Title: Chip Supply Cuts and the US–China AI Innovation Race: Theory and Policy Analysis

Speaker: Sun Rui, Assistant Researcher, School of Economics, Shandong University; Ph.D., Fudan University. Research fields: industrial organization and innovation economics.

Abstract: Artificial intelligence is a strategic frontier technology and a focal point of US–China competition. Under the real-world backdrop of US chip supply cuts to China, this paper examines impacts on domestic substitution incentives and the US–China AI innovation race in a vertical market-structure framework, and studies how R&D subsidy efficiency changes before and after supply cuts. Results show supply cuts reshape the supply chain, stimulate domestic upstream substitute firms’ innovation investments, shift profit rents downstream, and may ultimately intensify an innovation race between US and Chinese AI firms. Supply cuts also enhance complementarity of innovation investments across upstream and downstream domestic firms; when subsidy intensity exceeds a threshold, subsidy efficiency for downstream firms rises after supply cuts.

Date & time: 21 November 2024, 12:15–13:15

Venue: Room B321, Zhixin Building, Central Campus, Shandong University