Adds industry background, details of hearing, and comments by Senator Ted Cruz, paragraphs 7, 9-10 and 14-15

By Alexandra Alper, Jody Godoy

WASHINGTON, May 8 (Reuters) - Top executives at American AI giants OpenAI, Microsoft MSFT.O and Advanced Micro Devices AMD.O said at a U.S. Senate hearing on Thursday that while the U.S. is ahead in the artificial-intelligence race, Washington needs to boost infrastructure and champion AI chip exports to stay ahead of Beijing.

The U.S. Senate Commerce Committee, chaired by Republican Senator Ted Cruz, is looking to cut regulatory barriers to U.S. artificial intelligence after China's DeepSeek shocked the world with a high-quality, affordable AI model last year and as Huawei, long in Washington's crosshairs, unveiled an advanced AI chip.

The U.S. tech industry has seized on those concerns to lobby the Trump administration for more favorable policies including loosened export restrictions on AI chips, arguing that promoting worldwide use of AI that reflects democratic values is a matter of national interest.

"The number-one factor that will define whether the U.S. or China wins this race is whose technology is most broadly adopted in the rest of the world," said Microsoft President Brad Smith, adding that concerns about Chinese propaganda and personal data flows to China had driven his own company to bar employees from using DeepSeek.

"The lesson from Huawei and 5G is that whoever gets there first will be difficult to supplant," he said.

The Chinese telecommunications equipment manufacturer, which also makes an advanced AI chip, has faced U.S. restrictions over concerns its equipment could be used to spy on users. Reuters reported last month that Huawei [RIC:RIC:HWT.UL] is ramping up to make mass shipments of advanced AI chips to Chinese customers.

Sam Altman, CEO of OpenAI, maker of flagship AI model ChatGPT, and Lisa Su, CEO of AI chipmaker AMD, also testified at the hearing.

Altman told the panel he expects societal advances from AI to accelerate in the next few years through U.S. innovation, but that "investment in infrastructure is critical."

Such infrastructure includes everything from data centers to house more servers to power stations that fuel the energy-intensive calculations needed to drive AI.

In addition, Microsoft's Smith called for more education on AI to speed up adoption, training to increase the number of electricians, and support for AI research and development.

DeepSeek, a Hangzhou-based upstart, stunned the world last year when it unveiled a powerful AI model competitive with the likes of OpenAI and Meta Platforms META.O, but cheaper to run.

The move was surprising against the backdrop of sweeping rules imposed by former President Joe Biden's administration, aimed at cutting off China from American AI chips and capabilities, over fears Beijing could use the powerful technology to supercharge its military.

The Trump administration has so far taken a similar approach, last month imposing new licensing requirements on shipments to China of AI chips made by Nvidia NVDA.O and AMD that the companies designed to get around prior export restrictions.

But the Trump administration also plans to rescind and replace a set of AI chip export curbs unveiled during the waning days of the Biden administration, which were set to take effect on May 15. Cruz, Su and Altman all applauded the decision at the hearing.

"The Biden administration's misguided midnight AI diffusion rule on chips and model weights would have crippled American tech companies' ability to sell AI to the world," Cruz said.

(Reporting by Alexandra Alper in Washington and Jody Godoy in New York; Editing by David Gregorio, Chizu Nomiyama and Matthew Lewis)

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