On Wednesday, Nvidia Corporation (NASDAQ:NVDA) CEO Jensen Huang warned that China is poised to surpass the U.S. in artificial intelligence development, citing cheaper energy and looser regulations that give Beijing an edge.
China's AI Advantage: Cheaper Power And Government Support
Speaking on the sidelines of the Financial Times' Future of AI Summit, Huang told the publication that China will win the AI race.
He cited Beijing's subsidized electricity and streamlined regulations that make AI development more cost-effective.
The Nvidia CEO contrasted this with Western countries like the U.S. and U.K., which are being held back by "cynicism" and a growing wave of AI rules.
Huang also highlighted that Chinese tech giants, including ByteDance, Alibaba Group Holdings (NYSE:BABA) and Tencent Holdings (OTC:TCEHY), benefit from energy subsidies that made it cheaper for domestic tech firms to operate AI systems powered by Chinese-made chips instead of Nvidia's.
See Also: Palantir Could Be Nvidia’s Fastest Route To $500 Billion In AI Software — Cathie Wood Saw It Coming
US Chip Restrictions And Trump's Stance
The comments come days after President Donald Trump confirmed that the U.S. would not allow China access to Nvidia's most advanced Blackwell AI chips.
“Will not let anybody have them other than the United States,” Trump told CBS during an Oct. 31 interview.
Despite the restrictions, Nvidia and Advanced Micro Devices, Inc. (NASDAQ:AMD) have agreed to pay the U.S. government 15% of Chinese revenues from existing AI chips tailored for the Chinese market.
However, full regulatory approval for these sales has not yet been finalized.
China Bans Foreign AI Chips In State-Funded Data Centers
Meanwhile, Beijing has reportedly ordered a ban on foreign AI chips in state-backed data centers, escalating the U.S.-China tech war.
China now reportedly requires all new state-funded data center projects to use only domestically made AI chips. The directive applies to facilities less than 30% complete, which must remove or forgo foreign chips, while near-finished projects will be reviewed individually.
Separately, reports indicate China has increased subsidies for major data centers, cutting energy costs by up to 50% to bolster homegrown chipmakers and boost global competitiveness.
Nvidia shares fell 1.75% on Wednesday but rose 0.56% in after-hours trading. Benzinga's Edge Stock Rankings highlight the stock's strong Momentum, Growth and Quality, with a sustained upward trend across short, medium and long-term time frames. Click here to see how it compares with peers and competitors.
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