Who Will Win AI Arms Race Between US and China?

Last Updated on March 11, 2024 by SPN Editor

The AI arms race has become a prominent trend, with the United States and China vying for supremacy in the field of artificial intelligence.

These two global superpowers are engaged in fierce competition across various fronts, from intellectual expertise to the design of AI hardware and software, as well as access to the essential raw materials that fuel AI systems. Both nations are leveraging government subsidies to drive innovation in this domain.

At present, the US enjoys a significant advantage in the development of generative AI systems, particularly large language models (LLMs). These LLMs, like OpenAI’s ChatGPT, utilize existing data to create chatbots and other applications. Additionally, the US has the ability to impose export restrictions on high-performance semiconductors produced by companies such as Nvidia, which are in high demand globally. This strategic move currently prevents China from achieving the same level of sophistication in LLM development.

China, however, is not backing down. It has implemented its own strategies, including restricting the export of chipmaking metals like gallium and germanium to the US. Furthermore, China is reportedly establishing a substantial $27 billion chip fund to support its major AI projects.

Recently, the competition escalated when the US Justice Department revealed an indictment against a Chinese national and former Google AI software developer. The individual was charged with stealing 500 confidential files containing code used by Google’s supercomputing data centers to train LLMs. Shockingly, after the theft, the defendant began working simultaneously for rival companies in China.

FBI Director Christopher Wray emphasized that these charges highlight the lengths to which affiliates of Chinese-based companies are willing to go in their pursuit of American innovation.

The AI arms race for global AI supremacy has been a focal point of discussion during the recent Web Summit’s annual technology conference in Doha, Qatar. Investors and tech executives from around the world gathered to explore the future of artificial intelligence.

Acknowledging the current landscape, AI leaders from both the public and private sectors recognize that the United States and China hold dominant positions in the AI arms race. These two nations currently occupy the top spots in Tortoise Media’s Global AI Index, which evaluates countries based on their AI investments, innovation, and implementation.

However, this contest won’t be a straightforward sprint. As Frank Long from Goldman Sachs’ office of applied innovation aptly puts it, “It’s not just about one person or one country; it’s a full-stack competition.” This AI arms race extends beyond mere talent—it encompasses energy resources, computing power, data availability, and model development crucial for AI systems.

Interestingly, Goldman Sachs identifies certain geopolitical “swing states” as potential game-changers. Countries like the United Kingdom, the United Arab Emirates (UAE), Israel, Japan, the Netherlands, and South Korea are strategically positioned to harness AI technology and foster international alliances.

Other Nations in the AI Arms Race

Beyond China, other Asian nations already possess advantages. Taiwan, for instance, hosts the cutting-edge semiconductor manufacturer Taiwan Semiconductor Manufacturing Company (TSM), responsible for producing 90% of the world’s most advanced semiconductors and 68% of semiconductors globally.

Meanwhile, Japan and South Korea boast leading semiconductor manufacturing and design firms. These countries are ramping up government funding to propel AI advancements. Japan’s 2023 budget allocates $13 billion to AI technology (up from $8.6 billion in 2022), while South Korea commits a staggering $470 billion over the next 23 years to establish the world’s largest semiconductor manufacturing hub.