China is rolling out significant power subsidies for tech giants like ByteDance, Alibaba, and Tencent to encourage the adoption of domestically produced AI chips. Local governments are increasing incentives, potentially cutting data centre energy bills by up to 50% for companies using AI processors from firms like Huawei and Cambricon. This move aims to offset the increased energy costs resulting from restrictions on Nvidia's advanced chips and accelerate China's self-reliance in technology.
The subsidies are substantial enough to potentially cover a year's worth of operating expenses, offering crucial support to companies that have faced financial strain due to using less energy-efficient domestic chips. This initiative is part of a broader strategy to strengthen China's semiconductor ecosystem and shield its tech sector from US export controls. The subsidies highlight China's commitment to localising AI infrastructure and supporting domestic chipmakers, even if performance gaps exist compared to foreign products.
Analysts view this as a determined effort by Beijing to establish viable domestic AI hardware at scale and achieve long-term technological independence. The move could also boost Chinese semiconductor equities, signalling increased competition between the US and China in the technology sector.
