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China seeks cheaper AI chip substitutes as investor concerns mount
China is also narrowing the gap in AI model development, with a newly released open-weight model at 2.8 trillion parameters nearly matching top US rivals on performance, analysts said.
China’s growing role in the semiconductor supply chain is intensifying worries for global AI and technology investors, with analysts expecting more low-cost substitute products to pressure the margins of established chip leaders. The concern comes as AI and technology stocks continue to take a beating amid doubts about whether heavy capital spending will translate into cash flows that justify high valuations, according to SCMP Economy.
The outlet points to China’s expanding competitive footprint as a catalyst for what it describes as the unraveling of the AI trade. Analysts cited by SCMP Economy argue that advances could reshape the industry by eroding existing advantages, even as US platforms and chip companies still control a large share of current earnings.
SCMP Economy also links the semiconductor trend to progress in AI model development. It notes that Kimi K3, a 2.8-trillion-parameter open-weight model recently released by Moonshot AI, is reported to almost match the performance of the most sophisticated models from OpenAI and Anthropic.
In comments carried by SCMP Economy, Gary Dugan, CEO of The Global CIO Office, said the outlook for AI is becoming a two-sided business, with China creating investible competitors that could compress future margins and challenge assumptions embedded in supply chains.