China's investment in artificial intelligence is falling sharply behind the United States and Taiwan, a gap that could undermine its global tech ambitions, according to Chris Miller, author of the book 'Chip War'. The disparity, Miller argues, is not just about money—it's about the semiconductor supply chains that power AI systems.
Where the spending gap shows
Miller points out that the US and Taiwan have poured billions into AI research, development, and infrastructure, while China's outlays have grown more slowly. Taiwan, home to TSMC, the world's leading chipmaker, has a unique advantage: its semiconductor foundries are essential for producing the advanced processors that train and run large AI models. The US has its own strengths, including dominant cloud computing platforms and a deep pool of AI talent. China, despite its ambitions, lacks an equally integrated ecosystem.
Why semiconductors matter
The heart of AI competition is the chip. Without access to cutting-edge fabrication, Chinese firms must rely on older or less efficient hardware, which can slow model training and limit performance. Miller's analysis in 'Chip War' stresses that control over chip manufacturing gives the US and Taiwan a structural edge. Even if China invests heavily in AI software and algorithms, the hardware bottleneck remains a serious constraint.
A question of competitiveness
Chinese tech companies like Baidu, Alibaba, and Tencent have rolled out their own AI products, but they often depend on chips sourced from overseas. US export restrictions on advanced semiconductors have made that harder. Miller suggests that without a comparable domestic chip industry, China's AI sector will struggle to match the pace of innovation seen in the US and Taiwan. The result could be a widening gap in everything from generative AI to autonomous systems.
Chinese officials have poured resources into self-sufficiency, but building a world-class semiconductor supply chain takes years—or decades. Taiwan's foundries, after all, were not built overnight. The US, through the Chips Act, is also boosting domestic production. China's path forward is uncertain.
What remains unresolved is whether Beijing can accelerate its spending fast enough to close the gap, or whether the structural advantages of the US and Taiwan will prove insurmountable. Miller's assessment offers a stark warning for a country that wants to lead the world in AI.
