China’s Next AI Shock Is Hardware

China's advancements in AI hardware and its implications for the global AI race are examined. Despite U.S. restrictions on chip exports to China, companies like Huawei and Cambricon are rapidly developing domestic chip capabilities, supported by substantial government incentives. Naveen Rao, founder of Unconventional AI, discusses China's strategy of using less advanced but readily available chips in large quantities, combined with efficient software optimization, to achieve competitive AI model performance. While the U.S. still leads in cutting-edge chip technology, China's focus on energy efficiency, central planning, and a growing pool of talent pose a significant challenge. The global adoption of Chinese open-source AI models, particularly in regions outside the U.S., indicates a shift towards more economical and accessible AI solutions.