Elon Musk has issued a stark warning about China’s emerging dominance in the global AI race, predicting that the country will far exceed all other nations in artificial intelligence computing power within the next few years. Speaking on the “Moonshots with Peter Diamandis” podcast published Tuesday, the Tesla and SpaceX CEO stated that “China’s going to have more power than anyone else and probably will have more chips.”
The crux of Musk’s argument centers on electricity generation as the critical bottleneck for scaling AI systems. He estimates that China could reach approximately three times the electricity output of the United States by 2026, providing the massive energy capacity needed to support power-hungry AI data centers. “People are underestimating the difficulty of bringing electricity online,” Musk emphasized, highlighting that energy supply—not semiconductors or algorithms—has become the primary constraint in AI development.
Musk’s assessment challenges the prevailing US strategy of restricting China’s access to advanced semiconductors. He suggested these constraints may become less relevant over time, stating that China will “figure out the chips.” He noted that diminishing returns at the cutting edge of chip performance might make it easier for China to catch up, even without access to the most advanced semiconductor designs.
Goldman Sachs corroborated Musk’s concerns in a November report, warning that electricity shortages could slow US progress in AI development. The investment bank’s analysis projects that by 2030, China could have approximately 400 gigawatts of spare power capacity—more than three times the total electricity demand of data centers worldwide. “We expect China’s spare capacity to remain sufficient to accommodate data center power demand growth while supporting demand in other industries,” Goldman’s analysts wrote.
The energy infrastructure advantage comes as AI data centers require as much electrical power as small cities, creating unprecedented demands on power grids globally. While the US faces increasing pressure on its electrical infrastructure, China has been systematically expanding its energy capacity.
Chinese President Xi Jinping reinforced this narrative in his annual New Year’s address last week, praising China’s AI progress in 2025. Xi highlighted that “many large AI models have been competing in a race to the top, and breakthroughs have been achieved in the research and development of our own chips,” positioning China as “one of the economies with the fastest-growing innovation capabilities.”
Key Quotes
Based on current trends, China will far exceed the rest of the world in AI compute.
Elon Musk made this statement on the “Moonshots with Peter Diamandis” podcast, summarizing his assessment of China’s trajectory in AI computing power. This represents a significant warning from one of the tech industry’s most prominent figures about shifting global AI leadership.
People are underestimating the difficulty of bringing electricity online.
Musk emphasized this point to highlight that electricity generation—not chip technology—has become the primary bottleneck for AI development. This challenges conventional thinking about what determines AI leadership and suggests current US policy may be targeting the wrong constraint.
As AI demands massive power, a reliable and ample power supply is likely to be a key factor shaping this race, especially because power infrastructure bottlenecks can be slow to solve.
Goldman Sachs analysts wrote this in their November report, providing independent validation of Musk’s concerns. The investment bank’s research supports the thesis that energy infrastructure will determine AI supremacy more than semiconductor access.
Many large AI models have been competing in a race to the top, and breakthroughs have been achieved in the research and development of our own chips.
Chinese President Xi Jinping stated this in his New Year’s address, signaling China’s confidence in overcoming semiconductor restrictions and advancing AI capabilities. This demonstrates that China’s leadership views AI development as a national priority and is investing accordingly.
Our Take
Musk’s analysis reveals a critical blind spot in Western AI strategy. While policymakers have focused intensely on semiconductor export controls, they may have overlooked the more fundamental constraint of energy infrastructure. China’s authoritarian system allows for rapid, large-scale infrastructure development without the regulatory hurdles and public opposition that slow US projects. This structural advantage could prove decisive.
The shift from chips to electricity as the primary bottleneck also suggests we’re entering a new phase of AI development—one where scaling existing architectures matters more than algorithmic breakthroughs. If true, this favors nations with abundant, cheap electricity and the political will to build massive data centers. The geopolitical implications are sobering: technological leadership may be slipping away not through innovation deficits, but through infrastructure inadequacy. This should prompt urgent reassessment of US energy and AI policies.
Why This Matters
This development represents a fundamental shift in the global AI competition landscape. For years, the narrative has focused on semiconductor technology and algorithmic innovation as the primary determinants of AI leadership. Musk’s analysis—backed by Goldman Sachs research—reveals that energy infrastructure may be the true deciding factor in which nation dominates artificial intelligence.
The implications are profound for businesses, policymakers, and the technology sector. US export controls on advanced chips to China may prove less effective than anticipated if energy capacity becomes the primary constraint. Companies planning AI infrastructure investments must now factor in not just computing hardware but also reliable, abundant electricity supply.
For the broader economy, this signals a potential geopolitical realignment in technological leadership. If China achieves the computing power advantage Musk predicts, it could accelerate AI-driven innovations in manufacturing, healthcare, autonomous systems, and other critical sectors. This could reshape global supply chains, competitive dynamics, and even national security considerations. The race for AI supremacy is increasingly becoming a race for energy infrastructure—a competition where China appears to hold significant advantages.
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Source: https://www.businessinsider.com/elon-musk-china-ai-compute-exceed-electricity-power-2026-1