China’s technological advancements are rapidly closing the gap with the US in artificial intelligence (AI) and semiconductors, a US think tank warns. The Center for Strategic and International Studies (CSIS) claims that China’s startup DeepSeek has narrowed the US lead to just a few years.
DeepSeek’s R1 model recently sent shockwaves through the US tech industry, with investors questioning the billions of dollars invested in AI development. Despite this, CSIS director Gregory Allen argues that DeepSeek’s innovations are real and not propaganda. The think tank suggests that China’s chip industry still lacks domestic alternatives for key tools, restricting how quickly Chinese companies can produce advanced chips needed for AI applications.
The US fear that export controls may not be enough to maintain the lead over China in AI applications and semiconductors. CSIS alleges that Huawei has been using shell companies to acquire manufacturing capacity from Taiwan Semiconductor Manufacturing Company (TSMC), allowing it to access more than 2 million AI chip dies. This could ensure a regular supply of Huawei’s Ascend AI chips, used in DeepSeek’s R1 model.
Beijing is pushing the sector to produce domestic alternatives for advanced chipmaking equipment. CSIS warns that this combination of efforts – including chip smuggling and state-driven initiatives – poses a formidable challenge to the US lead. The think tank suggests that Huawei may be aided by DeepSeek’s open-source community enthusiasm, making it harder for Nvidia to compete with its AI software.
The gap between the US and China in AI is narrowing significantly, and it is unrealistic to expect a lead of more than a year or two, even with aggressive export controls.
Source: https://fortune.com/asia/2025/03/10/deepseek-china-ai-us-lead-narrowed-csis-huawei