Energy, Industry and AI - The New Axes of China-US Tech Competition

Talal Abu-Ghazaleh

The global struggle for semiconductors’ dominance is not just about computing power; it is a battle for preeminence in the 21st century. Semiconductors power the world’s most advanced AI, determines military prowess, fuels economic growth, and cements global influence. For decades, the US had dominated semiconductor design and manufacturing. Now, as China rises, the US is using that advantage to bar the way, imposing restrictions that it believes will keep China’s leaders from reaching technological parity. Beijing got the message and redoubled its effort to achieve semiconductor self-sufficiency, investing hundreds of billions of dollars in domestic design, fabrication, equipment, and packaging.
China is already the world's leading supplier of 'backbone' or legacy integrated chips such as those found in cars, industrial plant, power systems and other essential consumer electronics. These chips may not be the most exciting area of technology, but they are fundamental to the ongoing functioning of the global economy and China's capacity to supply them at a scale that is starting to have a profound impact on both prices and supplier ecosystems around the world. This is a demonstration of industrial strength and national planning, as well as a reminder that technological power is not defined only by leading, it is defined by the ability to supply the world with what it needs at scale.
Chinese semiconductor manufacturers are continuing to develop advanced semiconductor processing technology despite US sanctions and restrictions to the most advanced US manufacturing tools and technologies. Although it could be said that Chinese semiconductors lag behind the US, Taiwan and South Korea, they are still good enough to power modern devices and support the deployment of AI systems. History shows that once a nation commits itself to technological independence, the direction becomes irreversible.
China’s focus has shifted from dominating the advanced semiconductor chips sector to creating integrated computing ecosystems, where chips are only one piece of the equation. Their focus is on building practical AI that serves industry, government and society, on a totally Chinese built technology stack. This approach reduces dependence on the US and aligns with the needs of the Global South, where cost, accessibility and reliability matter more than theoretical performance. Chinese AI platforms are gaining market share across developing regions, and this trend will continue as long as they offer solutions that are affordable and effective.
The US seems to be facing its own challenges when attempting to build powerful AI systems, which require enormous energy, where its power grid is already under great strain. It first needs to overcome some structural issues. Building these systems requires large amounts of energy to run them, and the US is already struggling to keep up with the power demands of its data centers. Analysts warn that American data centers may soon be limited not by chip supply, but by the availability of electricity.
By contrast, China is ramping up energy capacity at a pace and scale that will allow it to power data centers with its current, less efficient AI chips. The Chinese are focusing on this and on improving the efficiency of AI algorithms to make them less compute-heavy and resource-hungry. Cheap and abundant energy becomes a vital compensating advantage and strengthens China’s position in the global AI race. This is a reminder that technological leadership is the result of an entire ecosystem that includes chips, energy, infrastructure, manufacturing, research and national strategy.
I see that the world is moving toward a bipolar global system in which two separate technological ecosystems emerge, one Chinese and the other American, each with its own standards, supply chains and spheres of influence. This shift confirms that resilience, self‑reliance and long‑term planning are the true determinants of technological leadership. Those who build their capabilities, establish their own technology ecosystems, solve the energy dilemma and move strategically will shape the future and lead the world.