Citadel Securities warns US energy bottleneck could cede AI advantage to China

Shah explained that China's ability to combine "slightly less capable (and much cheaper)" AI models with "more factories, robots, vehicles, drones, and industrial equipment" could lead to success. He differentiated between AI "development," driven by labs, and "deployment," which hinges on a country's ability to integrate AI across its economy.

The primary bottleneck identified is energy. Shah noted that the US may lack sufficient power supply for rapid AI expansion, citing local opposition to data centers and grid connection issues. In contrast, China is projected to significantly increase its power generation capacity. "China will add almost six times as much power-generation capacity as the US over the next five years, whilst America remains constrained by grid connections, permitting, and local opposition to data centers," Shah wrote. This scenario presents an "uncomfortable possibility: America develops the better models…but China has more places to run it."

Shah believes the US can still prevail but requires greater political support and relaxed regulations. He previously argued in August that "permission" rather than physical assets would be the next major AI bottleneck. He also suggested that recent AI doomsday warnings are an overreaction and could impede US progress, stating, "The mistake is to tell the public that AI may eliminate their jobs (or indeed humanity itself!) and then ask the same public to provide the land, electricity and permits required to build it."