huawei ai chips spark us-china tensions as nvidia ceo calls export controls a 'failure'

2025-05-22 general

beijing, Thursday, 22 May 2025.
the us government is warning companies against using huawei’s ai chips, a move beijing has denounced as ‘bullying’. this escalation occurs as nvidia’s ceo, jensen huang, suggests that us export controls on ai chips to china have backfired, stimulating domestic innovation. huang revealed nvidia’s market share in china has plummeted from 95% to 50% since 2022 due to these restrictions. he further stated that china’s ai market is expected to reach $50 billion by 2026.

Nvidia’s market challenges in china

Nvidia’s CEO, Jensen Huang, revealed that export controls have significantly hampered the company’s performance in China [1][2]. Nvidia’s market share has declined from approximately 95% to 50% since the implementation of stricter export regulations in 2022 [1][2]. Huang estimates that these restrictions have cost Nvidia billions of dollars in potential revenue [1]. He emphasized that Chinese firms are increasingly turning to domestically produced alternatives, like Huawei’s Ascend chips, to meet their AI needs [1][2].

us government’s stance and potential penalties

The US government is intensifying its scrutiny of AI chip usage, cautioning companies against utilizing Huawei’s Ascend chips [1][3]. The US Bureau of Industry and Security (BIS) has issued guidance indicating that using these chips could violate US export controls [3]. Firms found in violation may face severe penalties, including imprisonment, fines, and loss of export privileges [1]. This stance reflects Washington’s broader concerns about China’s advancements in AI and its potential military applications [1].

beijing’s response to us restrictions

Beijing has strongly condemned the US actions, characterizing them as ‘bullying’ and protectionism [1]. China’s Ministry of Commerce asserts that the US is undermining the stability of global semiconductor supply chains [1][8]. They warn that any organization or individual assisting in the enforcement of these measures may face legal repercussions under Chinese law [1][8]. This escalating tension highlights the ongoing tech war between the two nations, with significant implications for companies operating in both markets [1].

malaysia’s ai infrastructure project

The Malaysian government initially announced a partnership with Huawei to develop its AI infrastructure, planning to deploy 3,000 Huawei Ascend GPU-powered AI servers by the end of 2026 [5][6]. However, the government quickly retracted this statement, clarifying that the project was not government-endorsed [5]. Huawei also denied the claims, stating that Malaysia had not purchased Ascend chips [5][6]. This reversal underscores the pressure on countries to navigate the complex landscape of US-China tech relations [6].

expert opinions and market outlook

Jensen Huang believes that export controls have ultimately ‘failed’, spurring China’s domestic chip development [1][2]. He noted that China possesses a vibrant tech ecosystem with a significant pool of AI researchers [1]. Huang also highlighted the potential for a $50 billion Chinese AI market by 2026, a market Nvidia risks missing out on due to restrictions [1]. Bernstein Research indicates Nvidia’s revenue from China in the last fiscal year was $17 billion, a reduced portion of its $130 billion global revenue [2]. This represents a -86.923 or -86.92% [2].

Bronnen

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