China: An overlooked AI frontier

China’s AI market is gaining momentum as the country builds a more self-sufficient ecosystem across chips, data-center hardware, and software. While Taiwan and South Korea remain central to advanced semiconductors, much of the physical AI infrastructure is made in China, and local models are improving quickly on a cost basis.

For investors, the key opportunity may lie less in already-expensive global supply-chain winners and more in Chinese tech leaders with hidden AI optionality that is not yet fully reflected in valuations. The higher-risk area remains China-centric AI names that still need to prove they can turn heavy investment into durable earnings.

The main risks are policy uncertainty, uneven profitability, and the possibility that today’s chip shortage narrative gives way to excess capacity later in the cycle. In this environment, selective exposure matters most, especially where downside appears priced conservatively relative to long-term AI potential.