Following U.S. attempts to restrict the use of some Chinese semiconductors – saying that their use anywhere in the world would violate U.S. export controls – the Chinese government has warned that any entity that enforces or enables the U.S. restrictions could be in violation of China’s Anti-Foreign Sanctions Law. While the U.S. curbs might put short-term pressure on Chinese enterprises, analysts and executives believe that the restrictions will only prove to be a failure and ultimately catalyze the development of China’s homegrown software and hardware ecosystems. China condemned new U.S. warnings on the use of artificial intelligence (AI) chips by Huawei, vowing it would take steps against such “typical unilateral bullying and protectionism” by the U.S. to restrict other countries’ access to advanced computing chips and AI, according to a statement by the Ministry of Commerce (MOFCOM). “The U.S. should immediately rectify its erroneous practices, comply with international economic and trade rules, and respect other nations’ rights to technological development,” said a Spokesperson for the Ministry, stressing that “any organization or individual that enforces or assists in enforcing such measures will risk violating Chinese laws and regulations, including the Anti-Foreign Sanctions Law, and shall bear corresponding legal liabilities”.
The U.S. specifically warned companies not to use Huawei’s Ascend chips, which would put them at risk of violating U.S. export controls. The U.S. Commerce Department said that its policy was aimed at sharing its AI technology “with trusted foreign countries around the world, while keeping the technology out of the hands of our adversaries”. Nvidia CEO Jensen Huang said that “all in all, the export control was a failure. The fundamental assumptions that led to the AI diffusion rule in the beginning, in the first place, have been proven to be fundamentally flawed”. Over the past year, Washington’s ban on the sale of advanced AI chips to China has compelled Chinese tech companies to turn to domestic semiconductor designers like Huawei, while also spurring Beijing to invest heavily to develop a supply chain that doesn’t rely on manufacturers outside the country.
“The local companies are very, very talented and very determined, and the export control gave them the spirit, the energy and the government support to accelerate their development,” Huang said at the annual Computex event in Taipei. Nvidia’s market share in China, according to Huang, has plunged to 50% now from 95% at the start of former U.S. President Joe Biden’s Administration.
Meanwhile, China’s local semiconductor suppliers are expected to capture nearly 40% of the domestic market share by 2025, almost on a par with foreign-purchased chips, according to market research company TrendForce. China could also use its unreliable entity list and export controls on rare earth elements to protect its national interests, the China Daily reports.
