China plans for 50% boost in computing by 2025

China is aiming to ramp up its computing capacity by 2025
China seeks to advance by investing in computing power, particularly AI, while focusing on memory storage, data networks, and data centres

Several key ministries in The People's Republic of China have announced their intention to boost the country's computing power by 50% before 2025. This move is aimed at keeping pace with the United States in the fields of artificial intelligence (AI) and supercomputing applications.

In the country’s bid to be a global leader in AI by 2030, China is aiming to ramp up its computing capacity to reach 300 exaflops (or EFLOP which refers to a unit of computing power). This represents a substantial increase from its current computing power of 197 exaflops. For context, one exaflop is the equivalent of the computing power of two million mainstream laptop computers, according to Counterpoint Research.

Boosting computing power is regarded as key for supporting the advancement of artificial intelligence, as this field relies on advanced semiconductors for processing huge amounts of data.

In an email to CNBC, Akshara Bassi, Senior Research Analyst at Counterpoint, says: “China has found that traditionally, every 1 yuan invested in computing power has driven 3-4 yuan of economic output.

The investments echo China’s plans to drive economic output through leadership in technology prowess and integrating AI with existing technologies and solutions across all industries and domains.”

The tech battle between China and the US

As previously announced in August 2023 by US President Biden, the order to place limitations on US investments in The People’s Republic of China was designed to restrict the country from further development of surveillance technologies, that the US government considers a threat to national security.

The order, aimed at tightening regulations within the Chinese AI, semiconductor, and quantum computing industries, would undoubtedly have a significant effect on global business collaborations, as other nations have voiced concerns that severe restrictions could potentially damage their economies.

Technologies, such as semiconductors and AI, have become prime battlegrounds in the tech rivalry between the U.S. and China.

“China aims to invest in growing in its computing power, especially the AI, as it sees its major cloud providers launching AI solutions en masse for consumers and enterprises,” Bassi states.

As part of the drive to enhance computing capabilities, China aims to focus on areas such as memory storage and data transmitting networks, along with building more data centres. These developments are essential for cloud computing providers to grow their footprint, as many AI applications are currently sold through cloud computing services, including those provided by major Chinese companies like Alibaba and Tencent.

China will continue to advance and its supply chain strengthen

China’s technology supply chain has faced increasing challenges in recent years as the US has used export controls and other sanctions to attempt to cut the Asian nation off from critical technologies, such as microchips. In response, China has endeavoured to boost the capabilities of its homegrown industries in some of these areas.

In a recent development, Washington took note as well-known Chinese tech company  Huawei released a new smartphone with a 5G chip. This was unexpected since US sanctions were specifically designed to stop this.

Counterpoint’s Bassi says China’s ambitions to boost computing power could be held back by US sanctions that restrict the country’s access to some critical semiconductors, such as the graphics processing units, or GPUs, sold by American chip designer Nvidia.

“Access to latest and best in class AI chips/GPUs is the primary obstacle that the country faces due to chip ban in expanding its AI data centres,” Bassi concludes.

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