China's Major Assets in the AI Competition with the U.S.: Large Huawei Chip Clusters and Affordable Energy

China's AI Development: Despite U.S. restrictions on advanced semiconductors, China continues to advance in AI by utilizing homegrown chips and leveraging its abundant cheap energy, particularly through Huawei's chip clusters.

Huawei's Strategy: Huawei's approach involves connecting multiple Ascend chips to create high-performance clusters that can rival Nvidia's systems, although this results in higher power consumption.

Energy Advantage: China's investments in renewable and nuclear energy provide a cost-effective solution for powering large-scale AI infrastructure, allowing it to offset the inefficiencies of using less advanced chips.

Semiconductor Challenges: While China is striving for self-sufficiency in semiconductor production, it faces significant challenges due to export controls limiting access to advanced manufacturing technologies, hindering its ability to keep pace with global leaders like Nvidia and TSMC.