The head of the Monetary Authority of Singapore (MAS) on Monday warned of uncertainties surrounding the sustainability of the global artificial intelligence (AI) investment boom, citing rising computing costs, financing risks and the possibility of technology disruption or regulatory intervention.

The AI boom is sustained by a race to scale and a race to self improving models supported by relatively easy financing and large hyperscaler cashflows, the MAS’s Managing Director Chia Der Jiun said at the UBS Asian Investment Conference

According to him, the result has been competition for scarce chips and energy, and a rising unit cost for compute.

“The race may decelerate or wind down if the race is won, or if the market increases the cost of financing should it stop believing that the race could be won at reasonable cost relative to the winners’ prize money,

“Or as a tail risk, the race is disrupted by technology obsolescence or regulatory intervention,” he added.

He also highlighted that medium-term concerns over a scenario in which global growth is driven narrowly by AI, benefiting only a small group of companies and sectors, while productivity gains are unevenly distributed across economies and workers fail to receive a fair share of gains through wages and employment opportunities.

“This may mean high growth, but not balanced growth,” he said.

For him, a major factor driving both gross domestic product (GDP) growth and stock market optimism globally has been the AI boom.

According to him, AI related investment contributed most of US investment growth and half of US GDP growth, while AI-related stocks contributed most of the market’s gains this year.

AI investments have also boosted economic performance in Asia, with Taiwan and Korea being the most notable in experiencing very high export growth on the back of the semiconductor boom.

Investments announced by hyperscalers into data centers are in the order of several hundred billion dollars this year, and with strong projections sustained into the years ahead.

“Both the AI boom and the energy shock have taken place against a backdrop of inflation in major economies returning closer to target and interest rates in a relatively good position to respond to both risks to inflation and growth,” he said.

He also highlighted the priority for the city state now is to accelerate the equipping of its financial workforce with skills to work with AI.

According to him, the country’s financial center is among the leaders in AI adoption.

“MAS supported the growth of the FinTech ecosystem in Singapore, provided sandbox testing of new ideas and calculated risk-taking, put in place building blocks for the development of sustainable finance, advanced use cases for tokenization and digital assets, as well as taken initiatives to support the adoption of AI in finance,” he said.

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