China is winning one AI race, the US another – but either might pull ahead

The AI Arms Race: China and the US Compete in Different Spheres

During the latter half of the 20th century, the focus of global rivalry shifted to nuclear capabilities, as top minds in the US and Soviet Union vied for supremacy. Today, the competition unfolds across research labs, university halls, and start-up offices, with the US and China locked in a contest to master technology—specifically artificial intelligence. This race, however, is not about the same things. While the US excels in algorithmic innovation, China leads in physical applications, such as robotics.

Brains vs. Bodies: The Dual Fronts of AI Competition

Nicholas Wright, a cognitive neuroscience researcher at University College London, frames the contest as a clash between “brains” and “bodies.” The US, with its dominance in chatbots, microchips, and large language models (LLMs), holds the edge in software-driven AI. Meanwhile, China’s expertise in robotic systems, particularly humanoid robots that mimic human forms, gives it an advantage in hardware-based advancements. Yet, neither side can be certain of long-term dominance, as both seek to outpace the other in this evolving arena.

On 30 November 2022, OpenAI unveiled ChatGPT—a groundbreaking LLM capable of conversational interaction. Bloomberg’s Parmy Olson, in her book *Supremacy: AI, ChatGPT, and the race that will change the world*, describes the immediate impact: “People flooded social networks with posts celebrating the new text box that emerged online.” This marked the rise of AI “brains” as a critical global asset. Experts now widely acknowledge the US’s lead in this domain, with over 900 million weekly users of ChatGPT alone.

Microchips: The Hidden Weapon in the AI Race

Despite its software prowess, the US’s strategic edge hinges on hardware. According to a senior US official speaking to the BBC, the nation’s advantage lies in microchip technology, which powers the computational engines behind LLMs. Most of these high-end chips, essential for Silicon Valley’s AI development, are controlled by American firms. Nvidia, a California-based company, designs the majority, and by October 2022, it had reached a valuation of $5 trillion—potentially making it the most valuable corporation in history, as noted by Stephen Witt in *The Thinking Machine*.

The US enforces strict export regulations to limit China’s access to these critical components. While the policies trace their roots to the 1950s, they were intensified in 2022 under President Joe Biden as the AI race intensified. Even though many chips are manufactured in Taiwan—a US ally—Washington ensures they rarely reach Chinese hands. This is achieved through the “foreign direct product rule,” which compels foreign firms to comply with US standards if their products involve American technology. The proximity of Taiwan Semiconductor Manufacturing Corporation’s plants to mainland China underscores the geopolitical stakes.

China’s challenge in producing its own advanced chips remains significant. The country lacks the infrastructure and expertise to rival the US in semiconductor design, despite its rapid technological growth. As the race continues, the question of who controls the future of AI—and its economic and military implications—remains unresolved.