China targets 50% boost in computing power as AI race with U.S. ramps up

China plans to increase its computing power by 50% by 2025, the country's key ministries said Monday, as it looks to keep pace with the U.S. in artificial intelligence and supercomputing applications.

The world's second-largest economy wants to have computing capacity equal to 300 exaflops, according to a plan from six government departments, including the powerful cyberspace regulator. That would be up from the 197 exaflop computing power the country currently has.

An exaflop, or EFLOP, refers to a unit of computing power. For context, one exaflop is equivalent to the computing power of two million mainstream laptop computers, according to Counterpoint Research.

The Chinese ministries said that the increased computing power will be required to support applications in industries including finance and education.

Expanding computing power is seen as key for supporting the development of artificial intelligence which requires advanced semiconductors to process huge amounts of data.

"China has found that traditionally, every 1 yuan invested in computing power has driven 3-4 yuan of economic output," Akshara Bassi, senior research analyst at Counterpoint, told CNBC via email. "The investments echo China's plans to drive economic output through leadership in technology prowess and integrating AI with existing technologies and solutions across all industries and domains."

Technologies like semiconductors and AI have become key battlegrounds in the tech rivalry between the U.S. and China.

"China aims to invest in growing in its computing power especially the AI, as it sees its major cloud providers launching AI solutions en masse for consumers and enterprises," Bassi said.

As part of its computing push, China wants to focus on areas such as memory storage and networks for transmitting data, and it is also planning to build more data centers.

These are required for cloud computing players to grow their footprint. Many AI applications currently are sold via cloud computing services, such as those offered by Chinese giants like Alibaba and Tencent.

The Chinese ministries said that the security of the supply chain will also be strengthened.

The country's technology supply chain has been under pressure over the past few years as the U.S. has used export controls and other sanctions to attempt to cut the Asian nation off from key technologies like chips.

In response, China has sought to boost the capabilities of its homegrown industries in some of these areas.

Washington took note of a recent development in which Chinese tech champion Huawei released a new smartphone with a 5G chip — which was surprising as U.S. sanctions were designed to prevent this.

Counterpoint's Bassi said that China's ambitions to boost computing power could be held back by U.S. sanctions that restrict the country's access to some critical semiconductors, such as the graphics processing units, or GPUs, sold by American chip designer Nvidia.

"Access to latest and best in class AI chips/GPUs is the primary obstacle that the country faces due to chip ban in expanding its AI data centers," Bassi said.