Elon Musk warns the U.S. could soon be producing more chips than we can turn on. And China doesn’t have the same issue

Elon Musk warned the biggest issue hampering AI advancement in the United States is a problem Chinese competitors don’t have.

In a conversation in Davos, Switzerland, with BlackRock CEO and World Economic Forum interim chair Larry Fink, Musk said AI chip production is increasing exponentially, but electrical power is insufficient, hampering the efficiency of AI data centers in training and deploying AI models.

“I think the limiting factor for AI deployment is fundamentally electrical power,” Musk said. “It’s clear that we’re very soon—maybe even later this year—we’ll be producing more chips than we can turn on.”

The U.S. has been grappling with an outdated grid system, the result of decades of underinvestment and an aging infrastructure. As tech companies increasingly rely on grid operators for electrical power, reliability issues and production limitations have threatened the speed of AI implementation, raising investor concerns of an AI bubble and fueling the belief that the U.S. has already lost the battle with Chinese tech.

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