out strikes against Iranian leadership. AI is, at its core, an extremely powerful pattern recognition tool. Simultaneously, the U.S. is also using AI for battlefield scenario simulations. Combined with precision strike capabilities, these technologies can significantly reduce civilian casualties. It is precisely for this reason that the controversy between Anthropic and the Pentagon over the use of AI tools seems both shortsighted and unsettling to me.

The nature of warfare is changing. The Carter administration’s attempt to rescue hostages in Iran in 1980 ultimately failed, but with today’s technology, the outcome might have been completely different. Maduro’s capture is a real-world example. Donald Rumsfeld’s proposed strategy of “small ground forces + high-precision air strikes” may have finally met its true technological conditions. War is no longer about “shock and awe,” but more like “precision strike, rapid withdrawal.” Ground forces are smaller but rely on high-value intelligence resources—for example, Israel once hacked Tehran’s traffic camera system to track leadership movements. This model could be called “sneakers on the ground.”

What needs to be observed next is whether this “precision warfare” model can remain effective, and whether new, more pro-Western regimes can quickly reintegrate into the global market. I personally remain somewhat optimistic. Compared to wars lasting years, conflicts lasting 12 or 50 days are clearly more manageable.

Other pieces on the board are still moving. Iran launched retaliatory missiles at 11 countries, meaning at least 10 of them could become potential customers for Israel’s “Iron Dome” and the U.S. “Patriot” air defense systems, or need to replenish interceptor missile stocks. If arms sales are tied to joining the Abraham Accords, the game becomes even more complex.

Fund flows are also a key piece. The Wall Street Journal reported that the mật mã exchange Binance was used to funnel approximately $1.7 billion to Iran-backed groups, including the Houthis. Such channels should be blocked. Interestingly, this figure matches the amount of cash the Obama administration airlifted to Iran in 2016.

Historically, oil and gas have often been concentrated in the hands of authoritarian regimes, or more accurately, controlled by oligarchs and elites. The Kremlin controls over half of Gazprom’s shares, and Khamenei himself is said to control a financial empire worth about $95 billion. In contrast, “silicon” thrives more easily in free-market environments, such as the U.S., Taiwan, South Korea, and the Netherlands, which provides key technologies for semiconductor equipment.

Free societies still hold institutional advantages. If silicon becomes the new oil and drives the AI revolution, then future wars might become more “calculable.” AI can not only simulate battles but also conduct full-scale war games. If Maduro or Khamenei could have truly simulated the outcome of advanced fighter jets and precision weapons against their vulnerable air defenses, they might have made different choices. Other countries will obviously conduct such simulations seriously. After all, ChatGPT Plus costs only $20 per month.

Could this become the “peace dividend” of the AI era?

During the Cold War, people believed nuclear war wouldn’t happen because of “Mutually Assured Destruction” (MAD). This logic is terrifying, but it has worked so far. In the future, if AI can use large-scale simulations to clearly show an adversary the post-war outcome, that would be a new logic: SAD (Strongly Assured Destruction). In such a scenario, perhaps negotiation would be more attractive than war.

Checkmate.

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