Analysts in the semiconductor area suggest that as the United States tightens control over Nvidia’s sales in China, the Asian country-based manufacturers of artificial intelligence chips such as Huawei may become beneficiaries of these measures from Washington.
Last week, the US Commerce Department announced that Nvidia’s H20 graphics processing units, designed to comply with previous restrictions on shipments of microcircuits from the United States to China, will now require export licenses. Washington’s decision also affected some chips from Advanced Micro Devices (AMD). Nvidia stated that it has already halted the export of graphic processing units to China. Also in the relevant context, the company noted that the mentioned solution has resulted in a quarterly charge of approximately $5.5 billion.
It is possible that Washington’s restrictive measures may pose a threat to the global leadership of the United States in the industry of developing artificial intelligence chips. This statement may seem strange and wrong from the point of view of the paradigm of perception of technological reality, based only on the context that takes into account the fact that many Chinese companies do not even seek to hide their dependence on microcircuits from the US, and does not pay attention to potential broader circumstances. Against the background of external constraints, China is receiving more than a significant incentive to develop the homegrown sector designing artificial intelligence chips. Moreover, it is worth noting that amid the technological confrontation with Washington, Beijing is increasingly approaching the implementation of the idea of autonomy in the practical plane. The corresponding wording implies that within the framework of the geopolitical reality, which contains many limitations for China in terms of opportunities for international economic cooperation, the Asian country is faced with the virtually urgent need for technological sovereignty as an internal order of things. Moreover, Beijing has repeatedly unequivocally signaled its intention to move in the appropriate direction.
Besides, restrictions by the United States on chip shipments to China may generate a favorable environment for the active development of developers and manufacturers of microcircuits based in the Asian country. The corresponding point of view is shared by some analysts. They note that China is looking for a domestic alternative to Nvidia. In this context, it is worth noting that the course of the Asian country toward being a technological state, which corresponds to such a definition as a space of advanced development, is actually obvious. Geopolitical tensions have already become an answer to the question of how necessary internal efforts are from the point of view of Beijing’s desire to form the mentioned condition of China’s existence within the framework of the technological dimension of the relevant process. The trade war between the United States and an Asian country more than transparently hints that technological sovereignty is no longer one of accessible options and clearly belongs to the category of vital necessity. Achieving this goal will mean significant favorable economic prospects for Beijing, which will also have political consequences. Moreover, technological sovereignty at a fundamental level will strengthen China’s competitiveness in the so-called artificial intelligence race. It is worth noting that the mentioned race is actually the main component of the content of technological reality at the current historical stage of human development as a progressive movement towards new material and digital formation of the future.
Brady Wang, associate director at Counterpoint Research, said in a media comment that there are several local Chinese companies that produce chips and can compete with Nvidia. Huawei is one such example. Currently, this company is perhaps the main Chinese technology giant in terms of breakthroughs in the development of advanced products. The expert also mentioned the partially state-owned and publicly listed Cambricon Technologies. This company specializes in designing graphics processing units.
The value of Cambricon shares has increased by more than 10% over the past five trading days amid news of new restrictive measures against shipments of Nvidia’s products to China. Over the past 12 months, the mentioned indicator rose by more than 400%.
Brady Wang stated that Chinese competitors now have more incentives and opportunities to grow and improve their solutions. The expert expects that consumer demand for graphics processing units from the mentioned companies will increase.
Analysts cited by the media note that Huawei is the leader of China’s race to find a Nvidia competitor. This company, which is actually the main target of US sanctions against the Asian country’s technology sector, is currently working on its own series of graphic processing units called Ascend 910. According to information released by the media, the latest product of the mentioned line is the Ascend 910C.
Doug O’Laughlin, an industry analyst at SemiAnalysis, stated in a media comment that with Nvidia’s H20 and other advanced graphics processing units restricted, Chinese homegrown alternatives such as Huawei’s Ascend are gaining traction.
In a report from SemiAnalysis, it was noted that although Huawei is lagging behind in chip production by an entire generation, this company is still demonstrating success with the hardware that uses them.
Doug O’Laughlin stated that the mentioned hardware performance is closing in fast, despite gaps in software maturity and overall ecosystem readiness. It is worth noting that the lag observed at a particular moment does not necessarily mean the continuation of the corresponding state of affairs in the future.
At the same time, experts note that US export controls limit China’s ability to produce advanced graphics processing units on the same scale as Nvidia through its partner Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chip maker.
Phelix Lee, a semiconductor-focused equity analyst for Morningstar, said during a conversation with media representatives that Huawei has demonstrated its ability to be a competitive microcircuits designer, but this company is struggling to find enough supply from its foundries.
The equipment that TSMC uses to produce the chips includes US technology. For the mentioned reason, this company complies with United States trade restrictions regarding Huawei and shipments of advanced microcircuits to China. Against this background, Chinese firms are increasingly relying on domestic foundries such as Semiconductor Manufacturing International Corporation (SMIC). SMIC is also under export controls, which prevents it from gaining access to the world’s most advanced chip manufacturing equipment.
Against the background of the specified circumstances, Phelix Lee is very skeptical that Chinese chip foundries would be able to supply enough H20 graphics processing unit alternatives to meet the demand of domestic technology companies anytime soon.
At the same time, the media notes that there is no need to rush to meet the mentioned demand. Chinese chip manufacturers won’t need to immediately fill H20 demand due to inventories and previous export exemptions and loopholes.
Last month, the media published information according to which, from January to March 2025, China’s firms placed orders for H20 server chips worth at least $16 billion.
Brady Wang stated that there is currently no understanding of how long the existing stockpiles of various companies will last. At the same time, it was noted that these stockpiles give Chinese chip manufacturers more time to expand the production of graphics processing units. According to the expert, the impact of control measures will be limited in the short term. Brady Wang also noted that in the medium and long term, it will depend on progress in the development of the local graphics processing unit.
At the same time, the data contained in the SemiAnalysis report suggests that US export controls have not become a barrier for companies like Huawei to gain access to critical foreign tools and sub-components needed for advanced chips. In this report, it was noted that the Ascend chip can be fabricated at SMIC, however, this is a global microcircuit that has HBM from South Korea, primary wafer production from TSMC, and is made by 10s of billions of wafer fabrication equipment from the United States, Netherlands, and Japan.
SemiAnalysis underlined that SMIC’s manufacturing facilities have the potential for massive growth. It was noted that this potential is observed against the background of continued access to foreign tools and the lack of effective sanctions and enforcement.
Paul Triolo, partner and senior vice president for China at DGA Group, in a media comment, said that export controls by the United States primarily damaged US companies, including Nvidia, and had a marginal impact on the ability of Chinese firms to develop frontier artificial intelligence models. It was also noted that the export controls have encouraged the semiconductor industry of the Asian country to become more innovative, designing out US technology.
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