- China is mostly world-class in AI, but it’s still dependent on US chipmakers, Wall Street analysts who recently toured the country said.
- China has a huge leads the US and Europe in user data access due largely to more restrictive data collection rule in the west.
- But China will likely depend on US processors at least in the next 5 years, although the analysts cited efforts to close that gap long-term.
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China is fast emerging as a powerhouse in artificial intelligence, but it’s still heavily dependent on US processors that are key to building AI systems, according to Wall Street analysts who recently toured the Asian nation.
There’s been heightened interest in China’s bid to dominate AI, which is seen as the next battleground in global tech. and especially in light of growing trade tensions with the US. The dispute escalated recently with the Trump administration’s ban against US companies doing business with Chinese tech giant Huawei. But there have been signs that the restrictions could be eased, underscoring how the interconnectedness of the US and Chinese tech industries.
“When we look at China’s AI capabilities, we see it as mostly world class but the weakest area is in semiconductors,” UBS analysts led by Bill Lu told clients in a note.
China “could achieve global leadership by 2030,” they added, noting that the Asian country “was strongest in the collection of real world data.”
China is outpacing the US when it comes to access to huge amounts of user data which are key to building robust AI systems. That lead is largely based on restrictive laws when it comes to data collection in the US and Europe, the analysts found. The UBS analysts cited the city of San Francisco which has just banned the use of facial recognition.
But China still has a lot of catching up to do on semiconductors where US companies, such as Intel, Nvidia and AMD, have long enjoyed a commanding lead.
“There is essentially no path to replace US semiconductors in the next five years,” the UBS analysts said.
But China is clearly eyeing to close that gap, they added.
“Longer-term, efforts are underway to internally develop chips. We are told that there are now over 100 chip design companies, up from roughly 50 a year ago.”
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