Chinese enterprises covet US AI data center supply chain gains; geopolitics emerges as the largest barrier

China and the U.S. may be competing for dominance in artificial intelligence, but some Chinese manufacturers are eyeing the U.S. data center buildout as an opportunity. "We can see very big potential in the U.S. market," said S.K. Lee, global vice president of Singapore-registered Brightray, an AI infrastructure company. "The China market is equally important, but we can see that there's a stronger demand in the U.S."

Brightray's manufacturing partner is Chinese firm PrefabDC, which makes prefabricated data centers, while Brightray manages construction of the buildouts. Even as public backlash over the U.S. AI data center buildout grows, America vastly leads in deployment. The U.S. had 5,427 AI data centers in 2025, compared to China's 449, according to data from the Stanford Institute for Human-Centered Artificial Intelligence.

The scale of U.S. investment is staggering. Tech giants like Alphabet, Microsoft, Meta and Amazon are estimated to spend around $765 billion combined this year on AI infrastructure, with JPMorgan Chase CEO Jamie Dimon recently suggesting that figure could reach $1 trillion next year. Chinese companies like Alibaba have committed far less. Though the Chinese government has outlined plans to invest $295 billion to build data centers over the next five years, it remains a fraction of U.S. private-sector spending.

According to Jeffrey Ding, AI expert and assistant professor at The George Washington University, the imbalance reflects deeper economic differences. "Chinese companies just are not generating as much revenues from their AI services," Ding said. "And that's one of the reasons why they're not able to invest in these enormous data center buildouts that their competitors in the U.S. are doing." The root issue, he added, is that "there is not as much demand for the AI services."

Chinese President Xi Jinping's recent visit to Washington has refocused attention on the China-U.S. trade dynamic, with AI featuring prominently in talks between Xi and President Donald Trump. Yet the relationship remains fraught. American policymakers and the security establishment fear cybersecurity risks and worry the U.S. could become reliant on China for critical infrastructure, potentially giving leverage to its main AI competitor. The Trump administration is considering bans on Chinese open-weight AI models as well as new types of Chinese data center components.

"It is a very challenging environment between the geopolitics recently between the tariffs we've been seeing and the recent bans," said Benjamin Boucher, principal analyst on supply chains for Wood Mackenzie. "I think it is just going to depend on what we see at a political level over the coming years in terms of how it evolves."

Despite these tensions, China remains essential to the U.S. data center supply chain. The U.S., facing shortages in key components such as electrical equipment, lacks much of what it needs domestically. While some components are available in the U.S., lead times are long. "China can offer those at a much more favorable timing," Boucher explained. "China is definitely very important towards the U.S. supply chain for data centers at the moment."

China, the world's largest manufacturer, is already deeply embedded in the U.S. supply chain and has been for years. Chinese companies supply transformers, batteries and fiber-optic cables, among other products. At a factory in Yangzhou, in eastern China, Brightray's Lee described how the company benefits from China's integrated supply base. "These materials, equipment are sourced from different parts of the world and a very big portion come from China because China's supply chain is very integrated and comprehensive. That's the reason why we have the factory here in China," he said.

Prefabricated construction is used in the U.S., but mainly for modules inside buildings rather than modules including the exterior, as Brightray does. The method allows companies to build most of the data center in a controlled environment, protecting against weather and unexpected site events. While U.S. data centers take on average two to three years to build, Brightray says its prefabricated approach with PrefabDC can cut construction time by at least half.