Microsoft President Brad Smith warned that American tech companies should "worry a little bit" about Chinese government subsidies in the artificial intelligence race. Speaking at the AI Impact Summit in New Delhi, Smith acknowledged the U.S. maintains advantages in chip access and innovation but cautioned that state support for Chinese competitors poses a growing competitive challenge.

Smith drew parallels to China's previous strategy in telecommunications, where state backing helped companies like Huawei and ZTE expand globally while pushing European rivals like Ericsson and Nokia onto the defensive. He noted that Chinese data centers from firms like Huawei already operate worldwide, making it relatively easy for Beijing to extend subsidies to these operations.

The Microsoft executive emphasized that U.S. companies must compete effectively with Chinese state-backed rivals, with support from their own governments. Chinese AI companies have received substantial backing through measures including a multi-billion-dollar national investment fund and energy cost vouchers for computing needs, as Beijing pushes to close the technology gap with American firms.