From artificial intelligence to electric car batteries, Chinese technology is increasingly being integrated into the business of the world’s biggest companies, even as the U.S. government steps up efforts to rein in Beijing’s technological ambitions.
Apple leveraged Alibaba and Baidu for AI in China, while Ford turned to CATL for battery technology. Volkswagen is partnering with Xpeng to develop smart EVs in China, and Stellantis is expanding its partnership with Leap Motor for EV production and joint purchasing.
Analysts say broader changes are afoot, with Chinese companies becoming a source of technology and innovation that global companies cannot easily bypass.
“Five years ago, China was primarily a place where global companies went to sell. But now, in certain sectors, China has become a place to source capacity,” Kitty Fok, managing director of market research firm IDC China, told CNBC.
The development comes as the U.S. government expands efforts to rein in Chinese technology.
Since blacklisting Huawei in 2019, it has imposed significant restrictions on advanced chips and chip-making equipment, restricted some U.S. investments in Chinese semiconductors, quantum technology and AI, and banned companies including contract chipmaker Semiconductor Manufacturing International Corporation (SMIC).
From market to technology source
China has carved out a formidable position across a growing number of technology industries.
Automakers such as BYD, Changan and Chery accounted for nearly 63% of the global electric vehicle market in 2025, while battery makers such as CATL, BYD, CALB and Gotion accounted for nearly 70%, said Soumen Mandal, principal analyst at Counterpoint Research.
Mandal cited cost, scale, manufacturing depth, supply chain integration and speed of innovation as strong reasons for global companies to continue engaging with Chinese companies.
“China’s technological rise is moving from low-cost manufacturing to scale, supply chain depth and speed of innovation,” Mandal said, adding that global companies are maintaining a balance between geopolitical risks and commercial realities.
This change is particularly advanced in electric vehicle batteries.
CATL is deeply integrated into the global automotive industry. For example, Ford is working with CATL to use its lithium iron phosphate battery technology at a $3.5 billion battery factory in Michigan.
Fok said integrating China’s EV battery technology into global supply chains could be difficult to reverse.
“For EV batteries, the structural transformation has already been completed,” he said. “Switching suppliers is not a quarterly sourcing decision; it takes years of engineering, testing, and recertification.”
However, for some companies, collaboration with Chinese technology companies remains primarily about competition within China.
Multinational companies that need AI services or cloud infrastructure to operate in China will need to work with local providers due to restrictions on foreign providers, Fok said.
“Many of these things are not a choice within China,” she said, pointing to Apple’s collaborations with Alibaba and Baidu.
Lian Jie Hsu, principal analyst at Omdia, said access to the Chinese market remains a key driver for many such partnerships, especially as global automakers increasingly rely on Chinese vendors for software, AI and other systems sold in China.
But the driver is much more than that. Su said “slow but sustained structural changes” are occurring in supply chains and innovation flows in areas such as batteries, electric vehicles, energy storage and applied AI.
AI could be the next frontier
This trend is starting to show up in artificial intelligence, with increasingly capable Chinese models challenging the idea that companies rely on Chinese technology primarily because it’s cheaper.
An IDC survey of European companies earlier this year found that security and compliance requirements and superior performance, rather than cost, were the top two reasons for widespread adoption of Chinese AI models.
“So the popular narrative that Western companies are rushing to Chinese AI because it’s cheap is being reversed,” Fok said. “This decision is performance-driven and compliance-based.”
Unlike US-based Anthropic and OpenAI, Chinese companies like Alibaba and DeepSeek focus on open source models, making them more accessible to developers around the world.
Su said China’s advances in AI are accelerating domestic innovation, even as U.S. regulations restrict the Chinese government in areas such as cutting-edge semiconductors.
“The main impact of the US regulation is that it has become a catalyst for innovation and efficiency within China,” Su said, adding that Chinese vendors remain competitive in the areas of AI, batteries and automotive software.
Shift restrictions
Geopolitical considerations continue to shape where and how Chinese technology is adopted.
Su expects resistance to Chinese technology to be strongest in areas such as advanced semiconductors, cybersecurity, defense and national security-related services.
Analysts say that rather than simply boycotting or embracing technology, China’s adoption of technology will vary by sector.
Counterpoint’s Mandal expects the adoption of Chinese technology to expand globally in sectors including EVs, batteries, consumer electronics, robotics, drones, AI and some areas of semiconductors, leading to what he calls a “more fragmented but practical global technology ecosystem.”
Fok said this change is already structural in battery and electronics manufacturing, but AI is in transition and automotive software is still in its infancy.
