Stack battles: the US-China artificial-intelligence rivalry is moving beyond chips alone
Stack battles: the US-China artificial-intelligence rivalry is moving beyond chips alone
Publish Date: 2026-06-22 03:06:00
Source Domain: www.bruegel.org
- The United States, with companies like Nvidia leading, retains a significant advantage over China in the AI hardware stack, particularly in semiconductors and computing capacity.
- China’s Huawei poses the strongest foreign challenge to the US dominance in AI chip technology but has struggled to match US chip performance.
- Beijing is heavily supporting domestic chipmakers like Huawei through subsidies and procurement preferences to close the hardware gap, while also challenging US export controls diplomatically.
- Nvidia leads not just in hardware but also in proprietary software, CUDA, which creates strong network effects and maintains a dominant software ecosystem for AI development.
- Huawei has launched initiatives to create competitive software alternatives to CUDA, including open-sourcing the CANN toolkit and developing PyTorch compatibility to reduce switching costs.
- While significant progress is evident in China’s efforts to catch up in software, substantial challenges remain, including usability issues with CANN and the vast amount of CUDA-optimized code.
- Europe lacks a significant presence in both AI chip design and the critical software layer, relying instead on being an input provider rather than a competitor in the global AI race.
- European policymakers must consider targeted strategies to close the compute gap and leverage their strengths in open-source and vertical specialization to regain competitiveness in the AI ecosystem.
