A Coming "Tidal Wave" of Chinese AI Chips? How a Chinese AI Stack Might Compete Globally with the US

You guys recently published a really fascinating new report titled Voltcraft Industrial Competition in the Age of AI about the rise of compute as a powerful force in geopolitics and how the US and China are rushing to build up compute capacity.

What's the main thesis of your report?

I think it's hard to distill into one thesis.

We kind of ended up writing a few papers in one.

But just to hit the high notes, it's like a 50-page compendium.

We find a few things.

First of all, the US-led chipmaking ecosystem is currently the undisputed provider of global compute.

I think most people understand that.

And we model out exactly when and why global demand for AI accelerators will soon exceed supply if it hasn't already.

Then we also find, on the other hand, that despite massive constraints on China's ability to make AI chips in terms of access to advanced memory, access to advanced packaging capacity, we do expect that Chinese chip making companies are going to rapidly scale up their production over the next two to three years.

That leaves us with a pretty narrow window where the United States is effectively the world's sole provider of compute.

Time is waning.

The question is when exactly industry analysts expect certain production factors to scale up in China.

Yeah, so I would say that our analysis really kind of hinges on a few factors.

First of all, there is the access to advanced packaging and memory for Chinese chips.

There is just the changes in chip architectures.

There is the allocation of advanced SMIC logic manufacturing allocation to smartphones versus AI chips.

And that really takes up a lot of the higher, the advanced nodes of SMIC.

And based on how Chinese companies adjust these factors, in addition to their yield rates that they advance with better and better processes and iteration, that allows Chinese companies to grow rapidly.

We looked at Huawei specifically, but even outside of Huawei, this allows Chinese chip production to scale rapidly.