U.S. Restrictions on AI-chip Exports Benefit China
💡 Sneak Peek: The buzz in the tech world is all about the impact of U.S. export restrictions on Nvidia's AI chips in China. With Nvidia's H20 and other GPUs now a no-go, domestic players like Huawei are looking to fill the gap. But just how much has Huawei grown in the wake of the restrictions, and will they continue to capitalize on this opportunity?
🤝 Experts Weigh In:
Brady Wang, Deputy Director at Counterpoint Research, predicts increased demand for Chinese chips due to homegrown competition. He beliefs that local companies like Huawei and Cambricon have the advantage of more incentives and opportunities to grow. Agreeing with Brady is Doug O'Loughlin, an analyst at SemiAnalysis. He observes that Huawei's Ascend chips are gaining traction in China due to the restrictions on Nvidia's H20 graphics processors.
🛑 Challenges for Huawei:
While Huawei is poised to benefit from the situation, they face obstacles in scaling production. U.S. export controls prevent Huawei from producing chips at TSMC factories in the same volumes as Nvidia, as TSMC complies with trade restrictions against China. In response, Chinese chipmakers are leaning more heavily on domestic SMIC, which also faces export controls and lacks access to advanced equipment.
📣 The U.S. Regulatory Crackdown:
The U.S. has placed export restrictions on Nvidia chips to China since 2022, with the aim of limiting the supply of powerful chips to Chinese companies. Despite Nvidia's introduction of H800 chips designed for China, they were also banned in 2023. The company then offered Chinese companies H20 chips with lower performance, only for the Trump administration to restrict their export in April 2023. As a result, Nvidia anticipates losing around $5.5 billion quarterly due to these decisions.
💰 The Revenue Picture:
In 2024, Nvidia's revenue from H20 sales to China was estimated to be around $12-15 billion, making China the fourth-largest region for Nvidia's sales, following the U.S., Singapore, and Taiwan. In January 2023, Financial Times reported that Huawei aims to increase its share of the AI chip market in China.
👉 What's Next?
The future of the AI chip market in China remains uncertain, with the exact growth trajectory of Huawei unclear from the available data. The biggest policy shifts occurred in 2025, but preemptive stockpiling or strategic partnerships in late 2024 may have contributed to early gains for Huawei. Keep an eye on this space for updates!
🔍 Enrichment Information:
📌 Nvidia’s Export Restrictions:- The U.S. banned Nvidia's H20 AI chip and RTX 5090D gaming chip sales to China starting from April 2025. The H20 was explicitly designed to comply with prior export rules but now falls under stricter bandwidth thresholds.- Nvidia faces a potential $5.5 billion impairment due to lost Chinese demand if restrictions persist.
📌 Implications for Huawei:- With Nvidia's H20 and other GPUs restricted, Chinese firms face limited access to advanced AI chips, creating demand for domestic alternatives like Huawei's Ascend series.- U.S. controls target chips with ≥1,400 GB/s DRAM bandwidth or ≥1,100 GB/s I/O bandwidth, criteria Huawei’s chips may avoid through design modifications, though technical specifics are unspecified.- The restrictions primarily took effect in early 2025, with any 2024 impact likely related to anticipation of tighter controls rather than immediate policy changes.
- With Nvidia's H20 and other GPUs now restricted, domestic players like Huawei and Cambricon, as predicted by Brady Wang and Doug O'Loughlin, are expected to grow and capitalize on the opportunity presented by U.S. export restrictions.
- Huawei faces obstacles in scaling production due to U.S. export controls preventing them from producing chips at TSMC factories in the same volumes as Nvidia, as TSMC complies with trade restrictions against China.
- In response to these challenges, Chinese chipmakers are leaning more heavily on domestic SMIC, which also faces export controls and lacks access to advanced equipment.
- Nvidia anticipates losing around $5.5 billion quarterly due to U.S. export restrictions on their AI chips in China, with China estimated to contribute $12-15 billion of Nvidia's revenue from H20 sales in 2024.
- The future of the AI chip market in China remains uncertain, with early gains for Huawei potentially due to preemptive stockpiling or strategic partnerships in late 2024. The exact growth trajectory of Huawei is unclear from available data, as the biggest policy shifts occurred in 2025.
