China and America's AI war isn't just about compute, it's about energy — energy subsidies promote homegrown chip push, amid data center energy squeeze

Chinese tech companies like ByteDance, Alibaba, and Tencent are being incentivized by local governments with energy subsidies to reduce reliance on foreign chips like Nvidia's GPUs and promote the development of domestic AI hardware. Despite efforts to accelerate the production of Chinese chips, they still lag behind Nvidia's GPUs in efficiency due to export restrictions on key technologies. Rising energy costs in data centers have led to the implementation of energy subsidies in regions like Gansu and Guizhou, funded by China's $50 billion Big Fund III to boost the country's chip design industry. In the U.S., companies like OpenAI and Nvidia are investing heavily in AI infrastructure, but energy constraints could become a bottleneck for AI development.