In a surprising reversal of the United States’ years-long technology restrictions on China, President Donald Trump last month allowed Nvidia to resume sales of a key AI chip designed specifically for the Chinese market.
Yet rather than celebrating, Beijing’s response has been noticeably lukewarm, despite having long urged Washington to ease the stringent export controls. In the weeks since the policy U-turn, Beijing has called the chip a security risk, summoned Nvidia for explanations and discouraged its companies from using it.
The less-than-welcoming sentiment reflects Beijing’s drive to build a self-sufficient semiconductor supply chain – and its confidence in the progress its rapidly advancing chip industry has made.
But the cold shoulder may also represent some political posturing. Despite significant advances in its semiconductor sector, China still needs America’s chips and technology. Experts said China’s national champion Huawei has developed chips with performance comparable to — and in some cases surpassing — the newly approved Nvidia chip. However, China still wants the more advanced AI processors that remain blocked under US export controls.
In the years since Trump first imposed tech restrictions on Huawei during his first term, China’s chip technology has made significant strides, spurred by the frustration that mounted as Washington piled on export controls, said Xiang Ligang, director-general of a Beijing-based technology industry group and an advisor to the Ministry of Industry and Information Technology.
“We have this capability, it’s not as they imagine – that if China is blocked, China won’t be able to function, or that China will be finished,” he said.
To him, the policy about-face only reflects the importance of having a wholly homegrown chip supply chain.
“For Chinese companies, we may only have one choice if we wish to ensure a relatively secure supply of chips – that means relying on our own domestically produced chips,” Xiang said.
That may be China’s goal, but in the high-stakes AI race, with all its national security implications, the US remains the leader, at least for now.
China is not “naive”
The chip in focus is Nvidia’s H20, which was released by the AI chip leader last year to maintain access to the Chinese market following strict export controls put in place under the Biden administration that stopped the export of chips with high processing power.
Last month, Trump greenlit the sales of the chip to China after banning it in April as the US trade frictions with China deepened.