China's lesson for the US: it takes more than chips to win the AI race

Core Insights - The AI competition between China and the US is increasingly characterized by "hyperscalers," the largest tech companies with extensive capabilities across the AI stack, with estimates suggesting over US$400 billion in collective spending on AI infrastructure this year [1][5][11] - The focus of the AI race has shifted from merely developing foundational models to encompassing hardware, algorithms, and applications, indicating a more comprehensive approach to AI development [3][19] - Alibaba aims to become the "world's leading full-stack AI service provider," with significant investments in AI infrastructure and a clear roadmap towards artificial superintelligence (ASI) [6][7][32] Investment and Market Dynamics - US and Chinese tech giants are making substantial investments in AI, with the US leading in foundational model development and China focusing on practical applications and integration with existing industries [8][19][27] - The spending disparity between US and Chinese firms is notable, with Alibaba's three-year spending pledge being less than what any of the top three US hyperscalers spend annually [14][24] - OpenAI's valuation has reached US$500 billion, while leading Chinese AI start-ups have significantly lower valuations, indicating a gap in perceived market value [15] Technological Advancements - China leads in industrial robot installations, with over 2 million active robots, and is rapidly advancing in the humanoid robot market [20][21] - The Chinese government is promoting "embodied intelligence" as a key future industry, with substantial funding directed towards robotics and AI integration in various sectors [21][22] - Chinese AI models are performing competitively on global leaderboards, particularly in image and video generation, often at lower training costs compared to US counterparts [26][28] Strategic Collaborations and Ecosystem Development - A self-sufficient AI ecosystem is emerging in China, with collaborations among local tech firms to reduce reliance on US technologies [29][30] - The US government is considering broader chip export controls to limit China's access to advanced technologies, which is seen as crucial for maintaining a competitive edge in AI [31] - Both countries are recognizing the importance of AI applications in hard technology, with US firms ramping up efforts in robotics and AI applications [22][30]