china's chip ambitions: can 'delete america' dethrone us tech?
Beijing, Friday, 15 August 2025.
by 2025, china plans to significantly reduce its reliance on us semiconductor technology. a key part of this strategy is the ‘delete america’ initiative, which aims to replace foreign software in it systems by 2027. china’s huawei is already developing competitive ai chips, posing a direct threat to us chipmakers. the long-term goal is full semiconductor independence, which could reshape the market for industry giants like nvidia, asml and tsmc. china has invested $95 billion already.
impact on us chipmakers
The ‘Delete America’ initiative and China’s broader industrial policy present a challenge to U.S. chipmakers [1]. Chinese firms are rapidly developing competitive alternatives in key areas like AI chips [1]. Huawei’s operating profit nearly doubled from 42.2 billion yuan (approximately $6.3 billion) in 2022 to 104.4 billion yuan (approximately $14.8 billion) in 2023, highlighting the company’s growing strength [1]. Intel’s revenue from China decreased from $20.03 billion in 2019 to $14.85 billion in 2023. AMD’s revenue in China also fell, from $5.21 billion in 2022 to $3.42 billion in 2023 [1].
market reactions and analysis
The market is already reacting to these trends. On August 14, 2025, the chip ETF (512760) in China saw a strong morning surge of nearly 4%, driven by the push for domestic alternatives and AI demand [2]. This reflects growing investor confidence in Chinese semiconductor companies [2]. Conversely, there are videos circulating that suggest Nvidia may have already experienced a 17% drop [7]. Industry analysts are actively debating the potential impact on U.S. chipmakers, with some predicting a significant decline in sales [4].
nvidia’s balancing act
Nvidia faces a complex situation. The U.S. government briefly allowed the sale of Nvidia’s H20 AI chip to China in mid-July 2025 [1]. Commerce Secretary Howard Lutnick stated the goal was to make Chinese developers “addicted to the American technology stack” [1]. Nvidia officials expressed that it was better to have Chinese customers paying billions for their chips than pushing them to seek Chinese alternatives [1]. However, China’s Cyberspace Administration summoned Nvidia representatives in late July 2025 over security concerns related to the H20 chips [1].
china’s domestic advancements
China is making significant strides in domestic chip production. Huawei plans to produce Ascend 920 AI chips as alternatives to Nvidia’s H20 [1]. There are even reports of a Chinese super lithography machine factory emerging to overcome U.S. chip blockades [4]. The country’s focus extends beyond AI chips to encompass the entire semiconductor industry [2]. China aims to achieve 70% self-sufficiency in semiconductors by 2025 [4]. This ambition is supported by substantial state funding, including the National Integrated Circuit Industry Investment Fund [1].
investment landscape
China’s semiconductor market is the world’s largest, accounting for approximately 54% of global sales [2]. However, it also has a high import dependence, exceeding 80% [2]. The Chinese government is actively working to change this [6]. The National Integrated Circuit Industry Investment Fund has received $95 billion in funding, with $48 billion added in May 2024 [1]. This fund focuses on supporting key areas such as manufacturing equipment, materials, advanced packaging, and AI chips [2]. Investors are closely watching how these developments will reshape the global semiconductor landscape [4].