China is building an AI war machine. America must secure the infrastructure now

On June 24, OpenAI introduced its first custom-made inference chip, developed with Broadcom and known internally as “Jalapeño.” Most Americans will never see this. But Beijing has certainly noticed. The announcement signals that the rivalry between America and China is moving beyond software and chatbots into a struggle for control of the infrastructure that will shape economic, military and technological power in the 21st century.

Nations that control the chips, data centres, electricity and networks behind advanced computing systems could shape the global balance of power for decades to come. This fact should concern every American.

As Washington debates inflation, immigration and the latest foreign crisis, a new Cold War is accelerating beneath the surface. Unlike the previous one, this contest is not primarily about nuclear weapons, tanks or ideology. It’s about machine intelligence.

THE AI TECHNOLOGY RACE IS THE NEW ‘Cold War’ BETWEEN THE USA AND CHINA THAT COULD HAVE DEVASTIOUS CONSEQUENCES: REPORT

Most Americans view advanced computing systems as a consumer convenience, useful for answering questions or drafting emails. China doesn’t do this. Beijing sees these same systems as instruments of national power that can reshape military effectiveness, economic output, industrial competitiveness and global influence.

Recent developments reveal how quickly this competition is evolving. Chinese computing firm DeepSeek is seeking nearly seven billion dollars in new investment, a sign of Beijing’s determination to build advanced computing capabilities independent of American technology. Huawei continues to expand its domestic semiconductor ecosystem for advanced computing applications. As Xi Jinping pushes the People’s Liberation Army to develop what he calls “new quality warfare capabilities,” a direct reference to machine intelligence-enabled warfare, the Chinese military is rapidly fielding autonomous systems and intelligent command networks. And the White House has officially accused Chinese organizations of running industrial-scale campaigns to extract specialized capabilities from America’s most advanced computing models.

These are not isolated technology stories. Together they confirm what I argued in my last book. The New Artificial Intelligence Cold War: This rivalry has entered a new and more dangerous phase.

The Race Is Now About Infrastructure

THE NEW ARMS RACE IS FOR THE COMPUTER — AND AMERICA CAN’T HURT BEING LEFT BEHIND

The first phase of this competition focused on creating better models. The new phase focuses on who controls the infrastructure that makes advanced computing possible. Chips, energy, data centers, networking and cloud systems have become controversial areas. Whoever masters this entire technology stack will have decisive advantages in economic productivity, military capability, intelligence operations, and technological innovation.

China seems to understand this better than most Americans.

Xi Jinping has instructed his government and military to treat machine intelligence as an “important strategic pillar” in global technological competition. Beijing’s actions reflect this priority. China is pursuing a comprehensive national strategy that combines state-backed financing, civil-military fusion, domestic semiconductor development, and advanced computing deployment across industry and government. The goal is a sovereign computing ecosystem built on Chinese chips, Chinese cloud services and Chinese models, designed to project power abroad while reducing dependence on the West.

What Does the Jalapeño Chip Signify?

This strategic logic explains why OpenAI’s new inference chip matters beyond the headlines. The announcement isn’t just about a faster processor. This is evidence that competition is moving towards vertical integration. The advantage in the future may not belong to the person who writes the best software, but to the person who controls the entire chain that powers machine intelligence, from chips to electricity to cloud infrastructure to advanced models. China has clearly grasped this principle. The United States is just beginning to respond accordingly.

Ability to Knock at the Front Door

Perhaps the most overlooked threat in this rivalry is what the White House officially calls “hostile distillation.”

The concept sounds technical. The ground reality is not like that. Foreign actors can systematically extract capabilities from advanced American computing systems through mass interrogations, coordinated research, and jailbreaking techniques that never require stealing the source code. White House science and technology director Michael Kratsios warned in an April memorandum that Chinese organizations were conducting “deliberate, industrial-scale campaigns” using tens of thousands of proxy accounts to copy the functional capabilities of leading American computing models and train rival systems from the results.

During the original Cold War, spies stole nuclear and aerospace secrets through human intelligence networks and technical influence. Today, competitors can gain the same type of strategic advantage by walking through the front door of a commercial programming interface.

If America develops the world’s most capable computing systems but fails to maintain them, our technological superiority could become surprisingly fragile.

Supply Chain Conflict

But the biggest vulnerability may be closer to home. America is investing hundreds of billions of dollars in advanced computing infrastructure. Companies are building massive data centers across the country. Utilities are struggling to meet projected electricity demand. States are competing to attract investment.

THE WEST STILL DOES NOT UNDERSTAND CHINA’S RARE WORLD END DANGER

This all sounds encouraging until the supply chain is examined. Many of the electrical components needed to support these facilities, including transformers, switchgear and power management equipment, remain dependent on foreign manufacturing, which is largely dependent on China. These systems also depend on critical minerals and rare earth elements, of which China remains the leading global supplier. If this equipment depends on foreign suppliers, technological leadership becomes more fragile than most policymakers acknowledge.

This creates a strategic contradiction that Washington has yet to resolve. America increasingly recognizes China as its main long-term rival. But our computing fabric remains dependent on supply chains that are vulnerable to Chinese influence. No country can win by relying on its primary rival for the infrastructure that enables technological competition.

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What Should America Do?

Recent policy moves, including expanded semiconductor export controls, increased Pentagon investment in autonomous and decision support systems, and new federal attention to model safety, suggest Washington is moving in the right direction. But the pace falls short compared to the threat.

The United States needs safe semiconductor manufacturing, reliable domestic energy, resilient supply chains that bypass Beijing, sustained research investments, and stronger cooperation with allies who share our concerns about China’s ambitions. Most importantly, we must recognize that machine intelligence is no longer just a Silicon Valley story. This is a story of American power with consequences that will outlast any other debate currently occupying Washington.

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The first Cold War was won by industrial strength, military determination, technological innovation, and moral clarity, with free societies outperforming closed societies. This new Cold War will require the same qualities.

China’s leaders have concluded that advanced computers will help determine the balance of power this century. The United States still has tremendous advantages, but those advantages are eroded when taken for granted. This rivalry is no longer a guess. It continues. Whether America leads or follows may depend on decisions made today about chips, energy, infrastructure and national resolve. China is aware of the risks. The question is whether we do it.

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