China spends big on AI

In the first half of 2024, capital spending on AI infrastructure by the Chinese tech giants Alibaba, Tencent, and Baidu doubled year-over-year to about $7 billion. The spending spree reflects a thirst for artificial intelligence despite ever-stringent US regulations limiting their access to powerful chips, data centers, and AI models. TikTok parent company ByteDance and an AI startup called Moonshot are also boosting their spending.

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Much of China’s AI industry is reliant on low-grade chips from US chipmaker Nvidia, which is barred from selling its top models because of US export controls. (For more on the US-China chip race, check out GZERO AI’s interview with Trump export control chief Nazak Nikakhtar from last week’s edition.)

The US government’s homegrown chip advantage is now a crucial asset in its ongoing rivalry with its Chinese counterparts — and may only be strengthening as the Biden administration considers additional measures to curb China’s access.