7th July 2026

BNP Paribas: China: Late to the AI sprint, strong in the marathon

In today’s global artificial intelligence (AI) industry, the US leads in frontier models and accelerator design, Taiwan manufactures the most advanced chips, South Korea supplies high-bandwidth memory, and investors crowd into the most obvious winners. China — constrained by export controls and short of leading-edge semiconductors — is often seen as the laggard. That narrative is too simple. It may also be wrong.

By David Choa, Head of Greater China Equities, Lead Portfolio Manager, and Song Zhe, Senior Investment Specialist, Fundamental Active Equity, BNP Paribas Asset Management

While slower off the mark, China is not necessarily late to AI as a structural transformation, but its path is unlikely to mirror the US model.

Rather than being evaluated solely in the race for the most powerful chip or the highest-scoring model, China’s opportunity may lie in “full-stack” competition across the entire AI value chain: 

• Capable domestic models
• Alternative AI accelerators
• Microchip design
• Foundry capacity
• Memory manufacturing
• High-speed connectivity
• Power infrastructure
• Software optimisation
• Large-scale deployment 

The distinction matters because the next phase of AI may be less about benchmark leadership and more about usable, affordable and scalable deployment. The winners may not simply be those with the best single chip or model, but those who can transform computing into productivity at the lowest practical cost.

In short, China may not be copying the US playbook. Rather it may be building a different one with a broader and more diversified set of investable winners.

Perhaps an imperfect but useful analogy: In the 4G mobile network cycle, China was not viewed as the original technology leader. Yet once adoption in China accelerated, the country’s infrastructure rollout, local applications, mobile payments, e-commerce and hardware ecosystems created one of the world’s most dynamic digital economies. China did not merely catch up; it helped redefine how mobile internet could be commercialised at scale.

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