Analysis of Sino-US Tech Competition and Investment Opportunities Under Jensen Huang's AI 'Five-Layer Cake' Framework

The AI ‘Five-Layer Cake’ framework proposed by Nvidia CEO Jensen Huang divides the artificial intelligence industry into five key layers:

[1]. This framework provides a systematic analytical tool for us to understand the competitive landscape between China and the US in the AI field.

• Has the world’s largest power grid, which expanded significantly from 2010 to 2024[3]
• Significant advantage in electricity costs, providing basic support for large-scale AI training
• Leading in clean energy investment, aligning with ESG investment trends

• New energy power generation enterprises
• Energy storage technology and smart grid solution providers
• Energy management systems for data centers

• Maintains leadership in advanced process technologies, such as 3nm and 2nm processes
• Globally leading in GPU and AI accelerator design capabilities; Nvidia’s current market capitalization reaches $4.28 trillion[0]
• Complete chip ecosystem, with full-chain advantages from design to manufacturing

• Restricted access to high-end chips due to US export controls[2]
• Domestic substitution process accelerating, investment opportunities focus on:
  • Foundry enterprises like SMIC
  • Chip design companies like HiSilicon and Cambricon
  • Semiconductor equipment and material suppliers

• China leads the world in 5G network coverage
• China has faster data center construction speed, but the US has advantages in technology and energy efficiency
• AWS, Azure, and Google Cloud still dominate the cloud computing market

• Cloud computing service providers (Alibaba Cloud, Tencent Cloud, etc.)
• Data center REITs
• Network equipment and optical fiber manufacturers

• Leading in cutting-edge large model research and development, such as GPT series and Claude
• Huge R&D investment, obvious talent agglomeration effect
• Close integration of academic research and industry

• Active open-source ecosystem, with increasing contribution
• Outstanding performance in vertical domain models
• Obvious advantage in Chinese corpus

• Large user base and rich application scenarios
• Fast commercialization speed and strong policy support
• Perfect digital infrastructure such as mobile payment and e-commerce

• Intelligent manufacturing and industrial internet
• Smart cities and traffic management
• Fintech and digital currency
• Medical AI and precision medicine

Jensen Huang recently met with President Trump to discuss chip export control issues[2]. The US government has adopted a ‘precision strike’ strategy in AI export controls, trying to curb China’s AI development while protecting US enterprise interests. The strategic considerations behind this ‘calculation’ are:

• Maintain technological generation gap advantage
• Control key supply chain nodes
• Safeguard national security and economic interests

Facing US technology blockades, China has adopted a multi-pronged response strategy:

• Increase investment in independent R&D
• Build alternative technology ecosystems
• Strengthen technical cooperation with other countries
• Leverage market scale advantages

1. Application layer enterprises
   : Benefit from large domestic market and rapid commercialization
2. Domestic substitution concept
   : Semiconductor equipment and material suppliers
3. Computing power leasing services
   : Data center and cloud computing service providers

1. Vertical domain AI
   : Professional AI solutions for industries like healthcare, education, and manufacturing
2. Open-source ecosystem enterprises
   : Commercial companies based on open-source models
3. Edge computing
   : Technical solutions that reduce reliance on cloud computing power

1. Next-generation chip technologies
   : Disruptive technologies like quantum computing and photonic chips
2. New energy and energy storage
   : Clean energy solutions supporting large-scale AI computing
3. AI infrastructure
   : Next-generation data centers and communication networks

1. Geopolitical risk
   : Changes in Sino-US relations may affect technical cooperation and market access
2. Technology route risk
   : Rapid development of AI technology may lead to obsolescence of existing investments
3. Regulatory policy risk
   : AI regulatory policies are continuously strengthened in various countries
4. Valuation risk
   : Some AI concept stocks are overvalued, with correction pressure

Jensen Huang’s AI five-layer framework clearly shows the competitive landscape between China and the US in the AI field:

.

In this competitive landscape, investors should:

1. Focus on the differentiated advantages of China and the US across layers
   , avoiding a ‘one-size-fits-all’ investment approach
2. Attach importance to domestic substitution opportunities
   , especially in chips and key technology areas
3. Leverage China’s market scale advantage
   , focusing on investment opportunities in the application layer
4. Balance short-term returns and long-term layout
   , building a diversified AI investment portfolio

At the same time, attention should be paid to preventing geopolitical and technology route risks, maintaining flexibility and adaptability in investments.

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[0] 金灵AI数据 - 英伟达公司财务数据和市场表现
[1] Forbes - “The AI Cold War And The Race For Sovereign AI” (2025)
[2] CNBC - “Nvidia’s Jensen Huang talks chip controls with Trump, hits regulation” (2025)
[3] 华尔街日报 - “在内蒙古目睹中国竞逐AI赛道的另一张王牌：全球最大电网” (2025)
[4] Bloomberg - “Chinese Economy Shows Strength With EVs, Rare Earths, Robots” (2025)