The AI race’s surprising cost gap

A guest writer takes on China's AI firms keeping pace with US rivals. Plus, funding for Indonesia's One% Nutrition and a map of Israel's AI players.

Read from your browser Daily Newsletter Welcome to Tech in Asia's daily newsletter, your essential dose of Asia's tech and startup buzz. Subscribe to this newsletter or send story tips to editors@techinasia.com. Ensure our articles appear in your Google searches: IN FOCUS No billions, no problems for China's AI challengers One% Nutrition's bid to shake up wellness in Southeast Asia Who's who in Israel's AI boom Hello Betamax, The US spends the most money on its military out of all countries, almost reaching US$1 trillion in 2025. The military capabilities that spending buys have been on display in recent days, as images of the devastation US airstrikes have wrought in Iran are beamed around the world. The country's private sector also spends the most on AI compared to firms in every other country, splashing billions of dollars on chips, data centers, talent, and everything else needed to win the AI war. But while money buys air superiority on the battlefield, it doesn't seem to give the US a clear edge over its Chinese AI rivals. That's the conclusion of today's first top story from guest writer Matt Walker of MTN Consulting. The data shows that while hyperscalers like Meta, Microsoft, and Amazon spend far more on AI than their Chinese counterparts, the gap in model quality remains slim. Why haven't barrelfuls of cash opened up a decisive lead? Part of the answer may be capital efficiency, with Chinese firms learning to optimize models and infrastructure rather than simply throwing more compute at the problem. From flexing financial muscles to building real muscles, today's second top story looks at new funding for One% Nutrition, which aims to bring its protein drinks across Southeast Asia. The startup says its revenue nearly doubled between December 2025 and February 2026 following the launch of a new protein shake. If Chinese AI firms are winning on efficiency, maybe Silicon Valley just needs more protein. Peter Cowan, engagement editor TOP STORIES 1️⃣ How China's AI surge defies US spending power Billions spent, but where's the moat? Perhaps that's what the bosses of US-based AI firms should be asking, as Chinese companies are competing with them using a fraction of their budgets. If that sounds familiar, it should. A few years ago, the US tried to slow Huawei's progress in telecom infrastructure, but the Chinese company remains the world's largest telecom equipment vendor. Restrictions and spending gaps don't always decide the outcome. Once a domestic ecosystem forms - with talent, customers, and capital - it can keep advancing even under pressure. The data in this story suggests that China's AI industry may now be reaching that point. 2️⃣ One% Nutrition bags new funds to bring protein drinks to SEA The Indonesia-based health and wellness startup says that its protein shake tastes like soda. That's a far cry from most brands that offer thick, heavy shakes that don't prioritize taste. One% is riding the growing popularity of sports in Indonesia, but it also has ambitions to expand beyond its home country, with exports slated to begin later this year. FROM OUR ARCHIVES Mapping the dominant players in Israel's AI field Some have called the current conflict in the Middle East the "first AI war," and one of its main players is Israel. The country has a thriving AI sector, with US$930 million in funding raised last year. You won't find the secretive firms behind the missile targeting systems on this landscape map. But Israel's commercial AI ecosystem is booming all the same, and this piece dives into the startups, investors, and trends shaping it. TRENDING NEWS 1️⃣ Nvidia CEO signals end to OpenAI, Anthropic investments The investments have raised concerns among analysts that they may be circular, with Nvidia pouring money into customers whose funds could then be spent on the chipmaker's processors. 2️⃣ TSMC to open new Taiwan fab in 2028 Construction of the Tainan plant is expected to start later this year. The company did not specify whether the new fab will use its 2-nanometer process technology for chip production, which will be used in TSMC's upcoming facilities in Hsinchu and Kaohsiung. 3️⃣ S Korean chip industry fears Iran crisis could raise chip prices Aside from fears over disruption to data center construction, the war could affect supplies of materials such as helium, which is used for heat management in semiconductor production. 4️⃣ Indonesia inspects Meta office over disinformation, gambling content The communications ministry said Meta's compliance in following up on online gambling as well as disinformation, defamation, and hate content stood at 28.5%, one of the lowest among platforms in the country. 5️⃣ South Korea plans 20% cap on crypto exchange owners Limiting major shareholder stakes in cryptocurrency exchanges at 20% would likely force major players in the country to restructure their ownership. 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