On Labs and Fabs: Mapping How Alliances, Acquisitions, and Antitrust are Shaping the Frontier AI Industry

Abstract: As frontier AI models advance, policy proposals for safe AI development are gaining increasing attention from researchers and policymakers. This paper explores the current integration in the AI supply chain, focusing on vertical relationships and strategic partnerships among AI labs, cloud providers, chip manufacturers, and lithography companies. It aims to lay the groundwork for a deeper understanding of the implications of various governance interventions, including antitrust measures. The study has two main contributions. First, it profiles 25 leading companies in the AI supply chain, analyzing 300 relationships and noting 80 significant mergers and acquisitions along with 40 antitrust cases. Second, we discuss potential market definitions and the integration drivers based on the observed trends. The analysis reveals predominant horizontal integration through natural growth rather than acquisitions and notable trends of backward vertical integration in the semiconductor supply chain. Strategic partnerships are also significant downstream, especially between AI companies and cloud providers, with large tech companies often pursuing conglomerate integration by acquiring specialized AI startups or forming alliances with frontier AI labs. To further understand the strategic partnerships in the industry, we provide three brief case studies featuring companies like OpenAI and Nvidia. We conclude by posing open research questions on market dynamics and possible governance interventions, such as licensing and safety audits.