China and US AI race was a topic of contention at the recent CNBC conference taking place at Singapore’s Changi Airport with some tech leaders saying the cost of development has left many companies in a “hypnosis.”
The tech leaders – Salesforce CEO Marc Benioff, Bridgewater Associates founder Ray Dalio, and Alibaba co-founder Joe Tsai debated on an array of AI issues including data center spending, open source models, and the possible impacts on the fast-growing industry.
Benioff says companies need to rethink their data center spending
During the discussion, Benioff revealed that some tech leaders are in a fix, and are not certain about the number of data centers and the level of training needed to create AI models.
This comes as AI companies and other tech firms are betting on the transformative abilities of AI, forcing them to make huge investments in AI infrastructure, especially data centers.
However, in January, Chinese startup DeepSeek made headlines when it launched its models at a fraction of the cost of models by its US competitors including Llama, OpenAI’s ChatGPT, Claude, and Google’s Gemini. The startup also claimed that its models were superior to its global and US competitors in many aspects, which rattled US tech and AI companies.
“The emergence of seemingly low cost, high tech Chinese models like DeepSeek’s R1 shows that these investments might not be necessary.”
Benioff.
About the big tech companies spending hundreds of billions of dollars on hardware, the Salesforce CEO said it has to be rethought on exactly what the companies are doing and why they are doing it.
During the same discussion, Benioff described data centers that companies are rushing to build as “commodity centers,” noting that the cost of using such centers has never been so low.
Salesforce will take advantage of the low costs to hyperscale its AI applications, he added.
It came after the company had earlier announced plans to invest $1 billion in Singapore over the next five years.
The company said the investment is designed to accelerate the country’s digital transformation and the adoption of Salesforce’s flagship AI offering Agentforce.
Jermaine Loy, managing director of the Singapore Economic Development Board in a statement said, “Salesforce’s initiatives in AI research and workforce development will strengthen our ecosystem by catalyzing innovation for key industries and corporates based in Singapore.”
US outpaces China in AI, but real competition is between open source and closed models
On the same panel, famed hedge fund manager Ray Dalio said that the US remains ahead of China in designing and producing the best semiconductors. However, China is ahead in the application and usage of AI, according to Dalio.
“China is behind, but not by a lot, in the best chips,” he said during the discussion. But the Chinese were better at making them work together.
During a discussion about developments in AI and the likely disruption to labor markets, Alibaba chairman and co-founder Joe Tsai warned that research analysts “could be completely replaced by AI.”
He added that rather than compete with AI, analysts can let AI systems retrieve and process information and use their human judgment to enhance the quality of research.
Commenting on the “so called DeepSeek moment”, Joe Tsai said it is more about the open-source movement than which country has the best AI. He challenged the idea of AI development through the context of geopolitical competition, maintaining that real competition is about open and closed models as opposed to between nations.
According to Business Insider, open-source models allow for the free and open sharing of software to anyone for any purpose.
Tsai also predicted a rush of development on top of existing open-source models, adding that this will not benefit Big Tech companies only. Open-source models create a fair playing field.
“The AI game is not just left to the five richest companies in the world that can afford to invest $50 billion a year.”
Tsai.
A Microsoft executive said there needs to be less focus on AI models and more on how the technology can be used to help users do their jobs better.
AI innovation lead at Microsoft’s Office of the Chief Scientist, Dean Cargnan downplayed the risks of AI eliminating jobs, noting that machines cannot replicate the human-to-human interactions needed to manage and innovate staff.
In January, DeepSeek launched an open-sourced AI model that shook the markets globally. Third-party tests showed the model outperformed its peers from OpenAI, Meta, and other top developers in some tasks, and the company said it was built for less money.
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