Is cheap energy the key to China gaining AI supremacy?

Subscribe to enjoy similar stories.Artificial intelligence is like a cake, says Jensen Huang, the boss of Nvidia, a chipmaker. ai applications, such as chatbots, are at the top. The next layer down is software, like the large language models (llms) on which chatbots run.

Then comes hardware, the semiconductors needed to train the models. This spring China’s ai firms are busy baking all of these layers. ByteDance, the company behind TikTok, has unveiled a slick new video-generation app.

DeepSeek, a flashy startup, is due to release a powerful new llm. And Huawei, China’s tech champion, will unveil a new ai chip.Though these firms keep China in the ai race with America, they are not pushing it into the lead. But there is another layer of Mr Huang’s cake that goes underneath all the others, and that is energy.

Semiconductors require vast amounts of it to run the trillions of calculations behind the ai models. And China’s electrical grid has far more cheap power than the West. This disparity is known as the electron gap.

Can China use it to achieve ai supremacy?American companies seem spooked at the prospect. Sam Altman, the boss of OpenAI, has predicted the cost of ai will “eventually converge with the cost of energy”. In October his firm warned that China’s power advantage could “put us leadership [in ai] at risk”.

The following month Mr Huang predicted that China “will win the ai race” for the same reason. In January Elon Musk, who owns xAI, another ai company, said that “based on current trends, China will far exceed the rest of the world in ai compute” because of its grid.ai companies are increasingly worried about access to energy. They are building ever bigger and more power-hungry data centres to support smarter