Analyses suggest that the U.S. sanctions on artificial intelligence (AI) semiconductors targeting China, which continued under the Trump administration after the Biden administration, are leading to innovation and self-sufficiency in the Chinese semiconductor industry. Huawei, a representative big tech company in China, is rapidly enhancing its technology levels to the extent that it is competing with U.S. company NVIDIA in the domestic market, and it is noted that the semiconductor ecosystem is being activated in fields such as equipment and software (SW).
According to industry sources on the 12th, China is achieving notable success in the hardware computing sector, where its self-sufficiency had been slow. Due to U.S. sanctions making it difficult to secure state-of-the-art graphics processing units (GPUs), Chinese developers are securing computational resources by mixing overseas old GPUs and domestically produced GPUs. In fact, Morgan Stanley forecasted that China's self-sufficiency rate for AI chips, which was about 34% last year, will expand to 82% by 2027.
Earlier, Jim Keller, a leading semiconductor designer and CEO of Tenstorrent, pointed out in an interview with Japan's EE Times that "export regulations on AI technology do not help the U.S. at all. Export restrictions on semiconductor manufacturing equipment mean that China is strengthening its domestic development of this technology." He continued, "As far as I know, the semiconductor equipment regulations against China over the past five years have accelerated about five years' worth of evolution in China," adding, "Ultimately, victories are achieved not through regulation but through innovation."
The industry is particularly focused on Huawei's own AI semiconductor, "Ascend." While there are controversies surrounding the overestimation of chip performance, experts generally agree that developing chips comparable to AI accelerators from NVIDIA and AMD with its own technology, despite U.S. sanctions, is an impressive achievement. Previously, the U.S. government announced export control measures against Huawei's Ascend chips, effectively prohibiting their use worldwide.
China is also making progress in the field of electronic design automation (EDA), one of the first steps and most important software in semiconductor design. This field is mostly dominated by U.S. corporations such as Synopsys and Cadence. Chinese EDA company Empyrean Technology commercialized EDA supporting 14-nanometer (nm; 1 nm is one billionth of a meter) processes in 2023 and is reportedly nearing the 7-nm level. While it does not yet match the U.S. industry's technology for processes below 5 nm, it is being evaluated as rapidly evolving.
China is also looking for breakthroughs through the modernization of aging semiconductor equipment. In particular, as the supply of extreme ultraviolet (EUV) lithography equipment, essential for advanced processes, has been blocked by the U.S., companies like China Semiconductor Manufacturing International Corporation (SMIC) have reportedly increased yields using only deep ultraviolet (DUV) lithography. However, DUV cannot engrave fine circuits at once, necessitating multiple lithography and etching processes, which may negatively impact yield.
Global corporations are quickly developing alternative chips that exploit loopholes in U.S. regulations. NVIDIA plans to release an AI accelerator known as the "RTX Pro 6000" for export to China, referred to as B40, in the latter half of this year. This product is a lower-performance version compared to the existing H20 chips for export to China, priced about 30% cheaper. A semiconductor industry official explained that "the performance of the AI chips NVIDIA supplies to China is lower than that of chips exported to other countries, but Chinese corporations will find ways to enhance them to the levels required for advanced AI computations."