U.S.-China tech battle entering its ‘primetime’ — and generative A.I. could be the next frontier
China’s President Xi Jinping (R) met with U.S. Secretary of State Antony Blinken. The U.S. has looked to cut China off from key technologies like advanced semiconductors over the past few years. The two sides likely discussed tech tensions but analysts said not much is likely to change even as the two sides look to improve relations.
Leah Millis | AFP | Getty Images
Generative artificial intelligence, the technology that viral chatbot ChatGPT is based on, could be the new battleground in the battle for tech supremacy between the U.S. and China, according to one analyst.
Despite the two nations seeking better relations after U.S. Secretary of State Antony Blinken met with Chinese President Xi Jinping this week, analysts said the tech tensions will continue.
Washington has sought to cut off China from key technology like semiconductors while China has looked to boost its self-sufficiency and wean itself off American technology, touting its domestic sectors.
“The status quo isn’t likely to change much on any front — from sanctions to business pressure,” Abishur Prakash, CEO of Toronto-based advisory firm, The Geopolitical Business, told CNBC via email.
AI, which is seen as a critical technology by both nations, will likely be dragged into the battle between the two sides.
AI in the ‘crosshairs’
Meanwhile, the U.S. has looked to boost its own domestic technology including semiconductors, with funding such as the $52 billion available via the Chips and Science Act.
Washington’s attention is now likely to turn to generative AI.
“There will likely be more attempts coming from Washington to target the development in China of some types of applications, and generative AI could be in the crosshairs in the coming year,” Paul Triolo, the technology policy lead at consulting firm Albright Stonebridge, told CNBC.
It comes “as the Biden administration determines which technologies could benefit both China’s military modernization, and which could also boost Chinese companies’ ability to make breakthroughs in generative AI,” he added.
Generative AI relates to applications such as ChatGPT which are able to generate content when prompted by users.
How U.S. restrictions target A.I.
AI needs to be trained on huge amounts of data in order to work. Generative AI is based on so-called large language models, meaning it is trained on huge amount of language in order to be able to understand and respond to prompts from users.
The processing of this data requires a large amount of computing power that is powered by specific semiconductors, such as those sold by U.S. firm Nvidia, which is seen as the market leader in such chips.
Part of the U.S.’s current restrictions aim to cut China off from some of Nvidia’s key chips, which in turn could hamper China’s AI development.
Washington is also carrying out an outbound investment review, which would put rules in place for American investment into foreign companies.
“The upcoming outbound investment review executive order will include restrictions on U.S. investment in some AI-related technologies, and this will be a major indication of the direction of U.S. technology controls in the final two years of the Biden administration,” Triolo said.
China’s generative A.I. push
ChatGPT, developed by American firm OpenAI, has taken the world by storm and has sparked somewhat of an AI arms race between U.S. technology companies including Microsoft, which is an investor, and Alphabet.
Chinese technology giants have taken note.
Over the past few months, Chinese technology giants from Baidu to Alibaba have announced plans and launched trials for their own ChatGPT rivals.
Blinken-Xi meeting unlikely to change much
Beijing has accused the U.S. of violating international trade rules through its sanctions and said curbs on China’s chip industry amount to “bullying.”
Washington maintains its moves are in the interest of national security and are targeting specific sensitive technologies.
China hasn’t retaliated much. However, last month Chinese regulators barred operators of “critical information infrastructure” from buying chips from U.S. firm Micron, claiming the company’s products failed its network security review.
Technology wasn’t spoken about in public too much when Blinken recently met with China’s Xi, but the two sides no doubt discussed it.
Triolo told CNBC that the U.S. likely raised issues about the treatment of Micron while China would have brought up the export controls.
“Beijing views that package [export controls], and the U.S. CHIPS and Science Act, as a one-two punch designed to decouple China’s semiconductor industry from the global semiconductor ecosystem,” Triolo said.
However, the two sides are in somewhat of a stalemate.
Blinken spoke about areas of co-operation between the U.S. and China such as the climate crisis and the economy. But advanced technology is one area the two nations remain in competition.
“But, at the same time, as I said, it’s not in our interest to provide technology to China that could be used against us,” Blinken said on Monday.
“What China wants, the U.S. isn’t going to give, like opening up the chip ecosystem to Beijing or not scrutinizing Chinese investment in U.S. technology,” Prakash said. “The U.S.-China battle for technology supremacy is about to enter its primetime.”
Unlike the previous flashpoints, like over 5G or TikTok, when both sides still believed differences could be patched over, now such ideas are politically dead. The chasm between the U.S. and China has expanded so much — and neither superpower wants to bridge the differences.”
Reddit CEO Steve Huffman stands on the floor of the New York Stock Exchange (NYSE) after ringing a bell on the floor setting the share price at $47 in its initial public offering (IPO) on March 21, 2024 in New York City.
Spencer Platt | Getty Images News | Getty Images
Reddit shares rose more than 10% on Tuesday, reversing a three-day slump that coincided with a broader decline among technology companies.
Despite Tuesday’s gains, Reddit shares are still roughly 30% below the close on Wednesday.
Reddit’s stock market upswing was likely bolstered by a Loop Capital analyst note published Tuesday that reiterated a buy rating and characterized the company’s shares as “extremely attractive.” The analyst note said that Reddit’s 50% drop on Wall Street in the past month “is excessive,” and that the social media company “has the biggest upside potential relative to Street estimates in our coverage universe.”
The company’s shares dropped more than 15% in February after the company reported weaker-than-expected fourth-quarter user numbers as a result of a Google search change that temporarily hurt its search-derived traffic. Although Reddit said at the time that it had recovered from the algorithmic shift, the user number miss spooked investors.
Reddit’s shares have since spiraled downward along with other tech companies like Apple, Nvidia and Tesla off of concerns related to President Donald Trump‘s tariffs and growing fears of a recession. The seven most valuable tech companies lost more than $750 billion in market value on Monday with Nasdaq experiencing its biggest decline since 2022.
Loop Capital managing director Alan Gould acknowledged in the note that investors are operating in a “risk-off market environment,” but he contended that Reddit “has been one of the top performing stocks over the past year,” aside from its most recent dip.
“RDDT wildly exceeded ours and Street estimates for 2024, which explains why the stock increased almost 7-fold from a $34 IPO price to a peak of $230 in less than a year,” Gould wrote, noting Reddit’s growing revenue and improved advertising tools, among other positive developments.
Reddit’s fourth-quarter sales grew 71% year over year to $428 million, which represents the fastest growth rate for any quarter since 2022.
“In our view, RDDT deserves the revaluation it had experiencing based on the growth it has shown in the recent earnings reports and future projected growth driven by the ability to narrow the ARPU gap, and data licensing possibilities,” Gould wrote.
Waymo self-driving cars with roof-mounted sensor arrays traveling near palm trees and modern buildings along the Embarcadero, San Francisco, California, February 21, 2025.
Smith Collection/gado | Archive Photos | Getty Images
Waymo on Tuesday announced it is expanding its service to include another 27 square miles of coverage around the San Francisco Bay Area.
With the expansion, Waymo will now take passengers around Mountain View, Los Altos, Palo Alto and parts of Sunnyvale, California. The Alphabet-owned company opened its robotaxi service to the general public in San Francisco in June.
Waymo will initially limit the availability of its Silicon Valley service to users of the Waymo One app who are residents with ZIP codes in the area, the company said. Waymo plans to serve more riders across the region over time. The fleet of vehicles that will be in use in the new coverage areas are fully electric Jaguar I-Pace vehicles with Waymo’s fifth generation of self-driving sensors, software and other technology.
“Opening our fully autonomous ride-hailing service in Silicon Valley marks a special milestone in our Bay Area journey,” Waymo product chief Saswat Panigrahi said in a statement. “This is where Waymo began and where we’re headquartered.”
Waymo expanded its San Francisco Bay Area robotaxi service last summer into Daly City, Broadmoor and Colma. Its robotaxis do not yet carry passengers to San Francisco International Airport.
A spokesperson told CNBC that Waymo is in “active discussions with SFO,” and added that the company is “working to connect” Silicon Valley and San Francisco to “provide seamless autonomous rides across more of the Bay Area in the future.”
Waymo also recently launched a commercial robotaxi service in Austin, Texas, just in time for the city’s annual South by Southwest festival.
While would-be competitors including Elon Musk‘s automaker Tesla, and Amazon-owned Zoox, are continuing their own robotaxi testing and development, Waymo has pulled far ahead of self-driving companies in the U.S.
Before Tuesday’s expansion, Waymo said it was serving more than 200,000 paid trips per week across San Francisco, Los Angeles and Phoenix.
Alphabet doesn’t disclose financial results for the autonomous vehicle business, but Waymo is part of its “Other Bets.” That business unit generated $400 million in the fourth quarter of 2024 and incurred operating losses of $1.17 billion, according to the company’s most recent financial filing.
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