Who will win the AI race? If you ask NVIDIA CEO Jensen Huang this question, he said China will win it and beat the US. This is according to the answer he gave in an interview with the Financial Times.
The factors driving this success are lower energy costs and the lack of regulations on AI development in China. This week China was reported to be offering a 50% energy discount if local companies use locally made AI chips and not buy NVIDIA chips. Trump was also quoted as saying that NVIDIA's most powerful Blackwell chip should not be sold to other countries and instead be given to local companies first.
The barrier for Chinese companies to buy NVIDIA's most powerful chips was introduced by President Biden to ensure that the US advantage in AI technology would not be challenged. Many thought this would cripple China's capabilities but the opposite happened.
The Chinese government is making huge investments in the local semiconductor sector. Huawei and Cambricon chips can now be offered to customers. In terms of processing power, it is said to be comparable to NVIDIA's, only with higher energy consumption. With government subsidies, this is no longer an issue.
China has also chosen a different approach to AI development than America. While America develops and deploys more powerful chips every year, Chinese scientists like those at DeepSeek and Alibaba Cloud are developing more optimized AI training techniques. Alibaba Cloud, for example, reduced the use of NVIDIA GPUs by up to 82% to train models.
