The co-founder of Arm states that AI will generate more value than any previous revolution and predicts it will be a thrilling ride.

      Hauser joined CNBC’s The Tech Download podcast this month, with a write-up by Arjun Kharpal and Kai Nicol-Schwarz published on 14 August. His extensive experience is a compelling reason to pay attention. He co-founded Acorn Computers in 1978, was instrumental in creating Arm, and currently supports European deep-tech startups through Amadeus Capital. With four decades of observing technological shifts, his insights on the current movement merit careful consideration.

      The entire discussion lasts 40 minutes as a video episode, addressing topics such as AI, semiconductors, quantum computing, and European sovereignty.

      Hauser's stance is more optimistic than many skeptics. He stated, “This is a revolution that will create more value than probably any other technology revolution that we’ve ever seen.” He further described it as a “rollercoaster.”

      Regarding valuations, he is precise, noting that some have “clearly gotten ahead of themselves.” The risk he identified is structural, citing recently announced circular financing arrangements.

      The significance of this is substantial. Circular financing occurs when a chipmaker invests in an AI lab that subsequently purchases its chips. The Bank for International Settlements highlighted this in June, warning that an AI downturn could impact credit markets similarly to the 2008 crisis.

      However, Hauser does not foresee this outcome, suggesting the largest players will endure a reset. He believes OpenAI and Anthropic possess substantial capital reserves, enabling them to withstand turbulence even if surrounding expectations adjust.

      Thus, his position is nuanced and distinct. The revolution is genuine, not all prices reflect reality, and the most prominent players are not the vulnerable aspect of the market.

      This raises an unanswered question: if the labs endure a reset, it implies that others will bear the brunt, and the circular arrangements will be where that impact will be felt.

      In contrast, Masayoshi Son recently told SoftBank shareholders that labeling AI a bubble is insulting and has also termed similar commentary blasphemy. Hauser differentiates himself from both perspectives. He delineates the technology issue from the pricing issue, addressing them in different directions, which is less catchy for headlines but more insightful to read.

      The most current aspect involves chips. Hauser, having co-created the architecture found in most of the world’s phones, emphasizes that AI is prompting a reevaluation of computing architecture itself.

      He highlighted practical pressures: AI can be costly to operate, chips are tough to cool, memory is expensive, and bottlenecks are widespread across the industry. He noted two responses: in-memory computing and photonic computing, both aimed at reducing the energy consumed when transferring data between processors and memory.

      His comparison is striking, suggesting these innovations could be as significant as the architectural advancements that allowed Arm to compete with established chipmakers. “I never thought that we’d have a very fundamental change in computer architecture as a result of AI,” he remarked.

      Money is already flowing toward this direction. The photonics aspect is not just theoretical; Nvidia invested $6.5 billion in photonics companies over three months to replace copper with light in AI data centers. This approach addresses the bottleneck rather than engineering around it—the problem Hauser outlines already incurs a cost.

      In-memory computing is still nascent; it performs arithmetic within the memory instead of transferring data to and from a processor. Both strategies target the same objective: lowering the costs associated with data movement rather than the costs of computation.

      Arm is the precedent Hauser points to; it succeeded by optimizing for power efficiency when the industry focused on pure speed, and that limitation created opportunities.

      Regarding Europe’s potential, Hauser is straightforward. European firms possess the innovation and talent to compete with the US and China. The challenge lies in the subsequent growth phase, as European companies often falter in transitioning from small startups to significant global contenders.

      This observation is not new, but coming from an investor who has supported such ventures, it carries weight. Amadeus Capital aims to facilitate this leap. He connects this issue to a broader theme: technological sovereignty.

      Hauser expresses concern about Europe’s reliance on foreign suppliers for vital technologies, mentioning everything from AI models to semiconductor design software. The latter is often overlooked; chip design software is a niche market with limited suppliers, and it lies at the foundation of everything else.

      The desk has reported on shifts in this area; Synopsys shifted focus from chip fabrication software in July to pursue AI design margins. His warning is firm: close cooperation with allies is crucial, and dependence comes with risks in a climate of geopolitical tension and export controls.

      Export controls can turn a supplier into a chokepoint, where a tool acquired today becomes a dependency rather than just a purchase.

      His conclusion was clear and quotable: Europe should maintain its partnership with the US, but it should not become “a technology colony of the U.S.” Brussels has already taken action in response to these concerns, proposing a sovereignty package in June that