Why Your Next Phone Might Run on Chinese AI

Most of the world's population could be running on a Chinese tech stack within 5-10 years, according to one analyst's bold prediction. TS Lombard's chief China economist Rory Green told CNBC that the US's "perceived monopoly" on tech and AI has been broken, with China's rapid advancement threatening American market dominance.

The DeepSeek Wake-Up Call

This year's DeepSeek phenomenon sent shockwaves through Western AI circles. Here was a Chinese company achieving performance comparable to models that cost US Big Tech billions to develop, but at a fraction of the cost. Yet this was just the opening act.

Chinese AI companies still trail behind OpenAI, Anthropic, and Google. US export controls limiting access to advanced Nvidia GPUs create a "real ceiling on the compute side of scaling." Even Alibaba's Qwen team technical lead acknowledged in January that there's less than a 20% chance Chinese firms will surpass US tech giants in AI within the next three-to-five years.

China's Strategic Advantages

But China isn't playing the same game. First, there's efficiency. Constrained by chip limitations, Chinese labs have made "notable advances in inference efficiency and quantization techniques" - achieving strong performance at lower compute costs. Necessity has become the mother of innovation.

Second is power. China has added more electricity capacity in the past four years than the US has in total. This energy boom provides the foundation for massive AI infrastructure deployment across the country.

Third is the open-source gambit. By releasing competitive open-weight models, Chinese companies are "eroding the commercial moat that US closed model vendors have relied on." Why pay premium prices to American providers when you can deploy capable Chinese models on your own infrastructure at low cost?

The Global South Opportunity

This strategy could prove particularly effective in the Global South, where cost trumps geopolitical alignment. As AI competition shifts from "model performance to value realization," Chinese companies' efficiency-first approach becomes a significant advantage.

Microsoft President Brad Smith recently warned that American tech companies should "worry a little bit" about the subsidies Chinese competitors receive from their government. Beijing is backing its AI champions with multi-billion-dollar investment funds and energy vouchers for cheaper compute.

The Multi-Polar Reality

Yet the US retains substantial advantages: advanced semiconductors, frontier-model research, hyperscaler infrastructure, and massive investor backing. American AI tools continue to be deployed globally by governments and enterprises.

Gartner's Julian Sun sees the global AI landscape becoming "multi-polar" across different layers of the tech stack rather than dominated by a single ecosystem. This suggests a future where Chinese efficiency models coexist with American frontier research and European regulatory frameworks.