The US’ Nvidia is the dominant company in AI chips globally. Credit: Nor Gal/Shutterstock.

The current dominance of the US in the artificial intelligence (AI) chips sector means that it is likely to lead the Fourth Industrial Revolution (4IR), a new report suggests.

GlobalData’s AI Chips report asserts that the country that emerges on top in AI chips (and thus in AI more broadly) in the coming decade, will lead the 4IR. The 4IR refers to the driving of automation and transformative change across industries through the implementation of advanced technologies. These include AI, which is seen as the most significant, but also the likes of robotics, the internet of things (IoT) and biotechnology.

The impacts of AI are widely expected to be revolutionary, and the recognition of the technology as a likely differentiator has made it a geopolitical battleground. At present, the US and China are the two countries leading the AI chips sector, with the US viewed as the dominant player.

Among the factors outlined in the AI Chips report that are indicative of the US’ current strength in the sector are its current leadership in innovation through companies like NVIDIA, AMD, Intel, Alphabet and Amazon; support provided to the sector through the likes of the CHIPS Act and restrictions on Chinese technology; and strong global influence in the sector through technological partnerships and geopolitical allyships.

There are factors that aid China’s position in the sector too, such as a large domestic market, significant government investment and strength in the areas of AI software and data. However, China also relies heavily on Western technology for manufacturing AI chips and has less advanced chip manufacturing capabilities overall.

The report states: “The ongoing US-China trade dispute has negative implications for AI chip technology’s global progress, particularly for China. China will play a leading role in AI due to its strength in AI software and IoT technology and its progress in low-end chip manufacturing. However, unless it can secure access to advanced chip manufacturing technology, it will likely struggle in AI in leading cloud data centres and, most likely, autonomous vehicles.”

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Despite this, the report also notes that the US regards China’s efforts to become a dominant player in advanced technologies as a national security problem, with the Trump and Biden administrations having imposed tariffs on Chinese goods and restrictions on exports of advanced technologies among efforts to maintain its dominant position.

It adds of the challenges that China faces as a result: “While several domestic players, such as Alibaba, Baidu, Huawei, Cambricon, Biren Technology and Horizon Robotics, have successfully designed their own AI accelerators, they still rely on Western technology to manufacture them. As a result of the escalating trade war with the US, they face numerous challenges in bringing their latest products to market.”