US-China AI Chip Fight: Export Curbs Hit Sales, Boost China’s Push
US-China AI Chip Fight: Export Curbs Hit Sales, Boost China’s Push
The US and China compete hard for control over AI markets, with semiconductors at the center. US export controls on advanced chips aim to slow China’s military and tech rise, but they also cost American companies billions in sales while China builds its own hardware. Recent debates show companies like Nvidia caught between profits and policy.
Nvidia Wants to Keep Selling to China
Nvidia’s CEO Jensen Huang made waves in early November by telling the Financial Times that “China is going to win the AI race.” This came right after President Trump blocked sales of Nvidia’s advanced Blackwell chips to Chinese firms, saying on October 31, “The most advanced [artificial intelligence chips], we will not let anybody have them other than the United States.”
Huang later clarified that “China is nanoseconds behind America in AI,” but critics see Nvidia prioritizing China sales over US security. A proposed GAIN AI Act, pushed by Sen. Jim Banks and Rep. Brian Mast, would have required Congress review of chip sales to China and Commerce Department checks to protect US competitors. It failed to make the defense bill after Nvidia and White House pushback.
The Foreign Policy piece warns that selling chips now, when supply lags demand, lets China undercut US firms abroad with cheaper, state-backed AI services from Tencent, Huawei, and Alibaba. China’s DeepSeek models already compete globally, and chips would fill their gap, even as Reuters reports Nvidia’s servers speed up AI models from China’s Moonshot AI and others tenfold. Nvidia relies heavily on China revenue, especially as US giants like Amazon and Microsoft eye their own chips.
Controls Backfire, China Races Ahead Anyway
Export bans haven’t stopped China. A Fortune article says they just drove massive investments in homegrown AI hardware. China cuts AI costs through smart software, open-source models, cheap data centers, and strengths in chip packaging. Huawei’s new SuperClusters beat Nvidia systems without top chips.
China grows power supply faster than the US, handles less efficient chips, and dominates apps like robotics and driver assistance with simpler models it builds itself. Advanced AI might plateau, needing fewer resources overall. Beijing absorbs high upfront costs for military AI, then scales cheap.
US losses? China was a huge market for Nvidia chips, now gone, maybe forever. Controls sparked national pride and retaliation hurting US trade. Fortune calls for dropping them: focus on US energy, talent visas, supply chains including critical minerals, and standards instead.
Funding Doubts Add Pressure
Ex-Google CEO Eric Schmidt questions if China can bankroll its AI drive long-term, per a Bloomberg report. Investments pour in on both sides, but export rules sharpen the commercial edge.
- US holds chip lead but risks markets.
- China gains self-reliance in hardware and apps.
- Talent and investments decide who owns AI services.
China’s military ties commercial tech, while US firms chase global sales. The economic tug-of-war over chips shapes who dominates AI markets, with 2026 rivalry centering on AI, semiconductors, rare earths, and biotech, per The Diplomat.
Sebastyen
Sebastyen Wolf is our Editor-in-Chief. He is an analyst and entrepreneur with experience working alongside early-stage founders, launching online ventures, and studying the data patterns that shape successful companies. A fan of Shark Tank since Season 1, he now focuses on translating the show’s most valuable insights into clear, practical takeaways for readers.
