Sara Hsu
After China revealed its own homegrown large-language model, DeepSeek, in January 2025, the artificial intelligence (AI) competition intensified. Much of the conversation on this new technology has focused on semiconductors or model speeds, but the race is very much dependent on several upstream factors: energy, rare earth elements, and talent. These critical inputs into the AI industry face vastly different structures in the two countries and may determine the pace and scale of AI innovation.
Energy: Powering the AI Revolution
AI models use massive amounts of energy to power their computations. Ensuring a consistent and growing energy supply to power data centers and cool servers is now an essential part of national AI strategies. The United States and China have different energy ecosystems, with alternative methods of pricing, regulating, and sustaining energy for AI endeavors.
Due to increasing investment in electricity generation, the energy requirements of AI data centers have placed a great amount of pressure on local power grids. A notable incident occurred in July 2024, when 60 data centers in Northern Virginia were disconnected from the grid due to a surge protector failure. This incident forced operators to rapidly reduce power generation to prevent widespread outages, and demonstrated the challenges that utilities face in providing data centers with growing amounts of power.
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