Despite efforts by U.S. semiconductor makers to persuade the government to ease restrictions on their shipments to China, the Trump administration tightened them this week, effectively cutting off companies like Nvidia, Advanced Micro Devices and Intel from doing business in China, which buys more chips than any other country in the world, The New York Times reports.
Image source: NVIDIA
In particular, Nvidia lost orders from Chinese customers totaling $18 billion due to the introduction of restrictions on the export of the H20 computing accelerator, which is in fact a ban. Within two days of the announcement of the need to obtain licenses for the export of advanced AI chips to China, Nvidia shares fell by 8.4%, AMD by 7.4%, and Intel by 6.8%.
«“For the U.S. semiconductor industry, China is gone,” said Handel Jones, a semiconductor consultant at consultancy International Business Strategies. He predicts that by 2030, Chinese companies will lead in chip share in every major category of China’s AI market.
American companies are concerned that the restrictive policies pursued by the previous and current White House administrations will play into the hands of Huawei, which will take a leading position in China’s AI chip market due to the lack of competition from them. If Huawei gains momentum, China will use the company’s chips to build AI data centers around the world as part of the Belt and Road Initiative.
According to Gregory Allen, director of the Wadhwani Center for AI and Advanced Technologies, the restrictions from the US government will lead to Huawei’s current lag in the production of AI accelerators being reduced. In addition, the Chinese government will help Huawei attract promising AI startup DeepSeek as a client. This, in particular, will allow Huawei to improve the software for managing the chips it produces.
However, some analysts advocate further tightening of the bans. For example, Dylan Patel, chief analyst at research firm SemiAnalysis, believes that the US authorities should completely ban China from buying American chip-making equipment. Currently, some Chinese companies are able to buy this equipment for resale to other compatriots who are under sanctions.