United are currently top of the Premier League on goal difference ahead of local rivals Manchester City, but the veteran Welshman believes that the Blues from London pose a greater threat to his side's superiority.
"It is strange to see Manchester City, especially if you think about the last 20 years where Manchester United have won numerous trophies," said Giggs.
"But the situation has changed. They have plenty of money so they have some outstanding players. But I think Chelsea are more dangerous as a team."
United travel to Liverpool in the Premier League on Saturday.