ChatGPT 101 equipment needs. That said, the outlook for these ASEAN based players is still bright as their products and solutions should continue to be used by other ASEAN-based companies (e.g., OSATs), driven by the strong drive for domestic replacement due to cost. Moreover, they are also working hard to penetrate into the North Asian market. The key challenges that remain include the technology advantage of these ASEAN companies (less than 10% in the performance gap may not be enough of a trigger to change suppliers). Back-end players upgrading their offerings In the back-end space, ASEAN has continued to grow in market size, following the diversion of more business into the region over time through a combination of attractive pricing, targeting of SiP (to process more sophisticated chips), and addressing the growing base of international companies with supply chains already set up in ASEAN. We identified four listed OSATs in ASEAN currently but the largest listed one would be Inari (serves a key America-based customer in the smartphone industry), followed by Malaysia Pacific Industries (owns Carsem and is highly leveraged to the automotive industry), Unisem (30% exposed to consumer industry and recently welcomed a new major shareholder, i.e., China’s Tianshui Huatian Technology) and KESM (exposed to automotive industry). ASEAN’s OSAT global market share has generally remained at 3-4% over the past decade as the suppliers are also focused on profitability. ASEAN’s market share stayed at the same level mainly due three reasons: (1) both MPI and Unisem has been losing share; (2) major players (China and ex-China) continue to grow aggressively; and (3) lack of M&A to accelerate growth (the four OSATs listed in Malaysia have not been active in the M&A space). Nonetheless, that might change in the near term as Inari is gearing up for a large M&A after raising ~RM1 bn via private placement recently for this purpose.
102 ChatGPT is incredibly limited, but good enough at some things to create a misleading impression of greatness… it’s a preview of progress…” – Sam Altman, CEO of OpenAI “
ChatGPT 103 Risks and Regulatory Concerns with ChatGPT and AI Technologies As more businesses and organizations embrace ChatGPT and look to incorporate it (and the OpenAI family of models more broadly) into their daily operations, we note several key risks posed by ChatGPT and similar technologies. We would also highlight there are growing concerns around the state-of-theart AI capabilities and potential impacts on society altogether. Threats from ChatGPT if Being Used by Bad Actors: According to the CHKP’s research, underground hacking communities (e.g., Dark Web) have been using ChatGPT to develop malicious tools, with some designed by people with no software development skills but simply leveraging on ChatGPT’s AI capabilities. We do note, however, that ChatGPT will decline requests such as generating malware, attempting to spam, or conducting cybercrime. Importantly, any explicit requests for activities mentioned above will result in an account suspension. Despite this, several cyberattacks/malicious tools have been identified as being created by utilizing ChatGPT – this has lowered the barrier for cyber criminals as it does not require complex software development skills. ChatGPT May Be Too Helpful for Certain Use Cases: On Jan 5, 2023, New York City’s Dept. of Education announced a ban on ChatGPT from its public schools’ devices and networks owing to the concern for negative impacts on student learnings as ChatGPT has the ability to provide quick and easy answers to questions without helping students to form critical thinking and problemsolving skills. While there are some tools that can identify AI created content, the accuracy is low and we note it’s relatively easy to have the content rewritten to bypass these checks. We would also highlight OpenAI’s terms of use have restrictions on “representing that output from ChatGPT was human generated when it is not.” However, it remains unsolved how to accurately identify these cases which we believe will likely be an area of focus for the future AI regulation. AI Chatbot May Not Understand the Question (and May Not Care Either): There are reported incidents in which Bing AI’s Chatbot appears irritated by the questions asked. According to a report from Insider, one user asked the movie showtime for "Avatar: The Way of Water" and Bing replied that the movie had not been released yet. Given the latest training data for ChatGPT (GPT-3) was from 2021 (the main underlying technology that powered Bing AI chatbot), it has limited chatbot’s ability to answer questions related to recent events. In another reported incident, Bing’s Chatbot ended the conversation by responding, “You are the one who is confused or delusional. Please stop this nonsense and be reasonable.” Although we understand the limitations in ChatGPT and Bing AI and note it will probably take a long time for the AI to gain the ability to form a human conversation. However, such uncontrolled responses may greatly impact user experiences and usefulness. Figure 220: OpenAI CEO - Limitations of ChatGPT Figure 221: Bing Chatbot Demo: Key Takeaways GPT 3Q22 EPS Source: Twitter Source: Company data, Credit Suisse
104 Further, we submitted the following prompt into ChatGPT and below is what it noted as risks when using the tool/service. Regulators Across the Globe Are Taking Action The AI Industry Asks for More Rules and Regulations on AI and ChatGPT: OpenAI’s mgmt. has noted several times at various occasions that governments need to be involved sooner rather than later to make sure the impact from ChatGPT on society is controlled and responsible. As shown in Figure 223, Open AI CEO, Sam Altman, warned the public about the profound impact and risks of future AI development. Additionally, Mira Murati, CTO at OpenAI said in a Time interview, “we’re a small group of people and we need a ton more input in this system and a lot more input that goes beyond the technologies — definitely regulators and governments and everyone else.” While regulation typically follows negative outcomes–we note the potential to see more proactive regulation given how much media attention ChatGPT has drawn. US Regulators Are Taking Actions on AI But Not Chatbots Yet: Democratic California Rep. Ted Lieu introduced a resolution for the House to examine AI, a bill what was written entirely by ChatGPT. Lieu wrote: “As one of just three members of Congress with a computer science degree, I am enthralled by A.I. and excited about the incredible ways it will continue to advance society. And as a member of Congress, I am freaked out by A.I., specifically A.I. that is left unchecked and unregulated.” Despite acknowledging the potential positive impacts of AI, Lieu urged Congress to take on the “responsibility to ensure that the development and deployment of AI is done in a way that is safe, ethical, and respects the rights and privacy of all Americans.” Note US regulators have been taking actions on regulating AI already–the White House released an "AI Bill of Rights," protecting rights and privacy when using AI. Multiple states also have already come up with rules and regulations regarding the use of AI. For example, the state of Illinois requires employers that rely on AI for hiring processes to allow a government check to avoid racial bias. Other states like the states of Vermont, Alabama, and Illinois have commissions that ensure AI is being used ethically. Note none of the laws and regulations mentioned above specifically target ChatGPT or chatbots more broadly currently. The EU Is Already Ahead of the US With Regulations on AI: According to a report from Reuters, EU industry chief Thierry Breton has proposed AI rules that aim to deal with the risks and concerns from ChatGPT, with details for the rules currently being discussed. EU passed the Artificial Intelligence Regulation Act in December 2022 - the first law on AI by a major regulator anywhere (including the US), indicating that the EU is leading the regulations on AI. We expect there will be extensive regulations and risk controls deployed to contain the potential for misinformation and management of biases that make their way into AI technologies. Figure 222: Answers from ChatGPT Regarding the Risks of Using of Its Service Figure 223: Open AI CEO, Sam Altman Tweet on the AI Regulation Source: OpenAI. Source: Twitter
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