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US Shoots Itself in Foot with Chip Restrictions, While Boosting China

US Shoots Itself in Foot with Chip Restrictions, While Boosting China

Sputnik International

With the US continuing to tighten restrictions on chip exports to China, US-based chip giant Nvidia’s struggle to adjust exports to one of its key markets has once again come into the spotlight.

2025-05-20T10:07+0000

2025-05-20T10:07+0000

2025-05-20T10:51+0000

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Nvidia is evaluating how to address the China market after the US government placed limits on sales of its Hopper H20 chip there but will not put out another version from the Hopper series, CEO Jensen Huang said on Saturday, Reuters reported.Asked what the company’s next chip for China after the H20 was, Huang said: “It’s not Hopper because it’s not possible to modify Hopper any more,” Huang said, according to the Reuters report.His remarks underscore the company’s dilemma in navigating the complex terrain of political pressures, after the H20 chip, which had been the primary chip Nvidia was permitted to sell in China, was effectively blocked from the market after US officials informed the company last month that the product would require an export license, per Reuters.To a certain extent, the dilemma underscores a fundamental truth: China’s role as both a critical revenue source and innovation ecosystem for Nvidia is irreplaceable. In recent years, Nvidia has reportedly had to tweak its chip offerings for the Chinese market several times in compliance with the increasingly stringent US export controls on sales of advanced artificial intelligence (AI) chips to China. In recent days, several foreign media outlets, including Reuters, citing unnamed sources, also reported that Nvidia was seeking a site in Shanghai for a R&D center. Given the chip giant’s consistent efforts to balance compliance with US regulations while meeting the demands of the Chinese market, the latest round of US restrictions has unsurprisingly sparked speculation surrounding its next moves. Will it sell another modified version of its Hopper chip to China? Will it develop a new architecture exclusively for China? These questions highlight the self-defeating nature of US policies. By compelling a global tech leader like Nvidia to tweak its products, Washington is hurting American businesses by putting them at a disadvantage in one of the most critical chip markets. For Nvidia, circumventing US export restrictions by reducing chip performance is merely a stopgap measure, not a sustainable strategy. These “tweaked” chips are likely to become increasingly uncompetitive in the Chinese market, especially given the significant uncertainty surrounding potential future US government restrictions that Chinese clients must consider. As a result, the US government’s restrictions are actually weakening Nvidia’s presence in the Chinese market, and the company is likely to face intensified competition from Chinese companies.In the Chinese market, Nvidia once held a dominant position. Yet, with escalating US restrictions, the landscape is shifting. China’s appetite for AI chips is on the rise, creating fertile ground for domestic chipmakers. China has ramped up investment in chip R&D, yielding notable progress. While US export controls may pose temporary hurdles, they will only accelerate China’s quest for an autonomous chip supply chain and a viable and controllable alternative. In a sense, the US restrictions are also fueling China’s drive for technological self-sufficiency. While Chinese companies’ products may not yet match Nvidia’s offerings, many of them are already viable alternatives for many domestic applications.Nvidia’s predicament may serve as a microcosm of the implications of US export control policies. The irony is stark: while the US government aims to contain China’s tech sector, its policies are inadvertently strengthening the very ecosystem it seeks to contain. Also, by focusing on containing China, Washington risks continuously creating difficulties for US companies. Therefore, the real casualty of US tech restrictions may not be China’s progress, but the ability of US firms to lead in an increasingly multipolar technological world.The trajectory of US-China technology relations is not one of unilateral dependence but of mutual interdependence. No amount of sanctions or export controls can change the fact that technological progress thrives on collaboration, not isolation. As history has shown, attempts to stifle innovation through coercion invariably backfire, spurring the advancements. The semiconductor industry is no exception.This article originally appeared on the Global Times website.

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