By Michael Fennell

Prior to the economic, cultural, and seemingly unending prominence of Artificial Intelligence, the US had unequivocal control in chip development. American companies like Intel and AMD dominated the space. But the industry has changed. A company once known for making graphics cards for gaming PCs is now a multi trillion dollar empire on the cutting edge of the most burdening industry in the world.
Nvidia chips have been viewed as an industry flagship with the ability for massive parallel processing, a crucial part of training AI and the execution of AI prompts. What once lay in the gaming PCs now lines server warehouses across the world. And the country of the company who makes them has a big say in who can buy them and when.

China’s Interest in the AI Industry
AI has undoubtedly become a gigantic industry, one which many speculate is not just here to stay, but to change the world. China wants to be the major player in this space for a number of reasons. Most notably the economic growth; if anything akin to the tech boom of the early 2000s, this has the potentiality to create trillions in GDP growth, tens of thousands of jobs, as well as international esteem. Not only is there a positive ambition, but a defensive one too. A reliance on the US in these tumultuous times with fluctuating relations could cause serious trouble for China. But if the roles were reversed, they would have serious bargaining power.

China Battling US Strategy
Despite the excitement around AI, China has a dilemma on their hands. Unfortunately for them the new major chip manufacturer in the space, Nvidia, is another American company. Almost all cutting edge AI technology is being developed and operated with Nvidia at their core. For China, this means that in order to compete in the present, they need to depend on the United States, who are controlling and regulating Nvidia and their exports.

In July the US Commerce secretary took to the media to explain that the US plan to both profit off of China and prevent any AI leapfrogging from them. He stated the only chip they’d be able to buy was the H20, an inferior chip which he repeatedly referred to as the “fourth best”. He said China would become “addicted to the American technology stack” and that this would stifle their domestic innovation, keeping them from the AI mantle both in terms of chips and software.

Whether it was the interview in which the US Commerce secretary made the US economic strategy abundantly clear, or the Chinese government seeing the writing on the wall, they immediately sought to ban all US chips as quickly as possible, preventing all Chinese companies from the future purchase of Nvidia chips. This was something that Nvidia CEO Jensen Huang referred to as “disappointing” in a BBC interview, a comment which was not surprising considering the potential profits Nvidia could have made from a US China arms race with Nvidia in the middle. Now China seeks to develop their own Nvidia, with companies such as Cambricon, one which is working closely with Chinese AI powerhouse Deepseek.

While undoubtedly sub the standard of Nvidia, the prospects of a new chip making powerhouse in the AI space excited investors, thus skyrocketing stock prices. Now seemingly cash rich, it would appear as though the Chinese chip industry is well armed in their race against the US. Even prior to the banning, the Chinese technology company Huawei seemed desperate to catch up to Nvidia in the AI race, massively ramping up funding by billions in the AI chip space.

Consequences for China and the US
In the immediate future, China’s inability to obtain top of the line chips will undoubtedly stifle their ability to adapt and evolve in this ever-emerging industry. Despite backing domestic manufacturers, Deepseek too may take a hit with less access to domestic chips for servers and AI training. Although with their seemingly relentless pursuit from the Chinese government who are providing deregulation to fuel innovation and massive capital investments, a catch up in some way is not out of the realm of possibility. The US opium wars style tactics of dependency against China have failed, but they themselves are also investing heavily in AI both with huge sums of private capital and through the federal government through shared data factories, US AI is being fostered for world domination.

Despite their failure to export to China, the rest of the world seem eager to embrace the top of the line tech, including the UAE who recently secured a billion dollar a year investment agreement with the US for the securing of Nvidia chips.