Idea to kill today’s AI – based economy in China is an overstatement

    Some of China's methods of technology acquisition are legal, such as government-funded research, joint ventures, and partnerships, reports TorchStone Global.

 

    China has also made significant strides in indigenous innovation and development of its own advanced technologies across various sectors, including AI, quantum computing, and electric vehicles, says the Asia Society. Is obvious that Huawei produces its own AI chips. The question is how much money China will invest in production of these chips if we will not sell them to China at all, how quickly the Chinese chips will be better than ours, how our actions influence that.

 

1. Huawei's AI Chip Production:

 

    Huawei's Ascend series of AI chips is their response to US export restrictions that cut them off from Nvidia's chips.

 

While Huawei claims their Ascend chips are competitive with Nvidia's A100, analysts suggest they are still a generation behind, according to The New York Times.

Huawei is investing heavily in R&D to improve its chips, reportedly over $25 billion annually, according to Reuters.

 

2. China's Investment and Development:

 

    China is significantly increasing investments in AI and specifically AI chip production, aiming to become a global leader in AI.

 

Government funding dominates China's AI investments, with internet companies also contributing significantly.

The US export controls have spurred China to accelerate its efforts to develop domestic alternatives, particularly in areas where they were previously reliant on foreign technology.

While they've made progress in areas like memory chips, challenges remain in chipmaking equipment.

 

3. Impact of US Actions:

 

    US export controls on advanced chips and semiconductor manufacturing equipment, like the ones imposed in 2022, have directly impacted China's access to cutting-edge technology.

 

These restrictions have also prompted China to focus on developing its own AI chip ecosystem and domestic alternatives.

There's debate about the effectiveness of these controls, with some arguing they create a “false sense of security” by slowing down China's progress but not halting it.

The US has also taken steps to restrict Huawei's access to advanced technologies, further pushing them to develop their own solutions.

 

4. Future Trajectory:

 

    China's AI chip industry is likely to continue growing, driven by both government investment and the need to overcome US restrictions.

 

The pace of their progress will depend on their ability to overcome technological hurdles and build a robust supply chain.

The US actions will continue to play a significant role in shaping China's AI chip development, potentially accelerating or hindering their progress depending on the specific policies and their enforcement, says CNBC. Below is an opinion of Michael Sobolik, a person, inclined to kill today’s AI – based economy in China:

 

“Supporters of Nvidia's Jensen Huang such as Aaron Ginn insist that selling Nvidia H20 AI chips to China will make Beijing reliant on Washington for this century's most critical technologies ("Don't Surrender China's AI Market," op-ed, July 18). They ignore decades of reality: in telecommunications, self-driving cars, cranes, and semiconductors, U.S. companies have accused Chinese firms of stealing their technology. These firms then sell the allegedly stolen tech abroad at below-market prices. This pattern, repeated in multiple industries over decades, has trapped America in a dependency on the Chinese Communist Party for some of the 21st century's most critical technologies.

 

The Trump administration is rightfully enacting policies to break Chinese leverage over the U.S. Especially notable was the Pentagon's recent investment in MP Materials to support America's only active rare earth mineral mine that sells to the commercial market. It is an early but critical step toward eliminating Beijing's control of elements on which civilian and military technology rely. This strategic challenge didn't develop overnight. It is the product of decades of economic engagement with China, informed by the belief that trade would reform Beijing and reinforced by U.S. companies that cared more about accessing China's market than the risks of equipping the People's Liberation Army.

 

Why then, at the very moment Washington is cleaning up Wall Street's mess, would policy makers allow Silicon Valley to hijack America's China policy? Selling Nvidia chips to China won't, as Mr. Huang argues, keep the country reliant on the U.S. It will supercharge the Chinese AI capabilities commercially and militarily. Measuring for inference speed -- the relevant chip measure for AI -- the H20 chip is significantly faster than Huawei's Ascend 910C chip and edges out Nvidia's H100 chip, which Washington has blocked China from purchasing. Unilaterally ceding America's greatest AI advantage could render irrelevant the Trump administration's laudable efforts to decouple from China.

 

Michael Sobolik

 

Senior Fellow, Hudson Institute

 

Washington” [A]

 

Idea to kill today’s AI – based economy in China is an overstatement. Silicon is in sand. Sand is not oil. Sand is everywhere. China is not Japan in 1940-ies.

 

A. Giving China Chips Derails Trump Decoupling. Wall Street Journal, Eastern edition; New York, N.Y.. 21 July 2025: A16.