Microsoft President Brad Smith speaks at a press conference at the Representation of the State of North Rhine-Westphalia about future visions for the development and application of artificial intelligence in education in NRW in Berlin on June 4, 2025.
American tech companies should "worry a little bit" about the subsidies their Chinese competitors receive from their government in the AI race, Microsoft President Brad Smith told CNBC.
As competition between U.S. and Chinese companies intensifies to develop the most advanced models, Smith said that the U.S. has "an advantage in terms of access to the most powerful chips in the world" and "other technology innovation."
But, speaking in an interview on the sidelines of the AI Impact Summit in New Delhi, India, he also said: "I do think we always have to think about, maybe even worry a little bit about Chinese subsidies."
Chinese AI companies have been supported by their government with measures such as a multi-billion-dollar national investment fund and vouchers for cheaper energy for their computing needs. Smith's warning comes after Chinese firms released a slew of models over the past two weeks, and their lower-cost AI models could be attractive in developing nations.
Smith said subsidies from Beijing to Chinese companies were "the fundamental approach that China successfully took to disrupt the telecommunications market," when state money and support helped companies like Huawei and ZTE expand.
"Some American companies disappeared. European companies like Ericsson and Nokia were thrown on the defensive," Smith added.
Smith said data centers from Chinese firms Huawei and Alibaba exist around the world and "it will not be difficult for China to subsidize those."
"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 and Huawei for comment about whether they have accepted Chinese state subsidies but had not received a response as this article went live.
... continue reading