Agencies
In 2024, the fierce competition between the United States and China for technological supremacy took center stage, with a particular focus on strategic sectors such as artificial intelligence (AI), semiconductors and clean energy technologies.
In the startup ecosystem, the race for dominance saw both the U.S. and China investing heavily in AI and semiconductor technologies, while in Europe, 70% of total investment deals were concentrated in Germany, France and the United Kingdom.
Meanwhile, China is concentrating on developing generative AI and language models, with Baichuan AI standing out after raising $688 million in a Series A round, highlighting China’s AI-centric growth strategy. Technology giants Alibaba and Tencent are investing in cloud and AI-based applications across healthcare, fintech and e-commerce.
Semiconductor war intensifies
The need for powerful computer chips required by AI applications has intensified the semiconductor rivalry.
U.S. giants like NVIDIA dominate AI-powered chips, while China, through companies like SMIC and Huawei, strives to reduce dependence on the U.S.
The U.S. collaborates with European companies, such as the Dutch ASML, for semiconductor production and development, expanding its local manufacturing capacity. The federal support initiated by the CHIPS Act (2022) has strengthened companies like Intel, AMD and Qualcomm, with expectations of continued similar policies under President-elect Donald Trump.
Despite U.S. sanctions, China is boosting its domestic production capacity, with SMIC achieving significant progress by reaching 7 nm chip production and Huawei making bold strides in developing its chip technology.
Control of precious metals and clean energy
While Huawei’s rise as a competitor to Apple in smartphones has been curbed by ecosystem strength and operating systems, its presence in the automotive industry continues to grow.
U.S. export controls limit China’s access to technology, prompting China to establish new supply chains.
The U.S. is increasing investments in renewable energy storage, battery technologies and hydrogen energy. Electric vehicle maker Tesla reinforces U.S. leadership with energy storage systems and battery innovation. The Inflation Reduction Act (IRA) has accelerated clean energy investments in the U.S. with substantial incentives.
China leads globally in solar panel production and lithium battery technologies, producing over 70% of the world’s solar panels. Contemporary Amperex Technology (CATL) is the world’s largest producer of lithium-ion batteries, leading the market with cost-effective production.
The U.S. increases investments in lithium mining and domestic battery production, with IRA incentives potentially challenging China’s global market dominance.
AI as critical technology
As noted in Goldman Sachs’ AI blog, “While the United States, China and Russia may not agree on many things, they all agree that AI can reshape power balances.”
This view is supported by the AI Now research institute, which states, “AI is now positioned as a critical strategic technology for the geopolitical and economic goals of nation-states.”
The AI race is particularly intriguing due to the stark contrast in the two superpowers’ approaches to technological innovation.
China follows a strategy characterized by central planning, with direct state funds allocated to specific AI projects and the development of national computing centers. Conversely, the U.S. relies heavily on private enterprises utilizing open-source models.
U.S. government support has remained relatively modest, and export controls on the sector were limited until
recently.
