China Closes AI Algorithm Gap With US Despite Chip Shortfall, Says Former Microsoft Executive
- tech360.tv
- Jul 1, 2025
- 2 min read
China is narrowing the gap with the United States in artificial intelligence algorithms, even as it continues to lag in chip technology, according to former Microsoft executive Harry Shum Heung-yeung.
Shum, who led Microsoft’s AI and research division until 2020, said the US remains “clearly” ahead in AI chip development, but China is making significant strides in algorithm engineering.
Speaking at an economic summit hosted by the University of Hong Kong Business School on Friday, Shum said China’s chip production gap “cannot be bridged in one or two years.” He noted that computing power remains a major challenge for companies in mainland China and Hong Kong.
To overcome these limitations, Shum urged a focus on algorithm breakthroughs. He cited DeepSeek, a Hangzhou-based start-up, as an example of China’s progress in this area.
DeepSeek has developed large language models that rival those of US firms like OpenAI and Google, using only about 10,000 AI chips—far fewer than the hundreds of thousands used by its Western counterparts.
The two-year-old company gained international attention earlier this year for releasing two models that matched the performance of leading Western systems at significantly lower costs.
Shum said DeepSeek’s achievements demonstrate China’s growing competitiveness in AI, despite increasing US efforts to restrict its technological advancement.
Other Chinese firms are also advancing rapidly. OpenAI recently acknowledged that Chinese start-up Zhipu AI had made “notable progress” in providing infrastructure solutions to non-Western markets.
Meanwhile, Chinese tech giant Huawei Technologies is working to develop domestic alternatives to Nvidia chips, though it faces major obstacles.
Huawei founder and CEO Ren Zhengfei admitted that the company’s Ascend chips are still “a generation” behind US products. He added that the US has “exaggerated Huawei’s achievements,” but said high performance could still be reached through cluster computing.
Despite these challenges, Shum expressed optimism about China’s potential in AI applications. “In terms of applications, we actually have a very good chance of achieving truly remarkable innovations,” he said.
China is rapidly advancing in AI algorithms despite lagging in chip technology
DeepSeek developed competitive language models using far fewer chips than US firms
Huawei and other Chinese companies are working on domestic chip alternatives
Source: SCMP
