AI: the geopolitical innovation race
20th October 2025
As the technology continues to grow in importance, which nations are set to dominate the AI space?
Competition is, in general, good. Occasionally it just results in arguments and takes the enjoyment out of things, but, for most things, a bit of healthy competition is good. It encourages people, in whatever field it is, to work harder, innovate more and push further.
This competition is already prevalent in AI: the market is such a lucrative opportunity that nations across the world are fighting to make the most out of this new technology. But, in the race for AI dominance, who is leading so far and what steps are being taken to ensure that they stay ahead in future?
United States:
· Between 2013 and 2024 the US invested over $471 billion in private sector AI, with $109 billion in 2024 alone.
· The National AI R&D Strategic Plan, created by the government, focuses on trustworthy AI, developing the workforce and collaborating internationally.
· The US are leading in foundational model development (61% of global output) and control 73% of global AI compute.
· Currently only 25% of US companies have adopted AI at scale.
As expected, the US have gone big at the start: they have the money to invest and the people to make innovations. However, the lack of uptake overall creates concerns – will this momentum continue if US businesses aren’t using the technology? And how can this be rectified?
China:
· Another big investor, $133 billion was spent by the government on AI between 2019-2023, with an extra $47.5 billion fund for semiconductors (computer chips).
· China lead in AI adoption – 76% in healthcare and 57% in manufacturing.
· Their focus is on scale, patents and integration into the national infrastructure, with AI projected to contribute $4.8 trillion to GDP by 2030.
Adoption in China is better than the US, which is a good sign: a market that embraces the technology will continue to grow. But can China compete with the scale of the US’s AI investment? And is it wise to integrate into other services before we know the technology is reliable?
European Union:
· Regulatory leadership through the AI Act and Digital Markets Act.
· Hosts multiple AI safety institutes and leads global efforts in ethical AI.
· Because of the emphasis on strict regulation, deployment may be slower than China and the US.
The EU are very different to China and the US – they can’t compete with the two economic giants, so instead have focused on regulations, keeping themselves in the discussion by shaping the argument. Will this be enough, or does the EU need to start making more AI innovations of their own?
India:
· High adoption rate of 57% nationally, second only to China.
· Hosts multiple AI safety institutes and leads global efforts in ethical AI.
Like the EU, India has more of a focus on regulations than AI technology itself, though the amount of people using it makes them an encouraging market. Again, the question is are these guidelines enough to keep them in the conversation over bigger players?
United Kingdom:
· Have created a 10 year National AI strategy, emphasising innovation, governance and public trust.
· Invested $26 billion in AI between 2013 and 2023.
· Hosted the first AI Safety Summit and established the world’s first AI Safety Institute.
Another smaller player, another similar story: regulations and legislation are keeping the UK in the AI conversation (though $26 billion is a decent investment). What makes the UK different is their strong ties to both the EU and the US – it could position them favourably in terms of AI in the years to come.
So, who is ahead in the AI innovation race? Right now, China and the US are dominating the market, and it seems unlikely that this will change. However, it would be unwise to overlook the small players, who are keeping up with these two titans by controlling how AI is developed and used: it could make them very influential in future.
Ultimately, AI uptake will be an important metric to watch, as the more people use it (and pay for it), the quicker it will grow.
If you have any questions, on the future of AI or anything else, please contact Interfuture Systems today.
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