As AI infrastructure booms in Phoenix, Arizona’s Route 66 towns offer a sharp lesson in tech disruption—and survival |
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Welcome to Eye on AI! In today’s edition: Apple eyes AI-powered Safari amid looming shift away from Google…Nvidia’s CEO Jensen Huang warns of a ‘tremendous loss’ if U.S. firms lose access to China’s $50 billion AI market…CrowdStrike to lay off 5% of staff, citing AI as a “force multiplier”
You can witness Phoenix, Arizona’s shape-shift into an AI powerhouse by looking out the car window while cruising Loop 303 off of Interstate 17, north of the city’s downtown. That’s how I first laid eyes on the colossal semiconductor plant from Taiwan Semiconductor Company (TSMC) last week after escaping the fast-paced AI news cycle for some Southwest style R&R.
When I realized we would be passing the $65 billion manufacturing complex–where a third fabrication plant is already under construction to provide sophisticated AI chips to clients like Nvidia and Amazon–I couldn’t resist taking the detour onto Innovation Way to check out the sprawling gray campus rising from the desert like a data center monument to the AI age.
A city reshaped in real time by AI infrastructure
Phoenix, famous for its golf courses and suburban sprawl, is being reshaped by this massive local investment in AI infrastructure. The New York Times recently chronicled the influx of Taiwanese workers to Phoenix, and the new restaurants and housing that is springing up around the TSMC site. The mammoth manufacturing facilities sit next to a shimmering glass-walled office building and a seemingly-endless parking lot topped with solar panels—all while construction continues on the surrounding desert land.
But while Phoenix may be remade by the promise of AI and silicon, farther north, other Arizona towns have already lived through their version of tech disruption and have had to figure out how to survive. For today’s companies and workers that fear being displaced, bypassed and forgotten in the AI era, it’s worth taking heed of some hard-earned lessons.
Take Williams, Arizona, which is two-and-half-hours north of Phoenix and is a former boom town on Route 66 that was known as the “gateway” to the Grand Canyon. Route 66, the historic highway that was built in 1926, helped Williams become a major stop for travelers, bustling with shops, motels and restaurants catering to tourists en route to the canyon. Williams also boasted the Grand Canyon Railway, which began taking passengers to the Canyon’s South Rim in 1901.
For Route 66 towns, progress came at a cost
But by the 1980s, Interstate I-40 was built in the name of progress, part of a nationwide highway revolution designed to supercharge commerce and tourism. It came at a cost: I-40 bypassed dozens of Route 66 towns, draining them of traffic and relevance. Many faded away into ghost towns—but Williams was an exception.
Williams was the last town on Route 66 to be bypassed by I-40, holding out until 1984 by filing lawsuits that were only dropped when the state agreed to construct three exits providing direct access. But even with the exits, the town suffered since I-40 diverted traffic around the town, rather than through it like Route 66. Even worse, the Grand Canyon Railway—once a big tourist draw—had stopped running in 1968, more than 15 years before the interstate highway was built, after the rise of the automobile undercut rail travel.
Today, the town is a bustling tourist town that was revived by leaning into nostalgia. The Grand Canyon Railway was repurchased and restored, resuming service in 1989 and soon becoming the town’s biggest employer. Williams also pushed to preserve its Route 66 identity, opening the Route 66 Museum and reviving historic buildings.
Finding new ways to adapt
As I rode the historic Grand Canyon Railway to the South Rim last weekend, and took advantage of every Route 66 photo op in town, I couldn’t help but ruminate on how this small town survived a massive infrastructure shift through reinvention. So many companies and workers will need to do the same in the AI age or they risk becoming the next Route 66.
Not every Route 66 town had to reinvent itself by looking at the past. On the way to Williams, I passed through Flagstaff, which also once relied on Route 66 traffic. It had a more diversified economy than Williams—thanks to its ski area, the Lowell Observatory and a nearby university—and it continued to grow as a regional economic and transportation hub even after I-40 was built. It had already built the broad foundations it needed to survive before the disruption came.
In the age of AI, we all have to reckon with what comes next, as we face a disruption that will arguably be more sweeping than the rise of the Interstate Highway System. Phoenix is betting on turning desert into AI chip fabrication factories and building new neighborhoods to support them. But all cities, companies, and workers will have to find ways to adapt—or risk falling behind. In the 1980s, Williams and Flagstaff, like all Route 66 towns, had to figure out how to reinvent themselves or leverage what they already had. The ones that didn’t? They’re no longer on the map.
With that, here’s the rest of the AI news.
Sharon Goldman
sharon.goldman@fortune.com
@sharongoldman
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Responsible AI in finance: 3 key actions to take now AI is revolutionizing the finance function – adopting Responsible AI practices can help harness the transformative potential while mitigating inherent risks and helping to build stakeholder trust. Learn more
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OpenAI hires Instacart CEO Fidji Simo for new senior leadership role. Simo will be the AI company’s new CEO of Applications, a division that will combine the company’s product offerings and its business operations, OpenAI CEO Sam Altman said in a letter to employees that the company also posted to its website. Altman said he would continue to “directly oversee the success” of all of the company’s divisions, but would focus more intently going forward on OpenAI’s research, AI safety efforts, and the build out of massive AI computing infrastructure needed to support the rest of what OpenAI does. You can read more from Fortune’s Jeremy Kahn on the news here.
Trump administration plans to scrap Biden-era AI “diffusion rule” on chip exports. The Trump administration is set to revoke export controls enacted at the end of Joe Biden’s presidency that sought to limit the export of advanced computer chips and other AI-related technology to many countries. The revocation is a significant victory for U.S. chipmakers and AI firms, who criticized the rule for being overly complex and restrictive. The original regulation was part of the Biden administration's broader effort to limit Chinese access to critical technologies. Countries like Saudi Arabia, India, and the UAE had also lobbied to relax the restrictions. Some argued the rule was counterproductive since, by making it harder for countries to access U.S. technology, it might encourage other countries to turn to Chinese-made AI chips instead. Financial markets responded positively to the news of the rule's revocation, particularly with Nvidia’s stock rising over 3% after the planned policy reversal was reported. Read more from Axios here.
Apple eyes AI-powered Safari amid looming shift away from Google. Apple is “actively looking at” overhauling its Safari web browser to prioritize AI-powered search engines—a seismic shift hastened by the potential end of its long-standing partnership with Google. Apple’s senior vice president of services, Eddy Cue, revealed the strategy during his testimony in the U.S. Justice Department’s antitrust lawsuit against Alphabet Inc. At the heart of the case is the estimated $20 billion-per-year agreement that makes Google the default search engine on Apple devices. According to Bloomberg, the lawsuit could unravel this arrangement, disrupting how iPhones and other Apple products handle search.
Nvidia’s CEO Jensen Huang warns of a ‘tremendous loss’ if U.S. firms lose access to China’s $50 billion AI market. Nvidia CEO Jensen Huang cautioned that U.S. chip controls could result in a “tremendous loss” if American firms are locked out of China’s booming $50 billion AI market. Huang's remarks come weeks after Nvidia acknowledged it would take a $5.5 billion hit from restricted sales to China. In an interview with CNBC, Huang emphasized that access to Chinese markets would drive job growth in the U.S. and warned that U.S. export controls risk pushing Chinese companies toward domestic alternatives like Huawei. During a surprise visit to China in mid-April, Huang described the nation as a “key market” for Nvidia, underscoring its strategic importance.
Singapore releases a blueprint for future AI Safety research that seeks to bridge the China-U.S. AI divide. The city state’s government released a global blueprint for AI safety, developed in collaboration with researchers from the US, China, and Europe who convened in Singapore in late April. The report aimed to find areas of consensus between AI researchers from different parts of the world and encourage cooperation on finding ways to avoid AI's biggest risks. The “Singapore Consensus” outlines several pillars for further research: understanding AI risks, improving safe design practices, and developing control methods for advanced systems. The report is meant to counter views of AI development as a zero sum game between the U.S. and China as well as counteract the shift away from a focus on AI safety and governance at international conferences such as the Paris AI Action Summit. You can read more from Wired here.
CrowdStrike to lay off 5% of staff, citing AI as a “force multiplier.” CrowdStrike announced plans to cut 500 jobs—about 5% of its global workforce—to streamline operations and boost efficiency. CEO George Kurtz said the decision reflects the company’s commitment to “move faster, operate more efficiently, and continue our cybersecurity leadership.” Kurtz highlighted that CrowdStrike’s investments in AI have been foundational to its strategy, noting that AI technology has “flattened the hiring curve” and accelerated product development. He added that AI drives efficiency across both customer-facing and internal operations, acting as a “force multiplier” for the business. The comments come as companies like Shopify and Fiverr have clarified in recent weeks that AI will replace new hiring.
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May 19-22: Microsoft Build, Seattle
May 20-21: Google IO, Mountain View, Calif.
May 20-23: Computex, Taipei June 9-13: WWDC, Cupertino, Calif.
July 13-19: International Conference on Machine Learning (ICML), Vancouver
July 22-23: Fortune Brainstorm AI Singapore. Apply to attend here.
Sept. 8-10: Fortune Brainstorm Tech, Park City, Utah. Apply to attend here.
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57 Million
That’s how many people’s anonymized medical records were used to train Foresight, a new AI model developed by researchers at UCL and King’s College London using data from England's National Health Service (NHS). This marks the first time an AI model has been applied to such a vast national health dataset, with the goal of predicting hospitalizations, heart attacks, and other conditions. However, NewScientist reported there are already concerns about people’s medical data privacy. The researchers insisted all records were “de-identified” before being used to train the AI, but there are known risks of someone being able to use patterns in the data to re-identify the records, particularly with large datasets.
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