A few minutes every morning is all you need.
Stay up to date on the world's Headlines and Human Stories. It's fun, it's factual, it's fluff-free.
The backstory: The tech race is on between China and the US, with both countries in competition to make quick progress in this sector. Things really started to heat up when, last October, the US Biden administration started banning exports to China of certain high-level semiconductor microchips and the machines needed to make them. The ban even included US-produced tools that were located in other countries, too. Europe and Japan are also expected to jump on board and stop similar exports to China soon. One reason is to stop China from developing supercomputers for producing things like nuclear weapons and AI systems.
More recently: So, what effect has the chip export ban had in China so far? Well, US chipmaker Nvidia has already started making new chips that are less advanced to export to China legally. Its newest model, the Nvidia H800, could take 10% to 30% longer to complete some AI tasks and also double the costs. But even with these new rules, China’s tech sector has been holding up. In fact, these “slower” chips are even an improvement to what some Chinese companies were already working with.
The development: But China seems to be finding a workaround to these current sanctions by making its own chips so it can stay in the race. Chinese companies are looking to develop AI with weaker semiconductors and combinations of chips so that it’s not so reliant on US tech. These companies, like Hua Hong Semiconductor and a chip tool maker backed by Huawei, are also planning to raise money via public offerings this year to get these projects off the ground. And China hasn’t given up on making advanced chips either. It’s trying to do that using older, non-sanctioned parts with its own equipment that’s less advanced.
"The AI companies that we talk to seem to see the handicap as relatively small and manageable," said Charlie Chai, a Shanghai-based analyst with 86Research.
“The goal now in China in a lot of areas is to de-Americanize supply chains,” said Paul Triolo, the senior vice president for China at the strategy firm Albright Stonebridge Group.
"The government isn’t seeking to harm competition or U.S. industry, and allows U.S. firms to supply products for commercial activities, such as providing cloud services for consumers," Nvidia said in a statement last week.