US vs. China: Measuring Dominance in the Global Tech Stack

Nvidia CEO Jensen Huang recently framed the US-China tech competition in a new light, drawing a direct parallel to the dominance of the US dollar. This concept of a "tech stack" provides a powerful framework for understanding the current technological hierarchy and the scale of the rivalry.

What is a Tech Stack?

In technology, a "stack" is a layered model representing how different components work together to create the final products and services we use. For artificial intelligence (AI), this hierarchy can be broken down into four distinct layers:

• Applications: The top layer encompassing the end-user tools like chatbots, design software, and enterprise applications.
• Platforms: The foundational software tools and frameworks used by developers to build and run the applications.
• Infrastructure: The cloud services and data centers that power and deliver the software, often measured by capital expenditure.
• Hardware: The physical base layer, including semiconductors, servers, and networking equipment that everything else is built upon.

A Stark Contrast in Scale: US vs. China

When comparing the annual revenue and capital spending across each layer of the tech stack, the disparity in scale between the two nations becomes clear. It is important to note that these figures are estimates based on a number of assumptions.

A striking finding is that the value of the US hardware layer alone is estimated to be larger than the entire Chinese tech stack combined. This underscores a significant advantage for the US at the foundational level of technology.

The Dollar Dominance Parallel

Jensen Huang's mention of the US dollar was deliberate. As the world's primary reserve currency, the dollar is trusted for international trade, borrowing, and saving. Its dominance is quantifiable.

This creates a dominance ratio of approximately 25:1 in favor of the dollar over the yuan in global finance.

Tech Stack vs. Currency: A Comparative View

Placing these two metrics side-by-side reveals an insightful perspective on the current state of US dominance.

While the US tech stack is about six times larger than China's, the dollar's dominance is over four times greater than that. This comparison, though between two different domains, illustrates that the competition for global technological standards is still in a more dynamic phase than the established financial order.

The Race for Global Standards

The core insight is that the tech stack represents the modern battleground for setting global standards, much like the dollar sets the standard in global finance. The United States currently leads in establishing the architecture for future technologies, from chips to AI models.

However, the significant investment and focused industrial policy from China indicate that this race is intensifying. The outcome will be shaped not only by corporate innovation but also by strategic government policy on both sides.

For global businesses and governments, understanding the structure and scale of these competing tech stacks is crucial for navigating the future of the digital economy.