&imwidth=800&imheight=600&format=webp&quality=medium "AI revolution: Is China at an advantage against the US? Report makes big claims")
Jefferies, a US-based investment company, said in its latest report that it favours the Chinese approachto artificialintelligence rather than the US approach. It noted that China has structural advantages in energy capacity, and its open-source model is driving innovation.
Entrepreneurs will develop targeted and cost-effective AI use cases using China's open-source approach to the novel technology, the report added.
"The open-source model should lead to an inference boom as entrepreneurs come up with targeted cost-effective use cases for AI," it said.
China at an advantage against the US?
China has a massive advantage over the United States when it comes to cheap energy. AI data centres and other computational infrastructure have massive energy requirements, and AI pioneers have been pushing governments to meet their energy needs.
China's power generation capacity increased by 426 GW in 2024. On the other hand, the US electricity generation capacity's net addition, accounting for new installations minus retirements, was only 30 GW.
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"China has a massive advantage in terms of its access to almost unlimited cheap energy," it said.
The report also predicted that the AI capital expenditure (capex) boom will likely lead to a phase of massive over-investment in data centers and related infrastructure.
"AI capex mania will culminate in massive over-investment in data centers and the like as the Big Tech players feel compelled to participate for fear of being disrupted," the report stated.
The report said that it is unclear who will emerge as the winner of the AI race. It also noted that no "killer app" has yet been developed for the masses that could define the practical application of AI.