Neither the US nor China can win the AI race alone, BofA analyst says

A Bank of America analyst has warned that neither the United States nor China can emerge victorious in the AI race without relying on other countries, as their global tech supply chains are deeply interconnected. Matty Zhao, co-head of China equity at Bank of America Global Research, noted that while China excels in power grids and manufacturing equipment, the nation still depends on overseas suppliers for advanced chips, memory, and certain high-end materials.

Conversely, the US faces its own challenges, including an aging power grid with an average age of 30 to 40 years compared to China's 15 to 20 years. The US also experiences significant political and community opposition to data centers due to concerns over escalating power costs.

Although power grid constraints may hinder US growth, China continues to require "breakthroughs" in high-end chips. Zhao emphasized that the AI race is not feasible for a single country to accomplish alone. She highlighted the strengths of other nations, such as South Korea's expertise in memory chips, Japan's leadership in high-end materials and copper foil, and manufacturing equipment. The US and China will undoubtedly need to collaborate with other countries, Zhao stated, predicting a mix of competition and cooperation.

This perspective precedes Chinese President Xi Jinping's upcoming meeting with US President Donald Trump in Washington, where AI is expected to be discussed alongside trade and other geopolitical matters. On the eve of the summit, US Treasury Secretary Scott Bessent and Chinese Vice-Premier He Lifeng agreed to establish a dialogue on AI and form a bilateral trade body following eight hours of negotiations in New York.

Bessent and US Trade Representative Jamieson Greer emphasized that these initiatives aim to strengthen the relationship between President Trump and President Xi and prepare for a successful summit on Thursday.

The diplomatic efforts come at a time of heightened technological skepticism between the world's leading AI powers. The US has frequently accused Chinese developers of leveraging capabilities from leading US models, while China has criticized calls to moderate frontier AI development as potentially reinforcing American dominance.

Despite this tension, both nations have sought to lessen their reliance on each other for critical technologies. Anthropic CEO Dario Amodei has called for the US government to implement stricter chip export controls on China, while China has encouraged domestic tech firms to utilize domestically produced semiconductors. Nonetheless, the necessary infrastructure for creating and utilizing advanced AI systems remains predominantly globalized, complicating the prospects for either country to achieve technological independence.