From Financial Modeling Prep: 2025-05-12 07:31:00

UBS analysts highlight China’s progress in AI, showcasing strong applications and models, yet still dependent on foreign leaders like NVIDIA for high-end compute. Local champions like Baidu and Alibaba excel in building chatbots, recommendation engines, and vision systems, leveraging China’s vast data pool and uniform language ecosystem for rapid adoption in various sectors.

China’s self-sufficient AI layers now deliver competitive accuracy and customization for local use cases, with local platforms and models driving innovation in AI applications across e-commerce, finance, and public services. Despite export restrictions, China’s chip self-sufficiency is forecasted to reach 27% by 2025, with progress driven by state support and domestic investment.

NVIDIA’s dominance in AI compute is evident, controlling over 80% of the global market share. The performance gap between NVIDIA’s GB200 chip and Huawei’s 910C highlights the challenge for Chinese vendors to bridge this divide. UBS projects China’s domestic compute share to rise to 90% by 2029, but warns of trade-offs in pricing power and production costs.

Investors should monitor valuation differentials between Western leaders and emerging Chinese chipmakers as China strengthens its semiconductor ecosystem. While local AI services and models are top-notch, the bottleneck in high-end inference hardware poses a challenge. Balancing revenue growth with efficiency and global competitiveness will be crucial for China’s AI self-sufficiency journey.



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