As the Trump administration tightens export controls on crucial semiconductor technology to China, experts caution that these measures could inadvertently enhance innovation within Chinese firms, potentially strengthening their position in the global semiconductor market.
Jack Gold, principal analyst at J.Gold Associates, argued that the U.S. government’s actions might provide a significant boost to China’s chip industry. “What’s actually happening is that the U.S. government is handing China a big win as it tries to get their own chip business going,” Gold said. He warned that once Chinese firms become competitive, they could dominate the market, making it challenging for U.S. manufacturers to regain lost market share.
Nvidia and Advanced Micro Devices (AMD), two leading U.S. semiconductor companies, have reported substantial expected losses due to new licensing requirements for exports to China. Nvidia anticipates a $5.5 billion hit, while AMD projects a potential loss of up to $800 million, according to filings with the U.S. Securities and Exchange Commission (SEC). The new rules require Nvidia to obtain licenses for its H20 chips, which are believed to be used in Chinese supercomputers.
These restrictions follow previous limitations on the export of Nvidia’s advanced graphics processing units (GPUs) to China, the world’s largest consumer of chips. Nvidia’s H20 chip was designed specifically for the Chinese market, but the new regulations pose a significant obstacle, Gold noted. Similarly, AMD’s MI308 GPUs, intended for high-performance applications, are also affected by the new export controls.
Rob Enderle, an independent tech analyst, predicted that Chinese manufacturers, particularly Huawei, would seize this opportunity to enhance their microprocessor capabilities. “It’s going to be a godsend for China as they spin up their own microprocessor business,” Enderle stated, suggesting that U.S. leadership in microprocessors and GPUs could be at risk.
The Chinese government has the resources and motivation to support its chip industry, according to Gold, who added that U.S. tariffs could alienate allies, prompting them to turn to China for semiconductor needs. “This will create real problems for U.S. companies competitively,” Enderle said, emphasizing that foreign companies may find themselves better positioned to compete.
Nvidia CEO Jensen Huang expressed confidence that the company can meet the new U.S. requirements without hindering technological progress, asserting that the global advancement of artificial intelligence will continue unabated. Wedbush analyst Dan Ives noted Nvidia’s critical role in U.S. efforts against China, stating that the administration’s actions aim to slow China’s technological progress. However, Ives cautioned that the ongoing “chip wars” are far from over, predicting continued tensions between the two nations.
