How Can China Win the AI Race Against the US?

Market Dynamics & Capital Allocation - High CapEx intensity in artificial intelligence makes capital access a critical swing factor [1] - Passive vehicles account for 60% of US investing, while quantitative funds drive 75% of trading volume [3] - Long-term investors focus on foundational business attributes and innovation horizons spanning 5 to 10 years rather than quarterly changes [3][4] Semiconductor Industry & Semiconductor Barriers - Non-US artificial intelligence supply chain opportunities remain heavily concentrated in chip manufacturers such as TSMC, ASML, and SK Hynix [6][8] - TSMC holds an effective monopoly at the leading edge of chips, protected by high capital requirements for advanced node fabs and decades of accumulated process knowledge that export controls prevent competitors from replicating [6][7] - SK Hynix derives a growing proportion of revenue and earnings from high bandwidth memory, a complex product that competitors like CXMT struggle to manufacture due to equipment limitations [7] Non-Semiconductor Artificial Intelligence Opportunities - Shopify utilizes AI to manage shopping journey complexity, achieving 2 times higher order conversion using verified catalog metadata compared to scraped website data [9][10] - MercadoLibre drives strong gross merchandise volume and user growth by lowering shipping requirements and merchant take rates while increasing internal code deployment by 75% with reduced rollbacks through AI integration [11][12]