us escalates ai chip war with china, taiwan caught in the crossfire

2025-06-18 general

Washington, Wednesday, 18 June 2025.
the us is tightening export controls on advanced ai chips to slow china’s ai progress. this action elevates the tech rivalry between the two nations. taiwan, a major semiconductor manufacturer, is now a key player, possibly unwillingly. a report indicates that china may have already received 140,000 advanced ai chips through illicit channels in 2024. the under secretary of commerce for industry and security testified that china is investing heavily to boost its ai chip production, so the us must not underestimate china’s ambitions.

Taiwan’s position and actions

Taiwan is aligning itself with the us-led export controls [1]. On June 9, 2025, Taiwan added Huawei and Semiconductor Manufacturing International Corp (SMIC) to its Strategic High-Tech Commodities Entity List [1]. Companies wanting to export to these entities must first obtain a permit from Taiwan’s International Trade Administration [7]. Taiwan’s customs will also be involved in border inspections [7]. These measures could partially cut off chinese firms from accessing taiwanese technology, semiconductor materials, and equipment [7].

Industry impact and perspectives

Nvidia is expected to launch a downgraded H20 chip in July to comply with us export controls [2]. This adaptation highlights the immediate impact of the regulations on major industry players. Reva Goujon, Director at Rhodium Group, noted that chinese engineers are receiving substantial state support to overcome us chip production constraints [1]. Alibaba’s 蔡崇信 stated that the $500 billion us investment in ai is a significant bubble [2].

Huawei’s response and ai advancements

Huawei is actively seeking alternatives to counter us restrictions. Recently, Huawei applied for a patent for a ‘four-chip’ packaging design, potentially for its next-generation Ascend 910D AI chip [6][8]. This design resembles bridging technology and could enable Huawei to enhance overall performance by integrating multiple chips through advanced packaging [6][8]. While Huawei may lag in advanced manufacturing processes, it is approaching the level of Taiwan’s TSMC in advanced packaging [6][8].

China’s ai chip landscape

The ai chip market is experiencing rapid growth. Gartner projects the ai chip market will reach $53.4 billion in 2023 [4]. By 2027, revenues are expected to more than double to $119.4 billion [4]. Despite us efforts to curb china’s progress, domestic ai chip companies are emerging [4]. Companies like Cambricon, Hygon Information, and Fudan Microelectronics are developing various ai chips, including GPUs, FPGAs, and DCUs [4].

us strategy and potential risks

The us aims to maintain its dominance through innovation and extensive controls [1]. This strategy involves a shift towards a ‘knowledge-based’ enforcement regime, placing more responsibility on industry for due diligence [1]. However, this approach carries risks, potentially leading to more rigid controls and less tolerance for partners not fully aligning with the us [1]. The us must avoid a false sense of security, understanding that china is rapidly catching up in ai chip capabilities [1].

Bronnen

ai chips export controls