Gavekal Technologies: Chips

As presidents Donald Trump and Xi Jinping prepare for their summit meeting in Washington, China’s fast-growing technology capabilities are a major topic. The big questions at the moment are how close Chinese artificial-intelligence labs are to matching the US frontier models, and whether the two sides can start negotiating rules on AI safety. But behind those lie even bigger questions: What is the balance of technological power between the US and China? And how far can the world's two big tech powers go in pulling apart the thick webs of interdependence that tie them together?

On September 7, China’s Ministry of Commerce issued the preliminary ruling of its anti-dumping investigation into semiconductor-grade dichlorosilane imports from Japan, finding that Japanese imports were “dumped” and caused “material injury” to China’s domestic industry.

Both China and the US have devoted intense energy to slashing their technological reliance on each other. These efforts have had some impact, but the overall lesson is that decoupling is really difficult and even as old dependencies are cut, new ones pop up. This China Tech Brief examines the underlying causes.

Dario Amodei’s call to pace frontier AI development has sharpened a US divide between safety advocates and accelerationists. The innate prisoner’s dilemma among leading labs makes coordinated slowdown unlikely. China recognizes many of the same risks but rejects US-led standard setting and the use of safety to justify technology containment aimed at China. China also favors risk management through regulations and state intervention over slowdown. Given these divisions and the broader US-China rivalry, bilateral talks are unlikely to produce binding agreements. Continued dialogue, crisis-communication channels, and narrow cooperation are the most plausible outcomes.

Over the past year Gavekal Technologies has explored most corners of China’s vast and unique energy system, with a particular focus on how electrification is transforming China’s economy and its position in the world. We have now distilled our insights into our first annual China New Energy Guidebook. This concise presentation outlines China’s strategies for its energy and electricity systems, assesses the progress of wind, solar and nuclear deployment, and analyzes the key electricity related sectors: batteries, electric vehicles, AI and the “electrotech stack.”

Over the past year Gavekal Technologies has tracked China’s progress across a range of tech sectors. Today we take a step back and try to assess its overall capabilities. First, outside a handful of areas, China is still more of a fast follower than a global pace-setter. Second, China’s well-documented manufacturing dominance is mainly in products of medium or low complexity. Finally, China’s tech ecosystem still relies heavily on foreign-sourced components, equipment and intellectual property.