China's AI Chip Ambitions Clash with US Power Needs: Divergent Paths Emerge

China’s government-led push into artificial intelligence (AI) contrasts with the US’ private sector-led approach, with the world’s two largest economies advancing along divergent paths, according to China International Capital Corp (CICC). Chinese investments in AI had focused on underlying technologies, including advanced semiconductors, to address a shortage of computing resources resulting from the country’s restricted access to advanced chips, the state-backed investment management firm said in a research note on Tuesday. Meanwhile, the US has prioritised building data centres and energy infrastructure to meet the electricity demand needed to power them. The divergent investment focus of the two countries, which had locked horns in a heated global AI arms race, stemmed from differences in funding sources, among other factors, including gaps in chip and AI infrastructure, according to CICC. Last year, US venture capital investment in AI reached US$175 billion, nearly 30 times China’s US$6 billion in the same period, while Big Tech spending in the US was six times that of Chinese tech giants, according to the CICC note, citing data compiled by investment consultancies Pitchbook and FactSet. Overall, China’s private and state-funded AI outlays totalled US$165 billion in recent years, lagging the US$563 billion from US companies and government.