Chinese AI leaders say innovation can close U.S. gap but chip tools remain the choke point

China can close the technology gap with America, driven by more risk-taking and fresh ideas, but the country still lacks the advanced equipment needed to make cutting-edge chips. That’s what leading Chinese AI researchers said Saturday.

Two big Chinese AI startups, MiniMax and Zhipu AI, had strong debuts on the Hong Kong Stock Exchange this week. Investors seem confident in the sector as Beijing fast-tracks AI and chip listings to build homegrown alternatives to advanced US tech.

Chipmaking equipment shortage holds back progress

Yao Shunyu used to work as a senior researcher at OpenAI, the company that makes ChatGPT. Tencent named him their chief AI scientist last December. Yao thinks there’s a good chance a Chinese firm could become the world’s top AI company in three to five years. But he says not having advanced chipmaking machines is the biggest technical problem.

“Currently, we have a significant advantage in electricity and infrastructure. The main bottlenecks are production capacity, including lithography machines, and the software ecosystem,” Yao told an AI conference in Beijing.

China finished building a prototype of an extreme-ultraviolet lithography machine last month, Reuters reported. It might eventually make semiconductor chips that rival what the West produces. But the machine hasn’t produced working chips yet. People familiar with the matter told Reuters it probably won’t until 2030.

Yao and other Chinese industry leaders at Saturday’s Beijing conference admitted the US still has an edge in computing power. That’s because of heavy investments in infrastructure.

Limited resources push firms to find creative solutions

Lin Junyang is the technical lead for Alibaba’s flagship Qwen large language model. He explained the difference in scale. “The U.S. computer infrastructure is likely one to two orders of magnitude larger than ours. But I see that whether it’s OpenAI or other platforms, they’re investing heavily in next-generation research,” Lin said.

He spoke at a panel discussion during the AGI-Next Frontier Summit. The Beijing Key Laboratory of Foundational Models at Tsinghua University held the event. “We, on the other hand, are relatively strapped for cash; delivery alone likely consumes the majority of our computer infrastructure,” Lin added.

Lin says China’s tight budget has actually pushed researchers to get creative. They’ve focused on algorithm-hardware co-design, which lets AI firms run large models on smaller, cheaper hardware.

Tang Jie founded Zhipu AI, which raised HK$4.35 billion in its IPO. He pointed to something new happening with younger Chinese AI entrepreneurs. They’re willing to take on high-risk projects now. That’s usually been a Silicon Valley thing, and Tang sees it as good news.

“I think if we can improve this environment, allowing more time for these risk-taking, intelligent individuals to engage in innovative endeavors … this is something our government and the country can help improve,” Tang said.

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