Microsoft President Brad Smith speaks at a press conference at the North Rhine-Westphalia state representation about future visions for developing and applying artificial intelligence in education in the state of NRW in Berlin on June 4, 2025.
soren stash | Image Alliance | Getty Images
Microsoft President Brad Smith told CNBC that US tech companies should be “a little concerned” about the support their Chinese rivals are receiving from their government in the AI race.
As competition intensifies between American and Chinese companies to develop the most advanced models, Smith said the United States has an “advantage in terms of access to the world’s most powerful chips” and “other technological innovation.”
But he also said in an interview on the sidelines of the AI Impact Summit in New Delhi, India: “I think we always have to think, and maybe worry a little bit, about Chinese support.”
Its government has supported Chinese AI companies with measures such as a multibillion-dollar national investment fund and vouchers for cheaper power to meet their computing needs. Smith’s warning comes after Chinese companies released a large number of models over the past two weeks, and low-cost AI models may be attractive in developing countries.
Beijing’s support for Chinese companies was “China’s primary approach to successfully disrupting the telecoms market,” when state money and support helped companies like Huawei and ZTE expand, Smith said.
“Some American companies have disappeared,” Smith added. “European companies like Ericsson and Nokia have become defensive.”
Smith said that Chinese companies Huawei and Alibaba’s data centers are located all over the world and “it will not be difficult for China to support them.”
“I think for the rest of us, we have to compete with that, and we have to be good at competing with that, with the support of our governments,” Smith said.
CNBC approached Alibaba Huawei asked for comment on whether they had accepted Chinese government support but had not received a response when this article was published.
Alibaba’s cloud computing division, through which it sells artificial intelligence services, operates globally. But outside China, it doesn’t always build data centers, instead partnering with other infrastructure players.
How does China support its technology companies?
Beijing launched a national AI fund worth 60.06 billion yuan ($8.42 billion) last year to invest in early-stage projects.
Cities across the country, from Shanghai to the technology hub of Shenzhen, have offered “vouchers” to reduce the cost to companies looking to rent computing power.
Cheap energy has been another advantage for Chinese companies trying to build the power-hungry infrastructure needed to train and run AI models.
Microsoft said Wednesday it is on track to invest $50 billion by the end of the decade to help bring artificial intelligence to developing countries in the “Global South,” which includes investments in infrastructure and skills retraining.
Rory Green, chief China economist at TS Lombard, told CNBC this week that the “China tech space” could easily take shape in developing countries.
“For these economies, I think the choice is fairly simple, and you can easily see a world where perhaps most of the world’s population will be working on a combination of Chinese technology within five to 10 years,” Green said.
