China’s Game

Welcome Back to XcessAI

Hello AI explorers,

This week, something interesting happened in the world of AI — and most of the West barely noticed.

Huawei unveiled a new AI computing system called CloudMatrix 384, aimed squarely at rivalling NVIDIA’s top-tier H100.

If that doesn’t get your attention, it should. Because while Western headlines are busy arguing over regulation and ethics, China is building the future — and it’s moving fast.

Let’s take a closer look.

The Huawei Surprise

CloudMatrix 384 is no small upgrade. It’s a liquid-cooled system that combines hundreds of AI accelerator cards, designed to handle the most complex LLM training and inference tasks. Early reports suggest it may rival NVIDIA’s DGX GH200 and Amazon’s Trainium2.

Huawei’s new CloudMatrix 384 runs exclusively on its homegrown Ascend 910C chips (not Western GPUs) using scale‑out architecture to compensate for raw per‑chip efficiency.

The system is built around 384 HiSilicon Ascend 910C processors. Each 910C combines two Ascend 910B chiplets into a dual‑chiplet package. And, while individual Ascend 910C chips offer less performance per watt compared to Nvidia’s B200 or H100 equivalents, Huawei compensates with sheer scale and a high-speed optical mesh interconnect.

Huawei CEO Ren Zhengfei acknowledged the Ascend chips were “one generation behind US rivals” — but said cluster computing and advanced system design help close the performance gap.

Huawei claims the CloudMatrix system can train 10B+ parameter LLMs 25% faster than its last-gen system — entirely without US chips.

In non-technical terms, it means China is catching up fast even on chip technology, which was long seen as the West’s final line of technological defence.

The Bigger Picture

Huawei’s launch is just one headline in a broader trend that should be triggering reassessments and raising strategic eyebrows in boardrooms and ministries across the West.

Consider this:

🔧Engineer Factory: China graduates 1.4 million engineers annually — more than the US, EU, and India combined. These are professionals trained in AI, robotics, semiconductors, and material science.

🏭Manufacturing Supremacy: According to the UN Statistics Division (2023), China accounts for over 28% of global manufacturing output (vs. ~16% for the US). It’s the only country with a complete industrial supply chain, from rare earths to semiconductors to final assembly.

🧠 Patent Leadership: In 2023 alone, China filed over 1.5 million patents — 46% of the global total. That’s not just volume — it's strategic dominance in 5G, EVs, clean tech, and, increasingly, AI.

🏃 Work Ethic as National Policy: While the West debates work-life balance, China institutionalized “996” (9am–9pm, 6 days/week) for a generation. Is it sustainable? Maybe not. But in a global race, the pace matters.

🌍 Talent on the Move: High-performing individuals are voting with their feet. From London to California, tax burdens and bureaucratic drag are driving entrepreneurs and top talent to low-friction hubs like Singapore, Dubai, and even Shanghai. Innovation is borderless — and so is ambition.

🧠 Cognitive Decline: The West is facing a silent crisis — falling IQ scores and diminishing problem-solving ability. Studies across the UK, Scandinavia, and North America show steady drops in fluid intelligence since the 1970s. Digital distractions, falling academic standards, shifting talent pools, and a growing aversion to meritocracy are eroding the brainpower edge.

📈 Robotics: China currently deploys more industrial robots annually than the US did in the entire decade of the 2010s.

The West Realizes Too Late

While the West debates, China builds.

The West often discovers China’s dominance after the fact — when it’s already too late to compete. Here are a few reminders:

• 🧵 Textiles: The UK once led the world in global textile production. Now, China exports 10x more textiles than the UK produces. The UK’s textile workforce fell from over 1 million in the 1970s to under 90,000 today.

• 🔩 Steel: China now makes more than half of all steel produced globally — an industrial edge no Western nation can match.

• ⚗️ Chemicals: BASF, Germany’s crown jewel, is building its largest plant in China. Chemical companies operating in Europe are downsizing their operations in the region, squeezed by high energy costs and China’s large capacity build.

• 🚗 EVs: In 2023, BYD overtook Tesla in quarterly EV sales. Chinese electric vehicles are now flooding global markets — cheap, fast, and increasingly competitive. Even Elon Musk admitted Tesla is now the only non Chinese company in the global EV top 10.

And now it’s setting its sights on AI.

Next Frontier: China in the Robotics Race 🤖

While AI headlines focus on models and chips, the most disruptive frontier may soon be physical robotics. China is already leading here — and the momentum is strong.

🔍 What the Data Shows

• In 2023, China accounted for 51% of global industrial robot installations, with 276,288 units deployed — more than all of Europe, the US, and Japan combined.

• Chinese manufacturers supplied 54% of robots in the metal and machinery sector, with 85% market share in electronics automation.

• The domestic robotics market is projected to grow from US $47 billion in 2024 to US $108 billion by 2028 at a 23% CAGR.

🦾 Rapid Advances in Humanoid Robotics

• Unitree’s R1 humanoid robot, priced at just under $6,000, can run, cartwheel, and interact, demonstrating high mobility at a fraction of cost compared to Western alternatives.

• UBTech’s Walker S2 is the first humanoid robot capable of autonomously replacing its own battery, enabling continuous operations in factories or service roles.

• Over half of all publicly listed humanoid robotics firms globally are based in China, according to Morgan Stanley (link).

• FT reports that Chinese hardware now leads U.S. counterparts in robotics platforms—even as U.S. retains software lead—with significant state and private backing in hardware supply chains.

🏭 Companies Driving the Charge

Key players in China’s robotics sector include:

• Unitree Robotics: Pioneers in cost-effective, agile humanoids. Their R1 and G1 models have seen early adoption in consumer and industrial sectors.

• UBTech Robotics: Known for Walker robots used in logistics, public AI deployments, and manufacturing support.

• AgiBot (Zhiyuan Robotics): Open-source humanoid production line with thousands of units shipped since late 2024.

• EngineAI, Leju Robot, Zerith: Start-ups pushing innovation in dexterous robots, household assistants, and cognitive systems in hospitality and service.

📉 Potential Impacts for Businesses in the Robotics Space

• Cost Advantage: With robots like R1 undercutting Western counterparts by 3–5x, global pricing pressure seems a likely outcome.

• Scale Displacement: China’s robotics production makes it the go-to supply chain hub for manufacturers worldwide.

• Strategic Erasure: As robots enter public services, manufacturing, logistics, and hospitality, Western leading players risk falling behind in automation-led efficiency.

Takeaways for Business Leaders

Whether you’re based in London, São Paulo, or San Francisco, here’s why China’s AI acceleration matters:

🧭 Supply Chain Realignment: Your future compute capacity may depend on Chinese alternatives.

📊 New Competitive Benchmarks: Chinese AI firms will potentially soon match or exceed Western capabilities, at a lower cost.

🎯 Strategic Blind Spots: If your AI roadmap doesn’t consider China’s role, you're likely behind.

Don’t just read the headlines. Read the trendlines — and plan accordingly.

Final Thoughts

In geopolitics and AI alike, the world is changing.

That’s China’s game.

Games aren’t static - but can the West catch up?

Until next time,
Stay sharp. Stay informed.
And keep exploring the frontier of AI.

Fabio Lopes
XcessAI

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