China plans 50% boost in national computing power by 2025

CNBC reports that, as the China-US tech wars heat up, China is set on building a 50% enhancement of its computational capabilities by 2025 aiming for a total of 300 ExaFLOPS, the country's key ministries announced on Monday. This initiative is part of the nation's strategy to stay competitive in the high-tech sector, especially in Artificial Intelligence (AI) and High Performance Computing (HPC).

The Chinese government, through six of its primary ministries, announced its ambitious plan to dramatically elevate the country's computing prowess. Currently, China possesses an aggregated computational power of 197 ExaFLOPS, but it wants to increase that aggregated performance to around 300 ExaFLOPS by 2025, a which would be a major accomplishment, if achieved.

China's tech giants, such as Alibaba and Tencent, are poised to benefit from this initiative. The government's plan includes a focus on memory storage enhancements, massively improved data transmission infrastructure, and the establishment of additional data centers. These developments are crucial for cloud computing services, a domain where many AI solutions are currently being marketed. Meanwhile, it is unclear what kind of hardware will be used to build over 100 ExaFLOPS of additional computational capacity in such a short amount of time.

This surge in computational strength is not just for bragging rights. Chinese government recognises the crucial role of advanced computing in various sectors, notably in finance and the educational realms. The underlying idea is that a robust computational backbone can significantly aid in the development and deployment of AI technologies.

Historical data suggests that China's investments in computational infrastructure yield substantial economic returns. For every yuan spent on enhancing computing capabilities, the nation has seen an economic boost of three to four yuan, according to Akshara Bassi, senior research analyst at Counterpoint. This pattern underscores the importance of technology in driving economic growth.

"China has found that traditionally, every 1 yuan invested in computing power has driven 3-4 yuan of economic output," Bassi told CNBC. "The investments echo China's plans to drive economic output through leadership in technology prowess and integrating AI with existing technologies and solutions across all industries and domains. China aims to invest in growing in its computing power especially the AI, as it sees its major cloud providers launching AI solutions en masse for consumers and enterprises."

It is not going to be easy for China and its companies to build up over 100 ExaFLOPS of compute power in about a year. The US has imposed sanctions that have put a strain on China's tech supply chain, particularly in accessing AI and HPC CPUs and GPUs from companies like AMD, Intel, and Nvidia. Although Chinese No. 1 foundry SMIC can build fairly sophisticated application processors for smartphones, they do not have capability to build something as advanced as Nvidia's H100 or Intel's Ponte Vecchio. As a result, experts believe that US sanctions, especially those affecting access to top-tier AI and HPC chips, will continue to pose significant obstacles for China in the near future.