Gavekal Technologies: Chips

China’s latest five-year plan for energy disappointed many analysts because of its unambitious targets for scaling back fossil fuel use. This misses the point. The plan is important because for the first time, Beijing is formally committing to an energy system based mainly on non-fossil fuels, with traditional coal, oil and gas as backup stabilizers. Achieving this goal will take another couple of decades, but policymakers are already starting to look beyond brute additions of renewables capacity to the efficiency measures that will be required for success.

Changxin Memory Technologies' planned US$4–5bn Shanghai STAR Market IPO has raised concerns that China’s DRAM champion could flood the market with excess capacity and aggressive prices, but that risk looks overstated in the near term.

Tesla’s market capitalization is by far the biggest among global automakers, mainly because it has sold itself as a leader in AI—not just in cars, but for humanoid robots as well. To turn its AI vision into reality, it needs China. Its Shanghai gigafactory enabled Tesla to scale up electric vehicle production; to scale up robotaxis and humanoids, it will have to figure out how to operate in both the US and China even as the two countries wall off their AI ecosystems from each other.

Beijing is all-in on AI agents: its AI-Plus strategy calls for agents to be nearly ubiquitous in the economy by 2030. But widespread adoption still faces many hurdles: agent reliability is still spotty, training data is hard to access and to standardize, and general agent-builders such as Alibaba are short on the domain expertise needed to build industry-specific agents.

Conventional wisdom has held that while China’s AI buildout is constrained by lack of access to advanced chips, the US will be slowed by the scarcity and cost of electricity. Solving the power constraint is indeed a problem: AI data centers are suddenly adding a lot of new electricity demand on a system that has not grown in two decades. But aside from building new power plants and transmission lines—a long slog—there is a lot the US can do to squeeze more juice out of the current infrastructure.

US export controls frontier AI models; Unitree-Nvidia collab receives mixed reactions in China