New Delhi
Speaking at the AI Impact Summit in New Delhi, Smith acknowledged that the United States retains key technological strengths - including what he described as "an advantage in terms of access to the most powerful chips in the world" as well as "other technology innovation" - but he cautioned that state-directed financial backing for Chinese competitors cannot be ignored.
"I do think we always have to think about, maybe even worry a little bit about Chinese subsidies," Smith told CNBC in an interview following his remarks.
Smith drew a line to prior episodes in the technology sector, noting that government-supported expansion from Chinese telecommunications firms changed market dynamics overseas. "Some American companies disappeared. European companies like Ericsson and Nokia were thrown on the defensive," he said, framing the rise of those firms as a cautionary example for the AI era.
The Microsoft executive also pointed out the global footprint of Chinese cloud and data center operators, citing Huawei and Alibaba as examples of companies that already operate data centers around the world. He said that physical presence can make it straightforward for state support to extend to overseas operations.
"I think for the rest of us, we have to compete with that, and we have to be good at competing with that, with the support of our governments," Smith added, calling for competitive responses that include government backing.
The article notes that Chinese AI companies have benefited from concerted government support, including a multi-billion-dollar national investment fund and vouchers that reduce energy costs for computing. That financial assistance has come as a number of Chinese firms have introduced multiple AI models in a short span of time - described here as having released numerous AI models over the past two weeks.
Commercial commentary included with this report highlights investor tools and coverage. One service described evaluates MSFT alongside thousands of companies each month using more than 100 financial metrics and has identified prior winners such as Super Micro Computer (+185%) and AppLovin (+157%). The service offers to identify whether MSFT is included in its strategies or whether other opportunities exist in the same sector.
Context and takeaways
Smith’s comments combine acknowledgement of U.S. technological advantages with a clear warning: state subsidies in China are a competitive force that U.S. firms and policymakers should consider when planning strategy and support for the domestic AI ecosystem.