Chinese internet giants could start pocketing a much bigger share of AI profits within the next two to three years—if restrictions on chip supply and infrastructure loosen up. That’s according to Kenneth Fong, Head of China Internet Research at UBS, who spoke at an event in Shenzhen.

Who’s Getting the Margins Right Now

Fong says most of the margins today are going to hardware suppliers and related service providers. The market is running into a crunch on computing power, which keeps the "pricing power" squarely with the infrastructure players.

What Could Shift the Balance

If chip and infrastructure restrictions ease, that "pricing power" could shift to internet platforms—especially those with massive user bases, tons of data, and strong distribution channels. In that case, platforms themselves could start raking in the lion’s share of profits across the AI value chain.

The Forecast Timeline

UBS’s outlook comes with a big caveat: it all depends on how available computing power becomes. Their two-to-three-year forecast is tied to the potential loosening of restrictions on key component supplies and the rollout of critical infrastructure.