Dear Reader,
As we enter winter in the Northern Hemisphere, the impact of the European Union’s sanctions against Russia, the sabotage of the Nordstream 1 and 2 natural gas pipelines from Russia to Europe and, most importantly, the misplaced energy policy of some European countries are all starting to be felt…
But not in ways that most expected.
The fear that was perpetuated by the media – and the politicians that fed them fodder to support the desired narrative – has proven to be unfounded. After all, we were told that there would be widespread shortages of natural gas in Europe, and that there would be untold deaths from the cold.
The reality is starkly different.
In fact, as of Saturday, the E.U.’s natural gas storage is 91.3% full. As I wrote in the past in The Bleeding Edge, I simply didn’t see a risk that Europe wouldn’t be able to fill its reserves to make it through the winter.
The E.U.’s target was 80%, which would have been sufficient. And yet here we are at 91.3% and growing.
Europe has had no problem buying natural gas to fill its storage. The U.S. has experienced a booming business sending liquefied natural gas (LNG) across the Atlantic. And ironically, Europe has been buying Russian natural gas in loads, typically after it passes through China’s hands.
Sadly, this sleight of hand makes the sanctions laughable – and it comes at the cost of European taxpayers.
But while the crisis for warm homes and buildings has passed, there are interesting secondary effects of the region’s energy policy that are requiring some compelling emergency plans for what’s to come.
Let’s take Switzerland, for example.
Switzerland generates about 60% of its electricity from hydropower, 33% from nuclear power, and the rest from fossil fuels and some limited renewable energy.
Sounds good, right? But the issue is that the electricity production from hydropower isn’t consistent throughout the year.
Swiss electricity production from hydropower is naturally strongest in the spring and summer months, as the rain and snow melt fills the rivers and reservoirs. It generates excess amounts of clean energy, so much so that it exports large amounts to neighboring countries during those months.
But during the fall and winter, Switzerland becomes an energy importer. Most of its supply comes from Germany.
The problem is that Germany’s energy policy made it completely dependent upon Russian natural gas. It turned off nearly all of its nuclear power plants and then lost much of its access to Russian natural gas.
Unsurprisingly, wind and solar didn’t come anywhere near close to filling the gap, so Germany fell back to producing electricity from coal – not clean, and not smart.
The secondary effect is that Switzerland now doesn’t have the same electricity supply from Germany that it would normally have at this time of the year. And it’s also suffering from reduced supply from France, which is having its own issues maintaining its electricity production from its nuclear power plants.
The solution? The Swiss government has developed plans that will prohibit the use of electric vehicles (EVs) this winter, with the exception of an “absolutely necessary journey” (i.e. an emergency).
What will those who got rid of their gas-powered cars do now? The situation is a bit ironic considering the Swiss government has been aggressively promoting EVs to its population.
The reality of EV production and “fueling” is quite different than what’s presented by so many. There’s only one country that’s demonstrated the ability to employ EVs and “fuel” them consistently with electricity produced from clean energy sources – Norway.
About 90% of Norway’s electricity is produced with hydropower, and Norway has done an excellent job building an extensive reservoir system to ensure its hydropower plants continue to work in the cold and dry months. That makes perfect sense.
As if Elon Musk didn’t have enough on his plate preparing to launch the first SpaceX Starship into orbit this month and delivering the first of the Tesla Semis – not to mention his dangerous and noble efforts to restore freedom of speech through his acquisition of Twitter – he somehow made time for a major event at Neuralink, his brain computer interface (BCI) company.
Neuralink has been criticized by many “experts” in the field following the last two major events the company held. The first event demonstrated the ability of Neuralink’s implants to monitor and measure the brains of pigs.
The second major event demonstrated the ability of a monkey to control a computer game – Pong – through just its thoughts. The monkey’s thoughts were wirelessly transmitted via the Neuralink BCI and demonstrated successful control of the game.
Last week’s event demonstrated a monkey moving a cursor on a screen to letters on a virtual keyboard with just its mind. This was all made possible through Neuralink’s coin-sized BCI implant. The device is implanted flush and replaces part of the skull.
Neuralink’s BCI Implant
Source: Neuralink
The above device enabled a monkey to telepathically control a computing system. It was able to type words on a screen via just its thoughts. Poor spelling aside, it worked.
Neuralink’s approach to BCI technology is unique in that it’s developing what I like to think of as a “full stack” approach to solving a very complex problem.
In addition to the demonstration of the BCI in action, Musk’s team also demonstrated its surgical robot – R1 – which is explicitly designed for the purpose of “threading” the Neuralink brain-signal recording wires into the brain.
The demonstration was performed on a mannikin with a life-like brain. It showed the treads being inserted into the artificial brain via the surgical robot as an example of what the ultimate procedure will look like.
Neuralink is very ambitious in that its approach is full stack and its BCI implementation is intended to be completely wireless. No other company has done this.
On the back of last week’s event, Neuralink indicated that most of the necessary filings with the U.S. Food and Drug Administration have been completed to apply for the company’s first human trials, which Musk said will hopefully happen within the next six months.
This puts Neuralink sharply on the heels of competitor Synchron, which also made some progress this year.
Two other companies in the industry – Paradromics and Precision Neuroscience – are also gearing up for human tests next year. BCI technology like this will soon be transformational for patients with spinal cord injuries and for those with ALS.
Given the levels of investment and the speed of progress being made right now, we should expect at least one major breakthrough in BCI technology in humans next year.
What’s remarkable about Neuralink’s BCI technology isn’t that it’s demonstrated an early functional prototype in a monkey. It’s the speed of Neuralink’s progress during the last two years.
We’re in for some excitement in 2023, and my prediction is that Neuralink will be the company that makes it happen.
Another major topic that created quite a stir last week was a new development involving Google’s Sycamore quantum computer.
Over the last couple of years, Google has been remarkably hush-hush concerning developments of its own quantum computing platform. When it originally announced it had achieved quantum supremacy with Sycamore – a 54 qubit quantum computer – back in October of 2019, it was an industry breakthrough.
Quantum supremacy is the moment where a quantum computer can outperform and solve a task unachievable in any reasonable time frame by the world’s most powerful supercomputer.
It was a moment for the history books. But since then, Google has been closely guarded about its internal progress… unlike other companies in the industry.
Teaming up with researchers at the California Institute of Technology, Google’s Sycamore was used to simulate a holographic wormhole. A wormhole has long been a fascination of science fiction. It’s a tunnel through space-time connecting two black holes at either end of the wormhole.
Imagine being able to travel a thousand lightyears in a few seconds by using a wormhole as a short cut… assuming you don’t get ground up due to the gravitational forces.
But let’s put that aside for a moment.
The researchers developed a simulation of a wormhole using the quantum computer. The dynamics of gravity and mass were not possible in the simulation (obviously!), but they were replaced by quantum effects in order to simplify the simulation.
The experiment was performed by using seven of Sycamore’s 54 qubits. And despite its simplification, something incredible was demonstrated. The team was able to demonstrate that a piece of information could be sent through the wormhole and maintain fidelity.
While comparatively basic, this is theoretically how a wormhole should work.
Wormhole Simulation
Source: Quanta
Just imagine being able to send information back and forth in real life to a distant civilization through a wormhole in a matter of seconds. We may not be able to traverse the distance through a spacecraft, but it would still be incredible as a means of communication with far-reaching parts of the galaxy.
Embarrassingly, journalists proclaimed that the researchers created an actual wormhole.
Arguably, last week’s New York Times article was the worst with its headline: “Physicists Create ‘the Smallest, Crummiest Wormhole You can Imagine’.” Blather like that is hardly appropriate for such a material development on the next generation of computing systems.
This was a fantastic year for quantum computing, as the industry demonstrated a quantum computer with more than 256 qubits – a prediction that I made in December of 2021 for this year.
We’re in for even larger breakthroughs in 2023 with quantum computing. And this latest research is an example of how quantum computers will be used to model and simulate extremely complex systems that would be impossible using classical supercomputers.
One of the more interesting developments in the automotive industry that we’ve been tracking in The Bleeding Edge is the concept of viewing EVs as more of a consumer electronics product, as opposed to a traditional car.
This has resulted in the industry exploring business models that are more akin to the consumer electronics industry rather than the automotive industry. A perfect example is Fisker and its recently launched Ocean SUV, which is a fantastic product.
Rather than incurring all the capital expenditures of building a manufacturing plant and producing its own EVs, Fisker focused its energy on design, user experience, and marketing.
This is the same type of business approach that Apple takes with its own products.
Fisker is outsourcing its manufacturing not to an automotive company, but to Foxconn – which, unsurprisingly, is Apple’s most important contract manufacturer for its own consumer electronics.
It’s not just Fisker, either. Lordstown Motors and Saudi Arabia’s EV brand Ceer are also partnering with Foxconn for contract manufacturing.
And last week was the first I heard of a traditional automotive manufacturer, Volkswagen, beginning talks with Foxconn for the manufacturing of its electric pickup trucks and SUVs.
While I believe this was inevitable, it comes as a bit of a surprise that one of the world’s largest and most well-known automobile manufacturers is looking to turn to a consumer electronics contract manufacturer to make its cars and trucks.
For perspective, Volkswagen sold 8.6 million vehicles last year, all made and manufactured in-house.
Volkswagen remains strong as a company and has immense scale, but it’s burdened with massive debt, and completely missed the wave of EVs. Like so many other incumbents, it’s scrambling to catch up with competitive EV offerings from companies like Tesla.
And that’s where a company like Foxconn is so interesting.
With new entrants like Fisker and Lordstown pioneering the outsourcing model for EVs with Foxconn, others will surely follow. And Foxconn’s early partnerships gave it a foothold into an industry that it otherwise would have struggled to gain access to.
Foxconn’s importance to the global electronics industry is similar to the importance of Taiwan Semiconductor Manufacturing Company (TSMC) as a Taiwan-based company. It’s another clear example of how China would benefit by having effective control over Taiwan, and thus Taiwan-based corporations.
Given the progress that Foxconn continues to make in the industry, I expect it will use the same playbook as TSMC by expanding its manufacturing base outside of Taiwan and mainland China – and by building infrastructure close to the end markets that its customers serve.
This is all part of the “Great Recalibration” that will rearchitect the world manufacturing infrastructure.
Regards,
Jeff Brown
Editor, The Bleeding Edge
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
