Microsoft’s Brad Smith says U.S. firms should “worry” about China’s AI subsidies

Vlad Schepkov

Thu, February 19, 2026 at 3:53 AM GMT+9 1 min read

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Investing.com – Microsoft President Brad Smith cautioned that American tech companies should “worry a little bit” about subsidies Chinese competitors receive from their government in the artificial intelligence race.

Speaking at the AI Impact Summit in New Delhi, Smith acknowledged that while the U.S. has “an advantage in terms of access to the most powerful chips in the world” and “other technology innovation,” Chinese government subsidies pose a competitive challenge.

“I do think we always have to think about, maybe even worry a little bit about Chinese subsidies,” Smith told CNBC in an interview.

Smith drew parallels to China’s previous strategy in telecommunications, where state support helped companies like Huawei and ZTE expand globally. “Some American companies disappeared. European companies like Ericsson and Nokia were thrown on the defensive,” he noted.

The Microsoft executive pointed out that data centers from Chinese firms Huawei and Alibaba already exist worldwide, making it relatively easy for China to extend subsidies to these operations.

“I think for the rest of us, we have to compete with that, and we have to be good at competing with that, with the support of our governments,” Smith said.

Chinese AI companies have received substantial government backing through measures including a multi-billion-dollar national investment fund and vouchers for reduced energy costs for their computing needs. This support comes as Chinese firms have released numerous AI models over the past two weeks.

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