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Friday, October 11, 2024

g-f(2)3026 A Holistic Approach: Maximizing Europe's Generative AI Potential

 


genioux Fact post by Fernando Machuca and Perplexity


Introduction:


The McKinsey Global Institute's report "Time to place our bets: Europe's AI opportunity" provides a comprehensive analysis of Europe's position in the emerging generative AI economy. It examines the challenges and opportunities across three key dimensions: adoption, creation, and energy requirements.



genioux GK Nugget:


"Europe must embrace a holistic approach to generative AI, focusing on adoption, creation, and energy to unlock its full economic potential and boost productivity." — Fernando and Perplexity, October 11, 2024.



genioux Foundational Fact:


Generative AI could help Europe achieve an annual productivity growth rate of up to 3 percent through 2030, potentially adding $575.1 billion to the European economy. However, European organizations currently lag behind their US counterparts in AI adoption by 45 to 70 percent, highlighting the urgent need for action to capitalize on this opportunity.



The 10 most relevant genioux Facts:


  1. A three-lens approach focusing on adoption, creation, and energy is crucial for assessing Europe's competitiveness in the generative AI economy.
  2. European organizations lag behind US counterparts in AI adoption by 45 to 70 percent, but the window of opportunity remains open.
  3. Europe leads in only one of eight segments of the simplified generative AI value chain: AI semiconductor equipment.
  4. Generative AI is expected to accelerate data center power demand, potentially accounting for more than 5 percent of Europe's total electricity consumption by 2030.
  5. Europe has made progress in raising AI awareness and setting commitments, but major bottlenecks persist.
  6. Increasing investments, leapfrogging in emerging semiconductor technologies, and addressing talent retention are potential levers for improvement.
  7. Preparing the workforce through reskilling and mobility programs is crucial for leveraging the benefits of generative AI adoption.
  8. Europe is competitive in four of the eight segments of the generative AI value chain: AI semiconductor equipment, foundation models, AI applications, and AI services.
  9. Europe has less than 5 percent global market share in raw materials, AI semiconductor design, AI semiconductor manufacturing, and cloud infrastructure and supercomputers.
  10. Since 2022, more than 90 percent of LLM-related funding has taken place outside of Europe.



Conclusion:


Europe faces significant challenges in the generative AI landscape but also has substantial opportunities for growth and innovation. By adopting a holistic approach that addresses adoption, creation, and energy requirements, European leaders can work to close the gap with global competitors and unlock the full potential of generative AI for economic growth and productivity enhancement.



REFERENCES

The g-f GK Context


Alexander Sukharevsky, Eric Hazan, Sven Smit, Marc-Antoine de la Chevasnerie, Marc de Jong, Solveigh Hieronimus, Jan Mischke, and Guillaume Dagorret, Time to place our bets: Europe's AI opportunity, The McKinsey Global Institute, October 1, 2024.



ABOUT THE AUTHORS


Alexander Sukharevsky, a global leader of QuantumBlack, AI by McKinsey, is a senior partner in McKinsey’s London office; Eric Hazan is a senior partner in the Paris office, where Marc-Antoine de la Chevasnerie is a partner and Guillaume Dagorret is a McKinsey Global Institute (MGI) senior fellow; Sven Smit, the chair of MGI, is a senior partner in the Amsterdam office, where Marc de Jong is a senior partner; Solveigh Hieronimus is a senior partner in the Munich office; and Jan Mischke is an MGI partner in the Zurich office.


The authors wish to thank Adrien Fresko, Arjita Bhan, Arnaud Tournesac, Christoph Sohns, Gardar Björnsson Rova, Klaus Pototzky, Michael Chui, Oskar Harmsen, and Pieter Ottink for their contributions to this article.


This article was edited by Larry Kanter, a senior editor in the New York office.



Classical Summary of the Report:


The McKinsey Global Institute report "Time to place our bets: Europe's AI opportunity" analyzes Europe's position in the emerging generative AI economy across three key dimensions: adoption, creation, and energy requirements.


On adoption, European organizations lag behind their US counterparts by 45-70% in AI spending and implementation. However, with generative AI still in the early stages, there remains a significant opportunity for Europe to close this gap and unlock productivity gains of up to 3% annually through 2030.


Regarding creation, Europe leads in only one of eight segments of the generative AI value chain (AI semiconductor equipment) and is competitive in three others (foundation models, AI applications, and AI services). However, Europe has less than 5% market share in the remaining four segments, including critical areas like raw materials and semiconductor manufacturing.


The energy dimension highlights that generative AI is expected to accelerate data center power demand, potentially accounting for over 5% of Europe's total electricity consumption by 2030. Competitive electricity prices will be crucial for Europe to host generative AI applications and services.


While Europe has made progress in raising AI awareness and setting commitments, major bottlenecks persist. The report suggests several potential levers for improvement, including increased investments, focusing on emerging semiconductor technologies, addressing talent retention, and preparing the workforce through reskilling programs.


The article emphasizes that European leaders must adopt a holistic approach encompassing adoption, creation, and energy requirements to fully capitalize on generative AI's potential and boost the region's competitiveness in this rapidly evolving technological landscape.



About the McKinsey Global Institute


The McKinsey Global Institute (MGI) was established in 1990. Our mission is to provide a fact base to aid decision-making on the economic and business issues most critical to the world’s companies and policy leaders. We benefit from the full range of McKinsey’s regional, sectoral, and functional knowledge, skills, and expertise, but editorial direction and decisions are solely the responsibility of MGI directors and partners. We aim for independent and fact-based research and analysis. None of our work is commissioned or funded by any business, government, or other institution; we share our results publicly free of charge; and we are entirely funded by the partners of McKinsey.



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Categorization


This genioux Fact post is classified as Bombshell Knowledge which means: The game-changer that reshapes your perspective, leaving you exclaiming, "Wow, I had no idea!"


Type: Bombshell Knowledge, Free Speech



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REFERENCES



“genioux facts”: The online program on "MASTERING THE BIG PICTURE OF THE DIGITAL AGE”, g-f(2)3026, Fernando Machuca and Perplexity, October 11, 2024, Genioux.com Corporation.


The genioux facts program has established a robust foundation of over 3025 Big Picture of the Digital Age posts [g-f(2)1 - g-f(2)3025].



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