us export controls: a catalyst for chinese ai innovation?

2025-06-25 general

Beijing, Wednesday, 25 June 2025.
us export controls intended to curb china’s ai sector may be backfiring. deepseek is reportedly finding ways around restrictions. huawei’s ai chips are now outperforming some american competitors. nvidia’s ceo admits the export controls have failed. these restrictions are inadvertently fueling domestic innovation within china’s ai industry. this could close the technology gap with the us faster than anticipated. what does this mean for nvidia and the future of ai supremacy?

deepseek’s circumvention and military ties

DeepSeek, a Chinese AI firm, is reportedly aiding China’s military and intelligence operations [4][6]. A U.S. official stated DeepSeek is using shell companies in Southeast Asia to bypass U.S. export controls on high-end semiconductors [6]. This allows them to access restricted AI chips [6]. DeepSeek has appeared in over 150 procurement documents related to the People’s Liberation Army and associated entities [4]. These actions raise concerns about data security and the potential misuse of AI technology [1][4].

nvidia’s market position and challenges

Nvidia’s CEO, Jensen Huang, has openly acknowledged the failure of U.S. export controls [1]. He called on the White House to lower barriers to AI chip sales [1]. Huang fears American firms will lose market share to rivals like Huawei [1]. Nvidia states DeepSeek lawfully acquired H800 chips, a modified version of H100 designed for export to China, and not the restricted H100 [5]. The H800 has reduced capabilities compared to the H100 [5]. Despite this, the situation presents challenges for Nvidia, impacting its access to the Chinese market and potentially affecting its stock value [GPT].

huawei’s rise and competitive edge

Huawei’s advancements in domestically produced AI chips have allowed it to surpass some American competitors [1]. Huawei’s Ascend-powered CloudMatrix 384 outperformed Nvidia’s GPU-based SGLang in running DeepSeek’s R1 reasoning model [1]. This indicates a growing competitive threat to Nvidia [1]. While a SemiAnalysis report suggests Huawei is still a generation behind in chip technology, its scale-up solutions are considered a generation ahead of Nvidia and AMD [1]. This highlights the rapid innovation occurring within China’s AI sector [1].

broader implications and investor considerations

The U.S. and China are in a “sprint mode of a real race for supremacy,” according to George Lee of the Goldman Sachs Global Institute [1]. Lizzi C. Lee emphasizes that control over AI depends on chips, energy, data centers, cooling systems, and power grids [1]. Investors should closely monitor how these developments impact Nvidia’s market access and competitive positioning [GPT]. The ability of Chinese companies to circumvent export controls and innovate domestically poses a long-term risk to Nvidia’s dominance in the AI chip market [GPT].

Bronnen

export controls AI innovation